KPM HOLDING LIMITED 以配售方式 LISTING BY …360storage.hkej.com/ipo/08027.pdfOur Company,...

Incorporated in the Cayman Islands with limited liability

LISTING BY WAY OF PLACING

Stock Code : 8027

Sole Sponsor

GRAND VINCO CAPITAL LIMITED(A wholly-owned subsidiary of Vinco Financial Group Limited)

以配售方式

獨家保薦人

大唐域高融資有限公司( 域高金融集團有限公司之全資附屬公司 )

於開曼群島註冊成立的有限公司

股份代號： 8027

KPM H

OLD

ING

LIMITED

吉輝控股有限公司

Sole Sponsor 獨家保薦人

KPM HOLDING LIMITED吉輝控股有限公司

KPM HOLDING LIMITED吉輝控股有限公司

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


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

Sinomax Securities Limited

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited and Hong KongSecurities Clearing Company Limited take no responsibility for the contents of this prospectus, make norepresentation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any losshowsoever 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 ‘‘Documentsdelivered to the Registrar of Companies’’ in Appendix V to this prospectus, has been registered by the Registrar ofCompanies 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 theRegistrar of Companies in Hong Kong take no responsibility as to the contents of this prospectus or any of the otherdocuments referred to above.

The Placing Price is currently fixed at HK$0.50 unless otherwise announced. Investors applying for Placing Sharesmust pay, on application, the Placing Price of HK$0.50 for each Placing Share together with brokerage of 1%, SFCtransaction 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 inthis prospectus, including the risk factors set out in the section headed ‘‘Risk factors’’ in this prospectus. Pursuant tothe termination provisions contained in the Underwriting Agreement, Vinco Capital (for itself and on behalf of theUnderwriters) has the right in certain circumstances, in its sole and absolute discretion, to terminate the obligations ofthe Underwriters pursuant to the Underwriting Agreement at any time prior to 8 : 00 a.m. (Hong Kong time) on theListing 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

IMPORTANT

30 June 2015

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.

CHARACTERISTICS OF GEM

– i –

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:

1. All times and dates refer to Hong Kong local times and dates.

2. 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.

3. 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.

4. 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.

EXPECTED TIMETABLE

– ii –

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

CONTENTS

– iii –

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

CONTENTS

– iv –

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

SUMMARY AND HIGHLIGHTS

– 1 –

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.

Year ended 31 December 2013 Year ended 31 December 2014

Number of

contracts

and orders

From private

invitation/

representing

approximate

% of

contracts

Success

rate

From open

tender/

representing

approximate

% of

contracts

Success

rate

Number of

contracts

and orders

From private

invitation/

representing

approximate

% of

contracts

Success

rate

From open

tender/

representing

approximate

% of

contracts

Success

rate

(%) (%) (%) (%)

Public sector 1,041 1,029/98.8% 68 12/1.2% 28 1,170 1,167/99.7% 82 3/0.3% 33

Private sector 1,170 1,170/100.0% 30 — — 1,108 1,108/100.0% 35 — —

Total 2,211 2,199 30–68 12 28 2,278 2,275 35–82 3 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.


– 2 –

— From 2011 to 2013, Signmechanic Singapore obtained various contracts for the

supply of labour and machinery for the construction of precast facade 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


– 3 –

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.


– 4 –

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.


– 5 –

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.


– 6 –

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

December 2017

Purchase of materials and/or equipment in relation to

the expansion of existing sector and to target and

secure more non-road infrastructure related projects


December 2017

Capital contribution for the formation of new

companies and/or acquisitions


December 2017

Expand and enhance our workforce to support our

expansion of the existing sector and to target and

secure more non-road infrastructure related projects


December 2017

Working capital

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 ended

S$

31 December

2013

31 December

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


– 7 –

Highlight of statements of financial position

As at

S$

31 December

2013

31 December

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


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

(times)

31 December

2013

31 December

2014

Current ratio(1) 1.5 2.0

Gearing ratio(2) 0.51 0.23

For the year ended

(%)

31 December

2013

31 December

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.


– 8 –

(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.


Revenue

recognised Gross Profit

Gross profit

margin

Revenue

recognised Gross Profit

Gross profit

margin

S$’000 S$’000

Approximate

% S$’000 S$’000

Approximate

%

Public sector 5,220 1,953 37.4 9,562 4,595 48.1

Private sector 2,607 921 35.3 2,288 948 41.4

7,827 2,875 36.7 11,850 5,543 46.8


– 9 –

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.


Revenue

recognised

Net profit

before tax

Net profit

before tax

margin

Revenue

recognised

Net profit

before tax

Net profit

before tax

margin

S$’000 S$’000

Approximate

% S$’000 S$’000

Approximate

%

Public sector 5,220 580 11.1 9,562 2,405 25.1

Private sector 2,607 235 9.0 2,288 423 18.5

7,827 815 10.4 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.

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 higher value 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


– 10 –

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.


– 11 –

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 construction-

related 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.


– 12 –

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

of Association’’

the articles of association of our Company, conditionally

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

‘‘Board’’

our board of Directors

‘‘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

DEFINITIONS

– 13 –

‘‘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

Registrar’’

Appleby Trust (Cayman) Ltd., the Cayman Islands share

registrar of our Company

‘‘CCASS’’ the Central Clearing and Settlement System established and

operated by HKSCC

‘‘CCASS Broker

Participant(s)’’

a person admitted to participate in CCASS as a broker

participant

‘‘CCASS Clearing

Participant(s)’’

a person admitted to participate in CCASS as a direct clearing

participant or general clearing participant

‘‘CCASS Custodian

Participant’’

a person admitted to participate in CCASS as a custodian

participant

‘‘CCASS Investor

Participant’’

a person admitted to participate in CCASS as an investor

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

Up and

Miscellaneous

Provisions)

Ordinance (Cap 32)’’

the Companies (Winding Up and Miscellaneous Provisions)

Ordinance (Chapter 32 of the Laws of Hong Kong) as amended,

supplemented or otherwise modified from time to time

‘‘Companies Ordinance

(Cap 622)’’

the Companies Ordinance (Chapter 622 of the Laws of Hong

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

DEFINITIONS

– 14 –

‘‘connected persons’’ has the meaning ascribed thereto under the GEM Listing Rules

‘‘Controlling

Shareholder(s)’’

has the meaning ascribed thereto under the GEM Listing Rules.

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 Non-

competition’’

the deed of non-competition dated 23 June 2015 entered into by

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’’,

‘‘we’’, ‘‘our’’ or ‘‘us’’

our Company or, where the context otherwise requires, in respect

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

DEFINITIONS

– 15 –

‘‘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

Share Registrar’’

Union Registrars Limited, the Hong Kong branch 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 Non-

Executive

Director(s)’’

our independent non-executive Director(s)

‘‘Independent Third

Party(ies)’’

party(ies) which is/are independent of and not connected (within

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’’

or ‘‘Joint Lead

Managers’’

Grand Vinco Capital Limited and Sinomax Securities Limited

‘‘km’’ kilometre

‘‘Latest Practicable

Date’’

22 June 2015, being the latest practicable date prior to the

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

DEFINITIONS

– 16 –

‘‘Memorandum’’ or

‘‘Memorandum of

Association’’

the memorandum of association of our Company adopted on 23

June 2015, as amended from time to time

‘‘Ministry of Foreign

Affairs’’

Ministry of Foreign Affairs of Singapore

‘‘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

DEFINITIONS

– 17 –

‘‘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

DEFINITIONS

– 18 –

‘‘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

Agreement’’

the underwriting agreement dated 29 June 2015 entered into

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

States’’

the United States of America

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.

DEFINITIONS

– 19 –

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

reflective sheeting’’

sheeting that ensures long distance visibility at dawn, dusk, in the

work zone, on the roadway, at sea or in any environment where

visibility is compromised

GLOSSARY

– 20 –

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

FORWARD-LOOKING STATEMENTS

– 21 –

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.

FORWARD-LOOKING STATEMENTS

– 22 –

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






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

RISK FACTORS

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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 short-

term 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,

RISK FACTORS

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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 time-

consuming 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,

RISK FACTORS

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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


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 non-

performance, 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

RISK FACTORS

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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.

RISK FACTORS

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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.

RISK FACTORS

– 28 –

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

RISK FACTORS

– 29 –

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

RISK FACTORS

– 30 –

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.

RISK FACTORS

– 31 –

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.

RISK FACTORS

– 32 –

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:

1. variations in the results of our Group’s operations;

2. changes in securities analysts’ analysis of our Group’s financial performance;

3. announcement by our Group of significant acquisitions, disposals, strategic

alliances or joint ventures;

4. addition or departure of key management personnel;

5. fluctuations in market prices and trading volume of the Shares;

6. involvement in litigation; and

7. 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

RISK FACTORS

– 33 –

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.

RISK FACTORS

– 34 –

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 ‘‘forward-

looking’’ 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.

RISK FACTORS

– 35 –

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.

INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

– 36 –

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


– 37 –

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 –

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 –

Name Address Nationality

Executive Directors

Mr. Tan Thiam Kiat Kelvin (陳添吉) Block 232, Pasir Ris Drive 4

#13-510

Singapore 510232

Singaporean

Mr. Tan Kwang Hwee Peter (陳光輝) 35 Jalan Mariam

Singapore 509313

Singaporean

Independent Non-Executive Directors

Mr. Oh Eng Bin (Hu Rongming)

(胡榮明)

11 Tanjong Rhu Road

#09-04 Singapore 436896

Singaporean

Mr. Tan Kiang Hua (陳建華) 1 Bukit Batok Street 25

#06-22, Singapore 658882

Singaporean

Mdm. Kow Yuen-Ting

(Gao Yun Ting) (郜韵婷)

20 Clover Close

Singapore 579261

Singaporean

Please refer to the section headed ‘‘Directors, senior management and staff’’ in this

prospectus for further information.

DIRECTORS AND PARTIES INVOLVED IN THE PLACING

– 40 –

Sole Sponsor Grand Vinco Capital Limited

Units 4909–4910, 49/F, The Center99 Queen’s Road CentralHong Kong

Joint Bookrunners and

Joint Lead Managers




Unit 1601, Far East Financial Centre16 Harcourt RoadAdmiraltyHong Kong

Underwriters Grand Vinco Capital Limited



Unit 1601, Far East Finance Centre16 Harcourt RoadAdmiraltyHong Kong

Legal advisers to our Company As to Hong Kong lawsMichael Li & Co.

Solicitors, Hong Kong19th Floor, Prosperity Tower39 Queen’s Road CentralCentralHong Kong

As to Singapore lawsLPP Law Corporation

Advocates & SolicitorsLevel 39 Marina Bay Financial Centre Tower 210 Marina BoulevardSingapore 018983

As to Cayman Islands lawsAppleby

2206–19 Jardine House1 Connaught PlaceCentralHong Kong


– 41 –

Legal advisers to the Sole Sponsor

and the Underwriters

As to Hong Kong lawsRobertsons

57/F, The Center99 Queen’s Road CentralHong Kong

Reporting accountants Deloitte Touche Tohmatsu

Certified Public Accountants35/F One Pacific Place88 QueenswayHong Kong

Auditor Deloitte & Touche LLP

6 Shenton Way, OUE Downtown 2#32-00Singapore 068809

Compliance adviser Grand Vinco Capital Limited



– 42 –

Registered office Clifton House

75 Fort Street

PO Box 1350

Grand Cayman KY1-1108

Cayman Islands

Principal place of business in Hong

Kong registered under Part 16 of

the Companies Ordinance

(Cap 622)

19th Floor, Prosperity Tower

39 Queen’s Road Central

Central

Hong Kong

Headquarters and principal place of

business

424 Tagore Industrial Avenue

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

purpose of the GEM Listing Rules)

Mr. Kelvin Tan

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


Members of the remuneration

committee

Mr. Tan Kiang Hua

(Chairman of remuneration committee)


Mdm. Kow Yuen-Ting

CORPORATE INFORMATION

– 43 –

Members of the nomination

committee


(Chairman of nomination committee)

Mr. Tan Kiang Hua

Mdm. Kow Yuen-Ting

Principal Share Registrar and

transfer office in Cayman Islands

Appleby Trust (Cayman) Ltd.

