Business Overview

5. OUR GROUP 5. OUR GROUP 5.1 Our history and key milestones 5.1.1 Our history Overview of our Group Our Company was incorporated in Malaysia on 9 April 1997 under the Act as a private limited company under the name of Advance Earthworks Sdn Bhd. On 23 September 2010, our name was changed to Advancecon Holdings Sdn Bhd and subsequently on 23 August 2016, we were converted into a public limited company and assumed our present name of Advancecon Holdings Berhad to facilitate our Listing. We are currently an investment holding company and through our Subsidiaries, we are primarily involved in the provision of earthworks and civil engineering services, which are the subsectors of the construction industry operating in Malaysia. Our Group is also involved in the provision of support services such as sale of construction materials, hiring of machinery and ad­hoc general construction services or daywork. For the avoidance of doubt, earthworks and civil engineering services contributed approximately 92.3%, 87.1 % and 91.2% of our Group’s total revenue over the past three (3) financial years up to the FYE 31 December 2016, respectively whilst the revenue contributions of our support services were approximately 7.7%, 12.9% and 8.8% of our Group’s total revenue over the past three (3) financial years up to the FYE 31 December 2016, respectively. In April 2013, we commenced a new business segment, namely property investment which mainly arose due to our working relationship with certain of our clients, who are property developers, whereby we are offered to acquire properties at discounted prices. However, we have only generated revenue from this business segment since 2016, which contributed approximately 0.01 % of our Group’s total revenue for the FYE 31 December 2016. Please refer to Sections 6.1 and 11 of this Prospectus for further details in relation to our business activities and its respective revenue contributions. The evolution of Advancecon Group since its inception up to the internal reorganization exercise is depicted in the following diagram:­’” i  Advancecon Infra was incorporated by  Expansion  into  earthworks  selVices  Dato’ Phum and the Phum Brothers  through the incorporation of Advancecon  under the name of Pembinaan Sin Soon Kim Sdn Bhd to carry our civil engineering selVices  marking the commencement of earthworks selVices by Advancecon Group  Conversion of the Company into a public company

The incorporation of ASB which Internal reorganisation structure listing on the Main Market of was abrainchild of Dato’ Phum and undertaken and completed within the Bursa Securities Lim Swee Chai year. The formation of current ~_ __ _ _ __ ___ _ Advancecon’s Group structure I . ._~ i 5. OUR GROUP (CONT’D) The inception of our Group Our Group’s business operations began with the incorporation of Pembinaan Sin Soon Kim Sdn Bhd (now known as Advancecon Infra) in October 1990 by our Group Chief Executive Officer, namely Dato’ Phum together with the Phum Brothers. The incorporation of the company was initiated by Dato’ Phum’s desire to expand his family business, which was then solely involved in the business of providing hiring services of heavy machinery i.e. backhoes to the local construction industry players under the name of Soon Kim Trading & Engineering, a company owned by Dato’ Phum and the Phum Brothers. Under the stewardship of Dato’ Phum, Pembinaan Sin Soon Kim Sdn Bhd (now known as Advancecon Infra) commenced its business operations in October 1990 and was primarily engaged in the provision of civil engineering services undertaking small construction works such as the constructions of main drains and road works on a subcontract basis. During the same year in 1990, Dato’ Phum met Lim Swee Chai through a construction project undertaken by Pembinaan Sin Soon Kim Sdn Bhd (now known as Advancecon Infra) which was awarded by Teguh Kaya Sdn Bhd, a construction company where Lim Swee Chai was the Contracts Manager then. During his tenure with Teguh Kaya Sdn Bhd, Lim Swee Chai was responsible for the overall contract management functions of the construction projects undertaken by Teguh Kaya Sdn Bhd and is experienced in contract management functions such as tendering, subcontracting, contracts administration works and procurement functions. Dato’ Phum then invited Lim Swee Chai to join his business as he saw Lim Swee Chai’s expertise being beneficial and such collaboration would help elevate his business as Dato’ Phum’s expertise was focusing on the aspects of on-site construction services whilst Lim Swee Chai is experienced in contracts and office operations. Lim Swee Chai resigned from Teguh Kaya Sdn Bhd in 1993 and together with Dato’ Phum, they incorporated ASB in the same year as a stepping stone in pursuing their business career in the construction industry to undertake construction projects specialising in civil engineering segment. In July 1994, ASB was awarded its first civil engineering contract to carry out the construction and completion of main drain, box culverts and sewerage systems for a residential development project located at Pusat Bandar Puchong, Selangor undertaken by S P Setia group, for total contract value of approximately RM18.59 million, details of which is set out in Section 5.1.2 of this Prospectus. The tenure of the entire residential development project was approximately seven (7) years and it was successfully completed in February 2001 which was within the project timeline. During the course of our construction for the aforesaid residential development project, we encountered difficulty in sourcing for ready-mix concrete specifically for the construction of sewerage systems. Therefore in September 1994, Advancemix Sdn Bhd (now known as Advancecon Machinery) was incorporated and an in-house batching plant was then set up at Pusat Bandar Puchong, Selangor to produce and to supply ready-mix concrete to support our construction projects. With our in-house batching plant, we were able to reduce the reliance on external party in supplying ready-mix concrete which resulted in better control of our project schedule. At the same time, we also took the opportunity to supply our ready-mix concrete for the neighbouring projects located in Pusat Bandar Puchong, Selangor. II Company Number: 426965-M II

 

5. OUR GROUP (CONT’D) The expansion of our business activity via the entrance of earthworks construction service From 1994 to 1997, there was an increase in the number of our construction projects. We further noted that there was an increasing demand from our customers who requested us to also carry out earthworks while awarding us civil engineering services projects. During that initial period, we usually engage the services of subcontractors should the construction projects awarded to us involve earthworks services. As earthworks are complementary to, and synergistic with our existing civil engineering services, Dato’ Phum and Lim Swee Chai believed that the expansion of our business activities into earthworks would serve as a gateway to increase our competitiveness during the tender process as well as would uplift our profile by providing a wider range of construction services to our customers. Therefore in April 1997, we venture into the business of offering earthworks via Advance Earthworks Sdn Bhd (now known as Advancecon) and we recruited Lam Wing King, Chan Chew Lock and Cheah Keng Foo, who are equipped with the relevant expertise and technical skills in earthworks to undertake our earthworks projects. In June 1998, ASB was awarded its first contract for earthworks and civil engineering services which involved site clearance, earthworks, turfing works, construction of road, main drain and sewerage system for a residential development project in Precinct 9 and part of Precinct 7, Putrajaya for a total contract value of approximately RM26.32 million undertaken by Setia Putrajaya Sdn Bhd. This tenure of this residential development project was approximately two (2) years and we successfully completed this construction project in August 2000, which was within the project timeline. Further details of this project are set out in Section 5.1.2 of this Prospectus. Since the award of the first earthworks contract by Setia Putrajaya Sdn Bhd, in year 1998, our Group witnessed the increasing demand for our construction services, which consist of both earthworks and civil engineering services in nature. From 1998 to 2000, the construction projects which involve the scope of both earthworks and civil engineering services that have been awarded to us included the residential development project in Bukit Indah, Johor and a township development project in Taman Setia Indah, Johor, details of which are set out in Section 5.1.2 of this Prospectus. Since then, our business activities involved the offering of both earthworks and civil engineering services under the umbrella of our construction activities. For the past three (3) financial years under review up to the FYE 31 December 2016, the revenue derived from the provision of our construction services under a single contract accounted for approximately 78.9%, 81.8% and 69.5% of our Group’s revenue from construction services, respectively. Please refer to Section 6.1.1 of this Prospectus for further details of the revenue breakdown of our construction services. II Company Number: 426965-M II
5. OUR GROUP (CONT’D) Since our initial venture into earthworks, we noted that the scope of earthworks is rather niche and significant to the overall general construction services as it creates the foundation and/ or platform for any form of building works or infrastructure works. Over the years, our business focus gradually shifted towards earthworks segment. For the past three (3) financial years under review up to the FYE 31 December 2016, the revenue derived from earthworks services accounted for approximately 76.8%, 73.2% and 64.2% of our Group’s revenue from construction services, respectively whilst the revenue derived from civil engineering services accounted for approximately 23.2%, 26.8% and 35.8% of our Group’s revenue from construction services, respectively. Please refer to Sections 6.1.1 and 11 of this Prospectus for further details of the revenue breakdown of our construction services. Due to the nature of earthworks that requires extensive use of heavy machinery such as tipper trucks and dump trucks, in June 2001, we expanded our business activities to include support services via SK-II Tipper Truck Services to provide hiring service of tipper trucks for internal use as well as our subcontractors for our construction projects located across Malaysia. This has resulted in better coordination and management in the logistic operation of our fleet of tipper trucks and dump trucks to our construction sites. In January 2002, we expanded our scope of earthworks services via Inspirasi Hebat to provide on-site rock crushing services resulting from rock blasting activities during the course of construction works. In July 2003, we further expanded our support services particularly in procuring and supplying construction materials via Advancecon Trading which enables us to supply construction materials to our subcontractors to cater for the needs of our construction works, thus reducing our subcontractors’ reliance on third party for the supply of construction materials, in which at times, its late delivery would result in delay in the completion of our construction projects. In December 2003, we continued to expand our earthworks capabilities via Advancecon Rock by venturing into on-site rock blasting activity. On-site rock blasting involves the blasting of rocks using explosives when hard rocks are encountered which are too large to be removed during the course of construction works. On the other hand, on-site rock crushing involves crushing of rocks into smaller pieces resulting from rock blasting activity using our mobile rock crushing machine. This segment was headed by Chan Keng Kong who was recruited in 2002. He is a licensed shotfirer to carry out rock blasting works. Prior to his recruitment, we were engaging external parties as we do not have the requisite license and internal capability in carrying rock blasting works which can only be undertaken by a qualified shotfirer licensed under the Explosives Act, 1957 by the Royal Malaysia Police. With our in-house expertise, we have better control of our project schedule while strengthening our internal capabilities. In year 2010, as the demand for earthworks services grew, the need to centralise all our machinery and equipment started to arise as our fleets of machinery and equipment had further expanded to a total of 232 machinery and equipment. In the same year, we then sold off our batching plant located in Pusat Bandar Puchong, Selangor and Advancemix Sdn Bhd changed its name to Advancecon Machinery with its new principal activity to provide hiring services for heavy machinery such as excavators, backhoes, bulldozers and compactors for internal use. The commencement of this new activity has resulted in better coordination and maintenance system of our machinery and equipment for our construction projects until today. 64 5. OUR GROUP (CONT’D) With the formation of the aforesaid support services, which include centralised logistics operations for our fleet of machinery and tipper trucks, on-site rock crushing services, the procurement and supply of construction materials as well as in-house rock blasting services, our Group has successfully set up a comprehensive support services to complement our core business activities of earthworks and civil engineering services. Internal reorganization exercise was initiated as part of our talent retention strategy and the formation of our current Group structure Over the years, as our business grew from strength to strength, Dato’ Phum and Lim Swee Chai noted the importance of a strong management team to strengthen our operational efficiency in order to support the continuous growth of the Group. Accordingly in year 2010, an internal reorganization exercise was initiated and as part of our talent retention strategy, besides Dato’ Phum, Lim Swee Chai, Pham Soon Kok, Phum Oua and Yap Goon Ying who were already our substantial shareholders then, several key employees namely, Ir. Yeo An Thai, Tung Kai Hung, Lim Kok Tiong, Puah Kian Yiew, Lam Wing King, Chan Keng Kong and Cheah Keng Foo (Cheah Keng Foo and Phum Oua subsequently left our Group in September 2014 and December 2014, respectively) were invited to participate in the equity stake of our Group as a talent retention strategy to recognise their loyalty and contributions to the success of our Group and to ensure their continuous commitment and efforts for a sustainable growth of our Group. This talent retention strategy also forms part of the management succession planning to ensure the sustainability of the business operations of the Group. Please refer to Section 8.1.2 of this Prospectus for the details of our Promoters. Our Group structure prior to the internal reorganisation exercise in 2010:­
Machinery (formerly known as AdvancecanInsplrasi Hebat Advancecon ROck (formerly known {IS Aclvanc~ Earthworks Trading Advancemix Sdn Bhd) SdnBhcl) Company Number: 426965-M
5. OUR GROUP (CONT’D) Notes:­”1 The remaining 10.0% equity interest was held by Lim Chin Heng (5.0%) and Lim Hui Hoon (5.0%), respectively “2 The remaining 15.0% equity interest was held by Yap Goon Ying (10.0%) and Cheng Peng Sia (5.0%), respectively “3 The remaining 14.0% equity interest was held by Cheah Keng Foo (7.0%), Lam Wing King (7.0%), Dato’ Phum, Lim Swee Chai, Pham Soon Kok and Yap Goon Ying (who held one (1) share each in Advancecon), respectively “4 The remaining 19.0% equity interest was held by Chan Keng Kong (15.0%), Dato’ Phum (1.0%), Lim Swee Chai (1.0%), Pham Soon Kok (1.0%) and Yap Goon Ying (1.0%), respectively Our Group structure after the internal reorganisation exercise in 2010 and up to the LPD:­Advancecon”1 Advancecon Insplralli Advancecon Infra Hebal Machinery
Note:­”1 The equity interest in Advancecon was held by our substantial shareholders, details of which are set out in Section 8.1.1 of this Prospectus. Pursuant to the internal reorganisation exercise, Advancecon emerged and served as the holding company for all the businesses undertaken by our Group. To further streamline the shareholdings of our substantial shareholders in our Group, our current substantial shareholders acquired all the equity interests held by ASS in our Group and accordingly, ASS ceased to be our substantial shareholder in December 2010. In accordance with good corporate governance practice and to prevent any potential conflict of interest arising in the future, our substantial shareholders, namely Dato’ Phum, Lim Swee Chai and Yap Goon Ying who were also the substantial shareholders of ASS then, disposed of their respective equity interests in ASS in December 2014 with the pre-condition to the purchasers of ASS that, upon the disposal of their respective equity interests in ASS, ASS shall not be involved in any activities which will be conflicted in the business activities of our Group for a moratorium period of eight (8) years until December 2022 from the date of such disposal pursuant to the irrevocable undertaking letter executed by the purchasers of ASS dated 31 December 2014. In addition, the directors and! or shareholders of ASS shall not incorporate any new company for the purposes of entering into any projects or carry out any similar activities which are of similar business with Advancecon Group within the aforesaid moratorium period, further details of which are set out in Section 10.1.1 of this Prospectus.
5. OUR GROUP (CONT’D) For the avoidance of doubt, upon the expiry of the moratorium period of eight (8) years in December 2022, it is at the discretion of the directors of ASB to decide on the future plan and status of the company as ASB will not be sUbject to the conditions as set out in the irrevocable undertaking letter dated 31 December 2014. Notwithstanding the above, pursuant to the aforesaid irrevocable undertaking letter, the Board takes note of the following:­(i) As at the LPD, ASB only has one (1) on-going project with Advancecon Group, namely the Setia Eco Glades project which the expected completion date of the said project will be in August 2017;
(ii) The shareholders of ASB have undertaken to change its company name within two (2) years from 31 December 2014, which was successfully changed on 7 September 2016 to Prize Ventures Sdn Bhd. With the change in name, it has avoided any form of confusion to Advancecon’s clients. This marks the first step in eliminating any potential conflict of interest situation and/ or unnecessary perceptions that ASB is in any form, related to Advancecon Group; and

(iii) Pursuant to the irrevocable undertaking letter, ASB will not compete with Advancecon Group in similar business activities of Advancecon Group nor incorporate new company to undertake any projects or carry out similar activities which are of similar business with Advancecon Group during the moratorium period of eight (8) years until December 2022. In addition, as set out in Section 4.2.6 of this Prospectus, the barrier to entry into the earthworks and civil engineering services market in Malaysia is relatively high as it requires high capital investment for the machinery and equipment and specialised skillset. In view of the above, the Board is of the view that it may not be an easy route for a company which has not been undertaking any earthworks activities for a period of eight (8) years (pursuant to the irrevocable undertaking letter dated 31 December 2014), to establish its foothold in the earthworks services industry and to expand its resources in respect of technical skillset and specialised machinery to undertake earthworks related activities. Premised on the foregoing, the Board is of the view that ASB will not pose any significant risk to Advancecon Group. Following the successful completion of our internal reorganization structure in December 2010, Advancecon Infra has since then become our main sUbsidiary to undertake earthworks and civil engineering services. To further streamline our business operations of our Group, on 1 January 2015, Advancecon Infra assumed the business activities of Advancecon Rock and subsequently on 16 March 2015, Advancecon Infra assumed the business activities of Advancecon Trading to provide on-site rock blasting services and to procure and supply construction materials, respectively for the construction works undertaken by our Group. This is to centralise the rock blasting and procure and supply construction materials into Advancecon Infra, in view that these support services are complementary to the earthworks and civil engineering services undertaken by Advancecon Infra and the demand for such services are on project basis whereby not all construction projects require the services of rock blasting and our construction materials. This arrangement has resulted in overall administrative cost saving to the Group. Advancecon Rock and Advancecon Trading had since then become dormant with no new intended principal activities and plan at this juncture. 67 5. OUR GROUP (CONTO) 5.1.2 Year July 1994
August 1997 The growth in our business was attributed to the good track record that we have established in undertaking various construction works with our customers, particularly property developers. Certain of our customers who were primarily involved in the property development activity, offered us to purchase their properties being developed by them, at discounted price due to our good working relationship maintained with them. Therefore, our Group started investing in properties since December 2007 and subsequently in April 2013, we centralised our investment properties under Advancecon Properties as our property investment arm to hold all our investment properties with the intention to explore for capital gains in the long term and to generate recurring rental income during the holding period. Please refer to Section 6.1.2 of this Prospectus for further details. Today, we are an earthworks and civil engineering services provider, with services ranging across various earthworks and civil engineering related works such as road works, drainage works, bridge constructions, water supply works and sewerage systems. As at FYE 31 December 2016, construction services remain as our largest revenue contributors whereby the revenue contributed from earthworks services was approximately 58.6% of the total revenue of our Group whilst the revenue contributed from civil engineering services was approximately 32.6% of the total revenue of our Group. Please refer to Section 6.1 of this Prospectus for further details. We are registered with CIDB as a Grade “7” contractor, which allows us to tender for projects that are of unlimited value in Malaysia and our registered categories are under Category B (Building) and Category CE (Civil Engineering). With the above grade and categories, we are able to tender for various types of construction works including building general works (B04), road and pavement construction (CE01), bridge construction (CE02), pilling works (CE10), soil investigation (CE12), sewerage system (CE19), general civil engineering works (CE21), civil engineering structures (CE24), rock blasting works (CE25), pre-cast concrete installation works (CE34), earthworks (CE36) and breeding pond construction (CE41). We are also a Grade “7” contractor under the SPKK, which enables us to tender for Government projects that are of unlimited value in Malaysia. We have over the years built expertise and capabilities in earthworks and civil engineering services. Our success is attributed to our emphasis to the consistent quality in our delivery, strong technical capabilities and a good market reputation, all of which are key factors towards our Group’s continued success moving forward. Please refer to Section 5.8 of this Prospectus for our accreditations, key awards and recognitions. Key project milestones of our Group The list of our key project milestones are set out below:­Projects details • Secured the first civil engineering services contract for the residential development project in Pusat Bandar Puchong, Selangor with total contract value of approximately RM18.59 million from Wawasan Indera Sdn Bhd (S P Setia group).’1
• Secured civil engineering services contracts for the residential development project in Bukit Indah, Johor with total contract value of approximately RM20.45 mil/ion from Bukit Indah (Johor) Sdn Bhd (S P Setia group):1

[ Company Number: 426965-M
5. OUR GROUP (CONT’D) Year Projects details June 1998 March 2000 June 2002 June 2007 August 2009 September 2009 December 2009 August 2011 July 2012 October 2012 Note: ‘1 Our Group was subsequently awarded earthworks and civil engineering services contracts for this residential development project since 1999 with total contract value of approximately RM43.63 million. ‘1 • Secured the first earthworks and civil engineering services contracts for the residential development project in Precinct 9 and part of Precinct 7, Putrajaya with total contract value of approximately RM26.32 million from Setia Putrajaya Sdn Bhd:1
• Secured earthworks and civil engineering services contracts for the township development project in Taman Setia Indah, Johor with total contract value of approximately RM116.20 million from Setia Indah Sdn Bhd (S P Setia group).’1

This construction project has marked significant breakthrough of our Group in achieving contract value of more than RM1 00.00 million. • Secured earthworks and civil engineering services contracts for the township development project in Bandar Setia Alam, Selangor with total contract value of approximately RM230.82 million from Bandar Setia Alam Sdn Bhd and Bandar Eco-Setia Sdn Bhd (S P Setia group):1
• Secured earthworks and civil engineering services contract for the mixed development projects in Setia Eco Gardens, Johor with total contract value of approximately RM58.07 million from Kesas Kenangan Sdn Bhd (S P Setia group):1
• Secured earthworks and site clearance contract for Tanjong Agas Supply Base and Marine Services project in Tanjong Agas, Pahang with total contract value of approximately RM34.51 million from Putrajaya Perdana Construction Sdn Bhd:1
• Secured earthworks and civil engineering services contracts for the mixed development project in Bandar Amanjaya, Sungai Petani, Kedah with total contract value of approximately RM32.07 million from Paramount Property (Utara) Sdn Bhd (Paramount Corporation Berhad group of companies):1
• Secured earthworks and civil engineering services contracts for the housing development project in Bandar Coalfield, Selangor with total contract value of approximately RM41.46 million from KL-Kepong Country Homes Sdn Bhd (Kuala Lumpur Kepong Berhad group of companies):1
• Secured earthworks and civil engineering contracts in Cyberjaya, Selangor for total contract value of approximately RM42.90 million from Setia Haruman Sdn Bhd.
• Secured earthworks contract for the housing development in Setia Eco­Glades, Cyberjaya Selangor with total contract value of approximately RM59.68 million from Setia Eco-Glades Sdn Bhd (S P Setia group).
• Secured earthworks and site clearance contracts for the township development project in Setia Ecohill, Semenyih, Selangor with total contract value of approximately RM199.48 million from Setia Ecohill Sdn Bhd (S P Setia group).

Projects awarded before 2011 (prior to the completion of our internal restructuring exercise in 2010) were secured by ASB Our order book status as at the LPD amounting to approximately RM572.48 million which would sustain the Group’s operation for another 24 months. Please refer to Sections 6.1.1 and 11.5 for the lists of our construction projects completed for the past three (3) years and the ongoing construction projects currently undertaken by our Group. 5. OUR GROUP (CONT’D) 5.2 Share capital As at the LPD, our issued share capital are set out below:­Share capital No. of Shares Issued 312,079,000 Amount RM 31,207,900 The details of the changes in our issued share capital since our incorporation and up to the LPD are set out below:­Date of allotment 09.04.1997 19.06.1997 29.12.2010 19.07.2016 19.07.2016 Notes:­No. of Shares allotted 3 499,997 748,316 12,483,160’2 299,595,840’3 Consideration’1 Cash Cash Cash Subdivision of shares Bonus issue Nature of Cumulative issued transaction share capital RM Incorporation Allotment of 500,000 shares Allotment of 1,248,316 shares Not applicable 1,248,316 Capitalisation 31,207,900 of reserves ‘1 None of the Shares were issued at a discount, on special terms or instalment payment terms ‘2 Number of subdivided shares ‘3 Number of shares issued pursuant to bonus issue Upon completion of our IPO, our enlarged issued share capital will increase to RM87,907,900 comprising 402,079,000 Advancecon Shares. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in our Company.
5.3 Corporate structure All our Subsidiaries are wholly-owned by our Company and the present corporate structure is diagrammatically illustrated as below:­100% r

Advancecon Infra ] Inspirasi Hebat ] Advancecon Machinery J SK-II Tipper Truck Services J r Advancecon Properties ]l r Advancecon Rock lJ r Advancecon Trading I 1 100%  100%  100%
5. OUR GROUP (CONT’D) The details of our Subsidiaries and their respective principal activities are set out below:­Subsidiaries Advancecon Infra (Company No.: 206362-K) Inspirasi Hebat (Company No.: 382993-V) Advancecon Machinery (Company No.: 315552-U) SK-II Tipper Truck Services (Company No.: 444538-0) Advancecon Properties (Company No.: 1024903-V) Advancecon Rock (Company No.: 614298-A) Advancecon Trading (Company No.: 594538-P) Notes:­Date and place of incorporation 15.10.1990 Malaysia 09.04.1996 Malaysia 13.09.1994 Malaysia 25.08.1997 Malaysia 20.11.2012 Malaysia 06.05.2003 Malaysia
02.10.2002 Malaysia Issued share capital RM 10,000,000 100,000 500,000 300,000 800,000 500,000 1,000,000 Principal activities Engaged in the business of providing earthworks and civil engineering services and sale of construction materials Engaged in the business of providing on-site rock crushing services Engaged in the business of providing earth-moving machinery for hire Engaged in the business of providing tipper trucks for hire Engaged in the business of property investment Dormant since January 2015’1 Dormant since I\lovember 2015″2 ‘1 Previously engaged in the business of providing rock blasting services. The Board will commence voluntary winding up proceedings in June 2017 ‘2 Previously engaged in the business of sale of construction materials. The Board will commence voluntary winding up proceedings in June 2017 Save as disclosed in Section 5.1.1 above, there were no changes in our business activities and the types of services rendered by us since the commencement of our Group’s business up to the LPD.
5. OUR GROUP (CONT’D)

5.4 Subsidiaries 5.4.1 Advancecon Infra i.  Background and principal activities  Advancecon Infra was incorporated in Malaysia under the Act on 15 October 1990 as a private limited company under the name of Pembinaan Sin Soon Kim Sdn Bhd. On 22 September 2010, Advancecon Infra assumed its current name. It is principally engaged in the business of providing earthworks and civil engineering services and sale of construction materials. It commenced operations on 15 October 1990.  Advancecon Infra was previously wholly-owned by Dato’ Phum and the Phum Brothers and subsequently became our wholly-owned subsidiary pursuant to the internal reorganisation exercise undertaken in 2010.  ii.  Share capital  As at the LPD, the details of the issued share capital of Advancecon Infra are set out below:­ Share capital  No. of shares  Amount RM  Issued  10,000,000  10,000,000  The changes in the issued share capital of Advancecon Infra since its incorporation up to the LPD are set out below:­ Date of allotment  No. of shares allotted  Consideration’1  Nature transaction  of  Cumulative issued share capital RM  15.10.1990  4  Cash  Incorporation  4  18.02.1993  120,000  Cash  Allotment shares  of  120,004  31.12.2001  400,000  Cash  Allotment shares  of  520,004  09.03.2005  1,000,000  Cash  Allotment shares  of  1,520,004  20.11.2015  8,479,996  Cash  Allotment shares  of  10,000,000  Note:­ ‘1  None of the shares were issued at a discount, on special terms or instalment payment terms  As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Advancecon Infra.
~ Company Number: 426965-M ~ 5. OUR GROUP (CONT’D) iii. Shareholder and directors Advancecon Infra is our wholly-owned subsidiary and its directors are Dato’ Phum and Lim Swee Chai. iv. Subsidiary and associated companies As at the LPD, Advancecon Infra does not have any subsidiary or associated company.
5.4.2 Inspirasi Hebat i. Background and principal activities Inspirasi Hebat was incorporated in Malaysia under the Act on 9 April 1996 as a private limited company. It is principally engaged in the business of providing on-site rock crushing services. It commenced operations on 7 January 2001. Inspirasi Hebat was previously a wholly-owned subsidiary of ASS and subsequently became our wholly-owned subsidiary pursuant to the internal reorganisation exercise undertaken in 2010. ii. Share capital As at the LPD, the details of the issued share capital of Inspirasi Hebat are set out below:­Share capital No. of shares Amount RM Issued 100,000 100,000 The changes in the issued share capital of Inspirasi Hebat since its incorporation up to the LPD are set out below:­Cumulative Date of No. of shares Nature of issued share allotment allotted Consideration’1 transaction capital RM 09.04.1996  2  Cash  Incorporation  2  07.01.2002  99,998  Cash  Allotment  of  100,000/  shares
Note:­’1 None of the shares were issued at a discount, on special terms or instalment payment terms As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Inspirasi Hebat. iii. Shareholders and directors Inspirasi Hebat is our wholly-owned subsidiary and its directors are Dato’ Phum and Lim Swee Chai. 73 Company Number: 426965-M 5. OUR GROUP (CONT’D) iv. Subsidiary and associated companies As at the LPD, Inspirasi Hebat does not have any subsidiary or associated company.
5.4.3 Advancecon Machinery i. Background and principal activities Advancecon Machinery was incorporated in Malaysia under the Act on 13 September 1994 as a private limited company under the name of Advancemix Sdn Shd. On 23 September 2010, Advancecon Machinery assumed its current name. It is principally engaged in the business of providing earth-moving machinery for hire. It commenced operations on 13 September 1994. Advancecon Machinery was previously a wholly-owned subsidiary of ASS and became our wholly-owned subsidiary pursuant to the internal reorganisation exercise undertaken in 2010. In 2010, Advancecon Machinery changed its principal activity to provide hiring services for heavy machinery such as excavators, backhoes, bulldozers and compactors for internal use. ii. Share capital As at the LPD, the details of the issued share capital of Advancecon Machinery are set out below:­Share capital No. of shares Amount RM Issued 500,000 500,000 The changes in the issued share capital of Advancecon Machinery since its incorporation up to the LPD are set out below:­Cumulative Date of No. of shares Nature of issued share allotment allotted Consideration’1 transaction capital RM 13.09.1994 2 Cash Incorporation 24.12.1996 99,998 Cash Allotment of 100,000 shares 13.12.1997 100,000 Cash Allotment of 200,000 shares 06.03.2012 50,000 Cash Allotment of 250,000 shares 11.11.2015 250,000 Cash Allotment of 500,000 shares Note:­”1 None of the shares were issued at a discount, on special terms or instalment payment terms As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Advancecon Machinery. 74 5. OUR GROUP (CONT’O) iii. Shareholder and directors Advancecon Machinery is our wholly-owned subsidiary and its directors are Dato’ Phum and Lim Swee Chai. iv. Subsidiary and associated companies As at the LPD, Advancecon Machinery does not have any subsidiary or associated company.
5.4.4 SK-II Tipper Truck Services i. Background and principal activities SK-II Tipper Truck Services was incorporated in Malaysia under the Act on 25 August 1997 as a private limited company under the name of Megahprise Jaya Sdn Bhd and subsequently changed its name to A.D. Marketing Sdn Bhd on 22 January 1998. On 15 May 2001, SK-II Tipper Truck Services assumed its current name. It is principally engaged in the business of providing tipper trucks for hire. It commenced operation on 29 June 2001. SK-II Tipper Truck Services was previously 90.0% held by Dato’ Phum and the Phum Brothers and the remaining 10.0% equity interest was held by Lim Chin Heng and Lim Hui Hoon with 5.0% equity interest each. SK-II Tipper Truck Services subsequently became our wholly-owned subsidiary pursuant to the internal reorganization exercise undertaken in 2010. ii. Share capital As at the LPD, the details of the issued share capital of SK-II Tipper Truck Services are set out below:­Share capital No. of shares Amount RM Issued 300,000 300,000 The changes in the issued share capital of SK-II Tipper Truck Services since its incorporation up to the LPD are set out below:­Cumulative  Date of  No. of shares  Nature  of  issued share  allotment  allotted  Consideration’1  transaction  capital  RM

