PLACING JETE POWER HOLDINGS LIMITED COLORS SECURITIES LIMITED. Sole Sponsor. Kingsway Capital Limited. Sole Global Coordinator and Joint Lead Manager

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1 JETE POWER HOLDINGS LIMITED (incorporated in the Cayman Islands with limited liability) Stock Code: 8133 PLACING Sole Sponsor Kingsway Capital Limited Sole Global Coordinator and Joint Lead Manager Joint Lead Manager COLORS SECURITIES LIMITED Kingsway Financial Services Group Limited Financial Adviser * For identification purpose only Avista Capital Limited

2 IMPORTANT If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice. JETE POWER HOLDINGS LIMITED * (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 : 250,000,000 Shares comprising 150,000,000 New Shares and 100,000,000 Sale Shares Placing Price : HK$0.20 per Placing Share (payable in full upon application in Hong Kong dollars, plus brokerage of 1%, SFC transaction levy of % and Stock Exchange trading fee of 0.005%) Nominal value : HK$0.01 per Share Stock code : 8133 Sole Sponsor Kingsway Capital Limited Sole Global Coordinator and Joint Lead Manager Joint Lead Manager COLORS SECURITIES LIMITED Kingsway Financial Services Group Limited Financial Adviser Avista Capital Limited Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this prospectus. A copy of this prospectus, having attached thereto the documents specified in the paragraph headed Documents delivered to the Registrar of Companies in Hong Kong in Appendix V to this prospectus, has been registered by the Registrar of Companies in Hong Kong as required under Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this prospectus or any other documents referred to above. Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this prospectus, including the risk factors set out in the section headed Risk Factors in this prospectus. Prospective investors of the Placing Shares should note that the Underwriters are entitled to terminate their obligations under the Underwriting Agreement by notice in writing to be given by the Sole Sponsor or the Joint Lead Managers (for themselves and on behalf of the Underwriters) upon the occurrence of any of the events set forth in the paragraph headed Grounds for termination under the section headed Underwriting in this prospectus at any time prior to 8:00 a.m. (Hong Kong time) on the Listing Date. It is important that you refer to that section for further details. * For identification purpose only 23 April 2015

3 CHARACTERISTICS OF 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 high 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 website of the Stock Exchange at in order to obtain up-to-date information on GEM-listed issuers. i

4 EXPECTED TIMETABLE A separate announcement will be issued if there is any change to the following expected timetable. (Note 1) Announcement of the indication of the level of interests in the Placing to be published on our Company s website ( and the Stock Exchange s website ( on or before...29april 2015 Allotment of Placing Shares to placees on or about...29april 2015 Deposit of Share certificates into CCASS on or about (Notes 2 and 3)...29April 2015 Dealings in the Shares on GEM to commence at 9:00 a.m. on...30april 2015 Notes: 1. In this prospectus, unless otherwise stated, all times and dates refer to Hong Kong local times and dates. 2. Share certificates for the Placing Shares to be distributed via CCASS are expected to be deposited into CCASS on 29 April 2015 for credit to the respective CCASS Participant s 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. Share certificates will only become valid certificates of title at 8:00 a.m. (Hong Kong time) on the Listing Date (such date is currently expected to be 30 April 2015) provided that (i) the Placing becomes unconditional in all respects and (ii) the right of termination as described in the section headed Underwriting Grounds for termination below has not been exercised thereto and has lapsed. 4. No dealing in the Placing Shares should take place prior to the Listing Date. Investors who trade the Placing Shares on the basis of publicly available allocation details prior to the receipt of the share certificates or prior to the Share Certificates becoming valid certificates of title do so entirely at their own risk. Particulars of the structure of the Placing, including the conditions thereto, are set out under the section headed Structure and Conditions of the Placing in this prospectus. Pursuant to the grounds for termination contained in the Underwriting Agreement, the Sole Sponsor or the Joint Lead Managers (for themselves and on behalf of the Underwriters) have the right in certain circumstances, subject to their sole and absolute opinion (for themselves and on behalf of the Underwriters), to terminate the obligations of the Underwriters under the Underwriting Agreement at any time prior to 8:00 a.m. (Hong Kong time) on the Listing Date (which is currently expected to be 30 April 2015). Further details of the grounds for termination are set out in the section headed Underwriting in this prospectus. ii

5 CONTENTS IMPORTANT NOTICE TO INVESTORS This prospectus is issued by our Company solely in connection with the Placing and does not constitute an offer to sell or a solicitation of an offer to buy any security other than the Placing Shares offered by this prospectus pursuant to the Placing. This prospectus may not be used for the purpose of, and does not constitute, an offer or invitation in any other jurisdiction or in any other circumstances. You should rely on the information contained in this prospectus to make your investment decision. Our Company, Pure Goal, the Sole Sponsor, the Sole Global Coordinator, 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 in this prospectus must not be relied on by you as having been authorised by our Company, Pure Goal, the Sole Sponsor, the Sole Global Coordinator, the Joint Lead Managers, the Underwriters, any of their respective directors, officers, employees, agents, affiliates or representatives of any of them or any other person or parties involved in the Placing. Page CHARACTERISTICS OF GEM... i EXPECTED TIMETABLE... ii CONTENTS... iii SUMMARY... 1 DEFINITIONS GLOSSARY OF TECHNICAL TERMS FORWARD-LOOKING STATEMENTS RISK FACTORS INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING DIRECTORS AND PARTIES INVOLVED IN THE PLACING CORPORATE INFORMATION INDUSTRY OVERVIEW REGULATORY OVERVIEW HISTORY, REORGANISATION AND GROUP STRUCTURE iii

