Optima Group Holdings Limited 傲迪瑪集團控股有限公司

Transcription

1 The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, 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 Application Proof. Application Proof of Optima Group Holdings Limited 傲迪瑪集團控股有限公司 (the Company ) (incorporated in the Cayman Islands with limited liability) WARNING The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the Exchange ) and the Securities and Futures Commission (the Commission ) solely for the purpose of providing information to the public in Hong Kong. This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with the Company, its sponsor, advisers or members of the underwriting syndicate that: (a) (b) (c) (d) (e) (f) (g) (h) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document; the publication of this document or supplemental, revised or replacement pages on the Exchange s website does not give rise to any obligation of the Company, its sponsor, advisers or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with the offering; the contents of this document or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document; the Application Proof is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited; this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities; this document must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended; neither the Company nor any of its affiliates, advisers or underwriters is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this document; no application for the securities mentioned in this document should be made by any person nor would such application be accepted; (i) the Company has not and will not register the securities referred to in this document under the United States Securities Act of 1933, as amended, or any state securities laws of the United States; (j) (k) as there may be legal restrictions on the distribution of this document or dissemination of any information contained in this document, you agree to inform yourself about and observe any such restrictions applicable to you; and the application to which this document relates has not been approved for listing and the Exchange and the Commission may accept, return or reject the application for the subject public offering and/or listing. If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on the Company s prospectus registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period.

2 IMPORTANT If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. Optima Group Holdings Limited 傲迪瑪集團控股有限公司 (Incorporated in the Cayman Islands with limited liability) [REDACTED] Number of [REDACTED] : [REDACTED] Shares (subject to [REDACTED]) Number of [REDACTED] : [REDACTED] Shares (subject to reallocation and [REDACTED]) Number of [REDACTED] : [REDACTED] Shares (subject to reallocation) [REDACTED] : Not more than HK$[REDACTED] per [REDACTED] and expected to be not less than HK$[REDACTED] per [REDACTED] (plus brokerage fee of 1%, SFC transaction levy of % and Stock Exchange trading fee of 0.005%) (payable in full on application in Hong Kong dollars and subject to refund) Nominal value : HK$0.01 per Share Stock code : [REDACTED] Sole Sponsor [REDACTED] and [REDACTED] [REDACTED] [REDACTED] Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. A copy of this document, having attached thereto the documents specified in the section headed Documents delivered to the Registrar of Companies in Hong Kong and Available for Inspection in Appendix V to this document, has been registered with the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this document or any other document referred to above. The [REDACTED] is expected to be determined by the [REDACTED] between the [REDACTED] (for themselves and on behalf of the [REDACTED]) and our Company on or about [REDACTED] or such later date as may be agreed between the parties. If, for any reason, the [REDACTED] (for themselves and on behalf of the [REDACTED]) and our Company are unable to reach an agreement on the [REDACTED] by that date or such later date as agreed by our Company and the [REDACTED] (for themselves and on behalf of the [REDACTED]), the [REDACTED] will not become unconditional and will lapse. The [REDACTED] will not be more than HK$[REDACTED] per [REDACTED] and is expected to be not less than HK$[REDACTED] per [REDACTED], unless otherwise announced. The [REDACTED] (for themselves and on behalf of the [REDACTED]) may, with the consent of our Company, reduce the above indicative [REDACTED] range at any time prior to the [REDACTED]. In such a case, notice of the reduction in the indicative [REDACTED] range will be available on the website of the Stock Exchange at and the website of our Company at Prospective investors of the [REDACTED] should note that the [REDACTED] (for themselves and on behalf of the [REDACTED]) mayin its absolute discretion, upon giving notice in writing to our Company, terminate the [REDACTED] with immediate effect if any of the events set forth under the paragraph headed [REDACTED] [REDACTED] arrangement and expenses Grounds for termination in this document occurs at any time prior to 8:00 a.m. (Hong Kong time) on the [REDACTED]. Should the [REDACTED] (for themselves and on behalf of the [REDACTED]) terminatethe[redacted] in accordance with the terms of the [REDACTED], the[redacted] will not proceed and will lapse. Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this document, including the risk factors set out in the section headed Risk Factors in this document. [REDACTED]

3 CHARACTERISTICS OF GEM GEM has been positioned as a market designed to accommodate small and mid-sized 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. Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange 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 companies listed on GEM. i

4 EXPECTED TIMETABLE [REDACTED] ii

5 EXPECTED TIMETABLE [REDACTED] iii

6 EXPECTED TIMETABLE [REDACTED] iv

7 CONTENTS This document is issued by our Company solely in connection with the [REDACTED] and does not constitute an offer to sell or a solicitation of an offer to buy any security other than the [REDACTED] offered by this document pursuant to the [REDACTED]. This document may not be used for the purpose of, and does not constitute, an offer or invitation in any other jurisdiction other than Hong Kong or in any other circumstances. No action has been taken to permit the distribution of this document in any jurisdiction other than Hong Kong. The distribution of this document and [REDACTED] and [REDACTED] in other jurisdiction are subject to restrictions and may not be made except as permitted under the applicable securities laws of such jurisdiction pursuant to registration with or authorisation by the relevant securities regulatory authorities or an exemption therefrom. You should rely only on the information contained in this document to make your investment decision. We have not authorised anyone to provide you with information that is different from what is contained in this document. Any information or representation not contained nor made in this document must not be relied on by you as having been authorised by us, the Sole Sponsor, the [REDACTED], the[redacted] and the [REDACTED], any of their respective directors, advisers, officers, employees, agents, affiliates or representatives of any of them or any other persons or parties involved in the [REDACTED]. The contents of our Company s website at do not form part of this document. Pages CHARACTERISTICS OF GEM... i EXPECTED TIMETABLE... ii CONTENTS... v SUMMARY... 1 DEFINITIONS GLOSSARY FORWARD-LOOKING STATEMENT RISK FACTORS INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED] CORPORATE INFORMATION INDUSTRY OVERVIEW REGULATORY OVERVIEW HISTORY, REORGANISATION AND CORPORATE STRUCTURE BUSINESS RELATIONSHIP WITH CONTROLLING SHAREHOLDERS v

8 CONTENTS DIRECTORS AND SENIOR MANAGEMENT SUBSTANTIAL SHAREHOLDERS SHARE CAPITAL FINANCIAL INFORMATION FUTURE PLANS AND [REDACTED] [REDACTED] STRUCTURE AND CONDITIONS OF THE [REDACTED] HOW TO APPLY FOR [REDACTED] APPENDIX I ACCOUNTANTS REPORT ON THE FINANCIAL INFORMATION OF OUR GROUP... I-1 APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION... II-1 APPENDIX III SUMMARY OF THE CONSTITUTION OF THE 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 IN HONG KONG AND AVAILABLE FOR INSPECTION..... V-1 vi

9 SUMMARY This summary aims to give you an overview of the information contained in this document. Since this is a summary, it does not contain all the information that may be important to you. You should read the whole document before you decide to invest in the [REDACTED]. There are risks associated with any investment. Some of the particular risks in investing in the [REDACTED] are set forth in the section headed Risk Factors in this document. You should read that section carefully before you decide to invest in the [REDACTED]. Various expressions used in this summary are defined in the sections headed Definitions and Glossary in this document. OVERVIEW We are a one-stop premier after-market automotive service provider in Singapore offering comprehensive and integrated automotive related solutions to customers. According to the Frost & Sullivan Report, we (i) ranked first among the independent after-market automotive service providers with a market share of approximately 8.8% in terms of revenue derived from after-market automotive service provided by independent after-market automotive service providers in Singapore in 2017; and (ii) ranked third among the after-market automotive service providers with a market share of approximately 5.8% in terms of revenue derived from aftermarket automotive service in Singapore in We principally engage in the provision of a comprehensive range of after-market automotive services, with a focus on inspection, maintenance and repair services. We also engage in (i) offering short-term and long-term car rental services; (ii) supplying passenger car spare parts, accessories and automotive equipment to overseas countries (i.e. Sri Lanka and Myanmar). OUR SERVICES Our principal business can be broadly categorised as follows: (i) Provision of after-market automotive services We principally engage in the provision of a comprehensive range of after-market automotive services, with a focus on inspection, maintenance and repair services. We may also from time to time provide modification, tuning and grooming services to our customers in Singapore, the revenue derived from the provision of such service accounted for less than 1.0% of our total revenue during the Track Record Period. (ii) Provision of car rental services Our car rental services comprise (i) short-term rentals and (ii) long-term rentals. In addition, we offer various value-added services such as free towing service and battery recovery, courtesy car, and vehicle delivery, if required. (iii) Supply and export of passenger car spare parts, accessories and automotive equipment We supply passenger car spare parts and accessories (such as spark plug and navigator control unit) and automotive equipment to overseas countries (i.e. Sri Lanka and Myanmar). 1

10 SUMMARY OUR SERVICE CENTRES AND PAINT WORKSHOP During the Track Record Period, we operated three service centres and one paint workshop in Singapore. The three services centres are our Kung Chong Service Centre (Headquarters), Serangoon Service Centre and Upper Thomson Service Centre. Our service centres are equipped with cutting-edge diagnostics equipment and facilities for provision of all after-market automotive services except spray painting services. Our paint workshop is responsible for handling all the spray painting job required. For further details about our service centres and paint workshop, please refer to the paragraph headed Business Our service centres and paint workshop in this document. In view of the anticipated increasing market demand, we plan to expand our servicing capacity by setting up a new service centre and satellite workshops in Singapore, details of which are set out in the paragraph headed Business Business strategies in this document. OUR COMPETITIVE STRENGTHS Our directors believe that our success and market position in Singapore are derived from our following competitive strengths: (i) we are a leading after-market automotive service provider in Singapore; (ii) we have strong technical knowledge and after-market service capabilities; (iii) we are able to provide high quality aftermarket automotive services in a timely manner; (iv) we have developed a broad and diverse loyal customer base and collaborated with established insurance company; (v) we have strong relationships with our suppliers; and (vi) we have an experienced, dedicated and capable management team. For further details, please refer to the paragraph headed Business Our Competitive strengths in this document. OUR BUSINESS STRATEGIES Our goal is to maintain our market position as a leading after-market automotive service provider in Singapore by implementing the following strategies: (i) expanding our servicing capacity; (ii) continuing to grow our rental fleet to complement our after-market automotive business; (iii) strengthening our service capabilities and operating efficiencies; and (iv) brand building through strengthening our relationships with our existing customers and expanding our customer base. For further details, please refer to the paragraph headed Business Business strategies in this document. OUR CUSTOMERS During the Track Record Period, we had a large, rapidly growing and loyal customer base consisting of individual and corporate customers. Our customers include (i) automotive dealers; (ii) insurance companies; (iii) car service centres; (iv) car leasing companies; and (v) individuals or other corporations. For FY2016, FY2017 and 1Q2018, sales to our top five customers accounted for approximately 13.5%, 19.8% and 30.9% of our total revenue respectively. Sales to our largest customer accounted for approximately 5.3%, 8.0% and 11.8% respectively, of our total revenue during the same periods. 2

11 SUMMARY OUR SUPPLIERS During the Track Record Period, our major suppliers were (i) suppliers of passenger car spare parts; (ii) suppliers of accessories; and (iii) suppliers of passenger car consumables. Save for those agreements disclosed in the paragraph headed Business Suppliers and procurement of this document, we typically do not enter into any long-term agreements with our major suppliers. For FY2016, FY2017 and 1Q2018, the amount of purchases from our top five suppliers accounted for approximately 33.3%, 41.9% and 45.7% of our total amount of purchases respectively, and the amount of purchases from our largest supplier accounted for approximately 9.5%, 12.9% and 13.9% respectively, of our total amount of purchases during the same periods. COMPETITIVE LANDSCAPE The after-market automotive service industry in Singapore is highly fragmented. The degree of concentration of our major businesses in FY2017 are set out below: Top 5 service providers Our Group Maintenance and Repair All types of passenger cars 30.4% 5.8% Luxury and ultra-luxury passenger cars 73.6% 9.3% Top 10 service providers Our Group Car rental services 30.3% 1.4% Source: Frost & Sullivan Note: Concentration in percentage is calculated by dividing the revenue of (i) the top 5 service providers in the after-market automotive services industry in Singapore; (ii) the top 10 service providers in the car rental industry in Singapore; and (iii) our Group derived from each industry by the total revenue of each industry. For further details on the competitive landscape of the industries in which we operate in, please refer to the section headed Industry Overview in this document. 3

12 SUMMARY [REDACTED] The [REDACTED] from the [REDACTED], after deducting related expenses, are estimated to be HK$[REDACTED]. We intend that the [REDACTED] will be applied as follows: For the period from the Latest Practicable Date to 31 December 2018 (HK$ million) For the period from 1 January 2019 to 30 June 2019 (HK$ million) For the period from 1July2019 to 31 December 2019 (HK$ million) For the period from 1January 2020 to 30 June 2020 (HK$ million) For the period from 1July2020 to 31 December 2020 Total (HK$ million) (HK$ million) Approximate %ofthe total [REDACTED] Expanding our servicing capacity Setting up new service centre [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Setting up new satellite workshops [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Growing our rental fleet [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Strengthening our service capabilities and operating efficiencies Enhance costs efficiency by purchasing spare parts and accessories in bulk [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Training and recruiting of employees [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Upgrading our information technology and equipment [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Brand building through strengthening our relationships with our existing customers and expanding our customer base [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Repayment of bank borrowings obligations [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Funding of our working capital and general corporate purpose [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Total [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] For details, please refer to the section headed Future Plans and [REDACTED] in this document. SUMMARY FINANCIAL INFORMATION Highlight of our combined statements of profit or loss and other comprehensive income FY2016 FY2017 Change 1Q2017 1Q2018 Change S$ 000 S$ 000 % S$ 000 S$ 000 % (unaudited) Revenue 16,335 18, ,302 4,285 (0.4) Gross profit 6,763 8, ,947 1,929 (0.9) Profit for the year/period 1,429 1, (71.7) [REDACTED] expenses [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Profit for the year/period (excluding [REDACTED] expenses) (Note) 1,429 1, Note: It is a non-hkfrss measure, which is calculated by adding [REDACTED] expenses to the profit for the year/period. Profit for the year/period (excluding [REDACTED] expenses) is presented because our management believes such information will be helpful for investors in assessing the effect of [REDACTED] expenses on our net profit. However, when assessing our operating and financial performance, you should not view such information in isolation or as a substitute for our profit for the year/period or any other operating performance measure that is calculated in accordance with HKFRSs. 4

13 SUMMARY Revenue and gross profit margin Set out in this paragraph are the analysis of our revenue and gross profit margin by business segments. The following table sets forth our revenue by business segments during the Track Record Period: FY2016 FY2017 1Q2017 1Q2018 S$ 000 % S$ 000 % S$ 000 % S$ 000 % (unaudited) After-market automotive services Inspection, maintenance and non-insured repair services 12, , , , Insured repair services , Warranty related business 1, , Sub-total 15, , , , Car rental services , Supply of passenger car spare parts, accessories and automotive equipment Total 16, , , , Our revenue increased from S$16.3 million in FY2016 to S$18.6 million in FY2017 which was mainly due to (i) the increase in revenue from the provision of after-market automotive services from S$15.1 million in FY2016 to S$16.0 million in FY2017, which was mainly due to increase in the number of insured repair jobs; and (ii) the increase in revenue from car rental services which was mainly due to the increase in number of long term rental passenger cars that were rented out to a car sharing company as we entered into rental contracts with the car sharing company in FY2016 and first quarter of FY2017. The increase was partially offset by the slight decrease in revenue from the supply of passenger car spare parts, accessories and automotive equipment segment. Our revenue remained relatively stable at S$4.3 million in 1Q2017 and 1Q2018. For further details on revenue of each of the business segments, please refer to the paragraph headed Financial Information Description of selected components of combined statements of profit or loss and other comprehensive income Revenue by business segments in this document. 5

14 SUMMARY The following table sets forth our gross profit and gross profit margin during the Track Record Period (Note 1): FY2016 FY2017 1Q2017 1Q2018 Gross Gross Gross profit Gross profit Gross profit Gross margin profit margin profit margin profit Gross profit margin Gross profit S$ 000 % S$ 000 % S$ 000 % S$ 000 % (unaudited) After-market automotive services 6, , , , Car rental services (94) Note Supply of passenger car spare parts, accessories and automotive equipment Total 6, , , , Notes: 1. As (i) the materials; (ii) the operation team and workshop technicians; and (iii) the machine and equipment used in providing our after-market automotive services are shared between (i) inspection, maintenance, modification, tuning and grooming, repair of both insured and non-insured repair services; and (ii) warranty related business, we are not able to provide a further breakdown of our gross profit and gross profit margin by each specific service we provide in our after-market automotive services. 2. There was a gross loss in the relevant period. Our gross profit margin increased from 41.4% in FY2016 to 46.5% in FY2017 which was mainly due to the increase in gross profit margin of (i) after-market automotive service because of the decrease in average purchase prices for our passenger car spare parts, accessories and consumables as higher purchase discounts were given to us by our suppliers as our purchase volume increased in FY2017 and the increase in insured repair jobs which have a higher markup as they generally involve higher complexity; (ii) car rental services due to the increase in revenue has outweighed the increase in direct depreciation expenses as the number of long term rental passenger cars rented to the car sharing company has increased by 50 units after March The increases were partially offset by the decrease in the gross profit margin of supply of passenger car spare parts, accessories and automotive equipment due to the mark up for spare parts and accessories are lower than the mark up for automotive equipment. Our gross profit margin decreased slightly to 45.0% in 1Q2018, which was mainly due to the decrease in the gross profit margin of the provision of our after-market automotive services as a result of the decrease in our average revenue per passenger car we serviced under inspection, maintenance and non-insured repair services. For further details on gross profit and gross profit margin of each of the business segments, please refer to the paragraph headed Financial Information Description of selected components of combined statements of profit or loss and other comprehensive income Gross profit and gross profit margin in this document. 6

15 SUMMARY Highlight of our combined statements of financial position As at 31 As at 31 December March S$ 000 S$ 000 S$ 000 Current assets 5,902 9,980 10,663 Current liabilities (6,213) (8,450) (7,160) Net current (liabilities)/assets (311) 1,530 3,503 Non-current assets 7,205 12,506 12,035 Non-current liabilities (4,271) (8,281) (8,030) Total equity 2,623 5,755 7,508 Our net current assets and total equity had increased as at 31 March 2018 mainly due to the capital injection of S$1.7 million from API. Highlight of our combined statements of cash flows FY2016 FY2017 1Q2018 S$ 000 S$ 000 S$ 000 Cash and cash equivalents of beginning of year/period 1,119 1,810 4,071 Operating profit before working capital changes 3,185 4, Operating cash flows after working capital changes 2,887 3,273 (880) Net cash generated from/(used in) operating activities 2,566 3,020 (966) Net cash used in investing activities (1,099) (786) (8) Net cash generated from/(used in) financing activities (776) 27 1,514 Cash and cash equivalents at end of year/period 1,810 4,071 4,611 7

16 SUMMARY The movements in net cash generated from operating activities in FY2016 and FY2017 were mainly due to the increase in our revenue. The movements in net cash used in operating activities in 1Q2018 was mainly due to the decrease in trade payables. The movements in net cash used in investing activities in FY2016 and FY2017 were mainly due to the purchase of passenger cars for the provision of our car rental services. The movement in net cash used in financing activities in FY2016 was mainly due to repayment of finance lease obligations. The movement in net cash generated in financing activities in FY2017 and 1Q2018 were mainly due to capital injection from pre-[redacted] investors and repayment of finance lease obligations. Key financial ratios As at/for the three months As at/for the year ended 31 December ended 31 March Gross profit margin 41.4% 46.5% 45.0% Net profit margin 8.7% 10.2% 1.4% Current ratio Gearing ratio Net debt to equity ratio Interest coverage Note Return on total assets 10.9% 8.5% Note Return on equity 54.5% 33.1% Note Note: Such ratio would not be meaningful as it is not comparable to annual numbers. For further discussion and analysis of our financial information, please refer to the section headed Financial Information in this document. INFORMATION OF SHAREHOLDERS Pre-[REDACTED] Investments Optima Werkz and Mr. Chong, among others, entered into a convertible loan agreement dated 18 January 2017, pursuant to which Mr. Chong agreed to grant to Optima Werkz a loan in the principal amount of S$535,500 with the right to convert such loan into shares in Optima Werkz upon and subject to the terms of the agreement. The said loan is non-interest bearing and shall become due and payable on the date falling 48 months from the drawdown date. On 19 December 2017, upon exercise of the said conversion right, Optima Werkz allotted and issued 34,000 shares, all credited as fully paid, to Mr. Chong. The conversion price was S$15.75 per share in Optima Werkz. Immediately following the completion of the [REDACTED] and the Capitalisation Issue (assuming that the [REDACTED] is not exercised at all), Mr. Chong will be interested in approximately [REDACTED]% of the issued share capital of our Company. Mr. Chong is a private investor engaged in properties and securities investment, who was an Independent Third Party prior to his investment in our Group. 8

17 SUMMARY Optima Werkz and Ms. Lam, among others, entered into a convertible loan agreement dated 1 February 2017, pursuant to which Ms. Lam agreed to grant to Optima Werkz a loan in the principal amount of S$409,500 with the right to convert such loan into shares in Optima Werkz upon and subject to the terms of the agreement. The said loan is non-interest bearing and shall become due and payable on the date falling 48 months from the drawdown date. On 19 December 2017, upon exercise of the said conversion right, Optima Werkz allotted and issued 26,000 shares, all credited as fully paid, to Ms. Lam. The conversion price was S$15.75 per share in Optima Werkz. Immediately following the completion of the [REDACTED] and the Capitalisation Issue (assuming that the [REDACTED] is not exercised at all), Ms. Lam will be interested in approximately [REDACTED]% of the issued share capital of our Company. Ms. Lam is a private investor engaged in properties and securities investment, who was an Independent Third Party prior to her investment in our Group. Optima Werkz and Mr. Seow, among others, entered into a convertible loan agreement dated 20 February 2017, pursuant to which Mr. Seow agreed to grant to Optima Werkz a loan in the principal amount of S$202,000 with the right to convert such loan into shares in Optima Werkz upon and subject to the terms of the agreement. The said loan is non-interest bearing and shall become due and payable on the date falling 48 months from the drawdown date. On 19 December 2017, upon exercise of the said conversion right, Optima Werkz allotted and issued 12,825 shares, all credited as fully paid, to Mr. Seow. The conversion price was S$15.75 per share in Optima Werkz. Immediately following the completion of the [REDACTED] and the Capitalisation Issue (assuming that the [REDACTED] is not exercised at all), Mr. Seow will be interested in approximately [REDACTED]% of the issued share capital of our Company. Mr. Seow is a private investor engaged in properties and securities investment, who was an Independent Third Party prior to his investment in our Group. Optima Werkz and Ms. Ngo, among others, entered into a convertible loan agreement dated 3 March 2017, pursuant to which Ms. Ngo agreed to grant to Optima Werkz a loan in the principal amount of S$428,000 with the right to convert such loan into shares in Optima Werkz upon and subject to the terms of the agreement. The said loan is non-interest bearing and shall become due and payable on the date falling 48 months from the drawdown date. On 19 December 2017, upon exercise of the said conversion right, Optima Werkz allotted and issued 27,175 shares, all credited as fully paid, to Ms. Ngo. The conversion price was S$15.75 per share in Optima Werkz. Immediately following the completion of the [REDACTED] and the Capitalisation Issue (assuming that the [REDACTED] is not exercised at all), Ms. Ngo will be interested in approximately [REDACTED]% of the issued share capital of our Company. Ms. Ngo is a private investor engaged in properties and securities investment, who was an Independent Third Party prior to his investment in our Group. Our Company, API and Mr. Ang (as warrantor) entered into the API Subscription Agreement, pursuant to which the API conditionally agreed to subscribe for 50,000 Shares (representing 5.00% of the enlarged issued share capital of our Company at the time of completion of the API Investment) for a total cash consideration of HK$10,000,000. Immediately following the completion of the [REDACTED] and the Capitalisation Issue (assuming that the [REDACTED] is not exercised at all), API will be interested in approximately [REDACTED]% of the issued share capital of our Company. API is a company incorporated in the BVI with limited liability and is solely owned by Mr. Chan, who was an Independent Third Party prior to the API Investment. For further details of the Pre-[REDACTED] Investment by the Pre-[REDACTED] Investors, please see the paragraph headed History, Reorganisation and Corporate Structure Pre-[REDACTED] Investments in this document. Our Controlling Shareholders Immediately following completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme), our Company will be owned as to approximately [REDACTED]% by Red Link, which is in turn owned as to approximately 54.70% and 45.30% by each of Ms. FF Lim and Mr. Ang, respectively. Red Link is an investment holding company. 9

18 SUMMARY Ms. FF Lim and Mr. Ang were the founders of our Group and each of them has decided to restrict their ability to exercise direct control over our Company by holding their interests through Red Link. Ms. FF Lim and Mr. Ang also executed the Acting in Concert Confirmation, whereby, among other things, they confirmed that during the Track Record Period and up to the date of the Acting in Concert Confirmation, they have been acting in concert with each other in controlling the members of our Group; and have further undertaken that, during the period when they remain interested in the share capital of any members of our Group, until entering into a written agreement to terminate the Acting in Concert Confirmation, they will maintain the acting-in-concert relationship. As such, Ms. FF Lim, Mr. Ang and Red Link are regarded as a group of Controlling Shareholders of our Company under the GEM Listing Rules. For details of the background of the Controlling Shareholders, please refer to the sections headed History, Reorganisation and Corporate Structure and Directors and Senior Management in this document. RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGE For the period from 1 January 2018 to the Latest Practicable Date, we provided after-market automotive services to approximately 11,600 units of passenger cars. On 28 April 2018, our Group has acquired the remaining 45% equity interests in Optima Carz, which was an indirect non-wholly owned subsidiary of our Group, at an aggregate cash consideration of SGD300,000, which was determined with reference to the net asset value of Optima Carz. Save as disclosed in this paragraph and in the paragraph headed [REDACTED] Expenses in this section, our Directors confirm that, since 31 March 2018 and up to the date of this document, there had not been any material adverse change in the market conditions or the industry and environment in which we operate that had materially and adversely affect our financial or operating position. [REDACTED] EXPENSES Our Directors estimate that the total amount of expenses in relation to the [REDACTED] is approximately [REDACTED]. This includes approximately [REDACTED] which is directly attributable to the issue of the [REDACTED] and is expected to be accounted for as a deduction from equity upon [REDACTED]. The remaining amount of approximately [REDACTED], which cannot be so deducted, will be charged to our profit or loss. Out of the approximately [REDACTED] that will be charged to profit or loss, [REDACTED], [REDACTED], [REDACTED], and approximately [REDACTED] have been charged in FY2016, FY2017, 1Q2017 and 1Q2018 respectively, and approximately [REDACTED] is expected to be incurred for the financial year ending 31 December The recognition of [REDACTED] expenses is expected to affect our financial results for the financial year ending 31 December The estimated [REDACTED] expenses of our Group are subject to adjustments based on the actual amount of expenses incurred/to be incurred by our Company upon completion of the [REDACTED]. Our Directors would like to emphasise that such cost is a current estimate for reference only, and the final amount to be recognised in the consolidated statement of profit or loss for the financial year ending 31 December 2018 of our Group or to be capitalised is subject to adjustment based on audit and the then changes in variables and assumptions. REASONS FOR [REDACTED] Our Directors believe the estimated [REDACTED] from the [REDACTED] will provide our Group with financial resources for the execution of our business strategies and plans as set out in this document, which will help us pursue our business objective. 10

19 SUMMARY Our Directors consider that the [REDACTED] may act as a fund-raising platform for our Group. Through the [REDACTED], our Group can gain direct access to the capital market for equity and/or debt financing to fund our current business operations as well as to finance our future expansion plans. Our Directors believe that this way of financing is beneficial to the overall business development and financial performance of our Group, which in turn will maximise Shareholders return. Our Directors believe that through the [REDACTED], the internal control and corporate governance practices of our Group could be enhanced and the transparency in our operations and financial reporting could be increased. Following the [REDACTED], we are required to meet high standards with respect to internal control and corporate governance, which are instrumental in strengthening the overall control and supervision of our Group. This could also increase our customers and suppliers confidence in us and attract potential customers. [REDACTED] STATISTICS Based on the [REDACTED] of [REDACTED] per Share Based on the [REDACTED] of [REDACTED] per Share Market capitalisation of our Shares (Note 1) [REDACTED] [REDACTED] Unaudited pro forma adjusted combined net tangible assets attributable to the owners of the Company per share (Note 2) [REDACTED] [REDACTED] Notes: (1) The calculation of market capitalisation is based on [REDACTED] Shares expected to be in issue immediately after completion of the [REDACTED] and the Capitalisation Issue but without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] and the Share Option Scheme. (2) The unaudited pro forma adjusted combined net tangible assets attributable to the owners of the Company per Share is calculated based on [REDACTED] Shares in issue immediately following the completion of the Capitalisation Issue and the proposed [REDACTED] assuming the proposed [REDACTED] had been completed on 31 March 2018 and no exercise of the [REDACTED] or any options may be granted under the Share Option Scheme and no Shares which may be allotted, issued or repurchased by the Company pursuant to the general mandates for the allotment and issue or repurchase of Shares referred to in Appendix IV to this document or otherwise. DIVIDEND No dividend has been paid or declared by the Company since its incorporation. The dividend in FY2016 and FY2017 represented final dividends declared by the following subsidiaries to its then sole shareholders before the Reorganisation: On 30 November 2016, Optima Carz, one of our operating subsidiaries, declared interim dividend of approximately S$150,000, respectively, to Optima Werkz and Mr. Chew, which was its then shareholders. On 20 January 2017, Optima Carz, one of our operating subsidiaries, declared interim dividend of approximately S$220,000, respectively, to Optima Werkz and Mr. Chew, which was its then shareholders. On 28 August 2017, Optima Carz, one of our operating subsidiaries, declared interim dividend of approximately S$150,000, to Optima Werkz and Mr. Chew, which was its then shareholders. 11

