Business Overview

6. BUSINESS OVERVIEW 6. BUSINESS OVERVIEW 6.1 OUR HISTORY Our history can be traced back to 1978 with the formation of Syarikat Sunto Trading by Koh Lap Hing together with three (3) other partners, namely Wong Fai Nam, Chee Wooi Chi and the late Hew Foh @ Hew Foh Yew (the father of Hew Chun Shun) to provide general maintenance, repair and installation services for various types of electrical equipment, including commercial laundry equipment and medical devices across Peninsular Malaysia. Chung Eng Lam joined Syarikat Sunto Trading as its Technical Personnel in 1986 whilst Hew Chun Shun joined Syarikat Sunto Trading in 1996 to assist his father, Hew Foh @ Hew Foh Yew in running the operations of Syarikat Sunto Trading. During that time, Koh Lap Hing, Chung Eng Lam and Hew Chun Shun developed a good working relationship together and later decided to expand their capabilities to not only provide maintenance, repair and installation services, but also include the distribution of equipment. This is achieved by bringing new talents that have the necessary sales and technical expertise in the equipment distribution business to jointly move up the value chain in the distribution of equipment business segment, in addition to prOViding maintenance, repair and installation services. CS Laundry was established on 10 September 1996 by Koh Lap Hing and Abdul Halim bin Jamaludin with the intention to seek new business opportunities in the provision of laundry cleaning services. The Directors and shareholders of CS Laundry as at 10 September 1996 were Koh Lap Hing and Abdul Halim bin Jamaludin. However, from the period from 10 September 1996 to 1 December 1998, CS Laundry did not commence its business activity. In December 1998, CS Laundry underwent a change in shareholding structure that saw the entry of Chung Eng Lam, Hew Chun Shun and Lim Jit Wei as shareholders alongside Koh Lap Hing and Yap Soon Guan. Following the changes in the shareholding structure, CS Laundry ventured into the business related to the distribution of commercial laundry equipment which tapped on our Executive Directors’ technical expertise and experiences in the area of maintenance, repair and installation of equipment. This business venture is spearheaded and led by Lim Jit Wei, who at that point in time already had more than ten (10) years of prior sales and technical experiences in the commercial laundry equipment business segment during his working tenure at I.E Candid Sdn Bhd from 1988 to 1998. I.E Candid Sdn Bhd was principally involved in the trading and installation of industrial kitchen and laundry equipment, and Syarikat Sunto Trading was the sub-contractor to I.E Candid Sdn Bhd. Lim Jit Wei however was not attached to nor was he involved in Syarikat Sunto Trading from 1988 to 1998. During his tenure with I.E Candid Sdn Bhd, he held various positions including Senior Technician (1988 to 1991), Technical Supervisor (1991 to 1994) and Sales and Technical Design Executive (1994 to 1998). He was involved in the sales and maintenance of various commercial laundry equipment and its laundry systems (such as water inlet, drainage pipe and electrical supply box) during his tenure at I.E Candid Sdn Bhd, which includes the following:­(a) managing and negotiating the sales of various industrial kitchen and laundry equipment to various industry users such as hotels, hospitals and launderettes;
(b) managing and supervising the operations involving commercial laundry equipment and associated equipment maintenance and services;
(c) supervising the implementation of several projects for laundry facilities (i.e. the laundry department in its clients premises such as hotels, hospitals and traditional laundry shop); and
(d) managing and supervising the layout and design of the laundry facility as well as equipment selection.

