PROSPECTUS DATED 23 OCTOBER 2020

(Registered by the Monetary Authority of Singapore on 23 October 2020)

This document is important. Before making any investment in the securities being offered, you should
consider the information provided in this document carefully, and consider whether you understand what is
described in this document. You should also consider whether an investment in the securities being offered
is suitable for you, taking into account your investment objectives and risk appetite. If you are in any doubt
as to the action you should take, you should consult your legal, financial, tax or other professional adviser.
You are responsible for your own investment choices.
This is the initial public offering of the ordinary shares (the “Shares”) of Nanofilm Technologies International Nanofilm Technologies International Limited
Limited (the “Company” and together with our subsidiaries, the “Group”). Dr Shi Xu, Mr Lee Liang Huang
and Dr Wei Hao (the “Vendors”) are making an offering of 77,236,200 Shares (the “Offering Shares”) for (Company Registration Number 199902564C)
purchase by investors at the Offering Price (as defined herein) (subject to the Over-allotment Option). The (Incorporated in Singapore
Offering (as defined herein) comprises: (i) an international placement of 73,374,300 Offering Shares to investors
(the “Placement Shares”), including institutional and other investors in Singapore, outside the United States on 13 May 1999)
of America (the “U.S.”) in reliance on Regulation S under the U.S. Securities Act of 1933, as amended (the
“Securities Act”) (the “International Offering”), and (ii) an offering of 3,861,900 Offering Shares (the “Public
Offer Shares”) by way of a public offer in Singapore (the “Singapore Public Offer” and together with the
International Offering, the “Offering”). The Offering Shares may be re-allocated between the International
Offering and the Singapore Public Offer at the discretion of the Joint Global Coordinators (as defined herein) (in
consultation with us and the Vendors), subject to any applicable laws. See “Plan of Distribution”. The offering
price (the “Offering Price”) for each Offering Share is S$2.59.
At the same time as but separate from the Offering, each of (i) Aberdeen Standard Investments (Asia) Limited,
(ii) AIA Investment Management Private Limited, (iii) Avanda Investment Management Pte Ltd, (iv) Credit Suisse
AG, Singapore Branch and Credit Suisse AG, Hong Kong Branch (on behalf of certain of their private banking
A LEADING
PROVIDER OF
clients), (v) Eastspring Investments (Singapore) Limited, (vi) Employees Provident Fund Board, (vii) Fullerton Fund
Management Company Ltd., (viii) JPMorgan Asset Management (Singapore) Limited, (ix) Lion Global Investors
Limited, (x) Nikko Asset Management Asia Limited, (xi) Principal Asset Management (S) Pte Ltd, (xii) SMALLCAP
World Fund, Inc. and American Funds Insurance Series—Global Small Capitalization Fund (which are funds
advised by Capital Research and Management Company), and (xiii) Venezio Investments Pte. Ltd. (collectively,
the “Cornerstone Investors”) has entered into separate cornerstone agreements with our Company and/or
Dr Shi Xu (collectively, the “Cornerstone Agreements”) to subscribe for or purchase, at the Offering Price, an
NANOTECHNOLOGY
aggregate of 104,256,100 Shares (collectively, the “Cornerstone Shares”), of which 77,220,100 Shares (the
“New Cornerstone Shares”) will be new Shares issued by our Company and 27,036,000 Shares (the “Vendor
Cornerstone Shares”) will be Shares sold by Dr Shi Xu, conditional upon, among others, the Underwriting
Agreement (as defined herein) having been entered into and not having been terminated pursuant to its terms
SOLUTIONS
IN ASIA
on or prior to the Listing Date (as defined herein).
The Offering is underwritten by Citigroup Global Markets Singapore Pte. Ltd., CLSA Singapore Pte Ltd,
Credit Suisse (Singapore) Limited and Oversea-Chinese Banking Corporation Limited (collectively, the “Joint
Bookrunners and Underwriters”) at the Offering Price. Evercore Asia (Singapore) Pte. Ltd. is the financial
adviser for the Offering (the “Financial Adviser”).
In connection with the Offering, Dr Shi Xu (the “Over-allotment Option Grantor”) has granted the Joint
Bookrunners and Underwriters an over-allotment option (the “Over-allotment Option”) exercisable by
Credit Suisse (Singapore) Limited as stabilising manager (the “Stabilising Manager”) (or its affiliates or other
persons acting on its behalf), in full or in part, on one or more occasions, to purchase up to an aggregate of
15,447,200 Shares (the “Additional Shares”) at the Offering Price, representing approximately 20.0% of the
total number of Offering Shares, solely to cover the over-allotment of Shares (if any), subject to any applicable
laws and regulations, including the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), and any
regulations thereunder, from the Listing Date until the earlier of (i) the date falling 30 days from the Listing Date,
or (ii) the date when the Stabilising Manager (or its affiliates or other persons acting on its behalf) has bought
on the Singapore Exchange Securities Trading Limited (the “SGX-ST”) an aggregate of 15,447,200 Shares,
representing approximately 20.0% of the total number of Offering Shares, to undertake stabilising actions. The
exercise of the Over-allotment Option will not increase the total number of issued Shares immediately after
the completion of the Offering and the issue of the New Cornerstone Shares.
Prior to the Offering, there was no public market for the Shares. An application has been made to the SGX-ST
for permission to list all our issued Shares (including the Offering Shares, the Vendor Cornerstone Shares and
the Additional Shares), the New Cornerstone Shares, the Conversion Shares (as defined herein), the Shares
which may be issued upon the exercise of options granted under the Nanofilm Pre-IPO Employee Share
Option Scheme 2017 (the “Pre-IPO ESOS”, and such Shares, the “Pre-IPO Option Shares”) and the Shares
which may be issued upon the exercise of options to be granted under the Nanofilm Employee Share Option
Scheme (the “ESOS”, and such Shares, the “Option Shares”) on the Mainboard of the SGX-ST (the “Listing”).
Such permission will be granted when our Company has been admitted to the Official List of the SGX-ST.
Acceptance of applications for the Offering Shares will be conditional upon, among others, permission being
granted by the SGX-ST to deal in and for quotation of all our issued Shares, the New Cornerstone Shares, the
Conversion Shares, the Pre-IPO Option Shares and the Option Shares. Monies paid in respect of any application
accepted will be returned to you, at your own risk, without interest or any share of revenue or other benefit
arising therefrom, if the Offering is not completed because the said permission is not granted or for any other
reason, and you will not have any right or claim against us, the Vendors, the Financial Adviser, the Joint Issue
Managers (as defined herein), the Joint Global Coordinators or the Joint Bookrunners and Underwriters. Our
Company has received a letter of eligibility from the SGX-ST for the listing and quotation of all our issued Shares
(including the Offering Shares, the Vendor Cornerstone Shares and the Additional Shares), the New Cornerstone
Shares, the Conversion Shares, the Pre-IPO Option Shares and the Option Shares on the Mainboard of the
SGX-ST. Our Company’s eligibility to list and admission to the Official List of the SGX-ST is not to be taken
as an indication of the merits of the Offering, our Company, any of our subsidiaries, the Shares (including the
Offering Shares, the Additional Shares, the Cornerstone Shares, the Conversion Shares, the Pre-IPO Option OFFERING IN RESPECT OF
Shares and the Option Shares), the Pre-IPO ESOS or the ESOS. The SGX-ST assumes no responsibility for the
correctness of any statements or opinions made or reports contained in this Prospectus.
A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the
“MAS”) on 16 October 2020 and 23 October 2020, respectively. The MAS assumes no responsibility for the
77,236,200
contents of this Prospectus. Registration of this Prospectus by the MAS does not imply that the SFA, or any OFFERING SHARES,
other legal or regulatory requirements, have been complied with. The MAS has not, in any way, considered
the merits of the Shares being offered for investment. We have not lodged or registered this Prospectus in COMPRISING:
any other jurisdiction.
(i) 73,374,300 Placement Shares; and
No Shares may be allotted or allocated on the basis of this Prospectus later than six months after the date of
registration of this Prospectus by the MAS. (ii) 3,861,900 Public Offer Shares,
Investing in the Shares involves risks. See “Risk Factors” for a discussion of certain factors to be considered payable in full on application
in connection with an investment in the Shares. (subject to the Over-allotment Option)
Nothing in this Prospectus constitutes an offer for securities for sale in the U.S. or any other jurisdiction where
it is unlawful to do so. The Shares have not been, and will not be, registered under the Securities Act or the Offering Price of S$2.59
securities laws of any state of the United States and accordingly, may not be offered or sold within the United
States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of per Offering Share
the Securities Act. The Shares are only being offered and sold outside the United States in offshore transactions
as defined in, and in reliance on, Regulation S under the Securities Act (“Regulation S”). For further details
about restrictions on offers, sales and transfers of the Shares, see the section entitled “Plan of Distribution”.
Prospective investors applying for Offering Shares by way of Application Forms or Electronic Applications
(both as referred to in “Appendix L—Terms, Conditions and Procedures for Application for and Acceptance
of the Offering Shares in Singapore”) in the Singapore Public Offer will pay the Offering Price on application,
subject to refund of the full amount or, as the case may be, the balance of the application monies (in each
case without interest or any share of revenue or other benefit arising therefrom and without any right or claim
against us, the Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global Coordinators or the
Joint Bookrunners and Underwriters), where (i) an application is rejected or accepted in part only, or (ii) the All images shown here are snapshots of selected
Offering does not proceed for any reason. end-products and applications where our
nanotechnology solutions are applied and utilised.

Joint Issue Joint Bookrunners

Managers and Underwriters
(in alphabetical (in alphabetical
order) order)

Joint Global
Coordinators Financial Adviser
(in alphabetical
order)
COMPANY OVERVIEW

Since 1999, Nanofilm Our Key Business Units:

Technologies International
Limited has shown a strong (i) Advanced Materials – Provides advanced materials through surface solution
track record in acquiring services based on our vacuum coating technologies and processes. Includes
and retaining customers, both functional and decorative surface solutions;
including market leading
blue-chip end-customers1. Our (ii) Nanofabrication – Manufactures and supplies nanoproducts, which are used
solutions serve as key catalysts by our customers as components for the functioning and performance of
enabling our customers certain parts of their end-products, due to their nanoscale and/or nanofeatures.
to achieve high value-add Includes components used in the optical lens and sensors industry; and
advancements in their end- (iii) Industrial Equipment – Manufactures and sells turnkey equipment systems
products, in an environmentally ranging from coating equipment to auxiliary equipment such as cleaning lines to
sustainable manner. automation systems which are integrated into our customers’ manufacturing line.
We have grown and developed
alongside our customers,
through our continuous
focus on research and
development (“R&D”) and 4 3
innovation, often with R&D Production R&D
initiatives being undertaken Facilities Centres
in joint collaboration with
our customers, and by
leveraging our strong in-house
engineering capabilities as
well as our solid efficient 3 >1,400
production capabilities. Sales & Technical
Support Offices Employees2

>5 >240
million 72 Employees
Daily Turn-around Patents &
in R&D &
Parts Capacity Trademarks3
Engineering2

Integrating Nanotechnology In Advanced Materials and Nanoproducts for Daily Living

1 We do not have direct contractual arrangements with our end-customers for the sale and purchase of our products and services. Instead, our end-customers will direct
their contract manufacturers to engage us as a supplier and we would enter into purchase orders or schedules of work with these contract manufacturers (who would then
be our direct customers).
2 As at 30 June 2020.
3 Comprising 48 existing Patents and 24 existing Trademarks as at the Latest Practicable Date.

This overview section is qualified in its entirety by, and should be read in conjunction with, the full text of this document. Meanings of capitalised terms used may be found in the
section entitled “Defined Terms and Abbreviations” of this document.
 KEY INVESTMENT HIGHLIGHTS

Core competencies
Differentiated technology- in strong in-house
based solutions that we R&D, engineering and
believe have enabled the production capabilities
opening up of new markets form an integral part
and applications that were of our technology
previously inaccessible ecosystem which enables
by conventional coating us to drive additional
technologies and materials value creation
Multiple avenues for Highly experienced
thus driving sustainable founder and management
strong growth from a large
competitive advantage team with a strong track
Total Addressable Market
(“TAM”) and favourable record of customer-
secular industry trends centric R&D innovation

We believe we Highly attractive

are a key enabler financial profile,
for our blue-chip combining a track
customers across record of strong
multiple mission- growth, resilient
critical applications margin performance
and benefit from high and strong returns
customer intimacy
and stickiness

FINANCIAL HIGHLIGHTS

Revenue – Strong and accelerating growth Adjusted EBITDA4 – High and sustained margins
(S$’million) (S$’million)

41.9% 41.0% 40.0% 37.0% 42.7%

CAGR
17%
143 CAGR
15% 57
123
50
104 Y-o-Y
41% 43 Y-o-Y
78 63%
33
55

20

FY2017 FY2018 FY2019 1H2019 1H2020 FY2017 FY2018 FY2019 1H2019 1H2020
Adjusted EBITDA margin

BUSINESS STRATEGIES

a) Increase our market share in existing markets
through a two-pronged approach of increasing
sales to existing customers and by capturing new
customers
• Continue to deliver high quality value-add at
attractive cost-benefit payoffs;
• Enhance sales and marketing capabilities to target
new customers in our existing markets.
b) Upscale and integrate across the value chain of
our customers’ end-products by capitalising on
value chain opportunities
• Leverage synergies across our business segments
to offer our customers integrated solutions, for
example, combining our surface solutions with
nanofabrication capabilities;
• Become a one-stop solutions provider for our
customers for such technology-based solutions.

4 Adjusted EBITDA is reconciled from profit before income tax by adding back depreciation, amortisation, other professional fees, finance expenses and deducting gain on
disposal of PPE and finance income.
 PROSPECTS AND TRENDS

c) Expand into new high potential applications a) Growth of TAM size for key segments5
and end industries by leveraging our
industry-agnostic technological capabilities Advanced Materials Nanoproducts Components
• Commenced initial discussions with select TAM TAM Manufacturing TAM
(US$’billion) (US$’billion) (US$’billion)
customers in the biomedical and Internet
CAGR
of Things (“IoT”) optics industries, and are CAGR CAGR 4.6%
currently in the preliminary stages of R&D 7.5% 11.0%
423.0
to explore the possibility of utilising our 24.3 7.8
369.7
technology-based solutions to enhance their 19.5
end-products; 5.7
• In the process of developing surface solutions
for medical implants and devices.

d) Maintain our technology leadership through
R&D, and execute on operational improvement
opportunities to drive profitable growth
• Continue to invest and build on our three
core competencies – our R&D innovation and
product development capabilities, our strong
in-house engineering capabilities, and our
solid efficient production capabilities;
• Further strengthen our Quality Tracking
System for real-time monitoring of key
operations parameters and implement
LEAN thinking philosophy to achieve
improvements in quality while reducing
production time and cost.
e) Pursue strategic inorganic opportunities
through acquisitions and/or joint ventures
• Intend to undertake a disciplined approach by
investing in or acquiring companies that fit our
criteria and overall growth strategy;
• Seek to enter into strategic partnerships or
joint ventures with select key customers, with
a view towards either achieving value chain
integration in our existing markets, or to
facilitate our entry into new attractive markets.
5 Source: Frost & Sullivan – Independent Market Research (IMR) on the Global Advanced Materials industry.
2020* 2023* 2020* 2023* 2020* 2023*
* Forecast figures.
b) Key Drivers of End-Market
• Smartphones: 5G implementation, replacement cycle,
premiumisation trends and expanding services into
components manufacturing;
• Wearables & Accessories: Demand for nanotechnology
solutions for products such as smartwatch bands;
• Computers: New applications such as hinges and
premiumisation trends;
• Precision Engineering: Customer acquisition in existing
end-market and new applications;
• Automotive: Ramp up of joint venture with CYPR and
diversification into other engine components and fuel cells;
• Fast-Moving Consumer Goods Personal Grooming: Mass
production of applications under development and intended
expansion to include applications for other products;
• Printing and Imaging: Increasing market share in the MFP
industry;
• Nanofabrication: Increase in demand for optical lens and
sensory components in key end-markets such as computer,
communications, and consumer electronics (“3C”) and
automotive markets.

All images shown here are snapshots of selected end-products and applications
where our nanotechnology solutions are applied and utilised.

HOW TO APPLY

Applications for the Singapore Public Offer can be made through:

• ATMs and Internet Banking websites of Oversea-Chinese Banking Corporation Limited, DBS Bank Ltd. (including POSB)
and United Overseas Bank Limited;
• Mobile banking interface of DBS Bank Ltd.; or
• Printed WHITE Application Form, which forms part of the Prospectus.

IMPORTANT DATES
Opening date and time for the Singapore Public Offer 23 October 2020 at 6.00 p.m.
Closing date and time for the Singapore Public Offer 28 October 2020 at 12.00 noon
Commence trading on a “ready” basis 30 October 2020 at 9.00 a.m.
 TABLE OF CONTENTS

Page

Notice to Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Offering Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

The Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Indicative Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Summary Consolidated Financial Information and Other Information . . . . . . . . . . . . 44

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Capitalisation and Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Selected Consolidated Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Selected Consolidated Pro Forma Financial Information . . . . . . . . . . . . . . . . . . . . . . . 90

Management’s Discussion and Analysis of Results of Operations and

Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

Corporate Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

Regulatory Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237

Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

Interested Person Transactions and Potential Conflicts of Interest . . . . . . . . . . . . . . 287

Share Capital and Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298

Description of the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314

Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321

Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

Clearance and Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339

Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341

i
Independent Auditors and Reporting Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 342

Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343

General and Statutory Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344

Defined Terms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350

Appendix A — Independent Auditor’s Report on the Consolidated Financial

Statements for the Financial Years ended 31 December 2017,
2018 and 2019 of Nanofilm Technologies International Limited
and its subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Appendix B — Independent Auditor’s Review Report on Unaudited Condensed

Interim Consolidated Financial Statements for the Six-Months
Period ended 30 June 2020 of Nanofilm Technologies
International Limited and its subsidiaries . . . . . . . . . . . . . . . . . B-1

Appendix C — Independent Auditor’s Assurance Report on the Compilation of

the Unaudited Pro Forma Consolidated Financial Information
for the Financial Year ended 31 December 2019 and the
Six-Months Period ended 30 June 2020 of Nanofilm
Technologies International Limited and its subsidiaries . . . . . C-1

Appendix D — Independent Market Research (IMR) on the Global Advanced

Materials Industry—Executive Summary . . . . . . . . . . . . . . . . . . D-1

Appendix E — List of Outstanding Share Options under the Pre-IPO ESOS . . . . E-1

Appendix F — Rules of the Nanofilm Employee Share Option Scheme . . . . . . . . F-1

Appendix G — Summary of our Constitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1

Appendix H — List of Present and Past Principal Directorships of our Directors

and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1

Appendix I — Information on the Share Purchase Mandate . . . . . . . . . . . . . . . . I-1

Appendix J — Major Licences and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-1

Appendix K — Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . K-1

Appendix L — Terms, Conditions and Procedures for Application for and

Acceptance of the Offering Shares in Singapore . . . . . . . . . . . . L-1

ii
 NOTICE TO INVESTORS

No person is authorised to give any information or to make any representation not contained in this
Prospectus and any information or representation not so contained must not be relied upon as
having been authorised by or on behalf of us, the Vendors, the Financial Adviser, the Joint Issue
Managers, the Joint Global Coordinators or the Joint Bookrunners and Underwriters. Neither the
delivery of this Prospectus nor any offer, sale or transfer made hereunder shall under any
circumstances imply that the information herein is correct as of any date subsequent to the date
hereof or constitute a representation that there has been no change or development reasonably
likely to involve a material adverse change in our affairs, condition and prospects or the Shares
since the date hereof. In the event any changes occur, where such changes are material or required
to be disclosed by law, the SGX-ST and/or any other regulatory or supervisory body or agency, or
if we otherwise determine, we and the Vendors will make an announcement of the same to the
SGX-ST and, if required, the Vendors will issue and lodge an amendment to this Prospectus or a
supplementary document or replacement document pursuant to Section 240 or, as the case may
be, Section 241 of the SFA and take immediate steps to comply with the said sections. Investors
should take notice of such announcements and documents and upon release of such
announcements or documents shall be deemed to have notice of such changes.

None of us, the Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global
Coordinators, the Joint Bookrunners and Underwriters or any of our or their affiliates, directors,
officers, employees, agents, representatives or advisers are making any representation or
undertaking to any investors in the Shares regarding the legality of an investment by such investor
under appropriate investment or similar laws. In addition, investors in the Shares should not
construe the contents of this Prospectus or its appendices as legal, business, financial or tax
advice. Investors should be aware that they may be required to bear the financial risks of an
investment in the Shares for an indefinite period of time. Investors should consult their own
professional advisers as to the legal, tax, business, financial and related aspects of an investment
in the Shares.

The Offering Shares have not been, and will not be, registered under the Securities Act and
accordingly, may not be offered or sold within the United States except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act. The
Offering Shares are only being offered and sold outside the United States in offshore transactions
as defined in, and in reliance on, Regulation S.

By applying for the Offering Shares on the terms and subject to the conditions in this Prospectus,
each investor in the Offering Shares represents and warrants that, except as otherwise disclosed
to the Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and
Underwriters in writing, he is not (i) a director of our Company (a “Director”) or Substantial
Shareholder (as defined herein) of our Company, (ii) an associate of any of the persons mentioned
in (i), or (iii) a connected client of the Joint Issue Managers, the Joint Global Coordinators, the Joint
Bookrunners and Underwriters or lead broker or distributor of the Offering Shares.

Notification under Section 309B of the SFA: The Shares are prescribed capital markets products
(as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and
Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of
Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment
Products).

We and the Vendors are subject to the provisions of the SFA and the Listing Manual of the SGX-ST
(the “Listing Manual”) regarding the contents of this Prospectus. In particular, if after this
Prospectus is registered by the MAS but before the close of the Offering, we and/or the Vendors
become aware of:

(a) a false or misleading statement in this Prospectus;

1
(b) an omission from this Prospectus of any information that should have been included in it under
Section 243 of the SFA; or

(c) a new circumstance that has arisen since this Prospectus was lodged with the MAS which
would have been required by Section 243 of the SFA to be included in this Prospectus if it had
arisen before this Prospectus was lodged,

and that is materially adverse from the point of view of an investor, the Vendors may lodge a
supplementary or replacement document with the MAS pursuant to Section 241 of the SFA.

Where applications have been made under this Prospectus to purchase the Offering Shares prior
to the lodgment of the supplementary or replacement document and the Offering Shares have not
been transferred to the applicants, the Vendors shall either, among others:

(i) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgment
of the supplementary or replacement prospectus, give the applicants notice in writing of how
to obtain, or arrange to receive, a copy of the supplementary or replacement document, as the
case may be, and provide the applicants with an option to withdraw their applications and take
all reasonable steps to make available within a reasonable period of time the supplementary
or replacement document, as the case may be, to the applicants if they have indicated that
they wish to obtain, or have arranged to receive, a copy of the supplementary or replacement
document;

(ii) within seven days from the date of lodgment of the supplementary or replacement document,
provide the applicants with a copy of the supplementary or replacement document, as the
case may be, and provide the applicants with an option to withdraw their applications; or

(ii) treat the applications as withdrawn and cancelled and return all monies paid in respect of any
applications received (without interest or any share of revenue or other benefit arising
therefrom, at the applicant’s own risk and without any right or claim against us, the Vendors,
the Financial Adviser, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters), to the applicants within seven days from the date of lodgment
of the supplementary or replacement document.

Where applications have been made under this Prospectus to purchase the Offering Shares prior
to the lodgment of the supplementary or replacement document and the Offering Shares have been
transferred to the applicants, the Vendors shall either, among others:

(1) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgment
of the supplementary or replacement document give the applicants notice in writing of how to
obtain, or arrange to receive, a copy of the supplementary or replacement document, as the
case may be, and provide the applicants with an option to return to the Vendors the Offering
Shares which they do not wish to retain title in, and take all reasonable steps to make available
within a reasonable period of time the supplementary or replacement document, as the case
may be, to the applicants if they have indicated that they wish to obtain, or have arranged to
receive, a copy of the supplementary or replacement document;

(2) within seven days from the date of lodgment of the supplementary or replacement document,
provide the applicants with a copy of the supplementary or replacement document, as the
case may be, and provide the applicants with an option to return to the Vendors, those
Offering Shares that the applicants do not wish to retain title in; or

(3) subject to compliance with the Companies Act, Chapter 50 of Singapore (the “Companies
Act”) and our Constitution, treat the sale of the Offering Shares as void and return all monies
paid in respect of any applications received (without interest or any share of revenue or other

2
 benefit arising therefrom and at the applicant’s own risk and without any right or claim against
us, the Vendors, the Financial Adviser, the Joint Issue Managers, and the Joint Global
Coordinators and the Joint Bookrunners and Underwriters), within seven days from the date
of lodgment of the supplementary or replacement document.

Any applicant who wishes to exercise his option to withdraw his application or return the Offering
Shares sold to him (as the case may be) shall, within 14 days from the date of lodgment of the
supplementary or replacement document, notify us and the Vendors and (in the case of a return of
the Offering Shares, return all documents, if any, purporting to be evidence of title of those Offering
Shares to the Vendors), whereupon the Vendors shall, within seven days from the receipt of such
notification, return the application monies without interest or any share of revenue or other benefit
arising therefrom and at the applicant’s own risk and without any right or claim against us, the
Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters.

Under the SFA, the MAS may in certain circumstances issue a stop order (the “Stop Order”) to the
Vendors, directing that no or no further Offering Shares be allotted, issued or sold. Such
circumstances will include a situation where this Prospectus (i) contains a statement which, in the
opinion of the MAS, is false or misleading, (ii) omits any information that is required to be included
in accordance with the SFA or (iii) does not, in the opinion of the MAS, comply with the requirements
of the SFA.

Where the MAS issues a Stop Order pursuant to Section 242 of the SFA, and:

(A) in the case where the Offering Shares have not been transferred to the applicants, the
applications for the Offering Shares pursuant to the Offering shall be deemed to have been
withdrawn and cancelled and the Vendors, shall, within 14 days from the date of the Stop
Order, return to the applicants all monies paid by the applicants on account of their
applications for the Offering Shares; or

(B) in the case where the Offering Shares have been transferred to the applicants, the sale of the
Offering Shares shall be deemed to be void and the Vendors shall, within seven days from the
date of the Stop Order, return to the applicants all monies paid by the applicants on account
of their applications for the Offering Shares.

Where monies paid in respect of applications received or accepted are to be returned to the
applicants, such monies will be returned at the applicants’ own risk, without interest or any share
of revenue or other benefit arising therefrom, and the applicants will not have any claim against us,
the Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global Coordinators and
the Joint Bookrunners and Underwriters.

The distribution of this Prospectus and the offer, purchase, sale or transfer of the Shares may be
restricted by law in certain jurisdictions. We, the Vendors, the Financial Adviser, the Joint Issue
Managers, the Joint Global Coordinators and the Joint Bookrunners and Underwriters require
persons into whose possession this Prospectus comes to inform themselves about and to observe
any such restrictions at their own expense and without liability to us, the Vendors, the Financial
Adviser, the Joint Issue Managers, the Joint Global Coordinators or the Joint Bookrunners and
Underwriters. This Prospectus does not constitute or form part of an offer or sale of, or a solicitation
or invitation of any offer to purchase or subscribe for, any of the Shares in any jurisdiction in which
such offer, sale, solicitation or invitation would be unlawful or unauthorised, nor does it constitute
an offer or sale, or a solicitation or invitation to purchase or subscribe for, any of the Shares to any
person whom it is unlawful to make such an offer, sale, solicitation or invitation. Persons to whom
a copy of this Prospectus has been issued shall not circulate to any other person, reproduce or
otherwise distribute this Prospectus or any information herein for any purpose whatsoever nor
permit or cause the same to occur.

3
We and the Vendors are entitled to withdraw the Offering at any time before closing, subject to
compliance with certain conditions set out in the Underwriting Agreement. The Vendors are making
the Offering subject to the terms described in this Prospectus and the Underwriting Agreement.

In connection with the Offering, the Over-allotment Option Grantor has granted the Joint
Bookrunners and Underwriters the Over-allotment Option exercisable by the Stabilising Manager
(or its affiliates or other persons acting on its behalf), in full or in part, on one or more occasions,
to purchase up to an aggregate of 15,447,200 Shares at the Offering Price, representing
approximately 20.0% of the total number of Offering Shares, solely to cover the over-allotment of
Shares (if any), subject to any applicable laws and regulations, including the SFA and any
regulations thereunder, from the Listing Date until the earlier of (i) the date falling 30 days from the
Listing Date, or (ii) the date when the Stabilising Manager (or its affiliates or other persons acting
on its behalf) has bought on the SGX-ST an aggregate of 15,447,200 Shares, representing
approximately 20.0% of the total number of Offering Shares, to undertake stabilising actions. The
exercise of the Over-allotment Option will not increase the total number of issued Shares
immediately after the completion of the Offering and the issue of the New Cornerstone Shares.

In connection with the Offering, the Stabilising Manager (or its affiliates or other persons acting on
its behalf) may over-allot Shares or effect transactions that stabilise or maintain the market price of
the Shares at levels that might not otherwise prevail in the open market. Such transactions may be
effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in each case in
compliance with all applicable laws and regulations, including the SFA and any regulations
thereunder. However, there is no assurance that the Stabilising Manager (or its affiliates or other
persons acting on its behalf) will undertake any stabilising action. Such transactions may
commence on or after the Listing Date and, if commenced, may be discontinued at any time and
must not be effected after the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the
date when the Stabilising Manager (or its affiliates or other persons acting on its behalf) has bought
on the SGX-ST an aggregate of 15,447,200 Shares, representing approximately 20.0% of the total
number of Offering Shares, to undertake stabilising actions.

Copies of this Prospectus, the Application Forms and envelopes may be obtained on request,
subject to availability, during office hours from:

Citigroup Global CLSA Singapore Credit Suisse Oversea-Chinese

Markets Singapore Pte Ltd (Singapore) Limited Banking Corporation
Pte. Ltd. 80 Raffles Place One Raffles Link Limited
8 Marina View #18-01 UOB Plaza 1 #03-01 South Lobby 65 Chulia Street
#21-00 Asia Square Singapore 048624 Singapore 039393 #01-00 OCBC Centre
Tower 1 Singapore 049513
Singapore 018960

and where applicable, members of the Association of Banks in Singapore, members of the SGX-ST
and merchant banks in Singapore. A copy of this Prospectus is also available on the SGX-ST’s
website at http://www.sgx.com and the MAS’ OPERA website at https://eservices.mas.gov.sg/
opera/.

4
 FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements which are statements that are not historical
facts, including statements about our beliefs and expectations. Forward-looking statements
generally can be identified by the use of forward-looking terminology, such as “may”, “will”, “could”,
“expect”, “anticipate”, “intend”, “plan”, “believe”, “seek”, “estimate”, “project” and similar terms and
phrases. These statements include, among others, statements regarding our business strategy,
future financial results of operations, and plans and objectives of our management for future
operations. Forward-looking statements are, by their nature subject to substantial risks and
uncertainties, and investors should not unduly rely on such statements.

Forward-looking statements reflect our current views with respect to future events and are not a
guarantee of future performance. These statements are based on our management’s beliefs and
assumptions, which in turn are based on currently available information. Although we believe the
assumptions upon which these forward-looking statements are based are reasonable, any of these
assumptions could prove to be inaccurate, and the forward-looking statements based on these
assumptions could be incorrect. Actual results may differ materially from information contained in
the forward-looking statements as a result of a number of factors, many of which are beyond our
control, including:

• changes in political, economic and social conditions, as well as government policies, laws and
regulations in the jurisdictions in which our Group operates or has a presence in;

• the regulatory environment in the jurisdictions in which our Group operates or has a presence
in;

• competition in the Global Advanced Materials industry in the jurisdictions in which our Group
operates or has a presence in;

• the overall economic environment and general market and economic conditions in the
jurisdictions in which our Group operates or has a presence in;

• the ability of our Group to execute its strategies, plans and objectives;

• changes in the need for capital and the availability of financing and capital to fund these
needs;

• the ability of our Group to anticipate and respond to changes in the Global Advanced Materials
industry, the markets in which we operate, and in customer demands, trends and preferences;

• man-made or natural disasters, including war, acts of international or domestic terrorism, civil
disturbances, occurrences of catastrophic events and acts of God such as floods,
earthquakes, typhoons and other adverse weather and natural conditions that affect the
business or assets of our Group;

• the activities and financial health of our customers;

• the loss of key personnel of our Group and the inability to replace such personnel on a timely
basis or on terms acceptable to our Group;

• legal, regulatory and other proceedings arising out of the operations of our Group;

• changes in accounting practices and policies;

• other factors beyond the control of our Group;

• other matters not yet known to our Group; and

• other factors discussed under the section entitled “Risk Factors”.

5
Additional factors that could cause our actual results, performance or achievements to differ
materially include, but are not limited to, those discussed under the sections entitled
“Management’s Discussion and Analysis of Results of Operations and Financial Position”,
“Business” and “Appendix D—Independent Market Research (IMR) on the Global Advanced
Materials Industry—Executive Summary” of this Prospectus. Because of these factors, we caution
you not to place undue reliance on any of our forward-looking statements. Forward-looking
statements we make represent our judgement on the dates such statements are made. New risks
and uncertainties arise from time to time, and it is impossible for us to predict these events or how
they may affect us. Save as required by all applicable laws of applicable jurisdictions, including the
SFA, and/or rules of the SGX-ST, we assume no obligation to update any information contained in
this Prospectus or to publicly release the results of any revisions to any forward-looking statements
to reflect events or circumstances that occur, or that we become aware of, after the date of this
Prospectus.

PRESENTATION OF FINANCIAL INFORMATION

This Prospectus contains our audited consolidated financial statements for the financial years
ended 31 December 2017, 2018 and 2019, together with the related notes thereto, which has been
prepared in accordance with Singapore Financial Reporting Standards (International)
(“SFRS(I)s”). The unaudited condensed interim consolidated financial statements for the six-
months period ended 30 June 2020, together with the related notes thereto, has been prepared in
accordance with SFRS(I)1-34 Interim Financial Reporting (“SFRS(I) 1-34”). The unaudited pro
forma financial information for the financial year ended 31 December 2019 and for the six-months
period ended 30 June 2020, together with the related notes thereto, illustrate the impact of the
significant events as if the event had occurred or had been undertaken at an earlier date. SFRS(I)s
differs in certain respects from generally accepted accounting principles in certain other countries,
including the United States. We have not provided a quantitative reconciliation or narrative
discussion of these differences in this Prospectus. Investors should consult their own professional
advisers for an understanding of the differences between SFRS(I)s and generally accepted
accounting principles in the United States and how those differences might affect such financial
statements and financial information and, more generally, the financial results of our Group going
forward.

Certain numerical figures set out in this Prospectus, including financial data presented in millions
or thousands and percentages, have been subject to rounding adjustments, and, as a result, the
totals of the data in this Prospectus may vary slightly from the actual arithmetic totals of such
information. Percentages and amounts reflecting changes over time periods relating to financial
and other data set forth in the section entitled “Management’s Discussion and Analysis of Results
of Operations and Financial Position” of this Prospectus have been calculated using the numerical
data in our consolidated financial statements or the tabular presentation of other data (subject to
rounding) contained in this Prospectus, as applicable, and not using the numerical data in the
narrative description thereof.

NON-SFRS(I)S FINANCIAL MEASURES

This Prospectus discloses our consolidated EBITDA and Adjusted EBITDA, both of which are
non-SFRS(I)s financial measures. “EBITDA” represents net profit before interest, tax, depreciation
and amortisation. “Adjusted EBITDA” consists of EBITDA and other non-operational items.
EBITDA and Adjusted EBITDA are supplement financial measures of our Group’s performance and
liquidity, and are not required by, or presented in accordance with SFRS(I)s or any other generally
accepted accounting principles. Furthermore, EBITDA and Adjusted EBITDA are not measures of
financial performance or liquidity, and should not be considered as alternatives to net income,
operating income or any other performance measures derived in accordance with SFRS(I)s or any
other generally accepted accounting principles. See the section entitled “Management’s
Discussion and Analysis of Results of Operations and Financial Position” for further details.

6
 INDUSTRY AND MARKET DATA

This Prospectus includes market and industry data and forecasts that have been obtained from
internal surveys, reports and studies, where appropriate, as well as market research, publicly
available information and industry publications. Industry publications, surveys and forecasts
generally state that the information they contain has been obtained from sources believed to be
reliable, but there can be no assurance as to the accuracy or completeness of such included
information.

We have commissioned Frost & Sullivan (Singapore) Pte Ltd (“Frost & Sullivan” or the
“Independent Market Research Consultant”) to prepare a report (the “Independent Market
Research Report”) on the Global Advanced Materials industry for the purpose of inclusion in this
Prospectus, including data (actual, estimated and forecast) relating to, among other things,
demand and market share information. See “Appendix D—Independent Market Research (IMR) on
the Global Advanced Materials Industry—Executive Summary” for further details.

While we believe that the third party information and data contained in this Prospectus are reliable,
we cannot ensure the accuracy of the information or data, and we, the Vendors, the Financial
Adviser, the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and
Underwriters and any of our or their affiliates or advisers have not independently verified any of the
information or data or ascertained the underlying assumptions relied upon therein. Consequently,
none of us, the Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global
Coordinators, the Joint Bookrunners and Underwriters or their respective officers, agents,
employees and advisers makes any representation as to the accuracy or completeness of such
information and shall not be obliged to provide any updates on the same.

CERTAIN DEFINED TERMS AND CONVENTIONS

In this Prospectus, references to “S$” or “Singapore dollars” or “Singapore cents” are to the lawful
currency of Singapore, references to “RMB” or “Renminbi” are to the lawful currency of the People’s
Republic of China, references to “VND” are to the lawful currency of Vietnam, references to
“Japanese Yen” or “JPY” are to the lawful currency of Japan and references to “US$” are to the
lawful currency of the United States.

In this Prospectus, references to “period under review” are to the period covering our financial
years ended 31 December 2017, 2018 and 2019, and the six months ended 30 June 2020.

In this Prospectus, references to our Singapore Plant, Shanghai Plant 1, Shanghai Plant 2, Yizheng
Plant, Hai Duong Plant, Osaka Plant and Tokyo Office, mean our respective production facilities
and offices as described in the section entitled “Business—Our Material Properties and Fixed
Assets”.

In this Prospectus, references to the “Latest Practicable Date” refer to 5 October 2020, which is the
latest practicable date prior to the lodgment of this Prospectus with the MAS.

Any discrepancies in any tables, graphs or charts included in this Prospectus between the totals
and the sums of the amounts listed are due to rounding.

The information on our website, any website directly or indirectly linked to our website or the
websites of any of our related corporations or other entities in which we may have an interest, or
any website, is not incorporated by reference into this Prospectus and should not be relied on.

7
In this Prospectus, references to “our Company” are to Nanofilm Technologies International
Limited and, unless the context otherwise requires, “we”, “us”, “our” and “our Group” refer to
Nanofilm Technologies International Limited and its subsidiaries taken as a whole. All references
to “our Board” or “our Directors” are to the board of directors of Nanofilm Technologies International
Limited.

Customers

In this Prospectus, references to “customers” include both our “direct customers” and
“end-customers” collectively.

Direct Customers

In this Prospectus, references to “direct customers” are to our customers who are parties to
contractual arrangements with us in relation to the sale and purchase of our products and services.

Certain (and for the avoidance of doubt, not all) of our direct customers are contract manufacturers
who manufacture and assemble end-products for our end-customers. While we may enter into
purchase orders or schedules of work with these direct customers to provide our products and
services, such arrangements are typically at the direction of our end-customers. We would view our
end-customer (and not its contract manufacturer) as the party with whom we have the primary
business relationship.

End-Customers

In this Prospectus, references to end-customers are to our customers whose end-products are
manufactured and assembled by contract manufacturers whom they have directed to enter into
purchase orders or schedules of work with us as our direct customer.

We typically are parties to master development and/or master purchase agreements with our
end-customers, which would include key terms of our overall business relationship, and cover our
joint collaboration R&D efforts and our involvement in their end-product development and design
process. We would invoice our end-customers for our services in the end-product development and
design process, including development fees we charge, samples and fixtures and/or for
co-investment in equipment.

The master development and/or master purchase agreements are typically structured such that
once our end-customer’s end-product development reaches the production phase, our
end-customer will direct their contract manufacturers to engage us to provide our products and
services, and we would enter into the purchase orders or schedules of work with these contract
manufacturers (who would then be our direct customers). See “Business—Customers and
Suppliers—Customers” of this Prospectus for further details.

There are various references to unnamed customers in this Prospectus. A general description of
certain of these customers’ business and areas where they operate has been set out below:

• Customer A is an e-commerce company;

• Customer B is an electronic components manufacturer;

• Customer W is a measurement company which engages in chromatography, mass

spectrometry and thermal analysis innovations; and

• Customer Z is a global technology company that designs, develops and sells consumer
electronics, computer software and online services.

8
In this Prospectus, references to “Shareholders” are to registered holders of the Shares, except
where the registered holder is The Central Depository (Pte) Limited (“CDP”), the term
“Shareholders” shall, in relation to such Shares, mean the Depositors (as defined in the SFA)
whose Securities Accounts (as defined herein) with CDP are credited with Shares.

In this Prospectus, the definitions and explanation of terms found in this section and “Defined
Terms and Abbreviations” apply throughout where the context so admits.

In addition, unless we indicate otherwise, all information in this Prospectus assumes (i) that the
Over-allotment Option is not exercised; and (ii) that no Offering Shares have been re-allocated
between the International Offering and the Singapore Public Offer.

Any reference to dates or times of day in this Prospectus, the Application Forms and, in relation to
the Electronic Applications, the instructions appearing on the screens of the ATMs (as defined
herein) or the relevant pages of the internet banking websites of the relevant Participating Banks
(as defined herein), are to Singapore dates and times unless otherwise stated.

Any reference in this Prospectus, the Application Forms and, in relation to the Electronic
Applications, the instructions appearing on the screens of the ATMs or the relevant pages of the
internet banking websites of the relevant Participating Banks, to any statute or enactment is to that
statute or enactment as amended or re-enacted.

9
 CORPORATE INFORMATION

Company Nanofilm Technologies International Limited

Directors Dr Shi Xu (Executive Chairman)

Mr Lee Liang Huang (Chief Executive Officer)
Mr James Rowan (Lead Independent Director)
Ms Ong Siew Koon @ Ong Siew Khoon
(Independent Director)
Mr Kristian John Robinson
(Independent Director)
Ms Lee Lee Khoon (Independent Director)

Company Secretary Ms Yap Peck Khim (member of the Singapore

Association of the Institute of Chartered
Secretaries and Administrators)

Registered Office and Principal Place 28 Ayer Rajah Crescent

of Business #02-02/03
Singapore 139959

Company Registration Number 199902564C

Vendors Dr Shi Xu
28 Ayer Rajah Crescent
#02-02/03
Singapore 139959

Mr Lee Liang Huang

28 Ayer Rajah Crescent
#02-02/03
Singapore 139959

Dr Wei Hao
28 Ayer Rajah Crescent
#02-02/03
Singapore 139959

Joint Issue Managers Credit Suisse (Singapore) Limited

One Raffles Link
#03-01 South Lobby
Singapore 039393

Oversea-Chinese Banking Corporation

Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514

10
Joint Global Coordinators Citigroup Global Markets Singapore Pte. Ltd.
8 Marina View
#21-00 Asia Square
Tower 1
Singapore 018960

Credit Suisse (Singapore) Limited

One Raffles Link
#03-01 South Lobby
Singapore 039393

Oversea-Chinese Banking Corporation

Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514

Joint Bookrunners and Underwriters Citigroup Global Markets Singapore Pte. Ltd.
8 Marina View
#21-00 Asia Square
Tower 1
Singapore 018960

CLSA Singapore Pte Ltd

80 Raffles Place
#18-01 UOB Plaza 1
Singapore 048624

Credit Suisse (Singapore) Limited

One Raffles Link
#03-01 South Lobby
Singapore 039393

Oversea-Chinese Banking Corporation

Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514

Financial Adviser Evercore Asia (Singapore) Pte. Ltd.

12 Marina Boulevard
#33-01 Marina Bay Financial Centre Tower 3
Singapore 018982

Share Registrar Boardroom Corporate & Advisory Services

Pte Ltd
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623

Legal Advisers to our Company Allen & Gledhill LLP

as to Singapore law One Marina Boulevard #28-00
Singapore 018989

11
Legal Advisers to our Company TMI Associates
as to Japan law 23rd Floor, Roppongi Hills
Mori Tower, 6-10-1 Roppongi, Minato-ku
Tokyo 106-6123, Japan

Legal Advisers to our Company Haiwen & Partners

as to PRC law 20/F, Fortune Financial Center
5 Dong San Huan Central Road
Chaoyang District
Beijing 100020
The People’s Republic of China

Legal Advisers to our Company YKVN

as to Vietnam law Suite 1102 The Metropolitan
235 Dong Khoi Street, District 1
Ho Chi Minh City, Vietnam

Legal Advisers to the Joint Issue Managers, Allen & Overy LLP
the Joint Global Coordinators and the 50 Collyer Quay
Joint Bookrunners and Underwriters as to #09-01 OUE Bayfront
Singapore law and U.S. federal securities Singapore 049321
law

Legal Advisers to the Joint Issue Managers, JunHe LLP

the Joint Global Coordinators and the Joint 25/F, Tower 3
Bookrunners and Underwriters as to PRC Jing An Kerry Centre
law 1228 Middle Yan’an Road
Shanghai 200040
The People’s Republic of China

Legal Advisers to the Vendors Allen & Gledhill LLP

as to Singapore law One Marina Boulevard #28-00
Singapore 018989

Independent Auditors and Reporting Moore Stephens LLP

Accountants 10 Anson Road
#29-15 International Plaza
Singapore 079903

Partner-in-charge: Ms Chan Rouh Ting

Chartered Accountant, a member of the
Institute of Singapore Chartered Accountants

Independent Market Research Consultant Frost & Sullivan (Singapore) Pte Ltd
78 Shenton Way
#32-00
Singapore 079120

12
Principal Bankers Oversea-Chinese Banking Corporation
Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514

DBS Bank Ltd

12 Marina Boulevard
Level 43, DBS Asia Central
Marina Bay Financial Centre Tower 3
Singapore 018982

Citibank, N.A., Singapore Branch

5 Changi Business Park Crescent
Level 5
Singapore 486027

CTBC Bank Co., Ltd.

8 Marina View
#29-01 Asia Square Tower 1
Singapore 018960

United Overseas Bank Limited

80 Raffles Place
UOB Plaza
Singapore 048624

Industrial and Commercial Bank of China

Shanghai Municipal Branch
Qingpu Sub-branch
485 Chengzhong Rd (E)
Qingpu, Shanghai, China

China Merchants Bank

Shanghai Qingpu Sub-branch
No. 1 Chengzhong Road (W)
Shanghai, China

Receiving Bank Oversea-Chinese Banking Corporation

Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514

13
 OFFERING SUMMARY

You should read the following summary together with the more detailed information regarding us
and the Offering Shares being sold in the Offering, including our financial statements and related
notes appearing elsewhere in this Prospectus. You should carefully consider, among other things,
the matters discussed in the section entitled “Risk Factors”.

OVERVIEW

According to Frost & Sullivan, we are a leading provider of nanotechnology solutions in Asia,
leveraging our proprietary technologies, our core competencies in R&D, engineering and
production, to provide technology-based solutions across a wide range of industries. Our solutions
serve as key catalysts enabling our customers to achieve high value-add advancements in their
end-products, in an environmentally sustainable manner.

Since 1999, we have shown a strong track record in acquiring and retaining customers, including
market leading blue-chip end-customers 1. We have grown and developed alongside our
customers, through our continuous focus on R&D and innovation, often with R&D initiatives being
undertaken in joint collaboration with our customers, as well as by leveraging our strong in-house
engineering capabilities and our efficient production capabilities.

Our nanotechnology solutions are industry agnostic and are adaptable for use across a wide range
of industries, and have opened up new markets which were hitherto inaccessible to conventional
coating technologies. With the flexibility and advantages afforded by our proprietary technologies,
we believe that we are able to re-position ourselves as necessary to tap into promising growth
opportunities across our focus markets — be it in the computer, communications and consumer
electronics (“3C”), automotive, new energy, biomedical, or optical lens and sensors industry. We
intend to focus on attractive and innovative future industries, which upon maturity, have the
potential to constitute a large standalone business opportunity for us.

We seek to achieve technological breakthroughs, redraw the boundaries of material science to

enable new end-product possibilities and develop nanotechnology solutions. Our goal is to be a
future generation technology-based solutions company, with a vision of our advanced materials
and nanoproducts being integrated into the modern daily lives of consumers around the world.

Our Business Segments

We operate through our Advanced Materials Business Unit (“BU”), Nanofabrication BU and
Industrial Equipment BU segments.

Under our Advanced Materials BU, we provide advanced materials through surface solution
services based on our vacuum coating technologies and processes. Our surface solution services
involve the use of our Filtered Cathodic Vacuum Arc (“FCVA”) (and FCVA-hybrid with physical
vapour deposition (“PVD”)) and PVD coating equipment to deposit our advanced materials on key
components of our customers’ end-products, enabling our customers to achieve their desired
functional and/or decorative improvements for their end-products.

1 We do not have direct contractual arrangements with our end-customers for the sale and purchase of our products and
services during the production phase of their end-products. Our end-customers’ end-products are manufactured and
assembled by contract manufacturers, and our end-customers will direct their contract manufacturers to engage us as
a supplier and we would enter into purchase orders or schedules of work with these contract manufacturers (who would
then be our direct customers).

14
Our Nanofabrication BU is a manufacturer and supplier of nanoproducts, which are used by our
customers as components for the smooth functioning and performance of certain parts of their
end-products, due to their nanoscale and/or nanofeatures. We utilise our nanofabrication
technology and software to fabricate nanoproducts which are designed to fit the specific size and
shape requirements specified by our customers as well as to provide the required functional
properties to their end-products.

Under our Industrial Equipment BU, we manufacture and sell turnkey equipment systems ranging
from coating equipment to auxiliary equipment such as cleaning lines to automation systems which
are installed at our customers’ production lines. We provide our customers with not just the physical
equipment, but also customised operating software for our systems and training, as well as
spare-parts, customer service and other forms of after-sales support.

Our Technology-based Solutions

We were founded in 1999 as a high-tech spin-off from the Nanyang Technological University
(“NTU”), offering surface solutions based on vacuum deposition, including using our FCVA
technology.

Today, our technology-based solutions are utilised in a wide range of industries such as 3C,
automotive, precision engineering, and printing and imaging. Our products and services are
integral to the smooth functioning of many of the technologies and tools which are essential to our
modern daily lives, as illustrated in the representation below.

GARAGE LIVING ROOM STUDY ROOM

NF Solar film panel NF
Optical sensors Computers,
NF Laptops
Optical lens /
sensors
AM
5G
AM applications
Biomedical
implants

AM NF
Smartphone
AM
& wearables
Fuel cell AM
Printers
AM NF
AM NF Personal
Engine parts grooming
& components Sanitary fittings
AM
Tablets

BEDROOM BATHROOM
Industries: Automotive Bio-medical High Frequency Component and Equipment 3C Office automation & productivity modules FMCG Others

Business units: AM Advanced Materials NF Nanofabrication

Our Performance

We have experienced strong growth during the period under review. Our revenue for the financial
years ended 31 December 2017, 2018 and 2019 and for the six months ended 30 June 2020 was
S$103.6 million, S$122.8 million, S$142.9 million and S$77.8 million, respectively. Our profit
before tax for the financial years ended 31 December 2017, 2018 and 2019 and for the six months
ended 30 June 2020 was S$32.0 million, S$34.9 million, S$39.9 million and S$22.5 million,
respectively.

Our Adjusted EBITDA for the financial years ended 31 December 2017, 2018 and 2019 and the six
months ended 30 June 2020 was S$43.4 million, S$50.4 million, S$57.1 million and S$33.2 million,
respectively.

15
OUR COMPETITIVE STRENGTHS

Our business represents a highly scalable platform for future growth owing to the following
competitive strengths:

We provide proprietary differentiated technology-based solutions that we believe have

enabled the opening up of new markets and applications that were previously inaccessible
by conventional coating technologies and materials thus driving sustainable competitive
advantage

We believe that our vacuum coating technologies and advanced materials have significant
advantages compared to conventional coating technologies and materials which enable us to solve
complex problems. The advanced materials with differentiated properties utilised in our surface
solutions, coupled with our capability for high-volume coating processes, enable our customers to
achieve greater functional and aesthetic improvements in their end-products compared to what
would be possible with conventional technology.

• The functional improvements of our advanced materials include, among others, high
hardness and strength, strong corrosion resistance, high durability, low friction coefficient,
strong adhesiveness, and electrochemistry properties. According to Frost & Sullivan, our
TAC-ON ® advanced material is among the hardest materials in the world known to mankind,
including diamond and graphene (diamonds remain the most scratch resistant material yet
known). According to Frost & Sullivan, our TAC-ON ® advanced material contains a fairly high
quantity of sp 3 carbons (diamond-like) of 85% compared to other DLCs which contain between
10 to 55% of sp 3 carbons. These qualities prolong the durability and lifespan of our customers’
products and enhance the attractiveness and saleability of their products.

• Our advanced materials are also utilised by our customers to enhance the aesthetics of their
end-products, such as appearance, colour, texture and/or tactile quality. According to Frost &
Sullivan, such applications of our surface solutions are common in the 3C and FMCG personal
grooming industries.

According to Frost & Sullivan, our patented FCVA technology is considered to be superior in film
density, surface adhesion, hardness, strength and repeatability in comparison to existing
technologies such as PVD (sputtering) and CVD.

Our FCVA technology enables vacuum coating deposition to be performed at room temperature,
which is both environmentally friendlier and enables vacuum coating to be performed on a wider
variety of substrate materials such as plastics, rubber and ceramics, on a commercial scale. Due
to their low melting points, it has not been cost-effective or possible to perform vacuum coating on
such substrates using conventional coating technology. According to Frost & Sullivan, the ability of
FCVA to deposit advanced materials on substrates at room temperature (as opposed to high
temperature deposition by other conventional methods) opens up new markets that were
previously inaccessible by conventional coating technologies.

Frost & Sullivan has described the ability of our FCVA technology to be applied on low melting point
materials as creating new design (material choice) opportunities across several industries such as
3C (computer, communication and consumer electronics), automotive, precision engineering, and
printing and imaging.

16
Through our continuous R&D and engineering programmes, we have also been able to combine the
best of our proprietary FCVA technology with conventional coating technologies such as PVD
(sputtering), enabling us to provide our surface solutions in a cost-effective and environmentally
friendly manner as well as to reduce the time required for the vacuum coating process. See
“Business—Our Business—Our Advanced Materials BU” for further details.

According to Frost & Sullivan, our products and service offerings have enabled our customers to
achieve high value-add functional and aesthetics improvements in their end-products, in a
sustainable manner. Frost & Sullivan has stated that our technological advantages have enabled
us to open up new markets (such as personal grooming, new energy, 5G, biomedical and
aerospace industries) for such nanotechnology-based surface solutions that were previously
inaccessible by conventional technologies, and expanded the total market potential for such
technology-based solutions. This is illustrated in the diagram below.

Illustration of our ability to expand the market potential for such nanotechnology-based
solutions by leveraging our differentiated technology-based solutions

Other Players

Our
Enables
Expanding
Conventional Technology- Enables Provide High
Superior New Market
Technology based Value-Add
Properties Applications Potential
Solutions

Our differentiated technology-based solutions which enable our customers’ mission-critical

applications, our full service in-house equipment and surface solutions capabilities, our ability to
redraw market boundaries by opening up broader end-markets exposure, our scalable and reliable
production capabilities (see “Business—Our Core Competencies” for further details of our
production capabilities) and our long-term relationships with our existing customers jointly
constitute our sustainable competitive advantage.

17
 Illustration of Our Competitive Positioning

In summary, we believe that the combination of our differentiated customer-centric technology

offerings, full-service in-house equipment and surface solutions capabilities, ability to redraw
market boundaries by opening up broader end-markets exposure and scalable and reliable
operational capabilities form the basis of our sustainable competitive advantage.

We believe that we play a role as key enabler for our blue-chip customers across multiple
mission-critical applications and benefit from high customer intimacy and stickiness

Frost & Sullivan has described the importance of our technology-based solutions as enabling our
customers to offer end-products with properties such as improved wear resistance, reduced heat
generation caused by internal moving parts, product miniaturisation, requisite electrochemistry
properties, strong corrosion resistance, as well as improved aesthetics, which were not achievable
with conventional coating and nanofabrication technologies. We believe that these are mission-
critical applications for our customers, helping our customers differentiate their products by
enabling end-product innovation to overcome functional, performance, aesthetic and/or cost
constraints.

18
As set out in the diagram below, we believe that the key areas of value-add we provide to our
customers involve providing superior functional properties, ensuring aesthetic enhancements and
introducing new applications.

Note:

(1) Refers to Electromagnetic Interference.

According to Frost & Sullivan, through our R&D, engineering and production capabilities, we are
able to offer our technology-based solutions to customers at affordable prices, replacing the need
to rely on expensive materials.

Select examples of our product applications across various end-markets are set out in the diagram
in the following page.

19
 Select examples of our product applications across various existing-markets

3C – Smartwatch Automotive Printing & Imaging Precision

Bands (Piston Rings) (MFPs) Engineering
(Wearables) (HPLC Components)

Constant movement Subject to high wear High deformation and Only able to coat
and rubbing lead to and tear, accounting wear and tear due to stainless steel, which
Pain
wear and tear, for approximately 30% frequent movement reduces optionality for
Points scratches, breakage of total engine friction and high temperature customers
and discolouration loss

Enables wearables ✓ Extends useful life ✓ Provides ✓ Coats ceramics,

with: of the piston ring by components with plastics and
✓ High wear more than five times hardiness, superior stainless steel
resistance adhesion properties
✓ Low friction ✓ Maintains hardness,
and wear resistance
✓ Low friction coefficient, leading excellent cohesion,
Our Solution
coefficient to lower emissions ✓ Deposition at low corrosion and wear
✓ Broad range of and energy loss temperature, resistance
fashionable colours eliminating any
distortions caused
by heat

✓ We enable ✓ We enable ✓ We extend the ✓ We enable

Customer Z(1) to automotive useful life of multi- Customer W(2) to
produce wearables component functional printer use a wide range of
with an extended suppliers to meet components for materials for High
useful life at an the Euro VI Canon and Fuji Performance Liquid
affordable cost emission standard, Xerox and reduced Chromatography
Our which is the latest the cost to replace
✓ Our customers are engine emission and repair these
Enablement
able to derive high standards set by the components
benefit to cost European Union
payoffs(3) ✓ Our customers are
✓ Our customers are able to derive high
able to derive high benefit to cost
benefit to cost payoffs(3)
payoffs(3)

Segment % 22.5%
1.8% 9.0%
3.6%
of FY2019 (Wearables & (Precision
(Automotive) (Printing & Imaging)
Revenue(4) Accessories) Engineering)

123% 19% 24%

Revenues 71% (11%) 21%
(S$ million, 1,100%
32.2 521%
based on 20.5 12.9 5.1
4.8 5.6 2.6
year-on-year 2.6
growth)(5)
FY2019 1H2020 FY2019 1H2020 FY2019 1H2020 FY2019 1H2020

Denotes year-on-year revenue growth for the relevant financial year/period, against the corresponding
financial year/period (i.e. financial year ended 31 December 2019 compared with financial year ended 31
December 2018, and the six months ended 30 June 2020 compared with the six months ended 30 June
2019).

Notes:
(1) The name of Customer Z has not been identified due to confidentiality restrictions in our agreements with this customer.
Customer Z is a global technology company that designs, develops and sells consumer electronics, computer software
and online services.
(2) The name of Customer W has not been identified due to confidentiality restrictions in our agreements with this
customer. Customer W is a measurement company which engages in chromatography, mass spectrometry and thermal
analysis innovations.
(3) Benefits to cost payoffs is determined from the approximate benefits derived by our customers from the use of our
technology-based solutions against the costs borne by our customers.
(4) Proportion of revenues of our Advanced Materials BU by end-markets as a percentage of our total revenues.
(5) Revenues and growth rates are for the same categories mentioned in brackets for each of the examples in the
“Segment% of FY2019 Revenue” row.

20
We believe our differentiated technology-based solutions have entrenched us in our customers’
value chains, resulting in high customer stickiness. We believe our relationships with our
customers will continue to strengthen over time due to the following reasons:

• We are typically engaged at an early stage of our customers’ product development and design
process, developing and designing proprietary advanced materials which can be coated on
key components of their end-products as part of our surface solution services, so as to
achieve our customers’ desired functional and/or aesthetic properties, or nanoproducts
customised to the specific needs of their end-products.

For our Industrial Equipment BU, we often work closely with our customers to ensure that the
coating equipment we offer them are customised to their needs and seamlessly integrated into
their manufacturing lines.

• Although our technology-based solutions typically account for a small percentage of the total
costs of our customers’ end-products, they offer high value-add (such as miniaturisation,
increased durability, thermal management and wear resistance), and enable our customers to
overcome functional and costs constraints imposed by conventional coating technologies. In
addition, many of our customers have stringent supplier qualification processes, and we have,
over the years, established ourselves as a trusted and essential partner and supplier.

• In the future, as we aspire to capture more of, and further integrate across, our customers’
end-product value chains, we believe that our technology-based solutions will be further relied
upon by our customers. See “—Our Strategies” for further details.

A diagrammatic illustration of our demonstrated value chain creation framework is set out below.
We were initially founded as an industrial equipment manufacturer, and as at the Latest Practicable
Date, we have developed our advanced materials capabilities to drive our business. In the future,
we aspire to capture more of our customers’ value chain by expanding our capabilities in
components and modules production (including through our Nanofabrication BU), with the ultimate
end-goal of being able to integrate across more of the value chain of our customers’ end-product to
offer comprehensive one-stop nanotechnology-based solutions.

21
 Illustration of our Demonstrated Value Chain Creation Framework

We believe our proprietary technology enables us to solve complex problems and serves as a key
enabler and catalyst for our plans to capture a greater wallet share of our current market, and to
become more entrenched in our customer relationships as we continue to upscale in our
customers’ value chain.

We believe that the likelihood of our key customers switching to alternative solutions providers, to
the extent there are any, is relatively low as we benefit from high barriers to entry. Our customers’
stickiness is evidenced by us being the single source supplier, across a number of mission critical
applications, to nine out of our top 10 major customers (comprising four direct customers and five
end-customers) for the nanotechnology solutions we supply to them as at the Latest Practicable
Date.

As at the Latest Practicable Date, we have over 300 customers across different industries. The
following table outlines the length of our relationship with select key customers.

Our Company’s length of relationship with key customers

Key Customer Approximate Length of Relationship

Fuji Xerox 14 years

Nikon 13 years
Canon 13 years
Sunny Optical 12 years
TPR 11 years
Riken 10 years
Ricoh 10 years
Customer W 10 years
Customer Z 8 years

22
 Key Customer Approximate Length of Relationship

Microsoft 5 years
Huawei 4 years
AAC 4 years
Anqing TP Goetze Piston Ring (ATG) 3 years
CYPR 3 years
2
Customer A 2 years

See “Business—Our Business—Our Advanced Materials BU—Our Surface Solutions” and

“Business—Our Business—Our Nanofabrication BU” for further details on the value-add provided
by our advanced materials and nanoproducts.

We have multiple avenues for strong growth from a large total addressable market (“TAM”)
and favourable secular industry trends which can be leveraged to capture high-growth
opportunities across different end-market segments.

Our differentiated technology-based solutions, in-house engineering and production capabilities

and customer intimacy open up multiple avenues for us to grow our business. Frost & Sullivan has
estimated that the global market size for advanced materials is US$19.1 billion in 2019. Frost &
Sullivan has further forecasted the market size for advanced materials to grow at a CAGR of 7.5%
between 2020 and 2023 to reach US$24.3 billion by 2023.

The diagrammatic illustration below shows our multiple avenues for growth across different
end-market segments.
Overview of our growth strategy across different end-market segments

Note:
(1) Percentage figures in diagram denote year-on-year revenue growth in the financial year ended 31 December 2019
compared to the financial year ended 31 December 2018.

2 The name of Customer A has not been identified due to confidentiality restrictions in our agreements with this customer.
Customer A is an e-commerce company.

23
Capturing greater share in our existing markets

We believe that there is significant room for us to increase our market share in our existing markets
through increasing sales to existing customers and growing our customer base, which include
end-industries such as 3C (particularly in a larger base volume market, such as our smartphone
sub-segment which has a lower historical revenue contribution in our Advanced Materials BU),
printing and imaging, and precision engineering, by increasing sales to existing customers and
growing our customer base. A breakdown of our Advanced Materials BU revenue for the financial
years ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June 2019 and
2020, is as follows:

Financial year ended 31 December Six months ended 30 June

Revenue (S$ in millions) 2017 2018 2019 2019 2020

S$ % S$ % S$ % S$ % S$ %

Advanced Materials BU

—Smartphone . . . . . . . . . . . . . . . . . 11.1 10.7 12.6 10.3 13.6 9.6 3.0 5.4 6.7 8.6

—Computer (desktop, laptop, tablet) . . . 30.6 29.5 35.5 28.9 43.2 30.2 17.4 31.5 23.9 30.7

—Wearables & Accessories . . . . . . . . 16.9 16.3 18.8 15.3 32.2 22.5 9.2 16.7 20.5 26.4

—Printing and Imaging. . . . . . . . . . . . 11.2 10.8 10.8 8.8 12.9 9.0 6.3 11.4 5.6 7.2

—Precision Engineering . . . . . . . . . . . 4.1 4.0 4.2 3.4 5.1 3.6 2.1 3.8 2.6 3.3

—Automotive . . . . . . . . . . . . . . . . . 0.1 0.1 0.5 0.3 2.6 1.8 0.4 0.7 4.8 6.2

Total. . . . . . . . . . . . . . . . . . . . . . . 74.0 71.4 82.4 67.0 109.6 76.7 38.4 69.5 64.1 82.4

We believe we are well-positioned to achieve this given our track record with our customers, our
differentiated technology-based solutions, and our dedicated sales & customer service teams.
From 2017 to 2019, according to Frost & Sullivan, we have grown our revenues in our Advanced
Materials BU from our established markets at higher than the rate at which these industries have
grown, indicating that we have expanded our revenue share in these markets. See “Business—Our
Strategies—Increase our market share in existing markets through a two-pronged approach of
increasing sales to existing customers and by capturing new customers” for further details.

According to Frost & Sullivan, we are well-positioned to benefit from secular growth trends such as
the increasing premium nature of end-products, digitalisation, internet of things (“IoT”) adoption,
5G implementation, increasing data demand, stricter emission standards for combustion engines
and increasing environmental regulation. According to Frost & Sullivan, these trends would
increase the demand for, among others, high-speed data processors (which will need to manage
heat efficiently), environmentally friendly combustion engines (which will need to meet stricter
emission reduction standards), electric and autonomous vehicles, smart wearables and devices,
medical implants, new renewable energy sources (such as fuel cell and solid-state batteries) and
high frequency communication 5G network equipment. We believe that these trends will drive the
demand for our differentiated technology-based solutions.

Take-off in newer established end-markets

We consider our newly-established end-industries to be end-markets where we have recently

established a presence, and we see potential for strong growth via the ramping up of market share.
These comprise the FMCG personal grooming, automotive, optical lens and new energy industries.

• In the automotive industry, we have established a joint venture company in 2019 with CYPR,
the PRC’s largest piston ring maker, where we hold a 51% interest. Utilising our iTAC TM
surface solution, the joint venture supplies coated automotive components to CYPR which are

24
 then used in engines which are sold to well-established automotive makers and for export
markets. As CYPR is invested in the joint venture, the demand from CYPR is captive. We have
seen strong growth since the inception of the joint venture, given that we are the only supplier
currently providing piston rings coated to meet CYPR’s requirements. In the first year of the
joint venture, the revenue we derived from our Advanced Materials BU customers in the
automotive industry has increased more than four times from S$0.5 million for the financial
year ended 31 December 2018 to S$2.6 million for the financial year ended 31 December
2019.

• In the FMCG personal grooming industry, we believe our nanotechnology solutions have the
potential to serve as a catalyst to enable the development of the next generation of
end-products given that our surface solutions provide a commercially viable alternative to
conventional chrome plating. By leveraging our FCVA technology, we are capable of
depositing our advanced materials on zinc substrates, which Frost & Sullivan describes as an
environmentally friendly alternative to chrome plating. Our surface solutions provide
functional improvements to our customers’ end-products in the FMCG personal grooming
industry such as increased corrosion resistance and enhanced skin gliding capabilities. In
addition, our surface solutions provide aesthetic improvements by allowing our customers to
offer a wider range of colour and tactile choices to their consumers.

• In the optical sensors segment, Frost & Sullivan foresees growth driven by the continuous
adoption of multiple camera approaches in smartphones and Advanced Driver-Assistance
Systems (ADAS) and autonomous cars, as well as the boost provided by 5G adoption in the
smartphone global market. Frost & Sullivan has stated that our Nanofabrication BU is
well-positioned as a key supplier to the optical lens and sensors industry.

• In the new energy segment, we believe our surface solutions will have enabling applications
in electric vehicles. Electric vehicles use fuel cells in which the bi-polar plate electrodes
require a surface solution that provides high electrical conductivity and high corrosion
resistance. According to Frost & Sullivan, the conventional solution which is utilised in the
market has typically been gold-plating, which is costly and prone to corrosion. Our surface
solutions, which utilise advanced materials, offer a more cost-effective solution compared to
the gold-plating method, and provide superior functional properties such as high corrosion
resistance and high electrical conductivity. We believe that our surface solutions have the
potential to assist in enabling the production of fuel cells at scale and to lower the barriers of
entry and adoption cost of such fuel cells. According to Frost & Sullivan, this has the potential
to accelerate market adoption of electric vehicles.

Capture more of our customers’ value chain through vertical and horizontal integration

According to Frost & Sullivan, our customers are increasingly seeking out solution providers that
offer comprehensive one-stop solutions. We believe we have successfully achieved value chain
integration to offer one-stop solutions for several of our customers by leveraging synergies across
business segments to offer customers integrated solutions, and we are strategically positioned to
upscale and integrate across the value chains of those other customers’ end-products where we
believe these to be attractive and to add value to our business. See “—Our Strategies—Upscale
and integrate across the value chain of our customers’ end-products by capitalising on value chain
opportunities”.

For example, we are a supplier to Microsoft for their surface tablet logos and are responsible for the
end-to-end production of each logo, from laser cutting of each stainless steel piece to application
of our proprietary advanced materials on each logo. Other select case studies where we have been
able to integrate across the value chain are set out in the table below.

25
 Select Case Studies of Value Chain Integration

Piston Ring & 3C (Logo and Optical Sensing Device Modules Functional
Engine Parts Button) Enablers
(MFPs, Fuel
Cells)
Product(s)

■ Piston rings ■ Logos require ■ Requirement for ■ Demand for ■ Coatings

account for 30% high aesthetic component vertical critical to
of engine friction and functional miniaturisation integration in the impart
loss coating while maintaining value chain for necessary
superior optical FMCG personal features like
performance grooming electro-
modules chemical or
certain
Customer electrical
Pain Point properties to
these
products, in
addition to
wear and
corrosion
resistance
✓ Entered industry ✓ Technology to ✓ Develop ✓ Establish vertical ✓ Integrate
with iTAC™ in laser cut integrated integration from coatings with
2013 stainless steel coatings and substrate electronics /
plates for nanofabrication electric
✓ Established JV shaping to
deposition offerings for functions
with CYPR in electro- polymer molding
2019 ✓ Enables thin mechanical (coating is ✓ Offering
layer of coating sensor systems, technology imparts the
✓ Extends useful
with broad range enabling the next enabler within desired
life of the piston
of fashionable generation of that process) features while
ring by more than
colour choices, human-machine also enabling
Our five times, lowers ✓ Non-slip and
with standard interfaces seamless
Solution emissions and anti-fingerprint
functional interaction
energy loss effects on
properties with other key
various colours elements of
✓ Enables the broader
component ✓ Unique chemical
system
suppliers to meet corrosion
Euro VI emission resistance
standards
✓ Thin-wall metal
enclosure
✓ JV with CYPR ✓ Simplifies supply ✓ Position across ✓ Represents a ✓ Facilitates new
supplies coated chain by the value chain new and more device
components to becoming one- from mechanical effective way to architecture
CYPR which are structure molding make real-metal through
stop supplier for
then used in to coating and modules for reverse
engines sold to surface logos testing FMCG personal processing of
automotive ✓ Ensures grooming epoxy
OEMs consistency and ✓ Co-development products
quality for of offering with ✓ Enables our
Value Chain customer customers and Company to
✓ Enables our ✓ We seek to
Integration Company to integrators gradually expand further expand
gradually our offering to our customer
produce more cover the base
CYPR engine production of the
components as entire FMCG
well as to expand module
our offering to (compared to
other suppliers only shaver foil
or toothbrush
handle)

26
According to Frost & Sullivan, we possess the capabilities and potential to upscale in our
customers’ value chain and to capture a greater wallet share of our current market such as 3C,
automotive, optical sensors and optical lens industries. We believe that our capabilities and
potential to upscale in our customers’ value chains are based on our technologies and core
competences, our skilled and trained employees as well as our long-term relationships with our
customers.

Expansion into new end-industries

Given the secular growth trends described in “—Our Competitive Strengths—We have multiple
avenues for strong growth from a large TAM and favourable secular industry trends which can be
leveraged to capture high-growth opportunities across different end-market segments—Capturing
greater share in our existing markets” above, we anticipate further new expansion opportunities in,
among others, fuel cells, 5G networks, IoT optical sensors, medical lens and solid-state batteries.
We believe that we are able to opportunistically enter such new markets by leveraging the
adaptable nature of our technology.

Given the adaptability of our solutions, we intend to identify and capture opportunities in new
end-industries such as biomedical, aerospace and IoT optics industries. Frost & Sullivan believes
that our proprietary technologies are easily adaptable to allow for our smooth penetration into new
end-industries like personal grooming and CdTe solar panels. Frost & Sullivan further believes that
owing to our strength in our Advanced Materials BU, we are well-positioned to benefit from the
growth trends in these additional new markets such as rising usage of medical implants, rapid
adoption of electric vehicles, demand for high-speed data processors and high demand for aircraft
engine efficiency.

Our core competencies in strong in-house R&D, engineering and production capabilities
form an integral part of our technology ecosystem which enables us to drive additional value
creation

We design, manufacture and assemble our proprietary coating equipment (and auxiliary equipment
and spare parts), and develop and provide our surface solutions and advanced materials in-house.
We do not rely on third parties to provide our products and services. In addition, we possess strong
in-house engineering and production capabilities. Together, our core competencies constitute our
captive technology ecosystem which allows us to drive value creation.

27
 Overview of Nanofilm Technology Ecosystem with Blend of In-house Expertise and
Client-Driven Customisation

Note:

(1) Based on average revenue per equipment and average cost of equipment for our Advanced Materials BU for the six
months ended 30 June 2020, and payback period calculated by the number of years of gross profit (excluding
depreciation and amortisation) to cover capital investment.

Our engineering capabilities support our R&D functions, and in particular, our joint collaboration
programmes with customers. Once we have designed the surface solution or nanoproduct required
by our customers, our engineering capabilities enable us to design and develop the fixtures, molds
and inserts required by our production lines to scale for mass production.

As at the Latest Practicable Date, approximately 63% of our production processes in our Shanghai
Plant 1, Yizheng Plant, Hai Duong Plant and Osaka Plant have been automated. Through the use
of automation, we have been able to improve our production speed, scale and quality, and reduce
the risk of errors due to operator fatigue. We implemented a manufacturing execution system
(“MES”) in July 2017, which allows us to track key operational parameters in real-time, facilitating
efficient production planning. Due to the advantages conferred by our MES, as at the Latest
Practicable Date, our production facilities are able to process more than 5 million parts daily, while
giving us the flexibility to handle approximately 300 product types. Our MES has enabled us to
realise operational cost savings, reducing total cost per unit production by 13%, improving our
manufacturing cycle time by approximately 7% and improving overall equipment effectiveness by
approximately 6%, as compared to the period immediately prior to the implementation of our MES
in July 2017. We also have in place a quality tracking system (“QTS”) which provides a real-time
monitoring platform to track the quality of our manufacturing output.

Our robust operational capabilities and systems enable us to meet our customers’ time-sensitive
orders without compromising on quality and cost. See “Business—Our Core Competencies” for
further details of our engineering and production capabilities. We believe that our core
competencies, as well as our other competitive strengths described above, collectively ensure that
we remain integrated within our customers’ product development and production supply chains and
a trusted long-term partner to our customers.

28
We have a highly attractive financial profile, combining a track record of strong growth,
resilient margin performance and strong returns

We have a track record of strong financial performance and have enjoyed revenue growth
(primarily driven by our Advanced Materials BU) together with high and stable Adjusted EBITDA
margins. For the financial years ended 31 December 2017, 2018 and 2019, our revenue grew at a
CAGR of 17% while we also generated Adjusted EBITDA margins of 40% for the financial year
ended 31 December 2019.

Our revenue and Adjusted EBITDA growth for the financial years ended 31 December 2017, 2018
and 2019 and year-on-year growth for the six months ended 30 June 2019 and for the six months
ended 30 June 2020 are represented in the charts below.

Our Revenue and Adjusted EBITDA growth

Revenue – Strong and accelerating growth Adjusted EBITDA(2) – High and sustained margins
NTI Group
YoY Growth (%) 19% 16% 41%

(S$m)
AMBU
11% 33% 67% 41.9% 41.0% 42.7%
60.0%

40.0%
140

YoY Growth (%) 37.0%

(S$m) 120
40.0%

20.0%

150
143 100

123 0.0%

130

27 80

104 6 57
-20.0%

35
110

78 60

50
90

30 5 43 -40.0%

70
- 55 11 3 40 33
50 110 14 20
-60.0%

74 82 3
30

64 20

-80.0%

10
38
- -100.0%

FY2017 FY2018 FY2019 1H2019 1H2020 FY2017 FY2018 FY2019 1H2019 1H2020
(10)

(1)
AMBU NFBU IEBU

Notes:
(1) In January 2018, we completed our acquisition of a 51% equity interest in NFT. In November 2018, we subscribed for
additional ordinary shares in NFT. As a result, our Group’s interest in NFT increased by 19% from 51% to 70%.
Subsequently in June 2020, we increased our stake in NFT to 90%.

(2) Adjusted EBITDA is reconciled from profit before income tax by adding back depreciation, amortisation, other
professional fees, finance expenses and deducting gain on disposal of PPE and finance income.

Our strong balance sheet, as indicated by our net cash position of S$14.9 million as at 30 June
2020, offers financial flexibility to invest in and fund future growth, with the potential to take on
additional debt, where necessary. As at 30 June 2020, our gearing ratio was approximately 37.0%
and our adjusted gearing ratio, excluding amounts outstanding under the Convertible Notes, was
approximately 18.8%.

We benefit from our ability to recover the costs of our capital investments in equipment to take
advantage of growth opportunities in a relatively short period of time. Based on our average
revenue per equipment for our Advanced Materials BU and our average cost of equipment for our
Advanced Materials BU for the six months ended 30 June 2020, we expect to be able to generate
sufficient gross profit to recover our capital investment in such equipment within approximately 0.8
years 3, and would thereafter expect to be generating positive operating cash flows from each such
equipment. Our ability to recover our cost of investment within a relatively short time frame
strengthens the speed at which we are able to scale in our existing markets and take advantage of
growth opportunities in adjacent markets.

3 Based on average revenue per equipment and average cost of equipment for our Advanced Materials BU for the six
months ended 30 June 2020, and payback period calculated by the number of years of gross profit (excluding
depreciation and amortisation) to cover capital investment.

29
We have a highly experienced founder and management team with a strong track record of
customer-centric R&D innovation

Our Company is led by our visionary founder, Dr Shi Xu, who has developed our proprietary
nanotechnology and currently oversees our operations and research and development. Prior to
founding our Company in 1999, Dr Shi Xu was a tenured professor at the Nanyang Technological
University. Dr Shi Xu holds a Doctor of Philosophy in Physics from the University of Reading and
has published over 100 research papers to date, as well as being recognised for his visionary
leadership. See “Business—Awards” for further details.

Dr Shi Xu is ably assisted by a highly experienced and talented management team, comprising
industry veterans with significant industry experience in various fields and extensive experience in
delivering growth and innovation. Our Chief Executive Officer, Mr Lee Liang Huang, was previously
the Group Chief Executive Officer of MI Holdings Pte Ltd and has held various senior management
positions at IBM Singapore Pte Ltd. Our Chief Operating Officer, Mr Ricky Tan Chong Ho, has held
senior roles at HGST Singapore Pte Ltd, Pemstar Ltd and IBM. Our Chief Commercial Officer,
Mr Gary Ho Hock Yong, has previously held senior management positions at Hi-P International
Limited, an SGX-ST listed global manufacturing company in the telecommunications, lifestyle,
computing and automotive industries. See “Management—Executive Officers” for further details of
our management team.

We believe that our management team collectively possesses in-depth knowledge and strategic
and operational experience in their respective fields that gives us a competitive advantage to
operate and grow our business and to develop and execute our growth strategies.

OUR STRATEGIES

Increase our market share in existing markets through a two-pronged approach of

increasing sales to existing customers and by capturing new customers

We believe that there is significant room for us to increase our market share in our existing markets
by increasing sales to existing customers and growing our customer base. We believe we are
well-positioned to achieve greater market share in our existing markets given our established track
record with our customers (alongside our early stage, customer-centric co-development model),
our differentiated and highly-adaptable technology-based solutions, our ability to deliver high
quality value-add at attractive cost-benefit payoffs and our dedicated sales and customer service
teams. We believe the key factors which contribute to our market share in existing markets are
(1) our proprietary technology, (2) the quality of our nanotechnology solutions, (3) our service to
customers, (4) the potential cost-savings we provide to customers, and (5) the high value-add to
our customers’ end-products.

We aim to enhance our sales and marketing capabilities to target new customers in our existing
markets. Our sales and marketing teams are generally structured with an industry focus in order to
provide targeted solutions that address the unique challenges faced by each individual customer.
In addition, for our global key accounts, we employ dedicated sales specialists with a strong
product and engineering background to more effectively serve these customers. Our sales and
marketing teams seek to leverage our team’s network of industry contacts, as well as our strong
reputation, positive feedback and word-of-mouth to engage new customers to explore new
applications of our solutions.

In order to provide reliable and flexible operational support to cater to an anticipated increase in
demand for our nanoproducts and technology-based solutions, we are adding production capacity
to support our push to capture additional market share. Our Shanghai Plant 2 (which is undergoing
construction as at the Latest Practicable Date) is expected to commence initial operations in the

30
first quarter of 2021. Shanghai Plant 2 when fully operational is expected to be able to house
approximately an additional 200 coating equipment, and is expected to increase our total gross
floor area across all of our production facilities to over 110,000 sq m.

According to Frost & Sullivan, the below are the expected key drivers for the various end-markets
that we operate in.

End-market Key drivers

Smartphones • Key demand drivers are expected to be

5G implementation, replacement cycle
and premiumisation trends
• Significant opportunity to capture
more of our customers’ value
chain in components manufacturing
(e.g. smartphone enclosures)
Wearables & Accessories • Key demand drivers are expected to be
demand for nanotechnology solutions for
products such as smartwatch bands
Computers • Key demand drivers are expected to be
new applications such as hinges and
premiumisation trends
Precision Engineering • Key demand drivers are expected to be
customer acquisition in existing
end-markets (e.g. HPLC components)
and new applications (e.g. household
sanitary applications)
Automotive • Key demand drivers are expected to be
the ramp-up of our joint venture with
CYPR, and our diversification into other
engine components and fuel cells
FMCG Personal Grooming • Key focus in this segment is on enabling
product upgrades and enhancements
• Demand drivers are expected to be the
mass production of applications under
development and our intended expansion
to include applications for other products
Printing & Imaging • Key demand driver is expected to be
increasing market share in the MFP
industry

31
 End-market Key drivers

Nanofabrication • Our technology capabilities and potential

TAM opportunity (according to Frost &
Sullivan) provide us with growth
opportunities
• Key demand drivers are expected to be
the increase in demand for optical lens
and sensory components in key end-
markets such as 3C and automotive
markets
• Focus on segments such as Fresnel
lenses and tunable lenses
• We are in the process of developing
far/near zooming lenses, enabling us to
produce sleeker/slimmer sensors, mobile
phone camera modules, as well as
sportswear and protective goggles
• Leverage synergies across our business
segments to offer our customers
integrated solutions — for example,
combining our surface solutions with
nanofabrication capabilities

Upscale and integrate across the value chain of our customers’ end-products by capitalising
on value chain opportunities

Frost & Sullivan believes that we have strong growth potential in capturing more of our customers’
value chain which we serve. For example, in respect of the components market for smartphone
enclosures, wearable components, personal grooming components and automotive engine parts,
Frost & Sullivan has forecast the combined TAM of these markets as expected to be approximately
US$423.0 billion by the end of 2023. In terms of the overall market size for the various relevant
end-use segments 4, based on forecasts by Frost & Sullivan, the combined market size is expected
to be approximately US$4.5 trillion by the end of 2023.

Integration across the product value chain offers a natural progression for us to drive sustainable
growth, and we intend to achieve this through the following:

• Capture a greater market share of the value chains by selectively entering into the design,
manufacturing and assembly of vital components and modules in industries where our
advanced materials are key enablers and by further increasing our customer engagement.

• Leverage synergies across our business segments to offer our customers integrated
solutions—for example, combining our surface solutions with nanofabrication capabilities.

We aim to become a one-stop solutions provider for our customers for such technology-based
solutions, in particular, for customers in the FMCG personal grooming, automotive and smartphone
and wearables sub-segments. According to Frost & Sullivan, such value chain integration is
expected to enable us to achieve better pricing, as well as provide significant cost benefits to our
customers. Other expected benefits to our customers include a shorter supply chain, increased
margins, greater connectivity throughout the entire value chain and enabling our customers to have
higher control over their procurement processes. Our involvement across the value chain would

4 According to Frost & Sullivan, such end-use segments include automotive, smartphones, semiconductors, computer,
wearables, MFPs, image sensors, e-cigarettes, razors and others (others include smart cameras, HPLC, electric
toothbrush, Fresnel lens, other electronic products and eyewear). According to Frost & Sullivan, the quoted market size
accounts for approximately 90% to 93% of the overall end use segments in which Advanced Materials and
Nanoproducts are used. Additional 7% to 10% of the market is accounted for by segments such as tooling (cutting tools,
dies & molds) and several other industrial components.

32
also enable us to ensure consistency and quality. In turn, this will allow us to make ourselves even
more critical for our customers and capture additional upside from the value chain.

Our Value Chain Integration Strategy Framework

According to Frost & Sullivan, while our direct addressable market is the surface solutions
segment, our strategy of value chain integration has the potential to increase our addressable
market manifold and will allow us to position ourselves as a one-stop solutions provider in our
select segments. Frost & Sullivan further believes that this value chain integration strategy has the
potential to enable us to become a leading player of surface solutions and components in the region
in the medium to long term.

Expand into new high potential applications and end industries by leveraging our industry-
agnostic technological capabilities

We currently have plans to expand into new end-industries such as the biomedical, aerospace and
IoT optics industries. As at the Latest Practicable Date, we have commenced initial discussions
with select customers in the biomedical and IoT optics industries, and are currently in the
preliminary stages of R&D to explore the possibility of utilising our technology-based solutions to
enhance their end-products. We have also commenced initial discussions with customers in 5G
related applications and smart car initiatives and as at the Latest Practicable Date, we have signed
a memorandum of understanding with an unrelated third party in relation to 5G related applications.
In addition, we intend to expand our current footprint in new energy, combustion/hybrid engines,
next generation mobile devices and FMCG personal grooming applications.

In the biomedical industry, we believe there are many uses for our solutions in medical implants and
medical devices. As at the Latest Practicable Date, we are currently in the process of developing
a surface solution for medical implants utilising an advanced material based on a bio-compatible
carbon. This is expected to be compatible to human bodies, reducing the risk of rejection, and
prolonging the service lifespan of the medical implant. We are also exploring the development of
surface solutions for medical devices which we believe will help extend the lifespan of these
devices, reduce galling between sliding components and which have anti-glare properties for use
in bright operating rooms.

33
Maintain our technology leadership through R&D, and execute on operational improvement
opportunities to drive profitable growth

We will continue to invest and build on our three core competencies—our R&D innovation and
product development capabilities, our strong in-house engineering capabilities, and our solid
efficient production capabilities.

We conduct R&D and engineering activities in a focused and customer-centric manner through
early stage customer engagement that reduces the time to market of our innovative solutions. Our
development platform is focused on both existing end-markets (e.g. 3C) and new end-markets
(e.g. FMCG personal grooming). We adopt an early stage, customer-centric co-development
model, as described in “Business—Our Core Competencies—Our Customer-centric
Co-Development Model”. Our close collaboration with customers enables us to pioneer new
value-added solutions which when developed and in commercial production, provides us access to
a ready market. As such, a substantial portion of our R&D and engineering investments goes
towards joint collaboration programmes with our customers. The remainder of our R&D spend is
intended to strengthen our in-house proprietary research platform to develop next-generation
technologies, build sustainable competitive advantage by maintaining our intellectual property
rights and having multiple innovative products in the pipeline, advance our FCVA technology
platform, continue innovation on existing technology (e.g. copper plasma) to expand the scope of
their application and into new end-markets, and further develop our nanofabrication technology,
often in partnership with our customers and/or their contract manufacturers. Examples of our focus
markets for our research platform includes the biomedical and IoT optics industries.

In terms of our production capabilities, we are continuously exploring new initiatives to improve
efficiency and cost-effectiveness of our production processes. We anticipate such initiatives when
implemented will generate additional cost savings and improve our financial performance. From an
operational perspective, we will also continue to focus on efficient production planning through the
implementation of our MES. We aim to further strengthen our QTS for real-time monitoring of key
operations parameters and implement LEAN thinking philosophy to achieve improvements in
quality while reducing production time and cost. From a process transformation standpoint, we will
continue to invest in our ERP/SAP systems to support sustained resource planning. Finally, we will
continue to invest in talent development through leveraging the “Nanofilm College” platform and
other initiatives. See “Business—Our Core Competencies” for further details.

We have also implemented our operational excellence framework which guides the day-to-day
management and operation of our business. See “Business—Our Operational Excellence
Framework” for further details. We intend to maintain our commitment to our operational excellence
framework, to achieve high standards in our manufacturing operations and to introduce increased
automation in a systematic approach.

Pursue strategic inorganic opportunities through acquisitions and/or joint ventures

Although we have not entered into agreements in respect of any future acquisition targets and/or
joint ventures to-date, we may in the future pursue such acquisitions and/or joint ventures as part
of our growth strategy. For acquisitions, we intend to undertake a disciplined approach by investing
in or acquiring companies that fit our criteria and overall growth strategy. While evaluating such
acquisitions, we will assess if the target company possesses complementary technologies to
expand our capabilities, or has exposure to geographies (such as Japan and/or Europe) or
industries which would enable us to build up our customer base. In addition, we will also consider
if the opportunity helps us to realise revenue and/or cost synergies, achieve value chain integration
or enhance our financial profile. For example, in 2018, we acquired a majority stake in ManGo

34
Nanofab Group (which we renamed to NFT) which allowed us to expand our capabilities to include
the development and production of customised nanoproducts, and capture synergies with our
Advanced Materials BU.

For joint ventures, we would typically seek to enter into strategic partnerships or joint ventures with
select key customers, with a view towards either achieving value chain integration in our existing
markets, or to facilitate our entry into new attractive markets. For example, we have established our
joint venture with CYPR, as described in “Business—Our Competitive Strengths—We have
multiple avenues for strong growth from a large TAM and favourable secular industry trends which
can be leveraged to capture high-growth opportunities across different end-market
segments—Take-off in newer established end-markets”, and may seek to replicate the same
success with other select customers and/or partners.

COMPANY BACKGROUND

Our Company was incorporated in Singapore on 13 May 1999 under the Companies Act as a
private company limited by shares under the name of Nanofilm Technologies International Pte Ltd.
On 15 October 2020, our Company was converted into a public company limited by shares and
changed its name to Nanofilm Technologies International Limited.

Our telephone number is +65 6872 6890 and our facsimile number is +65 6872 5093. Our website
address is http://www.nanofilm.com.sg and our email address is info@nanofilm.com.sg. The
information on our website or any website directly or indirectly linked to such website or the
websites of any of our related corporations or other entities in which we may have an interest is not
incorporated by reference into this Prospectus and should not be relied on.

35
 THE OFFERING

Our Company . . . . . . . . . . . . . . . . Nanofilm Technologies International Limited, a company

incorporated under the laws of Singapore.

The Vendors . . . . . . . . . . . . . . . . . Dr Shi Xu, Mr Lee Liang Huang and Dr Wei Hao.

Offering . . . . . . . . . . . . . . . . . . . . . 77,236,200 Offering Shares (subject to the Over-allotment

Option) offered by the Vendors through the International
Offering and the Singapore Public Offer. The completion of
the International Offering and the Singapore Public Offer
are each conditional upon the completion of the other.

International Offering . . . . . . . . . . 73,374,300 Offering Shares are being offered at the

Offering Price by way of an international placement to
investors, including institutional and other investors in
Singapore. The International Offering will, subject to certain
conditions, be underwritten by the Joint Bookrunners and
Underwriters.

The Shares have not been, and will not be, registered under
the Securities Act and accordingly, may not be offered or
sold within the United States except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. The Shares
are only being offered and sold outside the United States in
offshore transactions as defined in, and in reliance on,
Regulation S.

Singapore Public Offer . . . . . . . . . 3,861,900 Offering Shares are being offered at the Offering
Price by way of a public offer in Singapore. The Singapore
Public Offer will, subject to certain conditions, be
underwritten by the Joint Bookrunners and Underwriters.

36
Cornerstone Investors . . . . . . . . .
Clawback and Re-allocation . . . .
Offering Price . . . . . . . . . . . . . . . .
Application Procedures for the
Singapore Public Offer . . . . . . . . .
At the same time as but separate from the Offering, each of
(i) Aberdeen Standard Investments (Asia) Limited, (ii) AIA
Investment Management Private Limited, (iii) Avanda
Investment Management Pte Ltd, (iv) Credit Suisse AG,
Singapore Branch and Credit Suisse AG, Hong Kong
Branch (on behalf of certain of their private banking clients),
(v) Eastspring Investments (Singapore) Limited,
(vi) Employees Provident Fund Board, (vii) Fullerton Fund
Management Company Ltd., (viii) JPMorgan Asset
Management (Singapore) Limited, (ix) Lion Global Investors
Limited, (x) Nikko Asset Management Asia Limited,
(xi) Principal Asset Management (S) Pte Ltd,
(xii) SMALLCAP World Fund, Inc. and American Funds
Insurance Series – Global Small Capitalization Fund (which
are funds advised by Capital Research and Management
Company), and (xiii) Venezio Investments Pte. Ltd. has
entered into separate Cornerstone Agreements with our
Company and/or Dr Shi Xu to subscribe for or purchase, at
the Offering Price, an aggregate of 104,256,100
Cornerstone Shares, of which 77,220,100 Cornerstone
Shares will be new Shares issued by our Company and
27,036,000 Cornerstone Shares will be Shares sold by
Dr Shi Xu, conditional upon, among others, the Underwriting
Agreement having been entered into and not having been
terminated pursuant to its terms on or prior to the Listing
Date.
The Offering Shares may be re-allocated between the
International Offering and the Singapore Public Offer, at the
discretion of the Joint Global Coordinators (in consultation
with us and the Vendors), subject to any applicable laws.
S$2.59 per Offering Share.
Investors applying for the Public Offer Shares must
follow the application procedures set out in
“Appendix L—Terms, Conditions and Procedures for
Application for and Acceptance of the Offering Shares in
Singapore”. Applications must be paid for in S$. No fee is
payable by applicants for the Public Offer Shares, save for
an administration fee of S$2.00 for each application made
through ATMs or the internet banking websites of the
Participating Banks. The minimum initial application is for
1,000 Offering Shares. An applicant may apply for a larger
number of Offering Shares in integral multiples of 100
Offering Shares.
37
Use of Proceeds . . . . . . . . . . . . . . We intend to use the net proceeds due to us from the issue
of the New Cornerstone Shares primarily for the following
purposes:

• capital expenditure on development and building of

new machinery for our Advanced Materials BU and
purchase of new machinery for our Nanofabrication
BU;

• R&D and engineering for entry into new end-industries

and new areas and/or products in existing markets;

• construction, refurbishment and renovation of new and

existing production facilities; and

• general corporate and working capital purposes.

For a complete description of the application of the

proceeds due to us, see “Use of Proceeds”.

We will not receive any of the proceeds from the Offering,

the sale of the Vendor Cornerstone Shares and the exercise
of the Over-allotment Option granted by the Over-allotment
Option Grantor.

Over-allotment Option . . . . . . . . . In connection with the Offering, the Over-allotment Option

Grantor has granted the Joint Bookrunners and
Underwriters the Over-allotment Option exercisable by the
Stabilising Manager (or its affiliates or other persons acting
on its behalf), in full or in part, on one or more occasions, to
purchase up to an aggregate of 15,447,200 Shares at the
Offering Price, representing approximately 20.0% of the
total number of Offering Shares, solely to cover the over-
allotment of Shares (if any), subject to any applicable laws
and regulations, including the SFA and any regulations
thereunder, from the Listing Date until the earlier of (i) the
date falling 30 days from the Listing Date, or (ii) the date
when the Stabilising Manager (or its affiliates or other
persons acting on its behalf) has bought on the SGX-ST an
aggregate of 15,447,200 Shares, representing
approximately 20.0% of the total number of Offering Shares,
to undertake stabilising actions. The exercise of the Over-
allotment Option will not increase the total number of issued
Shares immediately after the completion of the Offering and
the issue of the New Cornerstone Shares.

Market Capitalisation . . . . . . . . . . The market capitalisation of our Company upon the Listing
based on the Offering Price of S$2.59 and the post-Offering
share capital of 658,351,110 Shares will be approximately
S$1,705 million.

38
Lock-up . . . . . . . . . . . . . . . . . . . . . We have agreed with the Joint Issue Managers, the Joint
Global Coordinators and the Joint Bookrunners and
Underwriters that, subject to certain exemptions, from the
date of the Underwriting Agreement until the date falling six
months from the Listing Date, we will not, without the prior
written consent of the Joint Issue Managers, the Joint
Global Coordinators and the Joint Bookrunners and
Underwriters, amongst other things, allot, offer, issue, sell,
contract to issue, grant an option, warrant or other right to
subscribe or purchase, any Shares, and the making of any
announcements in connection with any of the foregoing
transactions, during the period from the date of the
Underwriting Agreement until the date falling six months
from the Listing Date.

Dr Shi Xu, Pearl Yard Holdings Inc., Harrymore International

Limited, Mdm Jin Xiao Qun, OCBC, Lion-OCBC Capital Asia
I Holding Pte. Ltd. and Lion Global Investors Limited have
agreed to lock-up arrangements with the Joint Issue
Managers), the Joint Global Coordinators and the Joint
Bookrunners and Underwriters.

Save for Lion Global Investors Limited (where the LGI

Non-Independent Cornerstone Shares (as defined herein)
subscribed for on behalf of LGI Clients (as defined herein)
who are not independent third parties, will be subject to a
lock-up arrangement), the Cornerstone Investors are not
subject to any lock-up restrictions in respect of their
shareholdings.

See “Plan of Distribution—No Sale of Similar Securities and

Lock-up” for further information on the lock-up arrangements.

Stabilisation . . . . . . . . . . . . . . . . . In connection with the Offering, the Stabilising Manager (or

its affiliates or other persons acting on its behalf) may over-
allot Shares or effect transactions that stabilise or maintain
the market price of the Shares at levels that might not
otherwise prevail in the open market. Such transactions may
be effected on the SGX-ST and in other jurisdictions where it
is permissible to do so, in each case in compliance with all
applicable laws and regulations, including the SFA and any
regulations thereunder. However, there is no assurance that
the Stabilising Manager (or its affiliates or other persons
acting on its behalf) will undertake any stabilising action.

39

Dividends. . . . . . . . . . . . . . . . . . . .
Listing and Trading . . . . . . . . . . . .
Such transactions may commence on or after the Listing Date
and, if commenced, may be discontinued at any time and
must not be effected after the earlier of (i) the date falling
30 days after the Listing Date, or (ii) the date when the
Stabilising Manager (or its affiliates or other persons acting
on its behalf) has bought on the SGX-ST, an aggregate of
15,447,200 Shares, representing approximately 20.0% of the
total number of Offering Shares, to undertake stabilising
actions.
See “Plan of Distribution—Price Stabilisation”.
Our Company currently does not have a fixed dividend policy.
We currently intend to utilise and/or reinvest any profits
generated in the financial year ending 31 December 2020
from our operations in our business (including financing
acquisition activities), and save for the payment of the Interim
Dividend (as defined herein) to our Shareholders on 2 July
2020, do not intend to pay any dividends to Shareholders with
respect to our profits generated in the financial year ending
31 December 2020. Moving forward, our Board intends to
recommend and distribute dividends of at least 20% of our
net profit after tax (excluding exceptional items) generated in
the financial year ending 31 December 2021, as we wish to
reward our Shareholders for participating in our Group’s
growth. Investors should note that the foregoing statements
are merely statements of our present intention and shall not
constitute legally binding obligations on our Company or
legally binding statements in respect of our future dividends
(including those proposed for the financial year ending
31 December 2021), which may be subject to modification
(including reduction or non-declaration thereof) in our
Directors’ sole and absolute discretion. Investors should also
not treat the proposed dividends for the financial year ending
31 December 2021 as an indication of our future dividend
policy. No inference should or can be made from any of the
foregoing statements as to our actual future profitability or
ability to pay dividends. See “Dividends”.
Prior to the Offering, there was no public market for the
Shares. An application has been made to the SGX-ST for
permission to list all our issued Shares (including the Offering
Shares, the Vendor Cornerstone Shares and the Additional
Shares), the New Cornerstone Shares, the Conversion
Shares, the Pre-IPO Option Shares and the Option Shares on
the Mainboard of the SGX-ST. Such permission will be
granted when the Shares have been admitted to the Official
List of the SGX-ST. Acceptance of applications for the
Offering Shares will be conditional upon, among others,
permission being granted by the SGX-ST to deal in and for
quotation of all our issued Shares (including the Offering
Shares, the Vendor Cornerstone Shares and the Additional
Shares), the New Cornerstone Shares, the Conversion
Shares, the Pre-IPO Option Shares and the Option Shares.
40
 The Shares are expected to commence trading on a “ready”
basis at 9.00 a.m. on 30 October 2020 (Singapore time). See
“Offering Summary—Indicative Timetable”.

The Shares will, upon their listing and quotation on the

SGX-ST, be traded on the SGX-ST under the book-entry
(scripless) settlement system of CDP. Dealing in and
quotation of the Shares will be in S$. The Shares will be
traded in board lots of 100 Shares.

Risk Factors . . . . . . . . . . . . . . . . . You should carefully consider certain risks connected with an
investment in the Shares, as discussed in “Risk Factors”.

41
 INDICATIVE TIMETABLE

An indicative timetable for trading in the Shares is set forth below for the reference of applicants for
the Offering Shares:

Date and time (Singapore) Event

23 October 2020, 6.00 p.m. . . . . . .
28 October 2020, 12.00 noon . . . . .
29 October 2020 . . . . . . . . . . . . . . .
30 October 2020, after 7.00 a.m. . .
30 October 2020, 9.00 a.m . . . . . . .
3 November 2020 . . . . . . . . . . . . . .
Opening date and time for the Singapore Public Offer.
Closing date and time for the Singapore Public Offer.
Balloting of applications in the Singapore Public Offer, if
necessary (in the event of an over-subscription for the
Public Offer Shares). Commence returning or refunding of
application monies to unsuccessful or partially successful
applicants, if necessary.
Crediting of Shares to investors to commence.
Commence trading on a “ready” basis.
Settlement date for all trades done on a “ready” basis.

The above timetable is indicative only and is subject to change at our and the Vendors’ discretion,
with the agreement of the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters. It assumes: (i) that the closing of the Singapore Public Offer is on
28 October 2020, (ii) that the Listing Date is on 30 October 2020, and (iii) compliance with the
SGX-ST’s shareholding spread requirement. All dates and times referred to above are Singapore
dates and times.

The above timetable and procedures may also be subject to such modifications as the SGX-ST may
in its discretion decide, including the Listing Date. The commencement of trading on a “ready” basis
will be entirely at the discretion of the SGX-ST. All persons trading in the Shares before their
Securities Accounts with CDP are credited with the relevant number of Shares do so at the risk of
selling Shares which neither they nor their nominees, as the case may be, have been allotted or are
otherwise beneficially entitled to.

We and the Vendors, may at our and the Vendors’ discretion, with the agreement of the Joint Issue
Managers, the Joint Global Coordinators and the Joint Bookrunners and Underwriters and subject
to all applicable laws and regulations and the rules of the SGX-ST, agree to extend or shorten the
period during which the Offering is open, provided that the Singapore Public Offer may not be less
than two Market Days (as defined herein).

In the event of the extension or shortening of the time period during which the Offering is open, we
will publicly announce the same:

(a) through a SGXNET announcement to be posted on the internet at the SGX-ST website
http://www.sgx.com; and/or

(b) in one or more major Singapore newspapers such as The Straits Times, The Business Times
and Lianhe Zaobao.

Investors should consult the SGX-ST announcement on the “ready” listing date on the internet at
the SGX-ST website, or the newspapers, or check with their brokers on the date on which trading
on a “ready” basis will commence.

42
We and the Vendors will provide details of and the results of the Singapore Public Offer through
SGXNET and/or in one or more major Singapore newspapers, such as The Straits Times, The
Business Times and Lianhe Zaobao.

We and the Vendors reserve the right to reject or accept, in whole or in part, or to scale down or
ballot any application for the Offering Shares, without assigning any reason therefor, and no
enquiry and/or correspondence on our and the Vendors’ decision will be entertained. In deciding
the basis of allocation, due consideration will be given to the desirability of allocating the Offering
Shares to a reasonable number of applicants with a view to establishing an adequate market for the
Shares.

In respect of an application made under the Singapore Public Offer, where any such application is
rejected, the full amount of the application monies will be refunded (without interest or any share of
revenue or other benefit arising therefrom, and the applicant will not have any claims against us,
the Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global Coordinators or the
Joint Bookrunners and Underwriters) to the applicant, at his own risk, within 24 hours after the
balloting of applications (provided that such refunds are made in accordance with the procedures
set forth in “Appendix L—Terms, Conditions and Procedures for Application for and Acceptance of
the Offering Shares in Singapore”).

In respect of an application made under the Singapore Public Offer, where any such application is
accepted in part only, any balance of the application monies will be refunded (without interest or
any share of revenue or other benefit arising therefrom, and the applicant will not have any claims
against us, the Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global
Coordinators or the Joint Bookrunners and Underwriters) to the applicant, at his own risk, within
14 Market Days after the close of the Singapore Public Offer (provided that such refunds are made
in accordance with the procedures set forth in “Appendix L—Terms, Conditions and Procedures for
Application for and Acceptance of the Offering Shares in Singapore”).

The manner and method of applications and acceptances under the International Offering will be
determined by us, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters. See “Appendix L—Terms, Conditions and Procedures for
Application for and Acceptance of the Offering Shares in Singapore” for further information.

Where the Offering does not proceed for any reason, the full amount of application monies received
will be returned (without interest or any share of revenue or other benefit arising therefrom, and the
applicant will not have any claims against us, the Vendors, the Financial Adviser, the Joint Issue
Managers, the Joint Global Coordinators or the Joint Bookrunners and Underwriters) to the
applicants under the Offering, at their own risk, within three Market Days after the Offering is
discontinued to the applicant (provided that such refunds are made in accordance with the
procedures set forth in “Appendix L—Terms, Conditions and Procedures for Application for and
Acceptance of the Offering Shares in Singapore”).

43
 SUMMARY CONSOLIDATED FINANCIAL INFORMATION AND OTHER INFORMATION

The following summary consolidated financial data should be read in conjunction with
“Management’s Discussion and Analysis of Results of Operations and Financial Position”, our
audited consolidated financial statements for the financial years ended 31 December 2017, 2018
and 2019, unaudited condensed interim consolidated financial statements for the six months ended
30 June 2020 and the accompanying notes and the related auditor’s reports as set out in
Appendices A and B of this Prospectus.

SUMMARY CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER

COMPREHENSIVE INCOME

Audited Unaudited

For the financial year ended For the six months ended
31 December 30 June

2017 2018 2019 2019 2020

S$ S$ S$ S$ S$

Revenue . . . . . . . . . . . . . . . . . . 103,603,553 122,844,245 142,908,469 55,235,147 77,827,957

Cost of sales . . . . . . . . . . . . . . . (45,721,362) (56,639,303) (65,244,940) (26,652,983) (36,914,733)

Gross profit . . . . . . . . . . . . . . . . 57,882,191 66,204,942 77,663,529 28,582,164 40,913,224

Other operating income. . . . . . . . 1,028,261 648,585 1,906,881 1,356,236 2,610,819
Finance income . . . . . . . . . . . . . 186,239 364,320 507,050 197,448 166,659
Expenses:
Selling and distribution . . . . . . . . (8,642,326) (11,486,047) (16,770,511) (7,118,610) (8,990,972)
Administrative . . . . . . . . . . . . . . (17,399,953) (18,828,785) (21,125,468) (9,523,500) (11,251,127)
Finance. . . . . . . . . . . . . . . . . . . (1,069,189) (1,111,416) (1,376,268) (623,780) (888,257)
Other operating . . . . . . . . . . . . . — — (871,759) — —
Impairment loss allowance on
trade receivables . . . . . . . . . . — (416,913) (37,091) — —
Share of loss of associated
company . . . . . . . . . . . . . . . . — (433,120) (1,054) (1,054) —

Profit before income tax . . . . . . 31,985,223 34,941,566 39,895,309 12,868,904 22,560,346

Income tax expenses . . . . . . . . . (5,050,837) (5,631,424) (5,354,550) (2,002,142) (4,023,166)

Profit after income tax . . . . . . . 26,934,386 29,310,142 34,540,759 10,866,762 18,537,180

Other comprehensive loss,

net of tax
Items that may be reclassified
subsequently to profit or loss
Exchange difference arising from
translation of foreign
operations . . . . . . . . . . . . . . . (649,597) (2,967,171) (3,900,163) (889,730) 2,875,678

Total comprehensive income

for the year/period . . . . . . . . . 26,284,789 26,342,971 30,640,596 9,977,032 21,412,858

44
 Audited Unaudited

For the financial year ended For the six months ended
31 December 30 June

2017 2018 2019 2019 2020

S$ S$ S$ S$ S$

Profit/(loss) attributable to:

Equity holders of the Company . . 26,934,386 29,300,363 35,755,229 11,374,427 18,465,497
Non-controlling interests . . . . . . . — 9,779 (1,214,470) (507,665) 71,683

26,934,386 29,310,142 34,540,759 10,866,762 18,537,180

Total comprehensive
income/(loss) attributable to:
Equity holders of the Company . . 26,284,789 26,292,715 32,022,289 10,490,619 21,260,242
Non-controlling interests . . . . . . . — 50,256 (1,381,693) (513,587) 152,616

26,284,789 26,342,971 30,640,596 9,977,032 21,412,858

Earnings per Share attributable

to equity holders of the
Company (cents)
Basic earnings per Share . . . . . . 5.32 5.74 6.99 2.22 3.59
Diluted earnings per Share . . . . . 5.42 5.53 6.52 2.10 3.34
Earnings per Share adjusted for
the issuance of the Conversion
Shares(1) . . . . . . . . . . . . . . . . 5.32 5.43 6.33 2.01 3.25
Earnings per Share adjusted for
the issuance of the Conversion
Shares, the New Cornerstone
Shares and the Offering(2) . . . . 4.62 4.75 5.57 1.89 3.05

Notes:

(1) Earnings per Share for the year/period indicated is computed based on the weighted average number of Shares for the
year/period, adjusted for the issuance of the Conversion Shares.

(2) Earnings per Share for the year/period indicated is computed based on the weighted average number of Shares for the
year/period, adjusted for the issuance of the Conversion Shares, the New Cornerstone Shares and the Offering.

45
SUMMARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Audited Unaudited

As at 31 December As at 30 June

2017 2018 2019 2020

S$ S$ S$ S$

ASSETS
Non-current assets
Property, plant and equipment . . . . . 64,913,183 73,736,676 107,276,482 136,693,144
Land use rights . . . . . . . . . . . . . . . . . 2,339,185 2,600,773 12,767,812 12,906,712
Intangible assets . . . . . . . . . . . . . . . 3,173,504 4,520,430 4,020,860 4,189,107
Investment in associated company . . — 2,539,885 — —
Other receivables . . . . . . . . . . . . . . . — — 179,676 173,625

70,425,872 83,397,764 124,244,830 153,962,588

Current assets
Inventories . . . . . . . . . . . . . . . . . . . . 10,255,605 17,006,626 14,733,738 15,140,511
Trade and other receivables, and
other current assets . . . . . . . . . . . 39,892,194 56,790,437 58,210,363 53,193,683
Contract assets/Accrued
receivables . . . . . . . . . . . . . . . . . . 4,635,112 7,775,450 11,376,429 13,940,691
Cash and bank balances . . . . . . . . . 23,217,764 25,088,357 25,404,651 41,198,083

78,000,675 106,660,870 109,725,181 123,472,968

Total assets . . . . . . . . . . . . . . . . . . . . 148,426,547 190,058,634 233,970,011 277,435,556

EQUITY AND LIABILITIES

Equity attributable to equity
holders of the Company
Share capital . . . . . . . . . . . . . . . . . . 8,548,273 9,695,920 9,695,920 9,717,778
Reserves . . . . . . . . . . . . . . . . . . . . . 87,135,827 88,264,164 110,817,756 123,534,583

95,684,100 97,960,084 120,513,676 133,252,361

Non-controlling interests. . . . . . . . . . — 2,440,594 6,912,441 7,234,830

Total equity. . . . . . . . . . . . . . . . . . . . . 95,684,100 100,400,678 127,426,117 140,487,191

Non-current liabilities
Bank loans . . . . . . . . . . . . . . . . . . . . 3,908,867 — — 11,774,183
Lease liabilities . . . . . . . . . . . . . . . . . 832,861 4,454,610 346,269 443,898
Convertible notes . . . . . . . . . . . . . . . — 49,910,763 49,940,019 —
Deferred taxation . . . . . . . . . . . . . . . 318,000 848,000 988,200 988,200

5,059,728 55,213,373 51,274,488 13,206,281

46
 Audited Unaudited

As at 31 December As at 30 June

2017 2018 2019 2020

S$ S$ S$ S$

Current liabilities
Trade and other payables. . . . . . . . . 23,339,002 26,027,082 37,013,648 42,336,879
Contract liabilities/Advanced
receipts . . . . . . . . . . . . . . . . . . . . . 6,652,553 2,070,877 6,368,253 7,299,670
Bank loans . . . . . . . . . . . . . . . . . . . . 12,067,407 — 3,864,000 14,527,301
Lease liabilities . . . . . . . . . . . . . . . . . 815,370 730,241 4,284,160 4,555,479
Convertible notes . . . . . . . . . . . . . . . — — — 49,960,531
Provisions. . . . . . . . . . . . . . . . . . . . . 391,672 423,190 454,745 280,570
Provision for taxation . . . . . . . . . . . . 4,416,715 5,193,193 3,284,600 4,781,654

47,682,719 34,444,583 55,269,406 123,742,084

Total liabilities . . . . . . . . . . . . . . . . . . 52,742,447 89,657,956 106,543,894 136,948,365

Total equity and liabilities . . . . . . . . . 148,426,547 190,058,634 233,970,011 277,435,556

Net Assets . . . . . . . . . . . . . . . . . . . . . 95,684,100 100,400,678 127,426,117 140,487,191

SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS

Audited Unaudited

For the six months ended

For the financial year ended 31 December 30 June

2017 2018 2019 2019 2020

S$ S$ S$ S$ S$

Net cash generated from

operating activities . . . . . . . 34,588,627 29,618,049 52,486,172 30,556,901 29,574,545
Net cash used in investing
activities . . . . . . . . . . . . . . . (15,489,704) (34,601,515) (45,291,722) (15,092,930) (36,198,003)
Net cash (used in)/generated
from financing activities . . . (9,643,123) 9,034,062 (7,226,766) 15,049,329 21,836,109

Net increase/(decrease) in
cash and cash equivalents . . 9,455,800 4,050,596 (32,316) 30,513,300 15,212,651
Cash and cash equivalents at
the beginning of the year/
period . . . . . . . . . . . . . . . . . 12,583,998 20,968,017 25,088,357 25,088,357 24,591,975
Effects of exchange rate
changes on cash and cash
equivalents held in foreign
currencies . . . . . . . . . . . . . . (1,071,781) 69,744 (464,066) (696,674) 563,531

Cash and cash equivalents at

the end of the year/period . . 20,968,017 25,088,357 24,591,975 54,904,983 40,368,157

47
 RISK FACTORS

Prospective investors should consider carefully the risks described below, together with all other
information contained in this Prospectus, before deciding to invest in our Shares. The risks
described below are not the only ones we face. Additional risks not described below or not presently
known to us or that we currently deem immaterial may turn out to be material. Our business,
financial condition, results of operations, cash flow and prospects could be materially and
adversely affected by any of these risks. The market price of our Shares could decline due to any
of these risks and you may lose all or part of your investment.

This Prospectus also contains forward-looking statements that involve risks and uncertainties. Our
actual results of operations could differ materially from those anticipated in these forward-looking
statements due to a variety of factors, including the risks described below and those discussed in
the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial
Position—Significant Factors Affecting Our Results of Operations” and elsewhere in this
Prospectus. See also “Notice to Investors—Forward-Looking Statements”.

RISKS RELATED TO OUR BUSINESS

We depend on a single customer for a substantial portion of our revenue and a limited
number of customers account for the majority of our revenue

Certain of our direct customers are contract manufacturers who manufacture and assemble
end-products for our end-customers. Some of these direct customers account for more than 5% of
our annual revenue. See “Business—Customers and Suppliers—Customers—Major Customers”.
However, while we may enter into purchase orders or schedules of work with these direct
customers to provide our products and services, such arrangements are typically at the direction of
our end-customers. We would view our end-customer (and not its contract manufacturer) as the
party with whom we have the primary business relationship. Our largest customer (who is an
end-customer) accounted for approximately 50.1%, 45.6%, 51.1%, 43.3% and 56.5% of our
revenue (which includes sales to its contract manufacturers) for the financial years ended
31 December 2017, 2018 and 2019, and the six months ended 30 June 2019 and 2020,
respectively. Our largest customer’s revenue contribution is primarily in our Advanced Materials BU
segment, although we supply nanoproducts under our Nanofabrication BU to this customer as well.
Our top five customers (both direct customers and end-customers, including our largest customer)
in each year overall account for approximately 82.6%, 67.5%, 72.8%, 67.3% and 81.9% of our
revenue for the financial years ended 31 December 2017, 2018 and 2019, and the six months
ended 30 June 2019 and 2020, respectively. See “Business—Customers and Suppliers—Major
Customers” for further details.

Notwithstanding that our major customers’ contribution to our revenue is diversified across our
business segments and/or product types, we cannot assure you that we can retain these
customers, that the volume of their product orders or service engagements (whether directly or
through their contract manufacturers) will not vary significantly from year to year. These events
could adversely impact our business, financial condition, results of operations and prospects.

Our major end-customers have significant leverage over us under our contracts with them

We have entered into master development and/or master purchase agreements with certain of our
major end-customers. These agreements set out a framework of key terms that govern the
business relationship between these end-customers and ourselves, including the end-customers’
right of termination, payment methods and quality standards and requirements. Some of the terms
are more favourable to our end-customers, including conferring on them the right to cancel all or
part of any purchase orders at any time and/or to reschedule delivery dates or redirect shipments
multiple times, without charge. In addition, such master agreements do not have a fixed term, and
are effective until terminated in accordance with the terms therein, and in certain instances, our
major end-customers have the right to terminate these agreements with notice.

48
In particular, the master development and supply agreement entered into by us with our largest
customer (who is an end-customer) requires us, in the event of transactions to transfer, assign, sell,
lease, loan or otherwise dispose of any material portion of the tangible or intangible assets,
personnel, technology, equipment, business, equity interest or voting interest of our entities
(including our Company) involved in or relating to the development, production or servicing of
goods under the agreement, to obtain from each other party to such transactions, as successors to
our Company, a written declaration of commitment to perform our obligations under the master
development and supply agreement. The written consent of the customer is also required in the
event that we assign, subcontract, delegate or transfer the agreement, any statement of work or
purchase order or any rights, obligations or interests under the agreement, whether directly,
indirectly, voluntarily, involuntarily, or by operation of law, including through any change of
beneficial ownership that occurs in connection with a merger (including a reverse triangular
merger), acquisition, or the sale or transfer of all, or any part of our business or assets
(the “Assignment”). Although the master development and supply agreement does not provide for
financial penalties for breaches of such provisions, an Assignment made in violation of the
agreement shall be void and shall constitute a material breach of the agreement, and the customer
will have the right to immediately terminate the agreement (together, the “Material Divestment
and Assignment Clauses”). We believe that the Offering and Listing will not trigger the Material
Divestment and Assignment Clauses because Dr Shi Xu, our founder and Controlling Shareholder,
will continue to have a direct and deemed interest in more than 50% of our Shares post-Listing, and
we have kept the customer updated on our Listing plans and they have not objected to the Listing
nor required us to obtain the written declaration of commitment from any person. Accordingly, we
have not obtained any written declaration of commitment from any person. Notwithstanding the
foregoing, in view of the broad wording of the Material Divestment and Assignment Clauses, we
cannot assure you that our customer will not take a different view, change their view and/or impose
conditions following the Listing, whether as a result of the Listing or any subsequent equity fund
raising by our Company or divestment of shares by our Controlling Shareholders. While we will
continue to closely engage with our customers to ensure that we do not inadvertently breach our
agreements with them, in the event that we are unable to comply with the terms of our agreements
with them or conditions imposed by them, we may be subject to termination of the customer
relationship, as well as claims, litigation and other liabilities which may negatively affect our
business, financial condition, results of operations and prospects.

Although we are the sole providers of certain products and nanotechnology solutions to
some of our major end-customers, we generally do not have exclusive arrangements with these
end-customers. In addition, we are required under our master development and/or master
purchase agreements to enter into separate purchase orders or schedules of work in respect of
specific product or service orders. For our end-customers, once their end-product development
reaches the production phase, our end-customer will direct their contract manufacturers to engage
us to provide our products and services, and we will enter into purchase or service agreements with
their designated contract manufacturers to deliver our products and services. The master
development agreements or master purchase agreements which we enter into with our end-
customers generally contain provisions which provide that in the event of termination, either the
purchase orders or schedules of work placed prior to termination shall survive until such obligations
are fulfilled by both parties (including those purchase orders entered into with our end-customer’s
designated contract manufacturer), or that payment would be made to us for purchase orders
outstanding as at the point of termination, in accordance with the terms of the relevant purchase
order or schedule of work. Accordingly, the termination of a master development agreement or
master purchase agreement (by either party or by mutual consent) would not materially affect any
ongoing purchase orders or schedules of work which were placed prior to termination.
Nonetheless, we cannot assure you that our end-customers will continue to place purchase orders
or service engagements with us, will not elect to terminate our master development and/or master
purchase agreements before expiry of their term, decide not to renew these agreements, or to
renegotiate the terms of these agreements in a manner that may be more unfavourable towards us.
We may not be able to replace any major end-customers that elect to terminate or not to renew its
contract with us, which would have a negative effect on our business, financial condition and results
of operations.

49
Further, certain of our customer contracts impose on us stringent confidentiality obligations, the
breach of which may expose us to significant damages, as well as termination of our customer
contracts. We cannot assure you that measures we have taken to protect confidential information
of our customers are sufficient and will protect the confidential information of our customers
effectively or at all. In the event that the confidential information of our customers is leaked, stolen
or misused, by any of our employees, inadvertently or not, or due to the failure of our information
technology systems, we may be subject to termination of our customer relationships, as well as
claims, litigation and other liabilities which may negatively affect our business, financial condition
and results of operations.

Our customers face competitive challenges which may adversely affect us

Factors adversely affecting our customers may also adversely affect us. These factors include:

• recessionary periods in their markets;

• their inability to adapt to rapidly changing technology and evolving industry standards, which
may contribute to short product lifecycles or shifts in their strategies;

• their inability to develop, market, or gain commercial acceptance of their products, some of
which may be new and untested;

• their products fail to gain commercial acceptance, or even if their products are commercially
successful, their appeal diminishes or become commoditised or obsolete;

• loss of business or a reduction in pricing power experienced by our customers;

• the emergence of new business models or more popular products and shifting patterns of
demand;

• a highly competitive consumer products industry, which is often subject to shorter product
lifecycles, shifting end-user preferences, and higher revenue volatility; and

• the loss of manufacturing capacity due to tightening environmental legislation and its
enforcement.

If our customers in the markets we serve, including the markets for smartphones, laptops and
tablets and smart wearables, are unsuccessful in addressing these competitive challenges, their
businesses may be adversely affected, in turn reducing the demand for our offerings, decreasing
our revenues, or altering our production cycles, each of which could have a negative effect on our
business, financial condition, results of operations and prospects.

Our ability to establish, maintain and protect our proprietary intellectual property rights is
important to our business

As a nanotechnology solutions company, our ability to establish, maintain and protect our patents
and other intellectual property rights and operate without infringing the intellectual property rights
of others is important to our business. To protect our proprietary know-how, we rely on a
combination of:

• contractually binding confidentiality and trade secret protection obligations, which we impose
on our customers, including customers with whom we collaborate with on R&D and
engineering, as well as non-compete obligations, which we impose on certain of our
employees and third parties, such as our business partners CYPR and MG Consulting
Holdings Pte. Ltd. (“MG Holdings”) who hold 49% and 10% of NHT and NFT, respectively,
who have access to the details and formula of our proprietary technology and nanotechnology
solutions; and

50
• granted patents, registered trademarks and copyright registrations in countries where we
have operations or which we consider pose a significant risk to our business
(from infringement or unauthorised use) if we do not have a protective registration.

As at the Latest Practicable Date, we have patents granted and pending patent applications in the
PRC, Singapore, the United States, Japan, the United Kingdom and Europe, and we have pending
international patent applications (also referred to as PCT applications) filed at WIPO. We also own
various copyrights and trademarks, which have been registered and/or are pending registration in
the PRC, Singapore, the United States, Japan, the United Kingdom and Europe. See
“Business—Intellectual Property” for further details. Notwithstanding the steps we have taken to
protect our intellectual property rights, we cannot assure you that our patents and/or other
intellectual property rights will not be susceptible to imitation or other forms of infringement. In the
event our patents and/or other intellectual property rights are imitated or otherwise infringed or if we
are unable to effectively protect our intellectual property rights, our business and financial
performance may be adversely affected. If we are compelled to undertake litigation to protect our
intellectual property rights, we cannot assure you that we will succeed and even if we prevail, such
litigation may be costly and time consuming, and may have a negative impact on our business and
profitability.

While we have sought to protect our proprietary know-how by filing patent applications in various
countries, this process is expensive and time consuming, and we may not be able to file and
prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
We may also fail to identify patentable aspects of our R&D output before it is too late to obtain
patent protection. The patent applications that we own may fail to result in granted patents in the
countries where we seek protection. We cannot assure you that all potentially relevant prior art,
schematics, blueprints and/or plans relating to our patents and patent applications have been
found, which can invalidate a patent or prevent a patent from issuing from a pending patent
application. Even if patents do successfully issue, third parties may challenge their validity,
enforceability, or scope, which may result in such patents being narrowed, found unenforceable or
invalidated. This could deprive us of rights necessary to successfully commercialise our products
and services that depend on these patents. Even if our patents or copyrights are unchallenged, our
patents or copyrights and patent applications may not adequately protect our intellectual property,
provide exclusivity for our products and nanotechnology solutions, or prevent others from
designing around our claims. We may also not be able to prevent third parties (including
competitors) from using our proprietary technology and nanotechnology solutions outside those
countries where we have patent, trademark or copyright protection, or from selling or importing
products or services made using our proprietary technology and nanotechnology solutions in and
into our target markets or elsewhere. Any of these outcomes could impair our ability to prevent
competition from third parties, which may have a negative impact on our business.

Patent protection and copyright registration is usually for a limited term. For instance, in the United
States, Singapore, Japan, Europe and the United Kingdom, the statutory expiration of a patent is
generally 20 years after it is filed. In the PRC, the statutory expiration of a patent for an invention
is generally 20 years after it is filed, and the statutory expiration of a patent for a utility model or
design is 10 years after it is filed. Although various extensions may be available, the life of a patent
or copyright and the protection it affords, is limited. Even if patents or copyrights covering our
products and nanotechnology solutions are obtained, we cannot assure we will be able to obtain
extensions and once the life of the right has expired we may no longer have exclusive use of our
proprietary products and nanotechnology solutions, which would negatively impact our business,
financial condition, results of operations and prospects.

In addition to the protection afforded by patents, we also rely on confidentiality agreements and
trade secret protection to protect proprietary know-how that is not patentable or protected by
copyright or which we elect not to patent. We also utilise certain processes for which patents or
copyrights may be difficult to enforce, whether as a result of challenges involved in proving that a
process infringes on our patent or copyright, which may involve securing a court order to obtain

51
access to documents such as blue prints, drawings or schematics relating to the alleged infringing
process, or the time taken and costs involved in gathering evidence and building a credible case
against the alleged infringement. In addition, other elements of our products and services, and
many elements of our development processes involve proprietary know-how, information or
technology that is not covered by patents or copyrights. Trade secrets may be difficult to protect.
We seek to protect our proprietary technology and processes, in part, by entering into
confidentiality agreements with our employees, consultants, collaborators, advisers, independent
contractors or other third parties who have access to our proprietary know-how, information, or
technology. We also require all of our employees and consultants to assign their inventions to us.
For example, in 2016, we filed a claim in the Supreme Court of Singapore against two of our
ex-employees and a company they founded for, among others, copyright infringement in relation to
their unauthorised use of various technical drawings and marketing materials relating to our FCVA
coating technology in connection with their business. These technical drawings and marketing
materials were obtained by the ex-employees in the course of their work at our Company where
they held managerial and sales positions, respectively, and were not removed or deleted from their
possession, against Company policy, when they left our Company. In 2018, we were awarded
damages of an aggregate of S$147,000 and an injunction was granted against the two
ex-employees and their new company to prevent their continued use of our intellectual property.
While our Company has since conducted a review of, and has taken steps to improve, our internal
intellectual property protection policies, we cannot assure you that we would be able to prevent
such incidents from arising again in the future, or that we will be able to succeed in future claims for
copyright or patent infringement against our employees and/or third parties. Any failure to
successfully enforce our claims may result in the infringement of our intellectual property by other
parties, which may impact our competitive advantage, and negatively affect our business,
operating results, financial condition and prospects.

We seek to preserve the integrity and confidentiality of our data and trade secrets, including by
maintaining physical and electronic security of premises and information technology systems.
While we have confidence in our individuals, organisations and systems, we cannot assure you that
all such agreements have been duly executed, that these agreements or security measures will not
be breached, or that we will have adequate remedies for any breach. In addition, competitors may
otherwise gain access to our trade secrets or independently develop substantially equivalent
know-how. If we are unable to prevent unauthorised material disclosure of our intellectual property
to third parties, or misappropriation of our intellectual property by third parties, we may not be able
to establish or maintain a competitive advantage in our markets, which could negatively affect our
business, operating results, financial condition and prospects.

Third-party claims of intellectual property infringement may negatively impact us

We also collaborate with our customers and other third-party collaborators to develop our
nanotechnology solutions under written agreements with these parties. Typically, the rights to the
intellectual property developed in the collaboration belong to us, and we may grant the counterparty
a licence to use the intellectual property resulting from the collaboration. Such licence is typically
royalty-bearing. However, depending on commercial negotiation, there is a possibility that on
occasion, some of the intellectual property resulting from the collaboration, belongs to the
counterparty or is jointly held by us and the counterparty. In such an event, we would seek to
negotiate for a right to use the intellectual property on a non-exclusive basis. In addition, our
customers with whom we collaborate with on R&D and engineering will retain their intellectual
property rights in respect of their own processes, products or components. To the extent that the
collaboration requires us to have access or to utilise our customer’s intellectual property, we may
also have to negotiate for a right to use our customer’s intellectual property for purposes of the
collaboration. If we are unable to negotiate for such a right on terms acceptable to us, we will be
unable to utilise the intellectual property belonging to the counterparty, which would limit the extent
of collaboration we may have with the customer. If our customers decide to revoke or limit our
licence to use their intellectual property, this could negatively affect our business and operations.

52
As at the Latest Practicable Date, we are not aware of, nor have we received any claims from third
parties for any violations or infringements of intellectual property rights of third parties by us.
Nevertheless, we cannot assure you that we have identified all relevant third-party patents or
applications or that the products and services offered under our nanotechnology solutions by us
(including those which are provided in accordance with our customers’ requirements and
specifications) would not inadvertently infringe the intellectual property rights of others, or that
others would not assert infringement claims against us or claim that we have infringed their
intellectual property rights. Such claims against us, even if untrue or baseless, may result in
additional costs, legal or otherwise, cause product shipment delays, require us to provide
non-infringing products, modify our business processes, enter into licensing agreements or
negatively affect our reputation and brand image. Licensing agreements, if required, may not be
available on terms acceptable to us or at all. If we decide to develop alternative technology(ies), we
may not be able to do so in a timely or cost-effective manner, if at all. In the event of a successful
claim of infringement of intellectual property rights against us and our failure or inability to provide
non-infringing products or to license the infringed intellectual property rights or to develop
alternative technology(ies) in a timely or cost-effective manner, our business, net assets, financial
condition and results of operations may be negatively affected.

Moreover, we do not insure against the risk of our, or our customers’, infringement of a third party’s
intellectual property rights or of a third party infringing our intellectual property rights.
Consequently, we may suffer losses, claims or damages from such infringement (either by us or our
customer) and in the case of a third party’s infringement of our intellectual property rights, we may
be unable to seek full indemnification or compensation from the infringing party if at all. Such
losses, claims or damages, if substantial, could have a negative effect on our business, financial
condition, results of operations and prospects.

COVID-19 or any other infectious and communicable disease or serious public health issue
may adversely impact us

In March 2020, the World Health Organisation declared the outbreak of a new infectious disease
known as “COVID-19”, to be a pandemic. COVID-19, has spread rapidly in almost all regions
around the globe, and has resulted in a rapid deterioration of the political, socio-economic and
financial situation globally. We continue to monitor the impact which the COVID-19 outbreak could
have on our operations, the markets in which we operate and more broadly on the macro-economic
outlook as further cases emerge and governments and international agencies impose a range of
measures to deal with the outbreak.

While the full impact of the COVID-19 pandemic is unknown as at the Latest Practicable Date, due
to the infectiousness and severity of the disease, the various emergency measures taken globally
to manage the pandemic, and the negative effects the pandemic may have on the economy and
financial markets, COVID-19 could adversely impact our business, financial condition, results of
operations and prospects. In particular, our employees or their contacts could be inflicted with
COVID-19 and the measures imposed on businesses generally in response to COVID-19 could
result in a closure of all or part of our business and manufacturing premises, the requirement to
implement social distancing measures, and the quarantine or self-isolation of all or some of our
staff, amongst other restrictive measures. This could disrupt and adversely affect our ability to carry
on our business and we may incur additional costs to comply with measures imposed on us.
COVID-19 has also disrupted global supply chains through restrictions on movement and travel
and border closures. Our ability to receive and provide goods and services could consequently be
delayed, become more costly, or be prevented altogether. The economic downturn from COVID-19
could also result in a decrease in demand for our products and services or the end-products of our
customers, and may affect the ability of our counterparties to perform their obligations in a timely
manner or at all. Government measures to alleviate the economic impact of COVID-19 such as the
adoption of rules relating to the payment of penalty interest, the imposition of restrictions on the
termination of agreements and/or the application of enforcement measures and on taking steps

53
with a view to initiating insolvency and/or enforcement proceedings could adversely affect our
ability to enforce and require our counterparties to perform their obligations under our contracts.
Factory footprint and business expansion decisions may be impacted by COVID-19 outcomes and
related complexities, and potential trade policy initiatives by governments to protect local industry.
A pandemic creates the risk of volatility in financial markets (including interest rate and foreign
exchange rate risks) and may adversely impact the cost, availability, duration or terms of financing
and credit available to us. The potential exists for recession within individual countries, the failure
of businesses and austerity measures, all of which might impact the confidence of, and in, the
economies and markets in which we do business. COVID-19 has also significantly increased the
risk of cyber-attack as some of our employees work from home in line with government policies and
recommendations.

While the impact of the COVID-19 pandemic on our Group’s business has not been material to date
and while our Group has not experienced any material disruptions to our supply chain as a result
of measures taken by our Group to minimise the impact of COVID-19 on our business and supply
chain, such as obtaining our supplies from multiple supplies located in various locations and
increasing our inventory levels during this period, we cannot assure you that the risks from
COVID-19 including those described above or from any other communicable or infectious disease
or public health issue will not have a material adverse effect on us in future. If the current COVID-19
situation deteriorates, or restrictions persist over longer periods (even intermittently), our business,
financial condition, results of operations and prospects may be adversely affected.

Major disruptions to our production capabilities could affect our operations

We currently operate four production facilities situated in Singapore, Shanghai and Yizheng in the
PRC, and Hai Duong in Vietnam. In addition, our new Shanghai Plant 2 is expected to commence
operations by the first quarter of 2021. Any major disruption in service at one or more of our
production facilities for any reason could cause significant delays in the shipment of our products
or delivery of our services, which may in turn cause us to breach our contracts with our customers,
exposing us to the risk of contract termination and liability for damages. Our production capabilities
are vulnerable to disruption from factors, including but not limited to, the following:

• breakdown of our machinery, information technology and automated systems;

• human error or accidents;

• physical or electronic security breaches;

• power outages or natural disasters;

• public health emergencies (including the ongoing COVID-19 pandemic) and outbreaks of
infectious diseases;

• terrorist attacks, civil unrest or riots; and

• theft, sabotage or vandalism.

We utilise automation extensively, with approximately 63% of our production processes in our
Shanghai Plant 1, Yizheng Plant, Hai Duong Plant and Osaka Plant being automated as at the
Latest Practicable Date. Accordingly, the performance of our machinery, information technology
and automated systems are critical to a number of business operations, including, manufacturing
operations, key management and analysis systems, and our R&D capabilities (e.g. coating
research lab and characterisation lab). Our proprietary MES system and QTS system allow

54
management to track key operational parameters, maintain quality assurance and facilitate
efficient production planning, and are reliant on our information technology infrastructure to
operate smoothly.

Any system or power failure that causes an interruption in service or availability of our machinery,
information technology and automated systems could adversely affect our operations or delay the
collection of revenues. In addition, our servers and information technology systems are vulnerable
to computer viruses, break-ins and similar disruptions from unauthorised tampering. The
occurrence of any of these events could result in interruptions or delays in production, the loss or
corruption of data or cessations in the availability of systems, all of which could have a material
adverse effect on our reputation, business, financial position, results of operations and prospects.

Further, the existing leases for our Singapore Plant and Yizheng Plant expire on 31 December 2021
and 28 February 2022, respectively. In addition, the lessors to our Singapore Plant and our Osaka
Plant have the right to unilaterally terminate our leases, with 3 months and 6 months written notice,
respectively. See “Business—Our Material Properties and Fixed Assets” for further details.
Notwithstanding that the landlord for our Yizheng Plant is a shareholder of our joint venture partner,
CYPR, we cannot assure you that when any of our leases for our Singapore Plant and/or Yizheng
Plant expire, we will be able to extend or renew them, or find and lease replacement premises, at
rates and terms acceptable to us. In such circumstances, we may not be able to or may decide not
to renew our lease and would have to terminate our operations at that location, which will result in
a loss of revenue from the facility. In addition, we cannot assure you that our leases to our
Singapore Plant or Osaka Plant may not be unilaterally terminated with written notice, and that in
such event, we will be able to find and lease replacement premises within the notice period at rates
and terms acceptable to us. We may also incur costs to reinstate the facility to its original state,
transport our existing fixtures and production machinery to another location, compensate staff for
loss of jobs if we are unable to redeploy them to our other facilities, and establish and fit out a new
production facility if we are even able to identify a suitable one. We may also experience delays in
fulfilling orders from our customers.

Any significant or prolonged disruption to our production capabilities may have a material and
adverse effect on our business, financial condition, results of operations and prospects.

We face competition from alternative products and solutions

We face competition in our business. See “Business—Competition” for further details on our
competitors.

While we believe our technology, quality, performance, reliability, reputation, range of

nanotechnology solutions, and service and support, provide us a strong competitive advantage, our
competitors may develop and introduce new technologies, advanced materials and/or enhance
their existing products and services, which could cause a reduction in our existing market share.
Some of our competitors may have greater financial, technical, and marketing resources than we
do or may benefit from governmental support or enjoy favourable tax, financial or other incentives.
They may also develop exclusive arrangements with potential customers and suppliers, or have the
ability to devote greater resources to promoting and selling certain products. Unlike many of our
competitors who specialise in a single or limited number of product lines, we have a portfolio of
businesses and must allocate resources across those businesses. Our competitors may therefore
have greater financial, technical, and marketing resources available to them with respect to those
businesses. If we are not able to successfully defend our existing market share against our
competitors, and if there is a significant reduction of our market share, our business, financial
condition, results of operations and prospects may be adversely affected.

In addition, while our nanotechnology solutions are versatile and can be developed in accordance
with our customers’ requirements, our existing nanotechnology solutions may not be suitable for
use in a customer’s new end-product or newer generation of an existing end-product. Any failure by
us to adapt or develop nanotechnology solutions for our customers for use in their new or newer
generation end-products may adversely affect our ability to retain our customers as well as our

55
revenue and financial performance. In addition, if there are significant delays in the launch of our
customers’ end-products, including due to factors outside of our control such as product
modifications by our end-customers or shortages in other areas of the supply chain, such delays
may adversely affect our operations and demand for our products and services, and revenue.

We are exposed to the credit risks of our customers

Our business and financial results are dependent on the timely payments, and credit worthiness of,
our customers. We invoice our end-customers for our services in the end-product development and
design process, including development fees we charge, samples and fixtures and/or for
co-investment in equipment. Additionally, certain end-customers (including some of our major
end-customers) require us to enter into purchase or service agreements with their designated
contract manufacturers to provide our nanotechnology solutions to their designated contract
manufacturers (who become our direct customers), and we are paid by the contract manufacturers.
Accordingly, in addition to the end-customer with whom we invoice directly for our services in the
end-product development and design process, we take the risk of the creditworthiness of the
contract manufacturers who engage us to provide the products and services in the production
process as well, and we do not have a contractual right against the end-customer to claim for
payment for products and services provided by us to the contract manufacturers, even though
these are provided at the end-customer’s direction. In particular, sales to certain of our major
end-customers’ contract manufacturers account for a substantial portion of our revenue. See
“Business—Customers and Suppliers—Customers—Major Customers” for further details. A failure
by an end-customer or, where applicable, a direct customer, to pay us in a timely manner or at all,
may have an adverse effect on our business, financial condition, results of operations and
prospects.

Any deterioration in the financial position of our customers and/or their designated contract
manufacturers may affect our profits and cash flow, as these contractual counterparties may
default on their payments to us. In addition, these customers may cancel, or direct their contract
manufacturers to cancel, their orders with us. Although we review the credit risk of our customers
regularly, we cannot assure you that such defaults will not occur which will negatively impact our
cash flow. We may also be unable to enforce our contractual rights to receive payment through
legal proceedings because of the bankruptcy of the end-customer or direct customer, legal
complexities or otherwise. While our end-customers and direct customers have not posed a
material credit risk, we cannot assure you that our end-customers and direct customers will not
default in future.

We incur R&D and engineering costs and capital expenditure which require funding

As our strategy is to provide nanotechnology solutions and services, R&D and engineering are also
critical to our business. For the financial years ended 31 December 2017, 2018 and 2019, and the
six months ended 30 June 2019 and 2020, approximately 4.4%, 5.4%, 6.4%, 7.5% and 7.2%
respectively of our Group’s revenue was attributable to R&D and engineering. R&D activities refers
to research and development undertaken for our Group’s own purposes and in some areas specific
to our customers’ projects, while engineering activities refers to project development undertaken
specifically to address the requirements of our customers or in connection with orders for our
products and services placed by our customers. Our joint collaboration R&D and engineering
efforts and our involvement in our customers’ end-product development and design process would
be subject to the development and/or collaboration agreements we have entered into with them.
Pursuant to these agreements, we will then enter into separate work orders in respect of each
product design process or service. Certain development agreements or collaboration agreements
with our customers for R&D also allow us to charge a development fee to our customers for the R&D
and engineering services we perform to assist in their end-product development process.

We cannot assure you that our R&D and engineering efforts, whether initiated on our own or in
collaboration with a customer or other parties, will be successful and will generate revenue. We
may not be able to capitalise fully or at all our R&D and engineering expenses and the revenue
generated from a new or enhanced product or solution may not fully offset its R&D and engineering

56
expenses. For joint collaboration programmes, any development fee charged to our customers may
not be for the full sum of expenses incurred and/or may be subject to terms and conditions, and we
cannot assure you that the development fees we charge to our customers will fully offset our R&D
and engineering expenses. The expenses or losses associated with unsuccessful R&D and
engineering activities, or a lack of market acceptance of our customers’ products, could negatively
affect our business, financial condition, results of operations and prospects.

Furthermore, the typical development cycle of a customer’s product can be lengthy and
complicated, and may require new scientific discoveries or advancements and complex technology
and engineering. Such developments may involve external suppliers and service providers, making
the management of R&D and engineering projects complex and subject to risks and uncertainties
regarding timing and the satisfactory technical precision of our products and nanotechnology
solutions. If we do not achieve the required technical specifications or successfully manage new or
enhanced product and solution development processes, or if R&D and engineering work is not
performed according to schedule, then our planned new or enhanced technologies, products or
nanotechnology solutions may not materialise, and our business and operating results may be
negatively affected.

We also incur capital expenditure to establish and fit-out our R&D and engineering facilities and
manufacturing plants and to purchase R&D and engineering equipment and machines.

We have historically financed our R&D and engineering costs and capital expenditure from a
combination of development fees charged to customers, internal resources, equity injections,
external borrowings and government grants and incentive schemes. As we grow and expand our
business, we anticipate our R&D and engineering costs and capital expenditure may increase and
we may need to commit additional financial resources to R&D and engineering in order to achieve
our business objectives. In addition, we may seek additional capital if market conditions are
favourable or due to strategic considerations; even if we believe we have sufficient funds for our
current or future operating plans. Adequate additional financing may not be available to us on
acceptable terms, or at all. Furthermore, various government grants and incentive schemes may be
subject to certain conditions or eligibility criteria which may, from time to time, be subject to change.
In the event the government decides to review the conditions or eligibility criteria of these grants
and/or incentive schemes in a manner that would result in us being ineligible to continue to receive
these grants and/or qualify for these incentive schemes, or if the government decides to cease
these grants and/or incentive schemes altogether, we may be required to seek alternative funding
to fund our R&D and engineering costs and capital expenditure. If adequate funds are not available
to us on a timely basis, we may be required to delay, limit, reduce or terminate our R&D and
engineering efforts and capital expenditures, which could negatively affect us, and our ability to
offer new or enhanced products and nanotechnology solutions, service our customer requirements,
maintain or grow our market position amongst others. See “Business—Our Core
Competencies—R&D and Engineering Investments” for further details.

We may be unable to meet our customers’ specifications resulting in liability, complaints

and negative publicity, or we may be exposed to product liability claims

We provide our nanotechnology solutions based on the demands, preferences and specifications
of our customers. Many of our nanotechnology solutions are mission-critical to the operations of our
customers’ end-products, and provide benefits which may be difficult to quantify. We may be
exposed to liability or claims from our customers (including both our end-customers and direct
customers) for issues with respect to our products and services or with our inability to meet client
orders or specifications, as well as product liability claims from consumers of our end-customers’
products.

We maintain general liability insurance coverage, including coverage for errors or omissions.
However, our insurance coverage may not cover every or the full amount of a product liability claim

57
or a claim for damages arising from a breach of contract due to our inability to meet client orders or
specifications. A successful assertion of one or more large product liability or breach of contract
claims against us which is uninsured or that exceeds our available insurance coverage, may
negatively affect our operating results.

As we rely on our existing relationships with our customers and the quality of our products and
services for the continued growth of our business, failure to consistently deliver quality products
and services which meet our customers’ specifications may negatively affect our ability to retain our
existing customers, secure new customers or develop new market segments, thereby hampering
our future business growth.

In addition to complaints arising from issues with our products and services or our failure to comply
with our customers’ specifications, we may also be subject to other complaints, whether with or
without merit, about our products and services. We may also be affected by negative publicity
arising from the publication of industry findings and research reports (regardless of their accuracy
or validity) concerning our nanotechnology solutions. Such complaints and negative publicity may
affect our reputation and our sales.

We have been involved in, and may in the future be involved in disputes, legal, regulatory,
and other proceedings arising out of our business operations

From time to time in the past, we have been, and in the future may be, involved in disputes with
various parties in the course of our business including customers, suppliers, employees and
ex-employees. Such disputes may involve various matters such as business disputes, employment
matters, disputes over intellectual property rights, disputes over breach of confidentiality
obligations, and regulatory compliance. We may be the subject of complaints and claims made by
our ex-employees in relation to, for instance, claims of unfair dismissal and disputes over
employment contracts and terms. As part of our R&D collaboration with customers, we receive
designs, schematics, blue prints and/or drawings of our customer’s products and are granted
access to information which may be the intellectual property of our customer, and in respect of
which we may be under stringent non-disclosure, confidentiality or other contractual obligations to
protect. In the event of any confidential information being leaked, stolen or misused by any of our
employees, inadvertently or not, or due to failure of our information technology systems, we may be
subject to disputes and claims from our customers.

These disputes and claims may lead to legal or other proceedings and may result in costs, negative
publicity, and the diversion of resources and management’s attention regardless of the outcome.
Any negative publicity arising from such disputes or complaints against us, whether with or without
merit, may negatively affect our reputation and goodwill. For example, in the past four years, we
were involved in several litigation and arbitration suits in the PRC with certain ex-employees and
outsource workers of our PRC subsidiaries in relation to claims of unfair dismissal and/or salary
disputes. The aggregate sum of these claims amounted to less than RMB112,874. While these
litigation and arbitration suits have since concluded and as at the Latest Practicable Date, we are
currently not involved in any disputes with any legal or arbitration proceedings with any customer,
supplier, employee or ex-employee which may have a material effect on the financial position or
profitability of our Group, we cannot assure you that similar disputes (whether relating to
employees, outsource workers or otherwise) will not arise in future.

In addition, we are subject to labour laws and regulations in the countries we operate in. See
“—Increases in employee salaries and benefits as well as changes to labour laws could affect our
business”. These include labour protection laws and laws and regulations relating to the use of
temporary workers, such as limitations on the use of labour dispatch arrangements in the PRC. Due
to the nature of our business operations which involves manufacturing and factory operations, we
are also subject to workplace health and safety laws. Breaches of such laws and regulations may
expose us to, among others, fines and/or other penalties. For example, in 2017, our Company was

58
also found to be in breach of certain provisions under the Workplace Safety and Health Act
(Chapter 354A of Singapore) by the Ministry of Manpower and ordered to pay a fine of S$3,000.

Negative publicity or announcements may also include, amongst others, our involvement in
litigation or regulatory investigations, online complaints or negative reviews of our business
(anonymous or otherwise), or unfavourable third party research reports on us. We cannot assure
you that attempts to resolve any outstanding disputes will be successful, or that similar claims
would not be asserted. Such claims may also incur significant costs and time to defend.

Responding to disputes and/or negative publicity arising from any of the above circumstances,
regardless of their ultimate outcomes and notwithstanding that they may be baseless, frivolous or
vexatious, can divert the time and effort of our management from our business. Claims and
complaints that assert some form of wrongdoing, regardless of the factual basis for the assertions
being made, may further result in negative publicity, lawsuits, or investigations by regulators. Any
unfavourable decisions by regulators may result in regulatory sanctions against us and other
person(s) responsible for the breach, including the imposition of fines and/or term of imprisonment,
where applicable.

In addition, whilst we maintain insurance coverage for workers’ injury compensation or losses
arising from workers’ compensation, we cannot rule out the possibility that the damages we suffer
or are liable for in the future may not be covered by our insurance, or may exceed our insurance
coverage. For example, in 2017, our Company received a work injury claim from an employee who
had suffered an injury in the course of his work at our production facility in Singapore. As a result
of the injury, the employee suffered permanent incapacity and incurred medical bills amounting to
approximately S$201,000. As our Company’s workplace injury insurance policy at the relevant time
had a cap on claims at S$36,000, our Company was liable for the shortfall and had to pay the
amount to the employee.

We may have to repay certain tax shortfalls in Vietnam

The corporate income tax rate in Vietnam is 20%. Under the terms of NFV’s Investment
Registration Certificate, NFV is exempt from income tax for two years starting from the first year it
generates a taxable profit (being the financial years ended 31 December 2018 and 2019) and will
thereafter be entitled to a 50% reduction in income tax for four succeeding years (being the
financial years ending 31 December 2020 to 2023) (the “Tax Incentive”).

For the financial year ended 31 December 2018, NFV registered a revenue of approximately
US$2.9 million in its financial statements attributed to research and development services, which
is not within the registered scope of business of NFV. Such revenue was derived from payments
received from NFJ for services relating to engineering, pilot run and installation of molds and
samples.

According to Decree No. 50/2016/ND-CP on Penalties for Administrative Violations against

Regulations on Planning and Investment, the failure to notify about changes in the enterprise
registration information (i.e. failure to register the business activity with the necessary authority)
more than 91 days after conducting the business activities, may subject NFV to an administrative
fine of up to VND5,000,000. However, according to the Law on Sanctioning Administrative
Violation, the statute of limitation for administrative violation is one year from the termination of the
violation. On the basis of the foregoing, our Company’s legal advisers as to Vietnam law have
advised that there would not be any legal implications on NFV arising from this matter. While NFV
no longer provides such services, and notwithstanding the foregoing advice by our Company’s
legal advisers as to Vietnam law, there is a possibility that NFV may not enjoy the Tax Incentive on
the income derived from such services for the financial year ended 31 December 2018 and that
NFV may be required by the relevant tax authorities to repay additional taxes and interest of up to
US$348,049 for the financial year ended 31 December 2018 (the “Shortfall”) as well as an
additional 20% penalty on the Shortfall should NFV fail to pay the Shortfall. Accordingly, we have
made a tax provision of US$348,049 in our Group’s consolidated financial statements for the
financial year ending 31 December 2020. For the avoidance of doubt, we have not made any

59
provision for the Shortfall and potential additional 20% penalty on the Shortfall in our audited
consolidated financial statements for the financial years ended 31 December 2018 and 2019, and
the six months ended 30 June 2020.

As at the Latest Practicable Date, our Company has carried out training for NFV’s finance team, to
educate them and enhance their awareness of the relevant regulations and the Chief Financial
Officer will regularly review NFV’s sales transactions to ensure that the sales revenue recognised
are within the registered scope of business for the relevant tax exemption. NFV has also engaged
external tax advisers in Vietnam to carry out a comprehensive tax review of its financial statements
for the financial years ended 31 December 2018 and 2019, which is expected to take place before
the end of 2020.

Our success may depend on the continued service of our founder, management, R&D
employees and other key personnel, as well as the hiring, retaining and motivating skilled
and experienced scientists, engineers and other professionals and managerial, sales and
technical staff

We view the continued services of our founder, management, R&D employees and other key skilled
employees as important to our business. Our success to date has been largely attributable to the
efforts of our management, R&D team and skilled employees. If one or more of our management or
key personnel are unable or unwilling to continue in their present positions, we might not be able
to replace them easily or at all. Competition for management and senior research personnel in our
industry is intense, and we may not be able to retain our personnel or attract and retain new talent
in the future. In addition, we compete for skilled employees, not only with other companies in our
industry, but also with companies in other industries and in the locations where we operate, where
there may be a limited number of highly trained employees available. Increased competition for
these employees, in our industry or otherwise, could have a negative effect on our business. We
cannot assure you that the departure and transition of management personnel or key R&D
employees will not cause disruption to our operations or customer relationships, or negatively
impact our results of operations. Furthermore, if any of our management, key R&D employees, or
other key personnel were to join a competitor or form a competing company, we may not just lose
key professionals, scientists, staff members and/or expertise, but may face increased competition
as well as a potential loss of customers and/or suppliers.

In addition, our founder serves as our Executive Chairman. He performs a central role in developing
and implementing our business strategies and initiatives and has been critical to our success.

We do not maintain key man life insurance for any of the senior members of our management team
or other key personnel. If we are not successful in retaining the services of our founder, our
management, key R&D employees, or other key personnel or hire suitably qualified personnel to
replace them, our business, financial condition, results of operations and prospects may be
negatively affected.

If we experience challenges with respect to labour relations, our overall operating costs and
profitability could be negatively affected and our reputation could be harmed

While we believe we have good relations with our employees, any work disruptions or collective
labour actions may have a negative impact on our production capabilities. We have entered into
collective bargaining/labour agreements with employees of NVC, NRE and NFV. Under the
relevant laws of the PRC, it is voluntary for our employees of NVC and NRE to be unionised. In
addition for NFV, our employees who are under probation are not eligible to join the union. See
“Business—Employees—Industrial Relations” for further details. As at the Latest Practicable Date,
approximately 27% of our workforce is under collective bargaining/labour agreements. The terms
of our collective bargaining/labour agreements in the PRC and Vietnam are generally renegotiated
every three years. If labour negotiations are not successful, or if any of the employees of our other
Group entities become subject to a collective bargaining/labour agreement, or we otherwise fail to

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maintain good relations with employees in any jurisdiction in which we operate, we could suffer a
strike, work stoppage or other form of labour disruption. Any of the foregoing could harm our
reputation and negatively affect our business, financial condition and results of operations.

Increases in employee salaries and benefits as well as changes to labour laws could affect
our business

Staff costs accounted for S$29.4 million, S$35.8 million, S$44.1 million, S$19.2 million and S$24.8
million for the financial years ended 31 December 2017, 2018 and 2019, and the six months ended
30 June 2019 and 2020, respectively, representing approximately 28.4%, 29.1%, 30.9%, 34.8%
and 31.9% of our revenue in each period, respectively.

Employee salaries and benefits expenses in certain of the countries in which we operate,
principally in Singapore, the PRC and Japan, have increased over recent years as a result of
economic growth, increased demand for business services and increased competition for trained
and talented employees and we cannot assure you that they will not continue to rise.

We intend to control our costs as we add capacity in locations or enter into new geographies. We
may need to increase salaries more significantly and rapidly than in previous periods in an effort to
remain competitive or meet the demand for our services, which may cause our labour costs to
increase. In addition, we may need to increase employee compensation more than in previous
periods to remain competitive in attracting the quantity and quality of skilled employees that our
business requires, depending on the state of the labour market for our skilled employees at any
given time. Wage increases may reduce our operating margins and negatively affect our
profitability if our revenue remains stagnant or if we face price pressure from competition.

If we expand our operations into new geographies with higher average wages and compensation
expectations for our prospective employee pool in such geographies, our average overall labour
costs may increase which will reduce our profitability, especially when we enter into new markets
and seek to grow our business in new geographies where we have no track record.

Furthermore, most of the countries in which we operate have labour laws which protect the
interests of workers, including statutorily mandated minimum wage, legislation that imposes
financial obligations on employers and laws governing the employment of workers. Labour laws in
one or more of the key jurisdictions in which we operate, including Singapore, may be amended in
the future in a way that causes our costs to increase and any such changes may be detrimental to
the business that we operate in such jurisdictions. The implementation or increase of additional
labour laws in the countries we operate may reduce our profit margins and have a negative effect
on our business, financial condition and results of operations.

Barriers to trade or escalation of trade disputes could negatively affect demand for our
products and services

We cannot predict whether the countries in which we operate, or may operate in the future, could
become subject to new or additional trade restrictions imposed by the United States or other
governments, including the likelihood, type or effect of any such restrictions. The U.S. government
imposed various actions regarding trade with the PRC, including levying various tariffs on imports
from China, and may impose additional actions in the future. President Trump had earlier issued an
executive order designed to secure the information and communications technology or services
designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to
the jurisdiction or direction of foreign adversaries. Recently, President Trump signed an executive
order to end Hong Kong’s preferential trade treatment and signed legislation to impose sanctions
against foreign individuals and banks for contributing to the crack down on the rights of Hong Kong
residents to free speech and peaceful assembly. Further, the U.S. Commerce Department has
implemented additional restrictions and may implement further restrictions that would affect
conducting business with certain Chinese companies. While we have not been impacted by these

61
tariffs and trade restrictions to date, we cannot assure you that neither we nor our customers, or the
global value chains we serve, will not be impacted in the future, which may cause our customers to
seek other suppliers for the products and solutions we offer and we may be unable to recapture or
replace such customers.

There is increased uncertainty with respect to trade relations, including as a result of potential
retaliatory tariffs, between the United States and other countries, particularly the PRC. The focus
on policy reforms that discourage U.S. corporations from outsourcing manufacturing and
production activities to foreign jurisdictions, including increased customs restrictions and tariffs or
quotas or the imposition of additional duties and other charges on imports and exports, could
change the way we and our customers conduct business, increase our costs or impede the timely
delivery of our products. This in turn could have a negative effect on our business, financial
condition, results of operations and prospects.

We operate in foreign countries and our Group is subject to risks relating to conducting
business in such countries

Our Group’s business and operations are concentrated in Asia, specifically, in the PRC, Japan,
Vietnam and Singapore. Accordingly, our Group’s business, financial condition, prospects and
results of operations may be adversely affected by economic, political, social, regulatory and legal
developments and risks in these countries. These developments and risks may be beyond the
control of our Group. They include:

• changes in customs and import duties, taxation rates and non-tariff barriers, whether resulting
from local regulations or the conclusion or amendment of free trade agreements;

• imposition of restrictions on currency conversion or the transfer of funds;

• general inflationary pressures;

• fluctuations in interest rates;

• fluctuations in foreign exchange rates;

• limitations and/or bans on imports and/or exports;

• expropriation or nationalisation of private enterprises or confiscation of private property or

assets;

• pressure from environmental groups and other stakeholders;

• unfavourable change of laws, regulations or policies; or

• anti-competitive policies or anti-competitive practices which are condoned and the imposition
of restrictions on investments and other measures that may be taken to protect the local
industry.

Should any of these risks materialise, our Group’s business, financial condition, results of
operations and prospects may be adversely affected.

The legal systems of the countries in which we operate are complex and the interpretation,
application and enforcement of laws and regulations may involve uncertainty

The legal systems of countries in which we operate are complex and the interpretation, application
and enforcement of laws and regulations may involve uncertainty. These laws and regulations may

62
be supplemented or otherwise modified by practices that may not have been ruled upon by the
courts or enacted by legislative bodies and could change without notice. There may also be limited
precedents on the interpretation, implementation or enforcement of the laws and regulations that
apply to us. Therefore, some degree of uncertainty exists and judgement is required in our
application of and compliance with laws and regulations that apply to our business.

In addition, we may not be able to enforce an arbitral award or court judgement obtained in one
country in another country without a re-examination of the merits of the case in a full proceeding in
the courts of the second-mentioned country. Complexity and uncertainty in the legal systems in the
countries in which we operate could have a negative effect on our business, financial condition,
results of operations and prospects.

We may not be able to maintain and/or obtain approvals and licences necessary to carry on
or expand our business

We require certain licences to conduct our business. These licences are subject to periodic renewal
by the relevant government authorities, and the standards of compliance may change. We are
subject to the supervision of these authorities with the power to revoke or grant, to extend and
amend our licences. While we have obtained all necessary certificates, licences and permits
required for our business operations, we cannot assure you that we will be able to do so in future
or that we will be able to renew our existing certificates, licences or permits. Additionally, we may
breach the conditions of our licences or the provisions of any code of practice, standard of
compliance or other government regulation or regulatory requirement. This exposes us to penalties
(including fines or imprisonment of our officers and staff), or the risk that our licences may be
suspended, revoked or amended by the relevant government authority to our detriment. The
occurrence of any of these events may be costly, require us to cease our business in whole or in
part, cause us to default on our obligations to our customers and other counterparties, harm our
reputation or otherwise adversely affect our business, financial condition, results of operations and
prospects.

We are exposed to risks of supply chain disruption in our business

We purchase raw materials and certain machine components and parts, from numerous external
suppliers for the manufacture of our advanced materials and coating systems sold under our
industrial equipment segment, as well as to fabricate our nanoproducts. Our ability to continue to
obtain these supplies in an efficient and cost-effective manner is subject to a number of factors,
some of which are not within our control. These factors include the ability of our suppliers to provide
a continued source of supply and our ability to compete with other users in obtaining the supplies.
If we are unable to obtain supplies for our business in a timely and cost-effective manner, or at all,
this may negatively affect our business, financial condition, results of operations and prospects.

Our expansion plans into new markets may place additional demands on our resources

We plan to expand our product offerings in the FMCG personal grooming, automotive, optical lens,
biomedical, new energy, aerospace and IoT optics industries. We anticipate that additional
investments in our production facilities and R&D spending will be required to scale our operations
to expand into these identified new markets. Our success will depend in part upon the ability of our
management team to manage our projected growth effectively. To do so, we must continue to
increase the productivity of our existing employees and to hire, train and manage new employees
as needed. To manage the expected growth of our operations and personnel, we may need to
improve our operational, financial and management controls and our reporting systems and
procedures. While our expansion plans would enable us to diversify and increase our current
revenue streams, the additional investments we make to this end will also increase our cost base,
which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses

63
in the short term. If we fail to successfully scale our operations and increase productivity or to meet
the demands of our newly diversified customer base, we will be unable to execute our expansion
plans successfully.

We face inherent risks from our joint ventures and other investments which we do not wholly
own

We have a joint venture with CYPR in respect of NHT, and may enter into future joint ventures or
make investments in entities that we do not wholly own or control. In 2018, we incorporated NHT in
Yizheng which manages and operates our production facility in Yizheng. NVC, NPC and CYPR
entered into a joint venture agreement on 20 September 2018 (the “NHT SHA”) to govern their
relationship in respect of NHT. See “Business—Our Business—Our Advanced Materials
BU—Applications of our Surface Solutions—(1) Automotive Industry” for further details of the
salient terms of the NHT SHA. NHT’s largest customer and supplier is CYPR, which holds a 49%
indirect interest in NHT. The landlord for our production facility in Yizheng is also one of the
shareholders of CYPR. NHT is therefore materially dependent on CYPR for its continued
operations, business and profitability. In the event CYPR decides to divest its interest in NHT,
cease its partnership with our Group, or if there are any adverse changes to our existing business
arrangement with CYPR, this may have a negative impact on NHT’s business, financial condition
and results of operations.

Joint ventures and such investments expose us to the inherent risk of disagreements with the other
investors regarding the business and operations of the joint venture and investee company that we
may not be able to resolve amicably. The other investors in these joint ventures or investee
companies may (i) have economic or business interests that conflict with our interests; (ii) take
action contrary to our instructions, requests, policies or objectives; (iii) be unable or unwilling to
fulfil their obligations; (iv) have financial difficulties; or (v) dispute the scope of their responsibilities
and obligations. Any of these and other factors may negatively affect the performance of our joint
ventures and investments, which may in turn negatively affect our business, financial condition,
results of operations and prospects.

We may not be able to successfully identify, acquire or integrate acquisition targets

While we have grown organically almost exclusively, we may, in the future, pursue acquisitions as
part of our growth strategy that may include acquisitions of complementary businesses in certain
geographies or exposure to certain industries, and acquisitions of companies with technologies
that are complementary to ours. See “Business—Our Strategies—Pursue strategic inorganic
opportunities through acquisitions and/or joint ventures”.

These transactions could be material to our business, financial condition, results of operations and
prospects. We may face difficulties identifying and acquiring suitable acquisition targets or
investments on attractive or commercially viable terms, and may face further difficulties arising
from integrating newly acquired businesses and facilities into our existing operations. We also
could experience negative effects on our results of operations and financial condition from
acquisition-related charges, amortisation of intangible assets and asset impairment charges, and
other issues that could arise in connection with, or as a result of, the acquisition of the acquired
company, including regulatory or compliance issues that could exist for an acquired company or
business and potential negative short-term effects on results of operations through increased costs
or otherwise. These effects, individually or in the aggregate, could cause a deterioration of our
credit profile and result in reduced availability of credit to us or increased borrowing costs and
interest expense in the future. Any such risks relating to future acquisitions could have a negative
effect on our business, financial condition, results of operations and prospects.

64
We may face difficulties as we expand our operations into countries in which we have no
prior operating experience

One of our growth strategies is to identify growth opportunities outside of jurisdictions in which we
currently operate in order to provide geographic breadth for our current and future customers. This
would involve expanding into countries and regions where we have less familiarity with local
regulations, environment and procedures. It may involve expanding into regions such as Europe
which have different cost structures, labour conditions, regulations and socioeconomic dynamics
than some of the countries in which we currently operate in Asia. As we expand our business into
new countries and regions, we may encounter economic, regulatory, personnel, technological and
other difficulties that increase our expenses or delay our ability to start up our operations or become
profitable in such countries. A failure to implement our growth strategy may negatively affect our
business, financial condition and results of operations.

Our historical financial and operating results are not indicative of our future performance

Our Company has navigated several challenging economic cycles over the course of its 21 years
of business operations since its incorporation in 1999, which we believe demonstrates our
resilience and ability to adapt to the changing business environment over the years. However, we
cannot assure you that our revenue and profits will grow at the same rate as in the past or that we
will be able to continue our performance in a manner consistent with our historical track record.

We are subject to foreign exchange translation risks and foreign exchange rate fluctuations

The reporting currency of our statutory financial statements is presented in S$. However, a
significant proportion of our subsidiaries’ functional currencies are in currencies other than S$,
such as US$, RMB and JPY, and must be translated into S$ for consolidation into our Group’s
consolidated financial statements. While our Group has not had a fixed hedging policy, our Group
regularly reviews and monitors its foreign currency exposure. Generally, monetary assets and
liabilities are translated from the respective functional currencies into S$ using the exchange rate
on the relevant reporting balance sheet date, while non-monetary assets and liabilities are
translated using their respective historical dates. Statements of comprehensive income are
generally translated using the average exchange rate for the reporting period. Any currency
exchange gain or loss arising from the translation process is recognised as other comprehensive
income and accumulated in the foreign currency translation reserve under equity. If the resulting
translation differences are significant, they may materially affect the results and shareholders’ fund
position of our Group. Further, the computation of bank covenants and debt servicing ratios may
also be affected.

In addition, our Group is exposed to foreign exchange risk on sales, purchases, cash and cash
equivalents, receivables and payables that are denominated in a currency other than the respective
functional currencies of our Group entities. Any decline in the value of S$, US$, RMB and JPY may
lead to a decrease in our net income and cash flow amounts.

Foreign exchange rate fluctuations may also cause increases in payments of interest expenses and
repayment of principal amounts on fixed obligations and indebtedness denominated in currencies
other than the functional currencies of our key subsidiaries which can and has had in the past a
significant impact on our results of operations. See “Management’s Discussion and Analysis of
Results of Operations and Financial Position—Foreign currency fluctuations” for further details. In
addition, transactions in our Shares on the SGX-ST will be settled in S$ and dividends we declare
will be in S$. Fluctuations in the exchange rate between the S$ and other currencies will affect the
equivalent in the S$ amount of any distributions or payments made to us by our subsidiaries, and
in turn will affect the amount of dividends we can declare in S$ to our Shareholders.

65
We are subject to stringent health, safety and environmental regulations and environmental,
social and governance risks

Our production and R&D facilities may contain, or their operations may utilise, certain materials,
processes or installations which are regulated pursuant to health, safety, environmental and other
similar laws and regulations, or may require environmental permits from regulatory authorities.
These items include, but are not limited to, the use of explosive precursors and certain noble gases.
We are also required to comply with laws, regulations and licence conditions which relate to the
management, handling, removal and disposal of hazardous or toxic substances and materials and
rectification of any non-compliance. As a result, we may also be liable for government fines and
damages for injuries to persons, natural resources and adjacent property.

Our operating expenses could be higher than anticipated due to the cost of complying with existing
and future environmental and occupational health and safety laws and regulations. Failure to
comply with these laws and regulations may expose us to fines or suspension by the relevant
authorities and could affect our reputation with our stakeholders and customers. Although we
actively take steps to comply with the laws and regulations in connection with such materials,
processes or installations, we cannot assure you that health, safety and environmental liabilities
will not exist in the future, or that any such liabilities will not be material to our business.

In addition, environmental, social and governance (“ESG”) matters are of increasing importance,
with companies facing heightened scrutiny for their performance on a variety of ESG matters, which
are considered to contribute to the long-term sustainability of companies’ performances. Such ESG
matters include climate change, diversity and inclusion, pollution and waste, exploitation of slave
labour and procuring of conflict minerals. Whilst we are subject to ESG audits by some of our major
customers (including our largest customer) on an annual basis to assess the adequacy of our
sustainability, human resource, diversity and inclusion, and environmental policies, we cannot
assure you that all of our customers and/or suppliers have such policies in place, or would be
similarly committed to implementing and maintaining such policies. We may therefore face
potential negative publicity based on the identity of those we choose to do business with and the
public’s (or certain segments of the public’s) view of those customers and suppliers arising from
various ESG matters, which may have a negative impact on our reputation and ability to attract and
retain customers and employees.

Our operations may be subject to transfer pricing adjustments by competent authorities

Transfer pricing regulations to which we are subject require that any transaction among us and our
subsidiaries be on arm’s length terms. We have engaged tax professionals in Singapore to advise
us on transfer pricing matters and to carry out transfer pricing review for our Singapore entities for
the financial years ended 31 December 2016, 2017 and 2018. We have also engaged tax
professionals in Singapore and Vietnam to conduct transfer pricing review for our Singapore
entities and our Vietnam entity for the financial year ended 31 December 2019 and is expected to
commence in the fourth quarter of 2020. Whilst transactions within our Group between our
subsidiaries have typically been conducted on normal commercial terms and notwithstanding that
our Group has not received a demand or challenge by any local tax authority for additional tax
payment arising from our transfer pricing arrangements to date, there is no assurance that the
relevant tax authorities in the jurisdictions in which we operate would not subsequently challenge
the appropriateness of our Group’s transfer pricing arrangement, determine that the transactions
among us and our subsidiaries do not meet the arms’ length criteria, or that the relevant regulations
or standards governing such arrangement will not be subject to future changes. Should the relevant
tax authorities find that the transfer prices and the terms that our Group has applied are not
appropriate, they may require our Group to re-assess the transfer prices and re-allocate the income
or adjust the taxable income. Any such reallocation or adjustment could result in a higher tax
liability for our Group and may adversely affect the business, financial condition and results of
operation of our Group.

66
RISKS RELATING TO THE PRC

We face uncertainties with respect to indirect transfers of equity interests in PRC resident
enterprises by their non-PRC holding companies

In October 2017, the State Administration of Taxation (the “SAT”) issued the Bulletin on Issues
Concerning the Withholding of Non-PRC Resident Enterprise Income Tax at Source (國家稅務總局
關於非居民企業所得稅源泉扣繳有關問題的公告) (“Bulletin 37”), amended on 15 June 2018, which
replaced the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers
by Non-PRC Resident Enterprises (國家稅務總局關於加強非居民企業股權轉讓所得企業所得稅管理的
通知) issued by the SAT on 10 December 2009 and partially replaced and supplemented by rules
under the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC
Resident Enterprises (國家稅務總局關於非居民企業間接轉讓財產企業所得稅若干問題的公告)
(“Bulletin 7”).

Bulletin 7 does not apply to transactions involving the sale of shares by investors through a public
stock exchange where such shares were acquired from a transaction through a public stock
exchange.

Pursuant to Bulletin 7, where a non-resident enterprise indirectly transfers properties such as

equity in resident enterprises without any justifiable business purposes and with an aim to avoid the
payment of Enterprise Income Tax, such as an indirect transfer must be reclassified as a direct
transfer of equity in a resident enterprise. To assess whether an indirect transfer of PRC taxable
properties has reasonable commercial purposes, all arrangements related to the indirect transfer
must be considered comprehensively and factors set forth in Bulletin 7 must be comprehensively
analysed in light of the actual circumstances.

In the case of an indirect offshore transfer of assets of a PRC establishment, the resulting gain is
to be included with the enterprise income tax filing of the PRC establishment or place of business
being transferred, and may consequently be subject to PRC enterprise income tax at a rate of
25.0% where such transfer of assets does not have a reasonable commercial purpose. Where the
underlying transfer relates to immovable properties located in the PRC or to equity investments in
a PRC-resident enterprise, which is not related to a PRC establishment or place of business of a
non-resident enterprise, a PRC enterprise income tax of 10.0% would apply where such transfer of
assets does not have a reasonable commercial purpose, and the party who is obligated to make the
transfer payments has the withholding obligation.

Pursuant to Bulletin 37, the withholding agent must declare and pay the withheld tax to the
competent tax authority in the place where such withholding agent is located within seven days
from the date of occurrence of the withholding obligation, while in the event that the withholding
agent fails to withhold the tax due or withhold the tax due in full, the transferor is required to declare
and pay such tax to the competent tax authority within the statutory time limit according to
Bulletin 7. Late payment of the applicable tax will subject the transferor to default interest.

There is uncertainty as to the application of Bulletin 37 or the rules under Bulletin 7, pursuant to
which, we may face uncertainties as to the reporting and other implications of future transactions
where PRC taxable assets are involved, such as offshore restructuring, or the sale of the shares in
our offshore subsidiaries or investments. Our Company may be subject to filing obligations or taxes
if our Company is the transferor in such transactions, and may be subject to withholding obligations
if our Company is the transferee in such transactions, under Bulletin 37 and Bulletin 7. For transfers
of Shares by investors that are non-PRC resident enterprises, our PRC subsidiaries may be
requested to assist with the filing under Bulletin 37 and Bulletin 7. As a result, we may be required
to expend valuable resources to comply with Bulletin 37 and Bulletin 7 or to request the relevant
transferors from whom we purchase taxable assets to comply with these Bulletins, or to establish
that our Company should not be taxed under these Bulletins, which may materially and adversely

67
affect our business, financial condition, results of operations and prospects. We understand that
Bulletin 37 and the previous rules under Bulletin 7 do not apply to the transactions involving our
PRC subsidiaries, as set out in “Management’s Discussion and Analysis of Results of Operations
and Financial Position—Contractual Commitments—Historical acquisitions, investments and
divestments”, which have complied with all the relevant PRC laws and regulations.

PRC regulations of loans to and direct investment in PRC entities by offshore holding
companies may delay or prevent us from transferring funds to our PRC subsidiaries

We may transfer funds to our PRC subsidiaries or finance their operations by means of loans or
capital contributions, including transferring the net proceeds from the issue of the New Cornerstone
Shares to our PRC subsidiaries upon completion of the Offering. According to the existing PRC
rules and regulations relating to supervision of foreign debt, loans by foreign companies to their
subsidiaries in the PRC are considered foreign debt, and such debt must be registered with the
relevant local branches of the State Administration of Foreign Exchange of the PRC (中華人民共和
國外匯管理局) (“SAFE”). In addition to the foregoing, according to the Notice of the People’s Bank
of China (“PBOC”) on Matters Concerning Macro-prudential Management on All-round Cross-
border Financing (中國人民銀行關於全口徑跨境融資宏觀審慎管理有關事宜的通知) and the Notice of
the PBOC and the SAFE on Adjustments to Macro-prudential Regulation Parameters for Full-
covered Cross-border Financing (中國人民銀行、國家外匯管理局關於調整全口徑跨境融資宏觀審慎
調節參數的通知), the limit for the total amount of foreign debt is 2.5 times of their respective net
assets. As at the Latest Practicable Date, none of our Company and our subsidiaries incorporated
outside of the PRC has provided loans to our PRC subsidiaries.

Furthermore, any capital contributions we make to our PRC subsidiaries are subject to the
requirement of necessary filings in the Enterprise Registration System and the National Enterprise
Credit Information Publicity system operated by the State Administration for Market Regulation and
registration with other governmental authorities in the PRC. Pursuant to the Notice on Further
Simplifying and Improving the Direct Investment Foreign Exchange Administration Policies (國家外
匯管理局關於進一步簡化和改進直接投資外匯管理政策的通知) issued by the SAFE on 13 February
2015, with effect from 1 June 2015 and amended on 30 December 2019, capital contributions that
we make to our PRC subsidiaries are exempted from the requirement of obtaining approval from
SAFE and need only be registered with the relevant banks.

