KPM Holding Limited - Capital/Financing Update 2015

KPM HOLDING LIMITED 吉輝控股有限公司 Incorporated in the Cayman Islands with limited liability Stock Code : 8027

LISTING BY WAY OF PLACING

Sole Sponsor

GRAND VINCO CAPITAL LIMITED

(A wholly-owned subsidiary of Vinco Financial Group Limited)

IMPORTANT

If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.

KPM HOLDING LIMITED 吉輝控股有限公司*

(Incorporated in the Cayman Islands with limited liability)

LISTING ON THE GROWTH ENTERPRISE MARKET OF THE STOCK EXCHANGE OF HONG KONG LIMITED BY WAY OF PLACING

Number of Placing Shares : 100,000,000 Placing Shares comprising 80,000,000 New Shares and 20,000,000 Sale Shares Placing Price : HK$0.50 per Placing Share, plus brokerage of 1%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005% (payable in full on application in Hong Kong dollars) Nominal value : HK$0.01 per Share Stock code : 8027

Sole Sponsor

Grand Vinco Capital Limited

(A wholly-owned subsidiary of Vinco Financial Group Limited)

Joint Lead Managers

Grand Vinco Capital Limited

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Sinomax Securities Limited

(A wholly-owned subsidiary of Vinco Financial Group Limited)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this prospectus.

A copy of this prospectus, having attached thereto the documents specified in the paragraph headed ‘‘Documents delivered to the Registrar of Companies’’ in Appendix V to this prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this prospectus or any of the other documents referred to above.

The Placing Price is currently fixed at HK$0.50 unless otherwise announced. Investors applying for Placing Shares must pay, on application, the Placing Price of HK$0.50 for each Placing Share together with brokerage of 1%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005%.

Prior to making an investment decision, prospective investors should carefully consider all the information set out in this prospectus, including the risk factors set out in the section headed ‘‘Risk factors’’ in this prospectus. Pursuant to the termination provisions contained in the Underwriting Agreement, Vinco Capital (for itself and on behalf of the Underwriters) has the right in certain circumstances, in its sole and absolute discretion, to terminate the obligations of the Underwriters pursuant to the Underwriting Agreement at any time prior to 8: 00 a.m. (Hong Kong time) on the Listing Date. Further details of the terms of the termination provisions are set out in the section headed ‘‘Underwriting — Grounds for termination’’ in this prospectus. It is important that you refer to the said section for further details.

For identification purpose only

30 June 2015

CHARACTERISTICS OF GEM

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (‘‘GEM’’)

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to higher market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the Internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspaper. Accordingly, prospective investors should note that they need to have access to the Stock Exchange’s website at www.hkexnews.hk in order to obtain up-to-date information on GEM-listed issuers.

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EXPECTED TIMETABLE

2015 (Note 1)

Announcement of the level of indication of interest in the Placing to be published on the Stock Exchange’s website at www.hkexnews.hk and our Company’s website at www.kpmholding.com on or before . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 July Allocation/transfer of Placing Shares to placees on or before . . . . . . . Thursday, 9 July

Deposit of share certificates for the Placing Shares into CCASS on or before (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 July Dealings in the Shares on GEM to commence at 9: 00 a.m. on . . . . . . . Friday, 10 July

Notes:

All times and dates refer to Hong Kong local times and dates.
Share certificates for the Placing Shares allocated and issued/transferred to the placees are expected to be deposited directly into CCASS on or before Thursday, 9 July 2015 for credit to the respective CCASS Participants’ or the CCASS Investor Participants’ stock accounts designated by the Underwriters, the placees or their agents (as the case may be). No temporary documents or evidence of title will be issued.
All share certificates will only become valid certificates of title when the Placing has become unconditional in all respects and the Underwriting Agreement has not been terminated in accordance with its terms at any time prior to 8: 00 a.m. Hong Kong time on the Listing Date.
If there is any change to the above expected timetable, our Company will make an appropriate announcement to inform investors accordingly on the Stock Exchange’s website at www.hkexnews.hk and on our Company’s website at www.kpmholding.com.

Details of the structure of the Placing, including the conditions and grounds for termination thereto, are set out in the section headed ‘‘Structure and conditions of the Placing’’ in this prospectus.

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CONTENTS

IMPORTANT NOTICE TO INVESTORS

This prospectus is issued by our Company solely in connection with the Placing and does not constitute an offer to sell or a solicitation of an offer to buy any security other than the Placing Shares offered by this prospectus. This prospectus may not be used for the purpose of and does not constitute an offer to sell or a solicitation of an offer in any other jurisdiction or in any other circumstances.

You should rely only on the information contained in this prospectus to make your investment decision. Our Company, the Selling Shareholder, the Sole Sponsor, the Joint Bookrunners, the Joint Lead Managers and the Underwriters have not authorised anyone to provide you with information that is different from what is contained in this prospectus. Any information or representation not made or contained in this prospectus must not be relied on by you as having been authorised by our Company, the Selling Shareholder, the Sole Sponsor, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, any of their respective directors or affiliates or any other persons or parties involved in the Placing.

		Page
Characteristics of GEM . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	i
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	iii
Summary and highlights . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Forward-looking statements . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Risk factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Information about this prospectus and the Placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		36
Directors and parties involved in the Placing	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40
Corporate information . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
Industry overview . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
Regulatory overview . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	61
History, reorganisation and group structure	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	87

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CONTENTS

	Page
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	93
Connected transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	139
Future plans and use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	145
Directors, senior management and staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	152
Relationship with Controlling Shareholders and non-competition undertakings . . . . . .	166
Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	171
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	172
Financial information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	175
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	211
Structure and conditions of the Placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	219
Appendices
I — Accountants’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
II — Unaudited pro forma financial information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
III — Summary of the constitution of our Company and Cayman Islands
company law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
IV — Statutory and general information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
V — Documents delivered to the Registrar of Companies and available
for inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1

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SUMMARY AND HIGHLIGHTS

This summary aims to give you an overview of the information contained in this prospectus and should be read in conjunction with the full text of this prospectus. As the following is only a summary, it does not contain all the information that may be important to you. You should read this prospectus in its entirety before you decide to invest in the Placing Shares.

There are risks associated with any investment. Some of the particular risks involved in investing in the Placing Shares are set out in the section headed ‘‘Risk factors’’ in this prospectus (pages 23 to 35). You should read that section carefully before making any decision to invest in the Placing Shares. Various expressions used in this summary are defined in the sections headed ‘‘Definitions’’ and ‘‘Glossary’’ in this prospectus (pages 13 to 20).

OVERVIEW

Our business model

We have been principally engaged in the design, fabrication, installation and maintenance of signage and related products in both the public and private sectors in Singapore since 1997. We are one of the established companies offering road signage in Singapore and have the capability to offer our products across public and private sectors. Both our public and private sector projects are typically non-recurring in nature. Approximately 66.7% and 80.7% of our revenue during the two years ended 31 December 2014 was derived from the public sector. Public sector includes road signage, signage and related products for education institutions, public housing flats/compounds and national parks. Private sector includes signage and related products for commercial buildings and fast food chains.

Our competitive advantage lies in our ability to provide reliable products in a timely manner. Our established track record and experienced management team have built a strong reputation in the industry over the years. Our Group did not apply for listing on the Singapore Exchange Limited or any other exchange. The business model is mostly the same for both public sector and private sector projects. All our projects undergo the following stages (1) tendering, (2) project implementation and (3) post-project review. However, there are some minor differences in the above stages between public and private sector projects:

(a) During the tendering stage, the tender documents for private sector projects are relatively less complex than that for public sector projects.
(b) During the implementation stage, there are (i) more project team members involved in public sector projects than private sector projects, (ii) broader scope of value-adding works involved in public sector projects, (iii) usually a stricter and defined time frame for public projects whilst the installation schedules for private

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SUMMARY AND HIGHLIGHTS

projects are more flexible, (iv) more project management required for public sector projects due to more work steps than private sector projects and (v) stricter requirements set by the LTA of Singapore for road signage public sector projects.

(c) Subsequent to the delivery and completion of the signage installation, customers in public sector projects typically undertake a more detailed process for reviewing the signage works done to ensure specifications are met in accordance with LTA’s requirements.

As such, there is higher barrier of entry into the public sector projects where reputable track record and experienced management team take time to build. Given that we have been in this industry for more than 15 years, our Directors believe that we are in a better position to get public sector projects as compared to smaller companies in the market. Moreover, as explained above, there is generally higher complexity, requirement for more resources, experience and project management capability involved in public sector projects, therefore leading to a higher margin for this sector.

Public sector Private sector Total	Number of contracts and orders 1,041 1,170 2,211	Year ended 3 From private invitation/ representing approximate % of contracts 1,029/98.8% 1,170/100.0% 2,199	1 Decemb Success rate (%) 68 30 30–68	er 2013 From open tender/ representing approximate % of contracts 12/1.2% — 12	Success rate (%) 28 — 28	Number of contracts and orders 1,170 1,108 2,278	Year ended 3 From private invitation/ representing approximate % of contracts 1,167/99.7% 1,108/100.0% 2,275	1 Decemb Success rate (%) 82 35 35–82	er 2014 From open tender/ representing approximate % of contracts 3/0.3% — 3	Success rate (%) 33 —
										33

Our principal business activities

Our principal business activity is the design, fabrication, installation and maintenance of signage and related products in both the public and private sectors in Singapore. Our signage and related products include, but are not limited to, indoor signage, outdoor signage, road signage, steel works, railings and hoarding signage.

Key milestones

From 2008 to 2014, Signmechanic Singapore was awarded the temporary signage projects required for Formula 1 Singapore Grand Prix, providing road diversion signage for the past seven years.
In 2009, Signmechanic Singapore obtained its first major road signage contract of value of approximately S$4.0 million, for the upgrading of directional and traffic signs in the west sector of Singapore.
In 2010, Signmechanic Singapore was awarded the road directional signage required for Youth Olympics held in Singapore.

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SUMMARY AND HIGHLIGHTS

From 2011 to 2013, Signmechanic Singapore obtained various contracts for the supply of labour and machinery for the construction of precast fac¸ ade wall, lane marking and road/directional signage along the Marinal Coastal Expressway, the widest undersea road tunnel in Singapore.
In 2013, Signmechanic Singapore was awarded Singapore Business Quality Award for its commitment towards quality, environment, health and safety management system.

We will continue to focus on the public sector in Singapore, while seeking opportunities to expand our business portfolio and product offering. Accordingly, we do not expect such continued focus to materially alter our operations and financial position in the future.

Customers

Our customers comprise mainly main contractors of civil engineering projects in the public sector in Singapore, who will subcontract the signage works of their projects to us. We are one of the established companies offering road signage in Singapore and we also have contracts in relation to signage and related products in the public sector for education institutions, public housing flats/compounds, defence compound, airport and national parks, amongst others. We also have customers in the private sector for signage and related products for commercial buildings, industrial buildings, private residential buildings, hospital and fast food chains. We had 310 and 317 customers for the two years ended 31 December 2014 respectively, of which revenue from the public sector comprised approximately 66.7% and 80.7% of our total revenue for the two years ended 31 December 2014, respectively. During the Track Record Period, we have recognised revenue from 2,211 and 2,278 contracts and orders respectively.

Our signage works for our contracts typically align with the project duration of our customers’ main contractor project, which can span from approximately 1 month to 4 years. Over the years, we have built a solid track record for providing reliable and timely products for road signage works in Singapore, and have a good reputation with our customers. There is no long-term agreement with any of our customers and contracts are signed on a case by case basis.

All open tender projects are competitive in nature; for private invitation projects, we understand from our customers that they typically require more than one quotation from their suppliers, and therefore with more than one quotation, these projects will also be competitive in nature. Please refer to the section headed ‘‘Business — Project Management’’ on pages 108 to 114 of this prospectus for details.

For the two years ended 31 December 2014, revenue from our five largest customers amounted to approximately S$2.1 million and S$5.1 million, and accounted for approximately 26.6% and 43.1% of our total revenue, respectively. Revenue from our largest customer for the same periods amounted to approximately S$0.7 million and S$1.4

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SUMMARY AND HIGHLIGHTS

million and accounted for approximately 8.9% and 12.1% of our total revenue, respectively. Please refer to the section headed ‘‘Business — Customers’’ on pages 116 to 120 of this prospectus for details.

Main qualifications and licences

Our Group holds a BCA L5 grading in the work head category of ‘‘Signcraft Installation’’ which would enable us to tender for Singapore public sector projects of up to S$14 million, amongst other gradings in other categories. For details of our qualifications and licences, please refer to the section headed ‘‘Business — Main qualifications and licences’’ on pages 101 to 102 of this prospectus.

Suppliers

We mainly engage suppliers in Singapore and our main suppliers supply steel and aluminium products, micro prismatic reflective sheeting and road safety products. There is no long term contract with our suppliers, and we make our purchases based on the requirements of each particular contract and for the customer orders we have on hand. Our Group has good relationships with our suppliers and has over the years established strong rapport with them. For the two years ended 31 December 2014, purchases from our five largest suppliers amounted to approximately S$1.0 million and S$1.4 million, and accounted for approximately 39.9% and 40.4% of our total purchases, respectively. Purchases from our largest supplier for the same periods amounted to approximately S$0.5 million and S$0.5 million, and accounted for approximately 19.7% and 14.4% of our total purchases, respectively. Please refer to the section headed ‘‘Business — Suppliers’’ on pages 121 to 123 of this prospectus for details.

Subcontractors

We may engage subcontractors for part of certain contracts secured by us, for instance, to provide certain services such as laying of road markings, installation of precast blocks, bulky metal works or excavation works which we do not typically provide in-house. Our Group has good relationships with our subcontractors and has over the years established strong rapport with them. Total amount paid for subcontracting works during the Track Record Period amounted to approximately S$1.4 million and S$1.7 million and accounted for approximately 29.2% and 27.1% of our total cost of sales, respectively. Please refer to the section headed ‘‘Business — Subcontractors’’ on pages 123 to 125 of this prospectus for details.

Sales and marketing

Our customers typically come to know us by word-of-mouth or are repeat customers. We also rely on our Executive Directors, Mr. Kelvin Tan and Mr. Peter Tan, and our general manager, Mr. Soh Chiau Kim, to build and foster relationships with our key customers. We also monitor the GeBIZ system for opportunities in public sector contracts related to signage. We do not have a dedicated sales and marketing team.

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SUMMARY AND HIGHLIGHTS

Competitive landscape

The infrastructure in Singapore is central to socio-economic development and advancement. Major infrastructure projects continue to dominate the construction industry and public projects are projected to sustain Singapore’s construction demand for 2015. Thus, the opportunities in this industry remain positive as construction demand in Singapore is expected to sustain at S$26 billion to S$37 billion per annum from year 2016 to 2019. This is in view with major public sector civil engineering projects such as new expressways and railways extensions underway, thus requiring more deployment and placement of road signage in the near future.

In 2014, Singapore’s total signage manufacturing industry is worth approximately S$304 million with at least 300 establishments in the market. The total value grew by 2.7% from 2012 to 2014. The market size for CR11 signcraft segment is estimated to be approximately 10% of the total industry in 2014 (which is approximately S$30.4 million in value). Based on our Group’s sales of approximately S$11.9 million in 2014, our Group’s market share in the CR11 signcraft segment is approximately 39.1%.

The market for the signage industry in Singapore is serviced by approximately 300 manufacturers with 71 CR11 registered construction agencies in Singapore (that are all private limited firms). In terms of competitors, our Group competes mainly with two other companies for the road signage segment and about twenty others for the commercial signage segment in the market. While our Group operates in a fairly competitive space, we did a competent job distinguishing ourselves from other suppliers. Our Group is one of the main players in the market focusing on civil projects thus far and is able to work on an expanded scope of work that includes railing; therefore making this one of the primary drivers for our Group’s good relationship with our customers. Some unique selling points that differentiates our Group from our competitor include our L5 grade certification in signcraft installation and trusted supplier for civil projects in Singapore.

Barriers for entry in this industry are not high and projects often vary in value. In addition, operational productivity is another core requirement for companies competing in this sector. Hence, as well as achieving the right levels of experience and financial backing for registration under the Contractor Registration Scheme (CRS), companies also need to meet government standards for productivity.

Although there are some barriers to entry for this industry as mentioned, the prospects for our Group however remains fair as long as there is a continued demand for more deployment and placement of road signage in the near future.

Please refer to the section headed ‘‘Industry overview’’ on pages 45 to 60 of this prospectus for details.

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SUMMARY AND HIGHLIGHTS

Competitive strengths

We have a reputation as an established signage provider, particularly for road signage works in Singapore
We have a solid track record of providing reliable and timely products for our customers
Our rapport with our suppliers enable us to obtain competitive pricing and fast delivery turnaround time
We have an experienced and dedicated management team and each of our Executive Directors has over 15 years of experience in the signage installation industry in Singapore

Please refer to the section headed ‘‘Business — Competitive strengths’’ on pages 93 to 95 of this prospectus for further details.

Business strategies

Our corporate objective is to achieve sustainable growth in our business and financial performance so as to create long-term Shareholders’ value. We intend to achieve this by implementing the following corporate strategies:

Expand and strengthen our market position in the public sector in Singapore
Expand our business portfolio through the formation of new companies and/or acquisitions
Expand our range of product offering to target and secure more non-road infrastructure related projects

Please refer to the section headed ‘‘Business — Business objectives and strategies’’ on pages 96 to 100 and the section headed ‘‘Future plans and use of proceeds’’ on page 145 to 151 in this prospectus for a detailed discussion of these strategies.

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SUMMARY AND HIGHLIGHTS

USE OF PROCEEDS

Based on the Placing Price of HK$0.50 per Placing Share, the net proceeds of the Placing after deduction of underwriting fees and estimated expenses payable by us in connection with the Placing upon Listing, are estimated to be approximately HK$23.4 million. Our Company currently intends to use the net proceeds from the Placing as follows:

Approximate amount of net

proceeds/utilised by year ending Intended applications
HK$8.2 million or 35%/31 Purchase of materials and/or equipment in relation to December 2017 the expansion of existing sector and to target and secure more non-road infrastructure related projects
HK$8.2 million or 35%/31 Capital contribution for the formation of new December 2017 companies and/or acquisitions
HK$4.7 million or 20%/31 Expand and enhance our workforce to support our December 2017 expansion of the existing sector and to target and secure more non-road infrastructure related projects
HK$2.3 million or 10%/31 Working capital December 2017

For further details, please refer to the section headed ‘‘Future plans and use of proceeds’’ on pages 145 to 151 in this prospectus.

SUMMARY OF FINANCIAL INFORMATION

The tables below summarise our financial information for the two years ended 31 December 2014 respectively, and should be read in conjunction with our financial information included in the Accountants’ Report set forth in Appendix I to this prospectus, including the notes thereto.

Highlight of statements of comprehensive income

	For the year	For the year	ended
	31 December	31 December
S$	2013		2014
Revenue	7,827,042		11,850,088
Gross profit	2,874,950		5,542,812
Profit before tax	815,419		2,828,211
Profit for the year	611,481		2,565,215
Total comprehensive income for the year	633,684		2,543,012

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SUMMARY AND HIGHLIGHTS

Highlight of statements of financial position

	As at
	31 December	31 December
S$	2013	2014
Non-current assets	578,600	679,373
Current assets	14,468,073	8,783,427
Current liabilities	7,068,628	4,293,783
Net current assets	7,399,445	4,489,644
Non-current liabilities	135,605	155,170
Net assets	7,842,440	5,013,867

Revenue

We derive our revenue mainly from the design, fabrication, installation and maintenance of signage and related products in both the public and private sectors in Singapore. The increase in our revenue for the year ended 31 December 2014 as compared to the year ended 31 December 2013, was mainly due to the fulfillment of several higher value contracts in the year ended 31 December 2014. For details, please refer to the section headed ‘‘Financial information — Period to period comparison of results of operations’’ on pages 187 to 191 in this prospectus.

Key financial ratios

	As at
	31 December	31 December
(times)	2013	2014
Current ratio(1)	1.5	2.0
Gearing ratio(2)	0.51	0.23
	For the year ended
	31 December	31 December
(%)	2013	2014
Gross profit margin(3)	36.7	46.8
Profit before tax margin(4)	10.4	23.9
Net profit margin(5)	7.8	21.6
Return on total assets(6)	9.9	27.1
Return on equity(7)	7.8	51.2

Notes:

(1) Current ratio is calculated by dividing current assets by current liabilities as at the respective year end, excluding asset classified as held for sale and liability directly associated with asset held for sale.

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SUMMARY AND HIGHLIGHTS

(2) Gearing ratio is calculated by dividing total borrowings (namely, bills payables, obligations under finance lease and liability directly associated with asset held for sale) by total equity as at the respective year end.
(3) Gross profit margin is calculated by dividing gross profit by the revenue for the financial year.
(4) Profit before tax margin is calculated by dividing profit before tax by the revenue for the year.
(5) Net profit margin is calculated by dividing profit for the year by the revenue for the year.
(6) Return on total assets is calculated by dividing profit for the year by the total assets (excluding asset classified as held for sale) as at the respective year end.
(7) Return on equity is calculated by dividing profit for the year by the total equity as at the respective year end.

Gross profit margin and net profit margin

Our gross profit margin increased from the year ended 31 December 2013 to the year ended 31 December 2014, from approximately 36.7% to approximately 46.8%. Gross profit amount also increased from approximately S$2.9 million in the year ended 31 December 2013 to approximately S$5.5 million in the year ended 31 December 2014. These improvements were mainly attributable to higher revenue, higher selling price and labour optimisation for certain contracts whose revenue was recognised in the year ended 31 December 2014. Please refer to the section headed ‘‘Financial information — Period to period comparison of results of operations — Gross profit and gross profit margin’’ on pages 188 to 190 in this prospectus.

Our net profit margin increased from the year ended 31 December 2013 to the year ended 31 December 2014, from approximately 7.8% to 21.6%. This was mainly attributable to the increase in gross profit margin mentioned above. Please refer to the section headed ‘‘Financial information — Period to period comparison of results of operations — Net profit before tax and net profit before tax margin’’ on pages 190 to 191 in this prospectus.

During the Track Record Period, we recorded gross profits and gross profit margins as below for public and private sector projects.

Public sector Private sector	Year ended 31 December 2013 Revenue recognised Gross Profit Gross profit margin S$’000 S$’000 Approximate % 5,220 1,953 37.4 2,607 921 35.3 7,827 2,875 36.7	Year ended 31 December 2014 Revenue recognised Gross Profit Gross profit margin S$’000 S$’000 Approximate % 9,562 4,595 48.1 2,288 948 41.4 11,850 5,543 46.8

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SUMMARY AND HIGHLIGHTS

During the Track Record Period, we recorded net profit before tax and net profit before tax margins as below for public and private sector projects.

Public sector Private sector	Year ended 31 December 2013 Revenue recognised Net profit before tax Net profit before tax margin S$’000 S$’000 Approximate % 5,220 580 11.1 2,607 235 9.0 7,827 815 10.4	Year ended 31 December 2014 Revenue recognised Net profit before tax Net profit before tax margin S$’000 S$’000 Approximate % 9,562 2,405 25.1 2,288 423 18.5 11,850 2,828 23.9

Impact of listing expenses on the financial performance of our Group for the year ending 31 December 2015

During the Track Record Period, we had not incurred listing-related expenses in the profit and loss account. The total estimated expenses in relation to the Listing are approximately HK$17.4 million, of which approximately HK$16.6 million and HK$0.8 million is directly attributable to the issue of New Shares to be borne by our Group and placing of Sales Shares to be borne by the Selling Shareholder, respectively. Out of the estimated listing expenses of approximately HK$16.6 million to be borne by us, approximately HK$12.1 million and HK$4.5 million are expected to be charged to the profit or loss and reserve of our Group for the year ending 31 December 2015 respectively. The recognition of the listing expenses is expected to materially affect our financial results for the year ending 31 December 2015. The estimated listing-related expenses of our Group are subject to adjustments based on the actual amount of expenses incurred/to be incurred by our Company upon the completion of the Listing.

Our latest development subsequent to the Track Record Period

We have continued to focus on strengthening our market position for our signage and related products in the public sector in Singapore. The following is a summary of our selected unaudited financial information for the four months ended 30 April 2015 which was prepared on the same basis as our audited financial information in Appendix I to this prospectus. As far as we are aware, our industry remained relatively stable after the Track Record Period. There was no material adverse change in the general economic and market conditions in the country or the signage industry in which we operate that had affected or would affect our business operations or financial condition materially and adversely.

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SUMMARY AND HIGHLIGHTS

revenue or increase in cost of sales or other costs (apart from listing expenses incurred) as there were no significant changes to the general business model of our Group and economic environment.

No material adverse change

Our Directors confirm that, up to the date of this prospectus, there has been no material adverse change in our financial or trading position or prospects since 31 December 2014 and there is no event since 31 December 2014 which would materially affect the information shown in our financial statements included in the Accountants’ Report set forth in Appendix I to this prospectus.

PLACING STATISTICS

Based on the Placing Price of HK$0.50

Market capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$200,000,000

Unaudited pro forma adjusted net tangible assets per Share . . 2.28 (Singapore cents), or 12.99 (Hong Kong cents)

Notes:

(1) The calculation of the market capitalisation of our Company is based on 400,000,000 Shares in issue immediately following the completion of the Placing and the Capitalisation Issue and the Placing Price of HK$0.50 per Placing Share.
(2) The unaudited pro forma adjusted net tangible assets per Share is arrived at after the adjustments set forth in Appendix II to this prospectus and on the basis that 400,000,000 Shares were in issue immediately following the completion of the Placing and the Capitalisation Issue.

DIVIDENDS AND DIVIDEND POLICY

For each of the two years ended 31 December 2014, Signmechanic Singapore declared dividends of S$0.1 million and approximately S$5.4 million respectively, out of the distributable profits, and all these dividends had been paid as at the Latest Practicable Date. Dividends declared and paid in the past should not be regarded as an indication of the dividend policy to be adopted by our Company following Listing. We do not have any predetermined dividend payout ratio. For details of our dividend policy, please refer to the section headed ‘‘Financial information — Dividend policy’’ on page 209 in this prospectus.

RISK FACTORS

There are risks associated with any investment. Some of the particular risks in investing in the Placing Shares are set out in the section headed ‘‘Risk factors’’ on pages 23 to 35 in this prospectus. You should read that section carefully before you decide to invest in the Shares.

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SUMMARY AND HIGHLIGHTS

The material risks relating to our Group relate to (i) our listing expenses will materially affect our financial results for the year ending 31 December 2015, (ii) a failure to obtain new contracts given the non-recurring nature of our contracts, (iii) short-term revenue and profitability not indicative of long-term results and (iv) loss of key management and inability to attract and retain technical and management staff. The material risks relating to our industry are (i) non-renewal or suspension of our qualifications, licences and permits, (ii) low barriers of entry and (iii) reduction in the pipeline of public sector contracts.

REGULATORY OVERVIEW

The signage industry in Singapore is regulated by the BCA and registration in the Contractors Registration System maintained by the BCA is a pre-requisite to tendering for projects in the Singapore public sector. Our Group has a L5 grading in a constructionrelated workhead CR11, under signcraft installation. As such, we are able to tender for public sector projects in Singapore of up to S$14 million. The requirements for L5 grading in signcraft installation workhead CR11 are; (i) a minimum paid-up capital and minimum net worth of S$500,000; and (ii) the employment of at least a professional or two technicians with at least one of them with minimum eight years of relevant experience. For further information, please refer to section headed ‘‘Regulatory Overview’’ to this prospectus from pages 61 to 86.

REGULATORY COMPLIANCE

As at the Latest Practicable Date, our business operations are not subject to any special legislation or regulatory controls other than those generally applicable to companies and businesses incorporated and/or operating in Singapore, apart from those in relation to the registration system for contractors, the security of payments applicable for the Singapore’s building and construction industry, the employment of foreign workers in Singapore, man-year entitlements, workplace safety and health laws and regulations, workmen’s compensation. For further details of the abovementioned regulations, please refer to the section headed ‘‘Regulatory overview’’ on pages 61 to 86 in this prospectus.

CONTROLLING SHAREHOLDERS’ INFORMATION

Immediately following the completion of the Placing and the Capitalisation Issue, Absolute Truth (a company jointly owned by Mr. Kelvin Tan and Mr. Peter Tan as to 50% each) will hold 300,000,000 Shares, representing 75% of the enlarged issued share capital of our Company.

There is no other person who will, immediately following the completion of the Placing and the Capitalisation Issue, be directly or indirectly interested in 30% or more of the Shares then in issue or have a direct or indirect equity interest in any member of our Group representing 30% or more of the equity in such entity.

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DEFINITIONS

In this prospectus, unless the context otherwise requires, the following expressions have the following meanings:

‘‘Absolute Truth’’ Absolute Truth Investments Limited, a private limited company incorporated in the British Virgin Islands on 2 January 2015, which is beneficially owned as to 50% of its equity interests by each of Mr. Kelvin Tan and Mr. Peter Tan, and is the Controlling Shareholder interested in 75% of the entire issued share capital of our Company immediately following completion of the Placing and the Capitalisation Issue
‘‘Articles’’ or ‘‘Articles the articles of association of our Company, conditionally of Association’’ adopted on 10 March 2015 and as amended from time to time, a summary of which is contained in Appendix III to this prospectus
‘‘associate(s)’’ having the meaning ascribed thereto under Chapter 20 of the GEM Listing Rules
‘‘BCA’’ Building and Construction Authority of Singapore
‘‘BCA Academy’’
the education and research arm of BCA
‘‘bizSafe’’
bizSafe is a five-step programme to assist companies build up their workplace safety and health capabilities in order to achieve quantum improvements in safety and health standards at the workplace, and organised under the Workplace Safety and Health Council of Singapore
‘‘Board of Directors’’ or our board of Directors ‘‘Board’’
‘‘Business Day’’ any day (other than a Saturday or a Sunday) on which banks in Hong Kong are generally open for normal banking business
‘‘C.K. Toh Construction’’
C.K. Toh Construction Pte. Ltd., a company incorporated in Singapore with limited liability on 16 June 2004 and is principally engaged in the business of building construction and general trading in Singapore which was owned as to 21.25% by each of Mr. Kelvin Tan and Mr. Peter Tan, our Executive Directors and the Controlling Shareholders. Mr. Kelvin Tan and Mr. Peter Tan ceased to have any shareholding interest in C.K. Toh Construction as at the Latest Practicable Date

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DEFINITIONS

‘‘Capitalisation Issue’’ the issue of Shares (of which 20,000,000 Shares are Sale Shares) to Absolute Truth to be made upon capitalisation of certain sums standing to the credit of the share premium account of our Company as referred to in the paragraph headed ‘‘A. Further information about our Company — 3. Written resolutions of the sole Shareholder passed on 23 June 2015’’ in Appendix IV to this prospectus
‘‘Cayman Share Appleby Trust (Cayman) Ltd., the Cayman Islands share Registrar’’ registrar of our Company
‘‘CCASS’’ the Central Clearing and Settlement System established and operated by HKSCC
‘‘CCASS Broker a person admitted to participate in CCASS as a broker Participant(s)’’ participant
‘‘CCASS Clearing a person admitted to participate in CCASS as a direct clearing Participant(s)’’ participant or general clearing participant
‘‘CCASS Custodian a person admitted to participate in CCASS as a custodian Participant’’ participant
‘‘CCASS Investor a person admitted to participate in CCASS as an investor Participant’’ participant who may be an individual or joint individuals or a corporation
‘‘CCASS Participant’’ a CCASS Clearing Participant or a CCASS Custodian Participant or a CCASS Investor Participant
‘‘close associate(s)’’ has the meaning ascribed to it under Chapter 1 of the GEM Listing Rules
‘‘Companies Law’’
the Companies Law (as revised) of the Cayman Islands as amended, supplemented or otherwise modified from time to time
‘‘Companies (Winding the Companies (Winding Up and Miscellaneous Provisions) Up and Ordinance (Chapter 32 of the Laws of Hong Kong) as amended, Miscellaneous supplemented or otherwise modified from time to time Provisions) Ordinance (Cap 32)’’
‘‘Companies Ordinance the Companies Ordinance (Chapter 622 of the Laws of Hong (Cap 622)’’ Kong) as amended, supplemented or otherwise modified from time to time
‘‘Company’’
KPM Holding Limited (吉輝控股有限公司*), a company incorporated in the Cayman Islands on 10 March 2015 with limited liability
for identification purpose only

– 14 –

DEFINITIONS

‘‘connected persons’’ has the meaning ascribed thereto under the GEM Listing Rules
‘‘Controlling has the meaning ascribed thereto under the GEM Listing Rules. Shareholder(s)’’ As at the date of this prospectus, the Controlling Shareholders of our Company are Absolute Truth, Mr. Kelvin Tan and Mr. Peter Tan
‘‘cm’’ centimetre
‘‘Deed of Indemnity’’ the deed of indemnity dated 23 June 2015 entered into by the Controlling Shareholders in favour of our Company (on our own behalf and as trustee for our subsidiaries), particulars of which are set out in the section headed ‘‘D. Other information — 1. Estate duty, tax and other indemnities’’ in Appendix IV to this prospectus
‘‘Deed of Nonthe deed of non-competition dated 23 June 2015 entered into by competition’’ the Controlling Shareholders in favour of our Company (for ourselves and as trustee of our subsidiaries) as further described in the section headed ‘‘Relationship with our Controlling Shareholders and non-competition undertakings’’ in this prospectus
‘‘Director(s)’’ the director(s) of our Company
‘‘Executive Director(s)’’ the executive Director(s) of our Company
‘‘FWL’’ Foreign Worker Levy
‘‘GEM’’ the Growth Enterprise Market operated by the Stock Exchange
‘‘GEM Listing Rules’’ the Rules Governing the Listing of Securities on GEM, as amended, supplemented or otherwise modified from time to time
‘‘Group’’, ‘‘our Group’’, our Company or, where the context otherwise requires, in respect ‘‘we’’, ‘‘our’’ or ‘‘us’’ of the period before our Company becoming the holding company of our present such subsidiary and the businesses carried on by them or their predecessors (as the case may be)
‘‘HK$’’ or ‘‘HK dollars’’ Hong Kong dollars, the lawful currency of Hong Kong
‘‘HKAS’’ Hong Kong Accounting Standards
‘‘HKFRS’’ Hong Kong Financial Reporting Standards issued by the HKICPA
‘‘HKICPA’’ Hong Kong Institute of Certified Public Accountants

– 15 –

DEFINITIONS

‘‘HKSCC’’

Hong Kong Securities Clearing Company Limited

‘‘HKSCC Nominees’’ HKSCC Nominees Limited, a wholly owned subsidiary of HKSCC

‘‘Hong Kong’’ or ‘‘HK’’ the Hong Kong Special Administrative Region of the PRC
‘‘Hong Kong Branch Union Registrars Limited, the Hong Kong branch share registrar Share Registrar’’ and transfer office of our Company
‘‘Ipsos’’ Ipsos Business Consulting, a global market research and consulting agency
‘‘Ipsos Report’’ the industry report prepared by Ipsos and commissioned by our Company
‘‘Independent Nonour independent non-executive Director(s) Executive Director(s)’’
‘‘Independent Third party(ies) which is/are independent of and not connected (within Party(ies)’’ the meaning ascribed to it in the GEM Listing Rules) with any of our Directors, Substantial Shareholders or chief executive of our Company or any of our subsidiaries or any of their respective associates and is not otherwise a connected person
‘‘Joint Bookrunners’’ Grand Vinco Capital Limited and Sinomax Securities Limited or ‘‘Joint Lead Managers’’
‘‘km’’

kilometre

‘‘Latest Practicable 22 June 2015, being the latest practicable date prior to the Date’’ printing of this prospectus for ascertaining certain information referred to in this prospectus
‘‘Listing’’ the listing of the Shares on GEM
‘‘Listing Date’’ the date on which dealings in the Shares first commence trading on GEM
‘‘Listing Division’’ the listing division of the Stock Exchange
‘‘LTA’’ Land Transport Authority
‘‘Main Board’’ the main board of the Stock Exchange

– 16 –

DEFINITIONS

‘‘Memorandum’’ or the memorandum of association of our Company adopted on 23 ‘‘Memorandum of June 2015, as amended from time to time Association’’
‘‘Ministry of Foreign Ministry of Foreign Affairs of Singapore Affairs’’
‘‘MOM’’ Ministry of Manpower of Singapore
‘‘Mr. Kelvin Tan’’ Mr. Tan Thiam Kiat Kelvin, a co-founder, an Executive Director and the chairman of our Group and a Controlling Shareholder
‘‘Mr. Peter Tan’’ Mr. Tan Kwang Hwee Peter, a co-founder, an Executive Director and the chief executive officer of our Group and a Controlling Shareholder
‘‘New Shares’’ 80,000,000 new Shares being offered by our Company for subscription under the Placing
‘‘NTA’’ the net tangible assets
‘‘OHSAS 18001’’ the requirements for occupational health and safety management system developed for managing the occupational health and safety risks associated with a business
‘‘per cent’’ or ‘‘%’’ per centum or percentage
‘‘Placing’’ the conditional placing by the Underwriters on behalf of our Company of the Placing Shares for cash at the Placing Price, details of which are described under the section headed ‘‘Structure and conditions of the Placing’’ in this prospectus
‘‘Placing Price’’ HK$0.50 per Placing Share (excluding brokerage fee of 1%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005%)
‘‘Placing Shares’’ 100,000,000 Shares, comprising 80,000,000 New Shares and 20,000,000 Sale Shares offered by the Selling Shareholder at the Placing Price under the Placing subject to the terms and conditions as described in the section headed ‘‘Structure and conditions of the Placing’’ in this prospectus
‘‘PRC’’ or ‘‘China’’ the People’s Republic of China which, for the purposes of this prospectus and for geographical reference only, excludes Hong Kong, Macau and Taiwan

– 17 –

DEFINITIONS

‘‘Predecessor Companies Ordinance’’
the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) as in force from time to time prior to 3 March 2014
‘‘Reorganisation’’

the pre-listing reorganisation of our Group, further details of which are described under the section headed ‘‘History, reorganisation and group structure — Reorganisation’’ in this prospectus

‘‘S$’’
Singapore dollars, the lawful currency of Singapore
‘‘Sale Shares’’
20,000,000 existing Shares to be allotted and issued to the Selling Shareholder under the Capitalisation Issue, being offered for sale by the Selling Shareholder at the Placing Price under the Placing
‘‘Selling Shareholder’’
Absolute Truth, further particulars of which are set out in the section headed ‘‘D. Other information — 8. Selling Shareholder’’ in Appendix IV to this prospectus
‘‘SFC’’
the Securities and Futures Commission in Hong Kong
‘‘SFO’’
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘Share(s)’’ ordinary share(s) of HK$0.01 each in the share capital of our Company
‘‘Shareholder(s)’’
holder(s) of the issued Share(s)
‘‘Signmechanic Singapore’’
Signmechanic Pte Ltd, a private limited company incorporated in Singapore on 2 September 1997 and a wholly-owned subsidiary of our Company
‘‘Sino Promise’’
Sino Promise Investments Limited, a private limited company incorporated in the British Virgin Islands on 12 January 2015 and a wholly-owned subsidiary of our Company
‘‘Sinomax Securities’’
Sinomax Securities Limited, a corporation licensed to carry on Type 1 (dealing in securities) regulated activities under the SFO
‘‘Sole Sponsor’’ or ‘‘Vinco Capital’’
Grand Vinco Capital Limited, a wholly-owned subsidiary of Vinco Financial Group Limited (stock code: 8340), a corporation licensed to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the sole sponsor to the Placing
‘‘Stock Exchange’’
The Stock Exchange of Hong Kong Limited

– 18 –

DEFINITIONS

‘‘subsidiaries’’
has the meaning ascribed thereto under the Companies Ordinance (Cap 622)
‘‘Substantial Shareholder’’
has the meaning ascribed thereto under the GEM Listing Rules
‘‘T3 Holdings’’
T3 Holdings Pte. Ltd., a company incorporated in Singapore with limited liability on 5 November 2012 and is principally engaged in the business of building construction and the general wholesale trade (including general importers and exporters) in Singapore which was owned as to 21.0% by each of Mr. Kelvin Tan and Mr. Peter Tan, our Executive Directors and the Controlling Shareholders. Mr. Peter Tan and Mr. Kelvin Tan ceased to hold any shareholding interest in T3 Holdings as at the Latest Practicable Date
‘‘Takeovers Code’’ the Hong Kong Code on Takeovers and Mergers, as amended, supplemented or otherwise modified from time to time
‘‘Track Record Period’’ the two years ended 31 December 2014
‘‘Underwriters’’
the underwriters of the Placing whose names are set out in the paragraph headed ‘‘Underwriters’’ in the section headed ‘‘Underwriting’’ in this prospectus
‘‘Underwriting the underwriting agreement dated 29 June 2015 entered into Agreement’’ between our Company, our Executive Directors, the Selling Shareholder, our Controlling Shareholders, the Sole Sponsor, the Joint Bookrunners, the Joint Lead Managers and the Underwriters relating to the Placing, brief particulars of which are summarised in the section headed ‘‘Underwriting’’ in this prospectus
‘‘US’’ or ‘‘United the United States of America States’’

Unless otherwise stated, the conversion of S$ into HK$ in this prospectus is based on the approximate exchange rate of S$1.00 to HK$5.6963.

Such conversions shall not be construed as representations that amounts in HK$ will be or may have been converted into S$ at such rates or any other exchange rates, or vice versa.

Any discrepancies in any table between the total shown and the sum of the amount (including the percentage) listed are due to rounding.

– 19 –

GLOSSARY

This glossary of technical terms contains explanations and definitions of certain terms used in this prospectus in connection with our Group and our business. The terms and their meanings may not correspond to standard industry meanings or usage of these terms.

‘‘A&A’’

Alteration & Additions works

‘‘cutting plotter’’
equipment that cuts a piece of material lying on a surface through the use of specialised cutting knife, connected to computerised design software
‘‘GeBIZ’’
refers to the Singapore government’s one-stop e-procurement portal where all public sector’s invitations for quotations and tenders are posted
‘‘ISO’’ International Organisation for Standardisation
‘‘micro prismatic sheeting that ensures long distance visibility at dawn, dusk, in the reflective sheeting’’ work zone, on the roadway, at sea or in any environment where visibility is compromised

– 20 –

FORWARD-LOOKING STATEMENTS

We have included in this prospectus forward-looking statements that are not historical facts, but relate to our intentions, beliefs, expectations or predictions for future event. These forward-looking statements are contained principally in the sections headed ‘‘Summary’’, ‘‘Risk factors’’, ‘‘Industry overview’’, ‘‘Business’’, and ‘‘Financial information’’, which are, by their nature, subject to risks and uncertainties.

In some cases, we use the words ‘‘aim’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘continue’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘might’’, ‘‘ought’’, ‘‘plan’’, ‘‘potential’’, ‘‘predict’’, ‘‘project’’, ‘‘propose’’, ‘‘seek’’, ‘‘should’’, ‘‘will’’, ‘‘would’’ and similar expressions or statements to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to:

‧ our business strategies and plan of operation;
‧ our capital expenditure plans;
‧ the amount and nature of, potential for and future development of our business;
‧ our operations and business prospects, including new locations of expansion;
‧ our dividend policy;
‧ our overall financial condition;
‧ our planned projects;
‧ the regulatory environment of our industry in general;
‧ general industry outlook and future development in our industry;
‧ general economic trends in Singapore; and
‧ other statements in this prospectus that are not historical facts.

Our Directors confirm that these forward-looking statements are made after due and careful consideration.

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect the current views of our Company with respect to future events and are not a guarantee of future performance.

Additional factors that could cause actual performance or achievements to differ materially include, but are not limited to, those discussed under the section headed ‘‘Risk factors’’ on pages 23 to 35 in this prospectus.

These forward-looking statements are based on current plans and estimates, and speak only as of the date they are made. Our Company undertakes no obligations to update or revise any forward-looking statement in light of new information, future events or

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FORWARD-LOOKING STATEMENTS

otherwise. Forward-looking statements involve inherent risks and uncertainties and are subject to assumptions, some of which are beyond our control. Our Company cautions you that a number of important factors could cause actual outcomes to differ, or to differ materially, from those expressed in any forward-looking statements.

Due to these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus might not occur in the way we expect, or at all. Accordingly, you should not place undue reliance on any forward-looking information. All forward-looking statements contained in this prospectus are qualified by reference to these cautionary statements.

– 22 –

RISK FACTORS

Potential investors of the Placing Shares should carefully consider all of the information set out in this prospectus and, in particular, the following risks and special considerations associated with an investment in our Company before making any investment decisions in relation to our Company. If any of the possible events as described below materialises, our Group’s business, financial position and prospects could be materially and adversely affected and the market price of the Placing Shares could fall significantly.

This prospectus contains certain forward-looking statements relating to our Group’s plans, objectives, expectations and intentions which involve risks and uncertainties. Our Group’s actual results may differ materially from those as discussed in this prospectus. Factors that could contribute to such differences are set out below as well as in other parts in this prospectus.

RISKS RELATING TO OUR GROUP

Approximately HK$12.1 million of listing expenses will be recognised upon Listing and will materially affect our financial results for the year ending 31 December 2015

Our Directors are of the view that there would be a negative impact on the financial results, including the net profit of our Group, for the year ending 31 December 2015 due to the non-recurring listing expenses. The total estimated expenses in relation to the Listing are approximately HK$17.4 million, of which approximately HK$16.6 million and HK$0.8 million is directly attributable to the issue of New Shares to be borne by our Group and placing of Sales Shares to be borne by the Selling Shareholder, respectively. Out of the estimated listing expenses of approximately HK$16.6 million to be borne by us, approximately HK$12.1 million and HK$4.5 million are expected to be charged to the profit or loss and reserve of our Group for the year ending 31 December 2015 respectively. Such listing expenses had not been incurred during the Track Record Period and will be recognised upon Listing. Our Directors would like to emphasise that such listing expenses is a current estimate for reference only and the final amount to be charged to the profit and loss account of our Group for the year ending 31 December 2015 is subject to adjustment based on audit and the then changes in variables and assumptions.

A failure to obtain new contracts (given the non-recurring nature of our contracts) could materially affect our financial performance

The higher value orders that we receive are mainly on a non-recurring contract basis, relating to road signage works in the public sector in Singapore. Our signage works for our contracts typically align with the project duration of our customers’ main contractor project, which can span from approximately 1 month to 4 years. The majority of our revenue is non recurring in nature and we cannot guarantee that we will continue to secure new contracts from our customers after the completion of the existing awarded contracts. Our Group generally has to go through a competitive tendering or quotation process to secure new contracts. In the event we are unable to maintain business relationship with existing customers or unable to price our tender or quotation competitively, our business

– 23 –

RISK FACTORS

and hence our revenue will be adversely affected. It is critical to our Group to secure new contracts of similar or larger value on a continuous basis, and should we fail to do so, the financial performance of our Group will be adversely affected.

Our short-term revenue and profitability may not be indicative of the long-term results of operations

The duration of our signage works vary, typically span approximately from 1 month (for short-term installation of signage) to 2 years (for signage works contract where we provided new and replacement of directional and traffic signs) and 4 years (for a supply and installation of signage contract). Revenue from some ongoing contracts is recognised across financial years. The revenue and profitability for different contracts vary and should the approved monthly payments be higher for a certain financial year, that particular financial year will record a better short-term results. There is, therefore, no assurance that our shortterm results of operations are indicative of our long-term results of operations.

Loss of our key management and inability to attract and retain technical and management staff will adversely affect our operations and financial performance

Our Group’s success and growth depends on our ability to identify, hire, train and retain suitable, skilled and qualified employees, including management personnel with the requisite industry expertise. Our Group’s growth is dependent on many factors, and one of which is the contribution by our key personnel. Mr. Kelvin Tan and Mr. Peter Tan are responsible for our Group’s overall business strategy and development, while Mr. Soh Chiau Kim, our general manager, is responsible for the overall management of operations, with a focus on the execution of contracts. Our business also requires technical expertise and thus managers and supervisors in our project and production teams are important to us.

If any of these Executive Directors or senior management ceases to be involved in the management of our Group in the future and our Group is unable to find suitable replacements in a timely manner, there could be an adverse impact on the business and results of operations of our Group. The loss of service of any of the abovementioned personnel without a suitable and timely replacement or the inability to attract and retain other staff could adversely affect our Group’s operation, and hence, our Group’s revenue and results of operations.

We may experience delays or defaults in receiving our receivables, and a failure to receive payment on time and in full, or that delay in the release of retention monies or that retention monies are not fully released to us after expiry of the defect liability period may affect our liquidity position

We typically receive payments subsequent to our customers’ approval, based on the agreed pricing, the due supply and/or installation of signage and the approved delivery orders. A portion of each payment, normally up to maximum of 10% is withheld by our customers as retention money, half of this retention sum shall be released upon completion of works under the main (our customer’s) contract and the balance to be released at the end of 12 to 18 months defect liability period. As at 31 December 2013 and 31 December 2014,

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RISK FACTORS

our trade receivables were approximately S$1.3 million and S$1.5 million respectively. For the two years ended 31 December 2013 and 31 December 2014, the allowance for doubtful debts were S$23,210 and S$129,608 respectively, accounting for approximately 1.8% and 8.0% of our trade receivables for the corresponding period respectively. As of 31 December 2013 and 31 December 2014, retention money of approximately S$0.2 million and S$0.2 million respectively, was retained by our customers. If a client delays payment, or fails to release our retention monies as scheduled, our cash flow and working capital may be materially and adversely affected. Even where we are able to recover any losses incurred pursuant to the terms of the contract, the process of such recovery is usually timeconsuming and requires financial and other resources to settle the disputes. Furthermore, there can be no assurance that any outcome will be in our favour or that any dispute will be resolved in a timely manner. Failure to secure adequate payments in time or to manage past due debts effectively could have a material and adverse effect on our business, financial position, results of operations and prospects.

During the Track Record Period, we have not encountered any material delay in payment and release of retention money by our customers. However, there can be no assurance that such payment will be made on time by our customers in the future. Any failure by our customers to make payment to us on a timely manner may have an adverse effect on our future liquidity position.

Our cash flows may fluctuate due to the payment practice applied to our projects

Our signage works normally incur net cash outflows at the early stage of carrying out our works when we are required to pay for the supplies and labour for the fabrication of signage, prior to receiving payment from our customers. Our contracts typically do not have deposit from customers prior to starting work, although we will request if deposit can be made for higher value contracts. Our customers will make payment based on approved payment requests, which will be after the completion of parts of the signage works. Accordingly the cash flows will turn from net outflows at the early stage into accumulative net inflows gradually as the works progress. We undertake a number of contracts at any given period, and the cash outflow of a particular contract could be compensated by the cash inflows of other contracts. Should the mix of the contracts be such that more are at the initial stage, our corresponding cash flow position may be adversely affected.

Cost overruns in our signage works will affect our costs and materially affect our financial performance

The duration of our signage works typically span from approximately 1 month to 4 years during the Track Record Period. For higher value orders, we are typically awarded the contracts after a tendering or quotation process, during which we will provide a quotation for the supply or supply and installation of our signage products. However, the time period from the quotation to our purchase of materials and engagement of labour can range from approximately 1 month to 2 years.

We currently generate, and expect to continue to generate, a substantial portion of our revenue from contracts where the unit selling prices are agreed upon quotation. Our quotations are subject to a number of assumptions, including future economic conditions,

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estimated cost and availability of labour and raw materials and subcontractors’ performance. These assumptions may prove to be substantially different from our original estimates. Cost overruns can result in lower profit or a loss, and therefore may have a material adverse effect on our business, financial position, results of operations and prospects.

Our operations may subject us to litigation, arbitration, administrative proceedings or other disputes which may be time consuming and expose us to significant liability claims

We may from time to time encounter disputes arising from contracts with customers, subcontractors, suppliers or other third parties, which may involve claims against them or us. Claims against us may involve defective work products or unfinished work, casualties, property damages, breach of warranties, delay of payment to subcontractors or suppliers, or delays in the completion of contracts.

Claims involving us could result in time-consuming and costly litigations, arbitration, administrative proceedings or other legal procedures. Expenses we incur in legal proceedings or arising from claims brought by or against us could have a material and adverse effect on our business, financial position, results of operations and prospects. Moreover, legal proceedings resulting in unfavourable judgment or findings may harm our reputation, cause financial losses and damage our prospects of winning future contracts, thereby materially and adversely affecting our business, financial position, results of operations and prospects.

We rely on third parties, including subcontractors, to complete certain projects and are subject to risk arising from the non-compliance, late performance or poor performance by such third parties

We may engage subcontractors for part of certain contracts secured by us, for instance, to provide certain services such as laying of road marking, installation of precast blocks, bulky metal works or excavation works which we do not typically provide in-house. The engagement of subcontractors is subject to certain risks, including difficulties in overseeing the performance of such subcontractors in a direct and effective manner, failure to complete the contracted scope of works, inability to hire suitable subcontractors, or losses as a result of unexpected subcontracting cost overrun. As the subcontractors have no direct contractual relationships with our customers, we are subject to risks associated with nonperformance, late performance or poor performance by our subcontractors. As a result, we may experience deterioration in the quality of our signage and related works, incur additional costs, or be exposed to liability in relation to the performance of subcontractors under the relevant contracts, which may have impact on our profitability, financial performance and reputation, and may result in litigation or damages claims.

In addition, we are also subject to claims arising from defective work performed by subcontractors. While we may attempt to seek compensation from the relevant subcontractors, who may be unable to perform or perform their obligations in a timely manner, we may be required to compensate our customers before receiving compensation from the subcontractors. If no corresponding claim can be asserted against a subcontractor, or the amounts of the claim cannot be recovered in full or at all from the subcontractors, we

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may be required to bear some or all the costs of the claims, in which case our business, financial position, results of operations and prospects could be materially and adversely affected.

Approximately 70% of our workforce is made up of foreign labour and inability to obtain foreign labour could materially affect our operations and financial performance

Our business is highly dependent on skilled, semi-skilled and unskilled foreign worker as the local construction and manufacturing labour force is limited and more costly. Any shortage in the supply of foreign workers or increase in FWL for foreign workers, or any restriction on the number of foreign workers that we can employ for our signage works, will adversely affect our operations and financial performance. As at the Latest Practicable Date, approximately 70% of our workforce is made up of foreign workers. On this basis, our operations and financial performance may be adversely affected due to any shortage in the supply of foreign workers and any increase in the cost of foreign labour. The supply of foreign labour in Singapore is subject to the policies and regulations imposed by the MOM. For example, the MOM imposes a quota on the number of foreign workers that the main contractor and its subcontractors (including our Group and our subcontractors) can employ in respect of each construction project and in manufacturing. Depending on the requirements of our projects, the tightening of such quota on the number of foreign workers that the main contractors and its subcontractors can employ could affect our operations and accordingly our business and financial performance could be adversely affected. Any changes in the policies of the foreign workers’ countries of origin may affect the supply of foreign labour and cause disruptions to our operations which may result in a delay in the completion of our projects. The MOM also imposes FWL for foreign workers. For instance, in the budget for Singapore announced on 23 February 2015, the FWL for basic skilled workers under the construction sector will increase to S$650 from 1 July 2016 and to S$700 from 1 July 2017. Any increase in FWL will increase our operating expenses and will affect our financial performance.

Our business plan may not be implemented successfully which may adversely affect our prospects

Our Directors are of the view that our Group’s future plan has been prepared after due enquiry by reference to, among other matters, the expected future prospects of the signage industry in Singapore and the continuation of our competitive advantages and other factors considered relevant. Some of our future business plans are based on certain assumptions. The successful implementation of our business plan may be affected by a number of factors including the availability of sufficient funds, government policies relevant for our industry, the economic conditions, our ability to maintain our existing competitive advantages and the threat of substitutes and new market entrants. There is no assurance that our business plan can be successfully implemented. Should there be any material adverse change in our operating environment which results in our failure to implement any part of our business plan, our prospects may be adversely affected.

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RISK FACTORS

Our insurance coverage may not be sufficient to cover all losses or potential claims from our customers which would affect our business, financial condition and results of operations

We have purchased third party public liability insurance to cover claims in connection with personal injuries or damage to property due to accidents at our premises or from negligence in connection with our business operations. However, we may become subject to liabilities against which we are not insured adequately or at all or liabilities against which cannot be insured. Should any significant property damage or personal injury occur in our facilities or to our employees due to accidents, natural disasters, or similar events which are not covered or inadequately covered by our insurance, our business may be adversely affected, potentially leading to a loss of assets, lawsuits, employee compensation obligations, or other form of economic loss. In addition, we have not maintained insurance policies against losses arising from our environmental liabilities, business interruption, industrial accidents, work stoppages, civil unrest or other activities. Pursuant to Singapore laws and regulations, purchasing such insurance is not compulsory. If we purchase such additional insurance, we would incur additional costs for our business operations.

Although we believe our insurance coverage is sufficient for the needs of our operations and appropriate for our current risk profile, we cannot guarantee that our current levels of insurance are sufficient to cover all potential risks and losses. If we face any operating risks resulting from any of the aforesaid events in relation to the failure to purchase insurance, we may bear a substantial cost and experience a loss. In addition, our insurers will review our policies each year and we cannot guarantee that we can renew our policies or can renew our policies on similar or other acceptable terms. If we suffer from severe unexpected losses or losses that far exceed the policy limits, it could have a material and adverse effect on our business, financial position, results of operations and prospects. For example, insurance covering losses from acts of war, terrorism, or natural catastrophes is either unavailable or cost prohibitive. Any losses that we may incur which we are not insured against may adversely affect our business, financial condition and results of operations.

Our business involves inherent industrial risks and occupational hazards and the materialisation of such risks will affect our business operations and financial results

Our business involves inherent industrial risks and occupational hazards, which may not be eliminated through implementing safety measures. We participate in certain activities presenting risks and dangers, among which are fabrication, installation and maintenance of signage works on the road, at construction sites and commercial locations. Thus we are exposed to risks related to such activities, such as equipment failure, industrial accidents and fire. We cannot ensure that such risks will not cause a material and adverse impact to us in the future. The materialisation of any of the risks mentioned above in the worst case scenario may disrupt our business and damage our reputation, which may also affect the validity of our relevant qualifications, business operations and results of operations. Our insurance coverage, such as builders’ risk and third party liability, may not be sufficient, and it may not be possible to obtain adequate insurance (or any insurance at all) to cover certain risks on commercially reasonable terms.

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RISK FACTORS

To the extent we are not adequately covered by insurance, we may incur losses that cannot be compensated by third parties.

RISKS RELATING TO THE INDUSTRY IN WHICH WE OPERATE

Inability to renew our existing qualifications, licences and permits or the existing qualifications or licences are cancelled or suspended could materially affect our operations and financial performance

Our business and construction activities in Singapore are regulated by the BCA and various other regulatory bodies. These regulatory bodies stipulate the criteria that must be satisfied by us before permits and licences are granted to, and/or renewed for, our business. The renewal of our permits and licences is subject to compliance with the relevant regulations. In particular, our Group has to meet the various requirements laid down by the BCA in order to maintain our BCA workhead categories. The requirements to maintain our workhead categories include (i) a minimum paid-up capital and net worth; (ii) qualified personnel with the necessary professional or technical qualifications and experience; (iii) the necessary performance track records and (iv) contracts’ profile.

If we fail to comply with the applicable requirements or any required conditions to keep the qualifications and licences, then our qualifications and licences may be downgraded, suspended or cancelled. Delay or refusal may occur when renewing such qualifications and licences upon expiry. Failure to keep or renew our existing BCA workhead categories could result in suspension of our business operations, restriction or prohibition of certain business activities, or commencement of new business, thereby materially and adversely affecting our business, financial position, results of operations and prospects. For details please refer to the section headed ‘‘Business — Main qualifications and licences’’ in this prospectus.

Low barriers of entry could increase competition in our industry that may affect our financial performance

Our business is not capital intensive nor involve areas of high technology and therefore has relatively low barriers of entry for new entrants, particularly in sectors other than road signage. It is also relatively easy for customers to switch to our competitors as the product differentiation is low. The overall signage sector in Singapore is also fragmented. Therefore, if we fail to compete effectively or maintain our competitiveness in the market, our business, financial condition and results of operations will be adversely affected.

A reduction in the pipeline of public sector contracts could materially affect our financial performance

Approximately 66.7% and 80.7% of our contracts relate to public sector during the Track Record Period. Therefore, we are dependent on the Singapore government’s decision in relation to the building of new roads or the alteration of existing roads and on public sector spending. Any significant reduction in particular road signage works will have a material adverse effect on our business. Moreover, the level of Singapore government’s spending budget on public sector may change from year to year and any change or

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RISK FACTORS

significant delay in the level of spending may affect the business and operation results of our Group. In the event that the level of spending on public sector is reduced and our Group fails to secure business from other sectors, the business and profitability of our Group could be adversely affected.

Cost controls in the public sector or reduction in government spending could adversely affect our profitability and financial performance

Our Group secures our contracts either through private invitation to quote or through open tender. For private invitation to quote, our quotations are typically made to main contractors who, our Directors understand, will have submitted their own quotations through the GeBIZ system for public sector projects. For open tenders, these are directly submitted by us via the GeBIZ system. Approximately 66.7% and 80.7% of our revenue were derived from the public sector for the two years ended 31 December 2014. Typically, cost is a key consideration for public sector projects. Approximately S$462,000 and S$100,000, representing approximately 5.9% and 0.8% of our revenue for the two years ended 31 December 2014 was derived directly from contracts awarded via the GeBIZ system. The majority of our revenue was thus generated from public sector projects that was quoted directly to main contractors. Our success rates were approximately 68% and 82% of the public sector contracts that we had quoted for to our customers (main contractors) during the Track Record Period. As we are one of the established companies offering road signage in Singapore, it is common that we will receive invitations to quote from more than one main contractor for the same project as these main contractors are individually tendering for the same project. Our success rate is therefore based on us securing the contract for road signage for the particular project, regardless of which main contractor being awarded the project. Given that our revenue was mainly generated from the public sector, should there be cost control by the relevant government authority or reduction of government spending, our profitability and financial performance will be adversely affected.

We are required to comply with various environmental, labour, safety and health laws and regulations that may increase the compliance costs

Our business is subject to various environmental, labour, safety and health laws and regulations promulgated by the Singapore government authorities. Given the complexity and continuous amendments to these laws and regulations, compliance therewith may involve substantial financial and other resources to establish efficient compliance and monitoring systems which may adversely affect our operating results. There is no assurance that any new or changes to the government legislation, regulations and policies will not have an adverse effect on our financial performance and financial position. Please see the section headed ‘‘Regulatory overview’’ in this prospectus for further details.

When we serve as a contractor or subcontractor, we are responsible for the quality of the works, including the breach of environmental, labour, safety and health laws and regulations. If our business operations or our execution of contracts cause damage to the

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RISK FACTORS

environment and natural resources or cause loss of assets or casualties in violation of environmental, safety and health laws and regulations, we may be required to rectify or be responsible for the harm, loss of assets or casualties.

In addition, due to the nature of our business, we cannot guarantee that parties at the worksites would comply with safety measure and procedures during execution of works. In the event of non-compliance, there may be occurrences of serious personal injuries or fatal accidents, which may lead to interruption of our operations and adversely affect our financial conditions and results of operations to the extent not covered by our insurance policies.

RISKS RELATING TO THE PLACING

Investors should not place undue reliance on facts, statistics and data contained in this prospectus with respect to the economies and our industry

Certain facts, statistics and data in this prospectus are derived from various sources including various official government sources that we believe to be reliable and appropriate for such information. However, we cannot guarantee the quality or reliability of such source materials. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false or misleading. Whilst our Directors have taken reasonable care in extracting and reproducing the information, they have not been prepared or verified by us, the Selling Shareholder, the Sole Sponsor, the Joint Bookrunners, the Joint Lead Managers, the Underwriters or any of their respective directors, affiliates or advisers. Therefore none of them makes any representation as to the accuracy or completeness of such facts, statistics and data. Due to possibly flawed or ineffective collection methods or discrepancies between published information, market practice and other problems, the statistics in this prospectus may be inaccurate or may not be comparable to statistics produced for other publications or purposes and you should not place undue reliance on them. Furthermore, there is no assurance that they are stated or compiled on the same basis or with the same degree of accuracy as similar statistics presented elsewhere. In all cases, investors should give consideration as to how much weight or importance they should attach to, or place on, such information or statistics.

There has not been any prior public market for the Shares and an active trading market may not develop

An active trading market for the Shares may not develop and the trading price of the Shares may fluctuate significantly. Prior to the Placing, there has been no public market for the Shares. The Placing Price has been determined through negotiation between our Company (for ourselves and on behalf of the Selling Shareholder) and the Joint Lead Managers (for themselves and on behalf of the Underwriters) and the Placing Price may not be indicative of the price at which the Shares will be traded following the completion of the Placing. In addition, there is no assurance that an active trading market for the Shares will develop, or, if it does develop, that it will be sustained following completion of the Placing, or that the trading price of the Shares will not decline below the Placing Price.

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RISK FACTORS

The trading price of the Shares may fluctuate

The trading price of the Shares may fluctuate in response to a number of events including variations in our operating results, new sectors or locations for our business, our direct competitors, general performance of the GEM, the Main Board or other equity capital markets, changes in recommendations or financial estimates by analysts and investors’ general perception on our future prospects. In addition, there is no guarantee that there will be a liquid market in the Shares.

Investors may experience difficulties in enforcing their shareholders’ rights as the laws of Cayman Islands may differ from those of Hong Kong or other jurisdictions where investors may be located

Our Company is incorporated in the Cayman Islands and our affairs are governed by the Articles, the Companies Law and common law applicable in the Cayman Islands. The laws of Cayman Islands may differ from those of Hong Kong or other jurisdictions where investors may be located. As a result, minority Shareholders may not enjoy the same rights as pursuant to the laws of Hong Kong or such other jurisdictions. A summary of the Cayman Islands company law on protection of minorities is set out in the paragraph headed ‘‘Protection of minorities and shareholders’ suits’’ in Appendix III to this prospectus.

Historical dividends are not indicative of our Group’s future dividends

Signmechanic Singapore declared a dividend of S$0.1 million during the year ended 31 December 2013 and approximately S$5.4 million during the year ended 31 December 2014 to the shareholders of Signmechanic Singapore respectively. The value of dividends declared and paid in previous years should not be relied on by potential investors as a guide to the future dividend policy of our Group or as a reference or basis to determine the amount of dividends payable in the future. There is no assurance that dividends will be declared or paid in the future, at a similar level or at all. The amount of any dividends to be declared in the future will be subject to, among other factors, our Directors’ discretion, having taken into account the substantial capital requirements of our Group in the foreseeable future, the availability of distributable profits, our Group’s earnings, working capital, financial position, capital and funding requirements, the applicable laws and other relevant factors.

In any event, there is no assurance that our Company will receive sufficient distribution from our subsidiaries to support any future profit distribution to our Shareholders, or that the amounts of any dividends declared by our Company in the future, if any, will be of a level comparable to dividends declared and paid by us in the past, or by other listed companies in the same industry as our Group.

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RISK FACTORS

No assurance of liquidity and possible price and trading volume volatility of our Shares

Prior to the Listing, there has been no public market for the Shares. The Placing Price is the result of negotiations between our Company (for ourselves and on behalf of the Selling Shareholder), the Joint Lead Managers (for themselves and on behalf of the Underwriters), and may differ from the market price for the Shares after the Listing. However, there is no assurance that the Listing will result in the development of an active and liquid public trading market for the Shares. The pricing and trading volume of the Shares may be volatile. The market price of the Shares may fluctuate significantly and rapidly as a result of the following factors, among others, some of which are beyond control of our Group:

variations in the results of our Group’s operations;
changes in securities analysts’ analysis of our Group’s financial performance;
announcement by our Group of significant acquisitions, disposals, strategic alliances or joint ventures;
addition or departure of key management personnel;
fluctuations in market prices and trading volume of the Shares;
involvement in litigation; and
general economic and stock market conditions in Singapore and Hong Kong.

These broad market and industry fluctuations may adversely affect the market price of the Shares.

Termination of the Underwriting Agreement

Prospective investors of the Placing Shares should note that the Underwriters are entitled to terminate their obligations under the Underwriting Agreement by the Vinco Capital (for itself and on behalf of the Underwriters) by giving written notice to our Company (for ourselves and on behalf of the Selling Shareholder) upon the occurrence of any of the events stated in the paragraph headed ‘‘Grounds for termination’’ under the ‘‘Underwriting’’ section of this prospectus at any time prior to 8: 00 a.m. (Hong Kong time) on the Listing Date. Such events include, without limitation, any act of God, war, riot, public disorder, civil commotion, fire, flood, tsunami, explosion, epidemic, pandemic, act of terrorism, earthquake, strike or lock-out.