Clifton House

75 Fort Street

PO Box 1350

Grand Cayman KY1-1108

Cayman Islands

Hong Kong Branch Share Registrar

and transfer office

Union Registrars Limited

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

CORPORATE INFORMATION

– 44 –

Investors should note that IPSOS has been engaged by our Company to prepare the IPSOSReport to provide an overview of the signage industry in Singapore, China and Hong Kong and ananalysis 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 IPSOSReport 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 andstatistics are appropriate sources for such information and statistics and have taken reasonable carein extracting and reproducing such information. While our Group, the Selling Shareholder, the SoleSponsor, the Joint Lead Managers, and the Underwriters have exercised reasonable care inextracting and reproducing such information and statistics, our Group cannot ensure the accuracy ofsuch information and statistics and such information and statistics may not be consistent with otherinformation. Our Group, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, andthe Underwriters have no reason to believe that such information and statistics are false or misleadingor that any fact has been omitted that would render such information and statistics false ormisleading. The information and statistics used in this section have not been independently verified byour Group, the Selling Shareholder, the Sole Sponsor, the Joint Lead Managers, the Underwritersand other parties involved in the Placing or their respective directors and advisers and norepresentation is given as to the accuracy of such information and statistics. You should not placeundue 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 sincethe date of the IPSOS Report which may qualify contradict or have an impact on the information inthis section.

REPORT COMMISSIONED FROM IPSOS

We commissioned Ipsos, an Independent Third Party, to conduct an industry analysis ofsignage 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 ofthe Ipsos Report. We believe that the fees are reasonable for the preparation of an industry report byan independent third-party consultant. The information and statistics set forth in this section havebeen extracted from the Ipsos Report. The sources cited in this section are in the form provided inthe Ipsos Report, unless otherwise noted.

With 87 dedicated offices worldwide, Ipsos is a global research firm that helps leadingcorporations build, compete and grow using fact-based consulting. Since 1994, Ipsos has had a teamof professional business consultants leading businesses in different sectors such as agribusiness,automotive, construction, energy, healthcare, industrial and many other sectors. Ipsos BusinessConsulting (the ‘‘IBC’’), a leader in fact-based business consulting, is trusted by top businesses,government sectors, and institutions worldwide. IBC support domestic and internationalorganisations 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 includemarket opportunity assessment, competitive analysis, new product development, distributionchannel and value chain analysis, market entry strategy, and partner diligence.

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

INDUSTRY OVERVIEW

– 45 –

Sources of information in the Ipsos Report

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

. Conducting both primary and secondary research obtained from numerous sources withinthe global and Singapore signage industry.

. Primary research involved interviewing leading industry participants and secondaryresearch involved reviewing publicly available documents, company reports, independentresearch reports and Ipsos’s proprietary database built up over the past decades.

. Forecast data was obtained from historical data analyses plotted against macroeconomicdata as well as specific industry-related drivers, such as, amongst others, economic growthand construction demand in Singapore.

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

. Projection and plans from Singapore government agencies, such as Building andConstruction 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 theinformation was extracted from the Ipsos Report. Our Directors believe the Ipsos Report is reliableand not misleading as Ipsos is an independent professional research agency with extensive experiencein their profession.

Future forecast in the Ipsos Report

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

. The social, economic and political environments of Singapore being examined remainstable during the forecast period, which ensures the sustained and steady development ofthe construction industry and signage market.

. Industry trend is expected to rise rapidly as construction demand is expected to sustain athigh level

. With the increase of civil engineering projects, there will be demand for the deploymentand 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 theseparameters.

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

INDUSTRY OVERVIEW

– 46 –

. Trend of published tenders being awarded to tenderers (e.g. low price, higherqualification)

. New requirements or regulation for registered builders and/or signage installers inSingapore.

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

a) Ipsos is an independent professional research agency with extensive experience in theirprofession; and

b) although the Ipsos Report contains forecast of the development of the signage industry inSingapore, 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 2011through 2014(1). The average contribution has been close to approximately 4.6% (ranging fromapproximately 4.3% to approximately 4.9%) every year which is in tandem with Singapore’s GDPgrowth rate of between 3 to 8%(2). The chart below illustrates the contribution of the constructionsector to the Singapore economy’s overall GDP from 2011 to 2014(3).

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

Total GDP of the economy

GDP from construction

Contribution percentage (%)

(S$ million)

segment (S$ million)

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

5.0%4.9%4.8%4.7%4.6%4.5%4.4%4.3%4.2%4.1%4.0%

2011

346,354 362,333 378,200 390,089

14,885 16,437 17,702 18,961

4.3% 4.5% 4.7% 4.9%

2012 2013 2014

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, whichis powered by higher volume of both institutional and civil engineering works. Major projectsbacking to such high demand include the construction of Tampines Town Hub project, communityhospitals, construction of Thomson-East Coast MRT Line as well as land preparation works for theupcoming Changi Airport Development. The chart below shows the total construction activities inSingapore from 2010 to 2014(5).

Notes:(1) Provisional information(2) Economic Intelligence Unit Statistics(3) Provisional information(4) Forecasted information(5) Provisional information

INDUSTRY OVERVIEW

– 47 –

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

By value, S$(7)

2010 2011 2012 2013 2014Million Singapore dollars (S$)

Contracts awarded 27,564.6 35,487.9 30,761.4 35,803.6 37,732.8Public 8,546.5 15,279.7 9,524.8 14,888.5 19,071.6Private 19,018.1 20,208.2 21,236.7 20,915.3 18,661.2Certified payments 27,427.8 28,861.4 31,638.8 33,666.3 35,752.2Public 10,975.7 11,652.9 12,316.1 12,566.9 14,762.1Private 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 inSingapore. The value of public sector contracts awarded has increased with an average growth of22.2% per annum from 2010, to reach approximately S$19.1 billion (approximately HK$ 107.2billion) in 2014(8),(9). The chart below illustrates the development of contracts awarded for bothpublic and private sector from 2010 to 2014(10).

Public and private contracts awarded, 2010–2014(11)

by value, S$ billion

2010

8.5

19.015.3

20.2

9.5

21.2

14.9

20.9 19.118.7

Public Private

2011 2012 2013 2014

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

INDUSTRY OVERVIEW

– 48 –

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

by value, S$ billion

2010

Public

11.0

16.5

11.7

17.2

12.3

19.3

12.6

21.1

14.8

21.0

Private

2011 2012 2013 2014

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 atapproximately 60% (between S$18 to S$21 billion in value). This expansion is expected to bepowered by the anticipated higher volume of contracts to be awarded for civil engineering andinstitutional construction works. The following charts below illustrate the review and future outlookfor the construction demand and output of Singapore’s construction industry; and the breakdown ofpublic construction demand in 2014 and 2015(15).

Review and future outlook for construction demand and outputby value, S$

2014p 2015f 20116–2017f 2018–2019fContracts awarded Singapore dollars (S$)

Public $19.7 billion $18–21 billion $16–20 billion(60% from building projects and

40% from civil engineeringprojects)

Private $18.0 billion $11–15 billionTotal $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 2015by value, S$ billion

Breakdown 2014p 2015f

Building construction 10.94 10.5–12.7Residential 4.99 3.4–3.8Commercial 0.13 0.1–0.1Industrial 0.63 2.1–2.8Institutional and others 5.2 4.9–5.9

Civil engineering 8.8 7.5–8.3Total public sector 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

INDUSTRY OVERVIEW

– 49 –

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

. Singapore has invested heavily in rail and road infrastructure, and has a strong pipeline ofvarious rail transit projects nationwide. With increases in the population and demands ontransportation, Singapore’s road infrastructure is in a constant state of development. Thegovernment aims to develop a high-performance rail network and plans to increase thecountry’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 JewelChangi Airport, which will be developed in front of the Changi Airport’s Terminal 1 inSingapore (end of 2014). The project will comprise hotel, retail offerings and facilities forairport operations and is a joint venture between Changi Airport Group and CapitaMallsAsia.

Number of construction tenders to be called by public sector agencies, 2015(16)

by value, S$

Construction costCategory Development type 2015

Up to S$14m Civil engineering (e.g. road and bridges, sewerage anddrainage, M&E, other works that include parks, waterway,earthworks, infrastructure works, utilities etc.)

109

Others (e.g. residential projects, education such as retrofittingof teaching facilities and upgrading of schools, other buildingproject such as community club upgrading, substations, businterchanges etc.)

80

S$14m–S$42m Civil engineering (e.g. road and bridges, sewerage anddrainage, M&E, other works that include parks, waterway,earthworks, infrastructure works, utilities etc.)

13

Others (e.g. residential projects, education such as retrofittingof teaching facilities and upgrading of schools, institution ofhigher learning, other building project such as community clubupgrading, substations, bus interchanges etc.)

32

Above S$42m Civil engineering (e.g. road and bridges, sewerage anddrainage, rail and rail related, M&E, other works that includeparks, waterway, earthworks, infrastructure works, utilitiesetc.)

25

Others (e.g. residential projects, education such as campusexpansion and upgrading facilities of institute of higherlearning and other building project such as community clubupgrading, substations, bus interchanges etc.)

54

Sub total Civil engineering 147

Others 166

Total 313

Source: BCA, 2015; Ipsos Analysis

Notes:(16) Provisional information

INDUSTRY OVERVIEW

– 50 –

CIVIL ENGINEERING SEGMENT

In 2015, civil engineering projects are forecasted to account to approximately 40 to 42% orS$7.5 billion to S$8.3 billion of the total public sector demand. BCA estimates that the number oftenders for civil engineering works in the pipeline for the public sector is approximately 147 tendersin 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 thenumber of tenders for the civil engineering projects in 2014 and 2015.

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

96

24

2014 2015

1327 25

109

Up to S$14 million S$14 million - S$42 million Above S$42 million

Source: BCA; Ipsos Analysis

The following chart depicts the breakdown of civil engineering tenders to be called by thepublic 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 46M&E — Rails and roads 1Others 62

S$14 million–S$42 million Roads and bridges 4M&E — Rails and roads —Others 9

Above S$42 million Roads and bridges 4M&E — Rails and roads 5Others 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 billionof the total construction demand. BCA estimates that the number of tenders for road and bridgeworks in the pipeline for the public sector is approximately 54 tenders in 2015. This is an increase of31.7% 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

INDUSTRY OVERVIEW

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

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

25

46

9

Up to S$14 million

2014 2015

S$14 million - S$42 million Above S$42 million

47

4

Source: BCA

For rail networks(19), BCA estimates that the number of tenders in the pipeline for the publicsector is approximately 6 tenders in 2015. Although there is a slight decrease from 2014, where 8tenders were estimated for public sector rail networks in Singapore, majority of the projects in 2015will be focused on larger projects that are estimated to be valued above S$42 million. Thus thisprovides 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 forboth years 2014 and 2015.

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

Up to S$14 million

1

2014 2015

8

5

S$14 million - S$42 million Above S$42 million

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, railnetworks projects are included as point of discussion in text.

INDUSTRY OVERVIEW

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OUTLOOK BEYOND 2015

The construction demand is expected to sustain at S$26 billion to S$37 billion per annum fromyear 2016 to 2019. This is in view of major public sector projects (i.e. new expressways and railwaystrack 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 railnetworks

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

Cross island line (CRL) . Connect residents in the east and northeast (e.g. Hougangand Serangoon) directly to the towns in the central (e.g. AngMo Kio) and western region (e.g. Tuas)

Jurong region line (JRL) . Connects the Jurong region, serving the future Tengah newtown, Nanyang Technological University, and JurongIndustrial Estate

Circle line stage 6 (CCL6) . Closes the loop for the Circle Line, between the central eastareas (e.g. Paya Lebar), and central and west areas (e.g. KentRidge)

North east line (NEL)extension

. This line will be extended northeast to serve PunggolDowntown and the northern part of Punggol toaccommodate the growing population in Punggol

Down town (DTL)extension

. Connects to the Eastern region line and enhances theconnectivity between the areas served by both lines

Future developments Possibility of adding a station between Sembawang (NS11) andYishun (NS13) on the North-south line, in anticipation of futuredevelopments in that area

Expansion of roadnetwork/system

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

North-south expressway(by 2020)

. Serves the expected increase in travel along the north-southcorridor

‘‘Reversible flow’’ system . The feasibility of a ‘reversible flow’ scheme along certainexpressways will be studied, where the traffic flow is heavy inone direction during the morning peak hours and in theopposite direction in the evening (This could optimise theuse of roads in Singapore).

Source: BCA, Secondary research.

Notes:(20) Ibid

INDUSTRY OVERVIEW

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CONTRACTORS REGISTRATION SYSTEM AND THE BUILDING LICENCE SYSTEM

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

To qualify for doing construction work for public sector projects, the BCA mandates that thebidding 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 thisregulatory system is that contractors for public sector work need to maintain particularly highprofessional standards. This acts as a barrier to new entrants looking to take market share. A criticalpart of the licensing system that the BCA has put in place includes the Contractor RegistrationSystem or CRS. According to the BCA website:

‘‘CRS serves the construction and construction-related procurement needs of the public sector includinggovernment 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 capitaland net worth. The company needs to also ensure it has the right number of full time qualified staffwith the correct professional qualifications. As well as having a suitable track record of suitableexperience, 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 thesematerial 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 to2015.