On 30 March 2015, the SAFE promulgated the Circular on Reforming the Management Approach
Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises (國家外匯管
理局關於改革外商投資企業外匯資本金結匯管理方式的通知) (“SAFE Circular 19”). SAFE Circular 19
reforms the administration of the settlement of the foreign exchange capital of foreign-invested
enterprises by allowing foreign-invested enterprises to settle their foreign exchange capital at their
discretion, but it continues to prohibit foreign-invested enterprises from using RMB funds converted
from their foreign exchange capital for expenditures beyond their business scope. On 9 June 2016,
the SAFE promulgated the Circular on Reforming and Standardising the Administrative Provisions
over Capital Account Foreign Exchange (國家外匯管理局關於改革和規範資本項目結匯管理政策的通
知) (“SAFE Circular 16”). SAFE Circular 16 continues to prohibit foreign-invested enterprises from
using the RMB funds converted from its foreign exchange capital for expenditures beyond their
business scope, investment and financing (except for securities investment or non-guaranteed
bank products), providing loans to non-affiliated enterprises or constructing or purchasing real
estate other than for self-use. On 23 October 2019, the SAFE issued the Notice of SAFE on Further
Facilitating Cross-border Trade and Investment (國家外匯管理局關於進一步促進跨境貿易投資便利化
的通知), which, among others, expanded the use of foreign exchange capital to domestic equity
investments. Non-investment foreign-funded enterprises are allowed to lawfully make domestic
equity investments by using their capital on the premise of no violation of prevailing special
administrative measures for access of foreign investments (the Negative List (as defined herein))
and the authenticity and compliance with the regulations of domestic investment projects. SAFE
Circular 19 and SAFE Circular 16 and other relevant foreign exchange rules may significantly limit

68
our ability to transfer and use the net proceeds from the issue of the New Cornerstone Shares in the
PRC, which may adversely affect our business, financial condition, results of operations and
prospects.

Whilst we undertake to continue to take all necessary steps and submit all relevant applications to
the relevant government authorities in accordance with prevailing PRC laws and regulations for
capital contributions and loans (if any) to PRC subsidiaries following the Listing, there is no
assurance that we will be able to obtain these government registrations or approvals on a timely
basis, or at all. If we fail to receive such registrations or approvals, our ability to provide loans or
capital contributions to our PRC subsidiaries may be negatively affected, which could materially
and adversely affect our liquidity and our ability to fund and expand our business. Under such
circumstances, our business, financial condition, results of operations and prospects may be
materially and adversely affected.

Restrictions on our ability to convert RMB into foreign currency may adversely affect our
operations

Governmental authorities in certain countries in which we operate impose restrictions on the

convertibility of the local currency into foreign currencies. The PRC government imposes controls
on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency
out of the PRC. Shortages in the availability of foreign currency may restrict the ability of our PRC
subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or
otherwise satisfy their foreign currency denominated obligations. Under the existing PRC foreign
exchange regulations, payments of current account items, including profit distributions, interest
payments and expenditures from trade-related transactions, can be made in foreign currencies
without prior approval from the SAFE by complying with certain procedural requirements. However,
approval from or registration or filing with the relevant government authorities is required where
RMB is to be converted into foreign currency and remitted out of the PRC to pay capital expenses
such as the repayment of loans denominated in foreign currencies. The PRC government may also,
at its discretion, restrict access to foreign currencies for current account transactions in the future.
If the foreign exchange control system prevents us from obtaining sufficient foreign currency to
satisfy our currency demands, our business, financial condition, results of operation and prospects
may be adversely affected.

RISKS RELATING TO OUR OFFERING

Our founder and Executive Chairman, Dr Shi Xu, has considerable influence over important
shareholder matters due to his significant voting power over our shares

Immediately following the completion of the Offering and the issue and sale of the Cornerstone
Shares, our founder and Executive Chairman, Dr Shi Xu, is expected to have an interest (directly
and indirectly), in approximately 57.4% of our total issued share capital (assuming the Over-
allotment Option is not exercised) and approximately 55.1% of our total issued share capital
(assuming the Over-allotment Option is exercised in full). See “Share Capital and
Shareholders—Current Shareholders and Vendors” for further details.

Our founder and Executive Chairman will have the ability to exercise significant control over most
matters requiring shareholders’ approval, including the election and removal of Directors and the
approval of significant corporate transactions, as well as have veto power with respect to any
shareholder action or approval requiring a majority vote. This control could delay, defer or prevent
a change in control of our Company, impede a merger, consolidation, take-over or other business
combination involving our Company, or otherwise discourage a potential acquirer from making a
take-over offer or attempting to obtain control of our Company.

69
In addition, the master development and supply agreement entered into by us with our largest
customer (who is an end-customer) contains Material Divestment and Assignment Clauses. See
“—Our major end-customers have significant leverage over us under our contracts with them” for
details. While we believe that the Offering and Listing will not trigger the Material Divestment and
Assignment Clauses because Dr Shi Xu, our founder and Controlling Shareholder, will continue to
have a direct and deemed interest in more than 50% of our Shares post-Listing, we cannot assure
you that our customer will not take a different view, change their view and/or impose conditions
following the Listing, whether as a result of the Listing or any subsequent equity fund raising by our
Company or divestment of shares by our Controlling Shareholders. In particular, although our
founder and Controlling Shareholder, Dr Shi Xu, has agreed to lock-up arrangements with the Joint
Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and Underwriters in
relation to his Shares held at Listing for six months post-Listing (see “Plan of Distribution—No Sale
of Similar Securities and Lock-up” for further details), any divestment of Shares in which he has an
interest after the expiry of the lock-up may trigger the Material Divestment and Assignment
Clauses. If we are unable to obtain the consent of the customer or to comply with conditions
imposed by the customer in relation to such divestment, we may be subject to termination of the
customer relationship, as well as claims, litigation and other liabilities which may negatively affect
our business, financial condition, results of operations and prospects. The Material Divestment and
Assignment Clauses, due to the various requirements to obtain consent, may also delay, defer or
prevent a change in control of our Company, impede a merger, consolidation, take-over or other
business combination involving our Company, or otherwise discourage a potential acquirer from
making a take-over offer or attempting to obtain control of our Company.

Our Shares may not be a suitable investment for all investors

Each prospective investor in our Shares must determine the suitability of that investment in light of
its own circumstances. In particular, each prospective investor should:

• have sufficient knowledge and experience to make a meaningful evaluation of our Shares, our
Company, the merits and risks of investing in our Shares and the information contained in this
Prospectus;

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in our Shares and the effect an investment in our
Shares will have on its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in our
Shares, including where the currency of our Shares is different from the prospective investor’s
currency;

• understand thoroughly the terms of the Offering; and

• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for
economic and other factors that may affect its investment and its ability to bear the applicable
risks.

There has been no prior market for our Shares

Prior to the Offering, there has been no public market for our Shares, and an active public market
for our Shares may not develop or be sustained after the Offering. Although we have received a
letter of eligibility from the SGX-ST for the listing and quotation of our Shares on the Mainboard of
the SGX-ST, this should not be taken as an indication of the merits of the Offering, our Company
or our Shares, and we cannot assure you that an active public market for our Shares will develop
or be sustained after the Offering. The Offering Price of our Shares may not be indicative of prices
that will prevail in the trading market. You may not be able to resell our Shares at the Offering Price

70
or at a price that is attractive to you. The trading prices of our Shares could be subject to
fluctuations in response to variations in our results of operations, changes in general economic
conditions, changes in accounting principles or other developments affecting us, our customers or
our competitors, changes in financial estimates by securities analysts, the operating and stock
price performance of other companies and other events or factors, many of which are beyond our
control. Volatility in the price of our Shares may be caused by factors outside of our control or may
be unrelated or disproportionate to our results of operations. An inactive market may also impair
our ability to raise capital by selling Shares, and it may impair our ability to attract and motivate our
personnel through equity incentive awards.

Although it is currently intended that our Shares will remain listed on the SGX-ST, there is no
guarantee of the continued listing of our Shares. If our Shares are no longer listed on the SGX-ST,
there may be no active or liquid market for our Shares.

The market price of our Shares may fluctuate following the Offering

The market price of our Shares may fluctuate as a result of, among others, the following factors,
some of which are beyond our control:

• a change in conditions affecting our industry, general economic and stock market conditions,
stock market sentiments or other events or factors;

• variations in our results of operations;

• results of operations that vary from the expectations of securities analysts and investors;

• results of operations that vary from those of our competitors;

• changes in expectations as to our future financial performance, including financial estimates

by research analysts and investors;

• a change in research analysts’ recommendations or perceptions of our Company or industry;

• announcements by us or our competitors of significant acquisitions, strategic alliances, joint

operations or capital commitments;

• announcements by third parties or governmental entities of significant claims or proceedings

against us;

• new laws and governmental regulations applicable to our industry;

• additions or departures of key personnel;

• changes in exchange rates;

• negative publicity involving our Company, any of our Directors, Executive Officers or
Substantial Shareholders, whether or not justified;

• changes in market valuations and share prices of publicly listed companies that are engaged
in business activities perceived to be similar to ours;

• changes in accounting policies;

• involvement in litigation or arbitration;

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• fluctuations in stock market prices and volume; and

• success or failure of our management team in implementing business and growth strategies.

Any of the factors listed above could adversely affect the price of our Shares and we cannot assure
you that the price of our Shares will achieve or be maintained at any particular level.

Forward-looking statements in this Prospectus may not be accurate and are subject to
uncertainties and contingencies

This Prospectus contains forward-looking statements. All statements, other than statements of
historical facts included in this Prospectus, including, without limitation, those regarding our
financial position, business strategies, growth prospects, plans and objectives for future operations
are forward-looking statements. Such forward-looking statements are made based on numerous
assumptions that we believe to be reasonable as at the date of this Prospectus.

Forward-looking statements can be identified by the use of forward-looking terminologies, such as

the words “may”, “will”, “would”, “could”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “aim”,
“plan”, “forecast” or similar expressions, and include all statements that are not historical facts.
Such forward-looking statements are subject to known and unknown risks, uncertainties and other
contingencies that may cause our actual results, performance or achievements, or industry results,
to be materially different from any future results, performance or achievements expressed or
implied by such forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding our present and
future business strategies and the environment in which we will operate in the future. Such factors
include, among others, general economic and business conditions, competition, the impact of new
laws and regulations affecting our industry and initiatives of the governments of the countries in
which we operate.

In light of these uncertainties, the inclusion of such forward-looking statements in this Prospectus
should not be regarded as a representation or warranty by us or our advisers that such plans and
objectives will be achieved.

We may be constrained from paying dividends on our Shares from time to time, including
due to restrictions on our subsidiaries’ ability to make distributions to us

Our ability to declare dividends in relation to our Shares will depend on our future financial
performance that, in turn, depends on successfully implementing our strategy and on financial,
competitive, regulatory, technical and other factors, general economic conditions, demand and
selling prices of our products, and other factors specific to our industry, many of which are beyond
our control.

Further, a substantial portion of our Group’s business is operated through our Company’s operating
subsidiaries, including foreign subsidiaries. Our ability to declare dividends will also be dependent
on the ability of our subsidiaries to declare and pay us dividend distributions, distribute capital to us,
and/or make payment on shareholder loans. These are dependent on, among others, the terms of
any borrowing arrangements (if any) and other contractual obligations of the relevant subsidiaries.
Our principal operating subsidiaries may, from time to time, enter into loan facilities with various
banks and financial institutions pursuant to which the relevant subsidiary may be prohibited from
making any distribution (including dividends) unless the relevant bank or financial institution has
determined that such distribution will not affect the ability of that subsidiary from repaying that
particular loan.

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In addition, the ability of our operating subsidiaries (particularly our foreign subsidiaries) to declare
and pay us dividends or repatriate capital to us, may be subject to applicable laws and regulations,
or adversely affected by the passage of new laws, adoption of new regulations or changes to, or in
the interpretation or implementation of, existing laws and regulations and/or other events beyond
our control. For example, prior to Circular 06/2019/TT-NHNN being issued by the State Bank of
Vietnam on 26 June 2019 (the “Circular”) which came into effect on 6 September 2019, any capital
transfer in foreign invested enterprises in Vietnam is required to be conducted through the direct
investment capital account (“DICA”) opened at an authorised commercial bank rather than by way
of settlement offshore (unless approval of the State Bank of Vietnam is obtained). We acquired NFV
from MG Consulting Co., Ltd. pursuant to a capital transfer agreement dated 15 January 2019 and
the capital transfer was conducted via an offshore settlement account (instead of a DICA). Although
the current regulations are silent on the administrative penalty in respect of such non-compliance,
our Company may in future be unable to transfer the proceeds of any future sale of the equity in
NFV (where the purchaser is Vietnamese), repatriate capital or remit dividends from NFV out of
Vietnam, as such transfers, repatriation or remittance out of Vietnam may be subject to challenge
by the remittance bank which may require evidence of the payment of charter capital through a
DICA when NFV was acquired. Since its acquisition by our Company, NFV has not paid any
dividends. For the financial year ended 31 December 2019 and the six months ended 30 June 2020,
NFV recorded a net loss of US$1.7 million and US$0.8 million, respectively, and accordingly NFV’s
financial contribution to our Group was not considered material to our financial condition and
results of operations then.

While our Company’s legal advisers as to Vietnam Law has advised that our Company may be able
to transfer the proceeds of any future sale of the equity of NFV where the purchaser is a foreign
purchaser and payment is made by way of transactions outside of Vietnam, our Company may not
be able to transfer the proceeds of any future sale of the equity in NFV where the purchaser is
Vietnamese. In such event, our Company’s ability to sell its equity in NFV would be constrained.
Our Company’s legal advisers as to Vietnam law has also confirmed that our Company and/or other
entities within our Group would not be prevented from transferring funds to NFV by way of
shareholder loans, and NFV is able to transfer funds overseas to repay such loans as well as
interest on such loans. Further, our Company has also been informed by NFV’s bank that it will
allow NFV to remit money (including dividends) out of Vietnam. However, notwithstanding the
foregoing, we cannot assure you that NFV’s bank will not change its policy in future, and in the
event that our Company desires for NFV to remit money out of Vietnam, we cannot assure you that
such remittance of money outside of Vietnam will not be challenged by the remittance bank.

Our Company intends to seek professional advice prior to future investments or acquisitions of
foreign companies, to prevent similar issues from arising in the future. This will be overseen by our
Chief Executive Officer on an ongoing basis.

Our intended use of the proceeds from the issue of New Cornerstone Shares may not
materialise

We intend to use the proceeds due to us from the issue of New Cornerstone Shares for the
purposes and in the manner set out in “Use of Proceeds”. We do not currently have definite and
specific commitments for the entire proceeds due to us from the issue of the New Cornerstone
Shares, and our current intentions may not materialise and may be prohibited. As a result of the
number and variability of factors that determine our use of the proceeds due to us from the issue of
the New Cornerstone Shares, the actual uses may vary substantially from our current intentions. In
such event, as we have broad discretion in the way we invest or spend the proceeds due to us from
the issue of the New Cornerstone Shares, we cannot assure you that we will invest or spend the
proceeds in ways which you agree with or which you believe will have the most beneficial effect on
our profitability.

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You will suffer immediate dilution, and may experience further dilution, in the net asset value
of our Shares and your equity interest may also be diluted as a result of future rights
offerings or other equity issuances we may make

The Offering Price of our Shares is higher than our net asset value (“NAV”) per Share. Dilution is
determined by subtracting the NAV per Share immediately after completion of the Offering from the
Offering Price paid by the new investors. NAV per Share is determined by subtracting total liabilities
and minority interests from total assets, and dividing the difference by the number of Shares
deemed to be outstanding on the date as at which the book value is determined. Since the Offering
Price per Share exceeds the NAV per Share immediately after the Offering, there is an immediate
and substantial dilution for investors who participate in the Offering. Investors who invest in the
Offering Shares will therefore experience immediate dilution in NAV per Share of our Shares that
they own. Further, investors may experience dilution in the event that the Shares are issued to MG
Holdings pursuant to the Share Swap (as defined herein) (“Swap Shares”) in accordance
with the terms of the NFT SHA (as defined herein). See “Dilution” and “Share Capital and
Shareholders—Change in Control of our Company” for further details.

In addition, we may, in the future, expand our capabilities and business through acquisitions, joint
ventures and strategic partnerships with parties who can add value to our business. We may also
require additional equity funding after the Offering, as permitted by our Constitution. If we choose
to issue new Shares in order to finance future expansion and acquisitions, our Shareholders will
face dilution of their shareholdings. If we fail to utilise the additional equity funding to generate a
commensurate increase in earnings, this will also lead to a dilution in our earnings per Share and
could lead to a decline in our Share price.

Overseas Shareholders may not be able to participate in future rights offerings or certain
other equity issues by us

We may, in the future, expand our capabilities and business through acquisitions, joint ventures
and strategic partnerships with parties who can add value to our business. We may also require
additional equity funding after the Offering. If we choose to issue new Shares in order to finance
future expansion, acquisition, joint ventures and strategic partnerships, our Shareholders will face
dilution of their shareholdings.

If we offer, or cause to be offered, to our Shareholders rights to subscribe for additional Shares or
any rights of any other nature, we will have the discretion as to the procedure to be followed in
making such rights available to our Shareholders or in disposing of such rights for the benefit of
such Shareholders and making the net proceeds available to such Shareholders. In relation to any
rights issue or preferential offering of Shares, we may, in our absolute discretion, elect not to
extend an offer of the Shares under a rights issue or, as the case may be, preferential offering to
those Shareholders whose addresses, as registered with CDP or recorded in our register of
members, are outside Singapore. Accordingly, such Shareholders may be unable to participate in
rights offerings and may experience a dilution in their shareholdings as a result.

Sales or possible sales of a substantial number of Shares by us or our significant

Shareholders following the Offering could adversely affect the market price of the Shares

The Shares will be traded on the Mainboard of the SGX-ST. For varying periods from the Listing
Date, we and certain of our Shareholders are restricted from selling Shares. See “Plan of
Distribution—No Sale of Similar Securities and Lock-up” for further details.

Any future sale or an increased availability of Shares may have a downward pressure on their price.
The sale of a significant number of Shares in the public market after the Offering, including by our
controlling Shareholders, as well as non-controlling but otherwise significant Shareholders, or the
issue of further new securities by us, or the perception that such sales or issues may occur, could

74
materially affect the market price of the Shares. These factors also affect our ability to sell
additional equity securities at a time and at a price favourable to us. The Shares may also be sold
outside the United States, subject to the restrictions of Regulation S. Except as otherwise
described in “Plan of Distribution—No Sale of Similar Securities and Lock-up”, there will be no
restriction on the ability of our Shareholders to sell their Shares either on the SGX-ST or otherwise.

Singapore take-over laws contain provisions which may vary from those in other
jurisdictions

We are subject to the Singapore Code on Take-Overs and Mergers (the “Singapore Take-Over
Code”). The Singapore Take-Over Code contains certain provisions that may possibly delay, deter
or prevent a future take-over or change in control of us. Under the Singapore Take-Over Code,
except with the consent of the Securities Industry Council of Singapore (the “SIC”), any person
acquiring an interest, whether by a series of transactions over a period of time or not, either on his
own or together with parties acting in concert with him, in 30.0% or more of our Shares, is required
to extend a take-over offer for our remaining Shares in accordance with the Singapore Take-Over
Code. Except with the consent of the SIC, such a take-over offer is also required to be made if a
person holding between 30.0% and 50.0% (both inclusive) of our Shares, either on his own or
together with parties acting in concert with him, acquires additional voting Shares representing
more than 1.0% of our voting Shares in any six months period.

While the Singapore Take-Over Code seeks to ensure an equality of treatment among
shareholders, its provisions could substantially impede the ability of the shareholders to benefit
from a change of control and, as a result, may adversely affect the market price of our Shares and
the ability to realise any benefits from a potential change of control.

Additionally, immediately following completion of the Offering and the issue and sale of the
Cornerstone Shares, Dr Shi Xu, our founder and Executive Chairman and Controlling Shareholder,
will have an interest (including interest in approximately 8.8% of our outstanding shares in which his
spouse, Mdm Jin Xiao Qun, has an interest) in approximately 57.4% of our outstanding Shares,
assuming the Over-allotment Option is not exercised, or approximately 55.1% of our outstanding
Shares assuming the Over-allotment Option is exercised in full. This concentration of ownership
could delay, defer or prevent a change in control of our Company or a successful offer under the
Singapore Take-Over Code by another person. Further, if Dr Shi Xu’s interest in our outstanding
Shares post-Listing (excluding the 8.8% interest of his spouse, Mdm Jin Xiao Qun) is more than
50%, he will not be subject to the obligation under the Singapore Take-Over Code to make a
general offer if he acquires additional Shares.

We are not able to guarantee the accuracy of third-party information

Market data and certain information and statistics relating to us and general market or industry data
are derived from both public and private sources, including market research, publicly available
information and industry publications. While we have taken reasonable care to ensure that the facts
and statistics presented are accurately reproduced from such sources, they have not been
independently verified by us, the Vendors, the Financial Adviser, the Joint Issue Managers, the
Joint Global Coordinators or the Joint Bookrunners and Underwriters, and therefore, we make no
representation as to the accuracy of such facts and statistics, which may not be consistent with
other information compiled within or outside Singapore. Due to possibly flawed or ineffective
calculation and collection methods and other problems, the facts and statistics herein may be
inaccurate or may not be comparable to facts and statistics produced for other economies and
should not be unduly relied upon. Further, we cannot assure you that the facts and statistics are
stated or compiled on the same basis or with the same degree of accuracy as may be the case
elsewhere.

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 DIVIDENDS

Statements contained in this section that are not historical facts are forward-looking statements.
Such statements are subject to certain risks and uncertainties which could cause actual results to
differ materially from those which may be forecast and projected. Under no circumstances should
the inclusion of such information herein be regarded as a representation, warranty or prediction
with respect to the accuracy of the underlying assumptions by us, the Vendors, the Financial
Adviser, the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners
and Underwriters or any other person. Investors are cautioned not to place undue reliance
on these forward-looking statements that speak only as at the date hereof. See “Notice to
Investors—Forward-Looking Statements”.

PAST DIVIDENDS

For the financial year ended 31 December 2017, our Company declared interim dividends to our
Shareholders of (a) approximately S$2.2 million (which translates to S$0.15 per Share) on
20 March 2017; and (b) approximately S$1.4 million (which translates to S$0.10 to per Share) on
15 September 2017.

For the financial year ended 31 December 2018, our Company declared dividends to our
Shareholders of approximately S$25.0 million (which translates to S$0.049 per Share) on 5 June
2018.

For the financial year ended 31 December 2019, our Company declared an interim dividend to our
Shareholders of approximately S$9.5 million (which translates to approximately S$0.019 per
Share) on 10 May 2019.

For the period from 1 January 2020 to the Latest Practicable Date, our Company declared an
interim dividend to our Shareholders of approximately S$9.6 million (which translates to
approximately S$0.019 per Share) on 2 June 2020, which was paid out on 2 July 2020 (the “Interim
Dividend”).

DIVIDEND POLICY

Our Company currently does not have a fixed dividend policy. The declaration and payment of
future dividends may be recommended by our Board at their discretion, after considering a number
of factors, including our level of cash and reserves, results of operations, business prospects,
capital requirements and surplus, general financial condition, contractual restrictions, the absence
of any circumstances which might reduce the amount of reserves available to pay dividends, and
other factors considered relevant by our Board, including our expected financial performance.

We currently intend to utilise and/or reinvest any profits generated in the financial year ending
31 December 2020 from our operations in our business (including financing acquisition activities)
and, save for the payment of the Interim Dividend, do not intend to pay any dividends to
Shareholders with respect to our profits generated in the financial year ending 31 December 2020.
Moving forward, our Board intends to recommend and distribute dividends of at least 20% of our net
profit after tax (excluding exceptional items) generated in the financial year ending 31 December
2021, as we wish to reward our Shareholders for participating in our Group’s growth. Investors
should note that the foregoing statements are merely statements of our present intention and shall
not constitute legally binding obligations on our Company or legally binding statements in respect
of our future dividends (including those proposed for the financial year ending 31 December 2021),
which may be subject to modification (including reduction or non-declaration thereof) in our
Directors’ sole and absolute discretion. Investors should also not treat the proposed dividends for
the financial year ending 31 December 2021 as an indication of our future dividend policy.

76
Any final dividends we declare must be approved by an ordinary resolution of our Shareholders at
a general meeting. All dividends must be paid out of our profits available for distribution. We are not
permitted to pay dividends in excess of the amount recommended by our Board. Our Board may,
without the approval of our Shareholders, also declare interim dividends.

We cannot assure you that dividends will be paid in the future or as to the timing of any dividends
that are to be paid in the future. No inference should or can be made from any of the foregoing
statements as to our actual future profitability or ability to pay dividends.

77
 CAPITALISATION AND INDEBTEDNESS

The table below sets forth the capitalisation and indebtedness of our Group as at 31 August 2020:

• on an actual basis; and

• as adjusted to reflect the issue of 4,868,000 Shares in October 2020 under the Pre-IPO ESOS,
the Conversion Shares and the New Cornerstone Shares at the Offering Price, and the
application of net proceeds from the issue of the New Cornerstone Shares due to us in the
manner described in “Use of Proceeds”.

You should read this table in conjunction with “Use of Proceeds”, “Selected Consolidated Financial
Information”, “Management’s Discussion and Analysis of Results of Operations and Financial
Position” and our consolidated financial statements and the related notes thereto included
elsewhere in this Prospectus.

As at 31 August 2020

Actual Adjusted(1)

(S$) (S$)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . 32,837,505 225,927,380

Indebtedness
Current loans and borrowings
Secured
Guaranteed . . . . . . . . . . . . . . ..................... — —
Non-guaranteed . . . . . . . . . . . ..................... — —
Unsecured
Guaranteed . . . . . . . . . . . . . . ..................... — —
Non-guaranteed . . . . . . . . . . . ..................... 66,576,475 16,608,828
Non-current loans and borrowings
Secured
Guaranteed . . . . . . . . . . . . . . ..................... 9,523,917 9,523,917
Non-guaranteed . . . . . . . . . . . ..................... — —
Unsecured
Guaranteed . . . . . . . . . . . . . . ..................... — —
Non-guaranteed . . . . . . . . . . . ..................... 4,178,946 4,178,946

Total indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,279,338 30,311,691

Shareholders’ equity:
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,301,965 269,396,547
Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,738,915 844,552
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,519,622 124,310,438

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . 150,560,502 394,551,537

Total capitalisation and indebtedness . . . . . . . . . . . . . . . . 230,839,840 424,863,228

Note:

(1) Adjusted to reflect the issue of 4,868,000 Shares in October 2020 under the Pre-IPO ESOS, 53,630,290 Conversion
Shares and 77,220,100 New Cornerstone Shares at the Offering Price, and the application of the net proceeds from the
issue of the New Cornerstone Shares in the manner described in “Use of Proceeds”, after deducting the underwriting
commissions and other estimated expenses payable by us in relation to the Offering and the issue of the New
Cornerstone Shares (but excluding discretionary incentive fees which we may pay).

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Except as described above and in the section titled “Management’s Discussion and Analysis of
Results of Operations and Financial Position—Borrowings”, there has been no material change in
our capitalisation and indebtedness since 31 August 2020. See the section entitled “Management’s
Discussion and Analysis of Results of Operations and Financial Position—Borrowings” of this
Prospectus for a description of our borrowings.

Contingent Liabilities

We do not have any contingent liabilities as at the Latest Practicable Date.

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 USE OF PROCEEDS

Based on the Offering Price of S$2.59 for each Offering Share, the estimated net proceeds from the
Offering and the issue and sale of the Cornerstone Shares (after deducting underwriting
commissions and estimated offering expenses payable by us and the Vendors but excluding
any discretionary incentive fees) will be approximately S$452.5 million (assuming that the
Over-allotment Option is not exercised), of which approximately S$190.9 million from the issue of
the New Cornerstone Shares will be due to us. If the Over-allotment Option is exercised in full, the
net proceeds from the Offering and the issue and sale of the Cornerstone Shares will be
approximately S$491.5 million.

We will not receive any proceeds from the Offering, the sale of the Vendor Cornerstone Shares and
the exercise of the Over-allotment Option granted by the Over-allotment Option Grantor.

USE OF PROCEEDS

We intend to use the net proceeds due to us from the issue of the New Cornerstone Shares
primarily for the following purposes:

• capital expenditure on development and building of new machinery for our Advanced
Materials BU (1) and purchase of new machinery for our Nanofabrication BU (2);

• R&D and engineering for entry into new end-industries and new areas and/or products in
existing markets;

• construction, refurbishment and renovation of new and existing production facilities; and

• general corporate and working capital purposes.

Notes:

(1) Part of the net proceeds is intended to be utilised to partially fund our Company’s expected capital expenditure in
developing and building additional coating equipment by our Industrial Equipment BU for our Advanced Materials BU
in connection with the continued expansion of our Advanced Materials BU.

(2) Part of the net proceeds is intended to be utilised for the purchase of new machinery to support our Company’s plans
to expand our Nanofabrication BU and move into the mass production phase. As at the date of this Prospectus, our
Company has not entered into any contractual commitments in relation to the purchase of any machinery using the
proceeds from the issue of the New Cornerstone Shares.

The estimated gross proceeds from the Offering and the issue and sale of the Cornerstone Shares
will be approximately S$470.1 million (assuming that the Over-allotment Option is not exercised).
For each Singapore dollar of the gross proceeds due to us from the issue of the New Cornerstone
Shares, we intend to use the following amounts for the purposes set out below:

As a dollar amount
for each S$1.00 of
the gross proceeds due
to us from the issue of the
New Cornerstone Shares
Application (S$ in millions) (S$)

Capital expenditure on development and building of

new machinery for our Advanced Materials BU and
purchase of new machinery to support our
Nanofabrication BU . . . . . . . . . . . . . . . . . . . . . . . . . 90.0 0.45
R&D and engineering for entry into new end industries
and new areas and/or products in existing business
segments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0 0.25
Construction, refurbishment and renovation of new
and existing production facilities . . . . . . . . . . . . . . . 30.0 (1) 0.15

80
 As a dollar amount
for each S$1.00 of
the gross proceeds due
to us from the issue of the
New Cornerstone Shares
Application (S$ in millions) (S$)

General corporate and working capital purposes . . . . 20.9 0.10

Payment of underwriting commissions and offering
expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 0.05

Gross proceeds due to us from the issue of the

New Cornerstone Shares . . . . . . . . . . . . . . . . . . . 200.0 1.00

Note:
(1) S$20 million of the gross proceeds will be utilised for the renovation (including refurbishment, furniture and fittings) of
Shanghai Plant 2. See “Management’s Discussion and Analysis of Results of Operations and Financial
Position—Contractual Commitments” for further details.

The foregoing represents our best estimate of our allocation of the proceeds due to us from the
issue of the New Cornerstone Shares based on our current plans and estimates regarding our
anticipated expenditures. Actual expenditures may vary from these estimates and we may find it
necessary or advisable to re-allocate our net proceeds within the categories described above or
use portions of our net proceeds for other purposes. In the event that we decide to re-allocate our
net proceeds or use portions of it for other purposes, we will publicly announce our intention to do
so through a SGXNET announcement to be posted on the internet at the SGX-ST website
http://www.sgx.com.

Pending the use of the net proceeds in the manner described above, we may also use the net
proceeds for working capital, place the funds in short-term deposits with banks and financial
institutions or use the funds to invest in short-term money market instruments, as our Directors may
deem appropriate in their absolute discretion.

We will make periodic announcements on the use of proceeds as and when material amounts of
proceeds from the issue of the New Cornerstone Shares are disbursed, and provide a status report
on the use of proceeds in our annual report.

EXPENSES

We estimate that the costs and expenses payable by us in connection with the Offering, the issue
of the New Cornerstone Shares and the application for Listing, including the underwriting and
placement commission and all other incidental expenses relating to the Offering and the issue of
the New Cornerstone Shares (but excluding discretionary incentive fees which we may pay, and
underwriting commissions, professional fees and expenses attributable to and payable by the
Vendors) will be approximately S$9.1 million. A breakdown of these estimated expenses is as
follows:
As a percentage of the
gross proceeds from the
Estimated issue of the New
Expenses(1) Cornerstone Shares

(S$ in millions)

Listing and application fees . . . . . . . . . . . . . . . . . . . . 0.2 0.1%

(2)
Underwriting and placement commission ........ 5.3 2.7%
Professional fees (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 1.6%
(4)
Miscellaneous expenses ..................... 0.4 0.2%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 4.6%

81
Notes:

(1) Includes GST.

(2) Based on the number of New Cornerstone Shares, the underwriting and placement commission payable in connection
with the issue of the New Cornerstone Shares amounts to 2.5% of the gross proceeds of the issue of the New
Cornerstone Shares, excluding GST (which amounts to S$0.06 per New Cornerstone Share). This translates to S$5.3
million when GST is included, which amounts to 2.7% of the gross proceeds of the issue of the New Cornerstone
Shares (which amounts to S$0.07 per New Cornerstone Share). The underwriting and placement commission excludes
any discretionary incentive fees payable to the Joint Bookrunners and Underwriters. For more details on such
discretionary fee, see the description below.
(3) Includes solicitors’ fees and fees for the Independent Auditors and Reporting Accountants, the Independent Market
Research Consultant and other professionals’ fees (but does not include professional fees and expenses attributable
to and payable by the Vendors).
(4) Includes the cost of the production of this Prospectus, roadshow expenses and certain other expenses incurred or to
be incurred in connection with the Offering and the issue of the New Cornerstone Shares (but does not include expense
attributable to and payable by the Vendors).

The Vendors will pay the Joint Bookrunners and Underwriters, as compensation for their services
in connection with the Offering, underwriting fees (including GST) amounting to 2.7% of the total
gross proceeds from the sale of the Offering Shares, the Vendor Cornerstone Shares and the
Additional Shares (if the Over-allotment Option is exercised). These underwriting fees will amount
to S$0.07 (including GST) per Offering Share, Vendor Cornerstone Share or Additional Share (if
the Over-allotment Option is exercised). The professional and other Offering-related expenses
which are payable by the Vendors (excluding underwriting fees and any discretionary incentive fee)
are estimated to amount to approximately S$1.2 million (including GST).
We may, at our sole discretion, pay the Joint Bookrunners and Underwriters a discretionary
incentive fee of up to 0.5% of the gross proceeds from the issue of the New Cornerstone Shares.
The discretionary incentive fee, if it is to be paid to the Joint Bookrunners and Underwriters, will
amount to up to S$0.01 per New Cornerstone Share (including GST).
The Vendors may, at their sole discretion, pay the Joint Bookrunners and Underwriters a
discretionary incentive fee of up to 0.5% of the gross proceeds from sale of the Offering Shares, the
Vendor Cornerstone Shares and Additional Shares (if the Over-Allotment Option is exercised). The
discretionary incentive fee, if it is to be paid to the Joint Bookrunners and Underwriters, will amount
to up to S$0.01 per Offering Share, Vendor Cornerstone Share or Additional Share (including
GST).
Purchasers of the Placement Shares will be required to pay to the Joint Bookrunners and
Underwriters a brokerage fee of up to 1.0% of the Offering Price, as well as stamp duty and other
similar charges to the relevant authorities in accordance with the laws and practices of the country
of purchase, at the time of settlement.
No fee is payable by applicants for the Public Offer Shares, save for an administration fee of S$2.00
for each application made through ATMs or the internet banking websites of the Participating
Banks.
See “Plan of Distribution” for further details.

82
 DILUTION

If you invest in the Offering Shares, your interest will be diluted to the extent of the difference
between the Offering Price per Offering Share and the NAV per Share immediately after the
completion of the Offering and the issue and sale of the Cornerstone Shares. Dilution is determined
by subtracting the NAV per Share immediately after completion of the Offering and the issue and
sale of the Cornerstone Shares from the Offering Price paid by the new investors in the Offering.
NAV per Share is determined by subtracting total liabilities and minority interests from total assets,
and dividing the difference by the number of Shares deemed to be outstanding on the date as of
which the book value is determined.

The NAV per Share of our Company as at 30 June 2020 was S$0.26 per Share. The pro forma NAV
per Share of our Company as at 30 June 2020 (after adjusting for the issue of 6,104,000 Shares in
July 2020 and 4,868,000 Shares in October 2020 under the Pre-IPO ESOS, the Conversion Shares
and the New Cornerstone Shares) was S$0.59.

The Offering Price of S$2.59 exceeds the pro forma NAV per Share of S$0.59 per Share as at
30 June 2020 (after adjusting for the issue of 6,104,000 Shares in July 2020 and 4,868,000 Shares
in October 2020 under the Pre-IPO ESOS, the Conversion Shares and the New Cornerstone
Shares) by approximately 338.98%. This represents an immediate and substantial dilution to new
investors.

The following table illustrates this per Share dilution:

Offering Price per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S$

. 2.59
NAV per Share as at 30 June 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S$
. 0.26
(1)
Pro forma adjusted NAV per Share as at 30 June 2020 , as further adjusted for
the issue of 6,104,000 Shares in July 2020 and 4,868,000 Shares in October 2020
under the Pre-IPO ESOS, the Conversion Shares, and the New Cornerstone
Shares (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S$
. 0.59
Dilution in adjusted NAV per Share to new investors . . . . . . . . . . . . . . . . . . . . . . . . . .S$
. 2.00
Percentage dilution in adjusted NAV per Share to new investors . . . . . . . . . . . . . . . . . . 338.98%

Notes:

(1) Based on the unaudited pro forma consolidated financial information of our Group for the financial year ended
31 December 2019 and the six months ended 30 June 2020 as set out in Appendix C of this Prospectus.

(2) Does not take into account our actual financial performance after 30 June 2020. Depending on our actual financial
performance, our NAV per Share may be higher or lower than the NAV per Share set out above.

83
The following table summarises the total number of Shares acquired by our Directors and
Substantial Shareholders and their associates (where applicable) during the period of three years
prior to the date of lodgment of this Prospectus or which they have the right to acquire, the total
consideration paid by them and the effective cash cost per Share to them, where there was a
disparity between the effective cash cost per Share to them and the Offering Price per Share:
Number of
Shares acquired
or which they
have the right Effective cash
to acquire Total consideration cost per Share
Directors and their Associates
Mr Lee Liang Huang
Acquisition from shareholder (2) . . . . . 15,183,840 (1) S$1,000,000 S$0.0659 (1)
Acquisition in connection with
Pre-IPO ESOS . . . . . . . . . . . . . . . . 1,610,000 (1) S$629,280 S$0.391 (1)
Substantial Shareholders
(other than Directors) and
their Associates
Harrymore International Limited
Acquisition in connection with vesting
of awards granted under the
Nanofilm Pre-IPO Restricted Share
Plan
2020 (3) . . . . . . . . . . . . . . . . . . . . . . 5,254,000 Nil Nil
Acquisition in connection with
exercise of options granted under
the Pre-IPO ESOS (3) . . . . . . . . . . . 5,741,000 S$3,368,818.80 S$0.5868
Acquisition in connection with
exercise of options granted under
the Pre-IPO ESOS (3) . . . . . . . . . . . 400,000 S$237,080 S$0.5927
Acquisition in connection with
exercise of options granted under
the Pre-IPO ESOS (3) . . . . . . . . . . . 4,868,000 S$2,856,542.40 S$0.5868
Mr Jin Xiaozhe
Acquisition from shareholder (4) . . . . . 286,000 S$100,100 S$0.35
Options granted under the Pre-IPO Not
ESOS . . . . . . . . . . . . . . . . . . . . . . . 1,466,000 S$1.00 applicable
Vanda 1 Investments Pte. Ltd. (5) . . . . . 10,940,579 S$10,200,000 S$0.93230898
Orchid 2 Investments Pte. Ltd. (5) . . . . . 7,293,719 S$6,800,000 S$0.93230902
New investors pursuant to the
Offering and the issue and sale of
the Cornerstone Shares . . . . . . . . . . 181,492,300 S$470,065,057.00 S$2.59

Notes:
(1) For comparison purposes, adjusted to reflect the sub-division of one existing Share into 35 ordinary Shares on 6 March
2018 (the “Share Split”).
(2) Comprises 433,824 Shares (on a pre-Share Split basis) acquired from Dr Shi Xu for a cash consideration of
S$1,000,000 on 19 December 2017.
(3) These Shares were issued pursuant to the vesting of awards granted under the Nanofilm Pre-IPO Restricted
Share Plan 2020 to certain of our employees and the exercise of options granted under the Pre-IPO ESOS by certain
of our employees and are held by Harrymore International Limited on account for such employees, including
Mr Lee Liang Huang and Mr Jin Xiaozhe. As at the date of lodgment of this Prospectus, each of Mr Lee Liang Huang
and Mr Jin Xiaozhe has the right to have 3,255,000 Shares and 4,234,000 Shares held by Harrymore International
Limited transferred to him or to his order, respectively.
(4) Comprises 286,000 Shares acquired from Mdm Jin Xiao Qun for a cash consideration of S$100,100 on 28 May 2020.
(5) Each of Vanda 1 Investments Pte. Ltd. (“Vanda 1”) and Orchid 2 Investments Pte. Ltd. (“Orchid 2”) is an associate of
Temasek Holdings (Private) Limited (“Temasek”), and holds Convertible Notes which will be converted into Conversion
Shares immediately prior to the Listing. See “—Convertible Notes” for further details on the Convertible Notes and
Conversion Shares. Vanda 1 and Orchid 2 are managed and controlled by Heliconia Capital Management Pte. Ltd
(“Heliconia”), an independently-managed subsidiary of Temasek. Temasek will be our Substantial Shareholder
immediately after completion of the Offering and the issue and sale of the Cornerstone Shares.

84
Convertible Notes

In addition, our Company, Dr Shi Xu and Pearl Yard Holdings Inc. entered into:

(a) a subscription agreement dated 22 May 2018 (the “T1 Subscription Agreement”) with Vanda
1, Orchid 2, ICH Gemini Asia Growth Fund Pte. Ltd., ASEAN China Investment Fund III L.P.,
ASEAN China Investment Fund (US) III L.P. and UVM 3 Venture Investments LP (together,
the “T1 Subscribers”); and

(b) a subscription agreement dated 6 June 2018 (together with the T1 Subscription Agreement,
the “Subscription Agreements”) with EDB Investments Pte Ltd (together with the T1
Subscribers, the “Subscribers”).

Pursuant to the Subscription Agreements, our Company issued S$50.0 million in aggregate
principal amount of convertible notes with a maturity date of 20 June 2021 (the “Convertible
Notes”) to the Subscribers. The interest payable on the Convertible Notes is the higher of (i) 2.00%
per annum on the principal amount of the outstanding Convertible Notes; and (ii) in the event of any
declaration of cash dividends (excluding certain distributions) by our Company in the relevant
interest period, the aggregate cash dividends (excluding certain distributions) that would be
payable on the Conversion Shares had all the Convertible Notes been converted at the beginning
of the interest period. For the financial years ended 31 December 2018 and 2019 and from
1 January 2020 to the Latest Practicable Date, our Company had incurred interest payments of
S$0.6 million, S$1.0 million and S$0.75 million on the Convertible Notes, respectively.

Pursuant to the Subscription Agreements, each of the Subscribers has the right, at its sole option,
to convert the outstanding principal amount of the Convertible Notes held by it into Shares in one
or more occasions at any time on and from the date of issue of the Convertible Notes and up to
(but excluding) the maturity date of the Convertible Notes (“Subscriber Conversion Right”). In
addition, our Company has the right, at its sole option to convert the outstanding principal amount
of the Convertible Notes into Shares (the “Conversion Shares”) at the conversion price of
S$0.93230903 (“Conversion Price”) per Conversion Share (the “Mandatory Conversion Right”).
The Subscription Agreements were negotiated by the parties on an arm’s length basis.

As at the date of this Prospectus, our Company has elected to exercise the Mandatory Conversion
Right, pursuant to which an aggregate of 53,630,290 Conversion Shares will be issued at the
Conversion Price to the Subscribers immediately prior to Listing and in accordance with the
relevant terms and conditions set out in the Subscription Agreements.

Pre-IPO ESOS, ESOS and Share Swap

Further, the issue of the Pre-IPO Option Shares pursuant to the exercise of options granted under
the Pre-IPO ESOS, the issue of the Option Shares pursuant to the exercise of options which may
be granted under the ESOS and the issue of new Shares pursuant to the Share Swap would have
a further dilutive effect on investors in the Offering. See “Management—Nanofilm Pre-IPO
Employee Share Option Scheme 2017”, “Management—Nanofilm Employee Share Option
Scheme”, “Appendix E—List of Outstanding Share Options under the Pre-IPO ESOS” and
“Appendix F—Rules of the Nanofilm Employee Share Option Scheme” for more details on the
Pre-IPO ESOS and the ESOS and “Share Capital and Shareholders—Change in Control of our
Company” for more details on the Share Swap.

85
 SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following selected consolidated financial data should be read in conjunction with
“Management’s Discussion and Analysis of Results of Operations and Financial Position”, our
audited consolidated financial statements for the financial years ended 2017, 2018 and 2019,
unaudited condensed interim consolidated financial statements for the six months ended 30 June
2020 and the accompanying notes and the related auditor’s reports as set out in Appendices A and
B of this Prospectus.

SELECTED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER

COMPREHENSIVE INCOME

Audited Unaudited

For the financial year ended 31 December For the six months ended 30 June

2017 2018 2019 2019 2020

S$ S$ S$ S$ S$

Revenue . . . . . . . . . . . . . 103,603,553 122,844,245 142,908,469 55,235,147 77,827,957

Cost of sales . . . . . . . . . . . (45,721,362) (56,639,303) (65,244,940) (26,652,983) (36,914,733)

Gross profit . . . . . . . . . . . . 57,882,191 66,204,942 77,663,529 28,582,164 40,913,224

Other operating income . . . 1,028,261 648,585 1,906,881 1,356,236 2,610,819
Finance income . . . . . . . . . 186,239 364,320 507,050 197,448 166,659
Expenses:
Selling and distribution . . . . (8,642,326) (11,486,047) (16,770,511) (7,118,610) (8,990,972)
Administrative . . . . . . . . . . (17,399,953) (18,828,785) (21,125,468) (9,523,500) (11,251,127)
Finance . . . . . . . . . . . . . . (1,069,189) (1,111,416) (1,376,268) (623,780) (888,257)
Other operating . . . . . . . . . — — (871,759) — —
Impairment loss allowance
on trade receivables . . . . — (416,913) (37,091) — —
Share of loss of associated
company . . . . . . . . . . . . — (433,120) (1,054) (1,054) —

Profit before income tax . . 31,985,223 34,941,566 39,895,309 12,868,904 22,560,346

Income tax expenses . . . . . (5,050,837) (5,631,424) (5,354,550) (2,002,142) (4,023,166)

Profit after income tax . . . 26,934,386 29,310,142 34,540,759 10,866,762 18,537,180

Other comprehensive
loss,
net of tax
Items that may be
reclassified subsequently
to profit or loss
Exchange difference arising
from translation of foreign
operations . . . . . . . . . . . (649,597) (2,967,171) (3,900,163) (889,730) 2,875,678

Total comprehensive
income for the year/
period . . . . . . . . . . . . . . 26,284,789 26,342,971 30,640,596 9,977,032 21,412,858

86
 Audited Unaudited

For the financial year ended 31 December For the six months ended 30 June

2017 2018 2019 2019 2020

S$ S$ S$ S$ S$

Profit/(loss) attributable
to:
Equity holders of the
Company . . . . . . . . . . . . 26,934,386 29,300,363 35,755,229 11,374,427 18,465,497
Non-controlling interests . . . — 9,779 (1,214,470) (507,665) 71,683

26,934,386 29,310,142 34,540,759 10,866,762 18,537,180

Total comprehensive
income/(loss)
attributable to:
Equity holders of the
Company . . . . . . . . . . . . 26,284,789 26,292,715 32,022,289 10,490,619 21,260,242
Non-controlling interests . . . — 50,256 (1,381,693) (513,587) 152,616

26,284,789 26,342,971 30,640,596 9,977,032 21,412,858

Earnings per Share

attributable to equity
holders of
the Company (cents)
Basic earnings per Share . . 5.32 5.74 6.99 2.22 3.59
Diluted earnings per Share . 5.42 5.53 6.52 2.10 3.34
Earnings per Share
adjusted for the issuance
of the Conversion
Shares (1) . . . . . . . . . . . . 5.32 5.43 6.33 2.01 3.25
Earnings per Share
adjusted for the issuance
of the Conversion Shares,
the New Cornerstone
Shares and the
Offering(2) . . . . . . . . . . . 4.62 4.75 5.57 1.89 3.05

Notes:
(1) Earnings per Share for the year/period indicated is computed based on the weighted average number of Shares for the
year/period, adjusted for the issuance of the Conversion Shares.

(2) Earnings per Share for the year/period indicated is computed based on the weighted average number of Shares for the
year/period, adjusted for the issuance of the Conversion Shares, the New Cornerstone Shares and the Offering.

87
SELECTED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Audited Unaudited

As at 31 December As at 30 June

2017 2018 2019 2020

S$ S$ S$ S$
ASSETS
Non-current assets
Property, plant and equipment . . 64,913,183 73,736,676 107,276,482 136,693,144
Land use rights . . . . . . . . . . . . . . 2,339,185 2,600,773 12,767,812 12,906,712
Intangible assets . . . . . . . . . . . . . 3,173,504 4,520,430 4,020,860 4,189,107
Investment in associated
company . . . . . . . . . . . . . . . . . — 2,539,885 — —
Other receivables . . . . . . . . . . . . — — 179,676 173,625

70,425,872 83,397,764 124,244,830 153,962,588

Current assets
Inventories . . . . . . . . . . . . . . . . . 10,255,605 17,006,626 14,733,738 15,140,511
Trade and other receivables, and
other current assets . . . . . . . . . 39,892,194 56,790,437 58,210,363 53,193,683
Contract assets/Accrued
receivables . . . . . . . . . . . . . . . 4,635,112 7,775,450 11,376,429 13,940,691
Cash and bank balances . . . . . . . 23,217,764 25,088,357 25,404,651 41,198,083

78,000,675 106,660,870 109,725,181 123,472,968

Total assets. . . . . . . . . . . . . . . . . . 148,426,547 190,058,634 233,970,011 277,435,556

EQUITY AND LIABILITIES

Equity attributable to equity
holders of the Company
Share capital . . . . . . . . . . . . . . . . 8,548,273 9,695,920 9,695,920 9,717,778
Reserves . . . . . . . . . . . . . . . . . . . 87,135,827 88,264,164 110,817,756 123,534,583

95,684,100 97,960,084 120,513,676 133,252,361

Non-controlling interests . . . . . . . — 2,440,594 6,912,441 7,234,830

Total equity . . . . . . . . . . . . . . . . . . 95,684,100 100,400,678 127,426,117 140,487,191

Non-current liabilities
Bank loans . . . . . . . . . . . . . . . . . 3,908,867 — — 11,774,183
Lease liabilities . . . . . . . . . . . . . . 832,861 4,454,610 346,269 443,898
Convertible notes . . . . . . . . . . . . — 49,910,763 49,940,019 —
Deferred taxation. . . . . . . . . . . . . 318,000 848,000 988,200 988,200

5,059,728 55,213,373 51,274,488 13,206,281

88
 Audited Unaudited

As at 31 December As at 30 June

2017 2018 2019 2020

S$ S$ S$ S$
Current liabilities
Trade and other payables . . . . . . 23,339,002 26,027,082 37,013,648 42,336,879
Contract liabilities/Advanced
receipts . . . . . . . . . . . . . . . . . . 6,652,553 2,070,877 6,368,253 7,299,670
Bank loans . . . . . . . . . . . . . . . . . 12,067,407 — 3,864,000 14,527,301
Lease liabilities . . . . . . . . . . . . . . 815,370 730,241 4,284,160 4,555,479
Convertible notes . . . . . . . . . . . . — — — 49,960,531
Provisions . . . . . . . . . . . . . . . . . . 391,672 423,190 454,745 280,570
Provision for taxation . . . . . . . . . 4,416,715 5,193,193 3,284,600 4,781,654

47,682,719 34,444,583 55,269,406 123,742,084

Total liabilities . . . . . . . . . . . . . . . 52,742,447 89,657,956 106,543,894 136,948,365

Total equity and liabilities . . . . . . 148,426,547 190,058,634 233,970,011 277,435,556

Net Assets . . . . . . . . . . . . . . . . . . . 95,684,100 100,400,678 127,426,117 140,487,191

SELECTED CONSOLIDATED STATEMENTS OF CASH FLOWS

Audited Unaudited

For the six months ended

For the financial year ended 31 December 30 June

2017 2018 2019 2019 2020

S$ S$ S$ S$ S$

Net cash generated from

operating activities . . . . . . . . 34,588,627 29,618,049 52,486,172 30,556,901 29,574,545
Net cash used in investing
activities . . . . . . . . . . . . . . . . (15,489,704) (34,601,515) (45,291,722) (15,092,930) (36,198,003)
Net cash (used in)/generated
from financing activities . . . . (9,643,123) 9,034,062 (7,226,766) 15,049,329 21,836,109

Net increase/(decrease) in
cash and cash equivalents. . . 9,455,800 4,050,596 (32,316) 30,513,300 15,212,651
Cash and cash equivalents at
the beginning of the year/
period . . . . . . . . . . . . . . . . . . 12,583,998 20,968,017 25,088,357 25,088,357 24,591,975
Effects of exchange rate changes
on cash and cash equivalents
held in foreign currencies . . . . . (1,071,781) 69,744 (464,066) (696,674) 563,531

Cash and cash equivalents at

the end of the year/period . . . 20,968,017 25,088,357 24,591,975 54,904,983 40,368,157

89
 SELECTED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION

The following selected consolidated pro forma financial data should be read in conjunction with
“Management’s Discussion and Analysis of Results of Operations and Financial Position” and the
report from the Independent Auditors and Reporting Accountants in relation to the unaudited pro
forma consolidated financial information of our Group for the financial year ended 31 December
2019 and the six months ended 30 June 2020 and the related notes thereto (together, the
“Pro Forma Financial Information”), as set out in Appendix C of this Prospectus.

The Pro Forma Financial Information has been prepared for illustrative purposes only, and is based
on the assumption that the significant events set out below have taken place on (a) 1 January 2019
for the unaudited pro forma consolidated statements of profit or loss and other comprehensive
income and unaudited pro forma consolidated statements of cash flows for the financial year ended
31 December 2019 and the six months ended 30 June 2020; and (b) on 31 December 2019 and
30 June 2020 for the unaudited pro forma consolidated statements of financial position as at
31 December 2019 and 30 June 2020, respectively:

(a) the issuance of Shares pursuant to the vesting of awards granted under the Nanofilm Pre-IPO
Restricted Share Plan 2020;

(b) the exercise of options granted under the Pre-IPO ESOS;

(c) the declaration of Interim Dividends; and

(d) the conversion of the Convertible Notes into Conversion Shares.

The Pro Forma Financial Information has been prepared for illustrative purposes only and because
of its nature, may not give a true and fair picture of our actual financial position and results and is
not necessarily indicative of the results of the operations or the related effects on the financial
position that would have been attained had the above-mentioned transactions existed earlier.

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PRO FORMA CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME

Unaudited

For the For the

financial year six months
ended ended
31 December 30 June
2019 2020

S$ S$
Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,908,469 77,827,957
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65,244,940) (36,914,733)
Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,663,529 40,913,224
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,906,881 2,610,819
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507,050 166,659
Expenses:
Selling and distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,770,511) (8,990,972)
Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,973,730) (10,039,616)
Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (321,139) (370,477)
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (871,759) —
Impairment loss allowance on trade receivables . . . . . . . . . . . (37,091) —
Share of loss of associated company . . . . . . . . . . . . . . . . . . . . (1,054) —
Profit before income tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,102,176 24,289,637
Income tax expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,354,550) (4,023,166)
Profit after income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,747,626 20,266,471
Other comprehensive (loss)/income, net of tax
Items that may be reclassified subsequently to profit or loss
Exchange difference arising from translation of foreign
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,900,163) 2,875,678
Total comprehensive income for the year/period . . . . . . . . 31,847,463 23,142,149

Profit/(loss) attributable to:

Equity holders of the Company. . . . . . . . . . . . . . . . . . . . . . . . . 36,962,096 20,194,788
Non-controlling interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,214,470) 71,683
35,747,626 20,266,471

Total comprehensive income/(loss) attributable to:

Equity holders of the Company. . . . . . . . . . . . . . . . . . . . . . . . . 33,229,156 22,989,533
Non-controlling interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,381,693) 152,616
31,847,463 23,142,149

Earnings per Share attributable to equity holders

of the Company (cents)
Basic earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.36 3.48
Diluted earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.36 3.48
Earnings per Share adjusted for the issuance of the
Conversion Shares, the New Cornerstone Shares and the
Offering (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.61 3.07

Note:

(1) Earnings per Share for the year/period indicated is computed based on the weighted average number of Shares for the
year/period, adjusted for the issuance of the Conversion Shares, the New Cornerstone Shares and the Offering.

91
PRO FORMA CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Unaudited

As at As at
31 December 30 June
2019 2020

S$ S$

ASSETS
Non-current assets
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . 107,276,482 136,693,144
Land use rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,767,812 12,906,712
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,020,860 4,189,107
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,676 173,625

124,244,830 153,962,588

Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,733,738 15,140,511
Trade and other receivables, and other current assets . . . . . 58,210,363 53,193,683
Contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,376,429 13,940,691
Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,235,897 39,007,617

106,556,427 121,282,502

Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,801,257 275,245,090

EQUITY AND LIABILITIES

Equity attributable to equity holders of the Company
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,396,401 69,396,547
Translation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,019,698) (6,224,953)
Statutory reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,433,781 5,433,781
Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702,361 578,630
Accumulated profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,038,944 122,233,732

168,551,789 191,417,737
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,912,441 7,234,830

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,464,230 198,652,567

Non-current liabilities
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 11,774,183
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346,269 443,898
Deferred taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 988,200 988,200

1,334,469 13,206,281

92
 Unaudited

As at As at
31 December 30 June
2019 2020

S$ S$

Current liabilities
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,746,800 31,941,568
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,368,253 7,299,670
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,864,000 14,527,301
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,284,160 4,555,479
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454,745 280,570
Provision for taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,284,600 4,781,654

54,002,558 63,386,242

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,337,027 76,592,523

Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,801,257 275,245,090

Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,464,230 198,652,567

PRO FORMA CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

For the For the

financial year six months
ended ended
31 December 30 June
2019 2020

S$ S$

Net cash generated from operating activities . . . . . . . . . . . 52,486,172 30,574,545

Net cash used in investing activities . . . . . . . . . . . . . . . . . . (45,291,722) (36,198,003)
Net cash (used in)/generated from financing activities . . . . (10,395,520) 18,645,643

Net (decrease)/increase in cash and cash equivalents . . . . (3,201,070) 13,022,185

Cash and cash equivalents at the beginning of
the year/period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,088,357 24,591,975
Effects of exchange rate changes on cash and
cash equivalents held in foreign currencies. . . . . . . . . . . . . . (464,066) 563,531

Cash and cash equivalents at the end of the year/period . . 21,423,221 38,177,691

93
 MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL POSITION

The following discussion and analysis of our financial condition and results of operations should be
read in conjunction with our audited consolidated financial statements and the accompanying notes
as at and for the financial years ended 31 December 2017, 2018 and 2019, and our unaudited
condensed interim consolidated financial statements and the accompanying notes as at and for the
six months ended 30 June 2020, which are included in Appendix A and Appendix B of this
Prospectus, respectively, and the related reports by our Independent Auditors and Reporting
Accountants included therein.

This discussion and analysis contains forward-looking statements that reflect our current views
with respect to future events and our financial performance and they involve risks and
uncertainties. Our actual results may differ significantly from those anticipated in the
forward-looking statements as a result of factors discussed below and elsewhere in this
Prospectus, including those set forth in this section and under the sections entitled “Risk Factors”
and “Notice to Investors—Forward-Looking Statements”.

Under no circumstances should the inclusion of forward-looking statements herein be regarded as

a representation, warranty or prediction with respect to the accuracy of the underlying assumptions
by our Company, the Joint Issue Managers or any other person. Investors are cautioned not to
place undue reliance on these forward-looking statements that speak only as at the date hereof.

OVERVIEW

According to Frost & Sullivan, we are a leading provider of nanotechnology solutions in Asia,
leveraging our proprietary technologies, our core competencies in R&D, engineering and
production, to provide nanotechnology solutions across a wide range of industries, enabling our
customers to achieve high value-add functional and aesthetic improvements in their end-products,
in an environmentally sustainable manner.

Our nanotechnology solutions are industry agnostic and are adaptable for use across a wide range
of industries, and have opened up new markets which were hitherto inaccessible to conventional
coating technologies, effectively providing us access to a large TAM. With the flexibility and
advantages afforded by our proprietary nanotechnologies, we believe that we are able to re-
position ourselves as necessary to tap into promising growth opportunities across our focus
markets—be it in the computer, communications and consumer electronics (“3C”), automotive, new
energy, biomedical, or optical lens and sensors industry. We intend to focus on attractive and future
innovative industries, which upon maturity, have the potential to constitute a large standalone
business opportunity for us.

Our business is categorised into the following segments:

• Advanced Materials BU—We provide our advanced materials through surface solution
services based on our vacuum coating technologies and processes. Our surface solution
services involve the use of our FCVA (and FCVA-hybrid with PVD) and PVD coating
equipment to deposit our advanced materials on key components of our customers’
end-products, enabling our customers to achieve their desired functional and/or decorative
improvements to their end-products.

• Nanofabrication BU—We are a manufacturer and supplier of nanoproducts, which are used by
our customers as components for the smooth functioning and performance of certain parts of
their end-products, due to their nanoscale and/or nanofeatures. We utilise our nanofabrication
technology and software to fabricate nanoproducts which are designed to fit the specific size
and shape requirements specified by our customers as well as provide required functional
properties to their end-products.

94
• Industrial Equipment BU—We manufacture and sell turnkey equipment solutions ranging from
coating equipment, to auxiliary equipment such as cleaning lines to automation systems,
which are installed at our customers’ production lines. We provide our customers not just the
physical equipment, but also customised operating software for our systems and training, as
well as spare-parts, customer service and other forms of after-sales support.

BASIS OF PRESENTATION

Our Company was incorporated in Singapore in May 1999. Except as otherwise indicated, the
discussion in this Prospectus is based on the audited consolidated financial statements and
unaudited condensed interim consolidated financial statements included in Appendix A and
Appendix B of this Prospectus, respectively. The consolidated financial statements of our Group,
expressed in Singapore dollar (“S$”), have been prepared in accordance with Singapore Financial
Reporting Standards (International) (“SFRS(I)s”) or SFRS(I) I-34 Interim Financial Reporting
(“SFRS(I) I-34”). The consolidated financial statements have been prepared under the historical
cost basis except as disclosed below.

The preparation of consolidated financial statements in conformity with SFRS(I)s requires the
management of our Group to exercise its judgement in the process of applying our Group’s
accounting policies. It also requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and contingent liabilities at the date of the consolidated financial statements, and the
reported amounts of revenue and expenses during the financial year. Although these estimates are
based on management’s best knowledge of current events and actions, actual results may
ultimately differ from these estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our results of operations are affected by several factors, including the following:

Our ability to retain our major customers and secure new customers

Our largest customer, who is our end-customer, accounted for 50.1%, 45.6%, 51.1%, 43.3% and
56.5% of our revenue (which includes sales to its contract manufacturers) for the financial years
ended 31 December 2017, 2018 and 2019, and the six months ended 30 June 2019 and 2020,
respectively. In addition, our top five customers (both direct customers and end-customers,
including our largest customer) in each year accounted for approximately 82.6%, 67.5%, 72.8%,
67.3% and 81.9% of our revenue for the financial years ended 31 December 2017, 2018 and 2019,
and the six months ended 30 June 2019 and 2020, respectively. Our revenue is dependent on our
major customers and the volume of their orders (whether directly or through their contract
manufacturers) to us. A number of factors, including those described in “Risk Factors—Risks
Related to Our Business—We depend on a single customer for a substantial portion of our revenue
and a limited number of customers account for the majority of our revenue”, which are outside our
control can have an adverse impact on the revenue contribution by our major customers.

Changes in demand for our end-customers’ end-products

The demand for our nanotechnology solutions is substantially linked to the demand for our
end-customers’ end-products. If our end-customers are not successful in marketing their
end-products or if their end-products do not gain widespread commercial acceptance, our
revenues may be adversely affected.

95
Life cycle of our end-customers’ end-products

Approximately 56.6%, 54.5%, 62.3%, 53.6% and 65.6% of our revenue for the financial years
ended 31 December 2017, 2018 and 2019, and the six months ended 30 June 2019 and 2020,
respectively was derived from end-customers utilising our nanotechnology solutions for their
end-products in the 3C industry. The life cycle of our customers’ end-products in the 3C industry is
relatively short, usually ranging from 18 months to 36 months, before our end-customers launch a
next generation of the end-product. While our nanotechnology solutions are versatile and can be
developed in accordance with our customers’ requirements, our existing nanotechnology solutions
may not be suitable for use in a customer’s new end-product or newer generation of an existing
end-product. Any failure by us to adapt or develop nanotechnology solutions for our customers for
use in their new or new generation end-products may adversely affect our ability to retain our
customers as well as our revenue and financial performance. In addition, if there are significant
delays in the launch of our customers’ end-products, including due to factors outside of our control
such as product modifications by our end-customers or shortages in other areas of the supply
chain, such delays may adversely affect our operations and demand for our products and services,
and revenue.

Our cost of sales

Our cost of sales comprises costs of goods, materials and consumables, staff costs for our
manufacturing facilities, amortisation and depreciation of our property, plant and equipment
relating to our manufacturing facilities and other factory overheads. The two largest components of
our cost of sales are costs of goods, materials and consumables and staff costs for our
manufacturing facilities, which account for more than half of our cost of sales for the financial years
ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June 2019 and 2020.
Amortisation and depreciation of our property, plant and equipment accounted for 16.6%, 18.8%,
16.3%, 18.8% and 17.1% of our costs of sales for the financial years ended 31 December 2017,
2018 and 2019, and for the six months ended 30 June 2019 and 2020, respectively. Our ability to
manage our cost of sales relating to the production and manufacturing of our products in our
business units will affect our profitability and results of operations.

Cost of goods, materials and consumables

Cost of goods, materials and consumables accounted for approximately 35.4%, 33.7%, 30.4%,
27.6% and 30.5% of our cost of sales for the financial years ended 31 December 2017, 2018 and
2019, and for the six months ended 30 June 2019 and 2020, respectively.

Our cost of goods, materials and consumables comprises a key component of our cost of sales.
Such cost includes the cost of (i) goods (parts and components) we purchase from certain
end-customers of our Advanced Materials BU, which we will value-add with our technologies and
solutions before selling the goods back to these end-customers, as well as various types of
components required for the manufacture and assembly of equipment systems we sell to end-
customers under our Industrial Equipment BU such as power supply units, (ii) key raw materials
such as carbon graphite, metals and metal oxides which we purchase in various grades and
specifications as required for the specific products and services we supply to our end-customers,
and (iii) consumables such as gloves, cleaning materials and factory gears. The cost of these
goods, materials and consumables forms one of our largest expenses during the period under
review.

The cost of our goods, materials and consumables is dependent on various factors such as price
fluctuations due to market supply and demand and our suppliers’ assessment of our
creditworthiness and payment terms. Depending on the size of our orders and length of our
relationships with them, our payment terms vary from 30 to 90 days. While no letter of credit was
required by our suppliers for the period under review, certain suppliers required us to provide
advanced payments for our orders. To the extent we are not able to predict or manage our
procurement costs, our profitability or results of operations may be affected.

96
Staff costs

The staff costs included in our cost of sales comprise salaries and related expenses of operators,
line leaders, supervisors, technicians, engineers and others who are directly involved in the
production of our products and services. Staff costs accounted for approximately 33.4%, 33.7%,
33.7%, 35.1% and 33.1% of our cost of sales for the financial years ended 31 December 2017, 2018
and 2019, and for the six months ended 30 June 2019 and 2020, respectively. These staff costs are
dependent on the availability of labour in the job market, the qualifications and experience of
workers hired, charges imposed by authorities (for example, the foreign workers’ levy in
Singapore), the number of workers required and the labour hours charged. Our cost of sales will
increase if our production staff costs increase significantly.

Gross profit

Gross profit is the amount of our revenue in excess of our cost of sales, and gross profit margin is
the percentage of revenue that exceeds our cost of sales.

Our gross profit margin may be affected by, inter alia, the following factors:

(a) the complexity of the products and value-added services required by our direct customers and
end-customers. Products and value-added services which are more complex generally
command higher unit prices and accordingly, higher profit margins;

(b) the volume of orders from our direct customers and end-customers. Higher volume of orders
generally results in lower costs to us per unit basis as a result of economies of scale and
corresponding cost savings;

(c) stage of the relevant product life cycle of the end-products of our direct customers and
end-customers, particularly those in the 3C industry. The prices of the end-products of our
direct customers and end-customers generally reduce towards the later stages of their
product life cycles as they prepare for new generations of products and they try to appeal to
a different segment of consumers for the previous generation of products. This will in turn
drive cost cutting measures of our direct customers and end-customers in order to offset the
impact of the reduction of the selling prices of their end-products, which will affect our unit
selling prices of our products and services. We can partially mitigate the decrease in selling
prices of our products and services by leveraging our experience in the production of the
relevant parts and provision of our services in order to drive further efficiencies and to reduce
our costs on a per unit basis; and

(d) level of sales of our surface solutions by our Advanced Materials BU and coating equipment
by our Industrial Equipment BU. We generally will derive bigger margins and longer term
revenue from direct and end-customers who contract us to provide them with our surface
solutions and advanced materials. Sale of our coating equipment to any type of customers
would allow them to perform coating solutions to their products directly without us.
Accordingly, we generally do not promote the sale of our coating equipment, and we only
consider selling our coating equipment to select customers in targeted markets, taking into
account business considerations as well as other longer term benefits to our Group.

Foreign currency fluctuations

We use S$ as our functional and reporting currency. Some of our subsidiaries have different
functional and reporting currencies in RMB, JPY and US$. As a result, fluctuations of S$ against
RMB, JPY and/or US$ have had, and may continue to have, a significant impact on our
consolidated financial statements and affect our revenues, expenses, profits, assets and liabilities
reflected therein.

97
As the reporting currency for our Company and our consolidated financial statements is in S$, any
transactions in a currency other than S$ are translated into S$ using the exchange rates prevailing
at the dates of the transactions. Foreign currency translation differences resulting from the
settlement of such transactions and from foreign exchange translation (which is at the year-end
exchange rate) of monetary assets and liabilities denominated in foreign currencies are recognised
in profit or loss, except for foreign currency translation differences on our Group’s net investment
in our Group’s foreign subsidiaries and borrowings and other currency instruments qualifying as net
investment hedges for foreign operations, which are included in the translation reserve within
equity in the consolidated financial statements.

The financial statements of our Group whose functional currencies are different from that of our
Group’s presentation currency are translated into our Group’s presentation currency as follows:
(i) assets and liabilities are translated at the closing exchange rates at the reporting date; and
(ii) income and expenses are translated at an average exchange rate. All resulting exchange
differences are recognised in other comprehensive income, and presented in the currency
translation reserve within equity.

We have used the exchange rates set out below to prepare our combined statements of profit or
loss and other comprehensive income and our combined statements of financial position for the
financial years ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June
2019 and 2020, respectively.

RMB to S$

Financial year ended 31 December Six months ended 30 June

2017 2018 2019 2019 2020

RMB RMB RMB RMB RMB

Statements of profit or loss and

other comprehensive income . . 0.2042 0.2036 0.1975 0.2005 0.1986
Statements of financial position . . 0.2054 0.1982 0.1932 0.1970 0.1973

JPY to S$

Financial year ended 31 December Six months ended 30 June

2017 2018 2019 2019 2020

JPY JPY JPY JPY JPY

Statements of profit or loss and

other comprehensive income . . 0.0124 0.0122 0.0125 0.0124 0.0130
Statements of financial position . . 0.0119 0.0124 0.0124 0.0125 0.0129

US$ to S$

Financial year ended 31 December Six months ended 30 June

2017 2018 2019 2019 2020

US$ US$ US$ US$ US$

Statements of profit or loss and

other comprehensive income . . 1.3846 1.3493 1.3631 1.3571 1.3998
Statements of financial position . . 1.3367 1.3633 1.3459 1.3529 1.3947

Please also refer to “Risk Factors” for a detailed account of the risks that could affect our business,
results of operation and financial performance.

98
CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS

The preparation of our consolidated financial statements requires the use of certain critical
accounting estimates, assumptions and judgements. Estimates and assumptions concerning the
future and judgements are made in the preparation of the consolidated financial statements. They
affect the application of our Group’s accounting policies, reported amounts of assets, liabilities,
income and expenses, and disclosures made. They are assessed on an on-going basis and are
based on experience and relevant factors, including expectations of future events that are believed
to be reasonable under the circumstances.

Set out below are the significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have significant effect on the amounts recognised in the financial
statements.

For a summary of our significant accounting policies, the key assumptions concerning the future
and other key sources of estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, please refer to Notes 2 and 3 to our audited consolidated financial statements and
Note 2 to our unaudited condensed interim consolidated financial statements which are included in
Appendix A and Appendix B of this Prospectus, respectively.

Estimated useful life of property, plant and equipment

Our property, plant and equipment are depreciated on a straight-line basis over their estimated
useful lives. We estimate the useful lives of these property, plant and equipment to be between 1.5
to 25 years. We assess annually the residual values and the useful lives of the property, plant and
equipment and if expectations differ from the original estimates due to changes in the expected
level of usage and/or technological developments, such differences will impact the depreciation
charges in the period in which such estimates are changed.

We conducted an operational efficiency review on our production lines. We revised the estimated
residual values and useful lives of some plant and machinery from five or eight years to 10 years,
after refurbishments that will enable these plant and machinery to remain in production for an
additional two to five years. The revision in estimate has been applied on a prospective basis from
1 January 2019. The effect of the above revision on depreciation charge resulted in a decrease in
depreciation charge of S$1,204,584 in the financial year ended 31 December 2019 and a
cumulative increase in depreciation charge of S$334,470 on future financial periods.

Please see Note 12 in each of Appendix A and Appendix B of this Prospectus for the carrying
amount of our Group’s property, plant and equipment at the respective reporting dates.

A 10% difference in the expected useful life of these assets from management’s estimates would
result in increasing/decreasing the carrying amount of our Group’s depreciable property, plant and
equipment by approximately S$977,000, S$1,390,000, S$1,393,000 and S$833,000 as at
31 December 2017, 2018 and 2019, and 30 June 2020, respectively.

Estimated useful life of development costs

R&D and engineering costs are expensed as they are incurred, save for development costs which
are capitalised in our consolidated financial statements as intangible assets. R&D and engineering
expenses are classified as development costs if they relate to the design and testing of new or
improved materials, products and processes and when we can demonstrate the technical feasibility
of completing the intangible asset so that it will be available for use or sale, our intention to
complete and our ability to use or sell the asset, how the asset will generate future economic
benefits, the availability of resources to complete and the ability to measure reliably the
expenditure during the development. Development costs are stated at cost less accumulated
amortisation and accumulated impairment losses. Development costs are amortised from the date

99
of commercial production of the product or from the date the process is put to use. The
classification of development costs which are capitalised as intangible assets will be reviewed by
management at each reporting period and will also be subject to assessment by the external auditor
in the course of their annual statutory audit. Any capitalisation of development costs as intangible
assets would be based on, and in accordance with SFRS(I) 1-38 Intangible Assets.

Initial capitalisation of costs is based on management’s assumptions that technological and

economical feasibility is confirmed, usually when a product development project has reached a
defined milestone according to an established project management model. Development costs are
amortised on a straight-line basis over the finite useful life of the project which management
estimates to be within five years. Any changes in such estimates will impact the amortisation
charge in the reporting period. The carrying amount of our Group’s development costs capitalised
at the reporting date are disclosed in Note 14 to the audited consolidated financial statements and
the unaudited condensed interim consolidated financial statements which are included in Appendix
A and Appendix B of this Prospectus, respectively.

For the financial years ended 31 December 2017, 2018 and 2019, and for the six months ended
30 June 2020, we capitalised development costs amounting to S$1.2 million, S$1.4 million,
S$1.3 million and S$0.6 million respectively, as intangible assets. These development costs
included cost of materials, staff costs and costs directly attributable to the design and development
of products or processes conducted internally by our Group.

A 10% difference in the expected useful life of the development costs from our estimates would
result in increasing/decreasing our Group’s development costs by approximately S$86,100,
S$96,000, S$112,000 and S$59,000 for the financial years ended 31 December 2017, 2018 and
2019, and for the six months ended 30 June 2020, respectively.

Provision for warranty

Our Group provides up to one-year warranties on equipment sold and undertakes to repair or
replace items that fail to perform satisfactorily. We estimate the related provision for future warranty
claims based on historical warranty claim information, current sales levels and current information
available on returns based on the twelve months warranty period for all equipment sold. The
carrying amount of our Group’s provision for warranty at the reporting date is disclosed in Note 26
to the audited consolidated financial statements and Note 25 to the unaudited condensed interim
consolidated financial statements which are included in Appendix A and Appendix B of this
Prospectus, respectively.

A 10% difference in the provision for warranty from our estimates would result in increasing/
decreasing our Group’s profit before tax by approximately S$39,200, S$42,300, S$45,500 and
S$28,000 for the financial years ended 31 December 2017, 2018 and 2019, and for the six months
ended 30 June 2020, respectively.

Loss allowance for receivables (including contract assets)

Our Group measures the loss allowance for receivables in accordance with the accounting policy
as disclosed in Note 2(m) to the consolidated financial statements. In making this estimation and
judgement for loss allowance for receivables, our Group evaluates, among other factors, the
ageing analysis of receivables, the financial healthiness and collection history of individual debtors
and expected future change of credit risks, including the consideration of factors such as general
economy measure and changes in macro-economic indicators. The carrying amount of our Group’s
contract assets and trade and other receivables at the reporting date are disclosed in Notes 5 and
16 to the audited consolidated financial statements and Notes 5 and 15 to the unaudited condensed
interim consolidated financial statements which are included in Appendix A and Appendix B of this
Prospectus, respectively.

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Income taxes

Our Group has exposure to income taxes in numerous jurisdictions. Significant judgement is
involved in determining our Group-wide provision for income taxes. There are certain transactions
and computations for which the ultimate tax determination is uncertain during the ordinary course
of business. Our Group recognises liabilities for expected tax issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is different from the
amounts that were initially recognised, such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made. Our Group’s income tax expenses
and deferred taxation at the reporting dates are set out in Notes 10 and 24 to the audited
consolidated financial statements and Notes 10 and 23 to the unaudited condensed interim
consolidated financial statements which are included in Appendix A and Appendix B of this
Prospectus, respectively.

Determination of functional currency

Our Group measures foreign currency transactions in the respective functional currencies of our
Company and our subsidiaries. In determining the functional currency of the entities in our Group,
judgement is required to determine the currency that mainly influences sales prices for goods and
services and of the country whose competitive forces and regulations mainly determines the sales
prices of its goods and services. The functional currency of the entities in our Group are determined
based on our assessment of the economic environment in which the entities operate that best
reflects the economic substance of the underlying events and circumstances relevant to the entities
in our Group.

PRINCIPAL COMPONENTS OF OUR CONSOLIDATED STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME

Revenue

We generate revenue primarily from the sale of our products and services in our Advanced
Materials BU, Nanofabrication BU and Industrial Equipment BU segments.

Operating segments

The breakdown of our revenue by segmentation is set out below:

Financial year ended 31 December Six months ended 30 June

Revenue (S$ in millions) 2017 2018 2019 2019 2020

S$ % S$ % S$ % S$ % S$ %

Advanced Materials BU
—Smart phone . . . . . . . . . . . . 11.1 10.7 12.6 10.3 13.6 9.6 3.0 5.4 6.7 8.6
—Computer (desktop, laptop,
tablet) . . . . . . . . . . . . . . . . . 30.6 29.5 35.5 28.9 43.2 30.2 17.4 31.5 23.9 30.7
—Wearable & Accessories . . . 16.9 16.3 18.8 15.3 32.2 22.5 9.2 16.7 20.5 26.4
—Printing and Imaging . . . . . . 11.2 10.8 10.8 8.8 12.9 9.0 6.3 11.4 5.6 7.2
—Precision Engineering . . . . . 4.1 4.0 4.2 3.4 5.1 3.6 2.1 3.8 2.6 3.3
—Automotive . . . . . . . . . . . . . 0.1 0.1 0.5 0.3 2.6 1.8 0.4 0.7 4.8 6.2

74.0 71.4 82.4 67.0 109.6 76.7 38.4 69.5 64.1 82.4

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 Financial year ended 31 December Six months ended 30 June

Revenue (S$ in millions) 2017 2018 2019 2019 2020

S$ % S$ % S$ % S$ % S$ %

Nanofabrication BU . . . . . . . . — — 5.3 4.4 5.9 4.1 2.9 5.3 3.2 4.1

Industrial Equipment BU. . . . 29.6 28.6 35.1 28.6 27.4 19.2 13.9 25.2 10.5 13.5

Total . . . . . . . . . . . . . . . . . . . . 103.6 100.0 122.8 100.0 142.9 100.0 55.2 100.0 77.8 100.0

Revenue from our Advanced Materials BU segment represents sales of advanced materials
through surface solutions services to our customers, as well as development fees we charge to our
customers for the R&D and engineering services we perform to assist in their end-product
development. Our surface solutions utilise our proprietary FCVA (and FCVA-hybrid with PVD) and
PVD coating technologies to deposit our advanced materials on key components of our customers’
end-products. The advanced materials are developed to provide key attributes to match our
customers’ specifications, such as high hardness, corrosion resistance, strong adhesion, low
frictional coefficient, electrochemistry properties, and even aesthetic improvements.

Revenue from Nanofabrication BU segment represents sales of nanoproducts which are

manufactured or supplied by us to our customers, such as lenses used in smartphones, wearable
watch parts, mold parts and other applications. Nanoproducts are utilised by our customers for the
smooth functioning and performance of certain components of their end-products, due to their
nanoscale and/or nanofeatures. We utilise our nanofabrication technology and software to
fabricate nanoproducts which are designed to fit the specific size and shape requirements specified
by our customers as well as provide required functional performance.

Revenue from Industrial Equipment BU segment represents sales of our services to provide
turnkey equipment solutions ranging from coating equipment, cleaning lines to automation
systems, which are designed and customised for integration into the manufacturing lines of our
customers. This includes the sale of physical equipment and customised operating software for our
systems and training, as well as spare-parts, customer service and other forms of after-sales
support.

Historical semi-annual revenue by segment

The following table sets forth our historical revenue on a semi-annual basis for the financial years
ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June 2020, by
segmentation:

1 January 1 July to 1 January 1 July to 1 January 1 July to 1 January

to 31 to 31 to 31 to
30 June December 30 June December 30 June December 30 June
Revenue (S$ in millions) 2017 2017 2018 2018 2019 2019 2020

Advanced Materials BU. . . 28.9 45.1 32.1 50.3 38.4 71.2 64.1
(1) (1)
Nanofabrication BU . . . . . . — — 2.8 2.5 2.9 3.0 3.2
Industrial Equipment BU. . 1.8 27.8 12.5 22.6 13.9 13.5 10.5

Total . . . . . . . . . . . . . . . . . . 30.7 72.9 47.4 75.4 55.2 87.7 77.8

Note:
(1) Our Nanofabrication BU only commenced operations in 2018 after we acquired a majority stake in NFT, which became
our subsidiary.

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Our Group typically registers higher revenue in the second half of the year, primarily driven by the
Advanced Materials BU. This is mainly due to an increase in demand for our surface solutions and
nanoproducts from customers in the 3C industry in the second half of the year, which is generally
in line with new launches of our customers’ end-products to coincide with the holiday season.

Geographical segments
We operate in four geographic segments, Singapore, China, Japan and Vietnam. The following
table sets forth our revenue based on the geographical location of our Group entities which issued
the invoices to our customers.

Financial year ended 31 December Six months ended 30 June

Revenue (S$ in millions) 2017 2018 2019 2019 2020

S$ % S$ % S$ % S$ % S$ %

Singapore . . . . . . . . . . . . 13.2 12.7 31.6 25.7 28.9 20.3 15.2 27.5 9.3 12.0
China . . . . . . . . . . . . . . . . 73.1 70.6 70.8 57.7 95.2 66.6 30.3 54.9 58.9 75.7
Japan . . . . . . . . . . . . . . . . 17.3 16.7 20.4 16.6 17.9 12.5 9.5 17.2 9.5 12.2
Vietnam . . . . . . . . . . . . . . — — — — 0.9 0.6 0.2 0.4 0.1 0.1

Total. . . . . . . . . . . . . . . . . 103.6 100.0 122.8 100.0 142.9 100.0 55.2 100.0 77.8 100.0

Other Income

We also generate other income mainly from government grants, sale of scrap, as well as property
plant and equipment, and others. The following table sets forth our income generated from such
other activities.

Financial year ended 31 December Six months ended 30 June

Other Income (S$ in millions) 2017 2018 2019 2019 2020

Government grants (1) . . . . . . . . 0.7 0.5 1.4 1.2 1.6

(2)
Others .................. 0.3 0.1 0.5 0.1 1.0

Total. . . . . . . . . . . . . . . . . . . . . . 1.0 0.6 1.9 1.3 2.6

Notes:

(1) Government grants refers to government grants given to our Group entities in Singapore, Japan and the PRC.

(2) Others comprise mainly income from the sale of scrap materials such as scrap metal which are by-products of our
manufacturing processes, as well as income received in 2019 relating to compensation from damages awarded to our
Group in 2018 in connection with certain civil proceedings against two ex-employees of NTI, and a company
established by the two defendants, for among others, the breach of NTI’s intellectual property, as well as exchange
gains recorded by our Group for the six months ended 30 June 2020.

Adjusted EBITDA

Adjusted EBITDA is a non-SFRS(I)s financial measure which corresponds to our earnings before
interest, tax, depreciation and amortisation, and other non-operational items (such as gains/losses
on disposal of plant, property and equipment, write off for obsolete stock, impairment loss on
goodwill, fair value loss on derivative, one-time restricted shares award cost and other
non-recurring professional fees) in our consolidated statements of profit or loss and other
comprehensive income for the financial years ended 31 December 2017, 2018 and 2019, and for
the six months ended 30 June 2019 and 2020. See Note 33 to our audited consolidated financial
statements and Note 31 to our unaudited condensed interim consolidated financial statements for
a discussion of our segment information and EBITDA.

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The following table sets out a breakdown of our Adjusted EBITDA by operating segments for the
years or periods indicated:

Financial year ended 31 December Six months ended 30 June

Adjusted EBITDA (S$ in millions) 2017 2018 2019 2019 2020

Advanced Materials BU . . . . . . 33.5 36.8 49.0 14.7 29.4

(1)
Nanofabrication BU . . . . . . . . . — 2.6 (1.1) 0.1 0.2
Industrial Equipment BU . . . . . 9.9 11.0 9.2 5.6 3.6

Total. . . . . . . . . . . . . . . . . . . . . . 43.4 50.4 57.1 20.4 33.2

Note:

(1) Our Nanofabrication BU only commenced operations in 2018 after we acquired a majority stake in NFT, which became
our subsidiary.

The below sets out a reconciliation of our Adjusted EBITDA to total profit before income tax for the
years or periods indicated:

Financial year ended 31 December Six months ended 30 June

(S$ in millions) 2017 2018 2019 2019 2020

Adjusted EBITDA (1) for

reportable segments . . . . . . . . 43.4 50.4 57.1 20.4 33.2
Depreciation . . . . . . . . . . . . . . . . (9.4) (13.3) (13.4) (6.4) (8.0)
Amortisation . . . . . . . . . . . . . . . . (0.9) (1.0) (1.4) (0.7) (0.7)
Gain, (Loss/write off) on
disposal of property, plant and
equipment . . . . . . . . . . . . . . . . — (2) (0.1) (0.1) — (2) — (2)
Write off of obsolete stock . . . . . — (0.2) — — —
Impairment loss on goodwill . . . . — — (0.9) — —
Fair value loss on derivative . . . . — — (0.1) — —
(2)
Other professional fees . . . . . . . (0.2) (0.2) (0.4) — (0.1)
Restricted shares award cost . . . — — — — (1.2)
(1)
Adjusted EBITDA for
reportable segments . . . . . . . . 43.4 50.4 57.1 20.4 33.2
Depreciation . . . . . . . . . . . . . . . (9.4) (13.3) (13.4) (6.4) (8.0)
Amortisation . . . . . . . . . . . . . . . (0.9) (1.0) (1.4) (0.7) (0.7)
Finance income . . . . . . . . . . . . . 0.2 0.4 0.5 0.2 0.2
Finance expenses . . . . . . . . . . . (1.1) (1.1) (1.4) (0.6) (0.9)

Profit before income tax . . . . . . . 32.0 34.9 39.9 12.9 22.5

Income tax . . . . . . . . . . . . . . . . . (5.1) (5.6) (5.4) (2.0) (4.0)

Profit after income tax . . . . . . . 26.9 29.3 34.5 10.9 18.5

Profit attributable to equity

holders of our Company . . . . 26.9 29.3 35.8 11.4 18.5

104
Notes:

(1) Net profit before interest, tax, depreciation and amortisation (EBITDA).
(2) Amounts less than S$100,000.

Adjusted EBITDA is a supplemental measure of our business performance and it is neither required
by nor presented in accordance with SFRS(I)s. In addition, as Adjusted EBITDA is not a
standardised term, direct comparisons of Adjusted EBITDA or EBITDA between companies may
not be possible.

Cost of sales

Our cost of sales represented approximately 44.1%, 46.1%, 45.7%, 48.3% and 47.4% of our
revenue for the financial years ended 31 December 2017, 2018 and 2019, and for the six months
ended 30 June 2019 and 2020, respectively. Cost of sales primarily comprises (i) cost of goods,
materials and consumables required for the manufacturing of our products and the provision of our
services, (ii) staff costs in relation to the manufacturing operations of our business units,
(iii) depreciation and amortisation of costs relating to our property, plant and equipment and land
use rights used in connection with our manufacturing operations and (iv) other overhead costs
incurred in connection with our manufacturing operations.

The following tables set forth a breakdown of our costs by operating segments for the years or
periods indicated, with the key expenses that contribute to our cost of sales identified:

Six months ended 30

Financial year ended 31 December June

(S$ in millions) 2017 2018 2019 2019 2020

Advanced Materials BU
Direct Materials (1) . . . . . . . . . . . . . . 6.9 8.5 9.5 3.2 8.0
(2)
Direct Labour ................ 13.4 14.9 18.3 7.5 10.6
(3)
Depreciation & Amortisation ..... 7.4 8.2 7.1 3.3 4.9
(4)
Other Factory Overheads ....... 5.4 6.0 10.0 3.5 4.9

Total . . . . . . . . . . . . . . . . . . . . . . . . 33.1 37.6 44.9 17.5 28.4

Nanofabrication BU (5)
Direct Materials (1) . . . . . . . . . . . . . . — 0.1 3.4 1.2 0.9
(2)
Direct Labour ................ — 1.8 2.0 0.9 0.9
(3)
Depreciation & Amortisation ..... — 2.2 3.1 1.5 1.2
(4)
Other Factory Overheads ....... — 0.1 1.0 0.5 1.2

Total . . . . . . . . . . . . . . . . . . . . . . . . — 4.2 9.5 4.1 4.2

Industrial Equipment BU
Direct Materials (1) . . . . . . . . . . . . . . 9.3 10.5 6.8 3.0 2.5
(2)
Direct Labour ................ 1.9 2.4 1.7 0.9 0.7
(3)
Depreciation & Amortisation ..... 0.1 0.2 0.4 0.2 0.2
Other Factory Overheads (4) . . . . . . . 1.3 1.7 1.9 0.9 0.9

Total . . . . . . . . . . . . . . . . . . . . . . . . 12.6 14.8 10.8 5.0 4.3

105
Notes:

(1) Direct Materials comprises the costs of goods, materials and consumables which we require to fulfil our manufacturing
needs for our business units.

(2) Direct Labour comprises salaries and related costs of employees in our manufacturing operations and contribution to
central provident fund for such employees in Singapore.

(3) Depreciation & Amortisation comprises depreciation of property, plant and equipment, and amortisation of land use
rights relating to the manufacturing operations of our business units.
(4) Other Factory Overheads comprises other overhead costs such as electricity and water, repair and maintenance,
freight and coating fixtures costs incurred in connection with the manufacturing operations of our business units.

(5) Our Nanofabrication BU commenced operations in 2018 after we acquired a majority stake in NFT, which became our
subsidiary.

Selling and distribution expenses

Selling and distribution expenses consist primarily of (i) staff costs in relation to our research and
development, engineering, sales and marketing and quality assurance operations, (ii) depreciation
and amortisation of costs relating to our property, plant and equipment and intangible assets used
in connection with our research and development, engineering, sales and marketing and quality
assurance operations, (iii) materials used for research and development purposes, and (iv) utility
costs.

For the financial years ended 31 December 2017, 2018 and 2019, and for the six months ended
30 June 2019 and 2020, our selling and distribution expenses represented 8.3%, 9.4%, 11.7%,
12.9% and 11.6% of our revenue, respectively.

The following table sets out a breakdown of our selling and distribution expenses for the years or
periods indicated:

Financial year ended 31 December Six months ended 30 June

Selling and distribution expenses

(S$ in millions) 2017 2018 2019 2019 2020

Staff costs (1) . . . . . . . . . . . . . . . . 4.6 5.4 9.6 3.9 4.8

Depreciation & Amortisation (2) . . 1.3 1.7 2.0 1.0 1.1
Materials for R&D and
Engineering (3) . . . . . . . . . . . . . 0.4 1.4 1.6 0.7 1.4
Utilities (4) . . . . . . . . . . . . . . . . . . 0.6 0.7 0.7 0.3 0.5
(5)
Others ................... 1.7 2.3 2.9 1.2 1.2

Total. . . . . . . . . . . . . . . . . . . . . . 8.6 11.5 16.8 7.1 9.0

Notes:
(1) Staff costs comprise salaries and related costs of employees in our research and development, engineering, sales and
marketing and quality assurance operations, and contribution to the central provident fund for such employees in
Singapore.

(2) Depreciation & Amortisation comprises depreciation of property, plant and equipment, and amortisation of intangible
assets relating to the research and development, engineering, sales and marketing and quality assurance divisions of
our business units.

(3) Materials for R&D and Engineering comprises costs of goods and materials used in connection with our research and
development and engineering activities for the purposes of commercialising solutions, inventing and developing new
advanced materials and other activities to enhance our research and development capabilities. See below for more
information on how we classify costs according to research and development activities and engineering activities.

106
(4) Utilities comprises electricity and water costs incurred in connection with the research and development, engineering,
sales and marketing and quality assurance divisions of our business units.

(5) Others comprise other expenses incurred in connection with the research and development, engineering, sales and
marketing and quality assurance divisions of our business units, mainly in relation to entertainment, travel and
transportation costs and consumables used by these divisions.

R&D and engineering expenses

Included in our selling and distribution expenses are Research and Development (“R&D”) and
Engineering expenses, which represented approximately 4.4%, 5.4%, 6.4%, 7.5% and 7.2% of our
revenue for the financial years ended 31 December 2017, 2018 and 2019, and for the six months
ended 30 June 2019 and 2020, respectively. R&D and engineering expenses also include
expenses incurred as a result of R&D and engineering activities that are conducted in collaboration
with our customers. R&D activities refers to research and development undertaken to develop new
applications and improve our existing technology and processes, in some areas specific to our
customers’ projects, while engineering activities refers to project development undertaken to
address specific requirements of our customers in connection with their orders placed with us.

The following table sets out a breakdown of expenses incurred in connection with R&D and
Engineering activities which form part of our selling and distribution expenses for the years or
periods indicated:

Financial year ended 31 December Six months ended 30 June

R&D and engineering expenses

(S$ in millions) 2017 2018 2019 2019 2020

Salary and related costs . . . . . . . . . . . . 2.0 2.6 4.6 2.0 2.5

Amortisation of intangible assets . . . . . 0.9 1.0 1.1 0.6 0.6
Depreciation . . . . . . . . . . . . . . . . . . . . . 0.3 0.5 0.7 0.3 0.4
Materials. . . . . . . . . . . . . . . . . . . . . . . . 0.4 1.4 1.6 0.7 1.4
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 0.7 0.6 0.2 0.5
(1)
Others ........................ 0.5 0.4 0.5 0.4 0.2

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 6.6 9.1 4.2 5.6

Note:

(1) Others comprise mainly expenses relating to travel and transportation, consumables and repair and maintenance.

R&D and engineering costs are expensed as they are incurred, save for development costs which
relate to the design and testing of new or improved materials, products and processes and which
are commercially feasible. See “Critical Accounting Estimates, Assumptions and
Judgements—Estimated useful life of development costs” above for further details.

Administrative expenses

Administrative expenses consist of costs relating to our administrative functions and logistics
operations, primarily of (i) staff costs, (ii) depreciation and amortisation of costs of our property,
plant and equipment and land use rights, (iii) costs arising from share awards to certain of our
employees, (iv) exchange loss, (v) certain tax expenses and (vi) professional and consultancy fees.
Staff costs (including restricted shares award costs for the six months ended 30 June 2020)
comprise the most significant component of our administrative expenses, accounting for 54.6%,

107
59.8%, 59.4%, 62.2% and 68.8% of administrative expenses for the financial years ended
31 December 2017, 2018 and 2019, and for the six months ended 30 June 2019 and 2020,
respectively.

For the financial years ended 31 December 2017, 2018 and 2019, and for the six months ended 30
June 2019 and 2020, our administrative expenses represented 16.8%, 15.3%, 14.8%, 17.2% and
14.5% of our revenue, respectively.

The following table sets out a breakdown of our administrative expenses for the years or periods
indicated:

Financial year ended 31 December Six months ended 30 June

Administrative expenses
(S$ in millions) 2017 2018 2019 2019 2020

Staff costs (1) . . . . . . . . . . . . . . .. 9.5 11.3 12.5 5.9 6.5

Depreciation & Amortisation (2) .. 1.5 2.0 2.2 1.1 1.2
Restricted shares award
costs (3) . . . . . . . . . . . . . . . . .. — — — — 1.2
Exchange loss (4) . . . . . . . . . . . .. 1.5 0.3 0.6 0.2 —
Other tax expenses (5) . . . . . . . .. 0.5 0.9 1.0 0.3 0.4
Professional and Consultant
fees (6) . . . . . . . . . . . . . . . . . .. 0.7 0.8 1.4 0.5 0.4
Others (7) . . . . . . . . . . . . . . . . . .. 3.7 3.6 3.4 1.5 1.6

Total. . . . . . . . . . . . . . . . . . . . . . 17.4 18.9 21.1 9.5 11.3

Notes:

(1) Staff costs comprise salaries and related costs of employees in our group administrative functions (such as executive
management, human resources, finance, corporate secretarial and other administrative support departments) and
logistics and transportation operations, and contribution to central provident fund for such employees in Singapore.
(2) Depreciation & Amortisation comprises depreciation of property, plant and equipment and amortisation of land use
rights relating to our Group administrative functions and logistics and transportation operations of our business units.

(3) Restricted shares award costs relate to the costs to our Group in connection with the grant of share awards under our
Nanofilm Pre-IPO Restricted Share Plan 2020.

(4) Exchange loss are foreign exchange losses arising from settlement of monetary items and on retranslation of monetary
items of our Group that are denominated in foreign currencies.

(5) Other tax expenses are property tax, stamp duty and surtax on value-added tax (VAT).

(6) Professional and Consultant fees are fees paid to external professionals and consultants in connection with the audit
of our financial statements, legal services, company secretarial services, tax agent services and consultant fees paid
to marketing personnel.

(7) Others comprise other expenses incurred in connection with our group administrative functions and logistics and
transportation operations, mainly general operational expenses, travel and transportation costs, freight and handling
charges, electricity and water costs, rental, and repair and maintenance of the premises used by our employees in such
functions.

Finance expenses

Finance expenses comprise interest and finance charges paid on our bank loans, borrowings and
Convertible Notes and interest expenses on the lease liabilities for our Group. See Note 22 to our
audited consolidated financial statements and Note 21 to our unaudited condensed interim
consolidated financial statements which are included in Appendix A and Appendix B of this
Prospectus, respectively, for information on our leases.

108
We expect to incur additional indebtedness and lease liabilities in the future to help finance our
expansion plans, which is expected to increase our finance expenses. Finance expenses may
increase or decrease as a percentage of revenue depending on interest rate movements and our
rate of expansion.

Other operating expenses

Other operating expenses comprise impairment loss on goodwill, which amounted to S$871,759 in
the financial year ended 31 December 2019. We did not recognise any impairment loss on goodwill
in the financial years ended 31 December 2018 and 2017.

Impairment loss allowance on trade receivables

Our Group assesses on a forward basis at the end of each reporting period whether there is any
objective evidence that any part of our trade receivables is impaired to determine the expected
credit loss on our trade receivables. Since the financial year ended 31 December 2018, we applied
a simplified approach to provide for expected credit losses for all trade receivables. The simplified
approach requires expected lifetime losses (representing the expected credit losses that will result
from all possible default events over the expected lifetime of a trade receivable) to be recognised
from initial recognition of the receivables. We estimate this using a provision matrix based on our
Group’s historical credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date including time value of money where appropriate.

Share of loss of associated company

In March 2018, our wholly-owned subsidiary, NVC, acquired a 32.5% interest in an associated
company, Yi Lin (Shanghai) Technologies Co., Ltd. (“YLST”), a company incorporated under the
laws of the PRC, for RMB15.0 million. The principal activity of YLST was the provision of water
treatment in the PRC. YLST was dormant when NVC acquired the company. We subsequently
completed the disposal of YLST on 13 June 2019 and recognised a gain on disposal of
S$0.07 million. Share of loss of associated company consists of our share of YLST’s losses for the
financial years ended 31 December 2018 and 2019.

Exchange losses/gains

Our Group recorded exchange losses from translation of foreign operations of S$0.6 million,
S$3.0 million, and S$3.9 million in the financial years ended 31 December 2017, 2018 and 2019,
respectively, and an exchange gain of S$2.9 million for the six months ended 30 June 2020.

These exchange losses or gains were derived primarily from the translation of the financial
statements of our subsidiaries in China whose functional currencies are in RMB and resulted from
the fluctuations of RMB against S$. See “—Foreign currency fluctuations—RMB to S$” for further
details.

Results of operations

The following table sets forth our consolidated statement of profit or loss and other comprehensive
income for the years or periods stated:

Financial year ended 31 December Six months ended 30 June

(S$ in millions) 2017 2018 2019 2019 2020

Revenue. . . . . . . . . . . . . . . . . . . 103.6 122.8 142.9 55.2 77.8

Cost of sales. . . . . . . . . . . . . . . . (45.7) (56.6) (65.2) (26.6) (36.9)

109
 Financial year ended 31 December Six months ended 30 June

(S$ in millions) 2017 2018 2019 2019 2020

Gross profit. . . . . . . . . . . . . . . . . 57.9 66.2 77.7 28.6 40.9

Other operating income . . . . . . . 1.0 0.6 1.9 1.3 2.6
Finance income . . . . . . . . . . . . . 0.2 0.4 0.5 0.2 0.2
Expenses
Selling and distribution . . . . . . . . (8.6) (11.5) (16.8) (7.1) (9.0)
Administrative . . . . . . . . . . . . . . . (17.4) (18.9) (21.1) (9.5) (11.3)
Finance. . . . . . . . . . . . . . . . . . . . (1.1) (1.1) (1.3) (0.6) (0.9)
Other operating . . . . . . . . . . . . . — — (0.9) — —
Impairment loss allowance on
trade receivables. . . . . . . . . . . — (0.4) (0.1) — —
Share of loss of associated
company . . . . . . . . . . . . . . . . . — (0.4) — (1) — (1) —

Profit before income tax. . . . . . 32.0 34.9 39.9 12.9 22.5

Income tax expense . . . . . . . . . . (5.1) (5.6) (5.4) (2.0) (4.0)

Profit after income tax . . . . . . . 26.9 29.3 34.5 10.9 18.5

Profit attributable to equity

holders of our Company . . . . 26.9 29.3 35.8 11.4 18.5

Note:

(1) Amounts less than S$10,000.

REVIEW OF PAST PERFORMANCE

Six months ended 30 June 2020 as compared to six months ended 30 June 2019

Revenue

The following table sets out a breakdown of our revenue by segmentation for the periods indicated:

Six months ended 30 June

Revenue (S$ in millions) 2019 2020

Advanced Materials BU
—Smart phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 6.7
—Computer (desktop, laptop, tablet) . . . . . . . . . . . . . . . . . . . 17.4 23.9
—Wearable & Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 20.5
—Printing and Imaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 5.6
—Precision Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.6
—Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 4.8

38.4 64.1

Nanofabrication BU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 3.2

Industrial Equipment BU . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 10.5

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.2 77.8

110
Our revenue for the six months ended 30 June 2020 was S$77.8 million, an increase of
S$22.6 million from S$55.2 million for the same period in 2019. This was primarily as a result of the
increase in revenue from our Advanced Materials BU segment, which increased S$25.7 million
from S$38.4 million for the six months ended 30 June 2019 to S$64.1 million for the same period
in 2020. The increase was partially offset by the decrease in revenue from our Industrial Equipment
BU segment, which decreased S$3.4 million from S$13.9 million for the six months ended 30 June
2019 to S$10.5 million for the same period in 2020.

Revenue—Advanced Materials BU

Our revenue from our Advanced Materials BU segment for the six months ended 30 June 2020 was
S$64.1 million, an increase of S$25.7 million from S$38.4 million for the same period in 2019. This
was primarily due to increased sales across most of our product sub-segments, particularly in the
3C sub-segments comprising Smartphone, Computer (desktop, laptop, tablet) and Wearables and
Accessories, due to an increase in demand across our product sub-segments, except for Printing
and Imaging. In particular, we experienced strong revenue growth led by our Wearables &
Accessories, which largely comprise orders from a key customer in the 3C industry utilising our
services for smart wearables, where we registered an increase of 122.8% from S$9.2 million for the
six months ended 30 June 2019 to S$20.5 million for the six months ended 30 June 2020. Revenue
from our Smartphone and Computer (desktop, laptop, tablet) sub-segments increased 123.3% and
37.4%, respectively from S$3.0 million and S$17.4 million, respectively for the six months ended
30 June 2019 to S$6.7 million and S$23.9 million, respectively for the six months ended 30 June
2020. Sales from the Automotive sub-segment, which was only recently established, also
increased more than 11 times from S$0.4 million for the six months ended 30 June 2019 to
S$4.8 million for the six months ended 30 June 2020, as mass production for our automotive parts
continued to ramp up. This was partially offset by a decline in revenue contribution from Printing
and Imaging from S$6.3 million for the six months ended 30 June 2019 to S$5.6 million for the six
months ended 30 June 2020, driven by a reduction of demand for certain heater parts we produce
for one of our customers which was in line with a general decline in global demand for office printing
products, as well as gradual end of life for certain parts we produce for this customer.

Revenue—Nanofabrication BU

Our revenue from our Nanofabrication BU segment for the six months ended 30 June 2020 was
S$3.2 million, an increase of S$0.3 million from S$2.9 million for the same period in 2019. This was
primarily due to new projects secured from a direct customer to produce Fresnel lenses for several
models of mobile phones of our end-customer.

Revenue—Industrial Equipment BU

Our revenue from our Industrial Equipment BU segment for the six months ended 30 June 2020 was
S$10.5 million, a decrease of S$3.4 million from S$13.9 million for the same period in 2019. This
was primarily due to the COVID-19 pandemic which resulted in travel restrictions globally.
Typically, customers will travel to Singapore to view the coating equipment we sell, in order to
understand their capabilities and evaluate their feasibility for installation at their production lines.
The coating equipment can cost more than S$3.0 million each, and customers do not place orders
for our coating equipment without first engaging with our Company, and viewing and understanding
them in person before placing orders. Due to the price point of our coating equipment, any small
reduction in orders compared to the period prior will have a more significant effect in terms of
percentage change compared to prior periods. We do not view the decrease in revenue to be of
concern for our Group as our priority is to provide coating services directly in our Advanced
Materials BU which will provide our Group with higher recurring revenue and command higher
margins than the sale of coating equipment to customers.

111
Cost of sales

Our cost of sales for the six months ended 30 June 2020 was S$36.9 million, an increase of
S$10.3 million from S$26.6 million for the same period in 2019. This was primarily due to an
increase of S$10.9 million from the cost of sales attributed to our Advanced Materials BU, which is
offset by the decrease of S$0.7 million from the cost of sales attributed to our Industrial Equipment
BU.

Cost of sales—Advanced Materials BU

The following table sets out a breakdown of our cost of sales for our Advanced Materials BU for the
periods indicated:

Six months ended 30 June

Cost of sales (S$ in millions) 2019 2020

Advanced Materials BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 8.0
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 10.6
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 4.9
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 4.9

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5 28.4

Our cost of sales from our Advanced Materials BU segment for the six months ended 30 June 2020
was S$28.4 million, an increase of S$10.9 million from S$17.5 million for the same period in 2019.
This was primarily due to an increase of S$4.8 million to our cost of materials and consumables due
to increased sales in the business unit, and increase of S$3.1 million to our direct labour costs as
a result of increased headcount in our production facilities to handle the increased sales.

Cost of sales—Nanofabrication BU

The following table sets out a breakdown of our cost of sales for our Nanofabrication BU for the
periods indicated:

Six months ended 30 June

Cost of sales (S$ in millions) 2019 2020

Nanofabrication BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 0.9
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 0.9
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 1.2
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 1.2

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.2

Our cost of sales from our Nanofabrication BU segment for the six months ended 30 June 2020 was
S$4.2 million, an increase of S$0.1 million from S$4.1 million for the same period in 2019. This was
primarily due to an increase in other factory overheads of S$0.7 million, which was partially offset
by a decrease of S$0.3 million to our Direct Materials and a decrease in Depreciation &
Amortisation of S$0.3 million.

112
Cost of sales—Industrial Equipment BU

The following table sets out a breakdown of our costs of sales for our Industrial Equipment BU for
the periods indicated:

Six months ended 30 June

Cost of sales (S$ in millions) 2019 2020

Industrial Equipment BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 2.5
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 0.7
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.2
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 0.9

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.3

Our cost of sales from our Industrial Equipment BU segment for the six months ended 30 June 2020
was S$4.3 million, a decrease of S$0.7 million from S$5.0 million for the same period in 2019. This
was primarily due to a decrease of S$0.5 million to our cost of materials and consumables due to
reduced deliveries of coating equipment for the six months ended 30 June 2020.

Gross profit margin

Our gross profit for the six months ended 30 June 2020 was S$40.9 million, an increase of
S$12.3 million, or 43.0%, from S$28.6 million for the same period in 2019. Our gross profit margin
was 52.6% for the six months ended 30 June 2020, an increase from 51.8% for the six months
ended 30 June 2019. We were able to grow our gross profit margin for the six months ended
30 June 2020 notwithstanding the COVID-19 pandemic and increasing labour costs in the PRC due
to our operations leverage as a result of economies of scale arising from higher levels of
production, increased efficiency of our operations through automation and improved manufacturing
work processes, while maintaining our fixed overheads at our manufacturing plants. Our gross
profit margins for the six months ended 30 June 2019 and 2020 were lower than the gross profit
margins of S$57.9 million, S$66.2 million and S$77.7 million for the financial years ended 31
December 2017, 2018 and 2019 respectively as we generally experience higher sale volumes in
the second half of each financial year. As part of our overheads are fixed, our gross profit margins
for the second half of each financial year will generally be higher than the first half of the financial
year.

Other operating income

Other operating income was S$2.6 million for the six months ended 30 June 2020, an increase of
S$1.3 million from S$1.3 million for the same period in 2019. This was primarily as a result of an
increase in government grants of S$0.4 million compared to the six months ended 30 June 2019
and the recognition of exchange gains commencing from 2020, compared to exchange losses
recognised under administrative expenses for the six months ended 30 June 2019. Exchange gains
amounted to S$0.8 million for the six months ended 30 June 2020 compared to exchange losses of
S$0.2 million recognised under administrative expenses for the six months ended 30 June 2019.

113
Selling and distribution expenses

The following table sets out a breakdown of our selling and distribution expenses for the periods
indicated:

Six months ended 30 June

Selling and distribution expenses (S$ in millions) 2019 2020

Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 4.8

Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 1.1
Materials for R&D and Engineering . . . . . . . . . . . . . . . . . . . . 0.7 1.4
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.5
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1.2

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 9.0

Our selling and distribution expenses were S$9.0 million for the six months ended 30 June 2020,
an increase of S$1.9 million from S$7.1 million for the six months ended 30 June 2019. This was
primarily due to (i) an increase of S$0.9 million to our staff costs as a result of increased staff count,
which was in line with our business growth and in preparation for the commencement of operations
of our Shanghai Plant 2 in the first quarter of 2021 and (ii) an increase of S$0.7 million for materials
used for our R&D and engineering activities. These increases in expenses are due to an overall
increase in sales by our Group for the six months ended 30 June 2020.

Administrative expenses

The following table sets out a breakdown of our administrative expenses for the periods indicated:

Six months ended 30 June

Administrative expenses (S$ in millions) 2019 2020

Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9 6.5

Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 1.2
Restricted shares award costs . . . . . . . . . . . . . . . . . . . . . . . . — 1.2
Exchange loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 —
Other tax expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.4
Professional and Consultant fees . . . . . . . . . . . . . . . . . . . . . . 0.5 0.4
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 1.6

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 11.3

Our administrative expenses were S$11.3 million for the six months ended 30 June 2020, an
increase of S$1.8 million from S$9.5 million for the six months ended 30 June 2019. This was
primarily due to (i) a one-time cost of S$1.2 million recognised as a result of the grant of share
awards to certain of our management team, and (ii) an increase of S$0.6 million to our staff costs
as a result of increased staff count.

114
Finance expenses

Our finance expenses were S$0.9 million for the six months ended 30 June 2020, an increase of
S$0.3 million from S$0.6 million for the six months ended 30 June 2019. This was primarily due to
an increase in interest expenses on bank loans as a result of an increase in outstanding bank loans
from S$17.3 million for the six months ended 30 June 2019 to S$26.3 million for the same period
in 2020.

Income tax expense

Our income tax expense for the six months ended 30 June 2020 was S$4.0 million, an increase of
S$2.0 million from S$2.0 million for the six months ended 30 June 2019, primarily due to an
increase in profit before income tax.

Profit for the period

As a result of the above, our profit for six months ended 30 June 2020 was S$18.5 million, an
increase of S$7.6 million from a profit of S$10.9 million for the six months ended 30 June 2019.

Profit attributable to equity holders of our Company and non-controlling interests

Our profit after income tax attributable to equity holders of our Company for the six months ended
30 June 2020 was S$18.5 million, an increase of S$7.1 million from S$11.4 million for the six
months ended 30 June 2019. Profit after tax attributable to non-controlling interests was
approximately S$0.07 million for the six months ended 30 June 2020, compared to a loss of S$0.5
million for the six months ended 30 June 2019.

Financial year ended 31 December 2019 as compared to financial year ended 31 December
2018

Revenue

The following table sets out a breakdown of our revenue by segmentation for the periods indicated:

Financial year ended 31 December

Revenue (S$ in millions) 2018 2019

Advanced Materials BU
—Smart phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6 13.6
—Computer (desktop, laptop, tablet) . . . . . . . . . . . . . . . . . . . 35.5 43.2
—Wearable & Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8 32.2
—Printing and Imaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8 12.9
—Precision Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 5.1
—Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 2.6

82.4 109.6

Nanofabrication BU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 5.9

Industrial Equipment BU . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.1 27.4

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.8 142.9

115
Our revenue for the financial year ended 31 December 2019 was S$142.9 million, an increase of
S$20.1 million from S$122.8 million for the financial year ended 31 December 2018. This was
primarily due to the increase in revenue from our Advanced Materials BU segment, which increased
S$27.2 million from S$82.4 million for the financial year ended 31 December 2018 to
S$109.6 million for the financial year ended 31 December 2019. Revenue from our Nanofabrication
BU segment also increased S$0.6 million from S$5.3 million for the financial year ended
31 December 2018 to S$5.9 million for the financial year ended 31 December 2019. The increase
was partially offset by the decrease in revenue from our Industrial Equipment BU segment, which
decreased S$7.7 million from S$35.1 million for the financial year ended 31 December 2018 to
S$27.4 million for the financial year ended 31 December 2019.

Revenue—Advanced Materials BU

Our revenue from our Advanced Material BU segment for the financial year ended 31 December
2019 was S$109.6 million, an increase of S$27.2 million from S$82.4 million for the financial year
ended 31 December 2018. This was primarily due to increased sales across all product
sub-segments. Particularly, product orders for our Wearables & Accessories, which largely
comprise orders from a key customer in the 3C industry utilising our services for smart wearables,
increased 71.3% from S$18.8 million for the financial year ended 31 December 2018 to
S$32.2 million for the financial year ended 31 December 2019. Sales from our Computer (desktop,
laptop, tablet) sub-segment increased 21.7% from S$35.5 million for the financial year ended
31 December 2018 to S$43.2 million for the financial year ended 31 December 2019 as a result of
an increase in purchase orders from two of our key end-customers as they shifted their
end-products away from conventional PVD coating towards our nanotechnology solutions. Sale
from the Automotive sub-segment also increased more than four times from S$0.5 million for the
financial year ended 31 December 2018 to S$2.6 million for the financial year ended 31 December
2019 primarily due to revenue recorded from NHT, which commenced operations in 2019.

Revenue—Nanofabrication BU

Our revenue from our Nanofabrication BU segment for the financial year ended 31 December 2019
was S$5.9 million, an increase of S$0.6 million from S$5.3 million for the financial year ended
31 December 2018. This was primarily due to increase of orders of S$3.3 million from a direct
customer for the production of lenses for use in various global smartphone brands and the
production of mold parts, which was partially offset by a decrease in orders of S$3.2 million from
another direct customer.

Revenue—Industrial Equipment BU

Our revenue from our Industrial Equipment BU segment for the financial year ended 31 December
2019 was S$27.4 million, a decrease of S$7.7 million from S$35.1 million for the financial year
ended 31 December 2018. This was due to reduced number of coating equipment we sold to
customers. As explained above, we are selective in selling our coating equipment as our focus is
on growing our recurring revenue and providing our surface solutions to our customer directly.

Cost of sales

Our cost of sales for the financial year ended 31 December 2019 was S$65.2 million, an increase
of S$8.6 million from S$56.6 million for the financial year ended 31 December 2018. This was
primarily due to increase in our staff costs of S$3.4 million for our Advanced Materials BU, which
was partially offset by the reduction of staff costs of S$0.7 million for our Industrial Equipment BU,
and cost of sales relating to our Nanofabrication BU was also S$5.3 million higher than the cost of
sales for the financial year ended 31 December 2018 when we acquired a majority stake in our
subsidiary, NFT.

116
Cost of sales—Advanced Materials BU

The following table sets out a breakdown of our cost of sales for our Advanced Materials BU for the
periods indicated:

Financial year ended 31 December

Cost of sales (S$ in millions) 2018 2019

Advanced Materials BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 9.5
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.9 18.3
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 7.1
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 10.0

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.6 44.9

Our cost of sales from our Advanced Materials BU segment for the financial year ended
31 December 2019 was S$44.9 million, an increase of S$7.3 million from S$37.6 million for the
financial year ended 31 December 2018. This was primarily due to an increase of (i) S$3.4 million
in staff costs and (ii) S$4.0 million in production overheads and variable costs in relation to the
operations in the business unit. The increases are due to increased sales of our products and
services in the financial year ended 31 December 2019.

Cost of sales—Nanofabrication BU

The following table sets out a breakdown of our cost of sales for our Nanofabrication BU for the
periods indicated:

Financial year ended 31 December

Cost of sales (S$ in millions) 2018 2019

Nanofabrication BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 3.4
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 2.0
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 3.1
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 1.0

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 9.5

Our cost of sales from our Nanofabrication BU segment for the financial year ended 31 December
2019 was S$9.5 million, an increase of S$5.3 million from S$4.2 million for the financial year ended
31 December 2018. This was primarily due to an increase of (i) S$3.3 million in our costs of goods,
materials and consumables, and (ii) S$0.9 million in depreciation and amortisation of costs relating
to our property, plant and equipment and land use rights for the business unit.

117
Cost of sales—Industrial Equipment BU

The following table sets out a breakdown of our cost of sales for our Industrial Equipment BU for the
periods indicated:

Financial year ended 31 December

Cost of sales (S$ in millions) 2018 2019

Industrial Equipment BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 6.8
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 1.7
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.4
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 1.9

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8 10.8

Our cost of sales from our Industrial Equipment BU segment in the financial year ended
31 December 2019 was S$10.8 million, a decrease of S$4.0 million from S$14.8 million for the
financial year ended 31 December 2018. This was primarily due to a decrease of S$3.7 million in
the costs of our materials and consumables used in the business unit as a result of lower sales of
equipment in the financial year ended 31 December 2019.

Gross profit margin

Our gross profit for the financial year ended 31 December 2019 was S$77.7 million, an increase of
S$11.5 million, or 17.4%, from S$66.2 million for the financial year ended 31 December 2018. Our
gross profit margin was 54.4% for the financial year ended 31 December 2019, an increase from
53.9% for the financial year ended 31 December 2018. The improvement was primarily as a result
of increased efficiency of our operations through automation and more efficient manufacturing work
processes.

Other operating income

Other operating income was S$1.9 million for the financial year ended 31 December 2019, an
increase of S$1.3 million from S$0.6 million for the financial year ended 31 December 2018. This
was primarily as a result of an increase in government grants of S$0.9 million and increase in
sundry income of S$0.4 million in 2019 compared to 2018. We received government grants for
S$1.4 million for the financial year ended 31 December 2019, which was more than double the
S$0.5 million received for the financial year ended 31 December 2018. This is mainly due to the
increase of S$0.4 million in government grants obtained by our Company in Singapore and
S$0.4 million obtained by NRE in the PRC.

118
Selling and distribution expenses

The following table sets out a breakdown of our selling and distribution expenses for the periods
indicated:

Financial year ended 31 December

Selling and distribution expenses (S$ in millions) 2018 2019

Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 9.6

Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 2.0
Materials for R&D and Engineering . . . . . . . . . . . . . . . . . . . . 1.4 1.6
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 0.7
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 2.9

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 16.8

Our selling and distribution expenses were S$16.8 million for the financial year ended 31 December
2019, an increase of S$5.3 million from S$11.5 million for the financial year ended 31 December
2018. This was primarily due to (i) an increase of S$4.2 million for our staff costs of our sales and
logistics staff in the financial year ended 31 December 2019 compared to the financial year ended
31 December 2018 due to an increase in headcount to handle the increased production demand as
a result of an increase in sales in our Advanced Materials BU, and (ii) increase of S$0.3 million in
depreciation of property, plant and equipment arising from a larger installed base of coating
equipment.

Administrative expenses

The following table sets out a breakdown of our administrative expenses for the periods indicated:

Financial year ended 31 December

Administrative expenses (S$ in millions) 2018 2019

Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 12.5

Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2.2
Restricted shares award costs . . . . . . . . . . . . . . . . . . . . . . . . — —
Exchange loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.6
Other tax expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 1.0
Professional and Consultant fees . . . . . . . . . . . . . . . . . . . . . . 0.8 1.4
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 3.4

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9 21.1

119
Our administrative expenses were S$21.1 million for the financial year ended 31 December 2019,
an increase of S$2.2 million from S$18.9 million for the financial year ended 31 December 2018.
This was primarily due to an increase in our staff costs of S$1.2 million from S$11.3 million for the
financial year ended 31 December 2018 to S$12.5 million for the financial year ended 31 December
2019 for our employees, other than those in our manufacturing plants, and the sale and distribution
of our products, along with an increase in professional and consultant fees and exchange loss of
S$0.6 million and S$0.3 million respectively.

Finance expenses

Our finance expenses were S$1.3 million for the financial year ended 31 December 2019, an
increase of S$0.2 million from S$1.1 million for the financial year ended 31 December 2018. This
was primarily due to an increase in the interest paid for our Convertible Notes of S$0.5 million for
the full financial year ended 31 December 2019 as compared to interest paid for only seven months
in the financial year ended 31 December 2018, which was offset by lower bank loans interest
expenses with lower outstanding loans in the financial year ended 31 December 2019 compared to
the financial year ended 31 December 2018.

Income tax expense

Our income tax expense for the financial year ended 31 December 2019 was S$5.4 million, a
decrease of S$0.2 million from S$5.6 million for the financial year ended 31 December 2018,
primarily due to (i) effective lower tax rate applicable on our profit before income tax, which
decreased from 17.5% for the financial year ended 31 December 2018 to 14.9% for the financial
year ended 31 December 2019, mainly due to the availability of special tax incentives from
Enterprise Singapore under the International Growth Scheme, which resulted in a reduction of
S$0.7 million in income tax payable by our Company, (ii) increase in the availability of tax incentives
of S$0.4 million for the financial year ended 31 December 2019 as compared to the financial year
ended 31 December 2018, which mainly comprise tax credits granted to our Company under the
Productivity and Innovation Credit Scheme of the Inland Revenue Authority of Singapore and
research and development tax deductions for NVC, one of our PRC subsidiaries, and (iii) the
decrease in deferred taxes of S$0.4 million in the financial year ended 31 December 2019
compared to the financial year ended 31 December 2018.

Profit for the year

As a result of the above, our profit for the financial year ended 31 December 2019 was
S$34.5 million, an increase of S$5.2 million from a profit of S$29.3 million for the financial year
ended 31 December 2018.

Profit attributable to equity holders of our Company and non-controlling interests

Our profit after income tax attributable to equity holders of our Company for the financial year
31 December 2019 was S$35.8 million, an increase of S$6.5 million from S$29.3 million for the
financial year ended 31 December 2018. Loss after tax attributable to non-controlling interests was
S$1.2 million for the financial year ended 31 December 2019, an increase of S$1.2 million
compared to a profit of approximately S$0.01 million for the financial year ended 31 December
2018.

120
Financial year ended 31 December 2018 as compared to financial year ended 31 December
2017

Revenue

The following table sets out a breakdown of our revenue by segmentation for the periods indicated:

Financial year ended 31 December

Revenue (S$ in millions) 2017 2018

Advanced Materials BU
—Smart phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 12.6
—Computer (desktop, laptop, tablet) . . . . . . . . . . . . . . . . . . . 30.6 35.5
—Wearable & Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9 18.8
—Printing and Imaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 10.8
—Precision Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.2
—Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.5

74.0 82.4

Nanofabrication BU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5.3
Industrial Equipment BU . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.6 35.1

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.6 122.8

Our revenue for the financial year ended 31 December 2018 was S$122.8 million, an increase of
S$19.2 million from S$103.6 million for the financial year ended 31 December 2017. This was
primarily due to the increase in revenue from our Advanced Materials BU and Industrial Equipment
BU segments, as well as the commencement of operations of our Nanofabrication BU segment in
the financial year ended 31 December 2018.

Revenue—Advanced Materials BU

Our revenue from our Advanced Materials BU segment in the financial year ended 31 December
2018 was S$82.4 million, an increase of S$8.4 million from S$74.0 million in the financial year
ended 31 December 2017. This was primarily due to an increase in product orders from and
services rendered to our key customers in the 3C industry utilising our services for the Computers
(desktops, laptops and tablets), Wearables & Accessories and Smartphone sub-segments.

Revenue—Nanofabrication BU

Our revenue from our Nanofabrication BU segment in the financial year ended 31 December 2018
was S$5.3 million arising from production of lenses for use in smartphones. We had no revenue
from Nanofabrication BU in 2017 as we only commenced operations in this segment in the financial
year ended 31 December 2018 with our acquisition of a majority stake in our subsidiary, NFT.

121
Revenue—Industrial Equipment BU

Our revenue from our Industrial Equipment BU segment in the financial year ended 31 December
2018 was S$35.1 million, an increase of S$5.5 million from S$29.6 million in the financial year
ended 31 December 2017. This was primarily due to an increase of S$16.1 million in sales of our
piston ring coating equipment, glass lens mold systems and de-coating systems by NTI and NTJ,
which was partially offset by a decrease of S$11.3 million in revenue recognised from the sale of
our solar glass coating in-line equipment based on its progress completion.

Cost of sales

Our cost of sales for the financial year ended 31 December 2018 was S$56.6 million, an increase
of S$10.9 million from S$45.7 million for the financial year ended 31 December 2017. This was
primarily due to increases in cost of sales for our three business units. Cost of sales increased for
our Advanced Materials BU and our Industrial Equipment BU due to increased sales of our products
and services in the financial year ended 31 December 2018, and our Nanofabrication BU is a new
segment recognised in the financial year ended 31 December 2018 as a result of our acquisition of
a majority stake in NFT which became our subsidiary in that financial year.

Cost of sales—Advanced Materials BU

The following table sets out a breakdown of our cost of sales for our Advanced Materials BU for the
periods indicated:

Financial year ended 31 December

Cost of sales (S$ in millions) 2017 2018

Advanced Materials BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 8.5
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4 14.9
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 8.2
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 6.0

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.1 37.6

Our cost of sales from our Advanced Materials BU segment for the financial year ended
31 December 2018 was S$37.6 million, an increase of S$4.5 million from S$33.1 million for the
financial year ended 31 December 2017. This was primarily due to an increase of (i) S$1.6 million
in costs of materials and consumables, (ii) S$1.5 million in staff costs, (iii) S$0.6 million in variable
costs in relation to the operations in the business unit, and (iv) S$0.8 million in depreciation of our
property, plant and equipment used in the business unit.

122
Cost of sales—Nanofabrication BU

The following table sets out a breakdown of our cost of sales for our Nanofabrication BU for the
periods indicated:

Financial year ended 31 December

Cost of sales (S$ in millions) 2017 2018

Nanofabrication BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.1
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1.8
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . — 2.2
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.1

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4.2

Our cost of sales from our Nanofabrication BU segment for the financial year ended 31 December
2018 was S$4.2 million. We did not incur any cost of sales for our Nanofabrication BU segment in
the financial year ended 31 December 2017 as we only commenced operations in this segment in
the financial year ended 31 December 2018.

Cost of sales—Industrial Equipment BU

The following table sets out a breakdown of our cost of sales for our Industrial Equipment BU for the
periods indicated:

Financial year ended 31 December

Cost of sales (S$ in millions) 2017 2018

Industrial Equipment BU
Direct Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 10.5
Direct Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 2.4
Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.2
Other Factory Overheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 1.7

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6 14.8

Our cost of sales from our Industrial Equipment BU segment for the financial year ended
31 December 2018 was S$14.8 million, an increase of S$2.2 million from S$12.6 million for the
financial year ended 31 December 2017. This was primarily due to an increase of (i) S$1.2 million
to our cost of materials and consumables due to increased deliveries of equipment in the financial
year ended 31 December 2018, (ii) S$0.5 million in staff costs due to increased headcount in the
business unit to work on the increased orders in the business unit, and (iii) S$0.4 million in variable
costs in relation to the production of the equipment for our customers, as a result of increased
orders in the business unit.

123
Gross profit margin

Our gross profit for the financial year ended 31 December 2018 was S$66.2 million, an increase of
S$8.3 million, or 14.4%, from S$57.9 million for the financial year ended 31 December 2017. Our
gross profit margin was 53.9% for the financial year ended 31 December 2018, a decrease from
55.9% for the financial year ended 31 December 2017. This was primarily due to a decrease in
revenue registered for our project for the manufacture of coating equipment for CdTe solar films
undertaken for a customer as the majority of revenue from the project was registered in the financial
year ended 31 December 2017 in accordance with its progress of completion. The project
commanded a higher unit selling price without increasing proportionately our costs, resulting in
higher profit margin to our Group.

Other operating income

Other operating income was S$0.6 million in the financial year ended 31 December 2018, a
decrease of S$0.4 million from S$1.0 million for the financial year ended 31 December 2017. This
was primarily due to a decrease in government grants of S$0.2 million and decrease in sundry
income of S$0.2 million in the financial year ended 31 December 2018 compared to the financial
year ended 31 December 2017.

Selling and distribution expenses

The following table sets out a breakdown of our selling and distribution expenses for the periods
indicated:

Financial year ended 31 December

Selling and distribution expenses (S$ in millions) 2017 2018

Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 5.4

Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 1.7
Materials for R&D and Engineering . . . . . . . . . . . . . . . . . . . . 0.4 1.4
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 0.7
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 2.3

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 11.5

Our selling and distribution expenses were S$11.5 million in the financial year ended 31 December
2018, an increase of S$2.9 million from S$8.6 million for the financial year ended 31 December
2017. This was primarily due to an increase of S$1.0 million in materials used for R&D activities
undertaken for our Group’s own purposes and S$0.8 million in staff costs as a result of increased
headcount in our R&D and engineering, and sales and marketing operations to handle the
increased sales.

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Administrative expenses

The following table sets out a breakdown of our administrative expenses for the periods indicated:

Financial year ended 31 December

Administrative expenses (S$ in millions) 2017 2018

Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 11.3

Depreciation & Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 2.0
Restricted shares award costs . . . . . . . . . . . . . . . . . . . . . . . . — —
Exchange loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 0.3
Other tax expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 0.9
Professional and Consultant fees . . . . . . . . . . . . . . . . . . . . . . 0.7 0.8
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 3.6

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4 18.9

Our administrative expenses were S$18.9 million in the financial year ended 31 December 2018, an
increase of S$1.5 million from S$17.4 million for the financial year ended 31 December 2017. This
was primarily due to an increase in our Directors’ remuneration and contributions to their central
provident funds of S$1.4 million, an increase in depreciation of property, plant and equipment, and
amortisation of land use rights of S$0.5 million in connection with our Group’s administrative
functions, which was partially offset by a decrease in foreign exchange loss of S$1.2 million.
General increases across multiple miscellaneous administrative costs also contributed to the
increase in our administrative expenses.

Finance expenses

Our finance expenses were S$1.1 million in the financial year ended 31 December 2018, which was
in line with our finance expenses of S$1.1 million for the financial year ended 31 December 2017.

Income tax expense

Our income tax expense for the financial year ended 31 December 2018 was S$5.6 million, an
increase of S$0.5 million from S$5.1 million for the financial year ended 31 December 2017. This
was primarily due to increased deferred tax expense of S$0.5 million in the financial year ended
31 December 2018. We did not have any deferred tax expenses in the financial year ended
31 December 2017.

Profit for the year

As a result of the above, our profit for the financial year ended 31 December 2018 was
S$29.3 million, an increase of S$2.4 million from a profit of S$26.9 million for the financial year
ended 31 December 2017.

125
Profit attributable to equity holders of our Company and non-controlling interests

Our profit after income tax attributable to equity holders of our Company for the financial year
31 December 2018 was S$29.3 million, an increase of S$2.4 million from S$26.9 million for the
financial year ended 31 December 2017. Profit after tax attributable to non-controlling interests was
approximately S$0.01 million for the financial year ended 31 December 2018. No profit or loss
attributable to non-controlling interests was recorded for the financial year ended 31 December
2017.

LIQUIDITY AND CAPITAL RESOURCES

Our working capital and other capital requirements have historically been principally financed
through a combination of cash generated from operating activities, borrowings from financial
institutions and the issuance of notes to investors and shareholders’ equity.

Our Group generated net cash flow from operating activities amounting to S$34.6 million,
S$29.6 million, S$52.4 million and S$29.6 million for the financial years ended 31 December 2017,
2018 and 2019, and the six months ended 30 June 2020, respectively.

With regard to borrowings from financial institutions and the issuance of notes to investors to fund
our working capital and capital expenditures, we typically apply the cash flows generated from our
operations towards repaying the facilities and payment of interest under the facilities and the
Convertible Notes, therefore reducing the outstanding amounts under these facilities and
performing our obligations under the relevant financing documents.

As at the Latest Practicable Date, our material sources of unused liquidity available include
S$49.5 million in undrawn credit facilities, which are available to fund our working capital and
capital expenditures.

Going forward, we expect to continue to incur capital expenditure for the expansion of the capacity
of our operations and the upgrading of our plant and machinery in our plants as we expand our
product offerings to tap into promising growth opportunities across our target markets.

We expect to receive net proceeds of approximately S$190.9 million from the issue of the New
Cornerstone Shares. See “Use of Proceeds” for a description of how the proceeds we expect to
receive from the issue of the New Cornerstone Shares are intended to be used.

Our working capital as at 31 December 2017, 2018 and 2019, and as at 30 June 2019 and 2020 is
set out in the following table.

As at 31 December As at June

(S$ in millions) 2017 2018 2019 2020

Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 17.0 14.7 15.1
Trade and other receivables, and other
current assets . . . . . . . . . . . . . . . . . . . . . 39.9 56.8 58.2 53.2
(1)
Contract assets/Accrued receivables ... 4.6 7.8 11.4 14.0
Cash and bank balances . . . . . . . . . . . . . . 23.2 25.1 25.4 41.2
Total current assets . . . . . . . . . . . . . . . . . 78.0 106.7 109.7 123.5

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 As at 31 December As at June

(S$ in millions) 2017 2018 2019 2020

Current liabilities
Trade and other payables. . . . . . . . . . . . . . 23.3 26.0 37.0 42.3
Contract liabilities/Advanced receipts . . . . . 6.7 2.1 6.4 7.3
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 — 3.9 14.5
(2)
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . 0.8 0.7 4.2 4.5 (2)
Convertible Notes . . . . . . . . . . . . . . . . . . . . — — — 50.0
Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 0.4 0.5 0.3
Provisions for taxation . . . . . . . . . . . . . . . . 4.4 5.2 3.3 4.8
Total current liabilities . . . . . . . . . . . . . . . 47.7 34.4 55.3 123.7

Working capital . . . . . . . . . . . . . . . . . . . . . 30.3 72.3 54.4 (0.2)

Notes:

(1) The increase in contract assets/accrued receivables for the period under review was driven by the completion of our
customers’ orders which provided our Group the right to payment for work completed but not billed as at the reporting
period. The increases were in line with the increase in sales from our Advanced Materials BU during the period under
review.
(2) The increase in lease liabilities over 2019 and the six months ended 30 June 2020 to S$4.5 million as at 30 June 2020
was due to new lease contracts being entered into by our Company for the rental of three factory units in Singapore
which are part of our Singapore Plant.

Based on the table above, our historical working capital was S$30.3 million, S$72.3 million and
S$54.4 million as at 31 December 2017, 2018 and 2019, respectively. We had negative working
capital of S$0.2 million as at 30 June 2020, mainly due to the re-classification of our Convertible
Notes from non-current liabilities as at 31 December 2019 to current liabilities as at 30 June 2020.

We may, however, incur additional indebtedness to finance all or a portion of our (i) capital
expenditure on development and building of new machinery for our Advanced Materials BU and
purchase of new machinery for our Nanofabrication BU, (ii) R&D and engineering activities,
(iii) construction, refurbishment and renovation of new and existing production facilities, and
(iv) other purposes. In addition, depending on our capital requirements, market conditions and
other factors, we may raise additional funds through debt or equity offerings.

Taking into account the foregoing, the historical trends in the last three years where our Group has
strong positive operating cash flow for the financial years ended 31 December 2017, 2018 and
2019, and for the six months ended 30 June 2020, the undrawn amounts of credit facilities available
to us, our working capital, and the net proceeds from the issue of New Cornerstone Shares due to
us, our Directors are of the reasonable opinion that, as at the date of lodgment of this Prospectus,
the working capital available to our Group is sufficient to meet our present requirements and
anticipated requirements for capital expenditures and other cash requirements for 12 months
following the date of this Prospectus.

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Historical cash flows

The following table summarises our cash flows for the years or periods indicated:

Financial year ended 31 December Six months ended 30 June

(S$ in millions) 2017 2018 2019 2019 2020

Net cash generated from

operating activities . . . . . . . . . 34.6 29.6 52.4 30.6 29.6
Net cash used in investing
activities . . . . . . . . . . . . . . . . . (15.5) (34.6) (45.3) (15.1) (36.2)
Net cash (used in)/generated
from financing activities. . . . . . (9.6) 9.0 (7.2) 15.0 21.8
Net increase/(decrease) in
cash and cash equivalents . . 9.5 4.0 (0.1) 30.5 15.2
Effects of exchange rate
changes on cash and cash
equivalents held in foreign
currencies . . . . . . . . . . . . . . . . (1.1) 0.1 (0.4) (0.7) 0.6
Cash and cash equivalents at
beginning of the year/
period . . . . . . . . . . . . . . . . . . . 12.6 21.0 25.1 25.1 24.6

Cash and cash equivalents at

end of the year/period . . . . . . 21.0 25.1 24.6 54.9 40.4

Net cash generated from operating activities

We generated positive net cash flows from operating activities for the financial years ended
31 December 2017, 2018 and 2019, and for the six months ended 30 June 2019 and 2020.

Net cash generated from operating activities consists primarily of our profit before income tax
adjusted by non-cash items such as depreciation of property, plant and equipment, warranty
provisions and reversals, finance expenses and unrealised foreign exchange differences, and
adjusted by changes in working capital, such as trade and other receivables, inventories, trade and
other payables and other provisions. Net cash flows from operating activities were after income tax
paid.

Our net cash generated from operating activities for the six months ended 30 June 2020 was
S$29.6 million consisting of net cash flows from operations before changes in working capital of
S$32.2 million and net cash inflows from changes in operating assets and liabilities of S$1.1 million,
which were partially offset by payment of interest of S$1.3 million and income tax of S$2.5 million.
Our net cash inflows from changes in operating assets and liabilities were primarily due to a
decrease in trade, other receivables and other current assets of S$4.1 million, mainly due to trade
receivables being typically lower in the first half of the year compared to the second half as our
sales volume is generally higher in the second half of the year, but were partially offset by a
decrease in trade, other payables and provisions of S$3.9 million.

Our net cash from operating activities for the financial year ended 31 December 2019 was S$52.4
million, consisting of net cash flows from operations before changes in working capital of S$57.2
million and net cash inflows from changes in operating assets and liabilities of S$2.7 million, which
were partially offset by payment of interest of S$0.8 million and income tax of S$7.1 million. Our net
cash inflows from changes in operating assets and liabilities were primarily due to a decrease in

128
inventories of S$4.6 million and an increase in trade, other payables and provisions of
S$15.2 million, which were partially offset by an increase in trade, other receivables and other
current assets of S$17.1 million in line with the increase in sales by our business units in the year.

Our net cash from operating activities for the financial year ended 31 December 2018 was
S$29.6 million, consisting of net cash flows from operations before changes in working capital of
S$50.3 million, which were partially offset by net cash outflows from changes in operating assets
and liabilities of S$15.7 million and payment of interest of S$1.0 million and income tax of
S$4.3 million. Our net cash outflows from changes in operating assets and liabilities were primarily
due to an increase in trade, other receivables and other current assets of S$6.9 million, an increase
in inventories of S$5.7 million and a decrease in trade, other payables and provisions of
S$3.1 million.

Our net cash from operating activities for the financial year ended 31 December 2017 was
S$34.6 million, consisting of net cash flows from operations before changes in working capital of
S$45.6 million, which were partially offset by net cash outflows from changes in operating assets
and liabilities of S$6.9 million and payment of interest of S$1.0 million and income tax of
S$3.2 million. Our net cash outflows from changes in operating assets and liabilities were primarily
due to an increase in trade, other receivables and other current assets of S$19.5 million, and an
increase in inventories of S$2.6 million, which were partially offset by an increase in trade, other
payables and provisions of S$15.2 million.

Net cash used in investing activities

Our net cash used in investing activities for the six months ended 30 June 2020 was S$36.2 million.
This was mainly due to additions of property, plant and equipment of S$35.7 million due to ongoing
construction of our Shanghai Plant 2 and intangible assets of S$0.6 million.

Our net cash used in investing activities for the financial year ended 31 December 2019 was
S$45.3 million. This was mainly due to ongoing construction of our Shanghai Plant 2, and the
purchase of plant and equipment amounting to S$46.3 million, which was partially offset by
proceeds of S$2.6 million we received from the disposal of YLST which was completed in June
2019.

Our net cash used in investing activities for the financial year ended 31 December 2018 was
S$34.6 million. This was mainly due to the purchase or property, plant and equipment of
S$18.6 million in the ordinary course of business of our business units, deposits paid for the
acquisition of land use rights of S$10.4 million in connection with the land used for the construction
of our Shanghai Plant 2, the remaining acquisition fees of S$1.6 million (after deposits of
S$2.1 million paid in 2017) for the acquisition of NFT which was completed in January 2018, and the
acquisition of YLST for S$3.0 million which was completed in March 2018.

Our net cash used in investing activities for the financial year ended 31 December 2017 was
S$15.5 million. This was mainly due to the purchase or property, plant and equipment of
S$12.6 million in the ordinary course of business of our business units and deposits of S$2.1 million
paid by our Group in connection with the investments in NFT which were completed in 2018.

Net cash generated from/(used in) financing activities

Our net cash generated from financing activities for the six months ended 30 June 2020 was
S$21.8 million. This was mainly due to bank loans undertaken to fund the construction of our
Shanghai Plant 2 of S$26.5 million, which was partially offset by repayment of bank loans of
S$4.1 million and principal payment of lease liabilities of S$0.6 million.

129
Our net cash used in financing activities for the financial year ended 31 December 2019 was
S$7.2 million. This was mainly due to the repayment of bank loans of S$17.9 million and the
payment of dividends of S$9.5 million to our shareholders. These amounts were partially offset by
new bank loans of S$21.8 million obtained by our Group during the year.

Our net cash generated from financing activities for the financial year ended 31 December 2018
was S$9.0 million. This was mainly due to the issue of the S$50.0 million principal amount of
Convertible Notes, new bank loans of S$4.1 million obtained by our Group during the year, a
decrease in fixed deposits of S$2.2 million which were pledged with banks for banking facilities
granted to our Group and with financial institutions for operation and completion of the construction
of property, plant and equipment, and proceeds of S$0.7 million from the issuance of new ordinary
shares by our Company. These amounts were partially offset by repayment of bank loans of
S$22.0 million and the payment of dividends of S$25.0 million to our shareholders.

Our net cash used in financing activities for the financial year ended 31 December 2017 was
S$9.6 million. This was mainly due to the repayment of bank loans of S$22.8 million and the
payment of dividends of S$3.6 million to our shareholders. These amounts were partially offset by
new bank loans of S$13.7 million obtained by our Group during the year, a decrease in fixed
deposits of S$3.0 million which were pledged with banks for banking facilities granted to our Group
and with financial institutions for operation and completion of the construction of property, plant and
equipment, and proceeds of S$0.7 million from the issuance of new ordinary shares by our
Company.

CONTRACTUAL COMMITMENTS

As at the Latest Practicable Date, our principal contractual commitments consist of our capital
expenditure commitments in connection with the construction of our Shanghai Plant 2 and
purchase of plant and equipment, as set out in the following table.

Due after
Due within Due within more than
(S$ in millions) 1 year 1 to 5 years 5 years Total

Capital expenditure commitments for

construction of Shanghai Plant 2 . . . . 24.1 (1) — — 24.1 (1)
Capital expenditure commitments for
plant and equipment (2) . . . . . . . . . . . . 6.5 — — 6.5

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.6 — — 30.6

Notes:
(1) Excludes the S$10.4 million paid in the financial year ended 31 December 2018 for the acquisition of land use rights
in connection with the land used for the construction of our Shanghai Plant 2. For the avoidance of doubt, there are no
outstanding amounts to be paid in respect of the acquisition of the land use rights.
(2) Capital expenditure commitments for plant and equipment comprise mainly ancillary systems such as cleaning lines,
machine power sources and Nanofabrication equipment.

The estimated total land costs and construction costs for Shanghai Plant 2 is an aggregate of
S$66.7 million, of which 60% will be funded by bank loans and 40% will be funded from cash
generated from operating activities. As at 30 June 2020, we have incurred total expenditures of
approximately S$31.2 million for the land costs and construction costs in relation to Shanghai
Plant 2. We expect to finance the contractual commitments above with our cash generated from
operating activities and bank borrowings.

130
In addition to the contractual commitments above, our Company plans to utilise S$20 million of the
gross proceeds raised from the issue of the New Cornerstone Shares for the renovation (including
refurbishment, furniture and fittings) of Shanghai Plant 2. See “Use of Proceeds—Use of Proceeds”
for further details.

Capital expenditures, Acquisitions and Divestments

Historical capital expenditures

Our capital expenditures comprise mainly expenditures relating to our property, plant and
equipment. Capital expenditures relating to property, plant and equipment comprise
(i) construction in-progress, (ii) plant and machinery, (iii) building and renovation, (iv) office and
other equipment, (v) tools and supplies, and (vi) motor vehicles. Our capital expenditures for the
financial years ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June
2020 are as follows:

Six months
Financial year ended 31 December ended
30 June
(S$ in millions) 2017 2018 2019 2020

Property, plant and equipment

—Plant and machinery . . . . . . . . . . . . . 4.2 5.4 5.7 4.5
—Building and renovation . . . . . . . . . . . 2.4 5.3 1.6 1.8
(1)
—Construction in-progress ......... 5.6 4.8 42.6 27.3
—Office and other equipment . . . . . . . . 1.5 3.4 2.4 2.9
—Tools and supplies . . . . . . . . . . . . . . . — 2.1 0.1 — (2)
—Motor Vehicles . . . . . . . . . . . . . . . . . . 0.4 — (2) 0.1 —

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 21.0 52.5 (3) 36.5

Notes:

(1) Construction in-progress comprises (i) plant and machinery, and office and other equipment, and (ii) building and
renovation.

Capital expenditure relating to plant and machinery, and office and other equipment was S$5.6 million, S$4.7 million,
S$35.4 million and S$15.9 million for the financial years ended 31 December 2017, 2018 and 2019, and for the six
months ended 30 June 2020, respectively. The increase in capital expenditure relating to plant and machinery, and
office and other equipment from S$4.7 million in the financial year ended 31 December 2018 to S$35.4 million for the
financial year ended 31 December 2019 was mainly due to the expansion of the business operations of NVC and NHT.
NVC is our Group’s headquarters in China and experienced revenue growth during this period, and accordingly, had
invested in additional coating equipment and ancillary equipment. NHT was newly incorporated in 2018 to provide
surface solutions for automotive piston rings and automotive component manufacturers, and had invested in acquiring
two new coating equipment in the financial year ended 31 December 2019. Capital expenditure relating to plant and
machinery, and office and other equipment amounted to S$15.9 million for the six months ended 30 June 2020 mainly
due to further business expansions by NVC, which had further invested in additional coating equipment and ancillary
equipment.

Capital expenditure relating to building and renovation was S$0.1 million, S$7.2 million and S$11.4 million for the
financial years ended 31 December 2018 and 2019, and for the six months ended 30 June 2020, respectively. No
capital expenditure relating to building and renovation was incurred in the financial year ended 31 December 2017.

(2) Amounts less than S$50,000.

(3) Our capital expenditures increased substantially for the financial year ended 31 December 2019 mainly due to the
building of coating equipment and commencement of construction of our Shanghai Plant 2.

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In addition to the capital expenditures set out above, we transferred the following from construction
in-progress to other categories of property, plant and equipment for the financial years ended
31 December 2017, 2018 and 2019, and for the six months ended 30 June 2020, as follows:

Six months
Financial year ended 31 December ended
30 June
(S$ in millions) 2017 2018 2019 2020

Transferred property, plant and

equipment (1)
—Plant and machinery . . . . . . . . . . . . . 4.9 1.6 19.9 7.5
—Building and renovation . . . . . . . . . . . 21.0 1.3 0.1 —
—Office and other equipment . . . . . . . . 1.1 0.9 2.4 2.0

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.0 3.8 22.4 9.5

Note:
(1) Transferred due to the completion of our construction in-progress.

Building and Renovation

Capital expenditures (including additions and transfers from construction in-progress) incurred in
relation to building and renovation for the financial years ended 31 December 2017, 2018 and 2019,
and for the six months 30 June 2020 comprise mainly of capital expenditure relating to new plant
capex and building upgrade of our existing buildings, as follows:

Six months
Financial year ended 31 December ended
30 June
(S$ in millions) 2017 2018 2019 2020

Building and renovation (1)

—New plant capex (2) . . . . . . . . . . . . . . . 19.9 (3) 3.4 0.2 0.9
(4)
—Building upgrade ............... 3.5 3.2 1.5 0.9

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.4 6.6 1.7 1.8

Notes:

(1) Building and renovation includes construction and renovation in-progress in prior years which have been completed
and transferred from construction in-progress to building and renovation.

(2) New plant capex refers to capital expenditure relating to the construction and building of new plants and buildings.

(3) Primarily attributable to the construction of our Shanghai Plant 1.

(4) Building upgrade refers to capital expenditure to upgrade existing buildings only.

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Plant and machinery

Capital expenditures (including additions and transfers from construction in-progress) incurred in
relation to plant and machinery for the financial years ended 31 December 2017, 2018 and 2019,
and for the six months 30 June 2020 comprise mainly of commissioned equipment cost for our
business units, as follows:

Six months
Financial year ended 31 December ended
30 June
(S$ in millions) 2017 2018 2019 2020

Plant and machinery (1)

—Commissioned equipment cost for
Advanced Materials BU . . . . . . . . . . . 8.8 4.3 23.9 10.3
—Commissioned equipment cost for
Industrial Equipment BU . . . . . . . . . . . 0.3 0.2 0.3 0.1
—Commissioned equipment cost for
Nanofabrication BU . . . . . . . . . . . . . . — 2.5 (2) 1.4 (2) 1.6

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 7.0 25.6 12.0

Notes:
(1) Plant and machinery includes construction in-progress in prior years for which the assets have been completed and
transferred from construction in-progress to plant and machinery.

(2) Representing mainly the capitalisation of 12 and two injection molding machines for the financial years ended
31 December 2018 and 2019, respectively, and six and three tooling machines for the financial years ended
31 December 2018 and 2019, respectively.

Construction in-progress

Capital expenditures incurred in relation to construction in-progress for the financial years ended
31 December 2017, 2018 and 2019, and for the six months 30 June 2020 comprise mainly building
and renovation, plant and machinery and office and other equipment procured, as follows:

Six months
Financial year ended 31 December ended
30 June
(S$ in millions) 2017 2018 2019 2020

Construction in-progress (1)

—Plant and machinery (2) . . . . . . . . . . . . 0.6 2.5 11.6 18.8
—Building and renovation (3) . . . . . . . . . — 0.2 7.1 18.6
(4)
—Office and other equipment ....... 0.7 0.2 1.7 1.0

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 2.9 20.4 38.4

Notes:

(1) Construction in-progress refers to the construction and building in-progress of buildings, plants, machinery and
equipment.

(2) Plant and machinery refers to production machinery and equipment (including coating and nanofabrication equipment).
(3) Building and renovation refers to the construction of new buildings and plants.

(4) Office and other equipment refers to office equipment and ancillary production equipment.

133
Historical acquisitions, investments and divestments

Our material acquisitions, investments and divestments for the financial years ended 31 December
2017, 2018 and 2019, for the six months ended 30 June 2020, and up to the Latest Practicable Date
are as follows:

• In August 2017, our Group, through NVC, contributed a total share capital of RMB1.0 million
in NPC in cash as a form of capital injection. NPC is our wholly-owned subsidiary in the PRC
which was incorporated in July 2017. The principal activity of NPC is in the provision of coating
services for precision components and technical services.

• In January 2018, we acquired a 51% interest in NFT (formerly known as ManGo Nanofab Pte
Ltd) and its wholly-owned subsidiaries, MG Consulting Co., Ltd, NFJ (formerly known as
ManGo Japan Co., Ltd) and NFV (formerly known as ManGo Vietnam Co., Ltd.) (collectively,
the “Nanofab Group”) for a total cash consideration of US$3.0 million. The consideration was
arrived following commercial negotiations between the parties conducted at arms’ length and
based on the Nanofab Group’s net equity as at the acquisition date and taking into
consideration Nanofab Group’s expected revenue growth and market development. The
principal activities of the Nanofab Group are in the development of nanofabrication
technologies and the acquisition was undertaken to build up our Group’s nanofabrication
capabilities and to expand our Group’s business in Japan and Vietnam. MG Consulting Co.,
Ltd. was subsequently amalgamated with NFJ in December 2019.

• In March 2018, NVC acquired a 32.5% interest in YLST for RMB15.0 million. The principal
activity of YLST was the provision of water treatment in the PRC and the acquisition was
undertaken by our Group to explore the potential commercialisation of water treatment
technology that was developed by one of YLST’s shareholders. Following a year of trials and
further research, our Group assessed that the water treatment technology was not
commercially viable and we subsequently completed the divestment of our entire interest in
YLST on 13 June 2019 pursuant to a sale and purchase agreement dated 5 May 2019 (the
“YLST Agreement”). The sale price was arrived at following commercial negotiations with
YLST’s other shareholders conducted at arms’ length and based on the capital contribution
we had provided to YLST previously and taking into consideration YLST’s expected future
growth.

• On 5 November 2018, we entered into an agreement with NFT and MG Holdings (the “2018
NFT Subscription Agreement”), pursuant to which we increased our interest in NFT from
51% to 70% by way of a subscription of 633 new ordinary shares at a consideration of
US$1.4 million. The consideration was arrived following commercial negotiations between the
parties conducted at arms’ length and based on the Nanofab Group’s net equity as at the
acquisition date and taking into consideration Nanofab Group’s expected revenue growth and
market development. The consideration was paid by way of cash.

• During the financial year ended 31 December 2019, our Group, through NVC and NPC,
contributed a total share capital of RMB30.6 million in NHT as a form of capital injection by
way of cash. The purpose of the cash injection was primarily to fund the working capital and
capital expenditures of NHT.

• In May 2020, our Group, through NAM, contributed a total share capital of US$14.3 million in
NRE as a form of capital injection by way of cash. The purpose of the cash injection was
primarily to fund the construction of our Shanghai Plant 2.

134
• In June 2020, NVC, holding a 51% interest in SNT (formerly known as Shanghai Zaichuang
Automation Co., Ltd.), acquired the remaining 49% interest from the other shareholders of
SNT at nil consideration. The consideration was arrived at based on the shareholders’ deficit
of SNT as at 30 June 2020. Following the acquisition, Shanghai Zaichuang Automation Co.,
Ltd.became a wholly-owned subsidiary of our Group and was subsequently renamed SNT in
August 2020.

• In June 2020, pursuant to a subscription agreement dated 8 June 2020 (the “2020 NFT
Subscription Agreement”), we increased our interest in NFT from 70% to 90% by way of a
subscription of 3,267 new ordinary shares for a total consideration of US$6.0 million. The
consideration was arrived following commercial negotiations between the parties conducted
at arms’ length and based on the Nanofab Group’s net equity as at 31 December 2019. The
consideration was paid by way of cash amounting to US$4.0 million and the remaining
US$2.0 million was set-off against an outstanding loan owed by NFT to our Company.

• In June 2020, we injected S$1.0 million as a form of capital injection, comprising 1.0 million
ordinary shares, in a newly incorporated Singapore subsidiary, WZH. The principal activity of
WZH is that of an investment holding company.

• In July 2020, we subscribed for an additional 32,037,444 new ordinary shares in NAM for a
total consideration of S$32.0 million as a form of capital injection. The majority of the
consideration was set-off against an outstanding loan owed by NAM to our Company while the
remaining sum of S$0.04 million was paid by way of cash.

• In September 2020, our Group, through NVC, contributed a total share capital of
RMB1.0 million in SNT as a form of capital injection by way of cash. The purpose of the cash
injection was primarily to fund the working capital of SNT.

• In October 2020, we subscribed for an additional 6,200,000 new ordinary shares in our
wholly-owned subsidiary, WZH for an aggregate cash consideration of S$6.2 million. The
purpose of the subscription of additional shares was to fund WZH’s investment in WZT.

• In October 2020, our Group, through WZH, contributed a total share capital of
RMB36.0 million in WZT as a form of capital injection by way of cash, representing an 80%
interest in WZT. The purpose of the cash injection was primarily to fund the working capital
and capital expenditures of WZT.

Please refer to Notes 4 and 15 of our audited consolidated financial statements, and Note 4 of our
unaudited condensed interim consolidated financial statements, which are included in Appendix A
and Appendix B of this Prospectus, respectively, for further details on these transactions.

Historical capital disposal

Save for the disposal of YLST in June 2019 as set out above, we did not have any material capital
disposals for the financial years ended 31 December 2017, 2018 and 2019, and for the six months
ended 30 June 2020.

135
KEY FINANCIAL RATIOS

Our Group’s key financial ratios based on our consolidated financial statements for the periods
indicated are as follows:

As at
As at 31 December 30 June

(S$ in millions) 2017 2018 2019 2020

Trade receivables (1) . . . . . . . . . . . . . . . . 30.8 40.3 49.6 45.2

Trade receivables turnover period
(days) (2) . . . . . . . . . . . . . . . . . . . . . . . . 108 120 127 106
(3)
Trade payables .................. 12.8 13.1 22.6 21.1
Trade payables turnover period
(days) (4) . . . . . . . . . . . . . . . . . . . . . . . . 102 85 126 104
(5)
Inventories ..................... 10.3 17.0 14.7 15.1
Inventories turnover period (days) (6) . . . . 82 110 82 75
(7)
Cash conversion cycle (days) ....... 88 145 83 77
(8)
Current ratio .................... 1.6 3.1 2.0 1.0 (9)
Gearing ratio (10) (%) . . . . . . . . . . . . . . . . 15.6 35.8 35.5 37.0
(11)
Adjusted gearing ratio (%) . . . . . . . . . 15.6 5.7 13.6 18.8

Notes:

(1) Trade receivables reflect the outstanding amount of receivables from third party customers after adjusting for any loss
allowance.

(2) Computed by multiplying the amount of trade receivables at the end of each year/period by the number of calendar days
in the year/period and dividing the resulting product by the total revenue in respect of that year/period.
(3) Trade payables reflect the outstanding amount payable to third party suppliers and vendors for the purchase of goods
and services, and comprise current trade payables.

(4) Computed by multiplying the amount of trade payables at the end of each year/period by the number of calendar days
in the year/period and dividing the resulting product by the cost of sales in respect of that year/period.

(5) Inventories comprise raw materials, consumables, finished goods and work-in-progress goods. Raw materials and
consumables are recognised at the weighted average cost, and finished and work-in-progress goods are recognised
based on the costs of direct materials and labour, subcontractors’ costs and a proportion of manufacturing overheads
based on normal operating capacity on a cost basis.
(6) Computed by multiplying the inventories at the end of each year/period by the number of calendar days in the
year/period and dividing the resulting product by the cost of inventories consumed and consumables used.

(7) Computed by aggregating trade receivables turnover period and inventories turnover period, and subtracting trade
payables turnover period.

(8) Current assets divided by current liabilities.

(9) Due to the re-classification of our Convertible Notes from non-current liabilities as at 31 December 2019 to current
liabilities as at 30 June 2020.

(10) Net debt divided by the total capital, being the aggregate of net debt and total equity. Net debt is calculated as total
liabilities less provision for taxation, deferred taxation, provisions, contract liabilities and cash and bank balances. Total
capital is calculated as total equity plus net debt.

(11) Adjusted net debt divided by the total capital, being the aggregate of adjusted net debt and total equity. Adjusted net
debt is the net debt as calculated based on note (10) above, less the amounts outstanding under the Convertible Notes,
on the basis that the Convertible Notes will be converted into ordinary shares of our Company. Total capital is
calculated as total equity plus adjusted net debt.

136
Trade receivables

Our trade receivables turnover period was 108 days, 120 days, 127 days and 106 days for the
financial years ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June
2020, respectively, reflecting the trade receivables of our business operations across our operating
segments.

Our trade receivables are interest-free and are generally on 30 to 90 days’ terms. Our payment
terms for each customer differ, depending on our assessment of their creditworthiness based on
our established credit policies. However, we may grant credit terms in excess of 90 days to some
of our customers, depending on the length and size of our business relationships with them, their
payment history and their financial strength, as well as the size of the relevant transaction. See the
sections “—Primary Risks—Credit risk” and “—Primary Risks—Credit management” below.

Our trade receivables turnover period increased from 108 days in the financial year ended
31 December 2017 to 120 days in the financial year ended 31 December 2018, and to 127 days in
the financial year ended 31 December 2019 which was mainly due to increased orders from repeat
customers whom we granted longer payment terms after taking into account their creditworthiness
and longer payment terms to our customers of our coating equipment and other auxiliary systems
under our Industrial Equipment BU due to the nature of payment terms. See the sections “—Primary
Risks—Credit risk” and “—Primary Risks—Credit management” below for a general description of
our payment terms for customers of our Industrial Equipment BU.

Our trade receivables turnover period decreased from 127 days in the financial year ended
31 December 2019 to 106 days for the six months ended 30 June 2020, which was mainly due to
our trade receivables turnover period being typically lower in the first half of the year compared to
the second half, as our sales volume is generally higher in the second half of each year.

We measure the loss allowance for receivables in accordance with the accounting policy as
disclosed in Note 2(m) to our audited consolidated financial statements. The majority of our trade
receivables are within the credit terms and the loss allowance on the expected credit loss is
assessed not to be material.

Trade payables

The credit period extended by our suppliers is normally between 30 to 90 days. Our trade payables
turnover period was 102 days, 85 days, 126 days and 104 days for the financial years ended
31 December 2017, 2018, and 2019 and for the six months ended 30 June 2020, respectively,
reflecting the trade payables of our business operations across our operating segments, which
includes parts which we purchased for our surface solution to be applied before on-selling the
finished products and other raw materials, including carbon graphite, metals and metal oxides, as
well as certain components utilised in our coating systems (such as power supply units).

Our trade payables turnover period decreased from 102 days in the financial year ended
31 December 2017 to 85 days in the financial year ended 31 December 2018, which was mainly due
to due to accelerated payments made from cash generated from our operations.

Our trade payables turnover period increased from 85 days in the financial year ended
31 December 2018 to 126 days in the financial year ended 31 December 2019, which was mainly
due to our working capital needs and the expansion of our business and operations.

Our trade payables turnover period decreased from 126 days in the financial year ended
31 December 2019 to 104 days for the six months ended 30 June 2020, which was mainly due to
lower working capital needs in the first half of the year compared to the second half, resulting in
faster payments to our suppliers.

137
Inventories

We only order and stock in advance the quantity of raw material and equipment we require as
scheduled in our production plans and most of our goods are produced based on our customers’
orders which are delivered to the customers in accordance with the sales contracts. We therefore
generally do not experience significant write down of inventories or have significant stock
obsolescence. We make allowance for any anticipated losses which are likely to be incurred on
completion of the jobs, and for any slow moving or obsolete inventories. The net realisable value of
our goods is the estimated selling price in the ordinary course of business, less the estimated cost
of completion and applicable variable selling expenses. For the period under review, we provided
for write-down of inventories of S$0.4 million in the financial year ended 31 December 2019, and
write off of obsolete stock of S$0.2 million in the financial year ended 31 December 2018.

Our inventories turnover period was 82 days, 110 days, 82 days and 75 days for the financial years
ended 31 December 2017, 2018 and 2019, and the six months ended 30 June 2020, respectively,
reflecting the inventories holding period of our business operations across our operating segments.

Our inventories turnover period increased from 82 days in the financial year ended 31 December
2017 to 110 days in the financial year ended 31 December 2018, due mainly to the build-up of
inventory to meet the increased orders from our customers, in anticipation of increasing orders from
our customers across all three business units in the financial year ended 31 December 2018. Our
inventories turnover period normalised back to 82 days in the financial year ended 31 December
2019 due to increased efficiency in production planning and our increased efforts to manage
inventory subsequent to the increase in inventories turnover period in the financial year ended
31 December 2018.

Current ratio

Our current ratio was 1.6 as at 31 December 2017, which increased to 3.1 as at 31 December 2018
due to an increase of S$28.7 million in current assets as at 31 December 2018, primarily due to an
increase of S$16.9 million in our trade receivables, other receivables and other current assets, and
an increase of S$6.7 million in our inventories, as at 31 December 2018. The increases were due
to increased sales of our products and services in the financial year ended 31 December 2018,
which resulted in a build-up of our products in inventories which were finished or work in progress.
Our current liabilities decreased S$13.3 million as at 31 December 2018, primarily due to a
decrease in bank borrowings of S$12.1 million as at 31 December 2018. The decrease was
because we did not have any bank borrowings as at 31 December 2018.

Our current ratio decreased from 3.1 as at 31 December 2018 to 2.0 as at 31 December 2019 due
to an increase of current assets of S$3.0 million, as compared to an increase of current liabilities
of S$20.9 million as at 31 December 2019. Our current assets as at 31 December 2019 increased
primarily due to an increase of S$1.4 million in our trade receivables, other receivables and other
current assets, which was partially offset by increases in our inventories and contract assets/
accrued receivables of S$1.3 million. The increases were due to completion of our customers’
orders and increased billings to our customers as compared to our contract assets/accrued
receivables as at 31 December 2018.

Our current ratio decreased from 2.0 as at 31 December 2019 to 1.0 as at 30 June 2020 due to the
re-classification of our Convertible Notes from non-current liabilities as at 31 December 2019 to
current liabilities as at 30 June 2020.

138
Gearing ratio

Our gearing ratio was 15.6% as at 31 December 2017, which increased to 35.8% as at
31 December 2018 due to a 215.8% increase in net debt, while total capital increased 37.9%, as at
31 December 2018. Our gearing ratio was 35.8% as at 31 December 2018, which decreased
slightly to 35.5% as at 31 December 2019 due to a 25.0% increase in net debt, while total capital
increased 26.2%, as at 31 December 2019.

Our gearing ratio was 35.5% as at 31 December 2019, which increased to 37.0% as at 30 June
2020 due to an increase in outstanding bank loans from S$3.9 million as at 31 December 2019 to
S$26.3 million as at 30 June 2020. Our adjusted gearing ratio was 15.6% as at 31 December 2017,
which decreased to 5.7% as at 31 December 2018 due to a 65.5% decrease in adjusted net debt,
while total capital decreased 6.1% as at 31 December 2018. Our adjusted gearing ratio was 5.7%
as at 31 December 2018 which increased to 13.6% as at 31 December 2019 due to a 228.3%
increase in adjusted net debt, while total capital increased 38.5% as at 31 December 2019.

Our adjusted gearing ratio was 13.6% as at 31 December 2019, which increased to 18.8% as at
30 June 2020 due to an increase in outstanding bank loans from S$3.9 million as at 31 December
2019 to S$26.3 million as at 30 June 2020.

Adjusted gearing ratio is adjusted net debt divided by the total capital, being the aggregate of
adjusted net debt and total equity. Adjusted net debt is calculated as total liabilities less provision
for taxation, deferred taxation, provisions, contract liabilities, cash and bank balances, and the
amounts outstanding under the Convertible Notes.

139
 BORROWINGS

As at 30 June 2020, we had aggregate borrowings of S$81.3 million (which included the S$50 million principal amount of the Convertible Notes and our
obligations under lease liabilities). Subsequently, we fully repaid our JPY300 million loan with Manufacturing Cheering No. 1 Investment Limited
Partnership (Japan) and entered into a RMB50 million loan with China Merchants Bank, Shanghai Branch, Qingpu Sub-branch (details of which are set out
below).

We have aggregate borrowings of S$94.3 million outstanding as at 30 September 2020 (which includes the S$50 million principal amount of the Convertible
Notes and our obligations under lease liabilities).

Save for our obligations under lease liabilities, our third party borrowings comprise term loan facilities and revolving credit facilities granted by financial
institutions (the “credit facilities”) and the S$50 million principal amount of the Convertible Notes. The table below sets forth certain information about our
material credit facilities as at 30 September 2020.

Principal amount
Original facility outstanding as at
amount 30 September
(Borrowing 2020 (Borrowing Brief Overview of
Facility Description currency) currency) Material Security

140
(Purpose) Lender Borrower (S$ equivalent) (S$ equivalent) Maturity Profile Interest Rate Provided

Credit Facilities
Citibank Uncommitted Citibank, N.A., NTI S$5.0 million S$1.5 million Up to 6 months per Interest is chargeable None
Short Term Loan Singapore drawdown (1) at a rate to be quoted
(Working capital Branch by Citibank for each
requirements) loan extended to NTI
under the credit
facility (1)
CTBC Bank Revolving CTBC Bank Co., NTI S$5.0 million S$2.0 million Packing Loan 0.9% per annum over None
Credit Facility Ltd the bank’s prevailing
(Working capital 180 days from the date cost of funds as
requirements) of each drawdown determined by the
bank
Revolving Facility

6 months from the date

of each drawdown (2)
 Principal amount
Original facility outstanding as at
amount 30 September
(Borrowing 2020 (Borrowing Brief Overview of
Facility Description currency) currency) Material Security
(Purpose) Lender Borrower (S$ equivalent) (S$ equivalent) Maturity Profile Interest Rate Provided

Enterprise Financing DBS Bank Ltd NTI S$5.0 million S$4.7 million Monthly instalment 2.00% per annum on None
Scheme Temporary repayment over monthly resets
Bridging Loan 1 5 years, from 4 May
(Working capital 2020 (being the date
requirements) of first disbursement)
DBS Fixed Advance DBS Bank Ltd NTI S$3.0 million None 12 months from the 0.95% per annum over None
Facility I date of each SIBOR prevailing
drawdown from time to time
OCBC Multi-currency Oversea-Chinese NTI S$6.0 million None 6 months from the date 1.25% per annum over None
Specific Advance Banking of each drawdown the bank’s prevailing
Facility Corporation cost of funds
(Working capital Limited
requirements)

141
OCBC Specific Oversea-Chinese NTI S$3.5 million None 3 months from the date 1.25% per annum over None
Advance Facility Banking of each drawdown the bank’s prevailing
(Working capital Corporation cost of funds
requirements) Limited
OCBC Letters of Credit/ Oversea-Chinese NTI S$2.0 million None 180 days from the date Letters of Credit/ None
Packing Loan Banking of each drawdown Shipping Guarantee/
(Money market loans, Corporation Bankers’ Guarantee
and import and export Limited
financing) Bank’s prevailing
schedule of charges

Trust Receipts/Draft
loans for sales and
purchase/Packing Loan

1.85% per annum over

the bank’s prevailing
cost of funds
 Principal amount
Original facility outstanding as at
amount 30 September
(Borrowing 2020 (Borrowing Brief Overview of
Facility Description currency) currency) Material Security
(Purpose) Lender Borrower (S$ equivalent) (S$ equivalent) Maturity Profile Interest Rate Provided

UOB Revolving Credit United Overseas NTI S$2.9 million None Trust Receipts Trust Receipts None
Facility (Money Bank Ltd 90 days from date of For S$ denominated
market loans, and each drawdown bills: 1.0% per annum
import and export over the bank’s prime
financing) Bills of Exchange lending rate
180 days from date of prevailing from time
each drawdown to time

For foreign currency

denominated bills:

The higher of 1.75%

per annum over
LIBOR prevailing
from time to time or

142
1.75% per annum
over the bank’s cost
of funds

Bills of Exchange
Higher of 1.75% per
annum over LIBOR
prevailing from time
to time or 1.75% per
annum over the
bank’s cost of funds
ICBC Term Loan Industrial and NVC RMB30.0 RMB30.0 million Until 27 April 2021 1 year Loan Prime Rate None
(Working capital Commercial million (S$6.0 million) (貸款市場報價利率) for
requirements) Bank of China, (S$6.0 the previous year as
Shanghai million) published by the
Qingpu branch National Interbank
(中國工商銀行上 Funding Centre
海市青浦支行) minus 0.40%
 Principal amount
Original facility outstanding as at
amount 30 September
(Borrowing 2020 (Borrowing Brief Overview of
Facility Description currency) currency) Material Security
(Purpose) Lender Borrower (S$ equivalent) (S$ equivalent) Maturity Profile Interest Rate Provided

ICBC Term Loan Industrial and NVC RMB20.0 RMB20.0 million Until 21 May 2021 1 year Loan Prime Rate None
(Working capital Commercial million (S$4.0 million) (貸款市場報價利率) for
requirements) Bank of China, (S$4.0 the previous year as
Shanghai million) published by the
Qingpu branch National Interbank
(中國工商銀行上 Funding Centre
海市青浦支行) minus 0.20%
OCBC Wing Hang OCBC Wing NVC and RMB50.0 None 6 months from each Floating interest rate 1. Letter of
Revolving Credit Hang Bank NRE million drawdown based on the guarantee
Facility (Working (China) Limited (S$10.0 prevailing benchmark provided by
capital requirements (華僑永亨銀行) million) interest rate of the NEM;
and refinancing of People’s Bank of
mortgage on China 2. Letter of
Shanghai Plant 1) guarantee
provided by NTI

143
in respect of up
to 30% of the
facility amount
OCBC Wing Hang OCBC Wing NRE RMB150.0 RMB71.9 million Until the expiration of 108% of one-year 1. Mortgage over
Revolving Credit Hang Bank million (S$14.5 million) 84 months after the benchmark interest the land use right
Facility (Development (China) Limited (S$30.1 date of initial rate of the People’s of Shanghai
of Shanghai Plant 2) (華僑永亨銀行) million) utilisation (being 15 Bank of China Plant 2 and the
January 2020) buildings and
construction in
progress on the
land

2. Letters of
guarantee
provided by NEM
and NVC
 Principal amount
Original facility outstanding as at
amount 30 September
(Borrowing 2020 (Borrowing Brief Overview of
Facility Description currency) currency) Material Security
(Purpose) Lender Borrower (S$ equivalent) (S$ equivalent) Maturity Profile Interest Rate Provided

China Merchants Bank China Merchants NVC and RMB50.0 RMB50.0 million Loan A (RMB26.0 1 year Loan Prime Rate Letter of guarantee
Credit Facility Bank, Shanghai NRE million (S$10.0 million) million) Until 6 (貸款市場報價利率) for provided by NRE
(Working capital Branch, Qingpu (S$10.0 September 2021 the previous year as and NVC in
requirements) Sub-branch (招 million) Loan B (RMB24.0 published by the respect of their
商銀行股份有限 million) Until 22 National Interbank respective
公司上海分行青 September 2021 Funding Centre obligations
浦支行) minus 0.15%
Japan Finance Japan Finance NTJ JPY48.0 million JPY45.2 million Until 5 May 2023 Loan A (JPY28.2 None
Corporation Term Corporation (S$0.6 (S$0.6 million) million) 0.46% per
Loan (Mitigate impact million) annum for the first 3
of COVID-19 years from 5 August
pandemic) 2020. 1.36% per
annum thereafter.
Loan B (JPY17.0
million) 1.36% per

144
annum
 Principal amount
Original facility outstanding as at
amount 30 September
(Borrowing 2020 (Borrowing Brief Overview of
Facility Description currency) currency) Material Security
(Purpose) Lender Borrower (S$ equivalent) (S$ equivalent) Maturity Profile Interest Rate Provided

Convertible Notes
Convertible Note (3) Syndicate of NTI S$35.0 million S$35.0 million Subscribers’ Higher of:
investors Conversion Right (i) 2.00% per annum
comprising: Each Subscriber has which shall accrue
the right, at its sole daily for the relevant
— Vanda 1; option, to convert the interest period; or
— Orchid 2; outstanding principal
— ICH Gemini amount of the (ii) in the event of any
Asia Growth Convertible Notes declaration of cash
Fund Pte. Ltd.; into Shares at a dividends by our
— ASEAN China conversion price of Company in the
Investment approximately S$0.93 relevant interest
Fund III L.P.; per Share. period, the
— ASEAN China aggregate cash
Investment Mandatory Conversion dividends that would

145
Fund (US) III Company has the be payable on the
L.P.; and right, at its sole Shares had all the
— UVM 3 option, to convert the Convertible Notes
Venture outstanding principal been converted at
Investments LP amount of the the commencement
Convertible Notes of the interest
into Shares at a period, which
conversion price of amount shall accrue
approximately S$0.93 as interest on the
per Share date of declaration.
 Principal amount
Original facility outstanding as at
amount 30 September
(Borrowing 2020 (Borrowing Brief Overview of
Facility Description currency) currency) Material Security
(Purpose) Lender Borrower (S$ equivalent) (S$ equivalent) Maturity Profile Interest Rate Provided
(3)
Convertible Note EDB Investments NTI S$15.0 million S$15.0 million Subscribers’ Higher of:
Pte Ltd Conversion Right (i) 2.00% per annum
Each Subscriber has which shall accrue
the right, at its sole daily for the relevant
option, to convert the interest period; or
outstanding principal
amount of the (ii) in the event of any
Convertible Notes declaration of cash
into Shares at a dividends by our
conversion price of Company in the
approximately S$0.93 relevant interest
per Share. period, the
aggregate cash
Mandatory Conversion dividends that would
Company has the be payable on the

146
right, at its sole
option, to convert the
outstanding principal
amount of the
Convertible Notes
into Shares at a
conversion price of
approximately S$0.93
per Share
Shares had all the
Convertible Notes
been converted at
the commencement
of the interest
period, which
amount shall accrue
as interest on the
date of declaration.

Notes:

(1) The maturity profile of the principal amount outstanding as at 30 September 2020 for the Citibank Revolving Credit Facility of S$1.0 million, and for the principal amount of S$0.5 million, is
24 November 2020 and 25 November 2020 respectively. The interest rate in respect of these loans is fixed at 1.8% per annum.

(2) The maturity profile of the principal amount outstanding as at 30 September 2020 for the CTBC Bank Revolving Credit Facility of S$2.0 million is 23 October 2020. The interest rate in respect
of this loan is fixed at 1.35% per annum.

(3) As at the date of this Prospectus, our Company has elected to exercise the Mandatory Conversion Right pursuant to which an aggregate of 53,630,290 Conversion Shares will be issued
at the Conversion Price to the Subscribers in accordance with the relevant terms and conditions set out in the Subscription Agreements. See “Dilution” for further details on the conversion
of the Convertible Notes.
Material borrowing terms

Our term loan facilities and revolving credit facilities contain various covenants and undertakings
that limit our and certain of our subsidiaries’ ability to engage in specified types of transactions,
including, among others:

(a) declare and pay dividends;

(b) sell or transfer material assets;

(c) create liens or additional security;

(d) make certain investments or acquisitions;

(e) substantially change the nature of its business;

(f) amalgamate, consolidate, merge, or undertake a reorganisation; and

(g) permit or undertake any change of its management.

Under the terms of our borrowings, we are required to, among others, comply with various
covenants, including satisfying and maintaining specified financial ratios and minimum net worth 5.
These financial ratios include requirements such as maintaining a minimum leverage and profit.
Our ability to meet those covenants may be affected by events beyond our control and there can be
no assurance that we will continue to meet these financial ratios or maintain the required level of
interest cover.