Additional equity fund raising may lead to dilution of shareholders’ interests and decrease in market price of the Shares and additional debt financing may restrict future dividend declaration and/or fund raising exercises of our Group

We may find opportunities to grow through acquisitions that cannot currently be anticipated. Secondary issue(s) of securities after the Placing may be necessary to raise the required capital to capture these growth opportunities. If additional funds are raised by

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issuing new equity securities in the future to new and/or existing Shareholders after the Listing, such new Shares may be priced at a discount to the then prevailing market price. If existing Shareholders are not offered an opportunity to participate, their shareholding interest in our Company will be diluted. Also, if our Company fails to utilise the additional funds to generate the expected earnings, our financial results may be adversely affected and in turn exert pressure on the market price of the Shares. If additional funds are raised through debt financing, any additional debt financing may, apart from increasing interest expense and gearing, may contain restrictive covenants with respect to dividends, future fund raising exercises and other financial and operational matters.

Future sale of Shares or major divestment of Shares by our Controlling Shareholders may cause the market price of the Shares to fall

The sale of a significant number of Shares in the public market after the Placing, or the perception that these sales may occur, could adversely affect the market price of the Shares. Except as otherwise described in the section headed ‘‘Underwriting’’ in this prospectus and the restrictions set out by the GEM Listing Rules, there are no restrictions imposed on our Controlling Shareholders or Substantial Shareholders to dispose of their shareholdings. Any major disposal of Shares by any of our Controlling Shareholders or Substantial Shareholders may cause the market price of the Shares to fall. In addition, these disposals may make it more difficult for our Group to issue new Shares, thereby limiting our Group’s ability to raise capital.

Investors should not place any reliance on any information contained in press articles or other media regarding our Group and the Placing

There may have been press and media coverage regarding our Group and the Placing, which may contain references to certain events, or information such as financial information, financial projections, and other information about us that do not appear in this prospectus. Potential investors should only rely on the information contained in this prospectus, and any formal announcements made by us in Hong Kong when making any investment decision regarding our Shares. We do not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, the fairness, appropriateness or reliability of any forecasts, or the views or opinions expressed by the press or other media regarding our Shares, the Placing, or our Group. We make no representation as to the appropriateness, accuracy, completeness or reliability of any such information or publication by the press or media. To the extent that any such information appearing in publications other than this prospectus is inconsistent with, or conflicts with, the information contained in this prospectus, our Group disclaims it. Accordingly, prospective investors are cautioned against making their investment decisions in reliance on any other information, reports, or publications other than this prospectus.

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RISK FACTORS

RISKS RELATING TO INFORMATION CONTAINED IN THIS PROSPECTUS

Statistics and facts from governmental source in this prospectus have not been independently verified

This prospectus includes certain statistics and facts that have been extracted from official sources and publications. Our Company believes that the sources of these statistics and facts are appropriate and we have taken reasonable care in extracting and reproducing such statistics and facts. Our Company has no reason to believe that such statistics and facts are false or misleading or that any fact has been omitted that would render such statistics and facts false or misleading. These statistics and facts from these sources have not been independently verified by our Company, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, the Underwriters or any of their respective directors or any other party involved in the Placing and therefore, our Company makes no representation as to the accuracy or completeness of these statistics and facts, as such these statistics and facts should not be unduly relied upon.

Forward-looking statements contained in this prospectus are subject to risks and uncertainties

This prospectus contains certain statements and information that are ‘‘forwardlooking’’ and uses forward-looking terminology such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘may’’, ‘‘ought to’’, ‘‘should’’ or ‘‘will’’ or similar terms. Those statements include, among other things, the discussion of our Group’s growth strategy and expectations concerning our future operations, liquidity and capital resources. Investors of the Shares are cautioned that reliance on any forward-looking statements involves risks and uncertainties and that any or all of those assumptions could prove to be inaccurate and as a result, the forward-looking statements based on those assumptions could also be incorrect. The uncertainties in this regard include, but are not limited to, those identified in this section, many of which are not within our Group’s control. In light of these and other uncertainties, the inclusion of forward-looking statements in this prospectus should not be regarded as representations by our Company that our plans or objectives will be achieved and investors should not place undue reliance on such forward-looking statements. Our Company does not undertake any obligation to update publicly or release any revisions of any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the section headed ‘‘Forward-looking statements’’ in this prospectus for further details.

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INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS

This prospectus, for which our Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32), the Securities and Futures (Stock Market Listing) Rules (Chapter 571V of the Laws of Hong Kong) and the GEM Listing Rules for the purpose of giving information with regard to our Company. Our Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this prospectus is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this prospectus misleading.

Copies of this prospectus are available, for information purpose only, at the respective offices of the Underwriters during normal office hours from 9: 00 a.m. to 5: 00 p.m. from Tuesday, 30 June 2015 to Monday, 6 July 2015 (both dates inclusive).

INFORMATION ON THE PLACING

The Placing Shares are offered solely on the basis of the information contained and representations made in this prospectus, on the terms and subject to the conditions set out herein. No person in connection with the Placing is authorised to give any information, or to make any representation not contained in this prospectus, and any information or representation not contained herein must not be relied upon as having been authorised by our Company, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, the Underwriters, and any of their respective directors, agents, employees or advisers or any other party involved in the Placing. It is expected that, pursuant to the Placing, the Underwriter will conditionally place the Placing Shares on behalf of our Company with investors.

SELLING SHAREHOLDER

The Placing consists of 20,000,000 Sale Shares being sold by the Selling Shareholder. We estimate that the net proceeds to the Selling Shareholder from the Sale Shares (after deduction of proportional underwriting fees and estimated expenses payable by our Selling Shareholder in relation to the Placing), and assuming the Placing Price of HK$0.50 per Share will be approximately HK$9.2 million. We will not receive any of the proceeds from the sale of the Sale Shares.

Details of the Selling Shareholder is set out in the section headed ‘‘D. Other information — 8. Selling Shareholder’’ in Appendix IV to this prospectus.

PLACING SHARES ARE FULLY UNDERWRITTEN

This prospectus sets out the terms and conditions of the Placing.

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INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

This prospectus is published solely in connection with the Placing, which is sponsored by the Sole Sponsor and managed by the Joint Lead Managers and to be fully underwritten by the Underwriters (subject to the terms and conditions of the Underwriting Agreement). Further information about the Underwriters and the underwriting arrangements is contained in the section headed ‘‘Underwriting’’ of this prospectus.

RESTRICTIONS ON OFFER AND SALE OF PLACING SHARES

Each person acquiring the Placing Shares will be required to confirm or by his/her/its acquisition of the Placing Shares will be deemed to confirm that he/she/it is aware of the restrictions on the Placing of the Placing Shares described in this prospectus. Save as mentioned above, no action has been taken in any jurisdiction other than Hong Kong to permit a placing or the general distribution of this prospectus. Accordingly, this prospectus may not be used for the purpose of, and does not constitute, an offer or invitation in relation to the Placing in any jurisdiction or, in any circumstance in which such an offer or invitation is not authorised, or to any person to whom it is unlawful to make such an offer or invitation. The distribution of this prospectus and the offering of the Placing Shares in other jurisdictions are subject to restrictions and may not be made except as permitted under any applicable laws, rules and regulations of such jurisdictions pursuant to registration with or authorisation by the relevant regulatory authorities as an exemption therefrom.

Prospective investors for the Placing Shares should consult their financial advisers and take legal advice as appropriate, to inform themselves of, and to observe the applicable laws, rules and regulations of any relevant jurisdictions.

The Placing Shares are offered for subscription solely on the basis of the information contained and the representations made in this prospectus. No person is authorised in connection with the Placing to give any information, or to make any representation, not contained in this prospectus. Any information or representation not contained herein shall not be relied upon as having been authorised by our Company, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, the Underwriters, any of their respective directors, officers, employees, agents, representatives or any other person or party involved in the Placing.

STRUCTURE AND CONDITIONS OF THE PLACING

Further details of the structure and conditions of the Placing are set out in the section headed ‘‘Structure and conditions of the Placing’’ of this prospectus.

APPLICATION FOR LISTING ON GEM

Application has been made to the GEM Listing Division for the listing of, and permission to deal in, the Shares in issue and to be issued as mentioned in this prospectus.

Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32), if the permission for the Shares offered under this prospectus to be listed on GEM has been refused before the expiration of three weeks from the date of the

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INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

closing of the Placing or such longer period not exceeding six weeks as may, within the said three weeks, be notified to our Company for permission by or on behalf of the GEM Listing Division, then any allotment made on an application in pursuance of this prospectus shall, whenever made, be void.

Pursuant to Rule 11.23(7) of the GEM Listing Rules, at all times after the Listing, our Company must maintain the ‘‘minimum prescribed percentage’’ of 25% or such applicable percentage of the issued share capital of our Company in the hands of the public (as defined in the GEM Listing Rules).

No part of the Shares or the loan capital of our Company is listed, traded or dealt in on any other stock exchange. At present, our Company is not seeking or proposing to seek listing of, or permission to deal in, any part of the Shares or loan capital on any other stock exchange. Only securities registered on the branch register of members of our Company kept in Hong Kong may be traded on GEM unless the Stock Exchange otherwise agrees.

PROFESSIONAL TAX ADVICE RECOMMENDED

If investors are unsure about the taxation implications of the subscription for, purchase, holding or disposal of, dealings in, or exercise of any rights in relation to the Placing Shares, they should consult an expert. It is emphasised that none of our Company, our Directors, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, the Underwriters or any of their respective directors, officers, employees, agents, representatives or any other person or party involved in the Placing accepts responsibility for any tax effects on or liabilities of any person resulting from the subscription for, purchase, holding or disposal of, dealings in, or the exercise of any rights in relation to the Placing Shares.

REGISTRATION AND STAMP DUTY

Our fully-paid Shares are freely transferable. The Shares may be registered on the principal register of members in the Cayman Islands or on the branch register of members of our Company in Hong Kong. Dealings in the Shares registered on our principal register of members in the Cayman Islands will not be subject to Cayman Islands stamp duty unless our Company holds an interest in land in the Cayman Islands.

Our Company’s principal register of members will be maintained in the Cayman Islands by our Company’s principal share registrar, Appleby Trust (Cayman) Ltd., and our Company’s branch register of members will be maintained in Hong Kong by our Hong Kong Branch Share Registrar, Union Registrars Limited.

All the Shares will be registered on the branch register of members of our Company in Hong Kong. Only Shares registered on our branch register of members maintained in Hong Kong may be traded on GEM, unless the Stock Exchange otherwise agrees.

– 38 –

INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

Unless our Company determines otherwise, dividends payable in HK$ in respect of the Shares will be paid by cheque sent by ordinary post at the Shareholder’s risk to the registered address of each Shareholder or, in the case of joint holders, the first-named holder.

SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS

Subject to the approval of the listing of, and permission to deal in, the Shares on GEM and the compliance with the stock admission requirements of HKSCC, the Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the Listing Date or, under contingent situation, any other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange is required to take place in CCASS on the second Business Day after any trading day. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. All necessary arrangements have been made for the Shares to be admitted into CCASS. If investors are unsure about the details of CCASS settlement arrangement and how such arrangements will affect their rights and interests, they should seek the advice of their stockbroker or other professional advisers.

COMMENCEMENT OF DEALING IN THE SHARES

Dealings in the Shares on GEM are expected to commence at 9: 00 a.m. on Friday, 10 July 2015. Shares will be traded in board lots of 5,000 each. The stock code for the Shares is 8027.

Our Company will not issue any temporary documents of title.

LANGUAGE

If there is any inconsistency between this prospectus and the Chinese translation of this prospectus, this prospectus shall prevail. Names of any laws and regulations, governmental authorities, institutions, natural persons or other entities which have been translated into English and included in this prospectus and for which no official English translation exists are unofficial translations for your reference only.

ROUNDING

Any discrepancies in any table between totals and sums of individual amounts listed in any table are due to rounding.

Unless otherwise stated, the conversion of Singapore dollars into Hong Kong dollars in this prospectus is based on the approximate exchange rate of S$1 to HK$5.6963.

Such conversions shall not be construed as representations that amounts in HK$ will be or may have been converted into Singapore dollars at such rates or any other exchange rates, or vice versa, or at all.

– 39 –

DIRECTORS AND PARTIES INVOLVED IN THE PLACING

Name	Address	Nationality
Executive Directors
Mr. Tan Thiam Kiat Kelvin (陳添吉)	Block 232, Pasir Ris Drive 4	Singaporean
	#13-510
	Singapore 510232
Mr. Tan Kwang Hwee Peter (陳光輝)	35 Jalan Mariam	Singaporean
	Singapore 509313
Independent Non-Executive Directors
Mr. Oh Eng Bin (Hu Rongming)	11 Tanjong Rhu Road	Singaporean
(胡榮明)	#09-04 Singapore 436896
Mr. Tan Kiang Hua (陳建華)	1 Bukit Batok Street 25	Singaporean
	#06-22, Singapore 658882
Mdm. Kow Yuen-Ting	20 Clover Close	Singaporean
(Gao Yun Ting) (郜韵婷)	Singapore 579261

Please refer to the section headed ‘‘Directors, senior management and staff’’ in this prospectus for further information.

– 40 –

DIRECTORS AND PARTIES INVOLVED IN THE PLACING

Sole Sponsor Grand Vinco Capital Limited Units 4909–4910, 49/F, The Center 99 Queen’s Road Central Hong Kong Joint Bookrunners and Grand Vinco Capital Limited Joint Lead Managers Units 4909–4910, 49/F, The Center 99 Queen’s Road Central Hong Kong Sinomax Securities Limited Unit 1601, Far East Financial Centre 16 Harcourt Road Admiralty Hong Kong Underwriters Grand Vinco Capital Limited Units 4909–4910, 49/F, The Center 99 Queen’s Road Central Hong Kong Sinomax Securities Limited Unit 1601, Far East Finance Centre 16 Harcourt Road Admiralty Hong Kong Legal advisers to our Company As to Hong Kong laws Michael Li & Co. Solicitors, Hong Kong 19th Floor, Prosperity Tower 39 Queen’s Road Central Central Hong Kong

As to Singapore laws LPP Law Corporation Advocates & Solicitors Level 39 Marina Bay Financial Centre Tower 2 10 Marina Boulevard Singapore 018983 As to Cayman Islands laws Appleby 2206–19 Jardine House 1 Connaught Place Central Hong Kong

– 41 –

DIRECTORS AND PARTIES INVOLVED IN THE PLACING

Legal advisers to the Sole Sponsor As to Hong Kong laws and the Underwriters Robertsons 57/F, The Center 99 Queen’s Road Central Hong Kong Reporting accountants Deloitte Touche Tohmatsu Certified Public Accountants 35/F One Pacific Place 88 Queensway Hong Kong

Auditor Deloitte & Touche LLP 6 Shenton Way, OUE Downtown 2 #32-00 Singapore 068809

Compliance adviser Grand Vinco Capital Limited Units 4909–4910, 49/F, The Center 99 Queen’s Road Central Hong Kong

– 42 –

CORPORATE INFORMATION

Registered office Clifton House 75 Fort Street PO Box 1350 Grand Cayman KY1-1108 Cayman Islands Principal place of business in Hong 19th Floor, Prosperity Tower Kong registered under Part 16 of 39 Queen’s Road Central the Companies Ordinance Central (Cap 622) Hong Kong Headquarters and principal place of 424 Tagore Industrial Avenue business Sindo Industrial Estate Singapore 787807 Company website www.kpmholding.com (Note: contents contained in this website do not form part of this prospectus) Compliance officer Mr. Kelvin Tan Block 232, Pasir Ris Drive 4, #13-510 Singapore 510232 Company secretary Mr. Li Chi Chung, Solicitor, Hong Kong 19th Floor, Prosperity Tower 39 Queen’s Road Central Central Hong Kong Authorised representatives (for the Mr. Kelvin Tan purpose of the GEM Listing Rules) Block 232, Pasir Ris Drive 4, #13-510 Singapore 510232 Mr. Li Chi Chung, Solicitor, Hong Kong Flat E, 1st Floor, CNT Bisney, 28 Bisney Road Pok Fu Lam, Hong Kong Members of the audit committee Mdm. Kow Yuen-Ting (Chairman of audit committee) Mr. Tan Kiang Hua Mr. Oh Eng Bin (Hu Rongming) Members of the remuneration Mr. Tan Kiang Hua committee (Chairman of remuneration committee) Mr. Oh Eng Bin (Hu Rongming) Mdm. Kow Yuen-Ting

Registered office

– 43 –

CORPORATE INFORMATION

Members of the nomination Mr. Oh Eng Bin (Hu Rongming) committee (Chairman of nomination committee) Mr. Tan Kiang Hua Mdm. Kow Yuen-Ting Principal Share Registrar and Appleby Trust (Cayman) Ltd. transfer office in Cayman Islands Clifton House 75 Fort Street PO Box 1350 Grand Cayman KY1-1108 Cayman Islands Hong Kong Branch Share Registrar Union Registrars Limited and transfer office A18/F., Asia Orient Tower, Town Place 33 Lockhart Road Wanchai Hong Kong Principal banker DBS Bank Ltd 12 Marina Boulevard Marina Bay Financial Centre Tower 3 Singapore 018982

– 44 –

INDUSTRY OVERVIEW

Investors should note that IPSOS has been engaged by our Company to prepare the IPSOS Report to provide an overview of the signage industry in Singapore, China and Hong Kong and an analysis of market demand, which will be used in whole or in part in this prospectus.

The information and statistics set out in this section have been extracted from the IPSOS Report and other publicly available sources. Our Group, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, and the Underwriters believe that the sources of the information and statistics are appropriate sources for such information and statistics and have taken reasonable care in extracting and reproducing such information. While our Group, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, and the Underwriters have exercised reasonable care in extracting and reproducing such information and statistics, our Group cannot ensure the accuracy of such information and statistics and such information and statistics may not be consistent with other information. Our Group, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, and the Underwriters have no reason to believe that such information and statistics are false or misleading or that any fact has been omitted that would render such information and statistics false or misleading. The information and statistics used in this section have not been independently verified by our Group, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, the Underwriters and other parties involved in the Placing or their respective directors and advisers and no representation is given as to the accuracy of such information and statistics. You should not place undue reliance on any of such information and statistics contained in this section.

So far as our Directors are aware of, there is no adverse change in the market information since the date of the IPSOS Report which may qualify contradict or have an impact on the information in this section.

REPORT COMMISSIONED FROM IPSOS

We commissioned Ipsos, an Independent Third Party, to conduct an industry analysis of signage industry in Singapore and produce the Ipsos Report. A fee of approximately US$ 42,740 (approximately S$58,850 and excluding any disbursements) is payable to Ipsos for the preparation of the Ipsos Report. We believe that the fees are reasonable for the preparation of an industry report by an independent third-party consultant. The information and statistics set forth in this section have been extracted from the Ipsos Report. The sources cited in this section are in the form provided in the Ipsos Report, unless otherwise noted.

With 87 dedicated offices worldwide, Ipsos is a global research firm that helps leading corporations build, compete and grow using fact-based consulting. Since 1994, Ipsos has had a team of professional business consultants leading businesses in different sectors such as agribusiness, automotive, construction, energy, healthcare, industrial and many other sectors. Ipsos Business Consulting (the ‘‘IBC’’), a leader in fact-based business consulting, is trusted by top businesses, government sectors, and institutions worldwide. IBC support domestic and international organisations or businesses using our fact-based market analysis as they endeavour to build, compete, and grow in emerging and developed markets globally. The areas of specialisation include market opportunity assessment, competitive analysis, new product development, distribution channel and value chain analysis, market entry strategy, and partner diligence.

Our Directors confirm that Ipsos, including all of its subsidiaries, divisions and units, are independent of and not connected with us (within the meaning of the GEM Listing Rules) in any way. Ipsos has given its consent for us to quote from the Ipsos Report and to use information contained in the Ipsos Report in this prospectus.

– 45 –

INDUSTRY OVERVIEW

Sources of information in the Ipsos Report

The information contained in the Ipsos Report is derived by means of fact-based analysis and information sourcing which include:

. Conducting both primary and secondary research obtained from numerous sources within the global and Singapore signage industry.
. Primary research involved interviewing leading industry participants and secondary research involved reviewing publicly available documents, company reports, independent research reports and Ipsos’s proprietary database built up over the past decades.
. Forecast data was obtained from historical data analyses plotted against macroeconomic data as well as specific industry-related drivers, such as, amongst others, economic growth and construction demand in Singapore.

The following parameters and assumptions were considered when analysing the market in the preparation of the Ipsos Report:

. Projection and plans from Singapore government agencies, such as Building and Construction Authority (BCA)
. Published awarded tenders from the Government Electronic Business (GeBIZ) website
. Published awarded tenders from Land Transport Authority, Singapore (LTA)
. Total signage industry defined by the US Census Categories (Code NAICS 339955)

Reliability of information in the Ipsos Report

Our Directors are of the view that sources of information used in this section are reliable as the information was extracted from the Ipsos Report. Our Directors believe the Ipsos Report is reliable and not misleading as Ipsos is an independent professional research agency with extensive experience in their profession.

Future forecast in the Ipsos Report

Analyses, projections and data relating to future periods in the Ipsos Report are based on the following bases and assumptions:

. The social, economic and political environments of Singapore being examined remain stable during the forecast period, which ensures the sustained and steady development of the construction industry and signage market.
. Industry trend is expected to rise rapidly as construction demand is expected to sustain at high level
. With the increase of civil engineering projects, there will be demand for the deployment and placement of signage (e.g. road signage and road directions).

The research may be affected by the accuracy of these assumptions and the choice of these parameters.

In the preparation of the projections relating to future periods and factor affecting growths, Ipsos has considered various growth drivers and/or barriers including, among others:

. New technologies that may impact the development of the signage industry in Singapore

– 46 –

INDUSTRY OVERVIEW

. Trend of published tenders being awarded to tenderers (e.g. low price, higher qualification)
. New requirements or regulation for registered builders and/or signage installers in Singapore.

Some of the analytical conclusions extracted from the Ipsos Report cover future forecasts. Our Directors and the Sole Sponsor consider such information to be reliable and not misleading after taking into account the following factors:

a) Ipsos is an independent professional research agency with extensive experience in their profession; and
b) although the Ipsos Report contains forecast of the development of the signage industry in Singapore, it does not contain future performance forecast of our Group.

SINGAPORE CONSTRUCTION INDUSTRY OVERVIEW

The Singapore construction sector’s contribution to its GDP has remained stable from 2011 through 2014[(1)] . The average contribution has been close to approximately 4.6% (ranging from approximately 4.3% to approximately 4.9%) every year which is in tandem with Singapore’s GDP growth rate of between 3 to 8%[(2)] . The chart below illustrates the contribution of the construction sector to the Singapore economy’s overall GDP from 2011 to 2014[(3)] .

Contribution of construction sector to the Singapore economy’s overall GDP

==> picture [311 x 164] intentionally omitted <==

----- Start of picture text -----

450,000 5.0%
400,000 4.9%
350,000 4.8%
4.7%
300,000
4.6%
250,000
4.5%
200,000
4.4%
150,000 4.3%
100,000 4.2%
50,000 4.1%
0 4.0%
2011 2012 2013 2014
Total GDP of the economy
346,354 362,333 378,200 390,089
(S$ million)
GDP from construction
14,885 16,437 17,702 18,961
segment (S$ million)
Contribution percentage (%) 4.3% 4.5% 4.7% 4.9%
----- End of picture text -----

Source: Ministry of Trade and Industry, Singapore Statistics

For 2015[(4)] , construction contracts are expected to reach between S$29 billion to S$36 billion. This follows solid performance in 2014 where total construction demand was at S$37.7 billion, which is powered by higher volume of both institutional and civil engineering works. Major projects backing to such high demand include the construction of Tampines Town Hub project, community hospitals, construction of Thomson-East Coast MRT Line as well as land preparation works for the upcoming Changi Airport Development. The chart below shows the total construction activities in Singapore from 2010 to 2014[(5)] .

Notes:

(1) Provisional information

(2) Economic Intelligence Unit Statistics

(3) Provisional information

(4) Forecasted information

(5) Provisional information

– 47 –

INDUSTRY OVERVIEW

Building and construction activities in Singapore, 2010–2014[(6)]

By value, S$ ~~[(7)]~~

	2010	2011	2012	2013	2014
		Million	Singapore dollars	(S$)
Contracts awarded	27,564.6	35,487.9	30,761.4	35,803.6	37,732.8
Public	8,546.5	15,279.7	9,524.8	14,888.5	19,071.6
Private	19,018.1	20,208.2	21,236.7	20,915.3	18,661.2
Certified payments	27,427.8	28,861.4	31,638.8	33,666.3	35,752.2
Public	10,975.7	11,652.9	12,316.1	12,566.9	14,762.1
Private	16,452.2	17,208.5	19,322.7	21,099.5	20,990.1

Source: BCA

PUBLIC SECTOR

Public sector construction has been the driving force behind the construction industry in Singapore. The value of public sector contracts awarded has increased with an average growth of 22.2% per annum from 2010, to reach approximately S$19.1 billion (approximately HK$ 107.2 billion) in 2014[(8),(9)] . The chart below illustrates the development of contracts awarded for both public and private sector from 2010 to 2014[(10)] .

Public and private contracts awarded, 2010–2014[(11)] by value, S$ billion

==> picture [317 x 110] intentionally omitted <==

----- Start of picture text -----

Public Private
19.0 20.2 21.2 20.9 19.1 18.7
15.3 14.9
8.5 9.5
2010 2011 2012 2013 2014
----- End of picture text -----

Source: BCA; CAGR for public sector: 22.2% and private sector: –0.5% for the period of 2010 to 2014.

In 2014[(12)] , construction output (or certified payments) increased by approximately 6.2% to reach approximately S$35.8 billion, surpassing the previous industry high of approximately S$33.7 billion in 2013. The growth was powered by strong on-site construction activities for public and private residential, private industrial and civil engineering developments. The chart below depicts total construction output and certified payments for year 2010 to 2014.

Notes:

(6) Ibid

(7) Figures in the chart may not be equal due to rounding up of decimals.

(8) S$1 = HK$5.62 (Xe.com, 23rd March 2015); Figures in may not be equal due to rounding up of decimals

(9) Provisional information

(10) Ibid

(11) Ibid

(12) Ibid

– 48 –

INDUSTRY OVERVIEW

Total construction output (certified payments), 2010–2014[(13)]

by value, S$ billion

==> picture [311 x 112] intentionally omitted <==

----- Start of picture text -----

Public Private
21.1 21.0
19.3
16.5 17.2
14.8
11.0 11.7 12.3 12.6
2010 2011 2012 2013 2014
----- End of picture text -----

Source: BCA; CAGR for public sector: 7.7% and private sector: 6.3% for the period of 2010 to 2014

In 2015[(14)] , public sector projects are expected to contribute to the industry’s total demand at approximately 60% (between S$18 to S$21 billion in value). This expansion is expected to be powered by the anticipated higher volume of contracts to be awarded for civil engineering and institutional construction works. The following charts below illustrate the review and future outlook for the construction demand and output of Singapore’s construction industry; and the breakdown of public construction demand in 2014 and 2015[(15)] .

Review and future outlook for construction demand and output

			by	value, S$
			2014p		2015f	20116–2017f 2018–2019f
Contracts	awarded			Singapore		dollars (S$)
Public		$19.7	billion	$18–21	billion	$16–20 billion
						(60% from building projects and
						40% from civil engineering
						projects)
Private		$18.0	billion	$11–15	billion
Total		$37.7	billion	$29–36	billion	$27–36 billion $26–37 billion

Source: BCA; Ipsos Analysis; p denotes provisional information; f denotes forecast information

Breakdown of projected public construction demand in 2014 and 2015

Breakdown Building construction Residential Commercial Industrial Institutional and others Civil engineering Total public sector	by value, S$ billion 2014p 2015f 10.94 10.5–12.7 4.99 3.4–3.8 0.13 0.1–0.1 0.63 2.1–2.8 5.2 4.9–5.9 8.8 7.5–8.3 19.74 18.0–21.0

Source: BCA; Ipsos Analysis; p denotes provisional information; f denotes forecast information

Notes:

(13) Ibid

(14) Forecast information

(15) Latest available data

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INDUSTRY OVERVIEW

As the government continues to focus on the infrastructure needs and demand, the outlook for the construction industry remain positive. Some factors impacting the growth of this segment include:

. Singapore has invested heavily in rail and road infrastructure, and has a strong pipeline of various rail transit projects nationwide. With increases in the population and demands on transportation, Singapore’s road infrastructure is in a constant state of development. The government aims to develop a high-performance rail network and plans to increase the country’s MRT network from 178km in 2014 to 360 km by 2030.
. Jewel Changi Airport Trustee Pte Ltd started building a mixed-use complex, called Jewel Changi Airport, which will be developed in front of the Changi Airport’s Terminal 1 in Singapore (end of 2014). The project will comprise hotel, retail offerings and facilities for airport operations and is a joint venture between Changi Airport Group and CapitaMalls Asia.

Number of construction tenders to be called by public sector agencies, 2015[(16)] by value, S$

Construction cost
Category	Development type	2015
Up to S$14m	Civil engineering (e.g. road and bridges, sewerage and	109
	drainage, M&E, other works that include parks, waterway,
	earthworks, infrastructure works, utilities etc.)
	Others (e.g. residential projects, education such as retrofitting	80
	of teaching facilities and upgrading of schools, other building
	project such as community club upgrading, substations, bus
	interchanges etc.)
S$14m–S$42m	Civil engineering (e.g. road and bridges, sewerage and	13
	drainage, M&E, other works that include parks, waterway,
	earthworks, infrastructure works, utilities etc.)
	Others (e.g. residential projects, education such as retrofitting	32
	of teaching facilities and upgrading of schools, institution of
	higher learning, other building project such as community club
	upgrading, substations, bus interchanges etc.)
Above S$42m	Civil engineering (e.g. road and bridges, sewerage and	25
	drainage, rail and rail related, M&E, other works that include
	parks, waterway, earthworks, infrastructure works, utilities
	etc.)
	Others (e.g. residential projects, education such as campus	54
	expansion and upgrading facilities of institute of higher
	learning and other building project such as community club
	upgrading, substations, bus interchanges etc.)
Sub total	Civil engineering	147
	Others	166
Total		313

Source: BCA, 2015; Ipsos Analysis

Notes:

(16) Provisional information

– 50 –

INDUSTRY OVERVIEW

CIVIL ENGINEERING SEGMENT

In 2015, civil engineering projects are forecasted to account to approximately 40 to 42% or S$7.5 billion to S$8.3 billion of the total public sector demand. BCA estimates that the number of tenders for civil engineering works in the pipeline for the public sector is approximately 147 tenders in 2015. Although there is no change in the number of tenders compared to the previous year[(17)] , more tenders valued at up to S$14 million will be called in 2015. The following chart compares the number of tenders for the civil engineering projects in 2014 and 2015.

Number of construction tenders by public sector agencies, 2014 and 2015

==> picture [267 x 123] intentionally omitted <==

----- Start of picture text -----

by value, S$
2014 2015
109
96
24 27 25
13
Up to S$14 million S$14 million - S$42 million Above S$42 million
----- End of picture text -----

Source: BCA; Ipsos Analysis

The following chart depicts the breakdown of civil engineering tenders to be called by the public sector agencies for 2015.

Number of construction tenders to be called by public sector agencies, 2015[(18)] by value, S$

Construction cost Category	Development type	2015
Up to S$14 million	Roads and bridges	46
	M&E — Rails and roads	1
	Others	62
S$14 million–S$42 million	Roads and bridges	4
	M&E — Rails and roads	—
	Others	9
Above S$42 million	Roads and bridges	4
	M&E — Rails and roads	5
	Others	16
Total		147

Source: BCA; Ipsos Analysis

Outlook for 2015

In 2015, public sector projects are forecasted to account for 60% or S$18 billion to S$21 billion of the total construction demand. BCA estimates that the number of tenders for road and bridge works in the pipeline for the public sector is approximately 54 tenders in 2015. This is an increase of 31.7% of tenders from 2014, where 41 tenders were estimated for public sector road and bridge

Notes:

(17) Number of construction tenders for the civil engineering sector for 2014 = 147

(18) Provisional information

– 51 –

INDUSTRY OVERVIEW

works in Singapore. With the increase in the number of tenders to be called on by public sector agencies, there will be also increased projects that will involve the deployment and placement of road signage and road directions.

The pipeline tenders to be called on by public sector agencies vary in value and can cost up to more than $$42 million. Majority of road and bridge work projects in 2015 will be focused on smaller projects that are estimated to be valued up to S$14 million. The chart below compares the number of tenders, by value for road and bridge works in the public sector for both years 2014 and 2015.

Number of tenders, by value of road and bridge works in the public sector, 2014 and 2015

==> picture [57 x 10] intentionally omitted <==

----- Start of picture text -----

by value, S$
----- End of picture text -----

==> picture [263 x 130] intentionally omitted <==

----- Start of picture text -----

2014 2015
46
25
9
7
4 4
Up to S$14 million S$14 million - S$42 million Above S$42 million
----- End of picture text -----

Source: BCA

For rail networks[(19)] , BCA estimates that the number of tenders in the pipeline for the public sector is approximately 6 tenders in 2015. Although there is a slight decrease from 2014, where 8 tenders were estimated for public sector rail networks in Singapore, majority of the projects in 2015 will be focused on larger projects that are estimated to be valued above S$42 million. Thus this provides good grounds for the deployment and placement of signage and markings on rail networks. The chart below compares the number of tenders, by value for rail works in the public sector for both years 2014 and 2015.

Number of tenders, by value of rail works in the public sector, 2014 and 2015 by value, S$

==> picture [309 x 104] intentionally omitted <==

----- Start of picture text -----

2014 2015
8
5
1
Up to S$14 million S$14 million - S$42 million Above S$42 million
----- End of picture text -----

Source: BCA

Notes:

(19) LTA’s requirements to tender for works on rail networks (e.g. as supply, fabrication and installation of signage at MRT/ LRT Stations and trains, platform markings etc.) include being registered as a CR11 Signcraft installer. Thus, rail networks projects are included as point of discussion in text.

– 52 –

INDUSTRY OVERVIEW

OUTLOOK BEYOND 2015

The construction demand is expected to sustain at S$26 billion to S$37 billion per annum from year 2016 to 2019. This is in view of major public sector projects (i.e. new expressways and railways track extensions) required to the growing population demand and infrastructure needs of Singapore.

Some of the key rail[(20)] and road projects are highlighted below:

Expansion of rail Double the length of the rail network to about 360km by building networks the following lines from 2020 to 2030

Cross island line (CRL) . Connect residents in the east and northeast (e.g. Hougang and Serangoon) directly to the towns in the central (e.g. Ang Mo Kio) and western region (e.g. Tuas)
Jurong region line (JRL) . Connects the Jurong region, serving the future Tengah new town, Nanyang Technological University, and Jurong Industrial Estate
Circle line stage 6 (CCL6) . Closes the loop for the Circle Line, between the central east areas (e.g. Paya Lebar), and central and west areas (e.g. Kent Ridge)
North east line (NEL) . This line will be extended northeast to serve Punggol extension Downtown and the northern part of Punggol to accommodate the growing population in Punggol

Down town (DTL) extension

. Connects to the Eastern region line and enhances the connectivity between the areas served by both lines
Future developments Possibility of adding a station between Sembawang (NS11) and Yishun (NS13) on the North-south line, in anticipation of future developments in that area
Expansion of road network/system

Further expansion of road network will largely serve new areas, improve bus speeds and support the continued growth of our economy

North-south expressway (by 2020)
. Serves the expected increase in travel along the north-south corridor
‘‘Reversible flow’’ system . The feasibility of a ‘reversible flow’ scheme along certain expressways will be studied, where the traffic flow is heavy in one direction during the morning peak hours and in the opposite direction in the evening (This could optimise the use of roads in Singapore).

Source: BCA, Secondary research.

Notes: (20) Ibid

– 53 –

INDUSTRY OVERVIEW

CONTRACTORS REGISTRATION SYSTEM AND THE BUILDING LICENCE SYSTEM

The BCA classifies road, bridge and rail works as civil engineering, denoted as CW02. Signage or sign craft installations are classified as CR11. There are currently 71 CR11 registered construction agencies in Singapore that are all private limited firms.

To qualify for doing construction work for public sector projects, the BCA mandates that the bidding company has the necessary levels of experience, and certifications and is financially sound. Contractors for private sector work are not bound by the same rules. One of the consequences of this regulatory system is that contractors for public sector work need to maintain particularly high professional standards. This acts as a barrier to new entrants looking to take market share. A critical part of the licensing system that the BCA has put in place includes the Contractor Registration System or CRS. According to the BCA website:

‘‘CRS serves the construction and construction-related procurement needs of the public sector including government ministries and statutory boards. Companies only need to register if they wish to participate in construction tenders or as sub-contractors for the public sector’’[(21)]

In order to qualify for CRS a company must prove its capabilities in number of different areas. They need to be financially stable, showing audited accounts with a suitable level of paid up capital and net worth. The company needs to also ensure it has the right number of full time qualified staff with the correct professional qualifications. As well as having a suitable track record of suitable experience, it also needs management certifications such as SAC Accredited ISO9000, ISO14000, OHSAS 18000, etc.

Historical prices for raw materials and main products

Our Group typically uses metal, sticker and aluminium products for our products, and these material specifications are typically included in the tender specifications.

The table and chart below stipulate the changes in the cost of material prices from year 2011 to 2015.

	Material cost 2011–2015(22)*	Material cost 2011–2015(22)*	Material cost 2011–2015(22)*
		by value, S$
Materials	2011	2012	2013	2014	2015
Metal	128	121	108	107	103
Sticker	45	45	45	45	45
Aluminium	61.3	58.5	55.3	55.0	55.0

Notes:

(21) Please see the BCA website at http://www.bca.gov.sg/ContractorsRegistry/others/CRS_FAQ.pdf

(22) Material cost is stipulated based on common materials used by Signmechanic Singapore for each material category: (a) Example of metal price is stipulated based on one of Signmechanic Singapore’s metal products commonly used (e.g. hollow section of 100 mm x 100 mm x 6 mm in size)

(b) Example of sticker price is stipulated based on one of Signmechanic Singapore’s sticker products commonly used (e.g. any sticker of 600 x 600 mm in size)

(c) Example of aluminium price is stipulated based on one of Signmechanic Singapore’s aluminium products commonly used (e.g. aluminium sheet of 4’ x 8’ x 2.0 mm thick in size)

– 54 –

INDUSTRY OVERVIEW

Material cost 2011–2015*

Average cost for main materials only (2011–2015)

==> picture [437 x 144] intentionally omitted <==

----- Start of picture text -----

140
120
Metal
100
80 Sticker
60
Aluminium
40
20
0
2011 2012 2013 2014 2015
Source: Signmechanic Singapore; Note: Material cost is stipulated based on common materials used by Signmechanic
Singapore.
Average Cost Price (SGD)
----- End of picture text -----*

The prices of their products are quoted on a case-by-case basis, taking into account market rates and their internal costing with no particular historical price trend. However changes in prices may also be influenced by inflation or other factors such as average wages in Singapore.

The table and chart below stipulates the percentage changes in average wages by industry from year 2000–2014.

Average wage change in percentage by industry, 2000–2014 By percentage (%)

Industry	Total	Manufacturing	Construction	Services
2000	4.9	4.4	2.2	5.4
2001	2.9	2.4	0.6	3.4
2002	1.8	1.8	0.2	2.0
2003	1.2	1.3	0.2	1.3
2004	2.7	2.6	1.1	2.9
2005	3.1	2.9	1.7	3.3
2006	3.6	3.2	2.4	3.9
2007	4.3	3.7	3.9	4.6
2008	4.4	4.0	3.9	4.6
2009	1.3	0.7	1.5	1.5
2010	3.9	3.6	3.5	4.0
2011	4.4	4.0	3.9	4.5
2012	4.5	4.3	3.6	4.6
2013	5.1	4.6	5.2	5.2
2014	4.9	4.3	3.8	5.1

Source: Survey on Annual Wage Changes, Manpower Research and Statistics Department, MOM

– 55 –

INDUSTRY OVERVIEW

Average wage change in percentage by industry, 2000–2014

==> picture [415 x 192] intentionally omitted <==

----- Start of picture text -----

Total Manufacturing Construction Services
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Average Wage Change (%)
----- End of picture text -----

Source: Survey on Annual Wage Changes, Manpower Research and Statistics Department, MOM

Environmental impact of our Group’s production nature

Light industries are generally regarded as less invasive than heavy industries. It is believed to have lesser environmental impact and these industries hardly operate with the need for environmental work approvals or licenses beforehand. Light industries include a variety of small businesses such as manufacturing, fabrication, chemical formulation, trade and others such as automotive repair shops, paint suppliers, signage suppliers, printers, food processors, service stations and etc.[(23)]

Our Group’s nature of production can be classified as part of a light industry as its processes carried out or the machinery installed can be done with very minimum pollution impacts to the environment.

SINGAPORE SIGNAGE INDUSTRY

Market share analysis

The sign manufacturing industry is defined as an industry that comprise of establishments primarily engaged in manufacturing signs and related displays of all materials (except printing paper and paperboard signs, notices, displays). This include sub-categories such as signs and advertising specialties; electric signs; neon signs; scoreboards and electric; advertising artwork; advertising novelties; displays, cut outs, window and lobby; displays and paint processes; letters for signs, metal; name plates (except engraved, etched etc.); and signs that are not made in custom sign painting shops[(24)] . In 2014[(25)] , Singapore’s total signage manufacturing industry is worth approximately S$304 million with at least 300 establishments in the market. The total value grew by 2.7% from 2012 to 2014[(26)] . The following chart shows the growth of Singapore’s total signage industry from year 2012 to 2016[(27)] .

Notes:

(23) Secondary research

(24) US Census Categories (Code NAICS 339955)

(25) Provisional information

(26) Ibid

(27) Forecasted information

– 56 –

INDUSTRY OVERVIEW

Singapore total signage industry, 2012–2016

by value, S$ million

==> picture [266 x 107] intentionally omitted <==

----- Start of picture text -----

340 5.0%
4.5%
330 4.0%
320 3.5%
3.0%
310 2.5%
2.0%
300 1.5%
290 1.0%
0.5%
280 0.0%
2012 2013 2014 2015 2016
Total Sales 296 297 304 314 328
% Change — 0.3% 2.4% 3.3% 4.5%
----- End of picture text -----

Source: GeBIZ, LTA, Barnes reports, Ipsos Analysis

The market size for CR11 signcraft segment is estimated to be approximately 10%[(28)] of the total industry in 2014 (which is approximately S$30.4 million in value). Based on our Group’s sales of approximately S$11.9 million in 2014[(29)] , our Group’s market share in the CR11 signcraft segment is approximately 39.1%.

Source: GeBIZ, LTA, Barnes reports, Secondary Research, Ipsos Analysis; Value in S$ million. Figures in the chart may not be equal due to rounding up of decimals.

COMPETITIVE LANDSCAPE

Competitive advantage

While our Group operates in a fairly competitive space, they do a good job distinguishing themselves against other suppliers. Primarily, our Group is one of the main players in the market especially for civil projects thus far and are able to work on an expended scope of work that includes railing; therefore making this one of the primary drivers for our Group’s good relationship with their customers.

Our Group is also registered for General Building, Civil Engineering, Repairs and Redecoration, Asphalt Works & Road Marking and Minor Construction Works; and with these additional registrations, our Group is able to bid for related projects. For signcraft installation, our Group has L5 grade certification, of which enables our Group to bid for tenders up to S$14 million in value[(31)] .

This puts our Group in an elite category which new entrants would not be able to achieve without getting substantial experience in the market. In order to attain Level 5 certification, the company needs to meet certain criteria. It has to have a track record with revenues of at least S$10 million in the last 3 years, of which S$1 million needs to be from one single contract. It also needs to have at least 2 professionally qualified full time managers, one with at least 8 years of relevant experience including the Basic Concept in Construction Productivity and Enhancement (BCCPE) qualification for productivity. The only companies in Singapore that have BCA CR11 (Signcraft Installation) certification to Grade L5 are our Group and Fuji Signcrafts Industries Pte Ltd.

Notes:

(28) Best estimation

(29) Source from Signmechanic Singapore

(30) Ibid

(31) Please see BCA’s homepage at http://www.bca.gov.sg/ContractorsRegistry/contractors_tendering_limits.html

– 57 –

INDUSTRY OVERVIEW

Barriers of entry

. Barriers for entry in this industry are not high and projects often varies in value (i.e. can be of very low to very high values, especially public tender projects).
. Road signs are mainly dominated by three main companies in Singapore which are our Group, Fuji Signcrafts Industries Pte Ltd and E Tech Construction Pte Ltd.[(32)]
Fuji Signcrafts Industries Pte Ltd has over the years established good record in successfully implementing signage projects and these include projects such as island upgrading exercise for the street name signs for LTA, new signs for Changi Airport Terminal 3 and Resort World Sentosa. They are also the term contractor for Sentosa Development Corporation, Changi Airport Terminals and LTA road signs.
E Tech Construction Pte Ltd on the other hand has CR11 Grade L3 certification only which means they are unable to bid for projects with a contract value higher than S$4.2 million.[(33)]
Our Group is certified in other areas apart from signage enabling it to have a higher level of productivity by being able to bid for different jobs within a main contract beyond just signage.
. Operational productivity is another core requirement for companies competing in this sector. Hence, as well as achieving the right levels of experience and financial backing for registration under the CRS scheme, companies also need to meet government standards for productivity. This is to ensure that companies are working to the highest professional standards and are not relying just on low cost labour. Contractors that are registered with CRS are obliged to undertake BCCPE[(34)] .

Opportunities and challenges in the industry

The opportunities in this industry remain positive as construction demand in Singapore is expected to sustain at S$26 billion to S$37 billion per annum from year 2016 to 2019. This as mentioned is in view with major public sector civil engineering projects such as new expressways and railways extensions underway, thus requiring more deployment and placement of road and/or rail signage in the near future[(35)] .

Manufacturing road sign in particular is a specialised trade that requires relevant trade workers and skilled employees. Thus, getting the correct people in the industry has been a challenge not only for our Group but with other market players as well. Labour costs have to be properly managed and sourcing of materials has to be extra prudent.

The requirements of the LTA to tender for works on rail networks (e.g. as supply, fabrication and installation of signage at MRT/LRT stations and trains, platform markings etc.) include being registered as a CR11 signcraft installer or other supply head titles defined by the government supplier’s guidelines. Thus, any suppliers can submit their tender as long as they meet the criteria. However, tenders being issued have been of late observed to be awarded to tenderers with the ‘lowest’ price given for the project. From year 2010 to 2014, there was approximately S$1.7 million worth of tenders published for public reference by the LTA[(36)] , of which majority of these tenders

Notes:

(32) Sources from Signmechanic Singapore

(33) BCA, Contractors’ Registry — Contractors Tendering Limits

(34) According to the BCA website, BCCPE covers topics such as the definition and measurement of productivity; improving construction productivity during planning, design and construction stage; site layout, deployment planning and site coordination; quality control and good management practices.

(35) Please also refer to key rail and road projects, page 53 for detailed information about growing projects

(36) All projects that include rail and road works

– 58 –

INDUSTRY OVERVIEW

were awarded to the lowest price tenderers. Between the stated years, our Group represents only 6% of total published tenders won. The following chart compares the percentage of published LTA tenders won by our Group with other qualifying contractors[(37)] from 2010 to 2014.

==> picture [135 x 131] intentionally omitted <==

----- Start of picture text -----

Published tenders, 2010–2014
By value, S$
Our Group
6%
Others
94%
----- End of picture text -----

Source: LTA, Ipsos Analysis; Total published tenders from 2010–2014: S$1.7 million; Note: Information extracted from published data, 18th March 2015.

Brief profiles of other signage manufacturers

The following table below depicts some examples of other signage manufacturer or companies in Singapore (in brief profile).

BCA Level 3 (L3 companies)

Company

Notes

CBD eVision Pte Ltd Business type: Distributor and wholesaler

Main markets:

North America, South America, Western Europe, Eastern Europe

Product/services:

. LED display system such as LED moving sign, LED video screen, multiline display, VMS, trivision display, roller poster, traffic sign, architectural lighting for disco and building users.

Lin Keong Projects Pte Business type: Ltd Manufacturer

Main markets: Singapore

Product/services:

. Custom made acrylic accessories such as display trays, racks, poster holder, brochure racks, voucher racks, voucher trays etc.
. Fabrication of all types of signs such as reversed silkscreen signs, brass, stainless steel etching signs, aluminium stainless steel, acrylic box up signage, self-adhesive stickers, glass panel graphics, large format full colour print.
. Neon or LED signs for indoor, outdoor building face, sky sign.

Notes:

(37) All projects tendered in LTA States multiple qualifying criteria for submissions. Based on observation from published records, as long as any contractor quality for either one of the criteria stated for the particular project, and has the ‘lowest’ price, the tender is awarded to the party. Majority is also believed to be main contractors.

– 59 –

INDUSTRY OVERVIEW

Company

Notes

Seiho Sign Business type: Engineering Pte Manufacturer and consulting Ltd

Main markets:

Malaysia, Indonesia, Philippines, Vietnam, Hong Kong

Product/services:

. Professional sign services (e.g. corporate signage for banks, automobile etc.; building sky signs, large billboard signs etc.)
. Engineering services (e.g. signs, advertising displays licensing to BCA) . Stainless steel and metal works (e.g. stainless steel directional pole sign)
E Tech Construction Business type: Pte Ltd Manufacturer and consulting

Main markets: Singapore

Product/services:

. Organisations, services and building contractors . Specialties include exterior signage, green products & services (signage)

BCA Level 4 (L4 companies)

Company Notes

Crimsign Graphics Business Type: Pte Ltd Manufacturer

Main markets:

Product/services:

. Alloy products (e.g. single, double or multi-sided signboard — illuminated and non-illuminated; notice boards etc.)
. Clip-O products (e.g. directory boards, mandatory signs, informative signs etc.)
. Simplex products (e.g. door signs, counter-top signs etc.)
Gleason Advertising Business Type: Pte Ltd Manufacturer

Main markets:

China, Malaysia, Indonesia

Product/services:

. Sign consulting, design and planning services
. Sign engineering and manufacturing . Sign installation, maintenance and repair

BCA Level 5 (L5 companies)

Company Notes

Fuji Signcrafts Business Type: Industries Pte Ltd Manufacturer

Main markets: Singapore

Product/services:

. Environmental signs, . Turnkey signage projects . Road signage projects (e.g. LTA road signs)

Source: Ipsos Analysis

– 60 –

REGULATORY OVERVIEW

This section of the prospectus contains a summary of certain laws and regulations currently relevant to our Group’s operations and the signage industry. Having made all reasonable enquiries and to their best knowledge, our Directors confirm that save as disclosed in this section and the sections headed ‘‘Risk factors’’ and ‘‘Business’’ in this prospectus, our Group has complied with all material applicable laws and regulations in Singapore, where our Group operated during the Track Record Period and as at the Latest Practicable Date and has obtained all necessary permits, licences and certificates for our operations. Save as disclosed below, as at the Latest Practicable Date, our business operations are not subject to any special legislation or regulatory controls other than those generally applicable to companies and businesses incorporated and/or operating in Singapore.

REGULATIONS AND SUPERVISION OF OUR BUSINESS IN SINGAPORE

Brief General Overview

The building and construction industry in Singapore is regulated by the BCA. There are two regimes administered by the BCA, the Builders Licensing Scheme (‘‘BLS’’) and the Contractors Registration System (‘‘CRS’’).

A General Builders’ (‘‘GB’’) Licence is issued under the BLS and such a licence is required for companies which intend to carry out private sector building works or public sector building works. A company which is only involved in private sector projects need not register under CRS and will only need a licence under the BLS. A company would need to have a licence issued under the BLS in order to be registered under the CRS.

Signmechanic Singapore is issued a GB 2 Licence by BCA under the BLS and is registered by BCA under the CRS under, inter alia, the CR 11 workhead (for signcraft installation) at the L5 Grade.

Accordingly Signmechanic Singapore is able to undertake:

(i) (in its capacity as the holder of a GB 2 Licence) contracts for building works of a contract value not exceeding S$6 million for non-government agencies and private sector customers;
(ii) (in its capacity as the holder of a CR 11 workhead L5 Grade registration) direct tendering of contracts for building works for government agencies of a contract value not exceeding S$14 million.
(iii) Other than the CR 11 workhead at the L5 Grade, Signmechanic Singapore is also registered under other categories of workheads, further details of which are set out below, each of which allows Signmechanic Singapore to undertake direct tendering of government agency contracts for the relevant workheads and in respect of the relevant contract values.

– 61 –

REGULATORY OVERVIEW

Contractors registration system

Although business entities which are not registered with the BCA are not precluded from conducting business as contractors or suppliers outside the Singapore public sector, registration in the CRS maintained by the BCA is a pre-requisite to tendering for projects in the Singapore public sector. At present, there are seven major categories of registration under the CRS: (a) Construction (‘‘CW’’) (b) Construction-Related (‘‘CR’’) (c) Mechanical and Electrical (‘‘ME’’) (d) Maintenance (‘‘MW’’) (e) Trade Heads for sub-contractors (‘‘TR’’) (f) Regulatory Workhead and (g) Supply (‘‘SY’’). Under these seven major categories, there is a further sub-classification of a total of 63 workheads. Each major category of registration under the BCA CRS is also subject to six to seven grades (‘‘Grades’’). In order to qualify for a particular Grade, companies must satisfy the respective Grade requirements in terms of (i) financial capability (valid audited accounts, paid-up capital, net worth, etc) (ii) relevant technical personnel (full-time employed, recognised professional, technical qualifications, valid licenses, etc) (iii) management certifications (iv) track record (valid projects with documentation proof, endorsed and assessed by clients for the past 3 years).

The qualified Grade of registered companies corresponds with a tendering limit (valid for one year) which, dependant on the economy of the construction industry in Singapore, may be adjusted from year to year.

A contractor’s eligibility to qualify under the different BCA gradings is dependent on inter alia, the company’s minimum net worth and paid-up capital, the professional and technical expertise of its management and its track record in relation to previously completed projects. The validity for a first time registration is for a period of three years. Registration will thereafter lapse automatically unless a renewal (for a period of three years) is filed and approved by BCA.

Signmechanic Singapore is currently licensed as a General Builder Class 2 (‘‘GB2 Licence’’) by the BCA under BLS and registered with the BCA under the following workheads (CRS):

Workheads	Title	Scope of work	Grade(1)	Expiry date
CR11	Signcraft	Planning and installation of an	L5	1 April 2017
	Installation	integrated signposting system for
		complexes, airports, shopping centres.
		It includes the setting up of exhibition
		stands and signs along roads.
CR09	Repairs &	Repainting and minor non-structural	L1	1 April 2017
	Redecoration	repair of buildings and existing
		structures. These works should not
		include addition & alteration works
		involving structural changes

– 62 –

REGULATORY OVERVIEW

Workheads	Title	Scope of work	Grade(1)	Expiry date
CR14	Asphalt Works &	Supply and laying of asphalt, marking	L1	1 April 2017
	Road Marking	and painting of roads. Applicants are
		required to have asphalt plant,
		vibratory roller and bituminous
		pavers.
CR01	Minor Construction	Minor building and civil engineering	Single Grade	1 April 2017
	Works	works that are not governed by the
		Building Control Act such as
		drainage, minor road works, aprons
		and minor A&A
CW01	General Building	All types of building works in	C3	1 April 2017
		connection with any structure, being
		built or to be built, for the support,
		shelter and enclosure of persons,
		animals, chattels or movable property
		of any kind, requiring in its
		construction the use of more than two
		unrelated building trades and crafts.
		Such structure includes the
		construction of multi-storey car-
		parks, buildings for parks and
		playgrounds and other recreational
		works, industrial plants, and utility
		plants. Scope of work includes the
		addition and alteration works on
		buildings involving structural changes
		and installation of roofs.

– 63 –

REGULATORY OVERVIEW

Workheads	Title		Scope	of work		Grade(1)	Expiry date
CW02	Civil	Engineering	(a)	Works involving concrete,		C3	1 April 2017
				masonry and steel in bridges,
				sewers, culverts, reservoirs,
				retaining walls, canals, drainage
				systems, underground
				structures, cutting and filling	of
				embankment, river banks,
				excavation of deep trenches,
				scraping of sub-soil, surface
				drainage works, flexible
				pavement, rigid pavement or
				laterite roads, bus bays, open
				car-parks and related works
				such as kerbs and footways.
			(b)	Works involving dredging	in
				canal, river and offshore for
				the purpose of deepening and
				extraction of mineral or
				construction material. It also
				includes reclamation works.
			(c)	Works involving marine piling
				and the construction of marine
				structures such as jetties,
				wharves, sea and river walls.
				The head does not cover the
				construction and fabrication of
				marine crafts, pontoons and
				oilrigs or any floating platform.

Note:

(1) The differences in BCA Grades relate to the tendering limits for Singapore public sector projects and may be adjusted on a yearly basis depending on the economy of the construction industry in Singapore.

– 64 –

REGULATORY OVERVIEW

Tendering limits for major categories of registration under the CRS are as summarised below:

Construction Workheads (CW01 and CW02)

Tendering Limit
(S$)	A1	A2	B1	B2	C1	C2	C3
1 July 2013 to	Unlimited	85,000,000	40,000,000	13,000,000	4,000,000	1,300,000	650,000
30 June 2014
1 July 2014 to	Unlimited	90,000,000	42,000,000	14,000,000	4,200,000	1,400,000	700,000
30 June 2015
Specialist Workheads (CR,		MR, MW	and SY)
Tendering Limit
(S$)	Single Grade	L6	L5	L4	L3	L2	L1
1 July 2013 to	Unlimited	Unlimited	13,000,000	6,500,000	4,000,000	1,300,000	650,000
30 June 2014
1 July 2014 to	Unlimited	Unlimited	14,000,000	7,000,000	4,200,000	1,400,000	700,000
30 June 2015

– 65 –

REGULATORY OVERVIEW

To maintain the existing BCA gradings of Signmechanic Singapore, there are certain requirements to be complied with, including but not limited to requirements relating to minimum paid up capital and net worth, employment of personnel (including registered professionals (‘‘RP’’)[(2)] , professionals (‘‘P’’)[(3)] and technicians (‘‘T’’)[(4)] , and track record of past projects or contracts secured.

Some of the specific requirements for Signmechanic Singapore’s BCA gradings as at the Latest Practicable Date are as follows:

Workhead/Title/Grade	Requirements
CW01, CW02 General Building/Civil Engineering Grade C3	Minimum paid-up capital & minimum net worth	S$25,000
	Management	To employ at least 1 RP, P or T, with no requirement for duration of relevant experience, with BCCPE(5).
	Track record (over a three- year period)	To secure projects with an aggregate contract value of at least S$100,000(6). To possess General Builder Licence Class 1 or Class 2.

Notes:

(2) A registered professional (‘‘RP’’) must have a minimum professional qualification of a degree in architecture, civil/structural engineering recognised by Professional Engineers Board (PEB) or equivalent qualifications approved by BCA (for Resident Engineer) or Board of Architects Singapore (BOA).
(3) A professional (‘‘P’’) must have a minimum professional qualification of a recognised degree in architecture, building, civil/structural engineering or equivalent.
(4) A technician (‘‘T’’) must have a minimum qualification of (i) a technical diploma in architecture, building, civil/structural mechanical, electrical engineering, or equivalent awarded by BCA or any one of Singapore’s 5 Polytechnics (ii) a National Certificate in Construction Supervision (NCCS) or Advance National Building Qualification (NBQ) or a Specialist Diploma in M&E Coordination awarded by BCA Academy (iii) such other diplomas or qualification as approved by the BCA from time to time.
(5) Basic Concept in Construction Productivity Enhancement (Certificate of Attendance) (‘‘BCCPE’’). This certificate is obtained after having attended a course conducted by the BCA Academy. Should the director of a company be the only person in the company possessing a BCCPE, he cannot utilise the same BCCPE to satisfy the requirements for another company of which he is also part of.
(6) Percentage of sub-contract value taken into consideration shall be 50% for CW01 and 75% for CW02.

– 66 –

REGULATORY OVERVIEW

Workhead/Title/Grade	Requirements
CR01 Minor Construction Works Single Grade	Minimum paid-up capital & Minimum net worth	S$10,000
	Management	To employ at least 1T with BCCPE, with no requirement for duration of relevant experience.
	Track record (over a three- year period)	To secure projects with an aggregate contract value of at least S$100,000
CR09, CR 14 Repairs & Redecoration/Asphalt Works & Road Marking Grade L1	Minimum paid-up capital & minimum net worth	S$10,000
	Management	To employ at least 1T with BCCPE
	Track record (over a three- year period)	To secure projects with an aggregate contract value of at least S$100,000
CR11 Signcraft Installation Grade L5	Minimum paid-up capital & Minimum net worth	S$500,000
	Management	To employ at least 1P or 2T, one with at least 8 years of relevant experience
	Track record (over a three- year period)	To secure projects with an aggregate contract value of at least S$10.0 million, with a minimum size single project (main/sub-contract) of at least S$1.0 million executed entirely by the licensee

– 67 –

REGULATORY OVERVIEW

As the holder of a GB2 Licence, Signmechanic Singapore can undertake contracts of estimated final prices of not more than S$6 million each. This estimated final prices refers to the total fee chargeable at practical completion for the building works, including any GST payable in relation to the supply of works.

The company’s work scope under a GB2 Licence includes all general building works as well as the following minor specialist building works:

(i) all specialist building works associated with minor specialist building works;
(ii) structural steelwork comprising fabrication and erection work for structures with a cantilever length of not more than 3 metres, a clear span of less than 6 metres and a plan area not exceeding 150 square metres; and
(iii) pre-cast concrete work comprising casting of pre-cast reinforced concrete slabs or planks on site

In addition to the above minor specialist building works, a company with a GB2 Licence may conduct all types of construction works, including all forms of specialist works if the project does not require checks from an accredited checker, but cannot undertake works that have been designated as specialist works to be carried out only by companies possessing a specialist builder class of builders’ licence.

– 68 –

REGULATORY OVERVIEW

To qualify for the General Builder Class 2 Licence, the following conditions must be met by Signmechanic Singapore:

	Class of Builders’ License	Financial (Minimum paid up capital) Approved person(7) Course Practical experience	Technical controller(8) Course Practical experience	Technical controller(8) Course Practical experience
	General Builder Class 2	S$25,000 A course leading to a diploma in a construction and construction-related field(9), or a Bachelor’s degree or post- graduate degree in any field At least 3 years (in aggregate) of practical experience in the execution of construction projects (whether in Singapore or elsewhere) after attaining the corresponding qualification OR A course conducted by BCA known as Essential Knowledge in Construction Regulations & Management for Licensed Builders At least 8 years (in aggregate) of practical experience in the execution of construction projects in Singapore	A course leading to a diploma, or a Bachelor’s degree or post graduate degree in a construction and construction related field	At least 5 years (in aggregate) of practical experience in the execution of construction projects (whether in Singapore or elsewhere) after attaining the corresponding qualification

Notes:

(7) The approved person is the appointed key personnel under whose charge and direction the management of the business of the Licensee, in so far it relates to general building works or specialist building works in Singapore, is to be at all times. The approved personnel shall be the sole-proprietor, partner, director or member of the board of management of the Licensee. If an employee of the Licensee is appointed as the approved person, he shall be employed in such a manner and with such similar duties and responsibilities as a director or member of its board of management. The approved person shall not have acted as an approved person or the technical controller of a Licensee whose licence has been revoked in the 12 months preceding the date of application for the licence by the Licensee. The approved person must not be acting, for so long as he is the approved person for the Licensee, as a technical controller for any company with or applying for a licence. The approved person must give his consent for carrying out the duties of an approved person for the Licensee.
(8) The technical controller is the appointed key personnel under whose personal supervision the execution and performance of any general building works or specialist building works in Singapore that the Licensee undertakes is carried out. The technical controller(s) could be the sole proprietor, partner, director or member of board of management of the Licensee or an employee (being a person employed in such a manner and with such similar duties and responsibilities as a partner, director or member of its board of management). The technical controller shall not have acted as an approved person or the technical controller of a Licensee whose Licence has been revoked in the 12 months preceding the date of application for the licence by the Licensee. The technical controller must not be acting, for so long as he is the technical controller for the Licensee, as a technical controller for any company with or applying for a licence. The technical controller must give his consent to carrying out the duties of a technical controller for the applicant of the Licensee.
(9) ‘Construction and Construction related fields’ means the field of architecture, civil or structural engineering, mechanical or electrical engineering, construction or project management, quantity surveying or building science, facilities and estate management.

– 69 –

REGULATORY OVERVIEW

Building and construction industry security of payments

Under the Building and Construction Industry Security of Payment Act, Chapter 30B of Singapore (‘‘BCISPA’’), any person who has carried out any construction work or supplied any goods or services under a contract is entitled to a progress payment. The BCISPA also contains provisions relating to, amongst others, the amount of the progress payment to which a person is entitled under a contract, the valuation of the construction work carried out under a contract and the date on which a progress payment becomes due and payable. In addition, the BCISPA, amongst others, endorses the following rights:

(i) the right of a claimant (being the person who is or claims to be entitled to a progress payment) who, in relation to a construction contract, fails to receive payment by the due date of an amount that is proposed to be paid by the respondent (being the person who is or may be liable to make a progress payment under a contract to a claimant) and accepted by the claimant, to make an adjudication application in relation to the payment claim. The BCISPA has established an adjudication process by which a person may claim payments due under a contract and enforce payment of the adjudicated amount;
(ii) the right of a claimant to suspend the carrying out of construction work or supply of goods or services, and to exercise a lien over goods supplied by the claimant to the respondent that are unfixed and which have not been paid for, or to enforce the adjudication determination as if it were a judgment debt, if, amongst others, such claimant is not paid after the adjudicator has determined that the respondent shall pay an adjudicated amount to the claimant; and
(iii) where the respondent fails to pay the whole or any part of the adjudicated amount to a claimant, the right of a principal of the respondent (being the person who is liable to make payment to the respondent for or in relation to the whole or part of the construction work that is the subject of the contract between the respondent and the claimant) to make direct payment of the outstanding amount of the adjudicated amount to the claimant, together with the right for such principal to recover such payment from the respondent.

Please refer to section headed ‘‘Business — Key contract terms’’ of this prospectus.

Employees

The Employment Act (Cap 91) (‘‘Employment Act’’) is the main legislation governing employment in Singapore.

The Employment Act covers every employee who is under a contract of service with an employer and includes a workman (as defined under the Employment Act) but does not include, inter alia, any person employed in a managerial or executive position (subject to the exceptions set out below).

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A workman is defined under the Employment Act as including, inter alia, (a) any person, skilled or unskilled, who has entered into a contract of service with an employer in pursuance of which he is engaged in manual labour, including any apprentice, (b) any person employed partly for manual labour and partly for the purpose of supervising in person any workman in and throughout the performance of his work.

Part IV of the Employment Act contains provisions relating to, inter alia, working hours, overtime, rest days, holidays, annual leave, payment of retrenchment benefit, priority of retirement benefit, annual wage supplement and other conditions of work or service and apply to: (a) workmen earning not more than S$4,500 basic monthly salaries and (b) employees (excluding workmen) earning not more than S$2,000 basic monthly salaries.

Paid public holidays and sick leave apply to all employees who are covered by the Employment Act regardless of salary levels.

Any person employed in a managerial or an executive position (who is generally not regarded as an employee under the Employment Act) who is in receipt of a salary not exceeding S$2,500 shall be regarded as an employee for the purposes of provisions in the Employment Act relating to, inter alia, payment and computation of salaries, powers of the Commissioner for Labour in relation to claims, complaints and investigations into offences under the Employment Act and procedures and regulations governing claims and offences under the Employment Act.

Employment of foreign workers in Singapore

The employment of foreign workers in Singapore is governed by the Employment of Foreign Manpower Act, Chapter 91A of Singapore (the ‘‘EFMA’’) and regulated by the MOM.

In Singapore, under Section 5(1) of the EFMA, no person shall employ a foreign employee unless he has obtained in respect of the foreign employee a valid work pass from the MOM, which allows the foreign employee to work for him. Any person who fails to comply with or contravenes Section 5(1) of the EFMA shall be guilty of an offence and shall:

. be liable on conviction to a fine of not less than S$5,000 and not more than S$30,000 or to imprisonment for a term not exceeding 12 months or to both; and
. on a second or subsequent conviction:
. in the case of an individual, be punished with a fine of not less than S$10,000 and not more than S$30,000 and with imprisonment for a term of not less than one month and not more than 12 months; or
. in any other case, be punished with a fine not less than S$20,000 and not more than S$60,000.