20 SUMMARY On 2 November 2017, Optima Werkz, one of our operating subsidiaries, declared interim dividend of approximately S$200,000, respectively, to Mr. Lee, Mr. Ang, Mr. Chee and Ms. FF Lim, which was its then shareholders. The declaration and payment of future dividends will be subject to the decision of our Board having regard to various factors, including but not limited to our operation and financial performance, profitability, business development, prospects, capital requirements, and economic outlook. Subject to the Companies Law and our Articles of Association, our Company may in a general meeting declare dividends, but no dividends shall exceed the amount recommended by our Board. Our Board may, subject to our Articles of Association, from time to time, pay to our shareholders such interim dividends as appear to our Board to be justified by the financial conditions and the profits of our Company. Our Board may in addition from time to time declare and pay special dividends of such amounts and on such dates and out of such distributable funds of our Company as it thinks fit. The historical dividend payments may not be indicative of future dividend trends. We do not have any predetermined dividend payout ratio. HIGHLIGHTS OF RISK FACTORS Our business is subject to a number of risks and potential investors are advised to read the entire Risk Factors carefully before making any investment decisions in the [REDACTED]. Some of the major risks we face include (i) our Group s business, financial condition and results of operations may be adversely affected by our reputation, consumer s perception of the quality of our services, any negative publicity, failure to maintain and/or enhance our reputation, or failure to deal with customer complaints; (ii) we rely on a constant supply of experienced and skilled staff; (iii) the retention of certain key personnel is critical to our Group s success, and the loss of any such key personnel may impair our Group s ability to manage our business and operations effectively; (iv) our Group does not manufacture the spare parts and accessories we use in our after-market automotive business and hence relies on our suppliers for the supply of such products; (v) the properties of our service centres and paint workshop are not owned by our Group; (vi) our car rental services business requires a large amount of capital to finance the expansion and replenishment of our rental passenger cars and the overall expansion of our business. Failure to manage our liquidity and cash flows or inability to obtain additional financing in the future may materially and adversely affect our business, results of operations and financial condition; (vii) our financial position and results of operations could be negatively affected if we are unable to collect our trade receivables in a timely manner; (ix) we face risks related to liabilities resulting from the use of our rental passenger cars by our customers; and (x) imposition of laws or regulations restricting the carrying on of our business, government policies on passenger car purchases and ownership for restricting road use in Singapore, or measures to encourage the use of public transport, may have a material adverse effect on our business. For further details, please refer to the section headed Risk Factors in this document. 12

21 DEFINITIONS Unless the context otherwise requires, the following expressions have the following meanings in this document. Accountants Report ACRA Portal Acting in Concert Confirmation affiliate(s) [REDACTED] the accountants report on our Group set out in Appendix I to this document the business filing system operated by the Accounting and Corporate Regulatory Authority, the national regulator of business entities, public accountants and corporate service providers in Singapore the deed of acting in concert dated 22 June 2018 executed by Ms. FF Lim and Mr. Ang, in relation to their confirmation of the existence of certain acting in concert arrangements. For details, please refer to the paragraph headed Relationship with Controlling Shareholders Our Controlling Shareholders in this document any other person(s), directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified person [REDACTED] API API Investment API Subscription Agreement Articles or Articles of Association Audit Committee Board Business Day(s) BVI CAGR Auspicious Profit International Limited, one of our Shareholders the subscription of 50,000 new Shares by API for a total cash consideration of HK$10,000,000, details of which are set out in the paragraph headed History, Reorganisation and Corporate Structure Pre-[REDACTED] Investments API Investment in this document the share subscription agreement dated 23 March 2018 and entered into among (i) API; (ii) our Company; and (iii) Mr. Ang in respect of the API Investment, details of which are set out in the paragraph headed History, Reorganisation and Corporate Structure Pre- [REDACTED] Investments API Investment in this document articles of association of our Company adopted on [ ] 2018, which will be effective upon the [REDACTED], as amended from time to time, a summary of which is set out in Appendix III to this document the audit committee of our Company the board of Directors any day(s) (other than Saturday(s), Sunday(s) or public holiday(s)) in Hong Kong on which banks in Hong Kong are open generally for normal banking business to the public the British Virgin Islands compound annual growth rate 13

22 DEFINITIONS Capitalisation Issue CCASS CCASS Clearing Participant CCASS Custodian Participant CCASS Investor Participant the issue of [REDACTED] Shares to be made upon capitalisation of certain sums standing to the credit of the share premium account of our Company as referred to in paragraph headed 1. Further information about our Group 1.3 Resolutions in writing of our Shareholders passed on [ ] 2018 in Appendix IV to this document the Central Clearing and Settlement System established and operated by HKSCC 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 CCASS Operational Procedures the operational procedures of HKSCC in relation to CCASS, containing the practices, procedures and administrative requirements relating to the operations and functions of CCASS, as from time to time in force CCASS Participant(s) Chairman Companies Law Companies Ordinance Companies (Winding Up and Miscellaneous Provisions) Ordinance a CCASS Clearing Participant, a CCASS Custodian Participant or a CCASS Investor Participant the chairman of our Company the Companies Law (as 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) which took effect from 3 March 2014, as amended, supplemented or otherwise modified from time to time the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) effective from 3 March 2014, as amended, supplemented or otherwise modified from time to time Company, us or we Optima Group Holdings Limited( 傲迪瑪集團控股有限公司 ), an exempted company incorporated in the Cayman Islands with limited liability on 14 March 2018 Controlling Shareholder(s) Corporate Governance Code has the meaning ascribed thereto under the GEM Listing Rules and unless the context requires otherwise, collectively refers to Red Link International Limited, Ms. FF Lim and Mr. Ang the Corporate Governance Code as set out in Appendix 15 to the GEM Listing Rules 14

23 DEFINITIONS Countries subject to International Sanctions CPF CPF Act CPFTA CWSH Deed of Indemnity Deed of Non-competition DGEP Director(s) or our Directors DNCR EA EFMA EFMR European Union countries subject to International Sanctions are countries regarding which governments such as the U.S. or Australia, or governmental organizations, such as the European Union or the United Nations, have, through executive order, passing of legislation or other governmental means, implemented measures that impose economic sanctions against such countries or against targeted industry sectors, groups of companies or persons, and/or organizations within such countries Central Provident Fund, a social security system in Singapore Central Provident Fund Act (Chapter 36 of the laws of Singapore), as amended, supplemented, or otherwise modified from time to time Consumer Protection (Fair Trading) Act (Chapter 52A of the laws of Singapore), as amended, supplemental or otherwise modified from time to time Commissioner for Workplace Safety and Health the deed of indemnity dated [ ] 2018 entered into by our Controlling Shareholders in favour of our Company (on its own behalf and as the trustee of its subsidiaries), details of which are set out in the paragraph headed 5. Estate duty, tax and other indemnities in Appendix IV to this document the deed of non-competition dated [ ] 2018 entered into by our Controlling Shareholders in favour of our Company (for ourselves and as trustee for each of our subsidiaries), particulars of which are set out in the paragraph headed Relationship with Controlling Shareholder Non-competition undertaking in this document Director-General of Environmental Protection the director(s) of our Company or any one of them Do Not Call Registry, established under the PDPA Employment Act (Chapter 91 of the laws of Singapore), as amended, supplemented or otherwise modified from time to time Employment of Foreign Manpower Act (Chapter 91A of the laws of Singapore), as amended, supplemented or otherwise modified from time to time Employment of Foreign Manager (Work Passes) Regulations 2012 of Singapore a political-economic union constituted by 28 European countries 15

24 DEFINITIONS Frost & Sullivan Frost & Sullivan International Limited, an independent market research and consulting company Frost & Sullivan Report the industry report issued by Frost & Sullivan, details of which are set out in the section headed Industry Overview in this document FY2016 the financial year ended 31 December 2016 FY2017 the financial year ended 31 December 2017 GDP GEM GEM Listing Rules General Rules of CCASS GST Group, we, our or us HKFRSs HKSCC HKSCC Nominees HK$ or HKD gross domestic product GEM of the Stock Exchange the Rules Governing the Listing of Securities on GEM of the Stock Exchange as amended, supplemented or otherwise modified from time to time the terms and conditions regulating the use of CCASS, as may be amended or modified from time to time and where the context so permits, shall include the CCASS Operational Procedures Goods and Services Tax of Singapore our Company, and its subsidiaries or any of them, or, where the context so requires, in respect of the period before our Company became the holding company of our present subsidiaries, our Company s current subsidiaries or the business operated by such subsidiaries or their predecessors (as the case may be) the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants Hong Kong Securities Clearing Company Limited, a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited HKSCC Nominees Limited, a wholly-owned subsidiary of HKSCC Hong Kong dollar(s), the lawful currency of Hong Kong Hong Kong, HKSAR or HK the Hong Kong Special Administrative Region of the People s Republic of China [REDACTED] [REDACTED] HPA IRAS Hire Purchase Act (Chapter 125 of the laws of Singapore), as amended, supplemental or otherwise modified from time to time the Inland Revenue Authority of Singapore 16

25 DEFINITIONS Independent Third Party(ies) International Sanctions International Sanctions Legal Advisers [REDACTED] person(s) or company(ies) which is (are) independent of and not connected (within the meaning of the GEM Listing Rules) with any of the Directors, chief executive or substantial shareholders of our Company or our subsidiaries or any of their respective associates within the meanings of the GEM Listing Rules all applicable laws and regulations related to economic sanctions, export controls, trade embargoes and wider prohibitions and restrictions on international trade and investment related activities, including those adopted, administered and enforced by the U.S. Government, the European Union and its member states, United Nations or the Government of Australia Hogan Lovells, our legal advisers as to International Sanctions laws in connection with the [REDACTED] [REDACTED] Kung Chong Service Centre Latest Practicable Date [REDACTED] [REDACTED] our headquarters and one of our three service centres in operation as at the Latest Practicable Date, located at 6 Kung Chong Road, Alexandra Industrial Estate, Singapore [27 June 2018], being the latest practicable date prior to the printing of this document for the purpose of ascertaining certain information contained herein [REDACTED] [REDACTED] [REDACTED] LTA Memorandum or Memorandum of Association MOM [REDACTED] the Land Transport Authority of Singapore memorandum of association of our Company adopted on [ ] 2018, which will be effective upon the [REDACTED], as amended from time to time, a summary of which is contained in Appendix III to this document the Ministry of Manpower of Singapore Mr. Ang Mr. Ang Lay Keong (Hong Liqiang), an ultimate owner of approximately 45.30% in Red Link, and one of our executive Directors and the Chairman of our Company. Mr. Ang is one of our Controlling Shareholders and the spouse of Ms. LL Lim Mr. Chan Mr. Chan Vincent Cham Wai, the sole shareholder of API 17

26 DEFINITIONS Mr. Chee Mr. Chew Mr. Chong Ms. Ngo Mr. Seow Mr. Lee Ms. Lam Mr. Lim Ms. FF Lim Ms. LL Lim Ms. Tan MVA Myanmar Nomination Committee OFAC [REDACTED] Mr. Chee Siew Wee (Xu Xiaowei), one of our Shareholders Mr. Chew Boon Weng, one of the previous shareholders of Optima Carz Mr. Chong Soo Hoon, Sean (Zhang Shiyun), one of our Shareholders Ms. Ngo Woon Kei, one of our Shareholders Mr. Seow Chee Siong (Xiao Zhixiang), one of our Shareholders Mr. Lee Seow Poh Jeremy, one of the previous shareholders of Optima Werkz Ms. Lam Wai Quen, one of our Shareholders Mr. Lim Lean Tiek, one of our previous Shareholders of Optima Werkz Ms. Lim Fang Fang, Queenie (Lin Fangfang, Queenie), an ultimate owner of approximately 54.70% in Red Link. Ms. FF Lim is one of our Controlling Shareholders Ms. Lim Li Ling (Lin Liling), one of our executive Directors and the spouse of Mr. Ang Ms. Tan Peck Luan (Chen Biluan), one of our executive Directors and chief financial officer Motor Vehicles (Third-Party Risks and Compensation) Act (Chapter 189 of the laws of Singapore), as amended, supplemented or otherwise modified from time to time the Republic of the Union of Myanmar (Burma) the nomination committee of our Company the United States Office of Foreign Assets Control [REDACTED] [REDACTED] [REDACTED] 18

27 DEFINITIONS [REDACTED] [REDACTED] One-Tier System the one-tier corporate taxation system of Singapore Optima Carz Optima Carz Pte. Ltd., a private company limited by shares incorporated in Singapore on 24 October 2014, which is an indirect wholly-owned subsidiary of our Company Optima Carz SPA Optima De Auto Optima International the sale and purchase agreement dated 23 April 2018 and entered into between (i) Mr. Chew; and (ii) Optima Werkz, details of which are set out in the section headed History, Reorganisation and Corporate Structure in this document Optima De Auto Pte. Ltd., a private company limited by shares incorporated in Singapore on 22 August 2013, which is an indirect wholly-owned subsidiary of our Company Optima International Limited, a company incorporated in the BVI with limited liability on 16 March 2018, which is a direct whollyowned subsidiary of our Company Optima Werkz Optima Werkz Pte. Ltd., a private company limited by shares incorporated in Singapore on 18 May 2012, which is an indirect wholly-owned subsidiary of our Company Optima Werkz International [REDACTED] Optima Werkz International Pte. Ltd. (formerly known as Growth Dynamics Pte. Ltd.), a private company limited by shares incorporated in Singapore on 23 September 2015, which is an indirect wholly-owned subsidiary of our Company [REDACTED] Part IV Employee PDPA PIC Scheme an employee who is covered under Part IV of the EA Personal Data Protection Act 2012 (No. 26 of 2012) of Singapore, as amended, supplemented or otherwise modified from time to time Productivity and Innovation Credit Scheme, a scheme introduced by the Singapore government to encourage productivity and innovation activities in Singapore by way of tax deduction/allowances and cash payout 19

28 DEFINITIONS [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Red Link Red Link International Limited, a company incorporated in the BVI on 2 February 2018 with limited liability, which is a Controlling Shareholder of our Company 20

29 DEFINITIONS Regulation S Regulation S under the US Securities Act Reorganisation the reorganisation arrangements undergone by our Group in preparation for the [REDACTED], details of which are set out in the paragraph headed History, Reorganisation and Corporate Structure Reorganisation in this document Remuneration Committee RIEA the remuneration committee of our Company Regulation of Imports and Exports Act (Chapter 272A of the laws of Singapore), as amended, supplemented or otherwise modified from time to time RTA Road Traffic Act (Chapter 276 of the laws of Singapore), as amended, supplemented or otherwise modified from time to time Sanctioned Person(s) SAP SDN List SEC Scheme Serangoon Service Centre SFC SFO SGD or S$ Share(s) [REDACTED] certain person(s) and identity(ies) listed on the SDN List or other restricted parties lists maintained by the U.S., European Union, United Nations or Australia a system that provides users with a real-time business application the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, which sets forth individuals and entities that are subject to its sanctions and restricted from dealing with U.S. persons Special Employment Credit Scheme, a scheme introduced by the Singapore government to encourage employment of Singapore citizens aged above 50 by way of co-funding part of the employee s wage one of our three service centres in operation as at the Latest Practicable Date, located at 9A Serangoon North Avenue 5, Singapore 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 Singapore dollar(s), the lawful currency of Singapore ordinary share(s) with nominal value of HK$0.01 each in the share capital of our Company, which are to be traded in Hong Kong dollars and [REDACTED] on GEM [REDACTED] 21

30 DEFINITIONS Share Option Scheme Share Swap Agreement Shareholder(s) or our Shareholders SIBOR Singapore Sole Sponsor or Orient Capital sq. ft. sq. m. Stock Exchange Takeovers Code Track Record Period [REDACTED] [REDACTED] the share option scheme conditionally adopted by our Company on [ ] 2018, the principal terms of which are summarized in the paragraph headed 4. Share Option Scheme in Appendix IV to this document the share swap agreement dated 22 June 2018 and entered into among (i) Optima International as purchaser; (ii) our Company (as the direct holding company of Optima International); (iii) Ms. FF Lim, Mr. Ang, Mr. Chee, Mr. Chong, Ms. Ngo, Ms. Lam and Mr. Seow as vendors; and (iv) Red Link (as nominee vehicle), details of which are set out in the section headed History, Reorganisation and Corporate Structure in this document holder(s) of the Share(s) Singapore Interbank Offered Rate the Republic of Singapore Orient Capital (Hong Kong) Limited, a licensed corporation to carry on type 6 (advising on corporate finance) regulated activities under the SFO, being the sole sponsor to the [REDACTED] square feet square metres, converted at 1 square metre: square feet for the purpose of illustration in this document The Stock Exchange of Hong Kong Limited the Codes on Takeovers and Mergers and Share Buy-backs issued by the SFC, as amended, supplemented or otherwise modified from time to time the period comprising FY2016, FY2017 and 1Q2018 [REDACTED] [REDACTED] United Nations United States or US or U.S. Upper Thomson Service Centre US dollars, USD or US$ an intergovernmental organization constituted by 193 member states the United States of America one of our three service centres in operation as at the Latest Practicable Date, located at 551 Upper Thomson Road, Singapore United States dollar(s), the lawful currency of U.S. 22

31 DEFINITIONS US Securities Act VER the United States Securities Act of 1933 (as amended from time to time) Environmental Protection and Management (Vehicular Emissions) Regulations of Singapore, as amended, supplemented or otherwise modified from time to time WC Scheme Wage Credit Scheme, a scheme introduced by the Singapore government to encourage wage increase to Singapore citizen employees by way of co-funding part of the wage increase [REDACTED] [REDACTED] WICA Work Injury Compensation Act (Chapter 354 of the laws of Singapore), as amended, supplemented or otherwise modified from time to time WSHA WSHR [REDACTED] Workplace Safety and Health Act (Chapter 354A of the laws of Singapore), as amended, supplemented or otherwise modified from time to time Workplace Safety and Health (General Provisions) Regulations of Singapore, as amended, supplemented or otherwise modified from time to time [REDACTED] 1Q2017 the three months ended 31 March Q2018 the three months ended 31 March 2018 % per cent 23

32 DEFINITIONS Unless otherwise specified, for the purpose of this document and for the purpose of illustration only, Hong Kong dollar amounts have been translated using the following rates: S$1.00: HK$5.77 No representation is made that any amounts in S$ or HK$ were or could have been converted at the above rate or at any other rates or at all. Unless otherwise expressly stated or the context otherwise requires, in this document, the terms associate(s), close associate(s), connected person(s), core connected person(s), connected transaction(s), subsidiary(ies), substantial shareholder(s) and significant shareholder(s) shall have the meanings ascribed to such terms in the GEM Listing Rules; all data in this document is as of the Latest Practicable Date; and certain amounts and percentage figures included in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them. 24

33 GLOSSARY This glossary contains explanations of certain terms used in this document 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. bodykit exterior modifications to a passenger car, such as front bumpers and side panels COE Certificate of Entitlement which represents a right to vehicle ownership and use of the limited road space for 10 years. Anyone who wishes to register a new vehicle in Singapore must first obtain a COE in the appropriate vehicle category. At the end of the 10-year COE period, vehicle owners may choose to deregister their vehicle or to revalidate their COEs for another 5 or 10-year period by paying the prevailing quota premium. Vehicle owners are also allowed to de-register their COEs before the expiry of the 10-year period and will receive monetary rebate. Bids for COE are submitted through the COE open bidding system exhaust system inspection luxury passenger cars pipes to convey exhaust gases away from an engine the act of examining the condition of passenger car a branding categorisation by Frost & Sullivan. For details, please see the paragraph headed Industry Overview Overview of the passenger car market in Singapore in this document maintenance the act of keeping predetermined condition of passenger car subsystems and servicing or replacing parts and fluids, which is critical to ensure the safety, reliability, drivability, comfort and longevity of a passenger car modification, tuning and grooming MPV PARF rebate passenger cars the procedures of modifying the performance or appearance of a passenger car multi-purpose vehicle the preferential additional registration fee rebate, which is computed based on the age of the car at deregistration. The age of the car is computed from the date of its registration (locally or overseas, whichever is earlier). No preferential additional registration fee eligibility and forfeiting PARF eligibility will mean that the owner shall not be able to enjoy the preferential additional registration fee rebate wheeled road motor vehicles, other than a motor cycle, intended primarily for the carriage of passengers. Vehicles such as buses and trucks are commercial vehicles and do not fall within the category of passenger cars 25

34 GLOSSARY repair the act of inspecting and repairing car failure from technical perspective, ensuring the quality of repaired passenger cars to reach certain safety standard and car performance level sedan SUV suspension system ultra-luxury supercars a passenger car in a three-box configuration and principal volumes articulated in separate compartments for engine, passenger and cargo sport utility vehicle the system of tyres, springs, shock absorbers, etc. that connects a vehicle to its wheels a branding categorisation by Frost & Sullivan. For details, please see the paragraph headed Industry Overview Overview of the passenger car market in Singapore in this document 26

35 FORWARD-LOOKING STATEMENT This document contains forward-looking statements that state our Company s belief, expectations, or intentions for the future. The forward-looking statements are contained principally in the sections headed Summary, Risk Factors, Industry Overview, Business, Financial Information and Future Plans and [REDACTED] in this document. These statements relate to events that involve known and unknown risks, assumptions, uncertainties and other factors, including those listed under the section headed Risk Factors in this document, which may cause our actual results, performance or achievements to be materially different from performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements include statements relating to: our operations and business prospects; our business objectives, strategies, implementation plans and [REDACTED]; the regulatory environment of our industry in general; our financial conditions and performance; our dividend policy; capital market development; the effects of the global financial markets and economic crisis; the nature of, and potential for, future development of our business; and future development in our industry. The words aim, anticipate, believe, can, could, estimate, expect, foresee, forecast, going forward, intend, may, might, ought to, plan, potential, predict, project, propose, seek, shall, should, will, would and the negative of these terms and other similar expressions, as they relate to us, are intended to identify a number of these forward-looking statements. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results may differ materially from information contained in the forward-looking statements as a result of a number of uncertainties and factors, including the risk factors described in the section headed Risk Factors in this document. One or more of these risks or uncertainties may materialise. Subject to the requirements of applicable laws, rules and regulations, we do not have any obligation nor do we intend to publicly update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this document might not occur in the way we expect, or at all. Accordingly, you should not place undue reliance on any forward-looking statements. All forward-looking statements contained in this document are qualified by reference to the cautionary statements set forth in this section as well as the risks and uncertainties discussed in the section headed Risk Factors in this document. 27

36 RISK FACTORS You should carefully consider all the information set forth in this document, including the risks described below, before making any investment in our Shares. The occurrence of any of the following risks may have a material adverse effect on our business, financial condition, results of operations and future prospects. The trading price of the [REDACTED] could decline due to any of these risks, and you may lose part or all of your investment. RISKS RELATING TO OUR BUSINESS Our Group s business, financial condition and results of operations may be adversely affected by our reputation, consumer s perception of the quality of our services, any negative publicity, failure to maintain and/or enhance our reputation, or failure to deal with customer complaints. Our Group s reputation and consumer s perception of the quality of our services may materially affect our business performance. By maintaining and enhancing our Group s reputation, we believe that we can maintain and expand our customer base. Factors such as the quality and consistency of our services, as well as the success of our marketing and promotional efforts may greatly affect our Group s ability to maintain and enhance our reputation. If customers do not perceive that the services we provide is of high quality, this will adversely affect our brand image and as a result undermine the attractiveness and competitiveness of our services. On one hand, there may be risks that our marketing efforts may not be successful in further promoting our services. On the other hand, our reputation may also be adversely affected by negative publicity or unfavourable forum discussions (whether accurate or not) relating to the services provided by our Group, for issues such as service quality, repair time, customer services and quotations or pricing. This may lead to loss of customers confidence in our Group and there can be no assurance that our Group can prevent such negative publicity or disadvantageous forum discussions, and this may in turn potentially harm our business. If our Group cannot maintain and further enhance our reputation and/or increase market awareness and/or properly promote our Group and our services, we may not be able to attract and retain customers. Accordingly, our business and result of operation may be materially and adversely affected. We rely on a constant supply of experienced and skilled staff. Our Group s operations require a sufficient number of experienced and skilled staff. Such experienced and skilled staff includes customer service officers, service advisors and technicians. Our Group employed five fulltime customer service officers, nine full-time service advisors and 41 full-time technicians as at the Latest Practicable Date. For FY2016, FY2017, 1Q2017 and 1Q2018, our employee benefit expenses amounted to approximately S$4.3 million, S$4.9 million, S$1.2 million and S$1.2 million, respectively, representing approximately 26.4%, 26.3%, 27.9% and 27.9% of our total revenue for the respective periods. There is no assurance that the labour cost will remain stable and will not increase significantly in the future. Since we rely on the stable supply of experienced and skilled staff, if there is any significant increase in our Group s labour cost, the cost of our business operations will increase and may adversely affect our profitability. Our Group also believes that our ability to recruit and retain such experienced and skilled staff contributed to our Group s continued success. However, there is no assurance that we will be able to retain our staff and if they leave our employment, we may not be able to recruit a sufficient number of comparable talents in a timely manner and on similar costs. If there is a sudden shortage of labour, our services will be materially and adversely affected due to the delays in our turnaround time or any adverse effect on the quality of our services so caused. Our reputation and operations may as a result be materially and adversely affected. In addition, our business is carried out in Singapore but some of our staff and employees, including technicians, are from overseas. If the Singapore government imposes limitations or reduces the quota for permits for employing foreign employees, our Group may need to recruit other suitable talents from Singapore. There is 28

37 RISK FACTORS no assurance that we will be able to recruit comparable talents with similar experience, skills and costs, and in a timely manner. If such restrictions are imposed, our financial condition and results of operations could be materially and adversely affected. The retention of certain key personnel is critical to our Group s success. The loss of any such key personnel may impair our Group s ability to manage our business and operations effectively. The contributions and experience of our Group s key personnel, in particular, their familiarity with our Group s business, play an important role in our Group s continued success. Such key personnel include, the founder of our Group and also one of our executive Directors, Mr. Ang Lay Keong. Mr. Ang has over 24 years of experience in the after-market automotive service industry and he is also supported by our experienced management team. Each of the members of our management team is experienced in the automotive industry in Singapore. For details of our management team s industry experience, please see the section headed Directors and Senior Management in this document. If one or more of the members of our management team is or are unable or unwilling to continue his/her present position, our Group may not be able to find a suitable replacement in a timely manner, and hence will disrupt the business of our Group and materially and adversely affecting the financial conditions and performance of our Group. Our Group does not manufacture the spare parts and accessories we use in our after-market automotive business and hence relies on our suppliers for the supply of such products. Our Group does not manufacture any spare parts and accessories which we use and distribute. We purchase all the spare parts and accessories from our suppliers. Therefore, we rely on our suppliers for the supply of spare parts and accessories. As such, if our suppliers significantly increase the price for the products we require, we may not be able to find comparable alternative suppliers in a timely manner for similar price. For FY2016, FY2017, 1Q2017 and 1Q2018, our cost of materials amounted to approximately S$6.5 million, S$6.1 million, S$1.5 million and S$1.4 million, respectively, representing approximately 67.5%, 61.4%, 63.2%, 60.3% of our total cost of sales for the respective periods. Shortages or delays in the supply of passenger car spare parts, accessories and consumables to the extent that we cannot procure them on acceptable terms from other sources in time will adversely affect our sales, profitability and customer relations. Moreover, if we are unable to pass the additional costs to our customers, our profitability may be adversely affected. In addition, if there is any defect in such products, this may damage our reputation or the reputation of a particular supplier, and/or cause a disruption in supply. This may in turn lead to a decrease in demand for a particular brand or all products provided by such supplier. Our business and results of operations may as a result be adversely affected. The properties of our service centres and paint workshop are not owned by our Group. Our Group operates three service centres and one paint workshop in Singapore. All of these service centres and workshop are located on rented properties. Our rental and utilities expenses amounted to approximately S$1.5 million, S$1.6 million and S$0.4 million for FY2016, FY2017 and 1Q2018, respectively. As such, our Group is subject to rental fluctuation in Singapore from time to time. If there is any significant increase in rental and utilities expenses for our rented properties upon the expiry of the existing tenancy, it will increase our operating expenses and put pressure on our operating cash flows. This may materially and adversely affect our business, results of operations, financial position and/or prospects. As at the Latest Practicable Date, the expiry dates of our rented properties ranged from August 2018 to February There is no guarantee that we will be able to renew such tenancy upon their expiration on commercially favourable terms or at all. 29

38 RISK FACTORS Furthermore, pursuant to the tenancy agreements entered into between our Group and our respective landlord, either party to the tenancy agreements may terminate the tenancy agreements by giving up to three months notice to the other party. If the landlord terminates our current tenancy, we will need to divert management resources to search for alternative premises with comparable location, size and rent. Further, there is no assurance that we will be able to secure alternative premises for our service centres and workshop in a timely manner and/or on commercially acceptable terms. If so, our business operations and financial results could be adversely affected. Our car rental services business requires a large amount of capital to finance the expansion and replenishment of our rental passenger cars and the overall expansion of our business. Failure to manage our liquidity and cash flows or inability to obtain additional financing in the future may materially and adversely affect our business, results of operations and financial condition. The car rental services business is capital intensive and requires a large amount of capital to finance the business expansion and replenish our rental passenger cars. In order to maintain our competitiveness and implement our growth strategies, we have to obtain sufficient fund to finance the expansion and replenishment. Our rental passenger cars acquisition costs were approximately S$4.6 million, S$7.4 million and S$nil in FY2016, FY2017 and 1Q2018. Further, we depended substantially on finance lease facilities from banks and other financial institutions for acquisition of our rental passenger cars. As at 31 March 2018, our outstanding interest-bearing indebtedness was S$9.9 million, 86.9% of which is related to our acquisition of rented passenger cars. We incurred a substantial amount of short-term and long-term borrowings to finance the expansion of our rental passenger cars. As at 31 March 2018, 24.7% of our borrowings were short-term borrowings repayable within one year or on demand. Such short-term borrowings were primarily used for purchasing rental passenger cars, which are non-current assets. The use of such short-term borrowings for non-current assets may cause liquidity risks to our Group. There is no assurance that we will be able to generate sufficient cash flows from our operations or obtain additional financing to fulfill all such repayment obligations of the short-term borrowings when they fall due. If so, our ability to obtain additional borrowings to finance our business growth may also be materially and adversely affected. Furthermore, we may need to raise additional funds to finance the expansion and replenishment of our rental passenger cars and the overall expansion of our business. Such additional financing may not be available on commercially reasonable terms or at all, especially if there is a recession or other events causing volatility in the capital markets in Singapore or worldwide. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience substantial dilution in share capital, and to the extent that we engage in debt financing, we may be subject to restrictive covenants that could potentially limit our flexibility in conducting future business activities. Our ability to retain our existing financial resources and obtain additional financing on acceptable terms is subject to a variety of uncertainties, including but not limited to: conditions of Hong Kong and other capital markets in which we may seek to raise funds; economic, political and other conditions in Singapore; Singapore governmental policies relating to bank loans and other credit facilities; investors perception of, and demand for, securities of car rental companies; and our future results of operations, financial condition and cash flows. 30

