The Prospectus is being displayed in the website to make the Prospectus accessible to more investors. The Philippine Stock Exchange, Inc. (“PSE”) assumes no responsibility for the correctness of any statements made or opinions or reports expressed in the Prospectus. Furthermore, the PSE makes no representation as to the completeness of the Prospectus and disclaims any liability whatsoever for any loss arising from or in reliance in whole or in part on the contents of the Prospectus.

PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

accepted prior to to prior accepted

Cal-Comp Technology (Philippines), Inc. to to registration or qualification under the securities

(incorporated in the Republic of the Philippines)

Offer of up to [378,071,100] Primary Common Shares With an Over-allotment Option of up to [19,898,500] Common Shares to be listed and traded on the Main Board of The Philippine Stock Exchange, Inc.

ffer Shares may not be sold nor may an offer buynotto nor Shares be be sold may may ffer Offer Price: Up to ₱[17.00] per share nstitute nstitute an offer to sell or the of solicitation an offer to buy any Offer Shares Issue Manager and Sole Bookrunner

Joint Lead Underwriters

The date of this Prospectus is [●], 2018

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE AND SHOULD BE REPORTED IMMEDIATELY TO THE PHILIPPINE SECURITIES AND EXCHANGE

COMMISSION.

olicitation olicitation or sale of the Offer Shares in any jurisdiction in which such offer, solicitation or sale would be unlawful prior

This Preliminary Prospectus and the information contained herein are subject to completion or amendment without notice. Thenotice. O without oramendment are completion to subject herein contained the information and Prospectus This Preliminary the time that the Preliminary Prospectus is issued in final form. Under no shall circumstances this Preliminary Prospectus co nor shall there be any offer, s jurisdiction. such of laws PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Cal-Comp Technology (Philippines), Inc. Block 7, Lot 1, Main Boulevard Lima Technology Center – Special Economic Zone Lipa City, Batangas

Telephone Number: +63 043 233-8888 Corporate Website: www.ccph.com.ph

This Prospectus relates to the offer and sale of up to [378,071,100] Common Shares (the “Firm Offer”, and such shares, the “Firm Shares”), with a par value of ₱1.00, of Cal-Comp Technology (Philippines), Inc., a corporation organized under Philippine law (the “Company”) as further described below. The Firm Shares will comprise [378,071,100] new Shares to be issued and offered by the Company by way of a primary offer. The Firm Shares shall be offered at a price of up to ₱[17.00] per Share (the “Offer Price”). The determination of the Offer Price is further discussed on page [45] of this Prospectus and was based on a book-building process and discussion between the Company, BDO Capital & Investment Corporation (“BDO Capital”) and the Joint Lead Underwriters.

The Company and [Kinpo Singapore] (the “Selling Shareholder”) have appointed BDO Capital to act as the stabilizing agent (the “Stabilizing Agent”), with an option exercisable in whole or in part for a period beginning on the date of the initial listing of the Shares on the Philippine Stock Exchange ("PSE") (the “Listing Date”) and ending on a date no later than thirty (30) calendar days from and including the Listing Date, to purchase up to an additional [19,898,500] Shares at the Offer Price (the “Optional Shares” and together with the Firm Shares, the “Offer Shares”), on the same terms and conditions as the Firm Shares as set forth in this Prospectus, solely to cover over-allotments, if any (the “Over-allotment Option”). The Stabilizing Agent or any person acting on its behalf may over-allot Offer Shares or effect transactions with a view to supporting the market price of the Offer Shares at a level higher than that which might otherwise prevail for a limited period after the Listing Date. However, there is no assurance that the Stabilizing Agent (or any person acting on behalf of the Stabilizing Agent) will undertake stabilization activities.

The offer of the Offer Shares, including the Optional Shares, is referred to as the “Offer”. If the whole or part of the Over-allotment Option is exercised, such Optional Shares will be sold as part of the institutional offer. See “Plan of Distribution” beginning on page [146] of this Prospectus. The total proceeds to be raised by the Company from the sale of the Firm Shares will be approximately ₱[6,427] million. The estimated net proceeds to be raised by the Company from the sale of the Firm Shares (after deducting fees and expenses payable by the Company of approximately ₱[322] million) will be approximately ₱[6,105] million. The Company intends to use the net proceeds from the Firm Offer to fund its facilities expansion program, capital expenditure, research and development, debt repayment, and for working capital requirements. For a more detailed discussion on the proceeds from the Firm Offer and the Company's proposed use of proceeds, please see “Use of Proceeds” beginning on page [39] of this Prospectus. The estimated net proceeds to be raised by the Selling Shareholder from the sale of the Optional Shares (after deducting fees and expenses payable by the Selling Shareholder of approximately ₱[14] million) will be approximately ₱[324] million, assuming full exercise of the Over- allotment Option. The Company will not receive any proceeds from the sale of the Optional Shares. The Over- allotment Option, to the extent not exercised, shall be deemed cancelled.

Pursuant to its articles of incorporation as amended on July 12, 2018, the Company has an authorized capital stock of ₱1,700,000,000 divided into 1,700,000,000 Common Shares with a par value of ₱1.00 per share. As of March 31, 2018, 1,108,350,000 Common Shares are outstanding and fully paid. A total of [1,486,421,100] Shares shall be outstanding after the Offer. The Firm Shares will represent approximately [25.43]% of the issued and outstanding capital stock of the Company after completion of the Firm Offer.

The Offer Shares will be listed and traded on the Main Board of the PSE under the trading symbol “CCPH”.

The Issue Manager and Sole Bookrunner, and the Joint Lead Underwriters will receive a transaction fee from the Company based on a percentage of the gross proceeds from the Offer. This is inclusive of the amounts to be paid to the other participating underwriters (collectively with the Joint Lead Underwriters, the “Underwriters”), if any, and selling agents, where applicable. For a more detailed discussion on the fees to be received by the Issue Manager and Sole Bookrunner, and Joint Lead Underwriters, see “Plan of Distribution” beginning on page [146] of this Prospectus.

i PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Each holder of the Shares will be entitled to such dividends as may be declared by the Company's Board of Directors (the “Board”), provided that any stock dividend declaration requires the approval of shareholders holding at least two-thirds (2/3) of the Company's total outstanding capital stock, which refers to the total shares of stock subscribed by, under binding subscription agreement with, subscribers or stockholders, whether paid in full or not, except treasury shares. On June 25, 2018, the Company's Board of Directors approved and adopted the following dividend policy: for the first three (3) years after listing commencing on 2019 until 2021, the Company will pay an annual cash dividend of P0.45, P0.50, and P0.55 per share, respectively and thereafter, beginning on the year 2022, the Company will follow its general dividend policy which is to pay at least 30% of the Company's net income after tax for the preceding fiscal year, payable in cash, property or shares, subject to cash flows and investment plans of the Company and its Subsidiary, as well as regulatory restrictions and other requirements. The Company’s Board, may, at any time, modify such dividend payout ratio depending upon the results of operations and future projects and plans of the Company. Please see “Dividends and Dividend Policy” beginning on page [43] of this Prospectus.

Up to [113,421,500] Firm Shares (or [30]% of the Firm Shares) (the “Trading Participants and Retail Offer Shares”) are being offered to all of the trading participants of the PSE (the “PSE Trading Participants”) and to local small investors under the Local Small Investors Program being implemented by the PSE (the “Trading Participants and Retail Offer”). Any Firm Shares allocated to the PSE Trading Participants and the local small investors but not taken up by them, will be distributed by the Underwriters to their clients, retail investors or the general public. Trading Participants and Retail Offer Shares not taken up by the PSE Trading Participants, Underwriters’ clients or the general public shall be subscribed to by the Underwriters on a firm commitment basis, pursuant to the terms and conditions of the Underwriting Agreement.

All of the Shares issued and to be issued or sold pursuant to the Offer have identical rights and privileges. The Shares may be owned by any person or entity regardless of citizenship or nationality, subject to the nationality limits under Philippine law. The Philippine Constitution and related statutes set forth restrictions on foreign ownership for companies engaged in certain activities.

The information contained in this Prospectus relating to the Company and the Company's operations has been supplied by the Company, unless otherwise stated herein. To the best of the Company's knowledge and belief, having taken reasonable care to ensure that such is the case, the Company confirms that the information contained in this Prospectus relating to the Company and the Company's operations is correct, and that there is no material misstatement or omission of fact which would make any statement in this Prospectus misleading in any material respect and that the Company hereby accepts full and sole responsibility for the accuracy of the information contained in this Prospectus with respect to the same.

Unless otherwise indicated, all information in this Prospectus is as of the date of this Prospectus. Neither the delivery of this Prospectus nor any sale of Shares made pursuant to this Prospectus shall, under any circumstances, create any implication that the information contained herein is correct as of any date subsequent to the date hereof or that there has been no change in the Company's affairs since such date.

Before making an investment decision, investors should carefully consider the risks associated with an investment in the Shares. These risks include:

 Risks relating to the Company's business;  Risks relating to the Philippines;  Risks relating to the Offer and the Offer Shares; and  Risk relating to the statistical information in this Prospectus.

Please refer to the section entitled “Risk Factors” beginning on page [23] of this Prospectus, which, while not intended to be an exhaustive enumeration of all risks, must be considered in connection with a purchase of the Offer Shares.

An application to list the Offer Shares as well as the rest of the Company's issued and outstanding Shares was approved by the PSE on [●]. The PSE assumes no responsibility for the correctness of any statements made or opinions expressed in this Prospectus. The PSE makes no representation as to its completeness and expressly disclaims any liability whatsoever for any loss arising from reliance on the entire or any part of this Prospectus. Such approval for listing is permissive only and does not constitute a recommendation or endorsement of the Offer Shares by the PSE or the Securities and Exchange Commission of the Philippines (the “SEC”). Prior to the Offer, there has been no public market for the Shares. Accordingly, there has been no market price for the

ii PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Shares derived from day to day trading. An application has been made with the SEC to register the Offer Shares under the provisions of the Securities Regulation Code of the Philippines (Republic Act No. 8799) (the “SRC”).

The Issue Manager and Sole Bookrunner, Underwriters, and the Company have exercised due diligence in ascertaining that all material representations contained in this Prospectus as of the Listing Date are true and correct as of the date of this Prospectus and that no material information was omitted, which was necessary in order to make the statements contained herein as of the Listing Date not misleading.

The Offer Shares are offered subject to receipt and acceptance of any order by the Company and subject to the Company's right to reject any order in whole or in part. It is expected that the Offer Shares will be delivered in book-entry form against payment thereof to the Philippine Depository and Trust Corporation (the “PDTC”) on or about [● 2018].

The Offer Shares are offered solely on the basis of the information contained and the representations made in the Prospectus. No dealer, salesman or other person has been authorized by the Company, the Issue Manager and Sole Bookrunner, or the Underwriters to issue any advertisement or to give any information or make any representation in connection with the Offer other than those contained in this Prospectus and, if issued, given or made, such advertisement, information or representation must not be relied upon as having been authorized by the Company, the Issue Manager and Sole Bookrunner, or the Underwriters.

A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BEEN DECLARED EFFECTIVE. NO OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE CAN BE RECEIVED UNTIL THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE THEREBY, AND ANY SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME PRIOR TO NOTICE OF ITS ACCEPTANCE. AN INDICATION OF INTEREST IN RESPONSE HERETO INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR BE CONSIDERED A SOLICITATION OF AN OFFER TO BUY.

CAL-COMP TECHNOLOGY (PHILIPPINES), INC.

By:

SHYH-YONG SHEN President

REPUBLIC OF THE PHILIPPINES) CITY OF ______) S.S

SUBSCRIBED AND SWORN to before me this ______in the City of ______, Philippines, affiant exhibiting to me the following as competent evidence of identity:

NAME GOVERNMENT ISSUED ID DATE AND PLACE OF ISSUE

Doc No. ______: Book No. ______: Page No. ______: Series of 2018.

iii PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION No representation or warranty, express or implied, is made by the Company, the Issue Manager and Sole Bookrunner, or the Underwriters regarding the legality of an investment in the Offer Shares under any legal, investment or similar laws or regulations. No representation or warranty, express or implied, is made by the Issue Manager and Sole Bookrunner, or the Underwriters as to the accuracy or completeness of the information herein and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by the Issue Manager and Sole Bookrunner, or the Underwriters. The contents of this Prospectus are not investment, legal or tax advice. Prospective investors should consult their own counsel, accountant and other advisors as to legal, tax, business, financial and related aspects of a purchase of the Offer Shares. In making any investment decision regarding the Offer Shares, prospective investors must rely on their own examination of the Company and the terms of the Offer, including the merits and risks involved. Any reproduction or distribution of this Prospectus, in whole or in part, and any disclosure of its contents or use of any information herein for any purpose other than considering an investment in the Offer Shares is prohibited. Each offeree of the Offer Shares, by accepting delivery of this Prospectus, agrees to the foregoing.

THE OFFER SHARES ARE BEING OFFERED IN THE PHILIPPINES ON THE BASIS OF THIS PROSPECTUS ONLY. ANY DECISION TO PURCHASE THE OFFER SHARES IN THE PHILIPPINES MUST BE BASED ONLY ON THE INFORMATION CONTAINED HEREIN.

No person has been authorized to give any information or to make any representations other than those contained in this Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Company, the Issue Manager and Sole Bookrunner, or the Underwriters. This Prospectus does not constitute an offer to sell or the solicitation of an offer to purchase any securities other than the Offer Shares or an offer to sell or the solicitation of an offer to purchase such securities by any person in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this Prospectus nor any sale of the Offer Shares offered hereby shall, under any circumstances, create any implication that there has been no change in the Company's affairs since the date hereof or that the information contained herein is correct as of any time subsequent to the date hereof.

Market data used throughout this Prospectus has been obtained from market research, reports and studies, publicly available information and industry publications. Industry publications generally state that the information that they contain have been obtained from sources believed to be reliable but that the accuracy and completeness of that information is not guaranteed. Similarly, industry forecasts, market research and the underlying economic assumptions relied upon therein, while believed to be reliable, have not been independently verified, and none of the Company, the Issue Manager and Sole Bookrunner, or the Underwriters makes any representation as to the accuracy of that information. The information related to the electronic manufacturing services industry in this Prospectus reflects estimates of market conditions based on publicly available sources and trade opinion surveys. Forecasts were made on the assumption that the Philippine economy is expected to maintain a steady growth and that the social, economic, and political environment is expected to remain stable.

Information in this Prospectus on the electronics manufacturing service (“EMS”) industry is from the Global Electronics Manufacturing Services (EMS) Market Size, Status and Forecast 2023 published by QY Research dated May 2018, but should not be relied upon in making, or refraining from making, any investment decision.

The operating information used throughout this Prospectus has been calculated by the Company on the basis of certain assumptions. As a result, this operating information may not be comparable to similar operating information reported by other companies.

The distribution of this Prospectus and the offer and sale of the Offer Shares in certain jurisdictions may be restricted by law. The Company, the Issue Manager and Sole Bookrunner, and the Underwriters require persons into whose possession this Prospectus comes to inform themselves about and to observe any such restrictions. This Prospectus does not constitute an offer of, or an invitation to purchase, any of the Offer Shares in any jurisdiction in which such offer or invitation would be unlawful. Each prospective purchaser of the Offer Shares must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, offers, sells or resells the Offer Shares or possesses and distributes this Prospectus and must obtain any consents, approvals or permissions required for the purchase, offer, sale or resale by it of the Offer Shares under the laws, rules and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales or resales, and none of the Issue Manager and Sole Bookrunner, the Underwriters or the Company shall have any responsibility therefor.

iv PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION The Company reserves the right to withdraw the offer and sale of the Offer Shares at any time, and the Issue Manager and Sole Bookrunner, and Underwriters reserve the right to reject any commitment to subscribe for the Offer Shares in whole or in part and to allot to any prospective purchaser less than the full amount of the Offer Shares sought by such purchaser. If the Offer is withdrawn or discontinued, the Company shall subsequently notify the SEC and the PSE. The Issue Manager and Sole Bookrunner, and the Underwriters and certain related entities may acquire for their own account a portion of the Offer Shares.

Each offeree of the Offer Shares, by accepting delivery of this Prospectus, agrees to the foregoing.

Conventions Used in this Prospectus

In this Prospectus, unless otherwise specified or the context otherwise requires, all references to the “Company”, are to Cal-Comp Technology (Philippines), Inc. and the Company's consolidated subsidiary, as the context requires. All references to the “BSP” are references to Bangko Sentral ng Pilipinas, the central bank of the Philippines. All references to “Philippine Peso,” “Pesos” and “₱” are to the lawful currency of the Philippines, and all references to “U.S. dollars” and “US$” are to the lawful currency of the United States. The Company publishes the Company's financial statements in U.S. dollars.

The Company and its subsidiary operates primarily in US Dollars and its official accounting records are maintained in US Dollars. The Philippine Peso amounts provided in the summary financial information represent supplementary information solely for the convenience of the reader and are unaudited. All US Dollar amounts are expressed in Philippine Peso at the rate of US$1.00 to ₱52.16, the exchange rate as of March 31, 2018. Such presentation is not in accordance with PFRSs, and should not be construed as a representation that the US Dollar amounts shown could be readily converted, realized or settled in Philippine Peso at this or at any other rate.

Presentation of Financial Information

The Company's financial statements are reported in U.S. dollars and are prepared based on the Company's accounting policies, which are in accordance with the Philippine Financial Reporting Standards (“PFRS”) issued by the Financial Reporting Standards Council of the Philippines.

Unless otherwise stated, all financial information relating to the Company contained herein is stated in accordance with PFRS.

Figures in this Prospectus have been subject to rounding adjustments. Accordingly, figures shown in the same item of information may vary, and figures which are totals may not be an arithmetic aggregate of their components.

The Company's fiscal year begins on January 1 and ends on December 31 of each year. SGV & Co. has audited the financial statements as at March 31, 2018, December 31, 2017, 2016 and 2015 and for the three (3) months ended March 31, 2018 and 2017 and for the years ended December 31, 2017, 2016 and 2015.

Forward-Looking Statements

This Prospectus contains forward-looking statements that are, by their nature, subject to significant risks and uncertainties. These forward-looking statements include, without limitation, statements relating to:

 known and unknown risks;  uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from expected future results; and  performance or achievements expressed or implied by forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. Important factors that could cause some or all of the assumptions not to occur or cause actual results, performance or achievements to differ materially from those in the forward-looking statements include, among other things:

 The Company’s ability to successfully implement its strategies;

v PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

 The Company’s ability to anticipate and respond to economic and market trends, including changes in the Philippines, Asian or global economies;  Changes in interest rates, inflation rates and foreign exchange rates of the Peso against other currencies; and  Changes in the laws, rules and regulations, including tax laws and licensing requirements, in the Philippines.

Additional factors that could cause the Company's actual results, performance or achievements to differ materially from forward-looking statements include, but are not limited to, those described under “Risk Factors” and elsewhere in this Prospectus, including:

 risks relating to the Company's business: . rapid changes in technologies . changes in the electronics manufacturing market and the demand for the Company’s products and services . availability of raw materials and volatility in the price of key components . inventory obsolescence or decline in inventory value . liquidity risks . competition in the EMS industry . Company’s ability to maintain government approvals required for its business operations . product liability or returns . intellectual property disputes . industrial accidents or disputes . legal or regulatory proceedings in which the Company may become involved . ability of the Company to maintain support from NKG and retain its current management team . the Company’s ability to successfully manage its future business, financial condition, results of operations, and cash flow;

 risks relating to the Philippines: . general political, social, financial and economic conditions of the Philippines . changes in interest rates, inflation rates, and the value of the Peso against the U.S. dollar and other currencies . changes in the laws, including tax laws, regulations, policies and licenses applicable to or affecting the Company . the Company’s continued enjoyment of tax incentives, such as its current income tax holiday with respect to its operations . uncontrollable events, such as war, civil unrest or acts of international or domestic terrorism, the outbreak of contagious diseases, accidents and natural disasters;

 risks relating to the Offer and the Offer Shares; and  risks relating to Certain Statistical Information in this Prospectus

These forward-looking statements speak only as of the date of this Prospectus. The Company, the Issue Manager and Sole Bookrunner, and the Underwriters expressly disclaim any obligation or undertaking to release, publicly or otherwise, any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions, assumptions or circumstances on which any statement is based.

This Prospectus includes statements regarding the Company's expectations and projections for future operating performance and business prospects. The words “believe,” “plan,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “seek,” “target,” “aim,” “may,” “might,” “will,” “would,” “could,” and similar words identify forward-looking statements. In addition, all statements other than statements of historical facts included in this Prospectus are forward-looking statements. Statements in this Prospectus as to the Company's opinions, beliefs and intentions accurately reflect in all material respects the opinions, beliefs and intentions of its management as to such matters as of the date of this Prospectus, although the Company gives no assurance that such opinions or beliefs will prove to be correct or that such intentions will not change. This Prospectus discloses, under the section “Risk Factors” and elsewhere, important factors that could cause actual results to differ materially from the Company's expectations. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on the Company's behalf are expressly qualified in their entirety by the above cautionary statements.

vi PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

In light of the risks and uncertainties associated with forward-looking statements, prospective investors should be aware that the forward-looking events and circumstances in this Prospectus may or may not occur. The actual results could differ significantly from those anticipated in the Company’s forward-looking statements.

vii PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

TABLE OF CONTENTS

GLOSSARY OF TERMS ...... 1

EXECUTIVE SUMMARY ...... 6

SUMMARY OF THE OFFER ...... 10

SUMMARY HISTORICAL FINANCIAL AND OPERATING INFORMATION ...... 17

RISK FACTORS ...... 23

USE OF PROCEEDS ...... 39

DIVIDENDS AND DIVIDEND POLICY ...... 43

DETERMINATION OF THE OFFER PRICE ...... 45

CAPITALIZATION AND INDEBTEDNESS ...... 46

DILUTION ...... 47

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 48

BUSINESS ...... 64

INDUSTRY ...... 97

REGULATORY AND ENVIRONMENTAL MATTERS ...... 104

BOARD OF DIRECTORS AND SENIOR MANAGEMENT ...... 113

PRINCIPAL SHAREHOLDER ...... 119

SECURITY OWNERSHIP OF CERTAIN RECORD AND BENEFICIAL OWNERS AND MANAGEMENT ... 119

RELATED PARTY TRANSACTIONS ...... 122

DESCRIPTION OF THE SHARES ...... 125

THE PHILIPPINE STOCK MARKET ...... 134

PHILIPPINE TAXATION ...... 140

PHILIPPINE FOREIGN EXCHANGE CONTROLS ...... 145

PLAN OF DISTRIBUTION ...... 146

LEGAL MATTERS ...... 150

INDEPENDENT AUDITORS ...... 151

ANNEXES ...... F-1

viii PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

GLOSSARY OF TERMS

In this Prospectus, unless the context otherwise requires, the following terms shall have the meanings set forth below.

AGV Automated Guided Vehicle

AOI Automatic Optical Inspection

AQL Acceptable Quality Limit

Application the documents to purchase or subscribe to the Offer Shares

Articles the Articles of Incorporation of the Company

Banking Day or Business a day on which commercial banks are open for business in Makati City, Day Metro Manila and Lipa City, Province of Batangas

BIR Bureau of Internal Revenue

Board of Directors or Board the Board of Directors of the Company

BOI Board of Investments, the lead investments promotion agency of the Philippines Bureau of Standards, Metrology and Inspection, the national standardizing BSMI body of Taiwan BSP Bangko Sentral ng Pilipinas, the central bank of the Philippines

By-Laws the By-Laws of the Company

CAGR Compounded annual growth rate

CCET Cal-Comp Electronics (Thailand) Public Company Limited

CE the abbreviation of the French phrase "Conformité Européene" which literally means "European Conformity. It is a certification mark that indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area.

CM Cost Management

Common Shares common shares of the Company with a par value of P1.00 per share

COA Commission on Audit

Congress the Congress of the Philippines, which comprises the House of Representatives and the Senate

CpK Process Capability Index

Debt-to-Equity Ratio the Company’s total liabilities divided by its total equity attributable to the equity holders of the Parent Company as described in the Consolidated Financial Statements included in this Preliminary Prospectus

DENR Department of Environment and Natural Resources

1 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

DENR-EMB Department of Natural Resources, Environmental Management Bureau

Director(s) the director(s) of the Company

DOLE Department of Labor and Employment

EAS Electronic article surveillance

EBITDA Earnings before interest, taxes, depreciation and amortization

ECC Environmental Compliance Certificate

EDGE Electronic Disclosure Generation Technology

EIS Environmental Impact Statement

EMB Environmental Management Bureau

EMC Electromagnetic compatibility

EMS Electronics Manufacturing Services

ESD Electrostatic Discharge

FCC and FCC Certification Federal Communications Commission, a certification mark employed on electronic products sold in the United States which certifies that the electromagnetic interference from the device is under limits approved by the Federal Communications Commission

FPIP First Philippine Industrial Park

GB Gigabyte,

Government the national government of the Republic of the Philippines

Group the Kinpo Group comprising of (1) the New Kinpo Group: KPO, Cal-Comp (Thailand), AcBel, CastleNet, Cal-Comp (Philippines), Qbit, Cal-Comp Precision, XYZ Printing, Cal-Comp Biotech, CCBS, Cal-Comp Big Data, and New Era AI Robotic; and (2) Compal Group: Compal, Arcadyan, and Allied.

HDD Hard Disk Drive

ICB Integrated Circuit Board

IECQ QC 080000:2012 A quality standard on Hazardous Substance Process Management system developed by the International Electrotechnical Commission Quality Assessment System for Electronic Components, a certification system for covering the supply of electronic components and associated materials and processes which uses quality assessment specifications that are based on International Standards prepared by the International Electrotechnical Commission.

IEE Initial Environmental Examination

IPP Investment Priorities Plan, an annual publication by the BOI that defines the areas of business that it intends to promote

2 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

IPQC In-process Quality Control

IQC Incoming Quality Control

IRRs Implementing Rules and Regulations of the SRC, as amended

ISO International Organization for Standardization, a non-governmental organization based in Geneva, Switzerland for assessing the quality systems of business organizations

ISO9001 the international standard that specifies requirements for a quality management system (QMS)

ISO14001 the international standard that specifies requirements for environmental management system (EMS)

Issue Manager and Sole BDO Capital & Investment Corporation Bookrunner

Joint Lead Underwriters BDO Capital & Investment Corporation, [] and []

KPO Kinpo Electronics Inc.

Kinpo Singapore Kinpo International (Singapore) Pte. Ltd.

LCD Liquid Crystal Display

LED Light-Emitting Diodes

LGU Local Government Unit

LLDA Laguna Lake Development Authority

M/O Manufacture order

MPO minimum public ownership

NKG the New Kinpo Group comprising of KPO, Cal-Comp (Thailand), AcBel, CastleNet, Cal-Comp (Philippines), Qbit, Cal-Comp Precision, XYZ Printing, Cal-Comp Biotech, CCBS, Cal-Comp Big Data, New Era AI Robotic

ODM Original Design Manufacturer

OEMs Original Equipment Manufacturers

Offer the offer and sale of the Offer Shares

OHSAS 18001: 2007 An Occupational Health and Safety Management Certification is an international standard which provides a framework to identify, control and decrease the risks associated with health and safety within the workplace

PCB Printed Circuit Board

PCBA Printed Circuit Board Assembly

PDTC the Philippine Depository & Trust Corporation

3 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Pesos, Philippine Pesos, ₱ the legal currency of the Republic of the Philippines and Philippine currency

PEZA Philippine Economic Zone Authority

PFRS Philippine Financial Reporting Standards

Philhealth Philippine Health Insurance Corporation

Philippine Constitution also known as the 1987 Constitution, the supreme law of the Republic of the Philippines

Philippine Corporation Batas Pambansa Blg. 68, also known as the Corporation Code of the Code Philippines

Philippine Nationals The term shall mean any of the following: (1) a citizen of the Philippines; or (2) a domestic partnership or association wholly owned by citizens of the Philippines; or (3) a corporation organized under the laws of the Philippines of which at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines; or (4) a corporation organized abroad and registered as doing business in the Philippines under the Corporation Code of which 100% of the capital stock outstanding and entitled to vote is wholly owned by Filipinos or (5) a trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine national and at least 60% of the fund will accrue to the benefit of the Philippine nationals. Where a corporation and its non- Filipino stockholders own stocks in an SEC- registered enterprise, at least 60% of the capital stock outstanding and entitled to vote of both corporations must be owned and held by citizens of the Philippines and at least 60% of the members of the Board of Directors of each of both corporations must be citizens of the Philippines, in order that the corporations shall be considered a Philippine national.

PQC Process Quality Control

Principal Shareholders Kinpo International (Singapore) Pte. Ltd. And Cal-Comp Electronics (Thailand) Public Company Limited

Prospectus this Preliminary Prospectus together with all its annexes, appendices and amendments, if any

PSA Philippine Standards on Auditing

PSE the Philippine Stock Exchange, Inc.

PSE Trading Participants the trading participants of the PSE in the Philippines

QIB Qualified institutional buyer

R.A. Republic Act, which refers to a statute enacted by the Senate or the House of Representatives

RCM Regulatory Compliance Mark, a certification requirement for electrical and electronic equipment sold in Australia

Receiving Agent BDO Unibank, Inc. – Trust and Investments Group

RFID Radio Frequency Identification

4 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

SAS Serial Attached SCSI (Small Computer System Interface)

SATA Serial Advanced Technology Attachment

SCCP Securities Clearing Corporation of the Philippines

SEC the Philippine Securities and Exchange Commission

Senate the Senate of the Philippines, one of the two branches of the Congress

Selling Agents PSE Trading Participants

SMT Surface-mount technology

S/N Serial number

SOIC Small-outline integrated circuit

SRC R.A. No. 8799, also known as the Securities Regulation Code of the Philippines

SSD Solid State Drives

SSS the Republic of the Philippines' Social Security System

Stock Transfer Agent BDO Unibank, Inc.- Trust and Investments Group

Subsidiary or KPPH Kinpo Electronics (Philippines), Inc., a wholly-owned subsidiary of the Company

SGV SyCip Gorres Velayo & Co

TB Terabyte

UL A global safety consulting and certification company headquartered in Northbrook, Illinois.

Underwriters The Joint Lead Underwriters and the participating underwriters

Underwriting Agreement the agreement entered into by and between the Company and the Underwriters, indicating the terms and conditions of the Offer and providing that the Offer shall be fully underwritten by the Underwriters

Unrestricted Retained the undistributed earnings of a corporation which have not been allocated for Earnings any managerial, contractual, or legal purpose and which are free for distribution to the shareholders as dividends, see “Dividends and Dividend Policy – Limitations and Requirements” on page [43] of this Preliminary Prospectus

USB Universal Serial Bus

VAT Value Added Tax

VCCI Voluntary Control Council for Interference by Information Technology, the Japanese body governing radio frequency and emission standards

VF Virtual Factory

5 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION EXECUTIVE SUMMARY

The following summary is qualified in its entirety by, and is subject to, the more detailed information presented in this Prospectus, including the Company's audited consolidated financial statements and the notes thereto, included elsewhere in this Prospectus. Because it is a summary, it does not contain all of the information that a prospective purchaser should consider before investing. Prospective investors should read the entire Prospectus carefully, including the section entitled “Risk Factors” and the audited consolidated financial statements and the related notes to those statements included in this Prospectus.

Overview

The Company was incorporated on June 1, 2012 as part of New Kinpo Group’s (NKG) expansion in Southeast Asia. NKG is part of the Kinpo Group, a US$38.18 Billion global electronics company based in Taiwan.

NKG is a US$6.30 Billion global EMS / ODM group and a world leader in manufacturing a broad range of key electronic product lines, including storage, printers, network-attached storage (NAS), wireless and broadband, digital home appliances, consumer electronics, wearables, 3D printing, robotics, power management and smart grid, industrial, automotive, security, medical/healthcare and emerging technologies. NKG’s global footprint can be found in the United States, Mexico, Brazil, China, Thailand, Malaysia and the Philippines covering approximately 1,846,435 sq. m. of factory space and employing over 39,000 employees worldwide.

Based on Global Electronics Manufacturing Services (EMS) Market Size, Status and Forecast 2023 published by QY Research, NKG ranks in the top 10 world EMS market in terms of revenue as of 2017 with a revenue market share of 14.59% and is the top leading EMS provider in Southeast Asia with a revenue market share of 22.47%.

The Company is primarily engaged in the design, development, and manufacture of data storage products such as HDD PCBA and External HDD for Toshiba, while its wholly owned subsidiary, KPPH, is engaged in the design, development and manufacture of consumer electronic products such as calculators for major brands, smart home appliances for a leading UK brand, and smart beauty products for the HiMirror™ brand. KPPH is the Group’s sole manufacturer of calculators and based on Casio’s market analysis report, KPPH supplies approximately 70% of the total scientific calculator demand globally.

As of March 31, 2018, the Company and KPPH have a total manufacturing space of approximately 286,434 sq. m. in 2 locations with a workforce of approximately 7,000. The Company's manufacturing facilities are located at the Lima Technology Center in Lipa City, Batangas while KPPH has manufacturing facilities in both the Lima Technology Center and at the First Philippine Industrial Park in Sto. Tomas, Batangas.

The Company and KPPH are registered with the Philippine Economic Zone Authority (“PEZA”) to perform various activities.

On June 25, 2012, the Company was initially registered as an Ecozone Export Enterprise manufacturing electronic products, computer peripherals and telecommunications products. On March 11, 2016, the Company was also registered with PEZA as an Ecozone Facilities Enterprise for its leasing facility in Calamba, Laguna.

In relation to KPPH, it was registered as an Ecozone Export Enterprise manufacturing graphing calculators at the Lima Technology Center –SEZ on February 14, 2014. On August 4, 2015, the registered activity of KPPH with the PEZA was amended to include research and development. On November 12, 2014 and October 2, 2015, KPPH registered new projects to manufacture all kinds of LED lights at the Lima Technology Center – SEZ and to manufacture electronic products at the First Philippine Industrial Park II – SEZ, respectively. Similar to the Company, KPPH is likewise registered with PEZA as an Ecozone Facilities Enterprise leasing to PEZA-registered enterprises its existing warehouse facility at the Lima Technology Center – SEZ which was approved on September 5, 2016. KPPH registered its additional warehouse facility at the First Philippine Industrial Park II – SEZ for its leasing activity on September 27, 2016. In November 2016, KPPH established a branch in the First Philippine Industrial Park, Sto. Tomas, Batangas to engage in the manufacturing of other electrical equipment, particularly vacuum cleaners and hair dryers.

6 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Except for the leasing activities which are taxed at 5% on the gross income of such activity, these PEZA registrations entitle the Company and KPPH to a four-year income tax holiday (“ITH”) and an option to apply for ITH extension for a maximum of three years subject to various PEZA requirements. On April 17, 2017, PEZA approved the Company's application for one (1) year extension of its income tax holiday related to the said registered activity covering the period October 1, 2016 to September 30, 2017. As of October 1, 2017, the Company already applies the 5% preferential tax on the gross income from the sale of its products.

Competitive Strengths

The Company believes that its principal strengths are the following:

1. Strong Automation Engineering and Advanced Automation Capability

Automation is used in almost all key aspects of the Company's production and operations, including SMT, PCBA, function test, assembly, materials handling and packing/pallet processing providing higher production efficiency with stable performance versus human intervention.

The Company’s automation system allows the Company to quickly detect and identify problems or errors in its manufacturing operations. The machine sensors automatically trigger an alarm when an error or fault is detected which allows the Company to immediately stop the production to correct the problem before it could result to the production of defective products.

The Company and its Subsidiary's factories employ Automated Guided Vehicles (AVGs) in all aspects of materials handling and logistics - from the transfer of raw materials from the warehouse to the production and assembly lines, and the movement of finished products from the production line to its temporary storage facilities before they are shipped to the Company’s customers.

2. Real-time Quality Management System and Virtual Factory Capability

The Company is implementing the virtual factory system in all aspects of its operations and manufacturing activities. Through this virtual factory system, the Company is able to monitor the entire manufacturing process at real time. The Company's virtual factory capability allows it to trace each aspect of its manufacturing process and data relating to its products through its barcode traceability system, including details of the raw materials used and the particulars of the manufacturing batch to which a specific product pertains to.

The Company’s virtual factory and traceability system has not only enhanced the Company’s operational efficiency and control over its production process but have strengthened customers’ confidence in the quality of the Company’s products.

3. Design, Research and Development Capability

The Company is backed by an experienced research and development team who are experts in their fields. The Company applies Design for Manufacturing (DFM) and Design for Cost Effective Assembly (DFC) principles in its manufacturing process to ensure that product design not only conform to customer specifications but are designed to optimize assembly, service, quality and process, and ensure compact hardware and mechanical integration. The Company has an in-house comprehensive qualification laboratory to test and verify that the products manufactured by the Company meets client’s specifications and comply with quality standards. Testing and monitoring of products does not stop at the design stage, each of the Company’s products is continuously monitored throughout its life cycle.

4. Certified to the Latest Safety, EMC, CSR and Quality System Standards

The Company and its Subsidiary conform to the highest quality in manufacturing standards and its manufacturing practices are designed to be compliant with industry requirements. As evidenced by the Company, its Subsidiary and/or its products’ certifications on the latest international standards for safety, EMC, CSR and quality, customers can trust that the Company’s products conform to international standards for quality, safety and reliability. Being certified by the latest international standards also ensures that the

7 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Company and its Subsidiary can export the products it manufactures to its customers around the globe, even those with the strictest quality standard requirements such as the United States, Europe and Japan.

5. Member of a Leading Global EMS and ODM Manufacturing Group with a Global Presence and Proven Superior Technical Expertise, Competence and Resources in Delivering Quality Solutions and Products to Customers Worldwide

The Company enjoys strong support from NKG and its member companies. With NKG’s global reach, diverse base of stable, blue-chip customers, and excellent reputation as a trusted EMS/ODM provider, the Company is able to leverage on NKG’s reputation and customer base in developing its own. Backed by the NKG name, the Company is able to attract the interest of customers worldwide. As the trade friction between China and the United States escalates, the Philippines is becoming a more favored manufacturing base for NKG's customers worldwide. As a leading EMS/ODM player in the Philippines, the Company may benefit from the transfers in the manufacturing sites of NKG's customers.

The Company also enjoys synergies with NKG and its related companies allowing it to benefit from greater cost efficiency due to economies of scale and stronger clout in negotiating terms with suppliers.

The Company also benefits from NKG’s research and development capabilities. Constant collaborations within the NKG group provides the Company access to wider research information and innovative ideas and keeps it abreast of the latest trends in the market for its products. This enables the Company to provide continuous and timely innovation for its existing products such as new product designs or features.

6. Vertical Integration of Supply Chain

The Company benefits from the strong vertical integration of critical supply parts within NKG. Critical supply parts such as molding, plastic injection, surface treatment, power supply and sheet metals are sourced within the NKG group which helps the Company to reduce its cost and improve its efficiencies. At the same time, the said vertical integration ensures the quality of critical materials that goes in the Company's products. With a vertically integrated supply chain, the Company is able to avoid disruption in its operations for the supply of critical parts.

KEY STRATEGIES

1. Continuously innovate and improve technology, product quality and design

2. Strengthen and expand manufacturing capability to capture potential new business opportunity for customers seeking EMS/ODM providers outside of China

3. Increase efficiency in the manufacturing process and continue to improve automation capability to further lower cost of production and improve quality

4. Improve supply chain capabilities

5. Develop own-brand products in the 3D printer, big data and beauty technology products and develop the Philippine domestic market

Risks of Investing

Before making an investment decision, prospective investors should carefully consider the risks associated with an investment in the Offer Shares. Some of these risks are discussed in the section entitled “Risk Factors” and include risks relating the following:

• risks relating to the Company’s business, • risks relating to the Philippines, • risks relating to the Offer and the Offer Shares, and • risks relating to certain statistical information in this Prospectus.

8 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Please refer to the section entitled “Risk Factors” which, while not intended to be an exhaustive enumeration of all risks, must be considered in connection with the purchase of the Offer Shares.

Company Information

The Company is a Philippine corporation with registered office located at Block 7, Lot 1, Main Boulevard, Lima Technology Center – SEZ, Lipa City, Batangas, Philippines. The Company's telephone number is: +63 043 233-8888. The Company's website is: www.ccph.com.ph. The information on the Company's website is not incorporated by reference into, and does not form part of, this Prospectus.

Investor Relations Office

The Investor Relations Office will be tasked with (a) the creation and implementation of an investor relations program that reaches out to all shareholders and informs them of corporate activities and (b) the formulation of a clear policy for accurately, effectively and sufficiently communicating and relating relevant information to the Company's stakeholders as well as to the broader investor community.

The investor relations office will be responsible for receiving and responding to investor and shareholder queries and ensuring that investors and shareholders have easy and direct access to the official and designated spokespersons of the Company.

Mr. Guo-Lun Lo (a.k.a. Hugh Lo) will head the Company's Investor Relations Office. Mr. Lo has been appointed as the Company's Investor Relations Officer (“IRO”) effective on June 4, 2018.

The IRO will also be responsible for ensuring that the Company's shareholders have timely and uniform access to official announcements, disclosures and market-sensitive information relating to the Company. As the Company's officially designated spokesperson, the IRO will be responsible for receiving and responding to investor and shareholder queries. In addition, the IRO will oversee most aspects of the Company's shareholder meetings, press conferences, investor briefings, management of the investor relations portion of the Company's website and the preparation of its annual reports. The IRO will also be responsible for conveying information such as the Company's policy on corporate governance and corporate social responsibility, as well as other qualitative aspects of the Company's operations and performance.

Mr. Frank Yu serves as the Company's Compliance Officer with respect to disclosures and continuing requirements of the SEC and the PSE.

The Company's Investor Relations Office is located at Block 7, Lot 1, Main Boulevard, LIMA Technology Center, Lipa City, Batangas, Philippines. The Company's investor relations office may be reached at the following contact details:

E-mail address : [email protected] Contact Number : +63 043 233-8888 ext. 14906 Website : www.ccph.com.ph.

9 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION SUMMARY OF THE OFFER

The following does not purport to be a complete listing of all the rights, obligations, and privileges attaching to or arising from the Offer Shares. Some rights, obligations, or privileges may be further limited or restricted by other documents and subject to final documentation. Prospective investors are enjoined to perform their own independent investigation and analysis of the Company and the Offer Shares. Each prospective investor must rely on its own appraisal of the Company and the Offer Shares and its own independent verification of the information contained herein and any other investigation it may deem appropriate for the purpose of determining whether to invest in the Offer Shares and must not rely solely on any statement or the significance, adequacy, or accuracy of any information contained herein. The information and data contained herein are not a substitute for the prospective investor’s independent evaluation and analysis.

Issuer Cal-Comp Technology (Philippines), Inc.

Issue Manager and Sole Bookrunner BDO Capital & Investment Corporation

Joint Lead Underwriters BDO Capital & Investment Corporation, [●] and [●]

Selling Agents PSE Trading Participants

Stock Transfer Agent & Receiving Agent BDO Unibank, Inc. – Trust and Investments Group

The Offer Offer of [378,071,100] Firm Shares, consisting of new Shares to be issued and offered by the Company together with an offer of up to [19,898,500] Optional Shares to be offered pursuant to the Over-allotment Option (as described below). Up to [75,614,300] Firm Shares (or 20% of the Firm Shares) are being allocated to all of the PSE Trading Participants and up to [37,807,200] Firm Shares (or 10% of the Firm Shares) are being offered to Local Small Investors at the Offer Price. Each PSE Trading Participant shall initially be allocated [●] Firm Shares and subject to reallocation as may be determined by the PSE. Based on the initial allocation for each trading participant, there will be a total of [●] residual Firm Shares to be allocated as may be determined by the Joint Lead Underwriters. Offer Shares not taken up by the PSE Trading Participants or the LSIs shall be distributed by the Underwriters to their respective clients or to the general public. Offer Shares not taken up by the PSE Trading Participants, the Joint Lead Underwriters’ clients, or the general public shall be purchased by the Underwriters on a firm commitment basis pursuant to the terms and conditions of the Underwriting Agreement.

Offer Shares the Firm Shares and the Optional Shares

Offer Price Up to ₱[17.00] per Offer Share. The Offer Price was determined through a book-building process and discussions among the Company and the Issue Manager and Sole Bookrunner, and Joint Lead Underwriters.

Over-allotment Option The Selling Shareholder has granted the Stabilizing Agent, BDO Capital, an over-allotment option, exercisable in whole or in part, to purchase up to [19,898,500] Optional Shares at the Offer Price, on the same terms and conditions as the Firm Shares as set out in this Prospectus, solely to cover over- allotments, if any, and effect price stabilization transactions. The Over-allotment Option is exercisable from time to time

10 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION for a period which shall not exceed thirty (30) calendar days from and including the Listing Date. See “Plan of Distribution—The Over-allotment Option” on page [148] of this Prospectus.

Offer Period The Offer Period shall commence at 9:00 a.m., Manila time, on [●], 2018 and end at 12:00 p.m., Manila time, on [●], 2018. The Company, the Issue Manager and Sole Bookrunner, and Underwriters reserve the right to extend or terminate the Offer Period with the approval of the SEC and the PSE.

Applications must be received by the Receiving Agent by 12:00 p.m., Manila time on [●], 2018, whether filed through a participating Selling Agent or filed directly with the Underwriters. Applications received thereafter or without the required documents will be rejected. Applications shall be considered irrevocable upon submission to a participating Selling Agent or the Underwriters, and shall be subject to the terms and conditions of the Offer as stated in this Prospectus and in the application. The actual purchase of the Offer Shares shall become effective only upon the actual listing of the Offer Shares on the PSE and upon the obligations of the Underwriters under the Underwriting Agreement becoming unconditional and not being suspended, terminated or cancelled on or before the Listing Date in accordance with the provisions of such agreement.

Eligible Investors The Offer Shares may be purchased by any natural person of legal age residing in the Philippines, regardless of nationality, or any corporation, association, partnership, trust account, fund or entity residing in and organized under the laws of the Philippines and/or licensed to do business in the Philippines, regardless of nationality, subject to the Company’s right to reject an application or reduce the number of Offer Shares applied for subscription or purchase if the same will cause the Company to be in breach of the Philippine ownership requirements under relevant Philippine laws. Foreign investors interested in subscribing or purchasing the Offer Shares should inform themselves of the applicable legal requirements under the laws and regulations of the countries of their nationality, residence or domicile, and as to any relevant tax or foreign exchange control laws and regulations affecting them personally. Foreign investors, both corporate and individual, warrant that their purchase of the Offer Shares will not violate the laws of their jurisdiction and that they are allowed to acquire, purchase and hold the Offer Shares. See “Regulatory and Environmental Matters – Nationality Restrictions” on page [107] of this Prospectus.

Use of Proceeds The Company intends to use the net proceeds from the Offer of the Firm Shares for facilities expansion, capital

expenditure, research and development, debt repayment and working capital requirement. See “Use of Proceeds” on page [39] of this Prospectus for details of how the total net proceeds are expected to be applied.

Minimum Subscription Each application must be for a minimum of [1,000] Offer Shares, and thereafter, in multiples of [100] Offer Shares. Applications for multiples of any other number of Offer

11 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Shares may be rejected or adjusted to conform to the required multiple, at the Company’s discretion.

Lock-up The PSE Consolidated Listing and Disclosure Rules (the “PSE Listing Rules”) require an applicant company for the Main Board to cause its existing shareholders owning at least ten percent (10%) of the outstanding shares of the Company not to sell, assign or in any manner dispose of their shares for a period of 180 days after the listing of the shares. See “Plan of Distribution — Lock-Up” on page [148] of this Prospectus. In addition, if there is any issuance or transfer of shares or securities such as private placements, assets for shares swap or a similar transaction or instruments which lead to issuance of shares or securities such as convertible bonds, warrants or a similar instrument done and fully paid for within 180 days prior to the start of the Offer Period, and the transaction price is lower than the Offer Price in the initial public offering, all such shares or securities shall be subject to a lock-up period of at least 365 days from full payment of such shares or securities. [500] Shares held by [Messrs. Domingo, Noel, Lobos, Lo and Huang] are subject to such 365-day lock-up. See “Plan of Distribution — Lock-Up” on page [148] of this Prospectus. To implement the foregoing lock-up requirements, the PSE requires the applicant company to lodge the locked-up shares with the PDTC through a Philippine Central Depository (“PCD”) participant for the electronic lock-up of the shares or enter into an escrow agreement with the trust department or custodian unit of an independent and reputable financial institution. In addition, the Company and the Principal Shareholders have agreed with the Issue Manager and Sole Bookrunner, and Underwriters that they will not, without the prior written consent of the Issue Manager and Sole Bookrunner, and Joint Lead Underwriters, issue, offer, pledge, sell, contract to sell, pledge or otherwise dispose of (or publicly announce any such issuance, offer, sale or disposal of) any Common Shares or securities convertible or exchangeable into or exercisable for any Common Shares or warrants or other rights to purchase Common Shares or any security or financial product whose value is determined directly or indirectly by reference to the price of the underlying securities, including equity swaps, forward sales and options for a period of 180 days after the listing of the Offer Shares. See “Principal Shareholders” on page [119] of this Prospectus and “Plan of Distribution – Lock-Up” on page [148] of this Prospectus.

Registration, Listing and Trading The Company has filed an application with the SEC for the registration and an application with the PSE for the listing of all its issued and outstanding stock (including the Offer Shares). The SEC issued an Order of Registration and Permit to Sell on [●] and the PSE approved the listing application on [●], subject to compliance with certain listing conditions. All of the Offer Shares in issue or to be issued are expected to be listed on the PSE under the symbol “CCPH.” See “Description of the Shares” on page [125] of this Prospectus. All of the Offer Shares are expected to be listed on the PSE on

12 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION or about [●]. Trading of the Offer Shares that are not subject to lock up is expected to commence on [●].

Dividends Each holder of the Common Shares will be entitled to such dividends as may be declared by the Board of Directors, provided that any stock dividend declaration requires the approval of shareholders holding at least two-thirds (2/3) of the Company’s total outstanding capital stock, which refers to the total shares of stock subscribed by, under binding subscription agreements with, subscribers or stockholders. The Company’s current dividend policy provides that for the first three (3) years after listing commencing on 2019 until 2021, the Company will pay an annual cash dividend of P0.45, P0.50, and P0.55 per share, respectively. Beginning the year 2022, the Company will follow its general dividend policy which is to pay at least 30% of the Company's net income after tax for the preceding fiscal year, payable in cash, property or shares, subject to cash flows and investment plans of the Company and its Subsidiary, as well as regulatory restrictions and other requirements. The Company’s Board, may, at any time, modify such dividend payout ratio depending upon the results of operations and future projects and plans of the Company. See “Dividends and Dividend Policy” on page [43] of this Prospectus for more discussion.