25.08.1997 2 Cash Incorporation 29.06.2001 299,998 Cash Allotment of 300,000 shares Note:­’1 None of the shares were issued at a discount, on special terms or instalment payment terms As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in SK-II Tipper Truck Services. 75 Company Number: 426965-M 5, OUR GROUP (CONT’D) iii. Shareholders and directors SK-II Tipper Truck Services is our wholly-owned subsidiary and its directors are Dato’ Phum and Lim Swee Chai. iv. Subsidiary and associated companies As at the LPD, SK-II Tipper Truck Services does not have any subsidiary or associated company. 5.4.5 Advancecon Properties i. Background and principal activities Advancecon Properties was incorporated in Malaysia under the Act on 20 November 2012 as a private limited company under the name of Desa Kuasa Sdn Bhd. On 17 April 2013, Advancecon Properties assumed its current name. It is principally engaged in the business of property investment. It commenced operations on 5 April 2013. ii. Share capital As at the LPD, the details of the issued share capital of Advancecon Properties are set out below:­Share capital No. of shares Amount RM Issued 800,000 800,000 The changes in the issued share capital of Advancecon Properties since its incorporation up to the LPD are set out below:­Cumulative Date of No. of shares Nature of issued share allotment allotted Consideration’1 transaction capital RM 20.11.2012  2  Cash  Incorporation  2  03.07.2013  499,998  Cash  Allotment  of  500,000  shares

11.11.2015 300,000 Cash Allotment of 800,000 shares Note:­’1 None of the shares were issued at a discount, on special terms or instalment payment terms As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Advancecon Properties. iii. Shareholders and directors Advancecon Properties is our wholly-owned sUbsidiary and its directors are Dato’ Phum and Lim Swee Chai. II Company Number: 426965-M II 5. OUR GROUP (CONT’D) iv. Subsidiary and associated companies As at the LPD, Advancecon Properties does not have any subsidiary or associated company.
5.4.6 Advancecon Rock i. Background and principal activities Advancecon Rock was incorporated in Malaysia under the Act on 6 May 2003 as a private limited company. It was principally engaged in the business of rock blasting services. It commenced its operations on 29 December 2003. Advancecon Rock was previously 81.0% owned by ASS and the remaining 19.0% equity interest was held by Chan Keng Kong (15.0%), Lim Swee Chai (1.0%), Dato’ Phum (1.0%), Yap Goon Ying (1.0%) and Pham Soon Kok (1.0%) who are also our Promoters and substantial shareholders. Subsequently in 2010, Advancecon Rock became our Wholly-owned subsidiary pursuant to the internal reorganisation exercise. Advancecon Rock has ceased its rock blasting services business in January 2015 as this business activity was assumed by Advancecon Infra on 1 January 2015. It is currently a dormant company with no intended business activity and plan as at the LPD. ii. Share capital As at the LPD, the details of the issued share capital of Advancecon Rock are set out below:­Share capital No. of shares Amount RM Issued 500,000 500,000 The changes in the issued share capital of Advancecon Rock since its incorporation up to the LPD are set out below:­Cumulative Date of No. of shares Nature of issued share allotment allotted Consideration’1 transaction capital RM 06.05.2003  2  Cash  Incorporation  2  29.12.2003  499,998  Cash  Allotment  of  500,000  shares
Note:­’1 None of the shares were issued at a discount, on special terms or instalment payment terms. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Advancecon Rock. 5. OUR GROUP (CONTO) iii. Shareholders and directors Advancecon Rock is our wholly-owned subsidiary and its directors are Dato’ Phum and Lim Swee Chai. iv. Subsidiary and associated companies As at the LPD, Advancecon Rock does not have any sUbsidiary or associated companies.
5.4.7 Advancecon Trading i. Background and principal activities Advancecon Trading was incorporated in Malaysia under the Act on 2 October 2002 as a private limited company. It was principally engaged in the business of sale of construction materials. It commenced its operations on 1 July 2003. Advancecon Trading was previously a wholly-owned subsidiary of ASS and sUbsequently became our wholly-owned sUbsidiary pursuant to the internal reorganisation exercise undertaken in 2010. Advancecon Trading has ceased its operation since November 2015 as this business activity was assumed by Advancecon Infra on 16 March 2015. It is currently a dormant company with no intended business activity and plan as at the LPD. ii. Share capital As at the LPD, the details of the issued share capital of Advancecon Trading are set out below:­Share capital No. of shares Amount RM Issued 1,000,000 1,000,000 The changes in the issued share capital of Advancecon Trading since its incorporation up to the LPD are set out below:­Cumulative Date of No. of shares Nature of issued share allotment allotted Consideration’1 transaction capital RM 02.10.2002  2  Cash  Incorporation  2  01.07.2003  99,998  Cash  Allotment  of  100,000  shares
03.08.2006 200,000 Cash Allotment of 300,000 shares 07.08.2012 700,000’2 Bonus issue Not 1,000,000 applicable Notes:­’1 None of the shares were issued at a discount, on special terms or instalment payment terms ‘2 700,000 shares issued pursuant to bonus issue 78 5. OUR GROUP (CONTO) As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Advancecon Trading. iii. Shareholder and directors Advancecon Trading is our wholly-owned subsidiary and its directors are Data’ Phum and Lim Swee Chai. iv. SUbsidiary and associated companies As at the LPD, Advancecon Trading does not have any subsidiary or associated company. 5.5 Restructuring Exercise In conjunction with, and as an integral part of our listing of and quotation for the entire issued share capital of our Company on the Main Market of Bursa Securities, our Company has undert~ken the Restructuring Exercise prior to the Listing involving the following:­5.5.1 Subdivision of Shares Our Company had, on 19 july 2016, implemented a subdivision of shares of everyone (1) existing ordinary share of RM1.00 each into ten (10) ordinary shares of RMO.10 each. Accordingly, all 1,248,316 ordinary shares of RM1.00 each in the issued and paid-up capital of our Company were subdivided into 12,483,160 ordinary shares of RMO.1 0 each, credited as fully paid up. Upon completion of the subdivision of our shares, the authorised capital of our Company, which was RM5,000,000 divided into 5,000,000 ordinary shares of RM1.00 each, was altered by subdividing the 5,000,000 ordinary shares of RM1.00 each into 50,000,000 Advancecon Shares.
5.5.2 Increase in authorised share capital Our Company had, on 19 July 2016 after the subdivision of shares, implemented an increase in authorised share capital of our Company from RM5,000,000 divided into 50,000,000 Advancecon Shares to RM50,000,000 divided into 500,000,000 Advancecon Shares by the creation of 450,000,000 new Advancecon Shares. Upon completion of the increase in authorised share capital, the authorised share capital of our Company was increased from RM5,000,000 divided into 50,000,000 Advancecon Shares to RM50,000,000 divided into 500,000,000 Advancecon Shares.
5.5.3 Bonus issue Our Company had, on 19 July 2016, implemented a bonus issue involving the issuance of 299,595,840 new Advancecon Shares which were credited as fully paid-up, on the basis of 24 new Advancecon Shares (“Bonus Shares”) for everyone (1) existing Advancecon Share held after the subdivision of shares (“Bonus Issue”). The Bonus Issue was effected by way of capitalisation of RM29,959,584 from our Company’s retained earnings account. Upon completion of the Bonus Issue, our issued and paid-up share capital increased from RM1,248,316 comprising 12,483,160 Advancecon Shares to RM31 ,207,900 comprising 312,079,000 Advancecon Shares. 79 ” Company Number: 426965-M II

 

 

5. OUR GROUP (CONT’D) 5.6 Listing Scheme Subsequent to the Restructuring Exercise and in conjunction with our Listing, our Company will undertake the Listing Scheme comprising the following:­5.6.1 Public Issue We will undertake a public issue of 90,000,000 new Advancecon Shares, representing approximately 22.4% of our enlarged issued share capital, at the IPO Price to be allocated in the following manner:­i. Malaysian Public via balloting 30,000,000 Issue Shares, representing approximately 7.5% of our enlarged issued share capital will be made available for application by the Malaysian Public through a balloting process, of which 15,000,000 Issue Shares, representing approximately 3.7% of our enlarged issued share capital are allocated to Bumiputera investors which include individuals, companies, societies, co-operatives and! or institutions; ii. The eligible Directors and our employees who have contributed to the success of our Group 5,000,000 Issue Shares, representing approximately 1.2% of our enlarged issued share capital will be reserved for application by our eligible Directors and our employees who have contributed to the success of our Group in recognition of their efforts and supports contributed to our Group. The allocation is set out below:­(a) 1,000,000 Issue Shares, representing 0.2% of our enlarged issued share capital will be allocated to our eligible Directors; and
(b) 4,000,000 Issue Shares, representing 1.0% of our enlarged issued share capital will be allocated to our employees who have contributed to the success of our Group;

iii. Private placement 55,000,000 Issue Shares, representing approximately 13.7% of our enlarged issued share capital will be made available for application in the manner as set out below:­(a) Private placement to institutions and identified investors
37,000,000 Issue Shares, representing approximately 9.2% of our enlarged issued share capital to be allocated by way of private placement to institutional and identified investors; and
(b) Private placement to identified Bumiputera investors approved by the IVIITI

18,000,000 Issue Shares, representing approximately 4.5% of our enlarged issued share capital to be allocated by way of private placement to identified Bumiputera investors approved by the MITI. 5. OUR GROUP (CONT’D) Our Issue Shares will rank pari passu in all respects with our existing Advancecon Shares including voting rights, except that the new Advancecon Shares will not be entitled to any dividends, rights, allotments or other forms of distribution made prior to the date of allotment of the said Issue Shares. Upon completion of the Public Issue, our enlarged issued share capital will increase from RM31 ,207,900 comprising 312,079,000 Advancecon Shares to RM87,907,900 comprising 402,079,000 Advancecon Shares. 5.6.2 Offer for Sale The Offerors will offer for sale of 33,000,000 Offer Shares, representing approximately 8.2% of our enlarged issued share capital, at the IPO Price by way of private placement to identified Bumiputera investors approved by the MIT!. The Offer Shares will rank pari passu in all respects with our existing issued ordinary shares, inclUding voting rights and rights to all dividends and distributions that may be declared, paid or made subsequent to the date of transfer thereof. 5.6.3 Listing of and quotation for our Shares Upon completion of the Public Issue and the Offer for Sale, our Company shall be admitted to the Official List and our entire enlarged issued share capital of RM87,907,900 comprising 402,079,000 Advancecon Shares shall be listed and quoted on the Main Market of Bursa Securities. 5.7 Capital expenditures and divestitures Save as disclosed below, our Group did not incur any capital expenditures and divestitures (including interests in other corporations) for the past three (3) financial years up to the LPD:­<———————————FyE 31 December——————————–> January 2017 up to
Expenditures, At Cost  2014 RM’OOO Qu antity  2015 RM’OOO Qu antity  2016 RM’OOO Qu antity  RM’OOO  LPD Quantity  Acquisition of machinery in relation to the business  39,158  77  10,151  31  24,633  59  6,783 23  Acquisition of investment properties’1  2,186  10  29,829  11  6,655  1,534  Divestitures, At Selling Price  Disposal of machinery in relation to the business  3,748  23  1,460  11  7,695  56  218  4  Disposal of investment properties  7,200  1,150  Note:
‘1 the expenditures incurred for the acqUisition of investment properties in each financial years also include, amongst others, the progress billings made for all the investment properties held under the Group during the respective financial years, whilst the number of investment properties acquired for each financial years is determined based on the date of the respective sales and purchase agreement of the investment properties 5. OUR GROUP (CONT’D) Over the past three (3) financial years under review up to the LPD, our capital expenditures were mainly focused on the acquisition of machinery for our business operations and to cater for our on-going construction projects. The acquisition of machinery which mainly consists of 48 units of excavators, 15 units of bulldozers and 83 units of dump trucks were to support our increase in construction activities. In addition, the main purpose of the above acquisitions of the investment properties were to explore the opportunities in reaping capital gains in the long term and to generate recurring rental income during the holding period. For the avoidance of doubt, the capital expenditures for the acquisitions of investment properties in January 2017 up to the LPD are the payments made for the progress billings incurred for the investment properties held by our Group, details of which are set out in Sections 6.1.2 and 6.16 of this Prospectus. Our capital divestitures for the past three (3) financial years under review up to the LPD were mainly on the disposal of machinery for our business operations which was in line with our replacement practice whereby we intend to replace with new machinery that comes with higher capacity models to enhance our operational efficiency to cater for our construction projects. We have disposed of our machinery, which mainly consist of 32 units of excavators, seven (7) units of lorries and 24 units of tipper trucks. Further, we have disposed of one (1) unit of investment property in 2016 located at Petaling Jaya, Selangor and one (1) unit of investment property in 2017 located at Bukit Indah, Johor Bahru. All of the capital expenditures listed above were primarily financed through our internally generated funds and/ or bank borrowings.

5.8 Accreditation, key awards and recognition Our commitment to excellence and achievements are evidenced by the accreditation and recognition as set out below:­Year Accreditation, awards and certifications 2009 • Our Group was accredited with ISO 9001 :2008 by IEC 2012 • Our Group was awarded the Golden Bull Award 2012 by Nanyang Siang Pau as one (1) of the 100 Outstanding small and medium-sized enterprises Award 2013 • Our Group was awarded the Asia Success Inc Award 2013 under the category of ‘Super Brand’ by Asia Success Award Inc Magazine which recognises the corporate branding established by enterprises 2014 • Our Group was awarded the ‘Golden Eagle Award 2014’ under the category of ‘Eminent Eagle’ by Nanyang Siang Pau which acknowledge our dedication for excellence as small and medium-sized enterprises in Malaysia • Our Group Chief Executive Officer namely, Dato’ Phum, on behalf of Advancecon Infra, was awarded the ‘Honesty Enterprise Award 2014″ under the category of ‘Honesty Enterprise’ by The 13th Asia Pacific International Honesty Enterprise Keris Award 2014 which recognizes us for carrying out business operations in honest manner 2016 • Our Group was qualified for Bronze Award under the category of Human Resources Best Practices on the 16th Malaysia HR Awards by the Malaysian Institute of Human Resource Management which recognises our human resource best practices and management as well as our efforts and commitments in enhancing our human talents and development 82 Company Number: 426965-M 6. BUSINESS OVERVIEW 6.1 Business activities The following is a diagrammatic representation of our Group’s operational structure:­

