PROSPECTUS DATED 3 June 2003 (Registered with the Monetary Authority of Singapore on 3 June 2003) This document is important.

If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser. We have applied to the Singapore Exchange Securities Trading Limited (the "SGX-ST") for permission to deal in and for quotation of all the ordinary shares of par value $0.04 each (the "Shares") in the capital of BreadTalk Group Limited (the Company) already issued, the new Shares (the "New Shares") which are the subject of this Invitation and the shares which may be issued upon the exercise of the options to be granted under the Share Option Scheme (the Scheme Shares). Such permission will be granted when we have been admitted to the Official List of the Stock Exchange of Singapore Dealing and Automated Quotation System (the "SGX-SESDAQ"). Acceptance of applications will be conditional upon, inter alia, permission being granted to deal in and for quotation of all of our existing issued Shares, the New Shares and the Scheme 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 us or the Managers. The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Official List of the SGX-SESDAQ is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries or our 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 by the Authority does not mean that the Securities and Futures Act (Cap. 289) or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of our New Shares being offered or in respect of which an invitation is made, for investments. We have not lodged or registered this Prospectus in any other jurisdictions. No Shares will be allotted on the basis of this Prospectus later than six months after the date of registration of this Prospectus. Investing in our New Shares involves risks which are described in the "Risk Factors" section beginning on page 22 of this Prospectus.

(Incorporated in the Republic of Singapore on 6 March 2003) Invitation in respect of 32,000,000 New Shares of $0.04 each comprising:-

BreadTalk Group Limited

(1) 3,200,000 Offer Shares at $0.24 for each Offer Share by way of public offer; and (2) 28,800,000 Placement Shares by way of placement comprising: (i) a minimum of 23,800,000 Placement Shares at $0.24 for each Placement Share; and (ii) up to 5,000,000 Reserved Shares at $0.205 for each Reserved Share reserved for employees and Independent Directors of our Group, payable in full on application.

Lets share
BreadTalk, an award-winning bakery chain, offers bakery products prepared with passion and vibrancy, employing creativity to inject life and personality into bread. Our innovative recipes, bread designs and creative branding concepts combine to give customers a unique shopping experience! Within three years, we have 22 retail outlets in Singapore, a central kitchen and 1 franchised retail outlet in Jakarta, Indonesia.

Parco Bugis Junction

The sleek, transparent concept adopted in the interior design of our retail outlets
Paragon

Open kitchen allows for viewing of the complete baking process, presenting freshly-baked bread, every day Capturing the imagination of consumers with the creation of wide varieties of bread with visual attractiveness, quirky names and interesting stories Innovative recipes, bread designs and creative branding concepts combine to give customers a unique shopping experience Constant development of new, innovative and creative bakery items
Jurong Point

Causeway Point

Well-known brand name with strong brand equity Emphasis on innovation and creativity with more than 150 different products created by research and development team Strategic retail locations, capturing strong market interest and creating brand awareness Experienced management team comprising individuals, each with years of experience in the F&B/retail industry

Received invitations from interested parties to franchise our concept in countries such as Malaysia, Hong Kong Special Administrative Region, Australia and the United States of America February 2003 - entered into a master franchise agreement covering the Indonesian market April 2003 - opened the first franchise retail outlet in Jakarta Second half of 2003 - to open the second franchise retail outlet in Jakarta By end of 2003 - to franchise to other countries in Asia

HotChic

Moshi Mushroom

Flosss

Mt. Fuji Swirl

A Bian

Bak Kwa Delight

Crouching Tiger, Hidden Bacon

Goldmine

mo

on

c ak

es, the Brea dTal

kw
ay
!

Tiramisu

Grassland

, ho, ho C hr i stmas log cakes , ho ...

Tropicana Fever

Financial Highlights
Expansion into Overseas Markets - Expand overseas markets through direct investments, joint ventures or franchising - Initial foray to establish franchise outlets in Indonesia, starting in Jakarta - To set up own operations in China
35000 $40000

Proforma Group Financial Information

Turnover & Profit/(Loss) Before Tax (S$000) from FY2000 to FY2002

34,970

Extension of Local Retail Operations - Continue to extend reach by locating retail outlets in strategic high mass and high human traffic locations Development of Corporate Sales - Constant evaluation of potential corporate customers to increase corporate sales Diversification into New Business - We will obtain franchise rights to bring Taiwanese "Din Tai Fung" restaurant to Singapore, serving Chinese delicacies such as "Xiao Long Bao"
FY 2000 FY 2001
PBT (S$000)

25000

16,741
15000

5000

1,164
0

2,601

4,563

(248)
FY 2002
Sales (S$000)

CONTENTS
Page CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DETAILS OF THE INVITATION LISTING ON THE SGX-SESDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . INDICATIVE TIMETABLE FOR LISTING . . . . . . . . . . . . . . . . . . . . . . . . . 10 12 14 15 19 20 22 27 29 31 32 33 39 41 43 45 46 47 48 4 6

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . . . PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE INVITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INVITATION STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SUMMARY OF OUR PROFORMA GROUP FINANCIAL INFORMATION . . . . . . . . . . . DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RESTRUCTURING EXERCISE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GROUP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MORATORIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GENERAL INFORMATION OF OUR GROUP HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BREADTALK FRANCHISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . QUALITY CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MARKETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RESEARCH AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . STAFF TRAINING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

49 50 52 53 54 54 56 56

Page INSURANCE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SEASONALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GOVERNMENT REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . PURCHASING AND SOURCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . INVENTORY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MAJOR SUPPLIERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MAJOR CUSTOMERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . COMPETITIVE STRENGTHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 57 57 57 58 58 58 59 59 60 61

PROPERTIES AND OTHER FIXED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . PROSPECTS AND FUTURE PLANS INDUSTRY OUTLOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OUR FUTURE PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64 64

DIRECTORS, MANAGEMENT AND STAFF MANAGEMENT REPORTING STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION . . . . . . . . . . . . . STAFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SERVICE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 66 68 69 72 72

THE BREADTALK GROUP LIMITED EMPLOYEES' SHARE OPTION SCHEME SUMMARY OF THE RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS INTERESTED PERSON TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . GUIDELINES FOR FUTURE INTERESTED PERSON TRANSACTIONS . . . . . . . . . REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS . . . POTENTIAL CONFLICTS OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BOARD PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

74

84 87 87 88 90 91 92 93 117 128 143 147 166

CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PROFORMA CONSOLIDATED FINANCIAL INFORMATION AND REPORT ON EXAMINATION OF PROFORMA CONSOLIDATED FINANCIAL INFORMATION . . . . . . GENERAL AND STATUTORY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . ANNEX A EXTRACTS OF ARTICLES OF ASSOCIATION OF OUR COMPANY . . . . . . ANNEX B DESCRIPTION OF OUR SHARES . . . . . . . . . . . . . . . . . . . . . . . ANNEX C RULES OF THE BREADTALK GROUP LIMITED EMPLOYEES' SHARE OPTION SCHEME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ANNEX D SINGAPORE TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Page ANNEX E AUDITED FINANCIAL STATEMENTS OF BREADTALK PTE LTD FOR THE FINANCIAL PERIOD/YEARS ENDED 31 DECEMBER 2000, 2001 AND 2002 ANNEX F TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION . . . . . 169 210

CORPORATE INFORMATION
Board of Directors : George Quek Meng Tong (Managing Director) Katherine Lee Lih Leng (Executive Director) Chen Kuo Hua (Non-Executive Director) Ong Kian Min (Independent Director) Lai Hock Meng (Independent Director) Wang Li-Er, Sherylene, LLB (Hons) Busarakham Kohsikaporn, (FCIS) 10 Collyer Quay #19-08 Ocean Building Singapore 049315 Tel: 6536 5355 Fax: 6536 1360 Business Address : 171 Kampong Ampat # 05-03/04 KA FoodLink Singapore 368330 Tel: 6285 6116 Fax: 6285 1661 Share Registrar and Share Transfer Agent : Lim Associates (Pte) Ltd 10 Collyer Quay # 19-08 Ocean Building Singapore 049315 SBI E2-Capital Pte Ltd 5 Shenton Way # 09-07 UIC Building Singapore 068808 The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809 Underwriters for the Public Offer : SBI E2-Capital Securities Pte Ltd 5 Shenton Way # 09-08 UIC Building Singapore 068808 The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809

Joint Company Secretaries Registered Ofce

: :

Joint Lead Managers

Joint Lead Placement Agents

SBI E2-Capital Securities Pte Ltd 5 Shenton Way # 09-08 UIC Building Singapore 068808 The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809 UOB Kay Hian Private Limited 80 Rafes Place # 30-01 UOB Plaza 1 Singapore 048624

Auditors and Reporting Accountants

Ernst & Young Certied Public Accountants 10 Collyer Quay # 21-01 Ocean Building Singapore 049315 Drew & Napier LLC 20 Rafes Place # 17-00 Ocean Towers Singapore 048620 The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809 The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809 United Overseas Bank Limited 80 Rafes Place UOB Plaza Singapore 048624

Solicitors to the Invitation

Receiving Bank

Principal Bankers

Public Relations Consultant

Quattro Media Pte Ltd 50 Rafes Place # 29-00 Singapore Land Tower Singapore 048623

DEFINITIONS
In this Prospectus and the accompanying Application Forms and in relation to Electronic Applications, the instructions appearing on the screens of the ATMs of Participating Banks and on the IB websites of the relevant Participating Banks, the following denitions apply throughout where the context so admits: Group Companies ``BreadTalk'' or ``Company'' ``BTI'' ``BTPL'' ``BreadTalk Group'' or ``Group'' or ``Proforma Group'' ``Taster Food'' General ``Act'' ``Application Forms'' : : The Companies Act, Chapter 50 of Singapore, as amended or modied from time to time The ofcial printed application forms to be used for the purpose of the Invitation which are issued with and form part of this Prospectus The list of applications to subscribe for the New Shares Association of Small and Medium Enterprises The immediate family (being spouse, child, sibling and parent) of a Director, Substantial Shareholder or Controlling Shareholder and any company in which a Director, Substantial Shareholder or Controlling Shareholder and his immediate family together (directly or indirectly) has an interest of 30% or more Automated teller machine of a Participating Bank The audit committee of our Company Monetary Authority of Singapore Agri-Food & Veterinary Authority of Singapore The Central Depository (Pte) Limited A person who holds directly or indirectly 15% or more of the nominal amount of all our shares, or in fact exercises control over our Company The Central Provident Fund The Development Bank of Singapore Ltd The directors of our Company as at the date of this Prospectus : : : : BreadTalk Group Limited BreadTalk International Pte Ltd BreadTalk Pte Ltd The Company and its subsidiaries following the completion of the Restructuring Exercise treated, for the purpose of this Prospectus, as if it had been in existence since 24 April 2000 Taster Food Pte Ltd

``Application List'' ``ASME'' ``Associate''

: : :

``ATM'' ``Audit Committee'' ``Authority'' or ``MAS'' ``AVA'' ``CDP'' ``Controlling Shareholder''

: : : : : :

``CPF'' ``DBS Bank'' or ``Receiving Bank'' ``Directors''

: : :

``Electronic Applications''

Applications for the Offer Shares made through an ATM of the Participating Banks or through IB websites of the relevant Participating Banks in accordance with the terms and conditions of this Prospectus The executive directors of our Company as at the date of this Prospectus The executive ofcers of our Company as at the date of this Prospectus Financial year ended or ending 31 December The independent directors of our Company as at the date of this Prospectus Internet banking The invitation by our Company to the public to subscribe for the New Shares, subject to and on the terms and conditions of this Prospectus $0.24 for each New Share save for Reserved Shares to be allocated to our employees and Independent Directors at $0.205 each SBI E2-Capital Securities Pte Ltd, DBS Bank and UOB Kay Hian Private Limited and ``Placement Agent'' means either of them 30 April 2003, being the latest practicable date prior to the printing of this Prospectus The listing manual of the SGX-ST as amended from time to time Mobileone Ltd SBI E2-Capital Pte Ltd and DBS Bank, and ``Manager'' means either of them A day on which the SGX-ST is open for trading in securities The 32,000,000 new Shares to be issued pursuant to the Invitation for which we invite applications to subscribe upon the terms of and subject to the conditions set out in this Prospectus The non-executive directors of our Company as at the date of this Prospectus Net tangible assets The invitation by our Company to the public for subscription of the Offer Shares at the Issue Price, upon the terms and subject to the conditions of this Prospectus The 3,200,000 New Shares which are the subject of the Offer The share options to be granted under the Share Option Scheme The Development Bank of Singapore Ltd (including POSB) (``DBS Bank''); Oversea-Chinese Banking Corporation Limited (``OCBC''); and United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited (the ``UOB Group'') 7

``Executive Directors'' ``Executive Ofcers'' ``FY'' ``Independent Directors'' ``IB'' ``Invitation''

: : : : : :

``Issue Price''

``Joint Lead Placement Agents'' or ``Placement Agent'' ``Latest Practicable Date'' ``Listing Manual'' ``M1'' ``Joint Lead Managers'' or ``Managers'' ``Market Day'' ``New Shares''

: : : : : :

``Non-Executive Directors'' ``NTA'' ``Offer''

: : :

``Offer Shares'' ``Options'' ``Participating Banks''

: : :

``Placement''

The placement by the Joint Lead Placement Agents on behalf of our Company of the Placement Shares for subscription subject to and on the terms of this Prospectus The 28,800,000 New Shares (including the Reserved Shares) which are the subject of the Placement People's Republic of China PSB Corporation Pte Ltd The restructuring exercise implemented in connection with the Invitation, as described on page 46 of this Prospectus Up to 5,000,000 Placement Shares reserved for subscription by employees and Independent Directors of our Group StarHub Cable Vision Ltd Securities Clearing & Computer Services (Pte) Ltd Singapore Exchange Securities Trading Limited Stock Exchange of Singapore Dealing and Automated Quotation System Securities account maintained by a Depositor with CDP Securities and Futures Act (Cap. 289) The new Shares to be issued upon the exercise of the Options The BreadTalk Group Limited employee share option scheme adopted by the Company on 30 April 2003 as replaced or amended from time to time, the rules of which are set out in Annex C Ordinary shares of $0.04 each in the capital of our Company Singapore Press Holdings Limited A person who holds directly or indirectly 5% or more of the total issued share capital in our Company Taiwan Din Tai Fung (Hong Kong) Co, Ltd SBI E2-Capital Securities Pte Ltd and DBS Bank, and ``Underwriter'' means either of them

``Placement Shares'' ``PRC'' ``PSB'' ``Restructuring Exercise'' ``Reserved Shares'' ``SCV'' ``SCCS'' ``SGX-ST'' ``SGX-Sesdaq'' ``Securities Account'' ``Securities and Futures Act'' or ``SFA'' ``Scheme Shares'' ``Share Option Scheme''

: : : : : : : : : : : : :

``Shares'' ``SPH'' ``Substantial Shareholder'' ``TDTF'' ``Underwriters'' Currencies ``$'' and ``cents'' or ``'' Units ``sq ft'' ``%'' or ``per cent''

: : : : :

Singapore dollars and cents, respectively

: :

Square foot (feet) Per centum or percentage

The terms ``Depositor'', ``Depository Agent'' and ``Depository Register'' shall have the meanings ascribed to them respectively in Section 130A of the Act. 8

Any discrepancies in tables included herein between the amounts listed and the totals thereof are due to rounding. Accordingly, gures shown as totals in certain tables may not be an arithmetic aggregation of the gures 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 dened under the Act, the SFA or any statutory modication thereof and used in this Prospectus and the Application Forms shall have the meaning ascribed to it under the said Act, the SFA or statutory modication, as the case may be. 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. Any reference in this Prospectus, the Application Forms and Electronic Applications to Shares being allotted to an applicant includes allotment to CDP for the account of that applicant. Any reference to a time of day in this Prospectus, the Application Forms and Electronic Applications shall be a reference to Singapore time unless otherwise stated.

DETAILS OF THE INVITATION

LISTING ON THE SGX-SESDAQ We have applied to the SGX-ST for permission to deal in and for quotation of all our Shares already issued, the New Shares and the Scheme Shares. Such permission will be granted when we have been admitted to the Ofcial List of the SGX-Sesdaq. Acceptance of applications will be conditional upon, inter alia, permission being granted to deal in and for quotation of all our issued Shares, the New Shares and the Scheme Shares on the SGX-Sesdaq. If 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 benet arising therefrom, and you will not have any claim against us or the Managers. The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Prospectus. Admission to the Ofcial List of the SGX-Sesdaq is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries or our Shares or the New Shares. We have lodged and registered a copy of this Prospectus, together with copies of the Application Forms, with the Authority who assumes no responsibility for its contents. 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 MAS has not, in any way, considered the merits of the Shares, the New Shares or the Scheme Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. No Shares may be allotted on the basis of this Prospectus later than 6 months after the date of registration of this Prospectus. This Prospectus has been seen and approved by our Directors and they collectively and individually accept full responsibility for the accuracy of the information given in this Prospectus and conrm, having made all reasonable enquiries, that to the best of their knowledge and belief, (i) the facts stated and opinions expressed in this Prospectus are fair and accurate in all material respects as at the date of this Prospectus; (ii) there are no other material facts the omission of which would make any statement in this Prospectus misleading; and (iii) this Prospectus constitutes a full and true disclosure of all the material facts about the Invitation, our Company and its subsidiaries. Neither our Company, the Managers, the Underwriters, the Joint Lead Placement Agents nor any other parties involved in the Invitation is making any representation to any persons regarding the legality of any investments in our Shares by such person under any investments or other laws or regulations. No information in this Prospectus should be considered as being business, legal or tax advice. Each prospective investor should consult his own professionals or other advisers for business, legal or tax advice regarding an investment in our Shares. We have not authorised any person to give any information or to make any representation not contained in this Prospectus in connection with the Invitation and, if given or made, such information or representation must not be relied upon as having been authorised by us or the Managers. Neither the delivery of this Prospectus and the Application Forms nor any documents relating to our Invitation shall, under any circumstances, constitute a continuing representation or create any suggestion or implication that there has been no change in our affairs or in any statement of fact or information contained in this Prospectus since the date of this Prospectus. Where such changes occur, we will comply with the relevant provisions of the SFA and make an announcement on the same to the SGX-ST and, if required, lodge a supplementary or replacement prospectus pursuant to the SFA. You should take note of any such announcement made and/or supplementary or replacement prospectus issued by us in compliance with the provisions of the SFA and, upon the release of such announcement and/or supplementary or replacement prospectus, shall be deemed to have notice of such changes. Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as, a promise or representation as to our future performance or policies of our Company or our subsidiaries. 10

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 lodgment of such supplementary or replacement prospectus. Where prior to the lodgment of the supplementary or replacement prospectus, applications have been made under this Prospectus to subscribe for our Shares and: (a) where our Shares have not been issued to the applicants, our Company shall either: (i) within seven days from the date of lodgment of the supplementary or replacement prospectus, give the applicants the supplementary or replacement prospectus, as the case may be, and provide the applicants with an option to withdraw their applications; or treat the applications as withdrawn and cancelled, in which case the applications shall be deemed to have been withdrawn and cancelled, and our Company shall, within seven days from the date of lodgment of the supplementary or replacement prospectus, pay the applicants all moneys the applicants have paid on account of their applications for our Shares; or

(ii)

(b)

where our Shares have been issued to the applicants, our Company shall either: (i) within seven days from the date of lodgment of the supplementary or replacement prospectus, give the applicants the supplementary or replacement prospectus, as the case may be, and provide the applicants with an option to return to our Company our Shares, which they do not wish to retain title in; or treat the issue of our Shares as void, in which case the issue shall be deemed void and our Company shall, within seven days from the date of lodgment of the supplementary or replacement prospectus, pay to the applicants all moneys paid by them for our Shares.

(ii)

An applicant who wishes to exercise his option under paragraph (a)(i) to withdraw his application shall, within 14 days from the date of lodgment of the supplementary or replacement prospectus, notify our Company of this, whereupon our Company shall, within seven days from the receipt of such notication, pay to him all moneys paid by him on account of his application for our Shares. An applicant who wishes to exercise his option under paragraph (b)(i) to return our Shares issued to him shall, within 14 days from the date of lodgment of the supplementary or replacement prospectus, notify our Company of this and return all documents, if any, purporting to be evidence of title to those Shares, to our Company, whereupon our Company shall, within seven days from the receipt of such notication and documents, if any, pay to him all moneys paid by him for those Shares and the issue of those Shares shall be deemed to be void. Under the SFA, the Authority may in certain circumstances issue a stop order (the ``Stop Order'') to our Company directing that no or no further Shares to which this Prospectus relates, be allotted or issued. Such circumstances will include a situation where this Prospectus (i) contains a statement or matter, which in the opinion of the Authority is false and misleading, (ii) omits any information that should be included in accordance with the SFA or (iii) does not, in the opinion of the Authority, comply with the requirements of the SFA. Where applications to subscribe for our Shares to which this Prospectus relates have been made prior to the Stop Order, and: (a) where our Shares have not been issued to the applicants, the applications shall be deemed to have been withdrawn and cancelled and our Company shall, within 14 days from the date of the Stop Order, pay to the applicants all moneys the applicants have paid on account of their applications for our Shares; or where our Shares have been issued to the applicants, the issue of our Shares shall be deemed to be void and our Company shall, within 14 days from the date of the Stop Order, pay to the applicants all moneys paid by them for our Shares.

(b)

11

This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon by any persons other than yourselves in connection with your application for the New Shares or for any other purpose. This Prospectus does not constitute an offer or invitation or solicitation to subscribe for the New Shares in any jurisdiction in which such offer or invitation or solicitation is unauthorised or unlawful nor does it constitute an offer or invitation or solicitation to any person to whom it is unlawful to make such an offer or invitation or solicitation. Copies of this Prospectus and the Application Forms and envelopes may be obtained on request, subject to availability, during ofce hours from: SBI E2-Capital Securities Pte Ltd 5 Shenton Way # 09-08 UIC Building Singapore 068808 The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809

and from branches of DBS Bank (including POSB) and where applicable, members of the Association of Banks in Singapore, members of the SGX-ST and merchant banks in Singapore. The Application List will open at 10.00 a.m. on 11 June 2003 and will remain open until 12.00 noon on the same day or such other period or periods as our Company may, in consultation with the Managers, decide subject to any limitation under all applicable laws. Where a supplementary document or replacement document has been lodged with the Authority, the Application List shall be kept open for at least 14 days after the lodgment of the supplementary document or replacement document. Where an applicant has notied our Company within 14 days from the date of lodgment of the supplementary document or replacement document of his wish to exercise his option under the Securities and Futures Act to withdraw his application, our Company shall pay to him all monies paid by him on account of his application for the New Shares without interest or any share of revenue or other benet arising therefrom, and at the applicant's own risk, within seven days from the receipt of such notication. INDICATIVE TIMETABLE FOR LISTING In accordance with the SGX-ST's News Release of 28 May 1993 on the trading of initial public offering shares on a ``when issued'' basis, an indicative timetable is set out below for the reference of applicants: Indicative Time and Date 11 June 2003, 12.00 noon 12 June 2003 13 June 2003, 9.00 a.m. 20 June 2003 23 June 2003, 9.00 a.m. 26 June 2003 Event Close of Application List Balloting of applications, when necessary (in the event of oversubscription for the Offer Shares) Commence trading on a ``when issued'' basis Last day of trading on a ``when issued'' basis Commence trading on a ``ready'' basis Settlement date for all trades done on a ``when issued'' basis and for all trades done on a ``ready'' basis on 23 June 2003

The above timetable is only indicative as it assumes that the closing of the Application List takes place on 11 June 2003, the date of admission of our Company to the Ofcial List of the SGX-Sesdaq will be 13 June 2003, the SGX-ST's shareholding spread requirement will be complied with and the New Shares will be issued and fully paid-up prior to 13 June 2003. The actual date on which the Shares will commence trading on a ``when issued'' basis will be announced when it is conrmed by the SGX-ST. The Invitation will open from 4 June 2003 to 11 June 2003 (12.00 noon). 12

The above timetable and procedure may be subject to such modications as the SGX-ST may in its discretion decide, including the decision to permit trading on a ``when issued'' basis and the commencement date of such trading. The commencement of trading on a ``when issued'' basis will be entirely at the discretion of the SGX-ST. All persons trading in the Shares on a ``when issued'' basis, do so at their own risk. In particular, persons trading in the Shares before their Securities Accounts with CDP are credited with the relevant number of Shares do so at the risk of selling Shares which neither they nor their nominees, where applicable, have been allotted or are otherwise benecially entitled to. Such persons are exposed to the risk of having to cover their net sell positions earlier if ``when issued'' trading ends sooner than the indicative date mentioned above. Persons who have net sell positions traded on a ``when issued'' basis should close their positions on or before the rst day of ``ready'' basis trading. In the event of an early or extended closure of the Application List or the shortening or extension of the time period during which the Invitation is open, we will publicly announce the same: (i) (ii) through a MASNET announcement to be posted on the Internet at the SGX-ST website http://www.sgx.com; and in a local English newspaper.

Investors should consult the SGX-ST announcement on the ``ready'' trading date on the Internet (at the SGX-ST website at http://www.sgx.com), INTV or newspapers or check with their brokers on the date on which trading on a ``ready'' basis will commence. We will provide details of the results of the Invitation through the channels in (i) and (ii) above.

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CAUTIONARY NOTE REGARDING 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 ofcers, Directors or employees acting on our behalf, that are not statements of historical fact constitute ``forward-looking statements''. We use words such as ``estimate'', ``forecast'', ``anticipate'', ``believe'', ``expect'', ``future'', ``intend'', ``may'', ``will'', ``would'', ``could'', ``plans'' and similar expressions to identify forward-looking statements. However, you should note that these words are not the exclusive means of identifying forward-looking statements. All statements regarding our expected nancial position, business strategy, plans and prospects are forward-looking statements. These forward-looking statements 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 expressed or implied by these forward-looking statements. These risks, uncertainties and other important factors include, amongst others, the following: . . . . . . . changes in the political, social and economic conditions and regulatory environment in Singapore and other countries in which we conduct business or expect to conduct business; the risk that we may be unable to realize our anticipated growth strategies and expected internal growth; changes in currency exchange rates; changes in competitive conditions in the food and beverage industry and our ability to compete under such conditions; changes in future capital needs and the availability of financing and capital to fund these needs; factors described under ``Risk Factors'' in this Prospectus; and other factors beyond our control.

All forward-looking statements by or attributable to us, or persons acting on our behalf, contained in this Prospectus are expressly qualied in their entirety by such factors. The risks and uncertainties that may cause our actual future results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by the forwardlooking statements in this Prospectus apply only as at the date of this Prospectus. Given the risk and uncertainty that may cause our Group's future results, performance or achievements to be materially different from that expected, expressed or implied by the forwardlooking statements in this Prospectus, undue reliance must not be placed on these statements. Neither our Company, the Managers, the Placement Agents, the Underwriters nor any other persons represent or warrant our Group's actual future results, performance or achievements will be as discussed in those statements. Our actual future results may differ materially from those anticipated in these forward-looking statements as a result of the risks faced by us. We and the Managers disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to any forwardlooking statements to reect future developments, events or circumstances. We are, however, subject to the provisions of the SGX-ST Listing Manual regarding corporate disclosure and the requirements of the SFA. In particular, pursuant to Section 241 of the SFA, if after the Prospectus is registered but before the close of the Offer, the Company becomes aware of: (a) a false or misleading statement or matter in the Prospectus; (b) an omission from the Prospectus of any information that should have been included under Sections 243 or 244 of the SFA; or (c) a new circumstance that has arisen since the Prospectus was lodged with the Authority and would have been required by Sections 243 or 244 of the SFA to be included in the Prospectus, if it had arisen before the Prospectus was lodged and that is materially adverse from the point of view of an investor, the Company may lodge a supplementary or replacement prospectus with the Authority.

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PROSPECTUS SUMMARY
The information contained in this summary is derived from, and should be read in conjunction with, the full text of this Prospectus. Because it is a summary, it does not contain all of the information that potential investors should consider before investing in the Shares of our Company. Potential investors should read this entire Prospectus carefully, including the ``Risk Factors'' section, the proforma consolidated nancial information and the notes to those statements. OVERVIEW OF OUR GROUP Our Company was incorporated in Singapore on 6 March 2003 as an investment holding company. Our principal subsidiary, BreadTalk Pte Ltd, is a private limited company incorporated in Singapore under the Companies Act on 24 April 2000. It was founded by our Managing Director, George Quek, and our Executive Director, Katherine Lee. Our Managing Director, George Quek, rst conceptualised ``BreadTalk'' in April 2000 when he saw an opportunity for starting a bakery selling freshly baked breads and buns which are visually creative and attractive. Our rst BreadTalk retail outlet commenced business on 1 July 2000 at Parco Bugis Junction. Since then, we have opened over 20 retail outlets island-wide. THE BREADTALK CONCEPT The uniqueness of BreadTalk is not only in the taste and freshness of the products, but also the way the products are presented in terms of their visual attractiveness and their names. Some of our products are accompanied by their own story or theme, which draws its inspiration mainly from social and cultural trends, for example, ``Crouching Tiger Hidden Bacon''. Our research and development team constantly innovates and comes up with new recipes and ideas on a regular basis as we believe that by constantly changing the variety of products offered, we will be able to continuously satisfy our customers' changing taste. BreadTalk also believes in an ``open'' concept in our interior design, which we consider to be one of the important factors for our success. The layout of our retail outlets is designed in such a way that customers are able to view the baking process of our breads and buns so as to emphasise the freshness of our products. We also adopt an ``open'' concept in the way we present and display our products to emphasise the variety of products we offer. We believe that our ``open'' concept design creates a unique ambience and shopping experience for our customers. Through our emphasis on quality and innovation, we seek to make ``BreadTalk'' a brand associated with high quality and freshly made bakery items. OUR BUSINESS We operate a chain of retail outlets selling a wide selection of breads, buns, cakes and pastries. Our breads and buns are made at our individual retail outlets. We emphasise good customer service to ensure that our customers have a comfortable shopping experience. We derive our revenue from the sale of our breads, buns, cakes and pastries. As at April 2003, we have 22 retail outlets and to complement our operations, we also operate a central kitchen at Kampong Ampat that prepares and distributes llings for our breads and buns, and bakes cakes and pastries for distribution to our various retail outlets island-wide. We offer a wide selection of breads, buns, cakes and pastries and at present, we introduce approximately 10 new bakery items every four months to provide new avours for our customers. The names and presentation of some of our new items are derived from events that occur in our daily life. Thus far, we have created over 150 different bakery items. Our signature items include the ``Flosss'', ``Fire Flosss'', ``Moshi Mushroom'', ``Only U'' and ``Applewerm''. The aggregate revenue from the sale of these items contributed approximately 23.1% to our total revenue in FY2002. 15

We strive to enhance our customers' shopping experience by offering a customer-friendly environment. Our retail outlets have a clean modern design and are brightly lit. Our bakery area employs an ``open'' concept by allowing our customers to view the baking process. Our displays are attractive, neat and orderly. Our employees are equipped with the necessary skills and knowledge of our bakery items and are able to explain to our customers the selection of breads and buns on offer and to assist the customers in their selection. Some of our retail outlets cater to the specic taste of the customers in their area. For example, our Paragon and Holland Village retail outlets offer a wider selection of European breads and cakes as the majority of our customers who frequent those retail outlets are likely to be tourists or expatriates. Our Peranakan Place retail outlet also has special items with a distinctive Peranakan avour to cater to the needs of the customers there. In addition to the retail market, we also intend to target corporate customers to increase our revenue. We have an arrangement with SCV whereby SCV's subscribers are able to redeem a cake from our retail outlets on their birthday as a birthday gift from SCV. We also have arrangements with companies like M1 where we supply special bakery items to them for their corporate events. These contracts are on an ad-hoc basis and revenue derived from such corporate sales have not contributed to our total revenue in a signicant manner in the last three nancial years. Due to the success of our retail outlets in Singapore, we have received many invitations from interested parties in various countries including Malaysia, Hong Kong Special Administrative Region, Australia and the United States of America to franchise our ``BreadTalk'' bakery concept. We have entered into a master franchise agreement covering the Indonesian market in February 2003. Our franchisee for Indonesia was selected after careful consideration and only after it was able to satisfy our criteria. We opened our rst franchise outlet in Jakarta in April 2003. Under the terms of the franchise agreement, our franchisee pays us an initial base fee, a store licence fee and a monthly royalty fee computed based on a percentage of the outlet's gross revenue. We will provide ongoing training for our franchisee's staff. We will also provide certain raw materials and ingredients that our franchisee requires for its operations. COMPETITIVE STRENGTHS We believe that our competitive strengths are as follows: Unique Concept and Branding The BreadTalk concept is unique and innovative as we distinguish ourselves from traditional bakeries in the market and more importantly, we constantly develop products reecting contemporary lifestyle and current events. As part of our unique concept, the layout of our retail outlets is designed such that our customers have a clear view of our bakery items on display. Our ``open'' concept design also allows customers and shoppers to watch our chefs and bakers at work. We also believe that the design of our retail outlets provides our customers with a warm and friendly atmosphere and allows them to shop in a comfortable environment. Despite our short track record, we have successfully established our brand. Our ``BreadTalk'' brand is one of the most recognisable local brands in Singapore in 2002 when we won the ``Singapore Promising Brand Award 2002'' awarded by the ASME and SPH and were voted Singapore's Most Popular Brand in a poll organised jointly by the ASME and SPH. We have also generated publicity for our brand through interviews with the local newspapers and various articles about our products have been published in both the English and Chinese local newspapers. We also market our products through the local media so as to increase our brand awareness.

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Wide Range of Products We believe that an important aspect of our success can be attributed to the wide variety of products available at our retail outlets. We recognise that our customers have varied needs and changing taste, and we believe that we can satisfy our customers as we presently offer over 150 varieties of breads, buns, pastries and cakes. Depending on the size of the retail outlet, each retail outlet offers between 40 to 60 different items daily. We are also constantly introducing new products to cater to our customers' changing taste. We introduce approximately 10 items every four months and this adds to the wide selection available from our retail outlets. This ensures that our customers are able to regularly purchase something new at our retail outlets. Strategic Locations We believe that one of our competitive strengths is the choice of location of our retail outlets. Our retail outlets are located at strategic and accessible locations to attract potential customers as having high customer trafc ow is crucial to the success of our retail outlets. Our retail outlets tend to be sited near public transport systems such as bus terminals, the Mass Rapid Transit stations and the Light Rail Transport stations. We also take into consideration the composition of our surroundings, such as the presence of departmental stores, cinemas and supermarkets as neighbouring tenants may attract potential customers to our retail outlets. We also consider whether there are any other bakeries within the vicinity of the site, the nature of such competition, if any, and how they may affect our business in the future. Use of Information Technology in Our Operations Our central kitchen and retail outlets in Singapore are all installed with web-enabled cameras using Internet Protocol. There are at least three cameras installed at each retail outlet, one at the production area, one at the cashier counter and one at the service area. Our management is able to monitor each retail outlet from any place where there is internet access. If any of our management personnel notices anything in a particular retail outlet that is not satisfactory, he can immediately call up the relevant branch manager and have the problem rectied. Our retail outlets are also installed with a point-of-sale system. This means that daily sales gures are processed and we are able to track the sales volume of each retail outlet and of each individual item on a daily basis. This enables our management to evaluate the reception of each individual item in a timely manner. As such, customer trends can be easily identied and we are able to respond quickly to our customers needs. Experienced Management Team Our Group is headed by our Managing Director, George Quek, who has 20 years of experience in the food and beverage industry. He is assisted by our senior management, most of whom have more than nine years of experience in the food and beverage or retail industries. For more information on our Directors and our Executive Ofcers and their experience, please refer to pages 67 to 69 of this Prospectus. OUR FUTURE PLANS We believe that we are well-positioned to grow our BreadTalk brand through several channels simultaneously, specically by way of increasing our advertising activities and expanding the number of retail outlets locally and overseas through direct investments, joint ventures or franchising.

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Overseas Expansion We intend to expand to overseas markets through direct investment, joint ventures or franchising. In overseas markets where our management is more conversant with the business risks of that country, we will consider setting up retail outlets on our own or with a suitable joint venture partner. We intend to set up operations and open retail outlets on our own in Shanghai, PRC. To that end, we have entered into a lease agreement for retail space for our rst retail outlet. We will be making the necessary applications for the relevant licences and governmental approvals, and will commence preparations for the setting up of this retail outlet in June 2003. We also believe that our BreadTalk concept has the potential to expand to overseas markets through franchising. In 2001 and 2002, we have received invitations from interested parties to franchise our concept in countries like Malaysia, Hong Kong Special Administrative Region, Australia and the United States of America. We have already entered into a master franchise agreement covering the Indonesian market and our franchisee has opened our rst franchise outlet in Jakarta in April 2003. Our Indonesian franchisee intends to open another franchise outlet in Jakarta in the second half of 2003. We have plans to franchise BreadTalk to certain other countries in Asia by end 2003. We intend to use approximately $3.0 million of the net proceeds to implement our overseas expansion plans as mentioned above. Growth of Retail Outlets We expect our retail outlets in Singapore to continue to account for a signicant portion of our revenue and prots. Our expansion plans in terms of setting up new retail outlets will depend on the availability of our cash ow and human resources. We also intend to increase the number of new retail outlets on new sites that become available and to further increase our brand awareness. We will continue to focus on locating our retail outlets where there is a high ow of human trafc. For the remainder of 2003, we intend to open an additional two to three retail outlets and $1.0 million of the net proceeds from the Invitation will be used to fund the capital expenditure for the new retail outlets. Corporate Sales Currently the contribution from our corporate sales is insignicant. With our increase in production capacity, we aim to further establish our market in corporate sales. We are constantly evaluating the feasibility of supplying our products to potential corporate customers. Diversication Further, we intend to diversify into other food and beverage business. We have plans to open a restaurant serving Chinese delicacies such as ``Xiao Long Bao'', a type of dumpling. BTPL will enter into a joint venture agreement with TDTF and an independent third party to set up the restaurant and Taster Food has been set up for this purpose. The restaurant is expected to commence operations by end 2003. ``Din Tai Fung'' is a well-established restaurant which has been in operation for more than 20 years in Taiwan Republic of China. Its specialty items include ``Xiao Long Bao'', noodles and chicken soup. There are ``Din Tai Fung'' restaurants in Shanghai PRC, Japan, Hong Kong Special Administrative Region and the United States of America. Taster Food, our 70% owned subsidiary, will enter into a franchise agreement with TDTF pursuant to which it will obtain the rights to use the ``Din Tai Fung'' brand and obtain training for our staff and advice for the setting up of the operations. Taster Food will pay an initial base franchise fee and a monthly royalty fee computed based on a percentage of the restaurant's gross turnover. We expect the overall investment for this restaurant to be approximately $2.3 million of which our Group will contribute approximately $1.6 million, which is to be funded internally.

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THE INVITATION
Issue Size : 32,000,000 New Shares comprising 3,200,000 Offer Shares and 28,800,000 Placement Shares. The Offer Shares and Placement Shares will, upon issue and allotment, rank pari passu in all respects with the existing issued Shares. $0.24 for each New Share, save for each Reserved Share to be allocated to our employees and Independent Directors at $0.205 each. Our Directors consider that the listing of our Company and the quotation of our Shares on the SGX-Sesdaq will: (i) (ii) (iii) (iv) Use of Proceeds : enhance the public internationally; image of our Group locally and

Issue Price

Purpose of the Invitation

enable us to tap the capital markets for expansion of our operations; enhance our Company's ability to use the Shares to attract and retain key employees; and provide members of the public and employees with an opportunity to participate in the equity of our Company.

The net proceeds from our Invitation (after deducting estimated issue expenses) are approximately $6.4 million, which we intend to use in the following manner: (a) (b) (c) $1.0 million for opening new retail outlets in Singapore; $3.0 million for overseas expansion via direct investment, joint venture and franchises; and the balance for working capital purposes.

Details of (a) and (b) above are set out under ``Prospects and Future Plans'' on pages 64 to 65 of this Prospectus. Pending the deployment of the net proceeds from the Invitation as aforesaid, the funds may be placed in short-term deposits or money market instruments or used for our working capital as our Directors may deem t. Reserved Shares : Up to 5,000,000 Placement Shares will be reserved for subscription by employees and Independent Directors at $0.205 per Share, a discount of approximately 14.6% from the Issue Price. In the event that any of the Reserved Shares are not taken up, they will be made available to satisfy excess applications for the Placement Shares or, in the event of any under-subscription for the Placement Shares, to satisfy excess applications from members of the public for the Offer Shares. Such Reserved Shares made available to satisfy excess applications are to be offered at $0.24 per Share and subject to the same conditions as the other Offer Shares or Placement Shares, as the case may be. Our Shares will be quoted on the SGX-Sesdaq, subject to admission of our Company to the Ofcial List of the SGX-Sesdaq and permission for dealing in and quotation of the Shares being granted by the SGX-ST.

Listing Status

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PLAN OF DISTRIBUTION
The Issue Price is determined by us after discussion with the Managers, the Underwriters and the Joint Lead Placement Agents, based on market conditions and the estimated market demand for our Shares. The Issue Price is the same for all New Shares, save for Reserved Shares which are offered at $0.205 per Share, a discount of approximately 14.6% from the Issue Price, and is payable in full on application. OFFER SHARES The Offer Shares are made available to the members of the public in Singapore for subscription at the Issue Price. The terms and conditions and procedures for application and acceptance are described in Annex F of this Prospectus. Pursuant to the terms and conditions contained in the Management and Underwriting Agreement signed between our Company and the Underwriters dated 3 June 2003, the Underwriters have agreed to underwrite our Offer Shares. In the event of an under-subscription for the Offer Shares as at the close of the Application List, that number of Offer Shares not subscribed for shall be made available to satisfy excess applications for the Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of the Application List. In the event of an over-subscription for the Offer Shares as at the close of the Application List and/or the Placement Shares are fully subscribed or over-subscribed as at the close of the Application List, the successful applications for the Offer Shares will be determined by ballot or otherwise as determined by our Directors and approved by the SGX-ST. PLACEMENT SHARES (EXCLUDING RESERVED SHARES) The Placement Shares are made available to retail investors and institutional investors in Singapore for subscription at the Issue Price. Applications for the Placement Shares by retail investors and institutional investors may only be made by way of application forms. The terms and conditions and procedures for application and acceptance are described in Annex F of this Prospectus. Pursuant to the terms and conditions in the Placement Agreement signed between our Company and the Joint Lead Placement Agents dated 3 June 2003, the Joint Lead Placement Agents have agreed to subscribe for or procure subscriptions for the Placement Shares at the Issue Price. In the event of an under-subscription for the Placement Shares as the close of the Application List, that number of Placement Shares not subscribed for shall be made available to satisfy excess applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. RESERVED SHARES To recognise contributions to our Group, we have reserved up to 5,000,000 Placement Shares for subscription by our employees and Independent Directors of our Group at $0.205 per Share, a discount of approximately 14.6% from the Issue Price. These Reserved Shares are subject to a moratorium of six months commencing from the date of admission of our Company to the Ofcial List of the SGX-Sesdaq. In the event that any of the Reserved Shares are not taken up, they will be made available to satisfy excess applications for the Placement Shares at $0.24 per Share to the extent that there is an oversubscription for the Placement Shares as at the close of the Application List or, in the event of an under-subscription for the Placement Shares as at the close of the Application List, to satisfy excess applications made by the members of the public for the Offer Shares at the Issue Price to the extent there is an over-subscription for the Offer Shares as at the close of the Application List. 20

Subscribers of Placement Shares (including the Reserved Shares) may be required to pay a placement commission of up to 1.0 per cent of the Issue Price to the Joint Lead Placement Agents. Save as disclosed in respect of the Reserved Shares, none of our Directors or Substantial Shareholders intends to subscribe for the New Shares. To the best of our knowledge, we are not aware of any person who intends to subscribe for more than 5% of the New Shares. However, through a book-building process to assess market demand for our Shares, there may be person(s) who may indicate his interest to subscribe for more than 5% of the New Shares. If such person(s) were to make an application for more than 5% of the New Shares pursuant to the Invitation and subsequently allocated or allotted such number of Shares, we will make the necessary announcements at an appropriate time. Further, no Shares shall be allocated or allotted on the basis of this Prospectus later than six months after the date of this Prospectus.

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RISK FACTORS
An investment in our Shares involves a degree of risk. Potential investors should consider carefully all information contained in this Prospectus, especially the following risk factors in evaluating whether to subscribe for our Shares. To the best of our Directors' knowledge and belief, all risk factors that are material to investors in making an informed judgment have been set out below. You should also note that certain statements set forth below constitute ``forward-looking statements'', which in themselves involve additional risks and uncertainties. If any of the following risk factors and uncertainties develops into actual events, our earnings, and possibly even our nancial position, may be adversely affected. In such circumstances, the trading price of our Shares could decline and you may lose a part of your investment. RISKS RELATED TO OUR INDUSTRY We are subject to intense competition We operate in an industry which is highly competitive where barriers to entry are low. Our competitors include large and diverse groups of bakery chains and individual operators. Some of our competitors are established in the bakery and confectionery industry and some of our competitors may have substantially greater nancial and marketing resources than us. There can also be no assurance that new competitors, some of which may have greater brand recognition and nancial resources than us, will not compete with us. The entry of new competitors into our industry or into the immediate areas surrounding our existing retail outlets could adversely affect our operating results. We are subject to changes in consumer preferences or discretionary consumer spending Our continued growth and success depend, in part, on the popularity of our bakery items. Shifts in consumer preferences away from our bakery items to other kinds of take-out food items offered in other types of eateries could materially affect our business. In addition, our continued success depends, in general, on disposable consumer income and consumer condence, all of which can affect discretionary consumer spending. Any outbreak of diseases and viruses from the region or around the world like the virus causing Severe Acute Respiratory Syndrome (``SARS'') may affect consumer condence and reduce discretionary spending and reduce the ow of customers. Please see page 64 for details of the impact of SARS on our sales and protability. In addition, any changes in the market and economic conditions of Singapore and countries which we may operate in may affect the consumers' disposable income, consumer condence and hence discretionary consumer spending. Adverse changes in these factors would reduce the ow of customers and may adversely affect our business. We will be affected by the outbreak of food related diseases Some of our buns may contain llings made from meat and seafood products. Any outbreak of diseases and viruses in meat or seafood from the region and around the world may have a material adverse impact on our business as it may affect the general public consumption of this product. We are unable to predict future occurrences of such diseases, or whether there will be any outbreaks of new diseases, not only on meat products, but also on vegetables or other ingredients that we require for our bakery items. Any such outbreak may result in a reduction in consumption of the bakery items that contain such food products. Any such outbreak may also have a material adverse effect on the sources of supply of that particular food product. In addition, efforts to source for alternative sources for that particular food product may be costly. This will have a negative impact on our nancial results. We are subject to changes in governmental regulations We are subject to government rules and regulations, including those relating to the sale of food and food hygiene. Any changes in such government regulations may have a negative impact on our business. Difculties or failure in obtaining the required licences and approvals could delay, or result in our decision not to open new retail outlets. Local authorities may suspend or deny renewal of our existing food licences if they determine that we do not meet applicable standards. Although we have satised the licensing requirements for our existing retail outlets, there is no assurance that we will be 22

able to maintain these approvals or obtain these approvals at future locations. The failure to maintain or renew governmental licences, permits and approvals, including the food hygiene licences, could have a material adverse effect on our operating results. Details of licences held by us are set out on page 57 of this Prospectus. RISKS RELATED TO OUR BUSINESS We may be affected by any increase in rental or the failure to procure the renewal of our existing leases We lease all of our premises from third parties. Rental costs form a signicant component of our total costs. For the past three nancial years, our rental expenses accounted for an average of approximately 15.1% of our total costs. These rental expenses include rental for our retail outlets premises, central kitchen and head ofce. Our total costs are therefore sensitive to any increase in rentals which may erode our prot margin and hence our earnings. In addition, upon expiry of our existing leases, the landlords have the right to review and change the terms and conditions of the lease agreements. We therefore face the possibility of not being able to renew the leases on terms and conditions which are favourable to us. The non-renewal of these leases or renewal upon less favourable terms may have a material adverse effect on our operations and protability. We may be affected by any unexpected closure or plans to demolish buildings in which our retail outlets are located There is no assurance that the buildings in which our retail outlets are located will continue to be in operation and will not be closed down or demolished. In the event that such closure or demolition happens, we will need to write off all the xed assets of that particular retail outlet. Furthermore, we may not be able to nd suitable alternative locations and there will be a loss in income for our Group. The compensation that we may receive from the owners of the building may not be sufcient to offset the loss in income and the write-off in xed assets. In such a situation, our earnings will be adversely affected. We may be affected by any change in tenant mix and poor maintenance of the malls in which our retail outlets are located Any change in the tenant mix or a change in anchor tenant of a shopping mall or complex in which our retail outlets are located may result in fewer customers visiting the complex and hence lower the human trafc ow to our retail outlets. Additionally, poor maintenance of the complex may also result in less patronage and this may affect our business. We may not be able to secure good locations for further expansion Our business volume is to a large extent dependent on our ability to procure additional strategic locations for our retail outlets. There is no assurance that we will be able to continue to secure good locations to expand our business, and this will limit our growth. Our business may be adversely affected if our competitors successfully imitate our baking and presentation methods We consider our baking and presentation methods, including our packaging and the design of the interior of our retail outlets, to be essential to the appeal of our products and brand. It may be difcult for us to prevent competitors from successfully imitating the design of our retail outlets, methods or recipes. If our competitors successfully imitate our preparation or presentation methods or recipes, the value of the BreadTalk brand may be diminished and our market share may decrease. Furthermore, our competitors may be able to develop food preparation and presentation methods or recipes that are more appealing to consumers. If any of the above events occur, our business may be adversely affected.

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We may be affected by intellectual property rights disputes Unauthorised use of our trademarks and brand may damage our brand, recognition and reputation of our Group. We have, as at 30 April 2003, obtained certicates of registration or led trademark applications or are in the process of ling for the registration of our marks, the details of which are set out on pages 54 to 55 of this Prospectus. We are currently encountering objections or competing applications in registering our trademarks in certain jurisdictions, the details of which are set out in the ``Litigation'' section on page 123 of this Prospectus. In certain jurisdictions which do not have clear laws protecting intellectual property rights, we may face considerable difculties and costly litigation in order to enforce our intellectual property rights. In the event that we face such difculties or are unable to register our trademarks, our protability may be affected. We may be affected by complaints from customers and negative publicity We may, from time to time, be the subject of complaints from customers with regard to food quality and operational inefciency. Our business may also be adversely affected by negative publicity resulting from the publication of industry ndings or health concerns concerning the bakery items that we offer. Such negative publicity, regardless of their validity, may reduce the number of customers at our retail outlets and hence adversely affect our turnover and prots. We may not be able to maintain the quality of our bakery items due to a shortage of trained staff It is essential in the food industry that the quality of food served must be consistently high. Inconsistency in the quality of food served would result in customers' dissatisfaction and hence a reduction in their patronage. The quality of our breads and buns may be affected by a change or shortage of staff or the lack of proper inspection by our operations team. Any failure to recruit skilled personnel and to retain key staff may adversely impact our operations and expansion plans. In addition, any material increases in employee turnover rates in our retail outlets could have a material adverse effect on our business operations, and operating results. Furthermore, increased competition for qualied employees may cause us to pay higher wages to attract and retain sufcient employees, which could result in higher labour costs and lower prots. We may not be able to successfully implement our franchise business model We have only recently begun to implement our franchising business model and therefore this model has not been tested fully. The results of our franchise business model is dependent on amongst other factors, the quality of our franchisees, their ability to maintain the quality of our products, their nancial strength and their ability to penetrate new markets. In the event that our franchisees do not follow our franchise programme or are unable to maintain the quality of the products and service to customers, our BreadTalk brand may be affected and we may not be able to penetrate into those markets and this may adversely affect our future growth and protability. We are dependent on our major suppliers We purchased approximately 67% of our supplies in FY2002 from our major suppliers (as described in the section on ``Major Suppliers'' on page 58 of this Prospectus). The involuntary or unexpected loss of any of our major suppliers will temporarily disrupt our supplies and may have an adverse effect on our business. Furthermore, there can be no assurance that our major suppliers will be able to continue to full our needs and expectations in terms of cost and product quality. In the event that our major suppliers are unable to full our requirements or cease to supply raw materials to us, we may incur time and higher costs in sourcing from new suppliers, which could result in disruptions to our business, and our protability may be adversely affected.

