Although our management has concluded that our internal control over financial reporting is effective, our independent
registered public accounting firm has not conducted an audit
of our internal control over financial reporting. After conducting its own independent testing, it may issue a report that is qualified
if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed,
or if it interprets the relevant requirements differently from us. Our reporting obligations as a public company may also place a burden
on our management, operational and financial resources and systems for the foreseeable future such that we may be unable to timely complete
our evaluation testing and any required remediation.
Effective
internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure
controls and procedures, is designed to prevent fraud. There can be no assurance that our internal controls will continue to be effectively
implemented.
Ms.
Hong, our Chairman, executive director and chief executive officer, beneficially owns an aggregate of approximately 64% of our
issued and outstanding Ordinary Shares. Accordingly, our controlling shareholder could control the outcome of any corporate transaction
or other matter submitted to the shareholders for approval, including mergers, consolidations, the election of directors and other significant
corporate actions, including the power to prevent or cause a change in control. The interests of our largest shareholder may differ from
the interests of our other shareholders. Without the consent of our controlling shareholder, we may be prevented from entering into transactions
that could be beneficial to us or our other shareholders. The concentration in the ownership of our shares may cause a material decline
in the value of our shares. For more information regarding our principal shareholders and their affiliated entities, see “Item
7. Major Shareholders and Related Party Transactions – Major Shareholders.”
Although we intend to have a majority of independent directors, that may change in the future.
As
of the Initial Closing, we have received approximately US$10,029,626 of net proceeds from this offering after deducting
underwriting discounts and commissions of US$966,400 and offering expenses of approximately US$1,083,974 paid by us. If
the underwriter exercises its over-allotment option in full, we expect to receive approximately US$11,985,926 of net proceeds
from this offering after deducting underwriting discounts of US$1,140,000 and estimated offering expenses of approximately US$1,105,674
payable by us. We will not receive any proceeds from the sale of Ordinary Shares by the Selling Shareholder.
As
of December 31, 2021, we had a historical net tangible book value of US$1,138,000, or US$0.09 per share. Historical net
tangible book value per share represents our total tangible assets (total assets excluding goodwill and other intangible assets, net)
less total liabilities, divided by the number of outstanding Ordinary Shares. After giving effect to the sale of 3,020,000 Ordinary
Shares in this offering by the Company at an Initial Public Offering price of US$4.00 per share, after deducting US$966,400
in underwriting discounts and commissions and offering expenses paid by the Company of US$1,083,974, the pro forma
as adjusted net tangible book value as of December 31, 2021 would have been approximately US$11,167,626, or US$0.74 per
share. This represents an immediate increase in pro forma as adjusted net tangible book value of US$0.65 per share to our existing
stockholders and an immediate dilution of US$3.26 per share to new investors purchasing Ordinary Shares in this offering.
Revenue
During
the years ended December 31, 2019, 2020 and 2021, our revenue was derived from (i) sale of cleaning systems and other equipment business;
and (ii) provision of centralized dishwashing and ancillary services business. The following table sets out the revenue generated from
each of our business sectors during the years ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Sale of cleaning systems and other equipment business | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 8,283 | | |
| 45.5 | | |
| 12,920 | | |
| 60.4 | | |
| 4,757 | | |
| 32.2 | |
Sale of other cleaning systems and other equipment | |
| 2,440 | | |
| 13.4 | | |
| 2,863 | | |
| 13.4 | | |
| 3,056 | | |
| 20.7 | |
Repair and servicing of cleaning systems and sale of related parts | |
| 1,503 | | |
| 8.2 | | |
| 1,162 | | |
| 5.4 | | |
| 1,162 | | |
| 7.9 | |
Sub-total | |
| 12,226 | | |
| 67.1 | | |
| 16,945 | | |
| 79.2 | | |
| 8,975 | | |
| 60.8 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Provision of centralized dishwashing and ancillary services business | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Provision of centralized dishwashing and general cleaning services | |
| 5,901 | | |
| 32.4 | | |
| 4,357 | | |
| 20.4 | | |
| 5,636 | | |
| 38.2 | |
Leasing of dishwashing equipment | |
| 92 | | |
| 0.5 | | |
| 95 | | |
| 0.4 | | |
| 153 | | |
| 1.0 | |
Sub-total | |
| 5,993 | | |
| 32.9 | | |
| 4,452 | | |
| 20.8 | | |
| 5,789 | | |
| 39.2 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total | |
| 18,219 | | |
| 100.0 | | |
| 21,397 | | |
| 100.0 | | |
| 14,764 | | |
| 100.0 | |
Our
total revenue increased by approximately S$3.2 million or 17.4% to approximately S$21.4 million for the year ended December 31, 2020
from approximately S$18.2 million in December 31, 2019, and it decreased by approximately S$6.6 million or 31.0% to approximately
S$14.8 million for the year ended December 31, 2021. The increase from 2019 to 2020 was mainly attributable to the increase in revenue
generated from our sale of cleaning systems and other equipment business of approximately S$4.7 million, while partially offset by the
decrease in revenue generated from our provision of centralized dishwashing and ancillary services business of approximately S$1.5 million.
The decrease from 2020 to 2021 was mainly attributable to the decrease in revenue generated from our sale of cleaning systems
and other equipment business of approximately S$8.0 million, while partially offset by the increase in revenue generated from our
provision of centralized dishwashing and ancillary services business of approximately S$1.3 million. The decrease in revenue generated
from our sale of cleaning systems and other equipment business for the year ended December 31, 2021 was primarily attributable to an
approximately S$8.3 million decrease in revenue from subsidiaries of a certain customer group in Malaysia caused by the disruption by
COVID-19 of their expansion in production facilities that resulted in the postponement of delivery of their orders until the year ending
December 31, 2022. Our group did not experience any material order cancellations by our customers during the years ended December 31,
2019, 2020 and 2021, or during the period from January 1, 2022 to the present date. The outstanding contract
value as of April 24, 2022 is approximately S$34.4 million. For further details of the movement in orders backlog, please refer to the
paragraphs headed “Sale of Cleaning Systems” in this prospectus.
For
the years ended December 31, 2019, 2020 and 2021, our revenue amounted to approximately S$18.2 million, S$21.4 million and S$14.8
million, respectively. Our net income amounted to approximately S$0.3 million, S$1.7 million and S$2,000 for the years ended
December 31, 2019, 2020 and 2021, respectively.
For
the years ended December 31, 2019, 2020 and 2021, approximately 46.6%, 25.8% and 43.6% of our total revenue, respectively, was
generated from customers located in Singapore and approximately 26.2%, 57.4% and 33.1% of our total revenue, respectively, was
generated from customers located in Malaysia. For the same years, our revenue generated from customers located in other countries accounted
for approximately 27.2%, 16.8% and 23.3% of our total revenue, respectively.
Revenue
by geographical locations
Our Group’s provision of centralized dishwashing and ancillary services
business is located in Singapore. During the years ended December 31, 2019, 2020 and 2021, the customers for our cleaning systems and
other equipment were mainly located in Singapore and Malaysia. The following table sets out a breakdown of our revenue by geographic location
of our customers for the years ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| SGD’000 | | |
| % | | |
| SGD’000 | | |
| % | | |
| SGD’000 | | |
| % | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Singapore | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 1,876 | | |
| 10.2 | | |
| 142 | | |
| 0.7 | | |
| — | | |
| — | |
Sale of other cleaning systems and other equipment | |
| 32 | | |
| 0.2 | | |
| 502 | | |
| 2.3 | | |
| 83 | | |
| 0.6 | |
Repair and servicing of cleaning systems and sale of related parts | |
| 593 | | |
| 3.3 | | |
| 431 | | |
| 2.0 | | |
| 568 | | |
| 3.8 | |
Provision of centralized dishware washing and general cleaning services | |
| 5,901 | | |
| 32.4 | | |
| 4,357 | | |
| 20.4 | | |
| 5,636 | | |
| 38.2 | |
Leasing of dishware washing equipment | |
| 92 | | |
| 0.5 | | |
| 95 | | |
| 0.4 | | |
| 153 | | |
| 1.0 | |
Sub-total | |
| 8,494 | | |
| 46.6 | | |
| 5,527 | | |
| 25.8 | | |
| 6,440 | | |
| 43.6 | |
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Malaysia | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 3,940 | | |
| 21.7 | | |
| 11,672 | | |
| 54.5 | | |
| 4,415 | | |
| 29.9 | |
Sale of other cleaning systems and other equipment | |
| 40 | | |
| 0.2 | | |
| — | | |
| — | | |
| — | | |
| — | |
Repair and servicing of cleaning systems and sale of related parts | |
| 791 | | |
| 4.3 | | |
| 617 | | |
| 2.9 | | |
| 462 | | |
| 3.2 | |
Sub-total | |
| 4,771 | | |
| 26.2 | | |
| 12,289 | | |
| 57.4 | | |
| 4,877 | | |
| 33.1 | |
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Other countries(1) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 2,467 | | |
| 13.5 | | |
| 1,106 | | |
| 5.2 | | |
| 343 | | |
| 2.3 | |
Sale of other cleaning systems and other equipment | |
| 2,368 | | |
| 13.0 | | |
| 2,361 | | |
| 11.0 | | |
| 2,998 | | |
| 20.3 | |
Repair and servicing of cleaning systems and sale of related parts | |
| 119 | | |
| 0.7 | | |
| 114 | | |
| 0.6 | | |
| 106 | | |
| 0.7 | |
Sub-total | |
| 4,954 | | |
| 27.2 | | |
| 3,581 | | |
| 16.8 | | |
| 3,447 | | |
| 23.3 | |
Total | |
| 18,219 | | |
| 100.0 | | |
| 21,397 | | |
| 100.0 | | |
| 14,764 | | |
| 100.0 | |
(1)
For the years ended December 31, 2019, 2020 and 2021, other countries include the U.S., Thailand, Belgium, Philippines, India,
South Korea, Taiwan, Japan and the PRC.
The following table sets out a breakdown of number of customers by geographical
locations of our customers for the years ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| | |
| | |
| |
Singapore | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 3 | | |
| 2 | | |
| — | |
Sale of other cleaning systems and other equipment | |
| — | | |
| 3 | | |
| 2 | |
Repair and servicing of cleaning systems and sale of related parts | |
| 19 | | |
| 18 | | |
| 27 | |
Provision of centralized dishware washing and general cleaning services | |
| 23 | | |
| 28 | | |
| 67 | |
Leasing of dishware washing equipment | |
| 16 | | |
| 18 | | |
| 23 | |
Sub-total | |
| 61 | | |
| 69 | | |
| 119 | |
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| | |
| | |
| |
Malaysia | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 1 | | |
| 2 | | |
| 1 | |
Sale of other cleaning systems and other equipment | |
| 1 | | |
| — | | |
| — | |
Repair and servicing of cleaning systems and sale of related parts | |
| 8 | | |
| 9 | | |
| 9 | |
Sub-total | |
| 10 | | |
| 11 | | |
| 10 | |
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| | |
| | |
| |
Other countries(1) | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 5 | | |
| 2 | | |
| 1 | |
Sale of other cleaning systems and other equipment | |
| 5 | | |
| 5 | | |
| 4 | |
Repair and servicing of cleaning systems and sale of related parts | |
| 15 | | |
| 13 | | |
| 10 | |
Sub-total | |
| 25 | | |
| 20 | | |
| 15 | |
Total | |
| 96 | | |
| 100 | | |
| 144 | |
(1)
For the years ended December 31, 2019, 2020 and 2021, other countries include the U.S., Thailand, Belgium, Philippines, India,
South Korea, Taiwan, Japan and the PRC.
Singapore
The
decrease in revenue in Singapore for the year ended December 31, 2020 was mainly because of (i) the decrease in revenue from the year
ended December 2019 to the year ended December 31, 2020 from a particular customer of approximately S$1.1 million; (ii) two customers
only procured our repairing services and/or related parts, which contributed revenue of approximately S$24,000 for the year ended December
31, 2020, whereas they purchased precision cleaning systems and contributed revenue of approximately S$0.8 million in aggregate for the
year ended December 31, 2019; and (iii) the decrease in revenue generated from provision of centralized dishwashing and general cleaning
services as discussed above.
The
increase in revenue in Singapore for the year ended December 31, 2021 was mainly due to the increase in revenue generated
from provision of centralized dishwashing and general cleaning services by approximately S$1.3 million.
Malaysia
The
increase in revenue in Malaysia for the year ended December 31, 2020 was primarily attributable to the increase in revenue from subsidiaries
of a certain customer group in Malaysia of approximately S$7.6 million.
The
decrease in revenue in Malaysia for the year ended December 31, 2021 was primarily attributable to the decrease
in revenue from subsidiaries of a certain customer group in Malaysia of approximately S$8.3 million mainly due to the delivery
for the orders received for the sales of precision cleaning machines will take place in FY2022 as their progress of expansion in production
facilities has been disrupted by COVID-19.
Other
countries
The
decrease in revenue in other countries for the year ended December 31, 2020 was primarily due to (i) a decrease in revenue from a customer
in the Philippines of approximately S$1.0 million; and (ii) the failure of a customer in Thailand to place orders for the year ended
December 31, 2020, whereas it contributed revenue of approximately S$0.7 million for the year ended December 31, 2019.
Revenue
in other countries for the year ended December 31, 2021 is relatively stable with only marginal fluctuation as compared to
revenue in other countries for the year ended December 31, 2020.
Cost
of revenues
During
the years ended December 31, 2019, 2020 and 2021, our Group’s cost of revenues was mainly comprised of raw materials costs, labor
costs, sub-contracting costs and production overhead. For the years ended December 31, 2019, 2020 and 2021, our cost of revenues amounted
to approximately S$13.3 million, S$15.5 million, and S$12.4 million, respectively.
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Cost of sale of cleaning systems and other equipment | |
| 7,697 | | |
| 58.0 | | |
| 11,224 | | |
| 72.4 | | |
| 6,885 | | |
| 55.5 | |
Cost of provision of centralized dishwashing and ancillary services | |
| 5,571 | | |
| 42.0 | | |
| 4,269 | | |
| 27.6 | | |
| 5,531 | | |
| 44.5 | |
Total | |
| 13,268 | | |
| 100.0 | | |
| 15,493 | | |
| 100.0 | | |
| 12,416 | | |
| 100.0 | |
Gross
profit and gross profit margin
The table below sets forth our Group’s gross profit and gross profit
margin by business sector during the years ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| | |
Gross | | |
| | |
Gross | | |
| | |
Gross | |
| |
Gross | | |
Profit | | |
Gross | | |
Profit | | |
Gross | | |
Profit | |
| |
profit | | |
Margin | | |
profit | | |
Margin | | |
profit | | |
Margin | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Sale of precision cleaning systems and other equipment business | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of precision cleaning systems | |
| 3,245 | | |
| 39.2 | | |
| 4,601 | | |
| 35.6 | | |
| 1,509 | | |
| 30.8 | |
Sale of other cleaning systems and other equipment | |
| 840 | | |
| 34.5 | | |
| 847 | | |
| 29.6 | | |
| 475 | | |
| 15.9 | |
Repair and servicing of cleaning systems and sale of related parts | |
| 444 | | |
| 29.5 | | |
| 273 | | |
| 23.4 | | |
| 106 | | |
| 9.7 | |
Sub-total/overall | |
| 4,529 | | |
| 37.0 | | |
| 5,721 | | |
| 33.8 | | |
| 2,090 | | |
| 23.3 | |
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| | |
Gross | | |
| | |
Gross | | |
| | |
Gross | |
| |
Gross | | |
Profit | | |
Gross | | |
Profit | | |
Gross | | |
Profit | |
| |
profit | | |
Margin | | |
profit | | |
Margin | | |
profit | | |
Margin | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
Provision of centralized dishwashing and ancillary services business | |
| 422 | | |
| 7.0 | | |
| 183 | | |
| 4.1 | | |
| 258 | | |
| 4.5 | |
Total/overall | |
| 4,951 | | |
| 27.2 | | |
| 5,904 | | |
| 27.6 | | |
| 2,348 | | |
| 15.9 | |
Our
total gross profit amounted to approximately S$5.0 million, S$5.9 million and S$2.3 million for the years ended December 31, 2019,
2020 and 2021, respectively. Our overall gross profit margins were approximately 27.2%, 27.6% and 15.9% for the years ended December
31, 2019, 2020 and 2021, respectively. Our total gross profit increased during the years ended December 31, 2019 and 2020, which was
generally in line with our revenue growth for those periods.
Our
total gross profit decreased by approximately S$3.6 million, from approximately S$5.9 million for the year
ended December 31, 2020 to approximately S$2.3 million for the year ended December 31, 2021, and our overall
gross profit margin decreased from approximately 27.6% for the year ended December 31, 2020 to approximately 15.9% for
the year ended December 31, 2021, which was mainly due to the decrease in our revenue from the sales of precision cleaning
systems and other equipment business, thereby leading to a relatively higher proportion of fixed costs such as direct labor
cost and depreciation as an overall percentage of revenue.
Selling
and marketing expenses
Our
selling and marketing expenses mainly included promotion and marketing expenses and transportation expenses. The following table sets
forth the breakdown of our selling and distribution expenses for the years ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
| |
| | |
| | |
| |
Promotion and marketing expenses | |
| 29 | | |
| 12 | | |
| 13 | |
Transportation expenses | |
| 17 | | |
| 8 | | |
| 9 | |
Total | |
| 46 | | |
| 20 | | |
| 22 | |
Our
selling and marketing expenses amounted to approximately S$46,000, S$20,000 and S$22,000 for the years ended December 31, 2019,
2020 and 2021, respectively.
The
substantially lower selling and marketing expenses, as a percent, for the year ended December 31, 2020 was primarily attributable to
the decrease in participation in exhibitions as a result of the Circuit Breaker Measures.
The
slight increase in promotion and marketing expenses for the year ended December 31, 2021 was primarily attributable
to an increase in online marketing activities.
Administrative
expenses
Our administrative expenses primarily consist of (i) staff cost; (ii) depreciation;
(iii) office supplies and upkeep expenses; (iv) travelling and entertainment; (v) legal and professional fees; (vi) property and related
expenses; and (vii) miscellaneous expenses. The following table sets forth the breakdown of our administrative expenses for the years
ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
% | | |
SGD’000 | | |
% | | |
SGD’000 | | |
% | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Staff costs | |
| 1,370 | | |
| 52.9 | | |
| 1,412 | | |
| 60.1 | | |
| 1,383 | | |
| 61.0 | |
Depreciation | |
| 399 | | |
| 15.4 | | |
| 339 | | |
| 14.4 | | |
| 379 | | |
| 16.7 | |
Office supplies and upkeep expenses | |
| 176 | | |
| 6.8 | | |
| 160 | | |
| 6.8 | | |
| 150 | | |
| 6.6 | |
Travelling and entertainment | |
| 263 | | |
| 10.1 | | |
| 123 | | |
| 5.2 | | |
| 105 | | |
| 4.6 | |
Legal and professional fees | |
| 121 | | |
| 4.7 | | |
| 120 | | |
| 5.1 | | |
| 49 | | |
| 2.2 | |
Property and related expenses | |
| 180 | | |
| 6.9 | | |
| 147 | | |
| 6.3 | | |
| 176 | | |
| 7.8 | |
Miscellaneous expenses | |
| 83 | | |
| 3.2 | | |
| 49 | | |
| 2.1 | | |
| 25 | | |
| 1.1 | |
Total | |
| 2,592 | | |
| 100.0 | | |
| 2,350 | | |
| 100.0 | | |
| 2,267 | | |
| 100.0 | |
Our
administrative expenses remained relatively stable at approximately S$2.6 million, S$2.4 million, and S$2.3 million for the years
ended December 31, 2019, 2020 and 2021, respectively, representing approximately 14.2%, 11.0% and 15.4% of our total revenue for
the corresponding years.
Staff
costs mainly represented the salaries, employee benefits and retirement benefit costs to our employees and Directors’ remuneration.
The staff costs of our Group remained relatively stable at approximately S$1.4 million for the years ended December 31, 2019, 2020
and 2021.
Depreciation
expense is charged on our property, plant and equipment which included (i) leasehold buildings; (ii) right-of-use assets; (iii) plant
and machinery; and (iv) furniture and fittings.
Office
supplies and upkeep expenses mainly represented office supplies, cleaning cost and the relevant utilities expenses such as electricity
and water.
Travelling
and entertainment mainly represented expenditure for business travel and cost incurred for social gathering and refreshment for our staff.
Legal
and professional fees mainly represented auditor’s remuneration and other professional fees for training and development and staff
recruitment services.
Property
and related expenses mainly represented property tax and related expenses in Singapore.
Miscellaneous
expenses were mainly comprised of insurance expenses, donation and other miscellaneous expenses.
Other
income
Other
income of our Group amounted to approximately S$0.5 million, S$0.8 million and S$0.7 for the years ended December 31, 2019, 2020
and 2021, respectively. The income was mainly derived from wholesale sales of STICO anti-slip shoes, Jobs Support Scheme, foreign worker
levy rebate and net foreign exchange gain. The following table sets forth the breakdown of our other income for these periods:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
| |
| | |
| | |
| |
Wholesale sales of STICO anti-slip shoes | |
| 177 | | |
| 97 | | |
| 120 | |
Impairment loss reversed | |
| 21 | | |
| - | | |
| 49 | |
Jobs Support Scheme | |
| - | | |
| 320 | | |
| 87 | |
Jobs Growth Incentive | |
| - | | |
| - | | |
| 72 | |
Foreign worker levy rebate | |
| - | | |
| 70 | | |
| - | |
Gain on disposal of plant and equipment | |
| - | | |
| - | | |
| 71 | |
Other(1) | |
| 331 | | |
| 266 | | |
| 308 | |
Total | |
| 529 | | |
| 753 | | |
| 707 | |
(1) Other mainly consists of sale of scrap materials, other government grant
and other miscellaneous income.
Wholesale
of STICO anti-slip shoes represented the income generated from wholesale of STICO anti-slip shoes mainly to F&B establishments in
Singapore, which amounted to approximately S$0.2 million for the year ended December 31, 2019. For the year ended December 31, 2020,
our wholesale sales of STICO anti-slip shoes decreased by approximately 45.2% as compared to the previous year mainly because of the
decrease in demand from F&B establishments during the outbreak of COVID-19, and for the year ended December 31, 2021 the wholesale
sales of STICO anti-slip shoes increased by approximately 24% due to resumption of demand from F&B establishments.
During
the year ended December 31, 2019, we reversed the loss allowance provision of approximately S$21,000 which we had previously impaired.
Jobs
Support Scheme is an initiative introduced by the Singapore Government in February 2020 in response to the outbreak of COVID-19, and
further enhanced in April, May and August 2020, to provide wage support to employers to help them retain local employees by co-funding
25% to 75% of the first S$4,600 of monthly salaries paid to each local employee in a 10-month period up to August 2020, and 10% to 50%
of the same in the subsequent seven-month period from September 2020 to March 2021. For the year ended December 31, 2020, our Jobs Support
Scheme amounted to approximately S$0.3 million.
Foreign
worker levy rebate refers to the rebate received by employers of work permit or S pass holders to relieve the cost of retaining foreign
workers in April and May 2020, which amounted to approximately S$70,000 for the year ended December 31, 2020.
Interest
expense
Our
interest expense arose from lease liabilities and secured bank loans. For the years ended December 31, 2019, 2020 and 2021, our interest
expense remained relatively stable at approximately S$0.5 million, S$0.3 million, and S$0.2 million, respectively. For more details
of our bank borrowings, please see the paragraph headed ‘‘Bank Indebtedness’’ in this section.
Other
expenses
Other expenses of our Group mainly consist of extraordinary expenses, cost
of STICO anti-slip shoes, bank charges and net foreign exchange loss. The following table sets forth the breakdown of our other expenses
for the years ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
| |
| | |
| | |
| |
Cost of STICO anti-slip shoes | |
| 98 | | |
| 72 | | |
| 96 | |
Bank charges | |
| 17 | | |
| 28 | | |
| 22 | |
Net foreign exchange loss | |
| 65 | | |
| 155 | | |
| 92 | |
Extraordinary expenses | |
| 1,476 | | |
| 1,264 | | |
| 234 | |
Others(1) | |
| 87 | | |
| 104 | | |
| 106 | |
| |
| | | |
| | | |
| | |
Total | |
| 1,743 | | |
| 1,623 | | |
| 550 | |
(1)
Others mainly consist of professional training expenses, withholding tax
expenses and other miscellaneous expenses.
Other
expenses of our Group decreased from approximately S$1.7 million for the year ended December 31, 2019 to approximately S$1.6 million
for the year ended December 31, 2020. Such decrease was primarily attributable to a decrease in extraordinary expenses incurred related
to business advisories and consultation. Other expenses of our Group decreased to approximately S$0.6 million for the year
ended December 31, 2021, also mainly due to a decrease in extraordinary expenses incurred related to business advisories and
consultation. The increase in net foreign exchange loss in 2020 was a result of depreciation of US$ assets against S$ assets.
Income
tax
During
the years ended December 31, 2019, 2020 and 2021, our income tax expense was comprised of our current tax expense and deferred tax for
the year. The following table sets forth the breakdown of our income tax for the years ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| SGD’000 | | |
| SGD’000 | | |
| SGD’000 | |
| |
| | | |
| | | |
| | |
Current tax expense | |
| 48 | | |
| 534 | | |
| 37 | |
Deferred tax | |
| 194 | | |
| 84 | | |
| (37 | ) |
| |
| | | |
| | | |
| | |
Total | |
| 242 | | |
| 618 | | |
| - | |
Pursuant
to the rules and regulations of the Cayman Islands and the BVI, our Group is not subject to any income tax in the Cayman Islands and
the BVI. Our Group’s operations are based in Singapore and we are subject to income tax on an entity basis on the estimated chargeable
income arising in Singapore at the statutory rate of 17%.
For
the year ended December 31, 2019, our income tax was approximately S$0.2 million, and our effective tax rate, calculated as income tax
divided by profit before income tax, was approximately 41.4%. The relatively high effective tax rate for the year ended December 31,
2019, as compared to our tax rate for the year ended December 31, 2020, was mainly attributable to non-deductible expenses incurred for
business advisories and consultation.
For
the year ended December 31, 2020, our income tax increased to approximately S$0.6 million and our effective tax rate was approximately
26.3% due to decreased non-deductible expenses. Such income tax increase was generally in line with the increase in our profit for the
year.
Our
income tax decreased to nil for the year ended December 31, 2021. Such decrease was generally in line with
the decrease in our profit for the year.
Our Group
had no tax obligation arising from other jurisdictions during the years ended December 31, 2019, 2020 and 2021. During the years ended
December 31, 2019, 2020 and 2021, our Group had no material dispute or unresolved tax issues with the relevant tax authorities.
Net Income for the
Year
As a
result of the foregoing, our net income for the year amounted to approximately S$0.3 million, S$1.8 million and S$2,000 for the
years ended December 31, 2019, 2020 and 2021, respectively.
Liquidity
and Capital Resources
Our
liquidity and working capital requirements primarily related to our operating expenses. Historically, we have met our working capital
and other liquidity requirements primarily through a combination of cash generated from our operations and loans from banking facilities.
Going forward, we expect to fund our working capital and other liquidity requirements from various sources, including but not limited
to cash generated from our operations, loans from banking facilities, the net proceeds from our Initial Public Offering and other
equity and debt financings as and when appropriate.
On
September 24, 2021, prior to the reorganization and the Company’s Initial Public Offering, the Company declared a dividend of SGD2.9
million (approximately US$2.1 million) payable in cash to its shareholders – JE Cleantech Global Limited, which is wholly-owned
by Ms. Bee Yin Hong, the Company’s controlling shareholder, and Triple Business Limited. The dividend was subsequently paid in
full. Of this amount, SGD2.5 million (approximately US$1.9 million) was paid to JE Cleantech Global Limited and SGD406,000 (approximately
US$0.3 million) was paid to Triple Business Limited. On October 5, 2021, the Company entered into a loan facility agreement with Ms.
Bee Yin Hong, the Company’s controlling shareholder, for a revolving loan facility of up to US$1.1 million for general working
capital and general corporate purposes, including the payment of expenses related to the Company’s initiative to raise capital
through an initial public offering and simultaneous listing of the Company’s Ordinary Shares on a globally recognized stock exchange.
Ms. Hong and the Company entered into a subsequent revolving loan facility on October 6, 2021 in the amount of US$0.7 million to be used
for the same purposes. The total amount of the loan of approximately US$1.8 million from Ms. Bee Yin Hong, the Company’s controlling
shareholder, is non-trade, unsecured, interest-free and payable on demand.
Cash
flows
The following
table summarizes our cash flows for the years ended December 31, 2019, 2020 and 2021:
| |
Year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
| SGD’000
| | |
| SGD’000
| | |
| SGD’000 | |
| |
| | | |
| | | |
| | |
Cash and cash equivalents at beginning of the
year | |
| 1,276 | | |
| 843 | | |
| 550 | |
| |
| | | |
| | | |
| | |
Net cash generated from operating activities | |
| 1,545 | | |
| 1,114 | | |
| 3,373 | |
Net cash used in investing activities | |
| (670 | ) | |
| (280 | ) | |
| (717 | ) |
Net cash used in financing activities | |
| (1,259 | ) | |
| (1,181 | ) | |
| (2,082 | ) |
Foreign currency effect | |
| (49 | ) | |
| 54 | | |
| (16 | ) |
Net increase/(decrease) in cash and cash equivalents | |
| (433 | ) | |
| (293 | ) | |
| 558 | |
| |
| | | |
| | | |
| | |
Cash and cash equivalents as at end of the year.. | |
| 843 | | |
| 550 | | |
| 1,108 | |
Cash flows from
operating activities
During
the years ended December 31, 2019, 2020 and 2021, the cash inflows from our operating activities
were primarily derived from the revenue generated from our sale of cleaning systems and other equipment and provision of centralized
dishwashing and ancillary services, whereas the cash outflows for our operating activities mainly comprised the purchase of raw materials,
sub-contracting fees, staff costs and administrative expenses.
Our
net cash generated from operating activities primarily reflected our net income, as adjusted for non-operating items, such as depreciation,
loss on disposal of property, plant and equipment, reversal/provision of loss allowance change in fair value of financial instruments
and effects of changes in working capital such as increase or decrease in inventories, accounts receivable, accounts and other payables,
contract liabilities and accruals.
For
the year ended December 31, 2019, our net cash generated from operating activities was approximately S$1.5 million, which primarily reflected
our net income of approximately S$0.3 million, as positively adjusted by (i) the non-cash depreciation of property, plant and equipment
of approximately S$1.0 million; (ii) the decrease in accounts receivable of approximately S$1.1 million; and (iii) the decrease in inventories
of approximately S$0.3 million, while partially offset by the decrease in accounts and other payables, contract liabilities and provision
of approximately S$1.2 million.
For
the year ended December 31, 2020, our net cash generated from operating activities was approximately S$1.1 million, which primarily reflected
our net income of approximately S$1.7 million, as positively adjusted by (i) the non-cash depreciation of property, plant and equipment
of approximately S$0.8 million; (ii) the increase in accounts and other payables and accruals of approximately S$1.5 million; and (iii)
the decrease in inventories of approximately S$1.6 million. The effect of these adjustments was offset by the increase in accounts receivable
of approximately S$4.5 million
For
the year ended December 31, 2021, our net cash generated from operating activities was approximately S$3.4 million,
which primarily reflected our profit before tax of approximately S$2,000, as positively adjusted by (i) the non-cash depreciation
of property, plant and equipment of approximately S$0.6 million; (ii) the increase in accounts receivable of approximately
S$5.5 million; and (iii) the decrease in inventory of approximately S$1.2 million. The effect of these factors was partially
mitigated by the decrease in accounts and other payables, contract liabilities and provision of approximately S$1.5 million.
Cash
flows from investing activities
Our
cash flows used in investing activities primarily consisted of (i) the proceeds from disposal of property, plant and equipment; (ii)
the purchase of property, plant and equipment; and (iii) the purchase of financial assets at Fair Value Through Profit or Loss (the “FVTPL”).
For
the year ended December 31, 2019, our net cash used in investing activities was approximately S$0.7 million, primarily attributable to
(i) the purchase of property, plant and equipment of approximately S$0.6 million for replacement of obsolete equipment; and (ii) the
purchase of financial assets at FVTPL of approximately S$0.3 million, while mitigated by (i) the release of pledged fixed deposit of
approximately S$0.2 million; and (ii) the proceeds from disposal of property, plant and equipment of approximately S$41,000.
For
the year ended December 31, 2020, our net cash used in investing activities was approximately S$0.3 million, primarily due to the purchase
of property, plant and equipment of approximately S$0.3 million for replacement of obsolete equipment.
For
the year ended December 31, 2021, our net cash used in investing activities was approximately S$0.7 million, primarily
due to the purchase of property, plant and equipment of approximately S$0.8 million for replacement of obsolete equipment and offset
by the proceed from disposal of plant and equipment of approximately S$0.1 million.
Cash
flows from financing activities
Our
cash flows used in financing activities primarily consists of interest paid, proceeds from loans, repayment of loans, payment for interest
portion of lease liabilities, payment for capital portion of lease liabilities, dividends paid and proceeds from issue of shares.
For
the year ended December 31, 2019, our Group recorded net cash used in financing activities of approximately S$1.3 million, which was
mainly attributable to (i) net repayment of bank borrowings of approximately S$1.3 million; (ii) payment for lease liabilities of approximately
S$0.1 million; and (iii) dividends paid of approximately S$1.5 million, while mitigated by the proceeds from the issuance of Ordinary
Shares of approximately S$1.6 million as a result of Pre-IPO Investments.
For
the year ended December 31, 2020, our Group recorded net cash used in financing activities of approximately S$1.2 million, which was
mainly attributable to the repayment of loans and lease liabilities of approximately S$0.8 million.
For
the year ended December 31, 2021, our Group recorded net cash used in financing activities of approximately S$2.1
million, which was mainly attributable to (i) dividends paid of S$2.9 million; and (ii) net repayment of bank loans of approximately
S$ 0.3 million (iii) payment of deferred financing costs of approximately S$0.4 million while mitigated by the cash inflow from the proceeds
from a controlling shareholder loan of S$1.5 million.
Working
Capital
We
believe that our Group has sufficient working capital for our requirements for at least the next 12 months from the date of this prospectus,
in the absence of unforeseen circumstances, taking into account the financial resources presently available to us, including cash and
cash equivalents on hand, cash flows from our operations and the net proceeds from our Initial Public Offering.
Accounts
receivable
Our
accounts receivable, net, increased from approximately S$4.8 million as of December 31, 2019 to approximately S$9.2 million as of December
31, 2020. The increase was primarily attributable to an increase of approximately S$6.2 million in amount due from our largest customer
as of December 31, 2020, which resulted from an increase in revenue from that customer of approximately S$4.3 million during the year
ended December 31, 2020 as compared to the year ended December 31, 2019. As of December 31, 2021, our accounts receivable decreased
to approximately S$3.2 million mainly due to the receipt of payments from our largest customer group for increased amounts owed
to us as of December 31, 2020.
We
did not charge any interest on, or hold any collateral as security over these accounts receivable balances. We generally offer credit
periods of 30 to 60 days to our customers in respect of the manufacture and sale of cleaning systems and other equipment, whereas our
customers will be offered credit terms of seven days to 30 days in respect of the provision of centralized dishwashing services and general
cleaning services.
The
following table sets forth the ageing analysis of our accounts receivable, net, based on the invoiced date as of the dates mentioned
below:
|
|
As of December 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 30 days |
|
|
2,804 |
|
|
|
5,097 |
|
|
|
1,511 |
|
Between 31 and 60 days |
|
|
883 |
|
|
|
1,290 |
|
|
|
587 |
|
Between 61 and 90 days |
|
|
589 |
|
|
|
2,073 |
|
|
|
282 |
|
More than 90 days |
|
|
563 |
|
|
|
770 |
|
|
|
840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accounts receivable, net |
|
|
4,839 |
|
|
|
9,230 |
|
|
|
3,220 |
|
Movements
in the provision for impairment of accounts receivable are as follows:
|
|
As of December 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance |
|
|
40 |
|
|
|
19 |
|
|
|
82 |
|
(Reversal)/provision of loss allowance |
|
|
(21 |
) |
|
|
63 |
|
|
|
(48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance |
|
|
19 |
|
|
|
82 |
|
|
|
34 |
|
We
have a policy for determining the allowance for impairment based on the evaluation of collectability and ageing analysis of accounts
receivable and on management’s judgement, including the change in credit quality, the past collection history of each customer
and the current market condition.
The
loss allowance for accounts receivable related to a general provision for accounts receivable applying the simplified approach to providing
for expected credit loss(es) (the ‘‘ECL(s)’’). Credit risk grades are defined using qualitative
and quantitative factors that are indicative of the risk of default. An ECL rate is calculated based on historical loss rates of the
industry in which our customers operate and ageing of the accounts receivable.
During
the years ended December 31, 2019, 2020 and 2021, other than the loss allowance provision discussed
above, no impairment loss was provided for amounts that were past due.
The following
table sets forth our average accounts receivable turnover days for the years ended December 31, 2019, 2020 and 2021:
|
|
Year ended December 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average accounts receivable turnover days(1) |
|
|
103.4 |
|
|
|
120.3 |
|
|
|
138.5 |
|
(1) Average
accounts receivable turnover days is calculated as the average of the beginning and ending of accounts receivable balance for the respective
year divided by revenue for the respective year and multiplied the number of days in the respective year.
Our
average accounts receivable turnover days were approximately 103.4 days, 120.3 days and 138.5 days for the years ended December
31, 2019, 2020 and 2021, respectively. The increase in average accounts receivable turnover days for the years ended December
31, 2020 and 2021 was mainly due to slower collection of our accounts receivable as it generally took a longer time for our customers
to settle our invoices as a result of the COVID-19 outbreak. During the years ended December 31, 2019, 2020 and 2021, the credit term
offered to our major customers ranged from 7 days to 60 days. For details of the credit terms of our top five customers for the years
ended December 31, 2019, 2020 and 2021, please refer to the section headed ‘‘Business — Our Customers’’
in this prospectus. Having taken into consideration the long-term business relationship with, the reputation of and the past settlement
history of two customers, which in aggregate accounted for approximately 44.9%, 84.4% and 24.9% of our accounts receivable, net
of loss allowance, as of December 31, 2019, 2020 and 2021, respectively, we permitted them to settle the payment after testing and commissioning
of our products. Hence, our Group’s average accounts receivable turnover days for the years ended December 31, 2019, 2020 and 2021were
longer than the credit periods granted to our customers.
As of
December 31, 2021, our accounts receivable as of December 31, 2020 have been fully settled. During the years ended December 31,
2019, 2020 and 2021, accounts receivable were closely monitored and reviewed on a regular basis to identify any potential non-payment
or delay in payment. Our Group conducted an individual review on each of the customers to determine the impairment, which is aligned
with external credit rating agencies’ definition when it is available or based on other data such as available press information
about the customer and past due status. Considering the increase in the average accounts receivable turnover days for the year ended
December 31, 2020 and the increase in the balance of accounts receivable as of December 31, 2020, we have further implemented certain
procedures to strengthen our credit control. For instance, we are actively monitoring the credit terms of our customers and follow up
on collection regularly to ensure greater control over our accounts receivable. For details of the background of our top five customers
for the years ended December 31, 2019, 2020 and 2021, please refer to the section headed ‘‘Business — Our Customers’’
in this prospectus.
Prepaid
expenses and other current assets, net
Prepaid
expenses and other current assets, net of our Group mainly represents amounts due from investors and prepayment of expenses of
listing our Ordinary Shares. The following table sets forth the breakdown of the prepaid expenses and other current assets, net as of
the dates indicated:
|
|
As of December 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables |
|
|
86 |
|
|
|
68 |
|
|
|
132 |
|
Deposits |
|
|
79 |
|
|
|
79 |
|
|
|
68 |
|
Prepayments |
|
|
55 |
|
|
|
179 |
|
|
|
647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
220 |
|
|
|
326 |
|
|
|
847 |
|
Our
total other receivables, deposits and prepayments increased from approximately S$0.2 million as of December 31, 2019 to approximately
S$0.3 million as of December 31, 2020, primarily attributable to the increase in prepayments of approximately S$0.1 million as a result
of an increase in upfront payments to raw materials suppliers. Our total prepaid expenses and other current assets, net increased from
approximately S$0.2 million as of December 31, 2020 to approximately S$0.6 million as of December 31, 2021, primarily
attributable to the increase in prepayments of approximately S$0.6 million as a result of an increase in upfront payments to raw
materials suppliers.
Accounts
and other payables
Accounts
payable
The
general credit terms from our major suppliers are 15 to 90 days. Our accounts payable increased from approximately S$1.8 million as of
December 31, 2019 to approximately S$2.4 million as of December 31, 2020, which was generally in line with the increase in our raw material
costs. Our accounts payable decreased to S$1.9 million as of December 31, 2021, primarily due to more purchases from
suppliers with payment on delivery terms.
The
following table sets forth the ageing analysis of our accounts payable based on the invoice date as of the dates mentioned below:
|
|
As of December 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 30 days |
|
|
1,076 |
|
|
|
1,040 |
|
|
|
1,712 |
|
Between 31 and 60 days |
|
|
486 |
|
|
|
930 |
|
|
|
196 |
|
Between 61 and 90 days |
|
|
192 |
|
|
|
394 |
|
|
|
5 |
|
More than 90 days |
|
|
8 |
|
|
|
74 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,762 |
|
|
|
2,438 |
|
|
|
1,916 |
|
The following
table sets forth our average accounts payable turnover days for the years ended December 31, 2019, 2020 and 2021:
|
|
Year ended December 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
Average accounts payable turnover days(1) |
|
|
53.6 |
|
|
|
48.5 |
|
|
|
64.0 |
|
(1)
Average accounts payable turnover days is calculated as the average of the beginning and ending of accounts payable balance for
the respective year/period divided by cost of revenues for the respective year and multiplied the number of days in the respective year/period.
Our
average payables turnover days remained relatively stable and amounted to approximately 53.6 days for the year ended December 31, 2019.
The decrease in our average accounts payable turnover days to approximately 48.5 days for the year ended December 31, 2020 primarily
resulted from the timing of billings of our raw materials suppliers and sub-contractors, and our timely settlement of the payments. Our
average accounts payable turnover days increased to approximately 64.0 days for the year ended December 31, 2021,
primarily due to the timing of billings by our raw materials suppliers and sub-contractors.
As
of December 31, 2021, our accounts payable as of December 31, 2020 have been fully settled.
Our
Group did not have any material default in payment of accounts payable during the years ended December 31, 2019, 2020 and 2021.
Accrued
expenses
Accrued
expenses mainly represented expenses related to our listing of our Ordinary Shares, salaries and bonus. As of December 31, 2019, our
Group’s accrued expenses amounted to approximately S$0.4 million, which was mainly due to the accrued listing expenses of approximately
S$0.6 million recognized in 2018. Our Group’s accrued expenses increased to approximately S$0.9 million as of December 31, 2020,
primarily attributable to accrued listing expenses of approximately S$0.4 million. Our Group’s accrued expenses decreased to approximately
S$0.4 million as of December 31, 2021, primarily attributable to the repayment of accrued listing expenses.
Our
Group did not have any material default in payment of other payables during the years ended December 31, 2019, 2020 and 2021.
Contract
liabilities
Our
contract liabilities represent the sales deposits and instalments received during the year in respect of machineries still under production
but not yet recognized as revenue under our revenue recognition policies. Our contract liabilities amounted to approximately S$29,000,
nil and nil as of December 31, 2019, 2020 and 2021, respectively.
Bank
indebtedness
As of
December 31, 2021, our bank indebtedness equaled an aggregate of S$9,878,000, of which S$9,691,000 is denominated
in Singapore dollars and bears interest at a variable rate ranging from 1.25% to 1.5% above the Singapore Interbank Offered Rate (“SIBOR”)
and S$187,000 is denominated in US dollars and bears interest at 1.25% above the London Interbank Offer Rate (“LIBOR”).
S$5,547,000 of our bank indebtedness constitutes current liability and S$4,421,000 constitutes non-current liability.
Provisions
Our
provisions during the years ended December 31, 2019, 2020 and 2021 mainly represented the provision for warranty for machines sold, which
usually covers a 12-month period from the date on which the machines are delivered. The provision is based on estimates made from historical
warranty data associated with similar products and services. As of December 31, 2019, 2020 and 2021, our Group recorded provision of
approximately S$47,000, S$28,000 and S$16,000, respectively.
Tax payables
Our
tax payables remained relatively stable at approximately S$59,000, S$0.5 million and nil as of December 31, 2019, 2020 and 2021, respectively.
The decrease in our tax payables as of December 31, 2021 was generally due to our settlement of tax payable for 2020
in 2021.
Deferred tax (assets)/liabilities
Our
deferred tax (assets)/liabilities during the years ended December 31, 2019, 2020 and 2021 mainly represented the Singapore tax implication
on the temporary difference between the tax written down value and the net book value of the property, plant and equipment, which are
owned by our Group. As of December 31, 2021, our deferred tax liabilities remained relatively stable.
Commitments
Operating
lease commitments as a lessor
Our
Group leases out the dishwashing machines pursuant to leases that are classified as non-cancellable operating leases.
The future
minimum lease receivables under non-cancellable operating leases contracted for as of December 31, 2019, 2020 and 2021, but not recognized
as receivables, are as follows:
|
|
As of December 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
SGD’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within one year |
|
|
28 |
|
|
|
40 |
|
|
|
40 |
|
After one but within two years |
|
|
16 |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
44 |
|
|
|
40 |
|
|
|
40 |
|
Capital
commitments
As
of December 31, 2019, December 31, 2020 and December 31, 2021, our Group did not have any capital commitments.
Capital
Expenditures
Historical
capital expenditures
Our
capital expenditures during the years ended December 31, 2019, 2020 and 2021 mainly related to replacement of obsolete equipment. For
the years ended December 31, 2019, 2020 and 2021, our capital expenditures in relation to property, plant and equipment were approximately
S$0.6 million, S$0.3 million and S$0.8 million, respectively. We principally funded our capital expenditures through cash flows
from operations and borrowings during the years ended December 31, 2019, 2020 and 2021.
Critical
Accounting Policies and Estimates
Our
financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements
and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting
policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding
of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal
of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often
as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility
that future events affecting the estimate may differ significantly from management’s current judgments. While our significant accounting
policies are more fully described in Note 2 to the consolidated financial statements included elsewhere in this prospectus, we believe
the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial
statements.
We
are an “emerging growth company” as defined under the federal securities laws and, as such, will be subject to reduced public
company reporting requirements. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage
of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting
standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards
and acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act. As a result of our election, our financial statements
may not be comparable to those of companies that comply with public company effective dates.
Use
of Estimates and Assumptions
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates
reflected in our consolidated financial statements include the useful lives of plant and equipment and intangible assets, impairment
of long-lived assets, allowance for doubtful accounts, and allowance for deferred tax assets and uncertain tax position, and inventory
allowance. Actual results could differ from these estimates.
Revenue
Recognition
We
recognized our revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC606). We recognize
revenue to depict the transfer of promised goods or services (that is, an asset) to customers in an amount that reflects the consideration
to which we expect to receive in exchange for those goods or services. An asset is transferred when the customer obtains control of that
asset. It also requires us to identify contractual performance obligations and determine whether revenue should be recognized at a point
in time or over time, based on when control of goods and services transfers to a customer. We elected the modified retrospective method
which required a cumulative adjustment to retained earnings instead of retrospectively adjusting prior periods. The adoption of ASC 606
did not have a material impact on the consolidated financial statements.
To
achieve that core principle, we apply the five steps defined under Topic 606: (i) identify the contract(s) with a customer, (ii) identify
the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance
obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
We
account for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms,
are identified, the contract has commercial substance and consideration to collect is substantially probable.