Earthworks Revenue” (‘000): RM137,418 Road Works’
Construction Services Drainage Works” Revenue” (‘000): RM213,970 Civil EngineeringServices
r———————· Bridge Construction Construction and Revenue”(‘OOO): Support Services
RM76,SS2 Revenue” (‘000): Water Supply Works RM234,636 Sewerage System These specialised works are
Sale of Construction Materials carried out entirely by our subcontractors, whereinRevenue” (‘000): RM17,111 the overall project planning and management isSupport Hiring of Machinery undertaken by our Group Services Revenue” (‘000): Revenue”(‘OOO): RM20,666 RM20S Ad hoc general construction Property Investment services/ Daywork Revenue”(‘OOO): Revenue” (‘000): RM32 RM3,350
Notes:­” Based on the latest audited consolidated financial statements of our Group for the FYE 31 December 2016 ” Only certain portions of these specialised works are carried out by our subcontractors We are primarily involved in the provision of earthworks and civil engineering services, which is a sub-sector of the construction industry in Malaysia. In a snapshot, earthworks relate to activities conducted to prepare a platform or embankment which is subsequently used as a base for construction of a building or any structure whilst civil engineering involves engineering activities for the construction of infrastructures such as roads, drains, bridges, water reticulations and reservoirs, and sewerage systems. The construction services business contributed approximately RM184.34 million, R1VI230.34 million and RM213.97 million or apprOXimately 92.3%, 87.1% and 91.2% to our Group’s total revenue for the past three (3) financial years under review. We are also involved in the provision of support services such as sale of construction materials, hiring of machinery and ad hoc general construction services/ daywork, contribution of which was approximately RM15.47 million, RM33.97 million and RM20.67 million or apprOXimately 7.7%, 12.9% and 8.8% to our Group’s total revenue for the past three (3) financial years under review.
6. BUSINESS OVERVIEW (CONT’D) In April 2013, we commenced a new business segment, namely property investment which mainly arose due to our working relationship with certain of our clients, who are property developers, whereby we are offered to acquire properties developed by them at discounted prices. It is our Group’s intention to hold the investment properties for a period of three (3) to five (5) years for the purpose of capital appreciation of approximately 10.0% (which translates to an average capital gain of approximately 2.0% per annum over a period of five (5) years) and then dispose for capital gain once the investment properties have achieved our investment objective on a case to case basis. As our core expertise remains in the provision of earthworks, our Board has set an investment policy to ensure that the asset value of our property investment business segment does not exceed 20.0% of the Group’s total asset. In any event, the expansion of this business segment will be monitored and carried out strictly in accordance to our Group’s investment policy. For the avoidance of doubt, none of our investment properties are located overseas. As at the FYE 31 December 2016, the total asset value (i.e. cost) of the investment properties stood at approximately RM31.60 million, accounting for approximately 10.7% of our latest audited total asset. The revenue of each of our business segment based on the audited consolidated financial statements of our Group (after inter-company elimination) for the past three (3) financial years up to the FYE 31 December 2016 is set out below:­<———————–FyE 31 Decem ber————————-> [I Company Number: 426965-M II 2014 RM’OOO %  2015 RM’OOO %  2016 RM’OOO %  seC rvices onstruction and support  199,809  100.0  264,307  100.0  234,636  100.0  Construction services  184,341  92.3  230,338  87.1  213,970  91.2  Earthworks  141,610  70.9  168,621  63.8  137,418  58.6  Civil engineering services  42,731  21.4  61,717  23.3  76,552  32.6  Support services  15,468  7.7  33,969  12.9  20,666  8.8  Sale of construction material s 15,208  7.6  30,108  11.4  17,111  7.3  Hiring of machinery  33  *1  259  0.1  205  0.1  Ad hoc general construction 227 services/ davwork  0.1  3,602  1.4  3,350  1.4  Property investment  32  :1  199,809  100.0  264,307  100.0  234,668  100.0  N ote:­ *1  Negligible
6. BUSINESS OVERVIEW (CONT’D) 6.1.1 Construction and support services 6.1.1 (a) Construction services We undertake a wide range of earthworks and civil engineering services in Malaysia. We are registered with the CIOB and hold a Grade “7” licence. Such licence allows us to tender for projects with unlimited value in Malaysia and our registered categories are under Category B (Building) and Category CE (Civil Engineering). We are also a Grade “7” contractor registered with CIOB under SPKK that enables us to tender for Government projects with unlimited value. Equipped with the above licences and certifications, we are able to tender for various types of construction works including building works (B04), road and pavement construction (CE01), bridge and jetty construction (CE02), pilling works (CE10), soil investigation (CE12), sewerage system (CE19), general civil engineering works (CE21), tower structures (CE24), rock blasting works (CE25), pre-cast concrete installation works (CE34), earthworks (CE36) and water retaining structures (CE41). Notwithstanding the foregoing, our current scope of construction works mainly entails earthworks and civil engineering services such as road works, drainage works, bridge construction, water supply works and sewerage system. Further description of our licences is set out below:­Code Specialisation Description B04 Building works Such category allows us to construct any buildings and plants CE01 Road and pavement Such category allows us to construct, construction maintain and repair road and pavement including road shoulder and walkway CE02 Bridge and jetty Such category allows us to construct, construction maintain and repair bridges, flyover and similar structures CE10 Piling works Such category allows us to carry out the installation of all types of piling CE12 Soil investigation Such category allows us to conduct soil investigation and all field tests for determining the classification, strength and soil composition CE19 Sewerage system Such category allows us to carry out any construction, installation or modification to any part of a sewerage system CE21 General civil Such category allows us to carry out the engineering works construction, maintenance and repair of all civil engineering construction CE24 Tower structures Such category allows us to carry out the construction and maintenance of tower structures such as telecommunication towers, transmission towers, pylons and chimneys CE25 Rock blasting works Such category allows us to carry out rock blasting works for the preparation of a construction site 6. BUSINESS OVERVIEW (CONT’D) Code Specialisation Description CE34 Pre-cast concrete Such category allows us to install pre-installation works cast reinforced concrete elements CE36 Earthworks Such category allows us to carry out earthworks such as cut, fill, transport, spread, level and compact of soil CE41 Water retaining Such category allows us to construct structures water retaining structures for construction industry Furthermore, our Group currently also holds the IPA Permit Type C1 (Sewerage) issued by NWSC under Section 50(1), Chapter 1, Part IV of the Water Services Industry Act 2006 (Act 655) for the construction, installation or modification to any part of a sewerage system. We usually obtain our tender opportunities in the construction projects via invitation from project principals whose projects require a combination of earthworks and civil engineering services. Since our earthworks and civil engineering services are mostly negotiated as a combined contract, these services are performed in a continuous sequence whereby earthworks are undertaken first whilst civil engineering services are executed subsequently. Notwithstanding the foregoing, we also have the flexibility to be able to deliver earthworks contracts or civil engineering contracts as standalone projects. For investors’ information, apprOXimately 76.7% our earthworks and civil engineering services are negotiated as a combined contract package (the aforesaid 76.7% was arrived at based on the total revenue contribution from the combined earthworks and civil engineering contracts amounting to apprOXimately RM482.65 million over total construction contracts amounting to approximately RM628.65 million for the past three (3) financial years under reView). However, to a lesser extent, our construction projects may be procured as a standalone earthworks contract or civil engineering contract. Revenue derived from our three (3) categories of construction contracts for the past three (3) financial years up to the FYE 31 December 2016 are set out below:­<————————————————-FyE 31 December——————————————> Categories of <———–·—-2014————-> <—————-2015————> <—————-2016—————> construction Number of Revenue Number of Revenue Number of Revenue contracts projects derived % projects derived % projects derived % RM’OOO RM’OOO RM’OOO Earthworks and civil 24 145,432 78.9 16 188,427 81.8 16 148,792 69.5 engineering contracts Earthworks 102,709 55.7 130,632 56.7 99,814 46.61 Civil engineering 42,723 23.2 57,795 25.1 48,978 22.9 services Earthworks 14 38,901 21.1 8 37,989 16.5 9 37,604 17.6 standalone contracts Civil engineering 8 ·1 3,922 1.7 2 27,574 12.9 standalone contracts Total 39 184,341 100.0 25 230,338 100.0 27 213,970 100.0 6. BUSINESS OVERVIEW (CONTO) Note:­”1 Negligible As set out in the table above, our combined earthworks and civil engineering contracts constituted the largest portion in terms of composition percentage over total construction contracts, recording at approximately 78.9%, 81.8% and 69.5% for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. Due to easier coordination for our clients, our construction contracts are usually awarded to us on a combined contract basis. Our scope of work in such contract usually covers the construction of a platform or embankment (part of earthworks) and the construction of roadways and drainage (part of civil engineering services). The total number of construction contracts undertaken by our Group was 39, 25 and 27 for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. Even though the total number of projects decreased from 39 in the FYE 31 December 2014 to 25 and 27 in the FYE 31 December 2015 and the FYE 31 December 2016, the revenue contribution from those projects increased from RM184.34 million in the FYE 31 December 2014 to RM230.34 million in the FYE 31 December 2015 before reduced to RM213. 97 million in the FYE 31 December 2016. For the avoidance of doubt, the overall increase in our construction services revenue despite the lower number of construction contracts undertaken by our Group was mainly attributable our Group’s ability to secure projects with higher contract value in recent years. For instance, we managed to secure our second largest contract to-date which is the Tropicana Aman project with a contract value of RM136.52 million on April 2015 and other construction contracts with contract value exceeding RM50 million such as the Setia Ecohil12 project with a contract value of RM53.1 0 million in March 2016 and the Bukit Jalil project with a contract value of RM63.00 million in May 2016. The aforementioned trend recorded by our Group is also in line with our future plans to place greater emphasis on bidding for large-scale construction projects which require the combination of earthworks and civil engineering services with contract value exceeding RM50 million. We believe such projects will generate higher revenue to our Group and further raise our business profile in the industry as an earthwork specialist. Further details on our future plans and strategies and notable earthworks and/ or civil engineering projects are set out in Sections 6.17 and 11.3(i)(a) of this Prospectus. Further breakdown on the composition of earthworks and civil engineering services for our Group’s construction contracts or construction services business for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016 is set out below:­<————————-FyE 31 December—————————> 2014 2015 2016 RM’OOO % RM’OOO % RM’OOO % Construction services Earthworks 141,610 76.8 168,621 73.2 137,418 64.2 Civil engineering 42,731 23.2 61,717 26.8 76,552 35.8 services 184,341 100.0 230,338 100.0 213,970 100.0 II Company Number: 426965-M II 6. BUSINESS OVERVIEW (CONT’O) As set out in the table above, earthworks contributed approximately 76.8%, 73.2% and 64.2% to our Group’s revenue from construction services business for the past three (3) financial years up to the FYE 31 December 2016. As earthworks remain as our core business activity and our area of expertise, the entire scope of work for earthworks is usually carried out by our in-house team, and we generally do not engage external subcontractors to undertake such activity. However, in the event where our Group encounter shortage of manpower or machinery, then the earthworks will usually be subcontracted to third parties. On the other hand, as some of our projects also require the provIsion of specialised civil engineering services such as road works, drainage works, bridge construction, water supply works and sewerage works which are not our major strength and core business to carry out in-house, these services will generally be subcontracted to external parties. Notwithstanding the foregoing, our Group still undertakes the overall project planning and management of all our subcontracted works and we are accountable to our customers for the execution of the contract and the overall management of the project. For investors’ information, the Group’s recognition policy for its construction services business segment is in accordance with paragraph 25 of Malaysian Financial Reporting Standards 111 “Construction Contracts”, whereby revenue on contracts is recognised based on the percentage of completion method unless the outcome of the contract cannot be reliably determined, in which case revenue on contracts is only recognised to the extent of contract costs incurred that are recoverable. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of contract costs incurred for work performed to date to the estimated total contract costs. Please refer to Section 11.3 of this Prospectus for further details on our Group’s revenue recognition policy. Further breakdown on our subcontracted work mainly comprises the following:­Civil engineering services  Scope of subcontracted work  Road works  (i)  Supply and laying pavement marking  of  asphalt  premix  and  (ii)  Installation of drainage system, utilities such as electric conduits and cablings, concrete kerbs, street lightings and metal guardrails  Drainage works  (i)  Installation of concrete box culverts, U-drains, concrete pipe culverts drains or rubble stone pitching drains within site boundary  Bridge construction  (i)  Construction and completion of bridge structure, including piling, substructures and superstructures of the bridge  Water supply works  (i)  Supply, installation and construction of water pipeline and/ or concrete water tanks and/ or reservoirs
Sewerage system (i) Supply and installation of sewer pipeline and/ or sewerage manhole ~ Company Number: 426965-M ~ 6. BUSINESS OVERVIEW (CONTO) Our subcontractors include local sole proprietors as well as companies which possess the required skills, machinery and/ or manpower to perform the subcontracted works. These subcontractors are selected based on, inter alia, their core expertise, our past working experience with them, their past completed jobs and their competitiveness in terms of pricing. Sub-contracting costs accounted for approximately 42.4%, 42.4% and 40.7% of our total cost of sales in the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. (i) Earthworks Our Group’s main source of income is derived from the provision of earthwork services to our customers. Earthworks constitute approximately 76.8%, 73.2% and 64.2% of our Group’s revenue from construction services business for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. Our Group’s earthwork activities include the removal and moving of large quantities of soil or rock from a particular area to another in order to construct a platform or embankment to be used for onward construction of building structures and roadways. In the process of constructing a platform or embankment, the following activities are involved and carried out in a series of stages:­Step 1: Site visit and preparation Step 2: Site clearance Step 3: Earthworks activities Step 4: Compaction and finishing of surfaces (building platform/embankment) Step 1-Site visit and preparation
Upon accepting the letter of award, our Group will send a land surveyor team to carry out original ground survey for the project site. It is the responsibility of the land surveyor team to ensure that the site boundaries and the original ground level condition of the project site are in accordance to the construction drawing(s) provided to us by our clients. 89 6. BUSINESS OVERVIEW (CONT’O) A soil investigation report will also be prepared by a geotechnical consultant appointed by our client to determine whether the physical properties of soil around the site are conducive for the subsequent construction activities. Once the soil investigation report has been finalised by the geotechnical consultant, a copy of the report will be furnished to our Group for our evaluation of the soil condition. Our technical team will then assess the laboratory test results specified in the soil investigation report to get a better understanding of the characteristics of the soil in order to determine the construction sequence and methodology that works well with the Project Management team.
Once the project site is deemed satisfactory by our land surveyor team and technical team, we will proceed to construct the hoarding/ fencing that surrounds the perimeter of the project site. The hoarding serves to help manage access across the project site, prohibiting unauthorised people from entering the project site. The hoarding also serves as part of the site’s security measure as it helps to prevent theft or vandalism on the project site. It also helps to improve privacy of the workers on site as well as the general public. Step 2: Site clearance
Site clearance works are carried out concurrently during the construction of the hoarding surrounding the project site. The project site will be cleared of any obstacles in preparation for the earthworks to begin. ~ Company Number: 426965-M ~ 6. BUSINESS OVERVIEW (CONT’D) Site clearance works may include activities such as the removal of trees, bushes, stumps, roots and other objectionable material and obstructions that may interfere with the construction work on the project site. Step 3: Earthworks activities Upon clearing the project site, our Group will proceed with earthworks to construct a platform or embankment to be used for further construction works. This stage can be separated into three (3) major activities that run concurrently. These activities are excavation and fill, erosion and sediment control as well as rock blasting. These activities can be described as follows:­(i) Excavation and fill Our earthworks services mainly entail preparation of the project site of which is necessary for the construction of foundation (platform/ embankment) for bUilding structures or roadways. Excavated mate ri al
Excavation and fill to create a new flat surface The first stage of earthworks entails the excavation and fill activity. During the excavation process, the amount of soil obtained from “cutting” the land will be placed to an area that requires filling.
Crawler excavators loading soil into a dump truck Excavators will be used to excavate the land and dump trucks will be used to transport the soil to the fill area. Excavation shall conform to the dimensions, lines, levels, and slope as indicated on the construction drawing(s). Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D)
An excavator, dump truck and back pusher are involved in the excavation and fill process During the fill process, bulldozers and back pushers are used to spread and level the terrain to construct the platform or embankment. Throughout the excavation and fill process, all excavated material required for filling is inspected by the Superintending Officer appointed by our client to ensure the soil or fill material complies with the specification required before it is used for filling. This is to ensure that the fill material is suitable for the formation of a platform or embankment which is then used for onward construction of building structures or roadways. In the event that the fill material, which in the opinion of the Superintending Officer, does not comply with the specification required or has been damaged by weather or in any other way, shall be removed and replaced with other suitable soil. For the avoidance of doubt, a Superintending Officer is normally appointed by the client to administer the terms and conditions of the construction contract between the client and the contractor (i.e. Advancecon Group), whereby he generally acts as the client’s representative to certify, supervise and issue work instructions in accordance with the provision of the construction contract. (ii) Erosion and sediment control plan (“ESCP”) Earthworks expose the soil to wind, rain or water which accelerates natural erosion processes. As a result, during our cut and fill activities, we have to ensure that an erosion and sediment control plan is put in place to prevent the erosion of the soil at the project site. For all our projects which involve soil disturbing activities and site preparation, an ESCP which forms part of the environmental management plan (“EMP”) will be prepared upfront by a project consultant appointed by our client. For the avoidance of doubt, an EMP is a strategic plan that specify the formulation, implementation and monitoring of environmental protection measures during and after commissioning of projects, whereas an ESCP consists of both drawings and a narrative that identifies best management practices to minimize accelerated erosion and sedimentation before, during and after earthworks activities. [I Company Number: 426965-M ~ 6. BUSINESS OVERVIEW (CONT’O) Once the EMP which comprises the ESCP has been prepared and finalised by the project consultant, it will be submitted to the DOE for approval. Subsequent to procuring the approval of the DOE, our client will include the ESCP in the letter of award where we are engaged as their contractor to carry out earthworks activities. As such, our role is to implement the ESCP for our client and to ensure that the ESCP is effectively carried out. The commonly used mitigating measures specified in the ESCP can be categorised as follows:­
Erosion control plan The most effective way to minimise erosion is by keeping the exposure of soil to rain or water as little as possible at anyone time and maintaining as much vegetative cover as possible. Erosion control methods may include, amongst others, the construction of berm drain and use of vegetative material (also known as turfing) to prevent erosion.
Berm drain being constructed on a slope Berm drain is a measure that is applied when concentrated storm water flow (also known as runoff) could cause erosion as it moves down the face of a slope. The berm drain is constructed horizontally across the slope and it will direct sediment-laden water to a sediment basin (as further elaborated in the following page). Berm drain will be constructed at different sections of the slope to mitigate the effects of runoff during earthworks. 6. BUSINESS OVERVIEW (CONTO)
Turf being laid on a slope The use of vegetative ground cover or turfing is an effective long term protection measure against erosion on disturbed soil. It binds soil particles together with a dense root system and reduces the volume and velocity of water flow. During the process of laying the turf, we will ensure that there is sufficient fertilisation and timely watering so as to establish a permanent ground cover. Sediment control plan Erosion and sediment control measure is meant to function as a system rather than operating in isolation (i.e. both erosion and sediment control are implemented concurrently as both measure compliments each other in preventing or minimising environmental effect of earthworks). As such, in addition to controlling the erosion rate through the construction of berm drain and vegetative cover, there is also a need to manage the eroded sediment from ending up in the streams, rivers or lakes and resulting in water pollution. The sediment control methods normally used by our Group· include, amongst others, the construction of silt fence and sediment basin in order to keep any eroded soil on the project site so that it does not cause water pollution to the vicinity. Geotextile fabri2m maximum
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:w; ~~~;;! ~ ~ .~~-“•l (I (I JI .il (I Woode n fence ~ posts d riven 400mm into the ground Front view of silt fence construction Waterflow Silt fence is generally made of non-woven geotextile fabric supported by hardwood posts driven at least 400mm into the ground. The permeability of the fabric is low in order to reduce the speed of water that can pass through the geotextile fabric as well as to prevent sediments from passing through. 94 6. BUSINESS OVERVIEW (CONTO) We usually replace the silt fence at an interval of six (6) to 12 months depending on its physical condition or when a replacement is deemed necessary by the Superintending Officer.
Sill fences are installed prior to the commencement of work on a site Overall, silt fence is effective when installed at sloping areas with less concentrated water flow. It also requires minimal labour for installation, low cost and has high efficiency in removing sediment.
Sediment basin located within a project site As highlighted earlier, the eroded soil that is washed off during rain storms or the sediment-laden water that was diverted from berm drain is usually channelled into a sediment basin constructed by our Group to capture the sediment and allow it to settle out in the basin. The main purpose of a sediment basin is to prevent sediment from entering into streams, rivers or lakes that are located within close proximity to the project site which causes water pollution. [I Company Number: 426965-M II 6. BUSINESS OVERVIEW (CONT’O)
zone Sediment Horizontal Pipe Side view of a sediment basin Based on the diagram set out above, a sediment basin generally consists of a catchment area and a primary outlet. The catchment area comprises two (2) components, namely the settling zone and the sediment storage zone. The purpose of the settling zone is to contain runoff and allow suspended sediment to settle whilst the sediment storage zone is to store settled sediment until the basin is cleaned out. The primary outlet normally consists of a vertical perforated pipe wrapped with filter cloth located at the bottom level of the basin (also known as the riser pipe) which is connected to a horizontal pipe to allow a controlled discharge of water out of the basin into the nearest main drain. Prior to the construction of a sediment basin, the project consultant appointed by our client will firstly identify an area which runoff can be easily diverted into the sediment basin, and the usual choice of location is at the lower end of the drainage area. The project consultant will then take into account several factors in determining the design of the sediment basin such as the sizes and concentration of the sediment particles entering into the basin, rate of flow of the sediment particles as well as the travel distance of the sediment particles in order to effectively reduce the velocity of runoff and to allow the suspended sediment to settle out in the sediment basin. For the avoidance of doubt, the design requirements and specifications of the sediment basin are prepared by the project consultant appointed by our client and included in the ESCP where our role is to construct and implement the sediment basin according to the ESCP. Throughout the implementation stage, our role is to monitor the sediment basin and conduct regular inspection of the basin for piping, seepage and other damages due to erosion. We will also ensure that there is no soil clotting around the riser pipe which would otherwise prevent proper drainage from the basin. In addition, we will remove sediment in the basin when the sediment storage zone is full by excavating the sediment to an upland area and to ensure that it does not re-enter the drainage course. The removed sediment will then be deposited on a designated dry out area for the sediment to dry out sufficiently.
6. BUSINESS OVERVIEW (CONT’D) Subsequently, screening tests of the dried sediment are carried by the project consultant to ascertain if the sediment is contaminated waste or clean fill. In the event that the results indicated that the sediment be classified as clean fill, we will seek the permission of the Superintending Officer to reuse the sediment as fill material for our earthworks operations as part of our Group’s effort to minimise wastage of natural resources. As the sediment basin constructed by our Group is usually located at the final discharge point from our worksite, we also engage an environmental consultant to collect and test water quality samples for total suspended solids (“TSS”) and turbidity on a monthly basis at each of our project site which carries out the ESCP to ensure that the water discharge from the sediment basin complies with the water quality regulations of DOE. As at the LPD, there were no findings of any non-compliance situation with regards to the water quality based on the latest quality monitoring report prepared by the environmental consultant at all of our project sites which carries out the ESCP. (iii) Rock blasting During excavation and fill, our Group may encounter hard materials that may interfere with our works as it is too hard to excavate. Under such circumstances, rock blasting using explosives is done and such activity is usually carried out internally for the earthworks projects undertaken by our Group. All blasting activities are conducted and supervised by our certified shotfirer; namely Chan Keng Kong, who holds a shotfirer licence issued by the Royal Malaysian Police and has training, knowledge or experience in the field of transporting, storing, handling and use of explosives. Before the commencement of blasting operations, our shotfirer and a blasting consultant appointed by our Group shall conduct a site inspection to determine and record the existing condition of all structures likely to be affected by our blasting activity. The blasting consultant will then prepare a written report supported by photographs where necessary, coupled with details of proposed drilling, blasting and excavation technique including proposed quantity and type of explosive, blasting technique, noise insulation and vibration methods, which shall be submitted to the Minerals & Geoscience Department Malaysia for consultation. In addition, our Group will also submit the blasting permit application to the Royal Malaysian Police for their approval before our blasting operations are carried out. Once we receive the written clearance from the Minerals & Geoscience Department Malaysia and the blasting permit from the Royal Malaysian Police, we will proceed to conduct our blasting operations. A signboard which carries the details of the blasting operations will be displayed at the blasting site one week before blasting activity. The signboard serves to notify the nearby occupants of the time of blasting, frequency, duration, purpose and precautions to be undertaken to prevent property damage as well as our representatives’ contact details for enquiry purposes. 97 Company Number: 426965-M I 6. BUSINESS OVERVIEW (CONT’D) During the rock blasting operation, the crawler drill is used to drill holes into the rock with proper hole alignment. Once the drilling is completed, pipes are inserted into the drilled holes to prevent any collapse of the soil caused by rainwater when necessary. Then, explosives are carefully inserted into the shot holes where our certified shotfirer, namely Chan Keng Kong, will supervise the procedure and carry out measures to ensure that the amount of explosives are rightly placed into each of the shot hole. Sirens are sounded to warn the surrounding site workers to gather at a safety point prior to blasting. After the blast, inspections are carried out by our blasting consultant around the blasting site to ensure that all the shot holes are fired correctly. Once the blasting works have been completed, the residual rocks arising from the blasts are usually further broken down into smaller sizes using our hydraulic breakers when necessary With the permission from the client and subject to the approval of the Superintending Officer, suitable residual rocks which have been crushed by our hydraulic breakers are excavated and used as our fill material and transported by dump truck to the fill area designated by the Superintending Officer. The steps of our rock blasting activity is further illustrated in the photos below:­

Step 2: Drilling works undertaken by inserting ammonium nitrate and explosive material deep into the ground ~ Company Number: 426965-M ! 6. BUSINESS OVERVIEW (CONT’D)
Step 3: Rock blasting
Step 4: Excavation of rocks after rock blasting Throughout the rock blasting operation, we have ensured that our rock blasting activities are carried out in a regulated manner and that the noise emitted is at a permissible range As part of our monitoring programme, noise level measurement is carried out by a project consultant appointed by our Group having the recognition of Laboratories Accreditation Scheme approved by the Department of Standard Malaysia for the purpose of monitoring and reporting to the project consultant appointed by our client on the blasting activities for records and monitoring purposes. ~ Company Number: 426965-M II 6. BUSINESS OVERVIEW (CONT’D) Step 4: Compaction and Finishing of Surfaces
Compacted soi I / high density (better load support) Soil density comparison between loose soil and compacted soil The final step in our earthworks activities are the compaction and surface finishing process. Proper compaction of platform or embankment is of vital importance to the structural quality of the final surfaces. Poor compaction will result in incidences of foundation erosion, basement cracks and leaks as well as pipe leakages. Each soil has a maximum density to which it can be compacted with a given compaction effort. As such, we generally engage a soil testing laboratory to conduct soil density tests to determine the degree of compaction upon completion of the compaction process. The fill material to be compacted shall be tested upfront by the soil testing laboratory to establish the maximum value of density and the optimum moisture content for compaction. We will then verify the required field density to be achieved and make the necessary adjustments to our compaction methods.
During the compaction process, the fill material is firstly deposited, spread and levelled uniformly of not more than 300mm thickness or any other thickness approved by the Superintending Officer using bulldozer and back pusher. If there is a presence of over-sized coarse material in the fill material, the over-sized coarse material shall be removed or broken down to sizes acceptable to the Superintending Officer. After spreading, the fill material will then be thoroughly compacted using vibratory roller to obtain a level, even and uniformly compacted base. Once the first layer of fill material has been evenly compacted, an in-situ test to determine the density of the fill material shall then be carried out by the soil testing laboratory. 6. BUSINESS OVERVIEW (CONT’D) Results of in-situ test are compared to the density standard established earlier for the soil being compacted, and are used as the basis to determine whether another layer of compaction is required. In the event that the measured in-situ field density is lower than the required degree of dry density and deemed not acceptable by the Superintending Officer, the steps undertaken for the compaction of the first layer of fill material will be repeated until the density level of the fill material complies with the specification that is acceptable to the Superintending Officer.
A finished surface in accordance to the specifications in the construction drawing(s) Once the final layer of the filling for platform or embankment has been compacted to the required degree of compaction/ density level, we will use motor grader to trim the final layer of the compacted soil to finish grade prior to the onward construction of bUilding structures or roadways. For the avoidance of doubt, our earthworks scope of work will end pursuant to the completion of the compaction process and where the final layer of the compacted soil has been trimmed to an even surface that conform to the levels, lines, grades and contours shown on the construction drawing(s) within the tolerances specified by the Superintending Officer. (ii) Civil engineering services Our civil engineering services constitute approximately 23.2%, 26.8% and 35.8% of our Group’s revenue from construction services business for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. The provision of specialised civil engineering services such as road works, drainage works, bridge construction, water supply works and sewerage works will generally be subcontracted to third parties as such services are not our major strength and core business to carry out in-house. We usually subcontract out certain portions of road works (as we do not own the asphalt paver set for road pavement activity) and drainage works (as drainage works are labour intensive to carry out in-house), whereas we will subcontract the entire bridge construction, water supply works and sewerage system to our subcontractors. Notwithstanding the foregoing, our Group still undertakes the overall project planning and management of all our subcontracted works and we are accountable to our customers for the execution of the contract and the overall management of the project. ~ Company Number: 426965-M ~ 6. BUSINESS OVERVIEW (CONT’D) (a) Road works Road construction involves the creation of a continuous right of way across geographical obstacles and allows for the use of vehicles or foot to travel along the constructed roads. Road works generally involve activities such as excavation and installation of drainage and utilities systems, the laying of sub-base and road-base, the laying of asphalt layer, the compaction of asphalt layer and finally, road surface marking. For the avoidance of doubt, road works generally commence pursuant to the completion of earthworks (where the platform or embankment for road has been formed). We generally carry out the entire construction process for road works and we only engage subcontractors for the supply and laying of asphalt premix (as we do not own the asphalt paver set for road pavement activity) as well as the installation of concrete kerbs, street lightings and metal guardrails which are usually carried out as a package by our subcontractors subsequent to the laying of asphalt premix. Road construction is carried out in several stages which can be seen as follows:­Step 1 Step 2

 