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REGULATORY OVERVIEW

The availability of the foreign workers to the construction and manufacturing industry is also regulated by the MOM through the following policy instruments:

. approved source countries;
. the imposition of security bonds and levies;
. dependency ceilings based on the ratio of local to foreign workers; and
. quotas based on the man year entitlements (‘‘MYE’’) in respect of workers from Non-Traditional Sources (‘‘NTS’’) and the PRC.

Please refer to section headed ‘‘Risk factors’’, and section headed ‘‘Directors, senior management and staff — staff’’ in this prospectus.

MYE

The MYE allocation system is a work permit quota system relating to the employment of construction workers from NTS and the PRC. MYEs represent the total number of such workers that each main contractor is allocated for a specific construction project based on the value of the project or contract awarded by the developer or owner. The allocation of MYE is in the form of the number of ‘‘man-years’’ required to complete a project and only main contractors may apply for MYE. One man-year is equivalent to one year’s employment under a work permit. All levels of subcontractors are required to obtain their MYE allocation from their main contractors. A main contractor’s MYE will expire on the completion date of the relevant project. NTS or PRC construction workers who have worked with any employer for a cumulative period of two or more years in the construction industry, may be hired by main contractors without the need for MYE.

Employers are required to comply with the conditions of the work permits, such as the requirement to provide acceptable accommodation for their foreign workers. Other conditions of the work permits which employers of foreign construction workers are also required to comply with include the following:

. that the foreign worker performs only those construction activities specified in the conditions;
. ensuring that the foreign worker is not sent to work for any other person, except as provided for in the conditions;
. providing safe working conditions for their foreign workers; and
. purchasing and maintaining medical insurance with coverage of at least S$15,000 per 12-month period of the foreign worker’s employment (or for such shorter period where the worker’s period of employment is less than 12 months) for the foreign worker’s in-patient care and day surgery except as the Controller of Work Passes may otherwise provide by notification in writing. Where the employer purchases group medical insurance policy for its foreign workers, the employer

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shall not be considered to have satisfied the obligation under this condition unless the terms of the employer’s group medical insurance policy are such that each and every individual foreign worker is concurrently covered to the extent as required aforesaid.

Approved source countries

Construction

The approved source countries for construction workers are Malaysia, the PRC, NTS and North Asian Sources (‘‘NAS’’). NTS countries include countries such as India, Sri Lanka, Thailand, Bangladesh, Myanmar and the Philippines. NAS countries include Hong Kong, Macau, South Korea and Taiwan.

Construction companies must have Prior Approval (‘‘PA’’) from the MOM to employ foreign workers from NTS countries and the PRC. The PA indicates the number of foreign workers a company is allowed to bring in from NTS countries and the PRC. It also determines the number of workers who can have their work permits renewed, or who can be transferred from another company in Singapore. PAs are given based on: (i) the duration of the work permits applied for; (ii) the number of full-time local workers employed by the company over the past three months as reflected in the company’s CPF contribution statements; (iii) the number of man-years allocated to the company (for main contractors) or the man-years directly allocated from the company’s main contractor (for subcontractors); and (iv) the remaining number of company’s quota available.

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Foreign construction workers would be required to obtain the following before they are allowed to work in Singapore:

Requirements

Type of workers

Skills Evaluation Certificate (‘‘SEC’’) NTS countries and the PRC under the PA or Skills Evaluation Certificate (Type: New); NAS countries (Knowledge) (‘‘SEC(K)’’)[(10)] , issued or accepted by the Building and Construction Authority (‘‘BCA’’)

Secondary 4 education or its Malaysia equivalent, the SEC or SEC(K)

Attend and pass full day Construction NTS counties, NAS countries, the PRC and Safety Orientation Course[(11)] Malaysia (All)
Pass medical examination by doctor NTS countries, NAS countries, the PRC and registered in Singapore Malaysia (All)

With respect to NTS and PRC construction workers, basic skilled workers are allowed to work up to a maximum of 10 years, while higher skilled workers would be allowed to work up to 22 years. There is no maximum employment period for all other foreign workers (from NAS and Malaysia). The maximum age limit for all foreign workers to work in Singapore, regardless of country of origin, is up to 60 years old.

In addition, for each individual’s work permit, in-principle approvals have to be sought. Upon receipt of approval, the foreign construction worker is required to undergo a medical examination by a doctor registered in Singapore and must pass such medical examination before a work permit can be issued to him.

All foreign workers in the construction sector must attend the Construction Safety Orientation Course (‘‘CSOC’’), a full-day course conducted by various training centres accredited by MOM and obtain a valid CSOC Pass. The CSOC is to (i) ensure that construction workers are familiar with common safety requirements and health hazards in the industry, (ii) educate them on the required measures to prevent accidents and diseases, and (iii) ensure that they are aware of their rights and responsibilities under employment law. Employers must ensure that the foreign workers attend the course within two weeks of their arrival in Singapore before their work permits can be issued. At the end of the course, the workers will receive a safety orientation pass if they pass its requirement/assessment. Foreign workers who have failed the CSOC must retake the CSOC as soon as possible.

Notes:

(10) Both the SEC and SEC(K) schemes are initiatives by the BCA to raise the skill levels and productivity of the construction project as well as to enhance safety in the construction sector.

(11) Employers who fail to ensure that their workers take and pass the Construction Safety Orientation Course will be barred from applying for new work permits for three months while the affected workers will have their work permits revoked.

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Employers who fail to ensure that their workers take and pass the CSOC will be barred from applying for any new work permits for three months, while the affected workers will have their work permits revoked.

Manufacturing

The approved source countries for manufacturing workers are Malaysia, the PRC and NAS.

With respect to NAS and PRC manufacturing workers, basic skilled workers are allowed to work up to a maximum of 10 years, while higher skilled workers would be allowed to work up to 18 years. There is no maximum employment period for all other foreign workers from NAS and Malaysia. The maximum age limit for all foreign workers to work in Singapore, regardless of country of origin, is up to 60 years old.

Security bonds and levies

In both the construction and manufacturing sectors, for each NAS, NTS or PRC worker whom were successfully granted with a work permit, a security bond of S$5,000 in the form of a banker’s guarantee or insurance guarantee is required to be furnished to the Controller of Work Passes. The security bond must be furnished prior to the foreign worker’s arrival in Singapore, failing which entry into Singapore will not be allowed.

Malaysian workers are exempt from the above requirement of furnishing a security bond.

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REGULATORY OVERVIEW

For the construction sector, employers pay the requisite levy according to the qualification of the foreign workers employed.

		Monthly	Monthly	Monthly
	Monthly	levy ($)	levy ($)	levy ($)
	levy ($)	(from 1 July	(from 1 July	(from 1 July
Worker category	(current)	2015)	2016)	2017)
Higher skilled and on Man-
year entitlements
(‘‘MYE’’) (see below for
more details on MYE)	300	300	300	300
Basic skilled and on MYE	550	550	650	700
Higher skilled, experienced
and exempted from
MYE(12)	700	600	600	600
Basic skilled, experienced
and exempted from MYE	950	950	950	950

Manufacturing

For the manufacturing sector, employers pay the requisite levy according to the percentage of the foreign workers employed out of the total workforce of the company. The current levies payable are as follows:

				Monthly	Monthly	Monthly
				levy rate	levy rate	levy rate
			Worker	($)	($) (1 July	($) (1 July
Pass Type	Tiers	Percentage	category	(current)	2015)	2016)
S-Pass	Basic/Tier 1	Up to 10% of total	Skilled	315	315	330
Quota:		workforce
20%	Tier 2	Above 10% and up	Unskilled	550	550	650
		to 20% of
		workforce
Work Permit	Basic/Tier 1	Up to 25% of the	Skilled	250	250	250
Quota:		total workforce	Unskilled	370	370	370
60%	Tier 2	Above 25% to 50%	Skilled	350	350	350
		of the total	Unskilled	470	470	470
		workforce
	Tier 3	Above 50% to 60%	Skilled	550	550	550
		of the total	Unskilled	650	650	650
		workforce

Notes:

(12) To be exempted from MYE, the foreign workers must have at least two years of working experience in Singapore which is relevant to the construction sector.

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The calculation of the total levy bill for the manufacturing sector is as follows:

Levy	tier	Levy bill for each tier	Total levy bill
Tier	1	T1 x Tier 1 levy rate = Levy for	Total levy bill = Levy for tier 1
		tier 1	+ Levy for tier 2 + Levy for
			tier 3
Tier	2	T2 x Tier 2 levy rate= Levy for
		tier 2
Tier	3	T3 x Tier 3 levy rate= Levy for
		tier 3

Dependency ceilings

Construction

The dependency ceiling for the construction industry is currently set at a ratio of one full-time local worker to seven foreign workers. This means that for every full-time Singapore Citizen or Singapore Permanent Resident employed by a company in the construction sector with regular full month CPF contributions made by the employer, the company can employ seven foreign workers. However, the quota may not apply to higherskilled foreign employees.

Manufacturing

The dependency ceiling for the manufacturing industry is currently set at 1 local full time employee to 1.5 foreign workers. Therefore for every 2 local employees in the manufacturing sector, the company may hire a maximum of 3 foreign employees.

However the manufacturing industry is further subject to different sub-quotas: (i) subquota for foreign workers from the PRC (ii) sub-quota for foreign workers under each different levy tier:

(i) Sub-quota for foreign workers from the PRC
a. For workers from the PRC the sub-quota is calculated using the following formula: 25% x (company’s total workforce amount + 1)
(ii) Foreign workers under each different levy tier (see below for levy tier details) Levy Tiers

Tier 1 T1 = 25% x total workforce Tier 2 T2 = (50% x total workforce) — T1 Tier 3 T3 = (Actual total number of foreign workers) — T1 — T2

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Apart from the EFMA, an employer of foreign workers is also subject to, amongst others, the provisions set out in:

. the Employment Act, as further discussed above.; and
. the Immigration Act, Chapter 133 of Singapore (‘‘Immigration Act’’) and the regulations issued pursuant to the Immigration Act.

Female employees

The Children Development Co-Savings Act (Cap 38A) (‘‘CDCSA’’) provides that every female employee is legally entitled to 16 weeks of paid maternity leave regardless of her occupation if: (1) her child is a Singapore Citizen, (2) she is lawfully married to the child’s father at the time of the child’s birth; and (3) she has served the company for at least 90 days before the birth of her child.

Workplace safety and health safety measures

Under the Workplace Safety and Health Act, Chapter 354A of Singapore (‘‘WSHA’’), every employer has the duty to take, so far as is reasonably practicable, such measures as are necessary to ensure the safety and health of his employees at work. These measures include providing and maintaining for the employees a work environment which is safe, without risk to health, and adequate as regards facilities and arrangements for their welfare at work, ensuring that adequate safety measures are taken in respect of any machinery, equipment, plant, article or process used by the employees, ensuring that the employees are not exposed to hazards arising out of the arrangement, disposal, manipulation, organisation, processing, storage, transport, working or use of things in their workplace or near their workplace and under the control of the employer, developing and implementing procedures for dealing with emergencies that may arise while those persons are at work and ensuring that the person at work has adequate instruction, information, training and supervision as is necessary for that person to perform his work.

The Workplace Safety and Health (Construction) Regulations 2007 sets out additional specific duties on employers which include, inter alia, appointing a workplace safety and health co-ordinator in respect of every worksite to assist and identify any unsafe condition in the worksite or unsafe work practice which is carried out in the worksite and recommend and assist in the implementation of reasonably practicable measures to remedy the unsafe condition or unsafe work practice.

More specific duties imposed on employers are laid out in the Workplace Safety and Health (General Provisions) Regulations (‘‘WSHR’’). Some of these duties include taking effective measures to protect persons at work from the harmful effects of any exposure to any bio-hazardous material which may constitute a risk to their health.

Pursuant to the WSHR, the following equipment are required to, amongst others, be tested and examined by an authorised examiner (‘‘Authorised Examiner’’) before they can be used and thereafter, at specified intervals:

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. hoists or lifts
. lifting gears
. lifting appliances and lifting machines

Upon examination, the Authorised Examiner will issue and sign a certificate of test and examination, specifying the safe working load of the equipment. Such certificate of test and examination shall be kept available for inspection. Under the WSHR, it is the duty of the occupier of a workspace in which the equipment is used to comply with the foregoing provisions of the WSHR, and to keep a register containing the requisite particulars with respect to the lifting gears, lifting appliances and lifting machines.

In addition to the above, under the WSHA, inspectors appointed by the Commissioner for Workplace Safety and Health (‘‘CWSH’’) may, among others, enter, inspect and examine any workplace, to inspect and examine any machinery, equipment, plant, installation or article at any workplace, to make such examination and inquiry as may be necessary to ascertain whether the provisions of the WSHA are complied with, to take samples of any material or substance found in a workplace or being discharged from any workplace for the purpose of analysis or test, to assess the levels of noise, illumination, heat or harmful or hazardous substances in any workplace and the exposure levels of persons at work therein and to take into custody any article in the workplace which is relevant to an investigation or inquiry under the WSHA.

Under the WSHA, the CWSH may issue a stop-work order in respect of a workplace if he is satisfied that (i) the workplace is in such condition, or is so located, or any part of the machinery, equipment, plant or article in the workplace is so used, that any process or work carried on in the workplace cannot be carried on with due regard to the safety, health and welfare of persons at work; (ii) any person has contravened any duty imposed by the WSHA; or (iii) any person has done any act, or has refrained from doing any act which, in the opinion of the CWSH, poses or is likely to pose a risk to the safety, health and welfare of persons at work. The stop-work order shall, amongst others, direct the person served with the order to immediately cease to carry on any work indefinitely or until such measures as are required by the CWSH have been taken, to the satisfaction of the CWSH, to remedy any danger so as to enable the work in the workplace to be carried on with due regard to the safety, health and welfare of the persons at work.

The MOM has also implemented a demerit points system for the construction sector. All main contractors and subcontractors in the construction sector will be issued with demerit points for breaches under the WSHA and relevant subsidiary legislation. The number of demerit points awarded depends on the severity of the infringement. A contractor that has received more than 18 demerit points within a 12-month period will receive a formal warning from the MOM, while the continued accumulation of demerit points will result in more stringent corrective actions. If a contractor continues to commit workplace safety and health offences, applications from the company for new and renewal of all types of work passes for all foreign employees will be rejected by MOM. MOM escalates warnings and penalties to main contractors as they commit repeated offences and accumulate demerit points, as follows:

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First stage:

A warning letter will be issued to the main contractor if the total points accumulated by the company exceed 18 demerit points within a 12-month rolling period.

Second stage:

The following will apply to an individual worksite if the total points accumulated by the worksite exceed 18 demerit points:

. Six-month MYE freeze for first occurrence;
. 12-month MYE freeze for second occurrence (within 12 months of the first occurrence); and
. 24-month MYE freeze for third or subsequent occurrences (within 12 months of the previous occurrence).

A main contractor will have its records cleared when all its worksites do not accumulate any demerit points for a rolling period of 12 months.

Third stage:

A 24-month MYE freeze will be extended to all worksites under the company if three of its worksites have each accumulated more than 18 demerit points within any 12month period i.e. the company’s MYE has been frozen three times within a year.

Applications from the company for new and renewal of all types of work passes for all foreign employees will also be rejected.

When the MYE allocated to a worksite is frozen, applications from the maincontractor for new and renewal of all types of work permits, including sub-contractors’ use of the worksite’s MYEs to employ or renew work permits holders will be rejected by MOM.

MOM escalates warnings and penalties to sub-contractors as they commit repeated offences and accumulate demerit points, as follows:

First stage: A warning letter will be issued to the sub-contractor if the total points accumulated by the company exceed 18 demerit points within a 12-month rolling period. Second stage: MOM will reject applications from the company for new and renewal of all types of work passes for all foreign employees if the total points accumulated by the subcontractor exceeds 18 demerit points:

. Six-month MYE freeze for first occurrence;

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. 12-month MYE freeze for second occurrence (within 12 months of the first occurrence); and
. 24-month MYE freeze for third or subsequent occurrences (within 12 months of the previous occurrence).

A sub-contractor will have its records cleared when it does not accumulate any demerit points for a rolling period of 12 months.

Under the Workplace Safety and Health (Registration of Factories) Regulations 2008 (‘‘Factories Regulations’’), any person who desires to occupy or use any premises as a factory falling within any of the classes prescribed under the First Schedule of the Factories Regulations is required to register the premises as a factory with the Commissioner for Workplace Safety and Health (‘‘Commissioner’’), while any person who desires to use or occupy any premises as a factory not falling within such classes shall only be required to submit a notification in the prescribed form to the Commissioner before the commencement of operation of the factory. In the latter case, the occupier of the factory is required to inform the Commissioner, inter alia, of any changes in any of the particulars of the factory, type of work carried out in the factory or any cessation of occupation or use of the factory.

Pursuant to the Workplace Safety and Health (Risk Management) Regulations, the employer in a workplace is supposed to, inter alia, conduct a risk assessment (at least once every 3 years) in relation to the safety and health risks posed to any person who may be affected by his undertaking in the workplace, take all reasonably practicable steps to eliminate or minimise risks, implement measures/safety procedures to address the risks, and to inform workers of the same, maintain records of such risk assessments and measures/ safety procedures for a period of not less than 3 years, and submit such records to the Commissioner from time to time when required by the Commissioner.

Please refer to section headed ‘‘Business — Workplace safety and health policy’’ in this prospectus.

Workmen’s compensation

The Work Injury Compensation Act (Chapter 354) (‘‘WICA’’), which is regulated by the Ministry of Manpower (‘‘MOM’’), applies to employees who are engaged under a contract of service or apprenticeship, regardless of their level of earnings. The WICA does not cover self-employed persons or independent contractors. However, as the WICA provides that, where any person (referred to as the principal) in the course of or for the purpose of his trade or business contracts with any other person (referred to as the subcontractor employer), the principal shall be liable to compensate those employees of the sub-contractor employer who were injured while employed in the execution of work for the principal.

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The WICA provides that if an employee dies or sustains injuries in a work-related accident or contracted occupational diseases in the course of the employment, the employer shall be liable to pay compensation in accordance with the provisions of the WICA. An injured employee is entitled to claim medical leave wages, medical expenses and lump sum compensation for permanent incapacity or death, subject to certain limits stipulated in the WICA.

An employee who has suffered an injury arising out of and in the course of his employment can choose to either:

(a) submit a claim for compensation through the MOM without needing to prove negligence or breach of statutory duty by employer. There is a fixed formula in the WICA on amount of compensation to be awarded; or
(b) commence legal proceedings to claim damages under common law against the employer for breach of duty or negligence.

Damages under a common law claim are usually more than an award under WCIA and may include compensation for pain and suffering, loss of wages, medical expenses and any future loss of earnings. However the employee must show that the employer has failed to provide a safe system of work, or breached a duty required by law or that the employer’s negligence caused the injury.

Under the WICA, every employer is required to insure and maintain insurance under approved policies with an insurer against all liabilities which he may incur under the provisions of the WICA in respect of all employees employed him, unless specifically exempted.

Personal Data Protection Act (2012) (the ‘‘PDPA’’)

The PDPA came into full effect on 2 July 2014. The PDPA governs the collection, use and disclosure of personal data by organisations in a manner that recognises both the right of individuals to protect their personal data and the need of organisations to collect, use or disclose the same for purposes that a reasonable person would consider appropriate in the circumstances. Under the PDPA, personal data is defined as data, whether true or not, about an individual (whether living or deceased) who can be identified (a) from that data; or (b) from that data and other information to which the organisation has, or is likely to have access. Generally, the PDPA imposes the following obligations on organisations collecting, using or disclosing personal data of individuals (‘‘relevant persons’’): obligations of obtaining consent, giving notification and access and correction rights to the relevant persons, purpose limitation in respect of use of, and retention limitation and transfer limitation in respect of personal data collected, ensuring accuracy and protection of data collected and openness in making information available on its privacy policies and procedures relating to protection of personal data.

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Company laws and regulations

Companies Act

Signmechanic Singapore, which is a wholly-owned subsidiary of KPM Holding Limited, is a private company limited by shares, incorporated and governed under the provisions of the Companies Act (Cap 50) (the ‘‘Companies Act’’) and its regulations.

The Companies Act generally governs, amongst others, matters relating to the status, power and capacity of a company, shares and share capital of a company (including issuances of new shares (including preference shares), treasury shares, share buybacks, redemption, share capital reduction, declaration of dividends, financial assistance, directors and officers and shareholders of a company (including meetings and proceedings of directors and shareholders, dealings between such persons and the company), protection of minority shareholders’ rights, accounts, arrangements, reconstructions and amalgamations, winding up and dissolution.

In addition, members of a company are subject to, and bound by the provisions of the memorandum and articles of association of the company. The memorandum of association of a company provides for, inter alia, the objects of the company while the articles of association of the company contains, inter alia, provisions relating to some of the matters in the foregoing paragraph, transfers of shares as well as sets out the rights and privileges attached to the different classes of shares of the company (if applicable).

The legal advisers to our Company as to Cayman Islands law and Singapore law have confirmed that apart from ad valorem stamp duty payable in Singapore in connection with the transfer of shares of Signmechanic Singapore pursuant to the Reorganisation (which has been duly paid), the change of shareholdings in Signmechanic Singapore under the Reorganisation did not require any approval or permit from any relevant government authorities in the Cayman Islands and Singapore respectively. Details of the Reorganisation are also set out in the section headed ‘‘History, Reorganisation and group structure’’ of this prospectus. Save for the Capitalisation Issue and Placing, no further changes in shareholding of our Company and its subsidiary will take place after the Reorganisation and at the time of Listing.

Singapore taxation

The following is a discussion of certain tax matters relating to Singapore corporate tax, capital gains tax, stamp duty and estate duty consequences in relation to the purchase, ownership and disposal of our Shares. The discussion is limited to a general description of certain tax consequences in Singapore with respect to ownership of our Shares, and does not purport to be a comprehensive nor exhaustive description of all of the tax considerations that may be relevant to a decision to purchase our Shares or apply to all categories of prospective subscriber, some of whom may be subject to special rules either in Singapore or in the tax jurisdictions where the subscribers are resident. The laws, regulations rulings, decisions and interpretations, however, may change at any time, and

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any change could be retroactive to the date of issuance of our Placing Shares. These laws and regulations are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below.

You, as a prospective subscriber of our Shares, should consult your tax advisors concerning the tax consequences of purchasing, owning and disposing our Shares. Neither our Company, our Directors nor any other persons involved in this Listing accepts responsibility for any tax effects or liabilities resulting from the subscription, purchase, holding or disposal of our Shares.

CORPORATE TAX

The prevailing corporate tax rate in Singapore is 17% with effect from Year of Assessment 2010. In addition, the partial tax exemption scheme applies on the first S$300,000 of normal chargeable income; and specifically 75% of up to the first S$10,000 of a company’s normal chargeable income, and 50% of up to the next S$290,000 is exempt from corporate tax. The remaining chargeable income (after the partial tax exemption) will be taxed at 17%. Further, companies will be granted a corporate income tax rebate of 30% of the tax payable for the Years of Assessment 2013 to 2015, subject to a cap of S$30,000 per year of assessment. During the 2015 Singapore Budget Announcement, the Minister proposed to extend this 30% rebate to the Years of Assessment 2016 and 2017, subject to a cap of S$20,000 per year of assessment.

Dividend distributions

(i) One tier corporate taxation system

Singapore adopts the One-Tier Corporate Taxation System. Under such a system, the tax collected from corporate profits is a final tax and the after-tax profits of the company resident in Singapore can be distributed to the shareholders as tax-exempt (One-Tier) dividends. Such dividends are tax-exempt in the hands of the shareholders, regardless of whether the shareholder is a company or an individual and whether or not the shareholder is a Singapore tax resident.

(ii) Withholding taxes

Singapore does not currently impose withholding tax on dividends paid to resident or non-resident shareholders. Foreign shareholders are advised to consult their own tax advisors to take into account the tax laws of their respective home countries/countries of residence and the applicability of any double taxation agreement which the relevant tax jurisdiction may have with Singapore.

Productivity and Innovation Credit Scheme

The Productivity and Innovation Credit Scheme (‘‘PIC Scheme’’) allows, amongst others, companies with active business operations in Singapore to claim (i) tax deductions and/or allowances and/or (ii) cash payouts, and/or (iii) cash bonuses (on a dollar for dollar matching basis) in addition to (i) and/or (ii) above, in respect of certain qualifying activities

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REGULATORY OVERVIEW

undertaken by such companies, including the acquisition or leasing of certain qualifying equipment and certain types of training of employees, subject to prescribed expenditure caps. Further conditions apply before a company is eligible to make each of such claims, including having to invest in relevant qualifying expenditure and (in the case of the cash payouts and the cash bonuses) meeting the minimum 3 local employees requirement and (in the case of cash bonuses) investing the minimum qualifying expenditure per year of assessment over the course of 3 years from year of assessment 2013 to 2015. The PIC Scheme has been extended for another 3 years from year of assessment 2016 to 2018, and higher expenditure caps in relation to tax deductions and allowances apply for qualifying small and medium enterprises, under the PIC+ scheme (for qualifying small and mediumsized enterprises) which takes effect from year of assessment 2015. As announced in Singapore Budget Announcement 2015, the PIC cash bonus will expire in year of assessment 2015.

CAPITAL GAINS TAX

There is no tax on capital gains in Singapore.

Thus any gains derived from the disposal of our Shares will not be taxable in Singapore, if the gains are of a capital nature. For the gain to be considered as capital in nature, the shares must be acquired for long-term investment purposes and primarily to derive investment income. The Shares must not have been originally acquired as part of the trading activities of the acquirer.

On the other hand, where the taxpayer is deemed by the IRAS to be carrying on a trade or business of dealing in shares, gains from disposal of shares by such taxpayer are of an income nature (rather than capital gains) and thus subject to Singapore income tax, if the gains are considered to be accruing in or derived from Singapore or received or deemed received in Singapore, unless exemptions apply.

Subject to certain conditions being met, with effect from 1 June 2012 and for a period of five (5) years ending on or before 31 May 2017, gains derived from the disposal of ordinary shares by companies will not be subjected to Singapore income tax, if the divesting company holds a minimum shareholding of 20% of the ordinary shares in the company whose shares are being disposed for a minimum continuous period of 24 months.

Other than the above, there are no specific laws or regulations which deal with the characterisation of capital gains, and hence, gains may be construed to be of an income nature and subject to tax especially if they arise from activities which the IRAS regards as the carrying on of a trade or business in Singapore.

Foreign sellers are advised to consult their own tax advisors to take into account the applicable tax laws of their respective home countries or countries of residence as well as the provisions of any applicable double taxation agreement.

STAMP DUTY

No stamp duty is payable on the subscription for and issuance of our Shares.

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REGULATORY OVERVIEW

Where existing Shares evidenced in certificated form are acquired or executed in Singapore, stamp duty is payable on the instrument of transfer of the Shares at the rate of 0.2% (if executed on or after 22 February 2014) of the consideration for, or market value of the Shares, whichever is higher. The purchaser is liable for stamp duty, unless otherwise agreed.

No stamp duty is payable if no instrument of transfer is executed (such as in the case of scripless shares, the transfer of which does not require instruments of transfer to be executed) or if the instrument of transfer is executed outside Singapore. However, stamp duty is payable if the instrument of transfer which is executed outside Singapore is subsequently received in Singapore. Stamp duty is also not applicable to electronic transfers of shares through the Central Depository System.

ESTATE DUTY

Singapore estate duty has been abolished with effect from 15 February 2008.

GOODS AND SERVICES TAX (‘‘GST’’)

General

The sale of our Shares by a GST-registered investor belonging in Singapore to another person belonging in Singapore is an exempt supply not subject to GST. Any GST (for example, GST on brokerage) incurred by the investor in connection with the making of this exempt supply will generally become an additional cost to the investor unless the investor satisfies certain conditions.

Where our Shares are sold by a GST-registered investor to a person belonging to a country other than Singapore, the sale is a zero-rated supply (i.e. subject to GST at zero rate). Any GST (for example, GST on brokerage) incurred by him in the making of this zero-rated supply for the purpose of his business will, subject to the provisions of the GST legislation, be recoverable as an input tax credit in his GST returns.

Services such as brokerage, handling and clearing services rendered by a GSTregistered person to an investor belonging in Singapore in connection with the investor’s purchase, sale or holding of our Shares will be subject to GST at the prevailing rate of 7.0%. Similar services rendered contractually to an investor belonging outside Singapore should qualify for zero-rating (i.e. subject to GST at zero rate) provided that the investor is the direct beneficiary of the services and is outside Singapore at the time the services are performed.

Investors should seek their own tax advice on the recoverability of GST incurred on expenses in connection with purchase and sale of our Shares.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

HISTORY AND DEVELOPMENT

Key milestones of our Group

The following table sets forth major development milestones of our Group:

Year Development milestones 1998 Signmechanic Singapore was acquired by Mr. Peter Tan and Mr. Kelvin Tan. Started providing in-house signage fabrication.
2001 Signmechanic Singapore started providing maintenance works for signage.
2008 to 2014 Signmechanic Singapore was awarded the temporary signage projects required for Formula 1 Singapore Grand Prix, providing road diversion signage from 2008 to 2014.
2009 Signmechanic Singapore obtained its first major road signage contract of value of approximately S$4.0 million, for the upgrading of directional and traffic signs in the west sector of Singapore.
2010 Signmechanic Singapore was awarded the road directional signage required for Youth Olympics in Singapore.
2011 to 2013 Signmechanic Singapore obtained various contracts for the supply of labour and machinery for the construction of precast fac¸ ade wall, lane marking and road/directional signage along the Marinal Coastal Expressway, the widest undersea road tunnel in Singapore.
2013 Signmechanic Singapore was awarded Singapore Business Quality Award for its commitment towards quality, environment, health and safety management system.

Our corporate and business history

Our Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law on 10 March 2015 and became the holding company of Signmechanic Singapore pursuant to the Reorganisation which was completed on 23 June 2015. We decided on the name KPM Holding Limited as it is representative of the names of our Executive Directors, Mr. Kelvin Tan and Mr. Peter Tan, and our general manager, Mr. Soh Chiau Kim (who is also known as Mike). We decided against using ‘‘Signmechanic’’ in the name of our Company as we wanted a corporate name to signify new horizons and challenges that the abovementioned parties will undertake together. Our Group comprises our Company, Sino Promise and Signmechanic Singapore, both whollyowned subsidiaries. Our Group is founded by our Executive Directors, Mr. Kelvin Tan and Mr. Peter Tan.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

Our founders, Mr. Kelvin Tan and Mr. Peter Tan, acquired Sign Mechanic Pte Ltd, then owned by two other Independent Third Parties, in July 1998. Sign Mechanic Pte Ltd was incorporated on 2 September 1997 with a share capital of S$5,000. In July 1998, for S$5,000 Mr. Kelvin Tan and Mr. Peter Tan bought all the shares in Sign Mechanic Pte Ltd held by the Independent Third Parties, using their personal resources, resulting in their holding of the entire beneficial ownership of 5,000 shares. On 17 December 1997, the Registrar of Companies approved the name of the Company be changed to Signmechanic Singapore and that it be substituted for Sign Mechanic Pte Ltd. From 9 July 1998 to 20 February 2011, Mr. Kelvin Tan and Mr. Peter Tan injected additional share capital into Signmechanic Singapore, using their personal resources, resulting in an aggregate additional 231,000 shares allotted and issued to each of Mr. Kelvin Tan and Mr. Peter Tan at a cash payment of S$231,000 each. On 4 December 2003, an additional 10,000 shares were allotted and issued to each of Ms. Khoo Ai Lin and Ms. Ong Siew Mui (the spouses of Mr. Kelvin Tan and Mr. Peter Tan respectively), who held the shares on trust for Mr. Kelvin Tan and Mr. Peter Tan, respectively. The shares were issued at a cash payment of S$10,000 each. On 26 October 2009, an additional 6,500 shares were allotted and issued to each of Ms. Khoo Ai Lin and Ms. Ong Siew Mui, who held the shares on trust for Mr. Kelvin Tan and Mr. Peter Tan, respectively. The shares were issued at a cash payment of S$6,500 each. On 7 April 2015, an additional 750,000 shares were allotted and issued to each of Mr. Kelvin Tan and Mr. Peter Tan and the shares were issued at a cash payment of S$750,000 each. The share capital of Signmechanic Singapore remained unchanged after the aforesaid allotment and issue of shares. On 19 June 2015, Ms. Khoo Ai Lin and Ms. Ong Siew Mui transferred their shares, held on trust for Mr. Kelvin Tan and Mr. Peter Tan back to them. Signmechanic Singapore became our wholly-owned subsidiary pursuant to the Reorganisation, details of which are also set out in the paragraph headed ‘‘Reorganisation’’ in this section of this prospectus. The abovementioned transfers had been properly and legally completed.

At the onset in 1998, Mr. Kelvin Tan and Mr. Peter Tan started as a two-person company and focused mainly on in-house fabrication of signage. Gradually, the scope of services and products we provided increased to cover maintenance for signages in 2001. From 2000 to 2010, we pursued business growth in terms of expanding business sectors to include national parks, hospitality (hotels and resort), commercial buildings and retail sectors (fast food and coffee retail chains).

In 2008, we were awarded the temporary signage projects required for Formula 1 Singapore Grand Prix, providing road diversion signage works. We were awarded such project for each subsequent year, from 2008 to 2014. In 2009, we obtained our first major road signage contract of value approximately S$4.0 million, providing directional and traffic signs in the west sector in Singapore. In 2010, we were awarded the road directional signage required for Youth Olympics held in Singapore. In 2011, Signmechanic Singapore made a business strategic decision to focus on road signage in the public sector, expanding its product portfolio to provide comprehensive product range of road signage, railings, bus shelters, linkways and metal works in the public sector in Singapore. From 2011 to 2013, Signmechanic Singapore obtained various contracts for the supply of labour and machinery for the construction of precast fac¸ ade wall, lane marking and road/directional signage along the Marinal Coastal Expressway, the widest undersea road tunnel in Singapore.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

In 2013, Signmechanic Singapore was awarded Singapore Business Quality Award for its commitment towards quality, environment, health and safety management system. As at the Latest Practicable Date, our Group had a work force of 20 local staff and 46 foreign workers.

Our Company was incorporated on 10 March 2015 and as a result of the Reorganisation, thus becoming the investment holding company of our Group. The legal advisers to our Company as to Cayman Islands law and Singapore law have confirmed that the change of shareholdings in Signmechanic Singapore under the Reorganisation would not require any approval or permit from any relevant government authorities in the Cayman Islands or Singapore. Details of the Reorganisation are also set out in the paragraph headed ‘‘Reorganisation’’ in this section of this prospectus. Save for the Capitalisation Issue and the Placing, no further changes in shareholding of our Company and our subsidiaries will take place after the Reorganisation and at the time of Listing.

The shareholding structure of our Group, immediately prior to the implementation of the Reorganisation, is illustrated below:

==> picture [205 x 128] intentionally omitted <==

----- Start of picture text -----

Mr. Kelvin Tan Mr. Peter Tan
50% 50%
Signmechanic Singapore
----- End of picture text -----

Note:

As at the Latest Practicable Date, the issued and paid-up share capital of Signmechanic Singapore was S$2,000,000 comprising 2,000,000 shares of S$1 each and the directors of Signmechanic Singapore are Mr. Kelvin Tan, Mr. Peter Tan, Ms. Khoo Ai Lin and Ms. Ong Siew Mui. Signmechanic Singapore is the principal operating entity of our Group which is principally engaged in the design, fabrication, installation and maintenance of signage and related products.

REORGANISATION

In preparation for the Listing, our Group has undergone the Reorganisation and the steps are as follows:

(i) Incorporation of Sino Promise and our Company

On 12 January 2015, Sino Promise was incorporated in the British Virgin Islands with limited liability and is authorised to issue a maximum of 50,000 shares of a single class, each with a par value of US$1.00, of which one fully paid share has been allotted and issued at par to our Company on 10 March 2015.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

On 10 March 2015, our Company was incorporated as an exempted company in the Cayman Islands under the Companies Law, with an authorised share capital of HK$380,000 divided into 38,000,000 Shares of HK$0.01 each, of which one Share was allotted and issued to the first subscriber, Reid Services Limited, as nil-paid Share, which was transferred to Absolute Truth on 12 March 2015 at nil consideration.

(ii) Acquisition of Signmechanic Singapore

On 23 June 2015, Mr. Kelvin Tan and Mr. Peter Tan transferred the entire issued share capital of Signmechanic Singapore to Sino Promise (as a nominee of our Company) in the consideration of HK$38,106,550, which was satisfied by (i) our Company allotting and issuing 999,999 new Shares to Absolute Truth (as a nominee of Mr. Kelvin Tan and Mr. Peter Tan) credited as fully paid; and (ii) the crediting of the one nil-paid Share, which was registered in the name of Absolute Truth, as fully paid. After completion of the above transaction, Signmechanic Singapore was wholly-owned by Sino Promise.

On the same date, in consideration of our Company nominating Sino Promise to hold the entire issued share capital of Signmechanic Singapore, Sino Promise allotted and issued 9 new shares of Sino Promise to our Company, credited as fully paid.

Based on the foregoing arrangements as agreed by the parties, the acquisition of Signmechanic Singapore by our Company was properly and legally completed and settled.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

(iii) Increase of authorised share capital of our Company

On 23 June 2015, the authorised share capital of our Company was increased from HK$380,000 divided into 38,000,000 Shares of HK$0.01 each to HK$50,000,000 divided into 5,000,000,000 Shares of HK$0.01 each by the creation of an additional 4,962,000,000 Shares of HK$0.01 each to rank pari passu in all respects with the existing Shares.

The following chart illustrates the shareholding structure of our Group immediately after the completion of the Reorganisation and prior to completion of the Placing and the Capitalisation Issue:

Mr. Kelvin Tan	Mr. Kelvin Tan			Mr. Peter Tan
50% 50% 100% Our Company (Cayman Islands) Absolute Truth (British Virgin Islands) 100% 100% Signmechanic Singapore (Singapore) Sino Promise (British Virgin Islands)	50%

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HISTORY, REORGANISATION AND GROUP STRUCTURE

GROUP STRUCTURE

The following chart sets out the shareholding structure and corporate structure of our Group immediately after completion of the Placing and the Capitalisation Issue:

==> picture [391 x 279] intentionally omitted <==

----- Start of picture text -----

Mr. Kelvin Tan Mr. Peter Tan
50% 50%
Absolute Truth
Public
(British Virgin Islands)
75% 25%
Our Company
(Cayman Islands)
100%
Sino Promise
(British Virgin Islands)
100%
Signmechanic
Singapore
(Singapore)
----- End of picture text -----

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BUSINESS

OVERVIEW

We have been principally engaged in the design, fabrication, installation and maintenance of signage and related products in both the public and private sectors in Singapore since 1997. We are one of the established companies offering road signage in Singapore and have the capability to offer our products across public and private sectors. Approximately 66.7% and 80.7% of our revenue during the two years ended 31 December 2014 was derived from the public sector. Public sector includes road signage, signage and related products for education institutions, public housing flats/compounds and national parks. Private sector includes signage and related products for commercial buildings and fast food chains.

Our Group was founded by our Executive Directors, Mr. Kelvin Tan and Mr. Peter Tan who are supported by our general manager, Mr. Soh Chiau Kim. Mr. Kelvin Tan and Mr. Peter Tan are responsible for our Group’s overall management, strategic planning and business development. Mr. Soh Chiau Kim is responsible for the overall management of operations, with a focus on the execution of contracts.

Our total revenue for the two years ended 31 December 2014 was approximately S$7.8 million and S$11.9 million, respectively.

OUR BUSINESS MODEL

Our principal business activities

Both our public and private sector projects are typically non-recurring in nature. All open tender projects are competitive in nature; for private invitation projects, we understand from our customers that they typically require more than one quotation from their suppliers and therefore with more than one quotation, these projects will be competitive in nature.

COMPETITIVE STRENGTHS

Our Directors believe that our Group’s competitive strengths set out below have driven growth in our business and financial performance.

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BUSINESS

We have a reputation as an established signage provider, particularly for road signage works in Singapore

We are an established signage provider for road signage works in Singapore. Our track record in road signage includes being awarded signage contract of value approximately S$4.0 million, for the upgrading of directional and traffic signs directional and traffic signs in the west sector of Singapore. We are reputable partly due to our ability to provide a comprehensive set of products to our customers, including lane marking works and road safety products where we work with suppliers and subcontractors to offer value-added related products and works. We are also experienced in managing road signage projects as these involve a series of work steps, ranging from removal of existing signage, re-directing ongoing traffic, managing of road closure hours, managing of subcontractors in laying of roads and lane marking, managing of equipment that can be deployed on the road site to installation of the road signage.

We have a solid track record of providing reliable and timely products for our customers

For public sector projects, our Directors believe that a key factor that our customers consider is the ability to provide reliable and timely installation of signage. Typically for road signage works, there will be certain closure times during which the signage installation has to be completed. We have consistently been completing the road installation on a timely manner for our customers. Reliability is also a consideration for our customers as the road signage has to meet both the aesthetics and technical requirements set by the LTA of Singapore.

Our rapport with our suppliers enable us to obtain competitive pricing and fast delivery turnaround time

Our Group has good relationships with our network of suppliers and subcontractors, some of whom had known or worked with us for over 5 years. Our good relationships with our suppliers are partly due to our prompt repayment of accounts payables which has enabled our Group to make purchases at a competitive pricing. We also enjoy economies of scale for certain purchases, in particular for metal products. We enjoy a close working relationship with our suppliers whose supplies to us for our signage fabrication is able to meet the technical specifications required of road signage and to do so, in a responsive and timely manner. Our suppliers, together with our subcontractors, allow us to offer a comprehensive set of products to our customers.

We have an experienced and dedicated management team and each of our Executive Directors has over 15 years of experience in the signage installation industry in Singapore

Each of our Executive Directors has over 15 years of experience in the signage installation industry, and our general manager has worked with us for 6 years and prior to that, 7 years of project management experience. Our Directors believe that our team has a strong knowledge of the industry and our execution team is competent to complete projects reliably and timely, and dynamic to take on new business opportunities. Please refer to the section headed ‘‘Directors, senior management and employees’’ for detailed work experience of our Directors and senior management team.

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BUSINESS

Other unique selling points for our Group include:

. Approximately 66.7% and 80.7% of our revenue for the two years ended 31 December 2014 was derived from public sector projects

Public sector projects include road infrastructure projects where the main contractor is; (i) LTA, or Housing Development Board (the ‘‘HDB’’). When they build new public housing, changes in road signs and metal installations would be required; and (ii) Jurong Town Council (the ‘‘JTC’’) which is a government owned developer of commercial property in Singapore.

National Parks (the ‘‘NParks’’) is another government agency that would often raise tenders. Our Group either bid directly for these projects or through main contractors who might be doing a project under infrastructure or which impacts the infrastructure by requiring re-routing of roads (and hence new road signs).

. Productivity optimisation

Our Group is careful to only bid for projects where we can aim for several bids (e.g. signage and metalwork). We can then have a supervisor or manual workers working on 2 or 3 projects in a day for the same site.

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BUSINESS

BUSINESS OBJECTIVES AND STRATEGIES

Our objectives

Our corporate objective is to achieve sustainable growth in our business and financial performance so as to create long-term shareholder’s value. We intend to achieve this by implementing the following corporate strategies:

Our strategies

Our Group intends to achieve our future expansion plans by pursuing the following key strategies:

(a) Expand and strengthen our market position in the public sector in Singapore

Our revenue attributable to the public sector in Singapore was approximately 66.7% and 80.7% of our total revenue for the two years ended 31 December 2014, respectively. Of the public sector in Singapore, the development of roads is one of the key sectors. We intend to expand and strengthen our market position in this sector by expanding our workforce, purchasing more materials and/or equipment to take on more projects.

(b) Expand our business portfolio through the formation of new companies and/or acquisitions

Apart from organic expansion, we will evaluate suitable external parties with experience in signage and related industry for joint ventures or acquisitions. Depending on discussions with the external parties, their current business and our financial and legal due diligence, we may proceed with either capital contribution into a new company (in the form of joint venture, jointly-controlled entities or subsidiaries) or we may acquire a controlling stake in their companies. As at the Latest Practicable Date, we have not identified any potential external party to expand our business portfolio, but we will evaluate based on factors, including but not limited to, their customer list, business contacts, track record, staff competencies and equipment. These external parties may be companies in other sectors of civil engineering, such as providing services such as lane marking or installation of precast blocks that we currently do not provide in house but require the engagement of subcontractors. This strategy serves to (i) increase our competitive edge by providing a wider range of product offering which we consider to be an unique selling point and (ii) increase our revenue or profits.

Apart from strengthening our position in the road signage sector, we also intend to expand our product offering to other non-road infrastructure related projects such as in the Mass Rapid Transit (MRT) stations and covered linkways. This will require us to strengthen our competencies to cater to different project specifications, such as

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BUSINESS

working with suppliers/operators with advanced technologies (including but not limited to environmentally friendly and energy-saving operators), training our workers or hiring staff who have competencies in the technical and project needs of new projects. Possible expansion of product offering include tactile guidance system (for the visually impaired) and covered linkways (to promote connectivity between transport points and schools, health care facilities, residential developments and amenities, part of Singapore’s Walk2Ride Programme).

To serve increasing demands for signages, we expect to use approximately HK$6.5 million, representing approximately 27.8% of the net proceeds from the Placing, to invest prudently to expand and penetrate signage markets as well as other high-growth new business opportunities.

We currently have plans to expand our business horizontally into (i) Mass Rapid Transit (the ‘‘MRT’’) stations and (ii) covered linkways projects, as we expect the demand for our products would continue to grow and represent a good business opportunity for our Group.

(i) With respect to expansion into MRT stations, there is a planned construction of the 6th MRT line, the Thomson-East Coast Line, in Singapore which is expected to add an additional 31 MRT stations with 7 interchange stations with existing lines. We plan to focus on the design, supply and installation of signages within the stations of this MRT line through the following planned business expansion steps:
. Equipment — This new business opportunity can leverage on our existing production facilities, as well as expertise in signage sector, which accomplishes economy of scale by reducing the cost per unit resulting from increased production, realised through operational efficiencies.
. Supply — We intend to engage more third-party subcontractors for fabrication of precision casing and electrical specialist who are selected on the basis of competitive tenders. The subcontractors must be arm’s length entities in which no staff member of our Group has any interest. While subcontracts are awarded primarily on the basis of cost and fees, we will also consider the overall experience, production schedule, guarantees of completion quality, and insurance.
. Labour — We plan to engage additional skilled workers responsible for the installation of signages. For further details, please see ‘‘Workforce expertise’’ section below.

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BUSINESS

. Marketing and Sales — We seek to engage an experienced sales coordinator to follow up and increase communications with the main contractor awarded with the new MRT station project through the Internet, SMS and other platforms to strengthen and deepen the relationship. We believe such collaborative relationships would not only solidify our position with the main contractor but would also enhance our competitiveness and accelerate our drive for deeper market penetration.
(ii) With respect to expansion into covered linkways, the Walk2Ride programme is expected to incur a government budget of approximately S$330 million from 2014 to 2018. We intend to design, supply, fabricate and install linkways for this Walk2Ride programme through the following planned business expansion steps:
. Equipment — We expect to make purchase of an additional offsite welding machine, to address this new business opportunity and offer a comprehensive suite of cost-effective signage solutions.
. Material — We intend to purchase the necessary raw materials from existing or new metal supplier. We expect that our consumption of some major materials will be increased as we process more projects with similar materials. Our raw material procurement policy is to select only those suppliers who have demonstrated a high level of quality control and reliability and have excellent record of on-time delivery as the quality of the materials used is important since they effectively define the limits of our signages. Nevertheless, our inventory management would be more efficient as we expect a better inventory turnover days will be achieved.
. Labour — We plan to employ additional skilled labour and practised welder to handle fabrication and installation of covered linkways. For further details, please see ‘‘Workforce expertise’’ section below.

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BUSINESS

Other planning are:

. Capital expenditure — The capital expenditure for investments into MRT stations and covered linkways projects is estimated at approximately HK$3 million and HK$3.5 million respectively. The estimated capital expenditure is made with reference to, among others, the cost of materials, new machineries and tools, supervisors and workers and facility operating fees. It is expected that the overall profit margin will remain stable initially as potential working capital required for operating new businesses will be increased but our Directors expect the overall profit margin will be improved in the long run.
. Production facilities — Based on our historical turnover during the Track Record Period, we do not expect that a dramatic change needs to be made in our existing production facilities, and in case there is a need for extra production space, we might consider to retain the sublet areas for our own usage after the completion of current subleasing agreement.
. Workforce expertise — We expect that the expansion into the new projects will need a workforce of about 15 workers with experiences of about one to two years. Further, in order to supervise our expanded workforce of 15 workers, we intend to employ 3 supervisors with at least five years of experience in relevant operation and management in Singapore on a comparable scale. As MRT stations projects and covered linkways projects do not involve sophisticated technical skills and knowledge, our Directors believe that our Group should not experience any particular difficulty in recruiting suitable workers in Singapore with the relevant experience and expertise. Our Directors and senior management, with extensive experience in the signage industry, will monitor and assist in the execution of the expansion plan from time to time. Having worked in the signage industry in Singapore for more than 15 years, our Executive Directors and senior management have acquired extensive experience in project management, operation management and project implementation which will be responsible for supervision and quality control of the production of the new business opportunities. We also would delegate certain decision makings to project management teams, so that they have the flexibility to respond quickly to market demand and improve business performance.
. Risk profile of the new projects — As the MRT stations and covered linkways businesses would be a horizontal expansion of our Group, our Directors do not consider that our Group would be subject to a risk profile completely different from that of our business model during the Track Record Period.

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BUSINESS

. Implementation and timing — In view of the new MRT stations and covered linkways projects, our Group will carry out the following measures: (i) identify equipment suppliers; (ii) identify material suppliers; (iii) establish new communication channel with potential customers; (iv) recruit experienced personnel to strengthen our team in managing and operating the new projects; (v) recruit new workers or provide adequate training to staff for the new projects; and (vi) regularly review the market responses, revenue, turnover rate, costs of operations and other relevant factors in relation to the new projects.

The above expansion strategy into MRT stations and covered linkways projects, it will also allow us to enjoy more flexibility and quicker response time in adjusting our production facilities in order to conform lead time to different projects which in turn making our utilisation of resources more efficient and more responsive to customers’ requests. We aim to streamline our existing business, achieve better oversight over the dissemination of industry know-how within our Group, achieve better quality control and inventory management, utilisation of manpower, and enhance customer satisfaction. Our Directors believe that by penetrating into the new projects, we will be able to provide more variety of income sources in both public and private sectors. This will further strengthen our competitive advantage and differentiate ourselves from other competitors in the market which do not cover any non-road signage projects, hence making positive contributions to our Group’s overall turnover and profit growth.

Given that (i) the new MRT stations and covered linkways project is not unfamiliar to our Group as we have been working in the signage field for more than fifteen years; (ii) the proposed new projects are not overly complex; (iii) our Directors and senior management have adequate management experience; and (iv) we have a team of experienced technical staff that possesses relevant expertise to monitor the quality of our products, our Directors are of the view that our Group has sufficient expertise to manage and operate the new projects.

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BUSINESS

MAIN QUALIFICATIONS AND LICENCES

The following table sets out a summary of our main qualifications and licences that Signmechanic Singapore has for the carrying out of our business and operations in Singapore:

Relevant authority/		Qualification/	Date of first
organisation	Relevant category	license/grade(1)	grant/registration	Expiry date
BCA	CR11 Signcraft	L5	12 April 2011	1 April 2017
	Installation
BCA	CR09 Repairs &	L1	12 April 2012	1 April 2017
	Redecoration
BCA	CR14 Asphalt Works &	L1	12 April 2012	1 April 2017
	Road Marking
BCA	CR01	Single Grade	12 April 2012	1 April 2017
	Minor Construction
	Works
BCA	CW01 General Building	C3	12 April 2012	1 April 2017
BCA	CW02	C3	12 April 2012	1 April 2017
	Civil Engineering
DAS Certification,	Occupational Health &	BS OHSAS	11 October 2011	10 October 2017
by SN Registrars	Safety Management	18001: 2007
(Holdings)	System, for the design,
Limited	fabrication and
	installation of signages
Workplace and	bizSAFE	Level Star	1 December 2008	10 October 2017
Safety Health
Council
BCA	General Builder	General Builder	12 April 2012	17 April 2017
		Class 2

Note:

(1) The differences in BCA gradings relate to the tendering limits for Singapore public sector projects. L5 refers to S$14 million, C3 to S$700,000 and L1 to S$700,000.

Our Group principally relies on its CR11 work head category of signcraft installation, and the other work head categories to take on particular projects where these categories are required. Our Directors are of the view that our existing BCA gradings are adequate for our business needs.

We will renew our licences before their respective expiry dates. Our Group had not experienced any refusal of renewal of the licences necessary for our operations during the Track Record Period. Our Directors confirm that our Group has as at the Latest

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BUSINESS

Practicable Date has obtained all the necessary licences which are required to carry on our principal business activities in Singapore. Our Directors confirm that our Group has been in compliance with all relevant laws and regulations during the Track Record Period and up to the Latest Practicable Date.

The legal adviser to our Company as to Singapore law advised that Signmechanic Singapore has as at the Latest Practicable Date obtained all the necessary licences, permits and certificates issued by the appropriate Singapore governmental or regulatory authorities which are material to the business or operations of our Group in Singapore.

For details of the licensing requirements for signage installation companies, please refer to the section headed ‘‘Regulatory overview’’, in this prospectus. In the absence of any non-compliance, and provided that our Group meets the requirements for the specific grading, there should not be any impediment for the renewal of our licences.

AWARDS

In 2013, Signmechanic Singapore was awarded Singapore Business Quality Award for its commitment towards quality, environment, health and safety management system.

OUR PRODUCTS

We deliver our products to both the public and private sectors in Singapore. The following table sets forth the number of contracts with corresponding revenue recognised in both the public and private sectors during the Track Record Period and up to the Latest Practicable Date.

Public sector Private sector Total	Year end 31 Decembe Number of contracts and orders Average contract value Approximate S$ 1,041 5,000 1,170 2,000 2,211	r 2013 Revenue recognised S$’000 5,220 2,607	66.7% 33.3%	Year end 31 Decembe Number of contracts and orders Average contract value Approximate S$ 1,170 8,000 1,108 2,000 2,278	r 2014 Revenue recognised S$’000 9,562 2,288	80.7% 19.3%	From 1 January 20 to Latest Practicable Number of contracts and orders Average contract value Approximate S$ 671 7,000 364 1,500 1,035	15 date Revenue recognised S$’000 4,703 563	89.3% 10.7%
		7,827	100.0%		11,850	100.0%		5,266	100.0%

Approximately 66.7% and 80.7% of our revenue are generated from the public sector for the two years ended 31 December 2014 respectively. As at the Latest Practicable Date, we have aggregate contract value of approximately S$11.8 million, from 31 contracts with value of over S$18,000 each. Out of these contracts, approximately S$2.1 million was delivered and recognised as revenue during the Track Record Period.

The breakdown of revenue recognised/to be recognised for these contracts is presented below:

Public sector Private sector Total	Number of contracts 22 9 31	During Track Record Period S$’ million 2.1 —	Revenue est 31 December 2015 S$’ million 6.1 0.5 6.6	imated to be recognised for the 31 December 2016 31 December 2017 S$’ million S$’ million 1.3 1.0 — — 1.3 1.0	year ended 31 December 2018 S$’ million 0.8 (Note) — 0.8	Total S$’ million 11.3 0.5
		2.1				11.8

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Note: This is in relation to two contracts which involve provision of new and replacement of directional and traffic signs to customers. The actual revenue recognised in relation to actual signage installed and replaced in each of the financial year may not be equivalent to the original contract value awarded. As at the Latest Practicable Date, the expected time of delivery of signage is not confirmed and it is not known if these contracts may be extended.

Public Sector

Some of our signage and related products are as follows:

(i) Road signage — Refers to road signage providing the road name road direction and road, information. Road-related products include gantry signs, directional signs, traffic signs, street name signs, tourism place signs and work zone signs

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(ii) Indoor signage — Refers to signage indoors including corporate logos, directional signs to rest rooms or key areas within a building

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(iii) Outdoor signage — Refers to signage that are located on the outside of buildings including the building name and directional signs within the compounds of a building

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(iv) Steel works — Refers to steel structure works products, bus shelters, linkways, safety bollards and travel time display structures

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(v) Railings — Refers to metal, aluminium and stainless steel railings

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(vi) Hoarding signage — Refers to signage outside of a compound, mainly of temporary nature such as notification of ongoing development

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Private Sector

Some of our signage and related products in private sector are mainly indoor signage, outdoor signage and hoarding signage, which include directional signs, building names and hoarding signage outside of a compound for notification purpose.

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There is no fixed price range for our products as the supply and installation of our products are agreed by our customers on a case-by-case basis. However, a common product is our 60 cm by 60 cm road signage where the price can typically range from approximately S$150 to S$250. The fluctuation in our pricing is mainly a strategic pricing choice, made based on consideration of various factors as disclosed in the section headed ‘‘Business — Pricing’’. For road signage that have micro prismatic reflective sheeting, we typically provide a warranty of seven years for the sheeting which we obtained a back-to-back

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warranty from the suppliers. All other products will follow the defect liability period of 12 to 18 months, depending on the contract terms. We are not aware of any future price trends, apart from general inflation, for our products.

We will continue to focus on the above products and on the public sector in Singapore, while seeking opportunities to expand our business portfolio and product offering. Accordingly, we do not expect such continued focus to materially alter our operations and financial position in the future.

SEASONALITY

Our principal business activity is not subject to seasonal factors as public sector contracts are not related to seasonal fluctuation.

PRICING

The pricing for our signage and related products are mainly based on market rates, our internal costing with a mark-up to costs decided based upon (i) our past experience (if any) with the customer (in relation to reputation, working relation, payment history and pricing), (ii) our knowledge of competitors’ pricing, (iii) the competitive environment surrounding the contract that our customer (if applicable, the main contractor) is pursuing, (iv) opportunity to optimise the use of workers near to the site for this potential contract, (v) the capacity and resources of our Group, and (vi) the value, scale, complexity, technical and timing requirements for the contract.

When there is a request for quotation, our project department will have the primary responsibility to prepare the quotation as they have the skills to analyse the project requirements and are able to understand the required material, labour, subcontracting service (if any) and time to complete the project. For quotations relating to public sector contracts related to land transportation, reference of the unit selling prices can be made to a schedule of rates that are published on the GeBIZ by the Singapore LTA. For contracts of other nature, reference can be made to past quotations of similar nature or to prepare a cost plus pricing sheet based on man-hours, materials and other contract requirements.

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PROJECT MANAGEMENT

The following diagram illustrates the general steps undertaken by us in assessing a potential contract/order:

Request for quotation phase

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----- Start of picture text -----

Private invitation Open tender
Project department evaluate the potential
No Rej ect opportunity
order based on capability and resources
Yes
Project manager will evaluate whether to
No Re ject opportunity
provide quotation
Yes
Request for quotations from customer
on same contract (additional order)
Request for quotations from
Project assistant will prepare the quotation
suppliers and subcontractors
Project manager will review the quotation
General manager or Executive Director
will approve the quotation
Attend tender interview (typically for direct
tender or new customers)
Negotiate terms and secure customer
orders/contracts
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Implementation phase

Project manager assign respective team members to ensure that quotation can be met profitably and project completed timely and reliably Confirm purchase orders to suppliers and contracts with subcontractors (if applicable) Design and fabricate signage at workshop } Install signage on-site Quality checks on the signage works by customer and LTA (if applicable) Progress billings to customer and from suppliers and subcontractors

The duration of our production processes varies from around 1 day to 1 month

Post completion of works

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Monitor return of retention sums
(if applicable) and reworks during
defect liability period
Final progress statement
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Request for quotation phase

Our Group secures our contracts either through private invitation to quote or through open tender. For private invitation for road signage contracts, LTA will generally award the civil engineering contract to main contractors (typically civil engineering main contractors), who will in turn subcontract to various subcontractors for different aspects of the contract from LTA. We are invited by main contractors to provide our quotation for the signage works which they will take into consideration in their submission of their quotation and tender to LTA. For other public sector and private sector contracts, we will similarly submit our quotation to our customers who are either the main contractors or direct customers.

We also participate directly in open tenders via the GeBIZ system, which is the Singapore government’s one-stop procurement portal. The GeBIZ system is applicable when we explore opportunities to submit our quotation for contracts that substantially comprise signage works or maintenance contracts for road signages (with LTA). We can tender for the signage projects as we have the BCA gradings in the relevant categories.

The tendering processes stated above are similar for both the public and private sector projects. The revenue contributed by the public and private sectors were approximately S$5.2 million and S$2.6 million for the year ended 31 December 2013, and approximately S$9.6 million and S$2.3 million for the year ended 31 December 2014 respectively.

Public sector

As our customers, the main contractors, are typically required to fill in tender documents according to the requirements of the relevant public sector organisation, we would similarly have to prepare our section related to the supply and installation of signage products to them. These tender documents will typically include various sections such as pricing, detailed scope of works, track record, certifications, relevant corporate information and ensure ability to fulfil the material specifications.

Private sector

Our customers in the private sector are typically the end customers who set their own requirements or main contractors for the private sector projects. Generally, the documents to be submitted during quotation for private sector projects are less complex and at times, given the past working relationship, we may only need to submit a quotation for the specific signage products requested with pricing and quantity stated.

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Set forth below are the number of contracts obtained from public and private sectors, the number via private invitation or open tender, and their respective success rates during the Track Record Period:

Public sector Private sector Total	Number of contracts and orders 1,041 1,170 2,211	Year ended 3 From private invitation/ representing approximate % of contracts 1,029/98.8% 1,170/100.0% 2,199	1 Decemb Success rate (%) 68 30 30–68	er 2013 From open tender/ representing approximate % of contracts 12/1.2% — 12	Success rate (%) 28 — 28	Number of contracts and orders 1,170 1,108 2,278	Year ended 3 From private invitation/ representing approximate % of contracts 1,167/99.7% 1,108/100.0% 2,275	1 Decemb Success rate (%) 82 35 35–82	er 2014 From open tender/ representing approximate % of contracts 3/0.3% — 3	Success rate (%) 33 —
										33

Our success rates for public sector projects from private invitation were approximately 68% and 82% in the two years ended 31 December 2014. Our success rates improved as we continued to build on our track record and reputation. As we are one of the established companies offering road signage in Singapore, it is common that we will receive invitations to quote from more than one main contractor for the same project as these main contractors are individually tendering for the same project. Our success rates were therefore based on us securing the contract for road signage for the particular project, regardless of which main contractor is being awarded the project. The success rates for open tender public sector projects were approximately 28% and 33% in the two years ended 31 December 2014. The lower success rates were due to costs being more of a consideration factor in these open tender projects. For private sector projects, our success rates were approximately 30% and 35% in the two years ended 31 December 2014 and this was lower due to more signage companies competing in these projects which generally have a lower barrier to entry.

For each potential contract, our project department will evaluate based on whether it matches with our capability and resources. If the opportunity fits our scope of products, the project manager will evaluate whether to proceed with the preparation of a quotation. The project department has project manager, project coordinator and project assistant who will oversee and assist in the preparation of the tender. Our project department will work with our purchasing department to obtain the quotations from suppliers and/or subcontractors. For quotations of value S$10,000 and above, approval of our general manager or an Executive Director is required. Typically for direct tender or new customers, we may be asked to attend tender interview. Further negotiation with customers may take place on the contract terms, including but not limited to, the price. Our quotation is valid for a period of 30 days and once it is signed and accepted by our customer, generally no pricing adjustment is allowed.

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In certain contracts, our customers may require additional signage and related products if the scope of their contracts has been amended in the course of carrying out the contract (‘‘additional order’’). We will provide our customer with a quotation to cover the additional scope and typically, the unit pricing will be as per agreed in the earlier quotation or contract.

Implementation phase

The duration of our signage works under a contract typically ranges between 1 month to 4 years, depending on the schedule set up by our customer, the main contractor, who in turn has to follow the timeline set by its customer. The project manager is the overall incharge of a project, assisted by the project coordinator, with the responsibility to meet both the timing and product specification required for the contract. He will also decide on the scope of supplies and subcontract services (if any) required for the fulfillment of the contract. On-site inspection is conducted by qualified staff and engineers to ensure that there is quality control for our signage works. Please refer to the section headed ‘‘Business — Quality control’’ of this prospectus for further information.

Our project team will work with the purchasing department to ensure that materials required for the signage works are sourced from a reliable supplier and arrive in time for the planned fabrication of our signage. Typically, we will request for supplier quotation during the preparation of our quotation, and should our quotation be accepted, we will follow-up with the supplier who has provided us with the competitive pricing and also one who we have worked with, or known to be reputable and reliable. We will typically obtain two order quotations from other suppliers to ensure that our supplies are sourced competitively, particularly if they are not on our approved supplier list. Our purchasing department will negotiate on pricing and contract terms with the supplier, and once a purchase order is issued, the supplier is obligated to fulfil the delivery at the agreed price and in accordance to the schedule. For certain supplies such as micro prismatic reflective sheeting, we may order in quantity for a few contracts we have on-hand. We maintain good working relationship with our suppliers and do not foresee any material difficulties in sourcing materials in the future. The project team also hold ad-hoc meetings to discuss progress and issues (if any) encountered or anticipated in a project.

Our in-house production has both design and fabrication capabilities. Our design team will design the signage, based on the specifications by the customer. The artwork will then be sent to our customer for approval. After approval, we will fabricate the signage which include the preparation of the metal works to the required dimension, adhesion of the plastic sheeting and cleaning the signage to make sure it meets the full specifications of the customer. As our signage are largely customised for a particular contract, our capacity is limited by the availability of labour instead of machine utilisation (in the case of mass production). At our production floor, key areas of the production area are segregated into (i) design of signage, (ii) signage production area and, (iii) metal fabrication. Our signage products of all dimension are not subject to any estimated monthly capacity, actual average monthly output and the utilisation rate of our production facilities during the Track Record Period as our production process are more labour-oriented. The machines we use for our business are mainly (i) cutting plotters, (ii) rollers (for application of the sheeting to the

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metal) and (iii) forklifts. We own these machines, which typically have a life span of 5 years. These machines are maintained regularly and are readily available in the market. As the production process of our signage products consist of many different steps and time required for processing each of the steps varies and depends on the nature of steps, our employees normally work on the machineries allocated in our in-house production facilities on an ad-hoc basis, and not by scheduled means. Our Directors are of the view that some of the steps such as cutting, bending and attachment of stickers are not very time consuming processes. Our Directors consider that the current arrangements in our production facilities is efficient for our business. We do not have research and development department as it is not applicable for our business.

Apart from the project and purchasing departments, our administrative department is responsible for recording of accounts payables, receivables and preparation of payment requests and invoices. We invoice our customers, and typically up to a maximum of 10% of each approved payment will be retained by our customer. Upon receiving our payment request, our Directors understand that our customer will have its own personnel to acknowledge the delivery of the signage which earlier had been received at the work site. We will then be requested to issue an invoice to our customer, for which, they will make payment to us within the 30 to 60 days credit term. Similarly, we will make payment to our suppliers and subcontractors within the credit term of 30 to 60 days; for subcontractors, they will submit their payment request to us and we will ascertain the completion of their works. Once ascertained, we will request for their invoice and make payment within the credit term. In instances where our customers require performance bonds with an insurer made in favour to them for a certain percentage of or the full amount stipulated in the contract, our project department will coordinate with the insurer and ensure that it is appropriately discharged at the end of the contract.

Public sector

The project team members involved in a public sector project may range from eight to twelve members. Public sector projects typically require more workers both in the fabrication of the signage products and the installation of the signage products.

Public sector project typically involve a broader scope of value-adding works such as installation of road safety products and lane marking.

For installation of road signage, our project team will expend more effort in the scheduling of the installation works to optimise our labour resource across various projects. Timing is typically a key factor in the project management of road infrastructure projects as road works have designated timing to conduct especially on current operating road networks. For certain road infrastructure projects, additional safety team members and workers may be deployed.

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For public sector projects in relation to road signage, more project management is required as there are more work steps than private sector projects, ranging from removal of existing signage, re-directing ongoing traffic, managing of road closure hours, managing of subcontractors in laying of roads and lane marking, managing of equipment that can be deployed on the road site to installation of the road signage. There are also stricter requirements set by the LTA of Singapore, both in terms of aesthetics and technical requirements.