We are currently not in breach of any terms and conditions or covenants associated with any credit
arrangement or bank loan which can materially affect our financial position and results or business
operations, or the investment by our Shareholders.

CHANGES IN ACCOUNTING POLICY AND DISCLOSURE ON ADOPTION OF NEW

ACCOUNTING STANDARDS

The audited consolidated financial statements of our Group and the unaudited condensed interim
consolidated financial statements included in Appendix A and Appendix B of this Prospectus,
respectively have been prepared in accordance with SFRS(I)s. These are our Group’s first financial
statements prepared in accordance with SFRS(I)s and SFRS(I) 1 First-time Adoption of Singapore
Financial Reporting Standards (International) has been applied.

In adopting SFRS(I)s, our Group is required to apply all of the specific transition requirements in
SFRS(I) 1 First-time Adoption of First-time Adoption of Singapore Financial Reporting Standards
(International). Our Group’s opening statement of financial position has been prepared as at
1 January 2017, which is our Group’s date of transition to SFRS(I)s.

The same accounting policies are applied throughout all periods presented in the audited
consolidated financial statements and the unaudited condensed interim consolidated financial
statements in Appendix A and Appendix B of this Prospectus, respectively, subject to the
mandatory exceptions and optional exemptions under SFRS(I) 1. For first-time adopters, SFRS(I)s
allow the exemptions from the retrospective application of certain requirements under SFRS(I)s.
The application of the mandatory exceptions and the optional exemptions in SFRS(I) 1 did not have
significant impact on the financial performance and financial position of our Group. Except for
SFRS(I) 16 Leases and SFRS(I) 9 Financial Instruments, there are no material impact on the
financial performance and financial position of the consolidated financial statements in the year of
initial application.

5 Calculated by aggregating paid-up capital, capital reserves, revenue reserves, retained earnings including amounts
due to directors, shareholders or related parties, less amounts owing by directors, shareholders or related parties and
excludes any amounts attributable to goodwill and deferred liabilities.

147
See Note 2(c) to our audited consolidated financial statements in Appendix A of this Prospectus for
a discussion of new standards and interpretations under SFRS(I)s which have been adopted by our
Group from 1 January 2017, 1 January 2018 and 1 January 2019, as the case may be.

See Note 2(d) to our audited consolidated financial statements in Appendix A of this Prospectus for
a discussion of new standards, amendments to standards and interpretations that have been
issued at the end of the reporting period but are not yet effective for our Group for the annual
periods beginning on or after 1 January 2020.

Our Group currently has no intention to make any changes to its accounting policy in the next
12 months that may result in material adjustments to the disclosed financials for the period under
review.

PRIMARY RISKS

Credit risk

Credit risk refers to the risk that the customer or counterparty failed to discharge an obligation
which resulted in a financial loss to our Group. As we do not hold any collateral, the maximum
exposure to credit risk is the carrying amount of the related financial assets presented on our
statements of financial position.

We have adopted an internal credit risk grading which is used to report our Group’s credit risk
exposure to key management personnel for credit risk management purposes and is described in
Notes 16 and 32(a) to our audit consolidated financial statements and Notes 15 and 30(a) to our
unaudited condensed interim consolidated financial statements set out in Appendix A and
Appendix B of this Prospectus, respectively.

Based on our internal rating assessment, there are no financial assets that are under-performing,
non-performing and assets written off during the financial years ended 31 December 2017, 2018
and 2019, and the six months ended 30 June 2020.

The credit quality of our Group’s performing financial assets, as well as maximum exposure to
credit risk by internal credit risk assessments are as follows:

Trade receivables

For the six months ended 30 June 2020, our trade receivables comprise one debtor (2019: two
debtors; 2018: one debtor; 2017: four debtors) that individually represented more than 5%
(2019: 5%; 2018: 10%; 2017:10%) of third parties trade receivables. During the financial years
ended 31 December 2018 and 2019, and the six months ended 30 June 2020, our Group has
applied the simplified approach in SFRS(I) 9 to measure the loss allowance at lifetime expected
credit loss for trade receivables.

The credit risk profile of trade receivables is presented based on the past due status in terms of the
provision matrix described in Note 16 to our audited consolidated financial statements and Note 15
to our unaudited condensed interim consolidated financial statements set out in Appendix A and
Appendix B of this Prospectus, respectively.

148
Other receivables

Impairment on other receivables has been measured on the 12-month expected credit loss basis
and reflects the short maturities of the exposures. We consider that these financial assets have a
low credit risk based on the external credit ratings of the counterparties and these counterparties
having low risk of default. The amount of the allowance on these financial assets is assessed to be
immaterial. The gross and net carrying amounts of other receivables are set out in Note 16 to our
audited consolidated financial statements and Note 15 to our unaudited condensed interim
consolidated financial statements set out in Appendix A and Appendix B of this Prospectus,
respectively.

Credit management

We have established credit policies under which customers are analysed for their creditworthiness
before our standard payment terms are offered. Our standard payment terms vary between each of
our business units. A general description of our credit policies in respect of each of our business
units are set out below.

Advanced Materials BU

Under our Advanced Materials BU, given the volume of components to be coated daily, we typically
invoice our customers on a monthly basis after shipment of the coated components and due
reconciliation of the quantity of coated components delivered. We normally grant our customers
credit terms ranging from 60 days to 120 days.

Nanofabrication BU

Under our Nanofabrication BU, we typically invoice our customers upon shipments. We normally
grant our customers credit terms ranging from 30 days to 75 days.

Industrial Equipment BU

Under our Industrial Equipment BU, given the lead-time required to design and manufacture the
equipment systems sold to our customers, the sales contract would be signed or purchase order
would be issued typically four to six months prior to the date specified for shipment and delivery of
the equipment system Under our Industrial Equipment BU, payment terms are negotiated with each
customer on a case-by-case basis. In general:

• upon signing of the sales contract or acceptance of the purchase order, we would require our
customers to make a down-payment of approximately 30% of the total purchase price;

• prior to shipment of the equipment system to our customer, we would require an additional
progress payment of approximately 30% of the total purchase price; and

• the remaining purchase price would be due within 30 days after our customers’ acceptance
and commissioning of the equipment system sold.

149
For all our business units, the actual credit terms and payment terms granted to a customer will
depend on our assessment of the customer’s creditworthiness, based on historic payment
behaviour and extensive analyses of customer credit risk, including underlying customers’ credit
ratings, where available. Upon our customers’ request, we may extend the credit terms, or modify
the payment terms granted, but this is based on a case-by-case review.

Credit risk profile

We monitor our credit risk according to the degree of default risk and the outstanding amounts will
be written off if there is evidence indicating that there is no reasonable expectation of recovery due
to customer default on long outstanding balances.

For the financial year ended 31 December 2017, our Group assessed at each reporting date
whether there is objective evidence that a financial asset or a group of financial assets is impaired
and recognised an allowance for impairment when such evidence exists. Our credit risk profile as
at 31 December 2017 is set out below:

Financial assets that are neither past due nor impaired

As at 31 December 2017, our trade and other receivables amounting to S$20.3 million that were
neither past due nor impaired were substantially companies with a good payment track record with
our Group. Cash and bank balances that were neither past due nor impaired are placed with
reputable financial institutions with high credit-ratings assigned by international credit-rating
agencies.

Financial assets that were past due but not impaired

There were no other classes of financial assets that are past due but not impaired as at
31 December 2017 except for trade and other receivables, summarised as follows:

(S$ in millions)

Past due 31 to 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3

Past due 61 to 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
Past due over 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3

We believe that the unimpaired amounts that were past due by more than 30 days are still
collectible, based on historic payment behaviour and extensive analyses of customer credit risk,
including underlying customers’ credit ratings, where available.

Financial assets that are past due and impaired

There were no financial assets that are past due and impaired in 2017.

150
Credit risk exposure in relation to trade receivables

As a result of SFRS(I) 9 Financial Instruments coming into effect on 1 January 2018, for the
financial years ended 31 December 2018 and 2019 and the six months ended 30 June 2020, our
Group assessed on a forward looking basis the expected credit losses associated with its financial
assets measured at amortised costs and financial guarantee contracts. Our Group’s credit risk
exposure in relation to trade receivables (including contract assets) as at 31 December 2018 and
2019, and as at 30 June 2020 is as follows:

As at 31 December 2018

Lifetime Lifetime
expected Gross carrying expected Net carrying
loss rate amount credit losses amount
(%) (S$ in millions) (S$ in millions) (S$ in millions)

Current . . . . . . . . . . . . . . . . . . . . . 0.5 42.5 (0.2) 42.3

Past due:
—1 to 30 days . . . . . . . . . . . . . . . . 1.0 5.0 (0.1) 4.9
(1)
—31 to 60 days . . . . . . . . . . . . . . . 2.0 0.4 — 0.4
(1)
—60 to 90 days . . . . . . . . . . . . . . . 4.0 0.2 — 0.2
More than 90 days (2) . . . . . . . . . . . 10.0 0.6 (0.4) 0.2

Total . . . . . . . . . . . . . . . . . . . . . . . 48.7 (0.7) 48.0

Notes:

(1) Amounts less than S$40,000.

(2) Included an amount of loss allowance of S$370,713 provided for a specific customer.

As at 31 December 2019

Lifetime Lifetime
expected Gross carrying expected Net carrying
loss rate amount credit losses amount
(%) (S$ in millions) (S$ in millions) (S$ in millions)

Current . . . . . . . . . . . . . . . . . . . . . 0.5 59.8 (0.3) 59.5

Past due:
—1 to 30 days . . . . . . . . . . . . . . . . 1.0 0.6 — (1) 0.6
(1)
—31 to 60 days . . . . . . . . . . . . . . . 2.0 0.6 — 0.6
—60 to 90 days . . . . . . . . . . . . . . . 4.0 0.2 — (1) 0.2
(2)
More than 90 days ........... 10.0 0.4 (0.4) — (1)

Total . . . . . . . . . . . . . . . . . . . . . . . 61.6 (0.7) 60.9

Notes:

(1) Amounts less than S$40,000.

(2) Included an amount of loss allowance of S$370,713 provided for a specific customer.

151
 As at 30 June 2020

Lifetime Lifetime
expected Gross carrying expected Net carrying
loss rate amount credit losses amount
(%) (S$ in millions) (S$ in millions) (S$ in millions)

Current . . . . . . . . . . . . . . . . . . . . . 0.5 58.7 (0.3) 58.4

Past due:
—1 to 30 days . . . . . . . . . . . . . . . . 1.0 0.3 — (1) 0.3
—31 to 60 days . . . . . . . . . . . . . . . 2.0 0.2 — (1) 0.2
(1)
—60 to 90 days . . . . . . . . . . . . . . . 4.0 0.2 — 0.2
More than 90 days (2) . . . . . . . . . . . 10.0 0.4 (0.4) — (1)

Total . . . . . . . . . . . . . . . . . . . . . . . 59.8 0.7 59.1

Notes:
(1) Amounts less than S$40,000.
(2) Included an amount of loss allowance of S$361,361 provided for a specific customer.

Interest rate risk

Interest rate risk arises on interest-bearing financial instruments recognised on the statement of
financial position. It is the risk that changes in interest rates will affect our Group’s income or the
value of their holdings of financial instruments. Our Group’s exposures to interest rate risk for
changes in interest rates mainly arise from interest-bearing borrowings. Interest rate risk is
managed by our Group on an on-going basis with the primary objective of limiting the extent to
which net interest expense could be affected by an adverse movement in interest rates.

If interest rates on bank loans had been 1% higher/lower with all other variables being held
constant, our profit before income tax and our interest expense arising from bank loans would have
been lower/higher by the amounts shown below:

Year ended 31 December Six months ended 30 June

(S$ in millions) 2017 2018 2019 2019 2020

Profit before income tax . . . . . . . 0.2 — — (1) — (1) 0.3

Note:

(1) Amounts less than S$10,000.

152
Liquidity risk

Liquidity risk is the risk that our Group will not be able to meet its financial obligations as they fall
due. In the management of liquidity risk, our Group monitors and maintains a level of cash and cash
equivalents deemed adequate by the management to finance our Group’s operations and where
required, mitigate the effects of fluctuation in cash flows. Our Group may also obtain additional
funding through credit facilities from banks and financial institutions. Our financial liabilities as at
31 December 2017, 2018 and 2019, and 30 June 2020 are as follows:

Carrying Contractual Between

(S$ in millions) amounts cash flows Within 1 year 1 to 5 years

As at 31 December 2017
Financial liabilities:
Trade and other payables. . . . . . . . . . . . 19.6 19.6 19.6 —
Bank loans . . . . . . . . . . . . . . . . . . . . . . . 16.0 16.4 12.4 4.0
Lease liabilities . . . . . . . . . . . . . . . . . . . . 1.7 1.8 0.9 0.9
Finance guarantee contracts . . . . . . . . . 18.0 18.0 18.0 —

Total undiscounted financial liabilities . . 55.3 55.8 50.9 4.9

As at 31 December 2018
Financial liabilities:
Trade and other payables. . . . . . . . . . . . 22.5 22.5 22.5 —
Lease liabilities . . . . . . . . . . . . . . . . . . . . 5.2 5.5 0.8 4.7
Convertible notes . . . . . . . . . . . . . . . . . . 49.9 52.4 1.0 51.4

Total undiscounted financial liabilities . . 77.6 80.4 24.3 56.1

As at 31 December 2019
Financial liabilities:
Trade and other payables. . . . . . . . . . . . 34.4 34.4 34.4 —
Bank loans . . . . . . . . . . . . . . . . . . . . . . . 3.9 3.9 3.9 —
Lease liabilities . . . . . . . . . . . . . . . . . . . . 4.6 5.2 4.5 0.7
Convertible notes . . . . . . . . . . . . . . . . . . 49.9 51.5 1.0 50.5

92.8 95.0 43.8 51.2

As at 30 June 2020
Financial liabilities:
Trade and other payables. . . . . . . . . . . . 40.9 40.9 40.9 —
Bank loans . . . . . . . . . . . . . . . . . . . . . . . 26.3 28.4 15.3 13.1
Lease liabilities . . . . . . . . . . . . . . . . . . . . 5.0 5.4 4.7 0.7
Convertible notes . . . . . . . . . . . . . . . . . . 50.0 51.5 51.5 —

Total undiscounted financial liabilities . . 122.2 126.2 112.4 13.8

153
Currency risk

Currency risk arises on financial instruments that are denominated in currencies other than the
respective functional currencies of the entities in our Group in which they are measured.

Our Group is not exposed to significant foreign currency risk on their operating activities as most
transactions and balances are denominated in the respective functional currencies of our Group
entities, except for certain cash and bank balances, borrowings, trade and other receivables and
payables which are denominated in foreign currencies, primarily US$, JPY and RMB. Exposure to
foreign currency risk is monitored on an on-going basis and our Group endeavours to keep the net
exposure at an acceptable level.

Foreign currency exposure

Our Group’s foreign currency exposures as at 31 December 2017, 2018 and 2019, and 30 June
2020 are as follows:

(S$ in millions) S$ US$ JPY RMB Others Total

As at 31 December 2017
Financial assets . . . . . . . . . . 2.2 17.1 4.8 36.3 — (1) 60.4
Financial liabilities . . . . . . . . 9.7 1.5 0.2 25.7 0.1 37.2
Less: Net financial
(liabilities)/assets
denominated in the
entities’ functional
currencies . . . . . . . . . . . . . (7.5) — 4.2 10.6 — 7.3

Net exposure . . . . . . . . . . . . — 15.6 0.4 — (0.1) 15.9

As at 31 December 2018
Financial assets . . . . . . . . . . 8.8 10.9 4.6 50.1 0.1 74.5
Financial liabilities . . . . . . . . 55.7 0.7 5.6 15.3 0.2 77.5
Less: Net financial
(liabilities)/assets
denominated in the
entities’ functional
currencies . . . . . . . . . . . . . (47.5) — 3.2 35.1 — (9.2)

Net exposure . . . . . . . . . . . . 0.6 10.2 (4.2) (0.3) (0.1) 6.2

As at 31 December 2019
Financial assets . . . . . . . . . . 1.9 9.4 7.0 69.1 0.1 87.5
Financial liabilities . . . . . . . . 58.8 2.0 5.5 26.2 0.3 92.8
Less: Net financial
(liabilities)/assets
denominated in the
entities’ functional
currencies . . . . . . . . . . . . . (56.9) (0.3) 0.2 34.2 — (22.8)

Net exposure . . . . . . . . . . . . — 7.7 1.3 8.7 (0.2) 17.5

154
(S$ in millions) S$ US$ JPY RMB Others Total

As at 30 June 2020
Financial assets . . . . . . . . . . 7.1 13.9 1.9 79.7 — (1) 102.6
Financial liabilities . . . . . . . . 72.9 1.7 5.7 41.8 0.1 122.2
Less: Net financial
(liabilities)/assets
denominated in the
entities’ functional
currencies . . . . . . . . . . . . . (66.8) 0.1 (4.1) 39.0 — (31.8)

Net exposure . . . . . . . . . . . . 1.0 12.1 0.3 (1.1) (0.1) 12.2

Note:

(1) Amounts less than S$30,000.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of our Group’s equity and profit before tax to a
change of 2% (taking into consideration both the strengthening and weakening aspect) of US$, JPY
and RMB against the respective functional currencies of our Group entities as at 31 December
2017, 2018 and 2019, and 30 June 2020, with all other variables being held constant:

Equity Profit after income tax

As at As at
As at 31 December 30 June As at 31 December 30 June

2017 2018 2019 2020 2017 2018 2019 2020

(S$ in millions)

US$ against S$
—strengthened . . 0.3 0.2 0.1 0.2 0.3 0.2 0.1 0.2
—weakened . . . . . (0.3) (0.2) (0.1) (0.2) (0.3) (0.2) (0.1) (0.2)
JPY against S$
—strengthened . . — (1) (0.1) — (1) — (1) — (1) (0.1) — (1) — (1)
—weakened . . . . . (—) (1) 0.1 (—) (1) (—) (1) (—) (1) 0.1 (—) (1) (—) (1)
RMB against S$
—strengthened . . — (—) (1) 0.1 (—) (1) — (—) (1) 0.1 (—) (1)
—weakened . . . . . — — (1) (0.1) — (1) — — (1) (0.1) — (1)

Note:

(1) Amounts less than S$50,000.

155
CONTINGENT LIABILITIES

We do not have any contingent liabilities as at the Latest Practicable Date.

OFF-BALANCE SHEET ARRANGEMENTS

As at the Latest Practicable Date, we have no off-balance sheet arrangements that are not reflected
in our financial statements.

OUR PROSPECTS

Based on our Directors’ knowledge and experience of the industry and barring any unforeseen
circumstances, our Directors have made the following observations for the next 12 months from the
Latest Practicable Date:

• continued growth in our Advanced Materials BU underpinned by sustained momentum in the

3C industry, increased market share in the automotive industry through our joint venture with
CYPR and growth in new industry end-markets such as FMCG personal grooming and 5G
equipment;

• significant growth in our Nanofabrication BU driven by the commercialisation and mass

production of optical lenses and sensors; and

• stable growth in our Industrial Equipment BU, with sales of coating equipment being made
only to select customers.

Save as disclosed above and in this Prospectus, including under the sections “Important
Notice—Forward-Looking Statements”, “Risk Factors”, “Capitalisation and Indebtedness”,
“Business”, “Management’s Discussion and Analysis of Results of Operations and Financial
Position” and “Appendix D—Independent Market Research (IMR) on the Global Advanced
Materials Industry—Executive Summary” of this Prospectus, and barring any unforeseen
circumstances, we are not aware of any known trends, uncertainties, demands, commitments or
events that are reasonably likely to have a material effect on net sales or revenue, profitability,
liquidity or capital resources, or that would cause financial information disclosed in this Prospectus
to be not necessarily indicative of our future operating results or financial condition, in respect of
the financial year ending 31 December 2020. Our Directors are not aware of any event which has
occurred since 1 July 2020 and up to the Latest Practicable Date, which may have a material effect
on the financial position and results of our Group.

156
 CORPORATE STRUCTURE

The following diagram summarises our corporate structure as at the date of this Prospectus:

Nanofilm Technologies International Limited

100%

100% 100% 100% 90%(1)

Nanofilm Technologies Nanofilm Advanced NanoFab Technologies

Wizture Holdings Pte. Ltd.
Japan Limited Materials Pte. Ltd. Pte. Ltd.

100% 100% 100% 80%(2) 100% 100%

157
Nanofilm Renewable Nanofilm Vacuum Nanofilm Enterprise Wizture
NanoFab Japan NanoFab Vietnam
Energy Technology Coating (Shanghai) Management Technologies
Co., Ltd Co., Ltd
(Shanghai) Co., Ltd. Co., Ltd (Shanghai) Co., Ltd (Yizheng) Co Ltd

45%(3) 100% 100%

Shanghai
Yizheng Nahuan
Nanofilm Shanghai Nanofilm
Technologies
Precision Coating Trading Co., Ltd
Co., Ltd 6% Co., Ltd
Notes:

(1) The remaining 10% of NFT is held by MG Holdings. As at the Latest Practicable Date, MG Holdings has
16 shareholders, of which: (a) one shareholder is a director of NFT, representative director and legal representative of
NFJ and general director and legal representative of NFV; and (b) one shareholder is a director of NFT and NFJ. Our
Group retained these two shareholders of MG Holdings in roles in NFT, NFJ and NFV as part of the acquisition of the
Nanofab Group and the subsequent amalgamation of MG Consulting Co., Ltd with NFJ. Save for the foregoing, none
of the shareholders of MG Holdings is related to our Company Controlling Shareholder, Director or Executive Officer
of our Company.

(2) The remaining 20% of WZT is held by Yizheng Piston Segments Factory (江蘇省儀徵活塞環廠), an unrelated third party.
WZH and Yizheng Piston Segments Factory (江蘇省儀徵活塞環廠) entered into a shareholders’ agreement on
18 August 2020 (the “WZT SHA”) to govern their relationship in respect of WZT.

According to the WZT SHA, neither party may transfer, pledge or otherwise dispose of all or any part of its equity
interests in WZT to a third party without the prior written consent of the other party and the approval of the shareholders’
meeting of WZT.

The length of life of WZT is 20 years. The WZT SHA may be terminated under certain circumstances, including, if (a) the
parties agree to terminate the WZT SHA in writing; (b) WZT fails to get its business licence within three months after
the WZT SHA is signed; (c) any party fails to make capital contribution obligations for more than six months; (d) any
party is declared bankrupt, adjudicated or dissolved, or fails to perform its obligation under the WZT SHA; or (e) there
is a material breach of the WZT SHA.

(3) The remaining 49% of NHT is held by our joint venture partner, CYPR.

SUBSIDIARIES

The table below sets forth our subsidiaries as at the date of this Prospectus:

Principal Effective
Company Date of Country of place of Principal ownership
No name incorporation incorporation business activities interest

1. Nanofilm 2 October Singapore Singapore Investment 100%

Advanced 2003 holding
Materials
Pte. Ltd.
2. Nanofilm 5 January Japan Japan Marketing and 100%
Technologies 2007 sales of
Japan Limited industrial
machinery and
equipment and
coating services
3. Wizture 18 May 2020 Singapore Singapore Investment 100%
Holdings Holding
Pte. Ltd.
4. NanoFab 20 October Singapore Singapore Research and 90%
Technologies 2017 experimental
Pte. Ltd. development on
engineering
5. Nanofilm 22 June 2011 China China Investment in 100%
Renewable solar cell
Energy business
Technology
(Shanghai)
Co., Ltd.

158
 Principal Effective
Company Date of Country of place of Principal ownership
No name incorporation incorporation business activities interest

6. Nanofilm 6 September China China Provision of 100%

Vacuum 2002 coating services
Coating to end users in
(Shanghai) the precision
Co., Ltd engineering
industry and
printed circuit
boards industry
7. Nanofilm 16 December China China Provision of 100%
Enterprise 2016 consultation
Management services and
(Shanghai) technical
Co., Ltd development
8. Wizture 8 September China China Provision of 80%
Technologies 2020 coating solutions
(Yizheng)
Co Ltd
9. Nanofab 14 February Japan Japan Manufacture and 100%
Japan 2008 forming modules
Co., Ltd
10. Nanofab 23 May 2017 Vietnam Vietnam Manufacture, 100%
Vietnam process and
Co., Ltd assembly plastic
11. Yizheng 29 October China China Provision of 51%
Nahuan 2018 coating services
Technologies for automotive
Co., Ltd parts
12. Shanghai 25 July 2017 China China Production and 100%
Nanofilm sale of auto
Precision parts, provision
Coating of coating
Co., Ltd services for
precision
components and
technical
services
13. Shanghai 14 March China China Trading and 100%
Nanofilm 2018 sales of
Trading electronics and
Co., Ltd equipment

159
 BUSINESS

Investors should read this section in conjunction with the more detailed information contained in
this Prospectus including the financial and other information appearing in the section entitled
“Management’s Discussion and Analysis of Results of Operations and Financial Position”.
Investors should also read the Independent Market Research Report prepared by Frost & Sullivan
and included elsewhere in this Prospectus.

OVERVIEW

According to Frost & Sullivan, we are a leading provider of nanotechnology solutions in Asia,
leveraging our proprietary technologies, our core competencies in R&D, engineering and
production, to provide technology-based solutions across a wide range of industries. Our solutions
serve as key catalysts enabling our customers to achieve high value-add advancements in their
end-products, in an environmentally sustainable manner.

Since 1999, we have shown a strong track record in acquiring and retaining customers, including
market leading blue-chip end-customers 6. We have grown and developed alongside our
customers, through our continuous focus on R&D and innovation, often with R&D initiatives being
undertaken in joint collaboration with our customers, as well as by leveraging our strong in-house
engineering capabilities and our efficient production capabilities.

Our nanotechnology solutions are industry agnostic and are adaptable for use across a wide range
of industries, and have opened up new markets which were hitherto inaccessible to conventional
coating technologies. With the flexibility and advantages afforded by our proprietary technologies,
we believe that we are able to re-position ourselves as necessary to tap into promising growth
opportunities across our focus markets—be it in the computer, communications and consumer
electronics (“3C”), automotive, new energy, biomedical, or optical lens and sensors industry. We
intend to focus on attractive and innovative future industries, which upon maturity, have the
potential to constitute a large standalone business opportunity for us.

We seek to achieve technological breakthroughs, redraw the boundaries of material science to

enable new end-product possibilities and develop nanotechnology solutions. Our goal is to be a
future generation technology-based solutions company, with a vision of our advanced materials
and nanoproducts being integrated into the modern daily lives of consumers around the world.

Our Business Segments

We operate through our Advanced Materials Business Unit (“BU”), Nanofabrication BU and
Industrial Equipment BU segments.

Under our Advanced Materials BU, we provide advanced materials through surface solution
services based on our vacuum coating technologies and processes. Our surface solution services
involve the use of our FCVA (and FCVA-hybrid with PVD) and PVD coating equipment to
deposit our advanced materials on key components of our customers’ end-products, enabling
our customers to achieve their desired functional and/or decorative improvements for their
end-products.

6 We do not have direct contractual arrangements with our end-customers for the sale and purchase of our products and
services during the production phase of their end-products. Our end-customers’ end-products are manufactured and
assembled by contract manufacturers, and our end-customers will direct their contract manufacturers to engage us as
a supplier and we would enter into purchase orders or schedules of work with these contract manufacturers (who would
then be our direct customers).

160
Our Nanofabrication BU is a manufacturer and supplier of nanoproducts, which are used by our
customers as components for the smooth functioning and performance of certain parts of their
end-products, due to their nanoscale and/or nanofeatures. We utilise our nanofabrication
technology and software to fabricate nanoproducts which are designed to fit the specific size and
shape requirements specified by our customers as well as to provide required functional properties
to their end-products.

Under our Industrial Equipment BU, we manufacture and sell turnkey equipment systems ranging
from coating equipment to auxiliary equipment such as cleaning lines to automation systems which
are installed at our customers’ production lines. We provide our customers not just the physical
equipment, but also customised operating software for our systems and training, as well as
spare-parts, customer service and other forms of after-sales support.

Our Technology-based Solutions

We were founded in 1999 as a high-tech spin-off from the Nanyang Technological University
(“NTU”), offering surface solutions based on vacuum deposition, including using our FCVA
technology.

Today, our technology-based solutions are utilised in a wide range of industries such as 3C,
automotive, precision engineering, and printing and imaging. Our products and services are
integral to the smooth functioning of many of the technologies and tools which are essential to our
modern daily life, as illustrated in the representation below.

GARAGE LIVING ROOM STUDY ROOM

NF Solar film panel NF
Optical sensors Computers,
NF Laptops
Optical lens /
sensors
AM
5G
AM applications
Biomedical
implants

AM NF
Smartphone
AM
& wearables
Fuel cell AM
Printers
AM NF
AM NF Personal
Engine parts grooming
& components Sanitary fittings
AM
Tablets

BEDROOM BATHROOM
Industries: Automotive Bio-medical High Frequency Component and Equipment 3C Office automation & productivity modules FMCG Others

Business units: AM Advanced Materials NF Nanofabrication

161
Our Performance

We have experienced strong growth during the period under review. Our revenue for the financial
years ended 31 December 2017, 2018 and 2019 and for the six months ended 30 June 2020 was
S$103.6 million, S$122.8 million, S$142.9 million and S$77.8 million, respectively. Our profit
before tax for the financial years ended 31 December 2017, 2018 and 2019 and for the six months
ended 30 June 2020 was S$32.0 million, S$34.9 million, S$39.9 million and S$22.5 million,
respectively.

Our Adjusted EBITDA for the financial years ended 31 December 2017, 2018 and 2019 and for the
six months ended 30 June 2020 was S$43.4 million, S$50.4 million, S$57.1 million and S$33.2
million, respectively.

OUR COMPETITIVE STRENGTHS

Our business represents a highly scalable platform for future growth owing to the following
competitive strengths:

We provide proprietary differentiated technology-based solutions that we believe have

enabled the opening up of new markets and applications that were previously inaccessible
by conventional coating technologies and materials thus driving sustainable competitive
advantage

We believe that our vacuum coating technologies and advanced materials have significant
advantages compared to conventional coating technologies and materials which enable us to solve
complex problems. The advanced materials with differentiated properties utilised in our surface
solutions, coupled with our capability for high-volume coating processes, enable our customers to
achieve greater functional and aesthetic improvements in their end-products compared to what
would be possible with conventional technology.

• The functional improvements of our advanced materials include, among others, high
hardness and strength, strong corrosion resistance, high durability, low friction coefficient,
strong adhesiveness, and electrochemistry properties. According to Frost & Sullivan, our
TAC-ON ® advanced material is among the hardest materials in the world known to mankind,
including diamond and graphene (diamonds remain the most scratch resistant material yet
known). According to Frost & Sullivan, our TAC-ON ® advanced material contains a fairly high
quantity of sp 3 carbons (diamond-like) of 85% compared to other DLCs which contain between
10 to 55% of sp 3 carbons. These qualities prolong the durability and lifespan of our customers’
products and enhance the attractiveness and saleability of their products.

• Our advanced materials are also utilised by our customers to enhance the aesthetics of their
end-products, such as appearance, colour, texture and/or tactile quality. According to Frost &
Sullivan, such applications of our surface solutions are common in the 3C and FMCG personal
grooming industries.

According to Frost & Sullivan, our patented FCVA technology is considered to be superior in film
density, surface adhesion, hardness, strength and repeatability in comparison to existing
technologies such as PVD (sputtering) and CVD.

Our FCVA technology enables vacuum coating deposition to be performed at room temperature,
which is both environmentally friendlier and enables vacuum coating to be performed on a wider
variety of substrate materials such as plastics, rubber and ceramics, on a commercial scale. Due
to their low melting points, it has not been cost-effective or possible to perform vacuum coating on
such substrates using conventional coating technology. According to Frost & Sullivan, the ability of
FCVA to deposit advanced materials on substrates at room temperature (as opposed to high

162
temperature deposition by other conventional methods) opens up new markets that were
previously inaccessible by conventional coating technologies.

Frost & Sullivan has described the ability of our FCVA technology to be applied on low melting point
materials as creating new design (material choice) opportunities across several industries such as
3C (computer, communication and consumer electronics), automotive, precision engineering and
printing and imaging.

Through our continuous R&D and engineering programmes, we have also been able to combine the
best of our proprietary FCVA technology with conventional coating technologies such as PVD
(sputtering), enabling us to provide our surface solutions in a cost-effective and environmentally
friendly manner as well as to reduce the time required for the vacuum coating process. See “—Our
Business—Our Advanced Materials BU” for further details.

According to Frost & Sullivan, our products and service offerings have enabled our customers to
achieve high value-add functional and aesthetics improvements in their end-products, in a
sustainable manner. Frost & Sullivan has stated that our technological advantages have enabled
us to open up new markets (such as personal grooming, new energy, 5G, biomedical and,
aerospace industries) for such nanotechnology-based surface solutions that were previously
inaccessible by conventional technologies, and expanded the total market potential for such
technology-based solutions. This is illustrated in the diagram below.

Illustration of our ability to expand the market potential for such nanotechnology-based
solutions by leveraging our differentiated technology-based solutions

Other Players

Our
Enables
Expanding
Conventional Technology- Enables Provide High
Superior New Market
Technology based Value-Add
Properties Applications Potential
Solutions

163
Our differentiated technology-based solutions which enable our customers’ mission-critical
applications, our full service in-house equipment and surface solutions capabilities, our ability to
redraw market boundaries by opening up broader end-markets exposure, our scalable and reliable
production capabilities (see “—Our Core Competencies” for further details of our production
capabilities) and our long-term relationships with our existing customers jointly constitute our
sustainable competitive advantage.

Illustration of Our Competitive Positioning

In summary, we believe that the combination of our differentiated customer-centric technology

offerings, full-service in-house equipment and surface solutions capabilities, ability to redraw
market boundaries by opening up broader end-markets exposure and scalable and reliable
operational capabilities form the basis of our sustainable competitive advantage.

We believe that we play a role as key enabler for our blue-chip customers across multiple
mission-critical applications and benefit from high customer intimacy and stickiness

Frost & Sullivan has described the importance of our technology-based solutions as enabling our
customers to offer end-products with properties such as improved wear resistance, reduced heat
generation caused by internal moving parts, product miniaturisation, requisite electrochemistry
properties, strong corrosion resistance, as well as improved aesthetics, which were not
achievable with conventional coating and nanofabrication technologies. We believe that these are
mission-critical applications for our customers, helping our customers differentiate their products
by enabling end-product innovation to overcome functional, performance, aesthetic and/or cost
constraints.

164
As set out in the diagram below, we believe that the key areas of value-add we provide to our
customers involve providing superior functional properties, ensuring aesthetic enhancements and
introducing new applications.

Note:

(1) Refers to Electromagnetic Interference.

According to Frost & Sullivan, through our R&D, engineering and production capabilities, we are
able to offer our technology-based solutions to customers at affordable prices, replacing the need
to rely on expensive materials.

165
Select examples of our product applications across various end-markets are set out in the diagram
below.
Select examples of our product applications across various existing-markets
3C – Smartwatch Automotive Printing & Imaging Precision
Bands (Piston Rings) (MFPs) Engineering
(Wearables) (HPLC Components)

Constant movement Subject to high wear High deformation and Only able to coat
and rubbing lead to and tear, accounting wear and tear due to stainless steel, which
Pain
wear and tear, for approximately 30% frequent movement reduces optionality for
Points scratches, breakage of total engine friction and high temperature customers
and discolouration loss

Enables wearables ✓ Extends useful life ✓ Provides ✓ Coats ceramics,

with: of the piston ring by components with plastics and
✓ High wear more than five times hardiness, superior stainless steel
resistance adhesion properties
✓ Low friction ✓ Maintains hardness,
and wear resistance
✓ Low friction coefficient, leading excellent cohesion,
Our Solution
coefficient to lower emissions ✓ Deposition at low corrosion and wear
✓ Broad range of and energy loss temperature, resistance
fashionable colours eliminating any
distortions caused
by heat

✓ We enable ✓ We enable ✓ We extend the ✓ We enable

Customer Z(1) to automotive useful life of multi- Customer W(2) to
produce wearables component functional printer use a wide range of
with an extended suppliers to meet components for materials for High
useful life at an the Euro VI Canon and Fuji Performance Liquid
affordable cost emission standard, Xerox and reduced Chromatography
Our which is the latest the cost to replace
✓ Our customers are engine emission and repair these
Enablement
able to derive high standards set by the components
benefit to cost European Union
payoffs(3) ✓ Our customers are
✓ Our customers are able to derive high
able to derive high benefit to cost
benefit to cost payoffs(3)
(3)
payoffs

Segment % 22.5%
1.8% 9.0%
3.6%
of FY2019 (Wearables & (Precision
(Automotive) (Printing & Imaging)
Revenue(4) Accessories) Engineering)

123% 24%
Revenues 71% 19% 21%
1,100% (11%)
(S$ million, 32.2 521%
based on 20.5 12.9 5.1
4.8 5.6 2.6
year-on-year 2.6
growth)(5)
FY2019 1H2020 FY2019 1H2020 FY2019 1H2020 FY2019 1H2020

Denotes year-on-year revenue growth for the relevant financial year/period, against the corresponding
financial year/period (i.e. financial year ended 31 December 2019 compared with financial year ended
31 December 2018, and the six months ended 30 June 2020 compared with the six months ended 30 June
2019).

Notes:
(1) The name of Customer Z has not been identified due to confidentiality restrictions in our agreements with this customer.
Customer Z is a global technology company that designs, develops and sells consumer electronics, computer software
and online services.
(2) The name of Customer W has not been identified due to confidentiality restrictions in our agreements with this
customer. Customer W is a measurement company which engages in chromatography, mass spectrometry and thermal
analysis innovations.
(3) Benefits to cost payoffs is determined from the approximate benefits derived by our customers from the use of our
technology-based solutions against the costs borne by our customers.
(4) Proportion of revenues of our Advanced Materials BU by end-markets as a percentage of our total revenues.
(5) Revenues and growth rates are for the same categories mentioned in brackets for each of the examples in the
“Segment% of FY2019 Revenue” row.

166
We believe our differentiated technology-based solutions have entrenched us in our customers’
value chains, resulting in high customer stickiness. We believe our relationships with our
customers will continue to strengthen over time due to the following reasons:

• We are typically engaged at an early stage of our customers’ product development and design
process, developing and designing proprietary advanced materials which can be coated on
key components of their end-products as part of our surface solution services, so as to
achieve our customers’ desired functional and/or aesthetic properties, or nanoproducts
customised to the specific needs of their end-products.

For our Industrial Equipment BU, we often work closely with our customers to ensure that the
coating equipment we offer them are customised to their needs and seamlessly integrated into
their manufacturing lines.

• Although our technology-based solutions typically account for a small percentage of the total
costs of our customers’ end-products, they offer high value-add (such as miniaturisation,
increased durability, thermal management and wear resistance), and enable our customers to
overcome functional and costs constraints imposed by conventional coating technologies. In
addition, many of our customers have stringent supplier qualification processes, and we have,
over the years, established ourselves as a trusted and essential partner and supplier.

• In the future, as we aspire to capture more of, and further integrate across, our customers’
end-product value chains, we believe that our technology-based solutions will be further relied
upon by our customers. See “—Our Strategies” for further details.

A diagrammatic illustration of our demonstrated value chain creation framework is set out below.
We were initially founded as an industrial equipment manufacturer, and as at the Latest Practicable
Date, we have developed our advanced materials capabilities to drive our business. In the future,
we aspire to capture more of our customers’ value chain by expanding our capabilities in
components and modules production (including through our Nanofabrication BU), with the ultimate
end-goal of being able to integrate across more of the value chain of our customers’ end-product to
offer comprehensive one-stop nanotechnology-based solutions.

167
 Illustration of our Demonstrated Value Chain Creation Framework

We believe our proprietary technology enables us to solve complex problems and serves as a key
enabler and catalyst for our plans to capture a greater wallet share of our current market, and to
become more entrenched in our customer relationships as we continue to upscale in our
customers’ value chain.

We believe that the likelihood of our key customers switching to alternative solutions providers, to
the extent there are any is relatively low as we benefit from high barriers to entry. Our customers’
stickiness is evidenced by us being the single source supplier, across a number of mission-critical
applications, to nine out of our top 10 major customers (comprising four direct customers and five
end-customers) for the nanotechnology solutions we supply to them, as at the Latest Practicable
Date.

168
As at the Latest Practicable Date, we have over 300 customers across different industries. The
following table outlines the length of our relationship with select key customers

Our Company’s length of relationship with key customers

Key Customer Approximate Length of Relationship

Fuji Xerox 14 years

Nikon 13 years
Canon 13 years
Sunny Optical 12 years
TPR 11 years
Riken 10 years
Ricoh 10 years
Customer W 10 years
Customer Z 8 years
Microsoft 5 years
Huawei 4 years
AAC 4 years
Anqing TP Goetze Piston Ring (ATG) 3 years
CYPR 3 years
7
Customer A 2 years

See “—Our Business—Our Advanced Materials BU—Our Surface Solutions” and “—Our
Business—Our Nanofabrication BU” for further details on the value-add provided by our advanced
materials and nanoproducts.

We have multiple avenues for strong growth from a large TAM and favourable secular
industry trends which can be leveraged to capture high-growth opportunities across
different end-market segments.

Our differentiated technology-based solutions, in-house engineering and production capabilities

and customer intimacy open up multiple avenues for us to grow our business. Frost & Sullivan has
estimated that the global market size for advanced materials is US$19.1 billion in 2019. Frost &
Sullivan has further forecasted the market size for advanced materials to grow at a CAGR of 7.5%
between 2020 and 2023 to reach US$24.3 billion by 2023.

7 The name of Customer A has not been identified due to confidentiality restrictions in our agreements with this customer.
Customer A is an e-commerce company.

169
The diagrammatic illustration below shows our multiple avenues for growth across different
end-market segments.

Overview of our growth strategy across different end-market segments

Note:

(1) Percentage figures in diagram denote year-on-year revenue growth in the financial year ended 31 December 2019
compared to the financial year ended 31 December 2018.

Capturing greater share in our existing markets

We believe that there is significant room for us to increase our market share in our existing markets
through increasing sales to existing customers and growing our customer base, which include
end-industries such as 3C (particularly in a larger base volume market, such as our smartphone
sub-segment which has a lower historical revenue contribution in our Advanced Materials BU),
printing and imaging, and precision engineering, by increasing sales to existing customers and
growing our customer base. A breakdown of our Advanced Materials BU revenue for the financial
years ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June 2019 and
2020, is as follows:

Financial year ended 31 December Six months ended 30 June

Revenue (S$ in millions) 2017 2018 2019 2019 2020

S$ % S$ % S$ % S$ % S$ %

Advanced Materials BU

—Smartphone . . . . . . . . . . . . . . . . 11.1 10.7 12.6 10.3 13.6 9.6 3.0 5.4 6.7 8.6

—Computer (desktop, laptop, tablet) . . . 30.6 29.5 35.5 28.9 43.2 30.2 17.4 31.5 23.9 30.7

—Wearables & Accessories . . . . . . . . 16.9 16.3 18.8 15.3 32.2 22.5 9.2 16.7 20.5 26.4

—Printing and Imaging . . . . . . . . . . . 11.2 10.8 10.8 8.8 12.9 9.0 6.3 11.4 5.6 7.2

—Precision Engineering . . . . . . . . . . 4.1 4.0 4.2 3.4 5.1 3.6 2.1 3.8 2.6 3.3

—Automotive . . . . . . . . . . . . . . . . . 0.1 0.1 0.5 0.3 2.6 1.8 0.4 0.7 4.8 6.2

Total. . . . . . . . . . . . . . . . . . . . . . . 74.0 71.4 82.4 67.0 109.6 76.7 38.4 69.5 64.1 82.4

170
We believe we are well-positioned to achieve this given our track record with our customers, our
differentiated technology-based solutions, and our dedicated sales and customer service teams.
From 2017 to 2019, according to Frost & Sullivan, we have grown our revenues in our Advanced
Materials BU from our established markets at higher than the rate at which these industries have
grown, indicating that we have expanded our revenue share in these markets. See “—Our
Strategies—Increase our market share in existing markets through a two-pronged approach of
increasing sales to existing customers and by capturing new customers” for further details.

According to Frost & Sullivan, we are well-positioned to benefit from secular growth trends such as
the increasing premium nature of end-products, digitalisation, internet of things (“IoT”) adoption,
5G implementation, increasing data demand, stricter emission standards for combustion engines
and increasing environmental regulation. According to Frost & Sullivan, these trends would
increase the demand for, among others, high-speed data processors (which will need to manage
heat efficiently), environmentally friendly combustion engines (which will need to meet stricter
emission reduction standards), electric and autonomous vehicles, smart wearables and devices,
medical implants, new renewable energy sources (such as fuel cell and solid-state batteries) and
high frequency communication 5G network equipment. We believe that these trends will drive the
demand for our differentiated technology-based solutions.

Take-off in newer established end-markets

We consider our newly-established end-industries to be end-markets where we have recently

established a presence, and we see potential for strong growth via the ramping up of market share.
These comprise the FMCG personal grooming, automotive, optical lens and new energy industries.

• In the automotive industry, we have established a joint venture company in 2019 with CYPR,
the PRC’s largest piston ring maker, where we hold a 51% interest. Utilising our iTAC TM
surface solution, the joint venture supplies coated automotive components to CYPR which are
then used in engines which are sold to well-established automotive makers and for export
markets. As CYPR is invested in the joint venture, the demand from CYPR is captive. We have
seen strong growth since the inception of the joint venture, given that we are the only supplier
currently providing piston rings coated to meet CYPR’s requirements. In the first year of the
joint venture, the revenue we derived from our Advanced Materials BU customers in the
automotive industry has increased more than four times from S$0.5 million for the financial
year ended 31 December 2018 to S$2.6 million for the financial year ended 31 December
2019.

• In the FMCG personal grooming industry, we believe our nanotechnology solutions have the
potential to serve as a catalyst to enable the development of the next generation of
end-products given that our surface solutions provide a commercially viable alternative to
conventional chrome plating. By leveraging our FCVA technology, we are capable of
depositing our advanced materials on zinc substrates, which Frost & Sullivan describes as an
environmentally friendly alternative to chrome plating. Our surface solutions provide
functional improvements to our customers’ end-products in the FMCG personal grooming
industry such as increased corrosion resistance and enhanced skin gliding capabilities. In
addition, our surface solutions provide aesthetic improvements by allowing our customers to
offer a wider range of colour and tactile choices to their consumers.

171
• In the optical sensors segment, Frost & Sullivan foresees growth driven by the continuous
adoption of multiple camera approaches in smartphones and Advanced Driver-Assistance
Systems (ADAS) and autonomous cars, as well as the boost provided by 5G adoption in the
smartphone global market. Frost & Sullivan has stated that our Nanofabrication BU is
well-positioned as a key supplier to the optical lens and sensors industry.

• In the new energy segment, we believe our surface solutions will have enabling applications
in electric vehicles. Electric vehicles use fuel cells in which the bi-polar plate electrodes
require a surface solution that provides high electrical conductivity and high corrosion
resistance. According to Frost & Sullivan, the conventional solution which is utilised in the
market has typically been gold-plating, which is costly and prone to corrosion. Our surface
solutions, which utilise advanced materials, offer a more cost-effective solution compared to
the gold-plating method, and provide superior functional properties such as high corrosion
resistance and high electrical conductivity. We believe that our surface solutions have the
potential to assist in enabling the production of fuel cells at scale and to lower the barriers of
entry and adoption cost of such fuel cells. According to Frost & Sullivan, this has the potential
to accelerate market adoption of electric vehicles.

Capture more of our customers’ value chain through vertical and horizontal integration

According to Frost & Sullivan, our customers are increasingly seeking out solution providers that
offer comprehensive one-stop solutions. We believe we have successfully achieved value chain
integration to offer one-stop solutions for several of our customers by leveraging synergies across
business segments to offer customers integrated solutions, and we are strategically positioned to
upscale and integrate across the value chains of those other customers’ end-products where we
believe these to be attractive and to add value to our business. See “—Our Strategies—Upscale
and integrate across the value chain of our customers’ end-products by capitalising on value chain
opportunities”.

For example, we are a supplier to Microsoft for their surface tablet logos and are responsible for the
end-to-end production of each logo, from laser cutting of each stainless steel piece to application
of our proprietary advanced materials on each logo. Other select case studies where we have been
able to integrate across the value chain are set out in the table below.

172
 Select Case Studies of Value Chain Integration

Piston Ring & 3C (Logo and Optical Sensing Device Modules Functional
Engine Parts Button) Enablers
(MFPs, Fuel
Cells)
Product(s)

■ Piston rings ■ Logos require ■ Requirement for ■ Demand for ■ Coatings

account for 30% high aesthetic component vertical critical to
of engine friction and functional miniaturisation integration in the impart
loss coating while maintaining value chain for necessary
superior optical FMCG personal features like
performance grooming electro-
modules chemical or
certain
Customer electrical
Pain Point properties to
these
products, in
addition to
wear and
corrosion
resistance
✓ Entered industry ✓ Technology to ✓ Develop ✓ Establish vertical ✓ Integrate
with iTAC™ in laser cut integrated integration from coatings with
2013 stainless steel coatings and substrate electronics /
plates for nanofabrication electric
✓ Established JV shaping to
deposition offerings for functions
with CYPR in electro- polymer molding
2019 ✓ Enables thin mechanical (coating is ✓ Offering
layer of coating sensor systems, technology imparts the
✓ Extends useful
with broad range enabling the next enabler within desired
life of the piston
of fashionable generation of that process) features while
ring by more than
colour choices, human-machine also enabling
Our five times, lowers ✓ Non-slip and
with standard interfaces seamless
Solution emissions and anti-fingerprint
functional interaction
energy loss effects on
properties with other key
various colours elements of
✓ Enables the broader
component ✓ Unique chemical
system
suppliers to meet corrosion
Euro VI emission resistance
standards
✓ Thin-wall metal
enclosure
✓ JV with CYPR ✓ Simplifies supply ✓ Position across ✓ Represents a ✓ Facilitates new
supplies coated chain by the value chain new and more device
components to becoming one- from mechanical effective way to architecture
CYPR which are structure molding make real-metal through
stop supplier for
then used in to coating and modules for reverse
engines sold to surface logos testing FMCG personal processing of
automotive ✓ Ensures grooming epoxy
OEMs consistency and ✓ Co-development products
quality for of offering with ✓ Enables our
Value Chain customer customers and Company to
✓ Enables our ✓ We seek to
Integration Company to integrators gradually expand further expand
gradually our offering to our customer
produce more cover the base
CYPR engine production of the
components as entire FMCG
well as to expand module
our offering to (compared to
other suppliers only shaver foil
or toothbrush
handle)

173
According to Frost & Sullivan, we possess the capabilities and potential to upscale in our
customers’ value chain and to capture a greater wallet share of our current market such as 3C,
automotive, optical sensors and optical lens industries. We believe that our capabilities and
potential to upscale in our customers’ value chain are based on our technologies and core
competences, our skilled and trained employees as well as our long-term relationships with our
customers.

Expansion into new end-industries

Given the secular growth trends described in “—Our Competitive Strengths—We have multiple
avenues for strong growth from a large TAM and favourable secular industry trends which can be
leveraged to capture high-growth opportunities across different end-market segments—Capturing
greater share in our existing markets” above, we anticipate further new expansion opportunities in,
among others, fuel cells, 5G networks, IoT optical sensors, medical lens and solid-state batteries.
We believe that we are able to opportunistically enter such new markets by leveraging the
adaptable nature of our technology.

Given the adaptability of our solutions, we intend to identify and capture opportunities in new
end-industries such as biomedical, aerospace and IoT optics industries. Frost & Sullivan believes
that our proprietary technologies are easily adaptable to allow for our smooth penetration into new
end-industries like personal grooming and CdTe solar panels. Frost & Sullivan further believes that
owing to our strength in our Advanced Materials BU, we are well-positioned to benefit from the
growth trends in these additional new markets such as rising usage of medical implants, rapid
adoption of electric vehicles, demand for high-speed data processors and high demand for aircraft
engine efficiency.

Our core competencies in strong in-house R&D, engineering and production capabilities
form an integral part of our technology ecosystem which enables us to drive additional value
creation

We design, manufacture and assemble our proprietary coating equipment (and auxiliary equipment
and spare parts), and develop and provide our surface solutions and advanced materials in-house.
We do not rely on third parties to provide our products and services. In addition, we possess strong
in-house engineering and production capabilities. Together, our core competencies constitute our
captive technology ecosystem which allows us to drive value creation.

174
 Overview of Nanofilm Technology Ecosystem with Blend of In-house Expertise and
Client-Driven Customisation

Note:

(1) Based on average revenue per equipment and average cost of equipment for our Advanced Materials BU for the
six months ended 30 June 2020, and payback period calculated by the number of years of gross profit (excluding
depreciation and amortisation) to cover capital investment.

Our engineering capabilities support our R&D functions, and in particular, our joint collaboration
programmes with customers. Once we have designed the surface solution or nanoproduct required
by our customers, our engineering capabilities enable us to design and develop the fixtures, molds
and inserts required by our production lines to scale for mass production.

As at the Latest Practicable Date, approximately 63% of our production processes in our Shanghai
Plant 1, Yizheng Plant, Hai Duong Plant and Osaka Plant have been automated. Through the use
of automation, we have been able to improve our production speed, scale and quality, and reduce
the risk of errors due to operator fatigue. We implemented an MES in July 2017, which allows us to
track key operational parameters in real-time, facilitating efficient production planning. Due to the
advantages conferred by our MES, as at the Latest Practicable Date, our production facilities are
able to process more than 5 million parts daily, while giving us the flexibility to handle approximately
300 product types. Our MES has enabled us to realise operational cost savings, reducing total cost
per unit production by 13%, improving our manufacturing cycle time by approximately 7% and
improving overall equipment effectiveness by approximately 6%, as compared to the period
immediately prior to the implementation of our MES in July 2017. We also have in place a QTS
which provides a real-time monitoring platform to track the quality of our manufacturing output.

Our robust operational capabilities and systems enable us to meet our customers’ time-sensitive
orders without compromising on quality and cost. See “—Our Core Competencies” for further
details of our engineering and production capabilities. We believe that our core competencies, as
well as our other competitive strengths described above, collectively ensure that we remain
integrated within our customers’ product development and production supply chains and a trusted
long-term partner to our customers.

175
We have a highly attractive financial profile, combining a track record of strong growth,
resilient margin performance and strong returns

We have a track record of strong financial performance and have enjoyed revenue growth
(primarily driven by our Advanced Materials BU) together with high and stable Adjusted EBITDA
margins. For the financial years ended 31 December 2017, 2018 and 2019, our revenue grew at a
CAGR of 17% while we also generated Adjusted EBITDA margins of 40% for the financial year
ended 31 December 2019.

Our revenue and Adjusted EBITDA growth for the financial years ended 31 December 2017, 2018
and 2019 and year-on-year growth for the six months ended 30 June 2019 and for the six months
ended 30 June 2020 are represented in the charts below.

Our Revenue and Adjusted EBITDA growth

Revenue – Strong and accelerating growth Adjusted EBITDA(2) – High and sustained margins
NTI Group
YoY Growth (%) 19% 16% 41%

(S$m)
AMBU
11% 33% 67% 41.9% 41.0% 42.7%
60.0%

40.0%
140

YoY Growth (%) 37.0%

(S$m) 120
40.0%

20.0%

150
143 100

123 0.0%

130

27 80

104 6 57
-20.0%

35
110

78 60

50
90

30 5 43 -40.0%

70
- 55 11 3 40 33
50 110 14 20
-60.0%

74 82 3
30

64 20

-80.0%

10
38
- -100.0%

FY2017 FY2018 FY2019 1H2019 1H2020 FY2017 FY2018 FY2019 1H2019 1H2020
(10)

(1)
AMBU NFBU IEBU

Notes:
(1) In January 2018, we completed our acquisition of a 51% equity interest in NFT. In November 2018, we subscribed for
additional ordinary shares in NFT. As a result, our Group’s interest in NFT increased by 19% from 51% to 70%.
Subsequently in June 2020, we increased our stake in NFT to 90%.

(2) Adjusted EBITDA is reconciled from profit before income tax by adding back depreciation, amortisation, other
professional fees, finance expenses and deducting gain on disposal of PPE and finance income.

Our strong balance sheet, as indicated by our net cash position of S$14.9 million as at 30 June
2020 offers financial flexibility to invest in and fund future growth, with the potential to take on
additional debt, where necessary. As at 30 June 2020, our gearing ratio was approximately 37.0%
and our adjusted gearing ratio, excluding amounts outstanding under the Convertible Notes, was
approximately 18.8%.

We benefit from our ability to recover the costs of our capital investments in equipment to take
advantage of growth opportunities in a relatively short period of time. Based on our average
revenue per equipment for our Advanced Materials BU and our average cost of equipment for our
Advanced Materials BU for the six months ended 30 June 2020, we expect to be able to generate
sufficient gross profit to recover our capital investment in such equipment within approximately
0.8 years 8, and would thereafter expect to be generating positive operating cash flows from each
such equipment. Our ability to recover our cost of investment within a relatively short time frame
strengthens the speed at which we are able to scale in our existing markets and take advantage of
growth opportunities in adjacent markets.

8 Based on average revenue per equipment and average cost of equipment for our Advanced Materials BU for the six
months ended 30 June 2020, and payback period calculated by the number of years of gross profit (excluding
depreciation and amortisation) to cover capital investment.

176
We have a highly experienced founder and management team with a strong track record of
customer-centric R&D innovation

Our Company is led by our visionary founder, Dr Shi Xu, who has developed our proprietary
nanotechnology and currently oversees our operations and research and development. Prior to
founding our Company in 1999, Dr Shi Xu was a tenured professor at the Nanyang Technological
University. Dr Shi Xu holds a Doctor of Philosophy in Physics from the University of Reading and
has published over 100 research papers to date, as well as being recognised for his visionary
leadership. See “—Awards” below for further details.

Dr Shi Xu is ably assisted by a highly experienced and talented management team, comprising
industry veterans with significant industry experience in various fields and extensive experience in
delivering growth and innovation. Our Chief Executive Officer, Mr Lee Liang Huang, was previously
the Group Chief Executive Officer of MI Holdings Pte Ltd and has held various senior management
positions at IBM Singapore Pte Ltd. Our Chief Operating Officer, Mr Ricky Tan Chong Ho, has held
senior roles at HGST Singapore Pte Ltd, Pemstar Ltd and IBM. Our Chief Commercial Officer,
Mr Gary Ho Hock Yong, has previously held senior management positions at Hi-P International
Limited, an SGX-ST listed global manufacturing company in the telecommunications, lifestyle,
computing and automotive industries. See “Management—Executive Officers” for further details of
our management team.

We believe that our management team collectively possesses in-depth knowledge and strategic
and operational experience in their respective fields that gives us a competitive advantage to
operate and grow our business and to develop and execute our growth strategies.

OUR STRATEGIES

Increase our market share in existing markets through a two-pronged approach of

increasing sales to existing customers and by capturing new customers

We believe that there is significant room for us to increase our market share in our existing markets
by increasing sales to existing customers and growing our customer base. We believe we are
well-positioned to achieve greater market share in our existing markets given our established track
record with our customers (alongside our early stage, customer-centric co-development model),
our differentiated and highly-adaptable technology-based solutions, our ability to deliver high
quality value-add at attractive cost-benefit payoffs and our dedicated sales and customer service
teams. We believe the key factors which contribute to our market share in existing markets are
(1) our proprietary technology, (2) the quality of our nanotechnology solutions, (3) our service to
customers, (4) the potential cost-savings we provide to customers, and (5) the high value-add to
our customers’ end-products.

We aim to enhance our sales and marketing capabilities to target new customers in our existing
markets. Our sales and marketing teams are generally structured with an industry focus in order to
provide targeted solutions that address the unique challenges faced by each individual customer.
In addition, for our global key accounts, we employ dedicated sales specialists with a strong
product and engineering background to more effectively serve these customers. Our sales and
marketing teams seek to leverage our team’s network of industry contacts, as well as our strong
reputation, positive feedback and word-of-mouth to engage new customers to explore new
applications of our solutions.

In order to provide reliable and flexible operational support to cater to an anticipated increase in
demand for our nanoproducts and technology-based solutions, we are adding production capacity
to support our push to capture additional market share. Our Shanghai Plant 2 (which is undergoing
construction as at the Latest Practicable Date) is expected to commence initial operations in the
first quarter of 2021. Shanghai Plant 2 when fully operational is expected to be able to house
approximately an additional 200 coating equipment, and is expected to increase our total gross
floor area across all of our production facilities to over 110,000 sq m.

177
According to Frost & Sullivan, the below are the expected key drivers for the various end-markets
that we operate in.

End-market Key drivers

Smartphones • Key demand drivers are expected to be

5G implementation, replacement cycle
and premiumisation trends
• Significant opportunity to capture more of
our customers’ value chain in
components manufacturing (e.g.
smartphone enclosures)
Wearables & Accessories • Key demand drivers are expected to be
demand for nanotechnology solutions for
products such as smartwatch bands
Computers • Key demand drivers are expected to be
new applications such as hinges and
premiumisation trends
Precision Engineering • Key demand drivers are expected to
be customer acquisition in existing
end-markets (e.g. HPLC components)
and new applications (e.g. household
sanitary applications)
Automotive • Key demand drivers are expected to be
the ramp-up of our joint venture with
CYPR, and our diversification into other
engine components and fuel cells
FMCG Personal Grooming • Key focus in this segment is on enabling
product upgrades and enhancements
• Demand drivers are expected to be the
mass production of applications under
development and our intended expansion
to include applications for other products
Printing & Imaging • Key demand driver is expected to be
increasing market share in the MFP
industry
Nanofabrication • Our technology capabilities and potential
TAM opportunity (according to Frost &
Sullivan) provide us with growth
opportunities
• Key demand drivers are expected to
be the increase in demand for optical
lens and sensory components in key
end-markets such as 3C and automotive
markets
• Focus on segments such as Fresnel
lenses and tunable lenses
• We are in the process of developing
far/near zooming lenses, enabling us
to produce sleeker/slimmer sensors,
mobile phone camera modules, as well
as sportswear and protective goggles
• Leverage synergies across our business
segments to offer our customers
integrated solutions—for example,
combining our surface solutions with
nanofabrication capabilities

178
Upscale and integrate across the value chain of our customers’ end-products by capitalising
on value chain opportunities

Frost & Sullivan believes that we have strong growth potential in capturing more of our customers’
value chain which we serve. For example, in respect of the components market for smartphone
enclosures, wearable components, personal grooming components and automotive engine parts,
Frost & Sullivan has forecast the combined TAM of these markets as expected to be approximately
US$423.0 billion by the end of 2023. In terms of the overall market size for the various relevant
end-use segments 9, based on forecasts by Frost & Sullivan, the combined market size is expected
to be approximately US$4.5 trillion by the end of 2023.

Integration across the product value chain offers a natural progression for us to drive sustainable
growth, and we intend to achieve this through the following:

• Capture a greater market share of the value chains by selectively entering into the design,
manufacturing and assembly of vital components and modules in industries where our
advanced materials are key enablers and by further increasing our customer engagement.

• Leverage synergies across our business segments to offer our customers integrated
solutions—for example, combining our surface solutions with nanofabrication capabilities.

We aim to become a one-stop solutions provider for our customers for such technology-based
solutions, in particular, for customers in the FMCG personal grooming, automotive and smartphone
and wearables sub-segments. According to Frost & Sullivan, such value chain integration is
expected to enable us to achieve better pricing, as well as provide significant cost benefits to our
customers. Other expected benefits to our customers include a shorter supply chain, increased
margins, greater connectivity throughout the entire value chain and enabling our customers to have
higher control over their procurement processes. Our involvement across the value chain would
also enable us to ensure consistency and quality. In turn, this will allow us to make ourselves even
more critical for our customers and capture additional upside from the value chain.

Our Value Chain Integration Strategy Framework

9 According to Frost & Sullivan, such end-use segments include automotive, smartphones, semiconductors, computer,
wearables, MFPs, image sensors, e-cigarettes, razors and others (others include smart cameras, HPLC, electric
toothbrush, Fresnel lens, other electronic products and eyewear). According to Frost & Sullivan, the quoted market size
accounts for approximately 90% to 93% of the overall end use segments in which Advanced Materials and
Nanoproducts are used. Additional 7% to 10% of the market is accounted for by segments such as tooling (cutting tools,
dies & molds) and several other industrial components.

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According to Frost & Sullivan, while our direct addressable market is the surface solutions
segment, our strategy of value chain integration has the potential to increase our addressable
market manifold and will allow us to position ourselves as a one-stop solutions provider in our
select segments. Frost & Sullivan further believes that this value chain integration strategy has the
potential to enable us to become a leading player of surface solutions and components in the region
in the medium to long term.

Expand into new high potential applications and end industries by leveraging our industry-
agnostic technological capabilities

We currently have plans to expand into new end-industries such as the biomedical, aerospace and
IoT optics industries. As at the Latest Practicable Date, we have commenced initial discussions
with select customers in the biomedical and IoT optics industries, and are currently in the
preliminary stages of R&D to explore the possibility of utilising our technology-based solutions to
enhance their end-products. We have also commenced initial discussions with customers in 5G
related applications and smart car initiatives and as at the Latest Practicable Date, we have signed
a memorandum of understanding with an unrelated third party in relation to 5G related applications.
In addition, we intend to expand our current footprint in new energy, combustion/hybrid engines,
next generation mobile devices and FMCG personal grooming applications.

In the biomedical industry, we believe there are many uses for our solutions in medical implants and
medical devices. As at the Latest Practicable Date, we are currently in the process of developing
a surface solution for medical implants utilising an advanced material based on a bio-compatible
carbon. This is expected to be compatible to human bodies, reducing the risk of rejection, and
prolonging the service lifespan of the medical implant. We are also exploring the development of
surface solutions for medical devices which we believe will help extend the lifespan of these
devices, reduce galling between sliding components and which have anti-glare properties for use
in bright operating rooms.

Maintain our technology leadership through R&D, and execute on operational improvement
opportunities to drive profitable growth

We will continue to invest and build on our three core competencies—our R&D innovation and
product development capabilities, our strong in-house engineering capabilities, and our solid
efficient production capabilities.

We conduct R&D and engineering activities in a focused and customer-centric manner through
early stage customer engagement that reduces the time to market of our innovative solutions. Our
development platform is focused on both existing end-markets (e.g. 3C) and new end-markets
(e.g. FMCG personal grooming). We adopt an early stage, customer-centric co-development
model, as described in “—Our Core Competencies—Our Customer-centric Co-Development
Model”. Our close collaboration with customers enables us to pioneer new value-added solutions
which when developed and in commercial production, provides us access to a ready market. As
such, a substantial portion of our R&D and engineering investments goes towards joint
collaboration programmes with our customers. The remainder of our R&D spend is intended to
strengthen our in-house proprietary research platform to develop next-generation technologies,
build sustainable competitive advantage by maintaining our intellectual property rights and having
multiple innovative products in the pipeline, advance our FCVA technology platform, continue
innovation on existing technology (e.g. copper plasma) to expand the scope of their application and
into new end-markets, and further develop our nanofabrication technology, often in partnership
with our customers and/or their contract manufacturers. Examples of our focus markets for our
research platform includes the biomedical and IoT optics industries.

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In terms of our production capabilities, we are continuously exploring new initiatives to improve
efficiency and cost-effectiveness of our production processes. We anticipate such initiatives when
implemented will generate additional cost savings and improve our financial performance. From an
operational perspective, we will also continue to focus on efficient production planning through the
implementation of our MES. We aim to further strengthen our QTS for real-time monitoring of key
operations parameters and implement LEAN thinking philosophy to achieve improvements in
quality while reducing production time and cost. From a process transformation standpoint, we will
continue to invest in our ERP/SAP systems to support sustained resource planning. Finally, we will
continue to invest in talent development through leveraging the “Nanofilm College” platform and
other initiatives. See “—Our Core Competencies” for further details.

We have also implemented our operational excellence framework which guides the day-to-day
management and operation of our business. See “—Our Operational Excellence Framework” for
further details. We intend to maintain our commitment to our operational excellence framework, to
achieve high standards in our manufacturing operations and to introduce increased automation in
a systematic approach.

Pursue strategic inorganic opportunities through acquisitions and/or joint ventures

Although we have not entered into agreements in respect of any future acquisition targets and/or
joint ventures to-date we may in the future pursue such acquisitions and/or joint ventures as part of
our growth strategy. For acquisitions, we intend to undertake a disciplined approach by investing in
or acquiring companies that fit our criteria and overall growth strategy. While evaluating such
acquisitions, we will assess if the target company possesses complementary technologies to
expand our capabilities, or has exposure to geographies (such as Japan and/or Europe) or
industries which would enable us to build up our customer base. In addition, we will also consider
if the opportunity helps us to realise revenue and/or cost synergies, achieve value chain integration
or enhance our financial profile. For example, in 2018, we acquired a majority stake in ManGo
Nanofab Group (which we renamed to NFT) which allowed us to expand our capabilities to include
the development and production of customised nanoproducts, and capture synergies with our
Advanced Materials BU.

For joint ventures, we would typically seek to enter into strategic partnerships or joint ventures with
select key customers, with a view towards either achieving value chain integration in our existing
markets, or to facilitate our entry into new attractive markets. For example, we have established our
joint venture with CYPR, as described in “—Our Competitive Strengths—We have multiple avenues
for strong growth from a large TAM and favourable secular industry trends which can be leveraged
to capture high-growth opportunities across different end-market segments—Take-off in newer
established end-markets”, and may seek to replicate the same success with other select customers
and/or partners.

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OUR HISTORY AND DEVELOPMENT

We were founded in 1999 by our founder and Executive Chairman, Dr Shi Xu, as a high-tech
spin-off from NTU. The major milestones in our corporate history are set out below:

Year Milestones

1999 Our Company was founded by Dr Shi Xu, as a technological start-up spin-off
from the NTU.
2000 We began providing our surface solutions to the hard disk drive industry.
2002 We established NVC in Shanghai, PRC.
2003 We began to offer surface solutions utilising our TAC-ON ® and MiCC TM
advanced materials under our Advanced Materials BU.
2004 Key players in the printing and imaging market began to utilise our surface
solutions to coat key components used in multi-functional printers.
2007 to 2009 Our aspherical glass lens mold became the industry standard.
We established NTJ in Tokyo, Japan.
2010 to 2012 We developed and commercialised our CdTe thin film surface solution and
production equipment for solar cells.

We developed the world’s first FCVA in-line system as well as a low/high

temperature PVD in-line system, which we manufacture and assemble under
our Industrial Equipment Segment.
2013 We began providing surface solutions utilising our iTAC TM advanced material
to coat automotive piston rings, which was adopted by leading automotive
component manufacturers in Japan.
2014 We commenced providing functional surface solutions for key components in
smart wearable devices.
2016 OCBC and Lion-OCBC Capital Asia I Holding Pte. Ltd. made an equity
investment in our Company, acquiring 2,183,930 Shares (on a post-Share
Split basis) and 3,439,695 Shares (on a post-Share Split basis), respectively.
2017 We commenced manufacturing and production operations at our Shanghai
Plant 1.

We also began taking steps to implement our “Industry 4.0” manufacturing

concept, making use of automation in our manufacturing as well as
implementing our MES.
2018 Our Nanofabrication BU segment began operations, through our acquisition of
a majority stake in ManGo Nanofab Group (which we renamed NFT). Following
the acquisition, we began fabricating nanoproducts for our customers.

A group of Heliconia and UOB managed private equity funds, as well as EDB
Investments Pte Ltd made an investment in our Company, through the
subscription of S$50 million in Convertible Notes.
2019 We established a joint venture with CYPR, the PRC’s largest piston ring
maker, to provide coated piston rings by CYPR. We own 51% of the joint
venture while CYPR owns 49%.
2020 We increased our stake in NFT to 90%.

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OUR BUSINESS

Our business operates in three segments—our Advanced Materials BU, Nanofabrication BU and
Industrial Equipment BU—as set out in the diagrammatic chart below.

SYNERGISTIC TECHNOLOGY, BUSINESS & INNOVATION ACROSS BUs

Advanced Materials BU Nanofabrication BU Industrial Equipment BU

Functional Decorative Optical Optical

Coating Cleaning Automation
Surface Surface Lens Sensory
Equipment Lines Systems
Solutions Solutions Components

n Creates new advanced materials,
through proprietary FCVA and
FCVA-hybrid vacuum coating
technologies
n Provides mission-critical surface
solution services for numerous
industries, including but not limited to
3C, printing & imaging, precision
engineering and automotive
n Mass production & high variability
configuration of more than 5 million
parts and components daily
n Proprietary nanofabrication n Designs and develops customised
technology and capabilities proprietary turnkey equipment
solutions in joint collaboration with
n Critical components supplier to
customers in selective markets
global optics/sensor end-users
n Enables us to have the capability to
n Part of our value chain integration
develop and produce our own
and positions us to capture the
equipment so that we are not reliant
nanoproducts (US$7.8 billion) TAM
on any third party to scale
opportunity

We believe that our segments are synergistic with each other, with our products and services
across all our segments being underpinned by our technologies and advanced materials. Such
synergies provide greater value-add to our customers, who are able to leverage a range of
complementary solutions to meet their technical requirements and commercial goals.

Our Advanced Materials BU

According to Frost & Sullivan, our Advanced Materials BU is a leading provider of surface solutions
based on our FCVA (and FCVA-hybrid) and PVD vacuum coating technologies and advanced
materials. This enables vacuum coating on a wide range of substrates.

We have leveraged our nanotechnology platform to develop a suite of advanced materials,

comprising patented new advanced materials with unique properties which we have invented, as
well as enhancing materials in FCVA-metals such as nitrides and oxides with improved
nanoproperties. Our advanced materials are often designed through our R&D collaboration with
customers, to provide key attributes to match their specifications, such as high hardness, corrosion
resistance, strong adhesion, low frictional coefficient, electrochemistry properties, and even
aesthetic improvements.

Our surface solution services involve the use of our FCVA (and FCVA-hybrid with PVD) and PVD
coating equipment to deposit our advanced materials on key components of our customers’
end-products. Our surface solutions are utilised by our customers to achieve both functional and/or
decorative improvements in their end-products.

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We believe that our Advanced Materials BU is able to deliver a strong value proposition to our
customers. Although our surface solutions typically account for a small percentage of our
customers’ end-products total cost, they offer mission-critical applications (such as miniaturisation,
increased durability, thermal management and wear resistance) and enable our customers to
overcome functional and costs constraints imposed by conventional coating technologies.

Set out below are certain key operating data of our Advanced Materials BU:

Six months
Year ended 31 December ended 30 June

2017 2018 2019 2019 2020

Number of coating equipment(1) . . . 68 68 103 83 122

Number of in-line coating
systems (2)(3) . . . . . . . . . . . . . . . . . . 3 3 3 3 4
Utilisation rate of coating
equipment and in-line coating
systems (4) . . . . . . . . . . . . . . . . . . . 66% 69% 71% 66% 73%
Average revenue per coating
chamber (S$’000) (5) . . . . . . . . . . . . 908 1,011 941 796 916

Notes:

(1) Based on the number of coating equipment at the end of the financial year/period which are utilised to fulfil revenue
generating customer orders only. This excludes coating equipment used for our R&D activities.

(2) Based on the number of in-line coating systems at the end of the financial year/period which are utilised to fulfil revenue
generating customer orders only.

(3) An in-line coating system is a multi-chamber coating system, comprising several coating chambers, vacuum buffer
chambers, ion beam cleaning chambers, and a multi-process vacuum coating chamber which allows for different
surface solutions to be applied. Our in-line coating systems typically contain more than 10 individual coating chambers
each, and as at 30 June 2020, our Company has two PVD in-line coating systems and two FCVA in-line coating
systems.

(4) Our long-term target optimal utilisation rate for the coating equipment and in-line coating systems under our Advanced
Material BU is approximately 80%. We believe that maintaining our long-term utilisation rate at 80% is optimal, as we
require sufficient downtime to cycle between different customer orders, for maintenance and unforeseen breakdowns.
Utilisation rate is calculated by dividing the average number of operating hours of our coating equipment and in-line
coating systems by the number of hours in a day (i.e. 24 hours).

(5) Computed based on the revenue for our Advanced Materials BU divided by the number of coating chambers we have
across all of our coating equipment and our in-line coating systems at the end of the financial year/period which are
utilised to fulfil revenue generating customer orders only. For the purposes of calculating average revenue per coating
chamber, each in-line coating systems is assumed to be equivalent to 4.5 coating chambers.

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Our advanced materials capabilities

We believe that our FCVA vacuum coating technologies and advanced materials have significant
advantages compared to conventional coating technologies and materials, which distinguishes us
from our competitors. Our technological edge is summarised in the chart below, and further
described thereafter.

Improved properties vs others Access to new substrates Specific technology edges

Others Others
TAC-ON®
(Amorphous >85%
diamond Diamond Content
Hardness High melting coating)
vs 25% in Others
and strength point products

Durability iTACTM
(Thick
5x
amorphous Average Life
Plastics diamond
Low friction Expectancy of Piston
coating) Rings
coefficient

Corrosion Superior
resistance
MiCCTM properties
Rubber (Nano-crystalline
chromium (Adhesion, Hardness
Electrochemistry nitride) and Low Temperature
properties Requirements)
Other low
melting point Superior
Adhesiveness products
FCVA properties
Metals (Energy efficiency,
Our nanotechnology’s ability to deposit at room temperature opens up new markets Conductivity, low
which others cannot access impurity)

Our FCVA vacuum coating technologies

FCVA is an arc-deposition process which deposits a thin film of advanced materials such as
carbon, metallic, ceramic, nitrides, oxides or composite materials on a variety of substrates.
Substrates which can be coated include metals, ceramics, glass, plastics, rubber and other
materials with a low melting point. Under our Advanced Materials BU, we offer surface solutions to
deposit our advanced materials onto substrates either by solely utilising our FCVA technology or in
combination with our other deposition technologies.

Components to be coated are passed through a short cylindrical-shape vacuum chamber, with our
advanced materials deposited on the substrate through the use of ionised plasma beams produced
by striking an electric current through the surface of the coating source. As the components are
passed through the vacuum chamber, a striker (anode) strikes on the surface of the target materials
(cathode) through electrical current, generating plasmas in the arc source, which are then passed
through a filtering bend to filter the unwanted particles. In this process, only pure ion species would
enter the coating chamber, forming our advanced materials for deposition on the substrate.

In addition, our FCVA coating equipment utilises our in-house software which allows for real time
monitoring of the coating process, as well as enabling our operators to control and tune the
direction and strength of the plasma beams to modify the thickness of the coating film.

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A brief diagrammatic representation of the coating process is set out below.

Increasing atom mobility

Increasing temperature (Energy)

Conventional coating technologies such as PVD (sputtering) and CVD typically require high
temperatures and energy consumption in order to operate. By contrast, our unique FCVA
technology has significant technological advantages, the technical specifications of which are set
out in the table below:

FCVA / FCVA-Hybrid PVD (Sputtering) CVD (PECVD)

Coating species ¡ Ions ¡ Atoms ¡ Radicals

Peak energy ¡ 20 – 5000eV HIGHEST ¡ ~ 0.1eV ¡ A few eV

Coating pressure ¡ 1E-3Pa LOWEST ¡ 5E-1Pa ¡ 0.1 - 1Pa

Adhesion ¡ Better ¡ Good ¡ Good

Hardness ¡ Superior ¡ Poorer ¡ Poorer

HIGHEST
Film density (DLC film) ¡ ~3.4g/cm3 DENSITY ¡ ~2.2g/cm3 ¡ ~2.0g/cm3

MOST
Coating uniformity ¡ Software adjustable UNIFORM ¡ Hardware dependent ¡ Hardware dependent

Target material ¡ Solids ¡ Solids ¡ Gases

Deposition temperature ¡ Room LOWEST ¡ High ¡ High

¡ Wide range including plastics,

Substrates ¡ Alloy metals ¡ Alloy metals
rubbers, and alloy metals

In particular, FCVA vacuum coating is capable of deposition at room temperature, which is both
environmentally friendly and enables vacuum coating to be performed on a wider variety of
substrate materials such as plastics, rubber and ceramics. According to Frost & Sullivan, due to
their low melting points, it has not been cost-effective to perform vacuum coating on such
substrates using conventional coating technologies.

Other characteristics of our unique FCVA technology include superior adhesion, high density, high
hardness and the ability to achieve good uniformity in the surface coating, which are qualities that
prolong the durability and lifespan of our customers’ products and enhance their attractiveness and
saleability.

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Through continuous R&D, we have also been able to combine the best of our FCVA technology with
conventional coating technologies such as PVD (sputtering), enabling us to provide our surface
solutions in a cost-effective manner as well as reducing the time required for the vacuum coating
process. In 2015, we developed a “co-deposition” process using both FCVA and conventional PVD
sputtering techniques.

Set out below are the key components of our diversified technology pillars. These serve as
complementary pillars built upon our FCVA technology platform.

Our advanced materials

Our advanced materials include patented new advanced materials with unique properties such as
the following:

• TAC-ON ® (tetrahedral amorphous carbon), an advanced material utilising tetrahedral

amorphous carbon (“ta-C”), which are diamond-like nanomaterials. TAC-ON ® contains a
stable diamond structure, containing up to 85% of diamond content (as compared to the 25%
of diamond content found in diamond-like carbon materials), and its attributes include high
hardness, excellent adhesion, low friction coefficient, low deposition temperature and density.

TAC-ON ® is typically deposited as a thin film (with a thickness of approximately 1 to 3 microns)

onto a variety of surfaces including metals, ceramics, glass, plastics, rubber and other low
melting point substrates using our FCVA vacuum coating technologies.

• iTAC TM (thick tetrahedral amorphous carbon) is a derivative of our TAC-ON ® advanced

material which is coated as a thick film (with a thickness of greater than 5 microns). Our
iTAC TM advanced material is utilised in surface solutions for automotive piston rings, and
extends the life of the piston ring by more than five times compared to other diamond-like
carbon materials.

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• MiCC TM is a nano-crystalline chrome nitride ceramic advanced material. MiCC TM’s
advantages are its superior adhesion, high surface hardness, low friction coefficient and
ability to be deposited on substrates at low temperatures, compared to conventional
replacement coating materials such as chromium nitride or hexavalent chrome.

MiCC TM is suitable for use in coating industrial tools, as it is able to prolong the service life of
industrial tools by reducing the force required in mold release, thereby reducing the rate of
rejection of the molded manufactured parts. Our MiCC TM advanced material enables our
customers to improve the efficiency of their manufacturing lines and lower their production
cost.

Our advanced materials also include conventional materials such as copper and aluminium which
we have enhanced with improved nanoproperties by utilising our FCVA technology.

• Copper—By utilising our FCVA technology, we are able to deposit a dense copper film coating
on substrates, with less impurities and at a lower temperature compared to conventional
coating technologies. The low deposition temperature enables us to coat copper on plastic
materials. In addition, our FCVA-copper coating techniques have the advantages of energy
efficiency and superior conductivity, without sacrificing coating quality. We believe that our
FCVA-copper coating surface solution has the potential to be used for the next generation of
on-chip conductor integrated circuits, with applications in flexible printed circuits and 5G base
station devices.

• Aluminium—Although aluminium has the potential to be an excellent coating material, it has

historically been difficult to deposit high quality aluminium coating on substrates using
conventional PVD sputtering technology as deposition is only possible at high temperatures.
With our FCVA technology, we have been able to deposit aluminium on substrates at lower
temperatures (of below 80 degrees Celsius) with good adhesion, allowing us to offer a high
quality and economical aluminium coating process to our customers. As at the Latest
Practicable Date, we are also exploring similar techniques for zinc oxide coating.

In addition, we may from time to time engage in R&D and engineering activities to expand and
enhance our suite of advanced material offerings, and to tailor our nanotechnology solutions to our
clients’ various specifications and requirements. For example, we are currently exploring
enhancing other materials for use in our surface solutions, including materials such as ceramics.

Our Surface Solutions

The advanced materials utilised in our surface solutions, coupled with our capability for
high-volume coating processes, enable our customers to achieve both functional and aesthetic
improvements in their end-products.

• Functional: Our advanced materials provide functional performance properties to our

customers’ end-products, which are often mission-critical in nature. These include special
surface properties relating to durability, reduction in friction (where our advanced materials
act as a dry lubricant), corrosion resistance and increased wear resistance. To achieve such
functional properties, our advanced materials are typically deposited on the components to be
coated using our FCVA vacuum coating technology.

• Decorative: Our advanced materials are also utilised by our customers to primarily enhance
the aesthetics and, occasionally, the functional performance of their end-products, including
with respect to appearance, colour, preventing fingerprint marks, scratch resistance, texture
and/or tactile quality of their products. Such applications of our surface solutions are common
in the 3C and FMCG personal grooming products industries. To achieve decorative
improvements, we typically utilise conventional PVD (sputtering) techniques coupled with our
FCVA technology to deposit our advanced materials on the components to be coated.

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We believe that our surface solutions are adaptable for use in multiple attractive end-industries. For
the financial years ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June
2020, our Advanced Materials BU generated revenue from the sale of surface solutions to our
customers for use in the following sub-segments:

• 3C, comprising the following sub-segments:

— Smartphones, which generated 15.0%, 15.3%, 12.5%, and 10.4% of the total revenue of
our Advanced Materials BU for the financial years ended 31 December 2017, 2018 and
2019, and for the six months ended 30 June 2020, respectively;

— Computer (desktop, laptop and tablet), which generated 41.3%, 43.1%, 39.4%, and
37.3% of the total revenue of our Advanced Materials BU for the financial years ended
31 December 2017, 2018 and 2019, and for the six months ended 30 June 2020,
respectively; and

— Wearables & accessories, which generated 22.9%, 22.8%, 29.3%, and 32.0% of the total
revenue of our Advanced Materials BU for the financial years ended 31 December 2017,
2018 and 2019, and for the six months ended 30 June 2020, respectively;

• Printing and imaging, which generated 15.1%, 13.1%, 11.7%, and 8.8% of the total revenue
of our Advanced Materials BU for the financial years ended 31 December 2017, 2018 and
2019, and for the six months ended 30 June 2020, respectively;

• Precision engineering, which generated 5.5%, 5.1%, 4.7%, and 4.0% of the total revenue of
our Advanced Materials BU for the financial years ended 31 December 2017, 2018 and 2019,
and for the six months ended 30 June 2020, respectively; and

• Automotive, which generated 0.1%, 0.5%, 2.4%, and 7.5% of the total revenue of our
Advanced Materials BU for the financial years ended 31 December 2017, 2018 and 2019, and
for the six months ended 30 June 2020 respectively.

As at the Latest Practicable Date, we have also entered into attractive and large markets such as
FMCG personal grooming where we believe that our Advanced Materials BU has strong expansion
potential. We have also begun exploring the provision of surface solutions to customers in
innovative future industries such as the 5G network and biomedical industries. See “—Applications
of our Surface Solutions” below for further details.

We typically work with our customers at an early stage of their product development, engineering
and design process, to design the engineering process and appropriate surface solution, including
developing customised advanced materials which are able to achieve the required specifications,
and integrating these into their end-product. Once the product development process advances to
the manufacturing and assembly stage, we provide our surface solutions to either:

(a) our customers directly; or

(b) in cases where the customer is an end-customer whose end-product(s) are manufactured and
assembled by third-party contract manufacturers, their contract manufacturers will be
directed to engage us (thereby becoming our direct customer) to provide our surface solutions
as an integral process within their production lines.

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Applications of our surface solutions

Overview

Set out below is a snapshot of the key end-products where our nanotechnology solutions are
applied.

Select applications of our surface solutions by our customers are set out in the case studies and
table below.

Case Studies

(1) Automotive Industry

We have a strong track record of providing functional, value-added surface solutions to our
customers in the automotive industry. We have been providing surface solutions to the
automotive industry since 2009, when we established successful partnerships with leading
Japanese automotive component manufacturers to jointly collaborate and develop new
advanced materials. Our advanced materials were able to reduce wear and tear of engine
parts, prolong their lifespan and optimise engine performance. This resulted in better fuel
efficiency and lower emissions.

Since then, we have expanded our surface solution service offerings to the automotive
industry. We subsequently commercialised our iTAC TM advanced material for the coating of
automotive piston rings. According to Frost & Sullivan, our iTAC TM advanced material has
been specified as the industry standard for the coating of piston rings by leading automakers
such as TPR and Riken.

The piston ring is an integral part of an automotive engine, and our customers had
encountered issues relating to the longevity of this key engine component, and the attendant
high costs of constant repair and/or replacement required. With our surface solution utilising
our iTAC TM advanced material, we have been able to extend the useful life of piston rings by
more than five times to match the product lifespan of the engine, removing the need to replace
piston rings during the engine life cycle. Our surface solution also provides superior coating
quality, hardness and friction coefficient, which in turn reduces fuel consumption, smoothens
the engine performance and enables our customers’ engines to meet the more stringent Euro
5 and Euro 6 emission standards.

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We support our key customers in the automotive industry on a regular basis, through the
following:

• Regular engagement through direct sales contact;

• Customer centric R&D approach, with a focus on joint collaboration programmes to

develop new surface solutions; and

• Strategic tie-ups to establish our production facilities providing surface solutions near
our customers’ manufacturing lines, enhancing turn-around time, reducing inventory
requirements for ourselves and our customers, resulting in cost savings.

The quality and unique properties of our advanced materials and nano-engineering
capabilities have helped us to establish successful business relationships with a number of
leading automotive component manufacturers in Japan, and have enabled us to expand into
adjacent markets in the automotive industry, for instance, to supply surface solutions for
application in other automotive components such as piston pins, tappets, injection nozzles,
piston heads, valve lifters and door latches.

Additionally, we also sell coating equipment to customers (on a selective basis), which are
directly integrated into our customers’ manufacturing lines, under our Industrial Equipment
BU. This enables them to reduce costs during the manufacturing process and improve the
surface properties of their products. See “—Our Business—Our Industrial Equipment BU”
below.

In 2019, we established a joint venture with CYPR. We own a 51% stake in the joint venture
while CYPR owns the remaining 49% stake. The joint venture owns and operates our Yizheng
plant. The salient terms under the NHT SHA include (i) a restriction on the disposal of shares
by NVC, NPC and CYPR (the “JV Shareholders”) to third parties without the other
shareholders’ consent; (ii) the requirement for two-thirds majority to pass resolutions which
increase or reduce NHT’s registered capital, or otherwise involve the merger, division,
dissolution or change of company structure of NHT; and (iii) a restriction, during the term of the
agreement, which prohibits NVC and NPC from cooperating in any form with any onshore third
parties in the field of piston ring surface coating, except with CYPR and its affiliates. In
addition, the NHT SHA may be terminated by (i) the written consent of all the JV Shareholders;
(ii) the written notice from one party to the other parties if there has been a material breach of
the agreement due to, amongst others, the other parties’ bankruptcy, reorganisation or
dissolution; (iii) the written notice from one party to the other parties if there has been a
material breach of the agreement, and such breach, if curable, has not been cured within a
reasonable period; or (iv) the expiry of the term of NHT and the JV Shareholders deciding not
to extend the term of NHT or such other events that result in NHT’s dissolution. Utilising our
TAC-ON ® surface solution, the joint venture supplies coated automotive components to
CYPR which are then used in engines sold to well-established automotive makers. The
demand from CYPR is captive and has been increasing at a rapid rate since the inception of
the joint venture as we are the only supplier currently providing piston rings coated to meet
CYPR’s requirement. We are also developing plans to offer our surface solutions utilising our
advanced materials, to other automotive component suppliers, as well as gradually producing
more of CYPR’s engine component products and we aim to eventually export our products
overseas.

Our success in providing surface solution services to the automotive industry is a testament
to our ability to enter and grow our market share in new adjacent market opportunities, support
our customers, including through R&D collaboration, commercialise new surface solutions
and provide value-added surface solutions, which present a compelling cost-benefit
proposition to our customers. Given the foregoing, we believe that we have the potential to
become one of the key carbon coating suppliers to global automotive OEMs.

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(2) Precision Engineering

High Performance Liquid Chromatography (“HPLC”) is a technique in analytical chemistry

which involves using pumps to pass a liquid solvent containing a sample mixture through a
column filled with a solid adsorbent material, at extremely high pressure. HPLC has the ability
to separate and identify compounds that are present in any sample that can be dissolved in a
liquid in low trace concentrations. Because of this versatility, HPLC is used in a variety of
industrial and scientific applications, such as the pharmaceuticals, food, nutraceuticals,
cosmetics, forensics and industrial chemical industries.

As high pressure is used in HPLC, this results in high wear and tear, and the need for constant
replacement of parts. In addition, conventional coating technologies offer limited solutions
given their inability to coat on ceramic and plastic substrates (which HPLC parts are typically
made out of).

Since 2010, our TAC-ON ® advanced material has enabled Customer W, a measurement
company which engages in chromatography, mass spectrometry and thermal analysis
innovations, to use base materials such as stainless steel to create rotors, stators and pump
heads with high quality anti-corrosion properties, hardness, smoothness, low friction
coefficient, anti-wearing and non-stick features. Our nanotechnology solutions also enable us
to provide superior coating solutions for stainless steel, ceramics and plastic surfaces,
enabling these to become key base materials for precision engineering products. Our
TAC-ON ® based surface solution is hydrogen-free and caters to the mass production
requirement of analytical laboratory equipment. Since 2010, we have been the single source
supplier of surface solutions to Customer W.

Other applications of our surface solutions

In addition to the use of our surface solutions as described in “—Our Competitive Strengths” and in
the case studies above, examples of other products and applications which utilise our surface
solutions are set out in the table below:

Product Issues Encountered by Our Differentiating Factor and

End-Product/Application our Customers Value-Add

3C industry
• Smartphone
Smartphones • As communication devices • Our surface solutions provide
such as smartphones are 3C functional properties for
devices which are regularly smartphones—such as
used by consumers, improved durability,
smartphones experience high anti-fingerprint, wear
wear and tear, scratches and resistance and scratch
discolouration on areas which resistance.
are frequently in contact with
human hands and exposed to • In addition to functional
foreign elements. improvements, our customers
also utilise our surface
solutions to offer their
smartphone products in a
range of fashionable colour
options.

192

End-Product/Application
• Computer (desktop, laptop, tablet)
Laptop and Tablets
• Wearables & Accessories
Internal smartwatch components
Product Issues Encountered by
our Customers
• Similar to smartphones,
laptops and tablets are
regularly used by consumers,
and undergo high wear and
tear.
• In addition, many laptop
devices include hinges and
joints. Frequent movements
and rotation of such hinges
and joints results in further
wear and tear.
• For devices which have
detachable parts, frequent
detaching and re-attaching of
detachable components may
cause connectivity issues.
• The need for high wear
resistance for internal
smartwatch components, due
to the high level of motion
movements which these
components would undergo.
193
Our Differentiating Factor and
Value-Add
• Our customers use our
surface solution for functional
improvements in their
end-products.
• By using our advanced
materials to coat the hinges
and joints of laptops, we
are able to provide high
wear resistance, corrosion
resistance and consistency in
colour across devices.
• For detachable devices, our
surface solutions ensure that
connectivity and functionality
are maintained.
• Our surface solutions offer
new colours and enable
consistency in colour shades
across devices.
• Our surface solutions enable a
low deposition temperature
which avoids distortions to
plastic components due to
heat.
• Our surface solution is
affordable and requires only a
thin layer of coating which
contributes to the
compactness of the
smartwatch design.
• Our advanced materials
ensure a very low friction
coefficient, limiting energy
loss and wear and tear, which
leads to an extended product
lifespan and reduced servicing
and product warranty costs.
• Our advanced materials
improve aesthetics by offering
a broader range of colour
options.
• We also offer nanoproducts in
sensory components which
are expected to facilitate the
adoption of wearables.
 Product Issues Encountered by Our Differentiating Factor and
End-Product/Application our Customers Value-Add

Printing and Imaging industry

Key components of Multi- • The high voltage pressure in • Our surface solution involves
Functional Printers (“MFPs”): MFPs result in key coating our ta-C film advanced
components being subject to material on key MFP
• Corotron charging wires risks of corrosion and charging components. Our ta-C film
degradation. advanced material is
comprised of non-stick
• In addition, MFPs undergo micro-particles, allowing for
frequent internal movements, smooth and precise printing
with high heat generation, and outputs.
• Roller charging this results in deformation and
wear and tear for key • Our advanced materials
components. ensure that the coated MFP
components possess
• According to Frost & Sullivan, high-hardness, superior
there is no conventional adhesion properties and wear
coating technology able to resistance.
• Heating element and fixing achieve the performance
components specifications required by the • The low deposition
photocopying industry, other temperature of our surface
than gold-plating, which is solutions also avoids
costly. distortions caused by heat to
these MFP components.

• Shields • Our functional surface

solutions extend the useful life
of key MFP components and
reduce the maintenance cycle,
which in turn improves
affordability, which would
• Doctor blades, developer have otherwise constrained
blades and cleaning blades the mass adoption and
commercial success of these
products which are now part of
daily commercial use by
offices and corporates.

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End-Product/Application
Plastics in camera brackets
FMCG personal grooming industry
Razor handle, dry shaver foil,
and shaving blades
Product Issues Encountered by
our Customers
• Electroplating (i.e. hard metals
coating) is the conventional
method for coating on plastics,
and provides decorative
properties. However, it causes
electromagnetic wave
interference which can result
in disturbance and errors,
when used in products such as
camera bracket devices.
• Further, Frost & Sullivan has
stated that in the case of
camera brackets, due to global
regulatory requirements, there
is a need to phase out
electroplating solutions (hard
metal coatings method on
plastic components) and
hence surface solutions
formulated with advanced
materials have the ability to
increase the functional
properties of critical
components.
• Razor handles and shaving
foils and blades are coated
using chrome plating, which
are being phased out due to
environmental regulations.
• Such products also commonly
encounter corrosion issues, as
zinc is a key base material,
and wear and tear.
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Our Differentiating Factor and
Value-Add
• We are able to offer a surface
solution utilising our FCVA
technology to apply ta-C film
coating to plastic substrates
which offers electromagnetic
interference properties.
• Our surface solution is also
more affordable than
electroplating, with reduced
weight enabling ergonomic
end-product designs for our
customers.
• We have entered the FMCG
personal grooming industry,
providing surface solutions
which serve as an alternative
to conventional chrome
plating.
• By leveraging our FCVA
technology, we are capable of
depositing our advanced
materials on zinc substrates,
providing an environmentally
friendly alternative to chrome
plating.
• Our surface solution provides
functional improvements to
our customers’ end-products
through increased corrosion
resistance and enhanced
skin gliding capabilities. In
addition, our surface
solutions provide decorative
improvements by allowing our
customers to offer a wider
range of end-product colour
choices to their consumers.

End-Product/Application
Biomedical industry
Medical implants • Medical implants are required
Medical devices—scalpels, • These medical devices suffer
needle drivers, bone saws,
reamers and dental tools
• In
We further expect our FCVA technology and advanced materials to enable new product
possibilities and applications for our customers.
Product Issues Encountered by
our Customers
to be compatible with human
bodies. In addition, they
typically suffer wear and tear
due to movements in the joint
parts.
wear and tear due to frequent
usage.
addition, medical
instruments used for invasive
surgery present an infection
risk to patients.
196
Our Differentiating Factor and
Value-Add
• Further, our surface solution
enables our customers to
replace the nickel used in their
shaver foils with stainless
steel, extending product
lifespan.
• Our surface solutions enable a
low deposition temperature
which avoids distortions to
plastic components due to
heat.
• As at the Latest Practicable
Date, we are developing a
surface solution utilising an
advanced material based on
bio-compatible carbon.
• Our advanced material is
expected to be compatible
with human bodies, reducing
the risk of rejection, and
prolonging the service lifespan
of the medical implant.
• As at the Latest Practicable
Date, we are exploring
developing surface solutions
for the biomedical industry.
• Our advanced materials are
expected to provide high
hardness and low friction
coefficient, extending the
lifespan of these devices.
• In addition, our advanced
materials are expected to
reduce galling between sliding
components, and increase
lubrication while retaining the
sharp edge on cutting
instruments.
• We are also developing
advanced materials with
properties such as anti-glare,
which would ensure that the
medical device is suitable for
use in bright operating rooms,
which would be particularly
useful in the biomedical
industry.
Surface Solution Process

A diagrammatic illustration of the typical process for our surface solution services is as follows
(subject always to the specific requirements of our customers and their projects which may differ):

• Product (Substrate)

The first stage in our surface solution process is the delivery by our customers of their
end-product components which require our surface solutions to be applied. Typically, we
receive the components on a consignment basis, with our customers retaining ownership of
the components. However, in certain cases, we purchase the end-product components
from our customer or their supplier (which are then recorded in our financial statements
as an expense), and after our surface solution has been applied, the coated component is
then on-sold back to the customer or their designated distributor or contract manufacturer.
See “—Customers and Suppliers—Suppliers—Major Suppliers” for further details.

• Incoming Quality Control

Upon receipt of the components from our customers, our quality control teams would inspect
samples of each batch of components (in accordance with our quality control process) to
ensure that the components are generally free of material defects and suitable for the
application of our surface solution. Our quality control process is implemented throughout the
process of applying our surface solution, and in addition to quality control inspections on the
incoming components, we also conduct in-process quality control inspections after cleaning
and outgoing quality control checks on coated components, as described below.

• Fixture Installation

Our production teams would then install the necessary fixtures on the coating equipment
which will be used to apply our surface solutions. Such fixtures include loading fixtures which
enable our operators to efficiently sort and load the components to be coated.

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• Cleaning

The components will need to be cleaned before our surface solutions are applied. We utilise
our customised cleaning line systems which are designed in-house and are optimised for the
specific surface solution which will be used and the component substrate.

• In-process Quality Control

Once the components have been cleaned, we conduct a further round of quality control
inspections to ensure that the components have been properly cleaned, and there are no
residual cleaning solutions remaining on the substrates.

• Loading

The components are then loaded by operators into a loading chamber. From the loading
chamber, the components would then be mechanically funnelled into the coating chamber.

• FCVA/Sputtering

In the coating chamber, our advanced materials would then be deposited onto the
components through our FCVA and/or FCVA-hybrid with PVD (e.g. PVD (Sputtering)) vacuum
coating technology. See “—Our advanced materials capabilities—Our FCVA vacuum coating
technologies” above for further details.

• Unloading

Once the component has been coated with our advanced material, our operators would
unload the coated components from the coating chamber.

• Outgoing Quality Control

The coated component undergoes a final quality control inspection to ensure that it conforms
to the specifications set by our customers. The results of our quality control inspections are
recorded. We do not usually offer any warranty for our surface solutions.

• Packing and Delivery

Following our final inspection, the coated components would be packed and delivered to our
customers or their designated delivery points. We typically utilise third party service providers
for shipment and delivery of the coated components.

Our Nanofabrication BU

We started our Nanofabrication BU in 2018 by acquiring a majority stake 10 in NFT (which was then
named ManGo Nanofab Group), a promising nanofabrication technology start-up with R&D
functions in Japan and production operations in Vietnam.

Our Nanofabrication BU fabricates nanoproducts which are used by our customers as components
for the functioning and performance of certain parts of their end-products, due to their nanoscale
and/or nanofeatures. We utilise our nanofabrication technology and software to fabricate
nanoproducts which are designed to fit the specific size and shape requirements specified by our
customers as well as to provide required functional performance.

As at the Latest Practicable Date, the focus of our Nanofabrication BU is on the optical lens and
sensors industry, which provides us with a sizeable TAM.

10 As at the Latest Practicable Date, our Group now has a 90% shareholding interest in NFT.

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Set out below are certain key operating data of our Nanofabrication BU:

Year ended 31 December Six months ended 30 June

2017(1) 2018 2019 2019 2020

Number of injection molding

equipment (2) . . . . . . . . . . . . . . . . — 12 14 14 13 (3)
Utilisation rate for injection
molding equipment (4) . . . . . . . . . — 37% (5) 39% (5) 39% (5) 30% (5)

Notes:

(1) Our Nanofabrication BU only commenced operations in 2018 after we acquired a majority stake in NFT, which became
our subsidiary.
(2) Based on the number of injection molding equipment at the end of the financial year/period which are utilised to fulfil
revenue generating customer orders only. This excludes injection molding equipment used for our R&D activities.

(3) For the six months period ended 30 June 2020, we sold one of our injection molding equipment to a customer.
(4) Our long-term target optimal utilisation rate for the injection molding equipment under our Nanofabrication BU is
approximately 80%. We believe that maintaining our long-term utilisation rate at 80% is optimal, as we require sufficient
downtime to shift between different customer orders, for maintenance and for unforeseen breakdowns.

Utilisation rate is calculated by dividing the average number of operating hours of our injection molding equipment by
the total number of hours in a day (i.e. 24 hours).

(5) The utilisation rate for our injection molding equipment was relatively low during the period under review as we had
acquired NFT while it was still in its start-up phase, and had not yet reached the mass production phase. In 2018 and
2019, NFT’s operations were primarily driven by the development and engineering of toolings and molds. Once
development of our toolings and molds have gained our customers’ acceptance, we believe that we will be in a position
to secure mass volume purchase orders for our Nanofabrication BU and commence nanofabrication of nanoproducts
for customers at a mass production scale.

Our nanofabrication technology and capabilities

Our technology and software

Our nanofabrication technology is based on our computer-aided manufacturing (“CAM”) software

which allows for 5-axis control and directional movement of advanced tooling machines, such as
our 5-axis Single Point Diamond Turning Machine. Due to the limitations of existing commercially
available software, we had developed our CAM software in-house through our R&D programmes.
Our CAM software utilises original algorithms which enable us to take full advantage of the
capabilities of our advanced tooling machines, as well as overcome the design limitations of
commercial CAD software, which are not customised to our specific needs.

Our tooling capabilities

Our nanofabrication production facilities are located in Hai Duong, Vietnam. We possess advanced
tooling capabilities, which enable us to fabricate nanoproducts with precision. Our tooling
machines include our 5-axis Single Point Diamond Turning Machine which is able to fabricate
nanoproducts with an accuracy of 10 nanometre, and a roughness of less than Ra5 nanometre. Our
nanofabrication capabilities are further supported by our computer numerical control machinery.

Our nanofabrication technology, tooling capabilities and proprietary know-how enable us to

achieve nanoscale fabrication with high accuracy, and also enable nanofabrication of complicated
3D shapes. Through our proprietary technology and know-how, we are able to fabricate
nanoproducts which are critical components for our customers’ products in bulk and
cost-effectively, offering significant value-add in product performance.

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Tooling capabilities Unique original CAM software

Proprietary CAM
software
§ 5-axis control and directional
movement of advanced tooling
machines

5-Axis Single Point High Precision CNC Example of free form lens final product
Diamond Turning
Accuracy: 10nm Accuracy: 0.5-1.0um Design by
original
Roughness: Ra5nm software

Osaka plant Hanoi plant Randomised micro lens array Free form lens

Fabrication
control by
original CAM
Toshiba Makino Sodick VL400Q
5axis Diamond Turning F3 CNC Wire EDM

Final product –
free form lens

Makino Okamoto PFG500II Sodick AG40L

iQ300 High Accurate CNC Grinding EDM

Sample Imprinting Process

A diagrammatic illustration of the sample imprinting process for our Nanofabrication BU (subject
always to the specific requirements of our customers and their end-customers, if any, which may
differ) is set out below:

Combining Nanofabrication and Advanced Materials Technologies for Nano Imprint Features

1 A Thin Layer of Resist is 2 A Mold is Applied onto 3 The Printed Pattern Ready
Deposited onto the the Resist to Create a to be Etched and Coated
Substrate Consistent Pattern

Resist Mold Printed pattern

Substrate Substrate Substrate

Completed Nano A Layer of Advanced Reactive-ion Etching

6 5 4
Imprint Features Materials is Deposited Method is used to Remove
Printed Resist

Coating Etching (O2 RIE)

Substrate Substrate Substrate

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Synergies with our Advanced Materials BU segment

Our Nanofabrication BU and Advanced Materials BU segments are complementary, enabling us to

realise product synergies, as well as cost synergies.

By combining our nanofabrication capabilities and our advanced materials, we are able to offer
comprehensive end-to-end nanotechnology solutions to our customers. An example of such
synergies are the rotational sensors for smart watches which we manufacture under our
Nanofabrication BU. In addition to fabricating nanoproducts for our customer, we also apply our
surface solutions to the rotational sensor as an integral part of our manufacturing process to enable
our customer to achieve the desired functional improvements, and this serves as an additional
revenue driver. See “—The nanoproducts we design and fabricate” below for further information.

In addition, we are also able to realise cost synergies. By applying our surface solutions to the
nanofabrication tools and equipment which we use, we are able to enhance the functional
performance of our tools, resulting in improvements in production yields and efficiency, and
enabling us to pass on cost-saving benefits to our customers.

Nanofabrication and Surface Solution

A diagrammatic illustration of the typical process in which we combine our nanofabrication

capabilities and our surface solutions to realise product synergies (subject always to the specific
requirements of our customers and their end-customers, if any, which may differ) is set out below:

• Injection Molding

The first step in the process is the delivery of the injection molding shafts by our customers.
Our quality control teams would then conduct an inspection of the injection molding shafts to
ensure that these conform to specifications. The injection molding shafts are then installed in
our nanofabrication injection machines.

The injection molding process involves the systematic heating of raw materials in the form of
small pellets to the point where the compound melts and flows under high pressure and is then
injected into the injection molding shaft. The compound is then cooled and subsequently
solidifies into the raw nanoproduct we produce. With the use of specialised magnetic
equipment, we are able to efficiently sort the raw nanoproducts.

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• Application of our Surface Solutions

We subsequently apply our surface solutions to the raw nanoproducts. This process involves
the use of nanofabricated optical inserts, and ultra precision tooling to create the appropriate
mold to contain the raw nanoproducts, before insertion into our coating equipment. The raw
nanoproducts are then laser marked before being vacuum coated with our proprietary
advanced materials.

A diagrammatic illustration of how we apply our surface solutions to the optical sensory
components we manufacture under our Nanofabrication BU is set out below:

Combining Nanofabrication and Advanced Materials Technologies for Miniature Optical Sensory
Components

1 Nanofabricated Optical 2 Ultra Precision Tooling 3 Insert Molding

Inserts by Diamond Turning

Automated Function Test Vacuum Coating with Nano Laser Marking

6 5 4
and Visual Inspection Proprietary Advanced
Materials

A diagrammatic illustration of how we combine our surface solution services and

nanofabrication capabilities to provide a one-stop solution for Fresnel optical lenses is set out
below:

Combining Nanofabrication and Spray Coating Technologies to provide One-stop Solution for
Optical Lens

1 Nanofabricated Fresnel 2 Ultra Precision 3 Injection Molding and

Optical Inserts by Tooling Automated De-gating
Diamond turning

Automated Visual Automated Function Automated UV Protective

6 5 4
Inspection and Tape & Test Spray Coating
Reel Packaging

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• Traceability and Customer Inspection

Once the nanoproducts have passed the function test, they would be inspected at our
automated optical inspection station.

A diagrammatic illustration of how we implement an automated function and visual inspection

to ensure traceability and facilitate customer inspection is set out below:

1 Nanofabricated Master Tool 2 Injection Molded 3 Replication of

by Diamond Turning Master Parts Mother Mold

Automated Function and Automated Die-cutting Epoxy Molding

6 5 4
Visual Inspection and Optical Clear
Adhesive (OCA) Process

The nanoproducts would undergo a final quality control inspection to ensure that it conforms
to the specifications set by our customers. The results of our quality control inspections are
recorded. We do not usually offer any warranty for our nanoproducts.

Following our final inspection, the nanoproducts would be vacuum packed and delivered to
our customers. We typically utilise third party service providers for shipment and delivery of
our nanoproducts.

The nanoproducts we design and fabricate

We believe that our Nanofabrication BU is well-positioned as a key supplier to the global optical
lens and sensors industries. According to Frost & Sullivan, our Nanofabrication BU has the
potential to be a high-volume profitable business, which will see strong growth underpinned by the
increasing adoption of optical lenses in 3C, medical equipment and automotive industries.

Similar to our Advanced Materials BU, we work with our customers at an early stage of their product
development and design process to fabricate prototype nanoproducts which can be integrated into
the end-product design. At the manufacturing and assembly stage, where our customers are
end-customers whose end-products are manufactured and assembled by contract manufacturers,
these end-customers will direct their contract manufacturers to engage us (thereby becoming our
direct customers) to provide our nanoproducts to them.

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Case Studies

(i) Tunable Lenses

Through R&D efforts and collaboration with our customer, our Nanofabrication BU has
developed tunable nano-precision lenses, which can fit into tunable glasses suitable for
sportswear and protective goggles. Our new tunable lenses provide a wearer the ability to
change the prescription of the lens, and is particularly useful for individuals with a presbyopia
condition who suffer from frequent vision changes. Our technology is able to cater to changing
vision needs and helps users avoid the inconvenience of needing to change their glasses
depending on circumstance.

We are in the process of developing far/near zooming lenses as a spin-off and which adapts
our tunable lens technology. We believe that such advances will enable us to produce
sleeker/slimmer designed sensors, mobile phone camera modules, as well as sportswear and
protective goggles.

Our development of tunable lenses, and subsequent spin-off technologies, highlights the
ability of our technological solutions to develop new markets, as well as open up new product
possibilities.

(ii) Optical Lenses for Lumileds

We manufacture optical lenses for Lumileds, which are utilised by Lumileds in the lighting
products which they produce for their own end-customers. Our strong customer relationship
with Lumileds is testament to our customer-centric approach. We are engaged by Lumileds
early in their product and development phase, and our R&D teams work closely with Lumileds
through multiple design iterations, before the finalised design of the optical lens proceeds to
mass production. With our technical know-how and R&D expertise, we are typically able to
finalise the design concept with Lumileds in fewer iterations. Our customer-centric R&D
approach contributes to Lumileds continued engagement with us as their supplier.

Other Nanoproducts we fabricate

In addition to the case studies above, other examples of other nanoproducts we fabricate under our
Nanofabrication BU are set out in the table below:

Nanoproduct End-product Use

Fresnel lens We manufacture thin lightweight Fresnel lenses which are used in
smartphone cameras to focus light. Our thin Fresnel lenses enable
our customer to reduce the thickness of their smartphone products
as well as minimise any increase in weight.

Wafer lens used in We manufacture wafer lenses which are used to form micro-lens
micro-lens array arrays in smartphones. These micro-lens arrays are utilised in
smartphone biometric identification systems.

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 Nanoproduct End-product Use

Optical sensor We manufacture high-precision optical sensor components which

components for are used in smartwatches to enable consumers to smoothly scroll
smartwatches through and control the smartwatch functions.

In addition, we also apply our surface solutions to the rotational

sensor, and this is directly integrated into the manufacturing
process. Our surface solutions enables the rotational sensor to
direct electrical signals by 360 degree reflection with precision.
Tooling inserts Our Nanofabrication BU also manufactures tooling inserts which
are used by Daicel in their wafer optics production lines.

Similar to our other customers, we work with Daicel at an early

stage in their product development process, to design the tooling
inserts based on requirements communicated to us. The quality of
our nanoproducts and our close R&D collaboration contribute to our
strong customer relationship with Daicel.

Our Industrial Equipment BU

Under our Industrial Equipment BU, we sell turnkey equipment systems ranging from coating
equipment to auxiliary equipment such as cleaning lines to automation systems, which are
designed and customised for integration into the manufacturing lines of our customers. We not only
provide the physical equipment, but also customise operating software for our systems and
training, as well as spare-parts, customer service and other forms of after-sales support. Our
Industrial Equipment BU also designs and manufactures coating equipment for internal use by our
Advanced Material BU.

Industrial Equipment BU

Batch system Load/Lock system In-line system Cleaning line Automation

¡ Lab system ¡ Lab system ¡ 2D sheet in-line ¡ Full automation ¡ Pick & place
¡ Production system ¡ Production system system cleaning system ¡ Measurement
¡ 3D plenary rotation ¡ Optical inspection
in-line system

BFSI-0505 Coating System LFSI-10 Coating System Vertical PVD In-line

Coating System

BSI-8 Coating System LSI-8 Coating System FCVA In-line Coating

System

ü Our equipment systems are ü Customised and integrated in ü Manufacture coating equipment for
designed and developed in-house customers’ existing manufacturing internal use by our Advanced
lines Materials BU

Given that our equipment systems are designed and based on our proprietary technologies, we are
selective in our choice of customers under our Industrial Equipment BU, and we focus on
customers in select markets, such as manufacturers of CdTe solar panels and manufacturers of
aspherical glass lens and plastic lens molds.

205
We also sell coating equipment designed for automotive components to automotive component
manufacturers whose factories are not situated in the same locality as our production facilities, as
the costs and logistics of shipping components to our production facilities to be coated would be
prohibitive.

Set out below are certain key operating data of our Industrial Equipment BU:

Year ended 31 December Six months ended 30 June

2017 2018 2019 2019 2020

Number of coating equipment

manufactured . . . . . . . . . . . . . . . 18 14 41 19 23
Number of coating equipment
sold. . . . . . . . . . . . . . . . . . . . . . . 6 14 8 4 4
Number of coating equipment
manufactured for internal use . . . 12 — 33 15 19

Synergies with Advanced Materials BU and Nanofabrication BU

We believe that our Industrial Equipment BU is complementary to our other business segments.
Under our Industrial Equipment BU, we manufacture coating equipment for internal use by our
Advanced Materials BU, as well as select nanofabrication tools, such as tooling inserts and
injection molding tools, which are used by our nanofabrication production lines under our
Nanofabrication BU. Going forward, we intend to explore manufacturing auxiliary automation
equipment for internal use in our nanofabrication production lines.

Our Industrial Equipment BU is underpinned by our strong engineering core competency, and
enables us to develop, manufacture and produce the products and services we provide across our
business segments in-house. Accordingly, we are not reliant on any third-parties for equipment
necessary to scale our operations.

In addition, the coating equipment we sell to our select customers provides another point of
customer contact, further driving customer integration. The installation of our equipment systems
tends to drive increased customer intimacy and create higher switching costs for our customers.

Our Equipment Systems

Our equipment systems are designed and developed in-house. Often, we jointly collaborate with
our customers to ensure that the system we sell is customised for and integrated into their existing
manufacturing lines. The equipment systems we offer enables our customers to engage in vacuum
coating processes directly as a seamless step within their manufacturing process, reducing costs
and improving supply chain management.

The range of equipment systems we sell under our Industrial Equipment BU comprises the
following:

• Coating Equipment, comprising batch systems, lock and load systems and in-line coating
systems:

— The batch system is a basic coating system comprising one vacuum coating chamber,
which can be equipped to apply different surface solutions based on requirement. The
advantage of the batch system is reliability and cost, and this system is ideally suited to
large volume vacuum coating. However, the drawbacks include potential variation in
coating quality as the substrates will be exposed to the atmosphere when they are
loaded and unloaded from the coating chamber.

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 — The lock and load system comprises two or more chambers, with a vacuum coating
chamber maintained in a vacuum state, as well as separate loading chamber(s). The
loading chambers allow for substrates to be funnelled into, and removed from, the
coating chamber in vacuum, avoiding contamination by atmospheric gas and ensuring
consistent coating quality. Such systems are costlier relative to systems without similar
features, and are thus suited for small volume coating with high quality requirements.

— We also manufacture and sell in-line systems (comprising both 2D sheet in-line system
and 3D plenary rotation in-line system). These are multi-chamber coating systems,
comprising loading chambers, vacuum buffer chambers, ion beam cleaning chambers,
and a multi-process vacuum coating chamber which allows for different surface solutions
to be applied. Each chamber would be in a vacuum and dedicated to a specific coating
process. In-line systems allow for higher coating productivity with consistent coating
quality, while requiring fewer operators. However, such systems are costlier than
systems without similar features, and thus are typically used only for high volume coating
requiring unique surface solutions.

• Cleaning Lines—to ensure the effectiveness of our surface solutions, the components to be
coated would need to be cleaned before the application of our surface solution. We
manufacture and sell customised cleaning line systems, which utilise different cleaning
processes optimised for the specific surface solution and are automated for production
efficiency.

• Automation Equipment (such as fixtures sorter, fixtures assembly and coiler, pick and place,
measurement, and optical inspection)—we also manufacture and sell auxiliary automation
equipment which assist to improve the efficiency of vacuum coating processes. These include
loading fixtures which are able to efficiently sort and load the products to be coated, quality
check systems, and packing systems.

Case Study—Aspherical Lens Mold

Aspherical molding is an ultra-precision pressing process used by manufacturers to manufacture

aspherical glass lenses and aspherical plastic lenses. Such lenses are used in consumer products
such as digital cameras and high-end products like mechanical systems.

The key advantage of aspherical molding over mechanical lens production is the cost efficiency
achieved in manufacturing complex lenses with aspherical geometries. However, the conventional
mold pressing process utilised by manufacturers to manufacture the glass lens subjects the lens to
the risks of corrosion, abrasion, and debris. Similarly, to produce aspherical plastic lens,
manufacturers utilise a plastic injection process which subjects the lens to risks of deformation and
debris. In addition, the lifespan of the plastic lens mold is relatively short, necessitating frequent
replacement.

Manufacturers have also been unable to utilise conventional coating technologies to address these
issues due to the high cost, high working temperature, non-reusability, poor adhesion and low
corrosion resistance of conventional coating.

We have also collaborated closely with leading manufacturers of aspherical glass lenses and
plastic lenses, to design and develop coating equipment capable of depositing our TAC-ON ®
surface solution on aspherical glass and plastic lens. Our TAC-ON ® surface solution provides a
hydrogen-free thin film coating with excellent anti-stick and anti-corrosion properties, as well as
strong wear resistance. This enables easy mold release and extends the useful life of the mold. In
addition, by incorporating and integrating our coating system as part of their manufacturing lines,
our customers are able to simplify their production process. We believe that our coating equipment
have contributed to the lowering of the costs of producing aspherical glass and plastic lenses,
enabling mass commercialisation of the technology and its use in multiple optical lens applications.

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In addition to the case study above, other examples of selected coating equipment supplied under
our Industrial Equipment BU are set out below:

Equipment Supplied Description Our role and contribution

Coating equipment for • We provide high performance • In 2013, we commenced

automotive components surface solutions for piston rings. development of customised
See “—Our Business—Our coating equipment for key
Advanced Materials BU” above. engine components.

• We also sell coating equipment • By integrating our coating

for key engine components which equipment in their
are customised and directly manufacturing lines, our
integrated directly into our customers are able to
customers’ manufacturing lines. realise cost savings and
efficiencies in supply chain
management.
In-line coating equipment for • CdTe solar films are thin films • In 2008, we started
CdTe Solar Films used in solar panels for buildings. developing an FCVA in-line
coating equipment for our
• However, it is expensive to coat customer, which is
solar modules with conventional customised for our
coating technologies. customer’s CdTe thin film
solar cell production line.
• We worked with a solar company
in China to design and develop • Our coating equipment
customised production lines for lowered the cost of coating
solar panels. solar modules. We believe
that our equipment has
contributed to the
enablement of mass
production and adoption of
solar panels.

Our involvement also does not end with the provision and/or installation of our coating equipment.
We provide a comprehensive suite of customer services, including continued provision of spare
parts, maintenance services, upgrades and technical support, which provide recurring revenue.

OUR CORE COMPETENCIES

We believe that the strengths of our business are underpinned by our three core competencies—
our nanotechnology platform which drives our R&D innovation and product development
capabilities, our strong in-house engineering capabilities, and solid efficient production capabilities
—which are described below.

First, Our Technology, R&D Innovation and Product Development Capabilities

We define R&D activities as research and development undertaken to develop new applications
and improve our existing technology and processes, in some areas specific to our customers’
projects.

As a high-tech university spin-off, R&D and innovation is important to our business. Our proprietary
and versatile nanotechnology platform which has been developed in-house drives our R&D and
product development capabilities.

We conduct R&D activities in a focused and strategic manner that accelerates the time to market
of our innovative technologies. Our R&D activities are vital in maintaining our competitiveness
enabling us to continuously develop and improve our technological solution offerings.

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Our R&D teams

Our R&D teams are led by a Chief Technology Officer, who is advised by Dr Shi Xu, our founder and
Executive Chairman who also serves as our Chief Technologist. Our Chief Technology Officer is in
turn assisted by three senior managers who oversee the following R&D teams:

• Advanced materials/Surface solutions (Singapore)—based in our Singapore Plant, and

supports our Advanced Materials BU in South East Asia;

• Advanced Materials/Surface solutions (China)—based in our Shanghai Plant 1, and supports

our Advanced Materials BU business in China;

• Nanofabrication (Japan)—based in our Osaka Plant, and supports our Nanofabrication BU

through R&D on new nanoproducts and processes; and

• Industrial Equipment (Singapore)—based in our Singapore Plant, and supports our Industrial
Equipment BU through equipment design and engineering R&D.

The organisation of our R&D department is set out in the chart below.

Lars Lieberwirth Dr Shi Xu

Chief Technology Officer Chief Technologist

Lars
Dr Yang Dr Yang Tang Zhi Atsuta
Lieberwirth

Product Equipment Advanced Surface Nanofabrication

development Materials solutions
processes

Project Measurement
management/ and analysis Research teams
support team centre

Laboratories Design teams

Workshop

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Our R&D professionals all hold at least a college degree, with 21% of our R&D professionals
holding postgraduate master’s degrees and/or doctorates. The breakdown of the academic
qualifications of our R&D professionals as at the Latest Practicable Date is diagrammatically
represented below.

Bachelor degree
41%

College degree
38%

Master’s degree PhD

16% 5%

Our R&D capabilities

Our R&D teams are located in our three research centres located in our Singapore Plant, Shanghai
Plant 1 and Osaka Plant. We believe our R&D facilities are state of the art, equipped with modern
and advanced machines and equipment that enhance our research and development capabilities.

Our R&D equipment include key measurement and analysis systems such as a spectrophotometer
and an electrochemical workstation; at our R&D facility in Singapore, we have a materials
characterisation lab, which includes instruments designed to enable us to evaluate the properties
of our surface solutions, such as film structure, adhesion force and thermal stability. See “—Our
Material Properties and Fixed Assets” below for further details of the properties in which our R&D
facilities are situated.

Second, our Strong In-house Engineering Capabilities

We define engineering activities as project development undertaken to address specific

requirements of our customers in connection with their orders placed with us.

We possess strong in-house engineering capabilities. We have been able to invent and develop the
advanced materials used for our surface solutions, as well as design and fabricate our
nanoproducts, in-house, in particular for our joint collaboration programmes with customers. We
also design, manufacture and assemble the coating equipment (and auxiliary equipment and spare
parts) under our Industrial Equipment BU.

Our engineering capabilities support our project development activities undertaken to address
specific requirements of our customers in connection with their orders placed with us. Once we
have designed the surface solution or nanoproduct required by our customers, our engineering
capabilities enable us to design and develop the fixtures, molds and inserts required by our
production lines to scale for mass production.

Our Customer-centric Co-Development Model

Together, our R&D and engineering capabilities have enabled us to adopt an early stage,
customer-centric co-development model.

We are typically engaged at an early stage of our customers’ product development and design
process, developing and designing proprietary advanced materials which can be coated on key

210
product components to achieve desired goals, or nanoproducts customised to the specific needs of
their end-products. For our Industrial Equipment BU, we often work closely with our customers, to
ensure that the coating equipment we offer them are customised to their needs and seamlessly
integrated into their manufacturing lines.

Notes:

(1) Refers to our ability to customise our products to meet our customers’ specific requirements.

(2) We are involved in discussions with our customers at an early stage of their product development life cycle when new
materials are being verified and approved.

This technology-based solutions framework and early engagement enable us to create deeper
customer engagement which accelerates growth and allow us to capture further parts of our
customers’ value chains.

Our R&D and engineering collaborations with our customers are typically documented in a
development or collaboration agreement. The terms of such agreements, which vary from
customer to customer, may provide for us to be able to charge a development fee to our customers
for the R&D and engineering services we perform to assist in their end-product development
process, which is recorded in our revenue. See “—Customers and Suppliers— Customers—Our
Customer Contracts and Pricing Model”.

A substantial portion of our R&D and engineering investments go towards joint collaboration
programmes with our customers. For the financial year ended 31 December 2019, over 60% of our
R&D and engineering projects were initiated as a result of customer requests. The remainder of our
R&D and engineering spend is on our R&D programmes to develop next-generation technologies,
advancing our FCVA technology platform, and further developing our nanofabrication technology.

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R&D and Engineering Investments

We invest substantially in R&D and engineering, with our R&D and engineering expenses (not
taking into account the development fee charged to certain customers) for the financial years
ended 31 December 2017, 2018 and 2019, and for the six months ended 30 June 2020 being S$4.6
million, S$6.6 million, S$9.1 million and S$5.6 million respectively. Such R&D and engineering
expenses represented 4.4%, 5.4%, 6.4% and 7.2% of revenue for the financial years ended
31 December 2017, 2018 and 2019, and for the six months ended 30 June 2020, respectively.

As at the Latest Practicable Date, we have more than 240 employees, including engineers and
materials scientists, engaged in our R&D and engineering programmes. The intellectual property
rights we own as at the Latest Practicable Date are described in “—Intellectual Property” below.
Our centralised R&D and engineering department supports all three of our business segments.

Third, Our Solid Efficient Production Capabilities

We also view our solid and efficient production capabilities as one of our core competencies. We
believe we have a well-managed production chain, underpinned by our operational excellence
framework. See “—Our Operational Excellence Framework” below. Through the use of automation,
our proprietary hardware and software systems, as well as our trained workers, we believe that we
possess the ability to scale up our production capabilities in both our Advanced Materials BU and
Nanofabrication BU, to achieve mass production of our products and services within a short lead
time.

Under our Advanced Materials BU, we are capable of applying our surface solutions to a high
volume of parts, as well as handling a high degree of variation (such as different colours, coating
thickness) in coating specifications for different parts. Our production teams are able to alter
coating specifications between batches in a manner which minimises downtime and increases the
efficiency and utilisation of our coating equipment. In addition, our in-house coating equipment are
designed for flexibility and are capable of achieving different coating specifications depending on
customer needs, providing us with the flexibility to provide different surface solution options with
the same equipment. Our workers are also cross-trained to handle different types of equipment.

Under our Nanofabrication BU segment, our advanced tooling machines, supported by our CAM
software, enable us to achieve fabricate nanoproducts at scale, with a high level of accuracy and
precision.

We utilise automation and seek to maintain an optimal level of automation in our production
process, balancing production efficiency, against the ability to handle high variation in vacuum
coating loads.

As at the Latest Practicable Date, approximately 63% of our production processes in our Shanghai
Plant 1, Yizheng Plant, Hai Duong Plant and Osaka Plant have been automated. We have also
implemented our MES which allows management to track key operational parameters, maintain
quality assurance and facilitate efficient production planning. We also have in place our QTS to
manage our production quality system, and which enables checks to ensure our customers’
product standards and specifications are consistently met, while also ensuring compliance with
relevant environmental, health and safety regulations.

Through the use of automation, we have been able to improve safety given that automated
production processes require less operator involvement, in particular when handling potentially
hazardous materials or equipment. In addition, automation improves our production speed, scale
and quality, and reduces the risk of errors due to operator fatigue. Despite its high initial upfront
cost, we believe the use of automation can help reduce overall production costs by reducing our
overall labour costs (such as wages, benefits, and other healthcare costs), integrating analytics
tools into our production process, reducing costs of installing separate data collection and
management tools, as well as integrating sensors and automated alerts which reduce the risk of
equipment failure or service outages.

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Environmental, Health & Safety

We are firm believers in environmental, health and safety requirements, and our production
facilities operate according to the requirements of ISO14001:2005 and OHSAS 18001:2007. We
obtained our ISO14001:2015 certification and OHSAS 18001:2007 certification in August 2016. In
addition, our Shanghai Plant 1 achieved a “Safety Production Standardisation Level 3” affirmation
in 2017. We aim to achieve zero pollution and zero disaster incidents.

Our Production Facilities

As at the Latest Practicable Date, we have production facilities located in our Singapore Plant,
Shanghai Plant 1, Yizheng Plant (which is held under a joint venture with CYPR) and Hai Duong
Plant, and are developing our Shanghai Plant 2, which is anticipated to commence initial operations
in the first quarter of 2021. When our Shanghai Plant 2 is fully operational, it will increase our total
gross floor area across all of our production facilities to over 110,000 sq m.

A diagrammatic representation of the location of our facilities, including our production facilities, is
set out below:

Osaka, Japan

Tokyo, Japan
Frankfurt, Germany
San Francisco, USA

Shanghai, China

Plant 2 – 1Q 2021

Yizheng, China

Plant 1
Hanoi, Vietnam
Plant
Singapore
Sales & technical support Headquarters

Production Capacity and Utilisation Rates

The details of the estimated production capacity (based on machine hours) and estimated
utilisation rate for the coating equipment and nanofabrication equipment at each of our production
facilities for the financial years ended 31 December 2017, 2018 and 2019 and the six months ended
30 June 2020, are set out in the table below.

Six months
ended
Year ended 31 December 30 June

2017 2018 2019 2020

Singapore Plant
Advanced Materials BU
Number of Coating Equipment (1) . . . . 8 8 8 8
Total production capacity in terms of
machine hours (3) . . . . . . . . . . . . . . . . . 70,080 70,080 70,080 34,944
Utilisation rate (4) . . . . . . . . . . . . . . . . . 32% 37% 40% 32%

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 Six months
ended
Year ended 31 December 30 June

2017 2018 2019 2020

Shanghai Plant 1
Advanced Materials BU
Number of Coating Equipment (1) . . . . 60 60 93 111
Number of in-line coating
systems (2) . . . . . . . . . . . . . . . . . . . . . . 3 3 3 4
Total production capacity (both
coating equipment and in-line coating
equipment) in terms of machine
hours (3) . . . . . . . . . . . . . . . . . . . . . . . . 551,880 551,880 840,960 502,320
(4)
Utilisation rate ................. 70% 73% 73% 75%
Yizheng Plant
Advanced Materials BU
Number of Coating Equipment (1) . . . . 0 0 2 3
Total production capacity in terms of
machine hours (3) . . . . . . . . . . . . . . . . . 0 0 8,688 12,240
Utilisation rate (4) . . . . . . . . . . . . . . . . . 0% 0% 79% 73%
Hai Duong Plant
Nanofabrication BU
Number of injection molding
equipment (5) . . . . . . . . . . . . . . . . . . . . — (6) 12 14 13 (7)
Total production capacity of injection
molding equipment in terms of
machine hours (3) . . . . . . . . . . . . . . . . . — (6) 105,120 122,640 56,784
Utilisation rate for injection molding
equipment (8)(9) . . . . . . . . . . . . . . . . . . — (6) 37% 39% 30%

Notes:

(1) Based on the number of coating equipment at the end of the financial year/period which are utilised to fulfil revenue
generating customer orders only. This excludes coating equipment used for our R&D activities.

(2) Based on the number of in-line coating systems at the end of the financial year/period which are utilised to fulfil revenue
generating customer orders only. An in-line coating system is a multi-chamber coating system, comprising several
coating chambers, vacuum buffer chambers, ion beam cleaning chambers, and a multi-process vacuum coating
chamber which allows for different surface solutions to be applied. Our in-line coating systems typically contain more
than 10 coating chambers each, and as at 30 June 2020, our Company has two PVD in-line coating systems and two
FCVA in-line coating systems.
(3) We have computed our machine hours capacity for the coating equipment and in-line coating systems under our
Advanced Materials BU and our injection molding equipment under our Nanofabrication BU as follows:

• For the financial years ended 31 December 2017, 2018 and 2019: (the number of equipment at the end of the
financial year) multiplied by (24 operating machine hours per working day) multiplied by (365 working days).

• For the six months ended 30 June 2020: (the number of equipment at the end of the financial year) multiplied
by (24 operating machine hours per working day) multiplied by (182/183 working days).

For the purpose of calculating the production capacity of our in-line coating equipment, we have assumed that each
in-line coating system contains 4.5 coating chambers and is assumed to be equivalent to 4.5 coating equipment.

(4) Our long-term target optimal utilisation rate for the coating equipment under our Advanced Material BU is
approximately 80%. We believe that maintaining our long-term utilisation rate at 80% is optimal, as we require
sufficient downtime to shift between different customer orders, for maintenance and for unforeseen breakdowns.

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 Utilisation rate is calculated by dividing the number of operating hours of our coating equipment and in-line coating
systems by the number of hours in a day (i.e. 24 hours).

(5) Based on the number of injection molding equipment at the end of the financial year/period which are utilised to fulfil
revenue generating customer orders only. This excludes injection molding equipment used for our R&D activities.

(6) Our Nanofabrication BU only commenced operations in 2018 after we acquired a majority stake in NFT, which
became our subsidiary.

(7) For the six months ended 30 June 2020, we sold one of our injection molding equipment to a customer.

(8) Our long-term target optimal utilisation rate for the injection molding equipment under our Nanofabrication BU is
approximately 80%. We believe that maintaining our long-term utilisation rate at 80% is optimal, as we require
sufficient downtime to shift between different customer orders, for maintenance and for unforeseen breakdowns.
Utilisation rate is calculated by dividing the number of operating hours of our injection molding equipment by the
number of hours in a day (i.e. 24 hours).

(9) The utilisation rate for our injection molding equipment was relatively low during the period under review as we had
acquired NFT while it was still in its start-up phase, and had not yet reached the mass production phase. In 2018 and
2019, NFT’s operations were primarily driven by the development and engineering of toolings and molds. Once
development of our toolings and molds gain customers’ acceptance, we believe that we will be in a position to secure
mass volume purchase orders for our Nanofabrication BU and commence nanofabrication of nanoproducts for our
customers at a mass production scale.

Our annual production capacity has increased over the period under review in tandem with our
business expansion and revenue growth.

We have computed our production capacity and utilisation rates based on the number of hours of
operation of our coating equipment and nanofabrication equipment which are used to fulfil revenue
generating customer orders, which are only estimates. We have also excluded equipment used for
R&D activities, as well as auxiliary equipment such as cleaning equipment under our Advanced
Materials BU and tooling equipment in our Nanofabrication BU. We provide a variety of surface
solution services and nanoproducts using a range of different types of coating equipment and
nanofabrication equipment (which have differing production speeds), which makes production time
vary significantly depending on the customer order. Additionally, many of our coating equipment
are designed for flexibility and are capable of being modified to provide different surface solution
options with the same equipment, with different production speeds. Further, our computation of
production capacity is based on the number of equipment at the end of the financial year/period,
whereas some equipment may be commissioned in the course of the financial year/period and
would not have been operational throughout the full financial year/period. Accordingly, the
utilisation rates in the table above may not be reflective of the actual production value of our
production facilities.

We have not provided our production capacity and utilisation rates for our Industrial Equipment BU.
We sell selectively a limited number of equipment systems under our Industrial Equipment BU, and
require a four to six months lead time to manufacture each equipment system (which varies
depending on the complexity of the system ordered by our customer). Accordingly, the production
capacity and utilisation rate for our Industrial Equipment BU may not be representative or
meaningful in understanding our business. See “—Our Business—Our Industrial Equipment BU”
for further details on our Industrial Equipment BU.

See “—Our Material Properties and Fixed Assets” below for further details of the properties we use
for our production facilities.

In addition, we are currently undertaking the construction of our new Shanghai Plant 2, which is
situated adjacent to the existing Shanghai Plant 1. We plan to commence provision of surface
solutions and manufacturing of coating equipment at this new facility. We expect to complete
construction of Shanghai Plant 2 by the end of 2020, and commence initial operations in the course
of the first quarter of 2021. Operations at our Shanghai Plant 2 will commence in stages, and we
expect our Shanghai Plant 2 to be fully operational by the end of 2021. Shanghai Plant 2 when fully

215
operational will provide us with an additional 66,406 sq m of gross built up area to house new
production facilities, and is expected to be able to house approximately an additional 200 coating
equipment.

As at the Latest Practicable Date, the aggregate land costs and construction costs for Shanghai
Plant 2 are estimated to be approximately S$66.7 million, of which approximately 60% will be
financed by our borrowings, with the remainder to be funded from cash generated from operating
activities. As at 30 June 2020, we have incurred total expenditures of approximately S$31.2 million
for the land costs and construction costs in relation to the Shanghai Plant 2. In addition to the land
and construction costs, our Company plans to utilise S$20 million from the gross proceeds raised
from the issue of the New Cornerstone Shares for the renovation (including refurbishment, furniture
and fittings) of Shanghai Plant 2.

The lease for our Singapore Plant is also expiring on 31 December 2021. As at the Latest
Practicable Date, we have commenced negotiations with a new landlord for a new factory premise
in Singapore for our Singapore Plant.

Our Manufacturing Execution System

Since July 2017, we have implemented an MES which allows us to track key operational
parameters in real-time, facilitating efficient production planning. The key operational activities
captured by our MES are diagrammatically represented below.

Common activities in MES today

Process order & work-in-progress Quality assurance

(“WIP”) n Production monitoring track
n Check-in / check-out process output quality
n Tracing process orders & WIP n Quality improvement

Material delivery Overall equipment

With barcode system effective (“OEE”)
MES
n
n Tracks every material n Track equipment
delivery operational hours
n Tracks OEE
improvement

Manpower Inventory
n Tracks labour operational hours n Production planning
n Calculate costs more accurately n Reduction in stock levels and
supply lead time

Prior to the implementation of our MES, we had to manually keep track of the key operational
parameters in our production process — such as the amount of raw materials utilised, the quality
of our production output (including the rate of defects), and the personnel time spent on each
production process. Such manual tracking was both inaccurate as well as labour intensive.

Due to the advantages conferred by our MES, as at the Latest Practicable Date, our production
facilities are able to process more than 5 million parts daily, across approximately 300 product
types. Our MES has enabled us to realise operational cost savings, reducing total cost per unit
production, by 13%, improving our manufacturing cycle time by 7% and improving overall
equipment effectiveness by approximately 6%, as compared to the period immediately prior to the
implementation of our MES in July 2017.

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 Manufacturing Execution System Dashboard

Available
manpower

Process
order
Machine
utilization

Production
KPI

Production Historical Production

target units per yield
fulfillment hour

Our Quality Tracking System

We also have in place a QTS which provides a real-time monitoring platform to track our operations
and the quality of our manufacturing output. Our QTS real-time monitoring platform covers the
following: system planning, process building, document and execution, audit process execution,
the collation of performance statistics, as well as the dissemination of management objectives. Our
QTS real-time monitoring platform is illustrated below:

FA/CAR
quality
monitor

Historical
monthly
Quality quality
incidents’ log monitor

Analysis of
root causes
of error

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We believe that our QTS facilitates our management’s oversight of our operations, enabling the
maintenance of quality assurance, through the following:

(a) maintaining an online tracking system which identifies quality issues as a result of low yield,
in-process non-compliance and/or quality complaints raised by our customers;

(b) conducting failure analysis to determine and identify how issues arise and implementation of
corrective and preventive actions; and

(c) follow-up inspection to monitor effectiveness of remedy action to ensure a close-loop quality
assurance system is in place.

As a testament to our emphasis on manufacturing quality and controls, our production facilities are
all ISO-accredited:

• our Singapore Plant achieved ISO9001:2015 accreditation in 2017;

• our Shanghai Plant 1 achieved ISO9001:2015 accreditation in 2016, ISO14001:2015

accreditation in 2016 and ISO27001 accreditation in 2018; and

• our Hai Duong Plant achieved ISO9001:2015 accreditation in 2018.

In addition, our Osaka Plant (where our R&D facilities for our Nanofabrication BU are located)
achieved ISO9001:2015 accreditation in 2018 and ISO14001:2015 accreditation in 2018.

Our Yizheng Plant (which is held under a joint venture with CYPR) is in the process of preparing for
IATF 16949 certification and is working towards achieving this by September 2021.

ERP/SAP System for Resource Planning

Our engineering and production capabilities are further supported by our ERP/SAP system for
resource planning, which allows us to accurately track our inventory levels, raw material supplies
and resource planning and allocation. Our ERP/SAP system is primarily used across a variety of
functions, including sales, production, warehousing, finance and human resource.

Since the implementation of our ERP/SAP system in July 2016, we have been able to achieve
greater labour efficiency and improved inventory accuracy. Our ERP/SAP system has contributed
to an approximately 20% reduction in our typical inventory levels, an approximately 40% reduction
in lead time to procure supplies, as well as an approximately 6% improvement in overall
effectiveness of the industrial equipment used in our production facilities for revenue generating
operations, as compared to the period immediately prior to the implementation of our ERP/SAP
system in July 2016.

In addition, since the implementation of our ERP/SAP system, we have been able to achieve a 70%
reduction in the amount of time needed for our monthly accounts closing, reducing the workload on
our accounting and finance staff. The above has enabled us to achieve financial cost savings. To
further illustrate, prior to implementation of our ERP system, our monthly closing time was
approximately 15 days. This has since been reduced to an average of approximately 5 days
following implementation of our ERP and Office Automation systems.

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OUR OPERATIONAL EXCELLENCE FRAMEWORK

As part of our vision to be a future generation technology solutions company, we strive for
operational excellence, and believe our strong and robust management systems and operational
processes allow us to achieve this.

We have implemented and followed an operational excellence framework comprising of five pillars,
which guides the day-to-day management and operation of our business. The goal of our
operational excellence framework is to enable us to achieve high standards in our manufacturing
operations, by minimising variations in quality and reducing waste.

Industry 4.0 Manufacturing Operations

Our goal is to move towards Industry 4.0 (i.e. the Fourth Industrial Revolution) in our manufacturing
operations. Industry 4.0 envisages a further digitisation of our manufacturing operations to further
transform our production sites into smart factories.

We have already taken steps towards this goal, with, among others, our implementation of our
MES, QTS and ERP/SAP system. In the near to medium term, we intend to further enhance our
smart manufacturing processes and plan to further use robotics and automation in our
manufacturing lines, including remote diagnostics tools to assist in inspecting coating quality.

NF industry 4.0 Integration information & manufacturing

exploration
Innovation Design Production SCM Service

Modular design & Collaboration Intelligent

Development 3D visualization
standardisation development
Remote control
diagnosis
intelligence
Global collaborative development Product intelligence

Digitised manufacturing Manufacturing process Inspection

Manufacturing process design intelligence
Robot & automation Lean
with AI
intelligence
Manufacturing intelligence

Global collaborative Global

Management operation
Budget
collaborative HR
BI Traceability
intelligence
Strategy & management Collaborative SCM

Service Remote diagnosis Spare parts Already done

intelligence Undergoing implementation / optimisation
Service intelligence In the planning phase

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We are strong believers in the benefits of further digitisation, connectivity, and automation in our
production processes and intend to leverage proven disruptive technologies/software as enablers.

LEAN System Thinking

We introduced LEAN System Thinking in mid-2017, as a structured and systematic problem-

solving approach to reduce variation in production quality and eliminate waste. We embarked on
our LEAN System Thinking journey to stay ahead of our competition, and ensure that our customers
pay for the value-add that our nanotechnology solutions can provide, and not for any waste.

Under our LEAN System Thinking, our management personnel and employees are encouraged to
identify gaps and deficiencies, as well as waste, within our manufacturing and production process
and propose action plans to resolve the identified issue. Once approved by our “LEAN Experts”
(being key management personnel who have undergone specialised training), we would implement
such action plans with the aim of reducing waste within our manufacturing processes, achieving
improvements in quality while reducing production time and cost.

In 2017, 2018, and 2019, we executed 79, 162, and 162 LEAN projects, respectively. These
projects cover processes such as reducing cycle time of our industrial equipment, machine
improvement and improving the yield and quality of our manufacturing processes.

Process Transformation Approach

We have also established a systematic approach to improving our manufacturing processes. Our
process transformation approach involves simplifying our manufacturing process, before the
introduction of automation to enhance efficiency.

Process simplification is our design technique where we identify the individual task which forms
each manufacturing process. Our management teams then observe each task to detect and correct
redundant or wasteful actions, so as to achieve productivity improvements among our employees.
We would then seek to introduce an optimal level of automation to further improve the efficiency of
the manufacturing process. We have a structured approach to introducing automation, which
comprises of the following:

• Firstly, we identify the manufacturing process which we believe can benefit from further
automation, including formulating management systems to ensure system control;

• Secondly, we establish risk and opportunity management procedures, to identify risks that
may be involved with any further automation, and corresponding countermeasures to take;

• Thirdly, we develop criteria, methods, measurements and related performance indicators to

enable management to assess the benefits of such automation; and

• Fourthly, we put in place a programme to periodically monitor and analyse our manufacturing
process, to assess whether the intended benefits of automation have been achieved, and
decide if further improvements are needed.

See “—Our Core Competencies——Third, Our Solid Efficient Production Capabilities” above for
further details of the automation we utilise in our manufacturing processes.

220
Customer Engagement Strategy

We have in place a formal customer engagement strategy. In addition to on-time delivery and
product quality, we focus on ensuring seamless interaction with our customers, with the goal of
reducing customer touchpoints so that customer feedback and complaints can be swiftly escalated
to the responsible personnel. We actively keep track of customer complaints and feedback, and
incidence of late deliveries.

Our customer engagement strategy is summarised in the charts below:

Word of mouth Expansion of versions and New customer acquisition

volumes to existing customers

n Leverage strong reputation and
positive feedback from existing
customers
n Sales teams organised by industry
to provide targeted solutions that
address unique challenges
n Concentrate on key account
management to strengthen existing
customer relationships
n Cross-selling solutions to other
projects of existing customers
n Co-development on other
products of existing customers to
increase wallet share
n Regularly attend trade shows and
industry events to increase
exposure, branding and presence
in new industries / with new
customers
n Leverage sales teams’ network of
industry contacts

Talent Development, Retention, and Social Responsibility

We believe people are the cornerstone of our business and invest in talent development and staff
training to continuously upgrade the skills of our employees, both for their own benefit and our
long-term prospects. We have in place an in-house talent training and development system known
as “Nanofilm College”. Nanofilm College is led by our Chief Executive Officer, who is assisted by a
Dean and Director of Training. The structure of our Nanofilm College is set out in the chart below.

CEO

Dean & Director

Training Section

Programme
Training Management Trainer Management Trainee Management Learning Platform
Management

Training Team Trainee Learning Learning Resource

Needs analysis Programme Design
Organization Planning Integration

Resource Training Team Trainee Ability Learning Platform

Training Design
Development Development Assessment Online

Training Team Talent Echelon Learning Platform

Planning Resource Promotion
Management Development Development

Resource Trainee Data Online Learning

Event Control Allowance Issuance
Managements Management Management

Material Logistics Assurance Learning Platform

Effective Assessment Resource Maintenance
Documentation Service Maintenance

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Nanofilm College is a structured training and development system which commences once a new
employee joins our Group, and begins with an orientation and on-the-job training. It continues
throughout his progression in our Group, and includes specialised trainings for promotions. An
overview of our Nanofilm College training process is set out in the chart below.

Promotion & development

n Recommend suitable employees for promotion by looking at role
matching, track records and past results of employees
Participants:
n Direct superior + HR member

Talent pool review

n Results, capabilities, Communication & feedback
qualities assessment n Performance review
n Potential and trends n Job application assessments
n Development and training n Development application and trends
mechanisms n Development and training mechanisms
Participants: n Salary adjustments
n HOD member n Job objectives
n Direct superior Participants:
n HR member n Direct superior
n Employee

Talent selection Nature & development

n From the talent pool review, via n Self-learning
qualifications and assessments, n OJT
selects excellent core employees n Role expansion
Participants: n Programme participation
n HOD member n Training & job rotation
n Direct superior Participants:
n HR member n Direct superior
n HR member

As at the Latest Practicable Date, Nanofilm College offers over 100 training courses across the
following course categories: (a) Procurement & Supply Chain Management, (b) LEAN Production
Management, (c) R&D, (d) Standard & Internal Auditing, (e) General Management Skill,
(f) Environment Health and Safety and (g) Quality. Our training programmes are designed to
ensure that our employees are competent in their roles and responsibilities, and include both
technical and professional training, as well as training designed to develop the management
qualities of our employees.

As a responsible corporate citizen, we take our social responsibilities seriously. We routinely

undergo audits conducted by external auditors, government bodies (including production safety
and human resource protection agencies in China), as well as our quality assurance team, which
covers the following aspects: (a) Environmental, (b) Health & Safety, and (c) Labour & Human
Rights. In addition, certain of our major customers also require us to participate in social
responsibility audits conducted by a third party social responsibility auditor.

We also participate actively in corporate social responsibility initiatives. See “—Corporate Social
Responsibility” below for further details.

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AWARDS

As an endorsement of the quality of our technological solutions and services, our founder and
Executive Chairman, Dr. Shi Xu, and our Company have been conferred the following awards:

Year(s) Awards Awarding Authority

1997 Dr Shi Xu was awarded the ASEAN ASEAN Federation of

Outstanding Engineering Achievement Award Engineering Organisation
2000 Dr Shi Xu was awarded the National National Science and
Technology Award Technology Board
2001 Our Company was awarded the Singapore Singapore Economic
Innovation Award Development Board
2002 Our Company was awarded the Deloitte & Deloitte & Touche LLP
Touche Asia FAST 250 Award
2006, 2008 and Our Company was named a Singapore SME DP Information Group
2009 500 Company (now known as Experian
Credit Services
Singapore Pte Ltd)
2008 Our Company was awarded the SME Growth DP Information Group
Excellence Recognition (now known as Experian
Credit Services
Singapore Pte Ltd)
2011 to 2015, Our Company was named a Singapore SME DP Information Group
and 2018 1000 Company (now known as Experian
Credit Services
Singapore Pte Ltd)
2017 Dr Shi Xu was awarded the Ernst & Young Ernst & Young Solutions
Entrepreneur Award (Overall) Limited

223
OUR MATERIAL PROPERTIES AND FIXED ASSETS

As at the Latest Practicable Date, our Group’s material properties comprise the following:

Singapore Shanghai Shanghai Yizheng Tokyo Hai Duong

Property Plant Plant 1 Plant 2 Plant Office Osaka Plant Plant
Lessee Our Company Nanofilm Nanofilm Yizheng Nanofilm Nanofab Nanofab
Renewable Renewable Nahuan Technologies Japan Co., Ltd Vietnam Co.,
Energy Energy Technologies Japan Limited Ltd
Technology Technology Co., Ltd
(Shanghai) (Shanghai)
Co., Ltd Co., Ltd

Use of R&D and R&D and R&D and Production Sales and R&D Production
Property production production production facility for technical facility for
facility for facility for facility for surface support nanofabrication
surface surface surface solutions
solutions and solutions and solutions and
coating coating coating
equipment equipment equipment

Address Blk 28, No 399 No 366 No 8 3-28-7, Creation Core Lot CN10, Tan
#02-02/03, Songhui Road, Songhui Road, Lianzhong Okusawa, Higashi Truong
Ayer Rajah Qingpu, Qingpu, Road Yizheng, Setagaya, Osaka, 1-4-1 Industrial
Crescent, Shanghai, Shanghai, Jiangsu, China Tokyo 158- Aramoto Kita Zone, Tan
Ayer Rajah China China 0083, Japan Higashi Osaka Truong
Industrial City, Osaka Commune,
Estate, 577-0011 Cam Giang
Singapore Japan District, Hai
139959 Duong
Province,
Vietnam

Total Land Not applicable 16,623 29,956 Not applicable Not applicable Not applicable 5,005
Size
(sq m)

Gross 4,397 35,184 66,406 2,458 153 312 2,619

Built-up Area
(sq m)

Lessor JTC Planning and Planning and Jiangsu Mr Satoshi Independent Nam Quang
Corporation Land Land Yizheng Piston Kinouchi Administrative Company
Administration Administration Ring Factory Agency,
of Qingpu of Qingpu Organisation
District, District, for Small &
Shanghai Shanghai Medium
Enterprises
and Regional
Innovation

Term of 3 years 50 years 50 years 3 years 3 years 5 years 38 years

Lease (expiring on (expiring on (expiring on (expiring on (expiring on (expiring on (expiring on
31 Dec 13 May 2062) 13 February 28 Feb 2022) 30 Nov 2021) 31 July 2 June 2055)
2021)(1) 2069) 2022)(2)

Notes:

(1) Under our lease for our Singapore Plant, our lessor, JTC Corporation, has the right to terminate the lease by giving
three months written notice or three months rent in lieu. Given that the lease for our Singapore Plant is also expiring on
31 December 2021, as at the Latest Practicable Date, we have commenced negotiations with a new landlord for a new
factory premise in Singapore for our Singapore Plant.
(2) Subject to the Amendment of Act of Small & Medium Enterprises and Regional Innovation, the lessor of our Osaka Plant
has the right to terminate our lease to the Osaka Plant with no later than six months prior written notification to NFJ.

224
SALES AND MARKETING

Through our sales and marketing teams, we combine the deep product expertise of our marketing
experts with our front-line sales staff’s intimate customer knowledge. Our sales and marketing
teams are generally structured with an industry focus, to provide targeted solutions that address
the unique challenges faced by customers.

In addition, for our global key accounts, we employ dedicated sales specialists with a strong
product and engineering background to more effectively serve these customers. Close customer
relationships are one of our competitive strengths, and is one of the key success factors driving
growth across our business segments.

As many of the advanced materials we develop for use in our surface solutions and nanoproducts
are designed to meet customer-specific needs, and the coating equipment (and spare-parts) we
sell under our Industrial Equipment BU are meant for integration within our customers’
manufacturing lines, our sales and marketing activities need to be closely engaged with both ours
and our customers’ R&D and engineering teams, in order to provide nanotechnology solutions
which meet our customers’ specifications. See “—Our Core Competencies—First, Our Technology,
R&D Innovation and Product Development Capabilities” above for further details.

We also regularly send representatives to attend trade shows and industry events to widen our
network in industries which are new to us, and to prospect potential clients. Our sales and
marketing teams seek to leverage our team’s network of industry contacts, as well as our strong
reputation, positive feedback and word-of-mouth to engage new customers to explore new
applications of our nanotechnology solutions.

As at the Latest Practicable Date, we employ a total of approximately 63 staff worldwide who are
engaged in our sales and marketing efforts.

CUSTOMERS AND SUPPLIERS

Customers

Our Customer Contracts and Pricing Model

For our key customers, we typically enter into master development and/or master purchase
agreements with our end-customers that embody the key terms of our partnership with our
customers. These master development agreements would cover our joint collaboration R&D efforts
and our involvement in our customers’ end-product development and design process. Pursuant to
the master development and/or master purchase agreement, we will then enter into separate work
orders in respect of each product design process, or as the case may be, orders for products or
services. We would invoice our end-customers for our services in the end-product development
and design process, including development fees we charge, samples and fixtures and/or for
co-investment in equipment. See “Risk Factors—Risks Related to our Business—Our major
end-customers have significant leverage over us under our contracts with them” for further details
on the master development agreements. None of our master development and master purchase
agreements contain terms which prevent our Group from transacting with the competitor(s) of the
respective counterparties.

Our end-customers are those customers whose products are manufactured and assembled by
contract manufacturers. Once our end-customer’s end-product development reaches the
production phase we will enter into purchase or service agreements with their designated contract
manufacturers to deliver advanced materials surface solution or nanoproducts. These
arrangements are pursuant to the master development and/or master purchase agreements which
would usually provide that our end-customer will direct their contract manufacturers to engage us

225
as the appointed supplier to provide the advanced materials surface solution or nanoproducts, or
require us to enter into contractual arrangements with their designated contract manufacturers. For
nanotechnology solutions providers like us, the choice of supplier in our end-customers’ supply
chain is typically determined by the end-customer, and is not at the discretion of the contract
manufacturers. Thereafter, at the production phase, we would enter into purchase orders or
schedules of work with our end-customers’ contract manufacturers (who would then become our
direct customers), to provide the specified product and/or service.

While the end-customers may not be a party to our contractual arrangements with the contract
manufacturers, the key terms of the contracts, including pricing, service quality and technical
specifications, and timing for delivery, would typically be decided by the end-customers, either
pursuant to the master development agreement or pursuant to the arrangements between our
end-customers and their contract manufacturers. Accordingly, while we may not directly enter into
a contract with our end-customers for the provision of our surface solution services or
nanoproducts during the production phase, we would view our end-customers (and not their
contract manufacturers, who are our direct customer) as the parties with whom we have the primary
business relationship.

Our contracts with our customers typically specify certain service levels and technical
specifications we must meet. In the last five years, we have generally met these service levels and
technical specifications. In the last five years, none of our customers have terminated their
agreements with us due to our failure to satisfy these standards.

Major Customers

Our top five customers (both direct customers and end-customers) in each year overall accounted
for approximately 82.6%, 67.5%, 72.8% and 81.9% of our revenue for the financial years ended
31 December 2017, 2018 and 2019 and for the six months ended 30 June 2020 respectively. Our
largest customer is Customer Z 11, an end-customer where the majority of its revenue contribution
is through the contract manufacturers it has directed to engage us as a supplier (who are our direct
customers).

Our direct customers who contributed 5% or more of our Group’s revenues for the financial years
ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2020 are set out
below:

Contribution to revenue (%)(1)

Six months
ended
Financial year ended 31 December 30 June

2017 2018 2019 2020

Ri Ming Computer Accessory

(Shanghai) Co., Ltd.
(日銘電腦配件(上海)有限公司) (2) . . . . . . 7.9 5.7 — (3) — (3)
Laird Technologies (Shanghai) Co., Ltd.
(萊爾德電子材料(上海)有限公司) (2) . . . . 7.8 — (3) — (3) — (3)
Juteng Electronic Technology
(Taizhou) Co. Ltd.
(巨騰電子科技(泰州)有限公司) (4) . . . . . . — (3) 5.4 — (3) — (3)

11 The name of Customer Z has not been identified due to confidentiality restrictions in our agreements with this customer.
Customer Z is a global technology company that designs, develops and sells consumer electronics, computer software
and online services.

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 Contribution to revenue (%)(1)

Six months
ended
Financial year ended 31 December 30 June

2017 2018 2019 2020

TPR Co., Ltd. . . . . . . . . . . . . . . . . . . . . . 7.4 6.1 — (3) 5.3

(6) (3) (3) (3)
Customer B ..................... — — — 5.3
(3) (3)
CYPR . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 6.3 9.4
Advanced Solar Power (Hangzhou) Inc.
(龍焱能源科技(杭州)有限公司)
(“Advanced Solar Power”) . . . . . . . . . 14.8 — (3)(5) — (3)(5) — (3)

Notes:
(1) The table above does not take into account our end-customers (who we do not have direct contractual relationships
with for the provision of our products and services). For the period under review, we had two end-customers, being
Customer Z (which is a leading global blue-chip technology company and which has a relationship of approximately
8 years with our Group) and Microsoft, who each contributed more than 5% of our revenue (and the majority of such
revenue is through their contract manufacturers).

• Customer Z contributed 50.1%, 45.6%, 51.1% and 56.5% of our revenue for the financial years ended
31 December 2017, 2018 and 2019 and for the six months ended 30 June 2020, respectively.

• Microsoft contributed more than 5.0% but less than 10.0% of our revenue for the financial years ended
31 December 2017, 2018 and 2019 and for the six months ended 30 June 2020, respectively.

See “Risk Factors—Risks Related to our Business—We depend on a single customer for a substantial portion of our
revenue and a limited number of customers account for the majority of our revenue” for further details.

(2) Both Ri Ming Computer Accessory (Shanghai) Co., Ltd. (日銘電腦配件(上海)有限公司) and Laird Technologies
(Shanghai) Co., Ltd. (萊爾德電子材料(上海)有限公司) are contract manufacturers for a certain end-customer.

(3) Less than 5% contribution to revenue.

(4) Juteng Electronic Technology (Taizhou) Co. Ltd. (巨騰電子科技(泰州)有限公司) is a contract manufacturer for a certain
end-customer.

(5) We were commissioned by Advanced Solar Power to design and develop customised production lines for solar
panels. The majority of the revenue from this project was recognised in the financial year ended 31 December 2017,
contributing to the fall in revenue from Advanced Solar Power in the financial years ended 31 December 2018 and
2019.

(6) The name of Customer B has not been identified due to confidentiality restrictions in our agreements with this
customer. Customer B is an electronic components manufacturer and is a contract manufacturer for a certain
end-customer.

Save as aforesaid, no other customer of our Group in any of our operating segments accounted for
5.0% or more of our Group’s revenue for any of the financial years ended 31 December 2017, 2018
and 2019 and for the six months ended 30 June 2020.

As at the Latest Practicable Date, none of our Group’s Directors, Executive Officers, Controlling
Shareholders, or their associates have any interest in or are involved in the management of our
major customers.

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Suppliers

Procurement

To ensure that we are not materially dependent on any single supplier, we continuously strive to
secure and diversify our supply sources. For our business operations, we have to obtain raw
materials, including graphite rods, and certain components required for use in our coating
equipment (such as power supply systems and vacuum pumps), from third party suppliers. Such
raw materials and components are generic in nature with multiple supplier choices, and we obtain
these from a variety of leading materials and component providers.

Certain items are sourced globally, with local procurement conducted as needed to fulfil individual
and unique customer demands. We have strengthened our procurement function to better leverage
our scale and we continuously reassess the terms of our supply contracts from time to time.

We care deeply about the quality of our raw materials and the components we acquire, and thus
have long-standing relationships with our most trusted suppliers and employ rigorous processes for
qualifying new suppliers. This ensures that we maintain consistent quality and control standards in
order to continue to develop products of the highest quality that have fostered our industry-leading
reputation.

In addition, we have arrangements with certain customers in our Advanced Materials BU where we
procure the parts to be coated from them or their affiliated entities, and this is accounted for as a
cost in our financial statements. Once our surface solutions have been applied, we then on-sell the
coated parts either to them or their distributor or contract manufacturer, as the case may be, at a
price which takes into account the cost of our surface solutions, which is accounted for in our
revenue.

Major Suppliers

The typical credit term given by our suppliers is between 30 to 90 days.

The following are our suppliers (excluding customers from whom we purchase raw material parts
to be coated) with whom we have sales which constituted 5.0% or more of our total purchases for
the financial years ended 31 December 2017, 2018 and 2019 and for the six months ended 30 June
2020.

Percentage of total purchases (%)

Six months
ended
Financial year ended 31 December 30 June

2017 2018 2019 2020

Kanto Bussan Co., Ltd.. . . . . . . . . . . . . . 6.3 5.2 — (1) — (1)

Note:
(1) Less than 5% of total purchases.

In addition to the above, certain of our customers, namely Canon and CYPR, are also major
suppliers, each of which accounts for 5.0% or more of our total purchases for the financial years
ended 31 December 2017, 2018 and 2019 and for the six months ended 30 June 2020. While we
receive most of our raw material parts to be coated from our customers on a consignment basis, for
Canon and CYPR, we purchase the raw parts to be coated from them or their affiliates (which is
recognised as an expense in our financial statements), and once our surface solution is applied, the
coated parts are then on-sold back to our customers (or their designated distributor).

228
Save as aforesaid, no other supplier of our Group in any of our operating segments accounted for
5.0% or more of our Group’s total purchases for any of the financial years ended 31 December
2017, 2018 and 2019 and for the six months ended 30 June 2020.

As at the Latest Practicable Date, none of our Group’s Directors, Executive Officers, Controlling
Shareholders, or their associates have any interest in or are involved in the management of our
major suppliers.

ORDER BOOK

For our Advanced Materials BU and Nanofabrication BU, we do not have any long-term
fixed-volume contractual agreements with our customers. This is due to the nature of the industries
our customers are in. Instead, our customers provide us with non-binding rolling forecasts which
provide an indication of the likely demand for our products and services in the short-term. Our
customers would from time to time enter into separate purchase orders for our products and
services, as and when they require our nanotechnology solutions. Such purchase orders would be
for a short-term duration, and setting out the quantity of products and services to deliver. As a
result, we have no significant long-term backlog or order book for these business segments.

However, we have an order book for our Industrial Equipment BU due to the approximately four to
six months of lead time we require to manufacture the customised coating equipment and auxiliary
equipment required by our customers. As at the Latest Practicable Date, our Group had an order
book for our Industrial Equipment BU amounting to approximately S$13.0 million. Generally, these
orders are subject to cancellation (with penalty), deferral or rescheduling by our customers. Due to
the possibility of changes in delivery schedules, cancellation or potential delays in the shipment,
our order book as of any particular date may not be indicative of our revenues for any succeeding
period.

SEASONALITY

Demand for our surface solutions and nanoproducts from customers in the 3C industry generally
tends to ramp up in July, and such heightened demand would last until December in each year. This
is as our customers in the 3C industry would be preparing for new product launches (which typically
occur during the holiday season). Save for the foregoing, we do not experience any material
seasonality from our customers in other industries.

CREDIT POLICY

Advanced Materials BU

Under our Advanced Materials BU, given the volume of components to be coated daily, we typically
invoice our customers on a monthly basis after shipment of the coated components and due
reconciliation of the quantity of coated components delivered. We normally grant our customers
credit terms ranging from 60 days to 120 days.

Nanofabrication BU

Under our Nanofabrication BU, we typically invoice our customers upon shipment. We normally
grant our customers credit terms ranging from 30 days to 75 days.

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Industrial Equipment BU

Under our Industrial Equipment BU, given the lead-time required to design and manufacture the
equipment systems sold to our customers, the sales contract would be signed or purchase order
issued typically four to six months prior to the date specified for shipment and delivery of the
equipment system. Under our Industrial Equipment BU, payment terms are negotiated with each
customer on a case-by-case basis. In general:

• upon signing of the sales contract or acceptance of the purchase order, we would require our
customers to make a down-payment of approximately 30% of the total purchase price;

• prior to shipment of the equipment system to our customer, we would require an additional
progress payment of approximately 30% of the total purchase price; and

• the remaining purchase price would be due within 30 days after our customers’ acceptance
and commissioning of the equipment system sold.

For all our business segments, the actual credit terms and payment terms granted to a customer
will depend on our assessment of the customer’s credit worthiness, based on historic payment
behaviour and extensive analyses of customer credit risk, including underlying customers’ credit
ratings, where available. Upon our customers’ request, we may extend the credit terms, or modify
the payment terms granted, but this is based on case-by-case reviews.

EMPLOYEES

Employee Details

As at 30 June 2020, we have 1,468 employees (which does not include workers sourced from
third-party outsourcing agencies). We provide various benefits to our employees, including
discretionary bonus, medical benefits, statutory pension and/or provident fund contributions, as
well as share-based incentive schemes.

Employee breakdown by Activity

The table below shows the breakdown of our employees by activity as at 31 December 2017, 2018,
and 2019 and 30 June 2020:

As at
As at 31 December 30 June

2017 2018 2019 2020

Activity
Management and Administration
(including Finance and Human
Resources) . . . . . . . . . . . . . . . . . . . . . 106 149 168 197
R&D and Engineers . . . . . . . . . . . . . . . . 95 143 200 241
Sales & Marketing . . . . . . . . . . . . . . . . . 36 41 54 63
Procurement & Logistics. . . . . . . . . . . . . 23 46 52 59
Operations . . . . . . . . . . . . . . . . . . . . . . . 614 627 771 908

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 874 1,006 1,245 1,468

230
Employee breakdown by Geography

The table below shows the breakdown of our employees by geographical region as at 31 December
2017, 2018, and 2019 and 30 June 2020:

As at
As at 31 December 30 June

2017 2018 2019 2020

Geographical Region

Singapore . . . . . . . . . . . . . . . . . . . . . . . . 93 109 120 122

(1)
China .......................... 775 770 1,010 1,198
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 23 24 24
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . — 104 91 124

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 874 1,006 1,245 1,468

Note:

(1) Since 30 June 2020, NVC and NPC have converted 12 and 13 workers sourced from third-party outsourcing agencies
into permanent workers, respectively.

The increase in the number of employees in our Group from 2017 to 30 June 2020 was primarily
due to our business expansion across our business segments, as well as hiring of employees in
preparation for the commencement of operation at our new Shanghai Plant 2 which is currently
under construction. In addition, our Group had also commenced operations in our Nanofabrication
BU in 2018, through the acquisition of a majority stake in NFT, as well as commenced
nanofabrication activities in our production facility in Hai Duong. The acquisition had resulted in
NFT’s employees being included in our Group’s employee headcount from 2018.

In addition to our employees, we also utilise workers sourced from third-party outsourcing
agencies. As at 31 December 2017, 2018, and 2019 and 30 June 2020, we had 468, 705, 874 and
1,225 outsourced workers, respectively. We have no direct contractual relationships with these
outsourced workers, and these workers are not under our payroll and permanent headcount. Our
contractual arrangements are entered into with the third-party outsourcing agencies, who are the
employers of these outsourced workers.

We utilise outsourced workers to supplement our manpower at our Shanghai Plant 1 during the
typical peak seasons, which typically are between July to December, where orders or demand for
our Advanced Materials BU would generally see an increase. See “Seasonality” above.

For the six months ended 30 June 2020, we have experienced an increase in demand for our
surface solutions, and have accordingly increased the number of outsourced workers we obtain
from third party agencies to meet this demand increase. We believe that this increase in demand
was partially driven by the COVID-19 pandemic, where work from home and other alternative
working arrangements which were implemented globally contributed to an increase in consumer
demand for the end-products produced by our customers in the 3C industry, such as laptops,
tablets and other computing devices.

231
Industrial Relations

As at the Latest Practicable Date, we have not experienced any strikes or other disruptions due to
labour disputes during the period under review. Due to the nature of our business, we have been
and may from time to time be involved in employment disputes with employees. See “Risk
Factors—Risks Related to our Business—We have been involved in, and may in the future be
involved in disputes, legal, regulatory, and other proceedings arising out of our business
operations” for further details. However, we believe that in general, we continue to enjoy good
relations with our employees.

Our local employees in Vietnam have terms and conditions of employment governed by a collective
labour agreement that is registered with the local labour authority (the “Collective Labour
Agreement”). The Collective Labour Agreement stipulates minimum terms and conditions of
employment for local employees relating to, among others, rates of pay (including overtime rates),
hours of work, insurance coverage, rosters and breaks. Our foreign employees working in Vietnam
are not subject to the Collective Labour Agreement. In addition, our local employees in Vietnam,
who are under probation, are not eligible to join the union.

In the PRC, we have entered into several collective bargaining contracts with the employees of
NVC and NRE. These collective bargaining contracts stipulate, among others, terms and
conditions relating to minimum wage, working hours, employer social insurance premiums and
housing fund contributions and health and safety conditions in the work place. We have also
separately entered into a collective bargaining contract with our female employees of NVC and
NRE which stipulates, among others, their right to minimum maternity leave, which is subject to
extension in the event of dystocia or miscarriage. Under the relevant laws of the PRC, it is voluntary
for our employees of NVC and NRE to be unionised. In addition, for NFV, our employees who are
under probation are not eligible to join the union.

Save for our employees in NVC and NRE, none of our employees in the PRC (being those under
NEM, NHT, NPC and NAT) belong to labour unions.

None of our employees in Singapore (being those under NTI, NAM, WZH and NFT) and Japan
(being those under NTJ and NFJ) belong to labour unions.

INTELLECTUAL PROPERTY

As a technological-based solutions company, our business and profitability is dependent on our

patents and other intellectual property. We own a portfolio of patents and other intellectual property
rights relating to our proprietary technology and our know-how. To protect our intellectual property
rights, we rely on a combination of:

• contractually binding confidentiality and/or non-compete obligations which we impose on

certain of our employees and third parties, such as our business partners CYPR and MG
Holdings who hold 49% and 10% of NHT and NFT, respectively, both of which have access to
the details and formula of our proprietary technology and nanotechnology solutions; and

• patent, trademark or other intellectual property registration in countries where we have

operations or which we consider pose a significant risk to our business (from infringement or
unauthorised use) if we do not have a protective registration.

As at the Latest Practicable Date, we have 48 patents granted and in force in China, Singapore, the
United States, Japan, the United Kingdom and Europe, and we have 20 pending patent
applications, comprising applications in China and Europe, as well as international Patent
Cooperation Treaty (“PCT”) applications.

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The procedure for obtaining a patent is typically started by filing a national patent application in a
patent office of a territory party to the Paris Convention for the Protection of Intellectual Property.
Most major industrialised countries are parties to the Paris Convention. This national application
can provide a “priority date” for the invention disclosed in the “priority application” such that the
patentability of the invention is assessed as of that date. This priority date can be made effective
for further patent applications filed in other Paris Convention territories provided that these further
patent applications are filed within 12 months of the first priority application.

Although it is possible to file individual national or regional patent applications in those Paris
Convention territories in which protection is sought, each claiming the right to priority based on the
priority application, it is also possible to file an international PCT application, and in this respect, we
have 7 PCT applications pending at the Latest Practicable Date. The PCT application is a single
application, which can provide a filing date in any of those territories which are party to the PCT and
which are specified in the PCT application. Accordingly, a PCT application is, effectively, a bundle
of separate territorial applications, each of which has the potential of becoming a national or
regional patent application if the appropriate steps are taken. No patent can be granted directly
from a PCT application and the right to grant a patent is left to the national or regional laws as
implemented by the national or regional patent offices. Most major industrialised countries
(including the United States, Australia, Japan, Singapore and major European countries) are
parties to the PCT.

Patent applications (and in particular the “claims” which define the protection the patent applicant
is seeking) are searched and examined by the relevant patent office before a patent is granted. The
purpose of the search is to identify documents (and possibly other prior disclosures) which are
relevant in assessing whether the invention claimed in the patent application is new and
non-obvious; the purpose of the examination is for a patent office examiner to assess whether the
claimed invention meets all the requirements of patentability. The examination process is an
interactive procedure between the patent examiner and patent applicant in which the patent
applicant may have to put forward arguments and evidence to rebut objections that the patent
examiner may have to the patent application. The patent applicant may have to amend the claims
to its invention during the procedure. At the culmination of examination the application,
incorporating any amendments made during examination, may be granted or refused

While a PCT application does not result in a PCT patent, it is searched and it may also be examined
to provide a basis for rendering a non-binding opinion on the patentability of the claimed invention.
In order to continue with the application in the specified territories, it must be processed in the
national or regional patent offices typically within approximately two and a half years from the first
priority date. These separate national and regional patent applications are typically searched and
examined further by the national and regional patent offices which determine whether a patent is to
be granted.

Where patent applications are pending, this means that the applications have been filed at the
relevant patent office but have not yet been examined for patentability by a patent office examiner,
or are in the process of undergoing examination before the relevant patent offices. The filing of a
patent application secures a “priority date” for the invention on which the patentability of the
invention will be judged. Therefore, any disclosures of a competing invention after the priority date
should not affect the patentability of the invention. In some countries, national laws determine
circumstances under which disclosure in a specific time window and/or by specific persons prior to
this date may also be disregarded.

Patent applications typically remain unpublished for a period of 18 months from their priority date
and the contents of the application at that stage are not available to public inspection. After
18 months from the priority date of the application, the application is typically published, at which
stage its details and contents become available to the public to see. For the avoidance of doubt, the
publishing of a patent application does not mean that it will proceed to grant.

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Based on the examination of the patent office, amendments to the pending patent applications may
be necessary to overcome objections raised by patent office examiners before the applications can
proceed to grant. Further, we cannot assure you that our pending patent application will proceed to
grant, or with respect to the timing of such grant.

See “Risk Factors—Risks Related to our Business—Our ability to establish, maintain and protect
our proprietary intellectual property rights is important to our business” for further details of risks
relating to our intellectual property rights.

As at the Latest Practicable Date, we also own 24 trademarks, which have been registered in
Singapore, China, the United States and Japan. We are the registered owner of trademarks for our
Company’s logo; however our name “Nanofilm”, is not a registered trademark given its generic
nature. In addition, as we are not a consumer focused company, and our products and services are
typically utilised by other corporations and businesses, we do not view our business as being
materially dependent on our name.

See “Appendix K—Intellectual Property Rights” of this Prospectus for further details of our
intellectual property as at the Latest Practicable Date.

Save as disclosed above and in “Appendix K—Intellectual Property Rights” of this Prospectus, we
do not have, and we are not dependent on, any patents, licences, trademarks or other intellectual
property rights which are material to our business or profitability.

INSURANCE

In Singapore, our insurance policies cover, among others, workers’ compensation, industrial
special risks, office contents and equipment, loss of money, public liability, all risks commercial, all
risks industrial, loss of profits and work injury. We also maintain general liability insurance
coverage, including coverage for errors or omissions.

In China, our insurance policies cover, among others, workers’ compensation, industrial special
risks, public and products liability, management liability, business travel, motor and cyber liability
and privacy protection.

In Japan, our insurance policies cover, among others, office contents and equipment, and damage
to cargo in transit.

In Vietnam, our insurance policies cover, among others, damage to equipment caused by fire,
earthquakes and other forms of natural disasters.

As at the Latest Practicable Date, we are also in the process of procuring directors’ and officers’
liability insurance for our Company’s Directors and officers.

We believe that the coverage of our insurance policies is in line with normal commercial practice
and is adequate for our present operations. However, significant legal liability claims, damage to or
loss suffered from our operations or our property, equipment or supplies, especially if these are not
provided for in our insurance coverage, could have a material adverse effect on our financial
performance and financial condition. We review our insurance policies, as well as their scope and
coverage, annually. The cost and availability of insurance coverage have varied in recent years and
may continue to vary in the future. While we believe that our insurance policies are adequate in
amount and coverage for our operations, we may experience unanticipated issues or incur
liabilities beyond our current coverage and we may be unable to obtain similar coverage in the
future.