Registration and Lodgment of Shares The Offer Shares are required to be lodged with the PDTC. with PDTC The applicant must provide the information required for the PDTC lodgment of the Offer Shares. The Offer Shares will be lodged with the PDTC at least two (2) trading days prior to the Listing Date. The applicant may request to receive share certificates evidencing such applicant’s investment in the Offer Shares through his/her broker after the Listing Date. Any expense to be incurred by such issuance of certificates shall be borne by the applicant.

Registration of Foreign Investments The BSP requires that investments in shares of stock funded by inward remittance of foreign currency be registered with the BSP only if the foreign exchange needed to service capital repatriation or dividend remittance will be sourced from the Philippine banking system. The registration with the BSP of all foreign investments in the Offer Shares shall be the responsibility of the foreign investor. See “Philippine Foreign Exchange Controls” beginning on page [145] of this Prospectus.

Restriction on Issuance and Disposal of See “Lock-up” above and “Principal Shareholders” on page Shares [119] of this Prospectus. These restrictions are in addition to the contractual lock-up described above.

Tax Considerations See “Philippine Taxation” beginning on page [140] of this Prospectus for further information on the Philippine tax consequences of the purchase, ownership and disposal of the Offer Shares.

13 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Procedure for Application for the Offer Application forms and signature cards may be obtained from any of the Underwriters, the Receiving Agent, or any participating Selling Agent. Applicants shall complete the application form, indicating all pertinent information such as the applicant’s name, address, taxpayer’s identification number, citizenship and all other information as may be required in the application form. Applicants shall undertake to sign all documents and to do all necessary acts to enable them to be registered as holders of Offer Shares. Failure to complete the application form may result in the rejection of the application. If the applicant is a corporation, partnership or trust account, the application must be accompanied by the following documents:  a certified true copy of the applicant’s latest articles of incorporation and by-laws (or articles of partnership in the case of a partnership) and other constitutive documents (each as amended to date) duly certified by its corporate secretary (or managing partner in the case of a partnership),  a certified true copy of the applicant’s SEC certificate of registration or certificate of filing amended articles of incorporation or by-laws, as the case may be, duly certified by its corporate secretary (or managing partner in the case of a partnership), and  a duly notarized corporate secretary’s certificate (or certificate of the managing partner in the case of a partnership) setting forth the resolution of the applicant’s board of directors or equivalent body authorizing the purchase of the Offer Shares indicated in the application, identifying the designated signatories authorized for the purpose, including his or her specimen signature, and certifying the percentage of the applicant’s capital or capital stock held by Philippine Nationals. Foreign corporate and institutional applicants who qualify as Eligible Investors, in addition to the documents listed above, are required to submit in quadruplicate, a representation and warranty stating that their purchase of the Offer Shares to which their application relates will not violate the laws of their jurisdictions of incorporation or organization, and that they are allowed, under such laws, to acquire, purchase and hold the Offer Shares.

Payment Terms for the Offer The purchase price must be paid in full in Philippine Pesos upon the submission of the duly completed and signed application form and signature card together with the requisite attachments. Payment for the Offer Shares shall be made either by: (i) a personal or corporate check drawn against an account with a BSP authorized bank at any of its branches located in Metro Manila, or (ii) a manager’s or cashier’s check issued by an authorized bank. All checks should be made payable to [“●”], crossed “Payee’s Account Only,” and dated the same date as the application. The applications and the related payments will be received at any of the offices of the Underwriters or the Selling Agents.

14 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Acceptance or Rejection of Applications Application forms are subject to confirmation by the for the Offer Underwriters and the final approval of the Company. The Company and the Underwriters reserve the right to accept, reject or scale down the number and amount of Offer Shares covered by any application. The Company and the Underwriters have the right to reallocate available Offer Shares in the event that the Offer Shares are insufficient to satisfy the total applications received. The Offer Shares will be allotted in such a manner as the Company and the Underwriters may, in their sole discretion, deem appropriate, subject to distribution guidelines of the PSE. Applications with checks dishonored upon first presentation and Application forms which do not comply with terms of the Offer will be automatically rejected. Notwithstanding the acceptance of any Application form, the actual subscription of the Offer Shares by the applicant will be effective only upon the listing of the Offer Shares at the PSE.

Refunds for the Offer In the event that the number of Offer Shares to be received by an applicant, as confirmed by the Underwriters, is less than the number covered by its application, or if an application is rejected by the Company, then the Underwriters shall refund, without interest, within five (5) banking days from the end of the Offer Period, all or a portion of the payment corresponding to the number of Offer Shares wholly or partially rejected. All refunds shall be made through the Receiving Agent with whom the applicant has filed the application, at the applicant’s risk.

Expected Timetable The timetable of the Offer is expected to be as follows:

Pricing and allocation of the Offer [September 13, 2018] Shares

Notice of final Offer Price to the [September 13, 2018] SEC and PSE

Start of the Offer Period [September 18, 2018, 9:00 a.m.]

Submission of Firm Order and [September 20, 2018] Commitments by PSE Trading 11:00 a.m Participants

Local Small Investors and Public [September 18 to 24, Offer Period 2018]

End of Offer Period [September 25, 2018, 12:00 p.m.]

Listing Date and Commencement of [October 2, 2018] Trading on the PSE

The dates included above are subject to the approval of the SEC and the PSE, market and other conditions, and may be changed at the discretion of the Company, the Issue Manager and Sole Bookrunner, and the Underwriters, subject to the approval of the SEC and PSE.

15 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Risks of Investing Before making an investment decision, prospective investors should carefully consider the risks associated with an investment in the Offer Shares. Certain of these risks are discussed in the section entitled “Risk Factors” on page [23] and include: risks relating to the Company’s business, risks relating to the Philippines, risks relating to the Offer and the Offer Shares, and risks relating to certain statistical information in this Prospectus.

16 SUMMARY HISTORICAL FINANCIAL AND OPERATING INFORMATION

The following tables set forth the summary consolidated financial information derived from the Company’s audited consolidated financial statements as of March 31, 2018, December 31, 2017, 2016 and 2015, and should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included elsewhere in this Prospectus, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page [48] and other financial information included herein.

The selected financial information set forth in the following table has been derived from the Company's audited consolidated financial statements as of March 31, 2018, December 31, 2017, 2016 and 2015 and for the three (3) months period ended March 31, 2018 and 2017 and for years ended December 31, 2017, 2016 and 2015, including the related notes, as audited by SGV in accordance with Philippine Standards on Auditing (“PSA”). All these information should be read in conjunction with the financial statements and notes thereto found on page [F-1] of this Prospectus.

The summary of financial information set out below does not purport to project the results of operations or financial condition of the Company for any future period or date. All figures are in US$ except per share figures, and where otherwise indicated.

The Company’s audited consolidated financial statements as of March 31, 2018, December 31, 2017, 2016 and 2015 and for the three (3) months ended March 31, 2018 and 2017 and for the years ended December 31, 2017, 2016 and 2015, were prepared in accordance with PFRS and were audited by SGV in accordance with the PSA. The summary consolidated financial information below is not necessarily indicative of the results of future operations.

17 CAL-COMP TECHNOLOGY (PHILIPPINES), INC. AND SUBSIDIARY SUMMARIZED CONSOLIDATED STATEMENTS OF INCOME

Three-Months Ended March 31 Years Ended December 31

2018 2018 2017 2017 2017 2017 2016 2016 2015 2015

In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) In US $ In ₧ (unaudited)

REVENUES Sale of goods $74,175,735 PHP 3,869,006,338 $39,849,213 PHP 2,078,534,950 $207,847,580 PHP 10,841,329,773 $122,532,728 PHP 6,391,307,092 $268,164,388 PHP 13,987,454,478

Rental revenue 609,289 31,780,514 403,391 21,040,875 2,752,324 143,561,220 1,075,478 56,096,932 - -

74,785,024 3,900,786,852 40,252,604 2,099,575,825 210,599,904 10,984,890,993 123,608,206 6,447,404,024 268,164,388 13,987,454,478

CO STS

Cost of goods sold 65,964,296 3,440,697,679 34,671,928 1,808,487,764 191,847,845 10,006,783,595 113,658,805 5,928,443,269 256,589,311 13,383,698,462 Cost of rent 403,914 21,068,154 423,336 22,081,206 1,397,951 72,917,124 865,904 45,165,553 - -

66,368,210 3,461,765,833 35,095,264 1,830,568,970 193,245,796 10,079,700,719 114,524,709 5,973,608,822 256,589,311 13,383,698,462

GROSS PROFIT 8,416,814 439,021,019 5,157,340 269,006,855 17,354,108 905,190,274 9,083,497 473,795,202 11,575,077 603,756,016 GENERAL AND ADMINISTRATIVE EXPENSES 1,975,427 103,038,272 1,355,751 70,715,972 7,442,357 388,193,341 6,390,440 333,325,350 4,979,811 259,746,942

OTHER INCOME (CHARGES)

Net foreign exchange gains (losses) 746,804 38,953,297 (791,333) (41,275,929) (1,387,081) (72,350,145) (1,400,159) (73,032,293) (528,258) (27,553,937)

Interest expense (517,454) (26,990,401) (125,505) (6,546,341) (1,257,307) (65,581,133) (474,900) (24,770,784) (874,911) (45,635,358) Scrap sales 10,972 572,300 19,049 993,596 84,285 4,396,306 61,375 3,201,320 97,410 5,080,906

Interest income 1,758 91,697 942 49,135 11,439 596,658 7,327 382,176 6,532 340,709

Others - - (3,482) (181,621) (49,586) (2,586,406) (10,684) (557,277) 121,356 6,329,929

242,080 12,626,893 (900,329) (46,961,160) (2,598,250) (135,524,720) (1,817,041) (94,776,858) (1,177,871) (61,437,751)

INCO ME BEFORE INCO ME TAX 6,683,467 348,609,640 2,901,260 151,329,723 7,313,501 381,472,213 876,016 45,692,994 5,417,395 282,571,323 PRO VISIO N FOR (BENEFIT FRO M) INCO ME TAX

Current 67,238 3,507,134 14,069 733,839 153,985 8,031,858 44,545 2,323,467 30,071 1,568,503

Deferred 287,115 14,975,918 (44,575) (2,325,032) (82,011) (4,277,694) 326,351 17,022,468 206,015 10,745,742

354,353 18,483,052 (30,506) (1,591,193) 71,974 3,754,164 370,896 19,345,935 236,086 12,314,245

NET INCO ME 6,329,114 330,126,588 2,931,766 152,920,916 7,241,527 377,718,049 505,120 26,347,059 5,181,309 270,257,078 O THER CO MPREHENSIVE INCO ME (LO SS) Item not to be reclassified to profit or loss in subsequent periods:

Remeasurement of employee benefits - - - - (39,763) (2,074,038) 9,896 516,175 (3,810) (198,730)

TOTAL CO MPREHENSIVE INCO ME 6,329,114 330,126,588 2,931,766 152,920,916 7,201,764 375,644,011 515,016 26,863,234 5,177,499 270,058,348

EARNINGS PER SHARE $0.0057 PHP 0.2979 $0.0026 PHP 0.1380 $0.0065 PHP 0.3408 $0.0005 PHP 0.0238 $0.0047 PHP 0.2438

Amounts in US Dollars were converted to Philippine pesos using the exchange rate as of 31 March 2018 of P52.16 to US$ 1.00.

18 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

CAL-COMP TECHNOLOGY (PHILIPPINES), INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

March 31, 2018 December 31, 2017 December 31, 2016 December 31, 2015

In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) In US $ In ₧ (unaudited)

ASSETS Current Assets

Cash $17,460,405 PHP 910,734,728 $26,403,834 PHP 1,377,223,983 $10,675,169 PHP 556,816,815 $9,937,429 PHP 518,336,298

Trade and other receivables 58,285,126 3,040,152,169 52,051,146 2,714,987,776 10,571,326 551,400,365 8,802,250 459,125,358 Inventories 68,692,473 3,582,999,392 52,446,803 2,735,625,244 29,880,224 1,558,552,484 29,506,805 1,539,074,949

Other current assets 1,869,556 97,516,041 2,388,712 124,595,218 1,891,917 98,682,391 2,238,505 116,760,421

Total Current Assets 146,307,560 7,631,402,330 133,290,495 6,952,432,221 53,018,636 2,765,452,055 50,484,989 2,633,297,026

Noncurrent Assets

Property, plant and equipment 76,758,865 4,003,742,398 81,642,111 4,258,452,510 73,009,183 3,808,158,985 62,606,212 3,265,540,018

Investment property 29,408,936 1,533,970,102 16,475,977 859,386,960 14,209,278 741,155,940 - - Intangible assets 21,435,514 1,118,076,410 22,921,590 1,195,590,134 22,563,470 1,176,910,595 24,975,030 1,302,697,565

Other noncurrent assets 3,729,384 194,524,669 3,478,946 181,461,823 3,185,731 166,167,729 250,157 13,048,189

Total Noncurrent Assets 131,332,699 6,850,313,579 124,518,624 6,494,891,427 112,967,662 5,892,393,249 87,831,399 4,581,285,772

TOTAL ASSETS $277,640,259 PHP 14,481,715,909 $257,809,119 PHP 13,447,323,648 $165,986,298 PHP 8,657,845,304 $138,316,388 PHP 7,214,582,798

LIABILITIES AND EQUITY Current Liabilities

Loans payable $73,181,102 PHP 3,817,126,280 $69,053,647 PHP 3,601,838,228 $10,000,000 PHP 521,600,000 $37,090,000 PHP 1,934,614,400

Trade and other payables 60,523,178 3,156,888,964 49,231,355 2,567,907,477 30,199,762 1,575,219,586 24,308,259 1,267,918,789 Due to related parties 5,123,296 267,231,119 7,190,522 375,057,628 756,740 39,471,558 2,804,695 146,292,891

Income tax payable 148,997 7,771,684 84,204 4,392,081 16,741 873,211 773 40,320

Total Current Liabilities 138,976,573 7,249,018,047 125,559,728 6,549,195,414 40,973,243 2,137,164,355 64,203,727 3,348,866,400

Noncurrent Liabilities

Retirement benefit obligation 245,437 12,801,994 247,596 12,914,607 131,013 6,833,638 71,986 3,754,790 Deferred tax liability 737,470 38,466,435 450,355 23,490,517 532,366 27,768,211 206,015 10,745,742

Deposit for future stock subscription ------42,624,146 2,223,275,455

Total Noncurrent Liabilities 982,907 51,268,429 697,951 36,405,124 663,379 34,601,849 42,902,147 2,237,775,987

Total Liabilities 139,959,480 7,300,286,476 126,257,679 6,585,600,538 41,636,622 2,171,766,204 107,105,874 5,586,642,387

Equity

Capital stock 22,658,472 1,181,865,900 5,000,000 260,800,000 5,000,000 260,800,000 5,000,000 260,800,000 Additional paid-in capital 82,141,753 4,284,513,836 ------

Retained earnings 24,928,147 1,300,252,148 18,599,033 970,125,561 11,357,506 592,407,513 10,852,386 566,060,454

Equity reserve 8,000,000 417,280,000 108,000,000 5,633,280,000 108,000,000 5,633,280,000 15,375,854 802,004,545 Remeasurement of employee benefits (47,593) (2,482,451) (47,593) (2,482,451) (7,830) (408,413) (17,726) (924,588)

Total Equity 137,680,779 7,181,429,433 131,551,440 6,861,723,110 124,349,676 6,486,079,100 31,210,514 1,627,940,411

TOTAL LIABILITIES AND EQUITY $277,640,259 PHP 14,481,715,909 $257,809,119 PHP 13,447,323,648 $165,986,298 PHP 8,657,845,304 $138,316,388 PHP 7,214,582,798

Amounts in US Dollars were converted to Philippine pesos using the exchange rate as of 31 March 2018 of P52.16 to US$ 1.00.

19 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

CAL-COMP TECHNOLOGY (PHILIPPINES), INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31 Years Ended December 31

2018 2018 2017 2017 2017 2017 2016 2016 2015 2015

In US $ In ₧(unaudited) In US $ In ₧(unaudited) In US $ In ₧(unaudited) In US $ In ₧(unaudited) In US $ In ₧(unaudited)

CASH FLO WS FRO M O PERATING ACTIVITIES Income before income tax $6,683,467 PHP 348,609,640 $2,901,260 PHP 151,329,723 $7,313,501 PHP 381,472,213 $876,016 PHP 45,692,994 $5,417,395 PHP 282,571,323 Adjustments for: Depreciation and amortization 1,828,840 95,392,294 1,514,437 78,993,034 6,666,601 347,729,908 5,685,946 296,578,943 3,366,892 175,617,087 Interest expense 517,454 26,990,401 125,055 6,522,869 1,257,307 65,581,133 474,900 24,770,784 874,911 45,635,358 Net unrealized foreign exchange losses (gains) (276,070) (14,399,811) (818,517) (42,693,847) 299,760 15,635,482 19,753 1,030,316 312,578 16,304,068 Interest income (1,758) (91,697) (942) (49,135) (11,439) (596,658) (7,327) (382,176) (6,532) (340,709) Retirement benefit expense 782 40,789 482 25,141 76,112 3,970,002 73,611 3,839,550 50,110 2,613,738

Loss (gain) on retirement and disposal of machinery and equipment - - - - 37,701 1,966,484 (928) (48,404) - -

Operating income before working capital changes 8,752,715 456,541,616 3,721,775 194,127,785 15,639,543 815,758,564 7,121,971 371,482,007 10,015,354 522,400,865 Decrease (increase) in: (13,536,261) Trade and other receivables (6,275,878) (327,349,796) (706,051,374) (40,508,127) (2,112,903,904) (1,774,993) (92,583,635) 25,743,787 1,342,795,930 (10,442,856) Inventories (16,245,670) (847,374,147) (544,699,369) (22,566,579) (1,177,072,761) (373,419) (19,477,535) 25,313,914 1,320,373,754 (1,397,675) Other current assets 613,783 32,014,921 (72,902,728) (974,866) (50,849,011) 75,758 3,951,537 560,442 29,232,655 Increase (decrease) in: Trade and other payables 11,218,212 585,141,938 7,336,784 382,686,653 19,069,482 994,664,181 5,512,685 287,541,650 (59,088,733) (3,082,068,313) Due to related parties (2,024,518) (105,598,859) 1,345,799 70,196,876 5,350,562 279,085,314 (2,622,606) (136,795,129) (729,366) (38,043,731)

Net cash generated from (used in) operations (3,961,356) (206,624,327) (12,972,434) (676,642,157) (23,989,985) (1,251,317,617) 7,939,396 414,118,895 1,815,398 94,691,160 Interest paid (456,263) (23,798,678) - - (1,191,452) (62,146,136) (469,360) (24,481,818) (994,651) (51,880,996) Interest received 1,758 91,697 942 49,135 11,439 596,658 7,327 382,176 9,617 501,623 Income taxes paid - - - - (35,708) (1,862,529) (11,325) (590,712) (28,870) (1,505,859) Net cash flows from (used in) operating activities (4,415,861) (230,331,308) (12,971,492) (676,593,022) (25,205,706) (1,314,729,624) 7,466,038 389,428,541 801,494 41,805,928

CASH FLOWS FROM INVESTING ACTIVITIES Additions to: Property, plant and equipment (8,190,872) (427,235,884) (2,737,057) (142,764,893) (13,984,815) (729,447,950) (28,340,643) (1,478,247,939) (30,591,988) (1,595,678,094) Intangible assets (228,084) (11,896,861) 1,297,396 67,672,175 (818,100) (42,672,096) (177,939) (9,281,298) (12,504,874) (652,254,228) Investment property - - - - (1,763,733) (91,996,313) - - - - Other noncurrent assets (249,805) (13,029,829) - - (1,307,386) (68,193,254) (1,582,316) (82,533,603) (183,830) (9,588,573) Proceeds from

Dsposal of machinery and equipment - - - - 9,935 518,210 555,934 28,997,517 - - Maturity of short-term investment ------1,424,000 74,275,840 Net cash flows used in investing activities (8,668,761) (452,162,574) (1,439,661) (75,092,718) (17,864,099) (931,791,403) (29,544,964) (1,541,065,323) (41,856,692) (2,183,245,055)

20 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

CAL-COMP TECHNOLOGY (PHILIPPINES), INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31 Years Ended December 31

2018 2018 2017 2017 2017 2017 2016 2016 2015 2015

In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) In US $ In ₧ (unaudited) (Forward) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from: Shares subscription 100,000,000 5,216,000,000 - - - - 50,000,000 2,608,000,000 - - Loans 41,220,000 2,150,035,200 16,996,406 886,532,537 153,363,293 7,999,429,363 10,000,000 521,600,000 106,260,000 5,542,521,600 Payments for:

Acquisition of KPPH (100,000,000) (5,216,000,000) ------Loans (36,848,380) (1,922,011,501) - - (94,553,811) (4,931,926,782) (37,090,000) (1,934,614,400) (87,170,000) (4,546,787,200) Share issue costs (199,775) (10,420,264) ------Deposit for future stock subscriptions ------25,000,000 1,304,000,000

Net cash flows from financing activities 4,171,845 217,603,435 16,996,406 886,532,537 58,809,482 3,067,502,581 22,910,000 1,194,985,600 44,090,000 2,299,734,400

EFFECT OF EXCHANGE RATE CHANGES ON CASH (30,652) (1,598,808) 718,407 37,472,109 (11,012) (574,386) (93,334) (4,868,301) (1,084) (56,541)

NET INCREASE IN CASH (8,943,429) (466,489,255) 3,303,660 172,318,906 15,728,665 820,407,168 737,740 38,480,517 3,033,718 158,238,732

CASH AT BEGINNING OF YEAR 26,403,834 1,377,223,983 10,675,169 556,816,815 10,675,169 556,816,815 9,937,429 518,336,298 6,903,711 360,097,566

CASH AT END OF YEAR $17,460,405 PHP 910,734,728 $13,978,829 PHP 729,135,721 $26,403,834 PHP 1,377,223,983 $10,675,169 PHP 556,816,815 $9,937,429 PHP 518,336,298

Amounts in US Dollars were converted to Philippine pesos using the exchange rate as of 31 March 2018 of P52.16 to US$ 1.00.

21 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

KEY PERFORMANCE INDICATORS

The Company uses a range of financial and operational key performance indicators (“KPIs”) to help measure and manage its performance. These KPIs reflect the Company’s continuous focus on efficiency, cost control and profitability across all its operations. The management considers the following as KPIs:

For the three months ended For the years ended December 31 March 31 2018 2017 2016 2015 Gross Profit Margin 11.25% 8.24% 7.35% 4.32% EBITDA (in US$) 9,029,761 15,237,409 7,036,862 9,659,198 EBITDA Margin 12.07% 7.24% 5.69% 3.60% Return on Average Equity 4.70% 5.66% 0.65% 18.10% Debt to Equity Ratio 1.02 0.96 0.33 3.43

For the three months ended For the years ended December 31 March 31

2018 2017 2017 2016 2015 Net income 6,329,114 2,931,766 7,241,527 505,120 5,181,309 Income tax expenses 354,353 (30,506) 71,974 370,896 236,086 Depreciation and amortization 1,828,840 1,514,437 6,666,601 5,685,946 3,366,892 Interest expense 517,454 125,055 1,257,307 474,900 874,911 9,029,761 4,540,752 15,237,409 7,036,862 9,659,198

1 Gross Profit Margin is gross profit as a percentage of revenues 2 EBITDA is defined as earnings before interest, taxes, depreciation and amortization from continuing. 3 EBITDA margin is EBITDA as a percentage of revenues 4 Return on Assets is net income as a percentage of average total assets 5 Return on Average Equity is net income as a percentage of the average of the equity as at year-end and equity as at end of the immediately preceding year. 6 Debt to Equity Ratio is total liabilities over total equity 7 Deposits for future stock subscription amounting to $25,000,000 and $17,624,146 were received from KPO in 2015 and 2014, respectively, and were classified under noncurrent liabilities. As result, there are abnormal percentages above. The adjusted Return on Average Equity and Debt to Equity Ratio will be 10.38% and 87.33%, respectively, once we regard the deposit for future stock subscription as equity

22 RISK FACTORS

An investment in the Offer Shares involves a number of risks. You should carefully consider the risk factors described below, in addition to other information contained in this Prospectus, including the Company's financial statements and notes relating thereto, before deciding to invest in the Offer Shares. The price of securities can and does fluctuate, and any individual security is likely to experience upward or downward movements and may even become valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling securities. The Company's past performance is not a guide to the Company's future performance. There may be a large difference between the buying price and the selling price of the Offer Shares and there is an additional risk of loss of investment when securities are purchased from smaller companies. For investors that deal in a range of investments, each investment carries a different level of risk.

Investors should carefully consider all the information contained in this Prospectus, including the risk factors described below, before deciding to invest in the Offer Shares. The occurrence of any of the following events, or other events not currently anticipated, could have an adverse effect on the Company's business prospects, financial condition, results of operation, the market price of the Offer Shares and the Company's ability to make dividend distributions to the Company's shareholders. All or part of an investment in the Offer Shares could be lost.

The means by which the Company intends to address the risk factors discussed herein are principally presented under “Business” beginning on page [64],“Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page [48], and “Board of Directors and Senior Management — Corporate Governance” on page [115] of this Prospectus. The Company believes that its efforts to manage the risks relating to the Company's business will help to alleviate the risks relating to the Philippines that the Company has not specifically addressed.

This risk factors discussion does not purport to disclose all of the risks and other significant aspects of investing in the Offer Shares. Investors should undertake independent research and study the trading of securities before commencing any trading activity. Investors may request publicly available information about the Company from the SEC. An investor should seek professional advice if he or she is uncertain of, or has not understood, any aspect of this Offer or the nature of risks involved in purchasing, holding and trading the Shares. Each investor should consult his or her own counsel, accountant and other advisors as to the legal, tax, business, financial and related aspects of an investment in the Shares.

The risk factors discussed in this section are of equal importance and are separated into categories for ease of reference only.

Risks Relating to the Company's Business

The Company's business is highly dependent on an industry that is characterized by rapid technological changes, such that it must be able to adapt to new technologies and be flexible to customer needs in order to remain competitive.

The pace of innovation in the consumer electronics industries is high. In order to remain competitive, the Company must adapt to new technologies required by the Company's customers. The Company must have the engineering capability for product development to meet the Company's clients’ needs.

The demand for the Company’s solutions is derived from the demand of end customers particularly for end-use applications in the computing, consumer electronics, and smart home appliances industries. These industries have historically been characterized by rapid technological change, evolving industry standards, and changing customer needs. There can be no assurance that the Company will be successful in responding to these industry demands. New services or technologies may also render the Company’s existing services or technologies less competitive. If the Company does not promptly take measures to respond to technological developments and industry standard changes, the eventual integration of new technology or industry standards or the eventual upgrading of its facilities and production capabilities may require substantial time, effort, and capital investment.

23 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION In response to a very dynamic operating environment and intense industry competition, the Company focuses on high-growth/high-margin specialized product niches, diversifies its markets and products, engages in higher value added services, improves its cost structure, and pursues strategies to grow existing accounts.

The Company depends on key EMS customers and the industry where the Company operates does not serve, generally, firm or long-term volume purchase commitments.

The Company currently serves a single customer, manufacturing HDD PCBA and external HDD products while its Subsidiary has 3 main customers for which it manufactures calculators, smart home appliances, and smart beauty products. As is customary in the Company's industry, the Company is not a party to any long-term sale and purchase agreements with its EMS customers. The loss of one or more of these customers or reduction or delay in their orders would have a material adverse effect on the Company’s results of operations and financial conditions.

Customers may also place lower than expected orders, cancel existing or future orders or change its production quantities which could negatively affect the sales volume of the Company.

The Company also makes significant investment decisions, including determining the levels of business that it will seek and accept, capacity expansion, personnel needs, and other resource requirements, which are ultimately based on estimates of customer long-term requirements. However, the rapid changes in the demand for its products reduce its ability to accurately estimate the long-term requirements of its customers. Thus, there is the risk that resource investments are not optimized at a certain period.

In order to manage the effects of these uncertainties, the Company through NKG has established long term relationships with its customers by providing quality technical service and working closely as a team to continuously create competitive advantages for both parties. Further, the Company requires its customers to provide demand forecasts which are regularly updated to enable the Company and its Subsidiary to manage their manufacturing requirements. Meanwhile, the Company has also committed in expanding its new customer base to mitigate the dependency on particular customers. At the same time, the Company has continued to develop new products as well as broaden its market base by embarking on new industries in order to reduce the risk of dependency upon its major customers.

Delay in the delivery of raw materials or defect in the raw materials supplied to the Company may materially and adversely affect the quality of the Company's products and the Company's business operations.

Supplies of raw materials are subject to a variety of factors that are beyond the Company's control, including interruptions in the supplier’s business operations, market supply and demand, industry conditions and overall economic conditions. Whereas, the quality of raw materials is dependent on the suppliers’ production capabilities, production facilities and quality control systems.

The Company's ability to complete a customer’s purchase order on time is dependent on the timely delivery and the quality of raw materials. However, there is no assurance that the Company's suppliers will be able to supply and deliver the required raw materials to the Company in a timely manner or that the raw materials that are supplied to the Company will not be defective or sub-standard.

Any delay in the delivery of raw materials or any defect in the raw materials supplied to the Company may materially and adversely affect or delay the Company's production schedule and, if the Company cannot secure raw materials of similar quality and at reasonable prices from alternative suppliers in a timely manner or at all, the Company may not be able to deliver the Company's products to the Company's customers on time. In such circumstances, the Company may lose its customers’ loyalty and confidence and damage its reputation. Further, the Company's results of operations and financial condition may be materially and adversely affected.

To the extent possible, the Company works closely with its customers to properly estimate the latter’s production requirements and with its suppliers to ensure that the Company would in turn have sufficient materials to fulfil such customers’ production requirements. Further, the Company ensures that there are back up suppliers or manufacturers for customer-supplied components or components supplied by customer-nominated suppliers to mitigate uncertainties in its supply chain. The Company has also established supplier certification and development programs designed to assess and improve its suppliers’ capability in ensuring uninterrupted supply of components to the Company.

24 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Considering that the procurement and production plans are prepared based on the forecasts of the customers’ demands, which may change based on the market conditions affecting its customers, the Company has created teams and established a system to constantly monitor the demand and material markets conditions in order to efficiently and effectively respond to its customers’ needs.

The Company may be exposed to risks of inventory obsolescence, decline in inventory value, significant inventory write-downs or write-offs and working capital tied up in inventories.

The Company may be exposed to risks of inventory obsolescence because of rapidly changing technology and customer requirements. Inventory obsolescence may require the Company to write down its inventory to the lower of cost or net realizable value which could adversely impact the Company's operating results.

If the Company fails to effectively manage the level of its inventories, the Company may experience a heightened risk of inventory obsolescence, a decline in inventory value and significant inventory write-downs or write-offs. Any of the said circumstances may materially and adversely affect the Company's financial condition and results of operations.

The Company is cognizant of these risks and accordingly exercises due diligence in material requirements planning.

To mitigate these risks, the Company works closely with its customers to plan its own procurement and production. The Company requires its customers to provide demand forecasts which are regularly updated to enable the Company to manage its manufacturing and inventory requirements and reduce excess purchases of unnecessary raw materials. The Company also developed a team and established a system which constantly monitors the demands and inventory levels in order to respond to customer’s needs efficiently. The Company has adopted a made-to-order method as a manufacturing policy. Raw material and obsolete inventories are evaluated from time to time and recorded in accordance with accounting standards to properly and timely determine its inventory levels. Generally, the Company writes-off unused inventories within two (2) years from the time of acquisition.

The Company may be exposed to liquidity risk from delayed payments of customers, as well as credit risks on its receivables from customers.

The Company may encounter difficulty with its cash flows due to delayed payments from its customers, which in turn may affect the Company's working capital cycle. The Company is also exposed to credit risks due to customers who are unable to fully settle amounts due for services and products delivered by the Company, as well as other claims owed to the Company.

To mitigate these risks, the Company has established well-defined credit policies and procedures which is consistent with sound credit practices and industry standards. The Company only trades with recognized reputable, competent, reliable and creditworthy third parties or customers who passed its credit evaluation and standards. In its credit evaluation, the Company assesses the customer’s overall credit strength based on key financial and credit characteristics such as financial stability, operations, focus market and trade references. All customers who wish to trade on credit terms are likewise subject to credit verification procedures. Thus, the current customers of the Company are all well-known international companies, who have not incurred delays in payment based on its past experiences.

The Company is required to maintain governmental approvals.

As a PEZA-registered entity, the Company is required to submit certain periodic reports to PEZA such as annual reports, quarterly reports, and audited financial statements. They are also required to submit quarterly, semi- annual, and annual reports to the Department of Energy and Natural Resources as part of the requirements in the Environmental Compliance Certificate issued to it. The Company's failure to comply with these reportorial and with any other requirements or regulations of the foregoing government agencies could expose the Company to penalties as well as the revocation of its registrations.

The Company has established specialized units which are responsible for monitoring and ensuring compliance with PEZA-related requirements. As of the date of this Prospectus, the Company is in compliance with all of its reportorial obligations and has never been cited for any violation.

25 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

The Company’s industry is dependent on the continuous growth of outsourcing by ODMs.

The Company belongs to an industry that is dependent on the strong and continuous growth of outsourcing in the computing, consumer electronics, and industrial electronics industries where customers choose to outsource production of certain components and parts, as well as functions in the production process. A customer’s decision to outsource is affected by its ability and capacity for internal manufacturing and the competitive advantages of outsourcing.

Future growth in the Company's revenue depends on new outsourcing opportunities in which it assumes additional manufacturing and supply chain management responsibilities from its customers. To the extent that these opportunities do not materialize, either because the customers decide to perform these functions internally or because they use other providers of these services, the Company’s future growth could be limited.

To mitigate this risk, Company is committed to grow orders from existing customers and expand its customer base.

The volatility in the price of key components and the availability of supply used by the Company in its production process could affect its profitability.

The Company’s production depends on obtaining adequate supplies of components on a timely basis. The Company purchases its components from a limited number of component manufacturers which can satisfy the Company's quality standards and meet its volume requirements.

Key components for products being manufactured by the Company and KPPH include ICB, PCB, LCD, heat matrix and bare board, among others.

From time to time, periodic shortages of such components have occurred. A shortage in any of these key components would likely increase their prices and would depress the Company's margins to the extent that the Company cannot pass these higher component prices to its customers. In addition, any shortage in a key component could limit the number of units the Company can produce. The Company believes that these shortages are cyclical and there can be no assurance that shortages of key components will not occur in the future or that any such shortages will not have a material adverse effect on the operations and financial conditions of the Company.

In order to mitigate risks, the procurement risk of key components of the Company's EMS business is borne by its customers. The Company works closely with its customers on price forecasts of raw materials and any projected material shortage or price increases to enable its customer to take these information into consideration in their demand forecast to avoid delays in or increases in the costs of manufacturing the products. The Company also continuously evaluates its manufacturing process to reduce costs and search for alternative sources of raw materials.

For its ODM product, the Company adopts a strategy of maximizing design sharing and recognizing multiple supply sources to reduce risks.

The Company also established a procurement center to ensure the stability of shipping schedule among qualified suppliers while minimizing the exposure of the Company to concentration risk on a particular supplier. In addition, for the materials which the Company constantly requires and which prices changes during the year, the Company purchase its whole year requirement during the period when such material is at its lowest price point.

The Company is exposed to risks of product returns and replacements and may be subject to claims in respect of product liability, which may materially and adversely affect the Company's business performance as well as the Company's customers’ confidence in the quality of the Company's products. The Company may be subject to reputation and financial risks due to product quality and liability issues.

The quality of the Company's products is crucial to the success of the Company's business. The Company's contracts with its customers typically include warranties that the products the Company delivers will be free from defects and will perform in accordance with agreed upon specifications. To the extent that the products the Company ships to its customers do not, or are not deemed to, satisfy such warranties, the Company could be liable for repairing or replacing any defective products, or, in certain circumstances, for the cost of effecting a recall of all products which might contain a similar defect, as well as for consequential damages. Any

26 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION reimbursement of a substantial amount of repair cost or any large-scale product recall or replacement may not only damage the Company's reputation in the industry and erode customers’ confidence in the quality of the Company's products, but also materially and adversely affect the Company's business, financial condition and results of operations.

In order to prevent or avoid a potential breach of warranties which may expose the Company to liability, the Company performs a detailed review and documentation of the manufacturing process that is verified, audited and signed-off by the customers. In addition, customers are encouraged, and in some cases, required to perform official audits of the Company’s manufacturing and quality assurance processes, to ensure compliance with specifications. The Company works closely with customers to define customer specifications and quality requirements, and follow closely these requirements to mitigate future product liability claims. The Company also insures itself on product liability and recall on a global basis thru NKG. By having manufacturing facilities in several countries, including the United States of America, Mexico, Brazil, China and other countries in South Asia, NKG would be able to utilize the available facilities to support the needs of the Company in case of product liability and recall.

Further, the Company has set up a Quality Assurance Centre which strictly examines the quality of raw materials prior to the deployment of the same to the production lines and the quality of the finished products before the same is shipped to the customer in order to protect the Company's reputation. In addition, materials which are provided and consigned by the customers to the Company for production of their own products are also subjected to the same quality measures to minimize the problems encountered by the Company when such materials are used later in the manufacturing process.

The Company may be subject to liability in connection with industrial accidents at its manufacturing sites.

The Company conducts a wide range of manufacturing and production activities in the Company's manufacturing sites and industrial accidents may occur. Any such industrial accidents may disrupt production activities and subject the Company to claims by or potential liabilities to the Company's employees or third parties as well as government penalty. Any of the foregoing events could have a material adverse effect on the Company's financial condition and results of operations.

To mitigate this risk, the Company continuously identifies ways to apply advanced technologies to monitor and eliminate potentially hazardous workplace practices. An internal professional assessment team and a labor supervision committee regularly conduct screening and monitoring of the Company's manufacturing facilities to detect and prevent the occurrence of hazards in the workplace. In addition, the Company undertakes periodic risk evaluation and provides work-related safety education and training to employees. The Company also employs automation in its manufacturing operations to minimize human intervention which reduces their exposure to hazards.

The Company's insurance coverage may not be sufficient to cover all risks involved in its business operations.

The Company's operations are subject to hazards and risks typically associated with manufacturing operations which may cause serious injury to person or damage to property. There is no assurance that the Company's current insurance coverage will be able to cover all types of risks involved in the Company's business operations, or be sufficient to cover the full extent of loss or liability for which the Company may be held liable. Any event that is not insured and any loss or liability that exceeds the limit or is excluded from the scope of the Company's existing insurance policies may materially and adversely affect the Company's business, results of operations and financial condition.

The Company continues to identify all hazards and risks associated with its manufacturing operations and secure appropriate insurance to cover such risks.

Any slowdown of the consumer electronics industry may materially and adversely affect the Company's results of operations, financial condition and business prospects.

As an EMS provider specialising in the manufacturing and sales of customised consumer electronic components and products, the Company's business performance depends, to a large extent, on the performance and condition of the consumer electronics industry. The consumer electronics industry may experience slowdown or downturn due to market or industry conditions, global economic environment or other factors beyond the

27 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Company's control. Any decrease in the demand for consumer electronics devices may reduce the demand for the Company's products. In such circumstances, the Company's sales may decline and the Company's results of operations, financial condition and business prospects may be materially and adversely affected.

To mitigate this risk, the Company ensures that it manufactures a diverse mix of products for its various customers. At present, the Company manufactures four categories of products: HDD, calculators, smart home appliances and smart beauty products. The Company is also focusing on developing, in cooperation with the NKG, its own brand products including 3D printer, smart speaker and wearable device.

The Company’s results of operations depend on its ability to keep pace with product innovation and changes in technology.

Consumer electronics have short product cycles due to frequent product introductions, rapidly changing technology and evolving industry standards. The Company’s success will depend in part on its ability to keep pace with technological developments and emerging industry standards and to respond to customer requirement by enhancing its current products and developing and introducing new products. There can be no assurance that the Company will be able to continue to develop new products as a result of its R&D activities or that it will keep pace with the technological changes taking place in the market. Failure to anticipate or respond rapidly to advances in technology and to adopt the Company’s products appropriately would have a material adverse effect on the Company’s financial conditions, results of operations and future prospectus.

The products currently being manufactured by the Company does not generally involve rapid change like other electronic products. Nevertheless, to mitigate this risk, the Company is continuously evaluating its existing products to introduce innovations in both the software and hardware components of its products.

The Company may be involved in intellectual property disputes.

The Company’s business depends in part on its ability to provide customers with technologically sophisticated products. The Company’s failure to protect the intellectual property of its customers exposes it to legal liability, loss of business to competition and could hurt customer relationships and affect its ability to obtain future business. It could incur costs in either defending or settling any intellectual property disputes.

The Company protects its customers' intellectual properties which comes into its possession in manufacturing the products by ensuring that only those employees who need to know the same would have access to such information. Further, in relation to the manufacturing process of the Company, it ensures that no single employee have access to the entire design of its facilities.

Unexpected disruptions to the Company's production facilities or production process may materially and adversely affect the Company's business operations.

The Company's business operations are heavily dependent on the smooth operations of its production facilities. Any unexpected disruption to the Company's production facilities as a result of machine breakdown or malfunction or power failure may cause a production halt or delay, which may affect its production schedule and prevent the Company from completing customers’ purchase orders on time. The Company may lose customer loyalty and confidence as a result. Furthermore, the Company's production volume and the utilization rates of its production facilities may be materially and adversely affected, which may result in a decline in its gross profit margin and profitability. The Company cannot assure that there will be no machine breakdown or malfunction or power failure at its production facilities in the future. Any such circumstances may materially and adversely affect the Company's business performance and results of operations.

In addition, the Company's production process may be disrupted due to (i) natural disasters such as typhoons, earthquakes and floods; (ii) political instability, riots, civil unrest and terrorist attacks; (iii) outbreak of infectious diseases such as Severe Acute Respiratory Syndrome (SARS), avian influenza (commonly known as the bird flu), Middle East respiratory syndrome coronavirus (commonly known as MERS-CoV) or the emergence of another similar disease in the Philippines such as the Zika virus; and (iv) other events that are beyond the Company's control. The Company may experience substantial loss as a result of disrupted production process and business operations, including loss of revenue. The Company may also need to incur additional cost to repair or replace any damaged machinery or equipment. In these circumstances, the Company's results of operations and financial condition may be materially and adversely affected.

28 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION The Company recognizes that its operations may be affected by natural disasters, and has continuously assessed the impact of such risks in its operations. Based on the foregoing, the Company has set up prevention plan which includes emergency related trainings for its employees on a regular basis. In addition, the Company has also coordinated with its parent company and its affiliate whose manufacturing facilities may be used to provide immediate support to the affected production facility of the Company.

The Company is exposed to the risk of industrial or labor disputes.

More than half of the Company’s workforce consists of contractual employees. These are the direct employees of the Company's subcontractors who perform specific services or certain aspects of the manufacturing process. Such arrangements involve a "trilateral relationship" among: (i) The Company, as the principal who decides to farm out the job, work or service to a contractor; (ii) the contractor who has the capacity to independently undertake the performance of the service; and (iii) the contractual workers engaged by the contractor to accomplish the job, work, or service for the Company.

Under the Labor Code of the Philippines, the Company, as principal in the contracting relationship, is liable as an indirect employer to the contractual employees, in the same manner and extent that it is liable to its own employees. Such liability is to the extent of the work performed under the contract and arises when the contractor fails to pay the wages of its employees or violates any provision of the Labor Code. The principal can then seek reimbursement from the contractor/agency.

To date, there are no pending labor-related claims filed by any contractual employee against the Company. Nevertheless, the Company continues to be exposed to the risk of industrial or labor disputes. The occurrence of such events could have a material adverse effect on the Company’s business, financial condition, or results of operation. Regardless of the outcome, these disputes may lead to legal or other proceedings and may result in substantial costs, delays in the subsidiaries' development schedule, and the diversion of resources and management’s attention.

To mitigate this risk, the Company continues to review and evaluate new labor-related laws and regulations against its existing policies in order to ensure its compliance with the changing labor-related laws. Once the Company determines that its human resource policies need to be updated to comply with new regulations, the Company’s Human Resource Department take quick positive actions to implement such new regulations and ensure immediate compliance by the Company.

The Company is subject to extensive environmental, occupational health and safety laws, regulations, government policies, and compliance with these laws, regulations and policies may be costly.

The Company's business operations are subject to various environmental, occupational health and safety laws, regulations and government policies promulgated by the Government. See “Regulatory and Environmental Matters” on page [104] of this prospectus for further details.

The environmental, occupational health and safety laws, regulations and government policies applicable to the Company's business operations and products are constantly evolving and the Company cannot predict when or how they will be amended, nor the consequence or impact thereof.

There is no assurance that the Government or its relevant administrative agencies will not impose additional or more stringent laws, regulations or government policies in the future, which may subject the Company to more onerous obligations. Any change or amendment to these laws, regulations or government policies may require the Company to incur substantial financial or other resources to adjust its production process, introduce new preventive or remedial measures, purchase new pollution control equipment and update the Company's compliance and monitoring systems in order to ensure compliance, which may have a negative impact on the Company's results of operations and financial condition.

The Company continues to review and evaluate new environmental, occupational and safety compliance-related laws and regulations against its existing policies in order to ensure its continued compliance. The Company have designated employees who are tasked to monitor the Company’s compliance with such laws.

Failure to sustain the level of support from NKG and retain the services of the Company's key personnel may adversely affect the Company's results of operations.

29 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION The Company's success to date has largely been attributable to the contributions, commitment and experience of the Company's management team and key employees, most of whom are members of the NKG executive management team. In particular, their familiarity with the Company’s business operations and their experience and expertise in the EMS and ODM industry harnessed through the more than forty years of operational experience of NKG. There can be no assurance that the Company will sustain the same level of support from NKG in the future. There is also no assurance that its current management team and key employees will continue to provide management oversight to the Company. If there is any significant or material change to the composition of the Company's key management team, the Company may not be able to recruit experienced or qualified personnel in a timely manner or at all, and may need to incur additional cost and resources in the recruitment and training of new personnel.

To mitigate this risk, the Company is investing in training and developing the management and operational skills of its employees in the Philippines.

There is no assurance that the Company's business strategies and future plans will be successfully implemented.

The successful implementation of the Company's business strategies and future plans will depend on various factors, including but not limited to the Company's ability to (i) maintain its strong automation engineering and advanced automation capability; (ii) enhance real-time quality management system and virtual factory capability; (iii) further develop its design, research and development capabilities; (iv) maintain and further expand its certifications to the latest safety, EMC, CSR and quality system standards; (v) leverage and taking advantage of its membership with a leading global EMS and ODM manufacturing group with a global presence and proven superior technical expertise, competence and resources in delivering quality solutions and products to customers worldwide; and (vi) take advantage of the vertical integration of its supply chain. There is no assurance that the Company will be able to successfully implement its business strategies or future plans. Even if the Company's business strategies or future plans are implemented, there is no assurance that they will increase the Company's market share or enhance its market position. The Company's results of operations and financial position may be materially and adversely affected if its business strategies or future plans are not successfully implemented.

To mitigate this risk, the Company will continuously evaluate its strengths and the risks to which its operations is exposed to and accordingly revise its key strategies to take advantage of its strengths and mitigate if not to eliminate the negative impact of the risks on its operations.

The Company engages independent third party logistics service providers to deliver the Company's products, and their failure to provide timely and high quality logistics services to the Company's customers may adversely affect the Company's brand image and financial condition.

The Company engages independent third-party logistics service providers to deliver the Company's products to its customers either by land, by sea or by air freight. Delivery disruptions such as transportation bottlenecks, inclement weather and natural disasters, social unrest, vehicle breakdown, labour strikes or other circumstances beyond the Company's control may result in delayed or lost deliveries. There is no assurance that the logistics service providers will be able to deliver the Company's products according to the delivery schedule or provide high quality services to the Company's customers. If the logistics service providers fail to deliver the Company's products to its customers on time or if the Company's products are damaged in the course of delivery, the Company's customers may refuse to accept its products and the Company's reputation and brand image may suffer as a result. The Company may also be subject to penalties in the event of late delivery, which may materially and adversely affect its financial position. In addition, any significant increase in the cost of transportation, such as fuel cost, will increase the Company's operating expenses.

To mitigate the risk, the Company engages third-party logistics providers designated by its customers, and to the extent possible, these contracts are made between such third-party logistics provider and the customer.

This risk is further mitigated by the Company’s arrangement with its customer wherein the customer handles the logistics with respect to the delivery of key components to the Company’s warehouse and the delivery of the finished products from the Company’s warehouse to its own warehouse. More than half of the products produced by the Company are made on ex-works arrangement. The Company also evaluates and engages different logistic service providers and utilizes different Philippine ports to mitigate this risk.

30 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Risks Relating to the Philippines

The Company's operations are concentrated in the Philippines, exposing it to business, political, operational, financial, and economic conditions affecting the Philippines.

All of the Company's business operations are conducted in the Philippines. The results of operations, financial condition and prospects are subject to a significant degree to the general state of the Philippine economy. There is no assurance that there will be no occurrence of an economic slowdown in the Philippines. Factors that may adversely affect the economy include but are not limited to:

• decreases in business, industrial, manufacturing, or financial activity in the Philippines or in the global market, • scarcity of credit or other financing, resulting in lower demand for products and services, • the sovereign credit ratings of the country, • exchange rate fluctuations, • a prolonged period of inflation or increase in interest rates, • changes in the Government's taxation policies, • natural disasters, including typhoons, earthquakes, fires, floods, and similar events, • political instability, terrorism, or military conflict, and • other regulatory, political, or economic developments in or affecting the Company

Changes in law including unexpected changes in regulatory requirements, affect the Company’s business plans, such as those relating to labor, environmental compliance, and product safety. Delays or difficulties, burdens, and costs of compliance with a variety of laws, including often conflicting and highly proscriptive regulations also directly affect the Company’s business plans and operations.

Increases in duties and taxation and a potential reversal of current tax or other currently favorable policies encouraging foreign investment or foreign trade by host countries may lead to the imposition of government controls, changes in tariffs, or trade restrictions on component or assembled products. This, in turn, may result to adverse tax consequences, including tax consequences which may arise in connection with inter-company pricing for transactions between separate legal entities within a group operating in different tax jurisdictions, as well as increases in cost of duties and taxation.