24

We may be affected by the uctuations in raw material prices The prices of the ingredients and raw materials that we use may be subject to price uctuations due to various factors beyond our control, including severe climatic conditions and governmental regulations, which might reduce supply, leading to increases in supply costs. Although we have not encountered any such uctuations in raw materials prices for the last three nancial years, there is no assurance that such raw material prices will not uctuate in the future. Should there be any signicant uctuations in our raw material prices, our operating results may be severely affected. We may not be able to manage our growth effectively We intend to expand locally and to expand overseas through direct investments, joint ventures or franchising. We may not be equipped to successfully manage any future expansion, which could place a signicant strain on our management, operating, nancial and other resources. We may require implementation of additional management information systems to further develop our operating, administrative, nancial and accounting systems and controls, and to maintain close coordination among accounting, nance, marketing, sales, distribution and operations. Moreover, we may need to hire and train additional personnel. Our failure to develop and maintain the infrastructure necessary to run our operations could materially harm our business. Furthermore, there is no assurance that our overseas expansion plans will work according to plan and expectations. We may not be able to attract suitable joint venture partners or franchisees. The loss of any franchisee will result in a decrease in our revenues. The termination of any protable joint venture partnership or franchise agreement may also affect our protability. We may be affected by the economic, social and political situations in other countries where we may locate our overseas retail outlets The rst retail outlet of our franchisee in Indonesia has opened in April 2003 in Jakarta, Indonesia. We also intend to commence retail operations in Shanghai, PRC. We have plans to franchise our business concept to certain other countries in Asia by end of 2003. If we adopt the franchise business model, or expand overseas, our business may be materially and adversely affected by developments with respect to ination, interest rates, government policies, price and wage controls, exchange control regulations, taxation, expropriation, social instability and other political, economic or diplomatic developments in or affecting the countries in which we intend to operate. We have no control over such conditions and developments and can provide no assurance that such conditions and developments will not adversely affect our operations. We rely heavily on our senior management staff and the inability to retain or attract senior staff will adversely affect our performance We are highly dependent on our senior management staff, in particular, our Managing Director, George Quek and our Executive Director, Katherine Lee. The loss of such personnel without adequate replacements could adversely affect our business. In addition, we believe that our future success will depend upon our ability to attract, retain and motivate our senior management. Our inability to do so would adversely affect our performance. RISKS RELATING TO INVESTMENT IN OUR SHARES There is a possibility that our Share price may uctuate widely and this may affect your investment We are not a large company in terms of market capitalization and thus the absolute dollar amount of the free float in our Shares will likely be modest. We expect the trading of our Shares to be volatile and may respond to, among others, the following factors, some of which are beyond our control: variations of our operating results; changes in analysts' estimates of our financial performance; additions or departures of our key executives; 25

material changes or uncertainty in the political, economic and regulatory environment in the markets that we operate in; fluctuations of stock market prices and volume; involvement in litigation; and general economic and stock market conditions.

Future sales of our Shares could adversely affect our Share price Any future sale or availability of Shares can have a downward pressure on our Share price. The sale of a signicant 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 also affect our ability to sell additional equity securities for subscription in future. Except as otherwise described in ``Moratorium'' (see page 48 of this Prospectus), there will be no restriction on the ability of the Substantial Shareholders to sell their Shares either on the SGX-Sesdaq or otherwise. Control of existing shareholders may limit our ability to inuence the outcome of decisions requiring the approval of shareholders Upon completion of the Invitation, we anticipate that our Directors and existing shareholders and their Associates will collectively own approximately 80.37% of our enlarged share capital. These shareholders, acting together, would be able to signicantly inuence our corporate actions such as mergers or takeover attempts in a manner that could conict with the interests of our public shareholders. There is no prior market for our Shares Prior to this Invitation, there has been no public market for our Shares. Therefore, we cannot assure investors that an active public market will develop or be sustained after the Invitation. We cannot predict the extent to which a trading market for our Shares will develop or how liquid this market might become. The Issue Price may not be indicative of our market price for the Shares after completion of this Invitation. Future dilution due to future capital requirements Our working capital and capital expenditure needs may vary materially from those presently planned, depending on numerous factors including the rate of market acceptance of our products, strategic alliances, marketing and distribution strategies, levels and results of research and development and other factors which cannot be foreseen. If we do not meet our goals with respect to revenues, or if costs are higher than anticipated, substantial additional funds may be required. Even if we exceed our goals, our success may introduce new opportunities that may have to be fullled quickly and this could also result in the need for substantial new capital. To the extent that funds generated from operations together with the proceeds from this Invitation have been exhausted, we may have to raise additional funds to meet the new capital requirements. These additional funds may be raised by way of a limited placement or by a rights offering or through the issuance of new shares. In all such events, if any shareholder is unable or unwilling to participate in this additional round of fund raising, such shareholder may suffer dilution in his investment.

26

INVITATION STATISTICS
ISSUE PRICE(1) NTA NTA per Share based on the consolidated balance sheet of our Proforma Group as at 31 December 2002 adjusted for the Sub-division of Shares as disclosed on page 43 of this Prospectus: (a) (b) Before adjusting for the estimated net proceeds from the Invitation and based on pre-Invitation share capital of 130,980,000 Shares After adjusting for the estimated net proceeds from the Invitation and based on post-Invitation share capital of 162,980,000 Shares 4.0 cents 7.1 cents $0.24

Premium of Issue Price over NTA per Share as at 31 December 2002, adjusted for the Sub-division of Shares as disclosed on page 43 of this Prospectus: (a) (b) Before adjusting for the estimated net proceeds from the Invitation and based on pre-Invitation share capital of 130,980,000 Shares After adjusting for the estimated net proceeds from the Invitation and based on post-Invitation share capital of 162,980,000 Shares 500.0% 238.0%

EARNINGS Historical net earnings per Share of our Proforma Group for FY2002 based on preInvitation share capital of 130,980,000 Shares Adjusted historical net earnings per Share of our Proforma Group for FY2002, had the Service Agreement (as disclosed on pages 72 to 73 of this Prospectus) been in place from the beginning of FY2002 and based on pre-Invitation share capital of 130,980,000 Shares PRICE EARNINGS RATIO Historical price earnings ratio based on the Issue Price and historical net earnings per Share of our Proforma Group for FY2002 Adjusted price earnings ratio based on the Issue Price and adjusted historical net earnings per Share of our Proforma Group for FY2002, had the Service Agreement (as disclosed on pages 72 to 73 of this Prospectus) been in place from the beginning of FY2002 NET OPERATING CASH FLOW(2) Historical net operating cash ow per Share for FY2002, based on the pre-Invitation share capital of 130,980,000 Shares Adjusted historical net operating cash ow per Share for FY2002, had the Service Agreement (as disclosed on pages 72 to 73 of this Prospectus) been in place from the beginning of FY2002 and based on pre-Invitation share capital of 130,980,000 Shares PRICE TO NET OPERATING CASH FLOW RATIO(1) Issue Price to historical net operating cash ow per Share for FY2002 Adjusted Issue Price to net operating cash ow per Share for FY2002, had the Service Agreement (as disclosed on pages 72 to 73 of this Prospectus) been in place from the beginning of FY2002 5.1 times 5.2 times 4.7 cents 4.6 cents 9.2 times 9.6 times 2.6 cents 2.5 cents

27

MARKET CAPITALISATION Our market capitalisation based on the Issue Price of $0.24 per Share and postInvitation share capital of 162,980,000 Shares
Notes: (1) Save for Reserved Shares offered to employees and Independent Directors at $0.205 per Share. (2) Net operating cash ow is dened as prot before taxation with depreciation expenses added back. (3) All gures and ratios have been derived without taking into consideration any Shares which may be issued pursuant to the exercise of options to be granted under the Share Option Scheme.

$39.1 million

28

SUMMARY OF OUR PROFORMA GROUP FINANCIAL INFORMATION

The following nancial information of our Proforma Group should be read in conjunction with the full text of this Prospectus, including the Report from the Reporting Accountants and Auditors in relation to the proforma consolidated nancial information for FY2000, FY2001 and FY2002 set out on pages 94 to 115 of this Prospectus. OPERATING RESULTS OF OUR PROFORMA GROUP(1)
$'000 Revenue Cost of sales Gross prot Distribution and selling expenses Administrative expenses Operating (loss)/prot Finance expenses net (Loss)/Prot before taxation Tax expenses (Loss)/Prot attributable to shareholders (Loss)/Earnings per Share (in cents)(2)
Notes: (1) The nancial results of our Proforma Group for the periods under review have been prepared on the basis that our Group has been in existence since 24 April 2000 and throughout the periods under review. (2) For comparative purposes, the earnings per Share for the periods under review has been computed based on the (loss)/ prot attributable to shareholders and the pre-Invitation share capital of 130,980,000 Shares. (3) Had the Service Agreement (as disclosed on pages 72 to 73 of this Prospectus) been in place from the beginning of FY2002, the prot before taxation, prot attributable to shareholders and earnings per Share for FY2002 would have been $4.4 million, $3.3 million and 2.52 cents respectively.

FY2000 1,164 (385) 779 (713) (311) (245) (3) (248) (248) (0.19)

FY2001 16,741 (5,299) 11,442 (7,365) (1,420) 2,657 (56) 2,601 (628) 1,973 1.51

FY2002 34,970 (11,750) 23,220 (15,348) (3,175) 4,697 (134) 4,563 (1,160) 3,403 2.60

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FINANCIAL POSITION OF OUR PROFORMA GROUP(1)

$'000 Non-current assets Fixed assets Trade mark Current assets Inventories Trade receivables Other receivables, deposits and prepayments Fixed deposits Cash on hand and at bank 425 214 2,119 344 2,848 5,950 Current liabilities Trade payables Other payables and accrued expenses Deferred revenue Provision for income tax Term loans (current portion) Finance lease obligations (current portion) 2,539 3,609 40 755 1,300 120 8,363 Net current liabilities Non-current liabilities Term loans (non-current portion) Finance lease obligations (non-current portion) Deferred tax Net assets Proforma shareholders' equity NTA per Share (cents)(2)
Notes: (1) The nancial position of our Proforma Group as at 31 December 2002 has been prepared on the basis that our Group had been in existence since 24 April 2000. (2) For comparative purposes, the NTA per Share has been computed based on the pre-Invitation share capital of 130,980,000 Shares.

As at 31 December 2002

9,079 89

(2,413)

(435) (366) (626) 5,328 5,328 4.00

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DILUTION
Dilution is the amount by which the Issue Price to be paid by the investors of our New Shares in this Invitation exceeds our NTA per Share immediately after this Invitation. Our NTA per Share as at 31 December 2002, adjusted for the sub-division of Shares (as disclosed on page 43 of this Prospectus), before adjusting for the net proceeds from the Invitation and based on the preInvitation share capital of 130,980,000 Shares was 4.0 cents per Share. Pursuant to this Invitation in respect of New Shares at the Issue Price of $0.24 for each New Share save for Reserved Shares offered to employees and Independent Directors at $0.205 per Share, our NTA per Share as at 31 December 2002, after adjusting for the sub-division of Shares (as disclosed on page 43 of this Prospectus), the net proceeds from the Invitation and based on the post-Invitation share capital of 162,980,000 Shares, would have been 7.1 cents. This represents an immediate increase in NTA per Share of 3.1 cents to our existing shareholders and an immediate dilution in NTA per Share of 16.9 cents to our new investors. The following table illustrates this Share dilution:
As at 31 December 2002 Issue Price per Share NTA per Share based on the pre-Invitation share capital of 130,980,000 Shares Increase in NTA per Share attributable to existing shareholders NTA per Share after the Invitation Dilution in NTA per Share to new investors Cents 24 4.0 3.1 7.1 16.9

The following table summarises the total number of Shares issued by us, the total consideration paid to us, and the average price per Share paid by our existing shareholders and our new investors pursuant to this Invitation:
Shares Number Existing shareholders New investors Total 130,980,000 32,000,000 162,980,000 % 80.37 19.63 100.0 Total Consideration $'000 5,239 7,505 12,744 % 41.11 58.89 100.0 Average Price Per Share Cents 4.0 23.5

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DIVIDENDS
The following table sets out the net dividends declared by our Group to our then existing shareholders over the last three nancial years:
FY2000 Final Dividends FY2001 $300,300 FY2002

Final dividends declared in respect of FY2001 were paid in FY2002. We currently do not have a dividend policy and therefore, our past dividend payments should not be taken as an indication of future dividend payments. There is no assurance that dividends will be paid in future or as to the amount or timing of any dividends that are to be paid in future. We may declare annual dividends with the approval of our shareholders in a general meeting, but the amount of such dividends shall not exceed the amount recommended by our Directors. Our Directors may also declare an interim dividend without the need to obtain shareholders' approval. In making their recommendation, our Directors will consider, inter alia, our future earnings, working capital requirements, capital expenditure requirements as well as general business considerations, as our Directors may deem appropriate.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our results of operations and nancial position should be read in conjunction with the proforma consolidated nancial information and the related notes included elsewhere in this Prospectus. REVENUE We operate a chain of retail outlets selling a wide selection of bread, buns, cakes and pastries. Our network grew from three retail outlets in FY2000 to 22 retail outlets as at April 2003. Our revenue from sales of such bakery products, net of goods and services tax and discounts, is recognised upon the acceptance of goods by our customers. Our revenue for the past three nancial years was mainly derived from sales of bakery products in our retail outlets. Our sales are dependent on consumer acceptance of our products. Any signicant decline in demand for our bakery products as a result of changes in consumers' taste and preferences may result in a substantial decline in our revenue. In this regard, we have a research and development department, led by our Executive Director, Katherine Lee, to monitor changes in customers' taste and their preferences of our bakery products and to introduce new products on a regular basis. Presently, we introduce approximately 10 new bakery items every four months. Our sales may also be affected by the pricing of our products as well as other competitive factors in our industry. In the event that our competitors introduce more innovative products, lower prices of their competing products or increase promotional activities relative to ours, our sales will be affected. However, we have been able to maintain our selling prices since our incorporation in year 2000 due to our brand and successful marketing and promotional activities. There is no apparent seasonality pattern in our sales during the periods under review. However, we generally experience higher sales during festive seasons like Christmas and Mid-Autumn festival, as well as during the school holidays in the months of June and December. EXPENSES Cost of sales Our cost of sales constituted an average of 34.5% of our total cost for the past three nancial years. Our cost of raw material accounts for a signicant portion of our cost of sales. For the past three nancial years, it represented an average of 91.9% of our cost of sales. Our major raw materials include our, butter, sugar and various types of lling ingredients which are sourced locally. Costs of these raw materials are primarily dependent on the demand and supply in the market. As most of these raw materials are easily sourced from various suppliers, for the periods under review, we have not experienced any signicant price uctuations of these raw materials. The balance of our cost of sales relate to expenses incurred for operating our central kitchen which include labour cost, depreciation expenses, repair and maintenance expenses, rental and other indirect costs. Operating expenses Our operating expenses comprise distribution and selling expenses, and administrative expenses.

33

Distribution and selling expenses constituted an average of 51.0% of our total costs for the past three financial years. These expenses are incurred at our retail outlets and are mainly as follows: (a) personnel expenses which include wages, salaries and bonuses, CPF contributions, sales incentives and commissions, and staff welfare costs. These personnel expenses accounted for an average of 41.1% of distribution and selling expenses for the past three financial years; rental and utilities expenses which accounted for an average of 30.2% of distribution and selling expenses for the past three financial years; and depreciation expenses for xed assets (such as baking machinery, electrical works and renovation) accounted for an average of 18.0% of distribution and selling expenses for the past three nancial years.

(b) (c)

The remaining distribution and selling expenses relate mainly to advertising and promotional activities, repair and maintenance, and upkeeping of our retail outlets. Our administrative expenses constituted an average of 14.2% of our total costs for the past three financial years and mainly relate to expenses incurred at our head office such as the following: (a) personnel expenses which include directors' remuneration, salary, bonus and staff related cost for our support and administrative personnel. These personnel expenses accounted for an average of 47.5% of our administrative expenses for the past three financial years; and rental of head ofce premises which accounted for an average of 4.3% of our administrative expenses for the past three nancial years.

(b)

The remaining administrative expenses relate mainly to numerous miscellaneous expenses such as depreciation, professional fees, consultancy fees and utilities. Generally, our personnel expenses and rental expenses account for a signicant portion of our operating expenses. Our personnel expenses are dependent on the supply and demand of the labour market, the qualication and experience of employees hired as well as the prevailing employers' CPF contribution rate. Our rental expenses may be affected by the general property sentiments and more specically, the supply and demand of space for operation of retail outlets. Finance Expenses Our nance expenses comprise interest charges on outstanding term loans and nance lease obligations and other charges incurred for the utilisation of banking facilities. For the past three nancial years, nance expenses accounted for an average of 0.3% of our total costs. INFLATION Our nancial performance during the periods under review was not materially affected by ination. REVIEW OF RESULTS OF OPERATIONS FY2001 vs FY2000 Revenue Our revenue increased by $15.5 million or about 13.4 times from $1.2 million in FY2000 to $16.7 million in FY2001. The substantial increase in our revenue was mainly attributable to the opening of additional retail outlets from three retail outlets in FY2000 to eight retail outlets as at the end of FY2001 as well as the full year sales contribution by our retail outlets in FY2001. Revenue for FY2000 comprised approximately six months sales contribution from our rst retail outlet opened in July 2000 at Parco Bugis Junction and a combined sales contribution of less than two months from our retail outlets at Novena Square and Junction 8, which only commenced operations in December 2000.

34

In addition, in FY2001, we also increased our bakery product range to include cakes and moon cakes compared to FY2000 when we only sold bread products. Cost of sales and gross prot margin Our cost of sales increased from $0.4 million in FY2000 to $5.3 million in FY2001 in tandem with our increased sales. Our gross prot margin improved by 1.4% from 66.9% in FY2000 to 68.3% in FY2001. This was mainly due to savings in production cost from tighter control over wastages in the production process and bulk purchase discounts of raw materials. Operating expenses Our total operating expenses increased by $7.8 million or about 7.6 times to $8.8 million in FY2001, from $1.0 million in FY2000. The increase was due mainly to our business expansion of opening additional retail outlets from three retail outlets as at end of FY2000 to eight retail outlets by end of FY2001. (a) Distribution and selling expenses Our distribution and selling expenses increased by $6.7 million from $0.7 million in FY2000 to $7.4 million in FY2001. The increase was due mainly to increase in rental expenses for our retail outlets and personnel expenses (including sales commissions and incentives) of approximately $2.1 million and $3.5 million respectively. Other expenses such as depreciation, utilities, repair and maintenance and promotional expenses, in aggregate, increased by $0.9 million. This arose as a result of (a) an increase in the number of retail outlets opened; (b) full year rental and depreciation expenses being recorded for our three retail outlets opened in FY2000 (namely at Parco Bugis Junction, Novena Square and Junction 8); and (c) an increase in headcount from 55 in FY2000 to 167 in FY2001. (b) Administrative expenses Our administrative expenses increased by $1.1 million or 357% from $0.3 million in FY2000 to $1.4 million in FY2001. Headcount of both management and supporting staff increased from a total of 6 in FY2000 to 23 by the end of FY2001 and this led to an increase in administrative personnel cost by $0.5 million, from $0.1 million in FY2000 to $0.6 million in FY2001. The Group also incurred professional fees, design and consultancy fees aggregating $0.2 million in FY2001 relating to legal fees and stamp duties for leases of outlet premises as well as consultancy fees for the design of these new retail outlets. The balance of increases was attributable to increase in various expenses such as cleaning expenses, repair and maintenance, and travelling expenses following the expansion of our business. Financial expenses net Net nancial expenses increased from approximately $3,000 in FY2000 to $56,000 in FY2001. The increase was due mainly to six new term loans drawn down in FY2001 to nance the opening of new retail outlets as well as for working capital purposes. (Loss)/Prot before taxation Our results improved from a start-up loss of $0.2 million in FY2000 to a prot before taxation of $2.6 million in FY2001. This improvement was due mainly to the signicant increase in revenue and improvement in gross prot margin as explained earlier. Tax expenses There was no tax charge for FY2000 as our Group was in a tax loss position. In FY2001, our tax charge was $0.6 million, giving rise to an effective tax rate of 24.1%. This was lower than the amount obtained by applying the statutory income tax rate of 24.5% mainly due to the utilisation of tax losses brought forward from FY2000 and statutory tax rebates, offset by certain non-deductible expenses added back for tax purposes.

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FY2002 vs FY2001 Revenue Our revenue increased from $16.7 million in FY2001 to $35.0 million in FY2002, an increase of $18.3 million or 108.9%. This was attributable to the opening of an additional 11 retail outlets in FY2002. Cost of sales and gross prot margin Our cost of sales increased from $5.3 million in FY2001 to $11.8 million in FY2002, an increase of $6.5 million or 121.7%. Our gross prot margin decreased from 68.3% in FY2001 to 66.4% in FY2002. The decrease in gross prot margin was due mainly to increased expenses (such as depreciation, rental, repair and maintenance and personnel costs) incurred for our central kitchen which was set up in September 2001. Our headcount for the central kitchen increased from 36 in FY2001 to 60 in FY2002. In addition, we also recorded a full year impact of depreciation and rental expenses, despite our central kitchen operating below capacity. The central kitchen completed its expansion in December 2002 as part of our strategy to grow our business. The decrease in gross margins was partly offset by quantity discounts enjoyed from our raw material purchases. Operating expenses Our operating expenses increased by $9.7 million or 110.8% to $18.5 million in FY2002, from $8.8 million in FY2001. The increase was due mainly to the increase in the number of our retail outlets from eight retail outlets as at end of FY2001 to 19 retail outlets by end FY2002. (a) Distribution and selling expenses Our distribution and selling expenses increased by $7.9 million, from $7.4 million in FY2001 to $15.3 million in FY2002. Following the opening of 11 new retail outlets in FY2002, our personnel expenses increased from $3.7 million in FY2001 to $6.7 million in FY2002 as our headcount increased from 167 in FY2001 to 335 in FY2002 to support the growth of our business. Rental expenses of retail outlets increased from $2.3 million in FY2001 to $5.1 million in FY2002. Depreciation expenses also increased by $0.7 million as a result of increased renovation costs, electrical works and purchases of baking machinery in connection with the new retail outlets opened. Cleaning expenses in relation to the retail outlets also increased by $0.3 million due to the 11 new retail outlets opened in FY2002. The remaining increases in distribution and selling expenses was mainly attributable to increase in repair and maintenance, and utilities expenses as a result of the increase in the number of retail outlets. (b) Administrative expenses In FY2002, our administrative expenses increased from $1.4 million in FY2001 to $3.2 million in FY2002, representing an increase of $1.8 million. The increase was due mainly to an increase of $1.0 million in personnel costs as we increased the headcount for administrative and support staff from 23 at end of FY2001 to 39 at end of FY2002 to cope with the increase in our operations. With the increase in headcount and expansion of business, we recorded an aggregate increase of $0.4 million in entertainment and travelling expenses, design and consultancy fees (incurred for the design of new retail outlets and expansion of head ofce and central kitchen premises) and printing and stationery. Depreciation expenses also increased by $0.1 million due to increased renovation costs and furniture and ttings acquired for use at our head ofce. Financial expenses net Net nancial expenses increased to $0.1 million in FY2002 as a result of new loans drawn down to nance the setting up of new retail outlets.

36

Prot before taxation Our prot before taxation increased from $2.6 million in FY2001 to $4.6 million in FY2002. This translated into a decrease in prot before taxation margin from 15.5% in FY2001 to 13.0% in FY2002. Such a decrease was mainly attributable to the decrease in our gross prot margin from 68.3% in FY2001 to 66.4% in FY2002 as explained earlier. Tax expenses Tax charge for FY2002 amounted to $1.2 million. The effective tax rate for FY2002 was 24.3%, higher than the statutory tax rate of 22.0%. This was mainly due to certain non-deductible expenses added back for tax purposes. REVIEW OF FINANCIAL POSITION Fixed assets Our xed assets comprise baking machinery, electrical works, furniture and ttings, ofce equipment, renovation and motor vehicles. As at 31 December 2002, net book value of our xed assets amounted to $9.1 million. Net book value of baking machinery at our central kitchen as well as at our 19 retail outlets amounted to $3.0 million. Renovation and electrical works amounted to $2.8 million and $1.8 million respectively and these relate to costs incurred for our head ofce, central kitchen and retail outlets. Our motor vehicles aggregating $0.6 million related to 5 vans to deliver ingredients and cakes from our central kitchen to our retail outlets and a motor vehicle for use by our Director. Furniture, ttings and other ofce equipment also amounted to $0.9 million. As at 31 December 2002, baking machinery, renovation and electrical works accounted for 32.7%, 30.5% and 19.5% of the net book value of our xed assets respectively. Trademark In FY2002, we incurred $0.09 million in registering our trademarks in various countries and such trademarks will be amortised over its estimated useful life of ve years. Current assets Current assets comprise inventories, trade receivables, other receivables, deposits and prepayments, xed deposits and cash on hand and at bank. Our current assets amounted to $6.0 million as at 31 December 2002. Other receivables, deposits and prepayments accounted for $2.1 million or 35.6% of our current assets as at 31 December 2002. As a result of our expansion from eight retail outlets as at 31 December 2001 to 19 retail outlets as at 31 December 2002, our rental deposits in respect of the lease of outlet premises amounted to approximately $1.3 million. We also had franchise development grants receivable amounting to $0.2 million as at 31 December 2002. The remaining balance mainly related to prepayment of expenses. We had trade receivables of $0.2 million as at 31 December 2002 due to credit sales to certain corporate customers. Our credit sales were made to customers such as SCV and M1 in respect of cakes to SCV subscribers on their birthdays and special bakery items for M1. Inventories amounted to $0.4 million and these related to raw materials held at our retail outlets and central kitchen. Fixed deposits and cash on hand and at bank amounted to $3.2 million or 53.6% of our current assets as a result of cash generated from our operations.

37

Current liabilities Current liabilities comprise trade payables, other payables and accrued expenses, term loans, nance lease obligations, deferred revenue and provision for income tax. Our current liabilities amounted to $8.4 million as at 31 December 2002. Trade payables and other payables and accrued expenses accounted for 30.4% and 43.2% of our current liabilities as at 31 December 2002 respectively. Trade payables of $2.5 million related to purchases of raw materials as a result of the increase in the number of our retail outlets. Our accrued operating expenses amounted to $1.6 million and these mainly related to accruals for personnel related expenses such as salaries, CPF contributions and bonuses. Other payables amounted to $1.8 million and these related mainly to amounts payable to sundry creditors for purchases of xed assets for our new retail outlets. Our current provision for income tax amounted to $0.8 million as a result of income tax payable on prots generated in FY2002. Current portion of term loans amounted to $1.3 million or 15.5% of our current liabilities as a result of loans drawn down to nance the opening of our new retail outlets. Non-current liabilities Non-current liabilities comprise non-current portion of term loans, nance lease obligations and deferred tax. Non-current liabilities amounted to $1.4 million as at 31 December 2002. Our deferred tax liability amounted to $0.6 million as a result of temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for nancial reporting purposes. Non-current portion of nance lease obligations amounted to $0.4 million as a result of leases taken up to nance the acquisition of certain of our baking equipment and motor vehicles. Non-current portion of term loans amounted to $0.4 million. Proforma shareholders' equity Proforma shareholders' equity comprises proforma share capital and revenue reserves. Our proforma shareholders' equity amounted to $5.3 million as at 31 December 2002. Proforma share capital amounted to $0.5 million due to the issue of shares for cash to provide working capital for our Group. Proforma revenue reserves amounted to $4.8 million due to accumulated prots generated from operations of $5.1 million offset by net dividends of $0.3 million paid in FY2002 in respect of FY2001.

38

LIQUIDITY AND CAPITAL RESOURCES

Our internal sources of cash comprise mainly cash generated from sales made to customers at our various retail outlets while our external sources of nancing are primarily from term loans, nance leases and credit extended to us by our suppliers. Our principal usage of cash has been for purchase of raw materials, capital expenditure and operating expenses. Our capital expenditure and working capital requirements have been nanced mainly through cash generated from our operations and external borrowings from nancial institutions. We recorded negative working capital of $2.4 million as at 31 December 2002, primarily due to the use of cash generated from operations instead of external long term funds, to nance our capital expenditure. Such capital expenditure mainly relates to xed assets at retail outlets and the central kitchen. In FY2002, our capital expenditure which included the purchase of xed assets, amounted to $6.8 million of which $1.1 million was nanced by term loans and nance leases. We were able to nance most of our capital expenditure using cash generated from operations as our sales are generally on cash terms. In FY2002, cash generated by our operations amounted to $7.5 million. We have taken steps to rectify our negative working capital position. In the rst quarter of 2003, we have drawn down additional term loans amounting to $4.2 million to renance our purchases of xed assets for opening of new retail outlets. Based on our unaudited management accounts as at 31 March 2003, we have a net current asset position of $1.8 million and cash balance of $4.8 million. The SGX-ST has granted us a waiver from compliance with Rule 210(4)(a) of the Listing Manual which requires us to have no shortfall in working capital. Our Directors are of the opinion that, after taking into account the present banking facilities and cash from our operations, we will have sufcient working capital available for our present requirements. The following table sets out a summary of the consolidated statement of cash ows of our Proforma Group for FY2002. Our cash and cash equivalents comprise xed deposits, cash and bank balances net of bank overdrafts. For FY2002, xed deposits of approximately $344,000 have been pledged to banks as security for banking facilities granted and these xed deposits have thus been excluded from cash and cash equivalents. Cash ow statements:
Net cash generated from operating activities Net cash used in investing activities Net cash used in nancing activities Net increase in cash and cash equivalents FY2002 $'000 7,537 (6,363) (64) 1,110

39

In FY2002, we generated operating prot before working capital changes of approximately $6.3 million due mainly to prot before taxation of $4.6 million adjusted for depreciation expenses of $1.6 million. The net increase in cash from working capital changes amounted to approximately $1.7 million. As a result of the opening of 11 new retail outlets, our raw material purchases increased and accordingly, trade payables increased by $1.3 million in FY2002. Other payables and accruals also increased by $1.8 million due mainly to increase in accruals for personnel related costs as well as amounts owing to sundry creditors for acquisition of xed assets and consultancy fees payable in respect of our new management information system. These were offset by an increase in inventories, trade receivables and other receivables, deposits and prepayments of $0.2 million, $0.2 million and $1.0 million respectively. The increase in inventories was a result of the increase in raw materials corresponding to the increase in the number of retail outlets. Our trade receivables increased due to credit sales made to certain corporate customers. Rental deposits and franchise development grant receivable were the main reasons for the increase in other receivables, deposits and prepayments. With interest and income tax payments of $0.6 million, our net cash from operating activities amounted to $7.5 million. In FY2002, cash used in investing activities mainly related to $6.3 million used to acquire xed assets. We recorded net cash outow from nancing activities of approximately $64,000 in FY2002. Net nancing from term loans amounted to $0.6 million. However, this was offset by repayment of nance lease obligations and payment of net nal dividend in respect of FY2001 of $0.2 million and $0.3 million respectively. Fixed deposits pledged to banks as security for banking facilities granted to our Group also increased by $0.2 million.

40

CAPITALISATION AND INDEBTEDNESS

The following table shows our cash and cash equivalents, debts and capitalisation of our Group as at 30 April 2003: (i) (ii) based on our Group's proforma consolidated balance sheet; and as adjusted after taking into account the issue of New Shares pursuant to the Invitation and the net proceeds, based on an Issue Price of $0.24 per New Share save for Reserved Shares offered to employees and Independent Directors at $0.205 per Share, after deducting estimated expenses incurred in connection with the Invitation.
As at 30 April 2003 Actual $'000 Fixed deposits, cash on hand and at bank Indebtedness Short-Term Debt (Secured) Bills payable Term loans Finance lease obligations 277 1,958 202 2,437 Long-Term Debt (Secured) Term loans Finance lease obligations Total indebtedness Proforma shareholders' equity Total capitalisation and indebtedness 3,666 481 6,584 5,656 12,240 3,666 481 6,584 12,061 18,645 277 1,958 202 2,437 4,849 As adjusted $'000 11,254

As at 30 April 2003, we had total banking facilities (comprising term loans, overdrafts, bankers' guarantees and trade nancing) amounting to $7.6 million granted by various nancial institutions, of which $6.7 million was utilised as at 30 April 2003. The bills payable bear an interest rate of 1.0% per annum above the bank's prevailing prime rate. The term loans bear interest rates ranging from 0.5% to 3.5% per annum above the respective banks' prevailing prime rates or cost of funds and are repayable over a period of three to four years. As at 30 April 2003, we also had total nance lease facilities of $0.9 million, of which $0.7 million was utilised. The nance lease obligations bear interest rates of 4.89% to 6.09% per annum, with repayment periods of three to ve years. Our overdraft facility bears an interest rate of 1.25% above the bank's prevailing prime rate. All our banking facilities are secured against xed deposits. They are also jointly and severally guaranteed by our Executive Directors, George Quek and Katherine Lee. We intend to procure the discharge of the personal guarantees upon the listing and quotation of our Shares on the SGXSesdaq. Our Directors are of the view that revisions to the terms and conditions of our banking facilities, if any, are unlikely to be material and would not adversely affect our operations and nancial performance. However, in the unlikely event that the revisions would adversely affect our operations or nancial performance, our Executive Directors will continue to provide such necessary guarantees to these facilities. As at 30 April 2003, banking facilities of $4.8 million are secured against xed and oating charges over all of BTPL's assets and undertakings. Based on our proforma shareholders' equity of $5.7 million and our total indebtedness of $6.6 million as at 30 April 2003, our gearing ratio stood at 1.2 times. Thus far, we have been able to service our loan repayment commitments on schedule.

41

As at 30 April 2003, we had bankers' guarantees of approximately $0.8 million in lieu of rental deposits for the lease of our ofce and our retail outlets' premises. As at 30 April 2003, we had capital commitments of $0.1 million in respect of xed assets for a new retail outlet. As at 30 April 2003, we had non-cancellable operating lease commitments of $23.3 million in respect of rental of ofce and retail premises. Save as disclosed above, the scheduled monthly repayments of our borrowings and changes in our retained earnings arising from the day-to-day operations in the ordinary course of our business, there were no material changes in our share capital and indebtedness since 30 April 2003 to the date of this Prospectus.

42

SHARE CAPITAL
We were incorporated in Singapore under the Act as BreadTalk Group Limited on 6 March 2003 as a public company limited by shares. Our authorised share capital is $20 million comprising 500,000,000 ordinary shares of $0.04 each, of which 130,980,000 Shares have been issued and are fully paid up. We have one class of shares, being ordinary shares of $0.04 each. Our Articles of Association relating to the voting rights and privileges of shareholders are set out on pages 128 to 142 of this Prospectus. We have no founder, management or deferred shares reserved for issuance for any purpose. A description of our ordinary shares relating to the more important rights and privileges shareholders as conferred by the laws of Singapore and our Articles of Association is set Annex B on pages 143 to 146 of this Prospectus. The relevant Articles of Association Company relating to the voting rights of shareholders are set out in Annex A on pages 128 to this Prospectus. of our out in of our 142 of

At the Extraordinary General Meeting held on 30 April 2003, our shareholders approved, inter alia, the following: (a) (b) (c) the sub-division of each existing ordinary share of $1.00 each into 25 ordinary shares of $0.04 each (the ``Sub-division of Shares''); the issue of 32,000,000 New Shares pursuant to the Invitation. The New Shares, when issued and fully paid, will rank pari passu in all respects with the then existing Shares of our Company; that authority be given pursuant to Section 161 of the Companies Act to our Directors to issue and allot Shares, convertible securities or Shares arising from the conversion of such convertible securities (notwithstanding that such authority may have ceased to be in force at the time the Shares are to be issued) in our Company (whether by way of rights, bonus issue or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as our Directors shall in their absolute discretion deem fit, provided that the aggregate number of Shares and/or convertible securities to be issued pursuant to such authority shall not exceed 50% of the issued share capital of our Company immediately prior to the proposed issue and the aggregate number of Shares and/or convertible securities to be issued other than on a pro-rata basis to the then existing shareholders shall not exceed 20% of the issued share capital of our Company immediately prior to the proposed issue, and, unless revoked or varied by our Company in a 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 of our Company is required by law to be held, whichever is earlier. For the purpose of this resolution, the percentage of the issued share capital of the Company is to be calculated based on the maximum potential share capital of our Company at the time this resolution is passed (taking into account the conversion or exercise of any convertible securities and employee share options issued or granted and remaining outstanding and exercisable, at the time this resolution is passed), adjusted for any subsequent consolidation or subdivision of Shares in our Company; and the adoption of the BreadTalk Group Limited Employees' Share Option Scheme, as set out in Annex C of this Prospectus, which comprises options that may be issued in respect of up to 15% of the issued share capital of our Company.

(d)

The present issued and paid-up share capital of our Company is $5,239,200 comprising 130,980,000 Shares. Upon the allotment of the New Shares, the resultant issued and paid-up share capital of our Company will be increased to $6,519,200 comprising 162,980,000 Shares.

43

The details of the changes in the issued and paid-up capital of our Company since incorporation, are as follows:
Number of shares Issued and fully paid ordinary shares of $1.00 each as at the date of incorporation New ordinary shares of $1.00 each issued pursuant to the Restructuring Exercise in consideration of the acquisition of all of the shares of BTPL 2 5,239,198 5,239,200 Sub-division of each ordinary share of $1.00 into 25 ordinary shares of $0.04 each New Shares to be issued pursuant to the Invitation Share capital after the Invitation $ 2 5,239,198 5,239,200

130,980,000 32,000,000 162,980,000

5,239,200 1,280,000 6,519,200

The authorised share capital and the shareholders' equity of our Company as at the date of incorporation and after adjustments to reect, inter alia, the Restructuring Exercise, the sub-division of Shares and the issue of New Shares pursuant to the Invitation are set out below. This should be read in conjunction with the ``Proforma Consolidated Financial Information and Report on Examination of Proforma Consolidated Financial Information'' set out on pages 93 to 116 of this Prospectus:
As at date of incorporation $ Authorised Share Capital Ordinary shares of $1.00 each Ordinary shares of $0.04 each Shareholders' Equity Issued and fully paid Shares Share premium Accumulated prots Total shareholders' equity 2 2 6,519,200 5,125,000 11,644,200 20,000,000 20,000,000 As adjusted $

The changes in the issued and paid-up share capital of our Company and subsidiaries in the two years preceding the date of this Prospectus are set out on page 121 of this Prospectus under ``General and Statutory Information''.

44

SHAREHOLDERS
The Directors and shareholders of our Company and their respective direct and indirect shareholding in our Company immediately before and after the Invitation are set out below:
----------------- Before Invitation ----------------- ------------------- After Invitation --------------------------------------------------- ----------------------------------Direct Interest Number of Shares Directors George Quek Meng Tong(1) Katherine Lee Lih Leng Chen Kuo Hua Ong Kian Min
(2) (2) (1)

Deemed Interest Number of Shares %

Direct Interest Number of Shares %

Deemed Interest Number of Shares %

52,130,050 43,550,850 12,443,100

39.80 33.25 9.50

50,099,850 52,130,050

38.25 39.80

52,130,050 43,550,850 12,443,100

31.99 26.72 7.63

50,099,850 52,130,050

30.74 31.99

Lai Hock Meng

Substantial Shareholders Frankie Quek Swee Heng(1) Jason Ng Kok Soon

(1)

6,549,000 9,954,475

5.00 7.60

52,130,050

39.80

6,549,000 9,954,475

4.02 6.11

52,130,050

31.99

Shareholders of less than 5% Go Kun Heng(4) Public (including Reserved Shares) Total 6,352,525 4.85 6,352,525 32,000,000 3.90 19.63

130,980,000 100.00

162,980,000 100.00

Notes: (1) Katherine Lee is the wife of George Quek. Frankie Quek Swee Heng is the brother of George Quek. Jason Ng Kok Soon is the cousin of Katherine Lee. Save as disclosed, there are no family relationships among our Directors and Substantial Shareholders. (2) Our Independent Directors, Ong Kian Min and Lai Hock Meng, shall each be offered 100,000 Reserved Shares. They will be subject to a moratorium of six months commencing on the date of listing of our Company on the SGX-Sesdaq. (3) There were no signicant changes in the percentage shareholding of our Substantial Shareholders in the last three years. (4) Go Kun Heng is an employee of our Group.

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RESTRUCTURING EXERCISE
To streamline our corporate and shareholding structure, a restructuring exercise (``Restructuring Exercise'') was carried out. The Restructuring Exercise is as follows: Pursuant to a sale and purchase agreement dated 12 March 2003, our Company acquired the entire share capital of BTPL comprising 500,000 ordinary shares of par value $1.00 each from George Quek (who held 210,000 shares), Katherine Lee (who held 175,000 shares), Chen Kuo Hua (who held 50,000 shares), Go Kun Heng (who held 25,000 shares), and Jason Ng Kok Soon (who held 40,000 shares), for a consideration of $5,239,198 (based on the audited NTA of BTPL as at 31 December 2002), which was satised by the issue and allotment of 5,239,198 ordinary shares of par value $1.00 each in the capital of our Company to them or their respective nominees.
Percentage of shareholding (excluding initial two subscription shares) (%) 42.00 35.00 10.00 5.00 8.00 100.00

Shareholders George Quek Meng Tong Katherine Lee Lih Leng Chen Kuo Hua Go Kun Heng Jason Ng Kok Soon Total

Number of shares to be issued as consideration 2,200,463 1,833,719 523,920 261,960 419,136 5,239,198

Each of the abovementioned shareholders renounced approximately 3% to 5% of his or her Shares that were to be issued and allotted to Frankie Quek Swee Heng. Pursuant to the renunciation of rights by the shareholders, Frankie Quek Swee Heng was issued and allotted 261,960 ordinary shares of par value $1.00 each in the capital of our Company, representing approximately 5.0% of our issued and paid-up capital, and the shareholding structure of our Company immediately after the Restructuring Exercise (excluding the initial two subscriber shares owned by George Quek and Katherine Lee) is as follows:
Number of shares held after renunciation of rights (excluding the initial two subscriber shares) 2,085,201 1,742,033 497,724 254,101 398,179 261,960 5,239,198 Percentage of shares after renunciation of rights (excluding the initial two subscriber shares) % 39.80 33.25 9.50 4.85 7.60 5.00 100.00

Shareholders George Quek Meng Tong Katherine Lee Lih Leng Chen Kuo Hua Go Kun Heng Jason Ng Kok Soon Frankie Quek Swee Heng Total

Number of shares renounced to Frankie Quek 115,262 91,686 26,196 7,859 20,957 261,960

46

GROUP STRUCTURE
The following chart illustrates the corporate structure of our Group immediately after the Invitation.

BreadTalk Group Limited

100% BreadTalk Pte Ltd *70%

100% BreadTalk International Pte Ltd

Taster Food Pte Ltd

SUBSIDIARIES The details of our Company's subsidiaries as at the date of this Prospectus are as follows:
Issued and paid-up capital $500,000 Effective interest owned by our Group 100%

Name of company BreadTalk Pte Ltd

Date and place of incorporation 24 April 2000 (Singapore) 6 March 2003 (Singapore) 4 April 2003 (Singapore)

Principal activities Bakers and manufacturers of and dealers in bread, our and biscuits Investment holding Operators of food and drinks sale outlets, eating houses and restaurants

BreadTalk International Pte Ltd Taster Food Pte Ltd

$2 $10

100% 70%*

* The remaining 30% of the effective interest is held by TDTF and an independent third party.

None of our subsidiaries is listed on any stock exchange. Further details of our subsidiaries are set out in the ``Proforma Consolidated Financial Information''.

47

MORATORIUM
To demonstrate their commitment to our Group, our existing shareholders, George Quek, Katherine Lee, Chen Kuo Hua, Go Kun Heng, Jason Ng Kok Soon and Frankie Quek Swee Heng who (directly and indirectly) hold an aggregate of 130,980,000 Shares, representing approximately 80.37 per cent of our Company's enlarged share capital after the Invitation, have each undertaken not to dispose of or transfer any of their shareholding interests, whether directly or indirectly held, in our Company for a period of 12 months commencing on the date of listing of our Company on the SGX-Sesdaq and in the 12 months thereafter, not to reduce their individual shareholdings, whether direct or indirect, to below 50 per cent of their original individual shareholdings in our Company. To demonstrate their commitment to our Group, our employees and Independent Directors who will be allotted Reserved Shares, representing approximately 3.07% of our Company's enlarged share capital after the Invitation, will each undertake when they have been issued and allotted the Reserved Shares, not to dispose of or transfer any of their individual shareholding interests, whether directly or indirectly held, in our Company for a period of six months commencing on the date of listing of our Company on the SGX-Sesdaq.

48

GENERAL INFORMATION OF OUR GROUP

HISTORY Our Company was incorporated in Singapore on 6 March 2003 as an investment holding public company. Our principal subsidiary, BreadTalk Pte Ltd, is a private limited company incorporated in Singapore under the Companies Act on 24 April 2000. It was founded by our Managing Director, George Quek and our Executive Director, Katherine Lee. Our Managing Director, George Quek, rst conceptualised ``BreadTalk'' in April 2000 when he saw an opportunity for starting a bakery selling freshly baked breads and buns which are visually creative and attractive. Our rst BreadTalk retail outlet commenced business on 1 July 2000 at Parco Bugis Junction. We opened our second retail outlet within ve months of our rst retail outlet in December 2000 at Novena Square. Our rst retail outlet situated in the HDB heartlands was also opened in December 2000 at Junction 8 Shopping Centre. In 2001, we expanded our operations by opening another ve retail outlets. When we rst commenced operations, the whole baking process, from the preparation of the dough to the nal topping of the bakery items, was done at each individual retail outlet. As our operations continued to grow, and in preparation for our franchising plans, we set up our central kitchen and shifted our corporate headquarters to our present premises at KA FoodLink, Kampong Ampat in September 2001. To expand our production capacity, we acquired more space, machinery and equipment in 2002. The expansion of our central kitchen was completed by November 2002. We invested a total of approximately $3.0 million on the outtting of our present premises. We started with approximately 50 varieties of breads and buns when we rst commenced in July 2000. Over the last two years, we have introduced many new varieties of breads, buns, cakes and pastries and we presently have approximately 150 varieties of such bakery items. For more information about our business, please refer to our section ``Business'' on pages 50 to 51 of this Prospectus. As at April 2003, we have 22 retail outlets situated across Singapore and as at 31 December 2002, we employed 434 staff. Our retail outlets are located as follows:
Location Parco Bugis Junction Novena Square Junction 8 Paragon Jurong Point Great World City Peranakan Place Turf City Tiong Bahru Plaza Marriott Hotel Capitol Building Parkway Parade Causeway Point Toa Payoh Tampines Mall CityLink Compass Point Date of Commencement July 2000 December 2000 December 2000 January 2001 April 2001 July 2001 October 2001 December 2001 January 2002 February 2002 February 2002 March 2002 April 2002 May 2002 May 2002 June 2002 August 2002

49

Location West Mall Plaza Singapura The Majestic Holland Village Wisma Atria

Date of Commencement September 2002 December 2002 January 2003 January 2003 March 2003

We have also received invitations from interested parties since 2001 to franchise our business concept overseas. We entered into a master franchise agreement covering the Indonesian market in February 2003. Our franchisee for Indonesia has set up the rst BreadTalk retail outlet in Jakarta in April 2003. We are also in the process of negotiating other franchise agreements with parties from other countries. For further details, please refer to ``Prospects and Future Plans'' on pages 64 to 65 of this Prospectus. We incorporated BTI on 6 March 2003 with an initial paid-up capital of $2.00. It is presently dormant. Taster Food was incorporated on 4 April 2003 for the purpose of venturing into the restaurant business. It is a 70% owned subsidiary and it has an issued and paid-up capital of $10.00. Its other shareholders are TDTF and an independent third party. Our revenue has grown from $1.2 million in FY2000 to $35.0 million in FY2002. We have won various awards and commendations and our ``BreadTalk'' brand has been listed as one of the most recognisable Singapore brands as we are the winner of the Singapore Promising Brand Award and was granted Superbrand status by the Singapore Superbrands Council for 2002/2003. For further details of our awards, please refer to page 60 of this Prospectus. BUSINESS Our Business We operate a chain of retail outlets selling a wide selection of breads, buns, cakes and pastries. Our breads and buns are baked at our individual retail outlets. We emphasise good customer service to ensure that our customers have a comfortable shopping experience. We derive our revenue from the sale of our breads, buns, cakes and pastries. As at April 2003, we have 22 retail outlets and to complement our operations, we also operate a central kitchen at Kampong Ampat that prepares and distributes llings for our breads and buns, and bakes cakes and pastries for distribution to our various retail outlets island-wide. We offer a wide selection of breads, buns, cakes and pastries and at present, we introduce approximately 10 new bakery items every four months to provide new avours for our customers. The names and presentation of some of our new items are derived from events that occur in our daily life. Thus far, we have created over 150 different bakery items. Our signature items include ``Flosss'', ``Fire Flosss'', ``Moshi Mushroom'', ``Only U'' and ``Applewerm''. The aggregate revenue from the sale of these items contributed approximately 23.1% to our total revenue in FY2002. We strive to enhance our customers' shopping experience by offering a customer-friendly environment. Our retail outlets have a clean modern design and are brightly lit. Our bakery area employs an ``open'' concept by allowing our customers to view the baking process. Our displays are attractive, neat and orderly. Our staff are trained with the necessary skills and knowledge of our bakery items and are able to explain to our customers in detail the selection of breads and buns on offer and to assist the customers in their selection. Our central kitchen and our retail outlets in Singapore are all installed with web-enabled cameras using Internet Protocol. There are at least three cameras installed at each retail outlet, with one at the production area, one at the cashier counter and one at the service area. The cameras enable us to monitor our retail outlets by remote and our management is able to monitor each retail outlet from any place where internet access is available.

50

Some of our retail outlets cater to specic taste of the customers in their area. Our Paragon and Holland Village retail outlets offer a wider selection of European breads and cakes as the majority of our customers who frequent those retail outlets are likely to be tourists or expatriates. Our Peranakan Place retail outlet also has special items with a distinctive Peranakan avour to cater to the needs of the customers there. Our retail outlets are located at easily accessible locations. They tend to be sited near public transport systems such as bus terminals, the Mass Rapid Transit stations and the Light Rail Transport stations. By locating our retail outlets in these areas, we are able to attract new customers and encourage repeat visits. The selection and evaluation of suitable sites for our retail outlets is undertaken by our Managing Director and our group general manager. Once the site is selected, our project management team will supervise the setting up of the retail outlet. They are responsible for ensuring that the retail outlet is renovated according to our ``BreadTalk'' concept. They will also ensure that all relevant government licenses and approvals required for the operation of the retail outlet are obtained. In addition to the retail market, we also intend to target corporate customers to increase our revenue. We have an arrangement with SCV whereby SCV's subscribers are able to redeem a cake from our retail outlets on their birthday as a birthday gift from SCV. We also have arrangements with companies like M1 where we supply special bakery items to them for their corporate events. These contracts are on an ad-hoc basis and such revenue derived from corporate sales have not contributed to our total revenue in a signicant manner in the last three nancial years. BreadTalk Concept The uniqueness of BreadTalk is not only in the taste and freshness of the products, but also the way the products are presented in terms of their visual attractiveness and their names. Some of our products are accompanied by its own story or theme which draws its inspiration mainly from social and cultural trends, for example, ``Crouching Tiger Hidden Bacon''. Our research and development team constantly innovates and comes up with new recipes and ideas on a regular basis as we believe that by constantly changing the variety of products offered, we will be able to continuously satisfy the changing taste of our customers. BreadTalk also believes in an ``open'' concept in our interior design, which we consider to be one of the important factors for our success. The layout of our retail outlets is designed in such a way that customers are able to view the baking process of our breads and buns so as to emphasise the freshness of our products. We also adopt an ``open'' concept in the way we present and display our products to emphasise the variety of products we offer. We believe that our ``open'' concept design creates a unique ambience and shopping experience for our customers. Through our emphasis on quality and innovation, we seek to make ``BreadTalk'' a brand associated with high quality and freshly made bakery items. Central Kitchen Our central kitchen occupies approximately 17,314 sq ft and is separated into three main sections, namely the food preparation/lling section, storage section and the bakery section. Currently, all our products are distributed exclusively through our retail outlets in Singapore. In order to control the quality of our products, we intend to distribute certain ingredients which are not easily available to our franchisees in their home countries.

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The central kitchen is responsible for the preparation of the our mixes, the llings for our buns, the preparation of our pastries, and the preparation and baking of our cakes. The quantity of our mixes, llings for our buns, and pastries and cakes that are supplied to our retail outlets are prepared daily based on the demand from each retail outlet to ensure that they are fresh for consumption. Depending on the specic item, our retail outlets will place an order within one to three days prior to delivery. Our staff will process the orders and ensure that the orders are fullled accordingly by our central kitchen. Our central kitchen prepares our mixes and produces various types of cakes and pastries. These products will require different amount of labour hours and resources. As such, we are unable to give an accurate estimate of our production capacity. However, our management estimates that the current utilisation rate of our central kitchen is approximately 70% of its full production capacity. Retail Outlets Each retail outlet is divided into two areas, the production area and the service area. The production area is where the bread, buns and pastries are prepared and baked. We have a team dedicated to preparing the dough in accordance with our recipes and quantity instructions of our production head. Once the dough pieces are ready for baking, they will then be lled with the appropriate llings (if required), before baking. Once the baking is completed, the baked items are then laid out in pans to cool after which they will either be put on display for sale if no further preparation is required or have toppings placed on them and the nished items are then put on display for sale. The production head supervises the production area and the whole baking process is under his supervision. We have quality control procedures enforced at our retail outlets. Each nished item goes through four visual inspections before it is put on display for sale. Any item that does not meet our requirements will be discarded. Our service area is where our bakery products are displayed and where our customers are served. The service area layout is designed after taking into consideration factors such as ease of human trafc ow and customer comfort. For the majority of our retail outlets, the branch manager will decide on the quantity of each of the products to be baked. His decision will be based on considerations such as the prole of the human trafc ow at different times of the day and the saleability of each item. Depending on the size of each retail outlet, we offer approximately 40 to 60 varieties of bakery items throughout the day at our retail outlets daily. Our selection changes daily so as to ensure that customers have a variety to choose from every day. In addition, we constantly introduce new items (approximately 10 items every four months) to provide new avours to cater for our customers' changing tastes. BREADTALK FRANCHISE Due to the success of our retail outlets in Singapore, we have received many invitations from interested parties in various countries including Malaysia, Hong Kong Special Administrative Region, Australia and the United States of America to franchise our ``BreadTalk'' bakery concept. In light of our intention to develop a franchise, we applied for and was offered a grant under the ``International Franchise Development Programme Methodology & Approach'' scheme by IE Singapore for the purposes of developing our franchise programme. We have already entered into a master franchise agreement covering the Indonesian market in February 2003. Our franchisee for Indonesia was selected after careful consideration and only after it was able to satisfy our stringent qualication criteria including having a strong network of contacts and being of sound nancial standing.