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COMPETITION

We provide differentiated technology-based solutions to our customers. Our solutions are based on
our proprietary technologies, which we believe distinguishes us from our direct competitors.
However, we do face a level of competition from other providers of surface solutions and
nanofabrication companies in the regions and markets in which we operate. Please refer to the
following sections of the Independent Market Research Report by Frost & Sullivan for more details
of our competitive landscape:

• paragraph 1.7.2, “Key Players in the Advanced Materials Segment & Third Party Surface
Solution Providers” for more details of other key players in the markets in which our Advanced
Materials BU operates;

• paragraph 1.8.2, “Key Players in the Nanoproducts Segment” for more details of other key
players in the markets in which our Nanofabrication BU operates; and

• paragraph 1.9.2, “Key Players in the Industrial Coatings Equipment Segment” for more details
of other key players in the markets in which our Industrial Equipment BU operates.

Advanced Materials BU

We believe that other surface solutions providers competing with our Advanced Materials BU to
provide surface solutions to customers include OC Oerlikon, Vitalink and Zhenghe.

Nanofabrication BU

We believe that other key players in the nanofabrication segment who may compete with us include
Sunny Optical, AAC Technologies, AMS AG, Largan Precision, Nissei Technology, NIL
Technology, Genius Electronic Optical and Hamamatsu Photonics.

Industrial Equipment BU

As we provide specialised turnkey equipment which are customised to our customers’ specific
requirements and such equipment is sold on a low volume and selective basis (and generally to
existing customers who already utilise our surface solutions or nanoproducts), we believe that our
Industrial Equipment BU does not face significant direct competition. For completeness, other key
players who are active in the industrial equipment space include Oerlikon Balzers, IHI Hauzer
Techno Coating, Kobelco, Kolzer SRL, ULVAC, Applied Materials, Lam Research, Tokyo Electron,
Mustang Vacuum Systems.

LICENCES AND PERMITS

We have obtained all material regulatory approvals and licences required to conduct our business
activities. See “Appendix J—Major Licences and Permits” of this Prospectus for key details of major
licences and permits held by our Group as at the Latest Practicable Date.

CORPORATE SOCIAL RESPONSIBILITY

As part of our corporate social responsibility initiative, we regularly undertake various community
work projects and support various charitable organisations. This includes the sponsoring of
internships for schools from low-income regions in China, as well as our Chinese business
operations providing employment for disabled persons. We also actively tie up with aged care
homes to organise events for elderly citizens in the communities in which we operate during festive
seasons (e.g. Lunar New Year and Mid-Autumn Festival), and encourage our employees to
participate in such events.

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LEGAL AND ARBITRATION PROCEEDINGS

Due to the nature of our business, we have been and may from time to time be involved in legal
action or proceedings relating to intellectual property disputes, including claims or disputes against
our employees or ex-employees, and/or other employment disputes. See “Risk Factors—Risks
Related to our Business— Our ability to establish, maintain and protect our proprietary intellectual
property rights is important to our business” and “Risk Factors—Risks Related to our
Business—We have been involved in, and may in the future be involved in disputes, legal,
regulatory, and other proceedings arising out of our business operations” for further details.

Nonetheless, to the best of our knowledge and belief, having made all reasonable enquiries, our
Group is not involved in any legal or arbitration proceedings and no proceedings are currently
pending or contemplated which may have or have had, in the 12 months immediately preceding the
date of lodgment of this Prospectus, a material effect on our financial position or profitability.

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 REGULATORY ENVIRONMENT

Save as disclosed in this section, as at the Latest Practicable Date, our business operations are not
subject to any special legislation or regulatory controls which have a material effect on our business
and operations, other than those generally applicable to companies and businesses incorporated
and/or operating in the jurisdictions in which we operate. To the best of our knowledge, as at the
Latest Practicable Date, we have obtained all requisite approvals, and are in compliance with laws
and regulations, that would materially affect our business and operations.

SINGAPORE

Arms and Explosives Act

Under Section 21A of the Arms and Explosives Act, Chapter 13 of Singapore (the “Arms and
Explosives Act”), as regulated by the Singapore Police Force, no person shall, unless authorised
thereto by licence, and in accordance with the conditions of the licence and such other conditions
as may be prescribed, have in his possession or under his control, import, export, manufacture or
deal in any explosive precursor.

Under Section 21D of the Arms and Explosives Act, no person shall store or keep, or cause to be
stored or kept, any explosive precursor except (i) in or on premises licensed for the storage or
keeping of such explosive precursor and in accordance with the conditions of the licence and such
other conditions as may be prescribed, or (ii) in any warehouse or store authorised under Section
21E of the Arms and Explosives Act.

Any person who is in contravention of Section 21A or Section 21D of the Arms and Explosives Act
shall be guilty of an offence and shall be liable on conviction (a) in the case of a body corporate, to
a fine not exceeding S$100,000; and (b) in any other case, to a fine not exceeding S$50,000 or to
imprisonment for a term not exceeding two years or to both.

Environmental Protection and Management Act

The Environmental Protection and Management Act, Chapter 94A of Singapore (the “EPMA”), as
regulated by the National Environment Agency, provides, inter alia, that every person storing, using
or otherwise dealing with any hazardous substance and every agent, servant or employee of such
person shall do so in such a manner as not to threaten the health or safety of any person, or to
cause pollution of the environment. Any person who contravenes the above requirement shall be
guilty of an offence and shall be liable on conviction to a fine not exceeding S$50,000 or to
imprisonment for a term not exceeding two years or to both and, in the case of a continuing offence,
to a further fine not exceeding S$2,000 for every day or part thereof during which the offence
continues after conviction.

In addition, the Environmental Protection and Management (Hazardous Substances) Regulations

(the “EPM(HS)R”), provides, inter alia, that a person shall not use, keep or have in his possession
or under his control any hazardous substance specified in the Schedule of the EPM(HS)R unless
he is authorised to store such hazardous substance. Any person who contravenes this provision
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$30,000 or
to imprisonment for a term not exceeding two years or to both and, in the case of a continuing
offence, to a further fine not exceeding S$1,000 for every day or part thereof during which the
offence continues after conviction. A person shall be authorised to store hazardous substances
where, inter alia, he is issued with a permit to store and use such hazardous substances. It shall not
be lawful for any person to store or use any hazardous substance specified in the Schedule of the
EPM(HS)R unless the storage or use of the hazardous substance is effected in accordance with the
provisions of the permit and with any condition specified therein.

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Employment Act

The Employment Act, Chapter 91 of Singapore (the “Employment Act”) is administered by the
Ministry of Manpower (the “MOM”) and sets out the basic terms and conditions for employees
covered under the Employment Act.

The term “employee” is defined in the Employment Act to mean a person who has entered into or
works under a contract of service with an employer and includes, amongst others, a workman, but
does not include certain specified categories of employees including, amongst others, any
domestic worker.

Part II of the Employment Act relates to certain aspects of contracts of services including, amongst
others, termination of contract, notice of termination of contract and liability on breach of contract.
For instance, Section 10 of the Employment Act provides, amongst others, that either party to a
contract of service may at any time give to the other party notice of his intention to terminate the
contract of service; and the length of such notice shall be the same for both employer and employee
and shall be determined by any provision made for the notice in the terms of the contract of service,
or, in the absence of such provision, shall be in accordance with Section 10(3) of the Employment
Act.

Section 19 of the Employment Act provides that any employer who enters into a contract of service
or collective agreement contrary to the provisions of Part II of the Employment Act shall be guilty of
an offence. Section 112 of the Employment Act provides that any person who is guilty of any breach
or any offence under the Employment Act for which no penalty is otherwise provided 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 for a subsequent offence under the same section to a fine not exceeding
S$10,000 or to imprisonment for a term not exceeding 12 months or to both.

Part IV of the Employment Act sets out requirements for, among others, rest days, hours of work
and other conditions of service. Part IV of the Employment Act only applies to certain specified
categories of employees, namely (a) workmen who are in receipt of a salary not exceeding S$4,500
a month (excluding overtime payments, bonus payments, annual wage supplements, productivity
incentive payments and any allowance however described) or such other amount as may be
prescribed by the Minister; and (b) every employee (other than a workman or a person employed
in a managerial or an executive position) who receives a salary not exceeding S$2,600 a month
(excluding any overtime payment, bonus payment, annual wage supplement, productivity incentive
payment and any allowance however described) or such other amount the Minister may prescribe
(the “Part IV Employees”).

For instance, Section 36(1) of Part IV of the Employment Act provides that a Part IV Employee shall
be allowed in each week a rest day without pay of one whole day which shall be Sunday or such
other day as may be determined from time to time by the employer.

Section 53(1) of the Employment Act provides that any employer who employs any person as a Part
IV Employee contrary to the provisions of Part IV of the Employment Act or fails to pay any salary
in accordance with the provisions of Part IV of the Employment Act 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.

Part X of the Employment Act sets outs the provisions in relation to holiday, annual leave and sick
leave entitlements. For instance, Section 89(1) of Part X of the Employment Act provides that any
employee who has served an employer for a period of not less than six months is entitled, after
examination by a medical practitioner, to such paid sick leave, as may be certified by the medical
practitioner, not exceeding in the aggregate (a) if no hospitalisation is necessary, 14 days in each

238
year; or (b) if hospitalisation is necessary, the lesser of the following: (i) 60 days in each year; and
(ii) the aggregate of 14 days plus the number of days on which he is hospitalised.

Section 90(1) of the Employment Act provides that any employer who employs any person as an
employee contrary to the provisions of Part X of the Employment Act or fails to pay any salary in
accordance with the provisions of Part X of the Employment Act 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.

Employment of Foreign Manpower Act and Employment of Foreign Manpower (Work Passes)
Regulations 2012

The employment of foreign manpower in Singapore is governed by the Employment of Foreign

Manpower Act, Chapter 91A of Singapore (the “EFMA”) and is regulated by the MOM.

Section 5(1) of the EFMA provides that no person shall employ a foreign employee unless the
foreign employee has a valid work pass issued by the Controller of Work Passes under Section 7
of the EFMA and in accordance with the Employment of Foreign Manpower (Work Passes)
Regulations 2012. Any person who contravenes Section 5(1) of the EFMA shall be guilty of an
offence and shall:

(a) be liable on conviction to a fine 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

(b) on a second or subsequent conviction:

(i) 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

(ii) in any other case, be punished with a fine of not less than S$20,000 and not more than
S$60,000.

Workplace Safety and Health Act

The Workplace Safety and Health Act, Chapter 354A of Singapore (the “WSHA”) provides that
every employer has the duty to take, so far as is reasonably practicable, such measures as are
necessary to ensure the safety and health of his employees at work. These measures include
providing and maintaining for those persons a work environment which is safe, without risk to
health, and adequate as regards facilities and arrangements for their welfare at work, ensuring that
adequate safety measures are taken in respect of any machinery, equipment, plant, article or
process used by those persons, ensuring that those persons 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 those persons at work have adequate instruction,
information, training and supervision as is necessary for them to perform their work. The relevant
regulatory body is the MOM.

Under the WSHA, inspectors appointed by the Commissioner for Workplace Safety and Health (the
“CWSH”) may, inter alia, enter, inspect and examine any workplace and any machinery, equipment,
plant, installation or article at any workplace, to make such examination and inquiry as may be
necessary to ascertain whether the provisions of the WSHA are complied with. Under the WSHA,
the CWSH may serve a remedial order or a stop-work order in respect of a workplace if he is

239
satisfied that (i) the workplace is in such condition, or is so located, or any part of the machinery,
equipment, plant or article in the workplace is so used, that any 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;
(ii) any person has contravened any duty imposed by the WSHA; or (iii) any person has done any
act, or has refrained from doing any act which, in the opinion of the CWSH, poses or is likely to pose
a risk to the safety, health and welfare of persons at work. The remedial order shall direct the
person served with the order to take such measures, to the satisfaction of the CWSH, to, inter alia,
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 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.

Workplace Safety and Health (General Provisions) Regulations

Under the Workplace Safety and Health (General Provisions) Regulations (the “WSHR”), additional
duties imposed include, inter alia, (a) taking effective measures to protect persons at work from the
harmful effects of exposure to any infectious agents or biohazardous material which may constitute
a risk to their health; (b) ensuring that while work is carried out in the workplace, the workplace is
not overcrowded so as to pose safety and health risks to persons at work therein; (c) ensuring that
every workroom of the workplace is provided with adequate ventilation; (d) 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; and (e) in any workplace where persons are at
work in any process or operation which involves exposure to vibration which may constitute a risk
to their health, providing, so far as it is reasonably practicable, effective means to reduce the
vibration.

Pursuant to the WSHR, the occupier of a workplace has a duty to (a) take all reasonably practicable
measures to ensure that no person at work in the workplace is exposed to toxic substances in
excess of the specified permissible exposure levels; and (b) ensure that, so far as reasonably
practicable, every container of hazardous substance is affixed with one or more warning labels that
conform with prescribed standards. In addition, all hazardous substances in a workplace must be
placed under the control of a competent person who has adequate knowledge of the properties of
the hazardous substances and their dangers.

Work Injury Compensation Act

The Work Injury Compensation Act, Chapter 354 of Singapore (the “WICA”), which is regulated by
the MOM, applies to all employees (with the exception of any class of persons specified in the
Fourth Schedule of the WICA) who have entered into or work under a contract of service or
apprenticeship with an employer, in relation to the payment of compensation for injury suffered by
such employees in the course of their employment, and sets out, inter alia, the methods of
calculating the amount of compensation they are entitled to.

The WICA provides, amongst others, 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 shall be liable
to pay compensation in accordance with the provisions of the WICA. The amount of compensation
under the WICA in respect of any personal injury of an employee caused by accident arising out of
and in the course of his employment shall be computed in accordance with the Third Schedule of
the WICA.

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Personal Data Protection Act

The Personal Data Protection Act (No. 26 of 2012) (“PDPA”) establishes the Singapore regime for
the protection of personal data (i.e. data, whether true or not, about an individual who can be
identified from that data or other information accessible to the relevant organisation) and seeks to
ensure that organisations comply with a baseline standard of protection for personal data of
individuals. The nine data protection obligations are summarised as follows:

• Purpose limitation obligation—personal data must be collected, used or disclosed only for
purposes that a reasonable person would consider appropriate in the circumstances, and if
applicable, have been notified to the individual concerned;

• Notification obligation—individuals must be notified of the purposes for the collection, use or
disclosure of their personal data, prior to such collection, use or disclosure;

• Consent obligation—the consent of individuals must be obtained for any collection, use or
disclosure of their personal data, unless exceptions apply. Additionally, an organisation must
allow the withdrawal of consent which has been given or is deemed to have been given;

• Access and correction obligations—when requested by an individual and unless exceptions

apply, an organisation must: (i) provide that individual with access to his personal data in the
possession or under the control of the organisation and information about the ways in which
his personal data may have been used or disclosed during the past year; and/or (ii) correct an
error or omission in his personal data that is in the possession or under the control of the
organisation;

• Accuracy obligation—an organisation must make reasonable efforts to ensure that personal
data collected by or on its behalf is accurate and complete if such data is likely to be used to
make a decision affecting the individual or if such data will be disclosed to another
organisation;

• Protection obligation—an organisation must implement reasonable security arrangements for

the protection of personal data in its possession or under its control;

• Retention limitation obligation—an organisation must not keep personal data for longer than
it is necessary to fulfil: (i) the purposes for which it was collected; or (ii) a legal or business
purpose;

• Transfer limitation obligation—personal data must not be transferred out of Singapore except
in accordance with the requirements prescribed under the PDPA; and

• Openness obligation—an organisation must implement the necessary policies and

procedures in order to meet the obligations under the PDPA and shall make information about
its policies and procedures publicly available.

Non-compliance may lead to financial penalties, civil liability or criminal liability. The Singapore
data protection regulator, the Personal Data Protection Commission, also has broad powers to
order the organisations to comply with the provisions of the PDPA.

Trade Marks Act

The registration and enforcement of trademarks in Singapore is provided for under the Trade Marks
Act, Chapter 332 of Singapore (the “TMA”) and its subsidiary legislation, the Trade Marks Rules
(the “TMR”) administered by the Intellectual Property Office of Singapore (the “IPOS”).

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The TMA and the TMR provide for, among others, the registration, renewal and licensing of
trademarks in Singapore. Under Section 7(1) of the TMA, the following shall not be registered:
(a) signs which do not satisfy the definition of a trademark under Section 2(1) of the TMA;
(b) trademarks which are devoid of any distinctive character; (c) trademarks which consist
exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity,
intended purpose, value, geographical origin, the time of production of goods or of rendering of
services, or other characteristics of goods or services; and (d) trademarks which consist
exclusively of signs or indications which have become customary in the current language or in the
bona fide and established practices of the trade. Under Section 18 of the TMA, a trademark shall
be registered for a period of 10 years from the date of registration, and registration may be renewed
in accordance with Section 19 of the TMA for further periods of 10 years. Section 22(1)(a) of the
TMA provides that the registration of a trademark may be revoked on the grounds that, within the
period of five years following the date of completion of the registration procedure, it has not been
put to genuine use in the course of trade in Singapore, by the proprietor or with his consent, in
relation to the goods or services for which it is registered, and there are no proper reasons for
non-use.

Section 26(1) of the TMA confers onto the proprietor of a registered trademark the exclusive rights
to use the trademark and to authorise other persons to use the trademark in relation to the goods
or services for which the trademark is registered.

Under Section 27(1) of the TMA, a person infringes a registered trademark if, without the consent
of the proprietor of the trademark, he uses in the course of trade a sign which is identical with the
trademark in relation to goods or services which are identical with those for which it is registered.
Under Section 27(2) of the TMA, a person infringes a registered trademark if, without the consent
of the proprietor of the trademark, he uses in the course of trade a sign where because (a) the sign
is identical with the trademark and is used in relation to goods or services similar to those for which
the trademark is registered; or (b) the sign is similar to the trademark and is used in relation to
goods or services identical with or similar to those for which the trademark is registered, there
exists a likelihood of confusion on the part of the public.

Under Section 31(2) of the TMA, subject to the provisions of the TMA, in an action for infringement,
the types of relief that the court may grant include the following: (a) an injunction (subject to such
terms, if any, as the court thinks fit); (b) damages; (c) an account of profits; or (d) in any action for
infringement of a registered trademark where the infringement involves the use of a counterfeit
trademark in relation to goods or services, statutory damages (i) not exceeding S$100,000 for each
type of goods or service in relation to which the counterfeit trademark has been used; and (ii) not
exceeding in the aggregate S$1 million, unless the plaintiff proves that his actual loss from such
infringement exceeds S$1 million.

Patents Act

The Patents Act, Chapter 221 of Singapore (the “PA”) and its subsidiary legislation, the Patents
Rules provide for, among others, the application of patents in Singapore and is similarly
administered by the IPOS. Under Section 13(1) of the PA, subject to Section 13(2) of the PA, a
patentable invention is one that satisfies the following conditions: (a) the invention is new; (b) it
involves an inventive step; and (c) it is capable of industrial application. Section 13(2) of the PA
provides that an invention the publication of which would be generally expected to encourage
offensive, immoral or anti-social behaviour is not a patentable invention.

Under Section 36(1) of the PA, a patent granted under the PA shall be treated for the purposes of
the PA as having been granted, and shall take effect, on the date of issue of the certificate of the
grant, and subject to Section 36(2) and Section 36A of the PA, shall continue in force until the end
of the period of 20 years beginning with the date of filing the application for the patent or with such
other date as may be prescribed. Section 36(2) of the PA provides that a patent shall cease to have

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effect at the end of the prescribed period for the payment of any renewal fee if it is not paid within
that period. Section 36A of the PA provides for the grounds on which the proprietor of a patent may
apply to the Registrar of Patents to extend the term of the patent.

Under Section 66(1) of the PA, subject to the provisions of the PA, a person infringes a patent for
an invention if, but only if, while the patent is in force, he does any of the following things in
Singapore in relation to the invention without the consent of the proprietor of the patent:

(a) where the invention is a product, he makes, disposes of, offers to dispose of, uses or imports
the product or keeps it whether for disposal or otherwise;

(b) where the invention is a process, he uses the process or he offers it for use in Singapore when
he knows, or it is obvious to a reasonable person in the circumstances, that its use without the
consent of the proprietor would be an infringement of the patent; and

(c) where the invention is a process, he disposes of, offers to dispose of, uses or imports any
product obtained directly by means of that process or keeps any such product whether for
disposal or otherwise.

Section 66(2) of the PA provides for exceptions for acts which, apart from Section 66(2) of the PA,
would constitute an infringement of a patent for an invention, such as an act which is done privately
and for purposes which are not commercial.

Section 67 of the PA provides that subject to Part XIII of the PA, civil proceedings may be brought
in the court by the proprietor of a patent in respect of any act alleged to infringe the patent and
(without prejudice to any other jurisdiction of the court) in those proceedings a claim may be made
for, among others, an injunction restraining the defendant from any apprehended act of
infringement, damages in respect of the infringement or an account of the profits derived by him
from the infringement. There are also various criminal offences as set out in Part XVIII of the PA,
for example, making a representation that a patent has been applied for in respect of any article
disposed of for value by the proprietor and no such application has been made or any such
application has been refused, withdrawn or treated as having been abandoned.

THE PEOPLE’S REPUBLIC OF CHINA

Laws and Regulations relating to Company Law and Foreign Investment

The establishment, operation, and management of corporate entities in China are governed by the
Company Law of the PRC (中華人民共和國公司法) (the “Company Law”), which was promulgated
by the Standing Committee of the National People’s Congress (全國人民代表大會常務委員會)
(the “SCNPC”) on 29 December 1993 and became effective on 1 July 1994. It was subsequently
amended on 25 December 1999, 28 August 2004, 27 October 2005, 28 December 2013, and
26 October 2018. Pursuant to the Company Law, companies are classified into two types, namely
limited liability companies and limited companies by shares. The Company Law shall also apply to
foreign-invested limited liability companies and companies limited by shares. According to the
Company Law, the provisions otherwise prescribed by the laws on foreign investment shall prevail.

The Company Law is the principal law governing dividend distributions by PRC companies. PRC
companies may pay dividends only out of their accumulated profits, if any, determined in
accordance with PRC accounting principles. In addition, PRC companies are required to set aside
each year at least 10% of their after-tax profit based on PRC accounting principles to their statutory
general reserves funds until the cumulative amount of such reserve fund reaches 50% of their
registered capital. These reserves are not distributable as cash dividends. These reserves or funds
are not distributable as dividends. A PRC company is not permitted to distribute any profits until any

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losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be
distributed together with distributable profits from the current fiscal year.

The establishment procedures, approval procedures, registered capital requirement, foreign

exchange, accounting practices, taxation and labour matters of a wholly foreign-owned enterprise
were regulated by the Wholly Foreign-owned Enterprise Law of the PRC (中華人民共和國外資企業
法), which was promulgated on 12 April 1986 and amended on 31 October 2000 and 3 September
2016, and the Implementation Regulations of the Wholly Foreign-owned Enterprise Law of the PRC
(中華人民共和國外資企業法實施細則).

On 15 March 2019, the SCNPC promulgated the Foreign Investment Law of the PRC (中華人民共
和國外商投資法) (the “Foreign Investment Law”), which came into force on 1 January 2020 and
repealed the Wholly Foreign-owned Enterprise Law of the PRC (中華人民共和國外資企業法).
Subject to the Foreign Investment Law, foreign-invested enterprises incorporated before the
enforcement of the Foreign Investment Law may keep their original organisational forms for five
years after the enforcement of the Foreign Investment Law. And the Implementation Regulations
for the Foreign Investment Law of the PRC (中華人民共和國外商投資法實施條例) was promulgated
by the State Council on 26 December 2019 and took effect on 1 January 2020. According to the
Foreign Investment Law, the State adopts the management system of the pre-establishment
national treatment and the negative list for foreign investment. The negative list refers to special
administrative measures for the access of foreign investment to specific fields as stipulated by the
State. The State will give national treatment to foreign investments outside the negative list.

Pursuant to the Catalogue for the Guidance of Foreign Investment Industries (外商投資產業指導目
錄) (the “Guidance Catalogue”) which was most recently amended on 28 June 2017 and came into
effect on 28 July 2017, the industries invested by foreign investors are classified into two
categories: encouraged industries and the industries included in special administrative measures
for the access of foreign investment (i.e. the “Negative List”) (including restricted industries and
prohibited industries). The Special Administrative Measures for the Access of Foreign Investment
(Negative List) (外商投資准入特別管理措施(負面清單)) (the “Negative List”) which was promulgated
on 28 June 2018, revised on 30 June 2019 and came into effect on 30 July 2019, replaced the
portion of special administrative measures for the access of foreign investment in the Guidance
Catalogue. The Negative List (2020 version) was recently promulgated on 23 June 2020 and
became effective on 23 July 2020. The Catalogue of Industries for Encouraging Foreign Investment
(鼓勵外商投資產業目錄) (the “Encouraged Catalogue”) which was promulgated on 30 June 2019
and came into effect on 30 July 2019, replaced the encouraged industries in the Guidance
Catalogue. Foreign investors shall not invest in the fields for which foreign investment is prohibited
in the Negative List. Investment in restricted fields of investment in the Negative List shall obtain
foreign investment access permit. Unless otherwise prescribed by the PRC laws, any industries not
falling into any of the encouraged, restricted, or prohibited industries set out in the Encouraged
Catalogue and the Negative List is a permitted industry for foreign investment.

Pursuant to the Interim Administrative Measures on Establishment and Modifications (Filing) for
Foreign Investment Enterprises (外商投資企業設立及變更備案管理暫行辦法) (the “Interim
Measures”) promulgated by the Ministry of Commerce of the PRC (中華人民共和國商務部)
(the “MOFCOM”) on 8 October 2016 and amended on 30 July 2017 and 29 June 2018,
establishment and modifications of foreign investment enterprises that are not subject to the
approval under the special entry management measures shall be filed with the delegated
commercial authorities.

The Measures on Reporting of Foreign Investment Information (外商投資信息報告管理辦法) was

issued by MOFCOM and State Administration for Market Regulation on 30 December 2019, which
came into effect on 1 January 2020 and replaced the Interim Measures for the Record-filling of the
Establishment and Modification of Foreign-invested Enterprises. Since 1 January 2020, for foreign

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investors carrying out investment activities directly or indirectly in China, the foreign investors or
foreign-invested enterprises shall submit investment information to the commerce authorities
pursuant to such measures.

Laws and Regulations Related to Production Safety

In accordance with the Work Safety Law of the PRC (中華人民共和國安全生產法) (the “Work Safety
Law”), promulgated by the SCNPC on 29 June 2002, effective from 1 November 2002, and
amended on 27 August 2009 and 31 August 2014, production and business operation entities shall
observe this law and other relevant laws and regulations concerning the production safety,
strengthen the administration of production safety, establish and optimise the system of
responsibility for and the rules and regulations on production safety, improve conditions for safe
production, promote the development for the standardisation of safe production, enhance the level
of production safety and ensure safe production is in place. Production and business operation
entities should offer education and training programmes to their employees, ensuring that they
possess the necessary knowledge of production safety, are familiar with the relevant regulations
and rules for safe production and the rules for safe operation, and master the skills for safe
operations for their own positions, while also getting to know the emergency measures for dealing
with accidents and are aware of their own rights and obligations in terms of safe production.
Operating personnel shall not perform duties before undergoing and passing production safety
training.

Pursuant to the Special Equipment Safety Law of the PRC (中華人民共和國特種設備安全法)

promulgated by the SCNPC on 29 June 2013 with effect from 1 January 2014, and the Regulations
on the Safety Supervision of Special Equipment (特種設備安全監察條例) promulgated by the State
Council on 11 March 2003 with effect from 1 June 2003, and was last amended on 24 January 2009,
special equipment products, components or new special equipment products, new components
under trial production and new raw materials used in special equipment that are required by the
safety technical specification to undergo safety verification by type testing, shall conduct their type
testing in testing institutions approved by the competent authority responsible for the supervision
and administration of special equipment safety.

Laws and Regulations Related to Product Quality

The Product Quality Law of the PRC (中華人民共和國產品質量法) (the “Product Quality Law”),
which was promulgated by the SCNPC on 22 February 1993 and amended on 8 July 2000, 27
August 2009 and 29 December 2018, applies to all production and marketing activities within the
territory of the PRC. Producers and sellers shall be liable for product quality in accordance with the
Product Quality Law. The State implements a system of supervision and inspection of product
quality mainly based on random inspection of products. Producers and sellers must not refuse
product quality supervision and inspection. Under the Product Quality Law, consumers or other
victims who suffer personal injury or property damage due to product defects may claim
compensation from the producer as well as the seller.

According to Regulations on Quality Responsibility for Industrial Products (工業產品質量責任條例)

promulgated on 5 April 1986 and effective as from 1 July 1986, manufacturers shall ensure that the
quality of their products meets the requirements of relevant laws and regulations, quality standard
and contracts. Moreover, manufacturers must set up a well-knit, coordinating and effective quality
assurance system to stipulate accountability of product quality.

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Laws and Regulations Related to the Construction of Projects

Construction Land Planning Permit

According to the Urban and Rural Planning Law of the PRC (中華人民共和國城鄉規劃法) (the “Urban
and Rural Planning Law”) promulgated by the SCNPC on 28 October 2007 and further amended
on 24 April 2015 and 23 April 2019, once a project which has been provided with a state-owned land
use right by way of allocation of land in city or town planning area has been authorised, approved,
or recorded by the relevant departments, the construction entity undertaking the project shall apply
for a construction land planning permit with competent planning authorities.

Construction Work Planning Permit

Under the Urban and Rural Planning Law, where construction work is conducted in a city or town
planning area, the relevant construction entity or individual shall apply to a competent urban or rural
planning departments for a Construction Work Planning Permit.

Construction Work Commencement Permit

Under the Construction Law of PRC (中華人民共和國建築法) promulgated by the SCNPC on

1 March 1998 and further amended on 22 April 2011 and 23 April 2019, a construction entity shall,
prior to the commencement of construction of a construction project, apply to a competent
department for a Construction Work Commencement Permit pursuant to the relevant regulations of
the State. However, small projects, as determined by the competent department of construction
administration of the State Council and construction projects which have already obtained
approvals for their construction commencement report pursuant to the terms of reference and
procedures prescribed by the State Council, are subject to exception.

Inspection and Acceptance on Completion of Construction Projects

In accordance with the Administrative Measures for the Filing of As-built Inspection of Housing,
Building and Municipal Infrastructure Projects (房屋建築和市政基礎設施工程竣工驗收備案管理辦法)
promulgated by the Ministry of Housing and Urban-rural Development on 4 April 2000 and
amended on 19 October 2009, and the Rules for the Confirmation of the Completion of Building
Construction and Municipal Infrastructure Projects (房屋建築和市政基礎設施工程竣工驗收規定)
promulgated by the Ministry of Housing and Urban-rural Development on 2 December 2013, after
the completion of a construction project, the construction entity shall pass inspections and receive
approvals from relevant local authorities, including planning bureaus, fire authorities and
environmental protection authorities.

Laws and Regulations Related to Environmental Protection

According to the Environmental Protection Law of the PRC (中華人民共和國環境保護法)

promulgated by the SCNPC on 26 December 1989 and amended on 24 April 2014, the
Environmental Impact Assessment Law of the PRC (中華人民共和國環境影響評價法) promulgated
by the SCNPC on 28 October 2002 and amended on 2 July 2016 and 29 December 2018,
respectively, the Administrative Regulations on the Environmental Protection of Construction
Project (建設項目環境保護管理條例) promulgated by the State Council on 29 November 1998 and
amended on 16 July 2017, and other relevant environmental laws and regulations, enterprises
which plan to construct projects shall engage qualified professionals to provide the assessment
reports, assessment form, or registration form on the environmental impact of such projects. The
assessment reports, assessment form, or registration form shall be filed with or approved by the
relevant environmental protection bureau prior to the commencement of any construction work.
After the completion of a construction project, the construction unit needs to make an acceptance
check of the matching environmental protection facilities and prepare an acceptance report in

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accordance with the standards and procedures stipulated by the relevant PRC authorities. There
shall be no use of the structure constructed and/or renovated until the necessary environmental
protection facilities have been completed, inspected and/or approved.

Laws and Regulations on Labour Protection

The Labour Law (中華人民共和國勞動法), which was promulgated by the SCNPC on 5 July 1994,
came into effect on 1 January 1995, and was amended on 27 August 2009 and 29 December 2018,
provides that an employer shall develop and improve its rules and regulations to safeguard the
rights of its workers. An employer shall develop and improve its labour safety and health system,
stringently implement national protocols and standards on labour safety and health, conduct labour
safety and health education for workers, guard against labour accidents and reduce occupational
hazards. Labour safety and health facilities must comply with relevant national standards. An
employer must provide workers with the necessary labour protection equipment that complies with
labour safety and health conditions stipulated under national regulations, as well as provide regular
health checks for workers that are engaged in operations with occupational hazards. Workers
engaged in special operations shall have received specialised training and obtained the pertinent
qualifications. An employer must develop a vocational training system. Vocational training funds
must be set aside and used in accordance with national regulations and vocational training for
workers must be carried out systematically based on the actual conditions of the company.

The Labour Contract Law of the PRC (中華人民共和國勞動合同法), which was promulgated by the
SCNPC on 29 June 2007, came into effect on 1 January 2008, and was amended on 28 December
2012, and the Implementation Regulations on Labour Contract Law (勞動合同法實施條例) which
were promulgated on 18 September 2008 and came into effect on the same day, regulate employer
and the employee relations and contain specific provisions involving the terms of the labour
contract. Labour contracts must be made in writing and may, after reaching agreement upon due
negotiations, be for a fixed-term, an un-fixed term, or conclude upon the completion of certain work
assignments. An employer may legally terminate a labour contract and dismiss its employees after
reaching an agreement upon due negotiations with the employee or by fulfilling the statutory
conditions.

According to the PRC Social Insurance Law (中華人民共和國社會保險法), which was promulgated
on 28 October 2010 and came into effect on 1 July 2011, and was amended on 29 December 2018,
the Regulations on Work Injury Insurance (工傷保險條例), the Regulations on Unemployment
Insurance (失業保險條例), the Trial Measures on Employee Maternity Insurance of Enterprises (企
業職工生育保險試行辦法), and the Regulations on the Administration of Housing Provident Fund (住
房公積金管理條例), which were promulgated and came into effective on 3 April 1999, and were
amended on 24 March 2002 and 24 March 2019, employers are required to contribute to housing
provident funds and a number of social security funds, including funds for basic pension insurance,
unemployment insurance, maternity insurance, work injury insurance and medical insurance.
These payments are made to local administrative authorities and employers who fail to contribute
may be fined and ordered to rectify within a stipulated time limit.

According to the Interim Provisions on Labour Dispatch (《勞務派遣暫行規定》, the “Interim

Provisions”) promulgated by the Ministry of Human Resources and Social Security of the PRC on
24 January 2014 and effective since 1 March 2014, employers may only employ dispatched
workers in temporary, auxiliary or substitutable positions. Companies shall strictly control the
number of dispatched workers, which shall not exceed 10% of their total workers. If an enterprise
fails to comply with such requirements, the competent labour authority can order it to rectify the
non-compliance within a period. If such an enterprise fails to rectify the non-compliance within the
prescribed time, it will be subject to administrative fines of RMB5,000 to RMB10,000 per headcount
over-dispatched.

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As at the Latest Practicable Date, our Group has implemented a human resource policy to ensure
that the relevant PRC laws and regulations on labour protection (including the PRC Social
Insurance Law and the Interim Provisions) are complied with. This will be overseen by our Group’s
PRC human resource director.

Regulations Related to Employee Stock Option Plans

On 15 February 2012, the SAFE promulgated the Circular on Issues concerning the Foreign
Exchange Administration for Domestic Individuals Participating in Share Incentive Plans of
Overseas Publicly-Listed Companies (國家外匯管理局關於境內個人參與境外上市公司股權激勵計劃
外匯管理有關問題的通知) (the “SAFE Circular 7”). Under the SAFE Circular 7, PRC citizens or
residents habitually residing in the PRC continuously for over one year, with a few exceptions, and
who have been granted, restricted shares or share options by an overseas listed company
according to its employee share option or share incentive plan, are required to appoint a qualified
PRC agent, register with the SAFE or its local counterparts, and complete certain other procedures
related to the shareholding plan, share option plan or other similar share incentive plans.
Concurrent with registration with the SAFE or its local counterparts, the qualified PRC agent is
required to obtain approval from the SAFE for an annual allowance for the foreign exchanges in
connection with shareholding or the exercise of a share option, and approval for opening a special
foreign exchange account at a PRC domestic bank to hold the funds required in connection with
share purchases or share option exercises, returned principals or profits upon sale of shares,
dividends issued on the stock and any other income or expenditures approved by the SAFE.
Currently, foreign exchange income of the participating PRC residents received from the sale of
share and dividends distributed by the overseas listed company are required to be fully remitted
into such special domestic foreign currency account before distribution to such participants. In
addition, the PRC agents are required to amend or deregister the registrations with the SAFE or its
local counterparts in case of any material change in, or termination of, the share incentive plans
within the period provided by the SAFE Circular 7.

Laws and Regulations on Intellectual Property Rights

Pursuant to the Copyright Law of the PRC (中華人民共和國著作權法) (the “Copyright Law”), which
was issued by the SCNPC on 7 September 1990 with effect from 1 June 1991, and was last
amended on 26 February 2010 and with effect from 1 April 2010, works of Chinese citizens, legal
persons or other organisations, including literature, art, natural sciences, social sciences,
engineering technologies and computer software created in writing or oral or other forms, whether
published or not, all enjoy copyright. The Measures for the Registration of Computer Software
Copyright (計算機軟件著作權登記辦法), which was issued by the National Copyright Administration
on 20 February, 2002 with effect on the same day, regulates the registration of software copyright,
the exclusive licensing contract and transfer contracts of software copyright. Copyright holders can
enjoy multiple rights, including but not limited to the right of publication, the right of authorship and
the right of reproduction.

Pursuant to (i) the Trademark Law of the PRC (中華人民共和國商標法) (the “Trademark Law”),
which was promulgated by the SCNPC on 23 August 1982 with effect from 1 March 1983 and was
last amended on 23 April 2019 with effect from 1 November 2019; and (ii) the Implementation
Regulations for the Trademark Law of the PRC (中華人民共和國商標法實施條例) promulgated by the
State Council on 3 August 2002 with effect from 15 September 2002 and last amended on 29 April
2014 with effect from 1 May 2014, the right to exclusive use of a registered trademark shall be
limited to trademarks which have been approved for registration and to goods for which the use of
the trademark has been approved. The period of validity of a registered trademark shall be 10
years, commencing from the date of registration. According to the Trademark Law, unauthorised
use of a trademark that is identical with or similar to a registered trademark in connection with the
same or similar goods constitutes an infringement of the exclusive right to use a registered

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trademark. The infringer will be required to cease infringement, take remedial action or pay
damages in accordance with relevant regulations.

Pursuant to (i) the Patent Law of the PRC (中華人民共和國專利法) (the “Patent Law”), which was
promulgated by the SCNPC on 12 March 1984 with effect from 1 April 1985 and last amended on
27 December 2008 with effect from 1 October 2009; and (ii) the Implementation Rules for the Patent
Law of the PRC (中華人民共和國專利法實施細則) promulgated by the State Council on 15 June 2001
with effect from 1 July 2001 and last amended on 9 January 2010 with effect on 1 February 2010,
enterprises may apply for patent rights of invention, utility models or designs based on the nature
of the inventions. The validity term of the invention shall be 20 years, and the validity terms of utility
models and designs shall be 10 years, all commencing from the date of application. Unauthorised
use of patents without consent from owners of patents, forgery of the patents belonging to other
persons, or engaging in other infringement acts against patent rights will be liable to tortious
liabilities. Serious offences may be prosecuted for criminal liabilities.

Pursuant to the Measures for Administration of Internet Domain Names (互聯網域名管理辦法),

which was promulgated by the Ministry of Industry and Information Technology of the PRC on
24 August 2017 and with effect from 1 November 2017, “domain name” shall refer to the character
mark of hierarchical structure, which identifies and locates a computer on the internet and
corresponds to the Internet protocol (IP) address of that computer. The domain name services
follow a “first come, first file” principle. After completing the domain name registration, the applicant
for the domain name registration becomes the holder of the domain name.

VIETNAM

Vietnam Laws on Enterprises and Investment

In 1999, the Law on Enterprises was first introduced in order to create a modern legal regime for the
establishment and operation of private enterprises. A principal change introduced under the Law on
Enterprises was to allow the establishment of companies upon registration, rather than by
discretionary licensing. On 29 November 2005, the National Assembly of the Socialist Republic of
Vietnam (the “National Assembly”) passed the Law on Enterprises (as amended by Law
No. 38/2009/QH12 on 19 June 2009) (the “Law on Enterprises 2005”) and the common Law on
Investment (the “Law on Investment 2005”) with the aim to simplify administrative procedures and
provide more equal treatment to local and foreign businesses. These laws together with their
implementing regulations enable foreign investors to invest in any sector of the Vietnamese
economy except certain prohibited sectors (for example, projects that are deemed detrimental to
national security, morals or harmful to public health) subject to caps in specific circumstances as
described below. In certain sectors (for example, broadcasting and television, transportation,
education and training, and hospitals and clinics), investments are subject to specific entry
conditions. These conditions must, however, be consistent with the market entry commitments that
Vietnam has made in international treaties. Accordingly, the investment options open to foreign
investors in Vietnam have expanded following Vietnam’s World Trade Organisation (“WTO”)
accession and its resulting WTO commitments, especially those contained in the Schedule of
Specific Commitments in Services.

Almost ten years after the introduction of the aforesaid company and investment laws, current
practices have emphasised the need for a transformation of the legal instruments regulating
investment and enterprises in Vietnam to ensure the transparency and balance of the business
environment. Responding to this need, the National Assembly passed the Law on Enterprises No.
68/2014/QH13 (the “Law on Enterprises 2014”) and the Law on Investment No. 67/2014/QH13 on
26 November 2014 (the “Law on Investment 2014”), replacing the previous laws from 1 July 2015.

Almost five years since promulgation of the Law on Enterprises 2014 and Law on Investment 2014,
the National Assembly passed Law on Enterprises No. 59/2020/QH14 (the “Law on Enterprises
2020”) and Law on Investment No. 61/2020/QH14 (the “Law on Investment 2020”) to replace the

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current regulations on enterprise and investment. Law on Enterprises 2020 and Law on Investment
2020 shall be effective since 1 January 2021.

Related Party Transactions

While the concept of related persons is broadly defined under the Law on Enterprises 2014, the Law
on Enterprises 2014 does not regulate all related person transactions but only the contracts or
transactions entered into by a joint stock company or a limited liability company and certain related
persons, for instance, in the context of a limited liability company, (i) the company’s owner and
related persons of the company’s owner; (ii) members of the Members’ Council, the Director/
General Director, and Inspectors; (iii) related persons of the persons mentioned in (ii);
(iv) managers of the company’s owner, persons to designate such managers; (v) relevant persons
of the persons mentioned in (iv). A related person transaction of the company must be approved by
the competent corporate body of such company.

Foreign Investment Restrictions

Foreign investment restrictions are provided in (i) Vietnam’s WTO commitments and other
international or bilateral treaties to which Vietnam is a party and (ii) Vietnamese laws. Vietnam’s
WTO commitments are the comprehensive international treaty provisions in relation to foreign
investment. They provide for Vietnam’s commitments to give foreign investors market access (and
limitation thereon) to all key service sectors. Vietnam’s WTO commitments and other treaties are
supplemented by a set of domestic laws, including the Law on Investment 2014, the Law on
Enterprises 2014 and other specialised laws regulating specific business sectors. Foreign
investment restrictions exist primarily in the form of prohibition of foreign investment, investment
form, scope of investment activities, foreign ownership limits, requirements to set up joint ventures
with local partners, regulatory approval for foreign investment or a combination thereof.

Investment Assurances

Law on Investment 2014 generally provides for the following investment assurances: assurances
of no-nationalisation; assurances of remittance of assets abroad; and Government’s support in
terms of public utilities. In addition, foreign investors can choose Vietnam’s arbitral tribunal or
Vietnam’s court for resolution of their disputes with the Government arising from their investments
in Vietnam to protect their legitimate rights and interests (unless otherwise agreed or prescribed by
an international agreement to which the Socialist Republic of Vietnam is a signatory).

Recognition and enforcement of foreign awards

Foreign arbitral awards

Article 424.1 of the Civil Procedure Code No. 92/2015/QH13 (National Assembly, 25 November
2015) (the “Civil Procedure Code”) provides that a Vietnamese court will consider recognising and
enforcing foreign arbitral awards where such awards have been made in, or by arbitrators of, a
country which is a party to a relevant international treaty of which Vietnam is a participant or a
signatory (e.g., the New York Convention). Vietnamese courts may also consider recognising and
enforcing in Vietnam foreign arbitral awards on a reciprocal basis without the condition that
Vietnam and the relevant country are signatories or participants of a relevant international treaty.

Under Article 459.2(b) of the Civil Procedure Code, a foreign arbitral award will not be recognised
and enforced in Vietnam where, among others, the Vietnamese courts determine that the
recognition and enforcement of such award in Vietnam is contrary to “the fundamental principles of
Vietnamese law.”

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Article 6 of Law on Commercial Arbitration No. 54/2010/QH12 (National Assembly, 17 June 2010)
provides that “where the parties in dispute already have an arbitration agreement but one-party
institutes court proceedings, the court must refuse to accept jurisdiction unless the arbitration
agreement is void or incapable of being performed.” Vietnamese courts could use this provision as
a basis for refusing to accept jurisdiction over a dispute if the parties had agreed on arbitration as
a dispute resolution forum.

Foreign court judgements

Article 423.1 of the Civil Procedure Code provides that a Vietnamese court will consider
recognising and enforcing a judgment rendered by a foreign court (i) where such judgment has
been made in, or by the court of a country which is a party to a relevant international treaty of which
Vietnam is a participant or a signatory, (ii) where such judgment is permitted to be recognised and
enforced under Vietnamese law or (iii) on a reciprocal basis without the condition that Vietnam and
the relevant country are signatories or participants of a relevant international treaty. Therefore, it is
possible that a judgment rendered by any federal or state court in the jurisdiction which have not
entered into or participated in any treaty with respect to the recognition and enforcement of the
court judgments will not be recognised and enforced in Vietnam.

In addition, Article 439.8 of the Civil Procedure Code provides that judgments rendered by foreign
courts will not be recognised and enforced in Vietnam where among others the Vietnamese courts
determine that the recognition and enforcement of such judgments in Vietnam are contrary to “the
fundamental principles of Vietnamese law.”

Vietnamese Land Law

Overview of the Land System in Vietnam

All land belongs to the people of Vietnam and is administered by the State for long-term use by the
people.

Although private freehold ownership over land is not permitted, persons may have legal rights to
use land in Vietnam, and are regarded as land users. In the event that a land user is granted a
“long-term” land-use right, such person may have rights similar to a freehold ownership over such
land. Vietnamese persons can have freehold ownership over residential houses and apartments.
The current regime of land management and use, including the rights and obligations of land users,
is set forth in Land Law No. 45/2013/QH13 which was adopted by the National Assembly on
29 November 2013 and took effect as from 1 July 2014, and its implementing regulations.

The State determines, amongst other things, the following matters in relation to land: the land-use
period, allocation and lease of land, land withdrawal, the use purpose of particular land, land
evaluation, land use fees, land rental rates, land tax and the rights and obligations of land users.
Land-use rights are determined by reference to the category of land-use (agricultural,
non-agricultural which includes residential and industrial land and unused land) and the type of
land user.

Land-use rights may be acquired through (i) allocation by the State; (ii) lease from the State;
(iii) successful bidding in an auction organised by the competent authority; (iv) lease from an
authorised lessor (for example, an industrial zone developer); or (v) transfer of land-use rights (in
the form of exchange, assignment, inheritance, gift, donation or capital contribution). The foreign
invested enterprise (the “FIE”) is not allowed to use the land in the form of land allocation with
collection of land use fee for its business (subject to certain regulatory exemptions in instances
where the FIE uses the land for implementing the project for investment and construction of
residential houses for sale or for combination of sale and lease).

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An enterprise is required to pay land-use fees for the entire land allocation period in case of land
allocation or it may elect to pay land rental in lump sum for the entire lease period or in annual
instalments in case of land lease. The method of payment will affect the rights (in particular the
land-use rights) of the enterprise over the leased or allocated land. Enterprises who pay the
land-use fees not using State budget funds or pay the land rental in lump sum will have, among
others, rights to mortgage or contribute capital using the land-use rights and assets attached to the
land. In comparison, enterprises who pay the land use fees using state budget funds or pay the land
rental in annual instalments can only mortgage or contribute capital using the assets attached to
the land. The FIE may use the land in the form of an upfront payment land lease or annual payment
land lease for its business.

All legitimate land users are entitled to obtain land-use right certificates in their name. Similarly, all
legitimate owners of property or buildings constructed on land are entitled to obtain certificates of
property ownership. These certificates constitute prima facie evidence of the rights of land users
and property owners. They also provide the basis for users to exercise their rights, such as to
transfer, to mortgage or to dispose of their land-use rights or properties.

Except for certain cases in which the land user has the right to use the land permanently (such as
residential land used by Vietnamese households and individuals), land is generally leased for a
term equivalent to the term of the investment project which will not exceed 50 years (or 70 years for
special cases) and this is also applied to the FIE. Upon expiry of the land use term/lease term, the
State will consider extension of the term if the land user wishes to continue using the land and has
satisfied the following conditions: (A) the land user has strictly observed the laws on land during the
term, and (B) such land use conforms to the approved land use zoning. During the term, the State
has the statutory right to recover land for purposes of national defence and security, national
interest, public interest or economic development.

Vietnamese Labour Code

The Labour Code of Vietnam was enacted by the National Assembly on 18 June 2012 (the “Labour
Code 2012”). The Government and the Ministry of Labour, War Invalids and Social Affairs have
also issued various regulations to implement the Labour Code, including the regulations on labour
contracts.

Pursuant to the Labour Code 2012 and its implementing regulations, any labour contract must be
in writing and signed by and between an employee and the legal representative of a company,
except for temporary jobs with a term of less than three months. A labour contract must include the
following mandatory items: identities of the employer and the employee, scope of work and duties,
working hours and length of break, wage or salary and payment method, work place, term of
contract, regimes for promotion and wage raise, labour hygiene and safety provisions, social and
health insurance, and training and improvement of occupational skills. The term of a labour contract
could be indefinite, fixed at 12 to 36 months, or for seasonal or temporary work with a term of less
than 12 months.

The National Assembly has passed the Labour Code No. 45/2019/QH14 which will replace the
Labour Code 2012 from 1 January 2021.

Vietnamese Environmental Regulations

Law on Protection of Environment No. 55/2014/QH13 passed by the National Assembly on 23 June
2014 sets out the general legal framework for the protection of the environment in Vietnam and
rights and obligations of individuals and organisations in relation to environment protection. It aims
to limit adverse impact on the environment, recover from environmental incidents, pollutions and
degradations, rehabilitate the environment and encourage reasonable exploitation and use of
natural resources.

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Depending on the nature and scale of a project, prior to implementing a project, the project owner
is required to prepare either (i) an environmental impact assessment report (the “EIAR”), or (ii) an
environmental protection undertaking (the “EPU”) prior to 1 January 2015 or an environmental
protection plan (the “EPP”) as from 1 January 2015.

The construction project of facility which manufactures plastic products is required to (i) prepare
EIAR if the project uses scraps and recycled plastic materials for production or (b) the project
produces above 1,000 tons of plastic products per year; or (ii) prepare EPP if it has production
capacity of under 1.000 tons products/year.

The EIAR must be approved by the provincial People’s Committee, the Ministry of Natural
Resources and Environment or other ministries with respect to certain projects falling within the
scope of management of such ministries.

Prior to 1 January 2015, the EPU must be registered with and acknowledged by the People’s
Committee at district level or the People’s Committee at commune level (as assigned by the
People’s Committee at district level). As from 1 January 2015, the EPP must be registered and
acknowledged by the provincial Department of Natural Resource and Environment, the People’s
Committee at district level, the People’s Committee at commune level or the management authority
of the industrial zones, economic zones, or export processing zones.

After approval has been obtained from the relevant authorities, the competent authorities may from
time to time conduct regular inspections to ensure that the relevant environment standards are
complied with.

Vietnamese Competition Law

On 12 June 2018, the National Assembly of Vietnam passed the new Competition Law
No. 23/2018/QH14 (“Competition Law 2018”) which took effect on 1 July 2019 and replaced the
Competition Law No. 27/2004/QH11 of the National Assembly dated 3 December 2004. The
Competition Law 2018 introduces, among other things, the following key changes: (i) governing
scope—the Competition Law 2018 governs any activities whether by Vietnamese or foreign entity
or individual which have or may have the “competition restraining impact” to Vietnam market and it
also applies to public service units such as hospitals or schools which are technically not
enterprises; (ii) market share calculation—a new method is added to determine the market share of
an enterprise in a relevant market, which is based on percentage of number of units of goods and
service sold or purchased of such enterprise to total units of goods and services sold or purchased
by all enterprises in the relevant market on a monthly, quarterly or annual basis; (iii) anti-
competitive agreements—there are new types of prohibited anti-competitive agreements, including
agreements to share customers, agreements to not have transactions with enterprises not being
parties to the agreement, agreements to limit the product sale market, source of goods and service
provision of enterprises not being parties to the agreement, and “other agreements” which have or
may have significant competition restraining impact; and (iv) merger control—previously, an
economics concentration transaction (e.g., a merger or a consolidation or an acquisition) is
prohibited only if the combined market share of enterprises in economics concentration is more
than 50% of the relevant market; however, under the Competition Law 2018, this condition is
replaced by factors as to whether an economic concentration has or may have significant
competition restraining impact.

Vietnamese Law on Protection of Consumers’ Rights

On 17 November 2010, the National Assembly passed Law on Protection of Consumers’ Rights No.
59/2010/QH12 which provides regulations on the rights and obligations of consumers, the liability
of organisations or individuals trading goods and/or services to consumers, the liability of social
organisations in protecting the interests of consumers, resolving disputes between consumers and

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organisations or individuals trading goods and/or services, the liability of the State on the protection
of consumers’ interests. Notably, this law specifies the responsibility of any organisations providing
goods and services to consumers as follows: (i) label the goods under applicable law, (ii) publicly
post the prices of goods and/or services at business locations, (iii) show warnings to consumers if
goods and/or services may be harmful to health, life and property of consumers and the preventive
measures, (iv) provide information on the availability of components and spare parts of goods, (v)
provide manual or guidance, conditions, duration, location, warranty procedures for warranty of
goods and/or services, and (vi) accurately and fully inform to consumers of the form-based
contracts, general conditions for transaction before the transaction.

Vietnamese Law on Intellectual Property

Vietnam has a comparatively strong intellectual property framework which includes several
multilateral agreements and other relevant bilateral trade agreements. The National Assembly
passed the Law on Intellectual Property Rights No. 50/2005/QH11 on 29 November 2005, which
was amended and supplemented on 19 June 2009 (the “Law on IP”). According to the Law on IP,
three major intellectual property rights are protected in Vietnam including (i) copyright (literary,
artistic and scientific works) and related rights (performances, audio and visual fixation, broadcasts
and satellite signals carrying coded programs); (ii) industrial property rights (inventions, industrial
designs, designs of semi-conducting closed circuits, trade secrets, marks, trade names and
geographical indications), and (iii) rights in plant varieties (plant varieties and reproductive
materials).

Trademarks are protected in Vietnam once they have been registered with the National Office of
Intellectual Property (“NOIP”) or they have been accepted for protection by the NOIP having been
filed through the Madrid System (in another member country of the Madrid Agreement or the Madrid
Protocol), designating Vietnam as a contracting party (where the trademark is to be protected).
There are also specific protections for ‘well-known’ marks. Consistent with international practice,
trademarks are registered in relation to particular goods and services. The term of protection is ten
years (renewable for consecutive ten-year terms) and international principles of ‘first to file’ and
‘priority’ apply.

The registration of a trademark in Vietnam is a time-consuming process, and takes approximately

one year. The process includes the following key steps: the relevant authorities examining the
submitted application to ensure it meets certain regulatory thresholds, known as a formality
examination (which takes approximately one to two months), the publication of a valid application
(which takes approximately two months), substantive examination of the application by the relevant
authority (which takes approximately nine months) and receiving the grant of protection (which
takes approximately ten days). During the period between the date of publication of the application
and the date on which a decision granting or rejecting a certificate of trademark is issued by the
relevant authority, any third party is entitled to oppose the application for trademark.

Vietnamese Bankruptcy Law

On 19 June 2014, a new bankruptcy law was adopted by the National Assembly of Vietnam. As from
1 January 2015, Bankruptcy Law No. 51/2014/QH13 (“Bankruptcy Law 2014”) replaced
Bankruptcy Law No. 21/2004/QH11 passed by the National Assembly on 15 June 2004
(“Bankruptcy Law 2004”). Bankruptcy Law 2014 introduces an amendment to the definition of
“bankruptcy” and “insolvency”. Accordingly, an enterprise is deemed insolvent when it fails to meet
its financial obligations and pay its debts within three months after such debts become due. An
enterprise is bankrupt when it is declared so by the People’s Court. Under Bankruptcy Law 2004,
the bankruptcy process is managed directly by the court through a committee formed to manage the
liquidation of assets while Bankruptcy Law 2014 replaced this committee with a liquidator or
company that is appointed by the court and specialises in the management and liquidation of
assets. Although it is a significant improvement from the old law, there is significant uncertainty in

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its implementation and interpretation due to lack of regulatory guidance. The bankruptcy process
may therefore be complex, uncertain and time-consuming.

JAPAN

Regulations regarding Protection of Personal Information

In Japan, the Act on the Protection of Personal Information (Act No. 57 of 30 May 2003, as
amended) and its related guidelines impose various requirements on businesses that use
databases containing personal information. Under the Act on the Protection of Personal
Information, business operators are required to lawfully use personal information they have
obtained within the purpose of use specified at the time they are obtained, and take appropriate
measures to maintain security of such information. Business operators are also restricted from
providing personal information to third parties.

The Act on the Protection of Personal Information imposes certain restrictions on cross boarder
transfer of personal information. Business operators are required to obtain prior consents of data
subject for the transfer of personal information to a third party located in a foreign country unless
(i) the foreign country is designated by rules of the Personal Information Protection Commission as
having established an adequate for protection of personal information (as of 17 August 2020, the
member states of European Economic Area as at 23 January 2019 are designated as those
countries) or (ii) the receiving party implements a system compliant with the standards of protection
prescribed by rules of the Personal Information Protection Commission.

General Rules of Labour and Employment

The Labour Standards Act, the Labour Contract Act and its respective related regulations and
guidelines impose various requirements on all employers in Japan. The maximum working hours
allowed under these Acts are eight hours per day and 40 hours per week, and a holiday must be
given to its employees at least once a week or four days per four weeks. If an employer wishes to
have its employees engage in overtime work or work on holidays, an employer must enter into a
labour-management agreement with the representative of its employees and file the same with the
Labour Standards Inspection Office (“LSIO”). LSIO is a governmental regulatory authority that
inspects employers in a random manner (normally once in a few years or when there is a
whistle-blower, in response to such whistle-blowing), and gives warnings or instructions to make
necessary rectification when it finds any breach of laws. The LSIO plays an important role in
enforcing the labour legislation in Japan, and it is quite rare that an employer is subject to penalties
as long as it follows the LSIO’s warning or instruction. Also, an employer must pay increased wages
for overtime, holiday and midnight (between 10 p.m. and 5 a.m.) work.

An employer which has 10 or more employees per workplace must set up its work rules and file the
same with the LSIO. An employer may only dismiss an employee for reasons that are objective,
logical and reasonable, and a dismissal without such objective and logical reasons is invalid.

Japanese Law on Intellectual Property

Intellectual property rights are granted under the following acts: the Patent Act (No. 121 of 1959),
the Utility Model Act (No. 123 of 1959), the Design Act (No. 125 of 1959), the Trademark Act
(No. 127 of 1959), the Plant Variety Protection and Seed Act (No. 83 of 1998), the Act on the Circuit
Layout of Semiconductor Integrated Circuits (No. 43 of 1985), the Copyright Act (No. 48 of 1970),
and the Unfair Competition Prevention Act (No. 47 of 1993).

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Registration with the Patent Office is required to obtain patent, utility model, design, and trademark
rights. Registration at the Software Information Centre designated by the Ministry of Economy,
Trade and Industry (“METI”) is required to obtain the right to the layout of semiconductor integrated
circuits. No registration is required for copyrights and trade secrets.

Licences to IP rights generally become effective upon agreement between a licensor and a
licensee, without registration with governmental authorities. However, the relevant acts state that
an exclusive licence to these registrable rights shall not be effective without registration with the
competent authorities. In reality, many licensees refrain from registering exclusive licences to save
registration costs. An exclusive licensee with a registration may file claims against infringing third
parties, but an exclusive licensee without a registration may only file claims against the licensor.

A transfer, waiver, or restriction on disposability of these registrable rights must be registered with
the relevant authorities. The creation, transfer, change, extinction, or restriction on disposability of
registered exclusive rights must also be registered. Unless so registered, no such transfer, etc, will
be effective against third parties.

If two or more people share these registrable rights, the transfer or licensing of such rights requires
the consent of all right holders.

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 MANAGEMENT

The following chart shows our management reporting structure at the Latest Practicable Date.

Board of Directors

Mr Lee Liang Huang

Chief Executive
Officer

Mr Lars Ralf Rainer Mr Ricky Tan Mr Gary Ho

Mr Lim Kian Onn
Lieberwirth Chong Ho Hock Yong
Chief Financial
Chief Technology Chief Operating Chief Commercial
Officer
Officer Officer Officer

DIRECTORS

The following table sets forth information regarding our Directors:

Date of Appointment
Name Age Address Position as Director

Dr Shi Xu . . . . . . . . 56 28 Ayer Rajah Crescent Executive 9 October 2020

#02-02/03 Chairman
Singapore 139959
Mr Lee Liang 59 28 Ayer Rajah Crescent Chief Executive 9 October 2020
Huang . . . . . . . . . . #02-02/03 Officer
Singapore 139959
Mr James Rowan . . 55 28 Ayer Rajah Crescent Lead Independent 9 October 2020
#02-02/03 Director
Singapore 139959
Ms Ong Siew Koon 61 28 Ayer Rajah Crescent Independent 9 October 2020
@ Ong Siew #02-02/03 Director
Khoon. . . . . . . . . . . Singapore 139959
Mr Kristian John 46 28 Ayer Rajah Crescent Independent 9 October 2020
Robinson . . . . . . . . #02-02/03 Director
Singapore 139959
Ms Lee Lee 64 28 Ayer Rajah Crescent Independent 9 October 2020
Khoon. . . . . . . . . . . #02-02/03 Director
Singapore 139959

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None of the Independent Directors sits on the board of any of the principal subsidiaries of our
Company that are based in jurisdictions other than Singapore.

Experience and Expertise of our Board

Certain information on the business and working experience of our Directors is set out below:

Dr Shi Xu is our Executive Chairman.

Dr Shi Xu is responsible for charting the corporate direction and business strategies, business and
corporate development and policy planning of our Group. He founded our Group in 1999 and has
led its growth as the Chief Executive Officer from 1999 to 2017 and as our Executive Chairman
since 2001. Dr Shi Xu has his roots in research and academia, and he was previously a Lecturer
(from 1991 to 1993), Senior Lecturer (from 1993 to 1996) and Associate Professor (from 1996 to
1999) at the Nanyang Technological University. Dr Shi Xu graduated from Tongji University with a
Bachelor of Science (Physics), and went on to obtain his Doctor of Philosophy (Physics) from the
University of Reading. He has earned numerous accolades, including the EY Entrepreneur of the
Year (Singapore) given in 2017 by Ernst and Young, the Innovation Award given in 2001 by the
Economic Development Board and the National Technology Award given in 2000 from the National
Science and Technology Board (now known as A*STAR).

Mr Lee Liang Huang is our Chief Executive Officer.

Mr Lee Liang Huang was appointed as an Executive Director of our Company and the Chief
Executive Officer of our Group in November 2017. His responsibilities include making major
corporate decisions, managing the overall operations and resources of our Company and acting as
the main point of communication between management and the Board. Mr Lee was previously with
MI Holdings Pte Ltd, where he served as the Group Chief Executive Officer from 2014 to September
2017. He has held various senior management positions in IBM Singapore Pte Ltd from 1996 to
2014 where he was responsible for, among others, developing strategies and operational
guidelines, strategic sourcing of hardware and integrated supply chain operational functions. His
last held position in IBM Singapore Pte Ltd was Global Hardware Procurement Sourcing Director.
He was also previously General Manager of Cleanseal Pte Ltd from 1994 to 1996 and held various
positions in Conner Peripherals Pte Ltd from 1987 to 1993, where his last position was Operations
Director. Mr Lee holds a Master of Engineering in Engineering Management from the Queensland
University of Technology.

Mr James Rowan is our Lead Independent Director.

Mr James Rowan was appointed as Lead Independent Director of our Company on 9 October 2020.
He was previously an Executive Director of Dyson Group from 2012 to 2020, where he initially
served as the Chief Operating Officer and, subsequently, the Chief Executive Officer. Prior to that,
Mr Rowan was the Chief Operating Officer (Global Operations) of BlackBerry Limited/Research in
Motion Limited from 2007 to 2012, Senior Vice-President (Global Operations) of Celestica Inc. from
2005 to 2007, Vice-President (European Operations) of Flextronics International Ltd. from 1998 to
2005 and Managing Director (Europe) of International Components Corporation from 1993 to 1997.
Mr Rowan holds a Higher National Certificate (Mechanical & Production Engineering) issued by the
Scottish Vocational Educational Counsel, and a Master of Science (Business with Supply Chain
and Logistics) from the Northumbria University. He is currently a member of the Industrial Advisory
Board of Nanyang Technological University, and was formerly a member on the Committee of the
Future Economy of Singapore.

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Ms Ong Siew Koon @ Ong Siew Khoon is our Independent Director

Ms Ong Siew Koon @ Ong Siew Khoon was appointed as an Independent Director of our Company
on 9 October 2020. She started her career with Ernst & Young LLP in 1982, where she rose to
become Partner from 1998 to 2019. Ms Ong also concurrently served as the Chief Financial Officer
of Ernst & Young LLP in Singapore from 2002 to 2005. Ms Ong graduated from the National
University of Singapore with a Bachelor of Accountancy, and is a Chartered Accountant of
Singapore with more than 30 years of experience in this profession.

Mr Kristian John Robinson is our Independent Director.

Mr Kristian John Robinson was appointed as an Independent Director of our Company on 9 October
2020. He is presently the Managing Director of Spruson & Ferguson (Asia) Pte Ltd—a role he has
held since 2012 and one which has seen him expand its footprints into various Intellectual Property
markets in Asia (including Hong Kong, SAR, Bangkok, Thailand and Jakarta, Indonesia). He has,
in this capacity, worked with IPH Limited (the listed holding company of Spruson & Ferguson
companies) as its key management person. Mr Robinson has held various roles in Spruson &
Ferguson companies since 2003, and this most notably includes the role of Principal and Head of
Chemical and Life Science from 2005 to 2011. Mr Robinson is a registered Patent Attorney in
Singapore, Australia and New Zealand and has more than 25 years of experience in this field. He
holds a Bachelor of Engineering (Chemical) (Honours) from Curtin University of Technology, and a
Bachelor of Science (Chemistry) from Murdoch University.

Ms Lee Lee Khoon is our Independent Director

Ms Lee Lee Khoon was appointed as an Independent Director of our Company on 9 October 2020.
Ms Lee is presently with the Kuok (Singapore) Group, where she has been a tax adviser since 2019.
She was formerly with the Inland Revenue Authority of Singapore from 1978 to 1980 and held
various positions in Ernst & Young from 1980 to 2016, her last held positions being ASEAN
Business Tax Services Leader and Lead Partner of a Corporate Tax Group. Ms Lee was admitted
as a Fellow of CPA Australia in 2004 and was admitted as an Accredited Tax Adviser of the
Singapore Institute of Accredited Tax Professionals in 2010. She is also registered as a Fellow
Chartered Accountant of Singapore. Ms Lee graduated from the University of Singapore (now
known as the National University of Singapore) in 1978 with a Bachelor of Accountancy.

Listed Company Experience

All of our Directors have been briefed on the roles and responsibilities of a director of a public-listed
company in Singapore and our Company confirms that all of our Directors will undergo training in
the roles and responsibilities of a director of a listed issuer as prescribed by the SGX-ST.

Independence of our Independent Directors

The Singapore Code of Corporate Governance 2018 (the “Code”) requires that the board of
directors of a company listed on the SGX-ST (the “Listco”) has an appropriate level of
independence and diversity of thought and background in its composition to enable it to make
decisions in the best interests of the Listco.

Under the Code, an “independent director” is one who is independent in conduct, character and
judgement, and has no relationship with the Listco, its related corporations, its substantial
shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the
exercise of the director’s independent business judgement in the best interests of the Listco.

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A director who falls under the following circumstances is not independent:

(a) if he is employed by the Listco or any of its related corporations for the current or any of the
past three financial years;

(b) if he has an immediate family member who is, or has been in any of the past three financial
years, employed by the Listco or any of its related corporations and whose remuneration is
determined by the remuneration committee of the Listco; and

(c) with effect from 1 January 2022, if he has been a director for an aggregate period of more than
nine years (whether before or after listing) and his continued appointment as an independent
director has not been sought and approved in separate resolutions by (A) all shareholders;
and (B) shareholders, excluding shareholders who also serve as the directors or the chief
executive officer of the Listco, and their respective associates.

Prior to 1 January 2022, the independence of any director who has served on the board beyond
nine years from the date of his first appointment should be subject to particularly rigorous review.
In doing so, the board should also take into account the need for progressive refreshing of the board
and should also explain why any such director should be considered independent.

Other examples of relationships which should deem a director not to be independent include:

(i) a director, or a director whose immediate family member, in the current or immediate past
financial year, provided to or received from the Listco or any of its subsidiaries any significant
payments or material services (which may include auditing, banking, consulting and legal
services), other than compensation for board service. The amount and nature of the service,
and whether it is provided on a one-off or recurring basis, are relevant in determining whether
the service provided is material. As a guide, payments aggregated over any financial year in
excess of S$50,000 should generally be deemed significant;

(ii) a director, or a director whose immediate family member, in the current or immediate past
financial year, is or was, a substantial shareholder or a partner in (with 5% or more stake), or
an executive officer of, or a director of, any organisation which provided to or received from
the Listco or any of its subsidiaries any significant payments or material services (which may
include auditing, banking, consulting and legal services). The amount and nature of the
service, and whether it is provided on a one-off or recurring basis, are relevant in determining
whether the service provided is material. As a guide, payments aggregated over any financial
year in excess of S$200,000 should generally be deemed significant irrespective of whether
they constitute a significant portion of the revenue of the organisation in question; and

(iii) a director who is or has been directly associated with a substantial shareholder of the Listco,
in the current or immediate past financial year. A director is considered “directly associated”
with a substantial shareholder when he is accustomed or under the obligation, whether formal
or informal, to act in accordance with the directions, instructions or wishes of the substantial
shareholder in relation to the corporate affairs of the Listco. A director will not be considered
“directly associated” with a substantial shareholder by reason only of his or her appointment
having been proposed by that substantial shareholder.

Mr Kristian John Robinson is currently the managing director of Spruson & Ferguson (Asia) Pte Ltd,
an intellectual property services firm in the Asia Pacific. From time to time, Spruson & Ferguson
(Asia) Pte Ltd receives professional fees for intellectual property services rendered to our
Company, including assisting our Company in patent and trademark registration and filings in
Singapore. Although Mr Robinson is the managing director of Spruson & Ferguson (Asia) Pte Ltd,
he was not directly involved in the provision of such intellectual property service. The quantum of
fees paid by our Company to Spruson & Ferguson (Asia) Pte Ltd for intellectual property services

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provided for the financial years ended 31 December 2017, 2018 and 2019 and for the six months
ended 30 June 2020 was S$25,067.75, S$24,761.92, S$17,820.95 and S$13,588.13, respectively.
All fees were charged at commercial rate and on an arm’s length basis. For the current or
immediate past financial year, our Company has not paid professional fees of more than S$200,000
for intellectual property services provided by Spruson & Ferguson (Asia) Pte Ltd.

Mr Robinson has a less than 5.0% stake in IPH Limited (the holding company of Spruson &
Ferguson (Asia) Pte Ltd) and the measures described in this paragraph will ensure that Mr
Robinson will not be involved in any decision making process which will involve the appointment of
Spruson & Ferguson (Asia) Pte Ltd. Mr Robinson will abstain from the Board’s decision in relation
to (a) the choice of intellectual property services provider, where Spruson & Ferguson (Asia) Pte
Ltd is involved, for various matters; and (b) any actions that may be taken by our Group against
Spruson & Ferguson (Asia) Pte Ltd in respect of advice rendered and/or services provided by
Spruson & Ferguson (Asia) Pte Ltd. Regardless of whether Mr Robinson is a director of our
Company, our Company will appoint our intellectual property services provider based on their
expertise and decide on their professional fees based on market rates.

As Mr Robinson will not be involved in any decision-making process which will involve the
appointment of Spruson & Ferguson (Asia) Pte Ltd, there will thus be no interference with his
exercise of independent judgement.

In light of the foregoing, our Board and our Nominating Committee (other than Mr Robinson) have
reviewed the independence of Mr Robinson under the Code and are satisfied that the relationship
described above will not interfere, or be reasonably perceived to interfere, with the exercise of
Mr Robinson’s independent business judgement of the best interests of our Company and our
subsidiaries.

On the basis of the above, our Board and our Nominating Committee (other than Mr Robinson) are
of the view that Mr Robinson should be regarded as independent.

Terms of Office for our Directors

Our Directors do not have fixed terms of office. Each Director is required to retire from office once
every three years and for this purpose, at each annual general meeting, one-third of the Directors
for the time being (or, if their number is not a multiple of three, the number nearest to but not less
than one-third) is required to retire from office by rotation and will be eligible for re-election at that
annual general meeting (the Directors so to retire being those longest in office).

Committees of Our Board

We have three Board committees: the Audit and Risk Committee, the Remuneration Committee
and the Nominating Committee.

Our Audit and Risk Committee

Our Audit and Risk Committee comprises Ms Ong Siew Koon @ Ong Siew Khoon, Ms Lee Lee
Khoon and Mr James Rowan. The Chairman of our Audit and Risk Committee is Ms Ong Siew Koon
@ Ong Siew Khoon.

Responsibilities of our Audit and Risk Committee include, among others:

• assisting our Board in fulfilling its responsibility for overseeing the quality and integrity of the
accounting, auditing, internal controls and financial practices of our Group;

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• reviewing and reporting to our Board significant financial reporting issues and judgements to
ensure the integrity of the financial statements and any announcements relating to financial
performance;

• reviewing the quarterly/half-yearly and annual financial statements before submission to our
Board for approval, focusing in particular on changes in accounting policies and practices,
major risk areas, significant adjustments resulting from the audit, compliance with accounting
standards and compliance with the Listing Manual and any other relevant statutory or
regulatory requirements;

• reviewing the assurance from the Chief Executive Officer and Chief Financial Officer on our
financial records and financial statements;

• reviewing the external auditors’ audit plan and audit reports (including assessing and
reporting to our Board the quality of the work carried out and the basis of such assessment,
and evaluating the performance of the external auditors), and the external auditors’ evaluation
of the system of internal accounting controls, with the external auditors, as well as the
assistance given by management to the external auditors;

• ensuring co-ordination between the external and internal auditors and the management and
reviewing the assistance given by the management to the auditors, and discussing problems
and concerns, if any, arising from the interim and final audits, and any matters which the
auditors may wish to discuss (in the absence of the management, where necessary);

• reviewing and reporting to our Board, at least annually, the adequacy and effectiveness of our
internal control systems (including financial, operational, compliance and information
technology controls) and risk management systems;

• monitoring and reviewing the implementation of the internal auditors’ and external auditors’
recommendations for internal control weaknesses (if any);

• reviewing the risk profile of our Group, its internal control and risk management procedures,
including financial, operation, compliance and information technology controls and the
appropriate steps to be taken to mitigate and manage risks at acceptable levels determined by
our Board;

• commissioning and reviewing the findings of investigations by internal or external auditors

into matters where there is any suspected fraud or irregularity, or suspected infringement of
any relevant laws, rules or regulations, which has or is likely to have a material impact on our
Group’s operating results or financial position, and the management’s response;

• reviewing the adequacy and effectiveness of our Group’s risk management and internal audit
function and ensuring that a clear reporting structure is in place between the Audit and Risk
Committee and the internal auditors;

• reviewing any interested person transactions as defined in the Listing Manual. See “Interested
Person Transactions and Potential Conflicts of Interest—Review Procedures for Future
Interested Person Transactions” of this Prospectus;

• reviewing and monitoring the measures we have put in place in respect of the legal
representatives of our PRC subsidiaries, as set out in “—Legal Representatives” below;

• reviewing the scope and results of the internal audit procedures and management’s response
and follow-up actions, and, at least annually, the adequacy and effectiveness of our internal
audit function;

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• reviewing the adequacy, effectiveness, independence, scope and results of the external audit
(including the independence and objectivity of the external auditors) and internal audit
function and procedures and management’s response and follow-up actions;

• ensuring that that the internal audit function is adequately resourced and staffed with persons
with the relevant qualification and experience, and that the internal auditors comply with the
standards set by nationally or internationally recognised professional bodies;

• ensuring that the internal audit function has unfettered access to all our Group’s documents,
records, properties and personnel, including the Audit and Risk Committee, and has
appropriate standing within our Group;

• approving the appointment, termination and remuneration of the head of the internal audit
function or the accounting/auditing firm or corporation to which the internal audit function is
outsourced;

• making recommendations to our Board on the proposals to Shareholders on the appointment,

reappointment and removal of the external auditors, and approving the remuneration and
terms of engagement of the external auditors;

• reviewing any actual or potential conflicts of interest that may involve our Directors as
disclosed by them to our Board and exercising directors’ fiduciary duties in this respect. Upon
disclosure of an actual or potential conflict of interest by a Director, our Audit and Risk
Committee will consider whether a conflict of interest does in fact exist. A Director who is a
member of our Audit and Risk Committee will not participate in any proceedings of our Audit
and Risk Committee in relation to the review of a conflict of interest relating to him. The review
will include an examination of the nature of the conflict and such relevant supporting data, as
our Audit and Risk Committee may deem reasonably necessary;

• reviewing and assessing from time to time whether additional processes are required to be put
in place to manage any material conflicts of interest with our Controlling Shareholders and
propose, where appropriate, the relevant measures for the management of such conflicts;

• ensuring that the issuance of the Swap Shares post-Listing will be in accordance with the NFT
SHA and in compliance with the relevant laws, rules and regulations (including the Companies
Act and the Listing Manual);

• reviewing and resolving all conflicts of interest matters referred to it;

• reviewing regulatory compliance matters, at least on a quarterly basis, with a view to ensuring
that adequate rectification measures are taken for past breaches as well as new initiatives
implemented to mitigate and reduce the risks of future breaches;

• reviewing the key financial risk areas;

• undertaking such other reviews and projects as may be requested by our Board, and reporting
to our Board its findings from time to time on matters arising and requiring the attention of the
Audit and Risk Committee;

• generally undertaking such other functions and duties as may be required by statute or the
Listing Manual, or by such amendments as may be made thereto from time to time;

• assessing the performance of the Chief Financial Officer, for the relevant period, on an annual
basis to determine his or her suitability of the position;

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• on an annual basis or any other period that the Audit and Risk Committee deems fit, ensuring
that trade receivables are stated at fair value and accurately recorded in the financial
statements, and that credit policies are adhered to;

• monitoring the cash flows of our Group;

• reviewing the adequacy our and approving procedures put in place related to any hedging
policies to be adopted by the Group;

• periodically reviewing our Group’s intellectual property protection policies to ensure that the
policies and/or procedures are complied with, and adequate and effective for our Group’s
operations;

• monitoring the use of net proceeds due to us from the issue of the New Cornerstone Shares
and ensuring that any material deviation from the stated use of proceeds will be announced in
accordance with the rules of the Listing Manual; and

• reviewing and establishing procedures for receipt, retention and treatment of complaints
received in relation to our Group, including criminal offences involving our Group or its
employees, questionable accounting, auditing, business, safety or other matters that may
impact negatively on our Group and ensuring that arrangements are in place for the
independent investigations of such matter and for appropriate follow-up.

Apart from the duties listed above, our Audit and Risk Committee shall review our policy and
arrangements for concerns about possible improprieties in financial reporting or other matters to be
safely raised, independently investigated and appropriately followed up on and the significant
matters raised through the whistle-blowing channel. Our Audit and Risk Committee shall ensure
that these arrangements allow such concerns to be raised and independently investigated, and
proportionate and independent investigation of such matters and appropriate follow up action be
taken.

Internal Controls and Risk Management Systems

Based on (i) the internal controls and risk management framework established and maintained by
our Group, (ii) work performed by external auditors on the accounting and internal control systems
in the ordinary course of their audit and internal auditors on our internal control policies and
procedures in respect of certain financial, operational and compliance controls, and (iii) reviews
performed by management and various Board committees, our Board is of the view that the internal
controls (including operational, financial, compliance and information technology controls) and risk
management systems of our Group are adequate and effective as at the date of this Prospectus to
address financial, operational, compliance and information technology controls risks, which our
Group considers relevant and material to its operations. In view of the foregoing, our Audit and Risk
Committee concurs with our Board’s comments on its assessment of the internal controls and risk
management systems of our Group.

Our Board notes that the system of internal controls and risk management provides reasonable, but
not absolute, assurance that our Group will not be adversely affected by any event that could be
reasonably foreseen as it works to achieve its business objectives. In this regard, our Board also
notes that no system of internal controls and risk management can provide absolute assurance
against the occurrence of material errors, poor judgement in decision making, human error, losses,
fraud or other irregularities.

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Our Nominating Committee

Our Nominating Committee comprises Mr Kristian John Robinson, Dr Shi Xu and Mr James Rowan.
The Chairman of our Nominating Committee is Mr Kristian John Robinson.

Responsibilities of our Nominating Committee include, among others:

• establishing a formal and transparent process for the appointment and re-appointment of
Directors to our Board, taking into account the need for progressive renewal of our Board, and
assessing annually the effectiveness of our Board as a whole, and that of each of our Board
committees and individual Directors;

• making recommendations to our Board on relevant matters relating to:

o the review of Board succession plans for our Directors, in particular, the appointment
and/or replacement of our Executive Chairman, our Chief Executive Officer and other
persons having authority and responsibility for planning, directing and controlling the
activities of our Company (“Key Management Personnel”);

o the review of training and professional development programmes for our Board and our
Director; and

o the appointment and re-appointment of Directors (including alternate Directors, if any);

• identifying candidates, reviewing and approving nominations for the positions of Director or
alternate Director (whether appointment or re-appointment) and membership of Board
Committees (including our Audit and Risk Committee, our Remuneration Committee and our
Nominating Committee) as well as appraise the qualifications and experience of any proposed
new appointments to our Board and to recommend to our Board whether the nomination
should be supported;

• reviewing and making recommendations on our Board diversity policy, including qualitative
and measurable quantitative objectives (where appropriate) as well as reviewing and
reporting to our Board on our Company’s progress towards achieving such objectives

• recommending on relevant matters relating to the review of training and professional

development programmes for our Board and our Directors;

• reviewing and determining on an annual basis, and as and when circumstances require, if a
Director is independent, bearing in mind the circumstances set forth in the Code and any other
salient factors;

• approving any proposed assumption of roles outside of our Group by a legal representative of
our PRC subsidiaries;

• where a Director has multiple board representations, deciding whether the Director is able to
and has been adequately carrying out his or her duties as Director, taking into consideration
the Director’s number of listed company board representations and other principal
commitments;

• reviewing and approving any new employment of related persons and the proposed terms of
their employment; and

• implementing a process for assessing the effectiveness of our Board as a whole and our
Board committees and for assessing the contribution of our Chairman and each individual

265
 Director to the effectiveness of our Board. The Chairman will act on the results of the
performance evaluation of our Board, and in consultation with our Nominating Committee,
propose, where appropriate, new members to be appointed to our Board or seek the
resignation of Directors.

In addition, each member of our Nominating Committee is required to abstain from voting,
approving or making a recommendation on any resolutions of our Nominating Committee in which
he or she has a conflict of interest in the subject matter under consideration.

Our Nominating Committee will also make recommendations to our Board on the development of a
process for evaluation of the performance of our Board, our Board committees and our Directors.
In this regard, our Nominating Committee will decide how our Board’s performance is to be
evaluated and propose objective performance criteria.

Our Remuneration Committee

Our Remuneration Committee comprises Mr James Rowan, Ms Lee Lee Khoon and Mr Kristian
John Robinson. The Chairman of our Remuneration Committee is Mr James Rowan.

Responsibilities of our Remuneration Committee include, among others:

• reviewing and recommending to our Board:

o a framework of remuneration for our Board and Key Management Personnel; and

o the specific remuneration packages for each of our Directors and Key Management
Personnel;

• ensuring the remuneration policies and systems of our Group, as approved by our Board,
support our Group’s objectives and strategies, and are consistently administered and being
adhered to within our Group;

• in the case of service agreements, reviewing our obligations arising in the event of termination
of an Executive Director or Key Management Personnel’s service agreement, to ensure that
such service agreements contain fair and reasonable termination clauses which are not overly
generous;

• proposing, for adoption by our Board, measurable, appropriate and meaningful performance
criteria to assist in the evaluation of the performance of Key Management Personnel,
Directors and of our Board as a whole; and

• administering the Nanofilm Employee Share Option Scheme in accordance with the rules of
the Nanofilm Employee Share Option Scheme and the Listing Manual, and recommending the
same with such adjustments or modifications as it may deem necessary, to our Board, for
endorsement.

Our Remuneration Committee shall also ensure that the level and structure of remuneration should
be aligned with the long-term interest and risk policies of our Group and should be appropriate, to
attract, retain and motivate (a) our Directors to provide good stewardship of our Group and (b) Key
Management Personnel to successfully manage our Company or our Group for the long term, as
well as ensure accountability of our Group.

If a member of our Remuneration Committee has an interest in a matter being reviewed or

considered by our Remuneration Committee, he will abstain from being involved in the decision or
voting on that matter.

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EXECUTIVE OFFICERS

The following table sets forth information regarding our Executive Officers:

Name Age Address Position

Mr Lee Liang Huang . . . . . . 59 28 Ayer Rajah Crescent Chief Executive Officer

#02-02/03
Singapore 139959
Mr Lim Kian Onn . . . . . . . . . 38 28 Ayer Rajah Crescent Chief Financial Officer
#02-02/03
Singapore 139959
Mr Gary Ho Hock Yong . . . . 48 28 Ayer Rajah Crescent Chief Commercial Officer
#02-02/03
Singapore 139959
Mr Ricky Tan Chong Ho . . . 58 28 Ayer Rajah Crescent Chief Operating Officer
#02-02/03
Singapore 139959
Mr Lars Ralf Rainer 44 28 Ayer Rajah Crescent Chief Technology Officer
Lieberwirth . . . . . . . . . . . . . #02-02/03
Singapore 139959

Certain information on the business and working experience of our Executive Officers is set out
below:

Mr Lee Liang Huang is our Chief Executive Officer.

See “Management—Directors”.

Mr Lim Kian Onn is our Chief Financial Officer.

Mr Lim Kian Onn joined our Group in 2019 as Business Adviser, where he was responsible for,
among others, managing and executing our Group’s mergers and acquisitions strategy, general
corporate affairs, managing engagements with external financial advisers appointed by our Group
and advising on fund raising activities involving strategic investments in our Group. He was
promoted to Senior Financial Controller (Corporate) in March 2020 and was subsequently
re-designated as Chief Financial Officer on 1 August 2020. He is responsible for providing
leadership in financial management, corporate finance and corporate affair matters, and his roles
include strategic financial planning, reporting and analysis as well as budgeting. Prior to joining our
Group, Mr Lim was an Executive Director of ZACD Capital Pte Ltd from 2018 to 2019, and worked
with Oversea-Chinese Banking Corporation Limited from 2013 to 2018, where his last held position
was Vice President and Senior Transactor. He started his career with Credit Suisse in 2007 as a
quantitative equity research analyst before joining DNB Bank from 2008 to 2012 as Director
(Corporate Finance) and Head of Securities Research (Asia). Mr Lim was also the business adviser
to Octopus Global Holdings Pte Ltd but relinquished such role on 1 October 2020. Mr Lim graduated
from the Singapore Management University with a Bachelor of Business Management, Summa
Cum Laude and a Bachelor of Accountancy, Summa Cum Laude. Mr Lim is a member of the CFA
Institute and was a member of the Institute of Certified Public Accountants of Singapore.

In considering the suitability of Mr Lim Kian Onn for his role as our Chief Financial Officer, our Audit
and Risk Committee has considered several factors, including his qualifications and experience,
the accounting reporting structure, the team that supports and reports to him (which comprises 29
employees as at the Latest Practicable Date, including a financial controller and a corporate
finance manager which have been employed by our Group for more than two years and more than

267
one year, respectively) and the interactions our Audit and Risk Committee had with Mr Lim Kian
Onn. Our Audit and Risk Committee noted that Mr Lim Kian Onn has more than 13 years of working
experience in finance and accounting. Mr Lim Kian Onn has also demonstrated his knowledge and
experience in accounting and financial reporting. After making all reasonable enquiries, and to the
best of its knowledge and belief, nothing has come to our Audit and Risk Committee’s attention to
cause it to believe that Mr Lim Kian Onn does not have the competence, character and integrity
expected of a chief financial officer (or its equivalent rank) of a listed issuer.

Mr Gary Ho Hock Yong is our Chief Commercial Officer.

Mr Gary Ho Hock Yong joined our Group as Chief Marketing Officer on 2 January 2018 and was
subsequently re-designated as Chief Commercial Officer on 1 August 2020. He oversees our
Group’s commercial strategy and development activities. Mr Ho started his career with Hi-P
International Limited in 1996, where he served multiple roles until his departure in 2016. His roles
in Hi-P International Limited include Chief Operating Officer (Greater China Business Unit), Chief
Operating Officer (Operations and Supply Chain), Managing Director (Corporate Business
Development) and Managing Director (Wireless Strategic Business Unit). Mr Ho holds a Diploma in
Production Technology from the German Singapore Institute, and also holds a Master of Business
Administration from the University of Roehampton.

Mr Ricky Tan Chong Ho is our Chief Operating Officer.

Mr Ricky Tan Chong Ho joined our Group as Senior VP, Operations on 11 May 2020 and was
subsequently re-designated as Chief Operating Officer on 1 August 2020. He is responsible for the
management and control of our international business operations, including designing, planning
and implementing our Group’s business operational strategies, processes and procedures. Mr Tan
has been in the electronic manufacturing industry for more than 20 years, and been involved in the
management of a number of notable multinational corporations. Mr Tan worked in Western Digital
Ltd as a Consultant from 2018 to 2019, as well as in HGST Singapore Pte Ltd as its Senior Director
cum Vice-President (from 2013 to 2017) and Global Director (Engineering) (from 2008 to 2013).
Prior to that, he was the Vice-President cum General Manager (Asia) of Pemstar Ltd from 2004 to
2008. From 1994 to 2004, he worked in IBM in Singapore and Shenzhen, PRC, where his last held
position was Director. Mr Tan graduated from the National University of Singapore in 1987 with a
Bachelor of Engineering (Honours).

Mr Lars Ralf Rainer Lieberwirth is our Chief Technology Officer.

Mr Lars Ralf Rainer Lieberwirth was engaged as a Business Development Director (Europe) of our
Company in July 2018 pursuant to a consultancy agreement and was subsequently re-designated
as Chief Technology Officer on 1 October 2020. He is responsible for implementing technology
strategies and ensuring that technological resources are aligned with our Company’s business
needs. Prior to joining our Group, Mr Lieberwirth was the founder of Ing.-Büro Lieberwirth (a
start-up focused on product development) from 2015 to 2020, during which he also served as the
interim Chief Operating Officer of Respinova Ltd. from July 2017 to July 2020. He started his career
with The Gillette Company in 1999 before joining Procter & Gamble from 2006 to 2008 as Asia
Technology Centre Manager, and Hi-P International Limited from 2008 to 2015 as Managing
Director (R&D) and Vice-President (R&D). Mr Lieberwirth graduated from the Mosbach University
of Cooperative Education, Germany, as a Graduate Engineer (Precision Engineering), and is
presently a member of the Association of German Engineers.

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LEGAL REPRESENTATIVES

Identities of the Legal Representatives

As at the Latest Practicable Date, the legal representative of our principal subsidiary is as follows:

Subsidiary Name Nationality Paid-up Capital

NVC Dr Shi Xu Singaporean US$4,150,000

Dr Shi Xu is our Executive Chairman and Controlling Shareholder. Save as disclosed above, none
of our subsidiaries is considered as a principal subsidiary (as defined in the Listing Manual). Our
Company has put in place processes and procedures to safeguard against the risk of any of the
legal representatives of NVC taking any unauthorised action in the future as further described
below.

Powers and Responsibilities of Legal Representatives in China

In accordance with applicable PRC laws, the above legal representative has the following powers
in relation to NVC:

(a) to act as representative of NVC; and

(b) to execute contracts on behalf of NVC, with or without the company seal.

Under the PRC Company Law, the legal representative shall be appointed and removed in
accordance with the articles of association of the company, and the legal representative shall be
either the chairman of the board (or the executive director in case no board is formed in the
company) or the general manager of the company. Any change in the legal representative shall be
registered with the competent authorities. Further, the chairman of the board or the executive
director shall be appointed by the shareholders and the general manager shall be appointed by the
board or the executive director. Therefore, the legal representative can be appointed and removed
by the shareholders or through the appointed board or executive director, with or without the legal
representative’s consent.

Based on the above and the articles of association of NVC, its shareholders, NAM, shall be able to,
either directly or indirectly, control the appointment and dismissal of its legal representatives.
Procedurally, (a) shareholders can execute a new appointment letter and pass a shareholders’
resolution for the appointment of a new legal representative and remove the existing legal
representative, and (b) the new legal representative can sign the application documents and submit
the same to the State Administration of Market Regulation in China, to effect the removal of the
existing legal representative and his/her appointment as the new legal representative.

Considering the impact in the event that a legal representative represents our PRC subsidiaries
without having obtained prior authorisation, we have implemented the following measures in the
event of a change to the legal representative of NVC as well as our other PRC subsidiaries:

(a) the implementation of internal control systems to ensure that payments require proper
approvals;

(b) the company seals, business licences and cheque books of our PRC subsidiaries are kept by
a different designated personnel (who is not the legal representative or related to the legal
representative of our PRC subsidiaries) under secured storage and the legal representative
and other authorised personnel are required to sign in and out of the registries which maintain
records for these company seals, business licences and cheque books when accessing them;

269
(c) ensuring the segregation of cash management duties, including receipt and payment
procedures;

(d) the maintenance of a register in relation to the legal representatives of our PRC subsidiaries
reflecting all other appointments and/or business interests (e.g. directorships, sole
proprietorships, partnerships, or shareholdings above 5.0%) of the legal representative
outside of our Group;

(e) the documents which are required to be registered with the relevant authorities to effect a
change of legal representative, as advised by our Company’s legal advisers as to PRC law,
have been executed and affixed with the company’s seal (where necessary) and left undated
and will be kept in escrow with the Company Secretary in Singapore prior to the date of Listing;

(f) relevant resolutions by the directors and shareholders, as well as the letter of powers of
attorney by the legal representatives, which grant to the Directors, the authority to take into
custody all necessary company seals and licences, and carry out the duties as the new legal
representative such that the business operations are not disrupted, have been executed and
affixed with the company’s seal (where necessary) and left undated and will be kept in escrow
with the Company Secretary in Singapore prior to the date of Listing; and

(g) the legal representatives undertake to seek the approval of our Nominating Committee to
assume any executive roles outside of our Group.

In view of the above and on the basis that the above measures are adhered to, our Board and our
Company’s legal adviser as to PRC law are of the opinion that the measures are adequate to
mitigate the risks in relation to the appointment of legal representatives and safeguard the interests
of our Group. Our Audit and Risk Committee will monitor and periodically review the processes and
procedures in relation to the appointment and removal of the legal representatives of our PRC
subsidiaries to ensure their effectiveness and robustness.

FAMILY RELATIONSHIP/ARRANGEMENT OR UNDERSTANDING

Save as disclosed below, there are no family relationships among any of our Directors, Executive
Officers or Substantial Shareholders.

Dr Shi Xu, our Executive Chairman, is also our Controlling Shareholder. Save for the foregoing,
there are no arrangements or understandings with any person pursuant to which any of our
Directors or Executive Officers were selected.

Mdm Jin Xiao Qun, the spouse of Dr Shi Xu, is an employee of our Company and holds the position
of Assistant Vice-President of our Company. She is our Company’s corporate affairs and project
manager of our production facilities. Mdm Jin Xiao Qun also has overall oversight for our Shanghai
Plant 1 as well as the on-going renovation of our Shanghai Plant 2.

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The compensation, in bands of S$50,000, we paid to Mdm Jin Xiao Qun (in terms of compensation)
for services rendered by her in all capacities to our Group for the financial years ended
31 December 2018 and 2019 is as follows:

Financial year ended 31 December

2018 2019

Name Actual(1)

Mdm Jin Xiao Qun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A A

Notes:

(1) Compensation includes any benefits in kind and any deferred compensation accrued for the relevant financial year and
payable at a later date.

(2) Remuneration bands:

“A” refers to remuneration greater than the equivalent of S$450,000 and less than or equal to S$500,000.

PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF OUR DIRECTORS AND EXECUTIVE

OFFICERS

The present and past principal directorships held by our Directors and Executive Officers in the last
five years preceding the Latest Practicable Date (excluding those held in our Company) are set out
in “Appendix H—List of Present and Past Principal Directorships of our Directors and Executive
Officers”.

SERVICE AGREEMENTS

Executive Chairman

The service agreement of our Executive Chairman, Dr Shi Xu, provides for compensation in the
form of a fixed monthly salary and a variable and discretionary performance bonus which may be
awarded from time to time during the continuance of his employment, to be determined by our
Board at its absolute discretion, based on his performance.

The service agreement of our Executive Chairman does not have a fixed term and contains
termination provisions, pursuant to which either party to the agreement may terminate his
employment by giving two months’ prior written notice or by paying (in the case of our Company) or
forfeiting (in the case of our Executive Chairman) two months’ salary in lieu of notice. We may also
terminate his employment, with written notice, under certain specified conditions, which include,
inter alia, the wilful and continued failure substantially to perform the services under the terms and
conditions of the service agreement (other than as a result of illness or injury), acts of fraud or
embezzlement by him or him being formally charged for a crime involving insobriety, gross
impropriety, misconduct, dishonesty or violence by a court of competent authority or gross
misconduct by him that is wilful and results in damage to the business or reputation of our
Company.

The service agreement of our Executive Chairman also contains non-compete provisions that apply
for the duration of the service agreement and for two years following the cessation of his
employment with our Company and prohibit, inter alia, the solicitation of services or business from
any person who at any time during his period of service to our Company was a customer, client,
agent, correspondent, officer, manager or employee of our Group (as the case may be), and the
participation in any competing business (other than as a holder of not more than 5% of the issued
shares or debentures of any company listed on any recognised stock exchange).

271
The service agreement also provides that all discoveries or inventions made by our Executive
Chairman or secret process or improvements discovered by him during his employment with our
Company shall belong to our Company. In addition, the service agreement contains restrictions on
the disclosure of our confidential information, including trade secrets, working of any process,
technology, invention, know-how and discovery or any other information of a confidential nature
relation to our Group.

Chief Executive Officer

The service agreement of our Chief Executive Officer, Mr Lee Liang Huang, provides for
compensation in the form of a fixed monthly salary and a variable and discretionary performance
bonus which may be awarded from time to time during the continuance of his employment, to be
determined by our Board at its absolute discretion, based on his performance.

The service agreement of our Chief Executive Officer does not have a fixed term and contains
termination provisions, pursuant to which either party to the agreement may terminate his
employment by giving two months’ prior written notice or by paying (in the case of our Company) or
forfeiting (in the case of our Chief Executive Officer) two months’ salary in lieu of notice. We may
also terminate his employment, with written notice, under certain specified conditions, which
include, inter alia, the wilful and continued failure substantially to perform the services under the
terms and conditions of the service agreement (other than as a result of illness or injury), acts of
fraud or embezzlement by him or him being formally charged for a crime involving insobriety, gross
impropriety, misconduct, dishonesty or violence by a court of competent authority or gross
misconduct by him that is wilful and results in damage to the business or reputation of our
Company.

The service agreement of our Chief Executive Officer also contains non-compete provisions that
apply for the duration of the service agreement and for one year following the cessation of his
employment with our Company and prohibit, inter alia, the solicitation of services or business from
any person who at any time during his period of service to our Company was a customer, client,
agent, correspondent, officer, manager or employee of our Group (as the case may be), and the
participation in any competing business (other than as a holder of not more than 5% of the issued
shares or debentures of any company listed on any recognised stock exchange).

The service agreement also provides that all discoveries or inventions made by our Chief Executive
Officer or secret process or improvements discovered by him during his employment with our
Company shall belong to our Company. In addition, the service agreement contains restrictions on
the disclosure of our confidential information, including trade secrets, working of any process,
technology, invention, know-how and discovery or any other information of a confidential nature
relation to our Group.

Chief Technology Officer

The service agreement of our Chief Technology Officer, Mr Lars Ralf Rainer Lieberwirth, provides
for compensation in the form of a fixed monthly salary and a variable and discretionary performance
bonus which may be awarded from time to time during the continuance of his employment, to be
determined by our Board at its absolute discretion, based on his performance.

The service agreement of our Chief Technology Officer does not have a fixed term and contains
termination provisions, pursuant to which either party to the agreement may terminate his
employment by giving two months’ prior written notice or by paying (in the case of our Company) or
forfeiting (in the case of our Chief Technology Officer) two months’ salary in lieu of notice. We may
also terminate his employment, with written notice, under certain specified conditions, which
include, inter alia, the wilful and continued failure substantially to perform the services under the
terms and conditions of the service agreement (other than as a result of illness or injury), acts of

272
fraud or embezzlement by him or him being formally charged for a crime involving insobriety, gross
impropriety, misconduct, dishonesty or violence by a court of competent authority or gross
misconduct by him that is wilful and results in damage to the business or reputation of our
Company.

The service agreement of our Chief Technology Officer also contains non-compete provisions that
apply for the duration of the service agreement and for two years following the cessation of his
employment with our Company and prohibit, inter alia, the solicitation of services or business from
any person who at any time during his period of service to our Company was a customer, client,
agent, correspondent, officer, manager or employee of our Group (as the case may be), and the
participation in any competing business (other than as a holder of not more than 5% of the issued
shares or debentures of any company listed on any recognised stock exchange).

The service agreement also provides that all discoveries or inventions made by our Chief
Technology Officer or secret process or improvements discovered by him during his employment
with our Company shall belong to our Company. In addition, the service agreement contains
restrictions on the disclosure of our confidential information, including trade secrets, working of any
process, technology, invention, know-how and discovery or any other information of a confidential
nature relation to our Group.

Save for our Executive Chairman and Chief Executive Officer, we have not entered into a service
agreement with any of our Directors.

None of our Directors (including our Executive Chairman and Chief Executive Officer) has entered,
or proposes to enter, into service agreements with our Company or any subsidiary or subsidiary
entity of our Group which provides for benefits upon termination of employment.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The compensation, in bands of S$250,000, we paid to each of our Directors and our Executive
Officers (in terms of compensation) for services rendered by them in all capacities to our Group for
the financial years ended 31 December 2018 and 2019 and paid and expected to be payable by our
Company and our subsidiaries to each of these Directors and Executive Officers for services to be
rendered by them in all capacities to our Group for the financial year ending 31 December 2020, is
as follows:

Financial year
Financial year ended ending
31 December 31 December

2018 2019 2020

Actual(1) Estimated(1)

Directors
Dr Shi Xu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E C C
Mr Lee Liang Huang . . . . . . . . . . . . . . . . . . . . . . . . C C F
Ms Ong Siew Koon @ Ong Siew Khoon . . . . . . . . . — — A
Mr James Rowan . . . . . . . . . . . . . . . . . . . . . . . . . . — — A
Mr Kristian John Robinson . . . . . . . . . . . . . . . . . . . — — A
Ms Lee Lee Khoon . . . . . . . . . . . . . . . . . . . . . . . . . — — A

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 Financial year
Financial year ended ending
31 December 31 December

2018 2019 2020

Actual(1) Estimated(1)

Executive Officers
Mr Lee Liang Huang . . . . . . . . . . . . . . . . . . . . . . . . See above See above See above
Mr Lim Kian Onn. . . . . . . . . . . . . . . . . . . . . . . . . . . — A B
Mr Gary Ho Hock Yong. . . . . . . . . . . . . . . . . . . . . . B B E
Mr Ricky Tan Chong Ho . . . . . . . . . . . . . . . . . . . . . — — B
Mr Lars Ralf Rainer Lieberwirth . . . . . . . . . . . . . . . A A B

Notes:
(1) Compensation includes any benefits in kind (including Award Shares granted under the RSP (as defined herein) and
based on the fair value of such Award Shares at the date of issuance) and any deferred compensation accrued for the
relevant financial year and payable at a later date.
(2) Remuneration bands:

“A” refers to remuneration less than or equal to the equivalent of S$250,000.

“B” refers to remuneration greater than the equivalent of S$250,000 and less than or equal to S$500,000.

“C” refers to remuneration greater than the equivalent of S$500,000 and less than or equal to S$750,000.

“D” refers to remuneration greater than the equivalent of S$750,000 and less than or equal to S$1,000,000.

“E” refers to remuneration greater than the equivalent of S$1,000,000 and less than or equal to S$1,250,000.

“F” refers to remuneration greater than the equivalent of S$1,250,000 and less than or equal to S$1,500,000.

In July 2020, Mr Lee Liang Huang and Mr Gary Ho Hock Yong exercised their options granted under
the Pre-IPO ESOS, pursuant to which 2,170,000 Shares and 400,000 Shares were issued to
Harrymore International Limited (to be held for the account of Mr Lee Liang Huang and Mr Gary Ho
Hock Yong) for an aggregate consideration of approximately S$1.3 million and S$0.2 million,
respectively. In addition, certain of our Executive Officers have outstanding options under the
Pre-IPO ESOS, details of which are set out below. The value of these options has not been included
in computing the compensation of the relevant Directors and Executive Officers:

No. of Shares in respect

of which outstanding
options have been Exercise price
granted Exercise period Expiration date (S$)

Executive Officers
Mr Lim Kian Onn . . . . . 100,000 1 July 2020— 30 June 2026 0.5868
30 June 2026
200,000 1 July 2021— 30 June 2026 0.5868
30 June 2026
200,000 1 July 2022— 30 June 2026 0.5868
1 July 2026
Mr Gary Ho Hock 1,175,000 1 July 2018— 2 April 2023 0.5927
Yong . . . . . . . . . . . . . . 2 April 2023
525,000 1 July 2019— 2 April 2023 0.5927
2 April 2023

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 No. of Shares in respect
of which outstanding
options have been Exercise price
granted Exercise period Expiration date (S$)

Mr Ricky Tan Chong 334,000 1 July 2020— 30 June 2026 0.5868

Ho . . . . . . . . . . . . . . . . 30 June 2026
333,000 1 July 2021— 30 June 2026 0.5868
30 June 2026
333,000 1 July 2022— 30 June 2026 0.5868
30 June 2026
Mr Lars Ralf Rainer 100,000 1 December 27 December 0.5868
Lieberwirth . . . . . . . . . 2020— 2024
27 December
2024
100,000 1 December 27 December 0.5868
2021— 2024
27 December
2024
100,000 1 July 2021— 30 June 2026 0.5868
30 June 2026
100,000 1 July 2022— 30 June 2026 0.5868
30 June 2026
100,000 1 July 2023— 30 June 2026 0.5868
30 June 2026

Save as disclosed above, none of our Directors, Executive Officers, Controlling Shareholders, or
their associates have outstanding options under the Pre-IPO ESOS.

Our Company does not have in place any formal bonus or profit-sharing plan or any other
profit-linked agreement or arrangement with any of our employees, and bonuses are expected to be
paid on a discretionary basis.

Other than amounts set aside or accrued for compliance with applicable Singapore, PRC and
Vietnam laws and regulations and as disclosed in the section entitled “Management’s Discussion
and Analysis of Results of Operations and Financial Position—Principal components of our
Consolidated statement of profit or loss and other comprehensive income—Administrative
Expenses”, no amounts have been set aside or accrued by our Company or our subsidiaries or our
subsidiary entity not set aside or accrued any amounts for our Directors and Executive Officers to
provide for pension, retirement or similar benefits.

NANOFILM PRE-IPO RESTRICTED SHARE PLAN 2020

The Nanofilm Pre-IPO Restricted Share Plan 2020 (“RSP”) was approved and adopted by our
Company on 9 March 2020. The RSP is administered by a committee comprising directors of our
Company who have been authorised and appointed by our Board.

Pursuant to the rules of the RSP, Shares which are allotted and issued pursuant to the release of
awards granted under the RSP (“Award Shares”) may be allotted and issued to Harrymore
International Limited for the account of the relevant employees. As at the date of this Prospectus,
Harrymore International Limited holds 5,254,000 Award Shares for the account of certain of our
employees, 11,009,000 Shares allotted and issued pursuant to the exercise of options granted
under the Pre-IPO ESOS for the account of certain of our employees (the “Harrymore ESOS
Shares”) and 47,684,560 Shares for its own account.

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In this regard, our Company had on 9 March 2020 entered into a nominee agreement with
Harrymore International Limited (the “Nominee Agreement”). Mdm Jin Xiao Qun, the spouse of
our Controlling Shareholder and Executive Chairman, Dr Shi Xu is interested in approximately
44.1% of the voting shares of Harrymore International Limited as at the Latest Practicable Date and
accordingly, Harrymore International Limited is an associate of Dr Shi Xu and an interested person.
Pursuant to the Nominee Agreement, Harrymore International Limited has agreed to, among
others, (i) hold all Award Shares registered in its name and their related interests and benefits for
the account of the relevant employees, as nominee of, and for the benefit of such employee;
(ii) account and pay to the relevant employee to whom Award Shares are released, all cash
dividends and other cash distribution attributable to such Award Shares as and when such payment
is made; and (iii) exercise its voting rights in relation to the Award Shares which are registered in
its name, in such manner as it deems fit (or not to vote at all) without reference to or consultation
with the relevant employee.

In addition, our Company has agreed to indemnify and keep Harrymore International Limited fully
indemnified against all claims, losses, demands, actions, proceedings, charges, expenses, costs,
damages, taxes, duties and other liabilities that may be suffered or properly incurred by it in
connection with the performance of the RSP and the Nominee Agreement other than liabilities
arising as a consequence of fraud, wilful misconduct or negligence of Harrymore International
Limited.

Upon Listing, all of the Award Shares will be transferred to the relevant employees or their
assignees. In this regard, our Company and Harrymore International Limited have on 2 October
2020 entered into a deed of termination, pursuant to which the Nominee Agreement will be
terminated upon completion of the transfer of the Award Shares and the Harrymore ESOS Shares
to the relevant employees or their assignees.

The Nominee Agreement was not entered into on an arm’s length basis and was not carried out on
normal commercial terms as no consideration was paid to our Company. Nevertheless, our
Directors are of the opinion that the above transaction was not prejudicial to our Group and our
minority Shareholders.

The RSP will terminate on the Listing Date and no further awards will be granted thereunder. No
awards under the RSP are outstanding as at the Latest Practicable Date.

NANOFILM PRE-IPO EMPLOYEE SHARE OPTION SCHEME 2017

The Pre-IPO ESOS was approved and adopted by our Company on 6 February 2017 and
subsequently amended on 29 October 2018 and further amended on 5 September 2019. The
Pre-IPO ESOS is administered by a committee comprising directors of our Company who have
been authorised and appointed by our Board.

Under the rules of the Pre-IPO ESOS, Shares alloted and issued pursuant to the exercise of options
granted under the Pre-IPO ESOS may be alloted and issued to Harrymore International Limited for
the account of the relevant employees. Upon Listing, all of the Harrymore ESOS Shares will be
transferred to the relevant employees or their assignees.

The Pre-IPO ESOS will terminate on the Listing Date and no further options will be granted
thereunder. The termination of the Pre-IPO ESOS does not prejudice the rights of holders holding
options which have been granted and accepted under the Pre-IPO ESOS prior to its termination.

As at the date of this Prospectus, options in respect of a total of 33,142,000 Shares have been
granted under our Pre-IPO ESOS to a total of 171 of our current employees, of which 11,327,000
are still outstanding. Each employee was required to pay a consideration of S$1.00 upon
acceptance of the offer of options.

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Details of the outstanding options held by such employees (other than our Executive Officers,
details of which have been set out under “—Compensation for our Directors and Executive Officers”
above), including the exercise prices payable upon the exercise of such outstanding options and
the applicable exercise periods, are set out in Appendix E of this Prospectus.

NANOFILM EMPLOYEE SHARE OPTION SCHEME

On 9 October 2020, our Shareholders approved a share based incentive plan known as the
Nanofilm Employee Share Option Scheme (the “ESOS”), details of which are set out below and in
Appendix E of this Prospectus. As at the Latest Practicable Date, no options have been granted
under the ESOS.

Objective of the Nanofilm Employee Share Option Scheme

The ESOS is a share incentive scheme. The ESOS is proposed on the basis that it is important to
retain staff whose contributions are essential to the well-being and prosperity of our Group and to
give recognition to outstanding employees and directors of our Group who have contributed to the
growth of our Group. The ESOS will give participants an opportunity to have a personal equity
interest in our Company and will help to achieve the following positive objectives:

(a) to motivate the participant to optimise his performance standards and efficiency and to
maintain a high level of contribution to our Group;

(b) to retain key executives and executive directors of our Group whose contributions are
essential to the long-term growth and profitability of our Group;

(c) to instil loyalty to, and a stronger identification by employees with the long-term prosperity of,
our Company;

(d) to attract potential employees with relevant skills to contribute to our Group and to create
value for our Shareholders;

(e) to align the interests of employees with the interests of our Shareholders; and

(f) to give recognition to the contributions made or to be made by our Group Non-Executive
Directors to the success of our Group.

Summary of the ESOS

A summary of the rules of the ESOS is set out as follows:

1. Participants

The following persons shall be eligible to participate in the ESOS at the absolute discretion of
our Remuneration Committee:

(a) Group Employees who have attained the age of twenty-one (21) years and hold such
rank as may be designated by our Remuneration Committee from time to time;

(b) Group Non-Executive Directors who, in the opinion of our Remuneration Committee,
have contributed or will contribute to the success of our Group; and

(c) Controlling Shareholders and Associates of Controlling Shareholders who qualify under
paragraph (a) or (b) above.

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 Controlling Shareholders of our Company and their associates who qualify as described
above are eligible to participate in the ESOS, if their participation in the ESOS and terms of the
options are approved by independent Shareholders in separate resolutions for each such
person and for each such option. We recognise that their participation in the ESOS will serve
not only as recognition of their valuable contributions to our Group but also give them a stake
in the future performance of our Group which will motivate them to continue to achieve and
maintain a high level of performance which is vital to the success of our Group.

2. Scheme administration

The ESOS shall be administered by our Remuneration Committee (See

“Management—Directors—Committees of Our Board—Our Remuneration Committee”) with
powers to determine, inter alia, the following:

(a) persons to be granted options;

(b) number of options to be granted; and

(c) modifications to the ESOS.

A member of our Remuneration Committee who is also a participant of the ESOS must not be
involved in its deliberation in respect of options granted or to be granted to him.

3. Size of the ESOS

The total number of Shares over which our Remuneration Committee may grant new options
on any date, when added to:

(a) the total number of new Shares issued allotted and issued and/or to be allotted and
issued and issued Shares (including treasury shares) delivered and/or to be delivered,
pursuant to share options already granted under the ESOS; and

(b) the total number of Shares subject to any other share option or share schemes adopted
by our Company after the Listing,

shall not exceed 5.0% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares and subsidiary holdings) on the date preceding the date of grant
of the relevant new option.

The total number of Shares which may be delivered pursuant to the exercise of options
granted under the ESOS to Controlling Shareholders and/or associates of Controlling
Shareholders, shall not exceed 25% of the total number of Shares available under the ESOS.

The total number of Shares which may be delivered pursuant to the exercise of options
granted under the ESOS to each Controlling Shareholder and each associate of a Controlling
Shareholder, shall not exceed 10% of the total number of Shares available under the ESOS.

Our Company believes that the foregoing 5% limit gives our Company sufficient flexibility to
decide the number of Option Shares to offer to eligible participants. The number of eligible
participants is expected to grow over the years. Our Company, in line with its goals of ensuring
sustainable growth, is constantly reviewing its position and considering the expansion of its
talent pool which may involve employing new employees. The employee base, and thus the
number of eligible participants will increase as a result.

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 If the number of options available under the ESOS is limited, our Company may only be able
to grant a small number of options to each eligible participant which may not be a sufficiently
attractive incentive. Our Company is of the opinion that it should have sufficient number of
options to offer to eligible participants, including new employees as well as existing ones. The
number of options offered must also be significant enough to serve as a meaningful reward for
contributions to our Group.

However, it does not necessarily mean that our Remuneration Committee will definitely issue
Option Shares up to the prescribed limit. Our Remuneration Committee shall exercise its
discretion in deciding the number of Option Shares to be granted to each participant which will
depend on the performance and value of the participant to our Group.

4. Maximum entitlements

The number of Shares comprised in options to be offered to a participant shall be determined

at the absolute discretion of our Remuneration Committee, which shall take into account such
criteria as it considers fit, including (but not limited to) his rank, job performance, years of
service, potential for future development and his contribution to the success and development
of our Group.

5. Options, exercise period and acquisition price

The options that are granted under the ESOS may have acquisition prices that are, at our
Remuneration Committee’s discretion, set at a price equal to the volume-weighted average
price for the Shares on the SGX-ST over the three consecutive trading days immediately
preceding the date of grant of that option, as determined by our Remuneration Committee by
reference to the daily official list or any other publication published by the SGX-ST (the
“Market Price”); or at a discount to the Market Price (subject to a maximum discount of 20%).
In accordance with the Listing Manual, options which are fixed at the Market Price (“Market
Price Option”) may be exercised on a date falling on or after the first anniversary of the date
on which an offer to grant that option is made while options exercisable at a discount to the
Market Price may be exercised on a date falling on or after the second anniversary from the
date on which an offer to grant that option is made (“Discount Price Option”).

Subject to the foregoing, our Company may, if it deems fit, impose conditions on the exercise
of the options, such as restricting the number of Shares for which the option may be exercised
during the initial years following its vesting. Options granted under the ESOS will have a life
span of 10 years for options granted to Group Employees and Controlling Shareholders and
Associates of Controlling Shareholders who qualify as described above and five years for
options granted to Group Non-Executive Directors.

6. Grant of options

Under the rules of the ESOS, there are no fixed periods for the grant of options. As such, offers
of the grant of options may be made at any time from time to time at the discretion of our
Remuneration Committee. However, in the event that an announcement on any matter of an
exceptional nature involving unpublished price sensitive information is made, offers may only
be made on or after the fourth market day after the date on which such announcement is
released.

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7. Termination of options

Special provisions for the vesting and lapsing of options apply in certain circumstances
including the following:

(i) an order being made for the winding-up of our Company on the basis, or by reason, of its
insolvency;

(ii) the misconduct on the part of the participant as determined by our Remuneration
Committee in its discretion;

(iii) the participant ceasing to be in the employment of our Group for any reason whatsoever
(other than as specified in paragraph (v) below);

(iv) the bankruptcy of a participant or the happening of any other event which results in his
being deprived of the legal or beneficial ownership of the option;

(v) the participant ceases at any time to be in the employment of our Group by reason of:

(1) ill health, injury or disability (in each case, evidenced to the satisfaction of our
Remuneration Committee);

(2) redundancy;

(3) retirement at or after the legal retirement age;

(4) retirement before the legal retirement age with the consent of our Remuneration
Committee;

(5) the company by which he is employed or to which he is seconded, as the case may
be, ceasing to be a company within our Group, or the undertaking or part of the
undertaking of such company being transferred otherwise than to another company
within our Group;

(6) his transfer to any Ministry, governmental or statutory body or corporation at the
direction of our Company; or

(7) any other event approved by our Remuneration Committee;

(vi) any other event approved by our Remuneration Committee; or

(vii) a take-over, reconstruction or amalgamation of our Company or an order being made or

a resolution passed for the winding-up of our Company (other than as provided in
paragraph (i) above or for amalgamation or reconstruction).

Upon the occurrence of any of the events specified in paragraphs (i), (ii) and (iii), an option
then held by a participant shall, subject as provided in the rules of the ESOS and to the extent
unexercised, immediately lapse without any claim whatsoever against our Company.

Upon the occurrence of any of the events specified in paragraphs (iv), (v) and (vi) above, our
Remuneration Committee may, in its absolute discretion, preserve all or any part of any option
in accordance with the rules of the ESOS. Our Remuneration Committee, in exercising such
discretion, may allow the option to be exercised at any time, notwithstanding that the date of
exercise of such option falls on a date prior to the first day of the exercise period in respect of
such option.

280
 Upon the occurrence of the event specified in paragraph (vii) above, a participant shall be
entitled to exercise in full or in part any option then held by him and as yet unexercised, during
the periods prescribed under the rules of ESOS. To the extent that an option is not exercised
within such prescribed periods, the option shall lapse and become null and void. If, in
connection with any of the events specified in paragraph (vii) above, arrangements are made
for the compensation of participants, whether by the continuation of their options or the
payment of cash or the grant of other options or otherwise, a participant holding an option, as
yet not exercised, may not, at the discretion of our Remuneration Committee, be permitted to
exercise that option.

8. Acceptance of options

The grant of options shall be accepted within 30 days from the date of the offer. Offers of
options made to grantees, if not accepted before the closing date, will lapse. Upon acceptance
of the offer, the grantee must pay our Company a consideration of S$1.00.

9. Rights of shares arising

Subject to the Companies Act and the rules of the Listing Manual, our Company shall have the
flexibility to deliver Shares to participants upon the exercise of their options by way of either
(i) an allotment of new Shares; and/or (ii) the transfer of existing Shares, including any Shares
held by our Company in treasury.

In determining whether to allot new Shares to participants upon the exercise of their options,
our Company will take into account factors such as (but not limited to) the number of Shares
to be delivered, the prevailing market price of the Shares and the cost to our Company of
allotting new Shares or transferring existing Shares.

The financial effects of the above methods are discussed below.

Shares arising from the exercise of options shall be subject to the provisions of our
Constitution, and rank in full for all entitlements, including dividends or other distributions
declared or recommended in respect of the then existing Shares, the record date for which is
on or after the later of (a) the relevant date upon which such exercise occurred; and (b) the
date of issue of the Shares, and shall in all respects rank pari passu with other existing Shares
then in issue.

10. Duration of the ESOS

The ESOS shall continue to be in force for a maximum period of 10 years and may continue
beyond the above stipulated period with the approval of our Shareholders by ordinary
resolution in general meeting and of any relevant authorities which may then be required.

11. Abstention from voting

Shareholders who are eligible to participate in the ESOS are to abstain from voting on any
shareholders’ resolution relating to the ESOS, including any shareholders’ resolution relating
to the implementation of the ESOS, or the making of offers and grants of options under the
ESOS at a discount not exceeding the maximum discount, or the participation by, and options
granted to, Controlling Shareholders and their associates, and should not accept nominations
as proxy or otherwise for voting unless specific instructions have been given in the proxy form
on how the vote is to be cast.

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Rationale for participation of Group Non-Executive Directors in the ESOS

The extension of the ESOS to Group Non-Executive Directors allows our Group to have a fair and
equitable system to reward such Group Non-Executive Directors who are not employed within our
Group but work closely with our Group and who have made and who continue to make significant
contributions to the long-term growth of our Group.

We recognise that it is important to the well-being and stability of our Group that we acknowledge
the services and contributions made by Group Non-Executive Directors, and that we continue to
receive their support and contributions. In particular, Group Non-Executive Directors are persons
who are able to provide us with valuable support, input and business contacts, and also provide us
with strategic or significant business alliances or opportunities.

Although Group Non-Executive Directors are not involved in the day-to-day running of our Group’s
business, they, nonetheless, play an invaluable role in furthering the business interests of our
Group by contributing their experience and expertise. The participation by Group Non-Executive
Directors in the ESOS will provide our Company with a further avenue to acknowledge and
recognise their services and contributions to our Group as it may not always be possible to
compensate them fully or appropriately by increasing the directors’ fees or other forms of cash
payment. By implementing the ESOS, we will have a means of providing Group Non-Executive
Directors who, while they are not employees of our Group, are nevertheless closely associated with
our Group and our business operations, with an opportunity to share in the success and
achievements of our Group as well as the performance of our Group through participating in the
equity of our Company.

Adjustment Events under the ESOS

If a variation in the ordinary share capital of our Company (whether by way of a capitalisation of
profits or reserves or rights issue, reduction, subdivision, consolidation, distribution or otherwise)
shall take place or if our Company shall make a capital distribution or a declaration of a special
dividend (whether in cash or in specie), then our Remuneration Committee may, in its sole
discretion, determine whether:

(i) the acquisition price of the Shares, class and/or number of Shares comprised in an option to
the extent unexercised; and/or

(ii) the class and/or number of Shares in respect of which future options may be granted under the
ESOS,

shall be adjusted and if so, the manner in which such adjustments should be made. Any adjustment
must be made in a way that a participant will not receive a benefit that a Shareholder does not
receive.

Unless our Remuneration Committee considers an adjustment to be appropriate, the following shall
not normally be regarded as a circumstance requiring adjustment:

(a) the issue of securities as consideration for an acquisition or a private placement of securities,
or upon the exercise of any options or conversion of any loan stock or any other securities
convertible into Shares;

(b) subscription rights of any warrants; or

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(c) the cancellation of issued Shares purchased or acquired by our Company by way of a market
purchase of such Shares undertaken by our Company on the SGX-ST during the period when
a share purchase mandate granted by Shareholders (including any renewal of such mandate)
is in force.

Any adjustment (except in relation to a bonus issue) must be confirmed in writing by our Company’s
auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and reasonable.

Grant of options with a discounted acquisition price

The ability to offer options to participants of the ESOS with acquisition prices set at a discount to the
prevailing market prices of the Shares will operate as a means to recognise the performance of
participants as well as to motivate them to continue to excel while encouraging them to focus more
on improving the profitability and return of our Group above a certain level which will benefit all
Shareholders when these are eventually reflected through share price appreciation. The ESOS will
also serve to recruit new employees whose contributions are important to the long-term growth and
profitability of our Group. Discounted options would be perceived in a more positive light by the
participants, inspiring them to work hard and produce results in order to be offered options at a
discount as only participants who have made outstanding contributions to the success and
development of our Group would be granted options at a discount.

At present, our Company foresees that options may be granted with a discount principally in the
following circumstances:

(a) firstly, where it is considered more effective to reward and retain talented individuals by way
of a discounted price option rather than a market price option. This is to reward the
outstanding performers who have contributed significantly to our Group’s performance and
the discounted price option serves as additional incentives to such participants. Options
granted by our Company on the basis of market price may not be attractive and realistic in the
event of an overly buoyant market and inflated share prices. Hence, during such period, the
ability to offer such options at a discount would allow our Company to grant options on a more
realistic and economically feasible basis. Furthermore, options granted at a discount will give
an opportunity to participants to realise some tangible benefits even if external events cause
the share price to remain largely static;

(b) secondly, where it is more meaningful and attractive to acknowledge a participant’s

achievements through a discounted price option rather than paying him a cash bonus. For
example, options granted at a discount may be used to compensate participants and to
motivate them during economic downturns when wages (including cash bonuses and annual
wage supplements) are frozen or cut, or they could be used to supplement cash rewards in
lieu of larger cash bonuses or annual wage supplements. Accordingly, it is possible that
merit-based cash bonuses or rewards may be combined with grants of market price options or
discounted price options, as part of eligible participants’ compensation packages. The ESOS
will also provide participants with an incentive to focus more on improving the profitability of
our Group thereby enhancing shareholder value when these are eventually reflected through
the price appreciation of the Shares after the vesting period; and

(c) thirdly, where due to speculative forces and having regard to the historical performance of the
Share price, the market price of the Shares at the time of the grant of the options may not be
reflective of financial performance indicators such as return on equity and/or earnings growth.

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Our Remuneration Committee will have the absolute discretion to grant options where the
acquisition price is discounted, to determine the level of discount (subject to a maximum discount
of 20% of the Market Price) and the grantees to whom, and the options to which, such discount in
the acquisition price will apply provided that our Shareholders in general meeting shall have
authorised, in a separate resolution, the making of offers and grants of options under the ESOS at
a discount not exceeding the maximum discount as aforesaid.

In deciding whether to give a discount and the quantum of such discount (subject to the aforesaid
limit), our Remuneration Committee shall be at liberty to take into consideration such criteria as our
Remuneration Committee may, in its absolute discretion, deem appropriate, including but not
limited to the performance of our Group, the years of service and the individual performance of the
participant, the contribution of the participant to the success and development of our Company
and/or our Group and the prevailing market conditions.

Our Company may also grant options without any discount to the market price. Additionally, our
Company may, if it deems fit, impose conditions on the exercise of the options (whether such
options are granted at the market price or at a discount to the market price), such as restricting the
number of Shares for which the option may be exercised during the initial years following its
vesting.

Financial Effects of the ESOS

The ESOS will increase our issued share capital to the extent of the new Shares that will be allotted
pursuant to the exercise of options. Under the SFRS(I) 2, the fair value of employee services
received in exchange for the grant of the options would be recognised as an expense. For
equity-settled share-based payment transactions, the total amount to be expensed in the income
statement over the vesting period is determined by reference to the fair value of each options
granted at the grant date and the number of options vested by vesting date, with a corresponding
increase in equity.

Before the end of the vesting period, at each balance sheet date, the entity revises its estimates of
the number of options that are expected to vest by the vesting date and recognises the impact of
this revision in the income statement with a corresponding adjustment to equity. After the vesting
date, no adjustment to the income statement would be made. The proceeds net of any directly
attributable transaction costs are credited to the share capital when the options are exercised.

During the vesting period, the consolidated earnings per share would be reduced by both the
expense recognised and the potential ordinary shares to be issued under the share option scheme.
When the options are exercised, the consolidated net tangible assets (“NTA”) will be increased by
the amount of cash received for exercise of the options. On a per share basis, the effect is accretive
if the acquisition price is above the NTA per share but dilutive otherwise.

There will be no cash outlay expended by us at the time of grant of such options as compared to the
payment of cash bonuses. However, as Shareholders may be aware, any options granted to
subscribe for new shares (whether the acquisition price is set at the market price of the shares at
the date of grant or otherwise) have a fair value at the time of grant. The fair value of an option is
an estimate of the amount that a willing buyer would pay a willing seller for the option on the grant
date. Options are granted to participants at a nominal consideration of S$1.00. Insofar as such
options are granted at a consideration that is less than their fair value at the time of grant, there will
be a cost to our Company in that we will receive from the participant upon the grant of the option a
consideration that is less than the fair value of the option.

284
The following sets out the financial effects of the ESOS:

(a) Share capital

The ESOS will result in an increase in our Company’s issued share capital when new Shares
are allotted to participants. The number of new Shares allotted will depend on, inter alia, the
size of the options granted under the ESOS. Whether and when the options granted under the
ESOS will be exercised will depend on the acquisition price of the options, when the options
will vest as well as the prevailing trading price of the Shares. In any case, the ESOS provides
that the total number of Shares over which our Remuneration Committee may grant new
options on any date, when added to:

(i) the total number of new Shares allotted and issued and/or to be allotted and issued and
issued Shares (including treasury shares) delivered and/or to be delivered, pursuant to
share options already granted under the ESOS; and

(ii) the total number of Shares subject to any other share option or share schemes adopted
by our Company after the Listing,

shall not exceed 5% of the total number of issued Shares (excluding Shares held by our
Company as treasury shares and subsidiary holdings) on the date preceding the date of grant
of the relevant new option. If instead of allotting new Shares to participants, existing Shares
are transferred to participants, the ESOS will have no impact on our Company’s issued share
capital.

(b) NTA

As described in paragraph (c) below on EPS, the grant of options will be recognised as an
expense, the amount of which will be computed in accordance with SFRS(I) 2. When new
Shares are allotted pursuant to the exercise of options, there would be no effect on the NTA
due to the offsetting effect of expenses recognised and the increase in share capital.
However, if instead of allotting new Shares to participants, existing Shares are purchased for
transfer to participants, the NTA would be impacted by the cost of the Shares purchased.

(c) EPS

Without taking into account earnings that may be derived by our Company from the use of the
proceeds from the allotment of new Shares pursuant to the exercise of options granted under
the ESOS, any new Shares allotted pursuant to any exercise of the options will have a dilutive
impact on our Company’s EPS.

(d) Dilutive Impact

The allotment of new Shares under the ESOS will have a dilutive impact on our consolidated
EPS.

Application to the SGX-ST

We have made an application to the SGX-ST for permission to deal in and for quotation of the
Option Shares which may be issued upon the exercise of the options to be granted under the ESOS.
The approval of the SGX-ST is not to be taken as an indication of the merits of the ESOS or the
Option Shares.

285
Disclosures in Annual Reports

Our Company will make such disclosures in our annual report for so long as the ESOS continues
in operation as from time to time required by the Listing Manual including the following (where
applicable):

(a) the names of the members of our Remuneration Committee administering the ESOS;

(b) in respect of the following participants of the ESOS:

(i) Directors of our Company;

(ii) participants who are our Controlling Shareholders or associates of our Controlling
Shareholders; and

(iii) participants (other than those in paragraphs (i) and (ii) above) who have been granted
options under the ESOS which, in aggregate, represent 5.0% or more of the total number
of Shares available under the ESOS,

the following information:

(aa) the name of such participant referred to in paragraph (b) above;

(bb) the following particulars relating to options granted under the ESOS:

(1) options granted during the financial year review (including terms);

(2) the aggregate number of Shares comprised in options granted since the
commencement of the ESOS to the end of the financial year under review;

(3) the aggregate number of Shares arising from options exercised since the
commencement of the ESOS to the end of the financial year under review;

(4) the aggregate number of Shares comprised in options outstanding as at the end of
the financial year under review;

(5) the number of new Shares issued to such participant during the financial year under
review; and

(6) the number of new Shares issued to such participant during the financial year under
review; and

(c) the number and proportion of Shares comprised in the options granted under the ESOS during
the financial year under review:

(i) at a discount of 10% or less of the market price in respect of the relevant option; and

(ii) at a discount of more than 10% of the market price in respect of the relevant option.

286
 INTERESTED PERSON TRANSACTIONS AND POTENTIAL CONFLICTS OF INTEREST

INTERESTED PERSON TRANSACTIONS

In general, a transaction between:

(1) an entity at risk (in this case, our Company or any of its subsidiaries or subsidiary entities or
(if certain conditions set out in the definition of “entity at risk” in the SFR are satisfied) any of
the associated companies or associated entities of our Company); and

(2) any of the interested persons of our Company (in this case (i) a Director, (ii) our Chief
Executive Officer, (iii) a Controlling Shareholder of our Company, or (iv) an associate of any
such Director, Chief Executive Officer or Controlling Shareholder),

would constitute an interested person transaction.

Certain terms such as “associate”, “associated company”, “control”, “Controlling Shareholder”,

“interested person” and “interested person transaction” used in this section have the meanings as
provided in the Listing Manual and in the SFR, unless the context specifically requires the
application of the definitions in one or the other as the case may be.

See “Defined Terms and Abbreviations” for the meanings of “associate”, “associated entity”,
“subsidiary” and “subsidiary entity”.

This section and the sections entitled “Dilution—Convertible Notes”, “Management—Nanofilm

Pre-IPO Restricted Share Plan 2020” and “Share Capital and Shareholders–Amendment
Agreement” sets out the past, present and on-going interested person transactions which we
consider to be material in the context of the Offering for the financial years ended 31 December
2017, 2018 and 2019 and for the period from 1 January 2020 until the Latest Practicable Date. Save
as otherwise provided in these sections, investors, upon subscription and/or purchase of the
Offering Shares, are deemed to have specifically approved these transactions with interested
persons and as such these transactions are not subject to Rules 905 and 906 of the Listing Manual
to the extent that there are no subsequent changes to the terms of the agreements in relation to
each of these transactions.

In line with the rules set out in Chapter 9 of the Listing Manual, a transaction which value is less than
S$100,000 is not considered material in the context of the Offering and is not taken into account for
the purposes of aggregation in this section.

PAST INTERESTED PERSON TRANSACTIONS

Details of the past transactions between our Group and interested persons which are material in the
context of the Offering, for the financial years ended 31 December 2017, 2018 and 2019 and for the
period from 1 January 2020 until the Latest Practicable Date are as follows:

Transactions with Shanghai Ji Ding Advanced Material Co Ltd (“Ji Ding”)

Our Company and certain of our subsidiaries, namely NPC and NVC had, from time to time
engaged in various transactions described below with Ji Ding. Mdm Shi Xiu Ying, the sister of our
Controlling Shareholder and Executive Chairman, Dr Shi Xu, had interests in 30% of the voting
shares of Ji Ding and accordingly, Ji Ding was an associate of Dr Shi Xu and an interested person.
For completeness, Dr Shi Xu’s father-in-law, Mr Jin Zhe Ming, held the remaining interests in the
voting shares of Ji Ding. On 13 August 2020, Mdm Shi Xiu Ying and Mr Jin Zhe Ming disposed of
all their shares in Ji Ding to Cao Can Ru, an unrelated third party, and Ji Ding has ceased to be an
interested person.

287
The details of the past transactions between our Group and Ji Ding for the financial years ended
2017, 2018 and 2019 and for the period from 1 January 2020 until the Latest Practicable Date (1) are
as follow:

1 January 2020
Financial year ended 31 December until the Latest
Practicable
2017 2018 2019 Date(1)

(a) Purchase of components,

spare parts and
consumables by our
Company (2) . . . . . . . . . . . . Nil Nil US$124,204 US$117,129
(b) Sales of coating services
by NPC to Ji Ding . . . . . . . Nil Nil RMB2,341,187 RMB5,787,986
(c) Purchase of spray
painting equipment by
NVC from Ji Ding . . . . . . . Nil RMB541,797 Nil Nil

Notes:
(1) This covers transactions between our Group and Ji Ding until 13 August 2020, when Ji Ding ceased to be an interested
person. While our Group continues to carry out similar transactions as those in (b) above with Ji Ding after 13 August
2020, these will be transactions with an unrelated third party.

(2) On 14 August 2020, SNT changed its business scope to allow it to export components, spare parts and consumables
from the PRC which our Company requires in our day to day business operations. Accordingly, our Group will not
continue to carry out similar transactions as those in (a) above with Ji Ding after 25 August 2020.

(a) Purchase of components, spare parts and consumables by our Company

Ji Ding is a trading company that mainly deals in the import and export of components, spare
parts and consumables. Ji Ding’s business scope allows it to export components, spare parts
and consumables from the PRC which our Company and its subsidiaries in Singapore require
in our day to day business operations. Our PRC-incorporated subsidiaries’ business scope
only allows them to export manufactured goods that they produce internally and they are
unable to export such components, spare parts and consumables purchased from third
parties. Accordingly, our Company had entered into the above transactions with Ji Ding to
obtain these products from third party suppliers in the PRC who manufacture such
components, spare parts and consumables. While our Company had the option of purchasing
such components, spare parts and consumables directly from these third party suppliers in
the PRC, we were able to benefit from economies of scale and consequently reduced freight
and transportation costs by consolidating such transactions through Ji Ding and Zun Yi (See
“Interested Person Transactions and Potential Conflicts of Interest—Past Interested Person
Transactions—Transactions with Shanghai Zun Yi International Trading Co Ltd” for further
information). Ji Ding had charged different mark-ups for different components, spare parts
and consumables.

On 14 August 2020, our subsidiary, SNT (formerly known as Shanghai Nanofilm Zaichuang
Automation Co., Ltd) changed its business scope to allow it to export components, spare parts
and consumables from the PRC which our Company requires in our day to day business
operations. Accordingly, our Group ceased to carry out such transactions with Ji Ding after
25 August 2020. As at the Latest Practicable Date, there are no outstanding amounts or
obligations owed by Ji Ding to our Group or owed by our Group to Ji Ding.

288
(b) Sales of coating services by NPC to Ji Ding

Ji Ding also acts as the intermediary between our Company and counterparties associated
with the PRC military for our Company to provide coating services to such military
counterparties. As Ji Ding is an approved vendor to Chongqing Jianshe Industry (Group)
Co Ltd (“Chongqing Jianshe”), a PRC state-owned enterprise associated with the military,
and its affiliated companies, our Group had also entered into transactions with Ji Ding
whereby Ji Ding acted as our Group’s intermediary for the sale of coating solutions from NPC
to Chongqing Jianshe. Our PRC subsidiaries, as companies ultimately held by a company
incorporated outside of China, being our Company, are viewed as foreign investment entities
which are deemed by Chongqing Jianshe to be ineligible as approved vendors. Accordingly,
while our Group intends to continue to carry out such transactions with Ji Ding after 13 August
2020, these will be transactions with an unrelated third party.

(c) Purchase of spray painting equipment by NVC from Ji Ding

The purchase of spray painting equipment by NVC from Ji Ding in the financial year ended
31 December 2018 arose as a result of a proposed joint venture between NVC with an
unrelated third party in relation to the provision of spray painting equipment that eventually did
not materialise. Ji Ding had acted as our Group’s intermediary to purchase such spray
painting equipment from unrelated third parties. This was a one-off transaction and the spray
painting equipment is currently being utilised by NVC’s research and development
department.

Ji Ding’s gross profit margin pursuant to the transactions in (a) and (b) above averaged 12.7% from
1 January 2017 to 30 June 2020. The above transactions were not entered into on an arm’s length
basis and were not carried out on normal commercial terms as no comparable quotes from
unrelated third parties were obtained prior to entry into such transactions. Nevertheless, our
Directors are of the opinion that the above transactions were not prejudicial to our Group and our
minority Shareholders. In relation to (a) and (b) above, these were based on our Group’s
assessment of the prevailing market rates for similar services, the work involved as well as
creditworthiness and reliability of Ji Ding. In relation to (c), the consideration for the purchase of the
spray painting equipment was based on the total costs incurred by Ji Ding without any mark-up.

Transactions with Shanghai Zun Yi International Trading Co Ltd (“Zun Yi”)

Our Company and our subsidiary, namely NVC, had from time to time engaged in various
transactions described below with Zun Yi. Mdm Shi Xiu Ying, the sister of our Controlling
Shareholder and Executive Chairman, Dr Shi Xu, has interests in voting shares of an aggregate of
50% of the voting shares of Zun Yi and accordingly, Zun Yi is an associate of Dr Shi Xu and an
interested person. For completeness, Dr Shi Xu’s mother-in-law, Mdm Zhang Yue Zhen, holds the
remaining interests in the voting shares of Zun Yi.

289
The details of the past transactions between our Group and Zun Yi for the financial years ended
31 December 2017, 2018 and 2019 and for the period from 1 January 2020 until the Latest
Practicable Date are as follows:

Financial year ended 31 December 1 January 2020

until the Latest
2017 2018 2019 Practicable Date

(a) Purchase of components,

spare parts and
consumables by our
Company from Zun Yi . . . . Nil US$411,480 US$1,226,993 US$668,164
(b) Sales of coated
components by our
Company to Zun Yi . . . . . . US$235,790 US$270,451 US$516,603 US$346,844
(c) Sale of components,
spare parts and
consumables by NVC to
Zun Yi . . . . . . . . . . . . . . . . Nil RMB12,144 RMB25,895 RMB13,417

(a) Purchase of components, spare parts and consumables by our Company from Zun Yi

Zun Yi is a trading company that mainly deals in the import and export of components, spare
parts and consumables. Zun Yi’s business scope allows it to export components, spare parts
and consumables from the PRC which our Company and its subsidiaries in Singapore require
in our day to day business operations. Our PRC-incorporated subsidiaries’ business scope
only allows them to export manufactured goods that they produce internally and they are
unable to export such components, spare parts and consumables purchased from third
parties. Accordingly, our Company had entered into the above transactions with Zun Yi to
obtain these products from third party suppliers in the PRC who manufacture such
components, spare parts and consumables. While our Company had the option of purchasing
such components, spare parts and consumables directly from these third party suppliers in
the PRC, we were able to benefit from economies of scale and consequently reduced freight
and transportation costs by consolidating such export transactions through Zun Yi and Ji Ding
(See “Interested Person Transactions and Potential Conflicts of Interest—Past Interested
Person Transactions—Transactions with Shanghai Ji Ding Advanced Material Co Ltd” for
further information). Zun Yi had charged different mark-ups for different components, spare
parts and consumables.

(b) Sales of coated components by our Company to Zun Yi

Due to commercial sensitivities, our Company had also entered into transactions with Zun Yi
whereby Zun Yi acted as our Group’s intermediary for the sale of coating components from our
Company to a certain end-customer in China (which is an unrelated third party).

(c) Sale of components, spare parts and consumables by NVC to Zun Yi

As mentioned above, our Chinese-incorporated subsidiaries’ business scope do not allow

them to export components, spare parts and consumables from China. Accordingly, NVC had
used Zun Yi’s services to export such components, spare parts and consumables to our
Company.

290
Zun Yi’s gross profit margin pursuant to all of the above mentioned transactions averaged 11.0%
from 1 January 2017 to 30 June 2020.The above transactions were not entered into on an arm’s
length basis and were not carried out on normal commercial terms as no comparable quotes from
unrelated third parties were obtained prior to entry into such transactions. Nevertheless, our
Directors are of the opinion that the above transactions were not prejudicial to our Group and our
minority Shareholders, as they were based on our Group’s assessment of the prevailing market
rates for similar services, the work involved and creditworthiness and reliability of Zun Yi.

On 14 August 2020, SNT (formerly known as Shanghai Nanofilm Zaichuang Automation Co., Ltd)
changed its business scope to allow it to export components, spare parts and consumables from
the PRC which our Company requires in our day to day business operations. Accordingly, our
Group ceased to carry out transactions set out in sub-paragraphs (a) and (c) above with Zun Yi after
25 August 2020. In respect of the transactions set out in sub-paragraph (b) above, our Group will
transact directly with the relevant end-customer (which is an unrelated third party) in the PRC and
accordingly, does not intend to enter into such transactions with Zun Yi following the Listing. As at
the Latest Practicable Date, there are no outstanding amounts or obligations owed by Zun Yi to
our Group or owed by our Group to Zun Yi.

Provision of guarantee and indemnity by Dr Shi Xu in favour of Oversea-Chinese Banking

Corporation Limited (“OCBC”) under various facility agreements entered into between our
Company and OCBC (the “OCBC Facility Agreements”)

2014 Personal Guarantee and Indemnity

In connection with an International Finance Scheme term loan of S$4.4625 million dated
8 September 2014 (the “2014 OCBC IFS Term Loan”), Dr Shi Xu, our Controlling Shareholder and
Executive Chairman, had on 11 September 2014 provided a deed of guarantee and indemnity for
all sums of monies or liabilities which are then or shall thereafter from time to time be due or owing
or shall remain unpaid to OCBC or be incurred from or by our Company anywhere (the “2014
Personal Guarantee and Indemnity”) in favour of OCBC. This 2014 Personal Guarantee and
Indemnity was later used to secure the International Finance Scheme term loan agreement entered
into between our Company and OCBC dated 29 September 2015 (the “2015 OCBC IFS Term
Loan”). The 2014 OCBC IFS Term Loan was superseded by the 2015 OCBC IFS Term Loan.

Details of the 2015 OCBC IFS Term Loan are set out below.

Largest
outstanding
amount
guaranteed for
the financial
years ended
31 December
Amount 2017, 2018 and
outstanding as 2019 and up to
Amount of Amount at the Latest the Latest
Facility guaranteed Practicable Practicable Nature of
Lender Borrower Guarantor (S$ million) (S$ million) Date Date Facility

OCBC Our Company Dr Shi Xu 4.4625 4.4625 Nil S$2.71 million Consists of a
S$4.4625 million
International
Finance Scheme
term loan

The interest rate for the 2015 OCBC IFS Term Loan is 5.50 per cent. per annum over the Bank’s
prevailing Cost of Funds.

The 2015 OCBC IFS Term Loan was fully repaid on 14 March 2018.

291
2015 Personal Guarantee and Indemnity

In connection with the term loan agreement entered into between our Company and OCBC dated
29 July 2015 (the “2015 OCBC Term Loan”), Dr Shi Xu, our Controlling Shareholder and Executive
Chairman, had on 31 August 2015 provided a deed of guarantee and indemnity for all sums of
monies or liabilities which are then or shall thereafter from time to time be due or owing or shall
remain unpaid to OCBC or be incurred from or by our Company anywhere (the “2015 Personal
Guarantee and Indemnity”) in favour of OCBC.

The 2015 Personal Guarantee and Indemnity was later used to secure the facility agreement
entered into between our Company and OCBC dated 16 March 2018 and as amended on 10 April
2018 and 20 September 2018 (the “2018 OCBC Facility Agreement”). Details of the 2015 OCBC
Term Loan and the 2018 OCBC Facility Agreement are set out below.

(a) 2015 OCBC Term Loan

Largest
outstanding
amount
guaranteed for
the financial
years ended
31 December
Amount 2017, 2018 and
outstanding as 2019 and up to
Amount of Amount at the Latest the Latest
Facility guaranteed Practicable Practicable Nature of
Lender Borrower Guarantor (S$ million) (S$ million) Date Date Facility

OCBC Our Company Dr Shi Xu 5 5 Nil S$3.75 million Consists of a

S$5 million term
loan

The interest rate for the 2015 OCBC Term Loan is 1.0 per cent. per annum over the Bank’s
prevailing Cost of Funds.

The 2015 OCBC Term Loan was fully repaid on 27 November 2018.

(b) 2018 OCBC Facility Agreement

Largest
outstanding
amount
guaranteed for
the financial
years ended
31 December
Amount 2017, 2018 and
outstanding as 2019 and up to
Amount of Amount at the Latest the Latest
Facility guaranteed Practicable Practicable Nature of
Lender Borrower Guarantor (S$ million) (S$ million) Date Date Facility

OCBC Our Company Dr Shi Xu 18.5 18.5 Nil S$2.77 million Consists of a
S$3.5 million
specific advance
facility, a S$2
million letters of
credit facility and
packing loan
and S$13 million
foreign
exchange facility

292
 Save for (i) the letters of credit, banker’s guarantee and shipping guarantee/airway bill which
are charged in accordance with OCBC’s prevailing schedule of charges, and (ii) for
commission in-lieu-of exchange for trade bills of 1/16%, the interest rate for the facilities for
the relevant interest period under the 2015 OCBC Facility Agreement is the aggregate of the
applicable of: (a) Margin, and (b) Cost of Funds.

“Margin” means, in respect of the 2018 OCBC Facility Agreement, between 1.85 to
2.0 per cent. per annum.

The 2018 OCBC Facility Agreement was superseded by a separate facility agreement dated
29 July 2019 between our Company and OCBC, which was not secured by the 2015 Personal
Guarantee and Indemnity.

For the purposes of the OCBC Facility Agreements, “Cost of Funds”, in the case of borrowing
in S$, means in relation to any period the rate payable by OCBC for the cost of borrowing in
S$ for such period in respect of the relevant amount plus the cost of maintaining statutory
reserves and liquid assets and/or complying with other requirements as may be imposed from
time to time by the MAS or such other authorities having jurisdiction over banks in Singapore.

The 2014 Personal Guarantee and Indemnity and the 2015 Personal Guarantee and Indemnity
(collectively, the “Personal Guarantees and Indemnities”) were discharged by OCBC on
20 September 2018. As no consideration was paid by our Group to procure the Personal
Guarantees and Indemnities, the Personal Guarantees and Indemnities were not provided on an
arm’s length basis and were not on normal commercial terms. However, as the Personal
Guarantees and Indemnities were to guarantee and secure the obligations of our Company under
the OCBC Facility Agreements, they are not prejudicial to the interests of our Group and its minority
Shareholders.

Provision of (a) guarantee and indemnity and share charge by our Company and
(b) guarantee and indemnity by NAM in favour of OCBC pursuant to the facility agreement
dated 21 August 2015 entered into between, among others, Pearl Yard Holdings Inc. and
OCBC (the “Pearl Yard Facility Agreement”)

Under the Pearl Yard Facility Agreement, OCBC had made available to Pearl Yard Holdings Inc. a
term loan facility in an aggregate principal amount of up to S$9.02 million to be used for financing
the purchase price of (a) the acquisition of 12.5 per cent. of the issued share capital of our Company
from Nissho Electronics Corporation, and (b) the acquisition of 15.6 per cent. of the issued share
capital of our Company from Standard Chartered Private Equity Limited. The interest rate for the
facilities for the relevant interest period under the Pearl Yard Facility Agreement is the aggregate
of: (a) the Margin, and (b) the Cost of Funds.

“Margin” means, in respect of the Pearl Yard Facility Agreement, 7.0 per cent. per annum.

“Cost of Funds” means, in respect of the Pearl Yard Facility Agreement, the rate per annum
determined by OCBC in its absolute discretion to be its cost in funding or taking deposits in the
Singapore interbank market for such period and such amount comparable to a proposed loan
together with any other costs occasioned by or attributable to complying with reserve, liquidity,
deposit or other requirements imposed by the MAS or any authority in Singapore or elsewhere.

In connection with the Pearl Yard Facility Agreement, our Company and NAM had each entered into
a deed of guarantee and indemnity dated 29 October 2015 for all sums of monies or liabilities due
or owing or remaining unpaid to OCBC or be incurred from or by Pearl Yard Holdings Inc.
(the “Corporate Guarantees”). The largest outstanding amount guaranteed for the financial years
ended 31 December 2017, 2018 and 2019 and up to the Latest Practicable Date under the
Pearl Yard Facility Agreement was S$10.2 million. Our Company had also granted a share charge

293
dated 16 November 2015 in respect of all the shares in the capital of NAM at any time and from time
to time legally and beneficially owned by our Company in favour of OCBC as continuing security for,
among others, the payment, discharge and performance of all present and future obligations and
liabilities of Pearl Yard Holdings Inc. to OCBC (including under the Pearl Yard Facility Agreement)
(the “Share Charge”).

The Pearl Yard Facility Agreement was fully repaid on 24 August 2018, and the Corporate
Guarantees and Share Charge were discharged and released on 11 October 2018.

As no consideration was paid by Pearl Yard Holdings Inc. (which was the holding company of our
Group at that time) for the Corporate Guarantees and Share Charge, the Corporate Guarantees
and Share Charge were not provided on an arm’s length basis and were not on normal commercial
terms. Nevertheless, our Directors are of the opinion that the above transactions were not
prejudicial to our Group and our minority Shareholders, as our Company and NAM were the
subsidiaries of Pearl Yard Holdings Inc. at the time of the entry into the Corporate Guarantees and
the Share Charge.

Provision of staff canteen operation services to NVC

上海納曦餐飲管理有限公司 (“Na Xi”) had provided staff canteen operation services to NVC for its
staff and guests. Na Xi is owned by Mdm Shi Xiu Ying, the sister of our Controlling Shareholder and
Executive Chairman, Dr Shi Xu, and is accordingly an associate of Dr Shi Xu and an interested
person.

The aggregate expenses payable by NVC to Na Xi arising from such services during the financial
years ended 31 December 2017, 2018 and 2019 and for the period from 1 January 2020 to the
Latest Practicable Date were approximately RMB795,962, RMB862,498, RMB1,158,474 and
RMB681,460, respectively. Such expenses were charged on a manpower cost-recovery basis with
a 5% mark-up pursuant to the agreement entered into between Na Xi and NVC dated 1 January
2017 (the “Original Staff Canteen Agreement”). While the Original Staff Canteen Agreement had
expired on 31 December 2017, Na Xi had continued to provide staff canteen operation services to
NVC on the same terms as the Original Staff Canteen Agreement for the financial years ended
31 December 2018 and 2019 and from 1 January 2020 up to the date prior to the entry into the Staff
Canteen Agreement (as defined herein).

The above transaction was not entered into on an arm’s length basis and was not carried out on
normal commercial terms. Nevertheless, our Directors are of the opinion that the above transaction
was not prejudicial to our Group and our minority Shareholders, as the 5% mark-up on a manpower
cost-recovery basis charged by Na Xi was lower than the prevailing market rates for similar
services.

The Original Staff Canteen Agreement has ceased and post-Listing, the provision and receipt of
staff canteen operation services to NVC by Na Xi will be governed by the Staff Canteen Agreement
described in “Interested Person Transactions and Potential Conflicts of Interest—Interested
Person Transactions—Present and Ongoing Interested Person Transactions—Staff Canteen
Agreement”.

294
PRESENT AND ONGOING INTERESTED PERSON TRANSACTIONS

Details of the present and on-going transactions between our Group and interested persons which
are material in the context of the Offering, for the financial years ended 31 December 2017, 2018
and 2019 and for the period from 1 January 2020 until the Latest Practicable Date are as follows:

Provision of staff canteen operation services to NVC

Na Xi and NVC have entered into a staff canteen agreement on 30 July 2020 (the “Staff Canteen
Agreement”) for Na Xi to continue to provide the services described in “Interested Person
Transactions and Potential Conflicts of Interest—Interested Person Transactions—Past Interested
Person Transactions—Provision of staff canteen operation services to NVC” to NVC.

The Staff Canteen Agreement has a term of one year and will be automatically renewed on a yearly
basis. Under the terms of the Staff Canteen Agreement, Na Xi will charge the expenses incurred to
NVC on a manpower cost-recovery basis with a 5% mark-up. The Staff Canteen Agreement also
provides that Na Xi must seek prior approval from NVC before it can claim manpower costs (without
the 5% mark-up) which exceed RMB100,000 in any given month. The Staff Canteen Agreement
may be terminated by either party giving three months prior written notice.

The Staff Canteen Agreement was negotiated by the parties on an arm’s length basis and carried
out on normal commercial terms as, among others, based on information provided by the auditors
of NVC, the 5% mark-up on a manpower cost-recovery basis charged by Na Xi is lower than the
prevailing market rates for similar services. Accordingly, the Staff Canteen Agreement is not
prejudicial to the interests of our Group and our minority shareholders.

Investors, upon subscription of the Offering, are deemed to have specifically approved the entry
into the Staff Canteen Agreement.

REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS

All future interested person transactions will be reviewed and approved in accordance with the
threshold limits set out under Chapter 9 of the Listing Manual, to ensure that they are carried out on
normal commercial terms and are not prejudicial to the interests of our Company and our minority
Shareholders. In the event that such interested person transactions require the approval of our
Board and our Audit and Risk Committee, relevant information will be submitted to our Board or our
Audit and Risk Committee for review. In the event that such interested person transactions require
the approval of Shareholders, additional information may be required to be presented to
Shareholders and an independent financial adviser may be appointed for an opinion.

In the review of all future interested person transactions the following procedures will be applied:

(1) transactions (either individually or as part of a series or if aggregated with other transactions
involving the same related party during the same financial year) equal to or exceeding
S$100,000 in value but below 3.0% of the value of our Company’s net tangible assets will be
subject to review by our Audit and Risk Committee at regular intervals;

(2) transactions (either individually or as part of a series or if aggregated with other transactions
involving the same related party during the same financial year) equal to or exceeding 3.0%
but below 5.0% of the value of our Company’s net tangible assets will be subject to the review
and prior approval of our Audit and Risk Committee. Such approval shall only be given if the
transactions are on arm’s length commercial terms and are consistent with similar types of
transactions made with non-interested parties; and

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(3) transactions (either individually or as part of a series or if aggregated with other transactions
involving the same related party during the same financial year) equal to or exceeding 5.0%
of the value of our Company’s net tangible assets will be reviewed and approved by our Audit
and Risk Committee, prior to such transactions being entered into, which may, as it deems fit,
request advice on the transaction from independent sources or advisers, including the
obtaining of valuations from independent professional valuers.

A register will be maintained to record all interested person transactions (incorporating the basis,
amount and nature, on which they are entered into and any quotation from unrelated parties
obtained to support such basis). Our Audit and Risk Committee will review all interested person
transactions to ensure that the prevailing rules and regulations of the SGX-ST (in particular,
Chapter 9 of the Listing Manual) are complied with. Our Company will also endeavour to comply
with the recommendations set out in the Code.

The annual internal audit plan will incorporate a review of all interested person transactions entered
into. Our Audit and Risk Committee will review internal audit reports to ascertain that the guidelines
and procedures established to monitor interested person transactions have been complied with. In
addition, our Audit and Risk Committee will also review from time to time such guidelines and
procedures to determine if they are adequate and/or commercially practicable in ensuring that
transactions between our Group and its interested persons are conducted on arm’s length
commercial terms.

Transactions falling within the above categories, if any, will be reviewed quarterly by our Audit and
Risk Committee to ensure that they are carried out on normal commercial terms and in accordance
with the procedures outlined above. All relevant non-quantitative factors will also be taken into
account.

Such review includes the examination of the transaction and its supporting documents or such
other data deemed necessary by our Audit and Risk Committee. Our Audit and Risk Committee will
also ensure that all disclosure, approval and other requirements on interested person transactions,
including those required by prevailing legislation, the Listing Manual and relevant accounting
standards, are complied with.

In the event that a member of our Audit and Risk Committee is interested in any interested person
transaction, he/she will abstain from reviewing that particular transaction. Our Company will also
disclose the aggregate value of interested person transactions conducted during the current
financial year in its annual report, as required pursuant to the Listing Manual.

POTENTIAL CONFLICTS OF INTEREST

None of our Directors, Controlling Shareholders or any of their associates has an interest in any
entity carrying on the same business or dealing in similar products as our Group.

Mitigation of Potential Conflicts of Interest

We believe that any potential conflicts of interest, whether with our Directors, Controlling
Shareholders and their respective associates or otherwise, are mitigated as follows:

(a) our Directors have a duty to disclose their interests in respect of any contract, proposal,
transaction or any other matter whatsoever in which they have any personal material interest,
directly or indirectly, or any actual or potential conflicts of interest (including conflicts of
interest that arise from any of their directorships or executive positions or personal
investments in any other corporations) that may involve them. Upon such disclosure, such
Directors shall not participate in any proceedings of our Board, and shall in any event abstain
from voting in respect of any such contract, arrangement, proposal, transaction or matter in

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 which the conflict of interest arises, unless and until our Audit and Risk Committee has
determined that no such conflict of interest exists;

(b) our Audit and Risk Committee is required to examine the internal control procedures and
review procedures put in place by our Company to determine if such procedures put in place
are sufficient to ensure that interested person transactions are conducted on normal
commercial terms and will not be prejudicial to our Company and our minority Shareholders;

(c) our Audit and Risk Committee will review any actual or potential conflicts of interest that may
involve our Directors as disclosed by them to our Board and exercising directors’ fiduciary
duties in this respect. Upon disclosure of an actual or potential conflict of interests by a
Director, our Audit and Risk Committee will consider whether a conflict of interest does in fact
exist. A Director who is a member of our Audit and Risk Committee will not participate in any
proceedings of our Audit and Risk Committee in relation to the review of a conflict of interest
relating to him. The review will include an examination of the nature of the conflict and such
relevant supporting data, as our Audit and Risk Committee may deem reasonably necessary;

(d) upon our listing on the SGX-ST, we will be subject to Chapter 9 of the Listing Manual in relation
to interested person transactions. The objective of these rules is to ensure that our interested
person transactions do not prejudice the interests of our Shareholders as a whole. These rules
require us to make prompt announcements, disclosures in our annual report and/or seek
Shareholders’ approval for certain material interested person transactions. Our Audit and
Risk Committee may also have to appoint independent financial advisers to review such
interested person transactions and opine on whether such transactions are fair and
reasonable to us, and not prejudicial to our interests and the interests of our minority
Shareholders; and

(e) our Directors owe fiduciary duties to us, including the duty to act in good faith and in our best
interests. Our Directors are also subject to a duty of confidentiality that, save to the extent
permitted under Singapore law, precludes a Director from disclosing to any third party
(including any of our Shareholders or their associates) information that is confidential.

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 SHARE CAPITAL AND SHAREHOLDERS

Our Company was incorporated in Singapore on 13 May 1999 under the Companies Act as a
private company limited by shares under the name of Nanofilm Technologies International Pte Ltd.
On 15 October 2020, our Company was converted into a public company limited by shares and
changed its name to Nanofilm Technologies International Limited.

As at the date of incorporation, the issued and paid-up share capital of our Company was S$2.00
comprising 2 Shares. As at the Latest Practicable Date, the issued and paid-up share capital of our
Company was S$12,626,829.599 comprising 522,632,720 Shares.

On 19 October 2020, 4,868,000 Shares were issued to Harrymore International Limited for the
account of certain of our employees pursuant to the exercise of options granted under the Pre-IPO
ESOS. As at the date of this Prospectus, the issued and paid-up share capital of our Company was
S$15,483,371.999 comprising 527,500,720 Shares.

As at the date of this Prospectus, there is only one class of shares in the capital of our Company.
The rights and privileges attached to the Shares are stated in our Constitution.

On 9 October 2020, our Shareholders passed resolutions to approve, inter alia, the following:

(a) the conversion of our Company into a public company limited by shares and the adoption of
a new Constitution effective upon our Listing;

(b) the change of our Company’s name to “Nanofilm Technologies International Limited”;

(c) that pursuant to Section 161 of the Companies Act and our Constitution, authority be given to
our Directors to:

(a) (i) issue Shares whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that

might or would require Shares to be issued, including but not limited to the creation
and issue of (as well as adjustments to) warrants, debentures or other similar
instruments convertible into Shares,

at any time and upon such terms and conditions and for such purposes and to such
person(s) as the Directors may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this resolution may have ceased to be in
force) issue Shares in pursuance of any Instrument made or granted by our Directors
while this resolution was in force,

provided that:

(1) the aggregate number of Shares to be issued pursuant to this resolution (including new
Shares to be issued in pursuance of Instruments made or granted pursuant to this
resolution) shall not exceed 50 per cent. of the total number of issued Shares of our
Company excluding treasury shares and subsidiary holdings (as calculated in
accordance with sub-paragraph (2) below), of which the aggregate number of Shares to
be issued other than on a pro rata basis to shareholders of our Company (including new
Shares to be issued in pursuance of Instruments made or granted pursuant to this
resolution) may not exceed 20 per cent. of the total number of issued Shares of our
Company excluding treasury shares and subsidiary holdings (as calculated in
accordance with sub-paragraph (2) below);

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 (2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the
purpose of determining the aggregate number of Shares that may be issued under
sub-paragraph (1) above, the total number of issued Shares excluding treasury shares
and subsidiary holdings shall be based on the total number of issued Shares excluding
treasury shares and subsidiary holdings immediately following the close of the Offering
and the issue of the Cornerstone Shares, after adjusting for:

(A) new Shares arising from the conversion or exercise of any convertible securities or
share options or vesting of share awards which are outstanding or subsisting at the
time this resolution is passed; and

(B) any subsequent bonus issue, consolidation or subdivision of Shares;

and, in sub-paragraph (1) above, and this sub-paragraph (2), “subsidiary holdings” has
the meaning given to it in the Listing Manual;

(3) in exercising the authority conferred by this resolution, our Company shall comply with
the provisions of the Listing Manual for the time being in force (unless such compliance
has been waived by the SGX-ST) and our Constitution for the time being of our
Company; and

(4) (unless revoked or varied by our Company in general meeting) the authority conferred by
this resolution shall continue in force until the conclusion of the next annual general
meeting of our Company or the date by which the next annual general meeting of our
Company is required by law to be held, whichever is the earlier;

(d) that authority be given to our Directors to issue new Shares from time to time pursuant to the
exercise of the options granted under the Pre-IPO ESOS, prior to the next annual general
meeting or, if earlier, the date by which our next annual general meeting is required by law to
be held;

(e) that authority be given to our Directors to issue Shares and offer the same to such persons, on
such terms and conditions and with such rights or restrictions as they may think fit to impose,
in connection with the Offering, the Cornerstone Agreements and the admission of our
Company to the Official List of the SGX-ST;

(f) the adoption of the ESOS and that authority be given to our Directors to allot and issue new
Shares as may be required to be issued pursuant to the the exercise of options granted under
the ESOS, provided that the total number of Shares over which options may be granted under
the ESOS on any date, when added to the total number of Shares allotted and issued and/or
to be allotted and issued and issued Shares (including treasury shares) delivered and/or to be
delivered, pursuant to options and awards already granted under our Company’s share plans
adopted post-Listing, shall not exceed 5% of the total number of issued Shares (excluding
treasury shares) on the date preceding the date of the relevant option;

(g) that authority be given to our Directors to grant options under the ESOS with an acquisition
price set at a discount of up to 20% of the market price for the Shares at the time of grant;

(h) that payment of directors’ fees to the Directors for the financial year ending 31 December 2020
be approved; and

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(i) for the purposes of Section 76C and 76E of the Companies Act, the exercise by our Directors
of all the powers of our Company to purchase or otherwise acquire Shares not exceeding in
aggregate the Maximum Limit (as hereafter defined), at such price or prices as may be
determined by our Directors from time to time up to the Maximum Price (as hereafter defined),
whether by way of:

(i) market purchase(s) on the SGX-ST transacted through the SGX-ST trading system;
and/or

(ii) off-market purchase(s) (if effected otherwise than on the SGX-ST) in accordance with
any equal access scheme(s) as may be determined or formulated by our Directors as
they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the
Companies Act,

and otherwise in accordance with the Companies Act and all other laws and regulations and
rules of the SGX-ST as may for the time being be applicable (the “Share Purchase
Mandate”);

Unless varied or revoked by our Company in general meeting, the authority conferred on our
Directors pursuant to the Share Purchase Mandate may be exercised by our Directors at any
time and from time to time during the period commencing from the end of the Stabilising Period
and expiring on the earliest of:

(A) the date on which the next annual general meeting of our Company is held or required by
law to be held;

(B) the date on which the authority conferred by the Share Purchase Mandate is revoked or
varied; or

(C) the date on which purchases and acquisitions of Shares pursuant to the Share Purchase
Mandate are carried out to the full extent mandated.

“Average Closing Price” means the average of the closing market prices of a Share over the
last five consecutive market days on which Shares are transacted on the SGX-ST immediately
preceding the date of the market purchase by our Company or, as the case may be, the date
of the making of the offer pursuant to the off-market purchase, and deemed to be adjusted in
accordance with the listing rules of the SGX-ST for any corporate action which occurs during
the relevant five-day period and the date of the Market Purchase by our Company or, as the
case may be, the date of the making of the offer pursuant to the Off-Market Purchase;

“date of the making of the offer” means the date on which our Company announces its
intention to make an offer for the off-market purchase or acquisition of Shares from holders of
Shares, stating therein the purchase price (which shall not be more than the Maximum Price
for an off-market purchase calculated on the basis set out below) for each Share and the
relevant terms of the equal access scheme for effecting the off-market purchase;

“Maximum Limit” means that number of issued Shares representing 10% of the issued
Shares of our Company immediately after the completion of the Offering;

“Maximum Price” in relation to a Share to be purchased or acquired, means the purchase

price (excluding related brokerage, commission, applicable goods and services tax, stamp
duties, clearance fees and other related expenses) which shall not exceed, in the case of a
market purchase of a Share, 105% of the Average Closing Price and, in the case of an
off-market purchase of a Share, 120% of the Average Closing Price; and

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 “Stabilising Period” means the period from the Listing Date until the earlier of (i) the date
falling 30 days from the Listing Date, or (ii) the date when the Stabilising Manager or persons
acting on its behalf has bought on the SGX-ST in aggregate the maximum number of Shares
agreed for price stabilisation purposes, to undertake stabilising actions.

CURRENT SHAREHOLDERS AND VENDORS

The table below sets out the names of each Substantial Shareholder of our Company, which means
a Shareholder who is known by our Company to beneficially own 5.0% or more of our issued
Shares, each Director (including our Executive Chairman and Chief Executive Officer) who has an
interest in the Shares, and the Vendors, and the number and percentage of Shares in which each
of them has an interest (whether direct or deemed) as at the Latest Practicable Date and
immediately after the issue of the Conversion Shares, the completion of the Offering and the issue
and sale of the Cornerstone Shares.

In addition to their shareholdings set out in the table below, our Directors and Executive Officers as
well as the Cornerstone Investors may, subject to applicable laws, purchase the Public Offer
Shares and/or the Placement Shares.

To our knowledge, save for certain Cornerstone Investors (being Aberdeen Standard Investments
(Asia) Limited, certain funds advised by Capital Research and Management Company, the
Employees Provident Fund Board and Venezio Investments Pte. Ltd.), no person intends to
purchase more than 5.0% of the Shares in the Offering.

All Shares owned by our Substantial Shareholders and Directors (including our Executive
Chairman and Chief Executive Officer) carry the same voting rights as the Offering Shares.

Percentage ownership is based on, as the case may be,

(1) 522,632,720 Shares outstanding as at the Latest Practicable Date;

(2) 527,500,720 Shares outstanding as the date of this Prospectus; and

(3) 658,351,110 Shares outstanding immediately after completion of the Offering and the issue
and sale of the Cornerstone Shares.

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 Immediately after completion of the Offering
and the issue and sale of the Cornerstone
Name As at the Latest Practicable Date As at the date of this Prospectus Shares

Direct Interest Deemed Interest Direct Interest Deemed Interest Direct Interest Deemed Interest

No. of No. of No. of No. of No. of No. of

Shares % Shares % Shares % Shares % Shares % Shares %
Directors
Dr Shi Xu(1) . . . . . . . . . . . . 154,262,220 29.5 322,979,895 61.8 154,262,220 29.2 327,847,895 62.2 66,290,020(2) 10.1(2) 311,584,895 47.3
(3)
Mr Lee Liang Huang . . . . . 16,793,840 3.2 3,255,000 0.6 16,793,840 3.2 3,255,000 0.6 10,048,840 1.5 — —
Ms Ong Siew Khoon
@ Ong Siew Khoon . . . . . . . — — — — — — — — — — — —
Mr James Rowan . . . . . . . . — — — — — — — — — — — —
Mr Kristian John Robinson . . — — — — — — — — — — — —
Ms Lee Lee Khoon . . . . . . . — — — — — — — — — — — —
Vendors (other than
Directors)
Dr Wei Hao . . . . . . . . . . . . 6,300,000 1.2 — — 6,300,000 1.2 — — – – — —
Substantial Shareholders
Mdm Jin Xiao Qun(4) . . . . . . 10,190,375 1.9 59,079,560 11.3 10,190,375 1.9 63,947,560 12.1 10,190,375 1.5 47,684,560(7) 7.2
(4) (7)

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Mr Wang Tong . . . . . . . . — — 59,079,560 11.3 — — 63,947,560 12.1 — — 47,684,560 7.2
Harrymore International
Limited . . . . . . . . . . . . . . 59,079,560 11.3 — — 63,947,560 12.1 — — 47,684,560(7) 7.2 — —
Pearl Yard Holdings Inc. . . . . 253,709,960 48.5 — — 253,709,960 48.1 — — 253,709,960 38.5 — —
(5)(6)
Temasek . . . . . . . . . . — — — — — — — — — — 49,894,498 7.6
Other Shareholders
Holders of Conversion
Shares(6) . . . . . . . . . . . . . — — — — — — — — 53,630,290 8.1 — —
Cornerstone Investors . . . . — — — — — — — — 104,256,100 15.8 — —
New investors in the
Offering . . . . . . . . . . . . . — — — — — — — — 77,236,200 11.7 — —
 Notes:

(1) Dr Shi Xu is the sole shareholder of Pearl Yard Holdings Inc. Accordingly, for the purposes of Section 4 of the SFA, Dr Shi Xu is treated as having an interest in the Shares held by Pearl
Yard Holdings Inc. In addition, for the purposes of Section 133(4) of the SFA, Dr Shi Xu is deemed to have an interest in the Shares in which his spouse, Mdm Jin Xiao Qun, has an interest.
(2) Assuming that the Over-allotment Option is not exercised. If the Over-allotment Option is exercised, Dr Shi’s direct interest will be reduced to 50,842,820 Shares, constituting 7.7% of the
post-Offering share capital.
(3) Mr Lee Liang Huang has the right to have 3,255,000 Shares held by Harrymore International Limited transferred to him or to his order. Accordingly, for the purposes of Section 4 of the SFA,
Mr Lee Liang Huang is treated as having an interest in 3,255,000 Shares held by Harrymore International Limited. Such Shares will be transferred from Harrymore International Limited to
Mr Lee Liang Huang or his assignee upon Listing. See “Management—Nanofilm Pre-IPO Restricted Share Plan 2020” and “Management—Nanofilm Pre-IPO Employee Share Option
Scheme 2017” for further details.

(4) Each of Mdm Jin Xiao Qun and Mr Wang Tong holds more than 20% of the shares of Harrymore International Limited. Accordingly, for the purposes of Section 4 of the SFA, each of Mdm
Jin Xiao Qun and Mr Wang Tong is treated as having an interest in the Shares held by Harrymore International Limited.

Mr Wang Tong is not related to any of the Directors, Executive Officers and/or Controlling Shareholders of our Company.

(5) Temasek will be our Substantial Shareholder immediately after completion of the Offering and the issue and sale of the Cornerstone Shares. For the purposes of Section 4 of the SFA,
Temasek is deemed interested in the Shares directly or indirectly held by its subsidiaries (namely, Heliconia, Venezio Investments Pte. Ltd. and Fullerton Fund Management Company Ltd.
(“Fullerton”)). Heliconia manages and controls each of Vanda 1 and Orchid 2 which are holders of Convertible Notes which will be converted into Conversion Shares immediately prior to
Listing. Each of Heliconia and Fullerton is an independently-managed Temasek portfolio company. Temasek is not involved in their business or operational decisions.
Temasek’s sole shareholder is the Singapore Minister for Finance12. The Singapore Government is not involved in Temasek’s business or operational decisions. See Note 6 below for further
details of Vanda 1, Orchid 2, the Convertible Notes and the Conversion Shares.

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(6) As at the date of this Prospectus, our Company has elected to exercise the Mandatory Conversion Right, pursuant to which an aggregate of 53,630,290 Conversion Shares will be issued
at the Conversion Price to the Subscribers (namely, Vanda 1, Orchid 2, ICH Gemini Asia Growth Fund Pte. Ltd., ASEAN China Investment Fund III L.P., ASEAN China Investment Fund (US)
III L.P., UVM 3 Venture Investments LP and EDB Investments Pte Ltd) in accordance with the relevant terms and conditions set out in the Subscription Agreements. See
“Dilution—Convertible Notes” for further details.
Each of Vanda 1 and Orchid 2 is a private limited company incorporated in Singapore and is managed and controlled by Heliconia. Heliconia is an investment company incorporated in
Singapore and a wholly-owned subsidiary of Temasek. Heliconia provides growth capital to Singapore’s leading small and medium-sized enterprises, to help them become globally
competitive companies. Heliconia is an independently managed Temasek portfolio company. Temasek is not involved in Heliconia’s business or operational decisions, including those
regarding our Shares.

EDB Investments Pte Ltd (“EDB Investments”) is a global investment fund managed by EDBI Pte Ltd (“EDBI”) a dedicated investment fund manager of the Economic Development Board
of Singapore (“EDB”). Both EDBI and EDB Investments are incorporated in Singapore and wholly-owned by the EDB. EDBI invests in high growth technology companies worldwide as well
as Singapore companies in strategic industries to support their growth in Asia and other international markets, through Singapore.

(7) Assuming that the transfer of the Award Shares and the Harrymore ESOS Shares by Harrymore International Limited to the relevant employees or assignees has been completed. See
“Management—Nanofilm Pre-IPO Restricted Share Plan 2020” and “Management—Nanofilm Pre-IPO Employee Share Option Scheme 2017” for further details.

12 Under the Minister for Finance (Incorporation) Act, Chapter 183, the Minister for Finance is a body corporate.
 SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP

The following table sets forth the significant changes in the shareholding interests in our Company of our Directors and Substantial Shareholders as at
31 December 2017, 2018 and 2019 and for the period between 1 January 2020 and the Latest Practicable Date. Save as disclosed below, there were no
significant changes in the percentage of ownership of our Company in the last three years prior to the Latest Practicable Date.

Name As at 31 December 2017(1) As at 31 December 2018 (1) As at 31 December 2019 (1) As at the Latest Practicable Date (1)

Direct Interest Deemed Interest Direct Interest Deemed Interest Direct Interest Deemed Interest Direct Interest Deemed Interest

No. of No. of No. of No. of No. of No. of No. of No. of

Shares % Shares % Shares % Shares % Shares % Shares % Shares % Shares %

Directors and Substantial

Shareholders

Dr Shi Xu(2) . . . . . . . . . . . 154,262,220 30.3 311,870,895 61.2 154,262,220 30.2 311,870,895 61.0 154,262,220 30.2 311,870,895 61.0 154,262,220 29.5 322,979,895 61.8

Mr Lee Liang Huang . . . . . . 16,793,840 3.30 — — 16,793,840 3.3 — — 16,793,840 3.3 — — 16,793,840 3.2 3,255,000 0.6

Ms Ong Siew Koon

@ Ong Siew Khoon . . . . . . . — — — — — — — — — — — — — — — —

Mr James Rowan . . . . . . . . — — — — — — — — — — — — — — — —

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Mr Kristian John Robinson . . . — — — — — — — — — — — — — — — —

Ms Lee Lee Khoon . . . . . . . — — — — — — — — — — — — — — — —

(3)
Mdm Jin Xiao Qun . . . . . . 10,476,375 2.1 47,684,560 9.4 10,476,375 2.0 47,684,560 9.3 10,476,375 2.0 47,684,560 9.3 10,190,375 1.9 59,079,560 11.3
(3)
Mr Wang Tong . . . . . . . . — — 47,684,560 9.4 — — 47,684,560 9.3 — — 47,684,560 9.3 — — 59,079,560 11.3

Harrymore International
Limited . . . . . . . . . . . . . . 47,684,560 9.4 — — 47,684,560 9.3 — — 47,684,560 9.3 — — 59,079,560 11.3 — —

Pearl Yard Holdings Inc. . . . . 253,709,960 49.8 — — 253,709,960 49.6 — — 253,709,960 49.6 — — 253,709,960 48.5 — —

Notes:

(1) Calculated based on the issued share capital of our Company as of the relevant dates. The number of Shares has been adjusted for the Share Split.

