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CIRCULAR DATED 9 JUNE 2006 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this Circular or the action that you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. If you have sold or transferred all your Shares (as defined herein) in the capital of Jackspeed Corporation Limited (“JCL” or the “Company”), you should forward this Circular, together with the Notice of Extraordinary General Meeting and the enclosed Proxy Form immediately to the purchaser or transferee or to the stockbroker, bank or agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. The Singapore Exchange Securities Trading Limited (“SGX-ST”) assumes no responsibility for the accuracy or correctness of any of the statements made, reports contained or opinions expressed in this Circular. Approval inprinciple granted by the SGX-ST for the admission of the Consideration Shares, New Shares and Additional New Shares (as defined herein) to the Official List of the SGX-ST and the listing of and quotation for the Consideration Shares, the New Shares and the Additional New Shares on the Official List of the SGX-ST is in no way reflective of the merits of the Company and its Subsidiaries, the Proposed Transactions (as defined herein) or the Shares. ®

JACKSPEED CORPORATION LIMITED (Incorporated in the Republic of Singapore on 15 January 1993) (Company Registration Number 199300300W)

CIRCULAR TO SHAREHOLDERS IN RELATION TO: (1)

THE PROPOSED ACQUISITION OF 100% OF THE ISSUED AND PAID-UP SHARE CAPITAL OF JACKSON VEHICLE HOLDINGS PTE LTD;

(2)

THE WHITEWASH RESOLUTION IN CONNECTION WITH THE PROPOSED ACQUISITION (AS DEFINED HEREIN);

(3)

THE PROPOSED PLACEMENT TO AAPICO HITECH PUBLIC COMPANY LIMITED OF 34,933,334 NEW ORDINARY SHARES IN THE CAPITAL OF JACKSPEED CORPORATION LIMITED;

(4)

THE PROPOSED PLACEMENT TO MR ANG KIAN LEE OF 8,733,333 NEW ORDINARY SHARES IN THE CAPITAL OF JACKSPEED CORPORATION LIMITED;

(5)

THE PROPOSED ALLOTMENT AND ISSUE OF UP TO 17,111,111 ADDITIONAL NEW SHARES (AS DEFINED HEREIN) TO AAPICO HITECH PUBLIC COMPANY LIMITED PURSUANT TO THE SUBSCRIPTION AGREEMENT; AND

(6)

THE PROPOSED ALLOTMENT AND ISSUE OF UP TO 4,277,778 ADDITIONAL NEW SHARES (AS DEFINED HEREIN) TO MR ANG KIAN LEE PURSUANT TO THE SUBSCRIPTION NOTICE. Independent financial adviser to the Independent Directors (as defined herein)

PricewaterhouseCoopers Corporate Finance Pte Ltd IMPORTANT DATES AND TIMES: Last date and time for lodgement of Proxy Form

:

24 June 2006 at 11.00 a.m.

Date and time of Extraordinary General Meeting

:

26 June 2006 at 11.00 a.m. or soon thereafter following the conclusion or adjournment of the Annual General Meeting of the Company to be held at 10.00 a.m. on the same day and at the same venue

Place of Extraordinary General Meeting

:

47 Loyang Drive Singapore 508955


CONTENTS Page DEFINITIONS ................................................................................................................................

3

LETTER TO SHAREHOLDERS ....................................................................................................

9

1.

INTRODUCTION..................................................................................................................

9

2.

DETAILS OF THE PROPOSED ACQUISITION ..................................................................

13

3.

INFORMATION ON JVHPL..................................................................................................

17

4.

FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION ............................................

27

5.

THE WHITEWASH RESOLUTION ......................................................................................

27

6.

THE FIRST PROPOSED PLACEMENT TO AAPICO HITECH PUBLIC COMPANY LIMITED OF 34,933,334 NEW ORDINARY SHARES IN THE CAPITAL OF JACKSPEED CORPORATION LIMITED ............................................................................

30

THE SECOND PROPOSED PLACEMENT TO MR ANG KIAN LEE OF 8,733,333 NEW ORDINARY SHARES IN THE CAPITAL OF JACKSPEED CORPORATION LIMITED ..............................................................................................................................

33

THE ALLOTMENT AND ISSUE OF UP TO 17,111,111 ADDITIONAL NEW SHARES TO AAPICO HITECH PUBLIC COMPANY LIMITED PURSUANT TO THE SUBSCRIPTION AGREEMENT ..........................................................................................

35

THE ALLOTMENT AND ISSUE OF UP TO 4,277,778 ADDITIONAL NEW SHARES TO MR ANG KIAN LEE PURSUANT TO THE SUBSCRIPTION NOTICE ..........................

35

10.

MATERIAL LITIGATION ......................................................................................................

36

11.

ABSTENTION FROM VOTING ............................................................................................

36

12.

OPINION OF THE INDEPENDENT FINANCIAL ADVISER ................................................

36

13.

AUDIT COMMITTEE’S STATEMENT ..................................................................................

37

14.

DIRECTORS’ RECOMMENDATIONS..................................................................................

37

15.

EXTRAORDINARY GENERAL MEETING ..........................................................................

38

16.

ACTION TO BE TAKEN BY SHAREHOLDERS ..................................................................

38

17.

DIRECTORS’ RESPONSIBILITY STATEMENT ..................................................................

38

18.

CONSENT............................................................................................................................

38

19.

DOCUMENTS FOR INSPECTION ......................................................................................

39

20.

ADDITIONAL INFORMATION ..............................................................................................

39

APPENDIX A ..................................................................................................................................

40

APPENDIX B..................................................................................................................................

63

APPENDIX C..................................................................................................................................

64

APPENDIX D..................................................................................................................................

67

NOTICE OF EXTRAORDINARY GENERAL MEETING ................................................................

69

7.

8.

9.

PROXY FORM

2


DEFINITIONS The following definitions apply throughout this Circular unless otherwise stated:“AAPICO”

:

AAPICO Hitech Public Company Limited.

“AGM”

:

The Annual General Meeting of the Company held on 29 June 2005.

“Accessories Segment”

:

The business of the JVHPL Group.

“Additional New Shares”

:

The Shares that AAPICO and/or Mr Ang are entitled to further subscribe for under the Subscription Agreement and the Subscription Notice respectively.

“Affected Parties”

:

Liew Ham Chow and any parties acting in concert with him.

“After Market”

:

A market made up of car traders, car accessories traders and parallel importers.

“Articles of Association”

:

The articles of association of the Company, as amended from time to time.

“Audit Committee”

:

The audit committee of the Company which as at the Latest Practicable Date of this Circular comprises: 1.

Chang Yeh Hong;

2.

Lee Kim Lian Juliana; and

3.

Voo Jun Hing.

“Board”

:

The board of directors of the Company.

“Business Day”

:

A day (excluding Saturdays, Sundays and public holidays) on which banks are open for business in Singapore.

“CDP”

:

The Central Depository (Pte) Limited.

“Car Distributor Market”

:

A market made up of car distributors who have the right to distribute a certain brand of automobiles on behalf of the respective automobile manufacturers.

“Cash Consideration”

:

An amount equal to the pro forma unaudited net tangible assets of the JVHPL Group as at 28 February 2006 payable in cash to the Vendors on Completion.

“Code”

:

The Singapore Code on Take-overs and Mergers, as amended from time to time.

“Companies Act”

:

The Companies Act, Chapter 50 of Singapore, including any modification or re-enactment thereof for the time being in force.

“Company” or “JCL”

:

Jackspeed Corporation Limited.

3


“Completion”

:

The completion of: (i)

the sale and purchase of the Sale Shares under the Share Purchase Agreement;

(ii)

the subscription by and the allotment and issue of new Shares to AAPICO pursuant to the Subscription Agreement; and/or

(iii)

the subscription by and the allotment and issue of new Shares to Mr Ang pursuant to the Subscription Notice.

“Completion Date”

:

The date on which the Proposed Acquisition and/or Proposed Placements are completed.

“Consideration”

:

The consideration for the purchase of the Sale Shares as set out in the Share Purchase Agreement.

“Consideration Shares”

:

The new Shares (if any), credited as fully paid, to be allotted and issued to the Vendors at the Issue Price within one (1) month after the completion of the audit of the JVHPL Group for each of FY 2007 and FY 2008 pursuant to the Share Purchase Agreement.

“Control”

:

The capacity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of the Company.

“Controlling Shareholder”

:

A person who: (a)

holds directly or indirectly 15% or more of the issued share capital of the Company; or

(b)

in fact exercises Control over the Company.

“Directors”

:

The directors of the Company from time to time.

“EGM”

:

The Extraordinary General Meeting of the Company to be convened on 26 June 2006, notice of which is set out on page 69 of this Circular.

“EPS”

:

Earnings per Share.

“Entitlement to Additional New Shares”

:

The number of Shares that AAPICO and/or Mr Ang are each entitled to further subscribe for under the Subscription Agreement and the Subscription Notice respectively.

“FY”

:

Financial year ended or, as the case may be, ending 28 February or in a leap year, 29 February.

“First Proposed Placement”

:

The proposed placement to AAPICO of 34,933,334 new Shares.

“Ford Group”

:

Ford Motor Company and its subsidiaries in Thailand.

“IATF”

:

International Automotive Task Force.

4


“Independent Directors”

:

The Directors who are not interested in the outcome of the resolution in respect of the Proposed Acquisition and the Whitewash Resolution, namely Ang Kian Lee, Chang Yeh Hong, Lee Kim Lian Juliana and Voo Jun Hing.

“Independent Shareholder”

:

A Shareholder of the Company other than the Vendors and their respective nominees, as at the date of this Circular, unless otherwise stated.

“Issue Price”

:

The issue price of S$0.18 per share.

“JCL Group”

:

The Company and its Subsidiaries.

“JVHPL”

:

Jackson Vehicle Holdings Pte. Ltd.

“JVHPL Group”

:

JVHPL, JVS and JVT.

“JVS”

:

Jackson Vehicle (Singapore) Pte. Ltd.

“JVT”

:

J.V. (Thailand) Co., Ltd.

“Latest Practicable Date”

:

6 June 2006, being the Latest Practicable Date prior to the printing of this Circular.

“Leather Segment”

:

The leather business of the JCL Group.

“Listing Manual”

:

The listing manual of the SGX-ST, as amended from time to time.

“Memorandum of Association”

:

The memorandum of association of the Company, as may be amended from time to time.

“Mr Ang”

:

Mr Ang Kian Lee.

“NTA”

:

Net tangible assets.

“Net Profit”

:

The net profit after tax of the JVHPL Group as set out in its audited accounts, such accounts having been prepared in conformity with the Singapore Financial Reporting Standards as employed by the JCL Group.

“New Shares”

:

The 43,666,667 new Shares to be issued at S$0.18 per Share pursuant to the Proposed Placements.

“OEM”

:

Original equipment manufacturer.

“P/E”

:

Price-earnings ratio.

“PBT of the Accessories Segment”

:

The profit before tax of the Accessories Segment (after (i) deducting profit before tax attributed to minority interests and (ii) excluding any extraordinary items) and after taking into account the basic salary and fixed annual wage supplement but before taking into account the annual incentive bonus.

5


“PBT of the Leather Segment”

:

The profit before tax of the JCL Group less the contributions from the aviation and marine division, the JVHPL Group and any other new investments from the date of the Service Agreements (after (i) deducting profit before tax attributed to minority interests and (ii) excluding any extraordinary items) and after taking into account the basic salary and fixed annual wage supplement but before taking into account the annual incentive bonus.

“PRC”

:

People’s Republic of China.

“PwCCF”

:

PricewaterhouseCoopers Corporate Finance Pte Ltd, the independent financial adviser to the Independent Directors in respect of the Proposed Acquisition and the Whitewash Resolution.

“Pool Bonus”

:

The bonus from the Accessories Segment and the bonus from the Leather Segment.

“Proposed Acquisition”

:

The proposed acquisition of 100% of the issued and paid-up share capital of JVHPL from the Vendors.

“Proposed Executive Directors”

:

Lee Seng Jeow and Ho Choon Meng.

“Proposed Placements”

:

The First Proposed Placement and the Second Proposed Placement.

“Proposed Transactions”

:

(1)

The Proposed Acquisition;

(2)

The Proposed Placements;

(3)

The allotment and issue of up to 17,111,111 Additional New Shares to AAPICO pursuant to the Subscription Agreement; and

(4)

The allotment and issue of up to 4,277,778 Additional New Shares to Mr Ang pursuant to the Subscription Notice.

“Purchase Consideration”

:

The sum of S$14.55 million, being the maximum aggregate purchase consideration payable by the Company to the Vendors in their respective Shareholding Proportion.

“RM”

:

Malaysian Ringgit, which is the lawful currency of Malaysia.

“RMB”

:

Renminbi, which is the lawful currency of the PRC.

“Record Date”

:

In relation to any dividends, rights, allotments or other distributions, the date as at the close of business (or such other time as may be notified by the Company), on which Shareholders of the Company must be registered in order to participate in such dividends, rights, allotments or other distributions.

“S$” and “cents”

:

Singapore dollars and cents respectively.

“SGS”

:

Socit Gnrale de Surveillance.

“SGX-ST”

:

Singapore Exchange Securities Trading Limited.

6


“SIC”

:

Securities Industry Council.

“SIC Confirmation”

:

The confirmation from the SIC required to ensure that the Affected Parties will not be obliged to make a general offer for the Company under the Code upon the allotment and issue of the Consideration Shares on the terms of the Share Purchase Agreement.

“Sale Shares”

:

The 10,000 ordinary shares in the capital of JVHPL, which are beneficially owned by the Vendors.

“Second Proposed Placement”

:

The proposed placement to Mr Ang of 8,733,333 new Shares.

“Securities and Futures Act” or “SFA”

:

The Securities and Futures Act, Chapter 289 of Singapore, as amended from time to time.

“Service Agreements”

:

The service agreements entered into by the Company with Lee Seng Jeow and Ho Choon Meng and the service agreement entered into by JVS with Liew Nyuk Ngoh on 7 June 2006.

“Shareholders”

:

Persons who are registered as holders of the Shares except where the registered holder is CDP, in which case the term “Shareholders” shall, in relation to such Shares, mean the Depositors whose securities accounts maintained with CDP are credited with the Shares.

“Shareholding Proportion”

:

The following shareholding proportion in which the Vendors hold shares in the capital of JVHPL: Liew Ham Chow – 45% Liew Nyuk Ngoh – 20% Ho Choon Meng – 20% Lee Seng Jeow – 15%

“Shares”

:

Ordinary shares in the capital of the Company.

“Share Purchase Agreement”

:

The conditional share purchase agreement dated 14 February 2006 for the sale of 100% of the issued and paid-up capital of JVHPL by the Vendors to the Company, as varied by the Supplemental Share Purchase Agreement.

“Singapore”

:

The Republic of Singapore.

“Singapore Dollar(s)”

:

The lawful currency of Singapore.

“Subscribers”

:

AAPICO and Mr Ang.

“Subscription Agreement”

:

The subscription agreement between AAPICO and the Company dated 15 February 2006.

“Subscription Notice”

:

The subscription notice from Mr Ang to the Company dated 15 February 2006.

“Subsidiary” or “Subsidiaries”

:

The subsidiaries of a company as defined in section 5 of the Companies Act.

7


“Supplemental Share Purchase Agreement”

:

The supplementary share purchase agreement entered into on 7 June 2006 by the Company with the Vendors varying the Share Purchase Agreement.

“THB”

:

Thai Baht, which is the lawful currency of Thailand.

“Tan Chong Motor”

:

Tan Chong Motor Sales Pte Ltd.

“Thailand”

:

The Kingdom of Thailand.

“Tier-one Supplier”

:

A supplier who is appointed by the automobile manufacturer to transact directly with it.

“Tranche”

:

Each of the tranches under which the Vendors may be issued Consideration Shares under the Share Purchase Agreement.

“USD”

:

United States dollars, which is the lawful currency of the United States of America.

“Vendors”

:

Liew Ham Chow, Liew Nyuk Ngoh, Ho Choon Meng and Lee Seng Jeow.

“Whitewash Resolution”

:

The proposed resolution for the waiver by the Independent Shareholders in respect of their right to receive a general offer from the Affected Parties.

“2007 Shortfall Amount” or “SF 2007”

:

The aggregate of the difference between S$1.5 million and the Net Profit for FY 2007.

“2008 Shortfall Amount” or “SF 2008”

:

The aggregate of the difference between S$2.0 million and the Net Profit for FY 2008.

“%” or “per cent.”

:

Per centum or percentage.

“Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined in the Companies Act, the SFA, the Code, the Listing Manual or any modification thereof and used in this Circular shall have the meaning assigned to it under the Companies Act, the SFA, the Code, the Listing Manual or such modification thereof, as the case may be, unless the context otherwise requires. Any discrepancies in figures included herein between the amounts and the totals thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. Any reference to a time of day and date in this Circular shall be a reference to Singapore time and date, unless otherwise stated.

8


LETTER TO SHAREHOLDERS

JACKSPEED CORPORATION LIMITED (Incorporated in the Republic of Singapore on 15 January 1993) (Company Registration Number 199300300W)

Directors:

Registered Office:

Liew Ham Chow Voo Jun Hing Ang Kian Lee Chang Yeh Hong Lee Kim Lian Juliana

47 Loyang Drive Singapore 508955

9 June 2006

To: The Shareholders of Jackspeed Corporation Limited

Dear Sir/Madam (1)

THE PROPOSED ACQUISITION OF 100% OF THE ISSUED AND PAID-UP SHARE CAPITAL OF JACKSON VEHICLE HOLDINGS PTE LTD;

(2)

THE WHITEWASH RESOLUTION IN CONNECTION WITH THE PROPOSED ACQUISITION;

(3)

THE PROPOSED PLACEMENT TO AAPICO HITECH PUBLIC COMPANY LIMITED OF 34,933,334 NEW ORDINARY SHARES IN THE CAPITAL OF JACKSPEED CORPORATION LIMITED;

(4)

THE PROPOSED PLACEMENT TO MR ANG KIAN LEE OF 8,733,333 NEW ORDINARY SHARES IN THE CAPITAL OF JACKSPEED CORPORATION LIMITED;

(5)

THE PROPOSED ALLOTMENT AND ISSUE OF UP TO 17,111,111 ADDITIONAL NEW ORDINARY SHARES TO AAPICO HITECH PUBLIC COMPANY LIMITED PURSUANT TO THE SUBSCRIPTION AGREEMENT; AND

(6)

THE PROPOSED ALLOTMENT AND ISSUE OF UP TO 4,277,778 ADDITIONAL NEW ORDINARY SHARES TO MR ANG KIAN LEE PURSUANT TO THE SUBSCRIPTION NOTICE.

1.

INTRODUCTION The Board is convening an EGM to be held on 26 June 2006 to seek the approval of Shareholders in relation to the following matters:

1.1

The Proposed Acquisition On 15 February 2006, the Board announced that the Company had entered into the Share Purchase Agreement with the Vendors for the sale and purchase of 10,000 shares in the capital of JVHPL. On 7 June 2006, the Company entered into the Supplemental Share Purchase Agreement with the Vendors to vary the terms of the Share Purchase Agreement. Subject to the fulfilment of the terms and conditions of the Share Purchase Agreement as varied by the Supplemental Share Purchase Agreement, the Company will acquire 100% of the issued and paid-up share capital of JVHPL for a maximum aggregate Consideration of S$14.55 million.

9


The Issue Price represents a discount of approximately 11% from the volume weighted average price of S$0.202 for trades in the Shares on the SGX-ST on 13 February 2006. The Issue Price is given at a premium of respectively 8.9% and 12.5% over the average daily closing price of the Shares for one month and three months preceding 15 February 2006 which is the date of the first announcement of the Share Purchase Agreement. Application of Chapter 9 of the Listing Manual The Controlling Shareholder and executive Director, Liew Ham Chow, is a shareholder of 45% of the issued and paid-up share capital of JVHPL as at the Latest Practicable Date. Liew Ham Chow and Liew Nyuk Ngoh are siblings and Liew Nyuk Ngoh is a director and shareholder of 20% of the issued and paid-up share capital of JVHPL as at the Latest Practicable Date. Accordingly, as Liew Ham Chow and Liew Nyuk Ngoh are “interested persons” under Chapter 9 of the Listing Manual, the Proposed Acquisition constitutes an “Interested Person Transaction”. Under Rule 906(1)(a) of the Listing Manual, an issuer must obtain shareholder approval for any Interested Person Transaction of a value equal to, or more than 5% of the group’s latest NTA. The Purchase Consideration payable pursuant to the Share Purchase Agreement will represent up to 78.4% of the JCL Group’s latest audited NTA. Accordingly, the Proposed Acquisition requires the approval of the Independent Shareholders at the EGM. As at 28 February 2005, the aggregate value of all transactions entered into by the JCL Group with the JVHPL Group in FY 2005 does not exceed S$100,000. As at the Latest Practicable Date, other than the Proposed Acquisition, there are no Interested Person Transactions that are required to be aggregated under Chapter 9 of the Listing Manual. Save as disclosed above, none of the Directors or Controlling Shareholders has any interest, direct or indirect, in the Proposed Acquisition. Application of Chapter 10 of the Listing Manual Under Rule 1013 of the Listing Manual, a transaction is classified as a “major transaction” if any of the relative figures computed on the bases set out in Rule 1006 exceeds 20%. In these circumstances, Shareholders’ approval must be obtained under Rule 1014 of the Listing Manual. Applying the applicable bases of Rule 1006 of the Listing Manual, the relative figures computed are as follows: (a)

Rule 1006(a) – not applicable, as this is an acquisition as opposed to a disposal.

(b)

Rule 1006(b) – the profit attributable to the Sale Shares is approximately S$0.40 million. The JCL Group’s net profit after tax for FY 2005 was approximately S$2.47 million. As such, the relative figure is approximately 16%.

(c)

Rule 1006(c) – the Company’s market capitalisation as at 13 February 2005 (the market day preceding the date of the Share Purchase Agreement) is approximately S$26.46 million. Based on the assumption that the NTA of the JVHPL Group for FY 2006 is S$3.0 million, and that the Net Profit for each of FY 2007 and FY 2008 is S$3.0 million, the aggregate value of the Consideration given, based on the volume weighted average price on 13 February 2006 of S$0.202, is S$15.96 million. Therefore, the relative figure computed under this rule is approximately 60%.

(d)

Rule 1006(d) – as at the date of the execution of the Share Purchase Agreement, the Company’s issued share capital comprised 131,000,000 Shares. Pursuant to the Share Purchase Agreement, assuming that the Cash Consideration for the Proposed Acquisition is S$3.0 million, a maximum aggregate of 64,166,667 Consideration Shares will be issued. Therefore, the relative figure computed under this rule is approximately 49%.