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Our rst franchised outlet has opened in April 2003 in Jakarta. Under the terms of the franchise agreement, our franchisee pays us an initial base fee, a store license fee and a monthly royalty fee computed based on a percentage of the outlet's gross revenue. We will provide ongoing training for our franchisee's staff. We will also provide certain raw materials and ingredients that our franchisee requires for its operations. Our franchisee also intends to set up a central kitchen in Jakarta to support their operations. In such an event, where possible, we will advise and assist in the setting up of the central kitchen. Our franchise division is responsible for supervising, monitoring and operating our franchises. Our management team will assist those franchisees in selecting the appropriate store locations and providing the initial training support for such franchisees' staff. Our management team will also advise on the interior design plans for the renovation of the retail outlet, assist in the selection of materials and advise on the materials to be used that are unique to our design and concept for outtting the franchisees' outlets. The management team will ensure that the logistical and administrative support to our franchisees is adequate, and will monitor the performance of the respective franchisees on an ongoing basis. QUALITY CONTROL We are committed to a high level of quality control in our baking process at our central kitchen and our retail outlets. Quality control procedure at central kitchen As our production process begins in the central kitchen, we place great emphasis on quality control on the items delivered to our retail outlets. We are also currently in the process of implementing a quality assurance program to ensure a high standard of food hygiene and safety. This quality assurance program is being implemented according to the Hazard Analysis of Critical Control Points (``HACCP''). The HACCP system focuses on critical points in our food production process that could contribute to the risk of health and food safety hazards if not monitored and controlled according to stringent food hygiene standards and quality assurance procedures. We started implementing the program with the assistance of PSB in late 2002 and expect to complete the implementation in the later half of 2003. In addition, we have personal hygiene guidelines which are adapted from the HACCP which include without limitation, requiring staff to: . . . wear disposable gloves or use utensils and avoid handling cooked food or final products with bare hands wear uniforms and footwear provided by us during production hours wash their hands with soap or detergent before the production shift, after handling raw food, after meals, after visiting the washrooms, after touching their hair or face or after touching or handling non-food contact surfaces or equipment not smoke at the central kitchen wear face masks when handling cooked or final products sanitise their boots or wear shoe covers in the central kitchen.

. . .

The personal hygiene guidelines have been fully implemented. Each cake and pastry also goes through visual inspections at the end of the baking and after the nal toppings and decorations are made on it.

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Quality control procedure at our retail outlets We conduct visual inspections of our products at various stages of preparation before the item is sold to the customer. Visual inspections are conducted when the dough is being prepared, after the items are baked and when the baked items are set out on display for sale. Our management will also conduct random tasting and visual inspections at the various retail outlets to ensure the quality of our products are maintained. We also conduct daily review sessions with our staff to determine the causes that have resulted in the particular item not satisfying our required standards. These review sessions are part of our on-going training and quality control process. We also send some of our bakery items and llings to PSB and AVA for testing to ensure that hygiene controls for storage of our products satisfactorily comply with the required standards. MARKETING We utilise marketing channels like newspapers, lifestyle magazines and pamphlets to promote our products. We also create awareness for our products by placing billboard advertisements at strategic locations of the buildings in which our retail outlets are situated. Our main marketing strategies are as follows: (1) Promotions We participate in promotions with our landlords and business associates to create greater public awareness of our products such as providing gift vouchers and product sponsorship. Occasionally, we have also sponsored events that promote creativity in Singapore such as the 2002/2003 ``Xinyao'' competition organised by SPH. (2) Festive Occasions We will create different varieties of products such as mooncakes and Christmas log cakes to cater specically for festive occasions like the Mid-Autumn festival and Christmas. We will also advertise intensively our products during these festive periods. We will continue to seek advertising avenues that may improve the public awareness of our products and our retail outlets. Our advertising and promotional expenses as a percentage of our total revenue in FY2002 was approximately 2%. TRADEMARKS We believe that our trademarks play a signicant role in creating brand recognition for our products. As such, we have registered or are in the process of registering various trademarks both locally and overseas. Singapore We have registered the trademarks (as shown below) in 2002 with the Intellectual Property Ofce of Singapore for classes 42 and 43, which relate to, inter alia, the cafe business.

54

We are in the process of applying to register the following trademarks (collectively known as the ``BreadTalk trademarks'') with the Intellectual Property Ofce of Singapore for classes 30 and 43. Class 30 relates to bread and confectionary items and class 43 relates to the cafe business.

We have also led an application to register the following trademark (the ``freemango mark'') for class 43 in Singapore although it does not relate to our core bakery business. At present, we do not have any business plans with regards to the freemango mark.

Overseas We have registered, led applications, or are in the process of ling for the registration of the BreadTalk trademarks in the following countries:
Asia Hong Kong Special Administrative Region India Indonesia Japan Korea Malaysia Myanmar Philippines PRC Sri Lanka Taiwan Republic of China Thailand Vietnam Others Australia Canada European Community New Zealand South Africa United States of America

We are currently encountering objections or competing applications in registering our trademarks in certain jurisdictions, the details of which are set out in the ``Litigation'' section on page 123 of this Prospectus. Save as disclosed in the above paragraphs, our business is not dependent on any other trademarks, copyrights, registered designs, patents or other intellectual property rights. 55

RESEARCH AND DEVELOPMENT We pay close attention to research and development. Our research and development team (``R&D Team'') headed by our Executive Director, Katherine Lee, is primarily responsible for developing new creations and varieties of bakery items. Due to their efforts, we are able to introduce approximately 10 new bakery items every four months. In 2002, our R&D Team added over 30 varieties of new bakery items to our selection. Our R&D Team also conducts in-house training seminars for all production heads prior to the introduction of any new product to ensure that the production heads are able to bake the new items to the required standards. Once these new items have been launched, our R&D Team also does random checks at our retail outlets to ensure that these items meet our quality standards. The nature of our R&D activities comprises the generation of creative ideas and concepts and utilises existing supplies and resources, as opposed to requiring separate resources and facilities which may be capital intensive. As such, the amount of expenditure incurred in relation to R&D for the past three nancial years, as a percentage of our Group's total revenue, has been insignicant. STAFF TRAINING As our business is largely service-oriented, staff training is essential and we place emphasis in enhancing our quality of service. We strive to maintain quality and consistency in each of our retail outlets through the training and supervision of personnel and the establishment of, and adherence to, high standards relating to personal performance, food preparation and maintenance facilities. We provide all new employees with orientation and training, including briengs on kitchen and display procedures, food preparation and other administrative procedures for their positions to ensure that they are able to meet our high standards. Trainee bakers are individually assessed by the production head and are subsequently put on three months probation training. Similarly, trainee branch managers will be assessed by the management upon recruitment and assigned to their respective retail outlets where they undergo three months of training with their respective managers. Our cashiers and service area staff undergo training at their respective retail outlets to familiarise them with their job responsibilities. With on-the-job training and the coaching of employees by direct supervisors or managers at the workplace, the trainees will be able to pick up the requisite skills quickly and effectively. The closely supervised training that we provide is also necessary to ensure that our day-to-day operations run smoothly and efciently. We have also invited external consultant bakers from Japan and Taiwan Republic of China to conduct training seminars for our staff. These consultant bakers share new techniques of baking and new trends or ideas in the baking industry in their countries with our staff, and also consult and comment on our methods and techniques. From time to time, we will send some of our staff overseas to countries such as Japan and Europe for training on various techniques and methods of baking. The amount of expenditure incurred in relation to staff training for the past three nancial years, as a percentage of our Group's total revenue, was insignicant. INSURANCE POLICIES We have insurance policies covering losses due to re and extraneous perils, loss of income, loss of money, direct pecuniary loss arising from any act of fraud or dishonesty committed by employees as well as public liability insurance (which cover accidental injury directly caused by or arising from anything harmful or defective in food and drink supplied or from poisoning of any kind caused by food and drink sold or supplied by our Group) for our retail outlets and our central kitchen. We have also insured our staff for workmen's compensation insurance, personal accident insurance, and re and public liability insurance. We also maintain keyman insurance for our Managing Director, George Quek. We believe that these insurance policies are adequate for the operations of our Group. 56

SEASONALITY There is no apparent seasonality pattern in our sales during the periods under review. However, we generally experience higher sales during festive seasons like Christmas and Mid-Autumn festival, as well as during the school holidays in the months of June and December. GOVERNMENT REGULATIONS The following are the main licences that are essential for our business operations in Singapore:
Type of Business Operations Central kitchen Central kitchen Retail outlets Retail outlets Retail outlets Central kitchen/Retail outlets Type of Licence Factory Permit Food Processing Establishment Licence Food Shop Licence Music Copyright Licence Signboard Licence Electrical Installation Licence Authority Ministry of Manpower AVA National Environment Agency, Ministry of Environment Composers and Authors Society of Singapore Building and Construction Authority Energy Market Authority

The food shop licences are valid for one year and are renewable annually subject to compliance with the relevant terms and conditions of the licences and at the discretion of the relevant authorities. The relevant authorities also have the right to terminate any of the licences any time. To date, we have not experienced any problems in obtaining or maintaining any of the above licences, permits or approvals. We also comply with the standards for food safety and hygiene set by the AVA for the central kitchen and those set by the National Environment Agency (``NEA'') for our retail outlets. Separate licences have to be obtained from the NEA for the retail outlets and from the AVA for our central kitchen. Pursuant to the issuance of these licences, regular inspections and grading exercises based on the food establishment's standard of cleanliness, housekeeping and hygiene are carried out by the AVA and NEA ofcers. All the food establishments, including the central kitchen, are graded from ``A'' to ``D'' in descending order of merit. As at the date of this Prospectus, our central kitchen and the retail outlets that have been graded thus far, have obtained either an ``A'' or ``B'' rating from the relevant regulatory authorities. PURCHASING AND SOURCING All our raw materials and ingredients for use in Singapore are sourced locally and are widely and readily available. We ensure the quality of our raw materials by having a list of approved suppliers and they are assessed based on factors such as the quality of their products, pricing, service and ability to meet delivery schedules. Our head ofce will assess and approve the suppliers and negotiate with them the terms of the supply contracts pertaining to the supply of the raw materials and ingredients. Our central kitchen and our retail outlets will, according to their own demand, place orders with the suppliers directly. Notwithstanding, the total purchases will be monitored by our management in order to maintain strict quality controls over our products. For our Indonesian franchisee, to control the quality of our products, we will supply them with certain raw materials and ingredient llings that are not easily available for its operations.

57

INVENTORY MANAGEMENT We do not maintain a large amount of inventory as most of our raw materials are easily available and are delivered daily by our suppliers. Our inventory turnover in FY2002 was about two weeks. However, we order our raw materials such as our in bulk and these are stored for a period of three to six weeks. Monthly full stock counts are carried out at our central kitchen and retail outlets. Our inventories are managed on a ``rst-in rst-out'' basis whereby supplies received rst will be the rst to be used for our production process. MAJOR SUPPLIERS Our major purchases for our operations are the ingredients for baking and include our, butter, sugar and llings for our products. All these ingredients are sourced in Singapore. The suppliers who accounted for more than 5% of our Group's purchases during each of the past three nancial years are as follows:
Suppliers Chop Hup Chong Food Industries Pte Ltd Chuan Leck Food Industries Pte Ltd Chunex Trading Company Pte Ltd Co-operate Associates Pte Ltd Dason Marketing Pte Ltd Jordon International Food Processing Pte Ltd Kimpack Industries Pte Ltd Lim Song Kee & Co. Mitsui & Co., Ltd Overseas Plastic Industries Pte Ltd Phoon Huat & Co. Pte Ltd Type of Products Meat Products Meat Products Dairy Products Bakery Supplies Bakery Supplies Meat Products Packaging Supplies Bakery Supplies Bakery Supplies Packaging Bakery supplies Percentage of Total Purchases FY2000 17.9% 9.2% 13.5% 13.0% 0.5% 4.3% 5.4% 6.3% 12.7% FY2001 23.6% 8.8% 1.5% 1.2% 9.1% 5.2% 5.1% 10.1% 0.1% 9.4% FY2002 18.3% 5.6% 5.5% 1.3% 8.3% 2.4% 4.6% 10.5% 10.0%

From time to time, we assess and consider our sources of supply. It is our policy to award more orders to suppliers who consistently deliver the best value in terms of price, quality and ability to meet our delivery schedules. This policy, coupled with the demand for each of our products, has accounted for the changes in the percentages above. None of our Directors or Substantial Shareholders has any interest (direct or indirect) in any of the abovementioned suppliers. These supplies which are sourced in Singapore are readily available and our Directors believe that there are many alternative suppliers in the market. In the event that our major suppliers are unable to full our requirements or cease to supply raw materials to us, we will source for alternative suppliers who are able to full our requirements. However, there may be temporary disruptions to our operations as we will require some time to source for suppliers who are able to full our requirements. To the extent that the inability of our major suppliers to full our requirements or the cessation of the supply of our raw materials by our major suppliers may cause a temporary disruption to our business, our Directors are of the opinion that we are dependent on the abovementioned major suppliers. MAJOR CUSTOMERS No customer accounts for ve per cent or more of our turnover during each of the past three nancial years. Our customers are mainly walk-in-customers, whose individual expenditure at our various retail outlets do not constitute a signicant percentage of our annual turnover. As such, we are not dependent on any single customer to the extent of ve per cent or more of our operating prot for the last three nancial years.

58

COMPETITION The food and beverage industry is intensely competitive. Our direct competitors include large and diverse groups of bakery chains and individual operators. Competition is based on, inter alia, taste, quality and price of bakery items offered, customer service, ambience, location and overall shopping experience. We believe that our branding and concepts and quality of food and service enable us to differentiate ourselves from our competitors and to continuously attract and retain customers. Some of our direct and indirect competitors are well-established international or local bakery chains and some may have substantial financial and marketing resources. Some examples of our direct competitors include: . . . . . Bengawan Solo; Delifrance; Four Leaves; Prima Deli Bakery; and bakeries at various shopping malls and hotels.

COMPETITIVE STRENGTHS We believe our competitive strengths are as follow: Unique Concept and Branding The BreadTalk concept is unique and innovative as we distinguish ourselves from traditional bakeries in the market and more importantly we constantly develop products reecting contemporary lifestyle and current events. As part of our unique concept, the layout of our retail outlets are designed such that our customers have a clear view of our bakery items on display. Our ``open'' concept design also allows customers and shoppers to view our chefs and bakers at work. We also believe that the design of our retail outlets give them a warm and friendly atmosphere and allows our customer to shop in a comfortable environment. Despite our short track record, we have successfully established our brand. Our ``BreadTalk'' brand is recognised as one of the most recognisable local brands in Singapore in 2002 as evidenced when we won the ``Singapore Promising Brand Award 2002'' awarded by the ASME and SPH and were voted Singapore's Most Popular Brand in a poll organised jointly by the ASME and SPH. We have also generated publicity for our brand through interviews with the local newspapers and various articles about our products have been published in both the English and Chinese local newspapers. We also market our products through the local media so as to increase our brand awareness. Wide Range of Products We believe that an important aspect of our success can be attributed to the wide variety of products available at our retail outlets. We recognise that our customers have varied needs and changing tastes, and we believe that we can satisfy our customers as we presently offer over 150 varieties of breads, buns, pastries and cakes. Depending on the size of the retail outlet, each retail outlet offers about 40 to 60 different items daily. We also constantly introduce new products to cater to customers' changing tastes. We introduce approximately 10 items every four months and this adds on to the wide selection available at our retail outlets.

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Strategic Locations We believe that one of our competitive strengths is the choice of location of our retail outlets. Our retail outlets are located at strategic and accessible places to attract potential customers as having high customer trafc ow is crucial to the success of our retail outlets. Our retail outlets tend to be sited near public transport systems such as bus terminals, the Mass Rapid Transit stations and the Light Rail Transport stations. We also take into consideration the composition of our surroundings, such as the presence of departmental stores, cinemas and supermarkets as neighbouring tenants may attract potential customers to our retail outlets. We also consider whether there are any other bakeries within the vicinity of the site, the nature of such competition, if any, and how they may affect our business in the future. Use of Information Technology in Our Operations Our central kitchen and our retail outlets in Singapore are all installed with web-enabled cameras using Internet Protocol. There are at least three cameras installed at each retail outlet, one at the production area, one at the cashier counter and one at the service area. Our management is able to monitor each retail outlet from any place with internet access. If any of our management personnel notices anything in a particular retail outlet that is not satisfactory, he can immediately call up the relevant branch manager and have the problem rectied. Our stores are also installed with a point-of-sale system. This means that daily sales gures are processed and we are able to track the sales volume of each retail outlet and of each individual item on a daily basis. This enables our management to evaluate the reception of each individual item in a timely manner. As such, customer trends can be easily identied and we are able to respond quickly to our customers needs. Experienced Management Team Our Group is headed by our Managing Director, George Quek, who has 20 years of experience in the food and beverage industry. He is assisted by our senior management, most of whom have more than nine years of experience in the food and beverage or retail industries. For more information on our Directors and our Executive Ofcers and their experience, please refer to pages 66 to 69 of this Prospectus. AWARDS A list of our awards since incorporation is set out below:
Award Singapore Promising Brand Award 2002 Singapore Most Popular Brand Superbrand status, Singapore version 2002 Number 1 in 2002's Enterprise 50 Start Up Award Organisation Sponsoring the Award ASME and SPH ASME and SPH Singapore Superbrands Council Business Times and Accenture Date of Award 25 August 2002 25 August 2002 2002/2003 18 November 2002

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PROPERTIES AND OTHER FIXED ASSETS

Our Group currently does not own any properties. Our Group currently rents/leases the following properties:
Location Parco Bugis Junction 200 Victoria Street # 01-67 Parco Bugis Junction Singapore 188021 Novena Square 238 Thomson Road # 01-26 Novena Square Singapore 307683 Junction 8 9 Bishan Place # 01-34 Junction 8 Shopping Centre Singapore 579837 Paragon 290 Orchard Road # B1-04/05 Paragon Singapore 238859 Jurong Point 1 Jurong West Central 2 # 01-26H Jurong Point Shopping Centre Singapore 648886 Great World City 1 Kim Seng Promenade # 01-52 Great World City Singapore 237994 Peranakan Place 182 Orchard Road Singapore 238847 Turf City 200 Turf Club Road # 01-05 Turf City Singapore 287994 Tiong Bahru Plaza 302 Tiong Bahru Road # 01-43 Tiong Bahru Plaza Singapore 168732 Marriott Hotel 320 Orchard Road Ground Floor Tang Plaza Singapore 238865 Approximate Gross Area Description (sq ft) 753 Retail Outlet Commencement of Tenancy 1 July 2000 Lessor BCH Retail Investment Pte Ltd

980

Retail Outlet

8 December 2000

Novena Square Investments Ltd and Novena Square Development Ltd Bermuda Trust (Singapore) Limited c/o SingMall Property Trust Orchard 290 Ltd

1,116

Retail Outlet

15 December 2000

1,615

Retail Outlet

15 January 2001

1,302

Retail Outlet

7 April 2001

Jurong Point Realty Limited

1,113

Retail Outlet

15 July 2001

Midpoint Properties Limited

1,593

Retail Outlet

16 September 2001

Peranakan Place Complex Pte Ltd Turf City Pte Ltd

1,572

Retail Outlet

16 November 2001

958

Retail Outlet

3 January 2002

ARMF (TBP) Private Limited

729

Retail Outlet

1 February 2002

Tang Choon Keng Realty Pte Ltd

61

Location Capitol Building 11 Stamford Road # 01-05/06/K2 Capitol Building Singapore 178884 Parkway Parade 80 Marine Parade Road # B1-47/48 Parkway Parade Singapore 449269 Parkway Parade 80 Marine Parade Road # B1-47/48 Parkway Parade Singapore 449269 Causeway Point 1 Woodlands Square # 01-38 Causeway Point Singapore 738099 Toa Payoh 530 Lorong 6 Toa Payoh # 01-04 HDB Hub Singapore 310530 Tampines Mall 4 Tampines Central 5 # B1-K7 Tampines Mall Singapore 529510 CityLink 1 Rafes Link # B1-42 CityLink Mall Singapore 039393 Compass Point 1 Sengkang Square # B1-45/46 Compass Point Singapore 545078 West Mall 1 Bukit Batok Central Link # 01-34/35 West Mall Singapore 658713 Plaza Singapura 68 Orchard Road, # B2-25/26 Plaza Singapura Singapore 238839 Holland Village No. 3 Lorong Liput, # 01-01 Holland V Shopping Mall Singapore 277725

Approximate Gross Area Description (sq ft) 1,557 Retail Outlet

Commencement of Tenancy 1 March 2002

Lessor The Government of the Republic of Singapore

570

Retail Outlet

1 April 2002

Prime Asset Holdings Ltd

307

Retail Outlet (previously the common corridor linking the units) Retail Outlet

1 April 2002

Management Corporation Strata Title No. 1008

2,051

1 May 2002

Woodlands Complex Pte Ltd

969

Retail Outlet

1 April 2002

Housing Development Board

1,087

Retail Outlet

1 June 2002

Bermuda Trust (Singapore) Limited as Trustee of Singmall Property Trust HKL (Esplanade) Pte Ltd

1,023

Retail Outlet

1 May 2002

775

Retail Outlet

1 August 2002

Nasidon Investments Pte Ltd

768

Retail Outlet

14 October 2002

Alprop Pte Ltd

904

Retail Outlet

8 December 2002

Plaza Singapura (Pte) Ltd

800

Retail Outlet

18 December 2002

Eng Tiong Realty Pte Ltd

62

Location The Majestic 80 Eu Tong Sen Street # 01-04 The Majestic Singapore 059810 Lot 1 21 Choa Chu Kang Avenue 4 # B1-10/11 Lot 1 Shoppers' Mall Singapore 689812 Wisma Atria 435, Orchard Road # B1-20/20A Wisma Atria Singapore 238877 * World Trade Centre 1 Maritime Square # 01-03/04 World Trade Centre Singapore 099253 Rafes Square (Shanghai) 728, Fuzhou Road # 01-18/19A Rafes Square, Shanghai PRC

Approximate Gross Area Description (sq ft) 743 Retail Outlet

Commencement of Tenancy 19 March 2003

Lessor Cathay Properties Pte Ltd

1,389

Retail Outlet

15 June 2003

Isrich Properties Pte Ltd

700

Retail Outlet

1 April 2003

Aspinden Holdings Limited

957

Retail Outlet

Immediately after completion of tting out period

The HarbourFront Pte Ltd

1,184

Retail Outlet

1 October 2003

Shanghai Hua Qing Real Estate Development Co Ltd

# 05-01/06

171 Kampong Ampat KA FoodLink Singapore 368330

25,974

Head Ofce/ Central Kitchen

1 October 20011 November 2002 (depending on specic unit) 26 November 2000

JTC Corporation

# 02-04

125 Meyer Road Singapore 437936

1,582

Apartment

Katherine Lee Lih Leng Orchard 290 Ltd

* Paragon 290 Orchard Road # B1-03/04/05/06 Paragon Singapore 238859

*

6,790

Restaurant

Completion of tting out period or commencement of business whichever is earlier

The addresses are provisional as the premises are still currently under construction.

The abovementioned leases are for terms of between three to six years.

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PROSPECTS AND FUTURE PLANS

INDUSTRY OUTLOOK The food and beverage industry in Singapore is competitive and fragmented with relatively low barriers of entry. Bakeries are continuously reinventing their product offerings, competing for choice locations and offering value for money products to stay in business. Besides focusing on these common factors and in order to differentiate ourselves from our competitors, we concentrate on creating a novel ``bread-shopping'' experience for our customers. As the average Singaporean continues to become more sophisticated in his or her gastronomic demands, we endeavour to meet this demand by regularly introducing new items on our shelves. Further, we recognise that increasingly, customers are not only attracted to a product, but to a lifestyle that the product portrays. The layout of each retail outlet is designed to provide an urbane shopping environment for our customers. The names given to our products are targeted at revolutionising the mundane buying of bread into a trendy lifestyle choice as well. Following the war in Iraq and the outbreak of Severe Acute Respiratory Syndrome (``SARS'') in the region, both our sales and protability have been affected. We are likely to experience a decline in our prots for the current nancial year. At present, it is not clear as to the extent of the impact of these two events on the general economic conditions and on the extent of decline in our sales and protability for the current nancial year. If the unfavourable economic conditions persist for a longer period, our sales and protability for the current nancial year will be adversely affected and the decline in our sales and prots may be signicant. However, our Directors are of the opinion that based on our assessment of the possible adverse impact on our sales and protability, we have sufcient resources to ensure that our business remains viable. OUR FUTURE PLANS We believe that we are well-positioned to grow our BreadTalk brand through several channels simultaneously, specically by way of increasing our advertising activities and expanding the number of retail outlets locally and overseas through direct investments, joint ventures or franchising. Overseas Expansion We intend to expand to overseas markets through direct investment, joint ventures or franchising. In overseas markets where our management is more conversant with the business risks of the country, we will consider setting up outlets on our own or with a suitable joint venture partner. We intend to set up operations and open retail outlets on our own in Shanghai, PRC. To that end, we have entered into a lease agreement for our rst retail outlet. We will be making the necessary applications for the relevant licences and governmental approvals, and will commence preparations for the setting up of the operations of this retail outlet in June 2003. We also believe that our BreadTalk concept has the potential to expand to overseas markets through franchising. In 2001 and 2002, we have received invitations from interested parties to franchise our concept in countries such as Malaysia, Hong Kong Special Administrative Region, Australia and the United States of America. We have entered into a master franchise agreement covering the Indonesian market in February 2003 and our franchisee has opened our rst franchise outlet in April 2003 in Jakarta. Our Indonesian franchisee intends to open another franchise outlet in Jakarta in the second half of 2003. We have plans to franchise BreadTalk to certain other countries in Asia by end of 2003. We intend to use approximately $3.0 million of the net proceeds to implement our overseas expansion plans as mentioned above.

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Growth of Retail Outlets We expect our retail outlets in Singapore to continue to account for a signicant portion of our revenue and prots. Our expansion plans in terms of setting up new retail outlets will depend on the availability of our cash ow and human resources. We also intend to increase the number of new retail outlets on new sites that become available and to further raise our brand prole. We will continue to focus on locating our retail outlets where there is a high ow of human trafc. For the remainder of 2003, we intend to open additional two to three retail outlets and $1.0 million of the net proceeds from the Invitation will be used to fund the capital expenditure for the new retail outlets. Corporate Sales Currently the contribution from our corporate sales is insignicant. With the increase in our production capacity, we aim to further establish our presence in the corporate sales market. We are constantly evaluating the feasibility of supplying our products to potential corporate customers. Diversication Further, we intend to diversify into other food and beverage businesses. We have plans to open a restaurant serving Chinese delicacies such as ``Xiao Long Bao'', a type of dumpling. BTPL will enter into a joint venture agreement with TDTF and an independent third party to set up the restaurant and Taster Food has been set up for this purpose. The restaurant is expected to commence operations by end 2003. ``Din Tai Fung'' is a well-established restaurant which has been in operation for more than 20 years in Taiwan Republic of China. Its specialty items include ``Xiao Long Bao'', noodles and chicken soup. There are ``Din Tai Fung'' restaurants in Shanghai, PRC, Japan, Hong Kong Special Administrative Region and the United States of America. Taster Food, our 70% owned subsidiary, will enter into a franchise agreement with TDTF pursuant to which it will obtain the rights to use the ``Din Tai Fung'' brand and obtain training for our staff and advice for the setting up of the operations. Taster Food will pay an initial base franchise fee and a monthly royalty fee computed based on a percentage of the restaurant's gross turnover. We expect the overall investment for this restaurant to be approximately $2.3 million of which our Group will contribute approximately $1.6 million, which is to be funded internally.

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DIRECTORS, MANAGEMENT AND STAFF

MANAGEMENT REPORTING STRUCTURE The following chart shows our management reporting structure:

Board of Directors

Managing Director George Quek

Executive Director Katherine Lee

Finance Manager Chung Pit Wah

Group General Manager Frankie Quek

General Manager, Regional (Local Operations) Koh Chee Song

General Manager, Regional (Overseas Franchising Operations) Tay Kiah Cheng

DIRECTORS Our Board of Directors is entrusted with the responsibility for the overall management of our Group. The particulars of our Directors are as follows: Name George Quek Meng Tong Katherine Lee Lih Leng Chen Kuo Hua Age 46 38 53 Address 67, Poh Huat Crescent Singapore 546900 67, Poh Huat Crescent Singapore 546900 No. 2, Sinseng S. Rd Sec. 1 Lane 12 Taipei, Taiwan Republic of China 16-D, Chatsworth Road Singapore 249778 17, Lorong Kismis, # 01-10 Kismis View Singapore 598010 Current Occupation Managing Director Executive Director Chairman and Chief Executive Ofcer, Shanghai Xiao Hu Foods Co. Ltd Consultant, Drew & Napier LLC Chief Executive Ofcer, Star Investment Consulting Pte Ltd

Ong Kian Min Lai Hock Meng

42 47

66

George Quek and Katherine Lee are husband and wife. Save as disclosed above, there are no other relationships among our Directors. The business and working experience of our Directors are as follows: George Quek Meng Tong, 46, is currently our Managing Director. He is responsible for the overall planning and development of our Group locally and globally. He has been instrumental in establishing the BreadTalk brand and concept. He has 20 years of experience in the food and beverage industry. Prior to the setting up of our Group, he was the managing director of Topwin Singapore Pte Ltd, which manages food courts in Singapore from 1993 to 2000. He is currently a non-executive director of Food Junction Holdings Limited. He also set up eight food courts in Shanghai and one food court in Beijing, PRC between 1997 and 2002. He holds a honorary Doctorate of Philosophy in Business Administration from Wisconsin International University, in the United States of America. He was the winner of Entrepreneur of the Year 2002 jointly organised by the ASME and the Rotary Club of Singapore and was also nalist of Entrepreneur of the Year 2002 organised by Ernst & Young. Katherine Lee Lih Leng, 38, is currently our Executive Director. Her responsibilities include assisting George Quek in overseeing the daily operations of the Group. She is also currently the head of our Group's Research and Development Department. She was previously responsible for, and had assisted in the setting up of our central kitchen. She has more than 10 years of experience in the food and beverage industry. From 1993 till 1999, she was the nance director of Topwin Singapore Pte Ltd, which manages food courts in Singapore. In addition to her responsibilities in the nance department, she also assisted in overseeing the operations of the food courts. Prior to 1993, she was in charge of the human resource and operations of more than 20 food and beverage outlets in Taiwan Republic of China for approximately six years. She has attended and completed two professional courses on baking techniques at the Liu Jung-Hwa Baking Cuisine Training Class while she was in Taiwan Republic of China. Chen Kuo Hua, 53, is our Non-Executive Director. He is currently the chairman and chief executive ofcer of Shanghai Xiao Hu Foods Co. Ltd. He is also a consultant with Shanghai Da Shi Dai Foods Co. Ltd. He has had more than 20 years of experience in providing consultation and strategic planning to business establishments in the food and beverage industry in various countries such as Hong Kong Special Administrative Region, Taiwan Republic of China, PRC and Singapore. From 1996 to 1999, he was the general manager of Shanghai Da Shi Dai Foods Co. Ltd and was in charge of the operations of the company. Prior to that from 1994 to 1999, he was a consultant with Topwin Singapore Pte Ltd, which manages food courts in Singapore, and advised and assisted the company in the setting up of food courts and the marketing of the company. He was also the chief strategic planner with Shanghai D-Mall Co. Ltd from 1992 to 1996 and was responsible for setting up and overseeing the daily operations of a shopping mall in Shanghai, PRC. He holds a degree in Drama and Mass Communication from the Chinese Culture University, Taipei, Taiwan Republic of China. Ong Kian Min, 42, is our Independent Director. He is currently a consultant with Drew & Napier LLC, a Singapore law rm. He was called to the Bar of England and Wales in 1988 and to the Singapore Bar the following year. He has been a practising advocate and solicitor of the Supreme Court of Singapore since 1989. He is also an independent director and chairman of the audit committee of a number of public companies listed on the Singapore Stock Exchange. He has been a Member of Parliament since January 1997 and serves as vice-chairman of the Government Parliamentary Committee (GPC) for Transport and as a member of the GPC for Finance, Trade and Industry. He was awarded the President Scholarship and Singapore Police Force Scholarship in 1979. He holds a Bachelor of Law (Honours) external degree from the University of London in England and a Bachelor of Science (Honours) degree from the Imperial College of Science & Technology in England. It is envisaged that the Group will continue to engage legal services rendered by Drew & Napier LLC. For concerns involving interested person transactions, please refer to the ``Ongoing Interested Person Transactions'' section on pages 85 to 86 of the Prospectus.

67

Lai Hock Meng, 47, is our Independent Director. He is the founder and the chief executive ofcer of Star Investment Consulting Pte Ltd, as well as the chairman of Star Acquisition Holdings Pte Ltd. His work entails the provision of consultancy services in private equity investments and general corporate advisory work. Lai Hock Meng has accumulated a wealth of experience in both the public and private nance sectors, having worked for more than 15 years in various nancial institutions, including the MAS. Within the private sector, he had attained senior management positions in specialised departments such as treasury management, corporate nance, and investment research. He currently holds and has also held directorships, in numerous private companies. He had obtained a Bachelor of Arts (Honours) and a Master of Arts from the University of Cambridge in England, majoring in Economics. He is also an accredited Chartered Financial Analyst with the Association of Investment Management and Research of the United States of America. MANAGEMENT The day-to-day operations of our Company are entrusted to our Executive Ofcers whose particulars are as follows: Name Frankie Quek Swee Heng Age 36 Address Blk 501 Pasir Ris Street 52 # 09-219 Singapore 510501 Blk 658 Choa Chu Kang Crescent # 10-49 Singapore 680658 Blk 134 Bishan Street 12 # 09-161 Singapore 570134 Blk 227 Pasir Ris Street 21 # 13-96 Singapore 510227 Current Occupation Group General Manager

Chung Pit Wah

30

Finance Manager

Koh Chee Song

49

General Manager, Regional (Local Operations) General Manager, Regional (Overseas Franchising Operations)

Tay Kiah Cheng

36

Frankie Quek is the brother of our Managing Director, George Quek and the brother-in-law of our Executive Director, Katherine Lee. Save as disclosed above and on page 45 of this Prospectus, none of our Directors and Executive Ofcers is related to one another or to the Substantial Shareholders of our Company. Further information on our Directors and our Executive Ofcers is set out on pages 117 to 121 of this Prospectus under the ``General and Statutory Information'' section. The business and working experience of our Executive Ofcers are as follows: Frankie Quek Swee Heng, 36, is currently our Group General Manager. Prior to his promotion in January 2003, he was our assistant general manager in 2001 and general manager in 2002. At present, he is assisting our Managing Director in overseeing the growth and expansion of the Company, as well as the daily operations of our Group. Prior to joining our Group, from 1993 to 1999, he held various positions in Topwin Singapore Pte Ltd, which manages food courts in Singapore. He started out as an assistant branch manager overseeing the daily operations of Junction 8 Food Junction. He was promoted to a branch manager in 1994 and was responsible for the setting up of a food court in Rafes City. He subsequently became an area operations manager in 1997 and was overseeing the operations of several food courts. From 1998 till 1999, he concurrently held the post of personnel manager and business development manager. As a personnel manager, he was responsible for human resource matters. His responsibilities as a business development manager include being responsible for the advertising and promotional activities, building and maintaining business relationships with the landlords and identifying locations for potential food court outlets and other food business. From 1999 to 2001, he was an associate in the residential properties division with the Dennis Wee Group before he was promoted to associate manager in 2001. He holds an honorary Master of Business Administration from the American University of Hawaii in the United States of America.

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Chung Pit Wah, 30, is our Finance Manager. She leads the nance department in their daily operations, which includes monitoring of the Company's cash ow, budgeting and forecasting. She has approximately 10 years' experience in nance and accounting. Prior to joining us in December 2001, she joined the accounts department of IMM Ltd from 1993 to 1997. From September 1997 to November 2001, she was working at Thiam Joo Pte Ltd as an accountant. She is a member of the Association of Chartered Certied Accountants and a non-practising Certied Public Accountant of the Institute of Certied Public Accountants of Singapore. Koh Chee Song, 49, is our General Manager, Regional and is currently assisting our Group General Manager in overseeing the daily operations of our retail outlets in Singapore. Prior to joining us in 2002, he was a retail director of Virgin Mobile (Singapore) Pte Ltd where he was responsible for the setting up and operations of the retail outlets of the company. From 1999 to 2001, he was a manager in the residential and commercial department of DTZ Debenham Tie Leung Singapore and was responsible for marketing properties in Singapore and the PRC. He was also a consultant on a project basis with De Max Design Pte Ltd. From 1993 to 1998, he was a deputy general manager at Hwa Kay Thai Singapore (Pte) Ltd where he was responsible for overseeing the distribution business and the operations of retail outlets and the warehouse in Singapore. He has more than 20 years of experience in retail and commercial marketing around the region. He holds diplomas in marketing from the Chartered Institute of Marketing, United Kingdom and the Marketing Institute of Singapore. Tay Kiah Cheng, 36, is our General Manager, Regional and is responsible for implementing our franchising plans. He supervises our overseas franchises and the setting up of our franchisees' outlets. He joined us in 2000 but left our Group in 2002 for approximately nine months to pursue his personal interests. He rejoined our Group in March 2003. Prior to joining us, he held various positions in Topwin Singapore Pte Ltd which manages the food courts in Singapore from 1995 to 2000. He was a branch manager from 1995 till 1998 and was responsible for overseeing the daily operations of a food court. From 1998 to 1999, he was an area operations manager overseeing the operations of several food courts. In 2000, he was a business development manager and was responsible for building and maintaining business relationships with the landlords and identifying locations for potential food court outlets and other food business. From 1993 to 1994, he was a manager with Solosa Sound Service and was based in Penang, Malaysia and Beijing, PRC to assist in the setting up of entertainment clubs. He holds an 'O' Levels certicate. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION The remuneration of our Directors (including directors' fees) and top ve executives (in terms of compensation) and in remuneration bands paid for FY2001 and FY2002 and expected to be paid for the current nancial year are as follows: (i) Aggregate Directors' remuneration ($'000)
FY2001 Executive Directors 318 NonExecutive Directors Executive Directors 571 FY2002 NonExecutive Directors FY2003 (estimated) Executive Directors 471 NonExecutive Directors 67

Total 318

Total 571

Total 538

(ii)

Directors in each remuneration band for FY2001

Directors George Quek Meng Tong Katherine Lee Lih Leng Chen Kuo Hua* Ong Kian Min* Lai Hock Meng* Up to $250,000 @ @

* The Non-Executive Director and Independent Directors had not yet been appointed in FY2001.

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(iii)

Top ve executives (in terms of compensation) in each remuneration band for FY2001
Executives Frankie Quek Swee Heng Jason Ng Kok Soon Lee Henry Tan Teng Beng Tay Kiah Cheng Up to $250,000 @ @ @ @ @

For information pertaining to the job responsibilities of Jason Ng Kok Soon and Lee Henry, please refer to the section titled ``Remuneration of Executive Ofcers and other employees who are related to our Directors and Substantial Shareholders'' on page 71 of this Prospectus. Tan Teng Beng is currently the Manager of our central kitchen. He is responsible for the daily operations of our central kitchen. (iv) Directors in each remuneration band for FY2002
Directors George Quek Meng Tong Katherine Lee Lih Leng Chen Kuo Hua* Ong Kian Min* Lai Hock Meng* Up to $250,000 @ $250,001 to $500,000 @

* The Non-Executive Director and Independent Directors had not yet been appointed in FY2002.

(v)

Top ve executives (in terms of compensation) in each remuneration band for FY2002
Executives Frankie Quek Swee Heng Jason Ng Kok Soon Lee Henry Tan Teng Beng Tay Kiah Cheng Up to $250,000 @ @ @ @ @

(vi)

Directors in each remuneration band for FY2003

Directors George Quek Meng Tong Katherine Lee Lih Leng Chen Kuo Hua Ong Kian Min Lai Hock Meng Up to $250,000 @ @ @ @ $250,001 to $500,000 @

(vii) Top ve executives (in terms of compensation) in each remuneration band for FY2003
Executives Frankie Quek Swee Heng Koh Chee Song Lee Henry Tan Teng Beng Tay Kiah Cheng Up to $250,000 @ @ @ @ @

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The above estimated remuneration for FY2003 excludes any amounts to be paid out pursuant to bonuses, performance-related bonuses and any prot-sharing arrangements in respect of FY2003. We have not set aside or accrued any amounts to provide for pension, retirement or similar benets for any of our Directors, Executive Ofcers or staff. Remuneration of Executive Ofcers and other employees who are related to our Directors and Substantial Shareholders As at the date of this Prospectus, four of our employees, Frankie Quek Swee Heng, Kok Swee Tiong, Lee Henry and Jason Ng Kok Soon are related to our Directors and our Substantial Shareholders. Frankie Quek Swee Heng and Kok Swee Tiong, are the brothers of our Managing Director and Substantial Shareholder, George Quek and the brothers-in-law of our Executive Director and Substantial Shareholder, Katherine Lee. Lee Henry is the brother of our Executive Director and Substantial Shareholder, Katherine Lee, and the brother-in-law of our Managing Director and Substantial Shareholder, George Quek. Jason Ng Kok Soon is the cousin of our Executive Director and Substantial Shareholder, Katherine Lee. Frankie Quek Swee Heng is our Group General Manager. Kok Swee Tiong is our Branch Manager and is responsible for the day-to-day operations of a retail outlet. Lee Henry is our Deputy General Manager and his scope of responsibility includes assisting our Executive Ofcer, Tay Kiah Cheng, in the implementation of our franchising plans. Jason Ng Kok Soon is our Training Manager, and is in charge of implementing our training programmes for our staff, including production heads, branch managers and franchisees. Lee Lih Pheng was employed by our Group between October 2000 to June 2001 as a baker at one of our retail outlets. She is the sister of our Executive Director and Substantial Shareholder, Katherine Lee, and the sister-in-law of our Managing Director and Substantial Shareholder, George Quek. The total amount of remuneration paid to her was approximately $14,000. For the last two nancial years, the aggregate remuneration (including CPF contributions thereon and benets) of these employees who are related to our Directors and Substantial Shareholders is set out below:
($'000) Remuneration paid FY2001 216 FY2002 493

The total remuneration of the Director and the above employees who are related to our Directors and Substantial Shareholders for FY2001 and FY2002 amounted to approximately $534,000 and $1.1 million respectively. This represented 20.5% and 23.3% of our prot before taxation in FY2001 and FY2002 respectively. The basis of determining the remuneration of these related employees is the same as the basis for determining the remuneration of other unrelated employees. The total remuneration of employees who are related to our Directors and Substantial Shareholders shall be subject to the review and approval of the Remuneration Committee to ensure that their remuneration packages are in line with our Group's staff remuneration guidelines, and are commensurate with their respective job scopes and levels of responsibilities. The total remuneration paid to our Directors and Substantial Shareholders will be disclosed in our annual reports. Save as disclosed above and in the section entitled ``Shareholders'' on page 45 of this Prospectus, none of the Executive Ofcers or other employees mentioned above is related to each other or to any Director or Substantial Shareholder.

71

STAFF Our headcount as at the end of each of the past three nancial years were 61, 226 and 434 respectively. Our headcount has increased over the past three nancial years as our business expanded and the number of our retail outlets increased. The functional distribution of our employees as at the end of each of the past three nancial years ended 31 December is as follows:
Functions Management and Administration Retail Outlets Production (central kitchen) FY2000 6 55 61 FY2001 23 167 36 226 FY2002 39 335 60 434

SERVICE AGREEMENT On 30 April 2003, our Company entered into a service agreement (``Service Agreement'') with George Quek, for an initial period of three years and renewable thereafter unless otherwise terminated by either party giving not less than six months' notice in writing, or in lieu of such notice or part thereof, by payment of an amount equal to six months' salary or part thereof in lieu of short notice. Under the terms of the Service Agreement, George Quek will be paid a monthly salary of $18,000. He shall, in respect of each nancial year, be entitled to a wage supplement which is equivalent to one month's salary. Under the Service Agreement, George Quek shall be entitled to the use of a car and a golf club membership with subscriptions paid for by our Company. In the event that the net prot before taxation (excluding extraordinary items and before deducting the incentive bonus) of our Group (``PBT'') is less than or equal to $5.0 million, George Quek shall be paid an incentive bonus equivalent to 3% of the PBT based on the audited accounts of that nancial year. In the event that the PBT exceeds $5.0 million, George Quek shall be paid an incentive bonus equivalent to 3% of the PBT for the amount of PBT up to $5.0 million and 4% of any amount of PBT in excess of $5.0 million.
PBT Less than or equal to $5.0 million Greater than $5.0 million
Note: (1) For amounts in excess of $5.0 million.

Entitlement (%) 3 4(1)

The Board of Directors will review George Quek's remuneration package annually and may make additional payments, allowances or benets to George Quek at its discretion. The Service Agreement does not provide for any benets upon termination of employment. In addition, George Quek has undertaken (amongst other covenants) with the Company under the Service Agreement that except for with the consent in writing of the Company for the period of three years after the cessation of his employment of the Company: (i) he will not either on his own account or in conjunction with or on behalf of any person, firm or company carry on or be engaged, concerned or interested directly or indirectly in, within Singapore or any country where the Group carries on business, whether as shareholder, director, employee, or otherwise, any business carried on by the Group prior to the date hereof; he will not either on his own account or in conjunction with or on behalf of any other person, firm or company, solicit or entice away or attempt to solicit or entice away from the Group any person who shall at any time prior to the date hereof have been a customer, client, agent or correspondent of the Group or in the habit of dealing with the Group;

(ii)

72

(iii)

he will not either on his own account or in conjunction with or on behalf of any other person, firm or company, solicit or entice away or attempt to solicit or entice away from the Group any person who is an officer, manager or employee of the Group whether or not such person would commit a breach of his contract of employment by reason of leaving such employment; and he will not counsel, procure or otherwise assist any person to do any of the acts referred to above.

(iv)

George Quek further agrees to the following upon the cessation of his employment with the Company: (i) he will not at any time hereafter make use of or disclose or divulge to any third party any information relating to the Group other than any information properly available to the public or disclosed or divulged pursuant to an order of a court of competent jurisdiction; and he will not at any time hereafter in relation to any trade, business or company use a name including the words ``BreadTalk'' or `` '' in such a way as to be capable of being or likely to be confused with the name of the Company and shall use all reasonable endeavours to procure that no such name shall be used by any person, rm or company which he is connected with.

(ii)

Had the Service Agreement been in effect for FY2002, the aggregate remuneration (including CPF contributions, bonus, prot sharing and benets-in-kind) payable to George Quek would have been $454,000 (approximately 10.2% of prot before taxation) instead of $328,000 (approximately 7.2% of prot before taxation) and the prot before taxation of our Group for FY2002 would have been $4.4 million instead of $4.6 million. Save as disclosed above, there are no other existing or proposed service agreements between our Company or our subsidiaries and to any of our Directors and Executive Ofcers.

73

THE BREADTALK GROUP LIMITED EMPLOYEES' SHARE OPTION SCHEME

In conjunction with our listing on the SGX-ST, we have adopted a share option scheme known as the ``BreadTalk Group Limited Employees' Share Option Scheme'' which was approved at an Extraordinary General Meeting of our shareholders held on 30 April 2003. The rules of our Share Option Scheme are set out in Annex C of this Prospectus. These rules comply with the requirements set out in the SGX-ST Listing Manual and the Companies Act. Capitalised terms used herein bear the same meanings as dened in Annex C of this Prospectus. The purpose of our Share Option Scheme is to provide an opportunity for Directors (including NonExecutive Directors) and employees of the Group to participate in the equity of our Company so as to inspire them to greater dedication, loyalty and higher standards of performance, and to give recognition to those who have contributed signicantly to the growth and performance of the Company and/or the Group. Our Share Option Scheme is proposed on the basis that it is important to recognise the fact that the contributions of our employees and Directors are important to the success and continued well-being of the Group. By implementing our Share Option Scheme, we will be able to give our employees and Directors a direct interest in the Company and will also help to achieve the following positive objectives: (i) (ii) (iii) (iv) (v) to motivate Participants to optimise performance standards and efficiency and to maintain a high level of contribution; to retain key Employees whose contributions are important to the long term growth and prosperity of the Group; to attain harmonious employer/employee relations as well as the strengthening of working relationships with the Group's close business associates; to align the interest of Employees and other Participants with the interests of the Shareholders; and to develop a participatory style of management which promotes greater commitment and dedication amongst the employees and to instill loyalty and a greater sense of identication with the long term prosperity of the Group.

SUMMARY OF THE RULES The following is a summary of the Rules of our Share Option Scheme: Eligibility Full-time Employees of our Group, Executive Directors and Non-Executive Directors are eligible to participate in our Share Option Scheme. Employees who are Controlling Shareholders and their Associates are also eligible to participate in our Share Option Scheme. The Participant must not be an undischarged bankrupt and must not have entered into a composition with his creditors. However, participation in the Share Option Scheme and the specic grant of options to a Controlling Shareholder or their Associates is subject to the approval of an independent Shareholder in separate resolutions for each person. The relevant Controlling Shareholder or any of his Associates is required to abstain from voting on, and (in the case where the Controlling Shareholder is also a Director) refrain from making any recommendation on the resolutions in relation to the Share Option Scheme. As at the date of this Prospectus, the Controlling Shareholders and their Associates are George Quek, Katherine Lee, Frankie Quek Swee Heng, Kok Swee Tiong, and Lee Henry.

74

Administration Our Share Option Scheme will be administered by our Remuneration Committee in its sole and absolute discretion with such powers and duties as are conferred on it by the Board. Our Remuneration Committee will determine the terms and conditions of the grant of the scheme options, including the vesting periods of the Options (which may be above the minimum vesting periods prescribed by the SGX-ST), the maximum number of Scheme Shares in respect of which Options may be offered to an eligible Participant and the price at which the Options may be exercised. The Directors who are in the Remuneration Committee may also participate in our Share Option Scheme but under the Rules of our Share Option Scheme, a Participant who is a member of the Remuneration Committee shall not be involved in its deliberation in respect of Options to be granted to him. Limitations on our Share Option Scheme Size The total number of Scheme Shares to be issued will not exceed 15% of the total issued share capital of our Company from time to time. Based on the post-Invitation issued share capital of 162,980,000 Shares, this 15% will be equivalent to approximately 24,447,000 Scheme Shares. As at the date of this Prospectus, 16 persons are entitled to participate in our Share Option Scheme. However, the Scheme Shares available will vary depending on the issued share capital of our Company at the relevant time. Our 15% Share Option Scheme size is intended to accommodate the potential pool of Participants arising from our base of eligible Participants. We also hope that with the signicant portion of our issued share capital that has been set aside for our Share Option Scheme, our Employees and Directors will recognise that we are making a good effort to reward them for their invaluable contributions to our Company by allowing them greater opportunities to participate in our equity. We are of the view that the size of our Share Option Scheme is reasonable, taking into account the share capital base of our Company, the contributions by our Employees and Directors and the potential number of Employees as our business expands. The implementation of our Share Option Scheme with the maximum amount of shares currently allowed under the rules of the SGX-ST Listing Manual will enable us to maintain exibility and remain competitive in the industry. Entitlement Subject to the size of our Share Option Scheme as described above and any requirement of the SGXST, the aggregate number of Scheme Shares in respect of which Options may be offered for subscription shall be determined at the discretion of our Remuneration Committee which will take into consideration criteria such as rank, past performance, years of service and potential for future development of the Participant, provided always (i) the aggregate number of Scheme Shares which may be offered by way of grant of Options to Participants who are Controlling Shareholders or their Associates shall not exceed 25% of the total number of Scheme Shares available under this Scheme, and such aggregate number of shares which may be offered to the Controlling Shareholders or their Associates have been approved by the independent Shareholders of our Company in a separate resolution; and any Options to be granted to any Participants who are Controlling Shareholders or their Associates, which, together with Options already granted to that Participant under our Share Option Scheme represent 10% or more of the aggregate number of Scheme Shares available to Participants who are Controlling Shareholders or their Associates collectively, shall be approved by independent Shareholders of our Company in a separate resolution for each such Participant who is a Controlling Shareholder or is an Associate of a Controlling Shareholder.

