WESTCOMB FINANCIAL GROUP LIMITED - NRA … DATED 13 OCTOBER 2004 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. This Circular is issued by Westcomb Financial Group

CIRCULAR DATED 13 OCTOBER 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

This Circular is issued by Westcomb Financial Group Limited. If you are in any doubt as to the actionyou should take, you should consult your stockbroker, bank manager, solicitor, accountant or otherprofessional adviser immediately.

If you have sold all your shares in the capital of Westcomb Financial Group Limited, you should handthis Circular, the Notice of Extraordinary General Meeting and attached Proxy Form to the purchaseror to the stockbroker or to the bank or to the agent through whom you effected the sale for onwardtransmission to the purchaser.

The Singapore Exchange Securities Trading Limited assumes no responsibility for thecorrectness of any of the statements made, reports contained or opinions expressed in thisCircular.

WESTCOMB FINANCIAL GROUP LIMITED(Incorporated in the Republic of Singapore)(Company Registration No. 200104762G)

CIRCULAR TO SHAREHOLDERS

in relation to

(1) The proposed acquisition of 49% of the issued and paid up capital of Westcomb SecuritiesPte. Ltd. from SBI E2-Capital Asia Limited

(2) The proposed early release of the moratorium undertakings given by Participants of theOne-Off Share Incentive Scheme of Westcomb Financial Group Limited

Independent Financial Adviser to the Independent Directors ofWestcomb Financial Group Limited

NRA Capital Pte. Ltd.

IMPORTANT DATES AND TIMES

Last date and time for lodgement of Proxy Form : 27 October 2004 at 10 a.m.

Date and time of Extraordinary General Meeting : 29 October 2004 at 10 a.m.

Place of Extraordinary General Meeting : 5 Shenton Way,#09-07 UIC Building,Singapore 068808

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TABLE OF CONTENTS

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DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2. THE ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2.1 BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2.2 REQUIREMENTS OF CHAPTERS 9 OF THE LISTING MANUAL. . . . . . . . . . . . . 7

2.3 INFORMATION ON THE ACQUISITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.4 RATIONALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.5 PROFORMA FINANCIAL EFFECTS OF THE ACQUISITION. . . . . . . . . . . . . . . . . 10

3. THE PROPOSED EARLY RELEASE OF THE MORATORIUM UNDERTAKINGS GIVENBY PARTICIPANTS TO THE SCHEME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3.1 BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3.2 RATIONALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3.3 POTENTIAL FINANCIAL EFFECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3.4 PROPOSED EARLY RELEASE OF THE UNDERTAKINGS . . . . . . . . . . . . . . . . . 13

4. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST . . . . . . . . . . . . . . . 13

5. EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6. ACTION TO BE TAKEN BY SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

7. DIRECTORS’ RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

8. AUDIT COMMITTEE’S OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

9. IFA’S OPINION AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

10. INDEPENDENT DIRECTORS’ OPINION AND RECOMMENDATIONS . . . . . . . . . . . . . 16

11. CONSENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

12. DIRECTORS’ RESPONSIBILITY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

13. DOCUMENTS AVAILABLE FOR INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

APPENDIX 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

PROXY FORM

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DEFINITIONS

In this Circular, the following definitions apply throughout unless otherwise stated.

“Act” : The Companies Act, (Chapter 50) of Singapore as amendedfrom time to time

“Acquisition” : The acquisition of the 49% of the issued and paid up capital ofWestcomb Securities by the Company from SE2C Asiapursuant to the Sale and Purchase Agreement

“Audit Committee” : The audit committee of the Company comprising Teoh TeikKee, Teo Kiang Kok and Tan Soo Kiat

“Board” or “Board ofDirectors”

: The board of directors of the Company

“CDP” : The Central Depository (Pte) Limited

“Company” or “Westcomb” : Westcomb Financial Group Limited

“Completion Date” : The first business day falling five (5) days after (a) all theconditions precedent referred to the Sale and PurchaseAgreement (as set out in paragraph 2.3.1 of this Circular) aresatisfied or waived or (b) the date on which the MAS hasagreed to the withdrawal of the Letter of Undertaking,whichever is later, or such date as the parties may agree inwriting.

“Depositors” : The term “Depositors” shall have the meaning ascribed to it bysection 130A of the Act

“Director” : A director for the time being of the Company

“EGM” : The extraordinary general meeting of the Shareholders, noticeof which is set out on page 34 of this Circular

“EPS” : Earnings per Share

“E2-HK” : E2-Capital (Holdings) Limited

“Free Incentive Shares” : 5,000,004 Free shares given to the Participants pursuant tothe Scheme

“FY” or

“Financial Year”

: Financial year ended 31 December 2003

“Goodwill” : Goodwill Investment (B.V.I) Limited

“Group” : The Company and its subsidiaries

“IFA” or “NRA Capital” : NRA Capital Pte. Ltd.

“Independent Directors” : The independent directors of the Company, namely Teoh TeikKee, Teo Kiang Kok and Tan Soo Kiat

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“Independent Shareholders” : Shareholders other than Goodwill, SIIS Capital and Wong SinJust who are each deemed to be interested in the Acquisition,details of which are set out at page 13 of this Circular under theparagraph entitled “Directors’ And Substantial Shareholders’Interest”

“Latest Practicable Date” : 30 September 2004 being the latest practicable date prior tothe printing of this Circular

“Long-Stop Date” : As defined in the Sale and Purchase Agreement to mean 31October 2004

“MAS” : The Monetary Authority of Singapore

“NTA” : Net tangible assets

“NAV” : Net asset value

“One-Off Share IncentiveScheme” or the “Scheme”

: A one-off share incentive scheme (details of which are set outat page 105 of the prospectus dated 12 January 2004 inconnection with its initial public offering (“IPO”)) (the“Scheme”) was implemented by the Scheme Shareholders.

“Participants” : Participants of the Scheme

“SE2C” : SBI E2-Capital Limited

“SE2C Asia” : SBI E2-Capital Asia Limited

“Sale and PurchaseAgreement”

: The conditional Sale and Purchase Agreement entered intobetween the Company and SE2C Asia on 15 July 2004 inrespect of the Acquisition

“Sale Shares” : The 2,646,000 ordinary shares of par value S$1.00 eachrepresenting 49% of the total issued and paid up capital ofWestcomb Securities

“Scheme Shareholders” : Choo Chee Kong, Goodwill, SIIS Capital and WestcombProfits

“Shares” : Fully paid ordinary shares of par value S$1.00 in the capital ofthe Company

“Shareholders” : Registered holders of Shares except that where the registeredholder is CDP, the term “Shareholders” in relation to Sharesheld by CDP shall mean the persons named as depositors inthe Depository Register maintained by CDP and to whosesecurities accounts such Shares are credited

“SGX-ST” : Singapore Exchange Securities Trading Limited

“SIIS Capital” : SIIS Capital Holdings Limited

“Softbank Investment” : Softbank Investment International (Strategic) Limited

“Westcomb Capital” : Westcomb Capital Pte Ltd (formerly known as SBI E2-CapitalPte Ltd)

“Westcomb Securities” : Westcomb Securities Pte Ltd (formerly known as SBI E2-Capital Securities Pte Ltd)

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“Westcomb Profits” : Westcomb Profits Limited

“S$” or “$” and “cents” : Singapore dollars and cents respectively

“%” : Percentage or per centum

Any reference in this Circular to any enactment is a reference to that enactment as for the time beingamended or re-enacted. Any word defined under the Act or any statutory modification thereof and usedin this Circular shall have the meaning assigned to it under the said Act.

Words importing the singular number shall include the plural number where the context admits and viceversa. Words importing the masculine gender shall include the feminine gender where the contextadmits. Reference to persons shall, where applicable, include corporations.

Any reference to a time of a day in this Circular is a reference to Singapore time.

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WESTCOMB FINANCIAL GROUP LIMITED(Incorporated in the Republic of Singapore)

Company Registration No. 200104762G

Directors: Registered Office:

Teo Kiang Kok (Non-Executive Chairman)Choo Chee Kong (Executive Director/CEO)Aw Soon Beng (Executive Director/COO)Wong Sin Just ( Non-Executive Director)Lim Boon Soon (Non-Executive Director)Teoh Teik Kee (Independent Director)Tan Soo Kiat (Independent Director)

5 Shenton Way#09-11UIC BuildingSingapore 068808

13 October 2004

To the Members ofWESTCOMB FINANCIAL GROUP LIMITED

Dear Sir/Madam,

(1) THE PROPOSED ACQUISITION OF 49% OF THE ISSUED AND PAID UP CAPITAL OFWESTCOMB SECURITIES PTE. LTD. FROM SBI E2-CAPITAL ASIA LIMITED

(2) THE PROPOSED EARLY RELEASE OF THE MORATORIUM UNDERTAKINGS GIVEN BYPARTICIPANTS OF THE ONE-OFF SHARE INCENTIVE SCHEME OF WESTCOMBFINANCIAL GROUP LIMITED

1. INTRODUCTION

The Board of Directors proposes to seek the approval of Shareholders at an EGM for thefollowing:

(a) Proposed acquisition of the 49% of the issued and paid up capital of Westcomb Securitiesby the Company from SE2C Asia; and

(b) Proposed early release of the moratorium undertakings given by Participants of the One-OffShare Incentive Scheme of the Company.

The purpose of this Circular is to explain the reasons for, and to provide Shareholders withinformation relating to, the above proposals to be tabled for Shareholders approval at the EGM.

2. THE ACQUISITION

2.1 Background

On 12 July 2004, the Company announced the agreement reached with SE2C Asia on 9 July2004 on the principles of settlement of certain disputes between them and that pursuant tosuch principles of settlement had entered into a global settlement agreement on 15 July2004 (the “Settlement Agreement”) with, SE2C Asia; Choo Chee Kong and Wong Sin Just(both of whom are directors of the Company); Ong Tiang Lock (then a director of theCompany); Pang Seng Tuong and Loo Chin Keong (both of whom are executive officers ofthe Company); Westcomb Profits (a controlling shareholder of the Company); SIIS Capital(a substantial shareholder of the Company) and its parent company Softbank Investment;and Goodwill (then a controlling shareholder of the Company) and its parent companyE2-HK.