Material cost 2011–2015(22)*by value, S$

Materials 2011 2012 2013 2014 2015

Metal 128 121 108 107 103Sticker 45 45 45 45 45Aluminium 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 commonlyused (e.g. aluminium sheet of 4’ x 8’ x 2.0 mm thick in size)

INDUSTRY OVERVIEW

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Material cost 2011–2015*

Average cost for main materials only (2011–2015)

2011 2012 2013 2014 2015

Metal

Sticker

Aluminium

Ave

rage

Cos

t P

rice

(SG

D)

0

20

40

60

80

100

120

140

Source: Signmechanic Singapore; *Note: Material cost is stipulated based on common materials used by SignmechanicSingapore.

The prices of their products are quoted on a case-by-case basis, taking into account marketrates and their internal costing with no particular historical price trend. However changes in pricesmay 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 fromyear 2000–2014.

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

Industry Total Manufacturing Construction Services

2000 4.9 4.4 2.2 5.42001 2.9 2.4 0.6 3.42002 1.8 1.8 0.2 2.02003 1.2 1.3 0.2 1.32004 2.7 2.6 1.1 2.92005 3.1 2.9 1.7 3.32006 3.6 3.2 2.4 3.92007 4.3 3.7 3.9 4.62008 4.4 4.0 3.9 4.62009 1.3 0.7 1.5 1.52010 3.9 3.6 3.5 4.02011 4.4 4.0 3.9 4.52012 4.5 4.3 3.6 4.62013 5.1 4.6 5.2 5.22014 4.9 4.3 3.8 5.1

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

INDUSTRY OVERVIEW

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Average wage change in percentage by industry, 2000–2014

Total Manufacturing Construction ServicesA

vera

ge W

age

Cha

nge

(%)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140.0

1.0

2.0

3.0

4.0

5.0

6.0

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 tohave lesser environmental impact and these industries hardly operate with the need forenvironmental work approvals or licenses beforehand. Light industries include a variety of smallbusinesses such as manufacturing, fabrication, chemical formulation, trade and others such asautomotive repair shops, paint suppliers, signage suppliers, printers, food processors, servicestations and etc.(23)

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

SINGAPORE SIGNAGE INDUSTRY

Market share analysis

The sign manufacturing industry is defined as an industry that comprise of establishmentsprimarily engaged in manufacturing signs and related displays of all materials (except printing paperand paperboard signs, notices, displays). This include sub-categories such as signs and advertisingspecialties; electric signs; neon signs; scoreboards and electric; advertising artwork; advertisingnovelties; 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 paintingshops(24). In 2014(25), Singapore’s total signage manufacturing industry is worth approximatelyS$304 million with at least 300 establishments in the market. The total value grew by 2.7% from 2012to 2014(26). The following chart shows the growth of Singapore’s total signage industry from year2012 to 2016(27).

Notes:(23) Secondary research(24) US Census Categories (Code NAICS 339955)(25) Provisional information(26) Ibid(27) Forecasted information

INDUSTRY OVERVIEW

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Singapore total signage industry, 2012–2016by value, S$ million

340

330

320

310

300

290

2802012

Total Sales

% Change

2013 2014 2015 2016

296 297 304 314 328

0.3%— 2.4% 3.3% 4.5%

5.0%4.5%4.0%3.5%3.0%2.5%2.0%1.5%1.0%0.5%0.0%

Source: GeBIZ, LTA, Barnes reports, Ipsos Analysis

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

Source: GeBIZ, LTA, Barnes reports, Secondary Research, Ipsos Analysis; Value in S$ million. Figures in the chart may notbe equal due to rounding up of decimals.

COMPETITIVE LANDSCAPE

The market for the signage industry in Singapore is serviced by approximately 300manufacturers with 71 CR11 registered construction agencies in Singapore (that are all privatelimited firms). In terms of competitors, our Group competes with two other companies for the roadsignage segment and about twenty others for the commercial signage segment in the market(30).

Competitive advantage

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

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

This puts our Group in an elite category which new entrants would not be able to achievewithout getting substantial experience in the market. In order to attain Level 5 certification, thecompany needs to meet certain criteria. It has to have a track record with revenues of at least S$10million in the last 3 years, of which S$1 million needs to be from one single contract. It also needs tohave at least 2 professionally qualified full time managers, one with at least 8 years of relevantexperience including the Basic Concept in Construction Productivity and Enhancement (BCCPE)qualification for productivity. The only companies in Singapore that have BCA CR11 (SigncraftInstallation) 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

INDUSTRY OVERVIEW

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Barriers of entry

. Barriers for entry in this industry are not high and projects often varies in value (i.e. canbe of very low to very high values, especially public tender projects).

. Road signs are mainly dominated by three main companies in Singapore which are ourGroup, Fuji Signcrafts Industries Pte Ltd and E Tech Construction Pte Ltd.(32)

* Fuji Signcrafts Industries Pte Ltd has over the years established good record insuccessfully implementing signage projects and these include projects such as islandupgrading exercise for the street name signs for LTA, new signs for Changi AirportTerminal 3 and Resort World Sentosa. They are also the term contractor for SentosaDevelopment Corporation, Changi Airport Terminals and LTA road signs.

* E Tech Construction Pte Ltd on the other hand has CR11 Grade L3 certificationonly which means they are unable to bid for projects with a contract value higherthan S$4.2 million.(33)

* Our Group is certified in other areas apart from signage enabling it to have a higherlevel of productivity by being able to bid for different jobs within a main contractbeyond just signage.

. Operational productivity is another core requirement for companies competing in thissector. Hence, as well as achieving the right levels of experience and financial backing forregistration under the CRS scheme, companies also need to meet government standardsfor productivity. This is to ensure that companies are working to the highest professionalstandards and are not relying just on low cost labour. Contractors that are registered withCRS are obliged to undertake BCCPE(34).

Opportunities and challenges in the industry

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

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

The requirements of the LTA to tender for works on rail networks (e.g. as supply, fabricationand installation of signage at MRT/LRT stations and trains, platform markings etc.) include beingregistered as a CR11 signcraft installer or other supply head titles defined by the governmentsupplier’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 millionworth 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 sitecoordination; 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

INDUSTRY OVERVIEW

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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 LTAtenders won by our Group with other qualifying contractors(37) from 2010 to 2014.

Published tenders, 2010–2014By value, S$

6%Our Group

94%Others

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

Brief profiles of other signage manufacturers

The following table below depicts some examples of other signage manufacturer or companiesin 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, trafficsign, architectural lighting for disco and building users.

Lin Keong Projects PteLtd

Business type: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.

INDUSTRY OVERVIEW

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Company Notes

Seiho SignEngineering PteLtd

Business type:Manufacturer and consulting

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 ConstructionPte Ltd

Business type:Manufacturer and consulting


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


Company Notes

Crimsign GraphicsPte Ltd

Business Type: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 AdvertisingPte Ltd


Main markets:China, Malaysia, Indonesia

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


Company Notes

Fuji SigncraftsIndustries Pte Ltd



Product/services:. Environmental signs,. Turnkey signage projects. Road signage projects (e.g. LTA road signs)

Source: Ipsos Analysis

INDUSTRY OVERVIEW

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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.

REGULATORY OVERVIEW

– 61 –

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

Installation

Planning and installation of an

integrated signposting system for

complexes, airports, shopping centres.

It includes the setting up of exhibition

stands and signs along roads.

L5 1 April 2017

CR09 Repairs &

Redecoration

Repainting and minor non-structural

repair of buildings and existing

structures. These works should not

include addition & alteration works

involving structural changes

L1 1 April 2017

REGULATORY OVERVIEW

– 62 –


CR14 Asphalt Works &

Road Marking

Supply and laying of asphalt, marking

and painting of roads. Applicants are

required to have asphalt plant,

vibratory roller and bituminous

pavers.

L1 1 April 2017

CR01 Minor Construction

Works

Minor building and civil engineering

works that are not governed by the

Building Control Act such as

drainage, minor road works, aprons

and minor A&A

Single Grade 1 April 2017

CW01 General Building All types of building works in

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.

C3 1 April 2017

REGULATORY OVERVIEW

– 63 –


CW02 Civil Engineering (a) Works involving concrete,

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.

C3 1 April 2017

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.

REGULATORY OVERVIEW

– 64 –

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

30 June 2014

Unlimited 85,000,000 40,000,000 13,000,000 4,000,000 1,300,000 650,000

1 July 2014 to

30 June 2015

Unlimited 90,000,000 42,000,000 14,000,000 4,200,000 1,400,000 700,000

Specialist Workheads (CR, MR, MW and SY)

Tendering Limit

(S$) Single Grade L6 L5 L4 L3 L2 L1

1 July 2013 to

30 June 2014

Unlimited Unlimited 13,000,000 6,500,000 4,000,000 1,300,000 650,000

1 July 2014 to

30 June 2015

Unlimited Unlimited 14,000,000 7,000,000 4,200,000 1,400,000 700,000

REGULATORY OVERVIEW

– 65 –

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.

REGULATORY OVERVIEW

– 66 –

Workhead/Title/Grade Requirements

CR01 Minor Construction

Works Single Grade


Minimum net worth

S$10,000

Management To employ at least 1T with

BCCPE, with no

requirement for duration of

relevant experience.


year period)



at least S$100,000

CR09, CR 14 Repairs &

Redecoration/Asphalt

Works & Road Marking

Grade L1


minimum net worth

S$10,000

Management To employ at least 1T with

BCCPE


year period)



at least S$100,000

CR11 Signcraft Installation

Grade L5


Minimum net worth

S$500,000

Management To employ at least 1P or 2T,

one with at least 8 years of

relevant experience


year period)



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

REGULATORY OVERVIEW

– 67 –

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.

REGULATORY OVERVIEW

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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) Technical controller(8)

Course Practical experience 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

A course leading to a

diploma, or a

Bachelor’s degree or

post graduate degree

in a construction and

construction related

field



experience in the

execution of


(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



experience in the

execution of


in Singapore

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.

REGULATORY OVERVIEW

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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).

REGULATORY OVERVIEW

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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.

REGULATORY OVERVIEW

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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

REGULATORY OVERVIEW

– 72 –

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.

REGULATORY OVERVIEW

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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’’)

or Skills Evaluation Certificate

(Knowledge) (‘‘SEC(K)’’)(10), issued

or accepted by the Building and

Construction Authority (‘‘BCA’’)

NTS countries and the PRC under the PA

(Type: New); NAS countries

Secondary 4 education or its

equivalent, the SEC or SEC(K)

Malaysia

Attend and pass full day Construction

Safety Orientation Course(11)NTS counties, NAS countries, the PRC and

Malaysia (All)

Pass medical examination by doctor

registered in Singapore

NTS countries, NAS countries, the PRC and

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.

REGULATORY OVERVIEW

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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.

REGULATORY OVERVIEW

– 75 –

For the construction sector, employers pay the requisite levy according to the

qualification of the foreign workers employed.

Worker category

Monthly

levy ($)

(current)

Monthly

levy ($)

(from 1 July

2015)

Monthly

levy ($)

(from 1 July

2016)

Monthly

levy ($)

(from 1 July

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:

Pass Type Tiers Percentage

Worker

category

Monthly

levy rate

($)

(current)

Monthly

levy rate

($) (1 July

2015)

Monthly

levy rate

($) (1 July

2016)

S-Pass

Quota:

20%

Basic/Tier 1 Up to 10% of total

workforce

Skilled 315 315 330

Tier 2 Above 10% and up

to 20% of

workforce

Unskilled 550 550 650

Work Permit

Quota:

60%

Basic/Tier 1 Up to 25% of the

total workforce

Skilled 250 250 250


Tier 2 Above 25% to 50%

of the total

workforce

Skilled 350 350 350


Tier 3 Above 50% to 60%

of the total

workforce

Skilled 550 550 550


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.

REGULATORY OVERVIEW

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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

tier 1

Total levy bill = Levy for 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 higher-

skilled 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) sub-

quota 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

REGULATORY OVERVIEW

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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:

REGULATORY OVERVIEW

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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:

REGULATORY OVERVIEW

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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 12-

month 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 main-

contractor 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 sub-

contractor exceeds 18 demerit points:

. Six-month MYE freeze for first occurrence;

REGULATORY OVERVIEW

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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 sub-

contractor 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.

REGULATORY OVERVIEW

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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.

REGULATORY OVERVIEW

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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

REGULATORY OVERVIEW

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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

REGULATORY OVERVIEW

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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 medium-

sized 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.

REGULATORY OVERVIEW

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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 GST-

registered 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.

REGULATORY OVERVIEW

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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 facade 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 wholly-

owned subsidiaries. Our Group is founded by our Executive Directors, Mr. Kelvin Tan and

Mr. Peter Tan.

HISTORY, REORGANISATION AND GROUP STRUCTURE

– 87 –

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 facade wall, lane marking and road/directional signage along

the Marinal Coastal Expressway, the widest undersea road tunnel in Singapore.