39 RISK FACTORS If additional financing is not available on acceptable terms or at all, we may not be able to fund our expansion, promote our brand, enhance our products and services, respond to competitive pressures or take advantage of investment or acquisition opportunities, all of which may adversely affect our results of operations and business prospects. Our financial condition and results of operations could be negatively affected if we are unable to collect our trade receivables in a timely manner. Passenger car owners may authorise us to facilitate an insurance claim when they bring in passenger cars involved in accidents for us to repair and our Group will handle the insurance claim with the relevant insurance companies on the owner s behalf. We will issue invoices to the passenger car owners or directly to the insurance companies, if requested, for the amount that the relevant insurance companies agreed to pay on behalf of the passenger car owners. In such circumstances, we may not be able to collect our trade receivables in a timely manner and payments to us may be delayed after the invoice dates due to various reasons, for instance, a prolonged process of claiming against an insurance company. As at 31 December 2016, 31 December 2017 and 31 March 2018, approximately S$0.5 million, S$0.5 million and S$0.6 million of trade receivables were aged for more than 180 days, respectively. Our credit risk increased as a result of the increase in our Group s trade receivables turnover days from approximately 46.1 days for FY2016 to approximately 57.4 days for FY2017, and further to approximately 82.1 days for 1Q2018. For details, please see Financial Information Discussion of selected components of combined statements of financial position Trade and other receivables. Our exposure to credit risks will increase due to such delayed payment for the services which we provide. This may affect our ability to manage our working capital and our business and financial performance can be adversely affected. The impairment losses recognised as at 31 December 2016, 31 December 2017 and 31 March 2018 were approximately S$27,000, S$0.1 million and S$27,000, respectively. There is no assurance that impairment losses will not continue to exist in the future. When any material amount of trade receivables is considered to be uncollectable, impairment will be made accordingly. As a result, our financial results may be adversely affected. We face risks related to liabilities resulting from the use of our rental passenger cars by our customers. There may be claims for personal injury, death and property damage resulting from the use of our rental passenger cars by our customers and our business can be exposed to such potential claims. For instance, we may be liable for the death or property damage resulted from motor vehicle accidents caused by any mechanical or other problem including manufacturing defect of our rental passenger cars. If we are unable to successfully defend ourselves, we could incur costs and losses that could materially and adversely affect our results of operations. A material disruption of our service centres and paint workshop could adversely affect our business. Our service centres and paint workshop are subject to operational risks. Such operational risks include but are not limited to disruptions to our power supply, natural disasters and industrial accidents. These risks could result in temporary, permanent, partial or complete shut-down of our operations, and as a result, our business operations and financial results could be adversely affected. In addition, certain events which are beyond our Group s control, such as adverse weather conditions, massive riots, non-cooperation of our suppliers and labour strikes, could lead to delay in delivery of spare parts and accessories and disruption to our operations. 31

40 RISK FACTORS Our operation is heavily dependant on the proper performance of our SAP system. Any serious disruption of such system could adversely impact our business. Our operation heavily relies on our information technology systems, including the SAP system, in many aspects, such as maintaining sales and purchase information which allows our staff to follow up and keep track of our customers, maintaining our inventory at a regular level and issuing invoices to customers. Any disruption to or breakdown of our SAP system may have a material adverse effect on our business and results of operations. Our insurance coverage could be inadequate and potential losses borne by us could adversely affect our cash flow and liquidity. There is no assurance that our insurance coverage would be sufficient to cover all of our potential losses or that we will be able to successfully claim our loss under our current insurance policies. The occurrence of any of these events could result in our incurring substantial costs and the diversion of our resources. In the event that we incur losses that are not covered by our insurance coverage, or our insurance policies fail to sufficiently compensate our actual losses, we would have to pay for the loss or the difference (as the case may be) ourselves and our cash flow and liquidity could be adversely affected. We cannot guarantee that our insurance premiums will not rise or we will not be required by law or our customers to obtain additional insurance coverage. Any significant increase in insurance costs (such as an increase in insurance premiums) or reduction in coverage in the future may materially and adversely affect our business operations and financial results. For details on our insurance policies, please see the paragraph headed Business Insurance in this document. Manufacturer safety recalls could create risks to our business. Our car rental business may be subject to safety recalls by the manufacturers of our rental car. During a recall period, we will have to retrieve recalled cars from customers and decline to rent these cars until we have taken all reasonable steps described by the manufacturers in the recall. If a large number of cars is subject to simultaneous recalls, we may not be able to rent those vehicles to our customers for a significant period of time. These recalls, depending on their severity, could materially affect our rental fleet utilization rate, revenues, damage our customer relations, reputation and brand image, and reduce the residual value of the vehicles involved. Future expansion plans are subject to uncertainties and risks. Our future plans have been set out in the section headed Future Plans and [REDACTED] in this document. Whether our future plans can be implemented successfully may be beyond our control and some future events may affect the smooth running of the expansion plan such as shortage of technicians and changes in applicable laws, rules and regulations. There is no assurance that we will be successful in our expansion plans. If we fail to project accurately the time, labour and costs required for implementing our expansion plans, or if there is insufficient demand for our services after the expansion, our business and results of operation may be adversely affected. 32

41 RISK FACTORS We may not be able to successfully register our trademark in Bangladesh, Cambodia, China, Hong Kong, Indonesia, Japan, Malaysia, Myanmar, Sri Lanka, Thailand and Vietnam. Our trademark is registered in Singapore. However, protection afforded by trademark registration may not be sufficient to prevent infringement of the trademark by third parties and may not prevent infringement of third parties trademarks. We have also applied for the registration of our trademark in Bangladesh, Cambodia, China, Hong Kong, Indonesia, Japan, Malaysia, Myanmar, Sri Lanka, Thailand and Vietnam which was undergoing examination by the relevant authority in these places as at the Latest Practicable Date. For details, please see the paragraph headed 2.2 Intellectual property rights of our Group in Appendix IV of this document. There is no assurance that such application will be successful, and our use of such trademark may infringe upon intellectual property rights of third parties. Should we fail to register such trademark or fail to enforce our rights against third parties, or we are held by any court or tribunal to be infringing upon or have infringed upon any trademarks of others, our financial and operating results may be adversely affected. Our financial performance for the financial year ending 31 December 2018 is expected to be affected by certain one-off non-recurring expenses. Our financial result for the financial year ending 31 December 2018 is expected to be affected by one-off non-recurring expenses in relation to the [REDACTED]. Our Directors estimate that the total amount of expenses in relation to the [REDACTED] is approximately [REDACTED]. This includes approximately [REDACTED] which is directly attributable to the issue of the [REDACTED] and is expected to be accounted for as a deduction from equity upon [REDACTED]. The remaining amount of approximately [REDACTED], which cannot be so deducted, will be charged to profit and loss. Out of the approximately [REDACTED] that will be charged to profit and loss, approximately [REDACTED], [REDACTED] and [REDACTED] have been charged during FY2016, FY2017 and 1Q2018, respectively, and approximately [REDACTED] is expected to be incurred for the financial year ending 31 December Accordingly, our financial results for the financial year ending 31 December 2018 will be affected by the expenses in relation to the [REDACTED]. We could be adversely affected as a result of any sales we make to certain countries that are, or become subject to, sanctions administered by the United States, the European Union, the United Nations, Australia and other relevant sanctions authorities. During the Track Record Period, we sold automotive spare parts and accessories to two Myanmar customers in the ordinary course of business. Myanmar is a jurisdiction that has historically been subject to a number of international sanctions programmes administered by the United States and other jurisdictions or organisations. While these programmes have been reduced considerably in recent years, there are a number of persons or organizations located in Myanmar that remain subject to targeted sanctions programmes, including being named on the SDN List or the Sectoral Sanctions Identifications List maintained by the OFAC. As advised by our International Sanctions Legal Advisors, our activities during the Track Record Period do not appear to implicate restrictions under International Sanctions. We have adopted know your client procedures and other means to assure that we do not engage in transactions that will subject us to any exposure under International Sanctions laws and regulations. However, we cannot predict the interpretation or implementation of government policy by the United States, or similar policies of other sanctions regulators in the European Union, the United Nations, Australia or by the governments or agencies of other applicable jurisdictions with respect to any current or future activities by us or our affiliates in Myanmar or any other countries that may be or become subject to International Sanctions. Therefore, our business and reputation could be adversely affected if the government of the United States, the European Union, the United Nations and Australia or any governmental entities were to determine that any of our activities constitute violations of the sanctions they impose. In addition, because sanctions programmes evolve over time, new requirements or restrictions could come into effect which may increase scrutiny on our business activities or result in our business activities being deemed to have violated sanctions laws or being sanctionable. In that event, our Group may be deemed to violate sanctions laws in the future and our business operations and financial conditions may be adversely affected as a result. 33

42 RISK FACTORS We had net current liabilities position as at 31 December As at 31 December 2016, we had net current liabilities of approximately S$0.3 million. Please see the paragraph headed Financial Information Summary of combined statements of financial position Net Current (Liabilities)/Assets in this document. We may have net current liabilities in the future. Having significant net current liabilities could constrain our operational flexibility and adversely affect our ability to expand our business. If we do not generate sufficient cash flow from our operations to meet our present and future financial needs, we may need to rely on additional external borrowings for funding. If adequate funds are not available, whether on satisfactory terms or at all, we may be forced to delay or abandon our development and expansion plans, and our business, financial condition and results of operations may be materially and adversely affected. We have high gearing ratio that may expose us to liquidity risk. Our business operation relies on cash generated from our business operations, finance lease obligations and bank borrowings and we expect this will be the case in the future. Our gearing ratio was approximately 1.9 times, 1.7 times and 1.3 times as at 31 December 2016, 31 December 2017 and 31 March 2018, respectively. Our high level of bank borrowings, finance lease obligations and gearing ratio may adversely affect our liquidity and business operations, including but not limited to: increase our vulnerability under adverse economic condition; potentially limit our ability to raise more debt; and increase our exposure to interest rate fluctuation. If we continue to have a high gearing ratio, our exposure to liquidity risk may restrict our ability to make necessary capital expenditure or develop business opportunities in the future, which may adversely affect our results of operations and financial positions. Dividends distributed in the past may not be indicative of our dividend policy in the future. On 30 November 2016, Optima Carz, one of our operating subsidiaries, declared interim dividend of approximately S$150,000 to Optima Werkz and Mr. Chew, which were its then shareholders. On 20 January 2017, Optima Carz declared interim dividend of approximately S$220,000 to Optima Werkz and Mr. Chew, which were its then shareholders. On 28 August 2017, Optima Carz declared interim dividend of approximately S$150,000 to Optima Werkz and Mr. Chew, which were its then shareholders. On 2 November 2017, Optima Werkz, one of our operating subsidiaries, declared interim dividend of approximately S$200,000 to Mr. Lee, Mr. Ang, Mr. Chee and Ms. FF Lim, which were its then shareholders. Any future dividend declaration and distribution by us will depend on various factors, including, without limitation, our results of operations, financial condition, future prospects and other factors which our Board of Directors may determine as important. Accordingly, our historical dividend distributions are not indicative of our future dividend policy and we cannot assure you that dividends of similar amounts or at similar rates will be declared in the future. Potential investors should be aware that the amount of dividends previously paid should not be used as a reference or basis upon which future dividends are determined. 34

43 RISK FACTORS RISKS RELATING TO OUR INDUSTRY Imposition of laws or regulations restricting the carrying on of our business, government policies on passenger car purchases and ownership for restricting road use in Singapore, or measures to encourage the use of public transport, may have a material adverse effect on our business. A substantial amount of our Group s revenue was derived from the provision of after-market automotive services by our Group to passenger cars in Singapore. There are laws in Singapore governing the carrying on of our businesses. For details, please see the paragraph headed Regulatory Overview Laws relating to the business of our Group in this document. In Singapore, a COE is required for the registration of a new vehicle in the appropriate vehicle category. A COE represents a right to own vehicle and use of the limited road space in Singapore for a term of 10 years. The Singapore government may limit the quota of COE in order to control the total number of vehicles in use. From 2010 to 2013, the Singapore government reduced the COE quota and increased the COE price. As a result, the number of newly registered passenger cars in Singapore decreased. The price of COE is expected to increase along with decreasing COE quota after 2019 and it is expected that it will be difficult for the total number of passenger cars in Singapore to keep increasing. If the Singapore government takes any measures to limit or reduce the number of passenger car registration, thereby reducing the number of passenger cars on the roads, and/or encourage the use of public transport, the demand of our services may be materially and adversely affected. In January 2016, the Ministry of Transport of Singapore announced that it aimed to make (i) public transport the main mode of travel by 2030; and (ii) walking, cycling and riding public transport the preferred life style, by improving rail reliability and walking and cycling connections. If the Singapore government imposes restrictions on road use, and/or if measures to encourage the use of public transport are imposed and successful, it may reduce the number of passenger cars in Singapore and hence may negatively affect the demand for our services. In this event, our financial condition and results of operations could be materially and adversely affected. If the Singapore government raises the import tariff rates on imported passenger cars or otherwise increases the costs of owning and using passenger cars in Singapore, our operations may be adversely affected. Our Group has provided services to car dealers which imported passenger cars from overseas during the Track Record Period. For details, please see the paragraph headed Business Customers in this document. If the Singapore government raises the import tariff rates for imported passenger cars, or otherwise increases the costs of owning and using passenger cars in Singapore, the market demand for passenger cars as well as the demand for our services may reduce. As a result, our results of operations and financial conditions may be adversely affected. Our Group also provides car rental services in Singapore. If the Singapore government raises the import tariff rates for imported passenger cars, or otherwise increases the costs of owning and using passenger cars in Singapore, our costs of purchasing new rental passenger cars for our car rental services will increase. If we are unable to pass the increase in costs to our customers, our profitability may be adversely affected. 35

44 RISK FACTORS Our Group s financial performance may be adversely affected by changes in the economic, financial or social conditions in Singapore or countries which we may have presence. During the Track Record Period, most of our revenue is derived from Singapore. Any changes or developments in the economic, financial or social conditions in Singapore or countries which we may have presence in, which are outside our Group s control, may affect the demand for our services and if there are any material adverse changes, our Group s business and profitability may be materially and adversely affected. Further, should there be a significant decrease in demand for our services in Singapore or countries which we may have presence in, our Group s business and results of operations may also be materially and adversely affected. There are competition from other service centres, including those operated by car dealers and from other car rental companies. If car dealers or owners of other service centres decide to expand their service centres and/or lower the prices charged for their services, or if the other car rental companies lower the prices charged for their services, our operating results and business performance may be materially and adversely affected. Our Group faces competition, in various aspects, such as number of service centres, convenience of the location of service centres, pricing, range of services and service quality, from other service centres, including those operated by car dealers. According to the Frost & Sullivan Report, the Singapore passenger car inspection, maintenance and repair services industry is highly fragmented, with approximately 1,400 service centres in Of the total market share as measured by revenue in Singapore in 2017, the top five players accounted for approximately 30.4%, while approximately 5.8% comprised our Group s market share and approximately 7.9% comprisedthetopplayer s market share. Our Group also faces competition from other car rental companies. Competition among car rental companies is primarily based on, among other things, fleet size, brand recognition, price, variety and condition of the vehicles, variety of service offerings and quality of customer service. According to the Frost & Sullivan Report, the Singapore car rental industry is relatively concentrated, with approximately 300 car rental companies. The top ten companies accounted for approximately 30.3% while our Group accounted for approximately 1.4% of the total market share in terms of revenue in If car dealers or owners of other service centres decide to expand their business, for instance increasing their number of service centres or lowering the prices charged for their services, we may face more intense competition from such market players. If the other car rental companies lower the prices charged for their services, we may also face more intense competition from such market players. As a result, we may not be competitive against these competitors and we may suffer from a decline in the demand for our services and our operating results and business performance may be materially and adversely affected. Due to the nature of our business, our Group is subject to changes in restrictions of import and export trade. Some of our Group s suppliers and customers are from overseas. Any changes in restrictions of import and export trade of the country or region which we purchase spare parts from or deliver spare parts to, such as regulatory restrictions, industry-specific quotas, tariffs, non-tariff barriers and taxes, could adversely affect our business, financial condition and results of operations. 36

45 RISK FACTORS RISKS RELATING TO THE [REDACTED] There has been no prior public market for our Shares and the liquidity, market price and trading volume of our Shares may be volatile. Prior to the completion of the Capitalisation Issue and the [REDACTED], there has been no public market for our Shares. An active trading market for our Shares may not develop after the [REDACTED] and the market price and liquidity of our Shares may be adversely affected. Factors such as variations in our Group s revenues, earnings and cash flows, announcements of new investments and/or strategic alliances could cause the market price of our Shares to change substantially. Any such developments may result in large and sudden changes in the volume and market price at which our Shares will be trading. There is no assurance that these developments will or will not occur in the future and it is difficult to quantify the impact on our Group and the trading volume and price of our Shares. In addition, both the market price and liquidity of our Shares could be adversely affected by factors beyond our control and unrelated to the performance of our business, for instance if the financial market in Hong Kong experiences a significant price and volume fluctuation. In such cases, investors may not be able to sell their Shares at or above the [REDACTED] or at all. Investors for our Shares may experience further dilution if our Group issues additional Shares in the future. We will comply with Rule of the GEM Listing Rules, which specifies that no further Shares or securities convertible into our equity securities (subject to certain exceptions) may be issued or form the subject of any agreement to such an issue within six months from the [REDACTED]. Having said that, upon expiry of such six-month period, we may raise additional funds by way of issue of new equity or equity-linked securities of our Company and such fund raising exercises may not be conducted on a pro-rata basis to the then existing Shareholders. As a result, the shareholding of the then Shareholders may be reduced or diluted and subject to the terms of the issue of the new securities, the new securities may confer rights and privileges that have priority over those conferred by the issued Shares. In addition, we may consider offering and issuing additional Shares in the future for expansion of our business or to the extent that our ordinary shares are allotted and issued upon the exercise of share options under the Share Option Scheme. In this regard, the then Shareholders may experience further dilution in the net tangible asset book value per Share if we issue additional Shares in the future at a price which is lower than the net tangible asset book value per Share. Future sales or perceived sales of a substantial amount of our Shares by our Controlling Shareholders in the public market may affect the prevailing market price of our Shares. The Shares beneficially owned by our Controlling Shareholders are subject to certain lock-up periods. There is no assurance that our Controlling Shareholders will not dispose of the Shares held by them following the expiration of the lock-up periods. We cannot predict the effect, if any, that any future sales of our Shares by any of our Controlling Shareholders, or the availability of our Shares for sale by any of our Controlling Shareholders may have on the market price of our Shares. Sales of substantial amount of our Shares by any of our Controlling Shareholders in the public market, or the perception that such sales may occur, could materially and adversely affect the prevailing market price of our Shares. 37

46 RISK FACTORS Granting options under the Share Option Scheme would result in the reduction in the percentage ownership of the Shareholders and may result in a dilution in the earnings per Share and net asset value per Share. We have conditionally adopted the Share Option Scheme although no options had been granted thereunder as at the Latest Practicable Date. Any exercise of the options to be granted under the Share Option Scheme in the future and issue of Shares thereunder would result in the reduction in the percentage ownership of the Shareholders and may result in a dilution in the earnings per Share and net asset value per Share, as a result of the increase in the number of Shares outstanding after such issue. Under HKFRSs, the costs of the share options to be granted under the Share Option Scheme will be charged to our combined statements of profit or loss and other comprehensive income over the vesting period by reference to the fair value at the date on which the options are granted under the Share Option Scheme. As a result, our profitability and financial results may be adversely affected. Investors should not place any reliance on any information contained in the press articles or other media regarding us and the [REDACTED]. There may have been press and media coverage on us and the [REDACTED], 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 document. You should only rely on the information contained in this document, the [REDACTED], and any formal announcement(s) made by us in Hong Kong when making any investment decision(s) 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 [REDACTED], or us. 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 document is inconsistent with, or conflicts with, the information contained in this document, we disclaim it. Accordingly, prospective investors are cautioned against making their investment decisions in reliance on any other information, reports, or publications other than this document. 38

47 INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] [REDACTED] 39

48 INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] [REDACTED] 40

49 INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] [REDACTED] 41

50 INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] [REDACTED] 42

51 DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED] DIRECTORS Name Residential address Nationality Executive Directors Mr. Ang Lay Keong (Hong Liqiang) Ms. Lim Li Ling (Lin Liling) Ms. Tan Peck Luan (Chen Biluan) Independent non-executive Directors 140 Countryside Road, Singapore Countryside Road, Singapore Blk 55 Geylang Bahru # Singapore Singaporean Singaporean Singaporean Mr. Chu Kin Ming( 朱健明 ) Room C, 11/F Block 1, Heya Aqua 395 Un Chau Street Cheung Sha Wan, KLN, Hong Kong Mr. Tang Chi Chiu( 鄧志釗 ) Unit C, 7/F Tower 5 28 Sheung Shing Street, Mantin Heights Ho Man Tin, Kowloon Hong Kong Ms. Liang Weizhang( 梁偉章 ) Room 204, Block 2, 8 Jiangnam Road Shiqi Zone, Zhongshan City, Guangdong Province, China Chinese Chinese Chinese For further information on the profile and background of our Directors, please refer to the section headed Directors and Senior Management in this document. 43

52 DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED] PARTIES INVOLVED IN THE [REDACTED] Sole Sponsor [REDACTED] Orient Capital (Hong Kong) Limited 28-29/F, 100 Queen s RoadCentral, Central, Hong Kong A licensed corporation to carry on type 6 (advising on corporate finance) regulated activities under the SFO [REDACTED] [ ] Legal advisers to our Company As to Hong Kong law Li & Partners 22/F, World-Wide House 19 Des Voeux Road Central Hong Kong As to Singapore law Equity Law LLC 7 Temasek Boulevard #43-03 Suntec Tower One Singapore As to Cayman Islands law Conyers Dill & Pearman Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman, KY Cayman Islands Legal advisers to the Sole Sponsor and the [REDACTED] As to Hong Kong law Hastings & Co. 5th Floor, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong As to Singapore law Shook Lin & Bok LLP 1 Robinson Road #18-00 AIA Tower Singapore

53 DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED] Reporting accountants Compliance adviser Industry consultant [REDACTED] BDO Limited 25th Floor, Wing On Centre 111 Connaught Road Central Hong Kong Orient Capital (Hong Kong) Limited 28-29/F, 100 Queen s RoadCentral, Central, Hong Kong Frost & Sullivan International Limited 1706, One Exchange Square 8 Connaught Place Central, Hong Kong [REDACTED] 45

54 CORPORATE INFORMATION Registered office in the Cayman Islands Principal place of business in Hong Kong Principal place of business in Singapore Company s website Company secretary Authorised representatives Cricket Square Hutchins Drive, PO Box 2681 Grand Cayman, KY Cayman Islands 17th Floor, MW Tower No. 111 Bonham Strand Hong Kong 6 Kung Chong Road Alexandra Industrial Estate Singapore (Note: the information contained in this website does not form part of this document) Mr. Chan Tsang Mo, HKICPA 17th Floor, MW Tower No. 111 Bonham Strand Sheung Wan, Hong Kong Ms. Tan Peck Luan (Chen Biluan) 6 Kung Chong Road Alexandra Industrial Estate Singapore Mr. Chan Tsang Mo, HKICPA 17th Floor, MW Tower No. 111 Bonham Strand Sheung Wan, Hong Kong Audit committee Remuneration committee Nomination committee [REDACTED] Mr. Tang Chi Chiu (Chairman) Mr. Chu Kin Ming Ms. Liang Weizhang Ms. Liang Weizhang (Chairman) Mr. Tang Chi Chiu Mr. Chu Kin Ming Ms. Liang Weizhang (Chairman) Mr. Ang Lay Keong (Hong Liqiang) Mr. Chu Kin Ming [REDACTED] 46

55 CORPORATE INFORMATION [REDACTED] [REDACTED] Compliance adviser Compliance officer Principal bankers Orient Capital (Hong Kong) Limited 28/F 29/F, 100 Queen s Road Central, Central, Hong Kong Ms. Tan Peck Luan (Chen Biluan) 6 Kung Chong Road Alexandra Industrial Estate Singapore United Overseas Bank Limited 80 Raffles Place UDB Plaza 1, #07-01 Singapore DBS Bank Ltd 12 Marina Boulevard Marina Bay Financial Centre Tower 3 Singapore

56 INDUSTRY OVERVIEW The information presented in this section is derived from the Frost & Sullivan Report, as well as various official or publicly available publications. The information derived from the Frost & Sullivan Report reflects estimates of the market conditions based on information from various sources. We believe that the sources of the information in this section are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any part has been omitted that would render such information false or misleading. Our Directors confirm that, after taking reasonable care, they are not aware of any adverse change in market information since the date of the Frost & Sullivan Report which may qualify, contradict or adversely impact the quality of the information in this section. We, the Sole Sponsor, the [REDACTED], the[redacted], the[redacted], or their respective affiliates or advisors or any other party involved in the [REDACTED], excluding Frost & Sullivan, have not independently verified, and make no representation as to, the accuracy of the information from official government or other third party sources. Such information may not be consistent with, and may not have been compiled with the same degree of accuracy or completeness as, other information compiled within or outside Singapore. Accordingly, the official government and other third party sources contained herein may not be accurate and should not be unduly relied upon. OVERVIEW OF MACRO ECONOMY IN SINGAPORE Nominal GDP and per capita nominal GDP Singapore s economy has gone through a period of stable growth in the last several years. Supported primarily by the steady expansion of its manufacturing sector and the fast growing service sector, nominal GDP in Singapore witnessed a stable growth from SGD billion in 2013 to SGD billion in 2017, representing a CAGR of 4.1%. Economy in Singapore is in a mature phase and is expected to remain its steady growth. Considering the continuous development trend of the aforementioned sectors, Singapore economy is expected to increase sustainably in the future. The nominal GDP is forecasted to increase to SGD billion in 2022, representing a CAGR of 3.1%. Influenced by the developing economy and stable population growth, per capita nominal GDP in Singapore increased from SGD70,560 in 2013 to SGD79,698 in 2017, representing a CAGR of 3.1%. In 2018, per capita nominal GDP in Singapore is expected to exceed SGD80,000, and it is forecasted to increase to SGD89,251 in 2022, representing a CAGR of 2.2% from 2018 to Average monthly household income Household income measures the combined incomes of all people sharing a particular household, indicates the monetary well-being of the citizens and is influenced by the macro economy development. The average monthly household income in Singapore including employer CPF contributions increased from SGD9,481 in 2013 to SGD10,336 in 2017, representing a CAGR of 2.9%. Considering the steady growth of nominal GDP in Singapore, average monthly household income is expected to show a CAGR of 2.3% from 2018 to 2022, and is forecasted to reach SGD11,936 in

57 INDUSTRY OVERVIEW OVERVIEW OF THE PASSENGER CAR MARKET IN SINGAPORE Definition and classification of passenger car A passenger car is defined as a wheeled road motor vehicle, other than a motor cycle, intended primarily for the carriage of passengers. Vehicles such as buses and trucks are defined as commercial vehicles, which do not fall into the category of passenger cars. In terms of the general public perception, passenger cars could be classified into entry and mediumlevel, luxury and ultra-luxury brands. Entry and medium-level brands are passenger cars with standardised functionalities that satisfy the basic necessity of driving, which are normally sold at affordable prices to the general public. Luxury brands are passenger cars with desirable functionalities beyond strict necessity and bring enhanced driving experience at increased expense. Ultra-luxury brands are prestige, exclusive and performance passenger cars with a diverse spectrum of superior functionalities compared with luxury passenger vehicles. Introduction of passenger car distributors and dealers in Singapore In Singapore, new passenger cars are all imported from overseas, and used passenger cars are imported from overseas or traded domestically. Based on the varying business models, passenger car distributors and dealers can be classified into two types: Authorised passenger car distributors and dealers, who sign dealership contracts with specific passenger car manufacturers or their sales subsidiary. Some authorised distributors and dealers usually sell single brand passenger cars. However, there are also multi-brand authorised passenger car distributors and dealers that sell passenger cars from different manufacturers. Independent passenger car distributors and dealers (also known as parallel importers), who sell passenger cars imported from another country without signing dealership contracts with manufacturers. Independent passenger car distributors and dealers do not obtain authorisation from the passenger car manufacturers, and they have full control over their business activities. Introduction of the COE System in Singapore A Certificate of Entitlement ( COE ) is the quota license which grants the legal right of car ownership and use of limited road space in Singapore for 10 years. Potential car owners in Singapore are required by the Land Transport Authority to first obtain a COE in the appropriate car category before purchasing a new car. According to the Land Transport Authority of Singapore, there are 5 categories to differentiate new registration of motor car under Vehicle Quota System ( VQS ), such as Category A (Cars up to 1600CC and 97kW), Category B (Cars above 1600CC or 97kW), Category C (Goods Vehicles & Buses), Category D (Motorcycles), and Category E (Open-all except motorcycle including taxis and vehicles exempted from VQS). All passenger cars including entry and medium level brands, luxury brands and ultra-luxury brands all fall in category A and category B in Singapore. The number of COEs available to the public are released through competitive bidding. There are 2 bidding exercises operated in the COE Open Bidding System each month and typically run as follows: starting on the first Monday and third Monday of the month at 12 p.m. and, ending 2 days later on Wednesday at 4 p.m.. The monthly COE quota is calculated by summing up (i) the allowed annual net increase in car population; (ii) the replacement of de-registered cars; and (iii) adjustments to account for changes in taxi population, past overprojections, expired or cancelled temporary COE, etc.. Given the vehicle growth rate from February 2018 onwards has been set at 0% per annum for Category A, B and D and the adjustments to account for changes in 49