10


Since the relative figures in Rule 1006 (c) and (d) exceed 20% but do not exceed 100%, the Proposed Acquisition is regarded as a major transaction pursuant to Rule 1013 of the Listing Manual. As a result of the Proposed Acquisition pursuant to the Share Purchase Agreement, (i) the aggregate value of the Consideration given, compared with the Company’s market capitalisation, and (ii) the number of equity securities issued by the Company as Consideration for the Proposed Acquisition, compared with the number of equity securities previously in issue being 60% and 49% respectively, has exceeded the 20% threshold imposed under Rule 1006. The Proposed Acquisition is therefore a “major transaction” requiring Shareholders’ approval, which the Company is seeking at the EGM. Compliance with Chapter 9 and 10 of the Listing Manual Given that the Proposed Acquisition is an Interested Person Transaction and a major transaction under Rule 906(1) and Chapter 10 Part VII of the Listing Manual respectively, the Company is seeking specific approval from the Independent Shareholders in respect of the Proposed Acquisition for, inter alia, the proposed acquisition of 100% of the issued and paid-up capital of JVHPL and the subsequent allotment and issue of the Consideration Shares at the forthcoming EGM. PwCCF has been appointed as the independent financial adviser to advise the Independent Directors on whether, from a financial point of view, the terms of the Proposed Acquisition are on normal commercial terms and are not prejudicial to the interests of the Company and the Independent Shareholders. A copy of PwCCF’s letter to the Independent Directors in relation to the Proposed Acquisition is set out in Appendix A of this Circular. 1.2

The Whitewash Resolution Pursuant to the Share Purchase Agreement, Liew Ham Chow and Liew Nyuk Ngoh, who are siblings and Vendors to the Proposed Acquisition will receive Consideration Shares. As such, the Affected Parties may be required under the Code to make a general offer for the Shares pursuant to Rule 14 of the Code, unless such obligation to make a general offer is waived by the SIC. The Affected Parties have applied for, and have received, a waiver from the SIC of the requirements of Rule 14 of the Code on 13 March 2006, subject to the fulfilment of the conditions set out in section 5.3 of this Circular which include obtaining Shareholders’ approval for the Whitewash Resolution at the EGM. PwCCF has been appointed by the Company as the independent financial adviser to advise the Independent Directors on, inter alia, the Whitewash Resolution. A copy of PwCCF’s letter to the Independent Directors in relation to the Whitewash Resolution is set out in Appendix A of this Circular. Independent Shareholders should note that by voting in favour of the Whitewash Resolution, they will be giving up their rights to receive a general offer under Rule 14 of the Code from Liew Ham Chow (which he and any parties acting in concert with him would be obliged to make upon the issue of the Consideration Shares) at the highest price paid or agreed to be paid by Liew Ham Chow (and any parties acting in concert with him) for Shares in the six months prior to the commencement of the offer. Independent Shareholders should also note that by voting in favour of the Whitewash Resolution, they could be forgoing the opportunity to receive a general offer from another person who may be discouraged from making a general offer in view of the potential dilutive effect of the Consideration Shares, which will only be issued to the Vendors after the accounts of the JVHPL Group for FY 2007 and FY 2008 are audited. Independent Shareholders should note that the passing of the resolutions to approve the Proposed Acquisition is conditional upon the Whitewash Resolution being approved by the Independent Shareholders. In view of this, in the event that the Whitewash Resolution is not passed by the Independent Shareholders, the Proposed Acquisition will NOT take place.

11


1.3

The First Proposed Placement to AAPICO of 34,933,334 new Shares On 15 February 2006, the Board also announced that the Company had entered into the Subscription Agreement with AAPICO. Subject to the satisfaction of the terms and conditions of the Subscription Agreement, AAPICO has agreed to subscribe and pay for 34,933,334 new Shares, which will constitute 20% of the increased number of Shares, at the Issue Price. The First Proposed Placement of 34,933,334 new Shares to AAPICO will constitute more than 20% of the increased number of Shares as at the last AGM. At the AGM, the share issue mandate given by the Shareholders for the aggregate number of Shares and convertible securities that may be issued must be not more than 50% of the issued share capital of the Company, of which the aggregate number of Shares and convertible securities of the Company issued other than on a pro rata basis to existing Shareholders must not be more than 20% of the issued share capital of the Company. The First Proposed Placement will require the approval of the Shareholders. The Company is seeking the specific approval from the Shareholders to permit it to allot and issue new Shares amounting to 20% of the increased number of Shares to AAPICO pursuant to Rule 805 of the Listing Manual. As the Issue Price for each Share represents a discount of approximately 11% from the volume weighted average price of S$0.202 for trades in the Shares on the SGX-ST on 13 February 2006, the First Proposed Placement will require Shareholders’ specific approval pursuant to Rule 811(3) of the Listing Manual.

1.4

The Second Proposed Placement to Mr Ang of 8,733,333 new Shares On 15 February 2006, the Company had also announced that it had, through the Subscription Notice, entered into an agreement with Mr Ang, a non-executive Director. Subject to the satisfaction of the terms and conditions stated in the Subscription Notice, Mr Ang has agreed to subscribe and pay for 8,733,333 new Shares, which will constitute 5% of the increased number of Shares, at the Issue Price. Mr Ang is a non-executive Director and as such, the Second Proposed Placement would require the approval of Shareholders under Rule 812(2) of the Listing Manual. In addition, the consideration payable by Mr Ang for his subscription of 8,733,333 new Shares is S$1.57 million, which constitutes 8.5% of the JCL Group’s NTA as at 28 February 2005 and would amount to an Interested Person Transaction under Chapter 9 of the Listing Manual requiring specific Shareholders’ approval. As the Issue Price for each Share represents a discount of approximately 11% from the volume weighted average price of S$0.202 for trades in the Shares on the SGX-ST on 13 February 2006, the specific approval of Shareholders pursuant to Rule 811(3) of the Listing Manual is required. As such, the Company is seeking Shareholders’ approval for the Second Proposed Placement pursuant to Rule 811(3), Rule 812(2) and Rule 906(1) under the Listing Manual.

1.5

The allotment and issue of up to 17,111,111 Additional New Shares to AAPICO and the allotment and issue of up to 4,277,778 Additional New Shares to Mr Ang pursuant to the Subscription Agreement and Subscription Notice respectively After the completion of the audit of the JVHPL Group for FY 2007 and FY 2008, subject to the profitability of the JVHPL Group, the Vendors to the Proposed Acquisition will receive Consideration Shares. Subject to AAPICO and Mr Ang maintaining at least 20% and 5% of the total number of issued Shares respectively from time to time, AAPICO and Mr Ang have each agreed to subscribe for all (and not some only) of their Entitlement to Additional New Shares of the Company, taking into account the share consideration to be paid under the Share Purchase Agreement on a pro rata basis, so as to maintain their shareholdings at 20% and 5% of the total number of issued Shares respectively.

12


Rule 812(2) of the Listing Manual requires that specific shareholder approval be obtained for all placements to directors or substantial shareholders of the Company. Thus, conditional upon the Shareholders approving the First Proposed Placement and the Second Proposed Placement which will result in both AAPICO and Mr Ang becoming at least substantial Shareholders of the Company, the Company is seeking Shareholders’ approval for the subsequent allotment and issue of Additional New Shares to AAPICO and Mr Ang as required under Rule 812 of the Listing Manual. Mr Ang is a non-executive Director of the Company and is thus an “interested person” under Chapter 9 of the Listing Manual. As such, conditional upon the Shareholders approving the Second Proposed Placement, the Company is seeking Shareholders’ approval for the subsequent allotment and issue of up to 4,277,778 Additional New Shares to Mr Ang. 1.6

Purpose of this Circular The purpose of this Circular is to provide Shareholders with information, the rationale for and the pro forma financial effects of the Proposed Transactions and to seek Shareholders’ approval for the proposed resolutions set out in the Notice of EGM on page 69 of this Circular.

2.

DETAILS OF THE PROPOSED ACQUISITION In connection with the listing of the Company on the Official List of the SGX-ST on 10 November 2003, a call option was entered into by the Company and two shareholders of JVS, Liew Ham Chow and Liew Nyuk Ngoh in respect of 56% of the shares in JVS on 21 July 2003 (the “Call Option”). On 14 February 2006, the Call Option was terminated by the parties to the Call Option by mutual agreement prior to the execution of the Share Purchase Agreement. Pursuant to the Share Purchase Agreement, the Company will acquire 100% of the issued and paid-up share capital in JVHPL consisting of the Sale Shares. The Purchase Consideration is proposed to be satisfied by way of Cash Consideration and by the allotment and issuance of Consideration Shares as described in paragraph 2.1.

2.1

Purchase Consideration The Purchase Consideration for the Proposed Acquisition is a maximum aggregate amount of S$14.55 million which will be paid to the Vendors in their respective Shareholding Proportion. The Purchase Consideration was determined following arm’s length negotiations on a willingbuyer and willing-seller basis, and is based on a price earnings ratio of 4.85. In addition, the parties have also taken into account the prospects of the JVHPL Group, the business of auto-parts manufacturing and assembly, as well as the Net Profit targets of S$1.5 million and S$2.0 million that are to be achieved by the Vendors in FY 2007 and FY 2008 respectively. The maximum aggregate value of the Proposed Acquisition being S$14.55 million will be satisfied by: (a)

the Cash Consideration of a sum of S$3,112,880, which is equivalent to the NTA of the JVHPL Group as at 28 February 2006, payable upon Completion; and

(b)

deferred Consideration through the allotment and issue of Consideration Shares at the negotiated pre-determined Issue Price. The Consideration Shares will be issued in two tranches, the first Tranche and the second Tranche in accordance with the prescribed formulae set out below: (i)

First Tranche

:

40% x (Net Profit for FY 2007 x 4.85 – Cash Consideration)

(ii)

Second Tranche

:

60% x (Net Profit for FY 2008 x 4.85 – Cash Consideration)

13


Deferred Share Consideration (a)

The Consideration Shares for the first Tranche will be payable within one (1) month after the completion of the audit of the JVHPL Group for FY 2007. The minimum and maximum value of the first Tranche of Consideration Shares payable will be zero (0) and S$4,574,848 respectively; and

(b)

The Consideration Shares for the second Tranche will be payable within one (1) month after the completion of the audit of the JVHPL Group for FY 2008. The minimum and maximum value of the second Tranche of Consideration Shares payable will be zero (0) and S$6,862,272 respectively.

Terms of payment The Consideration Shares to be allotted and issued by the Company to the Vendors will rank pari passu in all respects with the existing Shares save for any dividends, rights, allotments or other distributions that may be declared or paid, the Record Date for which falls before the date of the issue of the Consideration Shares in FY 2007 or FY 2008, as the case may be, and will only be issued under the following circumstances and on the following terms: (a)

based on a weightage of 40:60 for FY 2007 and FY 2008 respectively;

(b)

based on a price earnings ratio of 4.85;

(c)

in the event that the Net Profit for either FY 2007 or FY 2008 exceeds S$3.0 million, Consideration Shares will not be issued for the Net Profit amounts in excess of S$3.0 million; and

(d)

subject to the meeting of Net Profit targets of S$1.5 million and S$2.0 million in FY 2007 and FY 2008 respectively, the failure of which will result in the Vendors repaying to the Company, the 2007 Shortfall Amount in cash, up to a maximum of S$1.5 million, and/or the 2008 Shortfall Amount in cash, up to a maximum of S$2.0 million, as the case may be.

Illustrations For illustrative purposes we set out the following scenarios to illustrate the total number of Consideration Shares issued to the Vendors under various circumstances. As the maximum aggregate Consideration payable is S$14.55 million, assuming that the Cash Consideration for the Proposed Acquisition is S$3.0 million: Scenario (1) Where Net Profit targets of S$1.5 million in FY 2007 and S$2.0 million in FY 2008 are met, the total amount of share consideration received by the Vendors in terms of value and number of Shares will be calculated according to the following formula: Consideration payable

=

40% x [(Net Profit for FY 2007 X P/E 4.85) – Cash Consideration] + 60% x [(Net Profit for FY 2008 x P/E 4.85) – Cash Consideration]

Share Consideration (S$ million)

No. of Consideration Shares issued

Increase in no. of Shares (taking into consideration Additional New Shares issued to AAPICO and Mr Ang)

First Tranche

1.71

9,500,000

12,666,667

Second Tranche

4.02

22,333,333

29,777,778

Total (including Cash Consideration)

8.73

31,833,333

42,444,445

14


Scenario (2) Where the Net Profit for FY 2007 is S$4.0 million and the Net Profit for FY 2008 is S$4.0 million, as Consideration Shares will not be issued for the Net Profit amounts in excess of S$3.0 million, the maximum amount of share consideration received by the Vendors in terms of value and number of shares will be calculated according to the following formula: Consideration payable

=

40% x [(Net Profit for FY 2007 X P/E 4.85) – Cash Consideration] + 60% x [(Net Profit for FY 2008 x P/E 4.85) – Cash Consideration]

Share Consideration (S$ million)

No. of Consideration Shares issued

Increase in no. of Shares (taking into consideration Additional New Shares issued to AAPICO and Mr Ang)

First Tranche

4.62

25,666,667

34,222,222

Second Tranche

6.93

38,500,000

51,333,333

14.55

64,166,667

85,555,555

Total (including Cash Consideration)

Scenario (3) Where the Net Profit for each of FY 2007 and FY 2008 is negative, the Vendors will not receive any share consideration. After FY 2007, the Vendors will return the sum of S$1.5 million in cash to the Company due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will return the sum of S$2.0 million in cash to the Company due to the failure to meet the Net Profit target of S$2.0 million in FY 2008. 2.2

Conditions Precedent Under the Share Purchase Agreement, Completion of the Proposed Acquisition is conditional upon, inter alia,: (a)

the Vendors having divested all of their shareholding interest in the capital of Katsuya (Thailand) Co. Ltd (“Katsuya”);

(b)

each of the Vendors having discharged themselves of their respective roles in the management of Katsuya and/or resigned from their positions as directors of Katsuya, as the case may be.

(c)

the receipt of documentation reasonably satisfactory to the Company evidencing the restructuring exercise wherein the Vendors have transferred their beneficial interests in JVS and JVT to JVHPL;

(d)

the completion of the financial and legal due diligence investigations to be conducted by the Company’s professional advisers on JVHPL on or before the Completion Date, and the results of such due diligence investigations being reasonably satisfactory to the Company;

(e)

all consents, approvals and licenses (whether governmental, corporate or otherwise) which are necessary to be obtained under any existing contractual, financing or security arrangements or such other consents or approvals from any third party, governmental or regulatory body or relevant competent authority as may be necessary to be obtained in respect of or in connection with the transactions described or contemplated herein and the proposed allotment and issue of the Consideration Shares by the Company to the Vendors, being granted or obtained and such consents and approvals remaining in full force and effect and not withdrawn or revoked or amended, on or before the Completion Date, and all conditions attaching thereto required to be complied with being complied with on or before the Completion Date;

(f)

there being no material adverse change (as determined by the Company) in the JVHPL Group’s assets, properties, and business relationship in respect of Ford Motor Company and its subsidiaries, since the date of the Share Purchase Agreement; 15


(g)

The Company having obtained in-principle approval for the listing of and quotation for the Consideration Shares on the Official List of the SGX-ST and such approval not having been revoked or withdrawn on or before the Completion Date and, where such approval is subject to conditions, such conditions being acceptable to the parties and (to the extent that such conditions are capable of being fulfilled on or before Completion) they are so fulfilled;

(h)

the confirmation from the SIC having been obtained, to ensure that Liew Ham Chow will not be obliged to make a general offer for the Shares of the Company under the Code upon the allotment and issue of the Consideration Shares on the terms of the Share Purchase Agreement and such confirmation not having been revoked or withdrawn on or before the Completion Date and, where such confirmation is subject to conditions, such conditions being acceptable to the parties and (to the extent that such conditions are capable of being fulfilled on or before Completion) they are so fulfilled;

(i)

Lee Seng Jeow and Ho Choon Meng each entering into a service agreement with the Company and Liew Nyuk Ngoh entering into a service agreement with JVS for a minimum term of three (3) years from the Completion Date on terms to be mutually agreed by the parties;

(j)

all loans and advancements made by JVHPL, JVS and JVT to its directors, if any, being fully repaid on or before the Completion Date; and

(k)

the representations and warranties of the Vendors and the Company in the Share Purchase Agreement being true, accurate and correct in all material respects as if made on the Completion Date, with reference to the then existing circumstances (subject only to any matter disclosed or expressly provided for under the terms of the Share Purchase Agreement) and the Vendors having performed in all material respects all of their obligations therein to be performed on or before the Completion Date.

With regards to conditions (e) and (g), the SGX-ST has on 6 June 2006 granted in-principle approval for the listing of and quotation for the Consideration Shares on the Official List of the SGX-ST, subject to the approval of the Shareholders in respect of the Proposed Acquisition and the allotment and issue of the Consideration Shares. The in-principle approval of the SGX-ST is not to be taken as an indication of the merits of the Company, its Subsidiaries, the Proposed Acquisition or the allotment and issue of the Consideration Shares. With regards to condition (h), the SIC has on 13 March 2006 confirmed that Liew Ham Chow is not obliged to make a general offer for Company under the Code upon the allotment and issue of the Consideration Shares pursuant to the terms of the Share Purchase Agreement. With regards to condition (i), the Company and JVS have entered into the Service Agreements with the Proposed Executive Directors and Liew Nyuk Ngoh, respectively on 7 June 2006. The Service Agreements will commence upon Completion of the Proposed Acquisition. As the conditions precedent stated above are continuing warranties up to the Completion Date, to the best of the Company’s knowledge, as at the date of this Circular, the conditions precedent stated above have not been breached. 2.3

Continuing obligations The Vendors have agreed to meet Net Profit targets of S$1.5 million and S$2.0 million in FY 2007 and FY 2008 respectively. In the event that the Net Profit for FY 2007 is less than S$1.5 million, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2007 Shortfall Amount in cash within one (1) month after the accounts of the JVHPL Group for FY 2007 have been audited. Likewise, in the event that the Net Profit for FY 2008 is less than S$2.0 million, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2008 Shortfall Amount in cash within one (1) month after the accounts of the JVHPL Group for FY 2008 have been audited, provided that the payments made after FY 2007 and FY 2008 shall not exceed S$1.5 million and S$2.0 million respectively. 16


2.4

Rationale for and benefits of the Proposed Acquisition The Directors believe that the Proposed Acquisition is an investment opportunity that will be in the best interest of the Company, and note that completion of the Proposed Acquisition would allow the Company to enlarge its product portfolio and expand its regional presence. The Proposed Acquisition will facilitate the expansion of the Company’s operations into Thailand which is currently a major manufacturing and assembly hub for many international automobile and auto-parts manufacturers. The Company is currently in the business of producing custom-fitted automotive leather trim for car seats and leather wrapping for other automotive interior products, such as steering wheels, consoles, gear shift knobs and hand brakes. The JVHPL Group is in the business of supplying, assembling and installing carpet mats for automobiles and non-factory fitted accessories such as alarm systems, parking sensors and sill plates. Other business activities include the engineering and the assembly of automobile products such as stainless steel bars for pick ups, sport bar kits, side and rear protector bar kits. The Directors are of the view that the Proposed Acquisition will allow the Company to enjoy the benefits accruing from the acquisition of a complementary business by increasing its product range to provide a comprehensive and complementary, one-stop range of automotive accessories products and services for its customers. This will in turn broaden the earnings base of the Company and increase the Company’s revenue and eventually serve to enhance shareholder value by engaging in business activities which have growth prospects. The Directors view the Proposed Acquisition as a mode of generating business and gaining access to a new range of customers based on the JVHPL Group’s established business structure and business network in the automobile accessories sector of the automobile industry in Singapore and Thailand. The Proposed Acquisition of JVHPL will result in the expansion of the Company’s business, as well as the rationalising and streamlining of the management, administrative and sales teams through economies of scale. In this regard, the Directors are also of the view that the Proposed Acquisition will allow the Company to tap into the experience and network of the JVHPL Group’s management team and strengthen the Board. The Directors intend to propose that Ho Choon Meng and Lee Seng Jeow be appointed to the Board as executive Directors upon completion of the Proposed Acquisition. It is the Directors’ intention that upon their appointment, Ho Choon Meng will manage the JVHPL Group and assist in the growth of the JCL Group and Lee Seng Jeow will be involved in the sales, marketing and development of the JCL Group.

3.

INFORMATION ON JVHPL JVHPL is an investment holding company incorporated in Singapore on 1 June 2005 and has an issued and paid-up share capital of S$10,000 consisting of 10,000 shares. Upon completion of JVHPL’s restructuring exercise, JVHPL will beneficially own 100% of the issued and paid-up share capital of JVS and JVT. The JVHPL Group is primarily engaged in non-capital intensive business activity. The shareholders of JVHPL before the Proposed Acquisition are as follows: Name

No. of Shares Owned

%

Liew Ham Chow

4,500

45

Liew Nyuk Ngoh

2,000

20

Ho Choon Meng

2,000

20

Lee Seng Jeow

1,500

15

As at the Latest Practicable Date, Liew Nyuk Ngoh and Ho Choon Meng are directors of JVHPL.

17


3.1

Jackson Vehicle (Singapore) Pte Ltd JVS began as an automobile workshop in 1982 and was founded by Liew Ham Chow. JVS diversified its business over the years and in 2000, JVS relinquished its service and repair business and focused its principal business activity on the supply and installation of nonfactory fitted accessories, including interior-trim products to Singapore’s car distributors and dealers and supply and trade of carpet mats for automobiles. Other business activities include the supply and trade of car accessories such as alarm systems, parking sensors and sill plates, and exterior finish work for automobiles. In 2004, JVS was awarded the ISO 9002:3000 certification by Certification International. The primary product and service of JVS are the production and sale of carpets and the provision of carpeting services to the After Market in Singapore. JVS has a significant market share in the production and sale of carpets for the automobile industry in Singapore and provides carpeting services to approximately 5000 cars in Singapore every month. 25% of the carpets provided are manufactured in-house by JVS while the remaining carpets are procured overseas from third party manufacturers. Since 2000, the production and sale of carpet mats, audio and electronic components to the After Market in Singapore has been contributing approximately 55% of JVS’s annual revenue. The remaining revenue of JVS is attributable to the manufacture and installation of interior plastic panels, chrome trims and other interior steel products and the trading of automobile accessories.

3.2

J.V. (Thailand) Co., Ltd JVT was incorporated in Thailand on 19 April 2002 and is primarily an OEM engaged in the engineering and assembly of automobile products such as stainless steel bars for pick ups, sport bar kits, side and rear protector bar kits. Other products produced and installed by JVT include chrome door mirror covers, chrome exhaust tips, door handle protectors, gear knobs with leather wraps and wooden inserts, side protection moulding, lockable spare tyre covers, reverse parking sensors, roof rack cargo tray kits, roof rail assembly kits, side door weather shields, leather and wood grain steering wheels, tail lamp guards, tow hook kits and kit door scuff plates. In 2005, JVT was awarded the ISO/TS 16949 certification by SGS. The ISO/TS 16949 certification is a worldwide professional technical standard developed by the IATF. The IATF was formed by a group of international automotive manufacturers including General Motors, Ford, Daimler Chrysler, BMW, Volkswagen, Renault, Fiat, PSA Citroen and their respective trade associations to provide improved quality products to automotive customers worldwide. The ISO/TS 16949 certification is required by vehicle manufacturers in Europe and the United States of America and is integral to their process of selection of their suppliers for the supply of vehicle components. The ISO/TS 16949 certification is regarded as an accreditation evidencing the high standard of a manufacturer’s process management, the quality of parts supplied to its customers and timely delivery of its products and services to its customers. The ISO/TS 16949 certification played an integral part in the Ford Group entering into a letter of intent to order products worth a total of S$60.0 million from JVT over a period of four (4) years. JVT is a Tier-one Supplier to the Ford Group for the engineering and assembly of car accessories for, and the finishing of, automobiles manufactured by the Ford Group such as the Ford Ranger, Ford Escape, Ford Everest and Ford Focus. These finished models are then exported and sold overseas, including but not limited to parts of Europe.