Private sector

The project team members involved in a private sector project may range from four to five members. Private sector projects typically require less workers both in the fabrication and installation of the signage products. For private sector projects, the scope in more limited to installation of signage.

For installation of signage products for private sector projects, there is typically greater flexibility with regard to the installation as most of these installation can be conducted either after operating hours or without the obstruction of the building or business. Due to smaller scale of private sector projects, the fabrication of the signage will take a shorter time and is also faster to install.

Post completion of works phase

Subsequent to the delivery and completion of the signage installation for road signage public sector projects, there is typically a more detailed process for customers to review that the signage installed is in accordance with specifications due to stricter requirements set by the LTA. In certain instances, our project team members will be on-site to work with them.

Some of our contracts are subject to retention monies. Our retention monies are typically released to us in two different phases, 1) from the date of practical completion, which is when our customer has completed all the works that are needed to be conducted at the work site as agreed with its customer and 2) at the end of the defect liability period. From the date of practical completion, the defect liability period commences and we are required to attend to matters brought to us during this 12 to 18 month period at our own expense. We will, from time to time, also monitor our receipts and the returns of retention monies. Upon practical completion, half the retention monies shall be released to us and the balance upon expiry of the defect liability period. During the Track Record Period, no deduction was made against the retention monies.

QUALITY CONTROL

We have an established track record and reputation in the public infrastructure (road signage) sector and quality control is built into our implementation process. For each contract, our project manager and project engineer are in charge of quality control. Our general manager, Mr. Soh Chiau Kim, has over 12 years of industry experience and graduated with a bachelor’s degree (first class honours) in civil engineering and has completed numerous courses from the BCA Academy, as well as Awareness, Design and Implementation Training on OHSAS 18001: 2007 and Construction Safety Course for

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Project Managers. Our project manager, Mr.Tan Hock Sing, has over 9 years of industry experience and graduated with a diploma in graphic design. Mr. Tan Hock Sing has a Building Construction Supervisors Safety Course and a Work-at-Height Course for Assessors. Our project engineer, Mr. Muralidharan Saraswathi Yogesh, has over 4 years of industry experience and graduated with a bachelor’s degree (first class honours) in civil engineering. Mr. Muralidharan Saraswathi Yogesh has completed an Analysis and Design of Steel Structures Using STAAD-PRO course and a course for the development of risk management implementation plan.

Currently, our signage works are closely monitored on site by the project manager, who will ensure that (i) contractual and regulatory quality requirements are identified, (ii) signage works performed and materials used are in compliance with the contract and quality standards specified, and (iii) monitoring on-site is regularly carried out, and testing is properly conducted. We conduct quality control checks in various stages of the signage works through on-site regular inspection by qualified staff, and also before the handover of the signage and related products by our project engineer, and each time complying with the standards set by the end customer. Our project engineer and qualified staff assigned for onsite inspection will also inspect the works of our subcontractors. For further information, refer to the section headed ‘‘Business — Subcontractors’’ of this prospectus. Our Directors understand that our customers will also conduct their own quality checks of our installed signage prior to accepting our delivery order and making payment to us and also prior to the issue of the final statement of accounts to us.

For our purchases, the materials must be purchased from suppliers we approve and also in certain instance, by the end customer (typically LTA). The use of the materials must be able to meet the end customer’s specifications. During our signage fabrication before sending to the worksite, we will check that materials are of the right specifications and therefore, any defective supplies are promptly reported. Our Group has the OHSAS 18001: 2007 certification and bizSafe Level Star, for further information, please refer to the section headed ‘‘Business — Workplace safety and health policy’’, of this prospectus.

Our Group has not experienced any material disputes on its contracts relating to the quality of products provided nor significant delay in the installation of signage during the Track Record Period and up to the Latest Practicable Date.

SALES AND MARKETING

For our industry, our sales leads come from word-of-mouth, reputation and established track record rather than advertising and promotion. Our Group does not spend on advertising and promotion but instead focus on the fulfillment of our delivery, and relationships with our customers are maintained by our Executive Directors and our General Manager. We will also monitor opportunities on the GeBIZ system relevant to our signage business.

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CUSTOMERS

Public sector projects are awarded by the relevant government authority in Singapore; for instance, for roads, LTA will award the civil engineering contracts to main contractors based on its own criteria of selection. The main contractors will in turn select their subcontractors based on their criteria and for road signage works, we are one of the established companies in Singapore. The duration and timing of our signage works typically align with the timing requirements of our customers, which can span from 1 month to 4 years.

Over the years, we have built a solid track record for providing reliable and timely signage products for road signage works in Singapore, and have a good reputation with our customers. There is no long-term agreement with any of the customer and contracts are signed on a case by case basis. For the two years ended 31 December 2014, revenue from our five largest customers amounted to approximately S$2.1 million and S$5.1 million, and accounted for approximately 26.6% and 43.1% of our total revenue, respectively. Revenue from our largest customer for the same periods amounted to approximately S$0.7 million and S$1.4 million, and accounted for approximately 8.9% and 12.1% of our total revenue, respectively. None of our top five customers are our supplier or subcontractor, or our connected person. During the Track Record Period, we have not had any material disagreement nor dispute with any of our customers.

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The following table sets forth our five (5) largest customers for each of the two years ended 31 December 2014, respectively:

For the year ended 31 December 2014

				Revenue contribution	Revenue contribution
				Approximate	% of	total
	Years of	Scope of products	Payment and	aggregate	revenue of our
Background of customer	relationship	provided by our Group	credit terms	amount	Group
				(S$’ million)
Customer A	More than 10	Scope of services:	Payable by cheque, 60	1.4	12.1%
		Supply and	days due upon
		installation of	issuance of invoice
		signage
Customer B	5	Scope of services:	Payable by telegraphic	1.3	11.4%
		Supply and	transfer, 35 days
		installation of	due upon issuance
		signage	of invoice
Customer C	2	Scope of services:	Payable by bank	1.1		9.5%
		Supply and	transfer, 45 days
		installation of	due upon issuance
		signage	of invoice
Customer D	7	Scope of services:	Payable by telegraphic	0.8		6.8%
		Supply and	transfer, 60 days
		installation of	due upon issuance
		signage	of invoice
Customer E	1	Scope of services:	Payable by cheque, 30	0.5		3.3%
		Supply and	days due upon
		installation of	issuance of invoice
		signage
Total				5.1	43.1%

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For the year ended 31 December 2013

				Revenue contribution	Revenue contribution
				Approximate	% of	total
	Years of	Scope of products	Payment and	aggregate	revenue of our
Background of customer	relationship	provided by our Group	credit terms	amount	Group
				(S$’ million)
Customer F	7	Scope of services:	Payable by telegraphic	0.7		8.9%
		Supply and	transfer, 30 days
		installation of	due upon issuance
		signage	of invoice
Customer G	5	Scope of services:	Payable by cheque, 30	0.6		7.9%
		Supply and	days due upon
		installation of	issuance of invoice
		signage
Customer H	7	Scope of services:	Payable by cheque or	0.3		3.5%
		Supply and	cash on delivery, 45
		installation of	days due upon
		signage	issuance of invoice
Customer I	More than 10	Scope of services:	Payable by cheque, at	0.3		3.4%
		Supply and	30 days due upon
		installation of	issuance of invoice
		signage
Customer J	6	Scope of services:	Payable by cheque, at	0.2		2.9%
		Supply and	30 days due upon
		installation of	issuance of invoice
		signage
Total				2.1	26.6%

Background information of our customers

Customer A, a private company incorporated in Singapore, is principally engaged in the provision of civil engineering services, including manufacture of asphalt premix and road maintenance. The company was founded in 1985, and is based in Singapore.

Customer B, a Korea listed company of market capitalisation of approximately KRW10,044.8 billion as at the Latest Practicable Date, is principally engaged in the provision of civil engineering services. The company was founded in 1990, and is based in Korea. It has annual turnover of approximately US$25.97 billion for the year ended 31 December 2013.

Customer C, a subsidiary of a Singapore listed company of market capitalisation of approximately S$10,138.3 million as at the Latest Practicable Date, is a private company incorporated in Singapore principally engaged in the provision of end-to-end solutions in electronic systems. The company was founded in 1986, and is based in Singapore. It has an annual turnover of approximately S$335.18 million for the year ended 31 December 2013.

Customer D, a private company incorporated in Singapore, is principally engaged in the provision of civil engineering services. The company was founded in 1990, and is based in Singapore.

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Customer E, a subsidiary of a Singapore listed company of market capitalisation of approximately S$1,810.7 million as at the Latest Practicable Date, is a private company incorporated in Singapore principally engaged in the provision of investment holding services such as real estate management and development services. The company was founded in 1990, and is based in Singapore. It has an annual turnover of approximately S$47.83 million for the year ended 31 December 2013.

Customer F, a subsidiary of a Singapore listed company of market capitalisation of approximately S$229.5 million as at the Latest Practicable Date, is a private company incorporated in Singapore principally engaged in the provision of civil engineering services. The company was founded in 1969, and is based in Singapore. It has an annual turnover of approximately S$96.1 million for the year ended 31 December 2013.

Customer G, a subsidiary of an Australia listed company of market capitalisation of approximately AUD26.3 million and Singapore listed company of market capitalisation of approximately S$26.3 million as at the Latest Practicable Date, is a private company incorporated in Singapore principally engaged in the provision of civil engineering services. The company was founded in 1979, and is based in Singapore. It has an annual turnover of approximately S$137.98 million for the year ended 31 December 2013.

Customer H, a private company incorporated in Hong Kong and held by a Hong Kong private company is principally engaged in the provision of construction services. The company was founded in 1980, and is based in Singapore.

Customer I, a subsidiary of a U.S listed company of market capitalisation of approximately US$92.9 billion as at the Latest Practicable Date, is a private company incorporated in Singapore principally engaged in the provision of fast food. The company was founded in 1976, and is based in Singapore. It has an annual turnover of approximately S$526.81 million for the year ended 31 December 2013.

Customer J, a subsidiary of a Singapore listed company of market capitalisation of approximately S$58 million as at the Latest Practicable Date, is a private company incorporated in Singapore principally engaged in the provision of civil engineering services such as earthwork, roadwork, drainage work, basement work, and structural works involving demolition and underground infrastructure as well as other general building works. The company was founded in 1981, and is based in Singapore. It has an annual turnover of approximately S$29.79 million for the year ended 31 December 2013.

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None of our Directors, or any of their respective associates or any Shareholders which, to the knowledge of our Directors, owns more than 5% of the issued share capital of our Company immediately following the completion of the Placing and the Capitalisation Issue, was connected with (within the meaning of the GEM Listing Rules) or has any interest in any of our top five customers during the Track Record Period.

KEY CONTRACT TERMS

Generally the contracts with our customers contain terms relating to the contract price, duration, the scope of work, the payment terms, retention money, defect liability period provisions, performance bonds, liquidated damages and termination.

Duration

For certain contracts, the duration will be stated in the contract. Such duration typically align with the duration of the main contractor’s civil engineering contract, or for a duration for which the replacement and provision of new directional and traffic signs are required. For other contracts or orders, the duration may not be expressly stated but typically span approximately from 1 month (for short-term installation of signage) to 4 years (for a supply and installation of signage contract).

Payments

For certain contracts, payment requests to our customers are to be submitted regularly in respect of the signage works performed since the last approved payment, for verification by our customer. Subsequent to our customer’s confirmation, the credit terms are typically 30 to 60 days. Under the Building and Construction Industry Security of Payment Act, Chapter 30B of Singapore (‘‘BCISPA’’), any person who has carried out any construction work or supplied any goods or services under a contract is entitled to a payment. Therefore, we have the right to the payment in relation to the work that we carried out and based on the agreed contract terms with our customer. Please refer to the section headed ‘‘Regulatory overview’’ in this prospectus for further details of the BCISPA.

Retention money

Our contracts typically provide for a retention sum of up to maximum of 10% with each payment. Half of the retention sum shall be released upon the completion of works under the main (our customer’s) contract and the balance amount released at the end of the defect liability period.

Defect liability period

Our contracts typically include a defect liability period, during which we are responsible to rectify works defects. The defect liability period is typically for a period of 12 to 18 months from the date of completion of the contracted scope of works. If the materials used are defective, we will replace during the defect liability period or request our suppliers or subcontractors to do so. There was no material claim which was brought

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against our Group by our customers during the Track Record Period. Cost incurred to rectify defective works or products during the Track Record Period was immaterial. There was no significant customer complaint during the Track Record Period.

Performance bonds

For certain of our contracts, we are required to have stipulated value of performance bonds with an insurer made in favour to our customer, which will remain in effect until the return of the performance bond or upon expiry of the bond, which is upon completion of the project. The customer may utilise the performance bond to make good any loss or damages sustained as a result of any breach of the contract with them due to us, including any liquidated damages. There was no claim on the performance bonds during the Track Record Period.

Illegal immigrant/Foreign workers

We are solely responsible for ensuring that our own workforce shall not have any illegal immigrant, and similarly to ensure that our subcontractors comply. We are liable for and shall indemnify our customer against any damage, expense, liability, loss, claim or proceedings arising from our hiring of illegal immigrant. During the Track Record Period, we did not hire any illegal immigrants and no action or notifications were taken against us or issued to us in connection with hiring of illegal immigrants.

Liquidated damages

Our contracts typically include a liquidated damages clause where if we fail to complete the work scope within the stipulated time and/or cause unnecessary delay to the entire project that result in liquidated damages imposed on our customer, we are liable to penalties calculated as a percentage of our contract sum relative to our customer’s contract sum. There was no material liquidated damage paid by our Group during the Track Record Period.

Termination

Our contracts can typically be terminated, inter alia, if we materially default or breach the contract, or if we become bankrupt or insolvent.

SUPPLIERS

We mainly engage suppliers in Singapore and our main suppliers supply steel and aluminium products, micro prismatic reflective sheeting and road safety products. In selecting our suppliers, we take into account a number of criteria. For first-time suppliers and suppliers we have worked with, we will review based on (as the case maybe) its (i) track record in respect of timely delivery and ability to work with us on an urgent delivery basis, (ii) quality of supplies, (iii) pricing and (iv) whether they are on our approved supplier list or the approved list of suppliers by the main contractor or end customer (if applicable). We will only engage suppliers who can satisfy all our criteria. There is no long term contract with our suppliers, and we make our purchases based on the requirements of each customer

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contract and for the purchase orders we have on hand. Subsequent to the issue of purchase order to our suppliers, they will supply the specified item in accordance with the delivery time required at the contracted price. The prices that we pay to our suppliers are agreed at the stage we place our purchase orders and should our actual costs be higher than anticipated in our quotation to our customers, we cannot pass the price difference to our customer if our customer has already accepted our quotation. We manage fluctuations in material costs by (i) buffering for inflation and possible cost increase during the duration of the contract and (ii) purchasing materials mainly based on the needs of specific contracts. Please refer to the section ‘‘Risk factors’’ in this prospectus for further details.

Our Group has good relationships with our suppliers and has over the years established strong rapport with them. During the Track Record Period, we have not had any material disagreement nor dispute with any of our suppliers. For the two years ended 31 December 2014, purchases from our five largest suppliers amounted to approximately S$1.0 million and S$1.4 million, and accounted for approximately 39.9% and 40.4% of our total purchases, respectively. Purchases from our largest supplier for the same periods amounted to approximately S$0.5 million and S$0.5 million, and accounted for approximately 19.7% and 14.4% of our total purchases, respectively.

The following table sets forth our five (5) largest suppliers for each of the two years ended 31 December 2014, respectively:

For the year ended 31 December 2014

							Approximate
							percentage
							of our
							Group’s
				Location of			total
	Name of	Years of		business	Payment and credit		purchases
Ranking	supplier	relationship	Principal business	operations	terms	Supply amount	%
						Approximate
						S$’ million
1	Supplier A	9	Supplier of micro	Singapore	Payable by telegraphic	0.5	14.4%
			prismatic reflective		transfer, 60 days
			sheeting and other
			sheeting
2	Supplier B	2	Supplier of metal railings	Singapore	Payable by telegraphic	0.3	8.0%
					transfer, 60 days
3	Supplier C	8	Supplier of micro	Singapore	Payable by telegraphic	0.2	7.0%
			prismatic reflective		transfer, 60 days
			sheeting and other
			sheeting
4	Supplier D	8	Supplier of aluminium	Singapore	Payable by cash on	0.2	6.1%
			products		delivery or
					telegraphic
					transfer, 60 days
5	Supplier E	8	Supplier of steel products	Singapore	Payable by telegraphic	0.2	4.9%
					transfer, 30 days
Total						1.4	40.4%

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For the year ended 31 December 2013

							Approximate
							percentage
							of our
							Group’s
				Location of			total
	Name of	Years of		business	Payment and credit		purchases
Ranking	supplier	relationship	Principal business	operations	terms	Supply amount	%
						Approximate
						S$’ million
1	Supplier A	9	Supplier of micro	Singapore	Payable by telegraphic	0.5	19.7%
			prismatic reflective		transfer, 60 days
			sheeting and other
			sheeting
2	Supplier D	8	Supplier of aluminium	Singapore	Payable by cash on	0.2	6.0%
			products		delivery or
					telegraphic
					transfer, 60 days
3	Supplier C	8	Supplier of micro	Singapore	Payable by telegraphic	0.1	4.9%
			prismatic reflective		transfer, 60 days
			sheeting and other
			sheeting
4	Supplier F	2	Supplier of steel products	China	Payable by telegraphic	0.1	4.9%
					transfer, 30%
					deposit and 70%
					upon completion
5	Supplier G	2	Supplier of labour and	Singapore	Payable by cheque or	0.1	4.4%
			logistics services		cash on delivery, 30
					days
Total						1.0	39.9%

We are not reliant on any single supplier and have also not experienced any shortage of materials during the Track Record Period. We have alternative suppliers for each major category of supplies on our approved suppliers list, who we have evaluated to meet our pricing, quality and timeliness requirements. Save for Supplier G, none of our Directors, their respective associates or Shareholders who own more than 5% of the issued share capital of our Company (immediately following completion of the Placing and the Capitalisation Issue) had any interest in any of the five largest suppliers of our Group during the Track Record Period.

Supplier G refers to T3 Holdings which is a company incorporated in Singapore with limited liability, for which Mr. Kelvin Tan and Mr. Peter Tan each owned 21.0% of the issued and paid-up capital of the company prior to 2 April 2015. T3 Holdings mainly rented lorry cranes and truck mounted attenuators to our Group. Please see section headed ‘‘Connected transactions’’ of this prospectus for details.

None of our top five suppliers are our customer, subcontractor, or our connected person.

SUBCONTRACTORS

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general, we are liable to our customers for the performance of our subcontractors, including but not limited, to defects, delay in the delivery schedule and violation of rules or regulations. For first-time subcontractors and subcontractors we have worked with, we will review based on (as the case may be) its (i) track record in respect of its timely supply of subcontract works and ability to work with us on an urgent delivery basis, (ii) quality of subcontract works and (iii) pricing. The subcontracting fees is determined based on the estimate of market rate for comparable projects, taking into account their scope, size, complexity and contract value. We do not sign separate subcontracting agreements for such assignments but would engage our subcontractors based on our acceptance of their quotations.

Our Group has good relationships with our subcontractors and has over the years established strong rapport with them. During the Track Record Period, we have not had any material disagreement nor dispute with any of our subcontractors. Total amount paid for subcontracting works during the Track Record Period amounted to approximately S$1.4 million and S$1.7 million and accounted for approximately 29.2% and 27.1% of our total cost of sales respectively.

		For the year ended	For the year ended		Whether
		(Approximate	S$’million)		independent
Five largest	Background of	31 December	31 December	Years of	from our
subcontractors	subcontractor	2013	2014	relationship	Group
Subcontractor A	Subcontractor for	0.8	1.0	8	Independent
	supply and/or
	installation of
	bulky metal
	works
Subcontractor B	Subcontractor for	0.0	0.3	1	Independent
	installation of
	precast blocks
	and excavation
	works
Subcontractor C	Subcontractor for	0.2	0.0	4	Independent
	installation of
	precast blocks
	and excavation
	works
Subcontractor D(1)	Subcontractor for	0.2	0.2	9	Connected
	laying of road
	markings
Subcontractor E(2)	Subcontractor for	0.0	0.1	8	Independent
	parts of signage
	works
Total		1.2	1.6

Notes:

(1) Subcontractor D refers to C.K. Toh who is also our customer. Please refer to section headed ‘‘Connected transactions’’ for further information.
(2) Subcontractor E, an independent third party, is also our customer.

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Our main subcontractors are located in Singapore and do not work with us on an exclusive basis. They will provide quotation for their subcontract works and upon our acceptance of their quotation, they have the responsibility to ensure that all works performed must satisfy the requirements of the contract. The duration of these subcontracts vary depending on the nature of their subcontract works. For instance, for subcontractors providing laying of road works, they will have to complete as per the project schedule and thereafter, our signage can be installed. For those subcontractors who are required to source for materials as part of their subcontract services, the specifications for these materials are obtained from the main contractor, or specified by end customer (typically LTA) and provided to our subcontractors.

Our subcontractors may either (i) submit monthly payment request to be approved by us or for shorter subcontract works or (ii) submit a claim for the complete delivery of the subcontract works. Our payment terms to our subcontractors are typically from 0 to 30 days upon invoice (backed by delivery order accepted by our on-site staff).

In order to monitor our subcontractors, we typically:

(i) Request that our subcontractors ensure that their workmen follow strictly to the main contractor’s workplace safety enforcement on site, and have to use workers who have safety orientation certificates. Safety equipment such as safety helmets/ safety boots and safety belts shall be provided by our subcontractor;
(ii) Communicate from time to time between our project team and our subcontractors to ensure they understand our requirements and concerns; and
(iii) Inspect our subcontractors’ works.

To avoid over-reliance on a few subcontractors, our general manager will ensure that we have at least more than one subcontractor for a particular expertise. During the Track Record Period, none of the subcontractors had conducted a major non-performance that resulted in default in payment by our customer to us or liquidated damages payable by us to our customer. If our customer defaults in making payment, we remain liable to settle the subcontractors fees should the subcontracting works had already been performed.

Subcontractor D refers to C.K. Toh which is a company incorporated in Singapore with limited liability, for which Mr. Kelvin Tan and Mr. Peter Tan each owned 21.25% of the issued and paid-up capital of the company prior to 2 April 2015. C.K. Toh Construction had provided road marking services to our Group. Please see section headed ‘‘Connected transactions’’ of this prospectus for details.

Save for disclosed above, none of our Directors, or any of their respective associates or any Shareholders, which, to the knowledge of our Directors, own more than 5% of the issued share capital of our Company immediately following the completion of the Placing and the Capitalisation Issue, was connected with (within the meaning of the GEM Listing Rules) any of our subcontractors during the Track Record Period.

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CREDIT MANAGEMENT

During the request for quotation phase, we will consider the credit worthiness of the customer and the key contract terms, including payment terms and retention money. For customers that we have previously worked with, we will also consider its past payment history. Our Group generally extends a 30 to 60 days credit term to customers upon issuance of invoice and during the Track Record Period, there was an allowance for doubtful debts of S$23,210 and S$129,608 as at 31 December 2013 and 2014 respectively.

The credit terms typically granted by our suppliers vary from 30 to 60 days, and payment to them is typically by cheque or telegraphic transfer. Our Group generally is prompt in our payment and this has enabled us to secure competitive pricing. For our subcontractors, we will typically pay their payment request (if applicable) within 30 days upon receipt of their invoice, after verification of their invoice and ensuring that the subcontracting works have been satisfactorily completed.

INVENTORY MANAGEMENT

It is our Group’s practice to maintain inventory based on (i) foreseeable material requirements based on firm contracts or purchase orders and (ii) a certain level of inventory for common items such as metal and aluminium products. For signage required to be ready for installation, we will inform the production department by physically checking with them to ensure that the signage can be ready for installation. The production department will ensure that based on the required signage to be supplied and or installed, our purchases from suppliers coupled with our inventory can meet the projects’ requirements. Purchase orders issued to suppliers would indicate the different tentative delivery dates.

Every quarter, we will conduct a stock take. For the two years ended 31 December 2014, the inventory turnover day was approximately 9 days and 21 days and our inventory (materials and finished goods) balance was S$60,516 and approximately S$0.2 million as at 31 December 2013 and 2014, respectively. Part of our inventory as at 31 December 2013 and 2014 related to work-in-progress. Please refer to the section headed ‘‘Financial information — Certain balance sheet items’’ for further information.

WORKPLACE SAFETY AND HEALTH POLICY

Due to the nature of the signage industry, incidents at our plant or at the worksites may have detrimental effects on the health and safety of our workers, and our workers are valuable to our Group and to the successful execution of the contracts. Our customer, the main contractor of the public sector contracts, will ensure that all their subcontractors, including us and our subcontractors, comply with our workplace safety and health procedures on-site. For every contract, our project supervisor will ensure that work place safety procedures are adhered to by our employees and by the employees of our subcontractors.

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We have established a set of occupational, health and safety (‘‘OHS’’) policies with the objectives of:

(i) Ongoing identification of hazards, risk assessment and implementation of necessary control measures;
(ii) Minimisation of incidents and management of hazards through ongoing OHS inspection and training;
(iii) Compliance with practices governing OHS and other requirements; and
(iv) Continual improvement in our OHS management and performance.

Our OHS procedures comprise the following 8 key areas, and we have engaged an approved external consultant to set up the OHS policy, and who will also audit our compliance with the OHS procedures every three years.

(1) Planning for identification of hazards, risk assessment and controls, with the objective to minimise or eliminate the hazards and risks. We conduct an activitybased assessment to assess the hazards and risks relating to certain activities (covering both routine and non-routine, including office operations). For each activity identified, we will list the existing risk control and provide it with a risk assessment level. For certain activities relating to safety at work, we will lay out the procedure to ensure workplace safety in that aspect, including the control and preventive measures, reporting and monitoring of non-compliance and training. Training on OHS is provided to all employees annually.
(2) Identification of the applicable laws and regulations, with the objective to ensure conformance to legal requirements. This is done through keeping track of applicable regulatory requirements via a legal register and conducting training to relevant staff on legal requirements. For our production, the main applicable regulations are Workplace Safety and Health Regulations, Electricity Act, Smoking (Prohibition in Certain Places) Act, Code of Practice for Working Safely at Height and the Fire Safety Act.
(3) Monitoring of all work place incidents and implementation of controls and preventive actions with the objective of achieving zero work place incident. We also have safety inspection checklist to ensure that key items required for workplace safety are monitored regularly and communicated. Training in various aspects of workplace safety are conducted throughout the year, using a competency matrix to identify training needs. There are also communication channels to ensure that relevant employees and interested parties are aware of the pertinent OHS information, for instance to our employees, to contractors and visitors, to relevant parties and that they participate and be involved in a consultation process.

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(4) Conduct of regular noise monitoring by accredited laboratory, audiometric examination for our staff and specific noise training for relevant staff with the objective of ensuring compliance with requirements relating to noise and medical examinations relating to manufacturing staff.
(5) Control of documents to ensure that they are stored and maintained to be readily available and retrievable. Each document is to be accompanied by an amendment history and a documentary master list will list all the controlled documentations in the OHS policies. All documentation is to be initiative, controlled and approved by authorised personnel. Obsolete documentation is to be removed promptly.
(6) Preparation and readiness for emergency to ensure that emergency operating system and fire protection and response plans are effective. Safety briefings and fire drills are conducted.
(7) Measurement and monitoring of our OHS performance. This includes evaluation of the measures taken, evaluation of compliances with applicable legal requirements and incident investigation, corrective and preventive actions. Non-conformity are recorded, investigation and analysis of preventive and corrective actions taken.
(8) Internal audit are planned and conducted; OHS audits are conducted at least annually, and external audits are conducted once every three years. All audit findings are properly documented and filed and any non-conformance are followed up to ensure that appropriate corrective actions are taken.

Our subcontractors must also ensure that their workmen follow strictly to the main contractor’s workplace safety enforcement on site, and have to employ workers who have safety orientation certificates. Such safety orientation certificate is issued after the attendance of safety courses. All foreign workers in the construction sector must attend the Construction Safety Orientation Course (‘‘CSOC’’), a 2-day course conducted by various training centres accredited by MOM and obtain a valid CSOC Pass. The CSOC is to (i) ensure that construction workers are familiar with common safety requirements and health hazards in the industry, (ii) educate them on the required measures to prevent accidents and diseases, and (iii) ensure that they are aware of their rights and responsibilities under employment law. Safety equipment such as safety helmets/safety boots and safety belts shall be provided by the subcontractor, and workers who fail to comply shall be removed from the worksite.

The above OHS policy will assist us to obtain our OHSAS 18001: 2007 certification, which is a requirement for bizSafe Level Star and for our BCA ‘‘L5’’ grading. Our compliance to OHS policy assists us in obtaining a wider scope of projects by customers who are focused on our workplace safety related certifications.

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Our Group has also established procedures to provide our staff with a safe and healthy working environment by providing work safety rules in the staff manual for the staff to follow and also training in respect to workplace safety. All incidents are recorded as required in our OHS policy and we also provide audiometric and medical examination for our staff.

During the Track Record Period and up to the Latest Practicable Date, our Group did not experience any significant incidents or accidents or claims in relation to work safety or any non-compliance with the applicable laws and regulations relevant to the work safety and health issues.

INSURANCE

We have a work injury compensation policy for all our manual workers, as stipulated by MOM, renewed annually. We also have foreign worker medical insurance, as stipulated by MOM, renewed annually. We also have security bonds for our foreign workers which are required by MOM for new applications of their work permits. All employers of nonMalaysian work permit holders are required to deposit a S$5,000 security bond with MOM, which must be furnished prior to the foreign worker’s arrival in Singapore, failing which entry into Singapore will not be allowed.

We have insured our Executive Directors against personal accident with the beneficiary as Signmechanic Singapore. We also have public liability insurance to cover personal injury and property damage at our premise and in Singapore, in connection with our operations. In addition, we have an industrial all risks insurance to cover damage to our inventory, machinery and office equipment.

Our Directors confirm that our Group has obtained adequate insurance coverage for the operation of our business, and is in line with the industry norm. Our Directors believe that there is no material risk in connection with our business which is not covered by the abovementioned insurance. As at the Latest Practicable Date and during the Track Record Period, we had not made nor been the subject of any material insurance claims.

EMPLOYEES

As at the Latest Practicable Date, our Group had a total of 66 full-time staff (including our Executive Directors), of which 8 are in the project department, 10 in the design department, 17 in the administrative and finance department and 31 in the production department. There is no research and development required in our Group. Total local staff strength is 20 and total foreign workers is 46 as at the Latest Practicable Date. All our staff are located in Singapore.

Employee training

Our employees received training depending on their department and the scope of works. Typically they are required to attend trainings relating to our OHS policies, risk management systems, workplace safety and courses required by the BCA and MOM.

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Employee relations

Our Directors believe that we have a good relationship with our employees. During the Track Record Period, we did not have any dispute with our employees. Our employees are not members of any labour union. We have not experienced any significant problems with our employees or disruption to our operation due to labour disputes nor have experienced any material difficulties in recruiting or retaining experienced staff.

Recruitment policies

Our Executive Directors will assess the available human resources on a continuous basis and will determine whether additional employees are required to cope with our business development.

ENVIRONMENTAL IMPACT

The nature of our production is classified as light industry where the processes carried out or the machinery installed can be done without polluting the area with noise, vibration, odour, fumes, smoke, soot, ash, dust or grit. As such, there is minimal environmental impact generated by our production and cost involved for compliance.

PROPERTY INTEREST

Our office and plant

We rent our office and factory premise from an Independent Third Party, the details is as follows:

	Approximate
	built-in	Connected
Address	leased Area	transaction	Rates	Tenure	Deposit
424 Tagore Industrial	1,259 square	No	Monthly rent	Period of 3 years	S$112,000
Avenue Singapore	metres		of S$28,000	commencing
787807				from 1 March
				2014 and
				expiring on
				28 February
				2017

Of the above leased area, we have sublet:

Approximate 360 square metres to Double-Trans Pte Ltd at a monthly rent of S$5,000 from 1 March 2014 to 28 February 2017; and
Approximate 432 square metres to Xin Bang Pte Ltd at a monthly rent of S$11,000 from 16 July 2014 to 31 January 2017.

We maintain our office and factory premise separate from our sub-letted tenants.

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No valuation report for our office and factory premise has been included in this prospectus as it is exempted under section 6 of the Companies Ordinance (Exemption of Companies and Prospectus from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong) and Rule 8.01A of the GEM Listing Rules is not applicable.

As at the Latest Practicable Date, our Directors (i) were not aware of any investigations, notices, pending litigation, breaches of law or title defects; and (ii) had no plan in relation to construction, renovation, improvement, development or change the use, of the leased properties of our Group.

INTELLECTUAL PROPERTY RIGHTS

Our Company has made an application to register the following name and logo of our Company as a trademark under class 37 in Singapore and under class 16 and class 37 in Hong Kong in March 2015:

==> picture [79 x 78] intentionally omitted <==

----- Start of picture text -----

PANTONE 285 BLACK WHITE
----- End of picture text -----

Class 37 covers the areas of construction of signs, erection of signs, painting of signs, sign repair, installation and maintenance of signs, installation and maintenance of road signs, installation and maintenance of traffic signs and advisory and consultancy services relating to the aforesaid services.

Class 16 covers the areas of printed matter, printed publications, share certificates and share certificate paper.

MARKET AND COMPETITION

The infrastructure in Singapore is the central to socio-economic development and advancement. Major infrastructure projects continue to dominate the construction industry and public projects are projected to sustain Singapore’s construction demand for 2015. Thus, the opportunities in this industry remain positive as construction demand in Singapore is expected to sustain at S$26 billion to S$37 billion per annum from year 2016 to 2019. This is in view with major public sector civil engineering projects such as new expressways and railways extensions underway, thus requiring more deployment and placement of road signage in the near future.

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The market for the signage industry in Singapore is serviced by approximately 300 manufacturers with 71 CR11 registered construction agencies in Singapore (that are all private limited firms). In terms of competitors, our Group competes with 2 other companies for the road signage segment and about 20 others for the commercial signage segment in the market. While our Group operates in a fairly competitive space, we did a competent job distinguishing ourselves against other suppliers. Our Group is one of the main players in the market especially for civil projects thus far and is able to work on an expanded scope of work that includes railing; therefore making this one of the primary drivers for our Group’s good relationship with our customers. Some unique selling points that differentiates our Group from our competitor include being registered for general building civil engineering, repairs and redecoration, asphalt works and road marking and minor construction works, has L5 grade certification, strong financial setting and trusted supplier for civil projects in Singapore.

Barriers for entry in this industry are not high and projects often vary in value. In addition, operational productivity is another core requirement for companies competing in this sector. Hence, as well as achieving the right levels of experience and financial backing for registration under the CRS scheme, companies also need to meet government standards for productivity.

Please refer to the section headed ‘‘Industry overview’’ of this prospectus for details.

ADEQUACY AND EFFECTIVENESS OF OUR INTERNAL CONTROL SYSTEMS

We strive to maintain the integrity of our business, results of operations and reputation by strictly adhering to internal control system in respect of our signages. As such, we have implemented an effective internal control system by developing and enhancing, from time to time, different sets of internal control procedures and manuals covering a number of key control areas such as financial management, tendering, budgeting, purchase and procurement management, control over subcontractors, safety and environment compliance management, with a view to ensuring compliance by our Group with applicable laws and regulations.

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In preparation for the Listing and to further improve our internal control system, we have engaged an independent third party internal control consultant to undertake a review on the internal control system of our Group. The internal control consultant has recommended measures to improve and rectify significant weakness of the internal control systems identified during the review, and the following table summarised the findings, recommended measures and the implementation of these measures. All issues identified had been rectified:

Findings Recommended measures

Measures adopted and implemented by our Group

Segregation of duties contributes to an Our Group’s cash book or summary (in organisation’s system of checks and excel format) is held by General Manager balances. and this cash book or excel worksheet is reconciled on a bi-monthly basis, with
. Employees who have the ability to effect from March 2015. modify the accounts receivable balance or record adjustments to The Finance Manager will monitor the customer accounts should not Finance & Administrative (FA) staff’s receive customer payments. accounting entries before any

Segregation of duties Segregation of duties contributes to an can be enhanced. organisation’s system of checks and balances.

balance or record adjustments to The Finance Manager will monitor the customer accounts should not Finance & Administrative (FA) staff’s receive customer payments. accounting entries before any modification is being done on a monthly
. The general ledger system basis. generates a report of all changes to the chart of accounts at month-end Journal entries were prepared by the for review and approval by an Finance Manager and approved by the employee who does not have Executive Director. responsibility for modifying the general ledger. All changes should Physical inventory count is performed be reviewed to ensure that they quarterly and inventory reconciliation is were properly approved by the performed periodically. appropriate party and have a valid purpose. In addition, journal entries should be reviewed or tested for accuracy, completeness, supporting documentation and appropriate account coding. Adequate supervision to the accuracy of book-keeping is required.
. Physical inventory counts should be performed by an employee who does not have day-to-day responsibility for maintaining the physical inventory or inventory record-keeping and reconciliation responsibilities.
. In 2013 and 2014, the Company engaged an external accountant to help to prepare the accounts. There is a risk of ineffective supervision in the day-to-day financial controls, accounts book-keeping and financial reporting. The Company hired a full time Finance Manager on 18 March 2015.

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		Measures adopted and
Findings	Recommended measures	implemented by our Group
Bank reconciliation	Bank reconciliation should be performed	Our Group has conducted bank
were performed	once a month.	reconciliation on a monthly basis by
yearly in 2013 and		Finance Manager, with effect from 31
2014.		March 2015.
No fixed asset tagging	All fixed assets should be tagged and	Our fixed assets have been tagged and
or count performed in	accounted for.	accounted by respective department
2013 and 2014.		heads. Fixed asset count will be
	Fixed asset count will need to be	conducted on a yearly basis with the
	conducted on an annual basis. At least	supervision by the Finance Manager.
	one independent staff (who is not
	accountable for the fixed asset/custodian
	of the fixed asset) to verify the count.
Inventory reconciliation	Physical inventory count should be	Our Group has conducted inventory
was not performed	conducted and reconciled to the general	count periodically and tied it to the
periodically in 2013	ledger periodically, with variances	general ledger accounting books, with
and 2014.	reconciled on a timely basis.	effect from 1 March 2015.
No monitoring of	Vendor master file changes should be	Our Group has recorded manually
changes made to	reviewed by a supervisory role, and all	vendor master file changes, subjected to
vendor master file in	changes should be supported.	approval from an Executive Director,
2013 and 2014.		with effect from 31 March 2015.

Our Executive Directors are responsible for the formulation and overseeing the implementation of our internal control measures. We will engage legal advisers and a compliance adviser upon Listing to provide us with updates on the changes in the applicable laws and regulations from time to time to see if any change is required to be made to our operation and internal control procedures. Upon Listing, we will also engage internal control advisers to review our internal control systems on a regular basis and a compliance adviser to advise us on matters relating to the GEM Listing Rules.

Our Directors are of the view that the internal control measures are adequate and effective to enhance the internal control of our Group. The Sole Sponsor has reviewed the internal control and follow-up reports prepared by the internal control consultant, discussed with the internal control consultant on the areas reviewed together with the findings and concurred with the Directors’ view that our Company’s enhanced internal controls, when fully implemented, to be sufficient and effective.

RISK MANAGEMENT

In the course of conducting our business, we are exposed to various types of risks, including project management risks and regulatory risks, which are further elaborated below.

Save for establishing and implementing internal control procedures as mentioned above, our Executive Director, Mr. Peter Tan, is responsible for overseeing and reviewing the implementation of our Group’s internal control and risk management measures.

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Contract risk management

Contracts and customers

We recognise the continuous intake of new orders is vital for our financial performance and business sustainability. In this regard, we maintain good working relationship with a group of customers (main contractors) who regularly take on contracts from LTA or other public sector contracts. We continually review the possibility of expanding the scope of services for a contract, including expanding our range of value-added related products and works. Should an opportunity to quote arises in road signage contracts and we can do so profitably, we will dedicate resources for it so that our position as one of the established road signage providers in Singapore is maintained. Furthermore, with the proceeds we obtain from the Listing, our Group will increase our financial and operational capacities in order to expand in the public sector.

We have also established procedures for assessing and monitoring contract risk. In our preparation of quotations, our project team will consider and evaluate our customers’ financial conditions, past payment records and the adequacy of our internal resources and capacity for the duration of the said contract before a decision is made. We are mindful of not being over-reliant on any specific customer.

At any point in time, our ongoing contracts are likely to be in different stages, with some at the beginning where costs are incurred but works not completed while others have received payment for works completed. As such, our cash needs will unlikely exceed our cash inflows as we take on contracts with unit selling prices we are confident of making a profit. Furthermore, the 30 to 60 days credit terms granted to our customers will limit our financial risks and our project team also monitors the payment pattern of our customers regularly and closely. Our Executive Directors are aware of our Group’s contracts and cashflows and monitor the financial health of our Group.

Suppliers and subcontractors

Our Group has adopted a policy of maintaining good working relationship with a group of reliable suppliers and subcontractors with on-time payments. Having a good working relationship with our suppliers and subcontractors, maintaining at least more than one supplier or subcontractor in a given area of expertise and constantly sourcing for reliable suppliers and subcontractors will reduce risk in this aspect of contract risk. We also maintain an approved supplier list and evaluate our suppliers to ensure that our suppliers can meet our contracts’ fulfillment needs. We do not engage in hedging for our supplies.

Loss of key personnel

Our Executive Directors will ensure that suitable and sufficient numbers of staff are properly appointed and assigned to manage each project. We have also established a buddy system where another staff is aware of the contracts or work scope handled by his/her buddy. This will ensure that sufficient experience and technical knowledge are available within the organisation and any loss of any team member will have limited impact on the continuity of project implementation.

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BUSINESS

Regulatory risk management

Our Group keeps abreast of any changes in government policies, regulations, licensing requirement and permits and safety requirements and we are aware that any noncompliance of the above may impact on our operation and business. We will ensure that all changes in government policies, regulations, licensing requirement and permits and safety requirements are closely monitored and communicated to our staff for proper implementation and compliance.

Foreign labour

We believe that inability to employ foreign labour may materially affect our operation and financial performance. In order to mitigate the impact of foreign labour shortages arising from changes in relevant laws, rules and regulations in Singapore and/or other countries where the foreign labour originated, our management has adopted a policy to employ foreign labour from more than one countries including India, Bangladesh and China.

Our Directors confirm that as at the Latest Practicable Date, they are not aware of any impending changes in the relevant laws, rules and regulations that would affect our Group.

CORPORATE GOVERNANCE AND INTERNAL CONTROL MEASURES

We maintain corporate governance and internal control measures to ensure effective and efficient management and operations of our business and to safeguard the interests of our employees, stakeholders and Shareholders (as the case may be). These include:

. Confidentiality policy — this outlines the staff’s obligations to maintain confidentiality with respect to information pertaining to our operations
. Conflict of interest — directors and employees are required to declare any conflict of interest or connected persons
. Delegation of authority — different authority measures are in place to approve purchases, credit term, sales quotation and credit note issuance
. Business continuity plan — this outlines the measures to be taken to minimise the impact to business due to operational disruptions
. Whistle-blowing policy — this sets the framework to promote responsible and secure whistle-blowing without the fear of adverse consequences
. Regulatory listing — list of regulations to monitor compliance and to minimise over-sight
. Personal data protection policy — this outlines the measures for personal data protection to be in compliance with the Personal Data Protection Act 2012

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BUSINESS

. Revenue management measures — measures and approval in respect of areas in 1) sales and credit approval and 2) sales quotation pricing
. Purchases management measures — processes established in respect of areas in 1) purchases and expenditure, 2) approved suppliers, 3) inventory, 4) fixed assets and 5) petty cash to ensure effective and effective control and operation in these areas
. Human resources management — policies to provide clear guidelines on 1) recruitment, termination and resignation of staff and 2) incentives
. Information technology policy — this outlines general controls on 1) hardware/ software and information control, 2) authority matrix of user access rights and 3) information technology maintenance

LITIGATION

During the Track Record Period and as at the Latest Practicable Date, there was no litigation or arbitration proceeding pending or threatened against our Group or any of our Directors which could have a material adverse effect on our Group’s financial condition or results of operations.

REGULATORY COMPLIANCE

Our Directors confirmed that, during the Track Record Period and up to the Latest Practicable Date, our Group has complied with all applicable rules and regulations for our business activities and operations in all material aspects.

The legal adviser to our Company as to Singapore law has confirmed that as at the Latest Practicable Date, Signmechanic Singapore has conducted its business in Singapore in compliance with all applicable Singapore laws and regulations in all material respects, including obtaining all necessary permits and licences required in connection therewith, relating to or material to the business.

Non-compliance incidents

During the Track Record Period and up to the Latest Practicable Date, we had no material non-compliance incidents that would have a material adverse effect on our business, financial condition and results of operations taken as a whole.

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BUSINESS

Indemnity from our Controlling Shareholders

Our Controlling Shareholders have executed the Deed of Indemnity in favour of our Group whereby they will jointly and severally indemnify each member of our Group against, among others, all expenses, payments, sums, outgoings, fees, demands, claims, damages, losses, costs (among others, but not limited to, legal and other professional costs), charges, liabilities, fines, penalties and tax which any member of our Group may incur, suffer or accrue, as a result of directly or indirectly or in connection with, or in consequence of any non-compliance with or breach of any applicable laws, rules or regulations in any jurisdiction by any member of our Group on or before the Listing. Please refer to the section headed ‘‘D. Other information — 1. Estate duty, tax and other indemnities’’ in Appendix IV to this prospectus for further details of the Deed of Indemnity.

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CONNECTED TRANSACTIONS

Prior to the Listing, our Group has entered into transactions with its Connected Persons during the Track Record Period. These transactions constituted discontinued connected transactions on the part of our Company. Details of these transactions are as follows:

CONNECTED PERSONS

Mr. Kelvin Tan is our Executive Director and hence is a connected person of our Company.

Mr. Peter Tan is our Executive Director and hence is a connected person of our Company.

Fusion Displays was a business firm registered in Singapore on 8 June 2007 and was principally engaged in art and graphic design services and advertising activities. Prior to 16 March 2015, Fusion Displays was owned as to 50% by Mr. Kelvin Tan and as to 50% by Mr. Peter Tan. On 16 March 2015, Fusion Displays was terminated and ceased to be a business firm in Singapore. As Mr. Kelvin Tan and Mr. Peter Tan are our Executive Directors, Fusion Displays was a connected person of our Company under the GEM Listing Rules during the Track Record Period and prior to 16 March 2015.

C.K. Toh Construction is a company incorporated in Singapore with limited liability on 16 June 2004 and is principally engaged in road marking and civil construction. C.K. Toh Construction’s principal activities during the Track Record Period were mainly on the provision of road marking services, laying of asphalt services and civil construction and does not possess the relevant expertise and licenses in the signage sector. C.K. Toh Construction does not conduct similar business activities to that of our Group as it does not design, fabricate and supply signage products. As confirmed by C.K. Toh Construction, C.K. Toh Construction is specialised in road marking and has recently expanded into civil construction (but not signage fabrication). In addition, it is independently operated by a third party. Prior to 2 April 2015, C.K. Toh Construction was owned as to 21.25% by Mr. Kelvin Tan and as to 21.25% by Mr. Peter Tan. On 2 April 2015, Mr. Kelvin Tan and Mr. Peter Tan disposed of their entire respective shareholding interests in C.K. Toh Construction to Mr. Toh Chee Keong who is not related to our Group, the directors nor shareholders of our Group. The decision to dispose of the shareholding interests was made to avoid any future connected transactions between C.K. Toh Construction and our Group after the Listing. The decision made was not in relation to the profitability of our Group nor whether our Company can meet the minimum cash flow requirements under the GEM Rule 11.12A(1). C.K. Toh Construction is independently managed by its director, Mr. Toh Chee Keong who is not related to our Group, the directors nor shareholders of our Group. Mr. Kelvin Tan and Mr. Peter Tan had not participated in the daily management of C.K. Toh Construction, and collectively did not hold more than 50% of C.K. Toh Construction. As Mr. Kelvin Tan and Mr. Peter Tan are our Executive Directors, C.K. Toh Construction was deemed to be a connected person of our Company under the GEM Listing Rules during

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CONNECTED TRANSACTIONS

the Track Record Period and prior to 2 April 2015. The total value of transactions with C.K. Toh Construction was approximately S$0.2 million in each of the two years ended 31 December 2014.

T3 Holdings is a company incorporated in Singapore with limited liability on 5 November 2012 and is principally engaged in supply of labour and logistic services. Prior to 2 April 2015, T3 Holdings was owned as to 21% by Mr. Kelvin Tan and as to 21% by Mr. Peter Tan. On 2 April 2015, Mr. Kelvin Tan and Mr. Peter Tan disposed of their entire respective shareholding interests in T3 Holdings. As Mr. Kelvin Tan and Mr. Peter Tan are our executive Directors, T3 Holdings was deemed to be a connected person of our Company under the GEM Listing Rules during the Track Record Period and prior to 2 April 2015.

Signmechanic Sdn Bhd is a company incorporated in Malaysia with limited liability on 14 September 2007 and is principally engaged in the design, fabrication and supply of aluminium-based commercial and retail advertisement signage in Malaysia. Signmechanic Sdn Bhd does not conduct the similar business activities to our Group in Singapore. Signmechanic Sdn Bhd focuses its business in Malaysia and does not have a place of business in Singapore. In addition, it is independently operated by a third party. During the Track Record Period, Signmechanic Sdn Bhd supplied signage to us with total value of transactions of approximately S$74,000 and S$70,000 for the two years ended 31 December 2014. Prior to 12 January 2015, Signmechanic Sdn Bhd was owned as to approximately 33.33% by Mr. Kelvin Tan and as to approximately 33.33% by Mr. Peter Tan. On 12 January 2015, Mr. Kelvin Tan and Mr. Peter Tan disposed of their entire respective shareholding interests in Signmechanic Sdn Bhd to Mr. Lo Ken On who is one of the directors managing Signmechanic Sdn Bhd, is not related to our Group, the directors nor shareholders of our Group. The decision to dispose of the shareholding interests was made to avoid any future connected transactions between Signmechanic Sdn Bhd and our Group after the Listing. The decision made was not in relation to the profitability of our Group nor whether our Company can meet the minimum cash flow requirements under the GEM Rule 11.12A(1). Mr. Kelvin Tan and Mr. Peter Tan had not participated in the daily management of Signmechanic Sdn Bhd and our Group did not intend to expand further in Malaysia. As Mr. Kelvin Tan and Mr. Peter Tan are our Executive Directors, Signmechanic Sdn Bhd was a connected person of our Company under the GEM Listing Rules during the Track Record Period and prior to 12 January 2015.

DISCONTINUED CONNECTED TRANSACTIONS

Personal Guarantees

During the Track Record Period, Mr. Kelvin Tan and Mr. Peter Tan had jointly and severally provided a personal guarantee in favour of DBS Bank Ltd (‘‘DBS’’) in Singapore in relation to various banking facilities granted by DBS to Signmechanic Singapore in the maximum aggregate amount of S$4,927,000. On 17 March 2015, DBS has released the above said personal guarantee and a revised facility letter has been granted by DBS to Signmechanic Singapore.

– 140 –

CONNECTED TRANSACTIONS

In addition, Mr. Kelvin Tan and Mr. Peter Tan had jointly and severally provided a personal guarantee in favour of Ethoz Capital Ltd (‘‘Ethoz Capital’’) to secure the obligations and liabilities of Signmechanic Singapore under a loan agreement entered into between Signmenchanic Singapore as the borrower and Ethoz Capital as the lender dated 31 October 2014 in relation to a loan facility of S$1,000,000 granted by Ethoz Capital to Signmechanic Singapore. On or about 27 March 2015, Signmechanic Singapore has repaid the above loan in full and by a letter dated 6 April 2015 issued by Ethoz Capital to Signmechanic Singapore, Ethoz Capital has released the above said personal guarantee.

As the above provisions of personal guarantees were made on normal commercial terms and they were not secured by the assets of our Group, the above provisions of personal guarantees constitute connected transactions of our Company but are fully exempt from Shareholders’ approval, annual review and all disclosure requirements pursuant to Rule 20.88 of the GEM Listing Rules.

Sale of machinery

On 22 July 2014, Fusion Displays sold one unit of cutting plotter machine and one unit of colour sign maker printer machine to Signmechanic Singapore at a consideration of approximately S$10,000 and S$30,000. The consideration of the above transactions was determined on arm’s length basis between Signmechanic Singapore and Fusion Displays with reference to the market value of such machines.

Our Directors (including our Independent Non-Executive Directors) have confirmed that the acquisition of the cutting plotter machine and the colour sign maker printer machine was conducted in the ordinary and usual course of business of our Group on normal commercial terms. As such, our Directors considered that the entering into of the above transaction is fair and reasonable and in the interests of our Group and our Shareholders as a whole.

Our Group had bought machinery from unrelated independent third party suppliers, who would also be able to supply our Group with similar cutting plotter machine and color sign maker printer machine in the future.

Supply of lorry crane and truck mounted attenuator

During the Track Record Period, Signmechanic Singapore and T3 Holdings entered into an arrangement pursuant to which T3 Holdings agreed to supply lorry crane and truck mounted attenuator(s) to Signmechanic Singapore (the ‘‘T3 Services’’). The T3 Services amounted to approximately S$109,000 and S$31,000 respectively for each of the two years ended 31 December 2013 and 31 December 2014. Such transactions took place as and when Signmechanic Singapore was in need of such lorry crane and truck mounted attenuator(s) from time to time. The consideration of the T3 Services was determined on an arm’s length basis between Signmechanic Singapore and T3 Holdings with reference to prevailing market price.

– 141 –

CONNECTED TRANSACTIONS

Our Directors (including our Independent Non-Executive Directors) have confirmed that the supply of lorry crane and truck mounted attenuator(s) was conducted in the ordinary and usual course of business of our Group on normal commercial terms. As such, our Directors considered that the entering into of the above arrangement is fair and reasonable and in the interests of our Group and our Shareholders as a whole.

Our Group has alternative unrelated independent third party suppliers for the supply of lorry crane and truck mounted attenuator who are able to supply our Group should we require in the future.

Provision of installation related services

During the Track Record Period, Signmechanic Singapore and C.K. Toh Construction entered into an arrangement pursuant to which C.K. Toh Construction agreed to provide installation related services to Signmechanic Singapore (the ‘‘C.K. Toh Services’’). The C.K. Toh Services amounted to approximately S$18,000 and S$3,000 respectively for each of two years ended 31 December 2013 and 31 December 2014. Such transactions took place as and when Signmechanic Singapore was in need of installation related services from time to time. The consideration of the above arrangement was determined on an arm’s length basis between Signmechanic Singapore and C.K. Toh Construction.

Our Directors (including our Independent Non-Executive Directors) have confirmed that the C.K. Toh Services was conducted in the ordinary and usual course of business of our Group on normal commercial terms. As such, our Directors considered that the entering into of the above arrangement is fair and reasonable and in the interests of our Group and the Shareholders as a whole.

Our Group has alternative unrelated independent third party suppliers for the provision of installation related services, who would be able to supply our Group should we require in the future. However, transactions of this nature would continue with C.K. Toh Construction in the future should their quotation be more favourable compared to that of unrelated third party suppliers. As C.K. Toh Construction ceased to be a connected person on 2 April 2015, such transactions with C.K. Toh Construction would not constitute connected transactions for our Company following the Listing.

Subcontracting arrangements with C.K. Toh Construction

During the Track Record Period, Signmechanic Singapore and C.K. Toh Construction entered into an arrangement pursuant to which Signmechanic Singapore agreed to engage C.K. Toh Construction as a subcontractor to conduct road marking works (the ‘‘C.K. Toh Subcontracting’’). The C.K. Toh Subcontracting amounted to approximately S$164,000 and S$174,000 for each of the two years ended 31 December 2013 and 31 December 2014 respectively. The C.K. Toh Subcontracting took place as and when Signmechanic Singapore was in need of such services provided by C.K. Toh Construction from time to time. The consideration of the above arrangements was determined based on an arm’s length basis between Signmechanic Singapore and C.K. Toh Construction.

– 142 –

CONNECTED TRANSACTIONS

Our Directors (including our Independent Non-Executive Directors) have confirmed that the C.K. Toh Subcontracting was conducted in the ordinary and usual course of business of our Group on normal commercial terms. As such, our Directors considered that the entering into of the above arrangement is fair and reasonable and in the interests of our Group and the Shareholders as a whole. Our Group does not have any ongoing contract with C.K. Toh Construction.

Our Group can easily engage alternative unrelated independent third party suppliers for the provision of road marking works, who would be able to supply our Group should we require in the future. However, transactions of this nature would continue with C.K. Toh Construction in the future should their quotation be more favourable compared to that of unrelated third party suppliers. As C.K. Toh Construction ceased to be a connected person on 2 April 2015, such transactions with C.K. Toh Construction would not constitute connected transactions for our Company following the Listing.

Supply and installation of signage

During the Track Record Period, C.K. Toh Construction and Signmechanic Singapore entered into an arrangement pursuant to which Signmechanic Singapore agreed to supply and install signage to C.K. Toh Construction (the ‘‘Signmechanic Services’’). The Signmechanic Services amounted to approximately S$42,000 and S$19,000 for each of the two years ended 31 December 2013 and 31 December 2014 respectively. The Signmechanic Services took place as and when C.K. Toh Construction was in need of such services provided by Signmechanic Singapore from time to time. The consideration was determined based on an arm’s length basis between Signmechanic Singapore and C.K. Toh Construction.

Our Directors (including our Independent Non-Executive Directors) have confirmed that the Signmechanic Services was conducted in the ordinary and usual course of business of our Group on normal commercial terms. As such, our Directors considered that the entering into of the above arrangement is fair and reasonable and in the interests of our Group and the Shareholders as a whole.

Supply of signage

During the Track Record Period, Signmechanic Sdn Bhd and Signmechanic Singapore entered into an arrangement pursuant to which Signmechanic Sdn Bhd agreed to supply signage to Signmechanic Singapore (the ‘‘Signmechanic Malaysia Services’’). The Signmechanic Malaysia Services amounted approximately to S$74,000 and S$70,000 for each of the two years ended 31 December 2013 and 31 December 2014 respectively. The Signmechanic Malaysia Services took place as and when Signmechanic Singapore was in need of supply of signage from time to time. The consideration was determined based on an arm’s length basis between Signmechanic Singapore and Signmechanic Sdn Bhd.

– 143 –

CONNECTED TRANSACTIONS

Our Directors (including our Independent Non-Executive Directors) have confirmed that the Signmechanic Malaysia Services was conducted in the ordinary and usual course of business of our Group on normal commercial terms. As such, our Directors considered that the entering into of the above arrangement is fair and reasonable and in the interests of our Group and the Shareholders as a whole. Our Group does not have any ongoing contract with Signmechanic Sdn Bhd.

RELATED PARTY TRANSACTION

Save for the discontinued connected transactions disclosed above, we did not enter into any other related party transactions during the Track Record Period.

– 144 –

FUTURE PLANS AND USE OF PROCEEDS

FUTURE PLANS AND PROSPECTS

Future plans

See the section headed ‘‘Business — Our objectives and business strategies’’ in this prospectus for a detailed description of our business strategies and future plans.

Our business strategies are:

expand and strengthen our market position in the public sector in Singapore;
expand our business portfolio through the formation of new companies and/or acquisitions; and
expand our range of product offering to target and secure more non-road infrastructure related projects

Implementation plans

In light of the business objectives and future plans of our Group, our Group will seek to attain the milestones contained in the following paragraphs from the Latest Practicable Date to the year ended 31 December 2017. Investors should note that the milestones and their scheduled times for attainment are formulated on the bases and assumptions referred to in the paragraph headed ‘‘Bases and key assumptions of the business plan’’ in this section. These bases and assumptions are inherently subject to many uncertainties, variables and unpredictable factors, in particular the risk factors set out in the section headed ‘‘Risk factors’’ in this prospectus. There can be no assurance that the plans of our Group will materialise in accordance with the expected time frame or that the objectives of our Group will be accomplished at all. Our Directors intend to carry out the following implementation plans:

1 From the Latest Practicable Date to 31 December 2015

Purchase of materials and/or Purchase materials for expansion of business in the equipment in relation to existing sector expansion of existing sector and to target and secure more Identify suppliers/operators who are able to supply non-road infrastructure related materials for the new product offerings we intend to projects get into

Identify equipment that are of higher productivity and capability for our existing sector

Identify equipment that are suited for targeting and securing more non-road infrastructure related projects

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FUTURE PLANS AND USE OF PROCEEDS

Expansion via new companies Explore capital contributions or acquisition of and/or acquisitions controlling stake in companies that may be in other sectors of civil engineering, such as providing services like lane marking or installation of precast blocks

Expansion and enhancement of New headcount of about 3 to 8 foreign workers work force to support our based at our plant, for fabrication of signage and business expansion in the related works existing sector and to target and secure more non-road Review the remuneration and benefits of key staff in infrastructure related projects each department, critical to the execution of our business strategies

Provide opportunities and subsidies for staff to attend courses to learn new competencies and upgrade their quality management skills

From 1 January 2016 to 30 June 2016

Purchase of materials and/or Purchase materials for expansion of business in the equipment in relation to existing sectors expansion of existing sector and to target and secure more Identify suppliers/operators who are able to supply non-road infrastructure related materials for the new product offerings we intend to projects get into

Place purchase orders with the selected suppliers after we have secured projects in relation to our new product offerings

Purchase equipment that are of higher productivity and capability for our existing sector

Expansion via new companies Perform due diligence on potential targets and and/or acquisitions internal evaluation and approval of our directors Engage professional parties to conduct further due diligence and provide advice

– 146 –

FUTURE PLANS AND USE OF PROCEEDS

Expansion and enhancement of work force to support our business expansion in the existing sector and to target and secure more non-road infrastructure related projects

New headcount of about 3 to 5 staff that have competencies in new skills, who are part of our project and production teams

New headcount of about 5 to 10 foreign workers based at our plant, for fabrication of signage and related works

Provide opportunities and subsidies for staff to attend courses to learn new competencies and upgrade their quality management skills

Working capital and general corporate use

Reserve working capital for business growth and operation needs

From 1 July 2016 to 31 December 2016

Place purchase orders with the selected suppliers after we have secured projects in relation to our new product offerings

Identify equipment that are suited for targeting and securing more non-road infrastructure related projects

Purchase equipment that are of higher productivity and capability for our existing sector

Expansion via new companies Perform due diligence on potential targets and and/or acquisitions internal evaluation and approval of our directors

Engage professional parties to conduct further due diligence and provide advice

Finalise potential target and complete due diligence

– 147 –

FUTURE PLANS AND USE OF PROCEEDS

Expansion and enhancement of work force to support our business expansion in the existing sector and to target and secure more non-road infrastructure related projects

New headcount of about 4 to 6 staff that have competencies in new skills, who are part of our project and production teams

New headcount of about 8 to 15 foreign workers based at our plant, for fabrication of signage and related works

Provide opportunities and subsidies for staff to attend courses to learn new competencies and upgrade their quality management skills

Working capital and general corporate use

Reserve working capital for business growth and operation needs

From 1 January 2017 to 30 June 2017

Purchase of materials and/or equipment in relation to expansion of existing sector and to target and secure more non-road infrastructure related projects

Purchase materials for expansion of business in the existing sector

Place purchase orders with the selected suppliers after we have secured projects in relation to our new product offerings

Purchase equipment that are suited for targeting and securing more non-road infrastructure related projects

Expansion via new companies and/or acquisitions

Finalise potential target and complete due diligence

Execute the merger and acquisition plan of potential target in accordance with the requirements as required under Chapter 19 of the GEM Listing Rules

Expansion and enhancement of work force to support our business expansion in the existing sector and to target and secure more non-road infrastructure related projects

New headcount of about 5 to 8 staff that have competencies in new skills, who are part of our project and production teams

New headcount of about 5 to 8 foreign workers based at our plant, for fabrication of signage and related works

Provide opportunities and subsidies for staff to attend courses to learn new competencies and upgrade their quality management skills

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FUTURE PLANS AND USE OF PROCEEDS

Working capital and general Reserve working capital for business growth and corporate use operation needs

From 1 July 2017 to 31 December 2017

Purchase of materials and/or Purchase materials for expansion of business in the equipment in relation to existing sector expansion of existing sector and to target and secure more Place purchase orders with the selected suppliers non-road infrastructure related after we have secured projects in relation to our new projects product offerings

Purchase equipment that are suited for targeting and securing more non-road infrastructure related projects

Expansion via new companies Execute the merger and acquisition plan of potential and/or acquisitions target in accordance with the requirements as required under Chapter 19 of the GEM Listing Rules

Expansion and enhancement of New headcount of about 2 to 3 staff that have work force to support our competencies in new skills, who are part of our business expansion in the project and production teams existing sector and to target and secure more non-road New headcount of about 4 to 6 foreign workers infrastructure related projects based at our plant, for fabrication of signage and related works

Provide opportunities and subsidies for staff to attend courses to learn new competencies and upgrade their quality management skills

Working capital and general Reserve working capital for business growth and corporate use operation needs

Bases and key assumptions of the business plans

The business objectives and strategies set out by our Directors are based on the following bases and assumptions:

Our Group will have sufficient financial resources to meet the planned capital and operating expenditure and business development requirements during the period to which the business objectives relate;
There will be no material change in existing laws and regulations, or other government policies relating to our Group, or in the political, economic or market conditions in which our Group operates;

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FUTURE PLANS AND USE OF PROCEEDS

There will be no change in the funding requirement for each of the implementation plans described under the paragraph headed ‘‘Implementation plan’’ in this section from the amount as estimated by our Directors;
There will be no material changes in the bases or rates of taxation applicable to the activities of our Group;
There will be no disasters, natural, political, legal or otherwise, which would materially disrupt the business or operations of our Group;
Our Group will not be materially affected by the risk factors as set ou under the section headed ‘‘Risk factors’’ in this prospectus;
Our Group will be able to retain key staff in the management and the main operational departments; and
Our Group will be able to continue our operations in substantially the same manner as our Group had been operated during the Track Record Period and our Group will also be able to carry out our development plans without disruptions adversely affecting our operations or business objectives in any way.

Reasons for the Placing and use of proceeds

The Placing of the Placing Shares will enhance the capital base of our Group and provide us with additional working capital to implement the future plans set out in the section headed ‘‘Business — Our objectives and business strategies’’ in this prospectus.

Use of proceeds

Our Directors intend to apply the net proceeds from the Placing to finance the business expansion, capital expenditure and strengthen the capital base of our Group and improve our overall financial position. Based on the Placing Price of HK$0.50 per Placing Share, the net proceeds from the Placing of the Placing Shares, after deducting underwriting fees and estimated expense in connection with the Placing, are estimated to be HK$23.4 million.

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FUTURE PLANS AND USE OF PROCEEDS

From the Latest Practicable Date to 31 December 2015 HK$ (in million) 0.3 — 0.2 — 0.5	For the six months ending 30 June 2016 HK$ (in million) 2.2 1.9 1.3 0.7 6.1	For the six months ended 31 December 2016 HK$ (in million) 2.4 1.7 1.2 0.8 6.1	For the six months ending 30 June 2017 HK$ (in million) 2.6 2.9 1.4 0.5 7.4	For the six months ending 31 December 2017 HK$ (in million) 0.7 1.7 0.6 0.3 3.3	Total HK$ (in million) 8.2 8.2 4.7 2.3 23.4	Approximate percentage of net proceeds 35% 35% 20% 10%
						100%

Note:

As at the Latest Practicable Date, we have not identified any targets.

To the extent that the net proceeds from the Placing are not immediately required for the above purposes, it is the present intention of our Directors that such proceeds will be placed on short-term interest bearing deposits with authorised financial institutions in Singapore and/or Hong Kong.

We will bear the underwriting commissions, SFC transaction levy and Stock Exchange trading fee payable by us in connection with the issue of the new Shares together with any applicable fees relating to the Placing. The Selling Shareholder will be responsible for the underwriting commissions attributable to the Sale Shares, together with Stock Exchange trading fees, SFC transaction levy and any applicable fees in respect of the Sale Shares.

Based on the Placing Price, we estimate that the Selling Shareholder will receive net proceeds of approximately HK$9.2 million, after deducting the underwriting commissions and fees payable by the Selling Shareholder in respect of the Sale Shares. We will not receive the net proceeds from the sale of the Sale Shares by the Selling Shareholder in the Placing.