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The Settlement Agreement addresses, amongst other things, ownership of the Company’ssubsidiary Westcomb Securities. Contemporaneous with and pursuant to the SettlementAgreement, the Company and SE2C Asia had entered into a conditional sale and purchaseagreement (being the Sale and Purchase Agreement) pursuant to which SE2C Asia agreedto sell to the Company and the Company agreed to acquire from SE2C Asia the Sale Sharesrepresenting the entire of SE2C Asia’s 49% shareholding interest in Westcomb Securities.

On completion of the sale and purchase, Westcomb Securities will become a wholly-ownedsubsidiary of the Company.

The purchase consideration for the Sale Shares is S$4.9 million. The purchaseconsideration for the Sale Shares was negotiated on a “willing-buyer and willing-seller”basis.

The net tangible assets value attributable to the Sale Shares based on the audited financialstatements of Westcomb Securities for the financial year ended 31 December 2003 is S$2.9million.

This purchase consideration represents 52.73% of the latest audited NTA of the Group as at31 December 2003.

As at the date of the Sale and Purchase Agreement, Goodwill was a controlling shareholderof the Company (Goodwill has on 19 August 2004 divested 10.92% of its shareholdinginterests in the Company and currently owns 10.92% of the issued share capital of theCompany) owning 32,704,649 Shares representing 21.84% of the issued share capital ofthe Company.

Goodwill owns 49% of SE2C. SE2C Asia is wholly-owned by SE2C. Accordingly, as at thedate of the Sale and Purchase Agreement, SE2C Asia was an “interested person” of theCompany for purposes of the Chapter 9 of the Listing Manual. Accordingly, the Acquisitionfalls within the ambit of Chapter 9 of the Listing Manual and requires the approval of theShareholders at the EGM to be convened.

In view of the purchase consideration for the Acquisition and the relationship betweenGoodwill and the Company as at the date of the Sale and Purchase Agreement, theAcquisition attracts the application of Chapter 9 of the Listing Manual and requiresShareholders’ approval.

Pursuant to the requirements of Chapter 9 of the Listing Manual, NRA Capital has beenappointed to advise the Independent Directors on whether the Purchase Consideration isfair and reasonable for the purposes of the Acquisition and whether the Acquisition is onnormal commercial terms and whether it is prejudicial to the interests of the Company andthe Independent Shareholders.

An explanation of the applicable Listing Manual requirements, and the implications thereof,are set out in paragraph 2.2 below.

The Acquisition constitutes a “discloseable transaction” under Chapter 10 of the ListingManual and the appropriate announcement thereof was made in the announcement by theCompany of 12 July 2004. As the Acquisition is not a “major transaction” for purposes ofChapter 10 of the Listing Manual, approval of Shareholders is not required for purposes ofChapter 10 of the Listing Manual.

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2.2 Requirements of Chapters 9 of the Listing Manual

2.2.1 Chapter 9 of the Listing Manual

Under the provisions of Chapter 9 of the Listing Manual, where a listed company orany of its subsidiaries or associated companies which is an “entity at risk” (asdefined below) proposes to enter into a transaction with an “interested person” (asdefined below) of the company, an immediate announcement and/or shareholders’approval would be required in respect of the transaction if the value of thetransaction is equal or exceeds certain thresholds set out in Chapter 9 of the ListingManual.

In particular, an immediate announcement and shareholders’ approval is requiredfor an interested person transaction of a value equal to, or exceeds:–

(a) 5% of the listed company’s latest audited consolidated NTA; or

(b) 5% of the listed company’s latest audited consolidated NTA, when aggregatedwith other transactions entered into with the same interested person during thesame financial year.

For the purposes of aggregation, any transaction with an interested person which isbelow $100,000 shall be excluded.

For the purpose of Chapter 9 of the Listing Manual:–

(a) an “associated company” is defined as a company in which at least 20% butnot more than 50% of its shares are held by the listed company or the group;

(b) a “controlling shareholder” is defined as a person who:–

(i) holds directly or indirectly 15% or more of the nominal amount of all votingshares in the company; or

(ii) in fact exercises control over a company;

(c) an “entity at risk” is defined as:–

(i) the listed company;

(ii) a subsidiary of the listed company that is not listed on the SGX-ST or anapproved exchange; or

(iii) an associated company of the listed company that is not listed on theSGX-ST or an approved exchange, provided that the listed group, or thelisted group and its interested person(s), has control over the associatedcompany;

(d) an “interested person” is defined as a director, chief executive officer orcontrolling shareholder of the listed company or an associate of such director,chief executive officer or controlling shareholder;

(e) an “associate” in relation to an interested person who is a director, chiefexecutive officer, substantial shareholder or controlling shareholder includesan immediate family member (that is, the spouse, child, adopted-child,step-child, sibling or parent) of such director, chief executive officer, substantialshareholder or controlling shareholder, the trustees of any trust of which thedirector/his immediate family, the chief executive officer/his immediate family,substantial shareholder/his immediate family or controlling shareholder/hisimmediate family is a beneficiary or, in the case of a discretionary trust, is adiscretionary object, and any company in which the director/his immediatefamily, the chief executive officer/his immediate family, substantialshareholder/his immediate family or controlling shareholder/his immediatefamily has or have an aggregate interest (directly or indirectly) of 30% or more,and, where a controlling shareholder is a corporation, its subsidiary or holding

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company or fellow subsidiary or a company in which it and/or they have(directly or indirectly) an interest of 30% or more;

(f) an “approved exchange” is defined as a stock exchange that has rules whichsafeguard the interests of shareholders against interested person transactionsaccording to similar principles to Chapter 9; and

(g) an “interested person transaction” is defined as a transaction between anentity at risk and an interested person.

2.2.2 Implications of Chapter 9

As at the date of the Sale and Purchase Agreement, Goodwill was a controllingshareholder of the Company. Goodwill owns 49% of SE2C. SE2C Asia is wholly-owned by SE2C. Accordingly, as at the date of the Sale and Purchase Agreement,SE2C Asia was therefore an “interested person” of the Company for purposes of theChapter 9 of the Listing Manual.

Based on the Group’s latest audited accounts for the financial year ended 31December 2003, its NTA was approximately S$9.29 million.

As the purchase consideration of S$4.9 million for the Acquisition representsapproximately 52.73% of the latest audited consolidated NTA of the Group of S$9.29million as at 31 December 2003 and therefore exceeds the relevant threshold (being5% of the latest audited consolidated NTA of the Group as at 31 December 2003)prescribed under Rule 906(1)(a) of the Listing Manual, the Acquisition would besubject to the approval of shareholders of the Company under Chapter 9 of theListing Manual.

2.3 Information On the Acquisition

2.3.1 Conditions Precedent

The Acquisition is conditional upon the fulfilment of the following conditions on orprior to the Completion Date:

(a) the approval of the shareholders of the Company for the transactionscontemplated under the Sale and Purchase Agreement being obtained;

(b) the Company having obtained (if required), the approval of MAS and SGX-ST,for the sale and purchase of the Sale Shares; and

(c) MAS agreement to the withdrawal of the Letters of Undertaking (referred to inpage 111 of the prospectus dated 12 January 2004 issued by the Company inconnection with its initial public offering) issued by each of SoftbankInvestment and E2-HK in favour of MAS in connection with the grant of thecapital markets services licence to Westcomb Securities and WestcombCapital (“Letters of Undertaking”).

If any of the conditions precedent above is not fulfilled or waived on or before theLong-Stop Date, the time for the fulfilment thereof may be extended by mutualwritten agreement of the parties (the Company and SE2C Asia) and failingagreement within seven days after the Long-Stop Date, the Sale and PurchaseAgreement shall ipso facto cease to have any force and effect whatsoever andneither party shall have any claim against the other for costs, damages,compensation or otherwise arising out of the Sale and Purchase Agreement.

As at Latest Practicable Date, condition (c) above has been fulfilled whereasfulfilment of condition (b) will not be necessary as approval of MAS and SGX-ST isnot required for the Acquisition. MAS’ agreement to the withdrawal of the Letters ofUndertaking is subject to provision by Westcomb Capital and Westcomb Securities

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of bankers’ guarantees in favour of MAS in place of the Letters of Undertaking.Please refer to footnote 1 to paragraph 2.5 of this Circular for further information.

2.3.2 Purchase Consideration

The purchase consideration for the Acquisition will be paid by the Company in cash,to be drawn from the Group’s existing cash reserves. Accordingly, the Acquisitionwill not have any impact on the issued and paid up share capital of the Company.

2.3.3 Information on Westcomb Securities

Westcomb Securities was incorporated on 22 January 2003 and commenced itsoperations in April 2003. Westcomb Securities holds a capital markets serviceslicence under the Securities and Futures Act (Chapter 289 of Singapore) for dealingin securities. Westcomb Securities is engaged in underwriting and placement ofshares and provision of stockbroking services. Westcomb Securities is also aclearing member of the SGX-ST.

A summary of selected financial information of Westcomb Securities for financialyear 2003 and six months ended 30 June 2004 are as follows:

Audited UnauditedAs at

31 December 2003As at

30 June 2004S$’000 S$’000

Financial Position

Intangible asset 193 167

Cash and cash equivalents 5,745 11,249

Current assets 10,288 21,489

Current liabilities 4,663 10,132

Net current assets 5,625 11,357

Shareholders’ equity 6,038 6,994

Loan from immediate holding company — 5,000

Audited UnauditedPeriod from22 January

(date ofincorporation) to

31 December 2003

Period ended30 June 2004

S$’000 S$’000

Operating Performance

Revenue 2,858 6,865

Profit before tax 819 1,196

Profit after tax 638 956

2.4 Rationale

The Acquisition is in pursuance of the global settlement between the Company and SE2CAsia under the Settlement Agreement. On completion of the sale and purchase, WestcombSecurities will become a wholly-owned subsidiary of the Company. The Acquisition willenable the Company to have full shareholding ownership as well as full management controlof Westcomb Securities.

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The purchase consideration was negotiated between the Company and SE2C Asia on a“willing-buyer and willing-seller” basis and took into account the following:

(a) Westcomb Securities’ financial position, in particular, that it is profitable and has noexternal borrowings as well as the potential earnings having regard to the pipeline oftransactions; and

(b) the market valuation for other stockbroking units.