6 CONTENTS Page BUSINESS CONNECTED TRANSACTION CONTROLLING, SUBSTANTIAL AND SIGNIFICANT SHAREHOLDERS DIRECTORS, SENIOR MANAGEMENT AND STAFF SHARE CAPITAL SOLE SPONSOR S INTERESTS FINANCIAL INFORMATION FUTURE PLANS AND USE OF PROCEEDS UNDERWRITING STRUCTURE AND CONDITIONS OF THE PLACING APPENDIX I ACCOUNTANTS REPORT... I-1 APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION. II-1 APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANY LAW. III-1 APPENDIX IV STATUTORY AND GENERAL INFORMATION... IV-1 APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION... V-1 iv

7 SUMMARY 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 in investing in the Placing Shares are set out in the section headed Risk Factors in this prospectus. 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 section headed Definitions in this prospectus. BUSINESS OVERVIEW We are a manufacturer of metal casting parts and components in the PRC. Our products can be categorised into four main categories: (a) pump components; (b) valve components; (c) filter components; and (d) food machinery components, which are made of stainless steel, carbon steel, bronze and/or grey iron. Our customers generally are the suppliers of flow control devices, electromechanical equipment, and industrial machinery and equipment. Our products are the parts and components of our customers products. Our largest market is Germany, which accounts for approximately 77.4% and 70.6% of our total revenue for the two years ended 31 December 2014 respectively. We also have customers from the PRC, Hong Kong and the USA. Our products can also be classified as ferrous and non-ferrous products based on whether ferrous or non-ferrous metals are used. Ferrous and non-ferrous metals have different properties and thus are used in applications where their respective properties can be utilised. We do not have a strategic focus on ferrous products or non-ferrous products. Our major raw materials include (a) ferrous metals, namely, scrap stainless steel, iron and scrap carbon steel; (b) non-ferrous metals, namely, copper; and (c) various ferrous and/or non-ferrous metals and alloys such as tin, nickel and ferro niobium. For the two years ended 31 December 2014, the purchase cost of raw materials used for production of metal casting parts and components constituted our largest cost, which together accounted for approximately 47.3% and 58.4% of our total cost of sales, respectively. Among the purchase cost of raw materials, approximately 65.2% and 57.1% were the aggregate cost of scrap stainless steel, iron and scrap carbon steel, and approximately 33.6% and 15.0% were the cost of copper, respectively, during the same periods. Other auxiliary raw materials include resin, wax, polystyrene and sand. We source these materials principally from local suppliers in the PRC. 1

8 SUMMARY As at the Latest Practicable Date, we adopted two casting methods, namely precision casting and sand casting. For the two years ended 31 December 2014, our products from precision casting contributed to 95.2% and 95.7% of our revenue, respectively. During the Track Record Period, our production facilities comprise two foundries which are all located in Guangdong province in the PRC. Our first operating foundry is located at Danshui Town, Huiyang District, Huizhou City (the Danshui Foundry ) with a maximum precision casting production capacity at 50 tonnes per month. We commenced the operation of our second foundry in November Our second foundry is located at Qiuchang Town, Huiyang District, Huizhou City, which is around 5 k.m. from the Danshui Foundry (the Qiuchang Foundry ). We completed the migration of our precision casting line from the Danshui Foundry to the Qiuchang Foundry in mid-october Since then, the Danshui Foundry ceased to operate as a production base and became our centre for research, design and development. As at the Latest Practicable Date, the maximum production capacity of the Qiuchang Foundry reached up to 100 tonnes per month for precision casting. We will also operate a formal production line for sand casting in the Qiuchang Foundry after Listing, the maximum sand casting production capacity of which may reach up to 50 tonnes per month. For details of our production capacity expansion plan, please refer to the paragraph headed Business Operating Procedures Production capacity expansion plan on pages 110 to 111 of this prospectus. In recognition of our quality control system, we have obtained two international certifications: (i) the certification from TÜV Rheinland for the European Directive 97/23/EC for Pressure Equipment & AD 2000-Merkblatt W0/TRD100; and (ii) the recognition from Bureau Veritas for BV Mode II Survey Scheme. For the two years ended 31 December 2014, our total revenue was approximately HK$53.1 million and HK$61.2 million respectively. Excluding the Listing expenses of approximately HK$2.9 million in 2013 which was not expenses in our ordinary and usual course of business, we would record a net profit attributable to owners of our Company of approximately HK$10.7 million and a net profit margin of approximately 20.1% respectively. Our profit for the year ended 31 December 2013 was approximately HK$7.8 million. We incurred net loss of approximately HK$1.8 million for the year ended 31 December 2014 which was mainly attributable to (i) the expenses incurred for the Listing; (ii) increase in cost of raw materials; and (iii) the increase in staff cost as we increased our number of staff to cater for our expansion of operation. Our Qiuchang Foundry commenced operation in November New production staff were employed to cater for the production need in our Qiuchang Foundry. As new staff were less skillful, more raw materials and production time were generally required to produce the same amount of products in 2014 than that in As a result, raw materials consumed in production and direct labour cost increased by approximately HK$9.0 million and approximately HK$0.4 million respectively in 2014 compared to Excluding the Listing expenses of approximately HK$8.2 million which was not expenses in our ordinary and usual course of business, we would record a net profit attributable to owners of our Company of approximately HK$6.4 million and a net profit margin of approximately 10.5% respectively in