In
accordance with ASC 340-40,which requires the capitalization of all incremental costs from obtaining and fulfilling a contract with a
customer if such costs are expected to be recovered with the period of more than one year, we capitalize certain contract acquisition
costs consisting primarily of consulting fees, and expect such consulting fees as a result of obtaining customer contracts to be recoverable.
For contracts with the realization period of less than one year, the guidance provides a practical expedient that permits an entity to
immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been
amortized in one year or less.
Revenue
recognition policies for each type of revenue stream are as follows:
(a)
Goods and services sold
We
recognize revenue for our goods and services sold when we have satisfied a performance obligation by transferring control of a promised
good or service to the customer. The amount of revenue recognized is the amount of the transaction price allocated to the satisfied performance
obligation, which is the amount of the consideration in the contract to which our Group expects to be entitled in exchange for transferring
the promised goods or services.
Revenue
may be recognized at a point in time or over time following the timing of satisfaction of the performance obligation. If a performance
obligation is satisfied over time, revenue is recognized based on the percentage of completion reflecting the progress towards complete
satisfaction of that performance obligation.
(b)
Rental of dishware washing machines
We
recognize revenue for our rental of our dishware washing machines on a straight-line basis over the term of the lease.
Recent
Accounting Pronouncements
See
Note 2 of the notes to the consolidated financial statements included elsewhere in this prospectus for a discussion of recently issued
accounting standards.
Impact
of Inflation
In
accordance with the Monetary Authority of Singapore, the year-over-year percentage changes in the consumer price index for 2019 and 2020
were 0.57% and -0.18%, respectively. The rate of inflation in 2021 was significantly higher and is expected to reach 0.9%. Inflation
in Singapore has not materially affected our profitability and operating results. However, we can provide no assurance that we will be
unaffected by higher inflation rates in Singapore in the future.
Quantitative
and Qualitative Disclosures about Market Risk
Interest
Rate Risk
We
are exposed to interest rate risk while we have short-term bank loans outstanding. Although interest rates for our short-term loans are
typically fixed for the terms of the loans, the terms are typically twelve months and interest rates are subject to change upon renewal.
Credit
Risk
Credit
risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through in-house research
and analysis of the relevant economy and the underlying obligors and transaction structures. We identify credit risk collectively based
on industry, geography and customer type. In measuring the credit risk of our sales to our customers, we mainly reflect the “probability
of default” by the customer on its contractual obligations and consider the current financial position of the customer and the
current and likely future exposures to the customer.
Liquidity
Risk
We
are also exposed to liquidity risk, which is risk that we will be unable to provide sufficient capital resources and liquidity to meet
our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures.
When necessary, we will turn to financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.
Foreign
Exchange Risk
While
our reporting currency is the U.S. dollar, almost all of our consolidated revenues and consolidated costs and expenses are denominated
in S$. All of our assets are denominated in S$. As a result, we are exposed to foreign exchange risk as our revenues and results of operations
may be affected by fluctuations in the exchange rate between the U.S. dollar and S$. If the S$ depreciates against the U.S. dollar, the
value of our S$ revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. We have not entered
into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.
HISTORY
AND CORPORATE STRUCTURE
Our
Group’s history can be traced back to November 1999 when JCS was founded by Ms. Hong, our Chairman, Executive Director and
Chief Executive Officer, together with her then partner Mr. Yeo Hock Huat. Our Group commenced business in 2005. We have manufactured
a broad range of cleaning systems, including aqueous washing systems, plating and cleaning systems, train cleaning systems and other
equipment for our customers. Our business in the provision of centralized dishwashing services for the food and beverage industry commenced
in 2013.
As
of the date of this prospectus, our Group is comprised of the Company and its subsidiaries, JE Cleantech International Limited, JCS-Echigo
Pte Ltd., Hygieia Warewashing Pte. Ltd. and Evoluxe Pte. Ltd.
Corporate
Structure
Our
Company was incorporated in the Cayman Islands on January 29, 2019 under the Companies Act as an exempted company with limited liability.
Our authorized share capital is US$100,000 divided into 100,000,000 Ordinary Shares, par value US$0.001 each. Prior to a group reorganization,
JE Cleantech International Limited was the holding company of our group of companies comprised of JCS Echigo Pte. Limited, Hygieia Warewashing
Pte. Limited and Evoluxe Pte. Limited. JE Cleantech International Limited was held 80% by JE Cleantech Global Limited (which is wholly-owned
by Ms. Hong, our CEO), 14% by Triple Business Limited, 4% by Ever Bloom Properties Company Limited and 2% by Aqua Lady Group Limited.
Upon completion of our reorganization, we are owned as to 9,600,000, 1,680,000, 480,000 and 240,000 Ordinary Shares by JE Cleantech Global
Limited, Triple Business Limited, Ever Bloom Properties Company Limited and Aqua Lady Group Limited, respectively, and JE Cleantech International
Limited, JCS Echigo Pte. Limited, Hygieia Warewashing Pte. Limited and Evoluxe Pte. Limited are our direct and indirect subsidiaries.
Organization
Chart
The
chart below sets out our corporate structure as of the date of this prospectus.
Entities
A
description of our subsidiaries is set out below.
JE
Cleantech International Limited (“JEC International”)
On
April 9, 2018, JEC International was incorporated in the BVI as a BVI business company with limited liability. JEC International is authorized
to issue a maximum of 50,000 shares of a single class of US$1.00 par value each. As part of a group reorganization on December 28, 2021,
JEC International became a direct wholly-owned subsidiary of our Company.
JEC
International has been an investment holding company with no business operations since its incorporation.
JCS-Echigo
Pte Ltd (“JCS”)
On
November 25, 1999, JCS was incorporated in Singapore as a private company with limited liability. JCS commenced business in 2005 and
is principally engaged in the manufacture and sale of cleaning systems and other equipment. As part of a group reorganization on December
28, 2021, JCS became an indirect wholly-owned subsidiary of our Company.
Hygieia
Warewashing Pte. Ltd. (“Hygieia”)
On
December 29, 2010, Hygieia was incorporated in Singapore as a private company with limited liability. Hygieia commenced business in 2013
and is principally engaged in the provision of centralized dishwashing services, general cleaning services and leasing of dishwashing
equipment. As part of an internal reorganization on December 28, 2021, Hygieia became an indirect wholly-owned subsidiary of our Company.
Evoluxe
Pte. Ltd. (“Evoluxe”)
On
May 6, 2016, Evoluxe was incorporated in Singapore as a private company with limited liability. Evoluxe has been dormant since incorporation
and has not engaged in any business activities since its incorporation. As part of an internal reorganization on December 28, 2021, Evoluxe
became an indirect wholly-owned subsidiary of our Company.
Key
Milestones
The
key milestones in the development of our Group are highlighted chronologically below:
Year |
|
Milestones |
1999
|
|
JCS
was established. |
|
|
|
2005 |
|
JCS
began its business in the sale of cleaning systems. |
|
|
|
2006 |
|
We
established the JCS Facility and commenced the business of the design, development, manufacture
and sale of cleaning systems.
We
completed our first order for a cassette washing system for a customer in the HDD industry. |
|
|
|
2007 |
|
We
registered our first patent in Singapore under JCS for a cleaning process and apparatus. |
|
|
|
2010 |
|
Hygieia
was established. |
|
|
|
2011 |
|
We
completed our first order for a medical cleaning system.
|
|
|
|
2012 |
|
We
completed our first order for a dish cleaning system. |
|
|
|
2013 |
|
Hygieia
commenced provision of centralized dishwashing services at a customer’s premises. |
|
|
|
2014 |
|
We
established the Hygieia Facility. |
|
|
|
2018 |
|
We
received an invitation from a statutory board in Singapore to showcase a prototype of a robot floor scrubber for the interior of
public trains. |
INDUSTRY
OVERVIEW
We
are principally engaged in (i) the sale of cleaning systems and other equipment; and (ii) provision of centralized dishwashing and ancillary
services. Our cleaning systems business commenced in 2005. We design, develop, manufacture and sell cleaning systems for various industrial
end-use applications to our customers primarily in Singapore and Malaysia.
PRECISION
CLEANING INDUSTRY IN SINGAPORE AND MALAYSIA
The
precision cleaning industry often requires the provision of a sophisticated cleaning process and equipment to ensure that items can be
cleaned to a level that would meet the relevant industry standards for their specific use. In Singapore and Malaysia, the precision cleaning
industry can be divided into two sub-segments of precision cleaning services and precision cleaning equipment manufacturing.
There
are two major business models within the precision cleaning industry: (i) companies without manufacturing capability but providing precision
cleaning product and services by selling standardized equipment and products to end-clients; and (ii) precision cleaning equipment manufacturers
that offer both standardized and customized equipment and products to end-clients.
Precision
Cleaning Industry in Singapore
The
precision cleaning industry in Singapore saw a CAGR of 5.8% from 2016 to 2020, and market size was approximately S$88.8 million in 2020.
Growth before COVID-19 was driven by technology advancement and demand for miniaturized components for machinery which in turn increased
demand for precision cleaning services and equipment for these components. However, growth was slightly dampened when the airlines were
adversely affected by COVID-19. Nonetheless, other industries such as electronics saw stable growth while pharmaceutical and medical
devices saw accelerated growth in 2020, helping to cushion the decreased sales to the airline industry so the overall market only saw
a slight decline.
The
Singapore government’s initiatives to support Industry 4.0 has been supporting the growth of the precision cleaning industry. Presently,
both the manufacturing sector and the cleaning sector fall under the S$4.5 billion Industry Transformation Map (ITM), and the Singapore
government has been supporting technology trials for cleaning and waste management systems under the INCUBATE program.
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry
Revenue Receipts (SGD million) | |
2016 | | |
2017 | | |
2018 | | |
2019 | | |
2020 | | |
2016-2020 | |
Precision
Cleaning Industry | |
| 70.8 | | |
| 85.2 | | |
| 92.2 | | |
| 99.0 | | |
| 88.8 | | |
| 5.8 | % |
Growth
Rate (%) | |
| 4.0 | | |
| 20.3 | | |
| 8.2 | | |
| 7.3 | | |
| –10.3 | | |
| — | |
—
Precision Cleaning Services | |
| 32.6 | | |
| 30.0 | | |
| 33.3 | | |
| 37.8 | | |
| 33.6 | | |
| 0.8 | % |
—Precision
Cleaning Equipment Manufacturing | |
| 38.3 | | |
| 50.0 | | |
| 55.1 | | |
| 60.7 | | |
| 55.2 | | |
| 9.6 | % |
Source:
Euromonitor estimates from desk research and trade interviews with precision cleaning equipment and services providers as well as the
relevant trade associations in Singapore.
Since
the outbreak of the first COVID-19 case in Singapore on January 23, 2020, the Singapore government raised the DORSCON (the Disease
Outbreak Response System Condition, a color-coded framework that shows the current disease situation in Singapore) level from
yellow to orange and introduced several restrictions which tightened alongside increasing cases. This eventually culminated in a nationwide
partial lockdown, known as the ‘‘circuit breaker’’ from April 7, 2020 to May 4, 2020 (which was eventually extended
to June 1, 2020), where, apart from shopping for necessities and work for essential workers, all Singaporeans were required to stay at
home.
Despite
the significant impact on most of the retail and service industries, the overall cleaning industry, especially the precision cleaning
industry, was less impacted since the key end client group are business-to-business (“B2B”) clients who are less likely to
suffer direct impact from the downturn of consumer demand.
The
precision cleaning industry is estimated to see an accelerated CAGR of 9.0% between 2021 and 2025. Such growth is expected to be driven
by the manufacturing segment with a CAGR of 10.7% over the same period, which is expected to be benefited from Industry 4.0 as the industry
continues to transform. Nonetheless, as Industry 4.0 requires a hefty capital outlay, this will favor larger players who are managing
large facilities. In the near future, it is expected that precision cleaning companies will continue to invest in AI technology and data
to fully automate tasks, linking to cloud drive storage, and potentially leveraging the latest 5G technology to enhance data transmission
and processing speed.
Precision
Cleaning Industry in Singapore, Forecast (2021F–2025F)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry Revenue Receipts (SGD million) | |
2021F | | |
2022F | | |
2023F | | |
2024F | | |
2025F | | |
2021F–2025F | |
Precision Cleaning Industry | |
| 101.2 | | |
| 112.7 | | |
| 123.3 | | |
| 132.5 | | |
| 143.0 | | |
| 9.0 | % |
Growth Rate (%) | |
| 14.0 | | |
| 11.4 | | |
| 9.4 | | |
| 7.4 | | |
| 7.9 | | |
| — | |
— Precision Cleaning Services | |
| 39.4 | | |
| 42.8 | | |
| 45.1 | | |
| 47.1 | | |
| 50.2 | | |
| 6.2 | % |
— Precision Cleaning Equipment Manufacturing | |
| 61.8 | | |
| 70.0 | | |
| 78.2 | | |
| 85.4 | | |
| 92.8 | | |
| 10.7 | % |
Source:
Euromonitor estimates from desk research and trade interviews with precision cleaning equipment and services providers as well as the
relevant trade associations in Singapore.
Precision
Cleaning Industry in Malaysia
The
precision cleaning industry in Malaysia experienced a CAGR of 22.9% from 2016 to 2020, with a market size of MYR213.4 million in 2020.
Sharp growth of 77.2% in the industry in 2020 was driven by the strong momentum in the manufacturing segment, resulting in 166.8% growth
in 2020, due to the launch of 5G technology, the increase in demand experienced by the HDD and semiconductor industries and geopolitical
issues that arose over that period.
Precision
Cleaning Industry in Malaysia, Historic (2016–2020)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry
Revenue Receipts (MYR million) | |
2016 | | |
2017 | | |
2018 | | |
2019 | | |
2020 | | |
2016–2020 | |
Precision
Cleaning Industry | |
| 93.5 | | |
| 105.1 | | |
| 112.6 | | |
| 120.4 | | |
| 213.4 | | |
| 22.9 | % |
Growth
Rate (%) | |
| 8.1 | | |
| 12.4 | | |
| 7.1 | | |
| 6.9 | | |
| 77.2 | | |
| — | |
—
Precision Cleaning Services | |
| 58.4 | | |
| 63.2 | | |
| 66.3 | | |
| 69.4 | | |
| 77.1 | | |
| 7.2 | % |
—
Precision Cleaning Equipment Manufacturing | |
| 35.1 | | |
| 41.9 | | |
| 46.3 | | |
| 51.1 | | |
| 136.3 | | |
| 40.4 | % |
Source:
Euromonitor estimates from desk research and trade interviews with precision cleaning equipment and services providers as well as the
relevant trade associations in Malaysia.
The
US-Sino relationship saw no improvement after the US presidential election in 2020. The geopolitical impact caused by the trade dispute
between the world’s two largest economies constrained the growth of the semiconductor manufacturing industry in China. Leading
semiconductor manufacturers were then looking for a cost-friendly market in which to expand their manufacturing capacity in order to
better target the fast-growing Greater China and ASEAN markets. As a result, the demand for precision cleaning equipment manufacturing
shifted from markets like Singapore to neighboring markets such as Thailand and Malaysia.
The
strongly promoted initiative of Industry 4.0 by the Malaysian government acted as another major growth driver to keep the industry growing.
Despite the large capital outlay required for a company to transform into a highly automated manufacturer with AI technology and IoT
capabilities, industry players, in general, believe that such transformation can increase overall operational efficiency enough to result
in an approximately 20% increase in revenue, post-transformation.
Precision
Cleaning Industry in Malaysia, Forecast (2021F–2025F)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry Revenue Receipts (MYR million) | |
2021F | | |
2022F | | |
2023F | | |
2024F | | |
2025F | | |
2021F–2025F | |
Precision Cleaning Industry | |
| 236.4 | | |
| 258.9 | | |
| 279.1 | | |
| 299.5 | | |
| 319.8 | | |
| 7.8 | % |
Growth Rate (%) | |
| 10.8 | | |
| 9.5 | | |
| 7.8 | | |
| 7.3 | | |
| 6.8 | | |
| — | |
— Precision Cleaning Services | |
| 85.7 | | |
| 90.9 | | |
| 96.7 | | |
| 101.7 | | |
| 106.7 | | |
| 5.6 | % |
— Precision Cleaning Equipment Manufacturing | |
| 150.8 | | |
| 168.0 | | |
| 182.3 | | |
| 197.7 | | |
| 213.1 | | |
| 9.0 | % |
Source:
Euromonitor estimates from desk research and trade interviews with precision cleaning equipment and services providers as well as the
relevant trade associations in Malaysia.
It
is expected that the growth of precision cleaning activities in the Malaysian domestic market will record moderate growth over the next
few years. By 2025, it is expected that the industry will reach MYR319.8 million from MYR236.4 million in 2021 with a CAGR of 7.8%. (Source:
Euromonitor estimates from desk research and trade interviews with precision cleaning equipment and services providers as well as the
relevant trade associations in Malaysia.)
Precision
Cleaning Equipment Manufacturing Industry In Singapore
Market
Overview
In
Singapore, precision cleaning equipment manufacturing is a niche market and is estimated to have grown at a CAGR of 9.6% over the period
from 2016 to 2020, driven by a steady increase in both end-use applications and awareness of the beneficial effects of precision cleaning.
Precision cleaning employed in the electronics industry is linked closely to the industry’s output performance.
The
strong growth in semiconductor production was driven by the increasing demand from the smartphone market. In addition, a global shortage
in the memory segment of semiconductor chips also led to a strong gain for Singapore’s semiconductor producers in 2020.
Precision
Cleaning Equipment Manufacturing Industry in Singapore, Historic (2016–2020)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry
Revenue Receipts (SGD million) | |
2016 | | |
2017 | | |
2018 | | |
2019 | | |
2020 | | |
2016–2020 | |
Precision
Cleaning Equipment Manufacturing | |
| 38.3 | | |
| 50.0 | | |
| 55.1 | | |
| 60.7 | | |
| 55.2 | | |
| 9.6 | % |
Growth
Rate (%) | |
| 3.0 | | |
| 30.7 | | |
| 10.2 | | |
| 10.1 | | |
| –9.0 | | |
| — | |
—
Electronic Subsector | |
| — | | |
| 30.0 | | |
| 33.3 | | |
| 37.8 | | |
| 42.7 | | |
| — | |
Source:
Euromonitor estimates from desk research and trade interviews with precision cleaning equipment providers as well as the relevant trade
associations in Singapore.
Precision
cleaning equipment manufacturing in the electronics subsector, representing 77.4% of the industry at S$42.7 million in 2020, produces
equipment used to clean a wide range of electrical components including printed circuit boards, silicon wafers for semiconductors, flat
panel displays and consumer mobile parts, as well as the heads of hard disk drives (HDDs). An HDD is an electro-mechanical data storage
device that stores and retrieves digital data using magnetic storage, and is a type of semiconductor device that is made of semiconductors.
Market
Drivers
Components,
in particular those intended for consumer electronic end-use applications, are increasingly being miniaturized as manufacturers pursue
compactness. This requires highly precise cleaning at the micro-level to remove microparticles to ensure the components’ reliability
and performance and prevent adverse effects in their subsequent use. The miniaturization trend of components has caused companies and
production managers to increasingly pay attention to cleanliness, as they realize that their intricately engineered devices can be rendered
inoperable by undesired microcontaminants.
Historically,
Singapore has long been a manufacturing hub for HDD because of the prime location stationed in the fast-growing ASEAN economies, as well
as business-friendly legislation and political stability. Seagate, one of the key leading manufacturers of HDDs, began establishing its
manufacturing plants in Singapore in 2006, with its first Asian manufacturing hub. Recently, the Singapore government’s strong
initiative in Industry 4.0 further supports high-tech manufacturing industries including HDD manufacturing, fueling the growth of such
segment. It is expected that with the continuous effort of the Singapore government to develop the country into the regional powerhouse
for advanced manufacturing technologies, which provides a platform for the U.S. to enter ASEAN markets, the HDD industry will continue
to grow steadily.
Market
Constraints
In
the short term, precision cleaning equipment market players face growth constraints posed by a shrinking labor pool and rising labor
costs. Precision cleaning equipment manufacturers face steep competition for a shrinking pool of highly skilled labor in an ageing Singaporean
population. In addition, as labor regulations prevent the mass hiring of foreign skilled labor, companies increasingly pay wage premiums
to retain these employees. This can, however, be mitigated in the long term as companies invest in innovation and technology to automate
manufacturing processes.
The
Singapore Purchasing Managers’ Index (“PMI”), which indicates the industry consensus of the market condition of Singapore’s
manufacturing sectors monthly, recorded growth in May 2020 at 46.8, after three consecutive months of decline from 50.3 in January 2020
to 44.7 in April 2020. A PMI below 50 indicates that the overall manufacturing sector is under contraction. Since then, the market condition
started to grow and by February 2021, a PMI of 50.5 was recorded, showing that the overall manufacturing sector continues to expand.
Singapore’s manufacturing PMI in March 2022 was 50.1.
The
electronics sector PMI also posted a decline from 50.1 in January 2020, down to 42.8 in April 2020. Such decline in manufacturing activities
indicates that the domestic demand for precision cleaning equipment from the manufacturing sector, including the electronics sector,
has been weakened since the COVID-19 outbreak in Singapore in February 2020. The decline stopped in April 2020, when the electronics
sector PMI recorded 42.8, and started to grow. By August 2020, with a PMI of 50.6, it had overtaken the PMI of the overall manufacturing
sectors. By February 2021, a PMI of 50.8 was recorded for the electronics sector. Although in February 2022 it had receded slightly to
50.5 from 50.8 in January 2022, and in March 2022 it receded further to 50.4, a PMI above 50 indicates that the overall sector
continues to expand.
Singapore’s
manufacturing PMI of 50.1 in March 2022 was relatively low compared to regional neighbors’ including Indonesia and the Philippines,
which were 51.3 and 53.2, respectively, but higher than Malaysia, which dropped to 49.6 in March.
Operating
Costs
Manufacturers
that produce precision cleaning equipment in Singapore face high set-up, production and operating costs, which pose high barriers to
entry for potential new firms. This is split generally into about 30–40% for direct labor costs, staff costs and sub-contracting
costs, 10% for utilities and overhead, and the remaining 50–60% for raw materials. The predominant raw material for production
of precision cleaning equipment is stainless steel, with minimal plastic components for certain machines.
Source:
Department of Statistics Singapore, The Ministry of Manpower Singapore; Euromonitor findings from custom research.
According
to the Ministry of Manpower in Singapore, the median gross monthly income from work of full-time employed residents increased from S$4,056
in 2016 to S$4,534 in 2020, recording a CAGR of 2.8% over the historic period. With no significant change in terms of the foreign labor
policy as well as the low unemployment rate in the country, it is expected that Singapore’s median gross monthly income will grow
at a steady rate of 3.8% CAGR over the forecast period, from S$4,706.3 in 2021, to S$5,463.5 by 2025.
In
comparison, the steel bar price per ton fluctuated throughout the historic period with dramatic growth from approximately S$397.1 in
2015 to approximately S$649.6 in 2016, an increase of approximately 63.6% in a year time, driven by the rapid increase in construction
contracts in Singapore, at the cost of the resulting in reduced profit margins for the manufacturing and construction industries. Although
growth of construction contracts, value and volume was sluggish in 2017 and was recorded at only approximately 4.1% and 3.6% in 2018
and 2019, the steel bar price per ton, once again, recorded double digit growth of 12.5% in 2020. Such growth is the result of the reduced
logistic capacity in the steel bar export and import business, caused by the COVID-19 pandemic.
Over
the forecast period, both the construction and the manufacturing sectors are expected to further drive up the price of steel. On the
construction side, the Mega 2 infrastructure projects such as the Integrated Waste Management Facility, Tuas Water Reclamation Plant
and Tuas Mega Port all commenced in the latter part of 2019.
On
the manufacturing side, foreign investment in the industry sector is increasing, with Toll Group setting up a S$228 million logistic
hub in Tuas, and Canadian-based Bombardier quadrupling the size of its aircraft maintenance center in Seletar Aerospace Park. British
home appliance manufacturer Dyson recently announced that it will set up its first electric car plant here in Singapore, and also double
the size of its existing technology center at Science Park One.
The
active infrastructure and commercial activities give momentum for the steel price in Singapore to grow steadily in the foreseeable future,
from S$784.1 per ton in 2021 to S$816.7 per ton by 2025, an estimated CAGR of 1.0% over the forecast period.
Source:
Department of Statistics Singapore, The Ministry of Manpower Singapore; Euromonitor findings from custom research.
*Forecast
period figures of Median Gross Monthly Income and Steel Bar Price in Singapore, are estimated by Euromonitor International based on available
information from the Passport, Department of Statistics Singapore and custom research.
Market
Outlook
The
precision cleaning equipment manufacturing market in Singapore is estimated to be valued at S$88.8 million in 2020 and is expected to
reach an estimated S$143.0 million by 2025, marking a CAGR of 9.0% over the forecast period. The stable growth after the drop in 2020
will be largely driven by moderate expansion in the electronics sector and sustained growth of the emerging pharmaceutical and biomedical
sectors in Singapore. With no significant change in the requirement of precision cleaning services in the pharmaceutical and biomedical
sectors, it is expected that the rapidly expanding sector of electronics will continue to outgrow other subsectors and continue to be
the most significant segment of the precision cleaning equipment market.
The
precision equipment market for electronics in Singapore is expected to grow, but at a moderate pace in line with expected electronics
output in Singapore. The longer-term trends, including the emergence of new technologies such as autonomous vehicles and the proliferation
of the IoT in healthcare and robotic applications, is expected to sustain demand for semiconductors in the electronics industry for the
forecast period.
With
automation, digitization and robotic processes at the forefront of technological developments, it is expected that automated assembly
lines with digitized control panels will be the new standard manufacturing process for industrial industries, especially for the precision
cleaning equipment industry.
The
global pessimistic outlook of the economy in 2020 due to COVID-19 caused a delay of orders for precision cleaning equipment as the market
was not certain how long the pandemic would persist. However, as the COVID-19 vaccination progress began in early 2021, orders started
to resume at a more normal pace as the global economy was preparing for the post COVID-19 recovery.
The
delay of the orders caused a slowdown in cash flow and revenue generation, but the overall demand for precision cleaning equipment is
currently unaffected. It is expected that industry activities will resume to normal after the COVID-19 crisis.
Precision
Cleaning Equipment Manufacturing in Singapore, Forecast (2021F–2025F)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry
Revenue Receipts (SGD million) | |
| 2021F | | |
| 2022F | | |
| 2023F | | |
| 2024F | | |
| 2025F | | |
| 2021F–2025F | |
Precision
Cleaning Equipment | |
| 61.8 | | |
| 70.0 | | |
| 78.2 | | |
| 85.4 | | |
| 92.8 | | |
| 10.7 | % |
Growth
Rate (%) | |
| 12.0 | | |
| 13.2 | | |
| 11.8 | | |
| 9.2 | | |
| 8.7 | | |
| — | |
Source:
Euromonitor estimates from desk research and trade interviews with precision cleaning equipment providers as well as the relevant trade
associations in Singapore.
Competitive
Landscape
Singapore’s
precision cleaning equipment manufacturing market is niche and relatively consolidated, served by approximately 10 companies, consisting
of a handful of larger global companies that operate offices in Singapore, as well as several small and medium-sized players. High barriers
to entry in the form of high set-up and operating costs, as well as the importance that end-user clients place on a strong track record,
explains the absence of notable new entrants into the market.
The
market for precision cleaning equipment manufacturing in the electronics sector mirrors that of the wider industry, given that is the
dominant end-use application in the market. End-use application clients in general place a premium on quality of equipment performance
and after-sales service. There is also a trend towards procuring high-quality equipment that would last longer, thereby reducing repair
and replacement costs. Hence, precision equipment manufacturers that can strike the balance between quality products and price competitiveness
will continue to gain inroads into market share.
Industry
players also see a trend towards consolidation in the wider precision cleaning market, as companies move towards offering total solutions
in the value chain (both cleaning equipment and cleaning services) in order to stand out from the competition.
Multinational
companies (“MNCs”) are one of the major client types, especially for the HDD and semiconductor industries, of the precision
cleaning equipment manufacturing industry. MNCs often have a stringent vendor selection process in order to ensure the suppliers meet
their specific needs and standards. The rationale behind the rigid and stringent standard in the vendor selection process is to ensure
the vendors can provide high-quality products in order for the HDD manufacturers to meet the heightened internal cleanliness standard
of ensuring all components of the hard disk drive are free from submicron particulate contamination (less than 0.1 micrometer). Any existing
vendor who does not pass its required standard will be removed from the MNC’s approved vendor list. Therefore, suitable suppliers
are not easily available and existing suppliers are not easily replaceable.
Generally,
precision cleaning equipment and systems have an average life span of two to seven years. It is a common practice for HDD manufacturers
to allocate a certain amount of their annual budget to fund the acquisition of machines and equipment, including upgrading of existing
machines and equipment, to ensure their production facilities work smoothly, to cater to changes in technology and to meet their production
demand and expansion plans. As reported by Euromonitor, the annual budget allocated by MNCs for the purchasing and upgrading of precision
cleaning machinery, equipment and systems ranges from 5% to 25% of the cost of owned plant, equipment and machinery. Since the average
life span of precision cleaning systems and equipment ranges from two to seven years, upgrading and replacement of those machines have
to be done progressively in order to maintain a stable production capacity of MNCs, hence, to avoid the upgrade or replacement process
results in under-capacity. There are uncertainties including the system and machines’ stability after the upgrade or replacement.
Moreover, if the upgrade or replacement of machines all take place at the same time, the production capacity could drop to zero during
the process. It is a risk management consideration to better carry out such process progressively, rather than putting the MNC’s
production capacity at risk. Hence, MNCs usually upgrade or replace their entire precision cleaning systems and equipment progressively,
in order to level the cost associated with the upgrading and purchasing of machinery while maintaining product capacity throughout the
years. Such practice explains the frequency with which MNCs purchase and upgrade precision cleaning systems and equipment on an annual,
or on-demand basis. Several factors could cause variation in terms of the frequency and amount of budget allocation for MNCs to replace
and upgrade the existing precision cleaning equipment and machinery. These include but are not limited to the life cycle of the currently
owned precision cleaning equipment and machinery, technology advancement and product innovation of the company, as well as business expansion
need. Under the threat of SSD, in order for leading HDD manufacturers to maintain the low-cost advantage of HDD against SSD, they are
encouraged to further develop HDD technology, to not only upgrade existing storage technology but also to improve overall durability.
Precision
cleaning systems are generally custom-made to cater to the clients’ requirements and specifications, which involves a detailed
understanding of the clients’ production processes and product specifications, which are often highly confidential. Therefore,
MNCs generally prefer not to use many different vendors for precision cleaning systems, in order to protect their trade secrets. It would
also be costly and time consuming to teach a new vendor the technical requirements of the client. Euromonitor is of the view that this
makes HDD and semiconductor manufacturers loyal to only a few qualified vendors and to not change their suppliers from time to time.
These factors give a strong competitive advantage to existing vendors in the industry, and make it difficult for new industry players
to enter this key industry client segment.
The Precision Cleaning
Equipment Manufacturing Industry In Malaysia
Market
Overview
Precision
cleaning is a key part of Malaysia’s electronics manufacturing sector, driven by the nation’s large electrical and electronics
manufacturing industry. Within the sector, the manufacturing of semiconductors, printed circuit boards, HDD and precision metal components
are key users of precision cleaning equipment. Apart from the electronics and components sectors, medical and pharmaceutical, as well
as automotive sectors are the other two key end-use sectors that demand precision cleaning equipment and services.
During
the period from 2016 to 2020, the precision cleaning equipment manufacturing industry experienced the strongest growth in 2020 with revenue
receipts posting growth of 166.8%. The industry’s strong performance in 2020 was driven primarily by increased global demand for
semiconductors, as well as the rapidly expanding electrical and electronics industries manufacturing facilities in Malaysia, as per announced
in 2020.
Precision
Cleaning Equipment Manufacturing Industry in Malaysia, Historic (2016–2020)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry
Revenue Receipts (MYR million) | |
2016 | | |
2017 | | |
2018 | | |
2019 | | |
2020 | | |
2016–2020 | |
Precision
Cleaning Equipment Manufacturing | |
| 35.1 | | |
| 41.9 | | |
| 46.3 | | |
| 51.1 | | |
| 136.3 | | |
| 40.4 | % |
Growth
Rate (%) | |
| 9.2 | | |
| 19.5 | | |
| 10.5 | | |
| 10.3 | | |
| 166.8 | | |
| — | |
—
Electronic Subsector | |
| — | | |
| — | | |
| 27.9 | | |
| 30.2 | | |
| 79.1 | | |
| — | |
Source:
Euromonitor estimates from desk research and trade interviews with precision cleaning equipment providers as well as the relevant trade
associations in Malaysia.
The
electronics industry accounts for the bulk of revenue receipts from the sale of precision cleaning equipment in 2020, representing approximately
60% of the precision cleaning equipment industry, or approximately MYR79.1 million in terms of value. As the world’s seventh-largest
electronics exporter and the leading hub for semiconductor assembly and testing, precision cleaning catering to Malaysia’s HDD
and electronics industry is well-positioned for growth. In line with the trend of an increase in global demand for semiconductors, precision
cleaning equipment manufacturing companies catering to manufacturers in this sector are expected to post positive growth.
Historically,
the Malaysia HDD industry has been growing since the 1990s, thanks to the relatively low cost associated with the establishment of HDD
factories and production. In addition, the increasing demand for consumer electronics such as desktop and laptop computers in the region
further supports the growth of demand for HDDs over the historic period. However, the uprising of neighboring markets, such as the Philippines
and Indonesia, which offer a better cost advantage for HDD manufacturers, has reduced the comparative advantage of Malaysia. On the other
hand, the competition from SSD also hinders the demand for HDD. In 2019, Western Digital shut down its HDD assembly facility near Kuala
Lumpur and opened up an SSDs factory in Penang to support the growing demand for SSD.
Despite
challenges from neighboring markets as well as SSD, the uprising trend of data centers, where HDD remains a better choice of data storage
device compared to SSD, continues to grow in Malaysia and bolster the demand for HDD. In 2021, Microsoft announced plans to establish
its first data center region in Malaysia, with AWS and Google set to follow. With the advantage of land available for corporations to
build data centers at, as well as the long history of HDD and technology devices manufacturing, it is expected that Malaysia’s
data center market size will continue to grow and that it will reach revenues of over US$800 million by 2025, hence further fueling
growth in the demand for HDD industry.
Market
Drivers
The
positive growth of Malaysia’s precision cleaning industry is primarily due to the rising global demand for consumer electronics
such as smartphones, tablets and wearables. Such demand has attracted investments from electrical and electronics companies, which are
key users of products and services offered by precision cleaning equipment manufacturing companies. According to the Malaysian Investment
Development Authority (the “MIDA”), approved investments in the manufacturing sector from January 2020 to September 2020
were worth MYR65.3 billion. Malaysia saw a total of 56 electrical and electronics projects with approved investments of MYR7.7 billion
in 2020. The MIDA expects investments in the industry to further increase in 2021 and 2022.
Precision
cleaning equipment manufacturers benefit from the increased investments as a rise in local manufacturing capacity or requirements are
key drivers of revenue, especially for investments from the United States. The American Malaysian Chamber of Commerce also expects US
investments in Malaysia to expand over the forecast period.
Market
Constraints
End
users often turn to companies that are well established in the precision cleaning equipment manufacturing industry as they are perceived
to be more reliable than lesser-known companies. In line with this trend, industry players selling precision cleaning equipment often
work towards establishing a long-term partnership with their clients such as through collaborating with precision cleaning chemical suppliers
to provide a one-stop-shop solution and offering customization services and after-sales support. As a result of this, new players in
the precision cleaning equipment manufacturing industry often struggle to secure new sales opportunities.
Similar
to Singapore, COVID-19 caused the overall manufacturing sector of Malaysia to contract in 2020. Malaysia’s PMI declined from 48.8
in January 2020, down to 31.3 in April 2020, which showcased the heavy pressure faced by the manufacturing sectors due to the production
suspension or the necessity for factories to operate under capacity. While Singapore’s PMI started to grow again in the middle
of 2020, likewise, Malaysia’s PMI grew back to 45.6 in May 2020, and the PMI has remained fairly stable since then. By February
2021, the PMI of Malaysia’s manufacturing sector was recorded at 47.7 and in March 2022 it was 49.6.
Despite
the impact of the COVID-19 pandemic on the global chain of manufacturing activities, including the semiconductor sector, the semiconductor
industry in Malaysia remains relatively stable compared to other sectors due to the increased demand for electronics products caused
by the work from home arrangement during the COVID-19 crisis, which mitigated the decline caused by the lockdown measures imposed from
January to May 2020 arising from the COVID-19 outbreak.
Market
Outlook
The
precision cleaning industry is projected to post positive growth over the forecast period, driven primarily by the semiconductor industry.
With emerging megatrends such as IoT and AI creating new application opportunities for semiconductors, global demand for semiconductors
is expected to rise. The strong demand for semiconductors will likely lead to increased investment in Malaysia as the country has over
the review period emerged as a design, development and manufacturing hub for semiconductors. Increased investment in the semiconductor
industry benefits precision cleaning companies as semiconductor manufacturers are key users of precision cleaning equipment.
Similar
to Singapore, the global pessimistic outlook for the economy due to COVID-19 caused delays of orders for precision cleaning equipment
as the market was not certain how long the pandemic would persist. It is expected that industry activities will resume to normal after
the COVID-19 crisis.
Precision
Cleaning Equipment Manufacturing in Malaysia, Forecast (2021F–2025F)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry
Revenue Receipts (MYR million) | |
| 2021F | | |
| 2022F | | |
| 2023F | | |
| 2024F | | |
| 2025F | | |
| 2021–2025 | |
Precision
Cleaning Equipment Manufacturing | |
| 150.8 | | |
| 168.0 | | |
| 182.3 | | |
| 197.7 | | |
| 213.1 | | |
| 9.0 | % |
Growth
Rate (%) | |
| 10.6 | | |
| 11.4 | | |
| 8.6 | | |
| 8.5 | | |
| 7.8 | | |
| — | |
Source:
Euromonitor estimates from desk research and trade interviews with and trade interviews with precision cleaning equipment providers as
well as the relevant trade associations in Malaysia.
Competitive
Landscape
The
precision cleaning manufacturing industry in Malaysia is highly consolidated, with the top five companies in the industry accounting
for more than 80% of industry sales. The leading players in the industry are primarily in the electronics industry. These manufacturers
benefit from the robust growth of Malaysia’s position as a global hub for semiconductor manufacturing. In order to remain competitive,
it is common for companies providing precision cleaning equipment to collaborate with chemical suppliers to offer end-users packaged
solutions.
The
barriers to entry for precision cleaning companies within the electronics industry are high due to the start-up costs involved. The costs
incurred in obtaining relevant quality certifications such as the ISO9001 and ISO22000 certifications, for example, discourage small
players from entering the industry. In addition, the reluctance of manufacturers within the electronics industry to engage new precision
cleaning companies also increases barriers to entry. As a result, the precision cleaning industry in Malaysia is highly consolidated.
The Autonomous Robotic
Floor Cleaning Equipment Industry In Singapore
Market
Overview
Autonomous
cleaning robots have intelligent programming to detect areas in the designated vicinity that need to be cleaned. Their functions include
vacuuming, mopping and scrubbing and these robots are often paired with a platform where users can view the progress of the cleaning.
The
efficiency of the cleaning makes them a complement or even substitute to manual cleaners such that they have recently become widespread
in Singapore. The industry is relatively new in Singapore, with market leaders such as Lionsbot joining in as late as 2018 and still
gaining a large market share. This is seen as a potential solution for the labor squeeze in Singapore’s cleaning force, especially
for commercial property and food and beverage cleaning sectors.
Autonomous
Robotic Floor Cleaning Equipment Industry in Singapore, Historic (2016–2020)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry Revenue Receipts (SGD million) | |
2016 | | |
2017
| | |
2018
| | |
2019 | | |
2020 | | |
2016–2020 | |
Autonomous Robotic Floor Cleaning Equipment | |
| 0.8 | | |
| 1.2 | | |
| 1.7 | | |
| 2.3 | | |
| 6.5 | | |
| 68.2 | % |
Growth Rate (%) | |
| 58.6 | | |
| 49.2 | | |
| 40.2 | | |
| 35.3 | | |
| 182.6 | | |
| — | |
Source:
Euromonitor estimates from desk research and trade interviews with autonomous robotic cleaning equipment manufacturers as well in Singapore.
Market
Drivers
While
most industries suffered during the lockdown, this industry saw mixed results depending on where most of their robots were deployed.
Companies that mostly deployed to shopping malls suffered from reduced sales due to the closure of malls and offices during the lockdown.
On the other hand, companies that mostly deployed to healthcare and mass rapid transit stations found increased sales due to the demand
for higher frequency and a higher standard of cleanliness as preventive measures against COVID-19.
Government
subsidies also play a huge role as grants are extensive, encouraging businesses to adopt the technology. The National Environment Agency
of Singapore (the “NEA”) has authorized grants of 80% for approved autonomous cleaners, though there is a cap. As long as
the buyer applies for the grant and is able to justify its need for it, it can claim the grant retroactively.
The
launch of autonomous cleaning robots in Jewel Changi Airport, the National Gallery, Gardens by the Bay and other prominent areas have
raised awareness of this industry, especially since they are often seen on the news. Jewel Changi Airport, in particular, has been spearheading
the move towards autonomous cleaning by ordering one robot from every existing autonomous cleaning robot company.
Market
Constraints
The
main cost is the manufacturing of the robots, which remain quite expensive due to their advanced components such as LIDAR sensors, cameras,
and vacuum motors though such prices are expected to decrease in the future. The robots are also not mass-produced as they must maintain
their high quality, and this results in high production costs.
Secondly,
the robots need to be maintained by a team of people who understand the equipment and software. Maintenance fee depends on the type and
scale of the machine but ranges from around S$3,000 to S$6,000 per year. The attachable features, such as the scrubber head, also need
to be replaced regularly depending on the frequency of cleaning. Such high-costs associated with the initial purchase and the ongoing
maintenance fee inhibit purchases by some property management companies due to budget concerns.
Market
Outlook
Autonomous
Robotic Cleaning Equipment Industry in Singapore, Historic (2021–2025)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry
Revenue Receipts (SGD million) | |
| 2021F | | |
| 2022F | | |
| 2023F | | |
| 2024F | | |
| 2025F | | |
| 2021–2025 | |
Autonomous
Robotic Cleaning Equipment | |
| 12.5 | | |
| 17.3 | | |
| 23.1 | | |
| 29.4 | | |
| 36.3 | | |
| 30.5 | |
Growth
Rate (%) | |
| 92.3 | | |
| 38.4 | | |
| 33.5 | | |
| 27.3 | | |
| 23.5 | | |
| — | |
Source:
Euromonitor estimates from desk research and trade interviews with autonomous robotic cleaning equipment manufacturers as well in Singapore.
Since
the industry is still in its fast-growing stage in 2022, with a strong push due to the COVID-19 pandemic, which increased the
demand for unmanned cleaning solutions for commercial properties and public spaces in Singapore, the overall industry is expected to
grow at a CAGR of 30.5% over the forecast period.
The
growth of the industry over the forecast period is supported by the government through grants and incentives to companies to adopt the
technology. It is also expected that there will be further advancement in cloud infrastructure, AI and 5G that will make the robots more
attractive and cost-competitive.
Competitive
Landscape
Since
this is a relatively new market, the ranking of the market leaders was uncertain though it was acknowledged that there are three major
players. These companies provide larger robots for Changi Airport, Singapore Mass Rapid Transit, shopping malls and large offices. There
are also a number of smaller companies in the market, though they are not seen as strong competitors as they retrofit traditional cleaning
equipment with the technology rather than come up with new models like the leading three players. In light of the fast-growing stage
of the industry and the strong support from the government, it is expected that more and more new players will enter the market, hence,
the market is expected to move towards fragmentation over the forecast period.
The Centralized Dishwashing
Services Industry In Singapore
Market
Overview
Dishwashing
services entail the cleaning of food preparation equipment used in the foodservice industry to the standard required by the end-user
client, on a contractual basis. In Singapore’s food & beverage services sector, dishwashing providers deliver such back-end
services to frontline clients which include conventional commercial food & beverage establishments and non-conventional dining. The
potential client base may also include hotels, meetings, incentives, conferences and exhibitions (MICE) venues, confectioneries and bakeries.
Dishwashing
is undertaken both on-site and at centralized off-site locations. On-site cleaning is traditionally labor-intensive, sometimes undertaken
with the aid of small-scale dishwashing machines. In contrast, off-site cleaning is usually semi-automated, complemented by manual labor.
Apart
from dishwashing, companies also provide value-added services such as the lease of dishware and related equipment, as well as consultancy
services depending on their capability and clients’ needs.
Singapore’s
dishwashing services market is estimated to have posted a CAGR of 0.2% from 2016 to 2020. Before COVID-19, growth was stable, driven
by rising food & beverage services consumption due to rising incomes, increased eating out, growth in the tourism and MICE industry,
and lack of dishwashing manpower. However, there was a huge decline in 2020 due to the lockdown and temporary or even permanent closure
of food stores, though this is set to recover. Now that eating out has resumed, growth is expected because of the government’s
Foreign Worker Quota limiting foreign hires.
Centralized
Dishwashing Services Industry in Singapore, Historic (2016-2020)
| |
| | |
| | |
| | |
| | |
| | |
CAGR | |
Industry
Revenue Receipts (SGD million) | |
2016 | | |
2017 | | |
2018 | | |
2019 | | |
2020 | | |
2016-2020 | |
Centralized
Dishwashing Services | |
| 30.7 | | |
| 33.0 | | |
| 36.1 | | |
| 40.6 | | |
| 30.9 | | |
| 0.2 | |
Growth
Rate (%) | |
| 10.2 | | |
| 7.6 | | |
| 9.5 | | |
| 12.3 | | |
| -23.9 | | |
| — | |
On-site
Centralized Dishwashing Services | |
| 1.9 | | |
| 2.7 | | |
| 3.5 | | |
| 4.2 | | |
| 2.4 | | |
| 5.7 | |
Off-site
Centralized Dishwashing Services | |
| 28.8 | | |
| 30.3 | | |
| 32.6 | | |
| 36.4 | | |
| 26.7 | | |
| -1.9 | |
Source:
Euromonitor estimates from desk research and trade interviews with centralized dishwashing services providers as well as the relevant
trade associations in Singapore
Market
Drivers
The
biggest driver of the food & beverage services industry is economic growth and rising disposable income. Although Singapore’s
GDP growth rate has slowed due to the pandemic, the trend up until 2019 was a general increase and it is expected to continue to grow
in the next few years. As living standards rise, the ability to dine out and the propensity to try new culinary offerings also rises.
The
rising consumption of food & beverage services has also boosted the number of food & beverage establishments in Singapore. The
number of licensed food establishments in Singapore increased from 33,074 in 2015 to 38,373 in 2019, at a CAGR of 0.03%. Another contributing
factor is the mall asset enhancement initiatives (AEI) undertaken by shopping mall landlords to adjust to changing consumption patterns.
As Singaporeans increasingly engage in e-commerce, there is less need to visit shopping malls. In contrast, they gather with families
and friends at restaurants and cafes. Hence, landlords have been allocating more retail space to food & beverage outlets in a bid
to make their malls more ‘‘experiential’’ to fight declining retail footfall in this era of e-commerce.
Market
Constraints
While
the above factors may drive demand for centralized dishwashing services, growth in this traditionally labor-intensive sector is however
weighed down by manpower constraints. The scarcity of manpower in the sector is attributed to an increasingly ageing population, and
disinterest in manual labor among the younger generation. Dishwashing is undertaken predominantly by elderly workers, as the younger
generation shun manual labor in favor of higher value-added jobs that offer high remuneration in Singapore’s knowledge economy.
However, this can be alleviated in the longer term as the trend towards higher automation in line with productivity drives continues.
Operating
Costs
Centralized
dishwashing is a more labor-intensive service in Singapore, as compared to the precision cleaning equipment manufacturing industry. Given
that dishwashing labor is in general relatively less skilled as compared to manufacturing labor, companies have an incentive to hire
foreign workers even with the cost of paying levies.