[-R~~d~b-;~~———-‘~~~P;i-;~~-i : approved graded coarse: : aggregates to provide the: : stable foundation needed to: : support the placement of: i_ ~~~~~~t __. ..• j ;-S~b:b:;;~ –:.:–~-~~p;I~·~~· -ii~~-i : material like sand to act as: : platform for the construction of : : upper pavement layers : l. ..’ Excavation is firstly carried out on the Once the drainage system and other utilities shoulders of the road embankment to create are in place, the road pavement activity will be way for the subsequent installation of carried out. Motor graders are used to prepare drainage and utilities systems the sub-base and road-base to create a wide flat surface where the asphalt can be placed later Step 4 Step 3 ~•
Once the asphalt is placed, the asphalt layer Then, the asphalt paver set is used for the is compacted evenly. Pavement markings are laying of asphalt. Asphalt is produced by then applied on the finished surface and the combining a certain portion of aggregates with construction of road is completed bitumen at high temperatures which gives the smooth and durable surfaces on roads ~ Company Number: 426965-M ~ 6. BUSINESS OVERVIEW (CONT’D)
Upon the completion of embankments for road works, we will carry out excavation on the shoulders of the road embankment. Once the excavation is complete, we will engage our subcontractor to install the drainage system and other utilities such as electric conduits and cablings on both sides of the road embankment. An electric conduit is a tube that is used to protect and route electrical wiring throughout the infrastructure to provide power to the electrical appliances in the vicinity such as streetlights. Once the drainage system and other utilities are in place, the road pavement activity will be carried out. In general, the layers of road pavement include the sub-base, road base and asphaltic layer. Sub-base material is usually composed of natural sand or any other granular material whereas base material is usually made of coarse aggregates (also known as crusher run).
Levelling the road base with motor grader During the paving process, the sub-base material is deposited, spread and levelled by motor grader in lanes in a uniform layer. After spreading, the sub-base material will be thoroughly compacted using vibratory roller to obtain an even and uniformly compacted sub-base. 6. BUSINESS OVERVIEW (CONT’D) An in-situ CBR test to determine the load-bearing capacity of the sub-base material shall then be carried out by the soil testing laboratory appointed by us. In the event that the measured in-situ CBR is lower than the required specification and deemed not acceptable by the Superintending Officer, the steps undertaken for the compaction of the first layer of sub-base material will be repeated until the in-situ CBR test results of the sub-base material complies with the specification that is acceptable to the Superintending Officer. Once the sub-base material has been well compacted to the required density, the paving of road-base material will commence. For the avoidance of doubt, the paving procedure for road-base material is the same as sub-base material and such process is carried out until the road-base material is compacted to the required density and where the asphalt can be placed upon later.
Asphalt paver set is laying the asphaltic layer The asphaltic layer is put in place by our subcontractor using their own asphalt paver set. The surface where the asphalt paving is to be laid shall be thoroughly swept, dried and cleared of all loose stones and foreign material. During the laying of the asphalt, the temperature of the hot mix asphalt shall not be less than 11 DoC at the time of initial rolling as the right temperature is very critical to obtaining the required compaction density to ensure the durability of the newly paved surfaces.
Compacting the asphaltic layer using a steel wheeled tandem roller 6. BUSINESS OVERVIEW (CONT’D) After the asphaltic layer has been laid and all surface irregularities have been adjusted, the road surface will be thoroughly and uniformly compacted using steel wheeled tandem roller for the initial rolling. The levels and surface accuracy of the asphalt surfacing are checked continuously during compaction and any displacement shall be corrected immediately. Subsequently the heavy rolling, if applicable, shall be carried out using pneumatic tyred roller immediately following the initial rolling. The final rolling shall be carried out using steel wheeled tandem roller to eliminate all roller marks and until the surface is of uniform texture and reaches the specified level required in the construction drawing(s).
Completed roadway with pavement markings Once the compaction process is completed and the new road surface is in place, our subcontractor will apply the permanent pavement markings and the construction of road is complete. (b) Drainage works Main drains are generally used to collect, transport, and/ or dispose of water through an outfall or outlet. The main drain functions as the central pathway and is connected to other existing inlet and outlet structures. For drainage works, our Group generally undertakes the trench excavation and overall project planning and management whilst we engage subcontractor for the installation of the drainage structures within the site boundaries. The main drain carries mainly storm water which flows from road surfaces into the storm drains. The storm water is then transported into the inlet structure leading to the main drains. The purpose of main drains is to move away the storm water to avoid soil erosion issues. The drainage system may be an open type or a concealed type depending on the project design. An open type drain collects water and runs it along the ground surface leading into the main drain while a concealed type drain collects the water from the road side drains and channelling it through pipe culverts into the main drain. Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D) Trench excavation will be carried out by using hydraulic excavators, and the soil is excavated from downstream towards upstream of the main drain. The excavated materials are then collected and transported to the dumpsite as designated by the engineer(s). After the trench is completed, the main drains are constructed either using a cast in-situ concrete drain or a precast concrete drain. The precast concrete drain is casted off-site and installed on-site while the cast in-situ drain indicates that the drain is casted on the project premises. Both the different construction methods can be seen as follows:­(i) Precast concrete drain
Foundation Side view ofprecast concrete drains Precast concrete drains are casted off-site in the shape and dimension in accordance to the project plan. The use of precast concrete drains enables the project timeline to be shortened as compared to the use of cast in situ drains. The precast concrete shall be manufactured using moulds. Once manufactured, the precast concrete drain is transported to the project site and laid on the well compacted bedding. Sometimes a foundation is constructed! placed above the compacted bedding prior to the precast concrete drain being laid. The individual precast concrete drain units are bonded together to prevent leakage. The capping beam is constructed after the precast concrete drains are laid. Finally, earth filling works are carried out behind the main drain’s wall using suitable materials according to the construction drawing(s). (ii) Cast in-situ drain Cast in-situ drains are casted on the project site once the trench is completed. They allow for the construction to be done in all shapes and sizes with no limitation. The basic steps involved in construction of cast-in-situ drains are set out in the following page:­Company Number: 426965-M 6.  BUSINESS OVERVIEW (CONT’D)  Step 1  Formwork Reinforcement bars  Formwork is installed for the construction of the base of the cast-in-situ drain. Reinforcement bars are then placed inside the formwork  Ready-mix concrete is poured into the formwork  Step 4  Step 3 Formwork Reinforcement bars ~ \~–~~ ~  Ready-mix concrete is poured Into the form work  Once the base has sufficiently hardened, the form work for the construction of the walls of the cast-in-situ drain is installed. Reinforcement bars are then placed inside the formwork  Step 5  Step 6 Box culvert  Once the walls have sufficiently hardened, the form work is removed  The top slab is constructed to form a box culvert structure. The area surrounding the cast-in-situ drain is then backfilled with suitable materials
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Company Number: 426965-M 6. BUSINESS OVERVIEW (CONTO) (c) Bridge construction Bridges are structures that are built to extend and span across physical objects such as a valley, roads, or water; providing access of vehicles or foot travel over these areas. A beam bridge is a rigid structure that consists of one horizontal beam supported by piers. In structural terms, it is the simplest type of bridge in Malaysia and can be categorized as the short to medium span range of bridge where its length can reach up to 40m while its width is about 3.5m for each lane. It is commonly used for highway flyovers and for modern elevated structures of light rail transport. We generally engage our subcontractor to construct the bridge structure as highlighted in the four (4) main stages of the chart in the following page, whereas our role is to carry out the overall project management and supervision of the entire construction process. Beam bridge works on the principles of compression and tension. As such, a strong beam is needed to resist twisting and bending under the weight that it must support. When a load created by a group of traveling cars pushes down on the beam, the weight of the beam pushes down on the piers. The beam’s top edge is pushed together as the result of compression, and tension causes the bottom edge to stretch and lengthen. In spite of reinforcements like concrete, steel, and trusses, the biggest limitation of this type of bridge is still its length, so they rarely span more than 40m. Load Beam bridge: A rigid horizontal structure that is resting on two piers Before the construction of the bridge, excavation and piling are required to be done according to the construction drawing(s). Any soil investigations will generally be conducted by our clients prior to the piling works. Our Group engages subcontractors for the piling work in our projects. The beams used on the bridge generally consist of I-beams and T-beams. An I-beam is a beam that has an I-shaped cross section and is efficient in carrying both bending and shear loads while the T-beam has a T-shaped cross section and is able to withstand high compressive stress. The construction of the bridge generally involves four (4) main stages which can be seen in the followings page. 108
any Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D) Staae 1: Pile cap construction  Staae 2: Column construction  Staae 3: Crossbeam construction  Staae 4: Beam and deck slab construction  Step 5 Reinforcement bars  Step 1  Step 3  Step 7  Starter bar  Crossbeams  Plinth  Formwork  Precast  beams  Piles  Pile cap  Columns~~ Scaffolding  Piles are firstly driven into the ground with starter bars revealed. Formwork (temporary molds into which concrete or similar materials are poured) is then installed on the piles. SUbsequently, reinforcement bars are placed within the formwork J  Scaffoldings are erected around the pile cap. Then, formwork is installed and reinforcement bars are placed above the pile cap J  Starter bars—-. Step 6 The construction of crossbeam begins after the columns of the bridge are constructed. With the use of scaffoldings as platforms, formwork is installed and reinforcement bars are placed J  -. Step 8 Plinths are constructed on the completed crossbeams. Bearings are then placed on top of the plinths. Next, the precast beams are placed on top of the plinths and bearings using cranes. Subsequently, form work is installed on the beams or the casting of deck slab  ——­ Crossbeams  Pile cap  Deck  slab  Column  Pile cap  ~  Piles  B)  ~­ Thereafter, ready-mix concrete is  Thereafter, ready-mix concrete is  poured into the formwork. The  poured into the formwork. The  Following that, ready-mix concrete is poured into the  After that, ready-mix concrete is poured into the  formwork is removed when the ready­ formwork is removed when the ready­ formwork. The formwork is removed when the ready­ formwork to create the deck slab. Once the concrete  mix concrete has sufficiently  mix ccncrete has sufficiently  mix ccncrete has sufficiently hardened. thus forming  has sufficiently hardened, the formwork is removed  hardened, thus forming the pile cap  hardened. thus forming the cclumn  the crosslbeam  and the construction of the bridge is complete.
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~ Company Number: 426965-M i 6. BUSINESS OVERVIEW (CONTO) (d) Water supply works Water supply works can include the construction of water reticulation systems and reservoirs. Water reticulation system is generally a system engineered using hydrologic and hydraulic components to provide water supply. Depending on specifications and design, the water reticulation construction might include the connection of reservoirs, water tanks, water towers, raw water collection points to water purification facilities and pumping stations. We generally engage our subcontractor to construct the water reticulation systems and reservoirs (including reinforced concrete reservoirs which can be classified into elevated storage tanks and ground storage tanks), whereas our role is to carry out the overall project management and supervision of the entire construction process.
An elevated water tank constructed by our Group at Bandar Sultan Suleiman, Selangor
Water reticulation will involve excavations, installation of pipes and other activities to transport water between two or more points. The construction of the reinforced concrete reservoirs involves activities such as foundation work, construction of the tank structure, installation of mechanical and electrical services and completing the external and internal finishes of tank. Prior to installation of pipes and other activities, the materials used for the construction of the water reticulation system such as steel pipes, chambers and valves are inspected by the Superintending Officer. Pipe trench excavation will commence after ascertaining the position of other third party utility assets in the location. The trench is excavated using excavators and the levels are checked until the required formation is achieved. Once the trench is completed, the welding machine is deployed to weld the pipes together before laying it down into the trench using excavators. ~ Company Number: 426965-M ~ 6. BUSINESS OVERVIEW (CONT’O) After checking if the joints of the pipes are welded properly and no leakages are found, backfilling of soil is done to the required thickness and compaction. This process is repeated until the entire water reticulation system is in place.
Welded pipes are laid and checked by the workers Upon completion of both the activities, tests will be performed to ensure that the water facilities are functioning as planned. Pressure tests will be performed on the water facilities and disinfection of the water reticulation facilities will also be performed using chlorine. (e) Sewerage system A sewerage system is an underground carriage system used to transport wastewater from residential and commercial buildings to water treatment facilities or to be disposed off. We generally engage our subcontractor to construct the sewerage system, whereas our role is to carry out the overall project management and supervision of the entire construction process. Prior to the construction of the sewer, all materials used for the construction will be inspected by the Superintending Officer appointed by the client. Once approved, the location and alignment of each sewer line are set out on site and the excavation of the trench proceeds. The bedding shall be laid onto the base of the trench. The area around the sewerage pipe shall be backfilled with suitable material and compacted with a 1-ton roller or plate compactor to provide firm foundation of uniform density throughout the length of the sewer line. I 6. BUSINESS OVERVIEW (CONT’O) The vitrified clay pipe and/ or reinforced concrete sewer pipe which is highly resistant to almost all domestic and industrial sewage is installed and connected to a manhole. During the construction of the sewer line, a dewatering water pump shall be on standby to ensure dry working conditions. Upon completion of the sewer construction, tests such as closed­circuit television (CCTV) test and flow tests requirement by Indah Water Konsortium Sdn Bhd shall be carried out and witnessed by the Superintending Officer appointed by the client.
A summary of all our completed earthworks and/ or civil engineering projects for the past three (3) financial years up to the FYE 31 December 2016 and as at the LPD is set out below:­Project details  Industry  Contract value’1 RM’million  Commencement! completion date  Contract term’2 (months)  Site clearance, earthworks and other ancillary works for Zone 4 (Phase 1) and Zone 6 & 8 (Phase 2) for the mixed development of the Setia Eco Gardens project at Pulai, Johor  Property Development (Residential)  30.95  January 20121 January 2014  24  Construction of a 3972 at Taman Lumpur  temporary car Wahyu, Jalan  park on Lot Ipoh, Kuala  Property Development (Residential)  0.46  September 20131 January 2014  4  Construction, completion, maintenance including handing over for enlargement of Lake C at Cyberjaya Flagship Zone, Dengkil, Sepang, Selangor  Infrastructure (Earthworks)  11.51  April 20131 March 2014  11  Earthworks for Precinct 11, part of Precinct 15, remaining earthworks of Precinct 17, and Precinct 16 Reservoir of the Bandar Setia Alam project at Shah Alam, Selangor  Property Development (Residential)  45.72  September 201 01 March 2014  42  Site clearance, earthworks, main storm drains and detention ponds (Package 3) of the Desa Coalfields project at Coalfield Estate, Ijok, Selangor  Property Development (Residential)  19.42  November 20121 April 2014  17
II Company Number: 426965-M II 6, BUSINESS OVERVIEW (CONT’O) Project details Construction and completion of earthworks, road and drainage for part of Precinct 15 & 16, Section U13 and part of Section U14 of the Bandar Setia Alam project at Shah Alam, Selangor Execution and completion of site clearance, earthworks, road works, surface water drainage and sewerage works for the Taman Kenanga project at Dengkil, Sepang, Selangor Site clearance, earthworks, detention pond and ancillary works (Phase 1) for the mixed development of the Eco Business Park project at Tebrau, Johor Earthworks at Lot 5056 of the Bandar Setia Alam project, Klang, Selangor Earthworks and associated works at Phase 1 & 1A, Laman 3, Bernam Jaya, Selangor Construction and completion of earthworks, berm, drainage, turfing and other related works for the housing construction project at Block 17, Cyberjaya Flagship Zone, Dengkil, Sepang, Selangor Site clearance, earthworks, detention pond and ancillary works (Phase 2) for the mixed development of the Eco Business Park project at Tebrau, Johor Construction and completion of earthworks for the Hillpark Shah Alam project at Bandar Puncak Alam, Kuala Selangor, Selangor Infrastructure works for the construction of a temporary sales gallery building for the Tropicana Aman project at Tanjung Dua Belas, Kuala Langat, Selangor Site clearance and earthworks for the construction and completion of highway link from Setia Ecohill to the mixed development of the Eco Majestic project at Semenyih, Hulu Langat, Selangor Subsurface investigation works, piling works, reinforced soil wall, bridge and other ancillary works at Precinct 2 of the Nilai Impian 2 project at Seremban, Negeri Sembilan Industry Property Development (Residential) Infrastructure (Road works, Drainage works, Sewerage system) Property Development (Commercial) Property Development (Commercial) Property Development (Commercial) Property Development (Residential) Property Development (Commercial) Property Development (Residential) Property Development (Residential) Infrastructure (Bridge construction) Property Development (Commercial) Contract value’1 RM’million 1.55 19.52 15.55 0.32 12.05 6.50 15.08 21.65 2.03 3.39 4.07 Commencement! completion date March 20141 July 2014 July 20131 July 2014 September 20131 September 2014 December 20121 January 2015 August 20131 February 2015
July 20111 March 2015 July 20141 May 2015 November 20131 June 2015 April 20151 June 2015 April 20141 July 2015 August 20141 August 2015 Contract term’2 (months) 13 13 24 18 45 10 18 3 15 6. BUSINESS OVERVIEW (CONT’D) Project details Earthworks, main drain, detention pond and other ancillary works (Package 8) at Plot 2 of the Nilai Impian 2 project at Seremban, Negeri Sembilan Site clearance, earthworks and retaining walls for the industrial and commercial development at Jeram Batu, Pontian, Johor Construction and completion of Setia Ecohill Link from Semenyih Toll Plaza, Lebuhraya Kajang Seremban (LEKAS) Highway to the mixed development of the Setia Ecohill project at Semenyih, Hulu Langat, Selangor Site clearance, earthworks, main drains and ancillary works for the Eco Business Park 2 project at Tebrau, Johor Earthworks and associated works at Phase 3, Laman 1, Bernam Jaya, Selangor Construction and completion of trumpet interchange at Lebuhraya Kajang Seremban (LEKAS) Highway for the Eco Majestic project at Beranang, Hulu Langat, Selangor Construction and completion of erosion protection works, box culvert and ancillary works at pond B (Package 4) at the Cyberjaya Flagship Zone, Dengkil, Sepang, Selangor Construction and completion including handing over of 30 hectares detention pond and ancillary works (Package 3) at Cyberjaya Flagship Zone, Dengkil, Sepang, Selangor Site clearance and earthworks (Parcel 2) for the mixed development of the Bandar Amanjaya project at Sungai Petani, Kuala Muda, Kedah Construction and completion of site clearance, earthworks and associated infrastructure works for the mixed development of the Setia Ecohill project at Semenyih, Hulu Langat, SeJangor Incidental earthworks for the development of mixed residential land at Bukit Raja, Shah Alam, Selangor Industry Property Development (Commercial) Property Development (Commercial) Infrastructure (Road works, Drainage works, Bridge construction) Property Development (Commercial) Property Development (Residential) Infrastructure (Road works, Drainage works, Bridge construction) Infrastructure (Earthworks) Infrastructure (Earthworks) Property Development (Residential) Property Development (Residential) Property Development (Commercial) Contract value’1 RM’million 32.40 23.35 56.39 19.21 6.24 28.03 2.17 13.66 14.10 65.95 7.81 Commencement! completion date May 20131 August 2015 November 20141 September 2015 November 20131 September 2015 August 20141 February 2016
August 20141 March 2016 June 20141 June 2016 April 20161 August 2016 October 20131 September 2016
November 20151 September 2016 September 20121 October 2016 May 20161 October 2016 Contract term’2 (months) 10 23 18 19 25 4 35 11 49 6. BUSINESS OVERVIEW (CONT’D) Contract Commencement! Contract Project details Industry value·1 completion date term·2 RM’miliion (months) Earthworks and site preparation works for the Infrastructure 7.05 September 20161 3 Refinery and Petrochemical Integrated (Earthworks) December 2016 Development (RAPID) Project Package 18D at Pengerang, Kota Tinggi, Johor Construction and completion of link road and Infrastructure 30.15 September 20151 15 associated infrastructure from Eco Majestic (Road works, December 2016 interchange to the mixed development of the Drainage Eco Majestic project at Beranang, Hulu works) Langat, Selangor 516.28 Notes:­·1 For the avoidance of doubt, subsequent to the completion of these earthworks andl or civil engineering projects (upon receipt of CPC), these projects generally carry a warranty period of 12 to 24 months. During this period, the Group’s customers may require additional works for some of these construction projects, which would result in the addition to certain of the original scope of work. As such, the contract values for some of these completed projects which were affected by variation works during the warranty period had been adjusted accordingly to reflect the most updated project value ·2 The duration of our completed earthworks andl or civil engineering projects ranges from 3 to 49 months A summary of all our on-going earthworks and/ or civil engineering projects as at the LPD is set out below:­Stage of Commencement! completion Contract Expected Contract as at the Project details Industry value completion date term·1 LPD RM’miliion (months) % Earthworks and infrastructure works at Section 3 Property 12.93 October 20151 22 63.9 and part .of Section 2 of the Kota Puteri project Development August 2017 at Rawang, Selangor (Residential) Construction and completion of earthworks, Property 15.76 July 20151 26 75.4 main drain, realignment of existing rivers and Development August 2017 other related works for development of Phase 1 (Commercial) (R3) & sales gallery (C1) for Stage 2 of the Bandar Bukit Raja project at Kapar, Klang, Selangor Infrastructure & landscaping works (package Infrastructure 63.00 May 20161 13 97.9 NO.TP07 Infrastructure & Landscaping Works) (Road works, June 2017 for the additions, alterations and upgrading of Bridge the existing national sports complex Bukit Jalll, construction) Kuala Lumpur Construction and completion of site clearance, Property 114.20 November 20131 53 80.1 earthworks and associated infrastructure works Development March 2018 (Phase 1, 2 and 3) for the mixed development (Residential) of the Eco Majestic project at Beranang, Hulu Langat, Selangor 6. BUSINESS OVERVIEW (CONTD) 6. BUSINESS OVERVIEW (CONT’D) Project details  Industry  Contract value RM’million  Commencement! Expected Contract completion date term’1 (months)  Stage of completion as at the LPD %  Earthworks for Phase 1 mixed residential and commercial development at Bukit Raja, Petaling, Seksyen U12, Selangor  Property Development (Residential)  34.53  November 20161 June 2017  8  50.0  Site clearing, earthworks and ancillary works Package (I) & Package (II) for the Seri Serai development project at Rawang, Gombak, Selangor  Property Development (Residential)  14.48  August 20161 July 2017  11  44.5  Site clearing, earthworks and ancillary works (Package 3) (RSKU, Water Tank Reserve & Main Access Road) for the Serai development project at Rawang, Gombak, Selangor  Property Development (Residential)  5.99  February 20171 July 2017  5  Earthworks for the mixed development at Block 7, Cyber 1 of the Setia Eco Glades project at Cyberjaya Flagship Zone, Dengkil, Sepang, Selangor  Property Development (Residential)  54.11  July 20121 August 2017  62  77.1  Construction and completion of site clearance, earthworks and associated infrastructure for proposed housing, mixed and commercial development for the Setia Ecohill 2 project at Beranang, Hulu Langat, Sefangor  Property Development (Residential)  53.10  March 20161 September 2017  18  41.5  Earthworks for the Tropicana Aman project at Tanjung Dua Belas, Kuala Langat, Selangor  Property Development (Residential)  136.52  April 20151 September 2017  30  71.3  Earthworks for mixed development on Lot 48731 (PT 45264), Petaling, Selangor  Property Development (Residential)  6.58  March 20171 January 2018  10  3.9  Construction and completion of earthwork and other related works for mixed development at Ijok, Selangor  Property Development (Residential)  60.28  December 20161 February 2018  14  9.0  Construction and completion of civil works for West Coast Expressway (WCE) Interchange (from Section 1 -Banting Interchange to South Klang Valley Expressway (SKVE) Interchange)  Infrastructure (Earthworks, Road works, Drainage works, Bridge construction)  239.81  December 20161 June 2019  30  0.5  Development and upgrading of the proposed Pan Borneo highway in the state of Sarawak (from Sg Awik Bridge to Bintangor Junction)  Infrastructure (Earthworks)  105.23  December 20161 November 2019  35  0.9  Construction and completion of by-pass box culvert, temporary detention pond and sungai serai upgrading works for Bandar Serai Development, Rawang, Gombak, Selangor  Infrastructure (Drainage works)  6.70  April 20171 January 2018  9
Stage of  Commencement!  completion  Contract  Expected Contract  as at the  Project details  Industry  value  completion date  term·1  LPD  RM’miliion  (months)  %
Hard landscaping for east lake central park for zone A & zone B at Tanjung Dua Belas, Kuala Langat, Selangor.  Infrastructure (Road works)  15.23  April 2017/ January 2018  9  938.45
Note:­The duration of our on-going earthworks and/or civil engineering projects ranges from 8 to 62 months As depicted in the summary above, our Group generally undertakes earthworks focusing on both residential and commercial property development projects and infrastructure projects (for road and highway). In addition, our Group is also moving towards securing larger-scale and value projects, which is evident from our recently secured two (2) large-scale infrastructure projects which involve earthworks for the construction of highway (Le. the West Coast Expressway (WCE) Interchange project and the Pan Borneo Highway project). For the investors’ information, our scope of earj:hworks for both the West Coast Expressway (WCE) Interchange project and the Pan Borneo Highway project generally involves the construction of embankment to be used for the onward construction of highways. The scope of earthworks undertaken for both projects are the same as the conventional earthworks undertaken by our Group for the construction of embankment for onward construction of roadways, whereby the steps taken for such construction works generally include the following:­(i) site visit and preparation to determine whether the physical properties of soil around the project site are conducive for the subsequent construction activities;
(ii) site clearance for the removal of obstacles that may interfere with the construction work on the project site;

(iii) excavation and fill activities for the construction of embankment for the onward construction of highways; (iv) in concurrence with the excavation and fill activities, the necessary erosion and sediment control plan are put in place to prevent the erosion of the soil at the project site (such as the construction of berm drains at different sections of the slope at project site to mitigate the effects of runoff during earthworks);
(v) compaction of embankment in accordance with the required field density to be achieved for highways. For the avoidance of doubt, the load bearing capacity of a highway is higher than a road in order to support the higher traffic loads applied to the highway, which can be achieved through the usage of higher quantum of fill materials and resulting in more layers of fill materials to be compacted; and
(vi) the earthworks scope of work will end pursuant to the completion of the compaction process where the final layer of the compacted soil has been trimmed to an even surface that conform to the levels, lines, grades and contours shown on the construction drawing(s) within the tolerances specified by the Superintending Officer of both projects.

117 6. BUSINESS OVERVIEW (CONT’D) As such, the nature of earthworks for both the West Coast Expressway (WCE) Interchange project and the Pan Borneo Highway project is the same as the conventional earthworks undertaken by our Group for the construction of embankment for onward construction of roadways, save for the layer of compaction required during the compaction process to achieve the optimal load bearing capacity of highway as compared to residential roadway. Generally, the load bearing capacity of a highway is higher than a road in order to support the higher traffic loads applied to the highway, which can be achieved through the usage of higher quantum of fill materials and resulting in more layers of fill materials to be compacted. The other differences between road works undertaken for property development projects and infrastructure projects include the quantum of machinery, labour and duration required to complete both type of projects. Please refer to Section 6.5 of this Prospectus for further details on the key differences between road works undertaken for property development projects (i.e. for the construction of road) and infrastructure projects (i.e. for the construction of highway). As highlighted above, our scope of work for the Pan Borneo Highway project only involves earthworks to construct embankment to be used for the onward construction of highways. However, for the West Coast Expressway (WCE) Interchange project, our scope of work involves earthworks to construct embankment as well as the provision of specialised civil engineering services (i.e. road works, drainage works and bridge construction). Notwithstanding the foregoing, the nature of work for both the earthworks and! or specialised civil engineering services to be undertaken for both projects is the same as the conventional scope of work that our Group has performed for our other construction projects. Furthermore, the entire scope of work for earthworks are generally carried out in­house by our Group. However, we will subcontract out certain portions of road works (as we do not own the asphalt paver set for road pavement activity) and drainage works (as drainage works are labour intensive to carry out in-house) and the entire bridge construction to our subcontractors. Notwithstanding the foregoing, our Group still undertakes the overall project planning and management of all our subcontracted works and we are accountable to our customers for the execution of the contract and the overall management of the project. Premised on the above, there are no major differences in terms of skill set requirement nor the types of machinery required to undertake both the West Coast Expressway (WCE) Interchange project and the Pan Borneo Highway project as compared to our other construction projects. Please refer to Sections 4.1.7,4.1.8,4.1.9 and 4.1.10 of this Prospectus for the operational risks involved in undertaking the construction of road and highway and Sections 4.2 of this Prospectus for the risks relating to general construction industry. II Company Number: 426965-M II 6. BUSINESS OVERVIEW (CaNTO) 6.1.1 (b)Support services Apart from the provision of construction services, our Subsidiaries are also involved in the provision of other construction support services mainly to complement our operations in the earthworks and civil engineering activities as well as to support our subcontractors’ operations in the same project. Further details of our supporting activities are set out below:­i. Sale of construction materials We currently undertake the sale of construction materials which is mainly catered for our subcontractors who work at our project sites. Our direct supply of construction materials to our subcontractors reduces the risk of delay in delivery of materials causing material disruption to our construction works as we have better control over our suppliers who are fully accountable to us instead of relying on third party suppliers whom we are not familiar with their quality of products/ materials. Sale of construction materials constitute approximately 7.6%, 11.4% and 7.3% of our Group’s total revenue for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. Our construction materials are entirely sourced from our suppliers in Malaysia. Unless requested by our customer, we usually select our suppliers from our internal list of approved suppliers. We generally assess the overall performances of potential suppliers, including product quality, timeliness of delivery, references and reputation in the industry to be included in our list of approved suppliers on an annual basis to ensure that we have maintained a reasonably diversified base of reliable suppliers which offer competitive prices. As at the LPD, there were approximately 605 suppliers on our list of approved suppliers. For the avoidance of doubt, our inventories are ordered based on the request of our subcontractors who would usually place order with us on a case to case basis in accordance with the requirements of the projects undertaken by them. Upon completion of a particular project, we will sell our unused construction materials back to our subcontractor who was involved in the particular project or alternatively, third party contractors. As a result, we generally do not keep excess inventory of construction materials at our project sites. There were no construction materials remained at our project sites as at the FYE 31 December 2014, FYE 31 December 2015 and FYE 31 December 2016, respectively. [I Company Number: 426965-M II 6. BUSINESS OVERVIEW (CONT’O) The construction materials procured by us for supply to our subcontractors and any third (3rd) party contractors mainly for their civil engineering projects are summarised in the table below:­No. Products 1. Quarry products 20mm aggregate (3/4″) Quarry waste Quarry dust (dust form) 6″ x 9″ block stone Crusher run (50 mm) 2. Premix products Asphalt Sand Steel bar Detailsl Specifications The size of aggregate as quoted in the product name Fine crushed residual of quarry product Fine crushed dust and follow respective grading limit of scope of work 100mm (min) -250mm (max) Crushed rock which is hard & durable & follow grading limit required by consultant. Sticky, black and highly viscous liquid or semi-solid form of petroleum Fine granular materials & follow consultant’s stated grading limit. A hard metal bar composed of iron alloy with carbon added General usage and application Base materials used in production of construction premixes (mainly for wearing (surface) course-based road pavement) Materials for void fill, embankment and roadway structure As filler used in production of construction premixes. Also as alternative for fine aggregates such as sand Base materials for drainage and embankment structure Base materials for roadway structure Road works Base material for all kind of concrete structure and for roadworks All reinforced concreting structure ~ Company Number: 426965-M II 6. BUSINESS OVERVIEW (CONT’D) ii. Detailsl General usage and No. Products Specifications application 3. Precast products Box culvert A rectangular A structure that allows shaped, water to flow under a reinforced road or trail or similar concrete obstruction from one drainage side to the other side structure U-shape drain A “U” shape A structure that allows reinforced water to flow under a concrete road or trail or similar drainage obstruction from one structure. side to the other side L-shape drain A “L” shape A structure that allows reinforced water to flow under a concrete road or trail or similar drainage obstruction from one structure. side to the other side 4. Ready-mix concrete Various grades All reinforced as required by concrete works customers
5. Gabion Stone filled in Erosion protection & wire mesh retaining structures gabions.
6. Bitumen emulsion A coat to apply To act as glue on the road between road base base before (crusher run) & top laying the surface of finished premix work. road (premix work)

Hiring of machinery We currently provide renting of machinery mainly for our internal use as well as to cater for the needs of our subcontractor/ customers. Generally, we rent out machinery to our subcontractors who work at our project sites whenever they do not have sufficient machinery to undertake the construction work. Our machinery may be rented on a per hour, per day, per trip, per m3 or per ton bass based on the prevailing market rates, depending on the requirement of our subcontractors. At times where there are request from external parties who do not carry out our construction works, we would also cater our rental services to the said parties pursuant to our internal assessment on the availability of our machinery (i.e. machinery that are not being used at the construction site are usually selected for such purposes). However, our Board remains cautious on the number of machinery that are rented out to external parties (i.e. parties that are not carrying out our construction works/ not our subcontractors) to ensure that our Group has sufficient machinery to cater for internal usage. 6. BUSINESS OVERVIEW (CONT’D) As at the LPD, we own 131 units of tipper/ dump trucks, 78 units of excavators, 21 units of bulldozers, 29 units of compactors, eight (8) units of water trucks, nine (9) units of diesel trucks, seven (7) units of motor graders, eight (8) units of crawler drills and other machinery that allow us to undertake various construction activities (within the earthworks and civil engineering services) and to meet customers’ requirements, further details of which are set out in Section 6.16.4 of this Prospectus. As set out in the paragraph above, the rental of machinery is mainly for our in house purposes and the income generated from external rental only accounted for approximately negligible, 0.1 % and 0.1 % of our Group’s total revenue for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. We carry out maintenance works on our machinery on a regular basis to ensure that our machinery are well maintained. In addition, such measure is essential to ensure the continuity of our business operations without unnecessary interruption due to machinery breakdown as well as to ensure the safety of our employees. Generally, our Production and Operation department together with our Workshop department hold the responsibility to ensure the timeliness of the maintenance and servicing of our machinery based on our manufacturers’ recommended schedule for each of the machinery stated in our maintenance manual. We engage our manufacturers for scheduled servicing of machinery that are still under warranty validity period. After the machinery’s warranty expires, our in-house maintenance team will carry out maintenance and repairing services which involve general service intervals, minor defects and/ or minor breakdowns of our machinery. As set out in Sections 3.12(i)(b) of this Prospectus, our Group intends to allocate approximately RM14.60 million from the proceeds raised from our Public Issue to construct a workshop on the Industrial Land as our in-house workshop for the purpose of carrying out repair and maintenance services of our machinery and equipment. The workshop will have a total Gross Floor Area of approximately 8,200 m2 to house our internal servicing team and machinery that require maintenance and repairing services. Whilst pending the construction of our new workshop, we have temporary rented a workshop in Semenyih which is located nearer to several of our on-going project sites in the Hulu Langat District. Our workshop is headed by our Assistant General Manager of Workshop, namely Lam Wing King and we have an internal servicing team of nine (9) mechanics as at the LPD to perform repairing and maintenance services for our machinery on a timely basis. For major services which we do not have the diagnostic tools and equipment or OEM replacement parts, we will engage an external service provider who will send technicians to our project site to perform the repair works. Company Number: 426965-M 6. BUSINESS OVERVIEW (CONTO) Set out below are principal types of machinery owned and used by our Group:­Machinery’1
Tipper/ dump truck Diesel truck Water truck Excavator
Usage and application Used for transporting any form of construction material Used to transport diesel to be used at construction site Used to carry water to be used at construction site Used in digging of trenches, holes and material handling, demolition, general grading/landscaping, lifting and placing of pipes, and river dredging ~ Company Number: 426965-M i 6. BUSINESS OVERVIEW (CONTO)

Machinery’1 BUlldozer Compactor Motor grader Crawler drill Usage and application Used in clearing of rock materials, minerals and any other sediment or remains Used for compacting fill material during construction work Used in surfacing of earthworks or road to create a flat surface Used in drilling shot holes for rock blasting 6. BUSINESS OVERVIEW (CONT’D) Note:­”1 The type of machinery as shown above is non-exhaustive. Other machinery includes amongst others, wheel loader, backhoe, forklift and lorry iii. Ad hoc general construction services/ daywork Our Group also carry out ad hoc general construction services/ daywork services for our customers. The scope of ad hoc general construction services/ daywork projects undertaken by our Group in the past includes, but not limited to road maintenance and repair works such as filling of potholes, spot turfing to prevent soil corrosion as well as construction of temporary car parks. Ad hoc general construction service/ daywork is a specifically instructed construction services for which we are paid on daily basis or per hourly basis. It is usually undertaken for a period ranging from three (3) weeks up to 12 months, depending on the size of the contract and the technical complexity of the works undertaken. The revenue derived from ad hoc general construction services/ daywork services only accounted for approximately 0.1 %, 1.4% and 1.4% of our Group’s total revenue for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK Company Number: 426965­6. BUSINESS OVERVIEW (CONT’O) 6.1.2 Property investment The commencement of our property investment business segment Our property investment business segment arose mainly due to our working relationship with property developers (i.e. S P Setia, Paramount Corporation Berhad, Setia Haruman Sdn Bhd, Eco World, nopicana, PKNS and NCT) where we were offered to purchase investment properties from the respective property developers at various discounted prices. For the avoidance of doubt, the aforesaid property developers have been/ are our current clients who have awarded us earthworks/ civil engineering services contracts over the years. Further, our Group had acquired two (2) units of investment properties from NCT via a contra arrangement whereby the progress billing for the Taman Kenanga project awarded by NCT was partly offset against the aforesaid investment properties. Further details of the contra arrangement are set out in the following paragraphs under the sub header of “the business arrangement on the acquisition of investment properties by our Group” under Section 6.1.2 of this Prospectus. Our Board and the management were of the view that besides acquiring the investment properties at various discounted prices, the acquisition of the aforesaid investment properties from the respective property developers also shows a sense of support which in turn may enhance our working relationship with the said property developers. In addition to the support provided to these clients, our property investment business also serves as a channel to reap capital gain upon realisation of the investment properties after a holding period of three (3) to five (5) years. Please refer to Section 4.1.13 of this Prospectus for further details on our risk factor pertaining to the Group’s exposure to property investment which highlights the risk of property investment and the possible opportunity cost to our Group arising from property investment business segment. As part of our Group’s effort to centralise all our properties for investment purposes under one (1) subsidiary which serves as the property arm of the Group, we had in April 2013 commenced our property investment business segment via Advancecon Properties. However, our Group has been cautious in growing the property investment business segment as our core expertise remains in the provision of earthworks and civil engineering services. All our investment decisions will be carried out strictly in accordance to our Group’s investment policy as set out in the following paragraphs. This is to ensure that we remain focused on our core business, being the provision of earthworks and civil engineering services. Moving forward, our Board will continue its efforts to cautiously manage this property investment business segment. In the near term (approXimately two (2) years from the date of Listing), our Board has no intention to explore any acquisition of investment properties until such time when the local property market condition shows signs of gradual improvement. Whereas in the evaluation of any future acquisitions, our Board will also benchmark the potential capital appreciation rate of the identified investment property against the prevailing fixed deposit rates in Malaysia as one of our Group’s investment criteria, whereby the potential capital appreciation rate of the identified investment property upon realisation shall be higher than the prevailing fixed deposit rates in Malaysia on an annual basis, in addition to several other investment criteria as detailed in the following paragraphs under the sub header of “investment criteria” under Section 6.1.2 of this Prospectus. 126 II Company Number: 426965-M II 6. BUSINESS OVERVIEW (CONT’O) The business arrangement on the acquisition of investment properties bv our Group Our purchase of investment properties comes in two (2) forms of business arrangements, namely:­(i) Investment properties acquired directly relating to the projects undertaken by our Group; and
(ii) Investment properties that were not directly related to any particular project that was awarded tol undertaken by our Group from the property developers, however, the aforesaid investment properties were acquired from property developers who have awarded us other projects.

For information purposes, there are 22 units of investment properties held by our Group as at the LPD, details of which are as follows:­(i) 11 units were acquired directly relating to the projects undertaken by the Group, of which two (2) units were related to a contra arrangement whereby the progress billing for the particular project awarded by the property developer was partly offset against these two (2) units of investment properties (details of the contra arrangement are set out in the following paragraphs); and
(ii) 11 units were acquired from the property developers who awarded projects to our Group, however, these investment properties were not directly related to any particular project that was awarded tol undertaken by our Group from the property developers.