9 SUMMARY For the two years ended 31 December 2014, the operating cash flows before movements in working capital and taxes paid were approximately HK$11.5 million and HK$1.7 million respectively. After adjustment for expenses incurred by our Company for the Listing of approximately HK$2.9 million and HK$8.2 million for the years ended 31 December 2013 and 2014, representing HK$11.1 million in aggregate in 2013 and 2014 which were not expenses incurred in the ordinary and usual course of business, the operating cash flows of our Company for the years ended 31 December 2013 and 2014 amounted to approximately HK$14.4 million and HK$9.9 million, respectively, representing HK$24.3 million in aggregate for the two years ended 31 December Hence, we are able to satisfy the operating cash flow requirement under the GEM Listing Rule 11.12A(1). BUSINESS MODEL Our business model is competitive. We are able to manufacture high quality tailor-made metal casting parts and components in customised quantities at reasonable price in order to meet our customers needs in multiple aspects. After getting familiar with and confirming our customers requests, we will provide them with a fee quote and a proposed delivery date. In general, our product price comprises two parts: (i) a basic charge which generally depends on the complexity of the design of the component, costs of materials, weight and dimension of the components; and (ii) a surcharge which generally depends on the fluctuation of the costs of certain metals and/or fluctuation of the exchange rate of Euro vs RMB, or Euro vs USD (because most of our sales were settled in Euro). In most scenarios, our customers order more than one type of products so our fee quote is usually in a form of price list. Upon acceptance of our fee quote, we may request our new customers to pay 30% of the total purchase price as prepayment with the balance to be settled after delivery of our products. We generally deliver our products within around 3 to 4 months from the date of confirmation of the order. Most of our products are delivered to our customers by sea. FOB (free on board) and CIF (cost, insurance and freight) are the two most common modes of delivery chosen by our customers. Our customers generally inspect our products upon receipt. If our products are not up to the prescribed standard, we will arrange for refund, and we will bear all the extra costs incurred including the delivery costs. Our contracts with our customers do not provide any product warranty to our customers. We generally grant our customers an average credit period of 30 to 60 days for settling our invoices. We have consignment arrangement with one of our top five customers for the two years ended 31 December 2014 who has business relationship with us for over 9 years. For details of this consignment arrangement, please refer to the paragraph headed Business Our Customers Consignment arrangement on pages 99 to 100 of this prospectus. We generally source our raw materials from suppliers in the PRC. Since most of our suppliers have distribution points in Guangdong province, they generally deliver the raw materials to us within 7 days from the date of order. The price of the casting metals is determined with reference to the price quoted in the website namely Chang Jiang You Se Jin Shu Wang ( Our suppliers generally grant us an 3

10 SUMMARY average credit period of 30 to 90 days after we receive their invoices and inspect the goods provided by them. In most scenarios, we settle our suppliers invoices by telegraphic transfers in RMB. OUR COMPETITIVE STRENGTHS Our Directors believe that our Group possesses the following competitive advantages: we provide high quality tailor-made products; we have long-term relationships with our top five customers; we secure stable sourcing of quality raw materials; we possess an established production capacity; and we have an experienced and dedicated management team. OUR BUSINESS STRATEGIES We intend to implement the following strategies to capitalise on our strengths so as to enhance our business prospects and profitability: to increase our production capacity of the Qiuchang Foundry by acquiring equipment and increasing number of staff for manufacturing, and research, design and development; to increase our marketing effort to attract new customers by carrying out marketing activities such as joining the ACHEMA exhibition in 2015; and to continue to maintain our strong customer relationship with our long-term customers and procure more orders from them and also explore new business opportunities via these customers. FUTURE PLANS AND USE OF PROCEEDS Based on commercial negotiation between our Group and Pure Goal, the total amount of listing expenses in connection with the Placing will be solely borne by our Group while the underwriting fees for the New Shares and the Sale Shares will be borne by our Group and Pure Goal respectively on a pro-rata basis. On the basis that the Placing Price is HK$0.20 per Placing Share, the net proceeds from the Placing of the New Shares, after deducting the underwriting fees, the Stock Exchange trading fee and SFC transaction levy for the New Shares and estimated listing expenses in relation to the Placing and the 4