(2) Dr Shi Xu is treated as having an interest in the Shares in which each of Pearl Yard Holdings Inc. and Mdm Jin Xiao Qun has an interest in. See “Share Capital and Shareholders—Current
Shareholders and Vendors” of this Prospectus for further details.

(3) Each of Mdm Jin Xiao Qun and Wang Tong holds more than 20% of the shares of Harrymore International Limited. Accordingly, each of Mdm Jin Xiao Qun and Mr Wang Tong is treated as
having an interest in the Shares held by Harrymore International Limited. Mr Wang Tong is not related to any of the Directors, Executive Officers and/or Controlling Shareholders of our
Company.
THE VENDORS

The following table sets out the number of Offering Shares that Dr Shi Xu (our Executive
Chairman), Mr Lee Liang Huang (our Chief Executive Officer) and Dr Wei Hao (an executive in our
Company) will be selling in the Offering:

Offering Shares expressed as a percentage of

Number of Shares
immediately after
completion of the
Number of Shares Offering and the issue
Number of Offering as at the Latest and sale of the
Name Shares Offered Practicable Date Cornerstone Shares

Dr Shi Xu . . . . . . . . . . 60,936,200 11.7% 9.3%

Mr Lee Liang Huang . 10,000,000 1.9% 1.5%
Dr Wei Hao . . . . . . . . 6,300,000 1.2% 1.0%

In addition, Dr Shi Xu will be providing 15,447,200 Shares in connection with the Over-allotment
Option, which constitutes 2.96% of the number of Shares as at the Latest Practicable Date and
2.35% of the number of Shares immediately after completion of the Offering and the issue and sale
of the Cornerstone Shares. See “Plan of Distribution—Over-allotment Option”.

Dr Shi Xu will also be selling 27,036,000 Vendor Cornerstone Shares which constitutes 5.17% of
the number of Shares as at the Latest Practicable Date and 4.11% of the number of Shares
immediately after completion of the Offering and the issue and sale of the Cornerstone Shares.

CHANGES IN ISSUED SHARE CAPITAL

Details of the changes in the issued and paid-up capital of our Company and our subsidiaries for the
last three years prior to the Latest Practicable Date are set out in the table below:

Our Company

Price No. of Shares Issued/ Purpose of Issue/ Resultant Issued

Date per Share Reduced Reduction Share Capital

28 December S$13.68 46,000 Shares Allotment of S$8,229,505.799

2017 . . . . . . . . . . . issued Shares pursuant
to the exercise of
options granted
under the
Pre-IPO ESOS
28 December S$2 50,000 Shares Allotment of S$8,329,505.799
2017 . . . . . . . . . . . issued Shares pursuant
to the exercise of
options granted
under the
Pre-IPO ESOS
6 March 2018 . . . . Not 494,930,928 Sub-division of S$8,329,505.799
Applicable Shares issued one existing Share
into 35 Shares

305
 Price No. of Shares Issued/ Purpose of Issue/ Resultant Issued
Date per Share Reduced Reduction Share Capital

31 July 2018 . . . . . S$0.3951 1,750,000 Shares Allotment of S$9,020,930.799

issued Shares under
pursuant to the
exercise of
options granted
the Pre-IPO ESOS
8 April 2020 . . . . . S$0.5868 37,000 Shares Allotment of S$9,042,642.399
issued Shares pursuant
to the exercise of
options granted
under the
Pre-IPO ESOS
8 April 2020 . . . . . Nil 5,254,000 Shares Allotment of S$9,042,642.399
issued Shares pursuant
to awards vested
under the RSP
30 July 2020 . . . . . S$0.5868 5,704,000 Shares Allotment of S$12,389,749.599
issued Shares pursuant
to the exercise of
options granted
under the
Pre-IPO ESOS
30 July 2020 . . . . . S$0.5927 400,000 Shares Allotment of S$12,626,829.599
issued Shares pursuant
to the exercise of
options granted
under the
Pre-IPO ESOS
19 October 2020. . S$0.5868 4,868,000 Shares Allotment of S$15,483,371.999
issued Shares pursuant
to the exercise of
options granted
under the
Pre-IPO ESOS

Nanofilm Advanced Materials Pte. Ltd.

Price No. of Shares Issued/ Purpose of Issue/ Resultant Issued

Date per Share Reduced Reduction Share Capital

30 July 2020 . . . . . S$1.00 32,037,444 Capitalisation of S$41,847,522.00

ordinary shares loan
issued

306
NanoFab Technologies Pte. Ltd.

Price No. of Shares Issued/ Purpose of Issue/ Resultant Issued

Date per Share Reduced Reduction Share Capital

24 January 2018. . US5,882.4 510 ordinary Increase in capital US$3,000,000.75

shares issued
24 January 2018. . US3,272.0 489 ordinary Capitalisation of US$4,600,000.75
shares issued loan
28 November US2,211.7 633 ordinary Increase in capital US$6,000,000.75
2018 . . . . . . . . . . . shares issued and capitalisation
of loan
15 June 2020 . . . . US$1,836.5 3,267 ordinary Increase in capital US$12,000,000.75
shares issued and capitalisation
of loan

NanoFab Japan Co Ltd

Price No. of Shares Issued/ Purpose of Issue/ Resultant Issued

Date per Share Reduced Reduction Share Capital

31 December Nil 90 shares issued New issuance in JPY37,500,000

2019 . . . . . . . . . . . connection with
merger of MG
Consulting Co.,
Ltd with and into
NanoFab Japan
Co Ltd

Nanofilm Renewable Energy Technology (Shanghai) Co Ltd

Amount of Registered Purpose of Increase/

Capital Increased/ Reduction in Registered Resultant Registered
Date (Reduced) Capital Capital

14 October 2019 . . . . Increase of Increase in registered US$40,000,000

US$25,000,000 capital

Shanghai Nanofilm Trading Co., Ltd

Amount of Registered Purpose of Increase/

Capital Increased/ Reduction in Registered Resultant Registered
Date (Reduced) Capital Capital

14 March 2018 . . . . . . Increase of Registered capital on RMB1,000,000

RMB1,000,000 incorporation

Yizheng Nahuan Technologies Co., Ltd

Amount of Registered Purpose of Increase/

Capital Increased/ Reduction in Registered Resultant Registered
Date (Reduced) Capital Capital

29 October 2018 . . . . Increase of Registered capital on RMB60,000,000

RMB60,000,000 incorporation

307
Wizture Holdings Pte. Ltd.

Price No. of Shares Issued/ Purpose of Issue/ Resultant Issued

Date per Share Reduced Reduction Share Capital

18 May 2020. . . . . S$1.00 100 ordinary Issued on S$100.00

shares issued incorporation
2 June 2020 . . . . . S$1.00 999,900 ordinary Increase in capital S$1,000,000.00
shares issued
6 October 2020. . . S$1.00 6,200,000 Increase in capital S$7,200,000.00
ordinary shares
issued

Wizture Technologies (Yizheng) Co Ltd

Amount of Registered Purpose of Increase/

Capital Increased/ Reduction in Registered Resultant Registered
Date (Reduced) Capital Capital

8 September 2020 . . . Increase of Registered capital on RMB45,000,000

RMB45,000,000 incorporation

INFORMATION ON THE CORNERSTONE INVESTORS

At the same time as but separate from the Offering, each of (i) Aberdeen Standard Investments
(Asia) Limited, (ii) AIA Investment Management Private Limited, (iii) Avanda Investment
Management Pte Ltd, (iv) Credit Suisse AG, Singapore Branch and Credit Suisse AG, Hong Kong
Branch (on behalf of certain of their private banking clients), (v) Eastspring Investments
(Singapore) Limited, (vi) Employees Provident Fund Board, (vii) Fullerton Fund Management
Company Ltd., (viii) JPMorgan Asset Management (Singapore) Limited, (ix) Lion Global Investors
Limited, (x) Nikko Asset Management Asia Limited, (xi) Principal Asset Management (S) Pte Ltd,
(xii) SMALLCAP World Fund, Inc. and American Funds Insurance Series – Global Small
Capitalization Fund (which are funds advised by Capital Research and Management Company),
and (xiii) Venezio Investments Pte. Ltd. has entered into separate Cornerstone Agreements with
our Company and/or Dr Shi Xu to subscribe for or purchase, at the Offering Price, an aggregate of
104,256,100 Cornerstone Shares, conditional upon, among others, the Underwriting Agreement
having been entered into and not having been terminated pursuant to its terms on or prior to the
Listing Date. The Cornerstone Investors are:

Venezio Investments Pte. Ltd.

Venezio Investments Pte. Ltd. is a company incorporated in Singapore and its principal activity is
investment holding. Venezio Investments Pte. Ltd. is an indirect wholly-owned subsidiary of
Temasek. Incorporated in 1974, Temasek is a global investment company headquartered in
Singapore with a net portfolio value of S$306 billion as at 31 March 2020. Temasek’s investment
philosophy is anchored around four key themes: Transforming Economies; Growing Middle Income
Populations; Deepening Comparative Advantages; and Emerging Champions. Temasek actively
seeks sustainable solutions to address present and future challenges, as it captures investment
and other opportunities that help to bring about a better, smarter and more sustainable world.

Employees Provident Fund Board

The Employees Provident Fund Board is a social security institution in Malaysia formed under the
Employees Provident Fund Act 1991 (Act 452). The Employees Provident Fund Board primarily
provides retirement benefits for private sector and pensionable employees in Malaysia.

308
Nikko Asset Management Asia Limited

Nikko Asset Management Asia Limited is part of one of Asia’s largest asset managers, providing
high-conviction, active fund management across a range of equity, fixed income, multi-asset and
alternative strategies and its complementary range of passive strategies covers more than
20 indices and includes some of Asia’s largest exchange-traded funds. The Nikko Asset
Management group has US$235.9 billion in assets under management (consolidated assets under
management and sub-advisory of Nikko Asset Management group and its subsidiaries as of
30 June 2020). Headquartered in Asia since 1959, the group employs approximately 200
investment professionals (including employees of the Nikko Asset Management group and its
subsidiaries as of 30 June 2020) and represents approximately 30 nationalities across
11 countries. More than 400 banks, brokers, financial advisors and life insurance companies
around the world distribute the company’s products.

Aberdeen Standard Investments (Asia) Limited

Aberdeen Standard Investments (Asia) Limited (formerly known as Aberdeen Asset Management
Asia Limited) (“ASI Asia”) is incorporated in Singapore and is a wholly-owned subsidiary of
Aberdeen Asset Management PLC. In Singapore, ASI Asia provides investors with a range of
institutional services as well as an extensive range of locally-run single country, regional and global
funds.

Avanda Investment Management Pte Ltd

Avanda Investment Management Pte Ltd is an investment management company incorporated

under the laws of Singapore which holds a Capital Markets Services license issued by the MAS.
Avanda Investment Management Pte Ltd is acquiring the Cornerstone Shares for investment
purposes in its capacity as investment manager for and on behalf of certain investment funds
and/or managed accounts.

JPMorgan Asset Management (Singapore) Limited

JPMorgan Asset Management (Singapore) Limited is part of J.P. Morgan Asset Management,
which has a network of investment professionals based in the region and manages assets for
investors around the globe.

Credit Suisse AG, Singapore Branch and Credit Suisse AG, Hong Kong Branch (on behalf of
certain of their private banking clients)

Credit Suisse AG is domiciled in Switzerland and is a wholly-owned subsidiary of Credit Suisse

Group AG which is listed on the SIX Swiss Exchange (ISIN: CH0012138530). Credit Suisse AG’s
business builds on its core strengths: its position as a leading global wealth manager, its specialist
investment banking capabilities and its strong presence in its home market of Switzerland. Credit
Suisse AG seeks to follow a balanced approach to wealth management, aiming to capitalise on
both the large pool of wealth within mature markets as well as the significant growth in wealth in
Asia Pacific and other emerging markets, while also serving key developed markets with an
emphasis on Switzerland. Credit Suisse AG has entered into a Cornerstone Agreement to
subscribe for certain Cornerstone Shares, on behalf of certain clients of its Asia Pacific division.
Upon subscription completion, Credit Suisse AG (through its Singapore branch and Hong Kong
branch) will safekeep the subscribed Shares on behalf of these clients (without holding any
beneficial ownership rights to the subscribed Shares) and will place the subscribed Shares with an
appointed custodian.

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Funds advised by Capital Research Global Investors

Capital Research Global Investors is a division of Capital Research and Management Company
(“CRMC”), a Delaware corporation and an investment adviser registered under the Investment
Advisers Act of 1940, as amended. CRMC serves as the investment adviser to each of SMALLCAP
World Fund, Inc. (“SCWF”) and American Funds Insurance Series—Global Small Capitalization
Fund (“VISC”), which are registered as open-end management investment companies under the
Investment Company Act of 1940, as amended. Each of SCWF and VISC will be beneficial owners
of the Cornerstone Shares to be acquired pursuant to Cornerstone Agreements with the Company.

Principal Asset Management (S) Pte Ltd

Principal Asset Management (S) Pte Ltd was incorporated in Singapore on 18 May 2006 and is
wholly-owned by Principal Asset Management Berhad; a joint venture between Principal Financial
Group, a member of the FORTUNE 500 and a Nasdaq-listed global financial services and CIMB
Group Holdings Berhad, one of Southeast Asia’s leading universal banking groups.

Principal Asset Management (S) Pte Ltd is the centre of excellence for investment management for
the Principal Asset Management group of companies in managing Asian (ex-Japan) Equities
strategies, both conventional and Islamic. It is a licensed fund manager regulated by the MAS.

Eastspring Investments (Singapore) Limited

Eastspring Investments established its Asian regional headquarters in 1994 in Hong Kong. With
over 25 years of investment experience in Asia, the regional business now has US$220 billion of
assets under management, as of 30 June 2020. Eastspring Investments’ Singapore-based
investment hub currently manages assets across a broad range of investment strategies for both
Asian and non-Asian institutions and works in conjunction with its local offices to provide solutions
for institutional clients.

AIA Investment Management Private Limited

AIA Group Limited and its subsidiaries (collectively “AIA”) comprise the largest independent
publicly listed pan-Asian life insurance group. It has a presence in 18 markets in Asia-Pacific—
wholly-owned branches and subsidiaries in Mainland China, Hong Kong Special Administrative
Region, Thailand, Singapore, Malaysia, Australia, Cambodia, Indonesia, Myanmar, the
Philippines, South Korea, Taiwan (China), Vietnam, Brunei, Macau Special Administrative Region,
New Zealand, a 99 per cent. subsidiary in Sri Lanka, and a 49 per cent. joint venture in India.

AIA Group Limited is listed on the Main Board of The Stock Exchange of Hong Kong Limited under
the stock code “1299”.

Fullerton Fund Management Company Ltd.

Fullerton, acting in its capacity as investment manager for and on behalf of certain underlying funds
and accounts, has entered into a Cornerstone Agreement with the Company and invested in the
Cornerstone Shares for the account of those funds and accounts as cornerstone investors.

Fullerton is an Asia-based investment specialist, with capabilities that span equities, fixed income,
multi-asset and alternatives, including private equity.

Fullerton was incorporated in 2003 and is a subsidiary of Temasek. NTUC Income Insurance
Co-operative Limited, a leading Singapore insurer, became its minority shareholder in 2018.

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Fullerton is headquartered in Singapore, and has associated offices in Shanghai, London, Tokyo
and Brunei. Fullerton is licensed under the SFA and regulated by the MAS.

Lion Global Investors Limited

Lion Global Investors Limited (“Lion Global Investors”), acting solely in its capacity as investment
manager for and on behalf of its funds and/or clients (the “LGI Clients”), entered into a Cornerstone
Agreement with our Company. Lion Global Investors, one of the largest asset management
companies in Southeast Asia, is 70.0% owned by Great Eastern Holdings Limited and 30.0%
owned by Orient Holdings Private Limited, a wholly-owned subsidiary of OCBC. As of 30 June
2020, Lion Global Investors has a team of more than 40 fund managers and analysts averaging
over 16 years of financial industry experience. Lion Global Investors’ core competency is in
managing Asian fixed income, Asian equity and Asian multi-asset strategies (absolute and relative
basis) for institutional and retail investors. With S$61.0 billion (US$43.8 billion) of assets under
management (as of 30 June 2020), Lion Global Investors’ clients include government, government-
linked corporations, companies, charitable organisations and individual investors.

Lion Global Investors has given an undertaking that the LGI Non-Independent Cornerstone Shares
(as defined herein) subscribed for in its capacity as investment manager for and on behalf of LGI
Clients who are not independent third parties, including entities in the same group of companies as
OCBC, will be subject to a lock-up from the date on which such Shares are issued and allotted until
the date falling six months from the Listing Date, subject to certain exceptions. To the extent that
Lion Global Investors purchases any LGI Non-Independent Shares (as defined herein) under the
International Offering in its capacity as investment manager for and on behalf of LGI Clients who
are not independent third parties, including entities in the same group of companies as OCBC, such
LGI Non-Independent Shares will also be subject to the same lock-up arrangement. See “Plan of
Distribution—No Sale of Similar Securities and Lock-up—Lion Global Investors” for further details.

For the avoidance of doubt, Shares subscribed for and/or purchased by Lion Global Investors in its
capacity as investment manager for and on behalf of LGI Clients who are independent third parties
are not subject to a lock-up arrangement.

The Cornerstone Investors will be required to pay to the Joint Bookrunners and Underwriters a
brokerage fee of up to 1.0% of the Offering Price, as well as stamp duty and other similar charges
to the relevant authorities in accordance with the laws and practices of the country of purchase, at
the time of settlement.

CHANGE IN CONTROL OF OUR COMPANY

To our knowledge, save as disclosed in the section entitled “Share Capital and
Shareholders—Current Shareholders and Vendors” of this Prospectus, our Company is not directly
or indirectly owned or controlled, whether severally or jointly, by any government or any other
person and will not be directly or indirectly owned or controlled, whether severally or jointly, by any
government or any other person immediately after the issue of the Conversion Shares, the
completion of the Offering and the issue and sale of the Cornerstone Shares.

Our Company, NFT and MG Holdings, entered into a shareholders’ agreement dated 27 October
2017 (as amended on 1 July 2019, 15 June 2020 and 6 October 2020) in relation to the rights and
obligations of our Company and MG Holdings as shareholders of NFT (the “NFT SHA”). Based on
the audited financial statements of NFT for the financial year ended 31 December 2019, NFT
booked a pre-tax net loss of approximately S$4.1 million in the financial year ended 31 December
2019. Accordingly, NFT is not a principal subsidiary of our Company. As of the date of this
Prospectus, our Company holds 90% of the shares in NFT, while MG Holdings holds the remaining
10%, and our Company does not currently have any intention for a change in the respective level
of interests in NFT resulting in an increase in the level of MG Holdings’ interests in NFT.

311
Pursuant to the NFT SHA, from the Listing Date and up to and including the fifth year following the
Listing Date, MG Holdings may within 30 days after the release of the half year financial statements
or full year financial statements of our Group on the SGXNet elect by way of written notice
(the “Written Notice”) to our Company, to effect an exchange of the shares of NFT held by MG
Holdings with new Shares to be issued to MG Holdings (the “Share Swap”), provided that NFT has
positive profit after tax.

The number of Swap Shares to be issued shall be calculated based on the following formula,
rounded up to the nearest whole number:

Number of Swap Shares = (NFT Profit after Tax x PE of NTI x MG Shareholding x 0.8) ÷ NTI WAP

Where:

NFT Profit after Tax = profit after tax of NFT based on:

(a) (if the Written Notice is given within 30 days after the release of our Group’s consolidated half
year financial statements on the SGXNet) the aggregated profit after tax of NFT for the two
half year financial statements of NFT immediately preceding the Written Notice, and

(b) (if the Written Notice is given within 30 days after the release of our Group’s consolidated full
year financial statements on the SGXNet) the profit after tax of NFT for the full year financial
statements of NFT immediately preceding the Written Notice.

PE of NTI = NTI Market Capitalisation ÷ NTI Profit after Tax

Market Capitalisation = NTI WAP x average number of Shares in issue for the last five full market
days immediately prior to the day the Written Notice is given

NTI WAP = Weighted average price for trades done on our Shares on the SGX-ST for the last five
full market days immediately prior to the day the Written Notice is given

NTI Profit after Tax = profit after tax of our Group based on:

(a) (if the Written Notice is given within 30 days after the release of our Group’s consolidated half
year financial statements on the SGXNet pursuant to Rule 705(2) of the Listing Manual) the
aggregated profit after tax of our Group for the two half year financial statements of our Group
immediately preceding the Written Notice (which will be reviewed by our Group’s auditors),
and

(b) (if the Written Notice is given within 30 days after the release of our Group’s consolidated full
year financial statements on the SGXNet pursuant to Rule 705(1) of the Listing Manual) the
profit after tax of our Group for the audited full year financial statements of our Group
immediately preceding the Written Notice.

MG Shareholding = Percentage of issued shares in NFT held by MG Holdings as at the date of the
Written Notice.

The Share Swap will be subject to compliance with the relevant laws, rules and regulations
(including the Companies Act and the Listing Manual) as well as the prior approval of SGX-ST and
Shareholders of our Company (if required) and we will make timely announcements through
SGXNet upon the issuance of the Swap Shares, in accordance with the Listing Manual. For the
avoidance of doubt, we may utilise any general mandate for the issuance of Shares granted by our
Shareholders at general meeting for the issuance of the Swap Shares. However, specific
shareholders’ approval for the Share Swap may be required under Rule 803 of the Listing Manual

312
if the issuance of the Swap Shares would result in a transfer of controlling interest, or if the number
of Swap Shares to be issued exceeds the relevant limit in the general mandate for the issuance of
Shares granted by our Shareholders. In the event that the SGX-ST’s approval and/or approval of
our Shareholders are not obtained, our Company shall not have an obligation to complete the
Share Swap in relation to the Written Notice received, whereupon MG Holdings may only provide
another Written Notice after the release of the following half year or full year (as the case may be)
financial statements of our Group on the SGXNet. (provided that such Written Notice is given within
five years following the Listing Date). For the avoidance of doubt, in the event that MG Holdings
does not provide Written Notice within five years following the Listing Date (unless otherwise
agreed by our Company and MG Holdings in writing) or Written Notice has been provided within five
years following the date of the Listing (or any extension agreed by our Company and MG Holdings
in writing) but SGX-ST’s approval and/or approval of our Shareholders are not obtained for the
Share Swap, the obligations of our Company under the NFT SHA to effect the Share Swap will
cease to have any force and effect whatsoever and our Company and MG Holdings shall not have
any claim against the other party for any costs, damages, compensation or otherwise arising from
the provision on Share Swap in the NFT SHA.

As at the Latest Practicable Date, the shareholders of MG Holdings include (a) one shareholder
who is a director of NFT, representative director and legal representative of NFJ and general
director and legal representative of NFV; and (b) one shareholder who is a director of NFT and NFJ.
Our Company currently does not intend for such persons to relinquish their positions in the
respective entities. Furthermore, under the NFT SHA, the Share Swap will not affect the positions
of such shareholders in the respective entities.

Save as disclosed above, we are not currently aware of any arrangement the operation of which
may, at a subsequent date, result in a change of control of our Company.

AMENDMENT AGREEMENT

On 29 October 2019, our Company entered into a shareholders’ agreement (the “Shareholders’
Agreement”) with the then existing shareholders of our Company, including, amongst others,
Mr Lee Liang Huang, Mdm Jin Xiao Qun, Pearl Yard Holdings Inc. (together, the “SHA Parties”)
and Dr Shi Xu, which was amended by an amendment agreement dated 26 August 2020 (the
“Amendment Agreement”). Pursuant to the Shareholders’ Agreement, Dr Shi Xu has the option to
purchase all of the Shares registered in the name of such SHA Party in the event of a transaction(s)
which results in Dr Shi Xu, together with Mdm Jin Xiao Qun, ceasing to own or control (either
directly or through companies wholly-owned by them) at least 50% of the total number of Shares or
the voting rights attributable to the Shares (“Trade Sale”) at a price which is not less than the price
at which the purchaser in the Trade Sale pays to Dr Shi Xu for each of his Shares in the Trade Sale
(less costs and expenses).

The Amendment Agreement provides for, among others, the termination of the Shareholders’
Agreement immediately before completion of the Listing. The termination of the Shareholder’s
Agreement will result in the SHA Parties’ rights and obligations, as Shareholders, becoming the
same as those rights and obligations of other persons who will become Shareholders pursuant to
the Offering. Such rights and obligations will be governed by our Constitution, the Listing Manual
and applicable law.

The Shareholders’ Agreement and Amendment Agreement were negotiated by the parties on an
arm’s length basis.

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 DESCRIPTION OF THE SHARES

The following statements are brief summaries of the more important rights and privileges of
Shareholders conferred by the laws of Singapore and our Constitution. These statements
summarise the material provisions of our Constitution but are qualified in their entirety by reference
to our Constitution and the laws of Singapore. See “Appendix G—Summary of our Constitution”.

SHARES

The Shares, which have identical rights in all respects, rank equally with one another. Our
Constitution provides that we may issue shares of a different class with preferential, deferred,
qualified or special rights, privileges or conditions as our Board may think fit, and may issue
preference shares which are, or at our option are, redeemable, subject to certain limitations.

All of the Shares are in registered form. We may, subject to the provisions of the Companies Act
and the rules of the SGX-ST, purchase our own Shares. However, we may not, except in the
circumstances permitted by the Companies Act, grant any financial assistance for the acquisition
or proposed acquisition of the Shares.

NEW SHARES

We may only issue new Shares with the prior approval of our Shareholders in a general meeting.

SHAREHOLDERS

We only recognise the persons who are registered in our register of members and, in cases in which
the person so registered is CDP or its nominee, as the case may be, we recognise the persons
named as the Depositors in the Depository Register (as defined in the SFA) maintained by CDP for
the Shares as holders of the Shares.

We will not, except as required by law, recognise any equitable, contingent, future or partial interest
in any of the Shares, or any interest in any fractional part of a Share, or other rights in respect of any
Share, other than the absolute right thereto of the person whose name is entered in our register of
members as the registered holder thereof, or of the person whose name is entered in the
Depository Register maintained by CDP for that Share.

We may close our register of members at any time or times if we provide the SGX-ST with at least
five clear Market Days’ notice, or such other periods as may be prescribed by the SGX-ST.
However, our register of members may not be closed for more than 30 days in aggregate in any
calendar year. We typically close our register of members to determine Shareholders’ entitlement
to receive dividends and other distributions.

TRANSFER OF SHARES

There is no restriction on the transfer of fully paid-up Shares except where required by law or the
listing rules of, or bye-laws and rules, governing any securities exchange upon which the Shares
are listed or as provided in our Constitution. Our Board may in their discretion decline to register
any transfer of Shares on which we have a lien and in the case of Shares not fully paid-up may
refuse to register a transfer to a transferee of whom they do not approve. A Shareholder may
transfer any Shares registered in its own name by means of a duly signed instrument of transfer in
a form approved by any securities exchange upon which the Shares are listed or in any other form
acceptable to our Directors. Our Board may also decline to register any instrument of transfer
unless, among other things, it has been duly stamped and is presented for registration together with
the share certificate and such other evidence of title as they may require. A Shareholder may

314
transfer any Shares held through the SGX-ST book-entry settlement system by way of a book-entry
transfer without the need for any instrument of transfer.

We will replace lost or destroyed certificates of Shares provided that the applicant pays a fee which
will not exceed S$2.00, and furnishes such evidence and a letter of indemnity as our Board may
require.

GENERAL MEETINGS OF OUR SHAREHOLDERS

We are required to hold a general meeting of Shareholders every year and within four months from
the end of our financial year. Our Board may convene an extraordinary general meeting whenever
they think fit and it must do so upon the written request of Shareholders holding not less than 10.0%
of the total number of paid-up Shares as carries the right to vote at general meetings (disregarding
paid-up Shares held as treasury shares). In addition, two or more Shareholders holding not less
than 10.0% of our total number of issued Shares may call a meeting of our Shareholders.

Unless otherwise required by law or by our Constitution, voting at general meetings is by ordinary
resolution, requiring an affirmative vote of a simple majority of the votes cast at that meeting. An
ordinary resolution suffices, for example, for the appointment of directors. A special resolution,
requiring the affirmative vote of at least 75.0% of the votes cast at the meeting, is necessary for
certain matters under Singapore law, including:

• voluntary winding-up;

• amendments to our Constitution;

• a change of our corporate name; and

• a reduction in the share capital.

We must give at least 21 days’ notice in writing for every general meeting convened for the purpose
of passing a special resolution. Ordinary resolutions generally require at least 14 days’ notice in
writing. For so long as the Shares are listed on the SGX-ST, at least 14 days’ notice of any general
meeting shall be given in writing to the SGX-ST and by advertisement in the daily press.

The notice must be given to every Shareholder who has supplied us with an address in Singapore
for the giving of notices and must set forth the place, the day and the hour of the meeting and, in the
case of special business, the general nature of that business.

VOTING RIGHTS

A Shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy.
A proxy need not be a Shareholder. A person who holds Shares through the SGX-ST book-entry
settlement system will only be entitled to vote at a general meeting as a Shareholder if his name
appears on the Depository Register maintained by CDP 72 hours before the general meeting.

Except as otherwise provided in our Constitution, two or more Shareholders must be present in
person or by proxy or attorney to constitute a quorum at any general meeting. Under our
Constitution:

• on a show of hands, every Shareholder present in person or by proxy shall have one vote,
provided that:

o in the case of a Shareholder who is not a relevant intermediary (as defined below) and
who is represented by two proxies, only one of the two proxies as determined by that

315
 Shareholder or, failing such determination, by the chairman of the meeting (or by a
person authorised by the chairman of the meeting) in his sole discretion shall be entitled
to vote on a show of hands); and

o in the case of a Shareholder who is a relevant intermediary and who is represented by

two or more proxies, each proxy shall be entitled to vote on a show of hands; and

• on a poll, every Shareholder present in person or by proxy shall have one vote for each Share
which he/she holds or represents.

The following types of members (“relevant intermediaries” and each a “relevant intermediary”)
are allowed to appoint more than two proxies: (i) a licensed bank or its wholly-owned subsidiary
which provides nominee services and holds shares in that capacity; (ii) a capital markets services
licence holder which provides custodial services for securities and holds shares in that capacity;
and (iii) the CPF Board, in respect of shares purchased on behalf of CPF members.

The Listing Manual requires all resolutions at general meeting to be voted by poll. A poll may be
demanded in certain circumstances, including:

• by the chairman of the meeting;

• by not less than two Shareholders present in person or by proxy and entitled to vote at the
meeting;

• by any Shareholder present in person or by proxy and representing not less than 5.0% of the
total voting rights of all Shareholders having the right to vote at the meeting; and

• by any Shareholder present in person or by proxy and holding shares conferring a right to vote
at the meeting, being shares on which an aggregate sum has been paid-up equal to not less
than 5.0% of the total sum paid up on all the shares conferring that right.

In the case of a tie vote, whether on a show of hands or on a poll, the chairman of the meeting shall
be entitled to a casting vote.

LIMITATIONS ON RIGHTS TO HOLD SHARES

Singapore law and our Constitution do not impose any limitations on the right of non-resident or
foreign Shareholders to hold or exercise voting rights attached to the Shares.

DIVIDENDS

We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but we
may not pay dividends in excess of the amount recommended by our Board. Our Board may also
declare an interim dividend without the approval of our Shareholders.

We must pay all dividends out of our profit(s) available for distribution.

All dividends we pay are pro rata in amount to our Shareholders in proportion to the amount paid up
or credited as paid on each Shareholder’s Shares, unless the rights attaching to an issue of any
share or class of shares provide otherwise.

Unless otherwise directed, dividends may be paid by a cheque or warrant sent through the post to
each Shareholder at his registered address appearing in our register of members or (as the case
may be) the Depository Register. However, our payment to CDP of any dividend payable to a

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Shareholder whose name is entered in the Depository Register shall, to the extent of payment
made to CDP, discharge us from any liability to that Shareholder in respect of that payment.

BONUS AND RIGHTS ISSUE

Our Board may, with the approval from our Shareholders at a general meeting, capitalise any sums
standing to the credit of any of our Company’s reserve accounts or other undistributable reserve or
any sum standing to the credit of profit or loss account and distribute the same as bonus Shares
credited as paid-up to the Shareholders in proportion to their shareholdings.

Our Board may also issue bonus Shares to participants of any share incentive or option scheme or
plan implemented by our Company and approved by our Shareholders in such manner and on such
terms as our Board shall think fit.

Our Board may also issue rights to take up additional Shares to Shareholders in proportion to their
shareholdings. Such rights are subject to any conditions attached to such issue and the regulations
of any securities exchange upon which the Shares are listed.

TAKE-OVERS

Under the Singapore Take-Over Code, issued by the MAS pursuant to Section 321 of the SFA, any
person acquiring an interest, either on his own or together with parties acting in concert with him,
in 30.0% or more of the voting shares must extend a take-over offer for the remaining voting shares
in accordance with the provisions of the Singapore Take-Over Code. In addition, a mandatory
take-over offer is also required to be made if a person holding, either on his own or together with
parties acting in concert with him, between 30.0% and 50.0% of the voting rights acquires additional
voting shares representing more than 1.0% of the voting rights in any six months period. Under the
Singapore Take-Over Code, the following individuals and companies will be presumed to be
persons acting in concert with each other unless the contrary is established:

(a) the following companies:

(i) a company;

(ii) the parent company of (i);

(iii) the subsidiaries of (i);

(iv) the fellow subsidiaries of (i);

(v) the associated companies of (i), (ii), (iii) or (iv);

(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and

(vii) any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights;

(b) a company with any of its directors (together with their close relatives, related trusts as well as
companies controlled by any of the directors, their close relatives and related trusts);

(c) company with any of its pension funds and employee share schemes;

(d) a person with any investment company, unit trust or other fund whose investment such person
manages on a discretionary basis, but only in respect of the investment account which such
person manages;

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(e) a financial or other professional adviser, including a stockbroker, with its client in respect of
the shareholdings of the adviser and persons controlling, controlled by or under the same
control as the adviser;

(f) directors of a company (together with their close relatives, related trusts and companies
controlled by any of such directors, their close relatives and related trusts) which is subject to
an offer or where the directors have reason to believe a bona fide offer for their company may
be imminent;

(g) partners; and

(h) the following persons and entities:

(i) an individual;

(ii) the close relatives of (i);

(iii) the related trusts of (i);

(iv) any person who is accustomed to act in accordance with the instructions of (i);

(v) companies controlled by any of (i), (ii), (iii) or (iv); and

(vi) any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights.

Under the Singapore Take-Over Code, a mandatory offer made with consideration other than cash
must be accompanied by a cash alternative at not less than the highest price paid by the offeror or
any person acting in concert for voting rights within the preceding six months.

LIQUIDATION OR OTHER RETURN OF CAPITAL

If we are liquidated or in the event of any other return of capital, holders of the Shares will be entitled
to participate in the distribution of any surplus assets in proportion to their shareholdings, subject
to any special rights attaching to any other classes of shares in our Company.

INDEMNITY

As permitted by Singapore law, our Constitution provides that our Company may, subject to the
provisions of and so far as may be permitted by the Companies Act, indemnify our Board and
officers against any liability incurred or to be incurred by them in the execution of their duties.

Subject to certain exceptions, our Company may not indemnify our Board and our officers against
any liability attaching to them in connection with any negligence, default, breach of duty or breach
of trust in relation to our Company. Such exceptions are: (i) the purchase and maintenance for our
Directors and officers of insurance against any such liability; and (ii) circumstances where the
provision for indemnity is against liability incurred by our Directors and officers to a person other
than our Company, except when the indemnity is against (a) any liability of our Director or officer
to pay a fine in criminal proceedings or a sum payable to a regulatory authority by way of a penalty
in respect of non-compliance with any requirement of a regulatory nature (however arising); or
(b) any liability incurred by our Director or officer (1) in defending criminal proceedings in which he
is convicted; (2) in defending civil proceedings brought by our Company or a related company in
which judgment is given against him; or (3) in connection with an application for relief under Section
76A(13) or Section 391 of the Companies Act in which the court refuses to grant him relief.

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SUBSTANTIAL SHAREHOLDINGS

Under the SFA, a person has a substantial shareholding in our Company if he has an interest (or
interests) in one or more voting shares (excluding treasury shares) in our Company and the total
votes attached to that share or those shares, is not less than 5.0% of the aggregate of the total
votes attached to all voting shares (excluding treasury shares) in our Company.

The SFA requires our Substantial Shareholders, or if they cease to be our Substantial
Shareholders, to give notice to us using the forms prescribed by the MAS (which are available at
www.mas.gov.sg) of particulars of the voting shares in our Company in which they have or had an
interest (or interests) and the nature and extent of that interest or those interests, and of any
change in the percentage level of their interest.

In addition, the deadline for a Substantial Shareholder to make disclosure to our Company under
the SFA is two Singapore business days after he becomes aware:

• that he/she is or (if he/she had ceased to be one) had been a Substantial Shareholder;

• of any change in the percentage level in his/her interest; or

• that he/she had ceased to be a Substantial Shareholder,

there being a conclusive presumption of a person being “aware” of a fact or occurrence at the time
at which he/she would, if he/she had acted with reasonable diligence in the conduct of his/her
affairs, have been aware.

Following the above, we will in turn announce or otherwise disseminate the information stated in the
notice to the SGX-ST as soon as practicable and in any case, no later than the end of the Singapore
business day following the day on which we receive the notice.

“Percentage level”, in relation to a Substantial Shareholder in our Company, means the percentage
figure ascertained by expressing the total votes attached to all the voting shares in our Company
in which the Substantial Shareholder has an interest (or interests) immediately before or (as the
case may be) immediately after the relevant time as a percentage of the total votes attached to all
the voting shares (excluding treasury shares) in our Company, and, if it is not a whole number,
rounding that figure down to the next whole number.

MINORITY RIGHTS

Section 216 of the Companies Act protects the rights of minority shareholders of Singapore
incorporated companies by giving the Singapore courts a general power to make any order, upon
application by any of our Shareholders, as they think fit to remedy any of the following situations:

• if our affairs are being conducted or the powers of our Board are being exercised in a manner
oppressive to, or in disregard of the interests of, one or more of our Shareholders; or

• if we take an action, or threaten to take an action, or our Shareholders pass a resolution, or

propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial
to, one or more of our Shareholders, including the applicant.

Singapore courts have a wide discretion as to the reliefs they may grant and those reliefs are in no
way limited to those listed in the Companies Act itself. Without prejudice to the foregoing,
Singapore courts may:

• direct or prohibit any act or cancel or vary any transaction or resolution;

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• regulate the conduct of our affairs in the future;

• authorise civil proceedings to be brought in our name, or on our behalf, by a person or persons
and on such terms as the court may direct;

• direct us or some of our Shareholders to purchase a minority Shareholder’s Shares and, in the
case of our purchase of Shares, a corresponding reduction of our share capital;

• direct that our Constitution be amended; or

• direct that we be wound up.

In addition, Section 216A of the Companies Act allows a complainant (including a minority
Shareholder) to apply to court for leave to bring an action in a court proceeding or to commence an
arbitration proceeding in the name and on behalf of a company.

LEGAL FRAMEWORK

The following statements are brief summaries of the laws of Singapore relating to the legal
framework in Singapore and our Board, which are qualified in their entirety by reference to the laws
of Singapore.

Singapore has a common law system based on a combination of case law and statutes. The
Companies Act is the principal legislation governing companies incorporated under the laws of
Singapore and provides for three main forms of corporate vehicles, being the company limited by
shares, the company limited by guarantee and the unlimited company.

Companies are incorporated by filing with the Accounting and Corporate Regulatory Authority in
Singapore certain electronic forms, including the constitutional documents which comprise its
constitution.

The constitution of a Singapore incorporated company may set out the specific objects and powers
of the company, or may give the company full power to carry on or undertake any business activity.
The constitution generally contains provisions relating to share capital and variation of rights,
transfers and transmissions of shares, meetings of shareholders, directors and directors’ meetings,
powers and duties of directors, accounts, dividends and reserves, capitalisation of profits,
secretary, common seal, winding-up and indemnity of the officers of a company.

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 TAXATION

The statements made herein regarding taxation are general in nature and based on certain aspects
of current tax laws of Singapore and the PRC and administrative guidelines issued by the relevant
authorities in force as at the date of this Prospectus and are subject to any changes in such laws
or administrative guidelines, or in the interpretation of these laws or guidelines, occurring after such
date, which changes could be made on a retrospective basis. These laws and guidelines 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. The statements below are not to be regarded
as advice on the tax position of any holder of the Shares or of any person acquiring, selling or
otherwise dealing with the Shares or on any tax implications arising from the acquisition, sale or
other dealings in respect of the Shares. The statements made herein do not purport to be a
comprehensive or exhaustive description of all of the tax considerations that may be relevant to a
decision to purchase, own or dispose of the Shares and do not purport to deal with the tax
consequences applicable to all categories of investors, some of which (such as dealers in
securities) may be subject to special rules. Prospective Shareholders are advised to consult their
own tax advisers as to the Singapore, PRC or other tax consequences of the acquisition, ownership
of or disposal of the Shares. The statements below are based on the assumption that our Company
is tax resident in Singapore for Singapore income tax purposes. It is emphasised that neither our
Company nor any other persons involved in this Prospectus accepts responsibility for any tax
effects or liabilities resulting from the subscription for, purchase, holding or disposal of the Shares.

SINGAPORE TAXATION

Individual Income Tax

An individual is a tax resident in Singapore in a year of assessment if, in the preceding year, he was
physically present in Singapore or exercised an employment in Singapore (other than as a director
of a company) for 183 days or more, or if he resides in Singapore.

Individual taxpayers who are Singapore tax residents are subject to Singapore income tax on
income accruing in or derived from Singapore. All foreign-sourced income received in Singapore on
or after 1 January 2004 by a Singapore tax resident individual (except for income received through
a partnership in Singapore) is exempt from Singapore income tax if the Comptroller of Income Tax
in Singapore (“Comptroller”) is satisfied that the tax exemption would be beneficial to the
individual.

A Singapore tax resident individual is taxed at progressive rates ranging from 0.0% to 22.0%.
Non-resident individuals, subject to certain exceptions and conditions, are subject to Singapore
income tax on income accruing in or derived from Singapore at the rate of 22.0%.

Corporate Income Tax

A corporate taxpayer is regarded as resident in Singapore for Singapore tax purposes if the control
and management of its business is exercised in Singapore.

Corporate taxpayers who are Singapore tax residents are subject to Singapore income tax on
income accruing in or derived from Singapore and, subject to certain exceptions, on foreign-
sourced income received or deemed to be received in Singapore. Foreign-sourced income in the
form of dividends, branch profits and service income received or deemed to be received in
Singapore by Singapore tax resident companies on or after 1 June 2003 are exempt from tax if
certain prescribed conditions are met, including the following:

(i) such income is subject to tax of a similar character to income tax under the law of the
jurisdiction from which such income is received; and

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(ii) at the time the income is received in Singapore, the highest rate of tax of a similar character
to income tax (by whatever name called) levied under the law of the territory from which the
income is received on any gains or profits from any trade or business carried on by any
company in that territory at that time is not less than 15.0%.

Certain concessions and clarifications have also been announced by the Inland Revenue Authority
of Singapore (“IRAS”) with respect to such conditions.

A non-resident corporate taxpayer is subject to income tax on income that is accrued in or derived
from Singapore, and on foreign-sourced income received or deemed received in Singapore,
subject to certain exceptions.

The corporate tax rate in Singapore is currently 17.0%. In addition, three-quarters of up to the first
S$10,000 of a company’s annual normal chargeable income, and one-half of up to the next
S$190,000, is exempt from corporate tax from the year of assessment (“YA”) 2020 onwards. The
remaining chargeable income (after the tax exemption) will be fully taxable at the prevailing
corporate tax rate.

New companies will also, subject to certain conditions and exceptions, be eligible for tax exemption
on three-quarters of up to the first S$100,000 of a company’s normal chargeable income, and
one-half of up to the next S$100,000, a year for each of the company’s first three YAs from YA 2020
onwards. The remaining chargeable income (after the tax exemption) will be taxed at the applicable
corporate tax rate.

Dividend Distributions

All Singapore-resident companies are currently under the one-tier corporate tax system (“one-tier
system”).

Dividends received in respect of the Shares by either a resident or non-resident of Singapore are
not subject to Singapore withholding tax, on the basis that our Company is a tax resident of
Singapore and under the one-tier system.

Under the one-tier system, the tax on corporate profits is final and dividends paid by a Singapore-
resident company are tax exempt in the hands of a shareholder, regardless of whether the
shareholder is a company or an individual and whether or not the shareholder is a Singapore tax
resident.

Gains on Disposal of Shares

Singapore does not impose tax on capital gains. There are no specific laws or regulations which
deal with the characterisation of whether a gain is income or capital in nature. Gains arising from
the disposal of the Shares may be construed to be of an income nature and subject to Singapore
income tax, especially if they arise from activities which the IRAS regards as the carrying on of a
trade or business in Singapore.

Shareholders who apply, or who are required to apply, Singapore Financial Reporting Standard
(“FRS”) 39, FRS 109 or Singapore Financial Reporting Standard (International) 9 (“SFRS(I) 9”) (as
the case may be) may for the purposes of Singapore income tax be required to recognise gains or
losses (not being gains or losses in the nature of capital) in accordance with the provisions of FRS
39, FRS 109 or SFRS(I) 9 (as the case may be) (as modified by the applicable provisions of
Singapore income tax law) even though no sale or disposal of the Shares is made.

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Shareholders who may be subject to this tax treatment should consult their accounting and tax
advisers regarding the Singapore income tax consequences of their acquisition, holding and
disposal of the Shares.

Stamp Duty

There is no stamp duty payable on the subscription for the Shares.

Where the Shares evidenced in certificated form are acquired in Singapore, stamp duty is payable
on the instrument of transfer of the Shares at the rate of 0.2% of the consideration for, or market
value of, the Shares, whichever is higher.

Stamp duty is borne by the purchaser unless there is an agreement to the contrary. Where an
instrument of transfer is executed outside Singapore or no instrument of transfer is executed, no
stamp duty is payable on the acquisition of the Shares. However, stamp duty may be payable if the
instrument of transfer is executed outside Singapore and is received in Singapore.

Stamp duty is not applicable to electronic transfers of the Shares through the scripless trading
system operated by CDP.

Estate Duty

Singapore estate duty was abolished with respect to all deaths occurring on or after 15 February
2008.

Goods and Services Tax (“GST”)

The sale of the Shares by a GST-registered investor belonging in Singapore for GST purposes to
another person belonging in Singapore is an exempt supply not subject to GST. Any input GST
incurred by the GST-registered investor in making an exempt supply is generally not recoverable
from the Singapore Comptroller of GST.

Where the Shares are sold by a GST-registered investor in the course of or furtherance of a
business carried on by such investor contractually to and for the direct benefit of a person
belonging outside Singapore, the sale should generally, subject to satisfaction of certain
conditions, be considered a taxable supply subject to GST at 0.0%. Any input GST incurred by the
GST-registered investor in making such a supply in the course of or furtherance of a business may
be fully recoverable from the Singapore Comptroller of GST.

Services consisting of arranging, brokering, underwriting or advising on the issue, allotment or

transfer of ownership of the Shares rendered by a GST-registered person to an investor belonging
in Singapore for GST purposes in connection with the investor’s purchase, sale or holding of the
Shares will be subject to GST at the standard rate of 7.0%. Similar services rendered by a
GST-registered person contractually to and for the direct benefit of an investor belonging outside
Singapore should generally, subject to the satisfaction of certain conditions, be subject to GST at
0.0%.

PRC TAXATION

According to the Enterprise Income Tax Law of the PRC (the “EIT Law”) (中華人民共和國企業所得
稅法) which was promulgated on 16 March 2007 and latest amended on 29 December 2018, the
standard income tax rate of 25% applies to all PRC enterprises, FIEs and foreign enterprises which
have set up production and operation facilities in the PRC. The EIT Law provides that the enterprise
income tax should be levied at the reduced rate of 15% for “High and New Technology Enterprises”
in need of special support by the PRC. Under the implementation rules of the EIT Law (中華人民共

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和國企業所得稅法實施條例), effective from 1 January 2008 and amended on 23 April 2019, a
withholding tax of 10% is applicable to dividends paid by FIEs to foreign investors unless otherwise
stipulated in tax treaties concluded between the PRC government and other jurisdictions.

Pursuant to the Interim Regulations of the PRC on Value-Added Tax (中華人民共和國增值稅暫行條

例) (the “VAT Interim Regulations”) which was promulgated by the State Council on 13 December
1993 and amended on 10 November 2008, 26 February 2016 and 19 November 2017, its
Implementation Regulations (中華人民共和國增值稅暫行條例實施細則) which was last amended on
28 October 2011, and the Notice of the Ministry of Finance and the State Administration of Taxation
(the “SAT”) on Adjusting Value-added Tax Rates (財政部、稅務總局關於調整增值稅稅率的通知)
which was issued on 4 April 2018 and became effective from 1 May 2018, the Value-added Tax (the
“VAT”) rate of 16% shall be applicable to taxpayers engaging in the sale or import of goods,
provision of labour services, tangible movable property leasing services shall generally be 16%; the
VAT rate of 10% shall be applicable to taxpayers providing transportation, postal, basic
telecommunications, construction, or immovable leasing services, selling immovable, transferring
the rights to use lands, or selling or importing goods specified by the VAT Interim Regulations; and
the VAT rate of 6% shall be applicable to other modern service industries. Our business shall be
subject to VAT with reference to the above rules. Pursuant to the Announcement of the Ministry of
Finance, SAT and the General Administration of Customs on Relevant Policies for Deepening the
Value-Added Tax Reform (財政部、稅務總局、海關總署關於深化增值稅改革有關政策的公告) which
was issued on 20 March 2019 and became effective on 1 April 2019, the tax rate of 16% applicable
to the VAT taxable sale or import of goods by a general VAT taxpayer shall be adjusted to 13%; and
the tax rate of 10% applicable to such taxpayer shall be adjusted to 9%.

Pursuant to the Circular of the State Council on Unifying the System of Urban Maintenance and
Construction Tax and Education Surcharge Paid by Domestic and Foreign-invested Enterprises
and Individuals (國務院關於統一內外資企業和個人城市維護建設稅和教育費附加制度的通知) which
was issued on 18 October 2010 and effective on 1 December 2010, the Interim Regulations of the
PRC on Urban Maintenance and Construction Tax (中華人民共和國城市維護建設稅暫行條例), came
into effect on 1 January 1985 and amended on 8 January 2011, and the Interim Provisions on the
Collection of Educational Surcharges (徵收教育費附加的暫行規定), amended on 8 January 2011,
the collection of urban maintenance and construction tax and educational surcharges shall be
applicable to foreign-invested enterprises, foreign enterprises and individual foreigners. Any
enterprise or individual who is liable to pay consumption tax, VAT and business tax shall also pay
urban maintenance and construction tax and educational surcharges. The amount of consumption
tax, VAT and business tax paid by a taxpayer shall be the taxation basis of urban maintenance
construction tax and educational surcharges. The rates of urban maintenance and construction tax
shall be 7% for a taxpayer domiciled in a city, 5% for a taxpayer domiciled in a county or a town, and
1% in other places. The rate of education surcharge is 3%.

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 PLAN OF DISTRIBUTION

The Offering comprises 77,236,200 Offering Shares (representing 11.7% of our Company’s share
capital immediately after completion of the Offering and the issue and sale of the Cornerstone
Shares) for purchase under the International Offering and the Singapore Public Offer, subject to the
Over-allotment Option. At the same time as but separate from the Offering, each of (i) Aberdeen
Standard Investments (Asia) Limited, (ii) AIA Investment Management Private Limited, (iii) Avanda
Investment Management Pte Ltd, (iv) Credit Suisse AG, Singapore Branch and Credit Suisse AG,
Hong Kong Branch (on behalf of certain of their private banking clients), (v) Eastspring Investments
(Singapore) Limited, (vi) Employees Provident Fund Board, (vii) Fullerton Fund Management
Company Ltd., (viii) JPMorgan Asset Management (Singapore) Limited, (ix) Lion Global Investors
Limited, (x) Nikko Asset Management Asia Limited, (xi) Principal Asset Management (S) Pte Ltd,
(xii) SMALLCAP World Fund, Inc. and American Funds Insurance Series – Global Small
Capitalization Fund (which are funds advised by Capital Research and Management Company),
and (xiii) Venezio Investments Pte. Ltd. has entered into separate Cornerstone Agreements with
our Company and/or Dr Shi Xu to subscribe for or purchase the Cornerstone Shares at the Offering
Price, conditional upon, among others, the Underwriting Agreement having been entered into and
not having been terminated pursuant to its terms on or prior to the Listing Date.

The Offering Price was determined after a book-building process and agreed among our Company,
the Vendors, the Joint Issue Managers, the Joint Global Coordinators, and the Joint Bookrunners
and Underwriters, after taking into account, among other things, the prevailing market conditions.
73,374,300 Offering Shares are being offered under the International Offering and 3,861,900
Offering Shares are being offered under the Singapore Public Offer. The Offering Shares may be
re-allocated between the International Offering and the Singapore Public Offer at the discretion of
the Joint Global Coordinators, following consultation with our Company and the Vendors, subject
to any applicable laws.

UNDERWRITING AGREEMENT

Our Company, the Vendors, and the Joint Bookrunners and Underwriters have entered into an
underwriting agreement dated 23 October 2020 (the “Underwriting Agreement”). Subject to the
terms and conditions in the Underwriting Agreement, our Company and the Vendors have agreed
to appoint the Joint Bookrunners and Underwriters to procure subscribers/purchasers, and the
Joint Bookrunners and Underwriters have agreed to procure subscribers/purchasers, or failing
which to subscribe for or purchase, subject to certain conditions, the number of Offering Shares and
Cornerstone Shares set forth opposite their names below, at the Offering Price.

Number of
Number of Cornerstone
Joint Bookrunners and Underwriters Offering Shares Shares

Citigroup Global Markets Singapore Pte. Ltd.. . . . . . . . . . . . . 26,265,000 35,445,000

CLSA Singapore Pte Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,260,000 12,510,000
Credit Suisse (Singapore) Limited . . . . . . . . . . . . . . . . . . . . . 26,271,200 35,451,100
Oversea-Chinese Banking Corporation Limited . . . . . . . . . . . 15,440,000 20,850,000

The closing of the Offering is conditional upon, among other things, the closing of the transactions
contemplated in the Underwriting Agreement, including, among others, the fulfilment or waiver by
the SGX-ST of all conditions contained in the letter of eligibility from the SGX-ST for the listing and
quotation of the Shares on the Mainboard of the SGX-ST.

The Underwriting Agreement may be terminated by the Joint Bookrunners and Underwriters at any
time prior to the issue and delivery of the Shares, upon the occurrence of certain events including,
among other things, certain force majeure events pursuant to the terms of the Underwriting
Agreement.

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INDEMNITIES

Under the terms of the Underwriting Agreement, we and the Vendors have agreed to indemnify the
Joint Bookrunners and Underwriters against certain liabilities.

EXPENSES AND COMMISSION

We will pay the Joint Bookrunners and Underwriters, as compensation for their services in
connection with the Offering, underwriting fees (including GST) amounting to 2.7% of the total
gross proceeds from the issue of the New Cornerstone Shares. These underwriting fees will
amount to S$0.07 (including GST) per New Cornerstone Share.

The Vendors will pay the Joint Bookrunners and Underwriters, as compensation for their services
in connection with the Offering, underwriting fees (including GST) amounting to 2.7% of the total
gross proceeds from the sale of the Offering Shares, the Vendor Cornerstone Shares and the
Additional Shares (if the Over-allotment Option is exercised). These underwriting fees will amount
to S$0.07 (including GST) per Offering Share, Vendor Cornerstone Share or Additional Share (if
the Over-allotment Option is exercised). The professional and other Offering-related expenses
which are payable by the Vendors (excluding underwriting fees and any discretionary incentive fee)
are estimated to amount to approximately S$1.2 million (including GST).

We may, at our sole discretion, pay the Joint Bookrunners and Underwriters a discretionary
incentive fee of up to 0.5% of the gross proceeds from the issue of the New Cornerstone Shares.
The discretionary incentive fee, if it is to be paid to the Joint Bookrunners and Underwriters, will
amount to up to S$0.01 per New Cornerstone Share (including GST).

The Vendors may, at their sole discretion, pay the Joint Bookrunners and Underwriters a
discretionary incentive fee of up to 0.5% of the gross proceeds from sale of the Offering Shares, the
Vendor Cornerstone Shares and Additional Shares (if the Over-allotment Option is exercised). The
discretionary incentive fee, if it is to be paid to the Joint Bookrunners and Underwriters, will amount
to up to S$0.01 per Offering Share, Vendor Cornerstone Share or Additional Share (including
GST).

Purchasers of the Placement Shares will be required to pay to the Joint Bookrunners and
Underwriters a brokerage fee of up to 1.0% of the Offering Price, as well as stamp duty and other
similar charges to the relevant authorities in accordance with the laws and practices of the country
of purchase, at the time of settlement.

OVER-ALLOTMENT OPTION

In connection with the Offering, the Over-allotment Option Grantor has granted the
Joint Bookrunners and Underwriters the Over-allotment Option exercisable by the Stabilising
Manager (or its affiliates or other persons acting on its behalf), in full or in part, on one or more
occasions, to purchase up to an aggregate of 15,447,200 Shares at the Offering Price, representing
approximately 20.0% of the total number of Offering Shares, solely to cover the over-allotment of
Shares (if any), subject to any applicable laws and regulations, including the SFA and any
regulations thereunder, from the Listing Date until the earlier of (i) the date falling 30 days from the
Listing Date, or (ii) the date when the Stabilising Manager (or its affiliates or other persons acting
on its behalf) has bought on the SGX-ST an aggregate of 15,447,200 Shares, representing
approximately 20.0% of the total number of Offering Shares, to undertake stabilising actions. The
exercise of the Over-allotment Option will not increase the total number of issued Shares
immediately after the completion of the Offering and the issue of the New Cornerstone Shares.

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SHARE LENDING AGREEMENT

In connection with the Over-allotment Option, the Stabilising Manager has entered into a share
lending agreement (the “Share Lending Agreement”) with Dr Shi Xu pursuant to which the
Stabilising Manager (or its affiliates or other persons acting on its behalf) may borrow up to
15,447,200 Shares from Dr Shi Xu, which will be borrowed before the commencement of trading of
the Shares on the SGX-ST, to cover over-allotments, if any. Any Shares that may be borrowed by
the Stabilising Manager under the Share Lending Agreement will be returned by the Stabilising
Manager to Dr Shi Xu by no later than 30 business days following the earlier of (i) the last date for
exercising the Over-allotment Option and (ii) the date on which the Over-allotment Option is
exercised, either through the purchase of Shares in the open market by the Stabilising Manager in
the conduct of stabilisation activities or through the exercise of the Over-allotment Option by the
Stabilising Manager on behalf of itself and the Joint Bookrunners and Underwriters.

NO SALE OF SIMILAR SECURITIES AND LOCK-UP

Our Company

We have agreed with the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters that, subject to certain exceptions, from the date of the Underwriting
Agreement until the date falling six months from the Listing Date, we will not, without the prior
written consent of the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters, (i) allot, issue, offer, pledge, sell, contract to issue or sell, grant any
option, warrant, contract or other right to purchase, grant security over, encumber (whether by way
of mortgage, assignment of rights, charge, pledge, pre-emption rights, rights of first refusal or
otherwise), lend, hypothecate or encumber or otherwise transfer or dispose of, directly or indirectly,
any Shares or any other securities of our Company or any subsidiaries of ours (including any
equity-linked securities, perpetual securities and any securities convertible into or exercisable or
exchangeable for or which carry rights to subscribe or purchase any Shares or any other securities
of our Company or any subsidiary of ours), whether such transaction is to be settled by delivery of
Shares or other securities of our Company or any subsidiary of ours, or in cash or otherwise, (ii)
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Shares or any other securities of our Company or any
subsidiary of ours, or any interest in any of the foregoing (including any securities convertible into
or exercisable or exchangeable for or which carry rights to subscribe or purchase Shares or any
other securities of our Company or any subsidiary of ours), whether such transaction is to be settled
by delivery of Shares or other securities of our Company or any subsidiary of ours, or in cash or
otherwise, (iii) deposit any Shares or any other securities of our Company or any subsidiary of ours
(including any securities convertible into or exchangeable for or which carry rights to subscribe or
purchase Shares or any other securities of our Company or any subsidiary of ours) in any
depository receipt facilities, (iv) enter into a transaction which is designed or which may reasonably
be expected to result in any of the above, or (v) offer to, or agree to, or publicly announce any
intention to do any of the above.

The foregoing does not apply to the issue of the the Pre-IPO Option Shares, the Option Shares, the
New Cornerstone Shares, the Swap Shares and the Conversion Shares.

Dr Shi Xu

As at the date of this Prospectus, Dr Shi Xu directly holds 154,262,220 Shares.

Immediately following completion of the Offering and the issue and sale of the Cornerstone Shares,
Dr Shi Xu will hold 319,999,980 Shares (being 66,290,020 Shares held directly and 253,709,960

327
Shares indirectly held through Pearl Yard Holdings Inc.) (the “Dr Shi Lock-Up Shares”),
representing approximately 48.6% of our post-Offering share capital (assuming the Over-allotment
Option is not exercised).

Dr Shi Xu has given an undertaking to the Joint Issue Managers, the Joint Global Coordinators and
the Joint Bookrunners and Underwriters that, subject to certain exceptions, from the date of the
Underwriting Agreement until the date falling six months from the Listing Date, he will not, without
the prior written consent of the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters, (i) issue, offer, pledge, sell, contract to sell, grant any option, right,
warrant or contract to purchase, lend, hypothecate, grant security over or encumber (whether by
way of mortgage, assignment of rights, charge, pledge, pre-emption rights, rights of first refusal or
otherwise), or otherwise transfer or dispose of, directly or indirectly, any of his interest in the Dr Shi
Lock-Up Shares, (including any interests or any securities convertible into or exercisable or
exchangeable for or which carry rights to subscribe or purchase any Dr Shi Lock-Up Shares),
(ii) enter into any swap, hedge or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of (or having interests in) the Dr Shi Lock-Up
Shares or any interests or securities convertible into or exercisable or exchangeable for or which
carry rights to subscribe for or purchase the Dr Shi Lock-Up Shares whether such swap, hedge or
other arrangement is to be settled by delivery of shares or other securities, in cash or otherwise,
(iii) deposit any of the Dr Shi Lock-Up Shares (including any interests or any securities convertible
into or exchangeable for, or which carry rights to subscribe for or purchase any of the Dr Shi
Lock-Up Shares) in any depository receipt facilities (other than a CDP designated moratorium
account for the purpose of complying with his obligations under these restrictions), (iv) enter into
any transaction which is designed or which may reasonably be expected to result in any of the
above, or (v) offer to, or agree to, or publicly announce any intention to do any of the above.

Further, Dr Shi Xu has given an undertaking to the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters that, subject to certain exceptions, from
the date of the Underwriting Agreement until the date falling six months from the Listing Date, he
will not, without the prior written consent of the Joint Issue Managers and Joint Global Coordinators
and the Joint Bookrunners and Underwriters, (i) issue, offer, pledge, sell, contract to sell, grant any
option, right, warrant or contract to purchase, lend, hypothecate, grant security over, or encumber
(whether by way of mortgage, assignment of rights, charge, pledge, pre-emption rights, rights of
first refusal or otherwise) or otherwise transfer or dispose of, directly or indirectly, any of his
interests in his shares in Pearl Yard Holdings Inc. (the “Dr Shi Pearl Yard Lock-Up Shares”),
(including any interests or any securities convertible into or exercisable or exchangeable for or
which carry rights to subscribe or purchase any Dr Shi Pearl Yard Lock-Up Shares), (ii) enter into
any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of (or having interests in) the Dr Shi Pearl Yard Lock-Up
Shares or any interests or securities convertible into or exercisable or exchangeable for or which
carry rights to subscribe for or purchase the Dr Shi Pearl Yard Lock-Up Shares whether such swap,
hedge or other arrangement is to be settled by delivery of shares or other securities, in cash or
otherwise; (iii) deposit any of the Dr Shi Pearl Yard Lock-Up Shares (including any interests or any
securities convertible into or exchangeable for, or which carry rights to subscribe for or purchase
any of the Dr Shi Pearl Yard Lock-Up Shares) in any depository receipt facilities (other than a CDP
designated moratorium account for the purpose of complying with his obligations under these
restrictions), (iv) enter into any transaction which is designed or which may reasonably be expected
to result in any of the above, or (v) offer to, or agree to, or publicly announce any intention to do any
of the above.

The foregoing does not apply to (a) the Offering Shares and the Vendor Cornerstone Shares to be
sold by Dr Shi Xu, (b) the transfer of Shares pursuant to the Share Lending Agreement, provided
that these restrictions will apply to the Shares returned to Dr Shi Xu pursuant to the Share Lending
Agreement and (c) any Shares sold by Dr Shi Xu pursuant to the exercise of the Over-allotment
Option granted by Dr Shi Xu.

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Pearl Yard Holdings Inc.

As at the date of this Prospectus, Pearl Yard Holdings Inc. directly holds 253,709,960 Shares.

Immediately following completion of the Offering and the issue and sale of the Cornerstone Shares,
Pearl Yard Holdings Inc. will directly hold 253,709,960 Shares (the “Pearl Yard Lock-Up Shares”),
representing approximately 38.5% of our post-Offering share capital (assuming the Over-allotment
Option is not exercised).

Pearl Yard Holdings Inc. has given an undertaking to the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters that, subject to certain exceptions, from
the date of the Underwriting Agreement until the date falling six months from the Listing Date, it will
not, without the prior written consent of the Joint Issue Managers, the Joint Global Coordinators
and the Joint Bookrunners and Underwriters, (i) issue, offer, pledge, sell, contract to sell, grant any
option, right, warrant or contract to purchase, lend, hypothecate, grant security over, or encumber
(whether by way of mortgage, assignment of rights, charge, pledge, pre-emption rights, rights of
first refusal or otherwise) or otherwise transfer or dispose of, directly or indirectly, any of its
interests in the Pearl Yard Lock-Up Shares, (including any interests or any securities convertible
into or exercisable or exchangeable for or which carry rights to subscribe or purchase any Pearl
Yard Lock-Up Shares), (ii) enter into any swap, hedge or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of (or having interests
in) the Pearl Yard Lock-Up Shares or any interests or securities convertible into or exercisable or
exchangeable for or which carry rights to subscribe for or purchase the Pearl Yard Lock-Up Shares
whether such swap, hedge or other arrangement is to be settled by delivery of shares or other
securities, in cash or otherwise, (iii) deposit any of the Pearl Yard Lock-Up Shares (including any
interests or any securities convertible into or exchangeable for, or which carry rights to subscribe
for or purchase any of the Pearl Yard Lock-Up Shares) in any depository receipt facilities (other
than a CDP designated moratorium account for the purpose of complying with his obligations under
these restrictions), (iv) enter into any transaction which is designed or which may reasonably be
expected to result in any of the above, or (v) offer to, or agree to, or publicly announce any intention
to do any of the above.

Mdm Jin Xiao Qun

As at the date of this Prospectus, Mdm Jin Xiao Qun directly holds 10,190,375 Shares and
21,031,280 shares in Harrymore International Limited. Mdm Jin Xiao Qun is an associate of our
Controlling Shareholder, Dr Shi Xu, and accordingly is considered a promoter of our Company
under Rule 226(1) of the Listing Manual.

Immediately following completion of the Offering and the issue and sale of the Cornerstone Shares,
Mdm Jin Xiao Qun will directly hold 10,190,375 Shares (the “Jin Xiao Qun Lock-Up Shares”),
representing approximately 1.5% of our post-Offering share capital (assuming the Over-allotment
Option is not exercised).

Mdm Jin Xiao Qun has given an undertaking to the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters that, subject to certain exceptions, from
the date of the Underwriting Agreement until the date falling six months from the Listing Date, she
will not, without the prior written consent of the Joint Issue Managers and Joint Global Coordinators
and the Joint Bookrunners and Underwriters, (i) issue, offer, pledge, sell, contract to sell, grant any
option, right, warrant or contract to purchase, lend, hypothecate, grant security over, or encumber
(whether by way of mortgage, assignment of rights, charge, pledge, pre-emption rights, rights of
first refusal or otherwise) or otherwise transfer or dispose of, directly or indirectly, any of her
interests in the Jin Xiao Qun Lock-Up Shares, (including any interests or any securities convertible
into or exercisable or exchangeable for or which carry rights to subscribe or purchase any Jin Xiao
Qun Lock-Up Shares), (ii) enter into any swap, hedge or other arrangement that transfers to

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another, in whole or in part, any of the economic consequences of ownership of (or having interests
in) the Jin Xiao Qun Lock-Up Shares or any interests or securities convertible into or exercisable or
exchangeable for or which carry rights to subscribe or purchase the Jin Xiao Qun Lock-Up Shares
whether such swap, hedge or other arrangement is to be settled by delivery of shares or other
securities, in cash or otherwise, (iii) deposit any of the Jin Xiao Qun Lock-Up Shares (including any
interests or any securities convertible into or exchangeable for, or which carry rights to subscribe
or purchase any of the Jin Xiao Qun Lock-Up Shares) in any depository receipt facilities (other than
a CDP designated moratorium account for the purpose of complying with her obligations under
these restrictions), (iv) enter into any transaction which is designed or which may reasonably be
expected to result in any of the above, or (v) offer to, or agree to, or publicly announce any intention
to do any of the above.

Further, Mdm Jin Xiao Qun has given an undertaking to the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters that, subject to certain exceptions, from
the date of the Underwriting Agreement until the date falling six months from the Listing Date, she
will not, without the prior written consent of the Joint Issue Managers and Joint Global Coordinators
and the Joint Bookrunners and Underwriters, (i) issue, offer, pledge, sell, contract to sell, grant any
option, right, warrant or contract to purchase, lend, hypothecate, grant security over, or encumber
(whether by way of mortgage, assignment of rights, charge, pledge, pre-emption rights, rights of
first refusal or otherwise) or otherwise transfer or dispose of, directly or indirectly, any of her
interests in her 21,031,280 shares in Harrymore International Limited (the “Jin Xiao Qun
Harrymore Lock-Up Shares”), (including any interests or any securities convertible into or
exercisable or exchangeable for or which carry rights to subscribe for or purchase any Jin Xiao Qun
Harrymore Lock-Up Shares), (ii) enter into any swap, hedge or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of (or having interests
in) the Jin Xiao Qun Harrymore Lock-Up Shares or any interests or securities convertible into or
exercisable or exchangeable for or which carry rights to subscribe or purchase the Jin Xiao Qun
Harrymore Lock-Up Shares whether such swap, hedge or other arrangement is to be settled by
delivery of shares or other securities, in cash or otherwise, (iii) deposit any of the Jin Xiao Qun
Harrymore Lock-Up Shares (including any interests or any securities convertible into or
exchangeable for, or which carry rights to subscribe for or purchase any of the Jin Xiao Qun
Harrymore Lock-Up Shares) in any depository receipt facilities (other than a CDP designated
moratorium account for the purpose of complying with her obligations under these restrictions), (iv)
enter into any transaction which is designed or which may reasonably be expected to result in any
of the above, or (v) offer to, or agree to, or publicly announce any intention to do any of the above.

Harrymore International Limited

As at the date of this Prospectus, Harrymore International Limited directly holds 47,684,560 Shares
for its own account.

Immediately following completion of the Offering and the issue and sale of the Cornerstone Shares,
Harrymore International Limited will directly hold 47,684,560 Shares for its own account,
representing approximately 7.2% of our post-Offering share capital (assuming the Over-allotment
Option is not exercised).

Harrymore International Limited has given an undertaking to the Joint Issue Managers, the Joint
Global Coordinators and the Joint Bookrunners and Underwriters that, subject to certain
exceptions, from the date of the Underwriting Agreement until the date falling six months from the
Listing Date, it will not, without the prior written consent of the Joint Issue Managers, the Joint
Global Coordinators and the Joint Bookrunners and Underwriters, (i) issue, offer, pledge, sell,
contract to sell, grant any option, right, warrant or contract to purchase, lend, hypothecate, grant
security over, or encumber (whether by way of mortgage, assignment of rights, charge, pledge,
pre-emption rights, rights of first refusal or otherwise) or otherwise transfer or dispose of, directly
or indirectly, any of its interests in the 47,684,560 Shares held for its own account (the “Harrymore

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Lock-Up Shares”), (including any interests or any securities convertible into or exercisable or
exchangeable for or which carry rights to subscribe or purchase any Harrymore Lock-Up Shares),
(ii) enter into any swap, hedge or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of (or having interests in) the Harrymore Lock-Up
Shares or any interests or securities convertible into or exercisable or exchangeable for or which
carry rights to subscribe or purchase the Harrymore Lock-Up Shares whether such swap, hedge or
other arrangement is to be settled by delivery of shares or other securities, in cash or otherwise,
(iii) deposit any of the Harrymore Lock-Up Shares (including any interests or any securities
convertible into or exchangeable for, or which carry rights to subscribe for or purchase any of the
Harrymore Lock-Up Shares) in any depository receipt facilities (other than a CDP designated
moratorium account for the purpose of complying with its obligations under these restrictions),
(iv) enter into any transaction which is designed or which may reasonably be expected to result in
any of the above, or (v) offer to, or agree to, or publicly announce any intention to do any of the
above.

OCBC

As at the date of this Prospectus, OCBC directly holds 2,183,930 Shares for its own account (the
“OCBC Lock-up Shares”).

Immediately following completion of the Offering and the issue and sale of the Cornerstone Shares,
OCBC will directly hold 2,183,930 Shares for its own account, representing approximately 0.3% of
our post-Offering share capital (assuming the Over-allotment Option is not exercised).

OCBC has given an undertaking to the Joint Issue Managers, and the Joint Bookrunners and
Underwriters that, subject to certain exceptions, from the date of the Underwriting Agreement until
the date falling six months from the Listing Date (the “OCBC Lock-up Period”), it will not, without
the prior written consent of the Joint Issue Managers and the Joint Bookrunners and Underwriters,
(i) issue, offer, pledge, sell, contract to sell, grant any option, right, warrant or contract to purchase,
lend, hypothecate, grant security over or encumber (whether by way of mortgage, assignment of
rights, charge, pledge, pre-emption rights, rights of first refusal or otherwise), or otherwise transfer
or dispose of, any of its effective interest in the OCBC Lock-up Shares (including any interests or
securities convertible into or exercisable or exchangeable or which carry rights to subscribe for or
purchase any such OCBC Lock-up Shares), (ii) enter into any swap, hedge or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership (or
having an interests in) the OCBC Lock-up Shares or any interests or securities convertible into or
exercisable or exchangeable for or which carry rights to subscribe or purchase any OCBC Lock-Up
Shares whether such swap, hedge or other arrangement is to be settled by delivery of shares or
other securities, in cash or otherwise, (iii) deposit any of the OCBC Lock-up Shares (including any
interests or securities convertible into or exchangeable for, or which carry rights to subscribe for or
purchase any OCBC Lock-up Shares) in any receipt facilities other than in a moratorium account
designated by the CDP for the purpose of complying with its obligations under these restrictions,
whether any such transaction is to be settled by delivery of shares or other securities, in cash or
otherwise, (iv) enter into a transaction which is designed or which may reasonably be expected to
result in any of the foregoing, or (v) offer to, or agree to, publicly announce any intention to do any
of the above.

The foregoing does not prohibit OCBC from being able to directly or indirectly transfer such OCBC
Lock-up Shares to and between wholly-owned subsidiaries of OCBC provided that OCBC has
procured that such subsidiary has executed and delivered to the Joint Issue Managers, and the
Joint Bookrunners and Underwriters, an undertaking to the effect that it will comply with the
foregoing restrictions, to remain in effect for the unexpired period of the OCBC Lock-up Period.

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Lion-OCBC Capital Asia I Holding Pte. Ltd. (“LOCAF”)

As at the date of this Prospectus, LOCAF directly holds 3,439,695 Shares for its own account (the
“LOCAF Lock-up Shares”).

Immediately following completion of the Offering and the issue and sale of the Cornerstone Shares,
LOCAF will directly hold 3,439,695 Shares for its own account, representing approximately 0.5% of
our post-Offering share capital (assuming the Over-allotment Option is not exercised).

LOCAF has given an undertaking to the Joint Issue Managers, and the Joint Bookrunners and
Underwriters that, subject to certain exceptions, from the date of the Underwriting Agreement until
the date falling six months from the Listing Date (the “LOCAF Lock-up Period”), it will not, without
the prior written consent of the Joint Issue Managers and the Joint Bookrunners and Underwriters,
(i) issue, offer, pledge, sell, contract to sell, grant any option, right, warrant or contract to purchase,
lend, hypothecate, grant security over or encumber (whether by way of mortgage, assignment of
rights, charge, pledge, pre-emption rights, rights of first refusal or otherwise), or otherwise transfer
or dispose of, any of its effective interest in the LOCAF Lock-up Shares (including any interests or
securities convertible into or exercisable or exchangeable or which carry rights to subscribe for or
purchase any such LOCAF Lock-up Shares), (ii) enter into any swap, hedge or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership (or
having an interests in) the LOCAF Lock-up Shares or any interests or securities convertible into or
exercisable or exchangeable for or which carry rights to subscribe or purchase any LOCAF
Lock-Up Shares whether such swap, hedge or other arrangement is to be settled by delivery of
shares or other securities, in cash or otherwise, (iii) deposit any of the LOCAF Lock-up Shares
(including any interests or securities convertible into or exchangeable for, or which carry rights to
subscribe for or purchase any LOCAF Lock-up Shares) in any receipt facilities other than in a
moratorium account designated by the CDP for the purpose of complying with its obligations under
these restrictions, whether any such transaction is to be settled by delivery of shares or other
securities, in cash or otherwise, (iv) enter into a transaction which is designed or which may
reasonably be expected to result in any of the foregoing, or (v) offer to, or agree to, publicly
announce any intention to do any of the above.

The foregoing does not prohibit LOCAF from being able to directly or indirectly transfer such
LOCAF Lock-up Shares to and between wholly-owned subsidiaries of LOCAF provided that LOCAF
has procured that such subsidiary has executed and delivered to the Joint Issue Managers, and the
Joint Bookrunners and Underwriters, an undertaking to the effect that it will comply with the
foregoing restrictions, to remain in effect for the unexpired period of the LOCAF Lock-up Period.

Lion Global Investors

Lion Global Investors has entered into a cornerstone subscription agreement dated 14 October
2020 (the “LGI Cornerstone Subscription Agreement”) with our Company to subscribe for an
aggregate of 3,378,400 Cornerstone Shares as a Cornerstone Investor in its capacity as
investment manager for and on behalf of the LGI Clients, comprising:

(i) 885,500 Cornerstone Shares in its capacity as investment manager for and on behalf of LGI
Clients who are independent third parties (the “LGI Independent Cornerstone Shares”);
and/or

(ii) 2,492,900 Cornerstone Shares in its capacity as investment manager for and on behalf of LGI
Clients who are not independent third parties, including entities in the same group of
companies as OCBC (the “LGI Non-Independent Cornerstone Shares”).

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In addition to the foregoing, LGI may also purchase Placement Shares under the International
Offering in its capacity as investment manager for and on behalf of:

(a) LGI Clients who are independent third parties (the “LGI Independent Shares”); and/or

(b) LGI Clients who are not independent third parties, including entities in the same group of
companies as OCBC (the “LGI Non-Independent Shares”). To the extent that Lion Global
Investors purchases any LGI Non-Independent Shares, such LGI Non-Independent Shares
will be subject to the lock-up restrictions described below.

The LGI Non-Independent Cornerstone Shares and the LGI Non-Independent Shares shall be
collectively referred to as the “LGI Lock-up Shares”.

LGI has given an undertaking to the Joint Issue Managers, and the Joint Bookrunners and
Underwriters that, subject to certain exceptions, from the date on which the LGI Lock-up Shares are
issued and allotted until the date falling six months from the Listing Date (the “LGI Lock-up
Period”), it will not, without the prior written consent of the Joint Issue Managers and the Joint
Bookrunners and Underwriters, (i) issue, offer, pledge, sell, contract to sell, grant any option, right,
warrant or contract to purchase, lend, hypothecate, grant security over or encumber (whether by
way of mortgage, assignment of rights, charge, pledge, pre-emption rights, rights of first refusal or
otherwise), or otherwise transfer or dispose of, any of its effective interest in the LGI Lock-up
Shares (including any interests or securities convertible into or exercisable or exchangeable for or
which carry rights to subscribe for or purchase any such LGI Lock-up Shares), (ii) enter into any
swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership (or having interests in) the LGI Lock-up Shares or any interests or
securities convertible into or exercisable or exchangeable for or which carry rights to subscribe or
purchase any LGI Lock-Up Shares whether such swap, hedge or other arrangement is to be settled
by delivery of shares or other securities, in cash or otherwise, (iii) deposit any of the LGI Lock-up
Shares (including any interests or securities convertible into or exchangeable for, or which carry
rights to subscribe for or purchase any LGI Lock-up Shares) in any depository receipt facilities other
than in a moratorium account designated by the CDP for the purpose of complying with its
obligations under these restrictions, whether any such transaction is to be settled by delivery of
shares or other securities, in cash or otherwise, (iv) enter into a transaction which is designed or
which may reasonably be expected to result in any of the foregoing, or (v) offer to, or agree to,
publicly announce any intention to do any of the above.

The foregoing does not apply to prohibit LGI from being able to directly or indirectly transfer such
LGI Lock-up Shares to and between wholly-owned subsidiaries of LGI provided that LGI has
procured that such subsidiary has executed and delivered to the Joint Issue Managers, and the
Joint Bookrunners and Underwriters, an undertaking to the effect that it will comply with the
foregoing restrictions, to remain in effect for the unexpired period of the LGI Lock-up Period.

For the avoidance of doubt, the LGI Independent Cornerstone Stones and the LGI Independent
Shares will not be subject to any lock-up restrictions.

PRICE STABILISATION

In connection with the Offering, the Stabilising Manager (or persons acting on its behalf) may
over-allot Shares or effect transactions that stabilise or maintain the market price of the Shares at
levels that might not otherwise prevail in the open market. Such transactions may be effected on the
SGX-ST and in other jurisdictions where it is permissible to do so, in each case in compliance with
all applicable laws and regulations, including the SFA and any regulations thereunder. However,
there is no assurance that the Stabilising Manager (or persons acting on its behalf) will undertake
any stabilising action. Such transactions may commence on or after the Listing Date and, if
commenced, may be discontinued at any time and must not be effected after the earlier of (i) the

333
date falling 30 days from the Listing Date, or (ii) the date when the Stabilising Manager (or persons
acting on its behalf) has bought on the SGX-ST an aggregate of 15,447,200 Shares, representing
approximately 20.0% of the total number of Offering Shares, to undertake stabilising actions.

Neither we, the Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global
Coordinators, nor the Joint Bookrunners and Underwriters make any representation or prediction
as to the direction or magnitude of any effect that the transactions described above may have on
the price of the Shares. In addition, neither we, the Vendors, the Financial Adviser, the Joint Issue
Managers, the Global Coordinators, nor the Joint Bookrunners and Underwriters makes any
representation that the Stabilising Manager will engage in these transactions or that these
transactions, once commenced, will not be discontinued without notice (unless such notice is
required by law). The Stabilising Manager will also be required to make a public announcement
through the SGX-ST in relation to the cessation of the stabilising actions and the number of Shares
in respect of which the Over-allotment Option has been exercised not later than 8.30 a.m. on the
trading day of the SGX-ST immediately after the day of cessation of stabilising actions.

NO EXISTING PUBLIC MARKET

Prior to the Offering, there had been no trading market for the Shares. The Offering Price was
determined after a bookbuilding process and agreed among our Company, the Vendors, the Joint
Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and Underwriters.
Among the factors considered in determining the Offering Price of the Offering Shares were the
prevailing market conditions, current market valuations of publicly traded companies that our
Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters believe to be reasonably comparable to our Group, an assessment
of our Group’s recent historical performance, estimates of our Group’s business potential and
earnings prospects, the current state of our Group’s development and the current state of the
industry and the economy as a whole.

SELLING AND TRANSFER RESTRICTIONS

This Prospectus does not constitute an offer, solicitation or invitation to subscribe for and/or
purchase the Offering Shares in any jurisdiction in which such offer, solicitation or invitation is
unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation
or invitation.

No action has been or will be taken under the requirements of the legal or regulatory requirements
of the United States or any other jurisdiction, except for the lodgment and registration of this
Prospectus in Singapore in order to permit a public offering of the Offering Shares and the public
distribution of this Prospectus in Singapore. The distribution of this Prospectus and the offering of
the Offering Shares in certain jurisdictions may be restricted by the relevant laws in such
jurisdictions. Persons who may come into possession of this Prospectus are required by us, the
Vendors, the Financial Adviser, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters to inform themselves about, and to observe and comply with,
any such restrictions at their own expense and without liability to us, the Vendors, the Financial
Adviser, the Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and
Underwriters.

Persons to whom a copy of this Prospectus has been issued shall not circulate to any other
persons, reproduce or otherwise distribute this Prospectus or any information contained herein for
any purpose whatsoever nor permit or cause the same to occur.

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United States of America

The Offering Shares have not been and will not be registered under the Securities Act, and may not
be offered or sold within the US except in certain transactions exempt from the registration
requirements of the Securities Act. The Offering Shares are being offered and sold in offshore
transactions as defined in and in reliance on Regulation S. Terms used in this paragraph have the
meanings given to them by Regulation S under the Securities Act.

Hong Kong

The contents of this Prospectus have not been reviewed by any regulatory authority in Hong Kong.
You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the
contents of this Prospectus, you should obtain independent professional advice. This Prospectus
has not been authorised by the Securities and Futures Commission in Hong Kong.

Accordingly, no person shall issue or possess for the purposes of issue, whether in Hong Kong or
elsewhere, any advertisement, invitation or document relating to the Offering Shares, which is
directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong
(except if permitted to do so under the securities laws of Hong Kong) other than with respect to the
Offering Shares which are or are intended to be disposed of only to persons outside Hong Kong or
only to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of
Hong Kong (the “SFO”) and any rules made under the SFO.

Switzerland

This Prospectus does not constitute a prospectus pursuant to the Swiss Federal Financial Services
Act (“FinSA”) and the implementing Financial Services Ordinance (“FinSO”), and no such
prospectus pursuant to FinSA has been or will be prepared in connection with the offering of the
Offering Shares. No application has been made or will be made to admit the Offering Shares to
trading on any trading venue (exchange or multilateral trading facility) in Switzerland. The
Prospectus has not been and will not be filed with or approved by a Swiss review body (Prüfstelle).

The Offering Shares may not be publicly offered, sold or advertised, directly or indirectly, in
Switzerland other than to professional investors pursuant to the exemption under Article 36(1)(a)
FinSA or where such offer does not qualify as a public offer in Switzerland. For these purposes
“public offer” refers to the respective definitions in Article 3(g) and (h) FinSA and as further detailed
in FinSO.

Malaysia

No approval, authorisation or recognition from the Securities Commission of Malaysia

(“Commission”) has been applied for or will be obtained for the offer or sale, invitation for
subscription or purchase of the Offering Shares under the Capital Markets and Services Act 2007
(“CMSA”) as the Offering Shares will be offered to persons specified under paragraph 10 of
Schedule 5 of the CMSA (“Accredited Investors”) through a holder of Capital Markets Services
Licence who carries on the business of dealing in securities. No prospectus or other offering
material or document in connection with the Offering have been or will be registered with the
Commission as a prospectus under the CMSA. A copy of this Prospectus will not be deposited with
the Commission in accordance with Section 229(4) and 230(4) of CMSA for the purpose of the
Offering. Any investment to which this document relates in Malaysia with respect to the Offering is
deemed to be an excluded offer or an excluded invitation(s) and an excluded issue, as the case
may be, under Schedules 6 and 7 of the CMSA as the Offering Shares will be offered to persons
who fall within the exemptions specified in Schedules 6 and 7 of the CMSA (each, an “Excluded
Person”). Accordingly, this Prospectus or any other document or material in connection with this
Offering may not be circulated or distributed to persons in Malaysia, and the Offering Shares may
not be offered or sold, or be made the subject of an invitation for subscription or purchase, whether

335
directly or indirectly, to persons in Malaysia other than an Accredited Investor and an Excluded
Person. By reason of the foregoing, whether or not you invest in the Offering Shares, if you are in
Malaysia, you may not distribute this document to anyone other than your own financial and legal
advisers, nor may you make copies of this or any other document you receive, except to the extent
necessary to consult with your financial and legal advisers who are advising you in connection with
this potential investment (and only so long as such advisers agree to hold this information
confidential and not use it for purposes other than advising you in connection herewith). Any other
reproduction or distribution of this document in Malaysia, in whole or in part, or the disclosure of its
contents in Malaysia, without the issuer’s prior written consent, is prohibited.

European Economic Area and United Kingdom

In relation to each Member State of the European Economic Area and the United Kingdom (each a
“Relevant State”), no Offering Shares have been offered or will be offered pursuant to the Offering
to the public in that Relevant State prior to the publication of a prospectus in relation to the Offering
Shares which has been approved by the competent authority in that Relevant State or, where
appropriate, approved in another Relevant State and notified to the competent authority in that
Relevant State, all in accordance with the Prospectus Regulation, except that it may make an offer
to the public in that Relevant State of any Offering Shares at any time under the following
exemptions under the Prospectus Regulation:

(i) to any legal entity which is a qualified investor as defined under the Prospectus Regulation
(a “Qualified Investor”);

(ii) to fewer than 150 natural or legal persons (other than Qualified Investors), subject to obtaining
the prior consent of the Joint Bookrunners and Underwriters for any such offer; or

(iii) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of Offering Shares shall require our Company or any Joint Bookrunner
and Underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or
supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to any Offering
Shares in any Relevant State means the communication in any form and by any means of sufficient
information on the terms of the offer and any Offering Shares to be offered so as to enable an
investor to decide to purchase or subscribe for any Offering Shares, and the expression
“Prospectus Regulation” means Regulation (EU) 2017/1129.

In the case of any Offering Shares being offered to a “financial intermediary”, as that term is used
in Article 5(1) of the Prospectus Regulation, such financial intermediary will also be deemed to have
represented, acknowledged and agreed that the Offering Shares acquired by it in the Offering have
not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a
view to their offer or resale to, persons in circumstances which may give rise to an offer of any
Offering Shares to the public, other than their offer or resale in a Relevant State to Qualified
Investors or in circumstances in which the prior consent of the Joint Bookrunners and Underwriters
has been obtained to each such proposed offer or resale. Our Company, the Vendors, the Joint
Bookrunners and Underwriters and their affiliates, and others will rely upon the truth and accuracy
of the foregoing representation, acknowledgement and agreement. Notwithstanding the above, a
person who is not a Qualified Investor and who has notified the Joint Bookrunners and Underwriters
of such fact in writing may, with the prior consent of the Joint Bookrunners and Underwriters, be
permitted to acquire Offering Shares in the Offering.

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In addition, in the United Kingdom, the Offering is addressed to, and directed only at, Qualified
Investors who are (i) persons who have professional experience in matters relating to investments
and who fall within the definition of “investment professionals” in Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the “Order”),
(ii) persons who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, or
(iii) other persons to whom this document may otherwise lawfully be communicated (all such
persons referred to in (i), (ii) and (iii) together being referred to as “relevant persons”). This
document must not be acted on or relied on in the United Kingdom by persons who are not relevant
persons. Any investment or investment activity to which this document relates is available only to
relevant persons in the United Kingdom and will be engaged in only with such persons.

OTHER RELATIONSHIPS

The Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and
Underwriters and their affiliates are full service financial institutions engaged in various activities,
which may include securities trading, commercial and investment banking, investment and asset
management, investment research, principal investment, hedging, financing and brokerage
activities and/or other commercial transactions, including holding treasury investments for their
own account. The Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners
and Underwriters and certain of their affiliates may have, from time to time, performed and may, in
the future, engage in transactions with and/or performed one or more of the abovementioned
services for our Group, our affiliates and the Vendors in the ordinary course of business for which
they received or will receive customary fees and expenses.

The Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and
Underwriters and certain of their affiliates may also, from time to time, trade in our securities
(including holding treasury investments for their own account, make co-investments with funds
managed by them or their affiliates), manage funds which invest or trade in our securities and/or
engage in other transactions with our Group, our affiliates and the Vendors in the ordinary course
of business. It is expected that the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters and their affiliates will continue to provide such services to,
and enter into such transactions with our Group, our affiliates and the Vendors in the future.

In particular, OCBC is also a lender to the Group (see “Management’s Discussion and Analysis of
Results of Operations and Financial Position—Borrowings” for further details). In 2016, OCBC and
LOCAF also made an equity investment in our Company (see “Business—Our History and
Development” for further details) and the Shares they hold are subject to lock-up undertakings as
further described in “Plan of Distribution—No Sale of Similar Securities and Lock-up—OCBC” and
“Plan of Distribution—No Sale of Similar Securities and Lock-up—Lion-OCBC Capital Asia I
Holding Pte. Ltd.”, respectively.

In addition, Lion Global Investors (an asset management company which is 70.0% owned by Great
Eastern Holdings Limited and 30.0% owned by Orient Holdings Private Limited, a wholly-owned
subsidiary of OCBC) is subscribing for Cornerstone Shares as a Cornerstone Investor in its
capacity as investment manager for and on behalf of the LGI Clients and may also purchase
Placement Shares in the International Offering in its capacity as investment manager for and on
behalf of the LGI Clients. Such Cornerstone Shares and Placement Shares include the LGI
Non-Independent Cornerstone Shares and (if applicable) the LGI Non-Independent Shares
subscribed for and/or purchased by Lion Global Investors in its capacity as investment manager for
and on behalf of LGI Clients who are not independent third parties, including entities in the same
group of companies as OCBC. The LGI Non-Independent Cornerstone Shares and (if applicable)
the LGI Non-Independent Shares are subject to lock-up undertakings as further described in
“Share Capital and Shareholders—Cornerstone Investors—Lion Global Investors Limited” and
“—No Sale of Similar Securities and Lock-up—Lion Global Investors” above.

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The Financial Adviser is an independent investment banking advisory firm that engages in various
activities, including advising on mergers and acquisitions, strategic shareholder advisory, special
committee assignments, restructurings, as well as advising clients on raising public and private
capital. The Financial Adviser and certain of its affiliates may have, from time to time, performed
and may, in the future, engage in transactions with and/or performed one or more of the
abovementioned services for our Group, our affiliates and the Vendors in the ordinary course of
business for which they received or will receive customary fees and expenses.

As part of a global independent investment banking advisory firm, certain affiliates of the Financial
Adviser engage in other activities including (a) equity research, (b) agency trading execution and
(c) wealth and investment management services to high net worth and institutional investors. Such
affiliates of the Financial Adviser may also, from time to time, trade in our securities and engage in
transactions with our Group, our affiliates and the Vendors in the ordinary course of business. It is
expected that such affiliates of the Financial Adviser will continue to provide such services to, and
enter into such transactions with our Group, our affiliates and the Vendors in the future.

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 CLEARANCE AND SETTLEMENT

A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of the Shares
on the Mainboard of the SGX-ST. For the purpose of trading on the SGX-ST, a board lot of the
Shares will comprise 100 Shares. Upon listing and quotation on the SGX-ST, the Shares will be
traded under the book-entry (scripless) settlement system of CDP, and all dealings in and
transactions of the Shares through the SGX-ST will be effected in accordance with the terms and
conditions for the operation of Securities Accounts with CDP, as amended from time to time.

CDP, a wholly-owned subsidiary of the Singapore Exchange Limited, is incorporated under the
laws of Singapore and acts as a depository and clearing organisation. CDP holds securities for its
account holders and facilitates the clearance and settlement of securities transactions between
account holders through electronic book-entry changes in the Securities Accounts maintained by
such account holders with CDP.

The Shares will be registered in the name of CDP or its nominees and held by CDP for and on behalf
of persons who maintain, either directly or through Depository Agents, Securities Accounts with
CDP. Persons named as direct Securities Account holders and Depository Agents in the Depository
Register maintained by CDP, rather than CDP itself, will be treated, under the SFA and our
Constitution, as members of our Company in respect of the number of Shares credited to their
respective Securities Accounts.

Persons holding the Shares in Securities Accounts with CDP may withdraw the number of Shares
they own from the book-entry settlement system in the form of physical share certificates. Such
share certificates will, however, not be valid for delivery pursuant to trades transacted on the
SGX-ST, although they will be prima facie evidence of title and may be transferred in accordance
with our Constitution. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of
S$25.00 for each withdrawal of more than 1,000 Shares is payable upon withdrawing the Shares
from the book-entry settlement system and obtaining physical share certificates. In addition, a fee
of S$2.00 or such other amount as our Directors may decide, is payable to the Share Registrar for
each share certificate issued, and stamp duty of 0.2% of the last-transacted price where it is
withdrawn in the name of a third party. Persons holding physical share certificates who wish to
trade on the SGX-ST must deposit with CDP their share certificates together with the duly executed
and (where necessary) stamped instruments of transfer in favour of CDP, and have their respective
Securities Accounts credited with the number of Shares deposited before they can effect the
desired trades. A fee of S$10.00, subject to GST at the prevailing rate (currently 7.0%), is payable
upon the deposit of each instrument of transfer with CDP. The above fee may be subject to such
changes as may be in accordance with CDP’s prevailing policies or the current tax policies that may
be in force in Singapore from time to time. Transfers and settlements pursuant to on-exchange
trades will be charged a fee of S$30.00 and transfers and settlements pursuant to off-exchange
trades will be charged a fee of 0.015% of the value of the transaction, subject to a minimum of
S$75.00.

Transactions in the Shares under the book-entry settlement system will be reflected by the seller’s
Securities Account being debited with the number of Shares sold and the buyer’s Securities
Account being credited with the number of Shares acquired. No transfer stamp duty is currently
payable for transfer of the Shares that are settled on a book-entry basis.

A Singapore clearing fee for trades in the Shares on the SGX-ST is payable at the rate of 0.0325%
of the transaction value. The clearing fee, instrument of transfer deposit fee and share withdrawal
fee that CDP may charge may be subject to GST at the prevailing rate of 7.0% (or such other rate
prevailing from time to time).

339
Dealings of the Shares will be carried out in S$ and will be effected for settlement on CDP on a
scripless basis. Settlement of trades on a normal “ready” basis on the SGX-ST generally takes
place on the second Market Day following the transaction date, and payment for the securities is
generally settled on the following business day. CDP holds securities on behalf of investors in
Securities Accounts. An investor may open a direct account with CDP or a sub-account with any
CDP Depository Agent. The CDP Depository Agent may be a member company of the SGX-ST,
bank, merchant bank or trust company.

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 LEGAL MATTERS

Certain legal matters in connection with the Offering will be passed upon for our Company by Allen
& Gledhill LLP, Haiwen & Partners, TMI Associates and YKVN with respect to matters of Singapore
law, PRC law, Japan law and Vietnam law, respectively.

Certain legal matters in connection with the Offering will be passed upon for the Joint Issue
Managers, the Joint Global Coordinators and the Joint Bookrunners and Underwriters by Allen &
Overy LLP with respect to matters of Singapore and U.S. federal securities laws.

Certain legal matters in connection with the Offering will be passed upon for the Joint Issue
Managers, the Joint Global Coordinators and the Joint Bookrunners and Underwriters by JunHe
LLP with respect to matters of PRC law.

Certain legal matters in connection with the Offering will be passed upon for the Vendors by Allen
& Gledhill LLP with respect to matters of Singapore law.

Save for the statements attributed to:

(a) Haiwen & Partners in the section entitled “Management—Legal Representatives”; and

(b) YKVN in the sections entitled “Risk Factors—Risks Relating to our Offering—We may have to
repay certain tax shortfalls in Vietnam” and “Risk Factors—Risks Relating to our
Offering—We may be constrained from paying dividends on our Shares from time to time,
including due to restrictions on our subsidiaries’ ability to make distributions to us”,

as described in “Experts”, each of Allen & Gledhill LLP, Haiwen & Partners, TMI Associates, YKVN,
Allen & Overy LLP and JunHe LLP does not make, or purports to make, any statement in this
Prospectus and is not aware of any statement in this Prospectus which purports to be based on a
statement made by it and each of them makes no representation, express or implied, regarding,
and to the extent permitted by law takes no responsibility for, any statement in or omission from this
Prospectus.

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 INDEPENDENT AUDITORS AND REPORTING ACCOUNTANTS

Moore Stephens LLP, Public Accountants and Chartered Accountants, Singapore, the Independent
Auditors and Reporting Accountants for the purpose of complying with the SFA only, has given and
has not withdrawn its written consent to the issue of this Prospectus with the inclusion herein of:

(i) its name and all references thereto;

(ii) its report titled “Independent Auditor’s Report on the Consolidated Financial Statements for
the Financial Years ended 31 December 2017, 2018 and 2019 of Nanofilm Technologies
International Limited and its Subsidiaries” as set out in Appendix A of this Prospectus;

(iii) its report titled “Independent Auditor’s Review Report on Unaudited Condensed Interim
Consolidated Financial Statements for the Six-Months Period ended 30 June 2020 of
Nanofilm Technologies International Limited and its Subsidiaries” as set out in Appendix B of
this Prospectus; and

(iv) its report titled “Independent Auditor’s Assurance Report on the Compilation of the Unaudited
Pro Forma Consolidated Financial Information for the Financial Year ended 31 December
2019 and the Six-Months Period ended 30 June 2020 of Nanofilm Technologies International
Limited and its Subsidiaries” as set out in Appendix C of this Prospectus,

in the form and context in which they are included in this Prospectus and to act in such capacity in
relation to this Prospectus. The above-mentioned report was prepared for the purpose of
incorporation in this Prospectus.

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 EXPERTS

Frost & Sullivan, the Independent Market Research Consultant, was responsible for preparing the
Independent Market Research Report and has given and has not withdrawn its written consent to
the issue of this Prospectus with the inclusion herein of its name and its write-ups, statements and
reports in the form and context in which they appear in this Prospectus, and to act in such capacity
in relation to this Prospectus. The above-mentioned write-ups, statements and reports were
prepared for the purpose of incorporation in this Prospectus.

Haiwen & Partners, named as our legal advisers as to PRC law, has given and has not withdrawn
its written consent to the issue of this Prospectus with the inclusion herein of its name and all
references thereto, and the statements attributed to it in the section entitled “Management—Legal
Representatives”, in the form and context in which they are included in this Prospectus and to act
in such capacity in relation to this Prospectus. The statements attributed to it in the section entitled
“Management—Legal Representatives” were prepared for the purpose of incorporation in this
Prospectus.

YKVN, named as our legal advisers as to Vietnam law, has given and has not withdrawn its written
consent to the issue of this Prospectus with the inclusion herein of its name and all references
thereto, and the statements attributed to it in the sections entitled “Risk Factors—Risks Relating to
our Offering—We may have to repay certain tax shortfalls in Vietnam” and “Risk Factors—Risks
Relating to our Offering—We may be constrained from paying dividends on our Shares from time
to time, including due to restrictions on our subsidiaries’ ability to make distributions to us”, in the
form and context in which they are included in this Prospectus and to act in such capacity in relation
to this Prospectus. The statements attributed to it in the section entitled “Risk Factors—Risks
Relating to our Offering—We may have to repay certain tax shortfalls in Vietnam” and “Risk
Factors—Risks Relating to our Offering—We may be constrained from paying dividends on our
Shares from time to time, including due to restrictions on our subsidiaries’ ability to make
distributions to us” were prepared for the purpose of incorporation in this Prospectus.

None of the experts named in this Prospectus:

• is employed on a contingent basis by our Company or any member of our Group;

• has a material interest, whether direct or indirect, in the Shares or the shares or equity
interests of any member of our Group; or

• has a material economic interest, whether direct or indirect, in our Company, including an
interest in the success of the Offering.

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 GENERAL AND STATUTORY INFORMATION

RESPONSIBILITY STATEMENT

1. Our Directors and the Vendors collectively and individually accept full responsibility for the
accuracy of the information given in this Prospectus and confirm after making all reasonable
enquiries that, to the best of their knowledge and belief, this Prospectus constitutes full and
true disclosure of all material facts about the Offering, our Company, our Group, the ESOS
and the Share Purchase Mandate, and our Directors and the Vendors are not aware of any
facts the omission of which would make any statement in this Prospectus misleading. Where
information in this Prospectus has been extracted from published or otherwise publicly
available sources or obtained from a named source, the sole responsibility of our Directors
and the Vendors has been to ensure that such information has been accurately and correctly
extracted from those sources and/or reproduced in this Prospectus in its proper form and
context.

MATERIAL BACKGROUND INFORMATION

2. As at the date of this Prospectus, none of our Directors, Executive Officers and Controlling
Shareholders has:

(a) at any time during the last 10 years, had an application or a petition under any bankruptcy
laws of any jurisdiction filed against him or her or against a partnership of which he or she
was a partner at the time he or she was a partner or at any time within two years after the
date he or she ceased to be a partner;

(b) at any time during the last 10 years, had an application or a petition under any law of any
jurisdiction filed against an entity (not being a partnership) of which he or she was a
director or an equivalent person or a key executive, at the time when he or she was a
director or an equivalent person or a key executive of that entity, or at any time within two
years after the date he or she ceased to be a director or an equivalent person or a key
executive of that entity, for the winding-up or dissolution of that entity or, where the entity
is the trustee of a business trust, that business trust, on the ground of insolvency;

(c) any unsatisfied judgment against him or her;

(d) ever been convicted of any offence, in Singapore or elsewhere, involving fraud or
dishonesty which is punishable with imprisonment, or has been the subject of any
criminal proceedings (including any pending criminal proceedings of which he or she is
aware) for such purpose;

(e) ever been convicted of any offence, in Singapore or elsewhere, involving a breach of any
law or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere, or has been the subject of any criminal proceedings (including
any pending criminal proceedings of which he or she is aware) for such breach;

(f) at any time during the last 10 years, had judgment entered against him or her in any civil
proceedings in Singapore or elsewhere involving a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere,
or a finding of fraud, misrepresentation or dishonesty on his or her part, or been the
subject of any civil proceedings (including any pending civil proceedings of which he or
she is aware) involving an allegation of fraud, misrepresentation or dishonesty on his or
her part;

(g) ever been convicted in Singapore or elsewhere of any offence in connection with the
formation or management of any entity or business trust;

344
 (h) ever been disqualified from acting as a director or an equivalent person of any entity
(including the trustee of a business trust), or from taking part directly or indirectly in the
management of any entity or business trust;

(i) ever been the subject of any order, judgment or ruling of any court, tribunal or
governmental body permanently or temporarily enjoining him or her from engaging in any
type of business practice or activity;

(j) ever, to his or her knowledge, been concerned with the management or conduct, in
Singapore or elsewhere, of the affairs of:

(i) any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;

(ii) any entity (not being a corporation) which has been investigated for a breach of any
law or regulatory requirement governing such entities in Singapore or elsewhere;

(iii) any business trust which has been investigated for a breach of any law or regulatory
requirement governing business trusts in Singapore or elsewhere; or

(iv) any entity or business trust which has been investigated for a breach of any law or
regulatory requirement that relates to the securities or futures industry in Singapore
or elsewhere,

in connection with any matter occurring or arising during the period when he or she was
so concerned with the entity or business trust; and

(k) been the subject of any current or past investigation or disciplinary proceedings, or has
been reprimanded or issued any warning, by the MAS or any other regulatory authority,
exchange, professional body or government agency, whether in Singapore or
elsewhere.

MATERIAL CONTRACTS

3. The material contracts entered into by our Group within the two years preceding the date of
lodgment of this Prospectus (not being contracts entered into in the ordinary course of the
business of our Group) with the MAS, are as follows:

(a) the Cornerstone Agreements entered into by our Company;

(b) the Shareholders’ Agreement and the Amendment Agreement;

(c) the service agreements entered into with Dr Shi Xu, Mr Lee Liang Huang and
Mr Lars Ralf Rainer Lieberwirth as described in “Management—Service Agreements”;

(d) the YLST Agreement;

(e) the 2018 NFT Subscription Agreement;

(f) the 2020 NFT Subscription Agreement;

(g) the WZT SHA; and

(h) the NFT SHA.

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EXCHANGE CONTROLS

4. Singapore

There are no exchange control restrictions in effect in Singapore.

PRC

The principal law governing foreign currency exchange in the PRC is the Foreign Exchange
Administration Regulations of the PRC (中華人民共和國外匯管理條例). The Foreign Exchange
Administration Regulations was enacted by the State Council on 29 January 1996 and
implemented on 1 April 1996. On 14 January 1997 and 5 August 2008, the State Council
amended the Foreign Exchange Administration Regulations. According to the Foreign
Exchange Administration Regulations currently in effect, international payments in foreign
currencies and transfer of foreign currencies under current items shall not be restricted.
Foreign currency transactions under the capital account are still subject to limitations and
require approvals from, or registration with, the State Administration of Foreign Exchange of
the PRC (中華人民共和國外匯管理局) (the “SAFE”) or its local counterpart and other relevant
PRC governmental authorities.

Pursuant to the Regulation of Settlement, Sale and Payment of Foreign Exchange (結匯、售
匯及付匯管理規定), promulgated on 20 June 1996 by the People’s Bank of China (the “PBOC”)
and which became effective on 1 July 1996, the Foreign-Invested Enterprises (the “FIE”), may
only buy, sell or remit foreign currencies at those banks authorised to conduct foreign
exchange business after providing valid commercial supporting documents and, in the case of
capital account item transactions, obtaining approvals from the SAFE or its local counterpart.

On 29 August 2008, the SAFE promulgated the Notice of the General Affairs Department of
the SAFE on the Relevant Operating Issues concerning the Improvement of the
Administration of Payment and Settlement of Foreign Currency Capital of Foreign-invested
Enterprises (國家外匯管理局綜合司關於完善外商投資企業外匯資本金支付結匯管理有關業務操作
問題的通知) (the “SAFE Circular 142”) regulating the conversion by a foreign-invested
enterprise of its foreign currency registered capital into RMB. The SAFE Circular 142 provides
that the RMB fund converted from foreign currency registered capital of a foreign-invested
enterprise may only be used for purposes within the business scope approved by the
applicable governmental authority and may not be used for equity investments within the
PRC. The use of such RMB fund may not be altered without approval, and such RMB fund may
not, in any case, be used to repay any RMB loans that were taken out but that have not been
utilised. Violations of the SAFE Circular 142 could result in severe monetary penalties. On
30 March 2015, the SAFE promulgated the Circular on Reforming the Management Approach
regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises (國家
外匯管理局關於改革外商投資企業外匯資本金支付結匯管理方式的通知) (the “SAFE Circular
19”), which became effective on 1 June 2015 and replaced the SAFE Circular 142. Under the
SAFE Circular 19, the restriction on the use of the RMB fund converted from foreign currency
registered capital of a foreign-invested enterprise for equity investments within the PRC was
abolished. Meanwhile, the use of such RMB fund should still obey the restrictions as set out
in this circular, such as it cannot be directly or indirectly used for payment beyond the
business scope of the enterprises or the payment prohibited by national laws and regulations;
investment in securities unless otherwise provided by laws and regulations; granting the
entrust loans in RMB (unless permitted by the scope of business), repaying the
inter-enterprise borrowings (including advances by the third party) or repaying the bank loans
in RMB that have been sub-lent to the third party; and paying the expenses related to the
purchase of real estate not for self-use, except for foreign-invested real estate enterprises. On
9 June 2016, the SAFE promulgated the Circular of SAFE on Reforming and Regulating
Policies on the Control over Foreign Exchange Settlement of Capital Accounts (國家外匯管理

346
局關於改革和規範資本項目結匯管理政策的通知) (the “SAFE Circular 16”). The SAFE Circular
16 came into force as at the date of promulgation. Where the previous provisions, such as the
SAFE Circular 19, are not consistent with the Safe Circular 16, the latter shall prevail. The
SAFE Circular 16 unifies the Discretional Foreign Exchange Settlement for all the domestic
institutions. Furthermore, the SAFE Circular 16 stipulates that the use of foreign exchange
incomes of capital accounts by foreign-invested enterprises shall follow the principles of
authenticity and self-use within the business scope of enterprises. Violations of the SAFE
Circular 19 or the SAFE Circular 16 could result in administrative penalties in accordance with
the Regulations of the People’s Republic of China on Foreign Exchange Control and its
relevant provisions.

According to the Circular of SAFE on Optimising Foreign Exchange Administration to Support

the Development of Foreign-related Business (國家外匯管理局關於優化外匯管理支持涉外業務
發展的通知) (the “SAFE Circular 8”) promulgated and effective on 10 April 2020 by the SAFE,
the reform of facilitating the payments of incomes under the capital accounts shall be
promoted nationwide. Under the prerequisite of ensuring true and compliant use of funds and
compliance and complying with the prevailing administrative provisions on use of income from
capital projects, enterprises which satisfy the criteria are allowed to use income under the
capital account, such as capital funds, foreign debt and overseas listing, etc., for domestic
payment, without the need to provide proof materials for veracity to the bank beforehand for
each transaction.

Japan

Under the Foreign Exchange and Foreign Trade Act of Japan (Gaikoku Kawase oyobi Gaikoku
Boueki Hou) (Act No. 228 of 1 December 1949), as amended, and related cabinet orders and
ministerial ordinances (the “Foreign Exchange Regulations”), dividends paid on, and the
proceeds from sales in Japan of, shares held by exchange non-residents of Japan may
generally be converted into any foreign currency and repatriated abroad.

Exchange non-residents are defined in the Foreign Exchange Regulations as (i) individuals
who do not reside in Japan; or (ii) corporations whose principal offices are located outside
Japan.

As dividends paid on shares held by exchange non-residents may generally be converted into
any foreign currency and repatriated abroad, such regulations are not expected to have a
material impact on the availability of cash and cash equivalents for use by our Company.

Vietnam

Vietnam has historically imposed exchange control mechanisms designed to limit foreign
currency outflows, generally requiring the use of the VND in domestic transactions and
attempting to channel foreign currencies into its banking system. Vietnam’s exchange control
policy is administered primarily by the State Bank of Vietnam (“SBV”). As at the Latest
Practicable Date, our Company has implemented a finance policy for NFV, which requires all
transactions, payments, listings, quotations and prices in contracts executed in Vietnam to be
denominated in VND. This will be overseen by our Chief Financial Officer.

Government regulations allow for companies to open one foreign currency account in
Vietnam, and to open offshore foreign currency bank accounts with the approval of the SBV.
Foreign-invested enterprises (“FIEs”) may convert VND into foreign currency to cover current
payments denominated in foreign currency and to repay foreign loans. Under the current
Vietnamese foreign exchange control regulations, any person or organisation may exchange
VND for foreign currency at exchange rates quoted by credit institutions licensed to provide
foreign exchange services in Vietnam, provided that such person or organisation declares the

347
 intended use of the money and provides the appropriate supporting documents required by
the regulations set by the SBV on foreign exchange management. Foreign currencies may be
freely exchanged for VND at the exchange rates quoted by such licensed credit institutions.

There are no restrictions on inward remittances of foreign currency by companies, provided

that such remittances are conducted via authorised credit institutions. Outward remittances of
foreign currency by domestic enterprises may only be made to pay for imported goods and
services, to repay offshore loans registered with the SBV, to make overseas investments or
other permitted purposes. FIEs are generally allowed to repatriate profits and lawful incomes
in foreign currency from foreign direct investment activities and are allowed to make outward
remittances of foreign currency for payments relating to transactions not for the purpose of
transferring capital (or current transactions), such as for the purchase of raw material and
supplies, the provision of services, licensed technology transfers, payments of principal and
interest on offshore loans registered with the SBV, and salary and payments of other legally
owed sums of money and assets. Upon termination and dissolution of a business enterprise
or permitted decrease of contributed capital by the competent authorities, foreign investors
may repatriate their capital. Remittances must be made through certain registered accounts
opened at authorised banks licensed to operate in Vietnam.

MISCELLANEOUS

5. There have been no public take-over offers by third parties in respect of the Shares or by our
Company in respect of another corporation’s shares or units of a business trust which have
occurred between the beginning of the financial year ended 31 December 2019 and the Latest
Practicable Date.

6. Our Directors are not aware of any event which has occurred since 1 July 2020 and up to the
Latest Practicable Date, which may have a material effect on the financial position and results
of our Group.

7. Except for the Subscriber Conversion Right, the Over-allotment Option, the Share Swap and
the Pre-IPO ESOS, as at the Latest Practicable Date, no person has been, or has the right to
be, given an option to subscribe for any of the Shares or any of the shares of our subsidiaries.

CONSENTS

8. Citigroup Global Markets Singapore Pte. Ltd., named as the one of the Joint Global
Coordinators and one of the Joint Bookrunners and Underwriters, has given and has not
withdrawn their written consent to the issue of this Prospectus with the inclusion herein of its
name and all references thereto in the form and context in which they are included in this
Prospectus and to act in such capacity in relation to this Prospectus.

9. CLSA Singapore Pte Ltd, named as one of the Joint Bookrunners and Underwriters, has given
and has not withdrawn their written consent to the issue of this Prospectus with the inclusion
herein of its name and all references thereto in the form and context in which they are included
in this Prospectus and to act in such capacity in relation to this Prospectus.

10. Credit Suisse (Singapore) Limited, named as one of the Joint Issue Managers, one of the Joint
Global Coordinators and one of the Joint Bookrunners and Underwriters, has given and has
not withdrawn their written consent to the issue of this Prospectus with the inclusion herein of
its name and all references thereto in the form and context in which they are included in this
Prospectus and to act in such capacity in relation to this Prospectus.

11. Oversea-Chinese Banking Corporation Limited, named as one of the Joint Issue Managers,
one of the Joint Global Coordinators and one of the Joint Bookrunners and Underwriters, has

348
 given and has not withdrawn its written consent to the issue of this Prospectus with the
inclusion herein of its name and all references thereto in the form and context in which they are
included in this Prospectus and to act in such capacity in relation to this Prospectus.

DOCUMENTS AVAILABLE FOR INSPECTION

12. The following documents or copies thereof may be inspected at the registered office of our
Company at 28 Ayer Rajah Crescent, #02-02/03, Singapore 139959 during normal business
hours for a period of six months from the date of registration by the MAS of this Prospectus:

(a) the Constitution;

(b) the material contracts referred to in “—Material Contracts”;

(c) the service agreement of our Executive Chairman and Chief Executive Officer;

(d) the rules of the ESOS as set out in Appendix F of this Prospectus;

(e) the Independent Market Research (IMR) on the Global Advanced Materials
Industry—Executive Summary appearing in Appendix D of this Prospectus as well as the
complete Independent Market Research (IMR) Report on the Global Advanced Materials
industry;

(f) the report titled “Independent and Reporting Auditor’s Report and on the Audited
Consolidated Financial Statements for the Financial Years ended 31 December 2017,
2018 and 2019 of Nanofilm Technologies International Limited and its subsidiaries” and
the audited consolidated financial statements of our Group for the financial years ended
31 December 2017, 2018 and 2019, as set out in Appendix A of this Prospectus;

(g) the audited financial statements (including all notes, reports or information relating
thereto which are required to be prepared under the Companies Act, where applicable)
of the subsidiaries of our Group for the financial years ended 31 December 2017, 2018
and 2019;

(h) the report titled “Independent Auditor’s Review Report on Unaudited Condensed Interim
Consolidated Financial Statements for the Six-Months Period ended 30 June 2020 of
Nanofilm Technologies International Limited and its subsidiaries” and the unaudited
condensed interim consolidated financial statements of our Group for the six months
ended 30 June 2020, as set out in Appendix B of this Prospectus;

(i) the report titled “Independent Auditor’s Assurance Report on the Compilation of the
Unaudited Pro Forma Consolidated Financial Information for the Financial Year ended
31 December 2019 and the Six-Months Period ended 30 June 2020 of Nanofilm
Technologies International Limited and its subsidiaries” and the unaudited pro forma
financial statements of our Group for the financial year ended 31 December 2019 and the
six months ended 30 June 2020, as set out in Appendix C of this Prospectus; and

(j) the written consents of the Joint Issue Managers, the Joint Global Coordinators, the Joint
Bookrunners and Underwriters, the Independent Auditors and Reporting Accountants,
the Independent Market Research Consultant, the Legal Advisers to our Company as to
PRC law and the Legal Advisers to our Company as to Vietnam law.

349
 DEFINED TERMS AND ABBREVIATIONS

GROUP COMPANIES AND BUSINESS UNITS

Group Companies

NFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nanofab Japan Co., Ltd

NFT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NanoFab Technologies Pte. Ltd

NFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nanofab Vietnam Co., Ltd

NAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nanofilm Advanced Materials Pte. Ltd.

NEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nanofilm Enterprise Management (Shanghai)

Co., Ltd

NVC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nanofilm Vacuum Coating (Shanghai)

Co., Ltd

NRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nanofilm Renewable Energy Technology

(Shanghai) Co., Ltd.

NTJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nanofilm Technologies Japan Limited

NPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Nanofilm Precision Coating

Co., Ltd

SNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Nanofilm Trading Co., Ltd

NHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yizheng Nahuan Technologies Co., Ltd

WZH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wizture Holdings Pte. Ltd.

WZT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wizture Technologies (Yizheng) Co Ltd

Business Units

AMBU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advanced Materials Business Unit

NFBU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nanofabrication Business Unit

IEBU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Industrial Equipment Business Unit

OTHER CORPORATIONS AND AGENCIES

CDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Central Depository (Pte) Limited

CPF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Central Provident Fund

Frost & Sullivan or Independent Market Frost & Sullivan (Singapore) Pte Ltd
Research Consultant . . . . . . . . . . . . . . . . . . . .

IRAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inland Revenue Authority of Singapore

Joint Issue Managers . . . . . . . . . . . . . . . . . . . . Credit Suisse (Singapore) Limited and

Oversea-Chinese Banking Corporation Limited

Joint Global Coordinators . . . . . . . . . . . . . . . . . Citigroup Global Markets Singapore Pte. Ltd.,

Credit Suisse (Singapore) Limited and
Oversea-Chinese Banking Corporation Limited

350
Joint Bookrunners and Underwriters . . . . . . . . . Citigroup Global Markets Singapore Pte. Ltd.,
CLSA Singapore Pte Ltd, Credit Suisse
(Singapore) Limited and Oversea-Chinese
Banking Corporation Limited

MAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Monetary Authority of Singapore

OCBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oversea-Chinese Banking Corporation Limited

SGX-ST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Singapore Exchange Securities Trading Limited

Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . Evercore Asia (Singapore) Pte. Ltd.

Stabilising Manager . . . . . . . . . . . . . . . . . . . . . Credit Suisse (Singapore) Limited

Vendors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dr Shi Xu, Mr Lee Liang Huang and Dr Wei Hao

TECHNICAL TERMS

3C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Computer, communications and consumer

electronics

5G. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fifth generation mobile network

CAM software . . . . . . . . . . . . . . . . . . . . . . . . . . Our proprietary computer-aided manufacturing

software which allows for 5-axis control and
directional movement of advanced tooling
machines

CdTe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cadmium Telluride

CVD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chemical vapour deposition

CNC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Computer Numerical Control

DLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diamond-like carbon

EDM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Electrical Discharge Machining

ERP/SAP system . . . . . . . . . . . . . . . . . . . . . . . Our in-house system, that supports our

engineering and production capabilities through
resource planning

FATP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Final Assembly Test Packaging

FCVA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Filtered Cathodic Vacuum Arc

FMCG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fast moving consumer goods

Fresnel lens . . . . . . . . . . . . . . . . . . . . . . . . . . . Lens used in smartphone cameras to focus light

HPLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Performance Liquid Chromatography

IoT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet of things

iTAC TM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tetrahedral amorphous carbon, a derivative of

TAC-ON ® advanced material

351
MES system . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Manufacturing Execution System

MiCC TM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A nano-crystalline chrome nitride ceramic

advanced material

MFPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multi-Functional Printers

Nanometres . . . . . . . . . . . . . . . . . . . . . . . . . . . The nanometre is a unit of length in the metric

system, equal to one billionth of a metre

Nanotechnology; Nanoproducts . . . . . . . . . . . . Technology or products that use of

nanoparticles, which range between 1 and
100 nanometres in size

OEMs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Original Equipment Manufacturers

PVD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Physical vapour deposition

QTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Quality Tracking System

sp 3 carbon . . . . . . . . . . . . . . . . . . . . . . . . . . . . A type of carbon that has gone through sp 3

hybridisation where atomic orbitals fuse to form
newly hybridised orbitals, which have an effect
on molecular geometry and bonding properties

sputtering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A deposition technique where microscopic

particles of a solid material are ejected from its
surface, after the material is itself bombarded by
energetic particles of a plasma or gas

TAC-ON ® . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tetrahedral amorphous carbon, an advanced

material utilising ta-C

ta-C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tetrahedral amorphous carbon

TAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total addressable market

CUSTOMERS

AAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AAC Module Technologies (Changzhou) Co.,

Ltd.

Anqing TP Goetze Piston Ring (ATG) . . . . . . . . Anqing TP Goetze Piston Ring Co., Ltd.

Canon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Canon Inc.

CYPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asimco Shuanghuan Piston Ring (Yizheng) Co

Ltd

Customer A . . . . . . . . . . . . . . . . . . . . . . . . . . . . An e-commerce company

Customer B . . . . . . . . . . . . . . . . . . . . . . . . . . . . An electronic components manufacturer

Customer W . . . . . . . . . . . . . . . . . . . . . . . . . . . A measurement company which engages in

chromatography, mass spectrometry and
thermal analysis innovations

352
Customer Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . A global technology company that designs,
develops and sells consumer electronics,
computer software and online services

Daicel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Daicel Corporation

Fuji Xerox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fuji Xerox Co., Ltd.

Huawei . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Huawei Technologies Co., Ltd.

Lumileds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lumileds LLC

Microsoft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Microsoft Mobile Oy

Nikon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nikon Corporation

Ricoh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Ricoh Company Ltd.

Riken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Riken Corporation

Sunny Optical . . . . . . . . . . . . . . . . . . . . . . . . . . Sunny Optical Technology Company Limited

TPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Teikoku Piston Ring Co., Ltd.

GENERAL

1H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Six months ended 30 June

Additional Shares . . . . . . . . . . . . . . . . . . . . . . . Up to an aggregate of 15,447,200 Shares that

the Stabilising Manager (or persons acting on its
behalf) may, upon exercise of the
Over-allotment Option, purchase from the Over-
allotment Option Grantor at the Offering Price,
solely to cover the over-allotment of Shares (if
any)

Application Forms . . . . . . . . . . . . . . . . . . . . . . . The printed application forms to be used for the

purpose of the Offering and which form part of
this Prospectus

ATM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Automated teller machines of a Participating

Bank

Audit and Risk Committee . . . . . . . . . . . . . . . . The audit and risk committee of our Company

Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Our Company’s board of directors as at the date

of this Prospectus, unless otherwise stated

CAGR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compound annual growth rate

Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . The closing date of the Offering

Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Singapore Code of Corporate Governance

2018, as amended or modified from time to time

Companies Act . . . . . . . . . . . . . . . . . . . . . . . . . Companies Act, Chapter 50 of Singapore, as

amended or modified from time to time

353
Company or NTI . . . . . . . . . . . . . . . . . . . . . . . . Nanofilm Technologies International Limited

Constitution. . . . . . . . . . . . . . . . . . . . . . . . . . . . The constitution of our Company

Cornerstone Agreements . . . . . . . . . . . . . . . . . The separate cornerstone agreements dated

14 October 2020 and 15 October 2020 (where
applicable) entered into between each of the
Cornerstone Investors and our Company and/or
Dr Shi Xu

Cornerstone Investors . . . . . . . . . . . . . . . . . . . (i) Aberdeen Standard Investments (Asia)

Limited, (ii) AIA Investment Management
Private Limited, (iii) Avanda Investment
Management Pte Ltd, (iv) Credit Suisse AG,
Singapore Branch and Credit Suisse AG, Hong
Kong Branch (on behalf of certain of their private
banking clients), (v) Eastspring Investments
(Singapore) Limited, (vi) Employees Provident
Fund Board, (vii) Fullerton Fund Management
Company Ltd., (viii) JPMorgan Asset
Management (Singapore) Limited, (ix) Lion
Global Investors Limited, (x) Nikko Asset
Management Asia Limited, (xi) Principal Asset
Management (S) Pte Ltd, (xii) SMALLCAP
World Fund, Inc. and American Funds
Insurance Series – Global Small Capitalization
Fund (which are funds advised by Capital
Research and Management Company), and
(xiii) Venezio Investments Pte. Ltd.

Cornerstone Shares . . . . . . . . . . . . . . . . . . . . . The 104,256,100 Shares which are to be issued

and/or sold pursuant to the Cornerstone
Agreements

Convertible Notes . . . . . . . . . . . . . . . . . . . . . . . The S$50.0 million in aggregate principal

amount of convertible notes with a maturity date
of 20 June 2021 issued to the Subscribers

Conversion Shares . . . . . . . . . . . . . . . . . . . . . . The 53,630,290 Shares which are to be issued

pursuant to the exercise of the Mandatory
Conversion Right

Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The directors of our Company as at the date of

this Prospectus, unless otherwise stated

Electronic Applications . . . . . . . . . . . . . . . . . . . Applications for the Shares under the Singapore

Public Offer made through an ATM or the
internet banking websites of the relevant
Participating Bank in accordance with the terms
and conditions of this Prospectus

EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings per Share

ESOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Nanofilm Employee Share Option Scheme

354
Executive Directors . . . . . . . . . . . . . . . . . . . . . .
Executive Officers. . . . . . . . . . . . . . . . . . . . . . .
FRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Directors . . . . . . . . . . . . . . . . . . .
Independent Market Research Report . . . . . . .
International Offering . . . . . . . . . . . . . . . . . . . .
Latest Practicable Date. . . . . . . . . . . . . . . . . . .
Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Listing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Listing Manual . . . . . . . . . . . . . . . . . . . . . . . . .
Market Day . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MG Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . .
NAV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Cornerstone Shares . . . . . . . . . . . . . . . . .
355
The executive Directors of our Company as at
the date of this Prospectus, unless otherwise
stated
The executive officers of our Company as at the
date of this Prospectus, unless otherwise stated
Singapore Financial Reporting Standards
Financial year ended or, as the case may be,
ending 31 December
Our Company together with its subsidiaries
Goods and services tax
The independent Directors of our Company as
at the date of this Prospectus, unless otherwise
stated
The report by the Independent Market Research
Consultant entitled “Independent Market
Research (IMR) on the Global Advanced
Materials Industry—Executive Summary” as set
out in Appendix D of this Prospectus
The international placement of Offering Shares
to investors, including institutional and other
investors in Singapore and foreign institutional
and selected investors outside the
United States in reliance on Regulation S
5 October 2020 being the latest practicable date
prior to the lodgment of this Prospectus with the
MAS
The listing of the Shares on the Mainboard of the
SGX-ST
The date of commencement of dealing in the
Shares on the SGX-ST
Listing Manual of the SGX-ST
A day on which the SGX-ST is open for trading
in securities
MG Holdings Consulting Pte. Ltd.
Net asset value
The 77,220,100 new Shares which are to be
issued by our Company pursuant to the
Cornerstone Agreements
NFT SHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The shareholders’ agreement entered into
between our Company, NFT and MG Holdings,
dated 27 October 2017 (as amended on 1 July
2019, 15 June 2020 and 6 October 2020) in
relation to the rights and obligations of our
Company and MG Holdings as shareholders of
NFT

Nominating Committee . . . . . . . . . . . . . . . . . . . The nominating committee of our Company

Non-Executive Directors . . . . . . . . . . . . . . . . . . The non-executive Directors of our Company as

at the date of this Prospectus, unless otherwise
stated

Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The International Offering and the Singapore

Public Offer

Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . S$2.59 for each Offering Share

Offering Shares. . . . . . . . . . . . . . . . . . . . . . . . . 77,236,200 Shares offered by the Vendors in

the Offering

Option Shares . . . . . . . . . . . . . . . . . . . . . . . . . . The new Shares to be allotted and issued

pursuant to the exercise of options granted
under the ESOS

Over-allotment Option. . . . . . . . . . . . . . . . . . . . The over-allotment option granted by the

Over-allotment Option Grantor to the Joint
Bookrunners and Underwriters, exercisable by
the Stabilising Manager (or persons acting on its
behalf), in full or in part, on one or more
occasions, to purchase up to an aggregate of
15,447,200 Shares at the Offering Price,
representing approximately 20.0% of the total
number of Offering Shares, solely to cover the
over-allotment of Shares (if any), subject to any
applicable laws and regulations, including the
SFA and any regulations thereunder, from the
Listing Date until the earlier of (i) the date falling
30 days from the Listing Date, or (ii) the date
when the Stabilising Manager (or persons
acting on its behalf) has bought on the SGX-ST
an aggregate of 15,447,200 Shares,
representing approximately 20.0% of the total
number of Offering Shares, to undertake
stabilising actions

Over-allotment Option Grantor . . . . . . . . . . . . . Dr Shi Xu

Participating Banks . . . . . . . . . . . . . . . . . . . . . Oversea-Chinese Banking Corporation Limited,

DBS Bank Ltd. (including POSB), and United
Overseas Bank Limited

per cent. or% . . . . . . . . . . . . . . . . . . . . . . . . . . Per centum or percentage

PPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment

356
PRC or China . . . . . . . . . . . . . . . . . . . . . . . . . . The People’s Republic of China

Placement Shares. . . . . . . . . . . . . . . . . . . . . . . The 73,374,300 Offering Shares which are the

subject of the International Offering

Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . This prospectus dated 23 October 2020

Public Offer Shares. . . . . . . . . . . . . . . . . . . . . . The 3,861,900 Offering Shares which are the
subject of the Singapore Public Offer

R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and development

Regulation S . . . . . . . . . . . . . . . . . . . . . . . . . . . Regulation S under the Securities Act, as

amended, modified and supplemented from
time to time

Remuneration Committee . . . . . . . . . . . . . . . . . The remuneration committee of our Company

Securities Account . . . . . . . . . . . . . . . . . . . . . . Securities account maintained by a Depositor

with CDP

Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . The United States Securities Act of 1933, as

amended

SFA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities and Futures Act, Chapter 289 of

Singapore, as amended or modified from time to
time

SFR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities and Futures (Offers of Investments)

(Securities and Securities-based Derivatives
Contracts) Regulations 2018, as amended or
modified from time to time

SFRS(I)s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Singapore Financial Reporting Standards

(International)

Share Split . . . . . . . . . . . . . . . . . . . . . . . . . . . . The sub-division of one existing Share into

35 Shares, which was effected on 6 March 2018

Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . Registered holders of the Shares, except where

the registered holder is CDP, the term
“Shareholders” shall, in relation to such Shares,
mean the Depositors whose Securities
Accounts are credited with Shares

Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ordinary shares in the capital of our Company

Singapore Public Offer . . . . . . . . . . . . . . . . . . . An offering of Offering Shares by way of a public

offer in Singapore

Singapore Take-Over Code . . . . . . . . . . . . . . . Singapore Code on Take-Overs and Mergers,

as amended or modified from time to time

sq m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Square metres

357
Subscribers. . . . . . . . . . . . . . . . . . . . . . . . . . . . The subscribers of the Convertible Notes,
namely Vanda 1, Orchid 2, ICH Gemini Asia
Growth Fund Pte. Ltd., ASEAN China
Investment Fund III L.P., ASEAN China
Investment Fund (US) III L.P., UVM 3 Venture
Investments LP and EDB Investments Pte Ltd

Swap Shares . . . . . . . . . . . . . . . . . . . . . . . . . . The Shares to be issued to MG Holdings

pursuant to the Share Swap, subject to
compliance with the relevant laws, rules and
regulations (including the Companies Act and
the Listing Manual) as well as the prior approval
of the SGX-ST and shareholders of our
Company (if required)

Underwriting Agreement . . . . . . . . . . . . . . . . . The underwriting agreement dated 23 October

2020 entered into between our Company, the
Vendors, and the Joint Bookrunners and
Underwriters in connection with the Offering

United States or U.S. . . . . . . . . . . . . . . . . . . . . The United States of America

Vendor Cornerstone Shares . . . . . . . . . . . . . . . The 27,036,000 Cornerstone Shares which are

to be sold by Dr Shi Xu pursuant to a
Cornerstone Agreement

YoY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Year on year

All references to “Gary Ho Hock Yong” and “Ricky Tan Chong Ho” in this Prospectus shall be a
reference to “Ho Hock Yong” and “Tan Chong Ho”, respectively.

The expressions “Depositor”, “Depository Agent” and “Depository Register” shall have the
meanings ascribed to them respectively in Section 81SF of the SFA.

The expressions “associate”, “associated company”, “associated entity”, “Controlling

Shareholder”, “related corporation”, “subsidiary” and “subsidiary entity” shall have the meanings
ascribed to them in the Fourth Schedule of the SFR, save that in the sections “Interested Person
Transactions and Potential Conflicts of Interest”, “Management—Committees of Our Board” and
“Management—Nanofilm Employee Share Option Scheme”, such terms, if used, shall have the
meanings ascribed to them in the Listing Manual and/or the SFR as the context so requires. The
expression “Substantial Shareholder” shall have the meanings ascribed to it in the SFA.

Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders
and vice versa.

Any reference in this Prospectus to any legislation or enactment refers to the legislation or
enactment as amended or re-enacted unless the context otherwise requires.

358
 APPENDIX A
INDEPENDENT AUDITOR’S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

A-1
INDEPENDENT AUDITOR’S REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

23 October 2020

The Board of Directors

Nanofilm Technologies International Limited
Block 28 Ayer Rajah Crescent
#02-03 Ayer Rajah Industrial Estate
Singapore 139959

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Nanofilm Technologies International

Limited (the “Company”) and its subsidiaries (collectively, the “Group”), which comprise the
consolidated statements of financial position of the Group as at 1 January 2017, 31 December
2017, 31 December 2018 and 31 December 2019, and the consolidated statements of profit or loss
and other comprehensive income, consolidated statements of changes in equity and consolidated
statements of cash flows for each of the financial years ended 31 December 2017, 31 December
2018 and 31 December 2019, and notes to the consolidated financial statements, including a
summary of significant accounting policies, as set out on pages A-11 to A-92.

In our opinion, the accompanying consolidated financial statements of the Group are properly
drawn up in accordance with the Singapore Financial Reporting Standards (International)
(“SFRS(I)s”) so as to give a true and fair view of the consolidated financial position of the Group as
at 1 January 2017, 31 December 2017, 31 December 2018 and 31 December 2019, and of the
consolidated financial performance, consolidated changes in equity and consolidated cash flows of
the Group for each of the financial years ended 31 December 2017, 31 December 2018 and
31 December 2019.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the
Group in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code of
Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code)
together with the ethical requirements that are relevant to our audit of the financial statements in
Singapore, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the ACRA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Directors for the Consolidated Financial Statements

Management is responsible for the preparation of consolidated financial statements that give a true
and fair view in accordance with SFRS(I)s, and for devising and maintaining a system of internal
accounting controls sufficient to provide a reasonable assurance that assets are safeguarded
against loss from unauthorised use or disposition; and transactions are properly authorised and
that they are recorded as necessary to permit the preparation of true and fair financial statements
and to maintain accountability of assets.

A-2
INDEPENDENT AUDITOR’S REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

Responsibilities of Management and Directors for the Consolidated Financial Statements

(cont’d)

In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The directors’ responsibilities include overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial
statements.

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.

A-3
INDEPENDENT AUDITOR’S REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements (cont’d)

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

Restriction on Distribution and Use

This report is made solely to you as a body and for the inclusion in the prospectus to be issued in
relation to the proposed offering of shares of the Company in connection with the Company’s listing
on the Main Board of the Singapore Exchange Securities Trading Limited.

Moore Stephens LLP

Public Accountants and
Chartered Accountants
Singapore

Chan Rouh Ting

Partner

A-4
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE

INCOME FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

Note 2017 2018 2019

S$ S$ S$
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 103,603,553 122,844,245 142,908,469
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . (45,721,362) (56,639,303) (65,244,940)

Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,882,191 66,204,942 77,663,529

Other operating income . . . . . . . . . . . . . . . . . . . . 6 1,028,261 648,585 1,906,881
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . 7 186,239 364,320 507,050
Expenses:
Selling and distribution . . . . . . . . . . . . . . . . . . . . . (8,642,326) (11,486,047) (16,770,511)
Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,399,953) (18,828,785) (21,125,468)
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (1,069,189) (1,111,416) (1,376,268)
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . — — (871,759)
Impairment loss allowance on trade receivables . . . — (416,913) (37,091)
Share of loss of associated company . . . . . . . . . . . 15 — (433,120) (1,054)

Profit before income tax . . . . . . . . . . . . . . . . . . . 9 31,985,223 34,941,566 39,895,309

Income tax expenses . . . . . . . . . . . . . . . . . . . . . . 10 (5,050,837) (5,631,424) (5,354,550)

Profit after income tax . . . . . . . . . . . . . . . . . . . . 26,934,386 29,310,142 34,540,759

Other comprehensive loss, net of tax

Items that may be reclassified subsequently to
profit or loss
Exchange difference arising from translation of
foreign operations. . . . . . . . . . . . . . . . . . . . . . . (649,597) (2,967,171) (3,900,163)

Total comprehensive income for the year . . . . . . 26,284,789 26,342,971 30,640,596

Profit/(loss) attributable to:

Equity holders of the Company . . . . . . . . . . . . . . . 26,934,386 29,300,363 35,755,229
Non-controlling interests. . . . . . . . . . . . . . . . . . . . — 9,779 (1,214,470)

26,934,386 29,310,142 34,540,759

Total comprehensive income/(loss)

attributable to:
Equity holders of the Company . . . . . . . . . . . . . . . 26,284,789 26,292,715 32,022,289
Non-controlling interests. . . . . . . . . . . . . . . . . . . . — 50,256 (1,381,693)

26,284,789 26,342,971 30,640,596

Earnings per share attributable to equity

holders of the Company (cents)
Basic earnings per share . . . . . . . . . . . . . . . . . . . 11 5.32 5.74 6.99
Diluted earnings per share . . . . . . . . . . . . . . . . . . 11 5.42 5.53 6.52

The accompanying notes form an integral part of the financial statements.

A-5
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2017, 2018 AND 2019

1 January 31 December 31 December 31 December

Note 2017 2017 2018 2019

S$ S$ S$ S$
ASSETS
Non-current assets
Property, plant and equipment . . . . . 12 61,695,729 64,913,183 73,736,676 107,276,482
Land use rights . . . . . . . . . . . . . . . 13 2,425,720 2,339,185 2,600,773 12,767,812
Intangible assets . . . . . . . . . . . . . . 14 2,867,398 3,173,504 4,520,430 4,020,860
Investment in associated company . . 15 — — 2,539,885 —
Other receivables . . . . . . . . . . . . . . 16 — — — 179,676
66,988,847 70,425,872 83,397,764 124,244,830
Current assets
Inventories. . . . . . . . . . . . . ...... 17 7,630,186 10,255,605 17,006,626 14,733,738
Trade and other receivables, and
other current assets . . . . . ...... 16 24,137,294 39,892,194 56,790,437 58,210,363
Contract assets/Accrued
receivables . . . . . . . . . . . ...... 5 — 4,635,112 7,775,450 11,376,429
Cash and bank balances . . . ...... 18 17,811,326 23,217,764 25,088,357 25,404,651
49,578,806 78,000,675 106,660,870 109,725,181
Total assets . . . . . . . . . . . . . . . . . . . 116,567,653 148,426,547 190,058,634 233,970,011

EQUITY AND LIABILITIES

Equity attributable to equity holders
of the Company
Share capital . . . . . . . . . . . . . . . . . 19 7,818,993 8,548,273 9,695,920 9,695,920
Reserves . . . . . . . . . . . . . . . . . . . . 20 63,882,236 87,135,827 88,264,164 110,817,756
71,701,229 95,684,100 97,960,084 120,513,676
Non-controlling interests . . . . . . . . . 4 — — 2,440,594 6,912,441
Total equity . . . . . . . . . . . . . . . . . . . 71,701,229 95,684,100 100,400,678 127,426,117
Non-current liabilities
Bank loans . . . . . . . . . . . . . . . . . . 21 12,372,890 3,908,867 — —
Lease liabilities . . . . . . . . . . . . . . . 22 57,379 832,861 4,454,610 346,269
Convertible notes . . . . . . . . . . . . . . 23 — — 49,910,763 49,940,019
Deferred taxation . . . . . . . . . . . . . . 24 318,000 318,000 848,000 988,200
12,748,269 5,059,728 55,213,373 51,274,488
Current liabilities
Trade and other payables . . ...... 25 15,073,741 23,339,002 26,027,082 37,013,648
Contract liabilities/Advanced
receipts . . . . . . . . . . . . . . . . . . . 5 222,553 6,652,553 2,070,877 6,368,253
Bank loans . . . . . . . . . . . . . . . . . . 21 12,965,653 12,067,407 — 3,864,000
Lease liabilities . . . . . . . . . . . . . . . 22 776,923 815,370 730,241 4,284,160
Provisions . . . . . . . . . . . . . . . . . . . 26 462,905 391,672 423,190 454,745
Provision for taxation . . . . . . . . . . . 2,616,380 4,416,715 5,193,193 3,284,600
32,118,155 47,682,719 34,444,583 55,269,406
Total liabilities . . . . . . . . . . . . . . . . . 44,866,424 52,742,447 89,657,956 106,543,894
Total equity and liabilities . . . . . . . . 116,567,653 148,426,547 190,058,634 233,970,011

The accompanying notes form an integral part of the financial statements.

A-6
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

Attributable to equity holders of the Company

Share Translation Statutory Other Accumulated Total

Note capital reserve reserve reserves profits equity

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

At 1 January 2017 . . . . . . 7,818,993 (1,629,513) 3,037,049 — 62,474,700 71,701,229

Profit for the year . . . . . . . — — — — 26,934,386 26,934,386

Other comprehensive loss . . — (649,597) — — — (649,597)

Total comprehensive
(loss)/income for the
year . . . . . . . . . . . . . — (649,597) — — 26,934,386 26,284,789

Transfer of statutory
reserve . . . . . . . . . . . — — 2,030,569 — (2,030,569) —

Transactions with equity

holders, recognised
directly in equity

—Dividends . . . . . . . . . . 27 — — — — (3,615,198) (3,615,198)

—Issuance of ordinary
shares . . . . . . . . . . . . 19 729,280 — — — — 729,280

—Recognition of
share-based payments . . 20 — — — 584,000 — 584,000

Total transactions with

equity holders. . . . . . . . 729,280 — — 584,000 (3,615,198) (2,301,918)

At 31 December 2017 . . . . 8,548,273 (2,279,110) 5,067,618 584,000 83,763,319 95,684,100

The accompanying notes form an integral part of the financial statements.

A-7
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

Attributable to equity holders of the Company

Non-
Share Translation Statutory Other Accumulated controlling Total
Note capital reserve reserve reserves profits Total interests equity

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

At 31 December 2017 . . . . . 8,548,273 (2,279,110) 5,067,618 584,000 83,763,319 95,684,100 — 95,684,100

Adoption of SFRS(I) 9 . . . . . 2(c) — — — — (254,000) (254,000) — (254,000)

At 1 January 2018 . . . . . . . 8,548,273 (2,279,110) 5,067,618 584,000 83,509,319 95,430,100 — 95,430,100

Profit for the year . . . . . . . . — — — — 29,300,363 29,300,363 9,779 29,310,142

Other comprehensive
(loss)/income . . . . . . . . . — (3,007,648) — — — (3,007,648) 40,477 (2,967,171)

Total comprehensive
(loss)/income for the year . . . — (3,007,648) — — 29,300,363 26,292,715 50,256 26,342,971

Transfer of statutory reserve . . — — 156,684 — (156,684) — — —

Transactions with equity

holders, recognised directly
in equity

—Dividends . . . . . . . . . . 27 — — — — (24,964,897) (24,964,897) — (24,964,897)

—Issuance of ordinary shares . . 19 1,147,647 — — — — 1,147,647 — 1,147,647

—Adjustment on employee
share options . . . . . . . . . — — — (576,022) — (576,022) — (576,022)

—Acquisition of subsidiaries . . 4 — — — — — — 3,020,879 3,020,879

—Acquisition of additional
interest in subsidiaries . . . . 4 — — — 630,541 — 630,541 (630,541) —

Total transactions with equity

holders . . . . . . . . . . . . 1,147,647 — — 54,519 (24,964,897) (23,762,731) 2,390,338 (21,372,393)

At 31 December 2018 . . . . . 9,695,920 (5,286,758) 5,224,302 638,519 87,688,101 97,960,084 2,440,594 100,400,678

The accompanying notes form an integral part of the financial statements.

A-8
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

Attributable to equity holders of the Company

Non-
Share Translation Statutory Other Accumulated controlling Total
Note capital reserve reserve reserves profits Total interests equity

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

At 1 January 2019 . . . . . . . 9,695,920 (5,286,758) 5,224,302 638,519 87,688,101 97,960,084 2,440,594 100,400,678

Profit/(loss) for the year . . . . . — — — — 35,755,229 35,755,229 (1,214,470) 34,540,759

Other comprehensive loss . . . — (3,732,940) — — — (3,732,940) (167,223) (3,900,163)

Total comprehensive
(loss)/income for the year . . . — (3,732,940) — — 35,755,229 32,022,289 (1,381,693) 30,640,596

Transfer of statutory reserve . . — — 209,479 — (209,479) — — —

Transactions with equity

holders, recognised directly in
equity

—Dividends . . . . . . . . . . 27 — — — — (9,532,539) (9,532,539) — (9,532,539)

—Adjustment on employee
share options . . . . . . . . . — — — 63,842 — 63,842 — 63,842

—Additional investment in a
subsidiary from a
non-controlling interest . . . . 4(c) — — — — — — 5,853,540 5,853,540

Total transactions with equity

holders . . . . . . . . . . . . — — — 63,842 (9,532,539) (9,468,697) 5,853,540 (3,615,157)

At 31 December 2019 . . . . . 9,695,920 (9,019,698) 5,433,781 702,361 113,701,312 120,513,676 6,912,441 127,426,117

The accompanying notes form an integral part of the financial statements.

A-9
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

Note 2017 2018 2019

S$ S$ S$
Cash Flows from Operating Activities
Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . 31,985,223 34,941,566 39,895,309
Adjustments for:
Depreciation of property, plant and equipment. . . . . . . . . 9,450,722 13,244,553 13,452,782
Amortisation of land use rights . . . . . . . . . . . . . . . . . . 52,453 62,275 239,077
Amortisation of intangible assets . . . . . . . . . . . . . . . . . 875,538 969,166 1,126,387
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,069,189 1,111,416 1,376,268
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . (186,239) (364,320) (507,050)
Provision for warranty . . . . . . . . . . . . . . . . . . . . . . . . 697,715 838,062 579,177
Reversal of provision for warranty . . . . . . . . . . . . . . . . (725,449) (759,811) (472,113)
Fair value loss on derivatives . . . . . . . . . . . . . . . . . . . — — 151,738
Gain on disposal of an associated company . . . . . . . . . . — — (74,725)
(Gain), loss and/or write off on disposal of property,
plant and equipment . . . . . . . . . . . . . . . . . . . . . . . (45,081) 114,272 129,135
Impairment loss on goodwill . . . . . . . . . . . . . . . . . . . . — — 871,759
Expense recognised in respect of share-based payments . . 584,000 (119,800) 63,842
Exchange differences – unrealised . . . . . . . . . . . . . . . . 1,805,039 (169,120) 385,517
Share of loss of an associate company . . . . . . . . . . . . . — 433,120 1,054
Operating cash flow before working capital changes . . . . . . 45,563,110 50,301,379 57,218,157
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,625,612) (5,627,016) 4,550,472
Trade, other receivables and other current assets
(include contract assets) . . . . . . . . . . . . . . . . . . . . . (19,514,752) (6,924,783) (17,112,180)
Trade, other payables and provisions
(include contract liabilities) . . . . . . . . . . . . . . . . . . . 15,261,582 (3,112,848) 15,234,820
Cash generated from operations . . . . . . . . . . . . . . . . . 38,684,328 34,636,732 59,891,269
Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,033,562) (1,027,363) (836,051)
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,239 342,028 513,185
Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,248,378) (4,333,348) (7,082,231)
Net cash generated from operating activities . . . . . . . . . 34,588,627 29,618,049 52,486,172
Cash Flows from Investing Activities
Acquisition of subsidiaries, net of cash acquired . . . . . . . 4 — (3,730,897) —
Acquisition of associated company . . . . . . . . . . . . . . . . 15 — (2,973,005) —
Proceeds from disposal of associated company . . . . . . . . 15 — — 2,613,556
Purchase of property, plant and equipment. . . . . . . . . . . (12,629,088) (18,560,486) (46,335,037)
Proceeds from disposal of property, plant and equipment . . 151,437 151,520 47,289
Additions to intangible assets . . . . . . . . . . . . . . . . . . . (903,593) (1,175,733) (1,305,993)
Deposits/additions for land use rights . . . . . . . . . . . . . . 13, 16 — (10,421,374) (311,537)
Deposits for investment in acquiring subsidiaries . . . . . . . (2,108,460) 2,108,460 —
Net cash used in investing activities . . . . . . . . . . . . . . (15,489,704) (34,601,515) (45,291,722)
Cash Flows from Financing Activities
Proceeds from issuance of ordinary shares . . . . . . . . . . 729,280 691,425 —
Proceeds from issuance of convertible notes . . . . . . . . . — 50,000,000 —
Proceeds from bank loans . . . . . . . . . . . . . . . . . . . . . 13,727,927 4,071,993 21,825,000
Repayment of bank loans . . . . . . . . . . . . . . . . . . . . . (22,792,264) (22,010,283) (17,875,000)
Principal payment of lease liabilities . . . . . . . . . . . . . . . (670,449) (1,003,923) (831,551)
Decrease/(increase) in fixed deposits pledged with banks . 2,977,581 2,249,747 (812,676)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,615,198) (24,964,897) (9,532,539)
Net cash (used in)/generated from financing activities . . . (9,643,123) 9,034,062 (7,226,766)
Net increase/(decrease) in cash and cash equivalents . . . 9,455,800 4,050,596 (32,316)
Cash and cash equivalents at the beginning of the year . . 12,583,998 20,968,017 25,088,357
Effects of exchange rate changes on cash and cash
equivalents held in foreign currencies. . . . . . . . . . . . . (1,071,781) 69,744 (464,066)
Cash and cash equivalents at the end of the year . . . . . . 18 20,968,017 25,088,357 24,591,975

The accompanying notes form an integral part of the financial statements.

A-10
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

These notes form an integral part of and should be read in conjunction with the accompanying
consolidated financial statements.

1 General Information

(a) Introduction

The consolidated financial statements of Nanofilm Technologies International Limited

(the “Company”) and its subsidiaries (together referred to as the “Group” and individually
as “Group entities”) have been prepared in accordance with the principles and the
accounting policies set out in Note 2.

The consolidated financial statements have been prepared solely for inclusion in the
prospectus to be issued in relation to the proposed offering of shares of the Company in
connection with the Company’s listing on the Main Board of Singapore Exchange
Securities Trading Limited (“SGX”).

These consolidated financial statements of the Group are authorised for issue by the
directors of the Company on 23 October 2020.

(b) The Company

The Company was incorporated in the Republic of Singapore on 13 May 1999 as a

private company limited by shares. The Company’s registered address is Block 28 Ayer
Rajah Crescent, #02-03, Ayer Rajah Industrial Estate, Singapore 139959 and its
principal place of business is Block 28 Ayer Rajah Crescent, #02-01-#02-06, Ayer Rajah
Industrial Estate, Singapore 139959. The Company converted to a public company
limited by shares on 15 October 2020. Following the conversion, the Company is now
known as Nanofilm Technologies International Limited (formerly known as Nanofilm
Technologies International Pte Ltd).

The principal activities of the Company are that of the design, research, development,
integration, manufacturing and marketing of advanced material science and Nano
technology in industrial machinery, coating services/surface solutions and precision
components. The principal activities of the subsidiaries are disclosed in Note 4 to the
consolidated financial statements.

The ultimate controlling shareholder of the Company is Dr. Shi Xu.

2 Significant Accounting Policies

(a) Basis of Preparation

The consolidated financial statements of the Group, expressed in Singapore dollar

(“S$”), have been prepared in accordance with Singapore Financial Reporting Standards
(International) (“SFRS(I)”). These are the Group’s first financial statements prepared in
accordance with SFRS(I) and SFRS(I) 1 First-time Adoption of Singapore Financial
Reporting Standards (International) has been applied.

The consolidated financial statements have been prepared under the historical cost
basis except as disclosed in the accounting policies below.

A-11
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(a) Basis of Preparation (cont’d)

The preparation of consolidated financial statements in conformity with SFRS(I) requires

management to exercise its judgement in the process of applying the Group’s accounting
policies. It also requires the use of certain critical accounting estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and contingent liabilities at the date of the consolidated financial statements, and
the reported amounts of revenue and expenses during the financial year. Although these
estimates are based on management’s best knowledge of current events and actions,
actual results may ultimately differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis.

The areas involving a higher degree of judgement or complexity, or areas where

assumptions and estimates are significant to the consolidated financial statements are
disclosed in Note 3.

(b) Adoption of SFRS(I)

In December 2017, the Accounting Standards Council issued SFRS(I). SFRS(I)

comprises the standards and interpretations that are identical to the International
Financial Reporting Standards. As required by the listing requirements of SGX,
Singapore incorporated companies that have issued, or are in the process of issuing,
equity or debt instruments for trading in a public market in Singapore, will apply SFRS(I)
with effect from annual periods beginning on or after 1 January 2018.

In adopting SFRS(I), the Group is required to apply all of the specific transition
requirements in SFRS(I) 1 First-time Adoption of Singapore Financial Reporting
Standards (International). The Group’s opening statement of financial position has been
prepared as at 1 January 2017, which is the Group’s date of transition to SFRS(I) (“date
of transition”).

The same accounting policies are applied throughout all periods presented in these
consolidated financial statements, subject to the mandatory exceptions and optional
exemptions under SFRS(I) 1. For first-time adopters, SFRS(I) allows the exemptions
from the retrospective application of certain requirements under SFRS(I). The
application of the mandatory exceptions and the optional exemptions in SFRS(I) 1 did
not have significant impact on the financial performance and financial position of the
Group.

The optional exemptions applied included the following:

• SFRS(I) 3 Business Combinations has not been applied to business combinations

that occurred before the date of transition on 1 January 2017.

• SFRS(I) 1-21 The Effects of Changes in Foreign Exchange Rates has not been
applied retrospectively to fair value adjustments and goodwill from business
combinations that occurred before the date of transition to SFRS(I) on 1 January
2017.

A-12
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(b) Adoption of SFRS(I) (cont’d)

• The Group has not reassessed the determination of whether an arrangement

contained a lease in accordance with SFRS(I) INT 4 Determining whether an
Arrangement contains a Lease.

• Lease liabilities were measured at the present value of the remaining lease
payments, discounted using the lessee’s incremental borrowing rate at 1 January
2017. Right-of-use assets were measured at the amount equal to the lease
liabilities, adjusted by the amount of any prepaid or accrued lease payments
relating to that lease recognised in the statement of financial position immediately
before 1 January 2017. The lease payments associated with leases for which the
lease term ends within 12 months of the date of transition to SFRS(I) and lease for
which the underlying asset is of low value have been recognised as an expense on
either a straight-line basis over the lease term or another systematic basis.

• The Group has elected to apply the requirements in SFRS(I) 1-23 Borrowings Costs
from the date of transition to SFRS(I) on 1 January 2017.

• The Group has elected the short-term exemption to adopt SFRS(I) 9 on 1 January
2018. Accordingly, the information presented for 31 December 2017 is presented in
accordance with SFRS(I) 1-39 Financial Instruments: Recognition and
Measurement. Arising from this election, the Group is exempted from complying
with SFRS(I) 7 Financial Instruments: Disclosures to the extent that the disclosures
as required by SFRS(I) 7 relate to the items within the scope of SFRS(I) 9.

• The Group has elected to apply the transitional provisions under paragraph C5 of
SFRS(I) 15 at 1 January 2018 and have used the following practical expedients as
allowed under SFRS(I) 1 as follows:

o the Group has not restated those completed contracts that began and ended
in the same annual reporting in 31 December 2017 and contracts completed at
1 January 2017;

o for completed contracts that have variable consideration, the Group has used
the transaction price at the date the contract was completed, rather than
estimating the variable consideration amounts in the comparative reporting
period;

o for contracts which were modified before 1 January 2017, the Group did not
retrospectively restate the contract for those contract modifications; and

o for the year ended 31 December 2017, the Group did not disclose the amount
of transaction price allocated to the remaining performance obligations and
explanation of when the Group expects to recognise that amount as revenue.

A-13
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(b) Adoption of SFRS(I) (cont’d)

First-time adoption of SFRS(I) – Reconciliation of the Group’s financial information

reported in accordance with FRS to SFRS(I)

Effects of
FRS as at adjustments SFRS(I) as at
1 January (Note 2(c)) 1 January
2017 SFRS(I) 16 2017

S$ S$ S$

Statement of financial position

Property, plant and equipment . . . . . . . . 60,931,414 764,315 61,695,729
Lease liabilities (current) . . . . . . . . . . . . 12,608 764,315 776,923

The first-time adoption of SFRS (I) did not have significant impact on the financial
performance and cash flows of the Group at the date of transition and financial
performance, cash flows or financial position of the Group for the financial year ended
31 December 2019, the most recent completed financial year prepared in accordance
with FRS.

(c) Adoption of New Standards and Interpretation Issued

SFRS(I) 16 Leases

SFRS(I) 16 sets out a revised framework for the recognition, measurement, presentation
and disclosure of leases, and replaces SFRS(I) 1-17 Leases, SFRS(I) INT 4 Determining
whether an Arrangement contains a Lease, SFRS(I) INT 1-15 Operating
Leases—Incentives; and SFRS(I) INT 1-27 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease.

SFRS(I) 16 requires lessees to recognise right-of-use assets and lease liabilities for all
leases with a term of more than 12 months, except where the underlying asset is of low
value. The right-of-use asset is depreciated and interest expense is recognised on the
lease liability. Lease incentives (e.g. rent free period) are recognised as part of the
measurement of the right-of-use assets and lease liabilities. Right-of-use assets are
tested for impairment in accordance with SFRS(I) 1-36 Impairment of Assets. The
accounting requirements for lessors have not been changed substantially and continue
to be based on classification as operating and finance leases. Disclosure requirements
have been enhanced for both lessors and lessees.

On 1 January 2017, the Group has applied a modified retrospective approach that does
not restate comparative information, but recognises the cumulative effect of applying
SFRS(I) 16 as an adjustment to the opening balance of retained earnings on 1 January
2017. The Group elected a practical expedient offered by SFRS(I) 16, exempting the
Group from having to reassess whether pre-existing contracts contains a lease.

A-14
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(c) Adoption of New Standards and Interpretation Issued (cont’d)

SFRS(I) 16 Leases (cont’d)

The Group has, on a lease-by-lease basis:

• applied a single discount rate to a portfolio of leases with reasonably similar

characteristics;

• relied on previous assessments on whether leases are onerous as an alternative to

performing an impairment review;

• excluded initial direct costs in the measurement of the right-of-use asset at the date
of initial application; and

• used hindsight in determining the lease term where the contract contains options to
extend or terminate the lease.

The Group has elected not to recognise right-of-use assets and lease liabilities for
short-term leases that have a lease term of 12 months or less and leases of low-value
assets. The Group recognises the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.

There are no significant changes to the accounting by the Group as a lessor.

For leases previously classified as operating leases, the Group chose to measure its
right-of-use assets at a carrying amount as if SFRS(I) 16 had been applied since the
commencement of the lease but discounted using the incremental borrowing rate at
1 January 2017.

The Group recognised lease liabilities by discounting the remaining lease payments as
at 1 January 2017 using the incremental borrowing rate for each individual lease or, if
applicable, the incremental borrowing rate for each portfolio of leases with reasonably
similar characteristics. The difference between the carrying amounts of the right-of-use
assets and lease liabilities as at 1 January 2017 is adjusted directly to opening retained
earnings. Comparative information is not restated.

For leases previously classified as finance leases, the carrying amount of the leased
asset and finance lease liability as at 1 January 2017 are determined as the carrying
amount of the right-of-use assets and lease liabilities.

On 1 January 2017, the Group recognised right-of-use assets of S$764,315 and lease
liabilities of S$764,315.

When measuring lease liabilities, the Group discounted lease payments using its
incremental borrowing rate at 1 January 2017. The weighted-average rate applied is
approximately 3.88% per annum.

A-15
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(c) Adoption of New Standards and Interpretation Issued (cont’d)

SFRS(I) 16 Leases (cont’d)

The differences between the operating lease commitments disclosed applying

SFRS(I)1-17 in the Group’s consolidated financial statements as at 31 December 2016
and the lease liabilities recognised in the statement of financial position as at 1 January
are presented below:

S$

Operating lease commitments at 31 December 2016

as disclosed under SFRS(I) 1-17 . . . . . . . . . . . . . . . . .......... 1,165,329
Less: Discounted using the incremental borrowing rates
at 1 January 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... (25,202)
Less: Short-term leases . . . . . . . . . . . . . . . . . . . . . . . . . .......... (314,195)
Less: Low value leases . . . . . . . . . . . . . . . . . . . . . . . . . .......... (61,617)

Lease liabilities recognised as at 1 January 2017 . . . . . . . . . . . . . . . 764,315

SFRS(I) 9 Financial Instruments

SFRS(I) 9 Financial Instruments sets out requirements for recognising and measuring
financial assets, financial liabilities and some contracts to buy or sell non-financial items.
It also introduces a new expected credit loss model and applies to financial assets
measured at amortised cost. The Group adopted SFRS(I) 9 from 1 January 2018.
Changes in accounting policies resulting from the adoption of SFRS(I) 9 have been
generally applied by the Group retrospectively, except as described below:

• The following assessments were made on the basis of facts and circumstances that
existed at 1 January 2018:

— The determination of the business model within which a financial asset is held;
and

— The determination of whether the contractual terms of a financial asset give

rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding.

• If a debt instruments has low credit risk at 1 January 2018, the Group had assumed
that the credit risk on the asset has not increased significantly since its initial
recognition.

The Group has applied the simplified impairment approach to recognise only lifetime
expected credit loss impairment charges on all trade receivables. Based on the
assessment made, there was an increase of S$254,000 in the allowance for impairment
recognised in opening retained earnings of the Group at 1 January 2018 on transition to
SFRS(I) 9. There were no adjustments to the Group’s statement of cash flows arising
from the initial application of SFRS(I) 9. The adoption of SFRS(I) 9 did not have
significant impact on the Group’s accounting policies for financial liabilities.

A-16
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(c) Adoption of New Standards and Interpretation Issued (cont’d)

SFRS(I) 15 Revenue from Contracts with Customers

SFRS(I) 15 establishes a five step model to account for revenue arising from contracts
with customers, and introduces new contract cost guidance. Under SFRS(I) 15, revenue
is recognised at an amount that reflects the consideration which an entity expects to be
entitled in exchange for transferring goods or services to a customer. The Group adopted
SFRS(I) 15 from 1 January 2018 using the full retrospective approach. The adoption of
this standard did not have significant impact on the financial performance or financial
position of the Group.

(d) New and Revised FRS Issued but Not Yet Effective

New standards, amendments to standards and interpretations that have been issued at
the end of the reporting period but are not yet effective for the Group have not been
applied in preparing these consolidated financial statements. Management is of the view
that the adoption of these new standards would not have significant financial impact on
the financial performance or financial position of the Group.

Effective for annual periods

Description beginning on or after

Amendments to SFRS(I) 1-1 and SFRS(I) 1-8, 1 January 2020

Presentation of Financial Statements and Accounting
Policies, Changes in Accounting Estimates and Errors:
Definition of Material . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendments to SFRS(I) 3, Business Combination: 1 January 2020
Definition of Business . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Rate Benchmark Reform, Amendments to 1 January 2020
SFRS(I) Financial Instruments, SFRS(I) 9 Financial
Instruments: Recognition and Measurement and
SFRS(I) 7 Financial Instruments: Disclosures . . . . . . . . .
Amendment to SFRS(I) 16, Leases—Covid-19 Related 1 June 2020
Rent Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendments to SFRS(I) 1-16, Property, Plant and 1 January 2022
Equipment—Proceeds before Intended Use . . . . . . . . . .
Amendments to SFRS(I) 1-37, Provisions—Onerous 1 January 2022
Contracts—Cost of Fulfilling a Contract . . . . . . . . . . . . .
Amendments to SFRS(I) 3, Business 1 January 2022
Combinations—Reference to the Conceptual
Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual improvements to SFRS(I)s 2018-2020 . . . . . . . . . . 1 January 2022
Amendments to SFRS(I) 1-1, Classification of Liabilities 1 January 2023
as Current or Non-current . . . . . . . . . . . . . . . . . . . . . . . .

A-17
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(d) New and Revised FRS Issued but Not Yet Effective (cont’d)

Amendments to SFRS(I) 1-1 and SFRS(I) 1-8 Presentation of Financial Statements and
Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Material

The amendments refine the definition of “material”, provide guidance on its application,
and align the definitions used across SFRS(I)s. Based on the amendments, information
is material if omitting, misstating or obscuring it could reasonably be expected to
influence decisions that the primary users of general-purpose financial statements make
on the basis of those financial statements, which provide financial information about a
specific reporting entity.

Amendments to SFRS(I) 3 Business Combination: Definition of Business

The amendments confirm that a business must include inputs and a process. The
amendments also clarify that the process must be substantive, and the inputs and
process must significantly contribute to creating outputs. The revised definition of a
business focuses on goods and services provided to customers and other income from
ordinary activities, rather than on providing dividends or other economic benefits directly
to investors or lowering costs. A new optional test is available to assess whether a
business has been acquired, when the value assets acquired is concentrated in a single
asset or group of similar assets.

Amendment to SFRS(I) 16 Leases—Covid-19 Related Rent Concessions

The amendment provides a practical expedient to simplify the accounting for lease
concessions that meet specified criteria. This expedient provides lessees with an option
to account for such concessions as if they are lease modifications, regardless of whether
they qualify as such.

Amendments to SFRS(I) 1-1 Classification of Liabilities as Current or Non-current

The amendments require that the classification of liabilities as current or non-current

must be based on rights that are in existence at the end of the reporting period. The
classification is unaffected by management’s intentions or expectations about whether
an entity will exercise its right to defer settlement of a liability. The amendments clarify
that a counterparty conversion option that is recognised separately as an equity
component of a compound financial instrument does not affect the classification of the
associated liability component as current or non-current. All other obligations to transfer
equity instruments, cash, assets and liabilities, affect the classifications. The
amendments should be applied retrospectively.

A-18
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(e) Business Combinations

Consolidation

Subsidiaries are all entities (including structured entities) over which the Group has
control. The Group controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity.

In preparing the consolidated financial statements, transactions, balances and

unrealised gains on transactions between group entities are eliminated. Unrealised
losses are also eliminated but are considered an impairment indicator of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group. Subsidiaries are
consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that such control ceases.

Non-controlling interests are that part of the net results of operations and of net assets
of a subsidiary attributable to the interests which are not owned directly or indirectly by
the equity holders of the Company. They are shown separately in the consolidated
statement of comprehensive income, statement of changes in equity and statement of
financial position.

Total comprehensive income is attributed to the non-controlling interests based on their

respective interests in a subsidiary, even if this results in the non-controlling interests
having a deficit balance.

Acquisition of Businesses

The acquisition method of accounting is used to account for business combinations by

the Group.

The consideration transferred for the acquisition of a subsidiary or business comprises

the fair value of the assets transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred also includes the fair value of any
contingent consideration arrangement and the fair value of any pre-existing equity
interest in the subsidiary.

Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a

business combination are, with limited exceptions, measured initially at their fair values
at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling

interest in the acquiree at the date of acquisition either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s identifiable net assets. The
choice of measuring non-controlling interests at fair value or at the proportionate share
of the acquiree’s net assets applies only to instruments that represent present ownership
interests and entitle their holders to a proportionate share of the net assets in the event
of liquidation. All other components of non-controlling interests are measured at fair
value unless another measurement basis is required by SFRS(I).

A-19
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(e) Business Combinations (cont’d)

Acquisition of Businesses (cont’d)

Any excess of the sum of the fair value of the consideration transferred in the business
combinations, the amount of non-controlling interest in the acquiree (if any), and the fair
value of the Group’s previously held equity interest in the acquiree (if any), over the net
fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill on
the statement of financial position.

Disposals of Subsidiaries or Businesses

When a change in the Company’s ownership interest in a subsidiary results in a loss of

control over the subsidiary, the assets and liabilities of the subsidiary including any
goodwill are derecognised. Amounts previously recognised in other comprehensive
income in respect of that entity are also reclassified to profit or loss or transferred directly
to retained earnings if required by a specific Standard. Any retained interest in the entity
is remeasured at fair value. The difference between the carrying amount of the retained
interest at the date when control is lost and its fair value is recognised in profit or loss.

Transaction with Non-controlling Interests

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of
control over the subsidiary are accounted for as transactions with equity owners of the
Company. Any difference between the change in the carrying amounts of the non-
controlling interest and the fair value of the consideration paid or received is recognised
within equity attributable to the equity holders of the Company.

(f) Associated Company

Associated company is an entity over which the Group has significant influence, but not
control, generally accompanied by a shareholding giving rise to voting rights of 20% and
above but exceeding 50%. Investment in associated company is accounted for in the
consolidated financial statements using the equity method of accounting less impairment
losses, if any.

(g) Foreign Currencies

Items included in the financial statements of each entity in the Group are measured using
the currency of the primary economic environment in which the entity operates (the
“functional currency”). Management has determined the functional currency of the
Company to be Singapore dollar (“S$”), as it best reflects the economic substance of the
underlying events and circumstances relevant to the Company. The consolidated
financial statements of the Group are presented in S$.

A-20
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(g) Foreign Currencies (cont’d)

Transactions and Balances

Transactions in a currency other than the functional currency (“foreign currency”) are
translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Currency translation differences resulting from the settlement of
such transactions and from the translation at year-end exchange rate of monetary assets
and liabilities denominated in foreign currencies are recognised in profit or loss, except
for currency translation differences on the net investment in foreign entities and
borrowings and other currency instruments qualifying as net investment hedges for
foreign operations, which are included in the translation reserve within equity in the
consolidated financial statements.

Non-monetary items that are measured in terms of historical cost in foreign currencies
are translated using the exchange rate at the date of the transaction. Non-monetary
items that are measured at fair values in foreign currencies are translated using the
exchange rates at the date when the fair values are determined. Currency translation
differences on non-monetary items, whereby the gains or losses are recognised in profit
or loss, such as equity investments held at fair value through profit or loss, are reported
as part of the fair value gain or loss. Currency translation differences on non-monetary
items whereby the gains or losses are recognised directly in equity, such as equity
investments classified as financial assets are included in the fair value reserves, if any.

Translation of Group Entities’ Financial Statements

The results and financial positions of all the Group entities (none of which has the
currency of a hyperinflationary economy) that have a functional currency different from
the presentation currency are translated into the presentation currency as follows:

— Assets and liabilities are translated at the closing exchange rates at the reporting
date;

— Income and expenses are translated at an average exchange rate (unless this
average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are
translated using the exchange rates at the dates of the transactions); and

— All resulting exchange differences are recognised in other comprehensive income,

and are presented in the translation reserve within equity. These currency
translation differences are reclassified to profit or loss as disposal or partial
disposal (i.e. loss of control) of the entity giving rise to such reserve.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are
treated as assets and liabilities of the foreign operations and translated at the closing
rates at the reporting date.

A-21
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(g) Foreign Currencies (cont’d)

Translation of Group Entities’ Financial Statements (cont’d)

On the disposal of a foreign operation, all of the accumulated currency translation

differences in respect of that operation attributable to the Group are reclassified to profit
or loss. Any currency translation differences that have previously been attributed to
non-controlling interests are derecognised, but they are not reclassified to profit or loss.

In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a
foreign operation, the proportionate share of accumulated currency translation
differences are re-attributed to non-controlling interests and are not recognised in profit
or loss.

(h) Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and
accumulated impairment losses. The cost of property, plant and equipment includes
expenditure that is directly attributable to the acquisition of the items. Subsequent
expenditure relating to property, plant and equipment that has already been recognised
is added to the carrying amount of the asset when it is probable that future economic
benefits, in excess of the standard of performance of the asset before the expenditure
was made, will flow to the Group and the cost can be reliably measured. Other
subsequent expenditure is recognised as an expense in profit or loss during the financial
year in which it is incurred.

The projected cost of dismantlement, removal or restoration is also included as part of

the cost of property, plant and equipment if the obligation for the dismantlement, removal
or restoration is incurred as a consequence of acquiring or using the asset. On disposal
of an item of property, plant and equipment, the difference between the disposal
proceeds and its carrying amount is recognised in profit or loss.

Depreciation of property, plant and equipment is calculated using the straight-line

method to allocate their depreciable amounts over their estimated useful lives as follows:

Useful lives

Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 to 10 years

Buildings and renovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 to 25 years
Office and other equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 5 years
Tools and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 to 3 years
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 to 10 years

Property, plant and equipment held under leases arrangement are depreciated over their
expected useful lives on the same basis as owned assets or, where shorter, the term of
the relevant lease.

A-22
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(h) Property, Plant and Equipment (cont’d)

Construction in-progress represents property, plant and equipment under construction

and is stated at cost. It includes costs of construction, property, plant and equipment and
other direct costs. No depreciation is provided on construction-in-progress until such
time as it is completed and operationally ready for use.

The carrying amounts of property, plant and equipment are reviewed for impairment
when events or changes in circumstances indicate that the carrying amounts may not be
recoverable.

The residual values, estimated useful lives and depreciation method of property, plant
and equipment are reviewed, and adjusted as appropriate, at each reporting date. The
effects of any revision are recognised in profit or loss when changes arise.

Property, plant and equipment is derecognised upon disposal or when no future

economic benefits are expected from its use or disposal. Any gain or loss arising on
derecognition of the property, plant and equipment is included in profit or loss in the year
the property, plant and equipment is derecognised.

(i) Intangible Assets

Goodwill

Goodwill on acquisitions of subsidiaries and businesses, represents the excess of (i) the
sum of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the
acquiree over (ii) the fair value of the identifiable net assets acquired. Goodwill on
subsidiaries is recognised separately as intangible assets and carried at cost less
accumulated impairment losses.

Goodwill on acquisition of associated company represents the excess of the cost of the
acquisition over the Group’s share of the fair value of the identifiable net assets acquired.
Goodwill on associated company is included in the carrying amount of the investment.

Gains and losses on the disposal of subsidiaries and associated company include the
carrying amount of goodwill relating to the entity sold.

Patents

Patents are stated at cost less accumulated amortisation and impairment losses. Costs
associated with the application and registration of patents are capitalised as intangible
assets. Amortisation of patents is charged to profit or loss on a straight-line basis over
the estimated useful lives of 5 years.

A-23
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(i) Intangible Assets (cont’d)

Research and Development Costs

Research and development costs are expensed as incurred, except for development
costs which relate to the design and testing of new or improved materials, products or
processes which are recognised as an asset when the Group can demonstrate the
technical feasibility of completing the intangible asset so that it will be available for use
or sale, its intention to complete and its ability to use or sell the asset, how the asset will
generate future economic benefits, the availability of resources to complete and the
ability to measure reliably the expenditure during the development.

Development costs are stated at cost less accumulated amortisation and accumulated
impairment losses. Development costs are amortised from the date of commercial
production of the product or from the date the process is put into use. Such costs have
a finite useful life and are amortised over 5 years on a straight line basis.

(j) Land Use Rights

Land use rights are carried at cost less accumulated amortisation and impairment
losses. Amortisation is charged to profit or loss on a straight-line basis over the lease
term period of 38 years and 50 years.

(k) Impairment of Non-Financial Assets

i. Goodwill

Goodwill recognised separately as an intangible asset is tested for impairment

annually and whenever there is indication that the goodwill may be impaired.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of

the Group’s cash-generating units expected to benefit from synergies arising from
the business combination.

An impairment loss is recognised when the carrying amount of cash-generating

unit, including the goodwill, exceeds the recoverable amount of the
cash-generating unit. The recoverable amount of a cash-generating unit is the
higher of the cash-generating unit’s fair value less cost to sell and value-in-use.

The total impairment loss of a cash-generating unit is allocated first to reduce the
carrying amount of goodwill allocated to the cash-generating unit and then to the
other assets of the cash-generating unit pro-rata on the basis of the carrying
amount of each asset in the cash-generating unit.

An impairment loss on goodwill is recognised as an expense and is not reversed in

a subsequent period.

A-24
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(k) Impairment of Non-Financial Assets (cont’d)

ii. Intangible assets (other than goodwill)

Property, plant and equipment
Investments in associated company

Non-financial assets (other than Goodwill) are tested for impairment whenever
there is any indication that these assets may be impaired. At each reporting date,
the Group reviews the carrying amounts of its non-financial assets to determine
whether there is any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any), on an individual asset.