Centralized
dishwashing service providers in Singapore, in general, have an operational cost structure comprised of the following components: labor
costs, which includes labor costs, staff costs and sub-contracting costs representing 60% to 80% of the operating costs; 5%–15%
for cleaning equipment; 10% to 15% for logistical transportation; and 5% to 15% for utilities and rent. The cost structure could vary
depending on the business model of the provider, for example, a company that has a stronger focus on on-site dishwashing services will
incur a higher proportion of labor costs as compared to an off-site dishwashing services provider, and vice versa.
According
to Singapore’s Ministry of Manpower, ‘‘Cleaners, Laborer’s and Related Workers,’’ representing the
lower skill level group of labor of the industry, exhibited a CAGR of 2.0% in basic salary over the historic period from S$1,417 in 2016
to S$1,535 in 2020, with the progressive wage model playing a role in the increase. The basic salary of such labor group is expected
to grow at a slower CAGR of 2.1% over the forecast period, from S$1,594.4 in 2021 to S$1,741.0 by 2025.
Market
Outlook
The
dishwashing services market in Singapore was estimated to be valued at S$30.9 million in 2020 due to the lockdown in the first and second
quarters. However, recovery is expected to be fast as businesses were already receiving normal crowds in the first quarter of 2021. Dishwashing
is expected to reach S$75.0 million by 2024, resulting in a CAGR of 19.7% over the forecast period due to an expected sustained increase
in food & beverage services consumption, the existence of remaining market potential to be tapped, the government’s drive to
develop the centralized cleaning services sector (especially on-site) and persistent manpower shortages in the cleaning industry.
Demand
for food & beverage services is expected to be sustained over the forecast period as the country recovers economically from the lockdown.
According to the Singapore Department of Statistics survey of Business Expectations (Services Sector) in the first quarter of 2021, companies
in the food & beverage services sector improved business expectations, with 21% of firms being optimistic about future business conditions.
This is the first positive weighted balance after four quarters of negative sentiment due to the lockdown. Consumption levels are expected
to recover and sustain in the long run as Singapore’s macroeconomic growth recovers at a stable pace.
Furthermore,
the Singapore government is also supporting Industry 4.0 for centralized dishwashing services. In the longer term, automation and availability
of machines will not render centralized dishwashing services obsolete as the various food & beverage establishments are still too
small to possess automated cleaning machines (no economies of scale). Hence, food & beverage companies will still demand centralized
dishwashing services instead of directly investing in Industry 4.0 and automation themselves.
The
outbreak of COVID-19 caused a significant impact on both the retail and consumer services industries in Singapore. Several restrictions,
including the ban on gatherings of more than 8 people and the shutdown of entertainment venues, have significantly reduced the number
of people who dine out or shop. Additionally, the fear of COVID-19 also reduces the willingness of people to participate in any group
leisure or entertainment activities. The pessimistic and tense situation brought on by COVID-19 has reduced the number of tourists, as
well as the frequency at which residents dine in consumer food services venues, thereby reducing the demand for centralized dishwashing
services.
Furthermore,
the 85.7% drop in visitor arrivals in 2020, predicted by the Singapore Tourism Board, as well as the decline in foot traffic in shopping
malls and restaurants caused by the government’s lockdown measures implemented in April 2020, has significantly reduced consumer
spending and revenue of the consumer food service industry, thereby causing heavy pressure on the short-demand for centralized dishwashing
services in Singapore, before the relaxation of circuit breaker measures in June 2020. Such reduction in visitor arrivals continued into
2021, causing extended pressure on the consumer spending sector.
Consumers
footprint towards food halls and restaurants improved significantly subsequent to the relaxation of circuit breaker measures, as did
the demand for both on-site and off-site dishwashing services. However, compared to the year-to-date performance in 2019, the demand
remains relatively weak. Food and beverage providers in Singapore in general reduced prices and offered take-out options in order to
better retain consumers. Dishwashing service providers, in turn, suffered from reduced service fees charged to Singapore’s food
and beverage operators during the COVID-19 pandemic.
Centralized
Dishwashing Services in Singapore, Forecast (2021F-2025F)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR |
|
Industry Revenue Receipts (SGD million) |
|
2021F |
|
|
2022F |
|
|
2023F |
|
|
2024F |
|
|
2025F |
|
|
2021F-2025F |
|
Centralized Dishwashing Services |
|
|
36.5 |
|
|
|
44.9 |
|
|
|
53.6 |
|
|
|
63.3 |
|
|
|
75.0 |
|
|
|
19.7 |
% |
Growth Rate (%) |
|
|
25.7 |
|
|
|
23.0 |
|
|
|
19.5 |
|
|
|
18.0 |
|
|
|
18.5 |
|
|
|
— |
|
On-site Centralized Dishwashing Services |
|
|
3.1 |
|
|
|
3.9 |
|
|
|
4.6 |
|
|
|
5.4 |
|
|
|
6.1 |
|
|
|
18.3 |
% |
Off-site Centralized Dishwashing Services |
|
|
33.4 |
|
|
|
41.0 |
|
|
|
49.0 |
|
|
|
57.9 |
|
|
|
68.9 |
|
|
|
19.9 |
% |
Source:
Euromonitor estimates from desk research and trade interviews with centralized dishwashing services providers as well as the relevant
trade associations in Singapore
Competitive
Landscape
Singapore’s
dishwashing cleaning services market is relatively consolidated with approximately 10 market players. A few large-sized companies dominate
the market, while several other smaller players make up the remainder.
Competition
in the sector is keen due to the low barriers to entry and low switching costs. Exit and entry to and from the sector are easy due to
the relatively low set-up and labor costs compared to other industries. As a result, companies that can offer the greatest balance between
cost, technical competence and track record of quality service would gain the edge in market share.
Driven
by the fast-growing demand in centralized dishwashing services, competitors are required to increase productivity by either expanding
their factories or by implementing automated assembly lines of dishwashing facilities. The latter is likely to be the future trend of
the industry regarding the ongoing Industry 4.0 initiatives and the scarcity of land resources in Singapore.
BUSINESS
OVERVIEW
Our
Group is based in Singapore and is principally engaged in (i) the sale of cleaning systems and other equipment; and (ii) the provision
of centralized dishwashing and ancillary services. Our cleaning systems business started in 2006 and we design, develop, manufacture
and sell cleaning systems for various industrial end-use applications to customers mainly in Singapore and Malaysia. We have also provided
centralized dishwashing since 2013 and general cleaning services since 2015, mainly for food and beverage establishments in Singapore.
According to Euromonitor, our Group was ranked fifth in the precision cleaning equipment manufacturing market in Singapore in 2020, with
a market share of approximately 2.0% in terms of revenue, and we ranked first in the precision cleaning equipment manufacturing market
in Malaysia in 2020, with a market share of approximately 27.0% in terms of revenue. (Source: Euromonitor estimates from desk research
and trade interviews with leading precision cleaning equipment providers and the relevant trade associations in Singapore.) We are also
a leading centralized dishwashing services provider in Singapore. Our Group was ranked second in the dishwashing services industry in
Singapore in 2020, with a market share of approximately 15.0% in terms of revenue. (Source: Euromonitor estimates from desk research
and trade interviews with leading centralized dishwashing services providers and the relevant trade associations in Singapore.)
For
the years ended December 31, 2019, 2020 and 2021, our Group generated approximately S$12.2 million, S$16.9 million and S$9.0
million of revenue from our sale of cleaning systems and other equipment business, representing approximately 67.1%, 79.2% and 60.8%
of our total revenue, respectively.
For
the fiscal years ended December 31, 2019, 2020 and 2021, our Group generated approximately S$6.0 million, S$4.5 million and S$5.8
million of revenue from our provision of centralized dishwashing and ancillary services business, representing approximately 32.9%,
20.8% and 39.2% of our total revenue, respectively.
The
portion of our revenue from each business line has not changed substantially through April 24, 2022.
Our Products And Services
Our
Products
The
cleaning systems and other equipment we manufacture and sell can be categorized into four different categories, namely aqueous washing
systems, plating and cleaning systems, train cleaning systems and other equipment, such as filtration units. The product lives of our
cleaning systems and other equipment range from two to ten years.
While
the focus of our sale of cleaning systems and other equipment business is on precision cleaning, we are also able to design, develop
and manufacture other cleaning systems for various industrial end-use applications using our R&D and engineering capabilities.
Depending
on our customers’ requirements and specifications, our cleaning systems are designed to enable our users to monitor various parameters
and control the cleaning system or equipment. This enables our customers to monitor critical data and information such as water level,
wash and rinse tank temperatures, flow rate of water and chemicals, megasonic or ultrasonic generator power, ultrasonic or megasonic
frequency and pH value of the chemicals and waste water. Such critical data and information are crucial to our customers for their cleaning
systems, particularly in the HDD, semiconductor and industrial electronic equipment/product manufacturing industries.
Our
cleaning systems are mainly designed for precision cleaning, with features such as particle filtration, ultrasonic or megasonic rinses
with a wide range of frequencies, high pressure drying technology, high flow rate spray and deionized water rinses, which are designed
for effective removal of contaminants and to minimize particle generation and entrapment. In particular, precision cleaning systems to
be installed in cleanrooms (enclosed spaces in which airborne particulates, contaminants and pollutants
are kept within strict limits), such as those sold to HDD customers, will need to meet stringent cleanliness standards and requirements,
and are also equipped with High Efficiency Particulate Air (HEPA) filters to trap particles that are 0.3 microns and larger in size and/or
Ultra Low Particulate Air (ULPA) filters to trap particles that are 0.12 microns and larger in size, in order to ensure stringent cleanliness
performance.
Our
cleaning systems are designed and developed for megasonic cleaning or ultrasonic cleaning, and have megasonic or ultrasonic generators
to generate rinses with a wide range of frequencies. In particular, megasonic cleaning uses higher frequencies to produce controlled
cavitations, with cleaning bubbles that are smaller and less energetic but more numerous, thereby providing more gentle cleaning of fragile
and delicate components and the removal of microscopic contaminants. Megasonic cleaning also reduces or eliminates cavitation erosion
and the likelihood of surface damage to the product being cleaned.
The
table below sets forth the revenue generated from our sale of cleaning systems and other equipment by product type during the fiscal
years ended December 31, 2019, 2020 and 2021:
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
|
SGD’000 |
|
|
% |
|
|
SGD’000 |
|
|
% |
|
|
SGD’000 |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aqueous washing systems |
|
|
6,932 |
|
|
|
44.6 |
|
|
|
12,920 |
|
|
|
81.9 |
|
|
|
4,757 |
|
|
|
60.9 |
|
Plating and cleaning systems |
|
|
1,351 |
|
|
|
2.6 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other equipment |
|
|
2,440 |
|
|
|
22.8 |
|
|
|
2,863 |
|
|
|
18.1 |
|
|
|
3.056 |
|
|
|
39.1 |
|
Total |
|
|
10,723 |
|
|
|
100.0 |
|
|
|
15,783 |
|
|
|
100.0 |
|
|
|
7,813 |
|
|
|
100.0 |
|
The
table below sets out the features and major types of industrial end-use applications of the different types of cleaning systems:
Our
cleaning systems are designed and customized based on our customers’ requirements and specifications, and accordingly the cleaning
systems that we manufacture and sell are of varying sizes and have different features and functions. Our cleaning systems also are comprised
of different modules and components, parts and materials and the production and manufacturing process for each cleaning system will vary
between orders, depending on the complexity of the design and the component lead time.
In addition,
we also provide repair and servicing of the cleaning systems that we sell to our customers, and we also sell related parts used in such
cleaning systems which we purchase from third party suppliers such as proximity sensors and transducer plates. Provision of repair and
servicing of cleaning systems and sale of related parts amounted to approximately S$1.5 million, S$1.2 million and S$1.2 million
in revenue, representing approximately 8.2%, 5.4% and 7.9% of our total revenue, for the years ended December 31, 2019, 2020
and 2021, respectively.
We are
the sole distributor of STICO anti-slip shoes in Singapore, and our customers are mainly food and beverage establishments in Singapore.
The STICO anti-slip shoes are made of ethylene-vinyl acetate (EVA) material and are light with an anti-slip resistance function, making
them suitable for wear on wet and oily surfaces. Sale of such STICO anti-slip shoes amounted to approximately S$0.2 million, S$97,000
and S$120,000 in revenue, recognized as other income, for the years ended December 31, 2019, 2020 and 2021, respectively.
We
generally provide a one year warranty period for the cleaning systems manufactured and sold to our customers from acceptance of delivery
of such cleaning systems. During the warranty period, we offer free replacement for components and related parts, as well as repair and
servicing of our cleaning systems. After expiry of the warranty period, repair and maintenance services will be provided with additional
charges, based on the complexity of the services and cost of components required for any such repair or maintenance. Other equipment
is warranted to be in good working order without faulty workmanship or faulty materials. We generally do not offer any product return
or refunds for our cleaning systems and other equipment as our customers acknowledge that our products are functional and met their technical
specifications upon delivery and inspection by them.
Our
Services
We
provide centralized dishwashing services at our Hygieia Facility in Singapore. Leveraging on our expertise in designing, developing and
manufacturing cleaning systems, we set up our Hygieia Facility in 2014 with semi-automated washing lines, which are designed and manufactured
in-house, for our centralized dishwashing operations. As of the date of this prospectus, four semi-automated dishwashing lines
are installed at our Hygieia Facility, of which two are for washing Halal dishware and another two are for washing non-Halal dishware.
Our dishwashing lines have the flexibility to process dishware made of different materials including melamine, stainless steel, porcelain
and glass. The Halal washing lines at our Hygieia Facility have obtained a Halal certification, and are thus suitable for the washing
of Halal dishware.
Incorporating
our experience and know-how from precision cleaning, each of our in-house designed semi-automated washing lines are over 20 meters in
length and are designed for automated cleaning and washing of dishware, with high capacity to handle large volume and each washing line
can wash up to 20 to 30 tubs per hour, depending on the size and number of items in each tub.
Our
washing lines also have proper segregation to minimize cross contamination. Each of the washing lines at our Hygieia Facility is standalone
and separate, and the configuration of our Hygieia Facility is such that all the soiled dishware will be loaded on the respective washing
lines at the same end and the cleaned dishware is removed and unloaded from the washing lines at the other end, thus keeping the soiled
dishware and tubs completely separate from the cleaned dishware and tubs and Halal dishware completely separate from the non-Halal dishware.
Our technical support team at our Hygieia Facility oversees our centralized dishwashing operations and provides maintenance services
for our washing lines in order to ensure high reliability for our customers.
Soiled
dishware is collected from our customers’ premises and transported to our Hygieia Facility for centralized dishwashing and then
sent back to our customers’ premises daily throughout the year. As the soiled dishware can be loaded into our washing lines without
the need for pre-rinsing, this removes the need for dishwashers at our customers’ premises and saves time and labor costs. The
risks of contamination due to food remnants or cleaning detergent is also eradicated. Our off-site centralized dishwashing services also
allows our customers to cut down on manpower needed to wash dishware as well as the space allocated to dishwashing in order to maximize
the dining area.
Since
2015, we also provide general cleaning services to food courts and hawker centers in Singapore, which comprise off-site centralized dishwashing
services and on-site cleaning services. For such general cleaning services, we provide the off-site centralized dishwashing services
at our Hygieia Facility and generally outsource the on-site cleaning services to third party sub-contractors. Such customers enter into
general cleaning service contracts with our Group to appoint us as the main contractor to provide integrated cleaning solutions and services
for their food courts or hawker centers, thereby reducing their administrative burden in having to liaise with various service providers
for the cleaning of different aspects of the food and beverage establishment. As our Group specializes in centralized dishwashing services,
we generally outsource the labor-intensive on-site cleaning services to our sub-contractors in order to focus our resources on our core
competencies. Such on-site cleaning services include, among others, cleaning and maintenance of the entire food and beverage establishment
and pest control, as well as the removal and disposal of food waste, litter, rubbish and refuse.
We
typically enter into contracts for our provision of centralized dishwashing and general cleaning services with our customers for a term
of one to two years. As of April 24, 2022, 14 of the agreements for our provision of centralized dishwashing and general cleaning
services will expire during the year ending December 31, 2022. In view of the continued long-term relationship of at least three to four
years with most of the customer groups with whom the Group has expiring contracts, we are confident that the Group will be able to renew
these contracts.
We
generally charge our customers a fixed monthly fee for both our centralized dishwashing services and general cleaning services, and additional
fees if extra services are required. Such extra services include ad hoc logistics services and extra manpower for the decolorization
or de-staining of the dishware. Our sub-contractors are then paid a monthly fee for their on-site cleaning services, depending on the
number of on-site staff required to work at the relevant food and beverage establishment during the relevant period. For further details,
please refer to the paragraphs headed “Key contract terms with customers — Provision of general cleaning services”
and “Sub-contracting” in this section.
Dishwashing
equipment that we lease to customers
We
also provide leasing services of dishwashing equipment to our customers, mainly for use at food and beverage establishments in Singapore.
The terms of such leases are typically for a period of one to two year(s) and renew automatically, and our customers are charged a fixed
monthly fee for such leasing services. For further details, please refer to the paragraphs headed “Key contract terms with customers—
Provision of dishwashing equipment leasing services.” The dishwashing equipment leased to our customers typically enables a food
and beverage establishment to wash up to 150 racks of items per hour, depending on the size of the equipment. Such dishwashing equipment
is designed and manufactured in-house and can be customized to accommodate the needs of different customers.
Sale of Cleaning Systems
The
cleaning systems designed, developed, manufactured and sold by our Group can generally be divided into two categories, namely precision
cleaning systems and other cleaning systems, and are designed and customized based on our customers’ requirements and specifications.
Precision cleaning systems consist of equipment and machines designed for the cleaning of critical surfaces in precision equipment with
minimal particle generation and entrapment. Such cleaning processes aim to meet a measured limit of contaminants such as the particle
count and/or non-volatile residue requirements, which are supplied by the customer or industry standards. Our cleaning systems are generally
sold to HDD, semiconductor manufacturers or industrial electronic equipment/product manufacturers and are designed for cleaning of surfaces
and product parts in various industrial end-use applications. Leveraging on our engineering know-how and expertise, we are able to design,
develop and manufacture quality and customized products that suit our customers’ varying needs. Ancillary to our sale of cleaning
systems, our Group also manufactures and sells other equipment such as filtration units, provides repair and servicing of cleaning systems
and sells related parts.
For
the fiscal years ended December 31, 2019, 2020 and 2021 and the period from January 1, 2022 to April 24, 2022, we were engaged
by 15, 14, 11 and 8 customers, respectively, and we completed 101, 134, 90 and 20 orders, respectively, for our sale of
cleaning systems and other equipment.
The
following table sets forth the movement in orders backlog for our sale of cleaning systems and other equipment in terms of the number
of orders during the year or period.
| |
Year
ended December 31, | | |
Period
from January 1, 2022 to April 24, | |
| |
2019 | | |
2020 | | |
2021 | | |
2022 | |
| |
| | |
| | |
| | |
| |
Number
of orders as of beginning of year/period(1) | |
| 14 | | |
| 14 | | |
| 20 | | |
| 44 | |
Number
of new orders | |
| 101 | | |
| 140 | | |
| 114 | | |
| 33 | |
Number
of completed orders | |
| 101 | | |
| 134 | | |
| 90 | | |
| 20 | |
Number
of orders as of year/period-end(2) | |
| 14 | | |
| 20 | | |
| 44 | | |
| 57 | |
(1)
Number of orders as of beginning of year/period represents the number of orders which were not completed as of the beginning of the relevant
year or period.
(2)
Number of orders as of year/period-end represents the number of ongoing orders as of the end of the relevant year/period that will be
carried forward to the next year or period.
The
following table sets forth the movement in orders backlog for our sale of cleaning systems and other equipment in terms of approximate
contract value of orders during the fiscal years ended December 31, 2019, 2020 and 2021 and the period from January 1, 2022 to April
24, 2022.
| |
Year
ended December 31, | | |
Period
from January 1, 2022 to | |
| |
2019 | | |
2020 | | |
2021 | | |
April 24, 2022 | |
| |
| (SGD’000) | | |
| (SGD’000) | | |
| (SGD’000) | | |
| (SGD’000) | |
| |
| | | |
| | | |
| | | |
| | |
Outstanding
contract value as of beginning of year or period(1) | |
| 3,092 | | |
| 3,668 | | |
| 5,820 | | |
| 19,997 | |
New
contract value for the year | |
| 11,298 | | |
| 17,935 | | |
| 22,208 | | |
| 15,815 | |
Revenue
recognized for the year | |
| 10,723 | | |
| 15,783 | | |
| 8,031 | | |
| 1,410 | |
Outstanding
contract value as of year/period end(2) | |
| 3,668 | | |
| 5,820 | | |
| 19,997 | | |
| 34,402 | |
(1)
Outstanding contract value as of beginning of year/period represents the contract value of orders which were not completed as of
the beginning of the relevant year or period.
(2)
Outstanding contract value as of year/period-end represents the contract value of ongoing orders as of the end of the relevant
year or period that will be carried forward to the next year or period.
Design,
Development and Sale Process
A
brief description of our design and development process of our cleaning systems is set out as follows:
(1)
Customers contact our sales team to inquire about our cleaning systems or we submit tenders to potential customers to bid for contracts
Generally,
customers will approach our sales team to inquire about the purchase of our cleaning systems and may inform us of their specifications
or requirements. In addition, when suitable opportunities arise, we will also submit tenders to potential customers to bid for certain
contracts based on customers’ tender requirements.
(2)
Our R&D and engineering team will evaluate our customer’s requirements and specifications
Based
on the customer’s initial instructions, our R&D and engineering team will evaluate and will have internal discussions on the
design and development plan for the proposed cleaning system. Such discussions include product functions, fabrication and assembly requirements,
components, parts and materials required and any customized designs and/or functions required to be implemented in order to develop and
manufacture the proposed cleaning system according to our customer’s requirements.
(3)
Our R&D and engineering team will discuss the feasibility, design and specifications of the proposed cleaning system with our customer
Our
R&D and engineering team will discuss the feasibility, design and specifications of the proposed cleaning system with our customer,
in order to understand their specific needs and requirements, the proposed budget and intended usage for such cleaning systems. We will
also discuss market developments and trends with our customer, in order to better understand the latest cleaning systems technology utilized
in its industry, so that we can provide a comprehensive proposal to our customer.
After
such discussions with our customer, we will provide a proposal, which may include draft designs with suggestions on the technical specifications
and materials to be used for the cleaning system. The technical specifications of any cleaning system largely depend on its intended
use, type and desired outcome of our customer, including washing or rinsing frequency, spray rinse flow rate, drying speed, cleanroom
standards, desired residual liquid or air particle count or non-volatile residual levels. It generally takes approximately one to two
weeks for us to deliver a proposal to a customer, depending on the complexity of the design.
(4)
Our sales team will provide a price quotation to our customers
After
the proposal and the designs of the cleaning system have been finalized and confirmed by our customer, our R&D and engineering team
will discuss the proposed requirements with our procurement team in order to provide a price quotation to our customer. The quotation
will take into account the complexity of the cleaning system to be manufactured and sold, the cost of the relevant parts and materials
and the expected duration of the project. It generally takes approximately one to two weeks for us to deliver a quotation to a customer,
depending on the complexity of the design and the time required to source for and obtain quotations from our suppliers for certain parts
and components.
(5)
After receiving confirmation from our customer, we will prepare detailed drawings, 3D designs and/or model simulations
After
the quotation has been accepted by our customer, our R&D and engineering team will prepare the designs and detailed drawings for
fabrication, manufacture and assembly of the cleaning system. Depending on the nature of the project, we may also use our software systems
to prepare design simulations to enable the customer to have a preview of the proposed cleaning system upon the request of the customer,
and to demonstrate the feasibility and functionality of the design. It generally takes approximately one to two weeks for our R&D
and engineering team to prepare such detail drawings and designs and/or model simulations for our customer.
(6)
Once the drawings and designs are finalized, we will procure the relevant parts, materials and components
Once
the design and development plan for the cleaning system has been finalized, our R&D and engineering team will prepare the finalized
list of relevant parts, materials and components required for the manufacturing and production process, which will then be handed over
to our procurement team. Our procurement team will then proceed to source for and place orders for such parts, materials and components
from our suppliers.
(7)
Production and manufacturing
Generally,
our production process begins with the fabrication of the outer enclosure or tank for the cleaning system or equipment while we wait
for the necessary parts, materials and components to be delivered. Once we have the necessary supplies on hand, our engineering and technical
support team manufactures and assembles the various modules and components, which will comprise the cleaning system or equipment based
or the detailed drawings and designs.
Our
JCS Facility is well-equipped for the fabrication, production, assembly and in-house testing of our cleaning systems and equipment. In
particular, our JCS Facility is fitted with machines, which utilize the CNC manufacturing process for automated control of tools and
machinery using pre- programmed computer software. We also have various machinery and tools at our JCS Facility which are used in the
production and manufacturing of the modules and components of the cleaning systems, including laser cutting machines and welding machines.
Once the various modules and components have been produced, they are sent to our sub-assembly and system integration units for assembly
and implementation. Once the final product has been assembled and completed, we conduct in-house testing on the cleaning system or equipment
prior to delivery to our customer.
A
brief description of the flow of our production and manufacturing process of cleaning systems and equipment is set out as follows:
(a)
Fabrication of outer body of the cleaning system or equipment
Once
the design and development plan for the cleaning system or equipment has been finalized, our engineers and technical support team will
commence the production and manufacturing process by starting the fabrication of the outer body, which is usually the structure, enclosure
or tank for the cleaning system or equipment, mainly using stainless steel. Such fabrication of the outer body is done in-house using
(a) laser cutting machines which cut the metal sheets; (b) hydraulic press brake machines which bend the metal sheets to form the shape
of the enclosure or tanks; and (c) welding machines to join the material together by welding.
(b)
Delivery of components, parts and materials which undergo quality checks
Once
the relevant components, parts and materials required for the manufacture of the cleaning system and equipment have been delivered to
our JCS Facility, our quality control team will conduct an inspection upon their arrival to determine whether such components, parts
and materials conform to our quality standards and the requirements stated in our purchase orders, or whether there are any defects,
dents or scratches.
(c)
Production and manufacturing of modules and components
Once
the relevant components, parts and materials have been inspected, we will proceed to produce and manufacture the cleaning system or equipment.
Our engineers and technical support team will use the designs created for our customer to start fabrication of the cleaning system or
equipment. The production and manufacturing process utilizes CNC machines for automated control of tools and machinery using pre-programmed
computer software, thus minimizing the manual operation and labor required, and enabling us to manufacture each component more efficiently.
Once the software program has been input, we will conduct a trial run to ensure that the cleaning system or equipment meets our customer’s
requirements and specifications.
The
production and manufacturing processes for the modules and components of our cleaning systems and equipment include (a) laser cutting
machines to cut metal sheets to form the machine cover and various parts required to assemble the cleaning system or equipment, such
as brackets and air knives; (b) welding machines to weld together and assemble the fabricated tanks or enclosures with the various parts
manufactured; and (c) machining tools to manufacture precision parts such as robotic arms.
(d)
Sub-assembly and system integration of modules and components
Once
each module and component has been manufactured, it is sent to our sub-assembly and system integration units for assembly and implementation.
At this stage, the various manufactured modules and components are assembled together, together with the additional related parts such
as pipings, pumps and filters, as well as the control panels and electrical wiring to establish the electrical connection for the cleaning
systems and equipment. Certain modules and components will also undergo electropolishing prior to assembly to provide additional protection
to their stainless steel surface.
At
the sub-assembly stage, our engineers and technical support team also conduct quality checks on the functionality and performance of
each cleaning system module and component.
(e)
In-house testing of assembled cleaning systems and modules
Once
the final product has been assembled and completed, the cleaning system or equipment is sent for in-house testing prior to delivery to
our customer. Our technical support team will conduct functionality tests to ensure that the overall performance of the cleaning system
or equipment is satisfactory and that none of the modules and components are malfunctional, perform in-house quality checks and ensure
that the final product functions and performs in accordance with our customer’s order and specifications. A programmer will also
check all the input/output points with an electrician, before conducting the program testing and testing the cleaning system or equipment
for load and dryness.
(f)
Delivery, implementation and inspection by our customer
After
production, manufacturing and in-house testing have been completed, the cleaning system or equipment will be delivered to our customer’s
designated location. Our technical support team will assist with the implementation of the cleaning system or equipment at our customer’s
premises and assist our customer during any inspection or tests conducted. Our customers will typically use cleanliness testing devices,
such as a liquid particle counter which is an analytical instrument used to size and count particles in a liquid, to verify that the
cleaned item achieves the desired limit of post-cleaning residual contaminants and meets their standards. After our customer conducts
its inspections or tests, it is required to sign on a checklist to acknowledge that the cleaning system was functional and met their
technical specifications. If required, we will also provide on-site training to our customer on the use and maintenance of the cleaning
system or equipment.
The
lead time from confirmation of an order by our customer to delivery of the final product generally takes approximately eight to 18 weeks,
depending on the complexity of the design and the component lead time.
Provision of Centralized
Dishwashing Services
We
provide centralized dishwashing services at our Hygieia Facility which has four semi- automated dishwashing lines, of which two are for
washing Halal dishware and the other two are for washing non-Halal dishware.
A
brief description of the flow of the centralized dishwashing process is set out as follows:
(1)
Customers contact our sales team and inquire about our centralized dishwashing services or we may submit tenders to potential customers
to bid for contracts
Generally,
customers will approach us to inquire about the scope and fees for our centralized dishwashing services and request a quotation for such
services. In addition, when suitable opportunities arise, we will also submit tenders to potential customers to bid for certain contracts.
Some
customers may also request a quotation for general cleaning services for the food and beverage establishments, which will comprise both
off-site centralized dishwashing services and on-site cleaning services. In such instances, we may request a quotation for such on-site
cleaning services from our sub-contractors or may undertake such on-site cleaning services ourselves.
(2)
Our sales team conducts site visit at our customer’s premises and assesses the services required
Our
sales team will conduct a site visit at the customer’s premises, to inspect the space and the logistical arrangements to be made
for collection of the soiled dishware to our Hygieia Facility and delivery of the cleaned dishware from our Hygieia Facility.
(3)
Our sales team will provide a price quotation to our customer. After receiving confirmation, we proceed with provision of centralized
dishwashing services
Based
on our customers’ requirements, our sales team will prepare a price quotation, which will take into account, among other things,
(a) the size of the food and beverage establishment, number of seats and expected customer turnover, (b) frequency of collection and
delivery of dishware on a daily basis; (c) whether thermo stickers are required; (d) whether the services of a third party logistics
provider for collection and return of the dishware are required; and (e) whether the services of our sub-contractor for on-site cleaning
services are required.
After
the quotation has been accepted by our customer and the service contract has been entered into, we will proceed with the provision of
centralized dishwashing services based on the agreed terms of the contract.
(4)
We or a third party logistics services provider will collect and deliver the soiled dishware from our customer to our facility
On
a daily basis, the soiled dishware will be placed in tubs and trolleys provided by us at our customer’s premises, with Halal dishware
being separated from non-Halal dishware. Generally, we or a third party logistics services provider will collect the soiled dishware
from our customer’s premises, which will be delivered to our Hygieia Facility, usually one to two times per day depending on the
customers’ needs. Upon arrival at our Hygieia Facility, the soiled dishware will be unpacked from the tubs by our staff and food
remnants will be removed, if necessary, before the dishware is placed onto the respective Halal and non-Halal semi-automated washing
lines for washing, rinsing and blow-drying. The rinsing is performed with high temperatures to sanitize the dishware. In addition, our
customers may also request that thermo stickers are placed on a random sample of dishware to ensure that the temperature during the dishwashing
process is maintained at a certain minimum temperature for sanitization purposes.
The
lead time from collection of the soiled dishware from our customer’s premises to completion of the dishwashing process takes approximately
four to 12 hours, depending on the location of our customer’s premises and frequency of collection.
(5)
Our team will perform quality checks, and any dishware that requires further washing will be put back onto the washing lines. Cleaned
dishware will be packed for delivery
After
the dishware has been washed, rinsed and dried, the cleaned dishware is inspected by our staff before it is packed for delivery back
to our customer’s premises. If any of the dishware does not pass our quality checks, the dishware will be put back onto the washing
lines for re-washing. Once the cleaned dishware has passed our quality checks, it will be packed into clean tubs and trolleys, and moved
to the storage area at our Hygieia Facility and will be ready for delivery back to our customers’ premises according to the delivery
schedule, usually one to two times per day depending on our customers’ needs.
(6)
The cleaned dishware will be packed and delivered by us or the third party logistics services provider to our customer’s
premises
At
the scheduled time, we or our third party logistics services provider will pick up the cleaned dishware from our Hygieia Facility for
delivery back to our customer’s premises.
The
lead time from the inspection and quality checks on the cleaned dishware to the delivery of the cleaned dishware back to our customers’
premises takes approximately three to 12 hours, depending on the delivery schedule for each customer.
Pricing Policy
In
respect of the sale of cleaning systems and other equipment, we generally determine the price on a cost-plus basis for each cleaning
system or equipment that we manufacture and produce as our cleaning systems are customized. The unit selling price and gross profit margin
of each product may fluctuate significantly from order to order, depending on various factors and considerations, including but not limited
to the following:
●
complexity of the design, particularly for aqueous washing systems and train cleaning systems, as the cleaning systems may include different
features and various modules, components and parts, such as ultrasonic wash and rinse stations, spray rinse stations, vacuum oven, cleaning
stations with robotic transfer functions, washing baskets, pneumatic control systems, heaters, sensors and pumps;
●
the type and availability of the components and materials, such as stainless steel or aluminum, used for the cleaning system or equipment,
which would vary in terms of cost price and component lead time;
●
technical requirements for the production, including whether the customer’s approval is required for any changes to the processes,
products or services for the production and manufacturing process;
●
size and dimensions of the cleaning system or equipment, including the overall machine dimension, tank dimension and the size and number
of modules, components and parts installed;
●
level and number of functionality tests to be conducted, including whether test reports and certificates are to be provided to the customer;
●
the customer’s specifications for certain designated suppliers and/or sub-contractors to be used for the production and manufacture
of the cleaning system;
●
purchase quantity, as certain customers may place orders for more than one unit of the same cleaning system or equipment;
●
timeline for the production and manufacture of the cleaning system or equipment;
●
provision of installation, testing and commissioning services;
●
provision of on-site training by our technical personnel for our customer’s employees; and
●
the expected number of units to be placed by our customer in the future.
The
selling price and the corresponding profit margin for each cleaning system or equipment which we manufacture and sell will depend on
the above factors and considerations, and in particular, the complexity of the cleaning system or equipment to be manufactured and sold,
the cost of the relevant parts and materials and the expected duration of the project. Complex aqueous washing systems and train cleaning
systems which are generally larger in size and comprised of various modules, components and parts will require a longer time for our
R&D and engineering team to prepare the detailed drawings, designs and/or model simulations and will also require a longer time for
production and manufacture, with a corresponding increase in the cost of production and the number of relevant parts and materials. Less
complex aqueous washing systems such as standalone cleaning machines will require a comparatively shorter time for design, production
and manufacture, as well as lower cost of production. From a commercial perspective, our Group will usually quote an initial higher selling
price taking into consideration the aforesaid factors and with reference to the range of selling prices for similar cleaning systems
and equipment sold by our Group with an aim to maximizing our profit. During the price negotiation process, our Group will adopt different
negotiation strategies for different customers and our pricing is affected by various factors, such as the budget and cost consciousness
of the customer, size of the customer, our relationship with the customer, the customer’s specifications and requirements, the
features and functions of each product and the needs of the customer. The final selling price for each cleaning system or equipment will
be arrived at after arm’s length negotiation and largely dependent on the respective bargaining power of our Group and the customer.
In
respect of the sale of related parts used in our cleaning systems, we generally determine the price based on the selling price suggested
by our suppliers or at a mark-up of our own costs.
In
respect of the provision of centralized dishwashing services and general cleaning services, we generally charge our customers a fixed
monthly fee which is determined with reference to factors such as the size, number of seats and expected customer turnover of the food
and beverage establishment, frequency of delivery and collection of dishware on a daily basis, our costs of dishwashing (including staff
costs, cleaning detergent costs and utilities costs), sub-contracting costs, logistic costs, expected costs to be incurred by our customers
if they had the capacity and were to engage their own staff to wash the dishware, duration of the contract and the capacity and utilization
rate of our dishwashing lines. We may charge our customers additional fees if extra services are required.
In
respect of the dishwashing equipment leasing services, the rental of our dishwashing equipment to our customers is determined with reference
to prevailing market rates. In respect of our wholesale sale of STICO anti-slip shoes, the prices are determined with reference to the
suggested retail price under our distributorship arrangement and the purchase quantity.
Credit
period and payment methods
In
respect of the manufacture and sale of cleaning systems, depending on, among other things, the technical requirements, project amount
and size, project costs, relationship with our customers and the credit period offered by our suppliers to our Group in respect of the
materials and components used in the cleaning systems, our customers may be required to pay a deposit and settle the remaining purchase
price upon delivery and acceptance of the product, according to the terms of the contract. In other cases, our customers are generally
offered credit terms of 30 to 60 days from delivery. In respect of the sale of other equipment, our customers are generally offered credit
terms of 30 to 45 days from the day on which the order is completed.
In
respect of the sale of related parts used in our cleaning systems, our customers are generally offered credit periods ranging from 30
days to 60 days.
In
respect of the provision of centralized dishwashing services and general cleaning services, our customers are generally offered credit
terms of seven to 30 days upon the receipt of invoice. In respect of the provision of dishwashing equipment leasing services, our customers
are generally offered credit terms of 30 days upon receipt of invoice.
Settlements
with our customers who purchase cleaning systems and other equipment from us are mainly in S$ or US$ by way of check or telegraphic
transfers. Settlements with our customers who use our centralized dishwashing services, general cleaning services and dishwashing equipment
leasing services are mainly in S$ by way of check or telegraphic transfers.
Seasonality
Our
Directors believe that both our sale of cleaning systems and other equipment operations and our provision of centralized dishwashing
services and ancillary services operations are not subject to any seasonality.
Our Customers
During the fiscal years
ended December 31, 2019, 2020 and 2021, our customers were from various industries, including HDD manufacturing, semiconductor manufacturing,
food and beverage and public transportation. As of the date of this prospectus, our customers continue to be from such various industries.
Our cleaning systems and other equipment are mainly sold in Singapore and Malaysia, and we provided centralized dishwashing and ancillary
services to customers in Singapore.
Top
five customers
For
the years ended December 31, 2019, 2020 and 2021, our top five customers accounted for approximately 68.5%, 88.4% and 80.6% of
our total revenue, respectively. Our Group’s largest customer accounted for approximately 28.8%, 61.5% and 32.7% of our
total revenue, respectively, for the corresponding year. During the fiscal years ended December 31, 2019, 2020 and 2021 and up to the
present, we have not experienced any material disputes with our customers.
The
following table sets out information of our top five customers for the periods indicated below:
For the year ended December
31, 2019
Customer |
|
Country of Incorporation/
Establishment |
|
Product/Services |
|
Year of Commencement of Business Relationship |
|
|
General Payments |
|
Credit Terms |
|
Transaction Amounts
(SGD) |
|
|
% of Total Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group B(1) |
|
Malaysia and the United States |
|
Cleaning systems |
|
|
2009 |
|
|
60 days |
|
By check or telegraphic transfer |
|
|
5,244 |
|
|
|
28.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group E(4) |
|
Taiwan, South Korea, Thailand and Belgium |
|
Other equipment & related parts |
|
|
2008 |
|
|
45 days |
|
By check or telegraphic transfer |
|
|
2,368 |
|
|
|
13.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group D(3) |
|
Singapore |
|
General cleaning services & leasing of dishwashing equipment |
|
|
2016 |
|
|
7 to 30 days |
|
By check or telegraphic transfer |
|
|
2,029 |
|
|
|
11.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group C(2) |
|
Singapore |
|
Centralized dishwashing & general cleaning services, repair & servicing of cleaning systems |
|
|
2015 |
|
|
30 days |
|
By check or telegraphic transfer |
|
|
1,672 |
|
|
|
9.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group F(5) |
|
Singapore |
|
Centralized dishwashing & general cleaning services, repair & servicing of cleaning
systems |
|
|
2015 |
|
|
30 or 60 days |
|
By check or telegraphic transfer |
|
|
1,166 |
|
|
|
6.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
12,479 |
|
|
|
68.5 |
|
For the year ended December
31, 2020
Customer |
|
Country of Incorporation/Establishment |
|
Product/Services |
|
Year of Commencement of Business Relationship |
|
|
General Payments |
|
Credit terms |
|
Transaction amounts
(SGD) |
|
|
% of Total Sales |
|
Group B(1) |
|
Malaysia, the United States and PRC |
|
Cleaning systems |
|
|
2009 |
|
|
60 days |
|
By check or telegraphic transfer |
|
$ |
13,163 |
|
|
|
61.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group E(4) |
|
Taiwan, South Korea, Thailand, Belgium and the United States |
|
Other equipment & related parts |
|
|
2008 |
|
|
45 days |
|
By check or telegraphic transfer |
|
$ |
2,361 |
|
|
|
11.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group C(2) |
|
Singapore |
|
General cleaning services & leasing of dishwashing equipment |
|
|
2015 |
|
|
30 days |
|
By check or telegraphic transfer |
|
$ |
1,395 |
|
|
|
6.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group D(3) |
|
Singapore |
|
General cleaning services & leasing of dishwashing equipment |
|
|
2016 |
|
|
7 to 30 days |
|
By check or telegraphic transfer |
|
$ |
1,230 |
|
|
|
5.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group F(5) |
|
Singapore |
|
Centralized dishwashing & general cleaning services, repair & servicing of cleaning
systems |
|
|
2015 |
|
|
30 or 60 days |
|
By check or telegraphic transfer |
|
$ |
765 |
|
|
|
3.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
$ |
18,914 |
|
|
|
88.4 |
|
For the year ended December
31, 2021
Customer |
|
Country of Incorporation/Establishment |
|
Product/Services |
|
Year of Commencement of Business Relationship |
|
|
General Payments |
|
Credit Terms |
|
Transaction Amounts
(SGD) |
|
|
% of Total Sales |
|
Group B(1) |
|
Malaysia and the United States |
|
Cleaning systems |
|
|
2009 |
|
|
60 days |
|
By check or telegraphic transfer |
|
$ |
4,833 |
|
|
|
32.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group E(4) |
|
South Korea, Thailand, Belgium and the United States |
|
Other equipment & related parts |
|
|
2008 |
|
|
45 days |
|
By check or telegraphic transfer |
|
$ |
3,188 |
|
|
|
21.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group D(3) |
|
Singapore |
|
General cleaning services & leasing of dishwashing equipment |
|
|
2016 |
|
|
7 to 30 days |
|
By check or telegraphic transfer |
|
$ |
1,188 |
|
|
|
8.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group C(2) |
|
Singapore |
|
General cleaning services & leasing of dishwashing equipment |
|
|
2015 |
|
|
30 days |
|
By check or telegraphic transfer |
|
$ |
1,441 |
|
|
|
9.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group G(6) |
|
Singapore |
|
Centralized dishwashing & general cleaning services |
|
|
2015 |
|
|
30 days |
|
By telegraphic transfer |
|
$ |
1,254 |
|
|
|
8.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
$ |
11,904 |
|
|
|
80.6 |
|
(1) Four of the
entities in Customer Group B, which are principally engaged in the manufacture of HDD, were our customers for the years ended December
31, 2019, 2020 and 2021, respectively. The ultimate holding company of Customer Group B is headquartered in the United States with international
offices, and is listed on Nasdaq.
(2) Three, four
and four of the entities in Customer Group C, all of which are principally engaged as operators of food courts and retail malls or health
and eldercare service providers, were our customers for the years ended December 31, 2019, 2020 and 2021, respectively. The holding entity
of Customer Group C is headquartered in Singapore.
(3) Two of the
entities in Customer Group D, which are principally engaged as operators of food courts, were our customers for the years ended December
31, 2019, 2020 and 2021, respectively. The shares of Customer Group D’s parent company were listed on the Mainboard of the Singapore
Exchange Securities Trading Limited prior to June 5, 2020. The company is now privatized.
(4) Four, five
and four entities in Customer Group E, which are principally engaged in the provision of engine and industrial solutions, were our customers
for the years ended December 31 2019, 2020 and 2021, respectively. The ultimate holding company of Customer Group E is headquartered in
the United States with international offices, and is listed on the New York Stock Exchange.
(5) Four entities
in Customer Group F, which are principally engaged as ground-handling and in-flight catering services providers, were our customers for
the years ended December 31 2019, 2020 and 2021. The parent company of Customer Group F is headquartered in Singapore and is listed on
the Mainboard of the Singapore Exchange Securities Trading Limited.
(6) One entity
in Customer Group G, which is principally engaged as an operator of food courts, was our customer for the year ended December
31, 2021. The company is headquartered in Singapore and is listed on the Mainboard of the Singapore Exchange Securities Trading Limited.
Competitive Strengths
Long
and proven track record in precision cleaning in Singapore
We
have been providing cleaning systems to our customers for over 13 years and have accumulated extensive industry experience. We believe
our strong R&D and engineering capabilities enable us to design, develop and manufacture quality precision cleaning systems and other
cleaning systems for various industrial end-use applications, which are customized to each of our customers’ needs.
In
April 2018, JCS was awarded the Singapore Quality Class Certification by Enterprise Singapore, which validates JCS’s commitment
towards continuous improvement and sustainable business performance and commendable management practices. The management system of JCS
has also been assessed as conforming to ISO 9001: 2015 and ISO 45001: 2018 for design, manufacture, supply, installation and serving
of integrated cleaning systems.
We
believe our strong track record in precision cleaning will facilitate the promotion and demand for our products with both existing and
new customers, as well as the expansion of our business. We will continue to develop products for different industrial end-use applications
and to meet the needs of our customers across various industries by expanding our product portfolio.
Stable
relationships with our major customers
Since
2006, we have developed stable relationships with our major customers and we believe that our engineering know-how and ability to design,
develop and manufacture customized cleaning systems to meet our customers’ requirements and specifications and our ability to provide
centralized dishwashing services have been the key drivers for them to appoint us as their suppliers over the years.
We have
maintained stable business relationships with a majority of our major customers. During the fiscal years ended December 31, 2019,
2020 and 2021, our top five customers included renowned HDD manufacturers, a public transportation operator and food and beverage
establishment operators in Singapore, three of which have more than 10 years of business relationships with us. As of the date of this
prospectus, our customers continue to be from such various industries. We believe that certain customers, such as multinational corporations,
may have stringent selection processes for their suppliers and we have had to meet certain criteria and audit checks before becoming
an approved qualified supplier.
Experienced
R&D and engineering team
We have
an experienced R&D and engineering team led by Mr. Zhao Liang, who is also a member of our senior management team. Our Directors
believe that our Group has strong in-house R&D and engineering capabilities to design high quality precision cleaning systems and
other cleaning systems customized to meet the standards and particular needs of our customers, including HDD, semiconductors and industrial
electronic equipment/product manufacturers. As of the date of this prospectus, our R&D and engineering team has 11 members,
six of whom have obtained a bachelor’s degree in engineering.
With
our strong R&D and engineering team, we are able to design and develop customized cleaning systems catered to our customers’
requirements and specifications. Against the backdrop of Industry 4.0 and an increasing demand for digitized and automated machinery
in the manufacturing space, we have entered into collaborations with a customer, as well as other parties, to develop new customized
cleaning solutions. In addition to previously co-developing a high performance dryer with one of our customers, we have also developed
an initial prototype of a robot floor scrubber, which comprises a robotic enhancement that can be attached to floor cleaning equipment,
which will then enable such floor cleaning equipment to be used without manual operation. Following from this, we have entered into a
collaboration with a statutory board whose functions and duties include the management and operation of the segment of the public transportation
system in Singapore (“Collaboration Partner”) to co-develop an autonomous train interior cleaning robot, which is capable
of cleaning the floor of the interior of public trains autonomously based on the train type and car configuration. Our Directors believe
that such customized cleaning systems and collaborations demonstrate our customers’ belief in the strength of our R&D and engineering
capabilities.