2.5 Proforma Financial Effects Of The Acquisition

The proforma financial effects of the Acquisition set out below are for illustration purposesonly and do not reflect the future financial position of the Group after the completion of theAcquisition.

The proforma financial effects of the Acquisition have been computed based on the auditedfinancial statements of the Group for the financial year ended 31 December 2003(“FY2003”) and the unaudited financial statements for the six months ended 30 June 2004(“HY2004”).

The Acquisition will not have any impact on the issued and paid up share capital of theCompany as the purchase consideration will be fully satisfied in cash.

For illustration purposes only, the proforma financial effects of the Acquisition on the Groupare as follows:

(a) Consolidated NTA per Share assuming:

(i) the Acquisition had been effected at the end of FY2003

Before theAcquisition

After theAcquisition

NTA (S$’000) 9,293 7,257

Number of Shares 125,000,100 125,000,100

NTA per Share (cent) 7.43 5.81

(ii) the Acquisition had been effected at the end of HY2004



NTA (S$’000) 19,335 17,781

Number of Shares 149,800,100 149,800,100

NTA per Share (cent) 12.91 11.87

(b) Consolidated Earnings per Share assuming:

(i) the Acquisition had been effected at the beginning of FY2003



Profit/(Loss) attributed to Shareholders adjusted forthe amortisation of goodwill *arising from theAcquisition (S$’000)

4,518 4,424

Profit/(Loss) attributed to Shareholders excludingthe amortisation of goodwill arising from theAcquisition (S$’000)

4,518 4,831

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Earnings/(Loss) per Share adjusted for theamortisation of goodwill *arising from theAcquisition (Cent)

3.61 3.54

Earnings/(Loss) per Share excluding theamortisation of goodwill arising from theAcquisition (Cent)

3.61 3.86

(ii) the Acquisition had been effected at the beginning of HY2004



Profit/(Loss) attributed to Shareholders adjusted forthe amortisation of goodwill *arising from theAcquisition (S$’000)

4,319 4,583

Profit/(Loss) attributed to Shareholders excludingthe amortisation of goodwill arising from theAcquisition (S$’000)

4,319 4,787

Earnings/(Loss) per Share adjusted for theamortisation of goodwill *arising from theAcquisition (Cent)

2.88 3.06

Earnings/(Loss) per Share excluding theamortisation of goodwill arising from theAcquisition (Cent)

2.88 3.20

Note(s):

* For purposes of illustration, goodwill amortisation is S$203,611 calculated based on a straight-line amortisation of goodwill of S$2,036,113 arising on the Acquisition over a period of five years.

(b) Gearing assuming

(i) the Acquisition had been effected at the end of FY2003



Total Borrowings(S$’000)

— 3,000(1)

Shareholders’ Funds(S$’000)

9,486 9,486

Gearing (times) Not applicable 0.32

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(ii) the Acquisition had been effected at the end of HY2004



Total Borrowings(S$’000)

— 3,000(1)

Shareholders’ Funds(S$’000)

19,502 19,502

Gearing (times) Not applicable 0.15

Note(s):

(1) The Acquisition will be funded by cash reserves of the Group. However, in connection with therelease of the Letters of Undertaking which is a condition precedent to the Acquisition, WestcombCapital and Westcomb Securities are in the process of obtaining bankers’ guarantees fromcertain banks (the “Banks”) in favour of the Authority in place of the Letters of Undertaking. ChooChee Kong, an Executive Director and CEO of the Company and his wife, Lim Sok Cheng Julie,have provided an interest-bearing loan of S$2 million and S$1 million respectively (collectivelythe “Loan”) to the Company as part of the interest-bearing fixed deposits which the Banks arerequesting to be pledged in favour of the Banks as security for issue of the bank guarantees.Interest is payable by the Company to Choo Chee Kong and Lim Sok Cheng, Julie at the samerate as interest is paid by the Banks on such fixed deposits.

3. THE PROPOSED EARLY RELEASE OF THE MORATORIUM UNDERTAKINGS GIVEN BYPARTICIPANTS TO THE SCHEME

3.1 Background

Pursuant to the Scheme, the Participants were given Free Incentive Shares by the SchemeShareholders as a gift in recognition of and to reward the employees of the Group for theirpast efforts and contributions to the performance and success of the Group. The gift of theFree Incentive Shares was subject to a moratorium undertaking given by the Participants notto dispose or sell the Free Incentive Shares for a period of within one year from the date oflisting of the Company, as well as an undertaking that the Participants shall transfer the FreeIncentive Shares in the event of his/her resignation from employment with the Group ortermination of his/her employment by the Group within one year of the date of listing of theCompany, to the Company which will hold the same for the benefit of selected employeesand on such terms as the Executive Committee shall deem fit (collectively the“Undertakings”).

Free Incentive Shares transferred to Company by Participants who have ceasedemployment with the Group will be redistributed to selected employees (save for employeeswho are Directors or substantial shareholders, or their associates) on such terms as theExecutive Committee shall deem fit.

In paragraph 10 of the Half-Year Announcement of the Financial Results of the Companymade on 28 July 2004, the Company had announced its intention to seek approval ofShareholders at an EGM for the early release of the Undertakings.

3.2 Rationale

Certain Participants have pursuant to the release in April 2004 of the full year financialresults of the Group for the financial year ended 31 December 2003, requested for the earlyrelease of the Free Incentive Shares from the Undertakings. Having regard to theperformance of the Group for the financial year ended 31 December 2003, the SchemeShareholders had in April 2004, notified the Company that they are prepared to accede tothe Participants’ request for early release of all the Free Incentive Shares.

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3.3 Potential Financial Effects

As announced in paragraph 10 of the Half-Year Announcement of the Financial Results ofthe Company made on 28 July 2004, the Council on Corporate Disclosure and Governance(“CCDG”) had in July 2004 announced the adoption of a new financial reporting standard(FRS 102) (the “New Standard”) which requires that share-based payments to theemployees of a company be accounted for as a compensation charge. The New Standardhas been legislated via the Companies (Accounting Standards) (Amendment No. 4)Regulations 2004 on 6 September 2004 and is applicable for listed entities with financialperiods commencing 1 January 2005.

Under the New Standard, transfer of equity shares of a company by its shareholders to thecompany’s employees are also considered as a share based payment so long as these arerelated to services provided to the Group. The New Standard requires accounting for suchtransactions if these are granted on or after 22 November 2002 and not yet vested on 1January 2005.

Consequently, unless the Undertakings are released prior to 31 December 2004, the NewStandard requires a compensation charge to be recognised in the financial statements of theCompany with effect from financial year ending 2005. The New Standard will also requireretrospective application for comparative figures to financial year ending 2005.

The compensation charge will be based on the fair value of the Free Incentive ShareScheme at the time of the grant of the award, which would be determined by an independentvaluer taking into account, amongst other things, the market value, and the terms andconditions upon which the shares were granted.

As at the date of this Circular, no valuation has been conducted on the Free IncentiveShares.

3.4 Proposed Early Release of the Undertakings

The Participants will be released from all their respective obligations under the Undertakingssubject to and upon the passing of the resolution to approve the early release of the sameby the Shareholders at the EGM.

Subject to the approval of the Shareholders at the EGM for the early release of theUndertakings, the Free Incentive Shares which are currently maintained in scrip form andheld by the Company, will be released to the Participants as soon as is reasonablypracticable after the EGM.

4. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST

As at the Latest Practicable Date, the interest of Directors in the Company and of substantialshareholders of the Company (being a Shareholder whose interests in the Company’s issuedshare capital is equal to or more than 5 per cent.) are as follows:–

Direct Interest Deemed InterestNumber of Shares % Number of Shares %

Directors

Teo Kiang Kok — — — —

Choo Chee Kong(1) 2,644,419 1.77 50,074,050 33.43

Aw Soon Beng — — — —

Wong Sin Just(2) — — 16,352,325 10.92

Lim Boon Soon — — — —

Teoh Teik Kee — — — —

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Direct Interest Deemed InterestNumber of Shares % Number of Shares %

Tan Soo Kiat — — — —

Substantial Shareholders

Westcomb Profits 50,074,050 33.43 — —

Goodwill 16,352,325 10.92 — —

SIIS Capital 11,060,489 7.38 — —

ECM Libra Investment Limited (“ELIL”) 16,352,324 10.92 — —

E2-HK(3) — — 16,352,325 10.92

Softbank Investment(4) — — 11,060,489 7.38

ECM Libra Investment Bank Limited(“ELIB”)(5) — — 16,352,324 10.92

ECM Libra Holdings Limited(“ELHL”)(5) — — 16,352,324 10.92

ECM Libra Berhad (“ELB”)(5) — — 16,352,324 10.92

Note(s):

(1) Choo Chee Kong is deemed to be interested in the Shares held by Westcomb Profits by virtue of his 53.26% interestin Westcomb Profits.

(2) Wong Sin Just is deemed to be interested in the Shares held by Goodwill, a wholly-owned subsidiary of E2-HK, byvirtue of his beneficial interests in E2-Capital Inc which has a 26.04% shareholding interest in E2-HK. E2-Capital Incis wholly-owned by a discretionary family trust of which Wong Sin Just and his family members are beneficiaries.

(3) Goodwill is 100% owned by E2-HK which is listed on the Hong Kong Stock Exchange. Accordingly, E2-HK is deemedto be interested in the Shares held by Goodwill.

(4) SIIS Capital is 100% owned by Softbank Investment, which is listed on the Hong Kong Stock Exchange. Accordingly,Softbank Investment is deemed to be interested in the Shares held by SIIS Capital.

(5) ELIL is wholly-owned by ELIB. ELIB is wholly-owned by ELHL, and ELHL is wholly-owned by ELB which is listed onthe Kuala Lumpur Stock Exchange. Accordingly, each of ELIB, ELHL and ELB is deemed to be interested in theShares held by ELIL.

SE2C Asia is wholly owned by SE2C. SE2C is owned by Goodwill (which owns 49% of SE2C),SIIS Capital (which owns 49% of SE2C) and Wong Sin Just (who owns 2% of SE2C).

As at the date of the Sale and Purchase Agreement, Goodwill held 21.84% of theissued share capital of the Company whereas SIIS Capital held 14.76% of the issuedshare capital of the Company.