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6. BUSINESS OVERVIEW (Cont’d) Since the establishment of CS Laundry on 10 September 1996, CS Laundry has undergone a series of shareholding restructuring up until the LPD, details of which are as follows:­No.  Nature of restructuring! Issuance  Dates  Transferor  Transferee! Allottee  No. of shares allotted! transferred by transferor  Eventual no. of shares held by transferee! allottee  0/0  Remarks  (1)  Allotment new shares  of  10 September 1996  Koh Lap Hing Abdul Halim bin Jamaludin Total  1 1 2  1 1 2  50.0 50.0 100.0  Note (1)  (2)  Transfer  5 August Abdul Halim bin 1997 Jamaludin  Yap Soon Guan Koh Lap Hing Total  1 1  1 1 2  50.0 50.0 100.0  Note (1)  (3)  Allotment  10 December -1998  Koh Lap Hing Lim Jit Wei Chung Eng Lam Yap Soon Guan Hew Chun Shun Total  27,269 34,340 16,160 7,069 16,160 100,998  27,270 34,340 16,160 7,070 16,160 101,000  27.0 34.0 16.0 7.0 16.0 100.0  Note (2)  (4)  Allotment  3 October -2007  Koh Lap Hing Lim Jit Wei Chung Eng Lam Yap Soon Guan Hew Chun Shun Total  27,000 34,000 16,000 7,000 16,000 100,000  54,270 68,340 32,160 14,070 32,160 201,000  27.0 34.0 16.0 7.0 16.0 100.0  I\lote (3)  (5)  Transfer  15 December -2014 Lim Jit Wei and Koh Lap Hing Lim Jit Wei Koh Lap Hing  Koh Lap Hing Lim Jit Wei Chung Eng Lam Yap Soon Guan Hew Chun Shun Total  7,544 3,300 7,544 18,388  39,704 64,518 39,704 17,370 39,704 201,000  19.8 32.2 19.7 8.6 19.7 100.0  Note (4)  (6)  Transfer  25 February Yap Soon Guan 2015 Yap Soon Guan Yap Soon Guan  Koh Lap Hing Lim Jit Wei Chung Eng Lam Hew Chun Shun  5,790 5,790 5,790 17,370  45,494 64,518 45,494 45,494 201,000  22.6 32.2 22.6 22.6 100.0  I\lote (5)  (7)  Transfer  14 July 2016  Koh Lap Hing Lim Jit Wei Chung Eng Lam Hew Chun Shun  SCM SCM SCM SCM Total  45,494 64,518 45,494 45,494 201,000  45,494 64,518 45,494 45,494 201,000  22.6 32.2 22.6 22.6 100.0  Note (6)

6. BUSINESS OVERVIEW (Cont’d) Notes:­(1) Abdul Halim bin Jamaludin had subsequently disposed his entire 50.0% equity interest in CS Laundry to Yap Soon Guan on 5 August 1997 for a disposal consideration of RM1.00 as he intended to pursue new business opportunities elsewhere. Yap Soon Guan was a business associate of Koh Lap Hing and Hew Foh @ Hew Foh Yew.
(2) A total of 100,998 ordinary shares of RM1.00 each in CS Laundry were issued and allotted for a total consideration of RM100,998 which was utilised for working capital purposes of CS Laundry. This resulted in a change in the shareholding structure of CS Laundry that saw the entry of Chung Eng Lam, Hew Chun Shun and Lim Jit Wei as shareholders.
(3) The shareholders of CS Laundry had subscribed to an additional 100,000 ordinary shares of RM1.00 each in CS Laundry pursuant to additional capital injection of RM100,OOO by the shareholders of CS Laundry into CS Laundry, which was utilised for working capital purposes.
(4) The shareholders of CS Laundry, namely Lim Jit Wei and Koh Lap Hing, had transferred a total of 18,388 ordinary shares of RM1.00 each in CS Laundry to Yap Soon Guan, Chung Eng Lam and Hew Chun Shun for a total consideration of RI’118,388.
(5) Yap Soon Guan resigned as CS Laundry’s Director on 25 January 2006 and ceased to be a shareholder of CS Laundry on 25 February 2015 via the disposal of his entire equity interest in CS Laundry to Koh Lap Hing, Chung Eng Lam and Hew Chun Shun for a total disposal consideration of RM17,370. Yap Soon Guan has disposed his entire shareholdings in CS Laundry to fully concentrate in the running of MSB. He is presently the Managing Director of MSB and holds 54% equity interest in I’1SB, which is involved in the design, supply, installation, testing and commissioning of pneumatic tube transport system and central vacuum cleaning. He was not involved in other business activities that are similar to that of our Group in the past five (5) years.