11 SUMMARY Listing (including the GEM Listing fees, legal and other professional fees, and printing fees) payable by us, are estimated to amount to approximately HK$8.6 million. Our Group intends to apply such net proceeds from the Placing as follows: Use Approximate percentage or amount of net proceeds to be applied Acquisition of new production machines and Approximately 84.7% equipment or HK$7.3 million Attendance of the ACHEMA exhibition in Frankfurt, Approximately 4.6% or Germany HK$0.4 million Organisation of client relationship events in Europe and Approximately 3.5% or the USA HK$0.3 million Working capital and other general corporate purposes Approximately 7.2% or HK$0.6 million We estimate the net proceeds to Pure Goal from the Sale Shares will be approximately HK$19.5 million (to be received upon Listing), after deducting the underwriting fees, the Stock Exchange trading fee and SFC transaction levy for the Sale Shares. Our Company will not receive any proceeds from the Sale Shares in the Placing. For further details on our future plans and use of proceeds, please refer to the section headed Future Plans and Use of Proceeds on page 217 of this prospectus. SELECTED KEY OPERATIONAL AND FINANCIAL DATA The tables below present summary of financial information for the periods indicated and should be read in conjunction with our financial information in Appendix I of this prospectus. Highlight of statements of profit or loss and other comprehensive income Year ended 31 December HK$ 000 HK$ 000 Revenue 53,114 61,194 Cost of sales (32,392) (41,552) Gross profit 20,722 19,642 Profit (loss) for the year 7,809 (1,811) Total comprehensive income (expense) for the year 8,583 (2,528) Gross profit margin 39.0% 32.1% Net profit margin 14.7% N/A 5

12 SUMMARY Highlight of combined statements of financial position As at 31 December HK$ 000 HK$ 000 Non-current assets 13,306 15,139 Current assets 57,679 35,307 Current liabilities 48,957 17,943 Net current assets 8,722 17,364 Non-current liabilities Net assets 21,682 32,250 Breakdown of our revenue by products Year ended 31 December HK$ 000 % HK$ 000 % Pump components 25, , Filter components 13, , Valve components 6, , Food machinery components 5, , Other (Note 1) 2, , Total 53, , Note: 1. It includes mining equipment components, lighting equipment components and sports equipment components. For the year ended 31 December 2014, our revenue was approximately HK$61.2 million, representing an increase of approximately HK$8.1 million or 15.2% from approximately HK$53.1 million for the year ended 31 December Our Qiuchang Foundry commenced operation in November The increase in our production capacity allowed us to handle more orders from our customers. In particular, our revenue from valve components and pump components increased by approximately HK$4.7 million and HK$1.3 million respectively in 2014 compared to

13 SUMMARY Gross profit and gross profit margin Set out below is a breakdown of our gross profit and gross profit margin by products during the Track Record Period: Year ended 31 December Gross profit HK$ 000 % HK$ 000 % Pump components 10, , Filter components 4, , Valve components 1, , Food machinery components 2, , Others 1, Total 20, , Year ended 31 December Gross profit HK$ 000 % HK$ 000 % Precision casting 19, , Sand casting , Total 20, , Our gross profit was approximately HK$20.7 million and HK$19.6 million respectively, resulting in gross profit margin of approximately 39.0% and 32.1% respectively for the two years ended 31 December The decrease in gross profit margin to 2014 from 2013 was mainly due to the increase in raw materials consumed and direct labour cost, resulting from the commencement of operation of our Qiuchang Foundry in November In addition, production of large components, in particular, pump and food processing components, which were previously carried out in our Danshui Foundry was carried out in our Qiuchang Foundry since its commencement of operation in general. New production staff were employed to cater for the production need in our Qiuchang Foundry. As new staff were less skillful, more raw materials and production time were generally required to produce the same amount of products in 2014 than that in 2013, leading to decrease in overall gross profit margin. Set out below is a summary of the key financial ratios of our Group during the Track Record Period: As at 31 December Current ratio Gearing ratio 32.8% 21.1% Inventory turnover days days days 7