Wong Sin Just is deemed to be interested in the shares held by Goodwill in the Company by virtueof his beneficial interests in E2-Capital Inc which has a 26.04% shareholding interest in E2-HKwhich in turn owns 100% of Goodwill.

Accordingly, Goodwill, SIIS Capital and Wong Sin Just are deemed to be interested in theAcquisition.

Save as disclosed in this Paragraph 4 of this Circular, none of the Directors and substantialshareholders has any interest, direct or indirect, in the Acquisition.

None of the Directors and substantial shareholders has any interest, direct or indirect, in theproposed early release of the Undertakings on the One-Off Incentive Share Scheme.

5. EXTRAORDINARY GENERAL MEETING

The EGM, notice of which is set out on page 34 of this Circular, is being convened at 5 ShentonWay, #09-07 UIC Building, Singapore 068808 on 29 October 2004 at 10 a.m., for the purpose ofconsidering and, if thought fit, passing, with or without any modification the resolutions set outtherein.

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6. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who are unable to attend the EGM and wish to appoint a proxy to attend and voteat the EGM on their behalf will find attached to this Circular a Proxy Form which they arerequested to complete, sign and return in accordance with the instructions printed thereon assoon as possible and in any event so as to arrive at the registered office of the Company not lessthan 48 hours before the time fixed for the EGM. The sending of a Proxy Form by a Shareholderdoes not preclude him from attending and voting in person at the EGM if he finds that he is ableto do so.

7. DIRECTORS’ RECOMMENDATION

(a) The Acquisition

The Directors (save for Mr Wong Sin Just, who is deemed to be interested in the transactionby virtue of his interest in Goodwill and has abstained from making any recommendation onthe proposed Acquisition) have fully considered the rationale set out at paragraph 2.4 of thisCircular for the proposed Acquisition, and are in support of the same which they believe arein the interest of the Company and the Shareholders, and recommend that you vote in favourof the resolution to approve the Acquisition as set out in the Notice of EGM at page 34 of thisCircular.

Goodwill and SIIS Capital will abstain, and Mr Wong Sin Just will also abstain, and each willensure that its/his associates abstain from voting on the resolution to approve the Acquisitionas set out on page 34 of this Circular.

(b) The Proposed Early Release of the Undertakings on the One-Off Share Incentive Scheme

The Directors have fully considered the rationale set out at paragraph 3.2 of this Circular forthe proposed early release of the undertakings on the One-Off Share Incentive Scheme, andare in unanimous support of the same which they believe are in the interest of the Companyand the Shareholders.

The Board of Directors recommends that you vote in favour of the resolution to approve theproposed early release of the Undertakings under the Scheme as set out in the Notice ofEGM at page 34 of this Circular.

8. AUDIT COMMITTEE’S OPINION

The Audit Committee has reviewed the rationale and terms of the Acquisition and is of the opinionthat the Acquisition is on normal commercial terms and is not prejudicial to the interests of theCompany and the Independent Shareholders.

9. IFA’S OPINION AND RECOMMENDATIONS

Pursuant to Chapter 9 of the SGX-ST Listing Manual, NRA Capital has been appointed as theindependent financial adviser to the Independent Directors to advise them on whether theAcquisition is on normal commercial terms and whether it is prejudicial to the interests of theCompany and the Independent Shareholders. A copy of their letter to the Independent Directorsis set out in Appendix 1 to this Circular.

NRA Capital having reviewed and examined the following factors which they consider to bepertinent and to have a bearing on their assessment of the Acquisition:–

(a) The Directors’ commercial rationale for the Proposed Acquisition as set out in paragraph 2.4of the Circular.

(b) The Company’s announcement on 12 and 20 July 2004 regarding the SettlementAgreement.

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SE2C Asia and Westcomb have on 9 July 2004 reached an agreement on the principles ofsettlement, and that pursuant to such principles of settlement, entered into the SettlementAgreement. The principles of settlement cover, amongst other things, the business andmanagement arrangements of the Westcomb Group, which includes Westcomb Securities,the stockbroking subsidiary of Westcomb.

The principles of settlement reflect the parties’ common view on the future direction andstrategic growth of the companies in the Westcomb Group. The two Hong Kongshareholders of Westcomb, Softbank Investment and E2-HK, are agreeing to exit fromWestcomb. It is anticipated that the exit will be gradual, and would be completed in 2005;

(c) The time and cost of incorporating a subsidiary of similar size, business, and obtaining acapital market services licence from the Monetary Authority of Singapore to fulfill its currentobligation based on its confirmed order books on hand;

(d) The short operating history of Westcomb Securities which has only been incorporated on 22January 2003 compared to the substantially longer years of the Listed Peer Group whichcould suggest that its operating efficiencies are in the process of being optimized. Thedifference between Westcomb Securities and its Listed Peer Group in that they have a largeremisier/dealer base of a few hundred for GK Goh Holdings Limited and Kim Eng HoldingsLtd to more than 1,000 for UOB-Kay Hian Holdings Limited to just under 10 for WestcombSecurities as possible areas for differences in their financial ratios on which our comparisonsare made; and

(e) The Proposed Acquisition is both price to book accretive as well as earnings accretive for theGroup.

Based on the closing share price on 14 September 2004, the Company’s Shares are tradingat a 5.47 times based on a price to book basis of valuation (“Price to Book”). The ProposedAcquisition is at 1.71 times Price to Book (based on the NTA of Westcomb Securities forFY2003) and 1.29 times Price to Book (based on the forecast NTA for Westcomb Securitiesfor FY2004).

Similarly, the Company is (as at 14 September 2004) trading at a price earnings ratio(“PER”) of 11.50 times as compared to Westcomb Securities’ implied forecast PER of 5.2times for FY2004.

NRA Capital is of the view that the Acquisition is on normal commercial terms and is notprejudicial to the interests of the Company and the Independent Shareholders.Accordingly, NRA Capital has advised the Independent Directors to recommend thatIndependent Shareholders vote in favour of the resolutions to approve the Acquisition atthe EGM, notice of which is set out on page 34 of the Circular.

10. INDEPENDENT DIRECTORS’ OPINION AND RECOMMENDATIONS

The Independent Directors wish to draw the attention of the Independent Shareholders to theproforma financial effects in paragraph 2.5 of the Circular in the context of the Directors’commercial rationale for the Acquisition in paragraph 2.4 of the Circular and the advice of the NRACapital.

Having considered the terms and rationale of the Acquisition and the advice of NRA Capital, theIndependent Directors are of the opinion that the Acquisition is on normal commercial terms andis not prejudicial to the interests of the Company and the Independent Shareholders. Accordingly,the Independent Directors recommend that Independent Shareholders vote in favour of theresolution in respect of the Acquisition as set out in this Circular.

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It should be noted that in rendering their advice and giving their recommendation to theIndependent Directors, NRA Capital has not had regard to the specific investment objectives,financial situation or unique needs and constraints of any Shareholder. As different Shareholderswould have different investment objectives, any individual Shareholder who may require specificadvice in relation to his investment portfolio should consult his stockbroker, bank manager,solicitor, accountant or other professional advisers.

11. CONSENT

The independent financial adviser to the Independent Directors, NRA Capital, has given and hasnot withdrawn its written consent to the issue of this Circular with the inclusion herein of andreferences to its name, letter of advice as set out in Appendix 1 hereto in the form and context inwhich it appears in this Circular and to act in such capacity in relation to this Circular.

12. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the accuracy of theinformation given and confirm that, having made all reasonable enquiries, to the best of theirknowledge and belief, the facts stated and opinions expressed in this Circular are fair andaccurate and there are no material facts the omission of which would make any statement in thisCircular misleading.

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the principal business office of theCompany at 5 Shenton Way, #09-07 UIC Building, Singapore 068808, during normal businesshours from the date of this Circular up to and including the date of the EGM:

(a) the Sale and Purchase Agreement;

(b) the Settlement Agreement; and

(c) Consent of Scheme Shareholders for early release of the Moratorium Undertakings.

Yours faithfully

for and on behalf of the Board of DirectorsChoo Chee KongExecutive Director/CEOWESTCOMB FINANCIAL GROUP LIMITED

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APPENDIX 1

LETTER FROM NRA CAPITAL PTE. LTD. TO THE INDEPENDENT DIRECTORS

22 September 2004

PRIVATE AND CONFIDENTIAL

To the Independent Directors ofWestcomb Financial Group Limited5 Shenton Way #09-11UIC BuildingSingapore 068808

Dear Sirs/Mesdames

WESTCOMB FINANCIAL GROUP LIMITED (“WESTCOMB” OR THE “COMPANY”) –PROPOSED ACQUISITION OF THE REMAINING 49 PER CENTUM (“%”) SHAREHOLDING INWESTCOMB SECURITIES PTE LTD (THE “PROPOSED ACQUISITION”) FROM INTERESTEDPERSONS

1. INTRODUCTION

NRA Capital Pte. Ltd. (“NRA Capital” or the “IFA”) was appointed by the Independent Directors ofthe Company to advise them on whether the Proposed Acquisition is on normal commercial termsand whether it is prejudicial to the interests of the Company and its Shareholders who are notdeemed interested in the transaction (the “Independent Shareholders”). The specific terms ofreference for NRA Capital are set out in the section below entitled “The Role of NRA Capital”.

This letter, which is to be included in the circular to be sent to Shareholders of the Company inrespect of the Proposed Acquisition (the “Circular”), sets out, inter alia, our understanding of theProposed Acquisition, the information that we had relied upon and its related basis andassumptions, our evaluative criteria and our findings and conclusions in respect of the ProposedAcquisition.

Terms used herein shall, unless the context otherwise requires, have the same meanings asdefined in the Circular.

2. BACKGROUND

On 12 July 2004, the Company announced that it had reached an agreement with SBI E2-CapitalAsia Limited (“SE2C Asia”) on 9 July 2004 on the principles of settlement, resulting in SE2C Asiaoffering to discontinue, with liberty to restore, the writ of summons taken out by SE2C Asia in June2004. The principles of settlement cover, amongst other things, the business and managementarrangements of the Company and its subsidiaries (the “Group”), which include WestcombSecurities Pte Ltd (“Westcomb Securities”), the stockbroking subsidiary of the Group.