(6) Pursuant to the Acquisition of CS Laundry, Koh Lap Hing, Lim Jit Wei, Chung Eng Lam and Hew Chun Shun have transferred a total of 201,000 ordinary shares of RM1.00 each in CS Laundry, representing the entire issued and paid-up share capital of CS Laundry to our Company for a total purchase consideration of RM8,400,OOO.

During the early years of CS Laundry between 1998 to 2000, the distribution range of commercial laundry equipment was targeted at traditional non self-service laundry shops (e.g. shops that offer dry cleaning services besides the common laundry services of washing and drying mostly for individuals or families in the neighbourhood with relatively small load involved) and outsourced laundry service prOViders (e.g. laundry service prOViders that offer large scale laundry services to businesses and institutions such as hotel and hospitals, involVing large volume of textile and apparel) that were predominantly located in the Klang Valley. In 2000, CS Laundry expanded its distribution of equipment and services offerings to the hospitality sector in Malaysia. This includes prOViding consultancy services such as designing, recommendation of the types of commercial laundry equipment to be installed, drawing of schematics and layouts, flow and space planning, fixtures and fittings as well as other fit-outs to be installed. Additionally, CS Laundry also provides support in terms of training, after-sales services as well as repair and maintenance services as part of its service offerings. Its customers in the hospitality sector since then include amongst others, Micasa Hotel Kuala Lumpur (business relationship from June 1999 to February 2007), Regent Hotel Kuala Lumpur (business relationship from May 2000 to November 2006), Renaissance Hotel Kuala Lumpur (business relationship from November 2000 to August 2001), Mutiara Beach Resort Penang (business relationship from November 2001 to December 2002), Hotel Equatorial Penang, Hotel Nikko Kuala Lumpur (business relationship from November 2006 to September 2010), Hilton Hotel Kuala Lumpur, Pullman Kuala Lumpur City Centre Hotel and Residences (previously known as Prince Hotel Kuala Lumpur), Traders Hotel Kuala Lumpur and Putrajaya Marriott Hotel. These customers are part of the chain of international hotels and resorts which 6. BUSINESS OVERVIEW (Cont’d) emphasise high quality and professional services from service providers. This was a further stepping stone of our foray into the commercial laundry equipment business segment in Malaysia. To date, we have maintained our relationship with Hotel Equatorial Penang, Hilton Hotel Kuala Lumpur, Pullman Kuala Lumpur City Centre Hotel and Residences (previously known as Prince Hotel Kuala Lumpur), Traders Hotel Kuala Lumpur and Putrajaya Marriott Hotel, whereby we are still providing them with the maintenance and repair services as well as replacing their old on-premise commercial laundry equipment from time to time. In 2001, CS Laundry was appointed by Alliance Laundry, an international manufacturer and distributor of commercial laundry equipment, as its non-exclusive distributor for the Huebsch, IPSO, UniMac and Primus brands of commercial laundry equipment as well as its related spare parts, accessories and consumables in l”1alaysia. In 2002, CS Laundry was subsequently appointed as the non-exclusive authorised distributor by Jensen Asia Pte Ltd to distribute the full range of Jensen brand of commercial laundry equipment and related parts in Malaysia. In 2003, CS Laundry further expanded its business in the commercial laundry equipment business segment by successfully securing a business partner involved in the healthcare sector, namely Amirdic via non-formalised business collaboration with Amirdic to jointly supply commercial laundry equipment and provide after-sales maintenance services to UMMC as Amirdic’s sub-contractor. The