Investor Relations

Singapore, March 12, 2001 - Tung Lok Restaurants (2000) Ltd ("Tung Lok"), one of Singapore's leading innovative restaurant groups, today launched its initial public offer of 20 million new shares to be listed on the SGX-SESDAQ.

The initial public offer ("IPO"), representing approximately 20% of Tung Lok's enlarged share capital, comprises a public offer tranche of 2 million new shares and a placement tranche of 18 million new shares. Of the 18 million placement shares, 15 million shares are issued by way of placement and 3 million shares are reserved for the Group's employees and business associates. There is no issue of vendor shares.

The offer price of S$0.23 is based on a historical net earnings per share of 3.88 cents and a historical price earnings ratio of 5.93 times for the financial year ("FY") ended December 31, 2000.

The Group intends to raise net proceeds of approximately S$3.5 million from the IPO, to be used as follows:

• approximately S$0.4 million to finance the renovation costs of the Group's new corporate office cum food processing facility located at Bukit Batok;
• approximately S$0.5 million for capital expenditure on the Group's two new Lao Beijing restaurant outlets; and
• the balance for general working capital.

The Group's Managing Director, Mr Andrew Tjioe commented : "After 20 years of establishing the business, we feel that now is the right time to further our growth. We are well positioned to grow in a disciplined manner following the listing, both organically and through selective joint ventures and partnerships. Our brand is already well-known in Singapore and we have attained a critical mass to further our expansion here and into new markets. This listing will give us the status and the prestige to take us through the next phase of growth for the Group."

Besides owning and operating 13 restaurants in Singapore, the Group also provides restaurant management services to four restaurants outside the Group, two located in Singapore and two in Jakarta, Indonesia. Complementing the restaurant business, the Group operates a centralised food processing facility which produces Dianxin and Dianxin ingredients for its restaurants, as well as cakes and pastries for special occasions and festive months such as Chinese New Year and the Mid-Autumn Festival for distribution through its restaurants.

Said Mr Tjioe : "By being able to consistently provide good quality restaurant management services as well as produce good quality ingredients for our restaurants, we have been able to establish a strong brand name and maintain customer demand for our cuisines and services."

All the restaurants in the Group are located strategically in high traffic areas, with some even located in the same vicinity. The Group has four restaurants conveniently located along Orchard Road, two restaurants in the business district, three restaurants in the East Coast of Singapore. Apart from being located in hotels and commercial buildings, the Group has also set up restaurants in recreational clubs, to take advantage of the human traffic, rental rates and availability of parking spaces.

"We have chosen to adopt a 'cluster' strategy when deciding where to locate our restaurants, to enable us to enjoy operational cost savings and maximise utilisation of manpower to satisfy demands at each restaurant. We feel that due to the diversity of the restaurants and the range of different cuisines we offer that there is minimal inter-restaurant cannibalism despite the close proximity of the restaurants. This strategy has also enabled us to successfully generate a higher customer retention rate than most of our competitors," added Mr Tjioe.

Led by an active management team of experienced managers and quality chefs, the Group has been able to establish a strong reputation as a first mover and innovator of new tastes in the restaurant business in Singapore, and maintain its edge in this highly competitive industry.

"Over the last 20 years, we have created high barriers to entry to this business, just based on our brand name alone. Our standards for talent will continue to be high as we strive to keep one step ahead of our competition.

Going forward, we intend to bring the Tung Lok brand name further through the expansion of our full service restaurants in Singapore, which includes entering into selective joint ventures and partnerships. On the drawing board, we have plans to set up noodle houses, as well as to venture into a franchise model for our Lao Beijing Dining Hall which has been successful and we believe can be developed regionally. Our food processing facility, which is to be expanded, will provide another source of revenue once we commence the manufacturing of sauces and savouries, cakes and cookies and even the sale of our ingredients to our future franchisees and third parties. It will also provide support for our outside catering business which is also set to grow," said Mr Tjioe.

In FY1999, the Group achieved a turnover of S$41.0 million and a profit before tax of S$4.0 million, up from a turnover of S$37.1 million and a loss before tax of S$2.1 million incurred in the previous financial year. This loss was primarily due to the start-up costs and running-in period of opening both Club Chinois and Lao Beijing during the regional economic crisis which occurred during that year. In FY2000, the Group continued to record an increase in turnover of S$49.7 million and a profit before tax of S$4.5 million.

The manager, underwriter and placement agent for the IPO is Oversea-Chinese Banking Corporation Limited (OCBC Bank).

The IPO will close at 12 noon on March 19, 2001. Trading is expected to begin at 9.00 am on March 21, 2001.