14 SUMMARY Our gearing ratio was approximately 32.8% and 21.1% as at 31 December 2013 and Such improvement was mainly due to the receipt of approximately HK$27.6 million under the Pre-IPO Investment, which was partly offset by dividends paid of approximately HK$14.5 million during the year. Our inventory turnover days decreased from approximately days as at 31 December 2013 to approximately days as at 31 December 2014 because, compared to the end of 2014, more goods were pending delivery or in transit and kept at customer as consignment stock by the end of RECENT DEVELOPMENT As estimated by our Directors, our revenue and sales volume for the three months ended 31 March 2015 decreased by approximately 21% and 18% respectively, subject to audit, compared to the same period in Such decrease was mainly due to (i) more orders by the end of 2013, compared to the end of 2014, were delivered and billed in early 2014; (ii) our Chinese New Year s holiday was extended from 13 days in 2014 to 24 days in 2015 and hence the factory output in February 2015 was lower than February In addition, some orders which were originally scheduled to be delivered by the end of March 2015 were delivered and billed in early April 2015 instead. Hence, we expect a decline in our first quarter results in 2015 from the first quarter in Our confirmed outstanding orders for precision and sand casting products reached approximately tonnes in aggregate as at 31 March 2015 which, as considered by our Directors, is comparable to the corresponding amount in Those orders have been scheduled for production and are expected to be delivered by July We mainly sell our products to customers in Germany, Hong Kong, the PRC and the United States. We are exposed to foreign currency risks. From around 31 December 2014 to around 31 March 2015, the exchange rate of Euro against RMB decreased from around EUR1 to RMB7.51 to around EUR1 to RMB6.72. We generally have a surcharge mechanism with our customers to protect our future profitability against the (i) fluctuation of the cost of certain raw materials; and (ii) fluctuation of the exchange rate of Euro vs RMB, or Euro vs USD, if the purchase price is to be settled by Euro. It is our strategy to broaden our customer base by carrying out marketing activities such as participation in industry exhibitions. In 2014, we participated in exhibitions held in Germany and South Africa. Since 31 December 2014 and up to the Latest Practicable Date, we obtained some new customers and received orders from them. In 2015, we plan to join the ACHEMA exhibition which is the world forum for chemical engineering and process industry to be held in Frankfurt, Germany. Our Directors confirm that, save as mentioned above, since 31 December 2014 and up to the date of this prospectus, there has been no material adverse change in our financial position or prospects and no event has occurred that would materially affect the information shown in the accountants report set out in Appendix I to this prospectus. LISTING EXPENSES The Underwriters are expected to receive a commission of 2.5% of the aggregate Placing Price of all Placing Shares, which is payable by our Company and the Selling Shareholder on a pro rata basis. The total amount of listing expenses, including 8

15 SUMMARY commissions together with SFC transaction levy and the Stock Exchange trading fee and other listing expenses, that will be borne by us in connection with the Placing is estimated to be approximately HK$21.4 million, of which approximately HK$4.5 million is expected to be capitalised. The remaining estimated listing expenses amounted to approximately HK$16.9 million, including (i) approximately HK$0.2 million, approximately HK$2.9 million and approximately and HK$8.2 million were recognised for the years ended 31 December 2012, 2013 and 2014 respectively; and (ii) approximately HK$5.6 million is expected to be charged to the combined statements of profit or loss of our Group for the year ending 31 December The estimated listing expenses of our Group are subject to adjustments based on the actual amount of expenses incurred/to be incurred by our Group upon the completion of the Listing. Our Group s financial performance and results of operations for the year ending 31 December 2015 is expected to be significantly and adversely affected by the Listing expenses to be charged to the combined statements of profit or loss of our Group in STATISTICS OF THE PLACING The Placing comprises 150,000,000 New Shares conditionally offered for subscription by our Company and 100,000,000 Sale Shares conditionally offered for purchase by Pure Goal. Our Company and Pure Goal are together offering 250,000,000 Placing Shares (comprising 150,000,000 New Shares and 100,000,000 Sale Shares) for subscription and/or purchase by way of private placements to selected professional, institutional and/or other investors. Based on Placing Price of HK$0.20 per Placing Share (Note 1) HK$140 Market capitalisation of the Shares Unaudited pro forma adjusted combined net tangible assets of our Group attributable to owners of our Company per (Note 2) Share as at 31 December 2014 HK$0.07 million Notes: 1. The calculation of the market capitalisation of our Shares is based on an issued capital of 700,000,000 Shares, being the number of the Shares in issue immediately following the completion of the Placing and the Capitalisation Issue but not taking into account of any Shares which may be allotted and issued pursuant to the exercise of any options that may be granted under the Share Option Scheme. 2. The unaudited pro forma adjusted combined net tangible assets of our Group attributable to owners of our Company per Share is calculated based on 700,000,000 Shares in issue immediately following the completion of the Placing and the Capitalisation Issue but takes no account of any Shares which may be issued pursuant to be exercise of the options that may be granted under the Share Option Scheme as described in the paragraph headed D. Share Option Scheme in Appendix IV to this prospectus. 3. No adjustment has been made to the unaudited pro forma adjusted combined net tangible assets of our Group attributable to owners of our Company to reflect any trading results or other transactions of our Group entered into subsequent to 31 December