– 151 –

DIRECTORS, SENIOR MANAGEMENT AND STAFF

Our Board of Directors consists of two Executive Directors, and three Independent Non-Executive Directors. The following table sets forth the information concerning our Directors and senior management:

						Relationship with
				Date of Joining/	Roles and	other Directors and
Name	Age	Address	Position	Appointment	Responsibilities	senior management
Executive Directors
Mr. Kelvin Tan	42	Block 232, Pasir	Chairman and	December 1997/	Overall	None
(陳添吉)		Ris Drive 4,	Executive	10 March 2015	management,
		#13-510	Director		strategic
		Singapore			planning and
		510232			business
					development
Mr. Peter Tan	47	35 Jalan Mariam	Chief executive	December 1997/	Lead operational	None
(陳光輝)		Singapore	officer and	10 March 2015	departments and
		509313	Executive		provide
			Director		guidance and
					management
					experience in
					project
					management
					and contract
					negotiation.
Independent Non-Executive	Directors
Mr. Oh Eng Bin	41	11 Tanjong Rhu	Independent Non-	23 June 2015	Responsible for	None
(Hu Rongming)		Road	Executive		giving strategic
(胡榮明)		#09-04	Director		advice and
		Singapore			guidance on the
		436896			business and
					operations of
					our Group
Mr. Tan Kiang Hua	54	1 Bukit Batok	Independent Non-	23 June 2015	Responsible for	None
(陳建華)		Street 25,	Executive		giving strategic
		#06-22,	Director		advice and
		Singapore			guidance on the
		658882			business and
					operations of
					our Group
Mdm. Kow Yuen-	37	20 Clover Close	Independent Non-	23 June 2015	Responsible for	None
Ting (Gao		Singapore	Executive		giving strategic
Yunting)		579261	Director		advice and
(郜韵婷)					guidance on the
					business and
					operations of
					our Group
Senior management
Mr. Soh Chiau Kim	35	Apt Blk 766,	General Manager	July 2009/March	Overall	None
(蘇招金)		Woodlands		2013	management of
		Circle, # 09-346,			operations, with
		Singapore			a focus on
		730766			execution of
					contracts.

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DIRECTORS

Executive Directors

Mr. Kelvin Tan (陳添吉), age 42, co-founder of our Group, Executive Director and Chairman of our Board. He was first appointed as our Director on 10 March 2015. Mr. Kelvin Tan is also the director of Signmechanic Singapore, appointed 1 December 1997. Mr. Kelvin Tan is responsible for our Group’s overall management, strategic planning and business development. He has more than 15 years of experience in the signage industry.

Mr. Kelvin Tan started his career as a project team member in a company whose principal business was in signage related works. Signmechanic Singapore was acquired by Mr. Kelvin Tan and Mr. Peter Tan (who was an ex-colleague in that company) years after.

Since 1997, Mr. Kelvin Tan has been involved in Signmechanic Singapore, focusing on the growth of the business. Mr. Kelvin Tan is involved in overall management, strategic planning and business development, and maintains relationships with key customers in the public infrastructure sector.

Mr. Kelvin Tan graduated with a diploma in electronic engineering from Ngee Ann Polytechnic, Singapore in August 1992. Mr. Kelvin Tan does not have any current or past directorships in any listed companies in the last three years.

Mr. Peter Tan (陳光輝), age 47, co-founder of our Group. Executive Director and chief executive officer of our Group. He was first appointed as our Director on 10 March 2015. Mr. Peter Tan is also the director of Signmechanic Singapore, appointed 1 December 1997. Mr. Peter Tan is responsible for leading our Group’s operational departments and providing guidance and management experience in project management and contract negotiation. He has more than 15 years of experience in the signage industry.

Mr. Peter Tan started his career in the Singapore Air Force in 1987 as a technician. For his next job, he worked as a project coordinator in the company (where Mr. Kelvin Tan was also employed in) whose principal business was in signage related works. Signmechanic Singapore was acquired by him and Mr. Kelvin Tan years after.

Since 1997, Mr. Peter Tan has been involved in Signmechanic Singapore, focusing on the growth of the business. Mr. Peter Tan leads the operational departments and provides guidance and management experience in project management and contract negotiation. He also maintains relationships with customers in all non-public infrastructure contracts.

Mr. Peter Tan graduated with a diploma in mechanical engineering from Ngee Ann Polytechnic, Singapore in August 1987. He also obtained a graduate diploma in sales and marketing management from Temasek Polytechnic, Singapore in February 1993. Mr. Peter Tan does not have any current or past directorships in any listed companies in the last three years.

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Independent Non-Executive Directors

Mr. Oh Eng Bin (胡榮明), age 41, was appointed as our Independent Non-Executive Director on 23 June 2015. He is currently the chairman of the nomination committee and a member of the audit and remuneration committees. Mr. Oh is a partner in Rodyk & Davidson LLP’s Corporate Practice Group and a partner in the firm’s China Practice and Indonesia Practice. He has been in legal practice since 1999. Mr. Oh practises mainly in the areas of corporate finance and mergers and acquisitions, with a focus on equity capital markets transactions involving initial public offerings and reverse takeovers of Singapore and foreign companies, as well as secondary capital market issues including secondary listings, secondary post-listing fund raising and post-listing advisory and compliance. Mr. Oh also advises on capital markets licensing and compliance, and on a wide range of general corporate advisory work for both public listed and private companies including private equity investments, joint ventures, corporate restructurings, debt restructuring and franchising. Mr. Oh graduated with a Bachelor of Law degree (Honours) from the National University of Singapore in June 1998 and is admitted to the Singapore Bar.

Mr. Oh is an independent non-executive director of SHS Holdings Limited and Weiye Holding Limited, both companies are listed on the Mainboard of the Singapore Stock Exchange. Save for the above, Mr. Oh does not have other current or past directorships in any listed companies in the last three years.

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Mr. Tan Kiang Hua (陳建華), age 54, was appointed as our Independent NonExecutive Director on 23 June 2015. He is currently the chairman of the remuneration committee and a member of the audit and nomination committees. Mr. Tan graduated from the National University of Singapore with a Bachelor of Business Administration degree in June 1984. Mr. Tan has more than 25 years of experience in accounting, finance, investment and business management. The following table summarises Mr. Tan’s professional experience prior to joining our Group:

	Principal business
	activities of the
Company name	company	Last position held	Responsibilities	Period of services
Holiday Inn Yangtze	Hotel	Assistant controller	Responsible for setting	March 1988 to
Chongqing			up accounting	June 1989
			system and training
			of staff
Holiday Inn Lido Beijing	Hotel	Assistant financial	Responsible for	August 1989 to
		controller	financial reporting,	March 1991
			credit control, cost
			control and
			cashiering
Beijing Lufthansa Center/	Hotel	Chief financial	Responsible for setting	April 1991 to
Kempinski Hotel		controller	up accounting	December 1992
			system, training of
			staff and budgeting
Raffles International	Hotel management	Development manager	Responsible for	February 1993 to
Limited			property investment	December 1994
Shanghai Huanghe DHA	Pharmaceutical	General manager	Responsible for	January 1995 to
Pharmaceutical	manufacturing		general	January 1997
Company Ltd			management, sales
			and marketing and
			financial control
Transpac Capital Pte Ltd	Fund management	Vice president	Responsible for	February 1997 to
			portfolio investment	September 2003
			and management
Everbright Investment Pte	Investment fund	Director	Responsible for	October 2003 to
Ltd	management		portfolio investment	January 2004
			and management
Prime Capital Ltd	Consultancy for	Director	Responsible for	February 2004 to
	capital market fund		business	February 2007
	raising		development
Raintree Ventures Pte Ltd	Fund management	Investment director	Responsible for	March 2007 to
			portfolio investment	April 2012
			and management
Niehands City Pte Ltd	Property development	Chief investment and	Responsible for	January 2014 till
		finance officer	financial	Present
			management, fund
			raising and investor
			relations

Note: Mr. Tan was not employed from May 2012 to December 2013.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

Mr. Tan was a director of Wedo Virtual Tech Limited, a company incorporated in Hong Kong, which was dissolved by means of striking off on 13 June 2014 pursuant to section 291(6) of the Predecessor Companies Ordinance. Mr. Tan Kiang Hua confirmed that the said company was inactive at the time of it being struck off and that as far as he is aware, the dissolution of the said company has not resulted in any liability or obligation being imposed against him.

Mdm. Kow Yuen-Ting (Gao Yunting) (郜韵婷), age 37, was appointed as our Independent Non-Executive Director on 23 June 2015. She is currently the chairman of the audit committee and a member of the nomination and remuneration committees. Mdm. Kow graduated from the Nanyang Technological University of Singapore with a Bachelor of Accountancy degree in July 2000. She is also a chartered accountant of Singapore. Mdm. Kow has more than 10 years of experience in accounting and finance. The following table summarises Mdm. Kow’s professional experience prior to joining our Group:

	Principal activities
Company Name	of the company	Last position held	Responsibilities	Period of services
Arthur Andersen	Audit, consultancy	Associate	Financial analytical	August 2000 to
Associates (S) Pte Ltd	and corporate		review in restructuring	November 2001
	finance		engagements and
			statutory compliance
			work in formal
			insolvency agreements
Raffles International	Hotel management	Assistant manager	Coordination of annual	December 2001 to
Limited			budget submission and	November 2002
			compilation of market
			segment information
Accountant-General’s	Government	Accountant	Preparation of annual	November 2002 to
Department (seconded			budgets, periodic	June 2005
to the Ministry of			forecast and financial
Foreign Affairs in			statements
January 2003 as
Finance Officer)
JPMorgan Chase Bank,	Finance	Client service	Client relationships in	July 2005 to May
N.A.		manager	treasury services	2007
Philip Morris Singapore	Tobacco	Analyst	Analysis of revenue,	June 2007 to
Pte Ltd			budget and	August 2008
			management reporting
Polycom Asia Pacific Pte	Communications	Asia pacific	Preparation of budget and	November 2008 to
Ltd.		controller	management reports	May 2011
			for the Asia Pacific
			region
KCT Consulting Pte. Ltd.	Business and	Finance and project	Preparation of financial	January 2012 to
	management	manager	statements and	present
	consultancy		handling of tax and
			regulatory filings

Mdm. Kow Yuen-Ting does not have any current or past directorships in any listed companies in the last three years.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

Each of our Directors (i) did not hold other positions in our Company or other members of our Group as at the Latest Practicable Date; (ii) had no other relationship with any Directors, senior management or substantial Shareholders of our Company as at the Latest Practicable Date; and (iii) did not hold any other directorships in public listed companies in the three years prior to the Latest Practicable Date. As at the Latest Practicable Date, save as disclosed in the section headed ‘‘Substantial Shareholders’’ and the section headed ‘‘Further information about our Directors and Substantial Shareholders’’ in Appendix IV to this prospectus, each of our Directors did not have any interest in the Shares within the meaning of Part XV of the SFO.

Save as disclosed in the prospectus, none of our Directors have any interests in any business apart from business of our Group which competes or is likely to compete, either directly or indirectly, with business of our Group. Please refer to Appendix IV to this prospectus for further information about our Directors, including details of the interest of our Directors in the Shares and underlying shares of our Company (within the meaning of Part XV of the SFO) and particulars of their service contract and remuneration.

Save as disclosed herein, to the best of the knowledge, information and belief of our Directors having made all reasonable enquiries, there was no other matter with respect to the appointment of our Directors that needs to be brought to the attention of the Shareholders and there was no information relating to our Directors and senior management members that is required to be disclosed pursuant to Rule 17.50(2) of the GEM Listing Rules as at the Latest Practicable Date.

Senior management

Mr. Soh Chiau Kim (蘇招金), age 35, was appointed as the general manager of our Group on March 2013. He is responsible for overall management of operations, with a focus on the execution of contracts. His roles include managing, executing and coordinating the entire contracts, in particular larger value road infrastructure projects.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

Mr. Soh obtained a bachelor’s degree (first class honours) in civil engineering from Universiti Tecknologi Malaysia in July 2002. He has completed numerous courses from the BCA Academy, as well as Awareness, Design and Implementation Training on OHSAS 18001: 2007 and Construction Safety Course for Project Managers. The following table summarises Mr. Soh’s professional experience prior to joining our Group:

	Principal business
	activities of the
Company name	company	Last position held	Responsibilities	Period of services
Seri Jasmine Sdn. Bhd.	Property development	Project engineer	Tender and project	June 2002 to May 2003
	and construction		coordination
Vital Landscape Sdn Bhd	Property development	Site engineer	Project costing and	June 2003 to May 2006
			supervision
MDD Properties Sdn Bhd	Property development	Site engineer	Project costing,	June 2006 to June 2009
			contract negotiation
			and supervision.

Mr. Soh does not have any current or past directorships in any listed companies in the last three years.

COMPANY SECRETARY

Mr. Li Chi Chung, aged 47, is our Company Secretary of our Group. He was appointed on 15 June 2015. Mr. Li received a Bachelor of Laws degree from the University of Sheffield in 1990. He is a practising solicitor and was admitted as a solicitor in Hong Kong in 1993.

Mr. Li’s directorships and other positions in other listed companies are as follows:

Principal business activities of the company
Company name (during the tenure) Position held Period of services Quam Limited Provision of financial services Independent nonNovember 1999 to (stock code: 00952) executive director September 2002
Century Ginwa Retail Design, development, Independent nonSeptember 2000 to Holdings Limited (stock manufacture and sale of a executive director November 2001 code: 00162) wide range of wooden furniture products
Eagle Nice (International) Manufacturing and trading of Independent nonNovember 2002 to Holdings Limited sportswear and garments executive director February 2013 (stock code: 02368)
Winfull Group Provision of property Non-executive March 2007 to Holdings Limited brokerage services, director December 2011 (stock code: 00183) carrying out schemes for property consolidation, assembly and redevelopment, property trading and property development in Hong Kong

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Principal business

	Principal business
	activities of the company
Company name	(during the tenure)	Position held	Period of services
Anhui Tianda Oil Pipe	Manufacturing, sourcing and	Independent non-	October 2007 to
Company Ltd.	distribution of specialised	executive director	February 2009
(stock code: 00839)	seamless pipes
China Nonferrous Metals	Mining, processing and	Company secretary	December 2007 to
Company Limited	trading of mineral		June 2015
(stock code: 08306)	resources
Cheung Wo International	Film distribution and	Company secretary	March 2008 to
Holdings Limited	licensing, film processing,		March 2010
(stock code: 00009)	advertising and
	promotional services, and
	property investment
AVIC Joy Holdings	Operating compressed natural	Company secretary	September 2009 to
(HK) Limited	gas, liquefied petroleum gas		June 2015
(stock code: 00260)	and liquefied natural gas
	refueling stations, manage
	and operate LED energy
	management contracts,
	provide finance lease and
	loan services & provide
	land development services
	in the PRC
Infinity Chemical Holdings	Manufacturing and sales of	Company secretary	March 2011 to
Company Limited	adhesives, primers,		December 2011
(stock code: 00640)	hardeners and vulcanised
	shoes adhesive related
	products used by the
	footwear manufacturers
China City Infrastructure	Property development,	Company secretary	April 2011 to
Group Limited	property investment, hotel		June 2012
(stock code: 02349)	business and property
	management in the PRC
Evershine Group	Provision of travel agent	Company secretary	July 2013 to
Holdings Limited	services, advertising and		May 2015
(stock code: 08022)	marketing services, fashion
	garment trading and mobile
	application business
Z-Obee Holdings Limited	Distribution and marketing of	Company secretary	January 2014 to
(stock code: 00948)	mobile handset and mobile		April 2014
	handset components,
	provision of design and
	production solution
	services for mobile handset,
	assembly of mobile handset
	and surface mounting
	technology of printed
	circuit board

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

	Principal business
	activities of the company
Company name	(during the tenure)	Position held	Period of services
China Zenith Chemical	Manufacturing and sales of	Company secretary	May 2014 to
Group Limited	polyvinyl-chloride, vinyl		January 2015
(stock code: 00362)	acetate, vitamin C, glucose
	and starch, calcium
	carbide; generation and
	supply of heat and power
PINE Technology Holdings	Manufacturing and sales of	Independent non-	June 2000 to present
Ltd (stock code: 01079)	high-quality computer	executive director
	components and consumer
	electronic products
China Financial International	Investments in listed and	Company secretary	November 2004 to
Investments Limited	unlisted companies		present
(stock code: 00721)
Kenford Group	Designing, manufacturing	Independent non-	March 2005 to
Holdings Limited	and sales of electrical	executive director	present
(stock code: 00464)	haircare products, electrical
	healthcare products and
	other small household
	electrical appliances
Kingbo Strike Limited	Provision of electrical	Company secretary	December 2013 to
(stock code: 01421)	engineering services in		present
	Singapore

Mr. Li does not act as an individual employee of the Company, but as an external service provider in respect of the proposed appointment of Mr. Li as the company secretary of the Company. Pursuant to Code F.1.1 of the Corporate Governance Code, an issuer can engage an external service provider as its company secretary, provided that the issuer should disclose the identity of a person with sufficient seniority at the issuer whom the external provider can contact. In this respect, the Company has nominated Mr. Kelvin Tan as its contact point for Mr. Li.

While the Company is well aware of the importance of the company secretary in supporting the Board on governance matters, the Company, after having considered that Mr. Li’s firm, Michael Li & Co., Solicitors has more than fifteen professional staff and one qualified company secretary with professional qualifications, both the Company and Mr. Li are of the view that there will be sufficient time, resources and supporting for fulfilment of the company secretary requirements.

In view of Mr. Li’s experience in legal and company secretarial functions and with stock exchange rules and regulations, our Directors believe that Mr. Li has the appropriate legal and company secretarial expertise for the purposes of Rule 5.14 of the GEM Listing Rules.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

Our Company will comply with the Corporate Governance Code in Appendix 15 to the GEM Listing Rules.

Our Directors will review our corporate governance policies and compliance with the Corporate Governance Code each financial year and comply with the ‘‘comply or explain’’ principle in our corporate governance report which will be included in our annual reports upon the Listing.

BOARD COMMITTEES

AUDIT COMMITTEE

Our Group established an audit committee on 23 June 2015 with written terms of reference in compliance with Rule 5.28 of the GEM Listing Rules and paragraph C.3 of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 15 of the GEM Listing Rules. The audit committee consists of three independent NonExecutive Directors namely Mdm. Kow Yuen-Ting, Mr. Tan Kiang Hua and Mr. Oh Eng Bin. Mdm. Kow Yuen-Ting, a Director with the appropriate professional qualifications, serves as the chairman of the audit committee.

The primary duties of the audit committee are to assist the Board in providing an independent view of the effectiveness of our Group’s financial reporting process, internal control and risk management system, to oversee the audit process and to perform other duties and responsibilities as assigned by the Board.

REMUNERATION COMMITTEE

Our Group established a remuneration committee on 23 June 2015 with written terms of reference in compliance with paragraph B.1 of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 15 of the GEM Listing Rules. The remuneration committee consists of three Independent Non-Executive Directors namely Mr. Tan Kiang Hua, Mr. Oh Eng Bin and Mdm. Kow Yuen-Ting. Mr. Tan Kiang Hua serves as the chairman of the remuneration committee.

The primary duties of the remuneration committee include (but without limitation): (i) making recommendations to our Directors on the policy and structure for all remuneration of Directors and senior management and on the establishment of a formal and transparent procedure for developing policies on such remuneration; (ii) determining the terms of the specific remuneration package of our Directors and senior management; and (iii) reviewing and approving performance-based remuneration by reference to corporate goals and objectives resolved by our Directors from time to time.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

NOMINATION COMMITTEE

Our Group also established a nomination committee on 23 June 2015 with written terms of reference in compliance with paragraph A.5 of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 15 of the GEM Listing Rules. The nomination committee consists of three Independent Non-Executive Directors namely Mr. Oh Eng Bin, Mr. Tan Kiang Hua and Mdm. Kow Yuen-Ting. Mr. Oh Eng Bin serves as the chairman of the nomination committee.

The primary function of the nomination committee is to make recommendations to the Board to fill vacancies on the same.

COMPLIANCE ADVISER

In accordance with Rule 6A.19 of the GEM Listing Rules, our Company will appoint Grand Vinco Capital Limited as its compliance adviser, who will have access to our Company’s authorised representatives, Directors and other officers at all times:

(1) before the publication of any regulatory announcement, circular or financial report;
(2) where a transaction, which might be a notifiable or connected transaction, is contemplated including share issues and share repurchases;
(3) where our Company proposes to use the proceeds of the Placing in a manner different from that detailed in this prospectus or where our Group’s business activities, developments or results of operation deviate from any forecast, estimate or other information in this prospectus; and
(4) where the Stock Exchange makes an inquiry regarding unusual movements in the price or trading volume of the Shares.

The term of the appointment will commence on the Listing Date and end on the date on which our Company complies with Rule 18.03 of the GEM Listing Rules in respect of its financial results for the second full financial year commencing after the Listing Date and such appointment may be subject to extension by mutual agreement.

STAFF

There were 66 full-time staff in our Group as at the Latest Practicable Date of which approximately 30% were local employees and approximately 70% were foreign workers. All our employees are based in Singapore.

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

The following table sets forth the number of our staff in the respective functions of our Group (including our Executive Directors) as at the Latest Practicable Date:

Project department Design Administrative and finance Production Total	Number of local employees 3 3 13 1 20	Number of foreign workers 5 7 4 30 46	Total number of staff 8 10 17 31
			66

Our foreign workers are sourced and recruited through Independent Third Party agencies. The supply of foreign workers in Singapore is subject to various regulations and policies. Please see the section headed ‘‘Regulatory overview’’ in this prospectus for further details.

As at the Latest Practicable Date, we have both foreign workers hired under both the construction sector (for our workers engaged at work sites) and manufacturing sector (for our workers engaged at plant). Their levy rates are of various tiers, based on MOM’s definition of the proportion of foreign workers to the total workforce. The FWL for workers for these two sectors, as at the Latest Practicable Date and the next two years as announced in the Singapore Budget 2015 is as tabled below:

		Levy Rates	Levy Rates	Levy Rates	Levy Rates	Levy Rates	Levy Rates
		(S$) Higher	(S$) Higher	(S$) Higher	(S$) Higher	(S$) Higher	(S$) Higher
		Skilled/Basic	Skilled/Basic	Skilled/Basic	Skilled/Basic	Skilled/Basic	Skilled/Basic
		skilled, with	skilled, with	skilled, with	skilled, with	skilled, with	skilled, with
		effect from	effect from	effect from	effect from	effect from	effect from
Sector	Tier	1 July 2012	1 July 2013	1 July 2014	1 July 2015	1 July 2016	1 July 2017
Construction	Basic tier	280/400	300/450	300/550	300/550	300/650	300/700
	MYE-waiver	550/650	600/750	700/950	600/950	600/950	600/950
Manufacturing	Basic tier	230/330	250/350	250/370	250/370	250/370	Not available
	Tier 2	330/430	350/450	350/470	350/470	350/470	Not available
	Tier 3	500	550	550/650	550/650	550/650	Not available

The FWL had increased during the Track Record Period, as seen in above table but in the Singapore Government’s budget released in 2015, the levy rates for manufacturing will remain unchanged till 30 June 2017 while the levy rates for higher skilled workers will be lowered or remained unchanged to incentivise the upgrading of workers and hiring of skilled workers.

Our Group complies with strict immigration policies for our foreign workers. In view of these stringent requirements, our Group faces a possible shortage of foreign workers. To mitigate the increasing expenses incurred with employing foreign workers, our Group will either hire skilled foreign workers (whose FWL are lower), or conduct regular in-house

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

training and provides external training for unskilled foreign workers. After sufficient training, our Group would then apply to the BCA Academy to qualify them as skilled foreign workers so as to benefit from the lower FWL. In our recruitment exercise, our Group also makes it a point to hire more skilled foreign workers as they are normally more productive and incur a lower FWL.

Out of the 66 staff, 2 have qualifications in engineering degree, 5 have qualifications in non-engineering degree, 4 staff have engineering diplomas and 4 have non-engineering diplomas. Our staff also attend safety courses.

The amount of expenditure incurred in relation to staff training for during the Track Record Period as a percentage of our Group’s total revenue has been insignificant. We also have no research and development. Training is provided to staff on an as-needed basis, and all foreign workers undergo safety orientation courses.

Relationships with our employees

During the Track Record Period, we did not experience any significant problems with employees or other labour related disturbances to our operations and we did not experience any difficulties in the recruitment and retention of experienced staff. We believe we have a good working relationship with our employees.

Compensation of Directors and senior management

During the two years ended 31 December 2014, the aggregate amount of compensation paid (basic salary, performance-based compensation and retirement-based contribution) by our Company to our five highest paid individuals were approximately S$0.5 million and S$0.6 million, respectively.

Our Executive Directors are also employees of our Company and receive, in their capacity as employees of our Company, compensation in the form of salaries and other allowances and benefits in kind. Our Company reimburses our Directors for expenses which are necessarily and reasonably incurred for providing services to our Company or executing their functions in relation to the operations of our Company.

During the two years ended 31 December 2014, the aggregate amount of compensation paid (basic salary, performance-based compensation and retirement-based contribution) by our Company to our Directors were approximately S$345,000 and S$364,000, respectively.

Our Directors’ remuneration is determined with reference to salaries paid by comparable companies, experience, responsibilities and performance of our Group. Details of the terms of the service agreements are set out in the paragraph headed ‘‘C. Further information about our Directors and Substantial Shareholders — (b) Particulars of service agreements — Remuneration of the Directors’’ in Appendix IV to this prospectus.

During the Track Record Period, no remuneration was paid by our Group to, or receivable by, our Directors or the five largest paid individuals as an inducement to join or upon joining our Group. No compensation was paid by our Group to, or receivable by, our

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DIRECTORS, SENIOR MANAGEMENT AND STAFF

Directors, past Directors or the five highest paid individuals for each of the Track Record Period for the loss of any office in connection with the management of the affairs of any subsidiary of our Group. The Directors estimate that under the current proposed arrangement, the aggregate basic annual remuneration (excluding payment pursuant to any discretionary benefits or bonus or other fringe benefits) payable by our Group to the Directors will be approximately S$0.3 million for the year ending 31 December 2015.

None of our Directors waived any emoluments for any of the last two years. Save as disclosed in this paragraph headed ‘‘Compensation of directors and senior management’’, no other payments have been paid, or are payable, by our Company or any of our subsidiaries to our Directors and the five highest paid individuals during the Track Record Period.

Employees’ remuneration and benefits

Our employees are remunerated according to their job scope and responsibilities. Our local employees are also entitled to discretionary bonus depending on their respective performance. Our foreign workers are employed on one or two year contractual basis and are remunerated according to their work skills. Our Group provides insurance coverage for our foreign workers. Please refer to the section headed ‘‘Business — Insurance’’ in this prospectus for further information.

RETIREMENT BENEFIT SCHEME

Our Group participates in the mandatory provident fund for our employees in accordance with the Central Provident Fund (CPF) Act (which is in the context of the law of Singapore). Our Group has paid the relevant contributions in accordance with the aforesaid laws and regulations.

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS AND NON-COMPETITION UNDERTAKINGS

CONTROLLING SHAREHOLDERS

Immediately after completion of the Placing and the Capitalisation Issue, each of Absolute Truth, Mr. Kelvin Tan and Mr. Peter Tan is entitled to exercise or control the exercise of 30% or more of voting rights at general meetings of our Company. As such, each of Absolute Truth, Mr. Kelvin Tan and Mr. Peter Tan is regarded as a Controlling Shareholder.

Save as disclosed above, there is no other person who will, immediately following the completion of the Placing and the Capitalisation Issue, be directly or indirectly interested in 30% or more of the Shares then in issue or have a direct or indirect equity interest in any member of our Group representing 30% or more of the equity in such entity.

INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS

Having considered the following factors, we believe that our Group is capable of carrying on our business independently of our Controlling Shareholders and their respective associates (other than our Group) after the Listing.

(i) Management independence

As at the Latest Practicable Date, no Executive Director has overlapping roles or responsibilities in any business other than our business nor has any business which competes or is likely to compete, either directly or indirectly, with our business.

Each of our Directors is aware of his or her fiduciary duties as a director which require, among other things, that he or she acts for the benefit and in the best interests of our Company and does not allow any conflict between his or her duties as a Director and his or her interest to exist. In the event that there is a potential conflict of interest arising out of any transaction to be entered into between our Group and our Directors or their respective associates, the interested Director(s) shall abstain from voting at the relevant meeting of the Board in respect of such transaction and shall not be counted in the quorum.

(ii) Operational independence

Our operations are independent of and not connected with any of our Controlling Shareholders. Having considered that (i) we have established our own organisational structure comprising individual departments, each with specific areas of responsibilities including project department, design, administrative and finance, and production; (ii) our Group has not shared our operational resources, such as customers, marketing, sale and general administration resources with our Controlling Shareholders and/or their associates; (iii) the Group has also established a set of internal controls to facilitate the effective operation of its business; (iv) as at the Latest Practicable Date, our Controlling Shareholders have no interest in any of our customer, supplier or other business partners, our Directors consider that our Group can operate independently from our Controlling Shareholders from the

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS AND NON-COMPETITION UNDERTAKINGS

operational perspective; (v) as at the Latest Practicable Date, our Group had independent access to suppliers or customers of our Group; and (vi) all of our operating subsidiaries hold the licences necessary for the operation of our Group’s business in their own names.

(iii) Administrative independence

Our Group has its own capabilities and personnel to perform all essential administrative functions, including internal control and auditor monitor, financial and accounting management, invoicing and billing, human resources and information technology.

(iv) Financial independence

During the Track Record Period, Mr. Peter Tan and Mr. Kelvin Tan have jointly and severally provided a personal guarantee to secure the repayment obligations under credit facilities granted by DBS Bank Ltd (‘‘DBS’’) in Singapore to Signmechanic Singapore. By a letter dated 17 March 2015 issued by DBS, DBS has released the said personal guarantee.

During the Track Record Period, Mr. Peter Tan and Mr. Kelvin Tan have jointly and severally provided a personal guarantee in respect of the repayment obligations of Signmechanic Singapore under a loan agreement entered into between Signmechanic Singapore and Ethoz Capital Limited. On or about 27 March 2015, Signmechanic Singapore has repaid such loan in full. By a letter dated 6 April 2015 issued by Ethoz Capital Limited, Ethoz Capital Limited has released the said personal guarantee.

As the above personal guarantees given by Mr. Peter Tan and Mr. Kelvin Tan have been released as at the Latest Practicable Date, our Directors believe that we will be financially independent from our Controlling Shareholders upon Listing.

RULE 11.04 OF THE GEM LISTING RULES

None of our Controlling Shareholders and our Directors has any interest in a business apart from our Group’s business which competes or is likely to compete, directly or indirectly, with our Group’s business, and would require disclosure pursuant to Rule 11.04 of the GEM Listing Rules.

DEED OF NON-COMPETITION

Our Controlling Shareholders have entered into the Deed of Non-competition in favour of our Company (for ourselves and as trustee of our subsidiaries), pursuant to which our Controlling Shareholders have jointly and severally, irrevocably and unconditionally undertaken to and covenanted with our Company (for ourselves and for the benefit of our subsidiaries) that during the continuation of the Deed of Non-competition it or he would not, and would procure that its or his associates (other than any member of our Group) would not, whether on its or his own account or in conjunction with or on behalf of any

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS AND NON-COMPETITION UNDERTAKINGS

person, firm or company, whether directly or indirectly, carry on a business which is, or be interested or involved or engaged in or acquire or hold any right or interest or otherwise involved in (in each case whether as a shareholder, partner, principal, agent, director, employee or otherwise and whether for profit, reward or otherwise) any business which competes or is likely to compete directly or indirectly with the business currently and from time to time engaged by our Group (including but not limited to the provision of the design, fabrication, installation and maintenance of signage, in each case, to be more particularly described or contemplated in this prospectus), in Singapore and any other country or jurisdiction to which our Group provides such services and/or in which any member of our Group carries on such business from time to time (the ‘‘Restricted Business’’). Such noncompetition undertaking does not apply to:

(i) any interests in the shares of any member of our Group; or
(ii) interests in the shares of a company other than our Company whose shares are listed on a recognised stock exchange provided that:
(a) any Restricted Business conducted or engaged in by such company (and assets relating thereto) accounts for less than 10% of that company’s consolidated revenue or assets, as shown in that company’s latest audited accounts; or
(b) the total number of the shares held by our Controlling Shareholders and/or their respective associates in aggregate does not exceed 10% of the issued shares of that class of the company in question and such Controlling Shareholders and/or their respective associates are not entitled to appoint a majority of the directors of that company and at any time there should exist at least another shareholder of that company whose shareholdings in that company should be more than the total number of shares held by our Controlling Shareholders and their respective associates in aggregate; or
(c) our Controlling Shareholders and/or their respective associates do not have the control over the board of such company.

The Deed of Non-competition shall take effect upon Listing and shall expire on the earlier of:

(a) the day on which the Shares cease to be listed on GEM or other recognised stock exchange; or
(b) the day on which our Controlling Shareholders and his/its associates, individually or taken as a whole, cease to own, in aggregate, 30% or more of the then issued share capital of our Company directly or indirectly or cease to be deemed as Controlling Shareholders and do not have power to control the Board or there is at least one other independent shareholder other than our Controlling Shareholders and his/its associates holding more shares than our Controlling Shareholders and his/its associates taken together.

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS AND NON-COMPETITION UNDERTAKINGS

Pursuant to the Deed of Non-competition, each of our Controlling Shareholders has undertaken that if each of our Controlling Shareholders and/or any of his/its associates is offered or becomes aware of any project or new business opportunity (‘‘New Business Opportunity’’) that relates to the Restricted Business, whether directly or indirectly, he/it shall (i) promptly within ten Business Days notify our Company in writing of such opportunity and provide such information as is reasonably required by our Company in order to enable our Company to come to an informed assessment of such New Business Opportunity; and (ii) use his/its best endeavours to procure that such opportunity is offered to our Company on terms no less favourable than the terms on which such New Business Opportunity is offered to him/it and/or his/its associates.

All of our Directors (excluding those who is/are interested in the New Business Opportunity and has/have conflict of interests with our Company) will review the New Business Opportunity and decide whether to invest in the New Business Opportunity. If our Group has not given written notice of its desire to invest in such New Business Opportunity or has given written notice denying the New Business Opportunity within thirty (30) Business Days (the ‘‘30-day Offering Period’’) of receipt of notice from our Controlling Shareholders, our Controlling Shareholders and/or his/its associates shall be permitted to invest in or participate in the New Business Opportunity on his/its own accord. With respect to the 30-day Offering Period, our Directors consider that such period is adequate for our Company to assess any New Business Opportunity. In the event that our Company requires additional time to assess the new business opportunities, our Company may give a written notice to our Controlling Shareholders during the 30-day Offering Period and our Controlling Shareholders agree to extend the period to a maximum of 60 Business Days.

CORPORATE GOVERNANCE MEASURES

Our Company will adopt the following measures to manage the conflict of interests arising from competing business and to safeguard the interests of our Shareholders:

the Independent Non-Executive Directors will review, on an annual basis, the compliance with the non-competition undertaking by our Controlling Shareholders under the Deed of Non-competition;
our Controlling Shareholders undertake to provide all information requested by our Company which is necessary for the annual review by the Independent NonExecutive Directors and the enforcement of the Deed of Non-competition;
our Company will disclose decisions on matters reviewed by the Independent Non-Executive Directors relating to compliance and enforcement of the Deed of Non-competition in the annual report of our Company;
our Controlling Shareholders will make confirmation on compliance with their undertaking under the Deed of Non-competition in the annual report of our Company; and

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS AND NON-COMPETITION UNDERTAKINGS

the Independent Non-Executive Directors may appoint independent financial adviser and other professional advisers as they consider appropriate to advise them on any matter relating to the Deed of Non-competition or connected transaction(s) at the cost of our Company.

None of the members of our Group has experienced any dispute with its shareholders or among its shareholders themselves and our Directors believe that each member of our Group has maintained positive relationship with its shareholders. With the corporate governance measures including the measures set out in this paragraph headed ‘‘Corporate governance measures’’, our Directors believe that the interest of the Shareholders will be protected.

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SUBSTANTIAL SHAREHOLDERS

So far as our Directors are aware, immediately following completion of the Placing and the Capitalisation Issue, the following persons were expected to have interest and/or short positions in the Shares or underlying shares of our Company which would fall to be disclosed to us pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company or any other member of our Group:

			Percentage of
Name of	Capacity/	Total number	interest in our
interested party	Nature of interest	of Shares	Company
Absolute Truth	Beneficial owner	300,000,000	75%
		(Note)
Mr. Kelvin Tan	Interest of controlled corporation	300,000,000	75%
		(Note)
Mr. Peter Tan	Interest of controlled corporation	300,000,000	75%
		(Note)

Note:

The entire issued share capital of Absolute Truth is beneficially owned as to 50% by Mr. Peter Tan and as to 50% by Mr. Kelvin Tan. Under the SFO, each of Mr. Peter Tan and Mr. Kelvin Tan is deemed to be interested in all the Shares held by Absolute Truth. Both Mr. Peter Tan and Mr. Kelvin Tan are the Controlling Shareholders and Executive Directors.

Save as disclosed in this prospectus, we are not aware of any other person who will, immediately following completion of the Placing and the Capitalisation Issue, have an interest or short position in our Shares or underlying shares of our Company which would fall to be disclosed to us pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any of our subsidiaries. We are not aware of any arrangement which may at a subsequent date result in a change of control of our Company.

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SHARE CAPITAL

The authorised and issued share capital of our Company immediately following completion of the Placing and the Capitalisation Issue will be as follows:

Authorised share capital: 5,000,000,000 Shares Issued and to be issued, fully paid or credited as fully paid: 1,000,000 Shares in issue as at the date of this prospectus 319,000,000 Shares to be issued pursuant to the Capitalisation Issue (including 20,000,000 Sale Shares) 80,000,000 New Shares to be issued pursuant to the Placing 400,000,000 Shares	HK$ 50,000,000
	10,000 3,190,000 800,000
	4,000,000

Assumptions

The above table assumes the Placing and the Capitalisation Issue become unconditional and the issue of Shares pursuant thereto are made as described herein. It takes no account of any Shares which may be allotted and issued or repurchased by our Company under the general mandates for the allotment and issue or repurchase of Shares granted to Directors as referred to below or otherwise.

Minimum public float

Pursuant to Rule 11.23(7) of the GEM Listing Rules, at the time of Listing and at all times thereafter, our Company must maintain the ‘‘minimum prescribed percentage’’ of 25% of the total issued share capital of our Company in the hands of the public (as defined in the GEM Listing Rules).

Ranking

The Placing Shares will rank equally with all Shares now in issue or to be allotted and issued and will qualify for all dividends or other distributions declared, made or paid after the date of this prospectus save for the entitlements under the Capitalisation Issue.

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SHARE CAPITAL

General mandate to issue Shares

Subject to the Placing becoming unconditional, our Directors have been granted a general unconditional mandate to allot and issue and deal with the unissued Shares with an aggregate nominal value of not more than:

(a) 20% of the aggregate nominal value of the share capital of our Company in issue immediately following the completion of the Placing and the Capitalisation Issue; and
(b) the aggregate nominal value of the share capital of our Company repurchased by our Company (if any) pursuant to the general mandate to repurchase Shares as described below.

Our Directors may, in addition to the Shares which they are authorised to issue under the mandate, allot, issue and deal in the Shares pursuant to a rights issue, an issue of Shares pursuant to the exercise of subscription rights attaching to any warrants of our Company, scrip dividends or similar arrangements for the time being adopted.

For further details of this general mandate, please refer to the section headed ‘‘Further information about our Company’’ in Appendix IV to this prospectus.

General mandate to repurchase Shares

Subject to the Placing becoming unconditional, our Directors have been granted a general unconditional mandate to exercise all the powers of our Company to repurchase Shares with a total nominal value of not more than 10% of the aggregate nominal value of the share capital of our Company in issue immediately following the completion of the Placing and the Capitalisation Issue.

This mandate only relates to repurchases made on the Stock Exchange, or on any other stock exchange on which the Shares are listed (and which is recognised by the SFC and the Stock Exchange for this purpose), and which are in accordance with all applicable laws and the requirements of the GEM Listing Rules. A summary of the relevant GEM Listing Rules is set out in the paragraph headed ‘‘Repurchase by our Company of our own securities’’ in the section headed ‘‘Further information about our Company’’ in Appendix IV to this prospectus.

The general mandate to issue and repurchase Shares will expire:

at the conclusion of the next annual general meeting of our Company;
at the expiration of the period within which the next annual general meeting of our Company is required by any applicable law of the Cayman Islands or the Articles to be held; or
when varied, revoked or renewed by an ordinary resolution of the Shareholders in general meeting,

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SHARE CAPITAL

whichever is the earliest.

For further details of this general mandate, please refer to the paragraphs headed ‘‘Written resolutions of the sole Shareholder passed on 23 June 2015’’ and ‘‘Repurchase by our Company of our own securities’’ in the section headed ‘‘Further information about our Company’’ in Appendix IV to this prospectus.

Circumstances under which general meeting and class meeting are required

As a matter of the Companies Law, an exempted company is not required by law to hold any general meetings or class meetings. The holding of general meeting or class meeting is prescribed for under the articles of association of a company. Accordingly, our Company will hold general meetings as prescribed for under the Articles, a summary of which is set out in ‘‘Summary of the constitution of our Company and the Cayman Islands Company Law’’ set out in Appendix III to this prospectus.

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FINANCIAL INFORMATION

You should read the following discussion and analysis of our results of operations and financial condition in conjunction with our financial information as of and for the Track Record Period, including the notes thereto, included in Appendix I to this prospectus. Our financial information has been prepared in accordance with IFRSs. The following discussion contains forward-looking statements concerning events that involve risks and uncertainties. Our actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including those set forth under ‘‘Risk Factors’’ and elsewhere in this prospectus.

OVERVIEW

We have principally engaged in the design, fabrication, installation and maintenance of signage and related products in both the public and private sectors in Singapore since 1997. We are one of the established companies offering road signage in Singapore and have the capability to offer our products across public and private sectors. Our revenue for the two years ended 31 December 2014 was approximately S$7.8 million and S$11.9 million, respectively, while our profit after tax for the same periods were approximately S$0.6 million and S$2.6 million, respectively. Our total comprehensive income for the same periods were approximately S$0.6 million and S$2.5 million.

The business model is mostly the same for both public sector and private sector projects. All our projects undergo the following stages (1) tendering, (2) project implementation and (3) post-project review. However, there are some minor differences in the above stages between public and private sector projects: (a) During the tendering stage, the tender documents will typically include various sections such as pricing, detailed scope of works, track record, certifications, relevant corporate information and material specifications for public sector projects whist the documents submitted during quotation are relatively less complex private sector projects.

(b) Implementation stage

In the project implementation stage, some differences between public sector and private sector projects are:

(i) Project team members involved in a public sector project may range from eight to twelve members as compared to four to five members in a private sector projects. Furthermore, public sector projects usually require additional safety team members and workers;
(ii) Public sector projects typically involve a broader scope of value-adding works such as installation of road safety products and lane marking. For private sector projects, the scope is more limited to installation of signage;

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FINANCIAL INFORMATION

(iii) For public sector projects, there is usually a stricter and defined time frame for public projects whist the installation schedules for private projects are more flexible. For road signage projects, there will be certain closure times during which the signage installation has to be completed;
(iv) For public sector projects in relation to road signage, more project management is required as there are more work steps than private sector projects, ranging from removal of existing signage, re-directing ongoing traffic, managing of road closure hours, managing of subcontractors in laying of roads and lane marking, managing of equipment that can be deployed on the road site to installation of the road signage; and
(v) For public sector projects in relation to road signage, there are stricter requirements set by the LTA of Singapore, both in terms of aesthetics and technical requirements.
(c) Subsequent to the delivery and completion of the signage installation for road signage public sector projects, there is typically a more detailed process for customers to review that the signage installed is in accordance with specifications due to stricter requirements set by the LTA. In certain instances, our project team members will be on-site to work with them.

As such, there is higher barrier of entry into the public sector projects where reputable track record and experienced management team take time to build. Given that we have been in this industry for more than 15 years, we are in better position to get public sector projects as compared to smaller companies in the market. Moreover, as explained above, there is generally higher complexity, requirement for more resources, experience and project management capability involved in public sector projects, therefore leading to a higher margin for this sector.

BASIS OF PRESENTATION

Our Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law on 10 March 2015 and became the holding company of Signmechanic Singapore pursuant to the Reorganisation completed on 23 June 2015. Details of which are set out in the section headed ‘‘History, Reorganisation and group structure’’ in this prospectus.

The financial information of our Group has been prepared as if our Company had been the holding company of Sino Promise and Signmechanic Singapore throughout the Track Record Period.

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FINANCIAL INFORMATION

SIGNIFICANT FACTORS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Group’s financial condition and results of operations have been and will continue to be affected by a number of factors, including those set out below:

Pipeline of public sector contracts

We provide signage and related products in Singapore, mainly in the public sector during the Track Record Period. These contracts are mainly non-recurring, on a transaction-by-transaction basis. The duration of our signage works typically align with that of our customers, which can span from 1 month to 4 years. As our revenue is nonrecurring in nature, we have to continually secure new contracts of sufficient value. Specifically, as our Group is established in signage works, we are highly dependent on the pipeline of such contracts which in turn is dependent on the Singapore’s government decision on its plans and budget for roads and public sector spending.

Timing of delivery of signage and related products

Our contracts relate to the supply and/or installation of signage and related products. Our revenue is recognised based on the products sold, net of discounts and sales related taxes. However, as our products are largely customised for a particular contract, our delivery timing is dependent on the delivery schedule required by our customers, for instance, when to install the signage for a specific stretch of road. Therefore, only when our signage and related works are installed, our delivery of which accepted by our customer, we can proceed with requests for payment. As such, the revenue that we recognise is dependent not only on the number of contracts, its contract value, but also on our signage products being delivered/installed. Such delivery can span from 1 month to 4 years, and the approved payment from customer is dependent on the accepted delivery (installation) of our signage products which can vary from month to month. For more information on the revenue recognition, please see the Note 4 of the Accountants’ Report set out in Appendix I to this prospectus.

Pricing of our projects

Our Group secures its contracts either through private invitation to quote or through open tender. Our pricing is based on market rates and our internal cost plus pricing decided based on various factors, including but not limited to, the competitive environment, opportunity to optimise the use of workers, capacity and resources available and requirements of the contract. For further details, please refer to section headed ‘‘Business-Pricing’’ in this prospectus. The gross profit margin that we can get from a contract will vary in part, based on our pricing and each contract will result in a different gross profit margin. Our gross profit margins for the two years ended 31 December 2014 amounted to approximately 36.7% and 46.8%, respectively.

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FINANCIAL INFORMATION

Staff cost

Staff cost contribute the third largest component of our cost of sales and also the largest portion of our selling and administrative expenses during the Track Record Period. Staff cost, as cost of sales, is factored into our pricing. On the other hand, staff cost as administrative expenses, relate to overhead cost that is for salaries to employees, the contribution to the CPF stipulated by regulations and also costs related to the employment of foreign workers. The design, fabrication, installation and maintenance of signage and related products are all dependent on labour and thus, it is a significant factor of our financial performance.

Fluctuation in cost of sales

The main components of our cost of sales are purchases of materials from our suppliers, staff costs, subcontracting costs and overheads. We purchase materials from our suppliers, such as steel and aluminium products, micro prismatic reflective sheeting and road safety products, which are in turn dependent on the prices of the underlying commodities, such as aluminium, steel and plastics. We also engage subcontractors for part of certain contracts secured by us, for instance, to provide certain services such as laying of road markings, installation of precast blocks, bulky metal works or excavation works. Please refer to the sections headed ‘‘Business — Suppliers’’ and ‘‘Business — Subcontractors’’ for further details on our suppliers and subcontractors.

In our preparation of quotations, we will request for quotations from our suppliers and subcontractors as well as an estimate of our own labour cost. However, the time period from our quotation to our customers and to our purchase of materials, subcontracting services and deployment of labour can range from approximately 1 month to 2 years. As such, there is a possibility that the actual prices obtained from our suppliers and subcontractors will be different from that anticipated when we quote our customers. We do not enter into long-term contract with our suppliers nor subcontractors. The price that we pay to our suppliers and subcontractors is fixed at the time of issue of purchase order to them, and therefore, our exposure depends on the timing of the purchase order. The price of materials and subcontracting service make up a significant component of our cost of sales, and fluctuation in its prices will impact our financial performance. Our contracts with our customers typically do not permit any adjustment for escalation in the price of supplies or labour.

Our cost of sales mainly comprises (i) material costs (ii) subcontracting costs and (iii) labour costs.

As part of our project management policy, we manage the risk of cost overruns via (i) pricing based on market rates (reference can be made to the schedule of rates that are published on the GeBIZ by the Singapore LTA) and our internal cost plus pricing (for further details, please refer to section headed ‘‘Business-Pricing’’ in this prospectus) and (ii) fixing our purchase price for longer-term contracts. For our cost plus pricing, we use the latest available prices for material costs. We will also enquire with our potential suppliers on the prices of their materials should we engage them to supply for the particular contract. For subcontracting costs, we typically require our subcontractors to quote to us at

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FINANCIAL INFORMATION

approximately the same time we quote to our customers and therefore, there is certainty with respective to subcontracting costs for contracts that we quote for. For staff costs, our staff are not employed exclusively for the purposes of any single project. As the skills for the installation of our signage products are similar across projects, our project team will schedule our workers to work on a few projects to optimise our labour resource.

Another reason that we were able to manage these variable costs above mentioned efficiently during the Track Record Period is because of our contracts and orders tenures are short term in nature. The time period from our quotation to our customers and to our purchase of materials, subcontracting services and deployment of labour can range from approximately 1 month to 2 years. Of the contracts and orders that we have undertaken during the Track Record Period, only 7 out of 1,041 and 10 out of 1,170 public sector contracts and orders respectively were longer than one year from the time of our quotation to our customers and to the time of completion placing our purchase orders to our suppliers. In addition, all our private sector contracts and orders made during the Track Record Period were of duration shorter than one year. As the contract durations are short term in nature, we have been able to estimate our cost of sales accurately.

As such, we have no losses made on our contracts and orders during the Track Record Period.

The following sensitivity analysis illustrates the impact of hypothetical fluctuations of our cost of materials on our profit before tax during the Track Record Period. Fluctuations in our cost of materials are assumed to be 1%, 3% and 5%, which is commensurate with historical fluctuations in the prices of our major materials during the Track Record Period as derived from the fluctuation of our cost of materials which accounted for approximately 49.9% and 53.6% of our cost of sales for the two years ended 31 December 2014.

Hypothetical fluctuations	+/-1%	+/-3%	+/-5%
	S$	S$	S$
	(to	nearest hundred)
Increase/decrease in costs of
material
Year ended 31 December 2013	+/-24,700	+/-74,100	+/-123,500
Year ended 31 December 2014	+/-33,800	+/-101,400	+/-169,000
Increase/decrease in profit before
taxation
Year ended 31 December 2013	-/+24,700	-/+74,100	-/+123,500
Year ended 31 December 2014	-/+33,800	-/+101,400	-/+169,000

For the two years ended 31 December 2014, our gross profit amounted to approximately S$2.9 million and S$5.5 million respectively. For illustrative purpose, we would have recorded a breakeven in our gross profit if the costs of our materials increased by approximately 116.4% and 164.0%, respectively, from the corresponding period.

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FINANCIAL INFORMATION

Impact of listing expenses on the financial performance of our Group for the year ending 31 December 2015

Changes in laws and regulations governing the construction industry in Singapore

Our business is governed by the relevant regulations and licensing from BCA and MOM. Changes in laws and regulations governing our business may affect our profitability and financial performance, such as the change in foreign worker levy rates will affect our costs. A summary of the regulatory framework of our business in Singapore is set out in the section headed ‘‘Regulatory overview’’ in this prospectus.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Revenue and costs recognition

Revenue is measured at the fair value of the consideration received or receivable, net of discounts and sales related taxes. We recognise revenue when our customers approved our products delivered and work done. This is applicable even for longer duration contracts as revenue is recognised upon each separate delivery of our signage products (therefore several billings of distinct products over the contract term). Costs are recognised as and when they are incurred. Please refer to Note 4 of the Accountants’ Report set out in Appendix I to this prospectus for details.

During the Track Record Period, the percentage of completion milestone revenue recognition method is considered by the Directors to be inappropriate given the nature of the Group’s business and the contracts generally entered into by the Group with the relevant counter party. Although the contractual terms can span over for more than 1 financial year, these contracts are in substance bulk purchase orders of many different product items to be delivered at different time over the contractual period. Under the terms of the contracts, each of the delivery and installation of signage under the separate delivery orders are separately accepted by customers and billings are made accordingly.

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FINANCIAL INFORMATION

Estimates of impairment for receivables

Impairment for receivables are estimated and made based on an evaluation of its collectability. This involves judgement on its ultimate realisation, including the likelihood of the debtor entering into bankruptcy or financial reorganisation and past collection history.

For details of the significant accounting policies relating to our Group’s financial information, please refer to Note 4 of the Accountants’ Report set out in Appendix I to this prospectus.

RESULTS OF OPERATIONS

The following is a summary of the statements of comprehensive income of our Group for each of two years ended 31 December 2014, respectively, derived from the Accountants’ Report set out in Appendix I to this prospectus.

	For the financial	year ended
	31 December	31 December
	2013	2014
	S$	S$
Revenue	7,827,042	11,850,088
Cost of sales	(4,952,092)	(6,307,276)
Gross profit	2,874,950	5,542,812
Other income	71,198	208,193
Other gain and losses	(263,571)	(109,873)
Selling and administrative expenses	(1,800,235)	(2,638,320)
Other expense	—	(63,250)
Finance costs	(66,923)	(111,351)
Profit before tax	815,419	2,828,211
Income tax expense	(203,938)	(262,996)
Profit for the year	611,481	2,565,215
Total comprehensive income	633,684	2,543,012

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FINANCIAL INFORMATION

PRINCIPAL COMPONENTS OF STATEMENTS OF COMPREHENSIVE INCOME

The following table sets forth the revenue of our Group for each of the two financial years ended 31 December 2014, respectively:

	For the financial	year ended	year ended
	31 December	31	December
	2013		2014
	S$’000		S$’000
Revenue
Public sector	5,220		9,562
Private sector	2,607		2,288
Total	7,827		11,850

Revenue

Our revenue comprised of revenue from the sales of signage and related products in both the public and private sectors in Singapore, which amounted to approximately S$7.8 million and S$11.9 million for the two years ended 31 December 2014, respectively. Public sector includes road signage, education institutions, public housing flats/compounds, defence compound, airport and national parks, amongst others. Private sector includes signage and related products for commercial buildings, industrial buildings, private residential buildings, hospital and fast food chains.

Cost of sales

Cost of sales comprised costs incurred for the sales of our signage and related products and amounted to approximately S$5.0 million and S$6.3 million for the two years ended 31 December 2014 respectively. Our cost of sales is cost directly associated with the sales of our signage and related products. The table below sets forth a breakdown of our cost of sales by nature and percentage contribution to total costs for the periods indicated.

Materials Staff costs Subcontracting costs Overheads Total	For the financial year ended 31 December 2013 31 December 2014 S$ Approximate % to cost of sales S$ Approximate % to cost of sales 2,470,557 49.9 3,378,744 53.6 652,451 13.2 705,454 11.2 1,447,075 29.2 1,712,285 27.1 382,009 7.7 510,793 8.1 4,952,092 100.0 6,307,276 100.0

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FINANCIAL INFORMATION

A further breakdown of material costs is indicated in the table below:

Metal products Sheeting products Safety products Consumables Others Total	For the financial year ended 31 December 2013 S$ Approximate % 575,030 23.3 702,464 28.4 120,820 4.9 637,910 25.8 434,333 17.6 2,470,557 100.0	For the financial year ended 31 December 2014 S$ Approximate % 1,129,402 33.4 832,716 24.6 164,860 4.9 644,212 19.1 607,554 18.1 3,378,744 100.0	For the financial year ended 31 December 2014 S$ Approximate % 1,129,402 33.4 832,716 24.6 164,860 4.9 644,212 19.1 607,554 18.1 3,378,744 100.0
			100.0

Our composition of cost of sales remained fairly constant during the Track Record Period except that in the year ended 31 December 2014, there was an increase of metal product purchases. This increase was attributed to new contracts where more metal products were required for parts such as railings.

Materials include our purchases of steel and aluminium products, micro prismatic reflective sheeting and road safety products which are used in our supply and installation of signage and related products. Subcontracting costs are paid to our subcontractors for services in relation to the laying of road markings, installation of precast blocks, bulky metal works or excavation works. Staff costs relate to costs for our staff who work directly on-site such as project engineer, supervisors and foreign workers. Overheads relate to depreciation, utilities and other miscellaneous expenses incurred directly with the sales of our products.

Gross profit

Our gross profit was approximately S$2.9 million and S$5.5 million for the two years ended 31 December 2014 respectively. The gross profits and gross profit margins fluctuated due to higher turnover, with higher selling price and labour optimisation possible in certain contracts.

Other income

Our other income comprised mainly government grants, rental income in respect of subleasing of workshop premise and bank interest income. Government grants relate mainly to cash bonus from the government under the ‘Productivity and Innovation Credit Scheme’ which serves to encourage corporate productivity and innovation. Such government grants vary from year to year, depending on government policy and whether our business in the particular year is able to make use of such available grants. They are therefore non-recurring in nature. Rental income in respect of subleasing of workshop premise is expected to recur as we have agreements for the subleases up to January and February 2017. To the extent we would not require the spare space for our own use, we will

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continue the subletting arrangements. Other income amounted to approximately S$71,198 and S$208,193 for the two years ended 31 December 2014 respectively. Other income amounted to approximately 0.9% and 1.8% of our total turnover for two years ended 31 December 2014, respectively.

The table below sets forth a breakdown of our other income for the periods indicated.

Bank interest income Government grants Rental income in respect of subleasing of workshop premise Others Total	For the financial year ended 31 December 2013 31 December 2014 S$ S$ 22 496 56,903 78,629 — 113,508 14,273 15,560 71,198 208,193	For the financial year ended 31 December 2013 31 December 2014 S$ S$ 22 496 56,903 78,629 — 113,508 14,273 15,560 71,198 208,193
		208,193

Other gain and losses

Our other gain and losses comprised mainly impairment loss on a freehold property, allowance on doubtful debts, write-off of property, plant and equipment, loss on disposal of property, plant and equipment and fair value gain on available-for-sale investments. The freehold property related to our previous premise, which we entered into an agreement for its sale in August 2013 and the disposal was completed in October 2014. We conducted our business on this premise, which was located at 2B Mandai Estate #01-01 Singapore 729929. This premise was acquired in 2010 for a value of approximately S$4.65 million and revalued to S$9.0 million on 18 August 2011. We disposed this premise with a carrying value of S$9.1 million in October 2014 for a net value of approximately S$8.8 million. The premise was about 1,582 square metres. For available-for-sale investments, it was not our principal business and we do not intend to continue with such investment activity in the future. Allowance for doubtful debts related to trade receivables which we considered to be impaired based on the low likelihood of collectibility. Other gain and losses amounted to losses of S$263,571 and S$109,873 for the two years ended 31 December 2014 respectively. Other gain and losses amounted to approximately 3.4% and 0.9% of our total revenue for two years ended 31 December 2014, respectively.

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FINANCIAL INFORMATION

The table below sets forth a breakdown of our other gain and losses for the periods indicated.

Impairment loss on a freehold property (upon reclassified as held for sale) Allowance on doubtful debts Write-down of property, plant and equipment Loss on disposal of property, plant and equipment Fair value gain on available-for-sale investments Total	For the financial year ended 31 December 2013 31 December 2014 S$ S$ (263,571) — — (106,398) — (7,848) — (5,021) — 9,394 (263,571) (109,873)

Selling and administrative expenses

The following table sets forth a breakdown of our selling and administrative expenses for the periods indicated:

Staff costs Rental expenses Depreciation Upkeep of vehicles and machinery Professional fees Others Total	For the financial year ended 31 December 2013 31 December 2014 S$’ S$’ 1,392,644 1,736,986 12,520 45,224 103,735 76,721 177,015 140,819 12,900 314,829 101,421 323,741 1,800,235 2,638,320	For the financial year ended 31 December 2013 31 December 2014 S$’ S$’ 1,392,644 1,736,986 12,520 45,224 103,735 76,721 177,015 140,819 12,900 314,829 101,421 323,741 1,800,235 2,638,320
		2,638,320

Selling and administrative expenses comprised mainly staff costs, rental expenses, depreciation, upkeep of vehicles and machinery and professional fees. Others mainly include telecommunication, utilities, transportation expenses and other miscellaneous expenses. Selling and administrative expenses amounted to approximately S$1.8 million and S$2.6 million for the two years ended 31 December 2014 respectively.

Staff costs related to directors’ remuneration, staff salaries, CPF contributions, staff incentives and other welfare expenses. Our staff costs amounted to approximately S$1.4 million and S$1.7 million for the two years ended 31 December 2014 respectively.

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FINANCIAL INFORMATION

Rental expenses related mainly to rental of our current office premise which amounted to S$12,520 and S$45,224 for the two years ended 31 December 2014 respectively. Depreciation related to depreciation of our fixed assets, mainly office equipment and machinery, motor vehicles, computers and renovation which amounted to approximately S$0.1 million and S$0.1 million for the two years ended 31 December 2014 respectively.

Upkeep of vehicles and machinery referred to maintenance and servicing fees, which amounted to approximately S$0.2 million and S$0.1 million for the two years ended 31 December 2014 respectively. Professional fees related to audit fee, secretarial and legal fees of approximately S$13,000 and S$0.3 million.

Others included telecommunication, utilities, transportation expenses and other miscellaneous expenses. Other expenses amounted to approximately S$0.1 million and S$0.3 million for the two years ended 31 December 2014 respectively. Selling and administrative expenses amounted to approximately 23.0% and 22.3% of our total revenue for two years ended 31 December 2014, respectively.

Other expenses

Other expense of S$63,250 for the year ended 31 December 2014 related to expenses directly attributable in respect of workshop premises.

Finance costs

Finance costs comprised mainly interest expense on bank borrowings and finance lease, amounted to S$66,923 and S$111,351 for the two years ended 31 December 2014 respectively. These related to interests on property loan, finance leases and trade financing.

Taxation

Since our operation is based in Singapore, our Group is liable to pay corporate income tax in accordance with the tax regulations of Singapore. Income tax expenses of our Group amounted to approximately S$203,938 and S$262,996 for the two years ended 31 December 2014 respectively.

The statutory corporate tax rate in Singapore was 17.0% throughout the Track Record Period, while our corresponding effective tax rate were approximately 25.0% and 9.3% for the two years ended 31 December 2014, respectively. Our effective tax rate was lower than the statutory tax rate for the year ended 31 December 2014 due to the tax incentives relating to the Productivity and Innovation Credit Scheme where we had additional tax deductions. Our effective tax rate was higher than the statutory tax rate for the year ended 31 December 2013 due to non-deductible loss on disposal of freehold property. Our Directors have confirmed that all relevant taxes had been paid when due. Please see Note 10 of the Accountants’ Report found in Appendix I to this prospectus for further details.

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FINANCIAL INFORMATION

PERIOD TO PERIOD COMPARISON OF RESULTS OF OPERATIONS

Financial year ended 31 December 2014 compared to financial year ended 31 December 2013

Revenue

Our revenue increased by approximately S$4.0 million or 51.4%, from approximately S$7.8 million for the year ended 31 December 2013 to approximately S$11.9 million for the year ended 31 December 2014. This was principally due to the fulfillment of several higher value contracts of signage and related products in the year ended 31 December 2014, aggregating to approximately S$4.0 million. These higher value contracts of the abovementioned contracts mainly related to:

(i) five contracts which aggregated to approximately S$1.4 million for which we provided new and replacement of directional and traffic signs over a two-year period;
(ii) two contracts which aggregated to approximately S$2.0 million for which we provided directional and traffic signs, and gantry signs on expressway; and
(iii) one contract which aggregated to approximately S$1.0 million for which we provided travel time display boards.

Public sector Private sector Total	Year end 31 December 2013 Number of contracts and orders Revenue recognised S$’000 1,041 5,220 66.7% 1,170 2,607 33.3% 2,211 7,827 100.0%	Year end 31 December 2014 Number of contracts and orders Revenue recognised S$’000 1,170 9,562 80.7% 1,108 2,288 19.3% 2,278 11,850 100.0%

Approximately 66.7% and 80.7% of our revenue were generated from the public sector for the two years ended 31 December 2014 respectively. Of this revenue, approximately S$4,149,000 and S$8,927,000 were generated from LTA-related projects for the two years ended 31 December 2014 respectively. This represented approximately 79.5% and 93.4% of our revenue generated from the public sector, and approximately 53.0% and 75.3% of our total revenue for the two years ended 31 December 2014 respectively. Our Group is therefore reliant on new public sector projects that involved additions or modifications to road infrastructure that require the approval of LTA, and government spending in this sector.

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FINANCIAL INFORMATION

As seen in the above table, the proportion of revenue derived from the public sector increased in the year ended 31 December 2014 due mainly to obtaining more new contracts which were all road signage and related works. The public sector contracts that we obtained in the year ended 31 December 2014 were also of higher value as we secured higher value contracts in the year. Our revenue generated from the private sector remained relatively stable during the Track Record Period.

Cost of Sales

In line with the increase in our revenue, our cost of sales increased by approximately S$1.4 million or 27.4%, from approximately S$5.0 million for the year ended 31 December 2013 to approximately S$6.3 million for the year ended 31 December 2014. The increase in cost of sales, however, was less than proportional to the increase in revenue. The reasons were due to:

(a) the increase in our material costs by approximately S$0.9 million or 36.8%, from approximately S$2.5 million for the year ended 31 December 2013 to approximately S$3.4 million for the year ended 31 December 2014. The increase in material costs was less than proportional to the approximately 51.4% increase in turnover due to less increase in material costs (which remained fairly constant) than the relatively high increase in selling price;
(b) the increase in our subcontracting costs by approximately S$0.3 million or 18.3%, from approximately S$1.4 million for the year ended 31 December 2013 to approximately S$1.7 million for the year ended 31 December 2014. The increase in subcontracting costs was less than proportional to the approximately 51.4% increase in turnover due to less increase in subcontracting costs (which remained fairly constant) than the relatively high increase in selling price; and
(c) the increase in our staff costs by approximately S$0.1 million or 8.1%, from approximately S$0.6 million for the year ended 31 December 2013 to approximately S$0.7 million for the year ended 31 December 2014. The less than proportional increase in staff costs was due to (i) improved utilisation of labour as our staff and workers were able to take on more responsibilities and work load for the year ended 31 December 2014, (ii) closer proximity for the contracts that we took on in the year ended 31 December 2014, therefore reducing time spent on traveling from one location to another for our signage installation and (iii) relocation of our office and operations in the first half of 2014 such that our operations was now closer to the central area in Singapore thus reducing time to travel to both our suppliers and the worksite for installation (as the case may be).

Gross profit and gross profit margin

Our gross profit increased by approximately S$2.7 million or 92.8%, from approximately S$2.9 million for the year ended 31 December 2013 to approximately S$5.5 million for the year ended 31 December 2014. Our gross profit margin increased from approximately 36.7% to 46.8% during such period.

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FINANCIAL INFORMATION

Our increase in gross profit and gross profit margin was attributed to increase in revenue, lower than proportional increase in cost of sales, and higher selling price in certain contracts. Of these, our gross margin was improved also mainly due to:

(i) five contracts which aggregated to approximately S$1.4 million had a higher unit selling price as the nature of these contracts were that our signage products were to be installed at various areas over a two year period (as and when new signs are required or needed to be replaced) as opposed to contracts where our works were specific to a certain area;
(ii) two contracts which aggregated to approximately S$2.0 million had either a higher unit selling price for gantry signs or required a relatively short delivery time; and
(iii) one contract which aggregated to approximately S$1.0 million, the supply and installation of travel time display boards was a new revenue source for our Group for which labour utilisation was optimised as our staff costs did not increase materially despite taking on this contract.

During the Track Record Period, we recorded gross profits and gross profit margins as below for public and private sector projects.

Public sector Private sector	Year ended 31 December 2013 Revenue recognised Gross profit Gross profit margin S$’000 S$’000 Approximate % 5,220 1,953 37.4 2,607 921 35.3 7,827 2,875 36.7	Year ended 31 December 2014 Revenue recognised Gross profit Gross profit margin S$’000 S$’000 Approximate % 9,562 4,595 48.1 2,288 948 41.4 11,850 5,543 46.8

The increase in gross profits was mainly due to the increase in gross profits contributed by the public sector projects, whose gross profit margin increased from approximately 37.4% for the year ended 31 December 2013 to approximately 48.1% for the year ended 31 December 2014 due to the higher selling prices and more optimal labour utilisation.