58 INDUSTRY OVERVIEW taxi population remain comparatively stable every month, the replacement of de-registered cars influences the COE quota largely. Furthermore, as the government can control the COE quota based on past over-projections, the number of registered-cars are also affected by the authority to some extent. The COE price is largely influenced by the COE quota. In February 2013, the COE price dropped significantly after the new loan restrictions imposed by Monetary Authority of Singapore, which largely discouraged the purchase of new passenger cars. In September 2013, the COE price then increased significantly due to the announcement of new COE categorization criteria by LTA which took most premium models out of vehicle category A to vehicle category B. From 2014 to 2017, the COE price represented a downward trend as a result of the increase in COE quota during the same historical period. Vehicle category Category A Category B Category E 2013 Quota 8,534 8,230 6,247 Successful Bids 8,455 8,042 5, Quota 12,230 11,205 6,031 Successful Bids 12,127 11,076 5, Quota 32,867 21,578 11,207 Successful Bids 32,628 21,479 10, Quota 48,734 31,361 12,406 Successful Bids 48,180 31,055 12, Quota 45,282 31,868 5,635 Successful Bids 44,993 31,766 5,515 Total number of registered passenger cars Between 2013 and 2017, the total number of registered passenger cars remained relatively stable due to the Singapore government s control for the aim of preventing severe air pollution, alleviating traffic congestion and the shortage of space. The total number of registered passenger cars decreased from 623,688 units in 2013 to 614,789 units in 2017, representing a CAGR of -0.4%. The total number of registered passenger cars experienced slight decrease from 2014 to 2016 as large number of old passenger cars reached the 10-year usage limitation and were scrapped. The government has announced that the growth cap for all passenger cars would be cut from 0.25% per annum to 0% with effect from February 2018 in order to further alleviate the massive traffic jams. Due to the decreasing number of COE quotas after 2017, the total number of registered passenger cars is expected to slightly decrease at a CAGR of -0.4% from 611,669 units in 2018 to 601,629 units in

59 INDUSTRY OVERVIEW However driven by the continuously expanding sales volume, the total number of registered luxury and ultra-luxury passenger cars experienced a rapid growth from 112,542 units in 2013 to approximately 146,654 units in 2017, representing a CAGR of 6.8%, in spite of the downward trend of the total number of registered passenger cars in Singapore after Going forward, the total number of registered luxury and ultra-luxury passenger cars is expected to further increase over the next five years. It is estimated to increase from 155,976 units to 176,277 units, representing a CAGR of 3.1% from 2018 to Total Number of Registered Passenger Cars, Breakdown by Type, E Unit 800, , ,688 CAGR E-2022E Entry & Medium-level Passenger Car -2.2% -1.7% Luxury & Ultra-luxury Passenger Car 6.8% 3.1% Total -0.4% -0.4% Luxury & Ultra-luxury Passenger Car Entry & Medium-level Passenger Car 619, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , E 2019E 2020E 2021E 2022E Source: Land Transport of Authority, Frost & Sullivan Note: Luxury & ultra-luxury passenger cars encompass brands, such as Audi, Austin, B.M.W, Cadillac, Chrysler, Daimler, Holden, Hummer,Infinity,Jaguar,Lancia,LandRover,M.G.,MercedesBenz,MG-F,MINI,MINI-Mayfair,Morgan,Morris,Panther, Rover, Singer, Volvo, Alfa Romeo, Aston Martin, Bentley, Ferrari, Lamborghini, Maserati, Maybach, McLaren, Mitsuoka, Porsche and Rolls Royce. Total number of newly registered passenger cars The change in the total number of newly registered passenger cars in Singapore is cyclical in nature, driven by vehicle age limits and the COE system. With relatively low COE prices and growing purchasing power, high demand for passenger cars had contributed to a noticeable increase in total number of newly registered passenger cars between 2005 and 2007 in Singapore. It had then gradually decreased due to the Singapore government s controls on vehicle ownerships and the rising costs of COE prices. From 2015 to 2017, the total number of newly registered passenger cars has sharply increased due to the large number of passenger cars reaching the 10- year usage limitation, followed by the purchase of new passenger cars and COEs. Due to the cyclical nature of the market, a period of decline is expected after 2017 because of the shrinking number of passenger cars reaching the ten-year COE period. It is expected that the total number of newly registered passenger cars in Singapore shall decrease at a CAGR of -26.1% from 76,519 units in 2018 to 22,782 units in

60 INDUSTRY OVERVIEW Total Number of Newly Registered Passenger Car, Breakdown by Type, E Unit 120, , , , , , ,472 10,302 12, CAGR E-2022E Entry & Medium-level Passenger Car 62.2% -33.1% Luxury & Ultra-luxury Passenger Car 14.0% -10.1% Total 42.2% -26.1% Luxury & Ultra-luxury Passenger Car Entry & Medium-level Passenger Car 87,504 91,922 76,519 57,589 52,619 70,156 71,363 28,932 59,986 30,340 43,100 38,726 23,601 22,782 17,014 17,732 12,348 11,989 11,918 14,489 17,348 20,559 16,533 13,893 12,608 11,253 10, E 2019E 2020E 2021E 2022E Source: Land Transport of Authority, Frost & Sullivan OVERVIEW OF THE AFTER-MARKET AUTOMOTIVE SERVICE IN SINGAPORE Industry value chain analysis Upstream suppliers are manufacturers that produce and process all passenger car parts, chemicals, equipment, and accessories used in providing after-market automotive services, as well as providing products to authorised service centres, independent service centres and distributors. As there are almost no car and part manufacturers in Singapore, the upstream suppliers are mainly foreign-based companies, which export their products to Singapore importers in the midstream. Distributors refer to the middleman that imports goods used in providing after-market services and resell them to passenger vehicle after-market service providers. The imported goods generally include auto parts, equipment, exterior and structural products, appearance chemicals, mechanical products, electrical products, and electronic products. Passenger car after-market automotive service providers provide different services to end customers depending on their business development. A majority of the service providers can only provide one or few aftermarket automotive services to end customers due to capital and talent barriers, whereas some leading service providers are able to offer a wide range of comprehensive after-market automotive services to a broad class of passenger cars of different makers and models. Within the highly fragmented and complex market for after-market automotive services, two types of service providers can be identified; (i) authorised dealers; and (ii) independent service providers. It is common for Singapore authorised dealers to offer official factory warranty to their customers, and they generally have their own exclusive workshops in order to assure service quality and generate more revenues. In Singapore, younger age cars tend to be serviced in such workshops. Independent service providers provide maintenance and repair services for a wide range of customers from parallel importers, insurance companies, car leasing companies, individuals and other corporations. Although some parallel importers have their own workshops, there is a trend that parallel importers increasingly outsource their after-market functions, such as maintenance and repair and warranty management to well-chosen independent service providers owing to cost control and core business focus. 52

61 INDUSTRY OVERVIEW Introduction of Passenger Car Warranty in Singapore New passenger car purchased from the authorised dealers usually come with the factory warranties, which are backed by the original manufacturer for a specific period of time or specific mileage limits. A factory warranty generally covers all repairs or replacements needed for passenger cars to assure their performance and quality, and it prevents much risk for expensive repair bill. With more assurance and reliability, a majority of customers prefer to purchase new passenger cars from the authorised dealers. For parallel importers, after-sales automotive services are provided by their own workshops or independent services providers. New passenger car warranties from parallel importers may cover different aspects ranging from basic mechanical repairs to comprehensive after-sales services, as parallel importers have full control over their business activities. In terms of independent service providers, passenger car warranties must be back by insurance company in Singapore in light of the requirement of Monetary Authority of Singapore since late Independent service providers have to enter a service agreement with licensed insurers in order to provide warranty programme for customers. Typically, car owners who participate in the warranty programme will pay a premium to insurance company at first. When such vehicles are sent in for repair during the warranty period, independent service providers receive service fees for such in-warranty repairs from insurance companies. With increased assurance and reliability, parallel importers increasingly outsource their warranty management to independent service providers under warranty programme. In addition to pre-owned passenger cars, authorized dealers, parallel dealers and independent service providers with warranty programme offer extended warranty for vehicle owners to extend the protection for additional years or miles. Extended warranties costs extra and are sold separately. OVERVIEW OF PASSENGER CAR MAINTENANCE AND REPAIR MARKET IN SINGAPORE Market size of passenger car maintenance and repair service in Singapore The passenger car maintenance and repair industry in Singapore reflected a certain degree of fluctuation, but it overall remained at a stable level with a CAGR of 0.5% during 2013 and According to the passenger car age distribution in Singapore, the proportion of passenger cars aged over 7 years has increased from approximately 37.4% to 54.7% from 2013 to 2015, resulting a solid growth in maintenance and repair industry during the same period. However, following by the decline in aging passenger car population, the market size of passenger car maintenance and repair industry decreased in 2016 and With the rising number of aging passenger car in Singapore, the market size of passenger car maintenance and repair industry is expected to increase at a CAGR of 2.8% from SGD267.1 million in 2018 to SGD298.2 million in 2022, among which the market size of luxury and ultra-luxury passenger car segment is estimated to reach SGD117.2 million in 2022 at a CAGR of 5.1%. 53

62 INDUSTRY OVERVIEW Market Size of Passenger Car Maintenance and Repair Industry by Sales Value, E SGD Million 500 CAGR E-2022E Entry & Medium-level Passenger Car -0.6% 1.4% Luxury & Ultra-luxury Passenger Car 2.6% 5.1% Total 0.5% 2.8% Luxury & Ultra-luxury Passenger Car Entry & Medium-level Passenger Car E 2019E 2020E 2021E 2022E Source: Frost & Sullivan Key Market Drivers Increasing number of aged cars Average service life period of passenger cars is growing in Singapore. Revealed by LTA, in 2017, the percentage of passenger cars with over 10-year service life period was 12.2%, while such percentage was only 1.7% in Wear and tear of parts and components in cars are associated with the increasing mileages driven by cars, which requires timely maintenance and repair to guarantee the safety and user experience. Along with more aged cars on the road, market maintenance and repair demand for maintenance and repair service is also increasing. Technological innovation in engine types Due to the growing environmental awareness, eco-friendly cars are becoming more popular, such as electric cars, plug-in hybrid electric cars, hybrid cars, etc., which can reduce harmful gas emission and utilise fuels more efficiently. With these kinds of cars released in market, engines are also upgrading. Demand for inspecting and maintaining the new type of car engines drives the development of maintenance and repair market. To undertake the new business, players in industry will put more emphasis on training and purchasing new equipment. Key Market Trends More advanced technology and highly-skilled workers Because of environmental consciousness and limited land areas, the Singapore government has enacted laws and regulations to protect the environment, such as Environmental Protection and Management Act issued in 2008 to reduce carbon dioxide emission. Thus, potential passenger car owners will be encouraged to purchase more environment-friendly cars, such as those with more fuel-efficient engines. As a result, more advanced maintenance and repair technologies and highly-skilled workers are required. 54

63 INDUSTRY OVERVIEW More personalised service with the Internet combined With the high Internet penetration of 82.5% in Singapore in 2016, maintenance and repair business will be more closely combined with the Internet. For example, customers will have access to the services provided online and order service packages in advance. In the meanwhile, customers choice preferences and requirements, such as car types, spare parts consumption patterns, will be recorded in database system, to provide the customers with more personalised services in the whole life cycle of the cars, which can maximise the service efficiency and utility. Higher quality service will be provided in industry As the maintenance and repair market in Singapore has already been mature, developing core competitiveness to occupy market share will be a trend in the industry. For example, service centers will buy expensive diagnostic equipments to provide upscale service. Also, they will invest in marketing strategy to attract new customers and hire experienced worker to provide superior customer experience. Opportunities and Threats of Passenger Car Maintenance and Repair Market Opportunities Restricted by the COE quota, the growth rate of new passenger cars is maintained at a low level. Such characteristic of passenger car in Singapore brings opportunity to maintenance and repair market because the cars average service life period is getting longer. Issued by LTA, the percentage of passenger cars with over 10- year service life period was 12.2% in 2017, much higher than 1.7% in To keep the cars with such long service life period in a good condition, maintenance and repair service is in high demand. Hybrid battery powered vehicles and electrically powered cars are emerging in recent years. These new kinds of passenger cars have new generation of power train, which requires new technology to be maintained and repaired. Thus, maintenance and repair market has a new opportunity to develop. Threats The passenger car maintenance and repair market in Singapore is quite mature. The price of COE is expected to increase along with decreasing COE quota after 2019, the total number of passenger cars in Singapore is expected to be faced up with difficulties to keep increasing. Also, the government is developing the public transportation system, the growth potential of maintenance and repair market would be restrained by decreasing demand for passenger cars. Price of Major Raw Material Lubricant is one of the major raw material used in the passenger car maintenance and repair industry. Historical price of imported lubricating greases decreased from 4,916 USD/ton in 2013 to 2,699 USD/ton in 2017, representing a CAGR of -14.0%. The slump in lubricant price was closely related to the decreasing price of crude oil, which was a result of oversupply. Labour Cost Labour force is another essential cost component. Released by the Singapore Department of Statistics, average compensation in manufacturing industry increased from SGD82,930 in 2013 to SGD109,563 in 2017, representing a CAGR of 7.2%. The increasing compensation indicates that the Singapore economy continues to perform well. 55

64 INDUSTRY OVERVIEW Historical Price Trend of Average Service Fee From 2013 to 2015, the increase in average service fee was mainly due to the increase in aged passenger cars as passenger cars with a longer service life require longer servicing hours and consume more parts, resulting a higher service fee than younger age cars. However, the percentage of passenger cars aged more than 3 years has sharply decreased from approximately 82.1% in 2015 to approximately 61.4% in This was mainly attributed to the large number of passenger cars reaching the 10-year usage limitation. As repair and maintenance service fees are much higher for aged passenger cars, the decrease in average service fee is in line with the decrease in the age population of passenger cars in Singapore. Driven by the increasing demand for maintenance and repair services due to rising average passenger car age, the average service fee is forecasted to reach SGD495.6 in 2022, with a CAGR of 3.2% from 2018 to Historical Price Trend of Average Service Fee, E SGD Average Service Fee Growth Rate CAGR % 2018E-2022E 3.2% % 5.7% -2.9% -5.3% -2.4% 3.1% 3.8% 3.2% 2.8% 90% 70% 50% 30% 10% E 2019E 2020E 2021E 2022E -10% Source: Frost & Sullivan Competitive landscape of the passenger car maintenance and repair market in Singapore The competitive landscape of passenger car after-market service in Singapore is highly fragmented, and this is mainly attributed to fierce competition within the passenger car after-market service in Singapore. In terms of passenger car repair and maintenance market, it indicates a medium market concentration with the top 5 companies accounting for 30.4% of the total market share by revenue in There are approximately 1,400 maintenance and repair service centers in Singapore by And most of them focus on entry and medium level passenger vehicle brands due to low barriers of capital and talent. It is thereby that the competition is fierce among the maintenance and repair service providers who develop business for entry and medium-level passenger cars. On the other hand, due to higher entry barriers for luxury passenger car and ultra-luxury segment, there are fewer maintenance and repair service providers in the luxury passenger car and ultra-luxury supercar maintenance and repair service market. The top 5 companies accounted for approximately 73.6% of total market share of luxury passenger car and ultra-luxury supercar maintenance and repair services segment. 56

65 INDUSTRY OVERVIEW Our Group, being a one-stop premier after-market automotive service provider, owns three service centers among which the headquarters is located at the heart of Singapore s automotive business area populated with luxury and ultra-luxury passenger cars showrooms and service centers. With a strong foundation of automotive technical knowledge and know-how, our Group covers most of the major automotive belts with an abundance of car-related business, and develops a broad and diverse loyal customer base in Singapore. Furthermore, established long-standing relationships with high-quality suppliers ensure the quality of product offerings and enable price reduction of raw materials for Our Group. Therefore, Our Group accounted for 5.8% and 9.3% of the total and luxury and ultra-luxury maintenance and repair service market share respectively in 2017 in term of the sales revenue of all service providers. Among independent service providers, our Group ranked the first place accounting for 8.8% in maintenance and repair service market in 2017 in terms of the sales revenue of all independent service providers. Market share of passenger car maintenance and repair service providers by sales revenue, 2017 Market share of luxury passenger car and ultra-luxury supercar maintenance and repair service providers by sales revenue, % 7.0% 26.4% 22.2% Company A Company B Our Group Company C Company D Other 5.8% 5.0% 4.7% Company A Company B Company D Our Group Company E Others 19.9% 8.8% 69.6% 9.3% 13.4% Source: Frost & Sullivan Note: In the top 5 ranking of passenger car maintenance and repair market, our Group, Company C and Company E are independent service providers, whereas Company A, Company B and Company D are authorised dealers. Capital investment barrier Large capital investment is required to start a passenger car maintenance and repair service business. Among all initial investments, major investments include service center construction, specialised equipment procurement, channel management, labour cost and advertisement expenditure. To guarantee service quality, a passenger car maintenance and repair service provider should also keep investing in diagnostic equipment and materials, and regular training for technicians, which is consistent investment and requires sufficient cash flow. In conclusion, for new entrants, capital is the first important factor to overcome to enter the passenger car maintenance and repair market. Channel barrier Competition Commission of Singapore has worked with major car dealers to remove restrictions from existing and new warranties, which allows owners to repair their cars at independent workshops instead of at authorised workshops only. Services provided by players in passenger car maintenance and repair market are homogeneous, so the market is quite competitive, and the service price is expected to decrease. To have competitive advantages, establishing good cooperation with suppliers and getting raw materials at a favourable price is a long-lasting and essential way to remain profitable. 57

66 INDUSTRY OVERVIEW Brand images barrier Generally, car owners engage an automotive service provider on continuous basis as long as it provides quality services. Thus for new entrants of the market, establishing their own brand images and attracting customers are important issues. To establish good brand images, new entrants need to invest on marketing activities, such as online advertisements and offline promotions, to attract customers and expand their market share. However, it will take a long time to establish brand images and accumulate customers, which require not only capital investment but also high-quality service. OVERVIEW OF THE PASSENGER CAR RENTAL MARKET IN SINGAPORE Definition and classification of passenger car rental service Passenger car rental service refers to an operation mode that a company rents passenger cars for short periods of time, generally ranging from a few hours to several months or longer. Typically, passenger car rental service providers operate a number of local branches to allow users to return passenger cars at different locations, these branches are primarily located near airports or urban areas. It is common that customers can make reservations for preferred cars and value-added services via online website and telephone. Passenger car rental service could be classified into business to customer ( B2C ) rental and business to business ( B2B ) rental in terms of the type of client, or it could be classified into long-term rental and shortterm rental in terms of the tenancy. B2C car rental refers to a business mode in which passenger car rental service companies operate by purchasing or leasing passenger cars for the aim of renting them to their individual customers for a specific period of time. B2B car rental refers to a business mode in which passenger car rental service companies operate by purchasing or leasing passenger cars for the aim of renting them to business customers such as companies, organisations for a specific period of time. Long-term car rental is a rental business mode that a car rental company signs a long-term rental contract with customers on a monthly or longer basis. In most cases, rental of 180-days or longer are categorised as long-term car rentals; and such rentals are typically charged based on daily, weekly, or monthly rates. Short-term car rental is a rental business mode that a car rental company signs a short-term rental contract with customers on a hourly or daily basis. Car rental contracts under 180-day limit are categorised as short-term car rentals, and are typically charged based on hourly or daily rates. Market size of the passenger car rental industry in Singapore Driven by the increase in arrivals for both business and leisure travelers, as well as the demand for domestic commuting, the passenger car rental industry has witnessed a stable growth in the past few years from SGD118.3 million in 2013 to SGD162.2 million in 2017, representing a CAGR of 8.2%. Going forward, as a growing number of rental cars are seen by commuters and policymakers as a viable alternative to taxi or owning a car, people will increasingly choose to use rental cars as a medium of transportation. Moreover, due to growing cost of car ownership in Singapore, people prefer to choose long-term car rentals instead of purchasing a passenger car and hence, the passenger car rental market continues to grow. 58

67 INDUSTRY OVERVIEW In addition, tourism in Singapore is expected to remain flourishing, and it will further boost the growth in passenger car rental market. Therefore, the passenger car rental industry is expected to generate a total revenue of SGD220.0 million in 2022, representing a CAGR of 6.1% between 2018 and Market Size of Passenger Car Rental Industry by Sales Value, E SGD Million Market Size Growth Rate CAGR % 2018E-2022E 6.1% % 80% 60% % % 10.2% 6.5% 7.2% 7.0% 6.6% 6.4% 5.9% 5.6% 20% E 2019E 2020E 2021E 2022E 0% Source: Frost & Sullivan Key Growth Drivers Development of Tourism Brings High Demand for Passenger Car Rental Tourists are an important part of the car rental market in Singapore. There s a continuous increasing trend of the tourists arrivals in Singapore, from 900 thousand arrivals per month in 2010 to 1.5 million per month in The growing number of tourists will certainly be an optimistic symbol for the car rental market as it is necessary for visitors to hire a car while traveling in Singapore city. Also, unlike online taxi-hailing services, there are a lot of methods to ensure the security of car rental services such as insurance and GPS positioning. Being a convenient and safe transportation, the car rental market is promising with the development of tourism in Singapore. Restricted Expansion of Passenger Cars With the government s control, purchasing and using a passenger car is expensive in Singapore. Passenger car owners should have a COE before purchasing a passenger car, which was over SGD45,000 for Category A and over SGD42,000 for Category B in 2017 on average. The COE quota is controlled by the government, which means the maximum number of passenger cars is predetermined. Thus, car rental is necessary for those who have a demand for using cars but fail to bid for a COE. Also, the expenses of owning a passenger car such as parking fee, insurance, etc. is large as well, thus renting a passenger car can lower such cost to the largest extent. 59

68 INDUSTRY OVERVIEW Key Market Trends Increasing Demand for Long-term Car Rental More residents prefer to rent a car on a long term basis instead of buying one of their own because of high cost to own a car in Singapore. To own a passenger car, apart from COE, which is expected to have a higher price from 2019, the owners have to pay a large amount of fees, such as insurance, parking fees, etc. In addition, with the limit of COE quota from the government, less residents will have access to purchasing a passenger car in the future. Thus, renting a passenger car on a longer term is an alternative choice for those. More convenient to rent a car with Internet combined The development of Internet brings convenience to the passenger car rental market. With the increasing demand for renting a car, the traditional approach to go to the brick-and-mortar service center for consulting and selecting will be outdated. The Internet provides a feasible and convenient access to meet the growing demands for rental. People can select appropriate modes of cars on mobile applications and go to the nearest service centre. They can rent passenger cars in ways of both round-trip and one-way, and even peer-to-peer. Opportunities and Threats of the Passenger Car Rental Market Opportunities Tourists bring demand for passenger car rental market. Singapore is a tourism country, which attracts over 17 million tourists in In the following years, over SGD700 million will be funded in tourism industry, in aspects of tourism products update, tourism database establishment, and employee skills training. The passenger car rental market sees opportunities in flourishing tourism industry. As the government is controlling the total number of cars on the road, residents are more difficult to bid for a COE and purchase a passenger cars of their own. Yet, using cars is inevitable in daily life. Thus, renting a car for a period of time is an alternative, which brings customer base for passenger car rental market. Threats Using a passenger car is expensive in Singapore. The user should pay for parking charges, ERP, and petrol. Although the total expense is much less than purchasing a passenger car, the price of the package offered by a rental company is still quite high. With one of the most cost-efficient transport networks in the world, residents and tourists can go out by MRT (mass rapid transit), bus and taxi. Competitive landscape of the passenger car rental market Although there are approximately more than 300 car rental companies that can provide passenger car rental service in Singapore, the competitive landscape of passenger car rental market is relatively concentrated with the top 10 companies accounting for 30.3% of the total market share by revenue in This is mainly attributed to high requirements of capital and strict requirements of license. Most of the leading players in the market offer both B2C and B2B leasing services on a short-term or long-term basis. However, each of them targets different customer groups. Some leading companies focus on mass market by providing attractive prices, while other leading companies focus on middle and high-income level classes by providing higher quality services and addon services. In Singapore, the total fleet size of passenger cars for rental was approximately 7,800 in Our Group owns 134 passenger cars and generated revenue of SGD2.2 million from the provision of passenger car rental services in 2017, accounting for 1.4% of the market share of passenger car rental in

69 INDUSTRY OVERVIEW Market share of passenger car rental by sales revenue and ranking of passenger car rental company in terms of vehicle fleet size, 2017 Company F Company G Company H Company I Company J Company K Company L Company M Our Group Company N Other 69.7% 8.7% 7.9% 2.2% 2.0% 1.9% 1.8% 1.6% 1.5% 1.4% 1.3% Company F Company G Company H Company I Company J Company K Company L Company M Company N Our Group Vehicle fleet size Source: Frost & Sullivan Entry barriers to passenger car rental market Initial investment barrier Large initial investment is required to start a car rental business. Among all initial investments, major investments include service centre and parking lot construction, fleet purchase, COE fees, insurance premium, labour cost and advertisement expenditure. For a car rental agency, fleet should be well maintained and have a high turnover to meet the customers demand and attract high demanding customers, which requires consistent investment and sufficient capital. As a result, initial investment is an important barrier for new entrants. Certificates barrier To operate car rental business, all insurance and regulatory requirements should be fulfilled. For example, all fleet of a car rental agency should be converted into legal rental car by LTA with full comprehensive insurance coverage. Also, the Singapore government has enacted regulations such as Environmental Protection and Management Act, the Hire-Purchase Act, Road Traffic Rules, and so forth, which regulate the rental agencies conduct, standardise the whole rental market, and becomes a factor that new entrants must comply with at the very beginning. Brand images barrier With the development of the Internet and online social network, customers tend to share travelling experience online, and make their decisions largely based on online information. Thus the new entrants must attempt to stand out of other rental agencies to earn likes online and establish their good brand images. SOURCES OF INFORMATION Our Group commissioned Frost & Sullivan, a market research consultant, to prepare the Frost & Sullivan Report for use in this document. Our Group has agreed to pay a fee of [REDACTED] for the Frost & Sullivan Report, which will be fully paid prior to the [REDACTED]. Our Group is of the view that the payment of such fee does not affect the fairness of the conclusions drawn in the Frost & Sullivan Report. 61

70 INDUSTRY OVERVIEW Established in 1961, Frost & Sullivan provides market research on a variety of industries, including automotive industry. The Frost & Sullivan Report includes information on the inspection, maintenance, repair, modification, tuning and grooming market in Singapore. In preparing the Frost & Sullivan Report, Frost & Sullivan has conducted detailed primary research which involved discussing the status of the industry with certain leading industry participants. Frost & Sullivan has also conducted secondary research which involved reviewing company reports, independent research reports and data based on its own research database. Frost & Sullivan has obtained the figures for the estimated total market size from historical data analysis plotted against macroeconomic data as well as considered the industry key drivers. The Frost & Sullivan Report was compiled based on the following assumptions: (i) Singapore s economy is likely to maintain steady growth in the next decade; (ii) Singapore s social, economic, and political environment is likely to remain stable in the next few years; and (iii) key industry drivers are likely to continue to affect the market over the next few years. Frost & Sullivan, the Sponsor and we believe that the basic assumptions used in preparing the Frost & Sullivan Report, including those used to make future projections, are factual, correct and not misleading. Frost & Sullivan has independently analysed the information, but the accuracy of the conclusions of its review largely relies on the accuracy of the information collected. 62

71 REGULATORY OVERVIEW A summary of the relevant laws and regulations in Singapore which are applicable to our Group is set out below. LAWS RELATING TO THE BUSINESS OF OUR GROUP Vehicle Modifications Under Sections 6 and 140 of the RTA, the LTA may make rules generally as to the use of vehicles, their construction and equipment and conditions under which they may be used. Rules that have been made pursuant to Sections 6 and 140 of the RTA include, among other things, the Road Traffic (Motor Vehicles, Construction & Use) Rules, the Road Traffic (Motor Vehicles, Lighting) Rules and the Road Traffic (Motor Vehicles, Seat Belt) Rules which stipulate, among other things, the requirements pertaining to length, width and height of a vehicle, brakes, mirrors, smoke and noise emissions, lights, lamps and seat belts. Pursuant to Section 5(6) of the RTA, if a vehicle is used or is sold, supplied, offered or altered in contravention of the RTA, any person who so uses the vehicle or causes or permits the vehicle to be so used or so sells, supplies, offers or alters it or causes or permits it to be so sold, supplied, offered or altered shall be guilty of an offence. Any person who is guilty of an offence under Section 5(6) of the RTA shall be liable on conviction to a fine not exceeding S$5,000 or to imprisonment for a term not exceeding three months or to both and, in the case of a second or subsequent conviction, to a fine not exceeding S$10,000 or to imprisonment for a term not exceeding six months or to both. Under guidelines issued by the LTA, there are three categories of modifications: (a) modifications that are allowed without seeking the LTA s approval, (b) modifications that require the LTA s approval, and (c) modifications that are not allowed. Examples of each category are set out below: Modifications that require the LTA s approval engines exhaust system hoods or canopies seating arrangements sunroofs superchargers or turbochargers transmission Modifications that do not require the LTA s approval bumpers car seats fog lamps fuel additives fuel molecule polarisers gear knobs in-vehicle entertainment systems in-vehicle information & communication systems (GPS system) intake air filters meters and gauges radiators rollover bars roof racks 63