On 20 July 2004, the Company further announced that it had entered into a global settlementagreement on 15 July 2004 (the “Settlement Agreement”) with: SE2C Asia; Messrs Choo CheeKong and Wong Sin Just (both of whom are directors of the Company); Mr Ong Tiang Lock (thena director of the Company); Messrs Pang Seng Tuong and Loo Chin Keong (both of whom areexecutive officers of the Company); Westcomb Profits Limited (“Westcomb Profits”) (a controllingshareholder of the Company); SIIS Capital Holdings Limited (“SIIS Capital”) (then a substantialshareholder of the Company) and its parent company Softbank Investment International(Strategic) Limited (“Softbank Investment”); and Goodwill Investment (B.V.) Limited (“Goodwill”)

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(a substantial and then a controlling shareholder of the Company) and its parent companyE2-Capital (Holdings) Limited (“E2-HK”).

The Settlement Agreement addresses, amongst other things, ownership of the Company’ssubsidiary Westcomb Securities, formerly known as SBI E2-Capital Securities Pte Ltd.Contemporaneous with and pursuant to the Settlement Agreement, the Company and SE2C Asiahad entered into a conditional sale and purchase agreement (the “Sale and PurchaseAgreement”) pursuant to which SE2C Asia agreed to sell to the Company and the Companyagreed to acquire from SE2C Asia the Sale Shares representing the entire of SE2C Asia’s 49%shareholding interest in Westcomb Securities.

On completion of the sale and purchase, Westcomb Securities, which is currently 51% owned, willbecome a wholly-owned subsidiary of the Company.

The purchase consideration for the 2,646,000 ordinary shares of par value S$1.00 (“Sale Shares”)representing 49% of the total issued and paid up capital of Westcomb Securities is S$4.9 million.The purchase consideration for the Sale Shares was negotiated on a “willing-buyer andwilling-seller” basis.

The net tangible assets (“NTA”) value attributable to the Sale Shares based on the auditedfinancial statements of Westcomb Securities for the financial year ended 31 December 2003 isS$2.9 million.

As at the date of the Sale and Purchase Agreement, Goodwill is a controlling shareholder of theCompany (Goodwill has on 19 August 2004 divested 10.92% of its shareholding interests in theCompany and currently owns 10.92% of the issued share capital of the Company) owning32,704,649 Shares representing 21.84% of the issued share capital of the Company.

Goodwill owns 49% of SBI E2-Capital Limited (“SE2C”). SE2C Asia is wholly-owned by SE2C.Accordingly, as at the date of the Sale and Purchase Agreement, SE2C Asia is therefore an“interested person” of the Company for purposes of the Chapter 9 of the Singapore ExchangeSecurities Trading Limited (“SGX-ST”) Listing Manual (the “Listing Manual”).

As the purchase consideration of S$4.9 million for the Proposed Acquisition representsapproximately 52.7% of the latest audited consolidated NTA of the Group of S$9.29 million as at31 December 2003 and therefore exceeds the relevant threshold (being 5% of the latest auditedconsolidated NTA of the Group as at 31 December 2003) prescribed under Rule 906(1)(a) of theListing Manual, the Proposed Acquisition would be subject to the approval of shareholders of theCompany under Chapter 9 of the Listing Manual.

As Mr Wong Sin Just, by virtue of his beneficial interests in E2-Capital Inc which has a 26.04%interest in E2-HK which in turn owns 100% of Goodwill, he is deemed interested in the shares heldby Goodwill and is deemed an associate of the Vendors, he will refrain from making anyrecommendation on the Proposed Acquisition. Goodwill and SIIS Capital will abstain, and MrWong Sin Just will also abstain and will ensure that his associates abstain from voting on theresolution to approve the Proposed Acquisition.

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3. INFORMATION OF WESTCOMB SECURITIES

Principal activities and business overview:

Westcomb Securities holds a capital markets services licence under the Securities and FuturesAct (Chapter 289 of Singapore) for dealing in securities. Westcomb Securities is engaged inunderwriting and placement of shares and provision of stockbroking services. WestcombSecurities is also a clearing member of the SGX-ST.

Directors and management team of Westcomb Securities:

The directors as at the Latest Practicable Date are:

Choo Chee KongWong Sin JustWatt Wai MeiAw Soon BengYeo See Meng

The current management responsible for the overall management of Westcomb Securities are:

Mr Yeo See Meng

Mr Yeo See Meng is in-charge of the sales team of Westcomb Securities. He arranges theplacement and/or underwriting of shares in respect of transactions where Westcomb Securitiesact as placement agent and/or underwriter.

Ms Watt Wai Mei

Ms Watt Wai Mei is in charge of the backroom support operations and is responsible for thefinance, credit control, operations, information technology and human resource/administrationfunctions.

Except for Mr Yeo See Meng and Ms Watt Wai Mei, the directors of Westcomb Securities are alsodirectors of the Company.

Risk factors:

As Westcomb Securities is currently a subsidiary of the Group, the Proposed Acquisition is notexpected to increase the Group’s risks other than any risks attributable to the increase in theshareholding of the Group in Westcomb Securities from 51% to 100%.

Further, we believe that the risk factors affecting the Group, as highlighted in the Company’sprospectus dated 12 January 2004 issued in connection with the Company’s initial public offeringon the SGX-ST (the “Prospectus”), are also applicable to the business and operations ofWestcomb Securities. It is recommended that Independent Directors refer to the entire section ofRisk Factors on pages 28 to 35 of the Prospectus.

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Shareholding structure:

The shareholding structure of Westcomb Securities prior to the Proposed Acquisition is as follows:–

WestcombProfits Limited

Choo Chee KongGoodwill Investment(B.V.I.) Limited

E2-Capital (Holdings)Limited

E2-Capital Inc

n sWong Si Ju t

Goodwill International(Holdings) Limited and

Bo Hing Limited

SIIS Capital HoldingsLimited

Softbank InvestmentInternational (Strategic)

Limited

SBI E2-Capital AsiaLimited

SBI E2-CapitalLimited

Westcomb Financial Group Limited

WestcombSecurities

Pte Ltd

2%

10.92%

100%

49%

51%

1.77%7.38%

26.04%

100%*

100% 100%

26.45%

49%

53.26%

33.43%

49%

ECM Libra InvestmentsLimited (formerly known as

Bigfield InvestmentsLimited)

ECM Libra InvestmentBank Limited

ECM Libra Berhad

ECM Libra HoldingsLimited

100%

10.92%

100%

100%

Note(s)

* E2-Capital Inc is wholly-owned by a discretionary family trust of which Wong Sin Just and his family members are beneficiaries.

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Westcomb’s interest in Westcomb Securities include one share each held on-trust in the sharecapital of Westcomb Securities by Messrs Pang Seng Tuong and Loo Chin Keong.

Financial Highlights:

Some of the key financials as extracted from the audited financial results of Westcomb Securitiesfor the financial period from 22 January (date of incorporation) to 31 December 2003, of which itsentirety should be read concurrently with the notes and assumptions as set out in the financialstatements, and the management accounts for the period ended 30 June 2004, are as follows:–

Audited UnauditedAs at

31 December 2003As at

30 June 2004S$’000 S$’000

Financial Position

Intangible asset 193 167

Cash and cash equivalents 5,745 11,249

Current assets 10,288 21,489

Current liabilities 4,663 10,132

Net current assets 5,625 11,357

Shareholders’ equity 6,038 6,994

Loan from immediate holding company — 5,000

AuditedPeriod from

22 January (date ofincorporation) to

31 December 2003

UnauditedPeriod ended30 June 2004

S$’000 S$’000

Operating Performance

Revenue 2,858 6,865

Profit before tax 819 1,196

Profit after tax 638 956

More information including, inter alia, the principal business and financial performance ofWestcomb Securities are set out in Section 2.3.3 of the Circular.

4. RATIONALE OF THE PROPOSED ACQUISITION

It is important for the Independent Shareholders to understand the background of and therationale for the Company in undertaking the Proposed Acquisition. Accordingly, we recommendthat you advise Independent Shareholders to read carefully the full text of the Company’srationale for undertaking the Proposed Acquisition and the background leading to the decision,which are set out in Section 2.4 of the Circular and as highlighted below:–

“The Acquisition is in pursuance of the global settlement between the Company and SE2C Asiaunder the Settlement Agreement. On completion of the sale and purchase, Westcomb Securitieswill become a wholly-owned subsidiary of the Company. The Acquisition will enable the Companyto have full shareholding ownership as well as full management control of Westcomb Securities.

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The purchase consideration was negotiated between the Company and SE2C Asia on a“willing-buyer and willing-seller” basis and took into account the following:

(a) Westcomb Securities’ financial position, in particular, that it is profitable and has no externalborrowings as well as the potential earnings having regard to the pipeline of transactions;and

(b) The market valuation for other stockbroking units.”

5. THE PROPOSED ACQUISITION

The principal terms of the Proposed Acquisition are summarised below (more details are set outin Section 2.3 of the Circular):–

Purchase Consideration

The purchase consideration for the Proposed Acquisition will be paid by the Company in cash, tobe drawn from the Group’s existing cash reserves. Accordingly, the Proposed Acquisition will nothave any impact on the issued and paid up share capital of the Company.

As disclosed in the Circular, the Purchase Consideration was arrived at on a willing-buyer andwilling-seller basis.

Conditions Precedent

The Proposed Acquisition is conditional upon the fulfilment of the following conditions on or priorto the Completion Date:

(i) the approval of the shareholders of the Company for the transactions contemplated underthe Sale and Purchase Agreement being obtained;

(ii) the Company having obtained (if required), the approval of The Monetary Authority ofSingapore (“MAS”) and SGX-ST, for the sale and purchase of the Sale Shares; and

(iii) MAS’ agreement to the withdrawal of the Letters of Undertaking (referred to in page 111 ofthe prospectus dated 12 January 2004 issued by the Company in connection with its initialpublic offering) issued by each of Softbank Investment and E2-HK in favour of MAS inconnection with the grant of the capital markets services licence to Westcomb Securities andWestcomb Capital Pte Ltd (“Westcomb Capital”).