– 88 –

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:

Mr. Kelvin Tan Mr. Peter Tan

Signmechanic Singapore

50% 50%

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.


– 89 –

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.


– 90 –

(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:

50% 50%

100%

Our Company(Cayman Islands)

Absolute Truth(British Virgin Islands)

100%

100%

Signmechanic Singapore(Singapore)

Mr. Kelvin Tan Mr. Peter Tan

Sino Promise(British Virgin Islands)


– 91 –

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:

50% 50%

Public

75% 25%

100%

100%

Our Company(Cayman Islands)

Sino Promise(British Virgin Islands)

Signmechanic Singapore(Singapore)

Mr. Peter TanMr. Kelvin Tan

Absolute Truth(British Virgin Islands)


– 92 –

OVERVIEW

We have been principally engaged in the design, fabrication, installation and


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 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 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

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.

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


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.

BUSINESS

– 93 –

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.

BUSINESS

– 94 –

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.

BUSINESS

– 95 –

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.

(c) Expand our range of product offering to target and secure more non-road


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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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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. 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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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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. 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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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/

organisation Relevant category

Qualification/

license/grade(1)Date of first

grant/registration Expiry date

BCA CR11 Signcraft

Installation

L5 12 April 2011 1 April 2017

BCA CR09 Repairs &

Redecoration

L1 12 April 2012 1 April 2017

BCA CR14 Asphalt Works &

Road Marking

L1 12 April 2012 1 April 2017

BCA CR01

Minor Construction

Works

Single Grade 12 April 2012 1 April 2017

BCA CW01 General Building C3 12 April 2012 1 April 2017

BCA CW02

Civil Engineering

C3 12 April 2012 1 April 2017

DAS Certification,

by SN Registrars

(Holdings)

Limited

Occupational Health &

Safety Management

System, for the design,

fabrication and

installation of signages

BS OHSAS

18001 : 2007

11 October 2011 10 October 2017

Workplace and

Safety Health

Council

bizSAFE Level Star 1 December 2008 10 October 2017

BCA General Builder General Builder

Class 2

12 April 2012 17 April 2017

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 notexperienced any refusal of renewal of the licences necessary for our operations during theTrack Record Period. Our Directors confirm that our Group has as at the Latest

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

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

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

AWARDS

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

OUR PRODUCTS

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

Year end 31 December 2013 Year end 31 December 2014

From 1 January 2015

to Latest Practicable date

Number of

contracts

and orders

Average

contract value

Revenue

recognised

Number of

contracts

and orders

Average

contract value

Revenue

recognised

Number of

contracts

and orders

Average

contract value

Revenue

recognised

Approximate

S$

S$’000 Approximate

S$

S$’000 Approximate

S$

S$’000

Public sector 1,041 5,000 5,220 66.7% 1,170 8,000 9,562 80.7% 671 7,000 4,703 89.3%

Private sector 1,170 2,000 2,607 33.3% 1,108 2,000 2,288 19.3% 364 1,500 563 10.7%

Total 2,211 7,827 100.0% 2,278 11,850 100.0% 1,035 5,266 100.0%

Approximately 66.7% and 80.7% of our revenue are generated from the public sectorfor 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 withvalue of over S$18,000 each. Out of these contracts, approximately S$2.1 million wasdelivered and recognised as revenue during the Track Record Period.

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

Revenue estimated to be recognised for the year ended

Number of

contracts

During Track

Record Period

31 December

2015

31 December

2016

31 December

2017

31 December

2018 Total

S$’ million S$’ million S$’ million S$’ million S$’ million S$’ million

Public sector 22 2.1 6.1 1.3 1.0 0.8 (Note) 11.3Private sector 9 — 0.5 — — — 0.5

Total 31 2.1 6.6 1.3 1.0 0.8 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

(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

(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

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.

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

Reject opportunityNo

Yes

Yes

No Reject opportunity

Request for quotations from suppliers and subcontractors

Project department evaluate the potentialorder based on capability and resources

Project manager will evaluate whether toprovide quotation

Project assistant will prepare the quotation

Request for quotations from customeron same contract (additional order)

Project manager will review the quotation

General manager or Executive Directorwill approve the quotation

Attend tender interview (typically for directtender or new customers)

Negotiate terms and secure customerorders/contracts

Private invitation Open tender

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Implementation phase

Project manager assign respectiveteam members to ensure that

quotation can be met profitably andproject completed timely and reliably

Confirm purchase orders to suppliersand contracts with subcontractors

(if applicable) The duration of our production processes varies from around1 day to 1 monthDesign and fabricate signage at

workshop

Install signage on-site

Quality checks on the signage worksby customer and LTA (if applicable)

Progress billings to customer andfrom suppliers and subcontractors

}

Post completion of works

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:


Number of

contracts

and orders

From private

invitation/

representing

approximate

% of

contracts

Success

rate

From open

tender/

representing

approximate

% of

contracts

Success

rate

Number of

contracts

and orders

From private

invitation/

representing

approximate

% of

contracts

Success

rate

From open

tender/

representing

approximate

% of

contracts

Success

rate

(%) (%) (%) (%)

Public sector 1,041 1,029/98.8% 68 12/1.2% 28 1,170 1,167/99.7% 82 3/0.3% 33

Private sector 1,170 1,170/100.0% 30 — — 1,108 1,108/100.0% 35 — —

Total 2,211 2,199 30–68 12 28 2,278 2,275 35–82 3 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.

All open tender projects are competitive in nature; for private invitation projects, we


their suppliers, and therefore, with more than one quotations, these projects will also be

competitive in nature.

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 in-

charge 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.

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

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 on-

site 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

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.

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

Background of customer

Years of

relationship

Scope of products

provided by our Group

Payment and

credit terms

Approximate

aggregate

amount

% of total

revenue of our

Group

(S$’ million)

Customer A More than 10 Scope of services:

Supply and

installation of

signage

Payable by cheque, 60

days due upon

issuance of invoice

1.4 12.1%

Customer B 5 Scope of services:

Supply and

installation of

signage

Payable by telegraphic

transfer, 35 days

due upon issuance

of invoice

1.3 11.4%

Customer C 2 Scope of services:

Supply and

installation of

signage

Payable by bank

transfer, 45 days

due upon issuance

of invoice

1.1 9.5%

Customer D 7 Scope of services:

Supply and

installation of

signage


transfer, 60 days

due upon issuance

of invoice

0.8 6.8%

Customer E 1 Scope of services:

Supply and

installation of

signage


days due upon

issuance of invoice

0.5 3.3%

Total 5.1 43.1%

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Revenue contribution

Background of customer

Years of

relationship

Scope of products

provided by our Group

Payment and

credit terms

Approximate

aggregate

amount

% of total

revenue of our

Group

(S$’ million)

Customer F 7 Scope of services:

Supply and

installation of

signage


transfer, 30 days

due upon issuance

of invoice

0.7 8.9%

Customer G 5 Scope of services:

Supply and

installation of

signage


days due upon

issuance of invoice

0.6 7.9%

Customer H 7 Scope of services:

Supply and

installation of

signage

Payable by cheque or

cash on delivery, 45

days due upon

issuance of invoice

0.3 3.5%

Customer I More than 10 Scope of services:

Supply and

installation of

signage

Payable by cheque, at

30 days due upon

issuance of invoice

0.3 3.4%

Customer J 6 Scope of services:

Supply and

installation of

signage

Payable by cheque, at

30 days due upon

issuance of invoice

0.2 2.9%

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:


Ranking

Name of

supplier

Years of

relationship Principal business

Location of

business

operations

Payment and credit

terms Supply amount

Approximate

percentage

of our

Group’s

total

purchases

%

Approximate

S$’ million

1 Supplier A 9 Supplier of micro

prismatic reflective

sheeting and other

sheeting

Singapore Payable by telegraphic

transfer, 60 days

0.5 14.4%

2 Supplier B 2 Supplier of metal railings Singapore Payable by telegraphic

transfer, 60 days

0.3 8.0%

3 Supplier C 8 Supplier of micro


sheeting and other

sheeting


transfer, 60 days

0.2 7.0%

4 Supplier D 8 Supplier of aluminium

products

Singapore Payable by cash on

delivery or

telegraphic

transfer, 60 days

0.2 6.1%

5 Supplier E 8 Supplier of steel products Singapore Payable by telegraphic

transfer, 30 days

0.2 4.9%

Total 1.4 40.4%

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Ranking

Name of

supplier

Years of

relationship Principal business

Location of

business

operations

Payment and credit

terms Supply amount

Approximate

percentage

of our

Group’s

total

purchases

%

Approximate

S$’ million

1 Supplier A 9 Supplier of micro


sheeting and other

sheeting


transfer, 60 days

0.5 19.7%

2 Supplier D 8 Supplier of aluminium

products

Singapore Payable by cash on

delivery or

telegraphic

transfer, 60 days

0.2 6.0%

3 Supplier C 8 Supplier of micro


sheeting and other

sheeting


transfer, 60 days

0.1 4.9%

4 Supplier F 2 Supplier of steel products China Payable by telegraphic

transfer, 30%

deposit and 70%

upon completion

0.1 4.9%

5 Supplier G 2 Supplier of labour and

logistics services

Singapore Payable by cheque or

cash on delivery, 30

days

0.1 4.4%

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


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. In

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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.

Five largest

subcontractors

Background of

subcontractor

For the year ended

(Approximate S$’million)

Years of

relationship

Whether

independent

from our

Group

31 December

2013

31 December

2014

Subcontractor A Subcontractor for

supply and/or

installation of

bulky metal

works

0.8 1.0 8 Independent

Subcontractor B Subcontractor for

installation of

precast blocks

and excavation

works


Subcontractor C Subcontractor for

installation of

precast blocks

and excavation

works


Subcontractor D(1) Subcontractor for

laying of road

markings

0.2 0.2 9 Connected

Subcontractor E(2) Subcontractor for

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 activity-

based 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 non-

Malaysian 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.

BUSINESS

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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:

Address

Approximate

built-in

leased Area

Connected

transaction Rates Tenure Deposit

424 Tagore Industrial

Avenue Singapore

787807

1,259 square

metres

No Monthly rent

of S$28,000

Period of 3 years

commencing

from 1 March

2014 and

expiring on

28 February

2017

S$112,000

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.

BUSINESS

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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 :

PANTONE 285 BLACK WHITE

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.

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%.

BUSINESS

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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.

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’’ 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.

BUSINESS

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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

can be enhanced.

Segregation of duties contributes to anorganisation’s system of checks and

balances.

Our Group’s cash book or summary (inexcel format) is held by General Manager

and this cash book or excel worksheet isreconciled on a bi-monthly basis, witheffect from March 2015.

The Finance Manager will monitor theFinance & Administrative (FA) staff’s

accounting entries before anymodification is being done on a monthlybasis.

Journal entries were prepared by theFinance Manager and approved by theExecutive Director.

Physical inventory count is performedquarterly and inventory reconciliation is

performed periodically.

. Employees who have the ability tomodify the accounts receivablebalance or record adjustments to

customer accounts should notreceive customer payments.

. The general ledger system

generates a report of all changes tothe chart of accounts at month-endfor review and approval by an

employee who does not haveresponsibility for modifying thegeneral ledger. All changes shouldbe reviewed to ensure that they

were properly approved by theappropriate party and have a validpurpose. In addition, journal

entries should be reviewed ortested for accuracy, completeness,supporting documentation and

appropriate account coding.Adequate supervision to theaccuracy of book-keeping isrequired.

. Physical inventory counts shouldbe performed by an employee whodoes not have day-to-day

responsibility for maintaining thephysical inventory or inventoryrecord-keeping and reconciliationresponsibilities.

. In 2013 and 2014, the Companyengaged an external accountant tohelp to prepare the accounts. There

is a risk of ineffective supervisionin the day-to-day financialcontrols, accounts book-keepingand financial reporting. The

Company hired a full time FinanceManager on 18 March 2015.

BUSINESS

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Findings Recommended measures

Measures adopted and

implemented by our Group

Bank reconciliation

were performed

yearly in 2013 and

2014.

Bank reconciliation should be performedonce a month.

Our Group has conducted bankreconciliation on a monthly basis byFinance Manager, with effect from 31

March 2015.

No fixed asset tagging

or count performed in

2013 and 2014.

All fixed assets should be tagged andaccounted for.

Fixed asset count will need to beconducted on an annual basis. At leastone independent staff (who is not

accountable for the fixed asset/custodianof the fixed asset) to verify the count.

Our fixed assets have been tagged andaccounted by respective departmentheads. Fixed asset count will be

conducted on a yearly basis with thesupervision by the Finance Manager.

Inventory reconciliation

was not performed

periodically in 2013

and 2014.

Physical inventory count should be

conducted and reconciled to the generalledger periodically, with variancesreconciled on a timely basis.