Where it is not possible to estimate the recoverable amount of an individual asset,

the Group estimates the recoverable amount of the cash-generating unit to which
the asset belongs. Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been
adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be

less than its carrying amount, the carrying amount of the asset (or cash-generating
unit) is reduced to its recoverable amount. The difference between the carrying
amount and recoverable amount is recognised as an impairment loss in profit or
loss, unless the asset is carried at revalued amount, in which case, such
impairment loss is treated as a revaluation decrease.

An assessment is made at each reporting date as to whether there is any indication

that previously recognised impairment losses may no longer exist or may have
decreased. Where an impairment loss subsequently reverses, the carrying amount
of the asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years.

A reversal of an impairment loss is recognised immediately in profit or loss, unless

the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase. However, to the extent that an
impairment loss on the same revalued asset was previously recognised as an
expense, a reversal of that impairment is also credited to profit or loss.

A-25
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(l) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in
bringing the inventories to their present location and conditions are accounted for as
follows:

— Raw materials and consumables — weighted average basis; and

— Finished goods and work-in-progress — costs of direct materials and labour,

subcontractors’ costs and a proportion of manufacturing overheads based on
normal operating capacity on a cost basis

Allowance is made for any anticipated losses which are likely to be incurred on
completion of the jobs. Net realisable value is the estimated selling price in the ordinary
course of business, less estimated cost of completion and applicable variable selling
expenses. Allowances are made for any slow moving or obsolete inventories.

(m) Financial Assets

i. Accounting policies applied up to 31 December 2017

Classification

The Group classify the financial assets as loans and receivables. The classification
depends on the nature of the asset and the purpose for which the assets were
acquired. Management determines the classification of its financial assets at initial
recognition and re-evaluates this designation at each reporting date.

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or

determinable payments that are not quoted in an active market. They are presented
as current assets, except those maturing later than twelve months after the
reporting date which are classified as non-current assets. Loans and receivables
are presented as “trade and other receivables” and “cash and bank balances” at the
reporting date.

Recognition and Derecognition

Regular way purchases and sales of financial assets are recognised on the
trade-date—the date on which the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has
transferred substantially all risks and rewards of ownership.

On disposal of a financial asset, the difference between the net sale proceeds and
its carrying amount is recognised in profit or loss.

A-26
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(m) Financial Assets (cont’d)

i. Accounting policies applied up to 31 December 2017 (cont’d)

Initial Measurement

Loans and receivables are initially recognised at fair value plus transaction costs.

Subsequent Measurement

Loans and receivables are subsequently carried at amortised cost using the
effective interest method, less allowance for impairment.

Impairment

The Group assesses at each reporting date whether there is objective evidence that
a financial asset or a group of financial assets is impaired and recognises an
allowance for impairment when such evidence exists.

Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy, and default or significant delay in payments are objective evidence that
these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment
allowance account which is calculated as the difference between the carrying
amount and the present value of estimated future cash flows, discounted at the
original effective interest rate. When the asset becomes uncollectible, it is written
off against the allowance account. Subsequent recoveries of amounts previously
written off are recognised in profit or loss.

The allowance for impairment loss account is reduced through profit or loss in a
subsequent period when the amount of impairment loss decreases and the related
decrease can be objectively measured. The carrying amount of the asset previously
impaired is increased to the extent that the new carrying amount does not exceed
the amortised cost had no impairment been recognised in prior periods.

ii. Accounting policies applied from 1 January 2018

Classification and Measurement

The Group classifies its financial assets as amortised cost.

The classification depends on the Group’s business model for managing the
financial assets as well as the contractual terms of the cash flows of the financial
assets. The Group reclassifies debt instruments when and only when its business
model for managing those assets changes.

A-27
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(m) Financial Assets (cont’d)

ii. Accounting policies applied from 1 January 2018 (cont’d)

Classification and Measurement (cont’d)

At initial recognition, the Group measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through profit or loss, transactions
costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through profit or loss are
expensed in profit or loss.

Debt instruments mainly comprise of cash and cash equivalents, trade and other
receivables. Subsequent measurement of debt instruments depends on the
Group’s business model for managing the asset and the cash flow characteristics of
the asset.

Debt instruments that are held for collection of contractual cash flows where those
cash flows represent solely payments of principal and interest are measured at
amortised cost. A gain or loss on a debt instrument that is subsequently measured
at amortised cost and is not part of a hedging relationship is recognised in profit or
loss when the asset is derecognised or impaired. Interest income from these
financial assets is included in interest income using the effective interest rate
method.

Impairment

The Group assesses on a forward looking basis the expected credit losses
associated with its financial assets measured at amortised costs and financial
guarantee contracts.

Loss allowances of the Group are measured on either of the following bases:

— 12-month expected credit losses — represents the expected credit losses that
result from default events that are possible within the 12 months after the
reporting date (or for a shorter period if the expected life of the instrument is
less than 12 months); or

— Lifetime expected credit losses — represents the expected credit losses that
will result from all possible default events over the expected life of a financial
instrument or contract asset.

The impairment methodology applied depends on whether there has been a

significant increase in credit risk.

A-28
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(m) Financial Assets (cont’d)

ii. Accounting policies applied from 1 January 2018 (cont’d)

Impairment (cont’d)

Simplified approach—Trade receivables (including contract assets)

The Group applies the simplified approach to provide expected credit losses for all
trade receivables. The simplified approach requires expected lifetime losses to be
recognised from initial recognition of the receivables. The expected credit losses on
these financial assets are estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for factors that are specific to the
debtors, general economic conditions and an assessment of both the current as
well as the forecast direction of conditions at the reporting date, including time
value of money where appropriate.

General approach—Other financial instruments and financial guarantee contracts

The Group applies the general approach to provide for expected credit losses on all
other financial instruments and financial guarantee contracts, which requires the
loss allowance to be measured at an amount equal to 12-month expected credit
losses at initial recognition.

At each reporting date, the Group assesses whether the credit risk of a financial
instrument has increased significantly since initial recognition. When credit risk has
increased significantly since initial recognition, a loss allowance is measured at an
amount equal to lifetime expected credit losses. In assessing whether the credit risk
of a financial asset has increased significantly since initial recognition and when
estimating expected credit losses, the Group considers reasonable and
supportable information that is relevant and available without undue cost or effort.
This includes both quantitative and qualitative information that is reasonable and
supportable, including the Group’s historical experience and forward-looking
information that is available without undue cost or effort. Forward-looking
information considered includes the future prospects of the industries in which the
Group’s debtors operate, as well as consideration of various external sources of
actual and forecast economic information that relate to the Group’s core
operations.

If credit risk has not increased significantly since initial recognition or if the credit
quality of the financial instruments improves such that there is no longer a
significant increase in credit risk since initial recognition, loss allowance is
measured at an amount equal to 12-month expected credit losses.

The Group considers a financial guarantee contract to be in default when the debtor
of the loan is unlikely to pay its credit obligations to the creditor and the Group in full,
without recourse by the Group to actions such as realising security (if any is held).
The Group only applies a discount rate if, and to the extent that, the risks are not
taken into account by adjusting the expected cash shortfalls.

The maximum period considered when estimating expected credit losses is the
maximum contractual period over which the Group is exposed to credit risk.

A-29
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(m) Financial Assets (cont’d)

ii. Accounting policies applied from 1 January 2018 (cont’d)

Impairment (cont’d)

Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a

detrimental impact on the estimated future cash flows of the financial asset have
occurred. At each reporting date, the Group assesses whether financial assets
carried at amortised cost are credit-impaired.

Measurement of expected credit losses

Expected credit losses are probability-weighted estimates of credit losses. Credit

losses are measured at the present value of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in accordance with the contract and the
cash flows that the Group expects to receive). Expected credit losses are
discounted at the effective interest rate of the financial asset.

Write-off policy

The Group writes off a financial asset when there is information indicating that the
counterparty is in severe financial difficulty and there is no realistic prospect of
recovery. Any recoveries made are recognised in profit or loss.

Recognition and de-recognition

Regular way purchases and sales of financial assets are recognised on trade
date—the date on which the Group commits to purchase or sell the asset.

Financial assets are de-recognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has
transferred substantially all risks and rewards of ownership. On disposal of a debt
instrument measured at amortised cost, the difference between the carrying
amount and the sale proceeds is recognised in profit or loss.

(n) Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term
highly liquid investments that are readily convertible to known amounts of cash and
which are subjected to an insignificant risk of changes in value. For the purposes of the
consolidated statement of cash flows, cash and cash equivalents are shown net of
pledged bank deposits.

A-30
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(o) Financial Liabilities

Financial liabilities are recognised on the statement of financial position when, and only
when, the Group becomes a party to the contractual provisions of the financial
instrument. The Group de-recognises financial liabilities when, and only when, the
Group’s obligations are discharged, cancelled or expired. The difference between the
carrying amount of the financial liability recognised and the consideration paid and
payable is recognised in profit or loss.

(p) Trade and Other Payables

Trade and other payables are initially measured at fair value, and subsequently carried
at amortised cost, using the effective interest method.

(q) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred and are
subsequently stated at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in profit or loss over the period
of the borrowings using the effective interest method. Borrowings are presented as
current liabilities unless the Group has an unconditional right to defer settlement for at
least twelve months after the reporting date, in which case they are presented has
non-current liabilities.

(r) Convertible Notes

On issuance of the convertible notes, the proceeds are allocated between the embedded
equity conversion option and the liability component. The embedded option is
recognised at its fair value. The liability component is recognised as the difference
between total proceeds and the fair value of the equity conversion option.

The equity conversion option is subsequently carried at its fair value with fair value
changes recognised in profit or loss. The liability component is carried at amortised cost
until the liability is extinguished on conversion or redemption.

When an equity conversion option is exercised, the carrying amounts of the liability
component and the equity conversion option are derecognised with a corresponding
recognition of share capital.

(s) Borrowing Costs

Borrowing costs incurred to finance the development of plant and equipment are
capitalised during the period of time that is required to complete and prepare the asset
for its intended use. The amount of borrowing cost capitalised on that asset is the actual
borrowing costs incurred during the period less any investment income on the temporary
investment of those borrowings. Other borrowing costs are recognised on a
time-proportion basis in profit or loss using the effective interest method.

A-31
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(t) Derivative Financial Instruments

Derivative financial instruments are initially recognised at fair value at the date on which
a derivative contract is entered into and are subsequently re-measured at fair value at
each reporting date. All derivatives are classified as assets when the fair value is positive
(Positive replacement values for financial derivatives) and as liabilities when the fair
value is negative (Negative replacement values for financial derivatives).

The changes in the fair value of derivatives other than those designated as fair value
hedges, cash flow hedges or net investments in foreign operations hedges are
recognised in profit or loss.

(u) Provisions

Provisions are recognised when the Group and the Company have a present legal or
constructive obligation as a result of a past event, it is probable that the Group and the
Company will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required
to settle the present obligation at the reporting date, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value
of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to
be recovered from a third party, a receivable is recognised as an asset if it is virtually
certain that reimbursement will be received and the amount of the receivable can be
measured reliably.

Warranties

Provisions for the expected cost of warranty obligations under local sale of goods
legislation are recognised at the date of sale of the relevant products, at the
management’s best estimate of the expenditure required to settle the Group’s and the
Company’s obligation.

(v) Leases

When the Group is the lessee

At the inception of the contract, the Group assesses if the contract contains a lease. A
contract contains a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. Reassessment is only
required when the terms and conditions of the contract are changed.

A-32
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(v) Leases (cont’d)

When the Group is the lessee (cont’d)

The Group recognised right-of-use assets and lease liabilities at the date which the
underlying assets become available for use. Right-of-use assets are measured at cost
which comprises the initial measurement of lease liabilities adjusted for any lease
payments made at or before the commencement date and lease incentive received. Any
initial direct costs that would not have been incurred if the lease had not been obtained
are added to the carrying amount of the right-of-use assets.

Right-of-use assets are subsequently depreciated using the straight-line method from
the commencement date to the earlier of the end of the useful life of the right-of-use asset
or the end of the lease term. Right-of-use assets are presented within “Property, plant
and equipment” and “Land Use Rights” in the statements of financial position.

The initial measurement of lease liability is measured at the present value of the lease
payments discounted using the implicit rate in the lease, if the rate can be readily
determined. If that rate cannot be readily determined, the Group shall use its incremental
borrowing rate.

Lease payment included in the measurement of the lease liability comprise the following:

• fixed payments (including in-substance fixed payment), less any lease incentive
receivables;

• variable lease payment that are based on an index or rate, initially measured using
the index or rate at the commencement date;

• amount expected to be payable under residual value guarantees;

• the exercise price of a purchase option if its reasonably certain to exercise the
option; and

• payment or penalties for terminating the lease, if the lease term reflects the Group
exercising that option.

For contracts that contain both lease and non-lease components, the Group allocates
the consideration to each lease component on the basis of the relative stand-alone price
of the lease and non-lease component. The Group has elected to not separate lease and
non-lease component for property leases and account these as one single lease
component.

A-33
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(v) Leases (cont’d)

When the Group is the lessee (cont’d)

Lease liabilities are measured at amortised cost, and are re-measured when:

• there is a change in future lease payments arising from changes in an index or rate;

• there is a change in the Group’s assessment of whether it will exercise lease

extension and termination options;

• there is a change in the Group’s estimate of the amount expected to be payable

under a residual value guarantee; or

• there is a modification to the lease term.

Where lease liabilities are re-measured, corresponding adjustments are made against
the right-of-use assets. If the carrying amount of the right-of-use assets has been
reduced to zero, the adjustments are recorded in profit or loss.

The Group has elected to not recognise right-of-use assets and lease liabilities for
short-term leases that have lease terms of 12 months or less and low value leases,
except for sub-lease arrangements. Lease payments relating to these leases are
expensed to profit or loss on a straight-line basis over the lease term.

Variable lease payments that are not based on an index or a rate are not included as part
of the measurement and initial recognition of the lease liability. The Group shall
recognise those lease payments in profit or loss in the periods that triggered those lease
payments.

When the Group is the lessor

Leases where the Group retains a significant portion of the risks and rewards incidental
to ownership are classified as operating leases. Rental income from operating leases
(net of any incentives given to the lessees) are recognised in profit or loss on a
straight-line basis over the lease term. Contingent rents are recognised as income in
profit or loss when earned.

(w) Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the
issuance of new ordinary shares are deducted against the share capital account.

A-34
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(x) Reserves

Translation Reserve

The translation reserve is used to record foreign exchange differences arising from the
translation of the financial statements of entities of the Group whose functional
currencies are different from that of the Group’s presentation currency.

Statutory Reserve

The Group’s subsidiaries are required by the People’s Republic of China (“PRC”)
statutory laws to transfer 10% of the profit after taxation as reported in the PRC statutory
financial statements to a reserve fund. This reserve fund can be used to make up losses
incurred or to increase capital, subject to approval from the relevant government
authority.

In addition, the entities are required to allocate a portion of the profit after taxation as
reported in the PRC statutory financial statements to an enterprise expansion fund at
rates determined by the Board of Directors. This fund can also be used to increase
capital, subject to approval from the relevant government authority.

(y) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable for the
sales of goods and rendering of services in the ordinary course of the Group’s activities.

Revenue is recognised when the Group satisfies a performance obligation by

transferring a promised good or services to the customer, which is when the customer
obtains control of the good or services. A performance obligation may be satisfied at a
point in time or over time. The amount of revenue recognised is the amount allocated to
the satisfied performance obligation.

A contract asset is an entity’s right to consideration in exchange for goods or services

that the entity has transferred to a customer. If a customer pays consideration or the
Group has a right to an amount of consideration that is unconditional, before the Group
transfers a good or service to the customer, the Group presents the contract as a
contract liability when the payment is made or a receivable is recorded (whichever is
earlier). A contract liability is the Group’s obligation to transfer goods or services to a
customer for which the Group has received consideration (or an amount of consideration
is due) from the customer. A receivable is recorded when the Group has an unconditional
right to consideration. A right to consideration is unconditional if only the passage of time
is required before payment of that consideration is due.

A-35
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(y) Revenue Recognition (cont’d)

Sale of Goods

The Group manufactures and sell its specialised industrial equipment and products for
customers through fixed-price contracts. Revenue is recognised when the control has
been transferred to the customer. At contract inception, the Group assess whether the
Group transfers control of the equipment over time or at a point in time by determining if
(a) its performance does not create an asset with an alternative use to the Group; and
(b) the Group has an enforceable right to payment for performance completed to date.

For these contracts where the specialised equipment has no alternative use for the
Group due to contractual restriction, and the Group has enforceable rights to payment
arising from the contractual terms, revenue is recognised over time by reference to the
Group’s progress towards completing the construction of the specialised equipment. The
measure of progress is determined based on the surveys of work performed.

For contracts where the Group does not have an enforceable right to payment, revenue
is recognised only when the completed specialised equipment or products are delivered
to the customers and the customers have accepted in accordance with the sales
contracts.

For sale of spare parts, revenue is recognised when these are delivered to the customers
and the customers have accepted it in accordance with the sales contracts.

The period between the transfer of the promised goods and payment by the customer
may exceed one year. For such contracts, there is no significant financing component
present as the payment terms is an industry practice to protect the performing entity from
the customers’ failure to adequately complete some or all of its obligations under the
contract. As a consequence, the Group does not adjust any of the transaction prices for
the time value of money.

Sales-related warranties associated with the sale of goods cannot be purchased

separately and they serve as an assurance that the equipment sold comply with
agreed-upon specifications. Accordingly, the Group accounts for warranties in
accordance with SFRS(I) 1-37 Provisions, Contingent Liabilities and Contingent Assets
(see Note 2(u)).

Rendering of Services

The Group provides coating services to customers. Such services are recognised as a
performance obligation satisfied over time. Revenue is recognised for these services
based on the stage of completion of the contract. Management has assessed that the
stage of completion determined by reference to completion of the specific transaction
assessed on the basis of the actual service provided as a proportion of the total services
to be performed is an appropriate measure of progress towards complete satisfaction of
these performance obligation under SFRS(I) 15.

Dividend Income

Dividend income is recognised at a point in time when the right to receive payment is
established, it is probable that the economic benefits associated with the dividend will
flow to the Group, and the amount of the dividend can be reliably measured.

A-36
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(z) Government Grants

Government grants are not recognised until there is reasonable assurance that the
Group will comply with the conditions attaching to them and that the grants will be
received.

Government grants that are receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support to the Group with no
future related costs are recognised in profit or loss in the period in which they become
receivable.

(aa) Employee Compensation

Defined Contribution Plans

Defined contribution plans are post-employment benefit plans under which the Group
pays fixed contributions to separate entities such as the Central Provident Fund on a
mandatory, contractual or voluntary basis. The Group participates in the national
schemes as defined by laws of the countries in which it operates. The Group has no
further payment obligations once the contributions have been paid. The Group’s
contributions are recognised as expense in profit or loss as and when they are incurred.

Employee Leave Entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to
employees, if deemed payable. The estimated liability for leave is recognised for
services rendered by employees up to the reporting date.

Share-based Compensation

The Group operates an equity-settled, share-based compensation plan. The value of the
employee services received in exchange for the grant of options is recognised as an
expense with a corresponding increase in the share option reserve over the vesting
period. The total amount to be recognised over the vesting period is determined by
reference to the fair value of the options granted on the date of the grant. Non-market
vesting conditions are included in the estimation of the number of shares under options
that are expected to become exercisable on the vesting date. At each financial reporting
date, the Group revises its estimates of the number of shares under options that are
expected to be exercisable on the vesting date and recognises the impact of the revision
of the estimates in profit or loss, with a corresponding adjustment to the share option
reserve over the remaining vesting period.

When the options are exercised, the proceeds received (net of transaction costs) and the
related balance previously recognised in the share option reserve are credited to share
capital account, when new ordinary shares are issued.

A-37
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(ab) Income Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current Tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs
from profit as reported in the statement of comprehensive income because of items of
income or expense that are taxable or deductible in other years and items that are never
taxable or deductible. The Group’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the reporting date.

Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts of

assets and liabilities in the financial statements and the corresponding tax bases used in
the computation of taxable profit.

Deferred tax liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible temporary differences to
the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilised. Such deferred tax assets and liabilities
are not recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the period in which the liability is settled or the asset recognised, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the reporting
date. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at the end
of the reporting period, to recover or settle the carrying amount of its assets and
liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.

The Group recognised previously recognised deferred tax asset to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be
recovered.

A-38
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

2 Significant Accounting Policies (cont’d)

(ac) Dividends to Company’s Shareholders

Dividends to the Company’s shareholders are recognised when the dividends are
approved for payment.

(ad) Financial Guarantees

Financial guarantees contracts are initially measured at fair value plus transaction costs
and subsequently measured at the higher of: (i) premium received on initial recognition
less the cumulative amount of income recognised in accordance with the principles of
SFRS (I) 15; and (ii) the amount of expected loss computed using the impairment
methodology under SFRS(I) 9.

(ae) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting
provided to the management whose members are responsible for allocating resources
and assessing performance of the operating segments.

3 Critical Accounting Estimates, Assumptions and Judgements

Estimates and assumptions concerning the future and judgements are made in the
preparation of the consolidated financial statements. They affect the application of the
Group’s accounting policies, reported amounts of assets, liabilities, income and expenses,
and disclosures made. They are assessed on an on-going basis and are based on experience
and relevant factors, including expectations of future events that are believed to be
reasonable under the circumstances.

The key assumptions concerning the future and other key sources of estimation uncertainty at
the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below.

(i) Critical accounting estimates and assumptions

Estimated Useful Life of Property, Plant and Equipment

Property, plant and equipment are depreciated on a straight-line basis over their
estimated useful lives. Management estimates the useful lives of these property, plant
and equipment to be between 1.5 to 25 years. The Group assesses annually the residual
values and the useful lives of the property, plant and equipment and if expectations differ
from the original estimates due to changes in the expected level of usage and/or
technological developments, such differences will impact the depreciation charges in the
period in which such estimates are changed.

The Group conducted an operational efficiency review on its production lines. The Group
revised the estimated residual values and useful lives of some plant and machinery from
5 or 8 years to 10 years, after refurbishment that will enable these plant and machinery
to remain in production for additional 2 to 5 years.

A-39
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

3 Critical Accounting Estimates, Assumptions and Judgements (cont’d)

(i) Critical accounting estimates and assumptions (cont’d)

Estimated Useful Life of Property, Plant and Equipment (cont’d)

The revision in estimate has been applied on a prospective basis from 1 January 2019.
The effect of the above revision on depreciation charge resulted in a decrease in
depreciation charge of S$1,204,584 in financial year ended 31 December 2019 and a
cumulative increase in depreciation charge of S$334,470 on future financial periods.

The carrying amount of the Group’s property, plant and equipment at the reporting date
are disclosed in Note 12 to the consolidated financial statements.

A 10% difference in the expected useful life of these assets from management’s
estimates would result in increasing/decreasing the carrying amount of the Group’s
depreciable property, plant and equipment by approximately S$1,393,000 (2018:
S$1,390,000; 2017: S$977,000).

Estimated Useful Life of Development Costs

Development costs are capitalised in accordance with the accounting policy in Note 2(i).
Initial capitalisation of costs is based on management’s assumptions that technological
and economical feasibility is confirmed, usually when a product development project has
reached a defined milestone according to an established project management model.
Development costs are amortised on a straight-line basis over the finite useful life of the
project which management estimates to be within 5 years. Any changes in such
estimates will impact the amortisation charge in the reporting period. The carrying
amount of the Group’s development costs capitalised at the reporting date are disclosed
in Note 14 to the consolidated financial statements.

A 10% difference in the expected useful life of the development costs from
management’s estimates would result in increasing/decreasing the Group’s
development costs by approximately S$112,000 (2018: S$96,000; 2017: S$86,100).

Provision for Warranty

The Group provides up to 1 year warranties on equipment sold and undertakes to repair
or replace items that fail to perform satisfactorily. Management estimates that the related
provision for future warranty claims based on historical warranty claim information,
current sales levels and current information available about returns based on twelve
months warranty period for all equipment sold. The carrying amount of the Group’s
provision for warranty at the reporting date are disclosed in Note 26 to the consolidated
financial statements.

A 10% difference in the provision for warranty from management’s estimates would
result in increasing/decreasing the Group’s profit before tax by approximately S$45,500
(2018: S$42,300; 2017: S$39,200).

A-40
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

3 Critical Accounting Estimates, Assumptions and Judgements (cont’d)

(i) Critical accounting estimates and assumptions (cont’d)

Loss Allowance for Receivables (including contract assets)

The Group measures the loss allowance for receivables in accordance with the
accounting policy as disclosed in Note 2(m). In making this estimation and judgement,
the Group evaluates, among other factors, the ageing analysis of receivables, the
financial healthiness and collection history of individual debtors and expected future
change of credit risks, including the consideration of factors such as general economy
measure, changes in macro-economic indicators, etc. The carrying amount of the
Group’s contract assets and trade and other receivables at the reporting date are
disclosed in Note 5 and Note 16 to the consolidated financial statements.

(ii) Critical judgements made in applying accounting policies

Income Taxes

The Group has exposure to income taxes in numerous jurisdictions. Significant

judgement is involved in determining the Group-wide provision for income taxes. There
are certain transactions and computations for which the ultimate tax determination is
uncertain during the ordinary course of business. The Group recognises liabilities for
expected tax issues based on estimates of whether additional taxes will be due. Where
the final tax outcome of these matters is different from the amounts that were initially
recognised, such differences will impact the income tax and deferred tax provisions in
the period in which such determination is made. The Group’s income tax expenses and
deferred taxation at the reporting dates are set out in Note 10 and Note 24 to the
consolidated financial statements.

Determination of Functional Currency

The Group measures foreign currency transactions in the respective functional

currencies of the Company and its subsidiaries. In determining the functional currency of
the entities in the Group, judgement is required to determine the currency that mainly
influences sales prices for goods and services and of the country whose competitive
forces and regulations mainly determines the sales prices of its goods and services. The
functional currency of the entities in the Group are determined based on management’s
assessment of the economic environment in which the entities operate that best reflects
the economic substance of the underlying events and circumstances relevant to the
entities in the Group.

A-41
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

4 Subsidiaries

(a) Details of subsidiaries as at 31 December are as follows:

Name of company and Principal activities and

country of incorporation place of business Equity held by the Group

2017 2018 2019

% % %

Nanofilm Advanced Materials Investment holding company 100 100 100

Pte. Ltd. (Singapore)(1) . . . . (Singapore)
Nanofilm Technologies Japan Marketing and sales of industrial 100 100 100
Limited (Japan)(3) . . . . . . . machinery and equipment and
coating services (Japan)
Nanofab Technologies Research and experimental — 70 70
Pte. Ltd. (Singapore)(1) . . . . development on engineering
(Singapore)
Held by Nanofilm Advanced
Materials Pte. Ltd.
Nanofilm Vacuum Coating Provision of coating services to 100 100 100
(Shanghai) Co., Ltd end users in the precision
(People’s Republic of engineering industry and printed
China) (2) . . . . . . . . . . . . . . circuit boards industry (People’s
Republic of China)
Nanofilm Renewable Energy Involvement in solar cell 100 100 100
Technology (Shanghai) business (People’s Republic of
Co., Ltd. (People’s Republic China)
of China)(2) . . . . . . . . . . . .
Nanofilm Enterprise Provision of consultation 100 100 100
Management (Shanghai) services and technical
Co., Ltd (People’s Republic development (People’s Republic
of China)(2) . . . . . . . . . . . . of China)
Held by Nanofab
Technologies Pte. Ltd.
MG Consulting Co., Ltd Management consulting — 70 —
(Japan) (3)(5) . . . . . . . . . . . . services (Japan)
Nanofab Japan Co., Ltd Manufacture and forming — 70 70
(Japan)(3) . . . . . . . . . . . . . modules (Japan)
Nanofab Vietnam Co., Ltd Manufacture, process and — 70 70
(Vietnam)(4) . . . . . . . . . . . . assembly plastic (Vietnam)

A-42
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

4 Subsidiaries (cont’d)

(a) Details of subsidiaries as at 31 December are as follows: (cont’d)

Name of company and Principal activities and

country of incorporation place of business Equity held by the Group

2017 2018 2019

% % %

Held by Nanofilm Vacuum

Coating (Shanghai) Co., Ltd
Shanghai Nanofilm Precision Production and sale of auto 100 100 100
Coating Co., Ltd (People’s parts, provision of coating
Republic of China) (2) . . . . . services for precision
components and technical
services (People’s Republic of
China)
Shanghai Nanofilm Zaichuang Producing, research and — 51 51
Automation Co., Ltd development equipment, sale of
(People’s Republic of self-produced products
China)(2) . . . . . . . . . . . . . . (People’s Republic of China)
Yizheng Nahuan Provision of coating services for — 51 51
Technologies Co., Ltd automotive parts (People’s
(People’s Republic of Republic of China)
China)(2) . . . . . . . . . . . . . .

(1) Audited by Moore Stephens LLP, Singapore.

(2) Audited by Shanghai Yongcheng Certified Public Accountants Co., Ltd.

(3) Reviewed/Audited by Moore Stephens LLP, Singapore for the purpose of consolidation.

(4) Audited by KPMG Limited, Hanoi.

(5) MG Consulting Co., Ltd was amalgamated to Nanofab Japan Co., Ltd on 31 December 2019.

(b) Business combinations and additional interest in subsidiaries

In January 2018, the Company completed its acquisition of a 51% equity interest in
Nanofab Technologies Pte. Ltd. (f.k.a. ManGo Nanofab Pte Ltd) and its wholly owned
subsidiaries, MG Consulting Co., Ltd, Nanofab Japan Co., Ltd (f.k.a. ManGo Japan Co.,
Ltd) and Nanofab Vietnam Co., Ltd (f.k.a. ManGo Vietnam Co., Ltd) (collectively referred
to as the “Nanofab Group”). The principal activities of Nanofab Group are in the research
and development in nanofabrication technologies and current application are mainly in
design, production and sale of various lens for smartphone industries (“Nanofabrication
Segment”). The subsidiaries were acquired to expand the Group’s business in Japan and
Vietnam.

A-43
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

4 Subsidiaries (cont’d)

(b) Business combinations and additional interest in subsidiaries (cont’d)

The Group has elected to measure the non-controlling interest at the non-controlling
interest’s proportionate share of the acquired subsidiaries’ identifiable net assets.
Details of the consideration paid, the assets acquired and liabilities assumed, the
non-controlling interest recognised and the effects on the cash flows of the Group, at the
acquisition date, were as follows:

2018

S$

(i) Purchase consideration

Cash paid/Total purchase consideration. . . . . . . . . . . . . . . . . . . 4,022,700

(ii) Effects on cash flows of the Group

Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,022,700
Less: cash and cash equivalents in subsidiaries acquired . . . . . (291,803)

Cash outflow on acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,730,897

(iii) Acquisition-related costs of approximately S$40,000 have been recognised as an

expense in the financial year ended 31 December 2018 in consolidated statement
of profit or loss.

(iv) The receivables acquired in these transactions (Note 4(b)(ix)) approximate their fair
value and these are expected to be recovered.

(v) The fair values of the acquired identifiable tangible and intangible assets (Note
4(b)(ix)) have been finalised during the financial year ended 31 December 2018 and
no fair value adjustment was recognised.

(vi) There are no pending lawsuits and no contingent liability recognised.

(vii) Goodwill arose in the acquisition of Nanofab Group because the consideration paid
for the combination effectively included amounts in relation to the benefit of
expected synergies, revenue growth and future market development. These
benefits are not recognised separately from goodwill because they do not meet the
recognition criteria for identifiable intangible assets. The goodwill arising on these
acquisitions is not expected to be deductible for tax purposes.

(viii) The acquired business contributed revenue of S$5,345,696 and net profit after tax
of S$234,386 to the Group during the financial year ended 31 December 2018. Had
Nanofab Group been acquired from 1 January 2018, consolidated revenue and
consolidated profit for the financial year ended 31 December 2018 would have been
S$122,844,245 and S$29,310,142 respectively.

A-44
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

4 Subsidiaries (cont’d)

(b) Business combinations and additional interest in subsidiaries (cont’d)

(ix) Identifiable assets acquired and liabilities assumed

At fair value

S$

Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291,803

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,051
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,282,715
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,267
Land use rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396,670

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,994,506

Trade and other payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (803,935)

Short-term loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,066,438)
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,943,911)
Provision for income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,402)

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,822,686)

Total identifiable net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,171,820

Less: Non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,020,879)
Add: Goodwill (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871,759

Consideration transferred for the business . . . . . . . . . . . . . . . . . 4,022,700

(x) In November 2018, the Company subscribed additional ordinary shares of

S$1,933,171 in Nanofab Group. As a result, the Group’s interest in Nanofab Group
increased by 19% from 51% to 70% and the interest in non-controlling interests was
diluted. The effect of the change in the Group’s ownership interest in Nanofab
Group on the equity attributable to owners of the Company is summarised below:

2018

S$

Dilution of non-controlling interests

Subscription of additional ordinary shares in Nanofab Group . . . 1,933,173
Decrease in equity attributable to non-controlling interests . . . . (630,541)

Increase in equity attributable to owners of the Company . . . . . 1,302,632

A-45
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

4 Subsidiaries (cont’d)

(c) Incorporation of subsidiaries/Additional injection in capital

(i) A wholly owned subsidiary, Shanghai Nanofilm Precision Coating Co., Ltd was
incorporated in People’s Republic of China in July 2017.

(ii) A subsidiary, Shanghai Nanofilm Zaichuang Automation Co., Ltd was incorporated
in People’s Republic of China in March 2018. The Group holds a 51% effective
interest in the subsidiary.

(iii) A subsidiary, Yizheng Nahuan Technologies Co., Ltd was incorporated in People’s
Republic of China in October 2018. The Group holds a 51% effective interest in the
subsidiary. During the financial year ended 31 December 2019, the Group through
its subsidiaries, Nanofilm Vacuum Coating (Shanghai) Co., Ltd and Shanghai
Nanofilm Precision Coating Co., Ltd contributed a total share capital of
RMB30,600,000 (equivalent to S$6,092,460) in cash in the subsidiary. The
non-controlling interest of Yizheng Nahuan Technologies Co., Ltd contributed its
share capital of RMB29,400,000 (equivalent to S$5,853,540) through equipment
capital injection in the subsidiary. There are no changes to the equity interest held
by the Group.

(d) Interest in subsidiaries with material non-controlling interests

The Group has the following subsidiaries that have material non-controlling interests as
at the reporting date:

Proportion of
ownership interests
held by Profit/(loss) allocated Accumulated
non-controlling to non-controlling non-controlling
Name of subsidiaries interests interests interests

2018 2019 2018 2019 2018 2019

% % S$ S$ S$ S$

Nanofab Group . . . . . . . . . 70 70 107,427 (1,226,280) 2,535,653 1,313,468

Other subsidiaries with
immaterial non-controlling
interests . . . . . . . . . . . . 51 51 (97,648) 11,810 (95,059) 5,598,973

9,779 (1,214,470) 2,440,594 6,912,441

A-46
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

4 Subsidiaries (cont’d)

(d) Interest in subsidiaries with material non-controlling interests (cont’d)

Summarised financial information (before intragroup eliminations) in respect of Nanofab

Group is set out below.

2018 2019

S$ S$

Summarised Statement of Financial Position

Current
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,241,293 3,034,681
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (971,202) (3,301,403)

Total current net assets/(liabilities) . . . . . . . . . . . . . 2,270,091 (266,722)

Non-current
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,932,799 8,564,625
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,750,714) (3,919,676)

Total non-current net assets . . . . . . . . . . . . . . . . . . 6,182,085 4,644,949

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,452,176 4,378,227

Summarised Statement of Profit or Loss and Other

Comprehensive Income
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,365,696 6,347,996
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,131,310) (10,435,603)

Profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . 234,386 (4,087,607)

Profit/(loss) attributable to non-controlling

interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,427 (1,226,280)

Total comprehensive income/(loss) attributable to

non-controlling interests . . . . . . . . . . . . . . . . . . . 37,887 (1,222,185)

Summarised Cash Flow

Net cash generated from/(used in) operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,712,619 (492,497)
Net cash used in investing activities . . . . . . . . . . . . (6,887,972) (1,462,019)
Net cash generated from financing activities . . . . . 6,199,987 1,408,587

A-47
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

5 Revenue

(a) Revenue by product type

2017 2018 2019

S$ S$ S$

Industrial Equipment. . . . . . . . . . . . . . . . 29,635,555 35,137,913 27,370,629

Advanced Materials
—Smart phone . . . . . . . . . . . . . . . . . . . . 11,123,750 12,589,485 13,657,547
—Computer (desktop, laptop, tablet) . . . 30,569,465 35,523,490 43,197,041
—Wearable & Accessories . . . . . . . . . . . 16,929,236 18,799,044 32,168,085
—Printing and Imaging . . . . . . . . . . . . . . 11,204,697 10,791,140 12,860,842
—Precision Engineering . . . . . . . . . . . . . 4,040,985 4,232,090 5,100,454
—Automotive . . . . . . . . . . . . . . . . . . . . . 99,865 425,387 2,641,919

73,967,998 82,360,636 109,625,888

Nanofabrication . . . . . . . . . . . . . . . . . . . — 5,345,696 5,911,952

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,603,553 122,844,245 142,908,469

(b) Disaggregation of revenue from contracts with customers

2017 2018 2019

S$ S$ S$

Performance obligations satisfied

at a point in time
Sale of equipment. . . . . . . . . . . . . . . . . . 11,756,887 28,115,073 19,811,839
Sale of products and spare parts . . . . . . 2,354,657 7,340,830 7,863,676

14,111,544 35,455,903 27,675,515

Performance obligations satisfied

over time
Sale of equipment. . . . . . . . . . . . . . . . . . 14,975,371 4,078,770 3,964,754
Service rendered . . . . . . . . . . . . . . . . . . 74,516,638 83,309,572 111,268,200

89,492,009 87,388,342 115,232,954

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,603,553 122,844,245 142,908,469

A-48
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

5 Revenue (cont’d)

(c) Contract balances

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$

Current
Contract assets/Accrued
receivables . . . . . . . . . . . . . — 4,635,112 7,775,450 11,376,429
Contract liabilities/Advanced
receipts . . . . . . . . . . . . . . . . 222,553 6,652,553 2,070,877 6,368,253

Contract assets represent the Group’s rights to consideration for work completed but not
billed at the reporting date. Invoices are billed to customers when the rights become
unconditional. Contract liabilities relate to the Group’s obligation to transfer goods to
customers for which the Group have received consideration. Contract liabilities are
recognised as revenue as the Group perform under the contract.

The significant changes in the contract assets and contract liabilities during the financial
years ended 31 December 2017, 2018 and 2019 are as follows:

2017 2018 2019

S$ S$ S$

Contract assets
Contract assets billed . . . . . . . . . . . . . . . (10,367,564) (5,330,018) (9,926,002)
Changes in measurement of progress . . 15,002,676 8,470,356 13,526,981

Contract liabilities
Revenue recognised at the beginning
of the year . . . . . . . . . . . . . . . . . . . . . . 222,553 6,652,553 2,070,877
Increase due to cash received,
excluding amounts recognised as
revenue during the year . . . . . . . . . . . (6,652,553) (2,070,877) (6,368,253)

A-49
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

6 Other Operating Income

2017 2018 2019

S$ S$ S$

Government grants . . . . . . . . . . . . . . . . . . . . . . 702,207 564,601 1,395,318

Scrap sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,168 74,719 89,325
Gain on disposal of an associated company. . . — — 74,725
Gain on disposal of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,081 — —
Sundry income . . . . . . . . . . . . . . . . . . . . . . . . . 220,805 9,265 347,513

1,028,261 648,585 1,906,881

7 Finance Income

2017 2018 2019

S$ S$ S$

Interest income:
—bank deposits . . . . . . . . . . . . . . . . . . . . . . . . 186,239 342,028 507,050
—others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 22,292 —

186,239 364,320 507,050

8 Finance Expenses

2017 2018 2019

S$ S$ S$

Interest expense:
—bank loans. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,029,838 320,746 117,892
—convertible notes carried at amortised cost . . — 557,380 1,029,256
—lease liabilities . . . . . . . . . . . . . . . . . . . . . . . 39,351 233,290 229,120

1,069,189 1,111,416 1,376,268

A-50
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

9 Profit before Income Tax

This is stated after charging/(crediting) the following:

Note 2017 2018 2019

S$ S$ S$
Cost of inventories sold (recognised as
cost of sales) . . . . . . . . . . . . . . . . . . . . . . . . 38,587,723 46,620,204 54,226,242
Research and development &
engineering expenses . . . . . . . . . . . . . . . . . . 4,582,859 6,575,114 9,092,124
Directors’ fee . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 30,000 27,658
Depreciation of property, plant and equipment . . 12 9,450,722 13,244,553 13,452,782
Amortisation of land use rights . . . . . . . . . . . . . 13 52,453 62,275 239,077
Amortisation of intangible assets . . . . . . . . . . . . 14 875,538 969,166 1,126,387
Leases expenses . . . . . . . . . . . . . . . . . . . . . . 560,736 232,853 543,591
Impairment loss allowance on trade receivables . 16 — 416,913 37,091
Impairment of goodwill . . . . . . . . . . . . . . . . . . . 14 — — 871,759
Write down of inventories . . . . . . . . . . . . . . . . . 17 — — 366,722
Write off of obsolete stock . . . . . . . . . . . . . . . . — 153,030 —
Staff costs (including Directors’ remuneration):
—Salaries and related costs . . . . . . . . . . . . . . . 28,157,922 34,999,854 42,965,681
—Contribution to defined contribution plans . . . . 677,953 882,999 1,069,617
—Share option expenses . . . . . . . . . . . . . . . . . 584,000 (119,800) 63,842
Write off/loss on disposal of property,
plant and equipment . . . . . . . . . . . . . . . . . . . — 114,272 129,135
Exchange loss. . . . . . . . . . . . . . . . . . . . . . . . . 1,498,074 288,651 605,137
Fair value loss on derivative . . . . . . . . . . . . . . . — – 151,738
Provision for warranty . . . . . . . . . . . . . . . . . . . 26 697,715 838,062 579,177
Reversal of provision for warranty . . . . . . . . . . . 26 (725,449) (759,811) (472,113)

Breakdown of staff costs included in:

—Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . 15,276,451 19,083,803 21,993,383
—Selling and distribution expenses . . . . . . . . . . 4,637,009 5,411,821 9,556,099
—Administrative expenses . . . . . . . . . . . . . . . . 9,506,415 11,267,429 12,549,658

29,419,875 35,763,053 44,099,140

Breakdown of amortisation of land use rights and

intangible assets included in:
—Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . — — 10,075
—Selling and distribution expenses . . . . . . . . . . 875,538 969,166 1,126,387
—Administrative expenses . . . . . . . . . . . . . . . . 52,453 62,275 229,002

927,991 1,031,441 1,365,464

A-51
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

10 Income Tax

2017 2018 2019

S$ S$ S$

Income tax:
—Current year . . . . . . . . . . . . . . . . . . . . . . . . 5,052,917 5,034,780 5,637,797
—(Over)/Under provision in prior years . . . . . (2,080) 66,644 (423,447)

5,050,837 5,101,424 5,214,350

Deferred tax:
—Current year (Note 24) . . . . . . . . . . . . . . . . — 530,000 140,200

5,050,837 5,631,424 5,354,550

A reconciliation of income tax calculated at the applicable tax rates of the Group entities in
their respective tax jurisdictions with income tax expense is as follows:

2017 2018 2019

S$ S$ S$

Profit before income tax . . . . . . . . . . . . . . . . . 31,985,223 34,941,566 39,895,309

Tax calculated at applicable tax rates . . . . . . 5,449,519 6,099,126 5,953,521

Non-deductible expenses . . . . . . . . . . . . . . . . 678,155 125,349 677,122
Income not subject to tax . . . . . . . . . . . . . . . . (263,178) (2,723) (254,094)
Tax exemption . . . . . . . . . . . . . . . . . . . . . . . . (40,925) (35,925) (32,425)
(1)
Tax incentives ....................... (770,654) (851,001) (1,244,677)
Utilisation of previously unrecognised tax
losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (170,695)
Deferred tax assets not recognised . . . . . . . . — 229,954 849,245
(Over)/Under provision in prior years . . . . . . . (2,080) 66,644 (423,447)

5,050,837 5,631,424 5,354,550

(1) Tax incentives pertain mainly to Productivity and Innovation Credit and research and development tax
deductions.

Deferred income tax assets are recognised for tax losses carried forward to the extent that
realisation of the related tax benefits through future taxable profits is probable. At the
reporting date, several subsidiaries in Vietnam, Japan and China have unrecognised tax
losses of S$2,683,000 and S$6,110,000 in 2018 and 2019 respectively which can be carried
forward and used to offset against future taxable income subject to meeting certain statutory
requirements by those companies with unrecognised tax losses in their respective countries
of incorporation. The tax losses can be carried forward for five to ten years.

A-52
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

10 Income Tax (cont’d)

Singapore

The current corporate income tax rate applicable to the Company is 17% for 3 consecutive
years from 2017 to 2019. The Company enjoys a concessionary income tax rate of 10% under
the International Growth Scheme for 5 years from 1 July 2016, subject to the terms and
conditions being met.

People’s Republic of China

The current applicable corporate tax rate is 15% and 25% for 3 consecutive years on Nanofilm
Vacuum Coating (Shanghai) Co., Ltd and other subsidiaries incorporated in China
respectively. Nanofilm Vacuum Coating (Shanghai) Co., Ltd has been granted a certificate of
high technology enterprise by the local tax authorities and a concessionary tax rate of 15%
applies during the financial years ended 31 December 2017, 2018 and 2019 and valid to
30 October 2021.

Japan

Companies incorporated in Japan are subject to tax on their worldwide income. The taxes
included corporate tax, surtax on corporate tax, inhabitant tax and enterprise tax. The current
corporate (a national) tax rate is 23.2% (2018: 23.4%; 2017: 23.4%). Tax losses can be
carried forward for nine years. The utilisation of the tax losses is restricted at 80% of taxable
income for the year.

Vietnam

The subsidiary in Vietnam has an obligation to pay the government income tax at the rate of
20%. Under the terms of Investment Certificate, the subsidiary is allowed to be exempt from
income tax for 2 years starting from the first year it generates a taxable profit and entitled to
a 50% reduction in income tax for 4 succeeding years.

11 Earnings per Share

(a) Basic Earnings per Share

Basic earnings per share amounts are calculated by dividing profit for the year, net of tax,
attributable to equity holders of the Company by the weighted average number of
ordinary shares in issue during the financial years as follows:

2017 2018 2019

Profit for the year attributable to equity

holders of the Company (S$) . . . . . . . 26,934,386 29,300,363 35,755,229

Weighted average number of ordinary

shares (number) (1) . . . . . . . . . . . . . . . . 506,228,980 510,796,624 511,237,720

Basic earnings per share (cents) . . . . . . 5.32 5.74 6.99

(1) The weighted average number of ordinary shares outstanding during the financial year ended
31 December 2017 and 2018 were adjusted for the effect of the sub-division of shares as disclosed in Note
19 to the consolidated financial statements.

A-53
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

11 Earnings per Share (cont’d)

(b) Diluted Earnings per Share

For the purposes of calculating diluted earnings per share, profit attributable to equity
holders of the Company and the weighted average number of ordinary shares
outstanding are adjusted for the effects of all dilutive potential ordinary shares. The
Company has two categories of dilutive potential ordinary shares: convertible notes and
share options.

Convertible notes are assumed to have been converted into ordinary shares at issuance
and the net profit is adjusted to eliminate the interest expense less the tax effect. For
share options, the weight average number of shares on issue has been adjusted as if all
dilutive share options were exercised. The number of shares that could have been
issued upon the exercise of all dilutive share options less the number of shares that could
have been issued at fair value (determined as the Company’s average share price for the
financial year) for the same total proceeds is added to the denominator as the number of
shares issued for no consideration. No adjustment is made to the net profit.

Diluted earnings per share amounts attributable to equity holders of the Company are
calculated as follows:

2017 2018 2019

Profit for the year attributable to equity

holders of the Company (S$) . . . . . . . 26,934,386 29,300,363 35,755,229
Add back: interest and other expense
on share options and convertible
notes, net of tax (S$). . . . . . . . . . . . . . 584,000 599,147 1,091,307

Net profit used to determine diluted

earnings per share (S$) . . . . . . . . . . . 27,518,386 29,899,510 36,846,536

Weighted average number of ordinary

shares (number) . . . . . . . . . . . . . . . . . 506,228,980 510,796,624 511,237,720
Adjustments for:
—Share options . . . . . . . . . . . . . . . . . . . 1,866,089 1,763,931 — (1)
—Convertible notes . . . . . . . . . . . . . . . . — 28,504,866 53,630,290

508,095,069 541,065,421 564,868,010

Diluted earnings per share (cents) . . . . . 5.42 5.53 6.52

(1) Share options are anti-dilutive.

A-54
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

12 Property, Plant and Equipment

Building
Plant and and Office Motor Construction
machinery renovation equipment vehicles in-progress Total

2017 S$ S$ S$ S$ S$ S$

Cost

At 1 January . . . . . . . . . . . . . 51,342,045 2,842,307 9,418,375 1,026,370 23,249,565 87,878,662

Adoption of SFRS(I) 16 . . . . . . . — 764,315 — — — 764,315

Adjusted balance at 1 January . . 51,342,045 3,606,622 9,418,375 1,026,370 23,249,565 88,642,977

Additions. . . . . . . . . . . . . . . . 4,174,538 2,394,027 1,542,138 382,430 5,584,706 14,077,839

Disposal/Write off . . . . . . . . . . (652,448) (39,149) (473,452) (47,000) (20,455) (1,232,504)

Transfer . . . . . . . . . . . . . . . . 4,904,474 20,995,753 1,083,670 — (26,983,897) —

Reclassification (Note e) . . . . . . — — — — (47,954) (47,954)

Translation adjustment . . . . . . . (1,335,771) (38,876) (431,770) (6,556) (453,444) (2,266,417)

At 31 December . . . . . . . . . . . 58,432,838 26,918,377 11,138,961 1,355,244 1,328,521 99,173,941

Accumulated depreciation

At 1 January . . . . . . . . . . . . . 21,686,313 1,212,091 3,440,496 608,348 — 26,947,248

Charge for the year . . . . . . . . . 6,055,706 1,805,817 1,741,620 170,218 — 9,773,361

Disposal/Write off . . . . . . . . . . (583,991) (39,110) (456,830) (46,217) — (1,126,148)

Translation adjustment . . . . . . . (905,385) (141,762) (283,288) (3,268) — (1,333,703)

At 31 December . . . . . . . . . . . 26,252,643 2,837,036 4,441,998 729,081 — 34,260,758

Net book value

At 1 January 2017 . . . . . . . . . . 29,655,732 2,394,531 5,977,879 418,022 23,249,565 61,695,729

At 31 December 2017 . . . . . . . . 32,180,195 24,081,341 6,696,963 626,163 1,328,521 64,913,183

A-55
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

12 Property, Plant and Equipment (cont’d)

Building Office and

Plant and and other Tools and Motor Construction
machinery renovation equipment supplies vehicles in-progress Total

2018 S$ S$ S$ S$ S$ S$ S$

Cost

At 1 January . . . . . . . . 58,432,838 26,918,377 11,138,961 — 1,355,244 1,328,521 99,173,941

Acquisition of subsidiaries
(Note 4) . . . . . . . . . 2,727,625 197,007 123,123 517,870 13,618 1,298,024 4,877,267

Additions . . . . . . . . . . 5,384,654 5,284,484 3,421,417 2,092,814 11,296 4,770,117 20,964,782

Disposal/Write off . . . . . (313,761) (2,270) (261,467) — (35,835) (114,439) (727,772)

Transfer . . . . . . . . . . 1,643,326 1,252,878 851,646 — — (3,747,850) —

Reclassification
(Note e) . . . . . . . . . — — — — — (589,848) (589,848)

Translation adjustment. . . (1,906,098) (870,107) (454,242) — (31,001) (11,690) (3,273,138)

At 31 December . . . . . . 65,968,584 32,780,369 14,819,438 2,610,684 1,313,322 2,932,835 120,425,232

Accumulated depreciation

At 1 January . . . . . . . . 26,252,643 2,837,036 4,441,998 — 729,081 — 34,260,758

Charge for the year . . . . 8,332,999 2,541,097 2,175,498 648,572 203,093 — 13,901,259

Disposal/Write off . . . . . (229,506) (2,266) (214,389) — (15,819) — (461,980)

Translation adjustment. . . (737,203) (76,408) (178,660) — (19,210) — (1,011,481)

At 31 December . . . . . . 33,618,933 5,299,459 6,224,447 648,572 897,145 — 46,688,556

Net book value

At 31 December 2018 . . . 32,349,651 27,480,910 8,594,991 1,962,112 416,177 2,932,835 73,736,676

A-56
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

12 Property, Plant and Equipment (cont’d)

Building Office and

Plant and and other Tools and Motor Construction
machinery renovation equipment supplies vehicles in-progress Total

2019 S$ S$ S$ S$ S$ S$ S$

Cost

At 1 January . . . . . . . . 65,968,584 32,780,369 14,819,438 2,610,684 1,313,322 2,932,835 120,425,232

Additions . . . . . . . . . . 5,689,808 1,622,596 2,406,332 67,326 97,766 42,568,565 52,452,393

Disposal/Write off . . . . . (1,193,610) (306,290) (157,344) — (121,330) — (1,778,574)

Transfer . . . . . . . . . . 19,905,722 113,436 2,413,492 — 55,344 (22,487,994) —

Reclassification
(Note e) . . . . . . . . . (23,125) — — — — (2,210,797) (2,233,922)

Translation adjustment. . . (1,998,158) (722,385) (442,296) (34,232) (22,623) (411,473) (3,631,167)

At 31 December . . . . . . 88,349,221 33,487,726 19,039,622 2,643,778 1,322,479 20,391,136 165,233,962

Accumulated depreciation

At 1 January . . . . . . . . 33,618,933 5,299,459 6,224,447 648,572 897,145 — 46,688,556

Charge for the year . . . . 7,175,751 2,449,281 2,775,849 1,401,707 129,060 — 13,931,648

Disposal/Write off . . . . . (1,193,610) (231,532) (86,254) (87) (90,667) — (1,602,150)

Translation adjustment. . . (728,670) (98,345) (192,494) (26,025) (15,040) — (1,060,574)

At 31 December . . . . . . 38,872,404 7,418,863 8,721,548 2,024,167 920,498 — 57,957,480

Net book value

At 31 December 2019 . . . 49,476,817 26,068,863 10,318,074 619,611 401,981 20,391,136 107,276,482

(a) The carrying amount of leased properties, motor vehicles and plant and machinery held under leasing
arrangements to the Group amounted to S$1,669,169, S$3,943,315 and S$2,839,964 for financial years ended
31 December 2017, 2018 and 2019 respectively.

(b) Right-of-use assets acquired under leasing arrangements are presented together with the owned assets of the
same class.

(c) As at 31 December 2017, included in building and renovation and land use right amounting to S$14,289,678,
which were mortgaged to a bank to secure a bank loan (Note 21).
(d) During the financial year ended 31 December 2019, the additions to property, plant and equipment included
S$263,816 (2018: S$2,404,296; 2017: S$1,448,751) acquired under right-of-use assets under leasing
arrangement (Note 22) and S$5,853,540 acquired through capital injection from a non-controlling interest
(Note 4).

(e) Included manufactured coating services machinery transferred to inventories for sale during the financial years.

A-57
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

12 Property, Plant and Equipment (cont’d)

The breakdown of depreciation charged for the financial years are as follows:

2017 2018 2019

S$ S$ S$
Depreciation included in profit or loss:
—cost of sales . . . . . . . . . . . . . . . . . . . . . . . . 7,574,483 10,655,976 10,599,013
—selling and distribution expenses . . . . . . . . 431,725 656,089 929,038
—administrative expenses . . . . . . . . . . . . . . . 1,444,514 1,932,488 1,924,731

9,450,722 13,244,553 13,452,782

Capitalised in statement of
financial position as:
Intangible assets—development costs . . . . . . 278,051 268,600 192,583
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,588 388,106 286,283

9,773,361 13,901,259 13,931,648

13 Land Use Rights

2017 2018 2019

S$ S$ S$
Cost
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 2,675,426 2,638,178 2,950,383
Acquisition of subsidiaries (Note 4) . . . . . . . . – 396,670 –
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 311,537
Reclass from Other Receivables
(Note 13(b)). . . . . . . . . . . . . . . . . . . . . . . . . – – 10,384,550
Translation adjustment . . . . . . . . . . . . . . . . . . (37,248) (84,465) (302,381)

At 31 December . . . . . . . . . . . . . . . . . . . . . . . 2,638,178 2,950,383 13,344,089

Accumulated amortisation
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 249,706 298,993 349,610
Amortised during the year . . . . . . . . . . . . . . . 52,453 62,275 239,077
Translation adjustment . . . . . . . . . . . . . . . . . . (3,166) (11,658) (12,410)

At 31 December . . . . . . . . . . . . . . . . . . . . . . . 298,993 349,610 576,277

Net book value

At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 2,425,720 2,339,185 2,600,773

At 31 December . . . . . . . . . . . . . . . . . . . . . . . 2,339,185 2,600,773 12,767,812

A-58
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

13 Land Use Rights (cont’d)

The land use rights consisted of:

(a) Prepaid land costs for which the Group’s subsidiary in Vietnam obtained land use rights
certificate. These costs are amortised on a straight-line basis over the term of the lease
of 38 years.

(b) Certain plots of state-owned land in the People’s Republic of China where certain of the
Group’s production facilities reside. The land use rights are transferrable and have a
lease term period of about 50 years. During the financial year ended 31 December 2019,
the Group received the title deeds for one of the plot of state-owned land and
accordingly, a deposit of RMB52,580,000 (equivalent to S$10,384,550) was transferred
from other receivables (Note 16) to land use rights.

14 Intangible Assets

Development
Patents costs Total

S$ S$ S$

2017
Cost
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 320,891 8,243,298 8,564,189
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,181,644 1,181,644

At 31 December . . . . . . . . . . . . . . . . . . . . . . . 320,891 9,424,942 9,745,833

Accumulated amortisation
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 263,205 5,433,586 5,696,791
Amortised during the year . . . . . . . . . . . . . . . 14,560 860,978 875,538

At 31 December . . . . . . . . . . . . . . . . . . . . . . . 277,765 6,294,564 6,572,329

Net carrying amount
At 1 January 2017 . . . . . . . . . . . . . . . . . . . . . 57,686 2,809,712 2,867,398

At 31 December 2017 . . . . . . . . . . . . . . . . . . . 43,126 3,130,378 3,173,504

A-59
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

14 Intangible Assets (cont’d)

Development
Patents costs Goodwill Total

S$ S$ S$ S$

2018
Cost
At 1 January . . . . . . . . . . . . . . . . . . 320,891 9,424,942 — 9,745,833
Acquisition of subsidiaries
(Note 4) . . . . . . . . . . . . . . . . . . . . — — 871,759 871,759
Additions . . . . . . . . . . . . . . . . . . . . 37,646 1,406,687 — 1,444,333

At 31 December . . . . . . . . . . . . . . . 358,537 10,831,629 871,759 12,061,925

Accumulated amortisation
At 1 January . . . . . . . . . . . . . . . . . . 277,765 6,294,564 — 6,572,329
Amortised during the year . . . . . . . 8,881 960,285 — 969,166

At 31 December . . . . . . . . . . . . . . . 286,646 7,254,849 — 7,541,495

Net carrying amount

At 31 December 2018 . . . . . . . . . . . 71,891 3,576,780 871,759 4,520,430

2019
Cost
At 1 January . . . . . . . . . . . . . . . . . . 358,537 10,831,629 871,759 12,061,925
Additions . . . . . . . . . . . . . . . . . . . . 196,660 1,301,916 — 1,498,576

At 31 December . . . . . . . . . . . . . . . 555,197 12,133,545 871,759 13,560,501

Accumulated amortisation and

impairment losses
At 1 January . . . . . . . . . . . . . . . . . . 286,646 7,254,849 — 7,541,495
Amortised during the year . . . . . . . 4,823 1,121,564 — 1,126,387
Impairment loss . . . . . . . . . . . . . . . — — 871,759 871,759

At 31 December . . . . . . . . . . . . . . . 291,469 8,376,413 871,759 9,539,641

Net carrying amount

At 31 December 2019 . . . . . . . . . . . 263,728 3,757,132 — 4,020,860

Included in the additions are depreciation of plant and equipment, staff costs and rental
capitalised, amounting to S$192,583 (2018: S$268,600 and 2017: S$278,051), S$831,764
(2018: S$916,773 and 2017: S$693,194) and S$117,234 (2018: S$106,465 and 2017:
S$110,804), respectively. The additions to intangible assets during the financial year are
shown net of the depreciation of plant and equipment capitalised in the consolidated
statement of cash flows.

A-60
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

14 Intangible Assets (cont’d)

Goodwill

During the financial year ended 31 December 2019, the Group recorded an impairment loss
of S$871,759 (2018 and 2017: Nil) to profit or loss in relation to goodwill attributable to the
nanofabrication cash-generating unit which are in loss making position during the financial
year.

The recoverable amount of the cash-generating unit has been determined based on value in
use calculation using cash flow projections from financial budgets approved by management
covering a five-year period. The Group applied a pre-tax discount rate of approximately 13%,
budgeted average gross margins of about 20% and average growth rates of about 17% over
5 years to the cash flow projections. If the management’s estimated growth rates and
estimated pre-tax discount rate used in the value in use calculation decreased by 5% and
increased by 1% respectively, goodwill impairment charge will remain at S$871,759 (2018
and 2017: Nil).

15 Investment in Associated Company

2018 2019

S$ S$

Unquoted equity shares, at cost

At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,539,885
Addition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,973,005 —
Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (2,538,831)
Share of loss (including impairment charge). . . . . . . . . . (433,120) (1,054)

At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,539,885 —

In March 2018, the Company through its wholly owned subsidiary Nanofilm Vacuum Coating
(Shanghai) Co., Ltd invested 32.5% interest in an associated company, Yi Lin (Shanghai)
Technologies Co., Ltd, incorporated in People’s Republic of China. The principal activity is
that of Waste Water Treatment in People’s Republic of China. The entity was dormant at the
date of acquisition and the capital injection amounted to RMB15,000,000 (equivalent to
S$2,973,005), which included goodwill of RMB5,250,000 (equivalent to S$1,040,552) as part
of the expected benefit of synergies with the other investors.

At 31 December 2018, the Group reviewed for impairment indicators and provided impairment
of S$292,356 as the Group had agreed to assume the losses incurred by the associate during
the year as part of its discussion to exit from the investment and recovered the remaining
capital injected.

On 13 June 2019, the Group completed its disposal of its entire 32.5% interest in Yi Lin
(Shanghai) Technologies Co., Ltd at a consideration of RMB13,180,000 (equivalent to
S$2,613,556). The Group recognised a gain on disposal of associated company amounting to
S$74,725 in profit or loss during the financial year ended 31 December 2019.

A-61
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

15 Investment in Associated Company (cont’d)

Summarised financial information (before intragroup eliminations) in respect of the Group’s

associated company was set out below:

2018

S$

Summarised Statement of Profit or Loss and Other Comprehensive

Income
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (433,120)

Loss for the year and other comprehensive income . . . . . . . . . . . . . . . . . . (433,120)

2018

S$

Summarised Statement of Financial Position

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,799,908
Current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (287,397)

Total current net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,512,511

Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378

Total non-current net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,512,889

Reconciliation of the summarised financial information presented, to the carrying amount of

the Group’s interest in associated company, is as follows:

2018

S$

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,512,889

Group’s share of net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.5%

Carrying value of Group’s interest in associated company . . . . . . . . . . . . . 1,791,689

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,040,552

2,832,241
Less: Impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (292,356)

2,539,885

A-62
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

16 Trade and Other Receivables, and Other Current Assets

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$

Current
Trade receivables:
—Third parties . . . . . . . . . . . . . . . . 21,061,424 30,775,013 40,923,624 50,268,948
—Loss allowance . . . . . . . . . . . . . . — — (670,913) (708,004)

21,061,424 30,775,013 40,252,711 49,560,944

Other receivables:
—Deposits . . . . . . . . . . . . . . ..... 201,371 300,606 782,796 266,610
—Deposit for land use rights ..... — — 10,421,374 —
—GST/VAT and other taxes
receivable . . . . . . . . . . . . . ..... 302,774 344,584 412,661 1,880,439
—Sundry debtors . . . . . . . . . ..... 513,842 1,489,013 655,156 712,396

1,017,987 2,134,203 12,271,987 2,859,445

Other current assets:

—Prepayments . . . . . . . . . . . . . . . . 97,521 272,315 407,069 483,111
—Advances to suppliers . . . . . . . . . 1,960,362 4,602,203 3,858,670 5,306,863
—Deposits for investment in
acquiring subsidiaries . . . . . . . . . — 2,108,460 — —

2,057,883 6,982,978 4,265,739 5,789,974

Total . . . . . . . . . . . . . . . . . . . . . . . . 24,137,294 39,892,194 56,790,437 58,210,363

Non-current
Other receivables – staff loan . . . . . 179,676

As at 31 December 2017, the Group has trade receivables amounting S$31,695,084 pledged
to secure bank loans (Note 21).

As at 31 December 2018 and 2019, the Group has banker guarantees issued from financial
institutions for operation and completion of the construction of property, plant and equipment
in China, rental and electricity deposits amounting to S$214,065 and S$846,472 respectively.

As at 31 December 2019, the non-current loans to staff is unsecured, interest-free and

repayable in 120 equal monthly instalments commencing on 1 April 2019.

Trade receivables are interest-free and are generally on 30 to 90 days’ terms. Other
receivables are considered to have low credit risk and loss allowance is measured at an
amount equal to 12-month expected credit loss which reflects the low credit risk of the
exposures. There are no loss allowances arising from these outstanding balances as the
expected credit losses are assessed not to be material.

A-63
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

16 Trade and Other Receivables, and Other Current Assets (cont’d)

Loss allowance for trade receivables is measured at an amount equal to lifetime expected
credit losses as disclosed in accounting policy under Note 2(m). There has been no change in
the estimation techniques or significant assumptions made for financial years ended
31 December 2018 and 2019. Majority of the Company’s trade receivables are within the
credit terms and the loss allowance on the expected credit loss is assessed not to be material.
The Group’s credit risk exposure in relation to trade receivables (including contract assets) as
at the reporting date are set out in the provision matrix as presented below.

Lifetime Gross Lifetime

expected carrying expected Net carrying
loss rate amount credit losses amount

% S$ S$ S$
2018
Current . . . . . . . . . . . . . . . . . . . . . . 0.5% 42,485,180 (212,425) 42,272,755
Past due:
1 to 30 days . . . . . . . . . . . . . . . . . . 1.0% 4,995,425 (49,954) 4,945,471
31 to 60 days . . . . . . . . . . . . . . . . . 2.0% 438,143 (8,763) 429,380
60 to 90 days . . . . . . . . . . . . . . . . . 4.0% 199,363 (7,975) 191,388
(1)
More than 90 days ............ 10.0% 580,963 (391,796) 189,167

48,699,074 (670,913) 48,028,161

2019
Current . . . . . . . . . . . . . . . . . . . . . . 0.5% 59,771,754 (298,859) 59,472,895
Past due:
1 to 30 days . . . . . . . . . . . . . . . . . . 1.0% 594,921 (5,949) 588,972
31 to 60 days . . . . . . . . . . . . . . . . . 2.0% 664,591 (13,292) 651,299
60 to 90 days . . . . . . . . . . . . . . . . . 4.0% 202,116 (8,085) 194,031
(1)
More than 90 days ............ 10.0% 411,995 (381,819) 30,176

61,645,377 (708,004) 60,937,373

(1) Included an amount of loss allowance of S$370,713 provided for a specific customer.

2018 2019

S$ S$

Movements in loss allowance

At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254,000 670,913
Impairment loss recognised in profit or loss . . . . . . . . . . 416,913 37,091

At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670,913 708,004

There are no loss allowances in financial year ended 31 December 2017.

A-64
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

17 Inventories

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$

At cost or net realisable value:

Raw materials and consumables . . . . . 3,098,472 4,009,683 5,103,953 5,177,422
Work-in-progress . . . . . . . . . . . . . . . . 39,759 2,144,794 4,640,130 2,995,570
Finished goods . . . . . . . . . . . . . . . . . 3,554,033 3,794,262 6,113,667 4,863,776
Goods in transit . . . . . . . . . . . . . . . . . 937,922 306,866 1,148,876 1,696,970

7,630,186 10,255,605 17,006,626 14,733,738

The cost of inventories recognised as cost of sales for the Group in 2019 includes S$366,722
(2017 and 2018: Nil) in respect of write-down of inventories to net realisable value (Note 9).

18 Cash and Bank Balances

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$

Cash and bank balances . . . . . . . . 12,583,998 12,947,817 18,788,357 22,563,375

Fixed deposits . . . . . . . . . . . . . . . . 5,227,328 10,269,947 6,300,000 2,841,276

Cash and bank balances in the

statement of financial position . . . 17,811,326 23,217,764 25,088,357 25,404,651
Less: Pledged fixed deposits . . . . . (5,227,328) (2,249,747) — (812,676)

Cash and cash equivalents in the

consolidated statement of cash
flows . . . . . . . . . . . . . . . . . . . . . . 12,583,998 20,968,017 25,088,357 24,591,975

Cash at banks earns interest at floating rates based on daily bank deposit rates which
approximate 0.90% (2018: 0.90%; 2017: 0.16%) per annum. Short-term deposits are made for
varying periods of between one day and three months depending on the immediate cash
requirements of the Group, and earn interest at the respective short-term deposit rates.

For financial year ended 31 December 2019, fixed deposits bear interest ranging from 2.73%
to 3.58% (2018: 1.10% to 1.61%; 2017: 0.25% to 1.33%) per annum with maturity period
approximately 1 to 24 months (2018: 1 to 3 months; 2017: 1 month to 1 year) from the
reporting date.

As at 31 December 2017 and 2019, fixed deposits of S$2,249,747 and S$812,676 were
pledged with banks for banking facilities granted to the Group and with financial institutions for
operation and construction of property, plant and equipment respectively (Note 16).

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

19 Share Capital

2017 2018 2019

No. of No. of No. of

ordinary ordinary ordinary
shares S$ shares S$ shares S$
Fully paid ordinary shares
At 1 January . . . . . . . . . . . . 14,460,792 7,818,993 14,556,792 8,548,273 511,237,720 9,695,920
Sub-division of shares during
the year . . . . . . . . . . . . . . — — 494,930,928 — — —

After sub-division of shares. . . . 14,460,792 7,818,993 509,487,720 8,548,273 511,237,720 9,695,920

Issuance of shares under
employee share option plan . . 96,000 729,280 1,750,000 1,147,647 — —

At 31 December . . . . . . . . . . 14,556,792 8,548,273 511,237,720 9,695,920 511,237,720 9,695,920

For the purpose of the consolidated financial statements, the share capital in the consolidated
statements of financial position as at 31 December 2017, 2018 and 2019 represents the
Group’s share of paid-up capital of the Company.

At the Extraordinary General Meeting of the Company in March 2018, the Company
authorised and approved the sub-division of the share capital of the Company. The share
capital of the Company was sub-divided in such manner so that every 1 ordinary share in the
issued and paid up share capital of the Company be sub-divided into 35 ordinary shares (the
“Sub-division”). Upon such sub-division, the issued capital of the Company comprises a total
of 509,487,720 ordinary shares.

Ordinary shares have no par value. The holders of ordinary shares are entitled to receive
dividends as declared from time to time and are entitled to one vote per share without
restriction at meetings of the Company. All shares rank equally with regard to the Company’s
residual assets.

20 Reserves

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$
Translation reserve . . . . . . . . . . . . . . (1,629,513) (2,279,110) (5,286,758) (9,019,698)
Statutory reserve . . . . . . . . . . . . . . . . 3,037,049 5,067,618 5,224,302 5,433,781
Other reserves . . . . . . . . . . . . . . . . . — 584,000 638,519 702,361
Accumulated profits . . . . . . . . . . . . . . 62,474,700 83,763,319 87,688,101 113,701,312

63,882,236 87,135,827 88,264,164 110,817,756

The other reserves include share options reserve and reserve arising from step up acquisition
of Nanofab Group in the financial year ended 31 December 2018 from shareholding of 51% to
70%, which represented the difference between the carrying amount of the net assets of the
transferred group of entities and the consideration transferred.

Movements in the Group’s reserves are set out in the statements of changes in equity.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

20 Reserves (cont’d)

Share options reserve

The Company has an Employee Share Option Scheme (“Scheme”) for the granting of
non-transferable options to eligible executive officers. The Scheme was approved by the
shareholders of the Company at the Extraordinary General Meeting held on 6 February 2017.
The Scheme is established and administered by a committee comprising of directors of the
Company from time to time or persons duly authorised and appointed by the board of
directors.

The share options granted under the Scheme may have exercise prices that are at the
discretion of the committee. Share options can only be exercised after vesting has taken
place.

During the financial year ended 31 December 2017, the Company granted 239,000 share
options to the employees pursuant to the Scheme and out of which 96,000 share options were
exercised during the year when vested. As at 31 December 2017, 143,000 share options
remained outstanding. These share options were cancelled during the financial year ended 31
December 2018.

During the financial year ended 31 December 2018, the Company granted 24,755,000 shares
options to the employees pursuant to the Scheme and out of which 1,750,000 share options
were exercised during the year ended 31 December 2018 when vested. As at 31 December
2018, 22,705,000 share options remained outstanding. Out of which 7,575,000 has been
vested in 2018, 6,146,000 will be vested in 2019, 4,458,000 will be vested in 2020 and
4,526,000 will be vested in 2021.

During the financial year ended 31 December 2019, the Company granted 5,168,000 shares
options to the employees pursuant to the Scheme. No share options were exercised during
the year when vested. As at 31 December 2019, 27,080,000 share options remained
outstanding. Out of which 7,575,000 and 8,889,000 have been vested in 2018 and 2019,
respectively, 4,943,000 will be vested in 2020, 4,979,000 will be vested in 2021 and 694,000
will be vested in 2022.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

20 Reserves (cont’d)

Share options reserve (cont’d)

The details of the outstanding options to subscribe for ordinary shares of the Company
pursuant to the Scheme as at 31 December 2017, 2018 and 2019 are as follows:
Number of
share options Cancelled Exercised
Balance at granted during during the during the Balance at
1 January the financial financial financial 31 December Exercise
Date of grant 2017 year year year 2017 price Date of expiry

S$
1 March 2017* . . . — 100,000 — (50,000) 50,000 2.0000 5 March 2020
2 October 2017* . . — 139,000 — (46,000) 93,000 13.6800 31 October 2023

— 239,000 — (96,000) 143,000

Number of
share options Cancelled Exercised
Balance at granted during during the during the Balance at
1 January the financial financial financial 31 December Exercise
Date of grant 2018 year year year 2018 price Date of expiry

S$
1 March 2017* . . . 50,000 — (50,000) — — 2.0000 5 March 2020
2 October 2017* . . 93,000 — (93,000) — — 13.6800 31 October 2023
2 April 2018 . . . . — 1,750,000 — (1,750,000) — 0.3951 2 April 2023
2 April 2018 . . . . — 3,450,000 (300,000) — 3,150,000 0.5927 2 April 2023
3 December 9-27 December
2018 . . . . . . . — 19,555,000 — — 19,555,000 0.5868 2024

143,000 24,755,000 (443,000) (1,750,000) 22,705,000

Number of
share options Cancelled Exercised
Balance at granted during during the during the Balance at
1 January the financial financial financial 31 December Exercise
Date of grant 2019 year year year 2019 price Date of expiry

S$
2 April 2018 . . . . 3,150,000 – – – 3,150,000 0.5927 2 April 2023
3 December 9-27 December
2018 . . . . . . . 19,555,000 – (763,000) – 18,792,000 0.5868 2024
18-28 March
3 March 2019 . . . – 4,618,000 (30,000) – 4,588,000 0.5868 2025
3 June 2019 . . . . – 550,000 – – 550,000 0.5868 16-18 June 2025

22,705,000 5,168,000 (793,000) – 27,080,000

* Options granted prior to sub-division of shares in financial year ended 31 December 2018.

The fair value of options granted during the financial year ended 31 December 2019,
determined using the Black-Scholes Model was S$31,233 (2018: S$116,359). The significant
inputs into the model were the share price of S$0.5189 (2018: S$0.4889) at the grant date,
expected volatility of 13.0% (2018: 13.4%), the exercise price, option life shown above,
dividend yield and annual risk-free interest rate of 2% (2018: 2%). The Group has engaged a
third party valuation adviser to value the significant inputs which include the share price and
expected volatility.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

21 Bank Loans

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$

Current . . . . . . . . . . . . . . . . . . . . . . 12,965,653 12,067,407 — 3,864,000

Non-current (due 2-5 years) . . . . . . 12,372,890 3,908,867 — —

Total . . . . . . . . . . . . . . . . . . . . . . . . 25,338,543 15,976,274 — 3,864,000

These loans incurred interest at rates ranging from 1.94%-5.56% per annum during the
financial year ended 31 December 2017. They were secured by a deed of guarantee and
indemnity from the Company’s ultimate controlling shareholder, corporate guarantees from
subsidiaries, mortgage over property under construction/building (Note 12), certain trade
receivables (Note 16) and fixed deposits (Note 18). The bank loans were fully repaid during
the financial year ended 31 December 2018.

The loans during the financial year ended 31 December 2019 are unsecured, incurred interest
at 4.35% and are repayable in May 2020.

22 Lease Liabilities

The Group as a lessee

The Group made periodic lease payments for buildings for the purpose of office usage, motor
vehicles, plant and machinery and land use rights. These are recognised within property, plant
and equipment (Note 12) and land use rights (Note 13). The carrying amounts of right-of-use
assets classified within property, plant and equipment are as follows:

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$

Buildings and renovation . . . . . . . . 764,315 1,590,852 1,309,762 853,707

Plant and machinery . . . . . . . . . . . . — — 2,499,201 1,880,038
Office equipment . . . . . . . . . . . . . . — — 64,737 45,306
Motor vehicles . . . . . . . . . . . . . . . . 87,019 78,317 69,615 60,913

851,334 1,669,169 3,943,315 2,839,964

Additions of right-of-use assets classified within the Group’s property, plant and equipment
during the financial years ended 31 December 2017, 2018 and 2019 amounted to
S$1,448,751, S$2,404,296 and S$263,816 respectively.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

22 Lease Liabilities (cont’d)

The Group as a lessee (cont’d)

Amortisation charges on land use rights are set out in Note 13. Depreciation charges on
right-of-use assets classified within property, plant and equipment during the financial year
are as follows:

2017 2018 2019

S$ S$ S$
Buildings and renovation . . . . . . . . . . . . . . . . 622,214 873,195 717,900
Plant and machinery . . . . . . . . . . . . . . . . . . . . — 841,373 622,598
Office equipment . . . . . . . . . . . . . . . . . . . . . . — 19,124 19,588
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . 8,702 8,702 8,702

630,916 1,742,394 1,368,788

Amounts recognised in profit or loss and consolidated statements of cash flows are as follows:

2017 2018 2019

S$ S$ S$
Interest on lease liabilities . . . . . . . . . . . . . . . 39,351 233,290 229,120
Expenses relating to short-term leases and
low value assets (included in cost of sales
and administrative expenses) . . . . . . . . . . . 560,736 232,853 543,591

600,087 466,143 772,711

Total cash outflow for leases . . . . . . . . . . . . . (670,449) (1,003,923) (831,551)

The Group recognised leases liabilities as follows:

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$

Lease liabilities:
Current . . . . . . . . . . . . . . . . . . . . . . 776,923 815,370 730,241 4,284,160
Non-current . . . . . . . . . . . . . . . . . . 57,379 832,861 4,454,610 346,269

834,302 1,648,231 5,184,851 4,630,429

Subsequent to the financial year end in August 2020, the Group repaid lease liabilities with
outstanding amount of S$3,701,609 (JPY 298,517,000) as at 31 December 2019 which were
pledged with net book value of plant and machinery amounting to S$1,769,591 as at
31 December 2019.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

23 Convertible Notes

In June 2018, the Company issued convertible notes at a nominal value of S$50 million due
on 20 June 2021. Pursuant to the terms of the convertible notes agreements, the notes, can
be converted into shares of the Company (the “conversion option”) based on the terms of
convertible notes agreement at the holder’s option at a conversion price of S$0.93230903 for
each conversion shares. The interest is charged at 2% p.a. On full conversion, up to
53,630,290 conversion shares are issued and allotted to the holders of the notes, if the full
carrying amount of notes is converted into shares. Under the terms of the convertible notes
agreements, the mandatory conversion notice will be served on the date of registration of the
final prospectus with the Monetary Authority of Singapore. The convertible notes will be
converted into shares of the Company prior to the Company’s listing on Singapore Stock
Exchange.

The convertible notes recognised as at the reporting date are analysed as follows:

2018 2019

S$ S$

Face value of convertible notes issued, net of

transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000,000 50,000,000
Embedded equity conversion option . . . . . . . . . . . . . . . . (115,110) (115,110)

Liability component at initial recognition . . . . . . . . . . . . . 49,884,890 49,884,890

Accumulated amortisation of interest expense . . . . . . . . 25,873 55,129

Liability component at end of financial year . . . . . . . . . . 49,910,763 49,940,019

The liability component of the convertible notes at 31 December 2019 approximates its fair
value. The fair value is calculated using cash flows discounted at market borrowing rate
(Level 2 of the fair value measurements).

The derivatives payables (Note 25) relates to the fair value of the equity conversion option for
the Convertible Notes and is measured based on Level 3 of the fair value measurements. The
fair value of the derivatives payables that is not traded in an active market is determined by
using a valuation technique based on Black-Scholes Model valued by a third party valuer. The
key assumptions applied included implied volatility of 14% (2018: 13%) and risk-free interest
rate of 1.5% (2018: 2%).

As at 31 December 2019, the Group has convertible notes interest accrued for the year of
S$1,000,000 and derivatives payables of S$266,848. The outstanding convertible notes
interest of S$1,000,000 as at 31 December 2019 was paid in January 2020.

A-71
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

24 Deferred Taxation

2017 2018 2019

S$ S$ S$
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 318,000 318,000 848,000
Deferred tax expense (Note 10) . . . . . . . . . . . — 530,000 140,200
At 31 December . . . . . . . . . . . . . . . . . . . . . . . 318,000 848,000 988,200

The deferred tax liability relates to the temporary differences due to differences in
depreciation for tax purposes on the Group’s plant and equipment. The deferred tax liability is
expected to be settled after more than twelve months from the reporting date. As at
31 December 2019, deferred income tax liabilities of S$4,131,000 (2018: S$2,825,000; 2017:
S$2,077,000) have not been recognised for withholding tax that will be payable on the
earnings of subsidiaries in the PRC when remitted to the holding company. These unremitted
earnings amounted to approximately S$82,600,000 (2018: S$56,500,000;
2017: S$41,540,000) at the reporting date and the related deferred tax liabilities have not
been recognised in the consolidated financial statements as the Group is able to control the
timing of the remittance of the earnings and it is probable that the earnings will not be
distributed in the foreseeable future.

25 Trade and Other Payables

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$
Trade payables:
—Third parties . . . . . . . . . . . . . . . . 8,507,161 12,821,620 13,135,669 22,551,785
Other payables: . . . . . . . . . . . . . . .
—Accrued operating expenses . . . . 2,631,104 5,434,558 8,507,055 11,177,516
—VAT and other taxes payable . . . 1,975,300 3,717,642 3,508,683 2,633,686
—Sundry creditors . . . . . . . . . . . . . 1,634,076 1,365,182 526,535 383,813
—Due to a shareholder. . . . . . . . . . 326,100 — — —
—Derivatives payables . . . . . . . . . . — — 115,110 266,848
—Loan from non-controlling
interest. . . . . . . . . . . . . . . . ... — — 234,030 —
6,566,580 10,517,382 12,891,413 14,461,863
Total . . . . . . . . . . . . . . . . . . . . . . 15,073,741 23,339,002 26,027,082 37,013,648

Trade payables are interest-free and are normally settled on 30 to 90 days’ terms.

The loan from non-controlling interest and amount due to a shareholder were non-trade in
nature, unsecured, interest-free and repaid in the following financial years.

Included in accrued operating expenses are accrued staff costs (including bonus) of
S$8,241,395 (31 December 2018: S$5,660,337; 31 December 2017: S$4,379,488; 1 January
2017: S$2,425,015) for the Group.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

26 Provisions

A provision is recognised for expected warranty claims on all equipment sold during the
financial year, based on past experience of the level of repairs and returns. It is expected that
most of these costs will be incurred within the next one year from the reporting date.
Assumptions used to calculate the provision for warranties were based on current sales levels
and current information available about returns based on the twelve months’ warranty period
for all equipment sold.

2017 2018 2019

S$ S$ S$

Movement
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 462,905 391,672 423,190
Provision made. . . . . . . . . . . . . . . . . . . . . . . . 697,715 838,062 579,177
Provision utilised . . . . . . . . . . . . . . . . . . . . . . (43,499) (46,733) (74,742)
Reversal of provision made . . . . . . . . . . . . . . (725,449) (759,811) (472,113)
Currency translation differences . . . . . . . . . . . — — (767)

At 31 December . . . . . . . . . . . . . . . . . . . . . . . 391,672 423,190 454,745

27 Dividends

2017 2018 2019

S$ S$ S$

Ordinary dividends paid:

One-tier tax exempt interim dividend of a
total of S$0.250, S$0.049 and S$0.019 per
share paid in respect of each financial
year end . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,615,198 24,964,897 9,532,539

28 Derivative Financial Instruments

The Group entered into foreign currency spot contract in United States dollar. As at 31
December 2017, the outstanding firm commitments and their fair value adjustments of these
derivative financial instruments are as follows:

2017

Contract/
Notional amount Assets

S$ S$

Spot contract
—United States dollar. . . . . . . . . . . . . . . . . . . . . . . . . . . 42,811 — (1)

(1) The derivative financial instruments are assessed not to be material.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

29 Changes in Liabilities Arising from Financing Activities

Lease
Bank loans liabilities Total

S$ S$ S$

2017
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 25,338,543 69,987 25,408,530
Adoption of SFRS(I) 16 . . . . . . . . . . . . . . . . . — 764,315 764,315

25,338,543 834,302 26,172,845

Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,727,927 — 13,727,927
Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,792,264) (670,449) (23,462,713)
Non-cash changes:
Addition during the year . . . . . . . . . . . . . . . . . — 1,448,751 1,448,751
Currency translation differences . . . . . . . . . . . (297,932) 35,627 (262,305)

At 31 December . . . . . . . . . . . . . . . . . . . . . . . 15,976,274 1,648,231 17,624,505

2018
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . 15,976,274 1,648,231 17,624,505
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,071,993 — 4,071,993
Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,010,283) (1,003,923) (23,014,206)
Non-cash changes:
Acquisition of Nanofab Group (Note 4) . . . . . . 2,066,438 1,943,911 4,010,349
Addition during the year . . . . . . . . . . . . . . . . . — 2,404,296 2,404,296
Currency translation differences . . . . . . . . . . . (104,422) 192,336 87,914

At 31 December . . . . . . . . . . . . . . . . . . . . . . . — 5,184,851 5,184,851

2019
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . — 5,184,851 5,184,851
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,825,000 — 21,825,000
Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,875,000) (831,551) (18,706,551)
Non-cash changes:
Addition during the year . . . . . . . . . . . . . . . . . — 263,816 263,816
Currency translation differences . . . . . . . . . . . (86,000) 13,313 (72,687)

At 31 December . . . . . . . . . . . . . . . . . . . . . . . 3,864,000 4,630,429 8,494,429

A-74
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

30 Commitments and Contingencies

(a) Guarantees

2017

S$

Financial guarantees provided for/to:

—term loan facility for a shareholder . . . . . . . . . . . . . . . . . . . . . . . . . 18,035,576

(b) Capital Commitments

Capital expenditure contracted for as at the reporting date but not recognised in the
consolidated financial statements is as follows:

2017 2018 2019

S$ S$ S$

Property, plant and equipment . . . . . . . . 2,337,956 1,446,363 34,076,210

31 Related Party Transactions

A related party is a person or entity that is related to the entity that is preparing its financial
statements (“reporting entity”).

Parties are considered to be related if (a) a person or a close member of that person’s family
is related to a reporting entity, if that person (i) has control or joint control over the reporting
entity; (ii) has significant influence over the reporting entity; or (iii) is a member of the key
management personnel of the reporting entity or of a parent of the reporting entity. (b) An
entity is related to a reporting entity if (i) the entity and the reporting entity are members of the
same group; (ii) one entity is an associate or joint venture of the other entity; (iii) both entities
are joint ventures of the same third party; (iv) one entity is a joint venture of a third entity and
the other entity is an associate of the third entity; (v) the entity is a post-employment benefit
plan for the benefit of employees of either the reporting entity or an entity related to the
reporting entity; (vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the
key management personnel of the entity; and (viii) the entity or any member of a group of
which is a part, provides key management personnel services to the reporting entity or to the
parent of the reporting entity.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

31 Related Party Transactions (cont’d)

Related companies in these consolidated financial statements refer to members of Nanofilm

Technologies International Limited’s group of companies. Related parties in these financial
statements refer to a corporate shareholder of subsidiaries. In addition to the related party
information disclosed elsewhere in the consolidated financial statements, significant
transactions with related parties, on terms agreed between parties, are as follows:

2017 2018 2019

S$ S$ S$

Transactions with a related party

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,914,060
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 8,470,802

Compensation of key management personnel

The remuneration of directors and other members of key management personnel during the
financial years are as follows:

2017 2018 2019

S$ S$ S$

Short-term employee benefits. . . . . . . . . . . . . 1,308,032 3,063,005 3,086,349

Contributions to defined contribution plans. . . 54,117 79,898 105,059
Other short-term benefits . . . . . . . . . . . . . . . . 37,964 39,309 41,422

Total compensation paid to key

management personnel . . . . . . . . . . . . . . . . 1,400,113 3,182,212 3,232,830

Comprised amounts paid to:

Directors of the Company . . . . . . . . . . . . . . . . 1,400,113 2,857,945 2,205,610
Other key management personnel . . . . . . . . . — 324,267 1,027,220

1,400,113 3,182,212 3,232,830

32 Financial Instruments and Risk Management

The Group’s activities are exposed to a variety of financial risks, including the effects of credit
risk, interest rate risk, liquidity risk, currency risk and capital risk arising in the normal course
of the Group’s business. The Group’s risk management policy seeks to minimise the potential
adverse effects from these exposures. Management continually monitors the Group’s risk
management process to ensure that an appropriate balance between risk and control is
achieved. Risk management policies and systems are reviewed regularly to reflect changes in
market conditions and the Group’s activities.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

The Board of Directors of the Company is responsible for setting the objectives, the underlying
principles of financial risk management for the Group and establishing the policies such as
authority levels, over-sight responsibilities, risk identification and measurement, exposure
limits and hedging strategies, in accordance with the objectives and underlying principles
approved.

(a) Credit Risk

Credit risk refers to the risk that the customer or counterparty failed to discharge an
obligation which resulted in a financial loss to the Group.

As the Group does not hold any collateral, the maximum exposure to credit risk is the
carrying amount of the related financial assets presented on the statement of financial
position.

Credit risk grading guideline

The internal credit risk grading which are used to report the Group’s credit risk exposure
to key management personnel for credit risk management purposes are as follows:

Basis of recognition of
Internal rating grades Definition expected credit loss

i. Performing The counterparty has a low risk of 12-month ECL

default and does not have any past
due amounts
ii. Under-performing There has been a significant increase Lifetime ECL (not
in credit risk since initial recognition credit impaired)
(i.e. interest and/or principal
repayments are more than 30 days
past due)
iii. Non-performing There is evidence indicating that the Lifetime ECL
asset is credit impaired (i.e. interest (credit impaired)
and/or principal repayments are more
than 90 days past due)
iv. Write-off There is evidence indicating that Asset is written off
there is no reasonable expectation of
recovery as the debtor is in severe
financial difficulty (i.e. interest and/or
principal repayments are more than
180 days past due)

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(a) Credit Risk (cont’d)

Based on the Group’s internal rating assessment, there are no financial assets that are
under-performing, non-performing and assets written off during the financial years. The
credit quality of the Group’s performing financial assets, as well as maximum exposure
to credit risk by internal credit risk assessments are as follows:

The trade receivables of the Group comprise 2 debtors (2018: 1 debtor; 2017: 4 debtors)
that individually represented more than 5% (2018: 10%; 2017:10%) and of third parties
trade receivables. During the financial years ended 31 December 2019 and 2018, the
Group have applied the simplified approach in SFRS(I) 9 to measure the loss allowance
at lifetime expected credit loss for trade receivables. The credit risk profile of trade
receivables is presented based on the past due status in terms of the provision matrix
and is set out in Note 16. Other receivables are measured at 12-month expected credit
loss as they have a low risk of default and do not have any past due amounts.

The Group’s cash and cash equivalents are entered into with bank and financial
institution counterparties, with ratings mainly in A1 categories, based on rating agency
ratings. These are measured at amortised cost and are considered low credit risks and
the amount of the allowance on cash and cash equivalents is assessed not to be
material. The gross and net carrying amounts of cash and cash equivalents are set out
in Note 18 to the consolidated financial statements.

Impairment on other receivables has been measured on the 12-month expected loss
basis and reflects the short maturities of the exposures. The Group consider that these
financial assets have a low credit risk based on the external credit ratings of the
counterparties and these counterparties having low risk of default. The amount of the
allowance on these financial assets is assessed to be immaterial. The gross and net
carrying amounts of other receivables are set out in Note 16 to the consolidated financial
statements.

The Group monitor its credit risk according to the degree of default risk and the
outstanding amounts will be written off if there is evidence indicating that there is no
reasonable expectation of recovery due to customer default on long outstanding
balances.

31 December 2017

Financial assets that are neither past due nor impaired

As at 31 December 2017, trade and other receivables of the Group amounting to

S$20,272,072 that were neither past due nor impaired were substantially companies
with a good payment track record with the Group. Cash and bank balances that were
neither past due nor impaired are placed with reputable financial institutions with high
credit-ratings assigned by international credit-rating agencies.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(a) Credit Risk (cont’d)

31 December 2017 (cont’d)

Financial assets that were past due but not impaired

There were no other classes of financial assets that are past due but not impaired as at
31 December 2017 except for trade and other receivables, summarised as follows:

2017

S$

Past due 31 to 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,282,170

Past due 61 to 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,235,980
Past due over 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,754,106

17,272,256

The management believes that the unimpaired amounts that were past due by more than
30 days were still collectible, based on historic payment behaviour and extensive
analyses of customer credit risk, including underlying customers’ credit ratings, where
available.

Financial assets that are past due and impaired

There were no financial assets that are past due and impaired in 2017.

(b) Interest Rate Risk

Interest rate risk arises on interest-bearing financial instruments recognised on the

statement of financial position. It is the risk that changes in interest rates will affect the
Group’s income or the value of their holdings of financial instruments. The Group’s
exposures to interest rate risk for changes in interest rates mainly arise from
interest-bearing borrowings. Interest rate risk is managed by the Group on an on-going
basis with the primary objective of limiting the extent to which net interest expense could
be affected by an adverse movement in interest rates.

If interest rates on bank loans had been 1% higher/lower with all other variables being
held constant, the Group’s profit before income tax would have been lower/higher by
approximately S$39,000 (2018: Nil; 2017: S$159,800) and as a result of higher/lower
interest expense arising from bank loans of S$3,864,000 as at 31 December 2019 (2018:
Nil; 2017: S$15,976,274).

A-79
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(c) Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as
they fall due. In the management of liquidity risk, the Group monitor and maintain a level
of cash and cash equivalents deemed adequate by the management to finance the
Group’s operations and where required, mitigate the effects of fluctuation in cash flows.
The Group may also obtain additional funding through credit facilities from banks and
financial institutions.

The table below analyses the maturity profile of the Group’s financial liabilities based on
contractual undiscounted cash flows.

b Cash flows c

Carrying Contractual Between 1 to

amounts cash flows Within 1 year 5 years

S$ S$ S$ S$

2017
Trade and other payables. . . . 19,621,360 19,621,360 19,621,360 —
Bank loans . . . . . . . . . . . . . . . 15,976,274 16,405,144 12,425,003 3,980,141
Lease liabilities . . . . . . . . . . . . 1,648,231 1,732,112 864,678 867,434
Financial guarantee
contracts . . . . . . . . . . . . . . . 18,035,576 18,035,576 18,035,576 —

55,281,441 55,794,192 50,946,617 4,847,575

2018
Trade and other payables. . . . 22,518,399 22,518,399 22,518,399 –
Lease liabilities . . . . . . . . . . . . 5,184,851 5,524,883 771,174 4,753,709
Convertible notes . . . . . . . . . . 49,910,763 52,379,256 1,000,000 51,379,256

77,614,013 80,422,538 24,289,573 56,132,965

2019
Trade and other payables. . . . 34,379,962 34,379,962 34,379,962 —
Bank loans . . . . . . . . . . . . . . . 3,864,000 3,920,028 3,920,028 —
Lease liabilities . . . . . . . . . . . . 4,630,429 5,166,664 4,490,634 676,030
Convertible notes . . . . . . . . . . 49,940,019 51,468,493 1,000,000 50,468,493

92,814,410 94,935,147 43,790,624 51,144,523

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(d) Currency Risk

Currency risk arises on financial instruments that are denominated in currencies other
than the respective functional currencies of the entities in the Group in which they are
measured.

The Group is not exposed to significant foreign currency risk on their operating activities
as most transactions and balances are denominated in the respective functional
currencies of the Group entities, except for certain cash and bank balances, borrowings,
trade and other receivables and payables which are denominated in foreign currencies,
primarily United States Dollar (“USD”), Japanese Yen (“JPY”) and Renminbi (“RMB”).
Exposure to foreign currency risk is monitored on an on-going basis and the Group
endeavour to keep the net exposure at an acceptable level.

The Group’s foreign currency exposures as at the reporting date, based on the
information provided by key management, are as follows:

Denominated in the following currencies

SGD USD JPY RMB Others Total

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

2017

Financial assets

Cash and bank balances . . 1,798,856 13,743,642 3,367,453 4,305,733 2,080 23,217,764

Trade and other

receivables . . . . . . . . . 380,915 3,310,328 1,462,581 27,410,808 — 32,564,632

Contract assets/Accrued
receivables . . . . . . . . . — — — 4,635,112 — 4,635,112

2,179,771 17,053,970 4,830,034 36,351,653 2,080 60,417,508

Financial liabilities

Trade and other payables . . 3,991,968 1,521,800 246,418 13,819,369 41,805 19,621,360

Bank loans . . . . . . . . . . . 4,063,074 — — 11,913,200 — 15,976,274

Lease liabilities . . . . . . . . 1,648,231 — — — — 1,648,231

9,703,273 1,521,800 246,418 25,732,569 41,805 37,245,865

Net financial
(liabilities)/assets . . . . . . (7,523,502) 15,532,170 4,583,616 10,619,084 (39,725) 23,171,643

Less: Net financial

(liabilities)/assets
denominated in the
entities’ functional
currencies . . . . . . . . . . (7,523,502) — 4,177,358 10,619,084 — 7,272,940

Currency exposure . . . . . . — 15,532,170 406,258 — (39,725) 15,898,703

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(d) Currency Risk (cont’d)

Denominated in the following currencies

SGD USD JPY RMB Others Total

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

2018

Financial assets

Cash and bank balances . . 7,871,389 7,340,347 967,828 8,814,918 93,875 25,088,357

Trade and other

receivables . . . . . . . . . 899,427 3,544,844 3,694,387 33,547,744 4,261 41,690,663

Contract assets/Accrued
receivables . . . . . . . . . — — — 7,775,450 — 7,775,450

8,770,816 10,885,191 4,662,215 50,138,112 98,136 74,554,470

Financial liabilities

Trade and other payables . . 4,972,882 729,492 1,289,567 15,295,468 230,990 22,518,399

Lease liabilities . . . . . . . . 841,189 — 4,343,662 — — 5,184,851

Convertible notes . . . . . . . 49,910,763 — — — — 49,910,763

55,724,834 729,492 5,633,229 15,295,468 230,990 77,614,013

Net financial
(liabilities)/assets . . . . . . (46,954,018) 10,155,699 (971,014) 34,842,644 (132,854) (3,059,543)

Less: Net financial

(liabilities)/assets
denominated in the
entities’ functional
currencies . . . . . . . . . . (47,490,103) — 3,202,607 35,097,429 — (9,190,067)

Currency exposure . . . . . . 536,085 10,155,699 (4,173,621) (254,785) (132,854) 6,130,524

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(d) Currency Risk (cont’d)

Denominated in the following currencies

SGD USD JPY RMB Others Total

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

2019

Financial assets

Cash and bank balances . . 1,569,498 3,740,192 3,297,719 16,710,220 87,022 25,404,651

Trade and other

receivables . . . . . . . . . 374,474 5,619,421 3,679,006 41,044,839 1,886 50,719,626

Contract assets/Accrued
receivables . . . . . . . . . — — — 11,376,429 — 11,376,429

1,943,972 9,359,613 6,976,725 69,131,488 88,908 87,500,706

Financial liabilities

Trade and other payables . . 8,583,209 1,971,242 1,284,898 22,228,072 312,541 34,379,962

Bank loans . . . . . . . . . . . — — — 3,864,000 — 3,864,000

Lease liabilities . . . . . . . . 311,113 — 4,201,689 117,627 — 4,630,429

Convertible notes . . . . . . . 49,940,019 — — — — 49,940,019

58,834,341 1,971,242 5,486,587 26,209,699 312,541 92,814,410

Net financial
(liabilities)/assets . . . . . . (56,890,369) 7,388,371 1,490,138 42,921,789 (223,633) (5,313,704)

Less: Net financial

(liabilities)/assets
denominated in the
entities’ functional
currencies . . . . . . . . . . (56,890,369) (341,194) 218,515 34,217,419 — (22,795,629)

Currency exposure . . . . . . — 7,729,565 1,271,623 8,704,370 (223,633) 17,481,925

A-83
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(d) Currency Risk (cont’d)

Sensitivity analysis

A change of 2% (taking into consideration both the strengthening and weakening aspect)
of United States Dollar (“USD”), Japanese Yen (“JPY”) and Renminbi (“RMB”) against
the respective functional currencies of the Group entities as at the reporting date, with all
other variables being held constant would increase/(decrease) the Group’s profit after
income tax and equity as follows:

Equity Profit after income tax

2017 2018 2019 2017 2018 2019

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

USD against S$
—strengthened . . . . 257,717 167,660 131,526 257,717 167,660 131,526
—weakened . . . . . . (257,717) (167,660) (131,526) (257,717) (167,660) (131,526)

JPY against S$
—strengthened . . . . 6,741 (68,902) 21,638 6,741 (68,902) 21,638
—weakened . . . . . . (6,741) 68,902 (21,638) (6,741) 68,902 (21,638)

RMB against S$
—strengthened . . . . — (4,206) 148,114 — (4,206) 148,114
—weakened . . . . . . — 4,206 (148,114) — 4,206 (148,114)

(e) Capital Risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to
continue as going concern and to maintain an optimal capital structure so as to maximise
shareholders’ value. The Group’s policy is to maintain an adequate capital base so as to
maintain investor, creditor and market confidence and to sustain future development.
The Group fund the operations and growth through a mix of equity and debt. This
includes the maintenance of adequate lines of credit and assessing the need to raise
additional equity where required. The Group’s overall strategy remains unchanged for
the financial years ended 31 December 2017, 2018 and 2019.

In the management of capital risk, management takes into consideration the gearing
ratio as well as the Group’s working capital requirement. The gearing ratio is calculated
as net debt divided by total capital. Net debt is calculated as total liabilities less provision
for taxation, deferred taxation, provisions, contract liabilities and cash and bank
balances. Total capital is calculated as total equity plus net debt.

A-84
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(e) Capital Risk (cont’d)

1 January 31 December 31 December 31 December

2017 2017 2018 2019

S$ S$ S$ S$

Net debt . . . . . . . . . . . . . . . . . 23,435,260 17,745,743 56,034,339 70,043,445

Total equity. . . . . . . . . . . . . . . 71,701,229 95,684,100 100,400,678 127,426,117

Total capital . . . . . . . . . . . . . . 95,136,489 113,429,843 156,435,017 197,469,562

Gearing ratio. . . . . . . . . . . . . . 24.6% 15.6% 35.8% 35.5%

As disclosed in Note 2(x), subsidiaries of the Group incorporated in the People’s

Republic of China, are required by the Foreign Enterprise Law of the PRC to contribute
to and maintain a non-distributable statutory reserve fund whose utilisation is subject to
approval by the relevant PRC authorities. This externally imposed capital requirement
has been complied with by the PRC subsidiaries for the financial years ended
31 December 2017, 2018 and 2019. The Group have no other externally imposed capital
requirements for the financial years ended 31 December 2017, 2018 and 2019.

(f) Fair Value

The fair value information presented represents the Group’s best estimate of those
values and may be subject to certain assumptions and limitations. The methodologies
and assumptions used in the estimation of fair values depend on the terms and
characteristics of the various financial instruments. The following methods and
assumptions are used to determine the fair value of each class of financial instruments
for which it is practicable to determine that value.

Fair value measurements recognised in the statement of financial position

The Group provides an analysis of financial instruments that are measured subsequent
to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable:

(i) Level 1 fair value measurements are those derived from quoted prices (unadjusted)
in active markets for identical assets or liabilities;

(ii) Level 2 fair value measurements are those derived from inputs other than quoted
prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and

(iii) Level 3 fair value measurements are those derived from valuation techniques that
include inputs for the asset or liability that are not based on observable market data
(unobservable inputs).

A-85
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

32 Financial Instruments and Risk Management (cont’d)

(f) Fair Value (cont’d)

Financial instruments whose carrying amounts approximate fair values

The carrying amounts of the Group’s financial assets and financial liabilities with a
maturity of less than one year approximate their fair values due to their short-term
maturities.

The fair values of the Group’s non-current financial assets and financial liabilities are
calculated based on discounted expected future principal and interest cash flows. The
discount rate used is based on market rate for similar instruments as at the reporting date
(“Level 2”). As at 31 December 2017, 2018 and 2019, the carrying amounts of these
non-current assets and non-current liabilities approximate their fair values.

33 Operating Segment Information

Management has determined the operating segments based on the reports reviewed to make
strategic decisions. The Group has three reportable segments, as described below, which are
the Group’s strategic business units based on different services/products ranges.

Advanced Materials — material science solutions provider of advanced materials

through proprietary surface solutions nanotechnology applied
across wide range of end industries.

Industrial Equipment — designs and develops customised coating equipment,

cleaning lines and automation systems, including after sales
support, to customers in selective markets.

Nanofabrication — manufacturer and supplier of nanoproducts in optical imaging

lens and sensory components critical to customers’
end-products.

A-86
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

33 Operating Segment Information (cont’d)

Advanced Industrial Inter-segment

materials equipment eliminations Total

S$ S$ S$ S$

2017
Revenue from external customers . . . . . . 73,967,998 29,635,555 — 103,603,553
Inter-segment sales . . . . . . . . . . . . . . . . — 1,448,312 (1,448,312) —

73,967,998 31,083,867 (1,448,312) 103,603,553

Adjusted EBITDA . . . . . . . . . . . . . . . . . . 33,465,173 9,969,066 — 43,434,239

Other information
Depreciation . . . . . . . . . . . . . . . . . . . . . 9,075,949 374,773 — 9,450,722
Amortisation of land use rights . . . . . . . . . 52,453 — — 52,453
Amortisation of intangible assets . . . . . . . 358,971 516,567 — 875,538
Gain on disposal of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . (45,081) — — (45,081)
Provision for warranty . . . . . . . . . . . . . . . — 697,715 — 697,715
Reversal of provision for warranty . . . . . . — (725,449) — (725,449)

Assets
Segment assets . . . . . . . . . . . . . . . . . . . 101,448,104 23,760,679 — 125,208,783
Cash and bank balances . . . . . . . . . . . . . 23,217,764

148,426,547

Segment assets include:

Additions to non-current assets:
—Property, plant and equipment . . . . . . . 13,203,576 874,263 — 14,077,839
—Intangible assets . . . . . . . . . . . . . . . . . 484,474 697,170 — 1,181,644

Liabilities
Segment liabilities . . . . . . . . . . . . . . . . . 18,758,211 13,273,247 — 32,031,458
Bank loans . . . . . . . . . . . . . . . . . . . . . . 15,976,274
Deferred taxation . . . . . . . . . . . . . . . . . . 318,000
Provision for taxation . . . . . . . . . . . . . . . 4,416,715

52,742,447

A-87
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

33 Operating Segment Information (cont’d)

Advanced Industrial Inter-segment

materials equipment Nanofabrication eliminations Total

S$ S$ S$ S$ S$

2018

Revenue from external customers . 82,360,636 35,137,913 5,345,696 — 122,844,245

Inter-segment sales . . . . . . . . . — 2,803,990 — (2,803,990) —

82,360,636 37,941,903 5,345,696 (2,803,990) 122,844,245

Adjusted EBITDA . . . . . . . . . . . 36,793,083 11,032,587 2,578,104 –— 50,403,774

Other information

Depreciation . . . . . . . . . . . . . . 10,603,197 404,347 2,237,009 — 13,244,553

Amortisation of land use rights . . . 52,301 — 9,974 — 62,275

Amortisation of intangible assets . 261,675 707,491 — — 969,166

Impairment loss allowance on

trade receivables . . . . . . . . . . 16,359 398,853 1,701 — 416,913

Loss/write off on disposal of

property, plant and equipment . . 114,272 — — — 114,272

Provision for warranty . . . . . . . . — 838,062 — — 838,062

Reversal of provision for warranty . — (759,811) — — (759,811)

Assets

Segment assets . . . . . . . . . . . . 123,231,490 29,197,314 12,541,473 — 164,970,277

Cash and bank balances . . . . . . 25,088,357

190,058,634

Segment assets include:

Investment in associated
company . . . . . . . . . . . . . . . — 2,973,005 — — 2,973,005

Additions to non-current assets . .

—Property, plant and equipment. . 13,628,338 806,704 6,529,740 — 20,964,782

—Intangible assets . . . . . . . . . . 389,970 1,054,363 — — 1,444,333

Liabilities

Segment liabilities . . . . . . . . . . 17,036,616 11,443,665 5,225,719 — 33,706,000

Convertible notes . . . . . . . . . . . 49,910,763

Deferred taxation . . . . . . . . . . . 848,000

Provision for taxation. . . . . . . . . 5,193,193

89,657,956

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

33 Operating Segment Information (cont’d)

Advanced Industrial Inter-segment

materials equipment Nanofabrication eliminations Total

S$ S$ S$ S$ S$
2019
Revenue from external customers . 109,625,888 27,370,629 5,911,952 — 142,908,469
Inter-segment sales . . . . . . . . . 4,688 3,653,271 436,046 (4,094,005) —

109,630,576 31,023,900 6,347,998 (4,094,005) 142,908,469

Adjusted EBITDA . . . . . . . . . . . 48,976,559 9,200,581 (1,082,988) — 57,094,152

Other information
Depreciation . . . . . . . . . . . . . . 9,718,638 637,288 3,096,856 — 13,452,782
Amortisation of land use rights . . . 218,851 10,151 10,075 — 239,077
Amortisation of intangible assets . 405,499 720,888 — — 1,126,387
Impairment loss allowance on
trade receivables . . . . . . . . . . 45,297 (9,250) 1,044 — 37,091
Impairment of goodwill . . . . . . . . — — 871,759 — 871,759
Write down of inventories . . . . . . 228,280 138,442 — — 366,722
(Gain), loss/write off on disposal
of property, plant and
equipment . . . . . . . . . . . . . . (61,427) 109,976 80,586 — 129,135
Fair value loss on derivative . . . . 54,626 97,112 — — 151,738
Provision for warranty . . . . . . . . — 515,000 64,177 — 579,177
Reversal of provision for warranty . — (472,113) — — (472,113)

Assets
Segment assets . . . . . . . . . . . . 174,028,134 24,441,489 10,095,737 — 208,565,360
Cash and bank balances . . . . . . 25,404,651

233,970,011

Segment assets include:

Additions to non-current assets:
—Property, plant and equipment. . 49,508,087 1,389,873 1,554,433 — 52,452,393
—Land use rights . . . . . . . . . . . 10,696,087 — — — 10,696,087
—Intangible assets . . . . . . . . . . 539,487 959,089 — — 1,498,576

Liabilities
Segment liabilities . . . . . . . . . . 24,373,773 18,916,479 5,176,823 — 48,467,075
Convertible notes . . . . . . . . . . . 49,940,019
Bank loans . . . . . . . . . . . . . . . 3,864,000
Deferred taxation . . . . . . . . . . . 988,200
Provision for taxation. . . . . . . . . 3,284,600

106,543,894

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

33 Operating Segment Information (cont’d)

A reconciliation of total EBITDA to total profit before income tax is as follows:

2017 2018 2019

S$ S$ S$

Adjusted EBITDA (1) for reportable segments . . . . 43,434,239 50,403,774 57,094,152

Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,450,722) (13,244,553) (13,452,782)
Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (927,991) (1,031,441) (1,365,464)
Gain, (Loss/write off) on disposal of property,
plant and equipment. . . . . . . . . . . . . . . . . . . . . 45,081 (114,272) (129,135)
Write off of obsolete stock . . . . . . . . . . . . . . . . . . — (153,030) —
Impairment loss on goodwill . . . . . . . . . . . . . . . . — — (871,759)
Fair value loss on derivative . . . . . . . . . . . . . . . . — — (151,738)
Other professional fees . . . . . . . . . . . . . . . . . . . . (232,434) (171,816) (358,747)
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . 186,239 364,320 507,050
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . (1,069,189) (1,111,416) (1,376,268)

Profit before income tax. . . . . . . . . . . . . . . . . . . . 31,985,223 34,941,566 39,895,309

Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,050,837) (5,631,424) (5,354,550)

Profit after income tax . . . . . . . . . . . . . . . . . . . . . 26,934,386 29,310,142 34,540,759

(1) Net profit before interest, tax, depreciation and amortisation (EBITDA).

Revenue from external customers based on Group’s entities’ place of business are as follows:

2017 2018 2019

S$ S$ S$

Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,215,323 31,610,058 28,902,455

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,078,392 70,816,444 95,223,905
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,309,838 20,417,743 17,898,162
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 883,947

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . 103,603,553 122,844,245 142,908,469

Revenue of S$15,348,898 are derived from 1 customer in financial year ended 31 December
2017 contributing more than 10% of the Group’s revenue. These revenue are attributable to
industrial equipment segment.

A-90
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

33 Operating Segment Information (cont’d)

The following is an analysis of the carrying amount of non-current non-financial assets,

analysed by the geographical areas in which the assets are located:

2017 2018 2019

S$ S$ S$

Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,370,883 10,255,469 10,582,111

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,039,521 62,708,106 104,795,047
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,468 3,366,278 2,572,423
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 7,067,911 6,115,573

Total non-current non-financial assets . . . . . . 70,425,872 83,397,764 124,065,154

34 Subsequent Events

(a) On 3 February 2020, the Group’s wholly owned subsidiary, Nanofilm Advanced Materials
Pte. Ltd. approved the additional capital investment of RMB100,000,000 (equivalent to
US$14,260,986) in Nanofilm Renewable Energy Technology (Shanghai) Co., Ltd., a
wholly owned subsidiary of the Group. The additional capital investment was settled by
way of cash in May 2020. The purpose of the cash injection was primarily to fund the
construction of Shanghai Plant 2.

(b) On 8 April 2020, the Company has allotted 5,254,000 new ordinary shares pursuant to
the NTI Restricted Share Plan 2020 approved by the members on 9 March 2020 and
37,000 new ordinary shares by virtue of the exercise of options pursuant to the Employee
Share Option Scheme 2017.

(c) On 1 June 2020, the Group’s wholly owned subsidiary, Nanofilm Vacuum Coating
(Shanghai) Co., Ltd acquired the remaining 49% equity interest in Shanghai Nanofilm
Zaichuang Automation Co., Ltd from the existing shareholders at nil consideration.
Shanghai Nanofilm Zaichuang Automation Co., Ltd became a wholly owned subsidiary of
the Group upon the completion of the acquisition. Following the acquisition, the Group
recognised an increase in non-controlling interests and a decrease in other reserve of
S$35,827 and S$35,827 respectively.

With effect from 14 August 2020, the name of the Group’s wholly owned subsidiary,
Shanghai Nanofilm Zaichuang Automation Co., Ltd has changed to Shanghai Nanofilm
Trading Co., Ltd. The principal activities of the subsidiary are now trading and sales of
electronics and equipment. In September 2020, Nanofilm Vacuum Coating (Shanghai)
Co., Ltd contributed a total share capital of RMB1,000,000 in Shanghai Nanofilm Trading
Co., Ltd as a form of capital injection by way of cash. The purpose of the cash injection
was primarily to fund the working capital of Shanghai Nanofilm Trading Co., Ltd.

A-91
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2017, 2018 AND 2019

34 Subsequent Events (cont’d)

(d) On 15 June 2020, the Company has subscribed for 3,267 new ordinary shares in the
capital of the Nanofab Technologies Pte. Ltd. at a consideration of US$6,000,000
(equivalent to about S$8,475,000). Part of the consideration in the amount of
US$2,000,000 was set-off against the outstanding loans of US$2,000,000 (equivalent to
about S$2,825,000) owing by Nanofab Technologies Pte. Ltd. to the Company. Upon
completion of the subscription, the Group’s interest in Nanofab Technologies Pte. Ltd.
has increased from 70% to 90%. Following the additional subscription, the Group
recognised a net increase in non-controlling interest by S$133,946 and a corresponding
decrease in other reserve by S$133,946 respectively.

(e) In June 2020, the Company injected S$1,000,000, comprising of 1,000,000 ordinary
shares in a newly incorporated Singapore company, Wizture Holdings Pte. Ltd. The
principal activity of Wizture Holdings Pte. Ltd. is that of an investment holding company
and the ownership is held through a trust arrangement with an individual third party
trustee and subsequently transferred to the Company in August 2020.

In October 2020, the Company subscribed for an additional 6,200,000 new ordinary
shares in Wizture Holdings Pte. Ltd. at a total consideration of S$6,200,000 as a form of
capital injection by way of cash. The purpose of the cash injection was to fund Wizture
Holdings Pte. Ltd.’s investment in Wizture Technologies (Yizheng) Co., Ltd.

(f) On 2 June 2020, the Company declared one-tier exempt interim dividend of S$0.019 per
share amounting to S$9,631,195 to be paid out of the retained earnings of the Company
on 2 July 2020.

(g) On 30 July 2020, the Company has subscribed for 32,037,444 new ordinary shares in the
capital of Nanofilm Advanced Materials Pte. Ltd., a wholly owned subsidiary of the
Group, at a consideration of S$32,037,444. Part of the consideration in the amount of
S$32,001,294 was set-off against the outstanding loans of S$32,001,294 owing by
Nanofilm Advanced Materials Pte. Ltd. to the Company.

(h) On 30 July 2020, the Company has allotted 6,104,000 new ordinary shares by virtue of
the exercise of options pursuant to the Employee Share Option Scheme 2017.

(i) In October 2020, the Group’s wholly owned subsidiary, Wizture Holdings Pte. Ltd.
contributed a total share capital of RMB36,000,000 in Wizture Technologies (Yizheng)
Co., Ltd. as a form of capital injection by way of cash, representing 80% interest in
Wizture Technologies (Yizheng) Co., Ltd. The purpose of the cash injection was
primarily to fund the working capital and capital expenditures of Wizture Technologies
(Yizheng) Co., Ltd.

(j) On 19 October 2020, the Company issued 4,868,000 ordinary shares for consideration
of S$2,856,542 through the exercise of options granted under the existing employee
share option scheme.

A-92
 APPENDIX B
INDEPENDENT AUDITOR’S REVIEW REPORT ON UNAUDITED CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX-MONTHS PERIOD ENDED
30 JUNE 2020 OF NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

B-1
INDEPENDENT AUDITOR’S REVIEW REPORT ON UNAUDITED
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX-MONTHS PERIOD ENDED 30 JUNE 2020 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

23 October 2020

The Board of Directors

Nanofilm Technologies International Limited
Block 28 Ayer Rajah Crescent
#02-03 Ayer Rajah Industrial Estate
Singapore 139959

Report on Review of Unaudited Condensed Interim Consolidated Financial Statements

Introduction

We have reviewed the accompanying condensed statement of financial position of Nanofilm

Technologies International Limited (the “Company”) and its subsidiaries (collectively the “Group”)
as of 30 June 2020 and the related condensed consolidated statement of profit or loss and other
comprehensive income, condensed consolidated statement of changes in equity and condensed
consolidated statement of cash flows for the six-months period then ended, and a summary of
significant accounting policies and other explanatory notes (the “condensed interim financial
information”). Management is responsible for the preparation and presentation of the condensed
interim financial information in accordance with Singapore Financial Reporting Standards
(International) (SFRS(I)) 1-34, Interim Financial Reporting (SFRS(I) 1-34). Our responsibility is to
express a conclusion on this condensed interim financial information based on our review.

Scope of Review

We conducted our review in accordance with Singapore Standard on Review Engagements 2410,
“Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A
review of interim financial information consists of making inquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with Singapore Standards on
Auditing and consequently does not enable us to obtain assurance that we would become aware of
all significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the
accompanying condensed interim financial information is not prepared, in all material respects, in
accordance with SFRS(I) 1-34 Interim Financial Reporting.

Other Matter

Other than the Group’s consolidated statement of financial position as at 31 December 2019 which
has been audited, all other comparative figures have not been audited nor reviewed. The unaudited
condensed interim consolidated financial statements for the corresponding six-months period
ended 30 June 2020 is the responsibility of the management.

B-2
INDEPENDENT AUDITOR’S REVIEW REPORT ON UNAUDITED
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX-MONTHS PERIOD ENDED 30 JUNE 2020 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

Restriction on Distribution and Use

This report is made solely to you as a body and for the inclusion in the prospectus to be issued in
relation to the proposed offering of shares of the Company in connection with the Company’s listing
on the Main Board of the Singapore Exchange Securities Trading Limited.

Moore Stephens LLP

Public Accountants and
Chartered Accountants
Singapore

Chan Rouh Ting

Partner

B-3
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME
FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

Unaudited Six-months
period ended
30 June

Note 2020 2019

S$ S$

Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 77,827,957 55,235,147

Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,914,733) (26,652,983)
Gross profit. . . . . . . . . . . . . . . . . . . . . .............. 40,913,224 28,582,164
Other operating income . . . . . . . . . . . .............. 6 2,610,819 1,356,236
Finance income . . . . . . . . . . . . . . . . . .............. 7 166,659 197,448
Expenses:
Selling and distribution . . . . . . . . . . . . . . . . . . . . . . . . . . (8,990,972) (7,118,610)
Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,251,127) (9,523,500)
Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (888,257) (623,780)
Share of loss of associated company . . . . . . . . . . . . . . . — (1,054)
Profit before income tax. . . . . . . . . . . . . . . . . . . . . . . . 9 22,560,346 12,868,904
Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (4,023,166) (2,002,142)
Profit after income tax . . . . . . . . . . . . . . . . . . . . . . . . . 18,537,180 10,866,762
Other comprehensive income/(loss), net of tax
Items that may be reclassified subsequently to profit
or loss
Exchange difference arising from translation of foreign
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,875,678 (889,730)
Total comprehensive income for the year . . . . . . . . . 21,412,858 9,977,032
Profit/(loss) attributable to:
Equity holders of the Company. . . . . . . . . . . . . . . . . . . . 18,465,497 11,374,427
Non-controlling interests. . . . . . . . . . . . . . . . . . . . . . . . . 71,683 (507,665)
18,537,180 10,866,762
Total comprehensive income/(loss) attributable to:
Equity holders of the Company. . . . . . . . . . . . . . . . . . . . 21,260,242 10,490,619
Non-controlling interests. . . . . . . . . . . . . . . . . . . . . . . . . 152,616 (513,587)
21,412,858 9,977,032
Earnings per share attributable to equity holders of
the Company (cents)
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . 11 3.59 2.22
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . 11 3.34 2.10

The accompanying notes form an integral part of unaudited condensed interim consolidated
financial statements.

B-4
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

Unaudited Audited
30 June 31 December
Note 2020 2019
S$ S$
ASSETS
Non-current assets
Property, plant and equipment . . . . . . . . . . . . . . . . . . 12 136,693,144 107,276,482
Land use rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 12,906,712 12,767,812
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 4,189,107 4,020,860
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 173,625 179,676
153,962,588 124,244,830
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 16 15,140,511 14,733,738
Trade and other receivables, and other current
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 15 53,193,683 58,210,363
Contract assets . . . . . . . . . . . . . . . . . . . . . . . . . ..... 5 13,940,691 11,376,429
Cash and bank balances . . . . . . . . . . . . . . . . . . ..... 17 41,198,083 25,404,651
123,472,968 109,725,181
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277,435,556 233,970,011
EQUITY AND LIABILITIES
Equity attributable to equity holders of
the Company
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 9,717,778 9,695,920
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 123,534,583 110,817,756
133,252,361 120,513,676
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . 7,234,830 6,912,441
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,487,191 127,426,117
Non-current liabilities
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 11,774,183 —
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 443,898 346,269
Convertible notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 — 49,940,019
Deferred taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 988,200 988,200
13,206,281 51,274,488

Current liabilities
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . 24 42,336,879 37,013,648
Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 7,299,670 6,368,253
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 14,527,301 3,864,000
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4,555,479 4,284,160
Convertible notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 49,960,531 —
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 280,570 454,745
Provision for taxation . . . . . . . . . . . . . . . . . . . . . . . . . 4,781,654 3,284,600
123,742,084 55,269,406
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,948,365 106,543,894
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . 277,435,556 233,970,011

The accompanying notes form an integral part of unaudited condensed interim consolidated
financial statements.

B-5
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

Attributable to equity holders of the Company

Non-
Share Translation Statutory Other Accumulated controlling
Note capital reserve reserve reserves profits Total interests Total equity

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

At 1 January 2020
(Audited) . . . . . 9,695,920 (9,019,698) 5,433,781 702,361 113,701,312 120,513,676 6,912,441 127,426,117

Profit for the financial

period . . . . . . . — — — — 18,465,497 18,465,497 71,683 18,537,180

Other
comprehensive
income . . . . . . — 2,794,745 — — — 2,794,745 80,933 2,875,678

Total comprehensive
income for the
financial period . . — 2,794,745 — — 18,465,497 21,260,242 152,616 21,412,858

Transactions with
equity holders,
recognised directly
in equity

—Dividends . . . . . 26 — — — — (9,631,195) (9,631,195) — (9,631,195)

—Issuance of
ordinary shares . . 18 21,858 — — (146) — 21,712 — 21,712

—Adjustment on
employee share
options . . . . . . 19 — — — 46,188 — 46,188 — 46,188

—Adjustment on
restricted share
awards . . . . . . 19 — — — 1,211,511 — 1,211,511 — 1,211,511

—Acquisition of
additional
interest in a
subsidiary from
non-controlling
interest . . . . . . 4 — — — (35,827) — (35,827) 35,827 —

—Dilution of non-
controlling interest
following the
additional interest
in a subsidiary . . . 4 — — — (133,946) — (133,946) 133,946 —

Total transactions
with equity
holders . . . . . . 21,858 — — 1,087,780 (9,631,195) (8,521,557) 169,773 (8,351,784)

At 30 June 2020
(Unaudited) . . . . 9,717,778 (6,224,953) 5,433,781 1,790,141 122,535,614 133,252,361 7,234,830 140,487,191

The accompanying notes form an integral part of unaudited condensed interim consolidated
financial statements.

B-6
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

Attributable to equity holders of the Company

Non-
Share Translation Statutory Other Accumulated controlling Total
capital reserve reserve reserves profits Total interests equity

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

At 1 January 2019
(Audited) . . . . . . 9,695,920 (5,286,758) 5,224,302 638,519 87,688,101 97,960,084 2,440,594 100,400,678

Profit/(loss) for the

financial period . . . — — — — 11,374,427 11,374,427 (507,665) 10,866,762

Other comprehensive
loss . . . . . . . . . . — (883,808) — — — (883,808) (5,922) (889,730)

Total comprehensive
(loss)/income for the
financial period . . . — (883,808) — — 11,374,427 10,490,619 (513,587) 9,977,032

Transactions with
equity holders,
recognised directly
in equity . . . . . . .

—Adjustment on
employee share
options . . . . . . . . — — — 31,640 — 31,640 — 31,640

—Additional
investment in a
subsidiary from a
non-controlling
interest . . . . . . . . — — — — — — 5,791,800 5,791,800

Total transactions
with equity holders. . — — — 31,640 — 31,640 5,791,800 5,823,440

At 30 June 2019
(Unaudited) . . . . . 9,695,920 (6,170,566) 5,224,302 670,159 99,062,528 108,482,343 7,718,807 116,201,150

The accompanying notes form an integral part of unaudited condensed interim consolidated
financial statements.

B-7
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

Unaudited
Six-months period ended
30 June
2020 2019
S$ S$
Cash Flows from Operating Activities
Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 22,560,346 12,868,904
Adjustments for:
Depreciation of property, plant and equipment . . . . . . . . . . . . . . . . . . . 7,919,852 6,414,359
Amortisation of land use rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,617 103,276
Amortisation of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592,808 564,250
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 888,257 623,780
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (166,659) (197,448)
Provision for warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000 385,000
Reversal of provision for warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . (265,062) (301,602)
Gain on disposal of an associated company. . . . . . . . . . . . . . . . . . . . . — (74,725)
(Gain)/loss on disposal/write-off of property, plant and equipment . . . . . (5,499) 9,305
Expense recognised in respect of share-based payments/restricted
shares award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 1,257,699 31,640
Exchange differences – unrealised . . . . . . . . . . . . . . . . . . . . . . . .... (877,318) 643,077
Share of loss of an associate company . . . . . . . . . . . . . . . . . . . . .... — 1,054
Operating cash flow before working capital changes . . . . . . . . . . . ..... 32,233,041 21,070,870
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 864,077 972,627
Trade, other receivables and other current assets (include
contract assets). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 4,119,060 13,993,636
Trade, other payables and provisions (include contract liabilities) . ..... (3,910,277) (955,521)
Cash generated from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,305,901 35,081,612
Interest paid. . . . . . ......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,341,296) (636,985)
Interest received . . ......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,659 203,583
Income tax paid . . . ......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,556,719) (4,091,309)
Net cash generated from operating activities . . . . . . . . . . . . . . . . . . . 29,574,545 30,556,901
Cash Flows from Investing Activities
Proceeds from disposal of associated company . . . . . . . . . . . . . . . . . . — 2,596,460
Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . (35,704,305) (17,364,251)
Proceeds from sale of property, plant and equipment . . . . . . . . . . . . . . 94,366 27,588
Additions to intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (588,064) (352,727)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . (36,198,003) (15,092,930)
Cash Flows from Financing Activities
Proceeds from exercise of employee share options . . . . . . . . . . . . . . . 21,712 —
Proceeds from bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,497,867 17,525,000
Repayment of bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,050,972) —
Principal payment of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . (615,251) (404,019)
Increase in fixed deposits pledged with banks . . . . . . . . . . . . . . . . . . . (17,247) (2,071,652)
Net cash generated from financing activities . . . . . . . . . . . . . . . . . . . 21,836,109 15,049,329
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . 15,212,651 30,513,300
Cash and cash equivalents at the beginning of financial period. . . . . . 24,591,975 25,088,357
Effects of exchange rate changes on cash and cash equivalents held in
foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563,531 (696,674)
Cash and cash equivalents at the end of financial period . . . . . . . . . . 40,368,157 54,904,983

The accompanying notes form an integral part of unaudited condensed interim consolidated
financial statements.

B-8
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

These notes form an integral part of and should be read in conjunction with the accompanying
unaudited condensed interim consolidated financial statements.

1 General Information

(a) Introduction

The unaudited condensed interim consolidated financial statements of Nanofilm

Technologies International Limited (the “Company”) and its subsidiaries (together
referred to as the “Group” and individually as “Group entities”) have been prepared solely
for inclusion in the prospectus to be issued in relation to the proposed offering of shares
of the Company in connection with the Company’s listing on the Main Board of Singapore
Exchange Securities Trading Limited (“SGX”).

(b) The Company

The Company was incorporated in the Republic of Singapore on 13 May 1999 as a

private company limited by shares. The Company’s registered address is Block 28 Ayer
Rajah Crescent, #02-03, Ayer Rajah Industrial Estate, Singapore 139959 and its
principal place of business is Block 28 Ayer Rajah Crescent, #02-01-#02-06, Ayer Rajah
Industrial Estate, Singapore 139959. The Company converted to a public company
limited by shares on 15 October 2020. Following the conversion, the Company is now
known as Nanofilm Technologies International Limited (formerly known as Nanofilm
Technologies International Pte Ltd).

The principal activities of the Company are that of the design, research, development,
integration, manufacturing and marketing of advanced material science and Nano
technology in industrial machinery, coating services/surface solutions and precision
components. The principal activities of the subsidiaries are disclosed in Note 4 to the
audited consolidated financial statements for the financial year ended 31 December
2019, as set in pages A-42 to A-43 to the Offer Document.

The ultimate controlling shareholder of the Company is Dr. Shi Xu.

2 Significant Accounting Policies

(a) Basis of Preparation

The unaudited condensed interim consolidated financial statements for the six-months
financial period ended 30 June 2020 have been prepared in accordance with Singapore
Financial Reporting Standards (International) 1-34 Interim Financial Reporting (SFRS(I)
1-34).

The unaudited condensed interim consolidated financial statements do not include all
the information and disclosures required in the annual financial statements, and should
be read in conjunction with the Group’s audited consolidated financial statements for the
financial years ended 31 December 2017, 2018 and 2019.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

2 Significant Accounting Policies (cont’d)

(a) Basis of Preparation (cont’d)

The unaudited condensed interim consolidated financial statements are presented in

Singapore dollar (“S$”).

In the current financial period, the Group has adopted all the new and revised Singapore
Financial Reporting Standards (International) (“SFRS(I)”) and SFRS(I) Interpretations
(“SFRS(I) INT”) that are relevant to its operations and effective for the current financial
period. Changes to the Group’s accounting policies have been made as required, in
accordance with the transitional provisions in the respective SFRS(I) and SFRS(I) INT.

The accounting policies adopted in the preparation of the unaudited condensed interim
consolidated financial statements are consistent with those followed in the preparation of
the Group’s annual consolidated financial statements for the year ended 31 December
2019, except for the adoption of new standards effective as of 1 January 2020 which did
not have significant impact on the financial performance or financial position of the
interim consolidated financial statements. The Group has not early adopted any other
standard, interpretation or amendment that has been issued but is not yet effective.

The critical judgement and key sources of estimation uncertainty made by the
management remains unchanged from audited consolidated financial statements for the
financial years ended 31 December 2017, 2018 and 2019.

(b) New and Revised Standards Issued but Not Yet Effective

New standards, amendments to standards and interpretations that have been issued at
the end of the reporting period but are not yet effective for the Group for the annual
periods beginning on or after 1 June 2020 have not been applied in preparing these
unaudited condensed interim consolidated financial statements. Management is of the
view that the adoption of these new standards would not have significant financial impact
on the financial performance or financial position of the Group.

Effective for annual

periods beginning
Description on or after

Amendment to SFRS(I) 16, Leases—Covid-19 Related Rent 1 June 2020

Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendments to SFRS(I) 1-16, Property, Plant and 1 January 2022
Equipment—Proceeds before Intended Use . . . . . . . . . . . . . . . .
Amendments to SFRS(I) 1-37, Provisions—Onerous 1 January 2022
Contracts—Cost of Fulfilling a Contract . . . . . . . . . . . . . . . . . . .
Amendments to SFRS(I) 3, Business Combinations—Reference 1 January 2022
to the Conceptual Framework . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual improvements to SFRS(I)s 2018-2020 . . . . . . . . . . . . . . . . 1 January 2022
Amendments to SFRS(I) 1-1, Classification of Liabilities as 1 January 2023
Current or Non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-10
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

3 Seasonality or Cyclicality of Interim Operations

The Group typically enjoys significantly better results in the second half of the year, primarily
driven by the AMBU’s and NFBU’s exposure to the 3C market. Increase in demand for the
Group’s services and products in the 3C sector tend to be in line with new product launches
or product upgrades by the Group’s customers and increases in demand during holiday
seasons. However, such seasonality trend may change along with changes in consumer
pattern or the Group’s customers’ timing to launch new products or product upgrades.

The Group does not experience any material seasonality impact with respect to the Group’s
customers from the other industries.

4 Subsidiaries

During the financial period ended 30 June 2020:

(a) the Group’s wholly owned subsidiary, Nanofilm Advanced Materials Pte. Ltd. approved
the additional capital investment of RMB100,000,000 (equivalent to US$14,260,986) in
Nanofilm Renewable Energy Technology (Shanghai) Co., Ltd., a wholly owned
subsidiary of the Group. The additional capital investment was settled by way of cash in
May 2020. The purpose of the cash injection was primarily to fund the construction of
Shanghai Plant 2.

(b) the Group’s wholly owned subsidiary, Nanofilm Vacuum Coating (Shanghai) Co., Ltd
acquired the remaining 49% equity interest in Shanghai Nanofilm Zaichuang Automation
Co., Ltd from the existing shareholders at nil consideration. Shanghai Nanofilm
Zaichuang Automation Co., Ltd became a wholly owned subsidiary of the Group upon the
completion of the acquisition. Following the acquisition, the Group recognised a
decrease in other reserve and an increase in non-controlling interests of S$35,827 and
S$35,827 respectively.

(c) the Company has subscribed for 3,267 new ordinary shares in the capital of the Nanofab
Technologies Pte. Ltd. at a consideration of US$6,000,000 (equivalent to about
S$8,475,000). Upon completion of the subscription, the Group’s interest in Nanofab
Technologies Pte. Ltd. has increased from 70% to 90%. Following the additional
subscription only by the Company, the Group recognised a net increase in the
non-controlling interest by S$133,946 and a corresponding decrease in other reserve by
S$133,946 respectively.

(d) the Company injected S$1,000,000, comprising of 1,000,000 ordinary shares in a newly
incorporated Singapore company, Wizture Holdings Pte. Ltd. The principal activity of
Wizture Holdings Pte. Ltd. is that of an investment holding company and the ownership
is held through a trust arrangement with an individual third party trustee and
subsequently transferred to the Company in August 2020.

B-11
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

5 Revenue from Contract with Customers

(a) Revenue by product type

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Industrial Equipment. . . . . . . . . . . . . . . . . . . . . . . . 10,504,356 13,898,545

Advanced Materials
—Smart phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,660,685 2,950,470
—Computer (desktop, laptop, tablet) . . . . . . . . . . . 23,918,302 17,413,102
—Wearable & Accessories . . . . . . . . . . . . . . . . . . . 20,512,930 9,224,879
—Printing & Imaging. . . . . . . . . . . . . . . . . . . . . . . . 5,641,709 6,323,424
—Precision Engineering . . . . . . . . . . . . . . . . . . . . . 2,594,551 2,116,862
—Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,793,401 394,594

64,121,578 38,423,331

Nanofabrication . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,202,023 2,913,271

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,827,957 55,235,147

(b) Disaggregation of revenue from contracts with customers

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$
Performance obligations satisfied at a point
in time
Sale of equipment. . . . . . . . . . . . . . . . . . . . . . . . . . 8,845,969 10,721,697
Sale of products and spare parts . . . . . . . . . . . . . . 4,167,077 4,038,850

13,013,046 14,760,547

Performance obligations satisfied over time

Sale of equipment. . . . . . . . . . . . . . . . . . . . . . . . . . – 1,025,422
Service rendered . . . . . . . . . . . . . . . . . . . . . . . . . . 64,814,911 39,449,178

64,814,911 40,474,600

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,827,957 55,235,147

B-12
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

5 Revenue from Contract with Customers (cont’d)

(c) Contract balances

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Current
Contract assets . . . . . . . . . . . . . . . . . . . . . . . . . . 13,940,691 11,376,429

Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . 7,299,670 6,368,253

Contract assets represent the Group’s rights to consideration for work completed but not
billed at the reporting date. Invoices are billed to customers when the rights become
unconditional. Contract liabilities relate to the Group’s obligation to transfer goods to
customers for which the Group have received consideration. Contract liabilities are
recognised as revenue as the Group perform under the contract.

The significant changes in the contract assets and contract liabilities during the financial
periods ended 30 June 2020 and 31 December 2019 are as follows:

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Contract assets
Contract assets billed . . . . . . . . . . . . . . . . . . . . . (9,612,970) (9,926,002)
Changes in measurement of progress. . . . . . . . . 12,177,232 13,526,981

Contract liabilities
Revenue recognised at the beginning of the
financial period . . . . . . . . . . . . . . . . . . . . . . . . 6,368,253 2,070,877
Increase due to cash received, excluding
amounts recognised as revenue during the
financial period . . . . . . . . . . . . . . . . . . . . . . . . (7,299,670) (6,368,253)

B-13
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

6 Other Operating Income

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Government grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,652,207 1,216,116

Scrap sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,733 35,369
Gain on disposal of an associated company. . . . . . . . . . – 74,725
Gain on disposal of property, plant and equipment. . . . . 4,346 –
Sundry income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,410 30,026
Exchange gains, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 823,123 –

2,610,819 1,356,236

7 Finance Income

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Interest income:
—bank deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,659 197,448

8 Finance Expenses

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Interest expense:
—bank loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247,566 4,956
—convertible notes carried at amortised cost . . . . . . . . . 517,780 505,806
—lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,911 113,018

888,257 623,780

B-14
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

9 Profit before Income Tax

This is stated after charging/(crediting) the following:

Unaudited Six-months period

ended 30 June

Note 2020 2019

S$ S$
Cost of inventories sold (recognised as cost
of sales) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,732,549 21,554,036
Research and development & engineering
expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,565,606 4,140,236
Directors’ fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 12,658
Depreciation of property, plant and equipment . . . . 12 7,919,852 6,414,359
Amortisation of land use rights . . . . . . . . . . . . . . . . 138,617 103,276
Amortisation of intangible assets . . . . . . . . . . . . . . 14 592,808 564,250
Lease expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 241,346 255,756
Write back of inventories . . . . . . . . . . . . . . . . . . . . 16 (48,521) —
Staff costs (including Directors’ remuneration):
—Salaries and related costs. . . . . . . . . . . . . . . . . . 22,899,248 18,700,470
—Contribution to defined contribution plans . . . . . . 632,043 484,648
—Share option expenses . . . . . . . . . . . . . . . . . . . . 46,188 31,640
—Restricted shares award . . . . . . . . . . . . . . . . . . . 1,211,511 —
(Gain)/loss on disposal/write-off of property, plant
and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . (5,499) 9,305
Exchange (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . (823,123) 176,991
Provision for warranty. . . . . . . . . . . . . . . . . . . . . . . 25 190,000 385,000
Reversal of provision for warranty . . . . . . . . . . . . . 25 (265,062) (301,602)

Breakdown of staff costs included in:

—Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,203,152 9,359,737
—Selling and distribution expenses . . . . . . . . . . . . 4,844,848 3,934,219
—Administrative expenses . . . . . . . . . . . . . . . . . . . 7,740,990 5,922,802

24,788,990 19,216,758

Breakdown of amortisation of land use rights and

intangible assets included in:
—Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,563 5,133
—Selling and distribution expenses . . . . . . . . . . . . 592,808 564,250
—Administrative expenses . . . . . . . . . . . . . . . . . . . 133,054 98,143

731,425 667,526

B-15
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

10 Income Tax

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Income tax:
—Current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,958,070 2,002,142
—Under provision in prior years . . . . . . . . . . . . . . . . . . . 65,096 —

4,023,166 2,002,142

A reconciliation of income tax calculated at the applicable tax rates of the Group entities in
their respective tax jurisdictions with income tax expense is as follows:

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . 22,560,346 12,868,904

Tax calculated at applicable tax rates . . . . . . . . . . . . . . 4,488,713 1,817,693

Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . 44,409 92,865
Income not subject to tax . . . . . . . . . . . . . . . . . . . . . . . . (92,124) (51,935)
Tax exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,425) (32,425)
(1)
Tax incentives ............................... (455,056) (78,985)
Utilisation of previously unrecognised tax losses . . . . . . (231,645) (114,296)
Deferred tax assets not recognised . . . . . . . . . . . . . . . . 221,198 369,225
Under provision in prior years. . . . . . . . . . . . . . . . . . . . . 65,096 —

4,023,166 2,002,142

(1) Tax incentives pertain mainly to Productivity and Innovation Credit and research and development tax
deductions.

Singapore

The current corporate income tax rate applicable to the Company is 17% (2019: 17%). The
Company enjoys a concessionary income tax rate of 10% under the International Growth
Scheme for 5 years from 1 July 2016, subject to the terms and conditions being met.

B-16
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

10 Income Tax (cont’d)

People’s Republic of China

The current applicable corporate tax rate is 15% (2019: 15%) for Nanofilm Vacuum Coating
(Shanghai) Co., Ltd and 25% (2019: 25%) for other subsidiaries incorporated in China.
Nanofilm Vacuum Coating (Shanghai) Co., Ltd has been granted a certificate of high
technology enterprise by the local tax authorities and a concessionary tax rate of 15% applies
during the year and valid to 30 October 2021.

Japan

Companies incorporated in Japan are subject to tax on their worldwide income. The taxes
included corporate tax, surtax on corporate tax, inhabitant tax and enterprise tax. The current
corporate (a national) tax rate is 23.2% (2019: 23.2%). Tax losses can be carried forward for
nine years. The utilisation of the tax losses is restricted at 80% of taxable income for the year.

Vietnam

The subsidiary in Vietnam has an obligation to pay the government income tax at the rate of
20%. Under the terms of Investment Certificate, the subsidiary is allowed to be exempt from
income tax for 2 years starting from the first year it generates a taxable profit and entitled to
a 50% reduction in income tax for 4 succeeding years.

11 Earnings per Share

(a) Basic Earnings per Share

Basic earnings per share amounts are calculated by dividing profit for the year, net of tax,
attributable to equity holders of the Company by the weighted average number of
ordinary shares in issue during the financial periods as follows:

Unaudited
Six-months period
ended 30 June

2020 2019

Profit for the year attributable to equity holders of

the Company (S$) . . . . . . . . . . . . . . . . . . . . . . . . 18,465,497 11,374,427

Weighted average number of ordinary shares

(number) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513,679,720 511,237,720

Basic earnings per share (cents) . . . . . . . . . . . . . . 3.59 2.22

B-17
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

11 Earnings per Share (cont’d)

(b) Diluted Earnings per Share

For the purposes of calculating diluted earnings per share, profit attributable to equity
holders of the Company and the weighted average number of ordinary shares
outstanding are adjusted for the effects of all dilutive potential ordinary shares. The
Company has two categories of dilutive potential ordinary shares: convertible notes and
share options.

Convertible notes are assumed to have been converted into ordinary shares at issuance
and the net profit is adjusted to eliminate the interest expense less the tax effect. For
share options, the weight average number of shares on issue has been adjusted as if all
dilutive share options were exercised. The number of shares that could have been
issued upon the exercise of all dilutive share options less the number of shares that could
have been issued at fair value (determined as the Company’s average share price for the
financial period) for the same total proceeds is added to the denominator as the number
of shares issued for no consideration. No adjustment is made to the net profit.

Diluted earnings per share amounts attributable to equity holders of the Company are
calculated as follows:

Unaudited
Six-months period ended
30 June

2020 2019

Profit for the year attributable to equity holders of

the Company (S$) . . . . . . . . . . . . . . . . . . . . . . . 18,465,497 11,374,427
Add back: interest and other expense on share
options and convertible notes, net of tax (S$) . . . 496,657 471,692

Net profit used to determine diluted earnings per

share (S$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,962,154 11,846,119

Weighted average number of ordinary shares

(number) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513,679,720 511,237,720
Adjustments for:
—Share options . . . . . . . . . . . . . . . . . . . . . . . . . . . 909,592 — (1)
—Convertible notes . . . . . . . . . . . . . . . . . . . . . . . . 53,630,290 53,630,290

568,219,602 564,868,010

Diluted earnings per share (cents) . . . . . . . . . . . . . 3.34 2.10

(1) Share options are anti-dilutive.

B-18
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

12 Property, Plant and Equipment

Building Office and

Plant and and other Tools and Motor Construction
machinery renovation equipment supplies vehicles in-progress Total

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

Unaudited

30 June 2020

Cost

At 1 January 2020 . . . . . 88,349,221 33,487,726 19,039,622 2,643,778 1,322,479 20,391,136 165,233,962

Additions . . . . . . . . . . 4,523,186 1,777,588 2,914,573 49,749 — 27,278,233 36,543,329

Disposal/Write off. . . . . . (673,017) (252,371) (93,026) — — (4,504) (1,022,918)

Transfer . . . . . . . . . . 7,477,148 — 2,030,803 — — (9,507,951) —

Reclassification (Note b) . . (911,900) — — — — — (911,900)

Translation adjustment . . . 1,863,925 683,995 342,710 95,688 19,631 254,232 3,260,181

At 30 June 2020 . . . . . . 100,628,563 35,696,938 24,234,682 2,789,215 1,342,110 38,411,146 203,102,654

Accumulated depreciation

At 1 January 2020 . . . . . 38,872,404 7,418,863 8,721,548 2,024,167 920,498 — 57,957,480

Charge for the year . . . . . 4,511,254 1,574,226 1,677,791 515,242 54,708 — 8,333,221

Disposal/Write off. . . . . . (662,456) (201,627) (17,991) — — — (882,074)

Translation adjustment . . . 669,033 90,752 156,745 71,532 12,821 — 1,000,883

At 30 June 2020 . . . . . . 43,390,235 8,882,214 10,538,093 2,610,941 988,027 — 66,409,510

Net book value

At 30 June 2020 . . . . . . 57,238,328 26,814,724 13,696,589 178,274 354,083 38,411,146 136,693,144

At 1 January 2020 . . . . . 49,476,817 26,068,863 10,318,074 619,611 401,981 20,391,136 107,276,482

(a) During the financial period ended 30 June 2020, the additions to property, plant and
equipment included S$839,024 acquired under right-of-use assets under leasing
arrangement (Note 21).

(b) Included manufacturing coating services machinery transferred to inventories for sale
during the financial periods.

(c) The Group’s cost of construction in-progress on the land in People’s Republic of China,
Shanghai, used by the Group and classified as property, plant and equipment, amounted
to S$18,586,220 (31 December 2019: S$7,084,820) as at 30 June 2020. The
construction in-progress, together with certain plots of state-owned land (Note 13) are
held as security for the Group’s bank loan of S$7,396,590 (31 December 2019: Nil) as
disclosed in Note 20(a).

B-19
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

12 Property, Plant and Equipment (cont’d)

The breakdown of depreciation charged for the financial periods are as follows:

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Depreciation included in profit or loss:

—cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,300,203 5,010,416
—selling and distribution expenses . . . . . . . . . . . . . . . . 548,189 429,543
(1)
—administrative expenses ..................... 1,071,460 974,400

7,919,852 6,414,359
Capitalised in statement of financial position as:
Intangible assets – development costs . . . . . . . . . . . . . . 172,991 132,746
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,605 190,183

8,221,448 6,737,288

(1) During the financial period ended 30 June 2020, an amount of S$111,773 rental rebate received from the
government has been set off against administrative expenses.

13 Land Use Rights

The land use rights consisted of:

(a) Prepaid land costs for which the Group’s subsidiary in Vietnam obtained land use rights
certificate. These costs are amortised on a straight-line basis over the term of the lease
of 38 years.

(b) Certain plots of state-owned land in the People’s Republic of China where certain of the
Group’s production facilities reside. The land use rights are transferrable and have a
lease term period of about 50 years. During the financial period ended 30 June 2020,
amortisation of land use rights amounting to S$138,617 has been included in the
consolidated statement of profit or loss.

B-20
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

14 Intangible Assets

Development
Patents costs Goodwill Total

Unaudited S$ S$ S$ S$

30 June 2020
Cost
At 1 January 2020 . . . . . . . . . . . . . 555,197 12,133,545 871,759 13,560,501
Additions . . . . . . . . . . . . . . . . . . . . 115,228 645,827 — 761,055

At 30 June 2020 . . . . . . . . . . . . . . . 670,425 12,779,372 871,759 14,321,556

Accumulated amortisation
At 1 January 2020 . . . . . . . . . . . . . 291,469 8,376,413 871,759 9,539,641
Amortised during the period . . . . . . 637 592,171 — 592,808

At 30 June 2020 . . . . . . . . . . . . . . . 292,106 8,968,584 871,759 10,132,449

Net carrying amount

At 30 June 2020 . . . . . . . . . . . . . . . 378,319 3,810,788 — 4,189,107

At 1 January 2020 . . . . . . . . . . . . . 263,728 3,757,132 — 4,020,860

Included in the additions in financial period ended 30 June 2020 are depreciation of plant and
equipment and staff costs, amounting to S$172,991 and S$402,104, respectively. The
additions to intangible assets during the financial periods are shown net of the depreciation of
plant and equipment capitalised in the consolidated statement of cash flows.

B-21
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

15 Trade and Other Receivables, and Other Current Assets

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Current
Trade receivables:
—Third parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,910,893 50,268,948
Loss allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . (708,004) (708,004)

45,202,889 49,560,944

Other receivables:
—Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564,289 266,610
—GST/VAT and other taxes receivable. . . . . . . . . . . . 1,993,098 1,880,439
—Sundry debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,540,374 712,396

4,097,761 2,859,445

Other current assets:

—Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484,245 483,111
—Advances to suppliers . . . . . . . . . . . . . . . . . . . . . . . 3,408,788 5,306,863

3,893,033 5,789,974

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,193,683 58,210,363

Non-current
Other receivables—staff loan . . . . . . . . . . . . . . . . . . . 173,625 179,676

As at 30 June 2020 and 31 December 2019, the Group has banker guarantees issued from
financial institutions for operation and completion of the construction of property, plant and
equipment in China, rental and electricity deposits amounting to S$970,184 and S$846,472
respectively.

As at 30 June 2020 and 31 December 2019, the loans to staff is unsecured, interest-free and
repayable in 120 equal monthly instalments commencing on 1 April 2019.

Trade receivables are interest-free and are generally on 30 to 90 days’ terms. Other
receivables are considered to have low credit risk and loss allowance is measured at an
amount equal to 12-month expected credit loss which reflects the low credit risk of the
exposures. There is no loss allowance arising from these outstanding balances as the
expected credit losses are assessed not to be material.

B-22
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

15 Trade and Other Receivables, and Other Current Assets (cont’d)

Loss allowance for trade receivables is measured at an amount equal to lifetime expected
credit losses. There has been no change in the estimation techniques or significant
assumptions made for financial period ended 30 June 2020. Majority of the Company’s trade
receivables are within the credit terms and the loss allowance on the expected credit loss is
assessed not to be material. The Group’s credit risk exposure in relation to trade receivables
(including contract assets) as at the reporting date are set out in the provision matrix as
presented below.

Lifetime Gross Lifetime

expected carrying expected Net carrying
loss rate amount credit losses amount

Unaudited % S$ S$ S$

30 June 2020
Current . . . . . . . . . . . . . . . . . . . . . . 0.5% 58,734,506 (302,677) 58,431,829
Past due: . . . . . . . . . . . . . . . . . . . .
1 to 30 days . . . . . . . . . . . . . . . . . . 1.0% 340,850 (3,409) 337,441
31 to 60 days . . . . . . . . . . . . . . . . . 2.0% 226,104 (4,522) 221,582
60 to 90 days . . . . . . . . . . . . . . . . . 4.0% 169,012 (25,288) 143,724
(1)
More than 90 days ........... 10.0% 381,112 (372,108) 9,004

59,851,584 (708,004) 59,143,580

(1) Included an amount of loss allowance of S$361,361 provided for a specific customer.

There are no loss allowance recognised in consolidated statement of profit or loss during the
financial period ended 30 June 2020.

16 Inventories

Audited
Unaudited 31 December
30 June 2020 2019

S$ S$

At cost or net realisable value:

Raw materials and consumables . . . . . . . . . . . . . . . . . . 7,721,336 5,177,422
Work-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,879,640 2,995,570
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,097,101 4,863,776
Goods in transit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442,434 1,696,970

15,140,511 14,733,738

The cost of inventories recognised as cost of sales for the Group includes S$48,521 in respect
of write-back of inventories to net realisable value (Note 9).

B-23
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

17 Cash and Bank Balances

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Cash and bank balances . . . . . . . . . . . . . . . . . . . . . . . 29,122,060 22,563,375

Fixed deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,076,023 2,841,276

Cash and bank balances in the statement of

financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,198,083 25,404,651
Less: Pledged fixed deposits. . . . . . . . . . . . . . . . . . . . (829,926) (812,676)

Cash and cash equivalents in the consolidated

statement of cash flows . . . . . . . . . . . . . . . . . . . . . . 40,368,157 24,591,975

Cash at banks earns interest at floating rates based on daily bank deposit rates which
approximate 0.90% (31 December 2019: 0.90%) per annum. Short-term deposits are made for
varying periods of between one day and three months depending on the immediate cash
requirements of the Group, and earn interest at the respective short-term deposit rates.

As at 30 June 2020 and 31 December 2019, fixed deposits bear interest ranging from 2.40%
to 3.58% and 2.73% to 3.58% per annum, respectively. The maturity period is approximately
1 to 36 months (31 December 2019: 1 to 24 months) from the reporting date.

As at 30 June 2020 and 31 December 2019, fixed deposits of S$829,923 and S$812,676
respectively were pledged with financial institutions for operation and construction of
property, plant and equipment (Note 12).

18 Share Capital

Unaudited Audited
30 June 2020 31 December 2019

No. of No. of
ordinary ordinary
shares S$ shares S$

Fully paid ordinary shares

Balance at beginning of
period/year . . . . . . . . . . . . . . . 511,237,720 9,695,920 511,237,720 9,695,920
Issuance of shares under
employee share option plan . . 37,000 21,858 — —
Issuance of shares under
restricted share plan . . . . . . . . 5,254,000 — — —

Balance at end of period/year. . . 516,528,720 9,717,778 511,237,720 9,695,920

B-24
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

18 Share Capital (cont’d)

At the Extraordinary General Meeting of the Company held on 18 February 2020, the
shareholders of the Company approved of the NTI Restricted Share Plan 2020 (“Plan”). The
Plan was adopted on 9 March 2020 by a Members’ Resolution in Writing. As at 30 June 2020,
the Company allotted 5,254,000 new ordinary shares to the Group Employees pursuant to the
Plan at no consideration.

Ordinary shares have no par value. The holders of ordinary shares are entitled to receive
dividends as declared from time to time and are entitled to one vote per share without
restriction at meetings of the Company. All shares rank equally with regard to the Company’s
residual assets.

19 Reserves

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Translation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,224,953) (9,019,698)

Statutory reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,433,781 5,433,781
Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,790,141 702,361
Accumulated profits. . . . . . . . . . . . . . . . . . . . . . . . . . . 122,535,614 113,701,312

123,534,583 110,817,756

The other reserves include share options reserve and restricted shares reserve.

Movements in the Group’s reserves are set out in the consolidated statement of changes in
equity.

Share options reserve

The Company has an Employee Share Option Scheme (“Scheme”) for the granting of
non-transferable options to eligible executive officers. The Scheme was approved by the
shareholders of the Company at the Extraordinary General Meeting held on 6 February 2017.
The Scheme is established and administered by a committee comprising of directors of the
Company from time to time or persons duly authorised and appointed by the board of
directors.

The share options granted under the Scheme may have exercise prices that are at the
discretion of the committee. Share options can only be exercised after vesting has taken
place.

B-25
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

19 Reserves (cont’d)

Share options reserve (cont’d)

During the financial period ended 30 June 2020, no shares options were granted to the
employees pursuant to the Scheme. 37,000 share options were exercised during the period
when vested. As at 30 June 2020, 19,419,000 share options remained outstanding. Out of
which 5,695,000 and 6,305,000 have been vested in 2018 and 2019, respectively, 4,874,000
will be vested in 2020, 2,139,000 will be vested in 2021 and 406,000 will be vested in 2022.

The details of the outstanding options to subscribe for ordinary shares of the Company
pursuant to the Scheme as at 30 June 2020 are as follows:

Number of
share
options
granted Cancelled Exercised
Balance at during the during the during the Balance at
1 January financial financial financial 30 June Exercise
Date of grant 2020 period period period 2020 price Date of expiry

S$

2 April 2018 . . . . . 3,150,000 — (1,050,000) — 2,100,000 0.5927 2 April 2023

3 December 2018 . . 18,792,000 — (3,772,000) (27,000) 14,993,000 0.5868 9-27 December 2024

3 March 2019 . . . . 4,588,000 — (2,802,000) (10,000) 1,776,000 0.5868 18-28 March 2025

3 June 2019 . . . . . 550,000 — — — 550,000 0.5868 16-18 June 2025

27,080,000 — (7,624,000) (37,000) 19,419,000

Restricted shares reserve

The Plan, as disclosed in Note 18, is a share incentive scheme, proposed on a basis that it is
important to retain staff whose contributions are essential to the long-term growth and
profitability of the Group and to give recognition to outstanding Group Employees who have
contributed to the growth of the Group. It also aims to foster a share ownership culture among
Group Employees and to better align employees’ incentive scheme with shareholders’
interests. New ordinary shares allotted to the Group Employees pursuant to the Plan is at no
consideration.

On 12 March 2020, 5,284,000 Award Shares were granted to the Group Employees, out of
which 5,254,000 Award Shares were released on 8 April 2020 pursuant to the Plan.

B-26
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

20 Bank Loans

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,527,301 3,864,000

Non-current (due 2—5 years) . . . . . . . . . . . . . . . . . . . 11,774,183 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,301,484 3,864,000

Security granted/corporate guarantees granted:

(a) As at 30 June 2020, non-current bank loans amounting to S$7,396,590 (31 December
2019: Nil) is due by a wholly owned subsidiary, Nanofilm Renewable Energy Technology
(Shanghai) Co., Ltd. to a bank for the construction of Shanghai Plant 2. The bank loan is
secured by a mortgage over the land use rights of Shanghai Plant 2 and construction in
progress on the land and incurred interest of 5.13% per annum (Note 12 and 13). The
amount is also obtained with corporate guarantee of the Company and certain
subsidiaries of the Group.

(b) Other than disclosed in Note 20(a) above, the remaining current bank loans amounting
to S$14,527,301 and non-current bank loans amounting to S$4,377,593 of the Group as
at 30 June 2020 are unsecured, incurred interest ranging from 0.46% to 3.65% per
annum and are repayable from September 2020 to May 2025.

(c) The loans during the financial year ended 31 December 2019 were unsecured, incurred
interest at 4.35% per annum and have been repaid in April 2020.

21 Lease Liabilities

The Group as a lessee

The Group made periodic lease payments for buildings for the purpose of office usage, motor
vehicles, plant and machinery and land use rights. These are recognised within property, plant
and equipment (Note 12) and land use rights (Note 13).

B-27
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

21 Lease Liabilities (cont’d)

The Group as a lessee (cont’d)

The carrying amounts of right-of-use assets classified within property, plant and equipment
are as follows:

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Buildings and renovation . . . . . . . . . . . . . . . . . . . . . . . 1,236,735 853,707

Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . 1,717,043 1,880,038
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,133 45,306
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,562 60,913

3,057,473 2,839,964

Additions of right-of-use assets classified within the Group’s property, plant and equipment
during the financial period are S$839,024.

Amortisation charges on land use rights are set out in Note 13. Depreciation charges on
right-of-use assets classified within property, plant and equipment during the financial periods
are as follows:

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Buildings and renovation . . . . . . . . . . . . . . . . . . . . . . . . 555,356 347,098

Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,173 308,834
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,371 9,715
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,351 4,351

820,251 669,998

B-28
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

21 Lease Liabilities (cont’d)

The Group as a lessee (cont’d)

Amounts recognised in consolidated statement of profit or loss and consolidated statement of

cash flows are as follows:

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . 122,911 113,018

Expenses relating to short-term leases and low value
assets (included in cost of sales and administrative
expenses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,346 255,756

346,257 368,774

Total cash outflow for leases . . . . . . . . . . . . . . . . . . . . . (615,251) (404,019)

The Group recognised leases liabilities as follows:

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Lease liabilities:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,555,479 4,284,160
Non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443,898 346,269

4,999,377 4,630,429

Subsequent to the financial year end in August 2020, the Group repaid lease liabilities with
outstanding amount of S$3,850,868 (JPY 298,517,000) as at 30 June 2020 which were
pledged with net book value of plant and machinery amounting to S$1,609,848 as at 30 June
2020.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

22 Convertible Notes

In June 2018, the Company issued convertible notes at a nominal value of S$50 million due
on 20 June 2021. Pursuant to the terms of the convertible notes agreements, the notes, can
be converted into shares of the Company (the “conversion option”) based on the terms of
convertible notes agreement at the holder’s option at a conversion price of S$0.93230903 for
each conversion shares. The interest is charged at 2% p.a. On full conversion, up to
53,630,290 conversion shares are issued and allotted to the holders of the notes, if the full
carrying amount of notes is converted into shares. Under the terms of the convertible notes
agreements, the mandatory conversion notice will be served on the date of registration of the
final prospectus with the Monetary Authority of Singapore. The convertible notes will be
converted into shares of the Company prior to the Company’s listing on Singapore Stock
Exchange.

The convertible notes recognised as at the reporting dates are analysed as follows:

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Face value of convertible notes issued, net of

transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000,000 50,000,000
Embedded equity conversion option . . . . . . . . . . . . . . (115,110) (115,110)

Liability component at initial recognition . . . . . . . . . . . 49,884,890 49,884,890

Accumulated amortisation of interest expense . . . . . . 75,641 55,129

Liability component at end of financial period/year . . . 49,960,531 49,940,019

The liability component of the convertible notes at 30 June 2020, classified as current
liabilities, approximates its fair value. The fair value is calculated using cash flows discounted
at a borrowing rate of 2.08% (Level 2 of the fair value measurements). As at 30 June 2020, the
Group has convertible notes interest accrued for the period of S$497,268 and derivatives
payables of S$266,848.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

23 Deferred Taxation

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

At beginning of the financial period/year . . . . . . . . . . . 988,200 848,000

Deferred tax expense . . . . . . . . . . . . . . . . . . . . . . . . . — 140,200

At end of the financial period/year. . . . . . . . . . . . . . . . 988,200 988,200

24 Trade and Other Payables

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Trade payables:
—Third parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,131,402 22,551,785

Other payables:
—Accrued operating expenses . . . . . . . . . . . . . . . . . . 9,435,257 11,177,516
—VAT and other taxes payable. . . . . . . . . . . . . . . . . . 1,091,707 2,633,686
—Sundry creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . 430,277 383,813
—Derivatives payables . . . . . . . . . . . . . . . . . . . . . . . . 266,848 266,848
—Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,631,195 —
—Deferred grant income . . . . . . . . . . . . . . . . . . . . . . . 350,193 —

21,205,477 14,461,863

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,336,879 37,013,648

Trade payables are interest-free and are normally settled on 30 to 90 days’ terms.

Included in accrued operating expenses are accrued staff costs (including bonus) of
S$7,162,756 (31 December 2019: S$8,241,395) for the Group.

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NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

25 Provisions

A provision is recognised for expected warranty claims on all equipment sold during the
financial period, based on past experience of the level of repairs and returns. It is expected
that most of these costs will be incurred within the next one year from the reporting date.
Assumptions used to calculate the provision for warranties were based on current sales levels
and current information available about returns based on the twelve months’ warranty period
for all equipment sold.

Unaudited
30 June 2020

S$

Movement
At beginning of the financial period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454,745
Provision made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000
Provision utilised. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (101,634)
Reversal of provision made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (265,062)
Currency translation differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,521

At end of the financial period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280,570

26 Dividends

During the six-months period ended 30 June 2020, the Group declared one-tier exempt
interim dividend of S$0.019 per share amounting to S$9,631,195. As at 30 June 2020, the
dividends were not paid, dividends payable is included in “trade and other payables” in the
statement of financial position.

27 Changes in Liabilities Arising from Financing Activities

Lease
Bank loans liabilities Total

S$ S$ S$

Unaudited
At 1 January 2020 . . . . . . . . . . . . . . . . . . . . . 3,864,000 4,630,429 8,494,429
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,497,867 — 26,497,867
Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,050,972) (615,251) (4,666,223)
Non-cash changes:
Addition during the period. . . . . . . . . . . . . . . . — 839,024 839,024
Currency translation differences . . . . . . . . . . . (9,411) 145,175 135,764

At 30 June 2020 . . . . . . . . . . . . . . . . . . . . . . . 26,301,484 4,999,377 31,300,861

B-32
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

28 Commitments and Contingencies

Capital expenditure contracted for as at the reporting date but not recognised in the
consolidated financial statements is as follows:

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Property, plant and equipment . . . . . . . . . . . . . . . . . . 37,050,630 34,076,210

29 Related Party Transactions

A related party is a person or entity that is related to the entity that is preparing its financial
statements (“reporting entity”).

Parties are considered to be related if (a) a person or a close member of that person’s family
is related to a reporting entity, if that person (i) has control or joint control over the reporting
entity; (ii) has significant influence over the reporting entity; or (iii) is a member of the key
management personnel of the reporting entity or of a parent of the reporting entity. (b) An
entity is related to a reporting entity if (i) the entity and the reporting entity are members of the
same group; (ii) one entity is an associate or joint venture of the other entity; (iii) both entities
are joint ventures of the same third party; (iv) one entity is a joint venture of a third entity and
the other entity is an associate of the third entity; (v) the entity is a post-employment benefit
plan for the benefit of employees of either the reporting entity or an entity related to the
reporting entity; (vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the
key management personnel of the entity; and (viii) the entity or any member of a group of
which is a part, provides key management personnel services to the reporting entity or to the
parent of the reporting entity.

Related companies in these financial statements refer to members of Nanofilm Technologies

International Limited’s group of companies. Related parties in these financial statements refer
to a corporate shareholder of an associate and companies. In addition to the related party
information disclosed elsewhere in the consolidated financial statements, significant
transactions with related parties, on terms agreed between parties, are as follows:

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Transactions with a related party

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,418,450 1,914,060
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,794,358 8,470,802

B-33
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

29 Related Party Transactions (cont’d)

Compensation of key management personnel

The remuneration of directors and other members of key management personnel during the
financial periods are as follows:

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Short-term employee benefits. . . . . . . . . . . . . . . . . . . . . 2,566,195 1,985,754

Contributions to defined contribution plans. . . . . . . . . . . 63,385 63,175
Other short-term benefits . . . . . . . . . . . . . . . . . . . . . . . . 18,000 18,000

Total compensation paid to key management

personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,647,580 2,066,929

Comprised amounts paid to: . . . . . . . . . . . . . . . . . . . . . .

Directors of the Company . . . . . . . . . . . . . . . . . . . . . . . . 1,684,584 1,532,689
Other key management personnel . . . . . . . . . . . . . . . . . 962,996 534,240

2,647,580 2,066,929

30 Financial Instruments and Risk Management

The Group’s activities are exposed to a variety of financial risks, including the effects of credit
risk, interest rate risk, liquidity risk, currency risk and capital risk arising in the normal course
of the Group’s business. The Group’s risk management policy seeks to minimise the potential
adverse effects from these exposures. Management continually monitors the Group’s risk
management process to ensure that an appropriate balance between risk and control is
achieved. Risk management policies and systems are reviewed regularly to reflect changes in
market conditions and the Group’s activities.

The Board of Directors of the Group is responsible for setting the objectives, the underlying
principles of financial risk management for the Group and establishing the policies such as
authority levels, over-sight responsibilities, risk identification and measurement, exposure
limits and hedging strategies, in accordance with the objectives and underlying principles
approved.

B-34
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

30 Financial Instruments and Risk Management (cont’d)

(a) Credit Risk

Credit risk refers to the risk that the customer or counterparty failed to discharge an
obligation which resulted in a financial loss to the Group.

As the Group does not hold any collateral, the maximum exposure to credit risk is the
carrying amount of the related financial assets presented on the statement of financial
position.

Credit risk grading guideline

Based on the Group’s internal rating assessment, there are no financial assets that are
under-performing, non-performing and assets written off during the financial year. The
credit quality of the Group’s performing financial assets, as well as maximum exposure
to credit risk by internal credit risk assessments are as follows:

The trade receivables of the Group comprise 1 debtor (31 December 2019: 2 debtors)
that individually represented more than 5% (31 December 2019: 5%) of third parties
trade receivables. The Group has applied the simplified approach in SFRS(I) 9 to
measure the loss allowance at lifetime expected credit loss for trade receivables. The
credit risk profile of trade receivables is presented based on the past due status in terms
of the provision matrix and is set out in Note 15. Other receivables are measured at
12-month expected credit loss as they have a low risk of default and do not have any past
due amounts.

The Group’s cash and cash equivalents are entered into with bank and financial
institution counterparties, which are rated A1, based on rating agency ratings. These are
measured at amortised cost and are considered low credit risks and the amount of the
allowance on cash and cash equivalents is assessed not to be material. The gross and
net carrying amounts are set out in Note 17 to the financial statements.

Impairment on other receivables has been measured on the 12-month expected loss
basis and reflects the short maturities of the exposures. The Group consider that these
financial assets have a low credit risk based on the external credit ratings of the
counterparties and these counterparties having low risk of default. The amount of the
allowance on these financial assets is assessed to be immaterial. The gross and net
carrying amounts are set out in Note 15 to the financial statements.

The Group monitor its credit risk according to the degree of default risk and the
outstanding amounts will be written off if there is evidence indicating that there is no
reasonable expectation of recovery due to customer default on long outstanding
balances.

B-35
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

30 Financial Instruments and Risk Management (cont’d)

(b) Interest Rate Risk

Interest rate risk arises on interest-bearing financial instruments recognised on the

statement of financial position. It is the risk that changes in interest rates will affect the
Group’s income or the value of their holdings of financial instruments. The Group’s
exposures to interest rate risk for changes in interest rates mainly arise from
interest-bearing borrowings. Interest rate risk is managed by the Group on an on-going
basis with the primary objective of limiting the extent to which net interest expense could
be affected by an adverse movement in interest rates.

If interest rates on bank loans had been 1% higher/lower with all other variables being
held constant, the Group’s profit before income tax would have been lower/higher by
approximately S$263,000 as a result of higher/lower interest expense arising from bank
loans of S$26,301,484 as at 30 June 2020.

(c) Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as
they fall due. In the management of liquidity risk, the Group monitor and maintain a level
of cash and cash equivalents deemed adequate by the management to finance the
Group’s operations and where required, mitigate the effects of fluctuation in cash flows.
The Group may also obtain additional funding through credit facilities from banks and
financial institutions. The table below analyses the maturity profile of the Group’s
financial liabilities based on contractual undiscounted cash flows.

b Cash flows c

Carrying Contractual Between 1 to

amounts cash flows Within 1 year 5 years

S$ S$ S$ S$

Unaudited
At 30 June 2020
Trade and other
payables . . . . . . . . . . . 40,894,979 40,894,979 40,894,979 —
Bank loans . . . . . . . . . . . 26,301,484 28,402,060 15,333,656 13,068,404
Lease liabilities . . . . . . . . 4,999,377 5,466,065 4,781,804 684,261
Convertible notes . . . . . . 49,960,531 51,468,493 51,468,493 —

122,156,371 126,231,597 112,478,932 13,752,665

B-36
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

30 Financial Instruments and Risk Management (cont’d)

(d) Currency Risk

Currency risk arises on financial instruments that are denominated in currencies other
than the respective functional currencies of the entities in the Group in which they are
measured.

The Group is not exposed to significant foreign currency risk on their operating activities
as most transactions and balances are denominated in the respective functional
currencies of the Group entities, except for certain cash and bank balances, borrowings,
trade and other receivables and payables which are denominated in foreign currencies,
primarily United States Dollar (“USD”), Japanese Yen (“JPY”) and Renminbi (“RMB”).
Exposure to foreign currency risk is monitored on an on-going basis and the Group
endeavour to keep the net exposure at an acceptable level.

The Group’s foreign currency exposures as at the reporting date, based on the
information provided by key management, are as follows:

Denominated in the following currencies

SGD USD JPY RMB Others Total

Unaudited S$ S$ S$ S$ S$ S$

At 30 June 2020

Financial assets

Cash and bank balances . . . . . . . 6,233,407 10,003,770 1,344,696 23,597,673 18,537 41,198,083

Trade and other receivables . . . . . 859,819 3,950,147 522,727 42,146,508 1,976 47,481,177

Contract assets . . . . . . . . . . . . — — — 13,940,691 — 13,940,691

7,093,226 13,953,917 1,867,423 79,684,872 20,513 102,619,951

Financial liabilities

Trade and other payables . . . . . . . 13,821,192 1,694,024 876,035 24,426,118 77,610 40,894,979

Bank loans . . . . . . . . . . . . . . . 8,420,694 — 619,200 17,261,590 — 26,301,484

Lease liabilities . . . . . . . . . . . . 665,310 — 4,240,670 93,397 — 4,999,377

Convertible notes . . . . . . . . . . . 49,960,531 — — — — 49,960,531

72,867,727 1,694,024 5,735,905 41,781,105 77,610 122,156,371

Net financial (liabilities)/assets . . . . (65,774,501) 12,259,893 (3,868,482) 37,903,767 (57,097) (19,536,420)

Less: Net financial (liabilities)/assets

denominated in the entities’
functional currencies . . . . . . . . (66,774,503) 141,237 (4,145,233) 39,000,956 — (31,777,543)

Currency exposure . . . . . . . . . . 1,000,002 12,118,656 276,751 (1,097,189) (57,097) 12,241,123

B-37
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

30 Financial Instruments and Risk Management (cont’d)

(e) Capital Risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to
continue as going concern and to maintain an optimal capital structure so as to maximise
shareholders’ value. The Group’s policy is to maintain an adequate capital base so as to
maintain investor, creditor and market confidence and to sustain future development.
The Group fund the operations and growth through a mix of equity and debt. This
includes the maintenance of adequate lines of credit and assessing the need to raise
additional equity where required. The Group’s overall strategy remains unchanged for
the financial periods ended 30 June 2020 and 31 December 2019.

(f) Fair Value

The fair value information presented represents the Group’s best estimate of those
values and may be subject to certain assumptions and limitations. The methodologies
and assumptions used in the estimation of fair values depend on the terms and
characteristics of the various financial instruments. The following methods and
assumptions are used to determine the fair value of each class of financial instruments
for which it is practicable to determine that value.

Fair value measurements recognised in the statement of financial position

The Group provides an analysis of financial instruments that are measured subsequent to
initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair
value is observable:

(i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in
active markets for identical assets or liabilities;

(ii) Level 2 fair value measurements are those derived from inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and

(iii) Level 3 fair value measurements are those derived from valuation techniques that
include inputs for the asset or liability that are not based on observable market data
(unobservable inputs).

Financial instruments whose carrying amounts approximate fair values

The carrying amounts of the Group’s financial assets and financial liabilities with a maturity of
less than one year approximate their fair values due to their short-term maturities.

The fair values of the Group’s non-current financial assets and financial liabilities are
calculated based on discounted expected future principal and interest cash flows. The
discount rate used is based on market rate for similar instruments as at the reporting date
(“Level 2”). As at 30 June 2020 and 31 December 2019, the carrying amounts of these
non-current assets and non-current liabilities approximate their fair values.

B-38
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

31 Operating Segment information

For management purposes, the Group is organised into business units based on their
products.

Advanced Materials — material science solutions provider of advanced

materials through proprietary surface solutions
nanotechnology applied across wide range of end
industries.
Industrial Equipment — designs and develops customised coating equipment,
cleaning lines and automation systems, including after
sales support, to customers in selective markets.
Nanofabrication — manufacturer and supplier of nanoproducts in optical
imaging lens and sensory components critical to
customers’ end-products.