If any of the conditions precedent above is not fulfilled or waived on or before the Long-Stop Date(as defined in the Circular), the time for the fulfilment thereof may be extended by mutual writtenagreement of the parties (the Company and SE2C Asia) and failing agreement within seven daysafter the Long-Stop Date, the Sale and Purchase Agreement shall ipso facto cease to have anyforce and effect whatsoever and neither party shall have any claim against the other for costs,damages, compensation or otherwise arising out of the Sale and Purchase Agreement. As at theLatest Practicable Date, only condition (iii) above has been fulfilled. MAS’ agreement to thewithdrawal of the Letters of Undertaking is subject to provision by Westcomb Capital andWestcomb Securities of bankers’ guarantees in favour of MAS in place of the Letters ofUndertaking. Please refer to footnote 1 to paragraph 2.5 of the Circular for further information.

Other relevant terms in the Settlement Agreement

(a) Non-Competition Clause

Subject to the provisions of a non-competition agreement dated 9 December 2003 enteredinto between the Company, E2-HK and Softbank Investment, the parties agree that as at thedate of execution of the Settlement Agreement, each party shall be entitled to carry onbusiness, whether in Singapore or elsewhere, in competition with any other party.

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(b) Divestment of Interest in the Company

Each of Softbank Investment (in respect of SIIS Capital), E2-HK (in respect of Goodwill),SIIS Capital and Goodwill undertakes that it will, subject to certain terms and conditions,divest its respective stake in the capital of the Company over two tranches to partiesunrelated or unconnected to Softbank Investment, E2-HK, SIIS Capital, Goodwill and/orSE2C Asia, together with, and/or represented by Mr Wong Sin Just and/or Mr Ong TiangLock. The first tranche comprises 27,412,813 shares in the capital of the Company by 19August 2004 and the second tranche of the remaining shares held in the capital of theCompany by 7 February 2005. As at the Latest Practicable Date, the first tranche shares hasbeen divested.

6. THE ROLE OF NRA CAPITAL

NRA Capital was appointed by the Independent Directors of the Company to advise them, for thepurposes of Chapter 9 of the Listing Manual, on whether the Proposed Acquisition highlighted inthe section “The Acquisition” on pages 5 to 12 of the Circular is on normal commercial terms andwhether it is prejudicial to the interests of the Company and its Independent Shareholders.

We were not involved in any aspect of the negotiations pertaining to the ProposedAcquisition highlighted above, nor were we involved in the deliberations leading up to thedecision by the Board of Directors to enter into the Proposed Acquisition with theInterested Persons and its subsequent actions relating thereof. The objective of this letteris to purely form an independent opinion, for the purposes of Chapter 9 of the ListingManual on whether the Proposed Acquisition, being an interested person transaction, is onnormal commercial terms and whether it is prejudicial to the interests of the Company andthe Independent Shareholders. It is not within our terms of reference to comment on thecommercial merits and/or risks of the Proposed Acquisition, nor is it within our terms ofreference to comment on the financial merits and/or risks of the Proposed Acquisitionwhere the assessment of such financial merits and/or risks involves our reviewing ofnon-publicly available financial information of Westcomb Securities (including financialprojections) to which we have no access and with which we have not been furnished. It isnot within our terms of reference to compare the relative merits of the ProposedAcquisition vis-a-vis any alternative transaction previously considered by the Company ortransactions that the Company may consider in the future, and as such, we do not expresstheir views in arriving at our recommendation. The commercial and financial merits and/orrisks of the Proposed Acquisition are solely the responsibility of the Directors, althoughwe may draw upon their views in arriving at our recommendation.

We do not, by this letter, warrant and take any responsibility for any statement made,opinions expressed or reports contained in the Circular, or the merits, commercial orotherwise, of the Proposed Acquisition, other than to form an opinion, for the purposes ofChapter 9 of the Listing Manual, on whether the Proposed Acquisition is on normalcommercial terms and whether it is prejudicial to the interests of the Company andIndependent Shareholders. We have not conducted a comprehensive independent reviewof the business, operations or financial condition of the Company, Westcomb Securities orthe Group. Furthermore, the scope of our appointment does not require us to express, andwe do not express a view on the future growth prospects of the Company, WestcombSecurities, the Group or any other related or associated companies following the ProposedAcquisition. We are therefore not expressing any opinion herein as to the prices at whichthe Shares of the Company may trade upon completion of the Proposed Acquisition or thefuture performance of the Company, Westcomb Securities and the Group.

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In formulating our opinion and recommendation, we have relied to a considerable extenton the information set out in the Circular, other public information collated by us and theinformation, opinions, facts and statements provided to us by Westcomb Securities, theCompany and its other professional advisers. We have also relied on the informationcontained in the various announcements made by the Company in relation to the ProposedAcquisition. Whilst care has been exercised in reviewing the information we have reliedupon, we have not independently verified the information. Nevertheless, we have madesuch enquiries and judgment as we deemed necessary and have found no reason to doubtthe accuracy of such information.

We have also relied on the responsibility statement of the Directors (including those who havebeen delegated detailed supervision of the Circular) that the Circular and all documents relatingto the Circular have been seen and approved by them and they individually and collectively acceptfull responsibility for the accuracy of the information given therein and confirm, having made allreasonable enquiries, that to the best of their knowledge and belief, the facts stated and theopinions expressed in the Circular are fair and accurate in all material respects as of the datehereof and there are no material facts the omission of which would make any statements in theCircular misleading.

Where any information has been extracted from published or publicly available sources orotherwise based on information provided by the Company, the sole responsibility of the Directorshas been to ensure that, having made all reasonable enquiries, such information was accuratelyextracted from these sources or, as the case may be, reflected or reproduced in the Circular.

In rendering our advice, we have not considered the specific investment objectives, financialsituation, tax position or unique needs and constraints of any Shareholder. As differentShareholders will have different investment positions and objectives, we recommend that anyindividual Shareholder who may require specific advice in relation to his investment portfolioshould consult his stockbroker, bank manager, solicitor, accountant or other professional adviser.

We consider that we have reviewed sufficient information to enable us to reach an informed viewregarding the fairness and reasonableness of the terms of the Proposed Acquisition as providedto us and as contained in the Circular and to provide us with a reasonable basis for our opinion.

7. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION

The proforma financial effects of the Proposed Acquisition are set out in the section “ProformaFinancial Effects of the Acquisition” of the Circular. The proforma financial effects containedtherein and below are for illustrative purposes only and do not reflect the future financial positionof the Group after the completion of the Proposed Acquisition.

Issued Share Capital

The Proposed Acquisition will not have any impact on the issued and paid up share capital of theCompany as the purchase consideration will be fully satisfied in cash.

Net Tangible Assets

A summary of the proforma NTA of the Group as at 30 June 2004 adjusted to assume theProposed Acquisition had taken place on 30 June 2004, is as follows:–

S$’000

NTA as at 30 June 2004 19,335

Minority interest 3,345

Purchase Consideration (4,900)

Adjusted NTA as at 30 June 2004 17,780

Number of shares as at the Latest Practicable Date 149,800,100

NTA Per Share before the Proposed Acquisition (cents) 12.91

Adjusted NTA Per Share after the Proposed Acquisition (cents) 11.87

25

Earnings Per Share

A summary of the proforma profit and loss of the Group for the six months ended 30 June 2004(“1H FY2004”), assuming the Proposed Acquisition had taken place on 1 January 2004, is asfollows:–

S$’000

Profit for the six months ended 30 June 2004 4,319

Goodwill to be amortised (204)

Minority interest share of profits 468

Adjusted Profit for 1H FY2004 4,583

Number of shares as at the Latest Practicable Date 149,800,100

Adjusted Earnings Per Share before the Proposed Acquisition (cents) 2.88

Adjusted Earnings Per Share after the Proposed Acquisition (cents) 3.06

Share price as at 14 September 2004 (cents) 41.50

Price Earnings Ratio based on the adjusted earnings per share after the ProposedAcquisition as highlighted above and the closing share price of the Company’sshares on 14 September 2004 (times) 6.78

8. EVALUATION OF THE PROPOSED ACQUISITION

In evaluating the Proposed Acquisition as highlighted in the section “The Acquisition” of theCircular is on normal commercial terms and not prejudicial to the interest of the Company and itsIndependent Shareholders, we had given due consideration to the rationale of the ProposedAcquisition, the earnings and price to earnings ratio (the “PER”) of the share to be acquired, thenet asset backing for each of the shares to be acquired, and the comparison between the cost ofthe Proposed Acquisition and similar acquisitions and the peer review.

(a) Earnings

One of the traditional methods of valuing an ongoing business that is listed on a recognisedstock exchange would be to look at the company’s price earnings ratio, both on the historicas well as the prospective basis. On the historic basis, analyst would be comparing the lastaudited and/or announced unaudited net profit after tax as compared to the company’straded share price. On the prospective basis, analysts would make a forecast (or summarisethe forecasts by other analysts) of the company’s net profit after tax for the current and futurefinancial years and compare it with the company’s traded share price. By utilising thismethod of evaluation, an analyst would be able to form a view on the market value of thecompany’s shares as traded on the stock exchange.

Independent Directors should note that stock-broking companies are not normally valued onPER terms as their earnings are generally not within the control of the companies but areusually a function of the stock market capitalization and market turnover which in turn isgreatly influenced by the global and local economic outlook as well as global and domesticinterest rate trends. However, we have compared the PERs of Westcomb Securities andWestcomb to its listed peers to provide an alternative method of evaluation to form ouropinion. Charts 1 to 3 below illustrate, the high correlation between stock market’sperformance and GDP growth as well as GDP growth versus market turnover, and GDPgrowth versus the growth in new listings. The Independent directors should also note thatany comparison made with respect to the listed peer group in Singapore comprising GK GohHoldings Limited, Kim Eng Holdings Ltd and UOB-Kay Hian Holdings Limited (the “ListedPeer Group”) serves as an illustrative guide only.