18


3.3

Major Customers and Suppliers 3.3.1

Customers The customers of JVS are large players from the After Market and the Car Distributor Markets in the automobile industry in Singapore. JVS’s main customers in Singapore include, inter alia, distributors of car makes such as Nissan, Toyota, Mitsubishi, KIA, Mazda and Chevrolet. In 2005, JVT entered into a letter of intent with its key customer, the Ford Group, to supply products worth S$60.0 million to the Ford Group over a period of four (4) years.

3.3.2

Suppliers The JVHPL Group purchases its products and raw materials from Singapore, Malaysia, Thailand and the PRC. Major suppliers include manufacturers of automobile accessories and these suppliers are selected based on their competitive pricing and timely delivery of their products and services. JVS does not have any long-term agreement with any major supplier nor is it dependent on any single supplier.

3.4

Competitive Strengths of the JVHPL Group 3.4.1

Good macroeconomic fundamentals The JVHPL Group’s core markets are Singapore and Thailand, and these countries are relatively affluent with a high demand for automobiles. In the recent years, Thailand has developed to become a major manufacturing and assembly hub for many international automobile and auto-parts manufacturers. As such, the JVHPL Group is well positioned to develop and market their products in the automobile accessories market in Thailand.

3.4.2

Experienced management team Ho Choon Meng, the chief executive officer of the JVHPL Group has had more than ten (10) years of hands-on experience in the automotive industry and is instrumental in the growth and expansion of the JVHPL Group. In 2002, Ho Choon Meng spearheaded the JVHPL Group’s expansion into Thailand by setting up JVT. Lee Seng Jeow, the deputy chief executive officer of JVS, has had more than fifteen (15) years of experience in the automotive industry. He focuses on the business development and formulation of corporate strategies and general corporate direction of JVS. Together, their business acumen and industry knowledge, as well as the maintenance of good relationships with the JVHPL Group’s customers and suppliers in Singapore and overseas are vital to the business of the JVHPL Group.

3.4.3

Network of suppliers The JVHPL Group consciously maintains a good relationship with their suppliers. In addition, the JVHPL Group also constantly sources for alternative suppliers to ensure continuity in the supply of products for the performance of their contractual obligations to all their customers.

3.5

Risks associated with the JVHPL Group The JVHPL Group is exposed to a number of possible risks which may arise from economic, business, market and financial factors and developments, and which may have an adverse impact on the future performance of the JVHPL Group.

19


3.5.1

Risks associated with the JVHPL Group Risks associated with JVS’s and JVT’s key management personnel The JVHPL Group is dependent on the key management personnel of the JVHPL Group, in particular, Ho Choon Meng and Lee Seng Jeow. These key management personnel, together with a dynamic management team in both JVS and JVT, have expanded the JVHPL Group from an automobile workshop to a manufacturer and supplier of automobile accessories to the automobile industry in Singapore and Thailand. As such, the loss of the services of these key management personnel of the JVHPL Group, especially Ho Choon Meng and Lee Seng Jeow, will have an adverse impact on the performance of the JVHPL Group. Risks associated with JVT’s major customer JVT is dependent on orders that it will receive from the Ford Group pursuant to the letter of intent that it had entered into with the Ford Group in 2005. The Ford Group is currently JVT’s key customer, contributing 95% of JVT’s annual revenue. As such, the loss of or a significant reduction in purchase orders from the Ford Group in Thailand over the next four (4) years, will have a material adverse impact on JVT’s financial performance and position. Risks associated with JVT’s major supplier In respect of the contract it secured with the Ford Group, JVT is reliant on a single source supplier in Malaysia. A failure on the part of this supplier to meet JVT’s requirements will lead to a delay in the delivery of goods and services to the Ford Group. Risks associated with JVS’s major customer Tan Chong Motor, the distributor of Nissan in Singapore, contributes approximately 56% of JVS’s annual revenue. As such, the loss of, or a significant reduction in purchase orders from Tan Chong Motor, will have a material adverse impact on the JVHPL Group’s financial performance and position. Risks associated with the non-renewal of the ISO/TS 16949 certification Currently, the ISO/TS 16949 certification awarded to JVT is determined by factors such as the process management system, quality of products and services as well as the quality and standard of the staff in JVT. If JVT is unable to meet the criteria for the grant of this certification, the said certification may not be renewed. In the event that the certification is not renewed, JVT will not be allowed to bid for contracts which require the ISO/TS 16949 certification as a pre-requisite for tender. This would be detrimental to the business operations of JVT.

3.5.2

Risks associated with the industry in which the JVHPL Group operates Risks associated with economic conditions The JVHPL Group is heavily reliant on the automotive industry in Singapore, Thailand and Europe. The demand for cars is generally dependent on factors including economic conditions, the purchasing power of the consumers and the standard of living in the respective geographical markets. Any substantial decrease in demand in the automotive industry would result in a decrease in demand for the products and services of the JVHPL Group. Special factors affecting the demand for automobile accessories include the number and prices of certificates of entitlement for cars issued by the government in Singapore, and the import duties on cars which will affect car prices in Singapore, Thailand and Europe.

20


Risks associated with changes in governmental regulations The products supplied by JVS and JVT to its customers are affected by changes in governmental policies imposed on the Car Distributor Market in Singapore, Thailand and Europe. There is no assurance that JVS and JVT will continue to have the right to supply automobile accessories to all their customers in their respective Car Distributor Markets and the loss of such customers would have a material adverse effect on the results of their financial performance. Risks associated with changes in procurement policies of Car Distributor Markets JVS may lose its right to continue providing customers with their products and services if the car distributors or automobile manufacturers change their procurement policies with regard to the selection of suppliers of the automotive components in Singapore. Risks associated with potential new entrants to the Singapore market The car accessories industry in Singapore in which JVS operates is highly competitive. As such, JVS faces competition from new entrants. In the event that JVS’s existing or potential competitors offer cheaper alternatives to their products or services, or engage in aggressive pricing in order to increase their market share, the JVHPL Group’s financial performance may be adversely affected. 3.5.3

Risks associated with the PRC, the United States of America, Thailand and Malaysia Risks associated with political and economic conditions in Thailand JVT’s performance may be affected by the political, regulatory and economic uncertainties in Thailand. There are certain risks inherent in doing business in Thailand, such as unexpected changes in the regulatory requirements, political instability, banking and credit risks and potentially adverse tax consequences. Such changes may have a material adverse impact on the business, financial results and operations of the JVHPL Group. Risks associated with foreign exchange fluctuations The reporting currency of the JVHPL Group is S$ but the JVHPL Group also transacts in USD, RMB, RM and THB. As such, the JVHPL Group is exposed to the risk of foreign exchange fluctuations arising from the differing currency denominations of their revenue stream and costs. To the extent that the revenue stream of the JVHPL Group and its costs are not naturally matched in the same currency, the JVHPL Group will be exposed to any adverse fluctuations of the USD, RMB, RM, and THB. The JVHPL Group is also exposed to fluctuations in foreign exchange arising from the difference in timing between the receipt and payment of funds by the JVHPL Group. As such, any significant fluctuation in the USD, RMB, RM and THB will have an impact on the financial performance of the JVHPL Group. Further, any adverse fluctuation in exchange rates will cause the JVHPL Group to incur foreign exchange transaction losses.

3.6

Financial Information on the JVHPL Group The following pro forma financial information of the JVHPL Group is based on the JVHPL’s pro forma accounts for the financial year ended 30 November 2005 (which is based on the audited accounts of JVS for the financial year ended 30 November 2005 and the audited accounts of JVT for the financial year ended 31 December 2005).

21


Pro Forma Financial Results

3.7

FY 2005

Revenue (S$)

12,997,014

Cost of Goods Sold (S$)

9,565,992

Gross Profit (S$)

3,431,022

Gross Profit Margin (%)

26%

Net Profit After Tax (S$)

399,958

Pro Forma Financial Position

FY 2005

Non Current Assets (S$)

1,745,847

Current Assets (S$)

4,362,645

Current Liabilities (S$)

2,549,930

Net Current Assets / (Liabilities) (S$)

1,812,715

Non Current Liabilities (S$)

1,049,281

Capital and Reserves (S$)

2,509,281

Service Agreements On 7 June 2006, pursuant to a condition precedent in the Share Purchase Agreement, our Company entered into separate service agreements with the Proposed Executive Directors, and JVS entered into a service agreement with Liew Nyuk Ngoh. The Service Agreements will take effect upon Completion of the Proposed Acquisition. The terms of the appointment for the Proposed Executive Directors and Liew Nyuk Ngoh are for three (3) years. During this three year period, the Company or JVS, as the case may be, may terminate the services of the Proposed Executive Directors or Liew Nyuk Ngoh, by giving not less than three (3) months’ written notice, or the payment of salary in lieu of notice. The Company or JVS, as the case may be, may also terminate their respective Service Agreements if the person (i) commits any gross default or grave misconduct in connection with or affecting the business of the Company; (ii) breaches or does not observe the terms of his service agreement; (iii) becomes bankrupt or makes any composition or enters into any deed of arrangement with his creditors (if any); (iv) becomes of unsound mind; or (v) is incapacitated from performing his duties and obligations under the Service Agreements by reason of his health or accident for one hundred and eighty (180) days or more in the preceding twelve (12) months. The Service Agreements cover the various terms of employment, specifically the salaries, bonuses and benefits. Pursuant to the terms of their respective Service Agreements, the Proposed Executive Directors will each be entitled to a monthly salary of S$12,000 and an annual wage supplement equivalent to one (1) month’s salary. The Proposed Executive Directors are also entitled to an annual incentive bonus. The total annual incentive bonus for the Proposed Executive Directors will be payable within one (1) month after the announcement of the consolidated financial statements of our Group for each financial year has been made by the Board. The Proposed Executive Directors are also entitled to a transport allowance of S$2,000 per month each. All reasonable travelling, hotel and other expenses incurred by our Proposed Executive Directors wholly, exclusively and necessarily in or about the performance of their duties pursuant to their Service Agreements will be borne by the Company.

22


3.7.1

Lee Seng Jeow’s annual incentive bonus will comprise of three parts, which are as follows:(i)

a bonus from the Accessories Segment,

(ii)

a bonus from the Leather Segment, and

(iii)

a Pool Bonus which comprises of two parts, Part A and Part B. (a)

(b)

Lee Seng Jeow’s bonus from the Accessories Segment PBT of the Accessories Segment

Amount / Rate of bonus from the Accessories Segment

Up to the first S$1,800,000

16% of 2% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$1,800,000 but does not exceed S$2,500,000

16% of 3% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$2,500,000 but does not exceed S$3,600,000

16% of 4% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$3,600,000

16% of 7% of the PBT of the Accessories Segment

Lee Seng Jeow’s bonus from the Leather Segment PBT of the Leather Segment

Amount / Rate of bonus from the Leather Segment

Up to the first S$3,700,000

10% of 2% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$3,700,000 but does not exceed S$4,700,000

10% of 3% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$4,700,000 but does not exceed S$6,200,000

10% of 4% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$6,200,000

10% of 7% of the PBT of the Leather Segment

23


(c)

Lee Seng Jeow’s Pool Bonus = Part A + Part B Part A PBT of the Accessories Segment

Amount / Rate contributable to the pool bonus component from the Accessories Segment

Up to the first S$1,800,000

10% of 45% of 2% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$1,800,000 but does not exceed S$2,500,000

10% of 45% of 3% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$2,500,000 but does not exceed S$3,600,000

10% of 45% of 4% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$3,600,000

10% of 45% of 7% of the PBT of the Accessories Segment

Part B PBT of the Leather Segment

Amount / Rate contributable to the pool bonus component from the Leather Segment

Up to the first S$3,700,000

10% of 55% of 2% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$3,700,000 but does not exceed S$4,700,000

10% of 55% of 3% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$4,700,000 but does not exceed S$6,200,000

10% of 55% of 4% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$6,200,000

10% of 55% of 7% of the PBT of the Leather Segment

24


3.7.2

Ho Choon Meng’s annual incentive bonus comprises two parts, which are as follows:(i)

a bonus from the Accessories Segment, and

(ii)

the Pool Bonus. (a)

(b)

Ho Choon Meng’s bonus from the Accessories Segment PBT of the Accessories Segment

Amount / Rate of bonus from the Accessories Segment

Up to the first S$1,800,000

34% of 2% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$1,800,000 but does not exceed S$2,500,000

34% of 3% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$2,500,000 but does not exceed S$3,600,000

34% of 4% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$3,600,000

34% of 7% of the PBT of the Accessories Segment

Ho Choon Meng’s Pool Bonus = Part A + Part B Part A PBT of the Accessories Segment

Amount / Rate contributable to the pool bonus component from the Accessories Segment

Up to the first S$1,800,000

10% of 45% of 2% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$1,800,000 but does not exceed S$2,500,000

10% of 45% of 3% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$2,500,000 but does not exceed S$3,600,000

10% of 45% of 4% of the PBT of the Accessories Segment

Where the PBT of the Accessories Segment is more than S$3,600,000

10% of 45% of 7% of the PBT of the Accessories Segment

25


Part B

3.7.3

PBT of the Leather Segment

Amount / Rate contributable to the pool bonus component from the Leather Segment

Up to the first S$3,700,000

10% of 55% of 2% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$3,700,000 but does not exceed S$4,700,000

10% of 55% of 3% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$4,700,000 but does not exceed S$6,200,000

10% of 55% of 4% of the PBT of the Leather Segment

Where the PBT of the Leather Segment is more than S$6,200,000

10% of 55% of 7% of the PBT of the Leather Segment

Pursuant to the terms of the service agreement with Liew Nyuk Ngoh, she is entitled to a monthly salary of S$6,510 and an annual wage supplement equivalent to one (1) month’s salary. Liew Nyuk Ngoh is also entitled to a transport allowance of S$800 per month and a mobile phone allowance of S$400 per month. All reasonable travelling, hotel and other expenses incurred by her wholly exclusively and necessarily in or about the performance of her duties pursuant to her service agreement will be borne by JVS.

3.7.4

The Proposed Executive Directors and Liew Nyuk Ngoh have agreed, inter alia, that for the duration of the appointments under their respective Service Agreements, the Proposed Executive Directors and Liew Nyuk Ngoh shall not, without the prior written consent of the Board, directly or indirectly (i) be engaged in any other business which is in competition with that conducted by the JCL Group, or (ii) be concerned or interested in any other business of a similar nature to or in competition with that carried on by the JCL Group, or which is a supplier or customer of the JCL Group in relation to its goods or services. Furthermore, in the event the appointments of the Proposed Executive Directors and Liew Nyuk Ngoh are terminated under their respective Service Agreements, the Proposed Executive Directors and Liew Nyuk Ngoh are not permitted in connection with the carrying on of any business similar to or in competition with the business of the Company on their own behalf or on behalf of any person firm or company, directly or indirectly (a) seek to do business with any person, firm or company who has at any time during the twenty four (24) months immediately preceding the cessation of the appointment(s) of the Proposed Executive Director(s) or Liew Nyuk Ngoh done business with the JCL Group; or (b) endeavour to entice away from the JCL Group any person who has at any time during the twenty four (24) months immediately preceding the cessation of the appointment(s) of the Proposed Executive Director(s) or Liew Nyuk Ngoh been employed or engaged by the JCL Group. The Proposed Executive Directors and Liew Nyuk Ngoh are also, for a period of twenty four (24) months after ceasing to be employed under the Service Agreement(s), not permitted to carry on or be engaged in any activity or business which is in competition with the business of the Company in Singapore or any country where the JCL Group has operations or carried on business at the time of the termination of the Service Agreement(s), whether alone or jointly with or as manager, agent, consultant or employee of any person, firm or company. 26


4.

FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION The financial effects of the Proposed Acquisition on the NTA, gearing and EPS of the JCL Group are set out in Appendix C of this Circular.

5.

THE WHITEWASH RESOLUTION

5.1

Requirement under the Code to make a general offer Under Rule 14 of the Code, when any person acquires, whether by a series of transactions over a period of time or not, shares in a company which (taken together with shares held or acquired by persons acting in concert with him) carry 30% or more of the voting rights of such company, such person shall have to extend a general offer to all the other shareholders of such company for all the issued shares in the capital of such company in accordance with the provisions of Rule 14 of the Code. As at the Latest Practicable Date, Liew Ham Chow is a major Shareholder with an interest in 51,645,600 Shares (representing approximately 39.42% of the current issued and paid-up share capital of the Company) and Liew Nyuk Ngoh does not own or control any interest in the Shares. For illustrative purposes only, assuming that (i) all conditions precedent stipulated in relation to the Proposed Transactions are completed and/or satisfied, based on the existing shareholdings of the Company as at the Latest Practicable Date and (ii) the Cash Consideration for the Proposed Acquisition is S$3.0 million, the effects of the Proposed Transactions on the shareholdings of Liew Ham Chow, Liew Nyuk Ngoh, AAPICO, Mr Ang and the Independent Shareholders are set out in Appendix D of this Circular. In the event that the Proposed Placements are completed, Liew Ham Chow’s shareholding interest will be diluted below 30%. However, if the Proposed Acquisition is approved by the Independent Shareholders and Consideration Shares are issued to the Vendors based on the JVHPL Group’s Net Profit in FY 2007 and FY 2008, the Affected Parties could potentially cross the 30% threshold which will trigger a general offer under Rule 14 of the Code. For illustrative purposes, we set out the following scenarios: Scenario (1) Where the JVHPL Group achieves the Net Profit targets of S$1.5 million and S$2.0 million for FY 2007 and FY 2008 respectively. In the event that the Proposed Transactions are completed and the Net Profit targets of S$1.5 million and S$2.0 million for FY 2007 and FY 2008 respectively are met by the JVHPL Group, Liew Ham Chow will be issued 4,275,000 Consideration Shares and 10,050,000 Consideration Shares after FY 2007 and FY 2008 respectively, amounting to an aggregate of 14,325,000 new Shares. If a corresponding contemporaneous allotment and issue of an aggregate of 10,611,111 Additional New Shares is made to AAPICO and Mr Ang pursuant to the Subscription Agreement and Subscription Notice respectively, Liew Ham Chow’s shareholding interest in the Company will increase to 30.39% after FY 2008. In view of the foregoing, the allotment and issue of the Consideration Shares to Liew Ham Chow as deferred Consideration will result in Liew Ham Chow’s shareholding interest in the Company exceeding the 30% threshold in Rule 14.1 of the Code, thus triggering an obligation on his part to make a general offer for all the Shares.

27


Scenario (2) Where the JVHPL Group achieves a Net Profit of S$3.0 million in FY 2007. In the event that the Proposed Transactions are completed and the JVHPL Group achieves a Net Profit of S$3.0 million in FY 2007, Liew Ham Chow will be allotted and issued 11,550,000 Consideration Shares under the first Tranche after FY 2007. If a corresponding contemporaneous allotment and issue of an aggregate of 8,555,555 Additional New Shares is made to AAPICO and Mr Ang pursuant to the Subscription Agreement and Subscription Notice respectively, Liew Ham Chow’s shareholding interest in the Company will increase to 30.25% after FY 2007. In view of the foregoing, the allotment and issue of Consideration Shares after FY 2007 to Liew Ham Chow as deferred Consideration will result in Liew Ham Chow’s shareholding interest in the Company exceeding the threshold of 30% under Rule 14.1 of the Code. As such, the allotment and issue of the Consideration Shares to Liew Ham Chow after FY 2007 would trigger his obligation to make a general offer for all the Shares. 5.2

Potential Dilution of Shareholders who are independent in respect of the Proposed Transactions As a result of the Proposed Transactions, the collective shareholding interest of the Independent Shareholders may be diluted in certain circumstances. For illustrative purposes, the dilutive effects on the shareholding interest of the Independent Shareholders as a result of the Proposed Acquisition and/or the Proposed Placements are set out in Appendix D of this Circular. As set out in Appendix D, the Independent Shareholders’ aggregate shareholding in the Company could potentially be diluted to a maximum of approximately 30.36%.

5.3

Waiver from the requirements of Rule 14 of the Code On 13 March 2006, the SIC granted to the Affected Parties a waiver from the requirements of Rule 14 of the Code subject to, inter alia, the following conditions (the “SIC Conditions”): (a)

a majority of the Independent Shareholders present and voting at the EGM held before the Proposed Acquisition, approve by way of a poll, the Whitewash Resolution to waive their rights to receive a general offer from the Affected Parties;

(b)

the Whitewash Resolution being separate from other resolutions;

(c)

the Affected Parties and parties not independent of them abstain from voting on the Whitewash Resolution;

(d)

the Affected Parties did not purchase and are not to purchase any shares or instruments convertible into, rights to subscribe for and options in respect of Shares other than the Consideration Shares to be issued:

(e)

i.

during the period between the date of the announcement of the Proposed Acquisition and the date Shareholders’ approval is obtained for the Whitewash Resolution;

ii.

in the six (6) months prior to the announcement of the Proposed Acquisition, but subsequent to negotiations, discussions or the reaching of understandings or agreements with the Directors in relation to the allotment and issue of the Consideration Shares;

The Company appointing an independent financial adviser to advise the Independent Shareholders on the Whitewash Resolution;

28


(f)

The Company setting out clearly in this Circular: i.

details of the proposed issue of Consideration Shares;

ii.

the dilution effect to existing holders of voting rights of issuing the Consideration Shares;

iii.

the number and percentage of voting rights in the Company as well as the number of instruments convertible into rights to subscribe for and options in respect of Shares (other than the Consideration Shares to be issued) held by the Affected Parties as at the Latest Practicable Date;

iv.

the number and percentage of voting rights to be issued as Consideration Shares to each existing Shareholder;

v.

that the Independent Shareholders, by voting for the Whitewash Resolution, are waiving their rights to a general offer from Liew Ham Chow at the highest price paid by the Affected Parties for Shares in the past six (6) months preceding the commencement of the Proposed Acquisition; and

vi.

that the Independent Shareholders, by voting for the Whitewash Resolution, could be forgoing the opportunity to receive a general offer from another person who may be discouraged from making a general offer in view of the potential dilution effect of the Consideration Shares, which will only be issued after the accounts of the Company for FY 2007 and FY 2008 are audited;

(g)

the Circular states that the waiver granted by the SIC to the Affected Parties from the requirement to make a general offer under Rule 14 is subject to the conditions stated at (a) to (f) above;

(h)

Liew Ham Chow obtains SIC’s approval in advance for those parts of the Circular that refer to the Whitewash Resolution; and

(i)

Liew Ham Chow provides a written undertaking to Council that he will comply or procure the relevant persons to comply with the disclosure requirements set out in Note 2 on Section 2 of Appendix 1 of the Code.

The Waiver granted to the Affected Parties from the requirement to make a general offer is subject to the SIC conditions set out in section 5.3 above. As at the Latest Practicable Date, save for conditions (a) and (i), all other conditions imposed by the SIC set out above have been satisfied. Independent Shareholders in respect of the Whitewash Resolution are therefore asked to vote, by way of a poll, on the Whitewash Resolution in the Notice of EGM as set out on page 69 in this Circular. 5.4

Whitewash Resolution Independent Shareholders in respect of the Whitewash Resolution are requested to vote by way of a poll on the Whitewash Resolution set out in the Notice of EGM on page 69 of this Circular, waiving their rights to receive a general offer from the Affected Parties.

5.5

Advice of the Independent Financial Advisor It should be noted that PwCCF has been appointed by the Company as the independent financial adviser to advise the Independent Directors on, inter alia, the Whitewash Resolution. A copy of PwCCF’s letter to the Independent Directors in relation to the Whitewash Resolution is set out in Appendix A of this Circular.

