Established and long-standing relationships with international customers

We have established good relationships with these customers and have been supplying them consistently over a long period of time. For example, we were first appointed as a supplier of cocoa powder to Nestlé in Thailand in 1992. Today, we sell cocoa ingredients to Nestlé in 18 countries, out of all our production facilities in six countries. We have received awards from some of our customers like the Nestlé group, for achieving high product quality. We believe that our willingness to work closely with our customers, to help them achieve their objectives and overcome challenges and our flexibility in changing our own practices to cater to their needs, helps to differentiate us from our competition.

High and consistent product quality under our Delfi brand

We believe that our long-standing relationships with international food and beverage companies are also due to our ability to meet their stringent requirements in terms of product quality, consistency and delivery. These qualities are encapsulated under our well-known "Delfi" brand which we use for substantially all the sale of our cocoa ingredients products. We have been applying the "Delfi" brand to our cocoa ingredients products since 1990 and believe that the brand has acquired a strong reputation in the industry for quality products.

Internationally certified and high quality manufacturing processes

Our plants are audited regularly by our major customers, most of whom have exacting quality assurance standards. We believe that our stringent quality assurance processes and our ability to deliver high quality products consistently are critical to our ability to continue servicing our existing client base and to meet the demands of prospective customers. For example, our products are used by customers for sale into the United States, the European Union and Japan, which impose stringent requirements for food products.

In-house technical and product development expertise

Our expertise enables us to offer our customers a high degree of flexibility in meeting their needs and product specifications, whilst still meeting their stringent quality requirements and achieving cost efficiencies.

International manufacturing operations

We have cocoa processing plants in Indonesia, Malaysia, Thailand, the Philippines, Brazil and Mexico. We believe that the international scale of our manufacturing operations and reputation set us apart from smaller players in the market and provides us with a competitive advantage when marketing to international customers. We believe that physical proximity to our markets is advantageous as we are better able to work closely with our customers, and to attract other customers to our products. We also reduce our exposure to any single location by spreading out our production facilities.

The production facilities we have across different countries also enable us to achieve cost efficiency by providing us with the flexibility to transfer semi-processed products from one plant to another plant within the Group for further processing as may be required to meet specific customer requirements. We expect our plants to eventually specialise in certain types of cocoa beans and/or cocoa powders. We expect specialisation to yield greater cost efficiency. For example, we would be able to reduce the varieties of beans we need to stock at each plant and transfer different types of cocoa cake between plants as required.

Benefits of economies of scale

Experienced and proven management team

Our senior management team have a proven track record in running the Cocoa Ingredients Division and some of them have also previously worked for other major cocoa products companies. We place great emphasis on teamwork and close communication. We believe that our team possesses the appropriate mix of multi-disciplinary skills and experience necessary for us to grow the business in a competitive environment. In particular we believe our team has strong technical skills, experience in quality assurance and the ability to provide effective customer solutions.

Track record of growth and financial performance

Market leader for chocolate confectionery products in Indonesia

We are the market leader for branded chocolate confectionery products in Indonesia. We have a leading share of 56.9% in the urban grocery market for chocolate confectionery in Indonesia for the 12 month period ended March/April 2004 (Source: ACNielsen). Our top two products, "SilverQueen" and "Delfi Top", have a total share of 44.4% in the urban grocery market for moulded/enrobed chocolate in Indonesia for the 12 month period ended March/April 2004 (Source: ACNielsen). We also have a share of 54.2% in the urban grocery market for dragees in Indonesia for the 12 month period ended March/ April 2004 (Source: ACNielsen).

Established portfolio of household brands in Indonesia

We also have a number of sub-brands for different product categories under the "Delfi" and "Selamat" master brands e.g. "Delfi Cha Cha" for dragee, "Delfi Top" for enrobed chocolate wafer and "Selamat Briko" for chocolate wafer. We believe that our use of master and sub-brands results in consumers associating new products that we introduce with the quality assurance of our established master brands. It also gives rise to the indirect promotion of other products under the master brand, through the promotion of a sub-brand. We have in total a portfolio of eight master brands and 19 key sub-brands.

In-house product and brand development expertise

We have dedicated in-house product and brand development staff who regularly keep abreast of changing consumer preferences by conducting or monitoring market research in consumer preferences and industry trends. We also assess consumer preferences through discussions with our distributors and the management or proprietors of the modern and traditional outlets in which our products are sold. We use the information and market data that we receive to develop new products, sub-brands, packaging or product sizes to stimulate or meet consumer demand. We introduced over 97 new stock keeping units or SKUs in 2003 which included new products and different sizes and packaging for existing products, some of which have resulted in significant increases in sales.

We have also played a key role in promoting and significantly increasing the sales of some of the third party brands in the countries in which we distribute them. Our track record in helping to develop these brands is a key advantage in our efforts to add new brands to our portfolio.

Extensive sales and distribution network

We have an extensive sales and distribution network covering the Indonesian archipelago, which we have established over many years. Based on data provided to us by our distributors, we believe we have access through our distributors and sub-distributors to over 70,000 modern and traditional retail outlets. In addition, our distributors in turn supply our products to wholesalers, retailers and other distributors throughout Indonesia, thereby substantially increasing our reach. We had a total of 103 stock points as of 30 June 2004 across Indonesia. These stock points are principally owned by our distributors.

We also have a dedicated team which is focused on the distribution of our products to modern retail outlets in Jakarta and Bali. This team works closely with hypermarkets, supermarkets, minimarts and drugstores in these two cities. We believe our extensive sales and distribution network provides us with a distinct competitive advantage, in particular for the distribution of our products outside the urban markets.

We believe that our network represents a significant barrier to entry to new market entrants, and a challenge to existing confectionery producers who do not have the breadth of our distribution network across the Indonesian archipelago.

Well-known portfolio of third party brands

Experienced and proven management team

Long established operations and track record of growth

We have over 50 years of history and experience in the manufacture of chocolate products dating back to the Chuang family-run chocolate and cocoa business. Over the years, we have developed our engineering and manufacturing capabilities to produce a wide range of product types, which include moulded, enrobed, extruded and panned products, as well as wafers and biscuits. Our manufacturing expertise allows us to produce a large range of quality products consistently to cater to consumer preferences.

We have grown our business to become the market leader for chocolate confectionery in Indonesia. In tandem with our production growth, our revenue and profitability have also increased. We believe that our long standing track record of business expansion and growth provides us with valuable experience to continue to realise future growth opportunities for our business.