Experienced
management team
We
have an experienced management team, led by Ms. Hong, our Chairman, executive Director, chief executive officer and founder, who
has been instrumental in spearheading the growth of our Group. Ms. Hong has over 16 years of experience in the cleaning solutions industry
in Singapore and she is primarily responsible for planning and execution of our Group’s business strategies, including product
development, as well as managing our Group’s relationships.
Our
Group is supported by a senior management team with substantial experience in the cleaning solutions industry. Our senior management
team includes members such as Mr. Zhao Liang, who is the head of our R&D and engineering team and has over 13 years of experience
in the precision cleaning equipment industry.
For
details of the profiles of the senior management team, please refer to “Management” in this Prospectus.
Business Strategies
We
intend to expand our business and strengthen our market position in the cleaning systems industry in Singapore, Malaysia and other countries
and in the centralized dishwashing services industry in Singapore by implementing the following business strategies and future plans.
Expand
our product portfolio and R&D and engineering team
We
believe that our R&D capabilities and engineering expertise are vital in maintaining our long-term competitiveness and driving our
business growth. According to the Euromonitor Report, Industry 4.0 is the current trend for automation of industrial manufacturing and
it has been an ongoing process in Singapore. As part of the Industry 4.0 initiatives, the Singapore government has allocated investment
in R&D projects that speed up industry transformation projects to help local manufacturers undergo the industry transformation. Such
ongoing initiatives help create the demand for both digitized and automated machinery in the manufacturing space.
(1)
Expand our product portfolio
We
have a long track record in the manufacture and sale of precision cleaning systems and other equipment and we are committed to continuing
to increase our R&D and engineering capabilities so as to align ourselves with the Industry 4.0 initiatives and to cope with the
continuously increasing standards and requirements of our customers. Going forward, against the backdrop of Industry 4.0, we expect an
increase in demand for total automation products and solutions and we intend to leverage on our established reputation and engineering
know-how, as well as industry expertise to capture opportunities arising therefrom. In this regard, we intend to further grow our automated
cleaning systems and equipment business by expanding our product portfolio and developing cleaning systems which can be used across various
industries for industrial and/or commercial uses.
To
expand our product portfolio and as part of our R&D efforts, we have developed an initial prototype of a robot floor scrubber, which
comprises a robotic enhancement that can be attached to floor cleaning equipment, which will then enable such floor cleaning equipment
to be used without manual operation. The development of this initial prototype led us to enter into a collaboration with our Collaboration
Partner, to co-develop an autonomous train interior cleaning robot which is capable of cleaning the floor of the interior of public trains
autonomously based on the train type and car configuration. Our Group intends to further develop, build on and customize our initial
prototype of a robot floor scrubber to develop an autonomous train interior cleaning robot, which can operate in the required space and
configuration of public trains, for the collaboration with our Collaboration Partner.
Pursuant
to the terms of the collaboration, the collaboration was initially agreed to be for a period of 12 months from April 30, 2019. We agreed
with our Collaboration Partner to extend the timeline and in-house testing of the functions of the parts and components of the prototype
of the autonomous train interior cleaning robot was conducted in the second and third quarters of 2020. On August 13, 2021, we conducted
the final on-site testing of the autonomous train interior cleaning robot at the train depot and submitted the final progress and project
report to our Collaboration Partner.
Under
the terms of the collaboration, our Group provides in-kind contribution by undertaking the agreed scope of work to develop the autonomous
train interior cleaning robot, which includes conducting the engineering study and data collection, prototyping and system testing, whereas
our Collaboration Partner provides the monetary funding. The total value of the project is S$350,000. As of December 31, 2021,
we had incurred approximately S$272,000 of investment cost for development of the autonomous train interior cleaning.
Further,
under the terms of the collaboration, the intellectual property rights developed jointly by the parties in the course of the project
belong to our Group (save for those developed solely by any party or its personnel without contribution from the other party, which shall
be the sole and exclusive property of such party). In addition, we grant our Collaboration Partner an irrevocable, non-exclusive, royalty-free
perpetual license to use the intellectual property for certain purposes, including non-commercial, research, development and academic
purposes. Accordingly, the intellectual property and design of the autonomous train interior cleaning robot developed by our Group under
the project can be further customized for other uses in the future, including for commercial sale and use in other industries.
We believe
that this collaboration to develop a new and technologically-advanced cleaning system demonstrates our Collaboration Partner’s
belief in the strength of our R&D and engineering capabilities. Our Group intends to develop and commence commercial sale of the
autonomous train interior cleaning robot during the third quarter of 2022. Our initial customer operates train lines covering
over 148 kilometers of rail tracks across 106 stations with more than 250 trains in Singapore. Total ridership of its trains amounted
to approximately 830 million in 2019. Furthermore, we have an existing business relationship with this customer, our Group’s largest
customer for the year ended December 31, 2018. The sale of cleaning systems used for the cleaning of train exteriors to this customer
accounted for approximately 19.1% of our total revenue for that year. The sales to this customer during the fiscal years ended December
31, 2019, 2020 and 2021 were not related to such collaboration for the autonomous train interior cleaning robot. We believe the
extensive operations of this customer will provide ample demand for the commercial sale of the autonomous train interior cleaning robot.
Following
the development and commercial sale of such autonomous train interior cleaning robot for the public transportation industry, we intend
to leverage on our know-how from the design and development of the autonomous train interior cleaning robot to expand our product portfolio
by further developing autonomous robot floor scrubbers of varying sizes and functionalities to cater to potential customers in other
industries, including industrial properties (such as manufacturing facilities, factories and offices), commercial properties (such as
medical centers, shopping malls, commercial buildings and hotels) and food and beverage establishments (such as food courts and hawker
centers). Our Directors believe that as such properties are typically larger in size, with higher footfall and/or more stringent requirements
for hygiene and cleanliness, such industrial and commercial properties are more likely to require automated cleaning equipment in order
to reduce the manpower required for cleaning, given that cleaning is labor-intensive in nature, and to ensure consistency in the standards
of cleanliness. Our Group expects to develop and commence commercial sale of the autonomous robot floor scrubbers for industrial properties,
commercial properties and food and beverage establishments by the second half of 2022. While our Group has not yet commenced the development
and/or marketing of such autonomous robot floor scrubbers for such potential customers, we believe that the increasing awareness of hygiene
standards and the growth in demand for total automation products and solutions as well as the increasing labor cost in Singapore will
drive the demand for our Group’s autonomous robot floor scrubbers in the future.
In
particular, we believe that we will be able to market and sell the autonomous robot floor scrubbers to our existing customers in the
food and beverage industry for our centralized dishwashing and ancillary services, given that such customers are already using our products
and services to automate the dishwashing process at their respective food and beverage establishments and commercial properties. There
is a push by the Singapore government for Industry 4.0 initiatives to elevate productivity in the food and beverage services sector,
including the introduction of centralized dishwashing services at hawker centers, allocating investment into R&D projects that speed
up industry transformation projects and strengthening the workforce’s skillsets, to boost productivity in the face of manpower
challenges in the food and beverage industry. In light of the fact that such push will drive growth in the dishwashing cleaning sector,
our Directors believe that there also will be a corresponding increase in demand for other automation cleaning products and solutions
by food and beverage establishments. On the other hand, our existing customers, such as cookhouses, eldercare homes and hospitals for
which we have provided centralized dishwashing and ancillary services, may become our potential customers for the sale and marketing
of the autonomous robot floor scrubbers in the future.
We
believe that we can leverage on our existing customer base to market and sell the autonomous robot floor scrubbers in place of or to
supplement our on-site cleaning services, while still retaining the customer base for our centralized dishwashing services. We believe
that there will be sufficient demand for the autonomous robot scrubbers, which will also reduce our reliance on third party sub-contractors
given that our on-site cleaning services are generally outsourced to third party sub-contractors in order to focus our resources on our
core competencies, and therefore the autonomous robot scrubbers will not cannibalize our general cleaning services business. The autonomous
robotic cleaning equipment industry is relatively new in Singapore. This is seen as a potential solution for the labor squeeze in Singapore’s
cleaning force, especially for the commercial property and food and beverage cleaning sectors. Since the industry was still in
its fast-growing stage in 2021, with a strong push due to the COVID-19 pandemic which increased the demand for unmanned cleaning solutions
for commercial properties and public spaces in Singapore, the overall industry is expected to grow at a CAGR of 30.5% from 2021 to 2025.
With the launch of grants and incentives to companies for adoption of the technology (for example, the Ministry of Education of Singapore
has put out a tender to have these cleaning robots in schools), the growth of the industry is supported by the Singapore government.
It is also expected that there will be further advancement in cloud infrastructure, artificial intelligence and 5G that will make the
robots more attractive and cost competitive. Accordingly, we believe that there will be sufficient market demand for the commercial sale
of the autonomous robot floor scrubbers for the public transportation, food and beverage and other industries.
We
intend to leverage on our know-how from the design and development of the autonomous train interior cleaning robot to acquire the necessary
components and parts and engage in R&D efforts in order to further develop, refine, test and adapt the autonomous robot floor scrubbers
of varying sizes and functionalities for commercial sale and use in other industries. We intend to utilize the net proceeds from our
Initial Public Offering to develop, refine, test and adapt the autonomous robot floor scrubbers of varying sizes and functionalities,
including autonomous robot floor scrubbers for industrial properties, commercial properties and food and beverage establishments. Such
amount is expected to be sufficient to do so as it is not intended that the net proceeds from this offering will be used for the commercial
production and manufacture of such autonomous robot floor scrubbers.
Expected
cost of expanding our product portfolio by further
developing, refining, testing and adapting our autonomous robot floor scrubbers for commercial sale and use in other industries (S$’000):
Industrial
design and mechanical engineering | |
| 150 | |
Production
tooling cost for plastic enclosure | |
| 80 | |
Production
cost for mechanical enclosure and structure components | |
| 620 | |
Total | |
| 850 | |
We
believe our engineering know-how is the key to our success and we plan to increase our R&D efforts in order to support the expansion
of our product portfolio and strengthen our competitive edge. Accordingly, we intend to utilize part of the net proceeds from our
Initial Public Offering to increase our manpower by hiring at least three engineers for our R&D and engineering team.
(2)
Strengthen our production capability for cleaning systems and other equipment
There
is expected growth at a CAGR of approximately 10.7% from 2021 to 2025 in respect of the manufacture of precision cleaning equipment
in Singapore. The growth will largely be driven by the expansion in the electronics sector in Singapore. We strive to leverage on this
upward trend so as to strengthen our market presence in the cleaning equipment manufacturing industry by taking on more projects. Our
ability to strengthen our production capabilities and expand our product portfolio, as well as take on more projects concurrently is
dependent on, among other things, us having sufficient and quality machinery and equipment. We intend to achieve this by purchasing upgraded
or new production machinery and equipment for our JCS Facility.
Accordingly,
we intend to utilize part of the net proceeds from our Initial Public Offering to acquire the following machinery and equipment
to replace the existing ones used at our JCS Facility:
●
new vertical machining center to replace the existing one used at our JCS Facility which has fully depreciated and is past its useful
life. Such new vertical machining center will be equipped with an automatic workpiece measurement system and higher spindle speed, and
thus will have better accuracy and a higher cutting rate of up to 20 meters per minute, which will improve the machining process with
40% higher efficiency, hence increasing the production capacity by about 40%; and
●
new CNC lathe machine to replace the existing one used at our JCS Facility which has fully depreciated and is past its useful life, which
will improve the turning process with higher efficiency and productivity. The new CNC lathe machine will be equipped with higher spindle
motor power to machine tougher materials and achieve a cutting speed 30% faster than our existing machine, hence increasing the production
capacity by about 30%.
We
do not currently have a laser welding machine or a wire cutting machine at our JCS Facility. Accordingly, we intend to utilize part of
the net proceeds from this offering to acquire the following machinery which have better features and functions to strengthen our production
capabilities:
●
laser welding machine, which will enhance quality finishing and high precision welding application as the laser beam permits accurate
micro-welding of a wide range of metals and miniature components such that the parts have minimal deformity or distortion, hence increasing
the production capacity by 100%; and
●
wire cutting machine, which will increase our engineering capability as such wire cutting machine is able to cut workpieces of up to
100 mm thickness and is able to produce 16 times higher output compared to laser cutting technology, with higher precision accuracy of
within 0.005 mm. A wire cutting machine is also able to achieve better surface finishing and will improve productivity as fewer secondary
processes are required to finish the workpieces and reduce our dependency on sub-contractors, hence increasing our production capacity
by 100%.
In
addition, we intend to utilize part of the net proceeds from our Initial Public Offering to purchase an additional laser cutting
machine with an updated software system, which will reduce our dependency on sub-contractors for the cutting of workpieces and increase
our productivity by 100%, reducing the outsourcing lead time and sub-contracting costs.
Further,
we typically outsource the cutting of thicker steel plates to our subcontractors and the new wire cutting machine and the additional
laser cutting machine we intend to acquire will enable us to undertake a larger quantity of workpieces in-house and will allow us to
reduce the sub-contracting lead time and costs. The aggregate sub-contracting fees paid by us for the cutting of steel plates amounted
to approximately S$0.4 million, S$0.8 million and S$0.3 million for the years ended December 31, 2019, 2020 and 2021, respectively.
We believe that being able to undertake the cutting of a larger quantity of steel plate in-house and reducing the sub-contracting lead
time will improve our production efficiency and allow us to have better quality control during the production process.
We
believe that the above machinery and equipment with new technologies will enhance our production capabilities and enable our Group to
venture into potential industries such as medical equipment, aerospace and life sciences industries, which generally require higher level
of precision cleaning standard. Ownership of such machinery and equipment will also enable us to have greater control over the upkeep
and maintenance, as compared to outsourcing which is usually subject to the availability of the required machinery or equipment from
suppliers or sub- contractors and/or quality or maintenance issues. Possessing such machinery and equipment will also reduce our sub-contracting
costs, the lead time for our production and manufacturing process, as well as mitigate potential increases in such expenses.
Real Property
A
description of our leased real properties is below:
Location | |
Usage | | |
Lease
period | | |
Annual
Rent (SGD) | | |
Approximate
gross floor area (sq. ft.) | |
JCS
Facility 3 Woodlands Sector 1 Singapore 738361 | |
| Manufacturing
facility and office | | |
| To
November 15, 2027, with a further term of 30 years from expiry | | |
| 36,759 | | |
| 31,223.9 | |
| |
| | | |
| | | |
| | | |
| | |
Hygieia
Facility 17 Woodlands Sector 1 Singapore 738354 | |
| Centralized
dishwashing facility and office | | |
| To
March 15, 2044 | | |
| 52,020 | | |
| 34,276.7 | |
Production
capacity and utilization rate
JCS
Facility
It
is difficult to quantify the production capacity and utilization rates of our JCS Facility as the cleaning systems and other equipment
manufactured by us at our JCS Facility are customized depending on our customers’ specific requirements, and are therefore of varying
sizes, scale and capacity. Our JCS Facility is fitted with various types of machinery and equipment and the manufacturing process for
each cleaning system utilizes different types of machinery and equipment with different components, parts and materials. The production
and manufacturing process will also vary between orders, depending on the complexity of design and component lead time. We periodically
monitor the overall usage and capacity of the machinery and equipment at our JCS Facility.
The
following table sets forth the average utilization rates of certain major machinery and equipment used at our JCS Facility in respect
of the production and manufacture of cleaning systems and other equipment during the fiscal years ended December 31, 2019, 2020
and 2021:
|
|
Year ended December 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
|
Average utilization rate(1)(2)
(%) |
|
|
Average utilization rate(1)(2)
(%) |
|
|
Average utilization rate(1)(2)
(%) |
|
CNC lathe machine |
|
|
136.3 |
|
|
|
122.1 |
|
|
|
103.5 |
|
Laser cutting machine |
|
|
140.3 |
|
|
|
121.6 |
|
|
|
112.5 |
|
(1)
For illustration purposes only, the utilization rate is calculated by dividing the number of hours of usage of the relevant machine
per year by the number of operating hours of our JCS Facility for the same financial year, which is calculated based on the assumption
that there are 8.5 operating hours on weekdays and 3.5 operating hours on Saturdays per working day.
(2)
While the utilization rates may serve as proxies for the overall utilization rates of our JCS Facility, the production and manufacturing
process for our cleaning systems will vary among orders, depending on the type of machinery and equipment utilized, the components, parts
and materials required, complexity of design and component lead time. The usage time of the machines includes engineering work and machining
work (i.e. cutting). Engineering work includes machine set up and pre-programming for laser cutting and machining, and jig and fixture
preparation.
The
average utilization rates of the above machinery and equipment used at our JCS Facility generally exceeded 100% as these machines have
been operated past the normal operating hours of our JCS Facility in order to fill our orders for the cleaning systems and other equipment
based on contract requirements. The average utilization rates were slightly lower in the year ended December 31, 2020, as compared to
the year ended December 31, 2019, as our Group’s operations were restricted due to the safe distancing measures implemented from
time to time by the Singapore government to pre-empt the trend of increasing local transmission of COVID-19, which resulted in lower
average utilization rates for the affected months. The average utilization rates were lower in the year ended December 31, 2021, as
compared to the year ended December 31, 2020, corresponding with the decrease in orders for cleaning systems completed in 2021. Other
than the foregoing, there were no material fluctuations in the utilization rates for the above machinery and equipment during the
fiscal years ended December 31, 2019, 2020 and 2021. As of the date of this Prospectus, there have been no material fluctuations
in the utilization rates for the above machinery and equipment. For further details of the impact of COVID-19 on our business and operations,
please refer to the paragraph headed “Business — Impact of COVID-19 on our business and operations” in this Prospectus.
Notwithstanding
that the average utilization rate of the aforesaid machinery and equipment at our JCS Facility generally exceeded 100% during the fiscal
years ended December 31, 2019, 2020 and 2021, our directors are of the view that our JCS Facility has sufficient capacity to process
the orders for cleaning systems and other equipment for at least the next 12 months for the following reasons:
●
during the production process, the most time-consuming process is engineering. Engineering work includes machine set up and pre-programming
for laser cutting and machining, and jig and fixture preparation. All the above work could generally take more than 60% of the machine’s
total production lead time. The average production lead time for the production and manufacturing of bulk orders for the same cleaning
system/module is shorter as less time is required to use the relevant machinery and equipment for the aforesaid engineering work. In
general, our Group can reduce the engineering process time of the subsequent units by about 90% as compared to the first machine built;
and
●
the operating hours of our JCS Facility may be increased from time to time in order to meet the delivery schedule of the orders for cleaning
systems and other equipment as needed.
As
part of our Group’s business plan, we contemplate acquiring a new CNC lathe machine to replace the existing one used at our JCS
Facility in the first half of 2022. The new CNC lathe machine will be equipped with higher spindle motor power to machine tougher materials
and achieve a cutting speed 30% faster than the existing machine. Accordingly, it is expected that such new CNC lathe machine will have
an increased production capacity of about 30% as compared to the existing machine. In addition, our Group contemplates acquiring an additional
laser cutting machine in the second half of 2022, which is expected to increase the capacity by 100%. For further details of our Group’s
expansion plan, please refer to the paragraph headed “Business strategies — Strengthen our production capability for cleaning
systems and other equipment” in this Prospectus.
The
utilization rates of the CNC lathe machine and the laser cutting machine are calculated based on 8.5 operating hours on weekdays and
3.5 operating hours on Saturdays per working day. In the event that the current hours of usage cannot meet the demand, our Directors
will consider adding one or two more shifts on weekdays, and/or increase the number of working hours on weekends to increase the production
capacity of the CNC lathe machine and the laser cutting machine to meet the production schedule.
The
production floor at our JCS Facility has a total usable floor area of approximately 1,470.1 square meters, approximately 78.2% of which
has been utilized by the existing machinery and equipment. As we intend to acquire five new machinery and equipment, including a new
vertical machining center and a new CNC lathe machine to replace the existing ones which have fully depreciated, the total estimated
usable floor area which will be utilized by our machinery and equipment will be 1,219.4 square meters, representing approximately 83.0%
of the total usable floor area of the production floor of our JCS Facility.
Hygieia
Facility
The processing
capacity and utilization rates of our Hygieia Facility in respect of our provision of centralized dishwashing services during the fiscal
years ended December 31, 2019, 2020 and 2021 are as follows:
| |
For the year ended December 31, | |
| |
2019 | | |
2020 | | |
2021 | |
| |
Actual annual processing (tubs) | | |
Annual processing capacity(1) (tubs) | | |
Average daily utilization rate(2) (%) | | |
Actual annual processing (tubs) | | |
Annual processing capacity(1) (tubs) | | |
Average daily utilization rate(2) (%) | | |
Actual annual processing (tubs) | | |
Annual processing capacity(1) (tubs) | | |
Average daily utilization rate(2) (%) | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Halal semi-automated washing line A | |
| 125,468 | | |
| 148,010 | | |
| 84.8 | | |
| 84,257 | | |
| 148,010 | | |
| 56.9 | | |
| 91,289 | | |
| 148,010 | | |
| 61.7 | |
Halal semi-automated washing line B | |
| 153,112 | | |
| 214,614 | | |
| 71.3 | | |
| 95,237 | | |
| 214,614 | | |
| 44.4 | | |
| 78,119 | | |
| 214,614 | | |
| 36.4 | |
Non-Halal semi-automated washing line C | |
| 262,983 | | |
| 310,821 | | |
| 84.6 | | |
| 175,930 | | |
| 310,821 | | |
| 56.6 | | |
| 196,110 | | |
| 310,821 | | |
| 63.1 | |
Halal semi-automated washing line D | |
| 119,995 | | |
| 155,410 | | |
| 77.2 | | |
| 45,695 | | |
| 155,410 | | |
| 29.4 | | |
| 69,157 | | |
| 155,410 | | |
| 44.5 | |
(1)
For illustration purposes only, the processing capacity is determined by identifying the maximum number of tubs (which will contain
the soiled dishware) we can wash per year. In this regard, the processing capacity is calculated based on the following assumptions:
(a) 20.5 operating hours per working day (excluding equipment cleaning time and workers’ lunch break); and (b) 361 working days
each year for the years ended December 31, 2019, 2020 and 2021 (excluding the holidays and regular maintenance).
(2)
For illustration purposes only, the utilization rate is calculated by dividing the actual processing volume by the processing capacity
for the same financial year, which is calculated based on the assumptions as set out above.
There
was a general decrease in the utilization rates of the washing lines at our Hygieia Facility for the year ended December 31, 2020 as
(i) there were reductions in fees in respect of our centralized dishwashing services from April to December 2020; (ii) lower footfall
and demand for dine-in services at our customers’ food and beverage establishments due to the outbreak of COVID-19 and hence, lower
volume of soiled dishware from our customers, even after dine-in services resumed; (iii) the agreements with one of our customers for
the provision of centralized dishwashing services at five locations expired pursuant to the terms thereof; and (iv) two of our customers
terminated our centralized dishwashing services. Please refer to the paragraph headed “Business — Impact of COVID-19 on our
business and operations” in this prospectus for further details.
There was a general increase
in the utilization rates of the washing lines at our Hygieia Facility for the year ended December 31, 2021 as (i) fees
for our centralized dishwashing services were increased; (ii) there was higher footfall and demand for dine-in services at our customers’
food and beverage establishments as a result of the resumption of dine-in services, which resulted in a higher volume of soiled dishware
from our customers; and (iii) 16 additional customers contracted for our centralized dishwashing services.
Due
to the nature of the food and beverage industry, diners usually finish their meals at approximately the same time and thus, customers
of our centralized dishwashing services business generally require the soiled dishware to be washed and returned to their food and beverage
establishments during the day and particularly after mealtimes, with the peak hours being from 3:30 p.m. to 9:30 p.m. on weekdays, even
though our Hygieia Facility operates in three shifts and 20.5 hours per day. Thus, the average utilization rate of the Halal and non-Halal
washing lines at our Hygieia Facility during peak hours reaches their full capacity of 100%. The utilization rate during the peak hours
was calculated based on the number of tubs washed divided by the processing capacity of the respective washing lines. The utilization
rates during peak hours reaches their full capacity of 100% as we have more tubs arriving at our Hygieia Facility than we can process
during peak hours.
Impact
of COVID-19 on our business and operations
Singapore
Control Order Regulations
On
April 3, 2020, the Multi-Ministry Taskforce of the Singapore government implemented an elevated set of safe distancing measures to pre-empt
the trend of increasing local transmission of COVID-19 from April 7, 2020 (“Circuit Breaker Measures”). On April 7, 2020,
the Singapore Parliament passed the COVID-19 (Temporary Measures) Act 2020 (“COVID-19 Act”) which provides the Singapore
Government the legal basis to enforce the Circuit Breaker Measures, and the COVID-19 (Temporary Measures) (Control Order) Regulations
2020 (“Control Order Regulations”) under the COVID-19 Act to implement the Circuit Breaker Measures. The Control Order Regulations
impose restrictions on premises and businesses in relation to the closure of premises and respective controls on essential and non-essential
service providers, and the movement of people, both in public places and in places of residence. The Control Order Regulations require
the closing of most physical workplace premises and suspending all business, social and other activities that cannot be conducted through
telecommuting from home, save for those providing essential services and in selected economic sectors which are critical for local and
global supply chains (“Essential Services”). Entities providing Essential Services were required to operate with the minimum
number of staff on their premises to ensure the continued running of those services, and implement strict safe distancing measures. The
Control Order Regulations could be varied or extended, depending on the assessment of the then situation by the Singapore government.
The Circuit Breaker Measures were imposed under the Control Order Regulations during the period between April 7, 2020 and June 1, 2020.
On
May 19, 2020, the Multi-Ministry Taskforce announced that the Circuit Breaker Measures would end on June 1, 2020 and the Multi-Ministry
Taskforce would embark on a controlled approach to resume economic and community activities and progressively lift the relevant control
measures in place after June 1, 2020 over three phases, with the first phase to be implemented with effect from June 2, 2020. The three
phases were (a) a “Safe Re-opening” phase, implemented from June 2, 2020 to June 18, 2020 (inclusive), where economic activities
that do not pose high risk of transmission (“Permitted Services”) were resumed while social, economic and entertainment activities
that carry higher risk remained closed, and everyone was advised to continue to leave home only for essential activities and to wear
a mask when doing so (“Phase 1”); (b) a “Safe Transition” phase with the gradual resumption of more activities
including the re-opening of more firms and business (“Permitted Enterprises”), subject to safe management measures being
implemented and practiced by employers and employees in these workplaces and their ability to also maintain a safe environment for their
customers and social activities in small groups of not more than five persons, which were implemented with effect from June 19, 2020
(“Phase 2”); and (c) a “Safe Nation” phase, implemented with effect from December 28, 2020, whereby social, cultural,
religious and business gatherings or events were resumed, although gathering sizes still had to be limited in order to prevent large
clusters from arising, and services and activities that involve significant prolonged close contact or significant crowd management risk
in an enclosed space also were allowed to be re-opened, subject to their ability to implement strict safe management measures effectively
(“Phase 3”).
Between
May 16, 2021 and August 6, 2021, the Singapore government introduced two phases, namely the Phase 2 (Heightened Alert) and Phase
3 (Heightened Alert), along with the easing of certain measures within each of such phases. In summary, the Phase 2 (Heightened Alert)
measures which were in effect from May 16, 2021 to June 13, 2021, included reductions in prevailing social gathering group size,
sizes of larger scale events or activities and reinstatement of “work-from-home” as the default at workplaces to minimize
workplace interactions, and the Phase 3 (Heightened Alert) measures, which were in effect from June 14, 2021 to July 19, 2021, was contemplated
as a calibrated reopening and included increases in social gathering group sizes, event size and capacity limits, and subsequently the
resumption of dining in at food and beverage establishments. On July 20, 2021, the Singapore government announced the reversion
back to Phase 2 (Heightened Alert) measures from July 22, 2021 to August 18, 2021 which superseded the measures introduced on July 19,
2021, during which “work from home” remained the default, employers who needed staff to return to workplaces were required
to ensure that there was no cross-deployment at various worksites, enforce staggered start times and flexible working hours and social
gatherings at workplaces were not allowed.
On
August 6, 2021, the Singapore government announced the easing of some safe management measures, with the first phase to take effect on
August 10, 2021 and the second phase to take effect on August 19, 2021, which superseded those introduced on July 22, 2021 as part of
Singapore’s transition towards COVID-19 resilience. The eased measures allowed for an increase in social gathering group size,
event size and capacity limits for fully vaccinated individuals and easing of “work-from-home” requirements. A further easing
of community measures was announced on August 19, 2021. Subsequently, given the exponential rise in COVID-19 cases from the end of August
2021, on September 24, 2021, the Singapore government announced a tightening of safe management measures during the stabilization period
between September 27, 2021 and October 24, 2021, which was later extended to November 21, 2021, with a mid-point review. On November
8, 2021, the Singapore government announced calibrated adjustment of safe management measures including the easing of dine-in restrictions
and updates to border measures. On December 22, 2021, in response to the global emergence of the Omicron variant, the Singapore government
introduced travel restrictions for affected countries or regions and enhanced the testing requirements for travelers. Effective March
29, 2022, the Singapore government significantly eased COVID-19 restrictions by, among other things, lifting the requirement to wear
masks outdoors, doubling the group size limit to 10 people and lifting the ban on alcohol sales in pubs and eateries after 10:30 p.m.
It also eased testing and quarantine requirements for travelers and declared that up to 75% of employees who can work from home are allowed
to return to their workplaces. Effective April 26, 2022, the Singapore government further eased COVID-19 restrictions by, among other
things, (i) allowing employees to remove their masks at their workstations when they are not interacting physically with others and when
they are not in customer-facing areas; (ii) removing the group size limit and safe distancing requirement between individuals or between
groups; (i) allowing all employees to return to their workplaces; and (iv) removing all capacity limits.
Impact
on our suppliers and sub-contractors
Our
suppliers and sub-contractors were affected by the Circuit Breaker Measures if they did not constitute providers of Essential Services
and were required to suspend their businesses and operations. During the Circuit Breaker Period, our Group did not experience any material
supply chain disruption (including delivery time and pricing) in respect of our sale of cleaning systems and other equipment business
and our centralized dishwashing and ancillary services business. In addition, during the Circuit Breaker Period, we agreed with all our
sub-contractors for on-site cleaning services for food and beverage establishment and logistics service providers on reductions in fees
given that they had provided reduced manpower and/or services as our customers which are food and beverage establishments were required
to suspend dine-in operations under the Circuit Breaker Measures, which had resulted in reduced sub-contracting costs for our on-site
cleaning services and reduced logistics costs.
During
Phase 1, entities providing Permitted Services, which included manufacturing and wholesale trade, were allowed to resume normal operations.
As of April 24, 2022, (a) we had not been informed by any supplier and/or sub-contractor for our sale of cleaning systems and
other equipment business that their business has not yet resumed operations or that there would be any delays in parts required for our
ongoing orders; and (b) we had not encountered any disruption in the supply of rinsing aids and drying aids from our supplier
for our provision of centralized dishwashing services.
Our
Directors do not expect any material supply chain disruption (including delivery time and pricing) in respect of our sale of cleaning
systems and other equipment business and our centralized dishwashing and ancillary services business in the long run taking into consideration
the above and that the Circuit Breaker Measures had already ceased on June 1, 2020. In 2021, Singapore went through a lockdown phase
and a stabilization phase and it is now proceeding
with its plans to treat the virus as endemic. In
essence, Singapore is adapting to living with COVID permanently and our operations have essentially returned to normal.
Impact
on our business and revenue
(1)
Sale of cleaning systems and other equipment business
In
respect of our sale of cleaning systems and other equipment business, we were permitted under our Continued Operations Plans to continue
operations for the design and manufacture of cleaning systems and other equipment for the semiconductor sector during the Circuit Breaker
Period. During the Circuit Breaker Period from April 7, 2020 to June 1, 2020 (inclusive), our Group obtained four new orders for the
semiconductor industry and three new orders from customers in non-semiconductor sectors for sale of cleaning systems and other equipment,
with total contract value of approximately S$0.6 million, and delivered 12 orders, with total contract value of approximately S$0.4 million.
In addition, where there were short delays experienced for certain contracts, the relevant customers agreed to the revised delivery schedule
with no additional costs or penalties to be incurred by us, and none of our customers cancelled or terminated their orders and agreements
with our Group.
During
the Circuit Breaker Period, we were permitted to continue operations at our JCS Facility with a reduced workforce and with safe distancing
measures in place. Notwithstanding the reduced workforce during the Circuit Breaker Period, there were sufficient employees carrying
out the technical support and manufacturing function at our JCS Facility to fulfil the outstanding orders during the Circuit Breaker
Period, while the rest of the employees such as those carrying out finance and accounting, and R&D and engineering functions were
able to carry out their work from home. Accordingly, we were able to continue to operate with a reduced workforce physically attending
work at our production facilities during the Circuit Breaker Period and fulfill outstanding orders, and to ensure continuity of our Group’s
business operation, during such period.
Since the commencement of Phase
1 and during Phase 2 and Phase 3, we generally resumed normal business operations at our JCS Facility and in respect of the sale of cleaning
systems and other equipment business of our Group. During the period from January 1, 2021 to November 30, 2021, we had 53 orders for
our cleaning systems and other equipment with an aggregate contract value of approximately S$7.2 million, all of which were delivered
during the year ended December 31, 2021. Between April 7, 2020 (the commencement date of the Circuit Breaker Measures) and April
24, 2022, none of our customers for our sale of cleaning systems and other equipment business have cancelled or terminated or expressed
their intention to cancel or terminate their contracts or agreements with our Group due to the outbreak of COVID-19.
(2)
Centralized dishwashing and ancillary services business
In
respect of our centralized dishwashing and ancillary services business, we experienced a decrease in revenue of not more than 80% in
April and May 2020 during the Circuit Breaker Period, as compared to our revenue in February 2020, given that only 17 food and beverage
establishments, for which we provided centralized dishwashing services, maintained normal operations.
As
dine-in operations at food and beverage establishments continued to be suspended during Phase 1, we experienced a further decrease in
revenue of approximately 62.6% in June 2020, as compared to our revenue in February 2020.
Since
the commencement of Phase 2 and during Phase 3, we resumed the provision of our centralized dishwashing services and general cleaning
services for most of our customers. From January 1, 2021 to April 24, 2022, we obtained new contracts for 42 food and beverage
establishments, with total annual contract value of approximately S$0.4 million for our provision of centralized dishwashing and general
cleaning services business. As of April 24, 2022, we had ongoing contracts with 92 food and beverage establishments for the provision
of centralized dishwashing services and general cleaning services, and ongoing contracts with 16 customers for the leasing of dishwashing
equipment. For the period beginning from April 7, 2020 (the commencement date of the Circuit Breaker Measures) to April 24, 2022,
only 11 of our customers for our provision of centralized dishwashing and ancillary services business cancelled or terminated or expressed
their intention to cancel or terminate their contracts or agreements with our Group due to the outbreak of COVID-19.
In
view of the exceptional situation, we agreed on a fee reduction arrangement with our customers who requested such reduction in fees due
to the lower footfall at their food and beverage establishments even though dine-in services had resumed in Phase 2 and Phase 3, and
hence required less centralized dishwashing and general cleaning services from our Group. Accordingly, we experienced a decrease in revenue
in respect of our provision of centralized dishwashing and ancillary services business of approximately 25.7% for the year ended December
31, 2020, as compared to our revenue for the year ended December 31, 2019.
Impact
on our financial performance
Although
we were able to continue operations and fulfill outstanding orders under our sale of cleaning systems and other equipment business, the
global outbreak of the COVID-19 pandemic disrupted our operations, as well as the operations of our customers, suppliers and/or sub-contractors.
Accordingly, during the year ended December 31, 2020, there were delays in a total of 12 orders with total contract value of approximately
S$7.3 million under our sale of cleaning systems and other equipment business, of which (i) nine orders with total contract value of
approximately S$4.5 million were delayed for one to three months and were subsequently delivered and the relevant revenue was fully recognized
for the year ended December 31, 2020; and (ii) three orders with total contract value of approximately S$2.8 million were delayed for
seven to 10 months, S$1.1 million of which were delivered during the year ending December 31, 2021and S$1.7 million of which will be
delivered during the year ending December 31, 2022. The revenue from these orders will be recognized upon delivery to the respective
customers. Such orders were delayed primarily due to (a) delay in delivery by the supplier of materials and components; (b) delay in
finalizing the design of the products by the customer; and (c) request by the customer to delay delivery as its production facilities
were not ready to receive products.
In
addition, one customer requested that three orders be expedited to meet their production schedule. These orders, which have a total contract
value of approximately S$0.3 million, were originally due for delivery during the year ending December 31, 2021. Instead, we completed
and delivered these three orders during the year ended December 31, 2020 and the revenue from these orders was recognized upon delivery
to the customer.
Impact
on our workforce
During
the Circuit Breaker Period, a certain number of employees per day were permitted to carry out operations at our JCS Facility with safe
distancing measures in place under our Continued Operations Plans, which were sufficient to carry out the technical support and manufacturing
function at our JCS Facility and fulfil outstanding orders during such period. The rest of the employees, such as those carrying out
finance and accounting, and R&D and engineering functions were able to carry out their work from home. The average daily utilization
rate of our major machinery, namely the CNC lathe machine and the laser cutting machine, at our JCS Facility was approximately 122.1%
and 121.6%, respectively, for the year ended December 31, 2020. During the Circuit Breaker Period, all our employees employed by Hygieia
were permitted to continue carrying out operations at our Hygieia Facility with safe distancing measures in place.
Further,
pursuant to announcements by the Singapore government on April 21, 2020 and May 2, 2020, daily movement of workers in and out of all
dormitories (i.e., purpose built dormitories, factory converted dormitories, construction temporary quarters and temporary occupation
license quarters) would no longer be allowed from April 21, 2020 to the end of the Circuit Breaker Period (i.e. June 1, 2020). Notwithstanding
the foregoing, JCS received the approval from MTI on April 28, 2020 for our workers to be allowed to move between the dormitory and their
worksite, and the foreign workers employed by Hygieia were unaffected by the advisory as they were not housed in the dormitories or quarters
to which such advisory was applicable.
Since
the commencement of Phase 1, our employees resumed work at our JCS Facility and Hygieia Facility, with the appropriate safe distancing
measures in place.
Control
measures
Our
Group has also adopted control measures to protect our employees, workers and customers from outbreaks of infectious diseases, which
is in line with the advisories issued by the Singapore Ministry of Manpower (the “MOM”) on best practices to be adopted by
workplaces in Singapore, which includes the following:
●
we have asked our staff and workers who interact with our suppliers and other service providers to wear personal protective equipment
(such as face masks and gloves), and we will monitor the stock of personal protection equipment for our staff and workers; and
●
we will evaluate our existing service contracts and our customers’ food and beverage establishments which may require increased
frequency of on-site cleaning services, to ensure that our services are suitable for their enhanced cleaning needs due to COVID-19.
If
any of our staff or workers or the on-site cleaning staff of our sub-contractors are suspected or confirmed to have contracted COVID-19,
we may have to temporarily suspend our operations at our JCS Facilities and/or our Hygieia Facility or at some or all of our customers’
food and beverage establishments at which we provide on-site cleaning services as well as quarantine the affected staff, disinfect the
affected facilities and contract sites and reallocate manpower in order to deploy additional staff to the affected contract sites. As
of April 24, 2022, we had not encountered any incident where our staff and workers or the on-site cleaning staff of our sub-contractors
were suspected or confirmed to have contracted COVID-19 and thus failed to report for duty. Nonetheless, we will continue to work closely
with our customers to ensure that the impact of any such incidents which may occur due to unforeseen circumstances is minimized to its
fullest extent, and implement our business contingency plans as outlined above in mutual agreement with our customers.
Licenses And Permits
The
following licenses are material for our Group’s operations:
Description |
|
Issuing
Authority |
|
Expiry
Date |
|
Issued
to |
|
|
|
|
|
|
|
License
to operate a cleaning business |
|
NEA |
|
February
26, 2023 |
|
Hygieia |
|
|
|
|
|
|
|
License
/ Certificate issued under the Radiation Protection Act |
|
NEA
|
|
, 2023 |
|
JCS |
Certifications
As
of April 24, 2022, we have received the following certifications:
Relevant
authority/organization |
|
Recipient |
|
Relevant
list/category |
|
Qualification/
License/Grading |
|
Date
of grant/registration |
|
Date
of expiry |
Workplace
Safety and Health Council |
|
Hygieia |
|
BizSAFE |
|
Level
3 |
|
August
7, 2021 |
|
August
10, 2024 |
Workplace
Safety and Health Council |
|
JCS |
|
BizSAFE |
|
Level
Star |
|
August
23, 2017 |
|
July
6, 2023 |
Islamic
Religious Council of Singapore |
|
Hygieia |
|
Storage
management |
|
Halal
Certificate |
|
N/A |
|
February
28, 2023 |
SGS |
|
Hygieia |
|
Food
safety management |
|
ISO
22000: 2005 |
|
May
20, 2021 |
|
August
5, 2022 |
SOCOTEC
Certification International |
|
JCS |
|
Occupational
Health and Safety Management |
|
ISO
45001: 2018 |
|
July
7, 2017 |
|
July
6, 2023 |
SOCOTEC
Certification International |
|
JCS |
|
Quality
management system |
|
ISO
9001: 2015 |
|
June
23, 2017 |
|
June
22, 2023 |
We
intend to apply for the renewal of the above relevant certifications prior to their respective expiry dates and based on past experience,
our Directors do not foresee any material difficulties in renewing the certifications of our Group.
Awards
and Accreditations
Throughout
our operating history, our Group has received a number of awards and accreditations in recognition of our performance and quality products
and services. The following table sets forth the awards and accreditations we have been granted up to April 24, 2022.
Year |
|
Award |
|
Organized/Granted
By |
|
Recipient |
2013 |
|
Enterprise
50 Award |
|
KPMG
and the Business Times |
|
JCS |
2016 |
|
SME
1000 Ranking — Top companies ranked by sales/turnover (745th), net profit (443th) and return on equity (680th) |
|
Experian |
|
JCS |
2017 |
|
SME
1000 Ranking — Top companies ranked by return on equity (631st) |
|
Experian |
|
JCS |
2017 |
|
SME
1000 Ranking — Emerging 500 companies ranked by sales turnover (1134th) |
|
Experian |
|
JCS |
2018 |
|
Singapore
Quality Class — Recognition of Commendable Performance in Business Excellence |
|
Enterprise
Singapore |
|
JCS |
2018 |
|
Clean
Mark Silver Award |
|
NEA |
|
Hygieia |
2018 |
|
SME
1000 Ranking — Emerging 500 companies ranked by sale turnover (1118th) |
|
Experian |
|
JCS |
2019 |
|
SME
1000 Ranking — Emerging 500 companies ranked by sales turnover (1490th) |
|
Experian |
|
Hygieia |
2021 |
|
Clean
Mark Silver Award |
|
NEA |
|
Hygieia |
Competition
The
precision cleaning equipment market in Singapore is niche and relatively consolidated with just over 10 companies in play comprised of
a handful of larger global companies that operate offices in Singapore, as well as several small and medium-sized players, with high
barriers to entry in the form of high set-up and operating costs, and track record. The Euromonitor Report has identified a trend
towards consolidation in the wider precision cleaning market by industry players, as companies move towards offering total solutions
in the value chain of both cleaning equipment and cleaning services in order to stand out from the competition.
Our
Group has a market share of approximately 2.0% in terms of revenue for 2020 and there is an expected growth in the precision cleaning
equipment industry in Singapore at a CAGR of approximately 10.7% from 2021 to 2025. For further details, please refer to the section
headed “Industry Overview — Precision cleaning equipment industry in Singapore” in this Prospectus.
Our
major competitors in the precision cleaning equipment market in Singapore based on 2020 market share are Crest Ultrasonics Corp., Emerson
Electric Co., Kemet Far East Pte. Ltd. and Cyclosystem Pte. Ltd.
The
precision cleaning manufacturing industry in Malaysia is highly consolidated, with the top five companies in the industry accounting
for more than 80% of industry sales. The leading players in the industry are primarily present in the electronics industry. These manufacturers
benefit from the robust growth of Malaysia’s position as a global hub for semiconductor manufacturing. Our Group has a market share
of approximately 27.0% in terms of revenue for 2020 and there is an expected growth in the precision cleaning equipment industry in Malaysia
at a CAGR of approximately 9.0% from 2021 to 2025.
Our
closest competitors in the precision cleaning equipment market in Malaysia based on 2020 market share by revenue are Advanced Ceramics
Technology (M) Sdn. Bhd., SIP Technology (M) Sdn. Bhd., Frontken Corporation Berhad and Zestron Precision Cleaning Sdn. Bhd.
The
dishwashing services market in Singapore currently has a low penetration rate, and around 80% of the potential food and beverage market
remains untapped and relatively consolidated to about 10 players, with four bigger companies, including our Group, dominating the market,
and several other smaller players making up the remainder. In particular, there is keen competition for dishwashing services in the food
and beverage industry due to low barriers to entry and low switching costs, the relatively low set-up and labor costs compared to other
industries and clients being able to easily switch service providers given the relatively short span of contracts, with quality of service
as the key differentiating factor.
Our
Group is also one of the leading players in the centralized dishwashing services market in Singapore, with a market share of approximately
15.0% in terms of revenue for 2020. Further, there is expected growth in the dishwashing market in Singapore at a CAGR of approximately
19.7% for the years 2021 to 2025. For further details, please refer to the section headed “Industry Overview — The centralized
dishwashing services industry in Singapore” in this Prospectus.
Our
major competitors in the centralized dishwashing services market in Singapore based on 2020 market share by revenue are Synnovate Solutions
Pte. Ltd., Clean Mark Solutions Pte. Ltd., Clean Solutions Pte. Ltd. and Micro 2000 Group.
Sales And Marketing
As
of April 24, 2022, our sales and marketing team consisted of one full-time employee based in Singapore. Our Chairman, Ms. Hong,
oversees our sales and marketing department.
One
of our key channels for marketing is through word of mouth as our new customers are usually referred by our existing customers or business
contacts. Our Group and our Chairman, Ms. Hong, have participated in overseas exhibitions, trade shows and industry forums to promote
our Group’s products and services. Our Chairman, Ms. Hong has also taken interviews from magazines and newspapers to promote our
Group’s products and services. Our Group has also participated in overseas exhibitions and trade shows where we showcase our products
to potential customers in order to increase our publicity and presence in the cleaning solutions industry.
Our
sales and marketing team also communicates with our existing customers to understand their needs and markets trends, so as to improve
our cleaning systems and equipment. We consider customer feedback a valuable tool for improving our products and services. Our sales
and marketing team is also responsible for handling customers’ complaints and any complaints arising from product defects or service
quality and will relay such feedback internally to the relevant teams for follow up.
Our
Group relates to a few industry associations, with JCS being a member of the Singapore Precision Engineering & Technology Association
and a Technology Extension Partner of Singapore Institute of Manufacturing Technology, and Hygieia being a member of the Association
of Catering Professionals Singapore.