For clarification, we had on 28 February 2017, entered into a sale and purchase agreement for the disposal of an investment property namely, D’Fronde Bukit Indah, Johor Bahru, at a disposal price of approximately RM1.15 million. Our Group acquired this investment property on 5 November 2015 and after deducting the financing costs and other relevant expenses incurred in relation to this investment property, the selling price translates to a net return of approximately 10.9% during the holding period of approximately 16 months or approximately 8.2% per annum. Based on the sale and purchase agreement, this transaction is expected to be completed within 90 days from the date of the aforesaid agreement. Pursuant to a letter dated 3 April 2017, both parties decided to mutually extend the completion date for the aforesaid agreement up to 6 JUly 2017. Accordingly, this investment property is excluded from the abovementioned 22 units of investment properties currently held by our Group. Our Group was offered to acquire two (2) units of investment properties via a contra arrangement with NeT whereby the aggregate purchase price of the said investment properties amounting to approximately RM2.00 million was offset against the Group’s progress billings no.11 and no.12 for Taman Kenanga project amounting to an aggregate of R1VI1.60 million, with the remaining RMOAO million paid in cash. 6. BUSINESS OVERVIEW (CONT’D) The Group’s decision to accept the contra arrangement then was after taking into consideration the eight percent (8.0%) discount over the developer launching price then and the overall prospects of the investment properties given the prime location of the said properties which are located 2.5km from Genting Highlands and in view of the properties’ close proximity to the upcoming Twentieth Century Fox World theme park and Genting Premium Outlets. For the avoidance of doubt, throughout the past three (3) financial years under review, save for the aforementioned two (2) units of investment properties acquired through a contra arrangement, none of our investment properties was acquired as part of the projects undertaken by the Group via contra arrangement. The key personnel ofour property investment business segment Our property investment business segment is overseen by our Chief Operating Officer and Chief Financial Officer, namely Ir. Yeo An Thai and Teh Heng Wee. Specifically, Ir. Yeo An Thai is responsible for all aspects of real estate portfolio strategy including the identification and evaluation of our investment targets whilst Teh Heng Wee is responsible for the Company’s overall finances and procuring the necessary funding for the investment assets and to ensure that the funding rates are competitive. At times, we do engage with/ seek advice from property agents/ consultant to assess the viability of the identified investment properties to be acquired prior to making our investment decisions. Our investment objectives As highlighted above, we have been offered to acquire certain properties developed by our property developer clients mainly in the Klang Valley at certain discounted rates ranging from two percent (2.0%) to 18.0% on the prevailing selling price (launching price by the respective property developers) of the investment properties. It is our Group’s intention to hold the investment properties for a period of three (3) to five (5) years for the purpose of capital appreciation of approximately 10.0% and then dispose for capital gain once the investment properties have achieved our investment objective on a case to case basis, where possible and in the best interest of our Company. For clarity, the investment return of 10.0% (which translates to an average capital gain of approximately two percent (2.0%) per annum over a period of five (5) years) is determined after taking into consideration the financing costs and other relevant expenses that may be incurred in relation to the investment properties. The aforesaid investment return rate merely serves as an internal benchmark for any realisation of investment properties of the Group Whereby the Board will also take into consideration several other external factors that might affect the marketability of the investment properties of the Group which include, amongst others, the local property environment and challenging general economic outlook, the housing affordability sentiment as well as the price offered by the potential buyers as set out in the following paragraphs under the sub header of “investment criteria” under Section 6.1.2 of this Prospectus. Based on the above, the Board has then set a conservative investment return target of 10.0% (after taking into consideration the financing costs and other relevant expenses that may be incurred in relation to the investment properties) to achieve its investment objective amid a challenging property market condition. 128 6. BUSINESS OVERVIEW (CONTD) This business segment will be monitored and carried out strictly in accordance to our Group’s investment policy as our Board will ensure that our cash flow requirements shall be prioritised for our primary business operations (Le. our earthworks and civil engineering services) and to meet the financial commitment of our primary business operations. Thereafter, the cash flow available to our Group subsequent to meeting the aforesaid business obligations and the related capital expenditure will be allocated towards dividend payment which our Board aims to distribute minimum dividends of 20% of our Group’s annual PAT to our shareholders prior to allocating any residual financial resources for the purchase of any new investment properties. All investment decisions will be deliberated carefully by our Board whereby only the residual cash after allocating for business operations and dividend payment will be channelled towards this business segment. Please refer to Section 11.8 of this Prospectus for further details on our Group’s dividend policy. Investment criteria In evaluating the investment properties offered by our property developer clients, our Group focuses primarily on the following investment criteria, subject to the limitations and restrictions set forth in our investment policies:­(i) Location and accessibility -Properties which are located in close proximity and have convenient access to, major highways, roads and established retail areas as well as the potential development around the area where the investment properties are located which may drive the marketability of the investment properties;
(ii) Market outlook -To assess the prevailing market conditions in the local property market as well as the economic outlook, the ease of obtaining financing from the financial institutions and interest rate trend prior to making an investment decision; and

(iii) Population growth -Properties which are located in an area that is experiencing a positive population growth which will allow for capital appreciation over the longer term. Investment policv In accordance with our Group’s intention to remain focused on our primary business operations and to ensure that this business segment will not overtake its primary business, our Board has also set an investment policy to ensure that the total asset value (Le. cost) of our property investment business segment does not exceed 20.0% of the Group’s total asset. Furthermore, pursuant to our Listing, our Board will also ensure that the total asset value (Le. cost) of our property investment business segment does not exceed 30.0% of the Group’s total enlarged f\lA upon IPO after taking into consideration the financial obligations of this business segment. For the avoidance of doubt, our Group does not have any fixed policy on the proportion/ percentage of the project value that shall be allocated towards acquiring any investment properties from the property developers for the property investment activities of our Group. Nevertheless, we have set out in Table 2 of this section a tabulation of the value of the investment properties acquired from the respective property developers versus the total projects awarded to our Group by the aforesaid property developers for the past three (3) financial years under review. 129 6. BUSINESS OVERVIEW (CONT’D) Based on the above, it should be noted that not more than 30.0% of our Group’s total enlarged NA upon IPO may be tied to the property investment business segment which may only contribute a capital gain of approximately two percent (2.0%) per annum to our Group (after taking into consideration the financing costs and other relevant expenses that may be incurred in relation to the investment properties). On the other hand, at least 70.0% of our Group’s total enlarged NA upon IPO shall be attributable to our Group’s core business segment (i.e. earthworks and civil engineering services) which has historically recorded an average gross profit margin of approximately 24.8% for the past three (3) financial years up to the FYE 31 December 2016. As at the FYE 31 December 2016, none of our investment properties was located overseas and the total asset value (i.e. cost) of the investment properties stood at approximately RM31.60 million, accounting for approximately 10.7% of our latest audited total asset of approximately RM295.89 million and approximately 19.9% of our Group’s total enlarged NA upon IPO of approximately RM158.52 million. The total cost incurred for the aforementioned acquisition of approximately RM31.60 million comprises internally generated funds of RM18.33 million or 58.0% and bank borrowings of RM13.27 million or 42.0%, respectively. As at the LPD, none of our investment properties was located overseas and the total asset value (i.e. cost) of the investment properties stood at approximately RM32.10 million, accounting for approximately 10.8% of our latest audited total asset of approximately RM295.89 million and approximately 20.2% of our Group’s total enlarged NA upon IPO of approximately RM158.52 million. The total cost incurred for the aforementioned acquisition of approximately RM32.10 million comprises internally generated funds of RM18.06 million or 56.3% and bank borrowings of RM14.04 million or 43.7 %, respectively. The balance material commitment for our investment properties as at the LPD stood at approximately RM3.18 million. Further breakdown on the financing methods for the material commitment are set out in note 1 of Table 1 of this section. Our track record in realising investment properties and current management of our investment properties As mentioned in the paragraph above, the investment return of 10.0% for a holding period of three (3) to five (5) years which translates to an average capital gain of approximately two percent (2.0%) per annum over a period of five (5) years (after taking into consideration the financing costs and other relevant expenses that may be incurred in relation to the investment properties) merely serves as an internal benchmark of our Group to achieve our investment objectives and was set by our Board after taking into account the current challenging property market conditions. However, over the past five (5) years up to the LPD, our Group had disposed of eight (8) units of investment properties, of which the holding period ranging from 11 months to 68 months (approximately 5.5 years). Over the holding period from 11 months to 68 months (approximately 5.5 years), the average net return from the disposal of each investment properties ranging from approximately 2.1 % to 12.8% on annual basis, which translates to an average net return of approximately 9.2% per annum (after taking into consideration the financing costs and other relevant expenses incurred in relation to the investment properties).

 

6. BUSII\lESS OVERVIEW (CONT’D) 6. BUSII\lESS OVERVIEW (CONT’D) Furthermore, during the holding period of three (3) to five (5) years, our Group intends to improve the returns of our investment properties by renting out to suitable tenants. Currently, our Group holds 15 units of completed investment properties. Amongst the 15 units of completed investment properties, our Group has managed to rent out four (4) units of investment properties, details of which are set out below: (i) Centrus @ CBD Perdana 3, with a monthly rental of RM2,650 for a period of three (3) years from 18 March 2016 to 17 March 2019. Based on the purchase price of RM664,600 and annual rental of RM31 ,800 (being RM2,650 multiply with 12 months), the annual gross rental yield of the investment property would be approximately 4.8%;
(ii) Tropicana Grande Condominium, with a monthly rental of RM6,000 for a period of one (1) year from 24 December 2016 to 23 December 2017. Based on the purchase price of RM 1,636,060 and annual rental of RM72,OOO (being RM6,000 multiply with 12 months), the annual gross rental yield of investment property would be approximately 4.4%;

(iii) No. 18, Samanea Type 1, Setia Ecohill, with a monthly rental of RM1,100 for a period of one (1) year from 5 January 2017 to 4 January 2018. Based on the purchase price of RM680,560 of this particular investment property and annual rental of RM13,200 (being RM1,100 multiply with 12 months), the annual gross rental yield of the investment property would be approximately 1.9%; and (iv) ~Io. 15, Samanea Type 1, Setia Ecohill, with a monthly rental of RM1,100 for a period of one (1) year from 1 May 2017 to 30 April 2018. Based on the purchase price of RM553,660 of this particular investment property and annual rental of RM 13,200 (being RM 1,100 multiply with 12 months), the annual gross rental yield of the investment property would be approximately 2.4%. Based on the respective purchase prices and annual rentals of these tenanted investment properties, the annual gross rental yield ranges between approximately 1.9% and 4.8%. Notwithstanding the foregoing, our Group has engaged property agents to identify tenants for the remaining 11 units of the completed investment properties to generate recurring rental income during the holding period of the aforesaid investment properties. For the avoidance of doubt, the aforesaid 11 units of completed investment properties were delivered to us progressively between December 2015 and up to the LPD, and accordingly, we have been actively seeking rental opportunities for the aforesaid investment properties since then. For the avoidance of doubt, Advancecon Properties is treated as a real property company for carrying on a trade or business in dealing in real properties and therefore, any capital gains arising from the disposal of real properties held under Advancecon Properties would be subjected to corporate income tax, as specified under Section 4(a) of the Income Tax Act 1976. 131
6. BUSINESS OVERVIEW (CONT’D) For information purposes, as at the LPD, our Group holds six (6) units of investment properties that are under construction, 15 units of completed investment properties (excluding D’Fronde, Bukit Indah, Johor Bahru which is currently in the midst of a sale arrangement by our Group) and one (1) parcel of leasehold land. Further details of the types of investment properties currently held by our Group (Le. residential, commercial or land) are set out in Table 1 of this section. As set out in the earlier paragraphs under the sub header of “the business arrangement on the acquisition of investment properties by our Group” under section 6.1.2 of this Prospectus, our purchase of investment properties mainly arose due to our working relationship with our clients and the purchase is usually undertaken as follows:­(i) Investment properties acquired directly relating to the projects undertaken by our Group; and
(ii) Investment properties that were not directly related to any particular project that was awarded to/ undertaken by our Group from the property developers, however, the aforesaid investment properties were acquired from property developers who have awarded us other projects.

For investors’ further information/ clarity, we have set out in the ensuing tables an analysis of the investment properties that we have acquired as compared to (i) the project values that has been secured from the said developers which was directly related to the investment properties; and (ii) the project values that has been secured from the said developers which was not directly related to the investment properties, further details of which are set out below:­(i) Table 1(a): Comparison between the 11 units of investment properties that were related to the projects undertaken by the Group versus the specific project awarded by the respective property developers which was directly related to the investment properties
(ii) Table 1(b): Comparison between the 11 units of investment properties purchased from the particular property developer that were not directly related to any projects undertaken by the Group versus the total projects awarded by the aforesaid property developers during the financial year that the investment properties were purchased

(iii) Table 2: Comparison between the total purchase price of the investment properties acquired from a particular property developer versus the projects awarded by the respective property developers during the financial years under review (FYE 31 December 2014 ­FYE 31 December 2016) 132 II Company Number: 426965-M II 6. BUSINESS OVERVIEW (CONTO) Table 1(a): Comparison between the 11 units of investment properties that were related to the projects undertaken by the Grou p versus the specific project awarded by the respective property developers which was directly related to the investment properties (A)  (B)  (A) -(B)  (C)  (A)/ (C)  Total  Progress  project  Percentage  billings/  value  oflP  Name/Type  ”  .total  Balance  Status of  directly  purchase  of investment  payment  to be paid  NBV  NBV  construction  related to  price over  Name of  property  Purchase  made as at  as at  as at  as at  as at  the IP  project  developer  (“IP”)  Unit  Year of  price  the LPO  LPO”l  31.12.2016  the LPO  the LPO  p!Jrchased”2  value  . purchase  RM  RM  RM  RM  RM  RM  %  EcoWorld  Tenderfield,  2014  1,322,460  1,038,060  284,400  682,560  1,038,060″3  Ongoing  113,863,052  4.2
Eco Majestic/ Semi­detached house (Residential) Gentlebre, Eco Majestic/ (Freehold land) The Ivoris, Eco Majestic/ Shop (Commercial)  2  2014 2015  1,926,680 1,512,504  1,926,680 1,358,919  153,585  1,926,680 898,165  1,926,680″5 1,358,919″3  Completed Ongoing  Sub total  4,761,644  113,863,052″4  4.2
[I Company Number : 426965-~ 6. BUSINESS OVERVIEW (CONT’D) . Status of construction as at the LPD  (C) Total project value directly related to the IP purchased’2 RM  (A)I (C) Percentage of IP purchase price over project value %  NCT  Ion Delemen, Galeri Tropikal Serviced apartment (Residential)  2  2015  2,007,072  2,007,072  1,976,966  1,963,585’5  Completed  19,523,576  10.3  S P Setia  Samanea Type 1, Setia Ecohilll Terrace house (Residential)  4  2014  2,627,300  2,627,300  2,565,996  2,548,481″5  Completed  65,947,026  4.0  Setia Ecohilll Bungalow (Residential)  1  2016  1,959,859  1,959,859  1,927,195  1,914,129’5  Completed  53,102,853  3.7  Total (E)  –­11  11,355,875  10,917,890  437,985  9,977,562  10,749,854

Company Number: 426965-M 6. BUSINESS OVERVIEW (CONTO)
Table 1(b): Comparison between the 11 units of investment properties purchased from the particular property developer that were not directly related to any projects undertaken by the Group versus the total projects awarded by the aforesaid property developer during the financial year that the investment properties were purchased  Name of developer  Name! Type of investment property  Unit  Year of pu~chase  (A) Total purchase price RM  (B) Progress billings! . \ • total .R~yment mad~\asat the LPO RM  (A)-(B) Balance to be paid as at the LPO·1 RM  NBV as at 31.12.2016 RM  NBV as at theLPO RM  Status of construction as at the LPO  (0) Total value of projects awarded by the said developer in the year of purchase”· RM  (A)I (0) Percentage oflP purchase price over project value %  EcoWorld  Eco Skyl Condominium  2  2014  1,515,310  870,110  645,200  419,710  870,110.3  Ongoing  62,320,315  2.4  (Residential)  Saujana Glenmariel  1  2015  3,286,185  3,286,185  – 3,198,554  3,176,646.5  Completed  30,146,962.7  38.6.7  Semi-detached house  (Residential)  Saujana Glenmariel  1  2015  3,937,200  3,937,200  – 3,832,208  3,805,960″5  Completed  Bungalow (Residential)  Eco Sanctuaryl Semi-detached house  2  2015  4,420,350  2,326,500  2,093,850  2,326,500  2,326,500″3  Ongoing  (Residential)  Paramount Corporation Berhad  Utropolis Suites! Serviced apartment (Residential)  1  2013  627,855  627,855  – 618,701  611,112″5  Completed  NiI”8  -·S  Setia Haruman Sdn Bhd  Centrus @ CBD Perdana 31 SOHO/SOVOI SOFO  1  2013  664,600  664,600  – 643,554  639,124.5  Completed  25,173,472  2.6  (Residential)  135
II  Company Number: 426965-M  ~  6.  BUSINESS OVERVIEW (CONT’D) Name! Type of Name of investment developer property Unit Ceria 1 Residences! Terrace house (Residential) Tropicana Tropicana 1 Grande Condominium! Condominium (Residential) Tropicana Indah! 1 (Leasehold land) –­Total (F) 11 –­Grand total 22 (E) + (F)  Year of purchase 2014 2015 2015  (A) Total purchase price RM 1,271,860 1,636,060 6,566,121 23,925,541 35,281,416  (B) Progress billings! total payment made as at the LPO RM 1,271,860 1,636,060 6,566,121 21,186,491 32,104,381  (A) -(B) Balance to be paid as at the LPO’1 RM 2,739,050 3,177,035  NBV as at 31,12.2016 RM 1,004,100 1,596,243 6,457,958 20,097,528 30,075,090  NBV as at the LPO RM 1,265,501’5 1,542,231’5 6,432,508 20,669,692 31,419,546  Status of construction as at the LPO Completed Completed Not applicable  (0) Total value of projects awarded by the said developer in the year of purchase” RM nil 138,551,624’9 1  (A)! (0) Percentage of IP purchase price over project value % 5.9’9 1
[I Company Number : 426965-~ 6. BUSINESS OVERVIEW (CONTO) Notes:­”1 Further breakdown on the financing method for the material commitment are set out below:­Company Number: 426965-M
Mode of settlement (a)  Material  commitment as  Internally generated  at the LPD  funds  Bank borrowings  RM  RM  % (b)  RM  % (b)
EcoWorld  Tenderfield, Eco Majestic  Semi-detached house  284,400  284,400  100.0  The Ivoris, Eco Majestic  Shop  153,585  153,585  100.0  Eco Sky  Condominium  2  645,200  645,200  100.0  Total  Eco Sanctuary  Semi-detached house  2 6  2,093,850 3,177,035  2,093,850 3,177,035  100.0 100.0
(a)  For the avoidance of doubt, this is in reference to only the balance repayment for the respective investment properties  (b)  The percentage refers to the proportion of internally generated funds and bank borrowings for the material commitment as at the LPD  “2  Being the contract value of the specific project awarded by the respective property developers which was related to the investment properties  “3  As at the LPD, the physical construction of these investment properties is still ongoing. As such, the cost of the respective investment properties is recognised based on progress billings issued by the property developers in proportion to the stage of completion of the investment properties. In view of the foregoing, the cost of the respective investment properties would be lower than the total purchase price. Based on the Group’s accounting policy, investment properties under construction are stated at cost and are not depreciated. Hence, the NBV of the respective investment properties would be equal to the cost as at the LPD  “4  Being the Eco Majestic project at Beranang, Hulu Langat, Selangor with a contract value of RM114.20 million which was awarded to the Group in November 2013 and is expected to be completed in March 2018  “S  As at the LPD, the physical construction of these investment properties has been completed and the progress billings had been paid in full. In view of the foregoing, the cost of the respective investment properties would be equal to the total purchase price. Based on the G roup’s accounting policy, investment properties are stated at cost less depreciation. Hence, the NBV of the respective investment properties would be lower than cost as at the LPD  137
6, BUSINESS OVERVIEW (CONT’D) “6 Being the aggregate contract value of all the projects awarded by the respective property developers during the financial year that the investment properties were purchased. For the avoidance of doubt, the contract value of a project may not be the same as the revenue recorded for the said project during the particular financial year. A contract value is a mutually agreed total amount that the contract customers pay to the Group on completion of the contract whereas revenue for a construction contract is recognised based on progress billing raised by the Group to its contract customers in accordance with the proportion of work performed ‘7 For the avoidance of doubt, the total investment properties purchased from Eco World in 2015 was RM12.67 million (including a n investment property with total purchase cost of approximately RM1.02 million, which is currently in the midst of a sale arrangement) whilst the total project value awarded by the said property developer in 2015 was RM30.15 million. With the inclusion of the aforesaid investment property, the percentage of the total investment properties purchase price over total project value recorded in 2015 would be approximately 42.0% The high percentage of investment properties purchase price over project value recorded in 2015 was mainly due to timing issue as bulk of the projects was awarded by Eco World to the Group in the prior financial years. However, based on the total project value for the past three (3) financial years of approximately RM134.81 million, the percentage of investment properties purchase price over the total proj ect value for the past three (3) financial years would be approximately 13.3%. Further details on the projects awarded by Eco World to the Group during the financial years under review are set out in Table 2 below “8 For information purposes, the Group was not awarded with any projects by Paramount Corporation Berhad during the same year that the Group purchased the Utropolis Suites in 2013. Nevertheless, the Group has a long-running working relationship with Paramount Corporation Berhad since 2009. During the past three (3) financial years under review, the Group was only awarded one (1) project by the aforesaid property developer, namely the Bandar Amanjaya project which was awarded to the Group in November 2015 with contract value of RM14.10 million. For illustration purposes, the percentage of investment properties purchase price over the Bandar Amanjaya project was approximately 4.5% “9 For the avoidance of doubt, the total investment properties purchased from Tropicana in 2015 was RM8.20 million whilst the total project value awarded by the said property developer in 2015 was RM138.55 million. As such, the percentage of investment properties purchase price over project value recorded in 2015 was approximately 5.9% Company Number : 426965-~ 6. BUSINESS OVERVIEW (CONTD) Table 2: Comparison between the total purchase price of the investment properties acquired from a particular property developer versus the projects awarded by the respective property developers during the financial years under review (FYE 31 December 2014 -FYE 31 December 2016)
Eco World  10  17,920,689  134,803,057  13.3  NCT  2  2,007,072  S P Setia  5  4,587,159  54,650,214  8.4  Paramount Corporation Berhad  1  627,855  14,102,501  4.5  Setia Haruman Sdn Bhd  2  1,936,460  2,166,340  89.4  Tropicana  2  8,202,181  161,904,234  5.1  Total  22  35,281,416  367,626,346  9.6
For the avoidance of doubt, our Group was offered by NCT to acquire two (2) units of investment properties via a contra arrangement whereby the aggregate purchase price of the said investment properties amounting to approximately RM2.00 million was offset against the Group’s progress billings nO.11 and nO.12 for the Taman Kenanga project awarded by NCT amounting to an aggregate of RM1.60 million, with the remaining RM0.40 million paid in cash. The aggregate purchase price of the said investment properties of approximately RM2.00 million (via contra arrangement) represents approximately 10.3% of the total contract value of the Taman Kenanga project. In essence, our Group did not receive cash consideration for the aforesaid progress billings amounting to RM1.60 million as the said amount was offset against two (2) units of investment properties (which have an aggregate purchase price of approximately RM2.00 million) whilst the remaining balance of RM0.40 million was paid to NCT in cash. For investor’s information, the Group’s decision to accept the contra arrangement then was after taking into consideration the 8.0% discount over the developer launching price then and the overall prospects of the investment properties given the prime location of the said properties which are located 2.5km from Genting Highlands and in view of the properties’ close proximity to the upcoming Twentieth Century Fox World theme park and Genting Premium Outlets. Company Number: 426965-M
6. BUSINESS OVERVIEW (CONTO) As set out in the table above, the percentage of the total investment properties purchase price over total project value secured by our Group for the past three (3) financial years under review generally ranges from nil to approximately 13.3%, with the exception of the investment properties acquired from Setia Haruman Sdn Bhd Whereby the comparative percentage amounted to approximately 89.4%. For investors’ information, the high percentage of the total purchase price of investment properties acquired from Setia Haruman Sdn Bhd over the total project value secured from Setia Haruman Sdn Bhd over the past three (3) financial years under review was mainly due to timing issue as bulk of the projects were awarded by Setia Haruman Sdn Bhd to the Group in 2013. Over the past three (3) financial years up to the FYE 31 December 2016, there was only one (1) project awarded by Setia Haruman Sdn Bhd to our Group with a contract value of RM2.17 million. For clarification, the percentage of the total purchase price of investment properties acquired from Setia Haruman Sdn Bhd over the total project value secured from Setia Haruman Sdn Bhd for the past four (4) financial years of RM27.34 million would have been amounting to approximately 7.1 %. Please refer to Section 6.16.3 of this Prospectus for further details on our investment properties. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK ~

6. BUSINESS OVERVIEW (CONT’D) 6.2 Business process The diagram below depicts the flow of our business tendering process for our construction services as per our current business model:­
Not feasible Step 5 -Project commence ment and planning Step 6 -Project execution, monitoring and controlling Step 7 -Completion and obtaining project sign-offs 141
6. BUSINESS OVERVIEW (CONT’D) Step 1 -Evaluation of tender opportunities Most of our tender opportunities come via invitation from project principals whom we have previously worked with, or referrals from past customers. Nevertheless, we are also able to participate in open tenders. For the past three (3) financial years up to the FYE 31 December 2016 and the LPD, all our projects secured was via invitation from our existing customers, save for the construction and completion of civil works for West Coast Expressway (WCE) Interchange with a contract value of approximately RM239.81 million which commenced on December 2016 and is expected to be completed on June 2019 and earthworks and infrastructure works at Section 3 and part of Section 2 of the Kota Puteri project at Rawang with a contract value of approximately RM12.93 million value which commenced on October 2015 and is expected to be completed on August 2017. The aforementioned projects were awarded to our Group by means of participation in open tender. Upon receiving invitation from a project principal or project consultant for tender, our Finance department will conduct a credit risk assessment, if necessary, on our potential customer’s financial background and capacity in consultation with our key management team. Upon confirmation of the potential customer’s creditworthiness, the Finance department will prepare the required documents fees and arrange for collection of tender documents from the potential customer’s premise. Step 2 -Preparation and submission of tender Our Contracts department will then conduct a meeting to evaluate the project’s requirement in terms of project timeline, schedule, location and technicality. After considering the availability of resources for the project, our team will proceed to prepare the tender for submission. The processes are set out below:­i.  Establish requirements, specifications and schedule of the project frdocuments;  om tender  ii.  To clarify ambiguities in tender documents with project principal consultant;  or  project  iii.  Internal costing and budgetary evaluations on subcontractor costs, material costs and overheads to determine the pricing of the tender; and  iv.  Evaluate the availability of machinery, manpower according to the project timeline and schedule.  and  other  resources
The final pricing of the tender quoted in the tender submission is determined after having evaluated all the related costs, including indicative prices of raw materials from suppliers and subcontractors. Once the management has finalised and confirmed the tender price, the tender will be submitted to the project consultant or customer’s office, on or before the prescribed submission deadline. Step 3-Post-submission negotiations! interview Before the contract is awarded to us, the customer may call for an interview for clarification on details on the proposed tender, if necessary. Among the issues to be discussed are tender pricing, technical capabilities, related project experience, availability of plant and machinery including manpower, financial strength of our company, and project-completion time. In the event that there are any issues particularly on the timeline and pricing of the proposed tender which we are not able to resolve amicably during the negotiations! interview, we will reject or turn down the offer to participate as a contractor. 142 6. BUSINESS OVERVIEW (CONT’D) Step 4 -Award of contract .The notification of a successful tender is generally received from the project consultant or customer in the form of a letter of award within 60 to 90 days from the date of the submission of tender. Most customers require us to secure our performance by providing a performance bond within a stipulated timeframe after the award of the project. The value of the performance bond is usually five percent (5%) of the total contract value, and in the form of a bank guarantee provided by a licenced bank or financial institution acceptable to the customer. Step 5 -Project commencement and planning Once the letter of award is received, our project team will be assembled for the planning of project implementation and at the same time, the identified suppliers and subcontractors are formally contracted for the project. The project plan involves budgeting breakdown for resources required such as staffs costs, human labour, plant and machinery and construction materials. The temporary site facilities together with the necessary insurance coverage and signboard with details of the project will be put up, signifying the commencement of the project. Preparation and implementation of HSE policy will be on-going throughout the project life cycle to ensure safety at project site at all times. Step 6 -Project execution, monitoring and controlling The project team will manage the project based on the agreed scope of works. The project team will closely monitor the progress of the project according to the project’s Gantt chart (a type of bar chart commonly used in project management that illustrates a project schedule) as well as bill of quantities and ensure that there are sufficient available resources to perform the work required. The on-going performance of the project execution will be reported on a daily basis to the project manager. A meeting with the representative of our customers will also be organised periodically to discuss on the status of the project, project issues and change requests. If a change to the scope of works is requested, a variation order will be prepared and executed by our customers. Step 7 -Completion and obtaining project sign-offs A project deliverable or a milestone is considered to be completed when a sign-off is successfully obtained from our customer or representative of our customer. During the duration of the project, there may be more than one (1) sign-off required depending on the terms and conditions stipulated in the letter of award. The project is fully completed upon obtaining the final sign-off from our customer. Subsequent to the completion of the project (receipt of CPC), our project generally carries a warranty period of 12 to 24 months. Should our customer require remedial works, we will undertake to rectify construction defects within the warranty period given. 143 6. BUSINESS OVERVIEW (CONT’D)