(ii)

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Grant of Options The Remuneration Committee may grant Options at any time during the period when our Share Option Scheme is in force. However, in the event that an announcement on any matter of an exceptional nature involving unpublished price sensitive information is imminent, the Remuneration Committee may only grant Options on or after the second Market Day from the date on which the announcement is released. Acceptance of Options Options are personal to our Directors and Employees to whom they are granted and shall not be transferred, charged, pledged or otherwise disposed of or encumbered in whole or in part or in any way whatsoever save as provided for in the rules of our Share Option Scheme. All offers made to our Directors and Employees, if not accepted by the closing date (which shall not exceed 30 days from the date of the offer) shall lapse and shall be null and void and of no effect. Upon acceptance of the offer, the Participant must pay to us a consideration of S$1.00. Exercise of Options A Market Price Option can be exercised during the period commencing after the rst anniversary of the Offering Date and expiring on the tenth anniversary of such Offering Date. However, a Market Price Option granted to a Non-Executive Director will expire on the fth anniversary of such Offering Date. An Incentive Option can be exercised during the period commencing after the second anniversary of the Offering Date and expiring on the tenth anniversary of such Offering Date. However, an Incentive Option granted to a Participant not holding a salaried ofce or employment in our Group will expire on the fth anniversary of such Offering Date. Options can be exercised in whole or in part. Any Option exercised in part only shall continue to be exercisable until such time as it lapses in accordance with our Share Option Scheme. Exercise Price Under our Share Option Scheme, the Exercise Price of the Options granted will be determined by our Remuneration Committee in their absolute discretion. Our Remuneration Committee may grant Incentive Options to the Participants at up to 20% discount to the Market Price of the Scheme Shares (determined by reference to the daily ofcial list or other publication published by the SGXST for the ve consecutive trading days immediately preceding the date of offer of that Option, rounded up to the nearest whole cent in the event of fractional prices) and if the Exercise Price so determined is less than the par value of the Share, the par value will be taken to be the Exercise Price. Incentive Options will only be granted to deserving executives and Employees whose performance has been consistently good and/or whose future contributions to our Group will be invaluable. The ability to offer Incentive Options at Exercise Prices up to 20% discount to the Market Price of the Scheme Shares will operate as a means to recognise the performance of Participants as well as to motivate them to continue to excel while encouraging them to focus on improving the protability and returns of our Group to a level that benets all Shareholders when these are eventually reected through an appreciation of our Share price. Incentive Options would be perceived in a more positive light by the Participants, inspiring them to work hard and produce results in order to be granted Incentive Options as only employees who have made outstanding contributions to the success and development of our Group will be offered Incentive Options. In determining which Participant should be granted Incentive Options and the quantum of the discount, the Remuneration Committee shall be at liberty to take into consideration such criteria as they deem t, including factors such as (i) the performance of our Group, taking into account nancial considerations such as our Group's sales/revenue, prot and performance targets, (ii) the performance of the individual Participant, his effectiveness and contribution to the success and development of our Group and (iii) the potential for future contribution by the Participant to the success and development of our Group.

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In addition, it is envisaged that we may consider granting Incentive Options at up to 20% discount to the Market Price of the Scheme Shares under circumstances including, but not limited to, the following: (i) (ii) where, due to speculative forces in the stock market resulting in an overrun of the market, the Market Price of the Shares at the time of the grant of Incentive Options; to enable our Group to offer competitive remuneration packages in the event that the practice of granting options with exercise prices that have a discount element becomes a general market norm. As share options become more significant components of executive remuneration packages, a discretion to grant options with discounted prices will provide our Group with a means to maintain the competitiveness of our Group compensation strategy; and/or where our Group needs to provide more compelling motivation for specic business units to improve their performance, grants of share options with discounted exercise prices will help to align the interest of Employees to those of Shareholders by encouraging them to focus more on protability and returns of our Group above a certain level that will benet all Shareholders when these are eventually reected through an appreciation of our Share price, as such options granted at a discount would be perceived more positively by the employees who receive such options.

(iii)

The Remuneration Committee will determine on a case-by-case basis whether a discount will be given, and the quantum of the discount, taking into consideration the objective that is desired to be achieved by our Group and the prevailing market conditions. As the actual discount given will depend on the relevant circumstances, the extent of the discount may vary from one case to another, subject to a maximum discount of 20% of the Market Price of a Scheme Share, as described above. Lapse of Options (i) An Option shall, to the extent that it is unexercised, lapse: (a) (b) (c) (d) upon the bankruptcy of the Participant or the occurrence of any other event which results in his being deprived of the legal or beneficial ownership of such Option; or in the event of misconduct on the part of the Participant, as determined by the Remuneration Committee in its absolute discretion; or subject to paragraph (ii), upon the Participant ceasing to be in full-time employment of the Group, for any reason whatsoever; or the event that the Remuneration Committee shall, at its sole and absolute discretion, deem it appropriate that such Option shall lapse on the grounds that any of the objectives of the Share Option Scheme have not been met; or in the event that our Company is liquidated or wound-up prior to the acceptance of the Option.

(e) (ii)

Where a Participant who is an Executive Director ceases to be an Employee of the Group due to a change in control of the Board, he shall, be entitled to exercise in full all unexercised Options from the last date of employment with the Group until the end of the relevant Option Period.

Rights of Scheme Shares Scheme Shares allotted and issued upon the exercise of the Option shall rank pari passu in all respects with the then existing issued Shares in the capital of our Company except for any dividends, rights, allotments or other distributions, the record date of which is prior to the date of which such an option is exercised. For this purpose, ``record date'' means the date as at the close of business on which Shareholders must be registered in order to participate in any dividend, rights, allotments or other distributions, as the case may be.

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Duration of our Share Option Scheme Our Share Option Scheme shall continue in operation for a maximum duration of ten years commencing on 30 April 2003, the date on which our Share Option Scheme was adopted by our Company in an Extraordinary General Meeting. However, our Share Option Scheme may continue beyond the period above with the approval of the Shareholders in a general meeting by way of ordinary resolution and the relevant authorities. Our Share Option Scheme may also be terminated at any time by our Remuneration Committee or by resolution of our Shareholders at a general meeting subject to all other relevant approvals which may be required and if our Share Option Scheme is so terminated, no further Options shall be offered by our Company thereunder. Alteration of Capital If a variation in the issued ordinary share capital of our Company (whether by way of rights issue or capitalisation of profits or reserves, reduction of capital, or subdivision or consolidation or distribution of Shares or otherwise) shall take place: (a) (b) (c) the Exercise Price in respect of the Scheme Shares comprised in the Option to the extent unexercised; and/or the nominal value, class and/or number of Scheme Shares comprised in the Option to the extent unexercised and the rights attached thereto; and/or the nominal value, class and/or number of Scheme Shares in respect of which additional Options may be granted to Participants,

shall be adjusted by the Remuneration Committee in such manner as it may determine to be appropriate provided that written conrmation is given by the auditors that such adjustment is fair and reasonable. No adjustment of the Exercise Price shall be made which will result in the Scheme Shares issued in the exercise of the Option being issued at a discount to the nominal value of the Shares and if such adjustment provision has that result, the exercise price payable shall be the nominal amount of a Share. Upon any such adjustment being made, the Remuneration Committee shall notify the Participant in writing, informing him of the subscription price thereafter to be in effect and the number of Scheme Shares thereafter to be issued on the exercise of the Option. Any adjustment shall take effect upon such written notication being given. Modications or alterations to the Share Option Scheme The Share Option Scheme may be modied and/or altered from time to time by a resolution of our Remuneration Committee, subject to the prior approval of SGX-ST and such other regulatory authorities as may be necessary. However, no modication or alteration shall adversely affect the rights attached to Options granted except with the written consent of Participants who are entitled to not less than three-quarters in nominal amount of all our Shares which would be issued upon exercise in full of all outstanding Options held by Participants. No alteration shall be made to the particular rules of the Share Option Scheme to the advantage of the holders of the Options, except with the prior approval of Shareholders in a general meeting. Financial effects of the Share Option Scheme The Share Option Scheme will increase our issued share capital to the extent of the new Scheme Shares that will be issued and allotted pursuant to the exercise of Options.

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The grant of the Options will have no impact on our protability under the Statements of Accounting Standard in Singapore as no cash outlay would be expended by us at the time of grant of such Options as compared to the payment of cash bonuses. However, as the Shareholders may be aware, any Option granted to subscribe for new Scheme Shares (whether the Exercise Price is set at the Market Price or otherwise) have a fair value at the time of grant. The fair value of an Option is an estimate of the amount that a willing buyer would pay a willing seller for the option on the grant date. Options are granted to Participants at a nominal consideration of $1.00. Insofar as such Options are granted at a consideration that is less than their fair value at the time of grant, there will be a cost to our Company in that we will receive from the Participant upon the grant of the Option a consideration that is less than the fair value of the Option. As and when the Options are exercised, the cash ow will add to our NTA and our issued share capital base will grow. The effect of the issue of Scheme Shares upon the exercise of the Options on our NTA per Share is accretive if the exercise price is above the NTA per Share, but dilutive otherwise. Currently, the Singapore Statements of Accounting Standards is silent in relation to the recognition and measurement requirements for equity compensation benets granted to employees. However, if such costs to our Company, as described above, are to be recognised in our Company's accounts, such costs would be charged to our Company's prot and loss account at the time when the Options are granted. Our Company's prots would be reduced by the amount of such costs. The SGX-ST requirements While the Share Option Scheme is structured such that we have the discretion to make the appropriate allotments depending on the prevailing circumstances of our Group, the Share Option Scheme conforms with the requirements as set out in the Listing Manual of the SGX-ST for employee share option schemes. In-principle approval has been obtained from the SGX-ST for the listing and quotation of the Scheme Shares to be issued pursuant to the Share Option Scheme. This is not an indication of the merits of the Share Option Scheme or the Scheme Shares to be issued pursuant to the Share Option Scheme. The following details regarding the Share Option Scheme will be disclosed in our annual report: (i) (ii) the names of the Remuneration Committee administering the Share Option Scheme; the following details in respect of each Participant who is a Director, Controlling Shareholder, Associate of Controlling Shareholder or a person who received 5% or more of the total number of Options available under the Share Option Scheme: (a) (b) (c) (d) (e) (iii) (iv) name; the number of Options granted during the Financial Year in review; the aggregate number of Options granted since commencement of the Share Option Scheme up to the end of the financial year under review; the aggregate number of Options exercised since the commencement of the Share Option Scheme to the end of the financial year under review; and the aggregate number of Options outstanding as at the end of the Financial Year under review;

the number and proportion of Options granted at a discount during the Financial Year under review in respect of every 10% range, up to the maximum quantum of discount granted; and an appropriate negative statement that directors or employees of the parent company and its subsidiaries are not eligible to participate in the Share Option Scheme.

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Shareholders who are entitled to participate in the Share Option Scheme will abstain from voting on any resolution in relation to the Share Option Scheme, and they will not accept any nominations as proxies or otherwise for voting in respect of the aforesaid resolutions unless specic instructions have been given in the proxy instrument by the relevant Shareholder on how he wishes his votes to be cast for each resolution. Participation of Controlling Shareholders and their Associates It is the intention of our Company that Employees who are Controlling Shareholders or Associates of Controlling Shareholders be remunerated for their contributions on the same basis as Employees who are not Controlling Shareholders or their Associates. As the Share Option Scheme is intended to be part of a system of remuneration for Employees, our Company is of the view that Employees who are Controlling Shareholders or their Associates should not be unduly discriminated against by virtue only of their shareholding in the Company. Our Company is also of the view that the participation in the Share Option Scheme by Controlling Shareholders and their Associates will enhance their long term commitment to our Group as it will ensure that they will continue to have a stake in our Company even if they sell their Shares in our Company in the future thereby realising their capital gains. The participation of Employees who are Controlling Shareholders or Associates of Controlling Shareholders in the Share Option Scheme will provide our Company with an additional tool to craft a more balanced and innovative remuneration package that will link their total remuneration to the performance of our Group. For example, our Company may include Options (taking into account their intrinsic value) within the fee-based remuneration, or as an additional compensation in lieu of increasing the cash remuneration of the Controlling Shareholders or their Associates. The grant of Options to Controlling Shareholders or their Associates, who are our Employees, will act as an incentive for them to better their performance as the value of the Options will be best realized when the result of their performance correlates directly with the higher value of our Shares. Our Remuneration Committee, when deciding on the selection of any of the Controlling Shareholders or any of their Associates to participate in our Share Option Scheme, whether such Incentive Options are to be granted at a discount, the quantum of discount and the number of Scheme Shares to be offered to any of them, will take into consideration, amongst others, the factors mentioned above under ``Entitlement'' and ``Exercise Price''. Our Directors are of the view that the participation in the Share Option Scheme by the Controlling Shareholders and their Associates is in the best interests of the Company as such Controlling Shareholders and their Associates are able to set the direction of our Company, dene objectives and inuence the decisions made by our Company and are therefore in a position to contribute to the growth and prosperity of our Group. It is proposed that George Quek and Katherine Lee, our Executive Directors and Controlling Shareholders and Frankie Quek Swee Heng, Kok Swee Tiong and Lee Henry, who are Associates of our Controlling Shareholders, be entitled to participate in the Scheme. As at the date of this Prospectus, Kok Swee Tiong and Lee Henry do not have any interest in our Shares. Rationale for participation of George Quek George Quek, our Managing Director, holds an aggregate of 31.99% of our Company's shareholding (directly and indirectly) after the Invitation. He is one of the co-founders of our Group and has been instrumental in our Group's development over the years. He is responsible for overseeing the overall management of our Group and is pivotal in charting the direction and growth of our Group. His knowledge and contacts in the food and beverage industry, of which he has 20 years of experience, are key factors to the success of our Group.

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Our Company believes that George Quek will continue to play a key role in the growth and future development of our Group and there are further potential contributions that he can make. Our Company intends to have the exibility to structure his remuneration package to include such Options in the future if it is in the interests of the Company to do so. By allowing him to participate in the Share Option Scheme, our Company will have an additional tool to craft a more balanced and innovative remuneration package that will link his total remuneration to the performance of our Group. Rationale for participation of Katherine Lee Katherine Lee is our Executive Director and she holds an aggregate of 26.72% of our Company's shareholding (directly and indirectly) after the Invitation. She is one of the co-founders of our Group and has been assisting our Managing Director, George Quek, in our Group's development since its inception in April 2000. She heads the research and development department of our Group. She is also responsible for increasing and developing the range and the quality of our products, which we believe is one of our unique strengths and one of the factors for our success. Our Company believes that Katherine Lee will continue to contribute to the success of our Group. Our Company intends to have the exibility to structure her remuneration package to include such Options in the future if it is in the interests of the Company to do so. By allowing her to participate in the Share Option Scheme, our Company will have an additional tool to craft a more balanced and innovative remuneration package that will link her total remuneration to the performance of our Group. Rationale for participation of Frankie Quek Swee Heng Frankie Quek Swee Heng, our Group General Manager, holds an aggregate of 4.02% of our Company's shareholding (directly and indirectly) after the Invitation. He is involved in the formulation and implementation of the expansion plans of our Group. With his business acumen and extensive knowledge of the local food and beverage industry, he is assisting our Managing Director, George Quek, in overseeing the growth and expansion as well as the daily operations of our Group. We therefore believe that he has the potential and the ability to contribute to the further success of our Group. By allowing him to participate in the Share Option Scheme, our Company will have an additional tool to craft a more balanced and innovative remuneration package that will link his total remuneration to the performance of our Group. Frankie Quek Swee Heng will also be able to share in any future appreciation of our Company's Share price that is commensurate with our Company's future growth through an increase in his shareholdings to a more signicant level. Rationale for participation of Kok Swee Tiong and Lee Henry Kok Swee Tiong has been a Branch Manager since 2002. Lee Henry is currently our Deputy General Manager and is assisting Tay Kiah Cheng in the implementation of our franchising activities. He has been with our Group since its inception and has been in various positions in our Group. Prior to his appointment as our Deputy General Manager, he was the Purchasing Manager, the Area Operations Manager and the Assistant General Manager. Their remuneration packages have been determined on the same bases as the remuneration of other unrelated employees. Since the Share Option Scheme is intended to be part of a system of remuneration for Employees, our Company is of the view that they should not be unduly discriminated against by virtue of their being an Associate of George Quek and Katherine Lee respectively. By allowing them to participate in the Share Option Scheme, our Company believes that it will enhance their long term commitment to our Group. They will also be able to share in any future appreciation of our Company's Share price that is commensurate with our Company's future growth through an increase in their shareholdings to a more signicant level.

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The participation by George Quek, Katherine Lee, Frankie Quek Swee Heng, Kok Swee Tiong and Lee Henry in the Share Option Scheme will only take place after the listing of our Company on the SGXSesdaq. Their participation in the Share Option Scheme has been approved by Shareholders of our Company at an Extraordinary General Meeting held on 7 May 2003. Pursuant to the Listing Manual, any specic grant of Options to each of George Quek, Katherine Lee, Frankie Quek Swee Heng, Kok Swee Tiong, Lee Henry or any other Controlling Shareholders and/or their Associates will have to be by way of separate resolutions approved by independent Shareholders in a general meeting. Clear justication or rationale for participation, the specic grants to be made and any discount shall be disclosed in the circular seeking such approval. Details of the number of Options granted, the number of Options exercised and the subscription price (including any discount) will be disclosed in the annual report of our Company. Rationale for participation of the Non-Executive Directors of our Group Our Company has some exibility in formulating a share option scheme that recognises and benets not only persons who are in the direct employment of our Group but also persons who are not employed but nevertheless work closely with our Group and/or are in the position to contribute their experience, knowledge and expertise to the development and success of our Group. Although the Non-Executive Directors of our Group are not involved in the day-to-day running of our Group, they also play an invaluable role in the future success of our Group. The Non-Executive Directors of our Group are in a position to provide valuable support, input and business contacts and to contribute their experience, knowledge and expertise, and/or to provide our Company and our Group with strategic business alliances and opportunities. The Non-Executive Directors are individuals from various disciplines with different working experiences and backgrounds which we may tap for assistance in furthering our business objectives and shaping our business strategies. It is desirable that the Non-Executive Directors of our Group be allowed to participate in our Share Option Scheme to give recognition to their services and contributions and to further align their interests with that of our Group. It is anticipated that remuneration to the Non-Executive Directors of our Group will be by way of directors' fees (for their services as directors of a company), which is wholly in the form of cash. As at date of this Prospectus, no directors' fees have been paid to any of the Non-Executive Directors of our Group. None of the Non-Executive Directors of our Group is entitled to any prot sharing or other benets. Through our Share Option Scheme, our Company may acknowledge and give recognition to the efforts, achievements and contributions made by such persons in a combination of cash and share options. Although the level of their remuneration is in accordance with the level of remuneration paid to Non-Executive Directors of other companies, by allowing the Non-Executive Directors of our Group to participate in our Share Option Scheme, our Company will have the exibility to consider, in the future, compensating the Non-Executive Directors of our Group for their services in cash and in share options. We intend to extend our Share Option Scheme to the Non-Executive Directors of our Group as a token of our appreciation for their contribution, even though we recognise that the services of such directors cannot be measured in the same way as our full-time employees. We envisage that the bulk of the Options will be given to our employees. Non-Executive Directors of our Group will be granted the Options at the discretion of our Remuneration Committee. Our Remuneration Committee, when deciding on the selection of the Non-Executive Directors of our Group to participate in our Share Option Scheme and the number of Scheme Shares to be offered, will take into consideration the nature and extent of their input, assistance and expertise rendered to the boards on which they sit and the impact thereof on the growth, success and development of our Company and our Group, as well as their involvement and commitment to the boards on which they sit. Our Remuneration Committee may, where it considers relevant, take into account other factors such as the economic conditions and our Company's performance. The Non-Executive Directors of our Group will abstain from making any recommendation as a Director or abstain from voting as a member of our Company when the grant of options to him or her is being considered.

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We do not expect that the grant of Options to our Non-Executive Directors, who are also members of our Audit Committee, will compromise their independence, as the total number of Options granted to our Non-Executive Directors will not be signicant. Our Remuneration Committee may in future grant Options to other Non-Executive Directors of our Group who may be appointed from time to time. The ability to do so will ensure that we will be able to continue to attract persons of signicant ability and aptitude onto our Board.

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INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

INTERESTED PERSON TRANSACTIONS Save for the Restructuring Exercise and as disclosed below, none of our Directors, Controlling Shareholders or Executive Ofcers or Associates of such Directors, Controlling Shareholders or Executive Ofcers was or is interested (directly or indirectly) in any material transactions undertaken by our Group from the beginning of the last three nancial years up to the Latest Practicable Date (the ``Relevant Period''). Past Interested Person Transaction The transactions set out below have been completed and will not be continued in the future. 1. Transactions with our Directors (a) (i) Advances or loans to our Directors Advances of $210,000 and $180,000 were extended by BTPL (which at the time of the advances, was a private exempt company) to our Directors, George Quek and Katherine Lee during FY2002. These advances were interest-free, unsecured with no xed terms of repayment. The said advances were fully repaid by December 2002. A loan of $100,000 was extended to our Director, Chen Kuo Hua in June 2002. The interest charged was at 8% per annum, which was approximately 2% above the average interest rate of 6% imposed on our term loans. The loan and all interests have been fully repaid by January 2003. These amounts are the largest sums of advances or loans made to our Directors for the Relevant Period. Save as mentioned above, our Group has not made any other loans or advances to our Directors in the Relevant Period. (ii) Advances or loans made by our Director Our Executive Director, Katherine Lee, has extended loans to our Group for our initial working capital purposes in the Relevant Period. Such loans were not trade related and were extended unsecured, interest free and had no xed terms of repayment. The outstanding amounts on these loans have been fully repaid by December 2002. The outstanding amount of such loans as at 31 December for the past three nancial years are provided below:
FY2000 Amount due to Director ($) 170,643 FY2001 15,000 FY2002

The sum of $170,643 is the largest loan made by our Director for the Relevant Period. 2. Transaction with F. Yaming International Pte Ltd Our Managing Director, George Quek, is a director and shareholder of F. Yaming International Pte Ltd (``F. Yaming''). George Quek owns 20% of F. Yaming, which is engaged in the business of trading footwear and importing and exporting of leather goods.

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BTPL has entered into a letter of offer on 7 June 2001 with Tincel Properties (Private) Limited on behalf of F. Yaming, which at the time of the execution of the letter of offer, had yet to be incorporated. BTPL has, on 29 January 2002, novated the tenancy agreement to F. Yaming after its incorporation. All monies (which amounted to approximately $112,000) in relation to the said letter of offer which was paid by BTPL have since been repaid by F. Yaming. Ongoing Interested Person Transactions 1. Guarantees provided by Directors and/or shareholders A. Guarantees for Banking Facilities As at the Latest Practicable Date, the guarantees provided by our Executive Directors and/ or shareholders to secure banking facilities are as follows:
Banks The Development Bank of Singapore Ltd Standard Chartered Bank United Overseas Bank Limited Facility amount $4,809,237 $826,389 $2,032,000 Facility used by BTPL BTPL BTPL Guarantees provided by George Quek and Katherine Lee George Quek and Katherine Lee George Quek and Katherine Lee

We intend to procure the discharge of the said guarantees from the banks concerned by providing our corporate guarantees upon listing and quotation of our Shares on the SGXSesdaq. Should the banks not agree to the discharge of the said guarantees, our Executive Directors will continue to guarantee such facilities. B. Guarantees for Leases (i) Operating Leases Certain lessors require our Directors to provide guarantees to secure our obligations under the relevant lease. As at the Latest Practicable Date, guarantees provided by our Executive Directors to secure our obligations under the leases are as follows:
Location Toa Payoh 530 Lorong 6 Toa Payoh # 01-04 HDB Hub Singapore 310530 Tampines Mall 4 Tampines Central 5 # B1-K7 Tampines Mall Singapore 529510 Tiong Bahru Plaza 302 Tiong Bahru Road # 01-43 Tiong Bahru Plaza Singapore 168732 Lessor Housing and Development Board Lessee BTPL Guarantees provided by George Quek and Katherine Lee

Bermuda Trust (Singapore) Limited as Trustee of Singmall Property Trust ARMF (TBP) Private Limited

BTPL

George Quek

BTPL

George Quek and Katherine Lee

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(ii)

Finance Leases As at the Latest Practicable Date, the guarantee provided by our Executive Directors to secure our nance leases is as follows:
Financial institution Hong Leong Finance Limited Facility amount $500,000 Facility used by BTPL Guarantees provided by George Quek and Katherine Lee

We intend to procure the discharge of the said guarantees from the landlords and the nancial institution concerned by providing our corporate guarantees upon listing and quotation of our Shares on the SGX-Sesdaq. Should the landlords or nancial institution not agree to the discharge of the said guarantees, our Executive Directors will continue to guarantee such obligations. 2. Lease of private apartment to BTPL From 26 November 2000, BTPL has entered into a lease agreement with our Executive Director, Katherine Lee, to lease a private apartment at 125, Meyer Road, # 02-04 Singapore 437936, for 36 months effective from 1 December 2000 to 30 November 2003. The apartment has a built up area of approximately 1,582 square feet and is used to house some of our foreign employees who are in senior positions like our master bakers or consultant bakers. The lease is at an aggregate monthly rental and service charge of $3,464. This amount was arrived at based on reasonable commercial terms. We have obtained quotations for the monthly rentals for private apartments in the same development for the period commencing from 3 February 2003 to 3 April 2003 and the range of the quotations is from $2,900 to $5,000 depending on the size and oor on which the unit is located. The aggregate rental paid by BTPL and as a percentage of our total expenses for the past three nancial years and for the four months ended 30 April 2003 are as follows:
FY2000 $ Rental 3,464 % 0.2 FY2001 $ 41,568 % 0.3 FY2002 $ 41,568 % 0.1 1 January 2003 to 30 April 2003 $ 13,856 % 0.2

The lease has been approved by the shareholders of the Company. The terms of the lease will be subject to yearly review by our Audit Committee (in accordance with the guidelines for Interested Person Transactions described below) to ensure that they are based on reasonable commercial terms and are consistent with our Group's usual business practices and the procedures. 3. Provision of legal services Ong Kian Min, an Independent Director of our Company, is a consultant of Drew & Napier LLC. Drew & Napier LLC are the Solicitors to the Invitation and the professional fees to be paid to Drew & Napier LLC in respect of the Invitation are, to the Directors' opinion, consistent with prevailing market rates. It is envisaged that our Company may continue to engage the legal services of Drew & Napier LLC as and when the need arises. Our transactions will be based on normal commercial terms and will be subject to the review of the Audit Committee. Our Directors are of the view that the provision by Drew & Napier LLC of such services will not interfere with Mr Ong's independent judgment in his work as a member of the Audit Committee as legal matters involving the Group will be handled by other partners and associates of Drew & Napier LLC. In the event that Mr Ong is interested in any matter handled by Drew & Napier LLC involving our Group, including and not limited to the Invitation, he will adhere to the guidelines for Interested Person Transactions described below and abstain from reviewing and voting on that particular transaction. 86

GUIDELINES FOR FUTURE INTERESTED PERSON TRANSACTIONS All future transactions with related parties shall comply with the requirements of the Listing Manual. As required by the Listing Manual, our Company's Articles of Association 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 transactions with related parties at arm's length. In addition, the Audit Committee shall conduct half-yearly 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 related party transaction, he shall abstain from reviewing and voting on that particular transaction. In addition, our Directors will ensure that all future business dealings between us and our related parties will be at arm's length by undertaking, among others, the following procedures: (a) when purchasing from a related party, 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 shall not be higher than the most competitive price of the two comparative offers from third parties; when selling to a related party, 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; in determining the most competitive purchase price, our Directors shall take into consideration the nature of the project, the cost and the experience and expertise of the supplier; and should any future related party transaction be on less preferred terms than as determined in steps (a) to (c), our board of Directors must grant prior approval.

(b)

(c) (d)

The considerations in paragraphs (a) to (d) above will allow for variation from the prices and terms of the comparative offers or sales so long as the volume of trade, creditworthiness of the buyer, differences in service, reliability or other relevant factors justify the variation and so long as the contemporaneous comparative offer or sale incorporates modications that account for volatility of the market for the goods and services in question. REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS Our Audit Committee, when formed, will review and approve all interested person transactions as defined by the Listing Manual (``Interested Person Transactions'') to ensure they are on arm's length basis, that is, the transactions are transacted on terms and prices not more favourable to the interested person than if they were transacted with a third party and we have not been disadvantaged in any other way as follows: (i) All Interested Person Transactions above $100,000 are to be approved by a Director who shall not be an interested person in respect of the particular transaction. Any contracts to be made with an interested person shall not be approved unless the pricing is determined in accordance with our usual business practices and policies, consistent with the usual margin given or price received by us for the same or substantially similar type of transactions between us and unrelated parties and the terms are no more favourable to the interested person than those extended to or received from unrelated parties. In addition, we shall monitor all related Interested Person Transactions entered into by us categorising the transactions as follows: (a) (b) A category one Interested Person Transaction is one where the value thereof is in excess of 5% of the NTA of our Group; and A category two Interested Person Transaction is one where the value thereof is below or equal to 5% of the NTA of our Group.

(ii)

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Category one Interested Person Transaction must be approved by the Audit Committee prior to entry. Category two Interested Person Transaction need not be approved by the Audit Committee prior to entry but shall be reviewed on a quarterly basis by the Audit Committee. We will prepare relevant information to assist our Audit Committee in its review. Before any agreement or arrangement that is not in the ordinary course of business of our Group is transacted, prior approval must be obtained from our Audit Committee. In the event that a member of our Audit Committee is interested in any of the Interested Person Transaction, he will abstain from reviewing that particular transaction. Any decision to proceed with such an agreement or arrangement would be recorded for review by our Audit Committee. We will also comply with the provisions in Chapter 9 of the Listing Manual in respect of all future Interested Person Transactions, and if required under the Listing Manual, the Act or the SFA, we will seek our shareholders' approval for such transactions. POTENTIAL CONFLICTS OF INTEREST George Quek and Katherine Lee, our Executive Directors, as at 30 April 2003, collectively own shares comprising approximately 28% of Food Junction Holdings Limited (``Food Junction''), a company that manages the operations of food courts and food stalls. George Quek is also a non-executive director of Food Junction and its related companies. Although Food Junction is also in the food and beverage industry, its principal business differs from ours. In addition, our proposed restaurant business is not similar in concept and operation as the food courts that are managed by Food Junction. Furthermore, George Quek is not involved in the day-to-day operations of Food Junction. As such, our Directors are of the view that there is at present, no conict of interest arising from the shareholdings of George Quek and Katherine Lee in Food Junction or arising from George Quek being a non-executive director of Food Junction and its related companies. Chen Kuo Hua, our Non-Executive Director, is the chairman and chief executive ofcer of Shanghai Xiao Hu Foods Co. Ltd which owns a chain of restaurants in the PRC. He owns 90% of the shares of Shanghai Xiao Hu Foods Co. Ltd. Notwithstanding that our Company intends to diversify into other food and beverage business by setting up a restaurant in Singapore, a conict of interest does not arise as the Group presently does not envisage expanding its restaurant business to the PRC. In the event that the Group decides to expand its restaurant business to the PRC, a conict of interest between the Group and Chen Kuo Hua may arise. In the event that Shanghai Xiao Hu Foods Co. Ltd decides to expand its restaurant business to Singapore, a conict of interest between the Group and Chen Kuo Hua may arise. In the event of such conflict, the relevant parties will make the necessary disclosures and attempt to resolve the conflict. In addition, Chen Kuo Hua has undertaken to our Group that he will: (i) not, directly or indirectly, commence any restaurant business in Singapore without the prior written consent of BreadTalk Group Limited (which may be withheld at the sole discretion of BreadTalk Group Limited (such discretion to be reasonably exercised)); not, at any time, communicate or divulge to any person or make use of (and shall use his best endeavours to prevent the publication, disclosure or unauthorised use of) any confidential information relating to BreadTalk Group Limited's restaurant business; not, directly or indirectly, make use of any confidential information that he may be privy to or otherwise obtain as an Non-Executive Director of our Group for the purposes of his restaurant business without any prior written consent of BreadTalk Group Limited (which may be withheld at the sole discretion of BreadTalk Group Limited);

(ii)

(iii)

88

(iv)

not, directly or indirectly, make use of any business opportunity for his own benefit that may be presented to BreadTalk Group Limited of which he is aware of without first obtaining the written consent of BreadTalk Group Limited (which may be withheld at the sole discretion of BreadTalk Group Limited); not, directly or indirectly, be involved in the bakery business or any business that is competing or has a similar concept as the business engaged in by our Group without first obtaining the written consent of BreadTalk Group Limited (which may be withheld at the sole discretion of BreadTalk Group Limited); immediately declare to the board of Directors of BreadTalk Group Limited, the availability of the opportunity and his intention in relation to that opportunity where such business opportunity is presented to him in his capacity as a Non-Executive Director of BreadTalk Group Limited;

(v)

(vi)

(vii) disclose and declare any conflict of interest arising between him and BreadTalk Group Limited to our Group's Audit Committee (as soon as he is aware of such conflict) in the event that he, whether directly or indirectly, through Shanghai Xiao Hu Foods Co. Ltd or otherwise, is competing with BreadTalk Group Limited in respect of any opportunities pertaining to the restaurant business; (viii) provide BreadTalk Group Limited with periodic updates of any concepts, ideas or expansion plans of Shanghai Xiao Hu Foods Co. Ltd or any other companies that are owned or controlled by him that are in the restaurant business; (ix) (x) abstain from voting at the board with respect to any future ideas, concepts, expansion plans for the business of BreadTalk Group Limited with respect to the restaurant business in the PRC; abstain from voting or making any recommendations with respect to any transaction between BreadTalk Group Limited and Shanghai Xiao Hu Foods Co. Ltd or any company that is owned or controlled by him that is in the restaurant business; and in addition to abstaining from making any recommendations and abstaining from voting on such transaction, agreement or arrangement, also abstain from participating in discussions relating to the transaction, agreement or arrangement that has resulted in the conict of interest. He will also not be entitled to any information that BreadTalk Group Limited has in relation to such transaction, agreement or arrangement.

(xi)

The Audit Committee will review all transactions between BreadTalk Group Limited and Shanghai Xiao Hu Foods Co. Ltd or such other companies that are owned or controlled by Chen Kuo Hua. Chen Kuo Hua is a Non-Executive Director and is not involved in the day-to-day operations of our Group. Chen Kuo Hua will not be provided with any information (including the accounts or any information relating to the accounts) that the management determines will potentially place him in a position of conict with BreadTalk Group Limited. Although we believe that there are sufcient safeguards and control mechanisms in place to resolve the potential conict of interests between Chen Kuo Hua and BreadTalk Group Limited, our Audit Committee will, in future, review and if necessary, improve on the procedures in place for the resolution of such conicts of interest if they should arise. Save as disclosed above; (i) no Director, Executive Officer or Substantial Shareholder of our Group or any of their Associates has any interest, direct or indirect, in any transactions subsisting at the date of this Prospectus to which our Group is a party which is significant in relation to the business of our Group taken as a whole; no Director, Executive Officer or Substantial Shareholder of our Group or any of their Associates has any material interest, direct or indirect, in any business carrying on the same trade as our Group; and

(ii)

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(iii)

no Director, Executive Ofcer or Substantial Shareholder of our Group or any of their Associates has any material interest, direct or indirect, in any enterprise or company that is our Group's major customer or supplier of goods or services.

CORPORATE GOVERNANCE Our Directors recognise the importance of corporate governance and the maintenance of a high standard of accountability to our shareholders. Accordingly, our Directors have established a Nominating Committee, a Remuneration Committee and an Audit Committee. Nominating Committee Our Nominating Committee comprises George Quek, Ong Kian Min and Lai Hock Meng. The Chairman of the Nominating Committee is Ong Kian Min. Our Nominating Committee will be responsible for: (a) (b) (c) re-nomination of our Directors, having regard to the Director's contribution and performance; determining on an annual basis whether or not a Director is independent; and deciding whether or not a Director is able to and has been adequately carrying out his duties as a Director.

Our Nominating Committee will decide how the board's performance is to be evaluated and propose objective performance criteria, subject to the approval of the board, which address how the board has enhanced long-term shareholder's value. The performance evaluation will also include consideration of our Share price performance over a ve year period vis-a-vis the Straits Times Index. The board will also implement a process to be carried out by our Nominating Committee for assessing the effectiveness of the board as a whole and for assessing the contribution of each individual Director to the effectiveness of the board. Each member of our Nominating Committee shall abstain from voting on any resolutions in respect of the assessment of his performance or re-nomination as a Director. Remuneration Committee Our Remuneration Committee comprises George Quek, Chen Kuo Hua and Ong Kian Min. The Chairman of the Remuneration Committee is Ong Kian Min. Our Remuneration Committee will recommend to the board a framework of remuneration for our Directors and key executives, and determine specic remuneration packages for each Executive Director. The recommendations of our Remuneration Committee should be submitted for endorsement by the entire board. All aspects of remuneration, including but not limited to Directors' fees, salaries, allowances, bonuses, options and benets-in-kind shall be covered by our Remuneration Committee. Each member of the Remuneration Committee shall abstain from voting on any resolutions in respect of his remuneration package. Audit Committee Our Audit Committee comprises Chen Kuo Hua, Ong Kian Min and Lai Hock Meng. The Chairman of the Audit Committee is Ong Kian Min. Save as disclosed under the section ``Interested Person Transactions'' on pages 84 to 87 of this Prospectus, our Independent Directors do not have any existing business or professional relationship of a material nature with our Group, our other Directors or Substantial Shareholders. They are also not related to the other Directors or Substantial Shareholders. Our Audit Committee will meet periodically to discuss and review the following: (a) (b) (c) the audit plans of our Company's external auditors and their evaluation of our system of internal accounting controls; the external auditors' reports; the cooperation given by our officers to the external auditors; 90

(d) (e) (f) (g) (h)

the financial statements of our Company and our Group before their submission to our board of Directors; the nomination of external auditors for appointment or re-appointment; interested person transactions; the scope and results of our internal audit procedures; and the remuneration packages of employees who are related to our Directors and/or Substantial Shareholders.

Apart from the duties listed above, our Audit Committee shall commission and review the ndings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any Singapore law, rule or regulation which has or is likely to have a material impact on our Company's operating results and/or nancial position. In the event that a member of our Audit Committee is interested in any matter being considered by our Audit Committee, he will abstain from reviewing that particular transaction or voting on that particular resolution. BOARD PRACTICES Every Director shall retire from ofce once every three years and for this purpose, at each annual general meeting, one-third of the Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from ofce by rotation. A retiring Director shall be eligible for re-election.

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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 the 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, will be treated, under our Articles of Association and the Act, as members of our Company in respect of the number of Shares credited to their respective securities accounts. Persons holding the Shares in securities account with CDP may withdraw the number of the Shares they own from the book-entry settlement system in the form of physical share certicates. Such share certicates 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 of Association. A fee of $10.00 for each withdrawal of 1,000 Shares or less and a fee of $25.00 for each withdrawal of more than 1,000 Shares is payable upon withdrawing the Shares from the bookentry settlement system and obtaining physical share certicates. In addition, a fee of $2.00 or such other amount as our Directors may decide, is payable to the share registrar for each share certicate issued and a stamp duty of $10.00 is also payable where the Shares are withdrawn in the name of the person withdrawing the Shares or $0.20 per $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 certicates who wish to trade on the SGX-ST must deposit with CDP their share certicates 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 $20.00 is payable upon the deposit of each instrument of transfer with CDP. Transactions in the Shares under the book-entry settlement system will be reected by the seller's securities account being debited with the number of Shares sold and the buyer's securities account being credited with the number of Shares acquired. No stamp duty is currently payable for the Shares that are settled on a book-entry basis. A Singapore clearing fee for trades in Shares on the SGX-ST is payable at the rate of 0.05% of the transaction value. The clearing fee, instrument of transfer deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax of 4%. Dealings of the 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 business day following the transaction date, and payment for the securities is generally settled on the following business day. CDP holds securities on behalf of investors in securities accounts. An investor may open a direct account with CDP or a sub-account with a CDP agent. The CDP agent may be a member company of the SGX-ST, bank, merchant bank or trust company.

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PROFORMA CONSOLIDATED FINANCIAL INFORMATION AND REPORT ON EXAMINATION OF PROFORMA CONSOLIDATED FINANCIAL INFORMATION
INDEX TO PROFORMA CONSOLIDATED FINANCIAL INFORMATION Description A. B. PROFORMA CONSOLIDATED FINANCIAL INFORMATION REPORT ON EXAMINATION OF PROFORMA CONSOLIDATED FINANCIAL INFORMATION Page 94 115 116

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A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.1 THE PROFORMA GROUP The Company, BreadTalk Group Limited, was incorporated on 6 March 2003 in Singapore as a public company limited by shares, with an initial paid up share capital of $2, comprising two ordinary shares of $1 each. The principal activity of the Company is that of investment holding. At the date of this report, the Proforma Group comprises the Company and the following subsidiaries:
% equity interest held by the Proforma Group Principal activities % BreadTalk Pte Ltd Singapore 24 April 2000 $500,000 100 Bakers and manufacturers of and dealers in bread, our and biscuits Investment holding

Name of subsidiaries

Place and date of incorporation

Issued and paid-up capital

BreadTalk International Pte Ltd Held by a subsidiary Taster Food Pte Ltd

Singapore 6 March 2003

$2

100

Singapore 4 April 2003

$10

70

Operators of food and drinks sale outlets, eating houses and restaurants

The nancial statements of BreadTalk Pte Ltd for the nancial period/years covered by this report were audited by the following rms of Certied Public Accountants in Singapore (``CPA''), registered in accordance with the Accountants Act:
Auditors K.S Ng & Co. CPA Arthur Andersen CPA Ernst & Young CPA Financial Period/Year For the nancial period from the date of incorporation, 24 April 2000 to 31 December 2000 For the nancial year ended 31 December 2001 For the nancial year ended 31 December 2002

The audited nancial statements of BreadTalk Pte Ltd for the nancial period/years as detailed above were prepared in accordance with the provisions of the Companies Act and Singapore Statements of Accounting Standard. No audited nancial statements of the Company, BreadTalk International Pte Ltd and Taster Food Pte Ltd have been prepared since their respective dates of incorporation as they are newly incorporated companies.

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A.2 BASIS OF PRESENTATION OF FINANCIAL INFORMATION The nancial information set out in this report has been prepared based on certain assumptions and after making certain adjustments to show what the nancial results, changes in equity and cash ows of the Group would have been had the Proforma Group structure been in place throughout the nancial period/years covered by this report and what the nancial position of the Group as at 31 December 2002 would have been if the Group structure at the date of lodgement of the Prospectus had been in place on that date. The nancial information has been prepared in accordance with the accounting policies of the Proforma Group set out in section A.7 and in accordance with Statements of Accounting Standard in Singapore. The nancial information is based on the audited nancial statements of BreadTalk Pte Ltd for the respective period/years as appropriate. There were no material adjustments made to the nancial information used in the preparation of the pro forma nancial information. In arriving at the Proforma Group nancial information, adjustments have been made as considered necessary in order to present the nancial information on a consistent and comparable basis, including adjustments to reect the investment of the Company in its subsidiaries as if the Proforma Group at the date of lodgement of the Prospectus had been in place on that date. The Proforma nancial information is prepared for illustrative purposes only. The objective is to show what the historical nancial information might have been had the Proforma Group existed at an earlier date. However, the nancial information of the Proforma Group, by its nature may not give a true picture of the Group's actual nancial position and results and is not necessarily indicative of the results of the operations or the related effects on the nancial position that would have been attained had the abovementioned Proforma Group existed earlier. A.3 PROFORMA GROUP STATEMENTS OF PROFIT AND LOSS The nancial results of the Proforma Group after making such adjustments as considered appropriate are set out below:
Note Revenue Cost of sales Gross prot Distribution and selling expenses Administrative expenses Operating (loss) prot Financial income Financial expenses Other nancial costs Financial expenses, net (Loss) prot before tax Tax expense Net (loss) prot (Loss) earnings per share basic (cents) A.7.8 A.7.7 A.7.6 A.7.4 A.7.3 2000 $'000 1,164 (385) 779 (713) (311) (245) (1) (2) (3) (248) (248) (0.19) 2001 $'000 16,741 (5,299) 11,442 (7,365) (1,420) 2,657 5 (54) (7) (56) 2,601 (628) 1,973 1.51 2002 $'000 34,970 (11,750) 23,220 (15,348) (3,175) 4,697 10 (116) (28) (134) 4,563 (1,160) 3,403 2.60

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A.4 PROFORMA GROUP BALANCE SHEET The balance sheet of the Proforma Group as at 31 December 2002 as set out below has been prepared based on the audited nancial statements of BreadTalk Pte Ltd and on the basis that the Proforma Group had been in place since 24 April 2000.
Note Non-Current Assets Fixed assets Trade mark Current Assets Inventories at cost (raw materials less provision for stock obsolescence $Nil) Trade receivables less provision for doubtful debts $Nil Other receivables, deposits and prepayments Fixed deposits Cash on hand and at bank A.7.11 A.7.12 425 214 2,119 344 2,848 5,950 Current Liabilities Trade payables Other payables and accrued expenses Deferred revenue Provision for income tax Term loans (current portion) Finance lease obligations (current portion) A.7.15 A.7.16 A.7.13 A.7.14 2,539 3,609 40 755 1,300 120 8,363 Net Current Liabilities Non-Current Liabilities Term loans (non-current portion) Finance lease obligations (non-current portion) Deferred tax A.7.15 A.7.16 A.7.7 (435) (366) (626) (1,427) 5,328 Proforma Shareholders' Equity 5,328 (2,413) A.7.9 A.7.10 9,079 89 $'000

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A.5 CONSOLIDATED PROFORMA STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY The movements in the proforma shareholders' equity of the Group for the period/years ended 31 December 2000 to 2002 are as follows:
2000 $'000 Proforma share capital Balance at beginning of period/year Notional investment in a subsidiary via share issue by the Company Balance at end of period/year Accumulated (losses) prots Balance at beginning of period/year Net (loss) prot Dividend (Note A.7.20) Balance at end of period/year Proforma shareholders' equity (248) (248) 2 (248) 1,973 1,725 2,225 1,725 3,403 (300) 4,828 5,328 250 250 250 250 500 500 500 2001 $'000 2002 $'000

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A.6 PROFORMA CONSOLIDATED STATEMENT OF CASH FLOWS

Note Cash ows from operating activities Prot before tax Adjustment for: Depreciation of xed assets Amortisation of trade mark Fixed assets written off Interest expense and bank charges Interest income Operating prot before working capital changes (Increase)/decrease in: Inventories Trade receivables Other receivables, deposits and prepayments Increase/(decrease) in: Trade payables Other payables and accrued expenses Deferred revenue Due to directors Cash generated from operations Interest expense and bank charges paid Tax paid Net cash ow from operating activities Cash ows from investing activities Interest income Purchase of xed assets Trade mark costs incurred Net cash ow used in investing activities Cash ows from nancing activities Increase in xed deposits pledged Net nancing from term loans Repayments of nance lease obligations Dividend paid on ordinary shares Net cash ow used in nancing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year A (154) 590 (200) (300) (64) 1,110 1,738 2,848 B 10 (6,283) (90) (6,363) 1,340 1,777 40 (15) 8,088 (144) (407) 7,537 (214) (214) (975) 1,600 2 50 144 (10) 6,349 4,563 2002 $'000

98

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION Notes to the Proforma Consolidated Statement of Cash Flows Note A: Cash and cash equivalents Cash and cash equivalents consist of cash and bank balances and xed deposits. Fixed deposits pledged to banks for banking facilities granted to the Group as disclosed in Note A.7.12 are excluded from cash and cash equivalents. Cash and cash equivalents included in the statement of cash ows comprise the following balance sheet amounts:
2001 $'000 Cash on hand and at bank Fixed deposits 1,738 190 1,928 Less: Fixed deposits pledged Cash and cash equivalents (190) 1,738 2002 $'000 2,848 344 3,192 (344) 2,848

Note B:

Purchase of xed assets

For the year ended 31 December 2002, the Proforma Group acquired xed assets with an aggregate cost of $6,758,000 of which $475,000 was nanced via nance lease. Cash payments of $6,283,000 were made to purchase xed assets.

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PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION These notes are an integral part of and should be read in conjunction with the accompanying proforma nancial information. 1. General The Company is a limited company domiciled and incorporated in Singapore. The registered ofce of the Company is located at 10 Collyer Quay # 19-08 Ocean Building, Singapore 049315, and its principal place of business is at 171 Kampong Ampat, # 05-03/04 KA Foodlink, Singapore 368330. The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are as shown in section A.1. 2. Signicant accounting policies (a) Basis of preparation The nancial information, which is expressed in Singapore dollars, has been prepared in accordance with Singapore Statements of Accounting Standard (SAS) and applicable provisions of the Companies Act. (b) Changes in accounting policies SAS 34 (2000), Intangible Assets During the nancial period from the date of incorporation, 24 April 2000 to 31 December 2000, preliminary expenses are stated at cost less accumulated amortisation. Such expenses were amortised on a straight-line basis over 5 years through the prot and loss account. During the nancial year ended 31 December 2001, the Group adopted SAS 34 (2000), Intangible Assets, which is effective for nancial years beginning on or after 1 October 2000. Under this revised SAS, the deferral and amortisation of preliminary expenses is prohibited. Accordingly, the unamortised expenditure remaining on the balance sheet of approximately $5,000 has been charged to the prot and loss account of the Proforma Group for the nancial year ended 31 December 2001. SAS 12 (2001), Income Taxes During the nancial year ended 31 December 2002, the Group adopted SAS 12 (2001), Income Taxes. In accordance with SAS 12, deferred tax is recognised for all temporary differences at the balance sheet date between the carrying amounts of assets and liabilities and the amounts used for income tax purposes. Deferred tax assets should be recognised when it is probable that sufcient taxable prots will be available against which the deferred tax assets can be utilised. Previously, a deferred tax liability was recognised for timing differences only to the extent that a tax liability was expected to materialise in the foreseeable future. Deferred tax assets were not recognized unless there was reasonable expectation of their realisation. The nancial effect of this change in accounting policy is not material to the Proforma Group's nancial information.

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A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) (c) Foreign currency translation Transactions in foreign currencies are recorded at exchange rates approximating those ruling at the transaction dates. Foreign currency monetary assets and liabilities are translated into Singapore dollars at exchange rates ruling at balance sheet date. All resultant exchange differences are recognised in the prot and loss account. (d) Fixed assets Fixed assets are stated at cost less accumulated depreciation and any impairment loss. All items of xed assets are initially recorded at cost. The initial cost of xed assets comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the xed assets have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to the prot and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benets expected to be obtained from the use of an item of xed asset beyond its originally assessed standard of performance, the expenditures are capitalised as an additional cost of the xed asset. Depreciation is computed on a straight-line basis over the estimated useful life of the xed assets of 5 years. The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benets from items of xed assets. An assessment of the carrying value of xed assets is made when there are indications that the assets have been impaired or the impairment losses recognised in prior years no longer exist. (e) Intangible assets Trade mark Costs relating to trade mark are capitalised and amortised on a straight-line basis over its estimated useful life of ve years. Research costs Research costs are expensed as incurred. (f) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and at bank and unpledged xed deposits. Cash and cash equivalents are short term, highly liquid investments readily convertible to known amounts of cash and are subject to an insignicant risk of change in value. Cash on hand and at bank and short-term deposits which are held to maturity are carried at cost.

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A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) (g) Trade and other receivables Trade and other receivables, which generally have been granted 30 days credit terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. (h) Inventories Inventories are valued at the lower of cost and net realisable value. Inventories comprise raw materials and costs relate to purchase cost accounted for on a rst-in, rst-out basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Provision is made for deteriorated, damaged, obsolete and slow moving inventories. (i) Trade and other payables Liabilities for trade and other amounts payable which are normally settled on 3090 day terms, are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group. (j) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outow of resources embodying economic benets will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reect the current best estimate. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash ows at a pre-tax rate that reects current market assessments of the time value of money and, where applicable, the risks specic to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. (k) Borrowings Borrowing costs are expensed as incurred. (l) Employee benets (i) Pension and other post employment benets The Group makes contributions to the Central Provident Fund scheme in Singapore, a dened contribution pension scheme. Contributions to national pension schemes are recognised as an expense in the period in which the related service is performed.

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PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) (l) Employee benets (continued) (ii) Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for leave as a result of services rendered by employees up to the balance sheet date. (m) Leases (i) Finance lease Finance leases, which effectively transfer to the Group substantially all the risks and benets incidental to ownership of the lease item, are capitalised at the present value of the minimum lease payments at the inception of the lease term. Lease payments are apportioned between the nance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of liability. Finance charges are charged directly to the prot and loss account. Capitalised leased assets are depreciated over the estimated useful life of the assets. (ii) Operating lease Leases where the lessor effectively retains substantially all the risks and benets of ownership of the leased assets are classied as operating leases. Operating lease payments are recognised as an expense in the prot and loss account on a straight-line basis over the lease term. Some of the leases provide for contingent rentals based on a percentage of sales derived from rented premises held under operating leases and such contingent rentals are recognized as an expense in the prot and loss account as incurred. (n) Impairment of assets Fixed assets and trade mark are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the prot and loss account or treated as a revaluation decrease for assets carried at revalued amount to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal is recorded in income or as a revaluation increase. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for that asset in prior years.