Inter-
Advanced Industrial segment
materials equipment Nanofabrication eliminations Total

Unaudited Six-months period

ended 30 June 2020 S$ S$ S$ S$ S$

Revenue from external customers . . 64,121,578 10,504,356 3,202,023 — 77,827,957

Inter-segment sales . . . . . . . . . . 22,582 1,636,460 261,837 (1,920,879) —

64,144,160 12,140,816 3,463,860 (1,920,879) 77,827,957

Adjusted EBITDA . . . . . . . . . . . 29,422,516 3,546,819 232,968 — 33,202,303

Other information

Depreciation . . . . . . . . . . . . . . 6,340,949 351,605 1,227,298 — 7,919,852

Amortisation of land use rights . . . . 133,054 — 5,563 — 138,617

Amortisation of intangible assets . . . 177,842 414,966 — — 592,808

Write back of inventories . . . . . . . (48,191) (330) — — (48,521)

Gain on disposal of property, plant

and equipment . . . . . . . . . . . (3,161) (1,104) (1,234) — (5,499)

Provision for warranty . . . . . . . . . — 190,000 — — 190,000

Reversal of provision for warranty . . — (265,062) — — (265,062)

B-39
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

31 Operating Segment information (cont’d)

Inter-
Advanced Industrial segment
materials equipment Nanofabrication eliminations Total

At 30 June 2020 S$ S$ S$ S$ S$

Assets

Segment assets . . . . . . . . . . . . 204,934,686 20,061,259 11,241,528 — 236,237,473

Cash and bank balances . . . . . . . 41,198,083

277,435,556

Segment assets include:

Additions to non-current assets:

—Property, plant and equipment . . . 33,812,270 1,034,655 1,696,404 — 36,543,329

—Intangible assets . . . . . . . . . . 228,316 532,739 — — 761,055

Liabilities

Segment liabilities . . . . . . . . . . . 34,148,000 15,122,203 5,646,293 — 54,916,496

Convertible notes . . . . . . . . . . . 49,960,531

Bank loans . . . . . . . . . . . . . . . 26,301,484

Deferred taxation . . . . . . . . . . . 988,200

Provision for taxation . . . . . . . . . 4,781,654

136,948,365

Inter-
Advanced Industrial segment
materials equipment Nanofabrication eliminations Total

Unaudited Six-months period

ended 30 June 2019 S$ S$ S$ S$ S$

Revenue from external customers . . 38,423,331 13,898,545 2,913,271 — 55,235,147

Inter-segment sales . . . . . . . . . . — 1,204,283 — (1,204,283) —

38,423,331 15,102,828 2,913,271 (1,204,283) 55,235,147

Adjusted EBITDA . . . . . . . . . . . 14,706,719 5,608,804 75,167 — 20,390,690

Other information

Depreciation . . . . . . . . . . . . . . 4,570,341 328,091 1,515,927 — 6,414,359

Amortisation of land use rights . . . . 98,143 — 5,133 — 103,276

Amortisation of intangible assets . . . 197,487 366,763 — — 564,250

Loss on disposal of property, plant

and equipment . . . . . . . . . . . 8,253 1,052 — — 9,305

Provision for warranty . . . . . . . . . — 385,000 — — 385,000

Reversal of provision for warranty . . — (301,602) — — (301,602)

B-40
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

31 Operating Segment information (cont’d)

Inter-
Advanced Industrial segment
materials equipment Nanofabrication eliminations Total

At 31 December 2019 S$ S$ S$ S$ S$

Assets

Segment assets . . . . . . . . . . . . 174,028,134 24,441,489 10,095,737 — 208,565,360

Cash and bank balances . . . . . . . 25,404,651

233,970,011

Segment assets include:

Additions to non-current assets:

—Property, plant and equipment . . . 49,508,087 1,389,873 1,554,433 — 52,452,393

—Land use rights . . . . . . . . . . . 10,696,087 — — — 10,696,087

—Intangible assets . . . . . . . . . . 539,487 959,089 — — 1,498,576

Liabilities

Segment liabilities . . . . . . . . . . . 24,373,773 18,916,479 5,176,823 — 48,467,075

Convertible notes . . . . . . . . . . . 49,940,019

Bank loans . . . . . . . . . . . . . . . 3,864,000

Deferred taxation . . . . . . . . . . . 988,200

Provision for taxation . . . . . . . . . 3,284,600

106,543,894

B-41
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

31 Operating Segment information (cont’d)

A reconciliation of total EBITDA to total profit before income tax is as follows:

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$
(1)
Adjusted EBITDA for reportable segments . . . . . . . . . 33,202,303 20,390,690
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,919,852) (6,414,359)
Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (731,425) (667,526)
Gain/(Loss) on disposal/write-off of property, plant
and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,499 (9,305)
Other professional fees . . . . . . . . . . . . . . . . . . . . . . . . . (63,070) (4,264)
Restricted shares award . . . . . . . . . . . . . . . . . . . . . . . . . (1,211,511) —
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,659 197,448
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (888,257) (623,780)

Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . 22,560,346 12,868,904

Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,023,166) (2,002,142)

Profit after income tax . . . . . . . . . . . . . . . . . . . . . . . . . . 18,537,180 10,866,762

(1) Net profit before interest, tax, depreciation and amortisation (EBITDA).

Revenue from external customers based on Group’s entities’ place of business are as follows:

Unaudited
Six-months period ended
30 June

2020 2019

S$ S$

Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,375,597 15,279,881

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,954,750 30,282,031
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,487,560 9,486,155
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,050 187,080

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,827,957 55,235,147

B-42
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

31 Operating Segment information (cont’d)

The following is an analysis of the carrying amount of non-current non-financial assets,

analysed by the geographical areas in which the assets are located:

Unaudited Audited
30 June 2020 31 December 2019

S$ S$

Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,811,409 10,582,111

China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,549,696 104,795,047
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,858,598 2,572,423
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,569,260 6,115,573

Total non-current non-financial assets . . . . . . . . . . . . 153,788,963 124,065,154

32 Subsequent Events

(a) On 30 July 2020, the Company has subscribed for 32,037,444 new ordinary shares in the
capital of Nanofilm Advanced Materials Pte. Ltd., a wholly owned subsidiary of the
Group, at a consideration of S$32,037,444. Part of the consideration in the amount of
S$32,001,294 was set-off against the outstanding loans of S$32,001,294 owing by
Nanofilm Advanced Materials Pte. Ltd. to the Company.

(b) On 30 July 2020, the Company has allotted 6,104,000 new ordinary shares by virtue of
the exercise of options pursuant to the Employee Share Option Scheme 2017.

(c) With effect from 14 August 2020, the name of the Group’s wholly owned subsidiary,
Shanghai Nanofilm Zaichuang Automation Co., Ltd has changed to Shanghai Nanofilm
Trading Co., Ltd. The principal activities of the subsidiary are now trading and sales of
electronics and equipment. In September 2020, Nanofilm Vacuum Coating (Shanghai)
Co., Ltd contributed a total share capital of RMB1,000,000 in Shanghai Nanofilm Trading
Co., Ltd as a form of capital injection by way of cash. The purpose of the cash injection
was primarily to fund the working capital of Shanghai Nanofilm Trading Co., Ltd.

(d) In October 2020, the Company subscribed for an additional 6,200,000 new ordinary
shares in Wizture Holdings Pte. Ltd., a wholly owned subsidiary of the Group, at a total
consideration of S$6,200,000 as a form of capital injection by way of cash. The purpose
of the cash injection was to fund Wizture Holdings Pte. Ltd.’s investment in Wizture
Technologies (Yizheng) Co., Ltd.

(e) In October 2020, the Group’s wholly owned subsidiary, Wizture Holdings Pte. Ltd.
contributed a total share capital of RMB36,000,000 in Wizture Technologies (Yizheng)
Co., Ltd. as a form of capital injection by way of cash, representing 80% interest in
Wizture Technologies (Yizheng) Co., Ltd. The purpose of the cash injection was
primarily to fund the working capital and capital expenditures of Wizture Technologies
(Yizheng) Co., Ltd.

(f) On 19 October 2020, the Company issued 4,868,000 ordinary shares for consideration
of S$2,856,542 through the exercise of options granted under the existing employee
share option scheme.

B-43
This page has been intentionally left blank.
 APPENDIX C
INDEPENDENT AUDITOR’S ASSURANCE REPORT ON THE COMPILATION OF THE
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION FOR THE
FINANCIAL YEAR ENDED 31 DECEMBER 2019 AND THE SIX-MONTHS PERIOD
ENDED 30 JUNE 2020 OF NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

C-1
INDEPENDENT AUDITOR’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
AND THE SIX-MONTHS PERIOD ENDED 30 JUNE 2020 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

23 October 2020

The Board of Directors

Nanofilm Technologies International Limited
Block 28 Ayer Rajah Crescent
#02-03 Ayer Rajah Industrial Estate
Singapore 139959

Report on the Compilation of Unaudited Pro Forma Consolidated Financial Information

We have completed our assurance engagement to report on the compilation of the unaudited pro
forma consolidated financial information of Nanofilm Technologies International Limited (the
“Company”) and its subsidiaries (the “Group”) by management. The unaudited pro forma
consolidated financial information of the Group consists of the pro forma consolidated statements
of financial position as at 31 December 2019 and 30 June 2020, the pro forma consolidated
statements of profit or loss and other comprehensive income and the pro forma consolidated
statements of cash flows for the year ended 31 December 2019 and six-months period ended 30
June 2020 and related notes as set out on pages C-5 to C-10 of the Offer Document issued by the
Company. The applicable criteria on the basis of which management has compiled the unaudited
pro forma consolidated financial information are described in Note 3.

The unaudited pro forma consolidated financial information has been compiled by the management
to illustrate the impact of the Significant Events set out in Explanatory Note 2 on:

(i) the consolidated statements of financial position of the Group as at 31 December 2019 and 30
June 2020 as if the Significant Events had occurred on 31 December 2019 and 30 June 2020
respectively;

(ii) the consolidated statements of profit or loss and other comprehensive income of the Group for
the year/period ended 31 December 2019 and 30 June 2020 as if the Significant Events had
occurred on 1 January 2019; and

(iii) the consolidated statements of cash flows of the Group for the year/period ended
31 December 2019 and 30 June 2020 as if the Significant Events had occurred on 1 January
2019.

As part of this process, information about the Group’s financial position, profit or loss and cash
flows has been extracted by management from the Group’s audited consolidated financial
statements for the financial year ended 31 December 2019 and the unaudited condensed interim
consolidated financial statements for the six-months period ended 30 June 2020, on which the audit
and review reports have been published respectively.

Management’s Responsibility for the Unaudited Pro Forma Consolidated Financial

Information

Management is responsible for compiling the unaudited pro forma consolidated financial
information of the Group on the basis of the applicable criteria as described in Note 3.

C-2
INDEPENDENT AUDITOR’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
AND THE SIX-MONTHS PERIOD ENDED 30 JUNE 2020 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

Our Independence and Quality Control

We have complied with the independence and other ethical requirement of the Accounting and
Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants
and Accounting Entities, which is founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behavior.

The firm applies Singapore Standard on Quality Control 1 and accordingly maintains a
comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.

Auditor’s Responsibilities

Our responsibility is to express an opinion about whether the unaudited pro forma consolidated
financial information has been compiled, in all material respects, by management on the basis of
the applicable criteria as described in Note 3.

We conducted our engagement in accordance with Singapore Standard on Assurance

Engagements (“SSAE”) 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus (“SSAE 3420”), issued by the Institute of Singapore
Chartered Accountants. This standard requires that the auditors comply with ethical requirements
and plan and perform procedures to obtain reasonable assurance about whether management has
compiled, in all material respects, the unaudited pro forma consolidated financial information of the
Group on the basis of the applicable criteria as described in Note 3.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the unaudited pro forma
consolidated financial information, nor have we, in the course of this engagement, performed an
audit or review of the financial information used in compiling the unaudited pro forma consolidated
financial information.

The purpose of the unaudited pro forma consolidated financial information included in the Offer
Document is solely to illustrate the impact of significant events or transactions on unadjusted
financial information of the Group as if the event had occurred or the transaction had been
undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not
provide any assurance that the actual outcome of the events or transactions at the respective dates
would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma consolidated
financial information has been compiled, in all material respects, on the basis of the applicable
criteria involves performing procedures to assess whether the applicable criteria used by the
management in the compilation of the unaudited pro forma consolidated financial information
provide a reasonable basis for presenting the significant effects directly attributable to the events
or transactions, and to obtain sufficient appropriate evidence about whether:

(i) The related pro forma adjustments give appropriate effect to those criteria; and

(ii) The unaudited pro forma consolidated financial information of the Group reflects the proper
application of those adjustments to the unadjusted financial information.

C-3
INDEPENDENT AUDITOR’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
AND THE SIX-MONTHS PERIOD ENDED 30 JUNE 2020 OF
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED AND ITS SUBSIDIARIES

Auditor’s Responsibilities (cont’d)

The procedures selected depend on the auditor’s judgment, having regard to his understanding of
the nature of the Group, the event or transaction in respect of which the unaudited pro forma
consolidated financial information has been compiled, and other relevant engagement
circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma
consolidated financial information of the Group.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Opinion

In our opinion:

(a) The unaudited pro forma consolidated financial information has been compiled:

(i) in a manner consistent with the accounting policies adopted by the Group in its latest
audited financial statements, which are in accordance with Singapore Financial
Reporting Standards (International);

(ii) on the basis of the applicable criteria stated in Note 3 of the unaudited pro forma
consolidated financial information of the Group; and

(b) each material adjustment made to the information used in the preparation of the unaudited pro
forma consolidated financial information is appropriate for the purpose of preparing such
unaudited financial information.

Restriction of Use and Distribution

This report is made solely to you as a body and for the inclusion in the prospectus to be issued in
relation to the proposed offering of shares of the Company in connection with the Company’s listing
on the Main Board of the Singapore Exchange Securities Trading Limited.

Moore Stephens LLP

Public Accountants and
Chartered Accountants
Singapore

Chan Rouh Ting

Partner

C-4
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

Unaudited
Audited pro forma
consolidated consolidated
statement Unaudited pro forma adjustments statement
of financial of financial
position Event 1 Event 2 Event 3 Event 4 position

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

ASSETS Note 2(a) Note 2(b) Note 2(c) Note 2(d)

Non-current assets
Property, plant and equipment . . . . . . . 107,276,482 — — — — 107,276,482
Land use rights . . . . . . . . . . . . . . . 12,767,812 — — — — 12,767,812
Intangible assets . . . . . . . . . . . . . . . 4,020,860 — — — — 4,020,860
Other receivables . . . . . . . . . . . . . . 179,676 — — — — 179,676

124,244,830 — — — — 124,244,830

Current assets
Inventories . . . . . . . . . . . . . . . . . . 14,733,738 — — — — 14,733,738
Trade and other receivables, and other
current assets . . . . . . . . . . . . . . . 58,210,363 — — — — 58,210,363
Contract assets . . . . . . . . . . . . . . . 11,376,429 — — — — 11,376,429
Cash and bank balances . . . . . . . . . . 25,404,651 — 6,462,441 (9,631,195) — 22,235,897

109,725,181 — 6,462,441 (9,631,195) — 106,556,427

Total assets . . . . . . . . . . . . . . . . . 233,970,011 — 6,462,441 (9,631,195) — 230,801,257

EQUITY AND LIABILITIES

Equity attributable to equity holders of
the Company
Share capital . . . . . . . . . . . . . . . . . 9,695,920 3,238,040 6,462,441 — 50,000,000 69,396,401
Translation reserve . . . . . . . . . . . . . (9,019,698) — — — — (9,019,698)
Statutory reserve . . . . . . . . . . . . . . 5,433,781 — — — — 5,433,781
Other reserves . . . . . . . . . . . . . . . . 702,361 — — — — 702,361
Accumulated profits . . . . . . . . . . . . . 113,701,312 (3,238,040) — (9,631,195) 1,206,867 102,038,944

120,513,676 — 6,462,441 (9,631,195) 51,206,867 168,551,789

Non-controlling interests . . . . . . . . . . 6,912,441 — — — — 6,912,441

Total equity . . . . . . . . . . . . . . . . . 127,426,117 — 6,462,441 (9,631,195) 51,206,867 175,464,230

Non-current liabilities
Lease liabilities . . . . . . . . . . . . . . . 346,269 — — — — 346,269
Convertible notes . . . . . . . . . . . . . . 49,940,019 — — — (49,940,019) —
Deferred taxation . . . . . . . . . . . . . . 988,200 — — — — 988,200

51,274,488 — — — (49,940,019) 1,334,469

Current liabilities
Trade and other payables . . . . . . . . . . 37,013,648 — — — (1,266,848) 35,746,800
Contract liabilities . . . . . . . . . . . . . . 6,368,253 — — — — 6,368,253
Bank loans . . . . . . . . . . . . . . . . . . 3,864,000 — — — — 3,864,000
Lease liabilities . . . . . . . . . . . . . . . 4,284,160 — — — — 4,284,160
Provisions . . . . . . . . . . . . . . . . . . 454,745 — — — — 454,745
Provision for taxation . . . . . . . . . . . . 3,284,600 — — — — 3,284,600

55,269,406 — — — (1,266,848) 54,002,558

Total liabilities . . . . . . . . . . . . . . . 106,543,894 — — — (51,206,867) 55,337,027

Total equity and liabilities . . . . . . . . . 233,970,011 — 6,462,441 (9,631,195) — 230,801,257

C-5
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

Unaudited
Unaudited pro forma
consolidated consolidated
statement Unaudited pro forma adjustments statement
of financial of financial
position Event 1 Event 2 Event 3 Event 4 position

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

ASSETS Note 2(a) Note 2(b) Note 2(c) Note 2(d)

Non-current assets
Property, plant and equipment . . . . . . . 136,693,144 — — — — 136,693,144
Land use rights . . . . . . . . . . . . . . . 12,906,712 — — — — 12,906,712
Intangible assets . . . . . . . . . . . . . . . 4,189,107 — — — — 4,189,107
Other receivables . . . . . . . . . . . . . . 173,625 — — — — 173,625

153,962,588 — — — — 153,962,588

Current assets
Inventories . . . . . . . . . . . . . . . . . . 15,140,511 — — — — 15,140,511
Trade and other receivables, and other
current assets . . . . . . . . . . . . . . . 53,193,683 — — — — 53,193,683
Contract assets . . . . . . . . . . . . . . . 13,940,691 — — — — 13,940,691
Cash and bank balances . . . . . . . . . . 41,198,083 — 6,440,729 (9,631,195) 1,000,000 39,007,617

123,472,968 — 6,440,729 (9,631,195) 1,000,000 121,282,502

Total assets . . . . . . . . . . . . . . . . . 277,435,556 — 6,440,729 (9,631,195) 1,000,000 275,245,090

EQUITY AND LIABILITIES

Equity attributable to equity holders of
the Company
Share capital . . . . . . . . . . . . . . . . . 9,717,778 3,238,040 6,440,729 — 50,000,000 69,396,547
Translation reserve . . . . . . . . . . . . . (6,224,953) — — — — (6,224,953)
Statutory reserve . . . . . . . . . . . . . . 5,433,781 — — — — 5,433,781
Other reserves . . . . . . . . . . . . . . . . 1,790,141 (1,211,511) — — — 578,630
Accumulated profits . . . . . . . . . . . . . 122,535,614 (2,026,529) — — 1,724,647 122,233,732

133,252,361 — 6,440,729 — 51,724,647 191,417,737

Non-controlling interests . . . . . . . . . . 7,234,830 — — — — 7,234,830

Total equity . . . . . . . . . . . . . . . . . 140,487,191 — 6,440,729 — 51,724,647 198,652,567

Non-current liabilities
Bank loans . . . . . . . . . . . . . . . . . . 11,774,183 — — — — 11,774,183
Lease liabilities . . . . . . . . . . . . . . . 443,898 — — — — 443,898
Deferred taxation . . . . . . . . . . . . . . 988,200 — — — — 988,200

13,206,281 — — — — 13,206,281

Current liabilities
Trade and other payables . . . . . . . . . . 42,336,879 — — (9,631,195) (764,116) 31,941,568
Contract liabilities . . . . . . . . . . . . . . 7,299,670 — — — — 7,299,670
Bank loans . . . . . . . . . . . . . . . . . . 14,527,301 — — — — 14,527,301
Lease liabilities . . . . . . . . . . . . . . . 4,555,479 — — — — 4,555,479
Convertible notes . . . . . . . . . . . . . . 49,960,531 — — — (49,960,531) —
Provisions . . . . . . . . . . . . . . . . . . 280,570 — — — — 280,570
Provision for taxation . . . . . . . . . . . . 4,781,654 — — — — 4,781,654

123,742,084 — — (9,631,195) (50,724,647) 63,386,242

Total liabilities . . . . . . . . . . . . . . . 136,948,365 — — (9,631,195) (50,724,647) 76,592,523

Total equity and liabilities . . . . . . . . . 277,435,556 — 6,440,729 (9,631,195) 1,000,000 275,245,090

C-6
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF PROFIT AND LOSS

AND OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

Unaudited pro
Audited forma
consolidated consolidated
statement of Unaudited pro statement of
profit and loss forma profit and loss
and other adjustments and other
comprehensive comprehensive
income Event 4 income

S$ S$ S$

Note 2(d)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,908,469 — 142,908,469
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65,244,940) — (65,244,940)

Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,663,529 — 77,663,529

Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . 1,906,881 — 1,906,881
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507,050 — 507,050
Expenses:
Selling and distribution. . . . . . . . . . . . . . . . . . . . . . . . . . (16,770,511) — (16,770,511)
Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,125,468) 151,738 (20,973,730)
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,376,268) 1,055,129 (321,139)
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (871,759) — (871,759)
Impairment loss allowance on trade receivables . . . . . . . . . . (37,091) — (37,091)
Share of loss of associated company . . . . . . . . . . . . . . . . . (1,054) — (1,054)

Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . 39,895,309 1,206,867 41,102,176

Income tax expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . (5,354,550) — (5,354,550)

Profit after income tax . . . . . . . . . . . . . . . . . . . . . . . . . 34,540,759 1,206,867 35,747,626

Other comprehensive loss, net of tax

Items that may be reclassified subsequently to profit or loss
Exchange difference arising from translation of foreign
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,900,163) — (3,900,163)

Total comprehensive income for the year . . . . . . . . . . . . 30,640,596 1,206,867 31,847,463

Profit/(loss) attributable to:

Equity holders of the Company. . . . . . . . . . . . . . . . . . . . . 35,755,229 1,206,867 36,962,096
Non-controlling interests. . . . . . . . . . . . . . . . . . . . . . . . . (1,214,470) — (1,214,470)

34,540,759 1,206,867 35,747,626

Total comprehensive income/(loss) attributable to:

Equity holders of the Company. . . . . . . . . . . . . . . . . . . . . 32,022,289 1,206,867 33,229,156
Non-controlling interests. . . . . . . . . . . . . . . . . . . . . . . . . (1,381,693) — (1,381,693)

30,640,596 1,206,867 31,847,463

Earnings per share attributable to equity holders of the

Company (cents)
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . 6.99 6.36
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . 6.52 6.36

C-7
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF PROFIT AND LOSS

AND OTHER COMPREHENSIVE INCOME
FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

Unaudited
Unaudited pro forma
consolidated consolidated
statement of statement of
profit and loss Unaudited pro forma profit and loss
and other adjustments and other
comprehensive comprehensive
income Event 1 Event 4 income

S$ S$ S$ S$

Note 2(a) Note 2(d)

Revenue . . . . . . . . . . . . . . . . . . . . . . . 77,827,957 — — 77,827,957
Cost of sales. . . . . . . . . . . . . . . . . . . . (36,914,733) — — (36,914,733)
Gross profit. . . . . . . . . . ........... 40,913,224 — — 40,913,224
Other operating income ........... 2,610,819 — — 2,610,819
Finance income . . . . . . ........... 166,659 — — 166,659
Expenses:
Selling and distribution . ........... (8,990,972) — — (8,990,972)
Administrative . . . . . . . . ........... (11,251,127) 1,211,511 — (10,039,616)
Finance. . . . . . . . . . . . . ........... (888,257) — 517,780 (370,477)
Profit before income tax. . . . . . . . . . 22,560,346 1,211,511 517,780 24,289,637
Income tax expenses . . . . . . . . . . . . . (4,023,166) — — (4,023,166)
Profit after income tax . . . . . . . . . . . 18,537,180 1,211,511 517,780 20,266,471
Other comprehensive income,
net of tax
Items that may be reclassified
subsequently to profit or loss
Exchange difference arising from
translation of foreign operations . . . 2,875,678 — — 2,875,678
Total comprehensive income for
the year . . . . . . . . . . . . . . . . . . . . . 21,412,858 1,211,511 517,780 23,142,149
Profit attributable to:
Equity holders of the Company. . . . . . 18,465,497 1,211,511 517,780 20,194,788
Non-controlling interests. . . . . . . . . . . 71,683 — — 71,683
18,537,180 1,211,511 517,780 20,266,471
Total comprehensive income
attributable to:
Equity holders of the Company. . . . . . 21,260,242 1,211,511 517,780 22,989,533
Non-controlling interests. . . . . . . . . . . 152,616 — — 152,616
21,412,858 1,211,511 517,780 23,142,149
Earnings per share attributable to
equity holders of the Company
(cents)
Basic earnings per share . . . . . . . . . . 3.59 3.48
Diluted earnings per share . . . . . . . . . 3.34 3.48

C-8
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2019
Unaudited
Audited pro forma
consolidated Unaudited pro forma adjustments consolidated
statement of statement of
cash flows Event 2 Event 3 Event 4 cash flows

S$ S$ S$ S$ S$

Note 2(b) Note 2(c) Note 2(d)

Cash Flows from Operating Activities
Profit before income tax . . . . . . . . . . . . . . . 39,895,309 — — 1,206,867 41,102,176
Adjustments for:
Depreciation of property, plant and equipment. . . 13,452,782 — — — 13,452,782
Amortisation of land use rights . . . . . . . . . . . 239,077 — — — 239,077
Amortisation of intangible assets . . . . . . . . . . 1,126,387 — — — 1,126,387
Finance expenses . . . . . . . . . . . . . . . . . . 1,376,268 — — (1,055,129) 321,139
Finance income . . . . . . . . . . . . . . . . . . . (507,050) — — — (507,050)
Provision for warranty . . . . . . . . . . . . . . . . 579,177 — — — 579,177
Reversal of provision for warranty . . . . . . . . . (472,113) — — — (472,113)
Fair value loss on derivatives . . . . . . . . . . . . 151,738 — — (151,738) —
Gain on disposal of an associated company . . . . (74,725) — — — (74,725)
Loss and/or write off on disposal of property, plant
and equipment . . . . . . . . . . . . . . . . . . 129,135 — — — 129,135
Impairment loss on goodwill . . . . . . . . . . . . 871,759 — — — 871,759
Expense recognised in respect of share-based
payments . . . . . . . . . . . . . . . . . . . . . 63,842 — — — 63,842
Exchange differences – unrealised . . . . . . . . . 385,517 — — — 385,517
Share of loss of an associate company . . . . . . 1,054 — — — 1,054

Operating cash flow before working capital

changes . . . . . . . . . . . . . . . . . . . . . . 57,218,157 — — — 57,218,157
Inventories . . . . . . . . . . . . . . . . . . . . . . 4,550,472 — — — 4,550,472
Trade, other receivables and other current assets
(include contract assets) . . . . . . . . . . . . . (17,112,180) — — — (17,112,180)
Trade, other payables and provisions (include
contract liabilities) . . . . . . . . . . . . . . . . . 15,234,820 — — — 15,234,820

Cash generated from operations . . . . . . . . . 59,891,269 — — — 59,891,269

Interest paid . . . . . . . . . . . . . . . . . . . . . (836,051) — — — (836,051)
Interest received. . . . . . . . . . . . . . . . . . . 513,185 — — — 513,185
Income tax paid . . . . . . . . . . . . . . . . . . . (7,082,231) — — — (7,082,231)

Net cash generated from operating activities . . 52,486,172 — — — 52,486,172

Cash Flows from Investing Activities

Proceeds from disposal of associated company . . 2,613,556 — — — 2,613,556
Purchase of property, plant and equipment . . . . (46,335,037) — — — (46,335,037)
Proceeds from disposal of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . 47,289 — — — 47,289
Additions to intangible assets . . . . . . . . . . . . (1,305,993) — — — (1,305,993)
Additions for land use rights . . . . . . . . . . . . (311,537) — — — (311,537)

Net cash used in investing activities . . . . . . (45,291,722) — — — (45,291,722)

Cash Flows from Financing Activities

Proceeds from exercise of employee share
options . . . . . . . . . . . . . . . . . . . . . . . — 6,462,441 — — 6,462,441
Proceeds from bank loans . . . . . . . . . . . . . 21,825,000 — — — 21,825,000
Repayment of bank loans . . . . . . . . . . . . . . (17,875,000) — — — (17,875,000)
Principal payment of lease liabilities . . . . . . . . (831,551) — — — (831,551)
Increase in fixed deposits pledged with banks . . . (812,676) — — — (812,676)
Dividends paid . . . . . . . . . . . . . . . . . . . . (9,532,539) — (9,631,195) — (19,163,734)

Net cash (used in)/generated from financing

activities . . . . . . . . . . . . . . . . . . . . . (7,226,766) 6,462,441 (9,631,195) — (10,395,520)

Net (decrease)/increase in cash and cash

equivalents . . . . . . . . . . . . . . . . . . . . (32,316) 6,462,441 (9,631,195) — (3,201,070)
Cash and cash equivalents at the beginning of
the year . . . . . . . . . . . . . . . . . . . . . . 25,088,357 — — — 25,088,357
Effects of exchange rate changes on cash and
cash equivalents held in foreign currencies . . . (464,066) — — — (464,066)

Cash and cash equivalents at the end of the

year . . . . . . . . . . . . . . . . . . . . . . . . 24,591,975 6,462,441 (9,631,195) — 21,423,221

C-9
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTHS PERIOD FROM 1 JANUARY 2020 TO 30 JUNE 2020

Unaudited
pro forma
Unaudited consolidated
consolidated Unaudited pro forma adjustments statement
statement of of cash
cash flows Event 1 Event 2 Event 3 Event 4 flows

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

Note 2(a) Note 2(b) Note 2(c) Note 2(d)

Cash Flows from Operating Activities
Profit before income tax . . . . . . . . . . 22,560,346 1,211,511 — — 517,780 24,289,637
Adjustments for:
Depreciation of property, plant and
equipment . . . . . . . . . . . . . . . . 7,919,852 — — — — 7,919,852
Amortisation of land use rights . . . . . . 138,617 — — — — 138,617
Amortisation of intangible assets . . . . . 592,808 — — — — 592,808
Finance expenses . . . . . . . . . . . . . 888,257 — — — (517,780) 370,477
Finance income . . . . . . . . . . . . . . (166,659) — — — — (166,659)
Provision for warranty . . . . . . . . . . . 190,000 — — — — 190,000
Reversal of provision for warranty. . . . . (265,062) — — — — (265,062)
Gain on disposal of property, plant and
equipment . . . . . . . . . . . . . . . . (5,499) — — — — (5,499)
Expense recognised in respect of share-
based payments/Restricted shares
award . . . . . . . . . . . . . . . . . . . 1,257,699 (1,211,511) — — — 46,188
Exchange differences – unrealised . . . . (877,318) — — — — (877,318)

Operating cash flow before working

capital changes . . . . . . . . . . . . . 32,233,041 — — — — 32,233,041
Inventories . . . . . . . . . . . . . . . . . 864,077 — — — — 864,077
Trade, other receivables and other
current assets (include contract
assets) . . . . . . . . . . . . . . . . . . 4,119,060 — — — — 4,119,060
Trade, other payables and provisions
(include contract liabilities) . . . . . . . (3,910,277) — — — — (3,910,277)

Cash generated from operations . . . . 33,305,901 — — — — 33,305,901

Interest paid . . . . . . . . . . . . . . . . (1,341,296) — — — 1,000,000 (341,296)
Interest received . . . . . . . . . . . . . . 166,659 — — — — 166,659
Income tax paid . . . . . . . . . . . . . . (2,556,719) — — — — (2,556,719)

Net cash generated from operating

activities . . . . . . . . . . . . . . . . . 29,574,545 — — — 1,000,000 30,574,545

Cash Flows from Investing Activities

Purchase of property, plant and
equipment . . . . . . . . . . . . . . . . (35,704,305) — — — — (35,704,305)
Proceeds from disposal of property, plant
and equipment . . . . . . . . . . . . . . 94,366 — — — — 94,366
Additions to intangible assets . . . . . . . (588,064) — — — — (588,064)

Net cash used in investing activities . . (36,198,003) — — — — (36,198,003)

Cash Flows from Financing Activities

Proceeds from exercise of employee
share options . . . . . . . . . . . . . . 21,712 — 6,440,729 — — 6,462,441
Proceeds from bank loans . . . . . . . . . 26,497,867 — — — — 26,497,867
Repayment of bank loans . . . . . . . . . (4,050,972) — — — — (4,050,972)
Principal payment of lease liabilities . . . (615,251) — — — — (615,251)
Increase in fixed deposits pledged with
banks . . . . . . . . . . . . . . . . . . . (17,247) — — — — (17,247)
Dividends paid . . . . . . . . . . . . . . . — — — (9,631,195) — (9,631,195)

Net cash generated from/(used in)

financing activities . . . . . . . . . . . 21,836,109 — 6,440,729 (9,631,195) — 18,645,643

Net increase/(decrease) in cash and

cash equivalents . . . . . . . . . . . . 15,212,651 — 6,440,729 (9,631,195) 1,000,000 13,022,185
Cash and cash equivalents at the
beginning of the period . . . . . . . . 24,591,975 — — — — 24,591,975
Effects of exchange rate changes on
cash and cash equivalents held in
foreign currencies . . . . . . . . . . . . 563,531 — — — — 563,531

Cash and cash equivalents at the end

of the period . . . . . . . . . . . . . . 40,368,157 — 6,440,729 (9,631,195) 1,000,000 38,177,691

C-10
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

FOR THE YEAR ENDED 31 DECEMBER 2019 AND SIX-MONTHS PERIOD ENDED 30 JUNE 2020

1 General Information

Nanofilm Technologies International Limited (the “Company”) is a private limited company

incorporated and domiciled in Singapore. The Company’s registered address is Block 28 Ayer
Rajah Crescent, #02-03, Ayer Rajah Industrial Estate, Singapore 139959 and its principal
place of business is Block 28 Ayer Rajah Crescent, #02-01 – #02-06, Ayer Rajah Industrial
Estate, Singapore 139959. The Company converted to a public company limited by shares on
15 October 2020. Following the conversion, the Company is now known as Nanofilm
Technologies International Limited (formerly known as Nanofilm Technologies International
Pte Ltd).

The principal activities of the Company are that of the design, research, development,
integration, manufacturing and marketing of advanced material science and Nano technology
in industrial machinery, coating services/surface solutions and precision components. The
principal activities of the subsidiaries are disclosed in Note 4 to the audited consolidated
financial statements for the financial year ended 31 December 2019, as set out in pages A-42
to A-43 of the Offer Document.

The ultimate controlling shareholder of the Company is Dr. Shi Xu.

2 Significant Events

Save for the following Significant Events discussed below, the directors, as at the date of this
report, are not aware of any other Significant Events subsequent to 30 June 2020.

(a) The Grant of Award Shares under the Nanofilm Pre-IPO Restricted Share Plan 2020

On 8 April 2020 the Company issued 5,254,000 new ordinary shares, at no consideration
pursuant to the release of Award Shares granted under the Restricted Share Plan. The
new shares ranked pari passu in all aspects with the existing ordinary shares. The Award
Share had a grant date fair value of S$0.6163 and the fair value of the Restricted Share
Plan amounted to S$3,238,040.

For the financial period ended 30 June 2020, the Group recognised an expense in
respect of the Restricted Shares award amounted to S$1,211,511, with a corresponding
adjustment to the restricted shares reserve over the vesting period.

(b) The Exercise of Options Granted under the Nanofilm Pre-IPO Employee Share Option
Scheme 2017

On 8 April 2020 and 30 July 2020 the Company issued 37,000 and 6,104,000 ordinary
shares for consideration of S$21,712 and S$3,584,187 respectively through the exercise
of options granted under the existing employee share option scheme. On 19 October
2020, the Company issued 4,868,000 ordinary shares for consideration of S$2,856,542
through the exercise of options granted under the existing employee share options
scheme. The new shares ranked pari passu in all aspects with the existing ordinary
shares.

C-11
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

FOR THE YEAR ENDED 31 DECEMBER 2019 AND SIX-MONTHS PERIOD ENDED 30 JUNE 2020

2 Significant Events (cont’d)

(c) The Declaration of Interim Dividends of the Company

On 2 June 2020, the Company declared interim dividends of S$9,631,195 (equivalent to

S$0.018646 per share) to be paid out of the retained earnings of the Company. The
dividends were paid on 2 July 2020.

(d) The Conversion of the Convertible Notes into Shares

Pursuant to the terms of the convertible notes agreements, the notes, can be converted
into shares of the Company based on the terms of the convertible notes agreement at the
holder’s option at a conversion price of S$0.93230903 for each conversion shares.

As at 31 December 2019 and 30 June 2020, the Group has convertible notes interest
accrued for the year/period of S$1,000,000 and S$497,268 and derivatives payable of
S$266,848 and S$266,848, respectively. The outstanding convertible notes interests of
S$1,000,000 as at 31 December 2019 was paid in January 2020.

Under the terms of the convertible notes agreements, the mandatory conversion notice
will be served on the date of registration of the final prospectus with the Monetary
Authority of Singapore. The convertible notes will be converted into shares of the
Company prior to the Company’s listing on Singapore Stock Exchange.

3 Basis of Preparation of the Unaudited Pro Forma Consolidated Financial Information of

the Group

3.1 The unaudited pro forma consolidated financial information of the Group for the year ended 31
December 2019 and six-months period ended 30 June 2020 have been compiled based on:

(a) The audited consolidated financial statements of the Group for the financial year ended
31 December 2019, which were prepared by management in accordance with the
Singapore Financial Reporting Standards (International), and audited by Moore
Stephens LLP, Singapore in accordance with Singapore Standards on Auditing. The
auditor’s report on these consolidated financial statements was not modified; and

(b) The unaudited interim condensed consolidated financial statements of the Group for the
six-months period ended 30 June 2020, which were prepared by management in
accordance with Singapore Financial Reporting Standards (International) 1-34, Interim
Financial Reporting (“SFRS(I) 1-34”) and reviewed by Moore Stephens LLP, Singapore
in accordance with Singapore Standard on Review Engagements 2410, “Review of
Interim Financial Information Performed by the Independent Auditor of the Entity”. The
auditor’s review report on these condensed consolidated financial statements was not
modified.

C-12
NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED
AND ITS SUBSIDIARIES

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

FOR THE YEAR ENDED 31 DECEMBER 2019 AND SIX-MONTHS PERIOD ENDED 30 JUNE 2020

3 Basis of Preparation of the Unaudited Pro Forma Consolidated Financial Information of

the Group (cont’d)

3.2 The unaudited pro forma consolidated financial information of the Group has been prepared
using the same accounting policies and methods of computation in the preparation of the
audited consolidated financial statements for the year ended 31 December 2019.

The unaudited pro forma consolidated financial information of the Group for the year/period
ended 31 December 2019 and 30 June 2020 are prepared for illustrative purposes only. These
are prepared based on certain assumptions and after making certain adjustments to show
what:

(a) the unaudited pro forma consolidated financial position of the Group as at 31 December
2019 and 30 June 2020 would have been if the Significant Events had occurred on
31 December 2019 and 30 June 2020 respectively;

(b) the unaudited pro forma consolidated statement of profit or loss and other
comprehensive income of the Group for the financial year/period ended 31 December
2019 and 30 June 2020 would have been if the Significant Events had occurred on
1 January 2019; and

(c) the unaudited pro forma consolidated statement of cash flows of the Group for the
year/period ended 31 December 2019 and 30 June 2020 would have been if the
Significant Events had occurred on 1 January 2019.

3.3 Earnings per share for the relevant periods have been calculated based on the profit for the
year/period attributable to equity holders of the Company and Pre-Offering share capital of up
to 581,131,010 shares which is arrived at after the Significant Events, as disclosed in Note 2
above.

The diluted earnings per share is the same as the basic earnings per share as there were no
further potential dilutive shares for the respective periods.

3.4 The unaudited pro forma consolidated financial information of the Group, because of its
nature, is not necessarily indicative of the results of the operations, cash flows and financial
position that would have been attained had the Significant Events actually occurred earlier.
Save as disclosed in Note 2, the management, for the purpose of preparing this set of
unaudited pro forma consolidated financial information of the Group, has not considered the
effects of other events.

C-13
This page has been intentionally left blank.
 APPENDIX D
INDEPENDENT MARKET RESEARCH (IMR) ON
THE GLOBAL ADVANCED MATERIALS INDUSTRY—EXECUTIVE SUMMARY

Independent Market Research (IMR) on the Global

Advanced Materials industry ± Executive Summary

August 2020

© 2020

IMR Report 1
© Frost & Sullivan 2020

D-1
Date: 23
 October 2020

The Board of Directors

Nanofilm Technologies International Limited
28 Ayer Rajah Crescent
#02-02/03
Singapore 139959

Singapore

Dear Sirs,
Executive Summary of the Independent Study on the Global Advanced Materials industry for
Nanofilm Technologies International Limited ³NTI´RU ³1DQRILOP´, or WKH³&RPSDQ\´
We, Frost & Sullivan (Singapore) Pte Ltd. ³Frost & Sullivan´ KDYH SUHSDUHG WKLV ([HFXWLYH
Summary of the Study on the Global Advanced Materials industry ³the Report´IRULQFOXVLRQLQ17,¶V
Preliminary Prospectus and Final Prospectus HDFKD³Prospectus´ issued by NTI in relation to the
listing and quotation of the entire enlarged issued share capital of NTI on the Main Board of the
Singapore Exchange Securities Trading Limited.
We are aware that this Report will be included in each Prospectus and we further confirm that we are
aware of our responsibilities under the Securities and Futures Act, Chapter 289 of Singapore (the
³SFA´.
Frost & Sullivan has prepared this Report in an independent and objective manner and has taken
adequate care to ensure the accuracy and completeness of this Report. We believe that this Report
presents a true and fair view of the industry within the limitations of, among others, secondary
statistics and primary research, and does not purport to be exhaustive. Our research has been
FRQGXFWHGZLWKDQ³RYHUDOOLQGXVWU\´SHUVSHFWLYHDQGPD\QRWQHFHVVDULO\UHIOHFWWKHSHUIRUPDQFHRI
individual companies in the industry. Save as provided under applicable law, Frost & Sullivan shall
not be held responsible for the decisions and/or actions of the readers of this Report. This Report
should also not be considered as a recommendation to buy or not to buy the shares of any company
or companies as mentioned in this Report or otherwise.

For and on behalf of Frost & Sullivan (Singapore) Pte Ltd

___________________
Subhranshu Sekhar Das
Director

IMR Report 2
© Frost & Sullivan 2020

D-2
 1 EXECUTIVE SUMMARY
1.1 BRIEF INTRODUCTION ABOUT THE ADVANCED M ATERIALS AND NANOPRODUCTS INDUSTRY
ADVANCED M ATERIALS
Advanced Materials can be defined as materials with engineered properties created through
development of specialized processing and synthesis of technology. Advanced Materials owing
to their technological advantage have unique or enhanced properties relative to conventional
materials. Advanced Materials are essential to numerous innovations that offer clear benefits to
customers across various applications. One such application area of advanced materials is
surface solutions (high tech surface coatings).
Advanced Materials are designed using carbon, metals, nitrides & oxides to provide benefits,
such as high hardness, corrosion resistance, strong adhesion, low frictional coefficient,
electrochemistry properties, and even aesthetic improvements. These advanced materials are
deposited on end product surfaces using different coating technologies to provide superior
wear resistance and chemical barrier properties for metal, ceramic, glass, plastic, rubber &
other low melting point substrates. Advanced materials are often designed according to
customer requirements (to provide key attributes to match their specifications). Advanced
Materials cover both functional and decorative surface solutions.
These materials provide functional properties to tools and components across several verticals,
some of which are highly critical components in consumer electronics products, office and
home appliances as well as car engines. These include special surface properties relating to
durability, reduction in friction, corrosion resistance, high wear & tear resistance and electro-
chemical properties.
Advanced Materials can also be applied to achieve decorative improvements, thereby enabling
product manufacturers to enhance the aesthetics of their products, with respect to appearance,
colour, texture and/or tactile quality of finished product.
Surface solutions involve the deposition of a thin film of these advanced materials on key end-
product components using methods such as advanced Chemical Vapour Deposition (CVD),
Physical Vapour Deposition (PVD) processes, Filtered Cathodic Vacuum Arc (FCVA)
technology and FCVA-hybrid vacuum coating technologies. There are also several other
variants of CVD and PVD processes, some of which are patented by specific companies.
Different end use applications utilize different types of advanced materials for surface solutions
to achieve the desired specifications. Key advanced materials for surface solutions include
diamond like carbon (DLC), tetrahedral amorphous carbon (ta-C), amorphous diamond coating
(TAC-ON), thick amorphous diamond coating (iTAC), Nano-crystalline chromium coating (MiCC)
and others. Advanced Materials TAC-21L7$&DQG 0,&& DUH1DQRILOP¶VSDWHQWHGPDWHULDOV
TAC-ON is among the hardest materials in the world known to mankind; that includes diamond
and graphene (diamonds remain the most scratch-resistant material yet known). TAC-ON
which is an amorphous diamond coating is an excellent choice for the coating of components in
electronics, communications, semiconductors, data storage, optical solutions, automobile,
aerospace, and medical applications.
NANOPRODUCTS
Nanofabrication is one of the fastest growing areas of science which is used for the fabrication
of nano-scaled structures and materials for a product, which is called a nano-structured
products or simply nanoproducts. Nanoproducts are widely used in semiconductors and
microelectronics applications for ICs, memory chips and LEDs; in new energy applications such
as fuel & solar cells; in biomedical as well as in optical applications for lenses, sensory
components and sensors.
Nanoproducts can be stronger, lighter, more durable and electrically conductive as compared
to products without nanoscale manufacturing such as those produced by microfabrication. With
the creation of nanomaterials and nanostructures, the final products can bring many different
advantages to consumers through their end applications. Additional functionalities present in
nanoproducts are water-repellence, anti-reflectivity, self-cleansing, ultraviolet- or infrared
resistance and scratch-resistance. Some of the conventional systems used are molecular self-

IMR Report 3
© Frost & Sullivan 2020

D-3
 assembly, beam-pen lithography, etching, atomic layer deposition (ALD), CVD, PVD, high-
power impulse magnetron sputtering (HiPIMS), ion implantation and nanoimprint.
The focus of nanoproducts in this Report comprises nanofabrication of products in optical
applications including optical lenses and sensory components. Nanofabrication offers solutions
for new designs of nano-scale material structures resulting in better optical properties in optical
components and devices.

1.2 KEY END USE SEGMENTS FOR ADVANCED MATERIALS & NANOPRODUCTS
ADVANCED M ATERIALS
Some of the key sectors for Advanced Materials usage are described below:
SMARTPHONES
Communication devices such as smartphones are used by consumers on a daily basis; these
devices undergo high degree of wear & tear, scratches and discolouration especially on areas
which are frequently in contact with hands. These areas include the main enclosure of
smartphones, buttons, trims and meshes which require surface solutions with superior
functional properties ± such as improved durability, wear & tear and scratch resistance along
with aesthetics. This is where the usage of advanced materials for surface solutions becomes
very important.
As 5G is becoming the new global wireless standard after 4G, smartphones are adapting to a
new design language (to support millimeter wave technology (mmWave)) which incorporates
materials such as glass, ceramics and plastics. Ceramics are not cost effective as compared to
materials such as stainless steel & aluminium, whereas plastics do not provide a premium look;
hence glass is expected to be largely used in the main casing of smartphones. In order to
increase the structural strength of the device and thereby its durability, manufacturers are using
materials such as stainless steel and aluminium for the mainframe (housing) of the phone.
Globally, consumers are looking for premium smartphones models at affordable prices, when
they change or upgrade their existing smartphone. This is also reflected in the increasing
1
average selling price (ASP) of smartphones globally. The global ASP for smartphones
increased from USD 282 in 2016 to USD 302 in 2019 and is expected to reach USD 317 in
year 2021. Changes in design language coupled with premiumization are expected to increase
the requirement of advanced materials for surface solutions in smartphones.
COMPUTERS
Devices such as desktops, laptops and tablets, are commonly used by consumers in day to day
life. Brand logos on these devices can help consumers differentiate between products, grab
attention, make a strong first impression, helps manufacturers in developing brand image, as
well as builds trust and loyalty. As consumers expectations of product manufacturers are
increasing, both functional and aesthetic appeal of the device becomes crucial. Many electronic
devices such as laptops have hinges and joints which undergo frequent movements and
rotation that result in wear & tear over the usage course of device. For devices which have
detachable parts, frequent detaching and re-attaching of these parts may cause wear & tear
resulting in connectivity issues. In order to prevent degradation, advanced materials are used to
coat the logos, hinges and joints; which provide high wear & tear resistance, corrosion
resistance and consistency in colour across device range.

1
Source: Statista, Global average selling price (ASP) of smartphones from 2016 to 2021, found in
(https://www.statista.com/statistics/788557/global-average-selling-price-smartphones/) as extracted on 18 August 2020.

Statista has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information cited
and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of the
SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.

IMR Report 4
© Frost & Sullivan 2020

D-4
 WEARABLES AND ACCESSORIES
Smartwatches and fitness bands have become the most popular wearables in recent times.
These smartwatches, fitness trackers and wrist bands come in frequent contact and friction with
foreign elements, some of which have the potential to cause scratches and discolouration to
the devices and straps. A surface solution formulated with advanced materials will significantly
improve the wear & tear as well as the scratch resistance properties of the surface, prolonging
the age of the device. In addition to the functional product improvements, surface solutions also
offer a range of fashionable colour options for aesthetic purposes.
With the increasing complexity of internal hardware of smartwatches, manufacturers also
require high scratch resistance for internal components of the smartwatch, owing to the high
level of movements which these components would undergo. Advanced Materials are used for
surface solutions on these intricate components of smartwatches to reduce friction co-efficient,
limit energy loss and wear & tear.
Other accessories used with the wearables such as earphones and earpods are also frequently
exposed to external contact and movement; hence their body surfaces are coated by advanced
materials to protect against scratches and tears as well as for high-end decorative purposes.
OTHER ELECTRONIC PRODUCTS
Other notable products which require usage of advanced materials include hard disk drives
(HDD), camera brackets and e-cigarettes. During regular usage some parts of these products
undergo constant wear & tear. For example, in the case of HDDs there can be accidental
contact between the HDD head slider and disk which can cause serious damage to the stored
data. Another example is in the case of e-cigarette devices where the handles, trims and bands
undergo wear & tear. Finally, in the case of camera brackets due to regulatory requirements
there is a need to phase out electroplating solutions (hard metal coatings method on plastic
components) and hence surface solutions formulated with advanced materials have the ability
to increase the functional properties of critical components. Similarly advanced materials have
the potential to increase the aesthetic appeal in e-cigarette devices. Surface solutions using
FCVA technology (where vacuum coat on plastic substrates of camera brackets is used)
instead of electroplating, reduces disturbances and errors, when used in products such as
camera bracket devices and allows ergonomic product designs.
PRECISION ENGINEERING
Precision engineering is associated with designing a machine/instrument so it can continue to
perform the designated work with a high level of accuracy. Some of the key end use sectors for
precision engineering include molds, cutting tools (used for roughing and finishing),
semiconductors, HPLC (High performance liquid chromatography), Oil & Gas (pressure
detection units, flow sensors) and industrial components. These end use sectors require
precision engineered components which can withstand high pressure, high temperature, wear
resistance, and possess gas permeation (for Oil & Gas). Surface solutions formulated with
advanced materials provide superior anti-corrosion properties, as well as increased hardness
which prolongs the life of such components. In addition, these advanced materials possess
excellent adhesion properties with low permeability which further extends the useful life of such
components.
PRINTING & IMAGING
A Multi-Functional Printer (MFP) performs the functionality of multiple devices in one setup, so
as to have a smaller footprint in a home or office, or to provide centralized document
management. A typical MFP may act as a combination of email, fax, photocopier, printer, and
scanner. In order to succeed in providing a long lasting printer, with the ability to achieve
perfection and precision in a fast and repetitive manner, minimizing the wear & tear of vital
FRPSRQHQWV¶ during each use is of utmost importance. Many key components in MFP are very
sensitive to resistance, humidity and friction, and thus require a high quality coating/surface
solution to protect them. Our understanding suggests that, there is no conventional coating
technology able to achieve the performance specifications required by the photocopying
industry, other than gold-plating, which is costly. Successful application of surface solutions that
enhance lubrication and wear resistance with excellent adhesion on components would enable
the device to further satisfy clients and customers who seek consistency in precision. Corotron

IMR Report 5
© Frost & Sullivan 2020

D-5
 wires, charge rollers, heating elements & fixing components and doctor / developer blades are
some of the key components in a MFP that require surface treatment with advanced materials.
AUTOMOTIVE
Combustion engine components are the most susceptible parts of an engine which undergo a
high degree of wear & tear in the vehicle. This has resulted in higher cost of repair and change
of highly-critical engine components such as piston rings. Furthermore, the wear & tear of
piston rings and other injection components results in the inability of commercial vehicles and
diesel engine trucks to meet the national emission standards in various countries due to higher
emission levels and energy losses. Diesel engines in commercial vehicles undergo a greater
degree of wear & tear as compared to gasoline engines in passenger cars due to the harsh
environment in which the commercial vehicles are used.
Advanced materials such as amorphous diamond (ta-C) and chromium nitride (CrN) by plasma
coating are common in the piston ring industry. They are able to provide excellent wear
resistance and low friction between the piston rings and cylinder walls. The ever increasing
customerV¶ requirements in engine performance and regulatory emission standards are pushing
the automotive OEMs for look for high quality surface coatings.
PERSONAL GROOMING
Owing to a rise of awareness in global hygiene and efforts put into one¶V appearance, the
personal grooming market has been attracting further interest from consumers. In the case of
dental hygiene, electric toothbrushes have been recognized as being more efficient than their
manual counterparts, and as such have been offering an increasing number of features
(pressure sensors, quadrant times, Bluetooth, or even AI, incorporating more electronics in the
device) to attract consumers. The current trend among millennials for wearing a beard has
boosted the electric razors market due to the convenience they provide in trimming and
grooming. Personal grooming industry products have to comply with numerous market
requirements and specifications in order to create an impact among consumers. Due to
increasing environmental regulations, razor handles, shaving foils and blades which were
coated with chrome plating, are now being phased out (chrome plating uses Chromium which
has negative effects on the environment and human health). Such products also commonly
encounter corrosion issues (as zinc is a key base material) and wear & tear. Surface solutions
utilising advanced materials, are capable of deposition on zinc, as an environmentally-friendly
alternative to chrome plating. These surface solutions enhance electric toothbrushes and
electric razors product properties by increasing corrosion resistance and enhancing skin gliding
capabilities for razors, while providing a wider range of colour choices to consumers and
extending product life span. In addition, these surface solutions also enable manufacturers to
offer better (aesthetic appeal) razor blades, razor & toothbrush handles and dry shavers to their
customers.
BIOMEDICAL EQUIPMENT, NEW ENERGY, AEROSPACE
Biomedical equipment:
Medical implants are artificial devices or tissues, which are used to replace damaged biological
structures or enhance an existing biological structure. Some of the implants are made from
skin, bone, or other body tissues; while others are made from metal, plastic, or ceramic
materials. Medical implants can be permanent or can be taken out when they are no longer
needed. Medical implants are required to be compatible to human bodies. In addition, they
typically suffer wear & tear due to movements in the joint parts. Advanced Materials compatible
to human bodies can reduce the risk of rejection of these implants by human bodies thereby
prolonging the service lifespan of a medical implant. A rise in aging population and the
prevalence of chronic diseases are some of the major driving factors for the medical implants
market. Medical devices such as scalpels, needle drivers, bone saws, reamers and dental tools
undergo heavy wear & tear during surgeries. Surface solutions utilising advanced materials can
provide high hardness and low friction co-efficient, extending the lifespan of such surgical
devices and medical implants.
New energy:
Electric Vehicles (EV) are a cleaner alternative to traditional vehicles. These electric vehicles
have rechargeable batteries in which the bi-polar plate electrodes require a surface solution

IMR Report 6
© Frost & Sullivan 2020

D-6
 which provides high electrical conductivity. The conventional solution has typically been gold-
plating, which is costly and corrosive. Surface solutions utilizing advanced materials offer less
costly solutions as compared to gold-plating method, yet offer superior functional properties
such as corrosion resistance and high electrical conductivity. These advanced surface solutions
will help in enabling scalability in production of fuel cells, lowering the cost of such batteries and
will have the potential to accelerate market adoption of electric vehicles.
Aerospace:
Surface Technology is an important aspect in the aviation supply chain for many leading
aerospace component manufacturers. Typical applications of surface solutions in aviation
industry can be found in critical components such as fuel connectors, heating systems, turbine
blades, electronic housings, aircraft tyre moulds and many others. Surface solutions that use
advanced materials can extend component life (wear & tear resistance), act as a thermal
barrier to reduce material operating temperatures, increase surface hardness, increase
lubricity, anti-corrosion (rust, heat, dust and water) and improve engine efficiency. In the field of
aviation, guaranteed performance is vital and to ensure that the integrity of each critical
component is safeguarded; usage of surface solutions becomes a must.

NANOPRODUCTS
Some of the key sectors for Nanotechnology usage are described below:
OPTICAL LENS
Optical lenses focus or disperse light beams. Lenses are usually made up of glass or plastic
materials which are either injection-molded or manufactured through CNC machining into
desired shapes according to their end applications. Imaging lenses are a branch of optical
lenses that focus an image of an object onto a sensor by directing and focusing the path of
light. The types of optical lenses are Fresnel lenses, adjustable focal length lenses, wafer
lenses, FIR lenses, aspherical lenses, freeform lenses and others.
At the same time, imaging lenses are widely used in cameras & smartphones for photography,
as well as imaging and face recognition purposes. Other main imaging applications include
projection, vision correction and medical imaging equipment. Some non-imaging end uses of
optical lenses are in solar power and illumination.
Microlens or wafer lens are a miniaturized group of optics fabricated at the wafer level by micro-
or nanofabrication techniques. They allow for sharper and more concentrated focus of light
which translates into increased light sensitivity in the optical sensors for automotive and
smartphone applications as well as display applications.
OPTICAL SENSORY COMPONENTS
Optical sensors are devices, which are used to process light or infrared rays into electronic
signals. They are systems that are comprised of different optical lenses and components. The
latter include diffractive diffusers, beam splitters, micro lens arrays, optical encoders for smart
watches and diffraction gratings.
The main types of optical sensors used in the market are imaging sensors, fiber optic sensors,
photoelectric and ambient light sensors. Innovative displays, thinner cameras and efficient 3D
mapping are standard consumer expectations that have resulted in high product innovation.
The sensory components are required to have better functional performance to lead the high
technology innovations in optical applications.
The development of nanostructures enables optical components to be more compact and to
have new functionalities. Starting from imaging and photography application in smartphones,
sensors are also being used for 3D facial recognition, gesture sensing, IoT, health & fitness
tracking in smartphones and wearables. Other end use markets driven by nanostructures in
optical sensors are autonomous cars & LiDAR and virtual & augmented reality that allows 3D
mapping of the surroundings.

IMR Report 7
© Frost & Sullivan 2020

D-7
 1.3 KEY TRENDS & DRIVERS
Key end use segments for Advanced Materials and Nanoproducts include automotive,
smartphones, semiconductors, computers, wearables, printing & imaging, image sensors and
others. The global market size for various relevant end-use segments accounted for USD 4.3
2
Trillion in 2019 and is expected to grow to USD 4.5 Trillion in 2023 .
Chart 1: Global market size for key end use segments in focus, 2019 and 2023F

0.4% 0.4% 1.1% 0.5% 0.4%

0.8% 0.7%
0.8%
0.7% 0.8%
1.6%
1.1%

5.7% 4.9%

9.7%
11.9%

11.6%
12.7%
65.3%
68.8%

2019 2023

Automotive Smartphones Semiconductors Computer Wearable

MFP Image Sensors E-Cigarettes Razors Others

Source: Frost & Sullivan

Note:
1. Others include smart cameras, HPLC, electric toothbrush, fresnel lens, other electronic products and
eyewear.
2. Above market size accounts for ~90-93% of the overall end use segments in which Advanced Materials
and Nanoproducts are used. Additional 7%-10% of the market is accounted for by segments such as
tooling (cutting tools, dies & molds) and several other industrial components.

ADVANCED M ATERIALS
SMARTPHONES
Smartphone sales peaked in 2017 highlighting that the global smartphone market may have
become saturated. While smartphone sales could see a dip over the next five years the
introduction and adoption of 5G networks and / or other technological innovations could propel
the demand for new smartphones in the future.
By 2023, smartphone sales are expected to reach 1.5-1.6 billion units approximately. These
sales volumes translate to an approximate value of USD 569 Billion USD in 2023, showcasing
a CAGR of approximately 4% between 2019 and 2023. However the importance and
involvement of surface solution providers such as NTI is expected to grow faster than industry
growth rate owing to enhanced R&D efforts and material innovations.

2
The market size is a summation of the end use industries and not a summation of advanced materials used in these
industries.

IMR Report 8
© Frost & Sullivan 2020

D-8
 COMPUTERS
Like the smartphone market, 5G will play an important role in maintaining the size of the
computer market. Shipments of personal computing devices (PCDs), inclusive of traditional
3
PCs and tablets, are expected to see marginal decline between 2020 and 2023. However, 2-
in-1 devices (convertible notebooks and detachable tablets) and ultra-slim notebook PCs are
4
expected to grow at ~4% and ~8% by volume, respectively over the same period (2020-2023) .
Overall the global computer industry is expected to reach 368 million units by volume in 2023 at
a CAGR of 1.1% between 2020 and 2023. In terms of value the market stood at USD 241
Billion in 2019 and is expected to reach USD 218 Billion in 2023 growing at a CAGR of
approximately 0.5% between 2020 and 2023.
With the introduction of 5G, it is forecasted that by 2023, nearly 10% of 2-in-1 devices will
incorporate 5G technology, which will add to the 29% already running with 4G capabilities.
Meanwhile, the number of ultra-slim and convertible laptops with cellular connectivity is also
expected to increase between 2020 and 2023.
WEARABLES AND ACCESSORIES
The wearable industry experienced tremendous growth with an estimate year-on-year growth of
89% in 2019 as compared to 2018. The introduction of new hearable (wireless-earphones)
models such as Airpods 2 and Airpods Pro in 2019 with enhanced features such as wireless
charging cases, improved battery life were the most important reasons for the significant growth
in the wearable industry.
The global market for smart wearables is expected to reach 459 million units by volume in 2023
from an estimated 343 million units in 2020, registering a CAGR of approximately 10% between
2020 and 2023. Growing concern regarding personal health & fitness and the rise in the use of
smartphones are the key drivers for the growth of this market. Moreover, innovative features
such as tracking, alerts and connectivity in smartwatches have garnered consumer interest in
recent years. The integration of IoT technology is also expected to enhance the capability of
smartwatches to serve the purpose of multiple apps and devices.
The COVID-19 pandemic has placed an even greater emphasis on health & wellness, and
hence has increased consumer awareness regarding the importance of remote convenience
and real-time health check.
OTHER ELECTRONIC PRODUCTS
Hard Disk Drives (HDD):

3
Source: %XVLQHVV:LUH¶VQHZVUHOHDVHGDWHG)HEUXDU\DQGHQWLWOHG³Global Market for Personal Computing
Devices Will Be Impacted by COVID-´

Business Wire has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.
4
Source: %ORRPEHUJ¶VPHGLDUelease dated 11 September 2019 and entitled ³Demand for Thin and Light Designs Puts
a Positive Outlook on IDC's Forecast for Notebook PCs and Detachable Tablets ´

Bloomberg has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.

IMR Report 9
© Frost & Sullivan 2020

D-9
 Global volumes of HDD are expected to reduce from 424 million units in 2016 to 277 million
5
units in 2022 owing to the growth of cloud storage. Market value is expected to decline at a
CAGR of ±ve 0.7% between 2020 and 2023 and reach USD 19.1 billion in 2023 from its current
value of USD 20.6 billion in 2019. However, the market could rebound to 297.6 million units in
2025, at a CAGR of 2.4% during 2022 to 2025 owing to the disadvantages of cloud storage
such as the global availability of stable / high-speed internet connections, potentially high
subscription costs and customer requirements of hard drives, user support and privacy.
Smart Camera:
6
The smart cameras market is estimated to grow at a CAGR of 8% between 2019 and 2023 to
reach USD 2 billion by 2023. The growing application of smart cameras for security &
surveillance has been fuelling the demand in this market. These devices are expected to
showcase a positive trend owing to their functionalities such professional imaging features with
interchangeable lenses, accessibility for users with an open-source Android operating system,
and in built Wi-Fi or LTE (for real time information sharing).
E-cigarettes:
The E-cigarettes market has been showing continuous growth over the last five years and is
expected to increase at an approximate CAGR of 9% between 2020 and 2023 to reach a value
of USD 24.1 billion by 2023. One of the key factors driving growth in this category is the
increasing health concerns among smokers.
PRECISION ENGINEERING
Precision engineering market includes cutting tools (roughing, finishing), semiconductors,
7
internal parts (such as rotors, stators, pump heads) of HPLC and certain critical components
(pressure detection unit and flow sensors) in the oil & gas industry.
Semiconductor:
Amid a confluence of factors, including the ongoing global trade unrest and cyclicality in
product pricing, worldwide sales of semiconductors declined in 2019. With the ratification of the
U.S.-Mexico-Canada Agreement (USMCA) and the VLJQLQJRIWKHµSKDVHRQH¶86-China trade
agreement, the market size for Semiconductors is expected to increase at a CAGR of ~7-7.5%
between 2020 and 2023 to reach USD 532 billion by 2023. Semiconductors require advanced
materials in order to provide critical performance features like thermal conductivity and diffusion
barrier.
High-performance Liquid Chromatography:

5
Source: Statista, Worldwide unit shipments of hard disk drives (HDD) from 1976 to 2025, found in
(https://www.statista.com/statistics/398951/global-shipment-figures-for-hard-disk-drives/) as extracted on 15 July 2020.

Statista has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information cited
and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of the
SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.
6
Source: Market Research Future (MRFR), Global Smart Camera Market Forecast till 2023, found in
(https://www.marketresearchfuture.com/reports/smart-cameras-market-1326/) as extracted on 16 July 2020.

Market Research Future has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its
proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.
7
High Performance Liquid Chromatography

IMR Report 10
© Frost & Sullivan 2020

D-10
 The global HPLC market is expected grow at a CAGR of ~5% between 2020 and 2023 to reach
USD 5.2 billion by 2023. The growth in HPLC market is driven by the rising importance of
HPLC tests in drug approvals, sensitivity and accuracy of HPLC technique, growing popularity
of hyphenated (combined chromatographic and spectral method) techniques, and increasing
research and development spending in pharmaceutical industry.
The overall precision parts market is expected to display an impressive growth during the
forecast period due to the rise of Industry 4.0, artificial intelligence and Internet of Things (IoT).
In addition, the increased adoption of automation in the manufacturing of various products and
the usage of new metals and alloys have significantly contributed to the increasing growth of
precision parts.
PRINTING & IMAGING
The global Hardcopy Peripheral (HCP) market is a mature industry which was estimated to be
8
around 94 million units by volume in 2019 . HCP includes single-function printers, single-
function digital copiers, and Multi-Functional Printers. MFPs accounted for approximately 76%
9,10
of the total HCP market in 2019 . The global volume of Multi-Functional Printers declined
from 74.8 million units to 71.7 million at a CAGR of -1.2% between 2016 and 2019. This decline
is due to a combination of factors such as the high cost of MFP along with its longer life
expectancy of 5 years (average); and the general trend of paperless workplace environments.
Global shipments of HCP (and concurrently MFP) contracted by 7.5% year-on-year (Q1 of
2019 to Q1 of 2020) to 21.1 million units in the first quarter of 2020. This year-on-year drop was
due to global supply chain disruptions arising from the COVID-19 pandemic. However, with the
global situation beginning to ease after Q2 of 2020, market recovery is expected as more
companies adopt smarter and more sustainable supply chains.
However, it is estimated that the growth MFP market is expected to reach 71 million units in
2023, at a CAGR of - 0.25% between 2019 and 2023. In terms of market value, the inclusion of
increased functionalities and efficiencies in MFPs, which thereby increases their price per unit,
coupled with the quick expected turnaround post COVID-19 is expected to drive this segment
to USD 32.5 billion in 2023 at a CAGR of 0.85% between 2019 and 2023.

8
Source: Statista, Global Shipments of Hardcopy Peripherals from 2008 to 2019, found in
(https://www.statista.com/statistics/275275/global-printer-and-multifunctional-systems-shipments-since-2008/) as
extracted on 15 July 2020.

Statista has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information cited
and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of the
SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.
9
Source: EE Times Asia, based on archived sources found in (https://www.eetasia.com/) as extracted on 18 July 2020

EE Times Asia has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.

10
Source: %XVLQHVV:LUH¶VQHZVUHOHDVHGDWHG6HSWHPEHUDQGHQWLWOHG³Global Multi-functional Printer Market
2018-2022´

Business Wire has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.

IMR Report 11
© Frost & Sullivan 2020

D-11
 AUTOMOTIVE
The global automotive market appeared to have peaked in 2018 at an estimated 100 million
11
units of passenger and commercial vehicles sold, suggesting market saturation. One of the
reasons for this saturation or slowdown is the rise in services such as Mobility as a Service
(MaaS) and shared mobility. This shift in the auto industry is a reflection of changing customer
perceptions where automobiles are looked at as a service rather than ownership.
In 2020, the sales of passenger and commercial vehicles are expected to decline by over 14
million units worldwide owing to the COVID-19 pandemic. The sales in the United States, China
and Western Europe have been hit the hardest. However, a similar increase (14 million units) is
expected in 2021 for the automotive market as economies recover from the pandemic. The
automotive market is expected to grow at a CAGR of ~5% to 93 million shipment units by 2023.
The two-wheelers market, which is relatively concentrated in China, India and ASEAN markets,
is expected to experience moderate growth in the coming years.
At the same time, the sale of EVs is expected to rise by 2.35 million in 2020, as compared to
2.26 million in 2019. The increasing adoption of EVs is expected to continue beyond 2023
driven by 7HVOD¶V (9 VWUDWHJ\ DQG WKH SXVK WRZDUGV battery electric vehicles (BEVs) by
European OEMs such as Volkswagen and Mercedes-Benz. Tesla will remain the market leader
due to its expansion in the Chinese market.
Automotive engines are mission-critical parts which require functional coating to optimise
engine performance and lower gas emissions. Engine segment accounts for around 8-10% of
the automotive sales market. Manufacturing of engine parts will provide an ample value chain
growth opportunity for an Advanced Material solution provider.
PERSONAL GROOMING
The global electric toothbrush market has witnessed significant growth owing to a rise of
awareness in dental problems and hygiene (oral cavity, tartar, gingivitis, and plaque formation).
While the early adopters were Europe and North America, rise in disposable incomes in
developing economies such as China and India provides high potential growth opportunities for
electric toothbrushes in these countries. At the same time manufacturers are focusing on
developing innovative products - such as smart electric toothbrushes with features such as
pressure sensors, quadrant timer, Bluetooth or even AI to help consumers brush their teeth
better. This sub-sector within the personal grooming industry grew from USD 2.2 billion in 2016
to USD 2.7 billion in 2019, growing at a CAGR of 7.5%. A marginal decline is expected in 2020
owing to COVID-19, but the market is expected to grow at a CAGR of 6.8% between 2019 and
2023 to reach USD 3.5 billion in 2023.
The global razor market grew from USD 16.2 Billion in 2016 to USD 18 billion in 2019 at a
CAGR of 3.5%. One of the key reasons for demand growth has been the increasing focus on
12,13
personal hygiene in both men and women across the world LQ DGGLWLRQ WR ULVH RI PHQ¶V

11
Source: Frost & Sullivan, Global Automotive Industry Outlook 2020, June 2020
12
Source: 351HZVZLUH¶VPHGLDUHOHDVHGDWHG-XQHDQGHQWLWOHG³Razor Market to Witness Steady Growth
Based on Rising Awareness of Consumers Regarding Personal Hygiene & Rapid Growth in Men's Grooming Products
Industry Till 2025´

PR Newswire has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.
13
Source: Grand View Research, Industry Analysis Razor Market, found in
(https://www.grandviewresearch.com/industry-analysis/razor-market/) as extracted on 22 July 2020.

Grand View Research has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its

IMR Report 12
© Frost & Sullivan 2020

D-12
 grooming, with men putting more effort into their appearance. Beards have become particularly
popular among millennial men, which have had an impact on the number of times a man
shaves which in turn impacts the disposable razor market and to a lesser extent the cartridge
razor market. The global razor market is therefore foreseen to slow down until the pandemic is
contained and will reach USD 19.6 billion in 2023 at a CAGR of 2.1% between 2019 and 2023.
The electric razor and cartridge razor sectors have been growing from 66 million units to 74
million units at CAGR of 3.8%, and from 76 million to 84 million units at a CAGR of 3.4%
between 2016 and 2019 respectively. Growth potential is expected to be strong between 2019
and 2023 for these two sectors. The market for these two sectors is expected to reach 84
million units and 88 million units respectively in 2023, at a CAGR of 3.4% and 1.1% between
2019 and 2023. In term of value, the respective market are expected to reach USD 5.8 billion
and USD 7.4 billion respectively in 2023, at a CAGR of 3.4% and 2.1% between 2019 and 2023.

NANOPRODUCTS
Some of the key sectors for nanoproducts are described below:
OPTICAL LENS
The global market for Fresnel lenses declined from USD 382 million in 2016 to USD 381 million
in 2019 at a CAGR of ±ve 0.1% between 2016 and 2019. A boost provided by 5G to the global
smartphone market and a slight increase in tablet sales (as consumers turned to tablets for
entertainment, business, and e-learning) during COVID-19 are expected to chart a positive
trajectory for this segment over the next few years, The global market for Fresnel lenses is
expected to reach USD 436 million in 2023, at a CAGR of 3.38% between 2019 and 2023.
The market for tuneable lenses is also influenced by the growth of safety goggles and sports
eyewear both of which are expected to show strong growth in the near future. The market value
is expected to reach USD 705 million for safety goggles and USD 5.1 billion for sports eyewear
in 2023, at a CAGR of 4.1% and 4.4% respectively between 2019 and 2023.
OPTICAL SENSORY COMPONENTS
Increasing focus on pixel resolution, count and size, for improving the image and data quality,
has been driving the optical sensors industry. In the field of micro- and nano-engineered optical
sensors, it is expected that the combination of improved fabrication techniques and new
physical effects, obtained from features such as nano-grating and surface optical structuration,
may create new opportunities. In particular, the increasing number of cameras in smartphones,
and the increasing functionalities of these devices such as 3D sensing, will help in
compensating for the global slowdown in shipment volume of smartphone.
The demand for optical sensors in the automotive industry has increased over the last few
years as well, and will continue to do so with the development of autonomous cars and
Advanced Driver Assistance Systems (ADAS) as they have the capability to accurately
measure distances, positions, and displacements. Although full commercialization of self-
driving cars might still take time along with the complex regulatory approvals, manufacturers
are moving toward commercialization of these autonomous or ADAS vehicles. The demand for
optical sensors in the automotive industry is expected to increase in the coming years.
Other end use segments which are driving the growth for optical sensory components include
wearables, medical devices and Industry 4.0 based systems.
The optical sensor segment (to which lens sets and wafer lenses belong to) has been growing
from USD 24 billion to USD 34 billion at CAGR of 12.13%, between 2016 and 2019, owing to
the multiple camera approach trend in smartphones and their increased adoption in

proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.

IMR Report 13
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 autonomous and ADAS vehicles. The continuity of these two trends, along with the boost
provided by the 5G to the global smartphone market, will propel the optical sensors market to
USD 47 billion in 2023, at a CAGR of 8.67% between 2019 and 2023.

1.4 KEY CHALLENGES IN THE MARKET

Lack of One Stop Shops
Having a larger number of suppliers in the value chain for products such as electronics,
automotive and consumer goods can make the procurement process complex and can give
rise to quality issues. This is prevalent for large manufacturers who source components and
materials from various suppliers across the globe and ship them to their assembling plants
which are again scattered around the world. Reducing the number of key suppliers involved in
the manufacturing process can generate huge cost savings, streamline the procurement
process and synchronize the whole supply chain. End-use product manufacturers are
increasingly looking for comprehensive one-stop-solution providers (components/modules and
surface solutions) in order to increase efficiency of the supply chain. This creates a challenge
for surface solution providers, as majority of companies active in this industry are not offering
integrated services. NTI is among the very few companies which is already or in process of
offering these one stop solutions. The Company has the ability to convert this challenge into a
core opportunity.
Impact of COVID-19 across industries
The pandemic is currently affecting a broad range of economic sectors, starting from tourism,
medical supplies, consumer electronics, financial markets, energy, food, to a range of social
14
activities, to name a few . Disruptions to global industrial activity and supply chain constraints
are causing delays in shipments of computers, cell phones, and other consumer electronic
15
products. Factory output in China, the United States, Japan, and South Korea declined in the
16
first few months of 2020 . However output has started to pick up during the second half of

14
Source: Congressional Research Service (CRS), Global Economic Effects of COVID-19, found in
(https://fas.org/sgp/crs/row/R46270.pdf/) as extracted on 5 August 2020.

CRS has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information cited and
attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of the SFA.
While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners
and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper form and
context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the Joint Issue
Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has conducted an
independent review of this information or verified the accuracy of the contents of the relevant information.
15
Source: Financial Times, Covid-19 Delays PC and Smartphone Shipments for Weeks, found in
(https://www.ft.com/content/72742872-5c31-11ea-b0ab-339c2307bcd4/) as extracted on 5 August 2020.

Financial Times has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.
16
Source: Washington Post, The Finance 202: Stocks Stage Major Comeback, but Manufacturing Report Points to
Continued Covid-19 Pain, found in (https://www.washingtonpost.com/news/powerpost/paloma/the-finance-
202/2020/03/03/the-finance-202-stocks-stage-major-comeback-but-manufacturing-report-points-to-continued-
coronavirus-pain/5e5d84a6602ff10d49ac081f/) as extracted on 10 August 2020.

Washington Post has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its

IMR Report 14
© Frost & Sullivan 2020

D-14
 2020. In addition, numerous auto producers have faced shortages in parts and other supplies,
resulting in slower production. Reductions in international trade have also affected ocean
freight prices. Some freight companies argue they could be forced to shut if prices did not
17
rebound quickly , which can adversely affect the global logistics chain for nearly every end use
industry in the scope. Disruptions in the movements of goods and people caused some
companies to reassess their supply chain strategies. According to some estimates, nearly
18
every member of the Fortune 1000 list has been affected by disruptions in production.
The end use markets for NTI, especially smartphones, computers, wearables & accessories,
other electronic products, multi-functional printers and automotive, have begun to rebound in
the second half of 2020. Nevertheless, diversification of supply chains by the end producers is
considered to be a mid- to long-term solution in the event such scenarios occur again.
However, these challenges can be overcome to a large extent by NTI, through the use of
supply chain diversification strategies, coupled with the vast portfolio of end use industries the
company can cater to. Some of these end use industries have shown resilience to the
pandemic, such as smartphone and automotive industries.
Increasing smartphone replacement cycle
Research shows that the average replacement cycle of smartphones worldwide is gradually
19
increasing. In 2016, a smartphone was replaced after an average usage of ~28 months .
Owing to factors such as increasing smartphone prices, the wait for new telecommunication
technology (5G), coupled with increased usable durations due to larger batteries and stable
operation systems; the average replacement cycle for the smartphones is expected to be ~33.6

proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.
17
Source: Washington Post ³(FRQRPLF )DOORXW IURP &KLQD¶V &RYLG- 0RXQWV $URXQG WKH :RUOG´ found on
(https://www.washingtonpost.com/business/economy/economic-fallout-from-chinas-coronavirus-mounts-across-the-
globe/2020/02/13/7bb69a12-4e8c-11ea-9b5c-eac5b16dafaa_story.html/), as extracted 5 August 2020

Washington Post has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its
proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.
18
Source: Congressional Research Service (CRS), Global Economic Effects of COVID-19, found in
(https://fas.org/sgp/crs/row/R46270.pdf/) as extracted on 3 August 2020.

CRS has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information cited and
attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of the SFA.
While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners
and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper form and
context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the Joint Issue
Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has conducted an
independent review of this information or verified the accuracy of the contents of the relevant information.
19
Source: Morgan Stanley Research, Will 5G Supercharge Smartphone Sales, found in
(https://www.morganstanley.com/ideas/5G-smartphone-growth-2020/) as extracted on 3 Aug 2020.

Morgan Stanley has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.

IMR Report 15
© Frost & Sullivan 2020

D-15
 20
months in 2020. This increase in average replacement cycle creates a challenge for the
smartphone industry as it forces manufacturers to take big leaps in innovation on a yearly basis
to make customers upgrade their smartphones. As the wait for 5G comes to an end,
smartphone users who were holding on to their phones a bit longer are expected to upgrade
their smartphones. Wider availability and adoption of 5G is expected to shorten the average
smartphone replacement cycle.
Marginal decline in internal combustion vehicles and the rise of electric vehicles
The COVID-19 pandemic is expected to have an adverse effect on automotive sales, with the
21
number of vehicles sold in 2020 expected to reduce by 14% to 80 million units. Light Vehicle
sales in China, the United States, and Western Europe (primarily comprising the United
Kingdom, Spain, Germany, France, and Italy) have been impacted in the first quarter of 2020.
However it is expected that the virus will not have a negative impact on global EV sales in 2020.
In a low impact scenario, EVs are expected to grow by 10.3% YoY to about 2.5 million units in
22
2020. The segment of ICVs (Internal Combustion Vehicles) is estimated to reduce gradually,
with the share of this segment being transferred to EVs between 2019 to 2023, which suggests
that market players in the advanced materials industry need to adapt and evolve their focus &
product portfolio to cater to both ICVs and EVs.
Increasing demand for customization in industrial products
High-performing precision tooling is a critical aspect of a reliable production process, which is
needed to ensure quality, performance and optimal productivity. All types of manufacturing,
especially the manufacturing of durable equipment and machines, require high-quality
components treated to minimize friction, reduce wear, resist abrasion and enhance reliability.
The increasing demand for customization across many industries requires flexibility and speed
in tooling. The rapidly changing demand for high-performing precision tools creates a challenge
for advanced material suppliers to innovate continuously and extend the useful life of tools and
components.
Millennials impacting the Personal Grooming Industry
Beards have seen resurgence in recent years, especially among millennial men. This is resulting
23
in lower shaving frequency and eventually reduced demand for shaving blades and razors. It is
estimated that the demand for men's shaving products in the USA market has decreased by

20
Source: Statista, Replacement Cycle Length of smartphones worldwide, found in
(https://www.statista.com/statistics/786876/replacement-cycle-length-of-smartphones-worldwide/) as extracted on 4
Aug 2020.

Statista has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information cited
and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of the
SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.
21
Note: Section 1.3.7 of the Complete Independent Market Research (IMR) on the Global Advanced Materials Industry
Report
22
Source: Frost & Sullivan, Global Automotive Industry Outlook 2020, June 2020
23
Source: CNBC, Procter & Gamble writes down Gillette business but remains confident in its future, found in
(https://www.cnbc.com/2019/07/30/procter-gamble-writes-down-gillette-business-but-remains-confident-in-its-
future.html/) as extracted on 3 Aug 2020.

CNBC has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information cited
and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of the
SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.

IMR Report 16
© Frost & Sullivan 2020

D-16
 24
11% in the last five years. This trend impacts disposable razor market to a greater extent as
compared to the cartridge razor market. However, it has had a positive effect on the electric razor
market as electric razors and trimmers are widely preferred for grooming and maintaining the
beard.
Challenge for Multi-functional Printer market
Globally, work from home is becoming a norm owing to the pandemic, leading to lesser
requirement of print papers in offices, indirectly reducing the demand for MFPs for the duration.
7KLVDGGVXSWRWKHµ*R'LJLWDO¶HFR-friendly and paper-less trend in society and creates further
challenges. Some shifts in consumer behaviour due to the virus are likely to be transient in
nature; sales for MFPs have dropped while the sales of home printers have increased.
However, in a post pandemic world both will likely return to their previous levels.

1.5 INTRODUCTION TO NTI & FUTURE STRATEGIC DIRECTION

NTI is a leading provider of nanotechnology solutions in Asia. NTI operates through its
Advanced Materials Business Unit (BU), Nanofabrication BU and Industrial Equipment BU
segments. The company leverages its proprietary technologies, core competencies in R&D,
engineering and production, to provide nanotechnology solutions across a wide range of
induVWULHV 17,¶V RIIHULQJV HQDEOH LWV FXVWRPHUV WR DFKLHYH KLJK YDOXH-add functional and
aesthetic improvements in their end-products, in a sustainable manner.
7KHFRPSDQ\¶Vpatented FCVA technology is considered to be superior in film density, surface
adhesion, hardness, strength and repeatability in comparison to existing technologies such as
PVD and CVD. Other advantages that FCVA is able to bring to the table are adjustable coating
uniformity and room temperature deposition. The company is one of the leading providers of
surface solutions based on its FCVA (and FCVA-hybrid) and PVD vacuum coating technologies
and advanced materials. Having a process working at low temperature enables vacuum
coatings to be applied on low melting point materials such as plastic and rubber along with
other regular metal, glass and ceramic substrates on a commercial scale. This creates new
design (material choice) opportunities across several industries such as 3C (computer,
communication and consumer electronics), automotive, precision engineering, and printing and
imaging. 17,¶V products and services are integral to the smooth functioning of many of the
technologies and tools which are essential for modern daily life.
Through continuous R&D and engineering programmes, NTI has also been able to combine the
best of its proprietary FCVA technology with conventional coating technologies such as PVD
(sputtering). This has enabled NTI to provide the surface solutions in a cost-effective,
environmentally friendly manner as well as to a wider variety of substrate materials at reduced
coating time period (faster process). Due to their low melting points, it has not been cost-
effective to perform vacuum coating on such substrates using conventional coating
technologies.
17,¶V SURSULHWDU\ and differentiated technology-based solutions, owing to their superior
functional properties have opened up new markets (personal grooming, new energy, 5G,
biomedical, aerospace) for nanotechnology based surface solutions, which were not accessible
through conventional technologies and expanded the total market potential for such
technology-based solutions. NTI through its R&D, superior engineering and production

24
Source: Dailymail UK, Procter & Gamble blames slumping Gillette razor sales on the popularity of BEARDS among
millennial men, found in (https://www.dailymail.co.uk/femail/article-7315705/Procter-Gamble-blames-slumping-Gillette-
razor-sales-popularity-BEARDS-millennials.html/) as extracted on 4 Aug 2020.

Dailymail UK has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
(Continued from 24) the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information
is reproduced in its proper form and context and that the information is extracted accurately and fairly, none of the
Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and
Underwriters or any other party has conducted an independent review of this information or verified the accuracy of the
contents of the relevant information.

IMR Report 17
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D-17
 capabilities acts as an enabler for many highly-critical applications where no other suitable
materials exist and is able to offer its services at affordable prices to its customers, replacing
expensive materials. 17,¶V WHFKQRORJ\ VROXWLRQV HQDEOHV LWV FXVWRPHUV WR RIIHU SURGXFWV ZLWK
properties such as improved wear resistance, reduced heat generation caused by internal
moving parts, product miniaturisation, requisite electrochemistry properties, strong corrosion
resistance, as well as improved aesthetics, which could not be achieved with conventional
coating and nanofabrication technologies.
Also, the Company possesses capabilities and potential to upscale in the value chain to
capture greater wallet share of its current markets such as 3C, automotive, optical sensors and
optical lens industries.
17,¶VDGYDQFHGPDWHULDOVDUHDOVRXWLOLVHGE\LWVFXVtomers to enhance the aesthetic appeal of
their end-products, including appearance, colour, texture and/or tactile quality. These advanced
materials prolong the durability and lifespan of customers¶ products and enhance their
attractiveness and saleability. Such applications of advanced materials based surface solutions
are common in the 3C and FMCG personal grooming industries.
One of the key strategic initiatives that the company plans to undertake in the near future is to
integrate itself either up or down the value chain. NTI believes that its proprietary technology /
surface solutions are integral to the robust growth of end use industries such as automotive
piston rings, consumer electronics (smartphone enclosures etc.) as well as personal grooming
products (surface solutions for electric razor handles). One such example is the Smartphone
enclosure market / industry. While a smartphone can be sold without an advanced surface
solution / coating, its premium / aesthetic value diminishes significantly and in turn, the
smartphone brand cannot claim the premium attached to the product pricing. This could
adversely impact consumer sentiment towards a brand and could have unforeseen
repercussions for the smartphone brand as well. NTI understands the significance of its
technology, and intends to forge partnerships with certain enclosure / component
manufacturers, in order to provide the enclosure with the specific surface treatment.
Similarly, it has also undertaken the same strategy in the automotive piston rings market, by
IRUJLQJ D -9 ZLWK $6,0&2 LQ &KLQD ZKHUH $6,0&2 PDNHV WKH SLVWRQ ULQJ DQG 17,¶V
technology will provide the surface treatment for the piston ring.
By virtue of such forward looking strategies, NTI intends to become a one±stop-shop for
surface solutions as well as components / parts for personal grooming, Automotive,
Smartphones and Wearable customers. Not only will this integration enable NTI to achieve
better pricing, but it will also have significant cost benefits to the end customer. Increased
margins, shorter supply chain, greater connectivity throughout the entire value chain and higher
control over procurement process are some of the benefits which this strategy will bring to end-
use product manufacturers.
7KHUHIRUH ZKLOH 17,¶V GLUHFW DGGUHVVDEOH PDUNHW LV WKH VXUIDFH VROXWLRQV VHJPHQW WKH YDOXH
FKDLQ LQWHJUDWLRQ DXWRPDWLFDOO\ LQFUHDVHV WKH FRPSDQ\¶V DGGUHVVDEOH PDUNHW PDQLIROG This
value chain integration will also allow NTI to position itself as a one-stop-solution provider for
certain finished products in end use industries such as smartphone, automotive, FMCG
personal grooming and Wearables.
This unique integration strategy does have the potential to make NTI one of the leading players
of surface solutions and components in the region, in the medium to long term. The details of
the increase in addressable markets are mentioned in the subsequent chapter.

1.6 OVERVIEW OF GLOBAL ADVANCED M ATERIALS, NANOPRODUCTS AND COMPONENT

M ANUFACTURING
Advanced Materials: The global market size for advanced materials increased from USD 16.5
billion in 2016 to USD 19.1 billion in 2019, registering a CAGR of ~5%. This segment is

IMR Report 18
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D-18
 expected to grow at a CAGR of 7.5% between 2020 and 2023 to reach USD 24.3 Billion in
25
2023 .
Nanoproducts: The global market size for nanoproducts increased from USD 4.2 billion in 2016
to USD 4.9 billion in 2019, registering a CAGR of ~5.7%. This segment is expected to grow at a
26
CAGR of 11% between 2020 and 2023 to reach USD 7.8 Billion in 2023 .
&RPSRQHQWV 0DQXIDFWXULQJ &RQVLGHULQJ 17,¶V LQWHJUDWLRQ VWUDWHJ\ RI EHFRPLQJ D 2QH 6WRS
Shop for providing holistic solutions for smartphone enclosures, wearable components,
personal grooming components and automotive engine parts, the addressable market for the
company includes these end use segments as well. The component market across these end
use segments is expected to grow at a CAGR of 4.6% between 2020 and 2023 to reach USD
27
423 Billion in 2023 .
7KHUHIRUH 17,¶V WRWDO DGdressable market includes the market estimates of the above three
mentioned sectors.
Chart 2: Global market size for Advanced Materials, Nanoproducts and Components
Manufacturing (UHOHYDQWWR17,¶VSURGXFWSRUWIROLR), 2016-2023, USD Billion

455.1
30 449.8 450
444.7

394.9 423.0 400

420.2
25 24.3
417.3
24.0 369.7 22.7 350
23.9

Global Market Value (in Billion USD)

Advanced Materials and Nanoproducts

21.1
Global Market Value (in Billion USD)

22.6

Components Manufacturing
20.6 19.2 19.1 19.5
20 300
18.1
16.5
250
15
200

10 150
7.8
7.0
6.2
5.7 100
4.7 4.9
5 4.2 4.4

50

0 0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Advanced Materials Nanoproducts Components Manufacturing

Source: Frost & Sullivan

25
Note: Detailed analysis of advanced material in all eight end use segments is covered in section 1.7 of this Report
26
Note: Detailed analysis of nanoproducts in all end use segments is covered in section 1.8 of this Report
27
Note: Detailed analysis of components manufacturing in end use segments is covered in section 1.10 of this Report

IMR Report 19
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D-19
 1.7 ADVANCED M ATERIAL ASSESSMENT
1.7.1 MARKET SIZING AND FORECAST OF ADVANCED MATERIALS ± BY END USE
SEGMENTS

SMARTPHONE
The market size for advanced materials used for surface solutions in the smartphone industry
increased from USD 5 billion in 2016 to USD 5.8 billion globally in 2019, registering a CAGR of
~5%. Advanced Materials are typically used for smartphone enclosure, buttons, trims,
screws/fasteners, mesh, camera ring & other small parts to impart superior functional &
aesthetic properties. Figure  VKRZV WKH VLPSOLILHG YDOXH FKDLQ SRVLWLRQLQJ RI 17,¶V FRUH
business of providing advanced materials based surface solutions for smartphones.
Figure 1: Simplified Value Chain for Smartphone manufacturing (current NTI position)

Advanced Assembly
Materials (Manufacturer /
Components OEMs
based surface contract
solutions manufacturer)

Direct TAM (total addressable market) for NTI

5G enabled smartphones, in order to support Millimeter wave technology are adapting a new
design language which incorporates larger use of materials such as glass, ceramics and
plastics in the smartphone body. Materials such as stainless steel and aluminium for the
mainframe (housing) of the phone will continue to be used, owing to reasons such as structural
28
strength and durability. Along with 5G; factors such as increasing size of smartphones
(eventually increasing the surface area for advanced material usage), demand of advanced
material for surface solution in moving parts (such as hinges) for foldable phones (Galaxy Z Flip,
Motorola Razr, Huawei Mate X and more) support the market growth.
It is estimated that the market size will increase at a CAGR of ~7-7.5% between 2020 and 2023
to reach USD ~7.6 billion by 2023. The chart below shows the market size of advanced
materials used for surface solutions in the global smartphone industry from 2016 to 2023F.
Chart 3 (a): Global market size of advanced materials used for surface solutions in
smartphones, 2016-2023, USD Billion

10
Global market size
(in USD Billions)

7.1 7.6
8 6.6
5.8 6.1
5.0 5.4 5.4
6
4
2
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

28
Source: TechCrunch, Smartphone screens find their size sweet spot, found in
(https://techcrunch.com/2017/05/31/phables-are-the-phuture/) as extracted on 29 July 2020

TechCrunch has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party has
conducted an independent review of this information or verified the accuracy of the contents of the relevant information.

IMR Report 20
© Frost & Sullivan 2020

D-20
 +RZHYHU 17,¶V LQWHQWLRQ WR LQWHJUDWH VXUIDFH VROXWLRQV ZLWK HQFORVXUH PDQXIDFWXULQJ WKURXJK
JVs or partnerships) will significantly increase the total addressable market (TAM) for the
company. An enclosure (shell/case of a phone) is a key component of the smartphone that
requires treatment with advanced material surface solution, in order to reduce degradation over
the usage period. Smartphone enclosure market (without surface solutions) accounted for
29
~14.2 Billion USD in 2019 (~5-7% of total smartphone production cost) and is expected to
reach approximately 16-17 Billion USD in 2023. Surface solutions on the other hand accounted
for approximately 1.5-2.5% of the total smartphone production cost in 2019. Owing to
technological advancements, the percentage share of surface solutions in smartphones is
expected to gradually increase.
Figure 2: Simplified Value Chain Integration for Smartphone manufacturing (considering
17,¶VLQWHJUDWLRQIXWXUHVWUDWHJ\

Advanced Assembly
Components Materials (Manufacturer /
OEMs
(Enclosure) based surface contract
solutions manufacturer)

NTI’s new TAM by value chain integration into

components (enclosure) manufacturing

This strategy to enter the enclosure manufacturing along with surface treatment can increase
the total addressable market size from USD 6.1 billion in 2020 to USD 24 billion in 2023. This
will allow NTI to become a one-stop-solution for smartphone enclosures. This aggressive
JURZWK VWUDWHJ\ FRXSOHG ZLWK 17,¶V WHFKQRORJLFDO FDSDELOLWLHV DQG NQRZ KRZ ZLOO DOORZ 17, WR
grow faster as compared to other companies active in advanced material business.
Chart 3 (b): Global market size of advanced materials used for surface solutions in
smartphones + enclosure manufacturing, 2016-2023, USD Billion
Global market size (in USD

25

20
16.4
Billions)

15 15.3 15.8
14.7
10

5
5.4 5.4 5.8 6.1 6.6 7.1 7.6
5.0
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F
Potential enclosure manufacturing market (in Billions)

Advanced materials used for surface solutions (in Billions)

Source: Frost & Sullivan

29
Source: World Intellectual Property Organization, Success in the Smartphone Industry is based on intangibles found
in (https://www.wipo.int/edocs/pubdocs/en/wipo_pub_944_2017-chapter4.pdf/) as extracted on 10 Aug 2020.

World Intellectual Property Organization has not provided its consent, for purposes of Section 249 of the SFA, to the
inclusion of the information cited and attributed to it in this document and therefore is not liable for such information
under Sections 253 and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information
is reproduced in its proper form and context and that the information is extracted accurately and fairly, none of the
Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and
Underwriters or any other party has conducted an independent review of this information or verified the accuracy of the
contents of the relevant information.

IMR Report 21
© Frost & Sullivan 2020

D-21
 Note: Above TAM calculation are based on potential partnerships with enclosure manufacturers

COMPUTERS
The global market size for advanced materials used for surface solutions in the computer
industry (Laptops, Tablets and Desktops) increased from USD 0.87 billion in 2016 to USD 0.95
billion in 2019, registering a CAGR of ~2.5-3%. One of the key areas where advanced material
for surface solution is used in various computers is the brand logo. The logo is critical to
manufacturers as it helps in developing brand image and trust amongst its user base.
Computer elements such as detachable parts and hinges are components which undergo
substantial wear & tear over the usage course of the device. Hence, advanced materials are
used for surface solutions on these parts of computers to prevent degradation over time. Other
notable parts in a computer which require usage of surface solutions include electromagnetic
interference (EMI) components, rings & trims, screws/fasteners and housing.
The increasing requirement for effective functionality is propelling the demand for advances in
product design that make the life of the consumer easier. Some recent advancements in
product design include the changes in categories such as foldable tablets, 2-in-1 laptops
(portable computers that have features of both laptops and tablets) and all-in-one PCs
(convenience of a computer and monitor combined into one compact package). Products under
these categories have become slimmer, lighter and complex. The market for these products is
mainly driven by the growing demand for premium consumer electronic products among
affluent consumers and the growing demand for portability and convenience in consumer
electronics.
Similarly, the increasing demand for 2-in-1 laptops is expected to further drive the growth of the
market during the forecast period (2020-2023). These 2-in-1 laptops (such as Galaxy Book Flex,
Lenovo Yoga and others) are highly sophisticated and complex in terms of design and require
larger hinges and detachable components to offer the required functionalities. This increases
the requirement for surface solutions in these products. At the same time the introduction of
new and more sophisticated products under the categories of tablets (e.g. Lenovo ThinkPad X1)
and PCs (e.g. Microsoft surface studio) are also expected to increase the demand for advanced
materials used for surface solutions.
The faster and more powerful the CPU (central processing unit) is, the better the computer's
performance will be. Faster processors also create higher EMI, which is an unwanted radio
wave emission. These emissions cause interference with radios and other electronic devices in
the vicinity. Because of the possible consequences, EMI radiation is regulated by governments
worldwide and is being rigorously enforced. To ensure consistent EMI shielding and meet the
regulatory requirements when mass-producing products, advanced materials are used for
surface solutions. It is estimated that the market size will increase at a CAGR of ~3.5-4%
between 2020 and 2023 to reach USD 1.1 billion by 2023. The chart below shows the market
size of advanced materials used for surface solutions in the global computer industry from 2016
to 2023F.
Chart 4: Global market size of advanced materials used for surface solutions in
computers, 2016-2023, USD Billion

1 1.10
Global market size

1.03
(in USD Billions)

0.95 0.98
1 0.87 0.88 0.87 0.88
1
1
0
0
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

Note: Electromagnetic interference (EMI) coating for camera components has not being included here

IMR Report 22
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 WEARABLES AND ACCESSORIES
17,¶Vadvanced materials are growing significantly in relation to the rising demand for functional
properties in the internal components for these compactly designed wearables including the
smartwatches, wristbands or fitness trackers, hearables and smart rings. Figure 3 shows the
YDOXHFKDLQSRVLWLRQLQJRI17,¶VFRUHEXVLQHVVRISURYLGLQJDGYDQFHGPDWHULDOVRQWKHVXUIDFH
on certain mission-critical internal components, bands and casing.
Figure 3: Simplified Value Chain for Wearables & Accessories (current NTI position)

Advanced End
Components OEMs/ODMs*
Materials customers

Direct TAM for NTI business

Notes*: OEMs and ODMs are the assembly partners for brand wearables customers such as Apple, Samsung, Fitbit
and Huawei.

The market size for advanced materials used for surface solutions in the smart wearables and
accessories increased from USD 0.1 billion in 2016 to USD 0.37 billion globally in 2019,
registering a CAGR of ~56%. Smartwatches hold the largest market for total smart wearables.
Like the smart phones, smartwatches and wristbands are also divided in price categories of
entry level, mid-range and high-end. Wristbands, which are not considered as smartwatches,
are in the entry level category of the wearables as their design and functionality are more basic.
They are popular in emerging markets and ideal for those who are making a first time purchase
of wearable due to lower price point. Smartwatches are more sophisticated with more
functionality and applications than wristbands, that deliver better consumer experience. The
smartwatches, of which the casing is aluminium, are mid-range products with popular pairing
with sports and leather bands. Lastly, the smartwatches with stainless steel casing are the
premium products with common pairing with metal straps such as Milanese Loop band and
leather straps as well. The market for smartwatches has grown significantly in the last few
years to replace basic watches and wristbands. It was estimated that the volume of
smartwatches reached 69 million units in 2019. Apple is the market leader in smartwatches by
accounting more than 45% volume share, leading its closest competitor Samsung and Fitbit
which have an estimated 12% and 11% market share respectively.
Hearables also known as mobile accessories are the highest growth segment in the wearables
market. Since AirPod was launched in 2016, the Apple earwear has experienced exponential
growth over the past few years, especially in 2019. It was estimated that AirPods volume had
,
doubled in 2019 to 60 million units accounting for more than one-third of the total earwear
market.
The smart rings market is also growing as consumers are looking for convenience in payment
and health tracking.
Apple Watch and AirPods are expected to lead the sales in their respective categories and
consolidate their market shares until and beyond 2023. It is estimated that the market size of
advanced materials used for smart wearables and accessories will reach USD 0.68 billion by
2023, registering a CAGR of 18% between 2020 and 2023.

IMR Report 23
© Frost & Sullivan 2020

D-23
 Chart 5a: Global market size of advanced materials used for surface solutions in
wearables & accessories, 2016-2023, USD Billion

1.0

0.68
(in billion USD)

0.58
0.49
Value

0.5 0.37 0.42

0.22
0.10 0.14

0.0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

17,¶V YDOXH FKDLQ LQWHJUDWLRQ VWUDWHJ\ LQWR FRPSRQHQW PDQXIDFWXULQJ (through JVs and
partnerships) has expanded new possibilities in the TAM for the Company. The components
that NTI can provide to OEMs or ODMs as required by their end customers are the high-motion
and micro-electro-mechanical systems (MEMS) sensors, optical encoders, metal and non-
metal internal components, buttons, metal casings and bands. In certain products such as
smart rings and bands, NTI has the potential to become an OEM player themselves by
assembling a finished product to the end customer.

Figure 4: Simplified Value Chain Integration for Wearables & Accessories (considering
17,¶VLQWHJUDWLRQIXWXUHVWUDWHJ\

Advanced End
Components OEMs/ODMs*
Materials Customers

NTI’s new TAM by value chain integration into components manufacturing

*Notes: Becoming OEM to customers is only limited to smart rings and bands. In the case of more complex electronic
products such as smart watches and hearables, NTI will supply selected components to the OEMs/ODMs directed by
customers.

These components represent an estimated 5-10% of the total wearable sales. By providing
these finished components with the coating of advanced materials, NTI can capture additional
addressable market of USD 3.10 billion in 2020. In the same year, the total addressable market
is expected to increase from USD 0.42 billion for advanced materials only to USD 3.52 billion
for manufacturing of coated components. It is estimated that the TAM will further increase to
USD 4.9 billion by 2023 registering a CAGR growth of 12% from 2020.

IMR Report 24
© Frost & Sullivan 2020

D-24
 Chart 5b: Global market size of advanced materials + new TAM by components
manufacturing in wearables & accessories, 2016-2023, USD Billion

6
5
(in billion USD)

4
Value

3 4.3
3.9
2 3.1 3.4

1 0.37
0.22
0.10 0.14 0.42 0.49 0.58 0.68
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F
Advanced Materials New TAM by components manufacturing

Source: Frost & Sullivan

OTHER ELECTRONIC PRODUCTS
The global market size for advanced materials used for other electronic products (hard disk
drive, e-cigarettes and camera brackets computing devices) reached USD 0.39 billion in 2019
from USD 0.41 billion in 2016, registering a decline of CAGR 1.5%. Majority of computers till
date store their digital data in magnetic areas on a device called a HDD. Though the demand
for solid state drives (SSD) and cloud storage is rising, the usage of hard disk drives is
expected to continue due to the cost benefits which HDD offers. Also, HDDs are by far the most
practical solution for a data center. Surfaces of the magnetic media and the head must always
be protected against corrosion and against mechanical damages (wear & tear). Advanced
Materials are used for thin-film coatings (surface solution) to protect HDD head slider and disk,
thus prolonging the life span of HDDs.
EMI coating is applied in the case of camera brackets (primarily plastic) and for electronic
devices (such as tablets, laptops, digital camera, smart cameras) in order to increase shielding.
Surface solutions formulated with advanced materials have the ability to increase functional as
well as aesthetic (colour) properties of camera components.
E-cigarettes are now being seen as a better alternative to conventional smoking tobacco
products. As the demand for E-cigarettes increases, manufacturers are focusing on product
characterisation and design features in order to stand out in an increasingly competitive market.
This is leading to the demand for premium materials for the handles of the device as well as
parts of the trim or band, in order to provide a better look and feel. Advanced Materials are
used for coating these parts (made of plastic and metal) to achieve desired characteristics and
meet the design standards. It is estimated that the market size will increase at a CAGR of ~5%
between 2020 and 2023 to reach USD 0.45 billion by 2023.

IMR Report 25
© Frost & Sullivan 2020

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 Chart 6: Global market size of advanced materials used for other electronic products,
2016-2023, USD Billion

CAGR 2016-19, (1-1.5) %

Global market size (in USD

0.5 0.45
0.43
0.41 0.40 0.39 0.39 0.39 0.40
0.4
Billions)

0.3

0.2

0.1

0.0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

PRECISION ENGINEERING
The global market size for advanced materials used for Precision Engineering (molds, cutting
tools, semiconductor, HPLC, Oil & Gas and industrial components) industry increased from
USD 5.4 billion in 2016 to USD 6.6 billion in 2019, registering a CAGR of 7% approximately in
that timeframe.
Various advanced materials, such as titanium nitride, silicon nitride, silicon oxide, diamond, and
aluminium nitride are used in conductors and insulators that are produced by vacuum
deposition technology. Global semiconductor industry offers high potential growth areas, as
end use industries (communication, computer, consumer, industrial, automotive, and
government) sourcing semiconductors globally are witnessing high demand which is expected
to drive the demand for advanced materials.
Cutting tools are coated with advanced materials to protect them from harsh temperatures,
wear & tear during machining process.
The increasing use of HPLC by the pharmaceutical and chemical industries is expected to drive
the market during the forecast period. These factors will directly drive the demand of advanced
material required for surface treatment of components such as rotors, stators, and pump heads
(made of materials such as stainless steel, ceramics and plastics) in HPLC devices.
Other end use sectors for precision engineering include molds (a hollow frame that sets the
shape of the product being manufactured), Oil & Gas (pressure detection units, flow sensors)
and industrial components. The requirement of precision engineered components (which can
withstand high pressure, high temperature, wear resistance and have superior anti-corrosion
properties) for these end use sectors is also expected to drive the demand for advanced
materials used in surface solutions. It is estimated that the market size will increase at a CAGR
of ~7-8% between 2020 and 2023 to reach USD 8.5 billion by 2023.

IMR Report 26
© Frost & Sullivan 2020

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 Chart 7: Global market size of advanced materials used for Precision Engineering, 2016-
2023, USD Billion
Global market size (in

10 8.5
7.9
8 7.3 6.9 7.4
USD Billions)

6.4 6.6
6 5.4

4
2
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

PRINTING & IMAGING
With a set of primordial elements needing protection against wear & tear, electrostatic
discharges, heat, distortion and high utilization, every single MFP requires to be coated. It is
estimated that the global market value of the advanced materials used for surface solutions in
MFPs was US$ 2.1 billion in 2019, as compared to US$ 2.2 billion in 2016 showing a decline of
a CAGR of 1%. Although the market is mature, the recovery period after the COVID-19
pandemic is forecasted to boost the market, and it is estimated that the growth of the advanced
materials used for surface solutions in MFP market is expected to reach US$ 2.2 billion in 2023,
at a CAGR of 1.2% between 2019 and 2023.
Chart 8: Global market size of advanced materials used for surface solutions in Multi-
Functional Printer, 2016-2023, USD Billion
3

2.16 2.20 2.18 2.17 2.19

2.09 2.02
2 1.88
(in billion USD)
Value

0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

AUTOMOTIVE
Increasing demand in the requirements of engine performance and regulatory emission
standards are urging the automotive OEMs to look for high quality surface coatings. Figure 5
VKRZV WKH YDOXH FKDLQ SRVLWLRQLQJ RI 17,¶V FRUH EXVLQHVV RI providing advanced materials on
the mission-critical parts of an automotive engine, one of which are the piston rings.

IMR Report 27
© Frost & Sullivan 2020

D-27
 Figure 5: Simplified Value Chain for Automotive Piston Rings and Other Engine Parts
(current NTI position)

Advanced Engine
Components OEMs
Materials Manufacturers

Direct TAM for NTI business

The global market size for advanced materials used for surface solutions in the automotive
engine industry increased from USD 1.9 billion in 2016 to USD 2.3 billion in 2019, registering a
CAGR of ~5.5-6.5% in that timeframe. Other than piston rings, the critical parts in automotive
engines are the piston pins & heads, fuel injection parts like injection needles, high pressure
plungers & orifices valves, as well as valve train components such as tappet and camshaft. To
further optimise engine performance, the use of plasma coating has been extended in certain
countries to other engine parts such as dynamic seals, gears and roller bearings.
Light vehicles accounted for the largest sales volume in the total automotive market. Light
vehicles consist of sedans, hatchbacks, SUVs, MPVs and light commercial vehicles. In 2019, it
was estimated that a total of 90.2 million light vehicle units were sold globally. Despite the light
vehicle sales growth being relatively stagnant between 2016 and 2019 (estimated CAGR of ±ve
0.7% between 2016 and 2019); the market demand of plasma coatings has been growing as
the OEMs have been gradually shifting from chrome electroplating and nitriding to PVD
technology. Coating materials such as CrN and DLC are gaining popularity due to their overall
excellent performance in friction resistance when used on the engine parts such as piston rings
and valves.
Medium and heavy duty (MD-HD) commercial vehicles, which are the trucks and buses
carrying heavy loads of 6 tonnes and above, also experienced relatively stagnant growth
(CAGR -ve 0.5% in the period between 2016 and 2019). In 2019, it was estimated that a total of
3.5 million units were sold globally. These MD-HD vehicles use diesel engines. Their emission
levels are highly monitored to meet the environmental standards by each country. Therefore
the usage of coating that helps to reduce further friction and energy loss is crucial for OEMs.
The EVs and fuel cell vehicles (FCVs) have been witnessing high growth due to the trend of
powertrain electrification led by developed markets like USA, Europe, China and Japan to
reduce environmental impact and the shift from both gasoline and diesel engines to EVs and
FCVs. The number of EVs sold in 2019 was estimated to be 2.26 million units. The segment
provides new growth opportunities for the usage of coating materials. The bipolar electrodes in
the FCV segment that use hydrogen technology require vacuum coating to have high corrosion
resistance and high electrical conductivity for improved car efficiency.
It is estimated that the market size of coating materials for all vehicles will increase at a CAGR
of ~9-10% to reach USD 2.9 billion in 2023 from its expected level of USD 2.2 billion in 2020.
The automotive industry is going through a slowdown in 2020 due to Covid-19 pandemic.
Global automotive hotspots like China, USA and Europe have been impacted in Q1 2020. Light
vehicle sales are expected to contract by 14% in 2020 but will experience a rebound from early
2021. However, a relatively positive outlook for the EVs segment is expected.

IMR Report 28
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 Chart 9a: Global market size of advanced materials used for surface solutions in
automotive components, 2016-2023, USD Billion

4
2.9
3 2.5 2.7
3 2.2 2.3 2.2
(in billion USD)

2.1
1.9
2
Value

2
1
1
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

Furthermore, value chain integration of piston rings and other engine components has
expanded new possibilities in the TAM for NTI. Coated engine components represent
approximately 8-10% of the total automotive market.
Figure 6: Simplified Value Chain Integration for Automotive Piston Rings and Other
Engine Parts FRQVLGHULQJ17,¶VLQWHJUDWLRQIXWXUHVWUDWHJ\

Advanced Engine
Components OEMs
Materials Manufacturers

NTI’s new TAM by value chain integration into

components manufacturing

Due to the value chain integration total addressable market which was USD 2.3 Billion (only
advanced materials) in 2019 is expected to increase to USD 352.2 billion for engine
components and advanced materials supply. This represents a very huge possible market
wallet size that the coating players can capture in an automotive supply chain. It is estimated
that the TAM will increase to USD 403 billion by 2023 registering a CAGR growth of 5%
between 2020 and 2023.

Chart 9b: Global market size of advanced materials + new TAM by engine components
manufacturing in automotive, 2016-2023, USD Billion

450 397 398 400

400 350
350
(in billion USD)

300
Value

250
200
150
100
50 1.9 2.1 2.2 2.3 2.2 2.5 2.7 2.9
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F
Advanced Materials New TAM by component manufacturing

Source: Frost & Sullivan

IMR Report 29
© Frost & Sullivan 2020

D-29
 Traditional techniques such as chrome plating and nitriding are still often used by engine
manufacturers for major engine parts. Hence the market demand in advanced materials is
driven by the rate of PVD technology adoption in the market. The excellent results shown by
PVD-coated piston rings and the value positioning have accelerated global adoption of the
technology, therefore providing low-hanging TAM among all other engine components. Chart
9c shows the new TAM for coated piston ring market from 2016 to 2023.

Chart 9c: Global market size of advanced materials + new TAM by piston ring
manufacturing only (in automotive), 2016-2023, USD Billion

3
(in billion USD)

2
Value

1.81 1.79 1.78

1.65
1

0.43 0.47 0.50 0.51 0.49 0.58 0.61 0.65

0
2016 2017 2018 2019 2020F 2021F 2022F 2023F
Advanced Materials New TAM by piston ring manufacturing

Source: Frost & Sullivan

PERSONAL GROOMING
Personal grooming is one of the end use markets in which the Company is involved and for
which it not only provides coatings but also manufactures components. There is a growing
demand for the electric toothbrush handles to be protected with a layer of functional coating
due to the high levels of humidity in their use surroundings and Nanofilm produces coated
handles for this industry. Other personal grooming components are the handles of both electric
and cartridge razors which require functional coating due to the same reason as electric
toothbrushes.
Nanofilm already provides a client with a coated handle module for electric toothbrushes as a
one-stop-solution. This capability, extended to the global electric toothbrush market, promises
new opportunities in the TAM. The coated handle module for electric toothbrushes represents
an estimated 8-10% of the total electric toothbrush market, thus the addressable market here,
which grows in line with the electric toothbrush market, was USD 0.22 billion in 2019, as
compared to USD 0.18 billion in 2016 showing an increase of a CAGR of 7.5% between 2016
and 2019. Owing to a rise of awareness in dental problems and hygiene, an increase in
disposable incomes in developing economies and the development of more innovative products,
it is estimated that the market for advanced materials in personal grooming will reach ~USD
0.28 billion in 2023, at a CAGR of 6.63% between 2019 and 2023.
The accessible market for advanced material coatings is focussed on electric razor handles
and cartridge razors handles. By providing these handle modules with the coating of advanced
materials, Nanofilm can capture an addressable market that was USD 0.46 billion in 2019.
Compared to USD 0.42 billion in 2016, it showed an increase of a CAGR of 3.58%. With the
increasing focus on personal hygiene in both men and women across the world, and the ability
of electric razors to trim and groom beards, it is estimated that the TAM will further increase to
USD 0.53 million in 2023, at a CAGR of 3.36% between 2019 and 2023.

IMR Report 30
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 Chart 10: Global market size of personal grooming coated handle modules, 2016-2023,
USD Billion

1
0.81
1 0.77
0.71 0.74
0.68
1 0.65
0.62 0.28
0.59 0.26
(in billion USD)

1 0.23 0.25
0.20 0.22
1 0.18 0.19
Value

0
0
0.48 0.49 0.51 0.53
0.42 0.43 0.45 0.46
0
0
-
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Razor E-Toothbrush

Source: Frost & Sullivan

1.7.2 KEY PLAYERS IN THE ADVANCED MATERIALS SEGMENT & THIRD PARTY SURFACE
SOLUTION PROVIDERS

Key end use

Market Market Key Product Technology
Country industries/mark
Players Listing category Offered
ets
Consumable
electronics,
Advanced FCVA , Automotive,
Material based Sputtering, Medical, Textile,
Singapor To be
NTI Surface Hybrid (FCVA + Precision
e Listed
solutions and other components,
equipment technologies) Renewable
energy and
Automotive,
Advanced
Predominantly Electronics, Oil &
Materials,
focuses on Gas, Energy,
3M Company USA Yes Surface
providing the raw Healthcare,
Protection
materials Personal Health
solutions
and many others
Automotive,
Advanced Energy,
Predominantly
Materials, Electronics,
DuPont de focuses on
USA Yes Surface Aerospace,
Nemours, Inc. providing the raw
Protection Healthcare,
materials
solutions Industrial and
many others

Automotive,
Surface Predominantly
PPG Industrial,
Coatings, focuses on
Industries, USA Yes Aerospace,
Specialty providing the raw
Inc. Optics and
Materials materials
others

IMR Report 31
© Frost & Sullivan 2020

D-31
 Predominantly Automotive,
High focuses on Electro &
EMS- Performance providing the raw Electronic,
Switzerla
CHEMIE Yes Polymers and materials (e.g. Industry &
nd
HOLDING AG Specialty high-grade Consumer
Chemicals chemical goods, Optics,
intermediates) Packaging

Plasma Semiconductor,
Advanced Enhanced Data storage,
Materials, Chemical Vapor Aerospace,
Entegris, Inc. USA Yes
Surface Deposition Medical, and
solutions (PECVD), PVD, Industrial
ALD, CVD applications

Cabot
CVD, PVD,
Microelectroni Surface Electronics
USA Yes Electrochemical
cs solutions (Semiconductor)
Plating (ECP)
Corporation

Aerospace,
Hexcel Advanced Defense,
USA Yes PVD, CVD, ALD
Corporation Composites Automotive,
Energy
Solutions for
enhanced
performance
Automotive,
through
OC Oerlikon Tooling, Energy,
Switzerla advanced PACVD, PVD,
Corporation Yes Medical,
nd materials, and ePD
AG Aerospace and
surface
Others
engineering
and polymer
processing
Automotive,
Consumer
Formulates, and electronics,
delivers specialty Offshore Energy,
Element Surface
USA Yes chemicals and Water treatment,
Solutions, Inc. Solutions
materials for Medical,
surface solutions Aerospace,
Wearables and
Others
Automotive,
Consumer
Predominantly
Specialty electronics,
Rogers focuses on
USA Yes Engineered Printing, Wind &
Corporation providing the raw
Materials Solar, Medical,
materials
Aerospace, and
Others

IMR Report 32
© Frost & Sullivan 2020

D-32
 Aerospace,
High Predominantly Electronics,
Performance focuses on Energy,
Victrex plc UK Yes
Polymer providing the raw Automotive,
Solutions materials Medical and
Manufacturing
Red Avenue Chemical,
Predominantly
New Automotive,
Advanced focuses on
Materials China Yes Medical,
Materials providing the raw
Group Co., Electronics, and
materials
Ltd. others
Automotive,
Ceramic coating,
Aerospace,
Thermal Thermal coating
Energy and
Processing (flame, spray),
General
Bodycote UK Yes Services, High-Velocity
Industries
Specialised Oxygen Fuel
(Tooling,
Coatings (HVOF) coating,
Electronics,
K-Tech
Medial and
Electronic
components
PVD, PEO (Capacitive
Vitalink Cover Glass &
(Physical Touch Screens,
Industry China No PVD Surface
Electrolytic Heat Insulation
Shenzhen Treatment
Oxidation) Films, Display
Glasses, and
other products)
Electronic
Non-Conductive
components
ZhengheHon Surface Vacuum
China No (metal and
gxin Plastics Treatment Metallization
plastic exterior
(NCVM) PVD
body parts)
Cutting Tools,
Forming and
Surface coating Molding Tools,
IHI IonBond Switzerla solution and PVD, CVD and Automotive
No
AG nd coating PACVD Medical,
equipment Decorative Fuel
Cells, and
Electrolyzers
Machining tools
Surface (precision
Coating engineering
CemeCon AG Germany No materials, HIPIMS PVD, tools), Aircrafts,
service and Smartphones,
systems Medical, Heavy-
duty machinery

Automotive
Surface Thermal Spray (Piston Rods,
Frontken
Malaysia Yes Treatment Coating, Cold Spools, Valves
Corp. Bhd.
Solutions Build Up Coating etc.), Tooling &
Machine Parts

IMR Report 33
© Frost & Sullivan 2020

D-33
 The revenue growth between 2017 and 2019 for leading advanced material and surface
solutions providers were: 3M Company (0.8%), DuPont de Nemours, Inc. (-41.3%), PPG
Industries, Inc. (1.3%), EMS-CHEMIE Holding AG (0.2%), Entegris, Inc. (8.8%), Cabot
Microelectronics Corporation (44.8%), Hexcel Corporation (8.9%), OC Oerlikon Corporation AG
(12.0%), Element Solutions Inc. (-1.1%), Rogers Corporation (4.6%), Victrex plc (-1.8%) and
Red Avenue New Materials Group Co., Ltd. Class A (7.9%).
The EBITDA margins in 2019 for leading advanced material suppliers were: 3M Company
(26.7%), DuPont de Nemours, Inc. (22.6%), PPG Industries, Inc. (15.8%), EMS-CHEMIE
Holding AG (29.7%), Element Solutions Inc. (22.8%), Rogers Corporation (18.3%), Victrex plc
(43.3%), and Red Avenue New Materials Group Co., Ltd. Class A (23.1%).
Similarly the EBITDA margins in 2019 for advanced material based surface solution providers
were: OC Oerlikon Corporation AG (12.9%), Entegris, Inc. (24.4%), Cabot Microelectronics
Corporation (31.2%), and Hexcel Corporation (24.4%).
Graph 1: EBITDA margins and revenue CAGR growth (2017-2019) of NH\ FRPSDQLHV¶
3031
active in Advance Material and Surface Solutions industry, 2019

50% Companies such as 3M, NTI AMBU's EBITDA

PPG, EMS, Elements, Rogers, margin and revenue growth are
Red Avenue only provide raw materials among the highest
or source materials to players Cabot when compared with peers
40% who then provide coating services
Revenue CAGR Growth 2017-2019

Rogers Corp
30% Entegris
Hexcel Corp.
Red Avenue
Element Solutions
20% 3M
PPG
NTI AMBU's
EMS-Chemie EBITDA~44.7%

10% OC Oerlikon
Frontken Corp. Bhd.

0%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

-10% EBITDA Margins

Source: Frost & Sullivan

17, JURXS¶V (%,7'$ PDUJLQ LQ  ZDV  7KH JURXS KDV PDQDJHG WR PDLQWDLQ LWV
margins despite the acquisition of Nanofab Group in 2018 which is a start-up. EBITDA margin
has been consistent around ~40-41% (EBITDA margin in 2017 was 41.3%, in 2018 was 40.3%).
When compared with the average EBITDA margins of leading market players in advanced
material and surface solutions space (~24.6%)17,¶s margins are higher.
NTI as a group is focused on Advanced MDWHULDOVZKLFKFRQWULEXWHGRI17,¶VUHYHQXHLQ
2019. 17,¶V$dvanced Material Business Unit (AMBU) EBITDA margin in year 2019 was 44.7%,
AMBU EBITDA margin has been stable around ~44% between 2017 and 2019 as a result of
proprietary nanotechnology and Advanced Materials. 17,¶V revenue in AMBU has grown by
67% in the first half of 2020 (H1 2020) as compared to the first half of 2019 (H1 2019).

30
Note: DuPont has not been included in the chart owing to the split / de-merger of various business post its overall
merger with Dow Chemicals
31
Note: Wuhu Token Science has not been included as there was a change in revenue collection model in 2019 where
:XKX7RNHQ6FLHQFHVKLIWHGDZD\IURPWKH³%X\DQG6HOO´PRGHOWRFKDUJLQJDSURFHVVLQJIHH

IMR Report 34
© Frost & Sullivan 2020

D-34
 1.7.3 COMPARATIVE STRENGTHS OF THE 17,¶S ADVANCED M ATERIALS¶ CAPABILITIES
AND TECHNOLOGY AGAINST OTHER MATERIAL TYPES

The FCVA coating technology (and the hybrid version FCVA-PVD) developed, applied and
commercialized by Nanofilm, has been long studied in the academic world with universities in
Singapore (NTU and NUS), China, Russia, or even Poland. Yet, the number of companies
actually making business from that technology is very scarce. Only three operating companies
32 33
have been identified: Plasma Technology Ltd., Zunhua Baorui Titanium Technology Co.,
34
Ltd., and NCI-SwissNanoCoat SA .
These three companies involved in FCVA technology are minor players though, and for that
matter, Nanofilm is the global leader in providing surface solutions using FCVA and FCVA-
hybrid vacuum coating technologies. FCVA is a member of the family of arc deposition
processes used to deposit thin films for a range of applications. The creation of an electric arc
at the surface of the cathode produces the plasma beam (moving ions cloud, same material
than the cathode). This plasma contains some larger clusters of atoms or molecules of random
sizes (so called macro-particles), which prevent the formation of a uniform layer on the targeted
surface, as it is the case in other coating technologies such as PVD (sputtering), CVC (PECVD),
Magnetron Sputtering, etc.
The filtering consists in a magnetic field that makes use of the electrically charges of the ions to
bend their direction in a new trajectory, when the bigger particles, neutral, are not influenced by
the filter and leave the pathway. Consequently, only species with uniformity in size reach the
surface to be coated, providing with a homogeneous and dense layer of coating, in a highly
repeatable and reliable process. Therefore, the adhesion of the coating to the substrate is
enhanced due to lesser defects and higher coverage of the nano-layer on the surface, and its
overall properties such as hardness and strength are improved. Moreover, the surface does not
require to be heated to enable a proper arrangement of the material at its surface, unlike in
conventional coating processes, where high temperatures can provoke distortions (changes in
the shape and dimensions of the object to be coated), or even melting of the targeted surfaces.
Having a process working at low temperature opens possibility for usage of materials such as

32
Source: Plasma Technology Ltd, found in (http://www.plasmatechnol.com/) as extracted on 25 July 2020.

Plasma Technology Ltd has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its
proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.
33
Source: Zunhua Baorui Titanium Technology Co, found in (http://www.baoruipvd.com/info/8538/) as extracted on 25
July 2020.

Zunhua Baorui Titanium Technology Co has not provided its consent, for purposes of Section 249 of the SFA, to the
inclusion of the information cited and attributed to it in this document and therefore is not liable for such information
under Sections 253 and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information
is reproduced in its proper form and context and that the information is extracted accurately and fairly, none of the
Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and
Underwriters or any other party has conducted an independent review of this information or verified the accuracy of the
contents of the relevant information.
34
Source: NCI-Swiss NanoCoat SA, found in (http://www.swissnanocoat.com/index.php?page=912/) as extracted on
25 July 2020.

NCI-Swiss NanoCoat SA has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its
proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.

IMR Report 35
© Frost & Sullivan 2020

D-35
 low melting point metals, polymers (plastics and rubbers), and ceramics and hybrid materials
as a substrate.
The table below compares some properties of FCVA with some other coating technologies:
Table 1: Advantages of FCVA technology vs other conventional coating technologies
High Velocity Oxy-fuel
FCVA PVD 㸦 Sputtering㸧 CVD㸦 PECVD㸧
Thermal Spray

Coating Species Ions Atoms Radicals Powder

Process Repeatability Excellent Fair Fair Fair

Adhesion Excellent Fair Fair Excellent

Film Density (DLC

~3.4g/cm3 ~2.2g/cm3 ~2.0g/cm3 High
Film)
Adjustable (software Not Adjustable - Thick
Coating Uniformity Not Adjustable Not Adjustable
parameters) (mm range)
Solids (high temperature
Target Material Solids (any type) Gases Solids
resistance)
Deposition
Room temperature High High High
Temperature

In order to speed up the coating process and remain cost competitive without compromising the
quality of the coating, Nanofilm developed a proprietary process combining FCVA and PVD
(sputtering) technologies, taking advantage of their complementary properties in one process
solution. In the PVD sputtering process, a sputtering gas carries the coating material towards
the substrate. The sputtering increases the velocity of the material and thus the coating speed.
The FCVA-hybrid technology leverages the coating speed and scalability to large surfaces
under the PVD process, together with the high coating quality and the possibility to coat
multiple substrates (including plastics and rubbers) offered by the FCVA process.
The table below compares some properties of FCVA-hybrid technology with proprietary NTI
FCVA and conventional PVD technologies:
Table 2: Illustration of the complementarity of FCVA with PVD (sputtering) in the FCVA-
hybrid technology
Conventional PVD
FCVA-PVD (Sputtering) NTI FCVA
(Sputtering)

- Coating species: ions - - Coating species: ions - - Coating species: atoms

Coating quality Density of 3.4g/cm3 and Density of 3.4g/cm3 and - Density of 2.2g/cm3 and
uniformity adjustable uniformity adjustable uniformity not adjustable

Adhesion Excellent Excellent Fair

Coating temperature Room temperature Room temperature High

High Low: long coating cycle High

Deposition rate
*scalable over large surfaces time requested *scalable over large surfaces

Solids (including plastics Solids (including plastics Solids (high temperature

Target Material
and rubbers) and rubbers) resistance)

Nanofilm patented their advanced materials obtained from their FCVA and FCVA-hybrid
® ®
technologies, such as their TAC-ON and iTAC , which are a variation of Diamond-Like Carbon
® ® ®
coatings (iTAC being a thick version of TAC-ON ). This advanced material (TAC-ON )
3
contains a fairly high quantity of sp carbons (Diamond like) of 85% compared to other DLCs
which contain between 10 to 55%. Yet, the hardness claimed does not seem to be the highest
on the market with Oerlikon Balzers claiming 60 Gpa for their DLC produced by low
temperature PVD. The coating temperature of Nanofilm remains much lower though, enabling
the coating of material to be much more sensitive to temperature. The ability of FCVA to
deposit advanced materials on substrates at room temperature (as opposed to high
temperature deposition by other conventional methods) opens up new markets that were

IMR Report 36
© Frost & Sullivan 2020

D-36
 previousO\ LQDFFHVVLEOH E\ FRQYHQWLRQDO FRDWLQJ WHFKQRORJLHV :LWK 1DQRILOP¶V SURSULHWDU\
technology, coating on plastics, rubber and ceramics is now possible.
0,&&ΠLV DQRWKHU DGYDQFHG PDWHULDO invented by Nanofilm, commonly applied on a wide
range of molding processes, enabling them to run efficiently and lowering costs by prolonging
the life span of tools and molds. Its combined hardness, high critical load and low surface
energy compared to classical chromium nitride or hexavalent chrome for example, make it an
interesting coating choice (note that hexavalent chrome also poses concerns from a health and
environment point of view).
Other coatings made from various metals like Copper, Nitride or oxides like Alumina (Al2O3)
show better performance with the use of FCVA than with conventional coating processes, and
can additionally be coated on surfaces that normally unable to withstand high temperature
(applications in integrated circuits, flexible printed circuits, 5G devices, etc.).
®
Table 3: Comparison of TAC-ON with other DLC coatings

TAC-ON® DLC (a-C:H) DLC (ta-C)

Technology FCVA CVD PVD

Diamond content
~88% 10 to 50% ~55%
(sp3 carbon)

Hardness ~40 Gpa 15-30 Gpa ~60 Gpa

Coating Temperature < 80°C ~350°C ~200°C

Typical Thickness aȝP WRȝP WRȝP

Friction Coefficient ~0.1 ȝ ± ȝ ±

Wearing Rate <1.10-8 ~8.10-8 ~8.10-8

TM
Table 4: Comparison of MICC with other Chrome containing coatings
Chromium Nitride Hexavalent Chrome
MICCTM
(CrN) (H-Cr)

Technology FCVA PVD PVD or plating

Thickness ȝP aȝP aȝP

Friction Coefficient 0.1~0.2 0.3~0.4 0.4~0.5

Critical Load Excellent Good Good

Hardness ~20 Gpa ~15 Gpa 6~9 Gpa

Surface Energy Low Medium Medium

Nanofilm has created new patented advanced materials with unmatched unique properties
including but not limited to increased hardness, improved strength, stronger resistance, higher
durability and environmental sustainability, which allows Nanofilm to have a competitive
advantage over other firms operating in this domain.

IMR Report 37
© Frost & Sullivan 2020

D-37
 1.8 NANOPRODUCTS ASSESSMENT
1.8.1 M ARKET SIZING AND FORECAST OF NANOPRODUCTS (RELEVANT TO 17,¶S
PRODUCT PORTFOLIO) ± BY END USE SEGMENTS

OPTICAL LENS
NTI has been developing and manufacturing Fresnel lenses for smartphones, used for the
flashlight function. This function can also be found in some tablets equipped with cameras;
however, the market trend is closely related to the smartphone market as it is by far the main
user of these lenses. The market for Fresnel lenses remained relatively stable between 2016
and 2019. The global market is expected to increase and reach USD 0.44 billion in 2023, at a
CAGR of 3.38% between 2019 and 2023.

Chart 11: Global market size of optical lenses, 2016-2023, USD Billion

0.5

0.5 0.44
0.42
0.41
0.40 0.38 0.40
0.4 0.38 0.38

0.4
(in billion USD)

0.3
Value

0.3

0.2

0.2

0.1

0.1

0.0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Data for market value and growth rate between 2016 and 2019 from Yole Développement,
market figure forecast from 2019 onwards by Frost & Sullivan
Note: Yole Développement has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its
proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.

OPTICAL SENSORY COMPONENTS

NTI has been involved in the image sensor industry for a few years with the manufacturing of
Wafer Level Optics (WLO; elements such as micro-lenses array, nano-pattern surfaces)
associated with the 3D sensing functions. The company also has the capability to manufacture
35,36,37
and coat lens sets used in image sensors . The smartphone industry accounts for 82% of

35
Source: Yole Développement, Status Camera Module Industry 2019

Yole Développement has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its
proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.

IMR Report 38
© Frost & Sullivan 2020

D-38
 the share of the image sensor market, and although the global volume has slowed down, the
growth of this industry was robust between 2016 and 2019. It was predominantly driven by
multiple camera approaches in smartphones and the development of Advanced Driver-
Assistance Systems (ADAS) & autonomous cars. WLOs have been witnessing a mass-market
adoption in recent years, mainly driven by their usage in the smartphone industry, with the front
and back sides of smartphones being equipped with WLOs. They can also be found to a lesser
extent in other consumer electronics, automotive industry, medical industry and Industry 4.0.
The accessible global market of optical lens sets for imaging sensors has been growing from
USD 3.7 billion to USD 4.3 billion at a CAGR of 5.7% between 2016 and 2019. From 2019 to
2023, the market is estimated to reach USD 5.6 billion in 2023, at a CAGR of 6.7%. The growth
of WLOs was stagnant until 2017 when the mass-market adoption started. This translated to a
global market growth from USD 0.08 billion to USD 0.42 billion at a high CAGR of 74%
between 2016 and 2019. Although the smartphone market has slowed down, continuous
growth is foreseen for Wafer lenses; from USD 0.42 billion to USD 1.65 billion at a lower but
still high CAGR of 43% between 2019 and 2023.
Another type of optical sensory component that NTI is involved in is optical encoders. The
Company is currently developing the next generation of optical encoders for a leading brand in
smartwatches. The global market size is estimated to reach an additional USD 0.06 billion in
2020 up to USD 0.09 billion in 2023 at a CAGR of 15%.

36
Source: IC Insights, CMOS Image Sensor Sales Stay on Record-Breaking Pace, found in
(https://www.icinsights.com/news/bulletins/CMOS-Image-Sensor-Sales-Stay-On-RecordBreaking-Pace/) as extracted
on 2 Aug 2020.

IC Insights has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the information
cited and attributed to it in this document and therefore is not liable for such information under Sections 253 and 254 of
the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its proper
form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors, the
(Continued from 36) Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or
any other party has conducted an independent review of this information or verified the accuracy of the contents of the
relevant information.
37
Source: Image Sensors World, found in (http://image-sensors-world.blogspot.com/2020/) as extracted on 2 Aug 2020.

Image Sensors World has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its
(Continued from 37) proper form and context and that the information is extracted accurately and fairly, none of the
Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and
Underwriters or any other party has conducted an independent review of this information or verified the accuracy of the
contents of the relevant information.

IMR Report 39
© Frost & Sullivan 2020

D-39
 Chart 12: Global market size of optical sensory components, 2016-2023, USD Billion
8.00 7.33
0.09
7.00 6.54
5.83 0.08
6.00 5.26 0.07
(in billion USD)

5.00 4.53 0.06

4.33
4.02 5.6
Value

4.00 3.78
5.2
4.9
3.00 4.6
4.3
3.9 4.1
2.00 3.7

1.00 1.65
0.23 0.86 1.23
0.08 0.13 0.42 0.60
0.00
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Wafer lenses Lens sets Optical encoders

Source: Data for growth rate between 2016 and 2019 from Yole Développement, Validated market figures
between 2016 & 2019 and forecast from 2019 onwards by Frost & Sullivan
Note: Yole Développement has not provided its consent, for purposes of Section 249 of the SFA, to the inclusion of the
information cited and attributed to it in this document and therefore is not liable for such information under Sections 253
and 254 of the SFA. While the Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators and the
Joint Bookrunners and Underwriters have taken reasonable actions to ensure that the information is reproduced in its
proper form and context and that the information is extracted accurately and fairly, none of the Company, the Vendors,
the Joint Issue Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters or any other party
has conducted an independent review of this information or verified the accuracy of the contents of the relevant
information.

1.8.2 KEY PLAYERS IN THE NANOPRODUCTS SEGMENT

Key
Optical
Market Main Technology Nanofabricati
Nanotechnolo Country
Listing Products Offered on
gy Players
components
5-axis diamond
turning, high
precision CNC
Fresnel lenses,
(Computer
wafer level
To be Optical Numerical Control),
NTI Nanofilm Singapore optics and
Listed component EDM (Electrical
optical
Discharge
encoders
Machining),
Injection molding,
FCVA, FCVA-PVD
GMP (Glass Mold
Press), high Fresnel lenses,
Sunny Optical Optical
precision CNC, micro lenses,
Technology components
China Yes injection molding, aspherical and
(Group) Co., , sensors
multilayer coating camera
Ltd. and devices
(technology not modules
disclosed)

IMR Report 40
© Frost & Sullivan 2020

D-40
 Wafer-level glass
Acoustic molding, hybrid
AAC Lenses and
Hong components WLG and plastic
Technologies Yes camera
Kong for mobile lens, multilayer
Holdings Inc. modules
devices coating (technology
not disclosed)
Injection molding,
wafer level molding Wafer lenses,
Optical
process, multilayer face
AMS AG EU Yes components
coating (PVD, recognition
and sensors
CVD, and plasma- modules
CVD)
Optical
Plastic
lenses, Injection molding,
Largan aspherical
Voice Coil spin coating or no
Precision Co., Taiwan Yes lenses, camera
Motor, coating (material
Ltd. module lens
contact optimization)
set
lenses
Optical
components Plastic lenses,
Ultra-precision
Nissei and straight and
Japan No molding, Ion Assist
Technology precision folded optics,
Deposition coating
engineering TOF lenses
components
Nanoimprint
Lithography, UV
Micro lenses,
Replication, Hot
metalenses
NIL Optical Embossing,
EU No and 3D
Technology components Injection Molding
imaging
and Roll Imprinting
modules
(coating technology
not disclosed)
Ultra-precision
Optical molding, Multilayer Fresnel lenses,
Edmonds components coatings (PVD, many lenses
USA No
Optics , cameras CVD, E-Beam and and miniature
and devices Ion-Assisted cameras
Deposition)
Optical
Drawing, molding Sensors,
Hamamatsu components
Japan Yes (coating method cameras,
Photonics K.K , sensors
not disclosed) photodiodes
and devices

The EBITDA margins in 2019 for key companies active in Nanoproducts segment were: Sunny
Optical Technology (Group) Co., Ltd. (15.5%) and AAC Technologies Holdings Inc. (26%).

IMR Report 41
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D-41
 Graph 2: EBITDA and EBITDA margins of NH\ FRPSDQLHV¶ DFWLYH LQ 1DQRSURGXFWV
segment, 2019, USD Billion
0.45

0.40

0.35

0.30
EBITDA, Billion USD

0.25

0.20 Sunny Optical

0.15 AAC Technologies
NTI Group
0.10 ~40%

0.05

0.00
0% 10% 20% 30% 40% 50%
EBITDA Margins

Source: Frost & Sullivan

1.8.3 COMPARISON OF 17,¶S OFFERINGS WITH ITS COMPETITORS

In the manufacturing of optical lenses and optical sensory components, Nanofilm possesses
major strengths in the market: the integration of the FCVA and FCVA-hybrid coating step in
their nanofabrication technology (manufacturing step that can be applied to plastic lenses since
it is used at room temperature), together with their proprietary advanced material TAC-ON®.
Their combined influences grant an advantage over conventional fabrication lines of optical
lenses and optical sensors (optical parts) due to the quality of the coating deposited and the
properties of the advanced materials. Their tooling capabilities (Diamond turning, CNC
machines, EDM machines, grinding equipment, injection mold equipment, and imprinter) are
accessible to any manufacturer, but owing to the properties and advantages of FCVA over
other conventional coatings, Nanofilm offers a one-stop-shop to perform multiple procedures,
thus reducing additional time and risk in the supply chain. Also, Nanofilm developed its
proprietary Computer Aided Design (CAD) software and Computer Aided Manufacturing (CAM)
which specialize in optic lenses and sensory components. The original algorithm and software,
GHYHORSHGIURPWKHH[SHUWLVHJDWKHUHGRYHUWKH\HDUE\1DQRILOP¶Vin-house engineers, enable
Nanofilm to take full advantage of its tooling machines capabilities, providing superior design
realization and greater accuracy. This enables the Company to provide end-to-end solutions,
ranging from customized design to final product realization.
Some competitors may however obtain a significant advantage over Nanofilm by going even
further in providing a one-stop-solution that offers not only the lens set but also a fully
integrated module of camera and optical sensors.

1.9 INDUSTRIAL COATING EQUIPMENT

1.9.1 M ARKET SIZE AND FORECAST OF THE GLOBAL INDUSTRIAL COATINGS
EQUIPMENT (RELEVANT TO 17,¶S PRODUCT PORTFOLIO)

Vacuum coating equipment relates to the coating system that enables the deposition of a thin
film of advanced materials on key end-product components using PVD and CVD technologies.
There are many sub segments of technologies in both PVD and CVD such as magnetron
sputtering (PVD sputtering), arc-evaporation, FCVA, plasma-assisted CVD (PACVD) and ALD.

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 Chart 13: Global market size of vacuum coating equipment, 2016-2023, USD Billion
Global market size (in
40 35.4
31.7 33.5
35 29.9
28.3
USD Billions)

30 25.8 27.0
24.6
25
20
15
10
5
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

The market size for vacuum coating equipment increased from USD 24.6 billion in 2016 to USD
28.3 billion globally in 2019, registering a CAGR of 5.5-6%. The largest technology equipment
is the CVD technology widely used in semiconductors.
Some companies are focusing solely on equipment sales for a single industry, for example the
semiconductor players, while in most cases the manufacturers sell the equipment across
industries. Engineering services and after-sales support by these companies are provided
through spare parts provision and maintenance services, for additional revenue streams. There
are also companies which operate using a hybrid model, in which they provide both coating
services and equipment sales such as Oerlikon Balzers and IHI Group. These companies have
coating centres present worldwide to provide coating services efficiently to their target
customers. Another business model is in-house contract coating services. The suppliers install
their equipment & V\VWHPLQWRWKHFXVWRPHUV¶PDQXIDFWXULQJOLQHSURYLGLQJIOH[LELOLW\XSRQWKH
requirement of their customers.
Chart 14: Global Vacuum Coating Equipment by End Use Segment, 2019 and 2023F
Optics, Cutting Optics, Cutting
Glass Tools & Others* Glass Tools & Others*
and Molds 12% and Molds 11%
Display 19.0% Display 17.0%
9.0% 9.0%

Semicon Semicon
ductor ductor
60.0% 63.0%
2019 2023

Source: Frost & Sullivan

Note: *Others include 3C, medical devices, personal grooming, automotive and aerospace components
Semiconductor segment includes microelectronics, solar panels and data storage

It was estimated that sales of equipment in semiconductors reached USD 17 billion in 2019,
with more than two-thirds accounted for by CVD equipment. Semiconductors and
microelectronics are the largest end use markets which continuously spur the industry demand
for these types of equipment, followed by cutting tools and molds. The latter is used across a
broad range of precision engineering sectors which include automotive, 3C, metalworking and
other industrial markets. The third largest end use in equipment sales is the optics and displays
segment which are used primarily in 3C category.

It is forecasted that the market size of equipment will increase at a CAGR of ~4.5-5% to reach
USD 35.4 billion in 2023 from its current estimate of USD 29.9 billion in 2020. Semiconductor
equipment is expected to increase by 6-7% year on year and hence plays an important factor
for the overall equipment sales in the near future.

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 1.9.2 KEY PLAYERS IN THE INDUSTRIAL COATINGS EQUIPMENT SEGMENT

Vacuum
Coating Market
Country Technology Main end use market
Equipment Listing
Supplier
Consumer electronics,
To be precision engineering,
NTI Singapore FCVA, Sputtering
Listed automotive, printing and
imaging

Cutting tools and die

molds, consumer
Sputtering, Arc-
Oerlikon Balzers EU Yes electronics, automotive,
PVD and PACVD
home appliances and new
energy
Cutting tools and molds,
IHI Hauzer
Sputtering, Arc- automotive engine and
Techno Coating EU No
PVD and PACVD decorative for consumer
B.V.
products

Kobelco Steel Sputtering and Cutting tools and molds in

Japan Yes
Group Arc-PVD precision engineering
Sputtering, Automotive interior,
Kolzer SRL EU No Metalisation and exterior and decorative for
PACVD consumer products
Sputtering and Semiconductor and solar
ULVAC USA Yes
CVD panels
Applied Material PECVD, ALD and
USA Yes Semiconductor
Inc. ECD
Lam Research PECVD, ALD and
USA Yes Semiconductor
Corporation ECD
Tokyo Electron
Japan Yes ALD and LPCVD Semiconductor
Ltd

Energy, Automotive,
Mustang Vacuum
USA No PVD, Hybrid DLC Biomedical, Consumer
Systems Inc.
Products and others

The EBITDA margins in 2019 for industrial coating equipment suppliers were: Applied Materials,
Inc. (25.6%), Lam Research Corporation (28.2%), and Tokyo Electron Ltd. (24.2%).

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 Graph 3: EBITDA and EBITDA margins of NH\ FRPSDQLHV¶ DFWLYH LQ ,ndustrial coating
equipment, 2019, USD Billion
4.5

4.0 Applied Materials

3.5
EBITDA, USD Billion

3.0
Lam Research
2.5

2.0

1.5

1.0

0.5 NTI IEBU

Tokyo Electron ~33.6%
0.0
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
EBITDA Margins

Source: Frost & Sullivan

1.9.3 COMPARISON OF 17,¶S OFFERINGS WITH ITS COMPETITORS

NTI offers their proprietary FCVA and PVD coating equipment to certain customers to
complePHQW WKHLU FRUH EXVLQHVV RI $GYDQFHG 0DWHULDO FRDWLQJ  17,¶V FRDWLQJ HTXLSPHQW
competes with other PVD equipment suppliers, mainly those which utilise sputtering and arc-
evaporation technologies as well as the CVD equipment players.

7KH FRPSDQ\¶V )&9$ HTXLSPHQW DOORZV FRDWLQJ SURFHVV to be performed at lower

temperatures (below 80 deg C) hence covering new substrate materials as compared to the
high deposition temperature seen in conventional PVD sputtering and CVD. The use of FCVA
equipment also enables the production of nano-scaled coating which has superior adhesion,
density and hardness, which are qualities that prolong the durability and lifespan of their
FXVWRPHU¶V SURGXFWV (by more than 5 times). Furthermore, new proprietary coating materials

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 such as iTAC, TAC-ON and MiCC are only made possible due to the CRPSDQ\¶V XQLTXH
RIIHULQJRI)&9$ HTXLSPHQWDQGV\VWHP:LWK17,¶VHTXLSPHQWWKH Company can also apply
its technology on conventional materials such as copper and aluminium in their FCVA-hybrid
model equipment to produce new refined materials. At this stage, no other significant
competitor is able to offer FCVA technology based equipment.

0DQ\ LQWHUQDWLRQDOO\ UHFRJQLVHG SOD\HUV FRPSHWH GLUHFWO\ ZLWK 17,¶V 39' FRDWLQJ HTXLSPHQW
such as Oerlikon Balzer, IHI Hauzer and Kobelco. With the exception of a few players, NTI is
uniquely positioned in its equipment business due to its involvement in coating services and
components manufacturing. For example, in the latter, NTI works with smart ring and piston
rings manufacturers. The vertical integration has allowed NTI to customise to a certain extent
its equipment through direct understanding of the end use process requirements. NTI is able to
offer customised design to their coating chamber according to different customer needs and
specifications. In many cases, 17,¶VFRDWLQJFKDPEHUVDUHGHVLJQHGWRKDYe bigger dimensions
than their competitors in order to load more parts and offer cost saving benefits for its clients.
2ZLQJ WR 17,¶V SURSULHWDU\ VRIWZDUH it is able to design the process flow and control the
process parameters in its own machines, thereby positioning itself as an equipment player with
an end-to-end coating solution.

1.10 COMPONENT/MODULE MANUFACTURING

1.10.1 MARKET SIZING AND FORECAST OF THE GLOBAL COMPONENTS MANUFACTURING
SEGMENT - SPLIT BY END USE SEGMENTS

AUTOMOTIVE
The engine is one of the most critical modules of a vehicle which requires functional coating in
order to reduce friction loss and levels of gas emissions emitted by the internal combustion
engine. Automotive engine parts is one of the module manufacturing areas which NTI is
38
considering integrating its supply chain into, beyond surface solution services.
Extending the working life of piston rings is critical as piston rings are subject to high wear &
tear and they account for 30% of total engine friction loss. To improve the performance of
piston rings, several coating materials have been introduced such as CrN and DLC by PVD
methods to replace the traditional chrome plating and nitriding technologies. NTI

38
Note: Other components such as power transmission and brake systems are excluded in this component study
chapter.

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 commercialised its iTAC advanced material which has been specified as the industry standard
for use to coat piston rings by leading automakers such as TPR and Riken. NTI has the
potential to become one of the key carbon coating suppliers to global automotive OEMs. Other
parts of the engine which require tribological coatings for improved performance are the
injection and valve train systems which consist of injection needles, plungers, tappets,
camshafts and valve lifters.
Reducing wear & tear in the engine is paramount to controlling the emissions level of vehicles.
In Europe, Euro 6 standards for exhaust emissions have had a big impact on the automotive
industry, especially for the design and manufacturing of automotive engine parts.
Manufacturers have been mandated to ensure that new car emissions do not exceed the limits
of Euro 6 standards.
The global sales of finished coated engine parts were stagnant since 2016 due to a slowdown
in the automotive market. The sales are expected to drop in 2020 due to the COVID-19
pandemic, but they are expected to pick up owing to the potential rebound in global economy
starting early 2021.
Bipolar plate electrodes are one of the main components in EVs for coating applications. The
EVs market is expected to grow despite the pandemic. It is estimated that EVs are expected to
grow at a CAGR of ~8-10% between 2019 and 2020 to reach 2.5 million units in 2020. This
represents a long term growth opportunity area for EV coated components.
Chart 15: Global market size of overall automotive engine components, 2016-2023, USD
Billion

CAGR 2016-19, ~0%

Global market size

500 450
(In billion USD)

430
450 397 398 389 399
383 384
400
350
300
250
200
150
100
50
0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

Chart 16: Global market size of piston rings, 2016-2023, USD Billion

CAGR 2016-19, ~0%

Global market size

3.0
(In billion USD)

2.4 2.4 2.3 2.4 2.4 2.4

2.5 2.3
2.1
2.0

1.5

1.0

0.5

0.0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

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 SMART WEARABLES & ACCESSORIES
The components in smart wearables and accessories will require NTI¶V functional coatings and
39
offer value chain integration opportunities for the Company. Some areas include the high-
motion and MEMS sensors, optical encoders, metal and non-metal internal components,
buttons, metal casing and bands.
The demand for coatings is related to the usage of high-motion sensors which have built-in
micro mechanical metal parts subject to high wear & tear due to constant movement. In order
to offer health and fitness tracking functions to the consumers, sensors such as gyroscopes
and accelerometers are embedded in the compactly designed wearables.
The market size for these components in smart wearables and accessories increased from
USD 0.8 billion in 2016 to USD 3.2 billion globally in 2019, registering a CAGR of ~61%
between 2016 and 2019. The demand has been growing significantly mainly due to the higher
adoption of hearables with new product features.
In addition to the microphones, the new additional use of sensors in hearables such as optical
sensors and accelerometers to detect the earphones position in the ears were the new product
trends that led to a significant growth of hearables market in 2019.
The optical encoders are used primarily in the digital crown of Apple smartwatches, which
mimic the crown used in mechanical watches. The Apple digital crown enables the users to
navigate through the watch application by turning around the crown button. Smartwatches will
continue to show promising growth with an estimated 16.4% CAGR from 2018 to 2023. Led by
Apple, the market leader in smartwatches, the global sales of smartwatches have overtaken the
sales of fitness trackers in 2019. They are expected to continue their growth trends until and
beyond 2023.
Furthermore coating materials are used for decorative purposes in smartwatches and smart
rings. Compared to plastics, aluminium and rubber, the use of stainless steel and titanium in
the casings of smartwatches, wrist bands and rings offer a more premium look and design
targeting premium consumers. These high-end segment wearables will be the key growth
segment for the components market as well. It is estimated that the components market size
will increase at a CAGR of ~12% between 2020 and 2023 to reach USD 5 billion by 2023.
Chart 17: Global market size of smart wearables and accessories components, 2016-
2023, USD Billion

6
5.0
Global market size

5 4.4
(in billion USD)

3.9
4 3.5
3.2
3

2 1.7
1.1
0.8
1

0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

39
Note: Key components of these smart devices such as semiconductor chips and glass panels are excluded in this
component chapter study.

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 OTHERS
NTI is also targeting supply chain integration at smartphone enclosures and other selected
modules in certain end use markets, in which they are already providing surface solution
services.
Enclosure (shell/case of a phone) provides structural integrity to a smartphone but it also
undergoes wear & tear due to frequent contact with human hands and objects (e.g. friction with
car keys). This creates the need for advanced material surface solution in order to reduce
degradation over the usage period of smartphone. The enclosure market experienced a
moderate 4-5% CAGR growth from 2016 to 2019. Frost & Sullivan estimated that it will register
a slight declined growth of 3-4% between 2020 and 2023.
The logos for computers such as desktops, laptops and tablets are one of the components that
require high aesthetic and functional coating. Logos help the consumers to differentiate
between products, grab WKH FRQVXPHUV¶ DWWHQWLon and help the manufacturers in brand
development as well as in building trust among consumers. These finished logo components
market experienced stagnant growth from 2016 to 2019. Frost & Sullivan estimated that after a
dip in sales in 2020 due to the COVID-19 pandemic, the computer logos market will rebound
and increase with a single-digit growth until 2023.
Personal grooming is one end use market in which the Company is interested in its module
manufacturing business expansion as well. There is a growing demand for the electric
toothbrush handles to be protected with a layer of functional coating due to the high levels of
humidity in their use surroundings. The market of electric toothbrush with coated handles is
anticipated to grow at a CAGR of 6-8% between 2016 and 2023. Other FMCG personal
grooming components include the handles of both electric and cartridge razors which require
functional coating due to the same reason as electric toothbrushes. The market of electric and
cartridge razors with coated handles is estimated to register a CAGR growth of 3% between
2020 and 2023.
The rollers for MFP are components in which the Company has already started vertical module
integration. The rollers are very sensitive to humidity and resistance. As they are attached to
the printer drums, coating is required to protect the drum damage by arcing. The coated rollers
market has been declining slightly over the years, and a decline is expected in 2020 due to the
COVID-19 pandemic. It is estimated that the volume of coated roller will start to grow slightly
starting from early 2021 rebound and grow by a mild 3% CAGR from 2020 to 2023.
Chart 18: Global market size of smartphone enclosures, 2016-2023, USD Billion

25 22.0 22.8
20.7 20.5 21.2
19.5 19.8
20 17.2
Global market size
(In billion USD)

15

10

0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

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 Chart 19: Global market size of other selected components in 3C, MFP and Personal
Grooming, 2016-2023, USD Billion

CAGR 2016-19, ~ 0.5%

2.5 2.2 2.3
2.1 2.2 2.2 2.2 2.2
2.1
2.0
Global market size
(In billion USD)

1.5

1.0

0.5

0.0
2016 2017 2018 2019 2020F 2021F 2022F 2023F

Source: Frost & Sullivan

1.10.2 KEY PLAYERS IN THE COMPONENTS MANUFACTURING SEGMENT

The leading players in the automotive engine parts manufacturing are as follows:
Automotive
Engine Market Key OEM
Country Main Products
Components Listing customers
Players
Yizheng Nahuan
FAW Jiefang, Geely,
Technologies Co
Suzuki, Changan,
Ltd (NHT) ± JV China No Piston rings
Dongfeng, Peugeot,
between NTI and
Hyundai, Chery
Asimco

Toyota, Nissan,
Nippon Piston Piston rings and Honda, Mitsubishi,
Japan Yes
Rings Co., Ltd. valve seal inserts Audi, Volkswagen
AG

Engine systems
and components,
thermal Volkswagen, Audi,
Mahle GmBH EU Yes
management Mercedes
systems for
automotive
General Motors Audi,
Federal Mongul BMW, Ford,
Engine systems
(acquired by USA No Mercedes-AMG and
and components
Tenneco) PSA Peugeot
Citroën,
Automotive
engine, interior & Toyota, Nissan,
TPR CO.,LTD Japan Yes
exterior parts and Honda, Suzuki, Hino
suspension
Automotive Isuzu, Toyota,
Riken
Japan Yes engine, steering, Nissan, Honda,
Corporation
suspension Mitsubishi

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 Automotive
Tianjin FAW Toyota
engine,
Anhui Ring New Motor Co.,Ltd, GAC
China No transmission,
Group (ARN) Toyota Motor Co.,
clutch
Ltd, Geely,
components

Hunan
Fiat, Ford, Toyota,
ZhengYuanDongl China No Piston pings
Volkswagen AG
i Parts Co
Samkrg Piston Kawasaki, Honda,
Pistons, piston
And Rings India Yes Royal Enfield, Bajaj,
rings
Limited Yamaha

The leading players in the components manufacturing for smart wearables and accessories
segment are as follows:
Electronics
Market Business For end use market
Components Country
Listing Portfolio 3C and wearables
Suppliers
Advanced material
Advanced and coating, optical
NTI Singapore To be Listed Materials, encoder, sensory
nanofabrication components and
lenses

Semiconductor Encoders, optical

Broadcom USA Yes and infrastructure sensors, LEDs and
software solutions displays

Mainly
Position sensors
Sensata semiconductor
and encoders,
Technologies interconnects. Their
USA No switches and
(BEI Sensors - sensors and
relays, power
acquired) encoders for other
control
industrial application
Precision
measurement,
Optical and magnetic
Reinshaw UK Yes process control,
position encoder
position and
motion control
Advanced
Murata Encoders and
electronic
Manufacturing Japan Yes sensors, capacitor
materials and
Co., Ltd and inductors
components

Semiconductor
High motion sensors,
STMicrolectronics EU Yes chips
MEMS sensors
manufacturing

Microcontrollers, Processors, high

processors, motion sensors,
NXP EU and
Yes sensors, analog NFC, power, audio
Semiconductors USA
ICs and codec and wireless
connectivity management

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 Motion sensors for
MEMS sensors smartphones, tablets
Bosch Sensortec EU No
across industries wearables and
hearables

Processors,
Semiconductor connectivity and
chips and power systems,
Texas
USA Yes electronic optical heart rate
Instruments
systems sensors, temperature
manufacturing and ambient light
sensors

Integrated Motion
USA and MEMS sensors and
TDK Ivensense No and Sound
Japan microphones
solutions

MEMS sensors Accelerometers, 6-

Kionix USA No
across industries axis combo parts

1.10.3 17,¶S GROWTH STRATEGY INITIATIVES

17,¶V QDQRWHFKQRORJ\ VROXWLRQV FDQ EH ZLGHO\ XVHG DFURVV D ZLGH UDQJH RI LQGXVWULHV $Q\
component which is subject to wear & tear and requires friction resistance across various
industry verticals can eventually present a potential market opportunity for 17,¶V
nanotechnology. The cRPSDQ\¶VJURZWKVWUDWHJ\OLHVin the segregation of their business focus
by end use markets. They wish to expand their market share in current established markets
such as 3Cs, printers, automotive and precision engineering. 3C is a key focus market for NTI
and the market is driven by consumer and technology trends such as premiumisation of end
40
products, huge demand for wearables, 5G adoptions and others . Between 2017 and 2019,
17,¶V $GYDQFHG 0DWHULDO UHYHQXHs in all their established markets had increased at a higher
rate than the industry growth. NTI has expanded its revenue share in these markets and is
expected to continue its strong growth in 2020 and beyond.
NTI has identified other specific end use markets to accelerate business growth and has been
investing in R&D activities to cater to these markets. 17,¶s proprietary technologies are easily
adaptable to allow its smooth penetration into personal grooming and CdTe solar panels. In
these two industries, the Advanced Materials market is expected to grow as well and is driven
by increasing demand for hygiene and environmental friendliness in personal grooming
products along with the implementation of renewable energy policies. Solar panels made from
conventional coating technologies are expensive, whereas 17,¶V &G7H WKLQ films for solar
panels have lowered the cost of solar panels and have facilitated mass production as well as
higher market adoption of solar panels.
NTI is well positioned to benefit from secular growth trends such as the increasing premium
nature of end-products, digitalisation, IoT adoption, 5G implementation, increasing data
demand, stricter emission standards for combustion engines and increasing environmental
regulation. These trends would increase the demand for, among others, high-speed data
processors (which will need to manage heat efficiently), environmentally-friendly combustion
engines (which will need to meet stricter emission reduction standards), electric and
autonomous vehicles, smart wearables and devices, medical implants, new renewable energy
sources (such as fuel cell and solid state batteries) and high frequency communication 5G
network equipment.

40
Note: All trends and drivers for 3C and other end use segments are covered in section 1.3 of this Report

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 In particular, NTI has identified a few additional niche markets which are currently still at
nascent stages RI 17,¶V development cycle such as biomedical equipment, new energy (fuel
cell and solid-state batteries), high frequency communications (5G networks) and aerospace,
as future long term opportunities for the company. Owing to their strength in Advanced
Materials, NTI is well positioned to benefit from growth trends in these markets such as rising
usage of medical implants, fast adoption of electric vehicles, demand for high-speed data
processors and high demand for aircraft engine efficiency. In medical implants, NTI is currently
in the process of developing a surface solution that utilises an advanced material based on bio-
compatible carbon. This is expected to be compatible to human bodies, reducing the risk of
rejection, and prolonging the service lifespan of the medical implant.
Because of its patented FCVA technology and new patented advanced material, the Company
is able to find an unique position in the supply chain of components to end products and that
they would not easily be replaced by other conventional technology providing competitors.
Some components manufacturers can collaborate with NTI and find any possible cost savings
in the end product value chain. For example they have a joint venture with ASIMCO&KLQD¶V
largest piston ring maker, to in-house produce FCVA coated piston rings for Chinese and global
automotive manufacturers. Another example includes their partnership with smart ring
customer, Oura Ring, to assemble the complete module from titanium body to the embedded
sensors and electronic components. Such partnership initiatives of the Company have created
new vertical growth opportunities.
Another growth strategy of the Company is their hybrid business model in which they provide
both equipment sales and surface solutions services. The latter is provided in their China and
Singapore coating centres, and the choice of business depends on customer situation and
industry. This hybrid strategy allows NTI to have a strong understanding of the components
business as compared to other competitors who are more equipment focused. The Company is
able to provide finished components with surface solutions services included as one-stop
VROXWLRQWRWKHFXVWRPHUV¶2(0VDQG2'0VWKHUHE\IRUPLQJDQLQWHJUDOSDUWRIWKHFXVWRPHUV¶
manufacturing and assembly process.

1.10.4 KEY STRENGTHS OF NTI IN THE COMPONENTS MANUFACTURING SEGMENT

NTI has entered into the verticals of components assembly and manufacturing for certain
DSSOLFDWLRQV VXFK DV SLVWRQ ULQJV VPDUW ULQJV FRPSXWHUV¶ ORJRV DQG UD]RU KDQGOHV 17,¶V
strength lies in its patented coating technology and new advanced materials that are uniquely
created. These new materials have been proven to show superior characteristics and
functionalities. This gives them direct opportunities to work with international brand owners
such as Microsoft in the 3Cs industry and other global customers due to product differentiation
and superior performance. So when customers are looking for suppliers to provide one-stop-
solution, NTI is able to lead the supply chain management through their unique FCVA
technology and strong understanding of the customHUV¶PDQXIDFWXULQJDQGDVVHPEO\SURFHVV
For example it can provide coated piston rings to the automotive OEMs in China and other
international countries by collaborating with an existing component manufacturer.
17,¶V FRUH EXVLQHVV LV the provision of surface solutions services to third-party components.
Especially in the &VHJPHQW17,¶VFORVHFRPSHWLWRUVDUHsurface solutions service providers in
China which purchase and rely on third-party sputtering, arc-PVD and other PVD or CVD
equipment. NTI has its unique FCVA technology which provides new possibilities of substrates
to be used and engender the availability of new advanced materials that other technologies do
not offer. With its own design equipment and technology, NTI is in a strong position to offer
customised surface solution services and provide end-to-end solutions to its customers with
regards to coating and machine support. Its own nanoproducts such as Fresnel and optical
lenses as well as sensory components are also part of the total solutions that it can offer to the
customers to standout from its competitors. With its patented technology and advanced
materials used, its nanoproducts are unique in-house manufactured components that appeal to
the global customers. 17,¶V 1DQRIDEULFDWLRQ %8 LV ZHOO-positioned as a key supplier to the
global optical lenses and sensors industries. It has the potential to be a high-volume profitable
business which will see strong growth underpinned by the increasing adoption of optical lenses
in 3C, medical and automotive industries.

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 In cases where customers are looking to streamline their outsourcing suppliers and look for
single suppliers that provide the finished components, NTI is able to leverage on their key
technological strengths and deal with the components suppliers on behalf of their customers.

1.11 OUTLOOK & PROSPECTS FOR NTI

Frost & Sullivan believes that NTI, by virtue of its FCVA and Hybrid FCVA Technology, has a
unique position in the advanced materials & surface solutions landscape, in comparison to the
other surface solution providers that offer traditional PVD and CVD technologies along with
PRGLILHGYDULDQWVRIWKHVHSURFHVVHV17,¶VSURGXFWVDQGVHUYLFHVFDWHUWRDZLGHUDQJHof end
use industries which include Smartphones, Automotive, Wearables, Personal Grooming,
Consumer Electronics and others. Each of these end use industries is expected to show
relatively robust growth rates over the course of the next four to five years, once the economic
crisis owing to the COVID-19 pandemic tides over. NTI is well poised to provide high quality
surface solutions, nanoproducts as well as highly specialized surface solutions equipment for
these end use industries.
We expect that the key demand drivers of the various markets which NTI operates in are as
follows:

End-market Key demand drivers

x Key demand drivers are expected to be 5G implementation,

Smartphones
replacement cycle and premiumisation trends
x Significant opportunity to capture PRUHRIRXUFXVWRPHUV¶YDOXH
chain in components manufacturing (e.g. smartphone
enclosures)
x Key demand drivers are expected to be demand for
Wearables &
nanotechnology solutions for products such as smartwatch
Accessories
bands
x Key demand drivers are expected to be new applications such
Computers
as hinges and premiumisation trends
x Key demand drivers are expected to be customer acquisition in
Precision
existing end-markets (e.g. HPLC components) and new
Engineering
applications (e.g. household sanitary applications)
x Key demand drivers are expected to be the ramp-up of our joint
Automotive
venture with CYPR, and our diversification into other engine
components and fuel cells
x Key focus in this segment is on enabling product upgrades and
FMCG Personal
enhancements
Grooming
x Demand drivers are expected to be the mass production of
applications under development and our intended expansion to
include applications for other products
x Key demand driver is expected to be increasing market share
Printing & Imaging
in the MFP industry
17,¶Vtechnology capabilities and potential TAM opportunity provides it
Nanofabrication
with the following growth opportunities:
x Key demand drivers are expected to be the increase in demand
for optical lens and sensory components in key end-markets
such as 3C and Automotive
x Focus on segments such as Fresnel lenses and tunable lenses

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 x We are in the process of developing far/near zooming lenses,
enabling us to product sleeker/slimmer designed sensors,
mobile phone camera modules, as well as sportswear and
protective goggles
x Leverage synergies across our business segments to offer our
customers integrated solutions ± for example, combining our
surface solutions with nanofabrication capabilities

In addition, the aggressive strategy adopted by NTI, which entails having a greater degree of
integration along the value chain through partnerships or joint ventures, gives the Company a
wider market access coupled with more control along the value chain. This in turn, provides the
Company wiWKVWURQJJURZWKSRWHQWLDOLQFDSWXULQJPRUHRIWKHFXVWRPHUV¶YDOXHFKDLQZKLFKLW
serves. 7KURXJKWKLVLQWHJUDWLRQ17,KDVWKHSRWHQWLDOWREHFRPHDµ2QH-Stop-6KRS¶IRUVXUIDFH
treated components such as Piston Rings, Smartphone Enclosures, Wearable Components as
well as Electric Razor parts, handles and components. The Company has already secured its
first partnership / JV with a key piston ring manufacturer in China, namely ASIMCO. This joint
venture will manufacture the piston rings and NTI will provide the advanced surface treatment
products to improve the wear resistance of the piston rings. Without any form of surface
treatment, these piston rings will degrade in a short span of time, thereby rendering them not
usable and impacting vehicle life-span. Similar JVs are being looked into for smartphone
enclosures and other products by NTI.
The CRPSDQ\¶VUHYHQXHVRI86'0LOOLRQLQZKLOHUHODWLYHO\VPDOOKDVEHHQJURZLQJ
at approximately 17.4% CAGR between 2017 and 2019. With the inclusion of the Value Chain
Integration strategy envisaged by NTI, the potential for revenue growth could be significantly
higher than the growth in the last three to four years. These strategies have the potential to
make NTI one of the leading players in the Advanced Materials & Surface Solutions segment
across the world.
Lastly, NTI has also 48 patents granted and in force in China, Singapore, the United States,
Japan, the United Kingdom and Europe, and the company has 20 pending patent applications,
comprising applicDWLRQV LQ &KLQD DQG (XURSH DV ZHOO DV LQWHUQDWLRQDO ³3&7´ 3DWHQW
&RRSHUDWLRQ 7UHDW\ ³3&7´ DSSOLFDWLRQV to its credit. It also has a long standing relationship
with some of the largest brands in the world such as Microsoft, Sony, P&G, Samsung, Hitachi
and others. The significantly large market access provides NTI with the potential to work with
close to 300 customers globally across a multitude of end use segments.

IMR Report 55
© Frost & Sullivan 2020

D-55
This page has been intentionally left blank.
 APPENDIX E
LIST OF OUTSTANDING SHARE OPTIONS UNDER THE PRE-IPO ESOS

No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

500,000 2 December 2019 – 27 December 2024 0.5868

27 December 2024
500,000 1 July 2021 – 27 December 2024 0.5868
27 December 2024
167,000 2 December 2019 – 9 December 2024 0.5868
9 December 2024
166,000 1 December 2020 – 9 December 2024 0.5868
9 December 2024
167,000 1 December 2021 – 9 December 2024 0.5868
9 December 2024
100,000 30 June 2020 – 16 June 2025 0.5868
16 June 2025
100,000 30 June 2021 – 16 June 2025 0.5868
16 June 2025
100,000 30 June 2022 – 16 June 2025 0.5868
16 June 2025
134,000 2 December 2019 – 9 December 2024 0.5868
9 December 2024
133,000 1 December 2020 – 9 December 2024 0.5868
9 December 2024
133,000 1 December 2021 – 9 December 2024 0.5868
9 December 2024
80,000 30 June 2020 – 18 June 2025 0.5868
18 June 2025
80,000 30 June 2021 – 18 June 2025 0.5868
18 June 2025
90,000 30 June 2022 – 18 June 2025 0.5868
18 June 2025
34,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
33,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
33,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
734,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
732,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024

E-1
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

200,000 2 December 2019 – 27 December 2024 0.5868

27 December 2024
200,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
167,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
166,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
100,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
100,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
67,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
66,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
67,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
66,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
67,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
50,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
50,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
50,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
50,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
50,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
50,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
50,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
50,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
34,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024

E-2
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

33,000 2 December 2021 – 27 December 2024 0.5868

27 December 2024
13,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
34,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
33,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
33,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
33,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
33,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
4,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
10,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024

E-3
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

6,000 31 March 2021 – 28 March 2025 0.5868

28 March 2025
10,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
10,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
7,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
6,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
7,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
6,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
7,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
7,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
6,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
7,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
17,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
16,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
17,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
17,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
16,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
17,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024

E-4
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

2,000 2 December 2019 – 27 December 2024 0.5868

27 December 2024
1,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
2,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
2,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
1,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
4,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
2,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
1,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
2,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
1,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
17,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
16,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024

E-5
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

17,000 1 December 2021 – 27 December 2024 0.5868

27 December 2024
2,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
1,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
2,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
1,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
5,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
5,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
5,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
2,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
1,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
2,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024

E-6
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

1,000 1 December 2020 – 27 December 2024 0.5868

27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
5,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
5,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
5,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
2,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
1,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
2,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
2,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
1,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
2,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
1,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
2,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
17,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
16,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
17,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
7,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
6,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
7,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024

E-7
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

4,000 2 December 2019 – 27 December 2024 0.5868

27 December 2024
3,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
17,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
16,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
17,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
7,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
6,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
7,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
3,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
4,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
3,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025

E-8
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

3,000 31 March 2022 – 28 March 2025 0.5868

28 March 2025
5,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
5,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
5,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
10,000 2 December 2019 – 27 December 2024 0.5868
27 December 2024
10,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
10,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
16,000 1 December 2020 – 27 December 2024 0.5868
27 December 2024
17,000 1 December 2021 – 27 December 2024 0.5868
27 December 2024
31,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
33,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
33,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
100,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
100,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
7,000 31 March 2020 – 28 March 2025 0.5868
28 March 2025
7,000 31 March 2021 – 28 March 2025 0.5868
28 March 2025
6,000 31 March 2022 – 28 March 2025 0.5868
28 March 2025
34,000 1 July 2021 – 30 June 2026 0.5868
30 June 2026
33,000 1 July 2022 – 30 June 2026 0.5868
30 June 2026
33,000 1 July 2023 – 30 June 2026 0.5868
30 June 2026

E-9
 No. of Shares in
respect of which
outstanding
options have Exercise
Our employees been granted Exercise period Expiration price

(S$)

34,000 1 July 2021 – 30 June 2026 0.5868

30 June 2026
33,000 1 July 2022 – 30 June 2026 0.5868
30 June 2026
33,000 1 July 2023 – 30 June 2026 0.5868
30 June 2026
34,000 1 July 2021 – 30 June 2026 0.5868
30 June 2026
33,000 1 July 2022 – 30 June 2026 0.5868
30 June 2026
33,000 1 July 2023 – 30 June 2026 0.5868
30 June 2026
50,000 1 July 2021 – 30 June 2026 0.5868
30 June 2026
50,000 1 July 2022 – 30 June 2026 0.5868
30 June 2026
50,000 1 July 2023 – 30 June 2026 0.5868
30 June 2026
67,000 1 July 2021 – 30 June 2026 0.5868
30 June 2026
67,000 1 July 2022 – 30 June 2026 0.5868
30 June 2026
66,000 1 July 2023 – 30 June 2026 0.5868
30 June 2026
17,000 1 July 2021 – 30 June 2026 0.5868
30 June 2026
17,000 1 July 2022 – 30 June 2026 0.5868
30 June 2026
16,000 1 July 2023 – 30 June 2026 0.5868
30 June 2026

E-10
 APPENDIX F
RULES OF THE NANOFILM EMPLOYEE SHARE OPTION SCHEME

1. NAME OF THE PLAN

The Plan shall be called the “Nanofilm Employee Share Option Scheme” or the
“Nanofilm ESOS”.

2. DEFINITIONS

2.1 In the Nanofilm ESOS, unless the context otherwise requires, the following words and
expressions shall have the following meanings:

“Acquisition Price” : The price at which a Participant shall acquire each Share
upon the exercise of an Option which shall be the price as
determined in accordance with Rule 6.1 in relation to a
Market Price Option and Rule 6.2 in relation to a Discount
Price Option, as adjusted in accordance with Rule 11.

“Act” : The Companies Act, Chapter 50 of Singapore.

“Adoption Date” : The date on which the Nanofilm ESOS is adopted by the
Company in general meeting.

“Aggregate : The total amount payable for Shares which may be

Acquisition Cost” acquired upon the exercise of an Option.

“Associate” : Shall bear the meaning as set out in the Listing Manual;
and “Associates” shall be construed accordingly.

“Associated Company” : A company in which at least 20% but not more than 50%
of its shares are held by the Company or the Group.

“Auditors” : The auditors of the Company for the time being.

“Board” : The board of directors of the Company for the time being.

“CDP” : The Central Depository (Pte) Limited.

“Committee” : A committee comprising directors of the Company, duly

authorised and appointed by the Board to administer the
Nanofilm ESOS.

“Communication” : An offer, grant, acceptance and/or exercise of an Option,

including the Letter of Offer under Rule 5.2, the
completed Acceptance Form under Rule 5.4, and/or the
exercise of the Option under Rule 9.2, and/or any
correspondence made or to be made under the Nanofilm
ESOS (individually or collectively).

“Company” : Nanofilm Technologies International Limited, a company

incorporated in Singapore.

F-1
“Constitution” : The Constitution of the Company, as amended from time
to time.

“Controlling : Shall bear the same meaning as set out in the Listing
Shareholder” Manual; and “Controlling Shareholders” shall be
construed accordingly.

“Date of Grant” : In relation to an Option, the date on which the Option is

granted pursuant to Rule 5.

“Discount Price : A right to acquire Shares granted or to be granted

Option” pursuant to the Nanofilm ESOS and for the time being
subsisting, and in respect of which the Acquisition Price is
determined in accordance with Rule 6.2.

“Exercise Period” : The period for the exercise of an Option, being:

(a) in the case of a Market Price Option granted to a

Group Employee, Controlling Shareholder (who is
eligible to participate under Rule 4.1) and/or
Associate of a Controlling Shareholder (who is
eligible to participate under Rule 4.1), a period (as
may be determined by the Committee in its absolute
discretion on the Date of Grant of that Option)
commencing on a date falling on or after the 1st
anniversary of the Date of Grant and expiring on or
before the 10th anniversary of such Date of Grant;

(b) in the case of a Discount Price Option granted to a

Group Employee, Controlling Shareholder (who is
eligible to participate under Rule 4.1) and/or
Associate of a Controlling Shareholder (who is
eligible to participate under Rule 4.1), a period (as
may be determined by the Committee in its absolute
discretion on the Date of Grant of that Option)
commencing on a date falling on or after the 2nd
anniversary of the Date of Grant and expiring on or
before the 10th anniversary of such Date of Grant;

(c) in the case of a Market Price Option granted to a

Group Non-Executive Director, a period (as may be
determined by the Committee in its absolute
discretion on the Date of Grant of that Option)
commencing on a date falling on or after the 1st
anniversary of the Date of Grant and expiring on or
before the 5th anniversary of such Date of Grant or,
if applicable laws permit, on such later date as the
Committee may specify on the Date of Grant; and

F-2
 (d) in the case of a Discount Price Option granted to a
Group Non-Executive Director, a period (as may be
determined by the Committee in its absolute
discretion on the Date of Grant of that Option)
commencing on a date falling on or after the 2nd
anniversary of the Date of Grant and expiring on or
before the 5th anniversary of such Date of Grant or,
if applicable laws permit, on such later date as the
Committee may specify on the Date of Grant,

subject as provided in Rules 7 and 8 and to any other

conditions as may be determined by the Committee from
time to time.

“Grantee” : The person to whom an offer of an Option is made.

“Group” : The Company and its subsidiaries.

“Group Employee” : Any employee of the Group (including any Group

Executive Director) or any employee of the Group who is
seconded to an Associated Company. For the avoidance
of doubt, the secondment of an employee to an
Associated Company shall not be regarded as a break in
his employment or him having ceased by reason only of
such secondment to be an employee of the Group.

“Group Executive : A director of the Company and/or any of its subsidiaries,

Director” as the case may be, who performs an executive function.

“Group Non-Executive : A director of the Company and/or any of its subsidiaries,

Director” as the case may be, other than a Group Executive
Director.

“Listing Manual” : The listing manual of the Singapore Exchange.

“Market Day” : A day on which the Singapore Exchange is open for

trading in securities.

“Market Price” : In relation to an Option, a price determined by the

Committee to be equal to the volume-weighted average
price for the Shares on the Singapore Exchange over the
three consecutive Trading Days immediately preceding
the Date of Grant of that Option, as determined by the
Committee by reference to the daily official list or any
other publication published by the Singapore Exchange.