Our
Group has developed a strong existing customer base in Singapore and overseas. Our customers are corporate groups with their respective
group members incorporated or established in various jurisdictions, such as Malaysia, Australia, the U.S., Thailand, Belgium, Philippines,
India, South Korea, Taiwan, Japan and the PRC, for our sale of cleaning systems and other equipment business during the fiscal years
ended December 31, 2019, 2020 and 2021. Please refer to the paragraph headed “Our Customers — Top five customers”
in this section for further details of our top five customers and their respective countries of incorporation or establishment. We have
established stable business relationships with our customers, with three out of our top five customers having more than 10 years of business
relationships with us. The profile of our existing customer base, coupled with the stable business relationships we have with our customers,
allowed our Group (i) to secure orders from repeat customers, which contributed to approximately 93.2%, 92.7% and 100% of the
total sales of our cleaning systems and other equipment for the years ended December 31, 2019, 2020 and 2021, respectively, and
(ii) to gain referrals from our existing customers. Our Group also strives to maintain good customer relationships by producing high
quality products and providing professional technical support, and hence it is not necessary for our Group to actively engage in significant
sales and marketing efforts for maintaining such business relationships with our existing customers. In addition, as the average utilization
rate of certain major machinery and equipment used at our JCS Facility in respect of the production and manufacture of cleaning systems
and other equipment during the years ended December 31, 2020 and 2021 generally exceeded 100%, our Group was unable to take on
a large number of new orders from new customers. Rather, we mainly focused on fulfilling orders from repeat customers to maintain our
business relationships. Under such circumstances, we did not actively engage in sales and marketing activities to pursue orders from
new customers and only maintained a small sales and marketing team during the fiscal year ended December 31, 2021.
The
following tables set forth the breakdown of our revenue contributed from the sale of precision and other cleaning systems and equipment
from each geographical region during the fiscal years ended December 31, 2019, 2020 and 2021:
Year
ended December 31, 2019
Geographical
Region | |
Number
of Customers | |
Number
of Completed Orders | |
Method
of procurement | |
Transaction
amount (SGD’000) | | |
%
of total sales | |
Singapore | |
3
1 | |
8
1 | |
Order
from existing customer Trade exhibition | |
| 1,876
32 | | |
| 17.5
0.3 | |
Malaysia | |
1
1 | |
17
1 | |
Order
from existing customer Referral
from existing customer | |
| 3,944
40 | | |
| 36.8
0.4 | |
United
States | |
2 | |
1 | |
Order
from existing customer | |
| 563 | | |
| 5.2 | |
Thailand | |
2
1 | |
28
2 | |
Order
from existing customer Referral from existing customer | |
| 1,423 653 | | |
| 13.3 6.1 | |
Belgium | |
1 | |
35 | |
Order
from existing customer | |
| 1,115 | | |
| 10.4 | |
Philippines | |
1 | |
2 | |
Order
from existing customer | |
| 1,001 | | |
| 9.3 | |
South
Korea | |
1 | |
4 | |
Order
from existing customer | |
| 65 | | |
| 0.6 | |
Taiwan | |
1 | |
2 | |
Order
from existing customer | |
| 11 | | |
| 0.1 | |
Total | |
15 | |
101 | |
| |
| 10,723 | | |
| 100.0 | |
Year
ended December 31, 2020
Geographical
Region | |
Number
of Customers | |
Number
of Completed Orders | |
Method
of procurement | |
Transaction
amount (SGD’000) | | |
%
of total sales | |
Singapore | |
4
1 | |
7
3 | |
Order
from existing customer Referral from existing customer | |
| 398
246 | | |
| 2.5
1.6 | |
Malaysia | |
2 | |
46 | |
Order
from existing customer | |
| 11,672 | | |
| 74.0 | |
Thailand | |
2 | |
36 | |
Order
from existing customer | |
| 1,380 | | |
| 8.7 | |
Belgium | |
1 | |
32 | |
Order
from existing customer | |
| 1,096 | | |
| 6.9 | |
South
Korea | |
1 | |
7 | |
Order
from existing customer | |
| 77 | | |
| 0.5 | |
Taiwan | |
1 | |
1 | |
Order
from existing customer | |
| 1 | | |
| 0.01 | |
United
States | |
1 | |
1 | |
Order
from existing customer | |
| 11 | | |
| 0.1 | |
PRC | |
1 | |
1 | |
Referral
from existing customer | |
| 902 | | |
| 5.7 | |
Total | |
14 | |
134 | |
| |
| 15,783 | | |
| 100.0 | |
Year
ended December 31, 2021
Geographical
Region | |
Number
of Customers | |
Number
of Completed Orders | |
Method
of procurement | |
Transaction
amount (SGD’000) | | |
%
of total sales | |
Singapore | |
4 | |
3 | |
Order
from existing customer | |
| 83 | | |
| 1.1 | |
Malaysia | |
1 | |
13 | |
Order
from existing customer | |
| 4,414 | | |
| 56.5 | |
Thailand | |
1 | |
42 | |
Order
from existing customer | |
| 1,559 | | |
| 8.6 | |
Belgium | |
1 | |
27 | |
Order
from existing customer | |
| 1,182 | | |
| 20.0 | |
South
Korea | |
1 | |
4 | |
Order
from existing customer | |
| 73 | | |
| 0.9 | |
Taiwan | |
1 | |
1 | |
Order
from existing customer | |
| - | | |
| - | |
United
States | |
1 | |
6 | |
Order
from existing customer | |
| 376 | | |
| 4.8 | |
PRC | |
1 | |
1 | |
Order
from existing customer | |
| 126 | | |
| 1.6 | |
Total | |
11 | |
97 | |
| |
| 7,813 | | |
| 100.0 | |
For
the year ended December 31, 2019, (a) approximately 98.3% and 1.7% of the total sales to our customers in Singapore were comprised of
orders from repeat customers and orders through trade exhibitions, respectively; (b) approximately 99.0% and 1.0% of the total sales
to our customers in Malaysia were comprised of orders from repeat customers and referrals from existing customers, respectively; and
(c) approximately 68.5% and 31.5% of the total sales to our customers in Thailand were comprised of orders from repeat customers and
referrals from existing customers, respectively, for our sale of cleaning systems and other equipment.
For
the year ended December 31, 2020, approximately 61.8% and 38.2% of the total sales to our customers in Singapore were comprised of orders
from repeat customers and referrals from existing customers, respectively.
For
the year ended December 31, 2021, 100% of the total sales to our customers
in Singapore were comprised of orders from repeat customers.
Inventory
As
we generally manufacture and sell our cleaning systems and other equipment to our customers on an order-by-order basis, we maintain minimal
levels of raw materials and components required for the manufacture of cleaning systems and other equipment and we source for raw materials
and other components and parts based on the orders made by our customers.
Intellectual Property
Our
Group’s intellectual property rights are important to its business. As of the date of this Prospectus, the Group has:
●
registered eight trademarks in Singapore and one trademark in Hong Kong;
●
registered 24 patents in Singapore, Malaysia, the United States, Taiwan and the PRC, and applied for the registration of 9
patents in Singapore, Malaysia and Thailand; and
●
registered one design in Singapore.
As
of the date of this Prospectus, we were not involved in any proceedings with regard to, and we have not received notice of any
claims of infringement of, any intellectual property rights that may be threatened or pending, in which we may be involved either as
a claimant or respondent.
Employees
As
of December 31, 2021, we employed a total of 90 persons, who were all located in Singapore, as compared to 88 as of December
31, 2020 and 95 as of December 31, 2019, who were also all located in Singapore. Employees are not covered by collective bargaining agreements.
We consider our global labor practices and employee relations to be good.
Insurance
We
maintain property insurance policies covering our equipment and facilities in accordance with customary industry practice. We carry occupational
injury, medical, pension, maternity and unemployment insurance for our employees, in compliance with applicable regulations. We do not
carry general business interruption or “key person” insurance. We will continue to review and assess our risk portfolio and
make necessary and appropriate adjustments to our insurance practices to align with our needs and with industry practice in Singapore
and in the markets in which we operate.
Litigation And Other
Legal Proceedings
As
of the date hereof, we are not party to any significant proceedings.
REGULATORY
ENVIRONMENT
This
section sets forth a summary of the material laws and regulations that affect our Group’s business and operations in Singapore.
Information contained in this section should not be construed as a comprehensive summary nor detailed analysis of laws and regulations
applicable to the business and operations of our Group. This overview is provided as general information only and not intended to be
a substitute for professional advice. You should consult your own advisers regarding the implication of the laws and regulations of Singapore
on our business and operations.
Laws And Regulations
Relating To Our Business In Singapore
Our
business operations are not subject to any special legislation or regulatory controls other than those generally applicable to companies
and businesses incorporated and/or operating in Singapore.
Environmental
Public Health Act
The
Environmental Public Health Act 1987 of Singapore (the “EPHA”) is administered by the NEA and regulates, among other
things, the disposal and treatment of industrial waste and public nuisances. Under the EPHA, the Director-General of Public Health of
Singapore (the “DGPH”) may, upon receipt of any information with respect to the existence of a nuisance liable to
be dealt with summarily under the EPHA and if satisfied of the existence of a nuisance, serve a nuisance order on the person by whose
act, default or sufferance the nuisance arises or continues, or if the person cannot be found, on the owner or occupier of the premises
on which the nuisance arises. Some of the nuisances which are liable to be dealt with summarily under the EPHA include any factory or
workplace which is not kept in a clean state, any place where there exists or is likely to exist any condition giving rise, or capable
of giving rise to the breeding of flies or mosquitoes, any place where there occurs, or from which there emanates noise or vibration
as to amount to a nuisance and any machinery, plant or any method or process used in any premises which causes a nuisance or is dangerous
to public health and safety. If the DGPH receives any information in respect of the existence of a nuisance liable to be dealt with under
the EPHA, a nuisance order may be served on the person responsible for the nuisance prescribing the measures to be taken to remedy the
nuisance. Any failure to comply with the nuisance order served is an offense and such person is liable upon conviction for a fine not
exceeding S$10,000 for the first offense and to a further fine not exceeding S$1,000 for every day during which the offense continues
after conviction.
Cleaning
Business License
The
EPHA also regulates the cleaning standards and productivity of the cleaning industry through the licensing of cleaning businesses which
comprises the provision of cleaning work, being work carried out in Singapore that involves, as its main or only component, the bringing
of premises or any public place into, or keeping of premises or any public place in, a clean condition, and includes supervising the
carrying out of such work but excludes any work that the Minister for the Environment and Water Resources declares not to be cleaning
work. Any person who fails to obtain and maintain a cleaning business license while carrying on a cleaning business in Singapore will
be guilty of an offense and liable on conviction for a fine not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months
or both, and in the case of a continuing offense, for a further fine not exceeding S$1,000 for every day or part thereof during which
the offense continues after the conviction.
Prior
to being licensed, cleaning businesses must meet several track record, training and salary requirements which include (a) in respect
of an existing cleaning business, having at least one cleaning contract ongoing or completed in the 12 months preceding the license application
(for renewal of an existing cleaning business) and in respect of new start-ups, having at least one employee with no less than 2 years
of practical experience in supervising cleaning work or who has attended the requisite training modules under the Environmental Cleaning
(EC) Singapore Workforce Skills Qualifications (the “WSQ”); (b) having training for its cleaning workforce, where cleaners
attend at least one module under the WSQ framework or the Institute of Technical Education Skills Certificate in Housekeeping Operations
(Healthcare). At the point of license application and throughout the license period, at least 50% of the cleaners are to be trained and
at the point of license renewal and throughout the license period, 100% of the cleaners are to be trained; and (c) submitting and implementing
a progressive wage plan for resident (i.e. Singapore citizens or permanent residents) cleaners employed.
Progressive
wage model
To
obtain a cleaning business license, companies must, among other things, submit a progressive wage plan that covers employed resident
cleaners (being Singapore citizens and permanent residents) whether they are full-time, part-time or casual employees, and such plan
must (a) specify the basic wage for each class of cleaners; and (b) conform to the wage levels specified under the progressive wage model
by the Commissioner for Labor, based on the recommendations of the Tripartite Cluster for Cleaners. A tripartite effort which is made
up of seven unions, whose members are representatives from the National Trades Union Congress, Singapore National Employers Federation,
Employment and Employability Institute, Building Construction and Timber Industries Employees’ Union, Environmental Management
Association of Singapore, ISS Facility Services Private Limited, Integrated Property Management Pte Ltd, CapitaLand Mall Asia Limited,
City Developments Limited, town councils, the Singapore Ministry of Manpower (“MOM”), the National Environmental
Agency of Singapore (“NEA”) and Workforce Singapore. The progressive wage model was introduced in 2014 as a productivity-based
wage progression pathway that helps to increase wages of workers through upgrading skills and improving productivity, and is regulated
for the cleaning industry in Singapore by the NEA. The progressive wage model covers three broad categories of cleaning jobs: offices
and commercial buildings, food & beverage establishments (which includes hawker centers and food courts), and the conservancy sector
(which includes town councils and public cleansing).
In
December 2016, the Tripartite Cluster of Cleaners recommended the introduction of (i) yearly wage adjustments to each wage point in the
progressive wage model from 2017 to 2019; (ii) scheduled wage increases from 2020 to 2022; and (iii) an annual bonus equivalent to two
weeks of basic monthly wages, for all wage points from 2020 onwards.
On
June 7, 2021, the Tripartite Cluster of Cleaners recommended the introduction of a six-year schedule of sustained wage increases from
July 1, 2023 to June 30, 2029, which will be reviewed in 2025.
EC
WSQ Qualification
Cleaners
employed by a cleaning business are required to attend at least one module under the EC WSQ framework. The WSQ is a national credentialing
system. The EC WSQ is one of the 33 WSQ industry frameworks developed to date, and is designed to help workers in the cleaning industry
improve their employability as well as progress in their careers. This framework caters to the training of cleaning crew, stewards and
supervisors in two sub-sectors: (a) commercial and private residential cleaning; and (b) public cleaning. The types of EC WSQ qualifications
available include (i) the WSQ Certificate in Environmental Cleaning, which aims to equip cleaning professionals with skills needed to
perform basic cleaning activities; (ii) the WSQ Higher Certificate in Environmental Cleaning, which is suitable for cleaning professionals
who want to advance their skills with in-depth training and gain the soft skills required of a cleaning steward; and (iii) WSQ Advanced
Certificate in Environmental Cleaning, which aims to equip cleaning professionals with skills needed for supervisory positions. Upon
the completion of each unit, the worker will be awarded a statement of attainment (“SOA”). The WSQ qualifications will be
awarded after the worker completes the required number of SOAs.
To
help employers meet the challenge of having to release workers for training, Workforce Singapore has introduced the Assessment Only Pathway
(“AOP”) qualifying criteria, aimed at allowing workers to obtain their EC WSQ qualification through assessment without having
to attend classroom training. These workers would either have some prior training in cleaning or have a number of years of relevant working
experience, and will be screened before they are allowed to enroll in the AOP.
On
June 7, 2021, the Tripartite Cluster of Cleaners recommended the introduction of enhanced mandatory training requirements under the Skills
Framework for Environmental Services and that the number of WSQ training modules be increased as follows:
Job
Roles |
|
Current |
|
By
December 31, 2022 |
|
Beyond
2025 |
|
|
|
|
|
|
|
All
cleaners
Multi-skilled
cleaners
Mechanical
Driver
Supervisor |
|
Minimum
of 1 WSQ module (for licensing conditions) |
|
2
modules in total (1 mandatory workplace safety and health related module and 1 core module that is endorsed by the Tripartite Cluster
of Cleaners) |
|
3
modules in total
4
modules in total |
Environmental
Protection and Management Act
The
Environmental Protection and Management Act 1999 of Singapore and its subsidiary legislation are administered by the NEA, which
provide for, among other things, laws relating to pollution control in Singapore through the regulation of various industries. Pursuant
to the Environmental Protection and Management (Boundary Noise Limits for Factory Premises) Regulations (the “EPM Regulations”),
the owner or occupier of any factory premises shall ensure that the level of noise emitted from his premises does not exceed the maximum
permissible noise levels as set out in the First Schedule to the EPM Regulations. The permissible noise levels may vary depending on
the type of affected premises, which include, among others, noise sensitive premises that require peace and quiet, residential premises
and commercial premises not including factory premises. Any person who fails to comply with the requirements under the EPM Regulations
is guilty of an offense and liable upon conviction for (a) a fine not exceeding S$5,000 on the first conviction, and in the case of a
continuing offense, to a further fine not exceeding S$200 for every day or part thereof the offense continues after the conviction; and
(b) a fine not exceeding S$10,000 on a subsequent conviction, and in the case of a continuing offense, to a further fine not exceeding
S$300 for every day or part thereof during which the offense continues after conviction.
Radiation
Protection Act
The
Radiation Protection Act 2007 of Singapore (the “RPA”) controls and regulates, among other things, the possession
and use of radioactive materials and irradiating apparatus. The RPA provides that no person shall, except under and in accordance with
a license, have in his possession or under his control or use or otherwise deal in any radioactive material or irradiating apparatus.
Any person who contravenes the aforementioned requirement under the RPA is guilty of an offense and liable upon conviction for a fine
not exceeding S$100,000 or imprisonment for a term not exceeding five years or both.
Such
licenses are issued by the Radiation Protection and Nuclear Science Department under the RPA and its subsidiary legislation, such as
the Radiation Protection (Non-Ionizing Radiation) Regulations of Singapore (the “Non-Ionizing Radiation Regulations”),
which regulate, among other things, the licenses and requirements for the manufacture or dealing with, keeping or possession for use
and the import of a consignment of certain controlled irradiating apparatus, such as ultrasound apparatus and high power lasers. Ultrasound
apparatus means any industrial apparatus designed to generate and emit ultrasonic power at acoustic frequencies above 16kHz. High power
lasers means any laser apparatus from Class 3b and Class 4 based on the classification set out in the Second Schedule of the Non-Ionizing
Radiation Regulations, being those emitting visible and/or invisible laser radiation with specified maximum accessible emission levels
and those exceeding the accessible emission limits respectively.
The
Non-Ionizing Radiation Regulations further set out the requirements for (a) ultrasound apparatus, including the requirement that every
ultrasound apparatus shall be designed and constructed in such a manner that all marks, labels and signs are permanently affixed thereon
and clearly visible and all user controls, meters, lights or other indicators are clearly visible, readily discernible and clearly labelled
to indicate their function; and (b) high power lasers, including the requirement that every high power laser shall have a protective
housing that prevents human access during operation to laser and collateral radiation that exceed the specified accessible emission limits,
a safety interlock for each portion of the protective housing that is designed to be removed or displaced during operation or maintenance,
a readily available remote control connector, a key-actuated master control and an emission indicator which provides a visible or audible
signal during emission of accessible laser radiation in excess of the specified accessible emission limits. Any person who contravenes
any of the provisions of the Non-Ionizing Radiation Regulations is guilty of an offense and liable on conviction for a fine not exceeding
S$2,000 or imprisonment for a term not exceeding six months or both.
Our
subsidiary, JCS, has a license issued under the RPA for the possession of four industrial ultrasound apparatus and one high powered industrial
laser.
Workplace
Safety and Health Act
The
Workplace Safety and Health Act 2006 of Singapore (the “WSHA”) provides that every employer has the duty to take,
so far as is reasonably practicable, such measures as are necessary to ensure the safety and health of its employees at work. These measures
include providing and maintaining for the employees a work environment that is safe, without risk to health, and adequate with regards
to facilities and arrangements for employees’ welfare at work, ensuring that adequate safety measures are taken in respect of any
machinery, equipment, plant, article or process used by the employees, ensuring that the employees are not exposed to hazards arising
out of the arrangement, disposal, manipulation, organization, processing, storage, transport, working or use of things in or near their
workplace and under the control of the employer, developing and implementing procedures for dealing with emergencies that may arise while
those persons are at work and ensuring that the employees at work have adequate instruction, information, training and supervision as
is necessary for them to perform their work. The relevant regulatory body is the MOM.
Any
person who breaches his duty under the WSHA is guilty of an offense and will be liable on conviction, in the case of a body corporate,
to a fine not exceeding S$500,000 and if the contravention continues after the conviction, the body corporate shall be guilty of a further
offense and will be liable to a fine not exceeding S$5,000 for every day or part thereof during which the offense continues after conviction.
For repeat offenders, where a person has on at least one previous occasion been convicted of an offense under the WSHA that causes the
death of any person and that person is subsequently convicted of the same offense that causes the death of another person, the court
may, in addition to any imprisonment, if prescribed, punish the person, in the case of a body corporate, with a fine not exceeding S$1
million and, in the case of a continuing offense, with a further fine not exceeding S$5,000 for every day or part thereof during which
the offense continues after conviction.
Under
the WSHA, it is the duty of any person who manufactures any machinery, equipment or hazardous substance (“MEHS”), which includes,
among other things, welding equipment, for use at work to ensure, so far as is reasonably practicable, that (a) information regarding
the safe use of the MEHS is supplied for use at work (which should include precautions to be taken for the proper use and maintenance
of such MEHS, the health hazards associated with the MEHS and the information relating to and the results of any examinations or tests
of the MEHS that are relevant to its safe use); (b) the MEHS are safe, and without risk to health, when properly used; and (c) the MEHS
are examined and tested in compliance with the obligation imposed by paragraph (b). The duties imposed on any person in respect of the
aforementioned shall (i) apply only if the MEHS are manufactured or supplied in the course of a trade or business carried on by the person
(whether for profit or not); (ii) apply whether the MEHS are exclusively manufactured or supplied for use by persons at work; (iii) extend
to the supply of the MEHS by way of sale, transfer, lease or hire and whether as principal or agent, and to the supply of the MEHS to
a person for the purpose of supply to others; and (iv) not apply to a person by reason only that the person supplies the machinery or
equipment under a lease-purchase agreement, conditional sale agreement or credit-sale agreement to another (“customer”) in
the course of a business of financing the acquisition of the machinery or equipment by the customer from others. In the event any person
contravenes the relevant provision in the WSHA that imposes the aforementioned duty on such person, that person is guilty of an offense,
and liable on conviction (in the case of a natural person) for a fine not exceeding S$200,000 or imprisonment for a term not exceeding
two years or both, or (in the case of a body corporate) for a fine not exceeding S$500,000.
Further,
the Commissioner for Workplace Safety and Health (the “CWSH”) may serve a remedial order or a stop-work order in respect
of a workplace if he is satisfied that (a) the workplace is in such condition, or is so located, or any part of the machinery, equipment,
plant or article in the workplace is so used, that any work or process carried on in the workplace cannot be carried on with due regard
to the safety, health and welfare of persons at work; (b) any person has contravened any duty imposed by the WSHA; or (c) any person
has done any act, or has refrained from doing any act which, in the opinion of the CWSH, poses or is likely to pose a risk to the safety,
health and welfare of persons at work. The remedial order shall direct the person served with the order to take such measures, to the
satisfaction of the CWSH, to, among other things, remedy any danger so as to enable the work or process in the workplace to be carried
on with due regard to the safety, health and welfare of the persons at work, whereas a stop-work order will direct the person served
with the order to immediately cease to carry on any work or process indefinitely or until such measures as are required by the CWSH have
been taken, to the satisfaction of the CWSH, to remedy any danger so as to enable the work or process in the workplace to be carried
on with due regard to the safety, health and welfare of the persons at work, and shall specify the date on which such order is to take
effect.
Pursuant
to the Workplace Safety and Health (Noise) Regulations 2011 of Singapore (the “WSHNR”), the occupier of a workplace must
take reasonably practicable measures to reduce or control the noise from any machinery or equipment used or from any process, operation
or work carried out by him in the workplace, so that no person at work in the workplace is exposed or likely to be exposed to excessive
noise. This may include replacing noisy machinery, equipment, processes, operations or work with less noisy machinery, equipment, processes,
operations or work, and such other measures as prescribed under the WSHNR. Where it is not practicable to reduce the noise, the occupier
of a workplace shall limit the duration of time persons at work are exposed to the noise in accordance with the time limits prescribed
in the Schedule under the WSHNR. Any person who contravenes the aforementioned is guilty of an offense and is liable on conviction for
a fine not exceeding S$10,000, and in the case of a second or subsequent conviction, for a fine not exceeding S$20,000 or imprisonment
for a term not exceeding six months or both.
Pursuant
to the Workplace Safety and Health (Risk Management) Regulations, the employer in a workplace is supposed to, among other things, conduct
a risk assessment in relation to the safety and health risks posed to any person who may be affected by his undertaking in the workplace,
take all reasonably practicable steps to eliminate or minimize foreseeable risks, implement measures or safety procedures to address
the risks, and to inform workers of the same, maintain records of such risk assessments and measures/safety procedures for a period of
not less than three years and submit such records to the CWSH when required by the CWSH from time to time. Any employer who fails to
comply with the aforementioned requirements is guilty of an offense and is liable on conviction for a fine not exceeding S$10,000 for
the first offense, and for a fine not exceeding S$20,000 for a subsequent offense or imprisonment for a term not exceeding six months
or both.
Work
Injury Compensation Act
The
Work Injury Compensation Act 2019 of Singapore (The “WICA”), which is regulated by the MOM, applies to all
employees who are engaged under a contract of service or apprenticeship with an employer regardless of their level of earnings. The WICA
does not cover self-employed persons or independent contractors. However, as the WICA provides that, where any person (referred to as
the principal) in the course of or for the purpose of his trade or business contracts with any other person (referred to as the subcontractor
employer), the principal shall be liable to compensate those employees of the subcontractor employer who were injured while employed
in the execution of work for the principal.
The
WICA provides that if an employee dies or sustains injuries in a work-related accident or contracts occupational diseases in the course
of the employment, the employer shall be liable to pay compensation in accordance with the provisions of the WICA. An injured employee
is entitled to claim medical leave wages, medical expenses and lump sum compensation for permanent incapacity or death, subject to certain
limits stipulated in the WICA.
An
employee who has suffered an injury arising out of and in the course of his employment can choose to either:
(a)
report the accident to his employer in order to submit a claim for compensation through the MOM without needing to prove fault or negligence
on anyone’s part. There is a fixed formula in the WICA for the amount of compensation to be awarded; or
(b)
commence legal proceedings to claim damages under common law against the employer for breach of duty or negligence.
Damages
under a common law claim are usually more than an award under the WICA and may include compensation for pain and suffering, loss of wages,
medical expenses and any future loss of earnings. However, the employee must show that the employer has failed to provide a safe system
of work, or breached a duty required by law or that the employer’s negligence caused the injury.
Under
the WICA, every employer is required to insure and maintain insurance under approved policies with an insurer against all liabilities
which he may incur under the provisions of the WICA in respect of all employees employed by him, unless specifically exempted. Further,
every employer is required to maintain work injury compensation insurance for all employees engaged in manual work labor regardless of
their salary level, as well as all employees doing non-manual work who earn S$2,100 or less a month. Failure to provide adequate insurance
is an offense carrying a fine of up to S$10,000 or imprisonment for a term of up to 12 months, or both. For further information on our
Group’s insurance policies, please refer to the section headed “Business — Insurance”.
Employment
Act
The
Employment Act 1968 of Singapore (the “Employment Act”) is the main legislation governing employment in Singapore
and is administered by the MOM. The Employment Act covers every employee who is under a contract of service with an employer and includes
a workman (as defined under the Employment Act) but does not include, among others, any person employed in a managerial or executive
position (subject to the exceptions set out below). The definition of “employee” under the Employment Act does not extend
to freelance contractors who have entered into a contract for service. Accordingly, freelance contractors are not considered to be employees
of our Group.
A
workman is defined under the Employment Act as including, among others, (a) any person, skilled or unskilled, who has entered into a
contract of service with an employer in pursuance of which he is engaged in manual labor, including any apprentice; and (b) any person
employed partly for manual labor and partly for the purpose of supervising in person any workman in and throughout the performance of
his work.
Core
employment provisions of the Employment Act, such as public holiday and sick leave entitlements, minimum days of annual leave, payment
of salary and allowable deductions and release for wrongful dismissal, cover all employees, including persons employed in a managerial
or executive position, except public servants, domestic workers, seafarers and those who are covered separately.
In
addition to the core employment provisions of the Employment Act, Part IV of the Employment Act contains provisions relating to, among
other things, working hours, overtime, rest days, holidays, annual leave, payment of retrenchment benefit, priority of retirement benefit,
annual wage supplements and other conditions of work or service (“Part IV”). However, such Part IV provisions only apply
to: (a) workmen earning basic monthly salaries of not more than S$4,500; and (b) employees (excluding workmen) earning basic monthly
salaries of not more than S$2,600.
An
employer who breaches any provision of Part IV of the Employment Act is guilty of an offense and is liable on conviction for a fine not
exceeding S$5,000, and for a second or subsequent offense a fine not exceeding S$10,000 or imprisonment for a term not exceeding 12 months
or both.
From
April 1, 2016, employers are required to issue to their employees who are covered by the Employment Act and who are employed for 14 days
or more a written record of the key employment terms of the employee. The key employment terms required to be provided (unless inapplicable
to such employee) include, among other things, working arrangements (such as daily working hours, number of working days per week and
rest day(s)), salary period, basic salary, fixed allowances and deductions, overtime rate of pay, types of leave and other medical benefits.
Employment
of Foreign Manpower Act
The
employment of foreign employees in Singapore is governed by the Employment of Foreign Manpower Act 1990 of Singapore (the “EFMA”)
and is regulated by the MOM. The EFMA prescribes the responsibilities and obligations of employers of foreign employees in Singapore.
The
EFMA provides that no person shall employ a foreign employee unless the foreign employee has obtained a valid work pass from the MOM
in accordance with the Employment of Foreign Manpower (Work Passes) Regulations 2012, which allows the foreign employee to work for him.
Any person who fails to comply with or contravenes this provision of the EFMA is guilty of an offense and will: (a) be liable on conviction
for a fine not less than S$5,000 and not more than S$30,000 or imprisonment for a term not exceeding 12 months or both; and (b) on a
second or subsequent conviction: (i) in the case of an individual, be liable for a fine of not less than S$10,000 and not more than S$30,000
and imprisonment for a term of not less than one month and not more than 12 months; or (ii) in any other case, be punished with a fine
of not less than S$20,000 and not more than S$60,000.
In
Singapore, the work pass to be issued to a foreigner is contingent on, among other things, the type of work and salary being received
by the foreigner in question. Foreign professionals, managers and executives earning a fixed monthly salary of at least S$4,500 with
acceptable qualifications (such as a good university degree, professional qualifications or specialist skills) may apply for an employment
pass, whereas older and more experienced candidates will need higher salaries. Mid-level skilled staff earning a fixed monthly salary
of at least S$2,500 who possess a degree, diploma or technical certificate and have the relevant work experience may apply for an S-pass;
and semi-skilled foreign workers from approved source countries working in, among others, the manufacturing sector may apply for a work
permit.
Further,
under the Employment of Foreign Manpower (Work Passes) Regulations 2012, an employer is required to purchase and maintain medical insurance
with coverage of at least S$15,000 per 12-month period of a foreign workers’ employment (or for such shorter period where the foreign
workers’ period of employment is less than 12 months) for the foreign workers’ in-patient care and day surgery except as
the Controller of Work Passes may otherwise provide by notification in writing.
In
addition, the employment of foreign workers is also subject to sector-specific rules regulated by the MOM through the following policy
instruments: (a) business activity; (b) approved source countries; (c) the imposition of security bonds and levies; and (d) quota (or
dependency ratio ceilings) based on the ratio of local to foreign workers.
Business
activity
To
be considered to be under the manufacturing sector, a company must have a valid factory notification or registration, use machinery to
manufacture or produce items from raw materials and operate in a designated industrial setting area.
Approved
source countries
The
approved source countries for manufacturing workers are Malaysia, the PRC, and NAS countries. The minimum age for all foreign workers
(other than domestic foreign workers) is 18, and all workers can only work up to 60 years of age. In addition, Malaysian foreign workers
must be under 58 years of age and non-Malaysian foreign workers must be under 50 years of age in order to apply for a work permit.
Further,
for the manufacturing sector, the maximum number of years a foreign worker can work in Singapore on a work permit is as follows:
|
Nationality |
|
Type
of worker |
|
Maximum
period of employment |
|
PRC |
|
Basic
skilled |
|
14
years |
|
PRC |
|
Higher
skilled |
|
22
years |
|
NAS,
Malaysia |
|
All |
|
No
maximum period of employment |
Quota
and levies
The
number of foreign workers that employers can hire under a work pass is limited by the quota or dependency ratio ceiling, and employers
pay the requisite levy according to the qualification of the foreign worker employed. The levy rates are tiered so that employers who
hire close to the maximum quota will be required to pay a higher levy, and the levy rates are subject to changes as and when announced
by the Singapore government. The levy rates for the manufacturing sector are set out in the table below:
| |
Basic skilled |
Higher skilled |
| |
Monthly | |
Daily(1) | |
Monthly | |
Daily(1) |
Quota | |
| |
| |
| |
|
Tier 1: | |
| |
| |
| |
|
Up to 25% of the total workforce | |
SGD370 | |
SGD12.17 | |
SGD250 | |
SGD8.22 |
Tier 2: | |
| |
| |
| |
|
Above 25% of the total workforce | |
SGD470 | |
SGD15.46 | |
SGD350 | |
SGD11.51 |
Tier 3: | |
| |
| |
| |
|
Above 50% to 60% of the total workforce | |
SGD650 | |
SGD21.37 | |
SGD550 | |
SGD18.09 |
The
levy rates for the services sector are set out in the table below:
| |
Basic skilled | |
Higher skilled |
| |
Monthly | |
Daily(1) | |
Monthly | |
Daily(1) |
Tier 1: | |
| |
| |
| |
|
Up to 10% of the total workforce | |
SGD450 | |
SGD14.80 | |
SGD300 | |
SGD9.87 |
Tier 2: | |
| |
| |
| |
|
Above 10% to 25% of the total workforce | |
SGD600 | |
SGD19.73 | |
SGD400 | |
SGD13.16 |
Tier 3: | |
| |
| |
| |
|
Above 25% to 35% of the total workforce
| |
SGD800 | |
SGD26.31 | |
SGD600 | |
SGD19.73 |
(1)
The daily levy rate only applies to work permit holders who did not work for a full calendar month. The daily levy rate is calculated
as follows: (Monthly levy rate X 12)/365 = rounding up to the nearest cent.
The
quota for the services sector is set at 35%. A Singaporean or Permanent Resident employee employed under a contract of service, including
the company’s director, is counted as (a) one local employee if they earn the LQS of at least S$1,400 per month; and (b) 0.5 local
employee if they earn half the LQS of at least S$700 to S$1,400 per month.
Based
on the information extracted from the MOM website, as of March 7, 2022 the maximum number of foreign workers JCS and Hygieia can
hire is 27 and 15, respectively, which means that three additional foreign workers can be hired by JCS and three
additional foreign workers can be hired by Hygieia based on the number of local employees employed by each of JCS and Hygieia, calculated
based on the applicable dependency ratio ceiling.
Employers
pay less levy for higher skilled foreign workers. Foreign workers with the following certificates will qualify as higher skilled workers:
Type
of qualification |
|
Certificates
needed |
Academic
qualifications |
|
-
Malaysia: Sijil Pelajaran Malaysia
-
NAS: High school certificates
-
PRC: Diploma Skills
|
|
|
|
Evaluation
Test (“SET”) conducted by the Institute of Technical Education (“ITE”) |
|
SET
Level 1 or National ITE Certificate (Nitec) |
|
|
|
Workforce
skills qualification |
|
Composite
Assessment for Generic Manufacturing |
|
|
|
Market-Based
Skills Recognition Framework |
|
Earn
a fixed monthly salary of at least S$1,600 and worked at least four years in Singapore as a work permit holder |
Required
safety courses
For
the manufacturing sector, foreign workers who handle metals and machinery in the metalworking industry, such as our foreign workers employed
under JCS, must take a Metalworking Safety Orientation Course or an Apply Workplace Safety and Health in Metal Work course before their
work permits can be issued, and such courses may be conducted by either the Occupational Safety and Health Training and Promotion Centre
or other training institutions approved by the Chief Inspector appointed by the Minister of Manpower.
A
work permit cannot be issued to the foreign worker until he has taken the safety course. Employers are responsible for their workers
passing the test. If the foreign workers fail the course, they should retake it as soon as possible and are required to pass the course
within three months of their arrival or their work permit could be revoked. Foreign workers in the metalworking industry that have worked
in the metalworking industry for (a) less than six years must pass the safety course once every two years; and (b) more than six years
must pass the safety course once every four years.
Employers
renewing a work permit must ensure that the foreign worker’s safety course certificate has a validity period of more than one month
on the day of renewal, otherwise the work permit will not be renewed.
Infectious
Diseases Act
The
Infectious Diseases Act 1976 of Singapore (the “IDA”) relates to the quarantine and the prevention of infectious diseases.
Under the IDA, if the Director of Medical Services (the “DMS”) has reason to believe that there exist on any premises conditions
that are likely to lead to the outbreak or spread of any infectious disease, he may, among other things, by written notice, order the
closure of the premises for a period not exceeding 14 days, and require the owner or occupier of the premises to cleanse or disinfect
the premises in the manner and within the time specified in the notice or carry out such additional measures as the DMS may require in
the manner and within the time specified in the notice. Such notice directing the owner or the occupier of the premises to close the
premises may be renewed by the DMS from time to time for such period, not exceeding 14 days, as the DMS may, by written notice, specify.
In
addition, the DMS may order any person who is, or is suspected to be, a case or carrier or contact of an infectious disease to be detained
and isolated in a hospital or other place for such period of time and subject to such conditions as the DMS may determine. The DMS may
also direct any person carrying on any occupation, trade or business in a manner as is likely to cause the spread of infectious disease
to take preventative action that the DMS reasonably believes is necessary to prevent the possible outbreak or prevent or reduce the spread
of the infectious disease. Under the IDA, “preventative action” in the case of such direction, includes, among other things,
requiring the person to stop carrying on, or not carry on, the occupation, trade or business during a period of time specified in the
direction.
Any
person who, without reasonable excuse, fails to comply with any requirement of such notice or direction given to that person by the DMS
is guilty of an offense. While there are no specific penalties for such offense, any person guilty of an offense under the IDA for which
no penalty is expressly provided shall (a) in the case of a first offense, be liable on conviction for a fine not exceeding S$10,000
or imprisonment for a term not exceeding 6 months or both; and (b) in the case of a second or subsequent offense, be liable on conviction
for a fine not exceeding S$20,000 or imprisonment for a term not exceeding 12 months or both.
Infectious
Diseases (COVID-19 — Stay Orders) Regulations 2020
On
March 26, 2020, the Ministry of Health of Singapore (“MOH”) promulgated the Infectious Diseases (COVID-19 — Stay Orders)
Regulations 2020 (the “SHN Regulations”) under the Infectious Diseases Act of Singapore.
Under
the SHN Regulations, an at-risk individual may be ordered to go directly to one or more places of accommodation specified in an order
given under the SHN Regulations and not leave the place of accommodation if, among other things, the individual is a traveler entering
Singapore on or after October 7, 2021, for the period starting upon the issue of the order and ending on the later of (i) a day specified
in the order, which must not be later than the 21st day after the date the order was issued; and (ii) the day that the individual
knows that he tests negative for COVID-19 after undergoing any antigen rapid test or polymerase chain reaction test as prescribed under
the SHN Regulations, and if the individual is required to undergo a serology test, also tests positive after undergoing a serology test
as prescribed under the SHN Regulations. The penalty for an offense under the SHN Regulations is a fine of up to S$10,000 or imprisonment
of up to six months or both.
COVID-19
(Temporary Measures) Act 2020
On
April 3, 2020, the Singapore government announced the implementation of elevated safe distancing measures to prevent, protect against,
delay or otherwise control the incidence or transmission of COVID-19 in Singapore, including, among other things, closures of schools
and most physical workplace premises (except for those providing essential services and in selected economic sectors critical for local
and global supply chains) in favor of home-based learning and telecommuting, closures of retail outlets (except for those providing items
and services necessary to support daily living needs of the population), and closures of recreation venues, attractions and places of
worship (the “Circuit Breaker Measures”). On April 7, 2020, the Singapore Parliament passed the COVID-19 Act.
Under
Section 34(1) of the COVID-19 Act, the Minister of Health was authorized to make regulations by way of a control order for the purpose
of preventing, protecting against, delaying or otherwise controlling the incidence or transmission of COVID-19 in Singapore if the Minister
of Health was satisfied that the incidence and transmission of COVID-19 in the community in Singapore constituted a serious threat to
public health, and a control order was necessary or expedient to supplement the IDA, and any other written law. This included control
orders to require an individual to stay at a specified place and not to leave except for certain purposes, require the closure of premises
such as workplaces and impose restrictions such as those relating to the manner of carrying on business or work or the gathering of individuals
in any place.
COVID-19
(Temporary Measures) (Control Order) Regulations 2020
The
Control Order Regulations came into effect on April 7, 2020 under the COVID-19 Act to implement the Circuit Breaker Measures. The Control
Order Regulations impose restrictions on, among other things, (a) individuals in relation to (i) the wearing of face masks or face shields
outside their ordinary place of residence; (ii) movement and gatherings outside their ordinary place of residence; and (iii) keeping
a safe distance from other individuals; (b) owners or occupiers of non-residential premises; and (c) permitted enterprises occupying
a permitted premises and providing an authorized service in accordance with the Control Order Regulations.
Circuit
Breaker Period
During
the Circuit Breaker Period, the restrictions imposed under the Control Order Regulations effecting the Circuit Breaker Measures included,
among others, (a) restrictions on leaving or entering a place of residence, such that every individual must stay at or in, and not leave,
his or her ordinary place of residence in Singapore except only to the extent necessary for any of the prescribed purposes; (b) prohibitions
on social gatherings, such that a person must not meet another individual not living in the same place of residence for any social purpose
unless otherwise permitted under the Control Order Regulations; and (c) closure of premises, such that an owner or occupier of any premises
other than residential premises must ensure that the premises are closed to entry by any individual, save as otherwise provided under
the Control Order Regulations.
Phase
1
On
May 19, 2020, the Singapore government announced three phases to introduce the gradual resumption of activities and progressively lift
the relevant Circuit Breaker Measures in place with the first phase to be implemented from June 2, 2020 to June 18, 2020 (inclusive)
(“Phase 1”). In addition to essential services provided during the Circuit Breaker Period, Phase 1 included the resumption
of economic activities that did not pose a high risk of transmission with social, economic and entertainment activities that carry a
higher risk of transmission to remain closed. A list of permitted services was provided on the prescribed website operated by the MTI.
Entities providing permitted services must put in place and enforce safe management measures at the workplace, and employees are to strictly
adhere to them. With effect from June 2, 2020, the Control Order Regulations were amended to implement a revised set of measures in order
to facilitate the transition from the Circuit Breaker Period to Phase 1.
Phase
2
After
continuous monitoring of the daily COVID-19 infection rates during Phase 1, the Singapore government subsequently introduced the second
phase of the progressive lifting of the Circuit Breaker Measures (“Phase 2”) in due course to allow for a gradual resumption
of more activities. With effect from June 19, 2020, the Control Order Regulations were amended to implement a revised set of measures
in order to facilitate the transition from Phase 1 to Phase 2. Phase 2 commenced on June 19, 2020 and allowed for more businesses to
re-open and activities to resume subject to the continued adherence to safe management measures. The Control Order Regulations imposed
restrictions on (a) individuals in relation to (i) the wearing of face masks or face shields outside their place of residence; and (ii)
movement and gatherings outside their place of residence; (b) owners or occupiers of non-residential premises; and (c) permitted enterprises
occupying a permitted premises and providing an authorized service in accordance with the Control Order Regulations.
Phase
3
On
December 14, 2020, the Singapore government announced that the third phase of re-opening would start from December 28, 2020 (“Phase
3”). The Singapore government had assessed that the preconditions and enablers, being adherence to safe management measures, sufficient
testing capabilities for early detection and public health action and high adoption of the Trace Together Programme for quick and effective
contact tracing, for moving into Phase 3 were in place and thus allowed for the further reopening of activities in the community. With
effect from December 28, 2020, the Control Order Regulations were amended to implement a revised set of measures in order to facilitate
the transition from Phase 2 to Phase 3. Such transition has since seen a number of changes in the measures being imposed and revised
by the Singapore government in response to the developments in the COVID-19 situation, as further elaborated under “Heightened
Alert Measures” below.
Heightened
Alert Measures
Between
May 16, 2021 and August 6, 2021, the Singapore government introduced two phases, namely the Phase 2 (Heightened Alert) and Phase 3 (Heightened
Alert), along with the easing of certain measures within each of such phases. In summary, the Phase 2 (Heightened Alert) measures, which
were in effect from May 16, 2021 to June 13, 2021, included reductions made in prevailing social gathering group size, sizes of larger
scale events or activities and reinstatement of “work-from-home” as the default at workplaces to minimize workplace interactions,
and the Phase 3 (Heightened Alert) measures, which were in effect from June 14, 2021 to July 19, 2021, was contemplated as a calibrated
reopening and included increases in social gathering group sizes, event size and capacity limits and subsequently the resumption of dining
in at food and beverage establishments. On July 20, 2021, the Singapore government announced the reversion back to Phase 2 (Heightened
Alert) measures from July 22, 2021 to August 18, 2021 which superseded the measures introduced on July 19, 2021, during which “work
from home” remained the default and employers who needed staff to return to workplaces were required to ensure that there was no
cross-deployment at various worksites, enforce staggered start times and flexible working hours, and social gatherings at workplaces
were not allowed.
On
August 6, 2021, the Singapore government announced the easing of some safe management measures. The first phase, which took effect on
August 10, 2021, and the second phase, which took effect on August 19, 2021, superseded those introduced on July 22, 2021 as part of
Singapore’s transition towards COVID-19 resilience. The eased measures allowed for an increase in social gathering group
size, event size and capacity limits for fully vaccinated individuals and easing of “work-from-home” requirements. A further
easing of community measures was announced on August 19, 2021. Subsequently, given the exponential rise in COVID-19 cases from the end
of August 2021, on September 24, 2021, the Singapore government announced a tightening of safe management measures during the stabilization
period between September 27, 2021 and October 24, 2021, which was later extended to November 21, 2021, with a mid-point review. On November
8, 2021, the Singapore government announced calibrated adjustment of safe management measures including the easing of dine-in restrictions
and updates to border measures. On December 22, 2021, in response to the global emergence of the Omicron variant, the Singapore government
introduced travel restrictions for affected countries or regions and enhanced the testing requirements for travelers. However, on
December 31, 2021, the Singapore government announced that all non-vaccinated travel lane travelers entering Singapore from certain categories
of countries will no longer be required to undergo a COVID-19 polymerase chain reaction test on arrival with effect from January 8, 2022.
On
February 16, 2022, the Singapore government announced the further simplification of existing healthcare protocols, workplace testing
requirements and safe management measures, including focusing the mandatory rostered routine testing on sectors where there are interactions
with vulnerable populations as well as the provision of essential services, such as the healthcare and eldercare sectors and selected
essential services sectors, with effect from February 18, 2022, and workplace requirements will be aligned with those for community safe
management measures. The border measures for travelers were also simplified with effect from February 22, 2022, including the standardization
of the stay-home notice duration to seven days across all country/region categories in view of the Omicron variant’s shorter incubation
period and the cessation of the enhanced testing regime for travelers arriving on vaccinated travel lanes.
COVID-19
Measures In Relation To Our Operations
Under
the Control Order Regulations, a permitted enterprise may continue to carry out the business, undertaking or work at the permitted premises
of the permitted enterprise without closing those permitted premises to entry by any individual, with the prior permission of the Multi-Ministry
Taskforce, and in accordance with the prescribed restrictions for that type of business, undertaking or work or any conditions imposed
in the aforementioned permission. Such owner or occupier of the permitted premises may allow any employee (including employees of such
permitted enterprises or where any permitted enterprise is a principal, includes a contractor, a subcontractor or an employee of a contractor
or subcontractor of such permitted enterprise, where the contractor, subcontractor or employee works under the direction of the permitted
enterprise as to the manner in which the work is carried out), customer or other individual to enter the premises only for the purposes
of working for or dealing with the permitted enterprise (including procuring the provision of the authorized service), subject to the
continued adherence to the safe management measures under the Control Order Regulations or the conditions of the permission. Where the
permitted enterprise is directing a contractor or subcontractor, they are responsible under the Control Order Regulations for implementing
the necessary measures in relation to the employees of the contractor or subcontractor as well.