 

6.3 Competitive strengths Our business is supported by the following competitive strengths to sustain the business as well as to support our growth:­i. We have an experienced key management team Our key management team has extensive experience in their respective fields of earthworks and civil engineering services. They ensure smooth operations and are a key factor of our service quality. Their experience and combined expertise enable us to execute projects in accordance with project specifications, safety precautions, deadline and budget, as well as allowing us to make knowledgeable, accurate and realistic alternative solutions to our customer based on their accumulated experience in handling similar situations and project conditions. Due to the accumulated years of experience of our key management team, we are able to offer a one-stop solution for construction projects which require the provision of a combination of earthworks and civil engineering services. In addition, the extensive experience of our key management team in managing projects as mentioned above allows our Group to have a proper scheduling as well as coordination of projects intake and projects on-hand. Our key management team’s on-site experience in coordinating resources also allows our Group to reduce idle time of our machinery. The following is a summary of our Group’s key management team along with their experiences garnered inside and outside of our Group during their career:­Years of Date of experience in employment the Years of with the construction service with No. Key personnel Designation Group industry the Group 1. Dato’ Phum Group Chief Executive 15.10.1990 41 27’1 Officer
2. Lim Swee Chai Deputy Group Chief 13.01.1993 36 24’2 Executive Officer
3. Ir. Yeo An Thai Chief Operating Officer 14.05.2001 20 16’2
4. Tung Kai Hung General Manager of 15.12.1999 31 18’2 Contracts
5. Lim Kok Tiong General Manager of Project 01.10.2006 20 11’2 Management
6. Puah Kian Yiew General Manager of 01.12.2006 17 11″2 Production and Operation
7. Teh Heng Wee Chief Financial Officer 01.10.2010 15 7’3

Notes:­’1 Calculated from the date of him joining Advancecon Infra ‘2 Calculated from the date of him joining ASS ‘3 Calculated from the date of him joining Advancecon 144

 

6. BUSINESS OVERVIEW (CONT’D) Our Group is led by our Group Chief Executive Officer, Deputy Group Chief Executive Officer and two (2) Executive Directors, namely Dato’ Phum, Lim Swee Chai, Ir. Yeo An Thai and Tung Kai Hung who each has knowledge and experience in excess of approximately 20 years in the construction industry in Malaysia. They have played significant role in the growth of our Group and have been instrumental in providing quality services as well as maintaining good relationships with our customers, suppliers and sub­contractors. Please refer to Sections 8.1.2 and 8.3.2 of this Prospectus for further details on our key management team. ii. We own a sizeable fleet of machinery to support our business operations As at the LPD, we own 131 units of tipper/ dump trucks, 78 units of excavators, 21 units of bulldozers, 29 units of compactors, eight (8) units of water trucks, nine (9) units of diesel trucks, seven (7) units of motor graders, eight (8) units of crawler drills and other machinery that allow us to undertake various construction activities (within the earthworks and civil engineering services) and to meet customers’ requirements. Based on our latest audited consolidated financial statements as at 31 December 2016, we own and operate 323 units of machinery (excluding motor vehicles) with a total NBV of approximately RM80.89 million. In addition, 172 units (excluding motor vehicles) of these machinery were within the age band of 1 -3 years, 128 units (excluding motor vehicles) were within the age band of 4 -7 years whilst the remaining 23 units (excluding motor vehicles) had been used for eight (8) years and above, further details of which are set out in Section 6.16.4 of this Prospectus. As our Group’s core operations rely on the machinery, it is vital that the machinery are regularly serviced and well maintained. We have established an in-house service and maintenance team, comprising technical personnel trained in industrial machinery repair and maintenance, who are in charge of the servicing and maintenance of our Group’s machinery. This ensures that the machinery owned by our Group is serviced and maintained regularly so that the machinery can achieve consistent functionality and operational efficiency as well as to cater for any qUick on-site repair works. Our maintenance team has also adopted a preventative maintenance schedule whereby periodical testing and maintenance works are performed at off-peak hours so as to prepare for forward planning, as a preventative measure to avoid unscheduled downtime during subsequent on-peak operational hours. We engage our manufacturers for scheduled servicing of machinery that are still under warranty validity period. After the machinery’s warranty expires, our in-house maintenance team will carry out maintenance and repairing services which involve general service intervals, minor defects and/ or minor breakdowns of our machinery. For major services which we do not have the diagnostic tools and equipment or OEM replacement parts, we will engage an external service provider who will send technicians to our project site to perform the repair work. With our diverse range of machinery and our maintenance team’s support, we are able to undertake projects of larger scale whilst minimising downtime, unexpected repair works and overhaul costs, which in turn lead to higher cost savings for our Group. 145
6. BUSINESS OVERVIEW (CONT’D) In tandem with our expanding fleet of machinery, our Group intends to allocate approximately RM14.60 million from the proceeds raised from our Public Issue to construct a workshop on the Industrial Land as our in-house workshop for the purpose of carrying out repair and maintenance services of our machinery and equipment. The workshop will have a total Gross Floor Area of approximately 8,200 m2 to house our internal servicing team and machinery that require maintenance and repairing services. Whilst pending the construction of our new workshop, we have temporary rented a workshop in Semenyih which is located nearer to several of our on-going project sites in the Hulu Langat District. For the avoidance of doubt, our workshop is headed by our Assistant General Manager of Workshop, namely Lam Wing King who supervises our internal servicing team of nine (9) mechanics as at the LPD to perform repairing and maintenance services for our machinery on a timely basis. Please refer to Sections 3.12(i)(b) of this Prospectus for further details on our in-house workshop. iii. We are committed to maintaining quality standards in undertaking all of our construction projects We strive to render superior service quality and ensure customers’ satisfaction in the delivery of all of our projects. Since our establishment, our Group has established a reputation as a quality provider of consistent earthworks and civil engineering services. Our commitment in quality standards is proven by the accreditation of our QMS in compliance with ISO 9001 :2008 by IEC since 2009. Specifically, our Group’s QMS was certified with the ISO 9001 :2008 accreditation on 25 June 2009 and the subsequent revision of the ISO 9001 :2008 certification on 8 June 2015 for the provision of civil engineering and infrastructure services. Our quality consistency over the years has helped us establish a reputation as a reliable and trustworthy partner in the earthworks and civil engineering services market, and this has further strengthened our customers’ faith in our capabilities. iv. We have a proven track record in the earthworks and civil engineering services market We have been involved in the earthworks and civil engineering services market for approximately 27 years, which has contributed well to our brand name in the construction industry in Malaysia. We believe that, over the years, we have established a track record in completing our projects on time and have built a reputation for delivering quality earthworks and civil engineering services in accordance to our customers’ requirements. Our proven track record in securing contracts and our key achievements and milestones as disclosed in Sections 5.1.2 and 5.8 of this Prospectus has earned us recurring customers and new customers through referrals and recommendations from existing customers. For the past three (3) financial years up to the FYE 31 December 2016, there were a total of 53 earthworks and/ or civil engineering projects which had contributed revenue to our Group’s construction services business. The total revenue generated from these projects was RM628.65 million, and our single largest contract was the construction and completion of civil works for West Coast Expressway (WCE) Interchange which had a contract value of RM239.81 million and awarded to our Group on December 2016. Please refer to Section 11.3 of this Prospectus for the summary of our notable earthworks and/ or civil engineering projects with revenue contribution to our Group for the past three (3) financial years up to the FYE 31 December 2016. 146 6. BUSINESS OVERVIEW (CONT’O) Leveraging on our technical expertise and the knowledge of the properties of various types of construction materials, we are capable of providing pragmatic approach in construction and sUbmitting competitive quotation for potential projects. Our service quality and track record have also won us long-running working relationships with certain property developers and construction companies in Malaysia, where we have received frequent invitation to participate in tenders for earthworks and civil engineering works, contributing to a growing project portfolio. For example, we managed to secure contracts from S P Setia group for our construction services in its Bandar Setia Alam project, Bukit Indah project and Setia Eco Hill development projects, Eco World group for our construction services in its Eco Business Park 1 project, Eco Business Park 2 project and Eco Majestic project and Tropicana group for our construction services in its Tropicana Aman projects. 6.4 Principal markets Our principal market of operations is the Malaysian market. As at the LPD, all our customers and projects are based in Malaysia. We intend to continue focusing on the local earthworks and civil engineering services market in line with our expertise, track record and capacity in the country. Equipped with our 27 years of experience in the earthworks and civil engineering services market, we will step up our efforts to target larger-scale earthworks and civil engineering services for residential or commercial property development projects with contract value exceeding RM50 million. In addition, we will also allocate resources on projects related to the construction of pUblic infrastructures (roads or highways), which is evident from our submitted tenders for some of the sub-contracting jobs involving Government projects such as the sub-contracts for the Pan Borneo Highway project in Sarawak and the highways of Damansara-Shah Alam Elevated Expressway (“DASH”) project and the Sungai Besi-Ulu Klang Elevated Expressway (“SUKE”) project. For investors’ information, our Group had secured a subcontract for the development and upgrading of the proposed Pan Borneo highway in the state of Sarawak (from Sg Awik Bridge to Bintangor Junction) which had a contract value of RM1 05.23 million and awarded to our Group on December 2016.
6.5 Seasonality of our business The earthworks and civil engineering market are highly dependent on the property development market which is also subject to the general construction industry which is in turn, to certain extent reliant on government expenditure and investment. Any change in government policies will have direct impact on the growth of the construction industry. In recent years, the Government has rolled out various construction projects to spurn growth in this industry which allow us to expand our business. In the Budget 2017, the Government announced that approximately RM25.9 billion will be allocated for the economic sector under the development expenditure. It was mentioned that public transport is central to the daily mobility for the rakyat in moving towards development. The rakyat looks forward towards a safer, more efficient and comfortable public transport. The Kelana Jaya and Ampang LRT lines commenced operations in June 2016 whilst the Sungai Buloh -Kajang MRT line was launched in December 2016, benefitting 1.2 million users in Klang Valley. The Government is also committed to upgrade public transport in rural areas, including accelerating the implementation of Pan Borneo Highway in Sabah and Sarawak. There are numerous other ongoing and proposed infrastructure and major development project which would create opportunities for construction services providers in Malaysia up to 2022. 147

 

6. BUSINESS OVERVIEW (CONTO) The rolling out of such infrastructure projects by the Government is expected to spur up future property development projects as infrastructure projects help to open up the undeveloped land for the onward development of commercial and residential projects. As at the LPD, our Group has submitted tender for some of the sub-contracting jobs involving Government projects such as the sub-contracts for the Pan Borneo Highway project in Sarawak, the DASH project and the SUKE project. For investors’ information, our Group had secured a subcontract for the development and upgrading of the proposed Pan Borneo highway in the state of Sarawak (from Sg Awik Bridge to Bintangor Junction) which had a contract value of RM105.23 million and awarded to our Group on December 2016. For the avoidance of doubt, the key difference between road works undertaken for property development projects (i.e. for the construction of road) and infrastructure projects (i.e. for the construction of highway) is in relation to the layer of compaction required during the paving process to achieve the optimal load bearing capacity of the road or highway. Generally, the load bearing capacity of a highway is higher than a road in order to support the higher traffic loads applied to the highway, which can be achieved through the usage of higher quantum of sub-base and road-base materials and resulting in more layers of road pavement to be compacted. For instance, a highway generally requires four (4) layers of fill material of 150mm each to be compacted to achieve a compacted pavement thickness of approximately 600mm, whereas a road generally requires two (2) layers of fill material of 150mm each to achieve a compacted pavement thickness of approximately 300mm. In addition, the construction of a highway generally requires longer tenure to complete due to larger scale of works to be undertaken in consideration of the distance, number of lanes, lane width and other geometric design of the highway. As such, our Group would require additional machinery, labour and longer duration to carry out road works for infrastructure project as compared to property development project. For the avoidance of doubt, the types of machinery required to undertake road works for infrastructure projects and property development projects are the same. Based on our latest audited consolidated financial statements as at 31 December 2016, we own and operate 323 units of machinery (excluding motor vehicles) with a total NBV of approximately RM80.89 million and as at the LPD, we have not experienced difficulties in acquiring or replacing our machinery which are financed through the combination of hire purchase and internally generated funds. Furthermore, our management team has extensive industry knowledge and project experience in the handling infrastructure projects for road and highway. Ir. Yeo An Thai, who is our Chief Operating Officer and a registered Professional Engineer with the Board of Engineers Malaysia, has approximately 20 years of working experience in the construction industry. He had managed several highway projects undertaken by Gamuda Berhad in the past and currently oversees the execution of our construction projects with the support of other key management personnel. For information purposes, we have undertaken two (2) infrastructure projects in relation to the construction of highway with an aggregate contract value of approximately RM84.42 million during the past three (3) financial years, further details of which can be seen as follows:­ Project details  Industry  Contract value RM’million  CommencementJ completion date
Construction and completion of Setia Ecohill Infrastructure 56.39 November 20131 Link from Semenyih Toll Plaza, Lebuhraya (Road works, September 2015 Kajang Seremban (LEKAS) Highway to the Drainage mixed development of the Setia Ecohill works, project at Semenyih, Hulu Langat, Bridge Selangor construction) 148 6. BUSINESS OVERVIEW (CONT’D) 6.6 Contract CommencementJ Project details Industry value completion date RM’million Construction and completion of trumpet Infrastructure 28.03 June 20141 interchange at Lebuhraya Kajang (Road works, June 2016 Seremban (LEKAS) Highway for the Eco Drainage Majestic project at Beranang, Hulu Langat, works, Selangor Bridge construction) Total 84.42 Please refer to Section 6.17 of this Prospectus for our Group’s future plans and strategies. Types, sources and availability of materials! input The following are the major types of raw materials and service procured for our Group’s business operations for the FYE 31 December 2016:­Percentage Types of raw materialsl services Purpose  Value of purchases RM’OOO p of total urchases %  Services  Subcontractor Cost Payment to subcontractor for work rendered  69,389  52.5  Hiring of Machinery Machinery used for carrying out construction work  5,574  4.2  Repair and Maintenance Repair and maintenance work on our Services fleet of machinery Materials and Consumables  87,003 12,040  65.8 9.1  Industrial Diesel Diesel is used as fuel in machinery and equipment  14,845  11.2  Quarry Products Construction material  11,255  8.5  Precast Products Material for drainage works  5,663  4.3  Other building and construction materials’j Material to complete infrastructure & associated works  13,526 45,289  10.2 34.2  132,292  100.0  Note:­ “1  Mainly  consist  of premix products (i.e.  asphalt,  sand  and  steel  bar),  ready-mix
concrete, lubricants, explosive products, gabion and bitumen emulsion The bulk of our services procured are contributed by subcontractor cost and raw materials used for our business such as industrial diesel, quarry products and precast products. Our Group has also developed standardised procedures in selecting subcontractors and suppliers. All selected subcontractors are analysed prior to awarding of subcontracts. Our Group select only experienced subcontractors based on their past track record. 149
6. BUSINESS OVERVIEW (CONTD) All our raw materials are sourced locally. The prices of our principal raw materials such as industrial diesel, quarry products and precast products are subject to price fluctuations caused by supply and demand conditions. Diesel is an oil-based substance that is produced from the fractional distillation of crude oil and hence, we are exposed to crude oil price fluctuation. For instance, the average market prices of diesel on an annual basis was RM2.60 per litre, RM1.92 per litre and RM1.62 per litre for the FYE 31 December 2014, the FYE 31 December 2015 and the FYE 31 December 2016, respectively. Please refer to Section 11.3 (ii) of this Prospectus for further details on our raw materials cost. 6.7 Technologies and R&D We are generally a service provider in the earthworks and civil engineering market in the construction industry, and hence, our Group is not materially involved in the R&D of technology but rather a user of technology. From the aspect of being a service provider, the extent of our R&D involves research into the latest technologies and techniques developed or deployed in the earthworks and civil engineering markets to constantly update or improvise our knowledge, skill and technical capabilities as well as to enhance our current service offerings and performance. For example, we have invested in high capacity machinery such as the EC480D and EC700C Volvo Excavators. The EC480D excavator has a bucket capacity ranging from 1.8-3.8m3 and gross maximum power of 360hp while the EC700C excavator has a bucket capacity ranging from 2.5-6.6m3 and gross maximum power of 464hp. The high capacity of these excavators helps enhance our Group’s efficiency in carrying out earthworks activities.
6.8 Quality assurance procedures and management 6.8.1 Main quality objectives Our Group places strong emphasis on our quality control procedures to meet our customer’s expectations and to comply with the ISO’s standards and regulations set by the Government. Our Group ensures proper implementation and execution of stringent quality standards and procedures at each stage throughout the business processes. Our current quality objectives are:­i. To achieve a minimum of 90% of the total number of projects undertaken to be able to submit monthly progress claim on time; ii. To achieve an average of eight (8) hours per head of training per calendar year for employees who are involved in our construction projects; iii. To achieve a minimum of 65% of the total number of projects undertaken being able to progress on schedule; and iv. To achieve a minimum of 98% of the approved suppliers achieving a performance rating of grade A, grade B or grade C. Supplier performance is rated for each of our projects. The grades are assessed based on seven (7) internal criteria (i.e. quality of products/ services, delivery performance, aftersales service, responsiveness, ability to meet project requirement, price and market reputation). 150

 

6. BUSINESS OVERVIEW (CONT’O) 6.8.2 6.8.3 6.8.4 Ensuring quality through stringent partner selection In line with our mission of constructing solid foundation, our Group has also developed standardised procedures in selecting subcontractors and suppliers. All the subcontractors and suppliers are analysed prior to being selected. Our Group selects only experienced subcontractors and suppliers with proven track record and financial strength to ensure the best quality of works and services delivered to the customers. Quality assurance team Our quality management team comprises eight (8) committee members and is led by one (1) of our employees who is a management representative. Internal audit is conducted at least once a year, and is carried out on cross­checking basis amongst departments by our own internal auditors to ensure more findings and improvements throughout the auditing process. An external audit is conducted by IEC every year. ISO 9001 :2008 compliance Our Group’s OMS was certified with the ISO 9001 :2008 accreditation on 25 June 2009 and the subsequent revision of the ISO 9001 :2008 certification on 8 June 2015 for the provision of civil engineering and infrastructure services. Our Group has established a complete OMS, which complies with ISO requirements in ensuring the proper execution of our business processes to constantly meet our customer’s expectations within the given timeframe. As part of these processes, our audit team measures and monitors the characteristic of the service to verify that the requirements for the services are met. Our audit team also ensures that services, which do not conform to the service requirements, are identified and controlled to prevent unintended implementation. Corrective actions will be taken to eliminate the cause of non-conformities of the services in order to prevent recurrence of the problem. Our management is committed to the execution of the procedures established in the quality manual whilst the quality assurance personnel has complete authority to carry out the quality assurance system to identify non conformances, and to initiate, recommend and rectify the problems identified. The quality manual is reviewed as and when necessary to comply with our customers and our Group’s procedures. Our company focuses on the following criteria for our quality assurance:­i. Resource management Our Group recognises the experience and right working attitudes of our employees as an intangible asset in driving our company towards constantly meeting our customers’ expectations and conforming to the required standards and regulations set by several government bodies in relation to the local construction industry which include, but are not limited to, the CIOB and the NWSC. Hence, we ensure each of our employees possesses the necessary competency and is aware of his specific job functions from time to time. Each new entrant is briefed on his job function and provided information regarding our Group’s background, structure and policy especially our OMS. Besides that, new entrant is also guided by his immediate superior in executing his job until he is familiar with our Group’s procedures and OMS. 151 6. BUSINESS OVERVIEW (CONT’D) 6.8.5
On top of that, our Group also provides formal training to our employees from time to time to equip them with the required knowledge and skills to carry out their tasks, conforming to ISO requirements and the relevant government regulatory bodies. Training requirements are identified by our human resource manager and the management representative. The formal training provided to the site team covers the following criteria:­Purpose and objectives of quality system Quality system elements Documentation involved Technical nature of their duties Functional relationships Job responsibilities and functions ii. Measurement, analysis and improvement Our Group employs internal auditing as an approach to review our conformity to Government regUlations and the ISO standards, which will be assessed annually by IEC. Each department will be responsible to conduct audit on another department based on the prepared checklist. Our internal cross-checking effort ensures higher compliance to the regulations and requirements before being assessed by the relevant authorities. The results of audit are documented systematically for management review. Corrective action is taken if any non-conformity is highlighted during the aUditing process. Follow-up audit is conducted if necessary to ensure that all non-conformity issues are resolved. HSE policies We understand that our business operation involves the use of heavy machinery and our workers are subject to accidents at project site. Our Group is fully committed in pursuing the quality of services provided while taking care of the health and safety of all our staff as well as ensuring our operations leave minimal impact on the environment. To ensure the health and safety of all staff involved in the operation, we have set in place a strict HSE policy which is strictly enforced by our project supervisors. Our HSE policy complies with laws and regulation governing our industry and is constantly updated according to the latest changes. Our HSE policy objectives can be seen as follows:­i. Management, to the best of its ability, is responsible for preventing all injuries; ii. The machinery at project site are properly operated and maintained in accordance with appropriate legal and contract requirements, industrial standards and best practices; iii. All employees are informed, instructed, trained and supervised on how to perform their job safely and without risk to health; 152
6. BUSINESS OVERVIEW (CONT’D) iv. All accidents and near misses shall be reported and corrective measures shall be taken to ensure the accidents and near misses will not recur;
v. Whenever there is a conflict between the objectives of the DaSH’s and our Group’s mission objectives, the DaSH’s objectives shall be the first consideration;

vi. All employees and contractors are expected to strictly adhere to HSE rules at all times; vii. Develop and foster a strong environmental culture with a high level of awareness in the context of our commitment; viii. Ensure every employee and other interested parties conduct themselves in a manner consistent with our Group’s environmental objectives; ix. Prevent accident and environmental pollution to water, land and air; and
x. Ensure conformity to legal and other regulatory requirements at all times.

To meet the HSE objectives, our Group has established a HSE committee. Headed by the project manager, our HSE committee consists of a committee secretary, and eight (8) employee representatives. A safety officer and a safety supervisor will also be assigned for each individual project. The safety supervisor is posted on site and is responsible for monitoring and enforcing the safety policies on all personnel on site. Weekly inspections will be carried out and safety reports will be made on a monthly basis. In case of non-conformity, the safety supervisor will report it to the senior management and corrective measures will be taken to ensure effective implementation of HSE policies. 6.9 Sales and marketing strategles Our Group’s sales and marketing strategies are set out below:­i. Collaboration with past customers and customer referrals Our marketing approach and strategy is dependent on our track record and reputation in the construction industry, which has been solidified over the years. Our Group’s track record and reliability as an earthworks and civil engineering services provider has helped us establish a strong and mutually beneficial relationship with our customers. Our track record and goodwill with satisfied project principals continue to perpetuate new and greater business opportunities either through recurring business and/ or recommendations to other prospective customers. 153
6. BUSINESS OVERVIEW (CONT’D) This is witnessed by the fact that all our projects were secured via invitation from our existing customers, save for the construction and completion of civil works for West Coast Expressway (WCE) Interchange with a contract value of approximately RM239.81 million which commenced on December 2016 and is expected to be completed on June 2019 and the earthworks and infrastructure works at Section 3 and part of Section 2 of the Kota Puteri project at Rawang with a contract value of approximately RM12.93 million value which commenced on October 2015 and is expected to be completed by August 2017. Tender invitations and referrals represent more exclusive opportunities that offer a greater chance of success upon participation. The familiarity that comes with working in collaboration with past project principals also creates a synergy that leads to work effectiveness and efficiency over the project period. ii. Contracts department Maintaining our working relationship with our customers is paramount to our Group’s business development. As such, our Contracts department which is responsible for acting on project leads and sourcing for new projects for our Group, is also in charge of managing relationship with existing and potential customers. Our contracts team is generally responsible for liaising and networking with our customers and keeping abreast of market developments and potential business opportunities. We also rely on word-of-mouth by proving quality service in each of our projects in order to attract referral or for retaining our customers in future projects. In addition, our contracts team always endeavours to accommodate any reasonable request made by our customers if possible, given that the request does not cause any significant financial impact or undue disruption to our daily operation. As at the LPD, our Contracts department consists of 18 personnel and is headed by our Executive Director, namely Tung Kai Hung. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 154 Company Number: 426965-M -6. BUSINESS OVERVIEW (CONTO)

6.10 Approvals, major licences and permits obtained Save as disclosed below, as at the LPD, there are no other approvals, major licenses and permits issued to our Group in order for us to carry out our operations other than those pertaining to the general business requirements. Details of the approvals, major licences and permits obtained by us for the business and operations of our Group are set out below:­Approving Certificate no./ Company/ authority/ Registration Status of individual issuer Validity Type of licence and certificate no./Permit no. Conditions imposed compliance Advancecon CIOB From Grade “7” licence for A252593 (i) General conditions Infra 15.06.2016 specialisation in:-/1960828­(a) This certificate is non-transferable; and Notedto WP004806 15.06.2019 (i) Category B:­(b) CIOB reserves the right to review the registration Noted grade of Advancecon Infra from time to time; (a) B04: Building works (ii) Responsibilities and obligations(ii) Category CE:­
(a) Advancecon Infra shall comply with the Complied (a) CE21: General civil provisions of the CIOB Act 1994 the regulations
engineering works; made thereunder any term, condition or restriction imposed by CIOB from time to time;
(b) CE36: Earthworks;
(b) Advancecon Infra shall not participate any Complied
(c) CE24: Tower structures; tender or execute any construction works after this certificate has expired and unless it is
(d) CE01: Road and pavement renewed; construction;
(c) (i) Advancecon Infra shall not undertake any Not construction project which exceeds the value of applicable.
(e) CE34: Pre-cast concrete

construction works specified under the As a G7installation work; registration grade and licence holder, there (f) CE41: Water retaining is no limit tostructures; the value of construction(g) CE1 0: Piling works; works tendered by(h) CE12: Soil investigation; Advancecon Infra Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D) Approving  Certificate no.!  Companyl  authorityl  Registration  individual  issuer  Validity  Type of licence and certificate  no.!Permit no.  Conditions imposed  (i)  CE19: Sewerage system;  (ii)  Advancecon  Infra  shall  not  execute  any  construction  works  which  is  outside  its  registered category;  Q)  CE02: Bridge  and  jetty  construction; and  (d)  Advancecon  Infra  shall  submit  information  regarding  any  new  construction  works  or  (k)  CE25: Rock blasting works.  contracts within one (1) month of the award;
(e) Advancecon Infra shall submit any information required from CIOB from time to time;
(f) Advancecon Infra shall display the certificate of registration issued by CIOB or a certified true copy of the certificate by CIOB at the place of business;
(g) Advancecon Infra shall display its registration number on the signboard at each construction site;
(h) Advancecon Infra shall apply for renewal of registration at any time within 60 days before the expiry date specified in this certificate. Any application received by CIOB later than 30 days before the expiry of the certificate of registration shall be imposed with a fee of RM200 for late renewal; and

Status of compliance Noted and complied Complied. Any new construction works  or  contracts  is  submitted
within one (1) month from the date of receipt of the award Noted and complied Complied and will continue to comply Complied and will continue to comply Noted and complied
Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D)
Approving  Certificate no.l  Company!  authority!  Registration  Status of  individual  issuer  Validity  Type of licence and certificate  no.lPermit no.  Conditions imposed  compliance
(i)  shall comply with all requirements and stipulations in Advancecon Infra’s code of ethics;  Complied  (iii)  Disciplinary actions  The registration of Advancecon cancelled, suspended or revoked if:­ Infra  shall  be  (a)  Advancecon Infra fails to comply requirement of any other written law;  with  the  Noted  (b)  Advancecon bankrupt;  Infra  has  been  adjudicated  a  Noted  (c)  A winding up petition in relation to Advancecon Infra has been presented;  Noted  (d)  Advancecon Infra contravenes or fails to comply with any provision of the CIDB Act 1994;  Noted  (e)  Advancecon Infra has obtained the certificate by making or causing to be made any false or fraudulent declaration, certification or representation either in writing or otherwise;  Noted  (f)  Advancecon construction reason;  Infra has abandoned undertaken without any  any good  Noted  (g)  Advancecon Infra is found negligent by the court or by any board of enquiry established under any written law in connection with any construction works undertaken; or  Noted  (h)  Advancecon Infra contravenes any of the terms and conditions of the contractor’s responsibilities and obligations as specified in item (ii) above.  Noted
‘I Company Number: 426965-M]