29


5.6

Interests of the Directors and substantial Shareholders Liew Ham Chow has confirmed that he has declared all his interests in the Whitewash Resolution. None of the remaining Directors (other than in his or her capacity as a Director or Shareholder) and Controlling Shareholders of the Company has any interest, direct or indirect, in the Whitewash Resolution. The interests of all Directors and substantial Shareholders of the Company in the issued and paid-up share capital of the Company as at the Latest Practicable Date are set out in Appendix B of this Circular.

6.

THE FIRST PROPOSED PLACEMENT TO AAPICO HITECH PUBLIC COMPANY LIMITED OF 34,933,334 NEW ORDINARY SHARES IN THE CAPITAL OF JACKSPEED CORPORATION LIMITED

6.1

The Subscription Agreement The aggregate consideration of S$6.29 million is payable on Completion of the First Proposed Placement by AAPICO to the Company for the subscription of 34,933,334 new Shares at the Issue Price. Assuming the Proposed Placements are completed, the new Shares allotted and issued to AAPICO will represent 20% of the increased number of Shares of the Company. The New Shares, when allotted and issued, will rank pari passu in all respects with and carry all rights similar to the existing Shares in the Company, except that they will not rank for any dividends, rights, allotments or other distributions that may be declared or paid, the Record Date for which falls on or before the Completion Date.

6.2

Conditions Precedent Under the Subscription Agreement, Completion of the Subscription Agreement is conditional upon, inter alia: (a)

AAPICO carrying out a due diligence exercise on the Company for a period of four (4) weeks after the execution of the Subscription Agreement and disclosing to AAPICO information requested by AAPICO for the purposes of carrying out the due diligence and the results of such due diligence exercise being satisfactory to AAPICO;

(b)

in-principle approval for the listing of and quotation for the 34,933,334 new Shares on the Official List of the SGX-ST being obtained from the SGX-ST and not having been revoked and, where such approval is subject to conditions (only such conditions which are not normally imposed by the SGX-ST for a transaction of a similar nature), such conditions being reasonably acceptable to the Company and AAPICO and, to the extent that any conditions for the listing of and quotation for the 34,933,334 new Shares on the Official List of the SGX-ST are required to be fulfilled on or before the Completion Date, they are so fulfilled;

(c)

the subscription, issue and allotment of the 34,933,334 new Shares not being prohibited by any statute, order, rule, regulation, directive or request promulgated or issued after the date of the Subscription Agreement by any legislative, executive or regulatory body or authority of Singapore or elsewhere, which is applicable to the Company and/or AAPICO;

(d)

there being no material adverse change or the existence of circumstances which would give rise to any material adverse change in the business, financial condition, properties, assets, liabilities, actual or contingent or prospects of the Company from that shown in the audited financial statements of the Company for FY 2005 (together with the notes and reports annexed thereto or incorporated therein) and to the warranties given by the Company pursuant to the Subscription Agreement, since the date of the Subscription Agreement; and 30


(e)

the approval of the board of directors of AAPICO for the subscription of 34,933,334 new Shares pursuant to the Subscription Agreement.

If any of the conditions set forth above as the case may be is not satisfied on or before the Completion Date, the Subscription Agreement shall ipso facto cease and determine thereafter and none of the parties shall have any claim against the other for damages, losses, compensation or otherwise. Without prejudice to the aforesaid, in the event that the results of the due diligence exercise are unsatisfactory in any respect in the reasonable opinion of AAPICO, AAPICO is entitled, at its option, to waive condition (a) and proceed with the Completion or terminate the Subscription Agreement. With regards to conditions (b) and (c), the SGX-ST has on 6 June 2006 granted in-principle approval for the listing of and quotation for the New Shares on the Official List of the SGX-ST, subject to the specific approval of the Shareholders for the allotment and issue of the New Shares. The in-principle approval of the SGX-ST is not to be taken as an indication of the merits of the Company, its Subsidiaries, the First Proposed Placement or the allotment and issue of the 34,933,334 new Shares to AAPICO. As the conditions precedent stated above are continuing warranties up to the Completion Date, to the best of the Company’s knowledge, as at the date of this Circular, the conditions precedent stated above have not been breached. 6.3

Information about AAPICO AAPICO is a company incorporated in the Kingdom of Thailand and was listed on the Stock Exchange of Thailand in 2002. As at 14 February 2006, AAPICO had a market capitalisation of THB 6.24 billion. The head office of AAPICO is currently situated in Thailand and AAPICO has production facilities in Thailand and in Kunshan and Shanghai in the PRC. AAPICO is an established OEM of automotive parts and has been awarded the ISO/TS 16949:2002 certification of quality. It delivers a full spectrum of services in the automobile industry including the design, production and installation of automotive parts. In addition to being an OEM, AAPICO is also engaged in the manufacture of car assembly jigs and stamping dies, and its global clientele includes Isuzu, Ford Motors, Toyota and General Motors.

6.4

Rationale for the First Proposed Placement The Directors believe that the First Proposed Placement is an opportunity for the Company to enter into an alliance with an established automotive manufacturing company and will create positive synergies to the core business of the Company. The Directors believe that such an alliance will be in the best interest of the Company. The Directors intend to nominate Mr Yeap Swee Chuan to the Board in the capacity of a non-executive chairman as the Directors are of the opinion that Mr Yeap’s appointment will strengthen the Board and improve the management of the Company. The Directors note that completion of the First Proposed Placement would allow the JCL Group to expand its regional presence and generate business and gain access to a new range of customers based on AAPICO’s international business network in the automobile accessories sector of the automobile industry. The Directors are of the view that the alliance with AAPICO will facilitate the expansion of JCL Group’s operations and promote the sale of its products and services in Thailand. As such, the Directors believe that the alliance will eventually serve to enhance shareholder value by expanding its business activities in areas that have growth prospects.

31


6.5

Proceeds from the First Proposed Placement The estimated net proceeds from the First Proposed Placement, after deducting expenses of approximately S$0.57 million relating to the First Proposed Placement, are estimated to be approximately S$5.72 million and the Company intends to apply:

6.6

(a)

approximately S$3.0 million of such proceeds towards the Proposed Acquisition; and

(b)

approximately S$2.72 million of such proceeds towards the future investments of the JCL Group.

Moratorium Under the Subscription Agreement, AAPICO has undertaken to the Company that, inter alia, it will not transfer, assign or dispose of any part of the 34,933,334 new Shares for a period of six (6) months commencing on the Completion Date (the “FPP Moratorium Period”). In the event that AAPICO subscribes for the 34,933,334 new Shares through a wholly owned subsidiary, AAPICO has also undertaken to the Company that it will maintain its effective interest in such subsidiary throughout the FPP Moratorium Period.

6.7

Termination of the Subscription Agreement AAPICO will be entitled to terminate the Subscription Agreement prior to the Completion Date, by way of written notice, upon the occurrence of, inter alia, the following events:

6.8

(a)

any changes in the law materially affecting the Company and/or its Subsidiaries, their financial position or business, or any other material adverse change in the business of the Company and/or its Subsidiaries;

(b)

suspension in the trading of the Company’s shares on the SGX-ST for a consecutive period of more than seven (7) Business Days or a delisting of the issued Shares from the SGX-ST;

(c)

any material change in the Controlling Shareholders, or if the shareholding interest of Liew Ham Chow is reduced below 20% of the total number of issued Shares from time to time; or

(d)

it has come to the attention of AAPICO that the Company is in breach of its warranties and undertakings contained in the Subscription Agreement.

Interests of Directors and substantial Shareholders Save for Mr Ang who currently holds 2,000,000 shares representing, as at 31 December 2004, approximately 0.008% of the share capital of AAPICO, none of the Directors, and as far as the Directors are aware, none of the substantial Shareholders of the Company has any interest, direct or indirect, in the First Proposed Placement. The interests of all Directors and substantial Shareholders of the Company in the issued and paid-up share capital of the Company as at the Latest Practicable Date are set out in Appendix B of this Circular.

6.9

Financial Effects of the First Proposed Placement In the event that the First Proposed Placement is completed, the First Proposed Placement will increase the existing number of Shares from 131,000,000 Shares to 165,933,334 Shares. The new Shares allotted and issued to AAPICO will represent approximately 26.7% of the number of Shares as at 29 June 2005. Assuming that the Second Proposed Placement is completed, the new Shares allotted and issued to AAPICO will represent 20% of the Company’s increased number of Shares.

32


The Issue Price represents a discount of approximately 11% from the volume weighted average price of S$0.202 for trades in the Shares on the SGX-ST on 13 February 2006. The allotment and issue of the new Shares pursuant to the First Proposed Placement will exceed the share issue mandate granted to the Company at the AGM and the Company will be seeking the approval of its Shareholders for the First Proposed Placement at the forthcoming EGM. The financial effects of the First Proposed Placement on the NTA, gearing and EPS of the JCL Group are set out in Appendix C of this Circular. 6.10 Changes in the shareholding of the Company The effect of the First Proposed Placement on the interests of the Independent Shareholders as at the Latest Practicable Date is set out in Appendix D of this Circular. 7.

THE SECOND PROPOSED PLACEMENT TO MR ANG KIAN LEE OF 8,733,333 NEW ORDINARY SHARES IN THE CAPITAL OF JACKSPEED CORPORATION LIMITED

7.1

The Subscription Notice The aggregate consideration of S$1.57 million is payable on Completion of the Second Proposed Placement by Mr Ang to the Company for the subscription of 8,733,333 new Shares at the Issue Price. Assuming that the Proposed Placements are completed, the new Shares allotted and issued to Mr Ang will represent 5% of the increased number of Shares of the Company. The New Shares, when allotted and issued, will rank pari passu in all respects with and carry all rights similar to the existing Shares in the Company, except that they will not rank for any dividends, rights, allotments or other distributions that may be declared or paid, the Record Date for which falls on or before the Completion Date.

7.2

Information about Mr Ang Mr Ang, a Singapore citizen, is a non-executive Director who has had twenty (20) years of management experience and was previously a director of the Lion Group of Companies in Indonesia, including PT Lion Metal Works, a listed company. He had also previously worked as a bank inspector with the Monetary Authority of Singapore from 1974 to 1979. Mr Ang is currently a director of Raeco Pte Ltd, which is an investment company. Mr Ang, being a non-executive director of the Company, is an “interested person” under Chapter 9 of the Listing Manual. The consideration for the Second Proposed Placement is S$1.57 million which constitutes 8.5% of the JCL Group’s latest NTA. Under Rule 906(1) of the Listing Manual, the Second Proposed Placement is an Interested Person Transaction subject to Shareholders’ approval, which the Company is seeking at the EGM.

7.3

Rationale and benefits of the Second Proposed Placement The Directors regard Mr Ang as a strategic investor and the Directors intend to appoint Mr Ang as an executive Director to oversee the business development and networking strategies of the JCL Group. The Directors are of the opinion that the Completion of the Second Proposed Placement and Mr Ang’s appointment would strengthen and improve the management of the Company and increase the Company’s potential range of customers based on Mr Ang’s extensive business network. The Directors believe that the alliance with Mr Ang together with his appointment as an executive Director will serve to enhance shareholder value as the JCL Group will be able to engage in business activities through Mr Ang’s expertise, which will have growth prospects for JCL Group.

33


7.4

Use of Proceeds The estimated net proceeds from the Second Proposed Placement, after deducting expenses of approximately S$0.13 million relating to the Second Proposed Placement, are estimated to be approximately S$1.44 million and the Company intends to apply such proceeds towards the general working capital of the Company.

7.5

Moratorium Mr Ang has undertaken to observe a moratorium period of six (6) months commencing from the allotment date of the 8,733,333 new Shares not to transfer, assign or dispose of any part of the new Shares.

7.6

Interests of Directors and Substantial Shareholders Mr Ang is a non-executive Director of the Company. Save as aforesaid, none of the Directors, and as far as the Directors are aware, none of the substantial Shareholders of the Company has any interest, direct or indirect in the Second Proposed Placement. The interests of all Directors and substantial Shareholders of the Company in the issued and paid-up share capital of the Company as at the Latest Practicable Date are set out in Appendix B of this Circular.

7.7

Financial Effects of the Second Proposed Placement Assuming that the Second Proposed Placement is completed, the Second Proposed Placement will increase the existing number of shares of the Company from 131,000,000 ordinary shares to 139,733,333 ordinary shares. The new Shares allotted and issued to Mr Ang will represent approximately 6.7% of the number of Shares as at 29 June 2005 and assuming that the Proposed Placements are completed, the new Shares allotted and issued to Mr Ang will represent 5% of the Company’s increased number of Shares. The Issue Price represents a discount of approximately 11% from the volume weighted average price of S$0.202 for trades in the Shares on the SGX-ST on 13 February 2006. The allotment and issue of the new Shares pursuant to the Second Proposed Placement is an Interested Person Transaction under Chapter 9 of the Listing Manual. As such, the Company will be seeking the approval of its Shareholders for the Second Proposed Placement at the forthcoming EGM. The SGX-ST has on 6 June 2006 granted in-principle approval for the listing of and quotation for the New Shares on the Official List of the SGX-ST, subject to the specific approval of the Shareholders for the allotment and issue of the New Shares. The in-principle approval of the SGX-ST is not to be taken as an indication of the merits of the Company, its Subsidiaries, the Second Proposed Placement or the allotment and issue of the 8,733,333 new Shares to Mr Ang. The financial effects of the Second Proposed Placement on the NTA, gearing and EPS of the JCL Group are set out in Appendix C of this Circular.

7.8

Changes in the shareholding of the Company The effect of the Second Proposed Placement on the interests of the Independent Shareholders of the Company as at the Last Practicable Date is set out in Appendix D of this Circular.

34


8.

THE ALLOTMENT AND ISSUE OF UP TO 17,111,111 ADDITIONAL NEW SHARES TO AAPICO HITECH PUBLIC COMPANY LIMITED PURSUANT TO THE SUBSCRIPTION AGREEMENT

8.1

Subscription of Additional New Shares by AAPICO pursuant to the Subscription Agreement After the accounts of the JVHPL Group have been audited for FY 2007 and FY 2008, subject to the profitability of the JVHPL Group, the Vendors to the Proposed Acquisition will receive Consideration Shares. Separately, subject to AAPICO maintaining at least 20% of the total number of issued shares of the Company from time to time, AAPICO has agreed to subscribe for all (and not some only) of its Entitlement to Additional New Shares so as to maintain its shareholding interest at 20% of the total number of issued Shares. The Additional New Shares, when allotted and issued, will rank pari passu in all respects with and carry all rights similar to the existing Shares, except that they will not rank for any dividends, rights, allotments or other distributions that may be declared or paid, the Record Date for which falls on or before the date on which these Additional New Shares are allotted.

8.2

Financial effects of the subscription of Additional New Shares by AAPICO and Mr Ang The combined financial effects of the Subscription of Additional New Shares by AAPICO and Mr Ang on the NTA, gearing and EPS of the JCL Group are set out in Appendix C of this Circular.

8.3

Changes in the shareholding of the Company The effect of the subscription of Additional New Shares, by AAPICO and Mr Ang, on the interests of the Independent Shareholders as at the Latest Practicable Date is set out in Appendix D of this Circular.

8.4

In-principle approval of the SGX-ST The SGX-ST has on 6 June 2006 granted in-principle approval for the listing of and quotation for the Additional New Shares on the Official List of the SGX-ST, subject to the specific approval of the Shareholders for the allotment and issue of the Additional New Shares. The inprinciple approval of the SGX-ST is not to be taken as an indication of the merits of the Company, its Subsidiaries, or the allotment and issue of the Additional New Shares to AAPICO.

9.

THE ALLOTMENT AND ISSUE OF UP TO 4,277,778 ADDITIONAL NEW SHARES TO MR ANG KIAN LEE PURSUANT TO THE SUBSCRIPTION NOTICE

9.1

Subscription of Additional New Shares by Mr Ang pursuant to the Subscription Notice After the accounts of the JVHPL Group have been audited for FY 2007 and FY 2008, subject to the profitability of the JVHPL Group, the Vendors to the Proposed Acquisition will receive Consideration Shares. Subject to Mr Ang maintaining at least 5% of the total number of issued Shares from time to time, Mr Ang has agreed to subscribe for all (and not some only) of his Entitlement to Additional New Shares in the Company so as to maintain his shareholding interest at 5% of the total number of issued Shares.

9.2

Financial effects of the subscription of Additional New Shares by AAPICO and Mr Ang The combined financial effects of the Subscription of Additional New Shares by AAPICO and Mr Ang on the NTA, gearing and EPS of the JCL Group are set out in Appendix C of this Circular.

9.3

Changes in the shareholding of the Company The effect of the Subscription of Additional New Shares, by AAPICO and Mr Ang, on the interests of the Independent Shareholders as at the Latest Practicable Date is set out in Appendix D of this Circular.

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9.4

In-principle approval of the SGX-ST The SGX-ST has on 6 June 2006 granted in-principle approval for the listing of and quotation for the Additional New Shares on the Official List of the SGX-ST, subject to the specific approval of the Shareholders for the allotment and issue of the Additional New Shares. The inprinciple approval of the SGX-ST is not to be taken as an indication of the merits of the Company, its Subsidiaries, or the allotment and issue of the Additional New Shares to Mr Ang.

10.

MATERIAL LITIGATION Neither the Company nor its Subsidiaries are engaged in any litigation as plaintiff or defendant in respect of any claims or amounts which are or may be material and the Directors have no knowledge of any proceedings which are pending or threatened against the Company or its Subsidiaries or of any facts likely to give rise to any litigation, claims or proceedings which might materially affect the financial position or the business of the Company or any of its Subsidiaries during the last twelve (12) months before the Latest Practicable Date.

11.

ABSTENTION FROM VOTING The Affected Parties, together with all of the Vendors who are also Shareholders, have undertaken to abstain from making any recommendation to the Shareholders on the Proposed Acquisition and will abstain from voting, whether in person or by representative or proxy, at the EGM on the Proposed Acquisition in respect of their shareholdings in the Company. Liew Ham Chow will also abstain from voting on the Whitewash Resolution whether in person or by representative or proxy, at the EGM in respect of his shareholding in the Company. Mr Ang will abstain from voting on Ordinary Resolutions (4) and (6), whether in person or by representative or proxy, at the EGM on the Second Proposed Placement in respect of his shareholding in the Company, if any.

12.

OPINION OF THE INDEPENDENT FINANCIAL ADVISER PwCCF has been appointed as the independent financial adviser to advise the Independent Directors on (a)

whether, from a financial point of view, the Proposed Acquisition is on normal commercial terms and is not prejudicial to the interests of the Company and the Independent Shareholders; and

(b)

the Whitewash Resolution.

A copy of PwCCF’s letter to the Independent Directors, in relation to the Proposed Acquisition and the Whitewash Resolution, is set out in Appendix A of this Circular. Taking into consideration the factors set out in its letter, PwCCF is of the view that (a)

the Proposed Acquisition is on normal commercial terms and is not prejudicial to the interests of the Independent Shareholders; and

(b)

the Whitewash Resolution, when considered in the context of the Proposed Acquisition, is not prejudicial to the interests of the Independent Shareholders.

Accordingly, PwCCF has advised the Independent Directors to recommend that the Independent Shareholders vote in favour of the Proposed Acquisition and the Whitewash Resolution.

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13.

AUDIT COMMITTEE’S STATEMENT

13.1 Ordinary Resolution (1) The Audit Committee having considered and reviewed, amongst others, the terms, rationale and financial effects of the Proposed Acquisition of JVHPL and the other relevant facts set out in this Circular and taking into account the opinion of PwCCF in its letter set out in Appendix A of this Circular, is of the opinion that the Proposed Acquisition is on normal commercial terms, and is not prejudicial to the interests of the Company and the Independent Shareholders. 13.2 Ordinary Resolutions (4) and (6) The Audit Committee having considered and reviewed, amongst others, the terms, rationale and financial effects of: (a)

the Second Proposed Placement of new Shares to Mr Ang, and

(b)

the allotment and issue of Additional New Shares to Mr Ang after FY 2007 and FY 2008,

and the other relevant facts set out in this Circular, is of the opinion that the Second Proposed Placement and the allotment and issue of Additional New Shares to Mr Ang are on normal commercial terms, and are not prejudicial to the interests of the Company and the Independent Shareholders. 14.

DIRECTORS’ RECOMMENDATIONS

14.1 Ordinary Resolution (1) As one of the Directors, Mr Liew Ham Chow, is interested in the outcome of the Proposed Acquisition, he has abstained from deliberating on and making a recommendation in respect of the Whitewash Resolution. The Independent Directors have carefully considered the advice given by PwCCF in its letter set out in Appendix A of this Circular and the statement of the Audit Committee set out on page 37 of this Circular. Accordingly, the Independent Directors recommend that Shareholders vote in favour of Ordinary Resolution (1) in respect of the Proposed Acquisition to be proposed at the EGM and conditional upon Ordinary Resolution (2) being approved, to vote in favour of the allotment and issue of the Consideration Shares as set out in the Notice of EGM on page 69 of this Circular. 14.2 Ordinary Resolution (2) As one of the Directors, Mr Liew Ham Chow, is interested in the outcome of the Whitewash Resolution, he has abstained from deliberating on and making a recommendation in respect of the Whitewash Resolution. The Independent Directors are of the opinion, for the reasons set out in sections 5.3, 5.5 and 5.6 of this Circular and taking into account the opinion of PwCCF in its letter set out in Appendix A of this Circular, that the Whitewash Resolution is not prejudicial to the interests of the Company and the Independent Shareholders. Accordingly, the Independent Directors recommend that the Shareholders vote in favour of Ordinary Resolution (2) to be proposed at the EGM as set out in the Notice of EGM on page 69 of this Circular. 14.3 Ordinary Resolutions (3) and (5) Having considered the rationale for the First Proposed Placement and the placement of Additional New Shares to AAPICO as set out in sections 6.4 and 8 of this Circular, the Directors believe that the First Proposed Placement and the placement of Additional New Shares to AAPICO are on normal commercial terms and are not prejudicial to the interests of the Company and the Independent Shareholders. Accordingly, the Directors recommend that the Shareholders vote in favour of Ordinary Resolutions (3) and (5) to be proposed at the EGM as set out in the Notice of EGM on page 69 of this Circular.

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14.4 Ordinary Resolutions (4) and (6) As one of the Directors, Mr Ang, is interested in the outcome of Ordinary Resolutions (4) and (6), he has abstained from deliberating on and making a recommendation in respect of Ordinary Resolutions (4) and (6). Having considered the rationale for the Second Proposed Placement and the placement of Additional New Shares to Mr Ang as set out in sections 7.3 and 9 of this Circular and the statement of the Audit Committee set out on page 37 of this Circular, the Directors (save for Mr Ang) believe that the Second Proposed Placement and the placement of Additional New Shares to Mr Ang are on normal commercial terms and are not prejudicial to the interests of the Company and the Independent Shareholders. Accordingly, the Directors (save for Mr Ang) recommend that the Shareholders vote in favour of Ordinary Resolutions (4) and (6) to be proposed at the EGM as set out in the Notice of EGM on page 69 of this Circular. 15.

EXTRAORDINARY GENERAL MEETING The EGM, notice of which is set out on page 69 of this Circular, will be held on 26 June 2006 at 11.00 a.m. or soon thereafter following the conclusion or adjournment of the Annual General Meeting of the Company to be held at 10.00 a.m. on the same day at 47 Loyang Drive Singapore 508955, for the purpose of considering and, if thought fit, passing with or without modifications, the resolutions set out in the Notice of the EGM.