72 REGULATORY OVERVIEW seat belts side skirts side windows and partitions (for light good vehicles) spark plugs and spark plug cables spoilers sports rims (for cars only) steering wheels sunshades suspension systems tinted films tinted glass tyres Modifications that are not allowed air horns chassis crash bars (after-market) daytime running lamps (DRLs) decorative lamps increasing engine capacity (after-market) high intensity discharge (HID) headlamp motorcycle chain guards motorcycle headlamp disabling of automatic switch-on function nitrous injection devices (use of) spot lamps tinting or masking of vehicle lamps tow hooks Vehicle Quota System The LTA implements a vehicle quota system which regulates the rate of growth of vehicles on roads in Singapore. Anyone who wishes to register a new vehicle in Singapore must first obtain a COE, by paying the prevailing COE quota premium which is determined based on, among other things the type of vehicle, the engine capacity of the vehicle and/or the maximum power output of the vehicle. A COE represents a right to vehicle ownership and use of the limited road space for 10 years. At the end of the 10-year COE period, vehicle owners may choose to deregister their vehicle or to revalidate their COEs for another five or 10-year period by paying the prevailing COE quota premium. As at the Latest Practicable Date, COEs obtained on or after May 2017 comprise the following categories: Category A Category B Category C Category D Category E Car with engine capacity up to 1,600cc and maximum power output up to 97 kilowatts ( KW ) (130 brake horsepower ( bhp )) Car with engine capacity above 1,600cc and maximum power output 97KW (130 bhp) Goods vehicle and bus Motorcycle Open-all vehicle except motorcycle 64

73 REGULATORY OVERVIEW Vehicular Emission Standards and Testing The VER applies to all motor vehicles whose whole weight is transmitted to the road surface by means of its wheels that are in contact with the ground when the motor vehicle is in motion. Under the VER, every petrol driven motor vehicle (other than a motorcycle or scooter) to be registered in Singapore on or after 1 September 2017 shall conform to any of the standards for exhaust emission specified in the First Schedule of the VER for the class of motor vehicle to which that motor vehicle belongs. Similarly, every diesel driven motor vehicle (other than a motorcycle or scooter) to be registered in Singapore on or after 1 January 2018 shall conform to any of the standards for exhaust emission specified in the Second Schedule of the VER for the class of motor vehicle to which that motor vehicle belongs. Under the VER, owners of motor vehicle fleets of three or more motor vehicles may be required by the DGEP to, among other things, carry out regular servicing and repair of motor vehicles at such intervals and workshops as the DGEP may specify to ensure that every motor vehicle owned or in possession conforms to the applicable prescribed standards. Additional Registration Fee and Financing Restrictions on Motor Vehicle In addition to the registration fee of S$220 to register a motor vehicle in Singapore, the LTA imposes an additional registration fee calculated based on a percentage of the open market value of the motor vehicle. For private cars, company cars, rental cars and tuition cars registered with COEs obtained from the COE bidding exercise in March 2013 and onwards, the additional registration fee will be calculated as follows: Motor vehicle open market value Additional registration fee rate First S$20, % Next S$30,000 (i.e. S$20,001 to S$50,000) 140% Above S$50,000 (i.e. S$50,001 onwards) 180% Further, with effect from 27 May 2016, the MAS imposed, among other things, the following financing restrictions on motor vehicle loans granted by financial institutions: for motor vehicles with an open market value that is less than or equal to S$20,000, the maximum loan quantum is 70% of the purchase price; for motor vehicles with an open market value that is more than S$20,000, the maximum loan quantum is 60% of the purchase price; and the maximum tenure of a motor vehicle loan is seven years. Terms of Hire-Purchase Agreements of Motor Vehicles Under the HPA, for all hire-purchase agreements made on or after 15 July 1994, any motor vehicle the value of which does not exceed $55,000, which amount shall include any GST and any import and excise duty payable in respect of the motor vehicle, but shall exclude the cost of a COE for the motor vehicle, must contain all the information prescribed in Section 3 and the Second Schedule of the HPA, including, among other things, a description of the goods, cash price of the goods, applied interest rate, effective interest rate, date of monthly payment, amount of each instalment, number of instalments to be paid and processing fees (if any). 65

74 REGULATORY OVERVIEW Hire-Purchase (Motor Vehicles) Regulations 2013 (of the laws of Singapore) ( HPR ) The HPR shall apply only to any hire-purchase agreement or conditional sale agreement for a motor vehicle made on or after 6 April 2013 where: (a) the relevant agreement was made on or after 6 April 2013; or (b) the COE for the motor vehicle was issued on or after 6 April Under the HPR, the minimum amount of the deposit to be paid by the buyer under a hire-purchase agreement for a motor vehicle shall be: (a) (b) 30% of the purchase price of the motor vehicle if the applicable value of the motor vehicle does not exceed S$20,000; or 40% of the purchase price of the motor vehicle if the applicable value of the motor vehicle exceeds S$20,000. Additionally, the tenure of a hire-purchase agreement for a motor vehicle shall not exceed seven years. Automobile Insurance The MVA is an Act to provide against third-party risks arising out of the use of motor vehicles and for the payment of compensation in respect of death or bodily injury arising out of the use of motor vehicles and for matters incidental thereto. Under the MVA, it is unlawful for any person to use or to cause or permit any other person to use a motor vehicle in Singapore or a motor vehicle which is registered in Singapore in any territory specified in the Schedule of the MVA unless there is in force in relation to the use of the motor vehicle by that person or that other person, as the case may be, such a policy of insurance or such a security in respect of third-party risks that complies with the requirements of the MVA. In order to comply with the requirements of the MVA, a policy of insurance must, among other things, be a policy which insures such person, persons or classes of persons as may be specified in the policy of insurance in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle in Singapore and in any territory specified in the Schedule of the MVA ( Third Party Liability ). If judgment in respect of any Third Party Liability is obtained against any person insured by the policy of insurance, then the insurer shall pay the sum payable under the judgment to any person entitled to the benefit of the judgment up to the relevant amount under the policy of insurance, together with any amount payable in respect of costs and interest on the sum by virtue of any written law relating to interest on judgments, to the person. Management of Hazardous Waste The disposal of toxic industrial waste is regulated under the Environmental Public Health (Toxic Industrial Waste) Regulations 1988 (of the laws of Singapore). Such toxic industrial waste include, among other things, spent motor oils from petrol and diesel engines and waste lead-acid batteries. 66

75 REGULATORY OVERVIEW The generator of the toxic industrial waste is required to treat the waste in an approved in-house waste treatment plant and dispose of the residues, if any, at the National Environmental Agency s sanitary landfill site. Alternatively, the generator can engage a licensed toxic industrial waste collector to collect his waste for treatment and disposal. As at the Latest Practicable Date, our Group has engaged Ultramax Technologies Pte Ltd, a licensed toxic industrial waste collector to manage its toxic industrial waste. Workplace Safety and Health Measures Pursuant to the 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: (a) (b) (c) (d) (e) providing and maintaining for the employees a work environment which is safe, without risk to health, and adequate as regards to the 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 employees have adequate instruction, information, training and supervision as is necessary for that person to perform their work. More specific duties imposed on employers relating to health are set out in the WSHR, including, among other things, taking effective measures to protect persons at work from the harmful effects of any exposure to any biohazardous material which may constitute a risk to their health; ensuring that while work is carried on in the workplace, the workplace is not overcrowded so as to pose safety and health risks to the persons at work therein; ensuring that every workroom of the workplace is provided with adequate ventilation; and providing and maintaining sufficient and suitable lighting, whether natural or artificial, in every part of the workplace in which persons are at work or passing. The WSHR also imposes specific duties on employers relating to safety, including, among other things, duties in relation to hoists and lifts; lifting gears; and lifting appliances and lifting machines. In particular, such equipment are required to, among other things, be tested and examined by an authorised examiner ( Authorised Examiner ) before they can be used and thereafter, at specified intervals for hoists or lifts which are powered with mechanical power, at least once every six months or at such other intervals as the CWSH may determine; and for hoists or lifts which are not powered with mechanical power, lifting gears, and lifting appliances and lifting machines, at least once every year or at such other intervals as the CWSH may determine. After testing and examining such equipment, the Authorised Examiner will issue and sign a certificate of test and examination, specifying the safe working load of the equipment. Under the WSHR, it is the duty of the occupier of a workplace in which the equipment is used to comply with the provisions of the WSHR, and to keep a register containing such particulars as the CWSH may specify with respect to lifting gears, lifting appliances and lifting machines. 67

76 REGULATORY OVERVIEW Under the WSHA, inspectors appointed by the CWSH may, among other things, enter, inspect and examine any workplace, inspect and examine any machinery, equipment, plant, installation or article at any workplace, make such examination and inquiry as may be necessary to ascertain whether the provisions of the WSHA are complied with, take samples of any material or substance found in a workplace or being discharged from any workplace for the purpose of analysis or test, 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 require any person to produce any article which is relevant to any investigation or inquiry under the WSHA and, if necessary, to take into custody any such article. Any person who breaches his duty under the WSHA shall be guilty of an offence and shall be liable on conviction, in the case of a body corporate, to a fine not exceeding S$500,000 and, if the contravention continues after the conviction, the body corporate shall be guilty of a further offence and shall be liable to a fine not exceeding S$5,000 for every day or part thereof during which the offence continues after conviction. For repeat offenders, where a person has on at least one previous occasion been convicted of an offence under the WSHA that causes the death of any person and is subsequently convicted of the same offence that causes the death of another person, the court may, in addition to any imprisonment if prescribed, punish the person, in the case of a body corporate, with a fine not exceeding S$1.0 million and, in the case of a continuing offence, with a further fine not exceeding S$5,000 for every day or part thereof during which the offence continues after conviction. Under the WSHA, the CWSH may serve a remedial order or stop-work order in respect of a workplace if he is satisfied that: 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 work or process carried on in the workplace cannot be carried on with due regard to the safety, health and welfare of persons at work; any person has contravened any duty imposed by the WSHA; or 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 remedial order shall direct the person served with the remedial order to take such measures, to the satisfaction of the CWSH, to, among other things, remedy any danger so as to enable the work or process in the workplace to be carried on with due regard to the safety, health and welfare of the persons at work, whilst the stop-work order shall direct the person served with the stop-work order to immediately cease to carry on any work or process 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 or process in the workplace to be carried on with due regard to the safety, health and welfare of the persons at work. The Workplace Health and Safety Council has approved codes of practice for the purpose of providing practical guidance with respect to the requirements of the WSHA relating to safety, health and welfare at the workplace. Pursuant to the Workplace Safety and Health (Risk Management) Regulations 2006 (of the laws of Singapore), the employer in a workplace is supposed to, among other things, conduct a risk assessment 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 any foreseeable risk to any person who may be affected by his undertaking in the workplace, and where it is not reasonably practicable to eliminate the risk, implement reasonably practical measures to minimise the risk and safe work procedures to control the risk, specify the roles and responsibilities of persons involved in the implementation of any measure of safe work 68

77 REGULATORY OVERVIEW procedures and inform workers of the same, maintain records of such risk assessments, and measures or safe work procedures implemented for a period not less than three years, and submit such records to the CWSH when required by the CWSH from time to time. Imports and Exports The regulation, registration and control of imports and exports and making of provisions for matters connected therewith is provided under the RIEA. The RIEA is administered by the Director-General of Customs appointed under Section 4(1) of the Customs Act (Chapter 70 of the laws of Singapore). Pursuant to Section 3(2)(k) of the RIEA, the Minister of Trade and Industry of Singapore may make regulations for the registration of importers, exporters, common carriers of goods or any person making a declaration under the RIEA or any regulations made thereunder. In addition, Section 35B of the Regulation of Imports and Exports Regulations 1995 (of the laws of Singapore) states, among other things that the Director- General of Customs may register any person who is an importer, exporter, shipping agent, air cargo agent, freight forwarder or common carrier who is not a declaring entity and whom the Director-General of Customs deems necessary or expedient to be registered. As at the Latest Practicable Date, our Group has engaged licenced freight forwarders to manage our Group s imports and exports. Employment Act The EA is administered by the MOM and sets out the basic terms and conditions of employment, and the rights and responsibilities of employers as well as employees covered under the EA. Part IV of the EA sets out provisions in relation to, among other things, rest days, hours of work, overtime, annual leave and other conditions of service, and only applies to certain categories of employees covered under the EA, namely, workmen who receive salaries not exceeding S$4,500 a month and employees (other than workmen) who receive salaries not exceeding S$2,500 a month. Section 38(8) of the EA provides that a Part IV Employee is not allowed to work more than 12 hours in any one day except in specified circumstances, such as where the work is essential to the life of the community, or for defence or security. In addition, Section 38(5) of the EA limits the extent of overtime work that a Part IV Employee can perform to 72 hours a month. Employers must seek the prior written approval of the Commissioner for Labour for exemption if they require a Part IV Employee or class of Part IV Employees to work for more than 12 hours a day or perform overtime work for more than 72 hours a month. The Commissioner of Labour may, after considering the operational needs of the employer and the health and safety of the Part IV Employee or class of Part IV Employees by order in writing exempt the Part IV Employee or class of Part IV Employees from the overtime limits subject to such conditions as the Commissioner of Labour thinks fit. Where such exemptions have been granted, the employer shall display the order or a copy thereof conspicuously in the place where the Part IV Employee or class of Part IV Employees are employed. 69

78 REGULATORY OVERVIEW An employer who breaches any provision of Part IV of the EA shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$5,000, and for a second or subsequent offence to a fine not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months or to both. From 1 April 2016, all employers are required to make and keep employee records containing the prescribed particulars for every employee the employer employs and every former employee of the employer, give relevant employees of the employer written records of the key employment terms of the employee not later than 14 days after the day that the employee starts employment with the employer and give itemised pay slips for all salary paid by the employer for the salary period or salary period to which the pay slip relates to relevant employees. Failure to do so is considered a civil contravention for the purposes of the EA and may cause the employer to be issued with an administrative penalty by the MOM. The amount of administrative penalty payable depends on the circumstances in which the civil contravention took place. Any employer who (a) wilfully refuses or without lawful excuse (the proof of which shall lie on him) neglects to furnish the particulars or information required within the time allowed for furnishing the particulars and information, or to furnish the particulars and information in the form specified or prescribed, or to authenticate the particulars and information at the place or in the manner specified or prescribed for the delivery thereof; (b) wilfully furnishes or causes to be furnished any false particulars or information in respect of any matter specified in the notice requiring particulars or information to be furnished; or (c) refuses to answer, or wilfully gives a false answer to, any question necessary for obtaining any information or particulars required to be furnished under the EA, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$5,000 or to imprisonment for a term not exceeding six months or to both, and in the case of a continuing offence to a further fine not exceeding S$500 for every day during which the offence continues, and in respect of false particulars, information and answers, the offence shall be deemed to continue until true particulars, information or answers have been furnished or given. CPF Contributions Employers are required to make CPF contributions at the monthly rates stated in the CPF Act. An employer must pay CPF contributions for employees who are Singapore citizens or Singapore permanent residents. CPF contributions are due at the end of the month and an employer has a grace period of 14 days to make payment. The employer must pay both the employer s and the employee s share of the CPF contribution monthly. However, the employer can recover the employee s share of the CPF contribution by deducting it from their salary when the CPF contribution is paid for that month. If an employer fails to comply with the CPF Act, the employer may be liable to pay late payment interest charged at 18% per annum (1.5% per month), starting from the first day of the following month after the CPF contributions are due. The minimum interest payable is S$5 per month. If convicted of an offence under the CPF Act, the employer may also be liable to a fine not exceeding S$5,000 or to imprisonment for a term not exceeding six months or to both; and if that person is a repeat offender in relation to the same offence, to a fine not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months or to both. Employment of Foreign Workers The availability and the employment cost of skilled and unskilled foreign workers are affected by the government s policies and regulations on the immigration and employment of foreign workers in Singapore. The policies and regulations are set out in, among other things, the EFMA and the relevant government gazettes. 70

79 REGULATORY OVERVIEW The availability of the foreign workers to the services industry is dependent on, among other things, MOM s policies in connection with: the countries from which foreign workers may be sourced; the requirements and procedures for the issuance of work permits; the imposition of security bonds and levies; and the dependency ceilings, i.e. the maximum permitted ratio of foreign workers to the total workforce that a company in the stipulated sector is allowed to hire. The approved source countries for workers in the services industry are Malaysia, China, Hong Kong, Macau, South Korea and Taiwan. A S$5,000 security bond in the form of a banker s guarantee or insurance guarantee is required to be placed for each non-malaysian work permit holder that our Group employs in Singapore. The security bond will be discharged when the work permit has been cancelled and the foreign worker has returned to his home country, and there were no breaches of the conditions of the work permit, security bond and any relevant law. The employment of foreign workers who are work permit holders is also subject to the payment of levies. For the services sector, employers pay the requisite levy according to the quota and qualification of the foreign workers employed. The levy rates are tiered so that those who hire close to the maximum quota will pay a higher levy. The quota and levy rate for work permit holders for the services sector are as follows: Quota Basic skilled monthly Basic skilled daily Higher skilled monthly Higher skilled daily Tier 1: Up to 10% of the total workforce S$450 S$14.80 S$300 S$9.87 Tier 2: Above 10% to 25% of the total workforce S$600 S$19.73 S$400 S$13.16 Tier 3: Above 25% to 40% of the total workforce S$800 S$26.31 S$600 S$19.73 For the services sector, the quota and levy rate for S pass holders are as follows: Tier Quota % Monthly levy rate Daily levy rate Basic/Tier 1 Up to 10% of the total workforce S$330 S$10.85 Tier 2 Above 10% to 15% of the total workforce S$650 S$

80 REGULATORY OVERVIEW As at the Latest Practicable Date, our Group has a total workforce of 99 employees, 53 of which are foreign employees: 21 work permit holders; nine S pass holders; and 23 employment pass holders. The employment of foreign workers in Singapore is governed by the EFMA which is administered 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. In addition, the employment of the foreign employee must be in accordance with the conditions of the foreign employee s work pass. Any person who fails to comply with or contravenes Section 5(1) of the EFMA shall be guilty of an offence and shall: (a) (b) 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: (i) (ii) 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 of not less than S$20,000 and not more than S$60,000. In relation to the employment of semi-skilled or unskilled foreign workers, employers must ensure that such persons apply for a work permit. In relation to the employment of mid-level skilled foreign workers, employers must ensure that such persons apply for an S Pass. The S Pass is intended for mid-level skilled foreign workers who earn a monthly fixed salary of at least S$2,200. In relation to the employment of foreign professionals, managers and executives, employers must ensure that such persons apply for an employment pass. The employment pass is intended for professionals, managers and executives who earn a monthly fixed salary of at least S$3,600. Under the EFMR, employers of work permit holders are required, among other things, to: be responsible for and bear the costs of foreigner employee s upkeep (excluding the provision of food) and maintenance in Singapore including the provision of subsidised medical treatment in Singapore (unless otherwise agreed); provide safe working conditions and take such measures as are necessary to ensure the safety and health of the foreign employee at work; 72

81 REGULATORY OVERVIEW ensure that foreign employee has acceptable accommodation consistent with any written law directive, guideline, circular or other similar instrument issued by any competent authority; and purchase and maintain medical insurance with coverage of at least S$15,000 per 12-month period of the foreign employee s employment for the foreign employee s in patient care and day surgery. The EFMR also requires employers of S Pass holders, among other things, to: be responsible and subsidise the costs of the foreign employee s medical treatment in Singapore (unless otherwise agreed); and purchase and maintain medical insurance with coverage of at least S$15,000 per 12-month period of the foreign employee s employment for the foreign employee s in-patient care and day surgery. An employer of foreign workers is also subject to, among other things, the provisions set out in the EA, the EFMA, the Immigration Act (Chapter 133 of the laws of Singapore) and the Immigration Regulations 1972 (of the laws of Singapore). Work Injury Compensation The WICA, which is administered by MOM, applies to all employees (except members of the Singapore Armed Forces, officers of the Singapore Police Force, the Singapore Civil Defence Force, the Central Narcotics Bureau and the Singapore Prisons Service, and domestic workers) who have entered into or works under a contract of service or apprenticeship with an employer, in respect of injury suffered by them arising out of and in the course of their employment and sets out, among other things, the amount of compensation that they are entitled to and the method(s) of calculating such compensation. The WICA provides that if in any employment, personal injury by accident arising out of and in the course of the employment is caused to an employee, the employer of the employee shall be liable to pay compensation in accordance with the provisions of the WICA. The amount of compensation shall be computed in accordance with a fixed formula as set out in the WICA, subject to maximum and minimum limits. Further, the WICA provides, among other things, that, where any person (referred to as the principal) in the course of his business or for the purpose of his trade or business contracts with any other person (referred to as the contractor) for the execution by the contractor of the whole or any part of any work, or for the supply of labour to carry out any work, undertaken by the principal, the principal shall be liable to pay to any employee employed in the execution of the work any compensation which he would have been liable to pay if that employee had been immediately employed by the principal. Employers are required to maintain work injury compensation insurance for two categories of employees engaged under contracts of service (unless exempted) firstly, all employees doing manual work, and secondly, non-manual employees earning S$1,600 or less a month. An employer who breaches the above provisions shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months or to both. Employers are required to buy and maintain medical insurance coverage of at least S$15,000 per year for each work permit holder. Employers who fail to buy to maintain the required medical insurance may be fined up to S$5,000 or imprisoned for up to six months, or both. In addition, they may be barred from employing foreign workers in the future. 73

82 REGULATORY OVERVIEW LAWS RELATING TO CONSUMER PROTECTION Consumer Protection (Fair Trading) Act The Consumer Protection (Fair Trading) (Amendment) Act 2012 (of the laws of Singapore), which came into operation on 1 September 2012, amended the CPFTA to give consumers additional rights in respect of goods that do not conform to contract. Related amendments were also made to the HPA and the RTA. Part III of the CPFTA sets out the provisions relating to additional consumer rights in respect of nonconforming goods. Part III of the CPFTA applies if the transferee deals as consumer; the goods do not conform to the applicable contract at the time of delivery; and the contract was made on or after 1 September Goods which do not conform to the applicable contract at any time within the period of six months starting after the date on which the goods were delivered to the transferee must be taken not to have so conformed at that date. Under Part III of the CPFTA: (a) goods: (i) (ii) in relation to a sale, has the same meaning as in the Sale of Goods Act (Chapter 393 of the laws of Singapore); specifically, all personal chattels other than things in action and money; and in particular includes emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale and includes an undivided share in goods; and in relation to any other transfer, has the same meaning as in the Supply of Goods Act (Chapter 394 of the laws of Singapore); specifically, all personal chattels (including emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before the transfer or bailment concerned or under the contract concerned) other than things in action and money; (b) transferee: (i) (ii) (iii) in relation to a contract of sale of goods, means the buyer within the meaning of the Sale of Goods Act (Chapter 393 of the laws of Singapore); specifically, a person who buys or agrees to buy goods; in relation to a contract for the transfer of goods, has the same meaning as in the Supply of Goods Act (Chapter 394 of the laws of Singapore); specifically, (depending on the context) a person to whom the property in the goods is transferred under the contract, or a person to whom the property is to be so transferred, or a person to whom the rights under the contract of either of those persons have passed; and in relation to a hire-purchase agreement, means the hirer within the meaning of the HPA; specifically, the person who takes or has taken goods from an owner under a hire-purchase agreement or a conditional sale agreement and includes a person to whom the hirer s rightsor liabilities under the agreement have passed by assignment or by operation of law; and 74

83 REGULATORY OVERVIEW (c) transferor: (i) (ii) (iii) in relation to a contract of sale of goods, means the seller within the meaning of the Sale of Goods Act (Chapter 393 of the laws of Singapore); specifically, a person who sells or agrees to sell goods; in relation to a contract for the transfer of goods, has the same meaning as in the Supply of Goods Act (Chapter 394 of the laws of Singapore); specifically, (depending on the context) a person who transfers the property in the goods under the contract, or a person who agrees to do so, or a person to whom the duties under the contract of either of those persons have passed; and in relation to a hire-purchase agreement, means the owner within the meaning of the HPA; specifically, a person by whom goods are bailed to a hirer under a hire-purchase agreement or a conditional sale agreement and includes a person whom the owner s rights or liabilities under the agreement have passed by assignment or by operation of law. If Part III of the CPFTA applies, the transferee has the right (a) to require the transferor to repair or replace the goods; or (b) to require the transferor to repair or replace the goods; or to rescind the contract with regard to the goods in question. If the transferee requires the transferor to repair or replace the goods, the transferor must repair or, as the case may be, replace the goods within a reasonable time and without causing significant inconvenience to the transferee; and bear any necessary costs incurred in doing so (including in particular the cost of any labour, materials or postage). The transferee must not require the transferor to repair or, as the case may be, replace the goods if that remedy is (a) impossible; (b) disproportionate in comparison to the other of those remedies; or (c) disproportionate in comparison to an appropriate reduction in the amount to be paid for the transfer under paragraph (a), or rescission. Alternatively, the transferee may (a) require the transferor to reduce the amount to be paid for the transfer of the goods in question to the transferee by an appropriate amount; or (b) rescind the contract with regard to those goods, if the following conditions are satisfied (i) by virtue of the transferee rescinding the contract, the transferee may require neither repair nor replacement of the goods; or (ii) the transferee has required the transferor to repair or replace the goods, but the transferor is in breach of the requirement to do so within a reasonable time and without causing significant inconvenience to the transferee. If the transferee rescinds the contract, any reimbursement to the transferee may be reduced to take account of the use he has had of the goods since they were delivered to him. Personal Data Protection Act The purpose of the PDPA is to govern 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 personal data for purposes that a reasonable person would consider appropriate in the circumstances. Under the PDPA, personal data means data, whether true or not, about an individual who can be identified from that data; or from that data and other information to which the organisation has or is likely to have access. Under the PDPA, an organisation shall not collect, use or disclose personal data about an individual unless the individual gives, or is deemed to have given, his consent under the PDPA to the collection, use or disclosure, as the case may be; or the collection, use or disclosure, as the case may be, without the consent of the individual is required or authorised under the PDPA or any other written law. An individual is deemed to consent to the 75

84 REGULATORY OVERVIEW collection, use or disclosure of personal data about the individual by an organisation for a purpose if the individual voluntarily provides the personal data to the organisation for that purpose; and it is reasonable that the individual would voluntarily provide the data. If an individual gives, or is deemed to have given, consent to the disclosure of personal data about the individual by one organisation to another organisation for a particular purpose, the individual is deemed to consent to the collection, use or disclosure of the personal data for that particular purpose by that other organisation. On giving reasonable notice to the organisation, an individual may at any time withdraw any consent given, or deemed to have been given under the PDPA, in respect of the collection, use or disclosure by that organisation of personal data about the individual for any purpose. If an individual withdraws consent to the collection, use or disclosure of personal data about the individual by an organisation for any purpose, the organisation shall cease (and cause its data intermediaries and agents to cease) collecting, using or disclosing the personal data, as the case may be, unless such collection, use or disclosure, as the case may be, without the consent of the individual is required or authorised under the PDPA or other written law. An organisation shall also cease to retain its documents containing personal data, or remove the means by which the personal data can be associated with particular individuals, as soon as it is reasonable to assume that the purpose for which that personal data was collected is no longer being served by retention of the personal data; and retention is no longer necessary for legal or business purposes. An organisation may collect, use or disclose personal data about an individual only for purposes that a reasonable person would consider appropriate in the circumstances; and that the individual has been informed of under Section 20 of the PDPA, if applicable. In particular, Section 20 of the PDPA provides, among other things, that an organisation shall inform the individual of (a) the purposes for the collection, use or disclosure of the personal data, as the case may be, on or before collecting the personal data; (b) any other purpose of the use or disclosure of the personal data of which the individual has not been informed under paragraph (a), before the use or disclosure of the personal data for that purpose; and (c) on request by the individual, the business contact information of a person who is able to answer on behalf of the organisation the individual s questions about the collection, use or disclosure of the personal data. On request of an individual, an organisation shall, as soon as reasonably possible, provide the individual with (a) personal data about the individual that is in the possession or under the control of the organisation; and (b) information about the ways in which the personal data referred to in paragraph (a) has been or may have been used or disclosed by the organisation within a year before the date of the request. An individual may also request an organisation to correct an error or omission in the personal data about the individual that is in the possession or under the control of the organisation. Unless the organisation is satisfied on reasonable grounds that a correction should not be made, the organisation shall correct the personal data as soon as practicable; and send the corrected personal data to every other organisation to which the personal data was disclosed by the organisation within a year before the date the correction was made, unless that other organisation does not need the corrected personal data for any legal or business purpose. In addition, under the PDPA, the Info-communications Media Development Authority of Singapore which is designated as the Personal Data Protection Commission shall cause to be kept and maintained one or more DNCR of Singapore telephone numbers. A subscriber of a telecommunications service to which a Singapore telephone number is allocated may apply to the Personal Data Protection Commission, in the form and manner prescribed to add his Singapore telephone number to the relevant DNCR; or to remove his Singapore telephone number from the relevant DNCR. Under the PDPA, no person shall send a specified message to a Singapore telephone number unless the person had before sending the specified message applied to the Personal Data Protection Commission to confirm whether that Singapore telephone number is listed in the relevant DNCR; and received confirmation from the Personal Data Protection Commission that Singapore telephone number is not listed in the relevant DNCR. A specified message is, among other things, a message, where, having regard to: 76