“Market Price Option” : A right to acquire Shares granted or to be granted

pursuant to the Nanofilm ESOS and for the time being
subsisting, and in respect of which the Acquisition Price is
determined in accordance with Rule 6.1.

“Nanofilm ESOS” : The Nanofilm Employee Share Option Scheme, as

modified or altered from time to time.

F-3
 “Option” : A Market Price Option or a Discount Price Option, as the
case may be.

“Participant” : The holder of an Option (including, where applicable, the

executor or personal representative of such holder).

“Record Date” : The date fixed by the Company for the purposes of
determining entitlements to dividends or other
distributions to, or rights of, holders of Shares.

“Security Device” : Any smartcard, digital certificate, digital signature,

encryption device, electronic key, logon identifier,
password, personal identification number, and/or other
code or any access procedure incorporating any one or
more of the foregoing, designated by the Company for
use in conjunction with the Nanofilm ESOS.

“Shares” : Ordinary shares in the capital of the Company.

“Singapore Exchange” : The Singapore Exchange Securities Trading Limited.

“subsidiary holdings” : Shares referred to in Sections 21(4), 21(4B), 21(6A) and

21(6C) of the Companies Act, Chapter 50 of Singapore.

“Trading Day” : A day on which the Shares are traded on the Singapore
Exchange.

“Vesting Schedule” : In relation to an Option, a schedule for the vesting of

Shares comprised in the Option during the Exercise
Period in relation to that Option to be determined by the
Committee on the Date of Grant of that Option.

“S$” : Singapore dollar.

“%” : Per centum or percentage.

2.2 Words importing the singular number shall, where applicable, include the plural number
and vice versa. Words importing the masculine gender shall, where applicable, include the
feminine and neuter gender.

2.3 Any reference to a time of a day in the Nanofilm ESOS is a reference to Singapore time.

2.4 Any reference in the Nanofilm ESOS to any enactment is a reference to that enactment as
for the time being amended or re-enacted. Any word defined under the Act or any statutory
modification thereof and not otherwise defined in the Nanofilm ESOS and used in the
Nanofilm ESOS shall have the meaning assigned to it under the Act or any statutory
modification thereof, as the case may be.

F-4
3. OBJECTIVES OF THE PLAN

The Nanofilm ESOS is a share incentive scheme. The Nanofilm ESOS is proposed on the
basis that it is important to retain staff whose contributions are essential to the well-being
and prosperity of the Group and to give recognition to outstanding employees and
executive directors of the Group who have contributed to the growth of the Group. The
Nanofilm ESOS will give Participants an opportunity to have a personal equity interest in
the Company and will help to achieve the following positive objectives:

(a) to motivate the Participant to optimise his performance standards and efficiency and
to maintain a high level of contribution to the Group;

(b) to retain key executives and executive directors of the Group whose contributions
are essential to the long-term growth and profitability of the Group;

(c) to instil loyalty to, and a stronger identification by employees with the long-term
prosperity of, the Company;

(d) to attract potential employees with relevant skills to contribute to the Group and to
create value for the shareholders of the Company;

(e) to align the interests of employees with the interests of the shareholders of the
Company; and

(f) to give recognition to the contributions made or to be made by Group Non-Executive

Directors to the success of the Group.

4. ELIGIBILITY OF PARTICIPANTS

4.1 The following persons shall be eligible to participate in the Nanofilm ESOS at the absolute
discretion of the Committee:

(a) Group Employees who have attained the age of twenty-one (21) years and hold such
rank as may be designated by the Committee from time to time;

(b) Group Non-Executive Directors who, in the opinion of the Committee, have
contributed or will contribute to the success of the Group; and

(c) Controlling Shareholders and Associates of Controlling Shareholders who qualify

under paragraph (a) or (b) above.

4.2 Controlling Shareholders and their Associates who satisfy the criteria set out in Rule 4.1
above shall be eligible to participate in the Nanofilm ESOS provided that:

(a) their participation; and

(b) the actual or maximum number of Shares and terms of any Options to be granted to
them,

have been approved by independent shareholders of the Company at a general meeting in

separate resolutions for each such person and, in respect of each such person, in separate
resolutions for each of (i) his participation and (ii) the actual or maximum number of Shares
and terms of any Options to be granted to him, provided always that it shall not be
necessary to obtain the approval of the independent shareholders of the Company for the
participation in the Nanofilm ESOS of a Controlling Shareholder or his Associate who is, at
the relevant time, already a Participant.

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4.3 The number of Shares comprised in Options to be offered to a Participant in accordance
with the Nanofilm ESOS shall be determined at the absolute discretion of the Committee,
which shall take into account such criteria as it considers fit, including (but not limited to) his
rank, job performance, years of service, potential for future development and his
contribution to the success and development of the Group.

5. GRANT AND ACCEPTANCE OF OPTIONS

5.1 Subject as provided in Rule 10, the Committee may grant Options to Group Employees,
Controlling Shareholders (who are eligible to participate under Rule 4.1), Associates of
Controlling Shareholders (who are eligible to participate under Rule 4.1) and/or Group
Non-Executive Directors, in each case, as the Committee may select, in its absolute
discretion, at any time during the period when the Nanofilm ESOS is in force, provided that
in the event that an announcement on any matter of an exceptional nature involving
unpublished price sensitive information is made, Options may only be granted on or after
the 4th Market Day after the date on which such announcement is released.

5.2 The Letter of Offer to grant an Option shall be in, or substantially in, the form set out in
Schedule A, subject to such modification as the Committee may from time to time
determine. An Option may be granted subject to such conditions as may be determined by
the Committee, in its absolute discretion, on the Date of Grant of that Option.

5.3 An Option shall be personal to the Participant to whom it is granted and shall not be
transferred (other than to a Participant’s personal representative on the death of that
Participant), charged, assigned, pledged or otherwise disposed of, in whole or in part,
except with the prior approval of the Committee and if a Participant shall do, suffer or permit
any such act or thing as a result of which he would or might be deprived of any rights under
an Option without the prior approval of the Committee, that Option shall immediately lapse.

5.4 The grant of an Option under this Rule 5 shall be accepted by the Grantee within 30 days
from the Date of Grant of that Option and, in any event, not later than 5.00 p.m. on the 30th
day from such Date of Grant by completing, signing and returning the Acceptance Form in,
or substantially in, the form set out in Schedule B, subject to such modification as the
Committee may from time to time determine, accompanied by payment of S$1.00 as
consideration.

5.5 If a grant of an Option is not accepted in the manner as provided in Rule 5.4, such offer
shall, upon the expiry of the 30-day period, automatically lapse and become null, void and
of no effect.

6. ACQUISITION PRICE

6.1 The Acquisition Price for each Share in respect of which a Market Price Option is
exercisable shall be determined by the Committee in its absolute discretion, on the Date of
Grant, to be a price equal to the Market Price.

6.2 The Acquisition Price for each Share in respect of which a Discount Price Option is
exercisable shall be determined by the Committee in its absolute discretion, on the Date of
Grant, to be a price which is set at a discount to the Market Price, the quantum of such
discount to be determined by the Committee in its absolute discretion, provided that the
maximum discount which may be given in respect of any Option shall not exceed 20% of the
Market Price or such other percentage or amount as may be prescribed or permitted for the
time being by the Singapore Exchange. In making any determination under this Rule 6.2 on
whether to give a discount and the quantum of such discount, the Committee shall be at
liberty to take into consideration such criteria as the Committee may, in its absolute
discretion, deem appropriate, including but not limited to:

(a) the performance of the Group;

F-6
 (b) the years of service and the individual performance of the Participant;

(c) the contribution of the Participant to the success and development of the Company
and/or the Group; and

(d) the prevailing market conditions.

6.3 The Acquisition Price shall be subject to adjustment pursuant to Rule 11.

7. RIGHT TO EXERCISE OPTIONS

7.1 Subject as provided in Rules 7 and 8, an Option shall be exercisable, in whole or in part,
during the Exercise Period applicable to that Option and in accordance with the Vesting
Schedule and the conditions (if any) applicable to that Option.

7.2 An Option shall, to the extent unexercised, immediately lapse without any claim whatsoever
against the Company:

(a) in the event that an order is made for the winding-up of the Company on the basis of,
or by reason of, its insolvency;

(b) in the event of misconduct on the part of the Participant as determined by the
Committee in its discretion; or

(c) subject to Rule 7.3(b), upon the Participant ceasing to be in the employment of the
Group, for any reason whatsoever.

For the purposes of Rule 7.2(c), the Participant shall be deemed to have ceased to be so
employed as of the date the notice of termination of employment is tendered by or is given
to him, unless such notice is withdrawn prior to its effective date.

7.3 In any of the following events, namely:

(a) the bankruptcy of the Participant or the happening of any other event which results
in his being deprived of the legal or beneficial ownership of an Option;

(b) where the Participant ceases at any time to be in the employment of the Group, as
the case may be, by reason of:

(i) ill health, injury or disability (in each case, evidenced to the satisfaction of the
Committee);

(ii) redundancy;

(iii) retirement at or after the legal retirement age;

(iv) retirement before the legal retirement age with the consent of the Committee;

(v) the company by which he is employed or to which he is seconded, as the case

may be, ceasing to be a company within the Group, or the undertaking or part
of the undertaking of such company being transferred otherwise than to
another company within the Group;

(vi) his transfer to any Ministry, governmental or statutory body or corporation at

the direction of the Company; or

(vii) any other event approved by the Committee;

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 (c) where a Participant, being a Group Non-Executive Director, ceases at any time to be
a director of any company within the Group;

(d) the death of a Participant; or

(e) any other event approved by the Committee,

an Option then held by that Participant shall, to the extent unexercised, lapse without any
claim whatsoever against the Company, unless otherwise determined by the Committee in
its absolute discretion. In exercising such discretion, the Committee may:

(aa) determine the number of Shares comprised in that Option which may be exercised
and the period during which such Option shall be exercisable, being a period not later
than the expiry of the Exercise Period in respect of that Option. Such Option may be
exercised at any time notwithstanding that the date of exercise of such Option falls
on a date prior to the first day of the Exercise Period in respect of such Option. Upon
the expiry of such period as determined by the Committee, the Option, to the extent
unexercised, shall lapse; or

(bb) allow that Participant to exercise any unexercised Option(s) in the manner and at the
times provided in Rule 7.1.

7.4 Notwithstanding any provision to the contrary, the Committee may, in its absolute
discretion, by notice to the Participants, suspend the exercise of any Option for such period
or periods as the Committee may determine, provided that the period(s) of suspension shall
not exceed in aggregate 60 days in any one calendar year.

8. TAKE-OVER AND WINDING-UP OF THE COMPANY

8.1 Notwithstanding Rule 7 but subject to Rule 8.5, in the event of a take-over being made for
the Shares, a Participant shall be entitled to exercise any Option held by him and as yet
unexercised, in respect of such number of Shares comprised in that Option as may be
determined by the Committee in its absolute discretion, in the period commencing on the
date on which such offer is made or, if such offer is conditional, the date on which such offer
becomes or is declared unconditional, as the case may be, and ending on the earlier of:

(a) the expiry of six months thereafter, unless prior to the expiry of such six months
period, at the recommendation of the offeror and with the approvals of the
Committee, the Singapore Exchange and/or such other relevant regulatory authority,
such expiry date is extended to a later date (in either case, being a date falling not
later than the expiry of the Exercise Period relating thereto); or

(b) the date of expiry of the Exercise Period relating thereto,

whereupon the Option then remaining unexercised shall lapse.

Provided that if during such period, the offeror becomes entitled or bound to exercise rights
of compulsory acquisition under the provisions of the Act and, being entitled to do so, gives
notice to the Participants that it intends to exercise such rights on a specified date, the
Option shall remain exercisable by the Participant until the expiry of such specified date or
the expiry of the Exercise Period relating thereto, whichever is earlier. Any Option not so
exercised shall lapse, provided that the rights of acquisition or obligations to acquire shall
have been exercised or performed, as the case may be. If such rights or obligations have
not been exercised or performed, the Option shall, notwithstanding Rule 7, remain
exercisable until the expiry of the Exercise Period relating thereto.

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8.2 If under the Act, the court sanctions and/or the shareholders of the Company approve a
compromise or arrangement proposed for the purposes of, or in connection with, a scheme
for the reconstruction of the Company or its amalgamation with another company or
companies, each Participant shall be entitled, notwithstanding Rule 7 but subject to Rule
8.5, to exercise any Option then held by him, in respect of such number of Shares
comprised in that Option as may be determined by the Committee in its absolute discretion,
during the period commencing on the date upon which the compromise or arrangement is
sanctioned by the court and ending either on the expiry of 60 days thereafter or the date
upon which the compromise or arrangement becomes effective, whichever is later (but not
after the expiry of the Exercise Period relating thereto), whereupon the Option shall lapse
and become null and void.

8.3 In the event of an order being made or a resolution passed for the winding-up of the
Company (other than as provided in Rule 7.2(a) or for reconstruction or amalgamation), the
Participant shall be entitled, within 30 days of the making of the order or the passing of the
resolution of such winding-up (but not after the expiry of the Exercise Period relating
thereto), as the case may be, to exercise any unexercised Option in respect of such number
of Shares comprised in that Option as may be determined by the Committee in its absolute
discretion, after which such unexercised Option shall lapse and become null and void.

8.4 If, in connection with the making of a general offer referred to in Rule 8.1 or the scheme
referred to in Rule 8.2 or the winding-up referred to in Rule 8.3, arrangements are made
(which are confirmed in writing by the Auditors, acting only as experts and not as
arbitrators, to be fair and reasonable) for the compensation of Participants, whether by the
continuation of their Options or the payment of cash or the grant of other options or
otherwise, a Participant holding an Option, as yet not exercised, may not, at the discretion
of the Committee, be permitted to exercise that Option as provided for in this Rule 8.

8.5 To the extent that an Option is not exercised within any period referred to in this Rule 8, it
shall lapse and become null and void.

9. EXERCISE OF OPTIONS

9.1 Subject to Rule 7.1, an Option may be exercised, in whole or in part.

9.2 An Option may be exercised by a Participant giving notice in writing to the Company in, or
substantially in, the form set out in Schedule C, subject to such modification as the
Committee may from time to time determine. Such notice must be accompanied by
payment in cash for the Aggregate Acquisition Cost in respect of the Shares for which that
Option is exercised and any other documentation the Committee may require. An Option
shall be deemed to be exercised upon receipt by the Company of the said notice, duly
completed, and the Aggregate Acquisition Cost. All payments made shall be made by
cheque, cashiers’ order, banker’s draft or postal order made out in favour of the Company
or such other mode of payment as may be acceptable to the Company.

9.3 Subject to such consents or other required action of any competent authority under any
regulations or enactments for the time being in force as may be necessary and subject to
the compliance with the terms of the Nanofilm ESOS, the Constitution of the Company, the
Company shall, within 10 Market Days after the exercise of an Option, allot the relevant
Shares or, as the case may be, procure the transfer of existing Shares (which may include,
where desired, any Shares held by the Company as treasury shares) and, where required,
despatch to CDP the relevant share certificates or, as the case may be, share transfer
forms by ordinary post or such other mode as the Committee may deem fit.

Where new Shares are allotted upon the exercise of an Option, the Company shall, as soon
as practicable after such allotment, apply to the Singapore Exchange for permission to deal
in and for quotation of such Shares.

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9.4 Shares which are allotted or transferred to a Participant on the exercise of an Option by that
Participant shall be issued in the name of, or transferred to, CDP to the credit of the
securities account of that Participant maintained with CDP or the securities sub-account of
that Participant maintained with a Depository Agent, in each case, as designated by that
Participant.

9.5 New Shares allotted and issued, and existing Shares procured by the Company for transfer,
upon exercise of an Option shall:

(a) be subject to all the provisions of the Constitution of the Company; and

(b) rank in full for all entitlements, including dividends or other distributions declared or
recommended in respect of the then existing Shares, the Record Date for which is on
or after the later of (i) the relevant date upon which such exercise occurred; and
(ii) the date of issue of the Shares, and shall in all other respects rank pari passu with
other existing Shares then in issue.

9.6 Subject to the Act and the rules of the Listing Manual, the Company shall have the flexibility
to deliver Shares to Participants upon the exercise of their Options by way of:

(a) an allotment of new Shares; and/or

(b) the transfer of existing Shares, including any Shares held by the Company in
treasury.

10. LIMITATION ON THE SIZE OF THE PLAN

10.1 The total number of Shares over which the Committee may grant new Options on any date,
when added to:

(a) the total number of new Shares allotted and issued and/or to be allotted and issued
and issued Shares (including treasury shares) delivered and/or to be delivered,
pursuant to Options already granted under the Nanofilm ESOS; and

(b) the total number of Shares subject to any other share option or share schemes
adopted by the Company after the listing of Shares on the Singapore Exchange,

shall not exceed 5 per cent. of the total number of issued Shares (excluding Shares held by
the Company as treasury shares and subsidiary holdings) on the date preceding the date
of grant of the relevant new Option.

10.2 The total number of Shares which may be delivered pursuant to Options granted under the
Nanofilm ESOS to Controlling Shareholders and/or Associates of Controlling
Shareholders, shall not exceed 25 per cent. of the total number of Shares available under
the Nanofilm ESOS.

10.3 The total number of Shares which may be delivered pursuant to Options granted under the
Nanofilm ESOS to each Controlling Shareholder and each Associate of a Controlling
Shareholder, shall not exceed 10 per cent. of the total number of Shares available under the
Nanofilm ESOS.

10.4 Shares which are the subject of Options which have lapsed for any reason whatsoever may
be the subject of further Options granted by the Committee under the Nanofilm ESOS.

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11. ADJUSTMENT EVENTS

11.1 If a variation in the ordinary share capital of the Company (whether by way of a
capitalisation of profits or reserves or rights issue, reduction, subdivision, consolidation,
distribution or otherwise) shall take place or if the Company shall make a capital distribution
or a declaration of a special dividend (whether in cash or in specie), then the Committee
may, in its sole discretion, determine whether:

(a) the Acquisition Price of the Shares, class and/or number of Shares comprised in an
Option to the extent unexercised; and/or

(b) the class and/or number of Shares over which future Options may be granted under
the Nanofilm ESOS,

shall be adjusted and if so, the manner in which such adjustments should be made. Any
adjustment must be made in a way that a Participant will not receive a benefit that a
shareholder of the Company does not receive.

11.2 Unless the Committee considers an adjustment to be appropriate, the issue of securities as
consideration for an acquisition or a private placement of securities, or upon the exercise
of any options or conversion of any loan stock or any other securities convertible into
Shares or subscription rights of any warrants, or the cancellation of issued Shares
purchased or acquired by the Company by way of a market purchase of such Shares
undertaken by the Company on the Singapore Exchange during the period when a share
purchase mandate granted by shareholders of the Company (including any renewal of such
mandate) is in force, shall not normally be regarded as a circumstance requiring
adjustment.

11.3 Notwithstanding the provisions of Rule 11.1, any adjustment (except in relation to a bonus
issue) must be confirmed in writing by the Auditors (acting only as experts and not as
arbitrators) to be in their opinion, fair and reasonable.

11.4 Upon any adjustment required to be made pursuant to this Rule 11, the Company shall
notify the Participant (or his duly appointed personal representatives where applicable) in
writing and deliver to him (or his duly appointed personal representatives where applicable)
a statement setting forth the Acquisition Price thereafter in effect and the class and/or
number of Shares thereafter to be acquired on the exercise of the Option. Any adjustment
shall take effect upon such written notification being given or on such date as may be
specified in such written notification.

12. ADMINISTRATION OF THE PLAN

12.1 The Nanofilm ESOS shall be administered by the Committee in its absolute discretion with
such powers and duties as are conferred on it by the Board, provided that no member of the
Committee shall participate in any deliberation or decision in respect of Options granted or
to be granted to him. The Committee shall comprise directors of the Company (including
directors who may be Participants of the Nanofilm ESOS).

12.2 The Committee shall have the power, from time to time, to make and vary such
arrangements, guidelines and/or regulations (not being inconsistent with the Nanofilm
ESOS) for the implementation and administration of the Nanofilm ESOS, to give effect to
the provisions of the Nanofilm ESOS and/or to enhance the benefit of the Options to the
Participants, as it may, in its absolute discretion, think fit. Any matter pertaining or pursuant
to the Nanofilm ESOS and any dispute and uncertainty as to the interpretation of the
Nanofilm ESOS, or any rule, regulation or procedure thereunder or any rights under the
Nanofilm ESOS shall be determined by the Committee.

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12.3 Neither the Nanofilm ESOS nor Options granted under the Nanofilm ESOS shall impose on
the Company or the Committee or any of its members any liability whatsoever in connection
with:

(a) the lapsing or early expiry of any Options pursuant to any provision of the Nanofilm
ESOS;

(b) the failure or refusal by the Committee to exercise, or the exercise by the Committee
of, any discretion under the Nanofilm ESOS; and/or

(c) any decision or determination of the Committee made pursuant to any provision of
the Nanofilm ESOS.

12.4 Any decision or determination of the Committee made pursuant to any provision of the
Nanofilm ESOS (other than a matter to be certified by the Auditors) shall be final, binding
and conclusive (including for the avoidance of doubt, any decisions pertaining to disputes
as to the interpretation of the Nanofilm ESOS or any rule, regulation or procedure
hereunder or as to any rights under the Nanofilm ESOS). The Committee shall not be
required to furnish any reasons for any decision or determination made by it.

13. NOTICES AND COMMUNICATIONS

13.1 Any notice required to be given by the Participant to the Company shall be sent or made to
the registered office of the Company or such other address (including an electronic mail
address) or facsimile number, and marked for the attention of the Committee, as may be
notified by the Company to the Participant in writing.

13.2 Any notices or documents required to be given to a Participant or any correspondence to be

made between the Company and a Participant shall be given or made by the Committee (or
such person(s) as it may from time to time direct) on behalf of the Company and shall be
delivered to a Participant by hand or sent to a Participant at his home address, electronic
mail address or facsimile number according to the records of the Company or the last
known address, electronic mail address or facsimile number provided by the Participant to
the Company.

13.3 Any notice or other communication from a Participant to the Company shall be irrevocable,
and shall not be effective until received by the Company. Any other notice or
communication from the Company to a Participant shall be deemed to be received by the
Participant, when left at the address specified in Rule 13.2 or, if sent by post, on the day
following the date of posting or, if sent by electronic mail or facsimile transmission, on the
day of despatch.

13.4 Any Communication under the Nanofilm ESOS may be communicated electronically
through the use of a Security Device, or through an electronic page, site, or environment
designated by the Company which is accessible only through the use of a Security Device,
and such Communication shall thereby be deemed to have been sent by the designated
holder of such Security Device.

13.5 The Company may accept and act upon any Communication issued and/or transmitted
through the use of the Participant’s Security Device pursuant to Rule 13.4 (whether actually
authorised by the Participant or not) as his authentic and duly authorised Communication
and the Company shall be under no obligation to investigate the authenticity or authority of
persons effecting the Communication or to verify the accuracy and completeness of the
Communication and the Company may treat the Communication as valid and binding on the
Participant, notwithstanding any error, fraud, forgery, lack of clarity or misunderstanding in
the terms of such Communication.

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13.6 All Communications issued and/or transmitted through the use of a Participant’s Security
Device pursuant to Rule 13.4 (whether authorised by the Participant or not) are irrevocable
and binding on the Participant upon transmission to the Company and the Company shall
be entitled to effect, perform or process such Communications without the Participant’s
further consent and without any further reference or notice to the Participant.

13.7 It shall be the Participant’s sole responsibility to ensure that all information contained in a
Communication is complete, accurate, current, true and correct.

13.8 A Participant shall ensure (and shall take all necessary precautions to ensure) that:

(a) he complies with the Company’s procedural and/or operational guidelines relating to
Security Devices;

(b) all his Security Devices are kept completely confidential and secure; and

(c) there is no unauthorised use or abuse of his Security Devices.

13.9 A Participant shall notify and/or contact the Company immediately if he becomes aware,
has reason to believe, or suspects that any Security Device has become compromised,
including but not limited to where:

(a) the security or integrity of any Security Device may have been compromised;

(b) such Security Device has become known or been revealed to any other person;

(c) there has been unauthorised use of the Security Device; and/or

(d) such Security Device is lost, damaged, defective or stolen,

and the Participant shall immediately cease to use such compromised Security Device until
further notice from the Company. The Participant shall be bound by all Communications
and transactions resulting from any Communications made which are referable to any
compromised Security Device until such time as the Company has received a notification
from the Participant under this Rule 13.9.

13.10 The Company’s records of the Communications, and its record of any transactions
maintained by any relevant person authorised by the Company relating to or connected with
the Nanofilm ESOS, whether stored in electronic or printed form, shall be binding and
conclusive on a Participant and shall be conclusive evidence of such Communications
and/or transactions. All such records shall be admissible in evidence and the Participant
shall not challenge or dispute the admissibility, reliability, accuracy or the authenticity of the
contents of such records merely on the basis that such records were incorporated and/or
set out in electronic form or were produced by or are the output of a computer system, and
the Participant waives any of his rights (if any) to so object.

13.11 Any provision in these Rules requiring a Communication to be signed by a Participant may
be satisfied in the case of an electronic Communication, by the execution of any on-line act,
procedure or routine designated by the Company to signify the Participant’s intention to be
bound by such Communication.

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14. MODIFICATIONS TO THE PLAN

14.1 Any or all of the provisions of the Nanofilm ESOS may be modified and/or altered at any
time and from time to time by a resolution of the Committee, except that:

(a) no modification or alteration shall adversely affect the rights attached to any Option
granted prior to such modification or alteration except with the consent in writing of
such number of Participants who, if they exercised their Options in full, would thereby
become entitled to not less than three-quarters in number of all the Shares which
would fall to be acquired upon exercise in full of all outstanding Options;

(b) the definitions of “Acquisition Price”, “Associated Company”, “Committee”,

“Exercise Period”, “Group”, “Group Employee”, “Group Executive Director”, “Group
Non-Executive Director” and “Participant” and the provisions of Rules 4, 5.1, 5.3, 5.4,
5.5, 6, 7, 8, 9.1, 9.5, 10, 11, 12 and this Rule 14 shall not be altered to the advantage
of Participants except with the prior approval of the Company’s shareholders by
ordinary resolution in general meeting; and

(c) no modification or alteration shall be made without the prior approval of the
Singapore Exchange and such other regulatory authorities as may be necessary.

For the purposes of Rule 14.1(a), the opinion of the Committee as to whether any
modification or alteration would adversely alter the rights attached to any Option shall be
final, binding and conclusive. For the avoidance of doubt, nothing in this Rule 14.1 shall
affect the right of the Committee under any other provision of the Nanofilm ESOS to amend
or adjust any Option.

14.2 Notwithstanding anything to the contrary contained in Rule 14.1, the Committee may at any
time by a resolution (and without any other formality, save for the prior approval of the
Singapore Exchange) amend or alter the Nanofilm ESOS in any way to the extent
necessary or desirable, in the opinion of the Committee, to cause the Nanofilm ESOS to
comply with, or take into account, any statutory provision (or any amendment or
modification thereto, including amendment of or modification to the Act) or the provision or
the regulations of any regulatory or other relevant authority or body (including the
Singapore Exchange).

14.3 Written notice of any modification or alteration made in accordance with this Rule 14 shall
be given to all Participants.

15. TERMS OF EMPLOYMENT UNAFFECTED

The terms of employment of a Participant shall not be affected by his participation in the
Nanofilm ESOS, which shall neither form part of such terms nor entitle him to take into
account such participation in calculating any compensation or damages on the termination
of his employment for any reason.

16. DURATION OF THE PLAN

16.1 The Nanofilm ESOS shall continue to be in force at the discretion of the Committee, subject
to a maximum period of 10 years commencing on the Adoption Date, provided always that
the Nanofilm ESOS may continue beyond the above stipulated period with the approval of
the Company’s shareholders by ordinary resolution in general meeting and of any relevant
authorities which may then be required.

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16.2 The Nanofilm ESOS SOP may be terminated at any time by the Committee or, at the
discretion of the Committee, by ordinary resolution of the Company in general meeting,
subject to all relevant approvals which may be required and if the Nanofilm ESOS is so
terminated, no further Options shall be offered by the Company hereunder.

16.3 The expiry or termination of the Nanofilm ESOS shall not affect Options which have been
granted and accepted as provided in Rule 5.4 prior to such expiry or termination, whether
such Options have been exercised (whether fully or partially) or not.

17. TAXES

All taxes (including income tax) arising from the exercise of any Option granted to any
Participant under the Nanofilm ESOS shall be borne by that Participant.

18. COSTS AND EXPENSES OF THE PLAN

18.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the
issue and allotment or transfer of any Shares pursuant to the exercise of any Option in
CDP’s name, the deposit of share certificate(s) or, as the case may be, share transfer
form(s) with CDP, the Participant’s securities account with CDP, or the Participant’s
securities sub-account with a CDP Depository Agent.

18.2 Save for the taxes referred to in Rule 17 and such other costs and expenses expressly
provided in the Nanofilm ESOS to be payable by the Participants, all fees, costs and
expenses incurred by the Company in relation to the Nanofilm ESOS including but not
limited to the fees, costs and expenses relating to the allotment and issue, or transfer, of
Shares pursuant to the exercise of any Option shall be borne by the Company.

19. DISCLAIMER OF LIABILITY

Notwithstanding any provisions herein contained, the Committee and the Company and the
Company’s directors and employees shall not under any circumstances be held liable for
any costs, losses, expenses and damages whatsoever and howsoever arising in any event,
including but not limited to the Company’s delay in issuing, or procuring the transfer of, the
Shares or applying for or procuring the listing of new Shares on the Singapore Exchange in
accordance with Rule 9.3.

20. DISCLOSURES IN ANNUAL REPORT

The Company will make such disclosures in its annual report for as long as the Nanofilm
ESOS continues in operation as from time to time required by the Listing Manual including
the following (where applicable):

(a) the names of the members of the Committee administering the Nanofilm ESOS;

(b) in respect of the following Participants of the Nanofilm ESOS:

(i) Directors of the Company;

(ii) Participants who are Controlling Shareholders and/or Associates of

Controlling Shareholders; and

(iii) Participants (other than those in paragraph (i) and (ii) above) who have been
granted Options under the Nanofilm ESOS which, in aggregate, represent 5%
or more of the total number of Shares available under the Nanofilm ESOS,

F-15
 the following information:

(aa) the name of such Participant referred to in paragraph (b) above;

(bb) the following particulars relating to Options granted under the Nanofilm ESOS:

(1) Options granted during the financial year under review (including terms);

(2) the aggregate number of Shares comprised in Options granted since the
commencement of the Nanofilm ESOS to the end of the financial year
under review;

(3) the aggregate number of Shares arising from Options exercised since
the commencement of the Nanofilm ESOS to the end of the financial year
under review;

(4) the aggregate number of Shares comprised in Options outstanding as at

the end of the financial year under review;

(5) the number of new Shares issued to such Participant during the financial
year under review; and

(6) the number of existing Shares transferred to such Participant during the
financial year under review; and

(c) the number and proportion of Shares comprised in Options granted under the
Nanofilm ESOS during the financial year under review:

(i) at a discount of 10% or less of the Market Price in respect of the relevant
Option; and

(ii) at a discount of more than 10% of the Market Price in respect of the relevant
Option.

21. DISPUTES

Any disputes or differences of any nature arising hereunder shall be referred to the
Committee and its decision shall be final and binding in all respects.

22. GOVERNING LAW

The Nanofilm ESOS shall be governed by, and construed in accordance with, the laws of
the Republic of Singapore. The Participants, by accepting Options in accordance with the
Nanofilm ESOS, and the Company submit to the exclusive jurisdiction of the courts of the
Republic of Singapore.

23. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT, CHAPTER 53B

No person other than the Company or a Participant shall have any right to enforce any
provision of the Nanofilm ESOS or any Option by virtue of the Contracts (Rights of Third
Parties) Act, Chapter 53B of Singapore.

F-16
 APPENDIX G
SUMMARY OF OUR CONSTITUTION

The discussion below provides information about certain provisions of our Constitution and the
laws of Singapore. This description is only a summary and is qualified by reference to Singapore
law and our Constitution.

The instrument that constitutes and defines our Company is the Constitution of our Company.

The following summarises certain articles of our Constitution relating to:

(a) power of a Director to vote on a proposal, arrangement or contract in which he is interested:

Article 105

A Director shall not vote in respect of any contract or arrangement or any other proposal
whatsoever in which he has any personal material interest, directly or indirectly. A Director
shall not be counted in the quorum at a meeting in relation to any resolution on which he is
debarred from voting.

(b) the remuneration of our Directors:

Article 82

The ordinary remuneration of the Directors shall from time to time be determined by an
Ordinary Resolution of the Company, shall not be increased except pursuant to an Ordinary
Resolution passed at a General Meeting where notice of the proposed increase shall have
been given in the notice convening the General Meeting and shall (unless such resolution
otherwise provides) be divisible among the Directors as they may agree, or failing agreement,
equally, except that any Director who shall hold office for part only of the period in respect of
which such remuneration is payable shall be entitled only to rank in such division for a
proportion of remuneration related to the period during which he has held office.

Article 83

(A) Any Director who holds any executive office, or who serves on any committee of the
Directors, or who otherwise performs services which in the opinion of the Directors are
outside the scope of the ordinary duties of a Director, may be paid such extra
remuneration by way of salary, commission or otherwise as the Directors may determine.

(B) The remuneration (including any remuneration under article 83(A) above) in the case of
a Director other than an Executive Director shall be payable by a fixed sum and shall not
at any time be by commission on or percentage of the profits or turnover, and no Director
whether an Executive Director or otherwise shall be remunerated by a commission on or
a percentage of turnover.

Article 85

The Directors shall have power to pay and agree to pay pensions or other retirement,
superannuation, death or disability benefits to (or to any person in respect of) any Director for
the time being holding any executive office and for the purpose of providing any such pensions
or other benefits to contribute to any scheme or fund or to pay premiums.

G-1
 Article 86

A Director may be party to or in any way interested in any contract or arrangement or

transaction to which the Company is a party or in which the Company is in any way interested
and he may hold and be remunerated in respect of any office or place of profit (other than the
office of Auditor of the Company or any subsidiary thereof) under the Company or any other
company in which the Company is in any way interested and he (or any firm of which he is a
member) may act in a professional capacity for the Company or any such other company and
be remunerated therefor and in any such case as aforesaid (save as otherwise agreed) he
may retain for his own absolute use and benefit all profits and advantages accruing to him
thereunder or in consequence thereof.

Article 91

The remuneration of a Chief Executive Officer (or person holding an equivalent position) shall
from time to time be fixed by the Directors and may subject to this Constitution be by way of
salary or commission or participation in profits or by any or all these modes but he shall not
under any circumstances be remunerated by a commission on or a percentage of turnover.

Article 101(D)

An Alternate Director shall be entitled to contract and be interested in and benefit from
contracts or arrangements or transactions and to be repaid expenses and to be indemnified to
the same extent mutatis mutandis as if he were a Director but he shall not be entitled to receive
from the Company in respect of his appointment as Alternate Director any remuneration
except only such part (if any) of the remuneration otherwise payable to his principal as such
principal may by notice in writing to the Company from time to time direct.

(c) the borrowing powers exercisable by our Directors and how such borrowing powers may be
varied:

Article 112

Subject as hereinafter provided and to the provisions of the Statutes, the Directors may
exercise all the powers of the Company to borrow money, to mortgage or charge its
undertaking, property and uncalled capital and to issue debentures and other securities,
whether outright or as collateral security for any debt, liability or obligation of the Company or
of any third party.

The borrowing powers exercisable by our Directors under article 112 of our Constitution may
be varied by special resolution passed at a general meeting of shareholders of our Company.

(d) the retirement or non-retirement of a Director under an age limit requirement:

There are no specific provisions in our Constitution relating to the retirement or non-retirement
of a Director under an age limit requirement.

(e) the shareholding qualification of a Director:

Article 81

A Director shall not be required to hold any shares of the Company by way of qualification. A
Director who is not a member of the Company shall nevertheless be entitled to attend and
speak at General Meetings.

G-2
(f) the rights, preferences and restrictions attaching to each class of shares:

Article 54

Any General Meeting at which it is proposed to pass a Special Resolution or (save as provided
by the Statutes) a resolution of which special notice has been given to the Company, shall be
called by 21 days’ notice in writing at the least and an Annual General Meeting and any other
Extraordinary General Meeting by 14 days’ notice in writing at the least. The period of notice
shall in each case be exclusive of the day on which it is served or deemed to be served and
of the day on which the meeting is to be held and shall be given in the manner hereinafter
mentioned to all members other than such as are not under the provisions of this Constitution
and the Act entitled to receive such notices from the Company; Provided always that a
General Meeting notwithstanding that it has been called by a shorter notice than that specified
above shall be deemed to have been duly called if it is so agreed:

(a) in the case of an Annual General Meeting by all the members entitled to attend and vote
thereat; and

(b) in the case of an Extraordinary General Meeting by a majority in number of the members
having a right to attend and vote thereat, being a majority together holding not less than
95 per cent. of the total voting rights of all the members having a right to vote at that
meeting,

Provided also that the accidental omission to give notice to or the non-receipt of notice by any
person entitled thereto shall not invalidate the proceedings at any General Meeting. So long
as the shares in the Company are listed on any Stock Exchange, at least 14 days’ notice of any
General Meeting shall be given by advertisement in the daily press and in writing to the Stock
Exchange.

Article 68

Subject and without prejudice to any special privileges or restrictions as to voting for the time
being attached to any special class of shares for the time being forming part of the capital of
the Company and to article 13(C), each member entitled to vote may vote in person or by
proxy. Every member who is present in person or by proxy shall:

(a) on a poll, have one vote for every share which he holds or represents; and

(b) on a show of hands, have one vote, Provided always that:

(i) in the case of a member who is not a relevant intermediary and who is represented
by two proxies, only one of the two proxies as determined by that member or, failing
such determination, by the chairman of the meeting (or by a person authorised by
him) in his sole discretion shall be entitled to vote on a show of hands; and

(ii) in the case of a member who is a relevant intermediary and who is represented by
two or more proxies, each proxy shall be entitled to vote on a show of hands.

For the purpose of determining the number of votes which a member, being a Depositor, or his
proxy may cast at any General Meeting on a poll, the reference to shares held or represented
shall, in relation to shares of that Depositor, be the number of shares entered against his name
in the Depository Register as at 72 hours before the time of the relevant General Meeting as
certified by the Depository to the Company.

Article 13(C)

The Company shall not exercise any right in respect of treasury shares other than as provided
by the Act. Subject thereto, the Company may hold or deal with its treasury shares in the
manner authorised by, or prescribed pursuant to, the Act.

G-3
 Article 126

Subject to any rights or restrictions attached to any shares or class of shares and except as
otherwise permitted under the Act:

(a) all dividends in respect of shares must be paid in proportion to the number of shares held
by a member but where shares are partly paid all dividends must be apportioned and
paid proportionately to the amounts paid or credited as paid on the partly paid shares;
and

(b) all dividends must be apportioned and paid proportionately to the amounts so paid or
credited as paid during any portion or portions of the period in respect of which the
dividend is paid.

For the purposes of this article, an amount paid or credited as paid on a share in advance of
a call is to be ignored.

Article 150

If the Company shall be wound up (whether the liquidation is voluntary, under supervision, or
by the court) the Liquidator may, with the authority of a Special Resolution, divide among the
members in specie or kind the whole or any part of the assets of the Company and whether or
not the assets shall consist of property of one kind or shall consist of properties of different
kinds, and may for such purpose set such value as he deems fair upon any one or more class
or classes of property and may determine how such division shall be carried out as between
the members or different classes of members. The Liquidator may, with the like authority, vest
any part of the assets in trustees upon such trusts for the benefit of members as the Liquidator
with the like authority shall think fit, and the liquidation of the Company may be closed and the
Company dissolved, but so that no contributory shall be compelled to accept any shares or
other property in respect of which there is a liability.

(g) any change in capital:

Article 7

Subject to the Statutes and this Constitution, no shares may be issued by the Directors without
the prior approval of the Company in General Meeting but subject thereto and to Article 11,
and to any special rights attached to any shares for the time being issued, the Directors may
allot and issue shares or grant options over or otherwise dispose of the same to such persons
on such terms and conditions and for such consideration (if any) and at such time and subject
or not to the payment of any part of the amount (if any) thereof in cash as the Directors may
think fit, and any shares may be issued with such preferential, deferred, qualified or special
rights, privileges or conditions as the Directors may think fit, and preference shares may be
issued which are or at the option of the Company are liable to be redeemed, the terms and
manner of redemption being determined by the Directors, Provided always that:

(a) (subject to any direction to the contrary that may be given by the Company in General
Meeting) any issue of shares for cash to members holding shares of any class shall be
offered to such members in proportion as nearly as may be to the number of shares of
such class then held by them and the provisions of the second sentence of article 11(A)
with such adaptations as are necessary shall apply; and

(b) any other issue of shares, the aggregate of which would exceed the limits referred to in
article 11(B), shall be subject to the approval of the Company in General Meeting.

G-4
Article 11

(A) Subject to any direction to the contrary that may be given by the Company in General
Meeting or except as permitted under the listing rules of the Stock Exchange, all new
shares shall, before issue, be offered to such persons who as at the date of the offer are
entitled to receive notices from the Company of General Meetings in proportion, as far as
the circumstances admit, to the number of the existing shares to which they are entitled.
The offer shall be made by notice specifying the number of shares offered, and limiting
a time within which the offer, if not accepted, will be deemed to be declined, and, after the
expiration of that time, or on the receipt of an intimation from the person to whom the offer
is made that he declines to accept the shares offered, the Directors may dispose of those
shares in such manner as they think most beneficial to the Company. The Directors may
likewise so dispose of any new shares which (by reason of the ratio which the new shares
bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion
of the Directors, be conveniently offered under this article 11(A).

(B) Notwithstanding article 11(A), the Company may by Ordinary Resolution in General
Meeting give to the Directors a general authority, either unconditionally or subject to
such conditions as may be specified in the Ordinary Resolution, to:

(a) (i) issue shares of the Company (“shares”) whether by way of rights, bonus or
otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that

might or would require shares to be issued, including but not limited to the
creation and issue of (as well as adjustments to) warrants, debentures or other
instruments convertible into shares; and

(b) (notwithstanding the authority conferred by the Ordinary Resolution may have
ceased to be in force) issue shares in pursuance of any Instrument made or granted
by the Directors while the Ordinary Resolution was in force,

Provided always that:

(1) the aggregate number of shares to be issued pursuant to the Ordinary Resolution
(including shares to be issued in pursuance of Instruments made or granted
pursuant to the Ordinary Resolution) shall be subject to such limits and manner of
calculation as may be prescribed by the Stock Exchange;

(2) in exercising the authority conferred by the Ordinary Resolution, the Company shall
comply with the listing rules of the Stock Exchange for the time being in force
(unless such compliance is waived by the Stock Exchange) and this Constitution;
and

(3) (unless revoked or varied by the Company in General Meeting) the authority
conferred by the Ordinary Resolution shall not continue in force beyond the
conclusion of the Annual General Meeting of the Company next following the
passing of the Ordinary Resolution, or the date by which such Annual General
Meeting of the Company is required by law to be held, or the expiration of such other
period as may be prescribed by the Statutes (whichever is the earliest).

(C) Except so far as otherwise provided by the conditions of issue or by this Constitution, all
new shares shall be subject to the provisions of the Statutes and of this Constitution with
reference to allotment, payment of calls, lien, transfer, transmission, forfeiture and
otherwise.

G-5
 Article 12

(A) The Company may by Ordinary Resolution:

(a) consolidate and divide all or any of its shares;

(b) subdivide its shares, or any of them (subject, nevertheless, to the provisions of the
Statutes and this Constitution), and so that the resolution whereby any share is
subdivided may determine that, as between the holders of the shares resulting from
such subdivision, one or more of the shares may, as compared with the others,
have any such preferred, deferred or other special rights, or be subject to any such
restrictions, as the Company has power to attach to new shares; and

(c) subject to the provisions of the Statutes, convert its share capital or any class of
shares from one currency to another currency.

(B) The Company may by Special Resolution, subject to and in accordance with the
Statutes, convert one class of shares into another class of shares.

Articles 13(A) and (B)

(A) The Company may reduce its share capital or any undistributable reserve in any manner
and with and subject to any incident authorised and consent required by law.

(B) The Company may, subject to and in accordance with the Act, purchase or otherwise
acquire its issued shares on such terms and in such manner as the Company may from
time to time think fit. If required by the Act, any share which is so purchased or acquired
by the Company shall, unless held in treasury in accordance with the Act, be deemed to
be cancelled immediately on purchase or acquisition by the Company. On the
cancellation of any share as aforesaid, the rights and privileges attached to that share
shall expire. In any other instance, the Company may hold or deal with any such share
which is so purchased or acquired by it in such manner as may be permitted by, and in
accordance with, the Act. Without prejudice to the generality of the foregoing, upon
cancellation of any share purchased or otherwise acquired by the Company pursuant to
this Constitution, the number of issued shares of the Company shall be diminished by the
number of the shares so cancelled, and, where any such cancelled share was purchased
or acquired out of the capital of the Company, the amount of share capital of the
Company shall be reduced accordingly.

(h) any change in the respective rights of the various classes of shares including the action
necessary to change the rights, indicating where the conditions are different from those
required by the applicable law:

Article 9

Whenever the share capital of the Company is divided into different classes of shares, subject
to the provisions of the Statutes, preference capital, other than redeemable preference
capital, may be repaid and the special rights attached to any class may be varied or abrogated
either with the consent in writing of the holders of three-quarters of the issued shares of the
class or with the sanction of a Special Resolution passed at a separate General Meeting of the
holders of the shares of the class (but not otherwise) and may be so repaid, varied or
abrogated either whilst the Company is a going concern or during or in contemplation of a
winding up. To every such separate General Meeting all the provisions of this Constitution
relating to General Meetings of the Company and to the proceedings thereat shall mutatis
mutandis apply, except that the necessary quorum shall be two persons at least holding or

G-6
 representing by proxy at least one-third of the issued shares of the class and that any holder
of shares of the class present in person or by proxy may demand a poll and that every such
holder shall on a poll have one vote for every share of the class held by him, Provided always
that where the necessary majority for such a Special Resolution is not obtained at such
General Meeting, consent in writing if obtained from the holders of three-quarters of the issued
shares of the class concerned within two months of such General Meeting shall be as valid
and effectual as a Special Resolution carried at such General Meeting. The foregoing
provisions of this article shall apply to the variation or abrogation of the special rights attached
to some only of the shares of any class as if each group of shares of the class differently
treated formed a separate class the special rights whereof are to be varied.

Article 10

The special rights attached to any class of shares having preferential rights shall not unless
otherwise expressly provided by the terms of issue thereof be deemed to be varied by the
issue of further shares ranking as regards participation in the profits or assets of the Company
in some or all respects pari passu therewith but in no respect in priority thereto.

(i) any dividend restriction, the date on which the entitlement to dividends arises, any procedure
for our Shareholders to claim dividends, any time limit after which a dividend entitlement will
lapse and an indication of the party in whose favour this entitlement then operates:

Article 124

The Company may by Ordinary Resolution declare dividends but no such dividend shall
exceed the amount recommended by the Directors.

Article 125

If and so far as in the opinion of the Directors the profits of the Company justify such payments,
the Directors may declare and pay the fixed dividends on any class of shares carrying a fixed
dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed
for the payment thereof and may also from time to time declare and pay interim dividends on
shares of any class of such amounts and on such dates and in respect of such periods as they
think fit.

Article 126

Subject to any rights or restrictions attached to any shares or class of shares and except as
otherwise permitted under the Act:

(a) all dividends in respect of shares must be paid in proportion to the number of shares held
by a member but where shares are partly paid all dividends must be apportioned and
paid proportionately to the amounts paid or credited as paid on the partly paid shares;
and

(b) all dividends must be apportioned and paid proportionately to the amounts so paid or
credited as paid during any portion or portions of the period in respect of which the
dividend is paid.

For the purposes of this article, an amount paid or credited as paid on a share in advance of
a call is to be ignored.

G-7
Article 127

No dividend shall be paid otherwise than out of profits available for distribution under the
provisions of the Statutes.

Article 131

The payment by the Directors of any unclaimed dividends or other moneys payable on or in
respect of a share into a separate account shall not constitute the Company a trustee in
respect thereof. All dividends and other moneys payable on or in respect of a share that are
unclaimed after first becoming payable may be invested or otherwise made use of by the
Directors for the benefit of the Company and any dividend or any such moneys unclaimed after
a period of six years from the date they are first payable shall be forfeited and shall revert to
the Company but the Directors may at any time thereafter at their absolute discretion annul
any such forfeiture and pay the moneys so forfeited to the person entitled thereto prior to the
forfeiture. If the Depository returns any such dividend or moneys to the Company, the relevant
Depositor shall not have any right or claim in respect of such dividend or moneys against the
Company if a period of six years has elapsed from the date such dividend or other moneys are
first payable.

Article 134

Any dividend or other moneys payable in cash on or in respect of a share may be paid by
cheque or warrant sent through the post to the registered address appearing in the Register
of Members or (as the case may be) the Depository Register of a member or person entitled
thereto (or, if two or more persons are registered in the Register of Members or (as the case
may be) entered in the Depository Register as joint holders of the share or are entitled thereto
in consequence of the death or bankruptcy of the holder, to any one of such persons) or to
such person at such address as such member or person or persons may by writing direct.
Every such cheque or warrant shall be made payable to the order of the person to whom it is
sent or to such person as the holder or joint holders or person or persons entitled to the share
in consequence of the death or bankruptcy of the holder may direct and payment of the cheque
or warrant by the banker upon whom it is drawn shall be a good discharge to the Company.
Every such cheque or warrant shall be sent at the risk of the person entitled to the money
represented thereby.

Article 137

Any resolution declaring a dividend on shares of any class, whether a resolution of the
Company in General Meeting or a resolution of the Directors, may specify that the same shall
be payable to the persons registered as the holders of such shares in the Register of Members
or (as the case may be) the Depository Register at the close of business on a particular date
and thereupon the dividend shall be payable to them in accordance with their respective
holdings so registered, but without prejudice to the rights inter se in respect of such dividend
of transferors and transferees of any such shares.

G-8
 APPENDIX H
LIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF
OUR DIRECTORS AND EXECUTIVE OFFICERS

The present principal and past directorships held by our Directors and Executive Officers in the last
five years preceding the Latest Practicable Date (excluding those held in our Company) are as
follows:

(A) DIRECTORS

(1) Dr Shi Xu

Present Directorships Past Directorships

Group corporations Group corporations

Nanofilm Advanced Materials Pte. Ltd. Nil

NanoFab Technologies Pte. Ltd.

Wizture Holdings Pte. Ltd.

Other corporations Other corporations

Nil Nil

(2) Mr Lee Liang Huang

Present Directorships Past Directorships

Group corporations Group corporations

NanoFab Technologies Pte. Ltd. Nil

Nanofab Japan Co., Ltd

Yizheng Nahuan Technologies Co., Ltd

Nanofilm Technologies Japan Limited

Nanofilm Advanced Materials Pte. Ltd.

Wizture Holdings Pte. Ltd.

Other corporations Other corporations

Nil MG Consulting Holdings Pte. Ltd.

Moulding Industries Pte Ltd

MI Technologies Pte. Ltd.

MI Holdings Pte Ltd

Sealing Technologies Pte Ltd

H-1
(3) Ms Ong Siew Koon @ Ong Siew Khoon

Present Directorships Past Directorships

Group corporations Group corporations

Nil Nil

Other corporations Other corporations

Health Concepts and Nil

Measurements—Healthiersg Ltd.

(4) Mr James Rowan

Present Directorships Past Directorships

Group corporations Group corporations

Nil Nil

Other corporations Other corporations

Momentum Technologies Pte Ltd Dyson Holdings Pte. Ltd.

PCH International Limited Dyson Home Technologies Pte. Ltd.

Motech Pte. Ltd. Dyson Technology Holding Pte. Ltd.

Dyson Manufacturing Holding Pte. Ltd.

Dyson Technology Pte. Ltd.

Dyson Operations Pte. Ltd.

Dyson Singapore Pte. Limited

Dyson Asia Holdings Pte. Ltd.

Dyson Electronics Pte. Ltd.

Dyson Manufacturing Pte. Ltd.

Weybourne Holdings Pte. Ltd.

Weybourne Services Singapore Pte. Ltd.

Dyson Appliances (Aust.) Pty Limited

Dyson B2B, Inc

Dyson B2B Technical Services Inc

Dyson Canada Limited

Dyson Direct, Inc

H-2
 Dyson Hong Kong Limited

Dyson K.K.

Dyson Manufacturing Sdn. Bhd

Dyson New Zealand Limited

Dyson Technical Services, Inc.

Dyson Technology Inc

Dyson, Inc.

Sakti3, Inc.

Dyson SAS

Dyson Research and Development

(Shanghai) Limited

Dyson Technology (Beijing) Ltd

Dyson Technology (Shanghai) Limited

(5) Mr Kristian John Robinson

Present Directorships Past Directorships

Group corporations Group corporations

Nil Nil

Other corporations Other corporations

Spruson & Ferguson (Asia) Pte. Ltd. Nil

Spruson & Ferguson Intellectual Property

Agency (Beijing) Company Limited
(China)

Spruson & Ferguson (Hong Kong) Limited

Spruson & Ferguson Pty Ltd (Australia)

Spruson & Ferguson (M) Sdn. Bhd.

IPH Holdings (Asia) Pte Ltd

IPH (Thailand) Ltd.

Nadira Holdings (S) Pte. Ltd.

PT Spruson Ferguson Indonesia

H-3
(6) Ms Lee Lee Khoon

Present Directorships Past Directorships

Group corporations Group corporations

Nil Nil

Other corporations Other corporations

Nil EY Corporate Services Pte. Ltd.

(B) EXECUTIVE OFFICERS

(1) Mr Lee Liang Huang

Present Directorships Past Directorships

Group corporations Group corporations

See above See above

Other corporations Other corporations

See above See above

(2) Mr Lim Kian Onn

Present Directorships Past Directorships

Group corporations Group corporations

Nil Wizture Holdings Pte. Ltd.

Other corporations Other corporations

KLST Capital Pte Ltd ZACD Capital Pte Ltd

(3) Mr Gary Ho Hock Yong

Present Directorships Past Directorships

Group corporations Group corporations

Nanofilm Advanced Materials Pte. Ltd. Nil

NanoFab Technologies Pte. Ltd.

Wizture Holdings Pte. Ltd.

Other corporations Other corporations

MG Consulting Holdings Pte. Ltd. Nil

H-4
(4) Mr Ricky Tan Chong Ho

Present Directorships Past Directorships

Group corporations Group corporations

Nil Nil

Other corporations Other corporations

Nil Nil

(5) Mr Lars Ralf Rainer Lieberwirth

Present Directorships Past Directorships

Group corporations Group corporations

Nil Nil

Other corporations Other corporations

Ligu Development GmBH Nil

WOYC China Limited

LiGu Dev Limited

H-5
This page has been intentionally left blank.
 APPENDIX I
INFORMATION ON THE SHARE PURCHASE MANDATE

Rationale for the Share Purchase Mandate

In managing the business of our Group, our management will strive to increase Shareholders’ value
by improving, inter alia, the return on equity of our Company. In addition to growth and expansion
of the business, Share purchases at the appropriate price levels may be considered as one of the
ways through which the return on equity of our Company may be enhanced.

Further, in line with international practice, the Share Purchase Mandate will provide our Company
with greater flexibility in managing our capital and maximising returns to our Shareholders.

The Share Purchase Mandate will provide our Company the flexibility to undertake Share
purchases at any time, subject to market conditions, during the period when the Share Purchase
Mandate is in force. Share purchases allow our Company greater flexibility over our capital
structure.

Further, Shares which are purchased by our Company pursuant to the Share Purchase Mandate
and held in treasury may be transferred for the purposes of the ESOS and any other employee
share schemes implemented by our Company. The use of treasury shares in lieu of issuing new
Shares would mitigate the dilution impact on existing Shareholders.

The purchase or acquisition of Shares will only be undertaken when our Directors are of the view
that it can benefit our Company and Shareholders. Shareholders should note that purchases or
acquisitions of Shares pursuant to the Share Purchase Mandate may not be carried out to the full
10% limit described below. No purchase or acquisition of Shares will be made in circumstances
which would have or may have a material adverse effect on the liquidity and/or the orderly trading
of our Shares and/or the financial position of our Group as a whole.

Authority and Limits of the Share Purchase Mandate

Any purchase or acquisition of Shares by our Company would have to be made in accordance with
and in the manner prescribed by the Companies Act and the Listing Manual and such other laws
and regulations as may for the time being be applicable.

Our Company is also required to obtain approval of Shareholders at a general meeting if it wishes
to purchase or acquire its own Shares. As set out in “Share Capital and Shareholders”, Shareholder
approval has been obtained for the Share Purchase Mandate and for our purchase or acquisition
of our issued Shares.

The authority and limitations placed on purchases or acquisitions of Shares by our Company under
the Share Purchase Mandate are summarised below:

(a) Maximum Number of Shares

Our Company may only purchase or acquire Shares which are issued and fully paid-up. The
total number of Shares which may be purchased or acquired by our Company is limited to that
number of Shares representing not more than 10% of our issued Shares upon completion of
the Offering and the issue of the New Cornerstone Shares.

Purely for illustrative purposes, on the basis of 658,351,110 Shares (being the number of
issued Shares upon completion of the Offering and the issue of the New Cornerstone Shares),
our Company may not purchase or acquire more than 65,835,111 Shares (representing 10%
of our post-Offering issued Shares) pursuant to the Share Purchase Mandate.

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(b) Duration of Authority

Purchases or acquisitions of Shares may be made, at any time and from time to time, on and

from the end of the Stabilising Period up to:

(i) the date on which the next annual general meeting of our Company is held or required by
law to be held;

(ii) the date on which the authority conferred by the Share Purchase Mandate is revoked or
varied; or

(iii) the date on which purchases and acquisitions of Shares pursuant to the Share Purchase
Mandate are carried out to the full extent mandated,

whichever is the earliest.

(c) Manner of Purchases or Acquisitions of Shares

Purchases or acquisitions of Shares may be made by way of:

(i) on-market purchases (“Market Purchases”), transacted through the SGX-ST trading
system and/or on any other securities exchange on which our Shares may for the time
being be listed and quoted, through one or more duly licensed dealers appointed by our
Company for the purpose; and/or

(ii) off-market purchases (“Off-Market Purchases”) (if effected otherwise than on a

securities exchange), in accordance with an equal access scheme.

Our Directors may impose such terms and conditions which are not inconsistent with the
Share Purchase Mandate, the Listing Manual, the Companies Act as they consider fit in the
interests of our Company in connection with or in relation to any equal access scheme or
schemes. An equal access scheme must, however, satisfy all the following conditions:

(A) offers for the purchase or acquisition of Shares shall be made to every person who holds
Shares to purchase or acquire the same percentage of their Shares;

(B) all of those persons shall be given a reasonable opportunity to accept the offers made;
and

(C) the terms of all the offers are the same (except that there shall be disregarded (1)
differences in consideration attributable to the fact that offers may relate to Shares with
different accrued dividend entitlements; and (2) differences in the offers introduced
solely to ensure that each person is left with a whole number of Shares).

If our Company wishes to make an Off-Market Purchase in accordance with an equal access
scheme, it will issue an offer document containing at least the following information:

(I) the terms and conditions of the offer;

(II) the period and procedures for acceptances; and

(III) the information required under Rules 883(2), (3), (4), (5) and (6) of the Listing Manual.

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(d) Purchase Price

The purchase price to be paid for a Share as determined by our Directors (excluding related
brokerage, commission, applicable goods and services tax, stamp duties, clearance fees and
other related expenses) (the “Maximum Price”) must not exceed:

(i) in the case of a Market Purchase, 105% of the Average Closing Price; and

(ii) in the case of an Off-Market Purchase pursuant to an equal access scheme, 120% of the
Average Closing Price.

For the above purposes:

“Average Closing Price” means the average of the closing market prices of a Share over the
last five consecutive market days on which transactions in our Shares on the SGX-ST or, as
the case may be, such other securities exchange on which our Shares may for the time being
be listed or quoted, immediately preceding the date of the Market Purchase by our Company
or, as the case may be, the date of the making of the offer pursuant to the Off-Market
Purchase, and deemed to be adjusted in accordance with the listing rules of the SGX-ST for
any corporate action which occurs during the relevant five-day period and the date of the
Market Purchase by our Company or, as the case may be, the date of the making of the offer
pursuant to the Off-Market Purchase; and

“date of the making of the offer” means the date on which our Company announces its
intention to make an offer for the off-market purchase or acquisition of Shares from holders of
Shares, stating therein the purchase price (which shall not be more than the Maximum Price
calculated on the foregoing basis) for each Share and the relevant terms of the equal access
scheme for effecting the Off-Market Purchase.

Status of Purchased Shares

Shares purchased or acquired by our Company are deemed cancelled immediately on

purchase or acquisition (and all rights and privileges attached to our Shares will expire on
such cancellation) unless such Shares are held by our Company as treasury shares.
Accordingly, the total number of issued Shares will be diminished by the number of Shares
purchased or acquired by our Company, which are cancelled and are not held as treasury
shares.

TREASURY SHARES

Under the Companies Act, Shares purchased or acquired by our Company may be held or dealt
with as treasury shares. Some of the provisions on treasury shares under the Companies Act are
summarised below.

(a) Maximum Holdings

The number of Shares held as treasury shares cannot at any time exceed 10% of the total
number of issued Shares.

(b) Voting and Other Rights

Our Company cannot exercise any right in respect of treasury shares. In particular, our
Company cannot exercise any right to attend or vote at meetings and for the purposes of the
Companies Act, our Company shall be treated as having no right to vote and the treasury
shares shall be treated as having no voting rights.

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 In addition, no dividend may be paid, and no other distribution of our Company’s assets may
be made, to our Company in respect of treasury shares. However, the allotment of shares as
fully paid bonus shares in respect of treasury shares is allowed. A subdivision or consolidation
of any treasury share is also allowed so long as the total value of the treasury shares after the
subdivision or consolidation is the same as before.

(c) Disposal and Cancellation

Where Shares are held as treasury shares, our Company may at any time but subject always
to the Singapore Code on Take-overs and Mergers (the “Take-over Code”):

(a) sell the treasury shares for cash;

(b) transfer the treasury shares for the purposes of or pursuant to any share scheme,
whether for employees, directors or other persons;

(c) transfer the treasury shares as consideration for the acquisition of shares in or assets of
another company or assets of a person;

(d) cancel the treasury shares; or

(e) sell, transfer or otherwise use the treasury shares for such other purposes as may be
prescribed by the Minister for Finance of Singapore.

Under Rule 704(28) of the Listing Manual, an immediate announcement must be made of any
sale, transfer, cancellation and/or use of treasury shares. Such announcement must include
details such as the date of the sale, transfer, cancellation and/or use of such treasury shares,
the purpose of such sale, transfer, cancellation and/or use of such treasury shares, the
number of treasury shares which have been sold, transferred, cancelled and/or used, the
number of treasury shares before and after such sale, transfer, cancellation and/or use, the
percentage of the number of treasury shares against the total number of issued shares (of the
same class as the treasury shares) which are listed on the SGX-ST before and after such sale,
transfer, cancellation and/or use, and the value of the treasury shares if they are used for a
sale or transfer, or cancelled.

Source of Funds

Our Company may only apply funds for the purchase or acquisition of the Shares as provided in our
Constitution and in accordance with the applicable laws in Singapore.

Our Company may not purchase its Shares for a consideration other than in cash or, in the case of
a Market Purchase, for settlement otherwise than in accordance with the trading rules of the
SGX-ST.

Our Company may purchase or acquire its own Shares out of capital, as well as from its
distributable profits so long as our Company is solvent.

Our Company intends to use internal sources of funds to finance our Company’s purchase or
acquisition of the Shares pursuant to the Share Purchase Mandate. Our Directors do not propose
to exercise the Share Purchase Mandate to such an extent that it would materially and adversely
affect the financial position of our Group.

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Financial Effects

The financial effects on our Company and our Group arising from purchases or acquisitions of
Shares which may be made pursuant to the Share Purchase Mandate will depend on, inter alia, the
number of Shares purchased or acquired and the price paid for such Shares. The financial effects
on our Group, based on the audited consolidated financial statements of our Group for the financial
year ended 31 December 2019, are based on the assumptions set out below:

(a) Purchase or Acquisition out of Capital or Profits

(i) if Shares are purchased or acquired entirely out of the capital of our Company, our
Company shall reduce the amount of its share capital by the total amount of the purchase
price paid by our Company for our Shares (excluding brokerage, stamp duties,
applicable goods and services tax, clearance fees and other related expenses) (the
“Purchase Price”) and the amount available for the distribution of cash dividends by our
Company will not be reduced;

(ii) if Shares are purchased or acquired entirely out of profits of our Company, our Company
shall reduce the amount of its profits by the total amount of the Purchase Price and
correspondingly reduce the amount available for the distribution of cash dividends by our
Company; or

(iii) where Shares are purchased or acquired out of both the capital and the profits of our
Company, our Company shall reduce the amount of its share capital and profits
proportionately by the total amount of the Purchase Price.

(b) The Offering

Completion of the Offering had taken place on 1 January 2019.

(c) Number of Shares Acquired or Purchased

Based on the enlarged number of issued and paid-up Shares upon completion of the Offering
and the issue of the New Cornerstone Shares and on the assumptions set out in paragraph (a)
above, the purchase by our Company of up to the maximum 10% limit will result in the
purchase or acquisition of 65,835,111 Shares.

(d) Maximum Price Paid for Shares Acquired or Purchased

In the case of Market Purchases and assuming that our Company purchases or acquires
65,835,111 Shares at the Maximum Price of S$2.72 for each Share (being the price equivalent
to 105% of the Offering Price), the maximum amount of funds required for the purchase or
acquisition of 65,835,111 Shares is approximately S$179,071,502.

In the case of Off-Market Purchases and assuming that our Company purchases or acquires
65,835,111 Shares at the Maximum Price of S$3.11 for each Share (being the price equivalent
to 120% of the Offering Price), the maximum amount of funds required for the purchase or
acquisition of 65,835,111 Shares is approximately S$204,747,195.

(e) Illustrative Financial Effects

The financial effects on our Company and our Group arising from purchases or acquisitions of
Shares which may be made pursuant to the proposed Share Purchase Mandate will depend
on, inter alia, the aggregate number of Shares purchased or acquired and the consideration
paid at the relevant time.

I-5
For illustrative purposes only and on the basis of the assumptions set out in paragraphs (b)
and (c) above, and assuming the following:

(i) our Company had on 1 January 2019 purchased 65,835,111 Shares (representing 10%
of our issued Shares upon completion of the Offering and the issue of the New
Cornerstone Shares; and

(ii) such Share purchases are made entirely out of capital and held as treasury shares,

the financial effects on the consolidated financial statements of our Group for the financial
year ended 31 December 2019 would have been as follows:

Market Purchase Off-Market Purchase

Adjusted Adjusted
Balance Balance
Before Share After Share Before Share After Share
Purchase Purchase Purchase Purchase

S$’000 S$’000 S$’000 S$’000

Profit attributable to equity

holders of our Company as at
31 December 2019 . . . . . . . . . . . 23,624 23,624 23,624 23,624
Share capital . . . . . . . . . . . . . . . . . 269,397 269,397 269,397 269,397
Currency translation reserve . . . . . (9,020) (9,020) (9,020) (9,020)
Retained profits . . . . . . . . . . . . . . . 101,570 101,570 101,570 101,570
Treasury shares . . . . . . . . . . . . . . . — (179,072) — (204,747)
Shareholders’ equity . . . . . . . . . . 368,083 189,011 368,083 163,336
Total equity . . . . . . . . . . . . . . . . . . 374,995 195,924 374,995 170,248
Net assets value (NAV). . . . . . . . . 368,083 189,011 368,083 163,336
(1)
Current assets ............... 84,321 84,321 84,321 84,321
(1)
Current liabilities ............. 45,854 45,854 45,854 45,854
Working capital . . . . . . . . . . . . . . . 38,466 38,466 38,466 38,466
Total borrowings . . . . . . . . . . . . . . . 8,494 8,494 8,494 8,494
Cash and cash equivalents. . . . . . . 221,767 42,696 221,767 17,020
Net cash . . . . . . . . . . . . . . . . . . . . 217,903 38,832 217,903 13,156
Number of shares as at
31 December 2019 (2) (’000). . . . . 658,351 592,516 658,351 592,516
Weighted average number of
shares as at 31 December
(2)
2019 (’000) . . . . . . . . . . . . . . . . 658,351 592,516 658,351 592,516

Financial Ratios
NAV per share (3) (S$) . . . . . . . . . . . 0.5591 0.3190 0.5591 0.2757
Gearing ratio (4) . . . . . . . . . . . . . . . . -89.9% 0.8% -89.9% 13.8%
(5)
Current ratio ................ 1.8 1.8 1.8 1.8
Basic EPS (S$) (6) . . . . . . . . . . . . . . 0.0359 0.0399 0.0359 0.0399

I-6
 Notes:

(1) Current Assets excluding cash and Current Liabilities excluding debt
(2) Adjusted to reflect the issue of the Shares issued pursuant to the RSP, the Shares issued pursuant to the
exercise of options granted under the Pre-IPO ESOS, the New Cornerstone Shares and the Conversion Shares

(3) Total Equity attributable to equity holders of the Company divided by number of shares as of 31 December 2019
(4) Net Debt divided by the Total Capital, being the aggregate of Net Debt and Total Equity. Net Debt is calculated
as Total Liabilities less provision for taxation, deferred taxation, provisions, contract liabilities and cash and bank
balances. Total Capital is calculated as Total Equity plus Net Debt

(5) Current Assets divided by Current Liabilities

(6) Profit attributable to owners of our Company divided by the weighted average number of Shares as at
31 December 2019

Shareholders should note that the financial effects set out above, based on the
respective aforementioned assumptions, are for illustration purposes only. In
particular, it is important to note that the above analysis is based on historical numbers
for the financial year ended 31 December 2019, and is not necessarily representative of
future financial performance.

Although the Share Purchase Mandate would authorise our Company to purchase or
acquire up to 10% of our post-Offering issued Shares, our Company may not
necessarily purchase or acquire or be able to purchase or acquire the entire 10% of our
post-Offering issued Shares. In addition, our Company may cancel or hold in treasury
all or part of our Shares purchased or acquired.

Our Company will take into account both financial and non-financial factors (for example,
share market conditions and the performance of our Shares) in assessing the relative impact
of a share purchase before execution.

Tax Implications

Shareholders who are in doubt as to their respective tax positions or the tax implications of Share
purchases by our Company, or who may be subject to tax whether in or outside Singapore, should
consult their own professional advisers.

Listing Rules

Rule 886(1) of the Listing Manual specifies that a listed company shall report all purchases or
acquisitions of its shares to the SGX-ST not later than 9.00 a.m. (a) in the case of a Market
Purchase, on the market day following the day of purchase or acquisition of any of its shares and
(b) in the case of an Off-Market Purchase under an equal access scheme, on the second market
day after the close of acceptances of the offer. Such announcement must include, inter alia, details
of the date of the purchase, the total number of shares purchased, the number of shares cancelled,
the number of shares held as treasury shares, the purchase price per share or the highest and
lowest prices paid for such shares (as applicable), the total consideration (including stamp duties
and clearing charges) paid or payable for the shares, the number of shares purchased as of the
date of announcement (on a cumulative basis), the number of issued shares excluding treasury
shares and subsidiary holdings and the number of treasury shares held after the purchase and the
number of subsidiary holdings after the purchase.

While the Listing Manual does not expressly prohibit any purchase of shares by a listed company
during any particular time or times, because the listed company would be regarded as an “insider”
in relation to any proposed purchase or acquisition of its issued shares, our Company will not
undertake any purchase or acquisition of Shares pursuant to the proposed Share Purchase

I-7
Mandate at any time after a price or trade sensitive development has occurred or has been the
subject of a decision until the price sensitive information has been publicly announced.

In particular, our Company will not purchase or acquire any Shares through Market Purchases
during the period of one month immediately the announcement of our Company’s half year and full
year financial statements.

The Listing Manual requires a listed company to ensure that at least 10% of the total number of
issued shares (excluding treasury shares, preference shares and convertible equity securities) in
a class that is listed is at all times held by public shareholders. The term “public”, as defined under
the Listing Manual, is persons other than the directors, chief executive officer, substantial
shareholders or controlling shareholders of our Company or its subsidiaries, as well as the
associates of such persons. Immediately after completion of the Offering and the issue of the New
Cornerstone Shares, approximately 33.5% of our issued Shares (assuming that Over-allotment
Option is not exercised) are expected to be held by public Shareholders.

Assuming that immediately after completion of the Offering and the issue of the New Cornerstone
Shares, our Company purchases or acquires through Market Purchases 65,835,111 Shares, being
the full 10% limit pursuant to the Share Purchase Mandate, 26.1% of our issued Shares (assuming
that Over-allotment Option is not exercised) will be held by public Shareholders. Accordingly, our
Company is of the view that there will be a sufficient number of the Shares in issue held by public
Shareholders which would permit our Company to undertake purchases or acquisitions of its
Shares through Market Purchases up to the full 10% limit pursuant to the Share Purchase Mandate
without affecting the listing status of the Shares on the SGX-ST, and that the number of Shares
remaining in the hands of the public will not fall to such a level as to cause market illiquidity or to
affect orderly trading.

Our Directors will use their best efforts to ensure that we do not effect purchases or acquisitions of
Shares if the purchase or acquisition of Shares would result in the number of Shares remaining in
the hands of the public falling to such a level as to cause market illiquidity, adversely affect the
orderly trading of our Shares or adversely affect our listing status.

Take-over Implications

Appendix 2 of the Singapore Take-Over Code contains the Share Buy-Back Guidance Note as of
the Latest Practicable Date. The take-over implications arising from any purchase or acquisition by
our Company of our Shares are set out below:

(a) Obligation to Make a Take-over Offer

If the proportionate interest of a Shareholder and persons acting in concert with such
Shareholder in the voting capital of our Company increases as a result of any purchase or
acquisition by our Company of our Shares, such increase will be treated as an acquisition for
the purposes of Rule 14 of the Singapore Take-Over Code. If such increase results in a
Shareholder or group of Shareholders acting in concert obtaining or consolidating effective
control of our Company, such Shareholder or group of Shareholders acting in concert could
become obliged to make a take-over offer for our Company under Rule 14 of the Singapore
Take-Over Code.

(b) Persons Acting in Concert

Under the Singapore Take-Over Code, persons acting in concert comprise individuals or
companies who, pursuant to an agreement or understanding (whether formal or informal),
cooperate, through the acquisition by any of them of shares in a company, to obtain or
consolidate effective control of that company.

I-8
 Unless the contrary is established, the following persons will be presumed to be acting in
concert:

(i) a company with any of its directors (together with their close relatives, related trusts as
well as companies controlled by any of the directors, their close relatives and related
trusts); and

(ii) a company, its parent, subsidiaries and fellow subsidiaries, and their associated
companies and companies of which such companies are associated companies, all with
each other, and any person who has provided financial assistance (other than a bank in
the ordinary course of business) to any of the foregoing companies for the purchase of
voting rights. For this purpose, a company is an associated company of another
company if the second company owns or controls at least 20.0% but not more than
50.0% of the voting rights of the first-mentioned company.

The circumstances under which Shareholders (including our Directors) and persons acting in
concert with them respectively will incur an obligation to make a take-over offer under Rule 14
of the Singapore Take-Over Code after a purchase or acquisition of Shares by our Company
are set out in Appendix 2 of the Singapore Take-Over Code.

(c) Effect of Rule 14 and Appendix 2

In general terms, the effect of Rule 14 and Appendix 2 of the Singapore Take-Over Code is
that, unless exempted, our Directors and persons acting in concert with them will incur an
obligation to make a take-over offer for our Company under Rule 14 if, as a result of our
Company purchasing or acquiring our Shares, the voting rights of such Directors and their
concert parties would increase to 30.0% or more, or if the voting rights of such Directors and
their concert parties fall between 30.0% and 50.0% of our Company’s voting rights, the voting
rights of such Directors and their concert parties would increase by more than 1.0% in any
period of six months. In calculating the percentages of voting rights of such Directors and their
concert parties, treasury shares shall be excluded.

Under Appendix 2, a Shareholder not acting in concert with our Directors will not be required
to make a take-over offer under Rule 14 if, as a result of our Company purchasing or acquiring
our Shares, the voting rights of such Shareholder in our Company would increase to 30.0% or
more, or, if such Shareholder holds between 30.0% and 50.0% of our Company’s voting
rights, the voting rights of such Shareholder would increase by more than 1.0% in any period
of six months.

Under the Singapore Take-Over Code, our Company, Dr Shi Xu, Mdm Jin Xiao Qun, Pearl
Yard Holdings Inc. and Harrymore International Limited (the “Concert Party Group”) are
presumed to be acting in concert with each other. Based on their shareholding immediately
after completion of the Offering and the issue of the New Cornerstone Shares (assuming the
Over-allotment Option is exercised) as set out in “Share Capital and Shareholders—Current
Shareholders”, the Concert Party Group would become obliged to make a take-over offer for
our Company under Rule 14 of the Singapore Take-Over Code as a result of the purchase by
our Company of the maximum limit of 10.0% of our post-Offering issued Shares. Save for the
foregoing, none of the substantial Shareholders would become obliged to make a take-over
offer for our Company under Rule 14 of the Singapore Take-Over Code as a result of the
purchase by our Company of the maximum limit of 10.0% of our post-Offering issued Shares.

I-9
 Shareholders are advised to consult their professional advisers and/or the Securities Industry
Council of Singapore at the earliest opportunity as to whether an obligation to make a
take-over offer would arise by reason of any share purchases by our Company.

Shares Purchased by our Company

No purchases of Shares have been made by our Company in the 12 months preceding the Latest
Practicable Date.

I-10
 APPENDIX J

MAJOR LICENCES AND PERMITS

The major licences and permits held by our Group as at the Latest Practicable Date are as follows:

1. Singapore

Nature of approvals, licences and

No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

1. Permit to Store and Nanofilm National Environment Agency 29 May 2020/ Permit to deal with hazardous
Use Hazardous Technologies 28 May 2021 substance
Substances International Pte Ltd

2. Licence on Explosive Nanofilm Singapore Police Force 25 June 2020/ Permit to deal with hazardous
Precursor Technologies 24 June 2022 substance
International Pte Ltd

J-1
3. Electrical Installation Nanofilm Energy Market Authority 13 December 2019/ Licence to use or operate an
Licence Technologies 12 December 2020 electrical installation
International Pte Ltd

4. Report of Examination Nanofilm Ministry of Manpower 6 March 2020/ Inspection of pressure vessel under
of Air Receiver (Air Technologies 5 March 2022 the Workplace Safety and Health
Com) International Pte Ltd Act 2006

5. Report of Examination Nanofilm Ministry of Manpower 29 January 2019/ Inspection of pressure vessel under
of Air Receiver Technologies 28 January 2021 the Workplace Safety and Health
(Vansin) International Pte Ltd Act 2006
 2. Vietnam

Nature of approvals, licences and

No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

1. Certificate of Nanofab Vietnam Peoples’ Committee of Cam 13 December 2017/ Environment protection measures
registration of Co Ltd Giang District N.A.
environment protection
plan No. 1200/GXN-
UBND

2. Certificate of Design Nanofab Vietnam Police Department of Fire 30 November 2017/ Fire prevention and firefighting
Approval of Fire Co Ltd Prevention, Firefighting and N.A.
Prevention and Rescue under Hai Duong
Firefighting No. 14/TD- Province
PCCC

3. Inspection Minutes on Nanofab Vietnam Police Department of Fire 5 February 2018/N.A. Fire prevention and firefighting

J-2
acceptance of fire Co Ltd Prevention, Firefighting and
protection and Rescue under Hai Duong
firefighting Province

4. Inspection minutes on Nanofab Vietnam Department of Fire 10 July 2020/N.A. Fire prevention and firefighting
acceptance of fire Co Ltd Prevention, Firefighting and
protection and Rescue Police under Hai
firefighting Duong Police Province

5. Official Letter No. 109/ Nanofab Vietnam Department of Fire 10 July 2020/N.A. Fire prevention and firefighting
NT-PCCC on Co Ltd Prevention, Firefighting and
acceptance of fire Rescue Police under Hai
protection and Duong Police Province
firefighting
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

6. Decision No. 461/QD- Nanofab Vietnam Co Department of Fire 4 September 2018/ Fire prevention and firefighting
PCCC in respect of Ltd Prevention, Firefighting and N.A.
issuance of Certificate Rescue Police under Hai
of training in fire Duong Police Province
prevention and
firefighting

7. 18 Certificates of Nanofab Vietnam Co Department of Firefighting 4 September 2018/ Fire prevention and firefighting
training in fire Ltd 1 and Rescue Police under Hai 3 September 2020
prevention and Duong Police Province
firefighting

8. 8 Certificates for Nanofab Vietnam Co Viet Nam Equipment 27 August 2018/ Occupational safety and hygiene
occupational safety Ltd 2 Inspection And Safety 26 August 2020
and hygiene training Training Limited Company

J-3
1 Held by certain employees of Nanofab Vietnam Co Ltd.

2 Held by certain employees of Nanofab Vietnam Co Ltd.

 3. China

Nature of approvals, licences and

No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

1. Business Licence Nanofilm Shanghai Municipal 22 June 2011/ Establishment and conduct of
(營業執照) Renewable Energy Administration of market 21 June 2031 business
Technology supervision
(Shanghai)
Co., Ltd.

2. Food Operation Nanofilm Shanghai Qingpu District 10 January 2020/ Production and sale of hot food
Licence Renewable Energy Administration for Market 9 January 2025
Technology Regulation
(Shanghai)
Co., Ltd.

3. Feedback on Filings of Qingpu Industrial Economical Committee of 8 February 2020/N.A. Prevention and control of COVID-19

J-4
Manufacturing Park Shanghai Qingpu District for the resumption of work
Enterprises’ (Nanofilm
Resumption of Work Renewable Energy
and Production in Technology
Qingpu District (Shanghai)
Co., Ltd. is listed in
the filing application
of resumption of
work, which has
been approved by
the Economical
Committee of
Shanghai Qingpu
District.)
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

4. Registration Certificate Nanofilm Qingpu Customs, China 21 March 2012/N.A. Import and export consignee and
of Customs Renewable Energy consignor
Declaration Units of Technology
the People’s Republic (Shanghai)
of China Co., Ltd.

5. Licence on Discharge Nanofilm Shanghai Water Authority 1 July 2016/ Environment permit
of Urban Sewage into Renewable Energy 30 June 2021
the Drainage Network Technology
(Shanghai)
Co., Ltd.

6. Registration Receipt of Nanofilm Ecology and Environment 15 May 2020/ Environment permit
Pollution Discharge Renewable Energy Bureau 14 May 2025
from Fixed Pollution Technology

J-5
Sources (Shanghai)
Co., Ltd.

7. Approval for the Nanofilm Environment Protection 3 September 2012/ Approval related to Nanofilm
Environment Impact Renewable Energy Agency of Qingpu District N.A. Renewable Energy Technology
Statement Technology (Shanghai) Co., Ltd.’s construction
(Shanghai) projects
Co., Ltd.

8. Approval for inspection Nanofilm Environment Protection 14 September 2016/ Approval related to Nanofilm
and acceptance of the Renewable Energy Agency of Qingpu District N.A. Renewable Energy Technology
environmental facilities Technology (Shanghai) Co., Ltd.’s construction
(Shanghai) projects
Co., Ltd.
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

9. Approval for the Nanofilm Ecology and Environment 19 June 2019/N.A. Approval related to Nanofilm
Environment Impact Renewable Energy Bureau Renewable Energy Technology
Statement Technology (Shanghai) Co., Ltd.’s construction
(Shanghai) projects
Co., Ltd.

10. Approval for the Nanofilm Shanghai Qingpu District 19 July 2019/N.A. Approval related to Nanofilm
Energy Saving Report Renewable Energy Development and Reform Renewable Energy Technology
Technology Commission (Shanghai) Co., Ltd.’s construction
(Shanghai) projects
Co., Ltd.

11. Approval for the Nanofilm Ecology and Environment 18 December 2019/ Approval related to Nanofilm
Environment Impact Renewable Energy Bureau N.A. Renewable Energy Technology
Statement Technology (Shanghai) Co., Ltd.’s construction

J-6
(Shanghai) projects
Co., Ltd.

12. Registration form for Nanofilm Ecology and Environment Expires 31 December Health and safety permits for
hazardous waste Renewable Energy Bureau 2020 operations
management Technology
(Shanghai)
Co., Ltd.

13. Registration certificate Nanofilm Shanghai Bureau of Public 26 August 2020/ Health and safety permits for
for the purchase of Renewable Energy Security 26 November 2020 operations
Class II and Class III Technology
precursor chemicals (Shanghai)
Co., Ltd.
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

14. Certificate III of Work Nanofilm Shanghai Work Safety October 2017/ Health and safety permits for
Safety Standardisation Renewable Energy Association October 2020 operations
(light industry) Technology
(Shanghai)
Co., Ltd.

15. Business Licence Nanofilm Vacuum State Administration for 5 September 2002/ Establishment and conduct of
Coating (Shanghai) Industry and Commerce of 5 September 2042 business
Co., Ltd. Shanghai, China

16. Certificate of Approval Nanofilm Vacuum The Government of 5 September 2002/ Establishment and conduct of
for Establishment of Coating (Shanghai) Shanghai, China 5 September 2022 business
Enterprises with Co., Ltd.
Foreign Investment in
the People’s Republic

J-7
of China

17. Registration Certificate Nanofilm Vacuum Huangpu Customs District, 11 April 2008/N.A. Import and export consignee and
of Customs Coating (Shanghai) China consignor
Declaration Units of Co., Ltd.
the People’s Republic
of China

18. Opinions on the filling Nanofilm Vacuum Shanghai Qingpu District 13 February 2020/ Prevention and control of COVID-19
of the resumption of Coating (Shanghai) Economic Committee N.A. for the resumption of work
work and production of Co., Ltd.
Nanofilm Vacuum
Coating (Shanghai)
Co., Ltd. in Qingpu
District
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

19. Registration of Nanofilm Vacuum Qingpu District 15 May 2020/ Environment permit
pollution discharge Coating (Shanghai) Environmental Protection 14 May 2025
from fixed pollution Co., Ltd. Bureau, Shanghai
sources

20. Opinions on the Nanofilm Vacuum Qingpu District 11 November 2015/ Approval related to Nanofilm
examination and Coating (Shanghai) Environmental Protection N.A. Vacuum Coating (Shanghai) Co.,
approval of the Co., Ltd. Bureau, Shanghai Ltd.’s construction projects
environmental impact
report of the production
expansion project of
Nanofilm Vacuum
Coating (Shanghai)
Co., Ltd.

J-8
21. Opinions on the Nanofilm Vacuum Qingpu District 19 July 2013/N.A. Approval related to Nanofilm
approval of Coating (Shanghai) Environmental Protection Vacuum Coating (Shanghai) Co.,
environmental impact Co., Ltd. Bureau, Shanghai Ltd.’s construction projects
report forms
for technological
transformation project
of vacuum arc film
production technology
for electronic digital
products special filter
cathode vacuum arc
film production
technology project
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

22. Opinions on the Nanofilm Vacuum Qingpu District 25 April 2016/N.A. Approval related to Nanofilm
examination and Coating (Shanghai) Environmental Protection Vacuum Coating (Shanghai) Co.,
approval of Co., Ltd. Bureau, Shanghai Ltd.’s construction projects
environmental
protection facilities for
the technical
transformation project
of vacuum arc coating
production and the
production expansion

23. Opinions on the Nanofilm Vacuum Qingpu District 3 September 2018/ Approval related to Nanofilm
examination and Coating (Shanghai) Environmental Protection N.A. Vacuum Coating (Shanghai) Co.,
approval of the Co., Ltd. Bureau, Shanghai Ltd.’s construction projects
environmental impact

J-9
report of the relocation
project of Nanofilm
Vacuum Coating
(Shanghai) Co., Ltd.

24. Opinions on the Nanofilm Vacuum Qingpu District 16 September 2008/ Approval related to Nanofilm
examination and Coating (Shanghai) Environmental Protection N.A. Vacuum Coating (Shanghai) Co.,
approval of the Co., Ltd. Bureau, Shanghai Ltd.’s construction projects
environmental impact
report of the
construction project of
Nanofilm Vacuum
Coating (Shanghai)
Co., Ltd.
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

25. Opinions on the Nanofilm Vacuum Qingpu District 22 September 2009/ Approval related to Nanofilm
examination and Coating (Shanghai) Environmental Protection N.A. Vacuum Coating (Shanghai) Co.,
approval of Co., Ltd. Bureau, Shanghai Ltd.’s construction projects
environmental
protection facilities for
the construction
project of Nanofilm
Vacuum Coating
(Shanghai) Co., Ltd.

26. Business Licence Nanofilm Enterprise Shanghai Free Pilot Trade 16 December 2016/ Establishment and conduct of
Management Zone Market Supervision and 15 December 2036 business
(Shanghai) Co., Ltd. Administration Bureau of
China

J-10
27. Filing Form of Nanofilm Enterprise Shanghai Entry-Exit 5 June 2017/N.A. Establishment and conduct of
Declaration Management Inspection and Quarantine business
Enterprises for Entry- (Shanghai) Co., Ltd. Bureau of The People’s
Exit Inspection and Republic of China
Quarantine

28. Registration Form of Nanofilm Enterprise Shanghai Free Trade Zone of 7 June 2017/N.A. Establishment and conduct of
Foreign Trade Management China business
Business Operator (Shanghai) Co., Ltd.

29. Account opening Nanofilm Enterprise Shanghai Branch of the 23 December 2016/ Establishment and conduct of
permit Management People’s Bank of China N.A. business
(Shanghai) Co., Ltd.
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

30. PRC Customs Nanofilm Enterprise Waigaoqiao Customs, 21 June 2017/N.A. Establishment and conduct of
Declaration Agent Management General Administration of business
Registration Certificate (Shanghai) Co., Ltd. Customs of the People’s
Republic of China

31. Proof of Launch of Nanofilm Enterprise State Administration of 20 October 2017/N.A. Establishment and conduct of
Online Business for Management Foreign Exchange, Shanghai business
Foreign Exchange (Shanghai) Co., Ltd. Branch
Administration for
Trade in Goods

32. Business Licence Yizheng Nahuan Yizheng Municipal 19 March 2019/ Establishment and conduct of
Technologies Co., Administration for Market 28 October 2038 business
Ltd Regulation

J-11
33. Approval on the Yizheng Nahuan Management Committee of 7 December 2018/ Approval related to Yizheng Nahuan
Investment from the Technologies Co., the Yangzhou (Yizheng) N.A. Technologies Co., Ltd’s
Yizheng Nahuan Ltd Automobile Industrial Park construction projects
Technologies Co., Ltd.
regarding the DLC
Coating Production
Line Project

34. Registration Certificate Yizheng Nahuan Yangzhou Municipal 12 June 2019/N.A. Approval related to Yizheng Nahuan
of Investment Project Technologies Co., Development and Reform Technologies Co., Ltd’s
in Jiangsu Province Ltd Commission construction projects
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

35. Approval on the Yizheng Nahuan Yangzhou Municipal Bureau 4 June 2019/N.A. Approval related to Yizheng Nahuan
Assessment Form on Technologies Co., of Ecology and Environment Technologies Co., Ltd’s
the environmental Ltd construction projects
impact of the DLC
Coating Project of the
Yizheng Nahuan
Technologies Co., Ltd.

36. Return Receipt for Yizheng Nahuan Yizheng Bureau of Ecology 13 April 2020/ Environment permit
Pollutant Discharge Technologies Co., and Environment 13 April 2025
Registration of Ltd
Stationary Pollution
Source

37. Business Licence Shanghai Nanofilm Administration for Market 15 March 2018/ Establishment and conduct of

J-12
Precision Coating Regulation of Shanghai 24 July 2027 business
Co., Ltd. Qingpu District

38. Registration Form of Shanghai Nanofilm Shanghai Municipal 18 April 2018/N.A. Foreign trade licence
Foreign Trade Precision Coating Commission of Commerce
Business Operator Co., Ltd.

39. Registration Certificate Shanghai Nanofilm Qingpu Customs, General 21 March 2012/N.A. Import and export consignee and
of Customs Precision Coating Administration of Customs of consignor
Declaration Agent of Co., Ltd. the People’s Republic of
the People’s Republic China
of China

40. Licence on Discharge Shanghai Nanofilm Water Affairs Bureau of 8 September 2017/ Environment permit
of Urban Sewage into Precision Coating Qingpu District 7 September 2022
the Drainage Network Co., Ltd.
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

41. Return Receipt for Shanghai Nanofilm Qingpu Bureau of Ecology 26 April 2020/ Environment permit
Pollutant Discharge Precision Coating and Environment 25 April 2025
Registration of Co., Ltd.
Stationary Pollution
Source

42. Opinions on the filling Shanghai Nanofilm Shanghai Qingpu District 21 February 2020/ Prevention and control of COVID-19
of the resumption of Precision Coating Economic Committee N.A. for the resumption of work
work and production of Co., Ltd.
Shanghai Nanofilm
Precision Coating Co.,
Ltd. in Qingpu District

43. Opinions on the Shanghai Nanofilm Qingpu District 1 June 2017/N.A. Approval related to Shanghai
examination and Precision Coating Environmental Protection Nanofilm Precision Coating Co.,

J-13
approval of the Co., Ltd. Bureau, Shanghai Ltd.’s construction projects
environmental impact
report of the
construction project of
Shanghai Nanofilm
Precision Coating
(Shanghai) Co., Ltd.

44. Opinions on the Shanghai Nanofilm Qingpu District 7 December 2018/ Approval related to Shanghai
examination and Precision Coating Environmental Protection N.A. Nanofilm Precision Coating Co.,
approval of Co., Ltd. Bureau, Shanghai Ltd.’s construction projects
environmental
protection facilities for
the construction
project
 Nature of approvals, licences and
No Licence Licence Holder Issuing Authority Start Date/Date of Expiry permits

45. Business Licence Shanghai Nanofilm Administration for Market 14 March 2018/ Establishment and conduct of
Zaichuang Regulation of Shanghai 13 March 2028 business
Automation Co., Ltd. Qingpu District
(now known as
Shanghai Nanofilm
Trading Co., Ltd)

46. Approval on the Shanghai Nanofilm The Environment Protection 14 March 2018/N.A. Approval related to Shanghai
Assessment Form on Zaichuang Agency of Qingpu District, Nanofilm Zaichuang Automation
the environmental Automation Co., Ltd. Shanghai Co., Ltd.’s (now known as Shanghai
impact of the (now known as Nanofilm Trading Co., Ltd)
Construction Project of Shanghai Nanofilm construction projects
Shanghai Nanofilm Trading Co., Ltd)
Zaichuang Automation
Co., Ltd. (now known

J-14
as Shanghai Nanofilm
Trading Co., Ltd)

47. Approval on the Shanghai Nanofilm The Environment Protection 6 December 2018/ Environment permit
completion of Zaichuang Agency of Qingpu District, N.A.
environmental Automation Co., Ltd. Shanghai
protection facilities to (now known as
prevent water, noise, Shanghai Nanofilm
or solid waste pollution Trading Co., Ltd)

48. Return Receipt for Shanghai Nanofilm Qingpu District 14 May 2020/ Environment permit
Pollutant Discharge Zaichuang Environmental Protection 13 May 2025
Registration of Automation Co., Ltd. Bureau, Shanghai
Stationary Pollution (now known as
Source Shanghai Nanofilm
Trading Co., Ltd)
 APPENDIX K
INTELLECTUAL PROPERTY RIGHTS

This appendix set out the material intellectual property of our Group as at the Latest Practicable Date:

A. PATENT REGISTRATIONS AND APPLICATIONS

Application No./ Filing Date/
S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

1. Nanofilm Technologies Filter for removing SG 2013017272 30 September 2011 Patent in Force 30 September 2031
2. International Pte Ltd macro-particles from a JP JP5554451B2 30 September 2011 Patent in Force 30 September 2031
plasma beam
3. Nanofilm Technologies A novel coating having SG 2011089869 9 June 2009 Patent in Force 9 June 2029
4. International Pte Ltd reduced stress and a SG 2010085215 9 June 2009 Patent in Force 9 June 2029
method of depositing the
5. Nanofilm Vacuum Coating coating on a substrate PRC 2009801190797 9 June 2009 Patent in Force 9 June 2029
(Shanghai) Co., Ltd.
6. Nanofilm Technologies A method for rapid SG 2010085199 9 June 2009 Patent in Force 9 June 2029

K-1
International Pte Ltd deposition of a coating on
a substrate
7. Nanofilm Technologies A process for producing SG 2010085173 9 June 2009 Patent in Force 9 June 2029
International Pte Ltd an image on a substrate
8. Nanofilm Technologies Cutting tools having SG 2009085895 26 June 2007 Patent in Force 26 June 2027
9. International Pte Ltd plasma deposited carbon UK GB 1001155.9 26 June 2007 Patent in Force 26 June 2027
coatings
10. Nanofilm Vacuum Coating PRC 2007800537908 26 June 2007 Patent in Force 26 June 2027
(Shanghai) Co., Ltd.
11. Nanofilm Technologies A method and apparatus SG 2008007585 5 August 2005 Patent in Force 5 August 2025
12. International Pte Ltd for providing a substrate SG 2005049911 5 August 2005 Patent in Force 5 August 2025
coating having a
predetermined resistivity,
and uses therefor
 A. PATENT REGISTRATIONS AND APPLICATIONS
Application No./ Filing Date/
S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

13. Nanofilm Vacuum Coating Method and apparatus for PRC 2005100905052 17 August 2005 Patent in Force 17 August 2025
(Shanghai) Co., Ltd. removing material from a
substrate surface
14. Nanofilm Technologies Metal coatings SG 2006053342 7 August 2006 Patent in Force 7 August 2026
International Pte Ltd
15. Nanofilm Technologies Continuous arc SG 2005006754 7 February 2005 Patent in Force 7 February 2025
16. International Pte Ltd deposition apparatus and USA US 11/065168 18 January 2011 Patent in Force 13 November 2027
method with multiple
17. available targets JP JP4866555B2 22 February 2005 Patent in Force 22 February 2025

18. Nanofilm Technologies Arc deposition apparatus SG 2005002605 19 January 2005 Patent in Force 19 January 2025
International Pte Ltd and method
19. Nanofilm Vacuum Coating Method of Reducing the PRC 2010101682090 13 January 2005 Patent in Force 13 January 2025
(Shanghai) Co., Ltd. Pressure in Film Formed

K-2
by Physical Vapor
Deposition
20. Nanofilm Vacuum Coating A filter used to remove PRC 2011800454333 30 September 2011 Patent in Force 30 September 2031
(Shanghai) Co., Ltd. large particles from a
plasma beam
21. Nanofilm Vacuum Coating Rotary biasing device PRC 2012200265761 20 January 2012 Patent in Force 20 January 2032
(Shanghai) Co., Ltd.
22. Nanofilm Vacuum Coating Low temperature vacuum PRC 2012200265776 20 January 2012 Patent in Force 20 January 2032
(Shanghai) Co., Ltd. coating unit
23. Nanofilm Vacuum Coating Continuous vacuum PRC 2012200265780 20 January 2012 Patent in Force 20 January 2032
(Shanghai) Co., Ltd. coating unit
24. Nanofilm Vacuum Coating Transmission Roller of a PRC 2012200265831 20 January 2012 Patent in Force 20 January 2032
(Shanghai) Co., Ltd. Vacuum Coating Device
 A. PATENT REGISTRATIONS AND APPLICATIONS
Application No./ Filing Date/
S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

25. Nanofilm Vacuum Coating Planet Rotating Supports PRC 2012200265850 20 January 2012 Patent in Force 20 January 2032
(Shanghai) Co., Ltd. for Vacuum Coating
Devices
26. Nanofilm Vacuum Coating Rectangular flapper valve PRC 2012200265916 20 January 2012 Patent in Force 20 January 2032
(Shanghai) Co., Ltd.
27. Nanofilm Vacuum Coating A device for fastening PRC 2014202440872 13 May 2014 Patent in Force 13 May 2034
(Shanghai) Co., Ltd. screws
28. Nanofilm Vacuum Coating Coating fixture for small PRC 2014202441076 13 May 2014 Patent in Force 13 May 2034
(Shanghai) Co., Ltd. nameplate
29. Nanofilm Vacuum Coating Film Holding Device of PRC 2014202443584 13 May 2014 Patent in Force 13 May 2034
(Shanghai) Co., Ltd. Screw Head
30. Nanofilm Vacuum Coating Full coating device for PRC 201420244477X 13 May 2014 Patent in Force 13 May 2034

K-3
(Shanghai) Co., Ltd. screws
31. Nanofilm Vacuum Coating A High Efficiency PRC 2014202544369 19 May 2014 Patent in Force 19 May 2034
(Shanghai) Co., Ltd. Rectangular Valve
32. Nanofilm Vacuum Coating A New Method of Coating PRC 2016101059694 26 February 2016 Patent in Force 26 February 2036
(Shanghai) Co., Ltd. Nanometre Fingerprint
Preventing Film
33. Nanofilm Vacuum Coating Nanometre Film PRC 2016201443660 26 February 2016 Patent in Force 26 February 2036
(Shanghai) Co., Ltd. Evaporation Equipment
for Fingerprint Prevention
34. Nanofilm Vacuum Coating High Temperature PRC 2016112718534 30 December 2016 Patent in Force 30 December 2036
(Shanghai) Co., Ltd. Resistant Diamond
Coating Method for
Graphite Substrate
 A. PATENT REGISTRATIONS AND APPLICATIONS
Application No./ Filing Date/
S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

35. Nanofilm Vacuum Coating A Large Vacuum Coating PRC 2016214749104 30 December 2016 Patent in Force 30 December 2036
(Shanghai) Co., Ltd. Device for Diamond Like
Film
36. Nanofilm Vacuum Coating A New Diamond Like Film PRC 2016214877884 30 December 2016 Patent in Force 30 December 2036
(Shanghai) Co., Ltd. Coating
37. Nanofilm Vacuum Coating A Colour Matching PRC 2018115244844 13 December 2018 Sending out the N.A.
(Shanghai) Co., Ltd. Method for Decorative first office action,
Diamond Film waiting for reply
38. Nanofilm Vacuum Coating A Method for Preparing PRC 2018115245090 13 December 2018 Sending out the N.A.
(Shanghai) Co., Ltd. Wear-Resistant Diamond first office action,
Coatings Applied to waiting for reply
Cryogenic Materials
39. Nanofilm Vacuum Coating Preparation of PRC 2018115245211 13 December 2018 Sending out the N.A.

K-4
(Shanghai) Co., Ltd. Hydrophobic Diamond first office action,
Films Doped with Fluorine waiting for reply
40. Nanofilm Vacuum Coating A Kind of Coating PRC 2019212120341 30 July 2019 Patent in Force 30 July 2039
(Shanghai) Co., Ltd. Masking Appliance for
Watchcase
41. Nanofilm Vacuum Coating A Quick Feeding Tool for PRC 2019212120375 30 July 2019 Patent in Force 30 July 2039
(Shanghai) Co., Ltd. Coating Fixture
42. Nanofilm Vacuum Coating An Experimental Device PRC 2019212120479 30 July 2019 Patent in Force 30 July 2039
(Shanghai) Co., Ltd. for Simulating Ball Head
Hitting
43. Nanofilm Vacuum Coating The utility model relates PRC 2019212125951 30 July 2019 Patent in Force 30 July 2039
(Shanghai) Co., Ltd. to a coating masking
appliance used for
products with screws
 A. PATENT REGISTRATIONS AND APPLICATIONS
Application No./ Filing Date/
S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

44. Nanofilm Vacuum Coating A Coating Fixture for PRC 2019212126136 30 July 2019 Patent in Force 30 July 2039
(Shanghai) Co., Ltd. Improving the Uniformity
of Coating
45. Nanofilm Vacuum Coating Automatic packing PRC 2019212704850 7 August 2019 Patent in Force 7 August 2039
(Shanghai) Co., Ltd. machine
46. Nanofilm Vacuum Coating An Efficient Air Drying PRC 2019212705124 7 August 2019 Patent in Force 7 August 2039
(Shanghai) Co., Ltd. Equipment
47. Nanofilm Vacuum Coating Equipment for Automatic PRC 2019212710086 7 August 2019 Patent in Force 7 August 2039
(Shanghai) Co., Ltd. Bottle Picking Inspection
48. Nanofilm Vacuum Coating A Flat Valve Processing PRC 2019212710118 7 August 2019 Patent in Force 7 August 2029
(Shanghai) Co., Ltd. Equipment with Riveting
and Air Tightness
Detection Functions

K-5
49. Nanofilm Vacuum Coating Low-stress amorphous PRC 2019109471050 8 October 2019 Waiting for N.A.
(Shanghai) Co., Ltd. diamond thick film coating request for
substantive
examination
50. Nanofilm Vacuum Coating A hard carbon-based PRC 2019110823440 7 November 2019 Waiting for N.A.
(Shanghai) Co., Ltd. coating that is extremely request for
resistant to abrasion substantive
examination
51. Nanofilm Vacuum Coating Thermally resistant PRC 2019110824265 7 November 2019 Waiting for N.A.
(Shanghai) Co., Ltd. carbon coating request for
substantive
examination
 A. PATENT REGISTRATIONS AND APPLICATIONS
Application No./ Filing Date/
S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

52. Nanofilm Vacuum Coating Corrosion resistant PRC 2019112996957 16 December 2019 Waiting for N.A.
(Shanghai) Co., Ltd. carbon-based coating request for
substantive
examination
53. Nanofilm Technologies PCT (PCT Application) (PCT Application) (PCT Application) (PCT Application)
International Pte Ltd;
PCT/EP2019/ 17 December 2019 Pending 17 December 2039
Nanofilm Vacuum Coating 085617 unpublished
(Shanghai) Co., Ltd.; and
Schlich Ltd
54. Nanofilm Technologies European Patent EPC EP 19207830.1 7 November 2019 Pending 7 November 2039
International Pte Ltd Application on coloured unpublished
coatings

K-6
55. Nanofilm Technologies Patent Application on EPC EP 20176814.0 27 May 2020 Pending 27 May 2040
International Pte Ltd black coatings unpublished
56. Nanofilm Technologies PCT PCT/CN2020/ 7 April 2020 Pending 7 April 2040
International Pte Ltd; and 083527 unpublished

Nanofilm Vacuum Coating

(Shanghai) Co., Ltd.
57. Nanofilm Technologies European Patent EPC EP 20181191.6 19 June 2020 Pending 19 June 2040
International Pte Ltd Application on improved unpublished
cathode arc source filters
 A. PATENT REGISTRATIONS AND APPLICATIONS
Application No./ Filing Date/
S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

58. Nanofilm Technologies Improved cathode arc PCT (PCT Application) (PCT Application) (PCT Application) (PCT Application)
International Pte Ltd; source
PCT/EP2020/ 13 March 2020 Pending 13 March 2040
Nanofilm Vacuum Coating 056860 published
(Shanghai) Co., Ltd.; and
Schlich Ltd
59. Nanofilm Vacuum Coating PRC 2020101789335 15 March 2020 Pending 15 March 2040
(Shanghai) Co., Ltd.
60. Nanofilm Technologies European Patent EPC EP 20185790.1 14 July 2020 Pending 14 July 2040
International Pte Ltd Application on bipolar unpublished
plates
61. Nanofilm Technologies PCT Patent Application PCT PCT/EP2019/ 8 October 2019 Pending 8 October 2039
International Pte Ltd; on thick, low-stress 077230 unpublished

K-7
tetrahedral amorphous
Nanofilm Vacuum Coating carbon coatings
(Shanghai) Co., Ltd.; and
Schlich Ltd
62. Nanofilm Technologies PCT Patent Application PCT PCT/EP2019/ 7 November 2019 Pending 7 November 2039
International Pte Ltd; on Ta-C based coatings 080615 unpublished
with improved hardness
Nanofilm Vacuum Coating
(Shanghai) Co., Ltd.; and
Schlich Ltd
63. Nanofilm Technologies PCT Patent Application PCT PCT/EP2019/ 7 November 2019 Pending 7 November 2039
International Pte Ltd; on temperature resistant 080620 unpublished
coatings
Nanofilm Vacuum Coating
(Shanghai) Co., Ltd.; and
Schlich Ltd
 A. PATENT REGISTRATIONS AND APPLICATIONS
Application No./ Filing Date/
S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

64. Nanofilm Technologies Improved coating PCT (PCT Application) (PCT Application) (PCT Application) (PCT Application)
International Pte Ltd; processes PCT/EP2020/ 13 March 2020 Pending 13 March 2040
056864 published
Nanofilm Vacuum Coating
(Shanghai) Co., Ltd.; and
Schlich Ltd
65. Nanofilm Vacuum Coating PRC 2020101787908 15 March 2020 Pending 15 March 2040
(Shanghai) Co., Ltd.
66. Nanofilm Technologies Copper interconnects USA US 10/340898 10 January 2003 Patent in Force 25 April 2023
67. International Pte Ltd JP JP4721641B2 9 January 2004 Patent in Force 9 January 2024
68. Nanofilm Vacuum Coating A high temperature PRC 2019212704916 7 August 2019 Patent in Force 6 August 2029
(Shanghai) Co., Ltd. testing equipment for heat
insulation cotton of

K-8
automobile exhaust pipe
 B. REGISTERED TRADEMARKS

S/N Registered Owner Trademark Territory Trademark No. Class Code Status Expiry Date

1. Nanofilm Technologies SG T1412686C 01 and 02 Registered 11 August 2024

International Pte Ltd
2. Nanofilm Technologies SG T0420829H 01 Registered 29 November 2024
International Pte Ltd
3. Nanofilm Technologies SG T0420828Z 01 Registered 29 November 2024
International Pte Ltd
4. Nanofilm Technologies SG 40201921489T 02, 07 and 40 Registered 2 October 2029
International Pte Ltd
5. Nanofilm Technologies SG 40201905884Y 02, 07 and 40 Registered 19 March 2029
International Pte Ltd

6. Nanofilm Technologies SG 40201905878V 02, 07 and 40 Registered 19 March 2029

K-9
International Pte Ltd

7. Nanofilm Technologies SG 40201905876T 02, 07 and 40 Registered 19 March 2029

International Pte Ltd

8. Nanofilm Technologies SG 40201905873R 02, 07 and 40 Registered 19 March 2029

International Pte Ltd

9. Shanghai Nanofilm PRC 33429360 40 Registered 13 May 2029

Precision Coating Co.,
Ltd.
10. Shanghai Nanofilm PRC 33424402 10 Registered 13 May 2029
Precision Coating Co.,
Ltd.
 B. REGISTERED TRADEMARKS

S/N Registered Owner Trademark Territory Trademark No. Class Code Status Expiry Date

11. Shanghai Nanofilm PRC 33421444 07 Registered 13 May 2029

Precision Coating Co.,
Ltd.
12. Shanghai Nanofilm PRC 33416230 10 Registered 20 July 2029
Precision Coating Co.,
Ltd.

13. Shanghai Nanofilm PRC 33411780 07 Registered 13 May 2029

Precision Coating Co.,
Ltd.

14. Shanghai Nanofilm PRC 33411746 40 Registered 6 July 2029

Precision Coating Co.,
Ltd.

K-10
15. Nanofilm Technologies PRC 41135185 02, 07 and 40 Pending N.A.
International Pte Ltd

16. Nanofilm Technologies JP 2020-27483 01, 07 and 40 Pending N.A.

International Pte Ltd

17. Nanofilm Technologies EU Trademark for NTI EU 18125857 02, 07 and 40 Registered 17 September 2029
International Pte Ltd Logo

18. Nanofilm Technologies EU Trademark for EU 18125850 02, 07 and 40 Registered 17 September 2029
International Pte Ltd TAC-ON
 B. REGISTERED TRADEMARKS

S/N Registered Owner Trademark Territory Trademark No. Class Code Status Expiry Date

19. Nanofilm Technologies PRC Trademark for PRC 41135113 02, 07 and 40 Pending N.A.
International Pte Ltd TAC-ON
20. Nanofilm Technologies JP Trademark for JP 2020-27482 01, 07 and 40 Pending N.A.
International Pte Ltd TAC-ON
21. Nanofilm Technologies EU Trademark for NAFA EU 18125855 02, 07 and 40 Registered 17 September 2029
International Pte Ltd
22. Nanofilm Technologies PRC Trademark for NAFA PRC 41135112 02, 07 and 40 Registered 28 September 2030
International Pte Ltd
23. Nanofilm Technologies EU Trademark for i-TAC EU 18125856 02, 07 and 40 Registered 17 September 2029
International Pte Ltd
24. Nanofilm Technologies Trademark for i-TAC PRC/JP IR1230344 01 and 02 Registered 11 September 2024
International Pte Ltd
25. Nanofilm Technologies PRC Trademark for i-TAC PRC 41135114 02, 07 and 40 Pending N.A.

K-11
International Pte Ltd
26. Nanofilm Technologies JP Trademark for i-TAC JP 2019-123111 01, 07 and 40 Registered 14 April 2030
International Pte Ltd
27. Nanofilm Technologies EU Trademark for MiCC EU 18211687 02, 07 and 40 Registered 17 March 2030
International Pte Ltd
28. Nanofilm Technologies PRC Trademark for MiCC PRC IR 851773 01 Registered 12 January 2025
International Pte Ltd
29. Nanofilm Technologies JP Trademark for MiCC JP 2020-28366 02, 07 and 40 Pending N.A.
International Pte Ltd
30. Nanofilm Technologies PRC Trademark for MiCC PRC 45142625 02, 07 and 40 Pending N.A.
International Pte Ltd
31. Nanofilm Technologies Trademark for TAC-ON USA/ IR855346 01 Registered 12 January 2025
International Pte Ltd PRC
 C. OTHERS

Application No./ Filing Date/

S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

1. Nanofilm Vacuum Coating Software Copyright: PRC 2018SR213631 28 March 2018 Granted 28 March 2068
(Shanghai) Co., Ltd. Pre-coating adhesive
application system
2. Nanofilm Vacuum Coating Software Copyright: PRC 2018SR213068 28 March 2018 Granted 28 March 2068
(Shanghai) Co., Ltd. Automatic assembly
system
3. Nanofilm Vacuum Coating Software Copyright: Parts PRC 2018SR213061 28 March 2018 Granted 28 March 2068
(Shanghai) Co., Ltd. arrangement system for
vacuum coating
4. Nanofilm Vacuum Coating Software Copyright: PRC 2018SR213587 28 March 2018 Granted 28 March 2068
(Shanghai) Co., Ltd. Quality tracking
dashboard software
5. Nanofilm Vacuum Coating Software Copyright: PRC 2018SR214408 28 March 2018 Granted 28 March 2068

K-12
(Shanghai) Co., Ltd. Precision assembly
systems
6. Nanofilm Vacuum Coating Software Copyright: PRC 2018SR213473 28 March 2018 Granted 28 March 2068
(Shanghai) Co., Ltd. Post-coating parts
arrangement system
7. Nanofilm Vacuum Coating Software Copyright: PRC 2018SR214095 27 March 2018 Granted 28 March 2068
(Shanghai) Co., Ltd. Manufacturing execution
dashboard software
8. Nanofilm Vacuum Coating Domain name: PRC N.A. 23 October 2002 Registered 23 October 2029
(Shanghai) Co., Ltd. Nanofilm.com.cn
 C. OTHERS

Application No./ Filing Date/

S/N Registered Owner Nature and Description Territory Registration No. Registration Date Status Expiry Date

9. Nanofilm Vacuum Coating Domain name: PRC N.A. 3 January 2019 Registered 3 January 2023
(Shanghai) Co., Ltd. nanofilm-group.com
10. Nanofilm Vacuum Coating Domain name: PRC N.A. 3 January 2019 Registered 3 January 2023
(Shanghai) Co., Ltd. nanofilm-tech.com
11. Nanofilm Vacuum Coating Domain name: PRC N.A. 3 January 2019 Registered 3 January 2023
(Shanghai) Co., Ltd. nanofilmgroup.com

K-13
This page has been intentionally left blank.
 APPENDIX L
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION FOR AND
ACCEPTANCE OF THE OFFERING SHARES IN SINGAPORE

Applications are invited for or purchase of the Offering Shares at the Offering Price on the terms
and conditions set out below and in the printed application forms to be used for the purpose of the
Offering and which forms part of the prospectus (the “Application Forms”) or, as the case may be,
the Electronic Applications (as defined herein).

Investors applying for the Offering Shares by way of Application Forms or Electronic Applications
are required to pay, in Singapore dollars, the Offering Price, subject to a refund of the full amount
or, as the case may be, the balance of the applications monies (in each case without interest or any
share of revenue or other benefit arising therefrom, at the applicant’s own risk and without any right
or claim against us, the Vendors, the Joint Issue Managers, the Joint Global Coordinators or the
Joint Bookrunners and Underwriters) where (i) an application is rejected or accepted in part only,
or (ii) if the Offering does not proceed for any reason.

(1) The minimum initial application is for 1,000 Offering Shares. You may purchase a larger
number of Offering Shares in integral multiples of 100. Your application for any other number
of Offering Shares will be rejected.

(2) You may apply for the Offering Shares only during the period commencing at 6.00 p.m. on
23 October 2020 and expiring at 12.00 noon on 28 October 2020. The Offering period may
be extended or shortened to such date and/or time as we and the Vendors may agree with
the Joint Global Coordinators and the Joint Bookrunners and Underwriters, subject to all
applicable laws and regulations and the rules of the SGX-ST.

(3) (a) Your application for the Offering Shares offered in the Singapore Public Offer (the
“Public Offer Shares”) may be made by way of the printed WHITE Application Forms
or by way of Automated Teller Machines (“ATM”) belonging to the Participating Banks
(“ATM Electronic Applications”) or the Internet Banking (“IB”) website of the relevant
Participating Banks, where available (“Internet Electronic Applications”), or the
mobile banking interface of DBS Bank Ltd. (“DBS Bank”) (“mBanking Applications”,
which together with the ATM Electronic Applications and Internet Electronic
Applications, shall be referred to as “Electronic Applications”).

(b) Your application for the Offering Shares offered in the International Offering (the
“Placement Shares”), may be made by way of the printed BLUE Application Forms (or
in such other manner as the Joint Global Coordinators and the Joint Bookrunners and
Underwriters may in their absolute discretion deem appropriate).

UNLESS PERMISSIBLE IN SUCH OTHER JURISDICTION, YOU MUST BE IN

SINGAPORE AT THE TIME OF THE MAKING OF THE APPLICATION FOR THE
OFFERING SHARES. YOU MAY NOT USE YOUR CENTRAL PROVIDENT FUND OR CPF
INVESTIBLE SAVINGS TO APPLY FOR THE OFFERING SHARES.

(4) Only one application may be made for the benefit of one person for the Public Offer
Shares in his own name. Multiple applications for the Public Offer Shares will be
rejected, except in the case of applications by approved nominee companies where
each application is made on behalf of a different beneficiary.

You may not submit multiple applications for the Public Offer Shares whether by way
of an Application Form for Public Offer Shares or an Electronic Application. A person
who is submitting an application for the Public Offer Shares by way of an Application
Form for Public Offer Shares may not submit another application for the Public Offer
Shares by way of an Electronic Application and vice versa.

L-1
 A person other than an approved nominee company who is submitting an application
for the Public Offer Shares in his own name should not submit any other applications
for the Public Offer Shares, whether by way of an Application Form or an Electronic
Application, for any other person. Such separate applications will be deemed to be
multiple applications and shall be rejected.

Joint or multiple applications for the Public Offer Shares shall be rejected. Persons
submitting or procuring submissions of multiple applications for the Public Offer
Shares may be deemed to have committed an offence under the Penal Code, Chapter
224 of Singapore, and the SFA, and such applications may be referred to the relevant
authorities for investigation. Multiple applications or those appearing to be or
suspected of being multiple applications (other than as provided herein) will be liable
to be rejected at our discretion.

(5) Multiple applications may be made in the case of applications by any person for (i) the
Placement Shares only (by way of Application Forms for Placement Shares or such
other form of application as the Joint Global Coordinators and the Joint Bookrunners
and Underwriters may in their absolute discretion deem appropriate) or (ii) the
Placement Shares together with a single application for the Public Offer Shares
whether by way of an Application Form for Public Offer Shares or an Electronic
Application.

(6) Applications from any person under the age of eighteen (18) years, undischarged bankrupts,
sole proprietorships, partnerships, chops or non-corporate bodies, joint Securities Account
holders of CDP will be rejected.

(7) Applications from any person whose addresses (furnished in their printed Application Forms
or, in the case of Electronic Applications, contained in the records of the relevant
Participating Bank, as the case may be) bear post office box numbers will be rejected. No
person acting or purporting to act on behalf of a deceased person is allowed to apply under
the Securities Account with CDP in the deceased’s name at the time of the application.

(8) The existence of a trust will not be recognised. Any application by a trustee or trustees must
be made in his/her or their own name(s) and without qualification or, where the application
is made by way of a printed Application Form by a nominee, in the name(s) of an approved
nominee company or approved nominee companies after complying with paragraph 9 below.

(9) Nominee applications may only be made by approved nominee companies. Approved
nominee companies are defined as banks, merchant banks, finance companies, insurance
companies, licensed securities dealers in Singapore and nominee companies controlled by
them. Applications made by nominees other than approved nominee companies will be
rejected.

(10) If you are not an approved nominee company, you must maintain a Securities Account
with CDP in your own name at the time of your application. If you do not have an existing
Securities Account with CDP in your own name at the time of application, your application will
be rejected (if you apply by way of an Application Form) or you will not be able to complete
your application (if you apply by way of an Electronic Application). If you have an existing
Securities Account with CDP but fail to provide your CDP Securities Account number or
provide an incorrect CDP Securities Account number in your Application Form or in your
Electronic Application, as the case may be, your application is liable to be rejected.

L-2
(11) Subject to paragraphs 13 to 16 below, your application is liable to be rejected if your
particulars such as name, National Registration Identity Card (“NRIC”) number or passport
number or company registration number, nationality or permanent residence status, and
CDP Securities Account number provided in your Application Form, or in the case of an
Electronic Application, contained in the records of the relevant Participating Bank at the time
of your Electronic Application, as the case may be, differ from those particulars in your
Securities Account as maintained by CDP. If you have more than one individual direct
Securities Account with CDP, your application shall be rejected.

(12) If your address as stated in the Application Form or, in the case of an Electronic
Application, contained in the records of the relevant Participating Bank, as the case
may be, is different from the address registered with CDP, you must inform CDP of
your updated address promptly, failing which the notification letter on successful
allocation from CDP will be sent to your address that was last registered with CDP.

(13) This Prospectus and its accompanying documents (including the Application Forms) have
not been registered in any jurisdiction other than in Singapore. The distribution of this
Prospectus and its accompanying documents (including the Application Forms) may be
prohibited or restricted (either absolutely or unless various securities requirements, whether
legal or administrative, are complied with) in certain jurisdictions under the relevant
securities laws of those jurisdictions.

Without limiting the generality of the foregoing, neither this Prospectus and its
accompanying documents (including the Application Forms) nor any copy thereof may be
taken, transmitted, published or distributed, whether directly or indirectly, in whole or in part
in or into the United States or any other jurisdiction (other than Singapore) and they do not
constitute an offer of securities for sale or a solicitation of an offer to buy any securities in the
United States or any jurisdiction in which such offer is not authorised or to any person to
whom it is unlawful to make such an offer. The Offering Shares have not been and will not be
registered under the Securities Act or the securities law of any state of the United States and
may not be offered or sold within the United States (as defined in Regulation S) except
pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state laws. The Offering Shares are being
offered and sold outside the United States (including institutional and other investors in
Singapore) in reliance on Regulation S. There will be no public offer of Offering Shares in the
United States. Any failure to comply with this restriction may constitute a violation of
securities laws in the United States and in other jurisdictions.

We and the Vendors reserve the right to reject any application for the Offering Shares
where we and the Vendors believe or have reason to believe that such applications
may violate the securities laws or any applicable legal or regulatory requirements of
any jurisdiction.

No person in any jurisdiction outside Singapore receiving this Prospectus or its

accompanying documents (including the Application Forms) may treat the same as an offer
or invitation to subscribe for and/or purchase any Offering Shares unless such an offer or
invitation could lawfully be made without compliance with any regulatory or legal
requirements in those jurisdictions.

(14) We and the Vendors reserve the right to reject any application which does not conform
strictly to the instructions or with the terms and conditions set out in this Prospectus
(including the instructions set out in the accompanying Application Forms, the ATMs and IB
websites of the relevant Participating Banks and the mobile banking interface (“mBanking
Interface”) of DBS Bank) or, in the case of an application by way of an Application Form, the
contents of which are illegible, incomplete, incorrectly completed or which is accompanied
by an improperly drawn up, or improper form of remittance or a remittance which is not
honoured upon its first presentation.

L-3
(15) We and the Vendors further reserve the right to treat as valid any applications not completed
or submitted or effected in all respects in accordance with the instructions and terms and
conditions set out in this Prospectus (including the instructions set out in the accompanying
Application Forms, the ATMs and IB websites of the relevant Participating Banks and the
mBanking Interface of DBS Bank), and also to present for payment or other processes all
remittances at any time after receipt and to have full access to all information relating to, or
deriving from, such remittances or the processing thereof. Without prejudice to the rights of
our Company and the Vendors, the Joint Global Coordinators and the Joint Bookrunners and
Underwriters, agents of our Company and the Vendors, have been authorised to accept, for
and on behalf of our Company and the Vendors, such other forms of application as the Joint
Global Coordinators and the Joint Bookrunners and Underwriters may deem appropriate.

(16) We and the Vendors reserve the right to reject or to accept, in whole or in part, or to scale
down or to ballot, any application without assigning any reason therefor, and none of our
Company, the Vendors, the Joint Global Coordinators, nor the Joint Bookrunners and
Underwriters will entertain any enquiry and/or correspondence on the decision of our
Company and the Vendors. This right applies to applications made by way of Application
Forms and Electronic Applications and by such other forms of application as the Joint Global
Coordinators and the Joint Bookrunners and Underwriters may, in consultation with our
Company and the Vendors, deem appropriate. In deciding the basis of allocation, our
Company and the Vendors, in consultation with the Joint Global Coordinators and the Joint
Bookrunners and Underwriters, will give due consideration to the desirability of allocating the
Offering Shares to a reasonable number of applicants with a view to establishing an
adequate market for the Offering Shares.

(17) In the event that the Vendors lodge a supplementary or replacement document (“Relevant
Document”) pursuant to the SFA or any applicable legislation in force from time to time prior
to the close of the Offering, and the Offering Shares have not been transferred to you, the
Vendors will (as required by law) at the Vendors’ sole and absolute discretion either:

(a) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
the lodgment of the Relevant Document, give you notice in writing of how to obtain, or
arrange to receive, a copy of the same and provide you with an option to withdraw your
application and take all reasonable steps to make the Relevant Document available to
you within a reasonable period of time if you have indicated that you wish to obtain, or
have arranged to receive, a copy of the Relevant Document; or

(b) within seven (7) days of the lodgment of the Relevant Document, provide you with a
copy of the Relevant Document and provide you with an option to withdraw your
application; or

(c) treat your application as withdrawn and cancelled and refund all monies paid in respect
of your application (without interest or any share of revenue or other benefit arising
therefrom, at your own risk and without any right or claim against us, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators or the Joint Bookrunners and
Underwriters) to you within seven (7) days from the lodgment of the Relevant
Document.

Any applicant who wishes to exercise his option under paragraphs 17(a) and 17(b) above to
withdraw his application shall, within fourteen (14) days from the date of lodgment of the
Relevant Document, notify us and the Vendors of this whereupon the Vendors shall, within
seven (7) days from the receipt of such notification, return to the applicant all monies paid by
such applicant in respect of such application (without interest or any share of revenue or
other benefit arising therefrom, at the applicant’s own risk and without any right or claim
against us, the Vendors, the Joint Issue Managers, the Joint Global Coordinators or the Joint
Bookrunners and Underwriters) to the applicant.

L-4
(18) In the event that the Offering Shares have already been transferred at the time of the
lodgment of the Relevant Document but trading has not commenced, the Vendors will (as
required by law) either:

(a) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
the lodgment of the Relevant Document, give you notice in writing of how to obtain, or
arrange to receive, a copy of the same and provide you with an option to return to us the
Offering Shares which you do not wish to retain title in and take all reasonable steps to
make the Relevant Document available to you within a reasonable period of time if you
have indicated that you wish to obtain, or have arranged to receive, a copy of the
Relevant Document; or

(b) within seven (7) days from the lodgment of the Relevant Document, provide you with a
copy of the Relevant Document and provide you with an option to return to the Vendors
those Offering Shares which you do not wish to retain title in; or

(c) treat the transfer of the Offering Shares as void and return all monies paid in respect of
your application (without interest or any share of revenue or other benefit arising
therefrom, at your own risk and without any right or claim against us, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators or the Joint Bookrunners and
Underwriters) within seven (7) days from the lodgment of the Relevant Document.

Any applicant who wishes to exercise his option under paragraphs 18(a) and 18(b) above to
return the Offering Shares transferred to him shall, within fourteen (14) days from the date of
lodgment of the Relevant Document, notify us and the Vendors of this and return all
documents, if any, purporting to be evidence of title of those Offering Shares to the Vendors,
whereupon the Vendors shall, within seven (7) days from the receipt of such notification and
documents, if any, return to the applicant all monies paid by such applicant for the Offering
Shares (without interest or any share of revenue or other benefit arising therefrom, at the
applicant’s own risk and without any right or claim against us, the Vendors, the Joint Issue
Managers, the Joint Global Coordinators or the Joint Bookrunners and Underwriters), and
the Offering Shares transferred to him shall be treated as void.

Additional terms and instructions applicable upon the lodgment of the Relevant Document,
including instructions on how you can exercise the option to withdraw, may be found in such
Relevant Document.

(19) The Offering Shares may be re-allocated between the International Offering and the
Singapore Public Offer for any reason, including in the event of excess applications in one
and a deficit of applications in the other, by the Joint Global Coordinators, in consultation
with our Company and the Vendors, subject to any applicable laws.

(20) Subject to your provision of a valid and correct CDP Securities Account number, share
certificates in respect of the Offering Shares will be registered in the name of CDP or its
nominee and will be forwarded only to CDP. If your application is successful, it is expected
that CDP will send to you, at your own risk, within 15 Market Days after the close of the
Offering, and subject to the submission of valid applications and payment for the Offering
Shares, a statement of account stating that your CDP Securities Account has been credited
with the number of Offering Shares allocated to you. This will be the only acknowledgement
of application monies received and is not an acknowledgement by us and/or the Vendors.
You irrevocably authorise CDP to complete and sign on your behalf as transferee or
renouncee any instrument of transfer and/or other documents required for the issue or
transfer of the Offering Shares allocated to you. This authorisation applies to applications
made both by way of Application Form and Electronic Application.

L-5
(21) You irrevocably authorise CDP to disclose the outcome of your application, including the
number of Offering Shares allocated to you pursuant to your application, to our Company,
the Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and
Underwriters and any other parties so authorised by CDP, our Company, the Vendors and/or
the Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and
Underwriters.

(22) Any reference to “you” or the “Applicant” in this appendix shall include an individual, a
corporation, an approved nominee company and trustee applying for the Offering Shares by
way of an Application Form or an Electronic Application or by such other manner as the Joint
Global Coordinators and the Joint Bookrunners and Underwriters may, in their absolute
discretion, deem appropriate.

(23) By completing and delivering an Application Form and, in the case of: (i) an ATM Electronic
Application, by pressing the “Enter” or “OK” or “Confirm” or “Yes” key or any other relevant
key on the ATM, and (ii) an Internet Electronic Application or mBanking Application, by
clicking “Submit” or “Continue” or “Yes” or “Confirm” or any other relevant button on the
IB website screen of the relevant Participating Bank or the mBanking Interface of DBS Bank
in accordance with the provisions therein, you:

(a) irrevocably agree and undertake to purchase the number of Offering Shares specified
in your application (or such smaller number for which the application is accepted) at the
Offering Price and agree that you will accept such number of Offering Shares as may be
allocated to you, in each case on the terms of, and subject to the conditions set out in,
the Prospectus and its accompanying documents (including the Application Forms), as
well as the Constitution of our Company;

(b) agree that, in the event of any inconsistency between the terms and conditions for
application set out in this Prospectus and its accompanying documents (including the
Application Form) and those set out in the IB websites or ATMs of the relevant
Participating Banks or the mBanking Interface of DBS Bank, the terms and conditions
set out in this Prospectus and its accompanying documents (including the Application
Forms) shall prevail;

(c) in the case of an application by way of an Application Form for Public Offer Shares or
an Electronic Application, agree that the Offering Price for the Public Offer Shares
applied for is due and payable to the Vendors upon application;

(d) in the case of an application by way of an Application Form for Placement Shares or
such other forms of application as the Joint Global Coordinators and the Joint
Bookrunners and Underwriters may, in their absolute discretion, deem appropriate,
agree that the aggregate Offering Price for the Placement Shares applied for is due and
payable to the Vendors upon application;

(e) warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such
information, representations and declarations will be relied on by us, the Vendors and
the Joint Global Coordinators and the Joint Bookrunners and Underwriters in
determining whether to accept your application and/or whether to allocate any Offering
Shares to you;

L-6
(f) (i) consent to the collection, use, processing and disclosure of your name, NRIC or
passport number or company registration number, address, nationality or
permanent resident status, CDP Securities Account number, share application
details (including share application amount), the outcome of your application
(including the number of Offering Shares allocated to you pursuant to your
application) and other personal data (“Personal Data”) by the Share Registrar,
CDP, Securities Clearing Computer Services (Pte) Ltd (“SCCS”), the SGX-ST, the
Participating Banks, our Company, the Vendors, the Joint Issue Managers, the
Joint Global Coordinators and the Joint Bookrunners and Underwriters and/or
other authorised operators (the “Relevant Parties”) for the purpose of facilitating
your application for the Offering Shares, and in order for the Relevant Parties to
comply with any applicable laws, listing rules, regulations and/or guidelines
(collectively, the “Purposes”) and warrant that such Personal Data is true,
accurate and correct,

(ii) warrant that where you, as an approved nominee company, disclose the Personal
Data of the beneficial owner(s) to the Relevant Parties, you have obtained the
prior consent of such beneficial owner(s) for the collection, use, processing and
disclosure by the Relevant Parties of the Personal Data of such beneficial
owner(s) for the Purposes,

(iii) agree that the Relevant Parties may do anything or disclose any Personal Data or
matters without notice to you if the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters consider them to be
required or desirable in respect of any applicable policy, law, regulation,
government entity, regulatory authority or similar body, and

(iv) agree that you will indemnify the Relevant Parties in respect of any penalties,
liabilities, claims, demands, losses and damages as a result of your breach of
warranties. You also agree that the Relevant Parties shall be entitled to enforce
this indemnity (collectively, the “Personal Data Privacy Terms”);

(g) agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable
to your application, you have complied with all such laws and none of our Company, the
Vendors, the Joint Issue Managers, the Joint Global Coordinators nor the Joint
Bookrunners and Underwriters will infringe any such laws as a result of the acceptance
of your application;

(h) agree and confirm that you are not a U.S. person and that you are outside the United
States (within the meaning of Regulation S); and

(i) understand that the Offering Shares have not been, and will not be, registered under
the Securities Act or the securities laws of any state of the United States and
accordingly, they may not be offered or sold within the United States or for the account
or benefit of U.S. persons (as defined in Regulation S), except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. Accordingly, there will be no public
offer of the Offering Shares in the United States and the Offering Shares are only being
offered and sold outside the United States in offshore transactions as defined in, and in
reliance on, Regulation S or pursuant to another exemption. Any failure to comply with
these terms may constitute a violation of the United States securities laws.

L-7
(24) Acceptance of applications will be conditional upon, among others, our Company and the
Vendors being satisfied that:

(a) permission has been granted by the SGX-ST to deal in and for the quotation of all our
issued Shares, the New Cornerstone Shares, the Conversion Shares, the Pre-IPO
Option Shares and the Option Shares on the Mainboard of the SGX-ST;

(b) the Underwriting Agreement, referred to in the section entitled “Plan of Distribution”,
has become unconditional and has not been terminated; and

(c) the MAS has not served a stop order pursuant to Section 242 of the SFA directing that
no or no further Offering Shares to which this Prospectus relates be sold (“Stop
Order”). The SFA provides that the MAS shall not serve a Stop Order if all the Offering
Shares have been sold, and listed for quotation on the SGX-ST and trading in them has
commenced.

(25) In the event that a Stop Order in respect of the Offering Shares is issued by the MAS or other
competent authority, and subject to the laws of Singapore:

(a) where the Offering Shares have not been transferred to the applicants, all applications
shall be deemed to be withdrawn and cancelled and the Vendors shall, within 14 days
of the date of the Stop Order, return to the applicants all monies paid by the applicants
on account of their applications for the Offering Shares (without interest or any share of
revenue or other benefit arising therefrom, at their own risk and without any right or
claim against us, the Vendors, the Joint Issue Managers, the Joint Global Coordinators
and the Joint Bookrunners and Underwriters); or

(b) where the Offering Shares have been transferred but trading has not commenced, the
transfer will be deemed to be void and the Vendors shall, within seven days of the date
of the Stop Order, return to the applicants all monies paid by the applicants on account
of their applications for the Offering Shares (without interest or any share of revenue or
other benefit arising therefrom, at your own risk and without any right or claim against
us, the Vendors the Joint Issue Managers, the Joint Global Coordinators and the Joint
Bookrunners and Underwriters).

The above shall not apply where only an interim Stop Order has been served.

(26) In the event that an interim Stop Order in respect of the Shares is served by the MAS or other
competent authority, no Offering Shares shall be transferred to you until the MAS revokes
the interim Stop Order.

(27) Additional terms and conditions for applications by way of Application Forms are set out in
“—Additional Terms and Conditions for Applications using Printed Application Forms” on
pages L-9 to L-13 of this Prospectus.

(28) Additional terms and conditions for applications by way of Electronic Applications are set out
in the “—Additional Terms and Conditions for Electronic Applications” on pages L-13 to L-20
of this Prospectus.

(29) All payments in respect of any application for Public Offer Shares, and all refunds where
(a) an application is rejected or accepted in part only, or (b) the Offering does not proceed for
any reason, shall be made in Singapore dollars.

L-8
(30) All payments in respect of any application for Placement Shares, and all refunds where
(a) an application is rejected or accepted in part only, or (b) the Offering does not proceed for
any reason, shall be made in Singapore dollars.

(31) No application will be held in reserve.

(32) This Prospectus is dated 23 October 2020. No Offering Shares shall be allocated on the
basis of this Prospectus later than six months after the date of registration of this Prospectus
by the MAS.

Additional Terms and Conditions for Applications using Printed Application Forms

Applications by way of an Application Form shall be made on, and subject to, the terms and
conditions of this Prospectus, including, but not limited to, the terms and conditions set out below
in and elsewhere in this appendix, as well as the Constitution of our Company.

(1) Applications for the Public Offer Shares must be made using the printed WHITE Application
Forms for Public Offer Shares and printed WHITE official envelopes “A” and “B”, both of
which accompany and form part of this Prospectus.

Applications for the Placement Shares must be made using the printed BLUE Application
Forms for Placement Shares (or in such manner as the Joint Global Coordinators and the
Joint Bookrunners and Underwriters, in their absolute discretion, deem appropriate), both of
which accompany and form part of this Prospectus.

Without prejudice to the rights of our Company and the Vendors, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters, as agents of the Vendors, have
been authorised to accept, for and on behalf of the Vendors, such other forms of application
as the Joint Global Coordinators and the Joint Bookrunners and Underwriters may (in
consultation with our Company and the Vendors) deem appropriate.

Your attention is drawn to the detailed instructions contained in the Application Forms and
this Prospectus for the completion of the Application Forms, which must be carefully
followed. Our Company and the Vendors reserve the right to reject applications which do not
conform strictly to the instructions set out in the Application Forms and this Prospectus or to
the terms and conditions of this Prospectus or which are illegible, incomplete, incorrectly
completed or which are accompanied by an improperly drawn up, or improper form of
remittance or a remittance which is not honoured upon its first presentation.

(2) You must complete your Application Forms in English. Please type or write clearly in ink
using BLOCK LETTERS.

(3) You must complete all spaces in your Application Forms except those under the heading
“FOR OFFICIAL USE ONLY” and you must write the words “NOT APPLICABLE” or “N.A.”
in any space that is not applicable.

(4) Individuals, corporations, approved nominee companies and trustees must give their names
in full. If you are an individual, you must make your application using your full name as it
appears on your NRIC (if you have such an identification document) or in your passport and,
in the case of a corporation, in your full name as registered with a competent authority. If you
are not an individual, you must complete the Application Form under the hand of an official
who must state the name and capacity in which he signs the Application Form. If you are a
corporation completing the Application Form, you are required to affix your common seal (if
any) in accordance with your constitution or equivalent constitutive documents. If you are a
corporate applicant and your application is successful, a copy of your constitution or

L-9
 equivalent constitutive documents must be lodged with the Share Registrar. Our Company
and the Vendors reserve the right to require you to produce documentary proof of
identification for verification purposes.

(5) (a) You must complete Sections A and B and sign page 1 of the Application Form.

(b) You are required to delete either paragraph 7(c) or 7(d) on page 1 of the Application
Form. Where paragraph 7(c) is deleted, you must also complete Section C of the
Application Form with the particulars of the beneficial owner(s).

(c) If you fail to make the required declaration in paragraph 7(c) or 7(d), as the case may
be, on page 1 of the Application Form, your application is liable to be rejected.

(6) You (whether an individual or corporate applicant, whether incorporated or unincorporated

and wherever incorporated, established or constituted) will be required to declare whether
you are a citizen or permanent resident of Singapore or a corporation in which citizens or
permanent residents of Singapore or any body corporate constituted under any statute of
Singapore have an interest in the aggregate of more than 50.0% of the issued share capital
of or interests in such corporation. If you are an approved nominee company, you are
required to declare whether the beneficial owner of the Offering Shares is a citizen or
permanent resident of Singapore or a corporation, whether incorporated or unincorporated
and wherever incorporated, established or constituted, in which citizens or permanent
residents of Singapore or any body corporate incorporated or constituted under any statute
of Singapore have an interest in the aggregate of more than 50.0% of the issued share
capital of or interests in such corporation.

(7) You may apply and make payment for your application for the Public Offer Shares in
Singapore currency using only cash. Each application must be accompanied by a cash
remittance in Singapore currency for the full amount payable in Singapore dollars of the
Offering Price, in respect of the number of Public Offer Shares applied for. The remittance
must be in the form of a BANKER’S DRAFT or CASHIER’S ORDER drawn on a bank in
Singapore, made out in favour of “NANOFILM SHARE ISSUE SGD ACCOUNT” crossed
“A/C PAYEE ONLY” with your name, CDP Securities Account number and address written
clearly on the reverse side. Applications not accompanied by any payment or accompanied
by any other form of payment will not be accepted. No combined Banker’s Draft or Cashier’s
Order for different CDP Securities Accounts shall be accepted. Remittances bearing “NOT
TRANSFERABLE” or “NON-TRANSFERABLE” crossings will be rejected.

No acknowledgement of receipt will be issued for applications and application monies

received.

The manner and method for applications and acceptances of payment under the
International Offering will be determined by the Joint Global Coordinators and the Joint
Bookrunners and Underwriters in their sole discretion.

(8) Monies paid in respect of unsuccessful applications are expected to be returned (without
interest or any share of revenue or other benefit arising therefrom, at your own risk and
without any right or claim against us, the Vendors, the Joint Issue Managers, the Joint Global
Coordinators or the Joint Bookrunners and Underwriters) to you by ordinary post, in the
event of over-subscription for the Public Offer Shares, within 24 hours of the balloting (or
such shorter period as the SGX-ST may require, PROVIDED THAT the remittance
accompanying such application which has been presented for payment or other processes
has been honoured and the application monies received in the designated share issue
account).

L-10
 Where your application is rejected or accepted in part only, the full amount or the balance of
the application monies, as the case may be, will be refunded (without interest or any share
of revenue or other benefit arising therefrom, at your own risk and without any right or claim
against us, the Vendors, the Joint Issue Managers, the Joint Global Coordinators or the Joint
Bookrunners and Underwriters) to you by ordinary post within 14 Market Days after the close
of the Offering, PROVIDED THAT the remittance accompanying such application which has
been presented for payment or other processes has been honoured and the application
monies received in the designated share issue account.

If the Offering does not proceed for any reason, the full amount of application monies
(without interest or any share of revenue or other benefit arising therefrom, at your own risk
and without any right or claim against us, the Vendor, the Joint Issue Managers, the Joint
Global Coordinators and the Joint Bookrunners and Underwriters) will be returned to you
within three (3) Market Days after the Offering is discontinued, PROVIDED THAT the
remittance accompanying such application which has been presented for payment or other
processes has been honoured and the application monies received in the designated share
issue account.

(9) Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the
meanings assigned to them in this Prospectus.

(10) By completing and delivering the Application Form, you agree that:

(a) in consideration of the Vendors having distributed the Application Form to you and by
completing and delivering the Application Form before the close of the Offering:

(i) your application is irrevocable;

(ii) your remittance will be honoured upon its first presentation and that any monies
returnable may be held pending clearance of your payment without interest or any
share of revenue or other benefit arising therefrom, at your own risk and without
any right or claim against us, the Vendors and the Joint Issue Managers, the Joint
Global Coordinators and the Joint Bookrunners and Underwriters;

(iii) you represent and agree that you are not a U.S. person and that you are located
outside the United States (within the meaning of Regulation S); and

(iv) you understand that the Offering Shares have not been, and will not be, registered
under the Securities Act or the securities laws of any state of the United States and
accordingly, they may not be offered or sold within the United States or for the
account or benefit of U.S. persons (as defined in Regulation S), except pursuant
to state securities laws. Accordingly, there will be no public offer of the Offering
Shares in the United States and the Offering Shares are only being offered and
sold outside the United States in offshore transactions as defined in, and in
reliance or, Regulations S or pursuant to another exemption.

(b) all applications, acceptances or contracts resulting therefrom under the Offering shall
be governed by and construed in accordance with the laws of Singapore and that you
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;

(c) in respect of the Public Offer Shares for which your application has been received and
not rejected, acceptance of your application shall be constituted by written notification
by or on behalf of our Company and the Vendors and not otherwise, notwithstanding
any remittance being presented for payment by or on behalf of our Company and the
Vendors;

L-11
 (d) you will not be entitled to exercise any remedy of rescission for misrepresentation at
any time after acceptance of your application;

(e) reliance is placed solely on information contained in this Prospectus and that none of
our Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators
and the Joint Bookrunners and Underwriters or any other person involved in the
Offering shall have any liability for any information not contained therein;

(f) you accept and agree to the Personal Data Privacy Terms set out in this Prospectus;

(g) for the purpose of facilitating your application, you consent to the collection, use,
processing and disclosure, by or on behalf of our Company and the Vendors, of your
Personal Data to the Relevant Persons in accordance with the Personal Data Privacy
Terms; and

(h) you irrevocably agree and undertake to purchase the number of Public Offer Shares
applied for as stated in the Application Form or any smaller number of such Public Offer
Shares that may be allocated to you in respect of your application. In the event that our
Company and the Vendors decide to allocate any smaller number of Public Offer
Shares or not to allocate any Public Offer Shares to you, you agree to accept such
decision as final.

Procedures Relating to Applications for the Public Offer Shares by Way of Printed
Application Forms

(1) Your application for the Public Offer Shares by way of printed Application Forms MUST be
made using the WHITE Application Form for Public Offer Shares and WHITE official
envelopes “A” and “B”.

(2) You must:

(a) enclose the WHITE Application Form for Public Offer Shares, duly completed and
signed, together with the correct remittance for the full amount payable based on the
Offering Price and the number of Public Offer Shares applied for in Singapore currency
in accordance with the terms and conditions of this Prospectus and its accompanying
documents, in the WHITE official envelope “A” provided;

(b) in appropriate spaces on the WHITE official envelope “A”:

(i) write your name and address;

(ii) state the number of Public Offer Shares applied for; and

(iii) tick the relevant box to indicate the form of payment;

(c) SEAL THE WHITE OFFICIAL ENVELOPE “A”;

(d) write, in the special box provided on the larger WHITE official envelope “B” addressed
to Nanofilm Technologies International Limited c/o Boardroom Corporate & Advisory
Services Pte Ltd, 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623
the number of Public Offer Shares you have applied for;

(e) insert the WHITE official envelope “A” into the WHITE official envelope “B” and seal the
WHITE official envelope “B”; and

L-12
 (f) affix adequate Singapore postage on the WHITE official envelope “B” (if dispatching by
ordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY
HAND the documents, at your own risk, to Nanofilm Technologies International Limited
c/o Boardroom Corporate & Advisory Services Pte Ltd, 50 Raffles Place, #32-01
Singapore Land Tower, Singapore 048623, so as to arrive by 12.00 noon on 28 October
2020 or such other date(s) and time(s) as our Company and the Vendors may agree
with the Joint Global Coordinators and the Joint Bookrunners and Underwriters.
Courier services or Registered Post must NOT be used.

(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by an

improperly drawn up, or improper form of remittance or a remittance which is not honoured
upon its first presentation are liable to be rejected. Except for applications for the Placement
Shares where remittance is permitted to be submitted separately, applications for the Public
Offer Shares not accompanied by any form of payment will not be accepted.

(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of

receipt will be issued for any application or remittance received.

Procedures Relating to Applications for the Placement Shares by Way of Printed Application
Forms

(1) Your application for the Placement Shares by way of printed Application Forms must be
made using the BLUE Application Form for Placement Shares.

(2) You must enclose the BLUE Application Form for Placement Shares, duly completed and
signed, and together with the correct remittance for the full amount payable based on the
Offering Price and the number of Placement Shares applied for, in Singapore currency in
accordance with the terms and conditions of this Prospectus and its accompanying
documents with your name, CDP Securities Account number and address clearly written on
the reverse side of the Application Form, in an envelope to be provided by you. You must affix
adequate Singapore postage on the envelope (if despatching by ordinary post) and
thereafter the sealed envelope must be despatched by ordinary post or delivered by hand, at
your own risk, to Nanofilm Technologies International Limited c/o Boardroom Corporate &
Advisory Services Pte Ltd, 50 Raffles Place, #32-01 Singapore Land Tower, Singapore
048623 to arrive by 12.00 noon on 28 October 2020 or such other date(s) and time(s) as our
Company and the Vendors may agree with the Joint Global Coordinators and the Joint
Bookrunners and Underwriters. Courier services or Registered Post must NOT be used.

(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by an

improperly drawn up, or improper form of remittance or a remittance which is not honoured
upon its first presentation are liable to be rejected.

(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of

receipt will be issued for any application or remittance received.

Additional Terms and Conditions for Electronic Applications

Electronic Applications shall be made on and subject to the terms and conditions of this
Prospectus, including, but not limited to, the terms and conditions set out below and elsewhere in
this appendix, as well as the Constitution of our Company.

(1) The procedures for Electronic Applications are set out on the ATM screens of the relevant
Participating Banks (in the case of ATM Electronic Applications), the IB website screens of
the relevant Participating Banks (in the case of Internet Electronic Applications) and the
mBanking Interface of DBS Bank (in the case of mBanking Applications). Currently, OCBC,

L-13
 DBS Bank and UOB (each as defined below) are the Participating Banks through which
Internet Electronic Applications may be made and DBS Bank is the only Participating Bank
through which mBanking Applications may be made.

(2) For illustration purposes, the procedures for Electronic Applications for Public Offer Shares
through the ATMs and the IB website of OCBC (together the “Steps”) are set out in pages
L-20 to L-27 of this Prospectus. The Steps set out the actions that you must take at the ATMs,
the IB website or the mBanking Interface of DBS Bank to complete an Electronic Application.
The actions that you must take at the ATMs or the IB websites of the other Participating
Banks are set out on the ATM and IB website screens of the respective Participating Banks
or the mBanking Interface of DBS Bank. Please read carefully the terms and conditions of
this Prospectus and its accompanying documents (including the Application Forms), the
Steps and the terms and conditions for Electronic Applications set out below before making
an Electronic Application.

(3) Any reference to “you” or the “Applicant” in these Additional Terms and Conditions for
Electronic Applications and in the Steps shall refer to you making an application for Public
Offer Shares through an ATM of one of the relevant Participating Banks or the IB website of
a relevant Participating Bank or the mBanking Interface.

(4) If you are making an ATM Electronic Application:

(a) You must have an existing bank account with and be an ATM cardholder of one of the
Participating Banks. An ATM card issued by one Participating Bank cannot be used to
apply for Public Offer Shares at an ATM belonging to other Participating Banks.

(b) You must ensure that you enter your own CDP Securities Account number when using
the ATM card issued to you in your own name. If you fail to use your own ATM card or
do not key in your own CDP Securities Account number, your application will be
rejected. If you operate a joint bank account with any of the Participating Banks, you
must ensure that you enter your own CDP Securities Account number when using the
ATM card issued to you in your own name. Using your own CDP Securities Account
number with an ATM card which is not issued to you in your own name will render your
Electronic Application liable to be rejected.

(c) Upon the completion of your ATM Electronic Application, you will receive an ATM
transaction slip (“Transaction Record”) confirming the details of your ATM Electronic
Application. The Transaction Record is for your retention and should not be submitted
with any printed Application Form.

(5) If you are making an Internet Electronic Application or an mBanking Application:

(a) You must have an existing bank account with, and a User Identification (“User ID”) as
well as a Personal Identification Number (“PIN”) given by, the relevant Participating
Bank.

(b) You must ensure that the mailing address of your account selected for the application
is in Singapore and you must declare that the application is being made in Singapore.
Otherwise, your application is liable to be rejected. In connection with this, you will be
asked to declare that you are in Singapore at the time you make the application.

(c) Upon the completion of your Internet Electronic Application through the IB website of
the relevant Participating Bank or your mBanking Application through the mBanking
Interface of DBS Bank, there will be an on-screen confirmation (“Confirmation
Screen”) of the application which can be printed out or screen captured by you for your

L-14
 record. This printed record or screen capture of the Confirmation Screen is for your
retention and should not be submitted with any printed Application Form.

(6) In connection with your Electronic Application for Public Offer Shares, you are required to
confirm statements to the following effect in the course of activating the Electronic
Application:

(a) that you have received a copy of the Prospectus (in the case of ATM Electronic
Applications) and have read, understood and agreed to all the terms and conditions of
application for the Public Offer Shares and the Prospectus prior to effecting the
Electronic Application and agree to be bound by the same;

(b) you accept and agree to the Personal Data Privacy Terms set out in this Prospectus;

(c) that, for the purposes of facilitating your application, you consent to the collection, use,
processing and disclosure, by or on behalf of our Company and the Vendors, of your
Personal Data from your records with the Relevant Participating Bank to the Relevant
Parties in accordance with the Personal Data Privacy Terms; and

(d) where you are applying for the Public Offer Shares, that this is your only application for
Public Offer Shares and it is made in your name and at your own risk.

Your application will not be successfully completed and cannot be recorded as a completed
transaction unless you press the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant
key on the ATM or click “Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other
relevant button on the IB website screen or the mBanking Interface of DBS Bank. By doing
so, you shall be treated as signifying your confirmation of each of the four statements above.
In respect of statement 6(b) above, your confirmation, by pressing the “Enter” or “OK” or
“Confirm” or “Yes” or any other relevant key on the ATM or clicking “Confirm” or “OK” or
“Submit” or “Continue” or “Yes” or any other relevant button on the IB website screen or the
mBanking Interface of DBS Bank, shall signify and shall be treated as your written
permission, given in accordance with the relevant laws of Singapore, including Section 47(2)
of the Banking Act, Chapter 19 of Singapore, to the disclosure by that Participating Bank of
the Personal Data relating to your account(s) with that Participating Bank to the Relevant
Parties.

By making an Electronic Application, you confirm that you are not applying for the Public
Offer Shares as a nominee of any other person and that any Electronic Application that you
make is the only application made by you as the beneficial owner. You shall make only one
Electronic Application for the Public Offer Shares and shall not make any other application
for the Public Offer Shares whether at the ATMs or IB websites of any of the Participating
Banks or the mBanking Interface of DBS Bank or by way of an Application Form. Where you
have made an application for the Public Offer Shares by way of an Application Form, you
shall not make an Electronic Application for the Public Offer Shares and vice versa.

(7) You must have sufficient funds in your bank account with your Participating Bank at the time
you make your Electronic Application, failing which such Electronic Application will not be
completed. Any Electronic Application which does not conform strictly to the instructions set
out in this Prospectus or on the screens of the ATMs or the IB website of the relevant
Participating Bank or the mBanking Interface of DBS Bank, as the case may be, through
which your Electronic Application is being made shall be rejected.

(8) You may apply and make payment for your application for the Public Offer Shares in
Singapore currency in cash only. You may apply and make payment for your application in
Singapore currency through any ATM or IB website of your Participating Bank or the

L-15
 mBanking Interface of DBS Bank (as the case may be) by authorising your Participating
Bank to deduct the full amount payable from your bank account(s) with such Participating
Bank.

(9) You irrevocably agree and undertake to purchase and to accept the number of Public Offer
Shares applied for as stated on the Transaction Record or the Confirmation Screen or any
lesser number of such Public Offer Shares that may be allocated to you in respect of your
Electronic Application. In the event that our Company and the Vendors decide to allocate any
lesser number of such Public Offer Shares or not to allocate any Public Offer Shares to you,
you agree to accept such decision as final. If your Electronic Application is successful, your
confirmation (by your action of pressing the “Enter” or “OK” or “Confirm” or “Yes” or any other
relevant key on the ATM or clicking “Confirm” or “OK” or “Submit” or “Continue” or “Yes” or
any other relevant button on the IB website screen or the mBanking Interface of DBS Bank)
of the number of Public Offer Shares applied for shall signify and shall be treated as your
acceptance of the number of Public Offer Shares that may be allocated to you and your
agreement to be bound by the Constitution of our Company. You also irrevocably authorise
CDP to complete and sign on your behalf as transferee or renounce any instrument of
transfer and/or other documents required for the transfer of the Public Offer Shares that may
be allocated to you.

(10) Our Company and the Vendors will not keep any application in reserve. Where your
Electronic Application is unsuccessful, the full amount of the application monies will be
returned (without interest or any share of revenue or other benefit arising therefrom, at your
own risk and without any right or claim against us, the Vendors, the Joint Issue Managers,
the Joint Global Coordinators or the Joint Bookrunners and Underwriters) to you by being
automatically credited to your account with your Participating Bank, within 24 hours of the
balloting (or such shorter period as the SGX-ST may require), PROVIDED THAT the
remittance in respect of such application which has been presented for payment or other
processes has been honoured and the application monies received in the designated share
issue account.

Where your Electronic Application is accepted or rejected in part only, the balance of the
application monies will be returned (without interest or any share of revenue or other benefit
arising therefrom, at your own risk and without any right or claim against us, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators or the Joint Bookrunners and
Underwriters) to you by being automatically credited to your account with your Participating
Bank within 14 Market Days after the close of the Offering, PROVIDED THAT the remittance
in respect of such application which has been presented for payment or other processes has
been honoured and the application monies received in the designated share issue account.

If the Offering does not proceed for any reason, the full amount of application monies
(without interest or any share of revenue or other benefit arising therefrom, at your own risk
and without any right or claim against us, the Vendors, the Joint Issue Managers, the Joint
Global Coordinators or the Joint Bookrunners and Underwriters) will be returned to you by
being automatically credited to your account with your Participating Bank within three (3)
Market Days after the Offering is discontinued, PROVIDED THAT the remittance in respect
of such application which has been presented for payment or other processes has been
honoured and the application monies received in the designated share issue account.

Responsibility for timely refund of application monies (whether from unsuccessful or partially
successful Electronic Applications or otherwise) lies solely with the respective Participating
Banks. Therefore, you are strongly advised to consult your Participating Bank as to the
status of your Electronic Application and/or the refund of any money to you from an
unsuccessful or partially successful Electronic Application, to determine the exact number of
Public Offer Shares, if any, allocated to you before trading the Shares on the SGX-ST. None

L-16
 of the SGX-ST, CDP, SCCS, the Participating Banks, our Company, the Vendors, the Joint
Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and Underwriters
takes any responsibility for any loss that may be incurred as a result of you having to cover
any net sell positions or from buy-in procedures activated by the SGX-ST.

(11) If your Electronic Application is unsuccessful, no notification will be sent by the relevant
Participating Bank.

(12) Applicants who make ATM Electronic Applications through the ATMs of the following
Participating Banks may check the provisional results of their ATM Electronic Applications as
follows:

Operating Service
Bank Telephone Other Channels Hours expected from

Oversea-Chinese 1800363 3333 ATM/IB/Phone Banking 24 hours Evening of

Banking Corporation http://www.ocbc.com(1) a day the balloting
Limited (“OCBC”) day
DBS Bank Ltd. 1800339 6666 IB 24 hours Evening of
(including POSB) (for POSB http://www.dbs.com(2) a day the balloting
account holders) day

1800111 1111
(for DBS Bank
account holders)
United Overseas 1800222 2121 ATM (Other 24 hours Evening of
Bank Limited (“UOB”) Transactions—“IPO Results a day the balloting
Enquiry”)/Phone Banking/IB day
http://www.uobgroup.com (3)

Notes:

(1) Applicants who have made Electronic Applications through the ATMs or the IB website of OCBC may check the
results of their applications through OCBC Personal Internet Banking, OCBC ATMs or OCBC Phone Banking
services.

(2) Applicants who have made Internet Electronic Applications through the IB websites of DBS Bank or mBanking
Applications through the mBanking Interface of DBS Bank may also check the results of their applications
through the same channels listed in the table above in relation to ATM Electronic Applications made at the
ATMs of DBS Bank.

(3) Applicants who have made Electronic Applications through the ATMs or the IB website of the UOB may check
the results of their applications through UOB Personal Internet Banking, UOB ATMs or UOB Phone Banking
services.

(13) ATM Electronic Applications shall close at 12.00 noon on 28 October 2020 or such other
date(s) and time(s) as our Company and the Vendors may agree with the Joint Global
Coordinators and the Joint Bookrunners and Underwriters. All Internet Electronic
Applications and mBanking Applications must be received by 12.00 noon on 28 October
2020, or such other date(s) and time(s) as our Company and the Vendors may agree with the
Joint Global Coordinators and the Joint Bookrunners and Underwriters. Internet Electronic
Applications and mBanking Applications are deemed to be received when they enter the
designated information system of the relevant Participating Bank.

(14) You are deemed to have irrevocably requested and authorised our Company and the
Vendors to:

(a) register the Public Offer Shares allocated to you in the name of CDP for deposit into
your Securities Account;

L-17
 (b) send the relevant Share certificate(s) to CDP;

(c) return or refund (without interest or any share of revenue earned or other benefit arising
therefrom, at your own risk and without any right or claim against us, the Vendors or the
Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners and
Underwriters) the full amount of the application monies, should your Electronic
Application be unsuccessful, by automatically crediting your bank account with your
Participating Bank with the relevant amount within 24 hours of the balloting (or such
shorter period as the SGX-ST may require), PROVIDED THAT the remittance in
respect of such application which has been presented for payment or such other
processes has been honoured and application monies received in the designated share
issue account;

(d) return or refund (without interest or any share of revenue or other benefit arising
therefrom, at your own risk and without any right or claim against us, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators or the Joint Bookrunners and
Underwriters) the balance of the application monies, should your Electronic Application
be rejected or accepted in part only, by automatically crediting your bank account with
your Participating Bank with the relevant amount within 14 Market Days after the close
of the Offering, PROVIDED THAT the remittance in respect of such application which
has been presented for payment or such other processes has been honoured and
application monies received in the designated share issue account; and

(e) return or refund (without interest of any share of revenue or other benefit arising
therefrom, at your own risk and without any right or claim against us, the Vendors, the
Joint Issue Managers, the Joint Global Coordinators or the Joint Bookrunners and
Underwriters) the full amount of the application monies, should the Offering not
proceed for any reason, by automatically crediting your bank account with your
Participating Bank with the relevant amount within three (3) Market Days after the
Offering is discontinued, PROVIDED THAT the remittance in respect of such
application which has been presented for payment or such other processes has been
honoured and application monies received in the designated share issue amount.

(15) You irrevocably agree and acknowledge that your Electronic Application is subject to risks of
electrical, electronic, technical and computer-related faults and breakdown, fires, acts of
God and other events beyond the control of the Participating Banks, our Company, the
Vendors the Joint Issue Managers, the Joint Global Coordinators and the Joint Bookrunners
and Underwriters, and if, in any such event, our Company, the Vendors, the Joint Issue
Managers, the Joint Global Coordinators, the Joint Bookrunners and Underwriters and/or the
relevant Participating Bank do or does not receive your Electronic Application, or any data
relating to your Electronic Application or the tape or any other devices containing such data
is lost, corrupted or not otherwise accessible, whether wholly or partially for whatever
reason, you shall be deemed not to have made an Electronic Application and you shall have
no claim whatsoever against our Company, the Vendors, the Joint Issue Managers, the Joint
Global Coordinators, the Joint Bookrunners and Underwriters and/or the relevant
Participating Bank for any Public Offer Shares applied for or for any compensation, loss or
damage.

(16) The existence of a trust will not be recognised. Any Electronic Application by a trustee must
be made in his own name and without qualification. Our Company and the Vendors shall
reject any application by any person acting as nominee (other than approved nominee
companies).

(17) All your particulars in the records of your Participating Bank at the time you make your
Electronic Application shall be deemed to be true and correct and your Participating Bank

L-18
 and the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been
any change in your particulars after making your Electronic Application, you must promptly
notify your Participating Bank.

(18) You should ensure that your personal particulars as recorded by both CDP and the relevant
Participating Bank are correct and identical, otherwise, your Electronic Application is liable
to be rejected. You should promptly inform CDP of any change in your address, failing which
the notification letter on successful allocation will be sent to your address last registered with
CDP.

(19) By making and completing an Electronic Application, you are deemed to have agreed that:

(a) in consideration of our Company and the Vendors making available the Electronic
Application facility, through the Participating Banks (acting as agents of our Company
and the Vendors) at the ATMs and IB websites of the relevant Participating Banks and
the mBanking Interface of DBS Bank:

(i) your Electronic Application is irrevocable;

(ii) your Electronic Application, the acceptance by our Company and the Vendors and
the contract resulting therefrom under the Singapore Public Offer shall be
governed by and construed in accordance with the laws of Singapore and you
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;

(iii) you represent and agree that you are not a U.S. person and that you are not
located in the United States (within the meaning of Regulation S); and

(iv) you understand that the Offering Shares have not been, and will not be, registered
under the Securities Act or the securities laws of any state of the United States and
accordingly, they may not be offered or sold within the United States or for the
account or benefit of U.S. persons (as defined in Regulation S), except pursuant
to an exemption from, or in a transaction not subject to, the regulation
requirements of the Securities Act and applicable state securities laws.
Accordingly, there will be no public offer of the Offering Shares in the United
States and the Offering Shares are only being offered and sold outside the United
States in offshore transactions as defined in, and in reliance on Regulation S or
pursuant to another exemption.

(b) none of our Company, the Vendors, the Joint Issue Managers, the Joint Global
Coordinators and the Joint Bookrunners and Underwriters, the Participating Banks nor
CDP shall be liable for any delays, failures or inaccuracies in the recording, storage or
in the transmission or delivery of data relating to your Electronic Application to our
Company, the Vendors, CDP or the SGX-ST due to breakdowns or failure of
transmission, delivery or communication facilities or any risks referred to in paragraph
15 above or to any cause beyond their respective controls;

(c) in respect of the Public Offer Shares for which your Electronic Application has been
successfully completed and not rejected, acceptance of your Electronic Application
shall be constituted by written notification by or on behalf of our Company and the
Vendors and not otherwise, notwithstanding any payment received by or on behalf of
our Company and the Vendors;

(d) you will not be entitled to exercise any remedy for rescission for misrepresentation at
any time after acceptance of your application;

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 (e) reliance is placed solely on information contained in this Prospectus and that none of
our Company, the Vendors, the Joint Issue Managers, the Joint Global Coordinators
and the Joint Bookrunners and Underwriters or any other person involved in the
Offering shall have any liability for any information not contained therein; and

(f) you irrevocably agree and undertake to purchase the number of Public Offer Shares
applied for as stated in your Electronic Application or any smaller number of such Public
Offer Shares that may be allocated to you in respect of your Electronic Application. In
the event our Company and the Vendors decides to allocate any smaller number of
such Public Offer Shares or not to allocate any Public Offer Shares to you, you agree
to accept such decision as final.

Steps for ATM Electronic Applications for Public Offer Shares through ATMs of OCBC

Instructions for ATM Electronic Applications will appear on the ATM screens of the respective
Participating Bank. For illustration purposes, the steps for making an ATM Electronic Application
through an OCBC ATM are shown below. Certain words appearing on the screen are in abbreviated
form (“A/C”, “amt”, “appln”, “&”, “I/C”, “No.”, “SGX” and “Max” refer to “Account”, “amount”,
“application”, “and”, “NRIC”, “Number”, “the SGX-ST” and “Maximum”, respectively). Instructions
for ATM Electronic Applications on the ATM screens of Participating Banks (other than OCBC),
may differ slightly from those represented below.

Step 1: Insert your personal OCBC ATM Card.

2: Select “LANGUAGE”.

3: Enter your Personal Identification Number.

4: Select “MORE SERVICES”.

5: Select “INVESTMENT SERVICES”.

6: Select “Electronic Security Application”.

7: Select “NANOFILM”.

8: For an applicant making an Electronic Application at the ATM for the first time:

• For non-Singaporeans – Press the “Yes” if you are a permanent resident of

Singapore, otherwise, press the “No”.

• Enter your 12-digit CDP Securities Account number and press “Yes” to confirm
that the CDP Securities Account number you have entered is correct.

9: Read and confirm your personal particulars.

10: Read and understand the following statements which will appear on the screen:

IMPORTANT:

• READ THE OFFER DOCUMENT BEFORE SUBSCRIBING FOR THE

SECURITIES.

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• OBTAIN THE OFFER DOCUMENT FROM OUR BANK BRANCHES, WEBSITE
OR VIA THE FOLLOWING QR CODE.

WWW.OCBC.COM/IPO

(Scan the QR code or proceed to www.ocbc.com/ipo to read the offer documents

for the security that you are applying for)

PRESS “TO PROCEED WITH APPLICATION, PRESS” to continue with the application
on the ATM.

WARNING

• ALL INVESTMENTS COME WITH RISKS.

• YOU CAN LOSE MONEY ON YOUR INVESTMENT.

• INVEST ONLY IF YOU UNDERSTAND YOU CAN MONITOR YOUR

INVESTMENT.

(Press “TO CONTINUE, PRESS” to continue)

RISK WARNING FOR EQUITIES

• THE ISSUER MAY NOT ALWAYS PAY YOU DIVIDENDS.

• YOU WILL LIKELY LOSE MONEY IF THE ISSUER GETS INTO FINANCIAL
DIFFICULTIES.

• IF THE ISSUER IS WOUND UP, SHAREHOLDERS WILL BE THE LAST TO BE

PAID OFF.

(Press “TO CONTINUE, PRESS” to continue)

PLEASE CONFIRM THAT

• YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL TERMS OF

APPLICATION SET OUT IN THE PROSPECTUS/OFFER INFORMATION
STATEMENT/DOCUMENT/SUPPLEMENTARY DOCUMENT/SIMPLIFIED
DISCLOSURE DOCUMENT AND/OR PRODUCT HIGHLIGHTS SHEET.

• YOU ARE RESPONSIBLE FOR YOUR OWN INVESTMENT DECISIONS.

(Press “CONFIRM” to continue)

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 PLEASE CONFIRM THAT

• YOU CONSENT TO THE DISCLOSURE OF YOUR NAME, NRIC/PASSPORT

NO., ADDRESS, NATIONALITY, SECURITIES A/C NO., QTY OF SECURITIES
APPLIED FOR AND CPF INVESTMENT A/C NO., TO SHARE REGISTRAR, CDP,
CPF, SCCS, SGX-ST, ISSUERS AND VENDORS.

• THIS APPLICATION IS MADE IN YOUR OWN NAME AND AT YOUR OWN RISK.

(Press “CONFIRM” to continue)

• I AM NOT A U.S. PERSON/UNITED STATES PERSON AS REFERRED TO IN

THE PROSPECTUS/DOCUMENT.

(PRESS “CONFIRM” or “CANCEL” to continue)

PLEASE NOTE THAT YOU SHOULD:

• DIVERSIFY YOUR INVESTMENTS.

• AVOID INVESTING A LARGE PORTION OF YOUR MONEY IN A SINGLE

ISSUER.

(Press “TO CONTINUE, PRESS” to continue)

11: Enter the number of securities you wish to apply for using cash.

12: Select the type of bank account from which to debit your application moneys.

13: Check the details of your securities application appearing on the screen and press
“CONFIRM” to confirm your application.

15: Transaction is completed. Remove the ATM Transaction Record for your reference and
retention only.

Steps for Internet Electronic Application for Public Offer Shares through the IB website of
OCBC

For illustrative purposes, the steps for making an Internet Electronic Application through the OCBC
IB website are shown below. Certain words appearing on the screen are in abbreviated form (“A/C”,
“&”, “amt”, “I/C” and “No.” refer to “Account”, “and”, “Amount”, “NRIC” and “Number”, respectively).

Step 1: Click on OCBC website (www.ocbc.com).

2: Click on “Login to Internet Banking — Personal Banking”.

3: Enter your access code and PIN.

4: Under “Investments & Insurance” on the top navigation, select “Initial public offering”.

5: Enter your one-time password.

6: Under “Apply for IPO”, click “Yes” to represent and warrant that you are (1) currently
living in Singapore, (2) your country of residence, (3) that your mailing address is in

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 Singapore, (4) that you are not a U.S. person (click on the blue ‘i’ icon to read the
definition of U.S. person below), and that (5) you have complied with all applicable laws
and regulations.

“U.S. person” is defined in Rule 902 of Regulation S under the US Securities Act
1933, as amended, to mean:

(i) any natural person resident in the United States;

(ii) any partnership or corporation organised or incorporated under the laws of the
United States;

(iii) any estate of which any executor or administrator is a U.S. person;

(iv) any trust of which any trustee is a U.S. person;

(v) any agency or branch of a foreign entity located in the United States;

(vi) any non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. person;

(vii) any discretionary account or similar account (other than an estate or trust) held
by a dealer or other fiduciary organised, incorporated, or (if an individual)
resident in the United States; and

(viii) any partnership of corporation if:

a. organised or incorporated under the laws of any foreign jurisdiction; and

b. formed by a U.S. person principally for the purpose of investing in securities

not registered under the Act, unless it is organised or incorporated, and
owned, by accredited investors (as defined in §230.501(a)) who are not
natural persons, estates or trusts.

7: Read and acknowledge the Important Declaration below:

Electronic security application (ESA)

(1) Investment Risk

All investments involve risk. You should read the Offering Documents in connection
with the offer to understand more about the security in question before making any
application. You need to apply for the security in question in the manner set out in the
Offering Documents

(2) Offering Documents

Offering Documents are defined as the prospectus, offer information statement,

simplified disclosure document, product highlights sheet, document or profile
statement (and a replacement copy of or addition to these documents, if relevant)
Where applicable, these Offering Documents have been lodged with and registered by
the Monetary Authority of Singapore or the Singapore Exchange Securities Trading
Limited, each of which takes no responsibility for its or their contents.

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Information in connection with the offering of securities is contained in the Offering
Document. No person is authorised to give any information or make any representation
in connection with the offering of securities listed on our website.

Please read the Offering Documents in its entirety and the section headed “Risk
Factors” to understand the security in question. Copies of Offering Documents can be
obtained through the following means:

A. Digital Copy

The offer of securities on OCBC Internet Banking is accompanied with a copy of the
Offering Documents in PDF format.

B. Physical Copy

Physical copies of the Offering Documents can be obtained from the issue manager or
if applicable (as provided for in the Offering Documents) the parties stated in the
Offering Document including, but not limited to, OCBC branches in Singapore,
members of the Association of Banks in Singapore, members of the Singapore
Exchange Securities Trading Limited and merchant banks in Singapore during normal
banking or working hours.

C. Warranty

We do not represent or warrant that the information in an Offering Document listed on

our website is accurate or complete.

D. Context

Words and expressions not defined in this application have the same meaning as in the
main prospectus, offer information statement, document or profile statement, unless
the context gives them a different meaning.

(3) Distribution

A. Singapore only

The securities mentioned in this application have not been approved for offer,
subscription, sale or purchase by any authority outside Singapore and are meant to be
available only to residents of Singapore. The information in this application is not
intended to be or does not constitute a distribution, an offer to sell or a solicitation of an
offer to buy any securities in any country in which such a distribution or offer is not
authorised to any person.

B. United States

The information herein is not to be published or distributed in or into United States of

America. The securities mentioned in this application have not been and will not be
registered under the U.S. Securities Act of 1933 as amended (the “U.S. Securities
Act”) or the securities laws of any state of the United States and must not be offered or
sold in the United States or to, or for the account or benefit of, any person within the
United States or any ‘U.S. person’ (as defined in Regulation S under the U.S. Securities
Act). There will be no offer of the securities mentioned in this application in the United
States. Any failure to comply with this restriction may break United States securities
laws.

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 (4) Laws & Regulations

You must comply with all laws and regulations that apply to you when accessing the
information in this application. If you are in any doubt about which laws and regulations
apply to you or the action you should take, you must check with your professional
advisers immediately.

Important Note:

(a) all investments come with risk, including the risk that the investor may lose all or
part of his Investment;

(b) the potential investor is responsible for his own investment decisions; and

(c) the potential investor should read the prospectus, offer information statement and
product highlights sheet (as applicable) before making the application to
subscribe for the securities or units in a CIS.

8: Click on the box “I have read and understood the declaration”, and click “Confirm”.

9: Select “NANOFILM”.

10: Click on “here” to read the Offering Documents for the relevant Security.

11: Read the following terms and conditions:

(1) Investment Risk

(a) all investments come with risk, including the risk that the investor may lose all
or part of his investment;

(b) the potential investor is responsible for his own investment decisions; and

(c) the potential investor should read the prospectus, offer information
statement and product highlights sheet (as applicable) before making the
application to subscribe for the securities or units in a CIS.

(2) Offering Documents

Offering Documents are defined as the prospectus, offer information statement/

document or profile statement (and a replacement copy of or addition to these
documents, if relevant).

Click to read the Offering Documents in connection with the offer to understand
more about the security in question.

A. Information in the Offering Documents

Any information falling outside the demarcated areas of the electronic Offering
Documents does not form part of the Offering Documents for the security offered
herein. The security is offered based on the information in the electronic Offering
Documents set out within the demarcated area.

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B. Non-Distribution Rights for Digital Copies of Offering Documents

You are not to copy, forward or distribute in any manner the Offering Documents to any
other person.

C. Usage

You agree not to use the information contained in Offering Documents for any purpose
other than to evaluate an investment in the security.

D. Physical Copies of Offering Documents

Physical copies can be obtained from the issue manager or parties stated in the
Offering Documents including, but not limited to, OCBC branches in Singapore,
members of the Association of Banks in Singapore, members of the Singapore
Exchange Securities Trading Limited and merchant banks in Singapore during normal
banking or working hours.

Please confirm all of the following:

Acceptance of Terms of Application

You have read, understood and agreed to all terms of application set out in the Offering
Documents.

Consent to Disclosure

You consent to disclose your name, I/C or passport number, address, nationality,
CDP Securities Account number, CPF Investment Account number (if applicable) and
application details to registrars of securities, SGX, SCCS, CDP, CPF Board,
issuer/vendor(s) and the issue manager(s).

U.S. person

You are not a U.S. person (as such term is defined in Regulation S under the
United States Securities Act of 1933, as amended).

U.S. Securities Act

The securities mentioned herein have not been and will not be registered under the
U.S. Securities Act or the securities laws of any state of the United States and may not
be offered or sold in the United States or to, or for the account or benefit of, any
“U.S. person” (as defined in Regulation S under the U.S. Securities Act) except
pursuant to an exemption from or in a transaction subject to, the registration
requirements of the U.S. Securities Act and applicable state security laws. There will be
no public offer of the securities mentioned herein in the United States. Any failure to
comply with this restriction may constitute a violation of United States securities laws.

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 Application

This application is made in your own name and at your own risk.

For FIXED/MAXIMUM price securities application, this is your only application. For
TENDER price securities application, this is your only application at the selected
tender price.

For 1ST-COME-1ST-SERVE securities, the number of securities applied for may be

reduced, subject to availability at the point of application.

Foreign Currency

For FOREIGN CURRENCY securities, subject to the terms of the issue, please note the
following: The application monies will be debited from your bank account in S$, based
on the Bank’s prevailing board rates at time of application. Any refund monies will be
credited in S$ based on the Bank’s prevailing board rates at the time of refund. The
different prevailing board rates at the time of application and at the time of refund of
application monies may result in either a foreign exchange profit or loss. Alternatively,
application monies may be debited and refunds credited in S$ at the same exchange
rate.

12: Click on the box “Yes I have read & agree to the terms and conditions”, and click “Next”.

13: Input details for the securities application whether by cash and/or CPF, the number of
units and click “Next”.

14: Verify the details of your securities application and click “Submit” to confirm your
application.

15: You may print a copy of the IB Confirmation Screen for your reference and retention.

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Nanofilm Technologies International Limited

28 Ayer Rajah Crescent

#02-02/03
Singapore 139959