With regard to gross profit for our contracts, we have a budgeted margin set for each of our projects starting from the bidding stage of our project management. We would estimate the latest available prices for material costs, labour costs and subcontracting costs. Material and subcontracting costs are actual costs provided by our suppliers and subcontractors. We then incorporate a fixed margin on top of such costs during quotation. In general, we set a gross profit margin of 45% for public sector projects and 40% for private sector projects during the Track Record Period.

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FINANCIAL INFORMATION

Subsequent to the completion of our contracts, we review our performance in terms of meeting our customers’ requirements, timeliness, scheduling and reliability of signage works, subcontractors’ performance as well as our budgeted margin in order to improve our services to customers in the future.

Other income

Other income amounted to S$71,198 and S$208,193 for the two years ended 31 December 2014 respectively. The increase was mainly due to the increase in government grants and rental income for our premise which we sub-let in the year ended 31 December 2014. Government grants amounted to S$56,903 and S$78,629 for the two years ended 31 December 2014 respectively. Of which, S$51,814 (comprising S$15,000 of cash bonus and S$36,814 of cash payout for the year ended 31 December 2013) and S$57,716 (comprising nil cash bonus and S$57,716 of cash payout for the year ended 31 December 2014) for the two years ended 31 December 2014 respectively related to cash bonus and cash payout under the ‘‘Productivity and Innovation Credit Scheme’’, an initiative of the Singapore Government to encourage corporate productivity and innovation.

Other gain and losses

Other gain and losses amounted to approximately S$263,571 and S$109,873 for the two years ended 31 December 2014 respectively. The decrease was mainly due to an impairment loss on freehold property which was our previous premise recognised only in the year ended 31 December 2013. In the year ended 31 December 2014, the loss was mainly relating to the allowance of doubtful debts.

Selling and administrative expenses

Selling and administrative expenses increased by approximately S$0.8 million or 46.6%, from approximately S$1.8 million for the year ended 31 December 2013 to approximately S$2.6 million for the year ended 31 December 2014. The increase was primarily due to (i) increase in staff costs of approximately S$0.3 million mainly due to increase in number of staff, incentives paid to staff and staff welfare expenses, (ii) increase in professional fees of approximately S$0.3 million mainly due to appointment of auditors, legal fee for disposal of property, and administrative supporting services, and (iii) increase in other expenses of approximately S$0.2 million due to expansion of business.

Net profit before tax and net profit before tax margin

Our net profit before tax increased by approximately S$2.0 million or 246.8%, from approximately S$0.8 million for the year ended 31 December 2013 to approximately S$2.8 million for the year ended 31 December 2014. This was mainly attributable to the increase in gross profit by approximately S$2.7 million as discussed above. Our net profit before tax margin increased from approximately 10.4% for the year ended 31 December 2013 to approximately 23.9% for the year ended 31 December 2014, due to the increase of approximately 246.8% in net profit before tax, increase in gross profit margin from approximately 36.7% to 46.8% during such period.

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FINANCIAL INFORMATION

During the Track Record Period, we recorded net profit before tax and net profit before tax margins as below for public and private sector projects.

Public sector Private sector	Year ended 31 December 2013 Revenue recognised Net Profit before tax Net profit before tax margin S$’000 S$’000 Approximate % 5,220 580 11.1 2,607 235 9.0 7,827 815 10.4	Year ended 31 December 2014 Revenue recognised Net Profit before tax Net profit before tax margin S$’000 S$’000 Approximate % 9,562 2,405 25.1 2,288 423 18.5 11,850 2,828 23.9

The increase in net profit before tax was mainly due to the increase in net profits contributed by the public sector projects, whose net profit margin increased from approximately 11.1% for the year ended 31 December 2013 to approximately 25.1% for the year ended 31 December 2014. This was due to the the increase in gross profit in the public sector projects by approximately S$2.6 million and increase in gross profit margin in the public sector projects from approximately 37.4% to 48.1% during such period.

Income tax

Income tax increased by S$59,058 or 29.0%, from S$203,938 for the year ended 31 December 2013 to S$262,996 for the year ended 31 December 2014. Our effective tax rate was approximately 25.0% for the year ended 31 December 2013 and approximately 9.3% for the year ended 31 December 2014. Our effective tax rate was lower than the statutory tax rate for the year ended 31 December 2014 due to tax incentives relating to the Productivity and Innovation Credit Scheme where we had additional tax deductions. Our effective tax rate was higher than the statutory tax rate for the year ended 31 December 2013 due to deductible loss on disposal of freehold property.

Profit for the year

Our profit for the year increased by approximately S$2.0 million or 319.5%, from approximately S$0.6 million for the year ended 31 December 2013 to approximately S$2.6 million for the year ended 31 December 2014. This was mainly attributable to the increase in gross profit by approximately S$2.7 million as discussed above.

Net profit margin

Our net profit margin increased from approximately 7.8% for the year ended 31 December 2013 to approximately 21.6% for the year ended 31 December 2014, due to the increase of approximately 319.5% in net profit after tax for the year, increase in gross profit margin from approximately 36.7% to 46.8% during such period.

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FINANCIAL INFORMATION

LIQUIDITY AND CAPITAL RESOURCES

Our business operation depends on the sufficiency of working capital and effective cost management, in particular competitive prices from our suppliers and management of our foreign workforce. Our source of funds for our operations mainly comes from our internal generated funds. Our primary uses of cash are for payment to suppliers, subcontractors and working capital needs. Upon the Listing, our source of funds will be a combination of internal generated funds and net proceeds from the Placing. The following table is a condensed summary of our statements of cash flows for the periods indicated:

	For the financial	year ended
	31 December	31 December
	2013	2014
	S$	S$
Net cash flows generated from operating activities	1,204,954	3,745,761
Net cash flows (used in)/from investing activities	(160,923)	7,811,103
Net cash flows from/(used in) financing activities	64,845	(9,287,944)
Net increase in cash and cash equivalents	1,108,876	2,268,920
Cash and cash equivalents at the beginning of the
year	1,709,695	2,818,571
Cash and cash equivalents at the end of the year	2,818,571	5,087,491

Operating activities

Net cash generated from operating activities primarily consisted of profit before tax adjusted for non-cash items, such as depreciation, allowance on doubtful debts, impairment loss on freehold property upon reclassified as held for sale, fair value gain on available-forsale investments, finance costs, interest income and loss on disposal and write-off of the plant and equipment. We derive our cash inflow from operations principally from our revenue. Our cash outflow used in operations is principally for payment to suppliers, subcontractors and working capital needs.

For the year ended 31 December 2014, our net cash generated from operating activities was approximately S$3.7 million. The net cash from operating activities was mainly attributable to our profit before tax of approximately S$2.8 million, which was negatively adjusted primarily for (i) interest income of S$496 and (ii) fair value gain on available-forsale investments of S$9,394, offset by a positive adjustment of (iii) S$235,367 from depreciation of mainly motor vehicles, office equipment and machinery and computers, (iv) S$106,398 from allowance on doubtful debts, (v) S$111,351 of finance costs and (vi) S$12,869 loss on disposal and write-off of plant and equipment. These adjustments were non-cash items, and adjusted as they did not impact the cashflow of our Group.

The difference of approximately S$0.5 million between the operating cash flows before movements in working capital and net cash flow generated from operating activities was mainly attributable to the combined effect of (i) increase in inventories of S$278,005, (ii) increase of trade and other receivables of S$11,355, (iii) increase in amount due from related

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FINANCIAL INFORMATION

party of S$20,459, (iv) decrease in trade payables of S$492,203, (v) income tax paid of S$9,488, offset by (vi) increase in other payables and accruals of approximately S$1.1 million and (vii) increase in amount due to related parties of S$139,028.

For the year ended 31 December 2013, our net cash generated from operating activities was approximately S$1.2 million. The net cash from operating activities was mainly attributable to our profit before tax of approximately S$0.8 million, which was negatively adjusted primarily for (i) interest income of S$22, offset by a positive adjustment of (ii) S$263,571 from impairment loss on freehold property upon reclassified as held for sale, (iii) S$250,347 of depreciation expenses for mainly motor vehicles, office equipment and machinery and computers and (iv) S$66,923 of finance costs. These adjustments were noncash items, and adjusted as they did not impact the cashflow of our Group.

The difference of approximately S$0.2 million between the operating cash flows before movements in working capital and net cash flow generated from operating activities was mainly attributable to the combined effect of (i) increase in inventories of S$254,362, (ii) increase in trade and other receivables of approximately S$1.0 million, (iii) increase in amount due from related party of S$3,087, (iv) income tax paid of S$130,879 offset by (v) increase in trade payables of S$780,875, (vi) increase in other payables and accruals of S$315,679 and (vii) increase in amount due to related parties of S$142,409.

Investing activities

We derive our cash inflow from investing activities primarily from proceeds from disposal of asset classified as held for sale and available-for-sale investments and our cash outflow used in investing activities is primarily for the purchase of plant and equipment and placement of pledged deposits.

For the year ended 31 December 2014, our net cash generated from investing activities was approximately S$7.8 million, due to (i) disposal of asset classified as held for sale, which was our previous premise for approximately S$8.6 million, (ii) disposal of availablefor-sale investments of approximately S$0.3 million and offset by, (iii) purchase of plant and equipment which was mainly for motor vehicles, computers, office equipment and machinery (cutting plotter, engraver and forklift) for approximately S$0.5 million and (iv) placement of pledged bank deposits of approximately S$0.5 million.

For the year ended 31 December 2013, our net cash used in investing activities was approximately S$0.2 million, mainly due to (i) purchase of plant and equipment which was for motor vehicles and office equipment and machinery (computer controlled cutting machinery) for approximately S$0.2 million, (ii) placement of pledged bank deposit of $54,501 and offset (iii) by deposit received on disposal of asset classified as held for sale of S$90,000.

Financing activities

Our cash outflows used in financing activities is primarily for repayment of bank loan, obligations under finance leases and bills payables, repayment to directors, payment of interest obligations and payment of dividends.

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FINANCIAL INFORMATION

For the year ended 31 December 2014, our net cash used in financing activities was approximately S$9.3 million, mainly due to the repayment of bank loan, obligations under finance leases, bills payables and interest obligations of approximately S$4.0 million, payment of dividends of approximately S$5.4 million and repayment to directors of approximately S$0.8 million. The cash from financing activities came from increase in bills payables of approximately S$0.9 million.

For the year ended 31 December 2013, our net cash generated from financing activities was S$64,845, mainly due to (i) increase in bills payables of approximately S$0.5 million and offset by (ii) the repayment of interest-bearing obligations (bank loan, bills payables and obligations under finance leases and interest obligations) of approximately S$0.4 million and (iii) payment of dividends of S$0.1 million.

INDEBTEDNESS

We have total present value of minimum lease payments in relation to finance lease, which are secured by the relevant leased assets and unguaranteed of approximately S$285,000, of which current portion of approximately S$106,000 and non-current portion of approximately S$179,000 and finance bills payable, which are secured by fixed deposits of our Group and unguaranteed of approximately S$526,000 as at 30 April 2015. The following table summarises the details of our banking and other facilities as at 30 April 2015:

Facilities Type Committed/ Restricted Principal amount Interest rates Security S$ % Uncommitted facilities — trade No 750,000 5.75% Charge on fixed deposit Uncommitted facilities — letter of guarantee No 150,000 n/a Charge on fixed deposit Uncommitted facilities — extra long term letter of guarantee No 57,000 n/a Charge on fixed deposit	Amount outstanding and utilised as at 30 April 2015 Current Non-Current 525,753 — 61,903 52,875 — 52,875 587,656 105,750	Amount unutilised as at 30 April 2015 224,247 35,222 4,125
		263,594

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FINANCIAL INFORMATION

Contractual commitments

As at 31 December 2013, 31 December 2014 and as at the Latest Practicable Date, our Group had obligations under finance lease commitments, repayable as follows:

Within a year After one year but within five years	31 December 2013 S$ 76,019 135,605 211,624	As at 31 December 2014 S$ 91,825 155,170 246,995	Latest Practicable Date S$ 103,501 166,157
			269,658

The above finance leases were for certain motor vehicles. These obligations are secured by a charge over leased assets of carrying amounts of approximately S$0.3 million in each of the years ended 31 December 2014 and approximately S$0.3 million as at the Latest Practicable Date.

As at 31 December 2013, 31 December 2014 and as at the Latest Practicable Date, our Group had obligations under operating lease commitments were payable as follows:

Within a year After one year but within five years	31 December 2013 S$ — — —	As at 31 December 2014 S$ 406,560 392,000 798,560	Latest Practicable Date S$ 359,520 224,000
			583,520

The above operating lease commitments were in relation to Singapore office and workshop premises and worker dormitory. The lease for our premises was headed in section ‘‘Business — Property interest’’ to this prospectus. These leases have no renewal option and no contingent rental provision. As at the Latest Practicable Date, we only have the abovementioned operating lease commitments.

Contingent liabilities

As at 30 April 2015, being the latest practicable date for the preparation of the indebtedness statement in this prospectus, we had provided guarantees in respect of performance bonds in favor of our customers with utilised amount of approximately S$0.2 million.

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FINANCIAL INFORMATION

Our Directors confirm that, taking into consideration our internal resources available to us as at 30 April 2015, we have sufficient working capital for our requirements as at 30 April 2015, including funds necessary to meet our contractual obligations, maintain our operations and complete to fulfil our existing contracts as at 30 April 2015. Our Directors are not aware of any other factors that would have a material impact on our Group’s liquidity as at 30 April 2015, including those that may materially and adversely affect our future cash requirements associated with trends known to our Group. As at 30 April 2015, our Directors are not aware of any change in the applicable legal and regulatory requirements that would have a material adverse impact on our Group’s liquidity.

Save as disclosed above, our Group had no material contingent liabilities and was not involved in any material legal proceedings. Our Directors are not aware of any pending or potential material legal proceedings involving our Group. If our Group is involved in such material legal proceedings, our Group will record contingency loss when, based on information then available, it is likely that a loss will incur and the amount of loss can be reasonable estimated.

During the Track Record Period, Mr. Kelvin Tan and Mr. Peter Tan have jointly and severally provided personal guarantees in favour of DBS Bank Ltd in Singapore and Ethoz Capital Ltd for maximum guarantee amount of approximately S$5.9 million respectively.

Apart from the above, we do not have other material outstanding mortgages, charges, debentures or other loan capital (issued or agreed to be issued), bank overdrafts, loans, liabilities under acceptance or other similar indebtedness, hire purchase and finance lease commitments or any guarantees or other material contingent liabilities outstanding as at 30 April 2015. Our Directors confirmed that there has not been any material change in our indebtedness since 30 April 2015. Our Directors confirmed that we have not raised material external debt financing and unlikely to do so in the near future.

Our Directors confirmed that we had not experienced difficulties in repayment and breached major covenant of our bank loans during the Track Record Period.

CAPITAL EXPENDITURES

During the Track Record Period, our Group’s capital expenditures have principally consisted of expenditures on computer, motor vehicles, office equipment and machinery and renovation. We incurred cashflows on capital expenditures for purchase of property, plant and equipment in the amounts of approximately S$0.2 million and S$0.5 million for the two years ended 31 December 2014, respectively. We incurred capital expenditure for purchase of motor vehicles, computers and machinery of approximately S$0.1 million for the four months ended 30 April 2015.

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FINANCIAL INFORMATION

ASSETS AND LIABILITIES

The table below sets out selected information for our assets and liabilities as at 31 December 2013 and 31 December 2014, and as at 30 April 2015:

NON-CURRENT ASSETS Property, plant and equipment Available-for-sale investments Deferred tax assets CURRENT ASSETS Inventories Trade and other receivables Amount due from a related party Amount due from a director Pledged bank deposits Bank balances and cash Asset classified as held for sale CURRENT LIABILITIES Trade payables Bills payables Other payables and accruals Amounts due to related parties Term loan Amounts due to directors Obligations under finance leases Income tax payable Liability directly associated with asset classified as held for sale NET CURRENT ASSETS NON-CURRENT LIABILITY Obligations under finance leases NET ASSETS	31 December 2013 296,099 269,505 12,996 578,600 337,656 2,359,598 24,401 — 79,564 2,818,571 5,619,790 8,848,283 14,468,073 1,181,859 529,880 757,435 209,165 — 822,582 76,019 208,031 3,784,971 3,283,657 7,068,628 7,399,445 135,605 7,842,440	As at 31 December 2014 679,373 20 — 679,393 615,661 2,441,845 44,860 7,006 586,564 5,087,491 8,783,427 — 8,783,427 689,656 909,841 1,803,726 348,193 — 1,999 91,825 448,543 4,293,783 — 4,293,783 4,489,644 155,170 5,013,867	30 April 2015 (Unaudited) 721,033 20 —
			721,053
			507,683 4,164,367 — 599 956,999 4,035,997
			9,665,645 —
			9,665,645
			964,471 525,753 1,732,939 — — 1,999 105,572 178,135
			3,508,869 —
			3,508,869
			6,156,776
			179,470
			6,698,359

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FINANCIAL INFORMATION

We recorded net current assets of approximately S$7.4 million and S$4.5 million as at 31 December 2013 and 2014, respectively. Net current assets decreased by approximately S$2.9 million or approximately 39.3% primarily due to (i) net assets directly associated with asset classified as held for sale of approximately S$5.6 million associated with the property disposed in October 2014, (ii) the increase in other payables and accruals of approximately S$1.0 million and (iii) the increase in income tax payable of approximately S$0.2 million.

The above decrease in net current assets was partially offset by (i) increase in bank balances and cash of approximately S$2.3 million, (ii) increase in pledged bank deposits of approximately S$0.5 million, (iii) increase in inventories of approximately S$0.3 million and (iii) decrease in amounts due to directors of approximately S$0.8 million.

Based on the unaudited management accounts of our Group as at 30 April 2015, the net current assets increased to approximately S$6.2 million. The increase as compared with 31 December 2014 was mainly due to (i) increase in trade and other receivables of approximately S$1.7 million, (ii) increase in pledged bank deposits of approximately S$0.4 million, (iii) decrease in bills payables of approximately S$0.4 million, offset by (iv) decrease in bank balances and cash of approximately S$1.1 million, and (v) increase in trade payables of approximately S$0.3 million. The increase in trade and other receivables, trade payables and increase in pledged bank deposits were in line with the revenue generated for the four months ended 30 April 2015. The decrease in bills payables was mainly due to decrease in principal amount for the trade facility.

CERTAIN BALANCE SHEET ITEMS

Our inventories as at 31 December 2013 and 31 December 2014 were approximately S$0.3 million and S$0.6 million respectively, of which a breakdown is set out below:

Materials Work-in-progress Finished goods Total	As at 31 December 2013 31 December 2014 S$ S$ 60,516 120,456 277,140 421,935 — 73,270 337,656 615,661	As at 31 December 2013 31 December 2014 S$ S$ 60,516 120,456 277,140 421,935 — 73,270 337,656 615,661
		615,661

Materials refer to our purchases of steel and aluminium products and road safety products. The increase of approximately S$60,000 of materials was due to purchases closer to the year end of 31 December 2014, in line with the increased in revenue. Work-inprogress related to a contract with a customer for which our signage and related products were delivered to the site but pending for installation and acceptance by the customer. The increase of approximately S$0.1 million in work-in-progress was due to higher value of works under the abovementioned customer. Finished goods related to our signage products that were fabricated and ready for installation at site as at year end.

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FINANCIAL INFORMATION

Our Group makes allowance for inventories based on assessments of the net realisable values of existing inventories. Allowances are applied to inventories where events or changes in circumstances indicate that the net realisable value of certain items is lower than the cost of those items. The identification of obsolete inventories requires the use of estimation of the net realisable value of items of inventory and estimates on the conditions and usefulness of items of inventories. Where the estimated net realisable value is lower than the cost of the inventory items, an impairment may arise. Our Directors are of the view that our Group’s provisioning policies for inventories are adequate.

Based on the above, the Sole Sponsor is of the view that there is no reasonable doubt as to the opinion of our Directors on the sufficiency of our Group’s provisioning policies for inventories.

Our inventory turnover days for the Track Record Period was approximately 9 days and 21 days respectively. The increase in the inventory turnover days was due to an order for steel products in the later part of the year ended 31 December 2014.

The relatively lower consumption of existing inventory as at 31 December 2014 was due to (i) less business activity in general during these two months due to more public holidays such as the new year and lunar new year and (ii) composition of the materials (inventory) which comprised of a bulk purchase of steel products of approximately S$69,000 expected to be consumed over the next 18 months. Up to 30 April 2015, approximately 48% of our inventory as at 31 December 2014 had been consumed.

Trade and other receivables

Our trade and other receivables as at 31 December 2013 and 2014 were approximately S$2.4 million and S$2.4 million respectively, of which a breakdown is set out below:

Trade receivables Less: allowance for doubtful debts Unbilled receivables Retention receivables Purchase advances paid to suppliers Receivable from disposal of freehold property Rental and other deposits Other receivables and prepayments	At 31 December 2013 2014 S$ S$ 1,300,761 1,620,142 (23,210) (129,608) 1,277,551 1,490,534 603,696 136,335 213,102 241,017 174,873 143,536 — 200,000 37,540 147,840 52,836 82,583 2,359,598 2,441,845

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FINANCIAL INFORMATION

Trade receivables increased from approximately S$1.3 million as at 31 December 2013 to approximately S$1.6 million as at 31 December 2014, which was in line with our revenue trend during the Track Record Period and partly due to improvement in accounts receivable turnover days from 62 to 51 days. Trade receivables are non-interest bearing and due within 30 to 60 days from the date of invoice.

The aging analysis of trade receivables net of allowance for doubtful debts presented based on invoice date is as follows:

1–30 days 31–60 days 61–90 days 91–180 days 181–365 days Over 365 days	At 31 December 2013 2014 S$ S$ 790,139 607,134 201,864 238,622 148,665 57,261 63,921 306,283 72,962 266,187 — 15,047 1,277,551 1,490,534	At 31 December 2013 2014 S$ S$ 790,139 607,134 201,864 238,622 148,665 57,261 63,921 306,283 72,962 266,187 — 15,047 1,277,551 1,490,534
		1,490,534

Based on the above table, there was approximately S$0.6 million of trade receivables that were past 60 days as at 31 December 2014. Despite our credit terms typically being 30 to 60 days, such overdues were mainly due to (i) our billings not coinciding with our customers’ processing dates for payments for instance, if payment is to be made by the 30th of a calendar month to be within the credit terms but customers process the payments on a monthly fixed date after the 30th, for instance on the 10th of each month, there will be an additional time of 10 days, and (ii) customers requesting for a delay in payment as they have yet to be paid by the end customers and we extend their credit period after considering their payment history and financial situations in order to establish a long relationship with them.

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FINANCIAL INFORMATION

The aging analysis of trade receivables (net of allowance for doubtful debts), based on the due date that are past due but not impaired is as follows:

Overdue: 31 to 60 days 61 to 90 days 91 to 180 days 181 to 365 days Over 365 days Total	As at 31 December 2013 31 December 2014 S$ S$ 201,864 238,622 148,665 57,261 63,921 312,283 72,962 266,187 — 9,047 487,412 883,400	As at 31 December 2013 31 December 2014 S$ S$ 201,864 238,622 148,665 57,261 63,921 312,283 72,962 266,187 — 9,047 487,412 883,400
		883,400

As at 31 December 2013 and 2014, approximately S$0.5 million and S$0.9 million, representing approximately 37.5% and 54.5% of our trade receivables, respectively, were past due but not impaired. The increase in proportion of overdue trade receivables was due to certain contracts where the payment was made after our main contractors received the approved delivery of the works from their customers.

The movement in the allowance on doubtful debts for trade receivables is as follows:

At beginning of the year Allowance on doubtful debts recognised in profit or loss At end of the year	As at 31 December 2013 31 December 2014 S$ S$ 23,210 23,210 — 106,398 23,210 129,608	As at 31 December 2013 31 December 2014 S$ S$ 23,210 23,210 — 106,398 23,210 129,608
		129,608

As at 31 December 2013 and 2014, S$23,210 and S$129,608, representing approximately 1.8% and 8.0% of our trade receivables, respectively, were provided as doubtful debts. These were due to the customers who faced financial difficulties or entered into liquidation. Apart from the above, our Directors are of the view that no further provision is necessary in respect of the overdue balances that were not impaired as there has not been a significant change in credit quality of our customers and these balances are considered fully recoverable. Approximately 81.7% of our net trade receivables balance as at 31 December 2014 had been subsequently settled up to the Latest Practicable Date.

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FINANCIAL INFORMATION

Our Group assessed indicators of impairment for trade receivables at the end of each reporting period. Trade receivables would be impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition, the estimated future cash flows have been affected. Objective evidence of impairment for a portfolio of receivables would include our Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, observable changes in national or local economic conditions that correlate with default on receivables.

In assessing whether adequate allowance for doubtful debts had been provided for at the end of each reporting period, our Directors assessed the creditworthiness of individual debtors and the likelihood in collection of outstanding trade receivables by reference to past payment history and financial viability of the relevant counterparty and subsequent settlement amounts. Impairment was provided for those delayed payments in the portfolio past the average credit period which was in financial difficulties or when it became probable that the relevant debts were unlikely to be settled when other apparent impairment indicators arose. After individual assessment, trade receivables would be assessed for impairment on collective basis according to our Group’s past experience of collecting payments.

Further, the credit period granted by our Group to our customers is based on our assessment of our targeted customers’ performance, creditworthiness and history of business cooperation with such customers. Our Group has good debt settlement track records based on historical information. For those trade receivables that are past due as at the Latest Practicable Date, our Group has regularly made contacts with those customers and there are no indications that they will not settle the outstanding amounts in full or outside the credit period granted by our Group to such customers. Our Directors are of the view that our Group’s provisioning policies for trade receivables are adequate.

Based on the above, the Sole Sponsor is of the view that there is no reasonable doubt as to the opinion of our Directors on the sufficiency of our Group’s provisioning policies for trade receivables.

For the two years ended 31 December 2014, the trade receivable turnover days were 62 days and 51 days respectively. The shorter trade receivable turnover days for the year ended 31 December 2014 was primarily due to the faster settlement for a certain new contract for the year ended 31 December 2014.

Unbilled receivables related to contracts where revenue had been recognised but not yet billed as at 31 December 2014. Typically these situations arose when goods had been delivered and accepted by the customers as at the year-end but invoicing was not yet made. Unbilled receivables decreased from approximately S$0.6 million as at 31 December 2013 to approximately S$0.1 million as at 31 December 2014, which was due to the completed works for contracts where the billing schedules were not reached in the year ended 31 December 2013 but in 2014 billing schedule. Unbilled receivables are non-interest bearing.

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FINANCIAL INFORMATION

Our contracts typically provide for a retention sum of 10% with each payment, up to a maximum of 5% of the contract value. Half of the retention sum shall be released upon practical completion, and the balance amount shall be released upon the expiration of the defect liability period. Despite the increase in number of contracts, the balance of our retention receivables remained stable at approximately S$0.2 million as the increase in new contracts in the year ended 31 December 2014 did not require retention monies.

Other than those debtors provided with impairment allowance, none of our other customer has defaulted in their payment obligations during the Track Record Period and the retention receivables were settled in accordance with the terms of the respective contracts.

Purchase advances paid to suppliers remained relatively constant as at 31 December 2013 and 2014. Purchase advances related to monies paid for the micro prismatic reflective sheeting for sheeting products whose ownership had not yet passed to us. Receivable from disposal of freehold property related to the balance from the proceeds from the disposal of our previous premise. The Executive Directors have provided an undertaking to indemnify the Company for any loss from non-settlement of this amount.

Rental and other deposits increased from approximately S$38,000 as at 31 December 2013 to approximately S$148,000, mainly due to deposit paid for our new office rental.

Trade payables

Trade payables as at 31 December 2013 and 2014 were approximately S$1.2 million and S$0.7 million respectively, of which a breakdown is set out below:

			As
		31	December	31	December
			2013		2014
			S$		S$
Trade	payables		1,181,859		689,656

Trade payables decreased from approximately S$1.2 million as at 31 December 2013 to approximately S$0.7 million as at 31 December 2014. Despite an increase in revenue during the Track Record Period, our trade payables decreased due to the improvement of our trade payables turnover from 130 to 74 days, a result of increased trade financing taken in the year ended 31 December 2014. Our trade payables comprised primarily of amounts payable to our subcontractors and suppliers. The credit period granted by our subcontractors or suppliers is normally 30 to 60 days after issuance of invoice. Approximately 88.3% of our trade payables balance as at 31 December 2014 had been subsequently settled as at the Latest Practicable Date.

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FINANCIAL INFORMATION

Bills Payables

		At 31 December	At 31 December
		2013	2014
		S$	S$
Bills	payables	529,880	909,841

Bills payables related to facilities granted by the banks, secured by pledged bank deposits. Bills payables amounted to approximately S$0.5 million and S$0.9 million as at 31 December 2013 and 2014 respectively. Bills payables increased due to additional purchases close to the year ended 31 December 2014 with a corresponding increase in facility granted by the banks.

Other payables and accruals

Other payables and accruals as at 31 December 2013 and 2014 were approximately S$0.8 million and S$1.8 million respectively, of which a breakdown is set out below:

Advance billings to customers Retention payable to suppliers Goods and services tax payable Accrued operating expenses Deposit received in respect of disposal of freehold property Accrued staff bonus/commission Payable for acquisition of plant and equipment Other payables	At 31 December 2013 2014 S$ S$ 539,677 589,458 4,380 33,370 16,374 751,710 66,999 356,396 90,000 — 21,577 38,899 — 25,064 18,428 8,829 757,435 1,803,726	At 31 December 2013 2014 S$ S$ 539,677 589,458 4,380 33,370 16,374 751,710 66,999 356,396 90,000 — 21,577 38,899 — 25,064 18,428 8,829 757,435 1,803,726
		1,803,726

Other payables and accruals increased from approximately S$0.8 million as at 31 December 2013 to approximately S$1.8 million as at 31 December 2014. The increase was mainly due to (i) increase in accrued operating expenses of approximately S$0.3 million, mainly relating to accrual of professional fees, (ii) increase in goods and service tax payable of approximately S$0.7 million, mainly relating to the disposal of freehold property, (iii) increase in payable for mainly computers purchased (iv) increase in retention payable to suppliers of approximately S$29,000 and partly offset by (v) decrease in deposit received of S$90,000 for the disposal of freehold property only as at 31 December 2013.

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FINANCIAL INFORMATION

Asset classified as held for sale and liability directly associated with asset held for sale

The asset classified as held for sale and liability directly associated with it related to the previous premise which an agreement to sell was entered into in August 2013 and completed in October 2014. The liability referred to the property loan for the premise. As the disposal was completed in October 2014, the asset classified as held for sale of approximately S$8.8 million and liability directly associated with it of approximately S$3.3 million was only reflected as at 31 December 2013.

KEY FINANCIAL RATIOS

	As at
	31 December	31 December
	2013	2014
	times	times
Current ratio (1)	1.5	2.0
Gearing ratio (2)	0.51	0.23
	For the financial	year ended
	31 December	31 December
	2013	2014
	%	%
Return on total assets (3)	9.9	27.1
Return on equity (4)	7.8	51.2
	For the financial	year ended
	31 December	31 December
	2013	2014
	Days	Days
Trade receivable turnover (5)	62	51
Trade payable turnover (6)	130	74
Inventory turnover (7)	9	21

Analysis regarding our average trade receivable turnover, average trade payable turnover and average inventory turnover can be found in the section headed ‘‘Financial Information — Certain Balance Sheet Items’’ in this prospectus.

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FINANCIAL INFORMATION

Notes:

(1) Current ratio is calculated by dividing current assets by current liabilities as at the respective year end, excluding asset classified as held for sale and liability directly associated with asset held for sale.
(2) Gearing ratio is calculated by dividing total borrowings (namely, bills payables, obligations under finance leases and liability directly associated with asset held for sale) by total equity as at the respective year end.
(3) Return on total assets is calculated by dividing profit for the year by the total assets (excluding asset classified as held for sale) as at the respective year end.
(4) Return on equity is calculated by dividing profit for the year by the total equity as at the respective year end.
(5) Trade receivable turnover is calculated by dividing the ending trade receivables balance and amount from a related party balance by the revenue for the financial year and multiply by 365 days.
(6) Trade payable turnover is calculated by dividing the ending trade payables and amounts due to related parties balance, by the total purchases of materials and subcontracting costs, for the financial year and multiply by 365 days.
(7) Inventory turnover is calculated based on the ending material and finished goods balance divided by cost of materials, multiplied by 365 days respectively.

Current ratio

Our Group’s current ratio increased from 1.5 as at 31 December 2013 to 2.0 as at 31 December 2014. The increase in the current ratio was due to the increase in cash and bank balances as a result of profit from operation.

Gearing ratio

Our Group’s gearing ratio decreased from 0.51 to 0.23 from the year ended 31 December 2013 to 31 December 2014. The decrease in the gearing ratio was due to the disposal of the asset held for sale which referred to the freehold property disposed in October 2014. As such, the liability (property loan) associated with this property of approximately S$3.3 million was only reflected as at 31 December 2013, before the disposal of the property in October 2014.

Return on total assets

Our return on total assets increased from approximately 9.9% for the year ended 31 December 2013 to approximately 27.1% for the year ended 31 December 2014, which was mainly due to our substantial increase in profit for the year by approximately 319.5%, being more than our increase in total assets for the year ended 31 December 2014.

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FINANCIAL INFORMATION

Return on equity

Our return on equity increased from approximately 7.8% for the year ended 31 December 2013 to approximately 51.2% for the year ended 31 December 2014, which was mainly due to the increase in profit for the year by approximately 319.5% from approximately S$0.6 million as at 31 December 2013 to approximately S$2.6 million as at 31 December 2014. That was mainly because of the significant increase in turnover from approximately S$7.8 million as at 31 December 2013 to approximately S$11.9 million as at 31 December 2014, representing an increase of approximately 51.4% which resulted in significant increase in profit for the year.

WORKING CAPITAL

Our Directors are of the opinion that, taking into consideration the internal resources and credit facilities presently available to our Group, and the estimated net proceeds of the Placing, our Group has sufficient working capital for our present requirements, that is, for at least the next 12 months commencing from the date of this prospectus.

RELATED PARTY TRANSACTIONS

The table below sets out the amounts from/to related parties and amounts due from/to directors as at the financial years ended 31 December 2013 and 2014:

	As at
	31 December	31 December
	2013	2014
	S$	S$
Amount due from a related party	24,401	44,860
Amount due from a director	—	7,006
Amounts due to related parties	209,165	348,193
Amounts due to directors	822,582	1,999

Amounts due from/to related parties were trade in nature, unsecured, interest-free and repayable within 30 days credit period. Details of which are set out in Note 25 and Note 32 of the Accountants’ Report in Appendix I to this prospectus.

Amount due from a director of Signmechanic Singapore represented advance to Mr. Kelvin Tan as at 31 December 2013 and 2014 and the amount was unsecured, non-interest bearing and repayable on demand. The amounts due to directors of Signmechanic Singapore represented advances from Mr. Peter Tan, Mr. Kelvin Tan, Ms. Khoo Ai Lin and Ms. Ong Siew Mui as at 31 December 2013 and 2014 and the amounts were unsecured, noninterest bearing and repayable on demand. The Directors confirmed that the balances of the amounts due from/to them have been fully settled prior to Listing. Details of which are set out in the Accountants’ Report in Appendix I to this prospectus.

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FINANCIAL INFORMATION

With respect to the related party transactions set forth in Note 32 of the Accountants’ Report in Appendix I to this prospectus, our Directors confirm that these transactions were conducted on normal commercial terms and/or that such terms were no less favourable to our Group than terms available to Independent Third Parties and were fair and reasonable and in the interest of our Shareholders as a whole.

UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS

The following unaudited pro forma adjusted net tangible assets of our Group prepared in accordance with paragraph 31 of Chapter 7 of the GEM Listing Rules is for illustrative purposes only, and is set out below to illustrate the effect of the Placing on the audited net tangible assets of our Group as of 31 December 2014 as if the Placing had been completed on 31 December 2014.

This unaudited pro forma adjusted net tangible assets has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the net tangible assets of our Group as at 31 December 2014 or at any future dates following the Placing. The unaudited pro forma adjusted net tangible assets does not form part of the Accountants’ Report.

			Unaudited	Unaudited
	Audited net		pro forma	pro forma
	tangible	Estimated	adjusted net	adjusted net
	assets as at	net proceeds	tangible	tangible
	31 December	from the	assets of the	assets per
	2014	Placing	Group	Share
	S$	S$	S$
	(Note 1)	(Note 2)	(Note 3)	(Note 5)
Based on a Placing Price of	5,013,867	4,106,675	9,120,542	2.28
HK$0.50 per Placing				(Singapore
Share				cents) or
				12.99
				(Hong
				Kong cents)

Notes:

(1) The amount audited net tangible assets of the Group as at 31 December 2014 is derived from the financial information set forth in the Accountants’ Report set out in Appendix I to this prospectus, which is based on the audited net tangible assets of our Group of approximately S$5.0 million.
(2) The estimated net proceeds from the Placing are based on the indicative Placing Price of HK$0.50 per Placing Share after deduction of the estimated underwriting fees and other related expenses payable by our Company. The estimated net proceeds are converted into S$ at the rate of S$1 = HK$5.6963.

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FINANCIAL INFORMATION

(3) The unaudited pro forma adjusted net tangible assets per Placing Share is calculated based on 400,000,000 Shares in issue immediately following the completion of the Placing and the Capitalisation. It does not take into account any shares which may be allotted and issued or repurchased by the Company pursuant to the general mandates for the allotment and issue or repurchase of shares referred to in Appendix IV to this prospectus or otherwise.
(4) No adjustment has been made to the unaudited pro forma net tangible assets to reflect any trading results or other transactions of our Group entered into subsequent to 31 December 2014.
(5) The unaudited pro forma net tangible assets per share is arrived at after the adjustments referred to in the preceding paragraphs and on the basis that 400,000,000 Shares were in issue immediately following the completion of the Placing.

DISTRIBUTABLE RESERVES

The aggregate amount of the distributable reserves as at 31 December 2013 and 31 December 2014 of Signmechanic Singapore were approximately S$7.3 million and S$4.5 million respectively.

DIVIDEND POLICY

For each of the two years ended 31 December 2014, Signmechanic Singapore declared dividends of S$0.1 million and approximately S$5.4 million, respectively, out of the distributable profit and all these dividends had been paid as at the Latest Practicable Date. Dividends declared and paid in the past should not be regarded as an indication of the dividend policy to be adopted by our Company following Listing.

After completion of the Placing, our Shareholders will be entitled to receive dividends only when declared by our Board. The payment and the amount of any dividends will be at the discretion of our Directors and will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions (if any) and other factors which our Directors deem relevant. We do not have any predetermined dividend payout ratio.

Cash dividends on our shares, if any, will be paid in Hong Kong dollars. Other distributions, if any, will be paid to our shareholders by any means which our Directors deem legal, fair and practicable. Investors should note that historical dividend distributions are not indicative of our future dividend distribution policy.

FINANCIAL RISK MANAGEMENT AND FAIR VALUE

Credit risk management

Our Group’s maximum exposure to credit risk in the event of the counterparties’ failure to perform their obligations at 31 December 2013 and 31 December 2014 in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the statement of financial position. Our Group’s credit risk is primarily attributable to our trade receivables and cash and cash equivalents. In order to minimise the credit risk, our Group have established policies and systems for the monitoring and control of credit risk. Please refer to Note 30 of the Accountants’ Report in Appendix I to this prospectus for further details.

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FINANCIAL INFORMATION

Liquidity risk management

Our Group’s exposure to liquidity risk arises in the general funding of our Group’s operations, in particular, that the duration of our contracts span from 1 month to 4 years and during which the amount of progress claim vary from month to month depending on the provision of signage and related products for the month. Our supply and installation schedule is as directed by our customer, in accordance with the main contractor’s schedule. Please refer to section headed ‘‘Risk Factors’’ in this prospectus. As such, we actively manage our customers’ credit limits, aging, repayment of retention monies and monitor our operating cash flows to ensure adequate working capital funds and repayment schedule is met.

DISCLOSURE REQUIRED UNDER THE LISTING RULES

Our Directors have confirmed that, as at the Latest Practicable Date, there are no circumstances which, would have given rise to a disclosure requirement under Rules 17.15 to 17.21 of the GEM Listing Rules.

LATEST DEVELOPMENT SUBSEQUENT TO THE TRACK RECORD PERIOD AND NO MATERIAL ADVERSE CHANGE

Based on our unaudited financial information for the four months ended 30 April 2015, our revenue increased by approximately 12.4%, as compared to that for the four months ended 30 April 2014. The increase was primarily due to new contracts whose revenue was recognised in the four months ended 30 April 2015. From 1 January 2015 up to the Latest Practicable Date, we did not experience any significant drop in revenue or increase in cost of sales or other costs (apart from listing expenses incurred) as there were no significant changes to the general business model of our Group and economic environment.

Our Directors confirm that, up to the date of this prospectus, there has been no material adverse change in our financial or trading position or prospects since 1 January 2015 and there is no event since 1 January 2015 which would materially affect the information shown in our financial statements included in the Accountants’ Report set forth in Appendix I to this prospectus, in each case except as otherwise disclosed herein.

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UNDERWRITING

JOINT LEAD MANAGERS

Grand Vinco Capital Limited Sinomax Securities Limited

UNDERWRITERS

Grand Vinco Capital Limited Sinomax Securities Limited

UNDERWRITING ARRANGEMENTS AND EXPENSES

The Underwriting Agreement

Pursuant to the Underwriting Agreement, our Company and the Selling Shareholder are offering the Placing Shares for subscription and purchase by way of placing to selected professional, institutional or other investors in Hong Kong at the Placing Price subject to the terms and conditions in the Underwriting Agreement and this prospectus.

Subject to, among other conditions, the Stock Exchange granting the listing of, and permission to deal in, our Shares in issue and to be issued as mentioned in this prospectus (including any Shares which may fall to be allotted and issued pursuant to the Capitalisation Issue) and to certain other conditions set out in the Underwriting Agreement being fulfilled or waived on or before the dates and times specified in the Underwriting Agreement, the Underwriters have severally agreed to subscribe for or purchase or procure subscribers or purchasers for their respective applicable proportions of the Placing Shares on the terms and conditions of the Underwriting Agreement and this prospectus.

Grounds for termination

Vinco Capital (for itself and on behalf of the Underwriters) shall have the absolute right to terminate the underwriting arrangements with immediate effect pursuant to the Underwriting Agreement by notice in writing given to our Company (for ourselves and on behalf of the Selling Shareholder) at any time prior to 8: 00 a.m. (Hong Kong time) on the Listing Date (the ‘‘Termination Time’’), if any of the following events shall occur prior to the Termination Time:

(a) there develops, occurs, exists or comes into force:
(i) any change or development involving a prospective change or development in, or any event or series of events resulting or likely to result in or representing any prospective change or development in, local, national, regional or international financial, political, military, industrial, legal, economic, currency market, credit, fiscal or regulatory or market matters or conditions (including, without limitation, conditions in stock and bond markets, money and foreign exchange markets, credit markets, and interbank markets, a change in the system under which the value of the Hong

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UNDERWRITING

Kong currency is linked to that of the currency of the United States or a devaluation of the Renminbi against any foreign currencies) in or affecting Hong Kong, the Cayman Islands, Singapore, the British Virgin Islands, or any other jurisdiction relevant to any member of our Group (each a ‘‘Relevant Jurisdiction’’); or

(ii) any new law or regulation or any change or development involving a prospective change in any existing law or regulation, or any change or development involving a prospective change in the interpretation or application thereof by any court or other competent authority in or affecting any Relevant Jurisdiction; or
(iii) any event or series of events in the nature of force majeure (including, without limitation, acts of government, labour disputes, strikes, lock-outs, fire, explosion, flooding, earthquake, civil commotion, riots, public disorder, declaration of a national or international emergency, acts of war, riot, public disorder, acts of terrorism (whether or not responsibility has been claimed), acts of God, epidemic, pandemic, outbreak of disease (including without limitation Severe Acute Respiratory Syndromes (SARS), H5N1, H1N1, H7N9)), economic sanctions, in or affecting any of the Relevant Jurisdictions; or
(iv) any local, national, regional or international outbreak or escalation of hostilities (whether or not war is or has been declared) or other state of emergency or calamity or crisis in or affecting any of the Relevant Jurisdictions; or
(v) (A) any moratorium, suspension, restriction or limitation on trading in securities generally on the Stock Exchange, the New York Stock Exchange, the NASDAQ Global Market or the London Stock Exchange; or (B) a general moratorium on commercial banking activities in any of the Relevant Jurisdictions declared by the relevant authorities, or a disruption in commercial banking activities or foreign exchange trading or securities settlement or clearance services procedures or matters in or affecting any of the Relevant Jurisdictions; or
(vi) any change or development or event involving a prospective change in taxation or exchange controls (or the implementation of any exchange control), currency exchange rates or foreign investment regulations in any of the Relevant Jurisdictions; or
(vii) any imposition of economic sanction or withdrawal of trading privileges, in whatever form, directly or indirectly, by, or for, any of the Relevant Jurisdictions; or
(viii) any adverse change or development or event or a prospective adverse change or development or event in our Group’s assets, liabilities, profit, losses, performance, condition, business, financial, earnings, trading position,

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UNDERWRITING

prospects, properties, results of operations, general affairs, shareholders’ equity, management, position or condition, financial or otherwise, whether or not arising in the ordinary course of business, as determined by Vinco Capital in its sole and absolute discretion; or

(ix) the commencement by any judicial, regulatory, governmental or political body or organisation of any action, claim or proceedings against any Director or an announcement by any judicial, regulatory, governmental or political body or organisation that it intends to take any such action; or
(x) a Director being charged with an indictable offence or prohibited by operation of law or otherwise disqualified from taking part in the management of a company; or
(xi) the chairman or chief executive officer of our Company vacating his office in circumstances where the operations of our Group may be adversely affected, save and except for health reasons; or
(xii) save as disclosed in this prospectus, a contravention by any member of our Group of the GEM Listing Rules or any applicable laws or regulations in the Cayman Islands, Hong Kong, Singapore and the British Virgin Islands; or
(xiii) an order or petition is presented for the winding up or liquidation of our Company or any of our subsidiaries, or our Company or any of our subsidiaries make any composition or arrangement with its creditors or enter into a scheme of arrangement or any resolution is passed for the winding-up of our Company or any of our subsidiaries or a provisional liquidator, receiver or manager is appointed over all or part of the assets or undertaking of our Company or any of our subsidiaries or anything analogous thereto occurs in respect of our Company or any of our subsidiaries; or
(xiv) a valid demand by any creditor for repayment or payment of any of our Company’s indebtednesses or those of any of our subsidiaries or in respect of which our Company or any of our subsidiaries is liable prior to its stated maturity; or
(xv) any loss or damage sustained by our Company or any of our subsidiaries as a result of a breach of its respective obligations or non-compliance with the applicable laws and regulations (howsoever caused and whether or not the subject of any insurance or claim against any person); or
(xvi) any litigation or claim of material importance being threatened or instigated against our Company or any of our subsidiaries or any of the Directors; or
(xvii) a prohibition on our Company for whatever reason from allotting the Placing Shares pursuant to the terms of the Placing; or

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UNDERWRITING

(xviii) non-compliance by our Group or our Directors or the Selling Shareholder of this prospectus (of any other documents used in connection with the contemplated Placing of the Placing Shares) or any aspect of the Placing with the GEM Listing Rules or any other applicable law or regulation; or
(xix)other than with the approval of the Sole Sponsor (such approval shall not be unreasonably withheld or delayed), the issue or requirement to issue by our Company of any supplement or amendment to this prospectus (or to any other documents used in connection with the contemplated Placing of our Shares) pursuant to the Companies (Winding Up and Miscellaneous Provision) Ordinance (Cap 32) or the GEM Listing Rules; or
(xx) any event which give rise or would give rise to liability on the part of our Company pursuant to the indemnity provisions in the Underwriting Agreement; or
(xxi) any change or prospective change in, or a materialisation of, any of the risks set out in the section headed ‘‘Risk Factors’’ in this Prospectus, and which, individually or in the aggregate, in the sole opinion of the Sole Sponsor and the Joint Lead Managers (for themselves and on behalf of the Underwriters), (A) has or may have or will have or is likely to have a materially adverse effect, whether directly or indirectly, on the assets, liabilities, business, general affairs, management, shareholders’ equity, profits, losses, trading position or other condition or prospects of our Company or our subsidiaries as a whole; or (B) has or may have or will have or is likely to have a material adverse effect on the success or the level of indication of interest in the Placing; or (C) makes, may make or will or is likely to make it impracticable or inadvisable or in expedient for any part of the Underwriting Agreement or the Placing to proceed or to be performed or implemented as envisaged or to market the Placing; or (D) makes or may make or will or is likely to make it inadvisable or inexpedient to proceed with the Placing or the delivery of the Placing Shares on the terms and in the manner contemplated by this prospectus; or
(xxii) a prohibition on the Selling Shareholder for whatever reason from selling the Sale Shares pursuant to the Placing; or
(b) there has come to the notice of the Sole Sponsor and/or the Joint Lead Managers or any of the Underwriters after the date of the Underwriting Agreement:
(i) that any statement contained in this prospectus and other Placing Documents (as defined in the Underwriting Agreement), the formal notice or any announcements in the agreed form issued or used by or on behalf of our Company in connection with the Placing (including any supplement or amendment thereto) was, when it was issued, or has or may become untrue or incorrect or misleading in a material respect, or any expression of opinion,

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UNDERWRITING

intention or expectation contained therein is not fair and honest and based on reasonable assumptions with reference to the facts and circumstances then subsisting, when taken as a whole; or

(ii) that any matter has arisen or has been discovered which, had it arisen or been discovered immediately before the date of this prospectus which would or might constitute a material omission from this prospectus and/or in any notices or announcements issued or used by or on behalf of our Company in connection with the Placing (including any supplement or amendment thereto); or
(iii) that any of the warranties given by our Company or the covenantors or the Underwriting Agreement is (or would when repeated be) untrue, inaccurate or misleading or having been breached; or
(iv) that any matter, event, act or omission which gives or is likely to give rise to any liability of a material nature of our Company or the Covenantors out of or in connection with any breach, inaccuracy and/or incorrectness of the warranties as set out in the Underwriting Agreement and/or pursuant to the indemnities given by our Company, the covenantors or any of them under the Underwriting Agreement; or
(v) that any breach of any of the obligations or undertakings of any party to the Underwriting Agreement to be material in the context of the Placing (other than the Sole Sponsor, the Joint Lead Managers or the Underwriters); or
(vi) that our Company withdraws this prospectus; or
(vii) that approval by the Listing Division of the listing of, and permission to deal in, our Shares to be issued under the Placing is refused or not granted, other than subject to customary conditions, on or before the date of approval of the listing, or if granted, the approval is subsequently withdrawn, qualified (other than by customary conditions) or withheld; or
(viii) that any of the experts described under the paragraph headed ‘‘Other Information — Qualifications of experts and Consents of experts’’ in Appendix IV to this prospectus has withdrawn its respective consent to the issue of this prospectus with the inclusion of its reports, letters, summaries of valuations and/or opinions (as the case may be) and references to its name included in the form and context in which it respectively appears.

Undertakings

Under Rule 13.16A(1) of the GEM Listing Rules, no further Shares or securities convertible into our equity securities (whether or not a class already listed) may be issued by our Company or form the subject of any agreement to such an issue within six months from

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UNDERWRITING

the Listing Date (whether or not such issue of Shares or our securities will be completed within six months from the Listing Date), except in the circumstances prescribed by Rule 13.16A(1) of the GEM Listing Rules.

We have undertaken to the Sole Sponsor, the Joint Lead Managers, the Joint Bookrunners, and the Underwriters under the Underwriting Agreement that, and our Controlling Shareholders have undertaken to the Sole Sponsor, the Joint Lead Managers, the Joint Bookrunners and the Underwriters to procure, that except pursuant to the Placing, (1) our Company will not without the prior written consent of the Joint Lead Managers (for themselves and on behalf of the Underwriters) (such consent not to be unreasonably withheld or delayed) and unless in compliance with the GEM Listing Rules (including but not limited to Rule 17.29 of the GEM Listing Rules), at any time after the date of the Underwriting Agreement up to and including the date falling six months after the Listing Date (the ‘‘First Six-month Period’’), (i) offer, accept subscription for, pledge, charge, allot, issue, sell, lend, mortgage, assign, contract to allot, issue or sell, sell any option or contract to purchase, purchase any option or contract to sell, grant or agree to grant any option, right or warrant to purchase or subscribe for, make any short sale, lend or otherwise transfer or dispose of, either directly or indirectly, conditionally or unconditionally, or repurchase, any of our share capital, debt capital or other securities of our Company or any interest therein or any voting right or any other right attaching thereto (including, but not limited to, any securities convertible into or exercisable or exchangeable for, or that represent the right to receive any such share capital or securities or any interest therein) save as pursuant to the repurchase mandate granted by our Shareholders to our Directors as described in Appendix IV to this prospectus, or (ii) enter into any swap or other arrangement that transfers to or in favour of any third party other than any member of our Group, in whole or in part, any of the economic consequences of ownership of such share capital or securities or interest therein or any voting right or any other right attaching thereto, or (iii) enter into any transaction with the same economic effect as any transaction described in (i) and (ii) above, or (iv) agree or contract to, or publicly announce any intention to enter into, any foregoing transaction described in (i), (ii) and (iii); whether any of the foregoing transactions described in (i), (ii) and (iii) is to be settled by delivery of Shares or such other securities, in cash or otherwise; and (2) in the event of an issue or disposal of any Shares or any interest therein or any voting right or any other right attaching thereto during the six-month period immediately following the First Six-month Period (the ‘‘Second Six-month Period’’), we will take all reasonable steps to ensure that such issue or disposal will not create a disorderly or false market in the securities of our Company.

Under Rule 13.16A(1) of the GEM Listing Rules, each of our Controlling Shareholders, namely Mr. Kelvin Tan, Mr. Peter Tan and Absolute Truth, has undertaken to the Stock Exchange that except pursuant to the Placing that they shall not, and shall procure that the relevant registered holder(s) shall not (i) at any time during the period commencing on the date by reference to which disclosure of the shareholding of our Controlling Shareholders is made in this prospectus and ending on the date which is six months from the Listing Date, dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interest or encumbrances in respect of, any of our securities in respect of which it is shown by this prospectus to be the beneficial owners; and

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UNDERWRITING

(ii) at any time during the period of six months commencing on the date on which the period referred to in paragraph (i) above expires, dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of our securities referred to in paragraph (i) above if, immediately following such disposal or upon the exercise or enforcement of such options, rights, interests or encumbrances, they would then cease to be our Company’s controlling shareholders (as defined under the GEM Listing Rules).

Note of Rule 13.16A(1) of the GEM Listing Rules provides that our Controlling Shareholders are free to purchase additional securities and dispose of securities thus purchased in the period commencing on the date by reference to which disclosure of the shareholding of the Controlling Shareholders is made in this prospectus and ending on the date which is 1 year from the Listing Date, subject to compliance with the requirements of Rule 11.23 of the GEM Listing Rules to maintain an open market in the securities and a sufficient public float.

Under Rule 13.19 of the GEM Listing Rules, our Controlling Shareholders have also undertaken to the Stock Exchange, our Company, the Sole Sponsor and the Joint Lead Managers (for themselves and on behalf of the Underwriters) that (i) in the event that our Controlling Shareholders or any of their close associates pledges or charges any direct or indirect interest in the relevant Shares in favour of an authorised institution (as defined in the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)), as security for a bona fide commercial loan or pursuant to any right or waiver grated by the Stock Exchange pursuant to Rule 13.18(4) of the GEM Listing Rules, at any time during the period commencing on the date of this prospectus and ending on the date which is six months from the Listing Date, he/it must inform our Company immediately thereafter, disclosing the details specified in Rules 17.43(1) to (4) of the GEM Listing Rules; and (ii) having pledged or charged any interest in Shares under (i) above, he/she must inform our Company immediately in the event that he/she becomes aware that the pledgee or chargee has disposed of or intended to dispose of such interest and of the number of Shares affected.

Total commission, fee and expenses

In connection with the Placing, the Underwriters will receive an underwriting commission of 3.0% of the aggregate Placing Price of all Placing Shares according to the arrangement of the Underwriting Agreement, out of which they will pay any subunderwriting commissions and praecipium.

In connection with the Listing and the Placing, the total expenses, including the listing fees, the underwriting commission, the brokerage, the SFC transaction levy, the Stock Exchange trading fee, legal and other professional fees, printing and other expenses, to be borne by our Company and the Selling Shareholder, at the Placing Price of HK$0.50, are estimated to be approximately HK$16.6 million and approximately HK$0.8 million respectively.

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UNDERWRITING

Underwriters’ interest in our Company

Save as provided for under the Underwriting Agreement and disclosed otherwise in this prospectus, none of the Sole Sponsor, the Joint Lead Managers and the Underwriters or any of its directors, employees or associates has any shareholding interests in any member of our Group nor has any right or option to subscribe for or nominate persons to subscribe for any Shares.

SOLE SPONSOR’S INTEREST AND INDEPENDENCE

Save as disclosed in this prospectus, and for advisory and documentation fee paid and to be paid to Grand Vinco Capital Limited as the Sole Sponsor in connection with the Listing and as our compliance adviser with effect from the Listing Date, Vinco Capital nor any of its close associates has or may, as a result of the Listing and the Placing, have any interest in any class of securities of our Company or any other members of our Group (including options or rights to subscribe for such securities).

No director or employee of Vinco Capital who is involved in providing advice to our Company has or, as a result of the Listing and/or the Placing, may have any interest in any class of securities of our Company or any other members of our Group (including options or rights to subscribe for such securities). No director or employee of Vinco Capital has any directorship in our Company or any other members of our Group.

The Sole Sponsor satisfies the independence criteria applicable to sponsors as set forth in Rule 6A.07 of the GEM Listing Rules.

– 218 –

STRUCTURE AND CONDITIONS OF THE PLACING

CONDITIONS OF THE PLACING

The Placing will be conditional upon, among others:

(i) the Stock Exchange granting the listing of, and permission to deal in, the Shares in issue and the Shares to be issued as mentioned in this prospectus on GEM;
(ii) the obligations of the Underwriters under the Underwriting Agreement becoming unconditional (including the waiver of any condition(s) by the Sole Sponsor and/ or Vinco Capital (for itself and on behalf of the Underwriters)) and the Underwriting Agreement not being terminated in accordance with the terms of that agreement or otherwise.

The consummation of the Placing is conditional upon, among other things, the Placing becoming unconditional and not having been terminated in accordance with its terms.

If such conditions have not been fulfilled or waived by the Sole Sponsor and/or Vinco Capital (where appropriate) (for itself and on behalf of the Underwriters) prior to the times and dates specified, the Placing will lapse and the Stock Exchange will be notified immediately. Notice of the lapse of the Placing will be published by our Company on the website of the Stock Exchange at www.hkexnews.hk and our Company’s website at www.kpmholding.com on the next Business Day following such lapse.

THE PLACING

100,000,000 Placing Shares (comprising 80,000,000 New Shares and 20,000,000 Sale Shares) are being offered pursuant to the Placing, representing in aggregate 25% of the enlarged issued share capital of our Company immediately after the Capitalisation Issue and completion of the Placing.

The Placing is fully underwritten by the Underwriters (subject to the terms and conditions of the Underwriting Agreement. Pursuant to the Placing, it is expected that the Underwriters, on behalf of our Company and the Selling Shareholder, will conditionally place 100,000,000 Placing Shares at the Placing Price to selected individual, professional and institutional investors in Hong Kong.

BASIS OF ALLOCATION

Allocation of the Placing Shares to selected individual, professional and institutional investors will be based on a number of factors, including the level and timing of demand and whether or not it is expected that the relevant investors are likely to purchase further Shares or hold or sell their Shares after the Listing. Such allocation is intended to result in a distribution of the Placing Shares which would lead to the establishment of a solid professional and institutional shareholder base to the benefit of our Company and the Shareholders as a whole. In particular, the Placing Shares will be allocated pursuant to Rule 11.23(8) of the GEM Listing Rules, that not more than 50% of the Shares in public hands at the time of Listing will be owned by the three largest public Shareholders. There will not be any preferential treatment in the allocation of the Placing Shares to any persons.

– 219 –

STRUCTURE AND CONDITIONS OF THE PLACING

No allocations will be permitted to nominee companies unless the name of the ultimate beneficiary is disclosed, without the prior written consent of the Stock Exchange. Details of the Placing will be announced in accordance with Rules 10.12(4), 16.08 and 16.16 of the GEM Listing Rules.

PLACING PRICE

The Placing Price is HK$0.50 per Placing Share. Subscribers or purchasers, when subscribing for or purchasing the Placing Shares, shall pay the Placing Price plus 1% brokerage, 0.005% Stock Exchange trading fee and 0.0027% SFC transaction levy, representing a total of HK$2,525.20 for every board lot of 5,000 Shares.

The net proceeds from the Placing of New Shares based on the Placing Price of HK$0.50 per Share are estimated to be approximately HK$23.4 million, after deduction of the underwriting commission and other expenses relating to the Placing and the Listing payable by our Company.

The level of indications of interests in the Placing and the basis of allocations of the Placing Shares will be announced on the Stock Exchange’s website at www.hkexnews.hk and our Company’s website at www.kpmholding.com on or before Thursday, 9 July 2015.

SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS

Application has been made to the Stock Exchange for listing of and permission to deal in the Shares in issue and to be issued as mentioned in this prospectus. Subject to the granting of the listing of, and permission to deal in, the Shares in issue and to be issued as mentioned in this prospectus on GEM and the compliance with the stock admission requirements of HKSCC, the Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the Listing Date, or any other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange is required to take place in CCASS on the second Business Day after any trading day. Investors should seek the advice of their stockbroker or other professional adviser for details of those settlement arrangements as such arrangements will affect their rights and interests. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

All necessary arrangements have been made for the Shares to be admitted into CCASS.

DEALINGS AND SETTLEMENT

Dealings in the Shares on GEM are expected to commence at 9: 00 a.m. on Friday, 10 July 2015. Shares will be traded in board lots of 5,000 Shares each and are freely transferable. The stock code for the Shares is 8027.

– 220 –

ACCOUNTANTS’ REPORT

APPENDIX I

The following is a text of a report, prepared for the purpose of incorporation in this prospectus, received from the independent reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong.

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30 June 2015

The Directors KPM Holding Limited

Grand Vinco Capital Limited

Dear Sirs,

We set out below our report on the financial information relating to KPM Holding Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) for each of the two years ended 31 December 2014 (the ‘‘Track Record Period’’), for inclusion in the prospectus of the Company dated 30 June 2015 in connection with the initial listing of the shares of the Company on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) (the ‘‘Prospectus’’).

The Company was incorporated and registered as an exempted company in the Cayman Islands with limited liability on 10 March 2015, with headquarter located in Singapore. The Company is an investment holding company. The principal activities of its operating subsidiary are engaged in design, fabrication, installation and maintenance of signage products. Pursuant to a group reorganisation, as more fully explained in the section headed ‘‘History, Reorganisation and Group structure — Reorganisation’’ in the Prospectus (the ‘‘Group Reorganisation’’), the Company became the holding company of the entities comprising the Group on 23 June 2015.

– I-1 –

ACCOUNTANTS’ REPORT

APPENDIX I

As at 31 December 2013 and 2014 and the date of this report, the Group has equity interests in the following subsidiaries:

					Issued and
	Place of		Date of		fully paid	Equity interest
Name of subsidiaries	incorporation	Legal form	incorporation		share capital	attributable to the		Company		Principal activities
						31 December		Date of
						2013	2014	the	report
Direct
Sino Promise Investments	British Virgin	Limited liability	12 January		US$1	N/A	N/A		100%	Investment holding
Limited (‘‘Sino Promise’’)	Islands	company		2015
	(‘‘BVI’’)
Indirect
Signmechanic Pte. Ltd.	Singapore	Limited liability	2	September	S$500,000	100%	100%		100%	Engaged in the design,
(‘‘Signmechanic Singapore’’)		company		1997						fabrication, installation
										and maintenance of
										signage products

All entities now comprising the Group adopted 31 December as their financial year end date.

The statutory financial statements of Signmechanic Singapore for the years ended 31 December 2013 and 2014 were prepared in accordance with the Singapore Financial Reporting Standards (‘‘SFRSs’’) issued by Accounting Standards Council in Singapore and were audited by BSPL PAC and Deloitte & Touche LLP Singapore, respectively.

No audited financial statements have been prepared for the Company and Sino Promise since their respective dates of incorporation as they were incorporated in the jurisdictions where there are no statutory audit requirements.

For the purpose of this report, the directors of Signmechanic Singapore have prepared the financial statements of Signmechanic Singapore for the Track Record Period in accordance with International Financial Reporting Standards (‘‘IFRSs’’) (the ‘‘Underlying Financial Statements’’). We have undertaken an independent audit on the Underlying Financial Statements in accordance with the Hong Kong Standards of Auditing issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’) and have examined the Underlying Financial Statements in accordance with Auditing Guideline 3.340 ‘‘Prospectuses and the Reporting Accountant’’ as recommended by the HKICPA.

The financial information for the Track Record Period (‘‘Financial Information’’) set out in this report has been prepared from the Underlying Financial Statements on the basis of presentation set out in note 2 to Section A below. No adjustments are considered necessary to the Underlying Financial Statement in the preparation of this report for inclusion in the Prospectus.

The Underlying Financial Statements are the responsibility of the directors of Signmechanic Singapore who approved their issue. The directors of the Company are responsible for the contents of the Prospectus in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

– I-2 –

ACCOUNTANTS’ REPORT

APPENDIX I

In our opinion, on the basis of presentation set out in note 2 to Section A below, the Financial Information gives, for the purpose of this report, a true and fair view of the state of affairs of the Group as at 31 December 2013 and 2014 and the results and cash flows of the Group for the Track Record Period.