Our Group has conducted inventory

count periodically and tied it to thegeneral ledger accounting books, witheffect from 1 March 2015.

No monitoring of

changes made to

vendor master file in

2013 and 2014.

Vendor master file changes should be

reviewed by a supervisory role, and allchanges should be supported.

Our Group has recorded manually

vendor master file changes, subjected toapproval from an Executive Director,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.

BUSINESS

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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.

BUSINESS

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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 non-

compliance 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

BUSINESS

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. 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.

BUSINESS

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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.

BUSINESS

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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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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.


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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.


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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.


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 –


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.


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 –


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 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


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

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

Identify suppliers/operators who are able to supply

materials for the new product offerings we intend to

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

FUTURE PLANS AND USE OF PROCEEDS

– 145 –

Expansion via new companies

and/or acquisitions

Explore capital contributions or acquisition of

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

work force to support our

business expansion in the

existing sector and to target

and secure more non-road


New headcount of about 3 to 8 foreign workers

based at our plant, for fabrication of signage and

related works

Review the remuneration and benefits of key staff in

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






projects


existing sectors



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/or acquisitions

Perform due diligence on potential targets and

internal evaluation and approval of our directors

Engage professional parties to conduct further due

diligence and provide advice


– 146 –







New headcount of about 3 to 5 staff that have

competencies in new skills, who are part of our

project and production teams



related works




Working capital and general

corporate use

Reserve working capital for business growth and

operation needs

From 1 July 2016 to 31 December 2016






projects


existing sectors



get into



product offerings

Identify equipment that are suited for targeting and


projects

Purchase equipment that are of higher productivity



and/or acquisitions

Perform due diligence on potential targets and

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 –












related works





corporate use


operation needs

From 1 January 2017 to 30 June 2017






projects


existing sector



product offerings

Purchase equipment that are suited for targeting and


projects


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












related works





– 148 –


corporate use


operation needs

From 1 July 2017 to 31 December 2017






projects


existing sector



product offerings

Purchase equipment that are suited for targeting and


projects


and/or acquisitions

Execute the merger and acquisition plan of potential

target in accordance with the requirements as

required under Chapter 19 of the GEM Listing Rules












related works





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;


– 149 –

— 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.


– 150 –

From the

Latest

Practicable

Date to

31 December

2015

For the six

months

ending

30 June

2016

For the six

months ended

31 December

2016

For the six

months

ending

30 June

2017

For the six

months

ending

31 December

2017 Total

Approximate

percentage of

net proceeds

HK$

(in million)

HK$

(in million)

HK$

(in million)

HK$

(in million)

HK$

(in million)

HK$

(in million)



expansion of existing

sector and to target and

secure more non-road

infrastructure related

projects 0.3 2.2 2.4 2.6 0.7 8.2 35%


or acquisitions(1) — 1.9 1.7 2.9 1.7 8.2 35%

Expansion and enhancement

of work force to support

our business expansion in

the existing sector and

non-road infrastructure

related projects 0.2 1.3 1.2 1.4 0.6 4.7 20%

Working capital and other

general corporate

purposes — 0.7 0.8 0.5 0.3 2.3 10%

Total 0.5 6.1 6.1 7.4 3.3 23.4 100%

Note:

1. 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 –

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:

Name Age Address Position

Date of Joining/

Appointment

Roles and

Responsibilities

Relationship with

other Directors and

senior management

Executive Directors

Mr. Kelvin Tan

(陳添吉)

42 Block 232, Pasir

Ris Drive 4,

#13-510

Singapore

510232

Chairman and

Executive

Director

December 1997/

10 March 2015

Overall

management,

strategic

planning and

business

development

None

Mr. Peter Tan

(陳光輝)

47 35 Jalan Mariam

Singapore

509313

Chief executive

officer and

Executive

Director

December 1997/

10 March 2015

Lead operational

departments and

provide

guidance and

management

experience in

project

management

and contract

negotiation.

None


Mr. Oh Eng Bin

(Hu Rongming)

(胡榮明)

41 11 Tanjong Rhu

Road

#09-04

Singapore

436896

Independent Non-

Executive

Director

23 June 2015 Responsible for

giving strategic

advice and

guidance on the

business and

operations of

our Group

None

Mr. Tan Kiang Hua

(陳建華)

54 1 Bukit Batok

Street 25,

#06-22,

Singapore

658882

Independent Non-

Executive

Director


giving strategic

advice and

guidance on the

business and

operations of

our Group

None

Mdm. Kow Yuen-

Ting (Gao

Yunting)

(郜韵婷)

37 20 Clover Close

Singapore

579261

Independent Non-

Executive

Director


giving strategic

advice and

guidance on the

business and

operations of

our Group

None

Senior management

Mr. Soh Chiau Kim

(蘇招金)

35 Apt Blk 766,

Woodlands

Circle, # 09-346,

Singapore

730766

General Manager July 2009/March

2013

Overall

management of

operations, with

a focus on

execution of

contracts.

None

DIRECTORS, SENIOR MANAGEMENT AND STAFF

– 152 –

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.


– 153 –


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.


– 154 –

Mr. Tan Kiang Hua (陳建華), age 54, was appointed as our Independent Non-

Executive 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:

Company name

Principal business

activities of the

company Last position held Responsibilities Period of services

Holiday Inn Yangtze

Chongqing

Hotel Assistant controller Responsible for setting

up accounting

system and training

of staff

March 1988 to

June 1989

Holiday Inn Lido Beijing Hotel Assistant financial

controller

Responsible for

financial reporting,

credit control, cost

control and

cashiering

August 1989 to

March 1991

Beijing Lufthansa Center/

Kempinski Hotel

Hotel Chief financial

controller

Responsible for setting

up accounting

system, training of

staff and budgeting

April 1991 to

December 1992

Raffles International

Limited

Hotel management Development manager Responsible for

property investment

February 1993 to

December 1994

Shanghai Huanghe DHA

Pharmaceutical

Company Ltd

Pharmaceutical

manufacturing

General manager Responsible for

general

management, sales

and marketing and

financial control

January 1995 to

January 1997

Transpac Capital Pte Ltd Fund management Vice president Responsible for

portfolio investment

and management

February 1997 to

September 2003

Everbright Investment Pte

Ltd

Investment fund

management

Director Responsible for


and management

October 2003 to

January 2004

Prime Capital Ltd Consultancy for

capital market fund

raising

Director Responsible for

business

development

February 2004 to

February 2007

Raintree Ventures Pte Ltd Fund management Investment director Responsible for


and management

March 2007 to

April 2012

Niehands City Pte Ltd Property development Chief investment and

finance officer

Responsible for

financial

management, fund

raising and investor

relations

January 2014 till

Present

Note: Mr. Tan was not employed from May 2012 to December 2013.


– 155 –

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:

Company Name

Principal activities

of the company Last position held Responsibilities Period of services

Arthur Andersen

Associates (S) Pte Ltd

Audit, consultancy

and corporate

finance

Associate Financial analytical

review in restructuring

engagements and

statutory compliance

work in formal

insolvency agreements

August 2000 to

November 2001

Raffles International

Limited

Hotel management Assistant manager Coordination of annual

budget submission and

compilation of market

segment information

December 2001 to

November 2002

Accountant-General’s

Department (seconded

to the Ministry of

Foreign Affairs in

January 2003 as

Finance Officer)

Government Accountant Preparation of annual

budgets, periodic

forecast and financial

statements

November 2002 to

June 2005

JPMorgan Chase Bank,

N.A.

Finance Client service

manager

Client relationships in

treasury services

July 2005 to May

2007

Philip Morris Singapore

Pte Ltd

Tobacco Analyst Analysis of revenue,

budget and

management reporting

June 2007 to

August 2008

Polycom Asia Pacific Pte

Ltd.

Communications Asia pacific

controller

Preparation of budget and

management reports

for the Asia Pacific

region

November 2008 to

May 2011

KCT Consulting Pte. Ltd. Business and

management

consultancy

Finance and project

manager

Preparation of financial

statements and

handling of tax and

regulatory filings

January 2012 to

present

Mdm. Kow Yuen-Ting does not have any current or past directorships in any listed

companies in the last three years.


– 156 –

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.


– 157 –

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:

Company name

Principal business

activities of the

company Last position held Responsibilities Period of services

Seri Jasmine Sdn. Bhd. Property development

and construction

Project engineer Tender and project

coordination

June 2002 to May 2003

Vital Landscape Sdn Bhd Property development Site engineer Project costing and

supervision

June 2003 to May 2006

MDD Properties Sdn Bhd Property development Site engineer Project costing,

contract negotiation

and supervision.

June 2006 to June 2009

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:

Company name

Principal business

activities of the company

(during the tenure) Position held Period of services

Quam Limited

(stock code: 00952)

Provision of financial services Independent non-

executive director

November 1999 to

September 2002

Century Ginwa Retail

Holdings Limited (stock

code: 00162)

Design, development,

manufacture and sale of a

wide range of wooden

furniture products

Independent non-

executive director

September 2000 to

November 2001

Eagle Nice (International)

Holdings Limited

(stock code: 02368)

Manufacturing and trading of

sportswear and garments

Independent non-

executive director

November 2002 to

February 2013

Winfull Group

Holdings Limited

(stock code: 00183)

Provision of property

brokerage services,

carrying out schemes for

property consolidation,

assembly and

redevelopment, property

trading and property

development in Hong Kong

Non-executive

director

March 2007 to

December 2011


– 158 –

Company name

Principal business



Anhui Tianda Oil Pipe

Company Ltd.

(stock code: 00839)

Manufacturing, sourcing and

distribution of specialised

seamless pipes

Independent non-

executive director

October 2007 to

February 2009

China Nonferrous Metals

Company Limited

(stock code: 08306)

Mining, processing and

trading of mineral

resources

Company secretary December 2007 to

June 2015

Cheung Wo International

Holdings Limited

(stock code: 00009)

Film distribution and

licensing, film processing,

advertising and

promotional services, and

property investment

Company secretary March 2008 to

March 2010

AVIC Joy Holdings

(HK) Limited

(stock code: 00260)

Operating compressed natural

gas, liquefied petroleum gas

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

Company secretary September 2009 to

June 2015

Infinity Chemical Holdings

Company Limited

(stock code: 00640)

Manufacturing and sales of

adhesives, primers,

hardeners and vulcanised

shoes adhesive related

products used by the

footwear manufacturers

Company secretary March 2011 to

December 2011

China City Infrastructure

Group Limited

(stock code: 02349)

Property development,

property investment, hotel

business and property

management in the PRC

Company secretary April 2011 to

June 2012

Evershine Group

Holdings Limited

(stock code: 08022)

Provision of travel agent

services, advertising and

marketing services, fashion

garment trading and mobile

application business

Company secretary July 2013 to

May 2015

Z-Obee Holdings Limited

(stock code: 00948)

Distribution and marketing of

mobile handset and mobile

handset components,

provision of design and

production solution

services for mobile handset,

assembly of mobile handset

and surface mounting

technology of printed

circuit board

Company secretary January 2014 to

April 2014


– 159 –

Company name

Principal business



China Zenith Chemical

Group Limited

(stock code: 00362)


polyvinyl-chloride, vinyl

acetate, vitamin C, glucose

and starch, calcium

carbide; generation and

supply of heat and power

Company secretary May 2014 to

January 2015

PINE Technology Holdings

Ltd (stock code: 01079)


high-quality computer

components and consumer

electronic products

Independent non-

executive director

June 2000 to present

China Financial International

Investments Limited

(stock code: 00721)

Investments in listed and

unlisted companies

Company secretary November 2004 to

present

Kenford Group

Holdings Limited

(stock code: 00464)

Designing, manufacturing

and sales of electrical

haircare products, electrical

healthcare products and

other small household

electrical appliances

Independent non-

executive director

March 2005 to

present

Kingbo Strike Limited

(stock code: 01421)

Provision of electrical

engineering services in

Singapore

Company secretary December 2013 to

present

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.


– 160 –

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 Non-

Executive 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.


– 161 –

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.


– 162 –

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:

Number of

local

employees

Number of

foreign

workers

Total

number of

staff

Project department 3 5 8

Design 3 7 10

Administrative and finance 13 4 17

Production 1 30 31

Total 20 46 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:

Sector Tier

Levy Rates

(S$) Higher

Skilled/Basic

skilled, with

effect from

1 July 2012

Levy Rates

(S$) Higher

Skilled/Basic

skilled, with

effect from

1 July 2013

Levy Rates

(S$) Higher

Skilled/Basic

skilled, with

effect from

1 July 2014

Levy Rates

(S$) Higher

Skilled/Basic

skilled, with

effect from

1 July 2015

Levy Rates

(S$) Higher

Skilled/Basic

skilled, with

effect from

1 July 2016

Levy Rates

(S$) Higher

Skilled/Basic

skilled, with

effect from

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


– 163 –

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


– 164 –

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.