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A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) (o) Revenue Revenue from sale of goods is recognised net of goods and services tax and discounts upon the passing of title to the customer which generally coincides with delivery and acceptance of the goods sold. Initial franchise fee (``base fee'') is recognised upon the grant of rights, completion of the designated phases of the franchise setup and transfer of know-how to the franchisee in accordance with the terms stated in the franchise agreement. Recurring franchise fees are recognized on a periodic basis as a percentage of the franchisees' turnover in accordance with terms as stated in the franchise agreement. (p) Income taxes Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for nancial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date. At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable prot will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufcient taxable prot will be available to allow the benet of part or all of the deferred tax asset to be utilised. Deferred tax assets are recognised for all deductible temporary differences and carryforward of unused tax losses, to the extent that it is probable that taxable prot will be available against which the deductible temporary differences and carry-forward of unused tax losses can be utilised. Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity. (q) Government grants Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised in the prot and loss account over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the prot and loss account over the expected useful life of the relevant asset by equal annual instalments.

104

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PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) (r) Financial instruments Financial assets and nancial liabilities carried on the balance sheet include cash and cash equivalents, trade and other receivables and trade and other payables, loans and borrowings. The accounting policies on recognition and measurement of these items are disclosed in the respective accounting policies found in this Note. (s) Segment information No segment information is presented for the nancial years under review as the Group only has one business segment relating to ``bakery'', which relates to the business of manufacture and retail of all kinds of food, bakery and confectionery products. All revenues and costs relate to Singapore operations and all assets and liabilities are based in and arise out of Singapore. 3. Revenue Revenue relates to sale of food, bakery and confectionery products, net of goods and services tax and discounts. 4. Operating (loss) prot This is determined after charging (crediting) the following:
2000 $'000 Depreciation of xed assets Fixed assets written off Amortisation of trade mark Amortisation of preliminary expenses Preliminary expenses written off Directors' remuneration Operating lease expenses Employee benets (Note A.7.5)* Research costs Grant income
* This includes amounts shown as directors' remuneration.

2001 $'000 550 5 318 2,341 4,558

2002 $'000 1,600 50 2 571 5,268 9,573 29 (213)

283 1 24 159 358

5.

Employee benets
2000 $'000 Staff costs (including directors) salaries and bonuses Central Provident Fund contributions Sales incentives and commission Other personnel benets 235 37 2 84 358 2,602 493 910 553 4,558 6,044 754 1,322 1,453 9,573 2001 $'000 2002 $'000

105

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 6. Financial expenses, net
2000 $'000 Interest income Loan extended to a director Fixed deposits Interest expense Bank overdrafts Bank term loans Finance lease 1 1 Bank charges 2 4 49 1 54 7 99 17 116 28 (5) (5) (4) (6) (10) 2001 $'000 2002 $'000

7.

Income tax Major components of income tax expense for the year ended 31 December were:
2000 $'000 Current tax Current year Singapore tax Withholding tax Underprovision in respect of prior year Deferred tax Current year Deferred tax adjustment resulting from reduction in tax rate Underprovision in respect of prior year Tax expense 320 628 326 (33) 13 1,160 308 755 26 73 2001 $'000 2002 $'000

106

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 7. Income tax (continued) A reconciliation between the tax expense and the product of accounting prot multiplied by the applicable tax rate for the nancial period/years ended 31 December was as follows:
2000 $'000 (Loss) prot before tax Tax (credit) expense on prot before tax at 25.5%, 24.5% and 22% respectively Adjustments: Tax effect of expenses not deductible for tax purposes Underprovision of current tax in respect of prior year Underprovision of deferred tax in respect of prior year Deferred tax adjustment resulting from reduction in tax rate Others Tax expense 76 (14) 17 (26) 628 103 73 13 (33) 1,160 (248) 2001 $'000 2,601 2002 $'000 4,563

(62)

637

1,004

Deferred tax balances as at 31 December relate to the following: Deferred tax liabilities
2000 $'000 Deferred tax liabilities Excess of net book value over tax written down value of xed assets Deferred tax assets Accrued employee benets Deferred revenue Gross deferred tax assets Net deferred tax liabilities 320 (10) (9) (19) 626 320 645 2001 $'000 2002 $'000

8.

Earnings per share Basic earnings per share is calculated by dividing the net (loss)/prot for the year by the pre-invitation share capital of 130,980,000 shares.

107

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PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 9. Fixed assets
Baking Electrical machinery works $'000 Cost Balance at beginning of year Additions Write-off Balance at end of year $'000 Furniture and Office Motor fittings equipment Renovation vehicles Total $'000 $'000 $'000 $'000 $'000

1,832 2,104 3,936

1,063 1,167 2,230

220 480 700

226 310 (60) 476

1,261 2,218 3,479

202 479

4,804 6,758 (60)

681 11,502

Accumulated depreciation At beginning of year Charge for the year Write-off At end of year Net book value At end of year 2,964 1,768 592 407 2,772 576 9,079 367 605 972 151 311 462 28 80 108 20 59 (10) 69 253 454 707 14 91 105 833 1,600 (10) 2,423

As at 31 December 2002, baking machinery and motor vehicles with net book values of $34,000 and $576,000 respectively were acquired under nance leases. The xed assets of the Group are subject to a xed and oating charge as security for term loans granted to the Group as disclosed in Note A.7.15. 10. Trade mark
2002 $'000 Cost Balance at beginning of year Additions Balance at end of year Accumulated amortisation Balance at beginning of year Amortisation Balance at end of year Net book value At end of year 89 2 2 91 91

108

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PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 11. Other receivables, deposits and prepayments
2002 $'000 Sundry debtors Deposits Prepayments Staff loans Grants receivable 16 1,388 460 8 247 2,119

Staff loans are unsecured and interest free, with average repayment periods of 1 to 2 years. 12. Fixed deposits Fixed deposits are pledged to banks for banking facilities granted to a subsidiary and letters of guarantees issued by banks to lessors of premises occupied by a subsidiary as disclosed in Notes A.7.15 and A.7.18 (c) to the nancial statements. 13. Other payables and accrued expenses
2002 $'000 Other payables Accrued operating expenses Sales commission payable 1,768 1,630 211 3,609

14.

Deferred revenue
2002 $'000 Payment from franchisee Franchise costs incurred 174 (134) 40

15.

Term loans
2002 $'000 Secured term loans Due within one year Due after one year Bank term loans 1,300 435 1,735

109

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 15. Term loans (continued) These bank loans are repayable in 36 monthly instalments as follows:
Loans Term loan 1 Term loan 2 Term loan 3 Term loan 4 Term loan 5 Instalment commencement date October 2001 March 2001 June 2001 July 2002 Revolving credit 2002 $'000 351 83 112 339 850 1,735

Interest on these bank loans range from 1.5% to 2.5% per annum above the banks' prime lending rate or cost of funds. Security Term loans 1 and 4 are secured by xed deposits of the Group amounting to $102,000 and joint and several personal guarantees by certain directors of the Company. Term loans 2 and 3 are secured by the following: (i) (ii) (iii) Fixed and floating charge on all the assets and undertaking both present and future of a subsidiary, BreadTalk Pte Ltd; Joint and several personal guarantees by certain directors of the Company; and Fixed deposits of the Group amounting to $92,000.

Term loan 5 is secured by xed deposits of the Group amounting to $150,000 and personal guarantees by certain directors of the Company. 16. Finance lease obligations
Total minimum lease payments 2002 $'000 Within one year After one year but not more than ve years Total minimum lease payments Less amounts representing nance charges Present value of minimum lease payments 144 400 544 (58) 486 Present value of payments 2002 $'000 120 366 486 486

The lease periods range from 3 to 5 years with options to purchase at the end of the lease term. The average discount rates implicit in the leases range from 4.92% to 6.09% per annum. Lease terms do not contain restrictions concerning dividends, additional debt or further leasing. 110

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 17. Related party transactions During the period/years under review, except as disclosed in other parts of the pro forma nancial information, the Proforma Group had the following related party transactions, on terms agreed to by the respective parties:
2000 $'000 Income Interest income on loan extended to a director Expense Rental expense paid to a director 3 42 42 4 2001 $'000 2002 $'000

18.

Commitments and contingencies (a) Capital expenditure commitments The Group has purchase commitments for xed assets incidental to the ordinary course of business. Such commitments aggregated about $148,000 at 31 December 2002. (b) Operating lease commitments The Group has various operating lease agreements for equipment, ofce and retail outlet premises. These non-cancellable leases have remaining non-cancellable lease terms of between 1 and 4 years. Most leases contain renewable options. Some of the leases contain escalation clauses and provide for contingent rentals based on percentages of sales derived from assets held under operating leases. Lease terms do not contain restrictions on the Group's activities concerning dividends, additional debt or further leasing. Future minimum lease payments under non-cancellable leases are as follows as of 31 December 2002:
2002 $'000 Within one year After one year but not more than ve years 6,779 8,644 15,423

As at 31 December 2002, certain directors have provided guarantees to certain lessors as security for the Group's obligations under the leases. (c) Letters of guarantees, secured As at 31 December 2002, the banks issued letters of guarantees on behalf of a subsidiary, BreadTalk Pte Ltd, to lessors of premises amounting to $754,000. These letters of guarantees are secured by xed deposits of the subsidiary amounting to $194,000.

111

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 19. Financial instruments Financial risk management objectives and policies The main risks arising from the Group's nancial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. Interest rate risk The Group obtains additional nancing through bank borrowings and leasing arrangements. The Group's policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure. Surplus funds are placed with reputable banks. Information relating to the Group's interest rate exposure is also disclosed in the notes on the Group's borrowings, including leasing obligations. Liquidity risk The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to nance the operations of the Group. Short-term funding may be obtained from bank overdraft facilities where necessary. Foreign currency risk The directors are of the view that the Group has insignicant foreign currency risk arising from movements in foreign currency exchange rates as only an insignicant portion of the Group's revenues and expenses are denominated in foreign currencies. Credit risk The carrying amount of cash and cash equivalents, trade and other receivables represent the Proforma Group's maximum exposure to credit risk in relation to nancial assets. No other nancial assets carry a signicant exposure to credit risk. As at 31 December 2002, the balances owing by 2 major customers accounted for approximately 92% of the Proforma Group's trade receivables. The management monitors these trade receivables closely and considers the risk of default by these customers to be minimal as the debts are fairly current and these customers have no history of default and there is no debt under dispute.

112

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 19. Financial instruments (continued) Fair value of nancial instruments Fair value is dened as the amount at which the nancial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm's length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash ow models and option pricing models where practical. The following methods and assumptions are used to estimate the fair value of each class of nancial instruments: Bank balances and other liquid funds and short-term receivables The carrying amount approximates fair value due to the relatively short-term maturity of these instruments. Short-term borrowings and other current liabilities The carrying amount approximates fair value because of the short period to maturity of these instruments. Long-term bank loans and nance lease obligations The fair values of these nancial instruments approximate their carrying amounts after discounting the relevant cash ows using current interest rates for similar instruments as at balance sheet date. 20. Dividend Final dividend paid by BreadTalk Pte Ltd, a subsidiary, to the then existing shareholders of the subsidiary were as follows: During the nancial year ended 31 December 2002, a nal dividend of 77 cents per ordinary share less tax at 22%, amounting to $300,300, was paid in respect of the nancial year ended 31 December 2001. 21. Subsequent events Subsequent to 31 December 2002, the Company acquired the entire share capital of BreadTalk Pte Ltd (``BTPL'') comprising 500,000 ordinary shares of par value $1.00 each from the then existing shareholders for a consideration of $5,239,198 (based on the audited net tangible assets of BTPL as at 31 December 2002), which was satised by the issue and allotment of 5,239,198 ordinary shares of par value $1.00 each in the capital of the Company. At an Extraordinary General Meeting held on 30 April 2003, the shareholders of the Company approved, inter alia, the following: (a) (b) the sub-division of each existing ordinary share of $1.00 each into 25 ordinary shares of $0.04 each; the issue of 32,000,000 New Shares pursuant to the Invitation. The New Shares, when issued and fully paid, will rank pari passu in all respects with the then existing Shares of the Company;

113

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.7 NOTES TO THE PROFORMA CONSOLIDATED FINANCIAL INFORMATION (continued) 21. Subsequent events (continued) (c) that authority be given pursuant to Section 161 of the Companies Act to the directors to issue and allot Shares, convertible securities or Shares arising from the conversion of such convertible securities (notwithstanding that such authority may have ceased to be in force at the time the Shares are to be issued) in the Company (whether by way of rights, bonus issue or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the directors shall in their absolute discretion deem fit, provided that the aggregate number of Shares and/or convertible securities to be issued pursuant to such authority shall not exceed 50% of the issued share capital of the Company immediately prior to the proposed issue and the aggregate number of Shares and/or convertible securities to be issued other than on a pro-rata basis to the then existing shareholders shall not exceed 20% of the issued share capital of the Company immediately prior to the proposed issue, and, unless revoked or varied by the Company in a general meeting, such authority shall continue in full force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is earlier. For the purpose of this resolution, the percentage of the issued share capital of the Company is to be calculated based on the maximum potential share capital of the Company at the time this resolution is passed (taking into account the conversion or exercise of any convertible securities and employee share options issued or granted and remaining outstanding and exercisable, at the time this resolution is passed), adjusted for any subsequent consolidation or subdivision of Shares in the Company; and the adoption of the BreadTalk Group Limited Employees' Share Option Scheme, which comprises options that may be issued in respect of up to 15% of the issued share capital of the Company.

(d)

Other than (b), relating to the issue of 32,000,000 New Shares pursuant to the Invitation, with estimated net proceeds of $6.4 million which will increase the proforma shareholders' equity by the same amount, no other subsequent event as disclosed above is expected to have a material effect on the nancial information set out on pages 94 to 115.

114

A.

PROFORMA CONSOLIDATED FINANCIAL INFORMATION

A.8 NET TANGIBLE ASSET BACKING OF THE PROFORMA GROUP The net tangible asset backing of the Proforma Group for each ordinary share of $0.04 each is based on the net tangible assets of the Proforma Group as at 31 December 2002 and after taking into consideration and the issue of 32,000,000 New Shares, comprising 3,200,000 Offer Shares and 23,800,000 Placement Shares at $0.24 per share and 5,000,000 Reserved Shares at $0.205 per share, which forms the subject of the Invitation, and the proceeds and estimated expenses in connection therewith.
$'000 Net tangible assets Net tangible assets as at 31 December 2002 Proceeds from the issue of 32,000,000 New Shares of $0.04 each Less: estimated expenses of the Invitation 5,239 7,505 (1,100) 11,644

Number of shares Issued share capital Issued and paid-up share capital of the Company upon incorporation Issue of 5,239,198 shares of $1.00 as consideration for the acquisition of a subsidiary 2 5,239,198 5,239,200 Sub-division of 1 ordinary share of $1.00 each into 25 ordinary shares of $0.04 each Issue of 32,000,000 New Shares of $0.04 each in connection with the Invitation Issued and paid-up share capital after the Invitation Net tangible asset backing per $0.04 share 130,980,000 32,000,000 162,980,000 7.1 cents

115

B.

REPORT ON EXAMINATION OF PROFORMA CONSOLIDATED FINANCIAL INFORMATION 3 June 2003 The Board of Directors BreadTalk Group Limited 10 Collyer Quay # 19-08 Ocean Building Singapore 049315 Dear Sirs: We report on the pro forma financial information set out on pages 94 to 115 of the Prospectus dated 3 June 2003 which has been prepared, for illustrative purposes only and based on certain assumptions after making certain adjustments to show what (i) the financial results of BreadTalk Group Limited and its subsidiaries (the ``Group'') and changes in equity of the Group for the period/years ended 31 December 2000 to 2002, and cash flows of the Group for the year ended 31 December 2002 would have been if the Group structure as of the date of the lodgement of the Prospectus had been in place during the periods; and the nancial position of the Group as of the date of the balance sheet as at 31 December 2002 would have been if the Group structure as of the date of lodgement of the Prospectus had been in place on that date.

(ii)

The pro forma nancial information, because of their nature, may not give a true picture of the Group's actual nancial position, results, changes in equity and cash ows. The pro forma nancial information is the responsibility of the directors of BreadTalk Group Limited (the ``Company''). Our responsibility is to express an opinion on the pro forma nancial statements based on our work. We carried out our procedures in accordance with generally accepted auditing practice in Singapore. Our work, which involved no independent examination of the underlying nancial statements, consisted primarily of comparing the pro forma nancial information to the nancial information of each entity in the Proforma Group, considering the evidence supporting the adjustments and discussing the nancial information with the directors of the Company. In our opinion: (i) the pro forma financial information has been properly prepared from relevant financial statements making up the Proforma Group and which were prepared in accordance with Singapore Statements of Accounting Standard; the pro forma financial information has been properly prepared in a manner consistent with the format of the audited financial statements of BreadTalk Pte Ltd and the accounting policies of the Group; no material adjustment is required to be made to the information used in the preparation of the pro forma financial information; and the pro forma nancial information has been properly prepared on the basis of the assumptions as set out in Note A.2.

(ii)

(iii) (iv)

Yours sincerely Ernst & Young Certied Public Accountants Singapore Partner in charge: Max Loh Khum Whai 116

GENERAL AND STATUTORY INFORMATION

INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS 1. 2. The particulars and information on business and working experience of our Directors and Executive Ofcers are set out on pages 66 to 69 of this Prospectus. The interests of our Directors and Substantial Shareholders in our Shares as at the date of this Prospectus (before the Invitation) and as recorded in the Register of Directors' Shareholdings and the Register of Substantial Shareholders maintained under the Act, are as follows:
No. of Shares registered in the names of Directors or Substantial Shareholders (or their nominees) Directors George Quek Meng Tong Katherine Lee Lih Leng Chen Kuo Hua Ong Kian Min Lai Hock Meng Substantial Shareholders Frankie Quek Swee Heng Jason Ng Kok Soon 6,549,000 9,954,475 5.00 7.60 52,130,050 39.80 52,130,050 43,550,850 12,443,100 39.80 33.25 9.50 50,099,850 52,130,050 38.25 39.80 No. of Shares in which Directors or Substantial Shareholders are deemed to have an interest

3.

The list of present and past directorships of each of our Directors, excluding those held in our Company, over the past ve years preceding the date of this Prospectus, are as follows: Directors George Quek Meng Tong List of Other Directorships Group Companies BreadTalk Pte Ltd BreadTalk International Pte Ltd Taster Food Pte Ltd Other Companies Singapore BreadTalk Holdings Pte Ltd (in the process of being struck off) Food Junction Holdings Limited Food Junction Management Pte Ltd Food Culture Pte Ltd Food Junction Enterprises Pte Ltd Food Junction Singapore Pte Ltd Food Junction International Pte Ltd Food Junction Ventures Pte Ltd (in members' voluntary winding up) Express Teppan-Yaki (S) Pte Ltd F. Yaming International Pte Ltd Sky One Art Investment Pte Ltd Topwin Investment Holding Pte Ltd Watermark Technologies Pte. Ltd. 117 List of Past Directorships Group Companies Other Companies Singapore Cooker Zone Singapore Pte Ltd (struck off)

Directors

List of Other Directorships Malaysia T & W Food Junction Sdn Bhd Taiwan Republic of China Tee-Win Enterprise Co. Ltd PRC Shanghai Da Shi Dai Foods Co. Ltd Shanghai Ding Wei Food Co. Ltd Shanghai Huixin Restaurant Co. Ltd Shanghai Xin Jia Fang Food & Beverage Co. Ltd Beijing Da Shi Dai Foods Co. Ltd

List of Past Directorships

Katherine Lee Lih Leng

Group Companies BreadTalk Pte Ltd BreadTalk International Pte Ltd Taster Food Pte Ltd Other Companies BreadTalk Holdings Pte Ltd (in the process of being struck off) Express Teppan-Yaki (S) Pte Ltd

Group Companies

Other Companies Food Culture Pte Ltd Food Junction Enterprises Pte Ltd Food Junction Management Pte Ltd Topwin Investment Holding Pte Ltd Group Companies Other Companies Group Companies Other Companies Flextronics Holding (Singapore) Pte Ltd Hwa Ying (Pte) Ltd (liquidated pursuant to a members' voluntary winding up) Jinmao Pte Ltd MG Logic Pte Ltd (in creditors' voluntary winding up) SB Thrunet Pte Ltd

Chen Kuo Hua

Group Companies Other Companies PRC Shanghai Xiao Hu Foods Co. Ltd

Ong Kian Min

Group Companies Other Companies ACE Entrepreneurs & Advisors Pte Ltd AdXplorer Pte Ltd ASA Group Holdings Ltd Axis Systems Holdings Limited BrokersCapital Pte Ltd ENSOP Pte Ltd Esmart Holdings Limited Food Empire Holdings Limited GMG Global Ltd LANKom Electronics Limited OSIM International Ltd Penguin Boat International Ltd QEnergy Pte Ltd SB China Holdings Pte Ltd Senoko Power Ltd Sinor Invest Pte Ltd Startech Electronics Ltd

118

Directors

List of Other Directorships Water Cove Networks (S) Pte Ltd (in members' voluntary winding up) Zinglabs Pte Ltd

List of Past Directorships

Lai Hock Meng

Group Companies Other Companies City Gas Pte Ltd Immuno Biocare Pte Ltd Millennium 2000 Group Ltd Rabelaisian Resources Pte Ltd Senoko Power Ltd Singapore Chinese Orchestra Company Ltd Star Acquisition Holdings Pte Ltd Star Castle Ltd Star Dynamic Pte Ltd Star Investment Consulting Pte Ltd

Group Companies Other Companies Asia Medical Technology. com Sdn Bhd FA Systems Automation (S) Pte Ltd Heritage Advisory Asia Pte Ltd Star Technology Innovation Fund Ltd

4.

Save as disclosed below, none of our Executive Ofcers currently holds directorships or held any past directorships in the last ve years preceding the date of this Prospectus: Executive Officer Chung Pit Wah List of Directorships V-Fresh International Pte Ltd List of Past Directorships

5.

Save as disclosed under ``Shareholder'' and ``Remuneration of Executive Ofcers and other employees who are related to our Directors and Substantial Shareholders'' on page 71 of this Prospectus, none of our Directors, Executive Ofcers and Substantial Shareholders of our Company are related to one another by blood or marriage. Save as disclosed under the section on ``Interested Person Transactions'' on pages 84 to 87, none of our Directors has any professional relationship with our Company and our other Directors and Substantial Shareholders. Save as disclosed under the section on ``Interested Person Transactions'' on pages 84 to 87, none of our Directors and Executive Ofcers, Substantial Shareholders or experts is interested, directly or indirectly, in the promotion of, or in any assets which have been acquired or disposed of by, or leased to, our Company or any of our subsidiaries within the two years preceding the date of this Prospectus, or are proposed to be acquired or disposed of by, or leased to, our Group. Save as disclosed under ``Service Agreement'' on pages 72 to 73 of this Prospectus, there are no existing or proposed service agreements between our Directors or our Executive Ofcers and our Company or any of our subsidiaries. There is no shareholding qualication for our Directors under the Articles of Association of our Company. The aggregate remuneration and emoluments paid to the then existing Directors for services in all capacities to our Group for FY2002 amounted to approximately $571,000. For FY2003, the aggregate remuneration and emoluments payable to our Directors (excluding any estimated amount of prot sharing or performance bonus) under the arrangements in force as at the date of this Prospectus, including the service agreement referred to on pages 72 to 73 of this Prospectus is estimated to be approximately $538,000. No option to subscribe for shares in, or debentures of our Company or our subsidiary companies has been granted to, or has been exercised by, any of our Director or Executive Ofcer within the last three nancial years.

6.

7.

8. 9.

10.

119

11.

Save as disclosed under ``Interested Person Transactions'' on pages 84 to 87 of this Prospectus, no sum or benet has been paid or has been agreed to be paid to any Director, or to any rm in which such Director is a partner or any corporation in which such Director holds shares or debentures, in cash or shares or otherwise, by any person to induce him to become, or to qualify him as, a Director, or otherwise for services rendered by him or by such rm or corporation in connection with the promotion or formation of our Company. Save as disclosed below, none of our Directors, Executive Ofcers or Controlling Shareholders: (a) (b) has at any time during the last ten years, had a petition under any bankruptcy laws of any jurisdiction led against him or against a partnership of which he was a partner; has at any time during the last ten years, had a petition under any law of any jurisdiction led against a corporation of which he was a director or key executive for the winding up of that corporation on the ground of insolvency; has had any unsatised judgment against him; has been convicted of any offence, in Singapore or elsewhere, involving fraud or dishonesty which is punishable with imprisonment for three months or more, or has been the subject of any criminal proceedings (including any pending criminal proceedings which he is aware of) for such purpose; 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 been the subject of any criminal proceedings (including any pending criminal proceedings which he is aware of) for such breach; has at any time during the last ten years, had judgment 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 nding of fraud, misrepresentation or dishonesty on his part, or the subject of any civil proceedings (including any pending civil proceedings which he is aware of) involving an allegation of fraud, misrepresentation or dishonesty on his part; has been convicted in Singapore or elsewhere of any offence in connection with the formation or management of any corporation; has been disqualied from acting as a director of any corporation, or from taking part directly or indirectly in the management of any corporation; has been the subject of any order, judgment or ruling of any court, tribunal or governmental body, permanently or temporarily enjoining him from engaging in any type of business practice or activity; or has, to his knowledge, been concerned with the management or conduct, in Singapore or elsewhere, of the affairs of: (i) (ii) any corporation which has been investigated for a breach of any law or regulatory requirement governing corporations in Singapore or elsewhere; or any corporation or partnership which has been investigated for a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere,

12.

(c) (d)

(e)

(f)

(g) (h) (i)

(j)

in connection with any matter occurring or arising during the period when he was so concerned with the corporation or partnership. On 29 April 2003, a writ was served on George Quek claiming for sums amounting to approximately S$250,000 which are alleged to be due and owing pursuant to alleged loans made to George Quek in 1999. George Quek's defence is that the alleged amount was payment made in relation to Katherine Lee's divestment of her share of interest in a business in which Katherine Lee had entered into earlier with the plaintiff, and a claim on the share of the prots arising out of that business. George Quek has led his defence to the writ of summons on 21 May 2003. At present the plaintiff has led an application for summary judgment, which will be heard on 2 July 2003. 120

George Quek is defending the claim and is presently taking steps to resist the application for summary judgment. Our Independent Director, Lai Hock Meng, was the managing director of Morgan Grenfell Asia & Partners Securities Pte Ltd (``MGAPS'') from 1993 to 1996. In January 1994, MGAPS was found to have breached the regulations of the then Stock Exchange of Singapore pertaining to adjusted net capital of MGAPS. The breach was due to the company trading in business volumes in excess of a certain multiple of its capital after adjusting for, amongst other items, the doubtful debts, book losses on customers' outstanding positions and shares awaiting collection. The company was ned $75,000 by the then Stock Exchange of Singapore for the breach. Lai Hock Meng was not personally involved in the said breach. 13. There is no arrangement or understanding with any Substantial Shareholder, customer or supplier of our Company or any other persons, pursuant to which that person was selected as a Director or Executive Ofcer of our Company.

SHARE CAPITAL 14. As at the date of this Prospectus, there is only one class of shares in the capital of our Company. The rights and privileges of the Shares are stated in the Articles of Association of our Company. There are no founder, management, deferred or issued shares reserved for any purpose. Our Directors and Substantial Shareholders are not entitled to any different voting rights from other shareholders. As at the date of this Prospectus, to the best of the knowledge of our Directors, our Directors are not aware of any arrangements, the operation of which may at a subsequent date result in the change in the control of our Company. As at the date of this Prospectus, to the best of the knowledge and belief of our Directors, our Directors are not aware of, nor have they received any indications of, public take-over offers by third parties in respect of our Shares. Save as disclosed herein, there were no changes in the issued share capital of our Company and our subsidiaries within the three years preceding the date of this Prospectus. Number of ordinary shares issued 2 5,239,198 Issue price and basis of issue price $1.00 (par value) $1.00 (par value) $1.00 (par value) $1.00 (par value) $1.00 (par value) $1.00 (par value) $1.00 (par value) $1.00 (par value)

15. 16.

17.

18.

Name of company/ Date of issue BreadTalk Group Limited/ 6 March 2003 26 March 2003 $5,239,200 BreadTalk Pte Ltd/ 24 April 2000 26 May 2000 11 April 2001 BreadTalk International Pte Ltd/ 6 March 2003 Taster Food Pte Ltd/ 4 April 2003 30 April 2003

Purpose of issue Subscription shares Acquisition of BTPL Subscription shares Working capital Working capital Subscription shares Subscription shares New Allotment

Consideration $2.00 500,000 shares of BTPL $3.00 $249,997 $250,000 $2.00

Resultant paid-up capital $2.00

3 249,997 250,000 2

$3.00 $250,000 $500,000 $2.00

3 7

$3.00 $7.00

$3.00 $10.00

121

19.

Save as disclosed above, no Shares in or debentures of our Company or any of our subsidiaries have been issued or are agreed to be issued by our Company or any of our subsidiaries, as fully or partly paid-up and whether for cash or for a consideration other than cash, within the three years preceding the date of this Prospectus. Save as disclosed under ``The BreadTalk Group Limited Employees' Share Option Scheme'' on pages 74 to 83 of this Prospectus, no person has been, or is entitled to be granted an option to subscribe for Shares in or debentures of our Company or any of our subsidiaries.

20.

ARTICLES OF ASSOCIATION 21. Our Company is registered in Singapore with the Registrar of Companies and Businesses, and our Company's registration number is 200302045G. The main object of our Company is investment holding. Our objects can be found in Clause 3 of our Memorandum of Association which is available for inspection at our registered ofce as stated on page 4 of this Prospectus. An extract of our Articles of Association providing for, inter alia, transferability of Shares, directors' voting rights, borrowing powers of directors and dividend rights are set out in Annex A on pages 128 to 142 of this Prospectus. The Articles of Association of our Company is available for inspection at our registered ofce as stated on page 4 of this Prospectus.

22.

BANK BORROWINGS AND WORKING CAPITAL 23. Save as disclosed under ``Capitalisation and Indebtedness'' on page 41 of this Prospectus, as at 30 April 2003, there were no other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trading bills) or acceptance credits, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities. In the opinion of our Directors, there are no minimum amounts which must be raised by the issue of the New Shares in order to provide for the following items: (a) (b) (c) (d) the purchase price of any property purchased which is to be defrayed in whole or in part out of the proceeds from the issue of the New Shares; any estimated preliminary and issue expenses (including underwriting commission and brokerage) for this Invitation payable by our Company; the repayment of any money borrowed by our Company in respect of any of the foregoing matters; and working capital.

24.

Although no minimum amount must be raised by the Invitation in order to provide for the items set out above, the estimated expenses in connection with the Invitation is approximately $1.1 million. Such amount is proposed to be provided out of the proceeds of the Invitation or, in the event the Invitation is cancelled, out of the funds generated from our Company's operations. 25. Our Directors are of the opinion that, after taking into account cash generated from our operations and our existing banking facilities, our Group has adequate working capital for its present working capital requirements.

FINANCIAL CONDITION AND OPERATIONS OF THE GROUP 26. Save as disclosed in this Prospectus, our Directors are not aware of any material information including trading factors or risks which are unlikely to be known or anticipated by the general public and which could materially affect the prots of our Company and our subsidiaries. Save as disclosed in this Prospectus, the financial condition and operations of our Group are not likely to be affected by any of the following: (a) known trends or known demands, commitments, events or uncertainties that will result in or are reasonably likely to result in our Group's liquidity increasing or decreasing in any material way; material commitments for capital expenditure; 122

27.

(b)

(c) (d) 28.

unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from operations; and known trends or uncertainties that have had or that our Group expects to have a material favourable or unfavourable impact on revenue or operating income.

Save as disclosed under ``Subsequent Events'' on pages 113 and 114 of this Prospectus, the Directors are not aware of any event that has occurred since 31 December 2002 which may have a material effect on the nancial information provided under the Proforma Consolidated Financial Information or the Audited Financial Statements of BTPL for the nancial years from 2000 to 2002.

MATERIAL CONTRACTS 29. The dates of, parties to, and general nature of contracts, not being contracts entered into in the ordinary course of business of our Company and our subsidiaries (as the case may be) within the two years preceding the date of this Prospectus and are or may be material are as follows: (a) Sale and Purchase Agreement dated 12 March 2003 between George Quek Meng Tong, Katherine Lee, Chen Kuo Hua, Go Kun Heng and Ng Kok Soon pursuant to which our Company acquired the entire issued and paid up capital of BTPL for a consideration of $5,239,198; Lease Agreement dated 26 November 2000 between Katherine Lee as landlord and BTPL as lessee for the lease of an apartment at 125 Meyer Road # 02-04 Singapore 437936 at an aggregate monthly rent and service charge of $3,464; Depository Agreement dated 30 May 2003 between our Company and CDP pursuant to which CDP agreed to act as central depository for our Company's securities for trades in the securities of our Company through the SGX-ST; Management and Underwriting Agreement dated 3 June 2003 entered into between our Company, SBI E2-Capital Pte Ltd, SBI E2-Capital Securities Pte Ltd and The Development Bank of Singapore Ltd referred to in paragraph 32(a) on page 124 of this Prospectus; and Placement Agreement dated 3 June 2003 entered into between our Company and SBI-E2 Capital Securities Pte Ltd, The Development Bank of Singapore Ltd and UOB Kay Hian Private Limited referred to in paragraph 32(c) on page 124 of this Prospectus.

(b)

(c)

(d)

(e)

LITIGATION 30. (a) A claim has been made at the Subordinate Courts by one of our customers for incurred medical expenses, future medical expenses and loss of earning capacity due to an alleged injury caused by an accident at our retail outlet at Junction 8 Shopping Centre, Bishan. We have referred this matter to our insurers who are handling the matter. As at the date of this Prospectus, the matter is still pending resolution. Notwithstanding, the Company has adequate insurance coverage in relation to the subject nature and quantum of the claim. We were informed that our application to le our trademarks at the Philippines Intellectual Property Ofce in March 2002 was objected on the basis that there was a pending application for the name ``BreadTalk'' by an individual. We have lodged submissions against the application by that individual and are taking steps to ensure that our trademarks are registered at the Philippines Intellectual Property Ofce. A third party has made an application for the registration of ``BreadTalk'' with respect to Class 30 (for breads, rolls, confectionary items etc.) at the Indonesian Intellectual Property Ofce. We have commenced opposition proceedings against this third party and are taking steps to ensure that our trademarks are registered at the Indonesian Intellectual Property Ofce. A third party has made an application for the mark of `` '' in Class 43 at the Intellectual Property Ofce in the PRC. We are currently contemplating possible action against this party. 123

(b)

(c)

(d)

(e)

We were informed that there are applications by third parties for the mark ``BreadTalk'' at the Indian Trademarks Ofce in Class 30. We are currently contemplating possible actions against the parties.

31.

Save as disclosed above, neither our Company nor any of our subsidiaries is engaged in any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings and those involving any third party in respect of any claims or amounts which are material in the context of the Invitation and our Directors have no knowledge of any proceedings pending or threatened against our Company or any of our subsidiaries or any facts likely to give rise to any litigation, claims or proceedings which might materially affect the nancial position or the business of our Company or any of our subsidiaries.

MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS 32. (a) Pursuant to the Management and Underwriting Agreement dated 3 June 2003, our Company appointed the Managers to manage the Invitation, and SBI E2-Capital Securities Pte Ltd and The Development Bank of Singapore Ltd as the Underwriters to underwrite the Offer Shares. The Managers will receive a fee for its services as Managers in connection with the Invitation. Pursuant to the Management and Underwriting Agreement, the Underwriters agreed to underwrite the Offer Shares for a commission of 1.5 per cent of the Issue Price for each Share, payable by our Company for subscribing or for procuring subscribers for any Shares not subscribed for pursuant to the Invitation and will pay or procure payment to our Company for each Share. The number of Offer Shares each Underwriter has agreed to subscribe or procure subscription for is as follows:
Underwriter SBI E2-Capital Securities Pte Ltd The Development Bank of Singapore Ltd Number of Offer Shares 1,600,000 1,600,000

(b)

(c)

Pursuant to the Placement Agreement dated 3 June 2003, the Joint Lead Placement Agents agreed to subscribe for or procure the subscription for the Placement Shares for a placement commission of 2.5 per cent of the Issue Price of the Placement Shares, to be paid by our Company. The number of Shares each Joint Lead Placement Agent has agreed to subscribe or procure subscriptions for is as follows:
Joint Lead Placement Agents SBI E2-Capital Securities Pte Ltd The Development Bank of Singapore Ltd UOB Kay Hian Private Limited Number of Placement Shares 7,200,000 14,400,000 7,200,000

(d)

Brokerage will be paid by our Company pursuant to the Invitation, to members of the SGXST, merchant banks in Singapore and members of the Association of Banks in Singapore in respect of accepted applications made on Application Forms bearing their respective stamps, or to Participating Banks in respect of successful applications made through Electronic Applications at ATMs or Internet Banking websites (where applicable) of the relevant Participating Banks, at the rate of 1.0 per cent of the Issue Price for each Offer Share. Subscribers of Placement Shares (including the Reserved Shares) may be required to pay a placement commission of up to 1.0 per cent of the Issue Price to the Joint Lead Placement Agents. Save as aforesaid, no commission, discount or brokerage, has been paid or other special terms granted within the two years preceding the date of this Prospectus or is payable to any Director, promoter, expert, proposed Director or any other person for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any Shares in or debentures of our Company or any of our subsidiaries.

(e)

(f)

124

(g)

The Management and Underwriting Agreement may be terminated by the Managers and the Underwriters at any time on or prior to the close of the Application List on the occurrence of certain events including, inter alia: (1) any change, crisis or material deterioration or any development involving a prospective change, crisis or material deterioration in the monetary, political, financial or economic conditions (including stock market conditions, foreign exchange market conditions, the level of interest rates or exchange control requirements) in Singapore or internationally or the occurrence of any combination of any change, crisis, material deterioration or developments in such conditions, or any war, military action, conflict or engagement in any form or nature whatsoever anywhere in the world which in the reasonable opinion of the Managers and the Underwriters after due and careful consideration, is likely to result in (i) a material fluctuation or material deterioration or adverse conditions in the stock markets in Singapore or overseas or (ii) the success of the Invitation or the issue or distribution of the New Shares (whether in the primary or secondary market) being prejudiced or the Invitation not being well received or the New Shares not being substantially applied for; or (iii) it becoming inadvisable, inexpedient or uncommercial for the Invitation to commence, or to be proceeded with or completed; or (iv) the business, trading position, operations or prospects of our Company or our Group being materially and adversely affected; or (v) an adverse effect on the market price of our Shares, including the New Shares. any change or prospective change in or any introduction or prospective introduction of any legislation, regulation, policy, directive, guideline, request or interpretation or application thereof, by any government or regulatory body, whether in Singapore or elsewhere, whether or not having the force of law, or other occurrence of any nature whatsoever which, in the reasonable opinion of the Managers and/or the Underwriters after due and careful consideration, materially and adversely affects or is likely to materially and adversely affect the listing and quotation of our Shares on the Official List of the SGX-Sesdaq or the business, trading position, operations or prospects of our Company or our Group, or to result in the Invitation not being well received by the public.

(2)

(h)

The Placement Agreement is conditional upon the Management and Underwriting Agreement not having been terminated or rescinded pursuant to the provisions of the Management and Underwriting Agreement. In the event that the Management and Underwriting Agreement is terminated for any reason, our Company reserves the right to cancel the Invitation.

(i) 33.

Our Public Relations Consultant for the Invitation is an associated company of SBI E2-Capital Pte Ltd, one of our Joint Lead Managers and an associated company of SBI E2-Capital Securities Pte Ltd, one of our Underwriters and a Joint Lead Placement Agent. DBS Bank, one of our Joint Lead Managers, Underwriters and Joint Lead Placement Agents, is also our Receiving Bank and one of our Principal Bankers. Save as disclosed and in paragraph 32 above, we do not have any material relationships with the Joint Lead Managers, Underwriters and Joint Lead Placement Agents.

MISCELLANEOUS 34. The nature of the business of our Company and our subsidiaries is stated on page 47 of this Prospectus. All corporations which are deemed to be related to our Company by virtue of Section 6 of the Act, are subsidiaries of our Company as set out on page 47 of this Prospectus. The time of opening of the Application List is set out on page 12 of this Prospectus. The amount payable on application is $0.24 for each Offer and Placement Share and $0.205 for each Reserved Share. There has been no previous issue of Shares by our Company or offer for subscription of our Shares to the public within the two years preceding the date of this Prospectus. Application monies received by our Company in respect of successful applications (including successfully balloted applications which are subsequently rejected) will be placed in a separate 125

35. 36.

37.

non-interest bearing account with DBS Bank (the ``Receiving Bank''). In the ordinary course of business, the Receiving Bank will deploy these monies in the inter-bank money market. All prots derived from the deployment of such monies will accrue to the Receiving Bank. Any refund of all or part of the application moneys to unsuccessful applicants will be made without any interest or share of revenue or other benet arising therefrom. 38. No expert is employed on a contingent basis by our Company or any of our subsidiaries, or has a material interest, whether direct or indirect, in the Shares of our Company or our subsidiaries, or has a material economic interest, whether direct or indirect, in our Company, including an interest in the success of the Invitation. No property has been purchased or acquired or proposed to be purchased or acquired by our Group which is to be paid for, wholly or partly, out of the proceeds of the Invitation or the purchase or acquisition of which has not been completed at the date of the issue of this Prospectus, other than property the contract for the purchase or acquisition whereof was entered into in the ordinary course of business of our Company or our subsidiaries, the contract not being made in contemplation of the Invitation nor the Invitation in consequence of the contract. The estimated expenses payable by our Company in connection with the Invitation, including placement commission, brokerage, management fee, auditors' fee, solicitors' fee, listing fee and all other incidental expenses in relation to this Invitation will be borne by our Company and are estimated to amount to approximately $1.1 million which may be broken down as follows:
$'000 Listing fees Professional fees Underwriting and placement commission and brokerage Miscellaneous expenses Total $10 $700 $188 $202 $1,100

39.

40.

41.

Save as disclosed under the heading ``Restructuring Exercise'' on page 46 of this Prospectus and under the heading ``Interested Person Transactions'' on pages 84 to 87 of this Prospectus, no amount of cash or securities or benet 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. This Prospectus is dated 3 June 2003. No Shares will be allotted on the basis of this Prospectus later than six months after the date of this Prospectus. Our Company currently intends to continue to appoint Ernst & Young as the auditors of our Group after the listing of our Company on the Ofcial List of the SGX-Sesdaq. Details including the names, addresses and professional qualications (including membership in a professional body) of the auditors of BTPL since incorporation for the nancial years from FY2000 to FY2002 are as follows:
Period FY2000 Name, Membership and Address K S NG & CO Certied Public Accountants No. 35-A Lorong 17 Geylang Singapore 388559 ARTHUR ANDERSEN Certied Public Accountants 10 Hoe Chiang Road # 16-01 Keppel Towers Singapore 089315 Professional Body/ Membership Institute of Certied Public Accountants of Singapore (``ICPAS'') Partner in Charge/ Professional Qualification Ng Kem San Certied Public Accountant (``CPA'')

42. 43. 44.

FY2001

ICPAS

Max Loh Khum Whai CPA

126

Period FY2002

Name, Membership and Address ERNST & YOUNG Certied Public Accountants 10 Collyer Quay # 21-01 Ocean Building Singapore 049315

Professional Body/ Membership ICPAS

Partner in Charge/ Professional Qualification Max Loh Khum Whai CPA

CONSENTS 45. (a) The Auditors and Reporting Accountants have given and have not withdrawn their written consent to the issue of this Prospectus with the inclusion herein of their Report on Examination of Proforma Consolidated Financial Information and references to their name in the form and context in which it appears in this Prospectus and to act in such capacity in relation to this Prospectus. The Joint Lead Managers, Underwriters and Joint Lead Placement Agents, the Solicitors to the Invitation, Principal Bankers, Receiving Bank, Share Registrar and the Public Relations Consultant have each given and have not withdrawn their respective written consents to the issue of this Prospectus with the inclusion herein of and references to their respective names in the form and context in which they respectively appear in this Prospectus. KS Ng & Co, Arthur Andersen and Ernst & Young have given and have not withdrawn their written consent to the issue of this Prospectus and the inclusion of their auditors' reports in respect of the audited nancial statements of BTPL for FY2000 to FY2002 and references to their names in the form and context in which they appear in this Prospectus.

(b)

(c)

STATEMENT BY THE JOINT LEAD MANAGERS 46. The Joint Lead Managers acknowledge that, to the best of their knowledge and belief and based on information furnished to them by our Group, this Prospectus constitutes full and true disclosure of all material facts about the Invitation and our Group after due and careful enquiry and they are not aware of any other material facts the omission of which would make statements herein misleading in any material respect.

RESPONSIBILITY STATEMENT BY OUR DIRECTORS 47. This Prospectus has been seen and approved by our Directors and they collectively and individually accept full responsibility for the accuracy of the information given in this Prospectus and conrm, 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 thereof and that there are no other material facts the omission of which would make any statements herein misleading, and that this Prospectus constitutes full and true disclosure of all material facts about the Invitation, our Company and our subsidiaries.

DOCUMENTS AVAILABLE FOR INSPECTION 48. Copies of the following documents may be inspected at the registered office of our Company during normal business hours for a period of six months from the date of this Prospectus: (a) (b) (c) (d) (e) (f) the Memorandum and Articles of Association of our Company; the Proforma Consolidated Financial Information and Report on Examination of Proforma Consolidated Financial Information as set out on pages 93 to 116 of this Prospectus; the Service Agreement referred to on pages 72 to 73 of this Prospectus; the material contracts referred to in ``Material Contracts'' on page 123 of this Prospectus; the letters of consent referred to in ``Consents'' on pages 126 to 127 of this Prospectus; and the audited financial statements of BTPL for the financial years ended 31 December 2000 to 2002.

127

ANNEX A

EXTRACTS OF ARTICLES OF ASSOCIATION OF OUR COMPANY

The following provisions in the Articles of Association of our Company relate to the Directors' borrowing powers and remuneration, restrictions on voting powers of Directors in interested transactions, shareholders' voting rights, consents for variation of class rights and restrictions on the transferability of shareholdings: (a) Restrictions on voting powers of Directors in interested transactions Article 96(1) Powers of the Directors to contract with the Company No Director or intending Director shall be disqualified by his office from contracting or entering into any arrangement with the Company either as vendor, purchaser or otherwise nor shall such contract or arrangement or any contract or arrangement entered into by or on behalf of the Company in which any Director shall be in any way interested be avoided nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason only of such Director holding that office or of the fiduciary relation thereby established but every Director shall observe the provisions of Section 156 of the Act relating to the disclosure of the interests of the Directors in contracts or proposed contracts with the Company or of any office or property held by a Director which might create duties or interests in conflict with his duties or interests as a Director and any contract or arrangement to be entered into by or on behalf of the Company in which any Director shall be in any way interested shall be subject to any requirements that may be imposed by the Exchange. No Director shall vote in respect of any contract, arrangement or transaction in which he is so interested as aforesaid or in respect of any allotment of shares in or debentures of the Company to him and if he does so vote his vote shall not be counted but this prohibition as to voting shall not apply to: (i) (ii) any arrangement for giving to him any security or indemnity in respect of money lent by him or obligations undertaken by him for the benefit of the Company; or any arrangement for the giving by the Company of any security to a third party in respect of a debt or obligation of the Company for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the deposit of a security; or any contract by him to subscribe for or underwrite shares or debentures of the Company; or any contract or arrangement with any other company, corporation or body in which he is interested only as a director or other officer or creditor of or as a shareholder in or beneficially interested in the shares thereof; or approval or amendment of any share option scheme or other share incentive scheme even though the participants eligible to participate in that scheme include Directors provided that a Director shall not vote on any resolution concerning the grant of any option or shares to himself.

(iii) (iv)

(v)

Article 96(2) Relaxation of restriction on voting A Director, notwithstanding his interest, may be counted in the quorum present at any meeting where he or any other Director is appointed to hold any ofce or place of prot under the Company, or where the Directors resolve to exercise any of the rights of the Company (whether by the exercise of voting rights or otherwise) to appoint or concur in the appointment of a Director to hold any ofce or place of prot under any other company, or where the Directors resolve to enter into or make any arrangements with him or on his behalf pursuant to these Articles or where the terms of any such appointment or arrangements as hereinbefore mentioned are considered, and he may vote on any such matter other than in respect of the appointment of or arrangements with himself or the xing of the terms thereof. Notwithstanding Articles 96(1)(i) to (iv) above, a Director shall not vote in respect of any contract or arrangement or proposed contract or arrangement in which he has directly or indirectly a personal material interest. 128

Article 97(2) Exercise of voting power The Directors may exercise the voting power conferred by the shares in any company held or owned by the Company in such manner and in all respects as the Directors think t in the interests of the Company (including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors of such company or voting or providing for the payment of remuneration to the directors of such company) and any such Director of the Company may vote in favour of the exercise of such voting powers in the manner aforesaid notwithstanding that he may be or be about to be appointed a director of such other company. (b) Directors' borrowing powers Article 124 Director's borrowing powers The Directors may at their discretion exercise every borrowing power vested in the Company by its Memorandum of Association or permitted by law and may borrow or raise money from time to time for the purpose of the Company and secure the payment of such sums by mortgage, charge or hypothecation of or upon all or any of the property or assets of the Company including any uncalled or called but unpaid capital or by the issue of debentures (whether at par or at discount or premium) or otherwise as they may think t. (c) Retirement of Directors Article 99 Managing Director to be subject to retirement by rotation A Managing Director (or any Director holding an equivalent appointment) shall, subject to the provisions of any contract between him and the Company, be subject to the same provisions as to retirement by rotation, resignation and removal as the other Directors of the Company. The appointment of any Director to the ofce of Managing Director (or any Director holding an equivalent appointment), shall not automatically determine if he ceases from any cause to be a Director, unless the contract or resolution under which he holds ofce shall expressly state otherwise, in which event such determination shall be without prejudice to any claim for damages for breach of any contract of service between him and the Company. Article 102(1)(viii) Vacation of ofce of Director Subject as provided in these Articles or to the terms of any subsisting agreement and the Act, the ofce of a Director shall be vacated subject to the provisions of the Act at the conclusion of the Annual General Meeting commencing next after he attains the age of 70 years. Article 104 Retirement of Directors by Rotation Subject to these Articles and to the Act, at each Annual General Meeting at least one-third of the Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not greater than one-third) shall retire from ofce by rotation Provided that all Directors shall retire from ofce at least once every three years. Article 105 Selection of Directors to retire The Directors to retire by rotation shall include (so far as necessary to obtain the number required) any Director who is due to retire at the meeting by reason of age or who wishes to retire and not to offer himself for re-election. Any further Directors so to retire shall be those of the other Directors subject to retirement by rotation who have been longest in ofce since their last re-election or appointment or have been in ofce for the three years since their last election. However as between persons who became or were last re-elected Directors on the same day, those to retire shall (unless they otherwise agree among themselves) be determined by lot. A retiring Director shall be eligible for re-election.

129

(d)

Re-election of Directors Article 106 Deemed re-appointed The Company at the Meeting at which a Director retires under any provision of these Articles may by Ordinary Resolution fill up the vacated office by electing a person thereto. In default the retiring Director shall be deemed to have been re-elected, unless: (i) (ii) (iii) at such Meeting it is expressly resolved not to fill up such vacated office or a resolution for the re-election of such Director is put to the Meeting and lost; or such Director is disqualified under the Act from holding office as a Director or has given notice in writing to the Company that he is unwilling to be re-elected; or such Director has attained any retiring age applicable to him as a Director.

(e)

Qualication as Director Article 91 Qualications A Director need not be a Member and shall not be required to hold any share qualication in the Company and shall be entitled to attend and speak at General Meetings but subject to the provisions of the Act he shall not be of or over the age of 70 years at the date of his appointment.