26

Chart 1: STI Index performance versus Singapore GDP growth rates

STI Index and GDP growth rates

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1997 1998 1999 2000 2001 2002 2003 2004

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Spore GDP STI Index

Source: Bloomberg

Chart 2: Singapore GDP growth rates versus the SGX-ST turnover

Spore GDP growth versus Sgx turnover

0.00

50.00

100.00

150.00

200.00

250.00

S$bn

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Sgx mkt turnover Spore GDP growth rate

Source: Bloomberg

27

Chart 3: Singapore GDP growth rates versus Growth in New Listings on the SGX-ST

Spore GDP growth versus growth in new listings on SGX

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1997 1998 1999 2000 2001 2002 2003 2004

Spore GDP growth Growth in new listings on SGX

Source: Bloomberg

Historical Price Earning Ratio

Our assessment of the Purchase Consideration was carried out based on the financials ofWestcomb Securities for FY2003 and the market conditions prevailing at the time of theannouncement of the Proposed Acquisition, and for the six months ended 30 June 2004. Onthe basis of Westcomb Securities’ net profit after tax of S$638,000 for FY2003 andS$955,870 for 1H FY2004, the Purchase Consideration represents a historical PER(“Historical PER”) of approximately 15.7 times and 10.5 times (5.2 times on an annualizedbasis) respectively.

We have set out below the trailing historic PERs of the listed companies (based on theweekly closing prices) on SGX-ST between January 2002 and September 2004. The tablebelow tabulates the results and shows that the historic FY2003 PER of 15.7 times forWestcomb Securities is a 72.7% discount to the average of its Listed Peer Group of 57.41times.

Historical PER Average historical PERComparable companies Between 4 Jan 2002 Between 4 Jan 2002Listed on the SGX and 10 Sep 2004 and 10 Sep 2004

GK Goh Holdings Limited 11.74 to 255.00 112.64

Kim Eng Holdings Ltd 7.45 to 55.24 28.60

UOB-Kay Hian Holdings Limited 8.61 to 60.31 30.99

Average trailing PER 57.41

Westcomb Securities*(2) 15.70

Notes:

Source: Bloomberg and the SGX-ST.

* PER based on NPAT for FY2003.

(1) Based on the latest announced audited results of the Comparable Companies for their respective full yearfinancial statements.

(2) Based on Purchase Consideration and the FY2003 NPAT.

28

The trailing historic PERs of the Listed Peer Group based on the trading patterns for thecurrent year shows that the average trailing PERs is approximately 10.1 times (based on thedaily closing prices). Westcomb Securities Historic PER for FY2003 of 15.7 times is a 55%premium to this average trailing Historic PER of the Listed Peer Group.

Historical PER Average historical PERComparable companies Between 2 Jan 2004 Between 2 Jan 2004

Listed on the SGX and 14 Sep 2004 and 14 Sep 2004




Average trailing PER 10.1


Westcomb** 7.19 to 23.10 15.68

Notes:


* PER based on NPAT for FY2003.

** From date of listing to 14 September 2004.


(2) Based on Purchase Consideration and the FY2003 NPAT.

Implied Forecast Price Earnings Ratio

We have also analysed the implied forecast PER of Westcomb Securities’ results based onits annualised six months NPAT. We do not represent and warrant that Westcomb Securitiescan achieve the annualised NPAT. We have made the assumption that the growthmomentum in NPAT from the six months ended 30 June 2004 as compared to the lastaudited financial year is carried through the remaining part of the current financial year. Onthe above assumption, the NPAT for Westcomb Securities for FY2004 is expected to beapproximately S$1.9 million. The Implied Forecast PER is therefore approximately 5.2times. We are not able to make a comparison on a prospective PER basis with its ListedPeer Group as only one of three stockbrokers has a forward forecast as quoted by oneanalyst on Bloomberg, which might not be representative of the potential performance of theListed Peer Group. However, when compared to the historical PER range since January2002, the 5.2 times figure, if achievable, appears to be reasonable bearing in mind ourcomment that PER comparisons is only a secondary method to value stockbroking entities.

Given the unpredictability of earnings because they are a function of global and localeconomies and global and local interest rates, investors have preferred to use price to bookvaluation bearing in mind that in the medium to long term stock and capital markets usuallyshow a long term uptrend (see table below). However, the Independent Shareholders shouldnote that the Price to Book basis of valuation is meaningful in so far as it shows the extentto which the value of each Westcomb Securities share is backed by tangible assets andwould be relevant in the event that the shareholder of Westcomb Securities decide toliquidate Westcomb Securities subsequent to the completion of the Proposed Acquisition. Asat the Latest Practicable Date, we are not aware of any immediate plans by the shareholderof Westcomb Securities for major changes to the nature of Westcomb Securities’ businessor the redeployment of Westcomb Securities fixed assets.

29

Singapore ExchangeStatistics

1997 1998 1999 2000 2001 2002 2003 2004

GDP growth rate 8.6% –0.9% 6.9% 9.7% –1.9% 2.2% 1.1% 7.5%

ST Index 1507.65 1392.73 2479.58 1926.83 1625.98 1341.58 1730.23 1918.34

Percentage change –24.3% –7.6% 78.0% –22.3% –15.6% –17.5% 29.0% 10.9%

Market capitalisation(S$ billions) 332.44 265.62 455.85 393.51 334.70 291.28 389.47 421.39

Market capitalisationgrowth rate –37.2% –20.1% 71.6% –13.7% –14.9% –13.0% 33.7% 8.2%

Turnover (S$ billions) 114.30 98.69 196.91 172.02 131.70 118.65 161.91 190.74

Turnover growth rate 13.2% –13.7% 99.5% –12.6% –23.4% –9.9% 36.5% 17.8%

Turnover/marketcapitalisation 34% 37% 43% 44% 39% 41% 42% 45%

Number of companies listed on (excluding CLOB and extranet)

Main board 294 307 327 388 386 385 413 446

Sesdaq 62 64 81 92 106 116 138 145

Total 356 371 408 480 492 501 551 611

Growth in listed stocks 21% 4% 10% 18% 2% 2% 10% 11%

Market capitalisation oftop 15 stocks 177.74 112.17 217.81 188.32 157.82 126.49 167.02 186.75

% of total marketcapitalisation of top15 stocks 53% 42% 48% 48% 47% 43% 43% 44%

(b) Net Tangible Asset Value

Westcomb Securities’ audited NTA for FY2003 was approximately S$5.84 million. Adjustingfor the expected NPAT for the current financial year, Westcomb Securities is expected tohave an NTA of S$7.74 million. We have reviewed the audited balance sheet of WestcombSecurities as at 31 December 2003, the management accounts for 1H FY2004 and haveassumed that the assets being carried in the books of Westcomb Securities are of a tangiblenature (other than the intangible asset) and adequately reflect the net asset value ofWestcomb Securities.

We have reviewed the premium/discount of the company’s respective share price (weeklyclosing prices) over the book NTA (“Price to Book”) of the Listed Peer Group based on theirlatest announced unaudited financial statements for the period between January 2002 andSeptember 2004, which we set out below, for the purposes of comparison with the PurchaseConsideration’s premium over Westcomb Securities’ audited NTA as at 31 December 2003of S$5.84 million.

Historical Priceto Book

Average trailing Priceto Book

Comparable companiesBetween 4 Jan 2002

and 10 Sep 2004Between 4 Jan 2002

and 10 Sep 2004

Listed on the SGX




Average trailing price to book 0.93


30

Notes:

* Price to Book based on NTA for FY2003.

** From date of listing to 14 September 2004 based on the daily closing prices.



(2) Based on Purchase Consideration and the FY2003 NTA.

In comparison, the Purchase Consideration which represents a Price to Book as at 31December 2003 of 1.71 represents a 83.9% premium over the average trailing Price to Bookof the Listed Peer Group over the period of January 2002 to September 2004.

A comparison of the Listed Peer Group’s average trailing Price to Book over the current yearwith Westcomb Securities’ forecasted Price to Book based on the forecast NTA for FY2004of S$7.74 million is as follows:

Historical Price toBook

Average trailing Priceto Book

Comparable companies Between 2 Jan 2004 Between 2 Jan 2004

Listed on the SGX and 14 Sep 2004 and 14 Sep 2004




Average trailing price to book 1.08

Westcomb Securities(2) 1.29

Westcomb* 3.43 to 11.13 5.47

Notes:

* From date of listing to 14 September 2004 based on the daily closing prices.


1. Based on the latest announced audited results of the Comparable Companies for their respective full yearfinancial statements.

2. Based on Purchase Consideration and the Forecast NTA for FY2004.

In comparison, the Purchase Consideration which represents a Price to Book for theforecast FY2004 of 1.29 times represents a 19.4% premium to the average trailing Price toBook of the Listed Peer Group. It is however just below the high end of the ranges of thetrailing Price to Book of the Listed Peer Group.

(c) Recent transactions

We have also made reference to the publicly announced acquisitions and divestmentstransactions in Singapore for stockbroking operations. (or companies operating in the similarindustry). The most recent transaction of similar nature, which was almost four years ago,was in respect of:–

VendorDate of

announcement AssetPurchase

Consideration RemarksPrice to

book PER

UBS Warburg 18 December2000

S$100million

S$124.5million

1.24 times 9.7 times

31

9. CONCLUSION AND RECOMMENDATION

In evaluating the Proposed Acquisition, an NTA-based (Price to Book) approach would be moreappropriate than an earnings approach, given that Westcomb Securities is a going concernprincipally engaged in dealing in securities. We have also ascertained from the Directors thatthere is no current plan to change the nature of Westcomb Securities’ business or to realise orconvert the uses of its assets in the foreseeable future. Based on our analysis, the Price to Bookof the Proposed Acquisition (based on our forecast for FY2004) of 1.29 times is within the rangeof the historical Price to Book for the Listed Peer Group and closely approximates the mostrecently transacted sale and purchase of a stockbroking operations in Singapore.

We recognise that there is no particular listed company that we may be considered to be trulycomparable to Westcomb Securities in terms of composition of business activities, scale ofoperations, geographical spread of activities, track record and future prospects. However, inconsidering what may be regarded as a reasonable NTA range for the purposes of assessing thePurchase Consideration, we have made reference to a range of NTAs of Listed Peer Group togive an indication of the current market expectations with regard to the valuation of thesecompanies. We have not been able to obtain a comprehensive list of current transactions ofprivately held companies apart from those that related to publicly listed companies having madeannouncements thereof.

We have also evaluated the Proposed Acquisition on the earnings approach. Based on ouranalysis, the implied forecast for FY2004 for Westcomb Securities translates to a PER of 5.2times which compares very favourably to the average trailing PER of the Listed Peer Group forthe current year.