16.

ACTION TO BE TAKEN BY SHAREHOLDERS Shareholders who are unable to attend the EGM and who wish to appoint a proxy to attend and vote on their behalf will find attached to this Circular a Proxy Form which they are required to complete, sign and return in accordance with the instructions printed thereon as soon as possible and in any event so as to reach the registered office of the Company at 47 Loyang Drive Singapore 508955, no later than 48 hours before the time set for the EGM. The completion and lodgement of a Proxy Form by a Shareholder does not preclude him from attending and voting at the EGM in person if he so wishes. A Depositor shall not be regarded as a member of the Company entitled to attend the EGM and to speak and vote thereat unless his name appears on the Depository Register at least 48 hours before the EGM.

17.

DIRECTORS’ RESPONSIBILITY STATEMENT Save in respect of Appendix A of this Circular, the Directors collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in this Circular are fair and accurate as at the Latest Practicable Date and that there are no material facts the omission of which would make any statement disclosed in this Circular misleading. Save as disclosed in this Circular, the Directors are not aware of any other material information relating to the Proposed Transactions. In relation to Appendix A of this Circular, the sole responsibility of the Directors has been to ensure that the facts stated with respect to the JCL Group and the JVHPL Group are, to the best of their knowledge and belief, fair and accurate in all material respects.

18.

CONSENT PwCCF has given and has not withdrawn its written consent to the inclusion of its letter dated 9 June 2006 in the form and context in which it appears in Appendix A of this Circular to act in the capacity as the independent financial adviser to the Independent Directors in relation to the Proposed Acquisition and the Whitewash Resolution and to be named as such in this Circular, and to all references to them in the form and context in which they are made in this Circular.

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19.

DOCUMENTS FOR INSPECTION Copies of the following documents may be inspected at the registered office of the Company at 47 Loyang Drive Singapore 508955 during normal business hours from the date of this Circular up to and including the date of the EGM:

20.

(a)

the Memorandum and Articles of Association of the Company;

(b)

minutes of the AGM on 29 June 2005;

(c)

the Share Purchase Agreement dated 14 February 2006;

(d)

the Subscription Agreement dated 15 February 2006;

(e)

the Subscription Notice dated 15 February 2006;

(f)

the announcements of the Company made on 15 February 2006 and 22 February 2006 respectively;

(g)

the SIC letter dated 13 March 2006;

(h)

the Service Agreements dated 7 June 2006;

(i)

the Supplemental Share Purchase Agreement dated 7 June 2006;

(j)

the letter of consent from PwCCF dated 9 June 2006; and

(k)

the letter from PwCCF to the Independent Directors, in respect of the Proposed Acquisition and the Whitewash Resolution, dated 9 June 2006.

ADDITIONAL INFORMATION Your attention is also drawn to the additional information set out in Appendix B of this Circular.

Yours faithfully For and on behalf of the Directors of Jackspeed Corporation Limited

Liew Ham Chow Executive Chairman Jackspeed Corporation Limited

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APPENDIX A

LETTER FROM PRICEWATERHOUSECOOPERS CORPORATE FINANCE PTE LTD TO THE INDEPENDENT DIRECTORS OF JACKSPPED CORPORATION LIMITED 9 June 2006 To:

The Independent Directors Jackspeed Corporation Limited

Dear Sirs / Madam (1)

THE PROPOSED ACQUISITION OF 100% OF THE ISSUED AND PAID-UP SHARE CAPITAL OF JACKSON VEHICLE HOLDINGS PTE LTD

(2)

THE WHITEWASH RESOLUTION IN CONNECTION WITH THE PROPOSED ACQUISITION

1.

INTRODUCTION This letter forms part of the circular to the Shareholders dated 9 June 2006 (“Circular”) in relation to, inter alia, the proposed acquisition of the entire issued and paid-up share capital of JVHPL for a maximum aggregate consideration of S$14.55 million by JCL. Unless otherwise defined herein, all terms in this letter shall bear the same meaning as in the Circular. On 15 February 2006, the Board announced that the Company had entered into the Share Purchase Agreement with the Vendors for the sale and purchase of 10,000 shares in the capital of JVHPL. On 7 June 2006, the Company entered into the Supplemental Share Purchase Agreement with the Vendors to vary the terms of the Share Purchase Agreement. Subject to the fulfilment of the terms and conditions of the Share Purchase Agreement as varied by the Supplemental Share Purchase Agreement, the Company will acquire 100% of the issued and paid-up share capital of JVHPL for a maximum aggregate Consideration of S$14.55 million. The Purchase Consideration for the Proposed Acquisition is to be satisfied by way of (i) the Cash Consideration of a sum of S$3,112,880, which is equivalent to the NTA of the JVHPL Group as at 28 February 2006, payable upon Completion, and (ii) the deferred Consideration through the allotment and issue of a maximum value of S$11,437,120 Consideration Shares. The number of Consideration Shares to be allotted and issued is pegged to the Net Profit of the JVHPL Group for FY 2007 and FY 2008. Upon Completion, JVHPL will be a wholly-owned subsidiary of JCL. Accordingly, the Board is convening an EGM to be held on 26 June 2006 to seek the approval of Independent Shareholders in relation, inter alia, the Proposed Acquisition of 100% of the issued and paid-up share capital of Jackson Vehicle Holdings Pte Ltd and the Whitewash Resolution in connection with the Proposed Acquisition.

2.

TERMS OF REFERENCE PwCCF has been appointed to advise the Independent Directors on whether the financial terms of the Proposed Acquisition are on normal commercial terms and are not prejudicial to the interests of the Company and its Independent Shareholders, and to provide a recommendation on the Whitewash Resolution in relation to the Proposed Acquisition. We do not, by this letter, make any representation or warranty in relation to the merits of the Proposed Acquisition.

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We are not and were not involved in any aspect of the negotiations pertaining to the Proposed Acquisition, nor were we involved in the deliberations leading up to the decisions on the part of the Directors to agree on the terms of the Proposed Acquisition. We have limited our evaluation to the financial terms of the Proposed Acquisition and have not taken into account the commercial risks or commercial merits of the Proposed Acquisition. Our terms of reference do not require us to evaluate or comment on the rationale for, strategic or commercial merits and/or risks of the Proposed Acquisition or the future performance or prospects of either JCL Group or the JVHPL Group. As with other business transactions of the Company, the merit and/or associated risks, whether commercial, financial or otherwise, of the Proposed Acquisition are solely the responsibility of the Board. Likewise we are not expressing herein as to the prices at which the shares of JCL may trade upon completion of the Proposed Acquisition. We are also not addressing the relative merits of the Proposed Acquisition as compared to any alternative transaction previously considered by JCL or that otherwise may become available to JCL in the future. Such evaluations or comments remain the responsibility of the Board and management of JCL. Our terms of reference do not require us to, and we do not, evaluate or comment on the terms of, the rationale for, strategic or commercial merits and/or risks of the Proposed Placements and the allotment and issue of Additional New Shares pursuant to the Subscription Agreement and Subscription Notice. In the course of our evaluation and for the purpose of our opinion in relation to the Proposed Acquisition, we have held discussions with certain Directors and management of both JCL Group and JVHPL Group and have examined information provided by the Directors and management of both JCL Group and JVHPL Group and other publicly available information collated by us, upon which our view is based. We have not independently verified such information, whether written or verbal, and accordingly cannot and do not make any representation or warranty in respect of, and do not accept any responsibility for, the accuracy, completeness or adequacy of such information. We have nevertheless made enquiries and used our judgment as we deemed necessary or appropriate in assessing such information and are not aware of any reason to doubt the reliability of the information. We have not made an independent evaluation or appraisal of the assets and liabilities of either JCL Group or JVHPL Group and we have not been furnished with any such evaluation or appraisal. We have relied upon the assurances of the Directors that, save in respect of this letter, the Circular has been approved by the Directors (including those who have delegated detailed supervision of the Circular) who have taken all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in the Circular are fair and accurate as at the Latest Practicable Date and that there are no material facts the omission of which would make any statement disclosed in the Circular misleading. Save as disclosed in the Circular, the Directors are not aware of any other material information relating to the Proposed Transactions. Accordingly, the Directors collectively and individually accepted full responsibility for the accuracy of the information given in the Circular as set out in the “Directors’ Responsibility Statement”. In relation to this letter, the Directors have ensured that the facts stated with respect to the JCL Group and the JVHPL Group are to the best of their knowledge and belief, fair and accurate in all material respects. In addition, the Directors have provided us with a responsibility statement in a letter dated 9 June 2006, which we have relied upon. Accordingly, no representation or warranty, express or implied, is made and no responsibility is accepted by us concerning the accuracy, completeness or adequacy of all such information, provided or otherwise made available to us or relied on by us as described above. Furthermore, our terms of reference do not require us to express, and we do not express, an opinion on the future growth prospects of the Company, JVHPL Group or the consolidated group. We are, therefore, not expressing any opinion herein as to the future financial or other performance of the Company, JVHPL Group or the consolidated group.

41


Our opinion is based upon prevailing market, economic, industry, monetary and other conditions (where applicable) and the information made available to us contained in the Circular as of, the Latest Practicable Date. We assume no responsibility to update, revise or reaffirm our view in light of any subsequent development after the Latest Practicable Date that may affect our opinion contained therein. Shareholders should take note of any announcements relevant to their consideration of the Proposed Acquisition which may be released by the Company after the Latest Practicable Date. In rendering our advice and giving our recommendation, we have not had regard to the specific investment objectives, financial situation or individual circumstances of any Independent Shareholder. As different Shareholders would have different investment objectives, we would advise the Independent Directors to recommend that any individual Shareholder who may require specific advice in relation to their investment portfolio should consult their stockbroker, bank manager, solicitor, accountant, tax advisor or other professional advisor. Our opinion is for the use and benefit of the Independent Directors in their deliberation of whether the financial terms of the Proposed Acquisition are on normal commercial terms and are not prejudicial to the interests of the Company and its Independent Shareholders, and the statements made by the Independent Directors shall remain the responsibility of the Independent Directors. Our opinion in relation to the Proposed Acquisition and the Whitewash Resolution should be considered in the context of the entirety of this letter and the Circular. We recommend that the Independent Directors advise the Independent Shareholders to read these pages carefully. 3.

PROPOSED ACQUISITION AS A MAJOR TRANSACTION We set out extracts from section 1.1 of the Letter to Shareholders included in this Circular in italic as follows: Application of Chapter 10 of the Listing Manual Under Rule 1013 of the Listing Manual, a transaction is classified as a “major transaction” if any of the relative figures computed on the bases set out in Rule 1006 exceeds 20%. In these circumstances, Shareholders’ approval must be obtained under Rule 1014 of the Listing Manual. Applying the applicable bases of Rule 1006 of the Listing Manual, the relative figures computed are as follows: (a)

Rule 1006(a) – not applicable, as this is an acquisition as opposed to a disposal.

(b)

Rule 1006(b) – the profits attributable to the Sale Shares is approximately S$0.40 million. The JCL Group’s net profit after tax for FY 2005 was approximately S$2.47 million. As such, the relative figure is approximately 16%.

(c)

Rule 1006(c) – the Company’s market capitalisation as at 13 February 2005 (the market day preceding the date of the Share Purchase Agreement) is approximately S$26.46 million. Based on the assumption that the NTA of the JVHPL Group for FY 2006 is S$3.0 million, and that the Net Profit for each of FY 2007 and FY 2008 is S$3.0 million, the aggregate value of the Consideration given, based on the volume weighted average price on 13 February 2006 of S$0.202, is S$15.96 million. Therefore, the relative figure computed under this rule is approximately 60%.

42


(d)

Rule 1006(d) – as at the date of the execution of the Share Purchase Agreement, the Company’s issued share capital comprised 131,000,000 Shares. Pursuant to the Share Purchase Agreement, assuming that the Cash Consideration for the Proposed Acquisition is S$3.0 million, a maximum aggregate of 64,166,667 Consideration Shares will be issued. Therefore, the relative figure computed under this rule is approximately 49%.

Since the relative figures in Rule 1006 (c) and (d) exceed 20% but do not exceed 100%, the Proposed Acquisition is regarded as a major transaction pursuant to Rule 1013 of the Listing Manual. As a result of the Proposed Acquisition pursuant to the Share Purchase Agreement, (i) the aggregate value of the Consideration given, compared with the Company’s market capitalisation, and (ii) the number of equity securities issued by the Company as Consideration for the Proposed Acquisition, compared with the number of equity securities previously in issue being 60% and 49% respectively, has exceeded the 20% threshold imposed under Rule 1006.The Proposed Acquisition is therefore a “major transaction” requiring Shareholders’ approval, which the Company is seeking at the EGM. 4.

PROPOSED ACQUISITION AS AN INTERESTED PERSON TRANSACTION We set out extracts from section 1.1 of the Letter to Shareholders included in this Circular in italic as follows: Application of Chapter 9 of the Listing Manual The Controlling Shareholder and executive Director, Liew Ham Chow, is a shareholder of 45% of the issued and paid-up share capital of JVHPL as at the Latest Practicable Date. Liew Ham Chow and Liew Nyuk Ngoh are siblings and Liew Nyuk Ngoh is a director and shareholder of 20% of the issued and paid-up share capital of JVHPL as at the Latest Practicable Date. Accordingly, as Liew Ham Chow and Liew Nyuk Ngoh are “interested persons” under Chapter 9 of the Listing Manual, the Proposed Acquisition constitutes an “Interested Person Transaction”. Under Rule 906(1)(a) of the Listing Manual, an issuer must obtain shareholder approval for any Interested Person Transaction of a value equal to, or more than 5% of the group’s latest NTA. The Purchase Consideration payable pursuant to the Share Purchase Agreement will represent up to 78.4% of the JCL Group’s latest audited NTA. Accordingly, the Proposed Acquisition requires the approval of the Independent Shareholders at the EGM.

5.

PROPOSED WHITEWASH RESOLUTION We set out extracts from section 1.2 of the Letter to Shareholders included in this Circular in italic as follows: Pursuant to the Share Purchase Agreement, Liew Ham Chow and Liew Nyuk Ngoh, who are siblings and Vendors to the Proposed Acquisition, will receive Consideration Shares. As such, the Affected Parties may be required under the Code to make a general offer for the Shares pursuant to Rule 14 of the Code, unless such obligation to make a general offer is waived by the SIC. The Affected Parties have applied for, and have received, a waiver from the SIC of the requirements of Rule 14 of the Code on 13 March 2006, subject to the fulfilment of the conditions set out in section 5.3 of this Circular which include obtaining Shareholders’ approval for the Whitewash Resolution at the EGM. Independent Shareholders should note that by voting in favour of the Whitewash Resolution, they will be giving up their rights to receive a general offer under Rule 14 of the Code from Liew Ham Chow (which he and any parties acting in concert with him would be obliged to make upon the issue of the Consideration Shares) at the highest price paid or agreed to be paid by Liew Ham Chow (and any parties acting in concert with him) for Shares in the six months prior to the commencement of the offer.

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Independent Shareholders should also note that by voting in favour of the Whitewash Resolution, they could be forgoing the opportunity to receive a general offer from another person who may be discouraged from making a general offer in view of the potential dilutive effect of the Consideration Shares, which will only be issued to the Vendors after the accounts of the JVHPL Group for FY 2007 and FY 2008 are audited. Independent Shareholders should note that the passing of the resolutions to approve the Proposed Acquisition is conditional upon the Whitewash Resolution being approved by the Independent Shareholders. In view of this, in the event that the Whitewash Resolution is not passed by the Independent Shareholders, the Proposed Acquisition will NOT take place. 6.

RATIONALE AND BENEFITS OF THE PROPOSED ACQUISITION We set out extracts from section 2.4 of the Letter to Shareholders included in this Circular in italic as follows: The Directors believe that the Proposed Acquisition is an investment opportunity that will be in the best interest of the Company, and note that completion of the Proposed Acquisition would allow the Company to enlarge its product portfolio and expand its regional presence. The Proposed Acquisition will facilitate the expansion of the Company’s operations into Thailand which is currently a major manufacturing and assembly hub for many international automobile and auto-parts manufacturers. The Directors are of the view that the Proposed Acquisition will also allow the Company to enjoy the benefits accruing from the acquisition of a complementary business by increasing its product range to provide a comprehensive and complementary, one-stop range of automotive accessories products and services for its customers. This will in turn broaden the earnings base of the Company and increase the Company’s revenue and eventually serve to enhance shareholder value by engaging in business activities which have growth prospects. The Directors view the Proposed Acquisition as a mode of generating business and gaining access to a new range of customers based on JVHPL Group’s established business structure and business network in the automobile accessories sector of the automobile industry in Singapore and Thailand. The Proposed Acquisition of JVHPL will result in the expansion of the Company’s business, as well as the rationalising and streamlining of the management, administrative and sales teams through economies of scale. In this regard, the Directors are also of the view that the Proposed Acquisition will allow the Company to tap into the experience and network of the JVHPL Group’s management team and strengthen the Board. The Directors intend to propose that Ho Choon Meng and Lee Seng Jeow be appointed to the Board as executive Directors upon completion of the Proposed Acquisition. It is the Directors’ intention that upon their appointment, Ho Choon Meng will manage the JVHPL Group and assist in the growth of the JCL Group and Lee Seng Jeow will be involved in the sales, marketing and development of the JCL Group.

7.

INFORMATION ON JVHPL Information on JVHPL can be found in section 3 of the Letter to Shareholders included in this Circular.

8.

DETAILS ON THE PROPOSED ACQUISITION Information on the Proposed Acquisition is set out in section 2 of the Letter to Shareholders included in this Circular and key extracts are reproduced below. We set out extracts from this section in italic as follows:

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Purchase Consideration The Purchase Consideration for the Proposed Acquisition is a maximum aggregate amount of S$14.55 million which will be paid to the Vendors in their respective Shareholding Proportion. The Purchase Consideration was determined following arm’s length negotiations on a willingbuyer and willing-seller basis, and is based on a price earnings ratio of 4.85. In addition, the parties have also taken into account the prospects of the JVHPL Group, the business of auto-parts manufacturing and assembly, as well as the Net Profit targets of S$1.5 million and S$2.0 million that are to be achieved by the Vendors in FY 2007 and FY 2008 respectively. The maximum aggregate value of the Proposed Acquisition being S$14.55 million will be satisfied by: (a)

the Cash Consideration of a sum of S$ 3,112,880, which is equivalent to the NTA of the JVHPL Group as at 28 February 2006, payable upon Completion; and

(b)

deferred Consideration through the allotment and issue of Consideration Shares at the negotiated pre-determined Issue Price. The Consideration Shares will be issued in two tranches, the first Tranche and the second Tranche in accordance with the prescribed formulae set out below: (i) (ii)

First Tranche Second Tranche

: :

40% x (Net Profit for FY 2007 x 4.85 – Cash Consideration) 60% x (Net Profit for FY 2008 x 4.85 – Cash Consideration)

Deferred Share Consideration (a)

The Consideration Shares for the first Tranche will be payable within one (1) month after the completion of the audit of the JVHPL Group for FY 2007. The minimum and maximum value of the first Tranche of Consideration Shares payable will be zero (0) and S$4,574,848 respectively; and

(b)

The Consideration Shares for the second Tranche will be payable within one (1) month after the completion of the audit of the JVHPL Group for FY 2008. The minimum and maximum value of the second Tranche of Consideration Shares payable will be zero (0) and S$6,862,272 respectively.

Terms of payment The Consideration Shares to be allotted and issued by the Company to the Vendors will rank pari passu in all respects with the existing Shares save for any dividends, rights, allotments or other distributions that may be declared or paid, the Record Date for which falls before the date of the issue of the Consideration Shares in FY 2007 or FY 2008, as the case may be, and will only be issued under the following circumstances and on the following terms: (a)

based on a weightage of 40:60 for FY 2007 and FY 2008 respectively;

(b)

based on a price earnings ratio of 4.85;

(c)

in the event that the Net Profit for either FY 2007 or FY 2008 exceeds S$3.0 million, Consideration Shares will not be issued for the Net Profit amounts in excess of S$3.0 million; and

(d)

subject to the meeting of Net Profit targets of S$1.5 million and S$2.0 million in FY 2007 and FY 2008 respectively, the failure of which will result in the Vendors repaying to the Company, the 2007 Shortfall Amount in cash, up to a maximum of S$1.5 million, and/or the 2008 Shortfall Amount in cash, up to a maximum of S$2.0 million, as the case may be.

45


Illustrations For illustrative purposes we set out the following scenarios to illustrate the total number of Consideration Shares issued to the Vendors under various circumstances. As the maximum aggregate Consideration payable is $14.55 million, assuming that the Cash Consideration for the Proposed Acquisition is S$3.0 million: Scenario (1) Where Net Profit targets of S$1.5 million in FY 2007 and S$2.0 million in FY 2008 are met, the total amount of share consideration received by the Vendors in terms of value and number of Shares will be calculated according to the following formula: Consideration payable

=

40% x [(Net Profit for FY 2007 X P/E 4.85) – Cash Consideration] + 60% x [(Net Profit for FY 2008 x P/E 4.85) – Cash Consideration]

Share Consideration (S$ million)

No. of Consideration Shares Issued

Increase in no. of Shares (taking into consideration Additional New Shares issued to AAPICO and Mr Ang)

First Tranche

1.71

9,500,000

12,666,667

Second Tranche

4.02

22,333,333

29,777,778

Total (including Cash Consideration)

8.73

31,833,333

42,444,445

Scenario (2) Where the Net Profit for FY 2007 is S$4.0 million and the Net Profit for FY 2008 is S$4.0 million, as Consideration Shares will not be issued for the Net Profit amounts in excess of S$3.0 million, the maximum amount of share consideration received by the Vendors in terms of value and number of shares will be calculated according to the following formula: Consideration payable

First Tranche Second Tranche Total (including Cash Consideration)

=

40% x [(Net Profit for FY 2007 X P/E 4.85) – Cash Consideration] + 60% x [(Net Profit for FY 2008 x P/E 4.85) – Cash Consideration]

Share Consideration (S$ million)

No. of Consideration Shares Issued

Increase in no. of Shares (taking into consideration Additional New Shares issued to AAPICO and Mr Ang)

4.62

25,666,667

34,222,222

6.93

38,500,000

51,333,333

14.55

64,166,667

85,555,555

Scenario (3) Where the Net Profit for each of FY 2007 and FY 2008 is negative, the Vendors will not receive any share consideration. After FY 2007, the Vendors will return the sum of S$1.5 million in cash to the Company due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will return the sum of S$2.0 million in cash to the Company due to the failure to meet the Net Profit target of S$2.0 million in FY 2008.

