The Board of Directors of Sinwa KS Limited ("Sinwa") is pleased to announce that its wholly-owned subsidiary, Sinwa Ship Supply Pte Ltd has on Tuesday, June 3 2003 entered into a sale and purchase agreement ("the Agreement") with Unilever Singapore Pte Ltd to acquire the leasehold properties known as No. 24 and 26 Joo Koon Circle Singapore 629055 and No 35 Joo Koon Road Singapore 628987 (the "Properties").

Brief description of the Properties

The Property at No. 24 and 26 Joo Koon Circle has a tenure of 30 + 30 years lease from the Jurong Town Corporation commencing from 1 July 1981 (subject to there being no breaches of covenants and conditions at the time of expiry of the initial 30-year term) with an aggregate land area of approximately 7350 square metres.

The Property at No. 35 Joo Koon Road has a 30 + 30 years lease from the Jurong Town Corporation commencing from 1 September 1981 (subject to there being no breaches of covenants and conditions at the time of expiry of the initial 30-year term and certain investment criteria) with an aggregate land area of approximately 3950 square metres.

Rationale for the acquisition

The acquisition of the Properties is in line with the expansion of the Group's business. The Properties will provide additional warehousing and office space to meet the Group's current and growing requirements.

Purchase price and funding

The purchase price of SGD 2,840,000/- for the said properties is less than the current open market valuation of SGD 3,150,000 which has been arrived at by the vendor's realtor after direct comparison with recent transactions of comparable properties within the vicinity with necessary adjustments having been made for differences in location, tenure, size, shape, design and layout, age and condition of buildings, availability of facilities, dates of transactions and the prevailing market conditions amongst other factors.

The purchase price will be funded through a combination of IPO proceeds and bank borrowings

Conditions precedent

The purchase is subject to written approval from JTC being obtained by the Purchaser for the purchase of the Properties and the written approval from JTC and other relevant government authorities for the use of the Property for activities in connection with marine supply and logistics.

Financial Effects of the Proposed Acquisition

The earnings per share ("EPS") and net tangible assets ("NTA") per share before and after the acquisition, computed based on the issued share capital of the Company comprising 125,000,000 shares, are as follows:
Financial year ended 31 December 2002
EPS before acquisition (cents) 1.44
EPS after acquisition (cents) 1.34

As at 31 December 2002
NTA per share before acquisition (cents) 5.44
NTA per share after acquisition (cents) 5.35
The above information has been prepared for illustrative purposes only and based on certain assumptions to show what the financial effects of the acquisition would have been on the EPS for the financial year ended 31 December 2002 and on the NTA per share as at 31 December 2002 had the acquisition been completed and the assets were ready for use since the beginning of the financial year ended 31 December 2002. Because of their nature, they may not give a true picture of the actual EPS or NTA per share of the Sinwa group.

The assumptions upon which the information above was prepared are as follows:

(a) additional leasehold improvements with estimated costs of $1,100,000 are incurred to bring the property to its intended use at the beginning of the financial year ended 31 December 2002;
(b) these assets are accounted for in accordance with Singapore Statements of Accounting Standard and accounting policies of the group; and
(c) there is no incremental operating revenue directly attributable to the assets acquired.
The effect of the transaction would cause a 2% and 7% reduction in our net tangible assets and earnings per share respectively based on the results of the most recently completed financial year.


Directors' and Controlling Shareholders' interests

None of the Directors or controlling shareholders of the Company has any interest, direct or indirect, in the purchase of the Property.


Inspection

A copy of the Sales and Purchase Agreement is available for inspection during normal business hours at Sinwa registered office for three months after the date of this announcement.