In determining whether the Proposed Acquisition is on normal commercial terms and whether itis prejudicial to the interests of Westcomb and its independent Shareholders, we have alsoconsidered the following factors:–

(a) The Directors’ commercial rationale for the Proposed Acquisition as set out in Section 2.4 ofthe Circular.

The Acquisition will enable the Company to have full shareholding ownership as well as fullmanagement control of Westcomb Securities. The Acquisition is in pursuance of the globalsettlement between the Company and SE2C Asia under the global settlement agreement on15 July 2004 (the “Settlement Agreement”);

(b) The Company’s announcement on 12 and 20 July 2004 regarding the SettlementAgreement.

SE2C Asia and Westcomb have on 9 July 2004 reached an agreement on the principles ofsettlement, and that pursuant to such principles of settlement, entered into the SettlementAgreement. The principles of settlement cover, amongst other things, the business andmanagement arrangements of the Westcomb Group, which includes Westcomb Securities,the stockbroking subsidiary of Westcomb.

The principles of settlement reflect the parties’ common view on the future direction andstrategic growth of the companies in the Westcomb Group. The two Hong Kongshareholders of Westcomb, Softbank Investment and E2-HK, are agreeing to exit fromWestcomb. It is anticipated that the exit will be gradual, and would be completed in 2005;

(c) The time and cost of incorporating a subsidiary of similar size, business, and obtaining acapital market services licence from the Monetary Authority of Singapore to fulfill its currentobligation based on its confirmed order books on hand;

(d) The short operating history of Westcomb Securities, which has only been incorporated on 22January 2003, compared to the substantially longer years of the Listed Peer Group whichcould suggest that its operating efficiencies are in the process of being optimized. Thedifference between Westcomb Securities and its Listed Peer Group in that they have a largeremeisier/dealer base of a few hundred for GK Goh Holdings Limited and Kim Eng Holdings

32

Ltd to more than 1,000 for UOB-Kay Hian Holdings Limited to just under 10 for WestcombSecurities as possible areas for differences in their financial ratios on which our comparisonsare made; and

(e) The Proposed Acquisition is both Price to Book accretive as well as earnings accretive forthe Group.

Based on the closing share price on 14 September 2004, Westcomb is trading at a 5.47times Price to Book. The Proposed Acquisition is at 1.71 times Price to Book (based on theNTA of Westcomb Securities for FY2003) and 1.29 times Price to Book (based on theforecast NTA for Westcomb Securities for FY2004). Similarly, Westcomb is (as at 14September 2004) trading at a PER of 11.50 times as compared to Westcomb Securities’Implied Forecast PER of 5.2 times for FY2004.

Having considered the factors and made the assumptions set out above, and subject to thequalifications set out herein as at the date of this letter, we are of the view that the ProposedAcquisition is on normal commercial terms and is not prejudicial to the interest of Westcomb andits Independent Shareholders.

We have prepared this letter solely for the purpose of advising the Independent Directors inrespect of the Proposed Acquisition. The recommendations made by the Independent Directorsin respect of the Proposed Acquisition shall remain the sole responsibility of the IndependentDirectors.

Apart from its inclusion into the Circular, this letter or any part thereof may not be reproduced orcopied or disseminated or quoted without our prior written consent in each specific case. Ouropinion is governed by, and construed in accordance with, the laws of Singapore, and is strictlylimited to the matters stated herein and does not apply by implication to any other matter.

Yours faithfully

Kevin ScullyManaging DirectorNRA Capital Pte. Ltd.

Raymond LeeHead Corporate AdvisoryNRA Capital Pte. Lt(d)

33

WESTCOMB FINANCIAL GROUP LIMITED(Incorporated in the Republic of Singapore)


NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting (“EGM”) of the Members ofWESTCOMB FINANCIAL GROUP LIMITED (the “Company”) will be held at 5 Shenton Way, #09-07UIC Building, Singapore 068808 on 29 October 2004 at 10 a.m. for the purpose of considering and, ifthought fit, passing with or without any modifications the following ordinary resolutions:–

(1) THE PROPOSED ACQUISITION OF 49% OF THE ISSUED AND PAID UP SHARE CAPITAL OFWESTCOMB SECURITIES PTE LTD (“Westcomb Securities”) FROM SBI E2-CAPITAL ASIALIMITED (“SE2C Asia”)

THAT pursuant to Chapter 9 of the Listing Manual of the Singapore Exchange Securities TradingLimited, the proposed acquisition by Westcomb Financial Group Limited (the “Company”), of2,646,000 ordinary shares of par value S$1.00 each representing 49% of the issued and paid upshare capital of Westcomb Securities from SE2C Asia for a consideration of S$4.9 million andsubject to and upon the terms and conditions stipulated in the Sale and Purchase Agreementdated 15 July 2004 (the “Sale and Purchase Agreement’) entered into between, amongst others,the Company and SE2C Asia (and such other agreements as may be entered into between theCompany and SE2C Asia to give effect to the Agreement) be and is hereby approved, and that theDirectors of the Company be and are hereby authorised to complete and do all such acts andthings as they may consider necessary or expedient to give effect to the Sale and PurchaseAgreement and this Resolution as they shall think fit in the interests of the Company; and

(2) THE PROPOSED EARLY RELEASE OF THE MORATORIUM UNDERTAKINGS ON THEONE-OFF SHARE INCENTIVE SCHEME

THAT the moratorium undertakings given by the Participants to the One-Off Share IncentiveScheme (the “Scheme”) of the Company in respect of the Free Incentive Shares held by each ofthem, be and are hereby released with effect from the passing of this Resolution, and that theDirectors of the Company be and are hereby authorised to complete and do all such acts andthings as they may consider necessary or expedient to give effect to the proposed early releaseof the moratorium undertakings under the Scheme. [See Explanatory Note 1]

By Order of the Board

Foo Soon SooCompany Secretary, Singapore13 October 2004

34

Explanatory Note 1

Pursuant to the Scheme, the participants of the Scheme (“Participants”) (being employees of theCompany and its group of companies (the “Group”) were given shares in the capital of the Company(“Free Incentive Shares”) by certain shareholders of the Company, namely, Choo Chee Kong, GoodwillInvestment (B.V.I) Limited, SIIS Capital Holdings Limited and Westcomb Profits Limited, as a gift inrecognition of and to reward the employees of the Group for their past efforts and contributions to theperformance and success of the Group. The gift of the Free Incentive Shares was subject to amoratorium undertaking given by the Participants not to dispose or sell the Free Incentive Shares fora period of within one year from the date of listing of the Company, as well as an undertaking that theParticipants shall transfer the Free Incentive Shares in the event of his/her resignation fromemployment with the Group or termination of his/her employment by the Group within one year of thedate of listing of the Company, to the Company which will hold the same for the benefit of selectedemployees and on such terms as the Executive Committee of the Company shall deem fit.

The Free Incentive Shares which are currently maintained in scrip form and held by the Company, willbe released to the Participants as soon as is reasonably practicable after the EGM

Notes:–

1 A Member of the Company entitled to attend and vote at the above EGM may appoint not more than two proxies to attendand vote instead of him A proxy need not be a member and where there is more than one proxy, the proportion (expressedas a percentage of the whole) of his shareholding to be represented by each proxy must be stated

2 The instrument appointing a proxy shall, in the case of an individual, be signed by the appointer or his attorney, and in thecase of a Corporation shall be either under the Common Seal or signed by its attorney or an officer on behalf of theCorporation.

3. The instrument appointing a proxy must be deposited at the registered office of the Company at 5 Shenton Way, #09-11 UICBuilding, Singapore 068808, not less than forty-eight (48) hours before the time for holding the meeting.

35

This page has been intentionally left blank.

PROXY FORM

WESTCOMB FINANCIAL GROUP LIMITED(Incorporated in Singapore)


IMPORTANT

This proxy form is not valid for use by CPFinvestors and shall be ineffective for allintents and purposes if used or purportedto be used by them.

I/We

of

being a member/members of Westcomb Financial Group Limited hereby appoint:

NAME ADDRESSNRIC/PASSPORT

NO.

PROPORTION OFSHAREHOLDINGS

(%)

and/or (delete as appropriate)

NAME ADDRESSNRIC/PASSPORT

NO.

PROPORTION OFSHAREHOLDINGS

(%)

as my/our proxy/proxies to vote for me/us on my/our behalf and, if necessary, to demand a poll, at theExtraordinary General Meeting of Westcomb Financial Group Limited to be held at 5 Shenton Way,#09-07 UIC Building, Singapore 068808 on 29 October 2004 at 10 a.m., and at any adjournmentthereof.

I/We have indicated with an “X” against each resolution set out in the Notice of Extraordinary GeneralMeeting and summarised below how I/we wish my/our proxy/proxies to vote. If no specific direction asto voting is given, the proxy/proxies may vote or abstain at his/their discretion.

NO. ORDINARY RESOLUTION FOR AGAINST

1. To approve the acquisition of the 49% of the issued andpaid up capital of Westcomb Securities from SE2C Asia

2. To approve the early release of Undertakings under theOne-Off Share Incentive Scheme

Dated this day of 2004

TOTAL NUMBER OF SHARES HELD:

Signature(s) of Member(s)/Common Seal

(Please read notes overleaf)

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-✂

NOTES:

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the DepositoryRegister (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), you should insert that number of Shares.If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you haveShares entered against your name in the Depository Register and Shares registered in your name in the Register ofMembers, you should insert the aggregate number of Shares entered against your name in the Depository Register andregistered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxiesshall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies,whether a member or not, to attend and vote instead of him.

3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of hisshareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 5 Shenton Way,#09-11 UIC Building, Singapore 068808, not less than 48 hours before the time appointed for the Extraordinary GeneralMeeting.

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

6. A corporation which is a member may appoint an authorised representative or representatives in accordance with Section179 of the Companies Act, Cap. 50 of Singapore to attend and vote for and on behalf of such body corporate.

7. Where an instrument appointing a proxy is signed on behalf of the appointor by the attorney, the letter or power of attorneyor a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy,failing which the instrument may be treated as invalid.

General:

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

SN

PS

Prin

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teLt

d64

1862

4

WESTCOMB FINANCIAL GROUP LIMITED - NRA … DATED 13 OCTOBER 2004 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. This Circular is issued by Westcomb Financial Group

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