Although
a permitted enterprise may carry on business at the permitted premises, where such permitted enterprise is not a hospital, clinic or
other healthcare institution or facility for the reception, lodging, treatment or care of individuals requiring medical treatment or
a premise exempted under paragraph 2 of the Workplace Safety and Health (Exemption) Order, O 1 of Singapore, they must, where reasonably
practicable, direct permitted enterprise workers to work from their place of residence. A permitted enterprise must have appropriate
internal policies and procedures and adequate controls to monitor and ensure compliance with the relevant requirements by the permitted
enterprise and its permitted enterprise workers, to remedy without delay any instances of noncompliance and to conduct an adequate analysis
of the risks of COVID-19 infections arising from the permitted enterprise’s business, undertaking or work and make recommendations
to mitigate any risks identified to the permitted enterprise, which may include more stringent requirements than in the Control Order
Regulations.
Central
Provident Fund Act
The
Central Provident Fund (“CPF”) system is a mandatory social security savings scheme funded by contributions from employers
and employees. Pursuant to the Central Provident Fund Act 1953 of Singapore (“CPFA”), an employer is obliged to make
CPF contributions for all employees who are Singapore citizens or permanent residents who are employed in Singapore by an employer (save
for employees who are employed as a master, a seaman or an apprentice in any vessel, subject to an exception for non-exempted owners).
CPF contributions are not applicable for foreigners who hold employment passes, S passes or work permits. CPF contributions are required
for both ordinary wages and additional wages (subject to an ordinary wage ceiling and a yearly additional wage ceiling) of employees
at the applicable prescribed rates which is dependent on, among other things, the amount of monthly wages and the age of the employee.
An employer must pay both the employer’s and employee’s share of the monthly CPF contribution. However, an employer can recover
the employee’s share of CPF contributions by deducting it from their wages when the contributions are paid for that month.
Where
the amount of the contributions which an employer is liable to pay under the CPFA in respect of any month is not paid within such period
as may be prescribed, the employer shall be liable for the payment of interest on the amount for every day the amount remains unpaid
commencing from the first day of the month succeeding the month in respect of which the amount is payable and the interest shall be calculated
at the rate of 1.5% per month or the sum of S$5, whichever is greater. Where any employer who has recovered any amount from the monthly
wages of an employee in accordance with the CPFA fails to pay the contributions to the CPF within such time as may be prescribed, he
will be guilty of an offense and will be liable on conviction for a fine not exceeding S$10,000 or imprisonment for a term not exceeding
seven years or both. Where an offense has been committed under the CPFA but there are no penalties provided, the offender may be liable
for a fine not exceeding S$5,000 or imprisonment for a term not exceeding six months or both, and where the offense is repeated by the
same offender, the offender may be liable for a fine not exceeding S$10,000 or imprisonment for a term not exceeding 12 months or both.
Customs
Regulations
Goods
exported from Singapore are regulated under the Customs Act 1960 of Singapore (the “Customs Act”). To export goods
from Singapore, the exporter is required to declare the goods to Singapore Customs, a department under the Ministry of Finance, which
is the lead agency for trade facilitation and revenue enforcement. The Singapore Goods and Services Tax (the “GST”) is not
levied on goods exported from Singapore. A Customs export permit is required for, among other things, the export of locally manufactured
goods or local GST paid goods, the export of goods from free trade zones, dutiable goods from licensed warehouses and non-dutiable goods
from a zero-rated warehouse. The exporter will be the party that issues the commercial invoice to his overseas customer. Exporters who
intend to engage in import and/or export activities in Singapore or appoint a declaring agent to apply for Customs import, export and
transhipment permits or certificates will need to activate their Customs Account with Singapore Customs, further to which a declaring
agent may be appointed to apply for Customs permits on their behalf. Declaring agents have to be registered with Singapore Customs. Exporters
may be penalized if they do not comply with the requirements and conditions imposed under the Customs Act. Making an incorrect declaration
or failing to make a declaration of goods imported into, exported from or transhipped in Singapore will result in being liable on conviction
for a fine not exceeding S$10,000, or the equivalent of the amount of the customs duty, excise duty or GST payable, whichever is the
greater amount, or imprisonment for a term not exceeding 12 months, or both.
Intellectual
Property Rights
The
protection of industrial designs is provided for under the Registered Designs Act 2000 of Singapore. There are two key criteria
for registration: the subject matter must be (a) a ‘design’, which means features of shape, configuration, pattern or ornament
applied to article by any industrial process; and (b) ‘new’, being a design that is not the same, or substantially the same,
as any other design that has been registered or published in Singapore or elsewhere, and publication includes sale or use of any article
which embodies the design.
Inventions
are protected in Singapore under the Patents Act 1994 of Singapore and may be registered either through a domestic application
filed with the Registry of Patents within the Intellectual Property Office of Singapore (the “IPOS”) or an international
application filed in accordance with the Patent Cooperation Treaty, with the Registry of Patents acting as the receiving office for the
application. A patent may be granted for an invention which is a product or a process, and such invention must (a) be new; (b) involve
an inventive step (being a step that is not obvious to a person who is skilled in the relevant art); (c) be capable of industrial application;
and (d) not encourage offensive, immoral or anti-social behavior through its publication or exploitation.
Trademarks
may be protected both under the Trade Marks Act 1998 of Singapore (the “TMA”) and under common law. These two systems
are independent of each other. Protection under the TMA is conditional upon registration of the trademark with the Registry of Trade
Marks within the IPOS. There are three key criteria for registration: the subject matter must be (a) a ‘trademark’, which
is any sign capable of being graphically represented that is used, or proposed to be used, by a trader to distinguish his goods or services
from those of other traders; (b) ‘distinctive,’ if it is not descriptive of those goods or services. It is a question of
degree in every case whether the sign is so descriptive of the goods or services in question that it will be refused registration; and
(c) does not conflict with an earlier trademark, that is an earlier registered trade mark or a trademark (whether registered or not)
which is well known in Singapore.
MANAGEMENT
The
following table sets forth the names, ages and titles of our directors, executive officers and key personnel:
Name |
|
Age |
|
Title |
|
|
|
|
|
Executive
Officers and Directors: |
|
|
|
|
|
|
|
|
|
Hong
Bee Yin |
|
49 |
|
Chairman,
executive Director and Chief Executive Officer |
Long
Jia Kwang
|
|
43 |
|
Executive
Director and Chief Financial Officer |
|
|
|
|
|
Independent
Non-executive Directors: |
|
|
|
|
|
|
|
|
|
Singh
Karmjit |
|
74 |
|
Independent
non-executive Director |
Tay
Jingyan, Gerald |
|
33 |
|
Independent
non-executive Director |
Khoo
Su Nee, Joanne |
|
47 |
|
Independent
non-executive Director |
|
|
|
|
|
Key
Personnel: |
|
|
|
|
|
|
|
|
|
Zhao
Liang |
|
39 |
|
Head
of design department |
Wui
Chin Hou |
|
48 |
|
Field
operations manager
|
No
arrangement or understanding exists between any such Director or officer and any other persons pursuant to which any Director or executive
officer was elected as a Director or executive officer. Our Directors are elected annually and serve until their successors take office
or until their death, resignation or removal. The executive officers serve at the pleasure of the board of directors.
Executive
Officers and Directors:
Ms.
Hong Bee Yin is the founder of our Group, having incorporated JCS in November 1999. Ms. Hong is currently
our Chairman, executive Director and Chief Executive Officer. She was appointed as our Director on January 29, 2019 and re-designated
as our executive Director on March 5, 2020. Ms. Hong is primarily responsible for planning and execution of our Group’s strategies
including product innovation and customization, as well as managing our Group’s relationship with major customers and suppliers.
She is also responsible for overseeing all day-to-day aspects of our Group’s operation including production, inventory and material
control.
She
commenced her start-up business in November 1999 by incorporating JCS and since then has accumulated more than 20 years of operational
experience in providing cleaning solutions for the cleaning industry. Prior to forming our Group, Ms. Hong worked at JLW Property Consultants
Pte Ltd. from June 1993 to June 1998 with her last position as assistant manager (Industrial Department). From June 1998 to around September
1999, she worked at JCS Automation Pte Ltd. (now known as JCS Biotech Pte. Ltd.) as marketing manager.
Ms.
Hong obtained a Diploma in Electronic and Computer Engineering from Ngee Ann Polytechnic, Singapore in August 1993. She also completed
the Tsinghua SEM Indonesia-Singapore Executive Program and SPRING CEO Leadership Circle Program in May 2014 and November 2016, respectively.
Ms. Hong has been appointed as the deputy chairman of Singapore Precision Engineering and Technology Association from April 2017 to April
2019.
Mr.
Long Jia Kwang joined our Group as financial controller in December 2014 and was appointed as our executive Director and Chief
Financial Officer on March 5, 2020. Mr. Long is primarily responsible for managing accounting and finance, human resources and administrative
functions of our Group.
Mr.
Long has over 20 years of experience in auditing, accounting and financial management. Prior to joining our Group, Mr. Long worked at
KPMG in Johor Bahru, Malaysia from February 2000 to September 2007 with his last position as deputy audit manager. From October 2007
to October 2014, he worked at KPMG Services Pte. Ltd. in Singapore with his last position as senior manager.
Mr.
Long obtained a Bachelor of Commerce degree from the University of Adelaide, Australia in December 1999. Mr. Long was a certified practicing
accountant of CPA Australia from November 2004 to April 2015, a chartered accountant of the Malaysian Institute of Accountants from September
2006 to February 2010 and a member of the Institute of Singapore Chartered Accountants (formerly known as Institute of Certified Public
Accountants of Singapore) since April 2013.
Independent
Non-executive Directors:
Mr.
Karmjit Singh was appointed as a non-executive Director of the Company on March 5, 2020 and redesignated
as our independent non-executive Director on November 12, 2021. Mr. Singh serves as the chairman of the nomination committee and as a
member of the audit and compensation committees. Mr. Singh is primarily responsible for providing guidance to the management team on
corporate strategies and governance matters.
Mr.
Singh has over 45 years of experience in business management. From 1974 to 1998, Mr. Singh worked at Singapore Airlines Limited serving
in a variety of managerial capacities covering corporate affairs, planning, aviation fuel and administrative services. Mr. Singh joined
SATS Ltd. in July 1998 as the chief executive of SATS Airport Services Pte Ltd. and then became the chief operating officer of SATS Ltd.
in July 2004 overseeing the ground handling and inflight catering operation of the SATS group of companies until his retirement in September
2009. He then became the consultant to the president and chief executive officer of SATS Ltd. from October 2009 until September 2010.
Mr.
Singh has been an independent director of Keppel Telecommunications & Transportation Ltd. since October 2020, chairman
of that company’s nominating committee from October 2012 to July 2019, a member of its audit committee from January
2011 to July 2019 and a member of its board safety committee since July 2019. Keppel Telecommunications & Transportation
Ltd. was listed on Singapore Exchange Limited (stock code: K11) and subsequently delisted on May 8, 2019.
Mr.
Singh obtained a Bachelor of Arts degree in Geography from the National University of Singapore in June 1970. Mr. Singh has been actively
engaged in prominent civil and industry affairs in Singapore. Mr. Singh has served as the chairman of Chartered Institute of Logistics
and Transport Singapore since 1994. Mr. Singh was a council member of the Public Transport Council, Singapore from August 2005 to May
2019.
Mr.
Tay Jingyan, Gerald was appointed as an independent non-executive Director of the Company on January 19,
2022. Mr. Tay will serve as chairman of the compensation committee and as a member of the audit and nomination committees.
October
2014, Mr. Tay has been the group chief executive officer of TPS Group Alliance, an alliance of companies offering a variety of professional
services including corporate services, statutory compliance, accounting, corporate advisory, real estate and family office services.
Mr. Tay worked with TPS Group Alliance as an associate from January 2005 until his promotion as the chief executive officer. From August
2013 to January 2014 and from May 2014 to the present, Mr. Tay was and has also been a director of Capilion Corporation Pte. Ltd., a
company together with companies within its group engaging in private equity, corporate services, real estate and financial securities.
Mr. Tay also founded and has acted as the director of Excelsus Tech Pte Ltd. (formerly known as Excelsus Capital Pte. Ltd.), a holding
company for technology-related businesses and projects, since February 2014, and Galacthor International Pte Ltd, a company for general
physical commodities trading, since December 2011.
Mr.
Tay obtained a Bachelor of Arts degree in Communication from the University at Buffalo, The State University of New York in February
2012.
Ms.
Khoo Su Nee, Joanne was appointed as an independent non-executive Director of the Company on January 19, 2022. Ms. Khoo will
serve as the chairman of the audit committee and as a member of the compensation and nomination committees.
Ms.
Khoo has over 23 years of experience in corporate finance and business advisory services. Ms. Khoo started her career at PricewaterhouseCoopers
in January 1997 and her last position was senior associate in February 2000. From May 2000 to August 2004, she worked at Stone Forest
Consulting Pte Ltd., a business advisory company, and her last position was an assistant manager. She was responsible for providing consultancy
services including IPO advisory, working capital consulting, business turnaround and profit improvement. Ms. Khoo worked in the corporate
finance industry at several companies, which include (i) Hong Leong Finance Limited from September 2004 to November 2005 as an assistant
vice president; (ii) Phillip Securities Pte Ltd. from November 2005 to January 2008 as an assistant vice president; and (iii) Canaccord
Genuity Singapore Pte. Ltd. (formerly known as Collins Stewart Pte. Limited) from February 2008 to October 2012 with her last position
as a director. She founded and has acted as an executive director of Bowmen Capital Private Limited, a management consultancy company,
since February 2013. From October 2019 to April 2020, she also served as a director of PayLinks Pte. Ltd., a financial service company.
Ms.
Khoo served as an independent director of Kitchen Culture Holdings Limited (a company listed on the Catalist of the Singapore Exchange
Limited (stock code: SGX:5TI)) from October 2012 to February 2019. Since January 2014, she has served as an independent director of Teho
International Inc Ltd. (a company listed on the Catalist of the Singapore Exchange Limited (stock code: SGX:5OQ)). Ms. Khoo
served as an independent director of Excelpoint Technology Ltd. (a company listed on the main board of the Singapore Exchange Limited
(stock code: SGX: BDF)) from September 2016 to April 2022. She has also served as an independent non-executive director of Netccentric
Limited (a company listed on The Australian Securities Exchange (stock code: ASX: NCL)) since July 2017. Since June 2020, she has also
served as an independent non-executive director of ES Group (Holdings) Limited (a company listed on the Catalist of the Singapore Exchange
Limited (stock code: SGX:5RC).
Ms.
Khoo obtained a Bachelor of Business degree in Accountancy from Royal Melbourne Institute of Technology in November 1997. She was admitted
as a Certified Practicing Accountant of the CPA Australia in October 1999 and a Chartered Accountant of the Malaysian Institute of Accountants
in July 2000. Ms. Khoo was a member of the Women Corporate Directors from September 2018 to June 2019.
Key
Personnel:
Mr.
Zhao Liang joined our Group as the head of the design department in October 2010 and is mainly responsible for leading the design
of the mechanical and process aspects of cleaning systems and other equipment.
Mr.
Zhao has over 13 years of experience in engineering and mechanical design. From February 2006 to September 2010, Mr. Zhao worked in JCS
Automation Pte Ltd. with his last position as the head of the design department.
Mr.
Zhao obtained a Bachelor of Engineering degree in Mechanical Engineering from the Nanyang Technological University, Singapore in February
2012 and a Master of Science degree in Management from the Singapore Management University in August 2016.
Mr.
Wui Chin Hou is the field operations manager of our Group and is mainly responsible for managing the operation of dishwashing
facilities and the cleaning operation of food courts. Mr. Wui joined our Group in September 2016.
Mr.
Wui has over 24 years of experience in production management. Prior to joining our Group, Mr. Wui worked at Mitsubishi Chemical Infonics
Pte Ltd. from January 1996 to September 2008 with his last position as a production supervisor. From September 2008 to September 2016,
Mr. Wui worked at Armstrong Industrial Corporation Limited with his last position as an assistant production manager.
Mr.
Wui obtained a Diploma in Computer Studies from the Comsertrac School of Computer Training in Singapore in June 1992.
Committees
of the Board of Directors
Our
board of directors has established an audit committee, a compensation committee and a nomination committee, each of which will operate
pursuant to a charter adopted by our board of directors that will be effective upon the effectiveness of the registration statement of
which this prospectus is a part. The board of directors may also establish other committees from time to time to assist our company and
the board of directors. Upon the effectiveness of the registration statement of which this prospectus is a part, the composition and
functioning of all of our committees will comply with all applicable requirements of the Sarbanes-Oxley Act of 2002, Nasdaq and SEC rules
and regulations, if applicable. Upon our listing on Nasdaq, each committee’s charter will be available on our website at http://www.jecleantech.sg.
The reference to our website address does not constitute incorporation by reference of the information contained at or available through
our website, and you should not consider it to be part of this prospectus.
Audit
committee
Ms.
Khoo, Mr. Singh and Mr. Tay will serve
on the audit committee, which will be chaired by Ms. Khoo. Our board of directors has determined that each are “independent”
for audit committee purposes as that term is defined by the rules of the SEC and Nasdaq, and that each has sufficient knowledge in financial
and auditing matters to serve on the audit committee. Our board of directors has designated Ms. Khoo as an “audit committee financial
expert,” as defined under the applicable rules of the SEC. The audit committee’s responsibilities include:
|
● |
appointing,
approving the compensation of, and assessing the independence of our independent registered public accounting firm; |
|
● |
pre-approving
auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public
accounting firm; |
|
● |
reviewing
the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing
our financial statements; |
|
● |
reviewing
and discussing with management and our independent registered public accounting firm our annual and quarterly/semi-annual
financial statements and related disclosures as well as critical accounting policies and practices used by us; |
|
● |
coordinating
the oversight and reviewing the adequacy of our internal control over financial reporting; |
|
● |
establishing
policies and procedures for the receipt and retention of accounting-related complaints and concerns; recommending, based upon the
audit committee’s review and discussions with management and our independent registered public accounting firm, whether our
audited financial statements shall be included in our Prospectus on Form 20-F; |
|
● |
monitoring
the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial
statements and accounting matters; |
|
● |
reviewing
all related person transactions for potential conflict of interest situations and approving all such transactions; and |
|
● |
reviewing
earnings releases. |
Compensation
committee
Mr.
Tay, Ms. Khoo and Mr. Singh will serve on the compensation committee, which will be chaired by Mr. Tay. Our board of directors has determined
that each such member satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of
the Nasdaq Stock Market. The compensation committee’s responsibilities include:
|
● |
evaluating
the performance of our chief executive officer in light of our company’s corporate goals and objectives and, based on such
evaluation,: (i) recommending to the board of directors the cash compensation of our chief executive officer, and (ii) reviewing
and approving grants and awards to our chief executive officer under equity-based plans; |
|
● |
reviewing
and recommending to the board of directors the cash compensation of our other executive officers; |
|
● |
reviewing
and establishing our overall management compensation, philosophy and policy; |
|
● |
overseeing
and administering our compensation and similar plans; |
|
● |
reviewing
and approving the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation
matters and evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified
in the applicable Nasdaq rules; |
|
● |
retaining
and approving the compensation of any compensation advisors; |
|
● |
reviewing
and approving our policies and procedures for the grant of equity-based awards; |
|
● |
reviewing
and recommending to the board of directors the compensation of our directors; and |
|
● |
preparing
the compensation committee report required by SEC rules, if and when required. |
Nomination
committee
Mr.
Singh, Ms. Khoo and Mr. Tay and will serve on the nomination committee, which will be chaired by Mr. Singh. Our board of directors
has determined that each member of the nomination committee is “independent” as defined in the applicable Nasdaq rules. The
nomination committee’s responsibilities include:
|
● |
developing
and recommending to the board of directors criteria for board and committee membership; |
|
● |
establishing
procedures for identifying and evaluating director candidates, including nominees recommended by stockholders; and |
|
● |
reviewing
the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise
to advise us. |
While
we do not have a formal policy regarding board diversity, our nomination committee and board of directors will consider a broad range
of factors relating to the qualifications and background of nominees, which may include diversity (not limited to race, gender or national
origin). Our nomination committee’s and board of directors’ priority in selecting board members is identification of persons
who will further the interests of our shareholders through their established record of professional accomplishment, the ability to contribute
positively to the collaborative culture among board members, knowledge of our business, understanding of the competitive landscape and
professional and personal experience and expertise relevant to our growth strategy.
Foreign
Private Issuer Status
The
Nasdaq listing rules include certain accommodations in the corporate governance requirements that allow foreign private issuers, such
as us, to follow “home country” corporate governance practices in lieu of the otherwise applicable corporate governance standards
of the Nasdaq. The application of such exceptions requires that we disclose each Nasdaq corporate governance standard that we do not
follow and describe the Cayman Islands corporate governance practices we do follow in lieu of the relevant Nasdaq corporate governance
standard. We currently follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the Nasdaq
in respect of the following:
|
● |
the
majority independent director requirement under Section 5605(b)(1) of the Nasdaq listing rules; |
|
● |
the
requirement under Section 5605(d) of the Nasdaq listing rules that a compensation committee comprised solely of independent directors
governed by a compensation committee charter oversee executive compensation; |
|
|
|
|
● |
the
requirement under Section 5605(e) of the Nasdaq listing rules that director nominees be selected or recommended for selection by
either a majority of the independent directors or a nominations committee comprised solely of independent directors; |
|
|
|
|
● |
the
Shareholder Approval Requirements under Section 5635 of the Nasdaq listing rules; and |
|
|
|
|
● |
the
requirement under Section 5605(b)(2) of the Nasdaq listing rules that the independent directors have regularly scheduled meetings
with only the independent directors present. |
Code
of Conduct and Code of Ethics
Prior
to the effectiveness of the registration statement of which this prospectus is a part, we intend to adopt a written code of business
conduct and ethics that applies to our directors, officers and employees, including our chief executive officer, chief financial officer,
principal accounting officer or controller or persons performing similar functions. Following the effectiveness of the registration statement
of which this prospectus is a part, a current copy of this code will be posted on the Corporate Governance section of our website, which
is located at http://www.jecleantech.sg. The information on our website is deemed not to be incorporated in this prospectus or to
be a part of this prospectus. We intend to disclose any amendments to the code of ethics, and any waivers of the code of ethics or the
code of conduct for our directors, executive officers and senior finance executives, on our website to the extent required by applicable
U.S. federal securities laws and the corporate governance rules of the Nasdaq.
Compensation
of Directors and Executive Officers
The
following table summarizes all compensation received by our directors, our executive officers and our key employees during the years
ended December 31, 2019, 2020 and 2021.
Summary
Compensation Table
| |
Compensation Paid |
Name and Principal Position | |
Year | | |
Salary (SGD’000) | | |
Bonus (SGD’000) | | |
Other Compensation(1) (SGD’000) | |
Hong Bee Yin, CEO, Chairman and Executive Director | |
| 2019 | | |
| 287 | | |
| 24 | | |
| 50 | |
| |
| 2020 | | |
| 287 | | |
| - | | |
| 46 | |
| |
| 2021 | | |
| 292 | | |
| 22 | | |
| 51 | |
| |
| | | |
| | | |
| | | |
| | |
Long Jia Kwang, CFO and Executive Director | |
| 2019 | | |
| 121 | | |
| 11 | | |
| 22 | |
| |
| 2020 | | |
| 121 | | |
| - | | |
| 21 | |
| |
| 2021 | | |
| 130 | | |
| 10 | | |
| 30 | |
| |
| | | |
| | | |
| | | |
| | |
Zhao Liang, Departmental Head of Design | |
| 2019 | | |
| 62 | | |
| 5 | | |
| 22 | |
| |
| 2020 | | |
| 62 | | |
| 3 | | |
| 22 | |
| |
| 2021 | | |
| 68 | | |
| 5 | | |
| 24 | |
| |
| | | |
| | | |
| | | |
| | |
Wui Chin Hou, Field Operations Manager | |
| 2019 | | |
| 50 | | |
| 4 | | |
| 20 | |
| |
| 2020 | | |
| 50 | | |
| - | | |
| 19 | |
| |
| 2021 | | |
| 51 | | |
| - | | |
| 23 | |
| |
| | | |
| | | |
| | | |
| | |
Aye Myat Khine Win, Head of Electrical and Software Department (2) | |
| 2019 | | |
| 46 | | |
| 4 | | |
| - | |
| |
| 2020 | | |
| 48 | | |
| - | | |
| - | |
| |
| 2021 | | |
| 53 | | |
| 4 | | |
| 3 | |
| |
| | | |
| | | |
| | | |
| | |
Karmjit Singh, Independent Non-Executive Director | |
| 2019 | | |
| - | | |
| - | | |
| 24 | (3) |
| |
| 2020 | | |
| - | | |
| - | | |
| 24 | (3) |
| |
| 2021 | | |
| - | | |
| - | | |
| 24 | (3) |
| |
| | | |
| | | |
| | | |
| | |
Tay Jingyan, Gerald, Independent Non-Executive Director | |
| 2019 | | |
| - | | |
| - | | |
| - | |
| |
| 2020 | | |
| - | | |
| - | | |
| - | |
| |
| 2021 | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Khoo Su Nee, Joanne, Independent Non-Executive Director | |
| 2019 | | |
| - | | |
| - | | |
| - | |
| |
| 2020 | | |
| - | | |
| - | | |
| - | |
| |
| 2021 | | |
| - | | |
| - | | |
| - | |
(1) Other
compensation includes director’s fees, transportation allowances and the employer’s contribution to the Central
Provident Fund, Singapore’s mandatory social security savings scheme.
(2)
Ms. Win resigned from her position with the Company effective January 31, 2022.
(3)
Paid to Mr. Singh as compensation for serving as non-executive Director of a member of the Group pursuant to a prior agreement
dated September 5, 2014.
Employment
Agreements
Employment
Agreement with Hong Bee Yin
Effective
as of January 1, 2014, we entered into an employment agreement with Hong Bee Yin pursuant to which she was employed as Managing Director
of JCS-Echigo Pte Ltd. The agreement provides for an annual base salary of S$330,000, which amount may be adjusted from time to time
in the discretion of the Company. Under the terms of the agreement, Ms. Hong is entitled to receive an annual cash bonus in the amount
of S$500,000 for any financial year in which the Company’s net profit, after tax, (inclusive of any amounts payable or to be set
aside for all bonuses) equals at least S$5 million, together with such additional bonus as may be agreed from time to time with the Company.
Ms. Hong’s employment will continue indefinitely, subject to termination by either party to the agreement upon 6 months’
prior written notice or the equivalent salary in lieu of such notice. The agreement also contains non-compete and non-disclosure provisions
and restrictions against the unauthorized use of the Company’s intellectual property.
Employment
Agreement with Long Jia Kwang
We
entered into an employment agreement dated September 5, 2014 with Long Jia Kwang pursuant to which he was employed as Financial Controller
for JCS-Echigo Pte Ltd. The agreement provides for a monthly base salary of S$9,750, plus a transportation allowance of S$750 per month.
These amounts may be adjusted from time to time. The agreement provides that the Company may, in its discretion, transfer or assign
Mr. Long to any position compatible with that of Financial Controller or to any of the companies in our Group. Under the terms of the
agreement, Mr. Long’s employment will continue indefinitely, subject to termination by either party to the agreement upon 1 months’
written notice or the equivalent salary in lieu of such notice.
Employment
Agreement with Wui Chin Hou
We
entered into an employment agreement dated July 21, 2016 with Wui Chin Hou pursuant to which he was employed as Field Operations Manager
for Hygieia Warewashing Pte Ltd. The agreement provides for a monthly base salary of S$4,150, plus a transportation allowance of S$750
per month. These amounts may be adjusted from time to time. The agreement provides that the Company may, in its discretion, transfer
or assign Mr. Wui to any position compatible with that of Field Operations Manager or to any of the companies in our Group. Under the
terms of the agreement, Mr. Wui’s employment will continue indefinitely, subject to termination by either party to the agreement
upon 1 months’ written notice or the equivalent salary in lieu of such notice.
Employment
Agreement with Zhao Liang
We
entered into an employment agreement dated October 1, 2010 with Zhao Liang pursuant to which he was employed as Departmental Head of
Designing for JCS-Echigo Pte Ltd. The agreement provides for a monthly base salary of S$3,400, which amount may be adjusted from time
to time in the discretion of the Company. The agreement provides that the Company may, in its discretion, transfer or assign Mr.
Zhao to any position compatible with that of Departmental Head of Design or to any of the companies in our Group. Under the terms of
the agreement, Mr. Zhao’s employment will continue indefinitely, subject to termination by either party to the agreement upon 1
months’ written notice or the equivalent salary in lieu of such notice.
Directors’
Agreements
Each
of our directors has entered into a Director’s Agreement with the Company effective upon effectiveness of the Registration Statement
of which this prospectus forms a part. The terms and conditions of such Directors’ Agreements are similar in all material aspects.
Each Director’s Agreement is for an initial term of one year and will continue until the director’s successor is duly elected
and qualified. Each director will be up for re-election each year at the annual shareholders’ meeting and, upon re-election, the
terms and provisions of his or her Director’s Agreement will remain in full force and effect. Any Director’s Agreement may
be terminated for any or no reason by the director or at a meeting called expressly for that purpose by a vote of the shareholders holding
more than 50% of the Company’s issued and outstanding Ordinary Shares entitled to vote.
Under
the Directors’ Agreements, the initial annual salary that is payable to each of our directors is as follows:
Ms.
Hong Bee Yin | |
US$ | 72,000 | |
Mr.
Long Jia Kwang | |
US$ | 36,000 | |
Mr.
Karmjit Singh | |
US$ | 18,000 | |
Mr.
Tay Jingyan | |
US$ | 18,000 | |
Ms.
Khoo Su Nee, Joanne | |
US$ | 24,000 | |
In
addition, our directors will be entitled to participate in such share option scheme as may be adopted by the Company, as amended from
time to time. The number of options granted, and the terms of those options will be determined from time to time by a vote of the board
of directors; provided that each director shall abstain from voting on any such resolution or resolutions relating to the
grant of options to that director.
Other
than as disclosed above, none of our directors has entered into a service agreement with our Company or any of our subsidiaries that
provides for benefits upon termination of employment.
Indemnification Agreements
We
have entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify
our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made
by reason of their being a director or officer of our Company.
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing
provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
PRINCIPAL
AND SELLING SHAREHOLDERS
The
following table sets forth information regarding beneficial ownership of our share capital by:
|
● |
each
person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares; |
|
● |
each
of our named executive officers; |
|
● |
each
of our directors and director nominees; and |
|
● |
all
of our current executive officers, directors and director nominees as a group. |
Applicable
percentage ownership is based on 12,000,000 Ordinary Shares of our Company issued and outstanding prior to our Initial Public Offering
and, with respect to percent ownership after this offering, assumes no exercise of the underwriters’ over-allotment option
other than the 20,000,000 options exercised on initial closing of the offering.
The
information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of
the SEC and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial
owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose
or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right
to acquire sole or shared voting or investment power within sixty (60) days through the conversion or exercise of any convertible security,
warrant, option or other right. More than one (1) person may be deemed to be a beneficial owner of the same securities. The percentage
of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such
person, which includes the number of shares as to which such person has the right to acquire voting or investment power within sixty
(60) days, by the sum of the number of shares outstanding as of such date, plus the number of shares as to which such person has the
right to acquire voting or investment power within sixty (60) days. Consequently, the denominator used for calculating such percentage
may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe
that the beneficial owners of our shares listed below have sole voting and investment power with respect to the shares shown.
Unless
otherwise noted below, the address of each person listed on the table is 3 Woodlands Sector, Singapore 738361.
| |
Shares Beneficially Owned Before this Offering | | |
Shares Beneficially Owned After
this Offering | |
Name of Beneficial Owner | |
Number | | |
Percentage(1) | | |
Number | | |
Percentage(2) | |
| |
| | |
| | |
| | |
| |
Named Executive Officers and Directors: | |
| | | |
| | | |
| | | |
| | |
Hong
Bee Yin(3) | |
| 9,600,000 | | |
| 80.00 | % | |
| 9,600,000 | | |
| 63.92 | % |
Long Jia Kwang | |
| - | | |
| - | | |
| - | | |
| - | |
Karmjit Singh | |
| - | | |
| - | | |
| - | | |
| - | |
Tay Jingyan, Gerald | |
| - | | |
| - | | |
| - | | |
| - | |
Khoo Su Nee, Joanne | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
All executive officers and Directors as a group (5 persons) | |
| 9,600,000 | (1) | |
| 80.00 | %(1) | |
| 9,600,000 | | |
| 63.92 | % |
| |
| | | |
| | | |
| | | |
| | |
5% Shareholders: | |
| | | |
| | | |
| | | |
| | |
JE Cleantech Global Limited | |
| 9,600,000 | | |
| 80.00 | % | |
| 9,600,000 | | |
| 63.92 | % |
Triple
Business Limited(4) | |
| 1,680,000 | | |
| 14.00 | % | |
| 930,000 | | |
| 6.19 | % |
(1)
Based on 12,000,000 Ordinary Shares issued and outstanding
prior to this offering.
(2)
Based on 15,020,000 Ordinary Shares issued and outstanding upon the initial closing on this offering, which occurred on April 26,
2022, and assumes no additional exercise of the underwriters’ over-allotment option.
(3)
Represents shares held by JE Cleantech Global Limited, a company directly owned as to 100.00% by Ms. Hong.
(4)
Triple Business Limited is an investment holding company incorporated on August 4, 2016. Triple Business Limited is beneficially
and wholly-owned by Fuji Investment SPC, a regulated portfolio company incorporated in the Cayman Islands, none of the shareholders of
which are Directors, officers or executives of the Group.
Selling
Shareholder
This
prospectus covers the offering of 750,000 Ordinary Shares by the Selling Shareholder. This prospectus and any prospectus supplement
will only permit the Selling Shareholder to sell the number of Ordinary Shares identified in the column “Number of Ordinary Shares
to be Sold.” The Ordinary Shares owned by the Selling Shareholder are “restricted” securities under applicable
United States federal and state securities laws and are being registered pursuant to this prospectus to enable the Selling Shareholder
the opportunity to sell those Ordinary Shares.
The
following table sets forth the name of the Selling Shareholder, the number and percentage of Ordinary Shares beneficially owned by the
Selling Shareholder, the number of Ordinary Shares sold in this offering and the number and percentage of Ordinary Shares the Selling
Shareholder will own after the offering. The information appearing in the table below is based on information provided by or on behalf
of the named Selling Shareholder. We did not receive any proceeds from the sale of the Ordinary Shares by the Selling Shareholder.
Name of Selling Shareholder | |
Ordinary Shares Beneficially Owned
Prior to Offering | | |
Percentage Ownership Prior to Offering(1) | | |
Number of
Ordinary Shares Sold | | |
Number of Ordinary Shares Owned After Offering | | |
Percentage
Ownership After Offering(1) | |
Triple Business Limited | |
| 1,680,000 | | |
| 14.00 | % | |
| 750,000 | | |
| 930,000 | | |
| 6.19 | % |
(1)
Based on 12,000,000 Ordinary Shares issued and outstanding immediately prior to the offering and 15,020,000 Ordinary Shares to
be issued and outstanding immediately after the offering if the underwriters only exercise their over-allotment option to the extent
exercised at the Initial Closing.
From
April 16, 2018 to December 28, 2021, the Selling Shareholder was the record and beneficial owner of 14% of the issued and outstanding
shares of JEC International. On December 28, 2021, as part of a group reorganization, the Selling Shareholder transferred all of its
JEC International shares to the Company in exchange for 1,680,000 Ordinary Shares of the Company. The Selling Shareholder is wholly-owned,
of record and beneficially, by an Independent Third Party.
RELATED
PARTY TRANSACTIONS
We
have adopted an audit committee charter, which requires the committee to review all related-party transactions on an ongoing basis and
all such transactions be approved by the committee.
Set
forth below are related party transactions of our Company for the years ended December 31, 2019, 2020 and 2021, which are
identified in accordance with the rules prescribed under Form F-1 and Form 20-F and may not be considered as related party
transactions under Singapore law.
There
were no related party transactions or amounts due to/from related parties during the years ended December 31, 2019 and 2020.
On
September 24, 2021, prior to the reorganization and the Company’s Initial Public Offering, the Company declared a dividend
of SGD2.9 million (approximately US$2.1 million) payable in cash to its shareholders – JE Cleantech Global Limited,
which is wholly-owned by Ms. Bee Yin Hong, the Company’s controlling shareholder, and Triple Business Limited. The dividend
was subsequently paid in full. Of this amount, SGD2.5 million (approximately US$1.9 million) was paid to JE Cleantech
Global Limited and SGD406,000 (approximately US$0.3 million) was paid to Triple Business Limited. On October 5, 2021, the Company
entered into a loan facility agreement with Ms. Bee Yin Hong, the Company’s controlling shareholder, for a revolving loan facility
of up to US$1.1 million for general working capital and general corporate purposes, including the payment of expenses related to the
Company’s initiative to raise capital through an initial public offering and simultaneous listing of the Company’s
Ordinary Shares on a globally recognized stock exchange. Ms. Hong and the Company entered into a subsequent revolving loan
facility on October 6, 2021 in the amount of US$0.7 million to be used for the same purposes. The total amount of the loan
of approximately US$1.8 million from Ms. Bee Yin Hong, the Company’s controlling shareholder, is non-trade, unsecured, interest-free
and payable on demand.
DESCRIPTION
OF SHARE CAPITAL
We
are an exempted company incorporated with limited liability in the Cayman Islands and, upon completion of this offering, our affairs
will be governed by our Amended Memorandum and Articles of Association, the Companies Act and the common law of the Cayman Islands.
As
of the date of this prospectus, our authorized share capital is US$100,000 divided into 100,000,000 Ordinary Shares, par value US$0.001
each.
The
following are summaries of certain material provisions of our Amended Memorandum and Articles of Association and the Companies Act insofar
as they relate to the material terms of our Ordinary Shares.
Ordinary
Shares
General
All
of our outstanding Ordinary Shares are fully paid and non-assessable. Certificates representing the Ordinary Shares are issued in registered
form. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their Ordinary Shares.
Dividends
The
holders of our Ordinary Shares are entitled to such dividends as may be declared by our shareholders or board of directors subject to
the Companies Act and to the Articles of Association.
Voting
Rights
Each
ordinary share is entitled to one vote on all matters upon which the Ordinary Shares are entitled to vote. Voting at any meeting of shareholders
is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any one shareholder present
in person or by proxy.
An
ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of votes attached to the Ordinary
Shares cast in a general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of votes cast attached
to the Ordinary Shares. A special resolution will be required for important matters such as a change of name or making changes to our
memorandum and Articles of Association.
Transfer
of Ordinary Shares
Subject
to the restrictions contained in our Articles of Association, as applicable, any of our shareholders may transfer all or any of his or
her Ordinary Shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Our
board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share. Our board of directors may
also decline to register any transfer of any ordinary share unless:
|
● |
the
instrument of transfer is lodged with us, accompanied by the certificate for the Ordinary Shares to which it relates and such other
evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
|
|
|
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the
instrument of transfer is in respect of only one class of Ordinary Shares; |
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the
instrument of transfer is properly stamped, if required; |
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the
Ordinary Shares transferred are fully paid and free of any lien in favor of us; and |
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any
fee related to the transfer has been paid to us; and |
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the
transfer is not to more than four joint holders. |
If
our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged,
send to each of the transferor and the transferee notice of such refusal.
Liquidation
On
a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of Ordinary Shares), assets available
for distribution among the holders of Ordinary Shares shall be distributed among the holders of the Ordinary Shares on a pro rata
basis. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed
so that the losses are borne by our shareholders proportionately.
Calls
on Ordinary Shares and Forfeiture of Ordinary Shares
Our
board of directors may from time to time make calls upon shareholders for any amounts unpaid on their Ordinary Shares. The Ordinary Shares
that have been called upon and remain unpaid are subject to forfeiture.
Redemption
of Ordinary Shares
Subject
to the provisions of the Companies Act and other applicable law, we may issue shares on terms that are subject to redemption, at our
option or at the option of the holders, on such terms and in such manner, including out of capital, as may be determined by the board
of directors.
Variations
of Rights of Shares
If
at any time, our share capital is divided into different classes of shares, all or any of the special rights attached to any class of
shares may, subject to the provisions of the Companies Act, be varied with the sanction of a special resolution passed at a general meeting
of the holders of the shares of that class. Consequently, the rights of any class of shares cannot be detrimentally altered without a
majority of two-thirds of the vote of all of the shares in that class. The rights conferred upon the holders of the shares of any class
issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class,
be deemed to be varied by the creation or issue of further shares ranking pari passu with such existing class of shares.
General
Meetings of Shareholders
Shareholders’
meetings may be convened by a majority of our board of directors or our chairman. Advance notice of at least ten clear days is required
for the convening of our annual general shareholders’ meeting and any other general meeting of our shareholders. A quorum required
for a meeting of shareholders consists of at least two shareholders present or by proxy, representing not less than one-third in nominal
value of the total issued voting shares in our company.
Inspection
of Books and Records
Holders
of our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or
our corporate records. However, we will in our Articles of Association provide our shareholders with the right to inspect our list of
shareholders and to receive annual audited financial statements.
Changes
in Capital
We
may from time to time by ordinary resolution:
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increase
the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe; |
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consolidate
and divide all or any of our share capital into shares of a larger amount than our existing shares; |
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sub-divide
our existing shares, or any of them into shares of a smaller amount; or |
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cancel
any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish
the amount of our share capital by the amount of the shares so cancelled. |
We
may by special resolution reduce our share capital or any capital redemption reserve in any manner permitted by law.
CERTAIN
CAYMAN ISLANDS COMPANY CONSIDERATIONS
Exempted
Company
We
are an exempted company with limited liability under the Companies Act of the Cayman Islands. The Companies Act in the Cayman Islands
distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts
business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company
are essentially the same as for an ordinary company except for the exemptions and privileges listed below:
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an
exempted company does not have to file an annual return of its shareholders with the Registrar of Companies; |
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an
exempted company’s register of members is not open to inspection; |
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an
exempted company does not have to hold an annual general meeting; |
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an
exempted company may issue no par value, negotiable or bearer shares; |
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an
exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for
20 years in the first instance); |
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an
exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
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an
exempted company may register as a limited duration company; and |
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an
exempted company may register as a segregated portfolio company. |
“Limited
liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the
company. Upon the closing of this offering, we will be subject to reporting and other informational requirements of the Exchange Act,
as applicable to foreign private issuers. We currently intend to comply with the Nasdaq Rules in lieu of following home country practice
after the closing of this offering. The Nasdaq Rules require that every company listed on the Nasdaq hold an annual general meeting of
shareholders. In addition, our Articles of Association allow directors to call special meeting of shareholders pursuant to the procedures
set forth in our articles.
Differences
in Corporate Law
The
Companies Act is modeled after that of England and Wales but does not follow recent statutory enactments in England. In addition, the
Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the
significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated
in the State of Delaware.
This
discussion does not purport to be a complete statement of the rights of holders of our Ordinary Shares under applicable law in the Cayman
Islands or the rights of holders of the common stock of a typical corporation under applicable Delaware law.
Mergers
and Similar Arrangements
A
merger of two or more constituent companies under Cayman Islands law requires a plan of merger or consolidation to be approved by the
directors of each constituent company and authorization by (a) a majority in number representing seventy-five percent (75%) in value
of the shareholders voting together as one class and (b) if the shares to be issued to each shareholder in the surviving company are
to have the same rights and economic value as the shares held in the constituent company, a special resolution of the shareholders voting
together as one class.
A
merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders.
For this purpose a subsidiary is a company of which at least ninety percent (90%) of the issued shares entitled to vote are owned by
the parent company.
The
consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived
by a court in the Cayman Islands.
Save
in certain circumstances, a dissentient shareholder of a Cayman constituent company is entitled to payment of the fair value of his shares
upon dissenting to a merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other rights save for
the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
In
addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement
is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must,
in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and
voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently
the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express
to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines
that:
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the
statutory provisions as to the required majority vote have been met; |
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the
shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion
of the minority to promote interests adverse to those of the class; |
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the
arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest;
and |
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the
arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
When
a takeover offer is made and accepted within four months by holders of 90% of the shares that are the subject of the offer, the offeror
may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to
transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely
to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If
an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which
would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash
for the judicially determined value of the shares.
Shareholders’
Suits
In
principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder.
However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions
to the foregoing principle, including when:
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a
company acts or proposes to act illegally or ultra vires; |
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the
act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has
not been obtained; and |
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those
who control the company are perpetrating a “fraud on the minority”. |
Indemnification
of Directors and Executive Officers and Limitation of Liability
Cayman
Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers
and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such
as to provide indemnification against civil fraud or the consequences of committing a crime. Our Articles of Association permit indemnification
of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages
arise from dishonesty or fraud which may attach to such directors or officers. This standard of conduct is generally the same as permitted
under the Delaware General Corporation Act for a Delaware corporation. In addition, we intend to enter into indemnification agreements
with our directors and senior executive officers that will provide such persons with additional indemnification beyond that provided
in our Articles of Association.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
Anti-Takeover
Provisions in the Memorandum and Articles of Association
Some
provisions of our Amended Memorandum and Articles of Association may discourage, delay or prevent a change in control of our company
or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preference
shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without
any further vote or action by our shareholders.
However,
under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our Amended Memorandum and Articles
of Association, as amended and restated from time to time, for what they believe in good faith to be in the best interests of our Company.
Directors’
Fiduciary Duties
Under
Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty
has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care
that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and
disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires
that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use
his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best
interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder
and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis,
in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption
may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by
a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As
a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company
and therefore it is considered that he owes the following duties to the company — a duty to act bona fide in the best interests
of the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a
duty not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty
to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered
that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from
a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with
regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder
Action by Written Consent
Under
the Delaware General Corporation Act, a corporation may eliminate the right of shareholders to act by written consent by amendment to
its certificate of incorporation. Our Articles of Association provide that any action required or permitted to be taken at general meetings
of the Company may only be taken upon the vote of shareholders at general meeting and shareholders may not approve corporate matters
by way of a unanimous written resolution without a meeting being held.
Shareholder
Proposals
Under
the Delaware General Corporation Act, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided
it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other
person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
Neither
Cayman Islands law nor our Articles of Association allow our shareholders to requisition a shareholders’ meeting. As an exempted
Cayman Islands company, we are not obliged by law to call shareholders’ annual general meetings. However, our Articles of Association
require us to call such meetings every year.
Cumulative
Voting
Under
the Delaware General Corporation Act, cumulative voting for elections of directors is not permitted unless the corporation’s certificate
of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders
on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single
director, which increases the shareholder’s voting power with respect to electing such director. As permitted under Cayman Islands
law, our Articles of Association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections
or rights on this issue than shareholders of a Delaware corporation.
Removal
of Directors
Under
the Delaware General Corporation Act, a director of a corporation with a classified board may be removed only for cause with the approval
of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Articles
of Association, directors may be removed by ordinary resolution.
Transactions
with Interested Shareholders
The
Delaware General Corporation Act contains a business combination statute applicable to Delaware corporations whereby, unless the corporation
has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging
in certain business combinations with an “interested shareholder” for three years following the date that such person becomes
an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s
outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered
bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to
the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination
or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware
corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
Cayman
Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business
combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders,
it does provide that such transactions must be entered into bona fide in the best interests of the company and for a proper corporate
purpose and not with the effect of constituting a fraud on the minority shareholders.
Dissolution;
Winding Up
Under
the Delaware General Corporation Act, unless the board of directors approves the proposal to dissolve, dissolution must be approved by
shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors
may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to
include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution
of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has
authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable
to do so.
Under
the Companies Act of the Cayman Islands and our Articles of Association, our company may be dissolved, liquidated or wound up by the
vote of holders of two-thirds of our shares voting at a meeting.
Variation
of Rights of Shares
Under
the Delaware General Corporation Act, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding
shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our Articles of Association,
if our share capital is divided into more than one class of shares, we may vary the rights attached to any class only with the sanction
of a special resolution passed at a general meeting of the holders of the shares of that class.