decision to enter into the non-formalised business collaboration with Amirdic was made as UMMC had already awarded the distribution of commercial laundry equipment contract to Amirdic. Amirdic also possesses the relevant permits and licenses from the Ministry of Finance, Ministry of Works and CIDB (which was not obtained by CS Laundry). In addition, it would be more expedient, time saving and cost effective for CS Laundry to participate as the sub-contractor of Amirdic rather than to obtain its own permits and licenses required in order to participate in the tender award by UMMC. The non-formalised business collaboration commenced in 2003, whereby Amirdic was responsible for all administrative and billing matters relating to the business collaboration, whilst CS Laundry was responsible for the supply and installation of commercial laundry equipment as well as providing after-sales services, training, repair and preventive maintenance services to UMMC. The service and maintenance contract between UMMC and Amirdic expired in June 2015 and was not renewed at the request of UMMC to allow L1MMC the flexibility to request for maintenance services as and when required. However, CS Laundry continues to provide maintenance services on an ad hoc basis to UMMC through Amirdic under an arrangement whereby CS Laundry will act as a sub-contractor to Amirdic in providing the maintenance and repair services directly to UMMC. In this instance, CS Laundry is not required to possess the necessary permits and licenses as those held by Amirdic. From 2004 to 2010, we continued to build our commercial laundry equipment business segment in terms of expanding our customer base and improving our quality of service to our customers. Our Group’s foray into the distribution of medical devices business segment began in 2004 via Best Contact. Prior to this, Best Contact was involved in the business of supplying electronic control systems to electronic manufacturers which was established in 1994 by its shareholders, namely Koh Lap Hing and Chung Eng Lam and their business partners, namely Yap Soon Guan and Hew Foh @ Hew Foh Yew. Yap Soon Guan and Hew Foh @ Hew Foh Yew subsequently became shareholders of Best Contact on 10 August 1995. The types of electronic control systems include laser gauge and remote electronic controller. Laser gauge is an instrument to measure and monitor dimension in acceptable range while remote electronic controller is used to control various type of machinery. However, this business activity didn’t make much progress between 1994 and 2004. In 2004, Best Contact underwent a business rationalisation to change its business focus into the distribution of 6. BUSINESS OVERVIEW (Cont’d) No. (1)
(2)
(3)
(4)
(5)

medical devices, which began with the distribution of the Hitachi brand of medical imaging equipment such as X-Ray system, MRI system, CT scanner system and ultrasound machine. The business rationalisation of Best Contact saw changes in its shareholdings structure and key management team, whereby Liaw Chong Lin was invited to become the Managing Director of Best Contact to spearhead the expansion of the medical devices business segment. Liaw Chong Lin was previously attached to Smitech (M) Sdn Bhd as a Service Engineer (from 1990 to 1998) and Syarikat Sunto Trading was the sub-contractor to Smitech (M) Sdn Bhd, which was involved in the trading, servicing and maintenance of medical devices at that point in time. The summary changes in the shareholdings structure of Best Contact since its incorporation on 30 March 1994 up to the LPD are as follows:­No. of Eventual shares no. of Nature allotted/ shares held of transferred by restructuring/ Transferee/ by transferee/ Issuance Dates Transferor Allottee transferor allottee 0/0 Remarks Allotment  30  l”1arch  – Mansor  Bin  1  1  50.0  – 1994  Kenit  Sabtu Bin Ali  1  1  50.0  Total  2  2  100.0