On December 17, 2017, President Rodrigo Duterte signed into law Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act (“TRAIN”) which commenced implementation on January 1, 2018. The TRAIN which contains package 1 of the tax reforms increased the excise tax on fuel and other petroleum products, capital gains tax and the stock transaction tax on sale of shares, among others. Package 2 of the TRAIN is currently under review, package 2 of the TRAIN is studying corporate income tax rates and the tax incentives such as income tax holidays currently being enjoyed by certain entities like the Company who is registered with the PEZA. Any reduction in or the removal of the tax incentives currently enjoyed by the Company may adversely affect the Company’s business and financial condition.

Actions which may be taken by foreign governments pursuant to any trade restrictions, such as “most favored nation” status and trade preferences, as well as potential foreign exchange and repatriation controls on foreign earnings, exchange rate fluctuations, and currency conversion restrictions may adversely affect the Company’s business and financial condition.

Under existing foreign exchange controls in the Philippines, as a general rule, Philippine residents may freely dispose of their foreign exchange receipts and foreign exchange may be freely sold and purchased outside the Philippine banking system. Restrictions exist on the sale and purchase of foreign exchange in the Philippine banking system. In the past, the Government has instituted restrictions on the ability of foreign companies to use foreign exchange revenues or to convert Philippine pesos into foreign currencies to satisfy foreign currency- denominated obligations, and no assurance can be given that the Government will not institute such or other restrictive exchange policies in the future.

Any political or social instability in the Philippines could adversely affect the Company’s business operations.

The Philippines has from time to time experienced political and military instability. In December 2011, the Philippine House of Representatives initiated impeachment proceedings against the late Renato Corona, Chief

31 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Justice of the Supreme Court of the Philippines for allegedly issuing improper decisions that favored former President Gloria Macapagal-Arroyo, as well as failure to disclose certain properties, in violation of rules applicable to all public employees and officials. In May 2012, the Senate found the late Chief Justice Corona guilty of betraying the public trust and committing culpable violation of the Constitution due to his failure to disclose his statement of assets, liabilities, and net worth as required under the applicable laws and rules. In July 2013, a major Philippine newspaper exposed a scam relating to the diversion and misuse of the Priority Development Assistance Fund by some members of the Congress through pseudo-development organizations headed by Janet Lim Napoles, which prompted a number of investigations, including one in the Senate, on certain individuals. Subsequently in September 2013, cases of plunder and malversation of public funds were filed with the Office of the Ombudsman against Janet Lim Napoles, three Senators, a few members of the House of Representatives and other Government personnel. In July 2014, a valid impeachment complaint, endorsed by three representatives from the House of Representatives, against President Benigno S. Aquino, III over his controversial budget spending program, the Disbursement Acceleration Program, was filed, although subsequently dismissed. In July and December 2014, complaints for plunder and violations of the Anti-Graft and Corrupt Practices Act of the Philippines were filed against Vice President Jejomar C. Binay, Sr. and his son, Makati City Mayor Jejomar Erwin S. Binay, Jr. On August 2, 2017, two impeachment complaints were filed in the House of Representatives against sitting Chief Justice of the Supreme Court Maria Lourdes Sereno for culpable violation of the Constitution, betrayal of public trust, corruption, and other high crimes. On September 13, 2017, the complaint filed by Atty. Lorenzo Gadon was found sufficient in form and in substance by the House of Representatives Committee on Justice. On November 23, 2017, the House of Representatives Committee on Justice began hearings to determine probable cause in the impeachment complaint against Chief Justice Sereno. The hearings are set to be terminated and the committee report to be submitted for plenary vote of the House of Representatives by March 2018, according to the Chairman of the House Committee on Justice Oriental Mindoro Rep. Reynaldo Umali. An affirmative one-third vote is needed before the impeachment complaint will be elevated to the Senate for trial. On March 5, 2018, the Solicitor General filed a Quo Warranto petition before the Supreme Court to remove Chief Justice Sereno, questioning the validity of the Chief Justice’s appointment and alleging that she is unlawfully holding her post due to her alleged failure to fully disclose her wealth. On May 11, 2018, the Supreme Court of the Philippines voted to grant the Quo Warranto petition of the Solicitor General to remove the Chief Justice of the Supreme Court.

Moreover, between the beginning of the term of President Rodrigo R. Duterte’s and December 31, 2017, more than 12,000 alleged drug dealers and users have been killed, including an estimated 4,000 during police operations and the remainder by “unidentified gunmen,” according to Human Rights Watch. In May 2017, in response to the armed takeover of Marawi City by militants, President Duterte declared martial law over the island of Mindanao. Martial law persists in this region, with the Philippines Congress having reauthorized it to continue throughout 2018. Political figures have also pushed for constitutional change and a shift to a federal parliamentary form of government.

There is no assurance that the political environment in the Philippines will stabilize and any future political instability could adversely affect the Company’s business, financial condition and results of operations.

The Philippine Presidential elections were held on May 9, 2016, and any political instability resulting from such elections could have an adverse effect on the Company’s business operations.

On June 30, 2016, Rodrigo R. Duterte assumed the position of President of the Philippines after the presidential elections held on May 9, 2016 with a mandate to advance his “Ten-Point Socio-Economic Agenda” focusing on policy continuity, tax reform, infrastructure spending, and countryside development, among others. The Duterte government has initiated efforts to build peace with communist rebels and other separatists through continuing talks with these groups. However, on November 22, 2017 Presidential Adviser on the Peace Process Jesus Dureza announced that the government will no longer hold peace talks with the communist rebels on orders of President Duterte. On December 5, 2017, President Duterte signed Proclamation No. 374 declaring the Communist Party of the Philippines–New People’s Army (“CPP-NPA”) as a designated and identified terrorist organization under Republic Act No. 10168, the Terrorism Financing Prevention and Suppression Act of 2012. After declaring the CPP-NPA as a terrorist group on January 27, 2018, President Duterte declared that he would go after left-wing organizations, accusing them of being legal fronts for communists.

President Duterte has also advocated for a shift to a federal-parliamentary form of government. In December 2016, President Duterte signed Executive Order No. 10 creating a 25-member consultative committee to study and review the provisions of the 1987 Constitution. On January 25, 2018, President Duterte appointed 19 of the 25 members of the consultative committee. On January 16, 2018, the House of Representatives adopted a

32 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION resolution to convene as a constituent assembly to amend the 1987 Constitution. The proposals, among others, include a shift to a federal-parliamentary form of government and the division of executive powers between a President (as the head of state) and a Prime Minister (as the head of government). As of January 24, 2018, the Senate has yet to pass a similar resolution to form a constituent assembly. A disagreement between the two houses of Congress still remains as to the voting procedure in the constituent assembly including on whether the House and the Senate must vote jointly or separately. This issue has not been resolved and is expected to reach the Supreme Court.

There can be no assurance that the Duterte administration will continue to implement the economic policies favored by the previous administration. Major deviations from the policies of the previous administration or fundamental change of direction, including with respect to Philippine foreign policy, may lead to an increase in political or social uncertainty and instability. The President’s unorthodox methods may also increase the risks of social and political unrest. Any potential instability could have an adverse effect on the Philippine economy, which may impact the Company’s business, prospects, financial condition and results of operations.

Continued terrorist activities and high-profile violent crime in the Philippines may destabilize the country, adversely affecting the Company’s business environment.

Since 2000, the Philippines has been subject to a number of terrorist attacks and conflict between the Philippine army and terrorist organizations in certain parts of Southern Philippines. In its Country Reports on Terrorism 2016, the US State Department has identified the Abu Sayyaf Group (“ASG”), Jemaah Islamiyah, and Communist Party of the Philippines-New People’s Army (“CPP/NPA”) as among the Foreign Terrorist Organizations operating in the Philippines. The same report states that ASG remained active in 2016 and was responsible for numerous attacks on civilians and government targets. Previous ASG incidents include a July 2014 attack that claimed the lives of 21 civilians. In a video that surfaced on social media in July 2014, a senior leader of the ASG, Isnilon Hapilon, swore allegiance to the Islamic State in Syria or Iraq.

In January 2015, a clash took place in Mamasapano in Maguindanao province between the Special Action Force (“SAF”) of the Philippine National Police and the Bangsamoro Islamic Freedom Fighters (“BIFF”) and the Moro Islamic Liberation Front (“MILF”), which led to the deaths of 44 members of SAF, 18 from the MILF, five from the BIFF, and several civilians, including Zulkifli Abdhir, a Malaysian national included in the US Federal Bureau of Investigation’s most wanted terrorists. In April 2016, another gun battle took place in Tipo- tipo Basilan Mindanao, between the government group from the 44th Infantry Battalion, the 4th Special Forces Battalion and 14 Cavalry groups and the Abu Sayyaf terrorist group killing at least 19 soldiers with at least another 55 wounded. In addition to the September 2016 Davao city night market bombing, Dawlah Islamiyah Lanao (“DIL”) fighters temporarily seized the town center of Butig in Mindanao, resulting in six days of fighting that left dozens of DIL fighters dead. In May 2017, militant groups linked to ISIS, including ASG, attacked and took control of parts of Marawi City on the island of Mindanao, leading President Duterte to declare martial law in Mindanao. In December 2017, the Philippine Congress voted to extend martial law in Mindanao until the end of 2018, which was upheld by the Supreme Court.

To reduce terrorism related incidents, President Duterte, according to the US State Department’s Country Reports on Terrorism 2016, has pursued a strategy focused on establishing regional autonomy through a constitutional shift to a federalist model and pursuing parallel peace negotiations with the MILF and the CPP/NPA. The Government’s goal is to reduce radicalization and the attraction of terrorist groups by providing greater political and economic autonomy for Muslim-majority areas of Mindanao. These efforts have had limited success. In December 2017, the Government signed a proclamation officially declaring the CPP/NPA a terrorist organization. Notably, the Government has already convened a 19-member consultative commission headed by former Chief Justice Reynato Puno to review the 1987 Constitution particularly as regards provisions on the structure and powers of the government, local governance, and economic policies, among others, and to present recommendations on possible amendments to the Congress.

Continued conflicts between the Government and armed or terrorist groups could lead to further injuries or deaths of civilians and police or military personnel, which could destabilize parts of the country and adversely affect the country’s economy. An increase in the frequency, severity, or geographic reach of terrorist acts or violent crimes could also adversely affect the country’s economy. Any such destabilization and any other incidents of political or military instability may adversely affect the Company’s business, financial condition and results of operations.

33 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Territorial and other disputes with China and a number of Southeast Asian countries may disrupt the Philippine economy and business environment.

The Philippines, Vietnam and several Southeast Asian nations have been engaged in a series of longstanding territorial disputes with China and other Southeast Asian countries over certain territories in the West Philippine Sea, also known as the South China Sea. The Philippines’ efforts at bilateral talks with China failed, and thus the dispute remains unresolved. In January 2013, the Philippines initiated arbitral proceedings before a tribunal under the United Nations Convention on the Law of the Sea (“UNCLOS”), in which China refused to participate.

On June 20, 2015, the Government, through the Department of Foreign Affairs, issued a statement reiterating its serious concern that China’s reclamation and construction activities in a disputed part of the West Philippine Sea grossly violate the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea (“DOC”) and may serve to escalate the disputes and undermine efforts to promote peace, security, and stability. In the same statement, the Philippines called on China anew to heed calls from the region and the international community to exercise self-restraint in the conduct of activities pursuant to Paragraph 5 of the DOC. On May 17, 2016, outgoing President Aquino issued Memorandum Circular No. 94 s. 2016 creating a National Task Force for the West Philippine Sea, to secure the country’s sovereignty and national territory and to preserve marine wealth in its waters and the exclusive economic zone, thereby reserving use and enjoyment of the West Philippine Sea exclusively for Filipino citizens.

In July 2016, the UNCLOS tribunal rendered a decision stating that the Philippines has exclusive sovereign rights over the West Philippine Sea (in the South China Sea) and that China’s “nine-dash line” claim is invalid. Despite the decision, the Chinese Government has maintained its position that the Tribunal has no jurisdiction over the dispute, and thus, the decision is not binding on the Chinese Government. Recently, the Chinese Government successfully registered names for five undersea features found in the Philippine Rise (formerly Benham Rise) with the International Hydrographic Organization. This is despite the decision that the United Nations Commission on the Limits of the Continental Shelf had already granted the Philippines full territorial claim to the Philippine Rise in April 2012. While the Philippine Government downplays the Chinese names, the Philippines' central mapping agency is seeking the assistance of the Department of Foreign Affairs for the nullification of the Chinese names for underwater features from the International Hydrographic Organization- Intergovernmental Oceanographic Commission General Bathymetric Chart of the Oceans (“IHOIOC GEBCO”) Sub-Committee on Undersea Feature Names (“SCUFN”).

In the event that territorial disputes between the Philippines and other countries continue or escalate further, the Philippine economy may be disrupted and the Company’s business and financial standing may be adversely affected. In particular, further disputes between the Philippines and China may lead both countries to impose trade restrictions on the other’s imports. China may also seek to suspend visits by Chinese citizens to the Philippines, or Chinese citizens may choose not to the visit or do business in the Philippines as a result of these disputes.

Changes in foreign exchange control regulations in the Philippines may limit the Company’s access to foreign currency, and overseas shareholders may be subject to restrictions on repatriation of Pesos received with respect to the Shares.

Under existing foreign exchange controls in the Philippines, as a general rule, Philippine residents may freely dispose of their foreign exchange receipts and foreign exchange may be freely sold and purchased outside the Philippine banking system. Restrictions exist on the sale and purchase of foreign exchange in the Philippine banking system. In particular, a foreign investment must be registered with the BSP if the foreign exchange needed to service the repatriation of capital and the remittance of dividends, profits and earnings which accrue thereon is sourced from the Philippine banking system.

In the past, the Government has instituted restrictions on the ability of foreign companies to use foreign exchange revenues or to convert Pesos into foreign currencies to satisfy foreign currency denominated obligations. Moreover, the Monetary Board of the BSP, with the approval of the President of the Philippines, has statutory authority, in the imminence of or during a foreign exchange crisis or in times of national emergency, to (i) suspend temporarily or restrict sales of foreign exchange; (ii) require licensing of foreign exchange transactions; or (iii) require delivery of foreign exchange to the BSP or its designee banks. The Government has, in the past, instituted restrictions on the conversion of Peso into foreign currency and the use of foreign exchange received by Philippine residents to pay foreign currency obligations. The Company is not

34 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION aware of any pending proposals by the Government relating to such restrictions; moreover, the Government has from time to time made public pronouncements of a policy not to impose restrictions on foreign exchange.

Nonetheless, there can be no assurance that the Government would not institute such or other restrictive exchange policies in the future, and any restrictions imposed in the future pursuant to such statutory authority could adversely affect the Company’s ability to source foreign currency to comply with its foreign currency- denominated obligations and adversely affect the ability of investors to repatriate foreign currency upon sale of the Shares or dividends or distributions relating to them.

The occurrence of natural disasters or other catastrophes, severe weather conditions, or outbreaks of contagious diseases may adversely affect the Philippine economy and disrupt the Company’s operations.

The Philippines has experienced a number of major natural catastrophes over the years, including typhoons, droughts, floods, volcanic eruptions and earthquakes that may materially disrupt and adversely affect the Company’s business operations. There can be no assurance that the occurrence of such catastrophes would not disrupt the Company’s operations in the future. The Company may experience substantial equipment or property loss as a result of any such catastrophes, and might not be able to rebuild or restore operations in a timely fashion. Moreover, damage caused by natural catastrophes could result in cancellation of flights, temporary closure of major roads and highways or other disruptions to transportation, which would prevent the Company from receiving necessary raw materials or from delivering customers’ orders in a timely manner or at all. Such natural catastrophes could also increase the costs of operations. Although the Company maintains third-party insurance coverage, there is no assurance such insurance coverage will fully compensate for all the damages and economic losses resulting from these catastrophes.

The Philippines may be subject to outbreaks of contagious diseases, such as Avian flu, Ebola, and MERS-CoV. In April 2015, the Government, through the Department of Health (“DOH”), issued a Bureau of Quarantine alert bulletin after a Filipino citizen tested positive for MERS-CoV before his departure from the United Arab Emirates and arrival to Manila. The said individual has tested negative in follow-up findings of the DOH Research Institute for Tropical Medicine. As of July 31, 2015, South Korea had reported a total number of 186 cases of MERS-CoV, while there were reports of two cases in Hong Kong and one case in Thailand. To date, while reported cases of MERS-CoV have decreased substantially worldwide in 2016 and 2017 and while there have been no indications of the presence of such diseases in the Philippines, the DOH continues to monitor disembarking passengers suspected to be carriers of MERS-CoV, Ebola or Avian flu. In August 2017, an outbreak of bird flu from a poultry farm in Central Luzon was confirmed, and the avian influenza strain was later found to be transmissible to humans. In response to the outbreak, restrictions on the transport and sale of birds and poultry outside a seven-kilometer radius surrounding the affected site were imposed. The Philippines has since been cleared of any human infection of the avian influenza virus. The possible outbreak of contagious disease or increases in severity in the Philippines, in view of the incidence of the disease in neighboring and other countries, may adversely affect the Philippine economy and economic activity in the region, and thus, have an adverse effect on the Company’s business, financial condition and results of operations.

The sovereign credit ratings of the Philippines may adversely affect the Company’s business.

Historically, the Philippines’ sovereign debt has been rated relatively low by international credit rating agencies. In 2013, however, the Philippines’ long-term foreign currency-denominated debt was upgraded by each of Standard & Poor’s, Fitch Ratings and Moody’s Investors Service to investment grade, with a further upgrade in May 2014 by Standard & Poor’s and in December 2014 by Moody’s. The upgraded sovereign credit ratings of the Philippines were re-affirmed by Standard & Poor’s, Fitch Ratings and Moody’s in 2015 and have continued to hold steady at the same levels. In 2017, Fitch Ratings and Moody’s confirmed their investment grade ratings of the Philippines with grades of BBB (stable) and Baa2 (stable), respectively. However, no assurance can be given that Standard & Poor’s, Fitch Ratings or Moody’s or any other international credit rating agency will not downgrade the credit ratings of the Government in the future. Any such downgrade could have an adverse impact on liquidity in the Philippine financial markets, the ability of the Government and Philippine companies, including the Company, to raise additional financing, and the interest rates and other commercial terms at which such additional financing is available.

Investors may face difficulties enforcing judgments against the Company.

It may be difficult for investors to enforce judgments obtained outside of the Philippines against the Company. In addition, a majority of the Company’s Directors and officers are residents of the Philippines, and all or a

35 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION substantial portion of the assets of such persons are located in the Philippines. As a result, it may be difficult for investors to effect service of process upon such persons, or to enforce against them judgments obtained in courts or arbitral tribunals outside the Philippines predicated upon the laws of jurisdictions other than the Philippines.

The Philippines is party to the United Nations Convention on the Enforcement and Recognition of Foreign Arbitral Awards, but it is not party to any international treaty relating to the recognition or enforcement of foreign judgments. Nevertheless, the Philippine Rules of Civil Procedure provide that a judgment or final order of a foreign court is, through the institution of an independent action, enforceable in the Philippines as a general matter, unless there is evidence that: (i) the foreign court rendering judgment did not have jurisdiction; (ii) the judgment is contrary to the laws, public policy, customs or public order of the Philippines; (iii) the party against whom enforcement is sought did not receive notice; or (iv) the rendering of the judgment entailed collusion, fraud, or a clear mistake of law or fact.

Corporate governance and disclosure standards in the Philippines may be less stringent than those in other countries.

There may be less publicly available information about Philippine public companies than is regularly made available by public companies in other jurisdictions. The SEC and PSE requirements with respect to corporate governance standards may also be less stringent than those applicable in other jurisdictions.

On November 22, 2016, the SEC issued SEC Memorandum Circular No. 19, approving the Code of Corporate Governance for Publicly-Listed Companies (the “CG Code for PLCs”), which is intended to promote the development of a strong corporate culture and keep the corporate community abreast with recent developments in corporate governance. The CG Code for PLCs took effect on January 1, 2017. Under the CG Code for PLCs, the SEC recommends publicly listed companies to have at least three independent directors, or such number as to constitute at least one-third of the members of the board, whichever is higher.

The Company has three independent Directors in compliance with the recommendation provided under the CG Code for PLCs after becoming publicly traded. Many other countries require more independent directors. Further, rules against self-dealing and those protecting minority shareholders may be less stringent or developed in the Philippines. Such potentially lower standards in certain areas of disclosure and corporate governance may materially and adversely affect the interests of the Company’s shareholders, particularly those of minority shareholders.

Volatility in the value of the peso against the US dollar and other currencies could adversely affect the Company’s financial condition and results of operations.

The value of the Peso against the US dollar has experienced volatility in recent years. Based on the published exchange rates of the BSP, as of March 31, 2018, the Peso had depreciated to ₱52.207 per US$1.00 from ₱50.194 per US$1.00 as of March 31, 2017 and ₱46.108 per US$1.00 as of March 31, 2016. As such, the BSP may intervene in the foreign exchange market to curb the negative effects of a strong currency. Reduced risk appetite for emerging market assets could also result in a decline in value of the Peso as investors move their portfolios out of emerging markets. Intervention in the currency markets as well as changes in demand for the Peso could result in volatility in the value of the Peso against the US dollar and other currencies.

Risks Related to the Offer and the Offer Shares

There can be no guarantee that the Offer Shares will be registered with the SEC and listed on the PSE, or that there will be no other regulatory action that could delay or affect the Offer.

Purchasers of Offer Shares will be required to pay for such Offer Shares on the Settlement Date, which is expected to be on [●]. Although the PSE is expected to approve the Company's applications to list the Offer Shares because the Listing Date is scheduled to occur after the Settlement Date, there can be no guarantee that listing will occur on the anticipated Listing Date or at all. Furthermore, there is no guarantee that the shares will be registered with the SEC. Delays in registration with the SEC and admission and the commencement of trading in shares on the PSE have occurred in the past. If the SEC does not approve the registration of the shares and the PSE does not admit the Offer Shares onto the PSE, the market for the Offer Shares would be illiquid and shareholders may not be able to trade the Offer Shares. This may materially and adversely affect the value of the Offer Shares.

36 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

There has been no prior market for the Shares, so there may be no liquidity in the market for the Offer Shares and the price of the Offer Shares may fall.

As there has been no prior trading in the Common Shares, there can be no assurance that an active market for the Offer Shares will develop following the Offer or, if developed, that such market will be sustained.

The Offer Price has been determined after taking into consideration a number of factors including, but not limited to, the Company's prospects, the market prices for shares of companies engaged in related businesses similar to ours and prevailing market conditions. The price at which the Common Shares will trade on the PSE at any point in time after the Offer may vary significantly from the Offer Price.

The Offer Shares may not be a suitable investment for all investors.

Each prospective investor in the Offer 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 the Company and its businesses, the merits and risks of investing in the Offer Shares and the information contained in this Prospectus;

 have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of the Company's particular financial situation, an investment in the Offer Shares and the impact the Offer Shares will have on the Company's overall investment portfolio;

 have sufficient financial resources and liquidity to bear all of the risks of an investment in the Offer Shares, including where the currency for purchasing and receiving dividends on the Offer Shares is different from the potential investor’s currency;

 understand and be familiar with the behavior of any relevant financial markets; and,  be able to evaluate (either alone or with the help of a financial advisor) possible scenarios for economic, interest rate and other factors that may affect the Company's investment and its ability to bear the applicable risks.

The market price of securities can and does fluctuate. The Offer Shares have not been publicly traded and the relative volatility and illiquidity of the securities market may substantially limit an investor’s ability to sell the Offer Shares at a suitable price or at a time they desire which may result to an investors’ investments in the Company to decline.

The market price of securities can and does fluctuate, and it is impossible to predict whether the price of the Common Shares will rise or fall or even lose all of its value. The market price of Common Shares could be affected by several factors, including:

 general market, political and economic conditions;  changes in earnings estimates and recommendations by financial analysts;  changes in market valuations of listed shares in general and other retail shares in particular;  the market value of the assets of the Company;  changes to Government policy, legislation or regulations; and,  general operational and business risks.

In addition, many of the risks described elsewhere in this Prospectus could materially and adversely affect the market price of the Common Shares.

In part as a result of the global economic downturn, the global equity markets have experienced price and volume volatility that has affected the share prices of many companies. Share prices for many companies have experienced wide fluctuations that have often been unrelated to the operating performance of those companies. Fluctuations such as these may adversely affect the market price of the Common Shares.

37 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Shareholders may be subject to limitations on minority shareholders rights.

The obligation under Philippine law of majority shareholders and directors with respect to minority shareholders may be more limited than those in certain other countries such as the United States or United Kingdom. Consequently, minority shareholders may not be able to protect their interests under current Philippine law to the same extent as in certain other countries. There can be no assurance that legal rights or remedies of minority shareholders will be the same, or as extensive, as those available in other jurisdictions or sufficient to protect the interests of minority shareholders.

The Philippine Corporation Code, however, provides for certain protective rights to minority shareholders by requiring a vote by the Company's shareholders representing at least two-thirds of its outstanding capital stock for certain corporate acts.

The Company may be unable to pay dividends on the Common Shares.

Dividends declared by the Company on its shares of stock are payable in cash or in additional shares of stock. The Company’s Board has approved the following dividend policy: for the first three (3) years after listing, commencing on 2019 until 2021, the Company will pay an annual cash dividend of ₱0.45, ₱0.50, and ₱0.55 per share, respectively. Beginning the year 2022, the Company will follow its general dividend policy which is to pay at least 30% of the Company's net income after tax from the preceding fiscal year, subject to cash flows and investment plans of the Company and its subsidiaries, as well as regulatory restrictions and other requirements. The Company’s Board, may, at any time, modify such dividend payout ratio depending upon the results of operations and future projects and plans of the Company and future protects and plans of the Company as desired that best fit for the Company.

Declaration of cash dividends by the Company requires the approval of the Board. The declaration of stock dividends by the Company requires the approval of its Board and the approval of stockholders representing at least 2/3 of the outstanding capital stock.

Risks Relating to Certain Statistical Information in this Prospectus

Certain information contained herein is derived from unofficial publications

Certain information in this Prospectus relating to the Philippines, the industries in which the Company competes, and the markets wherein the Company operates, including statistics relating to market size, are derived from various Government and private publications. This Prospectus also contains industry information which was prepared from publicly available third-party sources. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of that information is not guaranteed. The information contained in the Industry section may not be consistent with other information. Similarly, industry forecasts and other market research data, including those contained or extracted herein have not been independently verified by the Company, the Issue Manager and Sole Bookrunner, and Underwriters, or any of their respective affiliates or advisors, and may not be accurate, complete, up-to-date or consistent with other information compiled within or outside the Philippines. Prospective investors are cautioned accordingly.

Non-verification of Certain Information

The section of this Prospectus entitled “Industry” was not independently verified by the Company, the Issue Manager and Sole Bookrunner, and Underwriters, or any of their respective affiliates or advisors.

38 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

USE OF PROCEEDS

Based on the Offer Price of up to ₱[17.00] per Offer Share, the Company expects to raise gross proceeds amounting to approximately ₱[6,427] million from the Offer. After deducting the applicable underwriting fees and commissions and expenses for the Offer payable by the Company, estimated net proceeds will be ₱[6,100] million.

Expenses

The following are the estimated expenses to be incurred in relation to the Offer:

Firm Offer With Over- Only allotment Option

(₱ millions) (₱ millions) Total proceeds from the Offer Before Oversubscription [6,427] [6,765] Underwriting and selling fees (including fees to be paid to the Joint Lead Underwriters, Participating Underwriters and Issue Manager and Sole [161] [169] Bookrunner) IPO Tax [129] [135] Documentary Stamps Tax [4] [4] SEC registration, filing, research and listing fees [2] [2] PSE Processing and Listing Fees (including VAT) [22] [22] Estimated professional fees (including legal, audit, and financial advisory [5] [5] fees) Marketing and other miscellaneous expenses [1] [1] Total estimated expenses [324] [338] Estimated net proceeds from the Offer [6,103] [6,427]

The actual underwriting and selling fees and other Offer-related expenses may vary from the estimated amounts indicated. In the event that the Over-allotment Option is not exercised, it is deemed cancelled and the filing fee is forfeited.

The Company intends to use the net proceeds from the Offer, as follows: Estimated Estimated Amounts Percentage Timing of Use of Proceeds (in Billion ₱) (%) Disbursement

Facilities Expansion ₱ 3.1 51% 2018~2022 Capital Expenditure ₱ 1.1 18% 2018-2021 Debt Repayment ₱ 0.9 15% 2018 Research and Development ₱ 0.8 13% 2018-2022 Working Capital ₱ 0.2 3% 2018-2021 Estimated Net Proceeds ₱ 6.10 100%

In the event that the Offer proceeds are less than the expected amount, the Company intends to allocate the proceeds in order of priority as follows:

1. Facilities Expansion 2. Capital Expenditure 3. Research and Development 4. Working Capital 5. Debt Repayment

In the event that the actual expenses are more than the estimates, or the actual net proceeds are less than the projected net proceeds, the Company will utilize said net proceeds as set out in this Prospectus and will use

39 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION internally generated funds and/or bank loans to finance the shortfall, or delay or abandon one or more of the components of its plans.

Use of Proceeds

Facilities Expansion

The Company’s expansion program will entail the construction and development by KPPH of phases 2 and 4 of its FPIP manufacturing complex in Sto. Tomas, Batangas, which will add approximately [48,000] sq.m of manufacturing space. Additional manufacturing facilities will also be built in KPPH’s Lima Technology Center site. Approximately ₱1.88 billion will be allocated for the construction of these additional manufacturing and office buildings, as follows:

% Completion Estimated Timing of Disbursement (as of 31 July 2018) 2018 2019 2020 Total In ₱ thousand Q4 1H 2H 1H 2H FPIP Phase 2 82% 143,524 - - - - 143,524 FPIP Phase 4 19% 646,648 - - - - 646,648 Lima 0% 430,572 127,560 127,560 - - 685,692 New Site in FPIP 0% - - - 200,000 200,000 400,000 Total 1,220,744 127,560 127,560 200,000 200,000 1,875,864

The Company, through KPPH is also looking to enter into additional land leases within FPIP covering a land area of approximately 300,000 sq.m. for purposes of expanding its manufacturing capacity. The new site is intended for additional manufacturing and production facilities. Approximately ₱1.26 billion will be allocated for this purpose.

Estimated Timing of Disbursement 2019 2020 2021 Total

In ₱ thousand 1H 2H 1H 2H 1H 2H Land Lease 630,000 - - - 630,000 - 1,260,000

Capital Expenditure

As the Company and its Subsidiary expand their manufacturing capacity, such expansion will require the acquisition of new assembly equipment and machineries as well as the upgrading of existing facilities equipment to increase production capacity.

Approximately ₱844 million of the net proceeds will be allocated for the acquisition of production machineries such as SMT and assembly lines for storage, home appliance and calculator products. The remaining ₱243.7 million will be used for other capital expenditure requirements which include the purchase of computer software required for the Company’s production operations.

Estimated Timing of Disbursement

2018 2019 2020 2021 2022 Total In ₱ thousand Q4 1H 2H 1H 2H 1H 2H 1H 2H

CPPH - 120,000 120,000 - - 60,000 60,000 - - 360,000

KPPH 185,000 48,452 48,452 95,605 95,605 77,495 77,495 49,817 49,817 727,738 Total 185,000 168,452 168,452 95,605 95,605 137,495 137,495 49,817 49,817 1,087,738

40 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Debt Repayment

The Company intends to use ₱900 million of the net proceeds to repay KPPH’s short-term loans with Metropolitan Bank and Trust Company (“Metrobank”) and Cathay United Bank Co., Ltd. Manila Branch (“Cathay United Bank”), as follows:

Banks to be Repaid Interest Maturity Estimated Allocation Estimated Rate Timing of (in US$) (in ₱ ) Disbursement Metrobank 3.50% September 11, 2018 10,000,000 500,000,000 2H 2018 Cathay United Bank 3.58% October 2, 2018 8,000,000 400,000,000 2H 2018 Total 18,000,000 900,000,000

The above loans obtained by KPPH were used to augment its working capital requirement to pay its suppliers.

Neither Metrobank nor Cathay United Bank is represented in the Company’s Board of Directors.

Working Capital

The Company and its Subsidiary will require additional working capital as more cash is needed for its day-to- day operations. Approximately ₱200 million of the net proceeds of the Offer will be allocated for this purpose.

The net proceeds from the Firm Offer to be used for working capital requirements will be disbursed as follows:

2018 2019 2020 Total In ₱ thousand Q4 1H 2H 1H 2H Accounts receivable 18,385 50,850 50,850 19,021 18,978 158,083 Inventory 3,387 12,858 12,858 13,965 13,922 56,991

Total 21,772 63,708 63,708 32,986 32,900 215,074

Research and Development

The Company intends to build on NKG’s world class innovations by investing on its own research and development initiatives. Research and development are intended for new product introductions that are expected to come out in the next four to five years.

Approximately ₱800 million of the net proceeds from the Firm Offer will be allocated for research and development initiatives and is estimated to be disbursed as follows:

In ₱ 2018 2019 2020 2021 2022 Total millions Q4 1H 2H 1H 2H 1H 2H 1H 2H R&D 135,175 81,418 81,418 82,379 82,379 84,637 84,637 86,086 86,085 804,214

The portion of the net proceeds which will be utilized by the Company for KPPH shall be advanced by the Company to KPPH as a shareholder’s advance. KPPH shall repay the Company through cash inflow from its operating activities.

The Company and/or its Subsidiary will not use any portion of the proceeds to reimburse any of its officers, directors, employees or shareholders for services rendered, asset previously transferred, or money loaned or advanced. Other than the fees relating to the underwriting and issue management of the Offer, the Company will not use the proceeds to pay any financial obligations with the Underwriter and its affiliates.

The proposed use of proceeds described above represents a best estimate of the use of the net proceeds of the

41 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Offer based on the Company's current plans and expenditures.

The actual amount and timing of disbursement of the net proceeds from the Offer for the use stated above will depend on various factors. To the extent that the net proceeds from the Offer are not immediately applied to the above purpose, the Company will invest the net proceeds in interest-bearing short-term demand deposits and/or money market instruments. Aside from underwriting and selling fees, the Underwriters will not receive any of the net proceeds from the Offer.

In the event of any material deviation or substantial adjustment in the planned use of proceeds, the Company shall inform its shareholders, the SEC and the PSE in writing at least 30 days before such deviation or adjustment is implemented. Any material or substantial adjustments to the use of proceeds, as indicated above, will be approved by the Company's Board of Directors and disclosed to the SEC and the PSE. In addition, the Company shall submit via the PSE’s Online Disclosure System, the PSE EDGE Portal, the following disclosure to ensure transparency in the use of proceeds:

(i) any disbursements made in connection with the planned use of proceeds from the Offer, (ii) Quarterly Progress Report on the application of the proceeds from the Offer on or before the first 15 days of the following fiscal quarter, the quarterly progress reports should be certified by the Company’s Chief Financial Officer or Treasurer and external auditor, (iii) annual summary of the application of the proceeds on or before 31 January of the following year, the annual summary report should be certified by the Company’s Chief Financial Officer or Treasurer and external auditor, and (iv) approval by the Company’s Board of Directors of any reallocation on the planned use of proceeds, or of any change in the Work Program. The actual disbursement or implementation of such reallocation must be disclosed by the Company at least 30 days prior to the said actual disbursement or implementation.

The quarterly and annual reports required in items (ii) and (iii) above must include a detailed explanation for any material variances between the actual disbursements and the planned use of proceeds in the Prospectus, if any. The detailed explanation must state the approval of the Board as required in item (iv) above.

42 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

DIVIDENDS AND DIVIDEND POLICY

Limitations and Requirements

Under Philippine law, a corporation can only declare dividends to the extent that it has unrestricted retained earnings that represent the undistributed earnings of the corporation which have not been allocated for any managerial, contractual or legal purpose and which are free for distribution to its shareholders as dividends. The amount of retained earnings available for declaration as dividends may be determined pursuant to regulations issued by the SEC. The Company's board of directors’ approval is generally sufficient to approve the distribution of dividends, except in the case of stock dividends which requires the approval of stockholders representing not less than two-thirds of the outstanding capital stock at a regular or special meeting duly called for the purpose. From time to time, the Company may reallocate capital among its subsidiaries depending on its business requirements.

The Philippine Corporation Code generally requires a Philippine corporation with retained earnings in excess of 100% of its paid-in capital to declare and distribute as dividends the amount of such surplus. Notwithstanding this general requirement, a Philippine corporation may retain all or any portion of such surplus in the following cases: (i) when justified by definite expansion plans approved by the board of directors; (ii) when the required consent of any financing institution or creditor to such distribution has not been secured; (iii) when retention is necessary under special circumstances, such as when there is a need for special reserves for probable contingencies; or (iv) when the non-distribution of dividends is consistent with the policy or requirement of a Government office.

The Company is allowed under Philippine laws to declare cash, property and stock dividends, subject to certain requirements. See “Description of the Shares—Rights Relating to Shares—Dividend Rights.”

Pursuant to existing SEC rules, cash dividends declared by corporations whose securities are registered or whose shares are listed in the stock exchange must have a record date not less than 10 days nor more than 30 days from the date of declaration. For stock dividends, the record date should not be less than 10 days nor more than 30 days from the date of the Company's shareholders’ approval, provided however, that the set record date is not to be less than 10 trading days from receipt by the PSE of the notice of declaration of stock dividend. In the event that a stock dividend is declared in connection with an increase in authorized capital stock, the corresponding record date is to be fixed by the SEC. In case no record date is specified for the cash and stock dividend declaration, then the same shall be deemed fixed at 15 days from such declaration.

In relation to foreign shareholders, dividends payable may not be remitted using foreign exchange sourced from the Philippine banking system unless the investment was first registered with the BSP. See “Philippine Foreign Ownership and Foreign Exchange Controls.”

Pursuant to the “Amended Rules Governing Pre-emptive and other Subscription Rights and Declaration of Stock and Cash Dividends” of the SEC, all cash dividends and stock dividends declared by a company shall be remitted to PDTC for immediate distribution to participants not later than 18 trading days after the record date (the “Payment Date”); provided that in the case of stock dividends, the credit of the stock dividend shall be on the Payment Date which in no case shall be later than the stock dividends’ listing date. If the stock dividend shall come from an increase in capital stock, all stock shall be credited to PDTC for immediate distribution to its participants not later than 20 trading days from the record date set by the SEC, which in no case shall be later than the stock dividends’ listing date.

Dividend History

The Company has not declared any dividends since its incorporation. It has reinvested all retained earnings back into the operations of the Company.

Dividend Policy

On June 25, 2018, the Company’s Board of Directors approved the following dividend policy: for the first three (3) years after listing commencing on 2019 until 2021, the Company will pay an annual cash dividend of ₱0.45, ₱0.50, and ₱0.55 per share, respectively. The foregoing cash dividend rates were based on the actual results of operations of the Company as of the second quarter of 2018 and the projected increasing results of operations

43 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION and unrestricted retained earnings of the Company from 2019 to 2021 which are sufficient for the Company to provide a dividend payout rate of 40%. Beginning the year 2022, the Company will follow its general dividend policy which is to pay at least 30% of the Company's net income after tax for the preceding fiscal year, payable in cash, property or shares, subject to cash flows and investment plans of the Company and its subsidiaries, as well as regulatory restrictions and other requirements. The Company’s Board, may, at any time, modify such dividend payout ratio depending upon the results of operations and future projects and plans of the Company.

44 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

DETERMINATION OF THE OFFER PRICE

The Company's Shares shall be listed and traded on the Main Board of the PSE under the symbol “CCPH”. The Company will apply for the Offer Shares to be listed and traded on the PSE under the same symbol. For a description of the PSE, see “The Philippine Stock Market” beginning on page [134].

The Offer Price has been set at up to ₱[17.00] per Offer Share. The Offer Price was determined through a book- building process and discussions among the Company, the Issue Manager and Sole Bookrunner, and the Joint Lead Underwriters. Since the Offer Shares have not been listed on any stock exchange, there has been no market price for Shares derived from day-to-day trading.

The factors considered in determining the Offer Price were, among others, historical financial and operating performance of the Company, its ability to generate earnings and cash flow, its business strategy, short and long term prospects, the level of demand from institutional investors, overall market conditions at the time of launch of the Offer and the market price of comparable listed companies. The Offer Price does not have any correlation to the actual book value of the Offer Shares.

45 CAPITALIZATION AND INDEBTEDNESS

The following table sets out the Company's debt, shareholders’ equity and capitalization as of March 31, 2018, and as adjusted to reflect the sale of the Firm Shares at the Offer Price of up to ₱[17.00] per Offer Share. The table should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto, included in this Prospectus beginning on page [1]. Other than as described below, there has been no material change in the Company's capitalization since March 31, 2018.

Actual as of As Adjusted After Giving Effect to March 31, 2018 the Offer

(Audited) (Unaudited) (In US$ Millions) (In ₱ Millions)* (In US$ Millions) (In ₱ Millions)* Total debt 140 7,302 140 7,302 Equity: Capital stock 23 1,200 30 1,565 Additional Paid-in Capital 82 4,277 198 10,328 Other components of equity 8 417 8 417 Retained earnings 25 1,304 19 991 Total equity 138 7,198 255 13,301 Total capitalization 278 14,500 395 20,603

*The US$ amount have been converted into in Philippine Peso at the rate of US$1.00 to ₱52.16, the exchange rate as of March 31, 2018.

46

PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

DILUTION

The Company will offer 378,071,100 Offer Shares to the public and 19,898,500 existing Common Shares to be offered by the Selling Shareholder, assuming full exercise of the Over-allotment Option.

Prior to the Offer, the Company has a total of 1,108,350,000 issued and outstanding shares. Upon listing, the Company will have 1,486,421,100 issued and outstanding shares.

The book value attributable to the Company's Common Shareholders, based on its audited consolidated financial statements as at March 31, 2018, was US$138 million (or ₱7,181 million). The book value attributable to the Company's Common Shareholders represents the amount of its total equity attributable to equity holders of the Parent Company. The Company's book value per share is computed by dividing the book value attributable to its shareholders by the equivalent number of Common Shares outstanding. Without taking into account any other changes in such book value after March 31, 2018 other than the sale of 378,071,100 Offer Shares at the Offer Price of ₱17.00 per Offer Share, and after deduction of the underwriting discounts and commissions and estimated offering expenses of the Offer payable by the Company, its net book value as of listing would increase to ₱13,281 million. This represents an immediate increase in net book value of ₱2.71 per Common Share to existing shareholders, and an immediate dilution of ₱8.82 per Common Share to purchasers of Offer Shares at the Offer Price of ₱17.00 per Offer Share.

The following table illustrates dilution on a per share basis based on the Offer Price of ₱[17.00] per Offer Share:

Offer Price per Offer Share ₱17.00 Net tangible book value per share as of March 31, 2018 ₱5.47 Difference in Offer Price per Offer Share and book value per Offer Share as of March 31, ₱11.53 2018 Pro forma book value per Common Share immediately following completion of the Offer ₱8.18 Dilution in Pro forma book value per Common Share to investors of the Offer Shares ₱8.82

The following table sets forth the shareholdings and percentage of Common Shares outstanding of the Company's existing and new shareholders immediately after completion of the Offer:

Common Shares Number % Existing shareholders 1,108,350,000 74.57% New investors 378,071,100 25.43% Total 1,486,421,100 100.0%

After the Offer, the Company will have a market capitalization ₱25,269 million. .

See also “Risk Factors – Risks Relating to the Offer and the Offer Shares - Future sales of Common Shares in the public market could adversely affect the prevailing market price of the Common Shares and shareholders may experience dilution in their holdings” and “Investors in the Offer Shares will face immediate and substantial dilution in the net asset value per Offer Share and may experience future dilution” on page [36] of this Prospectus.

47 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company's audited consolidated financial statements as of and for the years ended December 31, 2015, 2016 and 2017, and the audited interim consolidated financial statements for the three months ended March 31, 2017 and 2018 included in this Prospectus were prepared in compliance with PFRS.

The following management’s discussion and analysis of the Company's consolidated financial position and results of operations should be read in conjunction with its audited consolidated financial statements, including the related notes, contained in this Prospectus. This Prospectus contains forward-looking statements that involve risks and uncertainties. The Company cautions investors that its business and financial performance is subject to substantive risks and uncertainties. The Company's actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set out in “Risk Factors” on page [23] of this Prospectus. In evaluating the Company's business, investors should carefully consider all of the information contained in “Risk Factors” on page [23] of this Prospectus.

OVERVIEW

The primary purposes of the Company are to import, test, and manufacture electronic equipment of every kind as well as their spare parts; the calibration of testing tools and equipment in support of the manufacturing processes; and to engage in the marketing, sale and distribution for wholesale of the manufactured electronic equipment in the Philippines and for export thereof. The Company is continuing in investing in the Philippine market in order to provide Electronics Manufacturing Service and enhance excellent services to customers.

Critical Accounting Policies

The Company’s consolidated financial statements, prepared in compliance with PFRSs, require the Company to make judgments and estimates that affect amounts reported in the Company’s consolidated financial statements and related notes. In preparing these consolidated financial statements, the Company made its best judgments and estimates of certain amounts, giving due consideration to materiality. The Company believes that the following represent a summary of these significant accounting judgments and estimates and related impact and associated risks in the Company’s consolidated financial statements.

Judgments and estimates are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgments

Determining Functional Currency

Based on the economic substance of the underlying circumstances relevant to the Group, the functional currency of the Group has been determined to be the US dollar since the Group’s revenue and expenses are denominated mostly in US dollar. It is the currency that best reflects the economic substance of the underlying events and circumstances relevant to the Company. For presentation purposes, the Philippine Peso equivalent of the amounts are shown with the US$ amounts converted to Philippine Peso at the rate of US$1.00 to ₱52.16, the exchange rate as of March 31, 2018.

Determining Useful Lives of Property, Plant and Equipment, Investment Property and Intangible Assets

The Company estimates the useful lives of property, plant and equipment, investment property and intangible assets based on the period over which these assets are expected to be available for use. The estimated useful lives are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of these assets. In addition, estimation of the useful lives is based on collective assessment of industry practice, internal technical evaluation and experience with similar assets. It is possible that future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances.

48 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Estimate

Estimating Retirement Benefits

The cost of the defined benefit pension plan and other post-employment and the present value of the pension obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The discount rate assumption is based on the theoretical spot yield curve calculated from the Philippine Dealing Exchange (PDSI/T-R2) market yields by stripping the coupons from government bonds to create virtual zero coupon bonds as of valuation date and considering the average years of remaining working life of the employees as the estimated term of the benefit obligation.

The mortality rate is based on publicly available mortality tables and is modified accordingly with estimates of mortality improvements. Future salary increases are based on expected inflation rates.

DESCRIPTION OF CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME LINE ITEMS

Revenues from Sales of Goods – revenue is recognized when the goods are delivered to the customer and all criteria for acceptance have been satisfied.

Rental Revenue – rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease term.

Cost of Goods Sold - costs of goods sold include direct material costs, personnel expenses, utilities and other manufacturing costs. This is recognized when the inventories are sold and title is transferred to the buyer.

Cost of Rent - costs of rent include depreciation expense, repairs and maintenance and taxes and licenses. This is recognized when incurred.

General and Administrative Expenses –general and administrative expenses are incurred in the general administration of day-to-day operations of the Group. General and administrative expenses are generally recognized when the services are used or the expenses arise.

Other Income (Charges) – these comprise non-operating items such as finance/interest costs, interest income, foreign exchange gains or losses and other income arising from activities not related to the Company’s core operations.

Provision for Income Taxes – consist of provision for current income tax and deferred income tax. Current income tax is the amount expected to be paid to the tax authority. Deferred income tax is provided, using the balance sheet liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

RESULTS OF OPERATIONS

Revenues, gross profit, net income, and the related computed EBITDA and basic earnings per share, for the three-month periods ended March 31, 2018 and 2017 and for the years ended December 31, 2017, 2016, and 2015 are as follows (presented in United States dollar ($)):

In US$ thousands, except basic EPS In ₱ millions Three months ended For the years ended 31 Three months For the years ended 31 31 March December ended 31 March December 2018 2017 2017 2016 2015 2018 2017 2017 2016 2015 Revenues from 74,785 40,253 210,600 123,608 268,164 3,901 2,100 10,985 6,447 13,987 Sales and Rent

49 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

In US$ thousands, except basic EPS In ₱ millions Three months ended For the years ended 31 Three months For the years ended 31 31 March December ended 31 March December 2018 2017 2017 2016 2015 2018 2017 2017 2016 2015 Cost of Goods Sold 66,368 35,095 193,246 114,525 256,589 3,462 1,831 10,080 5,974 13,384 and Rent Gross Profit 8,417 5,158 17,354 9,083 11,575 439 269 905 474 604 1 EBITDA 9,030 4,541 15,237 7,037 9,659 471 237 795 367 504 Earnings per Share 0.0057 0.0026 0.0065 0.0005 0.0047 (EPS) 1 EBITDA is defined as earnings before interest, tax, depreciation and amortization from continuing operations. EBITDA and EBITDA Margin are not measures of performance under PFRS and investors should not consider EBITDA, EBITDA Margin or EBIT in isolation or as alternatives to net income as an indicator of the Company’s operating performance or to cash flows, or any other measure of performance under PFRS. Because there are various EBITDA calculation methods, the Company’s presentation of these measures may not be comparable to similarly titled measures used by other companies.

The Company mainly manufactures storage products, and KPPH manufactures consumer electronics. The contribution percentage is described as below:

Type 2015 2016 2017 March 31, 2018 Storage Products 12.7%* 12.1% 6.8% 7.6% Consumer Electronics 87.3%* 87.9% 93.2% 92.4% Total 100.0% 100.0% 100.0% 100% * The storage products in 2015 was adjusted to use the consignment model which was implemented in 2016 in order to have model-for-model comparison. In 2015, the Company still utilized the buy-and-sell model which generated revenues of US$148.0 million. For illustration purposes, the amounts reflected in the table above assumes the adoption of the consignment model in 2015, which was actually adopted starting 2016. This figure was adjusted to provide a more accurate illustration of the performance of key products.