Amendment
of Governing Documents
Under
the Delaware General Corporation Act, a corporation’s governing documents may be amended with the approval of a majority of the
outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law,
our Amended Memorandum and Articles of Association may only be amended by special resolution.
Rights
of Non-Resident or Foreign Shareholders
There
are no limitations imposed by our Amended Memorandum and Articles of Association on the rights of non-resident or foreign shareholders
to hold or exercise voting rights on our shares. In addition, there are no provisions in our Amended Memorandum and Articles of Association
governing the ownership threshold above which shareholder ownership must be disclosed.
Directors’
Power to Issue Shares
Subject
to applicable law, our board of directors is empowered to issue or allot shares or grant options and warrants with or without preferred,
deferred, qualified or other special rights or restrictions.
SHARES
ELIGIBLE FOR FUTURE SALE
Upon
completion of this offering, we will have 15,020,000 Ordinary Shares issued and outstanding, assuming the underwriters do not
exercise their over-allotment option to purchase additional Ordinary Shares and 15,562,500 Ordinary Shares outstanding if the over-allotment
option is exercised in full.
All
of the Ordinary Shares sold in this offering by the Company and by the Selling Shareholder will be freely transferable in the United
States, without restriction or further registration under the Securities Act, by persons other than our “affiliates.” Rule
144 of the Securities Act defines an “affiliate” of a company as a person that, directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with, our Company. All of our Ordinary Shares outstanding immediately
prior to the completion of this offering are “restricted securities” as that term is defined in Rule 144 because they were
issued in a transaction or series of transactions not involving a public offering. Restricted securities may be sold only if they are
the subject of an effective registration statement under the Securities Act or if they are sold pursuant to an exemption from the registration
requirement of the Securities Act such as those provided for in Rules 144 promulgated under the Securities Act, which rule is summarized
below. Restricted shares may also be sold outside of the United States to non-U.S. persons in accordance with Rule 904 of Regulation
S under the Securities Act. This prospectus may not be used in connection with any resale of our Ordinary Shares acquired in this offering
by our affiliates.
Sales
of substantial amounts of our Ordinary Shares in the public market could adversely affect prevailing market prices of our Ordinary
Shares. Prior to this offering, there has been no public market for our Ordinary Shares; however, our Ordinary Shares have been approved
for listing on Nasdaq under the symbol JCSE.
Lock-Up
Agreements
We
have agreed with the underwriters, for a period of 12 months after the date of this prospectus, subject to certain exceptions not to
(1) offer, sell, issue, pledge, contract to sell, contract to purchase, grant any option, right or warrant to purchase, lend, make any
short sale or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or any other securities so owned convertible
into or exercisable or exchangeable for Ordinary Shares, (2) enter into any swap, hedge or any other agreement that transfers, in whole
or in part, the economic consequences of ownership of the Ordinary Shares, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Ordinary Shares or such other securities, in cash or otherwise, or (3) file any registration statement
with the SEC relating to the offering of any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary
Shares, or publicly disclose the intention to take any such action.
Furthermore,
each of our directors and executive officers and our 5% or greater shareholders, except for the Selling Shareholder, with respect to
its Ordinary Shares sold in this offering, has also entered into a similar lock-up agreement with the underwriters for a period of 12
months from the date of this prospectus, subject to certain exceptions, with respect to our Ordinary Shares, and securities that are
substantially similar to our Ordinary Shares.
We
cannot predict what effect, if any, future sales of our Ordinary Shares, or the availability of Ordinary Shares for future sale, will
have on the trading price of our Ordinary Shares from time to time. Sales of substantial amounts of our Ordinary Shares in the public
market, or the perception that these sales could occur, could adversely affect the trading price of our Ordinary Shares.
Rule
144
In
general, under Rule 144 as currently in effect, once we have been subject to the public company reporting requirements of Section 13
or Section 15(d) of the Exchange Act for at least 90 days, persons who are not our affiliates and have beneficially owned our Ordinary
Shares for more than six months but not more than one year may sell such Ordinary Shares without registration under the Securities Act
subject to the availability of current public information about us. Persons who are not our affiliates and have beneficially owned our
Ordinary Shares for more than one year may freely sell our Ordinary Shares without registration under the Securities Act. Persons who
are our affiliates (including persons beneficially owning 10% or more of our outstanding shares), and have beneficially owned our Ordinary
Shares for at least six months, may sell within any three-month period a number of restricted securities that does not exceed the greater
of the following:
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1.0%
of the then outstanding Ordinary Shares; or |
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the
average weekly trading volume of our Ordinary Shares during the four calendar weeks preceding the date on which notice of the sale
on Form 144 is filed with the SEC by such person. |
Such
sales are also subject to manner-of-sale provisions, notice requirements and the availability of current public information about us.
In addition, in each case, these shares would remain subject to any applicable lock-up arrangements and would only become eligible for
sale when the lock-up period expires.
Non-IPO Selling Shareholders
Resale Prospectus
As
described in the Explanatory Note to the registration statement of which this prospectus forms a part, the registration statement also
contains the Resale Prospectus to be used in connection with the potential resale by the Non-IPO Selling Shareholders of our Ordinary
Shares held by them. These Ordinary Shares have been registered to permit public resale of such shares, and the Non-IPO Selling Shareholders
may offer the shares for resale from time to time pursuant to the Resale Prospectus. The Non-IPO Selling Shareholders may also sell,
transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities
Act or pursuant to another effective registration statement covering those shares. Any shares sold by the Non-IPO Selling Shareholders
until our Ordinary Shares are listed or quoted on an established public trading market will take place at US$4.00, which is the assumed
public offering price of the Ordinary Shares we are selling in our Initial Public Offering. Thereafter, any sales will occur at
prevailing market prices or in privately negotiated prices.
EXPENSES
RELATED TO THIS OFFERING
Set
forth below is an itemization of the total expenses, excluding underwriting discounts, which have been incurred by us in connection
with the offer and sale of the Ordinary Shares by us and the Selling Shareholder.
SEC Registration Fee | |
US$ |
1,599 | |
FINRA Filing Fee | |
US$ |
3,088 | |
Nasdaq Market Entry Fee | |
US$ |
70,000 | |
Printing and engraving expenses | |
US$ |
20,000 | |
Legal fees and expenses | |
US$ |
355,500 | |
Accounting fees and expenses | |
US$ |
280,000 | |
Transfer agent fee | |
US$ |
4,987 | |
DTC Advisory Fee | |
US$ |
15,000 | |
Miscellaneous | |
US$ |
333,800 | (1) |
Total | |
US$ |
1,083,974.00 | |
(1)
Includes the 1% non-accountable expense allowance and the $175,00 maximum accountable expense allowance paid to the Representative, plus
other miscellaneous expenses.
These
expenses have been paid by the Company.
MATERIAL
TAX CONSIDERATIONS
The
following summary of certain Cayman Islands and U.S. federal income tax consequences of an investment in our Ordinary Shares is based
upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This
summary does not deal with all possible tax consequences relating to an investment in the Ordinary Shares, such as the tax consequences
under U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands and the United States. You are
encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under U.S.
federal, state, local or foreign law of the ownership of our Ordinary Shares. To the extent that this discussion relates to matters of
Cayman Islands tax law, it is the opinion of Conyers Dill & Pearman, our counsel as to Cayman Islands law.
Cayman
Islands Tax Considerations
The
Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government
of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within
the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments
made to or by our Company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
We
have received an undertaking from the Governor in Cabinet of the Cayman Islands to the effect that, for a period of 20 years from the
date of the undertaking, no law that thereafter is enacted in the Cayman Islands imposing any tax or duty to be levied on profits, income
or on gains or appreciation shall apply to our Company or its operations; and that no tax to be levied on profits, income, gains or appreciations
or which is in the nature of estate duty or inheritance tax shall be payable (a) on or in respect of the shares, debentures or other
obligations of our Company; or (b) by way of the withholding in whole or in part of any relevant payment as defined in the Tax Concessions
Act of the Cayman Islands.
Payments
of dividends and capital in respect of our Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will
be required on the payment of a dividend or capital to any holder of our Ordinary Shares, nor will gains derived from the disposal of
our Ordinary Shares be subject to Cayman Islands income or corporation tax.
No
stamp duty is payable in respect of the issue of our Ordinary Shares or on an instrument of transfer in respect of our Ordinary Shares.
United
States Federal Income Tax Considerations
The
following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of
our Ordinary Shares by U.S. Holders (as defined below) that acquire our Ordinary Shares in this offering and hold our Ordinary Shares
as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended
(the “Code”). This discussion is based upon existing United States federal income tax law which is subject to differing interpretations
or change, possibly with retroactive effect. There can be no assurance that the Internal Revenue Service, or the IRS, or a court will
not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be relevant
to particular investors in light of their specific circumstances, including investors subject to special tax rules (for example, certain
financial institutions (including banks), cooperatives, pension plans, insurance companies, broker-dealers, traders in securities that
have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment companies,
real estate investment trusts, and tax-exempt organizations (including private foundations)), investors who are not U.S. Holders, investors
who own (directly, indirectly, or constructively) 10% or more of our stock (by vote or value), investors that will hold their Ordinary
Shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income
tax purposes, or U.S. Holders that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that
differ significantly from those summarized below. In addition, this discussion does not discuss any non-United States tax, state or local
tax, or non-income tax (such as the U.S. federal gift or estate tax) considerations, or any consequences under the alternative minimum
tax or Medicare tax on net investment income. Each U.S. Holder is urged to consult its tax advisor regarding the United States federal,
state, local, and non-United States income and other tax considerations of an investment in our Ordinary Shares.
General
For
purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Ordinary Shares that is, for United States federal
income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated
as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any
state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal
income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of
a United States court and which has one or more United States persons who have the authority to control all substantial decisions of
the trust or (B) that has otherwise validly elected to be treated as a United States person under the Code.
If
a partnership (or other entity or arrangement treated as a partnership for United States federal income tax purposes) is a beneficial
owner of our Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner
as a U.S. Holder, as described above, and the activities of the partnership. Partnerships holding our Ordinary Shares and partners in
such partnerships are urged to consult their tax advisors as to the particular United States federal income tax consequences of an investment
in our Ordinary Shares.
Dividends
The
entire amount of any cash distribution paid with respect to our Ordinary Shares (including the amount of any non-U.S. taxes withheld
therefrom, if any) generally will constitute dividends to the extent such distributions are paid out of our current or accumulated earnings
and profits, as determined under United States federal income tax principles, and generally will be taxed as ordinary income in the year
received by such U.S. Holder. To the extent amounts paid as distributions on the Ordinary Shares exceed our current or accumulated earnings
and profits, such distributions will not be dividends, but instead will be treated first as a tax-free return of capital to the extent
of the U.S. Holder’s adjusted tax basis, determined for federal income tax purposes, in the Ordinary Shares with respect to which
the distribution is made, and thereafter as capital gain. However, we do not intend to compute (or to provide U.S. Holders with the information
necessary to compute) our earnings and profits under United States federal income tax principles. Accordingly, a U.S. Holder will be
unable to establish that a distribution is not out of earnings and profits and should expect to treat the full amount of each distribution
as a “dividend” for United States federal income tax purposes.
Any
dividends that we pay will generally be treated as income from foreign sources for United States foreign tax credit purposes and will
generally constitute passive category income. Depending on the U.S. Holder’s particular facts and circumstances, a U.S. Holder
may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes
imposed (at a rate not exceeding any applicable treaty rate) on dividends received on our Ordinary Shares. A U.S. Holder who does not
elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal income tax purposes,
in respect of such withholdings, but only for a year in which such U.S. Holder elects to do so for all creditable foreign income taxes.
The rules governing the foreign tax credit are complex. U.S. Holders are advised to consult their tax advisors regarding the availability
of the foreign tax credit under their particular circumstances.
Dividends
paid in non-U.S. currency will be included in the gross income of a U.S. Holder in a U.S. dollar amount calculated by reference to a
spot market exchange rate in effect on the date that the dividends are received by the U.S. Holder, regardless of whether such foreign
currency is in fact converted into U.S. dollars on such date. Such U.S. Holder will have a tax basis for United States federal income
tax purposes in the foreign currency received equal to that U.S. dollar value. If such dividends are converted into U.S. dollars on the
date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect thereof. If the
foreign currency so received is not converted into U.S. dollars on the date of receipt, such U.S. Holder will have a basis in the foreign
currency equal to its U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the
foreign currency generally will be treated as ordinary income or loss to such U.S. Holder and generally will be income or loss from sources
within the United States for foreign tax credit limitation purposes. U.S. Holders should consult their own tax advisors regarding the
treatment of foreign currency gain or loss, if any, on any foreign currency received by a U.S. Holder that are converted into U.S. dollars
on a date subsequent to receipt.
Sale
or Other Disposition of Ordinary Shares
A
U.S. Holder will generally recognize capital gain or loss upon a sale or other disposition of Ordinary Shares, in an amount equal to
the difference between the amount realized and the U.S. Holder’s adjusted tax basis, determined for federal income tax purposes,
in such Ordinary Shares, each amount determined in U.S. dollars. Any capital gain or loss will be long-term capital gain or loss if the
Ordinary Shares have been held for more than one year and will generally be United States source gain or loss for United States foreign
tax credit purposes. The deductibility of a capital loss may be subject to limitations, particularly with regard to shareholders who
are individuals. Each U.S. Holder is advised to consult its tax advisor regarding the tax consequences if a foreign tax is imposed on
a disposition of our Ordinary Shares, including the availability of the foreign tax credit under its particular circumstances.
A
U.S. Holder that receives Singapore dollars or another currency other than U.S. dollars on the disposition of our Ordinary Shares will
realize an amount equal to the U.S. dollar value of the non-U.S. currency received at the spot rate on the date of sale (or, if the Ordinary
Shares are traded on a recognized exchange and in the case of cash basis and electing accrual basis U.S. Holders, the settlement date).
An accrual basis U.S. Holder that does not elect to determine the amount realized using the spot rate on the settlement date will recognize
foreign currency gain or loss equal to the difference between the U.S. dollar value of the amount received based on the spot market exchange
rates in effect on the date of sale or other disposition and the settlement date. A U.S. Holder will have a tax basis in the currency
received equal to the U.S. dollar value of the currency received on the settlement date. Any gain or loss on a subsequent disposition
or conversion of the currency will be United States source ordinary income or loss.
Passive
Foreign Investment Company Considerations
For
United States federal income tax purposes, a non-United States corporation, such as our Company, will be treated as a “passive
foreign investment company,” or “PFIC” if, in the case of any particular taxable year, either (a) 75% or more of our
gross income for such year consists of certain types of “passive” income or (b) 50% or more of the value of our assets (generally
determined on the basis of a quarterly average) during such year produce or are held for the production of passive income. Based upon
our current and expected income and assets (including goodwill and taking into account the expected proceeds from this offering) and
the expected market price of our Ordinary Shares following this offering, we do not expect to be a PFIC for the current taxable year
or the foreseeable future.
However,
while we do not expect to be or become a PFIC, no assurance can be given in this regard because the determination of whether we are or
will become a PFIC for any taxable year is a fact-intensive inquiry made annually that depends, in part, upon the composition and classification
of our income and assets. Fluctuations in the market price of our Ordinary Shares may cause us to be or become a PFIC for the current
or subsequent taxable years because the value of our assets for the purpose of the asset test, including the value of our goodwill and
other unbooked intangibles, may be determined by reference to the market price of our Ordinary Shares (which may be volatile). The composition
of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering.
It is also possible that the Internal Revenue Service may challenge our classification of certain income or assets for purposes of the
analysis set forth in subparagraphs (a) and (b), above or the valuation of our goodwill and other unbooked intangibles, which may result
in our company being or becoming a PFIC for the current or future taxable years.
If
we are classified as a PFIC for any taxable year during which a U.S. Holder holds our Ordinary Shares, and unless the U.S. Holder makes
a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution
that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than
125% of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period
for the Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge,
of Ordinary Shares. Under the PFIC rules:
|
● |
such
excess distribution and/or gain will be allocated ratably over the U.S. Holder’s holding period for the Ordinary Shares; |
|
|
|
|
● |
such
amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable
year in which we are a PFIC, each a pre-PFIC year, will be taxable as ordinary income; |
|
|
|
|
● |
such
amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect
applicable to the U.S. Holder for that year; and |
|
|
|
|
● |
an
interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year,
other than a pre-PFIC year. |
If
we are a PFIC for any taxable year during which a U.S. Holder holds our Ordinary Shares and we own any equity in a non-United States
entity that is also a PFIC, or a lower-tier PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the
shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are advised to consult their tax advisors
regarding the application of the PFIC rules to any of the entities in which we may own equity.
As an
alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with
respect to such stock, provided that certain requirements are met. The mark-to-market election is available only for stock that is regularly
traded on a national securities exchange that is registered with the SEC, or on a foreign exchange or market that the IRS determines
is a qualified exchange that has rules sufficient to ensure that the market price represents a legitimate and sound fair market value.
Our Ordinary Shares have been approved for listing on Nasdaq under the symbol JCSE. However, we cannot guarantee that,
once listed, our Ordinary Shares will continue to be listed and regularly traded on such exchange. U.S. Holders are advised to consult
their tax advisors as to whether the Ordinary Shares are considered marketable for these purposes.
If
an effective mark-to-market election is made with respect to our Ordinary Shares, the U.S. Holder will generally (i) include as ordinary
income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the
taxable year over its adjusted tax basis of such Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of its adjusted
tax basis of the Ordinary Shares held at the end of the taxable year over the fair market value of such Ordinary Shares held at the end
of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election.
The U.S. Holder’s adjusted tax basis in the Ordinary Shares would be adjusted to reflect any income or loss resulting from the
mark-to-market election. If a U.S. Holder makes an effective mark-to-market election, in each year that we are a PFIC any gain recognized
upon the sale or other disposition of the Ordinary Shares will be treated as ordinary income and loss will be treated as ordinary loss,
but only to the extent of the net amount previously included in income as a result of the mark-to-market election.
If
a U.S. Holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be a PFIC, the U.S. Holder will not
be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not a PFIC.
Because
a mark-to-market election generally cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. Holder who makes a mark-to-market
election with respect to our Ordinary Shares may continue to be subject to the general PFIC rules with respect to such U.S. Holder’s
indirect interest in any of our non-United States subsidiaries if any of them is a PFIC.
If
a U.S. Holder owns our Ordinary Shares during any taxable year that we are a PFIC, such holder would generally be required to file an
annual IRS Form 8621. Each U.S. Holder is advised to consult its tax advisor regarding the potential tax consequences to such holder
if we are or become a PFIC, including the possibility of making a mark-to-market election.
THE
DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE
INVESTOR IN THE OUR ORDINARY SHARES IS URGED TO CONSULT ITS OWN TAX ADVISER ABOUT THE TAX CONSEQUENCES TO IT OF OWNING AND DISPOSING
OF OUR ORDINARY SHARES IN LIGHT OF SUCH PROSPECTIVE INVESTOR’S OWN CIRCUMSTANCES.
UNDERWRITING
We
and the Selling Shareholder have entered into an underwriting agreement dated April 21, 2022 with ViewTrade Securities, Inc.,
or the Representative, acting as the lead managing underwriter and book-runner with respect to the Ordinary Shares subject to this offering.
Subject to the terms and conditions of the underwriting agreement, we and the Selling Shareholder have agreed to sell to the underwriters,
and each underwriter named below has severally agreed to purchase from us, on a firm commitment basis, the number of Ordinary Shares
set forth opposite its name below, at the public offering price, less the underwriting discount set forth on the cover page of this prospectus:
Name |
|
Number
of shares |
ViewTrade
Securities, Inc. |
|
3,750,000 |
Total |
|
|
The
underwriters are offering the Ordinary Shares subject to their acceptance of the Ordinary Shares from us and subject to prior sale. The
underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the Ordinary Shares offered
by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters
are obligated to take and pay for all of the Ordinary Shares offered by this prospectus if any such shares are taken. However, the underwriters
are not required to take or pay for the Ordinary Shares covered by the underwriters’ over-allotment option described below.
We
have granted to the underwriters an option, exercisable until, to purchase up to an additional 562,500 Ordinary Shares at the
public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The option may be exercised
in whole or in part, and may be exercised more than once, during the 45-day option period. The underwriters may exercise this option
solely for the purpose of covering over-allotments, if any, made in connection with the offering contemplated by this prospectus. To
the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase the same percentage
of the additional shares as the number listed next to the underwriter’s name in the preceding table bears to the total number of
shares listed next to the names of all underwriters in the preceding table. If any additional Ordinary Shares are purchased, the underwriters
will offer these Ordinary Shares on the same terms as those on which the other Ordinary Shares are being offered.
The
Representative has advised us that it proposes to offer the shares to the public at the public offering price set forth on the cover
page of this prospectus and to certain dealers at that price less a concession not in excess of US$0.16 per share. The underwriters
may allow, and certain dealers may re-allow, a discount from the concession not in excess of US$0.16 per share to certain brokers
and dealers. After this offering, the public offering price, concession and reallowance to dealers may be reduced by the Representative.
No such reduction shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The securities
are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any
order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
Discounts,
Commission and Expenses
The
underwriting discounts and commissions are 8.0% of the initial public offering price.
The
following table shows the price per share and total public offering price, underwriting discounts and commissions and proceeds before
expenses to us and the Selling Shareholder. These amounts are shown assuming both no exercise and full exercise of the underwriters’
over-allotment option.
| |
Total | |
| |
Per Share | | |
No Exercise | | |
Full Exercise | |
Public offering price | |
US$ | 4.00 | | |
US$ | 15,000,000 | | |
US$ | 17,250,000 | |
Underwriting discounts and commissions | |
US$ | 0.32 | | |
US$ | 1,200,000 | | |
US$ | 1,380,000 | |
Proceeds, before expenses and after underwriting discounts and commission, to us and Selling
Shareholder | |
US$ | 3.68 | | |
US$ | 13,800,000 | | |
US$ | 15,870,000 | |
Proceeds to us | |
| | | |
US$ | 11,040,000 | | |
US$ | 13,110,000 | |
Proceeds to Selling Shareholder | |
| | | |
US$ | 2,760,000 | | |
US$ | 2,760,000 | |
We
will also pay to the Representative by deduction from the net proceeds of the offering contemplated herein, a non-accountable expense
allowance equal to one percent (1.0%) of the gross proceeds from the sale of the Ordinary Shares in the offering.
We
have agreed to reimburse the Representative up to a maximum of US$175,000 for out-of-pocket accountable expenses (including the legal
fees and other disbursements as disclosed below). We agreed to pay US$70,000 as an advance towards the Representative’s accountable
expenses (US$35,000 paid upon execution of the engagement letter in connection with this offering, and an additional US$35,000 to be
paid upon receipt of initial comments from the SEC to the registration statement of which this prospectus forms a part), (together, the
“Advance”). As of the date of this prospectus, we have paid US$70,000 of the Advance to the Representative; any portion of
the Advance will be returned to us to the extent the Representative’s out-of-pocket accountable expenses are not actually incurred
in accordance with FINRA Rule 5110(g)(4)(A).
We
have agreed to pay expenses relating to the offering, including but not limited to (i) all filing fees and communication expenses relating
to the registration of the Ordinary Shares to be sold in this offering with the SEC and the filing of the offering materials with FINRA;
(ii) all fees and expenses relating to the listing of the Ordinary Shares on Nasdaq; (iii) all reasonable fees, expenses and disbursements
relating to background checks of the Company’s officers and directors; (iv) up to US$175,000 of legal fees, costs and expenses
incurred by the Representative, including all reasonable travel and lodging expenses incurred by the Representative or its counsel in
connection with visits to, and examinations of, the Company and any travel and lodging expenses for road show meetings and preparation
of a power point presentation and translation costs for due diligence purposes; (v) all fees, expenses and disbursements
relating to the registration or qualification of such Ordinary Shares under the “blue sky” securities laws of such states
and other jurisdictions as the Representative may reasonably designate (including, without limitation, all filing and registration fees
and the reasonable fees and disbursements of Representative’s counsel); (vi) the costs of all mailing and printing of the
underwriting documents, registration statements, prospectuses and all amendments, supplements and exhibits thereto and as many preliminary
and final prospectuses as the Representative may reasonably deem necessary; (vii) the costs of preparing, printing and delivering
certificates representing the Ordinary Shares and the fees and expenses of the transfer agent for such shares; (viii) stock transfer
taxes, if any; (ix) the fees and expenses of the Company’s accountants, legal counsel, public relations firm and other agents
and representatives; and (x) the costs associated with “tombstone or Lucite” advertisements, at a total cost of US$8,000.
The
total expenses of the offering paid by us, excluding the underwriters’ discount and commissions and non-accountable
expense allowance, were approximately US$924,674, including a maximum aggregate reimbursement of US$175,000 of the Representative’s
accountable expenses.
Indemnification;
Indemnification Escrow
We
and the Selling Shareholder have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities
Act and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute
to payments that the underwriters may be required to make in respect of those liabilities.
Concurrently
with the execution and delivery of the underwriting agreement, the Company set up an escrow account with a third-party escrow agent in
the United States and funded such account with US$600,000 from the offering proceeds that may be utilized by the underwriters
to fund any indemnification claims of the underwriters arising during the 12 month period following the closing of the offering. The
escrow account is interest bearing, and we are free to invest the assets in securities. All funds that are not subject
to an indemnification claim will be returned to us after the applicable period expires. The Company will pay the reasonable fees and
expenses of the escrow agent.
Lock-Up
Agreements
Our
officers, directors and principal shareholders (5% or more shareholders), except for the Selling Shareholder with respect to its Ordinary
Shares sold in this offering, have agreed, subject to certain exceptions, to a twelve (12) month “lock-up” period from the
closing of this offering with respect to the Ordinary Shares that they beneficially own, including the issuance of shares upon the exercise
of convertible securities and options that are currently outstanding or which may be issued. This means that, for a period of twelve
(12) months following the closing of the offering, such persons may not offer, sell, pledge or otherwise dispose of these securities
without the prior written consent of the Representative. We have also agreed, in the underwriting agreement, to similar restrictions
on the issuance and sale of our securities for 12 months following the closing of this offering, subject to certain customary exceptions,
without the prior written consent of the Representative.
The
Representative has no present intention to waive or shorten the lock-up period; however, the terms of the lock-up agreements may be waived
at its discretion. In determining whether to waive the terms of the lock-up agreements, the Representative may base its decision on its
assessment of the relative strengths of the securities markets and companies similar to ours in general, and the trading pattern of,
and demand for, our securities in general.
Right
of First Refusal
For
a period of twelve months from the completion of this offering, we have granted the Representative the right of first refusal to act
as lead manager and bookrunner or lead placement agent with respect to any public or private sale of the securities of the Company and/or
any of its subsidiaries.
Nasdaq
Listing
Our
Ordinary Shares are listed on the Nasdaq under the symbol “JCSE.”
Electronic
Distribution
A
prospectus in electronic format may be made available on websites or through other online services maintained by Representative or by
its affiliates. Other than the prospectus in electronic format, the information on the Representative’s website and any information
contained in any other website maintained by it is not part of this prospectus or the registration statement of which this prospectus
forms a part, has not been approved and/or endorsed by us or the Representative in its capacity as an underwriter, and should not be
relied upon by investors.
Any
underwriter who is a qualified market maker on the Nasdaq may engage in passive market making transactions on the Nasdaq in accordance
with Rule 103 of Regulation M, during the Business Day prior to the pricing of the offering, before the commencement of offers or sales.
Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general,
a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent
bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when
certain purchase limits are exceeded.
No
Prior Public Market
Prior
to this offering, there has been no public market for our securities and the public offering price for our Ordinary Shares will be determined
through negotiations between us and the Representative. Among the factors to be considered in these negotiations will be prevailing market
conditions, our financial information, market valuations of other companies that we and the Representative believe to be comparable to
us, estimates of our business potential, the present state of our development and other factors deemed relevant. The offering price for
our Ordinary Shares in this offering has been arbitrarily determined by the Company in its negotiations with the underwriters and does
not necessarily bear any direct relationship to the assets, operations, book or other established criteria of value of the Company.
Price
Stabilization, Short Positions and Penalty Bids
Until
the distribution of the Ordinary Shares offered by this prospectus is completed, rules of the SEC may limit the ability of the underwriters
to bid for and to purchase our Ordinary Shares. As an exception to these rules, the underwriters may engage in transactions effected
in accordance with Regulation M under the Exchange Act that are intended to stabilize, maintain or otherwise affect the price of our
Ordinary Shares. The underwriters may engage in over-allotment sales, syndicate covering transactions, stabilizing transactions and penalty
bids in accordance with Regulation M.
● Stabilizing
transactions consist of bids or purchases made by the managing underwriter for the purpose of preventing or slowing a decline in the
market price of our securities while this offering is in progress.
● Short
sales and over-allotments occur when the managing underwriter, on behalf of the underwriting syndicate, sells more of our shares than
they purchase from us in this offering. In order to cover the resulting short position, the managing underwriter may exercise the over-allotment
option described above and/or may engage in syndicate covering transactions. There is no contractual limit on the size of any syndicate
covering transaction. The underwriters will deliver a prospectus in connection with any such short sales. Purchasers of shares sold short
by the underwriters are entitled to the same remedies under the federal securities laws as any other purchaser of units covered by the
registration statement.
● Syndicate
covering transactions are bids for or purchases of our securities on the open market by the managing underwriter on behalf of the underwriters
in order to reduce a short position incurred by the managing underwriter on behalf of the underwriters.
● A
penalty bid is an arrangement permitting the managing underwriter to reclaim the selling concession that would otherwise accrue to an
underwriter if the Ordinary Shares originally sold by the underwriter were later repurchased by the managing underwriter and therefore
was not effectively sold to the public by such underwriter.
Stabilization,
syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our Ordinary Shares
or preventing or retarding a decline in the market price of our Ordinary Shares. As a result, the price of our Ordinary Shares may be
higher than the price that might otherwise exist in the open market.
Neither
we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the
prices of our Ordinary Shares. These transactions may occur on the Nasdaq or on any trading market. If any of these transactions are
commenced, they may be discontinued without notice at any time.
Other
Relationships
The
underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment,
hedging, financing and brokerage activities. Some of the underwriters and certain of their affiliates may in the future engage in investment
banking and other commercial dealings in the ordinary course of business with us and our affiliates, for which they may in the future
receive customary fees, commissions and expenses. In addition, in the ordinary course of their business activities, the underwriters
and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative
securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments
and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates
may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial
instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Offers
Outside the United States
Other
than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the Ordinary Shares
offered by this prospectus in any jurisdiction where action for that purpose is required. The Ordinary Shares offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection
with the offer and sale of any such shares be distributed or published in any jurisdiction, except under circumstances that will result
in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are
advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus.
This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any Ordinary Shares offered by this prospectus
in any jurisdiction in which such an offer or a solicitation is unlawful.
LEGAL
MATTERS
The
validity of the Ordinary Shares offered in this offering and certain legal matters as to Cayman Islands law has been passed upon
for us by Conyers Dill & Pearman.
Certain
legal matters in connection with this offering with respect to United States federal securities law have been passed upon for
us by Schlueter & Associates, Greenwood Village, Colorado. Ellenoff Grossman & Schole LLP is acting as U.S. counsel to the underwriters
with respect to this offering.
EXPERTS
The
financial statements as of December 31, 2020 and 2021, and for each of the three years in the period ended December
31, 2021 included in this prospectus have been audited by WWC, P.C., an independent registered public accounting firm, as stated
in their report appearing herein (which report expresses an unqualified opinion on the financial statements and includes two explanatory
paragraphs referring to the restatement for correction of an error and the translation of Singapore Dollars to United States Dollars).
Such financial statements have been so included in reliance upon the report of such firm given upon the authority of such firm as experts
in accounting and auditing. The office of WWC, P.C. is located at 2010 Pioneer Court, San Mateo, CA 94403, United States of America.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed a registration statement, including relevant exhibits, with the SEC on Form F-1 under the Securities Act with respect to the
underlying Ordinary Shares to be sold in this offering. For the purposes of this section, the term “registration statement”
means the original registration statement and any and all amendments thereto including the schedules and exhibits to the original registration
statement or any amendment. This prospectus, which constitutes a part of the registration statement on Form F-1, does not contain all
of the information contained in the registration statement. You should read our registration statements and their exhibits and schedules
for further information with respect to us and our Ordinary Shares.
We
are subject to periodic reporting and other informational
requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we are required to file reports, including
annual reports on Form 20-F, and other information with the SEC. All information filed with the SEC, including the registration statement,
can be obtained over the Internet at the SEC’s website at www.sec.gov or inspected and copied at the public reference facilities
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of documents, upon payment of a duplicating
fee, by writing to the SEC.
As
a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content
of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit
recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file
periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered
under the Exchange Act. As we are a foreign private issuer, we are required to file our annual report on Form 20-F within 120
days of the end of each year. However, we intend to furnish the depositary with our annual reports, which will include a review of operations
and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings
and other reports and communications that are made generally available to our shareholders.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To: |
The
Board of Directors and Stockholders of |
|
JE
Cleantech Holdings Limited |
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of JE Cleantech Holdings Limited and its subsidiaries (collectively the “Company”)
as of December 31, 2020 and 2021, and the related consolidated statements of income and comprehensive income (loss), changes in shareholders’
equity, and cash flows in each of the years for the three-year period ended December 31, 2021, and the related notes (collectively referred
to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2020 and 2021, and the results of its operations and its cash flows for each of the years in the three-year
period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
/s/
WWC, P.C.
WWC,
P.C.
Certified
Public Accountants
PCAOB
ID No.1171
We
have served as the Company’s auditor since 2021.
San
Mateo, California
May
2, 2022
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Amount
in thousands, except for share and per share data, or otherwise noted)
The
accompanying notes are an integral part of these consolidated financial statements.
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(Amount
in thousands, except for share and per share data, or otherwise noted)
The
accompanying notes are an integral part of these consolidated financial statements.
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amount
in thousands, except for share and per share data, or otherwise noted)
The
accompanying notes are an integral part of these consolidated financial statements.
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Amount
in thousands, except for share and per share data, or otherwise noted)
The
accompanying notes are an integral part of these consolidated financial statements.
JE
CLEANTECH HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES
TO FINANCIAL STATEMENTS
1.
ORGANIZATION AND PRINCIPAL ACTIVITIES
On
January 29, 2019, JE Cleantech Holdings Limited (the “Company”) was incorporated in the Cayman Islands, as an investment
holding company. The Company conducts its primary operations through its indirectly held wholly owned subsidiaries that are incorporated
and domiciled in Singapore, namely: 1.) by JCS-Echigo Pte. Ltd. (‘‘JCS-Echigo’’) which is principally engaged
in the manufacture and sale of cleaning systems, related cleaning equipment, equipment parts and components, and 2.) Hygieia Warewashing
Pte. Ltd. (‘‘Hygieia’’) which is principally engaged in the provision of centralized dishwashing and ancillary
services. The Company holds JCS-Echigo via its wholly owned subsidiary JE Cleantech International Ltd (“JEC International”),
a company that is incorporated and domiciled in the British Virgin Islands; Hygenia is a wholly owned subsidiary of the JCS-Echigo. JCS-Echigo
wholly owns Evoluxe Pte. Ltd (“Evoluxe”) which is also incorporated and domiciled in Singapore, which, as of the date of
the report, is dormant. The Company is headquartered in Singapore and conducts its operations domestically.
The
Company and its subsidiaries are in the table as follows:
SCHEDULE OF SUBSIDIARIES
Percentage of effective ownership |
December 31, |
Name | |
Date of Incorporation | |
2019 | | |
2020
| | |
2021 | | |
Place of incorporation | |
Principal Activities |
JE Cleantech Holdings Limited | |
January 29, 2019 | |
| - | | |
| - | | |
| - | | |
Cayman Islands | |
Investment holding |
JE Cleantech International Ltd | |
April 9, 2018 | |
| 100 | % | |
| 100 | % | |
| 100 | % | |
The British Virgin Islands | |
Investment holding |
JCS- Echigo Pte. Ltd. | |
November 25, 1999 | |
| 100 | % | |
| 100 | % | |
| 100 | % | |
Singapore | |
Manufacturing, selling and servicing of cleaning systems, component and parts |
Hygieia Warewashing Ptd. Ltd. | |
December 29, 2010 | |
| 100 | % | |
| 100 | % | |
| 100 | % | |
Singapore | |
Provision of centralized dishware washing services and leasing of dishware washing equipment |
Evoluxe Pte. Ltd | |
May 6, 2016 | |
| 100 | % | |
| 100 | % | |
| 100 | % | |
Singapore | |
Dormant |
The
accompanying financial statements are presented assuming that the Company was an existence at the beginning of the first period presented.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of presentation
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”).
(b)
Consolidation
The
consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company transactions,
if any, and balances due to, due from, long-term investment subsidiary, and registered paid in capital have been eliminated upon consolidation.
(c)
Use of estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the U.S. GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The
most significant estimates relate to allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment
for property, plant and equipment, valuation allowance for deferred tax assets, fair value of financial instruments, warranty liabilities,
and contingencies. Actual results could vary from the estimates and assumptions that were used.
(d)
Risks and uncertainties
The
main operations of the Company are located in Singapore. Accordingly, the Company’s business, financial condition, and results
of operations may be influenced by political, economic, and legal environments in Singapore, as well as by the general state of the economy
in Singapore. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in
Singapore. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing
laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.
The
Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters,
extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s
operations.
The
Company’s operations may be further affected by the ongoing outbreak of COVID-19 (the ‘‘Outbreak’’) which
in March 2020, had been declared as a pandemic by the World Health Organization. In light of the Outbreak, the Singapore Government had
implemented an elevated set of safe distancing measures to pre-empt the trend of increasing local transmission of COVID-19 from April
7 2020 to June 1 2020 (inclusive). On May 19 2020,
the Singapore Government further announced that a controlled approach would be implemented to resume economic and community activities
and progressively lift the relevant control measures in place after June 1 2020 over three phases. The three phases comprise (a) a ‘‘Safe
Re-opening’’ phase which was implemented from June 2 2020 to June 18 2020 (inclusive) (‘‘Phase 1’’);
(b) a ‘‘Safe Transition’’ phase which was implemented with effect from June 19 2020 (‘‘Phase 2’’);
and (c) a ‘‘Safe Nation’’ phase, which was implemented from December 28 2020 (‘‘Phase 3’’)
whereby social, cultural, religious and business gatherings or events were resumed, although gathering sizes still had to be limited
in order to prevent large clusters from arising, and services and activities that involve significant prolonged close contact or significant
crowd management risk in an enclosed space also were allowed to be re-opened, subject to their ability to implement strict safe management
measures effectively (“Phase 3”).
Between
May 1, 2020 and August 6, 2021, the Singapore government introduced two phases, namely the Phase 2 (Heightened Alert) and Phase 3 (Heightened
Alert), along with the easing of certain measures within each of such phases. In summary, the Phase 2 (Heightened Alert) measures which
were in effect from May 16, 2020 to June 13, 2021, included reductions in prevailing social gathering group size, sizes of larger scale
events or activities and reinstatement of “work-from-home” as the default at workplaces to minimize workplace interactions,
and the Phase 3 (Heightened Alert) measures, which were in effect from June 14, 2021 to July 19, 2021, was contemplated as a calibrated
reopening and included increases in social gathering group sizes, event size and capacity limits, and subsequently the resumption of
dining in at food and beverage establishments. On July 2, 2021, the Singapore government announced the reversion back to Phase 2 (Heightened
Alert) measures from July 22, 2021 to August 18, 2021 which superseded the measures introduced on July 19, 2021, during which “work
from home” remained the default, employers who needed staff to return to workplaces were required to ensure that there was no cross-deployment
at various worksites, enforce staggered start times and flexible working hours and social gatherings at workplaces were not allowed.
On
August 6, 2021, the Singapore government announced the easing of some safe management measures, with the first phase to take effect on
August 10, 2021 and the second phase to take effect on August 19, 2021, which superseded those introduced on July 22, 2021 as part of
Singapore’s transition towards COVID-19 resilience, which included an increase in social gathering group size, event size and capacity
limits for fully vaccinated individuals and easing of “work-from-home” requirements. A further easing of community measures
was announced on August 19, 2021. Subsequently, on September 24, 2021, the Singapore government announced a tightening of safe management
measures during the stabilization period between September 27, 2021 and October 24, 2021, given the exponential rise in COVID-19 cases
from the end of August 2021. Imposition of these measures was later extended to November 21, 2021. It is expected that in this phase
and until an effective vaccine or treatment is developed, social, cultural, religious and business gatherings or events will resume,
subject to limits on the size of such gatherings. The Company has generally resumed normal business operations during Phase 2 and Phase
3. On December 22, 2021, in response to the global emergence of the Omicron variant, the Singapore government introduced travel restrictions
for affected countries or regions and enhanced the testing requirements for travelers. Effective March 29, 2022, the Singapore government
significantly eased COVID-19 restrictions by, among other things, lifting the requirement to wear masks outdoors, doubling the group
size limit to 10 people and lifting the ban on alcohol sales in pubs and eateries after 10:30 p.m. It also eased testing and quarantine
requirements for travelers and declared that up to 75% of employees who can work from home are allowed to return to their workplaces.
Effective April 26, 2022, the Singapore government further eased COVID-19 restrictions by, among other things, (i) allowing employees
to remove their masks at their workstations when they are not interacting physically with others and when they are not in customer-facing
areas; (ii) removing the group size limit and safe distancing requirement between individuals or between groups; (i) allowing all employees
to return to their workplaces; and (iv) removing all capacity limits.
The
directors of the Company consider that the impact of the Outbreak has been and will be further alleviated by the measures announced by
the Singapore Government. As the situation continues to evolve, the directors of the Company will continue to closely monitor further
effect that could be caused by the Outbreak on the Company’s operation and financial position.
(e)
Foreign currency translation and transaction and Convenience translation
The
accompanying consolidated financial statements are presented in the Singaporean dollar (“$”), which is the reporting currency
of the Company. The functional currency of the Company and its subsidiary JEC International are the USD and HKD, respectively. JCS-Echigo,
Hygenia, and Evoluze use the Singaporean dollar as their functional currencies.
Assets
and liabilities denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of
exchange prevailing at the balance sheet date. Translation gains and losses are recognized in the consolidated statements of operations
and comprehensive loss as other comprehensive income or loss. Transactions in currencies other than the reporting currency are measured
and recorded in the reporting currency at the exchange rate prevailing on the transaction date. The cumulative gain or loss from foreign
currency transactions is reflected in the consolidated statements of income and comprehensive income as other income (other expenses).
The
value of foreign currencies including, the US Dollar and Hong Kong Dollar, may fluctuate against the Singaporean Dollar. Any significant
variations of the aforementioned currencies relative to the Singaporean Dollar may materially affect the Company’s financial condition
in terms of reporting in SGD. The following table outlines the currency exchange rates that were used in preparing the accompanying consolidated
financial statements:
SCHEDULE OF CURRENCY EXCHANGE RATES
| |
December 31, | |
| |
2020 | | |
2021 | |
SGD to HKD Year End | |
| 5.9220 | | |
| 5.8300 | |
SGD to HKD Average Rate | |
| 5.7065 | | |
| 5.8348 | |
SGD to USD Year End | |
| 0.7467 | | |
| 0.7396 | |
SGD to USD Average Rate | |
| 0.7251 | | |
| 0.7450 | |
Translations
of the consolidated balance sheets, consolidated statements of comprehensive loss and consolidated statements of cash flows from SGD
into US$ as of and for the year ended December 31, 2021 are solely for the convenience of the reader and were calculated at the
rate of US$0.7396
= SGD$1,
as set forth in the statistical release of the Federal Reserve System on December 30, 2021.
(f)
Fair Value Measurement
Accounting
guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact,
and it considers assumptions that market participants would use when pricing the asset or liability.
Accounting
guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based
upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs
that may be used to measure fair value:
|
● |
Level
1 applies to assets or liabilities for which there are quoted prices, in active markets for identical assets or liabilities. |
|
|
|
|
● |
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical
asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations
in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
|
|
|
|
● |
Level
3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities. |
Cash
and cash equivalents, accounts receivable, prepaid expenses and other current assets, financial instruments, deferred financing costs,
bank loans, leases, accounts payables and accruals, warranty liabilities, and contract liabilities and are financial assets and liabilities.
Cash and cash equivalents, accounts receivables, prepaid expenses and other currents, accounts payables and accruals, warranty liabilities,
and contract liabilities are subject to fair value measurement; however, because of their being short term in nature management believes
their carrying values approximate their fair value. Financial instruments are fair value financial assets that are marked to fair value
and are accounted for under as Level 3 under the above hierarchy. The Company accounts for bank loans and leases at amortized cost and
has elected NOT to account for them under the fair value hierarchy.
(g)
Related parties
We
adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions
(h)
Cash and cash equivalents
Cash
and cash equivalents consist of cash on hand, the Company’s demand deposit placed with financial institutions, which have original
maturities of less than three months and unrestricted as to withdrawal and use.
(i)
Restricted cash
Restricted
cash are bank deposits that are pledge to the bank as security for outstanding loans and bank borrowings. The carrying amount for restricted
cash was $0,
and $0 as
of December 31, 2021 and 2020, respectively.
(j)
Accounts Receivable, net
Accounts
receivable, net are stated at the original amount less an allowance for expected credit loss on such receivables. The allowance for expected
credit loss is estimated based upon the Company’s assessment of various factors including historical experience, the age of the
accounts receivable balances, current general economic conditions, future expectations and customer specific quantitative and qualitative
factors that may affect the Company’s customers’ ability to pay. An allowance is also made when there is objective evidence
for the Company to reasonably estimate the amount of probable loss.
(k)
Inventories
Inventories
are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in, first-out principle, and
includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them
to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate
share of production overheads based on normal operating capacity.
(l)
Property, plant and equipment, net
Property,
plant and equipment are stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis
over the estimated useful lives of the assets. Cost represents the purchase price of the asset and other costs incurred to bring the
asset into its intended use. Estimated useful lives are as follows:
SCHEDULE
OF ESTIMATED USEFUL LIVES
Category |
|
Estimated
useful lives |
|
|
|
Land
use right |
|
Over
the lease term |
Leasehold
buildings |
|
30
years |
Plant
and machinery |
|
5
to 10 years |
Equipment,
furniture and fittings |
|
1-5
years |
Expenditure
for repair and maintenance costs, which do not materially extend the useful lives of the assets, are charged to expenses as incurred,
whereas the expenditure for major renewals and betterment that substantially extends the useful lives of property and equipment are capitalized
as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation
and impairment with any resulting gain or loss recognized in the consolidated statements of income.
(m)
Impairment of long-lived assets
The
Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the
long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition.
If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment
loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No
impairment of long-lived assets was recognized
as of December 31, 2021 and 2020.
(n)
Contract liabilities
A
contract liability is recognized when the customer pays non-refundable consideration before the Company recognizes the related revenue.
A contract liability would also be recognized if the Company has an unconditional right to receive nonrefundable considerations before
the Company recognizes the related revenue. In such cases, a corresponding receivable would also be recognized.
(o)
Commitments and contingencies
In
the normal course of business, the Company is subject to commitments and contingencies, including operating lease commitments, legal
proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax
matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss will occur, and a reasonable
estimate of the loss can be made. The Company may consider many factors in making these assessments on liability for contingencies, including
historical and the specific facts and circumstances of each matter.
(p)
Revenue recognition
In
May 2014, the FASB issued Topic 606, “Revenue from Contracts with Customers”. This topic clarifies the principles for recognizing
revenue and develops a common revenue standard for U.S. GAAP. Simultaneously, this topic supersedes the revenue recognition requirements
in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle
of the guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The
Company currently generates its revenue from the following main sources:
Revenue
from good sold and services provided
Revenue
from sales of goods and services in the ordinary course of business is recognized when the Company satisfies a performance obligation
(‘‘PO’’) by transferring control of a promised good or service to the customer. The amount of revenue recognized
is the amount of the transaction price allocated to the satisfied PO.