– 165 –

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

RELATIONSHIP WITH CONTROLLING SHAREHOLDERSAND NON-COMPETITION UNDERTAKINGS

– 166 –

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


– 167 –

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 non-

competition 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.


– 168 –

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 Non-

Executive 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


– 169 –

— 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.


– 170 –

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:

Name of

interested party

Capacity/

Nature of interest

Total number

of Shares

Percentage of

interest in our

Company

Absolute Truth Beneficial owner 300,000,000

(Note)

75%

Mr. Kelvin Tan Interest of controlled corporation 300,000,000

(Note)

75%

Mr. Peter Tan Interest of controlled corporation 300,000,000

(Note)

75%

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.

SUBSTANTIAL SHAREHOLDERS

– 171 –

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: HK$

5,000,000,000 Shares 50,000,000

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

10,000

319,000,000 Shares to be issued pursuant to the

Capitalisation Issue (including

20,000,000 Sale Shares)

3,190,000

80,000,000 New Shares to be issued pursuant to the

Placing

800,000

400,000,000 Shares 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.

SHARE CAPITAL

– 172 –

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,

SHARE CAPITAL

– 173 –

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.

SHARE CAPITAL

– 174 –

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;

FINANCIAL INFORMATION

– 175 –

(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


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.


– 176 –

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 non-

recurring 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.


– 177 –

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


– 178 –

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.


– 179 –

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






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.

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.


– 180 –

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

2013

31 December

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)


Income tax expense (203,938) (262,996)

Profit for the year 611,481 2,565,215

Total comprehensive income 633,684 2,543,012


– 181 –

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:


31 December

2013

31 December

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.


31 December 2013 31 December 2014

S$

Approximate

% to

cost of sales S$

Approximate

% to

cost of sales

Materials 2,470,557 49.9 3,378,744 53.6

Staff costs 652,451 13.2 705,454 11.2

Subcontracting costs 1,447,075 29.2 1,712,285 27.1

Overheads 382,009 7.7 510,793 8.1

Total 4,952,092 100.0 6,307,276 100.0


– 182 –

A further breakdown of material costs is indicated in the table below:

For the financial year ended For the financial year ended

31 December 2013 31 December 2014

S$

Approximate

% S$

Approximate

%

Metal products 575,030 23.3 1,129,402 33.4

Sheeting products 702,464 28.4 832,716 24.6

Safety products 120,820 4.9 164,860 4.9

Consumables 637,910 25.8 644,212 19.1

Others 434,333 17.6 607,554 18.1

Total 2,470,557 100.0 3,378,744 100.0

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


– 183 –

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.


31 December

2013

31 December

2014

S$ S$

Bank interest income 22 496

Government grants 56,903 78,629

Rental income in respect of subleasing of workshop

premise — 113,508

Others 14,273 15,560

Total 71,198 208,193

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.


– 184 –

The table below sets forth a breakdown of our other gain and losses for the periods

indicated.


31 December

2013

31 December

2014

S$ S$

Impairment loss on a freehold property (upon

reclassified as held for sale) (263,571) —

Allowance on doubtful debts — (106,398)

Write-down of property, plant and equipment — (7,848)

Loss on disposal of property, plant and equipment — (5,021)

Fair value gain on available-for-sale investments — 9,394

Total (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:


31 December

2013

31 December

2014

S$’ S$’

Staff costs 1,392,644 1,736,986

Rental expenses 12,520 45,224

Depreciation 103,735 76,721

Upkeep of vehicles and machinery 177,015 140,819

Professional fees 12,900 314,829

Others 101,421 323,741

Total 1,800,235 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.


– 185 –

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.


– 186 –

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.

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.

Year end 31 December 2013 Year end 31 December 2014

Number of

contracts

and orders

Revenue

recognised

Number of

contracts

and orders

Revenue

recognised

S$’000 S$’000

Public sector 1,041 5,220 66.7% 1,170 9,562 80.7%

Private sector 1,170 2,607 33.3% 1,108 2,288 19.3%

Total 2,211 7,827 100.0% 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.


– 187 –

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.


– 188 –

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.


Revenue

recognised Gross profit

Gross profit

margin

Revenue

recognised Gross profit

Gross profit

margin

S$’000 S$’000

Approximate

% S$’000 S$’000

Approximate

%

Public sector 5,220 1,953 37.4 9,562 4,595 48.1

Private sector 2,607 921 35.3 2,288 948 41.4

7,827 2,875 36.7 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.


– 189 –

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.


– 190 –

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.


Revenue

recognised

Net Profit

before tax

Net profit

before tax

margin

Revenue

recognised

Net Profit

before tax

Net profit

before tax

margin

S$’000 S$’000

Approximate

% S$’000 S$’000

Approximate

%

Public sector 5,220 580 11.1 9,562 2,405 25.1

Private sector 2,607 235 9.0 2,288 423 18.5

7,827 815 10.4 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.


– 191 –

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:


31 December

2013

31 December

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-for-

sale 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-for-

sale 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


– 192 –

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 non-

cash 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 available-

for-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.


– 193 –

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

Amount outstanding

and utilised as at

30 April 2015

Amount

unutilised as at

30 April 2015

S$ % Current Non-Current

Uncommitted facilities —

trade

No 750,000 5.75% Charge on fixed

deposit

525,753 — 224,247


letter of guarantee

No 150,000 n/a Charge on fixed

deposit

61,903 52,875 35,222


extra long term letter of

guarantee

No 57,000 n/a Charge on fixed

deposit

— 52,875 4,125

587,656 105,750 263,594


– 194 –

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:

As at

31 December

2013

31 December

2014

Latest

Practicable

Date

S$ S$ S$

Within a year 76,019 91,825 103,501

After one year but within five years 135,605 155,170 166,157

211,624 246,995 269,658

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:

As at

31 December

2013

31 December

2014

Latest

Practicable

Date

S$ S$ S$

Within a year — 406,560 359,520

After one year but within five years — 392,000 224,000

— 798,560 583,520

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.


– 195 –

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.


– 196 –

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 :

As at31 December

2013

31 December

2014

30 April

2015(Unaudited)

NON-CURRENT ASSETSProperty, plant and equipment 296,099 679,373 721,033Available-for-sale investments 269,505 20 20Deferred tax assets 12,996 — —

578,600 679,393 721,053

CURRENT ASSETSInventories 337,656 615,661 507,683Trade and other receivables 2,359,598 2,441,845 4,164,367Amount due from a related party 24,401 44,860 —Amount due from a director — 7,006 599Pledged bank deposits 79,564 586,564 956,999Bank balances and cash 2,818,571 5,087,491 4,035,997

5,619,790 8,783,427 9,665,645

Asset classified as held for sale 8,848,283 — —

14,468,073 8,783,427 9,665,645

CURRENT LIABILITIESTrade payables 1,181,859 689,656 964,471Bills payables 529,880 909,841 525,753Other payables and accruals 757,435 1,803,726 1,732,939Amounts due to related parties 209,165 348,193 —Term loan — — —Amounts due to directors 822,582 1,999 1,999Obligations under finance leases 76,019 91,825 105,572Income tax payable 208,031 448,543 178,135

3,784,971 4,293,783 3,508,869

Liability directly associated withasset classified as held for sale 3,283,657 — —

7,068,628 4,293,783 3,508,869

NET CURRENT ASSETS 7,399,445 4,489,644 6,156,776

NON-CURRENT LIABILITYObligations under finance leases 135,605 155,170 179,470

NET ASSETS 7,842,440 5,013,867 6,698,359


– 197 –

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:

As at

31 December

2013

31 December

2014

S$ S$

Materials 60,516 120,456

Work-in-progress 277,140 421,935

Finished goods — 73,270

Total 337,656 615,661

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-in-

progress 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.


– 198 –

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


At 31 December

2013 2014

S$ S$

Trade receivables 1,300,761 1,620,142

Less: allowance for doubtful debts (23,210) (129,608)

1,277,551 1,490,534

Unbilled receivables 603,696 136,335

Retention receivables 213,102 241,017

Purchase advances paid to suppliers 174,873 143,536

Receivable from disposal of freehold property — 200,000

Rental and other deposits 37,540 147,840

Other receivables and prepayments 52,836 82,583

2,359,598 2,441,845


– 199 –

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:

At 31 December

2013 2014

S$ S$

1–30 days 790,139 607,134

31–60 days 201,864 238,622

61–90 days 148,665 57,261

91–180 days 63,921 306,283

181–365 days 72,962 266,187

Over 365 days — 15,047

1,277,551 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.


– 200 –

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:

As at

31 December

2013

31 December

2014

S$ S$

Overdue:

31 to 60 days 201,864 238,622

61 to 90 days 148,665 57,261

91 to 180 days 63,921 312,283

181 to 365 days 72,962 266,187

Over 365 days — 9,047

Total 487,412 883,400

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:

As at

31 December

2013

31 December

2014

S$ S$

At beginning of the year 23,210 23,210

Allowance on doubtful debts recognised in profit or

loss — 106,398

At end of the year 23,210 129,608

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.


– 201 –

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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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 at

31 December

2013

31 December

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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Bills Payables

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


At 31 December

2013 2014

S$ S$

Advance billings to customers 539,677 589,458

Retention payable to suppliers 4,380 33,370

Goods and services tax payable 16,374 751,710

Accrued operating expenses 66,999 356,396

Deposit received in respect of disposal of freehold

property 90,000 —

Accrued staff bonus/commission 21,577 38,899

Payable for acquisition of plant and equipment — 25,064

Other payables 18,428 8,829

757,435 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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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

2013

31 December

2014

times times

Current ratio (1) 1.5 2.0

Gearing ratio (2) 0.51 0.23


31 December

2013

31 December

2014

% %

Return on total assets (3) 9.9 27.1

Return on equity (4) 7.8 51.2


31 December

2013

31 December

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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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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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, non-

interest 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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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.

Audited net

tangible

assets as at

31 December

2014

Estimated

net proceeds

from the

Placing

Unaudited

pro forma

adjusted net

tangible

assets of the

Group

Unaudited

pro forma

adjusted net

tangible

assets per

Share

S$ S$ S$

(Note 1) (Note 2) (Note 3) (Note 5)

Based on a Placing Price of

HK$0.50 per Placing

Share

5,013,867 4,106,675 9,120,542 2.28

(Singapore

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 thefinancial 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$0.50per Placing Share after deduction of the estimated underwriting fees and other related expensespayable by our Company. The estimated net proceeds are converted into S$ at the rate of S$1 =HK$5.6963.


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(3) The unaudited pro forma adjusted net tangible assets per Placing Share is calculated based on400,000,000 Shares in issue immediately following the completion of the Placing and theCapitalisation. It does not take into account any shares which may be allotted and issued orrepurchased by the Company pursuant to the general mandates for the allotment and issue orrepurchase 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 tradingresults 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 toin the preceding paragraphs and on the basis that 400,000,000 Shares were in issue immediatelyfollowing 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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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

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.

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.


– 210 –

JOINT LEAD MANAGERS



UNDERWRITERS



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 inter-

bank markets, a change in the system under which the value of the Hong

UNDERWRITING

– 211 –

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,

UNDERWRITING

– 212 –

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

UNDERWRITING

– 213 –

(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,

UNDERWRITING

– 214 –

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

UNDERWRITING

– 215 –

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

UNDERWRITING

– 216 –

(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 sub-

underwriting 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.

UNDERWRITING

– 217 –

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.

UNDERWRITING

– 218 –

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 –

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 –

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.

30 June 2015

The Directors

KPM Holding 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.

APPENDIX I ACCOUNTANTS’ REPORT

– I-1 –

As at 31 December 2013 and 2014 and the date of this report, the Group has equity

interests in the following subsidiaries:

Name of subsidiaries

Place of

incorporation Legal form

Date of

incorporation

Issued and

fully paid

share capital

Equity interest

attributable to the Company Principal activities

31 December Date of

the report2013 2014

Direct

Sino Promise Investments

Limited (‘‘Sino Promise’’)

British Virgin

Islands

(‘‘BVI’’)

Limited liability

company

12 January

2015

US$1 N/A N/A 100% Investment holding

Indirect

Signmechanic Pte. Ltd.