85 REGULATORY OVERVIEW (a) (b) (c) (d) the content of the message; the presentational aspects of the message; the content that can be obtained using the numbers, URLs or contact information (if any) mentioned in the message; and if the telephone number from which the message is made is disclosed to the recipient (whether by calling line identity or otherwise), the content (if any) that can be obtained by calling that number, it would be concluded that the purpose, or one of the purposes, of the message is: (i) (ii) (iii) (iv) (v) (vi) to offer to supply goods or services; to advertise or promote goods or services; to advertise or promote a supplier, or prospective supplier, of goods or services; to offer to supply land or an interest in land; to advertise or promote land or an interest in land; to advertise or promote a supplier, or prospective supplier, of land or an interest in land; (vii) to offer to provide a business opportunity or an investment opportunity; (viii) to advertise or promote a business opportunity or an investment opportunity; (ix) (x) to advertise or promote a provider, or prospective provider, of a business opportunity or an investment opportunity; or any other prescribed purpose related to obtaining or providing information. Taxation in Singapore The following is a discussion of certain tax matters relating to Singapore corporate tax, capital gains tax and stamp 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 subscribers, 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 such changes may be retrospective. 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 persons involved in this [REDACTED] accepts responsibility for any tax effects or liabilities resulting from the subscription, purchase, holding or disposal of our Shares. 77

86 REGULATORY OVERVIEW Corporate Tax Corporate taxpayers (whether Singapore tax resident or non-singapore tax resident) are subject to Singapore income tax on income accruing in or derived from Singapore and on foreign income received or deemed received in Singapore (unless specified conditions for exemption are satisfied). A company is regarded as tax resident in Singapore for a year of assessment if the control and management of its business during that year of assessment is exercised in Singapore. The prevailing Singapore corporate tax rate is 17%. A tax exemption scheme applies for new start-up companies except a company whose principal activity is that of investment holding and a company which undertakes property development for sale, for investment, or for both investment and sale. Under the tax exemption scheme for new start-up companies, the following tax exemptions apply: (where any of the years of assessment of the first three years of assessment falls in the year of assessment 2010 to the year of assessment 2019) on the first S$300,000 of normal chargeable income; specifically 100% of up to the first S$100,000 of a company s normal chargeable income, and 50% of up to the next S$200,000 of a company s normal chargeable income is exempt from corporate tax; and (where any of the years of assessment of the first three years of assessment falls in or after the year of assessment 2020) on the first S$200,000 of normal chargeable income; specifically 75% of up to the first S$100,000 of a company s normal chargeable income, and 50% of up to the next S$100,000 of a company s normal chargeable income is exempt from corporate tax. The company s remaining normal chargeable income (after the tax exemption(s)) will be subject to corporate tax at a rate of 17%. To qualify for the tax exemptions under the tax exemption scheme for new start-up companies, a company must satisfy three conditions: the company must be incorporated in Singapore; the company must be a tax resident in Singapore for that year of assessment; and the company s total share capital is beneficially held directly by no more than 20 shareholders throughout the basis period for that year of assessment where all the shareholders are individuals or at least one shareholder is an individual holding at least 10% of the issued ordinary shares of the company. All companies, including companies limited by guarantee, can claim a partial tax exemption under the partial tax exemption scheme for companies, unless they have already claimed the tax exemptions under the tax exemption scheme for new start-up companies. Under the partial tax exemption scheme for companies, the following tax exemptions apply: (where the year of assessment falls in or before the year of assessment 2019) on the first S$300,000 of normal chargeable income; 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 of a company s normal chargeable income is exempt from corporate tax; and 78

87 REGULATORY OVERVIEW (where the year of assessment falls in or after the year of assessment 2020) on the first S$200,000 of normal chargeable income; 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$190,000 of a company s normal chargeable income is exempt from corporate tax. The company s remaining normal chargeable income (after the partial tax exemption(s)) will be subject to corporate tax at a rate of 17%. For the year of assessment 2016 and the year of assessment 2017, there is a corporate income tax rebate at 50% of the corporate tax payable, subject to a cap of S$20,000 and S$25,000, respectively, per year of assessment. For the year of assessment 2018, there is a corporate income tax rebate at 40% of the corporate tax payable, subject to a cap of S$15,000. Dividend Distributions (i) One-Tier Corporate Taxation System All Singapore tax resident companies are under the One-Tier System. Under the One-Tier 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 currently does not impose withholding tax on dividends paid to resident or non-resident shareholders. Foreign shareholders are advised to consult their own tax advisers to take into account the tax laws of their respective home countries or countries of residence and the applicability of any double taxation agreement which the relevant tax jurisdiction may have with Singapore. 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 in 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 specified conditions for exemption are satisfied). Subject to certain conditions being met, with effect from 1 June 2012 and for a period of 10 years ending on or before 31 May 2022, 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. 79

88 REGULATORY OVERVIEW Other than the above, there are no specific laws or regulations which deal with the characterisation of capital gains, and hence, gains may be considered 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. Goods and Services Tax GST is a consumption tax in Singapore that is levied on import of goods into Singapore, as well as nearly all supplies of goods and services in Singapore at a prevailing rate of 7%. 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 input GST (for example, GST on brokerage) incurred by the GST-registered investor in connection with the making of this exempt supply is generally not recoverable and will become an additional cost to the investor unless the investor satisfies certain conditions prescribed under the GST legislation or satisfies certain GST concessions. Where our Shares are sold by a GST-registered investor in the course or furtherance of a business carried on by such an investor to a person belonging outside Singapore (and who is outside Singapore at the time of supply), the sale is a taxable supply subject to GST at a zero rate (i.e. 0%). Any input GST (for example, GST on brokerage) incurred by the GST-registered investor in making this zero-rated supply for the purpose of his business will, subject to the provisions of the GST legislation, be recoverable from the Comptroller of GST. Investors should seek their own tax advice on the recoverability of GST incurred in expenses in connection with the purchase and sale of our Shares. Services such as brokerage and handling services rendered by a GST-registered person to an investor belonging in Singapore in connection with the investor s purchase or sale of our Shares will be subject to GST at the prevailing standard rate (currently 7%). Similar services rendered contractually to an investor belonging outside Singapore should, subject to certain conditions, qualify for zero-rating (i.e. subject to GST at zero rate). Stamp Duty There is no stamp duty payable on the subscription and issuance of the shares of any of the Group s Singapore-incorporated entities. Where the shares of any of the Group s Singapore-incorporated entities evidenced in certificate form are acquired and where such entities maintain a share registry in Singapore, stamp duty is payable on the instrument of transfer of such shares at the rate of 0.2% of the consideration for, or the net asset value or the allotment price of, such shares, whichever is higher. The purchaser has an obligation to pay stamp duty, unless there is an agreement to the contrary. No stamp duty is payable if no instrument of transfer is executed or the instrument of transfer is executed outside Singapore. However, stamp duty may be payable if the instrument of transfer, which is executed outside Singapore, is subsequently received in Singapore. The Stamp Duties Act (Chapter 312 of the laws of Singapore) was amended by the Stamp Duties (Amendment) Act 2017 (of the laws of Singapore) with effect from 11 March 2017 to, among other things, introduce the additional conveyance duty to be levied on acquisitions and disposals of equity interests in property-holding entities, and imposed the obligation to pay stamp duty once the agreement for the sale and purchase of shares was executed. However, pursuant to the Stamp Duties (Agreements for Sale of Equity 80

89 REGULATORY OVERVIEW Interests) (Remission) Rules 2018 (of the laws of Singapore) which came into operation on 11 April 2018, the position on stamp duty for the sale and purchase of shares before the enactment of the Stamp Duties (Amendment) Act 2017 (of the laws of Singapore) was reinstated. Stamp duties for agreements for the sale and purchase of shares were remitted with effect from 11 April 2018 except where the shares to be transferred are in property-holding entities. Accordingly, stamp duty in respect of the sale and purchase of shares remains payable on the instrument of transfer. Compliance with relevant laws and regulations Our Directors confirm that, during the Track Record Period and up to the Latest Practicable Date, our Group has been in compliance with all applicable law and regulations in Singapore which are material to the business and operations of our Group. SANCTIONS LAWS AND REGULATIONS Hogan Lovells, our International Sanctions Legal Advisers, have provided the following summary of the sanctions regimes imposed by their respective jurisdictions. This summary does not intend to set out the laws and regulations relating to the U.S., the European Union, the United Nations and Australian sanctions in their entirety. U.S. Treasury regulations OFAC is the primary agency responsible for administering U.S. sanctions programmes against targeted countries, entities, and individuals. Primary U.S. sanctions apply to U.S. persons or activities involving a U.S. nexus (e.g., funds transfers in U.S. currency or activities involving U.S.-origin goods, software, technology or services even if performed by non-u.s. persons), and secondary U.S. sanctions apply extraterritorially to the activities of non-u.s. persons even when the transaction has no U.S. nexus. Generally, U.S. persons are defined as entities organized under U.S. law (such as companies and their U.S. subsidiaries); any U.S. entity s domestic and foreign branches (sanctions against Iran and Cuba also apply to U.S. companies foreign subsidiaries or other non-u.s. entities owned or controlled by U.S. persons); U.S. citizens or permanent resident aliens ( green card holder), regardless of their location in the world; individuals physically present in the United States; and U.S. branches or U.S. subsidiaries of non-u.s. companies. Depending on the sanctions programme and/or parties involved, U.S. law also may require a U.S. company or a U.S. person to block (freeze) any assets/property interests owned, controlled or held for the benefit of a sanctioned country, entity, or individual when such assets/property interests are in the United States or within the possession or control of a U.S. person. Upon such blocking, no transaction may be undertaken or effected with respect to the asset/property interest no payments, benefits, provision of services or other dealings or other type of performance (in case of contracts/agreements) except pursuant to an authorization or license from OFAC. 81

90 REGULATORY OVERVIEW OFAC s comprehensive sanctions programmes currently apply to Cuba, Iran, North Korea, Syria, and the Crimea region of Russia/Ukraine (the comprehensive OFAC sanctions programme against Sudan was terminated on 12 October 2017). OFAC also prohibits virtually all business dealings with persons and entities identified in the SDN List. Entities that a party on the SDN List owns (defined as a direct or indirect ownership interest of 50% or more, individually or in the aggregate) are also blocked, regardless of whether that entity is expressly named on the SDN List. Additionally, U.S. persons, wherever located, are prohibited from approving, financing, facilitating, or guaranteeing any transaction by a non-u.s. person where the transaction by that non-u.s. person would be prohibited if performed by a U.S. person or within the United States. United Nations The United Nations Security Council (the UNSC ) can take action to maintain or restore international peace and security under Chapter VII of the United Nations Charter. Sanctions measures encompass a broad range of enforcement options that do not involve the use of armed force. Since 1966, the UNSC has established 26 sanctions regimes. The UNSC sanctions have taken a number of different forms, in pursuit of a variety of goals. The measures have ranged from comprehensive economic and trade sanctions to more targeted measures such as arms embargoes, travel bans, and financial or commodity restrictions. The UNSC has applied sanctions to support peaceful transitions, deter non-constitutional changes, constrain terrorism, protect human rights and promote non-proliferation. There are 14 ongoing sanctions regimes which focus on supporting political settlement of conflicts, nuclear non-proliferation, and counter-terrorism. Each regime is administered by a sanctions committee chaired by a non-permanent member of the UNSC. There are ten monitoring groups, teams and panels that support the work of the sanctions committees. United Nations sanctions are imposed by the UNSC, usually acting under Chapter VII of the United Nations Charter. Decisions of the UNSC bind members of the United Nations and override other obligations of United Nations member states. European Union Under European Union sanction measures, there is no blanket ban on doing business in or with a jurisdiction targeted by sanctions measures. It is not generally prohibited or otherwise restricted for a person or entity to do business (involving non-controlled or unrestricted items) with a counterparty in a country subject to European Union sanctions where that counterparty is not a Sanctioned Person or not engaged in prohibited activities, such as exporting, selling, transferring or making certain controlled or restricted products available (either directly or indirectly) to, or for use in a jurisdiction subject to sanctions measures. Australia The Australian restrictions and prohibitions arising from the sanctions laws apply broadly to any person in Australia, any Australian anywhere in the world, companies incorporated overseas that are owned or controlled by Australians or persons in Australia, and/or any person using an Australian flag vessel or aircraft to transport goods or transact services subject to United Nations sanctions. 82

91 HISTORY, REORGANISATION AND CORPORATE STRUCTURE GENERAL Our Group s history can be traced back to May 2012 when Optima Werkz was incorporated to carry out the business of providing after-market automotive services in Singapore. To capture the growing demand for after-market automotive services provided by the independent service providers arising from the price discrepancies of the services provided by authorised automobile dealers and independent service providers and the increasing number of the imported passenger cars in Singapore, Mr. Ang invited Mr. Lim and Ms. FF Lim to invest in and founded Optima Werkz. At the time of starting our business, Mr. Ang had accumulated more than 15 years of experience in the industry of automotive services and was responsible for the business operations and development of Optima Werkz. Please refer to the paragraph headed Corporate History and Development Establishment and shareholding changes of the members of our Group Optima Werkz in this section below for the details of the shareholding changes of Optima Werkz since its incorporation. In August 2013, Optima De Auto was incorporated to provide spray painting service as part of our strategy to provide one-stop shop experience for our customers. In October 2014, Optima Carz was incorporated to undertake the business of our service centre at 551 Upper Thomson Road, Singapore In September 2015, Optima Werkz International was incorporated to expand the business to supply automotive equipment. Please refer to the paragraph headed Corporate History and Development Establishment and shareholding changes of the members of our Group in this section below for the details of the shareholding changes of Optima De Auto, Optima Carz and Optima Werkz International since their respective incorporations. Optima Werkz, Optima De Auto, Optima Carz and Optima Werkz International are the principal operating subsidiaries of our Group. As at the Latest Practicable Date, our Group had provided various automotive services including inspection, maintenance and repair services to customers mainly in Singapore and employed approximately 99 employees for our business operation. As part of the Reorganisation, Mr. Ang and Ms. FF Lim held their respective interest in our Company through Red Link as a group of Controlling Shareholders. Please refer to paragraph headed Reorganisation below for the details of the Reorganisation. BUSINESS HISTORY AND MILESTONES The following illustrates our major business development milestones and achievements: Year Key Milestones 2012 Optima Werkz was incorporated. We established our Group s first service centre at 9A Serangoon North Avenue 5, Singapore with a total area of 4,000 sq. ft As part of our strategy to provide our customers with a one-stop shop experience, Optima De Auto was established to provide spray painting services. We established our Group s second service centre (our Headquarters) at 6 Kung Chong, Singapore with a total area of approximately 10,000 sq. ft We were appointed by an insurance company as its approved reporting centre for inspecting the insured passenger cars after accidents and filling out details of the accident claims in an e-filing system of the General Insurance Association of Singapore. 83

92 HISTORY, REORGANISATION AND CORPORATE STRUCTURE Year Key Milestones We established Optima Carz and our Group s third service centre at 551 Upper Thomson Road, Singapore with an area of 5,260 sq. ft We established Optima Werkz International (formerly known as Growth Dynamics Pte. Ltd) We secured two long term rental agreements with a car sharing company by renting 50 passenger cars to them We restructured our service for offering motor warranty to individual and corporate customers by cooperating with a renowned insurance company. We were appointed by such insurance company as its approved reporting centre and preferred workshop. We further secured two long term rental agreements with a car sharing companybyrenting51passengercarstothem We first attained the ISO 9001:2015 and OHSAS 18001:2007 Certification. CORPORATE HISTORY AND DEVELOPMENT As at the Latest Practicable Date, Optima Werkz, Optima De Auto, Optima Carz and Optima Werkz International were the principal operating subsidiaries of our Group. The following table contains some information of our Company and its subsidiaries as at the Latest Practicable Date: Name of Group member Date of incorporation/ Date of commencement of business (if different) Place of incorporation Principal activities Our Company 14 March 2018 Cayman Islands Investment holding Optima International 16 March 2018 BVI Investment holding Optima Werkz 18 May 2012 Singapore Repair and maintenance of motor vehicles (including installation of spare parts and accessories) Repair, maintenance and spray painting of motor vehicles Provision of car rental services Optima De Auto 22 August 2013 Singapore Repair, maintenance and spray painting of motor vehicles 84

93 HISTORY, REORGANISATION AND CORPORATE STRUCTURE Name of Group member Date of incorporation/ Date of commencement of business (if different) Place of incorporation Principal activities Optima Carz 24 October 2014 Singapore Repair and maintenance of motor vehicles (including installation of spare parts and accessories) General wholesale trade of spare parts and accessories for motor vehicles Optima Werkz International 23 September 2015 Singapore Retail sale and general wholesale trade of spare parts and accessories for motor vehicles Please refer to the paragraph headed Corporate structure below for the chart showing the shareholding and corporate structure of our Group immediately after the Reorganisation. Establishment and shareholding changes of the members of our Group Our Company Our Company was incorporated in the Cayman Islands as an exempted company with limited liability on 14 March 2018 with an authorized share capital of HK$380,000 divided into 38,000,000 shares of HK$0.01 each. It was incorporated for the purpose of implementing the Reorganisation. On 14 March 2018, one nil-paid Share of HK$0.01 was allotted and issued to Sharon Pierson (an officer of [REDACTED], the registered office provider of our Company), which was transferred to Red Link on the same date. On 14 March 2018, our Company further allotted and issued 631,329 Shares, 81,170 Shares, 80,750 Shares, 64,541 Shares, 61,750 Shares, 30,459 Shares, all nil-paid, to Red Link, Mr. Chee, Mr. Chong, Ms. Ngo, Ms. Lam and Mr. Seow respectively (in the proportion of 66.46%, 8.54%, 8.50%, 6.79%, 6.50% and 3.21% respectively). On 29 March 2018, as a result of the completion of the API Investment, 50,000 new Shares, representing 5.00% of the then enlarged issued share capital of our Company, were allotted and issued, credited as fully-paid, to API at the consideration of HK$10,000,000 in cash. Please refer to the paragraph headed Pre-[REDACTED] Investments API Investment in this section below for the details of the API Investment. Pursuant to the share swap agreement ( Share Swap Agreement ) dated 22 June 2018 and entered into among (i) Optima International (as purchaser); (ii) our Company (as the direct holding company of Optima International); (iii) Ms. FF Lim, Mr. Ang, Mr. Chee, Mr. Chong, Ms. Ngo, Ms. Lam and Mr. Seow (as vendors); and (iv) Red Link (as nominee vehicle), Optima International agreed to acquire the entire issued share capital in Optima Werkz. In consideration of and in exchange for such acquisition, our Company: (i) credited as fully paid at par the 950,000 nil-paid Shares which were first issued on 14 March 2018 (as mentioned above), and 85

94 HISTORY, REORGANISATION AND CORPORATE STRUCTURE (ii) issued 5,681,970, 730,530, 726,750, 580,869, 555,750 and 274,131 new Shares to Red Link, Mr. Chee, Mr. Chong, Ms. Ngo, Ms. Lam and Mr. Seow respectively, all credited as fully paid at par. The share swap under the Share Swap Agreement was completed on the same date of the Share Swap Agreement. For the purpose of anti-dilution in respect of API s shareholding in our Company resulting from the issue of Shares under the Share Swap Agreement, 450,000 fully-paid Shares were further allotted and issued to API on the same date of the Share Swap Agreement and, immediately after the allotment and issue, API s shareholding in the then enlarged issued share capital of our Company remained at 5.00%. Brief details of the shareholders of our Company immediately following completion of the Share Swap Agreement and the abovementioned allotment and issue of the Shares to API are set out below: Shareholders Number of issued Shares subscribed and held Shareholding percentage (%) Red Link 6,313, Mr. Chee 811, Mr. Chong 807, Ms. Ngo 645, Ms. Lam 617, Mr. Seow 304, API 500, Total: 10,000, Increase of authorised share capital On [ ] 2018, the authorised share capital of our Company increased from HK$380,000 divided into 38,000,000 Shares of a par value of HK$0.01 each to HK$[REDACTED] divided into [REDACTED] Shares of a par value of HK$0.01 each by creation of an additional [REDACTED] Shares, pursuant to the written resolution of our Shareholders passed on [ ] Capitalisation Issue and [REDACTED] Conditional upon the share premium account of our Company being credited with the proceeds of the [REDACTED], a sum standing to the credit of the share premium account of our Company will be capitalised and applied to paying up in full [REDACTED] Shares to be allotted and issued to all the then existing Shareholders in proportion to their then shareholdings in our Company. The number of Shares to be issued under the Capitalisation Issue together with the number of Shares then held by all such Shareholders shall represent not more than 75% of the entire issued share capital of our Company immediately after the completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme). 86

95 HISTORY, REORGANISATION AND CORPORATE STRUCTURE Pursuant to the [REDACTED], our Company will offer [REDACTED], being[redacted] of the total issued share capital of our Company (as enlarged by the Shares offered under the [REDACTED] and the Shares issued under the Capitalisation Issue excluding the Shares which may be allotted and issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme) for [REDACTED] by the public in Hong Kong and [REDACTED] to professional, institutional and individual investors. Optima International Optima International was incorporated in the BVI on 16 March It was incorporated for the purpose of implementing the Reorganisation. As at the date of incorporation, Optima International is authorised to issue a maximum of 50,000 shares of US$1.00 par value each. On 16 March 2018, 100 shares were issued and allotted as fully paid to our Company at par. Optima Werkz Optima Werkz was incorporated as a limited exempt private company in Singapore on 18 May 2012 with an issued share capital of S$100,000, representing 100,000 ordinary shares of S$1.00 each. Upon Optima Werkz s incorporation, Optima Werkz issued and allotted 40,000, 10,000 and 50,000 ordinary shares to Mr. Ang, Mr. Lim and Ms. FF Lim respectively. On 20 November 2012, the issued and paid-up capital of Optima Werkz increased from S$100,000 to S$550,000 and Optima Werkz further issued and allotted 40,000, 10,000 and 50,000 ordinary shares to Mr. Ang, Mr. Lim and Ms. FF Lim respectively at the aggregate consideration of S$450,000. On 20 November 2012, Mr. Ang, Mr. Lim and Ms. FF Lim transferred 8,000, 2,000 and 10,000 ordinary shares in Optima Werkz to Mr. Chee respectively at the aggregate consideration of S$250,000, which were in proportion to their then shareholding in Optima Werkz. The said transfer price was determined after arm s length commercial negotiations between the parties. On 23 January 2014, the issued and paid-up capital of Optima Werkz increased from S$550,000 to S$1,050,000 and Optima Werkz issued and allotted 15,054 ordinary shares to Mr. Lee for the capital injection of S$500,000. The said subscription price was determined with reference to the net asset value of Optima Werkz as at 31 December On 2 October 2017, Mr. Lim decided to pursue other business opportunities and transferred (i) his 18,000 ordinary shares in Optima Werkz to Mr. Ang, Ms. FF Lim, Mr. Chee and Mr. Lee in 4,500, 4,500, 4,500 and 4,500 shares respectively; and (ii) his 837 ordinary shares in Optima De Auto to Mr. Ang, Ms. FF Lim, Mr. Chee and Mr. Lee in 209, 209, 209 and 210 shares respectively at the aggregate consideration of S$250,000, which was determined with reference to the net asset value of Optima Werkz and Optima De Auto as at 31 December The said consideration was fully settled on 2 October On 18 December 2017, as part of an internal group restructuring, Optima Werkz issued and allotted 30,218, 37,327, 9,677 and 7,724 ordinary shares to Mr. Ang, Ms. FF Lim, Mr. Chee and Mr. Lee respectively in consideration of and in exchange for the then entire issued share capital in Optima De Auto and Optima Werkz International. 87

96 HISTORY, REORGANISATION AND CORPORATE STRUCTURE On 19 December 2017, Optima Werkz allotted and issued 34,000, 27,175, 26,000 and 12,825 shares, all credited as fully paid, to Mr. Chong, Ms. Ngo, Ms. Lam and Mr. Seow respectively, upon exercise of the conversion rights granted by Optima Werkz to each of them under the relevant convertible loan agreements. Please see the paragraphs headed Pre-[REDACTED] Investments Investment by Mr. Chong, Pre- [REDACTED] Investments Investment by Ms. Ngo, Pre-[REDACTED] Investments Investment by Ms. Lam and Pre-[REDACTED] Investments Investment by Mr. Seow in this section below for further details. On 30 January 2018, Mr. Lee decided to pursue other business opportunities and transferred his 27,278 ordinary shares in Optima Werkz to Mr. Ang and Ms. FF Lim in 13,639 and 13,639 shares respectively for the total consideration of S$430,000, which was determined with reference to the net asset value of Optima Werkz as at 31 December The said consideration was fully settled on 30 January As part of the Reorganisation, the entire issued share capital in Optima Werkz was transferred to Optima International on 22 June 2018 pursuant to the Share Swap Agreement. Please see the paragraph headed Corporate History and Development Establishment and shareholding changes of the members of our Group Our Company in this section below for the details of the Share Swap Agreement. Optima De Auto Optima De Auto was incorporated as a limited exempt private company in Singapore on 22 August 2013 with an issued share capital of S$100 representing 100 ordinary shares of S$1.00 each. Upon Optima De Auto s incorporation, Optima De Auto allotted and issued 36, 45, 10 and 9 ordinary shares to Mr. Ang, Ms. FF Lim. Mr. Chee and Mr. Lim respectively. On 28 July 2016, the issued and paid-up capital of Optima De Auto increased from S$100 to S$10,000 when Optima De Auto further allotted and issued 3,312, 4,140, 920, 828 and 700 ordinary shares to Mr. Ang, Ms. FF Lim. Mr. Chee, Mr. Lim and Mr. Lee respectively for the aggregate capital injection of S$9,900, which was fully settled on 28 July On 2 October 2017, Mr. Lim decided to pursue other business opportunities and transferred (i) his 18,000 ordinary shares in Optima Werkz to Mr. Ang, Ms. FF Lim, Mr. Chee and Mr. Lee in 4,500, 4,500, 4,500 and 4,500 shares respectively; and (ii) his 837 ordinary shares in Optima De Auto to Mr. Ang, Ms. FF Lim, Mr. Chee and Mr. Lee in 209, 209, 209 and 210 shares respectively for the aggregate consideration of S$250,000, which was determined with reference to the net asset value of Optima Werkz and Optima De Auto as at 31 December On 18 December 2017, as part of an internal group restructuring, the entire issued share capital of Optima De Auto was transferred to Optima Werkz. Please see the paragraph headed Corporate History and Development Establishment and shareholding changes of the members of our Group Optima Werkz in this section above for further details of such internal group restructuring. Optima Carz Optima Carz was incorporated as a limited private company in Singapore on 24 October 2014 with an issued share capital of S$1,000, representing 1,000 ordinary shares of S$1.00 each. Upon Optima Carz s incorporation, Optima Carz allotted and issued 1,000 ordinary shares to Optima Werkz. On 19 November 2014, Optima Werkz transferred 200 ordinary shares in Optima Carz to an individual investor ( Investor ) for the consideration of S$200 and 250 ordinary shares in Optima Carz to Mr. Chew for the consideration of S$250. Such considerations were determined with reference to the subscription price of S$1.00 per share paid by Optima Werkz. 88

97 HISTORY, REORGANISATION AND CORPORATE STRUCTURE On 18 October 2016, the administrators of the estate of the deceased Investor transferred 200 ordinary shares in Optima Carz to Optima Werkz for the consideration of S$150,000, which was determined with reference to the net asset value of Optima Carz as at 31 December 2015 and taking into account of the financial conditions of the deceased Investor s family. The said consideration was fully settled on 7 May On 29 December 2016, Optima Werkz transferred 200 ordinary shares in Optima Carz to Mr. Chew for the consideration of S$37,500, which was determined with reference to the net asset value of Optima Werkz as at 31 December The said consideration was fully settled on 30 December On 28 April 2018, as part of the Reorganisation, Optima Werkz acquired all Mr. Chew s sharesinoptima Carz for the consideration of S$300,000, which was determined with reference to the net asset value of Optima Carz as at 31 December The said consideration was fully settled on 28 April Optima Werkz International Optima Werkz International was incorporated as a limited exempt private company in Singapore on 23 September 2015 with an issued share capital of S$10,000, representing 10,000 ordinary shares of S$1.00 each. Upon Optima Werkz International s incorporation, Optima Werkz International allotted and issued 10,000 ordinary shares to Ms. LL Lim, who held all the said shares on trust for Optima Werkz pursuant to a trust deed dated 23 September On 18 December 2017, as part of an internal group restructuring, Ms. LL Lim (as trustee of Optima Werkz) transferred all the shares in Optima Werkz International to all the then shareholders of Optima Werkz (i.e. Ms. FF Lim, Mr. Ang, Mr. Chee and Mr. Lee) in proportion to their then shareholding in Optima Werkz; and Optima Werkz acquired the entire issued share capital of Optima Werkz International from the said shareholders on the same date. Please see the paragraph headed Corporate History and Development Establishment and shareholding changes of the members of our Group Optima Werkz in this section above for further details of such internal group restructuring. PRE-[REDACTED] INVESTMENTS Investment by Mr. Chong Optima Werkz and Mr. Chong, among others, entered into a convertible loan agreement dated 18 January 2017, pursuant to which Mr. Chong agreed to grant to Optima Werkz a loan in the principal amount of S$535,500 with the right to convert such loan into shares in Optima Werkz upon and subject to the terms of the agreement. The said loan is non-interest bearing and shall become due and payable on the date falling 48 months from the drawdown date. On 19 December 2017, upon exercise of the said conversion right, Optima Werkz allotted and issued 34,000 shares, all credited as fully paid, to Mr. Chong. The conversion price was S$15.75 per share in Optima Werkz. For further details of the Investment by Mr. Chong, please refer to the table below under the paragraph headed Pre-[REDACTED] investment Details of the Pre-[REDACTED] Investments. Since Mr. Chong will not be holding more than 10% of the total issued share capital of our Company immediately following the completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme), the Shares held by him will be counted as part of the public float for the purpose of Rule of the GEM Listing Rules. 89