For the Three Month Periods Ended March 31, 2018 vs. March 31, 2017

For the three months ended March 31

2018 2017 In ₱ % of In US$ In ₱ % of % Change In US$ 000's millions Revenue 000's millions Revenue Revenues 74,785.0 3,901 100.0% 40,252.6 2,100 100.0% 85.8% Costs 66,368.2 3,462 88.7% 35,095.3 1,831 87.2% 89.1% Gross Profit 8,416.8 439 11.3% 5,157.3 269 12.8% 63.2% General and Administrative (1,975.4) ( 103) (2.6%) (1,355.8) (71) (3.4%) 45.7% Expenses Net Foreign Exchange 746.8 39 1.0% (791.3) (41) (2.0%) 194.4% Gains (Losses) Interest Expense (517.4) (27) (0.7%) (125.5) (7) (0.3%) 312.3% Scrap sales 11.0 1 0.0% 19.0 1 0.0% (42.1%) Interest Income 1.7 – 0.0% 0.9 – 0.0% 88.9% Others – – 0.0% (3.5) – 0.0% 100.0% Income Before Tax 6,683.5 349 8.9% 2,901.1 151 7.2% 130.4% Provision for (Benefit 354.4 18 0.5% (30.5) (2) (0.1%) 1,262.0% from) Income Tax Net Income 6,329.1 330 8.4% 2,931.8 153 7.3% 115.9%

50 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Revenues The Company posted consolidated revenues of US$74.8 million for the three months ended March 31, 2018, an 85.8% increase from US$40.3 million consolidated revenues earned by the Company during the same period in the preceding year driven by new orders of vacuum cleaners and hair dryers.

Costs Cost of sales and rent went up by 89.1% due to the increase in sales volume.

Gross Profit The Company’s operations generated gross profit of US$8.4 million, higher year-on-year by 63.2% which is mainly revenue driven.

General and Administrative Expenses The Company’s operating expenses went up by US$0.6 million or 45.7% mainly due to the expansion of the production line for vacuum cleaners and hair dryers.

Interest Expense Interest expense increased by 312.3% from US$125.5 million in the first three months of 2017 to US$517.4 million in the first three months of 2018 due to an increase in bank loans to finance expansion and working capital.

Income Before Tax Income before tax went up by 130.4% due to improved sales volume and operating profit margins. Operating profit margin was 8.9% compared to 7.2% for the same period in 2017.

Net Income The Company generated US$6.3 million net income as a result of the foregoing.

For the Years Ended December 31, 2017 vs. 2016

For the years ended December 31 2017 2016

In US$ In ₱ % of In US$ In ₱ % of % 000's millions Revenue 000's millions Revenue Change Revenues 210,599.9 10,985 100.0% 123,608.2 6,447 100.0% 70.4% Costs 193,245.8 10,080 91.8% 114,524.7 5,974 92.7% 68.7% Gross Profit 17,354.1 905 8.2% 9,083.5 474 7.3% 91.1% General and Administrative Expenses (7,442.4) (388) (3.5%) (6,390.4) (333) (5.2%) 16.5% Net Foreign Exchange Losses (1,387.1) (72) (0.7%) (1,400.2) (73) (1.1%) (0.9%) Interest Expense (1,257.3) (66) (0.6%) (474.9) (25) (0.4%) 164.8% Scrap sales 84.3 4 0.0% 61.4 3 0.0% 37.3% Interest Income 11.4 1 0.0% 7.3 – 0.0% 56.2% Others (49.6) (3) 0.0% (10.7) (1) 0.0% 363.6% Income Before Tax 7,313.4 381 3.4% 876.0 46 0.7% 734.9% Provision for Income Tax 72.0 4 0.0% 370.9 19 0.3% (80.6%) Net Income 7,241.5 378 3.4% 505.1 26 0.4% 1,333.6%

Revenues The Company’s revenues increased by 70.4% from US$123.6 million in the year ended December 31, 2016 to US$210.6 million in the year ended December 31, 2017. This was driven by new orders of vacuum cleaners and hair dryers.

Costs The Company’s cost of sales and rent increased by 68.7% from US$114.5 million in year ended December 31, 2016 to US$193.2 million in the year ended December 31, 2017. The increase was primarily the result of increased sales volume.

51 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Gross Profit As a result of the foregoing, gross profit increased by 91.1% from US$9.1 million in the year ended December 31, 2016 to US$17.4 million in the year ended December 31, 2017. The Company’s gross margin in the year ended December 31, 2017 was 8.2%, an improvement from the 7.3% gross margin it recorded in the year ended December 31, 2016.

General and Administrative Expenses General and administrative expenses increased by 16.5% from US$6.4 million in the year ended December 31, 2016 to US$7.4 million in the year ended December 31, 2017 due to the expansion of the production line for vacuum cleaners and hair dryers.

Net Foreign Exchange Losses Foreign exchange losses decreased by 0.9% from US$1.4 million in the year ended December 31, 2016 to US$1.4 million in the year ended December 31, 2017 due to the devaluation of the Peso against the U.S. Dollar.

Interest Expense Interest expense increased by 164.8% from US$0.5 million in the year ended December 31, 2016 to US$1.3 million in the year ended December 31, 2017 due to an increase in loans payable.

Scrap Sales Other income from scrap sales increased by 37.3% from US$61.4 thousand in the year ended December 31, 2016 to US$84.3 thousand in the year ended December 31, 2017.

Interest Income Interest income increased by 56.1% from US$7.3 thousand in the year ended December 31, 2016 to US$11.4 thousand in the year ended December 31, 2017 due to higher cash balances in 2017.

Others Other income (expenses) increased by 363.6% from US$10.7 thousand in the year ended December 31, 2016 to US$49.6 thousand in the year ended December 31, 2017.

Income Before Tax As a result of the foregoing, income before tax increased by 734.9% from US$0.9 million in the year ended December 31, 2016 to US$7.3 million in the year ended December 31, 2017.

Provision for Income Tax Provision for income tax decreased by 80.6% from US$370.9 thousand in the year ended December 31, 2016 to US$72 thousand in the year ended December 31, 2017.

Net Income As a result of the foregoing, net income increased by 1,333.6% from US$0.5 million in the year ended December 31, 2016 to US$7.2 million in the year ended December 31, 2017.

For the Years Ended December 31, 2016 vs. 2015

For the years ended December 31 2016 % of 2015 % of In US$ 000's In ₱ millions Revenue In US$ 000's In ₱ millions Revenue % Change Revenues 123,608.2 6,447 100.0% 268,164.4 13,987 100.0% (53.9%) Costs 114,524.7 5,974 92.7% 256,589.3 13,384 95.7% (55.4%) Gross Profit 9,083.5 473 7.3% 11,575.1 604 4.3% (21.5%) General and Administrative Expenses (6,390.4) (333) (5.2%) (4,979.8) (260) (1.9%) 28.3% Net Foreign Exchange Losses (1,400.2) (73) (1.1%) (528.3) (28) (0.2%) 165.0% Interest Expense (474.9) (25) (0.4%) (874.9) (46) (0.3%) (45.7%) Scrap Sales 61.4 3 0.0% 97.4 5 0.0% (37.0%) Interest Income 7.3 – 0.0% 6.5 – 0.0% 12.3%

52 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Others (10.7) (1) 0.0% 121.4 6 0.0% (108.8%) Income Before Tax 876.0 44 0.7% 5,417.4 283 2.0% (83.8%) Provision for Income Tax 370.9 19 0.3% 236.1 12 0.1% 57.1% Net Income 505.1 25 0.4% 5,181.3 270 1.9% (90.3%)

Revenues The Company’s revenues decreased by 53.9% from US$268.2 million in the year ended December 31, 2015 to US$123.6 million in the year ended December 31, 2016. This was driven by a change in manner of revenue recognition.

Costs The Company’s cost of sales and rent decreased by 55.4% from US$256.6 million in year ended December 31, 2015 to US$114.5 million in the year ended December 31, 2016. The decrease was primarily the result of decreased sales volume.

Gross Profit As a result of the foregoing, gross profit decreased by 21.5% from US$11.6 million in the year ended December 31, 2015 to US$9.1 million in the year ended December 31, 2016. However, the Company’s gross margin in the year ended December 31, 2016 was 7.3%, an improvement from the 4.3% gross margin it recorded in the year ended December 31, 2015.

General and Administrative Expenses General and administrative expenses increased by 28.3% from US$5.0 million in the year ended December 31, 2015 to US$6.4 million in the year ended December 31, 2016 due to an increase in manpower for the expansion of its production facilities.

Net Foreign Exchange Losses Foreign exchange losses went up by 165.0% from US$0.5 million in the year ended December 31, 2015 to US$1.4 million in the year ended December 31, 2016 due to the devaluation of the Peso against the U.S. Dollar.

Interest Expense Interest expense decreased by 45.7% from US$874.9 thousand in the year ended December 31, 2015 to US$474.9 thousand in the year ended December 31, 2016 due to a decrease in loans payable.

Interest Income Interest income increased by 12.3% from US$6.5 thousand in the year ended December 31, 2015 to US$7.3 thousand in the year ended December 31, 2016 due to higher cash balances in 2016.

Others The Company realized other charges of US$10.7 thousand in December 31, 2016 as compared to other income of US$0.1 million in December 31, 2015.

Income Before Tax As a result of the foregoing, income before tax decreased by 83.8% from US$5.4 million in the year ended December 31, 2015 to US$0.9 million in the year ended December 31, 2016.

Provision for Income Tax Provision for income tax increased by 57.1% from US$0.2 million in the year ended December 31, 2015 to US$0.4 million in the year ended December 31, 2016.

Net Income As a result of the foregoing, net income decreased by 90.3% from US$5.2 million in the year ended December 31, 2015 to US$0.5 million in the year ended December 31, 2016.

LIQUIDITY AND CAPITAL RESOURCES

Three Months Ended March 31, 2018 compared to Year Ended December 31, 2017

53 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION As of March 31 As of December 31 2018 2017 % Change In US$ In ₱ In US$ In ₱ 000's millions 000's millions ASSETS

Current Assets Cash 17,460.4 911 26,403.8 1,377 (33.9%) Trade and other receivables 58,285.1 3,040 52,051.1 2,715 12.0% Inventories 68,692.5 3,583 52,446.8 2,736 31.0% Other current assets 1,869.6 98 2,388.7 125 (21.7%) Total Current Assets 146,307.5 7,632 133,290.4 6,952 9.8%

Noncurrent Assets Property, plant and equipment 76,758.9 4,004 81,642.1 4,258 (6.0%) Investment property 29,408.9 1,534 16,476.0 859 78.5% Intangible assets 21,435.5 1,118 22,921.6 1,196 (6.5%) Other noncurrent assets 3,729.4 194 3,478.9 181 7.2% Total Noncurrent Assets 131,332.7 6,850 124,518.6 6,495 5.5% TOTAL ASSETS 277,640.3 14,482 257,809.1 13,447 7.7%

LIABILITIES AND EQUITY Current Liabilities Loans payable 73,181.1 3,817 69,053.6 3,602 6.0% Trade and other payables 60,523.2 3,157 49,231.4 2,568 22.9% Due to related parties 5,123.3 267 7,190.5 375 (28.7%) Income tax payable 149.0 8 84.2 4 76.9% Total Current Liabilities 138,976.6 7,249 125,559.7 6,549 10.7%

Noncurrent Liabilities Retirement benefit obligation 245.4 13 247.6 13 (0.9%) Deferred tax liability 737.5 38 450.4 23 63.8% Total Noncurrent Liabilities 982.9 51 698.0 36 40.8% Total Liabilities 139,959.5 7,300 126,257.7 6,585 10.9%

Equity Capital stock 22,658.5 1,182 5,000.0 261 353.2% Additional paid-in capital 82,141.8 4,285 – – – Retained earnings 24,928.1 1,300 18,599.0 970 34.0% Equity reserves 8,000.0 417 108,000.0 5,633 (92.6%) Remeasurement of employee benefits (47.6) (2) (47.6) (2) 0.0% Total Equity 137,680.8 7,182 131,551.4 6,862 4.7% TOTAL LIABILITIES AND EQUITY 277,640.3 14,482 257,809.1 13,447 7.7%

Cash Cash decreased by 33.9% from US$26.4 million as of December 31, 2017 to US$17.5 million as of March 31, 2018.

54 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Trade and other receivables Trade and other receivables increased by 12.0% from US$52.1 million as of December 31, 2017 to US$58.3 million as of March 31, 2018.

Inventories Inventories increased by 31.0% from US$52.4 million in the year ended December 31, 2017 to US$68.7 million as of March 31, 2018.

Total Current Assets As a result of the foregoing, total current assets increased by 9.8% from US$133.3 million in the year ended December 31, 2017 to US$146.3 million as of March 31, 2018.

Property, plant and equipment Property, plant and equipment decreased by 6.0% from US$81.6 million in the year ended December 31, 2017 to US$76.8 million as of March 31, 2018.

Investment property Investment property increased by 78.5% from US$16.5 million in the year ended December 31, 2017 to US$29.4 million as of March 31, 2018.

Intangible assets Intangible assets decreased by 6.5% from US$22.9 million in the year ended December 31, 2017 to US$21.4 million as of March 31, 2018.

Total Noncurrent Assets As a result of the foregoing, total noncurrent assets increased by 5.5% from US$124.5 million in the year ended December 31, 2017 to US$131.3 as of March 31, 2018.

Total Assets As a result of the foregoing, total assets increased by 7.7% from US$257.8 million in the year ended December 31, 2017 to US$277.6 million as of March 31, 2018.

Loans Payable Loans payable increased by 6.0% from US$69.0 million in the year ended December 31, 2017 to US$73.2 million as of March 31, 2018 as the Company incurred additional loans to finance capital expenditure for the new production facilities.

Trade and Other Payables Trade and other payables increased by 22.9% from US$49.2 million in the year ended December 31, 2017 to US$60.5 million as of March 31, 2018.

Total Current Liabilities As a result of the foregoing, total current liabilities increased by 10.7% from US$125.6 million in the year ended December 31, 2017 to US$139.0 million as of March 31, 2018.

Total Liabilities As a result of the foregoing, total liabilities increased by 10.9% from US$126.3 million in the year ended December 31, 2017 to US$140.0 million as of March 31, 2018.

Retained Earnings Retained earnings increased by 34.0% from US$18.6 million in the year ended December 31, 2017 to US$24.9 million as of March 31, 2018.

Equity Reserves Equity reserves went down by 92.6% from US$108.0 million as of December 31, 2017 to US$8.0 million as of March 31, 2018.

Total Equity As a result of the foregoing, total equity increased by 4.7% from US$131.6 million in the year ended December 31, 2017 to US$137.7 million as of March 31, 2018.

55 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016 For the years ended December 31 2017 2016 In US$ In ₱ In US$ In ₱ 000's millions 000's millions % Change ASSETS

Current Assets Cash 26,403.8 1,377 10,675.2 557 147.3% Trade and other receivables 52,051.1 2,715 10,571.3 551 392.4% Inventories 52,446.8 2,736 29,880.2 1,559 75.5% Other current assets 2,388.7 125 1,891.9 99 26.3% Total Current Assets 133,290.4 6,953 53,018.6 2,766 151.4%

Noncurrent Assets Property, plant and equipment 81,642.1 4,258 73,009.2 3,808 11.8% Investment property 16,476.0 859 14,209.3 741 16.0% Intangible assets 22,921.6 1,196 22,563.5 1,177 1.6% Other noncurrent assets 3,478.9 181 3,185.7 166 9.2% Total Noncurrent Assets 124,518.6 6,494 112,967.7 5,892 10.2% TOTAL ASSETS 257,809.1 13,447 165,986.3 8,658 55.3%

LIABILITIES AND EQUITY Current Liabilities Loans payable 69,053.6 3,602 10,000.0 522 590.5% Trade and other payables 49,231.4 2,568 30,199.8 1,575 63.0% Due to related parties 7,190.5 375 756.7 39 850.2% Income tax payable 84.2 4 16.7 1 404.2% Total Current Liabilities 125,559.7 6,549 40,973.2 2,137 206.4%

Noncurrent Liabilities Retirement benefit obligation 247.6 13 131.0 7 89.0% Deferred tax liability 450.4 23 532.4 28 (15.4%) Total Noncurrent Liabilities 698.0 36 663.4 35 5.2% Total Liabilities 126,257.7 6,585 41,636.6 2,172 203.2%

Equity Capital stock 5,000.0 261 5,000.0 261 0.0% Retained earnings 18,599.0 970 11,357.5 592 63.8% Equity reserves 108,000.0 5,633 108,000.0 5,633 0.0% Remeasurement of employee benefits (47.6) (2) (7.8) – 510.3% Total Equity 131,551.4 6,862 124,349.7 6,486 5.8% TOTAL LIABILITIES AND EQUITY 257,809.1 13,447 165,986.3 8,658 55.3%

56 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Cash Cash increased by 147.3% from US$10.7 million in the year ended December 31, 2016 to US$26.4 million in the year ended December 31, 2017.

Trade and other receivables Trade and other receivables increased by 392.4% from US$10.6 million in the year ended December 31, 2016 to US$52.1 million in the year ended December 31, 2017.

Inventories Inventories increased by 75.5% from US$29.9 million in the year ended December 31, 2016 to US$52.4 million in the year ended December 31, 2017.

Total Current Assets As a result of the foregoing, total current assets increased by 151.4% from US$53.0 million in the year ended December 31, 2016 to US$133.3 million in the year ended December 31, 2017.

Property, plant and equipment Property, plant and equipment increased by 11.8% from US$73.0 million in the year ended December 31, 2016 to US$81.6 million in the year ended December 31, 2017.

Investment property Investment property increased by 16.0% from US$14.2 million in the year ended December 31, 2016 to US$16.5 million in the year ended December 31, 2017.

Intangible assets Intangible assets increased by 1.6% from US$22.6 million in the year ended December 31, 2016 to US$22.9 million in the year ended December 31, 2017.

Total Noncurrent Assets As a result of the foregoing, total noncurrent assets increased by 10.2% from US$113.0 million in the year ended December 31, 2016 to US$124.5 in the year ended December 31, 2017.

Total Assets As a result of the foregoing, total assets increased by 55.3% from US$166.0 million in the year ended December 31, 2016 to US$257.8 million in the year ended December 31, 2017.

Loans Payable Loans payable increased by 590.5% from US$10.0 million in the year ended December 31, 2016 to US$69.1 million in the year ended December 31, 2017 as the Company incurred additional loans to finance capital expenditure for the new production facilities.

Trade and Other Payables Trade and Other Payables increased by 63.0% from US$30.2 million in the year ended December 31, 2016 to US$49.2 million in the year ended December 31, 2017.

Total Current Liabilities As a result of the foregoing, total current liabilities increased by 206.4% from US$41.0 million in the year ended December 31, 2016 to US$125.6 million in the year ended December 31, 2017.

Total Liabilities As a result of the foregoing, total liabilities increased by 203.2% from US$41.6 million in the year ended December 31, 2016 to US$126.3 million in the year ended December 31, 2017.

Retained Earnings Retained earnings increased by 63.8% from US$11.4 million in the year ended December 31, 2016 to US$18.6 million in the year ended December 31, 2017.

Equity Reserves Equity reserves remained flat for the period.

57 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Total Equity As a result of the foregoing, total equity increased by 5.8% from US$124.3 million in the year ended December 31, 2016 to US$131.6 million in the year ended December 31, 2017.

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

For the years ended 31 December 2016 2015 In US$ In ₱ In US$ In ₱ % Change 000's millions 000's millions ASSETS

Current Assets Cash 10,675.2 557 9,937.4 518 7.4% Trade and other receivables 10,571.3 551 8,802.3 459 20.1% Inventories 29,880.2 1,559 29,506.8 1,539 1.3% Other current assets 1,891.9 99 2,238.5 117 (15.5%) Total Current Assets 53,018.6 2,766 50,485.0 2,633 5.0%

Noncurrent Assets Property, plant and equipment 73,009.2 3,808 62,606.2 3,266 16.6% Investment property 14,209.3 741 – – – Intangible assets 22,563.5 1,177 24,975.0 1,303 (9.7%) Other noncurrent assets 3,185.7 166 250.2 13 1,173.3% Total Noncurrent Assets 112,967.7 5,892 87,831.4 4,582 28.6% TOTAL ASSETS 165,986.3 8,658 138,316.4 7,215 20.0%

LIABILITIES AND EQUITY Current Liabilities Loans payable 10,000.0 522 37,090.0 1,935 (73.0%) Trade and other payables 30,199.8 1,575 24,308.3 1,268 24.2% Due to related parties 756.7 39 2,804.7 146 (73.0%) Income tax payable 16.7 1 0.8 – 1,987.5% Total Current Liabilities 40,973.2 2,137 64,203.8 3,349 (36.2%)

Noncurrent Liabilities Retirement benefit obligation 131.0 7 72.0 4 81.9% Deferred tax liability 532.4 28 206.0 11 158.4% Deposit for future stock subscription – – 42,624.1 2,223 (100%) Total Noncurrent Liabilities 663.4 35 42,902.1 2,238 (98.5%) Total Liabilities 41,636.6 2,172 107,105.9 5,587 (61.1%)

Equity Capital stock 5,000.0 261 5,000.0 261 – Retained earnings 11,357.5 592 10,852.4 566 4.6% Equity reserves 108,000.0 5,633 15,375.8 802 602.4% Remeasurement of employee (7.8) – (17.7) (1) (55.9%)

58 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

For the years ended 31 December 2016 2015 In US$ In ₱ In US$ In ₱ % Change 000's millions 000's millions benefits Total Equity 124,349.7 6,486 31,210.5 1,628 298.4% TOTAL LIABILITIES AND EQUITY 165,986.3 8,658 138,316.4 7,215 20.0%

Cash Cash increased by 7.4% from US$9.9 million in the year ended December 31, 2015 to US$10.7 million in the year ended December 31, 2016.

Trade and other receivables Trade and other receivables increased by 20.1% from US$8.8 million in the year ended December 31, 2015 to US$10.6 million in the year ended December 31, 2016.

Inventories Inventories increased by 1.3% from US$29.5 million in the year ended December 31, 2015 to US$29.9 million in the year ended December 31, 2016.

Total Current Assets As a result of the foregoing, total current assets increased by 5.0% from US$50.5 million in the year ended December 31, 2015 to US$53.0 million in the year ended December 31, 2016.

Property, plant and equipment Property, plant and equipment increased by 16.6% from US$62.6 million in the year ended December 31, 2015 to US$73.0 million in the year ended December 31, 2016.

Investment property Investment property increased by US$14.2 million from US$0.0 in the year ended December 31, 2015 to US$14.2 million in the year ended December 31, 2016 due to the lease to third parties.

Intangible assets Intangible assets decreased by 9.6% from US$25.0 million in the year ended December 31, 2015 to US$22.6 million in the year ended December 31, 2016.

Total Noncurrent Assets As a result of the foregoing, total noncurrent assets increased by 28.6% from US$87.8 million in the year ended December 31, 2015 to US$113.0 in the year ended December 31, 2016.

Total Assets As a result of the foregoing, total assets increased by 20.0% from US$138.3 million in the year ended December 31, 2015 to US$166.0 million in the year ended December 31, 2016.

Loans Payable Loans payable decreased by 73.0% from US$37.1 million in the year ended December 31, 2015 to US$10.0 million in the year ended December 31, 2016.

Trade and Other Payables Trade and Other Payables increased by 24.2% from US$24.3 million in the year ended December 31, 2015 to US$30.2 million in the year ended December 31, 2016.

Total Current Liabilities As a result of the foregoing, total current liabilities decreased by 36.2% from US$64.2 million in the year ended December 31, 2015 to US$41.0 million in the year ended December 31, 2016.

59 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Total Liabilities As a result of the foregoing, total liabilities decreased by 61.1% from US$107.1 million in the year ended December 31, 2015 to US$41.6 million in the year ended December 31, 2016.

Retained Earnings Retained earnings increased by 4.6% from US$10.9 million in the year ended December 31, 2015 to US$11.4 million in the year ended December 31, 2016.

Equity Reserves Equity reserves increased by 602.4% from US$15.4 million in the year ended December 31, 2015 to US$108.0 million in the year ended December 31, 2016 due to the additional issuance of KPPH stocks in 2016.

Total Equity As a result of the foregoing, total equity increased by 298.4% from US$31.2 million in the year ended December 31, 2015 to US$124.3 million in the year ended December 31, 2016.

Prospects for the future

As a global corporation, the Company believes the new global trend will be advantageous to the Company in further expanding its manufacturing facilities in the country.

The Company shall continue to prepare for its new business model of transforming from a traditional ODM/EMS company to a company with its own ODM know-how and its own brands in order to gain a more competitive position in the industry.

There are no known trends, events or uncertainties that will result in the Company’s liquidity increasing or decreasing in a material way.

There were no events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation.

Likewise, there were no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons created during the reporting period.

There are no known trends, events or uncertainties that have had or that are reasonably expected to have a material favorable or unfavorable impact on the Company’s revenues from continuing operations.

There were no significant elements of income or loss that did not arise from continuing operations.

There are no seasonal aspects that may have a material effect on the financial condition of the Company.

Debt Obligations and Credit Facilities

The Company has short-term debt obligations as follows:

Loans Payable March 31, December 31, December 31, December 31, 2018 2017 2016 2015 Bank loans $73,181,102 $69,053,647 $– $25,090,000 Loans from related parties – – 10,000,000 12,000,000 $73,181,102 $69,053,647 $10,000,000 $37,090,000

The Company obtained short-term loans from different banks and from a related party as follows:

March 31, 2018 Outstanding Banks Credit Line Drawdown Interest rates balance

60 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Mega International Commercial Bank $20,000,000 $10,120,000 2.73%–3.12% $19,120,000 CTBC Bank (Philippines) Corporation 20,000,000 2,100,000 2.75% 17,061,102 Metropolitan Bank and Trust Company 13,000,000 13,000,000 3.00% 13,000,000 BDO Unibank Inc. 10,000,000 10,000,000 3.19% 10,000,000 Taiwan Cooperative Bank 15,000,000 – 2.88% 8,000,000 First Commercial Bank Ltd. Manila 10,000,000 5,000,000 2.35% 5,000,000 Branch Cathay United Bank Co., Ltd. 10,000,000 1,000,000 3.58% 1,000,000 $98,000,000 $41,220,000 $73,181,102

December 31, 2017

Outstanding Credit Line Drawdown Interest rates balance Mega International Commercial Bank $20,000,000 $28,240,000 2.49%–2.83% $19,120,000 CTBC Bank (Philippines) Corporation 20,000,000 32,900,000 2.35%–2.75% 17,900,000 Metropolitan Bank and Trust Company 33,837,880 49,475,064 2.80%–3.10% 14,019,627 BDO Unibank Inc. 15,000,000 19,748,229 2.90%–3.00% 10,014,020 Taiwan Cooperative Bank 15,000,000 8,000,000 2.88% 8,000,000 Kinpo Electronics, Inc. (KPO) None 15,000,000 2.00%-2.35% – $103,837,880 $153,363,293 $69,053,647

December 31, 2016

Outstanding Credit Line Drawdown Interest rates balance Kinpo Electronics, Inc. (KPO) None $10,000,000 1.95% $10,000,000

December 31, 2015

Outstanding Credit Line Drawdown Interest rates balance Mega International Commercial Bank $25,000,000 $94,260,000 2.00%–3.50% $25,090,000 Kinpo Electronics, Inc. (KPO) None 12,000,000 1.20% 12,000,000 $25,000,000 $106,260,000 $37,090,000

. The loans from Mega International Commercial Bank, CTBC Bank (Philippines) Corporation and Taiwan Cooperative Bank are secured by a Letter of Support from KPO. While the loans from Metropolitan Bank and Trust Company and BDO Unibank Inc. are unsecured. Loan drawdowns made were considered short-term with a term not exceeding 180 days.

. In January 2018, KPPH entered into a credit line agreement with Cathay United Bank Co., Ltd. amounting to $10,000,000. Amount of drawdown made during 2018 was considered short-term with a term not exceeding 180 days and bears interest at 3.58% per annum.

. In November 2017, KPPH entered into a credit line agreement with First Commercial Bank, Ltd., Manila Branch amounting to $10,000,000. Amount of drawdown made during 2018 were considered short-term with a term not exceeding 180 days and bear interest at 2.35% per annum.

. In January 2017, KPPH entered into a loan agreement with KPO amounting to $15,000,000. The loan bears interest at 2.20% per annum. The principal amount and interest was paid in November 2017.

. In November 2016, KPPH entered into a loan agreement with KPO amounting to $10,000,000. The loan bears interest at 1.95% per annum. The principal amount and interest was paid in August 2017.

. In January 2016, KPPH entered into a loan agreement with KPO amounting to $13,000,000. The loan bears interest at 1.15% per annum. The principal amount and interest was paid in November 2016.

61 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

. In November 2015, KPPH entered into a loan agreement with KPO amounting to $12,000,000. The loan bears interest at 1.20% per annum. The principal amount and interest was paid in November 2016.

. In July 2015, the Parent Company obtained a 2.04% interest-bearing loan from Mega International Commercial Bank amounting to $8,000,000 maturing in October 2015. Payment was made on due date.

. In 2015, the Parent Company sold its discounted receivables to Sumitomo Mitsui Banking Corporation to finance the Company’s operations. The discounted receivable amount range from $9,000,000 to $20,000,000 with terms ranging from 45 to 85 days. The discount rates ranges from 0.88% to 0.95%. There are no outstanding discounted receivables as of December 31, 2015.

. Interest expense incurred amounted to $0.5 million, $0.1 million, $1.3 million, $0.5 million and $0.9 million for the three months ended March 31, 2018 and 2017, and years ended December 31, 2017, 2016, and 2015 respectively. Accrued interest amounted to $156,845, $86,980, $21,125 and $65,231 as of March 31, 2018, December 31, 2017, 2016 and 2015, respectively.

ACCELERATION OF FINANCIAL OBLIGATIONS

There are no known events that could trigger a direct or contingent financial obligation that would have a material effect on the Company’s liquidity, financial condition and results of operations.

OFF BALANCE SHEET ARRANGEMENTS

As of the date of this Prospectus, the Company has no material off-balance sheet transactions, arrangements, and obligations. The Company also has no unconsolidated subsidiaries. While the Company does not have any off-balance sheet commitments, KPPH has retention fees due to its contractors under its construction contract amounting to ₱77,350,424.

INCOME OR LOSSES ARISING OUTSIDE OF CONTINUING OPERATIONS

The Company has no sources of income or loss coming from discontinued operations. Its Subsidiary is expected to continue to contribute to the Company’s operating performance on an ongoing basis and/or in the future.

QUALITATIVE AND QUANTITATIVE DISCLOSURE OF MARKET RISK

Credit Risk

The Company’s exposure to credit risk on loans and receivables arise from default of the counterparty, with a maximum exposure equal to the carrying amounts of these receivables. Credit risk from cash is mitigated by transacting only with reputable banks duly approved by management.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s objectives to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking adverse effect to the Company’s credit standing.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Group’s short-term debt obligations with floating interest rates.

Foreign Currency Risk

The Company uses the US dollar ($) as its functional currency and is therefore exposed to foreign exchange movements, primarily in Philippine peso (=P) currencies. The Company follows a policy to manage its currency

62 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION risk by closely monitoring its cash flow position and by providing forecasts on all other exposures in currencies other than the US dollar.

63 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

BUSINESS

OVERVIEW

The Company was incorporated on June 1, 2012 as part of NKG's expansion in South East Asia. NKG is part of the Kinpo Group, a US$38.18 Billion global electronics company based in Taiwan.

NKG is a US$6.30 Billion global EMS and ODM company and a world leader in manufacturing a broad range of multiple key electronic products, including storage, printers, NAS, wireless and broadband, digital home consumer electronics, wearables, robotics, power management and smart grid, industrial, automotive, security, medical/healthcare and emerging technologies. NKG’s global footprint can be found in the United States, Mexico, Brazil, China, Thailand, Malaysia and the Philippines covering approximately 1,846,435 sq. m. of factory space and employing over 39,000 employees worldwide.

Based on Global EMS Market Size, Status and Forecast 2023 published by QY Research, NKG ranks in the top 10 world EMS market in terms of revenue as of 2017 with a revenue market share of 14.59% and is the top leading EMS provider in Southeast Asia with a revenue market share of 22.47%. In addition to being a global EMS and ODM provider, NKG has ventured into developing its own products using its vast research and development capability to create innovative technologies. It has developed its own products such as 3D printers, innovative smart beauty products, AI humanoid robot, artificial intelligence products, and a design system-on-chip (SOC) integrated circuits for cloud computing, among others. As of December 31, 2017, its 3D printer, XYZ printing, has cornered 23% of the global 3D printing market. In 2017, it launched its innovative smart beauty mirror, the HiMirror™, in the United States, Europe, Japan and Taiwan.

The Company was NKG’s expansion in South East Asia after its successful foray in Thailand and Malaysia. The Philippines was the ideal location for NKG’s expansion since one of NKG’s biggest customer for its HDD PCBA and external HDD products has a manufacturing plant in the country. To create efficiencies and savings on transportation and logistics, NKG established the Company to service Toshiba’s HDD PCBA and external HDD requirements. Toshiba has an existing manufacturing plant in the Philippines located at the Laguna Technopark. See “Business – Customers” beginning on page [84] of this Prospectus. The incentives provided by the Philippine government to foreign companies that establish in economic zones, the country’s wealth of well- educated and talented manpower who is well versed in English, a geographical location which is less than two hours away from Taipei, a country with GSP status with the European Union and the United States, was an additional attraction for NKG to locate in the Philippines. Satisfied with the Company’s results of operations and seeing the potential of expanding in the Philippines, NKG established KPPH less than two years after establishing the Company.

NKG Philippines

2012 JUN 2014 JAN 2015 MAR 2015 SEP 2016 MAR

Cal-Comp Philippines Kinpo Philippine (KPPH1) KPPH1 1st plant KPPH2 set up @FPIP KPPH1 LIMA plant (CCPH) set up @CIP II set up @LIMA completed Space : 133,600 m² Opening Ceremony Space: 140,000 m²

2012 2013 2014 2015 2016

2012 DEC 2014 OCT 2015 NOV 2016 OCT 2016 DEC

nd CCPH KPPH1 1st lot shipping KPPH1 2 plant KPPH2 started production KPPH2 vacuum Opening Ceremony completed (In-House) cleaner 1st shipping

64 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

The Company is primarily engaged in the design, development, and manufacture of data storage products such as HDD PCBA and External HDD products for Toshiba, while its wholly owned subsidiary, KPPH, is engaged in the design, development and manufacture of consumer electronic products such as calculators for several major brands, smart home appliances for a leading UK brand and smart beauty products under the HiMirror™ brand.

From 2016 to 2017, the Company’s consolidated net sales grew from US$122.5 million to US$207.9 million at a compounded annual growth rate (“CAGR”) of 70% while consolidated net income grew from US$0.5 million to US$7.2 million at a CAGR of 1,340%. For the three months ended March 31, 2018, the Company reported consolidated net sales and consolidated net income of US$74.2 million and US$6.3 million, a growth of 86% and 116%, respectively, as compared to March 31, 2017. As of March 31, 2018, the Company had a total consolidated asset of US$277.6 million and a total consolidated liabilities of US$140.0 million.

Being part of a leading global EMS and ODM provider, the Company has the reputation of providing its customers the highest quality of products. The Company, its Subsidiary and/or its products are accredited and certified by several standards institutions for (1) electromagnetic compatibility (EMC) standards such as the Bureau of Standards, Metrology and Inspection (BSMI), the national standardizing body in Taiwan; (2) corporate social responsibility (CSR) standards such as ISO 14001:2004, IECQ QC 080000:2012 and OHSAS 18001: 2007; and (3) quality standards such as ISO 9001: 2008 and ISO 9001: 2015, among others.

As of March 31, 2018, the Company and KPPH have a combined manufacturing space of approximately 286,434 sq. m. in two locations with a workforce of approximately 7,000 employees in the Philippines. The Company's manufacturing facilities are located at the Lima Technology Center in Lipa City, Batangas and at the First Philippine Industrial Park in Sto. Tomas, Batangas.

CORPORATE HISTORY

The Company was incorporated on June 1, 2012 as New Kinpo Group Technology (Philippines), Inc. to engage in the importation of raw materials, experimentation, testing and manufacturing of electronic equipment, calibration of testing tools and equipment. The Company first located its manufacturing plant at the Carmelray Industrial Park II in Calamba, Laguna. On June 25, 2012, the Company was registered as an Ecozone Export Enterprise manufacturing electronic products, computer peripherals and telecommunications products with the PEZA. As of October 1, 2017, the Company already applies the 5% preferential tax on the gross income from the sale of its products.

The Company commenced operations on October 15, 2012 primarily manufacturing portable hard disk drives. It obtained its first order of 500 pieces of portable hard disk drives from Toshiba International Procurement Hong Kong Ltd. in October 2012 after its manufacturing facility secured the audit approval from Toshiba. In less than six months, the Company has shipped over 400 thousand devices to Toshiba.

In April 2013, the Board of Directors and Stockholders of the Company resolved to change the name of the Company to Cal-Comp Technology (Philippines), Inc., which was approved by the SEC on June 17, 2013. In 2016, the Company moved its manufacturing facility to the Lima Technology Center in Batangas, leasing from its then affiliate, KPPH. The move was part of the efficiencies being implemented by NKG of its subsidiaries in the Philippines for better monitoring of the entities' operations and management oversight. The move also resulted to the maximization of KPPH's manufacturing facility.

Having moved its manufacturing plant to Batangas, the Company leased out its existing facility in Calamba as a manufacturing or warehousing facility for its customers and registered as an Ecozone Facilities Enterprise on May 16, 2016.

The Company used to be a 99.99% subsidiary of Cal-Comp Electronics (Thailand) (CCET), a publicly listed company since 2000 in the Thailand Stock Exchange, which has manufacturing facilities in Mahachai and Petchaburi, Thailand covering over 450,000 sq. m. of land and employing over 16,000 employees. Although CCET remains to be a stockholder of the Company holding 19.19% of the Company’s total issued and outstanding shares, the Company’s biggest shareholder is now Kinpo International (Singapore) Pte. Ltd. (“Kinpo Singapore”), holding 80.81% of the Company’s total issued and outstanding capital stock. The change in ownership of the Company was pursuant to an internal reorganization undertaken by the Company, which includes the acquisition by the Company of 99.99% of the capital stock of KPPH from Kinpo Singapore, in the

65 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION first quarter of 2018. See “Business – Corporate Structure and Reorganization” beginning on page [67] of this Prospectus.

Kinpo Singapore is a financial holding company established under the laws of Singapore in 1994. CCPH

2012 MAY 2012 AUG 2012 SEP 2013 JUN

Select the Facility Finish Zone-A and setup Received the ISO Change name Cal-Comp Location SMT, Cell-1 Line 9001:2008 Technology (Philippines), certificate Inc by SEC approval

2012 2013

2012 JUN 2012 OCT 2013 FEB

Register Company Name: Toshiba Audit Approval, Achieve the 446K New Kinpo Group Technology Start mass production shipment (Philippines), Inc and and 1st lot shipping Approved as PEZA registered company

The Company’s wholly-owned subsidiary, Kinpo Electronics (Philippines), Inc. was incorporated on January 16, 2014 to engage in the importation of raw materials, experimentation, testing and manufacture of electronic equipment of every kind as well as their spare parts, calibration of testing tools and equipment in support of the manufacturing process, engage in the export sale and wholesale marketing, sale and distribution in the Philippines of the manufactured electronic products, which include, among others: (1) calculators of all kinds;; (2) smart home appliances; and (3) smart beauty products.

KPPH was registered as an Ecozone Export Enterprise manufacturing graphing calculators, electronic products, computer peripherals and telecommunications products at the Lima Technology Center – Special Economic Zone (SEZ) on February 14, 2014. On August 4, 2015, the registered activity was amended to include research and development. On November 12, 2014 and October 2, 2015, KPPH registered new projects to (1) manufacture graphing calculators at the Lima Technology Center –SEZ (2) manufacture all kinds of LED lights at the Lima Technology Center – SEZ; and (3) manufacture electronic products at the First Philippine Industrial Park II – SEZ, respectively. KPPH registered as an Ecozone Facilities Enterprise leasing to PEZA-registered enterprises its existing warehouse facility at Lima Technology Center – SEZ on September 5, 2016. On the same month, KPPH registered its additional warehouse facility at First Philippine Industrial Park II – SEZ for its leasing activity. KPPH has three (3) project activities with ITH entitlement which will expire in 2018~2022.

KPPH entered into a long-term lease for a 143,107 sq. m. lot at the Lima Technology Center where it built its own manufacturing plant which it commenced in February 2014. By August 1, 2014, KPPH has started commercial operations and in October of the same year, it shipped 16,120 pieces of calculators to Citizen after obtaining its audit approval. In March of 2015, KPPH completed the construction of its own manufacturing facility at the Lima Technology Center in Batangas. This facility produces various types of calculators for some of the biggest well-known calculator brands in the world. With increasing volume of orders, KPPH began building its second manufacturing facility at the Lima Technology Center less than one year from completing its first facility. The second facility was completed in November 2015.

66 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION In February 2016, KPPH won orders from a leading UK smart home appliance manufacturer. In anticipation of winning orders from this new customer and product line, KPPH leased another manufacturing facility at the FPIP in Sto. Tomas, Batangas and commenced building its manufacturing plant in September of 2015 and started production in October 2016. It shipped its first orders of vacuum cleaners produced from its FPIP plant in December 2016.

KPPH was originally a wholly-owned subsidiary of Kinpo Electronics Inc. (KPO), a Taiwanese company engaged in the EMS business. On April 28, 2017, Kinpo Singapore acquired all the shares of KPO in KPPH. On January 27, 2018, the Company and Kinpo Singapore entered into a Deed of Assignment of Shares where the Company acquired 99.99% of the outstanding capital stock of KPPH from Kinpo Singapore thereby making KPPH a wholly-owned subsidiary of the Company. See “Business – Corporate Structure and Reorganization” beginning on page [67] of this Prospectus.

Corporate Structure and Reorganization

In preparation for this Offer, the Company undertook a general corporate reorganization.

On January 10, 2018, the Board of Directors and shareholders of the Company approved the increase in the authorized capital stock of the Company from ₱215 million divided into 2,150,000 Common Shares with a par value of ₱100.00 per share to ₱1.7 billion divided into 1.7 billion Common Shares with a par value of ₱1.00 per share. Pursuant to a Subscription Agreement dated January 22, 2018, Kinpo Singapore subscribed to 895,637,700 Common Shares of the Company representing 80.81% of the total issued and outstanding capital after such issuance. The increase in the authorized capital stock and amendment of the Company’s AOI was approved by the SEC on March 2, 2018.

On January 27, 2018, the Company entered into a Deed of Assignment of Shares with Kinpo Singapore for the acquisition by the Company of 49,260,070 Common Shares of KPPH. The BIR issued the CAR on the sale and transfer of the KPPH’s shares to the Company on May 24, 2018. As of the date of this prospectus, the Company is the registered and beneficial owner of 49,260,070 Common Shares representing 99.99% of the total issued and outstanding capital stock of KPPH.

As a result of the above described transactions, the Company’s corporate structure as of the date of this Prospectus is as follows:

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COMPETITIVE STRENGTHS

The Company believes that its principal strengths are the following:

1. Strong Automation Engineering and Advanced Automation Capability

Automation is used in almost all key aspects of the Company's production and operations, including SMT, PCBA, function test, assembly, materials handling and packing/pallet processing.

The Company's automation systems provide higher efficiency with stable performance versus human intervention. Human mistakes happen due to many reasons such as distractions, lack of focus, and physical limitations which increases the chance for error. Automation system helps reduce the possibility of error caused by such human limitations. It ensures consistency and accuracy in the manufacturing process, not only with respect to the quantity of products produced per cycle but also in maintaining the quality of the products produced each time. Many of the Company’s products use small components which are sensitive and require precise placements, measurements and installation. With the use of automation, the Company is able to program its machines to produce the same results which reduces the possibility of defects in its products.

The Company’s automation system allows the Company to quickly detect and identify problems or errors in its manufacturing operations. The machine sensors automatically trigger an alarm when an error or fault is detected and production can immediately be halted to correct the problem before it could result to the production of defective products.

The Company and its Subsidiary's factories employ Automated Guided Vehicles (AVGs) in all aspects of materials handling and logistics, from the transfer of raw materials to the production line, ship materials from the warehouse to its assembly lines, and move finished products to its temporary storage before they are shipped to the Company’s customers.

The Company’s Automation Division is dedicated to the key process of automation design and implementation and is continuously innovating to improve on its automation capability.

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2. Real-time Quality Management System and Virtual Factory Capability

The Company is implementing the virtual factory system in all aspects of its operations and manufacturing activities. Through this virtual factory system, the Company is able to monitor the entire manufacturing process at real time. The Company's virtual factory capability allows it to trace each aspect of its manufacturing process and data relating to its products through its barcode traceability system, including details of the raw materials used and particulars of the manufacturing process. This allows the Company to trace quality issues with the use of the traceability record system. It allows the Company to promptly ascertain the part of the production process which is the source of the defect, identify the defective products and take appropriate remedial measures to rectify the problem and to prevent future recurrence. The system also provides engineers automatic alerts to allow the Company to act quickly and take the necessary corrective actions to address any potential production issues.

The Company's virtual factory also provides its customers real-time online factory information, which enables them to access information on their orders, including information on production, quality, reliability and delivery status. Customers can easily oversee the production status at the touch of their fingers.

The Company’s virtual factory and traceability system have not only enhanced the Company’s operational efficiency and control over its production process but have strengthened customers’ confidence in the quality of the Company’s products.

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3. Design, Research and Development Capability

The Company is backed by an experienced research and development team who are experts in their fields. The Company applies Design for Manufacturing (DFM) and Design for Cost Effective Assembly (DFC) principles in its manufacturing process to ensure that product design not only conform to customer specifications but are designed to optimize assembly, service, quality and process, and ensure compact hardware and mechanical integration. The Company has an in-house comprehensive qualification laboratory to test and verify that the products manufactured by the Company meet client’s specifications and comply with quality standards. Testing and monitoring of products do not stop at the design stage. Each of the Company’s products is continuously monitored throughout its life cycle.

4. Certified to the Latest Safety, EMC, CSR and Quality System Standards

The Company and its Subsidiary conform to the highest quality in manufacturing standards, and its manufacturing practices are designed to be compliant with industry requirements. As evidenced by the Company, its Subsidiary and/or its products' certifications on the latest international standards for safety, EMC, CSR and quality, customers can trust that the Company’s products conform to international standards for quality, safety and reliability. Being certified by the latest international standards also ensures that the Company and its Subsidiary can export the products it manufactures to customers around the globe, even those with the strictest quality standard requirements such as the United States, Europe and Japan. The Company, its Subsidiary and/or its products are certified by the following safety, EMC, CSR and/or quality system standards:

Safety Standards

The Company’s HDD products are certified by UL and have the PSE safety marks. KPPH-manufactured calculators are likewise certified by UL, while its home appliances bear the safety certification from the China Quality Certification Centre.

Electromagnetic Compatibility (EMC) Standard

The HDD manufactured by the Company have certifications from BSMI, FCC, and VCCI. The calculators manufactured by KPPH have certifications from CE, BSMI, FCC, VCCI and RCM.

Corporate Social Responsibility (CSR) Standards

Both the Company and KPPH have ISO 14001 or the ISO Management Certificate for Environmental Management System. In addition, KPPH has OHSAS 18001 or the ISO Management Certificate for Occupational Health and Safety Assessment Series.

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Quality Standards

Both the Company and KPPH have ISO 9001 or the ISO Management Certificate for Quality Management System. In addition, KPPH has IECQ QC 080000 for the Lima manufacturing facility or the ISO Management Certificate for Hazardous Substance Process Management System.

5. Member of a Leading Global EMS and ODM Manufacturing Group with a Global Presence and Proven Superior Technical Expertise, Competence and Resources in Delivering Quality Solutions and Products to Customers Worldwide

The Company enjoys strong support from NKG and its member companies. With NKG’s global reach, diverse base of stable, blue-chip customers, and excellent reputation as a trusted EMS/ODM provider, the Company is able to leverage on NKG’s reputation and customer base in developing its own. Backed by the NKG name, the Company is able to attract the interest of customers worldwide.

The Company also enjoys synergies with NKG and its related companies allowing it to benefit from greater cost efficiency due to economies of scale and stronger clout in negotiating terms with suppliers.

The Company also benefits from NKG’s research and development capabilities. Constant collaborations within the NKG provides the Company access to research information and innovative ideas and keeps it abreast of the latest trends in the market for its products, thus enabling the Company to timely provide innovation for existing products such as new product designs or features.

6. Vertical Integration of Supply Chain

The Company benefits from the strong vertical integration of critical supply parts within NKG. Critical supply parts such as molding, plastic injection, surface treatment, power supply and sheet metals are sourced within the NKG which helps the Company to reduce its cost and improve its efficiencies and at the same time ensure quality of critical materials that goes into its products. With a vertically integrated supply chain, the Company is able to avoid disruption in its operations for the supply of critical parts.

KEY STRATEGIES

1. Continuously innovate and improve technology, product quality and design

The Company intends to continuously undertake research and development efforts in collaboration with its customers and the NKG to innovate and improve the technology, design and quality of the products it manufactures and delivers to customers and to create more complex and high tech products.

71 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION HDD PCBA and External HDD

With the rising attach rate of SSDs and its increasing availability and improved pricing, the volume of shipment of HDD products for notebooks have begun shifting to SSD. The NKG’s research, development and design team is continuously supporting and working together with the Company and the NKG's customers to create higher capacity HDD products. The NKG is developing shingled magnetic recording (SMR), heat assisted magnetic recording (HAMR), and helium-based HDD products, which may be subsequently manufactured by the Company. These new technology HDD devices greatly increase the amount of data and media that can be stored without significantly increasing cost, which is a significant advantage over SSDs, especially in the server, enterprise and surveillance market.

Calculators

With the rapid changes in technology, KPPH is continuously innovating the design and technical capabilities of its calculator products. Although scientific calculators have been in the market for over 50 years and is considered a mature product, there is still a growing demand from the education market for advanced high-tech scientific, financial and graphic calculators. KPPH is steadily gaining the market for high-tech scientific and graphic calculators and as of March 31, 2018, KPPH provides 70% of the total high-tech scientific, financial and graphic calculator market demand globally. KPPH intends to continue to increase its market share for these products through continuous research and development efforts to improve on existing technical capabilities of its products, and design initiatives to create ultra-thin stylish designs.