(‘‘Signmechanic Singapore’’)

Singapore Limited liability

company

2 September

1997

S$500,000 100% 100% 100% Engaged in the design,

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 –

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 –

A. FINANCIAL INFORMATION

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Year ended 31 December

NOTES 2013 2014

S$ S$

Revenue 6 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 7 71,198 208,193

Other gains and losses 8 (263,571) (109,873)

Selling and administrative expenses (1,800,235) (2,638,320)

Other expense — (63,250)

Finance costs 9 (66,923) (111,351)


Income tax expense 10 (203,938) (262,996)

Profit for the year 11 611,481 2,565,215

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 22,203 (12,809)

Reclassification of cumulative gains from

investment valuation reserve to profit or

loss upon disposal of available-for-sale

investments — (9,394)

Other comprehensive income (expense) for the

year 22,203 (22,203)

Total comprehensive income for the year 633,684 2,543,012


– I-4 –

STATEMENTS OF FINANCIAL POSITION

At 31 December

NOTES 2013 2014

S$ S$

NON-CURRENT ASSETS

Property, plant and equipment 16 296,099 679,373

Available-for-sale investments 17 269,505 20

Deferred tax assets 27 12,996 —

578,600 679,393

CURRENT ASSETS

Inventories 18 337,656 615,661

Trade and other receivables 19 2,359,598 2,441,845

Amount due from a related party 25 24,401 44,860

Amount due from a director 26 — 7,006

Pledged bank deposits 20 79,564 586,564

Bank balances and cash 20 2,818,571 5,087,491

5,619,790 8,783,427

Asset classified as held for sale 21 8,848,283 —

14,468,073 8,783,427

CURRENT LIABILITIES

Trade payables 22 1,181,859 689,656

Bills payables 22 529,880 909,841

Other payables and accruals 23 757,435 1,803,726

Amounts due to related parties 25 209,165 348,193

Amounts due to directors 26 822,582 1,999

Obligations under finance leases 24 76,019 91,825

Income tax payable 208,031 448,543

3,784,971 4,293,783

Liability directly associated with asset classified as

held for sale 21 3,283,657 —

7,068,628 4,293,783

NET CURRENT ASSETS 7,399,445 4,489,644

TOTAL ASSETS LESS CURRENT

LIABILITIES 7,978,045 5,169,037


– I-5 –

At 31 December

NOTES 2013 2014

S$ S$

NON-CURRENT LIABILITY

Obligations under finance leases 24 135,605 155,170

NET ASSETS 7,842,440 5,013,867

CAPITAL AND RESERVES

Share capital 28 500,000 500,000

Reserves 7,342,440 4,513,867

TOTAL EQUITY 7,842,440 5,013,867


– I-6 –

STATEMENTS OF CHANGES IN EQUITY

Share

capital

Investment

valuation

reserve

Accumulated

profits Total

S$ S$ S$ S$

At 1 January 2013 500,000 — 6,808,756 7,308,756

Profit for the year — — 611,481 611,481

Fair value gain on available-

for-sale investments — 22,203 — 22,203

Total comprehensive income

for the year — 22,203 611,481 633,684

Dividend declared (Note 13) — — (100,000) (100,000)

At 31 December 2013 500,000 22,203 7,320,237 7,842,440

Profit for the year — — 2,565,215 2,565,215

Fair value loss on available-

for-sale investments — (12,809) — (12,809)

Reclassification of cumulative

gains from investment

valuation reserve to profit or

loss upon disposal of

available-for-sale

investments — (9,394) — (9,394)

Total comprehensive (expense)

income for the year — (22,203) 2,565,215 2,543,012

Dividend declared (Note 13) — — (5,371,585) (5,371,585)

At 31 December 2014 500,000 — 4,513,867 5,013,867


– I-7 –

STATEMENTS OF CASH FLOWS

Years ended 31 December

2013 2014

S$ S$

OPERATING ACTIVITIES


Adjustments for:

Bank interest income (22) (496)

Depreciation of property, plant and equipment 250,347 235,367

Finance costs 66,923 111,351

Fair value gain on available-for-sale investments — (9,394)

Allowance on doubtful debts — 106,398

Impairment loss on a freehold property upon reclassified as

held for sale 263,571 —

Loss on disposal of property, plant and equipment — 5,021

Write-off of property, plant and equipment — 7,848

Operating cash flows before movements in working capital 1,396,238 3,284,306

Increase in inventories (254,362) (278,005)

(Increase) decrease in trade and other receivables (1,041,919) 11,355

Increase in amount due from a related party (3,087) (20,459)

Increase (decrease) in trade payables 780,875 (492,203)

Increase in other payables and accrual 315,679 1,111,227

Increase in amounts due to related parties 142,409 139,028

Cash generated from operations 1,335,833 3,755,249

Corporate income taxes paid (130,879) (9,488)

NET CASH FROM OPERATING ACTIVITIES 1,204,954 3,745,761

INVESTING ACTIVITIES

Advance to a director — (7,006)

Placement of pledged bank deposits (54,501) (507,000)

Proceeds from disposal of available-for-sale investments — 256,676

Purchase of property, plant and equipment (196,444) (490,346)

Proceeds from disposal of asset classified as held for sale — 8,558,283

Deposit received on disposal of asset classified as held for sale 90,000 —

Interest received 22 496

NET CASH (USED IN) FROM INVESTING ACTIVITIES (160,923) 7,811,103


– I-8 –


2013 2014

S$ S$

FINANCING ACTIVITIES

Advance from directors 37,509 —

Repayment to directors (6,108) (820,583)

Raised in bills payables 529,880 909,841

Repayment of bills payables (50,998) (529,880)

Obligations under finance leases interest paid (11,549) (23,666)

Repayment of bank loan (192,854) (3,283,657)

Bank loan interest paid (46,983) (48,127)

Repayment of obligations under finance leases (85,661) (80,729)

Trade finance interest paid (8,391) (39,558)

Dividend paid (100,000) (5,371,585)

NET CASH 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 BEGINNING OF

YEAR 1,709,695 2,818,571

CASH AND CASH EQUIVALENTS AT END OF YEAR,

represented by bank balances and cash 2,818,571 5,087,491


– I-9 –

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 –

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 IAS 16 and IAS 41 Agriculture: Bearer Plants5

Amendments to IAS 27 Equity Method in Separate Financial Statements5

Amendments to IFRS 10 and

IAS 28

Sale or Contribution of Assets between an Investor and its

Associate or Joint Venture5

Amendments to IFRS 10,

IFRS 12 and IAS 28

Investment Entities: Applying the Consolidation Exception5

1 Effective for annual periods beginning on or after 1 January 20182 Effective for first annual IFRS financial statements beginning on or after 1 January 20163 Effective for annual periods beginning on or after 1 January 20174 Effective for annual periods beginning on or after 1 July 20145 Effective for annual periods beginning on or after 1 January 20166 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 –

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 –

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 –

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 –

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 –

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 –

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 cash-

generating 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 –

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 –

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 –

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 –

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:

2013 2014

S$ S$

Public 5,220,488 9,561,824

Private 2,606,554 2,288,264

7,827,042 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 –

Major customers

During the Track Record Period, the revenue from customers individually contributed over 10% of

total revenue of the Group are as follows:


2013 2014

S$ S$

Customer A —Note 1,431,554

Customer B —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


Geographical information

The Group principally operates in Singapore, also the place of domicile. All revenue and non-

current 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


2013 2014

S$ S$

Bank interest income 22 496

Government grants (Note) 56,903 78,629

Rental income under operating lease in respect of subleasing of

workshop premises — 113,508

Others 14,273 15,560

71,198 208,193

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 –

8. OTHER GAINS AND LOSSES


2013 2014

S$ S$

Impairment loss on a freehold property upon reclassified as held for

sale (Note 21) (263,571) —

Allowance on doubtful debts (Note 19) — (106,398)

Write-off of property, plant and equipment — (7,848)

Loss on disposal of property, plant and equipment — (5,021)

Fair value gain on available-for-sale investments — 9,394

(263,571) (109,873)

9. FINANCE COSTS


2013 2014

S$ S$

Interests on borrowings wholly repayable within five years:

— Bank loan 46,983 48,127

— Obligations under finance leases 11,549 23,666

— Trade financing 8,391 39,558

66,923 111,351

10. INCOME TAX EXPENSE


2013 2014

S$ S$

Current tax

— Singapore Corporate Income Tax (‘‘CIT’’) 203,938 250,000

Deferred tax (Note 27) — 12,996

203,938 262,996

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 –

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:


2013 2014

S$ S$


Tax at Singapore CIT of 17% 138,621 480,796

Tax effect of expenses not deductible for tax purpose 61,084 15,282

Tax effect of income under tax exemption and rebate (55,925) (55,925)

Tax effect of enhanced allowance (Note) — (179,664)

Others 60,158 2,507

Income tax expense for the year 203,938 262,996

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


2013 2014

S$ S$

Profit for the year has been arrived at after charging:–

Auditor’s remuneration 5,400 70,000

Depreciation of property, plant and equipment 250,347 235,367

Cost of inventories recognised as expenses 3,917,632 5,091,029

Directors’ and chief executive’s remuneration (Note 12) 263,920 287,157

Other staff costs

— salaries and other staff costs 1,640,079 1,811,670

— contributions to CPF 104,745 140,177

Total staff costs 2,008,744 2,239,004

Minimum lease payment under operating lease in respect staff

dormitory, office and working premises — 267,680

Direct attributable expenses in respect of subleasing workshop

premises recognised in other expense — 63,250


– I-24 –

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:

Name Position

Date of joining

Signmechanic

Singapore and

appointment as

director

Date of

resignation

Mr. Tan Thiam Kiat, Kelvin

(Mr. Kelvin Tan)

Chairman and Executive

director

1 December 1997 N/A

Mr. Tan Kwang Hwee, Peter

(Mr. Peter Tan)

Executive director and

Chief Executive Officer

1 December 1997 N/A

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:


Mr. Kelvin

Tan Mr. Peter Tan Total

S$ S$ S$

Fee — — —

Salaries and other benefits 103,200 103,200 206,400

Bonus* 16,600 16,600 33,200

Contributions to CPF 12,160 12,160 24,320

131,960 131,960 263,920


Mr. Kelvin

Tan Mr. Peter Tan Total

S$ S$ S$

Fee — — —

Salaries and other benefits 120,757 127,200 247,957

Bonus* 10,000 10,000 20,000

Contributions to CPF 9,600 9,600 19,200

140,357 146,800 287,157

* 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 –

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:


2013 2014

S$ S$

Salaries and other staff costs 167,388 224,982

Bonus* — 22,850

Contributions to CPF 24,107 20,630

191,495 268,462

* 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:


2013 2014

No. of

employees

No. of

employees

Nil to HK$1,000,000 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 –

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

Freehold

Property Computers

Furniture

and fittings

Air

conditioners

Office

equipment

and

machinery Renovation

Motor

vehicles Total

S$ S$ S$ S$ S$ S$ S$ S$

COST

At 1 January 2013 9,000,000 59,414 4,467 4,160 353,439 102,938 588,592 10,113,010

Additions 111,854 4,190 — 3,600 36,800 — 90,000 246,444

Reclassified as held for sale (9,111,854) — — — — — — (9,111,854)

At 31 December 2013 — 63,604 4,467 7,760 390,239 102,938 678,592 1,247,600

Additions — 102,194 2,372 — 211,243 82,507 267,892 666,208

Eliminated on write-off/

disposals — (36,995) (4,467) (7,760) (290,223) (102,938) (80,600) (522,983)

At 31 December 2014 — 128,803 2,372 — 311,259 82,507 865,884 1,390,825

DEPRECIATION AND

IMPAIRMENT

At 1 January 2013 — (46,639) (2,767) (1,374) (312,080) (35,277) (303,017) (701,154)

Impairment loss recognised

in profit or loss

(Note 21) (263,571) — — — — — — (263,571)

Eliminated on

reclassification as held

for sale 263,571 — — — — — — 263,571

Provided for the year — (13,128) (1,700) (6,386) (46,054) (67,661) (115,418) (250,347)

At 31 December 2013 — (59,767) (4,467) (7,760) (358,134) (102,938) (418,435) (951,501)

Provided for the year — (28,644) (474) — (42,791) (16,501) (146,957) (235,367)

Eliminated on write-off/

disposals — 36,994 4,467 7,760 282,378 102,938 40,879 475,416

At 31 December 2014 — (51,417) (474) — (118,547) (16,501) (524,513) (711,452)

CARRYING AMOUNTS

At 31 December 2013 — 3,837 — — 32,105 — 260,157 296,099

At 31 December 2014 — 77,386 1,898 — 192,712 66,006 341,371 679,373


– I-27 –

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

At 31 December

2013 2014

S$ S$

Listed equity securities in Singapore, at fair value 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

At 31 December

2013 2014

S$ S$

Raw material 60,516 120,456

Work-in-progress 277,140 421,935

Finished goods — 73,270

337,656 615,661


– I-28 –

19. TRADE AND OTHER RECEIVABLES

At 31 December

2013 2014

S$ S$

Trade receivables 1,300,761 1,620,142

Less: allowance for doubtful debts (23,210) (129,608)

