Piston Machinery Ltd

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From the Prospectus

The Company is Piston Machinery Ltd, incorporated in New South Wales, Australia on 5 May 2017. Through its Operating Subsidiaries in the PRC, the Group manufactures and sells cast iron (and other alloys) components for use in air conditioner compressors and (commencing with a small volume in 2016) in commercial vehicles, to customers in the PRC.

Chairman’s Letter

Dear Investors,

On behalf of the Board of Piston Machinery Ltd (together with its subsidiaries, the Group), I am delighted to present this Prospectus and offer you the opportunity to become a Shareholder of the Company.

The Group commenced business in April 2007 and its operations are located primarily in Guangdong province, the PRC. Currently, the Group has two streams of business:

(a) a business manufacturing cast iron components, primarily for use in residential air conditioner rotary compressor units and related products, supplied to customers in the PRC who supply the Chinese and other international markets; and

(b) a new business, in development over the last two years, manufacturing cast motor vehicle components, primarily for commercial vehicles, for motor vehicle manufacturers in the PRC, for sale in the PRC and international markets.

The Group achieved revenues of approximately $53 million and a net profit after tax of approximately $4.28 million, for the 12 month period to 31 December 2016.

The Group is also actively pursuing growth in both of its businesses, but the more compelling opportunity exists in the motor vehicle components manufacturing business, which aims to operate in the rapidly expanding motor vehicle supply chain in the PRC. The Directors are also considering opportunities to supply into the heavy machinery and equipment market.

This Prospectus contains an offer of up to 50 million Shares at an issue price of $0.40 to raise up to $20 million. The Minimum Subscription under the Offer is $15 million. The funds raised under the Offer will be applied by the Group to:

expand and improve capacity and quality in its air conditioner components business;

expand and develop its motor vehicle components manufacturing business;

increase working capital to maximise leverage of the Group’s manufacturing base;

increase and drive research and development initiatives to innovate and improve efficiency and value for Shareholders;

pay the costs associated with the Offer and the Listing on the ASX; and

provide general working capital for the Group, including operational expenses.

The Company is committed to Listing on the ASX, as it will allow the Company to raise funds on an internationally recognised capital market, offer an internationally recognised corporate governance environment that the Directors believe will provide a suitable platform for the Group’s growth and provide a platform to establish, develop and promote its business and access to new markets. The Company also believes locating its head office in Australia will provide greater opportunities to access Australia’s world class research capability and enable the Company to further leverage its operational performance through this technology access.

An investment in the Company is subject to risks, such as product price variation risks, competition risks, loss of key customers and suppliers, risks in supplying cast iron products, quality control and loss of key personnel. Detailed information about these risks are set out in Section 9, which I encourage you to read carefully.

I believe that the journey ahead to realise the full potential of the Group will be an exciting one and on behalf of the Directors, I look forward to welcoming you as a Shareholder of Piston Machinery Ltd.

Yours sincerely,

Dennis Trlin

Chairman