46


Conditions Precedent Under the Share Purchase Agreement, Completion of the Proposed Acquisition is conditional upon, inter alia: (a)

the Vendors having divested all of their shareholding interest in the capital of Katsuya (Thailand) Co. Ltd (“Katsuya”);

(b)

each of the Vendors having discharged themselves of their respective roles in the management of Katsuya and/or resigned from their position as directors of Katsuya, as the case may be;

(c)

the receipt of documentation reasonably satisfactory to the Company evidencing the restructuring exercise wherein the Vendors have transferred their beneficial interests in JVS and JVT to JVHPL;

(d)

the completion of the financial and legal due diligence investigations to be conducted by the Company’s professional advisers on JVHPL on or before the Completion Date, and the results of such due diligence investigations being reasonably satisfactory to the Company;

(e)

all consents, approvals and licenses (whether governmental, corporate or otherwise) which are necessary to be obtained under any existing contractual, financing or security arrangements or such other consents or approvals from any third party, governmental or regulatory body or relevant competent authority as may be necessary to be obtained in respect of or in connection with the transactions described or contemplated herein and the proposed allotment and issue of the Consideration Shares by the Company to the Vendors, being granted or obtained and such consents and approvals remaining in full force and effect and not withdrawn or revoked or amended, on or before the Completion Date, and all conditions attaching thereto required to be complied with being complied with on or before the Completion Date;

(f)

there being no material adverse change (as determined by the Company) in the JVHPL Group’s assets, properties, and business relationship in respect of Ford Motor Company and its subsidiaries, since the date of the Share Purchase Agreement;

(g)

the Company having obtained in-principle approval for the listing of and quotation for the Consideration Shares on the Official List of the SGX-ST and such approval not having been revoked or withdrawn on or before the Completion Date and, where such approval is subject to conditions, such conditions being acceptable to the parties and (to the extent that such conditions are capable of being fulfilled on or before Completion) they are so fulfilled;

(h)

the confirmation from the SIC having been obtained, to ensure that Liew Ham Chow will not be obliged to make a general offer for the Shares of the Company under the Code upon the allotment and issue of the Consideration Shares on the terms of the Share Purchase Agreement and such confirmation not having been revoked or withdrawn on or before the Completion Date and, where such confirmation is subject to conditions, such conditions being acceptable to the parties and (to the extent that such conditions are capable of being fulfilled on or before Completion) they are so fulfilled;

(i)

Lee Seng Jeow and Ho Choon Meng each entering into a service agreements with the Company and Liew Nyuk Ngoh, each entering into a service agreement with JVS for a minimum term of three (3) years from the Completion Date on terms to be mutually agreed by the parties;

47


(j)

all loans and advancements made by JVHPL, JVS and JVT to its directors, if any, being fully repaid on or before the Completion Date; and

(k)

the representations and warranties of the Vendors and the Company in the Share Purchase Agreement being true, accurate and correct in all material respects as if made on the Completion Date, with reference to the then existing circumstances (subject only to any matter disclosed or expressly provided for under the terms of the Share Purchase Agreement) and the Vendors having performed in all material respects all of their obligations therein to be performed on or before the Completion Date.

With regards to conditions (e) and (g), the SGX-ST has on 6 June 2006 granted in-principle approval for the listing of and quotation for the Consideration Shares on the Official List of the SGX-ST, subject to the approval of the Shareholders in respect of the Proposed Acquisition and the allotment and issue of the Consideration Shares. With regards to condition (h), the SIC has on 13 March 2006 confirmed that Liew Ham Chow is not obliged to make a general offer for Company under the Code upon the allotment and issue of the Consideration Shares pursuant to the terms of the Share Purchase Agreement. With regards to condition (i), the Company and JVS have entered into the Service Agreements with the Proposed Executive Directors and Liew Nyuk Ngoh, respectively on 7 June 2006. The Service Agreements will commence upon Completion of the Proposed Acquisition. As the conditions precedent stated above are continuing warranties up to the Completion Date, to the best of the Company’s knowledge, as at the date of this Circular, the conditions precedent stated above have not been breached. Continuing obligations The Vendors have agreed to meet Net Profit targets of S$1.5 million and S$2.0 million in FY 2007 and FY 2008 respectively. In the event that the Net Profit for FY 2007 is less than S$1.5 million, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2007 Shortfall Amount in cash within one (1) month after the accounts of the JVHPL Group for FY 2007 have been audited. Likewise, in the event that the Net Profit for FY 2008 is less than S$2.0 million, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2008 Shortfall Amount in cash within one (1) month after the accounts of the JVHPL Group for FY 2008 have been audited, provided that the payments made after FY 2007 and FY 2008 shall not exceed S$1.5 million and S$2.0 million respectively. 9.

FINANCIAL ASSESSMENT OF THE PROPOSED ACQUISITION In assessing the financial terms of the Proposed Acquisition, we have considered the following: (a)

the Issue Price of the Consideration Shares;

(b)

the valuation multiples of Comparable Companies (as defined herein);

(c)

financial effects of the Proposed Acquisition on the JCL Group as set out in Appendix C of this Circular; and

(d)

other considerations.

These factors are discussed in greater detail in the ensuing paragraphs.

48


The Issue Price of the Consideration Shares In evaluating the Issue Price of S$0.18 per Consideration Share from a market price expectations perspective, on the basis that the stock market may be considered to provide an efficient mechanism by which such price expectations may be expressed, we have considered whether current and historical share prices of the Company are reasonable indicators for assessing the Purchase Consideration. We wish to highlight that under ordinary circumstances, the market valuation of shares traded on a recognised stock exchange may be affected by, inter alia, its relative liquidity, the size of its free float, the extent of research coverage and investor interest it attracts, and the general market sentiment at a given point in time. Therefore, this analysis serves as an illustrative guide only. We set out below a chart on the daily closing prices and the daily trading volume of the Shares during the period commencing 16 February 2005 (being 1 year immediately preceding the 15 February 2006 announcement of the Share Purchase Agreement) to the Latest Practicable Date for a general assessment of the trading patterns of the Shares. Closing price movement and volume of the Shares during the 12 months preceding the date of announcement of the Share Purchase Agreement to the Latest Practiable Date Further information on the Proposed Acquisition

Announcement of the Proposed Placements to AAPICO and Mr Ang Announcement of FY05 results

1 month

6,000,000

hare price (S$)

0.164

Incorporation of 6 months Jackspeed Europe 0.158 N.V.

9 months 12 months 0.162 of 0.178 Announcement

0.260

Announcement of FY06 results

0.240

the Proposed Acquisition

5,000,000

9.8%

Announcement of 1H06 results 14.2%

11.4%

0.200

1.2%

0.180

3,000,000

0.160 2,000,000 0.140

Share Price in (S$)

0.220

remium of the 4,000,000 sue Price over the verage Share price Volume Traded

1,000,000 0.120

06 n Ju

ay

06

06 M

Ap r

6

06

06

05

ar 0 M

Fe b

Ja n

05

D ec

N ov

05 ct O

Se

p

05

05 Au g

05

l0 5 Ju

n Ju

M

ay

05

05 Ap r

M

ar 0

5

0.100

05

0

Fe b

9.1

Source: Bloomberg

The highest closing price at which the Shares traded during this period was S$0.240 per Share on 21 March 2005 and the lowest closing price was S$0.140 per Share on 23 January 2006. The average daily trading volume is 331,888 Shares. Based on the annual report of the Company for FY 2005, there was a free float of 51.01% of the Shares. Since 16 February 2005, the Company has made the following significant announcements: (a)

Unaudited consolidated full year financial statement announcement for FY 2005 on 28 April 2005, which shows a 21.8% increase in revenue to S$32.8 million and a 24.7% increase in net profit to S$2.5 million as compared to the previous financial year;

(b)

Unaudited consolidated half year financial results announcement for the first half of FY 2006 on 12 October 2005, which shows a 1.0% increase in revenue to S$17.4 million and a 23.3% increase in net profit to S$1.4 million as compared to the previous corresponding period;

(c)

7 February 2006 announcement of the incorporation of the wholly-owned subsidiary of the Company - Jackspeed Europe NV, in Belgium.

(d)

15 February 2006 announcement of the Share Purchase Agreement;

(e)

15 February 2006 announcement of the Proposed Placements of 34,933,334 new ordinary shares in the capital of JCL to AAPICO and 8,733,333 new ordinary Shares to Mr Ang; 49


(f)

22 February 2006 announcement to provide further information in relation to certain aspects of the announcement of the Proposed Acquisition of JVHPL on 15 February 2006; and

(g)

Unaudited consolidated full year financial statement announcement for FY 2006 on 26 April 2006, which shows a 3% decease in revenue to S$31.8 million and a 5% increase in net profit to S$2.6 million as compared to the previous financial year

We set out below a table which shows the average daily closing price of the Shares and the premium of the Issue Price over the average daily closing price of the Shares for one month, three months, six months, nine months and twelve months respectively preceding the 15 February 2006 announcement of the Share Purchase Agreement. 1 month

3 months

6 months

9 months

12 months

Average daily closing price (S$)

0.164

0.160

0.158

0.162

0.178

Premium of the Issue Price over the average daily closing price

9.8%

12.5%

14.2%

11.4%

1.2%

We noted that the Issue Price is at a premium of 9.8%, 12.5%, 14.2%, 11.4% and 1.2% over the average daily closing price of the Shares over the last one, three, six, nine and twelve month(s) respectively preceding the 15 February 2006 announcement of the Share Purchase Agreement. Comparable Transactions We have tabulated below selected broadly comparable transactions by companies listed on the SGX-ST which involved the acquisition of a majority stake in companies via the issuance of new shares with/without cash payment or other types of payments by such companies (“Comparable Transactions”) based on the shareholders’ circular dated from January 2005 to February 2006, to illustrate the typical premium/discount represented by the respective issue price to the last traded share price before, and the average daily closing prices for one month and three months before the date of announcement of the transaction by the respective companies.

Company Name

China Entertainment Delong Holdings Limited Breadtalk Group Limited NeteLusion Limited Magnus Energy Group Ltd. Lasseters International Holdings Limited TPV Technology Limited Leong Hin Holdings Limited Ipco International Limited Xpress Holdings Limited

Date of announcement

Issue Price

14 Sep 2004 24 Sep 2004 21 Oct 2004 12 Nov 2004 23 Nov 2004

S$0.05 S$0.075 S$0.29 US$0.15 S$0.055

24 Nov 2004

S$0.28

16 Dec 2004 17 Dec 2004

HK$4.367 S$0.225

11 Jul 2005 17 Oct 2005

S$0.06 HK$0.34

Mean Median High Low Company(2)

15 Feb 2006

S$0.18

50

Premium/ (Discount) over the last transacted price before the date of announcement (%) (16.7) (1) 0 (1) 5.5 (25.0) (1) 10.0

Premium/ (Discount) over the average daily closing price for one month before the date of announcement (%) (4.3) (1) (9.8) (1) 8.9 (31.8) (1) 18.4

Premium/ (Discount) over the average daily closing price for three month before the date of announcement (%) 13.3 (1) (12.4) (1) 15.3 (32.8) (1) 18.4

14.3

13.6

12.9

0.1 (2.2) (1)

0.3 (0.1) (1)

(7.0) 10.5 (1)

(7.7) 12.3

(0.8) 19.2

(5.3) 37.7

5.7 7.7 14.3 (7.7)

9.9 11.2 19.2 (0.8)

12.0 14.1 37.7 (7.0)

(10.0)

9.8

12.5


Note: (1) (2)

Outliers specifically excluded as these acquisitions are mainly part of the corporate restructuring undertaken by distressed or loss making companies The last transacted price of the Shares was S$0.20 on 14 February 2006, being the last trading day before the announcement of the Proposed Acquisition

Source: Announcements & circulars of respective companies and Bloomberg

Based on the above, we noted that the Issue Price is at a 10.0% discount to the last transacted price of the Shares before the announcement of the Share Purchase Agreement, which is below the range of the Comparable Transactions. The Issue Price is at a 9.8% premium to the average daily closing prices for the one month preceding the date of announcement of the Share Purchase Agreement, which is within the range but below the mean of the Comparable Transactions. The Issue Price is at a 12.5% premium to the average daily closing prices for the three months preceding the date of announcement of the Share Purchase Agreement, which is within the range and above the mean of the Comparable Transactions. However, we also noticed that there has been substantial increase in the price and trading volume of the Shares since the beginning of February 2006, as compared to the price and trading volume of the Shares since August 2005. We have made reasonable enquiries and the Directors have confirmed to us that they are not aware of any information not previously announced concerning the Company which, if known, might explain such variances in the price and trading volume. Taking into consideration the following factors: (a)

the historical Share trading performance above;

(b)

the significant announcements released by the Company on the SGX-ST from 16th February 2005 to the Latest Practicable Date;

(c)

the Issue Price being at a premium of 9.8%, 12.5%, 14.2%, 11.4% and 1.2% over the average daily closing price of the Shares over the last one, three, six, nine and twelve month(s) respectively preceding the date of announcement of the Share Purchase Agreement;

(d)

the Issue Price is at a 12.5% premium to the average daily closing prices for the three months preceding the date of announcement of the Share Purchase Agreement, which is within the range and above the mean of the Comparable Transactions;

(e)

the Issue Price is at a discount of 10.0% to the last transacted price before the announcement of the Share Purchase Agreement, which is below the range of the Comparable Transactions;

(f)

the Issue Price is at a 9.8% premium to the average daily closing prices for the one month preceding the date of announcement of the Share Purchase Agreement, which is within the range and slightly below the mean of the Comparable Transactions; and

(g)

there has been substantial increase in the price and trading volume of the Shares since the beginning of February 2006. The Directors have confirmed to us that they are not aware of any information not previously announced concerning the Company which, if known, might explain such variances in the price and trading volume,

the Issue Price is not prejudicial to the interests of the Company and the Independent Shareholders.

51


9.2

Comparable Companies Analysis Selection of Comparable Companies In considering what may be regarded as a reasonable range for the valuation of the shares in JVHPL for the purposes of assessing the financial terms of the Proposed Acquisition, we have referred to the valuation statistics of listed companies primarily engaged in the manufacturing and trading of automobile parts and accessories in Singapore, Thailand and Malaysia. Based on our research and after discussions with the management of JVHPL Group and the Company, we are of the view that the following selected companies listed on the Stock Exchange of Thailand and Bursa Malaysia Berhad (“Comparable Companies”) may be considered to be broadly comparable to JVHPL Group. We recognise, however, that there is no listed company directly comparable to JVHPL Group in terms of location, sales growth, type of products, scale of operations, geographical spread of activities within South East Asia, track record, future prospects, asset base, risk profile and other relevant criteria. The Independent Directors should note that any comparison made with respect to the Comparable Companies in relation to JVHPL Group is for illustrative purposes only. Company Hirotako Holdings Berhad

Business Description Hirotako Holdings Berhad is an investment holding company. Through its subsidiaries, the company manufactures seat belts, car airbag modules, steering wheels, noise and heat reduction material and insulator parts for motor vehicles. Hirotako also trades in precision metal stamping, machining and automotive components, tooling dies and electrical and consumer products.

New Hoong Fatt Holdings Berhad

New Hoong Fatt Holdings Berhad is an investment holding company which provides management services. Through its subsidiaries, the company markets, distributes, and trades automotive spare parts and accessories. The company also has operations in metal stamping and cathodic electro-deposition painting services, and manufactures and trades automotive body stamped parts.

SMIS Corporation Berhad

SMIS Corporation Berhad is an investment holding company. The company, through its subsidiaries, manufactures and trades automotive carpets, manufactures automotive braking and motorcycle components, and trades machinery and industrial parts supplies.

AAPICO Hitech Public Company Limited

AAPICO Hitech Public Company Limited (“AAPICO Hitech PCL”) manufactures car assembly jigs and stamping dies used for manufacturing automobiles in assembly plants. The company also manufactures OEM automotive parts and operates automobile dealership business.

Interhides Public Company Limited

Interhides Public Company Limited (“Interhides PCL”) manufactures leather automobile upholstery. The company markets its leather products to automobile manufacturers.

KPN Automotive Public Company Limited

KPN Automotive Public Company Limited (“KPN Automotive PCL”) manufactures automotive parts and plastic used in the industry of car and motorcycle assembly, electrical appliances, and household appliances.

52


Somboon Advance Technology Public Company Limited

Somboon Advance Technology Public Company Limited (“PCL”) manufactures and sells automotive parts for sale to automobile manufacturers. The company’s products include axle shafts, leaf springs, disk and drum brakes, manifold exhaust, fly wheels, stabilizer bars, and coil springs.

Thai Rung Union Car Public Company Limited

Thai Rung Union Car Public Company Limited (“Thai Rung Union Car PCL”) is an original equipment manufacturer (OEM) for Isuzu automobile parts such as chassis and space cabs for minibuses. The company also provides customized-assembly services for cars, and manufactures generic molds automobile parts. Its subsidiaries provide automotive maintenance services.

Thai Steel Cable Public Company Limited

Thai Steel Cable Public Company Limited (“Thai Steel Cable PCL”) manufactures automobile parts. The Company produces control cables and window regulators for automobile manufacturers.

Selection of Valuation Statistics In our analysis, we have examined the valuation characteristics of the Comparable Companies based on the valuation statistics. Forward P/E The Purchase Consideration for the Proposed Acquisition will be determined substantially based on the Net Profit of JVHPL Group for FY 2007 and FY 2008 and a P/E of 4.85 as agreed in the Share Purchase Agreement (“Forward P/E”). For illustrative purpose only, approximately 78.6% of the Maximum Purchase Consideration will be paid after the completion of the audit for JVHPL Group for FY 2007 and FY 2008. Hence, we have used Forward P/E as the primary valuation statistics in our comparable analysis. We set out below in the table the estimated P/E based on the latest Institutional Brokers Estimate System (“IBES”) consensus mean estimates for the respective Comparable Companies for FY 2006 and FY 2007, and the Forward P/E of JVHPL Group for FY 2007 and FY 2008. As the financial year end of JVHPL Group will be 28 February 2007 for FY 2007 and 29 February 2008 for FY 2008, the financial year end of the Comparable Companies are 31 December, the Forward P/E of JVHPL Group for FY 2007 and FY 2008 are more comparable with the estimated P/E of Comparable Companies for FY 2006 and FY 2007 respectively. Company

Mkt. Cap. (S$million)(1)

2006 Estimated P/E (2)

2007 Estimated P/E (2)

Listed on the Bursa Malaysia Berhad Hirotako Holdings Berhad New Hoong Fatt Holdings BHD SMIS Corporation Berhad

40.1 60.8 8.9

N.A.(4) 6.63 N.A. (4)

N.A. (4) 5.81 N.A. (4)

163.3 37.9 61.0 191.8 99.9 118.9

6.64 N.A. (4) 7.56 8.55 12.74 9.75

5.92 N.A. (4) 7.05 7.50 15.37 7.91

8.65 8.06 12.74 6.63

8.26 7.28 15.37 5.81

Listed on the Stock Exchange of Thailand AAPICO Hitech PCL Interhides PCL KPN Automotive PCL Somboon Advance Technology PCL Thai Rung Union Car PCL Thai Steel Cable PCL Mean Median High Low Purchase Consideration of JVHPL

4.85

Source: Bloomberg, respective company annual reports and result announcements

53

(3)

4.85

(3)


Note: (1)

The market capitalisation is calculated based on the total number of issued shares for the Comparable Companies and their respective share prices as at the Latest Practicable Date, translated to S$ at exchange rate of S$1:RM 2.31 and S$1: Baht 24.25 as at the Latest Practicable Date.

(2)

2006 Estimated P/E and 2007 Estimated P/E are based on the estimates of net income obtained from latest IBES consensus mean estimates for the respective Comparable Companies for the financial years ending 31 December 2006 and 31 December 2007 as at the Latest Practicable Date.

(3)

Based on the P/E as agreed in the Share Purchase Agreement.

(4)

Estimated P/E from IBES were not available for these companies. For illustrative purposes, the historical P/E for Hirotako Holdings Berhad, SMIS Corporation Berhad and Interhides PCL are 7.88 times, 14.74 times and 5.00 times respectively as at the Latest Practicable Date.

From the table above, we noted that:The Purchase Consideration implies a Forward P/E of 4.85 times based on JVHPL Group’s audited consolidated Net Profit for the year ending 28 February 2007 (“2007 Forward P/E”). This compares favourably with the estimated forecast P/E of the Comparable Companies computed based on the last traded prices as at the Latest Practicable Date and the IBES estimates of their net income for the financial year ending 31 December 2006 for the respective companies (“2006 Comparable Companies P/E”) as the 2007 Forward P/E is below the range of the 2006 Comparable Companies P/E. The Purchase Consideration also implies a Forward P/E of 4.85 times based on JVHPL Group’s audited consolidated Net Profit for the year ending 29 February 2008 (“2008 Forward P/E”). This compares favourably with the estimated forecast P/E of the Comparable Companies computed based on the last traded prices as at the Latest Practicable Date and the IBES estimates of their net income for the financial year ending 31 December 2007 for the respective companies (“2007 Comparable Companies P/E”) as the 2008 Forward P/E is below the range of the 2007 Comparable Companies P/E. We set out below the following two tables to illustrate the Net Consideration (hereby defined as the Purchase Consideration less the cash repayment (if any) to be made by the Vendors, should the Net Profit of JVHPL Group falls below the Net Profit Targets of FY 2007 and/or FY 2008) and the Implied P/E (hereby defined as the price-earnings ratio calculated by dividing the Net Consideration by the weighted average Net Profit of JVHPL Group for FY 2007 and FY 2008. The weightage of Net Profit for FY 2007 and FY 2008 Net Profit is 40% and 60% respectively.) of the Proposed Acquisition under different Net Profit assumptions.

Net Profit for FY2008 (S$ million)

Net Consideration Net Profit for FY 2007 (S$ million) 0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

(0.50) 0.00 1.61 3.57 5.52 6.98 8.43 8.43

0.00 0.50 2.11 4.07 6.02 7.48 8.93 8.93

1.24 1.74 3.35 5.31 7.26 8.72 10.17 10.17

2.71 3.21 4.82 6.78 8.73 10.19 11.64 11.64

3.68 4.18 5.79 7.75 9.70 11.16 12.61 12.61

4.65 5.15 6.76 8.72 10.67 12.13 13.58 13.58

5.62 6.12 7.73 9.69 11.64 13.10 14.55 14.55

5.62 6.12 7.73 9.69 11.64 13.10 14.55 14.55

5.62 6.12 7.73 9.69 11.64 13.10 14.55 14.55

4.0

8.43

8.93

10.17

11.64

12.61

13.58

14.55

14.55

14.55

As illustrated by the table above, the Net Consideration would range from zero (0) to a maximum of S$14.55 million. In the event that the Net Profit for both FY2007 and FY2008 is zero (0), the Vendors would receive zero (0) Consideration Shares and be required to pay the Company S$3.5 million in cash which is S$0.4 million more than the S$3.1 million Cash Consideration. The Net Consideration is presented purely for illustrative purposes and may defer from the actual accounting treatment for the Company’s recording of their investment in JVHPL Group. 54


Net Profit for FY2008 (S$ million)

Implied P/E Net Profit for FY 2007 (S$ million) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

n.m. 0.00 2.68 3.96 4.60 4.65 4.68 4.01 3.51

0.00 1.00 2.64 3.70 4.30 4.40 4.47 3.88 3.43

3.10 2.49 3.35 4.08 4.54 4.59 4.62 4.07 3.63

4.52 3.57 4.02 4.52 4.85 4.85 4.85 4.31 3.88

4.60 3.80 4.14 4.56 4.85 4.85 4.85 4.35 3.94

4.65 3.96 4.23 4.59 4.85 4.85 4.85 4.38 3.99

4.68 4.08 4.29 4.61 4.85 4.85 4.85 4.41 4.04

4.01 3.60 3.87 4.21 4.48 4.52 4.55 4.16 3.83

3.51 3.22 3.51 3.87 4.16 4.22 4.28 3.93 3.64

As illustrated by the table above, the maximum Implied P/E will be 4.85 times. It should be noted that if the profit targets of JVHPL Group for FY 2007 of S$1.5 million or for FY 2008 of S$2.0 million are not met, not only will the Vendors be issued Consideration Shares computed based on the actual Net Profit of FY 2007 and FY 2008, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2007 Shortfall Amount and 2008 Shortfall Amount in cash within one (1) month after the accounts of FY 2007 and FY 2008 have been audited respectively, provided that the payments made at the end of FY 2007 and FY 2008 shall not exceed S$1.5 million and S$2.0 million respectively. Therefore this implies that under such situation, the Implied P/E will be lower than 4.85 times as illustrated in the table above. It should also be noted that under the potential scenarios where the Net Profit of JVHPL Group exceed S$3.0 million for FY 2007 or FY 2008, as the Net Profit used in the formulas to determine the Share Consideration shall be capped at S$3.0 million, the Implied P/E will also be lower than 4.85 times as illustrated in the table above. We recognise that using historical valuation statistics would not be necessarily relevant in our analysis of the value of the JVHPL Group as the purchase consideration is highly dependent on the future performance of the JVHPL Group and the Consideration Shares will only be issued to the Vendors after FY 2007 and FY 2008 respectively. Hence we have not used any historical valuation statistics in our analysis. 9.3

Financial effects of the Proposed Acquisition on the JCL Group as set out in Appendix C of this Circular; The financial effects of the Proposed Acquisition on the JCL Group have been set out in Appendix C of the Letter to Shareholders included in this Circular. In accordance to the terms of reference, we have only considered the financial effects of the Proposed Acquisition and have not considered the impact of the Proposed Placements. We set out extracts from this section in italics as follows: For illustrative purposes only, the following sets out the financial effects of the Proposed Acquisition but before the Placements on the NTA and gearing of the JCL group, assuming that the Proposed Acquisition had been completed on 28 February 2005 and that the Cash Consideration for the Proposed Acquisition is S$3.0 million.