1,277,551 1,490,534

Unbilled receivables 603,696 136,335

Retention receivables 213,102 241,017

Purchase advances paid to suppliers 174,873 143,536

Receivables from disposals of freehold property (note) — 200,000

Rental and other deposits 37,540 147,840

Other receivables and prepayments 52,836 82,583

2,359,598 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:

At 31 December

2013 2014

S$ S$

1–30 days 790,139 607,134

31–60 days 201,864 238,622

61–90 days 148,665 57,261

91–180 days 63,921 306,283

181–365 days 72,962 266,187

Over 365 days — 15,047

1,277,551 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 –

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:

At 31 December

2013 2014

S$ S$

Overdue:

31–60 days 201,864 238,622

61–90 days 148,665 57,261

91–180 days 63,921 312,283

181 days to 365 days 72,962 266,187

Over 365 days — 9,047

487,412 883,400

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 31 December

2013 2014

S$ S$

At beginning of the year 23,210 23,210

Allowance on doubtful debts recognised in profit or loss (Note) — 106,398

At end of the year 23,210 129,608

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 –

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:

31 December

2013

S$

Asset classified as held for sale:

Property, plant and equipment 8,848,283

Liability classified as held for sale:

Property loan 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 –

The table below summarises the repayment of property loan based on the agreed scheduled repayments set

out in the loan agreement:

At

31 December

2013

S$

Carrying amount repayable

— within one year 180,852

— more than one year but not more than two years 180,852

— more than two years but not more than five years 542,556

— more than five years 2,379,397

3,283,657

22. TRADE PAYABLES/BILLS PAYABLES

At 31 December

2013 2014

S$ S$

Trade payables 1,181,859 689,656

Bills payables 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:

At 31 December

2013 2014

S$ S$

0–30 days 570,153 148,912

31–90 days 554,049 260,016

Over 90 days 57,657 280,728

1,181,859 689,656

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 –

23. OTHER PAYABLES AND ACCRUALS

At 31 December

2013 2014

S$ S$

Advance billings to customers 539,677 589,458

Retention payable to suppliers 4,380 33,370

Goods and services tax payable 16,374 751,710

Accrued operating expenses 66,999 356,396

Deposit received in respect of disposal of freehold property (Note 21) 90,000 —

Accrued staff bonus/commission 21,577 38,899

Payable for acquisition of property, plant and equipment — 25,064

Other payables 18,428 8,829

757,435 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.

Minimum lease payments

Present value of minimum lease

payments

As at 31 December As at 31 December

2013 2014 2013 2014

S$ S$ S$ S$

Amounts payable under

finance leases:

Within one year 87,848 101,901 76,019 91,825

In more than one year but not

more than two years 77,376 68,280 65,221 62,038

In more than two years but not

more than five years 84,858 97,601 70,384 93,132

250,082 267,782 211,624 246,995

Less: future finance charges (38,458) (20,787) — —

Present value of lease obligations 211,624 246,995

Less: Amount due for

settlement within 12 months

(shown under current liabilities) (76,019) (91,825)

Amount due for settlement

after 12 months 135,605 155,170


– I-33 –

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.

31–90 days

91–180

days

180 days

to 365 days

Over

365 days Total

S$ S$ S$ S$ S$

Amount due from a related party:

At 31 December 2013

C.K. Toh Construction Pte. Ltd.

(‘‘C.K. Toh Construction’’) — 2,926 21,475 — 24,401

At 31 December 2014

C.K. Toh Construction 7,716 631 12,112 24,401 44,860

1–30 days 31–90 days

91–180

days Total

S$ S$ S$ S$

Amounts due to related parties:

At 31 December 2013

C.K. Toh Construction (46,880) (78,126) (63,934) (188,940)

Signmechanic Sdn Bhd — — (11,611) (11,611)

T3 Holdings Pte. Ltd. (‘‘T3 Holdings’’) (8,614) — — (8,614)

(55,494) (78,126) (75,545) (209,165)

At 31 December 2014

C.K. Toh Construction (9,823) (25,681) (304,417) (339,921)

Signmechanic Sdn Bhd — — (6,811) (6,811)

T3 Holdings — (1,461) — (1,461)

(9,823) (27,142) (311,228) (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.


– I-34 –

27. DEFERRED TAX ASSETS

The following are the major deferred tax assets recognised and movements thereon during the Track

Record Period:

Accelerated

Depreciation

S$

At 1 January 2013 and 31 December 2013 12,996

Charged to profit or loss (12,996)

At 31 December 2014 —

28. SHARE CAPITAL

The share capital as at 1 January 2013, 31 December 2013 and 2014 represented the share capital of

Signmechanic Singapore.

Number of

shares Share capital

S$

Ordinary shares 500,000 500,000

Issued and fully paid:

At 1 January 2013, 31 December 2013 and 31 December 2014 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.


– I-35 –

30. FINANCIAL INSTRUMENTS

a. Categories of financial instruments

At 31 December

2013 2014

S$ S$

Financial assets

Loans and receivables (including cash and cash equivalents) 5,092,978 7,987,283

Available-for-sale investments 269,505 20

5,362,483 7,987,303

Financial liabilities

Amortised cost 2,854,870 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 interest-

rate 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.


– I-36 –

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


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.

Effective

interest rate

On demand

or within

3 months 3–6 months 6–12 months 1–5 years

Total

undiscounted

cash flows

Carrying

amount

S$ S$ S$ S$ S$ S$

At 31 December 2013

Non-interest bearing instruments

Trade and other payables 1,293,243 — — — 1,293,243 1,293,243

Amounts due to related parties 209,165 — — — 209,165 209,165

Amounts due to directors 822,582 — — — 822,582 822,582

Interest bearing instruments

Bills payables 5.75% 569,402 — — — 569,402 529,880

Obligations under finance leases 3.8–7.14% 21,962 21,962 43,924 162,234 250,082 211,624

2,916,354 21,962 43,924 162,234 3,144,474 3,066,494

At 31 December 2014

Non-interest bearing instruments

Trade and other payables 1,152,214 — — — 1,152,214 1,152,214

Amounts due to related parties 348,193 — — — 348,193 348,193

Amounts due to directors 1,999 — — — 1,999 1,999

Interest bearing instruments

Bills payables 5.75% 943,246 — — — 943,246 909,841

Obligations under finance leases 3.8–10.8% 25,475 25,475 50,951 165,881 267,782 246,995

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 –

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.

Financial assets

Fair value as at Fair value

hierarchy

Valuation

technique and key

inputs31 December 2013 31 December 2014

Available-for-sale investments Listed equity

securities in

Singapore:

S$269,505

Listed equity

securities in

Singapore:

S$20

Level 1 Quoted bid prices

in an active

market

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 –

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:

At 31 December

2013 2014

S$ S$

Within one year — 406,560

In the second to fifth year inclusive — 392,000

— 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:

At 31 December

2013 2014

S$ S$

Within one year — 60,000

In the second to fifth year inclusive — 71,667

— 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 Years ended 31 December

2013 2014

S$ S$

C.K. Toh Construction Sub-contracting of installation

work and supply of labour from

related party

182,295 177,012

Sales to related parties 41,955 19,120

T3 Holdings Rental expense of crane from

related party

108,984 31,348

Signmechanic Sdn Bhd Purchases of signages and sub-

contracting of installation work

from related party

74,130 70,039

Fusion Displays Purchase of machineries — 39,600


– I-39 –

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:

At 31 December

2013 2014

S$ S$

Amount due from a related party

— C.K. Toh Construction 24,401 44,860

Amounts due to related parties

— C.K. Toh Construction 188,940 339,921

— Signmechanic Sdn Bhd 11,611 6,811

— T3 Holdings 8,614 1,461

209,165 348,193

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:


2013 2014

S$ S$

Short-term benefits 309,600 334,007

Post-employment benefits 35,520 29,720

345,120 363,727

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 –

33. CONTINGENT LIABILITIES

As at 31 December 2013 and 2014, the Group has following contingent liabilities:

At 31 December

2013 2014

S$ S$

Guarantee provided in respect of performance bonds in favor

of customers 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.


– I-41 –

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 –

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

the Group as at

31 December

2014

Estimated net

proceeds from the

Placing Shares

Unaudited pro

forma adjusted

net tangible assets

of the Group

Unaudited pro forma

adjusted net tangible assets

of the Group per share

S$ S$ S$ S cents

(Equivalent to

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

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

– II-1 –

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 –

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.

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 –

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 –

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 –

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.


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

APPENDIX III SUMMARY OF THE CONSTITUTION OF OURCOMPANY AND CAYMAN ISLANDS COMPANY LAW

– III-1 –

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 –

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.


– III-3 –

(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;


– III-4 –

(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


– III-5 –

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


– III-6 –

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;


– III-7 –

(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


– III-8 –

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.


– III-9 –

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.


– III-10 –

(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.


– III-11 –

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),


– III-12 –

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


– III-13 –

(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.


– III-14 –

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.


– III-15 –

(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.


– III-16 –

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


– III-17 –

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


– III-18 –

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.


– III-19 –

(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.


– III-20 –

(u) Untraceable members

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.

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.


– III-21 –

(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.


– III-22 –

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


– III-23 –

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.


– III-24 –

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 one-

fifth 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.


– III-25 –

(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.


– III-26 –

(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.


– III-27 –

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


– III-28 –

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.


– III-29 –

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.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

– IV-1 –

(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.

3. 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;


– IV-2 –

(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.


– IV-3 –

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


– IV-4 –

(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.


– IV-5 –

(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.


– IV-6 –

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


– IV-7 –

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.

2. 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:

Trademark Class

Place of

application

Application/

Registration

number Applicant Application date

37 Singapore 40201504904X Signmechanic

Singapore

24 March 2015

37 Hong Kong 303345930 Signmechanic

Singapore

25 March 2015

16 Hong Kong 303350600 Signmechanic

Singapore

27 March 2015

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


– IV-8 –

C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL

SHAREHOLDERS

1. 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:

Name

Long/Short

position

Capacity and nature of

interests

Number of

Shares

Percentage of

shareholding in

our Company

Mr. Kelvin Tan Long Interest of a controlled

corporation

300,000,000

(Note 1)

75%

Mr. Peter Tan Long Interest of a controlled

corporation

300,000,000

(Note 2)

75%

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


– IV-9 –

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 Non-

Executive 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.


– IV-10 –

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:

Name

Capacity and

nature of interests

Number of

Shares held

Percentage of

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.


– IV-11 –

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.


– IV-12 –

Under the Deed of Indemnity, the Indemnifiers have also given indemnities infavour of our Group whereby they would jointly and severally indemnify each memberof our Group against, among others, all claims, actions, demands, proceedings,judgments, losses, liabilities, damages, costs, charges, fees, expenses and fines ofwhatever nature suffered or incurred by any member of our Group (i) as a result ofdirectly or indirectly or in connection with, or in consequence of any non-compliancewith or breach of any applicable laws, rules or regulations of any jurisdiction by anymember of our Group on or before the Listing Date; (ii) as a result of directly orindirectly or in connection with any litigation, proceeding, claim, investigation,inquiry, enforcement proceeding or process by any governmental, administrative orregulatory body which (a) any member of our Group and/or their respective directorsor any of them is/are involved; and/or (b) arises due to some act or omission of, ortransaction voluntarily effected by, our Group or any member of our Group (whetheralone or in conjunction with some other act, omission or transaction) on or before theListing Date.

The indemnity contained above shall not apply to the extent that provision hasbeen made for such claim in the audited accounts of our Group or the audited accountsof any member of our Group for each of the two financial years ended 31 December2013 and 31 December 2014.

Our Directors have been advised that no material liability for estate duty is likelyto fall on any member of our Group in the Cayman Islands, Hong Kong and otherjurisdictions in which the companies comprising our Group are incorporated.

2. Litigation

Save as disclosed in the section headed ‘‘Business — Legal proceedings’’ in thisprospectus, no member of our Group is engaged in any litigation or arbitration ofmaterial importance and no litigation or claim of material importance is known to ourDirectors to be pending or threatened by or against any member of our Group whichwould have a material adverse effect on our business, result of operations or financialconditions.

3. Sole Sponsor

Grand Vinco Capital Limited has made an application on behalf of our Companyto the Stock Exchange for listing of, and permission to deal in, the Shares in issue andShares to be issued as mentioned herein.

The Sole Sponsor is independent from our Company pursuant to Rule 6A.07 ofthe GEM Listing Rules.

The sponsor’s fees payable by us in respect of Vinco Capital’s services as solesponsor 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 incurredare approximately US$6,000 and are payable by our Company.


– IV-13 –

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


– IV-14 –

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.


– IV-15 –

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


– IV-16 –

(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.


– IV-17 –

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.

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAROF COMPANIES AND AVAILABLE FOR INSPECTION

– V-1 –

KPM HOLDING LIMITED 以 配 售 方 式 LISTING BY …360storage.hkej.com/ipo/08027.pdfOur Company,...

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