16 SUMMARY PRE-IPO INVESTMENT On 2 January 2014, Well Gainer (a company wholly owned by Mr. Chung) and XETron Group entered into a share subscription agreement in relation to Well Gainer s investment in XETron Group, pursuant to which Well Gainer subscribed for a total of 2,337 new shares in XETron Group, credited as fully paid, for a total consideration of HK$21,500,000. On 2 January 2014, Bravo Luck (a company wholly owned by Mr. Choi) and XETron Group entered into a share subscription agreement in relation to Bravo Luck s investment in XETron Group, pursuant to which Bravo Luck subscribed for a total of 663 new shares in XETron Group, credited as fully paid, for a total consideration of HK$6,096,000. The subscription of shares by Well Gainer and Bravo Luck in XETron Group were properly and legally completed and settled. As part of the Reorganisation, on 10 April 2015, Well Gainer and Bravo Luck transferred 2,337 shares and 663 shares of XETron Group, respectively to our Company in consideration of and in exchange for the allotment and issue of 2,337 Shares to Well Gainer and 663 Shares to Bravo Luck, credited as fully paid, respectively. Well Gainer and Bravo Luck are not entitled to any special rights or privileges in connection with their investments in XETron Group. The Shares held by Well Gainer and Bravo Luck are not subject to any lock-up after the Listing Date and are not considered as part of the public float for the purpose of Rule of the GEM Listing Rules. For details of the Pre-IPO Investment, please refer to the paragraph headed History, Reorganisation and Group Structure Pre-IPO Investment on pages 78 to 80 of this prospectus. OUR SHAREHOLDERS So far as our Directors are aware, immediately following completion of the Capitalisation Issue and the Placing (but not taking into account of any Shares which may be issued pursuant to the exercise any options that may be granted under the Share Option Scheme), our Company will be owned as to approximately 40.7% by Mr. Wong, our chief executive officer, executive Director and Controlling Shareholder, approximately 18.4% by Mr. Chung, our Substantial Shareholder, and approximately 5.2% by Mr. Choi, our chairman, executive Director and Significant Shareholder, respectively. DIVIDENDS Other than a final dividend in respect of the year ended 31 December 2013 of HK$6,000,000 and an interim dividend in respect of the six months ended 30 June 2014 of HK$8,500,000 have been declared by XETron Group on 18 March 2014 and 30 November 2014 respectively and have been fully paid to its then shareholder as at 31 December 2013 and 30 June 2014 during the year ended 31 December 2014, no dividend has been paid or declared by the companies now comprising our Group during the Track Record Period. 10

17 SUMMARY After completion of the Placing, our Shareholders will be entitled to receive dividends only when declared by our Directors. Our Company does not have any pre-determined dividend distribution ratio. The declaration of future dividends will be subject to the decision by our Board and will depend on, among other things, the earnings, financial condition, cash requirements and availability, the availability of funds to meet the financial covenants of our Group s bank loans and any other factors that our Directors may consider relevant. RISK FACTORS We believe that there are certain risks involved in our operations, which are beyond our control. They can be broadly categorised into risks associated with us, our industry and the Placing, among which, the relatively material risks encompass the followings: (i) (ii) (iii) (iv) our top five customers for the two years ended 31 December 2014 accounted for over 75% of our revenue and any decrease in our sales to any one of them would affect our operations and financial results; our operating results could be affected by title defect of our leased properties which may force us to relocate our centre for research, design and development in the Danshui Foundry and/or our production facilities in the Qiuchang Foundry to our backup plants. If the landlord of the backup plants we have secured does not deliver vacant possession of such plants as agreed, and if we cannot identify other alternative production facilities in a timely manner, we may incur higher than expected loss for relocating our operations from the Qiuchang Foundry (and the Danshui Foundry, if applicable); our Group s business relies on the certification from TÜV Rheinland for the European Directive 97/23/EC for Pressure Equipment & AD Merkblatt W0/TRD100 and/or the recognition from Bureau Veritas for BV Mode II Survey Scheme; and we are reliant on German market and we may be unable to adjust our resources to other markets in the event of an economic downturn in Germany. For details on the risk factors, please refer to the section headed Risk Factors on page 26 of this prospectus. HISTORICAL NON-COMPLIANCE INCIDENTS There had been instances where our Group failed to comply with certain applicable laws and regulations in Hong Kong and the PRC during the Track Record Period, including: (i) failure to lay the audited accounts made up to a date falling not more than nine months under section 122 of the predecessor Companies Ordinance; (ii) failure to file notification of change of particulars of secretary and director after the time specified in the Companies Ordinance; and (iii) failure to open accounts of, nor made any contribution to the housing provident fund for our employees. For details of such non-compliance incidents and the respective rectification actions taken, please refer to the paragraph headed Business Legal Proceedings and Legal Compliance on pages 116 to 127 of this prospectus. 11

18 SUMMARY TITLE DEFECT OF THE DANSHUI FOUNDRY AND THE QIUCHANG FOUNDRY The land or property where the Qiuchang Foundry is located is owned by the Villagers Group in Xiajing of Villagers Committee of Chayuan Village, Huiyang District, Huizhou City ( ) (the Villagers Group ). Since the Villagers Group and both the landlords of the Danshui Foundry and the Qiuchang Foundry do not possess valid collective building land use rights certificates and building ownership certificates for the Danshui Foundry and the Qiuchang Foundry respectively, they shall not lease or sub-lease the Danshui Foundry and the Qiuchang Foundry. Further, they may be ordered by the relevant PRC authorities to dismantle the Danshui Foundry and the Qiuchang Foundry respectively within a prescribed time limit. In such circumstances, the lease agreements of the Danshui Foundry and/or the Qiuchang Foundry will be terminated by the respective landlords and our Group needs to relocate our centre for research, design and development in the Danshui Foundry and/or our production facilities in the Qiuchang Foundry. We have commenced our rectification to such title defect. According to the consultation by the PRC Legal Advisers with the relevant PRC authorities, we estimated that the valid building ownership certificate for the Qiuchang Foundry is likely to be obtained by the end of We will disclose the progress of obtaining the valid building ownership certificate for the Qiuchang Foundry in our future annual reports. For details of such title defect, our rectification to such title defect and our relocation arrangement in case of any forced relocation, please refer to the paragraph headed Business Property on pages 128 to 142 of this prospectus. 12