55


NTA

NTA(1) (S$)

Number of shares

NTA per Shares (cents)

As at 28 February 2005

18,630,401

131,000,000

14.22

With the Proposed Acquisition but without the Proposed Placements

23,839,682 (2)

195,166,667 (2)

12.22 (2)

21,339,682 (3)

162,833,333 (3)

13.11 (3)

20,639,682 (4)

131,000,000 (4)

15.76 (4)

The above pro forma financial information of the JVHPL Group is based on JVHPL’s unaudited pro forma accounts for the financial year ended 30 November 2005 (which is based on the audited accounts of JVS for the financial year ended 30 November 2005 and the unaudited accounts of JVT for the financial year ended 31 December 2005). Note: (1)

For illustrative purposes only, the NTA of the JCL Group after the Proposed Acquisition is computed by adding the NTA of JVHPL as at 30 November 2005 to the NTA of the JCL Group as at 28 February 2005. The effects of the Proposed Acquisition on the NTA takes into account the sum of S$300,000 being the expense paid by the Company pursuant to the Proposed Transactions.

(2)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is at least S$3 million, where such Net Profit is the maximum amount of Net Profit that will be used to calculate the number of Consideration Shares to be issued to the Vendors after each of the said financial years.

(3)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is S$1.5 million and S$2.0 million respectively.

(4)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is zero (0), no Shares will be issued for FY 2007 and FY 2008. After FY 2007, the Vendors will have to pay to the Company S$1.5 million in cash due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will have to pay to the Company S$2.0 million in cash due to the failure to meet the Net Profit target of S$2.0 million in FY 2008. The pro forma financial effect of the Proposed Acquisition on the NTA of the Company has taken into consideration that the sum of S$3.5 million payable as aforesaid is subject to corporate tax of 20%.

Gearing Total Borrowings (S$)

Shareholders’ Funds (S$)

Gearing(1) (times)

As at 28 February 2005

3,441,000

18,568,043

0.19

With the Proposed Acquisition but without the Proposed Placements

5,038,970 (2)

36,118,043 (2)

0.14

5,038,970 (3)

27,798,043 (3)

0.18

5,038,970 (4)

20,577,325 (4)

0.24

The above pro forma financial information of the JVHPL Group is based on the JVHPL Group’s unaudited pro forma accounts for the financial year ended 30 November 2005 (which is based on the audited accounts of JVS for the financial year ended 30 November 2005 and the audited accounts of JVT for the financial year ended 31 December 2005). Note: (1)

The Gearing is calculated based on total bank borrowing divided by shareholders’ funds.

(2)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is at least S$3.0 million, where such Net Profit is the maximum amount of Net Profit that will be used to calculate the number of Consideration Shares to be issued to the Vendors after each of the said financial years.

56


(3)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is S$1.5 million and S$2.0 million respectively.

(4)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is zero (0), no Shares will be issued for FY 2007 and FY 2008. After FY 2007, the Vendors will have to pay to the Company S$1.5 million in cash due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will have to pay to the Company S$2.0 million in cash due to the failure to meet the Net Profit target of S$2.0 million in FY 2008. In computing the pro forma financial effect of the Proposed Acquisition, it has been assumed that there is goodwill impaired and that the sum of S$3.5 million payable as aforesaid is subject to corporate tax of 20%.

For illustrative purposes only, the financial effect of the Proposed Acquisition on the EPS is computed assuming that the Proposed Acquisition had been completed on 1 March 2004 and that the Cash Consideration for the Proposed Acquisition is S$3.0 million. EPS Net Profit Attributable to Shareholders (S$)

Number of Shares

EPS (cents)

For the financial year ended 28 February 2005

2,467,359

131,000,000

1.88

With the Proposed Acquisition but without the Proposed Placements

5,467,359 (1)

195,166,667 (1)

2.80 (1)

4,467,359 (2)

162,833,333 (2)

2.74 (2)

4,476,641 (3)

131,000,000 (3)

3.42 (3)

The above pro forma financial information of the JVHPL Group is based on the JVHPL Group’s unaudited pro forma accounts for the financial year ended 30 November 2005 (which is based on the audited accounts of JVS for the financial year ended 30 November 2005 and the audited accounts of JVT for the financial year ended 31 December 2005) Note: (1)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is at least S$3 million, where such Net Profit is the maximum amount of Net Profit that will be used to calculate the number of Consideration Shares to be issued to the Vendors after each of the said financial years.

(2)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is S$1.5 million and S$2.0 million respectively.

(3)

Where the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is zero (0), no Shares will be issued for FY 2007 and FY 2008. After FY 2007, the Vendors will have to pay to the Company S$1.5 million in cash due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will have to pay to the Company S$2.0 million in cash due to the failure to meet the Net Profit target of S$2.0 million in FY 2008. In computing the pro forma financial effect of the Proposed Acquisition, it has been assumed that there is goodwill impaired and the sum of S$3.5 million payable as aforesaid is subject to corporate tax of 20%.

Our comments in this sub-section are to be read in conjunction with the selected Financial Effects illustrations as set out above. (i)

NTA per Share We noted from the table above, before the proposed acquisition, the NTA per Share of the JCL Group is 14.22 cents as at 28 February 2005. For illustrative purposes, assuming that the Net Profit of JVHPL Group is at least S$3.0 million for each of FY 2007 and FY 2008, the NTA per Share of the JCL Group as at 28 February 2005 is 12.22 cents after the completion of the Proposed Acquisition. This represents a decrease of 2.00 cents, or 14.1% from the NTA per share of 14.22 cents before the Proposed Acquisition.

57


For illustrative purposes, assuming that the Net Profit of JVHPL Group is S$1.5 million and S$2.0 million for FY 2007 and FY 2008 respectively, the NTA per Share of the JCL Group as at 28 February 2005 is 13.11 cents after the completion of the Proposed Acquisition. This represents a decrease of 1.11 cents, or 7.8% from the NTA per Share of 14.22 cents before the Proposed Acquisition. For the above 2 scenarios, the NTA per Share is diluted mainly due to the Cash Consideration of S$3,112,880 being higher than JVHPL Group’s NTA as at 30 November 2005. For illustrative purposes, assuming that the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is zero (0) and no Consideration Shares is issued, the NTA per Share of the JCL Group as at 28 February 2005 is 15.76 cents after the completion of the Proposed Acquisition. This represents an increase of 1.54 cents, or 10.8% from the NTA per share of 14.22 cents before the Proposed Acquisition. This is due to the Vendors paying to the Company a sum of S$3.5 million in cash for failure to meet the Net Profit targets. However, as the JVHPL Group is primarily engaged in non-capital intensive business activity, we are of the view that the use of NTA as a basis of measure of the financial impact of the Proposed Acquisition is not appropriate under this situation. (ii)

Gearing For illustrative purposes, assuming that the Net Profit of JVHPL Group is at least S$3.0 million for each of FY 2007 and FY 2008, the gearing ratio of the JCL Group as at 28 February 2005 is 0.14 times after the completion of the Proposed Acquisition. This represents a decrease of 0.05 times, or improvement of 26.3% from the Gearing of 0.19 times before the Proposed Acquisition. For illustrative purposes, assuming that the Net Profit of JVHPL Group is S$1.5 million and S$2.0 million for FY 2007 and FY 2008 respectively, the gearing ratio of the JCL Group as at 28 February 2005 is 0.18 times after the completion of the Proposed Acquisition. This represents a decrease of 0.01 times, or improvement of 5.3% from the gearing ratio of 0.19 times before the Proposed Acquisition. For illustrative purposes, assuming that the Net Profit of JVHPL Group for each of FY 2007 and FY2008 is zero (0) and no Consideration Shares is issued, the gearing ratio of the JCL Group as at 28 February 2005 is 0.24 times after the completion of the Proposed Acquisition. This represents an increase of 0.05 times, or deterioration of 26.3% from the gearing ratio of 0.19 times before the Proposed Acquisition. This is mainly due to no Consideration Shares being issued to the Vendors, hence the JCL Group’s shareholders’ equity remains unchanged while JVHPL Group’s total borrowings of S$1.6 million is included in the JCL Group’s total borrowings as a result of consolidation.

(iii)

EPS For illustrative purposes, assuming that the Net Profit of JVHPL Group is S$3.0 million for each of FY 2007 and FY 2008, the EPS for the JCL Group for FY 2005 is 2.80 cents after the completion of the Proposed Acquisition. This represents an increase of 0.92 cents, or 48.9% from the EPS of 1.88 cents before the Proposed Acquisition. For illustrative purposes, assuming that the Net Profit of JVHPL Group is S$1.5 million and S$2.0 million for FY 2007 and FY 2008 respectively, the EPS of the JCL Group for FY 2005 is 2.74 cents after the completion of the Proposed Acquisition. This represents an increase of 0.86 cents, or 45.7% from the EPS of 1.88 cents before the Proposed Acquisition.

58


For illustrative purposes, assuming that the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is zero (0) and that no Consideration Shares is issued, the EPS of the JCL Group for FY 2005 is 3.42 cents after the completion of the Proposed Acquisition. This represents an increase of 1.54 cents, or 81.9% from the EPS of 1.88 cents before the Proposed Acquisition. The significant increase in EPS of the JCL Group is mainly due to the recognition of the cash repayment of S$3.5 million as profits in the Company, partially offsetted by the full write down in value of goodwill and with no Consideration Shares being issued. 9.4

Other Considerations In determining whether the terms of the Proposed Acquisition are on normal commercial terms and are not prejudicial to the Company and Independent Shareholders, we have also considered the following:(a)

Rationale for the Proposed Acquisition and potential benefits to JCL The full text of the rationale and benefits of the Proposed Acquisition is set out in section 2.4 of the Letter to Shareholders included in this Circular and we would advise that the Independent Directors advise Shareholders to read this section carefully.

(b)

Cash Consideration The Cash Consideration is backed by the NTA of JVHPL Group as the amount of Cash Consideration is equivalent to audited NTA of JVHPL Group as at 28 February 2006.

(c)

Consideration Shares The terms of the payment under the Share Purchase Agreement provide for formulae to adjust the number of Consideration Shares to be issued based on the actual Net Profits of JVHPL Group for FY 2007 and FY 2008. We would like to draw to the attention of the Independent Directors that the minimum number of Consideration Shares will be zero (0) should the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 be less than S$0.62 million respectively, assuming that the Cash Consideration for the Proposed Acquisition is S$3.0 million. The maximum number of Consideration Shares will be 64,166,667 should the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 be S$ 3.0 million or more, respectively, and assuming that the Cash Consideration for the Proposed Acquisition is S$3.0 million.

(d)

Continuing obligations of the Vendors The Vendors have agreed to meet Net Profit targets of S$1.5 million and S$2.0 million in FY 2007 and FY 2008 respectively. In the event that the Net Profit for FY 2007 is less than S$1.5 million, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2007 Shortfall Amount in cash within one (1) month after the accounts of the JVHPL Group for FY 2007 have been audited. Likewise, in the event that the Net Profit for FY 2008 is less than S$2.0 million, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2008 Shortfall Amount in cash within one (1) month after the accounts of the JVHPL Group for FY 2008 have been audited, provided that the payments made after FY 2007 and FY 2008 shall not exceed S$1.5 million and S$2.0 million respectively.

(e)

Risk factors faced by the JVHPL Group The risks factors in relation to the JVHPL Group, the industry in which the JVHPL Group operates and Thailand and Malaysia are set out in section 3.5 of the Letter to Shareholders included in the Circular. Our terms of reference have limited our evaluation to the financial terms of the Proposed Acquisition and we have not taken into account the commercial risks or commercial merits of the Proposed Acquisition. Our terms of reference do not require us to evaluate or comment on the strategic or long-term commercial merits of the Proposed Acquisition or on the prospects of either JCL Group or on the JVHPL Group. 59


10.

OPINION Having regard to our terms of reference, in arriving at our opinion, we have taken into account a range of factors which we consider to be pertinent and have a significant bearing on our assessment of the Proposed Acquisition. We have carefully considered as many factors as we deem essential and balanced them before reaching our opinion. Accordingly, it is important that our letter, in particular, all the considerations and information we have taken into account, be read in its entirety. We have set out below a summary of our observations as follows: (a)

the Cash Consideration is backed by the NTA of JVHPL Group as the amount of Cash Consideration is equivalent to the audited NTA of the JVHPL Group as at 28 February 2006;

(b)

the terms of the payment under the Share Purchase Agreement provide for formulae to adjust the number of Consideration Shares to be issued based on the actual Net Profits of JVHPL Group for FY 2007 and FY 2008;

(c)

the Purchase Consideration implies a Forward P/E of 4.85 times which compares favourably with estimated forecast P/E of the Comparable Companies as it is below the range of the Comparable Companies P/E;

(d)

the vendors have continuing obligations to meet the profit targets of JVHPL Group for FY 2007 of S$1.5 million and for FY 2008 of S$2.0 million respectively. In the event that the Net Profit for FY 2007 is less than S$1.5 million, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2007 Shortfall Amount in cash within one (1) month after the accounts of the JVHPL Group for FY 2007 have been audited. Likewise, in the event that the Net Profit for FY 2008 is less than S$2.0 million, the Vendors shall, in accordance with their Shareholding Proportion, pay to the Company the 2008 Shortfall Amount in cash within one (1) month after the accounts of the JVHPL Group for FY 2008 have been audited, provided that the payments made after FY 2007 and FY 2008 shall not exceed S$1.5 million and S$2.0 million respectively. Hence under such circumstances, the Implied P/E for the Proposed Acquisition will be lower than 4.85 times with the cash repayment mechanism in place;

(e)

in the event that the Net Profit of JVHPL Group exceed S$3.0 million for both FY 2007 or FY 2008, the Net Profit used in the formulas to determine the Share Consideration shall be capped at S$3.0 million. Hence under such circumstances, the Implied P/E of the Proposed Acquisition could also be lower than 4.85 times;

(f)

the Issue Price is at premium to the average daily closing price of the Shares over the last one, three, six, nine and twelve month(s) preceding the date of announcement of the Share Purchase Agreement respectively;

(g)

the Issue Price is at a 10.0% discount to the last transacted price of the Shares before the announcement of the Share Purchase Agreement, which is below the range of the Comparable Transactions. The Issue Price is at a 9.8% premium to the average daily closing prices for the one month preceding the date of announcement of the Share Purchase Agreement, which is within the range but slightly below the mean of the Comparable Transactions. The Issue Price is at a 12.5% premium to the average daily closing prices for the three months preceding the date of announcement of the Share Purchase Agreement, which is within the range and above the mean of the Comparable Transactions.

60


However, we also noticed that there has been substantial increase in the price and trading volume of the Shares since the beginning of February 2006, as compared to the price and trading volume since August 2005. We have made reasonable enquiries and the Directors confirmed to us that they are not aware of any information not previously announced concerning the Company which, if known, might explain such variances in the price and trading volume. (h)

for illustrative purposes, assuming that the Net Profit of JVHPL Group is at least S$3.0 million for each of FY2007 and FY2008 and that the Cash Consideration for the Proposed Acquisition is S$3.0 million, the NTA per Share of the JCL Group as at 28 February 2005 after the completion of the Proposed Acquisition is 12.22 cents, this represents a decrease of 2.00 cents, or 14.1% from the NTA per Share as at 28 February 2005 before the completion of the Proposed Acquisition. for illustrative purposes, assuming that the Net Profit of JVHPL Group is S$1.5 million and S$2.0 million for FY2007 and FY2008 and that the Cash Consideration for the Proposed Acquisition is S$3.0 million, the NTA per Share of the JCL Group as at 28 February 2005 after the completion of the Proposed Acquisition is 13.11 cents, this represents a decrease of 1.11 cents, or 7.8% from the NTA per Share as at 28 February 2005 before the completion of the Proposed Acquisition. for illustrative purposes, assuming that the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is zero (0) and no Consideration Shares is issued, the NTA per Share of the JCL Group as at 28 February 2005 after the completion of the Proposed Acquisition is 15.76 cents, this represents a increase of 1.54 cents, or 10.8% from the NTA per Share of 14.22 cents as at 28 February 2005 before the completion of the Proposed Acquisition. However, as the JVHPL Group is primarily engaged in non-capital intensive business activity, we are of the view that the use of NTA as a basis of measure of the financial impact of the Proposed Acquisition is not appropriate under this situation.

(i)

for illustration purposes, assuming that the Net Profit of JVHPL Group is at least S$3.0 million for each of FY 2007 and FY 2008, the gearing ratio of the JCL Group as at 28 February 2005 is 0.14 times after the completion of the Proposed Acquisition. This represents a decrease of 0.05 times, or improvement of 26.3% from the Gearing of 0.19 times before the Proposed Acquisition. for illustrative purposes, assuming that the Net Profit of JVHPL Group is S$1.5 million and S$2.0 million for FY 2007 and FY 2008 respectively, the gearing ratio of the JCL Group as at 28 February 2005 is 0.18 times after the completion of the Proposed Acquisition. This represents a decrease of 0.01 times, or improvement of 5.3% from the gearing ratio of 0.19 times before the Proposed Acquisition. for illustrative purposes, assuming that the Net Profit of JVHPL Group for each of FY 2007 and FY2008 is zero (0) and no Consideration Shares is issued, the gearing ratio of the JCL Group as at 28 February 2005 is 0.24 times after the completion of the Proposed Acquisition. This represents an increase of 0.05 times, or deterioration of 26.3% from the gearing ratio of 0.19 times before the Proposed Acquisition.

(j)

for illustrative purposes, assuming the Net Profit of JVHPL Group is S$3.0 million for each of FY 2007 and FY 2008, EPS of the JCL Group for FY 2005 is 2.80 cents after the completion of the Proposed Acquisition. This represents an increase of 0.92 cents, or 48.9% from the EPS of 1.88 cents before the Proposed Acquisition. for illustrative purposes, assuming that the Net Profit of JVHPL Group is S$1.5 million and S$2.0 million for FY 2007 and FY 2008 respectively, the EPS of the JCL Group for FY 2005 is 2.74 cents after the completion of the Proposed Acquisition. This represents an increase of 0.86 cents, or 45.7% from the EPS of 1.88 cents before the Proposed Acquisition. 61


for illustrative purposes, assuming that the Net Profit of JVHPL Group for each of FY 2007 and FY 2008 is zero (0) and that no Consideration Shares will be issued, the EPS of the JCL Group for FY 2005 is 3.42 cents after the completion of the Proposed Acquisition. This represents an increase of 1.54 cents, or 81.9% from the EPS of 1.88 cents before the Proposed Acquisition. (k)

the rationale for the Proposed Acquisition as set out in section 2.4 of the Letter to Shareholders included in this Circular;

Accordingly, on balance after taking into account the above factors, PwCCF is of the opinion as of the date hereof that the Proposed Acquisition is on normal commercial terms and are not prejudicial to the interests of the Company and its Independent Shareholders. We therefore advise the Independent Directors of JCL to recommend that the Independent Shareholders vote in favour of the Proposed Acquisition and the Whitewash Resolution to be proposed in respect thereof at the EGM, the notice of which is set out in the Circular. This recommendation is not given in the context of any other requirement and is not to be taken or construed by any existing or prospective Shareholder as forming part of any recommendation in connection with their Shares other than for the purposes of the Proposed Acquisition and the Whitewash Resolution. Specifically, this opinion does not purport to provide any support given or guidance, express or implied, with respect to any invitation to acquire existing Shares. Shareholders should note that trading in the JCL Shares is subject to possible market fluctuations and, accordingly, our advice on the Proposed Acquisition does not and cannot take into account the future trading activities or patterns or price levels beyond the Latest Practicable Date. This letter is addressed to the Independent Directors for their benefit, in connection with and for the purpose of their consideration of the financial terms of the Proposed Acquisition, and the recommendation made by them to the Shareholders shall remain the responsibility of the Independent Directors. Whilst a copy of this letter may be reproduced in the Circular, neither the Company nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose at any time and in any manner without the prior written consent of PwCCF in each specific case. This opinion is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Nothing herein shall confer or be deemed or is intended to confer any right of benefit to any third party and the Contracts (Rights of Third Parties) Act Chapter 53B of Singapore and any re-enactment thereof shall not apply.

Yours truly for and on behalf of PricewaterhouseCoopers Corporate Finance Pte Ltd

Kan Yut Keong Managing Director

Ng Jiak See Executive Director

62


APPENDIX B

INTERESTS OF THE DIRECTORS AND SUBSTANTIAL SHAREHOLDERS The shareholding interests of the Directors and substantial Shareholders in the Company as at the Latest Practicable Date, as recorded in the Register of Directors’ Shareholdings and the Register of substantial Shareholders maintained under the provisions of the Companies Act were as follows: Direct Interest No. of Shares

Deemed Interest %

No. of Shares

%

35,645,600

27.21

16,000,000

12.21

Voo Jun Hing

980,000

0.75

Nil

Nil

Chang Yeh Hong

200,000

0.15

Nil

Nil

Directors Liew Ham Chow

63


APPENDIX C

FINANCIAL EFFECTS OF THE PROPOSED TRANSACTIONS For illustrative purposes only, the following sets out the financial effects of the Proposed Transactions on the NTA and gearing of the JCL Group, assuming that the Proposed Acquisition and the Proposed Placements had been completed on 28 February 2005 and that the Cash Consideration for the Proposed Acquisition is S$3.0 million. NTA NTA(1) (S$)

Number of Shares

NTA per Share (cents)

As at 28 February 2005

18,630,401

131,000,000

14.22

With the Proposed Acquisition but without the Proposed Placements

23,839,682 (2)

195,166,667 (2)

12.22 (2)

21,339,682 (3)

162,833,333 (3)

13.11 (3)

20,639,682 (4)

131,000,000 (4)

15.76 (4)

Without the Proposed Acquisition but with the Proposed Placements

25,797,401

174,666,667

14.77

With both the Proposed Acquisition and Proposed Placements

25,306,682

174,666,667

14.49

With the Proposed Acquisition, the Proposed Placements and allotment and issue of Consideration Shares and Additional New Shares to the Subscribers after FY 2007 and FY 2008

34,844,182 (2)

260,222,222 (2)

13.39 (2)

30,501,182 (3)

217,111,111 (3)

14.05 (3)

28,106,682 (4)

174,666,667 (4)

16.09 (4)

The above pro forma financial information of the JVHPL Group is based on the JVHPL’s unaudited pro forma accounts for the financial year ended 30 November 2005 (which is based on the audited accounts of JVS for the financial year ended 30 November 2005 and the audited accounts of JVT for the financial year ended 31 December 2005). Note: (1)

For illustrative purposes only, the NTA of the Company after the Proposed Acquisition is computed by adding the NTA of JVHPL as at 30 November 2005 to the NTA of the Company as at 28 February 2005. The effects of the Proposed Acquisition and the Proposed Placements on the NTA take into account the sum of S$300,000 being the expense paid by the Company pursuant to the Proposed Transactions.