Smart Home Appliances

KPPH intends to continue to develop its smart home appliance products by developing its relationship with present customers to increase their orders for existing products and to win orders for new product lines. In order to meet customer production targets and increased demands, KPPH constantly reviews and makes improvements in its production and assembly techniques and capabilities to improve productivity and efficiency.

KPPH also plans on working closely with its customers to create an accurate long-term forecast of the customer’s requirements to enable KPPH to better its own production plan, warehousing and shipping requirements to timely meet its customer’s demands.

Smart Beauty Products

KPPH launched its smart beauty products in 2017 and intends to continue to improve its existing beauty product lines under the HiMirrorTM brand. KPPH recognizes that the demand for these types of products would continue to rise and is thus working on further developing the capabilities and functionalities of these products and developing new product lines that would cater to the needs of the market.

2. Strengthen and expand manufacturing capability to capture potential new business opportunity for customers seeking EMS/ODM providers outside of China

With the rising cost of manufacturing in China, analysts are predicting that a significant number of multinationals will look to other Asian countries to bring their manufacturing requirements. The Company intends to be ready to promptly act on such opportunity by strengthening its organization and expanding its manufacturing capacity and capability to enable it to act swiftly once such opportunity presents itself. KPPH is currently in the process of building its 3rd manufacturing facility at its Lima Technology Center site to expand its production capacity.

3. Increase efficiency in the manufacturing process and continue to improve automation capability to further lower cost of production and improve quality

The Company continues to review and innovate its production and assembly techniques to realize production efficiencies, faster turnaround and delivery time and lower production costs. Its Automation

72 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Department continues to study ways and means to improve its automation systems in the production line to further increase efficiency and reduce error.

4. Improve supply chain capabilities

The Company is continuously strengthening and enhancing its supply chain management capabilities by constantly searching for suppliers that can provide the best and highest quality of raw materials and parts at the lowest cost. The Company sets stringent criteria for vendor selection by ensuring vendor qualification and certification. In addition, through NKG’s Vendor Partnership Program, where NKG partners with the best suppliers in the industry, the Company is able to access top suppliers with the most competitive prices.

Considering that some of its raw materials are currently not available in the domestic market, the Company has invited and is continuously inviting its foreign suppliers to establish presence in the Philippines. The Company finds this strategy as beneficial to both parties, since to some extent this arrangement allows the Company to pass on a portion of its inventory management given the Company would only need to monitor and manage the lead time for the delivery of raw materials from the Philippine office of its suppliers to the Company's manufacturing facilities. Meanwhile, the foreign supplier would now be responsible for the lead time from importation of the raw materials to the delivery of such raw materials to Company's facilities. In exchange, the foreign supplier would be assured that such raw materials requirements would be purchased by the Company and its Subsidiary from such supplier.

The Company also constantly monitors the price trends of its raw materials. This allows the Company to determine and take advantage of the lower prices of raw materials in certain months during the year.

5. Develop own-brand products in the 3D printer, big data and beauty technology products and develop the Philippine domestic market

The Company intends to leverage on NKG’s own-product design and develop and market the same under its own brands. The Company continuously negotiates with local players to determine the market feasibility of manufacturing and introducing certain products, such as 3D printing and robotics, in the Philippine market.

FUTURE PLANS AND PROJECTS

With the growing China-US trade war, the Company has received interest from its existing customers and potential customers to move their businesses out of China and into Southeast Asia. The Company has made plans to expand its manufacturing facilities in anticipation of such growth orders.

KPPH’s Research and Development Center is currently developing a voice artificial intelligence (AI) device with speech recognition capabilities, using Taglish, a mixture of the Tagalog and English languages. The device intends to perform a range of tasks, such as playing music, answering queries and listing down grocery items for its users, upon receipt of a voice command. The device is also envisioned to be marketed for the use of big businesses, which may use the device to collect, record and analyze consumer data, such as preferences, purchasing power, and behavior, and assist such businesses in making proper marketing decisions. The Company expects to launch the AI device by the middle of 2019.

Beginning the second half of 2018, the Company will be exporting its smart beauty products under the HiMirrorTM brand to its related entity Cal-Comp Big Data Inc.

PRODUCTS

The Company and KPPH’s products compose of storage device products like HDD PCBAs and external HDDs, and consumer electronic products, such as calculators, smart home appliances and beauty products. The Company mainly manufacture HDD PCBA and external HDD, while KPPH produce the rest of the products. Revenues (in thousand US$) derived from key products in 2015, 2016 and 2017 are as follows:

Type 2015 2016 2017 March 31, 2018 Storage Products 17,570* 14,870 14,117 5,632

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Consumer Electronics 120,469 107,662 193,730 68,544 Total 138,039 122,532 207,847 74,176 * The storage products in 2015 was adjusted to use the consignment model which was implemented in 2016 in order to have model-for-model comparison. In 2015, the Company still utilized the buy-and-sell model which generated revenues of US$148.0 million. For illustration purposes, the amounts reflected in the table above assumes the adoption of the consignment model in 2015, which was actually adopted starting 2016. This figure was adjusted to provide a more accurate illustration of the performance of key products.

The table below illustrates the distribution of the revenue contributions of these products or the years ended December 31, 2015, 2016 and 2017 and the three-month period ended March 31, 2018:

Type 2015 2016 2017 March 31, 2018 Storage Products 12.7% 12.1% 6.8% 7.6% Consumer Electronics 87.3% 87.9% 93.2% 92.41% Total 100.0% 100.0% 100.0% 100.0%

HDDs

The Company’s main product line is the HDD. The HDD is an electromechanical data storage device that uses a magnetic surface to store and retrieve digital information using one or more rigid rapidly rotating discs coated with magnetic materials. The Company produces HDD PCBA, external HDDs and retail HDDs.

1. HDD – Printed Circuit Board Assembly (PCBA)

The Company produces various types of HDD PCBA for Toshiba. The HDD PCBA is a component of the HDD. HDD PCBAs are installed in different electronic products such as laptops, desktops and storage clouds. The Company’s HDD PCBA comes in various storage capacities (up to 4 terabytes), sizes (2.5 and 3.5 inches), and interfaces (SATA, SAS, and USB).

The Company manufactures the HDD PCBA for Toshiba. The Company is also engaged by Toshiba to assemble and produce external HDDs for Toshiba using the HDD PCBA the Company manufactures for Toshiba.

HDD PCBA for SAS interface HDD PCBA for SATA interface HDD PCBA for USB interface

2. External HDD

Toshiba also engages the Company for the casing design, assembly, testing and packaging of its external HDD products. External HDD is a storage device which allows end users to store data and content from laptops or desktop PCs into the portable storage device via USB cable.

The Company manufactures two size variants of the external HDD for Toshiba: the mainstream 2.5” ExHDD (or portable HDD) and the 3.5 ExHDD. The 2.5” ExHDD comes in 500GB, 1TB, 2TB and 3TB storage capacities while its 3.5” ExHDDs comes in 4TB, 5TB and 6TB storage capacities.

The Company designs the casing & packing, performs manufacturing (assembly), and conducts the final test of the external HDD. There are two sources for the material: (1) the bare HDD inside the external HDD is

74 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION consigned from the customer, Toshiba; (2) other components (except the bare HDD) such as plastic casing and packing material is obtained from the Company’s suppliers in the Philippines.

Toshiba delivers to the Company the bare HDD which goes inside the external HDD products. The Company then assembles the small interface board and casing/housing of the external HDD. The Company also installs the initial software for the external HDDs. After assembly, the external HDDs are tested, packaged and shipped back to Toshiba.

2.5” ExHDD

3.5” ExHDD

3. Retail Packing for Bare HDD

The Company also provides packing services for bare HDD SATA interface products. These bare HDDs are commonly installed in NAS devices, gaming PCs and surveillance recorders. The Company’s customer consigns to the Company 2.5” and 3.5” bare HDDs and the Company packages these bare HDD into retail packing boxes and delivers them back to its customers. These bare HDDs are sold in the worldwide retail market by the customer.

Retail bare HDD

Calculators

KPPH manufactures different types of calculators for the world’s best-known calculator brands. KPPH manufactures basic calculators, scientific calculators, financial calculators, and graphing calculators.

1. Basic Calculator

Most people have used a basic calculator as part of their everyday lives. Its basic function is to provide basic mathematical computations, such as addition, subtraction, multiplication, division, and other mathematical operations, such as computing for percentages and square roots. It is also equipped with simple memory functions.

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2. Scientific Calculator

KPPH also manufactures scientific calculators. These calculators are designed to process complex computations for use in science, engineering and mathematics. These also provide users quick access to certain advanced mathematical functions such as trigonometric functions, scientific notations, floating point arithmetic, logarithmic functions, exponential functions and roots beyond the square root. They also provide quick access to constants such as pi and e.

In KPPH’s more high-end scientific calculators, additional functions include hexadecimal, binary, and octal calculations, including Boolean math, fractions, statistics and probability calculation, calculus, among others.

3. Financial Calculators

KPPH also manufactures financial calculators. These calculators perform financial functions commonly needed in business and commerce. It has standalone keys for many financial calculations and functions, making such calculations more direct than on standard calculators. These calculators are made for Hewlett Packard and Texas Instruments.

4. Graphing Calculator

KPPH’s graphing calculators are handheld devices capable of plotting graphs, solving simultaneous equations and are programmable. These devices are typically used for scientific/engineering and education applications and can provide angle measurements (degrees/radians/grads), bar charts, combinations (nCr) and permutations

76 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION (nPr), confidence intervals, number conversions (into decimal, hexadecimal, binary or octal), distribution tests (Z, t, chi, and analysis of variance), dynamics graphing, hyperbolic and inverse hyperbolic and logic operations, among others. These calculators are used both in the classroom and laboratories.

5. TI-Innovator Hub

KPPH also recently assisted in the manufacture of the TI-Innovator Hub of Texas Instruments. This is a device designed to make it easy to teach science technology engineering and mathematics (STEM) education and coding and engineering design in the classroom. The TI-Innovator Hub connects to certain graphing calculators of Texas Instruments, and makes it easy to interface such calculators with LEDs, motors, sensors, buttons, switches and other electronics.

The table below illustrates the distribution of the different types of calculators produced and shipped by KPPH to its customers for the periods ended December 31, 2015, 2016 and 2017 and March 31, 2018 by number of units shipped:

Type 2015 2016 2017 March 31, 2018 No of Units Revenue No of Units Revenue No of Units Revenue No of Units Revenue (in thousand (in thousand (in thousand (in thousand (in thousand (in thousand (in thousand (in thousand pieces) US$) pieces US$) pieces US$) pieces US$) Basic 20,130 40,925 21,177 40,662 21,259 39,704 4,679 10,744 Calculator Scientific 7,402 22,292 6,814 17,987 7,189 18,868 1,625 4,716 Calculator Financial 533 2,597 928 5,231 809 4,689 130 700 Calculator Graphing 3,122 54,594 2,747 41,598 2,781 42,988 1,066 16,229 Calculator Total 31,188 120,408 31,666 105,478 32,038 106,250 7,500 32,389

Meanwhile, the table below illustrates the distribution of the different types of calculators produced and shipped by KPPH to its customers for the periods ended December 31, 2015, 2016 and 2017 and March 31, 2018 based on their revenue contributions:

Type 2015 2016 2017 March 31, 2018 Basic Calculator 33.99% 38.55% 37.37% 33.17% Scientific Calculator 18.51% 17.05% 17.76% 14.56% Financial Calculator 2.16% 4.96% 4.41% 2.16% Graphing Calculator 45.34% 39.44% 40.46% 50.11% Total 100.0% 100.0% 100.0% 100.00%

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OTHERS

Smart Home Appliances

KPPH provides final assembly services for a technology company with engineering and operations footprints in the United Kingdom and South East Asia. The range of products includes cord-free vacuum cleaners and hairdryers which are shipped globally.

Beauty Products

In 2017, KPPH commenced manufacturing several beauty products under the HiMirrorTM brand for XYZ Life (Philippines), Inc., a Philippine distribution entity of NKG, specifically:

1. Facial moisturizing spray

KPPH manufactures HiMirrorTM’s portable facial moisturizing spray which transforms the mineral water or water-soluble toner inside the water tank into nano-scale mist. This nano-scale mist is easily absorbed by the skin and, thus, moisturizes the skin more effectively. The facial moisturizing spray is chargeable via USB.

2. Facial cleansing brush

KPPH manufactures HiMirrorTM’s facial cleansing brush with two (2) changeable heads which allows the device to be both a cleanser and a massaging device. It includes a cleansing head which has over 20,000 silky soft bristles for deep cleansing & gentle exfoliation. Meanwhile, the massaging head has a variable angle design which allows it to follow the contours of the face and a long oval design made to increase the massage surface area and shorten the massage time. The device massages 10,000 times per minute giving the user a spa-like experience which relieves skin fatigue & stimulate blood circulation. Similar to the facial moisturizing spray, the device is chargeable via USB.

3. Facial massager

KPPH manufactures HiMirror’s HiSkin facial massager, which is an ion facial massager that helps maintain skin elasticity for a more youthful look. It provides hot and ion massage which enhances blood circulation;

78 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION deeply cleans which helps clear, lighten and smoothen the skin; and moisturizes, which improves absorption of skin care products.

4. Sonic Electric Toothbrush

KPPH manufactures HiMirrorTM’s sonic electronic toothbrush, which uses sonic technology. It has a vibration frequency of up to 28 thousand times per minute which effectively cleans areas which are hard for manual toothbrushes to reach. It has dual ultra-soft bristles, which gently cleans teeth and gums.

MANUFACTURING PROCESS FLOW

CCPH Manufacturing Process Flow

The Company manufactures its HDD products at its manufacturing facility located at the Lima Technology Center in Batangas. The figure below illustrates the typical manufacturing process for the Company’s HDD products:

HDD PCBA

Material Preparation and Surface-Mount Technology (SMT) Process Flow

Process Process description

Material Receiving

IQC Material Inspection Critical component CpK [X] OK Material storage

M/O issues material Check & Storage by SMT

Warm solder paste

SMT machine setup

SMT process

AOI & microscope check

V-Cut

F1 Stick Barcode at PCBA

Firmware download

PCBA Function TEST

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The surface mount assembly process starts with the inspection of the critical components to be used in the manufacture of the HDD PCBA. Once the components pass quality control, these are properly stored in the Company’s warehouse until the components are ready for use. A machine solder paste printer which is designed to apply warm solder paste in the pads on the PCB begins the manufacturing process. A solder paste thickness check is conducted before each component is placed in the PCB. Once completed, the PCB passes through an automatic optical inspection (AOI) and microscopic check before going through the final processing. Once a HDD PCBA is completed, it is labeled with a barcode and firmware is downloaded into its system.

M1 Sub-assembly Process Flow Process Process description PCBA Function TEST

Function test & scan PCBA serial no. into system

PQC sampling inspection

Assembly

Each completed HDD PCBA goes through a function test. Once it passes the function test, each HDD PCBA unit is scanned into the Company’s system. As an added quality control measure, a sampling inspection is conducted for each batch of HDD PCBA produced. When this is completed, the HDD PCBAs are packed and shipped to the customer.

80 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION External HDD

The Company’s customer delivers to the Company the HDD for assembly. The Company then places the HDD in an enclosure and labels it. Once assembly is completed, the external HDD products are run though a stringent function test and quality control verification test before being boxed ready for delivery.

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KPPH Manufacturing Process Flow

KPPH manufactures its calculators and beauty products at its manufacturing facility located at its Lima Technology Center in Batangas. The figure below illustrates the typical manufacturing process for calculators and beauty products:

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1. Surface-Mount Technology (SMT)

KPPH uses SMT in its manufacturing process. SMT is a method for producing electronic circuits in which the components are mounted or placed directly onto the surface of PCBs.

2. Chip on board (COB)

After the SMT process, the manufacture proceeds with the COB process. The COB process involves attaching a semiconductor die directly to a PCB substrate with adhesive, wire bonding it to a circuit pattern

83 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION already present on the board, and then encapsulating it. COB is SMT taken to its extreme, the difference between COB and SMT essentially being that COB usually involves high lead count, active devices and dispenses with the ceramic or molded plastic outer device packaging.

3. Soldering process

Due to their size, some components cannot be mounted or placed directly on the surface of PCBs using the SMT process. In such case, KPPH uses component insertion machines or manual hand insertion. Thereafter, the products undergo wave soldering or manual soldering. Wave soldering is a large-scale soldering process by which electronic components are soldered to a PCB to form an electronic assembly. The name is derived from the use of waves of molten solder to attach metal components to the PCB. The process is much faster than manual soldering of components.

4. Hot pressing process

This process involves the use of a hot-pressing machine to connect the LCD module to the PCB.

CUSTOMERS

The Company

Toshiba Corporation (“Toshiba”), a corporation organized and existing under the laws of Japan engaged in the design, manufacture and sale of storage products, has been one of the biggest and valued customers of KPO even prior to the establishment of the Company. Toshiba has a manufacturing facility located at an economic zone in the Philippine where KPO ships orders of Toshiba. To create efficiencies and savings on transportation and logistics and take advantage of the incentives provided by the Philippine government to foreign companies that invest in the Philippines by establishing presence in economic zones and the availability of sufficient skilled manpower, NKG, KPO’s parent, decided to set up the Company to manufacture the HDD PCBA requirements of Toshiba.

Currently, Toshiba, through its Philippine entity, Toshiba Information Equipment (Philippines), Inc. (“Toshiba Philippines”), is the single largest customer of the Company. The Company manufactures HDD PCBA based on the three (3)-month rolling forecast of the products (i.e. HDD PCBA and one or more models of HDDs) from Toshiba Philippines as confirmed every second week following the month in which the said forecast is provided. Based on the agreement with Toshiba Philippines, as a rule, Toshiba Philippines shall supply the parts and materials necessary for the manufacture of the products the Company manufactures for Toshiba. In case the Company needs to source raw materials to service the requirements of Toshiba Philippines, it must first obtain the approval of Toshiba Philippines.

The Company also provides assembly, testing and packaging services for Toshiba for its external HDDs.

As of December 31, 2017, 47% of the total demand of Toshiba for external HDD and 18% of the total demand of Toshiba for HDD PCBA is provided and manufactured by the Company. As of March 31, 2018, 53% of the total demand of Toshiba for external HDD and 20% of the total demand of Toshiba for HDD PCBA is provided and manufactured by the Company. Products manufactured by the Company for Toshiba and Toshiba Philippines are non-interest bearing and generally have credit terms ranging from 45 to 91 days.

KPPH

Following the success of establishing a Philippine manufacturing entity to service its existing customers, KPO established KPPH to manufacture all types of calculators to meet all calculator demands of KPO’s customers.

In view of the relationship and system established by KPO with its major customers for the calculator products, all orders for the same are coursed through KPO. Thus, KPO is the single largest customer of KPPH for its calculator products, although it produces products to service KPO's requirements for different brands including Casio, Citizen, HP and Texas Instruments.

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Based on the arrangement between KPO and KPPH, KPO is required to submit order forecasts ranging from 3 - 6 months, which KPPH uses to project its supply requirements and manage its inventory and manufacturing requirements. KPPH provides KPO flexible payment terms ranging from 30 to 60 days.

At present, KPPH has only one customer for its smart home appliances, which is a UK-based customer. Meanwhile, XYZ Life (Philippines), Inc., a Philippine distribution entity of the NKG group, is the sole customer of KPPH for its smart beauty products under the HiMirrorTM brand.

COMPETITION

The Company and KPPH are members of NKG, which according to the May 2018 report published by QY Research, ranks in the top 10 world EMS market in terms of revenue, with revenue market share of 14.59% in 2017 while it is the top leading EMS provider in Southeast Asia with a revenue market share of 22.47%. With its strong production capability and capacity and backed up by the NKG name, the Company and KPPH are leaders in their respective markets.

Competition in the HDD products market

The Company produces HDD products for Toshiba. The Company competes with Power7Tech Corp. Co. Ltd of China to provide external HDD products to Toshiba while it competes with Integrated Micro-electronics Inc. (Philippines), Alliance Mansols Inc,, Sanritsu Great International Corporation and Ionics EMS in the HDD PCBA line.

Competition in the calculator market

Since KPPH produces and sells calculators to KPO, a related party, KPPH does not directly have to compete with other competitors. KPO, in turn, competes with Inventec Corporation and Logicom, Inc., both Taiwanese companies.

Competition in the smart home appliances market

KPPH produces its smart home appliance products for a UK-based customer. KPPH potential competitors in this product line are the manufacturers in similar industry with SMT and plastic injection molding capabilities.

Competition in the beauty products market

All beauty products manufactured and produced by KPPH under the HiMirrorTM brand are marketed through XYZ Life (Philippines), Inc., a Philippine distribution entity of the NKG group. XYZ Life (Philippines), Inc. Thus, KPPH does not directly compete with any competitors. On the other hand, XYZ Life competes with local distributors of imported smart beauty products from China.

SUPPLIERS

The Company sources its raw materials and components both from within NKG as well as from third party suppliers. Most of the Company’s critical component suppliers are from abroad. While there is no real shortage of raw materials or components which the Company needs for its day-to-day business, most of these raw materials or components are not readily available locally. Thus, the Company sources these raw materials and critical components abroad. The Company is not dependent on any single supplier or service provider.

The Company’s and KPPH’s supply requirements are supported by key vendors, which NKG ensures to be brought in the Philippines to support the local subsidiaries operations. These vendors provide various types of supply inputs such as plastic injection, rubber, packaging material and blister packaging. Some of these vendors are encouraged to set up in the Philippines by allowing them to set up inside the KPPH factory.

The Company and KPPH strive to ensure that the quality of the materials supplied complies with strict adherence to quality standards and to only purchase from suppliers whose products meet all applicable quality, health and safety standards. Through a purchasing team, the Company or KPPH prepares a comprehensive

85 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION description of the materials required for its operations. Interested suppliers are then invited to fill out a “Vendor Data Sheet” and provide their quotation. The purchasing team will then endorse the proposals to the Company’s or KPPH’s quality assurance department who will then evaluate the proposal and qualify and accredit suppliers who meet the quality standards at the best value.

The figure below illustrates the typical vendor accreditation and purchasing process of the Company:

Operation Flow Chart

A No Develop and select Incoming supplier and bring forward material evaluation inspection B OK Trace and Trace and Build new supplier supervise the supervise all first batch of the machine mass production types after the Warehousing Quote, pricing of the new-type first batch of System, Maintenance machine and mass material number production

Loan operation Purchasing order operation (B2B)

Confirm delivery Accept the date delivered goods temporarily

A B

The following are the Company’s top five suppliers:

Product / Service % of Total Supplier Provided Purchases

Joinsoon Electronics Manufacturing Co., Ltd. Cable 15.76%

Fong Shann Printing Co. Ltd. Packing material 14.29%

Taihan Precision Technology (Philippines) Co., Inc. Plastic material 11.24%

Greatland Electronics Taiwan Ltd Cable 11.00%

Celeraise Electronic Corporation Cable 8.78%

The following are KPPH top five suppliers:

Product / Service % of Total Supplier Provided Purchases

Cal Comp Precision (Philippines), Inc. Plastic 7.98%

LG Chem, Ltd. Battery 5.36%

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Bo Cheng Rubber Philippines, Inc. Rubber & Plastics 5.31%

Yiking Plastic Production Inc. Plastic 5.00%

Giantplus Technology Co, Ltd. LCD Module 3.72%

In the next 12 months, both the Company and KPPH will consider opportunities for improvement to strengthen vendor management, such as accreditation of quality suppliers and improved procurement practices. The Company and KPPH are planning to further encourage other vendors to set up locations in the Philippines to improve coordination and delivery of supply requirements and to reduce transportation costs which contribute substantially to the cost of manufacturing inputs.

LOGISTICS.

The Company engages independent third-party logistics service providers to deliver the Company’s products to its customers either by land, by sea or by air freight. However, to mitigate the risks related to disruptions in the business of such third-party logistics service providers, the Company engages third-party logistics providers designated by its customers, and to the extent possible, these contracts are made between such third-party logistics provider and the customer.

The following are the logistics providers directly engaged by the Company and engaged by the Company through its customers:

Mode of Delivery Directly Contracted the Company Designated by Customers By Land 1. Master Cargo (International) Co., 1. Trucklane Moving Services Ltd. 2. Kintetsu World Express 2. Sun Express Logistics Pte. Ltd. (Philippines) Inc. 3. Jugro Transport Int'l. Phils Corp. 3. Expeditors Philippines, Inc. 4. Trucklane Moving Services 4. TLGPF (Tl Forwarding Services) 5. DHL Express (Philippines) Corporation 6. Air-Ocean Management Express

By Sea 1. Master Cargo (International) Co., 1. Expeditors Philippines, Inc. Ltd. 2. Nippon Express Phils. Corp. 2. Sun Express Logistics Pte. Ltd. 3. Jugro Transport Int'l Phils Corp. 4. Trucklane Moving Services 5. Agility International Logisi Geologistics 6. Damco Philippines Inc.

By Air 1. Master Cargo (International) Co., 1. Kintetsu World Express Ltd. (Philippines) Inc. 2. Fedex Corporation 2. Damco Philippines Inc. 3. Sun Express Logistics Pte. Ltd. 3. DHL Express (Philippines) 4. Jugro Transport Int'l Phils Corp. Corporation 5. Trucklane Moving Services 4. TNT Express Worldwide (Phil.), 6. DHL Express (Philippines) Inc. Corporation 7. Agility International Logisi Geologistics 8. Damco Philippines Inc.

RESEARCH AND DEVELOPMENT

The Company’s research and development (“R&D”) efforts are mainly coursed through KPPH. KPPH has a R&D Center located in its Lima Technology Center site in Batangas which houses over 100 employees, mostly

87 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION engineers and technical personnel. Currently, the R&D Center is developing the Taglish AI and 3D printer technology. In addition to its R&D Center, KPPH also has a 10-man R&D team whose main R&D focus is the continuous improvement of the assembly, mechanical, electrical and packaging processes of the Company and KPPH.

KPPH continues to improve its R&D activities by hiring experienced engineers with skills developed from previous work experiences. The improvement of these skills is a continuing concern of KPPH, which conducts training to hone the skills of the technical staff. The expenses incurred by the Company and KPPH in connection with research and development activities are not material as it is engaged in the ODM/EMS business. Expenses related to R&D are approximately 0.31% to 1.17% of the total net revenue per year. However, the Company expects its expenses related to research and development to increase as the Company invests in the development of its own-brand products.

MATERIAL AGREEMENTS

Company

The Company has entered into the following contracts which may be considered material.

Lease agreements

The Company, as lessee, entered into a lease agreement on July 24, 2012 with Panorama Property Ventures, Inc., over a 9,727 sq. m. lot located in Brgy. Punta Carmelray Industrial Park II, Calamba City, Laguna to set up the Company's manufacturing facility. The term of the lease is for fifty years or from September 1, 2012 until August 30, 2062. At present, the Company is leasing its facility in Laguna to one of KPPH’s customer for their own manufacturing and warehousing needs.

Customer Agreements

The Company entered into a General Purchase Terms Agreement with the Semiconductor & Storage Products Company of Toshiba on October 1, 2012 wherein the Company shall sell storage products, including software, parts and components manufactured or procured by the Company for Toshiba in accordance with the latter’s specifications. Another General Purchase Terms Agreement was entered into by the Company and Toshiba on October 1, 2013 for the sale by the Company to Toshiba of Wi-Fi adapters for Toshiba storage products. The Company also entered into a General Service Agreement with Toshiba Philippines on March 11, 2014 wherein the Company agrees to manufacture PCBAs, one or more models of HDDs and SSDs for Toshiba Philippines. These agreements are automatically renewed for successive periods of one (1) year unless either party gives the other party a prior written notice not to extend the term of the agreement.

Joint Development Agreement

On January 1, 2015, the Company together with KPPH and KPO, a company incorporated under the laws of Taiwan, entered into a Joint Development Agreement wherein the parties will collaborate on the development project including key milestones and success criteria, which is expected to result in the development of products, including but not limited to smart voice speaker, robot, calculator and hard disk. The same parties again entered into a Joint Development Agreement on January 1, 2017 for the development of products provided by Cal-Comp Big Data, Inc. The Company and KPPH also entered into a Joint Development Agreement on January 1, 2015 with XYZ Printing, Inc., a company incorporated under the laws of Taiwan, for the development of products including but not limited to 3D printers. These Joint Development Agreements shall be in full force for 1 year and shall continue for successive one (1) year periods thereafter unless otherwise earlier terminated by the parties.

Supply Agreements

The Company entered into various supply agreements with the following suppliers: Joinsoon Electronics Manufacturing Co., Ltd., Fong Shann Printing Co., Ltd., Greatland Electronics Taiwan Ltd., Bo Cheng Rubber Philippines Inc., Yiking Plastic Production Inc., Giantplus Technology Co., Ltd.

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KPPH

KPPH also entered into the following contracts which may be considered material.

Construction Contracts

KPPH entered into contracts with various contractors for the construction of phase 4 of its FPIP manufacturing site covering approximately 22,870 sq. m. floor area. Some of the major contractors are Vistagreen, MCM Auxillary System Inc., ANT Industrial Works, Lynkonstruct Inc. and Ridgepower Construction and Management.

KPPH entered into contract with Shengfu Corporation for the phase 2 construction of office and factory building with an approximately 25,000 sq. m. floor area also in its FPIP manufacturing site.

Lease agreements

KPPH, as lessor, also entered into a lease agreement on March 6, 2017 with the Company, as lessee, over a lot located in Lima Technology Center, Lipa City, Batangas to be used exclusively for commercial purposes to provide materials or products to the lessor. The term of the lease is for 5 years, from March 1, 2017 to February 28, 2022.

KPPH, as lessee, entered into a lease agreement on June 23, 2014 with Lima Land, Inc. for the 143,107 sq. m. lot at Block 7 Lot 1, Main Blvd., Lima Technology Center, Lipa City, Batangas. The term of the lease is 50 years, commencing on July 9, 2014 and expiring on July 8, 2064, renewable for a non-extendible term of up to 25 years, or up to July 8, 2089. This property is currently the manufacturing site of both the Company and KPPH at the Lima Technology Center.

KPPH, as lessee entered into a lease agreement on August 6, 2015 with FPIP for the lease of a 133,600 sq. m. property at FPIP II-SEZ. The term of the lease is for 50 years commencing on October 14, 2015 and expiring on October 13, 2065, renewable for a non-extendible period of up to 25 years. This property is currently the FPIP manufacturing site of KPPH.

On December 7, 2017, KPPH entered into a lease agreement with FPIP Property Developers and Management Corporations (FPDMC) for the lease of a 3,168 sq. m property located at [First Philippine Industrial Park – Special Economic Zone (FPIP-SEZ), Tanauan City, Batangas] for a lease term of 5 years commencing on December 9, 2017 up to December 8, 2022. This property is currently being used by KPPH as a warehouse.

Financing Agreements

KPPH entered into various loan and credit agreements with BDO Unibank Inc., Cathay United Bank Co. Ltd., CTBC Bank (Philippines) Corp., First Commercial Bank Ltd., Mega International Commercial Bank Co. Ltd., Metropolitan Bank and Trust Company and Taiwan Cooperative Bank Manila Offshore Banking Branch to finance its operations.

KPPH has an unsecured working capital credit line consisting of (1) an omnibus line with limit of US$10 million (including a P/S revolving credit line with sub-limit of US$10 million and standby letters of credit with sub-limit of US$10 million) and (2) a foreign exchange settlement line with limit of US$10 million, with BDO Unibank Inc. executed on July 31, 2017 and ending on June 29, 2018. The credit line is being renewed with an expiry date of March 31, 2019.

KPPH has a working capital credit line for ₱500 million with Cathay United Bank Co. Ltd. executed on January 10, 2018 expiring one year from the approval date. The credit line can be converted to the equivalent US$10 million.

KPPH has a credit agreement with CTBC Bank (Philippines) Corp. for US$20 million which is shared with CCPH, expiring on June 30, 2018 and secured by a letter of support from the Parent Company.

KPPH has a credit line for a trust receipt credit facility and general working capital credit facility with First Commercial Bank Ltd. executed on November 9, 2017. The amount involved is US$10 million (General working capital is only up to US$1 million).

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KPPH has a loan facility agreement with Mega International Commercial Bank Co. Ltd. executed on December 28, 2017 ending on November 26, 2018. This involves an omnibus line for performance guarantee, import & time loan currencies. The amount involved is US$20 million or its equivalent in other foreign currencies, subject to: (1) Performance Guarantee - US$3 million; (2) Time loan - US$10 million; (3) Time loan & performance guarantee - US$10 million.

KPPH has an unsecured working capital credit line of up to ₱700 million with Metropolitan Bank and Trust Company executed on April 6, 2018, ending on February 28, 2019.

KPPH has an omnibus line for import & time loan in the amount of US$15 million with Taiwan Cooperative Bank Manila executed on September 15, 2017, ending on August 4, 2018.

HUMAN RESOURCES

The Company believes that its and its Subsidiary’s relationship with their employees are generally good and, since the start of its operations, both the Company and KPPH have not experienced any work stoppage, disruption or strikes as a result of any labor or labor-related disagreements. There were no incidents of strikes at present nor are there threatened incidences of strikes. The Company and KPPH have no collective bargaining agreements with their employees and none of their employees belong to a union. The Company and KPPH complies with occupational requirements such as minimum compensation and benefits standards, child-free labor and other employment best practices, including providing performance bonuses, transportation services and meal subsidies to employees.

Company

As of March 31, 2018, the Company has 95 regular employees, broken down as follows:

Position Total Managers & Executives 9 Engineers 25 Administration & Support Group 10 Other Rank & File 51 Total 95

To augment its manpower requirement, the Company engages the services of manpower agencies. At present, the Company engages two manpower agencies to provide approximately 200 personnel. Subject to the changing needs of the business, the Company expects to hire approximately 50 additional employees within the next 12 months.

The Company also currently employ 17 foreign nationals holding various senior management and technical positions. The appropriate alien employment permits of such foreign employees have been secured or are currently being secured.

KPPH

As of March 31, 2018, KPPH has 1,245 regular employees, broken down as follows:

KPPH - LIMA KPPH - FPIP Total

Number Number Number Managers & Executives 39 69 108 Engineers 190 166 356 Administration & Support Group 72 80 152 Other Rank & File 227 402 629 Total 528 717 1,245

90 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Likewise, KPPH also engages the services of several manpower agencies to augment its manpower requirement. As of March 31, 2018, the manpower agencies provide approximately 5,000 personnel to KPPH. Subject to the changing needs of the business, KPPH expects to hire approximately 800 additional employees within the next 12 months.

KPPH currently employs 108 foreign nationals who hold senior management and highly technical positions. The appropriate alien employment permits of such foreign employees have been secured or are currently being secured.

PROPERTIES AND FACILITIES

The Company does not own land and manufacturing facility, but has entered into a long-term lease agreement with KPPH for the use of a portion of KPPH’s manufacturing facility at the Lima Technology Center. The Company operates in a 9,727 sq. m. facility within the Lima Technology Center.

The Company owns a factory building located in Carmelray Industrial Park II, Calamba City, Laguna, which it currently leases to an existing customer. The Company also owns machinery and equipment such as carrier scroll chiller, modular high speed placement, multi-function chip mounting, surface mounting machine, generator set, storage units, x-ray inspection system, reflow machine, screen printing machine with accessories, solder paste inspection machine, network equipment, automated optical inspection machine, auto-stick machine and ultrasonic stencil cleaner machine among others. All of these properties are free and clear of liens, encumbrances, and other charges and are not subject of any mortgage or other security arrangements.

KPPH also does not own land but has entered into a long-term lease with Lima Land, Inc. for its 143,107 sq. m. land where KPPH’s manufacturing facility at the Lima Technology Center is located and with First Philippine Industrial Park, Inc. for its manufacturing facility at the First Philippine Industrial Park in Sto. Tomas, Batangas covering 133,600 sq. m. The terms of its leases are for an initial term of 50 years with an option to renew for another term of 25 years.

KPPH, nevertheless, owns the factory buildings in the Lima Technology Center and the First Philippine Industrial Park, a residential building in Campo Verde Subdivision, Batangas for its employees. KPPH also owns different machines, equipment and transportation equipment which it uses in manufacturing its products. The photos show the factory buildings in the Lima Technology Center and the First Philippine Industrial Park, respectively.

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Lima Technology Center

FPIP

INTELLECTUAL PROPERTY

The Company believes that its operations are not dependent on any patent, trademark, copyright, license, franchise, concession or royalty agreement.

The Company and its Subsidiary do not own any trademark. However, its affiliate, Cal-Comp Big Data, Inc., a corporation organized under the laws of Taiwan, owns the HiMirrorTM trademark and logos and has authorized KPPH to use the said logo for business purposes within the Philippine territory:

HIMIRROR

MATERIAL PERMITS AND LICENSES

All government approvals and permits issued by the appropriate government agencies or bodies which are material and necessary to conduct the business and operations of the Company and its Subsidiary, have been obtained and are in full force and effect.

Set out below are all the material permits and licenses of the Company necessary to operate its business as currently conducted. The failure to possess any of which would have a material adverse effect on the business and operations of the Company.1

1 As the Company continuous to operate and expand its business, certain permits and licenses will be added to the list below as they are secured in the ordinary course of business.

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Name of Permit Issuing Agency License/ Issue Date Expiry Date Permit No. Certificate of Registration SEC CS201210301 June 01, 2012 June 01, 2062 Certificate of Registration- Philippine 12-48 June 25, 2012 Valid unless Ecozone Export Enterprise at Economic Zone revoked or Lima Technology Center- Special Authority (“PEZA”) suspended Economic Zone Certificate of Registration- PEZA 12-48 March 11, 2016 Valid unless Ecozone Facilities Enterprise at revoked or Carmelray Industrial Park II- suspended Special Economic Zone PEZA-ERD Form No. 00-01 PEZA 2018-0371 January 09, 2018 Valid for 2018 Certificate of Entitlement to 5% Special Tax on Gross Income: Ecozone Export Enterprise and Ecozone Facilities Enterprise PEZA-ERD Form No. 03-01 PEZA 2018-0491 January 09, 2018 Valid for 2018 Certificate of Applicable Incentives for Ecozone Export Entrprise and Ecozone Facilities Enterprise PEZA-ERD Form No. 97-01 PEZA 2018-0681 December 28, 2017 Valid for 2018 PEZA VAT Certificate (Vat Zero- rating) Certificate of Registration BIR- CALAMBA OCN April 27, 2016 Not applicable 1RC0000869291 Certificate of Registration BIR- LIPA OCN July 16, 2012 Not applicable 1RC0000956757 Certificate of Registration Philhealth 008030003860 June 27, 2013 Not applicable Certificate of Registration SSS 0410356247 March 30, 20162 Not applicable Certificate of Registration HMDF 050003530703 March 30, 20163 Not applicable Hazardous Waste Generator DENR-EMB GR-4A-10- May 6, 2018 Not applicable Registration 00995 DOLE Registry of Establishment Department of RO IV-A – BPO January 12,2017 Not applicable Labor and 1020-2273 Employment “DOLE” Discharge Permit Lima Water LWC-DP-18- May 7, 2018 March 31, 2019 Corporation 035 Temporary Permit to Operate (Air DENR Regional 2018-POA- May 8, 2018 February 28, 2023 Pollution Source and Control Office No. IV- 0410-1706 Installations)- Five(5) units Calabarzon Electric Reflow Oven provided with exhaust system Certificate of Non Coverage DENR-EMB CNC-OL-R4A- June 17, 2016 Not applicable 2016-06-07306

Set out below are all the material permits and licenses of KPPH necessary to operate its business as currently conducted. The failure to possess any of which would have a material adverse effect on the business and operations of KPPH.4

KPPH

2 Date of filing of SSS Employer Data Change Request form to transfer to Lima Technology Center, Lipa City, Batangas. 3 Date of approval of transfer to Lima Technology Center, Lipa City, Batangas. 4 As KPPH continuous to operate and expand its business, certain permits and licenses will be added to the list below as they are secured in the ordinary course of business.

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Name of Permit Issuing Agency License/ Issue Date Expiry Date Permit No. Certificate of Registration SEC CS20140061 January 16, 2014 January 15, 0 2064 Certificate of Registration- PEZA 14-09 February 14,2014 Unless Ecozone Export Enterprise at otherwise Lima Technology Center and revoked or First Philippine Industrial Park suspended II- Special Ecozones PEZA-ERD Form No. 03-01 PEZA 2018-0498 January 9, 2018 Valid for 2018 Certificate of Applicable Incentives for Ecozone Export Enterprise and Ecozone Facilities Enterprise PEZA-ERD Form No. 97-01 PEZA 2018-0682 December 28, Valid for 2018 PEZA VAT Certificate (Vat 2017 Zero-rating) License to Operate Optical Optical Media License no. September October 12, Media Business-Exporter Board (“OMB”) EBS 17- 29,2017 2018 09293 SSS Registration SSS Employer No. April 2014 Not Applicable 0410584860 Philhealth Registration Philhealth Employer No. May 23, 2014 Not Applicable 00803000577 9 HDMF Registration HDMF Employer No. Not Applicable 20493367000 7

KPPH-LIMA Technology Center

Name of Permit Issuing Agency License/ Issue Date Expiry Date Permit No. Certificate of Occupancy- Phase PEZA N-091814-A- December 4,2014 Not applicable 1A – 06 Office/Production/Warehouse Area Certificate of Occupancy- PEZA N-081415-A- October 15,2015 Not applicable Factory/Office Building Phase 04 1 Permit to Operate- Electrical PEZA R050417B04 April 24, 2018 One year from Equipment E the Date of Inspection Permit to Operate- Mechanical PEZA R050417B04 April 24, 2018 One year from Equipment/ Machinery M the Date of Inspection Permit to Operate- Electronics PEZA R050417B01 October 14, 2017 One year from Equipment EL the date of inspection Certificate of Registration BIR-LIPA OCN February 12, 2014 Not applicable 1RC0000703 309 DOLE Certification- DOLE-LIPA BPO 1020- September 11, Up to cessation Occupational Safety and Health 1192 2014 Standards Environmental Compliance DENR- Regional ECC-R4A- November 06, Not applicable Certificate Office No. IV- 1711-0395 2017 Calabarzon Permit to Operate (Air DENR-Region IV 2017-POA- March 31, 2017 February 28,

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Name of Permit Issuing Agency License/ Issue Date Expiry Date Permit No. Pollution Source and Control Calabarzon 0410-1367 2022 Installations)- One Diesel Engine Generator Permit to Operate (Air Pollution DENR-Region IV 2018-POA- February 23, 2018 February 28, Source and Control Calabarzon 0410-1367 2022 Installations)-16 Units Electric Reflow Ovens (provided with exhaust system [1-64 KW,1-44 KW,11-38 KW,1-36 KW, 1-24 KW, & 1-23 KW], and 1 unit 6,000 liters capacity diesel storage tank Discharge Permit Lima Water LWC-DP-18- March 27, 2018 March 31, 2019 Corporation 035 Hazardous Waste Generator DENR GR-4A-10- April 21, 2016 Not applicable Registration Certificate 00129 Fire Safety Inspection PEZA F.S.I.C. No. Not applicable Not applicable Certificate N- 022616A05- HB

KPPH- FPIP

Name of Permit Issuing Agency License/ Issue Date Expiry Date Permit No. Certificate of Occupancy- PEZA N101216B01 January 20, 2017 Not applicable Office Factory Building (Phase C 1) Building 1 Permit to Operate- Electrical PEZA Renewal of Renewal of the Renewal of the Equipment the permit is permit is under permit is under under process process process Permit to Operate- Electronics PEZA Renewal of Renewal of the Renewal of the Equipment the permit is permit is under permit is under under process process process Permit to Operate- Mechanical PEZA Renewal of Renewal of the Renewal of the Equipment/ Machinery the permit is permit is under permit is under under process process process Certificate of Registration BIR-STO. OCN November 17, Not applicable TOMAS 1RC0000833 2015 701 DOLE Certification- DOLE- BPO 1020- May 29, 2017 Up to cessation Occupational Safety and Health STO.TOMAS 2473 Standards Certificate of Sewer Pollution Control CSI-27-18 February 19, 2018 Not applicable Interconnection (Renewal) Officer of FPIP Utilities Inc. Hazardous Waste Generator DENR- Regional GR-4A-10- August 04, 2017 Not applicable Registration Certificate Office No. IV- 000267 Calabarzon Permit to Operate (Air DENR- Regional 2017-POA- August 09, 2017 August 05, Pollution Source and Control Office No. IV- 0410-1569 2022 Installations)- One Diesel Calabarzon Engine Generator Permit to Operate Air Pollution DENR- Regional 2018-POA- February 05, 2018 August 05, Source and Control Office No. IV- 0410-1569 2022 Installations) - Five units Calabarzon 9.5KW “Heller” electric reflow

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Name of Permit Issuing Agency License/ Issue Date Expiry Date Permit No. oven provided with exhaust system. Environmental Compliance DENR- Regional ECC-OL- April 26, 2016 Not applicable Certificate Office No. IV- R4A-2016- Calabarzon 0172 Clearance for Development LLDA STS14934 June 23, 2016 Not applicable Plan/Program/Project in Laguna De Bay Region

LEGAL PROCEEDINGS

There are no material pending legal proceedings, bankruptcy petition, conviction by final judgment, order, judgment or decree or any violation of a securities or commodities law for the past five years to which the Company and KPPH or their directors or executive officers is a party or of which any of its material properties are subject in any court or administrative government agency.

INVESTOR RELATIONS OFFICE

The Investor Relations Office (IRO) will be tasked with (a) the creation and implementation of an investor relations program that reaches out to all shareholders and informs them of corporate activities and (b) the formulation of a clear policy for accurately, effectively and sufficiently communicating and relating relevant information to the Company's stakeholders as well as to the broader investor community.

The IRO will also be responsible for ensuring that the Company’s shareholders have timely and uniform access to official announcements, disclosures and market-sensitive information relating to us. As the Company’s officially designated spokesperson, the IRO will be responsible for receiving and responding to investor and shareholder queries. In addition, the IRO will oversee most aspects of the Company’s shareholder meetings, press conferences, investor briefings, management of the investor relations portion of the Company’s website and the preparation of the Company’s annual reports. The IRO will also be responsible for conveying information such as the Company’s policy on corporate governance and corporate social responsibility, as well as other qualitative aspects of the Company’s operations and performance. The Company’s IRO will be located at Block 7, Lot 1, Main Boulevard, LIMA Technology Center, Lipa City, Batangas Philippines. Effective June 4, 2018, the Company’s Investor Relations Officer will be Guo-Lun Lo. He may be contacted at +(632) 043-233 8888 ext. 14906.

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INDUSTRY

The information set out in this section “Industry” has been extracted from the Global Electronics Manufacturing Services (EMS) Market Size, Status and Forecast 2023 published by QY Research dated May 2018.

Electronics manufacturing services is a term used for companies that design, manufacture, test, distribute, and provide return/repair services for electronic components and assemblies for original equipment manufacturers. The concept is also referred to as electronics contract manufacturing (“ECM”).

Global Electronics Manufacturing Services Market Overview

In 2017, thanks to a surge in shipments of mobile phone vendors such as Apple, Huawei, and Xiaomi, the EMS market rose by 5.17%. In 2017, the growth in mobile phone offset the drop in notebook computer market. It is predicted that the mobile phone will still have strong growth potential, but with the growth rate dwarfed by that in 2018. The 4G construction of Radio Access Networks (“RAN”) reached the peak after 2015. It is projected that the RAN market will be on the decline in 2018-2023. Moreover, the data size of mobile internet surged, data center or cloud computing services market grew robustly.

IT infrastructure, with data center or cloud computing services as the core, will constitute the biggest driving force. Server EMS is basically monopolized by the Taiwanese vendors, with a global market share of over 90%. Taiwan has a complete industrial chain of server, which is viewed as an extension of the computer. As the Taiwanese vendors have stronger and stronger technical ability, the future equipment cabinet solution of Server+Routing+Storage+Switching will gain more market space.

However, the European and US EMS vendors are dedicated to improving profitability by reducing the revenue proportion of telecom and communication infrastructure, and intensifying the expansion to industrial, medical, and automotive sectors. Meanwhile, they have also strengthened the weakness in components, and ventured into the upstream sector of industrial chains. But compared with the Taiwanese vendors, the European and US EMS peers lagged far behind in the field of components.

In the upcoming five years, the mobile phone market will embody the biggest growth potentials in the EMS industry. The success of Xiaomi that focuses on marketing hype and brand promotion while entirely outsources manufacturing to its contract vendors propels EMS services. Xiaomis’ remarkable achievement stimulates a large number of mobile phone companies to follow suit, which opens a wide space for EMS vendors. Samsung and LG may commission EMS vendors to conduct manufacturing partly.

The EMS market size is expected to jump from US$43,165.32 million in 2017 to US$54,985.81 million in 2023, with a CAGR of 4.12%. The EMS market size in Southeast Asia, which holds a market share of 9.58% in 2017, is expected to jump from US$4,134.50 million in 2017 to US$6,033.29 million in 2023, with a CAGR of 6.50%.

97 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION On the basis of products, the EMS market is primarily split into electronic manufacturing, engineering services, test development and implementation, logistic services and others. Electronic manufacturing holds about 45.19% of global share in 2017, and it will reach US$23,485.64 million in 2023 from US$19,506.75 million in 2017.

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On the basis of the end users/application, the EMS market covers computer, communications, consumer, industrial and others. Globally, the EMS market is mainly driven by growing demand for computer and communications which totally account for nearly 66.52% in 2017.

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Players in the Global EMS market

The total EMS revenue of US$43,165.32 million in 2017 is shared largely by fifteen major players.

New Kinpo Group 14.59%

New Kinpo EMS Business Revenue and Market Share

New Kinpo Group, a corporation of several subsidiaries including Kinpo Electronics, Cal-Comp Electronics, and AcBel, is a global EMS and ODM company that offers its customers lower costs, faster delivery times and world-class product quality. The company’s EMS business spans multiple product lines, including storage, printers, NAS, wireless and broadband, digital home, consumer electronics, wearables, 3D printing, robotics, power management and smart grid, industrial, automotive, security, medical/healthcare and emerging technologies.

New Kinpo Group’s network of strategically located manufacturing sites have the added benefit of allowing customers to manufacture products closer to their end customer, resulting in dramatically reduced shipping costs, lower tariffs and more cost-effective inventory management.

In 2017 and as of March 31, 2018, NKG recorded revenues of US$6,296.03 million and US$[●] million, respectively which is expected to rise to US$6,368.43 million in full year 2018.