98 HISTORY, REORGANISATION AND CORPORATE STRUCTURE Investment by Ms. Lam Optima Werkz and Ms. Lam, among others, entered into a convertible loan agreement dated 1 February 2017, pursuant to which Ms. Lam agreed to grant to Optima Werkz a loan in the principal amount of S$409,500 with the right to convert such loan into shares in Optima Werkz upon and subject to the terms of the agreement. The said loan is non-interest bearing and shall become due and payable on the date falling 48 months from the drawdown date. On 19 December 2017, upon exercise of the said conversion right, Optima Werkz allotted and issued 26,000 shares, all credited as fully paid, to Ms. Lam. The conversion price was S$15.75 per share in Optima Werkz. For further details of the Investment by Ms. Lam, please see the table below under the paragraph headed Pre-[REDACTED] investment Details of the Pre-[REDACTED] Investments. Since Ms. Lam will not be holding more than 10% of the total issued share capital of our Company immediately following the completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme), the Shares held by her will be counted as part of the public float for the purpose of Rule of the GEM Listing Rules. Investment by Mr. Seow Optima Werkz and Mr. Seow, among others, entered into a convertible loan agreement dated 20 February 2017, pursuant to which Mr. Seow agreed to grant to Optima Werkz a loan in the principal amount of S$202,000 with the right to convert such loan into shares in Optima Werkz upon and subject to the terms of the agreement. The said loan is non-interest bearing and shall become due and payable on the date falling 48 months from the drawdown date. On 19 December 2017, upon exercise of the said conversion right, Optima Werkz allotted and issued 12,825 shares, all credited as fully paid, to Mr. Seow. The conversion price was S$15.75 per share in Optima Werkz. For further details of the Investment by Mr. Seow, please see the table below under the paragraph headed Pre-[REDACTED] investment Details of the Pre-[REDACTED] Investments. Since Mr. Seow will not be holding more than 10% of the total issued share capital of our Company immediately following the completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme), the Shares held by him will be counted as part of the public float for the purpose of Rule of the GEM Listing Rules. Investment by Ms. Ngo Optima Werkz and Ms. Ngo, among others, entered into a convertible loan agreement dated 3 March 2017, pursuant to which Ms. Ngo agreed to grant to Optima Werkz a loan in the principal amount of S$428,000 with the right to convert such loan into shares in Optima Werkz upon and subject to the terms of the agreement. The said loan is non-interest bearing and shall become due and payable on the date falling 48 months from the drawdown date. On 19 December 2017, upon exercise of the said conversion right, Optima Werkz allotted and issued 27,175 shares, all credited as fully paid, to Ms. Ngo. The conversion price was S$15.75 per share in Optima Werkz. For further details of the Investment by Ms. Ngo, please see the table below under the paragraph headed Pre-[REDACTED] investment Details of the Pre-[REDACTED] Investments. Since Ms. Ngo will not be holding more than 10% of the total issued share capital of our Company immediately following the completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme), the Shares held by her will be counted as part of the public float for the purpose of Rule of the GEM Listing Rules. 90

99 HISTORY, REORGANISATION AND CORPORATE STRUCTURE API Investment Our Company, API and Mr. Ang (as warrantor) entered into the API Subscription Agreement, pursuant to which API conditionally agreed to subscribe for 50,000 Shares (representing 5.00% of the enlarged issued share capital of our Company at the time of completion of the API Investment) for a total cash consideration of HK$10,000,000. For further details of the API Investment, please see the table below under Details of the Pre- [REDACTED] Investments. Since API will not be holding more than 10% of the total issued share capital of our Company immediately following the completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme), the Shares held by API will be counted as part of the public float for the purpose of Rule of the GEM Listing Rules. Details of the Pre-[REDACTED] Investments Investment by Mr. Chong Investment by Ms. Lam Investment by Mr. Seow Investment by Ms. Ngo API Investment Date of the agreement 18 January February February March March 2018 Parties to the agreement Optima Werkz, Optima De Auto, Optima Werkz International, Mr. Ang, Ms. FF Lim and Mr. Chong Optima Werkz, Optima De Auto, Optima Werkz International, Mr. Ang, Ms. FF Lim and Ms. Lam Optima Werkz, Optima De Auto, Optima Werkz International, Mr. Ang, Ms. FF Lim and Mr. Seow Optima Werkz, Optima De Auto, Optima Werkz International, Mr. Ang, Ms. FF Lim and Ms. Ngo Our Company, API and Mr. Ang Number of shares allotted and issued by Optima Werkz/Company 34,000 shares in Optima Werkz 26,000 shares in Optima Werkz 12,825 shares in Optima Werkz 27,175 shares in Optima Werkz 50,000 Shares Consideration S$535,500 S$409,500 S$202,000 S$428,000 HK$10,000,000 ( Subscription Price ) Payment date 7 December December December December March 2018 Completion date 19 December December December December March 2018 Basis of determination of the consideration The consideration was determined based on arm s length negotiation and with reference to the financial position and net asset value of Optima Werkz and its subsidiaries as at 31 December 2016, and the investment risk assumed by the investor in investing in an unlisted company. The consideration was determined based on arm s length negotiation and with reference to the financial position and net asset value of Optima Werkz and its subsidiaries as at 31 December 2016, and the investment risk assumed by the investor in investing in an unlisted company. The consideration was determined based on arm s length negotiation and with reference to the financial position and net asset value of Optima Werkz and its subsidiaries as at 31 December 2016, and the investment risk assumed by the investor in investing in an unlisted company. The consideration was determined based on arm s length negotiation and with reference to the financial position and net asset value of Optima Werkz and its subsidiaries as at 31 December 2016, and the investment risk assumed by the investor in investing in an unlisted company. The consideration was determined based on arm s length negotiation and with reference to the then financial position and net asset value of our Group as at 31 December 2017, and the investment risk assumed by the investor in investing in an unlisted company. 91

100 HISTORY, REORGANISATION AND CORPORATE STRUCTURE Investment by Mr. Chong Investment by Ms. Lam Investment by Mr. Seow Investment by Ms. Ngo API Investment Strategic benefits The conversion of the loan increased our equity capital and we will benefit from the investor bringing in business connections and insights to our Group s business strategies. The conversion of the loan increased our equity capital and we will benefit from the investor bringing in business connections and insights to our Group s business strategies. The conversion of the loan increased our equity capital and we will benefit from the investor bringing in business connections and insights to our Group s business strategies. The conversion of the loan increased our equity capital and we will benefit from the investor bringing in business connections and insights to our Group s business strategies. API Investment provided us with additional capital and we will benefit from API bringing in business connections and insights to our Group s business strategies. Lock-up period Shareholding of the investor in our Company immediately following the completion of the Capitalisation Issue and the [REDACTED] Investment cost per Share paid under Pre-[REDACTED] investment (Note 1) Discount to [REDACTED] of [REDACTED] per [REDACTED](Note 2) [REDACTED] Special rights granted to the investor The terms of the agreements did not impose any lock-up obligations over the Shares held by each of the Pre-[REDACTED] Investors. [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% The [REDACTED] received by our Group from the Pre-[REDACTED] Investors were utilized for funding [REDACTED] expenses and working capital purposes. As at the Latest Practicable Date, approximately [REDACTED]% of the [REDACTED] were utilized. For Investment by Mr. Chong, Investment by Ms. Lam, Investment by Mr. Seow and Investment by Ms. Ngo: No special rights are granted. For API Investment: Restriction on share issue Save for the issue and allotment of [REDACTED] under the [REDACTED], any issue and allotment of further Shares shall require the prior written consent of API (such consent not to be unreasonably withheld or delayed) provided API shall hold any Share for the time being. Right of Share Buyback In the event of either of the following circumstances, API shall be entitled to, by written notice to Mr. Ang, require Mr. Ang to purchase all of the Shares beneficially owned by API for the time being at 104% of the Subscription Price in the manner as determined by API and set forth in the served written notice: (i) our Company fails to procure the issue and delivery of the draft audited accounts of our Group in the form as stipulated under the API Subscription Agreement ( Accounts ) to API on or before 30 June 2018; 92

101 HISTORY, REORGANISATION AND CORPORATE STRUCTURE (ii) API reasonably believes that based on the financial information and figures shown in the Accounts, our Group fails to meet the minimum cash flow requirement under the GEM Listing Rules of having an adequate trading record of a positive cash flow of at least HK$30,000,000 in aggregate for FY2016 and FY2017 generated from operating activities in the ordinary and usual course of business before changes in working capital and taxes paid; or (iii) the corporate reorganisation as stipulated under the API Subscription Agreement fails to take place by 30 April 2018 (or such other date as agreed by API in writing). All the special rights mentioned above shall automatically cease to have any effect on or before the [REDACTED]. Notes: (1) This is derived based on [REDACTED], [REDACTED], [REDACTED], [REDACTED] and [REDACTED] Shares to be held by each of Mr. Chong, Ms. Lam, Mr. Seow, Ms. Ngo and API respectively upon completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], andthe options which may be granted under the Share Option Scheme). (2) This is derived based on the [REDACTED] of [REDACTED], being the mid-point of the indicative [REDACTED] range. Information regarding the Pre-[REDACTED] Investors Mr. Chong Mr. Chong is a private investor engaged in properties and securities investment, who was an Independent Third Party prior to his investment in our Group. Mr. Chong graduated with a Bachelor s (Honours) degree in Accounting and Financial Studies from the University of Exeter, United Kingdom in July He is currently an independent non-executive director of each of China Yuanbang Property Holdings Limited (Singapore Stock Code: CYBP) and SMJ International Holdings Ltd (Singapore Stock Code: 40B), both listed on Singapore Exchange Securities Trading Limited. Mr. Chong learnt of our Group through Mr. Ng Chee Keen (the spouse of Ms. FF Lim, one of our Controlling Shareholders). To the best of the knowledge and belief of our Directors, Mr. Chong decided to invest in our Group in view of the prospects and growth potential of our Group. Ms. Lam Ms. Lam is a private investor engaged in properties and securities investment, who was an Independent Third Party prior to her investment in our Group. Ms. Lam graduated with a diploma in Banking and Finance from The Institute of Banking and Finance Singapore in June Ms. Lam learnt of our Group through Mr. Ang, our executive Director. To the best of the knowledge and belief of our Directors, Ms. Lam decided to invest in our Group in view of the prospects and growth potential of our Group. Mr. Seow Mr. Seow is a private investor engaged in properties and securities investment, who was an Independent Third Party prior to his investment in our Group. Mr. Seow graduated with a Bachelor s degree in Building from National University of Singapore in June Mr. Seow learnt of our Group through Mr. Ng Chee Keen (the spouse of Ms. FF Lim, one of our Controlling Shareholders). To the best of the knowledge and belief of our Directors, Mr. Seow decided to invest in our Group in view of the prospects and growth potential of our Group. 93

102 HISTORY, REORGANISATION AND CORPORATE STRUCTURE Ms. Ngo Ms. Ngo is a private investor engaged in properties and securities investment, who was an Independent Third Party prior to her investment in our Group. Ms. Ngo graduated with a Bachelor s degree in Business and Management Studies (Accounting and Finance) from the University of Bradford in November Ms. Ngo learnt of our Group through Ms. LL Lim (the spouse of Mr. Ang and our administrative director). To the best of the knowledge and belief of our Directors, Ms. Ngo decided to invest in our Group in view of the prospects and growth potential of our Group. API API is a company incorporated in the BVI with limited liability and is solely owned by Mr. Chan, who was an Independent Third Party prior to the API Investment. Mr. Chan is a private investor engaged in properties and securities investment and obtained the degree of Master in Business Administration from Harvard University in June Mr. Chan learnt of our Group through Mr. Ang, our executive Director. To the best of the knowledge and belief of our Directors, Mr. Chan decided to invest in our Group in view of the prospects and growth potential of our Group. Save as disclosed above and being the Shareholders as a result of the Pre-[REDACTED] investments, to the best of our Directors knowledge, information and belief having made all reasonable enquiries, Mr. Chong, Ms. Lam, Ms. Ngo, Mr. Seow and Mr. Chan did not have any other past or present relationships, including but not limited to family, trust, business, employment relationships, or any agreements, arrangements or understanding with our Group or any of its connected persons. Sole Sponsor s confirmation The Sole Sponsor has confirmed that each of the investments by the Pre-[REDACTED] Investors is in compliance with the Interim Guidance on Pre-[REDACTED] Investments issued on January 2012 and updated in March 2017, the Guidance Letter HKEX-GL43-12 issued in October 2012 and updated in March 2017 by the Stock Exchange. REORGANISATION Prior to the Reorganisation which started in March 2018, the corporate structure of our Group was as follows: Ms. FF Lim Mr. Ang Mr. Chee Mr. Chong Ms. Ngo Ms. Lam Mr. Seow 36.37% 30.09% 8.54% 8.50% 6.79% 6.50% 3.21% Optima Werkz (Singapore) Mr. Chew 45% 100% Optima De Auto (Singapore) 100% Optima Werkz International (Singapore) 55% Optima Carz (Singapore) 94

103 HISTORY, REORGANISATION AND CORPORATE STRUCTURE Steps of Reorganisation In preparation for the [REDACTED] and the [REDACTED], our Group implemented the Reorganisation which involved the following principal steps: 1. Mr. Ang and Ms. FF Lim acquired and activated Red Link on 27 February 2018 for holding their respective shares in the Company. The shareholdings of Red Link immediately following such acquisition are shown below: Shareholders of Red Link Number of issued shares held Shareholding percentage (%) Ms. FF Lim Mr. Ang Total: 1, On 14 March 2018, our Company was incorporated in the Cayman Islands as an exempted company. Its initial authorised share capital is HK$380,000 divided into 38,000,000 Shares of HK$0.01 each. On 14 March 2018, one Share was issued to Sharon Pierson (an officer of [REDACTED], the registered office provider of our Company), which was transferred to Red Link on the same date. 3. On 14 March 2018, the Company further allotted and issued 949,999 Shares, all nil-paid, to Red Link, Mr. Chee, Mr. Chong, Ms. Ngo, Ms. Lam and Mr. Seow. Brief details of the shareholders of our Company immediately following the abovementioned transfer and subscriptions are shown below: Shareholders Number of issued Shares subscribed and held Shareholding percentage (%) Red Link 631, Mr. Chee 81, Mr. Chong 80, Ms. Ngo 64, Ms. Lam 61, Mr. Seow 30, Total: 950, Optima International was incorporated in the BVI on 16 March It is initially authorised to issue a maximum of 50,000 shares of a single class of par value US$1.00 each. On 16 March 2018, 100 shares in Optima International were issued and allotted as fully paid to the Company at par, and the aggregate subscription price was US$100 which was equal to the aggregate value of the shares issued. 95

104 HISTORY, REORGANISATION AND CORPORATE STRUCTURE 5. On 29 March 2018, pursuant to the API Subscription Agreement, our Company allotted and issued 50,000 Shares to API. Please refer to the paragraph headed Pre-[REDACTED] Investments API Investment in this section above for the details of the API Subscription Agreement. The shareholdings of the shareholders of our Company immediately following completion of the API Subscription Agreement are shown below: Shareholders Number of issued shares subscribed and held Shareholding percentage (%) Red Link 631, Mr. Chee 81, Mr. Chong 80, Ms. Ngo 64, Ms. Lam 61, Mr. Seow 30, API 50, Total: 1,000, On 28 April 2018, Optima Werkz acquired all Mr. Chew s shares in Optima Carz and Optima Carz became a direct wholly-owned subsidiary of Optima Werkz. 7. On 22 June 2018, pursuant to the Share Swap Agreement, Optima International became the sole shareholder of Optima Werkz and the Company allotted and issued a total of 8,550,000 new Shares to Red Link, Mr. Chee, Mr. Chong, Ms. Ngo, Ms. Lam and Mr. Seow. Our Company further allotted and issued 450,000 new Shares to API on the same date. The shareholding percentage of Red Link, Mr. Chee, Mr. Chong, Ms. Ngo, Ms. Lam, Mr. Seow and API in our Company remained the same immediately before and immediately after the completion of the Share Swap Agreement and the said share allotment. 96

105 HISTORY, REORGANISATION AND CORPORATE STRUCTURE CORPORATE STRUCTURE The following chart depicts the shareholding and corporate structure of our Group immediately after the Reorganisation: Ms. FF Lim Mr. Ang 54.70% 45.30% Red Link (BVI) Mr. Chee Mr. Chong Ms. Ngo Ms. Lam Mr. Seow API 63.13% 8.12% 8.08% 6.45% 6.18% 3.04% 5.00% Company (Cayman Islands) 100% Optima International (BVI) 100% Optima Werkz (Singapore) 100% 100% 100% Optima Carz (Singapore) Optima De Auto (Singapore) Optima Werkz International (Singapore) 97

106 HISTORY, REORGANISATION AND CORPORATE STRUCTURE The following chart depicts the shareholding and corporate structure of our Group immediately after the completion of the Capitalisation Issue and the [REDACTED] (without taking into account any Shares which may be issued upon the exercise of the [REDACTED], and the options which may be granted under the Share Option Scheme): Ms. FF Lim Mr. Ang 54.70% 45.30% Red Link (BVI) Mr. Chee Mr. Chong Ms. Ngo Ms. Lam Mr. Seow API Public [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% Company (Cayman Islands) 100% Optima International (BVI) 100% Optima Werkz (Singapore) 100% 100% 100% Optima Carz (Singapore) Optima De Auto (Singapore) Optima Werkz International (Singapore) 98

107 BUSINESS OVERVIEW We are a one-stop premier after-market automotive service provider in Singapore offering comprehensive and integrated automotive related solutions to customers. According to the Frost & Sullivan Report, we (i) ranked first among the independent after-market automotive service providers with a market share of approximately 8.8% in terms of revenue derived from after-market automotive service provided by independent after-market automotive service providers in Singapore in 2017; and (ii) ranked third among the after-market automotive service providers with a market share of approximately 5.8% in terms of revenue derived from aftermarket automotive service in Singapore in We principally engage in the provision of a comprehensive range of after-market automotive services, with a focus on inspection, maintenance and repair services. We also engage in (i) offering short-term and long-term car rental services; and (ii) supplying passenger car spare parts, accessories and automotive equipment to overseas countries (i.e. Sri Lanka and Myanmar). During the Track Record Period, we operated three service centres and one paint workshop in Singapore. The three service centres are our Kung Chong Service Centre, Serangoon Service Centre and Upper Thomson Service Centre. Our service centres are equipped with cutting-edge diagnostics equipment and facilities for provision of comprehensive after-market automotive services except spray painting services. Our paint workshop is responsible for handling all the spray painting job required. We provide after-market automotive services for a wide range of passenger cars, including luxury passenger cars and ultra-luxury supercars. We provided aftermarket automotive services to approximately 15,600, 25,200 and 5,900 units of passenger cars for FY2016, FY2017 and 1Q2018 respectively. We have a large, rapidly growing and loyal customer base consisting of individual and corporate customers. Our customers include (i) automotive dealers; (ii) insurance companies; (iii) car service centres; (iv) car leasing companies and (v) individuals or other corporations. Our revenue grew from approximately S$16.3 million for FY2016 to approximately S$18.6 million for FY2017, representing an increase of approximately 14.1%. Our revenue for 1Q2017 and 1Q2018 was approximately S$4.3 million and S$4.3 million respectively. For further details of our financial performance, please refer to the paragraph headed Financial Information Description of selected components of combined statements of profit or loss and other comprehensive income in this document. 99

108 BUSINESS The table below summarises the key revenue information by business segment for FY2016, FY2017, 1Q2017 and 1Q2018: FY2016 FY2017 1Q2017 1Q2018 S$ 000 % S$ 000 % S$ 000 % S$ 000 % (unaudited) After-market automotive services Inspection, maintenance and non-insured repair services 12, , , , Insured repair services , Warranty related business 1, , Sub-total 15, , , , Car rental services , Supply of passenger car spare parts, accessories and automotive equipment Total 16, , , ,

109 BUSINESS The table below sets forth a breakdown of our gross profit and gross profit margin by business segment for FY2016, FY2017, 1Q2017 and 1Q2018 (Note 1): FY2016 FY2017 1Q2017 1Q2018 Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin S$ 000 % S$ 000 % S$ 000 % S$ 000 % After-market automotive services 6, , , , Car rental services (94) Note Supply of passenger car spare parts, accessories and automotive equipment Total 6, , , , Notes: 1. As (i) the materials; (ii) the operation team and workshop technicians; and (iii) the machine and equipment used in providing our after-market automotive services are shared between (i) inspection, maintenance, modification, tuning and grooming, repair of both insured and non-insured repair services; and (ii) warranty related business, we are not able to provide a further breakdown of our gross profit and gross profit margin by each specific service we provide in our after-market automotive services. 2. There was a gross loss in the relevant period. 101

110 BUSINESS OUR COMPETITIVE STRENGTHS We believe that our competitive strengths put us in an advantageous position to tap into rising market opportunities. Our main competitive strengths include:- We are a leading after-market automotive service provider in Singapore Since the commencement of our first service centre (Serangoon Service Centre) in 2012, we have progressed steadily to become one of the leading after-market automotive service providers in Singapore. According to the Frost & Sullivan Report, we (i) ranked first among the independent after-market automotive service providers with a market share of approximately 8.8% in terms of revenue derived from after-market automotive service provided by independent after-market automotive service providers in Singapore in 2017; and (ii) ranked third among the after-market automotive service providers with a market share of approximately 5.8% in terms of revenue derived from after-market automotive service in Singapore in We believe we have established a reputation as a reliable and responsive after-market automotive service provider with strong brand recognition within the industry in Singapore. This is achieved through our consistent and timely delivery of quality services to meet the stringent requirements of our customers. As at the Latest Practicable Date, we have three service centres and a paint workshop with a combined built-in area of approximately 27,347 sq. ft., covering most of the major automotive belts with an abundance of car-related businesses in Singapore. Our position as one of the leading players in the after-market automotive service industry in Singapore is further cemented by our collaborations with a renowned insurance company in Singapore, where we fulfilled the stringent criteria set by it in relation to our passenger car inspection, maintenance and repair services. Since January 2017, our service centres are the exclusive workshops which can provide after-market automotive services to the car owners under a motor warranty programme with the renowned insurance company. For further details of our cooperation with the renowned insurance company, please refer to the paragraph headed Our Business After-market automotive services Cooperation with the renowned insurance company for warranty related business in this section. Our leading market position will give us a competitive advantage over new players in the market and we are well positioned to cement business relationships with potential customers. We have strong technical knowledge and after-market service capabilities We have a team of management, service advisors and technicians, who are equipped with a strong foundation of automotive technical knowledge and know-how to allow us to offer sophisticated services and advice to our customers. Coupled with our cutting-edge diagnostics equipment and facilities, we are able to offer a wide range of comprehensive after-market automotive services to a broad class of passenger cars of different makes and models. Our strong after-market servicing capabilities have also enabled us to undertake after-market services for luxury passenger car and ultra-luxury supercar, which are of higher margin and generally requires more dedicated and specialised skill set. Our technicians are trained to handle the necessary repairs on the passenger cars after a problem has been identified. We arrange our management, service advisors and technicians to attend courses and seminars to upgrade their skills and keep up with developments in the industry. We conduct in-house training for them to share technical knowledge and information to further enhance our capabilities. We believe that the continuous development of our employees provides us with a solid foundation for the continuing success of our business. 102

111 BUSINESS We are able to provide high quality after-market automotive services in a timely manner We differentiate ourselves from our competitors by placing great emphasis on the provision of high quality after-market automotive services in a timely manner. Through our consistent and timely delivery of quality services, we have, over the years, built a prominent brand and achieved a leading position in the after-market automotive services market in Singapore. As a testament to our established reputation as a premier provider of high quality after-market automotive services, we have attracted a large pool of customers who engage us to service their luxury passenger cars and ultra-luxury supercars. During the Track Record Period, at least 30% of the number of passenger car we serviced were luxury passenger cars and ultra-luxury supercars. The owners of these kinds of passenger cars generally have high expectation and place more value on high quality customer service. We believe that providing high quality customer service to each of our customers is key to building customer relationships and attracting new customers. Our ability to provide high quality after-market automotive services also enables us to service the luxury passenger car and ultra-luxury supercar segments. These market segments usually have a relatively high entry barrier due to (i) high cost of the specialised diagnostic equipment required; and (ii) higher dedicated and specialised skill set required to handle these luxury passenger cars and ultra-luxury supercars. In line with this core business philosophy, we have established and adopted quality assurance and control procedures. To maintain the quality of the work done by our employees, we (i) provide training to our employees to improve their skills and professional knowledge as well as to keep them updated on new developments; and (ii) assign experienced employees familiar with our business and policies to monitor the work of our new employees for a period of at least three months from their commencement of employment. To maintain the quality of our services, our workshop supervisors conduct quality control inspections before the handover of the passenger car to our customers for after-market automotive services rendered and our car rental executives will ensure that the rental passenger cars are in a good condition before the handover of the passenger car to our customers for car rental services rendered. Further, our management system has been certified to be in accordance with the standard required under ISO 9001:2015 (Quality management systems). Our Directors believe that our effective quality management systems would improve our overall service quality and customer s satisfaction. We have developed a broad and diverse loyal customer base and collaborated with established insurance company We have developed a broad and diverse loyal customer base, with over 6,400, 7,200 and 2,100 customers in FY2016, FY2017 and 1Q2018 respectively. Our customers include (i) automotive dealers; (ii) insurance companies; (iii) car service centres; (iv) car leasing companies; and (v) individuals or other corporations. Most of our customers are repeat customers (who had contracted with us more than once during the Track Record Period) and we maintain good business relationships with them. Revenue of repeat customers represents approximately 60.4%, 54.4% and 57.0% of our revenue in FY2016, FY2017 and 1Q2018 respectively. We believe that, by forging a close relationship with our customers, we are able to familiarise ourselves with the customers needs and preferences so that we can better manage their expectations and offer them with services best suited to their needs. 103

112 BUSINESS Further, we have entered into an exclusive service agreement with a renowned insurance company, which is a general insurer licensed by the Monetary Authority of Singapore. The exclusive service agreement commenced from 1 January Our service centres are the exclusive workshops which can provide after-market automotive services to the car owners under the motor warranty programme provided by the renowned insurance company. All passenger cars that purchased the motor warranties sold under the motor warranty programme have to be serviced by our service centres. For further details of our cooperation with the renowned insurance company, please refer to the paragraph headed Our Business After-market automotive services Cooperation with the renowned insurance company for warranty related business in this section. We have strong relationships with our suppliers We believe that our success is largely built upon the strong relationships that we have developed with our suppliers over the years. We have developed long-standing relationships with many of our suppliers and maintained regular contact with our suppliers who provide us with regular updates on market trends and new technological developments in the automotive industry which enables us to better understand customers requirements and keep up with developments in the industry. We have an experienced, dedicated and capable management team We have an experienced, dedicated and capable management team, led by Mr Ang Lay Keong, our founder, chairman, executive Director and chief executive officer. Mr Ang Lay Keong has over 24 years of experience in the automotive after-market service industry and has been instrumental in spearheading our growth since our incorporation. For details of the qualification and experience of our Directors and senior management, please refer to the section headed Directors and Senior Management in this document. Over the years, our management team and executive officers have built close relationships with our key principal suppliers and customers, accumulated in-depth knowledge of the industry and have stayed abreast of industry development and market trends. The in-depth industry knowledge and extensive operational and management experience of our management team have helped us to seize new market opportunities, formulate sound business strategies and foster a strong customer service oriented culture within our Group. 104

113 BUSINESS BUSINESS STRATEGIES Our Directors believe that our competitive strengths should form the pillars for our business strategies, as this will provide our Group with competitive advantage to sustain our business growth within the after-market automotive services industry in Singapore. To further strengthen our leading position as a one-stop premier aftermarket automotive service provider in Singapore, we have adopted and will continue to adopt the following business strategies:- Expanding our servicing capacity According to the Frost & Sullivan Report, as announced by the Competition Commission of Singapore in December 2017, major automotive dealers have agreed to remove restriction on warranties that require customers to service or repair their vehicles exclusively at the respective dealers authorised workshops. Such restrictions had deterred passenger car owners from using independent workshops and thus undermined our ability to compete effectively with dealer s authorised workshops. Our Directors believe that as passenger car is an expensive asset in Singapore, with the removal of such restrictions, passenger car owners will seek for reputable and high quality independent workshops, like us, to replace the relatively more expensive dealers authorised workshops. According to the Frost & Sullivan Report, we (i) ranked first among the independent after-market automotive service providers with a market share of approximately 8.8% in terms of revenue derived from aftermarket automotive service provided by independent after-market automotive service providers in Singapore in 2017; and (ii) ranked third among the after-market automotive service providers with a market share of approximately 5.8% in terms of revenue derived from after-market automotive service in Singapore in Our Directors are of the view that because of our leading position in Singapore, our Group will benefit from such industry development. In order to capture the emerging business opportunities and enhance our customers experience, we plan to continue to implement our business strategy of geographic customization in order to expand our service capacity. Currently, our business activities are carried out at three service centres and one paint workshop located in the central part of Singapore. We intend to continuously provide greater convenience and value to our customers by expanding our geographical coverage to close up the proximity between our customers and us in the following ways: (i) Setting up a new service centre Our Directors consider that our servicing capacity is mainly limited by the number of hoists we have installed in our service centre and the area of our service centre. As at the Latest Practicable Date, we operated three service centres and one paint workshop in Singapore with a combined built-in-area of approximately 27,347 sq. ft. and a total of 37 hoists installed. Set out below are the utilisation rate of our total available hoist hours as estimate by our Directors: FY2016 FY2017 1Q2018 Total available hoist hours 1 86,580 86,580 21,645 Utilisation rate % 80.0% 83.3% 105