(f)

Directors' remuneration Article 92(1) Fees The fees of the Directors shall be determined from time to time by the Company in General Meetings and such fees shall not be increased except pursuant to an Ordinary Resolution passed at a General Meeting where notice of the proposed increase shall have been given in the notice convening the Meeting. Such fees shall be divided among the Directors in such proportions and manner as they may agree and in default of agreement equally, except that in the latter event any Director who shall hold ofce for part only of the period in respect of which such fee is payable shall be entitled only to rank in such division for the proportion of fee related to the period during which he has held ofce. Article 92(2) Extra Remuneration Any Director who is appointed to any executive ofce or serves on any committee or who otherwise performs or renders services, which, in the opinion of the Directors, are outside his ordinary duties as a Director, may be paid such extra remuneration as the Directors may determine, subject however as is hereinafter provided in this Article. Article 92(3) Remuneration of Director The fees (including any remuneration under Article 92(2) above) in the case of a Director other than an Executive Director shall be payable by a xed sum and shall not at any time be by commission on or percentage of the prots or turnover, and no Director whether an Executive Director or otherwise shall be remunerated by a commission on or percentage of turnover. Article 94 Pensions to Directors and Dependents Subject to the Act, the Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director or former Director who had held any other salaried ofce or place of prot with the Company or to his widow or dependants or relations or connections and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

130

Article 95 Benets for employees The Directors may procure the establishment and maintenance of or participate in or contribute to any non-contributory or contributory pension or superannuation fund or life assurance scheme or any other scheme whatsoever for the benet of and pay, provide for or procure the grant of donations, gratuities, pensions, allowances, benets or emoluments to any persons (including Directors and other ofcers) who are or shall have been at any time in the employment or service of the Company or of the predecessors in business of the Company or of any subsidiary company, and the wives, widows, families or dependants of any such persons. The Directors may also procure the establishment and subsidy of or subscription and support to any institutions, associations, clubs, funds or trusts calculated to be for the benet of any such persons as aforesaid or otherwise to advance the interests and well-being of the Company or of any such other company as aforesaid or of its Members and payment for or towards the insurance of any such persons as aforesaid, and subscriptions or guarantees of money for charitable or benevolent objects or for any exhibition or for any public, general or useful object. Article 100 Remuneration of Managing Director The remuneration of a Managing Director (or any Director holding an equivalent appointment) shall from time to time be xed by the Directors and may subject to these Articles be by way of salary or commission or participating in prots or by any or all of these modes but he shall not under any circumstances be remunerated by a commission on or a percentage of turnover. Article 109(1) Alternate Directors Any Director of the Company may at any time appoint any person who is not a Director or an alternate of another Director and who is approved by a majority of his Co-Directors to be his Alternate Director and may at any time remove any such Alternate Director from ofce. An Alternate Director so appointed shall be entitled to receive from the Company such proportion (if any) of the remuneration otherwise payable to his appointor as such appointor may by notice in writing to the Company from time to time direct, but save as aforesaid he shall not in respect of such appointment be entitled to receive any remuneration from the Company. Any fee paid to an Alternate Director shall be deducted from the remuneration otherwise payable to his appointor. (g) General Meetings Article 60(1) Annual General Meeting Subject to the provisions of the Act, the Company shall in each year hold a General Meeting in addition to any other meetings in that year to be called the Annual General Meeting, and not more than fteen months shall elapse between the date of one Annual General Meeting of the Company and that of the next. The Annual General Meeting shall be held at such time and place as the Directors shall appoint. Article 60(2) Extraordinary General Meetings All General Meetings other than Annual General Meetings shall be called Extraordinary General Meetings. Article 65 Quorum No business shall be transacted at any General Meeting unless a quorum is present at the time the meeting proceeds to business. Save as herein otherwise provided, two Members present in person shall form a quorum. For the purpose of this Article, ``Member'' includes a person attending by proxy or by attorney or as representing a corporation which is a Member. Provided that (i) a proxy representing more than one Member shall only count as one Member for the purpose of determining the quorum; and (ii) where a Member is represented by more than one proxy such proxies shall count as only one Member for the purpose of determining the quorum. 131

Article 66 Adjournment if quorum not present If within half an hour from the time appointed for the Meeting a quorum is not present, the Meeting if convened on the requisition of Members shall be dissolved. In any other case it shall stand adjourned to the same day in the next week at the same time and place, or to such other day and at such other time and place as the Directors may determine, and if at such adjourned Meeting a quorum is not present within half an hour from the time appointed for holding the Meeting, the Meeting shall be dissolved. Article 67 Resolutions in writing Subject to the Act, a resolution in writing signed by every Member of the Company entitled to vote or being a corporation by its duly authorised representative shall have the same effect and validity as an Ordinary Resolution of the Company passed at a General Meeting duly convened, held and constituted, and may consist of several documents in the like form, each signed by one or more of such Members. Article 68 Chairman The Chairman of the Directors or, in his absence, the Deputy Chairman (if any) shall preside as Chairman at every General Meeting. If there is no such Chairman or Deputy Chairman or if at any Meeting he is not present within fteen minutes after the time appointed for holding the Meeting or is unwilling to act, the Members present shall choose some Director to be Chairman of the Meeting or, if no Director is present or if all the Directors present decline to take the Chair, some Member present to be Chairman. Article 69 Adjournment The Chairman may, with the consent of any Meeting at which a quorum is present (and shall if so directed by the Meeting), adjourn the Meeting from time to time and from place to place, but no business shall be transacted at any adjourned Meeting except business which might lawfully have been transacted at the Meeting from which the adjournment took place. When a meeting is adjourned for fourteen days or more, notice of the adjourned Meeting shall be given as in the case of the original Meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned Meeting. Article 70 Method of voting At any General Meeting a resolution put to the vote of the Meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded: (i) (ii) by the Chairman of the meeting; or by at least two Members present in person or by proxy (where a Member has appointed more than one proxy, any one of such proxies may represent that member) or attorney or in the case of a corporation by a representative and entitled to vote thereat; or by any Member or Members present in person or by proxy (where a Member has appointed more than one proxy, any one of such proxies may represent that member) or attorney or in the case of a corporation by a representative or any number or combination of such Members, holding or representing not less than one-tenth of the total voting rights of all the Members having the right to vote at the Meeting; or by a Member or Members present in person or by proxy (where a Member has appointed more than one proxy, any one of such proxies may represent that member) or attorney or in the case of a corporation by a representative or any number or combination of such Members, holding or representing shares in the Company conferring a right to vote at the Meeting being shares on which an aggregate sum has been paid up equal to or not less than one-tenth of the total sum paid up on all the shares conferring that right.

(iii)

(iv)

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Provided always that no poll shall be demanded on the election of a Chairman or on a question of adjournment. Unless a poll is so demanded (and the demand is not withdrawn) a declaration by the Chairman that a resolution has been carried or carried unanimously or by a particular majority or lost and an entry to that effect in the minute book shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. A demand for a poll may be withdrawn. Article 71 Taking a poll If a poll is duly demanded (and the demand is not withdrawn) it shall be taken in such manner (including the use of ballot or voting papers or tickets) as the Chairman may direct and the result of a poll shall be deemed to be the resolution of the Meeting at which the poll was demanded. The Chairman may, and if so requested shall, appoint scrutineers and may adjourn the Meeting to some place and time xed by him for the purpose of declaring the result of the poll. Article 72 Votes counted in error If any votes are 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 is pointed out at the same Meeting or at any adjournment thereof, and not in that case unless it shall in the opinion of the Chairman be of sufcient magnitude. Article 73 Chairman's casting vote Subject to the Act and the requirements of the Exchange, in the case of equality of votes, whether on a show of hands or on a poll, the Chairman of the Meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a second or casting vote in addition to the votes to which he may be entitled as a Member or as proxy of a Member. Article 74 Time for taking a poll A poll demanded on any question shall be taken either immediately or at such subsequent time (not being more than thirty days from the date of the Meeting) and place as the Chairman may direct. No notice need be given of a poll not taken immediately. Article 75 Continuance of business after demand for a poll The demand for a poll shall not prevent the continuance of a Meeting for the transaction of any business, other than the question on which the poll has been demanded. (h) Shareholder's voting rights Article 9(1) Rights attached to certain shares Preference shareholders shall have the same rights as ordinary shareholders as regards receiving of notices, reports and balance sheets and attending General Meetings of the Company. Preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing the capital or winding up or sanctioning a sale of the undertaking of the Company or where the 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 10(2) Rights of Preference shareholder The repayment of preference capital other than redeemable preference or any other alteration of preference shareholder rights, may only be made pursuant to a special resolution of the preference shareholders concerned. PROVIDED ALWAYS that where the necessary majority for such a special resolution is not obtained at the Meeting, consent in writing if obtained from the 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. 133

Article 76 Voting rights of Members Subject and without prejudice to any special privileges or restrictions as to voting for the time being attached to any special class of shares for the time being forming part of the capital of the Company each Member entitled to vote may vote in person or by proxy or attorney, and (in the case of a corporation) by a representative. On a show of hands every Member who is present in person or by proxy or attorney, or in the case of a corporation by a representative, shall have one vote provided that if a Member is represented by two proxies, only one of the two proxies as determined by their appointor shall vote on a show of hands and in the absence of such determination, only one of the two proxies as determined by the Chairman (or by a person authorised by him) shall vote on a show of hands and on a poll, every Member who is present in person or by proxy, attorney or representative shall have one vote for each share which he holds or represents Provided Always That notwithstanding anything contained in these Articles, a Depositor shall not be entitled to attend any General Meeting and to speak and vote thereat unless his name is certied by the Depository to the Company as appearing on the Depository Register not later than 48 hours before that General Meeting (the ``cut-off time'') as a Depositor on whose behalf the Depository holds shares in the Company. For the purpose of determining the number of votes which a Depositor or his proxy may cast on a poll, the Depositor or his proxy shall be deemed to hold or represent that number of shares entered in the Depositor's Securities Account at the cut-off time as certied by the Depository to the Company, or where a Depositor has apportioned the balance standing to his Securities Account as at the cut-off time between two proxies, to apportion the said number of shares between the two proxies in the same proportion as specied by the Depositor in appointing the proxies; and accordingly no instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason of any discrepancy between the number of shares standing to the credit of that Depositor's Securities Account as at the cut-off time, and the true balance standing to the Securities Account of a Depositor as at the time of the relevant general meeting, if the instrument is dealt with in such manner as aforesaid. Article 77 Voting rights of joint holders Where there are joint holders of any share any one of such persons may vote and be reckoned in a quorum at any Meeting either personally or by proxy or by attorney or in the case of a corporation by a representative as if he were solely entitled thereto but if more than one of such joint holders is so present at any meeting then the person present whose name stands rst in the Register of Members or the Depository Register (as the case may be) in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased Member in whose name any share stands shall for the purpose of this Article be deemed joint holders thereof. Article 78 Voting rights of Members of unsound mind If a Member be a lunatic, idiot or non-compos mentis, he may vote whether on a show of hands or on a poll by his committee, curator bonis or such other person as properly has the management of his estate and any such committee, curator bonis or other person may vote by proxy or attorney, provided that such evidence as the Directors may require of the authority of the person claiming to vote shall have been deposited at the Ofce not less than forty-eight hours before the time appointed for holding the Meeting. Article 79 Right to vote Subject to the provisions of these Articles, every Member either personally or by attorney or in the case of a corporation by a representative and every proxy shall be entitled to be present and to vote at any General Meeting and to be reckoned in the quorum thereat in respect of shares fully paid and in respect of partly paid shares where calls are not due and unpaid.

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Article 80 Objections No objection shall be raised to the qualication of any voter except at the Meeting or adjourned Meeting at which the vote objected to is given or tendered and every vote not disallowed at such Meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the Meeting whose decision shall be nal and conclusive. Article 81 Votes on a poll On a poll votes may be given either personally or by proxy or by attorney or in the case of a corporation by its representative and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. Article 82 Appointment of proxies (1) (2) A Member may appoint not more than two proxies to attend and vote at the same General Meeting. If the Member is a Depositor, the Company shall be entitled: (i) to reject any instrument of proxy lodged if the Depositor is not shown to have any shares entered in its Securities Account as at the cut-off time as certified by the Depository to the Company; and to accept as validly cast by the proxy or proxies appointed by the Depositor on a poll that number of votes which corresponds to or is less than the aggregate number of shares entered in its Securities Account of that Depositor as at the cut-off time as certied by the Depository to the Company, whether that number is greater or smaller than the number specied in any instrument of proxy executed by or on behalf of that Depositor.

(ii)

(3)

Where a Member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy. If no such proportion or number is specied the rst named proxy may be treated as representing 100% of the shareholding and any second named proxy as an alternate to the rst named. Voting right(s) attached to any shares in respect of which a Member has not appointed a proxy may only be exercised at the relevant general meeting by the member personally or by his attorney, or in the case of a corporation by its representative. Where a Member appoints a proxy in respect of more shares than the shares standing to his name in the Register of Members, or in the case of a Depositor, standing to the credit of that Depositor's Securities Account, such proxy may not exercise any of the votes or rights of the shares not registered to the name of that Member in the Register of Members or standing to the credit of that Depositor's Securities Account as at the cut-off time, as the case may be.

(4)

(5)

Article 83 Proxy need not be a Member A proxy or attorney need not be a Member, and shall be entitled to vote on a show of hands on any question at any General Meeting. Article 84 Instrument appointing a proxy Any instrument appointing a proxy shall be in writing in the common form approved by the Directors under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, under seal or under the hand of its attorney duly authorised and the Company shall accept as valid in all respects the form of proxy approved by the Directors for use at the date relevant to the General Meeting in question.

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Article 85 Instrument to be left at Company's ofce The instrument appointing a proxy, together with the power of attorney or other authority, if any, under which the instrument of proxy is signed or a duly certied copy of that power of attorney or other authority (failing previous registration with the Company) shall be attached to the instrument of proxy and must be left at the Ofce or such other place (if any) as is specied for the purpose in the notice convening the Meeting not less than forty-eight hours before the time appointed for the holding of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll) at which it is to be used failing which the instrument may be treated as invalid. An instrument appointing a proxy shall, unless the contrary is stated thereon, be valid as well for any adjournment of the Meeting as for the Meeting to which it relates. Provided that an instrument of proxy relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purposes of any meeting shall not be required again to be delivered for the purposes of any subsequent meeting to which it relates. An instrument of proxy shall be deemed to include the power to demand or concur in demanding a poll on behalf of the appointer. Unless otherwise instructed, a proxy shall vote as he thinks t. The signature on an instrument appointing a proxy need not be witnessed. Article 86 Intervening death or insanity of principal not to revoke proxy A vote given in accordance with the terms of an instrument of proxy (which for the purposes of these Articles shall also include a power of attorney) shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy, or of the authority under which the proxy was executed or the transfer of the share in respect of which the proxy is given, provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at the Ofce (or such other place as may be specied for the deposit of instruments appointing proxies) before the commencement of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll) at which the proxy is used. Article 87 Corporations acting by representatives Any corporation which is a Member may by resolution of its directors or other governing body authorise such person as it thinks t to act as its representative at any Meeting of the Company or of any class of Members and the persons so authorised shall be entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual Member of the Company. The Company shall be entitled to treat a certicate under the seal of the corporation as conclusive evidence of the appointment or revocation of appointment of a representative under this Article. (i) Consents for variation of class rights Article 10(1) Variation of rights If at any time the share capital is divided into different classes, the repayment of preference capital other than redeemable preference and the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of the Act, whether or not the Company is being wound up, only be made, varied or abrogated with the sanction of a Special Resolution passed at a separate General Meeting of the holders of shares of the class and to every such Special Resolution the provisions of Section 184 of the Act shall, with such adaptations as are necessary, apply. To every such separate General Meeting the provisions of these Articles relating to General Meetings shall mutatis mutandis apply; but so that the necessary quorum shall be two persons at least holding or representing by proxy or by attorney one-third of the issued shares of the class and that any holder of shares of the class present in person or by proxy or by attorney 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 the holders of three-fourths of the issued shares of the class concerned within two months of the Meeting shall be as valid and effectual as a Special Resolution carried at the Meeting.

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(j)

Restrictions on the transferability of shareholdings Article 21 Form of transfer of shares Subject to these Articles, any Member may transfer all or any of his shares but every instrument of transfer of the legal title in shares must be in writing and in the form for the time being approved by the Directors and the Exchange. Shares of different classes shall not be comprised in the same instrument of transfer. The Company shall accept for registration transfers in the form approved by the Exchange. Article 22 Execution The instrument of transfer of a share shall be signed by or on behalf of the transferor and the transferee and be witnessed, provided that an instrument of transfer in respect of which the transferee is the Depository shall not be ineffective by reason of it not being signed or witnessed for by or on behalf of the Depository. The transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the Register of Members. Article 23 Person under disability No share shall in any circumstances be transferred to any infant, bankrupt or person of unsound mind. Article 24(1) Director's power to decline to register Subject to these Articles, the Act or as required by the Exchange, there shall be no restriction on the transfer of fully paid up shares except where required by law, rules Bye-Laws or Listing Rules of the Exchange but the Directors may in their discretion decline to register any transfer of shares upon which the Company has a lien and in the case of shares not fully paid up may refuse to register a transfer to a transferee of whom they do not approve. If the Directors shall decline to register any such transfer of shares, they shall give to both the transferor and the transferee written notice of their refusal to register as required by the Act. Article 24(2) Terms of registration of transfers The Directors may decline to register any instrument of transfer unless: (i) such fee not exceeding S$2 (or such other fee as the Directors may determine having regard to any limitation thereof as may be prescribed by any stock exchange upon which the shares of the Company may be listed) as the Directors may from time to time require, is paid to the Company in respect thereof; the instrument of transfer, duly stamped in accordance with any law for the time being in force relating to stamp duty, is deposited at the Office or at such other place (if any) as the Directors appoint accompanied by the certificates of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer and, if the instrument of transfer is executed by some other person on his behalf, the authority of the person so to do; and the instrument of transfer is in respect of only one class of shares.

(ii)

(iii)

Article 25 (1) Retention of transfers All instruments of transfer which are registered may be retained by the Company, but any instrument of transfer which the Directors may decline to register shall (except in the case of fraud) be returned to the person depositing the same.

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Article 25(2) Destruction of transfer instruments Subject to any legal requirements to the contrary, the Company shall be entitled to destroy all instruments of transfer which have been registered at any time after the expiration of six years from the date of registration thereof and all dividend mandates and notifications of change of address at any time after the expiration of six years from the date of recording thereof and all share certificates which have been cancelled at any time after the expiration of six years from the date of the cancellation thereof and it shall be conclusively presumed in the favour of the Company that every entry in the Register of Members purporting to have been made on the basis of an instrument of transfer or other documents so destroyed was duly and properly made and every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered and 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 in accordance with the recorded particulars thereof in the books or records of the Company. PROVIDED that: (i) the provisions aforesaid shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant; nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any circumstances which would not attach to the Company in the absence of this Article; and references herein to the destruction of any document include references to the disposal thereof in any manner.

(ii)

(iii)

Article 26 Closing of Register The Register of Members and the Depository Register may be closed at such times and for such period as the Directors may from time to time determine, provided always that the Registers shall not be closed for more than thirty days in the aggregate in any year. Provided Always that the Company shall give prior notice of such closure as may be required to the Exchange, stating the period and purpose or purposes for which the closure is made. Article 27(1) Renunciation of allotment Nothing in these Articles shall preclude the Directors from recognising a renunciation of the allotment of any share by the allottee in favour of some other person. Article 27(2) Indemnity against wrongful transfer Neither the Company nor its Directors nor any of its Ofcers shall incur any liability for registering or acting upon a transfer of shares apparently made by sufcient parties, although the same may, by reason of any fraud or other cause not known to the Company or its Directors or other Ofcers, be legally inoperative or insufcient to pass the property in the shares proposed or professed to be transferred, and although the transfer may, as between the transferor and transferee, be liable to be set aside, and notwithstanding that the Company may have notice that such instrument of transfer was signed or executed and delivered by the transferor in blank as to the name of the transferee or the particulars of the shares transferred, or otherwise in defective manner. And in every such case, the person registered as transferee, his executors, administrators and assigns, alone shall be entitled to be recognised as the holder of such shares and the previous holder shall, so far as the Company is concerned, be deemed to have transferred his whole title thereto. (k) Stock Holders Article 56 Power to convert into stock The Company may by Ordinary Resolution convert any or all its paid up shares into stock and may from time to time by resolution reconvert any stock into paid up shares of any denomination. 138

Article 58 Rights of stockholders The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards dividend, return of capital, voting and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except as regards dividend and return of capital and the assets on winding up) shall be conferred by any such aliquot part of the stock which would not if existing in shares have conferred that privilege or advantage, and no such conversion shall affect or prejudice any preference or other special privileges attached to the shares so converted. (l) Winding Up Article 165 Distribution of assets in specie If the Company is wound up (whether the liquidation is voluntary, under supervision or by the Court) the Liquidator may, with the authority of a Special Resolution, divide among the Members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds and may for such purpose set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The Liquidator may, with the like authority, vest the whole or any part of the assets in trustees upon such trusts for the benet of Members as the Liquidator with the like authority thinks t, and the liquidation of the Company may be closed and the Company dissolved, but no Member shall be compelled to accept any shares or other securities in respect of which there is a liability. (m) Limitations on rights to own shares Article 28(1) Transmission on death In case of the death of a registered shareholder, the survivor or survivors, where the deceased was a joint holder, and the legal representatives of the deceased, where he was a sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing herein shall release the estate of a deceased registered shareholder (whether sole or joint) from any liability in respect of any share held by him. Article 28(2) Transmission on death In the case of the death of a Depositor, the survivor or survivors, where the deceased was a joint holder, and the legal personal representatives of the deceased, where he was a sole holder and where such legal representatives are entered in the Depository Register in respect of any shares of the deceased, shall be the only persons recognised by the Company as having any title to his interests in the share; but nothing herein contained shall release the estate of a deceased Depositor (whether sole or joint) from any liability in respect of any share held by him. Article 29(1) Persons becoming entitled on death or bankruptcy of Member may be registered Any person becoming entitled to a share in consequence of the death or bankruptcy of any Member or by virtue of a vesting order by a court of competent jurisdiction and recognised by the Company as having any title to that share may, upon producing such evidence of title as the Directors shall require, be registered himself as holder of the share upon giving to the Company notice in writing or transfer such share to some other person. If the person so becoming entitled shall elect to be registered himself, he shall send to the Company a notice in writing signed by him stating that he so elects. If he shall elect to have another person registered he shall testify his election by executing to that person a transfer of the share. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers shall be applicable to any such notice or transfer as aforesaid as if the death or bankruptcy of the Member had not occurred and the notice or transfer were a transfer executed by such Member. The Directors shall have, in respect of a transfer so executed, the same power of refusing registration as if the event upon which the transmission took place had not occurred, and the transfer were a transfer executed by the person from whom the title by transmission is derived. 139

Article 29(2) Rights of unregistered executors and trustees The Directors may at any time give notice requiring any such person to elect whether to be registered himself as a Member in the Register of Members or, (as the case may be), entered in the Depository Register in respect of the share or to transfer the share and if the notice is not complied with within 60 days the Directors may thereafter withhold payment of all dividends or other moneys payable in respect of the share until the requirements of the notice have been complied with. Article 30 Rights of unregistered executors and trustees A person entitled to a share by transmission shall be entitled to receive, and may give a discharge for, any dividends or other moneys payable in respect of the share, but he shall not be entitled in respect of it to receive notices of, or to attend or vote at meetings of the Company, or, save as aforesaid, to exercise any of the rights or privileges of a Member, unless and until he shall become registered as a shareholder or have his name entered in the Depository Register as a Depositor in respect of the share. (n) Substantial Shareholdings Sections 81 and 82 of Companies Act (Cap 50) A person having a substantial shareholding in a company (that is, he has interest or interests in one or more voting shares in the company and the nominal amount of that share, or the aggregate of the nominal value of those shares, is not less than 5% of the aggregate of the nominal amount of all voting shares in the company) shall give notice in writing to the Company within 2 days after becoming a substantial shareholder. (o) Alteration of Capital Article 50 Power to increase capital The Company in General Meeting may from time to time by Ordinary Resolution, whether all the shares for the time being authorised shall have been issued or all the shares for the time being issued shall have been fully called up or not, increase its capital by the creation of new shares of such amount as may be deemed expedient. Article 51 Rights and privileges of new shares Subject to any special rights for the time being attached to any existing class of shares, the new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the General Meeting resolving upon the creation thereof shall direct and if no direction be given as the Directors shall determine; subject to the provisions of these Articles and in particular (but without prejudice to the generality of the foregoing) such shares may be issued with a preferential or qualied right to dividends and in the distribution of assets of the Company or otherwise. Article 52(1) Issue of new shares to members Subject to any direction to the contrary that may be given by the Company in General Meeting, or except as permitted under the Exchange's listing rules, all new shares shall before issue be offered to the Members in proportion, as nearly as the circumstances admit, to the amount of the existing shares to which they are entitled or hold. 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 benecial to the Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered under this Article. 140

Article 52(2) Limitation to Directors' right to issue new shares to members Notwithstanding Article 52(1) above but subject to the Act and the byelaws and listing rules of the Exchange, Company may by Ordinary Resolution in General Meeting give to the Directors a general authority, either unconditionally or subject to such conditions as may be specified in the Ordinary Resolution to: (i) (ii) (iii) issue shares in the capital of the Company (whether by way of rights, bonus or otherwise); and/or make or grant Instruments; and/or (notwithstanding the authority conferred by the Ordinary Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while the Ordinary Resolution was in force;

Provided that the aggregate number of shares or Instruments to be issued pursuant to the Ordinary Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to the Ordinary Resolution but excluding shares which may be issued pursuant to any adjustments effected under any relevant Instrument) does not exceed any applicable limits prescribed by the Exchange. Article 52(3) Limitation to Directors' right to issue new shares to certain foreign members Notwithstanding Article 52(1) above but subject to the Act, the Directors shall not be required to offer any new shares to members to whom by reason of foreign securities laws such offers may not be made without registration of the shares or a prospectus or other document, but to sell the entitlements to the new shares on behalf of such Members in such manner as they think most benecial to the Company. Article 53 New shares otherwise subject to provisions of Articles Except so far as otherwise provided by the conditions of issue or by these Articles, any capital raised by the creation of new shares shall be considered part of the original ordinary capital of the Company and shall be subject to the provisions of these Articles with reference to allotments, payment of calls, lien, transfer, transmission, forfeiture and otherwise. Article 54(1) Power to consolidate, cancel and subdivide shares The Company may by Ordinary Resolution: (i) (ii) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; cancel any shares which, at the date of the passing of the Resolution, have not been taken or agreed to be taken by any person or which have been forfeited and diminish the amount of its share capital by the amount of the shares so cancelled; subdivide its shares or any of them into shares of a smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the provisions of the Act), provided always that in such subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; and subject to the provisions of these Articles and the Act, convert any class of shares into any other class of shares.

(iii)

(iv)

141

Article 54(2) Power to repurchase company's shares The Company may purchase or otherwise acquire its issued shares subject to and in accordance with the provisions of the Act and any other relevant rule, law or regulation enacted or promulgated by any relevant competent authority from time to time (hereafter, the ``Relevant Laws''), on such terms and subject to such conditions as the Company may in general meeting prescribe in accordance with the Relevant Laws. Any shares purchased or acquired by the Company as aforesaid shall be dealt with in accordance with the Relevant Laws. Article 55 Power to reduce capital The Company may by Special Resolution reduce its share capital, any capital redemption reserve fund or share premium account in any manner and subject to any incident authorised and consent required by law. (p) Dividends Article 137 Unclaimed dividends The payment by the Directors of any unclaimed dividends or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof. All dividends unclaimed after being declared may be invested or otherwise made use of by the Directors for the benet of the Company and any dividend unclaimed after a period of six years from the date of declaration of such dividend may be forfeited and if so shall revert to the Company but the Directors may at any time thereafter at their absolute discretion annul any such forfeiture and pay the dividend so forfeited to the person entitled thereto prior to the forfeiture. For the avoidance of doubt no Member shall be entitled to any interest, share of revenue or other benet arising from any unclaimed dividends, howsoever and whatsoever.

142

ANNEX B

DESCRIPTION OF OUR SHARES

The following statements are brief summaries of our capital structure and of the more important rights and privileges of our shareholders as conferred by the laws of Singapore and our Articles of Association (``Articles''). These statements summarise the material provisions of our Articles but are qualied in entirety by reference to our Articles, a copy of which will be available for inspection at our ofces during normal business hours for a period of six months from the date of this Prospectus. SHARES There are no founder, management, deferred or unissued shares reserved for issue for any purpose. The rights and privileges of these shares are stated in our Articles. Our authorised capital is $20 million consisting of 500,000,000 ordinary shares of par value $0.04 each. We have only one class of shares, namely, our ordinary shares, which have identical rights in all respects and rank equally with one another. Our Articles provide that we may issue shares of a different class with preferential, deferred, qualied or special rights, privileges or conditions as our Board of Directors may think t and may issue preference shares which are, or at our option are, redeemable, subject to certain limitations. We may issue shares at a premium. If shares are issued at a premium, our Board of Directors will transfer a sum equal to the aggregate amount or value of the premium to a share premium account and moneys in such an account will not be applied in the payment of any cash dividend. As at the date of this Prospectus,130,980,000 ordinary shares have been issued and fully paid. All of the ordinary shares are in registered form. We may, subject to the provisions of the Act and the rules of the SGX-ST, purchase our own ordinary shares. However, we may not, except in circumstances permitted by the Act, grant any nancial assistance for the acquisition or proposed acquisition of our own ordinary shares. New Shares New shares may only be issued with the prior approval of our shareholders in a general meeting. The aggregate number of shares to be issued pursuant to such approval must not result in the transfer of a controlling interest in our Company unless the prior approval of the members of our Company in a general meeting is obtained. Furthermore, all new shares shall, before issue, be offered to the members of our Company on a pro-rata basis unless our Company in general meeting approves otherwise or if permitted under the SGX listing rules. Subject to the foregoing, the provisions of the Act and any special rights attached to any class of shares currently issued, all new ordinary shares are under the control of our Board of Directors who may allot and issue the same with such rights and restrictions as they may think t. Shareholder Only persons who are registered on our register of shareholders and, in cases in which the person so registered is CDP, the persons named as the depositors in the depository register maintained by CDP for the ordinary shares, are recognised as our shareholders. We 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. We may close our register of shareholders for any time or times if we provide the ROC with at least 14 days' notice and the SGX-ST at least 10 clear market days' notice. However, the register may not be closed for more than 30 days in aggregate in any calendar year. We typically close the register to determine our shareholders' entitlement to receive dividends and other distributions. 143

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 SGX-ST. Our Board of Directors may decline to register any transfer of ordinary shares which are not fully paid shares or ordinary shares on which we have a lien. Ordinary shares may be transferred by a duly signed instrument of transfer in a form approved by SGX-ST. Our 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 certicate and such other evidence of title as they may require. We will replace lost or destroyed certicates for shares if such evidence is produced to us and our Company is indemnied against all losses and expenses arising from or connected to the loss/ destruction and upon the payment of a sum not exceeding S$2.00 (or such other sum as may be approved by the SGX-ST) by the applicant. General Meetings of shareholder We are required to hold an annual general meeting every year. Our Board of Directors may convene an extraordinary general meeting whenever it thinks t and must do so if our shareholders representing not less than 10% of the total voting rights of all our shareholders request in writing that such a meeting be held. In addition, two or more of our shareholders holding not less than 10% of our issued share capital may call a meeting. Unless otherwise required by law or by our Articles, voting at general meetings is by ordinary resolution, requiring an afrmative vote of a simple majority of the votes cast at that meeting. An ordinary resolution sufces, for example, for the appointment of directors. A special resolution, requiring the afrmative vote of at least 75% of the votes cast at the meeting, is necessary for certain matters under Singapore law, including voluntary winding up, amendments to our Memorandum of Association and our Articles, a change of our corporate name and a reduction in our share capital, share premium account or capital redemption reserve fund. We must give at least 21 days' notice in writing for every general meeting convened for the purpose of passing a special resolution. Ordinary resolutions generally require at least 14 days' notice in writing. The notice must be given to each of our shareholders who have supplied us with an address in Singapore for the giving of notices and must set forth the place, the day and the hour of the meeting and, in the case of special business, the general nature of that business. Voting Rights A holder of our ordinary shares is entitled to attend, speak and vote at any general meeting, in person or by proxy or by attorney, and in a case of a corporation by a representative. Proxies and attorneys 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 our Articles, two or more shareholders, must be present in person or by proxy to constitute a quorum at any general meeting. Under our Articles, on a show of hands, every shareholder present in person and by proxy or attorney 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. But no poll shall be demanded on the election of a Chairman or on a question of adjournment. 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. 144

Dividends We may, by ordinary resolution of our shareholders, declare dividends at a general meeting, but we may not pay dividends in excess of the amount recommended by our Board of Directors. We must pay all dividends out of our prots. All dividends are paid pro-rata amongst our shareholders in proportion to the amount paid up on each shareholder's ordinary shares, unless the rights attaching to an issue of any ordinary share provide otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through the post to, each shareholder at his registered address. Notwithstanding the foregoing, the payment by us to CDP of any dividend payable to a shareholder whose name is entered in the depository register shall, to the extent of payment made to CDP, discharge us from any liability to that shareholder in respect of that payment. Bonus and Rights Issue Our Board of Directors may, with the approval of our shareholders at a general meeting, capitalise any reserves or prots (including prots or moneys carried and standing to any reserve or to the share premium account) and distribute the same as bonus shares credited as paid-up to our shareholders in proportion to their shareholdings. Our Board of Directors may also issue rights to take up additional ordinary shares to other shareholders in proportion to their shareholdings. Such rights are subject to any conditions attached to such issue and the regulations of any stock exchange on which we are listed. Takeovers The Singapore Code on Take-overs and Mergers (``Singapore Take-over Code'') 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 our voting shares must extend a takeover offer for the remaining voting shares in accordance with the provisions of the Singapore Take-over Code. ``Parties acting in concert'' includes 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 nancial advisor and its client in respect of shares held by the nancial advisor and shares in the client held by funds managed by the nancial 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 12 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 shares acquires additional voting shares representing more than 1% of the voting shares in any 6 month period. Liquidation or Other Return of Capital If we liquidate or in the event of any other return of capital, holders of our 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, our Articles provide that, subject to the Companies Act, our Board of Directors and ofcers shall be entitled to be indemnied by us against any liability incurred in defending any proceedings, whether civil or criminal, which relate to anything done or omitted to have been done as an ofcer, 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. We may not indemnify our Directors and ofcers against any liability which by law would otherwise attach to them in respect of any negligence, default, breach of duty or breach of trust of which they may be guilty in relation to us.

145

Limitations on Rights to Hold or Vote Shares Except as described in ``Voting Rights'' and ``Takeovers'' above, there are no limitations imposed by Singapore law or by our Articles on the rights of non-resident shareholders to hold or vote ordinary shares. Minority Rights The rights of minority shareholders of Singapore-incorporated companies are protected under Section 216 of the Companies Act, which gives the Singapore courts a general power to make any order, upon application by any of our shareholders, as they think fit to remedy any of the following situations: . . our affairs are being conducted or the powers of our 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 we take an action, or threaten to take an action, or our shareholders pass a resolution, or propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of our shareholders, including the applicant.

Singapore courts have a wide discretion as to the reliefs they may grant and those reliefs are in no way limited to those listed in the Companies Act itself. Without prejudice to the foregoing, Singapore courts may: . . . . . . direct or prohibit any act or cancel or vary any transaction or resolution; regulate the conduct of our affairs in the future; authorise civil proceedings to be brought in our name, or on our behalf, by a person or persons and on such terms as the court may direct; provide for the purchase of a minority shareholder's shares by our other shareholders or by us and, in the case of a purchase of shares by us, a corresponding reduction of our share capital; in the case of a purchase of shares by the company, provide for a reduction accordingly of the company's capital; or provide that we be wound up.

146

ANNEX C

RULES OF THE BREADTALK GROUP LIMITED EMPLOYEES' SHARE OPTION SCHEME

1. NAME OF THIS SCHEME This Scheme shall be called the ``BreadTalk Group Limited Employees' Share Option Scheme'' (the ``Scheme''). 2. DEFINITIONS In this Scheme, except where the context otherwise requires, the following words and expressions shall have the following meanings: ``Acceptance Period'' ``Act'' ``Adoption Date'' ``Associated Company'' ``Auditors'' ``Board'' ``CDP'' ``CPF'' ``Company'' or ``BreadTalk'' ``Control'' The period within which an Option maybe accepted, as described in Rule 7.2. The Companies Act, Chapter 50 of Singapore as amended or modied from time to time. The date on which this Scheme is adopted by the Company in general meeting. A company in which at least 20% but no more than 50% of its shares are held by the Company. The auditors of the Company for the time being. The Board of Directors of the Company for the time being. The Central Depository (Pte) Limited. Central Provident Fund. BreadTalk Group Limited. The capacity to dominate decision-making, directly or indirectly, in relation to the nancial and operating policies of the Company. A Shareholder who has control over the Company and unless rebutted, a person who controls directly or indirectly a shareholding of fteen (15) per cent. or more of the Company's issued share capital shall be presumed to be a Controlling Shareholder of the Company. A person being a Depository Agent or holder of a securities account maintained with CDP but not including a holder of a sub-account maintained with a Depository Agent A person holding ofce as a director for the time being of the Company. Extraordinary General Meeting. Any full-time conrmed employee of the Group selected by the Remuneration Committee to participate in this Scheme in accordance with Rule 4. A Director who is a full-time or part time employee of the Group and who performs an executive function.

``Controlling Shareholder''

``Depositor''

``Director'' ``EGM'' ``Employee''

``Executive Director''

147

``Executive Option''

The right to subscribe for Shares granted or to be granted to an Employee (other than an employee of an Associated Company), including an Executive Director (other than a director of an Associated Company), pursuant to this Scheme and for the time being subsisting. The price at which a Participant shall subscribe for each Share upon the exercise of an option as determined in accordance with Rule 8.1 in relation to a Market Price Option, and Rule 8.2 in relation to an Incentive Option. Each period of twelve (12) months or more or less than twelve (12) months, at the end of which the balance of accounts of the Company are prepared and audited, for the purpose of laying the same before an annual general meeting of the Company. The person to whom an offer of an Option is made. The Company, its Subsidiaries (as they may exist from time to time) and Associated Companies which the Company has control over. The right to subscribe for Shares granted or to be granted pursuant to this Scheme and for the time being subsisting, and in respect of which the Exercise Price is determined in accordance with Rule 8.2. A day on which the SGX-ST is open for trading of securities. The price as dened in Rule 8.1(i). The right to subscribe for Shares granted or to be granted pursuant to this Scheme and for the time being subsisting, and in respect of which the Exercise Price is determined in accordance with Rule 8.1. A Director who is not an Executive Director. An Option other than an Executive Option. The date on which an Option is granted pursuant to Rule 6.1. A Market Price Option or an Incentive Option, as the case may be. The period for the exercise of an Option as set out in Rule 9.1. A holder of an Option. A committee comprising Directors of the Company, duly authorised and appointed by the Board pursuant to Rule 13 to administer this Scheme. The rules of this Scheme, as the same may be amended from time to time. BreadTalk Group Limited Employees' Share Option Scheme, as modied or amended from time to time. The Singapore Exchange Securities Trading Limited. The Stock Exchange of Singapore Dealing and Automated Quotation System. 148

``Exercise Price''

``Financial Year''

``Grantee'' ``Group''

``Incentive Option''

``Market Day'' ``Market Price'' ``Market Price Option''

``Non-Executive Director'' ``Non-Executive Option'' ``Offering Date'' ``Option'' ``Option Period'' ``Participant'' ``Remuneration Committee''

``Rules'' ``Scheme'' ``SGX-ST'' ``SGX-Sesdaq''

``Shareholder''

The registered holders for the time being of the Shares (other than the CDP) or in the case of Depositors, Depositors who have Shares entered against their names in the Depository Register. Fully paid ordinary shares of $0.04 each in the capital of the Company. A company which is for the time being a subsidiary of the Company as dened by Section 5 of the Act. A day on which the Shares are traded on the SGX-Sesdaq. Singapore dollars.

``Shares'' ``Subsidiary'' ``Trading Day'' ``$'' or ``S$''

The terms ``Depository Register'' and ``Depository Agent'' shall have the meanings ascribed to them respectively by Section 130A of the Act. The term ``associate'' shall have the meaning ascribed to it by the SGX-ST Listing Manual as set out below: (i) any person or corporation (or the directors of that corporation) who is accustomed or under an obligation, whether formal or informal, to act in accordance with your instructions, in relation to shares held by you, or on whose instructions you act, in relation to shares held by that person or corporation; a member of your immediate family; the trustees, acting in their capacity as such trustees, of any trust of which you or your immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; or (in relation to a director, or substantial/controlling shareholder who is an individual) any company in which you or your immediate family together (directly or indirectly) have an interest of 30% or more; or (in relation to a substantial/controlling shareholder that is a corporation) any other company which is its subsidiary or holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30% or more.

(ii) (iii)

(iv)

(v)

Words denoting the singular shall, where applicable, include the plural and vice versa and words denoting the masculine gender shall, where applicable, include the feminine and neuter gender. References to persons shall include corporations. References to Rules and Appendices shall be construed as references to Rules of and the Appendices to this Scheme. Any reference to this Scheme to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word dened under the Act or any statutory modication thereof and used in this Scheme shall, where applicable, have the same meaning assigned to it under the Act. Any reference in this Scheme to a time of day shall be a reference to Singapore time unless otherwise stated. 3. OBJECTIVES OF THIS SCHEME This Scheme is a share incentive scheme. The purpose of this Scheme is to provide an opportunity for directors and employees of the Group to participate in the equity of the Company so as to motivate them to greater dedication, loyalty and higher standards of performance, and to give recognition to those who have contributed signicantly to the growth and performance of the Company and/or the Group.

149

This Scheme is proposed on the basis that it is important to recognise the fact that the services of such Employees and Directors are important to the success and continued well-being of the Group. Implementation of this Scheme will enable the Company to give recognition to the contributions made by such Employees and Directors, which is essential to the well-being and prosperity of the Group. At the same time, it will give such Employees and Directors an opportunity to have a direct interest in the Company and will also help to achieve the following positive objectives: (i) (ii) (iii) (iv) (v) the motivation of Participants to optimise performance standards and efficiency and to maintain a high level of contribution; the retention of key employees whose contributions are important to the long term growth and prosperity of the Group; the attainment of harmonious employer/employee relations as well as the strengthening of working relationships with the Group's close business associates; to align the interest of Employees and Directors with the interests of the Shareholder; and the development of a participatory style of management which promotes greater commitment and dedication amongst the employees and instills loyalty and a stronger sense of identication with the long term prosperity of the Group.

4. 4.1

ELIGIBILITY The following persons shall be eligible to participate in this Scheme at the absolute discretion of the Remuneration Committee: (i) Employees and Directors (a) (b) (c) Employees of the Group who are not on probation and have attained the age of twenty-one (21) years on or before the Offering Date; Executive Directors who have attained the age of twenty-one (21) years on or before the Offering Date; and Non-Executive Directors who have attained the age of twenty-one (21) years on or before the Offering Date.

The Participants must not be an undischarged bankrupt and must not have entered into a composition with his creditors. (ii) Controlling Shareholder and their associates Subject to Rule 4.2, persons who are qualied under 4.1(i) above and who are also a Controlling Shareholder or their associates. 4.2 Employees who are Controlling Shareholders and their associates shall (notwithstanding that they may meet the eligibility criteria in Rule 4.1(i) above) not participate in this Scheme unless: (i) (ii) their participation; and the actual number of Shares to be issued to them and the terms of any Option to be granted to them,

have been approved by the independent Shareholders in general meeting in separate resolutions for each such person, and in respect of each such person, in separate resolutions for each of (i) his participation and (ii) the actual number of Shares to be issued to him and the terms of any Option to be granted to him, provided always that it shall not be necessary to obtain the approval of the independent Shareholders of the Company for the participation of this Scheme of a Controlling Shareholder or an associate to a Controlling Shareholder who is, at the relevant time already a Participant. For the purposes of obtaining such approval from the independent Shareholders, the Company shall procure that the circular, letter or notice to the Shareholder in connection therewith shall set out the following: 150

(a) (b) (c)

clear justifications for the participation of such Controlling Shareholder and/or their associates; clear rationale for the number and terms (including the Exercise Price) of the Options to be granted to such Controlling Shareholder and/or their associates; and (where Incentive Options are proposed to be granted to Controlling Shareholder(s) or their associates) the discount to the Market Price applicable to the Exercise Price of such Options (as determined in accordance with Rule 8.2).

4.3

There shall be no restriction on the eligibility of any Grantee or Participant to participate in any other share option or share incentive scheme, whether or not implemented by any other companies within the Group. Subject to the Act and any requirement of the SGX-ST or any other stock exchange on which the Shares may be listed or quoted, the terms of eligibility for participation in this Scheme may be amended from time to time at the absolute discretion of the Remuneration Committee. LIMITATIONS OF THIS SCHEME The aggregate nominal amount of Shares over which the Remuneration Committee may grant Options on any date, when added to the nominal amount of Shares issued and issuable in respect of all Options granted under this Scheme, shall not exceed fteen (15) per cent. of the issued share capital of the Company on the date preceding the grant of an Option. Subject to Rule 4 and Rule 10, the aggregate number of Shares comprised in Market Price Options or, as the case may be Incentive Options, to be offered to any Grantee in accordance with this Scheme shall be determined at the absolute discretion of the Remuneration Committee, who shall take into account, in respect of a Grantee, criteria such as rank, past performance, years of service and potential for future development of that Employee, provided that in relation to the Controlling Shareholder or their associates: (i) the aggregate number of Shares which may be offered by way of grant to options to Participants who are Controlling Shareholders or their associates under this Scheme shall not exceed 25% of the total number of Shares available under this Scheme, and such aggregate number of Shares which may be offered to such Participants under this Scheme has been approved by the independent Shareholders of the Company in a separate resolution. For the purposes of obtaining such approval of the independent Shareholder of the Company, the Remuneration Committee shall procure that the circular, letter or notice to the Shareholders in connection therewith shall set out clear rationale for the participation of and grant of Options to which Participants who are Controlling Shareholders or their associates, provided always that it shall not be necessary obtain the approval of the independent Shareholders of the Company for the participation of this Scheme of Controlling Shareholders or their associates, at the relevant time already Participants; and any Options to be granted to any Participants who are Controlling Shareholders or their associates which, together with options already granted to that Participant under this Scheme, represent 10% or more of the aggregate number of Shares available to Participants who are Controlling Shareholders or their associates, shall be approved by independent Shareholders of the Company in a separate resolution for each such Participant who is a Controlling Shareholder or is an associate to a Controlling Shareholder.

4.4

5. 5.1

5.2

(ii)

6. 6.1

OFFERING DATE The Remuneration Committee may, save as provided in Rule 4 and Rule 5, offer to grant Options to such Grantees as it may select in its absolute discretion at any time during the period when this Scheme is in force, provided that in the event that an announcement on any matter of an exceptional nature involving unpublished price sensitive information is imminent, Options may only be granted on or after the second Market Day from the date on which the aforesaid announcement is released. 151

6.2

An offer to grant the Option to a Grantee shall be made by way of a letter (the ``Letter of Offer'') in the form or substantially in the form set out in Appendix I, subject to such modication including, but not limited to imposing restrictions on the number of Options that may be exercised within particular sections of the relevant Option Period, as the Remuneration Committee may from time to time determine. ACCEPTANCE OF OFFER An Option shall be personal to the Participant to whom it is granted and shall not be transferred (other than to a Participant's personal representative on the death of that Participant), charged, assigned, pledged or otherwise disposed of, in whole or in part, unless with the prior approval in writing of the Remuneration Committee. The closing date for the acceptance for the grant of any Option under this Rule 7 shall not be less than fteen (15) days and not more than thirty (30) days from the Offering Date of that Option. The grant of an Option must be accepted by completing, signing and returning of the Acceptance Form in or substantially in the form set out in Appendix II, subject to such modication as the Remuneration Committee may from time to time determine, accompanied by payment of S$1.00 as consideration or such other amount and such other documentation as the Remuneration Committee may require. The Option is deemed not accepted until actual receipt by the Company of the Acceptance Form. Unless the Remuneration Committee determines otherwise, an Option shall automatically lapse and become null, void and of no effect and shall not be capable of acceptance if: (a) (b) (c) (d) a grant of an Option is not accepted strictly in the manner as provided in Rule 7.2, such offer within the Acceptance Period; or the Grantee dies prior to his acceptance of the Option; or the Grantee is adjudicated a bankrupt or enters into composition with his creditors prior to his acceptance of the Option; or the Grantee being an Executive Director or, as the case may be, an Employee ceases to be in the employment of the Group or (being a Non-Executive Director) ceases to be a Director of the Company, in each case, for any reason whatsoever prior to his acceptance of the Option; or the Company is liquidated or wound-up prior to the Grantee's acceptance of the Option.

7. 7.1

7.2

7.3

(e) 7.4

The Company shall be entitled at its absolute discretion to reject any purported acceptance of a grant of an Option made pursuant to this Rule 7 or Exercise Notice given pursuant to Rule 11 which does not strictly comply with the terms of this Scheme. In the event that an Option results in a contravention of any applicable law or regulation, such grant shall be null and void and of no effect and the relevant Participant shall have no claim whatsoever against the Company. EXERCISE PRICE Subject to any adjustment pursuant to Rule 12, the Exercise Price for each Share in respect of which a Market Price Option is exercisable shall be determined by the Remuneration Committee at its absolute discretion, and fixed by the Remuneration Committee at: (i) a price (the ``Market Price'') equal to the average of the last dealt prices for a Share, as determined by reference to the daily official list or other publication published by the SGXST for the five (5) consecutive trading days immediately preceding the Offering Date of that Option, rounded up to the nearest whole cent in the event of fractional prices, provided in the case of a Market Price Option that is proposed to be granted to a Controlling Shareholder or his associate, the Exercise Price for each Share shall be equal to the average of the last dealt process for a Share, as determined by reference to the daily official list published by the SGX-ST, for the five (5) consecutive Market Days immediately 152

7.5

8. 8.1

preceding the latest practicable date prior to the date of any circular, letter or notice to the Shareholders proposing to seek their approval of the grant of such Options to such Controlling Shareholder or his associate. 8.2 Subject to any adjustment pursuant to Rule 12, the Exercise Price for each Share in respect of which an Incentive Option is exercisable shall be determined by the Remuneration Committee at its absolute discretion, and xed by the Remuneration Committee at a price which is set a discount to the Market Price (as determined in accordance with Rule 8.1), provided that: (i) the maximum discount shall not exceed 20 per cent of the Market Price (or such other percentage or amount as may be prescribed or permitted for the time being by the SGXST). In determining the quantum of such discount, the Remuneration Committee shall take into consideration such criteria as the Remuneration Committee may, in its absolute discretion, deem appropriate including but not limited to: (1) (2) (3) (ii) the performance of the Company and the Group; the individual performance of the Participant; and the contribution of the Participant to the success and development of the Company and/or the Group; and

the prior approval of the Shareholders of the Company in general meeting shall have been obtained for the making of offers and grants of Options under this Scheme at a discount not exceeding the maximum discount as aforesaid (for the avoidance of doubt, such prior approval shall be required to be obtained only once and, once obtained, shall, unless revoked, authorise the making offers and grants of Options under this Scheme at such discount for the duration of this Scheme), rounded up to the nearest whole cent.

8.3

In no event shall the Exercise Price be less than the par value of a Share. Where the Exercise Price (as determined per Rule 8.1 or as the case may be 8.2) is less than the par value of a Share, the Exercise Price shall be the par value. EXERCISE OF OPTION Subject as provided in this Rule 9 and Rule 10 and any other conditions as may be introduced by the Remuneration Committee from time to time, each option shall be exercisable, in whole or in part, as follows: (i) In the case of a Market Price Option, during the period commencing after the first anniversary of the Offering Date and expiring on the first anniversary of such Offering Date, provided that in the case of a Market Price Option which is granted to a Participant not holding a salaried office or employment in the Group, such Option Period shall expire on the fifth anniversary of such Offering Date; and In the case of an Incentive Option, during the period commencing after the second anniversary of the Offering Date and expiring on the tenth anniversary of such Offering Date, provided that in the case of an Incentive Option which is granted to a Participant not holding a salaried ofce or employment in the Group, such Option Period shall expire on the fth anniversary of such Offering Date.

9. 9.1

(ii)

9.2

In the event of an Option being exercised in part only, the balance of the Option not thereby exercised shall continue to be exercisable in accordance with this Scheme until such time as it shall lapse in accordance with the Rules of this Scheme. Subject to Rule 9.4, an Option shall, to the extent unexercised, immediately lapse and become null and void and a Participant shall have no claim against the Company: (i) (ii) upon the bankruptcy of the Participant or the happening of any other event which results in his being deprived of the legal or beneficial ownership of such Option; or in the event of misconduct on the part of the Participant, as determined by the Remuneration Committee in its absolute discretion; or 153

9.3

(iii) (iv)

subject to Rules 9.4, 9.5 and 9.6, upon the Participant ceasing to be in full-time employment of the Group, for any reason whatsoever; or in the event that the Remuneration Committee shall, at its sole and absolute discretion, deem it appropriate that such Option granted to a Participant shall so lapse on the grounds that any of the objectives of this Scheme (as set out in Rule 3) have no been met.

For the purpose of Rule 9.3(iii), the Participant shall be deemed to have ceased to be so employed as of the earlier of the date of the Participant's notice of resignation of employment of the cessation of his employment/appointment with the Group. 9.4 Where a Participant who is an Executive Director ceases to be an employee of the Group due to a change in control of the Board of Directors, he shall, notwithstanding Rule 9.3, be entitled to exercise in full all unexercised Options from the last date of employment with the Group until the end of the relevant Option Period. If a Participant dies and at the date of his death holds any unexercised Option, such Option may, at the absolute discretion of the Remuneration Committee, be fully exercisable by the duly appointed legal personal representatives of the Participant from the date of his death to the end of the relevant Option Period and upon the expiry of such period, the Option shall immediately lapse and become null and void. TAKE-OVER AND WINDING-UP OF THE COMPANY

9.5

10.