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NKG’s focus and orientation on products have propelled the company to be the world’s leading manufacturer of wireless routers, TV set top boxes, printers and hard disks drives. NKG, seeing opportunities in Southeast Asia and manufacturing potential in the Philippines, established a highly-automated and vertically-integrated factory in Batangas in 2015 dedicated to consumer product manufacturing. This is NKG’s first factory in the Philippines and 19th in Southeast Asia.

NKG’s strong presence in Southeast Asia is reflected by its 22.47% market size share in 2017 or equivalent to US$929.06 million which is expected to jump to an estimated amount of US$990.23 million in 2018.

New Kinpo Group 22.47%

Trends and Challenges

Electronics manufacturing is facing both challenges and opportunities in 2017. The need to control costs continues to be a priority for manufacturers, while new technologies enter the landscape providing revenue opportunities but requiring manufacturers to partner with technology solutions providers and other organizations that can supply capabilities outside of the company’s core focus.

The nature of electronics manufacturing trends in 2018 is such that every trend comes along with challenges. Electronics manufacturers will focus on finding ways to capitalize on current trends while balancing the need to control costs, integrate technologies outside of their primary areas of expertise, and meet customer demands for more efficient, eco-friendly manufacturing processes and electronics.

The five biggest trends and challenges shaping electronics manufacturing in 2018 are:

a. Brief product life cycles

Technology isn’t evolving for its own sake. It’s responding to the wants and needs of consumers hungry for products that perfectly suit their day to day lives. Thus, companies in EMS and contract manufacturers are required to have quality processes in place for new product introduction. To make sure product launches hit set goals on quality, volume and release, it’s important to use closed-loop communication concepts between engineering, sales and manufacturing.

b. Intricate international supply-chain

It is obvious now that we live in a global economy. Those who are positioned best to deal with the complexities of international sales are those best positioned to succeed in the long run. Now, it is common for components to skate across multiple continents-sometimes more than three-before arriving at their endpoint. Companies must be prepared to deal with varying international standards along with the twin issue of compliance and traceability that are prone to raise operational problems.

101 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION c. Demand

The worst of the global economic crisis is fortunately in the rear view mirror, so it is expected that the demand for electronics should continue to rise. While cyclical fluctuations and economic dips are responsible for large shifts in demand, on a smaller level technology is highly susceptible to changing local conditions because tech is now so heavily tied to consumer demand. Consumer demand is an uncertain thing, determined by the vagueness of perceived value and swiftly fleeting taste. For that reason, production capabilities must remain lean and able to shift quickly with uncertain demand.

d. Environmental issues

This is no longer a world where companies’ margins are freely raised above the concerns of the environment. New standards and regulations are pushing electronics manufacturers to consider their “social responsibility” when making decisions both small and large. The entire life cycle of a product must be considered; from manufacturing, with the use of harmful chemicals and human exposure; to consumer use, with the consumption of energy; to the end of its life, with disposal and complex disassembly.

e. Tighter margins

Consumers have benefited from a global marketplace that has emphasized competition to bring in the latest and greatest innovations and lower prices. On the supply side, however, this has to lead to shrinking margins. Gains in efficiency and organization have slowed and there is not enough differentiation between products to stave off this growing trend of commoditization. Electronic manufacturers must deal with this downward pressure on operating margins as lights continue to turn on across world.

Threat from competition

The services EMS provides are available from many independent sources as well as from the in-house manufacturing capabilities of current and potential customers. The global competitors include Celestica Inc., Flex Ltd., Foxconn Technology Group, Jabil Circuit, Inc., Plexus Corp., and Sanmina Corporation, some of whom have greater financial, manufacturing or marketing resources than normal. The principal competitive factors in targeted markets are engineering solutions capabilities, product quality, flexibility, cost and timeliness in responding to design and schedule changes, reliability in meeting product delivery schedules, pricing, technological sophistication and geographic location.

In addition, ODMs that provided design and manufacturing services to OEMs have significantly increased their share of outsourced manufacturing services provided to OEMs in traditional markets, such as computing and telecommunication. Competition from ODMs may increase if our business in these markets grows or if ODMs expand further into or beyond these markets.

Potential Market and Market Opportunities

a. 5G technologies

With the arrival of cloud computing, big data, and 5G technologies, smartphones and tablets will be widely used in games, entertainment, smart homes, wearable devices, and smart cities.

5G is the main direction for the development of new generation mobile communication technology. According to relevant plans, China has made 5G R&D and industrial advancement a key project and has actively promoted key technologies for 5G and ultra-broadband research. It is expected that it will formally commercialize 5G networks in 2020. Based on the advantages of 5G communication technology, countries around the world are actively promoting 5G R&D and industrial applications. The future industry has broad prospects for development and will drive the continuous development of related communications equipment and component industries.

102 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION b. EMS opportunities in the medical industry

The pervasiveness of electronics in the medical industry is increasing rapidly. The use of wireless communications, robotics, and software in this sector is expected to grow rapidly in the next three to four years.

At the same time medical OEMs are under increasing pressure to restructure their growth strategies and product portfolios. Increasing demand for affordable medical devices, convergence of electronics, and rising cost pressured have helped bolster EMS providers’ participation in the last few years.

Medical OEMs have the requisite knowledge of designing, marketing, and other core competencies. However, they require continuous investment to keep pace with advancing electronic content in medical devices and with manufacturing and quality tools. EMS providers have the ability to offer effective solutions to lower cost, while increasing quality, efficiency, value of innovation, time-to-market and supply chain management.

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REGULATORY AND ENVIRONMENTAL MATTERS

The information in this section has been derived from various Government and private publications or obtained from communications with various Government agencies unless otherwise indicated and has not been prepared or independently verified by us, the Issue Manager and Sole Bookrunner, and Joint Lead Underwriters, or any of the Company's respective subsidiaries, affiliates or advisors in connection with the Offer and sale of the Offer Shares.

Philippine Economic Zone Authority (PEZA)

The PEZA is an attached agency to the Department of Trade and Industry and is tasked to promote investments, extend assistance, register, grant incentives to, and facilitate the business operations of investors in export- oriented manufacturing and service facilities located inside selected areas throughout the country proclaimed by the President of the Philippines as PEZA Special Economic Zones. It oversees and administers incentives to developers/operators and locators in Special Economic Zones.

Entities registered with the PEZA are entitled to fiscal and non-fiscal incentives. Fiscal incentives include income tax holiday; tax and duty free importation of raw materials, capital equipment, machineries and spare parts; VAT zero rating; exemption from payment of local government imposts, fees, licenses, and taxes; and exemption from expanded withholding tax. Non-fiscal incentives include simplified import-export procedures; and special non-immigrant visa with multiple entry privileges for certain officers and employees. PEZA also extends visa facilitation assistance to foreign nationals and their spouses and dependents.

PEZA registered entities are required to maintain distinct and separate books for its operations inside the Special Economic Zones and are mandated to submit financial and other reports/documents to PEZA. Below are some of the periodic reports/documents required to be submitted to PEZA and their respective due dates:

Types of Report Due Date Quarterly Reports 45 days after the end of the quarter

Annual Report (For Developer/Operator Enterprises) 90 days after the end of the accounting period Audited Financial Statements (For Developer/Operator Enterprises) 30 days after filing with BIR Quarterly Income Tax Returns (For Developer/Operator 15 days after filing with BIR Enterprises) Annual Income Tax Returns (ITR) (For Developer/Operator 30 days after filing with BIR Enterprises) Breakdown/Schedule of Sales per Activity Together with AFS & Annual ITR

Breakdown/Schedule of Other Income Together with AFS & Annual ITR

Data on Revenues and Taxes Paid Together with AFS & Annual ITR

Commission on Audit (“COA”) Annual Audit Report Audit After the end of the year Certificate (For Developer/Operator owned by the Government) Change of Corporate Name & Equity Ownership 30 days after the said change

As PEZA-registered entities, the Company and KPPH are required to submit the periodic reports described above to PEZA. The Company and KPPH are also required to submit quarterly, semi-annual and annual reports to the DENR as part of their ECC requirements. The failure to comply with these reports and with any other requirements or regulations of these government agencies could expose the Company and KPPH to penalties and the revocation of their respective registrations.

The Company and KPPH ensure compliance with these requirements by assigning dedicated personnel to monitor, prepare the necessary filings and liaise with the relevant government agencies.

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Environmental Laws

Presidential Decree No. 1586 established the Environmental Impact Statement System which is concerned primarily with assessing the direct and indirect impacts of a project or undertaking to the quality of the environment and ensures that these impacts are addressed by appropriate environmental protection and enhancement measures. The EIS system successfully culminates in the issuance of an ECC.

The ECC serves as a government certification based on the representations of the proponent that: (i) the proposed project or undertaking will not cause a significant negative environmental impact; (ii) that the proponent has complied with all the requirements of the EIS system; and (iii) that the proponent is committed to implement its approved environmental management plan in the EIS or Initial Environmental Examination. The ECC also contains specific measures and conditions that a project proponent must undertake before, during, and in some cases, at the abandonment of a project.

Development projects that are classified by law as environmentally critical or projects within statutorily defined environmentally critical areas are required to obtain an ECC prior to commencement. The DENR, through its regional offices or through the Environmental Management Bureau, determines whether a project is environmentally critical or located in an environmentally critical area. As a pre-requisite for the issuance of an ECC, an environmentally critical project must submit an EIS to the EMB while a project in an environmentally critical area is generally required to submit an IEE to the proper DENR regional office. In the case of an environmentally critical project within an environmentally critical area, an EIS is required. The construction of major roads and bridges are considered environmentally critical projects for which EIS and ECC are mandatory. The EIS refers to both the document and the study of a project’s environmental impact, including a discussion of the direct and indirect consequences to human welfare and the ecological as well as environmental integrity. The IEE refers to the document and the study describing the environmental impact, including mitigation and enhancement measures, for projects in environmentally critical areas.

While the terms and conditions of an EIS or an IEE may vary from project to project, as a minimum it contains all relevant information regarding the project’s environmental effects. The entire process of organization, administration, and assessment of the effects of any project on the quality of the physical, biological, and socio- economic environment as well as the design of appropriate preventive, mitigating, and enhancement measures is known as the EIS System. The EIS System successfully culminates in the issuance of an ECC. The issuance of an ECC is a Government certification that the proposed project or undertaking will not cause a significant negative environmental impact; that the proponent has complied with all the requirements of the EIS System; and that the proponent is committed to implementing its approved Environmental Management Plan in the EIS or, if an IEE is required, that it shall comply with the mitigation measures provided therein.

Project proponents that prepare an EIS are required to establish an Environmental Guarantee Fund when the ECC is issued for projects determined by the DENR to pose a significant public risk to life, health, property, and the environment or where the project requires rehabilitation or restoration. The Environmental Guarantee Fund is intended to meet any damage caused by such a project as well as any rehabilitation and restoration measures. Project proponents that prepare an EIS are required to include a commitment to establish an Environmental Monitoring Fund when an ECC is eventually issued. In any case, the establishment of an Environmental Monitoring Fund must not occur later than the initial construction phase of the project. The Environmental Monitoring Fund must be used to support the activities of a multi-partite monitoring team, which will be organized to monitor compliance with the ECC and applicable laws, rules and regulations.

The Company and KPPH incur expenses for the purposes of complying with environmental laws that consist primarily of payments for Government regulatory fees. Such fees are standard in the industry and are minimal.

All development projects, installations, and activities that discharge liquid waste into and pose a threat to the environment of the Laguna de Bay region are also required to obtain a discharge permit from the Laguna Lake Development Authority, unless otherwise exempted.

DENR Rules on Disposition of Hazardous Waste

A waste generator or a person who generates or produces hazardous wastes through any institutional, commercial, industrial or trade activity must register online and pay the registration fee to the EMB Regional Office having jurisdiction over the location of the waste generator. Upon registration, the EMB shall issue a

105 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION DENR identification number, which is generally a one-time permit unless there is a change in the hazardous wastes produced.

Under DENR Administrative Order No. 2013-22, a duly registered waste generator must, among others: (a) designate a full-time Pollution Control Officer; (b) disclose to the DENR the type and quantity of waste generated; (c) implement proper waste management from the time the wastes are generated until they are rendered non-hazardous; (d) continue to own and be responsible for the wastes generated in the premises until the wastes have been certified by an accredited waste treater as adequately treated, recycled, reprocessed, or disposed of; (e) adhere to the hazardous waste transport manifest system when transporting hazardous wastes for offsite treatment, storage, and/or disposal; (f) prepare and submit to the DENR comprehensive emergency preparedness and response program to mitigate spills and accidents involving chemicals and hazardous wastes; (g) communicate to its employees the hazards posed by the improper handling, storage, transport, use and disposal of hazardous wastes and their containers; and (h) develop capability to implement the emergency preparedness and response programs and continually train core personnel on the effective implementation of such programs.

Failure to comply with DENR Administrative Order No. 2013-22 shall make the violator liable for a fine of ₱50,000.00. In addition to such penalty, a violation of any of its Governing Rules or rules covering the Contingency Program shall result in the immediate suspension of the permit.

DENR Rules against Air Pollution

DENR Administrative Order No. 2000-81, as amended by DENR Administrative Order No. 2004-26, requires a Permit to Operate for each source emitting regulated air pollutants, which shall be issued by the EMB. The permittee shall display the permit upon the installation itself in such manner as to be clearly visible and accessible at all times. In the event that the permit cannot be so placed, it shall be mounted in an accessible and visible place near the installation covered by the permit.

The Permit to Operate is valid for five years from the date of issuance, unless sooner suspended or revoked. It may be renewed by filing an application for renewal at least 30 days before its expiration date and upon payment of the required fees and compliance with requirements.

Moreover, under DENR Administrative Order No. 2014-02, the managing heads of establishments required to have pollution control officers must apply for accreditation of their appointed/designated Pollution Control Officer at the concerned EMB Regional Office within 15 days from the date of appointment/designation.

Laguna Lake Development Authority Clearance

R.A. No. 4850, as amended, created the Laguna Lake Development Authority in order to promote and accelerate the balanced growth of the Laguna de Bay Region, with due regard for environmental management and control, preservation and preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution.

As an attached agency of the DENR, the LLDA is mandated to manage and protect the environmentally critical Laguna de Bay Region. It is empowered to pass upon and approve or disapprove all plans, programs, and projects proposed by local government offices or agencies within the region, public corporations, and private persons or enterprises where such plans, programs, and projects are related to the development of the region.

At present, the jurisdiction and scope of authority of the LLDA comprises the towns of Rizal and Laguna Provinces, towns of Silang, General Mariano Alvarez, Carmona, Tagaytay City in Cavite, Lucban, Quezon, City of Tanauan, towns of Sto. Tomas and Malvar in Batangas, Cities of Marikina, Pasig, Taguig, Muntinlupa, Pasay, Caloocan, Quezon and town of Pateros in Metro Manila. Accordingly, any person, natural and juridical, with existing and/or new development projects and activities within these areas are required to secure an LLDA Clearance, which is issued upon submission of an application and the supporting financial documents.

An administrative fine is imposed on establishments operating, developing, or constructing within the Laguna de Bay Region without the necessary LLDA Clearance. Any proposed, ongoing, or completed expansion inconsistent with a previously issued LLDA Clearance must be covered by a new LLDA Clearance.

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Wastewater Discharge Permit

The Philippine Clean Water Act of 2004 (Republic Act No. 9275) prohibits the discharge of material of any kind into water bodies, which shall cause pollution or impede natural flow of water, discharge of substance into soil or sub-soil which would pollute groundwater, operating facilities that discharge regulated water pollutants without valid permits, and other related acts. The Clean Water Act also regulates the discharge of effluents on land.

Pursuant to this law, all industries that discharge in any manner wastewater into Philippine waters and/or land are required to secure a wastewater discharge permit from the EMB. This permit is valid for five years and renewable for five-year periods.

Nationality Restrictions

The Philippine Constitution limits ownership of land in the Philippines to Filipino citizens or to corporations the outstanding capital stock of which is at least 60% owned by Philippine Nationals. While the Philippine Constitution prescribes nationality restrictions on land ownership, there is generally no prohibition against foreigners owning buildings and other permanent structures. However, with respect to condominium developments, the foreign ownership of units in such developments is limited to 40%.

Republic Act No. 7042, as amended, otherwise known as the Foreign Investments Act of 1991, and the Tenth Regular Foreign Investment Negative List, provide that certain activities are nationalized or partly- nationalized, such that the operation and/or ownership thereof are wholly or partially reserved for Filipinos. Under these regulations, and in accordance with the Philippine Constitution, ownership of private lands is partly-nationalized and thus, landholding companies may only have a maximum of 40% foreign equity.

The Company does not currently own real estate. However, if the Company acquires real estate in the future, it would be subject to nationality restrictions found under the Philippine Constitution and other laws limiting land ownership to Philippine Nationals. The term “Philippine National” as defined under the R.A. No. 7042, as amended, shall mean a citizen of the Philippines, a domestic partnership or association wholly owned by citizens of the Philippines or a corporation organized under the laws of the Philippines of which at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines, or a corporation organized abroad and registered to do business in the Philippines under the Philippine Corporation Code of which 60% of the capital stock outstanding and entitled to vote is wholly owned by Filipinos or a trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine National and at least 60% of the fund will accrue to the benefit of Philippine Nationals.

Philippine Investors' Lease Act

R.A. No. 7652, or the Investors' Lease Act, provides the guidelines for the granting of long-term lease on private lands to foreign investors for the establishment of industrial estates, factories, assembly or processing plants, agro-industrial enterprises, land development for industrial, or commercial use, tourism, and other similar priority productive endeavors. Under the Investors' Lease Act, foreign investors investing in the Philippines, which means mean making an equity investment in the Philippines through actual remittance of foreign exchange or transfer of assets, whether in the form of capital goods, patents, formulae, or other technological rights or processes, upon registration with the SEC, shall be allowed to lease private lands in accordance with the laws of the Philippines subject to the following conditions:

1. No lease contract shall be for a period exceeding fifty (50) years, renewable once for a period of not more than twenty- five (25) years;

2. The leased area shall be used solely for the purpose of the investment upon the mutual agreement of the parties;

3. The leased premises shall comprise such area as may reasonably be required for the purpose of the investment subject however to the Comprehensive Agrarian Reform Law and the Local Government Code (“LGC”).

The leasehold right acquired under long-term lease contracts entered into pursuant to the Investors' Lease Act may be sold, transferred, or assigned: provided, that when the buyer, transferee, or assignee is a foreigner or a

107 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION foreign-owned enterprise, the conditions and limitations in respect to the use of the leased property as provided for under the Investors' Lease Act shall continue to apply.

Foreign individuals, corporations, associations, or partnerships not otherwise investing in the Philippines as defined above, shall be covered by Presidential Decree No. 471 which limits the lease of private lands to foreigners to a maximum of twenty-five (25) years, renewable for another period of twenty-five (25) years upon mutual agreement of both lessor and lessee.

Philippine Competition Act

R.A. No. 10667, or the Philippine Competition Act (“PCA”), is the primary competition policy of the Philippines. It aims to enhance economic efficiency and promote free and fair competition in trade, industry and all commercial economic activities.

The PCA prohibits and imposes sanctions on:

1. Anti-competitive agreements between or among competitors, which restrict competition as to price, or other terms of trade and those fixing price at an auction or in any form of bidding including cover bidding, bid suppression, bid rotation and market allocation and other analogous practices of bid manipulation; and those which have the object or effect of substantially preventing, restricting or lessening competition;

2. Practices which are regarded as abuse of dominant position, by engaging in conduct that would substantially prevent, restrictor lessen competition; and

3. Merger or acquisitions which substantially prevent, restrict or lessen competition in the relevant market or in the market for goods or services.

Moreover, the parties to a merger, acquisition or joint venture are required to comply with the compulsory notification requirements of the Philippine Competition Commission (“PCC”), the agency responsible for the implementation of the PCA, before consummating the transaction where the value of the assets in the Philippines or the gross revenues from sales in, into and from the Philippines of the ultimate parent entity of one of the parties to the transaction, including all entities such ultimate parent directly or indirectly controls exceeds Five Billion Pesos (₱5,000,000,000.00), and:

1. With respect to a proposed merger or acquisition of assets in the Philippines, the aggregate value of the assets in the Philippines being acquired or the gross revenues generated in the Philippines by assets acquired in the Philippines exceeds Two Billion Pesos (₱2,000,000,000.00);

2. With respect to a proposed merger or acquisition of assets outside the Philippines, the aggregate value of the assets in the Philippines of the acquiring entity exceeds Two Billion Pesos (₱2,000,000,000.00) and the gross revenues generated in or into the Philippines by those assets acquired outside the Philippines exceed Two Billion Pesos (₱2,000,000,000.00);

3. With respect to a proposed merger or acquisition of assets inside and outside the Philippines, the aggregate value of the assets in the Philippines of the acquiring entity exceeds Two Billion Pesos (₱2,000,000,000.00) and the gross revenues generated in or into the Philippines by assets acquired in the Philippines and any assets acquired outside the Philippines collectively exceed Two Billion Pesos (₱2,000,000,000.00);

4. With respect to a proposed acquisition of voting shares of a corporation or of an interest in a non-corporate entity:

a the aggregate value of the assets in the Philippines that are owned by the corporation or non-corporate entity or by entities it controls, other than assets that are shares of any of those corporations or the gross revenues from sales in, into, or from the Philippines of the corporation or non-corporate entity or by entities it controls, other than assets that are shares of any of those corporations, exceed Two Billion Pesos (₱2,000,000,000.00); and

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b as a result of the proposed acquisition, the acquiring entity, together with its affiliates, would own more than thirty-five percent (35%) of the voting shares, or, if the entity or entities already own more than thirty-five percent, increase the said shareholdings to more than fifty percent (50%);

5. In a notifiable joint venture transaction, if either (i) the aggregate value of the assets that will be combined in the Philippines or contributed into the proposed joint venture exceeds Two Billion Pesos (₱2,000,000,000.00) or (ii) the gross revenues generated in the Philippines by assets to be combined in the Philippines or contributed into the proposed joint venture exceed Two Billion Pesos (₱2,000,000,000.00).

An agreement consummated in violation of the compulsory notification requirement shall be considered void, and shall subject the parties to an administrative fine of one percent (1%) to five percent (5%) of the value of the transaction.

Laws on Importation

Republic Act No. 1937 (“R.A. No. 1937”) or the “Tariff and Customs Code of the Philippines” provides that all articles, when imported from any foreign country into the Philippines, shall be subject to duty upon each importation, even though previously exported from the Philippines, except as otherwise specifically provided for in this Code or in other laws.

In 2014, the Department of Finance issued DO No. 12-2014 requiring importers to secure an Importer Clearance Certificate (“ICC”) from the BIR as a pre-requisite for accreditation with the Bureau of Customs (“BOC”). This is the first stage of the accreditation process that will enable the importers to import and transact business with the BOC. Importers will then present the BIR ICC to the BOC as a final requirement for accreditation and to be able to enter the customs premises.

The BIR then issued Revenue Memorandum Order No. 10-2014 (“RMO 10-2014”), which provides for the requirements and guidelines for ICC applicants, and required ICC applicants to establish a physical and legitimate presence in the Philippines and to demonstrate compliance with existing tax laws and regulations.

Under BOC Memorandum Order No. 14-2015, or the Revised Regulations for BOC Accreditation of PEZA Locators, all PEZA locators that have already been registered and approved by PEZA through the Client Profile Registration System (“CPRS”) shall be activated immediately by the BOC-Management Information System and Technology Group (“MISTG”) after payment of an activation fee of ₱1,000 and presentation of the corresponding official receipt and copy of the CPRS Certificate of Registration to MISTG. The memorandum order was issued with the objective of promoting an effective and efficient customs management by streamlining and simplifying the BOC accreditation procedure for PEZA locators, thereby creating a more business and investor-friendly environment.

Labor Laws

The Labor Code and Social Welfare Legislations

The Philippine Labor Code and other statutory enactments provide the minimum benefits that employers must grant to their employees, which include certain social security benefits, such as benefits mandated by the Social Security Act of 1997 (R.A. No. 8282), the National Health Insurance Act of 1995 (R.A. No. 7875), as amended, and the Home Development Fund Law of 2009 (R.A. No. 9679).

Social Security Act

Under the Social Security Act of 1997, social security coverage is compulsory for all employees under 60 years of age. An employer has the duty to report to the SSS the names, ages, civil status, occupations, salaries and dependents of its employees who are subject to compulsory coverage, and to pay and remit their monthly contributions. This enables the employees or their dependents to claim their pension, death benefits, permanent disability benefits, funeral benefits, sickness benefits and maternity-leave benefits. The failure of the employer to comply with any of its obligations may lead to sanctions, including the impositions of a fine of not less than ₱5,000.00 nor more than ₱20,000.00, or imprisonment for not less than six years and one day nor more than 12

109 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION years, or both, at the discretion of the court. The erring employer will also be liable to the SSS for damages equivalent to the benefits to which the employee would have been entitled had his name been reported on time to the SSS and for the corresponding contributions and penalties thereon.

National Health Insurance Act

The National Health Insurance Act created the National Health Insurance Program (“NHIP”) to provide health insurance coverage and ensure affordable and accessible health care services to all Filipino citizens. Under the law, all members of the SSS are automatically members of the NHIP. An employer is required to deduct and withhold the contributions from its employee’s salary, wage or earnings, make a counterpart contribution for the employee, and remit both amounts to the PhilHealth, the agency which administers the NHIP. The NHIP will then subsidize personal health services required by the employee subject to certain terms and conditions under the law. An employer who fails or refuses to register its employees, regardless of their employment status, or to deduct contributions from its employees’ compensation or remit the same to PhilHealth shall be punished with a fine of not less than ₱5,000.00 multiplied by the total number of employees of the firm.

Home Development Fund Law

The Home Development Fund Law (R.A. No. 9679) or the Pag-IBIG Fund Law, created the Home Development Mutual Fund ("HDMF"), a national savings program as well as a fund to provide for affordable shelter financing to Filipino workers. Coverage under the HDMF is compulsory for all SSS members and their employers. Under the law, an employer must deduct and withhold 2% of the employee's monthly compensation, up to a maximum of ₱5,000.00, likewise make a counterpart contribution of 2% of the employee's monthly compensation, and remit the contributions to the HDMF. Refusal of an employer to comply, without any lawful cause or with fraudulent intent, particularly with respect to registration of employees as well as collection and remittance of contributions, is punishable by a fine of not less but not more than twice the amount involved, or imprisonment of not more than six years, or both such fine and imprisonment. When the offender is a corporation, the penalty will be imposed upon the members of the governing board and the president or general manager, without prejudice to the prosecution of related offenses under the Revised Penal Code and other laws, revocation and denial of operating rights and privileges in the Philippines and deportation when the offender is a foreigner.

The Labor Code

The Philippine Labor Code provides that, in the absence of a retirement plan provided by their employers, private-sector employees who have reached 60 years of age or more, but not beyond 65 years of age, the compulsory retirement age for private-sector employees without a retirement plan, and who have rendered at least five years of service in an establishment, may retire and receive a minimum retirement pay equivalent to one-half month's salary for every year of service, with a fraction of at least six months being considered as one whole year. For the purpose of computing the retirement pay, "one-half month's salary" shall include all of the following: fifteen days salary based on the latest salary rate; in addition, one-twelfth of the thirteenth month pay and the cash equivalent of five days of service incentive leave pay. Other benefits may be included in the computation of the retirement pay upon agreement of the employer and the employee or if provided in a collective bargaining agreement.

Other Labor-Related Laws and Regulations

Contracting and Subcontracting

The Labor Code recognizes subcontracting arrangements, whereby a principal puts out or farms out with a contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. Such arrangements involve a "trilateral relationship" among: (i) the principal who decides to farm out a job, work or service to a contractor; (ii) the contractor who has the capacity to independently undertake the performance of the job, work, or service; and (iii) the contractual workers engaged by the contractor to accomplish the job, work, or service.

On March 16, 2017, the DOLE issued DOLE Department Order No. 174-17 or Rules Implementing Articles 106 to 109 of the Labor Code, As Amended (“D.O. No 174-17”), under the principle that non-permissible forms of contracting and subcontracting arrangements undermine the constitutional and statutory right to security of

110 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION tenure of workers. D.O. No 174-17 empowered the Secretary of Labor and Employment to regulate contracting and subcontracting arrangement by absolutely prohibiting labor-only contracting, and restricting job contracting allowed under the provisions of the Labor Code. Labor-only contracting refers to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job or work for a principal, and the contractor or subcontractor does not have substantial capital, or the contractor or subcontractor does not exercise the right to control over the performance of the work of the employee. D.O. No. 174-17 expressly requires the registration of contractors with the Regional Office of the DOLE where it principally operates, without which, a presumption that the contractor is engaged in labor-only contracting arises.

D,O. No. 174-17 provides that in the event that there is a finding that the contractor or subcontractor is engaged in labor-only contracting and other illicit forms of employment arrangements, the principal shall be deemed the direct employer of the contractor's or subcontractor's employees. Further, in the event of violation of any provision of the Labor Code, including the failure to pay wages, there exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the provisions of the Labor Code and other social legislations, to the extent of the work performed under the employment contract.

On May 2, 2018, President Rodrigo Duterte signed Executive Order No. 51, reiterating the prohibition of the practice of illegal contracting or subcontracting in the country. The executive order aims to protect the worker’s right to security of tenure, self -organization and collective bargaining and peaceful concerted activities.

Employment of Foreign Nationals

Under Department Order No. 186, Series of 2017 ("D.O. No. 186-17"), issued by the DOLE, all foreign nationals who intend to engage in gainful employment in the Philippines shall apply for an Alien Employment Permit ("AEP"). However, D.O. No. 186-17 clarifies that an AEP is not an exclusive authority for a foreign national to work in the Philippines. It is just one of the requirements in the issuance of a work visa (9g) to legally engage in gainful employment in the country. The foreign national must obtain the required special temporary permit from the Professional Regulation Commission in case the employment involves practice of profession and Authority to Employ Alien from the Department of Justice where the employment is in a nationalized or partially nationalized industry, as well as from the Department of Environment and Natural Resources in case of employment in a mining company. D.O. No. 186-17 also provides for the list of foreign nationals who are exempt and excluded from securing an AEP.

Under D.O. No. 186-17, the Regional Director shall impose a fine of ₱10,000.00 for every year or a fraction thereof to foreign nationals found working without a valid AEP. Employers found employing foreign nationals without a valid AEP shall also pay a fine of ₱10,000.00 for every year or a fraction thereof. Further, an employer who is found to have failed to pay the penalty provided under D.O. No. 186-2017 shall not be allowed to employ any foreign national for any position in the said company.

DOLE Mandated Work-Related Programs

Under the Comprehensive Dangerous Drugs Act, a national drug abuse prevention program implemented by the DOLE must be adopted by private companies with 10 or more employees. For this purpose, employers must adopt and establish company policies and programs against drug use in the workplace in close consultation and coordination with the DOLE, labor and employer organizations, human resource development managers and other such private sector organizations. DOLE Department Order No. 053-03 sets out the guidelines for the implementation of Drug-Free Workplace policies and programs for the private sector.

The employer or the head of the work-related, educational or training environment or institution, also has the duty to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement or prosecution of such cases. Under the Anti-Sexual Harassment Act, the employer will be solidarily liable for damages arising from the acts of sexual harassment committed in the workplace if the employer is informed of such acts by the offended party and no immediate action is taken. Notwithstanding, the victim of sexual harassment is not precluded from instituting a separate and independent action for damages and other affirmative relief. Any person who violates the provisions of this law shall, upon conviction, be penalized by imprisonment of not less than one month nor more than six months, or a fine of not less than ₱10,000 nor more than ₱20,000, or both such fine and imprisonment, at the discretion of the court. Any action arising from the violation of the provisions of this law shall prescribe in three years.

111 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Moreover, Department Order No. 102-10 requires all private workplaces to have a policy on HIV and AIDS and to implement a workplace program in accordance with the Philippines AIDS Prevention and Control Act. The workplace policies aim to manage sensitive issues, such as confidentiality of medical information and continuation of employment for HIV-positive staff, and to avoid the discrimination of any employee due to HIV/AIDS. Any HIV/AIDS-related information of workers should be kept strictly confidential and kept only on medical files, whereby access to it are strictly limited to medical personnel.

All private workplaces are also required to establish policies and programs on solo parenting, Hepatitis B, and tuberculosis prevention and control.

Local Government Code

The LGC establishes the system and powers of provincial, city, municipal, and barangay governments in the country. The LGC general welfare clause states that every local government unit (“LGU”) shall exercise the powers expressly granted, those necessarily implied, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare.

LGUs exercise police power through their respective legislative bodies. Specifically, the LGU, though its legislative body, has the authority to enact such ordinances as it may deem necessary and proper for sanitation and safety, the furtherance of the prosperity, and the promotion of the morality, peace, good order, comfort, convenience, and general welfare of the locality and its inhabitants. Ordinances can reclassify land, order the closure of business establishments, and require permits and licenses from businesses operating within the territorial jurisdiction of the LGU.

An ordinance may be repealed by a subsequent ordinance expressly repealing or declaring it as invalid. An ordinance may also be repealed by implication by a subsequent ordinance that is inconsistent or contrary, in whole or in part, to the previous ordinance. Under the LGC, the Sangguniang Panlalawigan (provincial council) has the power to review ordinances passed by a city or municipality council and can declare ordinances invalid, in whole or in part, if it finds that the lower council exceeded its authority in enacting the ordinance.

Intellectual Property Code

Under the Intellectual Property Code of the Philippines (“IP Code”), the rights to a trademark are acquired through the registration with the Bureau of Trademarks of the Intellectual Property Office, which is the principal government agency involved in the registration of brand names, trademarks, patents and other registrable intellectual property materials.

Upon registration, the Intellectual Property Office shall issue a certificate of registration to the owner of the mark, which shall confer the right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs or containers for goods or services which are identical or similar to those in respect of which the mark is registered. The said certificate of registration shall also serve as prima facie evidence of the validity of registration and the registrant’s ownership of the mark. A certificate of registration shall remain in force for an initial period of ten (10) years and may be renewed for periods of ten (10) years at its expiration.

The IP Code applies to franchise agreements and software license agreements which generally fall within the definition of technology transfer arrangements (“TTAs”). The IP Code defines TTAs as “contracts or agreements involving the transfer of systematic knowledge for the manufacture of a product, the application of a process, or rendering of a service including management contracts; and the transfer, assignment or licensing of all forms of intellectual property rights, including licensing of computer software except computer software developed for mass market.” TTAs must comply with Sections 87 and 88 of the IP Code, i.e., TTAs cannot contain the provisions which are prohibited under Section 87 but must contain the mandatory provisions under Section 88. Failure to comply with these provisions of the IP Code will automatically render the entire arrangement unenforceable.

The Company retains legal counsel to ensure its continued compliance with applicable laws and regulations affecting its operations. The Company has secured, applied for, or is in the process of applying or renewing all material permits and licenses required to conduct its business. The Company expects to obtain these permits and licenses in the ordinary course.

112 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Pursuant to the Company’s amended articles of incorporation, the board of directors consists of 7 members, of whom 3 are independent directors. The table below sets forth each member of the Company's board of directors as of the date of this Prospectus.

Name Age Nationality Position Shen, Shyh-Yong 52 Taiwanese Chairman and President Khongsit Choukitcharoen 57 Thai Director and General Manager Lo, Guo-Lun 56 Taiwanese Director and Investor Relations Officer Huang, Kuan-Jen 45 Taiwanese Director Gregory L. Domingo 63 Filipino Independent Director Cirilo P. Noel 61 Filipino Independent Director Emmanuel M. Lombos 64 Filipino Independent Director

The business experiences for the last five years of members of the Company's board of directors are set forth below.

Shen, Shyh-Yong (a.k.a Simon Shen), Taiwanese, 52, has served as the Company’s Directors, President and Chief Executive Officer since 2012. Mr. Shen, is also the current Chief Executive Officer of the New Kinpo Group, which position he has held since 2008. Mr. Shen graduated from the National Chengchi University in Taiwan with a degree in Public Administration. He obtained his Master of Business Administration from the University of Southern California and his law degree from the Whittier Law School in California. Under Mr. Shen’s leadership, NKG has reached new heights and has been transformed from a traditional EMS company to a vertically integrated company with enhanced supply chain, and up-scaled R&D capabilities. With Mr. Shen at the helm, NKG has also evolved into an original designed and owned-brand products company ahead of its competitors. These innovative owned-brand products include XYZprinting Inc. which currently ranked number one in the consumer desktop 3D printer segment within 3 years from its establishment; HiMirror, which is the first in the world to develop the smart beauty business, New Era Robotics which focus on the new frontier of AI Robotic business and more. Mr. Shen spearheaded the establishment of the Company and believes that the operation in the Philippines will be the next height for NKG.

Khongsit Choukitcharoen (a.k.a Tony Chou), Thai, 57, has served as the Company’s Director and General Manager since 2012. Mr. Choukitcharoen obtained his degree in Engineering from the Feng Chia University and his Master of Business Administration from the Pacific Western University in the United States. Before joining the Company, he served as Director and Managing Director of Cal-Comp Electronics (Thailand) Public Company Limited. Mr. Choukitcharoen concurrently serves as the Chief Operation Officer of the New Kinpo Group’s global operation. Mr. Choukitcharoen has over 30 years of extensive experience in the field of manufacturing and business management under his belt and has the reputation for successfully expanding manufacturing operations across various continents.

Lo, Guo-Lun, (a.k.a Hugh Lo), Taiwanese, 56, was elected as the Company’s Director and Investor Relations Officer since June 4, 2018. He concurrently serves as a Director and Vice-President in Kinpo Electronics Inc. Mr. Lo obtained his degree in Industrial Engineering at the Tunghai University in Taiwan and his Master Degree in Industrial Engineering from the University of Massachusetts, U.S.A. Mr. Lo has been with the NKG group for over 27 years serving in various capacities including as project manager, sales manager, and director. Under his leadership, he was able to successfully shift the group’s calculator business from business-centric to education-focused. He was also successful in leading the NKG group’s new business foray in the LED lighting, gaming mouse, finger print scanner, music instrument, beauty products, and robotic floor cleaner. He has vast experience in the consumer electronics industry and has innovated ideas on DFM/DFC which provides the Company a competitive edge against other CM manufacturers.

Huang, Kuan-Jen, Taiwanese, 46, was elected as the Company’s Director since June 4, 2018. He obtained his Master of Environmental Engineering at the National Taiwan University in 1999. Mr. Huang joined NKG in 1996 and is currently a business unit senior director of NKG overseeing the smart home appliance product segment of NKG. Prior to heading the smart home appliance business, he was in charge of the quality assurance department and new product introduction of NKG’s Thailand Petchaburi facility operation. He also oversaw the overseas factory division providing support to the overseas factories of the NKG group.

113 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Gregory L. Domingo, Filipino, 63, was elected as the Company’s Independent Director on June 4, 2018. Mr. Domingo obtained his Bachelor of Science in Management Engineering from the Ateneo de Manila University in 1976. He earned his Master of Science in Operations Research from the Wharton School, University of Pennsylvania with a Research Fellowship at the Wharton Applied Research Center. He also holds a Master in Business Management (with Distinction) from the Asian Institute of Management. He previously served as Department Secretary for the Department of Trade and Industry and as the Head of the Board of Investments. He also worked for 13 years in the United States, starting in IT with Mellon Bank, moving on to fixed income research on Wall Street with Drexel Burnham Lambert and First Boston, and finally as managing director at Chemical Bank before he returned to the Philippines in 1995. Since his return to the Philippines, he has worked in the financial and real estate sectors in various capacities and was appointed as member of the board of directors in some of the largest Philippine companies including but not limited to Carmelray-JTCI Corp., Belle Corporation, SM Investments Corp. in which he also currently serves as senior advisor, BDO Private Bank, Pampanga Sugar Development Company (PASUDECO), Manila Electric Corp., Pico de Loro Beach and Country Club, Wharton-Penn Club, and Foreign Exchange Association of the Philippines. Recently he has taken an interest in the area of digital economy and technological innovation as applied in business.

Cirilo P. Noel, Filipino, 61, was elected as the Company’s Independent Director on June 4, 2018. Mr. Noel graduated from the University of the East in Manila with a degree in Business Administration. He completed his Bachelor of Laws degree from the Ateneo de Manila University Law School in 1981 and his Master’s degree in Law from the Harvard Law School in 1992. Mr. Noel is a fellow of the Harvard International Tax Program. He also attended the Management Development Program at the Asian Institute of Management. Mr. Noel is a certified public accountant and lawyer and his areas of expertise include international inbound and outbound investments, tax advisory and planning, tax advocacy and litigation. He retired as Chairman and Managing Partner of SyCip Gorres Velayo & Co., the Philippine member firm of Ernst & Young Global Limited, in June 2017. He currently serves as independent director of Globe Telecom and chairs its Audit Committee, and is also a director of St. Luke’s Medical Center, Inc., Security Bank, LH Paragon Inc., and JG Summit Holdings, Inc.

Emmanuel M. Lombos, Filipino, 64, was elected as the Company’s Independent Director on June 4, 2018. Mr. Lombos holds a Bachelor of Arts degree from the Ateneo de Manila University and Bachelor of Laws from the University of the Philippines. He is a Partner at the Litigation Department of SyCip Salazar Hernandez & Gatmaitan Law Offices. He has argued and won precedent-setting cases for major multinational corporations before the Philippine Supreme Court. He has also acted as litigation counsel for various parties, including the Philippine Government and top U.S., European and Philippine corporations in various domestic and foreign arbitrations. Mr. Lombos has been repeatedly named as one of Asia’s and the Philippines’ leading litigators by various legal publications, including Asialaw, Euromoney Publications, International Financial Law Review, Who’s Who Legal, and Chambers and Partner.

The table below sets forth the Company's key executive and corporate officers as of the date of this Prospectus.

Name Age Nationality Position Shen, Shyh-Yong 52 Taiwanese President & CEO Khongsit Choukitcharoen 57 Thai General Manager Marlo P. Arcinas 54 Filipino Corporate Secretary Lo, Guo-Lun 56 Taiwanese Investor Relations Officer Yu, Fu-Lai 49 Taiwanese Compliance Officer Lee, Huangsiang 46 Taiwanese Treasurer

The business experience for the past five years of each of Messrs. Shen, Shyh-Yong, (President and CEO), Khongsit Choukitchareon (General Manager), and Guo-Lun Lo (Investor Relations Officer) are set out above, while the business experience for the past five years of the other Company’s executive officers are described below.

Marlo P. Arcinas, Filipino, 54, was elected as the Company’s Corporate Secretary on June 4, 2018. Mr. Arcinas obtained his A.B.S. in Legal Management, magna cum laude, from the Ateneo de Manila University. He likewise obtained his law degree from the same university. He has served in the last three decades as the external legal counsel of a number of corporations in a wide range of industries, particularly in the energy sector, such as First Gen Corporation, First Gas Power Corporation, FGP Corporation, First NatGas Power Corporation, Prime Meridian Powergen Corporation, FG Land Corporation, FGEN LNG Corporation, First Philippine Industrial Corporation, First Philippine Holdings Corporation, Meralco Industrial Engineering Services Corporation, Farmers Savings and Loan Bank, Inc., Banapra Development Cooperative, Olympus

114 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Credit and Loans Corporation, Port City Credit and Loans Corporation, Royal Sales Center, Royalsouth Marketing Corp., Pic N Save Supermarket, The Nazareth School, Sun hill Montessori Casa, Casa del Bambino Emmanuel Montessori, Inc., St. Bridget College, Rizal College of Taal, Batangas, Society Glass and Gabriel Builders, Inc., Integrated Barangay Waterworks and Sanitation Association, Inc., among others. He is at present a Senior Leader of the Brotherhood of Christian Businessmen and Professionals, a Catholic renewal organization duly registered with the SEC.

Yu, Fu-Lai (a.k.a Frank Yu), Taiwanese, 49, was appointed the Company’s Compliance Officer on June 4, 2018. He concurrently serves as Senior Legal Manager of NKG, which position he has held since 2006. Prior to joining the Company, Mr. Yu was a Senior Legal Manager at Cal-Comp Indústria e Comércio de Eletrônica LTDA in Brazil. He has over 20 years of extensive experience in the field of legal management and regulatory compliance in different industries such as financial services (banking and insurance), telecommunications, and electronic manufacturing services. Mr. Yu graduated from the Chung Yu Institute of Technology with a degree in Banking and Insurance and did further studies and obtained his degree in Economics and Financial Law at the University of Fu Jen Catholic University in Taiwan.

Lee, Huang-Hsiang (a.k.a Martin Lee), Taiwanese, 46, was elected as the Company’s Treasurer on June 4, 2018. Mr. Lee graduated from the Chinese Culture University with a degree in Accounting. He obtained his Master of Business Administration from the Miramar University in June 2008. Prior to joining the Company, Mr. Lee had served as a Manager at Deloitte Touche Tohmatsu Limited’s Audit Division. He joined Kinpo Electronics, Inc. in 2005 and had served as the Director for Financial & Accounting, in charge of all financial, accounting, and tax affairs from 2009 to 2012. Concurrent to his position in the Company, Mr. Lee also serves as a Senior Manager for Financial & Accounting in Kinpo Electronics, Inc. and is in charge of financial monitoring of all overseas subsidiaries including China, Philippines, United States and Mexico.

Corporate Governance

The Company has a Manual on Corporate Governance (“Manual”) which was approved and adopted by its board of directors on June 4, 2018. The Manual has been submitted to the SEC in compliance with SEC Memorandum Circular No. 19 Series of 2016, or the Code of Corporate Governance for Publicly-Listed Companies.

The Company's policy on corporate governance is based on the Manual. The Manual lays down the principles of good corporate governance in the entire organization. The Manual provides that it is the Board’s responsibility to initiate compliance with the principles of good corporate governance, to foster the long-term success of the Company and to secure its sustained competitiveness in a manner consistent with its fiduciary responsibility, which it shall exercise in the best interest of the Company, its shareholders and other stakeholders.

Corporate governance rules/principles were established to ensure that the interests of stakeholders are always taken into account; that its directors, officers, and employees are conducting business in a safe and sound manner; and that transactions entered into between the Company and its related interests are conducted at arm’s length basis and in the regular course of business.

The Company is committed to doing business in accordance with the highest professional standards, business conduct and ethics and all applicable laws, rules, and regulations. The Company, its directors, officers, and employees are dedicated to promote and adhere to the principles of good corporate governance by observing and maintaining its core business principles of accountability, integrity, fairness, and transparency.

Independent Directors

Philippine regulations require the Company to have at least three independent directors in its board of directors, or such number as to constitute at least one-third of the members of the Board, whichever is higher. The Company’s board of directors is composed of seven members, four of whom are regular directors and three are independent directors. The Company’s independent directors are Gregory L. Domingo, Cirilo P. Noel and Emmanuel M. Lombos. Independent directors must hold no interest or relationship with the Company that may hinder their independence from the Company or its management, or which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

The Company’s Manual provides that independent directors shall endeavor to always attend board meetings, provided, however, that their absence shall not affect the quorum requirement. The Company’s board of

115 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION directors may, to promote transparency, require the presence of at least one independent director in all its meetings.

Compliance Officer

The Compliance Officer designated by the Chairman of the Company’s board of directors shall hold the rank of at least Vice President or its equivalent and shall not be a member of the Company’s board of directors. He shall have direct reporting responsibilities to the Chairman of the Board. He shall have the following duties and responsibilities:

1) Ensure proper onboarding of new directors (i.e. orientation on the Company’s business, charter, articles of incorporation and by-laws, among others);

2) Monitor compliance with the provisions and requirements of this Manual and the rules and regulations of regulatory agencies and, if violations are found, report the matter to the Board and recommend the adoption of measures to prevent a repetition of the violation;

3) Appear before the SEC upon summons on matters related to compliance with the provisions and requirements of this Manual that need to be clarified by the same;

4) Determine violation/s of the Manual and recommend appropriate penalty/ies for violation thereof for further review and approval of the Company’s Board;

5) Collaborate with other departments to properly address compliance issues, which may be subject to investigation;

6) Ensure the integrity and accuracy of all documentary submissions to regulators;

7) Ensure the attendance of board members and key officers to relevant trainings;

8) Issue a certification every January 30th of the year on the extent of the Company's compliance with this Manual for the completed year, explaining the reason/s of the latter's deviation from the same; and

9) Identify, monitor and control compliance risks.

Resolving Stockholders’ Disputes

Stockholders who have matters for discussion or concerns directly resulting to the business of the Company may initially elevate such matters or concerns to: (a) the Corporate Secretary; (b) the Investor Relations Officer; (c) Management; or (d) the Company’s Board.

Committees of the Board of Directors

The Company’s Board of Directors has constituted certain committees to effectively manage the operations of the Company. The Company’s principal committees include [the Executive Committee, ]the Audit Committee, and the Corporate Governance Committee. A brief description of the functions and responsibilities of the key committees are set out below:

A. [Executive Committee

The Executive Committee shall act by majority vote of all of its members, on matters within the competence of the Board of Directors, except as specifically limited by law or by the Board of Directors. During every meeting of the Board of Directors, the Executive Committee shall report in summary form all matters acted upon by it, all of which matters shall be considered ratified unless otherwise expressly revoked by the Board of Directors.

The Executive Committee shall be composed of three (3) members to be determined and appointed by the Board of Directors.]

116 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

B. Audit Committee

The Board of Directors shall establish an Audit Committee to enhance its oversight capability over the company’s financial reporting, internal control system, internal and external audit processes, and compliance with applicable laws and regulations. It shall have such duties and responsibilities as set out in the relevant laws and regulations.

The Audit Committee shall be composed of at least three (3) directors, majority of whom shall be independent directors. The Chairman of the Audit Committee will be an independent director.

C. Corporate Governance Committee

The Board of Directors shall establish a Corporate Governance Committee to ensure compliance with and proper observance of corporate governance principles and practices. The Corporate Governance Committee shall also review and evaluate the qualifications of all persons nominated to the Board and other appointments that require the approval by the Board of Directors.

The Corporate Governance Committee shall be composed of at least three (3) directors, all of whom shall be independent directors.