– I-3 –

ACCOUNTANTS’ REPORT

APPENDIX I

A. FINANCIAL INFORMATION

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

NOTES
Revenue
6
Cost of sales
Gross profit
Other income
7
Other gains and losses
8
Selling and administrative expenses
Other expense
Finance costs
9
Profit before tax
Income tax expense
10
Profit for the year
11
Other comprehensive income (expense)
Items that may be reclassified subsequently to profit
or loss:
Available-for-sale investments
Fair value gain (loss) on available-for-sale
investments
Reclassification of cumulative gains from
investment valuation reserve to profit or
loss upon disposal of available-for-sale
investments
Other comprehensive income (expense) for the
year
Total comprehensive income for the year

Year ended 31 December
2013
2014
S$ S$ 7,827,042
11,850,088
(4,952,092)
(6,307,276)
2,874,950
5,542,812
71,198
208,193
(263,571)
(109,873)
(1,800,235)
(2,638,320)
—
(63,250)
(66,923)
(111,351)
815,419
2,828,211
(203,938)
(262,996)
611,481
2,565,215
22,203
(12,809)
—
(9,394)
22,203
(22,203)
633,684
2,543,012

– I-4 –

ACCOUNTANTS’ REPORT

APPENDIX I

STATEMENTS OF FINANCIAL POSITION

NOTES NON-CURRENT ASSETS Property, plant and equipment 16 Available-for-sale investments 17 Deferred tax assets 27 CURRENT ASSETS Inventories 18 Trade and other receivables 19 Amount due from a related party 25 Amount due from a director 26 Pledged bank deposits 20 Bank balances and cash 20 Asset classified as held for sale 21 CURRENT LIABILITIES Trade payables 22 Bills payables 22 Other payables and accruals 23 Amounts due to related parties 25 Amounts due to directors 26 Obligations under finance leases 24 Income tax payable Liability directly associated with asset classified as held for sale 21 NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	At 31 December 2013 2014 S$ S$ 296,099 679,373 269,505 20 12,996 — 578,600 679,393 337,656 615,661 2,359,598 2,441,845 24,401 44,860 — 7,006 79,564 586,564 2,818,571 5,087,491 5,619,790 8,783,427 8,848,283 — 14,468,073 8,783,427 1,181,859 689,656 529,880 909,841 757,435 1,803,726 209,165 348,193 822,582 1,999 76,019 91,825 208,031 448,543 3,784,971 4,293,783 3,283,657 — 7,068,628 4,293,783 7,399,445 4,489,644 7,978,045 5,169,037	At 31 December 2013 2014 S$ S$ 296,099 679,373 269,505 20 12,996 — 578,600 679,393 337,656 615,661 2,359,598 2,441,845 24,401 44,860 — 7,006 79,564 586,564 2,818,571 5,087,491 5,619,790 8,783,427 8,848,283 — 14,468,073 8,783,427 1,181,859 689,656 529,880 909,841 757,435 1,803,726 209,165 348,193 822,582 1,999 76,019 91,825 208,031 448,543 3,784,971 4,293,783 3,283,657 — 7,068,628 4,293,783 7,399,445 4,489,644 7,978,045 5,169,037
		679,393
		615,661 2,441,845 44,860 7,006 586,564 5,087,491
		8,783,427 —
		8,783,427
		689,656 909,841 1,803,726 348,193 1,999 91,825 448,543
		4,293,783 —
		4,293,783
		4,489,644
		5,169,037

– I-5 –

ACCOUNTANTS’ REPORT

APPENDIX I

NOTES NON-CURRENT LIABILITY Obligations under finance leases 24 NET ASSETS CAPITAL AND RESERVES Share capital 28 Reserves TOTAL EQUITY	At 31 December 2013 2014 S$ S$ 135,605 155,170 7,842,440 5,013,867 500,000 500,000 7,342,440 4,513,867 7,842,440 5,013,867	At 31 December 2013 2014 S$ S$ 135,605 155,170 7,842,440 5,013,867 500,000 500,000 7,342,440 4,513,867 7,842,440 5,013,867
		5,013,867
		500,000 4,513,867
		5,013,867

– I-6 –

ACCOUNTANTS’ REPORT

APPENDIX I

STATEMENTS OF CHANGES IN EQUITY

At 1 January 2013 Profit for the year Fair value gain on available- for-sale investments Total comprehensive income for the year Dividend declared (Note 13) At 31 December 2013 Profit for the year Fair value loss on available- for-sale investments Reclassification of cumulative gains from investment valuation reserve to profit or loss upon disposal of available-for-sale investments Total comprehensive (expense) income for the year Dividend declared (Note 13) At 31 December 2014	Share capital S$ 500,000 — — — — 500,000 — — — — — 500,000	Investment valuation reserve S$ — — 22,203 22,203 — 22,203 — (12,809) (9,394) (22,203) — —	Accumulated profits S$ 6,808,756 611,481 — 611,481 (100,000) 7,320,237 2,565,215 — — 2,565,215 (5,371,585) 4,513,867	Total S$ 7,308,756 611,481 22,203 633,684 (100,000) 7,842,440 2,565,215 (12,809) (9,394) 2,543,012 (5,371,585) 5,013,867

– I-7 –

ACCOUNTANTS’ REPORT

APPENDIX I

STATEMENTS OF CASH FLOWS

OPERATING ACTIVITIES
Profit before tax
Adjustments for:
Bank interest income
Depreciation of property, plant and equipment
Finance costs
Fair value gain on available-for-sale investments
Allowance on doubtful debts
Impairment loss on a freehold property upon reclassified as
held for sale
Loss on disposal of property, plant and equipment
Write-off of property, plant and equipment
Operating cash flows before movements in working capital
Increase in inventories
(Increase) decrease in trade and other receivables
Increase in amount due from a related party
Increase (decrease) in trade payables
Increase in other payables and accrual
Increase in amounts due to related parties
Cash generated from operations
Corporate income taxes paid
NET CASH FROM OPERATING ACTIVITIES
INVESTING ACTIVITIES
Advance to a director
Placement of pledged bank deposits
Proceeds from disposal of available-for-sale investments
Purchase of property, plant and equipment
Proceeds from disposal of asset classified as held for sale
Deposit received on disposal of asset classified as held for sale
Interest received
NET CASH (USED IN) FROM INVESTING ACTIVITIES

Years ended 31 December
2013
2014
S$ S$ 815,419
2,828,211
(22)
(496)
250,347
235,367
66,923
111,351
—
(9,394)
—
106,398
263,571
—
—
5,021
—
7,848
1,396,238
3,284,306
(254,362)
(278,005)
(1,041,919)
11,355
(3,087)
(20,459)
780,875
(492,203)
315,679
1,111,227
142,409
139,028
1,335,833
3,755,249
(130,879)
(9,488)
1,204,954
3,745,761
—
(7,006)
(54,501)
(507,000)
—
256,676
(196,444)
(490,346)
—
8,558,283
90,000
—
22
496
(160,923)
7,811,103

– I-8 –

ACCOUNTANTS’ REPORT

APPENDIX I

FINANCING ACTIVITIES
Advance from directors
Repayment to directors
Raised in bills payables
Repayment of bills payables
Obligations under finance leases interest paid
Repayment of bank loan
Bank loan interest paid
Repayment of obligations under finance leases
Trade finance interest paid
Dividend paid
NET CASH FROM (USED IN) FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR,
represented by bank balances and cash

Years ended 31 December
2013
2014
S$ S$ 37,509
—
(6,108)
(820,583)
529,880
909,841
(50,998)
(529,880)
(11,549)
(23,666)
(192,854)
(3,283,657)
(46,983)
(48,127)
(85,661)
(80,729)
(8,391)
(39,558)
(100,000)
(5,371,585)
64,845
(9,287,944)
1,108,876
2,268,920
1,709,695
2,818,571
2,818,571
5,087,491

– I-9 –

ACCOUNTANTS’ REPORT

APPENDIX I

NOTES TO THE FINANCIAL INFORMATION

1. GENERAL

The Company was incorporated and registered as an exempted company in the Cayman Islands with limited liability on 10 March 2015 and its registered office is Clifton House, 75 Fort Street, P.O. Box 1350, Grand Cayman KY1-1108, Cayman Islands. The principal place of business is at 424 Tagore Industrial Avenue, Sindo Industrial Estate, Singapore 787807.

The Company is an investment holding company and the principal activities of its operating subsidiary are engaged in the design, fabrication, installation and maintenance of signage products.

The Financial Information is presented in Singapore Dollar (‘‘S$’’), which is also the functional currency of the Company.

2. GROUP REORGANISATION AND BASIS OF PRESENTATION OF FINANCIAL INFORMATION

Prior to the commencement of the Group Reorganisation in 2015, throughout the Track Record Period, Signmechanic Singapore is under control of two independent individuals, Mr. Tan Thiam Kiat and Mr. Tan Kwang Hwee (together referred to as the ‘‘Controlling Shareholders’’). Mr. Tan Thiam Kiat and Mr. Tan Kwang Hwee held 50% respectively of the issued share capital of Signmechanic Singapore immediately prior to the implementation of the Group Reorganisation.

On 23 March 2015, Mr. Tan Thiam Kiat and Mr. Tan Kwang Hwee have executed an acting in concert confirmatory deed in respect of Signmechanic Singapore whereby they confirmed the existence of their acting in concert arrangements during the Track Record Period and for so long as they remain interests in Signmechanic Singapore to collectively control over Signmechanic Singapore. The Group Reorganisation comprised of the following steps:

. On 12 January 2015, Sino Promise was incorporated in the BVI. The authorised share capital of Sino Promise was US$50,000 divided into 50,000 shares of US$1.00 each and its issued and paid-up share capital was US$1, which has been allotted and issued to the Company on 10 March 2015.
. On 10 March 2015, the Company was incorporated in the Cayman Islands under the Companies Law, with an authorised share capital of HK$380,000 divided into 38,000,000 shares of HK$0.01 each.
. On 23 June 2015, the Controlling Shareholders transferred the entire issued share capital of Signmechanic Singapore to Sino Promise in the consideration of HK$38,106,550, which was satisfied by (i) the Company allotting and issuing 999,999 new shares of the Company to the Controlling Shareholders, credited as fully paid and (ii) the crediting of the one nil-paid share of the Company, which was registered in the name of Absolute Truth Investments Limited (a company controlled by the Controlling Shareholders), as fully paid. The total issued shares of the Company has been increased to 1,000,000 shares since then. The Company had nominated Sino Promise to hold the entire issued share capital of Signmechanic Singapore. The Controlling Shareholders had nominated Absolute Truth Investments Limited to hold the 999,999 new shares of the Company. In consideration of the Company nominating Sino Promise to hold the entire issued share capital of Signmechanic Singapore, on 23 June 2015, Sino Promise allotted and issued 9 new shares to the Company, credited as fully paid.

– I-10 –

ACCOUNTANTS’ REPORT

APPENDIX I

Since the Controlling Shareholders’ interest in Signmechanic Singapore is the same before and after the above transactions, the Group, comprising the Company, Sino Promise and Signmechanic Singapore, resulting from the group reorganisation is regarded as a continuing entity. The Financial Information of the Group has been prepared as if the Company had been the holding company of Sino Promise and Signmechanic Singapore throughout the Track Record Period. As the Company and Sino Promise are incorporated subsequent to the Track Record Period, the Financial Information was prepared based on the financial statements of Signmechanic Singapore for the Track Record Period.

3. APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

For the purpose of preparing and presenting the Financial Information for the Track Record Period, the Group has consistently adopted IFRSs, International Accounting Standards (‘‘IASs’’), amendments and interpretations which are mandatorily effective for the Group’s accounting period beginning on 1 January 2014 throughout the Track Record Period.

At the date of this report, the following new and revised IFRSs have been issued but are not yet effective. The Group has not early applied these standards and amendments.

IFRS 9	Financial Instruments1
IFRS 14	Regulatory Deferral Accounts2
IFRS 15	Revenue from Contracts with Customers3
Amendments to IFRS 11	Accounting for Acquisitions of Interests in Joint Operations5
Amendments to IAS 1	Disclosure Initiative5
Amendments to IAS 16 and IAS 38	Clarification of Acceptable Methods of Depreciation and
	Amortisation5
Amendments to IAS 19	Defined Benefit Plans: Employee Contributions4
Amendments to IFRSs	Annual Improvements to IFRSs 2010–2012 Cycle6
Amendments to IFRSs	Annual Improvements to IFRSs 2011–2013 Cycle4
Amendments to IFRSs	Annual Improvements to IFRSs 2012–2014 Cycle5
Amendments to IAS 16 and IAS 41	Agriculture: Bearer Plants5
Amendments to IAS 27	Equity Method in Separate Financial Statements5
Amendments to IFRS 10 and	Sale or Contribution of Assets between an Investor and its
IAS 28	Associate or Joint Venture5
Amendments to IFRS 10,	Investment Entities: Applying the Consolidation Exception5
IFRS 12 and IAS 28

1 Effective for annual periods beginning on or after 1 January 2018

2 Effective for first annual IFRS financial statements beginning on or after 1 January 2016

3 Effective for annual periods beginning on or after 1 January 2017

4 Effective for annual periods beginning on or after 1 July 2014

5 Effective for annual periods beginning on or after 1 January 2016

6 Effective for annual periods beginning on or after 1 July 2014, with limited exceptions

IFRS 9 Financial Instruments

IFRS 9 issued in 2009 introduces new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in 2010 to include the requirements for the classification and measurement of financial liabilities and for derecognition, and further amended in 2013 to include the new requirements for hedge accounting. Another revised version of IFRS 9 was issued in 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement by introducing a ’fair value through other comprehensive income’ (FVTOCI) measurement category.

– I-11 –

ACCOUNTANTS’ REPORT

APPENDIX I

Key requirements of IFRS 9 are described below:

. All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.
. With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value of financial liabilities attributable to changes in the financial liabilities’ credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss was presented in profit or loss.
. In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.
. The new general hedge accounting requirements retain the three types of hedge accounting. However, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.

The management of the Group considers that the adoption of IFRS 9 in the future may have an impact on the amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the financial effect on the Group’s financial information until a detailed review has been completed.

IFRS 15 Revenue from Contracts with Customers

In 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective.

– I-12 –

ACCOUNTANTS’ REPORT

APPENDIX I

The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5- step approach to revenue recognition:

. Step 1: Identify the contract(s) with a customer
. Step 2: Identify the performance obligations in the contract
. Step 3: Determine the transaction price
. Step 4: Allocate the transaction price to the performance obligations in the contract
. Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ’control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15.

The management of the Group has yet to perform a detailed review on the potential impacts of IFRS 15. Hence, it is not practicable to provide a reasonable estimate of the financial effect and the relevant disclosures at this juncture.

Except as described above, the management of the Group considers that the application of the other new and revised standards is unlikely to have a material impact on its financial position and performance as well as disclosure.

4. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared on the historical cost basis, except for certain financial instruments that are measured at fair values, and in accordance with the following accounting policies which conform to IFRSs. In addition, the Financial Information includes applicable disclosures required by the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange.

In addition, the Financial Information includes applicable disclosures required by the Hong Kong Companies Ordinance which for the Track Record Period continue to be those of the predecessor Companies Ordinance (Cap. 32), in accordance with transitional and saving arrangements for Part 9 of the Hong Kong Companies Ordinance (Cap. 622), ‘‘Accounts and Audit’’, which are set out in sections 76 to 87 of Schedule 11 to that ordinance.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in the Financial Information is determined on such a basis, except leasing transactions that are within the scope of IAS 17 Leases and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairment of assets.

– I-13 –

ACCOUNTANTS’ REPORT

APPENDIX I

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
. Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
. Level 3 inputs are unobservable inputs for the asset or liability.

The principal accounting policies are set out below.

Merger accounting for business combination involving entities under common control

The Financial Information incorporate the financial statements items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.

The net assets of the combining entities or businesses are consolidated using the existing book values from the controlling party’s perspective. No amount is recognised in respect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the continuation of the controlling party’s interest.

The statement of profit or loss and other comprehensive income includes the results of each of the combining entities or businesses, as appropriate, from the earliest date presented or since the date when the combining entities or businesses first came under the common control, where this is a shorter period, regardless of the date of the common control combination.

Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs of disposal.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for goods sold and services provided in the normal course of business, net of discounts and sales related taxes.

Revenue from the sales of goods including signage, bollard, variable-message signs and aluminum railings is recognised when goods are delivered to and accepted by the customers.

Service income is recognised when services are provided.

– I-14 –

ACCOUNTANTS’ REPORT

APPENDIX I

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease.

The Group as lessee

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligations so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term.

Foreign currencies

In preparing the financial information of the Group, transactions in currencies other than the functional currency of the Group (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the Group operates) at the rates of exchanges prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

– I-15 –

ACCOUNTANTS’ REPORT

APPENDIX I

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate.

Retirement benefit costs

Payments made to Central Provident Fund (‘‘CPF’’) in Singapore which is a defined contribution retirement plan are recognised as an expense when employees have rendered service entitling them to the contributions.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ’profit before tax’ as reported in the statement of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of each reporting period.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary difference to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business consolidation) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of each reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of each reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax is recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

Property, plant and equipment

Property, plant and equipment, including freehold property held for use in production or supply of goods or services or for administrative purposes are stated in the statements of financial position at cost less subsequent accumulated depreciation and accumulated impairment losses, if any.

Other than freehold property, depreciation is recognised so as to write off the cost of items of property, plant and equipment less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

– I-16 –

ACCOUNTANTS’ REPORT

APPENDIX I

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Impairment of tangible assets

At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets with finite useful lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or a cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in, first-out method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Financial instruments

Financial assets and financial liabilities are recognised in the statements of financial position when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

– I-17 –

ACCOUNTANTS’ REPORT

APPENDIX I

Financial assets

The Group’s financial assets are classified as loans and receivables and available-for-sale (‘‘AFS’’) financial assets. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial debt instrument and of allocating interest income over the Track Record Period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the finance assets, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis for debt instruments.

AFS financial assets

AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified as (a) loans and receivables; (b) held-to-maturity investments; or (c) financial assets at FVTPL.

Equity securities held by the Group that are classified as AFS financial assets and are traded in an active market are measured at fair value at the end of each reporting period. Other changes in the carrying amount of AFS financial assets are recognised in other comprehensive income and accumulated under the heading of ‘‘investment revaluation reserve’’. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss (see the accounting policy in respect of impairment loss on financial assets below).

Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including trade and other receivables, amounts due from a related party and a director, pledged bank deposits and bank balances and cash) are carried at amortised cost using effective interest method, less any identified impairment losses (see accounting policy on impairment of financial assets below).

Interest income is recognised by applying the effective interest rate, except for short-term receivables where the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

– I-18 –

ACCOUNTANTS’ REPORT

APPENDIX I

For loans and receivables, objective evidence of impairment could include:

. significant financial difficulty of the issuer or counterparty;
. breach of contract, such as a default or delinquency in interest or principal payments; or
. it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, observable changes in national or local economic conditions that correlate with default on receivables.

When an AFS financial asset is considered to be impaired, cumulative losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

For financial assets carried at amortised cost, the amount of impairment loss recognised is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity investments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of ‘‘investment revaluation reserve’’.

Financial liabilities and equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instrument

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instrument issued by the Company is recognised at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities including trade and bills payables, other payables, amounts due to related parties and directors and property loan are subsequently measured at amortised cost, using the effective interest method.

– I-19 –

ACCOUNTANTS’ REPORT

APPENDIX I

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the Track Record Period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest expense is recognised on an effective interest basis.

Derecognition

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

5. KEY SOURCES OF ESTIMATION UNCERTAINTY

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of each reporting period, that has a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year from the end of each reporting period.

Useful lives and impairment assessment of property, plant and equipment

Property, plant and equipment (other than freehold property) are stated at cost less accumulated depreciation and accumulated impairment loss in the statement of financial position. The estimation of their useful lives is the key element for the annual depreciation expense. Property, plant and equipment are evaluated for any possible impairment on a specific asset basis or group of similar assets basis, as applicable. This process requires the management’s estimate of future cash flows generated by each asset or group of assets. For any instance where this evaluation process indicates impairment, the appropriate asset’s carrying value would be written down to the recoverable amount and the impairment loss recognised would be charged to profit or loss. As at 31 December 2013 and 2014, the carrying amount of property, plant and equipment amounted to S$296,099 and S$679,373, respectively. The details of impairment on property, plant and equipment were set out in Note 21.

Estimated impairment of trade receivables

When there is objective evidence of impairment loss, the Group takes into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). When the actual future cash flows are less than expected, a material impairment loss may arise. As at 31 December 2013 and 2014, the carrying amount of

– I-20 –

ACCOUNTANTS’ REPORT

APPENDIX I

trade receivables of the Group amounted to S$1,277,551 and S$1,490,534, respectively, net of impairment loss recognised of S$23,210 and S$129,608 respectively. The details of allowance provided for on doubtful debts were set out in Note 19.

Estimated allowance for write-down of inventories to net realisable value

The Group makes allowance for inventories based on assessments of the net realisable values of existing inventories. Allowances are applied to inventories where events or changes in circumstances indicate that the net realisable value of certain items is lower than the cost of those items. The identification of obsolete inventories requires the use of estimation of the net realisable value of items of inventory and estimates on the conditions and usefulness of items of inventories. Where the estimated net realisable value is lower than the cost of the inventory items, an impairment may arise. As at 31 December 2013 and 2014, the carrying amount of inventories amounted to S$337,656 and S$615,661, respectively.

6. REVENUE AND SEGMENT INFORMATION

The Group operates in a single segment which mainly including sale of signage, bollard, variable-message signs and aluminium railing to customers located in Singapore.

Information is reported to the Controlling Shareholders, being the chief operating decision maker (‘‘CODM’’) of the Group, for the purposes of resource allocation and performance assessment. The accounting policies are the same as Group’s accounting policies described in Note 4. The CODM reviews revenue by nature of contracts, i.e. ‘‘Public’’ and ‘‘Private’’ and profit for the year as a whole. No analysis of the Group’s assets and liabilities is regularly provided to the CODM for review. Accordingly, only entity-wide disclosures on products, major customers and geographical information are presented in accordance with IFRS 8 Operating Segments.

An analysis of the Group’s revenue for the Track Record Period provided to the CODM for resource allocation and performance assessment is as follows:

Public Private	2013 S$ 5,220,488 2,606,554 7,827,042	2014 S$ 9,561,824 2,288,264
		11,850,088

Entity-wide disclosures

Major products

Revenue during the Track Record Period represents sale of signage, bollard, variable-message signs and alluminum railing in Singapore.

No information in respect of revenues from external customers for each product and service was presented, as the necessary information is not available and the cost to develop it would be excessive in the opinion of the management of the Group.

– I-21 –

ACCOUNTANTS’ REPORT

APPENDIX I

Major customers

During the Track Record Period, the revenue from customers individually contributed over 10% of total revenue of the Group are as follows:

Customer A Customer B	Year ended 31 December 2013 2014 S$ S$ —Note 1,431,554 —Note 1,347,011

Note The corresponding revenue did not contribute over 10% of the total revenue of the Group. None of the customers individually contributed over 10% of total revenue of the Group for the year ended 31 December 2013.

Geographical information

The Group principally operates in Singapore, also the place of domicile. All revenue and noncurrent assets of the Group are generated from external customers and located in Singapore by location of customers and non-current assets, respectively.

7. OTHER INCOME

Bank interest income Government grants (Note) Rental income under operating lease in respect of subleasing of workshop premises Others	Year ended 31 December 2013 2014 S$ S$ 22 496 56,903 78,629 — 113,508 14,273 15,560 71,198 208,193	Year ended 31 December 2013 2014 S$ S$ 22 496 56,903 78,629 — 113,508 14,273 15,560 71,198 208,193
		208,193

Note: Included in the amount is S$51,814 and S$57,716 cash bonus and cash payout under the ‘‘Productivity and Innovation Credit Scheme’’ (‘‘PIC Scheme’’) for the years ended 31 December 2013 and 2014, respectively. The PIC Scheme cash bonus gives businesses a dollar-for-dollar matching cash bonus for qualifying expenditure incurred during the Year of Assessment 2013 to 2015 subject to an overall cap of S$15,000 for all 3 years of assessment combined. On the other hand, the PIC Scheme cash payout allows businesses to convert up to S$100,000 of their total qualifying expenditure incurred from Year of Assessment 2013 to 2018 for each year of assessment in all 6 qualifying activities into a non-taxable cash receipt, at maximum amount of S$60,000.

– I-22 –

ACCOUNTANTS’ REPORT

APPENDIX I

8. OTHER GAINS AND LOSSES

Impairment loss on a freehold property upon reclassified as held for sale (Note 21) Allowance on doubtful debts (Note 19) Write-off of property, plant and equipment Loss on disposal of property, plant and equipment Fair value gain on available-for-sale investments	Year ended 31 December 2013 2014 S$ S$ (263,571) — — (106,398) — (7,848) — (5,021) — 9,394 (263,571) (109,873)	Year ended 31 December 2013 2014 S$ S$ (263,571) — — (106,398) — (7,848) — (5,021) — 9,394 (263,571) (109,873)
		(109,873)

9. FINANCE COSTS

Interests on borrowings wholly repayable within five years: — Bank loan — Obligations under finance leases — Trade financing	Year ended 31 December 2013 2014 S$ S$ 46,983 48,127 11,549 23,666 8,391 39,558 66,923 111,351	Year ended 31 December 2013 2014 S$ S$ 46,983 48,127 11,549 23,666 8,391 39,558 66,923 111,351
		111,351

10. INCOME TAX EXPENSE

Current tax — Singapore Corporate Income Tax (‘‘CIT’’) Deferred tax (Note 27)	Year ended 31 December 2013 2014 S$ S$ 203,938 250,000 — 12,996 203,938 262,996	Year ended 31 December 2013 2014 S$ S$ 203,938 250,000 — 12,996 203,938 262,996
		262,996

Singapore CIT is calculated at 17% of the estimated assessable profit eligible for CIT rebate of 30%, capped at S$30,000 for Year of Assessment 2013 to 2015. Singapore incorporated companies can also enjoy 75% tax exemption on the first S$10,000 of normal chargeable income and a further 50% tax exemption on the next S$290,000 of normal chargeable income.

– I-23 –

ACCOUNTANTS’ REPORT

APPENDIX I

The income tax expense for the year can be reconciled to the profit before tax per the statement of profit or loss and other comprehensive income as follows:

Profit before tax Tax at Singapore CIT of 17% Tax effect of expenses not deductible for tax purpose Tax effect of income under tax exemption and rebate Tax effect of enhanced allowance (Note) Others Income tax expense for the year	Year ended 31 December 2013 2014 S$ S$ 815,419 2,828,211 138,621 480,796 61,084 15,282 (55,925) (55,925) — (179,664) 60,158 2,507 203,938 262,996	Year ended 31 December 2013 2014 S$ S$ 815,419 2,828,211 138,621 480,796 61,084 15,282 (55,925) (55,925) — (179,664) 60,158 2,507 203,938 262,996
		480,796 15,282 (55,925) (179,664) 2,507
		262,996

Note: Being additional 300% tax deductions/allowances for qualified capital expenditures and operating expenses under the PIC scheme in Singapore for the Year of Assessment 2014.

11. PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging:– Auditor’s remuneration Depreciation of property, plant and equipment Cost of inventories recognised as expenses Directors’ and chief executive’s remuneration (Note 12) Other staff costs — salaries and other staff costs — contributions to CPF Total staff costs Minimum lease payment under operating lease in respect staff dormitory, office and working premises Direct attributable expenses in respect of subleasing workshop premises recognised in other expense	Year ended 31 December 2013 2014 S$ S$ 5,400 70,000 250,347 235,367 3,917,632 5,091,029 263,920 287,157 1,640,079 1,811,670 104,745 140,177 2,008,744 2,239,004 — 267,680 — 63,250	Year ended 31 December 2013 2014 S$ S$ 5,400 70,000 250,347 235,367 3,917,632 5,091,029 263,920 287,157 1,640,079 1,811,670 104,745 140,177 2,008,744 2,239,004 — 267,680 — 63,250
		2,239,004
		267,680
		63,250

– I-24 –

ACCOUNTANTS’ REPORT

APPENDIX I

12. DIRECTORS’, CHIEF EXECUTIVE’S AND EMPLOYEES’ EMOLUMENTS

The following table sets forth certain information in respect of the directors of Signmechanic Singapore, who will be appointed as directors of the Company, during the Track Record Period:

		Date of joining
		Signmechanic
		Singapore and
		appointment as	Date of
Name	Position	director	resignation
Mr. Tan Thiam Kiat, Kelvin	Chairman and Executive	1 December 1997	N/A
(Mr. Kelvin Tan)	director
Mr. Tan Kwang Hwee, Peter	Executive director and	1 December 1997	N/A
(Mr. Peter Tan)	Chief Executive Officer

During the Track Record Period, the emoluments paid or payable to each of the directors and the chief executive (Mr. Kelvin Tan) of Signmechanic Singapore were as follows:

For the year ended 31 December 2013

Fee Salaries and other benefits Bonus Contributions to CPF For the year ended 31 December 2014 Fee Salaries and other benefits Bonus Contributions to CPF	Mr. Kelvin Tan S$ — 103,200 16,600 12,160 131,960 Mr. Kelvin Tan S$ — 120,757 10,000 9,600 140,357	Mr. Peter Tan S$ — 103,200 16,600 12,160 131,960 Mr. Peter Tan S$ — 127,200 10,000 9,600 146,800	Total S$ — 206,400 33,200 24,320
			263,920
			Total S$ — 247,957 20,000 19,200
			287,157

The discretionary bonus is determined having regard to the performance and market trend by the management of the Group.

Neither the chief executive nor any of the directors of Signmechanic Singapore waived any emoluments during the Track Record Period.

– I-25 –

ACCOUNTANTS’ REPORT

APPENDIX I

Employees’ emoluments

Of the five individuals with the highest emoluments in the Group, 2 and 2 were directors of Signmechanic Singapore during the years ended 31 December 2013 and 2014 whose emoluments are included in the disclosures above. The emoluments of the remaining 3 and 3 individuals were as follows:

Salaries and other staff costs Bonus* Contributions to CPF	Year ended 31 December 2013 2014 S$ S$ 167,388 224,982 — 22,850 24,107 20,630 191,495 268,462	Year ended 31 December 2013 2014 S$ S$ 167,388 224,982 — 22,850 24,107 20,630 191,495 268,462
		268,462

The discretionary bonus is determined having regard to the performance and market trend by the management of the Group.

Their emoluments were within the following band:

Nil to HK$1,000,000	Year ended 31 December 2013 2014 No. of employees No. of employees 3 3

During the Track Record Period, no emoluments were paid by the Group to any of the directors of Signmechanic Singapore or the five highest paid individual of the Group as an inducement to join or upon joining the Group or as compensation for loss of office.

13. DIVIDENDS

During the year ended 31 December 2013, Signmechanic Singapore had declared and paid a dividend of S$100,000 to its then shareholders.

During the year ended 31 December 2014, Signmechanic Singapore had declared and paid dividend to its then shareholders in total of S$5,371,585 to its shareholders on 8 November 2014 and 10 November 2014 respectively.

The rate of dividend and the number of shares ranking for dividend are not presented as such information is not meaningful having regard to the purpose of this report.

14. EARNINGS PER SHARE

No earnings per share information is presented, as its inclusion, for the purpose of this report, is not considered meaningful.

15. RETIREMENT BENEFITS CONTRIBUTION

The Group’s employees employed in Singapore are required to join the CPF. The Group’s contributions to the CPF Scheme are made in accordance with 16% of monthly salary with the cap of S$30,000 per annum as prescribed by the Central Provident Fund Ordinance of Singapore.

– I-26 –

ACCOUNTANTS’ REPORT

APPENDIX I

The total cost charged to profit or loss of S$129,065 and S$159,377 for the years ended 31 December 2013 and 2014 respectively, represents contributions paid to the retirement benefits scheme by the Group.

As at 31 December 2013 and 2014, contributions of S$36,431 and S$24,401, respectively, were due in respective years had not been paid to the plans. The amounts were paid subsequent to the end of the respective year.

16. PROPERTY, PLANT AND EQUIPMENT

COST At 1 January 2013 Additions Reclassified as held for sale At 31 December 2013 Additions Eliminated on write-off/ disposals At 31 December 2014 DEPRECIATION AND IMPAIRMENT At 1 January 2013 Impairment loss recognised in profit or loss (Note 21) Eliminated on reclassification as held for sale Provided for the year At 31 December 2013 Provided for the year Eliminated on write-off/ disposals At 31 December 2014 CARRYING AMOUNTS At 31 December 2013 At 31 December 2014	Freehold Property S$ 9,000,000 111,854 (9,111,854) — — — — — (263,571) 263,571 — — — — — — —	Computers S$ 59,414 4,190 — 63,604 102,194 (36,995) 128,803 (46,639) — — (13,128) (59,767) (28,644) 36,994 (51,417) 3,837 77,386	Furniture and fittings S$ 4,467 — — 4,467 2,372 (4,467) 2,372 (2,767) — — (1,700) (4,467) (474) 4,467 (474) — 1,898	Air conditioners S$ 4,160 3,600 — 7,760 — (7,760) — (1,374) — — (6,386) (7,760) — 7,760 — — —	Office equipment and machinery S$ 353,439 36,800 — 390,239 211,243 (290,223) 311,259 (312,080) — — (46,054) (358,134) (42,791) 282,378 (118,547) 32,105 192,712	Renovation S$ 102,938 — — 102,938 82,507 (102,938) 82,507 (35,277) — — (67,661) (102,938) (16,501) 102,938 (16,501) — 66,006	Motor vehicles S$ 588,592 90,000 — 678,592 267,892 (80,600) 865,884 (303,017) — — (115,418) (418,435) (146,957) 40,879 (524,513) 260,157 341,371	Total S$ 10,113,010 246,444 (9,111,854)
								1,247,600 666,208 (522,983)
								1,390,825
								(701,154) (263,571) 263,571 (250,347)
								(951,501) (235,367) 475,416
								(711,452)
								296,099
								679,373

– I-27 –

ACCOUNTANTS’ REPORT

APPENDIX I

Freehold property comprising a building (fully depreciated prior to the Track Record Period) and land that has an unlimited useful life and therefore is not depreciated and the carrying amount of freehold property is measured at cost which are situated on freehold land in Singapore. The above items of property, plant and equipment are depreciated on a straight-line basis over the following estimated useful lives:

Computers	3 years
Furniture and fittings	5 years
Air conditioners	5 years
Office equipment & machinery	5 years
Renovation	5 years
Motor vehicles	5 years

In August 2013, following the binding agreement with a third party for disposal of the freehold property by the Group, the management of the Group reassessed the remaining useful life of existing non-movable facilities including air furniture and fittings, air conditioners and renovation, taking into account the expected completion date of hand-over the freehold property to the buyer. Since the remaining useful life of those facilities was expected to be shorter than originally estimated, useful life has been revised to the end of 2013. This change in useful life has increased the depreciation charge for the year ended 31 December 2013 by S$89,147.

During the years ended 31 December 2013 and 2014, included in the additions of motor vehicles amounting to S$50,000 and S$116,100 (net of trade-in price of disposed motor vehicles amounting to nil and S$34,698), respectively, which were acquired under hire purchase arrangements. These constituted as non-cash transactions during the years.

17. AVAILABLE-FOR-SALE INVESTMENTS

Listed equity securities in Singapore, at fair value	At 31 December 2013 2014 S$ S$ 269,505 20

At 31 December 2013, the balance represented investments in two listed equity securities in Singapore and measured at fair value by reference to quoted prices as at year end. During the year ended 31 December 2014, One investment was disposed of, resulting in S$9,394 fair value gain (Note 8) recognised in profit or loss for the year.

18. INVENTORIES

Raw material Work-in-progress Finished goods	At 31 December 2013 2014 S$ S$ 60,516 120,456 277,140 421,935 — 73,270 337,656 615,661	At 31 December 2013 2014 S$ S$ 60,516 120,456 277,140 421,935 — 73,270 337,656 615,661
		615,661

– I-28 –

ACCOUNTANTS’ REPORT

APPENDIX I

19. TRADE AND OTHER RECEIVABLES

Trade receivables Less: allowance for doubtful debts Unbilled receivables Retention receivables Purchase advances paid to suppliers Receivables from disposals of freehold property (note) Rental and other deposits Other receivables and prepayments	At 31 December 2013 2014 S$ S$ 1,300,761 1,620,142 (23,210) (129,608) 1,277,551 1,490,534 603,696 136,335 213,102 241,017 174,873 143,536 — 200,000 37,540 147,840 52,836 82,583 2,359,598 2,441,845	At 31 December 2013 2014 S$ S$ 1,300,761 1,620,142 (23,210) (129,608) 1,277,551 1,490,534 603,696 136,335 213,102 241,017 174,873 143,536 — 200,000 37,540 147,840 52,836 82,583 2,359,598 2,441,845
		1,490,534 136,335 241,017 143,536 200,000 147,840 82,583
		2,441,845

Note: The amount of $200,000 is withheld by a lawyer as the stakeholder is pending the finalisation of transfer of a part of related common property from the Management Corporation Strata Title to increase in the gross floor area of the disposed property. The directors are of the view that the process is administrative and is confident that the finalisation will be done in due course. In addition, the Controlling Shareholders have provided an undertaking to indemnify the Group for any loss arising from non-settlement of this amount.

For majority of customers, invoices are issued upon transferred risks and rewards of the products or upon completion of rendering services. For one particular customer, invoices would be raised in according to the schedule set out in the sales contracts (i.e. recognised as advanced billing as disclosed in Note 23) while the revenue will be recognised until goods are delivered and accepted by the counterparties.

Trade receivables are generally granted a credit period of 30 to 60 days from the invoice date for trade receivables to all customers. The following is an aging analysis of trade receivables net of allowance for doubtful debts presented based on invoice date at the end of the reporting period, which approximated the respective revenue recognition dates:

1–30 days 31–60 days 61–90 days 91–180 days 181–365 days Over 365 days	At 31 December 2013 2014 S$ S$ 790,139 607,134 201,864 238,622 148,665 57,261 63,921 306,283 72,962 266,187 — 15,047 1,277,551 1,490,534	At 31 December 2013 2014 S$ S$ 790,139 607,134 201,864 238,622 148,665 57,261 63,921 306,283 72,962 266,187 — 15,047 1,277,551 1,490,534
		1,490,534

Before granting credit to new customers, the Group reviews the customers’ profile and available financial information to assess the potential customer’s credit quality and defines credit limits for each customer.

– I-29 –

ACCOUNTANTS’ REPORT

APPENDIX I

The Group assesses at each of the reporting period end whether there is objective evidences that trade and other receivables are impaired. At each of reporting period end, unbilled receivables, all aged within 30 days from the date of revenue recognition, related to invoices issued after the financial year ended for the products delivered prior to each of year end. Retention receivables are retention monies held by customers which will be refunded upon expiry of defect liability period, generally of 1 year, in accordance with sales contracts.

The following is an aging analysis of trade receivables (net of allowance for doubtful debts) which are past due but not impaired based on the due date:

Overdue: 31–60 days 61–90 days 91–180 days 181 days to 365 days Over 365 days	At 31 December 2013 2014 S$ S$ 201,864 238,622 148,665 57,261 63,921 312,283 72,962 266,187 — 9,047 487,412 883,400	At 31 December 2013 2014 S$ S$ 201,864 238,622 148,665 57,261 63,921 312,283 72,962 266,187 — 9,047 487,412 883,400
		883,400

The Group has provided allowance for individual receivables that were considered to be impaired based on management assessment performed at each reporting period end and write off individual debtors with long overdue amounts which management assessed are unlikely to be recovered. Based on past experience, management believes that no impairment allowance is necessary in respect of remaining balances as there has not been a significant change in credit quality and the remaining balances are still considered fully recoverable. The balances of trade receivables that are neither past due nor impaired have good credit quality as assessed by the Group according to repayment history of respective customer. The Group does not hold any collateral over these balances.

Movement in the allowance on doubtful debts for trade receivables

At beginning of the year Allowance on doubtful debts recognised in profit or loss (Note) At end of the year	At 31 December 2013 2014 S$ S$ 23,210 23,210 — 106,398 23,210 129,608	At 31 December 2013 2014 S$ S$ 23,210 23,210 — 106,398 23,210 129,608
		129,608

Note: An allowance for impairment is established when there is objective evidence that the Group will not be able to collect all outstanding debts according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. As at 31 December 2013 and 2014, allowance of S$23,210 and S$129,608, respectively was provided for on debts which the counterparts were facing financial difficulties or entering into liquidation process.

– I-30 –

ACCOUNTANTS’ REPORT

APPENDIX I

20. PLEDGED BANK DEPOSITS AND BANK BALANCES AND CASH

As at 31 December 2013 and 2014, included in pledged bank deposits are S$79,564 and S$79,564, respectively representing balances held in trust for the Group by Controlling Shareholders. Pledged bank deposits have been pledged as a security for bankers guarantee issued in relation to contracts awarded to the Group and bills payables facilities (Note 22). Pledged bank deposits carry prevailing market interest rate at 0.05% and 0.25% per annum as at 31 December 2013 and 2014, respectively.

Bank balances carry interest at prevailing market interest rates at 0.05% and 0.25% per annum as at 31 December 2013 and 2014, respectively.

21. ASSET CLASSIFIED AS HELD FOR SALE AND LIABILITY DIRECTLY ASSOCIATED WITH ASSET HELD FOR SALE

The major classes of assets and liabilities classified as held for sale are as follows:

Asset classified as held for sale: Property, plant and equipment Liability classified as held for sale: Property loan	31 December 2013 S$ 8,848,283
	3,283,657

In August 2013, the Group entered into a binding agreement with an independent third party to sell the freehold property for S$9,000,000 and received a deposit of S$90,000. Accordingly, the freehold property and related property loan which were expected to be sold or settled within twelve months were classified as held for sale and were presented separately in the statement of financial position. Based on the transaction price and the expected cost to sell amounting to S$151,717, including legal fee for completion of the transaction, the freehold property which was previously included in the property, plant and equipment (Note 16) was written down from the carrying amount to level 2 fair value less cost to sell.

As at 31 December 2013, the property loan is subject to floating interest rate of 3.65% per annum below enterprise financing rate and secured by a first legal mortgage over the freehold property with original maturity expires in 2037 and jointly and severally guaranteed by the Controlling Shareholders. The property loan was denominated in S$ and was fully settled upon the completion of disposal of the freeland property in October 2014.

The guarantees provided by the Controlling Shareholders were released in October 2014.

– I-31 –

ACCOUNTANTS’ REPORT

APPENDIX I

The table below summarises the repayment of property loan based on the agreed scheduled repayments set out in the loan agreement:

Carrying amount repayable — within one year — more than one year but not more than two years — more than two years but not more than five years — more than five years	At 31 December 2013 S$ 180,852 180,852 542,556 2,379,397
	3,283,657

22. TRADE PAYABLES/BILLS PAYABLES

Trade payables Bills payables	At 31 December 2013 2014 S$ S$ 1,181,859 689,656 529,880 909,841

The following is an aging analysis of trade payables presented based on the purchase recognition date, that is, goods receipt date, at the end of each reporting period:

0–30 days 31–90 days Over 90 days	At 31 December 2013 2014 S$ S$ 570,153 148,912 554,049 260,016 57,657 280,728 1,181,859 689,656	At 31 December 2013 2014 S$ S$ 570,153 148,912 554,049 260,016 57,657 280,728 1,181,859 689,656
		689,656

The credit period on trade payable is normally between 30 to 60 days from the purchase recognition date for the Track Record Period.

As at 31 December 2013 and 2014, all bills payables of the Group are aged within 120 days and the bills payables are drawn down under the terms of the banking facilities granted by the banks to the Group. Bills payables carried interest at prime rate plus margin per annum, i.e. 5.75% per annum as at 31 December 2013 and 2014, and are secured by pledged bank deposits as disclosed in Note 20.

– I-32 –

ACCOUNTANTS’ REPORT

APPENDIX I

23. OTHER PAYABLES AND ACCRUALS

Advance billings to customers Retention payable to suppliers Goods and services tax payable Accrued operating expenses Deposit received in respect of disposal of freehold property (Note 21) Accrued staff bonus/commission Payable for acquisition of property, plant and equipment Other payables	At 31 December 2013 2014 S$ S$ 539,677 589,458 4,380 33,370 16,374 751,710 66,999 356,396 90,000 — 21,577 38,899 — 25,064 18,428 8,829 757,435 1,803,726	At 31 December 2013 2014 S$ S$ 539,677 589,458 4,380 33,370 16,374 751,710 66,999 356,396 90,000 — 21,577 38,899 — 25,064 18,428 8,829 757,435 1,803,726
		1,803,726

24. OBLIGATIONS UNDER FINANCE LEASES

The Group entered into lease arrangements with independent third parties in relation to certain motor vehicles during the Track Record Period. The Group considered that these lease arrangements are finance lease as substantially all the risks and rewards incidental to ownership of these motor vehicles retained with the Group. The lease terms ranged from 2–7 years. Interest rates of underlying all obligations under finance leases at the date of inception is 3.8% to 10.8% and 3.8% to 7.1% per annum as at 31 December 2013 and 2014, respectively.

Amounts payable under finance leases: Within one year In more than one year but not more than two years In more than two years but not more than five years Less: future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Minimum lease payments As at 31 December 2013 2014 S$ S$ 87,848 101,901 77,376 68,280 84,858 97,601 250,082 267,782 (38,458) (20,787) 211,624 246,995	Present value of minimum lease payments As at 31 December 2013 2014 S$ S$ 76,019 91,825 65,221 62,038 70,384 93,132 211,624 246,995 — — (76,019) (91,825) 135,605 155,170	Present value of minimum lease payments As at 31 December 2013 2014 S$ S$ 76,019 91,825 65,221 62,038 70,384 93,132 211,624 246,995 — — (76,019) (91,825) 135,605 155,170
			246,995 —
			(91,825)
			155,170

– I-33 –

ACCOUNTANTS’ REPORT

APPENDIX I

As at 31 December 2013 and 2014, the balance of obligations under finance leases are secured by the lessor’s charge over the leased assets of carrying amounts of S$260,157 and S$270,337, respectively and denominated in S$.

25. AMOUNTS DUE FROM (TO) RELATED PARTIES

The amounts due from (to) related parties (details of relationship with the Group are set out in Note 32) as at 31 December 2013 and 2014 are trade in nature, unsecured, non-interest bearing and repayable within 30 days credit period.

Amount due from a related party: At 31 December 2013 C.K. Toh Construction Pte. Ltd. (‘‘C.K. Toh Construction’’) At 31 December 2014 C.K. Toh Construction Amounts due to related parties: At 31 December 2013 C.K. Toh Construction Signmechanic Sdn Bhd T3 Holdings Pte. Ltd. (‘‘T3 Holdings’’) At 31 December 2014 C.K. Toh Construction Signmechanic Sdn Bhd T3 Holdings	31–90 days S$ — 7,716	91–180 days S$ 2,926 631 1–30 days S$ (46,880) — (8,614) (55,494) (9,823) — — (9,823)	180 days to 365 days S$ 21,475 12,112 31–90 days S$ (78,126) — — (78,126) (25,681) — (1,461) (27,142)	Over 365 days S$ — 24,401 91–180 days S$ (63,934) (11,611) — (75,545) (304,417) (6,811) — (311,228)	Total S$ 24,401 44,860 Total S$ (188,940) (11,611) (8,614) (209,165) (339,921) (6,811) (1,461) (348,193)

26. AMOUNTS DUE FROM (TO) DIRECTORS

The amount due from a director of Signmechanic Singapore represented advance to Mr. Tan Thiam Kiat as at 31 December 2014 and the amount is unsecured, non-interest bearing and repayable on demand. The maximum balance outstanding in respect of amount due from a director during 2014 is S$7,006.

The amounts due to directors of Signmechanic Singapore represented advances from Mr. Tan Kwang Hwee, Mr. Tan Thiam Kiat, Ms. Khoo Ai Lin and Ms. Ong Siew Mui as at 31 December 2013 and 2014 and the amounts are unsecured, non-interest bearing and repayable on demand.

The amounts due from (to) directors have been settled in May 2015.

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ACCOUNTANTS’ REPORT

APPENDIX I

27. DEFERRED TAX ASSETS

The following are the major deferred tax assets recognised and movements thereon during the Track Record Period:

At 1 January 2013 and 31 December 2013 Charged to profit or loss At 31 December 2014	Accelerated Depreciation S$ 12,996 (12,996)
	—

28. SHARE CAPITAL

The share capital as at 1 January 2013, 31 December 2013 and 2014 represented the share capital of Signmechanic Singapore.

Ordinary shares Issued and fully paid: At 1 January 2013, 31 December 2013 and 31 December 2014	Number of shares 500,000 500,000	Share capital S$ 500,000 500,000

The Company and Sino Promise were incorporated subsequent to the Track Record Period and hence no share capital for these companies was presented as at 31 December 2013 and 2014.

29. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged throughout the Track Record Period.

The capital structure of the Group consists of debt, which includes property loan, obligations under finance leases and amounts due to directors, as disclosed in Notes 21, 24 and 26, respectively, net of bank balances and cash and equity attributable to owners of the Group, comprising share capital and reserves.

The management of the Group reviews the capital structure from time to time. As a part of this review, the management considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the management, the Group will balance its overall capital structure through the payment of dividends, the issue of new shares and new debts.

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ACCOUNTANTS’ REPORT

APPENDIX I

30. FINANCIAL INSTRUMENTS

a. Categories of financial instruments

Financial assets Loans and receivables (including cash and cash equivalents) Available-for-sale investments Financial liabilities Amortised cost	At 31 December 2013 2014 S$ S$ 5,092,978 7,987,283 269,505 20 5,362,483 7,987,303 2,854,870 2,412,247	At 31 December 2013 2014 S$ S$ 5,092,978 7,987,283 269,505 20 5,362,483 7,987,303 2,854,870 2,412,247
		7,987,303
		2,412,247

b. Financial risk management objectives and policies

The major financial instruments include trade and other receivables, amounts due from a related party and a director, pledged bank deposits, bank balances and cash, trade and bills payables, other payables, obligations under finance leases and amounts due to related parties and directors. Details of the financial instruments are disclosed in the respective notes. The risks associated with these financial instruments include market risks (interest rate risk and other price risk), liquidity risk and credit risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risks

(i) Interest rate risk

The Group is exposed to cash flow interest rate risk in relation to bills payables, pledged bank deposits and bank balances. The cash flow interest rate risk is mainly concentrated on fluctuations associated with bills payables with floating rate which represent prime rate plus margin per annum and variable rate pledged bank deposits and bank balances.

The Group currently does not have an interest rate hedging policy. However, the management monitors interest rate risk exposure and will consider interest rate hedging should the need arise.

No sensitivity analysis of pledged bank deposits, bank balances and bills payables is presented as a reasonably possible change in interest rate would not have significant impact on profit or loss of the Group.

Obligations under finance leases issued at fixed rates expose the Group to fair value interestrate risk. During the Track Record Period, the Group did not hedge its fair value interest rate risk.

(ii) Other price risk

The Group is exposed to equity price risk through its available-for-sale investments in relation to listed equity securities in Singapore.

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ACCOUNTANTS’ REPORT

APPENDIX I

Sensitivity analysis

The sensitivity analyses have been determined based on the exposure to equity price risks at the end of reporting period. If the prices of the respective equity instruments had been 5% higher/ lower, the investment valuation reserve would increase/decrease by S$13,475 for the Group as a result of the changes in fair value of available-for-sale investments.

No sensitivity analysis is presented for the available-for-sale investments for the year ended 31 December 2014 as significant amount of available-for-sale investments have been disposed of during the year ended 31 December 2014.

Liquidity risk

In the management of the liquidity risk, the management of the Group monitors and maintains a level of bank balances and cash deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows.

The following tables detail the Group’s remaining contractual maturities for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows.

On demand or within 3 months S$ 1,293,243 209,165 822,582 569,402 21,962	3–6 months S$ — — — — 21,962	6–12 months S$ — — — — 43,924	1–5 years S$ — — — — 162,234	Total undiscounted cash flows S$ 1,293,243 209,165 822,582 569,402 250,082	Carrying amount S$ 1,293,243 209,165 822,582 529,880 211,624
2,916,354	21,962	43,924	162,234	3,144,474	3,066,494
1,152,214 348,193 1,999 943,246 25,475	— — — — 25,475	— — — — 50,951	— — — — 165,881	1,152,214 348,193 1,999 943,246 267,782	1,152,214 348,193 1,999 909,841 246,995
2,471,127	25,475	50,951	165,881	2,713,434	2,659,242

Credit risk

The Group’s concentration of credit risk by geographical locations is mainly in Singapore, which accounted for 100% of the total financial assets as at 31 December 2013 and 2014.

In order to minimise the credit risk on trade and other receivables, amount due from a related party and amount due from a director, the management of the Group has delegated a team responsible for monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the

– I-37 –

ACCOUNTANTS’ REPORT

APPENDIX I

end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the management of the Group considers that the Group’s credit risk is significantly reduced.

Approximately 38% and 40% of total trade receivables outstanding at 31 December 2013 and 2014 were due from top 5 customers which exposed the Group to concentration of credit risk.

Other than concentration of credit risk on bank deposits and balances placed in 5 banks in which the counterparties are financially sound and on trade receivables from top 5 customers, the Group has no other significant concentration of credit risk on other receivables, with exposure spread over a number of counterparties.

At the end of each reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective recognised financial assets as stated in the statement of financial position.

c. Fair value measurements of financial instruments

Fair value of the Group’s financial assets that are measured at fair value on recurring basis

Certain of the Group’s financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.

				Valuation
	Fair	value as at	Fair value	technique and key
Financial assets	31 December 2013	31 December 2014	hierarchy	inputs
Available-for-sale investments	Listed equity	Listed equity	Level 1	Quoted bid prices
	securities in	securities in		in an active
	Singapore:	Singapore:		market
	S$269,505	S$20

There is no transfer between the different levels of the fair value hierarchy during the Track Record Period.

Fair value of the Group’s financial assets and financial liabilities that are not measured at fair value on recurring basis

The fair value of other financial assets and financial liabilities is determined in accordance with generally accepted pricing model based on discounted cash flow analysis.

The management of the Group considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Financial Information approximate to their fair values.

– I-38 –

ACCOUNTANTS’ REPORT

APPENDIX I

31. OPERATING LEASES COMMITMENTS

As lessee

At the end of each of the reporting period, the Group had commitment for future minimum lease payments under non-cancellable operating leases which fall due as follows:

Within one year In the second to fifth year inclusive	At 31 December 2013 2014 S$ S$ — 406,560 — 392,000 — 798,560	At 31 December 2013 2014 S$ S$ — 406,560 — 392,000 — 798,560
		798,560

Operating lease payment represented rentals payable by the Group for staff dormitory, office and workshop premises. Leases are negotiated for terms of 1 to 3 years with fixed rental and no renewal option or contingent rent provision.

As lessor

At the end of the reporting period, part of the workshop premises of the Group is subleased out for rental income under non-cancellable operating lease which fall due as follows:

Within one year In the second to fifth year inclusive	At 31 December 2013 2014 S$ S$ — 60,000 — 71,667 — 131,667	At 31 December 2013 2014 S$ S$ — 60,000 — 71,667 — 131,667
		131,667

Lease is negotiated for a term of 3 years with fixed rental and no contingent rent provision.

32. RELATED PARTY DISCLOSURES

Apart from details disclosed elsewhere in the Financial Information, the Group has entered into the following significant transactions with its related parties during the Track Record Period:

Name of related parties Nature of transactions C.K. Toh Construction Sub-contracting of installation work and supply of labour from related party Sales to related parties T3 Holdings Rental expense of crane from related party Signmechanic Sdn Bhd Purchases of signages and sub- contracting of installation work from related party Fusion Displays Purchase of machineries	Years ended 31 December 2013 2014 S$ S$ 182,295 177,012 41,955 19,120 108,984 31,348 74,130 70,039 — 39,600

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ACCOUNTANTS’ REPORT

APPENDIX I

The Controlling Shareholders have equity interests in these related parties with significant influence over them.

In addition, Mr. Tan Thiam Kiat and Mr. Tan Kwang Hwee had jointly and severally provided a personal guarantee in favour of Ethoz Capital Ltd (‘‘Ethoz Capital’’) to secure the obligations and liabilities of Signmechanic Singapore under a loan agreement entered into between Signmenchanic Singapore as the borrower and Ethoz Capital as the lender dated 31 October 2014 in relation to a loan facility of S$1,000,000 granted by Ethoz Capital to Signmechanic Singapore.

The loan had not been utilised as at 31 December 2014 and it was utilised subsequent to 2014 and fully repaid in March 2015 and Ethoz Capital has released the guarantee from Mr. Tan Thiam Kiat and Mr. Tan Kwang Hwee.

At the end of the respective reporting period, the Group has the following balances with related parties:

Amount due from a related party — C.K. Toh Construction Amounts due to related parties — C.K. Toh Construction — Signmechanic Sdn Bhd — T3 Holdings	At 31 December 2013 2014 S$ S$ 24,401 44,860 188,940 339,921 11,611 6,811 8,614 1,461 209,165 348,193	At 31 December 2013 2014 S$ S$ 24,401 44,860 188,940 339,921 11,611 6,811 8,614 1,461 209,165 348,193
		339,921 6,811 1,461
		348,193

Compensation of key management personnel

The remuneration of directors of Signmechanic Singapore, which represent key management of the Group during the Track Record Period was as follows:

Short-term benefits Post-employment benefits	Years ended 31 December 2013 2014 S$ S$ 309,600 334,007 35,520 29,720 345,120 363,727	Years ended 31 December 2013 2014 S$ S$ 309,600 334,007 35,520 29,720 345,120 363,727
		363,727

The remuneration of directors of Signmechanic Singapore and key executives is determined by having regard to the performance of individuals of the Group and market trends.

Guaranteed from Controlling Shareholders

Apart from disclosure elsewhere in these financial statements, the Controlling Shareholders jointly and severally provided a personal guarantee in respect of a loan facility of S$1,000,000 in favor to the Group in October 2014. The loan has not been drawn down as at 31 December 2014.

– I-40 –

ACCOUNTANTS’ REPORT

APPENDIX I

33. CONTINGENT LIABILITIES

As at 31 December 2013 and 2014, the Group has following contingent liabilities:

Guarantee provided in respect of performance bonds in favor of customers	At 31 December 2013 2014 S$ S$ 204,411 193,528

B. DIRECTORS’ REMUNERATION

Under the arrangements presently in force, the aggregate remuneration payable to the directors for the year ending 31 December 2015, excluding discretionary bonus, is estimated to be approximately S$0.3 million.

Save as disclosed herein, no remuneration has been paid or is payable to the directors of the Group during the Track Record Period.

C. SUBSEQUENT EVENTS

The following events and transactions took place subsequent to 31 December 2014:

. In January 2015, the Group has drawn a 4-year term loan of S$1,000,000, which carries a fixed interest rate of 4% per annum and is repayable over 48 monthly instalments. The term loan is unsecured, guaranteed jointly and severally by the Controlling Shareholders. The loan was fully repaid on 27 March 2015 and the guarantee from the Controlling Shareholders was released as well.
. On 7 April 2015, an addition 750,000 shares in Signmechanic Singapore were allotted an issued to each of Mr. Tan Thiam Kiat and Mr. Tan Kwang Hwee and the shares were issued at a cash consideration of S$750,000 each.
. On 23 June 2015, shareholders’ resolutions of the Company were passed to approve the increase of the Company’s authorised share capital of the Company from HK$380,000 divided into 38,000,000 shares of HK$0.01 each to HK$50,000,000 divided into 5,000,000,000 shares of HK$0.01 each by the creation of an additional 4,962,000,000 shares of HK$0.01 each to rank pari passu in all respects with the existing shares. On 23 June 2015, the directors of the Company were authorised to capitalise the amount of HK$3,190,000 from the amount standing to the credit of the share premium account of the Company and applying such sum to pay up in full at par 319,000,000 shares for allotment and issue to the person(s) whose name(s) appears on the register of members of the Company at the close of business on 23 June 2015, pro-rata (or as nearly as possible without involving fractions) to its/their then existing shareholdings in the Company. On the same date, it’s resolved to issue 80,000,000 new shares being offered by the Company for subscription under a placing exercise.

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ACCOUNTANTS’ REPORT

APPENDIX I

D. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Group, the Company or any of its subsidiaries have been prepared in respect of any period subsequent to 31 December 2014.

Yours faithfully

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

– I-42 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION

APPENDIX II

The information set forth in this appendix does not form part of the Accountants’ Report on the financial information of the Group for the two years ended 31 December 2014 prepared by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the reporting accountants of our Company, as set forth in Appendix I of this prospectus (the ‘‘Accountants’ Report’’), and is included herein for illustrative purposes only. The unaudited pro forma financial information should be read in conjunction with the section headed ‘‘Financial Information’’ in this prospectus and the Accountants’ Report set forth in Appendix I of this prospectus.

A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS

The following is an illustrative unaudited pro forma statement of adjusted net tangible assets of the Group which has been prepared in accordance with paragraph 31 of Chapter 7 of the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of illustrating the effect of the Placing as if the Placing had taken place on 31 December 2014 and based on the audited net tangible assets of the Group as at 31 December 2014 as shown in the Accountants’ Report set out in Appendix I of this prospectus and adjusted as described below.

This unaudited pro forma statement of adjusted net tangible assets of the Group has been prepared for illustrative purposes only and, because of its hypothetical nature, it may not give a true picture of the net tangible assets of the Group following the Placing.

	Audited net
	tangible assets of		Unaudited pro
	the Group as at	Estimated net	forma adjusted	Unaudited	pro forma
	31 December	proceeds from the	net tangible assets	adjusted net tangible assets
	2014	Placing Shares	of the Group	of the Group per share
					(Equivalent to
	S$	S$	S$	S cents	HK	cents)
	(Note 1)	(Note 2)		(Note 3)	(Note 4)
Based on a Placing Price
of HK$0.5 per
Placing Share	5,013,867	4,106,675	9,120,542	2.28		12.99

Notes:

(1) The amount of audited net tangible assets of the Group as at 31 December 2014 amounting to S$5,013,867 is extracted from the Accountants’ Report of the Group set out in Appendix I of this prospectus.
(2) The estimated net proceeds from the Placing are based on 80,000,000 New Shares at the Placing Price of HK$0.5 per Placing Share, after deduction of the estimated underwriting fees and other related expenses expected to be incurred by the Group subsequent to 31 December 2014 and does not take into account of any shares which may be issued or repurchased pursuant to the Company’s general mandate. The estimated net proceeds from the New Shares are converted from Hong Kong Dollars into Singapore Dollars at an exchange rate of HK$5.6963 to S$1, which was the rate

– II-1 –

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

prevailing on 10 April 2015. No representation is made that Hong Kong Dollars amounts have been, could have been or may be converted to Singapore Dollars amounts, or vice versa, at that rate or at any other rates or at all.

(3) The unaudited pro forma adjusted net tangible assets of the Group per share is calculated based on 400,000,000 shares, assuming the Placing of 80,000,000 New Shares and the Shares to be issued pursuant to the Reorganisation and the Capitalisation Issue were in issue on 31 December 2014. It does not take into account of any shares which may be issued or repurchased pursuant to the Company’s general mandate.
(4) The unaudited pro forma adjusted net tangible assets of the Group per share is converted from Singapore Dollars to Hong Kong Dollars at an exchange rate of HK$5.6963 to S$1, which was the rate prevailing on 10 April 2015. No representation is made that Singapore Dollars amounts have been, could have been or may be converted to Hong Kong Dollars amounts, or vice versa, at that rate or at any other rates or at all.

– II-2 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION

B. ASSURANCE REPORT FROM THE REPORTING ACCOUNTANTS ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of the assurance report received from Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the reporting accountants of our Company, in respect of the Group’s unaudited pro forma financial information prepared for the purpose of incorporation in this prospectus.

==> picture [122 x 55] intentionally omitted <==

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

TO THE DIRECTORS OF KPM HOLDING LIMITED

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of KPM Holding Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted net tangible assets as at 31 December 2014 and related notes as set out on pages II-1 to II-2 of Appendix II to the prospectus issued by the Company dated 30 June 2015 (the ‘‘Prospectus’’). The applicable criteria on the basis of which the Directors have compiled the unaudited pro forma financial information are described on pages II-1 to II-2 of Appendix II to the Prospectus.

The unaudited pro forma financial information has been compiled by the Directors to illustrate the impact of proposed shares placing on the Group’s financial position as at 31 December 2014 as if the proposed shares placing had taken place at 31 December 2014. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s financial information for the two years ended 31 December 2014, on which an accountants’ report set out in Appendix I to the Prospectus has been published.

Directors’ Responsibilities for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (the ‘‘GEM Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

– II-3 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 7.31(7) of the GEM Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountants comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the unaudited pro forma financial information in accordance with paragraph 7.31 of the GEM Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the unaudited pro forma financial information.

The purpose of unaudited pro forma financial information included in the investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 31 December 2014 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

. The related unaudited pro forma adjustments give appropriate effect to those criteria; and
. The unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the unaudited pro forma financial information has been compiled, and other relevant engagement circumstances.

– II-4 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 7.31(1) of the GEM Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong 30 June 2015

– II-5 –

APPENDIX III

SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

Set out below is a summary of certain provisions of the Memorandum and Articles of Association of our Company and of certain aspects of Cayman Islands company law.

Our Company was incorporated in the Cayman Islands as an exempted company with limited liability on 10 March 2015 under the Companies Law. Our Company’s constitutional documents consist of its Amended and Restated Memorandum of Association (the ‘‘Memorandum’’) and the Amended and Restated Articles of Association (the ‘‘Articles’’).

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum provides, inter alia, that the liability of members of our Company is limited and that the objects for which our Company is established are unrestricted (and therefore include acting as an investment company), and that our Company shall have and be capable of exercising any and all of the powers at any time or from time to time exercisable by a natural person or body corporate whether as principal, agent, contractor or otherwise and since our Company is an exempted company that our Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of our Company carried on outside the Cayman Islands.
(b) By special resolution our Company may alter the Memorandum with respect to any objects, powers or other matters specified therein.

2. ARTICLES OF ASSOCIATION

The Articles were adopted on 23 June 2015. The following is a summary of certain provisions of the Articles:

(a) Shares

(i) Classes of shares

The share capital of the Company consists of ordinary shares.

(ii) Share certificates

Every person whose name is entered as a member in the register of members shall be entitled to receive a certificate for his shares. No shares shall be issued to bearer.

Every certificate for shares, warrants or debentures or representing any other form of securities of our Company shall be issued under the seal of our Company, and shall be signed autographically by one Director and the Secretary, or by 2 Directors, or by some other person(s) appointed by our Board for the purpose. As regards any certificates for shares or debentures or other securities of our Company, our Board may by resolution determine that such signatures or either

– III-1 –

SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

of them shall be dispensed with or affixed by some method or system of mechanical signature other than autographic or may be printed thereon as specified in such resolution or that such certificates need not be signed by any person. Every share certificate issued shall specify the number and class of shares in respect of which it is issued and the amount paid thereon and may otherwise be in such form as our Board may from time to time prescribe. A share certificate shall relate to only one class of shares, and where the capital of our Company includes shares with different voting rights, the designation of each class of shares, other than those which carry the general right to vote at general meetings, must include the words ‘‘restricted voting’’ or ‘‘limited voting’’ or ‘‘non-voting’’ or some other appropriate designation which is commensurate with the rights attaching to the relevant class of shares. Our Company shall not be bound to register more than 4 persons as joint holders of any share.

(b) Directors

(i) Power to allot and issue shares and warrants

Subject to the provisions of the Companies Law, the Memorandum and Articles and without prejudice to any special rights conferred on the holders of any shares or class of shares, any share may be issued with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as our Company may by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as our Board may determine). Any share may be issued on terms that upon the happening of a specified event or upon a given date and either at the option of our Company or the holder thereof, they are liable to be redeemed.

Our Board may issue warrants to subscribe for any class of shares or other securities of our Company on such terms as it may from time to time determine.

Where warrants are issued to bearer, no certificate thereof shall be issued to replace one that has been lost unless our Board is satisfied beyond reasonable doubt that the original certificate thereof has been destroyed and our Company has received an indemnity in such form as our Board shall think fit with regard to the issue of any such replacement certificate.

Subject to the provisions of the Companies Law, the Articles and, where applicable, the rules of any stock exchange of the Relevant Territory (as defined in the Articles) and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in our Company shall be at the disposal of our Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.

– III-2 –

SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

Neither our Company nor our Board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others whose registered addresses are in any particular territory or territories where, in the absence of a registration statement or other special formalities, this is or may, in the opinion of our Board, be unlawful or impracticable. However, no member affected as a result of the foregoing shall be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of our Company or any subsidiary

While there are no specific provisions in the Articles relating to the disposal of the assets of our Company or any of its subsidiaries, our Board may exercise all powers and do all acts and things which may be exercised or done or approved by our Company and which are not required by the Articles or the Companies Law to be exercised or done by our Company in general meeting, but if such power or act is regulated by our Company in general meeting, such regulation shall not invalidate any prior act of our Board which would have been valid if such regulation had not been made.

(iii) Compensation or payments for loss of office

Payments to any present Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which our Director is contractually or statutorily entitled) must be approved by our Company in general meeting.

(iv) Loans and provision of security for loans to Directors

There are provisions in the Articles prohibiting the making of loans to Directors and their close associates which are equivalent to provisions of Hong Kong law prevailing at the time of adoption of the Articles.

Our Company shall not directly or indirectly make a loan to a Director or a director of any holding company of our Company or any of their respective close associates, enter into any guarantee or provide any security in connection with a loan made by any person to a Director or a director of any holding company of our Company or any of their respective close associates, or if any one or more of our Directors hold (jointly or severally or directly or indirectly) a controlling interest in another company, make a loan to that other company or enter into any guarantee or provide any security in connection with a loan made by any person to that other company.

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(v) Disclosure of interest in contracts with our Company or with any of its subsidiaries

With the exception of the office of auditor of our Company, a Director may hold any other office or place of profit with our Company in conjunction with his office of Director for such period and, upon such terms as our Board may determine, and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profits or otherwise) in addition to any remuneration provided for by or pursuant to any other Articles. A Director may be or become a director or other officer or member of any other company in which our Company may be interested, and shall not be liable to account to our Company or the members for any remuneration or other benefits received by him as a director, officer or member of such other company. Our Board may also cause the voting power conferred by the shares in any other company held or owned by our Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing our Directors or any of them to be directors or officers of such other company.

No Director or intended Director shall be disqualified by his office from contracting with our Company, either as vendor, purchaser or otherwise, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to our Company for any profit realised by any such contract or arrangement by reason only of such Director holding that office or the fiduciary relationship thereby established. A Director who is, in any way, materially interested in a contract or arrangement or proposed contract or arrangement with our Company shall declare the nature of his interest at the earliest meeting of our Board at which he may practically do so.

There is no power to freeze or otherwise impair any of the rights attaching to any Share by reason that the person or persons who are interested directly or indirectly therein have failed to disclose their interests to our Company.