10.1 Notwithstanding Rule 9 but subject to Rule 10.5, in the event of a take-over being made for the Shares, a Participant (including Participants holding Options which are then not exercisable pursuant to the provisions of Rule 9.1) shall be entitled to exercise in full or in part any Option held by him and as yet unexercised, in the period commencing on the date on which such offer 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: (i) 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 Remuneration Committee and the SGX-ST, such expiry date is extended to a later date (being a date falling not later than the date of expiry of the Option Period relating thereto); or the date of the expiry of the Option Period relating thereto,

(ii)

whereupon any Option then remaining unexercised shall immediately lapse and become null and void. Provided always that if during such period the offeror becomes entitled or bound to exercise the rights of compulsory acquisition of the Shares under the provisions of the Act and, being entitled to do so, gives notice to the Participants that it intends to exercise such rights on a specied date, the Option shall remain exercisable by the Participants until such specied date or the expiry of the Option Period relating thereto, whichever is earlier. Any Option not so exercised by the said specied date shall lapse and become null and void provided that the rights of acquisition or obligation to acquire shall have been exercised or performed, as the case may be. If such rights of acquisition or obligations have not been exercised or performed, all Options shall subject to Rule 9 remain exercisable until the expiry of the Option Period relating thereto. 10.2 If under the Act, the court sanctions a compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the reconstruction of the Company or its amalgamation with another company or companies, each Participant (including Participants holding Options which are then not exercisable pursuant to the provisions of Rule 9.1) be entitled, notwithstanding Rule 9 but subject to Rule 10.5, to exercise any Option then held by him during the period commencing on the date upon which the compromise or arrangement is sanctioned by the court and ending either on the expiry of sixty (60) days thereafter or the date upon which the compromise or arrangement becomes effective, whichever is later (but not after the expiry of the Option period relating thereto), whereupon the Option shall lapse and become null and void. 154

10.3 If an order is made for the winding-up of the Company on the basis of its insolvency, all Options to the extent unexercised, shall lapse and become null and void. 10.4 In the event of a members' voluntary winding-up (other than amalgamation or reconstruction), the Participants (including Participants holding Options which are not exercisable pursuant to the provisions of Rule 9.1) shall be entitled within thirty (30) days of the passing of the resolution of such winding-up (but not after the expiry of the Option Period relating thereto), to exercise any unexercised Option, after which period such unexercised Option shall lapse and become null and void. 10.5 If in connection with the making of a general offer referred to in Rule 10.1 or this Scheme referred to in Rule 10.2 or the winding-up referred to in Rule 10.4, arrangements are made (which are conrmed in writing by the Auditors, acting only as experts and not as arbitrators, to be fair and reasonable) for the compensation of Participants, whether by the continuation of their Options or the payment of cash or the grant of other options or otherwise, a Participant holding an Option, as yet not exercised, may not, at the discretion of the Remuneration Committee, be permitted to exercise that Option as provided for in this Rule 10. 10.6 To the extent that an Option is not exercised within the periods referred to in this Rule 10, it shall lapse and become null and void. 11. MANNER OF EXERCISE

11.1 An Option may be exercised during the Option Period, in whole or in part (provided that an Option may be exercised in part only in respect of 1,000 Shares or any multiples thereof), by a Participant giving notice in writing to the Company in or substantially in the form set out in Appendix III (the ``Exercise Notice''), subject to each case to such modications as the Remuneration Committee may from time to time determine. Every Exercise Notice must be accompanied by a remittance for the full amount of the aggregate Exercise Price in respect of the Shares which have been exercised under the Option, the relevant CDP charges (if any) and any other documentation the Remuneration Committee may require. An Option shall be deemed to be exercised upon the receipt by the Company of Exercise Notice duly completed, the relevant documentation required by the Remuneration Committee and the aggregate Exercise Price. 11.2 All payment shall be made by cheque, cashier's order, bank draft or postal order made out in favour of the Company or such other mode of payment as may be acceptable to the Company. 11.3 Subject to: (a) such consents or other required actions of any competent authority under any regulations or enactments for the time being in force as may be necessary (including any approvals required from the SGX-ST); and compliance with the Rules of this Scheme and the Memorandum and Articles of Association of the Company,

(b)

the Company shall, as soon as practicable after the exercise of an Option by a Participant but in any event within ten (10) Market Days after the date of the exercise of the Option in accordance with Rule 11.1, allot the relevant Shares and within ve (5) Market Days from the date of such allotment, dispatch the relevant share certicates to CDP for the credit of the securities account of that Participant by ordinary post or such other mode of delivery as the Remuneration Committee may deem t. 11.4 The Company shall as soon as practicable after the exercise of an Option, apply to the SGX-ST and any other stock exchange on which the Shares are quoted or listed for permission to deal in and for quotation of the Shares which may be issued upon exercise of the Option and the Shares (if any) which may be issued to the Participant pursuant to any adjustments made in accordance with Rule 12.

155

11.5 Shares which are all allotted on the exercise of an Option by a Participant shall be issued, as the Participant may elect, in the name of CDP to the credit of the securities account of the Participant maintained with CDP, the Participant's securities sub-account with a CDP Depository Agent or the CPF investment account maintained with a CPF agent bank. 11.6 Shares allotted and issued upon the exercise of an Option shall be subject to all provisions of the Memorandum and Articles of Association of the Company and shall rank pari passu in all respects with the then existing issued Shares in the capital of the Company except for any dividends, rights, allotments or other distributions, the record date of which is prior to the date such Option is exercised. 11.7 The Company shall keep available sufcient unissued Shares to satisfy the full exercise of all Options for the time being remaining capable of being exercised. 11.8 Except as set out in Rule 11.3 and subject to Rule 12, an Option does not confer on a Participant any right to participate in any new issue of Shares. 12. ALTERATION OF CAPITAL

12.1 If a variation in the issued share capital of the Company (whether by way of a capitalisation of profits or reserves or rights issue or reduction, subdivision, consolidation or distribution, or issues for cash or for shares or otherwise than for cash or otherwise howsoever) should take place, then: (a) (b) (c) the Exercise Price in respect of the Shares comprised in the Option to the extent unexercised; and/or the nominal value, class and/or number of Shares comprised in the Option to the extent unexercised and the rights attached thereto; and/or the nominal value, class and/or number of Shares in respect of which additional Options may be granted to Participants,

shall, at the option of the Remuneration Committee, be adjusted in such manner as the Remuneration Committee may determine to be appropriate including retrospective adjustments where such variation occurs after the date of exercise of an Option but the Record Date relating to such variation precedes such date of exercise and, except in relation to a capitalisation issue, upon the written conrmation of the Auditors (acting only as experts and not as arbitrators), that in their opinion, such adjustment is fair and reasonable. For this purpose, ``Record Date'' means the date as at the close of business on which the Shareholders must be registered in order to participate in any dividends, rights, allotments or other distributions (as the case may be). 12.2 Unless the Remuneration Committee considers an adjustment to be appropriate, the following shall not be regarded as a circumstance requiring adjustment under the provisions of this Rule 12: (i) (ii) the issue of securities as consideration for an acquisition of any assets or private placement of securities by the Company; and the cancellation of issued Shares purchased or acquired by the Company by way of a market purchase of such Shares undertaken by the Company on the SGX-ST during the period when a share purchase mandate granted by Shareholders of the Company (including any renewal of such mandate) is in force.

12.3 Notwithstanding the provisions of Rule 12.1 above, no such adjustment shall be made: (i) which would result in the Exercise Price falling below the par value of a Share and if such adjustment would, but for Rule 12.1, result in the Exercise Price being less than the par value of a Share, the Exercise Price payable shall be the par value of a Share; and

156

(ii)

any determination by the Remuneration 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 conrmed in writing by the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and reasonable.

12.4 Upon any adjustment required to be made, the Company shall notify each Participant (or his duly appointed personal representative(s)) in writing and deliver to him (or, where applicable, his duly appointed personal representative(s)) a statement setting forth the new Exercise Price thereafter in effect and the nominal value, class and/or number of Shares thereafter comprised in the Option so far as unexercised and the maximum entitlement in any one Financial Year. Any adjustment shall take effect upon such written notication being given. 12.5 The restriction on the number of Shares to be offered to any Grantee under Rule 5 above, shall not apply to the number of additional Shares or Options over additional Shares issued by virtue of any adjustment to the number of Shares and/or Options pursuant to this Rule 12. 13. ADMINISTRATION

13.1 This Scheme shall be administered by the Remuneration Committee in its absolute discretion with such powers and duties as are conferred on it by the Board, provided that no member of the Remuneration Committee shall participate in any deliberation or decision in respect of Options granted or to be granted to him. 13.2 The Remuneration Committee shall have the power, from time to time, to make or vary such regulations (not being inconsistent with this Scheme) for the implementation and administration of this Scheme as it thinks t including, but not limited to, imposing restrictions on the number of Options that may be exercised within particular sections of the relevant Option Period. 13.3 Any decision of the Remuneration Committee, made pursuant to any provision of this Scheme (other than a matter to be certied by the Auditors), shall be nal, binding and conclusive (including any decisions pertaining to quantum of discount applicable to an Incentive Option pursuant to Rule 8.2 or to disputes as to the interpretation of this Scheme or any rule, regulation, or procedure thereunder or as to any rights under this Scheme). 14. NOTICES AND ANNUAL REPORT

14.1 Any notice given by a Participant to the Company shall be sent by post or delivered to the registered ofce of the Company or such other address as may be notied by the Company to the Participant in writing. 14.2 Any notice, documents or correspondence given by the Company to a Participant shall be sent to the Participant by the Remuneration Committee (or such person(s) as it may from time to time direct) on behalf of the Company and shall be delivered to him by hand or sent to him at his home address stated in the records of the Company or the last known address of the Participant, and if sent by post shall be deemed to have been given on the day immediately following the date of posting. 14.3 The Company shall in relation to this Scheme, as required by law, the SGX-ST or other relevant authority, make the following disclosures in its annual report to shareholder: (i) (ii) the names and members of the Remuneration Committee; the following details in respect of each Participant who is a Director, Controlling Shareholder, associate of Controlling Shareholder or a person who received more than five (5) per cent. or more of the total number of Options available under this Scheme: (a) (b) name; the number of Options granted during the Financial Year in review;

157

(c) (d) (e) (iii)

the aggregate number of Options granted since the commencement of this Scheme up to the end of the Financial Year in review; the aggregate number of Options exercised since the commencement of this Scheme up to the Financial Year in review; and the aggregate number of Options outstanding as at the end of the Financial Year in review;

the number and proportion of Options granted at a discount during the Financial Year in review in respect of every ten (10) per cent range, up to the maximum quantum of discount granted; and an appropriate negative statement that directors and employees of the parent company and its subsidiaries are not eligible to participate in this Scheme.

(iv)

15.

MODIFICATIONS TO THIS SCHEME

15.1 Any or all of the provisions of this Scheme may be modified and/or altered at any time and from time to time by resolution of the Remuneration Committee except that: (i) any modification or alteration which shall alter adversely the rights attaching to any Option granted prior to such modification or alteration and which in the opinion of the Remuneration Committee, materially alters the rights attaching to any Option granted prior to such modification or alteration may only be made with the consent in writing of such number of Participants who, if they exercised their Options in full, would thereby become entitled to not less than three-quarters (3/4) in nominal amount of all the Shares which would fall to be issued and allotted upon exercise in full of all outstanding Options; the definitions of ``Controlling Shareholder'', ``Director'', ``Employee'', ``Group'', ``Participant'', ``Remuneration Committee'', ``Option Period'' and ``Exercise Price'' and the provisions of Rules 4, 5, 6, 7, 8, 10, 11.1, 11.6, 12, 13 and this Rule shall not be altered or modified to the advantage of Participants under this Scheme except with the prior approval of Shareholders at a general meeting; and no modication or alteration shall be made without the prior approval of the SGX-ST or (if required) any other stock exchange on which the Shares are quoted or listed, and such other regulatory authorities as may be necessary.

(ii)

(iii)

For the purposes of Rule 15.1(i), the opinion of the Remuneration Committee as to whether any modication or alteration would alter adversely the rights attaching to any Option shall be nal and conclusive. 15.2 Notwithstanding anything to the contrary contained in Rule 15.1, the Remuneration Committee may at any time by resolution (and without any other formality save for the prior approval of the SGX-ST) amend or alter this Scheme in any way to the extent necessary to cause this Scheme to comply with any statutory provision or the provisions or the regulations of any regulatory or other relevant authority or body (including the SGX-ST). 15.3 Shareholders who are eligible to participate in this Scheme must abstain from voting on any resolution relating to the Scheme (other than a resolution relating to the participation of, or grant of Options to the Employees). 15.4 Employees who are also Shareholders and are eligible to participate in this Scheme must abstain from voting on any resolution relating to the participation of, or grant of Options to the Employees). 15.5 Written notice of any modication or alteration made in accordance with this Rule shall be given to all Participants.

158

16.

VESTING

16.1 The Options may, at the discretion of the Remuneration Committee, be vested partially over a number of years. The periods over which the Options will vest may exceed any minimum vesting periods prescribed by any laws, regulations or rules to which this Scheme may be subject, including the regulations of any stock exchange on which the Shares may be listed and quoted. Further, the Shares to be issued and allotted to a Participant pursuant to the exercise of any Option under this Scheme may or may not at the discretion of the Remuneration Committee, be subject to any retention period. 17. TERMS OF EMPLOYMENT UNAFFECTED

17.1 This Scheme or any Option shall not form part of any contract of employment between the Company, or any Company within the Group and any Participant and the rights and obligations of a Participant (who is an Employee or a Director) under the terms of the ofce or employment with such company within the Group shall not be affected by his participation in this Scheme or any right which he may have to participate in it or any Option which he may hold and this Scheme or any Option shall afford such an individual no additional rights to compensation or damages in consequence of the termination of such ofce or employment for any reason whatsoever. 17.2 This Scheme shall not confer on any person any legal or equitable rights (other than those constituting the Options themselves) against the Company or the Group directly or indirectly or give rise to any cause of action at law or in equity against the Company and/or the Group. 18. DURATION OF THIS SCHEME

18.1 This Scheme shall continue to be in force at the discretion of the Remuneration Committee, for a maximum period of ten (10) nancial years commencing on the Adoption Date. Subject to compliance with any applicable laws and regulations in Singapore, this Scheme may be continued beyond the above stipulated period with the approval of the shareholder by ordinary resolution at a general meeting and of any relevant authorities which may then be required. 18.2 This Scheme may be terminated at any time by the Remuneration Committee or by resolution of the Shareholders at a general meeting subject to all other relevant approvals which may be required and if this Scheme is so terminated, no further Options shall be offered by the Company hereunder. 18.3 The termination, discontinuance or expiry of this Scheme shall be without prejudice to the rights accrued to Options which have been granted and accepted as provided in Rule 7.2, whether such Options have been exercised (whether fully or partially) or not. 19. TAXES All taxes (including income tax) arising from the exercise of any Option granted to any Participant under this Scheme shall be borne by the Participant. 20. COSTS AND EXPENSES OF THIS SCHEME

20.1 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 exercise of any Option in CDP's name, the deposit of share certicate(s) with CDP, the Participant's securities account with CDP or the Participant's securities sub-account with a CDP Depository Agent or CPF investment account with a CPF agent bank (collectively, the ``CDP Charges''). 20.2 Save for the taxes referred to in Rule 19 and such costs and expenses expressly provided in this Scheme to be payable by the Participants, all fees, costs, and expenses incurred by the Company in relation to this Scheme including but not limited to the fees, costs and expenses relating to the issue and allotment of the Shares pursuant to the exercise of any Option shall be borne by the Company. 159

21.

DISCLAIMER OF LIABILITY Notwithstanding any provisions herein contained and subject to the Act, the Board, the Remuneration Committee and the Company shall not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and howsoever arising in respect of any matter under or in connection with this Scheme including but not limited to the Company's delay or failure in issuing and allotting the Shares or in applying for or procuring the listing of and quotation for the Shares on the SGX-ST in accordance with Rule 11.4 (and any other stock exchanges on which the Shares are quoted or listed).

22.

DISPUTES Any disputes or differences of any nature in connection with this Scheme shall be referred to the Remuneration Committee and its decision shall be nal and binding in all respects.

23.

CONDITION OF OPTION Every Option shall be subject to the condition that no Shares shall be issued pursuant to the exercise of an Option if such issue would be contrary to any law or enactment, or any rules or regulations of any legislative or non-legislative governing body for the time being in force in Singapore or any other relevant country having jurisdiction in relation to the issue of Shares hereto.

24.

GOVERNING LAW This Scheme shall be governed by and construed in accordance with the laws of the Republic of Singapore. The Company and the Participants, by accepting the offer of the grant of Options in accordance with this Scheme, submit to the exclusive jurisdiction of the courts of the Republic of Singapore.

160

APPENDIX I

BREADTALK GROUP LIMITED EMPLOYEES' SHARE OPTION SCHEME LETTER OF OFFER

Serial No: Date: To: Name Designation Address PRIVATE AND CONFIDENTIAL

Dear Sir/Madam We are pleased to inform you that you have been nominated by the Remuneration Committee of the Board of Directors of BreadTalk Group Limited (the ``Company'') to participate in the BreadTalk Group Limited Employees' Share Option Scheme (the ``Scheme''). Terms as dened in the Scheme shall have the same meaning when used in this letter. Accordingly, an offer is hereby made to grant you an Option, in consideration of the payment of a sum of S$1.00, to subscribe for and be allotted * Shares of S$* each in the capital of the Company at the price of S$* per Share (the ``Exercise Price''). The Option shall be subject to the terms of this Letter of Offer and the Rules of the Scheme (as the same may be amended from time to time pursuant to the terms and conditions of the Scheme). You may obtain a copy of the Rules of the Scheme from [name]. [Subject to the Rules of the Scheme, the Option shall vest in the following manner: [terms] If you do not exercise your Option vested in any vesting period pursuant to the conditions set out above (a ``Vested Option''), such Vested Option may be added to the Options vesting in subsequent vesting periods and you may exercise such Vested Option in respect of the aggregate number of outstanding Vested Options. To the extent to which an Option has not yet vested, no further vesting can occur from the date you resign or from the date your employment is terminated for whatever reason. For the avoidance of doubt, no further vesting can occur from the date of your notice of resignation or the notice of termination of your employment by the Company.] You may exercise the [Vested] Option in whole or in part (provided that the [Vesting] Option may be exercised in part only in respect of 1,000 Shares or any multiplies thereof) during the Option Period on the rst Business Day of every [period], or, subject to the Rules of the Scheme, up to close of business on the last day of your employment with the Company or in the case of a director up to the date of vacation of your ofce as director for any reason whatsoever, whichever is the earlier date. The Company shall as soon as practicable after your exercise apply to the SGX-ST or any other stock exchange on which the Shares of the Company are quoted or listed for permission to deal in and for quotation of the Shares which may be issued upon the exercise of the Vested Option but the Company cannot assure you that the Shares will be listed and quoted within any xed time frame.

161

You may exercise the [Vested] Option by notice in writing to the Remuneration Committee. The notice must be accompanied by a remittance of the full amount of the aggregate subscription cost (being the amount derived by multiplying the Exercise Price by the number of Shares subscribed for on exercise of the [Vested] Option). The Option is personal to you and may not be sold, mortgaged, transferred, charged, assigned, pledged or otherwise disposed of or encumbered in whole or in part or in any way whatsoever. If you wish to accept the offer, please sign and return the enclosed Acceptance Form with a sum of S$1.00 not later than * a.m./p.m. on the * day of * 2003 failing which this offer will forthwith lapse. Yours faithfully for and on behalf of BreadTalk Group Limited

Name: Designation:

162

APPENDIX II

BREADTALK GROUP LIMITED EMPLOYEES' SHARE OPTION SCHEME ACCEPTANCE FORM

Serial No: To: The Remuneration Committee BreadTalk Group Limited Employees' Share Option Scheme c/o The Company Secretary [address] : : : :

Closing Date and Time for Acceptance of Option No. of Shares in respect of which Option is offered Exercise Price per Share Total Amount Payable on acceptance of Option (exclusive of the relevant CDP charges)

I have read your Letter of Offer dated * (the ``Offering Date'') and agree to be bound by the terms hereof and of the BreadTalk Group Limited Employees' Share Option Scheme stated therein. I conrm that my acceptance of the Option will not result in the contravention of any applicable law or regulation in relation to the ownership of shares in the Company or options to subscribe for such shares. I hereby accept the Option to subscribe for * Shares of S$* each in the capital of BreadTalk Group Limited (the ``Shares'') at S$* per Share and enclose a *cheque/banker's draft/cashier's order/postal order no. * for S$1.00 being payment for the purchase of the Option. I understand that I am not obliged to exercise the Option. I also understand that I shall be responsible for all the fees of CDP relating to or in connection with the issue and allotment of any Shares in CDP's name, the deposit of share certicate(s) with CDP, the Participant's securities account with CDP or the Participant's securities sub-account with a CDP Depository Agent or CPF investment account with a CPF agent bank (collectively, the ``CDP Charges''). I confirm as at the date hereof: (a) (b) (c) I am not less than 21 years old and nor an undischarged bankrupt nor have I entered into a composition with any of my creditors; I satisfy the eligibility requirements to participate in the Scheme as defined in Rule 4 of the Scheme; and I satisfy the other requirements to participate in the Scheme as set out in the Rules of the Scheme.

I hereby acknowledge that you have not made any representation or warranty or given me any expectation of employment or continued employment to induce me to accept the offer and that the terms of the Letter of Offer and this Acceptance Form constitute the entire agreement between us relating to the offer. I agree to keep all information pertaining to the grant of the Option to me condential.

163

PLEASE PRINT IN BLOCK LETTERS Name in Full Designation Address Nationality *NRIC/Passport No. Signature Date
* Delete where inapplicable

: : : : : : :

Notes: 1. 2. 3. Option must be accepted in full or in multiples of 1,000 Shares. The Acceptance Form must be forwarded to the Company Secretary in an envelope marked ``Private and Condential''. The Participant shall be informed by the Company of the relevant CDP charges payable at the time of the exercise of an Option.

164

APPENDIX III

BREADTALK GROUP LIMITED EMPLOYEES' SHARE OPTION SCHEME EXERCISE NOTICE

To: The Remuneration Committee BreadTalk Group Limited Employees' Share Option Scheme c/o The Company Secretary [Address] :

Total Number of Shares of S$* each (the ``Share'') at S$* per Share under an Option granted on * (the ``Offering Date'') Number of Shares previously allotted and issued thereunder Outstanding balance of Shares which may be allotted and issued thereunder Number of Shares now to be subscribed (in multiples of 1,000) 1.

: : :

Pursuant to your Letter of Offer dated * (the ``Offering Date'') and my acceptance thereof, I hereby exercise the Option to subscribe for Shares in BreadTalk Group Limited (the ``Company'') at S$* per Share. I hereby request the Company to allot and issue to me the number of Shares specied in paragraph 1 in the name of The Central Depository (Pte) Limited (``CDP'') to the credit of my ``Securities Account with a CDP/*Securities Sub-Account with a CDP Depository Agent/* CPF investment account with a CPF agent bank specied below and to deliver the share certicates relating thereto to CDP at my own risk. I further agree to bear such fees or other charges as may be imposed by CDP/CPF (the ``CDP charges'') and any stamp duties in respect thereof: *(a) *(b) Direct Securities Account Number Securities Sub-Account Number Name of CDP Depository Agent *(c) CPF Investment Account Number: Name of CPF agent bank : : : : :

2.

3. 4.

I enclose a *cheque/cashier's order/bank draft/postal order no. * for $* in payment for the subscription of $* for the total number of the said Shares and the CDP charges of $*. I agree to subscribe for the Shares subject to the terms of the Letter of Offer, the BreadTalk Group Limited Employees' Share Option Scheme (as the same may be amended pursuant to the terms thereof from time to time) and the Memorandum and Articles of Association of the Company. I declare that I am subscribing for the Shares for myself and not as a nominee for any other person.

5.

* Delete where inapplicable

165

ANNEX D

SINGAPORE TAXATION
The following is a discussion of certain tax matters arising under the current tax laws in Singapore and is not intended to be and does not constitute legal or tax advice. While this discussion is considered to be a correct interpretation of existing laws in force as at the date of this Prospectus, no assurance can be given that courts or scal authorities responsible for the administration of such laws will agree with this interpretation or that changes in such laws will not occur. The discussion is limited to a general description of certain tax consequences in Singapore with respect to ownership of our Shares by Singapore investors, and does not purport to be a comprehensive nor exhaustive description of all of the tax considerations that may be relevant to a decision to purchase our Shares. Prospective investors should consult their tax advisors regarding Singapore tax and other tax consequences of owning and disposing our Shares. It is emphasized that neither our Company, the Directors nor any other persons involved in the Invitation accepts responsibility for any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of our Shares. SINGAPORE INCOME TAX General Singapore tax residents are subject to Singapore income tax on income that is accrued in or derived from Singapore and on foreign income received in Singapore, subject to certain exceptions. Non-resident corporate taxpayers are subject to income tax on income that is accrued in or derived from Singapore, and on foreign income received in Singapore, subject to certain exceptions. Nonresident individuals, subject to certain exceptions, are subject to income tax on the income accrued in or derived from Singapore. A company is tax resident in Singapore if the control and management of its business is exercised in Singapore. An individual is tax resident in Singapore in a year of assessment if, in the preceding 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 resides in Singapore. The corporate tax rate in Singapore is 22% with effect from the year of assessment 2003 i.e. the nancial year ended in 2002. In addition, three-quarters of up to the rst $10,000 of a company's chargeable income, and one-half of up to the next $90,000 will be exempt from corporate tax with effect from the year of assessment 2002. The remaining chargeable income (after the tax exemption) will be taxed at 22%. The above tax exemption will not apply to Singapore dividends received by companies. In the Budget Statement 2003 announced on 28 February 2003, the Finance Minister has reafrmed the Government's intention to reduce the corporate tax rate to 20% by the year of assessment 2005. For a Singapore tax resident individual, the rate of tax will vary according to the individual's circumstances but is subject to a maximum rate of 22% with effect from the year of assessment 2003 i.e. calendar year 2002. In the Budget Statement 2003 announced on 28 February 2003, the Finance Minister also reafrmed the Government's intention to reduce the top individual tax rate to 20% by the year of assessment 2005.

166

Dividend Distributions Dividend Distributions Imputation Tax System Singapore adopted the imputation tax system up to 31 December 2002. Under the imputation tax system, the tax we pay at the prevailing corporate tax rate is deemed to be paid by our shareholders. Our shareholders receive dividends net of such tax. Our shareholders are taxed on the gross amount of dividends (that is, on the amount of net dividends plus an amount equal to the amount of gross dividends multiplied by the prevailing corporate tax rate). The tax we pay effectively becomes available to our shareholders as a tax credit to offset their Singapore income tax liability on the gross amount of dividends paid by us. Dividends on our Shares received by a Singapore resident individual will be liable to tax in Singapore. The rate of tax will vary according to the individual's circumstances. The tax we pay can be set off as a tax credit against the individual's income tax liabilities where the individual's income tax liabilities on the dividends are lower (or, as the case may be, higher) than the tax credit, such individual may receive a refund from (or, as the case may be, have to pay further tax to) the Inland Revenue Authority of Singapore. Dividends on our Shares received by a Singapore resident company will be liable to tax in Singapore at the corporate income tax rate. In the absence of any expenses which may be deductible against the dividends, the Singapore resident company will not receive any tax refund from the Inland Revenue Authority of Singapore, nor be required to pay a further tax, since tax has been deducted at the prevailing corporate tax rate. A non-resident shareholder is effectively taxed on dividends on our Shares at the corporate income tax rate. Thus, no further Singapore income tax will be imposed on the net dividends received by a non-resident holder of our Shares. Further, the non-resident shareholder which does not have a permanent establishment in Singapore and deductible expenses attributable to such dividend income will normally not receive any tax refund from the Inland Revenue Authority of Singapore. Dividend Distributions One-Tier Corporate Tax System Singapore adopts the ``one-tier'' corporate tax system with effect from 1 January 2003. Under this new system, the tax collected from corporate prots is nal and Singapore dividends are tax exempt in the hands of the shareholder, regardless of whether this is a corporate or individual shareholder and whether the shareholder is a Singapore tax resident. To enable companies to make use of the unutilised dividend franking credits as at 31 December 2002, a 5-year transition period from 1 January 2003 to 31 December 2007 has been introduced for such companies to pay franked dividends out of their unutilised dividend franking credits. During this period, the shareholders will continue to receive these dividends with credits attached as mentioned above under the current tax system. As we have moved to the one-tier corporate tax system on 1 January 2003, our shareholders would receive tax exempt dividends as described above. Gains on Disposal of our Shares Singapore does not impose tax on capital gains. However, there are no specic 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 Inland Revenue Authority of Singapore regards as the carrying on of a trade in Singapore. Any prots 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 prots would be taxable.

167

Stamp Duty There is no stamp duty payable on the subscription of our Shares. Stamp duty is payable on the instrument of transfer of our Shares at the rate of $2.00 for every S$1,000.00 market value of our Shares registered in Singapore. The purchaser is liable for stamp duty, unless there is an agreement to the contrary. No stamp duty is payable if no instrument of transfer is executed or the instrument of transfer is executed outside Singapore. However, stamp duty may be payable if the instrument of transfer which is executed outside Singapore is received in Singapore. The above stamp duty is not applicable to electronic transfers of our Shares through the CDP. Estate Duty Singapore estate duty is imposed on the value of immovable property situated in Singapore owned by individuals who are not domiciled in Singapore, subject to specic exemption limits. Movable assets of non-domiciles will be exempt from estate duty with respect to deaths occurring on or after 1 January 2002. Singapore estate duty is imposed on the value of most immovable property situated in Singapore and on most movable property, wherever it may be, owned by individuals who are domiciled in Singapore, subject to specic exemption limits. Our Shares are considered to be movable property situated in Singapore as we are a company incorporated in Singapore. Accordingly, our Shares held by an individual domiciled in Singapore are subject to Singapore estate duty upon such individual's death. Singapore estate duty is payable to the extent that the value of our Shares aggregated with any other assets subject to Singapore estate duty exceeds $600,000. Unless other exemptions apply to the other assets, for example, the separate exemption limit for residential properties, any excess beyond $600,000 will be taxed at 5% on the rst $12,000,000 of the individual's Singapore chargeable assets and thereafter at 10%. Individuals should consult their own tax advisors regarding the Singapore estate duty consequences of their ownership of our Shares.

168

ANNEX E

AUDITED FINANCIAL STATEMENTS OF BREADTALK PTE LTD FOR THE FINANCIAL PERIOD/YEARS ENDED 31 DECEMBER 2000, 2001 AND 2002
The information in this Appendix consists of audited nancial statements of BreadTalk Pte Ltd (``BTPL'') for the nancial period/years ended 31 December 2000, 2001 and 2002 and the auditors' reports thereon. The audited nancial statements of BTPL as at 31 December 2000 and for the nancial period then ended have been reproduced on pages 171 to 176 of this Prospectus. The audited nancial statements of BTPL as at 31 December 2001 and for the nancial year then ended referred to on pages 7 to 21 on page 177 of the Prospectus have been reproduced on pages 178 to 189 of this Prospectus. The audited nancial statements of BTPL as at 31 December 2002 and for the nancial year then ended referred to on pages 7 to 29 on page 190 of the Prospectus have been reproduced on pages 191 to 209 of this Prospectus.

169

BREADTALK PTE LTD

(Incorporated in the Republic of Singapore)

REPORT OF THE AUDITORS TO THE MEMBERS

We have audited the accompanying balance sheet as at 31 December 2000, the prot and loss account and the statement of changes in equity for the period then ended. These nancial statements are the responsibility of the Company's directors. Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the nancial statements. An audit also includes assessing the accounting principles used and signicant estimates made by the directors, as well as evaluating the overall nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act and Statements of Accounting Standard and so as to give a true and fair view of: (i) (ii) (b) the state of affairs of the Company as at 31st December 2000 and the results of the Company for the period then ended on that date; and the other matters required by Section 201 of the Act to be dealt with in the accounts.

the accounting and other records, and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

K.S. NG & CO., CERTIFIED PUBLIC ACCOUNTANTS SINGAPORE: 10 September 2001

170

BREADTALK PTE LTD

(Incorporated in the Republic of Singapore)

BALANCE SHEET AS AT 31ST DECEMBER 2000

Note NON-CURRENT ASSETS Fixed assets Intangible assets 3.2 & 4 3.3 & 5 1,131,963 5,128 1,137,091 CURRENT ASSETS Other debtors, deposit & prepayment Cash & bank balances 358,149 166,906 525,055 LESS: CURRENT LIABILITIES Trade creditors Other creditors & accruals Amount owing to directors Bank overdraft Term loan 6 7 8 853,007 291,247 170,643 209,068 45,333 1,569,298 NET CURRENT LIABILITIES NON CURRENT LIABILITIES Term loan 8 (90,667) 2,181 SHARE CAPITAL AND EQUITY Share capital Accumulated loss 9 250,000 (247,819) 2,181 (1,044,243) S$ S$

The annexed notes form an integral part of and should be read in conjunction with these accounts. 171

BREADTALK PTE LTD

(Incorporated in the Republic of Singapore)

PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 24TH APRIL 2000 (DATE OF INCORPORATION) TO 31ST DECEMBER 2000
Note Revenue Sales & services rendered Less: Direct cost 10 1,164,445 385,459 778,986 Less: Operating expenses Depreciation Staff cost Finance cost Other operating expenses 282,991 342,307 3,183 398,324 1,026,805 Net loss before taxation Taxation Net loss after taxation 12 (247,819) (247,819) S$ S$

The annexed notes form an integral part of and should be read in conjunction with these accounts. 172

BREADTALK PTE LTD

(Incorporated in the Republic of Singapore)

STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD FROM 24TH APRIL 2000 (DATE OF INCORPORATION) TO 31ST DECEMBER 2000
Share Capital S$ Subscribers shares Net loss after taxation Balance as at 31st December 2000 250,000 250,000 Accumulated Loss S$ (247,819) (247,819)

Total S$ 250,000 (247,819) 2,181

The annexed notes form an integral part of and should be read in conjunction with these accounts. 173

BREADTALK PTE LTD

(Incorporated in the Republic of Singapore)

NOTES TO THE ACCOUNTS 31ST DECEMBER 2000

These notes form an integral part of and should be read in conjunction with the accompanying nancial statements. 1. CORPORATE INFORMATION The nancial statements of BreadTalk Pte Ltd for the period ended 31st December 2000 were authorised for issued in accordance with a resolution of the directors on 10 September 2001. It is a limited liability company which is incorporated in Singapore. The registered ofce of BreadTalk Pte Ltd is located at 35A Lorong 17 Geylang Singapore 388559. The principal activities of the Company in the course of the nancial period are to carry on the business as manufacturers of all kinds of food, bakery and confectionery products, and operators of cafes, snack bars, coffee houses and restaurants. 2. STATEMENTS OF ACCOUNTING STANDARD The Company has complied in all material respect with applicable Statements of Accounting Standard effective for the nancial period in the preparation of the nancial statements. 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Basis of Accounting The nancial statements, expressed (to the nearest) in Singapore Dollars are prepared in accordance with the historical cost convention and on a going concern assumption. 3.2 Fixed Assets And Depreciation Fixed assets are stated at cost less accumulated depreciation. Depreciation is calculated on the straight line method so as to write off the cost of the xed assets over their estimated useful lives. The depreciation rates basing on the estimated useful lives have been taken as follows:
Number of Years Baking machinery Electrical works Furniture & ttings Ofce equipment Renovation 5 5 5 5 5

3.3

Preliminary Expenses Preliminary expenses are stated at cost less amount amortised. These are written off to the statement of prot and loss over 5 years.

3.4

Deferred Taxation Deferred tax based on the deferred method has been provided on the amount by which the book value of those assets which qualify for the tax allowances exceed their written down value for tax purposes and other differences arising from the recognition of income and expenditure in different period for tax purposes than those for accounting purposes. 174

3.

SIGNIFICANT ACCOUNTING POLICIES (cont'd) 3.5 Foreign Currency Transactions Transactions in foreign currencies have been converted into Singapore Dollars at the rate of exchange ruling at the date of transaction or where settlement had been taken place at balance sheet date, at the appropriate rate ruling on that date. Differences in exchange are taken to prot & loss account.

4.

FIXED ASSETS
Baking machinery S$ Cost At beginning of the period Additions At end of the period Accumulated depreciation At beginning of the period Charge for the period At end of the period Net book value At beginning of the period At end of the period 533,043 162,029 26,289 8,619 401,983 1,131,963 133,261 133,261 40,507 40,507 6,572 6,572 2,155 2,155 100,496 100,496 282,991 282,991 666,304 666,304 202,536 202,536 32,861 32,861 10,774 10,774 502,479 502,479 1,414,954 1,414,954 Electrical works S$ Furniture & fittings S$ Office equipment S$

Renovation S$

Total S$

5.

INTANGIBLE ASSETS
S$ Preliminary expenses at cost Less: Amount amortised 6,410 1,282 5,128

6.

AMOUNT OWING TO DIRECTORS These are directors' current accounts with no xed term of repayment, unsecured and interest free.

7.

BANK OVERDRAFT UNSECURED The bank overdraft facilities were secured by personal guarantee of the directors.

175

8.

TERM LOAN The term loan of S$136,000 was to nance the renovation of chained outlet which to be repaid by equal monthly instalments over 3 years commenced from April 2000 at an interest of 2% above bank's prime rate at monthly rests.

9.

SHARE CAPITAL
S$ Authorised 1,000,000 shares of S$1.00 each Issued and fully paid 250,000 shares of S$1.00 each 1,000,000

250,000

During the nancial period, the Company has issued 250,000 ordinary shares of S$1.00 each, at par for cash, to provide for working capital. Subsequent to the nancial period, the Company has issued 250,000 ordinary shares of S$1.00 each, at par for cash, to provide for working capital. 10. REVENUE Revenue represents invoiced net sales and services rendered to external customers. 11. PROFIT BEFORE TAXATION This is determined after charging:
S$ Auditors' remuneration Amortisation of preliminary expenses Depreciation Directors' remuneration Rental 2,000 1,282 282,991 12,000 159,078

12.

TAXATION No provision for taxation is necessary as the Company sustained an operating loss for the year. There are estimated tax loss of S$254,483 available to offsetting against future taxable income subject to there being no substantial change in shareholdings as required by provisions of the Income Tax Act. No credit has been recognised in these nancial statements for these tax benet.

13.

OTHER INFORMATION The numbers of employee at the end of the year was 57.

14.

COMPARATIVE FIGURES As this is the rst set of accounts since the Company's incorporation on 24 April 2000, comparative gures are not available.

176

Auditors' Report to the Members of BreadTalk Pte Ltd We have audited the nancial statements of BreadTalk Pte Ltd as at 31 December 2001 and for the year then ended set out on pages 7 to 21. These nancial statements are the responsibility of the Company's directors. Our responsibility is to express an opinion on these nancial statements based on our audit. The nancial statements of BreadTalk Pte Ltd for the period from the date of incorporation, 24 April 2000 to 31 December 2000 were audited by another auditor whose report dated 10 September 2001 expressed an unqualied opinion on those nancial statements. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the nancial statements. An audit also includes assessing the accounting principles used and signicant estimates made by the directors, as well as evaluating the overall nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act and Statements of Accounting Standard in Singapore and so as to give a true and fair view of: (i) (ii) (b) the state of affairs of the Company as at 31 December 2001 and of the results and changes in equity of the Company for the year then ended; and the other matters required by section 201 of the Act to be dealt with in the nancial statements;

the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

Arthur Andersen Certied Public Accountants Singapore 2 May 2002

177

BREADTALK PTE LTD

(Incorporated in Singapore)

BALANCE SHEET AS AT 31 DECEMBER 2001

(Amounts in Singapore dollars)
Note Share capital and reserves Share capital Accumulated prot (loss) 3 500,000 1,725,370 2,225,370 Fixed assets Preliminary expenses Current assets Stocks, less provision for stock obsolescence $Nil (2000: $Nil) Other debtors, deposits and prepayments Fixed deposits Cash and bank balances 6 7 211,098 1,144,099 190,109 1,737,837 3,283,143 Current liabilities Trade creditors Other creditors and accruals Provision for income tax Due to directors (non-trade) Term loans (current portion) Finance lease obligations (current portion) Bank overdrafts 9 10 11 12 8 1,196,816 1,831,976 308,000 15,000 439,350 55,172 3,846,314 Net current liabilities Non-current liabilities Term loans (non-current portion) Finance lease obligations (non-current portion) Deferred tax 10 11 (705,266) (156,200) (320,000) 2,225,370 (90,667) 2,181 (563,171) 99,058 1,045,196 170,643 45,333 209,068 1,569,298 (1,044,243) 358,149 166,906 525,055 4 5 3,970,007 250,000 (247,819) 2,181 1,131,963 5,128 2001 $ 2000 $

The accompanying notes are an integral part of the nancial statements. 178

BREADTALK PTE LTD

(Incorporated in Singapore)

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 DECEMBER 2001
(Amounts in Singapore dollars)
Note Turnover Cost of sales Gross prot Distribution and selling expenses Administrative expenses Prot (loss) from operations Financial expenses net Prot (loss) before tax Tax Prot (loss) after tax 17 15 16 13 2001 $ 16,740,738 (4,877,630) 11,863,108 (7,381,827) (1,824,099) 2,657,182 (55,993) 2,601,189 (628,000) 1,973,189 2000 $ 1,164,445 (385,459) 778,986 (712,763) (310,859) (244,636) (3,183) (247,819) (247,819)

The accompanying notes are an integral part of the nancial statements. 179

BREADTALK PTE LTD

(Incorporated in Singapore)

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2001

(Amounts in Singapore dollars)
Share capital $ Balance as at the date of incorporation Issue of shares during the nancial period Loss for the period Balance at 31 December 2000 Issue of shares during the nancial year Prot for the year Balance at 31 December 2001 3 249,997 250,000 250,000 500,000 Accumulated (loss) profit $ (247,819) (247,819) 1,973,189 1,725,370

Total $ 3 249,997 (247,819) 2,181 250,000 1,973,189 2,225,370

The accompanying notes are an integral part of the nancial statements. 180

BREADTALK PTE LTD

(Incorporated in Singapore)

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2001

(Amounts in Singapore dollars) These notes are an integral part of and should be read in conjunction with the accompanying nancial statements. 1. GENERAL The Company is a limited exempt private company domiciled and incorporated in Singapore. The address of the Company's registered ofce is 35-A Lorong 17 Geylang, Singapore 388559. The address of its principal place of business is 171 Kampong Ampat # 05-03/04 KA Foodlink, Singapore 368330. The principal activities of the Company are to carry on the business of manufacture and retail of all kinds of food, bakery and confectionery products. The nancial statements of BreadTalk Pte Ltd for the year ended 31 December 2001 were authorised for issue in accordance with a directors' resolution dated 2 May 2002. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The nancial statements, which are expressed in Singapore dollars, are prepared in accordance with Statements of Accounting Standard in Singapore and under the historical cost convention. Fixed assets Fixed assets are stated at cost, net of depreciation. Depreciation is provided on all xed assets at the following rates calculated to write off the cost on a straight-line basis over its estimated useful life:
Years Baking machinery Electrical works Furniture and ttings Ofce equipment Renovation Motor vehicles 5 5 5 5 5 5

Preliminary expenses For the nancial period from the date of incorporation, 24 April 2000 to 31 December 2000, preliminary expenses are stated at cost less accumulated amortisation. These expenses are amortised on a straight-line basis over 5 years through the prot and loss account. Under Statement of Accounting Standard (SAS) No. 34, Intangible Assets, which is effective for nancial years beginning on or after 1 October 2000, the deferral and amortisation of preliminary expenses and production costs is prohibited. The Company has applied the new accounting standard in the current nancial year. Accordingly, the unamortised expenditure remaining on the balance sheet has been charged to the current year's prot and loss account.

181

2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd) Leases Finance leases, which effectively transfer to the Group substantially all the risks and benets incidental to ownership of the lease item, are capitalised at the present value of the minimum lease payments at the inception of the lease term and disclosed as leased xed assets. Lease payments are apportioned between the nance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of liability. Finance charges are charged directly against income. Leases where the lessor effectively retains substantially all the risks and benets of ownership of the leased assets are classied as operating leases. Operating lease payments are recognised as an expense in the prot and loss account on a straight-line basis over the lease term. Impairment of assets Fixed assets and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in income for items of xed assets and intangible assets carried at cost. The recoverable amount is the higher of an asset's net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm's length transaction. Value in use is the present value of estimated future cash ows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit. Reversal of an impairment loss recognised in prior years is recorded when there is an indication that the impairment loss recognised for an asset no longer exists or has decreased. The reversal is recorded in income or as a revaluation increase. Stocks Stocks include foodstuff and related products and are stated at the lower of cost and net realisable value. Cost includes materials and all direct expenditure, determined on a rst-in, rst-out basis. Net realisable value is the estimated normal selling price, less estimated costs necessary to make the sale. Provision is made for deteriorated, damaged, obsolete and slow-moving stocks. Other debtors Other debtors, which generally have 3090 day terms, are recognised and carried at original invoiced amount less provision for doubtful debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. Cash and cash equivalents Cash consists of cash on hand and cash with banks, including bank overdrafts. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignicant risk of changes in value. Trade creditors Trade creditors, which are normally settled on 3090 day terms, are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received.

182

2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd) Turnover and revenue recognition Sales are recognised net of goods and services tax and discounts when goods have been delivered and accepted by the customer. Income tax Income tax expense is determined on the basis of tax effect accounting, using the liability method, and is applied to all signicant timing differences. Deferred tax benets are not recognised unless there is reasonable expectation of their realisation. Financial instruments Financial assets and nancial liabilities carried on the balance sheet include cash and cash equivalents, other accounts receivable and trade and other payable, loans and borrowings. The accounting policies on recognition and measurement of these items are disclosed in the respective accounting policies found in this Note. Accounting standards not effective until after the nancial year SAS 12, Income Taxes, was issued in March 2001 and is effective for nancial years beginning on or after 1 April 2001. SAS 12 requires deferred tax to be calculated using the balance sheet liability method, for all temporary differences at the balance sheet date between the carrying amounts of assets and liabilities and the amounts used for income tax purposes. Deferred tax assets should be recognised when it is probable that sufcient taxable prot will be available against which the deferred tax assets can be utilised. Had SAS 12 been applied in the current nancial year, there would not be a material impact on the deferred tax liability of the Company as at 31 December 2001.

3.

SHARE CAPITAL
2001 $ Authorised 1,000,000 ordinary shares of $1 each Issued and fully paid At beginning of year (date of incorporation) 250,000 (2000: 3) ordinary shares of $1 each Issued during the year/period 250,000 (2000: 249,997) ordinary shares of $1 each At end of year 500,000 (2000: 250,000) ordinary shares of $1 each 1,000,000 2000 $ 1,000,000

250,000 250,000 500,000

3 249,997 250,000

183

4.

FIXED ASSETS
Baking machinery $ Cost At 1 January 2001 Additions At 31 December 2001 Accumulated depreciation At 1 January 2001 Charge for the year At 31 December 2001 Charge for 2000 Net book value At 31 December 2001 At 31 December 2000 1,465,549 533,043 912,100 162,029 192,073 26,289 205,331 8,619 1,007,541 401,983 187,413 3,970,007 1,131,963 133,261 233,292 366,553 133,261 40,507 110,445 150,952 40,507 6,572 20,990 27,562 6,572 2,155 18,262 20,417 2,155 100,496 152,593 253,089 100,496 14,599 14,599 282,991 550,181 833,172 282,991 666,304 1,165,798 1,832,102 202,536 860,516 1,063,052 32,861 186,774 219,635 10,774 214,974 225,748 502,479 758,151 1,260,630 202,012 202,012 1,414,954 3,388,225 4,803,179 Electrical works $ Furniture and fittings $ Office equipment Renovation $ $ Motor vehicles $ Total $

Baking machinery and motor vehicles with net book values of $50,570 and $187,413 respectively (2000: $Nil and $Nil) were acquired under nance leases. The xed assets of the Company are subject to a xed and oating charge by a bank to secure the Company's term loans as disclosed in Note 10. 5. PRELIMINARY EXPENSES
2001 $ Cost At beginning of year/period Additions At end of year Accumulated amortisation/write off At beginning of year/period Amortisation for the year/period Written off during the year/period At end of year Net book value (1,282) (5,128) (6,410) (1,282) (1,282) 5,128 6,410 6,410 6,410 6,410 2000 $

6.

OTHER DEBTORS, DEPOSITS AND PREPAYMENTS

2001 $ Deposits Prepayments Sundry debtors Staff loan 912,295 137,220 80,184 14,400 1,144,099 2000 $ 281,913 36,236 2,500 37,500 358,149

184

7.

FIXED DEPOSITS Fixed deposits are pledged to banks for banking facilities granted to the Company as disclosed in Notes 10 and 12 to the nancial statements.

8.

OTHER CREDITORS AND ACCRUALS

2001 $ 709,221 896,076 226,679 1,831,976

2000 $ 818,709 226,486 1,045,195

Other creditors Accrued operating expenses Sales commission

9.

DUE TO DIRECTORS (NON-TRADE) The amounts due to directors are unsecured, interest free and are repayable on demand.

10.

TERM LOANS
2001 $ Secured term loans Bank loans Due within one year Due after one year or more 1,144,616 (439,350) 705,266 136,000 (45,333) 90,667 2000 $

These bank loans are repayable in 36 monthly installments as follows:

Installment commencement date Term loan 1 Term loan 2 Term loan 3 Term loan 4 Term loan 5 Term loan 6 Term loan 7 December 2000 January 2001 February 2001 February 2001 October 2001 March 2001 June 2001 2001 $ 93,967 86,599 22,730 94,723 524,101 147,387 175,109 1,144,616 2000 $ 136,000 136,000

Interest on these bank loans is payable at 2% (2000: 2%) above the lending banks' prime lending rate. Term loan 1 to 5 are secured by fixed deposits of the Company amounting to $100,000 (2000: $Nil) and joint and several personal guarantees by the directors of the Company. Term loan 6 and 7 are secured by the following: (i) (ii) (iii) (iv) Fixed and floating charge on all the Company's assets and undertaking both present and future; Joint and several personal guarantees by the directors of the Company; Fixed deposits of the Company amounting to $90,190 (2000: $Nil); and Fixed deposits of a director of the Company in her personal capacity amounting to $31,500 (2000: $Nil) 185

11.

FINANCE LEASE OBLIGATIONS

Minimum lease payments $ 2001 More than 1 year and not later than 5 years Not later than 1 year 178,078 62,573 240,651 21,878 7,401 29,279 156,200 55,172 211,372 Present value of payments $

Interest $

Lease terms do not contain restrictions concerning dividends, additional debt or further leasing. 12. BANK OVERDRAFTS The bank overdrafts facilities are secured by the Company's xed deposits of $190,190 (2000: $Nil) and xed deposits of a director of the Company in her personal capacity amounting to $31,500 (2000: $Nil), joint and several guarantees from the directors. Interest rates are at 2% (2000: 2%) per annum above the bank's prime lending rate. 13. TURNOVER Turnover represents invoiced sales, net of discounts. 14. PERSONNEL EXPENSES
2001 $ Wages, salaries and bonuses Central Provident Fund contributions Other personnel expenses 2,602,262 492,740 553,411 3,648,413 2000 $ 223,471 37,054 83,692 344,217

15.

PROFIT (LOSS) FROM OPERATIONS This is determined after charging the following:
2001 $ Auditors' remuneration Depreciation Amortisation of preliminary expenses Preliminary expenses written off Directors' remuneration Operating lease expenses Personnel expenses (Note 14)*
* This includes the amount shown as directors' remuneration.

2000 $ 2,000 282,991 1,282 12,000 159,078 344,217

12,500 550,181 5,128 129,000 2,340,514 3,648,413

186

16.

FINANCIAL EXPENSES NET

2001 $ Interest expense bank overdrafts bank term loans nance lease Bank charges Interest income on xed deposits 3,983 48,764 1,681 6,868 (5,303) 55,993 2000 $ 1,158 2,025 3,183

17.

TAX
2001 $ Current tax current year Deferred tax current year 308,000 320,000 628,000 2000 $

The current year's tax charge is lower than the amount obtained by applying the statutory income tax rate to prot before taxation mainly due to the utilization of unutilised losses brought forward from prior year of approximately $398,000, resulting in a tax savings of approximately $98,000, offset by certain non-deductible expenses added back for tax purposes. 18. CONTINGENT LIABILITY AND COMMITMENTS (a) Contingent liabilities, secured As at 31 December 2001, a bank issued letters of guarantees on behalf of the Company to lessors of premises amounting to $289,332 (2000: $Nil). These letters of guarantees are secured by a xed deposit of the Company amounting to $190,109. (b) Non-cancellable operating lease commitments The Company has various operating lease agreements for ofce premises and retail outlets. Most leases contain renewable options. Some of the leases contain escalation clauses and provide for contingent rentals based on percentages of sales derived from such operating leases. Lease terms do not contain restrictions on the Company's activities concerning dividends, additional debt or further leasing.
2001 $ Future minimum lease payments not later than 1 year 1 year through 5 years 2,971,000 4,690,000 7,661,000 684,000 1,453,000 2,137,000 2000 $

(c)

Capital expenditure commitments

2001 $ Capital expenditure not provided for in the nancial statements commitments in respect of contracts placed 459,030 2000 $

187

19.

FINANCIAL INSTRUMENTS Financial risk management objectives and policies The main risks arising from the Company's nancial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. Interest rate risk The Company obtains additional nancing through bank borrowings and leasing arrangements. The Company's policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure. Surplus funds are placed with reputable banks. Information relating to the Company's interest rate exposure is also disclosed in the notes on the Company's borrowings, including leasing obligations. Liquidity risk The Company monitors and maintains a level of cash and cash equivalents deemed adequate by the management to nance the operations of the Company. Short-term funding is obtained from bank overdraft facilities. Foreign exchange risk The directors are of the view that the Company has insignicant foreign exchange risk as only an insignicant portion of the Company's sales and expenses are denominated in foreign currencies. Credit risk The carrying amount of cash and cash equivalents, other debtors and deposits represent the Company's maximum exposure to credit risk in relation to nancial assets. No other nancial assets carry a signicant exposure to credit risk. The Company has no signicant concentrations of credit risk. Fair value of nancial instruments Fair value is dened as the amount at which the nancial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm's length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash ow models and option pricing models where practical. The following methods and assumptions are used to estimate the fair value of each class of nancial instruments: Bank balances and other liquid funds and short-term receivables The carrying amount approximates fair value due to the relatively short-term maturity of these instruments. Short-term borrowings and other current liabilities The carrying amount approximates fair value because of the short period to maturity of these instruments.