Composition of Committees of the Company’s Board of Directors a) Audit Committee

Gregory L. Domingo – Chairman Cirilo P. Noel – Member Emmanuel M. Lombos – Member b) Corporate Governance Committee

Gregory L. Domingo – Chairman Cirilo P. Noel – Member Emmanuel M. Lombos – Member

Executive Compensation

Compensation

For the past years, the Company has been receiving management support from its parent and NKG, thus, the Company has not yet paid or accrued any executive compensation during the last 2 calendar years. For the ensuing calendar year, the Company estimates that total compensation to be paid to its top 5 Highly Compensated Executive Officers and to its officers and directors as a group unnamed will be as follows:

List of Highly Compensated Executive Officer

Name & Position Year Salary Bonus & Other Total (estimate in ₱) Income (estimate in ₱) (estimate in ₱) Shen, Shyh-Yong (President & CEO) 2018 3,120,000.00 13,312,850.00 16,432,850 Khongsit Choukitcharoen (General Manager) Lo, Guo-Lun (Investor Relations Officer) Huang, Kuan-Jen (Sub Business Head) Mr. Marlo P. Arcinas (Corporate Secretary) Aggregate compensation paid to all officers and 2018 4,520,000.00 21,592,850.00 26,112,850 directors as a group unnamed

117 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Standard Arrangements

The by-laws of the Company provide that the Board is authorized to fix and determine the compensation of the Directors and Officers in accordance with law.

By resolution of the Board, other than a per diem allowance of ₱360,000.00 annually for attending Board meetings and a bonus at the end of the year, there are currently no standard arrangements pursuant to which Directors of the Company are compensated, or are to be compensated, directly or indirectly, for any services provided as a Director.

Other Arrangements

There are no other arrangements for compensation either by way of payments for committee participation or special assignments other than reasonable per diem. There are also no outstanding warrants or options held by the Company’s Chief Executive Officer, other officers and/or directors.

Warrants and Options

There are no outstanding warrants and options held by any of the Company’s directors, executive officers or any other third person.

Involvement in Certain Legal Proceedings of Directors and Executive Officers

To the best of the Company’s knowledge and belief and after due inquiry, none of the Company’s directors, nominees for election as director or executive officers has in the past five years up to the date of this Prospectus been involved in or subject to:

1. Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2. Any conviction by final judgment, including the nature of the offense, in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses;

3. Any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; and

4. Being found by a domestic or foreign court of competent jurisdiction (in a civil action), the SEC or comparable foreign body, or a domestic or foreign exchange or other organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation, and the judgment has not been reversed, suspended, or vacated.

Significant Employees

While the Company values the contribution of each executive and non-executive employee, there is no non- executive employee whose resignation or termination of employment would have a significant adverse effect on the business of the Company. Other than standard employment contracts and except as otherwise disclosed in this Prospectus, there are no arrangements with non-executive employees that will assure the continued stay of these employees with the Company. The Company employs proper succession planning to ensure that the resignation or termination of its employees will not adversely affect the business of the Company.

Family Relationships

There are no known family relationships up to the fourth civil degree either by consanguinity or affinity among the current members of the Board of Directors and key officers of the Company.

118 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

PRINCIPAL AND SELLING SHAREHOLDER

Shareholders

As of the date of this Prospectus, the shareholdings in the Company are as follows:

Name of Shareholder Number of Shares Held % of Shareholding Cal-Comp Electronics (Thailand) PCL. 212,711,600 19.19% Kinpo International (Singapore) Pte. Ltd. 895,637,600 80.81% Shen, Shyn-Yong 100 0.00% Khongsit Choukitcharoen 100 0.00% Shih-Tung Yu 100 0.00% Lo, Guo-Lun 100 0.00% Huang, Kuan-Jen 100 0.00% Gregory L. Domingo 100 0.00% Cirilo P. Noel 100 0.00% Emmanuel M. Lombos 100 0.00% Total 1,108,350,000 100%

Of the aforementioned Common Shares held by the Selling Shareholder, the Secondary Offer Shares shall comprise of [19,898,500] as the Over-allotment Option Shares such that after the completion of the offering (assuming the Over-allotment Option is exercised in full), the resulting shareholdings in respect of the Common Shares of the Company shall be as follows:

Before the Offer After the Offer Name of Shareholders Common Shares % Common Shares % Cal-Comp Electronics (Thailand) PCL. 212,711,600 19.19% 212,711,600 14.31% Kinpo International (Singapore) Pte. Ltd. 895,637,600 80.81% 875,739,100 58.92% Shen, Shyn-Yong 100 Nil 100 Nil Khongsit Choukitcharoen 100 Nil 100 Nil Shih-Tung Yu 100 Nil 100 Nil Lo, Guo-Lun 100 Nil 100 Nil Huang, Kuan-Jen 100 Nil 100 Nil Gregory L. Domingo 100 Nil 100 Nil Cirilo P. Noel 100 Nil 100 Nil Emmanuel M. Lombos 100 Nil 100 Nil IPO Investors 0 0 397,969,600 26.77% Total 1,108,350,000 100% 1,486,421,100 100.00%

To date, and prior to listing of the Company with the PSE, no part of the Company’s equity is currently listed in any trading market.

Selling Shareholder

Before the Offer During the After the Offer Offer Name of Selling Common % of Maximum Assuming Over-Allotment Assuming the Over-allotment Shareholder and Shares Common Number of Option is not Exercised Option is exercised in full Position Shares Over- Common % of Common % of Outstanding Allotment Shares Common Shares Common Option Shares Shares Shares Outstanding Outstanding Kinpo International 895,637,600 80.81% 19,898,500 895,637,600 60.25% 875,739,100 58.92% (Singapore) Pte. Ltd. Stockholder

119 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

SECURITY OWNERSHIP OF CERTAIN RECORD AND BENEFICIAL OWNERS AND MANAGEMENT

The following table sets out the Company’s shareholders of more than 5% of the Company's voting securities and their respective shareholdings and corresponding percentage ownership as of the date of this Prospectus.

Name of Beneficial Owner Name and Address of and Relationship % of Total Record Owner and Relationship with with Record No. of Outstanding Title of Class Issuer Owner Citizenship Shares Held Shares Common Cal-Comp Electronics (Thailand) PCL. Same as record Thai 212,711,600 19.19% 191/54, 191/57, 18th Foor CTI Tower holder Ratchadapisek Rd, Klongtoey, Bangkok

Common Kinpo International (Singapore) Pte. Same as record Singaporean 895,637,600 80.81% Ltd. holder 19 Changi South Street 1, Changi South Industrial Estate Singapore 486779

Lock-up

The PSE rules require existing shareholders owning at least ten percent (10%) of the outstanding shares of a company not to sell, assign or in any manner dispose of their shares for a period of one hundred eighty (180) days after the listing of the shares.

Thus, the following shall be subject to such one hundred eighty (180) - day lock-up period:

Shareholder No. of Shares Subject to 180-day Lock-up Period Assuming Over-Allotment Option is not Assuming the Over-allotment Option is Exercised exercised in full Cal-Comp Electronics (Thailand) PCL. 212,711,600 212,711,600 Kinpo International (Singapore) Pte. 895,637,600 875,739,100 Ltd.

In addition, if there is any issuance or transfer of shares or securities such as private placements, assets for shares swap or a similar transaction or instruments which lead to issuance of shares or securities such as convertible bonds, warrants or a similar instrument that are completed within one hundred eighty (180) days prior to the listing date, and the transaction price is lower than the offer price in the initial public offering, all such shares or securities shall be subject to a lock-up period of at least three hundred sixty five (365) days from full payment of such shares or securities.

The following shall be subject to such three hundred sixty five (365)-day lock-up period:

No. of Shares Subject to 365-day Reckoned from Shareholder Lock-up Period Gregory L. Domingo 100 June 4, 2018 Cirilo P. Noel 100 June 4, 2018 Emmanuel M. Lombos 100 June 4, 2018 Lo, Guo-Lun 100 June 1, 2018 Huang, Kuan-Jen 100 June 1, 2018

To implement the foregoing lock-up requirements, the PSE requires the applicant company to lodge the shares with the PDTC through a Philippine Central Depository participant for the electronic lock-up of the shares or enter into an escrow agreement with the trust department or custodian unit of an independent and reputable financial institution.

120 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Security Ownership of Directors and Officers

The following comprise the Company’s board of directors as of the date of this Prospectus. Under the Philippine Corporation Code, to qualify as a member of the board of directors, each director is required to hold at least one share in his name in the books of the corporation.

% of Total Out- Title of Number of Amount Nature of Beneficial standing Class Name of Record Owner Shares (₱) Ownership Citizenship Shares common Shen, Shyh- Yong 100 100 in trust for CCET Taiwanese 0.00% common Khongsit Choukitcharoen 100 100 in trust for CCET Thai 0.00% common Lo, Guo-Lun 100 100 in trust for Kinpo Taiwanese 0.00% Singapore common Huang, Kuan Jen 100 100 in trust for CCET Taiwanese 0.00% common Gregory L. Domingo 100 100 Direct Filipino 0.00% common Cirilo P. Noel 100 100 Direct Filipino 0.00% common Emmanuel M. Lombos 100 100 Direct Filipino 0.00% common TOTAL 700 700 0.00%

Dilution of Principal Shareholders

The chart below shows the dilution of the Company’s principal shareholders as a result of the Offer.

Number of Common Shares Held Percentage Assuming Total of Number of Percentage Number of Percentage Full Shareholding Common Total of Common Total of Exercise of Assuming Full Shares Held Shareholding Shares after Shareholding the Over- Exercise of the before the before the the Firm after the Firm allotment Over-allotment Name of Shareholder Offer Offer Offer Offer Option Option Cal-Comp Electronics 212,711,600 19.19% 212,711,600 14.31% 212,711,600 14.31% (Thailand) PCL.

Kinpo International 895,637,600 80.81% 895,637,600 60.25% 875,739,100 58.92% (Singapore) Pte. Ltd.

Voting Trust Holders of Five Percent (5%) or more

The Company has no knowledge of any persons holding more than five percent of a class of shares of the Company under a voting trust or similar agreement as of the date of this Prospectus.

Changes in Control

The Company and Kinpo Singapore entered into a Subscription Agreement dated January 22, 2018, for the subscription by Kinpo Singapore to 895,637,700 Common Shares of the Company representing 80.81% of the total issued and outstanding capital stock of the Company after its issuance. The shares were to be issued out of the increase in the authorized capital stock of the Company. The increase in the authorized capital stock and amendment of the Company’s AOI was approved by the SEC on March 2, 2018.

See “Business—Corporate Structure and Reorganization.” on page 67.

121 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

RELATED PARTY TRANSACTIONS

The Company and KPPH, in the ordinary course of business, engage in transactions with related parties and affiliates consisting of their shareholders (KPO and CCET) and entities under common control. These transactions include acquisition and sale of property and equipment, purchase and sale of raw materials and finished goods and loans and advances.

It is a policy of the Company that related party transactions are entered into on terms which are not more favorable to the related party than those generally available to third parties dealing at arm’s length basis and are not detrimental to unrelated shareholders. All related party transactions shall be reviewed by the appropriate approving authority, as may be determined by the Board. In the event of a related party transaction involving a Director, the relevant Director should make a full disclosure of any actual or potential conflict of interest and must abstain from participating in the deliberation and voting on the approval of the proposed transaction and any action to be taken to address the conflict.

The summary of the Company and KPPH’s transactions with its related parties for the years ended December 31, 2015, 2016 and 2017 and period ended March 31, 2018 and the related outstanding balances as of December 31, 2015, 2016 and 2017 and March 31, 2018 are as follows:

Transactions for the Outstanding (Payables) / Receivables period/year ended as of December 31, March 31, December 31, March 2015 2016 2017 2018 2015 2016 2017 (in Thousands US$) (in Thousands US$)

KPO – ultimate parent Sale of finished goods ...... 120,407.98... 105,565.90 97,480.40 32,433.41 5,062.27 5,581.69 6,903.96 14,207.00 Short-term loans ...... 12,000.00 10,000.00 15,000.00 – (12,000.00) (10,000.00) – – Interest payable 185.09 295.45 403.77 – (15.20) (21.13) – – Recharges and various expenses – 66.02 498.71 – – 60.74 201.10 85.02 132,593.07 115,927.37 113,382.88 32,433.41 (6,952.93) (4,378.7) 7,105.06 14,292.02

CCET – shareholder Acquisitions of property and equipment ...... 10.97 683.82 684.93 – (2,047.38) – (600.98) (600.98) Sale of property and equipment ...... – – 9.94 – – – – – Sale of finished goods ...... – – 5.53 – 13.76 – – – Purchase of raw materials, spare parts ...... 85.57 66.12 17.15 13.27 (116.11) (3.69) (0.93) (13.27) Repairs and maintenance...... – – 36.58 – – – (0.95) (0.95) 96.54 749.94 754.13 13.27 (2,149.73) ( 3.69) (602.86) (615.19)

Entities under common control Acquisitions of property and equipment ...... 10,144.48 493.30 594.12 66.72 (249.34) (183.36) (20.48) – Purchase of raw materials, spare parts ...... 1,345.11 633.95 14,550.66 8,921.80 (376.67) (547.41) (6,566.49) (4,508.11) Sale of finished goods ...... 61.74 6.83 1.44 2.05 0.35 0.58 1.44 3.20 Rentals, recharges and various expenses ...... – 380.97 2,190.31 1,802.16 – 168.71 982.19 2,036.24 Repairs and maintenance...... – – 0.96 – – – (0.70) – 11,551.33 1,515.05 17,337.49 10,792.73 (625.66) (561.48) (5,604.04) (2,468.66)

122 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Transactions for the Outstanding (Payables) / Receivables period/year ended as of December 31, March 31, December 31, March 2015 2016 2017 2018 2015 2016 2017 (in Thousands US$) (in Thousands US$) Due from key management personnel Salaries, wages and other benefits 53.70 87.05 164.15 10.7 – – – – Net 144,294.64 118,279.41 131,638.65 43,250.11 (9,728.32) (4,943.87) 898.16 11,208.17

The Company and KPPH have the following major transactions with related parties:

Subscriptions to the Company’s Common Shares

On January 22, 2018, the Company executed a subscription agreement with Kinpo Singapore, a corporation organized and existing under the laws of Singapore Islands, in which Kinpo Singapore agreed to subscribe to eight hundred ninety five million six hundred thirty seven thousand seven hundred (895,637,700) Shares of the Company with a par value of One Peso (₱1.00) per share out of the increase in the authorized capital stock of the Company for a consideration of One Hundred Million US Dollars (US$100,000,000.00) or Five Billion Seventy Two Million Pesos (₱5,072,000,000.00). This subscription represents eighty and 81/100 percent (80.81%) of the outstanding capital stock of the Company after the increase in its authorized capital stock. The Company’s application for the increase in its authorized capital stock was approved by the SEC on March 2, 2018.

Acquisition of KPPH

On April 28, 2017, KPO and Kinpo Singapore, entered into a share transfer agreement wherein KPO transferred and sold 49,260,070 Common Shares representing 99.99% of the outstanding capital stock of KPPH in favor of Kinpo Singapore in exchange for Common Shares of Kinpo Singapore, effectively making Kinpo Singapore as KPPH’s immediate parent company. The BIR issued the certificate authorizing registration in relation to this transaction on September 14, 2017.

On January 27, 2018, the Company entered into a Deed of Assignment of Shares with Kinpo Singapore wherein Kinpo Singapore sold 49,260,070 Common Shares representing 99.99% of the outstanding capital stock of KPPH in favor of the Company for a consideration amounting to Five Billion Eighty Million (₱5,080,000,000.00). This resulted to the Company’s acquisition of KPPH as its subsidiary. The BIR issued the related certificate authorizing registration on May 24, 2018.

Arrangement with KPO

KPO and KPPH entered into an arrangement wherein purchase orders from certain customers for products manufactured and produced by KPPH are received by KPO. Under the arrangement KPPH sends the related invoices to KPO which in turns bills the customers. KPPH directly ships the products to the customers.

Lease Agreements

On February 23, 2016, the Company entered into a lease agreement with KPPH to lease the latter’s building located in Lima Technology Center-SEZ, Lipa City, Batangas for use as office and factory facility for a term of one year commencing on March 1, 2016, renewable for one year. On March 6, 2017, the Company renewed the contract for a period of five years commencing on March 1, 2017. Rental expense related to this transaction amounted to US$118,826 and US$105,174 in 2017 and 2016, respectively.

On November 1, 2016, KPPH entered into a contract of lease with an affiliate, Cal-Comp Precision (Philippines), Inc. for the use of its parcel of land for a period of one (1) year and two (2) months commencing on November 1, 2016 to December 31, 2017, renewable upon the mutual agreement of the parties.

123 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Cash Advances to and from Related Parties

In the normal course of business, the Company obtains from and grants unsecured, interest and non-interest- bearing, cash advances to its related parties which are payable within a period of ninety (90) days to finance acquisition and sale of property and equipment, working capital requirements and other purposes.

124 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

DESCRIPTION OF THE SHARES

The shares to be offered by the Company shall be up to [397,969,600] Offer Shares, consisting of [378,071,100] primary Common Shares and [19,898,500] secondary shares, with a par value of ₱[1.00] per share]. A total of up to [1,486,421,100] shares of the Company shall be outstanding after the Offer.

Share Capital Information

The authorized capital stock of the Company is One Billion Seven Hundred Million Pesos (₱1,700,000,000.00) divided into One Billion Seven Hundred Million (1,700,000,000) Common Shares with a par value of One Peso [₱1.00] per share. As of the date of this Prospectus, the issued and outstanding share capital of the Company consists of [1,108,350,000] Common Shares. Upon listing, the Company will have [1,486,421,100] issued and outstanding Common Shares.

Objects and Purposes

Primary Purpose

Under the Company's articles of incorporation, the Company's primary purpose is to engage in the importation of raw materials, experimentation, testing and manufacturing of electronic equipment of every kind as well as their spare parts; the calibration of testing tools and equipment in support of the manufacturing processes, and to engage in the marketing, sale and distribution for wholesale of the manufactured electronic equipment in the Philippines and for export thereof.

Secondary Purposes

The Company is also authorized to undertake the following activities as part of the Company's secondary purposes:

 To carry on the manufacturing of the following products:

o calculators of all kinds o computer screens o computers o electronic typewriters o memory recorders / organizers o fax machines o radio receivers-transmitters, cordless phones, telephone and every kind of equipment and accessories for telecommunications o data reading machines o battery chargers for cordless telephones and mobile phones and equipment for use with computes, remote control for use with electronic products of every kind and electronics products for children and printers for use with computers, cameras, scanners to receive- transmit digitalized signals. o semi-finished spare parts for use with other products as defined in the business objectives of the Company o lamps, undertake production of lamps by contractual commitments including tools and equipment for lighting that are optic fiber based or other commodities of all kinds for use in houses, factories, vehicles, machinery and electronics equipment.

 To set up business offices or appoint agents locally as well as overseas.

 To purchase, acquire, own, lease, sell and convey real properties (except land) such as buildings, factories and warehouses, machineries, equipment and personal properties as may be necessary or incidental to the conduct of the corporate business, and to pay in cash, shares of its capital stock, debentures and other evidences of indebtedness, or other securities, as may be deemed expedient, for any business or property acquired by the corporation;

 To make procurements, receive, lease, sell, convey ownership rights, occupy and improve for usage and acquire by other means any personal property and byproducts thereof by not trading.

125 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

 To issue and sell stocks of every kind to the public pursuant to the law governing stocks and securities exchange.

 To borrow or raise money necessary to meet the financial requirements of this business by the issuance of bonds, promissory notes and other evidences of indebtedness, and to secure the repayment thereof by mortgage, pledge, deed of trust or lien upon the properties of the corporation or to issue pursuant to law, shares of capital stock, debentures and other evidences of indebtedness in payment for properties acquired by the corporation or for money borrowed in the prosecution of its lawful business;

 To acquire monetary loans, overdrafts from banks, juristic persons or other financial institutions by other means, by means of guarantee and without guarantee and receive, issue, transfer and endorse promissory notes or other changeable instruments.

 To acquire equity by assuming limited liabilities in partnership and hold shares in other limited companies.

 To invest and deal with the money and properties of the corporation in such manner as may from time to time be considered wise or expedient for the advancement of its interest and to sell, dispose of or transfer the business, properties and goodwill of the corporation or any part thereof for such consideration and under such terms as it shall see fit to accept;

 To aid in any manner, any individual, firm, corporation, association, or trust estate, domestic or foreign, wherein shares of stock, bonds, debentures, notes securities, evidences of indebtedness, contracts or obligations are held by or for this corporation, directly or indirectly or through other corporations otherwise;

 To enter into any lawful arrangement for sharing profits, union of interest, utilization or farm-out agreement, reciprocal concession, or cooperation with any corporation, association, partnership, syndicate, entity, person or governmental, municipal or public authority, domestic or foreign, in carrying on any business or transaction deemed necessary, convenient or incidental to carry out any of the purposes of this corporation;

 To acquire or obtain from any government authority, national, provincial, municipal or otherwise, or form any corporation, company or partnership or person, such charter, contract, franchise, privilege, exemption, license and/or concession as may be conducive to any of the objects of the corporation.

 To do or cause to be done any one or more of the acts and things herein set forth as its purposes, within or outside the Philippines, and in any and all foreign countries, and to do everything necessary, desirable or incidental to the accomplishment of the purposes or the exercise of any one or more of the powers herein enumerated, or which shall at any time appear conducive to or expedient for the protection or benefit of this corporation;

 To guarantee obligations of other corporations or entities in which it has lawful interest;

 To offer guarantee services to ordinary persons or juristic persons of those having businesses contacts with the Company and retinue of such persons under the immigration law and labor laws.

Under Philippine law, the Company may invest its funds in any other corporation or business or for any purpose other than the primary purpose for which it was organized when approved by a majority of the board of directors and ratified by the Company's shareholders representing at least two-thirds (2/3) of the outstanding capital stock, at a meeting of the shareholder duly called for the purpose; provided, however, that where the investment by the Company is reasonably necessary to accomplish its primary purpose, the approval of the Company's shareholders shall not be necessary.

Share Capital

A Philippine corporation may issue common or preferred shares, or such other classes of shares with such rights, privileges or restrictions as may be provided for in its articles of incorporation and by-laws. A Philippine

126 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION corporation may also increase or decrease its authorized capital stock, provided that the increase or decrease is approved by a majority of the board of directors and by shareholders representing at least two-thirds of the outstanding capital stock of the corporation voting at a shareholders’ meeting duly called for the purpose and is duly approved by the SEC.

All of the Company's shares that are currently issued or authorized to be issued are Common Shares and have a par value of One Peso (₱1.00) per share. If par value shares are issued at a price above par, whether for cash or otherwise, the amount by which the subscription price exceeds the par value is credited to an account designated as paid-in surplus.

The Company may acquire its own shares for a legitimate corporate purpose as long as it has unrestricted retained earnings or surplus profits sufficient to pay for the shares to be acquired, such as in the following instances: (i) elimination of fractional shares arising out of stock dividends, (ii) the purchase of shares of dissenting shareholders exercising their appraisal right and (iii) the collection or compromise of an indebtedness arising out of an unpaid subscription in a delinquency sale or to purchase delinquent shares during such sale. Upon repurchase of its own shares, the shares become treasury shares, which may be resold at a reasonable price fixed by the board of directors.

The Board is authorized to issue shares from the treasury from time to time.

Rights Relating to Shares

Voting Rights

The Company’s shares have full voting rights. Each common share entitles the holder to one vote at all shareholders’ meeting for each Common Share standing in his name on the books of the Company at the time or closing thereof for the purpose of the meeting. In determining the shareholders who are entitled to vote at any meeting of the stockholders, the Board may provide that the stock and transfer book be closed for a stated period of ten (10) working days immediately preceding such meeting.

The Company's directors are elected by its shareholders at the annual shareholders’ meeting. Cumulative voting is allowed whereby a shareholder may cumulate his votes by giving one candidate as many votes as the number of directors to be elected multiplied by the number of his shares. Under Philippine law, voting rights cannot be exercised with respect to shares declared delinquent, treasury shares, or if the shareholder has elected to exercise his appraisal rights.

Dividend Rights

Dividends are payable to all shareholders on the basis of outstanding shares held by them, each common share being entitled to the same unit of dividend as any other outstanding Common Shares. Dividends are payable to shareholders whose names are recorded in the stock and transfer book as of the record date fixed by the Company's directors. The PDTC has an established mechanism for distribution of dividends to beneficial owners of the shares which are traded through the PSE and lodged with the PDTC as required for scripless trading.

Under Philippine law, the Company can only declare dividends to the extent that the Company have unrestricted retained earnings that represent the amount of accumulated profits and gains realized out of the normal and continuous operations of the company after deducting therefrom distributions to stockholders and transfers to capital stock or other accounts, and which is: (1) not appropriated by its Board of Directors for corporate expansion projects or programs; (2) not covered by a restriction for dividend declaration under a loan agreement; and (3) not required to be retained under special circumstances obtaining in the corporation such as when there is a need for a special reserve for probable contingencies. The Company may pay dividends in cash, property or by the issuance of shares. Dividends may be declared by the board of directors except for stock dividends which may only be declared and paid with the approval of shareholders representing at least two-thirds of the issued and outstanding capital stock of the Company voting at a shareholders’ meeting duly called for the purpose.

The Philippine Corporation Code prohibits a Philippine corporation from retaining surplus profits in excess of one hundred percent (100%) of its paid-in capital stock. Notwithstanding this general requirement, a Philippine corporation may retain all or any portion of such surplus in the following cases: (i) when justified by definite

127 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION expansion plans approved by the board of directors of the Company; (ii) when the required consent of any financing institution or creditor to such distribution has not been secured; (iii) when retention is necessary under special circumstances, such as when there is a need for special reserves for probable contingencies; or (iv) when the non-distribution of dividends is consistent with the policy or requirement of a Government office.

Philippine corporations whose securities are listed on any stock exchange are required to maintain and distribute an equitable balance of cash and stock dividends, consistent with the needs of shareholders and the demands for growth or expansion of the business.

See “Dividends and Dividend Policy” on page [43].

Pre-emptive Rights

The Philippine Corporation Code confers pre-emptive rights on shareholders of a Philippine corporation entitling such shareholders to subscribe for all issues or other dispositions of equity-related securities by the Company in proportion to their respective shareholdings, regardless of whether the equity-related securities proposed to be issued or otherwise disposed of are identical to the shares held. A Philippine corporation may, however, provide for the denial of these pre-emptive rights in its articles of incorporation. Likewise, shareholders who are entitled to such pre-emptive rights may waive the same through a written instrument to that effect. The articles of incorporation of the Company denies shareholders the pre-emptive right to subscribe to all classes of shares that the Company may issue in the future including any increases in the capital stock of the Company.

Derivative Rights

Philippine law recognizes the right of a shareholder to institute proceedings on behalf of the Company in a derivative action in circumstances where the Company itself is unable or unwilling to institute the necessary proceedings to redress wrongs committed against the Company or to vindicate corporate rights as, for example, where the directors themselves are the malefactors.

Appraisal Rights

Under the Philippine Corporation Code, a shareholder has the right to dissent and demand payment of the fair value of his shares in the following instances: ian amendment of the articles of incorporation which has the effect of changing or restricting the rights attached to his shares or of authorizing preferences in any respect superior to those of outstanding shares of any class or of extending or shortening the term of corporate existence; (ii) the sale, lease, exchange, transfer, mortgage, pledge or other disposal of all or substantially all the corporate assets; (iii) in a merger or consolidation; and (iv) and investment by the Company of funds in any other corporation or business or for any purpose other than the primary purpose for which it was organized. In these circumstances, the dissenting shareholder may require the corporation to purchase his shares at a fair value which, in default, is determined by three disinterested persons, one of whom shall be named by the stockholder, one by the corporation, and the third by the two thus chosen. The appraisal rights may be exercised by the dissenting stockholder by making a written demand within thirty (30) days after the date on which the vote was taken on the corporate action. The failure to make the demand within the period shall be deemed a waiver of the appraisal rights.

The payment to the dissenting stockholder of the fair value of his shares will only be available if the Company has unrestricted retained earnings to cover such purchase. From the time the shareholder makes a demand for payment until the Company purchases such shares, all rights accruing on the shares, including voting and dividend rights, shall be suspended, except the right of the shareholder to receive the fair value of the share.

Right of Inspection and Disclosure Requirements

Philippine stock corporations are required to file an annual general information sheet, which sets forth data on their management and capital structure, and copies of their annual financial statements with the SEC. Corporations must also submit their annual financial statements to the BIR. Corporations whose shares are listed on the PSE are also required to file current, quarterly and annual reports with the SEC and the PSE.

128 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Shareholders are entitled to require copies of the most recent financial statements of the corporation, which include a statement of financial position as of the end of the most recent tax year and a statement of income for that year. Shareholders are also entitled to inspect and examine the books and records which the corporation is required by law to maintain.

Provisions that Would Delay, Deter or Prevent a Change in Control

Article Eight of the Company's articles of incorporation provides that should the Company apply for, and qualify to list its shares in the PSE, the Company shall comply with the lock-up requirements of the PSE Listing Rules. See “Security Ownership of Certain Record and Beneficial Owners and Management” on page [119] of this Prospectus.

Board of Directors

Unless otherwise provided by law, the corporate powers of the Company are exercised, the Company's business is conducted, and the Company's property is controlled, by its board of directors. Pursuant to the Company's articles of incorporation, as amended, the Company shall have seven directors, three of whom are independent directors within the meaning set forth in Section 38 of the SRC. The Company's directors shall be elected during each regular meeting of shareholders, at which shareholders representing at least a majority of the issued and outstanding capital shares of the Company are present, either in person or by proxy. Directors may only act collectively; individual directors have no power as such. Four directors, which are a majority of the Directors, constitute a quorum for the transaction of corporate business. In general, every decision of a majority of the quorum duly assembled as a Board is valid as a corporate act. Any vacancy created by the death, resignation or removal of a director prior to expiration of such director’s term shall be filled by a vote of at least a majority of the remaining directors, if still constituting a quorum, Otherwise, the vacancy must be filled by the Company's shareholders at a meeting duly called for the purpose. Any director elected in this manner by the Company's board of directors shall serve only for the unexpired term of the director whom such director replaces and until his successor is duly elected and qualified.

Shareholders’ Meetings

Annual or Regular Shareholders’ Meetings

All Philippine corporations are required to hold an annual meeting of shareholders for corporate purposes including the election of directors. The by-laws of the Company provides for annual meetings on the 15th day of June of each year to be held at the principal office of the Company and at such hour as specified in the notice.

Special Shareholders’ Meeting

Special meetings of shareholders, for any purpose or purposes, may at any time be called by any of the following: (a) Board of Directors, at its own instance, or at the written request of stockholders representing a majority of the outstanding capital stock; or (b) President.

Notice of Shareholders’ Meeting

Whenever shareholders are required or permitted to take any action at a meeting, a written or printed notice of the meeting stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be sent by personal delivery, courier, electronic mail, facsimile or by registered mail, at least thirty (30) days before the day on which the meeting is to be held to each stockholder of record at his last known address. Shareholders entitled to vote may, by written consent, waive notice of the time, place and purpose of any meeting of shareholders and any action taken at such meeting pursuant to such waiver shall be valid and binding. When the meeting of the Company's shareholders is adjourned to another time or place, notice of the adjourned meeting need not be provided if the time and place to which the meeting is adjourned. At the reconvened meeting, any business may be transacted that might have been transacted on the original date of the meeting.

Quorum

A quorum at any meeting of the Company's shareholders shall consist of a majority of the outstanding voting stock of the Company represented in person or by proxy, and a majority of such quorum shall decide any

129 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION question that may come before the meeting, save and except those several matters in which the laws of the Philippines require the affirmative vote of a greater proportion.

Place of Meetings

All meetings of the stockholders shall be held at the principal office of the Company, unless written notice of such meetings should fix another place within the same municipality or city where the said principal office is located.

Voting

The Company's shareholders may vote at all meetings the number of shares registered in their respective names, either in person or by proxy duly appointed as herein provided. All elections and questions, except in cases specified by law or the Company’s articles of incorporation, shall be decided by the majority vote of the stockholders present in person or by proxy, a quorum being present. Unless required by law or demanded by a stockholder present in person or by proxy at any meeting, the vote on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting, or in his name by his proxy if there be such proxy, and shall state the number of shares voted by them.

Fixing Record Dates

Under existing SEC rules, cash dividends declared by corporations whose shares are listed on the PSE shall have a record date which shall not be less than ten (10) and not more than thirty (30) days from the date of declaration of cash dividends. With respect to stock dividends, the record date shall not be less than ten (10) nor more than thirty (30) days from the date of shareholder approval. In the event that a stock dividend is declared in connection with an increase in authorized capital stock, the corresponding record date shall be fixed by the SEC and shall be indicated in the SEC order which shall not be less than ten (10) days nor more than thirty (30) days after all clearances and approvals by the SEC shall have been secured. Regardless of the kind of dividends, the record date set shall not be less than ten (10) trading days from receipt by the PSE of the notice of declaration of the dividend.

Proxies

Shareholders may vote at all meetings the number of shares registered in their respective names, either in person or by proxy duly given in writing and duly presented to and received by the Corporate Secretary for inspection and recording at or prior to the opening of the meeting. No proxy bearing the signature that is not legally acknowledged, if unrecognized by the Corporate Secretary, shall be honored at the meetings. Unless otherwise provided in the proxy, it shall be valid only for the meeting at which it has been presented to the Corporate Secretary. No proxy shall be valid and effective for a period longer than five years at any one time. No member of the PSE and no broker/dealer shall give any proxy, consent or authorization, in respect of any securities carried for the account of a customer to a person other than the customer, without the express written authorization of such customer. The proxy executed by the broker shall be accompanied by a certification under oath stating that before the proxy was given to the broker, he had duly obtained the written consent of the persons in whose account the shares are held.

There shall be a presumption of regularity in the execution of proxies and proxies shall be accepted if they have the appearance of prima facie authenticity in the absence of a timely and valid challenge. Proxies should comply with the relevant provisions of the Philippine Corporation Code, the SRC, the Implementing Rules and Regulations of the SRC (as amended), and SEC Memorandum Circular No. 5 (series of 1996) issued by the SEC.

Issues of Shares

Subject to otherwise applicable limitations, the Company may issue additional Shares to any person for consideration deemed fair by the Board, provided that such consideration shall not be less than the par value of the issued Shares. No share certificates shall be issued to a subscriber until the full amount of the subscription together with interest and expenses (in case of delinquent Shares) has been paid and proof of payment of the applicable taxes shall have been submitted to the Company’s Corporate Secretary. Under the PSE Rules, only fully-paid shares may be listed on the PSE.

130 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

Transfer of Common Shares

All transfer of shares on the PSE shall be effected by means of a book-entry system. Under this system of trading and settlement, a registered shareholder transfers legal title over the shares to such nominee but retains beneficial ownership over the shares. A shareholder transfers legal title by surrendering the stock certificate representing his shares to participants of the PDTC System (i.e., brokers and custodian banks) that, in turn, lodge the same with the PCD Nominee. A shareholder may request his shares to be uplifted from the PDTC, in which case a certificate of stock is issued to the shareholder and the shares are registered in the shareholder’s name. See “The Philippine Stock Market” on page [134] of this Prospectus.

Philippine law does not require transfers of the Company's Shares to be effected on the PSE, but any off- exchange transfers will subject the transferor to a capital gains tax that may be significantly greater than the stock transfer tax applicable to transfers effected on an exchange. See “Philippine Taxation” on page [140] of this Prospectus. All transfers of Shares on the PSE must be effected through a licensed stockbroker in the Philippines.

Share Register

The Company’s share register is maintained at the principal office of its stock transfer agent, BDO Unibank,Inc. – Trust and Investments Group located at the 15th Floor, South Tower, BDO Corporate Center, 7899 Makati Avenue, Makati City.

Share Certificates

Certificates representing the Shares will be issued in such denominations as shareholders may request, except that certificates will not be issued for fractional Shares. Shareholders may request the Company's stock transfer agent to split their certificates. Shares may also be lodged and maintained under the book-entry system of the PDTC. See “The Philippine Stock Market” on page [134] of this Prospectus.

Beneficial Ownership Disclosure

The Securities Regulation Code and the SRC Rules provide for disclosure of beneficial and legal ownership of shares in a reporting company, such as a public company. The term “beneficial owner” or “beneficial ownership” is defined under the SRC Rules.

Any person who acquires directly or indirectly the beneficial ownership of five percent (5%) or more of any class of equity securities of a public company shall within five (5) business days after such acquisition submit to the issuer, the exchange where the security is traded and to the SEC a sworn statement containing the information required by SEC Form 18-A. If the equity securities under the name of the legal owner are beneficially owned by another person/s, the legal owner and beneficial owner shall file individually or jointly. The regulations also provide that if any change occurs in the facts set forth in the statements, an amendment shall be transmitted to the issuer, the exchange and the SEC.

Every person who is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of any security of a public company, or who is a director or an officer of the issuer of such security, shall: (i) within ten (10) calendar days after the effective date of the registration statement for that security, or within ten (10) calendar days after he becomes such beneficial owner, director or officer, subsequent to the effective date of the registration statement, whichever is earlier, file a statement with the SEC, and with the exchange, if the security is listed on an exchange, on SEC Form 23-A indicating the amount of securities of such issuer of which he is the beneficial owner; (ii) within ten (10) calendar days after the close of each calendar month thereafter, if there has been any change in such ownership during the month, file a statement with the SEC and with the exchange, if the security is listed on an exchange, on SEC Form 23-B indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during that calendar month, and (iii) notify the SEC if his direct or indirect beneficial ownership of securities falls below ten percent (10%), or if he ceases to be an officer or director of the issuer. However, a newly appointed officer, who has no beneficial ownership over the shares of the company, shall notify the SEC of such fact within ten (10) calendar days from such appointment.

If the security is listed on an exchange, the report shall be filed on that exchange in accordance with the rules of the exchange, but not more than five (5) calendar days after such person became beneficial owner. The filing

131 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION with the exchange may be deemed as filing with the SEC pursuant to a Memorandum of Agreement between the exchange and the SEC; provided that the Memorandum of Agreement shall provide for the ability of the SEC to download and upload the same information made available to the exchange.

The law and regulations contain a separate procedure and conditions by which the following entities may comply with the disclosure obligation: broker or dealer registered under the SRC, a bank authorized to operate as such by the BSP, an insurance company subject to the supervision of the Insurance Commission, an investment house registered under the Investment Houses Law, an investment company registered under the Investment Company Act, a pension plan subject to the regulation and supervision by the BIR and/or the Insurance Commission, or a group where all its members are persons specified above.

Mandatory Tender Offer

In general, under the SRC and its implementing rules and regulations, it is mandatory for any person or group of persons acting in concert to make a tender offer to all the shareholders of the target corporation before the intended acquisition of:

 at least thirty five percent (35%) of the outstanding voting shares or such outstanding voting shares sufficient to gain control of the Board of a public company in one or more transactions for a period of twelve (12) months; or  thirty five percent (35%) of the outstanding voting shares or such outstanding voting shares sufficient to gain control of the Board of a public company directly from one or more stockholders; or  equity which would result in ownership of over fifty percent (50%) of the outstanding equity securities of a public company.

Under the first instance, when the securities tendered pursuant to such an offer exceed the number of shares that the acquiring person or group of persons is willing to acquire, the securities shall be purchased from each tendering shareholder on a pro rata basis according to the number of securities tendered by each security holder. In the event that the tender offer is oversubscribed, the aggregate amount of securities to be acquired at the close of such tender offer shall be proportionately distributed to both the selling shareholders with whom the acquirer may have been in private negotiations with and the minority shareholders.

Under the second instance, the tender offer shall be made for all the outstanding voting shares. The shares pursuant to the private transaction with the stockholders shall not be completed prior to the closing and completion of the tender offer.

Under the third instance, the acquirer shall be required to make a tender offer for all the outstanding equity securities to all remaining stockholders of a corporation at a price supported by a fairness opinion provided by an independent financial advisor or equivalent third party. The acquirer shall be required to accept all securities tendered.

No mandatory tender is required in:

 purchases of shares from unissued capital shares unless it will result in a fifty percent (50%) or more ownership of shares by the purchaser;  purchases from an increase in the authorized capital shares of the target company;  purchases in connection with a foreclosure proceeding involving a pledge or security where the acquisition is made by a debtor or creditor;  purchases in connection with a privatization undertaken by the government of the Philippines;  purchases in connection with corporate rehabilitation under court supervision;  purchases through an open market at the prevailing market price; or  purchases resulting from a merger or consolidation.

Fundamental Matters

Corporate power and competence is lodged primarily with the Board of Directors. However, the Philippine Corporation Code considers certain matters as significant corporate acts that may be implemented only with the approval of shareholders, including those holding shares denominated as non-voting in the Articles of Incorporation. These acts, which require Board approval and the approval of shareholders representing at least two-thirds (2/3) of the issued and outstanding capital stock of the Company in a meeting duly called for the

132 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION purpose (except for the amendment of the By-Laws and the approval of management contracts in general, which require approval of shareholders representing a majority of the Company's outstanding capital stock), include:iamendment of the articles of incorporation;ii) removal of directors; (iii) sale, lease, exchange, mortgage, pledge or other disposition of all or a substantial part of the assets of the Company; (iv) investment of corporate funds in any other corporation or business or for any purpose other than the primary purpose for which the Company was organized; (v) delegation to the board of directors of the power to amend or repeal by- laws or adopt new by-laws; (vi) merger or consolidation; (vii) an increase or decrease in capital stock; (viii) dissolution; (ix) extension or shortening of the corporate term; (x) creation or increase of bonded indebtedness; (xi) declaration of stock dividends; (xii) management contracts with related parties; and (xiii) ratification of contracts between the Company and a director or officer.

Accounting and Auditing Requirements

Philippine stock corporations are required to file copies of their annual consolidated financial statements with the SEC. Corporations whose shares are listed on the PSE are also required to file quarterly consolidated financial statements for the first three quarters with the SEC and the PSE. The Board is required to present to shareholders at every annual meeting a financial report (including the financial statements) of the operations of the Company for the preceding year.

Recent Sale of Unregistered Securities

The following securities were issued as exempt from the registration requirements of the SRC and therefore have not been registered with the SEC.

1. On [May 29, 2018], the Company’s stockholders representing 100.00% of the total outstanding shares unanimously approved and ratified the execution of the Deed of Assignment of Shares with Kinpo Singapore dated January 27, 2018 wherein the Company purchased from Kinpo Singapore 49,260,070 Common Shares representing 99.99% of the outstanding capital stock of KPPH for a consideration amounting to Five Billion Eighty Million Pesos (₱5,080,000,000.00). The BIR issued the related certificate authorizing registration on May 24, 2018.

2. On January 10, 2018, the Company’s stockholders representing 100.00% of the total outstanding shares unanimously approved and ratified the increase in the authorized capital stock of the Company from Two Hundred Fifteen Million Pesos (₱215,000,000.00) divided into Two Million One Hundred Fifty Thousand (2,150,000) Common Shares with a par value of One Hundred Pesos (₱100.00) per share to One Billion Seven Hundred Million Pesos (₱1,700,000,000.00) divided into One Billion Seven Hundred Million (1,700,000,000) Common Shares with a par value of One Peso (₱1.00) per share. On March 2, 2018, the SEC approved the Company's application for increase in its authorized capital stock and decrease in its par value per share. Out of the increase in the authorized capital stock, Kinpo Singapore subscribed to Eight Hundred Ninety Five Million Six Hundred Thirty Seven Thousand Six Hundred (895,637,600) Common Shares of the Company with a par value of One Peso (₱1.00) per share and paid a total of One Hundred Million US Dollars (US$100,000,000.00) or Five Billion Seventy Two Million pesos (₱5,072,000,000.00).

No underwriting discounts or commissions were incurred or paid for the foregoing issuances of shares. No request for confirmation of exemption was filed by the Company for the sale of securities relying upon exemptions under Sec. 10.1(k) of the SRC, and SRC Rule 10.1.2.

133 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

THE PHILIPPINE STOCK MARKET

The information presented in this section has been extracted from publicly available documents which have not been prepared or independently verified by us, the Issue Manager and Sole Bookrunner, and Joint Lead Underwriters, or any of the Company's respective subsidiaries, affiliates or advisors in connection with the offer and sale of the Offer Shares.

Brief History

The Philippines initially had two stock exchanges, the Manila Stock Exchange, which was organized in 1927, and the Makati Stock Exchange, which began operations in 1963. Each exchange was self-regulating, governed by its respective Board of Governors elected annually by its members.

Several steps initiated by the Philippine government have resulted in the unification of the two bourses into the PSE. The PSE was incorporated in 1992 by officers of both the Makati and the Manila Stock Exchanges. In March 1994, the licenses of the two exchanges were revoked. While the PSE maintains two trading floors, one in Makati City and the other in Pasig City, these floors are linked by an automated trading system, which integrates all bids, and ask quotations from the bourses.

In June 1998, the SEC granted the Self-Regulatory Organization status to the PSE, allowing it to impose rules as well as implement penalties on erring trading participants and listed companies. On August 8, 2001, the PSE completed its demutualization, converting from a non-stock member-governed institution into a stock corporation in compliance with the requirements of the SRC. The PSE had an authorized capital stock of One Hundred Million Pesos (₱120,000,000.00), of which Seventy Three Million Five Hundred Thousand Pesos (₱73,500,000.00) was subscribed and fully paid-up as of September 30, 2017. Each of the one hundred eighty four (184) member-brokers was granted fifty thousand (50,000) Common Shares of the new PSE at a par value of One Peso (₱1.00) per share. In addition, a trading right evidenced by a “Trading Participant Certificate” was immediately conferred on each member broker allowing the use of the PSE’s trading facilities. As a result of the demutualization, the composition of the PSE Board of Governors was changed, requiring the inclusion of seven brokers and eight non-brokers, one of whom is the President. On December 15, 2003, the PSE listed its shares by way of introduction at its own bourse as part of a series of reforms aimed at strengthening the Philippine securities industry.

Classified into financial, industrial, holding firms, property, services, and mining and oil sectors, companies are listed either on the PSE’s Main Board or the Small, Medium and Emerging Board. In 2013, the PSE issued Rules on Exchange Traded Funds (“ETF”) which provides for the listing of ETFs on an ETF Board separate from the PSE’s existing boards. Previously, the PSE allowed listing on the First Board, Second Board or the Small, Medium and Enterprises Board. With the issuance by the PSE of Memorandum No. CN-No. 2013-0023 dated June 6, 2013, revisions to the PSE Listing Rules were made, among which changes are the removal of the Second Board listing and the requirement that lock-up rules be embodied in the Company's articles of incorporation. Each index represents the numerical average of the prices of component shares. The PSE has an index, referred to as the PHISIX, which as at the date thereof reflects the price movements of selected shares listed on the PSE, based on traded prices of shares from the various sectors. The PSE shifted from full market capitalization to free float market capitalization effective April 3, 2006, simultaneous with the migration to the free float index and the renaming of the PHISIX to PSEi. The PSEi is composed of shares of thirty (30) selected companies listed on the PSE. On July 26, 2010, the PSE launched its current trading system, PSE Trade.

The PSE also launched its Corporate Governance Guidebook in November 2010 as another initiative of the PSE to promote good governance among listed companies. It is composed of ten guidelines embodying principles of good business practice and is based on internationally recognized corporate governance codes and best practices.

With the increasing calls for good corporate governance, the PSE has adopted an online daily disclosure system to improve the transparency of listed companies and to protect the investing public. In December 2013, the PSE replaced its online disclosure System (“OdiSy”) with a new disclosure system, the PSE Electronic Disclosure Generation Technology (“EDGE”). EDGE was acquired from the Korea Exchange and is a fully automated system, equipped with a variety of features to (i) further standardize the disclosure reporting process of listed companies on the PSE, (ii) improve investors’ disclosure searching and viewing experience and (iii) enhance overall issuer transparency in the market.

134 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION In January 2018, the PSE transferred to its new office located at the PSE Tower, Bonifacio Global City, Taguig City, which currently houses the unified trading floors in Makati City and Pasig City.

On March 22, 2018, the PSE completed a stock rights offering of 11,500,000 Common Shares which were offered at the price of ₱252.00 per share, or a total of ₱2,898,000,000. The proceeds of the stock rights offering will be used to fund the acquisition of PDS and capital expenditure requirements of the PSE. As of the date of this Prospectus, the PSE has an authorized capital stock of ₱120 million, of which 85,025,692 shares are issued. Out of this total, 84,925,686 shares are outstanding, and 100,006 are treasury shares.

The table below sets out movements in the composite index as of the last business day of each calendar year from 1995 to 2017 and shows the number of listed companies, market capitalization, and value of shares traded for the same period:

Composite Number of Aggregate Combined Index at Listed Market Value of Year Closing Companies Capitalization Turnover (in ₱ billions) (in ₱ billions) 1995 ...... 2,594.2 205 1,545.7 379.0 1996 ...... 3,170.6 216 2,121.1 668.8 1997 ...... 1,869.2 221 1,251.3 586.2 1998 ...... 1,968.8 222 1,373.7 408.7 1999 ...... 2,142.9 225 1,936.5 781.0 2000 ...... 1,494.5 229 2,576.5 357.7 2001 ...... 1,168.1 231 2,141.4 159.6 2002 ...... 1,018.4 234 2,083.2 159.7 2003 ...... 1,442.4 236 2,973.8 145.4 2004 ...... 1,822.8 235 4,766.3 206.6 2005 ...... 2,096.0 237 5,948.4 383.5 2006 ...... 2,982.5 239 7,173.2 572.6 2007 ...... 3,621.6 244 7,977.6 1,338.3 2008 ...... 1,872.9 246 4,069.2 763.9 2009 ...... 3,052.7 248 6,029.1 994.2 2010 ...... 4,201.1 253 8,866.1 1,207.4 2011 ...... 4,372.0 245 8,697.0 1,422.6 2012 ...... 5,812.7 254 10,952.7 1,771.7 2013 ...... 5,889.8 257 11,931.3 2,546.2 2014 ...... 7,230.6 263 14,251.7 2,130.1 2015 ...... 6,952.1 265 13,465.1 2,172.5 2016 ...... 6,840.6 268 14,438.8 1,929.5 2017 ...... 8,558.4 324 17,583.1 1,958.4 ______Source: PSE

Trading

The PSE is a double auction market. Buyers and sellers are each represented by stockbrokers. To trade, bid or ask prices are posted on the PSE’s electronic trading system. A buy (or sell) order that matches the lowest asked (or highest bid) price is automatically executed. Buy and sell orders received by one broker at the same price are crossed at the PSE at the indicated price. Payment of purchases of listed securities must be made by the buyer on or before the third trading day (the settlement date) after the trade.