A Director shall not vote (nor shall he be counted in the quorum) on any resolution of our Board in respect of any contract or arrangement or other proposal in which he or his close associate(s) is/are materially interested, and if he shall do so his vote shall not be counted nor shall he be counted in the quorum for that resolution, but this prohibition shall not apply to any of the following matters namely:

(aa) the giving of any security or indemnity to our Director or his close associate(s) in respect of money lent or obligations incurred or undertaken by him or any of them at the request of or for the benefit of our Company or any of its subsidiaries;

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(bb) the giving of any security or indemnity to a third party in respect of a debt or obligation of our Company or any of our subsidiaries for which our Director or his close associate(s) has/have himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;
(cc) any proposal concerning an offer of shares or debentures or other securities of or by our Company or any other company which our Company may promote or be interested in for subscription or purchase, where our Director or his close associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;
(dd) any proposal or arrangement concerning the benefit of employees of our Company or our subsidiaries including (i) the adoption, modification or operation of any employees’ share scheme or any share incentive or share option scheme under which our Director or his close associate(s) may benefit; or (ii) the adoption, modification or operation of a pension fund or retirement, death or disability benefits scheme which relates both to Directors, his close associates and employees of our Company or any of its subsidiaries and does not provide in respect of any Director, or his close associate(s), as such any privilege or advantage not generally accorded to the class of persons to which such scheme or fund relates; or
(ee) any contract or arrangement in which our Director or his close associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of our Company by virtue only of his/their interest in shares or debentures or other securities of our Company.

(vi) Remuneration

Our Directors shall be entitled to receive, as ordinary remuneration for their services, such sums as shall from time to time be determined by our Board, or our Company in general meeting, as the case may be, such sum (unless otherwise directed by the resolution by which it is determined) to be divided amongst our Directors in such proportions and in such manner as they may agree or failing agreement, equally, except that in such event any Director holding office for only a portion of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he has held office. Our Directors shall also be entitled to be repaid all travelling, hotel and other expenses reasonably incurred by them in attending any Board meetings, committee meetings or general meetings or otherwise in connection with the discharge of their duties as Directors. Such remuneration shall be in addition

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

to any other remuneration to which a Director who holds any salaried employment or office in our Company may be entitled by reason of such employment or office.

Any Director who, at the request of our Company performs services which in the opinion of our Board go beyond the ordinary duties of a Director may be paid such special or extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as our Board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration (whether by way of salary, commission or participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as our Board may from time to time decide. Such remuneration shall be in addition to his ordinary remuneration as a Director.

Our Board may establish, either on its own or jointly in concurrence or agreement with other companies (being subsidiaries of our Company or with which our Company is associated in business), or may make contributions out of our Company’s monies to, such schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or former Director who may hold or have held any executive office or any office of profit with our Company or any of its subsidiaries) and former employees of our Company and their dependents or any class or classes of such persons.

In addition, our Board may also pay, enter into agreements to pay or make grants of revocable or irrevocable, whether or not subject to any terms or conditions, pensions or other benefits to employees and former employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or former employees or their dependents are or may become entitled under any such scheme or fund as mentioned above. Such pension or benefit may, if deemed desirable by our Board, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

(vii)Appointment, retirement and removal

At any time or from time to time, our Board shall have the power to appoint any person as a Director either to fill a casual vacancy on our Board or as an additional Director to the existing Board subject to any maximum number of Directors, if any, as may be determined by the members in general meeting. Any Director appointed by our Board to fill a casual vacancy shall hold office only until the first general meeting of our Company after his appointment and be

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subject to re-election at such meeting. Any Director appointed by our Board as an addition to the existing Board shall hold office only until the next following annual general meeting of our Company and shall then be eligible for re-election. Any Director so appointed by our Board shall not be taken into account in determining our Directors or the number of Directors who are to retire by rotation at an annual general meeting.

At each annual general meeting, one third of our Directors for the time being will retire from office by rotation. However, if the number of Directors is not a multiple of three, then the number nearest to but not less than one third shall be the number of retiring Directors. Our Directors who shall retire in each year will be those who have been longest in the office since their last re-election or appointment but as between persons who become or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot.

No person, other than a retiring Director, shall, unless recommended by our Board for election, be eligible for election to the office of Director at any general meeting, unless notice in writing of the intention to propose that person for election as a Director and notice in writing by that person of his willingness to be elected shall have been lodged at the head office or at the registration office. The period for lodgment of such notices will commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than 7 days prior to the date of such meeting and the minimum length of the period during which such notices to our Company may be given must be at least 7 days.

A Director is not required to hold any shares in our Company by way of qualification nor is there any specified upper or lower age limit for Directors either for accession to our Board or retirement therefrom.

A Director may be removed by an ordinary resolution of our Company before the expiration of his term of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and our Company) and our Company may by ordinary resolution appoint another in his place. Any Director so appointed shall be subject to retirement by rotation provisions in the articles of association. The number of Directors shall not be less than two.

In addition to the foregoing, the office of a Director shall be vacated:

(aa) if he resigns his office by notice in writing delivered to our Company at the registered office or head office of our Company for the time being or tendered at a meeting of our Board;

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(bb) if he dies or becomes of unsound mind as determined pursuant to an order made by any competent court or official on the grounds that he is or may be suffering from mental disorder or is otherwise incapable of managing his affairs and our Board resolves that his office be vacated;
(cc) if, without special leave, he is absent from meetings of our Board for six (6) consecutive months, and our Board resolves that his office is vacated;
(dd) if he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors generally;
(ee) if he is prohibited from being a director by law;
(ff) if he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles;
(gg) if he has been validly required by the stock exchange of the Relevant Territory (as defined in the Articles) to cease to be a Director and the relevant time period for application for review of or appeal against such requirement has lapsed and no application for review or appeal has been filed or is underway against such requirement; or
(hh) if he is removed from office by notice in writing served upon him signed by not less than three-fourths in number (or, if that is not a round number, the nearest lower round number) of our Directors (including himself) then in office.

From time to time our Board may appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with our Company for such period and upon such terms as our Board may determine and our Board may revoke or terminate any of such appointments. Our Board may also delegate any of its powers to committees consisting of such Director or Directors and other person(s) as our Board thinks fit, and from time to time it may also revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed upon it by our Board.

(viii) Borrowing powers

Pursuant to the Articles, our Board may exercise all the powers of our Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and uncalled capital of our Company and, subject to the Companies Law, to issue debentures, debenture stock, bonds and other securities of our Company, whether outright or as collateral security for any debt, liability

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or obligation of our Company or of any third party. The provisions summarised above, in common with the Articles of Association in general, may be varied with the sanction of a special resolution of our Company.

(ix) Register of Directors and officers

Pursuant to the Companies Law, our Company is required to maintain at its registered office a register of directors, alternate directors and officers which is not available for inspection by the public. A copy of such register must be filed with the Registrar of Companies in the Cayman Islands and any change must be notified to the Registrar within 30 days of any change in such directors or officers, including a change of the name of such directors or officers.

(x) Proceedings of our Board

Subject to the Articles, our Board may meet anywhere in the world for the despatch of business and may adjourn and otherwise regulate its meetings as it thinks fit. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have a second or casting vote.

(c) Alterations to the constitutional documents

To the extent that the same is permissible under Cayman Islands law and subject to the Articles, the Memorandum and Articles of our Company may only be altered or amended, and the name of our Company may only be changed by our Company by special resolution.

(d) Variation of rights of existing shares or classes of shares

Subject to the Companies Law, if at any time the share capital of our Company is divided into different classes of shares, all or any of the special rights attached to any class of shares may (unless otherwise provided for by the terms of issue of the shares of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of the Articles relating to general meetings shall mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be not less than two persons together holding (or in the case of a shareholder being a corporation, by its duly authorised representative) or representing by proxy not less than one-third in nominal value of the issued shares of that class. Every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him, and any holder of shares of the class present in person or by proxy may demand a poll.

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Any special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

(e) Alteration of capital

Our Company may, by an ordinary resolution of its members, (a) increase its share capital by the creation of new shares of such amount as it thinks expedient; (b) consolidate or divide all or any of its share capital into shares of larger or smaller amount than its existing shares; (c) divide its unissued shares into several classes and attach thereto respectively any preferential, deferred, qualified or special rights, privileges or conditions; (d) subdivide its shares or any of them into shares of an amount smaller than that fixed by the Memorandum; and (e) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled; (f) make provision for the allotment and issue of shares which do not carry any voting rights; (g) change the currency of denomination of its share capital; and (h) reduce its share premium account in any manner authorised and subject to any conditions prescribed by law.

Reduction of share capital — subject to the Companies Law and to confirmation by the court, a company limited by shares may, if so authorised by its Articles of Association, by special resolution, reduce its share capital in any way.

(f) Special resolution — majority required

In accordance with the Articles, a special resolution of our Company must be passed by a majority of not less than three-fourths of the votes cast by such members as, being entitled so to do, vote in person or by proxy or, in the case of members which are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been duly given.

Under Companies Law, a copy of any special resolution must be forwarded to the Registrar of Companies in the Cayman Islands within 15 days of being passed.

An ‘‘ordinary resolution’’, by contrast, is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of our Company as, being entitled to do so, vote in person or, in the case of members which are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which not less than 14 clear days’ notice has been given and held in accordance with the Articles. A resolution in writing signed by or on behalf of all members shall be treated as an ordinary resolution duly passed at a general meeting of our Company duly convened and held, and where relevant as a special resolution so passed.

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(g) Voting rights (generally and on a poll) and right to demand a poll

Subject to any special rights, restrictions or privileges as to voting for the time being attached to any class or classes of shares at any general meeting on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every share which is fully paid or credited as fully paid registered in his name in the register of members of our Company but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purpose as paid up on the share, and on a show of hands every member who is present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy shall have one vote. Notwithstanding anything contained in the Articles, where more than one proxy is appointed by a member which is a Clearing House (as defined in the Articles) (or its nominee(s)), each such proxy shall have one vote on a show of hands. On a poll, a member entitled to more than one vote need not use all his votes or cast all the votes he does use in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided by poll save that the chairman of the meeting may, pursuant to the Listing Rules, allow a resolution to be voted on by a show of hands. Where a show of hands is allowed, before or on the declaration of the result of the show of hands, a poll may be demanded by:

(i) at least two members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or
(ii) any member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or
(iii) a member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and holding shares in our Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Should a Clearing House or its nominee(s), be a member of our Company, such person or persons may be authorised as it thinks fit to act as its representative(s) at any meeting of our Company or at any meeting of any class of members of our Company provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person authorised in accordance with this provision shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same rights and powers on behalf of the Clearing House or its nominee(s), as if such person were an individual member including the right to vote individually on a show of hands.

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Where our Company has knowledge that any member is, under the Listing Rules, required to abstain from voting on any particular resolution of our Company or restricted to voting only for or only against any particular resolution of our Company, any votes cast by or on behalf of such member in contravention of such requirement or restriction shall not be counted.

(h) Annual general meetings

Our Company must hold an annual general meeting each year other than the year of our Company’s adoption of the Articles. Such meeting must be held not more than 15 months after the holding of the last preceding annual general meeting, or such longer period as may be authorised by the Stock Exchange at such time and place as may be determined by our Board.

(i) Accounts and audit

Our Board shall cause proper books of account to be kept of the sums of money received and expended by our Company, and the matters in respect of which such receipt and expenditure take place, and of the assets and liabilities of our Company and of all other matters required by the Companies Law necessary to give a true and fair view of the state of our Company’s affairs and to show and explain its transactions.

The books of accounts of our Company shall be kept at the head office of our Company or at such other place or places as our Board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any account or book or document of our Company except as conferred by the Companies Law or ordered by a court of competent jurisdiction or authorised by our Board or our Company in general meeting.

Our Board shall from time to time cause to be prepared and laid before our Company at its annual general meeting balance sheets and profit and loss accounts (including every document required by law to be annexed thereto), together with a copy of the Directors’ report and a copy of the auditors’ report not less than 21 days before the date of the annual general meeting. Copies of these documents shall be sent to every person entitled to receive notices of general meetings of our Company under the provisions of the Articles together with the notice of annual general meeting, not less than 21 days before the date of the meeting.

Subject to the rules of the stock exchange of the Relevant Territory (as defined in the Articles), our Company may send summarised financial statements to shareholders who has, in accordance with the rules of the stock exchange of the Relevant Territory (as defined in the Articles), consented and elected to receive summarised financial statements instead of the full financial statements. The summarised financial statements must be accompanied by any other documents as may be required under the rules of the stock exchange of the Relevant Territory (as defined in the Articles),

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

and must be sent to the shareholders not less than 21 days before the general meeting to those shareholders that have consented and elected to receive the summarised financial statements.

Our Company shall appoint auditor(s) to hold office until the conclusion of the next annual general meeting on such terms and with such duties as may be agreed with our Board. The auditors’ remuneration shall be fixed by our Company in general meeting or by our Board if authority is so delegated by the members.

The auditors shall audit the financial statements of our Company in accordance with generally accepted accounting principles of Hong Kong, the International Accounting Standards or such other standards as may be permitted by the Stock Exchange.

(j) Notices of meetings and business to be conducted thereat

An annual general meeting of our Company must be called by at least 21 days’ notice in writing, and a general meeting of our Company, other than an annual general meeting, shall be called by at least 14 days’ notice in writing. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and must specify the time, place and agenda of the meeting, and particulars of the resolution(s) to be considered at that meeting, and, in the case of special business, the general nature of that business.

Except where otherwise expressly stated, any notice or document (including a share certificate) to be given or issued under the Articles shall be in writing, and may be served by our Company on any member either personally or by sending it through the post in a prepaid envelope or wrapper addressed to such member at his registered address as appearing in our Company’s register of members or by leaving it at such registered address as aforesaid or (in the case of a notice) by advertisement in the newspapers. Any member whose registered address is outside Hong Kong may notify our Company in writing of an address in Hong Kong which for the purpose of service of notice shall be deemed to be his registered address. Where the registered address of the member is outside Hong Kong, notice, if given through the post, shall be sent by prepaid airmail letter where available. Subject to the Companies Law and the Listing Rules, a notice or document may be served or delivered by our Company to any member by electronic means to such address as may from time to time be authorised by the member concerned or by publishing it on a website and notifying the member concerned that it has been so published.

Although a meeting of our Company may be called by shorter notice than as specified above, such meeting may be deemed to have been duly called if it is so agreed:

(i) in the case of a meeting called as an annual general meeting, by all members of our Company entitled to attend and vote thereat; and

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

(ii) in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than 95% of the total voting rights at the meeting of all members of our Company.

All business transacted at an extraordinary general meeting shall be deemed special business and all business shall also be deemed special business where it is transacted at an annual general meeting with the exception of the following, which shall be deemed ordinary business:

(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;
(cc) the election of Directors in place of those retiring;
(dd) the appointment of auditors;
(ee) the fixing of the remuneration of our Directors and of the auditors;
(ff) the granting of any mandate or authority to our Board to offer, allot, grant options over, or otherwise dispose of the unissued shares of our Company representing not more than 20% in nominal value of its existing issued share capital (or such other percentage as may from time to time be specified in the rules of the Stock Exchange) and the number of any securities repurchased by our Company since the granting of such mandate; and
(gg) the granting of any mandate or authority to our Board to repurchase securities in our Company.

(k) Transfer of shares

Subject to the Companies Law, all transfers of shares shall be effected by an instrument of transfer in the usual or common form or in such other form as our Board may approve provided always that it shall be in such form prescribed by the Stock Exchange and may be under hand or, if the transferor or transferee is a Clearing House or its nominee(s), under hand or by machine imprinted signature or by such other manner of execution as our Board may approve from time to time.

Execution of the instrument of transfer shall be by or on behalf of the transferor and the transferee provided that our Board may dispense with the execution of the instrument of transfer by the transferor or transferee or accept mechanically executed transfers in any case in which it in its discretion thinks fit to do so, and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members of our Company in respect thereof.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

Our Board may, in its absolute discretion, at any time and from time to time remove any share on the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

Unless our Board otherwise agrees, no shares on the principal register shall be removed to any branch register nor shall shares on any branch register be removed to the principal register or any other branch register. All removals and other documents of title shall be lodged for registration and registered, in the case of shares on any branch register, at the relevant registration office and, in the case of shares on the principal register, at the place at which the principal register is located.

Our Board may, in its absolute discretion, decline to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve or any share issued under any share option scheme upon which a restriction on transfer imposed thereby still subsists, and it may also refuse to register any transfer of any share to more than four joint holders or any transfer of any share (not being a fully paid up share) on which our Company has a lien.

Our Board may decline to recognise any instrument of transfer unless a fee of such maximum sum as the Stock Exchange may determine to be payable or such lesser sum as our Board may from time to time require is paid to our Company in respect thereof, the instrument of transfer is properly stamped (if applicable), is in respect of only one class of share and is lodged at the relevant registration office or the place at which the principal register is located accompanied by the relevant share certificate(s) and such other evidence as our Board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).

The register of members may, subject to the Listing Rules (as defined in the Articles), be closed at such time or for such period not exceeding in the whole 30 days in each year as our Board may determine.

Fully paid shares shall be free from any restriction with respect to the right of the holder thereof to transfer such shares (except when permitted by the Stock Exchange) and shall also be free from all liens.

(l) Power of our Company to purchase its own shares

Our Company is empowered by the Companies Law and the Articles to purchase its own shares subject to certain restrictions and our Board may only exercise this power on behalf of our Company subject to any applicable requirement imposed from time to time by the Articles, code, rules or regulations issued from time to time by the Stock Exchange and/or the Securities and Futures Commission of Hong Kong.

Where our Company purchases for redemption a redeemable Share, purchases not made through the market or by tender shall be limited to a maximum price, and if purchases are by tender, tenders shall be available to all members alike.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

(m) Power of any subsidiary of our Company to own shares in our Company

There are no provisions in the Articles relating to the ownership of shares in our Company by a subsidiary.

(n) Dividends and other methods of distribution

Our Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by our Board.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide:

(i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid, although no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share; and
(ii) all dividends shall be apportioned and paid pro rata in accordance with the amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. Our Board may deduct from any dividend or other monies payable to any member all sums of money (if any) presently payable by him to our Company on account of calls, instalments or otherwise.

Where our Board or our Company in general meeting has resolved that a dividend should be paid or declared on the share capital of our Company, our Board may resolve:

(aa) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the members entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment; or
(bb) that the members entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as our Board may think fit.

Upon the recommendation of our Board, our Company may by ordinary resolution in respect of any one particular dividend of our Company determine that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to members to elect to receive such dividend in cash in lieu of such allotment.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

Any dividend, bonus or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, but in the case of joint holders, shall be addressed to the holder whose name stands first in the register of members of our Company in respect of the shares at his address as appearing in the register, or addressed to such person and at such address as the holder or joint holders may in writing so direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent and shall be sent at the holder’s or joint holders’ risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to our Company. Any one of two or more joint holders may give effectual receipts for any dividends or other monies payable or property distributable in respect of the shares held by such joint holders.

Whenever our Board or our Company in general meeting has resolved that a dividend be paid or declared, our Board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

Our Board may, if it thinks fit, receive from any member willing to advance the same, and either in money or money’s worth, all or any part of the money uncalled and unpaid or instalments payable upon any shares held by him, and in respect of all or any of the monies so advanced may pay interest at such rate (if any) not exceeding 20 % per annum, as our Board may decide, but a payment in advance of a call shall not entitle the member to receive any dividend subsequently declared or to exercise any other rights or privileges as a member in respect of the share or the due portion of the shares upon which payment has been advanced by such member before it is called up.

All dividends, bonuses or other distributions unclaimed for one year after having been declared may be invested or otherwise made use of by our Board for the benefit of our Company until claimed and our Company shall not be constituted a trustee in respect thereof. All dividends, bonuses or other distributions unclaimed for six years after having been declared may be forfeited by our Board and, upon such forfeiture, shall revert to our Company.

No dividend or other monies payable by our Company on or in respect of any share shall bear interest against our Company.

Our Company may exercise the power to cease sending cheques for dividend entitlements or dividend warrants by post if such cheques or warrants remain uncashed on two consecutive occasions or after the first occasion on which such a cheque or warrant is returned undelivered.

(o) Proxies

Any member of our Company entitled to attend and vote at a meeting of our Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of our Company or

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

at a class meeting. A proxy need not be a member of our Company and shall be entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy shall be entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise if it were an individual member. On a poll or on a show of hands, votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised. Every instrument of proxy, whether for a specified meeting or otherwise, shall be in such form as our Board may from time to time approve, provided that it shall not preclude the use of the two-way form. Any form issued to a member for use by him for appointing a proxy to attend and vote at an extraordinary general meeting or at an annual general meeting at which any business is to be transacted shall be such as to enable the member, according to his intentions, to instruct the proxy to vote in favour of or against (or, in default of instructions, to exercise his discretion in respect of) each resolution dealing with any such business.

(p) Calls on shares and forfeiture of shares

Our Board may from time to time make such calls as it may think fit upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment thereof made payable at fixed times. A call may be made payable either in one sum or by instalments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding 20% per annum as our Board shall fix from the day appointed for the payment thereof to the time of actual payment, but our Board may waive payment of such interest wholly or in part. Our Board may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the money uncalled and unpaid or instalments payable upon any shares held by him, and in respect of all or any of the monies so advanced our Company may pay interest at such rate (if any) not exceeding 20% per annum as our Board may decide.

If a member fails to pay any call or instalment of a call on the day appointed for payment thereof, our Board may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve not less than 14 days’ notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment. The notice will name a further day (not earlier than the expiration of 14 days from the date of the notice) on or before which the payment required by the notice is to

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

be made, and it shall also name the place where payment is to be made. The notice shall also state that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of our Board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, nevertheless, remain liable to pay to our Company all monies which, at the date of forfeiture, were payable by him to our Company in respect of the shares together with (if our Board shall in its discretion so require) interest thereon from the date of forfeiture until payment at such rate not exceeding 20% per annum as our Board may prescribe.

(q) Inspection of corporate records

Members of our Company have no general right under the Companies Law to inspect or obtain copies of the register of members or corporate records of our Company. However, the members of our Company will have such rights as may be set forth in the Articles. The Articles provide that for so long as any part of the share capital of our Company is listed on the Stock Exchange, any member may inspect any register of members of our Company maintained in Hong Kong (except when the register of member is closed) without charge and require the provision to him of copies or extracts thereof in all respects as if our Company were incorporated under and were subject to the Hong Kong Companies Ordinance (Cap 622).

An exempted company may, subject to the provisions of its articles of association, maintain its principal register of members and any branch registers at such locations, whether within or outside the Cayman Islands, as its directors may, from time to time, think fit.

(r) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, and continues to be present until the conclusion of the meeting.

The quorum for a general meeting shall be two members present in person (or in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

(s) Rights of minorities in relation to fraud or oppression

There are no provisions in the Articles concerning the rights of minority members in relation to fraud or oppression. However, certain remedies may be available to members of our Company under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.

(t) Procedures on liquidation

A resolution that our Company be wound up by the court or be wound up voluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares:

(i) if our Company shall be wound up and the assets available for distribution amongst the members of our Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, then the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively; and
(ii) if our Company shall be wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, on the shares held by them respectively.

In the event that our Company is wound up (whether the liquidation is voluntary or compelled by the court) the liquidator may, with the sanction of a special resolution and any other sanction required by the Companies Law divide among the members in specie or kind the whole or any part of the assets of our Company whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members and the members within each class. The liquidator may, with the like sanction, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator shall think fit, but so that no member shall be compelled to accept any shares or other property upon which there is a liability.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

(u) Untraceable members

In accordance with the Articles, our Company is entitled to sell any of the shares of a member who is untraceable if:

(i) all cheques or warrants, being not less than three in total number, for any sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years;
(ii) upon the expiry of the 12 years and 3 months period (being the 3 months notice period referred to in sub-paragraph (iii)), our Company has not during that time received any indication of the existence of the member; and
(iii) our Company has caused an advertisement to be published in accordance with the rules of the stock exchange of the Relevant Territory (as defined in the Articles) giving notice of its intention to sell such shares and a period of three months has elapsed since such advertisement and the stock exchange of the Relevant Territory (as defined in the Articles) has been notified of such intention. The net proceeds of any such sale shall belong to our Company and upon receipt by our Company of such net proceeds, it shall become indebted to the former member of our Company for an amount equal to such net proceeds.

(v) Subscription rights reserve

Pursuant to the Articles, provided that it is not prohibited by and is otherwise in compliance with the Companies Law, if warrants to subscribe for shares have been issued by our Company and our Company does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of the shares to be issued on the exercise of such warrants, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of such shares.

3. CAYMAN ISLANDS COMPANY LAW

Our Company was incorporated in the Cayman Islands as an exempted company on 10 March 2015 subject to the Companies Law. Certain provisions of Cayman Islands company law are set out below but this section does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of the Companies Law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar.

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APPENDIX III

(a) Company operations

As an exempted company, our Company must conduct its operations mainly outside the Cayman Islands. Moreover, our Company is required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the amount of its authorised share capital.

(b) Share capital

In accordance with the Companies Law, a Cayman Islands company may issue ordinary, preference or redeemable shares or any combination thereof. The Companies Law provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called the ‘‘share premium account’’. At the option of a company, these provisions may not apply to premiums on shares of that company allotted pursuant to any arrangements in consideration of the acquisition or cancellation of shares in any other company and issued at a premium. The Companies Law provides that the share premium account may be applied by the company subject to the provisions, if any, of its memorandum and articles of association, in such manner as the company may from time to time determine including, but without limitation, the following:

(i) paying distributions or dividends to members;
(ii) paying up unissued shares of the company to be issued to members as fully paid bonus shares;
(iii) any manner provided in section 37 of the Companies Law;
(iv) writing-off the preliminary expenses of the company; and
(v) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company.

Notwithstanding the foregoing, the Companies Law provides that no distribution or dividend may be paid to members out of the share premium account unless, immediately following the date on which the distribution or dividend is proposed to be paid, the company will be able to pay its debts as they fall due in the ordinary course of business.

It is further provided by the Companies Law that, subject to confirmation by the court, a company limited by shares or a company limited by guarantee and having a share capital may, if authorised to do so by its articles of association, by special resolution reduce its share capital in any way.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

The Articles include certain protections for holders of special classes of shares, requiring their consent to be obtained before their rights may be varied. The consent of the specified proportions of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares is required.

(c) Financial assistance to purchase shares of a company or its holding company

There are no statutory prohibitions in the Cayman Islands on the granting of financial assistance by a company to another person for the purchase of, or subscription for, its own, its holding company’s or a subsidiary’s shares. Therefore, a company may provide financial assistance provided the directors of the company when proposing to grant such financial assistance discharge their duties of care and acting in good faith, for a proper purpose and in the interests of the company. Such assistance should be on an arm’s-length basis.

(d) Purchase of shares and warrants by a company and its subsidiaries

A company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or a member and, for the avoidance of doubt, it shall be lawful for the rights attaching to any shares to be varied, subject to the provisions of the company’s articles of association, so as to provide that such shares are to be or are liable to be so redeemed. In addition, such a company may, if authorised to do so by its articles of association, purchase its own shares, including any redeemable shares. Nonetheless, if the articles of association do not authorise the manner and terms of purchase, a company cannot purchase any of its own shares without the manner and terms of purchase first being authorised by an ordinary resolution of the company. A company may not redeem or purchase its shares unless they are fully paid. Furthermore, a company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any issued shares of the company other than shares held as treasury shares. In addition, a payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business.

Under Section 37A(1) the Companies Law, shares that have been purchased or redeemed by a company or surrendered to the company shall not be treated as cancelled but shall be classified as treasury shares if (a) the memorandum and articles of association of the company do not prohibit it from holding treasury shares; (b) the relevant provisions of the memorandum and articles of association (if any) are complied with; and (c) the company is authorised in accordance with the company’s articles of association or by a resolution of the directors to hold such shares in the name of the company as treasury shares prior to the purchase, redemption or surrender

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

of such shares. Shares held by a company pursuant to section 37A(1) of the Companies Law shall continue to be classified as treasury shares until such shares are either cancelled or transferred pursuant to the Companies Law.

A Cayman Islands company may be able to purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. Thus there is no requirement under Cayman Islands law that a company’s memorandum or articles of association contain a specific provision enabling such purchases. The directors of a company may under the general power contained in its memorandum of association be able to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances, may acquire such shares.

(e) Dividends and distributions

With the exception of sections 34 and 37A(7) of the Companies Law, there are no statutory provisions relating to the payment of dividends. Based upon English case law which is likely to be persuasive in the Cayman Islands, dividends may be paid only out of profits. In addition, section 34 of the Companies Law permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account (see sub-paragraph 2(n) of this Appendix for further details). Section 37A(7)(c) of the Companies Law provides that for so long as a company holds treasury shares, no dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of a treasury share.

(f) Protection of minorities and shareholders’ suits

It can be expected that the Cayman Islands courts will ordinarily follow English case law precedents (particularly the rule in the case of Foss v. Harbottle and the exceptions thereto) which permit a minority member to commence a representative action against or derivative actions in the name of the company to challenge:

(i) an act which is ultra vires the company or illegal;
(ii) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of the company; and
(iii) an irregularity in the passing of a resolution the passage of which requires a qualified (or special) majority which has not been obtained.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

Where a company (not being a bank) is one which has a share capital divided into shares, the court may, on the application of members thereof holding not less than onefifth of the shares of the company in issue, appoint an inspector to examine the affairs of the company and, at the direction of the court, to report thereon.

Moreover, any member of a company may petition the court which may make a winding up order if the court is of the opinion that it is just and equitable that the company should be wound up.

In general, claims against a company by its members must be based on the general laws of contract or tort applicable in the Cayman Islands or be based on potential violation of their individual rights as members as established by a company’s memorandum and articles of association.

(g) Disposal of assets

There are no specific restrictions in the Companies Law on the power of directors to dispose of assets of a company, although it specifically requires that every officer of a company, which includes a director, managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a view to the best interest of the company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(h) Accounting and auditing requirements

Section 59 of the Companies Law provides that a company shall cause proper records of accounts to be kept with respect to (i) all sums of money received and expended by the company and the matters with respect to which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company and (iii) the assets and liabilities of the company.

Section 59 of the Companies Law further states that proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions.

If our Company keeps its books of account at any place other than at its registered office or at any other place within the Cayman Islands, it shall, upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Law (2013 Revision) of the Cayman Islands, make available, in electronic form or any other medium, at its registered office copies of its books of account, or any part or parts thereof, as are specified in such order or notice.

(i) Exchange control

There are no exchange control regulations or currency restrictions in effect in the Cayman Islands.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

(j) Taxation

Pursuant to section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, our Company has obtained an undertaking from the Governor-in-Cabinet:

(i) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to our Company or its operations; and
(ii) in addition, that no tax be levied on profits, income gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable by our Company:
(aa) on or in respect of the shares, debentures or other obligations of our Company; or
(bb) by way of withholding in whole or in part of any relevant payment as defined in section 6(3) of the Tax Concessions Law (2011 Revision).

The undertaking for our Company is for a period of twenty years from 24 March 2015.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our Company levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments.

(k) Stamp duty on transfers

There is no stamp duty payable in the Cayman Islands on transfers of shares of Cayman Islands companies save for those which hold interests in land in the Cayman Islands.

(l) Loans to directors

The Companies Law contains no express provision prohibiting the making of loans by a company to any of its directors. However, the Articles provide for the prohibition of such loans under specific circumstances.

(m) Inspection of corporate records

The members of the company have no general right under the Companies Law to inspect or obtain copies of the register of members or corporate records of the company. They will, however, have such rights as may be set out in the company’s articles of association.

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

APPENDIX III

(n) Register of members

A Cayman Islands exempted company may maintain its principal register of members and any branch registers in any country or territory, whether within or outside the Cayman Islands, as the company may determine from time to time. The Companies Law contains no requirement for an exempted company to make any returns of members to the Registrar of Companies in the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection. However, an exempted company shall make available at its registered office, in electronic form or any other medium, such register of members, including any branch register of member, as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Law (2013 Revision) of the Cayman Islands.

(o) Winding up

A Cayman Islands company may be wound up either by (i) an order of the court; (ii) voluntarily by its members; or (iii) under the supervision of the court

The court has authority to order winding up in a number of specified circumstances including where, in the opinion of the court, it is just and equitable that such company be so wound up.

A voluntary winding up of a company occurs where the company so resolves by special resolution that it be wound up voluntarily, or, where the company in general meeting resolves that it be wound up voluntarily because it is unable to pay its debt as they fall due; or, in the case of a limited duration company, when the period fixed for the duration of the company by its memorandum or articles expires, or where the event occurs on the occurrence of which the memorandum or articles provides that the company is to be wound up. In the case of a voluntary winding up, such company is obliged to cease to carry on its business from the commencement of its winding up except so far as it may be beneficial for its winding up. Upon appointment of a voluntary liquidator, all the powers of the directors cease, except so far as the company in general meeting or the liquidator sanctions their continuance.

In the case of a members’ voluntary winding up of a company, one or more liquidators shall be appointed for the purpose of winding up the affairs of the company and distributing its assets.

As soon as the affairs of a company are fully wound up, the liquidator must make a report and an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof.

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APPENDIX III

When a resolution has been passed by a company to wind up voluntarily, the liquidator or any contributory or creditor may apply to the court for an order for the continuation of the winding up under the supervision of the court, on the grounds that (i) the company is or is likely to become insolvent; or (ii) the supervision of the court will facilitate a more effective, economic or expeditious liquidation of the company in the interests of the contributories and creditors. A supervision order shall take effect for all purposes as if it was an order that the company be wound up by the court except that a commenced voluntary winding up and the prior actions of the voluntary liquidator shall be valid and binding upon the company and its official liquidator.

For the purpose of conducting the proceedings in winding up a company and assisting the court, there may be appointed one or more persons to be called an official liquidator or official liquidators; and the court may appoint to such office such person or persons, either provisionally or otherwise, as it thinks fit, and if more than one persons are appointed to such office, the court shall declare whether any act required or authorised to be done by the official liquidator is to be done by all or any one or more of such persons. The court may also determine whether any and what security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such office, all the property of the company shall be in the custody of the court.

(p) Reconstructions

Reconstructions and amalgamations are governed by specific statutory provisions under the Companies Law whereby such arrangements may be approved by a majority in number representing 75% in value of members or creditors, depending on the circumstances, as are present at a meeting called for such purpose and thereafter sanctioned by the courts. Whilst a dissenting member would have the right to express to the court his view that the transaction for which approval is being sought would not provide the members with a fair value for their shares, nonetheless the courts are unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of management and if the transaction were approved and consummated the dissenting member would have no rights comparable to the appraisal rights (i.e. the right to receive payment in cash for the judicially determined value of their shares) ordinarily available, for example, to dissenting members of a United States corporation.

(q) Take-overs

Where an offer is made by a company for the shares of another company and, within four months of the offer, the holders of not less than 90% of the shares which are the subject of the offer accept, the offeror may at any time within two months after the expiration of the said four months, by notice require the dissenting members to transfer their shares on the terms of the offer. A dissenting member may apply to the court of the Cayman Islands within one month of the notice objecting to the transfer. The burden is on the dissenting member to show that the court should exercise its

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SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW

discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority members.

(r) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, save to the extent any such provision may be held by the court to be contrary to public policy, for example, where a provision purports to provide indemnification against the consequences of committing a crime.

4. GENERAL

Appleby, our Company’s legal adviser on Cayman Islands law, has sent to our Company a letter of advice which summarises certain aspects of the Cayman Islands company law. This letter, together with a copy of the Companies Law, is available for inspection as referred to in the paragraph headed ‘‘Documents available for inspection’’ in Appendix V. Any person wishing to have a detailed summary of Cayman Islands company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

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APPENDIX IV

STATUTORY AND GENERAL INFORMATION

A. FURTHER INFORMATION ABOUT OUR COMPANY

1. Incorporation of our Company

Our Company was incorporated in the Cayman Islands under the Companies Law as an exempted company with limited liability on 10 March 2015. Our Company has established its principal place of business in Hong Kong at 19th Floor, Prosperity Tower, 39 Queen’s Road Central, Central, Hong Kong and has been registered with the Registrar of Companies in Hong Kong as a non-Hong Kong company under Part 16 of the Companies Ordinance (Cap 622) on 30 March 2015. In connection with such registration, our Company has appointed Mr. Li Chi Chung of 19th Floor, Prosperity Tower, 39 Queen’s Road Central, Central, Hong Kong, as the authorised representative of our Company for the acceptance of service of process and notices on behalf of our Company in Hong Kong.

As our Company is incorporated in the Cayman Islands, it operates subject to the Companies Law and its constitution comprising the Memorandum and the Articles. A summary of various provisions of our Company’s constitution and certain relevant aspects of the Companies Law is set out in Appendix III to this prospectus.

2. Changes in the share capital of our Company

(a) The authorised share capital of our Company as of the date of its incorporation was HK$380,000 divided into 38,000,000 Shares of HK$0.01 each, of which one nil-paid Share was allotted and issued to the initial subscriber and was transferred to Absolute Truth on 12 March 2015 at nil consideration.
(b) On 23 June 2015, in consideration of Mr. Kelvin Tan and Mr. Peter Tan transferred the entire issued share capital of Signmechanic Singapore to Sino Promise (as a nominee of our Company), (i) our Company allotted and issued 999,999 new Shares, credited as fully paid, to Absolute Truth (as a nominee of Mr. Kelvin Tan and Mr. Peter Tan); and (ii) the one nil-paid Share, which was registered in the name of Absolute Truth, was credited as fully paid.
(c) Pursuant to the resolutions in writing of the sole Shareholder passed on 23 June 2015, the authorised share capital of our Company was increased from HK$380,000 to HK$50,000,000 by the creation of an additional 4,962,000,000 Shares.
(d) Pursuant to the Capitalisation Issue, our Company will allot and issue 319,000,000 Shares to Absolute Truth.
(e) Immediately following completion of the Placing and the Capitalisation Issue, the authorised share capital of our Company will be HK$50,000,000 divided into 5,000,000,000 Shares and the issued share capital of our Company will be HK$4,000,000 divided into 400,000,000 Shares, all fully paid or credited as fully paid and 4,600,000,000 Shares will remain unissued.

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STATUTORY AND GENERAL INFORMATION

(f) Save as aforesaid and as mentioned in the paragraph headed ‘‘Written resolutions of the sole Shareholder passed on 23 June 2015’’ below, there has been no alteration in the share capital of our Company since incorporation.
(g) Save as disclosed in this prospectus, our Directors do not have any present intention to issue any part of the authorised but unissued share capital of our Company and, without prior approval of the Shareholders at general meeting, no issue of Shares will be made which would effectively alter the control of our Company.
Written resolutions of the sole Shareholder passed on 23 June 2015

On 23 June 2015, written resolutions of the sole Shareholder were passed pursuant to which, among others:

(a) the authorised share capital of our Company was increased from HK$380,000 to HK$50,000,000 by the creation of an additional 4,962,000,000 Shares;
(b) our Company approved and adopted the Memorandum and the Articles to be effective conditional on the Listing;
(c) conditional on (A) the Stock Exchange granting the listing of, and permission to deal in, the Shares in issue and the Shares to be issued as mentioned herein (including any Shares which may be issued pursuant to the Placing and the Capitalisation Issue) and (B) the obligations of the Underwriters under the Underwriting Agreement becoming unconditional and not being terminated in accordance with the terms of such agreement or otherwise, in each case on or before the date determined in accordance with the terms of the Underwriting Agreement:
(i) the Placing was approved and our Directors were authorised to allot and issue the Placing Shares; and
(ii) conditional upon the share premium amount of our Company being credited as a result of the Placing, our Directors were authorised to capitalise the amount of HK$3,190,000 from the amount standing to the credit of the share premium account of our Company and applying such sum to pay up in full at par 319,000,000 Shares for allotment and issue to the person(s) whose name(s) appears on the register of members of our Company at the close of business on 23 June 2015, pro-rata (or as nearly as possible without involving fractions) to its/their then existing shareholdings in our Company;

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(d) a general unconditional mandate was given to our Directors to allot, issue and deal with (otherwise than by way of a rights issue or any scrip dividend schemes or similar arrangements in accordance with the Articles of Association or the Placing or the Capitalisation Issue) Shares with an aggregate nominal amount not exceeding the sum of (i) 20% of the aggregate nominal amount of the share capital of our Company in issue immediately following completion of the Placing and the Capitalisation Issue; and (ii) the nominal amount of the share capital of our Company repurchased by our Company pursuant to the authority granted to our Directors as referred in paragraph (e) below, until the conclusion of the next annual general meeting of our Company, or the date by which the next annual general meeting of our Company is required by the Articles of Association or any laws applicable to our Company to be held, or the passing of an ordinary resolution by our Shareholders revoking or varying the authority given to our Directors, whichever occurs first; and
(e) a general unconditional mandate was given to our Directors to exercise all powers of our Company to repurchase Shares with an aggregate nominal amount not exceeding 10% of the aggregate nominal amount of the share capital of our Company in issue immediately following completion of the Placing and the Capitalisation Issue, until the conclusion of the next annual general meeting of our Company, or the date by which the next annual general meeting of our Company is required by the Articles of Association or any laws applicable to our Company to be held, or the passing of an ordinary resolution by our Shareholders revoking or varying the authority given to our Directors, whichever occurs first.

4. Corporate reorganisation

Please refer to the section headed ‘‘History, Reorganisation and Group structure — Reorganisation’’ in this prospectus for further details.

5. Changes in the share capital of subsidiaries of our Company

Our Company’s subsidiaries are referred to in the Accountant’s Report for our Company, the text of which is set out in Appendix I to this prospectus. On 7 April 2015, an additional 750,000 shares in Signmechanic Singapore were allotted and issued to each of Mr. Kelvin Tan and Mr. Peter Tan and the shares were issued at a cash payment of S$750,000 each. On 23 June 2015, 9 shares in Sino Promise were allotted and issued to our Company in the consideration of 2,000,000 shares of Signmechanic Singapore transferred to Sino Promise under the instruction of our Company. Save for the aforesaid, there has been no alteration in the share capital of any subsidiary of our Company within the two years immediately preceding the date of this prospectus.

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STATUTORY AND GENERAL INFORMATION

6. Particulars of Subsidiaries

As at the Latest Practicable Date, our Group has two subsidiaries, namely Sino Promise and Signmechanic Singapore. Set out below is a summary of the corporate information of Sino Promise and Signmechanic Singapore:

(a) Sino Promise

Date of incorporation: 12 January 2015 Registered Office: P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands Nature: Limited liability company Principle business activities: Investment holding Issued share capital: US$10.00 Paid-up share capital: US$10.00 Shareholder: Our Company

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STATUTORY AND GENERAL INFORMATION

(b) Signmechanic Singapore

Date of incorporation: 2 September 1997 Registered Office: 424 Tagore Industrial Avenue, Sindo Industrial Estate, Singapore 787807 Nature: Limited liability company Principle business activities: Design, fabrication, installation and maintenance of signage products Issued share capital: S$2,000,000 Paid-up share capital: S$2,000,000 Shareholder: Sino Promise

7. Repurchase by our Company of our own securities

This paragraph contains information required by the Stock Exchange to be included in this prospectus concerning the repurchase by our Company of its own securities.

(a) Provisions of the GEM Listing Rules

The GEM Listing Rules permit a company listed on GEM to repurchase its securities on GEM subject to certain restrictions, details of which are summarised below:

(i) Shareholders’ approval

All proposed repurchases of securities (which must be fully paid up in the case of shares) by a company listed on GEM must be approved in advance by an ordinary resolution of the shareholders, either by way of general mandate or by specific approval of a particular transaction.

Note: Pursuant to a resolution in writing passed by the sole Shareholder on 23 June 2015, a general unconditional mandate was given to our Directors authorising any repurchase by our Company of Shares on GEM or on any other stock exchange on which the securities of our Company may be listed and which is recognised by the SFC and the Stock Exchange for this purpose, of up to 10% of the aggregate nominal amount of the share capital of our Company immediately following completion of the Placing and the Capitalisation Issue, such mandate to expire at the conclusion of the next annual general meeting of our Company, or the date by which the next annual general meeting of our Company is required by the Articles or applicable laws to be held, or the passing of an ordinary resolution by Shareholders in general meeting revoking or varying the authority given to our Directors, whichever occurs first.

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STATUTORY AND GENERAL INFORMATION

(ii) Source of funds

Repurchases must be funded out of funds legally available for the purpose in accordance with a company’s constitutive documents and the laws of the jurisdiction in which the company is incorporated or otherwise established. A listed company may not purchase its own securities on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time. Under the Cayman Islands laws, any repurchase by our Company may be made out of profits of our Company, out of the share premium account or out of the proceeds of a fresh issue of Shares made for the purpose of the repurchase or, if authorised by the Articles and subject to the Companies Law, out of capital. Any premium payable on a redemption or purchase over the par value of the Shares to be repurchased must be provided for out of either or both of the profits or the share premium account of our Company or, if authorised by the Articles and subject to the Companies Law, out of capital.

(b) Reasons for repurchases

Our Directors believe that it is in the best interests of our Company and our Shareholders for our Directors to have general authority from our Shareholders to enable our Company to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of our Company and/or earnings per Share and will only be made if our Directors believe that such repurchases will benefit our Company and our Shareholders.

(c) Funding of repurchases

In repurchasing securities, our Company may only apply funds legally available for such purpose in accordance with the Memorandum and Articles and the applicable laws of the Cayman Islands.

On the basis of the current financial position of our Group as disclosed in this prospectus and taking into account the current working capital position of our Group, our Directors consider that, if the Repurchase Mandate is to be exercised in full, it might have a material adverse effect on the working capital and/or the gearing position of our Group as compared with the position disclosed in this prospectus. However, our Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of our Group or the gearing levels which in the opinion of our Directors are from time to time appropriate for our Group.

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STATUTORY AND GENERAL INFORMATION

The exercise in full of the Repurchase Mandate, on the basis of 400,000,000 Shares in issue immediately after the Listing, would result in up to 40,000,000 Shares being repurchased by our Company during the period in which the Repurchase Mandate remains in force.

(d) General

None of our Directors nor, to the best of their knowledge and belief having made all reasonable enquiries, any of their associates currently intends to sell any Shares to our Company or its subsidiaries.

Our Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the GEM Listing Rules and the applicable laws of the Cayman Islands.

If, as a result of a securities repurchase, a shareholder’s proportionate interest in the voting rights of our Company is increased, such increase will be treated as an acquisition for the purpose of the Takeovers Code. Accordingly, a shareholder or a group of shareholders acting in concert could obtain or consolidate control of our Company and become obliged to make a mandatory offer in accordance with rule 26 of the Takeovers Code. Save as aforesaid, our Directors are not aware of any consequences which would arise under the Takeovers Code as a consequence of any repurchases pursuant to the Repurchase Mandate.

No connected person has notified our Company that he has a present intention to sell Shares to our Company, or has undertaken not to do so if the Repurchase Mandate is exercised.

B. FURTHER INFORMATION ABOUT OUR BUSINESS

1. Summary of material contracts

The following contracts (not being contracts in the ordinary course of business of our Group) have been entered into by members of our Group within the two years immediately preceding the date of this prospectus and are or may be material:

(a) the option to purchase (commercial) dated 14 June 2013 and granted by Signmechanic Singapore for a consideration of S$90,000 and accepted by Sunland Development Pte Ltd on 5 August 2013, in relation to an option to purchase the property situated at 2B Mandai Estate #01-01, Singapore 729929 for an aggregate consideration of S$9,000,000;
(b) the agreement for sale and purchase of shares in Signmechanic Singapore dated 23 June 2015 and entered into between our Company, Mr. Kelvin Tan and Mr. Peter Tan, pursuant to which our Company agreed to acquire the entire shareholding interests in Signmechanic Singapore from Mr. Kelvin Tan and Mr. Peter Tan in the consideration of HK$38,106,550, which was

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STATUTORY AND GENERAL INFORMATION

APPENDIX IV

satisfied our Company by (i) the allotment and issue of 999,999 Shares, credited as fully paid on the date of the agreement, to Mr. Kelvin Tan and Mr. Peter Tan (or their nominee); and (ii) the crediting of the one nil-paid Share, which was registered in the name of Reid Services Limited as the initial subscriber of our Company and was subsequently transferred to Absolute Truth, as fully paid;

(c) the Underwriting Agreement;
(d) the Deed of Indemnity; and
(e) the Deed of Non-competition.
Intellectual property rights
(a) As at the Latest Practicable Date, our Group had applied for registration of the following trademark which is material to the business of our Group:

			Application/
		Place of	Registration
Trademark	Class	application	number	Applicant	Application date
	37	Singapore	40201504904X	Signmechanic	24 March 2015
				Singapore
	37	Hong Kong	303345930	Signmechanic	25 March 2015
				Singapore
	16	Hong Kong	303350600	Signmechanic	27 March 2015
				Singapore

Notes:

(1) Class 37: Construction of signs; erection of signs; painting of signs; sign repair; installation and maintenance of signs; installation and maintenance of road signs; installation and maintenance of traffic signs; advisory and consultancy services relating to the aforesaid services.
(2) Class 16: Printed matter; printed publications; share certificates; share certificate paper.
(b) As at the Latest Practicable Date, we had registered the following domain name which is material to the business of our Group:

Domain name Expiry date Registrant www.kpmholding.com 9 March 2020 Signmechanic Singapore

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STATUTORY AND GENERAL INFORMATION

C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL SHAREHOLDERS
Directors
- (a) Interest of Directors and the chief executive of our Company in Shares

Immediately following completion of the Placing and the Capitalisation Issue, the interests or short positions of each of our Directors and the chief executive in the share capital, underlying shares and debentures of our Company and our associated corporations (within the meaning of Part XV of the SFO) which, once the Shares are listed, will have to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he is taken or deemed to have taken under such provisions of the SFO) or which will be required, pursuant to Section 352 of the SFO, to be entered in the register required to be kept therein or which, once the Shares are listed, will be required pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules to be notified to our Company and the Stock Exchange are set out as follows:

				Percentage of
	Long/Short	Capacity and nature of	Number of	shareholding in
Name	position	interests	Shares	our Company
Mr. Kelvin Tan	Long	Interest of a controlled	300,000,000	75%
		corporation	(Note 1)
Mr. Peter Tan	Long	Interest of a controlled	300,000,000	75%
		corporation	(Note 2)
Notes:

(1) Mr. Kelvin Tan is deemed to be interested in the Shares held by Absolute Truth as Absolute Truth is owned as to 50% by Mr. Kelvin Tan and 50% by Mr. Peter Tan.
(2) Mr. Peter Tan is deemed to be interested in the Shares held by Absolute Truth as Absolute Truth is owned as to 50% by Mr. Peter Tan and 50% by Mr. Kelvin Tan.

(b) Particulars of service contracts

Each of the Executive Directors has entered into a service contract with our Company which will become effective on the Listing Date. The terms and conditions of each of such service contracts are similar in all material respects. The service contracts are initially for a fixed term of three years commencing from the Listing Date and will continue thereafter until terminated by not less than three months’ notice in writing served by either party on the other. Each of our Executive Directors is entitled to a basic salary set out below (subject to an annual increment at the discretion of our Directors) and a discretionary bonus. An Executive Director is required to abstain from voting and is not counted in the quorum in respect of any resolution of the Directors regarding the amount of the

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STATUTORY AND GENERAL INFORMATION

monthly salary and the discretionary bonus payable to him. The annual remuneration payable to the Executive Directors under each of the service contracts are as follows:

Name	Amount
Mr. Kelvin Tan	S$150,000
Mr. Peter Tan	S$150,000

The Executive Directors are entitled to a bonus in respect of each financial year of our Company in an amount to be determined by the Board in its absolute discretion.

Each of the Independent Non-Executive Directors has entered into a letter of appointment with our Company. The terms and conditions of each of such letters of appointment are similar in all material respects. Each of the Independent NonExecutive Directors is appointed with an initial term of two years commencing from the Listing Date subject to termination in certain circumstances as stipulated in the relevant letters of appointment. The annual remuneration payable to the Independent Non-Executive Directors under each of the letters of appointment are as follows:

Name	Amount
Mr. Oh Eng Bin	S$21,066
Mr. Tan Kiang Hua	S$21,066
Mdm. Kow Yuen-Ting	S$21,066

Save as disclosed above, none of our Directors has or is proposed to have any service contract with our Company or any of its subsidiaries (other than contracts expiring or determinable by the employer within one year without payment of compensation other than statutory compensation).

Remuneration of our Directors

The aggregate remuneration paid by our Company to our Directors in respect of each of the two financial years ended 31 December 2014 were approximately S$0.3 million and S$0.3 million respectively.

Pursuant to the current arrangements, it is estimated that an aggregate amount of approximately S$0.3 million (excluding discretionary bonus, if any) will be paid to our Directors as remuneration for the year ending 31 December 2015.

Our Company’s policy concerning the remuneration of our Directors is that the amount of remuneration is determined by reference to the relevant Director’s experience, workload and the time devoted to our Group.

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STATUTORY AND GENERAL INFORMATION

2. Substantial Shareholders

So far as our Directors are aware, immediately following completion of the Placing and the Capitalisation Issue, in addition to the interests disclosed under the section headed ‘‘Further information about our Directors and Substantial Shareholders — Directors’’ in this Appendix IV above, the persons (not being a director or chief executive of our Company) who will have interests or short positions in the Shares and underlying Shares which are required to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO are as follows:

		Capacity and	Number of	Percentage of
Name		nature of interests	Shares held	shareholding
Absolute	Truth	Beneficial owner	300,000,000	75%

3. Interest in customers of our Group

As at the Latest Practicable Date, so far as our Directors were aware, no Director or their respective associates or Shareholder (which to the knowledge of our Directors owns more than 5% of the issued share capital of our Company) had any interest in the five largest customers of our Group.

4. Related party transactions

Our Group entered into the related party transactions within the two years immediately preceding the date of this prospectus as mentioned in Note 32 of the Accountant’s Report set out in Appendix I to this prospectus.

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STATUTORY AND GENERAL INFORMATION

D. OTHER INFORMATION

1. Estate duty, tax and other indemnities

Each of Mr. Kelvin Tan, Mr. Peter Tan and Absolute Truth (collectively, the ‘‘Indemnifiers’’) and our Company entered into the Deed of Indemnity referred to in the paragraph headed ‘‘Summary of material contracts’’ in the section headed ‘‘Further information about the Business’’ of this Appendix, under which the Indemnifiers have given joint and several indemnities in favour of our Group in respect of, among other things, the amount of any and all taxation falling on any member of our Group resulting from or by reference to any income, profits, gains earned, accrued or received on or before the Listing Date or any event or transaction entered into or occurring on or before the Listing Date whether alone or in conjunction with any circumstances whenever occurring and whether or not such taxation is chargeable against or attributable to any other person, firm or company.

The indemnity contained above shall not apply:

(i) to the extent that full provision or reserve has been made for such taxation in the audited accounts of our Group or the audited accounts of the relevant member of our Group for each of the two financial years ended 31 December 2013 and 31 December 2014, as set out in Appendix I to this prospectus; or
(ii) to the extent that such taxation or liability would not have arisen but for some act or omission of, or transaction entered into by any member of our Group (whether alone or in conjunction with some other act, omission or transaction, whenever occurring) otherwise than in the course of normal day to day operations of that company or carried out, made or entered into pursuant to a legally binding commitment created on or before the Listing Date;
(iii) to the extent that any provision or reserve made for taxation in the audited accounts of any member of our Group for each of the two financial years ended 31 December 2013 and 31 December 2014 which is finally established to be an over-provision or an excessive reserve provided that the amount of any such provision or reserve applied pursuant to the Deed of Indemnity to reduce the Indemnifiers’ liability in respect of taxation shall not be available in respect of any such liability arising thereafter; or
(iv) to the extent that such taxation liability or claim arises or is incurred as a result of the imposition of taxation as a consequence of any retrospective change in the laws, rules or regulations or the interpretation or practice thereof by the Inland Revenue Department in Hong Kong, the taxation authority in Singapore or any other relevant authority (whether in Hong Kong, Singapore, or any part of the world) coming into force after the Listing Date or to the extent that such taxation claim arises or is increased by an increase in rates of taxation after the Listing Date with retrospective effect.

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APPENDIX IV

Under the Deed of Indemnity, the Indemnifiers have also given indemnities in favour of our Group whereby they would jointly and severally indemnify each member of our Group against, among others, all claims, actions, demands, proceedings, judgments, losses, liabilities, damages, costs, charges, fees, expenses and fines of whatever nature suffered or incurred by any member of our Group (i) as a result of directly or indirectly or in connection with, or in consequence of any non-compliance with or breach of any applicable laws, rules or regulations of any jurisdiction by any member of our Group on or before the Listing Date; (ii) as a result of directly or indirectly or in connection with any litigation, proceeding, claim, investigation, inquiry, enforcement proceeding or process by any governmental, administrative or regulatory body which (a) any member of our Group and/or their respective directors or any of them is/are involved; and/or (b) arises due to some act or omission of, or transaction voluntarily effected by, our Group or any member of our Group (whether alone or in conjunction with some other act, omission or transaction) on or before the Listing Date.

The indemnity contained above shall not apply to the extent that provision has been made for such claim in the audited accounts of our Group or the audited accounts of any member of our Group for each of the two financial years ended 31 December 2013 and 31 December 2014.

Our Directors have been advised that no material liability for estate duty is likely to fall on any member of our Group in the Cayman Islands, Hong Kong and other jurisdictions in which the companies comprising our Group are incorporated.

2. Litigation

Save as disclosed in the section headed ‘‘Business — Legal proceedings’’ in this prospectus, no member of our Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to our Directors to be pending or threatened by or against any member of our Group which would have a material adverse effect on our business, result of operations or financial conditions.

3. Sole Sponsor

Grand Vinco Capital Limited has made an application on behalf of our Company to the Stock Exchange for listing of, and permission to deal in, the Shares in issue and Shares to be issued as mentioned herein.

The Sole Sponsor is independent from our Company pursuant to Rule 6A.07 of the GEM Listing Rules.

The sponsor’s fees payable by us in respect of Vinco Capital’s services as sole sponsor for the Listing is HK$4.6 million (excluding any disbursements).

4. Preliminary expenses

The preliminary expenses of our Company incurred or proposed to be incurred are approximately US$6,000 and are payable by our Company.

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STATUTORY AND GENERAL INFORMATION

5. Promoter

Our Company has no promoter. Save as disclosed in this prospectus, within the two years preceding the date of this prospectus, no cash, securities or other benefit had been paid, allotted or given, nor are any such cash, securities or other benefit intended to be paid, allotted or given, to the promoter of our Company in connection with the Placing or the related transactions described in this prospectus.

6. Qualifications of experts

The following are the qualifications of the experts who have given opinion or advice which are contained in this prospectus:

Name of expert	Qualification
Vinco Capital	Licensed to conduct Type			1	(dealing	in
	securities) and		Type 6	(advising		on
	corporate finance)		regulated activities under
	the SFO
Deloitte Touche Tohmatsu	Certified Public	Accountants
LPP Law Corporation	Legal adviser	to	our Company as			to
	Singapore laws
Appleby	Legal adviser to	our Company as			to Cayman
	Islands laws

7. Consents of experts

Each of the experts referred to under the heading ‘‘Qualifications of experts’’ of this Appendix IV has given and has not withdrawn its written consent to the issue of this prospectus with the inclusion of its report and/or letter and/or the references to its name included herein in the form and context in which they are respectively included.

8. Selling Shareholder

The particulars of the Selling Shareholder are set out as follow:

Name:	Absolute Truth
Place of incorporation:	British Virgin Islands
Date of incorporation:	2 January 2015
Registered office:	P.O. Box 957,	Offshore	Incorporations
	Centre, Road Town, Tortola,		British Virgin
	Islands

Number of Sale Shares to be sold: 20,000,000 Shares

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STATUTORY AND GENERAL INFORMATION

9. Compliance adviser

In accordance with the requirements of the GEM Listing Rules, our Company will appoint the Sole Sponsor as our compliance adviser to provide advisory services to our Company to ensure compliance with the GEM Listing Rules for a period commencing on the Listing Date and ending on the date on which our Company complies with Rule 18.03 of the GEM Listing Rules in respect of its financial results for the second full year commencing after the Listing Date or until the agreement is terminated, whichever is the earlier.

10. Agency fees or commission received

The Underwriters will receive an underwriting commission, and the Sole Sponsor will receive a documentation/advisory fee, as referred to under the section headed ‘‘Underwriting — Commission and expenses’’ in this prospectus.

11. Disclaimers

Save as disclosed in this prospectus:

(a) none of our Directors nor any of the persons whose names are listed in the paragraph headed ‘‘Other information — Consents of experts’’ in this Appendix IV is interested in the promotion of our Company, or in any assets which have been within the two years immediately preceding the issue of this prospectus, or are proposed to be, acquired or disposed of by or leased to any member of our Group nor will any Director apply for the Placing Shares either in his/her own name or in the name of a nominee;
(b) none of our Directors nor any of the persons whose names are listed in the paragraph headed ‘‘Other information — Consents of experts’’ in this Appendix IV is materially interested in any contract or arrangement subsisting at the date of this prospectus which is significant in relation to the business of our Group; and
(c) save in connection with the Underwriting Agreement, none of the parties whose names are listed in the paragraph headed ‘‘Other information — Consents of experts’’ in this Appendix IV: (i) is interested legally or beneficially in any securities of any member of us; or (ii) has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of us.

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12. Miscellaneous

Save as disclosed in this prospectus:

(a) within the two years immediately preceding the date of this prospectus:
(i) no share or loan capital of our Company or any of our subsidiaries has been issued or agreed to be issued fully or partly paid either for cash or for a consideration other than cash;
(ii) no commissions, discounts, brokerages or other special terms have been granted in connection with the issue or sale of any capital of our Company or any of our subsidiaries; and
(iii) no commission has been paid or payable (excluding commission payable to sub-underwriters) for subscription, agreeing to subscribe, procuring subscription or agreeing to procure subscription of any shares in our Company;
(b) no founders, management or deferred shares of our Company or any of our subsidiaries have been issued or agreed to be issued;
(c) no share or loan capital of our Company or any of our subsidiaries is under option or is agreed conditionally or unconditionally to be put under option;
(d) none of the experts referred to under the paragraph headed ‘‘Consents of experts’’ in the section headed ‘‘Other information’’ of this Appendix IV:
(i) is interested beneficially or non-beneficially in any shares in any member of our Group; or
(ii) has any right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in any member of our Group;
(e) there has not been any interruption in the business of our Group which has had a material adverse effect on the financial position of our Group in the 24 months preceding the date of this prospectus;
(f) no company within our Group is presently listed on any stock exchange or traded on any trading system;
(g) our Company has no outstanding convertible debt securities;
(h) all necessary arrangements have been made to enable the Shares to be admitted into CCASS for clearing and settlement;
(i) there are no arrangements in existence under which future dividends are to be or agreed to be waived; and

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STATUTORY AND GENERAL INFORMATION

(j) as at the Latest Practicable Date, there is no restriction affecting the remittance of profits or repatriation of capital of our Company into Hong Kong from outside Hong Kong.

13. Binding effect

This prospectus shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all of the provisions (other than the penalty provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) so far as applicable.

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APPENDIX V

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to the copy of this prospectus delivered to the Registrar of Companies in Hong Kong for registration were the written consents referred to in the paragraph headed ‘‘Other information — Consents of experts’’ of Appendix IV to this prospectus, a statement of the particulars of the Selling Shareholder and copies of the material contracts referred to in the paragraph headed ‘‘Further particulars about our Business — Summary of material contracts’’ of Appendix IV to this prospectus.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of Michael Li & Co. at 19th Floor, Prosperity Tower, 39 Queen’s Road Central, Central, Hong Kong, during normal business hours up to and including the date which is 14 days from the date of this prospectus:

(a) the Memorandum and Articles;
(b) the Accountant’s Report of our Group from Deloitte Touche Tohmatsu, the text of which is set out in Appendix I to this prospectus;
(c) the audited financial statements of our Group for each of the two years ended 31 December 2014;
(d) the report on unaudited pro forma financial information from Deloitte Touche Tohmatsu, the text of which is set out in Appendix II to this prospectus;
(e) the letter prepared by Appleby summarising certain aspects of Cayman Islands company law referred to in Appendix III to this prospectus;
(f) the Companies Law;
(g) the service contracts and letters of appointment referred to in the paragraph headed ‘‘Further information about our Directors and Substantial Shareholders — Particulars of service contracts’’ in Appendix IV to this prospectus;
(h) the material contracts referred to in the section headed ‘‘Further information about our Business — Summary of material contracts’’ in Appendix IV to this prospectus;
(i) the written consents referred to in the paragraph headed ‘‘Other information — Consents of experts’’ in Appendix IV to this prospectus; and
(j) the statement of the name, description and address of the Selling Shareholder.

– V-1 –

AI assistant

KPM Holding Limited — Capital/Financing Update 2015

51222_rns_2015-06-29_ba2ce2ca-a576-4f56-8b84-9e5e7dd27899.pdf

LISTING BY WAY OF PLACING

KPM HOLDING LIMITED 吉輝控股有限公司*

LISTING ON THE GROWTH ENTERPRISE MARKET OF THE STOCK EXCHANGE OF HONG KONG LIMITED BY WAY OF PLACING

Grand Vinco Capital Limited

Sinomax Securities Limited

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (‘‘GEM’’)

EXPECTED TIMETABLE

IMPORTANT NOTICE TO INVESTORS

OVERVIEW

Our business model

Our principal business activities

Key milestones

SUMMARY AND HIGHLIGHTS

Customers

Main qualifications and licences

Suppliers

Subcontractors

Sales and marketing

Competitive landscape

Competitive strengths

Business strategies

USE OF PROCEEDS

Approximate amount of net

SUMMARY OF FINANCIAL INFORMATION

Highlight of statements of comprehensive income

Highlight of statements of financial position

Revenue

Key financial ratios

SUMMARY AND HIGHLIGHTS

Gross profit margin and net profit margin

SUMMARY AND HIGHLIGHTS

Our latest development subsequent to the Track Record Period

No material adverse change

PLACING STATISTICS

Notes:

DIVIDENDS AND DIVIDEND POLICY

RISK FACTORS

SUMMARY AND HIGHLIGHTS

REGULATORY OVERVIEW

REGULATORY COMPLIANCE

CONTROLLING SHAREHOLDERS’ INFORMATION

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

GLOSSARY

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS

RISKS RELATING TO OUR GROUP

Approximately HK$12.1 million of listing expenses will be recognised upon Listing and will materially affect our financial results for the year ending 31 December 2015

A failure to obtain new contracts (given the non-recurring nature of our contracts) could materially affect our financial performance

RISK FACTORS

Our short-term revenue and profitability may not be indicative of the long-term results of operations

Loss of our key management and inability to attract and retain technical and management staff will adversely affect our operations and financial performance

RISK FACTORS

Our cash flows may fluctuate due to the payment practice applied to our projects

Cost overruns in our signage works will affect our costs and materially affect our financial performance

Our operations may subject us to litigation, arbitration, administrative proceedings or other disputes which may be time consuming and expose us to significant liability claims

We rely on third parties, including subcontractors, to complete certain projects and are subject to risk arising from the non-compliance, late performance or poor performance by such third parties

RISK FACTORS

Approximately 70% of our workforce is made up of foreign labour and inability to obtain foreign labour could materially affect our operations and financial performance

Our business plan may not be implemented successfully which may adversely affect our prospects

Our insurance coverage may not be sufficient to cover all losses or potential claims from our customers which would affect our business, financial condition and results of operations

Our business involves inherent industrial risks and occupational hazards and the materialisation of such risks will affect our business operations and financial results

RISKS RELATING TO THE INDUSTRY IN WHICH WE OPERATE

Inability to renew our existing qualifications, licences and permits or the existing qualifications or licences are cancelled or suspended could materially affect our operations and financial performance

Low barriers of entry could increase competition in our industry that may affect our financial performance

A reduction in the pipeline of public sector contracts could materially affect our financial performance

Cost controls in the public sector or reduction in government spending could adversely affect our profitability and financial performance

We are required to comply with various environmental, labour, safety and health laws and regulations that may increase the compliance costs

RISK FACTORS

RISKS RELATING TO THE PLACING

Investors should not place undue reliance on facts, statistics and data contained in this prospectus with respect to the economies and our industry

There has not been any prior public market for the Shares and an active trading market may not develop

The trading price of the Shares may fluctuate

Investors may experience difficulties in enforcing their shareholders’ rights as the laws of Cayman Islands may differ from those of Hong Kong or other jurisdictions where investors may be located

KPM Holding Limited Capital/Financing Update 2015