188

19.

FINANCIAL INSTRUMENTS (cont'd) Long-term bank loans The carrying amount approximates fair value as these instruments bear interest at variable rates. Finance lease obligations The fair values of these nancial instruments approximate the carrying amounts after discounting the relevant cash ows using current interest rates for similar instruments as at balance sheet date. Disclosure of the nature of nancial instruments and their signicant terms and conditions that could affect the amount, timing and certainty of future cash ow is presented in the respective Notes to the nancial statements, where applicable.

20.

SUBSEQUENT EVENTS Subsequent to the nancial year end, the directors proposed a nal dividend of 77 cents per share, less tax at 22%, amounting to $300,300 in respect of the nancial year ended 31 December 2001, subject to approval by shareholders at the forthcoming Annual General Meeting of the Company.

21.

COMPARATIVES The Company's comparative gures were audited by a rm of certied public accountants other than Arthur Andersen and relate to the period from the date of incorporation, 24 April 2000 to 31 December 2000. Certain prior year comparatives have been reclassied to conform with current year's presentation.

189

Auditor's Report to the members of BreadTalk Pte Ltd

We have audited the nancial statements of BreadTalk Pte Ltd (the ``Company'') set out on pages 7 to 29. The nancial statements comprise the balance sheet of the Company as at 31 December 2002, the prot and loss account, the statement of changes in equity and cash ow statement of the Company for the year ended 31 December 2002, and notes thereto. These nancial statements are the responsibility of the Company's directors. Our responsibility is to express an opinion on these nancial statements based on our audit. The nancial statements of BreadTalk Pte Ltd for the year ended 31 December 2001 were audited by another auditor whose report dated 2 May 2002 expressed an unqualied opinion on those nancial statements. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the nancial statements. An audit also includes assessing the accounting principles used and signicant estimates made by the directors, as well as evaluating the overall nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act (Act) and Singapore Statements of Accounting Standard and so as to give a true and fair view of: (i) (ii) (b) the state of affairs of the Company as at 31 December 2002 and the results, changes in equity and cash flows of the Company for the financial year ended on that date; and the other matters required by section 201 of the Act to be dealt with in the financial statements;

the accounting and other records, and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

ERNST & YOUNG Certied Public Accountants Singapore 11 February 2003

190

BreadTalk Pte Ltd

Prot and Loss Account for the year ended 31 December 2002 (Amounts in Singapore dollars)
Note Revenue Cost of sales Gross prot Distribution and selling expenses Administrative expenses Operating prot Financial income Financial expenses Other nancial costs Financial expenses, net Prot before tax Tax expense Net prot 7 6 4 3 2002 $ 34,969,291 (11,749,508) 23,219,783 (15,347,709) (3,175,147) 4,696,927 9,878 (115,686) (28,498) (134,306) 4,562,621 (1,159,993) 3,402,628 2001 $ 16,740,738 (5,299,005) 11,441,733 (7,365,076) (1,419,475) 2,657,182 5,303 (54,428) (6,868) (55,993) 2,601,189 (628,000) 1,973,189

The accounting policies and explanatory notes form an integral part of the nancial statements. 191

BreadTalk Pte Ltd

Balance Sheet as at 31 December 2002 (Amounts in Singapore dollars)

Note Non-Current Assets Fixed assets Trade mark Current Assets Inventories (raw materials less provision for stock obsolescence $Nil) Trade receivables less provision for doubtful debts $Nil Other receivables, deposits and prepayments Fixed deposits Cash on hand and at bank 10 11 8 9

2002 $ 9,078,635 88,500

2001 $ 3,970,007

424,851 214,448 2,118,696 344,343 2,847,887 5,950,225

211,098 1,144,099 190,109 1,737,837 3,283,143

Current Liabilities Trade payables Other payables and accrued expenses Deferred revenue Provision for income tax Due to directors (non-trade) Term loans (current portion) Finance lease obligations (current portion) 14 15 16 12 13 2,538,626 3,609,067 39,624 755,000 1,300,472 120,454 8,363,243 Net Current Liabilities Non-Current Liabilities Term loans (non-current portion) Finance lease obligations (non-current portion) Deferred tax 15 16 7 (434,807) (365,862) (625,750) (1,426,419) 5,327,698 Equity Share capital Accumulated prots 17 500,000 4,827,698 5,327,698 500,000 1,725,370 2,225,370 (705,266) (156,200) (320,000) (1,181,466) 2,225,370 (2,413,018) 1,196,816 1,831,976 308,000 15,000 439,350 55,172 3,846,314 (563,171)

The accounting policies and explanatory notes form an integral part of the nancial statements. 192

BreadTalk Pte Ltd

Statement of Changes in Equity for the year ended 31 December 2002 (Amounts in Singapore dollars)
Note Issued capital Balance at beginning of year Issuance of ordinary shares Balance at end of year Accumulated prots (losses) Balance at beginning of year Dividend Net prot Balance at end of year Total equity 21 1,725,370 (300,300) 3,402,628 4,827,698 5,327,698 (247,819) 1,973,189 1,725,370 2,225,370 17 500,000 500,000 250,000 250,000 500,000 2002 $ 2001 $

The accounting policies and explanatory notes form an integral part of the nancial statements. 193

BreadTalk Pte Ltd

Cash Flow Statement for the year ended 31 December 2002 (Amounts in Singapore dollars)
Note Cash ows from operating activities Prot before tax Adjustment for: Depreciation of xed assets Amortisation of trade mark Fixed assets written off Preliminary expenses written off Interest expense and bank charges Interest income Operating prot before working capital changes (Increase)/decrease in: Inventories Trade receivables Other receivables, deposits and prepayments Increase/(decrease) in: Trade payables Other payables and accrued expenses Deferred revenue Due to directors Cash generated from operations Interest expense and bank charges paid Tax paid Net cash ow from operating activities Cash ows from investing activities Interest income Purchase of xed assets Trade mark costs incurred Net cash ow used in investing activities Cash ows from nancing activities Increase in xed deposits pledged Proceeds from issuance of ordinary shares Net nancing from term loans Repayments of nance lease obligations Dividend paid on ordinary shares Net cash ow (used in) from nancing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year A (154,234) 590,663 (199,983) (300,300) (63,854) 1,110,050 1,737,837 2,847,887 (190,109) 250,000 1,008,616 (74,605) 993,902 1,779,999 (42,162) 1,737,837 B 9,878 (6,283,515) (90,000) (6,363,637) 5,303 (3,102,248) (3,096,945) 1,341,810 1,777,091 39,624 (15,000) 8,088,968 (144,184) (407,243) 7,537,541 1,097,758 786,780 (155,643) 3,944,338 (61,296) 3,883,042 (213,753) (214,448) (974,597) (211,098) (785,950) 1,599,814 1,500 50,000 144,184 (9,878) 6,348,241 550,181 5,128 61,296 (5,303) 3,212,491 4,562,621 2,601,189 2002 $ 2001 $

194

BreadTalk Pte Ltd

Cash Flow Statement for the year ended 31 December 2002 (cont'd) (Amounts in Singapore dollars)

Note A:

Cash and cash equivalents

Cash and cash equivalents included in the cash ow statement comprise the following balance sheet amounts:
2002 $ Cash on hand and at bank Fixed deposits 2,847,887 344,343 3,192,230 Less: Fixed deposits pledged Cash and cash equivalents (344,343) 2,847,887 2001 $ 1,737,837 190,109 1,927,946 (190,109) 1,737,837

Note B:

Purchase of xed assets

During the nancial year, the Company acquired xed assets with an aggregate cost of $6,758,442 (2001: $3,388,225) of which $474,927 (2001: $285,977) was nanced via nance lease. Cash payments of $6,283,515 (2001: $3,102,248) were made to purchase xed assets.

The accounting policies and explanatory notes form an integral part of the nancial statements. 195

Notes to the Financial Statements --- 31 December 2002

(Amounts in Singapore dollars unless otherwise stated)

1.

CORPORATE INFORMATION The nancial statements of BreadTalk Pte Ltd (the ``Company'') for the year ended 31 December 2002 were authorised for issue in accordance with a resolution of the directors on 11 February 2003. The Company is a limited exempt private company incorporated and domiciled in Singapore. The registered ofce of the Company is located at 10 Collyer Quay # 19-08 Ocean Building, Singapore 049315, and its principal place of business is at 171 Kampong Ampat, # 05-03/04 KA Foodlink, Singapore 368330. The principal activities of the Company are to carry on the business of manufacture and retail of all kinds of food, bakery and confectionery products. In the current nancial year, the Company has embarked on plans to diversify into franchising to penetrate new overseas markets. The Company employed 434 (2001: 226) employees as of 31 December 2002.

2.

SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation The nancial statements have been prepared in accordance with Singapore Statements of Accounting Standard (SAS) and applicable provisions of the Companies Act. The nancial statements have been prepared on a historical cost basis. The accounting policies have been consistently applied by the Company and, except for the changes in accounting policies discussed more fully below, are consistent with those used in the previous nancial year. The nancial statements are presented in Singapore Dollars (SGD or $). (b) Changes in accounting policies During the nancial year, the Company adopted SAS 12 (2001), Income Taxes. In accordance with SAS 12, deferred tax is recognised for all temporary differences at the balance sheet date between the carrying amounts of assets and liabilities and the amounts used for income tax purposes. Deferred tax assets should be recognised when it is probable that sufcient taxable prots will be available against which the deferred tax assets can be utilised. Previously, a deferred tax liability was recognised for timing differences only to the extent that a tax liability was expected to materialise in the foreseeable future. Deferred tax assets were not recognised unless there was reasonable expectation of their realisation. The nancial effect of this change in accounting policy is not material to the Company's nancial statements. (c) Foreign currency translation Transactions in foreign currencies are recorded at exchange rates approximating those ruling at the transaction dates. Foreign currency monetary assets and liabilities are translated into Singapore dollars at exchange rates ruling at balance sheet date. All resultant exchange differences are recognised in the prot and loss account.

196

2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd) (d) Fixed assets Fixed assets are stated at cost less accumulated depreciation and any impairment loss. All items of xed assets are initially recorded at cost. The initial cost of xed assets comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the xed assets have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to the prot and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benets expected to be obtained from the use of an item of xed asset beyond its originally assessed standard of performance, the expenditures are capitalised as an additional cost of the xed asset. Depreciation is computed on a straight-line basis over the estimated useful life of the xed assets of 5 years. The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benets from items of xed assets. An assessment of the carrying value of xed assets is made when there are indications that the assets have been impaired or the impairment losses recognised in prior years no longer exist. (e) Intangible assets Trade mark Costs relating to trade mark are capitalised and amortised on a straight-line basis over its estimated useful life of ve years. Research costs Research costs are expensed as incurred. (f) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and at bank and unpledged xed deposits. Cash and cash equivalents are short term, highly liquid investments readily convertible to known amounts of cash and are subject to an insignicant risk of change in value. Cash on hand and at bank and short-term deposits which are held to maturity are carried at cost. (g) Trade and other receivables Trade and other receivables, which generally have been granted 30 days credit terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

197

2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd) (h) Inventories Inventories are valued at the lower of cost and net realisable value. Inventories comprise raw materials and costs relate to purchase cost accounted for on a rst-in, rst-out basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Provision is made for deteriorated, damaged, obsolete and slow moving inventories. (i) Trade and other payables Liabilities for trade and other amounts payable which are normally settled on 3090 day terms, are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company. (j) Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outow of resources embodying economic benets will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reect the current best estimate. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash ows at a pre-tax rate that reects current market assessments of the time value of money and, where applicable, the risks specic to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. (k) Borrowings Borrowing costs are expensed as incurred. (l) Employee benets (i) Pension and other post employment benets The Company makes contributions to the Central Provident Fund scheme in Singapore, a dened contribution pension scheme. Contributions to national pension schemes are recognised as an expense in the period in which the related service is performed. (ii) Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for leave as a result of services rendered by employees up to the balance sheet date. (m) Leases (i) Finance lease Finance leases, which effectively transfer to the Company substantially all the risks and benets incidental to ownership of the lease item, are capitalised at the present value of the minimum lease payments at the inception of the lease term. Lease payments are apportioned between the nance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of liability. Finance charges are charged directly to the prot and loss account. Capitalised leased assets are depreciated over the estimated useful life of the assets. 198

2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd) (m) Leases (cont'd) (ii) Operating lease Leases where the lessor effectively retains substantially all the risks and benets of ownership of the leased assets are classied as operating leases. Operating lease payments are recognised as an expense in the prot and loss account on a straightline basis over the lease term. Some of the leases provide for contingent rentals based on a percentage of sales derived from rented premises held under operating leases and such contingent rentals are recognised as an expense in the prot and loss account as incurred. (n) Impairment of assets Fixed assets and trade mark are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the prot and loss account or treated as a revaluation decrease for assets carried at revalued amount to the extent that the impairment loss does not exceed the amount held in the revaluation surplus for that same asset. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal is recorded in income or as a revaluation increase. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for that asset in prior years. (o) Revenue Revenue from sale of goods is recognised net of goods and services tax and discounts upon the passing of title to the customer which generally coincides with delivery and acceptance of the goods sold. Initial franchise fee (``base fee'') is recognised upon the grant of rights, completion of the designated phases of the franchise setup and transfer of know-how to the franchisee in accordance with the terms stated in the franchise agreement. Recurring franchise fees are recognised on a periodic basis as a percentage of the franchisees' turnover in accordance with terms as stated in the franchise agreement. (p) Income taxes Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for nancial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date. At each balance sheet date, the Company re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Company recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable prot will allow the deferred tax asset to be recovered. The Company conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufcient taxable prot will be available to allow the benet of part or all of the deferred tax asset to be utilised.

199

2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd) (p) Income taxes (cont'd) Deferred tax assets are recognised for all deductible temporary differences and carryforward of unused tax losses, to the extent that it is probable that taxable prot will be available against which the deductible temporary differences and carry-forward of unused tax losses can be utilised. Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity. (q) Government grants Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised in the prot and loss account over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the prot and loss account over the expected useful life of the relevant asset by equal annual instalments. (r) Financial instruments Financial assets and nancial liabilities carried on the balance sheet include cash and cash equivalents, trade and other receivables and trade and other payables, loans and borrowings. The accounting policies on recognition and measurement of these items are disclosed in the respective accounting policies found in this Note.

3.

REVENUE Revenue relates to sale of food, bakery and confectionery products, net of goods and services tax and discounts.

4.

OPERATING PROFIT This is determined after charging (crediting) the following:

2002 $ Auditors' remuneration Non-audit fee paid to auditors Depreciation of xed assets Fixed assets written off Amortisation of trade mark Preliminary expenses written off Directors' remuneration Operating lease expenses Employee benets (Note 5)* Research costs Grant income
* This includes amounts shown as directors' remuneration.

2001 $ 12,500 2,500 550,181 5,128 317,820 2,340,514 4,558,461

20,000 2,000 1,599,814 50,000 1,500 571,467 5,267,954 9,573,349 29,239 (213,000)

200

5.

EMPLOYEE BENEFITS
2002 $ Staff costs (including directors) salaries and bonuses Central Provident Fund contributions Sales incentives and commission Other personnel benets 6,044,156 754,020 1,321,688 1,453,485 9,573,349 2,602,262 492,740 910,048 553,411 4,558,461 2001 $

6.

FINANCIAL EXPENSES, NET

2002 $ Interest income Loan to a shareholder Fixed deposits Interest expense Bank overdrafts Bank term loans Finance lease Bank charges 99,151 16,535 115,686 28,498 134,306 3,983 48,764 1,681 54,428 6,868 55,993 (4,000) (5,878) (9,878) (5,303) (5,303) 2001 $

7.

INCOME TAX Major components of income tax expense for the year ended 31 December were:
2002 $ Current tax Current year Singapore tax Withholding tax Underprovision in respect of prior year Deferred tax Current year Deferred tax adjustment resulting from reduction in tax rate Underprovision in respect of prior year Tax expense 325,642 (32,653) 12,761 1,159,993 320,000 628,000 755,000 26,115 73,128 308,000 2001 $

201

7.

INCOME TAX (cont'd) A reconciliation between the tax expense and the product of accounting prot multiplied by the applicable tax rate for the years ended 31 December was as follows:
2002 $ Prot before tax Tax expense on prot before tax at 22% (2001: 24.5%) Adjustments: Tax effect of expenses not deductible for tax purposes Underprovision of current tax in respect of prior year Underprovision of deferred tax in respect of prior year Deferred tax adjustment resulting from reduction in tax rate Others Tax expense 102,980 73,128 12,761 (32,653) 1,159,993 17,279 (26,570) 628,000 4,562,621 1,003,777 2001 $ 2,601,189 637,291

The statutory income tax rate applicable to the Company was reduced to 22% for year of assessment 2003 from 24.5% for year of assessment 2002. Deferred tax liabilities
2002 $ Deferred tax liabilities Excess of net book value over tax written down value of xed assets Deferred tax assets Accrued employee benets Deferred revenue Gross deferred tax assets Net deferred tax liabilities (10,797) (8,717) (19,514) 625,750 320,000 645,264 320,000 2001 $

202

8.

FIXED ASSETS
Baking machinery $ Cost Balance at beginning of year Additions Write-off Balance at end of year Electrical works $ Furniture and Office fittings equipment Renovation $ $ $ Motor vehicles $

Total $

1,832,102 2,103,966 3,936,068

1,063,052 1,166,531 2,229,583

219,635 480,193 699,828

225,748 310,489 (60,000) 476,237

1,260,630 2,218,319 3,478,949

202,012 478,944

4,803,179 6,758,442 (60,000)

680,956 11,501,621

Accumulated depreciation At beginning of year Charge for the year Write-off At end of year Charge for 2001 Net book value At end of year At beginning of year 2,964,741 1,767,916 591,781 407,117 2,771,461 575,619 9,078,635 366,553 604,774 971,327 233,292 150,952 310,715 461,667 110,445 27,562 80,485 108,047 20,990 20,417 58,703 (10,000) 69,120 18,262 253,089 454,399 707,488 152,593 14,599 90,738 105,337 14,599 833,172 1,599,814 (10,000) 2,422,986 550,181

1,465,549

912,100

192,073

205,331

1,007,541

187,413

3,970,007

Baking machinery and motor vehicles with net book values of $34,191 and $575,619 (2001: $50,570 and $187,413) respectively were acquired under nance leases. The xed assets of the Company are subject to a xed and oating charge as security for term loans granted to the Company as disclosed in Note 15.

203

9.

TRADE MARK
Trade mark 2002 $ Cost Balance at beginning of year Additions Balance at end of year Accumulated amortisation Balance at beginning of year Amortisation Balance at end of year Net book value At end of year At beginning of year 88,500 1,500 1,500 90,000 90,000 2001 $

10.

OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

2002 $ Sundry debtors Deposits Prepayments Staff loans Grants receivable 15,698 1,388,174 459,524 7,800 247,500 2,118,696 2001 $ 80,184 912,295 137,220 14,400 1,144,099

Staff loans are unsecured and interest free, with average repayment periods of 1 to 2 years. 11. FIXED DEPOSITS Fixed deposits are pledged to banks for banking facilities granted to the Company and letters of guarantees issued by banks to lessors of premises occupied by the Company as disclosed in Notes 15 and 19(c) to the nancial statements. 12. OTHER PAYABLES AND ACCRUED EXPENSES
2002 $ Other payables Accrued operating expenses Sales commission payable 1,768,421 1,629,806 210,840 3,609,067 2001 $ 709,221 896,076 226,679 1,831,976

204

13.

DEFERRED REVENUE
2002 $ Payment from franchisee Franchise costs incurred 174,124 (134,500) 39,624 2001 $

14.

DUE TO DIRECTORS (NON-TRADE) The amounts due to directors are unsecured, interest free and repayable on demand.

15.

TERM LOANS
2002 $ Secured term loans Due within one year Due after one year Bank term loans 1,300,472 434,807 1,735,279 439,350 705,266 1,144,616 2001 $

These bank loans are repayable in 36 monthly instalments as follows:

Loans Term loan 1 Term loan 2 Term loan 3 Term loan 4 Term loan 5 Term loan 6 Term loan 7 Term loan 8 Term loan 9 Instalment commencement date December 2000 January 2001 February 2001 February 2001 October 2001 March 2001 June 2001 July 2002 Revolving credit 2002 $ 350,800 83,372 112,096 339,011 850,000 1,735,279 2001 $ 93,967 86,599 22,730 94,723 524,101 147,387 175,109 1,144,616

Interest on these bank loans range from 1.5% to 2.5% (2001: 2.0%) per annum above the banks' prime lending rate or cost of funds. Security Term loans 5 and 8 are secured by xed deposits of the Company amounting to $101,875 (2001: $100,000) and joint and several personal guarantees by the directors of the Company. Term loans 6 and 7 are secured by the following: (i) (ii) (iii) Fixed and floating charge on all the Company's assets and undertaking both present and future; Joint and several personal guarantees by the directors of the Company; and Fixed deposits of the Company amounting to $92,468 (2001: $90,109).

Term loan 9 is secured by xed deposits of the Company amounting to $150,000 (2001: $Nil) and personal guarantees by the directors of the Company. 205

16.

FINANCE LEASE OBLIGATIONS

Total minimum lease payments 2002 $ Within one year After one year but not more than ve years Total minimum lease payments Less amounts representing nance charges Present value of minimum lease payments 144,169 400,109 544,278 (57,962) 486,316 Present value of payments 2002 $ 120,454 365,862 486,316 486,316 Total minimum lease payments 2001 $ 62,573 178,078 240,651 (29,279) 211,372 Present value of payments 2001 $ 55,172 156,200 211,372 211,372

The lease periods range from 3 to 5 years with options to purchase at the end of the lease term. The average discount rates implicit in the leases range from 4.92% to 6.09% (2001: 5.55% to 6.09%) per annum. Lease terms do not contain restrictions concerning dividends, additional debt or further leasing. 17. SHARE CAPITAL
2002 $ Authorised 1,000,000 ordinary shares of $1 each Issued and fully paid At beginning of year 500,000 (2001: 250,000) ordinary shares of $1 each Issued during the year Nil (2001: 250,000) ordinary shares of $1 each At end of year 500,000 (2001: 500,000) ordinary shares of $1 each 500,000 500,000 250,000 500,000 250,000 1,000,000 1,000,000 2001 $

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. 18. RELATED PARTY DISCLOSURES During the year, the Company had the following transactions with related parties as follows:
2002 $ Income Interest income on loan extended to a shareholder Expense Rental expense paid to a director 41,568 41,568 4,000 2001 $

206

19.

COMMITMENTS AND CONTINGENCIES (a) Capital expenditure commitments The Company has purchase commitments for xed assets incidental to the ordinary course of business. Such commitments aggregated about $147,500 at 31 December 2002 and $459,030 at 31 December 2001. (b) Operating lease commitments The Company has various operating lease agreements for equipment, ofce and retail outlet premises. These non-cancellable leases have remaining non-cancellable lease terms of between 1 and 4 years. Most leases contain renewable options. Some of the leases contain escalation clauses and provide for contingent rentals based on percentages of sales derived from assets held under operating leases. Lease terms do not contain restrictions on the Company's activities concerning dividends, additional debt or further leasing. Future minimum lease payments under non-cancellable leases are as follows as of 31 December:
2002 $ Within one year After one year but not more than ve years 6,779,000 8,644,000 15,423,000 2001 $ 2,971,000 4,690,000 7,661,000

As at 31 December 2002, the directors have provided guarantees to certain lessors as security for the Company's obligations under the leases. (c) Letters of guarantees, secured As at 31 December 2002, the banks issued letters of guarantees on behalf of the Company to lessors of premises amounting to $753,666 (2001: $289,332). These letters of guarantees are secured by xed deposits of the Company amounting to $194,343 (2001: $190,109). 20. FINANCIAL INSTRUMENTS Financial risk management objectives and policies The main risks arising from the Company's nancial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. Interest rate risk The Company obtains additional nancing through bank borrowings and leasing arrangements. The Company's policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure. Surplus funds are placed with reputable banks. Information relating to the Company's interest rate exposure is also disclosed in the notes on the Company's borrowings, including leasing obligations.

207

20.

FINANCIAL INSTRUMENTS (cont'd) Liquidity risk The Company monitors and maintains a level of cash and cash equivalents deemed adequate by the management to nance the operations of the Company. Short-term funding may be obtained from bank overdraft facilities where necessary. Foreign currency risk The directors are of the view that the Company has insignicant foreign currency risk arising from movements in foreign currency exchange rates as only an insignicant portion of the Company's revenues and expenses are denominated in foreign currencies. Credit risk The carrying amount of cash and cash equivalents, trade and other receivables represent the Company's maximum exposure to credit risk in relation to nancial assets. No other nancial assets carry a signicant exposure to credit risk. As at 31 December 2002, the balances owing by 2 major customers accounted for approximately 92% of the Company's trade receivables. The management monitors these trade receivables closely and considers the risk of default by these customers to be minimal as the debts are fairly current and these customers have no history of default and there is no debt under dispute. Fair value of nancial instruments Fair value is dened as the amount at which the nancial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm's length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash ow models and option pricing models where practical. The following methods and assumptions are used to estimate the fair value of each class of nancial instruments: Bank balances and other liquid funds and short-term receivables The carrying amount approximates fair value due to the relatively short-term maturity of these instruments. Short-term borrowings and other current liabilities The carrying amount approximates fair value because of the short period to maturity of these instruments. Long-term bank loans and nance lease obligations The fair values of these nancial instruments approximate their carrying amounts after discounting the relevant cash ows using current interest rates for similar instruments as at balance sheet date.

208

21.

DIVIDEND A nal dividend of 77 cents per ordinary share less tax at 22%, amounting to $300,300, was paid in respect of the nancial year ended 31 December 2001.

22.

COMPARATIVES Prior year comparatives were audited by a rm of certied public accountants other than Ernst & Young. Where necessary, prior year comparatives have been reclassied/restated to conform with current year's presentation as follows: Prot and loss account In prior year, central kitchen expenses aggregating $421,375 classied under ``distribution and selling expenses ($16,751) and ``administrative expenses'' ($404,624) have been reclassied to ``cost of sales''.
As previously reported $ Cost of sales Distribution and selling expenses Administrative expenses 4,877,630 7,381,827 1,824,099 As reclassified/ restated $ 5,299,005 7,365,076 1,419,475

Cash ow statement Prior year comparatives for the cash ow statement have been included. Notes to the nancial statements (i) Note 7 on Income Tax Prior year comparatives relating to reconciliation between the tax expense and the product of accounting prot multiplied by the applicable tax rate and details of deferred income tax liabilities have been presented in accordance with SAS 12, Income Taxes. (ii) Note 16 on Finance Lease Obligations Prior year comparatives have been reclassied to conform with current year's presentation.

209

ANNEX F

TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION

You are invited to apply for the New Shares at the Issue Price subject to the following terms and conditions: 1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 NEW SHARES AND HIGHER INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF NEW 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 IB websites 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 CPF FUNDS TO APPLY FOR THE NEW SHARES. You are allowed to submit only one application in your own name for the Offer 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 shall be rejected. 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 shall be rejected. If you (being other than 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 shall be rejected. If you have made an application for Placement Shares (other than the Reserved 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 shall be rejected. 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 (other than Reserved Shares). Such separate applications shall be deemed to be multiple applications and shall be rejected. Joint or multiple applications shall be rejected. If you submit or procure submissions of multiple share applications for Offer Shares, Placement Shares or both Offer Shares and Placement Shares, you may be deemed to have committed an offence under the Penal Code, Chapter 224 of Singapore and the Securities and Futures Act, Chapter 289 of Singapore, and your applications may be referred to the relevant authorities for investigation. Multiple applications or those appearing to be or suspected of being multiple applications will be liable to be rejected at our discretion. If you have made an application for Reserved Shares by way of a Reserved Shares Application Form, you may submit one separate application for Offer Shares in your own name either by way of the Offer Shares Application Form or through an Electronic Application or you may submit one separate application for Placement Shares, provided you adhere to the terms and conditions of this Prospectus. Such separate applications will not be treated as multiple applications. 210

2.

3.

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) bear post ofce box numbers. 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 qualication 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 below. WE WILL NOT ACCEPT APPLICATIONS FROM NOMINEES EXCEPT THOSE MADE BY APPROVED NOMINEE COMPANIES ONLY. Approved nominee companies are dened as banks, merchant banks, nance 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 case of an Electronic Application, contained in the records of the relevant Participating Banks, 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 notication letter on successful allotment and/or allocation will be sent to your address last registered with CDP. We 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 with the terms and conditions of this Prospectus, which is illegible, incomplete, incorrectly completed or which is accompanied by an improperly drawn up or improper form of remittance. We further reserves the right to treat as valid any applications not completed or submitted or effected in all respects in accordance with the instructions set out in the Application Forms or the instructions for Electronic Applications or the terms and conditions of this Prospectus, and also to present for payment or other processes all remittances at any time after receipt and to have full access to all information relating to, or deriving from, such remittances or the processing thereof. We reserve the right to reject or to accept, in whole or in part, or to scale down or to ballot any application, without assigning any reason therefor, and we will not entertain any enquiry and/or correspondence on our decision. This right applies to applications made by way of Application Forms and by way of Electronic Applications. In deciding the basis of allotment and/or allocation, we will give due consideration to the desirability of allotting and/or allocating the New Shares to a reasonable number of applicants with a view to establishing an adequate market for the Shares.

5.

6.

7.

8.

9.

10.

211

11.

Share certicates 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 you own risk, within 15 Market Days after the close of the Application List, a statement of account stating that your Securities Account has been credited with the number of New Shares allotted to you. This will be the only acknowledgement of application moneys received and is not an acknowledgement by us. You irrevocably authorise CDP to complete and sign on your behalf as transferee or renouncee any instrument of transfer and/or other documents required for the issue or transfer of the New Shares allotted to you. This authorisation applies to applications made by way of Application Forms and by way of Electronic Applications. In the event of an under-subscription for Offer Shares as at the close of the Application List, we will make available that number of Offer Shares under-subscribed to satisfy excess applications for Placement Shares 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 (including the Reserved Shares) as at the close of the Application List, we will make available that number of Placement Shares undersubscribed to satisfy excess applications for Offer Shares to the extent that there is an oversubscription for Offer Shares as at the close of the Application List. In the event of an over-subscription for Offer Shares as at the close of the Application List and Placement Shares are fully subscribed or over-subscribed as at the close of the Application List, the successful applications for Offer Shares will be determined by ballot or otherwise as determined by our Directors and approved by the SGX-ST.

12.

13. 14.

You irrevocably authorise CDP to disclose the outcome of your application, including the number of New Shares allotted to you pursuant to your application, to authorised operators. Any reference to the ``you'' in this section shall include an individual, a corporation, an approved nominee and trustee applying for the Offer Shares by way of an Offer Share Application Form or by way of an Electronic Application; an individual, a corporation, an approved nominee and trustee applying for the Placement Shares (other than Reserved Shares) through the Joint Placement Agents by way of a Placement Shares Application Form; and an individual, a corporation, an approved nominee and trustee applying for the Reserved Shares by way of a Reserved 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 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'' on the IB website screen (as the case may be) in accordance with the provisions of this Prospectus, you: (a) irrevocably offer to subscribe for the number of Offer Shares specified in your application (or such smaller number for which the application is accepted) at the Issue Price and agree that you will accept such Offer Shares as may be allotted to you, in each case on the terms of this Prospectus and on the terms and subject to the conditions set out in this Prospectus and the Memorandum and Articles of Association of our Company; and warrant the truth and accuracy of the information provided in your application.

15.

(b) 16.

Our acceptance of applications will be conditional upon, inter alia, we being satisfied that: (a) permission has been granted by the SGX-ST to deal in and for quotation of all our existing Shares and the New Shares on a ``when issued'' basis on the Official List of the SGX-Sesdaq; and the Management and Underwriting Agreement and the Placement Agreement referred to on pages 124 to 125 of this Prospectus have become unconditional and have not been terminated or cancelled prior to such date as our Company may determine.

(b)

17. 18.

We will not hold any applications in reserve. We will not allot Shares on the basis of this Prospectus later than six months after the date of this Prospectus. 212

19. 20. 21.

The Issue Price for each New Share is S$0.24, save for each Reserved Share to be allocated to our employees and Independent Directors at $0.205 each. Additional terms and conditions for applications by way of Application Forms are set out on pages 213 to 216 of this Prospectus. Additional terms and conditions for applications by way of Electronic Applications are set out on pages 216 to 222 of this Prospectus.

ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION FORMS You shall make an application by way of Application Forms made on and subject to the terms and conditions of this Prospectus including but not limited to the terms and conditions appearing below as well as those set out under the section on ``TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION'' on pages 210 to 222 of this Prospectus, as well as the Memorandum and Articles of Association of our Company. 1. Your application must be made using the WHITE Application Forms for Offer Shares and the BLUE Application Forms for Placement Shares (other than for Reserved Shares) or the PINK Application Forms for Reserved Shares accompanying and forming part of this Prospectus. We draw your attention to the detailed instructions contained in the respective Application Forms and this Prospectus for the completion of the Application Forms which must be carefully followed. We reserve the right to reject applications which do not conform strictly to the instructions set out in the Application Forms and this Prospectus or to the terms and conditions of this Prospectus or which are illegible, incomplete, incorrectly completed or which are accompanied by improperly drawn remittances or improper form of remittances. Your 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 that is not applicable. Individuals, corporations, approved nominee companies and trustees must give their names in full. You must make your application, in the case of individuals, in your full names appearing in your identity cards (if applicants have such identication documents) or in your passports and, in the case of corporations, in your full names as registered with a competent authority. If you are a non-individual completing the Application Form under the hand of an ofcial, you must state the name and capacity in which that ofcial signs. If you are a corporation completing the Application Form, you are required to afx your Common Seal (if any) in accordance with your Memorandum and Articles of Association or equivalent constitutive documents. If you are a corporate applicant and your application is successful, a copy of your Memorandum and Articles of Association or equivalent constitutive documents. If you are a corporate applicant and your application is successful, a copy of your Memorandum and Articles of Association or equivalent constitutive documents must be lodged with the Share Registrar and Share Transfer ofce. We reserve the right to require you to produce documentary proof of identication for verication purposes. (a) (b) You must complete Sections A and B and sign page 1 of the Application Form. You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form. Where paragraph 7(a) is deleted, you must also complete Section C of the Application Form with particulars of the beneficial owner(s). If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, on page 1 of the Application Form, your application is liable to be rejected.

2. 3.

4.

5.

(c)

213

6.

You (whether you are an individual and corporate applicant, whether incorporated or unincorporated and wherever incorporated or constituted), will be required to declare whether you are a citizen or permanent resident of Singapore or a corporation in which citizens or permanent residents of Singapore or any body corporate constituted under any statute of Singapore have an interest in the aggregate of more than 50 per cent. of the issued share capital of or interests in such corporations. If you are an approved nominee company, you are required to declare whether the benecial owner of the New Shares is a citizen or permanent resident of Singapore or a corporation, whether incorporated or unincorporated and wherever incorporated or constituted, in which citizens or permanent residents of Singapore or any body corporate whether incorporated or unincorporated and wherever incorporated or constituted under any statute of Singapore have an interest in the aggregate of more than 50 per cent. of the issued share capital of or interests in such corporation. Your application must be accompanied by a remittance in Singapore currency for the full amount payable, in respect of the number of New Shares applied for, in the form of a BANKER'S DRAFT or CASHIER'S ORDER drawn on a bank in Singapore, made out in favour of ``BREADTALK SHARE ISSUE ACCOUNT'' crossed ``A/C PAYEE ONLY'', with your name and address written clearly on the reverse side. We will not accept applications accompanied by ANY OTHER FORM OF PAYMENT. We will reject remittances bearing ``NOT TRANSFERABLE'' or ``NON TRANSFERABLE'' crossings. No acknowledgement or receipt will be issued by us or the Managers for applications and application moneys received. Unsuccessful applications are expected to be returned (without interest or any share of revenue or other benet arising therefrom) to you by ordinary post within 24 hours of the balloting at your own risk. Where your application is rejected or accepted in part only, the full amount or the balance of the application moneys, as the case may be, will be refunded (without interest or any share of revenue or other benet arising therefrom) to you by ordinary post at your own risk in the shortest possible time. Capitalised terms used in the Application Forms and dened in this Prospectus shall bear the meanings assigned to them in this Prospectus. By completing and delivering the Application Form in accordance with the provisions of this Prospectus, you agree that: (a) in consideration of us having distributed the Application Form to you and agreeing to close the Application List at 12.00 noon on 11 June 2003 or such other time or date as our Directors may, in consultation with the Managers, decide and by completing and delivering the Application Form, you agree that: (i) (ii) your application is irrevocable; and your remittance will be honoured on first presentation and that any moneys returnable may be held pending clearance of your payment without interest or any share of revenue or other benefit arising therefrom;

7.

8.

9. 10.

(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 New Shares for which your application has been received and not rejected, acceptance of your application shall be constituted by written notication and not otherwise, notwithstanding any remittance being presented for payment by or on our behalf; 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 Managers, the Underwriters for the Public Offer, our Joint Lead Placement Agents or any other person involved in the Invitation shall have any liability for any information not so contained.

(c)

(d) (e)

214

Applications for Offer Shares 1. Your applications for Offer Shares MUST be made using the WHITE Offer Shares Application Forms and BROWN ofcial envelopes ``A'' and ``B''. ONLY ONE APPLICATION should be enclosed in each envelope. You must: (a) (b) enclose the WHITE Offer Shares Application Form, duly completed and signed, together with your remittance in the BROWN envelope ``A'' provided; in the appropriate spaces on BROWN envelope ``A'': (i) (ii) (iii) (iv) (c) (b) write your name and address; state the number of Offer Shares applied for; tick the relevant box to indicate the form of payment; and affix adequate Singapore postage;

2.

SEAL BROWN ENVELOPE ``A''; and write, in the appropriate box provided on the larger BROWN envelope ``B'' addressed to Lim Associates (Pte) Ltd, 10 Collyer Quay, # 19-08 Ocean Building, Singapore 049315, the number of Offer Shares you have applied for; and insert BROWN envelope ``A'' into BROWN envelope ``B'', seal BROWN envelope ``B'' and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND at your own risk to Lim Associates (Pte) Ltd, 10 Collyer Quay, # 19-08 Ocean Building, Singapore 049315, so as to arrive by 12.00 noon on 11 June 2003 or such other time as we may, in consultation with the Managers, 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 are liable to be rejected.

Applications for Placement Shares (other than for the Reserved Shares) 1. 2. Your application for Placement Shares MUST be made using the BLUE Placement Shares Application Forms. ONLY ONE APPLICATION should be enclosed in each envelope. The completed and signed BLUE Placement Shares Application Form and your remittance, in accordance with the terms and conditions of this Prospectus, for the full amount payable in respect of the number of Placement Shares applied for, with your name and address written clearly on the reverse side, must be enclosed and sealed in an envelope to be provided by you. You must afx adequate Singapore postage on the envelope (if despatching by ordinary post) and thereafter the sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your own risk to Lim Associates (Pte) Ltd, 10 Collyer Quay, # 19-08 Ocean Building, Singapore 049315, to arrive by 12.00 noon on 11 June 2003 or such other time as we may, in consultation with the Managers, decide. Local Urgent Mail or Registered Post must NOT be used. No acknowledgement of receipt will be issued for any application or remittance received. Alternatively, you may remit your application moneys by electronic transfer to the current account of DBS Bank, account number 003-900634-9, in favour of ``BREADTALK SHARE ISSUE ACCOUNT'' for the number of Placement Shares applied for by 12.00 noon on 11 June 2003 or such other time as we may, in consultation with the Managers, decide. If you remit your application moneys via electronic transfer, you should fax and send a copy of the remittance advice to SBI E2-Capital Pte Ltd at fax number 6227 3936 to arrive by 12.00 noon on 11 June 2003 or such other time as we may, in consultation with the Managers, decide.

3.

215

Applications for Reserved Shares 1. 2. Your application for Reserved Shares MUST be made using the PINK Reserved Shares Application Forms. ONLY ONE APPLICATION should be enclosed in each envelope. The completed and signed PINK Reserved Shares Application Form and your remittance in accordance with the terms and conditions of this Prospectus for the full amount payable in respect of the number of Reserved Shares applied for, with your name and address written clearly on the reverse side, must be enclosed and sealed in an envelope to be provided by you. You must afx adequate Singapore postage on the envelope (if dispatching by ordinary post) and thereafter DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your own risk to Lim Associates (Pte) Ltd, 10 Collyer Quay, # 19-08 Ocean Building, Singapore 049315, so as to arrive by 12.00 noon on 11 June 2003 or such other time as we may, in consultation with the Managers, decide. Local Urgent Mail or Registered Post must NOT be used. No acknowledgement of receipt will be issued for any application or remittance received.

ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS The procedures for Electronic Applications at ATMs 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 DBS Bank and the IB website of DBS Bank are set out respectively in the ``Steps for Electronic Applications for Offer Shares through ATMs of DBS Bank (including its POSB)'' and the ``Steps for Internet Electronic Applications through the IB website of DBS Bank'' (the ``Steps'') appearing on pages 221 to 222 of this Prospectus. The Steps set out the actions that you must take at an ATM of DBS Bank or the IB website of DBS Bank to complete an Electronic Application. Please read carefully the terms of this Prospectus, the Steps and the terms and conditions for Electronic Applications set out below before making 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. 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 Identication (``User ID'') and a Personal Identication Number/Password given by a relevant Participating Bank. The Steps set out the actions that you must take at ATMs of DBS Bank or the IB website of DBS Bank to complete an Electronic Application. 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''), conrming the details of your Electronic Application. Upon completion of your Internet Electronic Application, there will be an on-screen conrmation (``Conrmation Screen'') of the application which you can print out for your record. The Transaction Record or your printed record of the Conrmation 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.

216

For an Internet Electronic Application, you must have a bank account, and a User Identication (``User ID'') and a Personal Identication Number (``PIN'') given by the relevant Participating Banks. Upon completion of your Internet Electronic Application through the IB website of DBS Bank, there will be an on-screen conrmation (``Conrmation Screen'') of the application which can be printed out by you for your record. This printed record of the Conrmation 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 AND CONDITIONS AND PROCEDURES FOR APPLICATION'' on pages 210 to 213 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 the ATM for your Electronic Application: (a) that you have received a copy of this Prospectus and have read, understood and agreed to all the terms and conditions of application for 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, and share application amount (the ``Relevant Particulars'') from your account with that Participating Bank to the Share Registrar, CDP, SCCS, our Company and our Managers (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 in the ATM unless you press the ``Enter'' or ``OK'' or ``Conrm'' or ``Yes'' key. By doing so, you shall be treated as signifying your conrmation of each of the above three statements. In respect of statement 1(b) above, your conrmation, by pressing the ``Enter'' or ``OK'' or ``Conrm'' or ``Yes'' key, shall signify and shall be treated as your written permission, given in accordance with the relevant laws of Singapore including Section 47(2) of the Banking Act (Chapter 19) of Singapore to the disclosure by that Participating Bank of the Relevant Particulars to the Relevant Parties. 2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYING FOR OFFER SHARES AS NOMINEE OF ANY OTHER PERSON AND THAT ANY ELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU AS BENEFICIAL OWNER. YOU SHOULD MAKE ONLY ONE ELECTRONIC APPLICATION FOR OFFER SHARES AND SHOULD NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES, WHETHER AT THE ATM OR THE IB WEBSITES OF ANY PARTICIPATING BANK OR ON THE APPLICATION FORMS. IF YOU HAVE MADE AN APPLICATION FOR OFFER SHARES ON AN APPLICATION FORM, YOU SHALL NOT MAKE AN ELECTRONIC APPLICATION FOR OFFER SHARES AND VICE VERSA. 3. You must have sufcient 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. 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.

217

You may make an ATM Electronic Application at the ATM of any Participating Bank or an Internet Electronic Application at the IB websites of the relevant Participating Banks for Offer Shares, using only cash by authorising such Participating Bank to deduct the full amount payable from your account with such Participating Bank. 4. You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares applied for as stated on the Transaction Record or any lesser number of Offer Shares that may be allotted to you in respect of your Electronic Application. In the event that we decide to allot any lesser number of such Offer Shares or not to allot and/or allocate any Offer Shares to you, you agree to accept such decision as nal. If your Electronic Application is successful, your conrmation (by your action of pressing the ``Enter'' or ``OK'' or ``Conrm'' or ``Yes'' key on the ATM or clicking ``Conrm'' or ``OK'' 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 moneys will be refunded (without interest or any share of revenue or other benet arising therefrom) to you by being automatically credited to your account with your Participating Bank within 24 hours of the balloting at your own risk. Trading on a ``WHEN ISSUED'' basis, if applicable, is expected to commence after such refund has been made. Where your Electronic Application is rejected or accepted in part only, the full amount or the balance of the application moneys, as the case may be, will be refunded (without interest or any share of revenue or other benet arising therefrom) to you by being automatically credited to your account with your Participating Bank within the shortest possible time. Responsibility for timely refund of application moneys 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. Neither the SGX-ST, the CDP, the SCCS, the Participating Banks, ourselves or the Managers assume any responsibility for any loss that may be incurred as a result of you having to cover any net sell positions or from buy-in procedures activated by the SGX-ST. 6. If your Electronic Application made through the ATMs is unsuccessful, no notication will be sent by the relevant Participating Bank. If your Internet Electronic Application made through the IB website is unsuccessful, no notication will be sent by such Participating Bank.

5.

218

If you make Electronic Applications through the ATMs of the following banks, you may check the provisional results of your Electronic Applications as follows:
Bank DBS Bank Telephone 1800 339 6666 (for POSB account holders) 1800 111 1111 (for DBS account holders) OCBC UOB Group 1800 363 3333 1800 222 2121 ATM ATM (Other Transactions ``IPO Enquiry'')(2) http://www.uobgroup.com(1)(2)
Notes: (1) If you make your Internet Electronic Applications through the IB website of DBS Bank or UOB Group, you may check the result through the same channels listed in the table above in relation to ATM Electronic Applications made at ATMs of DBS Bank or UOB Group. (2) If you make your Electronic Application through the ATMs or IB website of UOB Group, you may check the results of your application through UOB Personal Internet Banking, UOB Group ATMs or UOB PhoneBanking Services.

Available at IB or Internet Kiosk www.dbs.com(1)

Operating Hours 24 hours a day

Service expected from 7 p.m. of the balloting day

ATM/Phone Banking 24 hours a day ATM/Phone Banking 24 hours a day IB 24 hours a day

Evening of the balloting day Evening of the balloting day

7.

Electronic Applications shall close at 12.00 noon on 11 June 2003 or such other time as we may, in consultation with the Managers, decide. All Internet Electronic Applications must be received by 12:00 noon on 11 June 2003. Subject to the paragraph 9 below, an Internet Electronic Application is deemed to be received when it enters the designated information system of the relevant Participating Bank. You are deemed to have requested and authorised us to: (a) (b) (c) 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 moneys, should your Electronic Application be rejected, by automatically crediting your bank account with your Participating Bank with the relevant amount within 24 hours of the balloting; and return or refund (without interest or any share of revenue or other benet arising therefrom) the balance of the application moneys, should your Electronic Application be accepted in part only, by automatically crediting your bank account with your Participating Bank with the relevant amount within the shortest possible time.

8.

(d)

9.

You irrevocably agree and acknowledge that your Electronic Application is subject to risks of electrical, electronic, technical and computer-related faults and breakdowns, res, acts of God and other events beyond the control of the Participating Banks and if, in any such event, we, the Managers 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 us, the Managers and/or the relevant Participating Bank for Offer Shares applied for or for any compensation, loss or damage.

219

10.

We do not recognise the existence of a trust. Any Electronic Application by a trustee must be made in your own name and without qualication. We will reject any application by any person acting as nominee. 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 notication letter on successful allotment and/or allocation will be sent to your address last registered with CDP. By making and completing an Electronic Application, you agreed that: (a) in consideration of us making available the Electronic Application facility, through the Participating Banks acting as our agents, at the ATMs and the IB websites (if any): (i) (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;

11.

12.

13.

(b)

none of us, the Managers or the Participating Banks shall be liable for any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of data relating to 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 9 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 our behalf and not otherwise, notwithstanding any payment received by or on our behalf; you will not be entitled to exercise any remedy of rescission for misrepresentation at any time after acceptance of your application; and reliance is placed solely on information contained in this Prospectus and that none of our Company, the Managers, the Underwriters for the Public Offer, the Joint Lead Placement Agents nor any other person involved in the Invitation shall have any liability for any information not so contained.

(c)

(d) (e)

The instructions for Electronic Applications will appear on the ATM screens and the IB website screens. For illustration purposes, the steps for making an Electronic Application through an ATM belonging to DBS Bank or through the IB website of DBS Bank are shown below. Instructions for Electronic Applications on the ATM screens and the IB websites screens (if any) of the Participating Banks, other than DBS Bank, may differ from those represented below.

220

Steps for Electronic Applications for Offer Shares through ATMs of DBS Bank (including its POSB) Instructions for ATM Electronic Applications will appear on the ATM screens of the Participating Bank. For illustration purposes, the steps for making an ATM Electronic Application through a DBS Bank or POSB ATM are shown below. Certain words appearing on the screen are in abbreviated form (``A/c'', ``amt'', ``appln'', ``&'', ``I/C'' and ``No.'' refer to ``Account'', ``amount'', ``application'', ``and'', ``NRIC'' and ``Number'' respectively. Instructions for ATM Electronic Applications on the ATM screens of Participating Banks (other than DBS Bank (including its POSB)), may differ slightly from those represented below. Step 1 2 3 4 5 6 : : : : : : Insert your personal DBS or POSB ATM Card Enter your Personal Identication Number Select ``CASHCARD & MORE SERVICES'' Select ``ESA-IPO SHARE/BOND/RIGHTS'' Select ``ELECTRONIC SECURITY APPLICATION (IPO-SHARE/BOND)'' to ``BreadTk'' Press the ``ENTER'' key to acknowledge: . . you have read, understood and agreed to all terms of the application & the Prospectus. you consent to disclose your name, I/C/Passport No., address, nationality, CDP Securities A/c No., and share application amount from your Bank Account(s) to share registrars, SCCS, CDP, CPD, issuer. For FIXED price share application, this is your only application and it is made in your own name and at your own risk. You are not a US Person as referred to in the Prospectus/Document, where applicable.

. . 7 8 9 10 : : : :

Select your nationality Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSB account (current/savings) from which to debit your application moneys Enter the number of securities you wish to apply for using cash Enter your own 12-digit CDP Securities Account number. (Note: This step will be omitted automatically if your CDP Securities Account Number has already been stored in the Bank's records) Check the details of your share application, your I/C/Passport number and CDP Securities Account number and number of securities on the screen and press the ``ENTER'' key to conrm application Remove the Transaction Record for your reference and retention only

11

12

221

Steps for an Internet Electronic Application through the IB website of DBS Bank For illustrative purposes, the steps for making an Internet Electronic Application through the DBS Bank IB website is shown below. Certain words appearing on the screen are in abbreviated form (``A/C'', ``&'', ``I/C'' and ``No.'' refer to ``Account'', ``NRIC'' and ``Number'' respectively). Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 : : : : : : : Click on to DBS Bank website (www.dbs.com) Login to IB website Enter your User ID and PIN Select ``Electronic Security Application'' Click ``Yes'' to proceed and to warrant that you have observed and complied with all applicable laws and regulations Click on ``BreadTk'' and click the ``Submit'' button Click ``Conrm'' to conrm (1) (2) You have read, understood & agreed to all terms of application and the Prospectus You consent to disclose your name, I/C/passport No., address, nationality, CDP Securities A/C No., CPF Investment A/C No. and share application amount from your DBS/POSB Account(s) to share registrars, SCCS, CDP, CPF Board and issuer(s) This application is made in your name and at your own risk For FIXED price share application, this is your only application. For TENDER price securities application, this is your only application at the selected tender price You are not a US person as referred to in the Prospectus/Document, where applicable

(3) (4)

(5) Step 8 Step 9 Step 10 : : :

Fill in details for share application and click ``Submit'' Check details of your share application, your IC/passport No. and no. of shares on the screen and click ``OK'' to conrm your application Print Conrmation Screen (optional) for your reference & retention only

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BreadTalkAward-winning brand name

Promising Brand Award 2002 (ASME and SPH) Most Popular Brand 2002 (ASME and SPH)

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Superbrand status, Singapore version 2002/2003 (Singapore Superbrands Council)

Ranked Number 1 in Enterprise 50 Start Up Award 2002 (The Business Times and Accenture)

Our Retail Outlets

Parco Bugis Junction...Novena Square...Junction 8...Paragon...Jurong Point...Great World City... Peranakan Place...Turf City...Tiong Bahru Plaza...Marriott Hotel...Capitol Building...Parkway Parade... Causeway Point...Toa Payoh...Tampines Mall...CityLink...Compass Point. . . We s t M a l l . . . Plaz a Singapura...Holland Village...The Majestic ...Wisma Atria... Website address: www.breadtalk.com

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