Equities trading on the PSE starts at 9:30 a.m. until 12:00 p.m., when there will be a one and a half hour lunch break. In the afternoon, trading resumes at 1:30 p.m. and ends at 3:30 p.m., with a 10-minute extension during which transactions may be conducted, provided that they are executed at the last traded price and are only for the purpose of completing unfinished orders. Trading days are Monday to Friday, except legal holidays and days when the BSP clearing house is closed.

135 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Minimum trading lots range from five (5) to one million (1,000,000) shares depending on the price range and nature of the security traded. The minimum trading lot for the Company’s Shares is one (100) shares. Odd-sized lots are traded by brokers on a board specifically designed for odd-lot trading.

To maintain stability in the stock market, daily price swings are monitored and regulated. Under current PSE regulations, when the price of a listed security moves up by fifty percent (50%) or down by fifty percent (50%) in one day (based on the previous closing price or last posted bid price, whichever is higher), the price of that security is automatically frozen by the PSE, unless there is an official statement from the corporation or a government agency justifying such price fluctuation, in which case the affected security can still be traded but only at the frozen price. If the subject corporation fails to submit such explanation, a trading halt is imposed by the PSE on the listed security the following day. Resumption of trading shall be allowed only when the disclosure of the subject corporation is disseminated, subject again to the trading ban.

In cases where an order has been partially matched, only the portion of the order that will result in a breach of the trading threshold will be frozen. Where the order results in a breach of the trading threshold, the following procedures shall apply:

In case the static threshold is breached, the PSE will accept the order, provided the price is within the allowable percentage price difference under the implementing guidelines of the revised trading rules (i.e., fifty percent (50.0%) of the previous day’s reference or closing price, or the last adjusted closing price); otherwise, such order will be rejected. In cases where the order is accepted, the PSE will adjust the static threshold to sixty percent (60.0%). All orders breaching the sixty percent (60.0%) static threshold will be rejected by the PSE.

In case the dynamic threshold is breached, the PSE will accept the order if the price is within the allowable percentage price difference under the existing regulations (i.e., twenty percent (20.0%) for security cluster A and newly-listed securities; fifteen percent (15.0%) for security cluster B; and ten percent (10.0%) for security cluster C); otherwise, such order will be rejected by the PSE.

Non-Resident Transactions

When the purchase/sale of Philippine shares involves a non-resident, whether the transaction is effected in the domestic or foreign market, it will be the responsibility of the securities dealer/broker to register the transaction with the BSP. The local securities dealer/broker shall file with the BSP, within three (3) business days from the transaction date, an application in the prescribed registration form. After compliance with other required undertakings, the BSP shall issue a Certificate of Registration. Under BSP rules, all registered foreign investments in Philippine securities including profits and dividends, net of taxes and charges, may be repatriated.

Settlement

The SCCP is a wholly-owned subsidiary of the PSE, and was organized primarily as a clearance and settlement agency for SCCP-eligible trades executed through the facilities of the PSE. SCCP received its permanent license to operate on January 17, 2002. It is responsible for:

 synchronizing the settlement of funds and the transfer of securities through delivery versus payment clearing and settlement of transactions of clearing members, who are also PSE Trading Participants;

 guaranteeing the settlement of trades in the event of a PSE Trading Participant’s default through the implementation of its fails management system and administration of the Clearing and Trade Guaranty Fund; and

 performance of risk management and monitoring to ensure final and irrevocable settlement.

SCCP settles PSE trades on a three (3)-day rolling settlement environment, which means that settlement of trades takes place three (3) trading days after transaction date (“T+3”). The deadline for settlement of trades is 12:00 noon of T+3. Securities sold should be in scripless form and lodged under the book-entry system of the PDTC. Each PSE Broker maintains a cash settlement account with one of the seven existing settlement banks of SCCP, which are Banco de Oro Unibank, Inc., Rizal Commercial Banking Corporation, Metropolitan Bank and Trust Company, DB, The Hong Kong Shanghai Banking Corporation Limited, Unionbank of the Philippines

136 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION and Maybank Philippines Inc. Payment for securities bought should be in good, cleared funds and should be final and irrevocable. Settlement is presently on a broker level.

SCCP implemented its CCCS system on May 29, 2006. CCCS employs multilateral netting, whereby the system automatically offsets “buy” and “sell” transactions on a per issue and a per flag basis to arrive at a net receipt or a net delivery security position for each clearing member. All cash debits and credits are also netted into a single net cash position for each clearing member. Novation of the original PSE trade contracts occurs, and SCCP stands between the original trading parties and becomes the central counterparty to each PSE-eligible trade cleared through it.

Scripless Trading

In 1995, the PDTC (formerly the Philippine Central Depository, Inc.), was organized to establish a central depository in the Philippines and introduce scripless or book-entry trading in the Philippines. On December 16, 1996, the PDTC was granted a provisional license by the SEC to act as a central securities depository.

All listed securities at the PSE have been converted into book-entry settlement in the PDTC. The depository service of the PDTC provides the infrastructure for lodgment (deposit) and upliftment (withdrawal) of securities, pledge of securities, securities lending and borrowing and corporate actions including shareholders’ meetings, dividend declarations and rights offerings. The PDTC also provides depository and settlement services for non- PSE trades of listed equity securities. For transactions on the PSE, the security element of the trade will be settled through the book-entry system, while the cash element will be settled through the current settlement banks, Banco de Oro Unibank, Inc., Rizal Commercial Banking Corporation, Metropolitan Bank and Trust Company, DB, The Hong Kong Shanghai Banking Corporation Limited, Unionbank of the Philippines and Maybank Philippines Inc. In order to benefit from the book-entry system, securities must be immobilized into the PDTC system through a process called lodgment. Lodgment is the process by which shareholders transfer legal title (but not beneficial title) over their shares in favor of the PCD Nominee, a corporation wholly-owned by the PDTC, whose sole purpose is to act as nominee and legal title holder of all shares lodged in the PDTC. “Immobilization” is the process by which the warrant or share certificates of lodging holders are cancelled by the transfer agent and the corresponding transfer of beneficial ownership of the immobilized shares in the account of the PCD Nominee through the PDTC participant will be recorded in the issuing corporation’s registry. This trust arrangement between the participants and PDTC through the PCD Nominee is established by and explained in the PDTC Rules and Operating Procedures approved by the SEC. No consideration is paid for the transfer of legal title to the PCD Nominee. Once lodged, transfers of beneficial title of the securities are accomplished via book-entry settlement.

Under the current PDTC system, only participants (e.g. brokers and custodians) will be recognized by the PDTC as the beneficial owners of the lodged equity securities. Thus, each beneficial owner of shares, through his participant, will be the beneficial owner to the extent of the number of shares held by such participant in the records of the PCD Nominee. All lodgments, trades and uplifts on these shares will have to be coursed through a participant. Ownership and transfers of beneficial interests in the shares will be reflected, with respect to the participant’s aggregate holdings, in the PDTC system, and with respect to each beneficial owner’s holdings, in the records of the participants. Beneficial owners are thus advised that in order to exercise their rights as beneficial owners of the lodged shares, they must rely on their participant-brokers and/or participant-custodians.

Any beneficial owner of shares who wishes to trade his interests in the shares must course the trade through a participant. The participant can execute PSE trades and non-PSE trades of lodged equity securities through the PDTC system. All matched transactions in the PSE trading system will be fed through the SCCP, and into the PDTC system. Once it is determined on the settlement date that there are adequate securities in the securities settlement account of the participant-seller and adequate cleared funds in the settlement bank account of the participant-buyer, the PSE trades are automatically settled in the SCCP CCCS system, in accordance with the SCCP and PDTC Rules and Operating Procedures. Once settled, the beneficial ownership of the securities is transferred from the participant-seller to the participant-buyer without the physical transfer of stock certificates covering the traded securities.

If a shareholder wishes to withdraw his shareholdings from the PDTC system, the PDTC has a procedure of upliftment under which PCD Nominee will transfer back to the shareholder the legal title to the shares lodged. The uplifting shareholder shall follow the Rules and Operating Procedures of the PDTC for the upliftment of the shares lodged under the name of the PCD Nominee. The transfer agent shall prepare and send a Registry

137 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION Confirmation Advice to the PDTC covering the new number of shares lodged under the PCD Nominee. The expenses for upliftment are for the account of the uplifting shareholder.

The difference between the depository and the registry would be on the recording of ownership of the shares in the issuing corporations’ books. In the depository set-up, shares are simply immobilized, wherein customers’ certificates are cancelled and a confirmation advice is issued in the name of PCD Nominee to confirm new balances of the shares lodged with the PDTC. Transfers among/between broker and/or custodian accounts, as the case may be, will only be made within the book-entry system of the PDTC. However, as far as the issuing corporation is concerned, the underlying certificates are in the PCD Nominee’s name. In the registry set-up, settlement and recording of ownership of traded securities will already be directly made in the corresponding issuing company’s transfer agents’ books or system. Likewise, recording will already be at the beneficiary level (whether it be a client or a registered custodian holding securities for its clients), thereby removing from the broker its current “de facto” custodianship role.

Amended Rule on Lodgment of Securities

On June 24, 2009, the PSE apprised all listed companies and market participants through Memorandum No. 2009-0320 that commencing on July 1, 2009, as a condition for the listing and trading of the securities of an applicant company, the applicant company shall electronically lodge its registered securities with the PDTC or any other entity duly authorized by the SEC, without any jumbo or mother certificate in compliance with the requirements of Section 43 of the SRC. In compliance with the foregoing requirement, actual listing and trading of securities on the scheduled listing date shall take effect only after submission by the applicant company of the documentary requirements stated in Article III Part A of the Revised Listing Rules.

Pursuant to the said amendment, the PDTC issued an implementing procedure in support thereof to wit:

 For a new company to be listed at the PSE as of July 1, 2009, the usual procedure will be observed but the transfer agent of the corporation shall no longer issue a certificate to PCD Nominee but shall issue a registry confirmation advice, which shall be the basis for the PDTC to credit the holdings of the depository participants on the listing date.

 On the other hand, for an existing listed company, the PDTC shall wait for the advice of the transfer agent that it is ready to accept surrender of PCD Nominee jumbo certificates and upon such advice the PDTC shall surrender all PCD Nominee jumbo certificates to the transfer agent for cancellation. The transfer agent shall issue a registry confirmation advice to PDTC evidencing the total number of shares registered in the name of PCD Nominee in the listed company’s registry as of confirmation date.

Further, the PSE apprised all listed companies and market participants on May 21, 2010 through Memorandum No. 2010-0246 that the Amended Rule on Lodgment of Securities under Section 16 of Article III, Part A of the Revised Listing Rules of the PSE shall apply to all securities that are lodged with the PDTC or any other entity duly authorized by the PSE.

For listing applications, the amended rule on lodgment of securities is applicable to:

 The offer shares/securities of the applicant company in the case of an initial public offering;

 The shares/securities that are lodged with the PDTC, or any other entity duly authorized by the PSE in the case of a listing by way of introduction;

 New securities to be offered and applied for listing by an existing listed company; and

 Additional listing of securities of an existing listed company.

Pursuant to the said amendment, the PDTC issued an implementing procedure in support thereof, to wit:

“For new companies to be listed at the PSE as of July 1, 2009 the usual procedure will be observed but the Transfer Agent of the companies shall no longer issue a certificate to PCD Nominee but shall issue a Registry Confirmation Advice, which shall be the basis for the PDTC to credit the holdings of the Depository Participants on listing date.”

138 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION “On the other hand, for existing listed companies, the PDTC shall wait for the advice of the Transfer Agents that it is ready to accept surrender of PCNC jumbo certificates and upon such advice the PDTC shall surrender all PCNC jumbo certificates to the Transfer Agents for cancellation. The Transfer Agents shall issue a Registry Confirmation Advice to PCNC evidencing the total number of shares registered in the name of PCNC in our registry as a confirmation date.”

Issuance of Stock Certificates for Certificated Shares

On or after the listing of the shares on the PSE, any beneficial owner of the shares may apply with PDTC through his broker or custodian-participant for a withdrawal from the book-entry system and return to the paper- based settlement. If a shareholder wishes to withdraw his stockholdings from the PDTC system, the PDTC has a procedure of upliftment under which PCD Nominee will transfer back to the shareholder the legal title to the shares lodged. The uplifting shareholder shall follow the Rules and Operating Procedures of the PDTC for the uplifting of the shares lodged under the name of the PCD Nominee. The transfer agent shall prepare and send a Registry Confirmation Advice to the PDTC covering the new number of shares lodged under PCD Nominee. The expenses for upliftment are on the account of the uplifting shareholder.

Upon the issuance of stock certificates for the shares in the name of the person applying for upliftment, such shares shall be deemed to be withdrawn from the PDTC book-entry settlement system, and trading on such shares will follow the normal process for settlement of certificated securities. The expenses for upliftment of the shares into certificated securities will be charged to the person applying for upliftment. Pending completion of the upliftment process, the beneficial interest in the shares covered by the application for upliftment is frozen and no trading and book-entry settlement will be permitted until the relevant stock certificates in the name of the person applying for upliftment shall have been issued by the relevant company’s transfer agent.

139 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

PHILIPPINE TAXATION

The statements made regarding taxation in the Philippines are based on the laws in force at the date of this Prospectus and are subject to any changes in law occurring after such date. The following summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to invest in the Shares and does 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 rates. Prospective purchasers of the Shares are advised to consult their own tax advisers concerning the tax consequences of their investment in the Shares.

As used in this section, the term “resident alien” refers to an individual whose residence is within the Philippines and who is not a citizen thereof; a “non-resident alien” is an individual whose residence is not within the Philippines and who is not a citizen of the Philippines; a non-resident alien who is actually within the Philippines for an aggregate period of more than 180 days during any calendar year is considered a “non- resident alien engaged in trade or business in the Philippines;” otherwise, such non-resident alien who is actually within the Philippines for an aggregate period of 180 days or less during any calendar year is considered a “non-resident alien not engaged in trade or business in the Philippines”. A “resident foreign corporation” is a foreign corporation engaged in trade or business within the Philippines; and a “non-resident foreign corporation” is a non-Philippine corporation not engaged in trade or business within the Philippines.

The term “non -resident holder” means a holder of the Company’s Shares:  who is an individual who is neither a citizen nor a resident of the Philippines or an entity which is a non-resident foreign corporation; and  should a tax treaty be applicable, whose ownership of the Company’s Shares is not effectively connected with a fixed base or a permanent establishment in the Philippines.

Tax on Dividends

Cash and property dividends received from a domestic corporation by individual shareholders who are either citizens or residents of the Philippines are subject to a final withholding tax at the rate of 10%, which shall be withheld by the Company. Cash and property dividends received by non-resident alien individuals engaged in trade or business in the Philippines are subject to a twenty percent (20%) final withholding tax on the gross amount thereof, while cash and property dividends received by non-resident alien individuals not engaged in trade or business in the Philippines are subject to a final withholding tax at twenty five percent (25%) of the gross amount, subject, however, to the applicable preferential tax rates under tax treaties executed between the Philippines and the country of residence or domicile of such non-resident foreign individuals.

Cash and property dividends received from a domestic corporation by another domestic corporation or by resident foreign corporations are not subject to tax while those received by non-resident foreign corporations are generally subject to a final withholding tax at the rate of thirty percent (30%), subject to applicable preferential tax rates under tax treaties in force between the Philippines and the country of domicile of such non-resident foreign corporation. The thirty percent (30%) rate for dividends paid to a non-resident foreign corporation with countries of domicile having no tax treaty with the Philippines may be reduced to a lower rate of fifteen percent (15%) if (i) the country in which the non-resident foreign corporation is domiciled imposes no tax on foreign sourced dividends or (ii) if the country of domicile of the non-resident foreign corporation allows a fifteen percent (15%) or greater credit equivalent for taxes deemed to have been paid in the Philippines.

To avail of tax treaty relief on dividend income, a non-resident holder must follow the special procedure prescribed in the applicable tax treaty and by the BIR as set out in BIR Form No. 1901-D. These include proof of tax residence in the country that is a party to the tax treaty. Proof of tax residence consists of a Certificate of Residence for Tax Treaty Relief Form (“CORTT Form”) or consularized certification from the tax authority of the country of residence of the non-resident shareholder which states that the non-resident stockholder is a tax resident of such country under the applicable tax treaty. If the non-resident shareholder is a juridical entity, an authenticated certificated true copy of its articles of incorporation or articles of association issued by the proper government authority should also be submitted to the BIR in addition to the foregoing.

The CORTT Form must be submitted every 2 years (unless the non-resident holder uses a tax residency certificate, in which case, the validity period of such certificate will apply). The submission of a CORTT Form will entitle the Company to withhold using the applicable treaty rate. The Company will then submit original copies of the CORTT to the International Tax Affairs Division (“ITAD”) and Revenue District Office (“RDO”)

140 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION 39 within thirty (30) days from the initial payment of withholding taxes due. Each time a subsequent payment is made within the coverage of the originally filed CORTT Form, the Company must submit an updated Part II of the CORTT Form to ITAD and RDO 39 within thirty (30) days from each subsequent payment of the withholding tax due.

If the regular tax rate is withheld by the Company instead of the reduced rates applicable under a treaty, the non- resident holder of the shares may file a claim for refund from the BIR. However, because the refund process in the Philippines requires the filing of an administrative claim and the submission of supporting information and may also involve the filing of a judicial appeal, it may be impractical to pursue such a refund.

Stock dividends distributed pro rata to any holder of shares of stock are generally not subject to Philippine income tax. However, the sale, exchange or disposition of shares received as stock dividends by the shareholder is subject to capital gains or stock transaction tax, and documentary stamp tax. The capital gains tax is based on gross selling price or fair market value, whichever is higher, less the adjusted basis (taking into account the stock dividends). The stock transaction tax of 0.6% is based on the gross selling price.

Tax Treaties

The following table lists some of the countries with which the Philippines has tax treaties and the tax rates currently applicable to non-resident holders who are residents of those countries:

Stock transaction tax Capital gains tax due on sale or disposition on disposition of Dividends effected through the shares outside the PSE (%) PSE(%)(12) (%)

Canada ...... 25(1) ...... 0.5 ...... May be exempt(9)...... China ...... 15(2) ...... 0.5 ...... May be exempt(9)...... France ...... 15(3) ...... 0.5 ...... May be exempt(9)...... Germany ...... 15(4) ...... 0.5 ...... 5/10(10) ...... Japan ...... 15(5) ...... 0.5 ...... May be exempt...... (9) ...... Singapore ...... 25(6) ...... 0.5 ...... May be exempt(9) ...... United Kingdom ...... 25(7) ...... 0.5 ...... Exempt...... (11) ...... United States ...... 25(8) ...... 0.5...... May...... be exempt(9) ......

(1) fifteen percent (15%) if the recipient company controls at least ten percent (10%) of the voting power of the company paying the dividends. (2) ten percent (10%) if the beneficial owner is a company which holds directly at least ten percent (10%) of the capital of the company paying the dividends. (3) ten percent (10%) if the recipient company (excluding a partnership) holds directly at least ten percent (10%) of the voting shares of the company paying the dividends. (4) ten percent (10%) if the recipient company (excluding a partnership) owns directly at least twenty five percent (25%) of the capital of the company paying the dividends. (5) ten percent (10%) if the recipient company holds directly at least ten percent (10%) of either the voting shares of the company paying the dividends or of the total shares issued by that company during the period of six months immediately preceding the date of payment of the dividends. (6) fifteen percent (15%) if during the part of the paying company’s taxable year which precedes the date of payment of dividends and during the whole of its prior taxable year at least fifteen percent (15%) of the outstanding shares of the voting shares of the paying company were owned by the recipient company. (7) fifteen percent (15%) if the recipient company is a company which controls directly or indirectly at least ten percent (10%) of the voting power of the company paying the dividends. (8) twenty percent (20%) if during the part of the paying corporation’s taxable year which precedes the date of payment of dividends and during the whole of its prior taxable year, at least ten percent (10%) of the outstanding shares of the voting shares of the paying corporation were owned by the recipient corporation. Notwithstanding the rates provided under the Republic of the Philippines-United States Treaty, residents of the United States may avail of the 15% withholding tax rate under the tax-sparing clause of the Philippine Tax Code provided certain conditions are met. (9) Capital gains are taxable only in the country where the seller is a resident, provided the shares are not those of a corporation, the assets of which consist principally of real property situated in the Philippines, in which case the sale is subject to Philippine taxes.

141 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION (10) Under the tax treaty between the Philippines and Germany, capital gains from the alienation of shares of a Philippine corporation may be taxed in the Philippines irrespective of the nature of the assets of the Philippine corporation. Tax rate is fifteen percent (15%) on the net capital gains realized during the taxable year. (11) Under the tax treaty between the Philippines and the United Kingdom, capital gains on the sale of the shares of Philippine corporations are subject to tax only in the country where the seller is a resident, irrespective of the nature of the assets of the Philippine corporation. (12) Exempt if the stock transaction tax is expressly covered by the applicable tax treaty or is deemed by the relevant authorities as an identical or substantially similar tax to the Philippine income tax. In BIR Ruling No. ITAD 22-07 dated February 9, 2007, the BIR held that the stock transaction tax cannot be considered as an identical or substantially similar tax on income, and, consequently, ruled that a Singapore resident is not exempt from the stock transaction tax on the sale of its shares in a Philippine corporation through the PSE.

When availing of capital gains tax exemption on the sale of shares of stock under a tax treaty, a tax treaty exemption ruling shall be necessary in order to completely implement the transfer. For sale of shares made outside the PSE, a certificate authorizing registration (CAR) from the BIR is required before the transfer is registered in the stock and transfer book. The BIR issues the CAR only after verifying that the applicable taxes have been paid. Thus, in lieu of proof of payment of capital gains tax, the tax treaty relief ruling should be submitted to the BIR office processing the CAR.

Pursuant to BIR issuances, in order for an exemption under a tax treaty to be recognized, an application for tax treaty relief must be filed by the income recipient before the deadline for the filing of the documentary stamp tax return, which is the fifth day from the end of the month when the document transferring ownership was executed. However, on August 19, 2013, the Philippine Supreme Court in Deutsche Bank AG Manila Branch v. CIR, G.R. No. 188550, ruled that the period of application for the availment of tax treaty relief should not operate to divest entitlement to the relief as it would constitute a violation of the duty required by good faith in complying with a tax treaty. Thus, the application for a tax treaty relief to be filed with the BIR should merely operate to confirm the entitlement of the taxpayer to such relief.

The requirements for a tax treaty relief application in respect of capital gains tax on the sale of shares are set out in the applicable tax treaty and BIR Form No. 0901-C. These include proof of residence in the country that is a party to the tax treaty. Proof of residence consists of a consularized certification from the tax authority of the country of residence of the seller of shares which provides that the seller is a resident of such country under the applicable tax treaty. If the seller is a juridical entity, authenticated certified true copies of its articles of incorporation or association issued by the proper government authority should also be submitted to the BIR in addition to the certification of its residence from the tax authority of its country of residence.

Sale, Exchange or Disposition of Shares through an Initial Public Offering (IPO)

The sale, barter, exchange or other disposition through an IPO of shares of stock in closely held corporations is subject to an IPO Tax at the rates below based on the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed. Up to 25% ...... 4% ...... 1 Above 25% up to 33 /3% ...... 2% ...... 1 Above 33 /3% ...... 1%......

A “closely held corporation” means any corporation at least fifty percent (50%) in value of outstanding capital stock or at least fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote is owned directly or indirectly by or for not more than twenty (20) individuals.

The total IPO Tax is arrived at after separately computing the IPO Tax for primary and secondary offerings. The total IPO Tax for the Offer Shares, if applicable, shall be paid by the Company.

Sale, Exchange or Disposition of Shares after the IPO

Capital Gains Tax, If Sale Was Made outside the PSE

Unless an applicable treaty exempts such gains from tax or provides for preferential rates, the net capital gains realized by a resident or non-resident (other than a dealer in securities) during each taxable year from the sale, exchange or disposition of shares of stock outside the facilities of the PSE, are subject to fifteen percent (15%)

142 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION final tax. An application for tax treaty relief must be filed (and approved) by the Philippine tax authorities to obtain an exemption or preferential tax rate under a tax treaty.

The transfer of shares shall not be recorded in the books of a company, unless the BIR certifies that the capital gains and documentary stamp taxes relating to the sale or transfer have been paid, or where applicable, a tax treaty relief has been confirmed by the International Tax Affairs Division of the BIR or other conditions have been met.

Taxes on Transfer of Shares Listed and Traded at the PSE

Unless an applicable treaty exempts the sale from income and/or percentage tax, a sale or other disposition of shares of stock through the facilities of the PSE by a resident or a non-resident shareholder (other than a dealer in securities) is subject to a stock transaction tax at the rate of 0.6% of the gross selling price or gross value in money of the shares of stock sold or otherwise disposed. This tax is required to be collected by and paid to the Government by the selling stockbroker on behalf of his client. The stock transaction tax is classified as a percentage tax in lieu of a capital gains tax. Under certain tax treaties, the exemptions from capital gains tax discussed herein may not be applicable to stock transaction tax.

In addition, Value Added Tax (VAT) of twelve percent (12%) is imposed on the commission earned by the PSE-registered broker and is generally passed on to the client.

The PSE issued Memorandum CN-No. 2012-0046 dated August 22, 2012, which provides that immediately after December 31, 2012, the SEC shall impose a trading suspension for a period of not more than six (6) months, on shares of a listed company who has not complied with the Rule on Minimum Public Ownership (“MPO”) which requires listed companies to maintain a minimum percentage of listed securities held by the public at ten percent (10%) of the listed companies issued and outstanding shares at all times. On December 1, 2017, the SEC, through Memorandum Circular No. 13, raised the MPO requirement to twenty percent (20%) for any company applying for registration of its shares of stock for the purpose of conducting an initial public offering. Companies which do not comply with the MPO requirement after the lapse of the trading suspension shall be automatically delisted. Consequently, the sale of such listed company’ shares during the trading suspension may be effected only outside the trading system of the Exchange and shall be subject to capital gains tax and documentary stamp tax. Furthermore, if the fair market value of the shares of stock sold is greater than the consideration or the selling price, the amount by which the fair market value of the shares exceeds the selling price shall be deemed a gift that is subject to donor’s tax at the under Section 100 of the National Internal Revenue Code.

On November 7, 2012, the BIR issued Revenue Regulations No. 16-2012 (“R.R. 16-12”), which provides that the sale, barter, transfer, and/or assignment of shares of listed companies that fail to meet the MPO requirement after December 31, 2012 will be subject to capital gains tax and documentary stamp tax. R.R. 16-12 also requires publicly listed companies to submit public ownership reports to the BIR within fifteen (15) days after the end of each quarter.

Documentary Stamp Tax

The original issue of shares of stock is subject to documentary stamp tax of Two Pesos (₱2.00) for each Two Hundred Pesos (₱200.00) par value, or fraction thereof, of the shares of stock issued. The DST on the issuance of the Firm Offer shall be paid by the Company.

The transfer of shares of stock is subject to a documentary stamp tax of One 50/100 Peso (₱1.50) for each Two Hundred Pesos (₱200.00) par value or a fractional part thereof of the share of stock transferred. The DST is imposed on the person making, signing, issuing, accepting or transferring the document and is thus payable by the vendor or the purchaser of the shares. However, the sale, barter or exchange of shares of stock listed and traded at the PSE is exempt from documentary stamp tax.

143 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

In addition, the borrowing and lending of securities executed under the securities borrowing and lending program of a registered exchange, or in accordance with regulations prescribed by the appropriate regulatory authority, are likewise exempt from documentary stamp tax. However, the securities borrowing and lending agreement should be duly covered by a master securities borrowing and lending agreement acceptable to the appropriate regulatory authority, and should be duly registered and approved by the BIR.

Estate and Gift Taxes

The transfer of shares of stock upon the death of a registered shareholder (whether such holder was a citizen of the Philippines or an alien, regardless of residence) to his heirs by way of succession, is subject to Philippine taxes at a fixed rate of 6% of the net estate.

Individual and corporate registered shareholders (whether or not citizens or residents of the Philippines), who transfer shares of stock by way of gift or donation are liable to pay Philippine donors’ tax on such transfer of shares at the fixed rate of 6% based on the total gifts in excess of ₱250,000 exempt gifts made during the calendar year, whether the donor is a stranger or not.

Estate and gift taxes, however, shall not be collected in respect of intangible personal property, such as shares of stock: (a) if the decedent at the time of his death or the donor at the time of the donation was a citizen and resident of a foreign country which at the time of his death or donation did not impose a transfer tax of any character, in respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or (b) if the laws of the foreign country of which the decedent or donor was a citizen and resident at the time of his death or donation allows a similar exemption from transfer or death taxes of every character or description in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country.

Taxation outside the Philippines

Shares of stock in a domestic corporation are considered under Philippine law as situated in the Philippines and the gain derived from their sale is entirely from Philippine sources; hence, such gain is subject to Philippine income tax and the transfer of such shares by gift (donation) or succession is subject to the donors’ or estate taxes stated above.

The tax treatment of a non-resident shareholder in jurisdictions outside the Philippines may vary depending on the tax laws applicable to such holder by reason of domicile or business activities and such holder’s particular situation. This Prospectus does not discuss the tax considerations of non-resident holders of shares of stock under laws other than those of the Philippines.

EACH PROSPECTIVE HOLDER SHOULD CONSULT WITH HIS OWN TAX ADVISER AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF PURCHASING, OWNING AND DISPOSING OF THE OFFER SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND NATIONAL TAX LAWS.

144 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

PHILIPPINE FOREIGN EXCHANGE CONTROLS

Under current BSP regulations, an investment in listed Philippine securities (such as the Shares) must be registered with the BSP if the foreign exchange needed to service the repatriation of capital and the remittance of dividends, profits and earnings derived from such Shares is to be sourced from the Philippine banking system. If the foreign exchange required to service capital repatriation or dividend remittance is sourced outside the Philippine banking system, registration is not required. BSP Circular No. 471 (Series of 2005), as amended, however, subjects foreign exchange dealers and money changers to Republic Act No. 9160, or the Anti-Money Laundering Act of 2001, as amended, and requires these nonbank sources of foreign exchange to require foreign exchange buyers to submit supporting documents in connection with their application to purchase foreign exchange for purposes of capital repatriation and remittance of dividends.

Registration of Philippine securities listed in the PSE may be done directly with the BSP or through an investor’s designated custodian bank on behalf of the BSP. A custodian bank may be any authorized agent bank (as defined below) of the BSP or an offshore banking unit registered with the BSP to act as such and appointed by the investor to register the investment, hold shares for the investor, and represent the investor in all necessary actions in connection with his investments in the Philippines. The term “authorized agent bank” refers to all categories of banks, except offshore banking units, duly licensed by the BSP. Applications for registration must be accompanied by: (i) a purchase invoice, subscription agreement and proof of listing on the PSE (either or both) and (ii) the original Certificate of Inward Remittance of foreign exchange and its conversion to Pesos through an authorized agent bank of the BSP in the format prescribed by the BSP.

Upon registration of the investment, proceeds of divestments, or dividends of registered investments are repatriable or remittable immediately and in full through the Philippine banking system, net of applicable tax, without need of BSP approval. Capital repatriation of investments in listed securities is permitted upon presentation of the BSP registration document from the registering custodian bank and the broker’s sales invoice, at the exchange rate prevailing at the time of purchase of the foreign exchange from the banking system. Remittance of dividends is permitted upon presentation of: (i) the BSP registration document from the registering custodian bank; (ii) the cash dividends notice from the PSE and the PCD printout of cash dividend payment or computation of interest earned; (iii) copy of the secretary’s sworn statement on the Board Resolution covering the dividend declaration and (iv) detailed computation of the amount applied for in the format prescribed by the BSP. Pending reinvestment or repatriation, divestment proceeds, as well as dividends of registered investments, may be lodged temporarily in interest-bearing deposit accounts. Interest earned thereon, net of taxes, may also be remitted in full. Remittance of divestment proceeds or dividends of registered investments may be reinvested in the Philippines if the investments are registered with the BSP or the investor’s custodian bank.

The foregoing is subject to the power of BSP, with the approval of the President of the Philippines, to restrict the availability of foreign exchange during an exchange crisis, when an exchange crisis is imminent, or in times of national emergency.

The registration with the BSP of all foreign investments in the Offer Shares shall be the responsibility of the foreign investor.

145 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

PLAN OF DISTRIBUTION

The [397,969,600] Offer Shares shall be offered by the Company to investors, through the Issue Manager and Sole Bookrunner, and Underwriters. At least [264,649,800] Offer Shares (or 70% of the Firm Shares) are being offered by the Underwriters to the QIBs and to the general public. Up to [113,421,500] Offer Shares (or % of the Firm Shares) are being offered at the Offer Price to all of the PSE Trading Participants and LSIs in the Philippines. Prior to the closing of the Offer, any Offer Shares not taken up by the QIBs, PSE Trading Participants, and LSIs shall be distributed by the Underwriters to their clients or to the general public. In the event that there are Firm Shares that remain unsubscribed at the end of the Offer, the Underwriters shall subscribe to the balance on a firm commitment basis pursuant to the terms and conditions of the Underwriting Agreement between the Company and the Underwriters.

Underwriting Commitment

To facilitate the Offer, the Company has appointed BDO Capital as Issue Manager and Sole Bookrunner of the Offer, and with [●] and [●] as the Underwriters. BDO Capital, [●] and [●] are duly licensed by the SEC to engage in underwriting or distribution of the Offer Shares. The Company may, from time to time, engage in transactions with and perform services in the ordinary course of its business for it or other members of its Group of which the Company forms a part of. The Company and the Underwriters shall enter into an Underwriting Agreement to be dated on or about [●] (the “Underwriting Agreement”), whereby the Underwriters agree to underwrite all of the Firm Shares at the Offer Price on a firm commitment basis.

In accordance with the Underwriting Agreement, the Underwriters have agreed to underwrite the Firm Shares on a firm basis, and to distribute and sell the Offer Shares. The Underwriting Agreement will be subject to certain conditions and is subject to termination by the Underwriters if certain circumstances, including force majeure, occur on or before the time at which the Common Shares, including the Firm Shares, are listed on the PSE. In addition, this agreement is conditional, inter alia, on the Firm Shares being listed on the PSE on the Listing Date or such date as the Joint Lead Underwriters may determine.

Each of the Underwriters, has committed to underwrite the Offer up to the amount indicated below

Amount of Commitment Amount of Commitment (in ₱) (in no. of Offer Shares)

BDO Capital & Investment Corporation [●]Billion [●] [●] [●]Billion [●] TOTAL [●]Billion [●]

There is no arrangement for the Underwriters to return to the Company any unsold Offer Shares. The Underwriting Agreement may be terminated in certain circumstances prior to payment of the net proceeds of the Offer Shares being made to the Company. The Underwriters do not have any other business relationships with Company. BDO Capital, [●] and [●] are not represented in the Company’s Board of Directors. Neither is there a provision in the Underwriting Agreement, which would entitle the Underwriters to representation in the Company’s Board of Directors as part of their compensation for underwriting services. The Issue Manager and Sole Bookrunner and the Underwriters shall receive from the Company a transaction fee equivalent to [●] of the gross proceeds of the Offer, inclusive of the amounts to be paid to the Underwriters and the Selling Agents such as the PSE Trading Participants. The transaction fee is based on the final nominal amount of the Offer Shares to be issued and shall be withheld by [●], the Receiving and Paying Agent, from the proceeds of the Offer. All reasonable out-of-pocket expenses to be incurred by the Issue Manager and Bookrunner, and the Underwriters in connection with the Offer shall be for the account of Company.

Allocation to the Trading Participants of the PSE and Local Small Investor Program

Pursuant to the rules of the PSE, the Company will make available [75,614,300] Offer Shares comprising twenty percent (20%) of the Firm Shares for distribution to PSE Trading Participants. The total number of Offer Shares allocated to the one hundred thirty two (132) PSE Trading Participants will be distributed following the procedures indicated in the implementing guidelines for the Offer Shares to be distributed by the PSE. Each PSE Trading Participant will be allocated a total of [●] Offer Shares. The balance of [●] Offer Shares will be allocated by the Issue Manager and Sole Bookrunner, and Joint Lead Underwriters to the PSE Trading Participants.

146 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

PSE Trading Participants who take up the Offer Shares shall be entitled to a selling fee of one percent (1%), VAT-inclusive of the Offer Shares taken up and purchased by the relevant trading participant. The selling fee, less a withholding tax of ten percent (10%), will be paid to the PSE Trading Participants within ten (10) banking days after the Listing Date.

The PSE Trading Participants may be allowed to subscribe for their dealer accounts provided that, if they opt to sell the Offer Shares to the clients during the Offer period, it must be at a price not higher than the Offer Price per share. Likewise, the trading participants are prohibited from selling the Offer Shares during the period after the Offer period and prior to the Listing Date.

The balance of the Offer Shares allocated but not taken up by the PSE Trading Participants will be distributed by the Underwriters to their clients or to the general public.

A total of [37,807,200] Offer Shares, or ten percent (10%) of the Firm Shares, shall be made available to LSIs. LSIs is defined as a subscriber to the Offer who is willing to subscribe to a maximum of [●] Offer Shares under the LSI program. Should the total demand for the Offer Shares in the LSI program exceed the maximum allocation, the Joint Lead Underwriters shall allocate the Offer Shares by balloting.

The balance of the Offer Shares allocated but not taken up by the LSIs will be distributed by the Underwriters to their clients or to the general public.

All Offer Shares not taken up by the QIBs, the PSE Trading Participants, the LSIs, the general public and the Underwriters’ clients shall be purchased by the Underwriters on a firm commitment basis pursuant to the terms and conditions of the Underwriting Agreement. Nothing herein or in the Underwriting Agreement shall limit the rights of the Underwriters from purchasing the Offer Shares for its own respective account.

BDO Capital & Investment Corporation

BDO Capital is the wholly owned investment banking subsidiary of BDO Unibank, Inc. It obtained its license from the Philippines SEC to operate as an investment house in 1998 and is licensed by the SEC to engage in the underwriting and distribution of securities to the public. As of March 31, 2018, BDO Capital’s total assets amounted to ₱[●] billion and its capital base amounted to ₱[●]. It has an authorized capital stock of ₱1.1 billion and paid up capital stock of ₱1.0 billion.

[OTHER UNDERWRITERS]

The Issue Manager and Sole Bookrunner, and the Underwriters have no other direct or indirect interest in the Company or in any securities thereof, including options, warrants, or rights thereto. Furthermore, they do not have any relationship with the Company other than as the Issue Manager and Sole Bookrunner, and Underwriters for the Offer.

The Issue Manager and Sole Bookrunner and Underwriters also have no direct relations with the Company in terms of ownership by their respective major stockholders, and have no rights to designate or nominate any member of the Board of the Company.

There is no contract or arrangement existing between or among the Company, the Issue Manager and Sole Bookrunner, and the Underwriters, or any other third party whereby the Issue Manager and Sole Bookrunner, and the Underwriters may return any unsold securities from the Offer.

Subscription Procedures

On or before [●], the PSE Trading Participants shall submit to the Joint Lead Underwriters their respective firm orders and commitments to purchase the Offer Shares.

With respect to the LSIs, all applications to purchase or subscribe for the Offer Shares must be evidenced by a duly accomplished and completed application form. An application to purchase Offer Shares shall not be deemed as a duly accomplished and completed application unless submitted with all required relevant information and applicable supporting documents to the Joint Lead Underwriters or such other institutions that

147 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION may be invited to manage the LSI program. Payment for the Offer Shares must be made upon submission of the duly completed application form.

Payment Procedures <>

Lodgment of Shares

All of the Offer Shares shall be lodged with the PDTC and shall be issued to the PSE Trading Participants and LSIs in scripless form. They may maintain the Offer Shares in scripless form or opt to have the stock certificates issued to them by requesting an upliftment of the relevant Offer Shares from the PDTC’s electronic system after the Listing Date.

The Over-Allotment Option and Stabilization Activities

The Selling Shareholder has granted BDO Capital, in its role as Stabilizing Agent, an option exercisable in whole or in part from and including the Listing Date and when trading of the Shares commences on the PSE and ending on the date thirty (30) calendar days from the Listing Date to purchase the Optional Shares on the same terms and conditions as the Firm Shares as provided in this Prospectus. In connection therewith and the stabilization activities set out below, the Company and the Selling Shareholder have entered into a Greenshoe Agreement dated [●] with BDO Capital as the Stabilizing Agent. In a letter dated [●], the SEC allowed BDO Capital to act as Stabilizing Agent in relation to the Offer and set out the guidelines for the stabilization activities.

Pursuant to the Greenshoe Agreement, the Stabilizing Agent may effect prize stabilization activities with a view to supporting the market price of the Common Shares at a level higher than that which might otherwise prevail for a period of thirty (30) days after the Listing Date; provided, however, that there is no obligation on the part of the Stabilizing Agent to do so and such stabilizing activities, if commenced, may be discontinued by the Stabilizing Agent prior to the end of the thirty (30)-day period, upon mutual agreement with the Company, on behalf of and after consulting the Selling Shareholder.

Initial stabilizing action shall be below the initial Offer Price. The price for the subsequent stabilization activities shall be as follows:

i. after the initial stabilization action, and if there has not been an independent trade in the market at a higher price than the initial stabilization trade, the subsequent trade shall be below the initial stabilizing price; and

ii. after the initial stabilizing action, and if there has been an independent trade in the market at a higher price than the initial stabilization trade, the subsequent trade shall be at the lower of the stabilizing action price or the independent trade price.

For this purpose, independent trade shall mean any trade made by any person other than the Stabilizing Agent.

Such activities may stabilize, maintain or otherwise affect the market price of the Common Shares, which may have the effect of preventing a decline in the market price of the Common Shares and may also cause the price of the Common Shares to be higher than the price that otherwise would exist in the open market in the absence of these transactions.

Once the Over-allotment Option has been exercised and payment has been made to the Selling Shareholders for the shares sold by the Stabilizing Agent, it will no longer be allowed to purchase Common Shares in the open market for the conduct of stabilization activities. Any decision to terminate the stabilization activities (and accordingly return shares and/or cash to the Selling Shareholder) before the end of the thirty (30)-day stabilization period shall be subject to the mutual agreement between the Stabilizing Agent and the Company, on behalf of the Selling Shareholder.

The Over-allotment Option, to the extent not fully exercised by the Stabilizing Agent, shall be deemed cancelled and the relevant Optional Shares shall be re-delivered to the Selling Shareholders.

LOCK-UP

148 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

The PSE rules require existing shareholders owning at least ten percent (10%) of the outstanding shares of a company not to sell, assign or in any manner dispose of their shares for a period of one hundred eighty (180) days after the listing of the shares subscribed in the transaction or three hundred sixty five (365) days after the Listing Date in case the Company are exempt from the track record and operating history requirements.

In addition, if there is any issuance or transfer of Shares (i.e., private placements, asset for shares swap or a similar transaction) or instruments which lead to issuance of Shares (i.e., convertible bonds, warrants or a similar instrument) done and fully paid for within one hundred eighty (180) days prior to the start of the Offer, and the transaction price is lower than that of the Offer Price, all such Shares issued or transferred shall be subject to a lock-up period of at least three hundred sixty five (365) days from full payment of such Shares.

In accordance with the foregoing, the Common Shares held by the following shareholders will be subject to the lock-up periods specified below:

Before the Offer After the Offer Assuming Firm Offer Assuming Full Exercise of No. of Only Over-allotment Option Period of % Total Shareholder Common No. of % Total No. of % Total of Lock-up (in of Share- Shares Common of Common Share- days) holding Held Shares Share- Shares holding Held holding Held Cal-Comp Electronics 212,711,600 19.19% 212,711,600 14.31% 212,711,600 14.31% [180] (Thailand) PCL.

Kinpo International 895,637,600 80.81% 895,637,600 60.25% 875,739,100 58.92% [180] (Singapore) Pte. Ltd.

Lo, Guo-Lun 100 nil 100 nil 100 nil [365]

Huang, Kuan-Jen 100 nil 100 nil 100 nil [365]

Gregory L. Domingo 100 nil 100 nil 100 nil [365] Cirilo P. Noel 100 nil 100 nil 100 nil [365] Emmanuel M. Lombos 100 nil 100 nil 100 nil [365] TOTAL 1,108,349,700 100% 1,108,349,700 74.56% 1,088,451,200 73.23%

To implement this lock-up requirement, the PSE requires, among others, to lodge the shares with the PDTC through a participant of the PDTC system for the electronic lock-up of the shares or to enter into an escrow agreement with the trust department or custodian unit of an independent and reputable financial institution.

The Company, the Selling Shareholders and the shareholders listed above, being subject to the lock-up requirement, will enter into an escrow agreement with [●] as the escrow agent thereunder.

In addition, the Company and the Principal Shareholders have agreed with the Issue Manager and Sole Bookrunner, and the Underwriters that it will not, without the prior written consent of the Issue Manager and Sole Bookrunner, and the Underwriters, issue, offer, pledge, sell, contract to sell, pledge or otherwise dispose of (or publicly announce any such issuance, offer, sale or disposal of) any Shares or securities convertible or exchangeable into or exercisable for any Shares or warrants or other rights to purchase Shares or any security or financial product whose value is determined directly or indirectly by reference to the price of the underlying securities, including equity swaps, forward sales and options for a period of [one hundred eighty (180)] days after the listing of the Offer Shares.

149 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

LEGAL MATTERS

Certain legal matters as to Philippine law relating to the Offer will be passed upon by Romulo Mabanta Buenaventura Sayoc & de los Angeles, the Company's legal counsel, and Angara Abello Concepcion Regala & Cruz Law Offices, legal counsel to the Issue Manager and Sole Bookrunner, and the Underwriters.

Each of the foregoing legal counsels has neither the Company's shareholdings nor any right, whether legally enforceable or not, to nominate persons or to subscribe for the Company's securities. None of the legal counsels will receive any direct or indirect interest in any securities thereof (including options, warrants or rights thereto) pursuant to or in connection with the Offer.

150 PRELIMINARY PROSPECTUS DATED AS OF AUGUST 10, 2018 SUBJECT TO COMPLETION

INDEPENDENT AUDITORS

The Company's fiscal year begins on January 1 and ends on December 31. SGV has audited the Company's financial statements as of and for the three (3) months ended March 31, 2018 and as of and for the years ended December 31, 2017, 2016 and 2015 in accordance with the Philippine Standards on Auditing.

Jhoanna Feliza C. Go was the audit partner for the 2015 audited financial statements of the Company while Ma. Genalin Q. Arevalo is the current audit partner and has served the Company for the March 2018, December 31 2017 and 2016 financial statements. The Company has not had any material disagreements on accounting and financial disclosures with its current external auditor for the same periods or any subsequent interim period. SGV has neither shareholdings in the Company nor any right, whether legally enforceable or not, to nominate persons or to subscribe for the securities of the Company. SGV will not receive any direct or indirect interest in the Company or the Company's securities (including options, warrants or rights thereto) pursuant to or in connection with the Offer. The foregoing is in accordance with the Code of Ethics for Professional Accountants in the Philippines set by the Board of Accountancy and approved by the Professional Regulation Commission.

The following table sets out the aggregate fees billed for the current year and each of the last three years for professional services rendered by SGV to the Company, excluding fees directly related to the Offer.

In ₱ Millions 2015 2016 2017 Audit and Audit-Related Feesa 1,990 1,665 2,150 All Other Feesb 450 1,168 400 Total 2,440 2,833 2,550

a. Audit and Audit-Related Fees. This category includes the audit of annual financial statements and interim financial statements and services that are normally provided by the independent auditor in connection with statutory and regulatory filings or engagements for those calendar years. This is exclusive of out-of-pocket expenses incidental to the independent auditors’ work, the amounts of which do not exceed 10% of the agreed-upon engagement fees.

b. Out of Pocket Expenses. This category includes other services rendered by SGV such as charges for the use of IT facilities and Global Accounts Knowledge and Technology allocation (e.g. computer time, printer, scanner, internet hub, projector, etc.), printing and reproduction charges, supplies and other miscellaneous charges, mailing costs, and regular and overtime meal and transportation allowance (inclusive of actual transportation charges).

In relation to the audit of the Company's annual financial statements, the Company's Corporate Governance Manual, which was approved by the Board of Directors on June 4, 2018, provides that the audit committee shall, among other activities, (i) evaluate significant issues reported by the external auditors in relation to the adequacy, efficiency and effectiveness of policies, controls, processes and activities of the Company, (ii) ensure that other non-audit work provided by the external auditors are not in conflict with their functions as external auditors, and (iii) ensure the compliance of the Company with acceptable auditing and accounting standards and regulations.

151

ANNEXES

1. Audited Consolidated Financial Statements of the Company and Subsidiary as of March 31, 2018, December 31, 2017, 2016 and 2015

Independent Auditor’s Report

Consolidated Statements of Financial Position as of March 31, 2018, December 31, 2017, 2016 and 2015

Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2018 and 2017 and for the years ended December 31, 2017, 2016 and 2015

Consolidated Statements of Changes in Equity for the three-month periods ended March 31, 2018 and 2017 and for the years ended December 31, 2017, 2016 and 2015

Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2018 and 2017 and for the years ended December 31, 2017, 2016 and 2015

Consolidated Notes to the Financial Statements

Independent Auditors’ Report on Supplementary Schedules

2. Global Electronics Manufacturing Services (EMS) Market Size, Status and Forecast 2023 published by QY Research dated May 2018

F-1

ISSUER

Cal-Comp Technology (Philippines), Inc. Block 7, Lot 1, Main Boulevard Lima Technology Center – Special Economic Zone Lipa City, Batangas

ISSUE MANAGER AND SOLE BOOKRUNNER

BDO Capital & Investment Corporation 20/F South Tower BDO Corporate Center 7899 Makati Ave., Makati City, 0726

JOINT LEAD UNDERWRITERS

BDO Capital & Investment Corporation 20/F South Tower BDO Corporate Center 7899 Makati Ave., Makati City, 0726

[●]

[●]

LEGAL ADVISORS

to the Issue Manager and Sole Bookrunner, and to the Issuer the Underwriters

Romulo Mabanta Buenaventura Angara Abello Concepcion Sayoc & Delos Angeles Regala & Cruz Law Offices 21/F Philamlife Tower, 8767 Paseo de Roxas 22/F ACCRALAW TOWER Makati City, 1226, Metro Manila, Philippines Second Avenue corner 30th Street Crescent Park West, Bonifacio Global City, 1635 Taguig City, Philippines

INDEPENDENT AUDITORS SGV & Co. (a member firm of Ernst & Young Global Limited) 6760 Ayala Avenue, Makati City 1226 Philippines