The
transaction price is allocated to each PO in the contract on the basis of the relative stand-alone selling prices of the promised goods
or services. The individual standalone selling price of a good or service that has not previously been sold on a stand-alone basis, or
has a highly variable selling price, is determined based on the residual portion of the transaction price after allocating the transaction
price to goods and/or services with observable stand-alone selling price. A discount or variable consideration is allocated to one or
more, but not all, of the performance obligations if it relates specifically to those performance obligations.
Transaction
price is the amount of consideration in the contract to which the Group expects to be entitled in exchange for transferring the promised
goods or services. The transaction price may be fixed or variable and is adjusted for time value of money if the contract includes a
significant financing component. Consideration payable to a customer is deducted from the transaction price if the Group does not receive
a separate identifiable benefit from the customer. When consideration is variable, if applicable, the estimated amount is included in
the transaction price to the extent that it is highly probable that a significant reversal of the cumulative revenue will not occur when
the uncertainty associated with the variable consideration is resolved.
Revenue
may be recognized at a point in time or over time following the timing of satisfaction of the PO. If a PO is satisfied over time, revenue
is recognized based on the percentage of completion reflecting the progress towards complete satisfaction of that PO. Typically, POs
for products where the process is described as below, the PO is satisfied at point in time. POs for services are more typically satisfied
over time such as in the contracts for sterilization and sanitation service where the Company delivers service daily over the course
of a month, and the Company will recognize revenue and charge the client on a monthly basis.
For
the sales of sterilization and cleaning systems, related cleaning equipment, equipment parts and components, the Company typically receives
purchase orders from its customers which will set forth the terms and conditions including the transaction price, products to be delivered,
terms of delivery, and terms of payment. The terms serve as the basis of the performance obligations that the Company must fulfill in
order to recognize revenue. The key performance obligation is the delivery of the finished product to the customer at their location
at which point title to that asset passes to the customer. The completion of this earning process is evidenced by a written customer
acceptance indicating receipt of the product. The Company includes a warranty on its product for one year from the point of delivery
and acceptance. The warranty is antecedent to the performance obligation set forth above; however, management develops an estimate of
future warranty costs and accrues that amount to cost of sales in the period that revenue is recognized to the Company’s consolidated
statements of income and the corresponding amount to the warrant liabilities on the Company’s consolidated balance sheets. Details
on the changes in the warranty liabilities can be found in Note 11 below. Typical payment terms set forth in the purchase order ranges
from 30 to 90 days from the date of delivery. The amount of revenue recognized from contract liabilities to the Company’s result
of operations can be found in Note 12 below.
Revenue
from rental of dishware washing machines
In
accordance with ASC 842 Lease Topics. The Company accounts for the rental of dishware washing machines as direct finance leases where,
lease income from the prospective of lessor is recognized to the Company’s statement of income straight-line basis over the term
of the lease once management has determined that the lease payments are reasonably expected to be collected. The performance obligation
under these leasing arrangements is to deliver the unit to the customer at their location and ensure that the equipment is ready for
use, and to ensure that the equipment is available for use over the life of the lease contract.
(q)
Cost of revenue
Cost
of revenue mainly consists of raw material costs, labor costs, sub-contracting costs and production overhead.
(r)
Selling and marketing expenses
Selling
expenses mainly consists of promotion and marketing expenses and transportation expenses. The Company does not carry any capitalized
contract acquisition costs that would be amortized to its results of operations over time, and potential expenses related to customer
and contract acquisitions costs if any are accounted for as periodic costs.
(s)
General and administrative expenses
General
and administrative expenses mainly consist of staff cost, depreciation, office supplies and upkeep expenses, travelling and entertainment,
legal and professional fees, property and related expenses, other miscellaneous administrative expenses.
(t)
Operating leases
Prior
to the adoption of ASC 842 on January 1, 2019:
Leases,
mainly leases of factory buildings, offices and employee dormitories, where substantially all the rewards and risks of ownership of assets
remain with the lessor are accounted for as operating leases. Payments made under operating leases are recognized as an expense on a
straight-line basis over the lease term. The Company had no finance leases for any of the periods stated herein.
Upon
and hereafter the adoption of ASC 842 on January 1, 2019:
The
Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)
assets, operating lease liability, and operating lease liability, non-current in the Company’s consolidated balance sheets. ROU
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend
or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not
provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining
the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of
ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain
to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of
practical expedients for existing arrangements entered into prior to January 1, 2019 to not reassess (a) whether an arrangement is or
contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs.
(u)
Income taxes
The
Group accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective
tax bases.
Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
The
provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for
consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This
interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred
income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.
The
Company did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line
of its consolidated statements of income for the years ended December 31, 2021 and 2020, respectively. The Company does
not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months.
(v)
Earnings per share
Basic
earnings per share is computed by dividing net earnings attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other
contracts to issue ordinary shares were exercised or converted into ordinary shares.
(w)
Recent accounting pronouncements
The
Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material
effect on the Company’s audited consolidated balance sheets, statements of income and comprehensive income and statements of cash
flows.
3.
ACCOUNTS RECEIVABLE, NET
Accounts
receivable, net, consists of the following:
SCHEDULE OF ACCOUNTS RECEIVABLE, NET
| |
2020 | | |
2021 | |
| |
December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Accounts receivable | |
| 9,312 | | |
| 3,254 | |
Less: allowance for doubtful accounts | |
| (82 | ) | |
| (34 | ) |
Accounts receivable, net | |
| 9,230 | | |
| 3,220 | |
The
movements in the allowance for doubtful accounts for the years ended December 31, 2020 and 2021 were as follows:
SCHEDULE
OF ALLOWANCE FOR DOUBTFUL ACCOUNTS
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Balance at beginning of the year | |
| 19 | | |
| 82 | |
Additions | |
| 63 | | |
| - | |
Reversal | |
| - | | |
| (48 | ) |
Exchange effect | |
| - | | |
| - | |
Balance at end of the year | |
| 82 | | |
| 34 | |
As
of the end of each of the financial year, the ageing analysis of accounts receivable, net of allowance for doubtful accounts, based on
the invoice date is as follows:
SCHEDULE
OF ACCOUNTS NET OF ALLOWANCE FOR DOUBTFUL ACCOUNTS
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Within 30 days | |
| 5,097 | | |
| 1,511 | |
Between 31 and 60 days | |
| 1,290 | | |
| 587 | |
Between 61 and 90 days | |
| 2,073 | | |
| 282 | |
More than 90 days | |
| 770 | | |
| 840 | |
Accounts receivable | |
| 9,230 | | |
| 3,220 | |
4.
INVENTORY
SCHEDULE
OF INVENTORIES
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Raw materials | |
| 177 | | |
| 1,980 | |
Work-in-progress | |
| 1,179 | | |
| 516 | |
Finished goods | |
| 24 | | |
| 61 | |
Total inventory, net | |
| 1,380 | | |
| 2,557 | |
5.
FINANCIAL INSTRUMENT
The
Financial instrument is key management insurance policy. The fair value of the key management insurance policy is determined by reference
to the surrender cash value of the insurance policy at the end of each of the reporting period, which is primarily based on the performance
of the underlying investment portfolio together with the guaranteed minimum returns of 1.5% per annum. The fair value measurement of
the key management insurance contract has been categorized as a Level 3 fair value based on the inputs to the valuation technique used
and is positively correlated to the surrender cash value that is valued by the policy underwriter at the end of each reporting period.
The
following table shows a reconciliation from the opening balances to the ending balances for Level 3 fair value:
SCHEDULE
OF FINANCIAL INSTRUMENT
| |
| | |
| |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
As of January 1, | |
| 239 | | |
| 240 | |
Purchases | |
| - | | |
| - | |
Change in fair value recognized in profit or loss | |
| 1 | | |
| 3 | |
As of December 31, | |
| 240 | | |
| 243 | |
6.
PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment, net, consists of the following:
SCHEDULE
OF PROPERTY, PLANT, AND EQUIPMENT
| |
2020 | | |
2021 | |
| |
December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Leasehold improvements | |
| 7,523 | | |
| 7,523 | |
Right-of-use assets | |
| 2,328 | | |
| 2,328 | |
Plant and machinery | |
| 5,488 | | |
| 5,585 | |
Furniture and fittings | |
| 2,926 | | |
| 3,101 | |
Subtotal | |
| 18,265 | | |
| 18,537 | |
Less: accumulated depreciation | |
| (9,351 | ) | |
| (9,556 | ) |
Property, plant and equipment, net | |
| 8,914 | | |
| 8,981 | |
Depreciation
expense was approximately SGD$614
thousands, SGD$769
thousands and SGD$972
thousands for the years ended December
31, 2021, 2020 and 2019, respectively.
7.
RIGHT-OF-USE (“ROU”) ASSETS AND LEASE PAYABLE
The
right-of-use assets relate to leases of industrial lands in Singapore and certain plant and machinery and motor vehicles under a number
of leases.
The
Group recognized operating lease ROU assets and lease liabilities as follows:
SCHEDULE
OF RIGHT OF USE ASSETS AND LIABILITIES
| |
December 31, 2020 | | |
December
31, 2021 | |
| |
SGD’000 | | |
SGD’000 | |
Operating lease ROU asset | |
| 1,297 | | |
| 1,180 | |
| |
December 31, 2020 | | |
December
31, 2021 | |
| |
SGD’000 | | |
SGD’000 | |
Operating lease liabilities | |
| | | |
| | |
Current portion | |
| 110 | | |
| 158 | |
Non-current portion | |
| 1,149 | | |
| 1,395 | |
Total | |
| 1,259 | | |
| 1,553 | |
As
of December 31, 2021, future minimum lease payments under the non-cancelable operating leases are as follows:
SCHEDULE
OF FUTURE MINIMUM LEASE PAYMENTS UNDER NON-CANCELABLE OPERATING LEASES
Future payment | |
SGD’000 | |
2022 | |
| 205 | |
2023 | |
| 206 | |
2024 | |
| 201 | |
2025 | |
| 185 | |
2026 | |
| 84 | |
Thereafter | |
| 672 | |
Total | |
| 1,553 | |
The
following summarizes other supplemental information about the Company’s operating lease as of December 31, 2021:
SCHEDULE
OF OTHER SUPPLEMENTAL INFORMATION ABOUT THE COMPANY’S OPERATING LEASE
Weighted average discount rate | |
| 4.67 | % |
Weighted average remaining lease term (years) | |
| 15 | |
8.
DEFERRED FINANCING COSTS
The
Company complies with the requirement of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A —
“Expenses of Offering”. Deferred offering costs consist of underwriting, legal and other expenses incurred through the balance
sheet date that are directly related to the intended IPO. Deferred offering costs will be charged to shareholders’ equity upon
the completion of the IPO. Should the IPO prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred,
will be charged to operations. As of December 31, 2021 and 2020, the Company capitalized $1,321,306
and $960,468
of deferred offering costs, respectively.
Such costs will be deferred until the closing of the IPO, at which time the deferred costs will be offset against the offering proceeds.
9.
BANK LOANS
The
bank loans as of December 31, 2020 and 2021 are set out below:
SCHEDULE
OF BANK LOANS
Bank loans | |
Currency | |
Period | |
Interest rate | |
Third Party guarantee | |
Director’s Personal guarantee | | |
Carrying amount | |
| |
| |
| |
| |
| |
| | |
SGD’000 | |
Secured floating rate bank loans | |
SGD | |
2020
- 2026 | |
SIBOR+1.25%
to +1.5% | |
NIL | |
| | | |
| 10,305 | |
| |
USD | |
2029 | |
London
Inter Bank Offer Rate +1.25% | |
NIL | |
| | | |
| 211 | |
December 31, 2020 | |
| |
| |
| |
| |
| 3,430 | | |
| 10,516 | |
| |
| |
| |
| |
| |
| | | |
| | |
Secured floating rate bank loans | |
SGD | |
2021
- 2026 | |
SIBOR+1.25%
to +1.5% | |
NIL | |
| | | |
| 9,692 | |
| |
USD | |
2029 | |
London Inter Bank Offer Rate +1.25% | |
NIL | |
| | | |
| 186 | |
December 31, 2021 | |
| |
| |
| |
| |
| 3,430 | | |
| 9,878 | |
SCHEDULE
OF MATURITIES OF BANK LOANS
Bank loans | |
Carrying amount | | |
Within 1 year | | |
2021 | | |
2022 | | |
2023 | | |
2024 | | |
Thereafter | |
| |
SGD’000 | | |
| | |
| | |
| | |
| | |
| | |
| |
Secured floating rate bank loans | |
| 10,305 | | |
| 5,614 | | |
| 432 | | |
| 415 | | |
| 196 | | |
| 180 | | |
| 3,468 | |
| |
| 211 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 91 | |
December 31, 2020 | |
| 10,516 | | |
| 5,638 | | |
| 456 | | |
| 439 | | |
| 220 | | |
| 204 | | |
| 3,559 | |
| |
Carrying amount | | |
Within 1 year | | |
2022 | | |
2023 | | |
2024 | | |
2025 | | |
Thereafter | |
Secured floating rate bank loans | |
| 9,692 | | |
| 5,432 | | |
| 437 | | |
| 198 | | |
| 180 | | |
| 180 | | |
| 3,265 | |
| |
| 186 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 24 | | |
| 66 | |
December 31, 2021 | |
| 9,878 | | |
| 5,456 | | |
| 461 | | |
| 222 | | |
| 204 | | |
| 204 | | |
| 3,331 | |
10.
ACCOUNTS PAYABLE, ACCRUALS AND OTHER CURRENT LIABILITIES
Account
Payable, accrued expenses and other liabilities consists of the following:
SCHEDULE
OF ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES
| |
| | |
| |
| |
December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Accounts Payable | |
| 2,438 | | |
| 1,916 | |
Payroll payable | |
| 343 | | |
| 196 | |
Insurance fees collected to be paid to insurance companies | |
| - | | |
| - | |
Payable to other services | |
| 468 | | |
| 146 | |
Deposits | |
| 6 | | |
| 7 | |
Others | |
| 41 | | |
| 25 | |
Total | |
| 3,296 | | |
| 2,290 | |
11.
WARRANTY LIABILITIES
SCHEDULE
OF WARRANTY LIABILITIES
| |
| | |
| |
| |
December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
As of January 1, | |
| 47 | | |
| 28 | |
Additional accrual | |
| 28 | | |
| 22 | |
Utilized | |
| (30 | ) | |
| (28 | ) |
Expired | |
| (17 | ) | |
| - | |
As of December 31, | |
| 28 | | |
| 22 | |
The
warranty for machines sold typically covers a 12-month period from the date on which the machines are delivered and accepted by the customers.
The warrant liability is based on estimates made from historical warranty data associated with similar products and services. The
Company expects to make use of the accrued liability over the next operating period.
12.
LOAN FROM CONTROLLING SHAREHOLDER
The
amount of loan from controlling shareholder is non-trade, unsecured, interest-free and repayable on demand.
13.
DEFERRED TAX ASSETS/ LIABILITIES
SCHEDULE
OF DEFERRED TAX ASSETS AND LIABILITIES
| |
| | |
| |
| |
December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Deferred tax assets | |
| 163 | | |
| 163 | |
Deferred tax liabilities | |
| (188 | ) | |
| (151 | ) |
| |
| (25 | ) | |
| 12 | |
Following
are the major deferred tax assets and liabilities recognized by the Company:
SCHEDULE
OF DEFERRED TAX ASSETS AND LIABILITIES RECOGNIZED BY THE COMPANY
| |
Property, plant and equipment | | |
Provisions | | |
Tax losses | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
As of January 1, 2019 | |
| 226 | | |
| 27 | | |
| - | | |
| 253 | |
Recognized in statements of income | |
| (363 | ) | |
| (21 | ) | |
| 190 | | |
| (194 | ) |
As of December 31, 2019 | |
| (137 | ) | |
| 6 | | |
| 190 | | |
| 59 | |
Recognized in statements of income | |
| (56 | ) | |
| (1 | ) | |
| (27 | ) | |
| (84 | ) |
As of December 31, 2020 | |
| (193 | ) | |
| 5 | | |
| 163 | | |
| (25 | ) |
Recognized in statements of income | |
| 37 | | |
| - | | |
| - | | |
| 37 | |
As of December 31, 2021 | |
| (156 | ) | |
| 5 | | |
| 163 | | |
| 12 | |
14.
EQUITY
For
the sake of undertaking a public offering of the Company’s ordinary shares, the Company has performed a series of re-organizing
transactions resulting in 12,000,000 shares of ordinary shares outstanding that have been retroactively restated to the beginning of
the first period presented. The Company only has one single class of ordinary shares that are accounted for as permanent equity.
On
April 22, 2022, the Company issued 3,020,000
ordinary shares pursuant to the Initial
Public Offering.
15.
REVENUES BY PRODUCT AND GEOGRAPHY
SCHEDULE
OF PRINCIPAL TRANSACTIONS REVENUE
| |
2019 | | |
2020 | | |
2021 | |
| |
December 31, | | |
| |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Sales of cleaning systems and other equipment | |
| 12,226 | | |
| 16,945 | | |
| 8,975 | |
Provision of centralized dishware washing and general cleaning services | |
| 5,901 | | |
| 4,357 | | |
| 5,636 | |
Leasing of dishware washing equipment | |
| 92 | | |
| 95 | | |
| 153 | |
Revenue | |
| 18,219 | | |
| 21,397 | | |
| 14,764 | |
The
following tables present summary information by product type for the years ended December 31, 2019, 2020 and 2021, respectively:
SCHEDULE
OF REVENUE INFORMATION BY PRODUCT TYPE
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
For the years ended December
31, 2021 | |
| |
Cleaning Systems | | |
Dishware
Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Revenue | |
| 8,975 | | |
| 5,789 | | |
| 14,764 | |
Gross Profit | |
| 2,090 | | |
| 258 | | |
| 2,348 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
For the years ended December 31, 2020 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Revenue | |
| 16,945 | | |
| 4,452 | | |
| 21,397 | |
Gross Profit | |
| 5,721 | | |
| 183 | | |
| 5,904 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
For the years ended December 31, 2019 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Revenue | |
| 12,226 | | |
| 5,993 | | |
| 18,219 | |
Gross Profit | |
| 4,352 | | |
| 599 | | |
| 4,951 | |
In
the following table, revenue is disaggregated by the geographical locations of customers and by the timing of revenue recognition.
SCHEDULE
OF DISAGGREGATION OF REVENUE BY GEOGRAPHICAL CUSTOMER LOCATIONS
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
For the years ended December 31, 2021 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Geographical location: | |
| | | |
| | | |
| | |
Singapore | |
| 651 | | |
| 5,789 | | |
| 6,440 | |
Malaysia | |
| 4,877 | | |
| - | | |
| 4,877 | |
Other countries | |
| 3,447 | | |
| - | | |
| 3,447 | |
Revenue | |
| 8,975 | | |
| 5,789 | | |
| 14,764 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
For the years ended December 31, 2020 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Geographical location: | |
| | | |
| | | |
| | |
Singapore | |
| 1,075 | | |
| 4,452 | | |
| 5,527 | |
Malaysia | |
| 12,289 | | |
| - | | |
| 12,289 | |
Other countries | |
| 3,581 | | |
| - | | |
| 3,581 | |
Revenue | |
| 16,945 | | |
| 4,452 | | |
| 21,397 | |
In
the following table, revenue is disaggregated by the timing of revenue recognition.
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
For
the years ended December 31, 2021 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Timing of revenue recognition: | |
| | | |
| | | |
| | |
Point in time | |
| 8,975 | | |
| - | | |
| 8,975 | |
Over time | |
| - | | |
| 5,789 | | |
| 5,789 | |
Revenue | |
| 8,975 | | |
| 5,789 | | |
| 14,764 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
For
the years ended December 31, 2020 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Timing of revenue recognition: | |
| | | |
| | | |
| | |
Point in time | |
| 16,897 | | |
| - | | |
| 16,897 | |
Over time | |
| 48 | | |
| 4,452 | | |
| 4,500 | |
Revenue | |
| 16,945 | | |
| 4,452 | | |
| 21,397 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
For the years ended December 31, 2019 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Geographical location | |
| | | |
| | | |
| | |
Singapore | |
| 2,593 | | |
| 5,901 | | |
| 8,494 | |
Malaysia | |
| 4,771 | | |
| - | | |
| 4,771 | |
Other countries | |
| 4,954 | | |
| - | | |
| 4,954 | |
Revenue | |
| 12,318 | | |
| 5,901 | | |
| 18,219 | |
| |
Cleaning Systems | | |
Dishware Washing Services | | |
Total | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Timing of revenue recognition | |
| | | |
| | | |
| | |
Point in time | |
| 11,946 | | |
| - | | |
| 11,946 | |
Over time | |
| 372 | | |
| 5,901 | | |
| 6,273 | |
Revenue | |
| 12,318 | | |
| 5,901 | | |
| 18,219 | |
16.
INCOME TAX EXPENSES
Caymans
and BVIs
The
Company and its subsidiary, JE Cleantech International Ltd. are domiciled in the Cayman Islands and the British Virgin Islands, respectively.
Both localities currently enjoy permanent income tax holidays; accordingly, the Company and JE Cleantech International Ltd. do not accrue
for income taxes.
Singapore
The
Company’s subsidiary, JCS-Echigo Pte. Ltd. and Hygieia Warewashing Pte. Ltd are considered Singapore tax resident enterprises under
Singapore tax laws; accordingly, they are subject to enterprise income tax on their taxable income as determined under Singapore tax
laws and accounting standards at a statutory tax rate of 17%
(2020: 17%).
The
income tax provision consists of the following components:
SCHEDULE
OF COMPONENTS OF INCOME TAX EXPENSE BENEFIT
| |
2019 | | |
2020 | | |
2021 | |
| |
For the years ended December 31, | | |
| |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
Income tax: | |
| | | |
| | | |
| | |
Current year | |
| 29 | | |
| 500 | | |
| - | |
(Over) Under provision of prior years | |
| 19 | | |
| 34 | | |
| 37 | |
Current Income Tax Expense Benefit | |
| 48 | | |
| 534 | | |
| 37 | |
Deferred tax: | |
| | | |
| | | |
| | |
Current year | |
| 194 | | |
| 84 | | |
| (37 | ) |
(Over) Under provision of prior years | |
| - | | |
| - | | |
| - | |
Deferred Income Tax Expense
Benefit | |
| 194 | | |
| 84 | | |
| (37 | ) |
Income Tax Expense (Benefit) | |
| 242 | | |
| 618 | | |
| - | |
The
income tax expense varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17% (2020: 17%)
to profit before income tax as a result of the following differences:
SCHEDULE
OF EFFECTIVE INCOME TAX RATE RECONCILIATION
| |
2019 | | |
2020 | | |
2021 | |
| |
For the years ended December 31, | | |
| |
| |
2019 | | |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | | |
SGD’000 | |
| |
| | | |
| | | |
| | |
Tax at the domestic income tax rate | |
| 99 | | |
| 399 | | |
| 1 | |
Tax effect of expenses that are not deductible in determining taxable profit | |
| 528 | | |
| 391 | | |
| 37 | |
(Over) Under provision in prior years | |
| 19 | | |
| 34 | | |
| 37 | |
Tax effect of non-taxable incomes | |
| (11 | ) | |
| (98 | ) | |
| (44 | ) |
Tax effect of unused tax losses not recognized in prior years now recognized | |
| (190 | ) | |
| - | | |
| - | |
Tax incentives | |
| (203 | ) | |
| (110 | ) | |
| (31 | ) |
Others | |
| - | | |
| 2 | | |
| - | |
Income Tax Expense (Benefit) | |
| 242 | | |
| 618 | | |
| - | |
As
of December 31, 2021 and 2020, the one of the Company’s subsidiaries in Singapore, namely Hygieia Warewashing Pte
Ltd had net operating loss carryforwards of approximately SGD751,000
and SGD959,000,
respectively. As of December 31, 2021 and 2020, deferred tax assets from the net operating loss carryforwards amounted
to SGD163,000
and SGD163,000,
respectively, and the Company has provided a valuation
allowance as it has concluded that it is more likely than not that these net operating losses would not be utilized in the future.
17.
RELATED PARTY TRANSACTIONS
There
were neither outstanding balances due from nor due to related parties as of December 31, 2020, and the Company did not conduct any transactions
with related parties during the year then ended.
On
September 24, 2021, prior to the reorganization and the Company’s initial public offering, the Company declared a dividend
of SGD 2.9
million (approximately US$2.1
million) payable in cash to its shareholders—JE
Cleantech Global Limited, which is wholly-owned by Ms. Bee Yin Hong, the Company’s controlling shareholder, and Triple Business
Limited. The dividend was subsequently paid in full. Of this amount, SGD 2.5
million (approximately US$1.9
million) was paid to JE Cleantech Global Limited
and SGD 406,000
(approximately US$0.3
million) was paid to Triple Business Limited.
On October 5, 2021, the Company entered into a loan facility agreement with Ms. Bee Yin Hong, the Company’s controlling
shareholder, for a revolving loan facility of up to US$1.1
million for general working capital and general
corporate purposes, including the payment of expenses related to the Company’s initiative to raise capital through an initial
public offering and simultaneous listing of the Company’s ordinary shares on a globally recognized stock exchange. Ms.
Hong and the Company entered into a subsequent revolving loan facility on October 6, 2021 in the amount of US$0.7
million to be used for the same
purposes. The total amount of the loan of approximately US$1.8
million from Ms. Bee Yin Hong, the Company’s
controlling shareholder, is non-trade, unsecured, interest-free and payable on demand.
Other
than the above-mentioned disclosure, there were no other significant related party transactions conducted during the year ended December
31, 2021.
18.
CONCENTRATIONS AND RISKS
Concentrations
Financial
instruments that potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. The Company
conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company evaluates
its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Company conducts
periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.
The
following table sets forth a summary of single customers who represent 10% or more of the Company’s total revenue:
SCHEDULE
OF CONCENTRATION RISK BY RISK FACTOR
| |
For the years ended December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Amount of the Company’s revenue | |
| | | |
| | |
Customer A | |
| 13,163 | | |
| 4,833 | |
Customer B | |
| 2,361 | | |
| 3,188 | |
Customer C | |
| N/A* | | |
| N/A* | |
*Revenue
from relevant customer was less than 10% of the Group’s total revenue for the respective year.
The
following table sets forth a summary of single customers who represent 10% or more of the Company’s total accounts receivable:
| |
As of December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Amount of the Company’s accounts receivable | |
| | | |
| | |
Customer A | |
| 7,788 | | |
| 802 | |
Customer B | |
| N/A** | | |
| 898 | |
Customer C | |
| N/A** | | |
| 393 | |
**Account
receivable from relevant customer was less than 10% of the Group’s total accounts receivable for the respective year.
The
following table sets forth a summary of suppliers who represent 10% or more of the Company’s total purchases:
| |
For the years ended December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Amount of the Company’s purchase | |
| | | |
| | |
Supplier A | |
| 1,418 | | |
| 551 | |
Supplier B | |
| N/A# | | |
| 507 | |
#
Purchase from relevant supplier was less than 10% of the Group’s total revenue for the respective year.
The
following table sets forth a summary of single supplier who represent 10% or more of the Company’s total accounts payable:
| |
As of December 31, | |
| |
2020 | | |
2021 | |
| |
SGD’000 | | |
SGD’000 | |
Amount of the Company’s accounts payable | |
| | | |
| | |
Supplier A | |
| 447 | | |
| - | |
Supplier B | |
| N/A## | | |
| 320 | |
##
Accounts payable from relevant supplier was less than 10% of the Group’s total accounts payable for the respective year.
Credit
Risk
Credit
risk is the potential financial loss to the Company resulting from the failure of a customer or a counterparty to settle its financial
and contractual obligations to the Company, as and when they fall due. As the Company does not hold any collateral, the maximum exposure
to credit risk is the carrying amounts of trade and other receivables (exclude prepayments) and cash and bank deposits presented on the
consolidated statements of financial position. The Company has no other financial assets which carry significant exposure to credit risk.
Liquidity
Risk
Liquidity
risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Company’s reputation.
Typically,
the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the
servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted,
such as natural disasters.
19.
COMMITMENTS AND CONTINGENCIES
Contingencies
In
the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and
a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable,
and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation
as of December 31, 2021 and through the issuance date of these consolidated financial statements.
20.
SUBSEQUENT EVENTS
The
Company has assessed all events from December 31, 2021 through May 2, 2022, which is the date that these consolidated financial
statements are available to be issued, unless as disclosed below, there are not any material subsequent events that require disclosure
in these consolidated financial statements other than events detailed below.
On
April 22, 2022, the Company issued 3,020,000
ordinary shares pursuant to the initial
public offering.
PRELIMINARY
PROSPECTUS
Through and including [_____________], 2022 (the 25th day after the
date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter
and with respect to their unsold allotments or subscriptions.
The
information in this prospectus is not complete and may be changed or supplemented. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted.
Subject to Completion, dated May __, 2022
PRELIMINARY
PROSPECTUS
JE
Cleantech Holdings Limited
720,000
Ordinary Shares
This prospectus relates to the resale of 720,000 Ordinary Shares held by
the Non-IPO Selling Shareholders named in this prospectus. We will not receive any of the proceeds from the sale of Ordinary Shares by
the Non-IPO Selling Shareholders named in this prospectus.
Any shares sold by the Non-IPO Selling Shareholders will occur at prevailing
market prices or at privately negotiated prices. The distribution of securities offered hereby may be effected in one or more transactions
that may take place in ordinary brokers’ transactions, privately negotiated transactions or through sales to one or more dealers
for resale of such securities as principals. Usual and customary or specifically negotiated brokerage fees or commissions may be paid
by the Non-IPO Selling Shareholders.
On
March 31, 2022, a registration statement under the Securities Act with respect to our Initial Public Offering of Ordinary
Shares was declared effective by the Securities and Exchange Commission. We received approximately $10 million in net proceeds
from the offering (assuming no additional exercise of the underwriters’ over-allotment option subsequent to the Initial
Closing) after payment of underwriting discounts and commissions and expenses of the offering.
Concurrent with our initial public offering, our Ordinary Shares were listed
on the Nasdaq under the symbol “JCSE.”
We are an “emerging growth company” as defined in Section 2(a)
of the Securities Act of 1933, as amended, and we have elected to comply with certain reduced public company reporting requirements.
An investment in our Ordinary
Shares involves significant risks. You should carefully consider the risk factors beginning on page 19 of this prospectus before you make
your decision to invest in our Ordinary Shares.
Neither the Securities and Exchange
Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is _______, 2022
THE
OFFERING
Ordinary
Shares being offered |
|
720,000
Ordinary Shares |
|
|
|
Ordinary
Shares outstanding after
this
offering |
|
15,020,000
Ordinary Shares |
|
|
|
Use
of proceeds |
|
We
will not receive any proceeds from the sale of Ordinary Shares held by the Non-IPO Selling Shareholders being offered
pursuant to this prospectus. |
|
|
|
Proposed
Nasdaq Symbol |
|
JCSE |
|
|
|
Risk
factors |
|
An
investment in our securities involves a high degree of risk. See “Risk Factors” beginning on page 19 of this prospectus
and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest
in our Ordinary Shares. |
USE
OF PROCEEDS
The Non-IPO Selling Shareholders
will receive all of the proceeds from any sales of the Ordinary Shares offered hereby. However, we will incur expenses in connection
with the registration of our Ordinary Shares offered hereby.
THE
NON-IPO SELLING SHAREHOLDERS
The
Ordinary Shares being offered by the Non-IPO Selling Shareholders listed below were issued to the Non-IPO Selling Shareholders on December
28, 2021 as part of a group reorganization pursuant to which the Non-IPO Selling Shareholders transferred all of their shares of JEC
International Limited, which they had previously purchased from JE Cleantech Global Limited for cash, to the Company in
exchange for an equivalent proportional percentage of the Ordinary Shares of the Company. We are registering those Ordinary Shares in
order to permit the Non-IPO Selling Shareholders to offer the shares for resale from time to time.
This
prospectus covers the offering for resale of 720,000 Ordinary Shares by the Non-IPO Selling Shareholders. This prospectus and
any prospectus supplement will only permit the Non-IPO Selling Shareholders to sell the number of Ordinary Shares identified in the column
“Number of Ordinary Shares to be Sold.” The Ordinary Shares issued to the Non-IPO Selling Shareholders are “restricted”
securities under applicable U.S. federal and state securities laws and are being registered to provide the Non-IPO Selling Shareholders
the opportunity to sell those Ordinary Shares.
The
following table sets forth the name of each Non-IPO Selling Shareholder who is offering the Ordinary Shares for resale by this
prospectus, the number and percentage of Ordinary Shares beneficially owned by such Non-IPO Selling Shareholder, the number of Ordinary
Shares that may be offered for resale by this prospectus and the number and percentage of Ordinary Shares such Non-IPO Selling Shareholder
will own after the offering. The information appearing in the table below is based on information provided by or on behalf of the named
Non-IPO Selling Shareholders. We will not receive any proceeds from the resale of the Ordinary Shares by the Non-IPO Selling Shareholders.
The Non-IPO Selling Shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
Name
of Non-IPO Selling
Shareholder | |
Ordinary Shares Beneficially Owned Prior to Offering | | |
Percentage Ownership Prior to Offering(3) | | |
Number of Ordinary Shares to be Sold | | |
Number
of Ordinary Shares Owned After Offering(4) | |
Percentage Ownership After Offering(5) | |
Ever Bloom Properties Company Limited(1) | |
| 480,000 | | |
| 4.0 | % | |
| 480,000 | | |
Nil | |
| 0.0 | % |
Aqua Lady Group Limited(2) | |
| 240,000 | | |
| 2.0 | % | |
| 240,000 | | |
Nil | |
| 0.0 | % |
(1) The person having voting, dispositive or investment powers over Ever Bloom Properties Company Limited is Mr. Hui Wing Kit. The registered address for Ever Bloom Properties Company Limited is Portcullis Chambers, P.O. Box 1225, Apia, Samoa. Ever Bloom Properties Company Limited is not an affiliate of the Company.
(2) The person having voting, dispositive or investment powers over Aqua Lady Group Limited is Mr. Tong Siu Ting. The registered address for Aqua Lady Group Limited is 3rd, J&C Building, Road Town, Tortola, British Virgin Islands. Aqua Lady Group Limited is not an affiliate of the Company.
(3) Based on 12,000,000 Ordinary Shares issued and outstanding prior to completion of the Company’s initial public offering.
(4)
Since we do not have the ability to control how many, if any, of their shares each of the Non-IPO Selling Shareholders will
sell, we have assumed that the Non-IPO Selling Shareholders will sell all of the shares offered herein for purposes of
determining how many shares they will own after the offering and their percentage of ownership following the offering.
PLAN
OF DISTRIBUTION
The
Non-IPO Selling Shareholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any
or all of their Ordinary Shares covered hereby on the Nasdaq or any other stock exchange, market or trading facility on which the Ordinary
Shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A Non-IPO Selling Shareholder
may use any one or more of the following methods when selling its Ordinary Shares:
| ● | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block
trades in which the broker-dealer will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an
exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately
negotiated transactions; |
| ● | settlement
of short sales; |
| ● | in
transactions through broker-dealers that agree with the Non-IPO Selling Shareholder
to sell a specified number of such securities at a stipulated price per security; |
| ● | through
the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise; |
| ● | a
combination of any such methods of sale; or |
| ● | any
other method permitted pursuant to applicable law. |
The
Non-IPO Selling Shareholders may also sell their Ordinary Shares under Rule 144 or any other exemption from registration
under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker-dealers
engaged by a Non-IPO Selling Shareholder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Non-IPO Selling Shareholder (or, if any broker-dealer acts as agent for the purchaser
of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case
of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal
transaction a markup or markdown in compliance with FINRA Rule 2121.
In
connection with the sale of the Ordinary Shares or interests therein, the Non-IPO Selling Shareholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Ordinary Shares in the
course of hedging the positions they assume. The Non-IPO Selling Shareholders may also sell Ordinary Shares short and deliver
these shares to close out their short positions, or loan or pledge the shares to broker-dealers that in turn may sell these shares. The
Non-IPO Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions
or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of Ordinary
Shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).
The
Non-IPO Selling Shareholders and any broker-dealers or agents that are involved in selling the Ordinary Shares may be deemed to
be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the Ordinary Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Non-IPO Selling Shareholders have informed the Company that they
do not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Ordinary Shares.
The
Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the Ordinary Shares.
We
agreed to keep this prospectus effective until the earlier of (i) the date on which the Ordinary Shares may be resold by the Non-IPO
Selling Shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without
the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any
other rule of similar effect; or (ii) all of the Ordinary Shares held by the Non-IPO Selling Shareholders have been sold pursuant
to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The Ordinary Shares will be sold only through
registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the Ordinary
Shares covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the Ordinary Shares may not simultaneously
engage in market making activities with respect to the Ordinary Shares for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution. In addition, the Non-IPO Selling Shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases
and sales of the Ordinary Shares by the Non-IPO Selling Shareholders or any other person. We will make copies of this prospectus
available to the Non-IPO Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to
each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
Lock-up
Each
Non-IPO Selling Shareholder has agreed not
to sell its Ordinary Shares for a period of 90 days after the date of this prospectus (the “Lock-up Period”) except
as follows:
|
● |
Each Non-IPO
Selling Shareholder may sell up to 34%
of its Ordinary Shares if (a) the closing price of the shares on Nasdaq on each of 3 consecutive trading days equals or exceeds
125% of the offering price per share in the initial public offering, and (b) the average daily trading volume on Nasdaq over such
3 consecutive trading days equals or exceeds 50,000 shares (subject to adjustment for reverse and forward stock splits and similar
transactions). |
|
|
|
|
● |
Each Non-IPO
Selling Shareholder may sell up to an additional 33% of its Ordinary Shares if (a) the closing price of the
shares on Nasdaq on each of 3 consecutive trading days equals or exceeds 150% of the offering price per share in the initial public
offering, and (b) the average daily trading volume on Nasdaq over such 3 consecutive trading days equals or exceeds 50,000 shares
(subject to adjustment for reverse and forward stock splits and similar transactions). |
|
|
|
|
● |
Each Non-IPO
Selling Shareholder may sell up to an additional 33% of its Ordinary Shares if (a) the closing price of the
shares on Nasdaq on each of 3 consecutive trading days equals or exceeds 200% of the offering price per share in the initial public
offering, and (b) the average daily trading volume on Nasdaq over such 3 consecutive trading days equals or exceeds 50,000 shares
(subject to adjustment for reverse and forward stock splits and similar transactions). |
After
the Lock-up Period, all of the Ordinary Shares registered hereby may be freely sold in accordance with this prospectus.
LEGAL
MATTERS
The
validity of the Ordinary Shares being offered by this prospectus will be passed upon for us by Conyers Dill & Pearman.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Cayman
Islands’ laws do not prohibit or restrict a company from indemnifying its directors and officers against personal liability for
any loss they may incur arising out of the Company’s business, except to the extent such provision may be held by the Cayman Islands
courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.
The indemnity extends only to liability for their own negligence and breach of duty other than breaches of fiduciary duty and not where
there is evidence of dishonesty, willful default or fraud.
Our
Amended Memorandum and Articles of Association permits, to the fullest extent permissible under Cayman Islands law, indemnification of
our officers and directors against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained
by them, other than by reason of their own dishonesty, willful default or fraud, in connection with the execution or discharge of their
duties, powers, authorities or discretion as directors or officers of our Company, including without prejudice to the generality of the
foregoing, any costs, expenses, losses or liabilities incurred by them in defending (whether successfully or otherwise) any civil proceedings
concerning our Company or its affairs in any court whether in the Cayman Islands or elsewhere.
We
intend to enter into indemnification agreements with each of our directors and officers. These agreements will require us to indemnify
these individuals to the fullest extent permitted under Cayman Islands law against liabilities that may arise by reason of their service
to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified, subject to
our Company reserving its rights to recover the full amount of such advances in the event that he or she is subsequently found to have
been negligent or otherwise have breached his or her trust or fiduciary duties to our Company or to be in default thereof, or where the
Cayman Islands courts have declined to grant relief.
The
form of underwriting agreement to be filed as Exhibit 1.1 to this registration statement will also provide for indemnification of us
and our officers and directors.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
ITEM
7. RECENT SALES OF UNREGISTERED SECURITIES
During
the past three years, we have issued and sold the following securities without registering such securities under the Securities Act.
We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of
the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding
sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.
Ordinary
Shares
Pursuant
to a group reorganization on December 28, 2021, the Registrant issued an aggregate of 11,999,999 Ordinary Shares, par value US$0.001,
as follows:
Securities/Purchaser |
|
Date
of Sale or Issuance |
|
Number
of Securities |
|
Consideration |
JE
Cleantech Global Limited, a company incorporated in the BVI with limited liability on November 19, 2018 and wholly-owned by Ms. Hong,
our CEO |
|
December
28, 2021 |
|
9,599,999
Ordinary Shares |
|
9,599,999
shares of JE Cleantech International Limited |
|
|
|
|
|
|
|
Triple
Business Limited, a company incorporated in the BVI on August 4, 2016 with limited liability, which is legally and beneficially owned
by Fuji Investment SPC, an Independent Third Party |
|
December
28, 2021 |
|
1,680,000
Ordinary Shares |
|
1,680,000
shares of JE Cleantech International Limited |
|
|
|
|
|
|
|
Ever
Bloom Properties Company Limited, a company incorporated in Samoa on November 14, 2017 with limited liability |
|
December
28, 2021 |
|
480,000
Ordinary Shares |
|
480,000
shares of JE Cleantech International Limited |
|
|
|
|
|
|
|
Aqua
Lady Group Limited, a company incorporated in the British Virgin Islands on 3 July 2017 with limited liability |
|
December
28, 2021 |
|
240,000
Ordinary Shares |
|
240,000
shares of JE Cleantech International Limited |
ITEM
8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See
“Exhibit Index” beginning on page II-3 of this registration statement.
|
(b) |
Financial
Statement Schedules |
All
supplement schedules are omitted because of the absence of conditions under which they are required or because the data is shown in the
financial statements or notes thereto.
ITEM
9. UNDERTAKINGS
The
undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements certificates
in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The
undersigned registrant hereby undertakes that:
|
1) |
For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time
it was declared effective. |
|
|
|
|
2) |
For
the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. |
EXHIBIT
INDEX
Exhibit
No. |
|
Description
of Document |
1.1 |
|
Form
of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to the Company’s Registration Statement on Form F-1
filed with the SEC on March 10, 2022) |
3.1 |
|
Amended
and Restated Memorandum of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Company’s Registration
Statement on Form F-1 filed with the SEC on March 10, 2022) |
3.2 |
|
Amended
and Restated Articles of Association of the Registrant (incorporated by reference to Exhibit 3.2 to the Company’s Registration
Statement on Form F-1 filed with the SEC on March 10, 2022) |
5.1 |
|
Opinion
of Conyers Dill & Pearman regarding the validity of securities being registered (incorporated by reference to Exhibit 5.1
to the Company’s Registration Statement on Form F-1 filed with the SEC on March 10, 2022) |
8.1 |
|
Opinion
of Conyers Dill & Pearman regarding certain Cayman Islands tax matters (incorporated by reference to Exhibit 8.1 to the Company’s
Registration Statement on Form F-1 filed with the SEC on March 10, 2022) |
10.1 |
|
Form
of Directors’ Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form F-1
filed with the SEC on March 10, 2022) |
10.2 |
|
Form
of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form F-1
filed with the SEC on March 10, 2022) |
10.3 |
|
Banking
Facility from United Overseas Bank Limited to JCS-Echigo Pte Ltd (incorporated by reference to Exhibit 10.4 to the Company’s
Registration Statement on Form F-1 filed with the SEC on March 10, 2022) |
10.4 |
|
Loan
Facility Agreement between Hong Bee Yin and JE Cleantech Holdings Limited (incorporated by reference to Exhibit 10.4 to the Company’s
Registration Statement on Form F-1 filed with the SEC on March 10, 2022) |
10.5 |
|
Audit
Committee Charter (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form F-1 filed with
the SEC on March 10, 2022) |
10.6 |
|
Nomination
Committee Charter (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form F-1 filed with
the SEC on March 10, 2022) |
10.7 |
|
Compensation
Committee Charter (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form F-1 filed with
the SEC on March 10, 2022) |
10.8 |
|
Form of Indemnification Escrow Agreement (incorporated by reference to Exhibit 10.8 to Amendment 1 to the Company’s Registration Statement on Form F-1 filed with the SEC on March 28, 2022) |
14 |
|
Code
of Ethics of the Registrant (incorporated by reference to Exhibit 14 to the Company’s Registration Statement on Form F-1 filed
with the SEC on March 10, 2022) |
21.1 |
|
List
of Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Company’s Registration Statement on Form
F-1 filed with the SEC on March 10, 2022) |
23.1 |
|
Consent of WWC, P.C.* |
23.2 |
|
Consent of Conyers Dill & Pearman (included in Exhibits 5.1 and
8.1) |
23.3 |
|
Consent of Rajah & Tann Singapore LLP (included as Exhibit 99.2) |
24.1 |
|
Power of Attorney (included on signature page) |
99.1 |
|
Opinion of Rajah & Tann Singapore LLP regarding Singapore legal matters (incorporated by reference to Exhibit 99.1 to Amendment 1 to the Company’s Registration Statement on Form F-1 filed with the SEC on March 28, 2022) |
99.2 |
|
Consent of Rajah & Tann Singapore LLP (incorporated by reference to Exhibit 99.2 to Amendment 1 to the Company’s Registration Statement on Form F-1 filed with the SEC on March 28, 2022) |
107 |
|
Filing Fee Table (incorporated by reference to Exhibit 107 to the Company’s Registration Statement on Form F-1 filed with the SEC on March 10, 2022) |
SIGNATURES
Pursuant
to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Singapore, on May 12, 2022.
|
JE
CLEANTECH HOLDINGS LIMITED |
|
|
|
|
By: |
/s/
HONG Bee Yin |
|
Name: |
HONG
Bee Yin |
|
Title:
|
Chief Executive Officer
(Principal
Executive Officer) |
|
By: |
/s/
LONG Jia Kwang |
|
Name:: |
LONG
Jia Kwang |
|
Title: |
Chief Financial Officer
(Principal
Financial and Accounting Officer) |
We,
the undersigned directors and executive officers of JE Cleantech Holdings Limited and its subsidiaries hereby severally constitute and
appoint HONG Bee Yin, singly (with full power to act alone), our true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution in him for him and in his name, place and stead, and in any and all capacities, to sign this Registration
Statement on Form F-1 and any and all amendments (including post-effective amendments) to this Registration Statement (or any other Registration
Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the
same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, and him, full power and authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and
on the dates indicated.
Date: |
May
12, 2022 |
|
/s/
HONG Bee Yin |
|
|
|
HONG
Bee Yin, Chief Executive Officer (Principal Executive Officer) and Executive Director |
|
|
|
|
Date: |
May
12, 2022 |
|
/s/
LONG Jia Kwang |
|
|
|
LONG
Jia Kwang, Chief Financial Officer (Principal Financial and Accounting Officer) and Executive Director |
|
|
|
|
Date: |
May
12, 2022 |
|
* |
|
|
|
Karmjit
Singh, Director |
|
|
|
|
Date: |
May
12, 2022 |
|
* |
|
|
|
TAY
Jingyan, Director |
|
|
|
|
Date: |
May
12, 2022 |
|
* |
|
|
|
KHOO
Su Nee, Director |
*
By |
/s/ HONG Bee Yin |
|
HONG
Bee Yin, Attorney-in-Fact |
|
SIGNATURE
OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT
Pursuant
to the Securities Act, the undersigned, the duly authorized representative in the United States of JE Cleantech Holdings Limited, has
signed this registration statement or amendment thereto on this 12th day of May 2022.
|
SCHLUETER
& ASSOCIATES, P.C. |
|
|
|
|
By:
|
/s/
Henry F. Schlueter |
|
Name: |
Henry
F. Schlueter |
|
Title:
|
Managing
Director
Authorized
Representative in the United States |
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