19 DEFINITIONS In this prospectus, unless the context otherwise requires, the following terms and expressions shall have the following meanings: Articles of Association or Articles associate AUD Avista Capital or Financial Adviser Board Bravo Luck Business Day BVI Capitalisation Issue the articles of association of our Company conditionally adopted on 10 April 2015 and effective upon Listing and as amended from time to time, a summary of which is set out in Appendix III to this prospectus has the meaning ascribed to it under the GEM Listing Rules Australian dollars, the lawful currency of Australia Avista Capital Limited, a licensed corporation under the SFO to engage in type 6 (advising on corporate finance) regulated activities the board of Directors Bravo Luck Limited, a company incorporated in the Republic of Seychelles with limited liability on 16 May 2013 and wholly owned by Mr. Choi has the meaning ascribed to it under the GEM Listing Rules the British Virgin Islands the issue of 549,990,000 Shares to be made upon capitalisation of part of the amount standing to the credit of our share premium account as referred to in the paragraph headed A. Further Information about Our Company 3. Written resolutions in Appendix IV to this prospectus CCASS the Central Clearing and Settlement System established and operated by HKSCC CCASS Clearing Participant(s) CCASS Custodian Participant(s) CCASS Investor Participant(s) a person admitted to participate in CCASS as a direct clearing participant or general clearing participant a person admitted to participate in CCASS as a custodian participant a person admitted to participate in CCASS as an investor participant who may be an individual or joint individuals or a corporation 13

20 DEFINITIONS CCASS Participant(s) close associate Colors Securities or Joint Lead Manager Companies (Winding Up and Miscellaneous Provisions) Ordinance Companies Law or Cayman Companies Law Companies Ordinance Companies Registry Company or our Company connected person(s) Controlling Shareholder(s) core connected person(s) Corporate Governance Code CSRC a CCASS Clearing Participant or a CCASS Custodian Participant or a CCASS Investor Participant has the meaning ascribed to it under the GEM Listing Rules Colors Securities Limited, a licensed corporation under the SFO to engage in type 1 (dealing in securities), type 4 (advising on securities) and type 9 (asset management) regulated activities 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 the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands as amended, supplemented or otherwise modified from time to time the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time the Companies Registry of Hong Kong Jete Power Holdings Limited ( *), a company incorporated with limited liability in the Cayman Islands on 24 February 2014 has the meaning ascribed to it under the GEM Listing Rules has the meaning ascribed to it under the GEM Listing Rules and, in the context of our Company, means Mr. Wong and Pure Goal has the meaning ascribed to it under the GEM Listing Rules Appendix 15 of the GEM Listing Rules (as amended, supplemented or otherwise modified from time to time) China Securities Regulatory Commission ( ) 14

21 DEFINITIONS Deed of Indemnity the deed of indemnity dated 22 April 2015 given by our Controlling Shareholders in favour of our Company regarding certain indemnities, details of which are set out in the paragraph headed E. Other Information 1. Tax Indemnity and indemnity relating to Compliance Matters and Title Defect Matters in Appendix IV to this prospectus Deed of Non-competition the deed of non-competition dated 22 April 2015 given by our Controlling Shareholders in favour of our Company regarding non-competition undertaking, details of which are set out in the paragraph headed Controlling, Substantial and Significant Shareholders Non-competition Undertaking in this prospectus Director(s) or our Directors EIT Law and its implementing rules EUR or Euro the director(s) of our Company Enterprise Income Tax Law of the PRC ( ), and the Implementation Regulations of the Enterprise Income Tax Law of the PRC ( )) the euro, the single currency of the participating member states of the European Union G. Force (Hong Kong) G. Force (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability on 5 December 2003 and an indirect wholly-owned subsidiary of our Company GEM GEM Listing Rules Government Group or our Group or we or us the Growth Enterprise Market of the Stock Exchange the Rules Governing the Listing of Securities on the GEM of the Stock Exchange, as amended, supplemented or otherwise modified from time to time the government of Hong Kong our Company and our subsidiaries at the relevant time or, where the context refers to any time prior to our Company s becoming the holding company of our present subsidiaries, such subsidiaries and the businesses carried on by such subsidiaries or (as the case may be) our predecessors, and we, our or us shall be construed accordingly 15