114 BUSINESS Notes: 1. The total available hoist hours for FY2016 and FY2017 is based on the number of hoists we have multiplied by the maximum number of working hours in that respective year. The total available hoist hours for 1Q2018 is estimated at approximately one-fourth of the total available hoist hours for a year. 2. The utilisation rate for the respective period is calculated according to the following formula: (Number of hours used for insured repair services) (Number of hours used for other after-market + automotive services) Total available hoist hours As only one passenger car can be serviced by one hoist at the same time, we believe the above utilisation rate is calculated based on reasonable ground in order to demonstrate our operational efficiency during the Track Record Period. The increase in the utilisation rate during the Track Record Period was due to the increase in number of passenger cars we provided after-market automotive services. For the length of time we required to complete each type of our aftermarket automotive services, please refer to the paragraph headed Our Business Inspection, maintenance and repair services in this section. In anticipation of the increase in demand for our after-market automotive service, we intend to increase our servicing capacity by setting up a new service centre. As at the Latest Practicable Date, we have not identified any potential target premises. We target to search for potential premises within the major automotive belts with an abundance of car-related business in Singapore. Before we choose a location, we will consider various factors including, amongst others, accessibility, rental costs and degree of competition within the vicinity. Our Group will examine the performance of existing competitors in the vicinity and conduct further assessment on our investment breakeven point at a later stage closer to the execution of our expansion plan in order to collect more timely data. For further details, please refer to the paragraph headed Business strategies Site selection process in this section. We intend to set up a new service centre, which is similar to our Upper Thomson Service Centre, with target floor area of at least 6,000 sq. ft. and we expect to install at least 8 hoists at the new service centre. Our Directors estimate that the investment cost for the new service centre would be approximately HK$[REDACTED] which includes, among others, rental deposits, costs of renovation, furniture and fixtures, equipment, as well as legal fees. As such, we have allocated [REDACTED] for such investment, which will be funded by the [REDACTED] from the [REDACTED]. For further details, please refer to the paragraph headed Future Plans and Use of [REDACTED] Implementation plans in this document. (ii) Setting up satellite workshops We intend to establish two new satellite workshops in other parts of Singapore so that our customer can send their vehicles to these satellite workshops that are in close proximity to their home. We believe that the geographic convenience arising from these satellite workshops will help increase our customer loyalty and secure new customers. These satellite workshops would be smaller in scale than our existing and planned service centres, with the capacity of handling simple inspection, maintenance and repair jobs. Complicated jobs will be sent back to our service centres after the customers drop off their passenger car at the satellite workshops. 106

115 BUSINESS As at the Latest Practicable Date, we have not identified any potential target premises for our satellite workshops. As our service centers are mainly located in the central part of Singapore, we target to search for potential premises in the eastern or western part of Singapore to set up our satellite workshops. Before we choose a location, we will consider various factors including, amongst others, accessibility, rental costs and degree of competition within the vicinity. Our Group will conduct further assessment on investment breakeven point at a later stage closer to the execution of our expansion plan in order to collect more timely data. For further details, please refer to the paragraph headed Business strategies Site selection process in this section. Our target floor area for each of the satellite workshop is approximately 2,000 sq. ft. and we expect to install at least two hoists at each satellite workshop. Based on our past experience, our Directors estimate that the investment cost for each satellite workshop would be approximately [REDACTED] which includes, among others, rental deposits, costs of renovation, furniture and fixtures, equipment, as well as legal fees. As such, we have allocated [REDACTED] for such investment, which will be funded by the [REDACTED] from the [REDACTED]. For further details, please refer to the section headed Future Plans and [REDACTED] in this document. Site selection process Our Directors consider that identifying a suitable location for our business is crucial in determining the long-term success of our Group. Our Group s service centres are currently located at the major automotive belts with an abundance of car-related business in Singapore. Our Group considers the following factors before we choose the location for opening our new service centre and/or satellite workshops: Accessibility of the potential sites: We will consider whether the potential sites are easily accessible by pedestrians and vehicles; Size: We will consider whether the proposed location can meet our target size requirement; Rental and other costs of operation: We will consider whether our Group can operate profitably based on the rental and other costs of operation, and whether the rental costs fall within our acceptable proportion of total costs; Visibility: We will consider whether the proposed location can bring visibility to our brand; Competition: We will consider whether we are able to outperform the existing competitors in the vicinity; Breakeven and payback periods: We will consider the time it may take for us to achieve breakeven and payback periods. In deciding on whether a location is suitable, we will also prepare a feasibility report internally which will cover matters such as budgeting, staff costs and pricing structure. 107

116 BUSINESS We typically follow the procedures as set out below for the establishment of a new service centre or a satellite workshop: 1. Site selection: Our Directors and senior management will decide a suitable site for our new service centre or satellite workshop; 2. Rental agreement negotiation and execution: Once our Directors approve the location, our Group will commence negotiation on the terms of the rental agreement with the landlord. We will take into account of factors such as comparable rents of sites of similar size in the vicinity and potential increase in the rental upon the expiry of the rental agreement when negotiating with the landlord. Our Directors will sign the rental agreement with the landlord if we are satisfied with the proposed terms of the rental agreement after negotiation; 3. Renovation: Upon signing of the rental agreement, our Group will commence the interior designing of the new service centre or satellite workshop. We will engage independent contractors to carry out the renovation work for us; 4. Purchase of equipment and hoists: Our Group will also commence the purchase of equipment and hoists necessary for the provision of our after-market automotive services; 5. Licensing and permits: When the renovation work is in progress, our Group concurrently applies for various licences and permits necessary for our operation. For details of the licensing requirements, please refer to the section headed Regulatory Overview in this document; and 6. Sourcing staff: Our Group will confirm the number of staff members that our new service centre or satellite workshop requires to employ. We will first explore the possibility of internal transfers and promotions. Then we will recruit new employees and provide training for them before the opening of our new service centre or satellite workshop. Our directors estimate the typical lead time from the delivery of the premises to the actual opening of a service centre and/or satellite workshop will be approximately six months. Continue to grow our rental fleet to complement our after-market automotive business We believe our car rental service is complementary to our after-market automotive business. Apart from the steady and recurring revenue generated from the provision of long term car rental services, we are able to provide value-added services to our after-market automotive customers by offering short-term replacement car when these customers send in their vehicle for repair or maintenance. This creates a ready pool of users for our car rental services. Further, as we also maintain and repair our rental passenger cars through our service centres in Singapore, we believe our own maintenance and repair services will help ensure the service quality while reducing our costs. According to the Frost & Sullivan Report, the market size of the passenger car rental industry has increased from S$118.3 million in 2013 to S$162.2 million in 2017, representing a CAGR of 8.2% between 2013 and It is also projected to reach S$220.0 million by 2022, representing a CAGR of 6.3% between 2018 and 2022, driven by more people considering to use hired vehicles as a viable alternative to owning a car in Singapore. 108

117 BUSINESS We intend to grow our rental fleet to optimize fleet composition and to achieve further economies of scale in terms of vehicle procurement, insurance coverage costs and car repair and maintenance which in turn leads to lower operating costs per rental car. However, such expansion will be carried out progressively, after taking into consideration of the overall market conditions and financial position of our Group. Strengthening our service capabilities and operating efficiencies (i) Enhance costs efficiency by purchasing spare parts and accessories in bulk We plan to continue to enhance our costs efficiency to improve our profitability. We have been able to lower our costs of spare parts and accessories with growing business volume when we meet the sales target provided by our suppliers, allowing us to enjoy a higher purchase discount. We intend to grow our supply of passenger car spare parts and accessories business so that we can negotiate a deeper discount when we purchase spare parts and accessories in bulk. According to the Frost & Sullivan Report, the after-market automotive service mainly encompasses six types of services, in which sales of spare parts and accessories is one of the key services. During the Track Record Period, we have engaged in the supply of spare parts and accessories to overseas customers. By purchasing spare parts and accessories in bulk, we seek to strengthen our relationship with our suppliers and lower our purchase costs of spare parts and accessories. (ii) Training and recruitment of our employees We recognise that our employees are critical to our success and we place strong emphasis on continuous training and personal development to develop our people to keep them abreast of the knowledge and skills desirable to our customers. We will continue to develop and enhance the expertise and skills of our staff in order to recruit, train and retain the best personnel for our business. We will continue to offer competitive remuneration packages and opportunities for career advancement. We plan to recruit and train a team of new technicians for our new service centres and satellite workshops as we expand our servicing capacity. (iii) Upgrade of information technology and other equipment We plan to strengthen our market leadership position in Singapore by increasing our service capabilities to cope with the evolving market trend and changing of customer demand. The passenger car industry is characterised by rapid introduction of new car models with advanced technological features. For example, the introduction of hybrid battery powered vehicle and electrically powered vehicle are new product trends in this industry. To ensure that we stay ahead, we intend to continue upgrading our service capabilities by keeping ourselves abreast of technological trends and knowhow and regularly updating and enhancing our diagnostic equipment for the latest makes and models of passenger cars. We also plan to continue to strengthen our operational efficiency to improve our revenue and profitability. We have conducted, and will continue to conduct regular analysis of our business processes to identify areas that require improvement. Our centralised SAP system has enabled us to coordinate the resources of our Group to achieve operational efficiencies. We will continue to develop and invest in software infrastructure, as we believe that this will help us manage our internal operations and business as well as external requirements of our customers more effectively. 109

118 BUSINESS We plan to upgrade our SAP system to incorporate an advanced customer relationship management system and develop mobile applications so as to enable our customer to, amongst others, make advance appointment, check repair status, purchase accessories online and record repair history using different mobile application platform such as Android and Apple ios. We believe that an improved SAP system will enable us to better track, monitor and analyse our key operating data and achieve greater operational efficiency, more efficient management and allocation of our resources. Brand building through strengthening our relationships with our existing customers and expanding our customer base Our Directors believe that apart from the improvement in servicing capacity, operational efficiencies, technical skills and service quality, the strengthening of our brand recognition in the market is an area which we will work on further to attract new customers and enhance our customers loyalty. We believe our brand image is critical to our business development and we aim to develop a brand name that is synonymous with a consistently high service quality level. To further enhance customer awareness of our brand image, we intend to leverage on our marketing efforts to attract and maintain public awareness. We plan to commission printed advertisements in magazines and/or newspaper publications. We also intend to participate in promotional events organised by different passenger car clubs and sponsor their events and conduct marketing and promotion activities for the launch of our new service centre in order to improve awareness of our brand. We also plan to take advantage of the rapid development of digital communications and social media through increased marketing and public relation activities on social media platforms such as Facebook to promote interactions with customers. We believe that our continuous efforts in engaging our customers will help increase our customer loyalty, strengthen our brand, and further add to our brand equity. We plan to continue to strengthen our existing relationships with the insurance companies, automotive dealers, car leasing companies, other car service centres as well as individual and corporate customers as their preferred after-market automotive services provider. We will continue to strengthen our established relationships with these customers by fostering close cooperation and maintaining good communication and service standards. We believe that our proven track record and reputation have positioned us well to secure new customers and provide more reliable services to existing customers. We have been able to expand our customer base through strategic co-operation with companies whose business complements with our services. For example, in 2017, we established a strategic co-operation with the renowned insurance company, where our service centres provide exclusive after-market automotive services to the car owners under the motor warranty programme provided by the renowned insurance company. We plan to continue our strategy of entering into selective strategic co-operation, joint ventures or partnership in the future with companies whose business complements with our services so as to add value to our Group or in the areas where we wish to increase our market share, and develop customised products or solutions relevant to our customers in the relevant geographic area. 110

119 BUSINESS OUR BUSINESS We are a one-stop premier after-market automotive service provider in Singapore offering comprehensive and integrated automotive related solutions to customers. We principally engage in the provision of a comprehensive range of after-market automotive services, with a focus on inspection, maintenance and repair services. We also engage in (i) offering short-term and long-term car rental services; and (ii) supplying passenger car spare parts, accessories and automotive equipment to overseas countries (i.e. Sri Lanka and Myanmar). The detailed description of our core business segments are as follows: After-Market Automotive Services We principally engage in the provision of a comprehensive range of after-market automotive services, with a focus on inspection, maintenance and repair services. We may also from time to time provide modification, tuning and grooming services to our customers in Singapore, the revenue derived from the provision of such service accounted for less than 1.0% of our total revenue during the Track Record Period. We provided after-market automotive services to approximately 15,600, 25,200 and 5,900 units of passenger cars for FY2016, FY2017 and 1Q2018 respectively. During the Track Record Period, at least 30% of the number of passenger car we serviced were luxury passenger cars and ultra-luxury supercars. For FY2016, FY2017 and 1Q2018, our revenue generated from after-market automotive services accounted for approximately 92.5%, 85.8% and 81.6% respectively, of our total revenue. Inspection, maintenance and repair services We provide inspection, maintenance and repair services to a wide range of makes and models of passenger cars in Singapore including luxury passenger cars and ultra-luxury supercars. 111

120 BUSINESS The flowchart below illustrates the general steps taken by us in providing our inspection, maintenance and repair services. For our services relating to the motor warranty programme with the renowned insurance company, please refer to the paragraph headed Our Business After-market automotive services Cooperation with the renowned insurance company for warranty related business in this section. For our services as approved reporting centre or preferred workshop of the insurance companies, please refer to the paragraph headed After-market automotive services Cooperation with insurance companies as approved reporting centre or preferred workshop in this section. Customer brings the passenger car to our service centre or we send a driver to collect the passenger car. Our service advisor makes enquiries to the customer and records the customer s issue with the passenger car. A job card with details of the services required and customer s contact details is generated. Our service advisor confirms the details on the job card with the customer. The customer acknowledges and signs on the job card. Our technician conducts inspection and examination of the customer s car. Our technician checks whether the spare parts required are available. If certain spare parts have to be replaced but are not in stock, our service advisor will seek consent from the customer on the price of the spare parts. 30% deposit based on the total cost of the job is required from the customer if spare parts to be purchased will be sourced from overseas and cost more than S$500. No Yes Depending on the condition of the passenger car, the customer may have to keep the passenger car in our service centre. If customer is allowed to drive away the passenger car, our service advisor will inform the customer to return the passenger car once spare parts are available. Our technician conducts the work required. Upon completion of work required, quality control procedures are conducted. Our service advisor informs the customer to return and collect the passenger car. Our technician explains to the customer on the work done. Customer pays the remaining balance. 112

121 BUSINESS Our service centres are equipped with comprehensive passenger car inspection, maintenance and repair facilities, such as Car-O-Liner collision repair and wheel alignment systems. Suppliers of passenger cars vary in their recommendations on how frequently passenger car owners should find a service provider for periodic passenger car inspection and maintenance. It generally ranges from every three to six months or from 5,000 to 10,000 kilometres driven. Our services for passenger car inspection and maintenance includes, amongst others, a routine passenger car inspection, replacement of battery, filters, spark plugs or other spare parts if required. We provide product warranty on new spare parts purchased and installed by us for a period of up to one year or 30,000 kilometres driven, except wear and tear. We also provide product warranty on reconditioned spare parts purchased and installed by us for a period of up to six months or 10,000 kilometres driven, except wear and tear. Within the product warranty period, customers can bring the passenger car for inspection if there is any problem with the spare parts installed by us and we will conduct inspection and repair or replace the spare parts if required. For further details, please refer to the paragraph headed Product warranty in this section. We keep records on customers served with inspection and maintenance services and would send reminders to those customers to schedule subsequent inspection and maintenance checks. We also provide a comprehensive range of passenger car repair services, ranging from minor repairs such as replacement of faulty spare parts, to major repairs such as overhaul of engine and transmission systems. We categorise our spray painting services conducted in our paint workshop as part of our repair services. We are able to service a wide range of makes and models of passenger cars in Singapore, including luxury passenger cars and ultra-luxury supercars which usually requires specialised diagnostic equipment as well as dedicated and sophisticated skill set. We update diagnostic equipment and software from time to time for the newer car models as appropriate. Our technicians are periodically trained to operate our diagnostic equipment by our workshop supervisors, who has expertise on the diagnostic equipment and the relevant software. We are also able to service hybrid vehicles that requires, for example, hybrid battery conditioning and rebuilding services, testing of electric transmissions, DC-DC converters, and maintenance for hybrid battery. For passenger car inspection services, it generally takes between one day and five days to complete the work. For passenger car maintenance services, it generally takes between one day and seven days to complete the work. For passenger car repair services, depending on the complexity of the damage, it may take up to 21 days to complete the work. As a one-stop premier after-market automotive service provider, we may further provide value-added services for customers by sending a driver to collect the customers passenger car upon request. Our motor accident concierge services include, amongst others, handling the paperwork and managing the claim process on behalf of the client, providing professional assessment on the damage of the accident vehicle, liaising with insurance company on the cost of repair and additional claim for the loss of use of vehicle as well as arranging a replacement vehicle for our customer. Cooperation with automotive dealers We cooperate with our customers which are established automotive dealers in Singapore. Our Directors believe that automotive dealers recognise that good after-market service contributes significantly to total customer satisfaction and is, therefore, a critical part of an effective marketing strategy. These automotive dealers offer motor warranty of the passenger cars to their customers directly. However, since many automotive dealers need to concentrate on their core business activities, they typically outsourced their after-market functions such as passenger car inspection, maintenance and repair services to third-party service providers like us. Further, by providing the critical link between the automotive dealers and the end-users after the sale has taken place, we help our automotive dealers customers maintain customer relationship, brand integrity and product reliability as well as make after-market service easily available to the end-users. Our Directors believe this enables the automotive dealers to foster a better relationship with the end-users as our after-market automotive service is considered an integral part of their business operations. 113

122 BUSINESS Cooperation with the renowned insurance company for warranty related business The flowchart below illustrates the general steps taken by us in handling a job involving the motor warranty programme with the renowned insurance company: New passenger car (purchased from parallel importer) Used passenger car Pre-inspection of used passenger car The condition of the used car is satisfactory The condition of the used car is unsatisfactory Pay a premium and join the motor warranty programme with the renowned insurance company The condition of the used car is satisfactory Car owner can repair the used passenger car at his own costs and conduct second inspection Car owner, who joined the motor warranty programme with the renowned insurance company, brings passenger car for inspection The repair costs are below the limit stated in the exclusive service agreement with the renowned insurance company If there is a defect in component covered under the warranty coverage The repair costs are above the limit stated in the exclusive service agreement with the renowned insurance company Repair the component and issue invoice to charge the renowned insurance company directly Negotiate with the renowned insurance company for the repair costs and seek its consent before rendering repair services 114

123 BUSINESS According to the Frost & Sullivan Report, it was a common practice for passenger car service centres to offer motor warranty to customers because it improves customers loyalty and reinforces the brand. We have been offering motor warranty to individual and corporate customers on or before 31 December Our customers paid us warranty premium and we provided repair services in respect of the defective car components of our customers if they are covered by our warranty. However, as the Monetary Authority of Singapore is of the view that such warranty programmes are within the definition of insurance business in Singapore and have to be provided by an insurer licensed by the Monetary Authority of Singapore, we have applied for and have been granted an exemption from the Monetary Authority of Singapore for our motor warranty programmes provided on or before 31 December In light of the requirement of Monetary Authority of Singapore, we restructured our motor warranty business by cooperating with a renowned insurance company, which is a general insurer licensed by the Monetary Authority of Singapore. Pursuant to this collaboration, we have entered into an insurance of motor warranties and service agreement with the renowned insurance company pursuant to which we transferred all motor warranty agreements entered into by us up to and including 31 December 2016 with an outstanding obligation to that insurance company. For details of this agreement, please refer to the paragraph headed Customers Our motor warranties transfer agreement with Customer F in this section. We have also entered into an exclusive service agreement with the renowned insurance company which commenced from 1 January Car owners may participate in the motor warranty programme by paying a premium to the renowned insurance company. Our service centres are the exclusive workshops which can provide after-market automotive services to the car owners under the motor warranty programme. All passenger cars that purchased the motor warranties under the motor warranty programme have to be serviced by our service centres. For new car owners, they can directly enrol in the motor warranty programme without inspection of their passenger cars. For used car owners, before enrolment in the motor warranty programme, the used passenger car has to be inspected by our service centres. We receive a pre-agreed inspection fee from the renowned insurance company for each used passenger car inspected in our service centres. After the inspection, if the condition of the used passenger car is satisfactory, the used car owner can pay a premium to the renowned insurance company to join the motor warranty programme. If the condition of the used passenger car is unsatisfactory, the used car owner may repair the passenger car at his own costs and a second inspection may be conducted. If the condition of the used passenger car is satisfactory after the repair, the used car owner can pay a premium to the renowned insurance company to join the motor warranty programme. The motor warranty programme provides cover for mechanical or electrical breakdowns that may affect the passenger cars during the warranty period. The components covered by the warranty include air-con, braking systems, clutch systems, drive shaft, electrical components, electrical motors, engine components, engine cooling systems, gearbox, hybrid batteries, steering and suspensions. The warranty coverage is up to five years. During the warranty period, car owners who participated in the motor warranty programme may bring their passenger cars to our service centres for inspection. If it is discovered upon inspection that there is a defect in component covered under the warranty coverage, and the repair costs are below the limit stated in the exclusive service agreement with the renowned insurance company, we will repair the component and issue invoice to charge the renowned insurance company for the services rendered; if the repair costs are above the limit stated in the exclusive service agreement, we will negotiate with the renowned insurance company for the repair costs and seek their consent before rendering repair services to the passenger cars. Since our cooperation with the renowned insurance company (i.e. Customer F) in January 2017, we have provided services to 566 and 170 units of passenger cars for FY2017 and 1Q2018 respectively under the motor warranty programme, accounting for approximately 5.9% and 10.3% respectively, of our revenue. For further details of the terms of our exclusive service agreement with the renowned insurance company, please refer to the paragraph headed Customers Our exclusive service agreement with Customer F The motor warranty programme in this section. 115

124 BUSINESS Cooperation with insurance companies as approved reporting centre or preferred workshop The flowchart below illustrates the general steps taken by us in handling a job for which we act as the approved reporting centre: Passenger car is delivered to our service centre Conduct inspection of the passenger car Fill out details of the accident claims, including the date of the event and our inspection results, in an e-filing system of the General Insurance Association of Singapore Report the type of repair works and the estimated fees to the relevant insurance company The flowchart below illustrates the general steps taken by us in handling a job for which we act as the preferred workshop: Passenger car with insurance coverage is delivered to our service centre Conduct inspection of the passenger car Prepare and submit accident claims report with photos of the passenger car to insurance company Negotiate the type of repair works required and the fees with insurance company Conduct the repair works Issue invoices to insurance company for its payment on behalf of the insured 116

125 BUSINESS We work closely with two insurance companies in Singapore by acting as their approved reporting centre and/or preferred workshop. We have written agreements with the renowned insurance company to act as its approved reporting centre and preferred workshop since We also have a written agreement with another insurance company to act as its approved reporting centre since As an approved reporting centre of the insurance companies, we are authorised to inspect the insured passenger cars after accidents. After the inspection, we have to fill out details of the accident claims, including the date of the event and our inspection results, in an e-filing system of the General Insurance Association of Singapore. We will report the type of repair works required and the estimated fees to the relevant insurance company. Although we do not receive any fees for acting as the approved reporting centre, our Directors believe that car owners are likely to engage us to provide after-market automotive service after they have arranged to deliver their passenger cars to us for accident reporting. As the preferred workshop of the renowned insurance company, we are responsible for repairing the insured passenger cars and assisting the insured to file repair report of non-injury motor accident or the Singapore accident statement with the General Insurance Association of Singapore. Passenger car owners who purchased motor insurance from the renowned insurance company can bring the insured passenger cars to us for repair after motor accident. If the repair required is covered by the motor insurance, we will conduct inspection of the passenger car, prepare and submit accident claims report with photos of the passenger car to the renowned insurance company and negotiate the type of repair works required and the fees with the renowned insurance company. If the fees are acceptable to the insurance company, we will repair the car and issue invoice to the renowned insurance company for the payment of our repair costs. For details of our agreements for appointment of preferred workshop and approved reporting centres, please refer to the paragraph headed Customers Agreements for preferred workshop and approved reporting centres in this section. Car Rental Services Our car rental services comprise (i) short-term rentals and (ii) long-term rentals. In addition, we offer various value-added services such as free towing service and battery recovery, courtesy car, and vehicle delivery, if required. As at the Latest Practicable Date, we had a total number of 134 rental passenger cars. Our rental passenger cars are of various classes, such as economy and luxury, and body types, such as MPVs, sedans, and SUVs, to meet different rental needs. As at 31 March 2018, our rental passenger cars had a total of 24 models from 7 makes. As at 31 March 2018, the average age of our rental passenger cars was approximately 18 months, on the assumption that our rental passenger cars have a useful life of 120 months, and the average remaining useful life is 102 months. We maintain and repair our rental passenger cars through our service centres in Singapore. We believe our own maintenance and repair services help ensure the service quality while reducing our costs. For maintenance and repair works on our rental passenger cars, including passenger cars rented to the car sharing company, due to normal wear and tear, the costs for maintenance and repair are born by us. In the event that the repair works on our rental passenger cars are not due to normal wear and tear, for example, when there is a collision on our rental passenger cars due to car accidents, our customer of rental passenger car is responsible for the repair costs up to the amount stipulated in the insurance policy taken out by our Group, any amount excess and above the stipulated amount is borne by the insurance company providing the insurance coverage. As our business strategy, we acquired most of our passenger cars from automotive dealers directly. We negotiate the terms of the sale and purchase agreements, including delivery arrangement and price, directly with the automotive dealers. As at the Latest Practicable Date, the purchase of 132 out of our 134 rental passenger cars was financed by hire purchase arrangement with two banks and four financial institutions in Singapore. Typically, our hire purchase for rental passenger cars has a tenure of five years. As at 31 March 2018, hire purchase financing for the rental passenger cars amounted to approximately S$8.8 million. For more details, please refer to the paragraph headed Financial Information Indebtedness Finance lease obligations in this document. 117

126 BUSINESS Short-term rentals For rentals of less than 180 days, we categorise them as short-term rentals. Our short-term rentals meet the needs of individual and corporate customers who may wish to rent a passenger car on a short-term basis for leisure or business purposes. Moreover, we leverage our short-term rental passenger cars services to provide temporary replacement car rentals to our after-market automotive services customers whose passenger cars are unavailable due to repair or maintenance. As at the Latest Practicable Date, we offered 16 passenger cars for short-term rentals in Singapore. We charge our short-term rental customers basic rental rates, which are inclusive of cost of basic insurance coverage and our administrative fees. We implement standard pricing on our short-term rental rates. Our customers are responsible for the cost of gasoline consumed during the rental period. Our short-term rental customers must present their identity cards and valid driving licences for our verification. Short-term rental customers are required to sign our rental agreement and pay basic rental in advance by debit card, credit card or cash prior to picking up passenger car. Our short-term rental customers are reminded by us that: (i) they are not allowed to travel out of Singapore with the passenger car; (ii) the passenger car is not allowed to be used for any illegal activities; and (iii) the customer shall bear all financial loss suffered by us. We will also conduct background search on the customer, such as checking the credibility of the customer as road user, the customer s credit worthiness and whether the customer is a subject of warrant of arrest of the Singapore. If the background search result is not satisfactory to us, we will not rent the passenger car to the customer. When our short-term rental customers return passenger car, our staff follows standard procedures to inspect the passenger car condition, such as conducting assessment on damage, if any. Upon confirmation from our staff, customer can handover the passenger car. For FY2016, FY2017 and 1Q2018, our revenue generated from short-term rental services accounted for approximately 1.2%, 1.9% and 1.5% respectively, of our total revenue. Long-term rentals For rentals of 180 days or longer, we categorise them as long-term rentals. Our long-term rental customers include individual and corporate customers. We provide long-term rentals under individually negotiated contracts. Our long-term rentals meet the needs of individual and corporate customers who may wish to rent a passenger car on a long-term basis for leisure or business purposes. Terms of long-term rental contracts vary based on rental length and makes and models of passenger cars. As at the Latest Practicable Date, we offered 118 passenger cars for long-term rentals, 101 of which are rented by a Singapore car sharing company. For more details, please refer to the paragraph headed Customer Passenger car rental contracts in this document. For FY2016, FY2017 and 1Q2018, our revenue generated from the Singapore car sharing company accounted for approximately 0.8%, 8.0% and 11.4% respectively, of our total revenue. Our long-term rental rates typically include basic rental fees which are inclusive of cost of basic insurance coverage and our administrative fees. We generally require our long-term rental customers to make an upfront deposit and pay rental fees in advance monthly. Each long-term rental customer s payment plan, such as deposit amount or installment frequency, varies based on our evaluation of their creditworthiness. The customer acceptance procedures of our long-term rental services rendered to individual customers are similar to those of our short-term rental services. For FY2016, FY2017 and 1Q2018, our revenue generated from long-term rental services accounted for approximately 2.6%, 10.2% and 13.6% respectively, of our total revenue. 118

127 BUSINESS Supply and Export of Passenger Car Spare Parts, Accessories and Automotive Equipment We supply passenger car spare parts and accessories (such as spark plug and navigator control unit) and automotive equipment to overseas countries (i.e. Sri Lanka and Myanmar). We engage a freight forwarder for exporting spare parts, accessories and automotive equipment out of Singapore. We are the distributor of passenger car spare parts, accessories and automotive equipment of certain brands in South East Asia. For FY2016, FY2017 and 1Q2018, our revenue generated from supply and export of passenger car spare parts, accessories and automotive equipment accounted for approximately 3.7%, 2.1% and 3.3% respectively, of our total revenue. OUR SERVICE CENTRES AND PAINT WORKSHOP During the Track Record Period, we operated three service centres and one paint workshop in Singapore. The three services centres are our Kung Chong Service Centre (Headquarters), Serangoon Service Centre and Upper Thomson Service Centre. The map below sets forth the locations of our service centres and the paint workshop during the Track Record Period and as at the Latest Practicable Date. All of our service centres and paint workshop are located in industry hubs for provision of after-market automotive services. Our Kung Chong Service Centre (Headquarters) is located at the heart of Singapore s automotive business area populated with luxury passenger cars and ultra-luxury supercars showrooms and service centres. Our Serangoon Service Centre is just behind Ang Mo Kio Autopoint, which is an industry hub for car repair. Our Upper Thomson Service Centre is near to Sin Ming Auto Hub, which is an automotive business focused area surrounded by automotive service centres and suppliers of vehicle spare parts. Our paint workshop is located at Ang Mo Kio Autopoint, which is an industry hub for car repair. 119