6. BUSINESS OVERVIEW (CONT’D) Approving  Certificate no./  Company/  authority/  Registration  individual  issuer  Validity  Type of licence and certificate  no.lPermit no.  Advancecon  CIOB  From  Grade  “7”  Certificate  of  A129848/  Infra  03.05.2016  Government  Procurement  1960828­ to  Works for:  WP004806  15.06.2019  Category  B:  Building  Construction; and  Category CE: Civil Engineering  Construction
Conditions imposed  Status of compliance  (i)  General conditions  (a)  This certificate is issued based on the information provided by the applicant/company.  Noted  (b)  This certificate shall not be used as acknowledgement for initiation or undertaking to execute construction work. This certificate shall be used to participate in the government procurement or any work with the governmental agencies only.  Noted  (c)  This certificate will be revoked automatically if the certificate of registration as a contractor has expired or cancelled/revoked/suspended in accordance with Regulation 15 of the Registration of Contractors (Construction Industry) Regulations 1995.  Noted  (d)  This certificate must be submitted together with the certificate of registration as contractor during the tender for government procurement work or any work with the government agencies.  Noted  (e)  This acknowledgement of registration certificate shall be renewed together with the certificate of registration issued by CIOB as contractor.  Noted  (f)  This certificate which is not renewed within six (6) months from the date of expiry of the certificate of registration as contractor will be removed from the register of CIOB. Any application made thereafter is deemed to be a new application and the terms and conditions for the issuance of SPKK for new application shall be complied with.  Noted
Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D) Approving  Certificate no./  Company/  authority/  Registration  Status of  individual  issuer  Validity  Type of licence and certificate  no./Permit no.  Conditions imposed  compliance  (ii) Responsibilities of the Company/Holder of  the certificate  (a) Advancecon Infra shall not lend, lease, transfer,  Complied  permit or do anything that will cause the  certificate to be used by someone who has not  been named to use this certificate for the  purpose of procuring the government work.  (b) Only officers of the company who are named in  Complied  this certificate is authorised to sign the company  contract documents and take or authorise the  employees to take document tendered.  (c) The company holder of the certificate shall  Noted  ensure all terms and conditions to obtain this  certificate are complied with at all times during  the period of validity of this certificate.  (d) The company/holder of this certificate shall  Noted  inform CIOB of any changes of information  within 21 days from the date of occurrence of  the said change.  (e) The company/holder of this certificate shall  Complied  comply with all the instructions and resolution of  government via treasury instructions, treasury  circular letters and circulars issued by Jabatan  Teknikal (Jabatan Kerja Raya/ Jabatan  Pengairan &Saliran) from time to time.  (f) The company/holder of this certificate shall  Complied  comply with all instructions and resolutions  issued by CIOB from time to time.
Company Number : 426965-~1
6. BUSINESS OVERVIEW (CONT’D) Approving  Certificate no.!  Company/  authority/  Registration  Status of  individual  issuer  Validity  Type of licence and certificate  no.!Permit no.  Conditions imposed  compliance  (iii) Disciplinary actions  (a) The company/holder of this certificate shall be  Noted  subject to disciplinary action as set out in  Regulation 15 of the Registration of Contractors  (Construction Industry) Regulations 1995 in the  event of failure to comply with item (ii) above.  (b) CIDB has the right to take disciplinary action and  Noted  impose any punishment on registered  contractor.  (c) The company/holder of this certificate who has  Noted  been blacklisted, suspended, revoked or which  this certificate has been withdrawn due to  disciplinary proceeding shall not participate in  any lender or involve in government  procurement work.  (d) The company/holder of this certificate whose  Noted  certificate has been revoked or withdrawn will be  removed from the register of CIDB. Such  company/holder of this certificate shall comply  with the terms and conditions of the issuance of  SPKK for new application. A blacklisted key  management personnel is prohibited from  obtaining SPKK for a period of three (3) years.  (e) The company/holder of this certificate who has  Noted  been blacklisted and suspended shall participate  in tender or government procurement work only  after the expiry of the blacklisting or suspension  period.
Company Number: 426965-M ] 6. BUSINESS OVERVIEW (CONT’O) 6. BUSINESS OVERVIEW (CONTO) Approving  Certificate no./  Company!  authority!  Registration  Status of  individual  issuer  Validity  Type of licence and certificate  no./Permit no.  Conditions imposed  compliance  (iv)  Financial limits (work costs)  (a)  SPKK registered contractor shall only participate  Complied  in tender allowed under the registration grade it  registered.
Advancecon  NWSC  From  IPA Permit Type C1 (Sewerage)  SPAN/EKS!(PT)!8  (i)  General conditions  Infra  25.06.2016  to carry out works in West  00-2C/1!13!447  to  Malaysia, Federal Territories,  (a)  Advancecon Infra shall only carry out the works,  Noted  24.06.2019  Putrajaya and Labuan  and in the state or states, specified in the permit;  (b)  Advancecon Infra shall notify the Commission of  Noted  any change in particulars of Advancecon Infra;  (c)  Advancecon Infra shall provide information, in  Noted  the format and at intervals, as required by the  NWSC;  (d)  The employees and servants of Advancecon  Noted  Infra shall be authorised to carry out for  Advancecon Infra the works authorised under  the permit provided that Advancecon Infra shall  at all times be responsible for all acts or  omissions of its employees and servants;  (e)  Advancecon Infra shall at all times maintain the  Noted  requisite certificate of registration as a registered  contractor issued by the CIOB;  (f)  Advancecon Infra shall at all times have and  Noted  maintain the qualification to hold a permit as  may be specified by the NWSC from time to  time;  161
Approving  Certificate no.l  Companyl  authorityl  Registration  Status of  individual  issuer  Validity  Type of licence and certificate  no.lPermit no.  Conditions imposed  compliance  (g) Advancecon Infra shall at all times deal with  Noted  consumers fairly and reasonably and where  applicable, comply with the consumer standards;  (h) Advancecon Infra shall at all times safeguard the  Noted  safety of the public and its employees and shall  at all times comply with relevant occupational,  health and safety procedures and regulations  imposed by the relevant authority;  (i) Advancecon Infra, its employees and servants  Noted  shall at all times comply with the applicable  health requirements by the relevant health  authorities;  U) Advancecon Infra shall observe and comply with  Noted  the obligations of the permit and the provisions  of the CIDB Act 1994 and any subsidiary  legislation made or other instruments issues  under the CIDB Act 1994; and  (k) Advancecon Infra shall comply with such other  Noted  conditions as may be imposed by the  Commission from time to time;  (ii) Special conditions  (a) Advancecon Infra shall ensure that they always  Noted  have qualified workers to carry out company  operations; and  (b) Advancecon Infra shall ensure that works that  Noted  have been subcontracted out to other  contractors are legitimate NWSC permit holders.
II Company Number: 426965-M ~ 6. BUSINESS OVERVIEW (CONT’D) Approving  Certificate no.l  Company!  authority!  Registration  Status of  individual  issuer  Validity  Type of licence and certificate  no.lPermit no.  Conditions imposed  compliance
Advancecon  Ministry  of  From  Permit for Scheduled Controlled  Serial No:  (i)  The permit holder is allowed to purchase diesel  Noted  and  Infra  Domestic  05.04.2017  Items  B021990  with the quantity of 32,000 litres;  complied  Trade,  Co­ to  operatives and  04.04.2018  (ii)  The  permit holder is not allowed  to  store  the  Noted  and  Consumerism  controlled item in any other place other than in  complied  Lot  35, Lot  1252  &  part of Lot  1365 Mukim  Beranang, Daerah Hulu Langat, Sefangor;  (iii)  The  permit  holder  cannot  own  more  of  the  Noted  and  controlled item as stated in the permit;  complied  (iv)  The permit cannot be transferred;  Noted  and  complied  (v)  The controlled item is only for own use and not  Noted  and  for sale;  complied  (vi)  The permit holder needs to keep the receipt of  Noted  and  purchase of the controlled items for examination;  complied  (vii)  Skid tanks for the storage of the controlled items  Noted  and  has to be labelled;  complied  (viii) The permit is only valid for the duration as stated  Noted  and  in the permit and any renewals will need to be  complied  done one month prior to expiry;  (ix)  The permit holder is subject to the Controlled  Noted  and  Items Act 1961 and its subsidiary acts;  complied  (x)  If the permit holder does not use the controlled  Noted  and  items,  the  permit  holder needs  to  return  the  complied  controlled items to the officer; and  (xi)  If the permit holder gives false information or is  Noted  and  against any rules, the permit can be revoked at  complied  any time.
Company Number: 426965-M II

 

6. BUSINESS OVERVIEW (CONTO) Approving  Certificate no.!  Company!  authority!  Registration  individual  issuer  Validity  Type of licence and certificate  no.lPermit no.  Conditions imposed  Advancecon  Ministry of  From  Permit for Scheduled Controlled  Serial No:  (i) The permit holder is allowed to purchase diesel  Infra  Domestic  12.08.2016  Items  B023019  with the quantity of 32,000 litres;  Trade, Co­ to  operatives and  11.08.2017  (ii) The permit holder is not allowed to store the  Consumerism  controlled item in any other place other than in  Lot PT 33010, PT 33019-PT 33028, Mukim  Tanjung Dua Belas, Jalan Kebun, 40200 Klang  Selangor;  (iii) The permit holder cannot own more of the  controlled item as stated in the permit;  (iv) The permit cannot be transferred;  (v) The controlled item is only for own use and not  for sale;  (vi) The permit holder needs to keep the receipt of  purchase of the controlled items for examination;  (vii) Skid tanks for the storage of the controlled items  has to be labelled;  (viii) The permit is only valid for the duration as stated  in the permit and any renewals will need to be  done one month prior to expiry;  (ix) The permit holder is subject to the Controlled  Items Act 1961 and its subsidiary acts;  (x) If the permit holder does not use the controlled  items, the permit holder needs to return the  controlled items to the officer; and
Status of compliance Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Company Number : 426965~ 6. BUSINESS OVERVIEW (CONT’O) Approving  Certificate no.!  Company!  authority!  Registration  Status of  individual  issuer  Validity  Type of licence and certificate  no.lPermit no.  Conditions imposed  compliance
(xi)  If the permit holder gives false information or is against any rules, the permit can be revoked at any time.  Noted and complied  Advancecon Infra  Ministry of From Domestic 04.07.2016 Trade, Co-­operatives and 03.07.2017 Consumerism  Permit for Scheduled Controlled Items  Serial No: B021602  (i) (ii)  The permit holder is allowed to purchase diesel with the quantity of 32,000 litres; The permit holder is not allowed to store the controlled Items in any other place other than in Precinct 5,6 & 7 on part of Lot 39,43100 Mukim Beranang, Hulu Langat, Selangor;  Noted and complied Noted and complied  (iii)  The permit holder cannot own more controlled item as stated in the permit;  of  the  Noted and complied  (iv)  The permit cannot be transferred;  Noted and complied  (v)  The controlled Items is only for own use and not for sale;  Noted and complied  (vi)  The permit holder needs to keep the receipt of purchase of the controlled items for examination;  Noted and complied  (vii) Skid tanks for the storage of the controlled items has to be labelled;  Noted and complied  (viii) The permit is only valid for the duration as stated in the permit and any renewals will need to be done one month prior to expiry;  Noted and complied  (ix)  The permit holder is subject to the Controlled Items Act 1961 and its subsidiary acts;  Noted and complied  (x)  If the permit holder does not use the controlled items, the permit holder needs to return the controlled items to the officer; and  Noted and complied
II Company Number: 426965-M II
6. BUSINESS OVERVIEW (CONTO) Approving  Certificate no./  Company!  authority!  Registration  individual  issuer  Validity  Type of licence and certificate  no./Permit no.  Conditions imposed  (xi) If the permit holder gives false information or is  against any rules, the permit can be revoked at  any time.  Advancecon  Ministry of  From  Permit for Scheduled Controlled  Serial No:  (i) The permit holder is allowed to purchase diesel  Infra  Domestic  15.03.2017  Items  B024455  with the quantity of 32,000 litres;  Trade, Co­ operatives and  14.03.2018  (ii) The permit holder is not allowed to store the  Consumerism  controlled Items in any other place other than in  Seksyen 3 & Seksyen 2, Kota Puteri, Mukim  Rawang, Daerah Gombak, Selangor Darul  Ehsan;  (iii) The permit holder cannot own more of the  controlled item as stated in the permit;  (iv) The permit cannot be transferred;  (v) The controlled Items is only for own use and not  for sale;  (vi) The permit holder needs to keep the receipt of  purchase of the controlled items for examination;  (vii) Skid tanks for the storage of the controlled items  has to be labelled;  (viii) The permit is only valid for the duration as stated  in the permit and any renewals will need to be  done one month prior to expiry;  (ix) The permit holder is subject to the Controlled  Items Act 1961 and its sUbsidiary acts;
Status of compliance Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Company Number: 426965-M]
6. BUSINESS OVERVIEW (CONT’O) Approving  Companyl  authorityl  individual  issuer  Validity  Advancecon  Ministry  of  From  Infra  Domestic  19.01.2017­ Trade,  Co­ 18.01.2018  operatives and  Consumerism
Type of licence and certificate  Certificate no.l Registration no.lPermit no.  Permit for Scheduled Controlled Items  Serial No: B023742
Conditions imposed (x) If the permit holder does not use the controlled items, the permit holder needs to return the controlled items to the officer; and
(xi) If the permit holder gives false information or is against any rules, the permit can be revoked at any time.
(i) The permit holder is allowed to purchase diesel with the quantity of 32,000 Iitres;
(ii) The permit holder is not allowed to store the controlled Items in any other place other than in PT8 (22218), PT9 (22219), PT (20090) (244038),40170 Bukit Raja, Selangor;

(iii) The permit holder cannot own more of the controlled item as stated in the permit; (iv) The permit cannot be transferred;
(v) The controlled Items is only for own use and not for sale;
(vi) The permit holder needs to keep the receipt of purchase of the controlled items for examination;

(vii) Skid tanks for the storage of the controlled items has to be labelled; (viii) The permit is only valid for the duration as stated in the permit and any renewals will need to be done one month prior to expiry; (ix) The permit holder is subject to the Controlled Items Act 1961 and its subsidiary acts; Status of compliance Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Company Number: 426965-M

6. BUSINESS OVERVIEW (CONTO) Companyl individual Advancecon Infra Approving authorityl issuer Validity Ministry of From Domestic 07.12.2016 Trade, Co-­operatives and 06.12.2017 Consumerism Certificate no.! Registration Type of licence and certificate no.!Permit no. Permit for Scheduled Controlled Serial No: Items 8023339 Conditions imposed (x) If the permit holder does not use the controlled items, the permit holder needs to return the controlled items to the officer; and
(xi) If the permit holder gives false information or is against any rules, the permit can be revoked at any time.
(i) The permit holder is allowed to purchase diesel with the quantity of 32,000 litres;
(ii) The permit holder is not allowed to store the controlled Items in any other place other than in Seri Seri, Mukim Rawang, Daerah Gombak, 48050 Rawang, Selangor Darul Ehsan;

(iii) The permit holder cannot own more of the controlled item as stated in the permit; (iv) The permit cannot be transferred;
(v) The controlled Items is only for own use and not for sale;
(vi) The permit holder needs to keep the receipt of purchase of the controlled items for examination;

(vii) Skid tanks for the storage of the controlled items has to be labelled; (viii) The permit is only valid for the duration as stated in the permit and any renewals will need to be done one month prior to expiry; (ix) The permit holder is subject to the Controlled Items Act 1961 and its subsidiary acts; Status of compliance Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Noted and complied Company Number: 426965-M

6. BUSINESS OVERVIEW (CONTO)
Approving  Certificate no.!  Company!  authority!  Registration  Status of  individual  issuer  Validity  Type of licence and certificate  no.!Permit no.  Conditions imposed  compliance
(x)  If the permit holder does not use the controlled  Noted  and  items, the permit holder needs to return the  complied  controlled items to the officer; and  (xi)  If the permit holder gives false information or is  Noted  and  against any rules, the permit can be revoked at any time.  complied  Chan  Keng  Royal  From  Shotfirer Licence  00316 (0035)  None  None  Kong  Malaysian  01.04.2017  Police  to  31.03.2018  Ng  Chee  Royal  From  Shotfirer Licence  00315 (806)  None  None  Yung  Malaysian  01.04.2017  Police  to  31.03.2018  Advancecon  Majlis  From  Business  trade  and  industrial  L950000185793  None  None  Bandaraya  01.01.2017  licence for  management office  Petaling Jaya  to  at No. 16 & 18, Jalan Pekaka  31.12.2017  8!3,  Seksyen  8,  Kota  Damansara,  47810  Petaling  Jaya  Advancecon,  Royal  Date  of  Goods and Services Tax  Advancecon:  The registered person shall notify the senior officer of  Advancecon  Malaysian  issuance:  001857490944  customs on, inter-alia, the following:­ Infra,  Customs  30.09.2014  Advancecon  Advancecon  Department  Infra:  (a)  Change of name or business;  Noted  Machinery,  00736018432  Advancecon  Advancecon  (b)  Change of business address;  Noted  Trading,  Machinery:  Advancecon  000900489216  (c)  Change  of director,  shareholder,  key officer,  Noted  Properties  Advancecon  representative or authorised person;  and Inspirasi  Trading:  Hebat  00250232832  (d)  Change of status of the business; or  Noted  Advancecon  Properties:  (e)  Change of business activity.  Noted  001419939840
Company Number : 426965~ 6. BUSINESS OVERVIEW (CONT’D) Companyl individual  Approving authorityl issuer  Validity  Type of licence and certificate  Certificate no.l Registration no.lPermit no.  Conditions imposed  Status of compliance  Inspirasi Hebat : 001737736192  Our Group have not experienced any difficulties in renewing its approvals, major licenses and permits in the past and have not experienced, nor do we anticipate any major difficulty in obtaining approvals and renewal for the necessary approvals, major licenses and permits within a reasonable timeframe which may impact the business continuity of our Group.  I  THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK  ]
6. BUSINESS OVERVIEW (CONT’D) 6.11 Brand names, patents, trademarks, technical assistance agreements, franchises and other intellectual property rights Save as disclosed below, as at the LPD, we do not have any other brand names, patents, trademarks, technical assistance agreements, franchises and other intellectual property rights for our business operations:­Application number/ Status/ Trademark Approving Registration Company Trademark Class number authority validity Advancecon 37 2015059744 Intellectual Registered”1/ Property 22 June 2015 to Corporation 22 June 2025 of Malaysia (“MyIPO”) Certificate issuance date:
ADVANCECON 10 August 2016 Advancecon 37 2016064087 MylPO Application forADVANCECON the trademark has been filed on 2 August 2016″2 Notes:­”1 Notwithstanding that the trade mark has been registered with MylPO for a period of ten (10) years from 22 June 2015 to 22 June 2025, the Board does not intend to use this trademark moving forward and it shall be kept as an intellectual property of the Company. This is in line with the rebranding exercise undertaken by the Group “2 MylPO had, via a letter dated 11 November 2016, objected to our application as the trademark in question does not comply with the Trade Mark Act 1976 on the following aspects:­(i) The mark uses words/ several words that were not invented and therefore contravene Section 10(1) (c) of Trade Mark Act 1976
(ii) The mark is a word/ some words that have a direct reference to the character or quality of the goods / services. It is inconsistent with Section 10 (1) (d) of Trade Mark Act 1976

(iii) The mark is not distinctive and could not be used to distinguish the goods/ services of the trade mark owner with the goods/services of another person in the course of trade and thus violates Section 10(1) (e) ofTrade Mark Act 1976 Quality Oracle Sdn Bhd, which filed the application on behalf of us, had submitted a written appeal to the objection to Myl PO on 11 January 2017, of which we are pending for MyIPO’s reply as at the LPD. In the event there is an unfavourable decision from the appeal submitted to MyIPO, we will take immediate steps to amend and refile a new trade mark. 171
6. BUSINESS OVERVIEW (CONT’D) 6.12 Dependency on patents, licences, industrial, commercial or financial contracts or arrangements Save for the licences as disclosed in Sections 6.10 and 6.11 of this Prospectus, we are not dependent on any other patents, licences, industrial, commercial or financial contracts or arrangements that could materially affect our business or profitability. 6.13 Interruptions in business for the past 12 months We have not experienced any business interruption in the form of trade disputes or major operational breakdown occurring within and! or outside our Group that may have a significant effect on our operations during the 12 months preceding the date of this Prospectus. _____T_H_E_R_ES_T_O_F_T_H_IS_P_A_G_E_H_A_S_B_E_E_N_IN_T_E_N_T_I_O_N_A_L_L_Y_L_E_F_T_B_L_A_N_K ~ 172 Company Number: 426965 6. BUSINESS OVERVIEW (CONT’O)

6.14 Major customers Our customers which comprises project owners and who individually contributed 10.0% or more of our revenue for each of the past three (3) financial years up to the FYE 31 December 2016 are set out below:­Years of <——————————-Revenue——————————-> relationship as at <————————FYE 31 December————————-> Customers Services provided Country the LPD 2014 2015 2016 RM’OOO % RM’OOO % RM’OOO % S P Setia group Earthworks and civil engineering Malaysia 24 years 62,955 31.5 42,352 16.0 32,012 13.6 Eco World group Earthworks and civil engineering Malaysia 5 years 47,971 24.0 79,155 29.9 67,620 28.8 Tropicana group Earthworks and civil engineering Malaysia 4 years 2,203 1.1 70,306 26.6 40,472 17.2 We are engaged by the above customers for the delivery of earthworks and/ or civil engineering services projects in Malaysia, where specifically over the past three (3) financial years up to the FYE 31 December 2016, we were involved in the following projects:­(i) S P Setia group:­Earthworks and civil engineering services for the Setia Eco Glades project in Cyberjaya, Bandar Setia Alam project in Shah Alam, Setia Ecohill project in Semenyih, Bukit Indah project in Johor Bahru and Eco Garden project in Pulai.
(ii) Eco World group:­Earthworks and civil engineering services for Eco Business Park 1 and Eco Business Park 2 projects in Iskandar Malaysia and Eco Majestic project in Semenyih.

(iii) Tropicana group:­Earthworks and civil engineering services for the Tropicana Aman projects in Tanjung Dua Belas and the provision of earthworks at Jeram Batu, Johor. II Company Number: 426965-M ~

6. BUSINESS OVERVIEW (CONTO) Each of our Group’s projects differs in terms of size and scope of work and the revenue recognised for each project fluctuates from year to year. As such, revenue derived from certain customers may account for 10.0% or more of our Group’s total revenue in a particular financial year when there are several projects being implemented with those customers. However, as the projects are nearing completion, revenue contribution from these customers will also decrease correspondingly, which is a norm in the construction industry in Malaysia. As set out in the table above, the aggregate revenue contributed by our major customers, namely S P Setia group and Eco World group accounted for approximately 55.5%, 45.9% and 42.4% of our total revenue for the past three (3) financial years under review, respectively. As such, our Group is dependent on the aforesaid major customers. Notwithstanding the foregoing, we have been aggressively looking for new contract opportunities by tendering for new contracts and we endeavour to expand our customer base. Our efforts have resulted in us establishing new working relationship with other local property developers such as MKH Berhad group of companies, Perdana Parkcity Sdn Bhd, Tropicana group, Malaysian Resources Corporation Berhad group of companies and Gamuda Berhad group of companies who are our newly secured customers up to the LPD. Our other customer, namely Tropicana group has also contributed approximately 1.1 %, 26.6% and 17.2% of our total revenue for the past three (3) financial years under review. For the avoidance of doubt, the aforementioned revenue contribution from Tropicana group was derived from the following projects:­Contract . Commencement Project details. .value ICompletion RM’rriillion
Site clearance, earthworks and retaining walls for the industrial and commercial development at Jeram Batu, Pontian, Johor  23.35  November 20141 September 2015  Infrastructure works for the construction of a temporary sales gallery building for the Tropicana Aman project at Tanjung Dua Belas, Kuala Langat, Selangor  2.03  April 2015/ June 2015  Earthworks for the Tropicana Aman project at Tanjung Dua Belas, Kuala Langat, Selangor  136.52  April 2015/ September 2017
As at 31 December 2016, the Group has completed the abovementioned projects, save for the provision of earthworks for the Tropicana Aman project at Tanjung Dua Belas which has a contract sum of RM136.52 million. The Group has recognised RM87.22 million of revenue from the aforesaid project in the FYE 31 December 2015 and the FYE 31 December 2016, whilst the remaining portion of the revenue amounting to RM49.3 million will be recognised in the financial year ending 31 December 2017. Company Number: 426965-M
6. BUSINESS OVERVIEW (CONT’D) Despite the significant revenue contribution by Tropicana Group in the FYE 31 December 2015 and the FYE 31 December 2016, the Group does not deem the aforesaid property developer as its major customer in view that the Group has not secured any projects from Tropicana group in the past and throughout the financial years under review and up to the LPD, save for the abovementioned projects including additional landscaping works to the Tropicana Aman project, of which two (2) of the projects have been completed. For the avoidance of doubt, the Group had secured additional landscaping works to the Tropicana Aman project from Tropicana group with a contract value of approximately RM15.23 million which commenced on April 2017 and is expected to be completed by January 2018. Pursuant to the completion of the Tropicana Aman projects in Tanjung Dua Belas in September 2017 and January 2018 respectively, the revenue contribution from Tropicana group is expected to decline accordingly. Please refer to Section 4.1.3 of the Prospectus on the risk factor pertaining to reliance on the aforementioned major customers. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D) 6.15 Major suppliers Our suppliers who individually contributed 10.0% or more of our purchases for each of the past three (3) financial years up to the FYE 31 December 2016 are set out below:­Years of <——————————Purchases—————————–> relationship as at <————————–FYE 31 December———————–> Supplier Productsl services Country the LPD 2014 2015 2016 RM’OOO % RM’OOO % RM’OOO % KSJ Construction Sdn Bhd Subcontractor Malaysia 5 years 12,180 10.8 2,381 1.5 Our Group is not dependent on any of our major suppliers for the past three (3) financial years up to FYE 31 December 2016. KSJ Construction Sdn Bhd contributed more than ten (10) percent of our total purchases only in the FYE 31 December 2014 as they were our major subcontractor for the construction and completion of earthworks for the Hillpark Shah Alam project at Bandar Puncak Alam, Kuala Selangor, Selangor which commenced on November 2013 and completed on June 2015. Generally, our Group does not enter into long term contracts with any of our suppliers, which is the norm in the construction industry in Malaysia. Our Group strives to maintain long term relationships with a large pool of suppliers to ensure that we are not dependent on any single supplier or subcontractor. Our Group has established long term business relationship with a number of these companies, and believes these relationships are beneficial to our purchasing and cost efficiency. Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D) 6.16  Information on land and buildings  6.16.1  Material properties owned by our group  A summary of the material properties owned by our Group are set out below:­ Registered ownerl Beneficial owner  Address I Title identification  Tenurel Expiry of leasel Remaining lease tenure  Descriptionl EXisting use  Date of issuance ofCFI CCC  Approximate age of building  Approximate land areal Built up area ftl  NBVas at 31.12.2016 RM  Major encumbrances  Advancecon  Address: No. 16, 16-1, 16-2, 16-3 Jalan Pekaka 8/3 Seksyen 8 Kota Damansara 47810 Petaling Jaya Selangor Darul Ehsan  Leasehold for 99 yearsl Will expire on 17.12.21061 approximately 89 years  Description: Whole of ground floor to 2nd floor of a three (3)­storey shop office  Date ofCCC: 06.09.2001  16 years  Land area: 2,594 Built up area: 7,782  1,411,485  Charged to UOB Bank  Title Identification: H.S.(D) 242484, PT 10063, Sungai Buloh, District of Petaling, State of Selangor Darul Ehsan  EXisting use: Occupied by Advancecon Group as head office for business  operations  Advancecon Infra  Address: 9-B-2, Binjai Residency No.1, Lorong Binjai, 50450 Kuala Lumpur Title Identification: Geran 29539/M1/10/18, Lot 206 Section 63, Bandar Kuala Lumpur, State of Wilayah Persekutuan  Freehold  Description: One (1) of the condominium units located on the 9th floor and one (1) car park lot located on the 2nd floor of a 31-storey building  Date of CCC: 10.12.2007  10 years  Land area: Not applicable Built-up: 2,208  1,154,753  Charged HSBC Bank  to  Existing Vacant  use:
II Company Number: 426965-M ] 6. BUSINESS OVERVIEW (CONTD) Registered ownerl Beneficial owner Datuk Bandar Kuala Lumpur I Advancecon Properties Advancecon Properties Address I Title identification Address: B01-A-08, Level 8 Boutique Office, KL Eco City
Title Identification: PN 52716, Lot 20007 Section 95A and Geran 79381, Lot 20006 Section 95A (formerly known as HS(D) 120054, Lot PT Seksyen 95A and HS(D) 120053, Lot PT 29 Seksyen 95A Town of Kuala Lumpur, District of Kuala Lumpur)
Address: Lot 8, Jalan Sultan Alauddin 5, Kawasan Perindustrian Fasa 4 Bandar Sultan Suleiman Pelabuhan Kelang, 42000 Selangor Darul Ehsan
Title Identification: H.S.(M) 42054, PT 65651, Mukim Kapar, Selat Klang Utara, District of Klang, State of Selangor Darul Ehsan
Note:-Tenurel  Expiry  of  leasel  Approximate  Approximate  Remaining  Descriptionl  Date of issuance  age of  land areal  NBVas at  Major  lease tenure  Existing use  ofCF/CCC  building  Built up area  31.12.2016  encumbrances  ttl  RM  Leasehold  for  Description:  Date of CCC:  Less than one  Land area:  5,110,726  Charge to Public  99  yearsl  Will  Whole  of  8th  03.04.2017  (1) year  Not applicable  Bank  expire  on  floor  of  a  20­ 05.12.21131  storey  building  Built-up area  approximately  office  tower  4,381  96 years  block  Existing use:  Vacant  Leasehold  for  A  parcel  of  Not applicable”1  Not  Land area:  5,528,833  Charged  to  AI  99 yearsl  industrial land  applicable  167,982  Rajhi  Banking  &  Will  expire  on  Investment  07.12.21101  Existing use:  Built up area:  Corporation  approximately  Proposed  to  Not applicable  (Malaysia)  93 years  construct  an  Berhad  in-house  workshop  to  carry out repair  and  maintenance  services  of  machinery
·1 As at the LPD, there is no CF issued on the land as it is currently a vacant land 178 Company Number: 426965-M 6. BUSINESS OVERVIEW (CONTO)
6.16.2 Material properties leased or tenanted by our Group As at the LPD, we leased or tenanted the following properties:­Approximate Description and existing land areal Tenant Landlord Address Tenurel Date of expiry of lease use Built up area Yearly rental ft2 RM Advancecon Dato’ Phum No. 18, 18-1 & 18-2, Jalan Pekaka Three (3) years from 01.08.2016 Description: Land area: 66,000 8/3, Seksyen 8, Kota Damansara till 31.07.2019 (with an option to Whole of ground floor to 1,798 2nd47810 Petaling Jaya, Selangor renew for a further three (3) floor of a three (3)­Darul Ehsan years) storey shop office Built-up area
5,394 Existing Use: Occupied by Advancecon Group as head office for business operation Advancecon Chow Chan 22, Jalan Semtec 4, Semenyih Two (2) years from 16.07.2016 Description: Land area: 84,000 Machinery Hoe, Low Say Technology Park, 43500 till 15.07.2018 (with an option to Whole of ground floor to 1st 1,073 Sim, Yap Shuh Semenyih, Selangor Darul Ehsan renew for a further one (1) year) floor of a two (2)-storey Chuu and Yap terrace factory Built-up area Shuh Jen 5,439
Existing Use: Occupied by Advancecon as workshop for repair and maintenance services of machinery There are no major restrictions, special conditions or major encumbrances in the abovementioned tenancy agreement. The above properties owned and rented by our Group have been issued with the relevant CF as at the date of this Prospectus. As at the date of this Prospectus, our Group is not in breach of any law, rules and building regulations in relation to the use of the properties above. Our Directors wish to highlight that, with respect to the land and buildings owned and rented by our Group as stated above, there are no environmental issues that may affect our Group’s operations and utilisation of the above properties. Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D) Registered owner / Beneficial Owner Paramount Property (Glenmarie) Sdn Bhd /Advancecon Properties Company Number : 426965-~ 6.16.3  Investment properties  A summary of our Group’s investment properties as at the LPD are set out below:­ Address! Identification  Title  Tenure! Expiry of lease! Remaining lease tenure  Description! Existing use  Date of issuance of CF! CCC  Approximate age of building  Approximate land area! Built up area tt2  NBV as at 31.12.2016 RM  Major encumbrances  Address: B-10-12, Tower B Utropolis Suites, Jalan Kontraktor U1!14, Seksyen U1 40150, Shah Alam SeJangor Darul Ehsan Title Identification: Geran 312887 Lot 91903 (formerly known as H.S. (D) 280267 PT 35292), Mukim Damansara, District of Petaling, State of Selangor Darul Ehsan  Freehold  One (1) of the service apartment units located on the 10th floor and two (2) car park lots located on the 15t floor of a 14-storey service apartment building Existing use: Vacant  Date of CCC: 14.12.2015  One (1) year  Land area: Not applicable Built up area: 1,066  618,701  Charged to Hong Leong Bank
6. BUSINESS OVERVIEW (CONT’D) Registered owner I Beneficial Owner Setia Ecohill Sdn Bhd I Advancecon Properties Descriptionl Existing use Tenurel Expiry of  Addressl  Title  leasel  Remaining  Identification  lease tenure  Address:  Freehold  No.2,  2A  and  18, Jalan  Ecohill 1/1 K, and  No. 15, Jalan Ecohill1/1L  Setia Ecohill  43500, Semenyih  Selangor Darul Ehsan  Title Identification:  HSD 153425 PT 33987 and  Geran  50544  Lot  650  Mukim of Semenyih, District  of  Ulu  Langat,  State  of  Selangor Darul Ehsan
Four (4) units of double storey terrace house (i) Existing use: No.2 and 2A are vacant
(ii) No. 15 has been rented out to (1) tenan(1