22 DEFINITIONS HK$ or HK dollars or Hong Kong dollars HKFRS HKICPA HKSCC Hong Kong or HK Hong Kong Branch Share Registrar Independent Third Party(ies) Ipsos Hong Kong dollars, the lawful currency of Hong Kong Hong Kong Financial Reporting Standards Hong Kong Institute of Certified Public Accountants Hong Kong Securities Clearing Company Limited the Hong Kong Special Administrative Region of the PRC Tricor Investor Services Limited, the Hong Kong branch share registrar of our Company a party or parties which is/are independent of and not connected with (within the meaning of the GEM Listing Rules) our Company and connected persons of our Company within the meaning of the GEM Listing Rules Ipsos Hong Kong Limited, an Independent Third Party, being a professional market research company Ipsos Report the industry report prepared by Ipsos and commissioned by our Company Issue Mandate Kingsway Capital or Sole Sponsor Kingsway Financial or Sole Global Coordinator or Joint Lead Manager the general unconditional mandate to issue Shares granted to our Directors pursuant to the written resolutions of all the Shareholders passed on 10 April 2015 as described in the paragraph headed A. Further Information about our Company 3. Written resolutions in Appendix IV to this prospectus Kingsway Capital Limited, a licensed corporation under the SFO to engage in type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities Kingsway Financial Services Group Limited, a licensed corporation under the SFO to engage in type 1 (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities) and type 9 (asset management) regulated activities 16

23 DEFINITIONS KTech (Huizhou) (KTech Industrial Technology (Huizhou) Limited*), a wholly foreign-owned enterprise established in the PRC on 26 December 2003 and an indirect wholly-owned subsidiary of our Company KTech (Qiuchang) Latest Practicable Date Legal Counsel Listing Listing Date Listing Division M&A Rules Main Board Memorandum of Association Ministry of Commerce or MOFCOM (Qiuchang Branch of KTech Industrial Technology (Huizhou) Limited*), the branch of KTech (Huizhou) established in the PRC on 29 March April 2015, being the latest practicable date prior to the publication of this prospectus for ascertaining certain information contained in this prospectus Bernard Mak, barrister-at-law of Hong Kong the listing of our Shares on GEM the date on which dealings in the Shares first commence on GEM, which is to be on or around 30 April 2015 the Listing Division of the Stock Exchange (with responsibility for GEM) (The Rules on Merger and Acquisition of Domestic Enterprises by Foreign Investors) issued by MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, SAT, SAIC, CSRC and SAFE on 8 August 2006 and amended by MOFCOM on 22 June 2009 the stock market operated by the Stock Exchange prior to the establishment of GEM (excluding the options market) and which stock market continues to be operated by the Stock Exchange in parallel with GEM and which, for the avoidance of doubt, excludes GEM the memorandum of association of our Company adopted on 10 April 2015 and as amended from time to time Ministry of Commerce of the PRC ( ) 17

24 DEFINITIONS Mr. Choi Mr. Chung Mr. Wong Mr. Choi Chiu Ming Jimmy ( ), being our chairman, executive Director and Significant Shareholder Mr. Chung Tsai Kin ( ), being our Substantial Shareholder Mr. Wong Thomas Wai Yuk, being our chief executive officer, executive Director and Controlling Shareholder New Shares the 150,000,000 new Shares to be offered for subscription pursuant to the Placing Placing Placing Price Placing Shares PRC or China PRC Legal Advisers Pre-IPO Investment Pure Goal the conditional placing of the Placing Shares at the Placing Price by the Underwriters on behalf of our Company and Pure Goal for cash, as further described in the section headed Structure and Conditions of the Placing in this prospectus HK$0.20 per Placing Share (exclusive of brokerage, the Stock Exchange trading fee and SFC transaction levy) the 150,000,000 New Shares being offered by our Company for subscription and the 100,000,000 Sale Shares being offered by Pure Goal for purchase under the Placing the People s Republic of China which, for the purpose of this prospectus, excludes Hong Kong, the Macau Special Administrative Region of the People s Republic of China and Taiwan Jun He Law Offices ( ), our legal advisers as to the PRC law the pre-ipo investment by Well Gainer and Bravo Luck, the details of which are set forth under the paragraph headed History, Reorganisation and Group Structure Pre-IPO Investment in this prospectus Pure Goal Holdings Limited, a company incorporated in the BVI with limited liability on 6 July 2012 and wholly owned by Mr. Wong 18

25 DEFINITIONS Renminbi or RMB Reorganisation Repurchase Mandate SAFE SAIC SAT SFC SFO Sale Shares Share(s) Shareholder(s) Share Option Scheme Renminbi yuan, the lawful currency of the PRC the corporate reorganisation of our Group prior to the issue of this prospectus, details of which are set out in the paragraph headed A. Further Information about Our Company 4. Corporate Reorganisation in Appendix IV to this prospectus the general unconditional mandate to repurchase Shares granted to our Directors pursuant to the written resolutions of all the Shareholders passed on 10 April 2015 as described in the paragraph headed A. Further Information about Our Company 3. Written resolutions in Appendix IV to this prospectus The State Administration of Foreign Exchange of the PRC ( ) The State Administration for Industry and Commerce of the PRC ( ) The State Administration of Taxation of the PRC ( ) the Securities and Futures Commission of Hong Kong the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time the 100,000,000 existing Shares to be offered for purchase by Pure Goal pursuant to the Placing ordinary share(s) with a nominal value of HK$0.01 each in the capital of our Company holder(s) of issued Share(s) the share option scheme conditionally adopted by our Company on 10 April 2015, the principal terms of which are set forth under the paragraph headed D. Share Option Scheme in Appendix IV to this prospectus 19