(2)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is at least S$3.0 million, where such Net Profit is the maximum amount of Net Profit that will be used to calculate the number of Consideration Shares to be issued to the Vendors after each of the said financial years.

(3)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is S$1.5 million and S$2.0 million respectively.

(4)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is zero (0), no Shares will be issued for FY 2007 and FY 2008. After FY 2007, the Vendors will have to pay to the Company S$1.5 million in cash due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will have to pay to the Company S$2.0 million in cash due to the failure to meet the Net Profit target of S$2.0 million in FY 2008. The pro forma financial effect of the Proposed Transactions on the NTA of the Company has taken into consideration that the sum of S$3.5 million payable as aforesaid is subject to corporate tax of 20%.

64


Gearing Total Borrowings (S$)

Shareholders’ Funds (S$)

Gearing(1) (times)

As at 28 February 2005

3,441,000

18,568,043

0.19

With the Proposed Acquisition but without the Proposed Placements

5,038,970 (2)

36,118,043 (2)

0.14 (2)

5,038,970 (3)

27,798,043 (3)

0.18 (3)

5,038,970 (4)

20,577,325 (4)

0.24 (4)

Without the Proposed Acquisition but with the Proposed Placements

3,441,000

25,735,043

0.13

With both the Proposed Acquisition and Proposed Placements

5,038,970

26,035,043

0.19

With the Proposed Acquisition, the Proposed Placements and allotment and issue of Consideration Shares and Additional New Shares to the Subscribers after FY 2007 and FY 2008

5,038,970 (2)

47,122,543 (2)

0.11 (2)

5,038,970 (3)

36,959,543 (3)

0.14 (3)

5,038,970 (4)

28,044,324 (4)

0.18 (4)

The above pro forma financial information of the JVHPL Group is based on JVHPL’s unaudited pro forma accounts for the financial year ended 30 November 2005 (which is based on the audited accounts of JVS for the financial year ended 30 November 2005 and the audited accounts of JVT for the financial year ended 31 December 2005). Note: (1)

The Gearing is calculated based on total bank borrowings divided by shareholders’ funds.

(2)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is at least S$3.0 million, where such Net Profit is the maximum amount of Net Profit that will be used to calculate the number of Consideration Shares to be issued to the Vendors after each of the said financial years.

(3)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is S$1.5 million and S$2.0 million respectively.

(4)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is zero (0), no Shares will be issued for FY 2007 and FY 2008. After FY 2007, the Vendors will have to pay to the Company S$1.5 million in cash due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will have to pay to the Company S$2.0 million in cash due to the failure to meet the Net Profit target of S$2.0 million in FY 2008. In computing the pro forma financial effect of the Proposed Transactions, it has been assumed that there is goodwill impaired and that the sum of S$3.5 million payable as aforesaid is subject to corporate tax of 20%.

65


For illustrative purposes only, the financial effects of the Proposed Transactions on the EPS have been computed assuming that the Proposed Acquisition and Proposed Placements had been completed on 1 March 2004 and that the Cash Consideration for the Proposed Acquisition is S$3.0 million. EPS Net Profit Attributable to Shareholders (S$)

Number of Shares

EPS (cents)

2,467,359

131,000,000

1.88

5,467,359(1)

195,166,667(1)

2.80(1)

4,467,359(2)

162,833,333(2)

2.74(2)

4,476,641(3)

131,000,000(3)

3.42(3)

Without the Proposed Acquisition but with the Proposed Placements

2,467,359

174,666,667

1.41

With both the Proposed Acquisition and Proposed Placements

2,867,317

174,666,667

1.64

With the Proposed Acquisition, the Proposed Placements and allotment and issue of Consideration Shares and Additional New Shares to the Subscribers after FY 2007 and FY 2008

5,467,359(1)

260,222,222(1)

2.10(1)

4,467,359(2)

217,111,111(2)

2.06(2)

4,476,641(3)

174,666,667(3)

2.56(3)

For the financial year ended 28 February 2005 With the Proposed Acquisition but without the Proposed Placements

The above pro forma financial information of the JVHPL Group is based on JVHPL’s unaudited pro forma accounts for the financial year ended 30 November 2005 (which is based on the audited accounts of JVS for the financial year ended 30 November 2005 and the audited accounts of JVT for the financial year ended 31 December 2005). Note: (1)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is at least S$3.0 million, where such Net Profit is the maximum amount of Net Profit that will be used to calculate the number of Consideration Shares to be issued to the Vendors after each of the said financial years.

(2)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is S$1.5 million and S$2.0 million respectively.

(3)

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is zero (0), no Shares will be issued for FY 2007 and FY 2008. After FY 2007, the Vendors will have to pay to the Company S$1.5 million in cash due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will have to pay to the Company S$2.0 million in cash due to the failure to meet the Net Profit target of S$2.0 million in FY 2008. In computing the pro forma financial effect of the Proposed Transactions, it has been assumed that there is goodwill impaired and the sum of S$3.5 million payable as aforesaid is subject to corporate tax of 20%.

66


67

51,645,600

39.42

% –

Number of Shares –

%

Liew Nyuk Ngoh

51,645,600

29.57

34,933,334

Number of Shares

AAPICO

20.0

%

6.58 (1) 3.91 (2) – (3)

80,520,600 (1) 41.26 (1) 12,833,333 (1) 65,970,600 (2) 40.51 (2) 6,366,667 (2) (3) 51,645,600 (3) 39.42 (3) –

On Completion of the allotment and issue of second Tranche of Consideration Shares after FY 2008

(3)

(3)

1.01 (2)

55,920,600 (2) 29.85 (2) 1,900,000 (2)

51,645,600 (3) 29.57 (3)

2.46 (1)

63,195,600 (1) 30.25 (1) 5,133,333 (1)

FY 2008

On Completion of the allotment and issue of second Tranche of Consideration Shares and Additional New Shares to the Subscribers after –

(3)

(3)

2.93 (2)

65,970,600 (2) 30.39 (2) 6,366,667 (2)

51,645,600 (3) 29.57 (3)

4.93 (1)

80,520,600 (1) 30.94 (1) 12,833,333 (1)

Effect on shareholdings after FY 2008 in the event the Proposed Transactions are approved

On Completion of the allotment and issue of the first Tranche of Consideration Shares and Additional New Shares to the Subscribers after FY 2007

Effect on shareholdings after FY 2007 in the event the Proposed Transactions are approved

3.28 (1) 1.35 (2) – (3)

63,195,600 (1) 40.34 (1) 5,133,333 (1) 55,920,600 (2) 39.80 (2) 1,900,000 (2) (3) 51,645,600 (3) 39.42 (3) –

On Completion of the allotment and issue of first Tranche of Consideration Shares after FY 2007

34,933,334 (3)

43,422,222 (2)

52,044,445 (1)

34,933,334 (3)

37,466,667 (2)

41,777,778 (1)

8,733,333

8,733,333 (3)

9,366,667 (2)

20.0 (3)

8,733,333 (3)

20.0 (2) 10,855,556 (2)

20.0 (1) 13,011,111 (1)

20.0 (3)

20.0 (2)

20.0 (1) 10,444,444 (1)

Mr Ang Number of Shares

Effect on shareholdings in the event the Proposed Acquisition is approved but the Proposed Placements are not approved

On Completion of the allotment and issue of the New Shares to the Subscribers (1)

Effect on shareholdings after FY 2006 in the event the Proposed Acquisition is not approved

As of the Latest Practicable Date

Number of Shares

Liew Ham Chow

Interests in JCL Shares

341,000 (3)

3,666,000 (2)

9,324,334 (1)

22,799,334 (1) 11,482,666 (2) 341,000 (3)

9,324,334 (1) 3,666,000 (2) 341,000 (3)

341,000

341,000

Number of Shares

5.0 (3)

341,000 (3)

5.0 (2) 11,482,666 (2)

5.0 (1) 22,799,333 (1)

5.0 (3)

5.0 (2)

5.0 (1)

5.0

%

79,013,400

79,013,400

Number of Shares

45.24

60.32

%

Independent Shareholders

174,666,667

131,000,000

0.19 (3) 79,013,400 (3) 45.24 (3) 174,666,667 (3)

5.29 (2) 79,013,400 (2) 36.39 (2) 217,111,111 (2)

8.77 (1) 79,013,400 (1) 30.36 (1) 260,222,222 (1)

0.19 (3) 79,013,400 (3) 45.24 (3) 174,666,667 (3)

1.96 (2) 79,013,400 (2) 42.18 (2) 187,333,334 (2)

4.46 (1) 79,013,400 (1) 37.83 (1) 208,888,889 (1)

11.67 (1) 79,013,400 (1) 40.49 (1) 195,166,667 (1) 7.05 (2) 79,013,400 (2) 48.53 (2) 162,833,333 (2) 0.26 (3) 79,013,400 (3) 60.32 (3) 131,000,000 (3)

5.95 (1) 79,013,400 (1) 50.43 (1) 156,666,667 (1) 2.61 (2) 79,013,400 (2) 56.24 (2) 140,500,000 (2) 0.26 (3) 79,013,400 (3) 60.32 (3) 131,000,000 (3)

0.19

0.26

%

Other Vendors

Total Number of JCL Shares

For illustrative purposes only, the changes in the shareholding interest of the Company pursuant to the allotment and issue of the Consideration Shares and/or the New Shares and/or the Additional New Shares as the case may be, have been computed assuming that the Cash Consideration for the Proposed Acquisition is S$ 3.0 million.

CHANGES IN THE SHAREHOLDING INTEREST OF JACKSPEED CORPORATION LIMITED

APPENDIX D


68

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is at least S$3.0 million, where such Net Profit is the maximum amount of Net Profit that will be used to calculate the number of Consideration Shares to be issued to the Vendors after each of the said financial years.

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is S$1.5 million and S$2.0 million respectively.

Where the Net Profit of the JVHPL Group for each of FY 2007 and FY 2008 is zero (0), no Shares will be issued after FY 2007 and FY 2008. After FY 2007, the Vendors will have to pay to the Company S$1.5 million in cash due to the failure to meet the Net Profit target of S$1.5 million in FY 2007. Likewise, after FY 2008, the Vendors will have to pay to the Company S$2.0 million in cash due to the failure to meet the Net Profit target of S$2.0 million in FY 2008.

(1)

(2)

(3)

Note:


JACKSPEED CORPORATION LIMITED (Company Registration No. 199300300W) (Incorporated in the Republic of Singapore)

NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Jackspeed Corporation Limited (the “Company”) will be held on 26 June 2006 at 11.00 a.m. or soon thereafter following the conclusion or adjournment of the Annual General Meeting of the Company to be held at 10.00 a.m. on the same day at 47 Loyang Drive Singapore 508955 for the purpose of considering and, if thought fit, passing, with or without amendments, the following ordinary resolutions: ORDINARY RESOLUTION (1) The proposed acquisition of 100% of the issued and paid-up share capital of Jackson Vehicle Holdings Pte Ltd (“JVHPL”), (“Proposed Acquisition”) and allotment and issue of up to 64,166,667 new ordinary shares in the capital of the Company at the issue price of S$0.18 per share (the “Consideration Shares”) thereunder That:(a)

Pursuant to Chapters 9 and 10 of the Listing Manual of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), approval be and is hereby given for the acquisition by the Company of an aggregate of 10,000 ordinary shares in the capital of JVHPL, representing the entire issued and paid-up capital of JVHPL from Liew Ham Chow, Liew Nyuk Ngoh, Ho Choon Meng and Lee Seng Jeow (collectively, the “Vendors”), for a maximum aggregate consideration of S$14.55 million to be satisfied by: (i)

cash consideration of a sum equal to the net tangible assets of JVHPL as at 28 February 2006, and

(ii)

deferred share consideration through an allotment and issue of the Consideration Shares after the Company’s financial years ending 28 February 2007 and/or 29 February 2008,

on terms and subject to the conditions set out in the Share Purchase Agreement dated 14 February 2006 (the “Share Purchase Agreement”), as varied by the Supplemental Share Purchase Agreement dated 7 June 2006 (the “Supplemental Share Purchase Agreement”) entered into between the Company and the Vendors, as may be amended or supplemented from time to time; (b)

the Directors be and are hereby authorised, pursuant to section 161 of the Companies Act, Chapter 50 of Singapore, to allot and issue the Consideration Shares to the Vendors, such Consideration Shares to rank pari passu in all respects with all existing shares in the capital of the Company; and

(c)

the Directors be and are hereby authorised to complete and do all acts and things as they may consider necessary or expedient or in the interest of the Company for the purposes of or in connection with the Share Purchase Agreement, as varied by the Supplemental Share Purchase Agreement and/or to give effect to this Ordinary Resolution (1), including but not limited to the negotiations and execution of other ancillary documents, procurement of third party consents and making of amendments to the Share Purchase Agreement as varied by the Supplemental Share Purchase Agreement.

69


JACKSPEED CORPORATION LIMITED (Company Registration No. 199300300W)

ORDINARY RESOLUTION (2) Whitewash Resolution in connection with the Proposed Acquisition (by way of poll) That:Subject to the passing of Ordinary Resolution (1), and subject to the conditions in the letter from the Securities Industry Council dated 13 March 2006 being fulfilled, the shareholders of the Company who are independent of Liew Ham Chow and any parties acting in concert with him (the “Affected Parties”), do hereby, on a poll taken, unconditionally and irrevocably waive their rights to receive a general offer for all the shares in the capital of the Company held by them (the “Offer”) to be made by the Affected Parties at the highest price paid or agreed to be paid by the Affected Parties in the six months prior to the Affected Parties incurring the Offer obligation under Rule 14 of the Singapore Code on Take-overs and Mergers, as a result of the allotment and issue of Consideration Shares to the Affected Parties. ORDINARY RESOLUTION (3) The proposed allotment and issue of 34,933,334 new ordinary shares in the capital of the Company to AAPICO Hitech Public Company Limited (“AAPICO”) That:Pursuant to Chapter 8 of the Listing Manual of the SGX-ST and section 161 of the Companies Act, Chapter 50 of Singapore, the Directors be and are hereby authorised to allot and issue, in accordance with the terms and conditions of the Subscription Agreement dated 15 February 2006 between AAPICO and the Company (the “Subscription Agreement”), 34,933,334 new ordinary shares in the capital of the Company to AAPICO at an issue price of S$0.18 per share (the “AAPICO Shares”), such AAPICO Shares to rank pari passu in all respects with all existing shares in the capital of the Company, and to complete and do all acts and things as they may consider necessary or expedient or in the interest of the Company for the purposes of or in connection with the Subscription Agreement and/or to give effect to this Ordinary Resolution (3). ORDINARY RESOLUTION (4) The proposed allotment and issue of 8,733,333 new ordinary shares in the capital of the Company to Mr Ang Kian Lee (“Mr Ang”) That:Pursuant to Chapters 8 and 9 of the Listing Manual of the SGX-ST and section 161 of the Companies Act, Chapter 50 of Singapore, the Directors be and are hereby authorised to allot and issue, in accordance with the terms and conditions of the Subscription Notice dated 15 February 2006 from Mr Ang (the “Subscription Notice”), 8,733,333 new ordinary shares in the capital of the Company to Mr Ang at an issue price of S$0.18 per share (the “Ang Shares”), such Ang Shares to rank pari passu in all respects with all existing shares in the capital of the Company, and to complete and do all acts and things as they may consider necessary or expedient or in the interest of the Company for the purposes of or in connection with the Subscription Notice and/or to give effect to this Ordinary Resolution (4).

70


JACKSPEED CORPORATION LIMITED (Company Registration No. 199300300W)

ORDINARY RESOLUTION (5) The proposed allotment and issue of up to 17,111,111 new ordinary shares in the capital of the Company to AAPICO after the Company’s financial years ending 28 February 2007 and/or 29 February 2008 That:Subject to the passing of Ordinary Resolution (3) and pursuant to Chapter 8 of the Listing Manual of the SGX-ST and section 161 of the Companies Act, Chapter 50 of Singapore, the Directors be and are hereby authorised to allot and issue, up to 17,111,111 additional new ordinary shares in the capital of the Company to AAPICO at an issue price of S$0.18 per share (the “Additional AAPICO Shares”) on the terms and subject to the conditions of the Subscription Agreement, such Additional AAPICO Shares to rank pari passu in all respects with all existing shares in the capital of the Company, and to complete and do all acts and things as they may consider necessary or expedient or in the interest of the Company for the purposes of or in connection with the Subscription Agreement and/or to give effect to this Ordinary Resolution (5). ORDINARY RESOLUTION (6) The proposed allotment and issue of up to 4,277,778 new ordinary shares in the capital of the Company to Mr Ang after the Company’s financial years ending 28 February 2007 and/or 29 February 2008 That:Subject to the passing of Ordinary Resolution (4) and pursuant to Chapters 8 and 9 of the Listing Manual of the SGX-ST and section 161 of the Companies Act, Chapter 50 of Singapore, the Directors be and are hereby authorised to allot and issue up to 4,277,778 additional new ordinary shares in the capital of the Company to Mr Ang at an issue price of S$0.18 per share (the “Additional Ang Shares”) on terms and subject to the conditions of the Subscription Notice, such Additional Ang Shares to rank pari passu in all respects with all existing shares in the capital of the Company, and to complete and do all acts and things as they may consider necessary or expedient or in the interest of the Company for the purposes of or in connection with the Subscription Notice and/or to give effect to this Ordinary Resolution (6).

BY ORDER OF THE BOARD

KHOO SOO FANG LOW MEI MEI MAUREEN COMPANY SECRETARIES 9 JUNE 2006 SINGAPORE

71


Notes: (1)

A Shareholder entitled to attend and vote at a meeting of the Company is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a Shareholder of the Company.

(2)

Where a Shareholder appoints two proxies, the Company may treat the appointment as invalid unless the Shareholder specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

(3)

The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 47 Loyang Drive Singapore 508955 not less than 48 hours before the time appointed for holding the Extraordinary General Meeting.

(4)

The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.

(5)

A corporation which is a Shareholder may authorize by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Extraordinary General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Extraordinary General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

72


JACKSPEED CORPORATION LIMITED

Important:

(Incorporated in the Republic of Singapore on 15 January 1993) (Company Registration Number 199300300W)

1.

For investors who have used their Central Provident Fund (“CPF”) monies to buy shares in the capital of Jackspeed Corporation Limited, this Circular is sent to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2.

This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

3.

CPF Investors who wish to vote should contact their CPF approved nominee.

EXTRAORDINARY GENERAL MEETING PROXY FORM

I/We*

(Name), NRIC/Passport No

of

(Address)

being a member/members* of JACKSPEED CORPORATION LIMITED hereby appoint Name

Address

NRIC/ Passport Number

Percentage of shareholdings to be represented by proxy

Address

NRIC/ Passport Number

Percentage of shareholdings to be represented by proxy

And/or* failing him/her* Name

or, failing him/her/them*, the Chairman of the Extraordinary General Meeting of the Company (“EGM”) as my/our* proxy/proxies* to attend and to vote for me/us* on my/our* behalf and, if necessary, to demand a poll, at the EGM of the Company to be held on 26 June 2006 at 11.00 a.m. or soon thereafter following the conclusion or adjournment of the Annual General Meeting of the Company to be held at 10.00 a.m. on the same day at 47 Loyang Drive Singapore 508955 and at any adjournment thereof. I/We* direct my/our* proxy/proxies* to vote for/against* the Resolution to be passed at the EGM as indicated below. If no specific direction as to voting is given, my/our* proxy/proxies* will vote or abstain from voting at his/her/their* discretion, as he/she/they will on any other matter arising at the EGM. If no person is named in the above boxes, the Chairman of the EGM shall be my/our* proxy/proxies* to vote, for or against the Resolution to be passed at the EGM as indicated below, for me/us and on my/our behalf at the EGM and at any adjournment of the EGM. No. Ordinary Resolutions:-

To be used on a show of hands For**

1.

To approve the Proposed Acquisition and the allotment and issue of the Consideration Shares

2.

To approve the Whitewash Resolution in connection with Proposed Acquisition

3.

To approve the proposed allotment and issue of 34,933,334 New Shares to AAPICO pursuant to the First Proposed Placement

4.

To approve the proposed allotment and issue of 8,733,333 New Shares to Mr Ang pursuant to the Second Proposed Placement

5.

To approve the proposed allotment and issue of up to 17,111,111 Additional New Shares to AAPICO

6.

To approve the proposed allotment and issue of up to 4,277,778 Additional New Shares to Mr Ang

* ** ***

Against**

For***

Against***

Please delete accordingly Please indicate your vote “For” or “Against” If you wish to exercise all your votes “For” or “Against”, please tick “X” within the box provided. Alternatively please indicate the number of votes as appropriate.

Dated this

day of

2006.

Total number of Shares held in: No. of Shares CDP Register Register of Members



To be used in the event of a poll

Signature(s) of Member(s) or Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF


NOTES: 1.

Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register as defined in Section 130A of the Companies Act, Chapter 50 of Singapore, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members of the Company, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, this instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2.

A Shareholder of the Company entitled to attend and vote at the EGM is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a Shareholder of the Company.

3.

Where a Shareholder appoints two proxies, the appointments shall be deemed to be in the alternative unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4.

This instrument appointing a proxy or proxies (together with the power of attorney (if any) under which it is signed or a certified copy thereof) must be deposited at the registered office of the Company at 47 Loyang Drive Singapore 508955 no less than 48 hours before the time appointed for holding the EGM.

5.

The instrument appointing a proxy or proxies must be in writing and signed by the appointer or his/her duly authorised attorney or, if the appointer is a body corporate, signed by a duly authorised attorney or affixed with its common seal thereto.

6.

A body corporate which is a member may appoint by resolution of its directors or other governing body an authorised representative or representatives in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore to attend and vote for and on behalf of such body corporate.

7.

The Company shall be entitled to reject this instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in this instrument appointing a proxy or proxies.

8.

In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies if the member, being the appointor, is not shown to have Shares entered against his/her name in the Depository Register as at 48 hours before the time appointed for holding the EGM, as certified by CDP to the Company.

9.

Terms not defined herein have the meanings ascribed to them in the Circular dated 9 June 2006.

10.

The submission of an instrument or form appointing a proxy or proxies by a member of the Company does not preclude him/her from attending and voting in person at the EGM if he wishes to do so.

11.

A Depositor’s name must appear on the Depository Register maintained by CDP no less than 48 hours before the time appointed for holding the EGM in order for him to be entitled to attend and vote at the EGM.


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