(iii) No. 18 has been rented out to (1) tenan(2 Approximate  Approximate  Date of issuance  age of  land areal  NBVas at  Major  ofCFI CCC  building  Built up area ft2  31.12.2016 RM  encumbrances  Date of CCC:  One (1) year  Land area:  2,565,996  Charged to  26.11.2015  10,238  Alliance Islamic  Bank  Built up area:  8,070
Company Number: 426965-M 6. BUSINESS OVERVIEW (CONTD)
Registered owner I Beneficial Owner Eco Sky Development Sdn Bhd I Advancecon Properties Cyberview Sdn Bhd I Advancecon Properties Tenurel Expiry of  Approximate  Approximate  Addressl Title  leasel Remaining  Descriptionl  Date of issuance  age of  land areal  NBVas at  Major  Identification  lease tenure  Existing use  of CFI CCC  building  Built up area  31.12.2016  encumbrances  tt2  RM  Address:  Freehold  Two (2) of the  Not applicable”3  Not  Land area:  419,710  Charged to  B-21-11 (B2), Level 21 and  condominium  applicable  Not applicable  Alliance Islamic  B-30-12 (A1), Level 30  units located  Bank  Eco Sky  on the 21 st  Built up area:  floor and 30th  2,336  Title Identification:  floor and four  HSD 120256, PT 26749  (4) cark park  Mukim Batu, District of  lots located on  Kuala Lumpur, Wilayah  the 1sl floor  Persekutuan  and 3rd floor of  a 39-storey  service  apartment  building  Existing use:  Under  construction  Address:  Freehold  One (1) unit of  Date ofCCC:  Two (2) years  Land area:  643,554  Suite E-2-3A, Blok E  office suite  21.04.2015  Not applicable  CBD Perdana 3  Jalan Perdana, Cyber 12  Existing use:  Built up area:  63000 Cyberjaya, Selangor  Rented to one  1,701  Darul Ehsan  (1) tenanf4  Title Identification:  Geran 267026, Lot 47591,  Mukim Dengkil, District of  Sepang, State of Selangor  Darul Ehsan
Company Number: 426965-M 6. BUSINESS OVERVIEW (CONTD)
Registered owner! Beneficial Owner Riverside Hills Sdn Bhd !Advancecon Properties Cyberview Sdn Bhd! Advancecon Properties Tenure! Expiry of  Approximate  Approximate  Address!  Title  leasel  Remaining  Descriptionl  Date of issuance  age of  land areal  NBVas at  Major  Identification  lease tenure  Existing use  of eFI eee  building  Built up area ft2  31.12.2016 RM  encumbrances  Address:  Freehold  Two  (2)  Not applicable’6  Not  Land area:  1,926,680  Charged to  Lot 3020 and 3021,  parcels  of  applicable  14,499  Public Bank  Phase  3A  Precinct  3­ freehold  Gentlebre  residential land  Built up area:  Eco Majestic  Not applicable  Title Identification:  Existing  use:  Geran No. 47935 Lot 1252,  Vacant  Geran  No.  47936  Lot  35  and Geran No. 313661 Lot  42195,  Mukim  Beranang  District of Ulu Langat, State  of Selangor Darul Ehsan  Address:  Freehold  One (1) unit of  21.12.2016  One (1) year  Land area:  1,004,100  Charged to  Land Parcel No. 68  double  storey  3,294  Public Bank  Ceria Residen  terrace house  Built up area:  Title Identification:  Existing  use:  2,302  Geran 332127 Lot 115100  Vacant  (formerly known as H.S.(D)  36148 PT 50489), Mukim of  Dengkil, District of Sepang,  State  of  Selangor  Darul  Ehsan
Company Number: 426965-M 6. BUSINESS OVERVIEW (CONTO)
Registered owner I Beneficial Owner Riverside Hills Sdn Bhd IAdvancecon Properties Riverside Hills Sdn Bhd IAdvancecon Properties Company Number: 426965:M’J Tenurel Expiry of  Approximate  Approximate  Addressl Title  leasel Remaining  Descriptionl  Date of issuance  age of  land areal  NBVas at  Major  Identification  lease tenure  Existing use  of CF/CCC  building  Built up area fe  31.12.2016 RM  encumbrances  Address:  Freehold  One (1) unit of  Not applicable’S  Not  Land area:  682,560  Charged to  Lot 2373, Phase 2F01  double storey  applicable  3,197  Public Bank  Precinct 2 -Tenderfield  semi-detached  Eco Majestic  house  Built up area:  3,501  Title Identification:  Existing use:  Geran 47935 Lot 1252,  Under  Geran 47936 Lot 35 and  construction  Geran 313661 Lot 42195  Mukim Beranang, District of  Ulu Langat, State of  Selangor Darul Ehsan  Address:  Freehold  Whole of  Not applicable’3  Not  Land area:  898,165  Charged to  Lot 9014, Phase 9A01  ground floor to  applicable  1,916  Public Bank  Precinct 9 -The Ivoris  1st floor of a  Eco Majestic  two-(2) storey  Built up area:  shop office  3,833  Title Identification:  Geran 47935 Lot 1252,  Existing use:  Geran 47936 Lot 35 and  Under  Geran 313661 Lot 42195  construction  Mukim Beranang, District of  Ulu Langat, State of  Selangor Darul Ehsan

 

6. BUSINESS OVERVIEW (CONTO) Registered owner I Beneficial Owner Eco Sanctuary Sdn Bhd IAdvancecon Properties Galeri Tropika Sdn Bhd I Advancecon Properties Addressl Title Identification Address: Land Parcel No. S1001 and S1002 Phase 1A03 -Rio Villa Eco Sanctuary
Title Identification: HS(D) 39255 PT 41293, HS(D) 39256 PT 41294, HS(D) 39257 PT 41295 Mukim Tanjong Duabelas, District of Kuala Langat, State of Selangor Darul Ehsan
Address: E1-10-06, Tower One and E5-3-01, Tower Five Jalan Ion Delemen 1 Genting Highlands 69000 Genting, Pahang
Title Identification: HS(D) 10562 PT 11385, Mukim Bentong, District of Bentong, State of Pahang
Tenurel Expiry of leasel Remaining lease tenure Leasehold for 99 years/ Will expire on 09.11.21101 approximately 94 years Freehold Descriptionl Existing use Two (2) units of double storey semi­detached house Existing use: Under construction Two (2) of the service apartment units located on the 3’d floor of a 8-storey service apartment building and 10th floor of a 25-storey service apartment building Existing use: Vacant Approximate Date of issuance age of of CFI CCC building Not applicable”3 Not applicable Date of CCC: One (1) year 22.04.2016 Approximate land areal Built up area ft2 Land area: 8,805 Built up area: 7,099 Land area: Not applicable Built up area: 2,440 NBVas at Major 31.12.2016 encumbrances RM 2,326,500 Charged to Public Bank
1,976,966 Company Number: 426965-M
6. BUSINESS OVERVIEW (CONTO) Registered owner I Beneficial Owner Tropicana Golf& Country Resort Berhad I Advancecon Properties Advancecon Properties Addressl Title Identification Address: A-27-01, Block A Tropicana Grande Condominiums No.3 Persiaran Tropicana Tropicana Golf & Country Resort PJU 3 47410 Petaling Jaya Selangor Darul Ehsan Title Identification: PN 92830, Lot 89552, Bandar Damansara, District of Petaling, State of Selangor Darul Ehsan Address: No.1, Jalan Pengaturcara U1/51 E, Seksyen U1 40150 Shah Alam Petaling Jaya Selangor Darul Ehsan Title Identification: Geran 316473, Lot 64445, Town of Glenmarie, District of Petaling, State of Selangor Darul Ehsan Tenurel Expiry of  Approximate  Approximate  leasel Remaining  Descriptionl  Date of issuance  age of  land areal  NBVas at  Major  lease tenure  Existing use  ofCFI CCC  building  Built up area  31.12.2016  encumbrances  ft2  RM  Leasehold for 99  One (1) of the  Date of CCC:  Four (4) years  Land area:  1,596,243  Charged to  yearsl  condominium  06.11.2013  Not applicable  UOB Bank  onWill expire  units located  04.04.21091  on the 27th  Built up area:  93approximately  floor and two  2,079  years  (2) car park  lots located on  the 5th floor of  a 39-storey  service  apartment  building  Existing use:  Rented to one  (1) tenanfS  Freehold  One (1) unit of  Date of CCC:  Six (6) years  Land area:  3,832,208  Charged to  three-(3)  27.07.2011  7,158  Alliance Bank  storey  bungalow  Built up area:  4,790  Existing use:  Vacant
Company Number: 426965-M II
6. BUSINESS OVERVIEW (CONT’O) Registered  owner I  Tenurel Expiry of  Approximate  Approximate  Beneficial  Addressl  Title  leasel  Remaining  Descriptionl  Date of issuance  age of  land areal  NBV as at  Major  Owner  Identification  lease tenure  Existing use  ofeFI eee  building  Built up area ft2  31.12.2016 RM  encumbrances  Advancecon  Address:  Freehold  One (1) unit of  Date of CCC:  Four (4) years  Land area:  3,198,554  Charged to  Properties  No. 18, Jalan Pengaturcara  three-(3)  16.04.2013  8,253  Alliance Bank  U1/51H, Seksyen U1  storey  semi­ 40150 Shah Alam  detached  Built up area:  Petaling Jaya  house  3,940  Selangor Darul Ehsan  Existing  use:  Title Identification:  Vacant  HS(D) 279746, Lot No. PT  1981  Town  of  Glenmarie,  District of Petaling, State of  Selangor Darul Ehsan  Advancecon  Address:  Leasehold  for  99  A  parcel  of  Not applicable”6  Not  Land area:  6,457,958  Charged to  Properties  No.8,  Jalan  PJU  3/160  yearsl  leasehold  applicable  21,269  UOB Bank  Tropicana Indah  Will  expire  on  residential land  47410 Petaling Jaya  _  27.05.2101/  Built up area:  Selangor Darul Ehsan  approximately  85  Existing  use:  Not applicable  years  Vacant  Title Identification:  H.S.(D)  173541  P.T.  No  32213, Pekan Baru Sungai  Buloh,  District of Petaling,  State  of  Selangor  Darul  Ehsan
Company Number: 426965-M 6. BUSINESS OVERVIEW (CONT’D) Registered owner I Tenurel Expiry of Approximate Approximate Beneficial Addressl Title leasel Remaining Descriptionl Date of issuance age of land areal NBVas at Major Owner Identification lease tenure Existing use ofCFI CCC building Built up area 31.12.2016 encumbrances ft2 RM Advancecon Address: Freehold One (1) unit of Date ofCCC: One (1) year Land area: 1,927,195 Charged to Properties No. 55, Jalan Ecohill 3/1 B double storey 01.12.2015 6,712 Public Bank Setia Ecohill zero lot 43500 Semenyih bungalow Built up area: Selangor Darul Ehsan 3,304 Existing use: Title Identification: Vacant HS(D) 164582 PT 40672 Mukim Semenyih, District of Ulu Langat, State of Selangor Darul Ehsan
Total 30,075,090 Notes:­’1 The investment property has been rented out for residential purposes for a monthly rental of RM1,100 for a period of one (1) year from 1 May 2017 to 30 April 2018 “2 The investment property has been rented out for residential purposes for a monthly rental of RM1, 100 for a period of one (1) year from 5 January 2017 to 4 January 2018 ‘3 As at the LPD, there is no CF issued on these investment properties as they are currently under construction ‘4 The investment property has been rented out for office purposes for a monthly rental of RM2,650 for a period of three (3) years from 18 March 2016 to 17 March 2019 ‘5 The investment property has been rented out for residential purposes for a monthly rental of RM6,000 for a period of one (1) year from 24 December 2016 to 23 December 2017 ‘6 As at the LPD, there is no CF issued on these lands as these are currently vacant lands II Company Number: 426965-M II 6. BUSINESS OVERVIEW (CONT’D) 6.16.4 Material tangible fixed assets other than property A summary of the tangible fixed assets owned by our Group other than properties and plants, segregated in the order of the assets’
age band, are set out below:­Description Age of assets: 1-3 years Motor vehicles Earthworks Excavator Bulldozer Compactor Dump Truck Tipper Truck Long Arm Earthworks Supporting Machinery Water Truck Diesel Truck Motor Grader Wood Crusher Plant Civil Engineering Services Backhoe No. of units 84 43 16 17 78 3 5 189
Useful life No. of years
8 8 8 8 8 8 8 8 8 8 8 8 Remaining useful life as NBVas at 31 at 31 December 2016 December 2016 Average no. of years RM’OOO 6.1 6,688 6.0 24,550 5.4 7,670
6.4 3,203

5.7 21,783 5.0 902
6.0 35

5.0 37
6.0 60

6.0 1,786 6.0 553 5.0 83 Company Number:

6. BUSINESS OVERVIEW (CONT’D) Remaining useful life as  NBV as at 31  Description  No. of units  Useful life  at 31 December 2016  December 2016  No. of years  Average no. of years  RM’OOO  Shovel  2  8  5.5  355  Hydro Crusher  1  8  6.0  21  Forklift  1  8  7.0  70  Support Services  Crusher Plant  1  8  6.0  71  Total (excluding motor vehicles)  172  61,179  Total (including motor vehicles)  256  67,867  Age of assets: 4 -7 years’1  Motor vehicles  69  8  3.1  2,589  Earthworks  Excavator  26  8  3.3  9,289  Bulldozer  5  8  3.6  1,059  Compactor  8  8  2.5  812  Dump Truck  26  8  3.5  4,283  Tipper Truck  16  8  2.6  1,912  Amphibious Undercarriage  4  8  2.8  359  Earthworks Supporting Machinery  Water Truck  5  8  2.0  24  190
II  Company Number: 426965-MJ  6. BUSINESS OVERVIEW (CONT’D)  Remaining useful life as  NBV as at 31  Description  No. of units  Useful life  at 31 December 2016  December 2016  No. of years  Average no. of years  RM’OOO  Diesel Truck  6  8  2.0  23  Crawler Drill  8  8  2.3  1,186  Compressor  4  8  2.3  43  Backpusher  3  8  2.0  Motor Grader  2  8  4.0  389  Civil Engineering Services  Backhoe  1  8  2.0  4  Hydraulic Breaker  4  8  3.0  74  Forklift  2  8  1.5  14  Others·3  3  8  3.0  41  Support Services  Trailer  4  8  1.5  186  Lorry  1  8  1.0  11  Total (excluding motor vehicles)  128  19,709  Total (including motor vehicles)  197  22,298  Age of assets: 8 years and above  Motor vehicles  8  8  ·2  ·4  Earthworks  Dump Truck  1  8  ·2  ·4  191
Company Number: 426965-MJI 6. BUSINESS OVERVIEW (CONT’D) Remaining useful life as  NBV as at31  Description  No. of units  Useful life  at 31 December 2016  December 2016  No. of years  Average no. of years  RM’OOO
Earthworks Supporting Machinery ‘2 “4Compressor 38 “2 “4Water Truck 2 8 “2 “4Diesel Truck 8 Civil Engineering Services “2 “4Others”3 15 8 Support Services “2 “4Crusher Plant 8 Total (excluding motor vehicles) 23 “4 Total (including motor vehicles) 31 “4 Grand total (excluding motor vehicles) 323 80,888 Grand total (including motor vehicles) 484 90,165 Notes:­Amongst the assets used beyond five (5) years, our Group has identified fourteen (14) units of excavators, ten (10) units of tipper trucks “‘ and two (2) units of motor graders with age of machinery exceeding five (5) years that necessitate replacement after taking into consideration that our Group had been incurring relatively high monthly maintenance and repairing costs to maintain these machinery. We shall part-finance for investment in new machinery to replace the aforesaid assets used beyond its useful life by utilising the IPO proceeds earmarked for such purpose, as further elaborated in Section 3.12 of this Prospectus “2 No remaining useful life as per our depreciation policy as these are assets used beyond its useful life. “3 Comprises equipment for construction services such as generator sets, electronic total station, cone crusher, pan feeder, welding machine, high pressure sand and pump, hydro seeding machine, grinder, demolition hammer and rotary hammer, etc “4 Negligible 192 ompany Number: 42
6. BUSINESS OVERVIEW (CONTD) 6.16.5 Material plans to construct, expand or improve facilities Save for the utilisation of the gross proceeds arising from the Public Issue which we earmark for the working capital and purchase of construction machinery and equipment to cater for our expansion of construction services as well as the construction of a new workshop to provide servicing and maintenance of our machinery as set out in Section 3.12 of this Prospectus, we do not have any other immediate material plans to construct, expand or improve our facilities as at the date of this Prospectus. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK =

 

6. BUSINESS OVERVIEW (CONT’D) 6.17 Future plans and strategies Our Group’s vision is to become the leading earthworks and civil engineering services contractor in Malaysia, specialising in earthworks and major infrastructure works. Moving forward, our Group’s future plans and business strategies will centre on the following key action plans:­i. Continued expansion within the earthworks and civil engineering services market Our Group’s primary thrust moving forward is to continue expanding within the earthworks and civil engineering services market in Malaysia. Specifically, we will continue to undertake earthworks focusing on both residential and commercial property development projects and infrastructure projects (for road and highway). We will also continue to concentrate on civil engineering services especially on the construction of road and highway. In line with the increase in the scale of our projects in recent years, we intend to continue to focus on earthworks and civil engineering projects of larger scale whereby we will focus on bidding projects with contract value exceeding RM50 million. We intend to step up our efforts to target larger-scale construction projects which require the combination of earthworks and civil engineering services as we believe such projects will generate higher revenue to our Group and further raise our business profile in the industry as an earthworks specialist. In the Budget 2017, the Government announced that approximately RM25.9 billion will be allocated for the economic sector under the development expenditure. Infrastructure is a catalyst for overall economic and social development and the Government will continue to improve logistics infrastructure, including building and improving rail transport network and highways. Our Board believes that the demand for public sector projects, in particular projects related to the construction of public infrastructures, will continue to be strong. Therefore, equipped with our SPKK licence, we intend to focus our resources on such public sector projects. As at the LPD, our Group has submitted tenders for some of the sub-contracting jobs involving Government projects such as the sub-contracts for the Pan Borneo Highway project, DASH project and SUKE project. For investors’ information, our Group had secured a subcontract for the development and upgrading of the proposed Pan Borneo highway in the state of Sarawak (from Sg Awik Bridge to Bintangor Junction) which had a contract value of RM105.23 million and awarded to our Group on December 2016. Premised on the above and at this juncture, we plan to bid for more Government projects in the western region of Peninsular Malaysia, particularly in the Klang Valley and Johor. For the avoidance of doubt, our expansion plan will be undertaken on an on-going basis and it will be funded via the combination of both internally generated funds and external borrowings. ii. Upgrading internal capabilities In line with our future plans to bid for more large-scale projects, we intend to invest in more new machinery to cater for such expansion as well as to replace certain fleet of our existing machinery. The machinery that we are identifying for future investment are mainly excavators (with capacity weight of 48 tonnes) and tipper trucks to undertake bulk earthworks and road construction works. Such acquisitions are intended to further enhance the capacity and capability of our Group’s fleet of machinery to support our business expansion to compete effectively against our competitors operating in the local market. 194 6. BUSINESS OVERVIEW (CONT’D) This is in tandem with our allocation of approximately RM15.1 0 million of the proceeds from our Public Issue for the purchase of new construction machinery and equipment within 12 months upon Listing. In line with the expansion of our fleet of machinery, we intend to utilise our IPO proceeds amounting to approximately RM14.60 million to construct an organised and well-equipped workshop, used to maintain, modify and repair our fleet of machinery within 24 months upon Listing. The workshop would house a dedicated team of experienced technical personnel responsible for supporting our large fleet of machinery. They can be deployed as part of our mobile response team to perform quick on-site repairing works if necessary. The workshop enables our Group to optimise the utilisation of our fleet of machinery by reducing machinery downtime, ensuring maximum machinery effectiveness and prolonging the useful life of each machine. Furthermore, the workshop would be eqUipped with hoisting equipment to facilitate the repair of our machinery. The hoisting equipment is used to lift the machinery by using a hoist and will allow the lifting our heavier machinery such as excavators and bulldozers to facilitate the undercarriage repair and maintenance process. There would also be a segmented area for storage of spare parts for the purpose of repair and maintenance. As our Group is equipped with large numbers of machinery, there is a consistent demand for spare parts for the repair and maintenance of our machinery. Smaller spare parts such as air filter, oil filter and hydraulic pumps will be stored in containers, whilst larger spare parts such as tyres, excavator buckets and engines will have another designated storage area within the workshop. By haVing an internal storage for our spare parts, the waiting time for repair and maintenance of our machinery would be minimised as we can avoid delayed deliveries of spare parts from third party providers in the event of unexpected increases in internal demand for such items. iii. Implementing an ISO 14001-compliant environmental management system In our continuous effort towards process improvement, we plan to implement an environmental management system that is in compliance with the ISO 14001 :2015 standard through internally generated funds. We have conducted internal meetings to discuss the requirements to obtain the ISO 14001 :2015 accreditation and we are gradually adapting our environment management practices such as waste management at the project site to be ISO 14001:2015 compliant and are targeting to obtain the certification by 2018. The methodology adopted in ISO 14001 :2015 places emphasis in identifying Environment Aspect and Impact analysis through a systematic approach. As such, through a planned and documented process, it ensures an efficient waste management in order to achieve the works and cost efficiency at project site. By implementing a framework that is in compliance with the ISO 14001 :2015 standard, we stand to benefit from the potential reduction in operational cost and the potential increase in workplace productivity through efficient resource and waste management. Reduction in wastages at project site will help to provide a cleaner and safer working environment, which in turn can improve workplace efficiency and result in cost savings. 195

6. BUSINESS OVERVIEW (CONT’O) 6.18 Prospects of our Group We believe the prospects of our Group are favourable as our business is led by an experienced management team. In view that our Group has been serving in the earthworks and civil engineering services market for approximately 27 years, we have a proven track record of our service quality and have accrued an extensive experience over the years. Furthermore, our sizeable fleet of machinery and equipment and maintenance team can assist us to undertake large-scale projects or more small-to medium-scale projects leading to more potential revenue stream. Our commitment to quality assurance and our quality consistency over the years has helped us establish a strong reputation as a reliable and trustworthy partner in the earthworks and civil engineering services market. Further details on our competitive strengths are set out in Section 6.3 of this Prospectus. Our Group’s vision is to become the leading earthworks and civil engineering services contractor in Malaysia. Moving forward, our Group’s future plans and business strategies will centre on the continuous expansion within the earthworks and civil engineering services market, upgrading internal capabilities and the implementation of an ISO 14001-compliant Environmental Management System. We also intend to increase our penetration rate in the Malaysian earthworks and civil engineering services market by actively bidding for Government projects. According to the Independent Market Researcher’s report, the earthworks and civil engineering services market in Malaysia was valued at an estimated RM16.14 billion in 2016 and is expected to grow at a CAGR of 15.3% for the years 2017 to 2021. Further details on our prospects and outlook of the industry are set out in Section 7 of this Prospectus. As our Group is primarily project-based, our future profitability is dependent on the number of projects and value of the projects secured. Over the past three (3) years, we have been able to secure projects from our customers who are predominantly in the property development sector. As at the LPD, our order book in our earthworks and civil engineering services segment amounts to RM572.48 million which is expected to sustain the Group’s earnings for approximately 24 months from the LPD. Further details on the state of our order book are set out in Section 11.5 of this Prospectus. Given that the earthworks and civil engineering services business is capital intensive, we need to constantly upgrade our machinery with newer, more powerfUl and more efficient machines to remain competitive. Our Group has earmarked approximately RM15.10 million, representing 26.6% of the proceeds from the Public Issue, for the purchase of construction machinery and equipment to further expand our earthworks and civil engineering services market. We would be able to operate in a more cost efficient manner with newer and higher technology machinery and eqUipment due to lower likelihood of machinery and equipment breakdown. As SUCh, we would be able to further enhance our competitiveness in our tender. Please refer to Section 3.12 of this Prospectus for further details on utilisation of proceeds from the Public Issue. We will continue to leverage on our core competencies, competitive edge and our established track record whilst pursuing growth opportunities within the earthworks and civil engineering services industry. 196

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