Transfer 10 May Mansor Bin Chee Wooi Chi 1 1 50.0 ­1994 Kenit Sabtu Bin Ali Wong Chin 1 1 50.0 Siang Total 22 100.0 Transfer 28 Chee Wooi Chi Koh Lap Hing 1 1 50.0 ­November Wong Chin Chung Eng Lam 1 1 50.0 1994 Siang Total 22 100.0 Allotment 10 August -Koh Lap Hing 2,199 2,200 22.0 Note (1) 1995 Chung Eng Lam 2,199 2,200 22.0 Yap Soon Guan 3,400 3,400 34.0 Hew Foh @ Hew 2,200 2,200 22.0 Foh Yew Total 9,998 10,000 100.0 Allotment 25 Koh Lap Hing 93,800 96,000 24.0 Note (2) November -Chung Eng Lam 45,800 48,000 12.0 2004 Yap Soon Guan 3,400 0.9 Hew Foh @ Hew 2,200 0.6 Foh Yew Liaw Chong Lin 116,000 116,000 29.0 Hew Chun Shun 96,000 96,000 24.0 Chong Wai Mun 24,600 24,600 6.0 Kew Kin Chee 13,800 13,800 3.5 Total 390,000 400,000 100.0 Company No.: 1135238-U I I 6. BUSINESS OVERVIEW (Cont’d) No. of Eventual shares no. of Nature allotted/ shares held of transferred by restructuring/ Transferee/ by transferee/
No. Issuance Dates Transferor Allottee transferor allottee DID Remarks (6) Transfer 30 Koh Lap Hing 96,000 24.0 Note (3) November -Chung Eng Lam 48,000 12.0 2004 Liaw Chong Lin 116,000 29.0 Hew Chun Shun 96,000 24.0 Yap Soon Guan Chong Wai Mun 3,400 28,000 7.0 Hew Foh @ Hew Kew Kin Chee 2,200 16,000 4.0 Foh Yew Total 5,600 400,000 100.0 (7) Transfer 14 July Koh Lap Hing BCM 96,000 96,000 24.0 Note (4) 2016 Chung Eng Lam BCM 48,000 48,000 12.0 Liaw Chong Lin BCM 116,000 116,000 29.0 Hew Chun Shun BCM 96,000 96,000 24.0 Chong Wai Mun BCM 28,000 28,000 7.0 Kew Kin Chee BCM 16,000 16,000 4.0 Total 400,000 400,000 100.0
Notes:­(1) On 10 August 1995, Yap Soon Guan and Hew Foh @ Hew Foh Yew became the shareholders of Best Contact via subscription of new shares of RM1.00 each in Best Contact. On 22 November 2004, Yap Soon Guan and Hew Foh @ Hew Foh Yew have resigned as Directors of Best Contact. However, they remained as shareholders of Best Contact.
(2) Pursuant to the business rationalisation to change the business focus of Best Contact to the distribution of medical devices and the restructuring of its shareholdings structure, the new shareholders had subscribed to 390,000 new ordinary shares of RM1.00 each in Best Contact on 25 November 2004. As a result, the equity interests held by Yap Soon Guan and Hew Foh @ Hew Foh Yew in Best Contact were diluted to 0.9% and 0.6%, respectively.
(3) Subsequently, Yap Soon Guan and Hew Foh @ Hew Foh Yew disposed their entire equity interests held in Best Contact of 0.9% and 0.6%, respectively on 30 I\lovember 2004, as Yap Soon Guan has decided to fully concentrate in the running of MSB whilst Hew Foh @ Hew Foh Yew decided to retire to allow his son, Hew Chun Shun to succeed him.
(4) Pursuant to the Acquisition of Best Contact, Koh Lap Hing, Chung Eng Lam, Liaw Chong Lin, Chong Wai Mun, Kew Kin Chee and Hew Chun Shun transferred a total of 400,000 ordinary shares of RM1.00 each representing the entire issued and paid-up share capital of Best Contact to our Company for the total purchase consideration of RM5,750,000.

In 2004, Best Contact was appointed as the exclusive distributor by Hitachi Medical Systems (S) Pte Ltd to distribute the Hitachi brand of medical imaging equipment in Malaysia. This enabled us to gain immediate participation in the medical devices industry in Malaysia. Both Yap Soon Guan and Hew Foh @ Hew Foh Yew resigned as the Directors of Best Contact on 22 November 2004. 6. BUSINESS OVERVIEW (Cont’d) In 2006, Maymedic was established to venture into the distribution of sterilisation, disinfection and surgical room equipment sub-segment, as part of our expansion drive to further expand our range of distribution of medical devices products to the healthcare sector in Malaysia. In the same year, our Group was appointed as the exclusive distributor by STERIS Corporation to distribute the STERIS brand of sterilisation, disinfection and surgical room equipment in Malaysia. In 2010, we expanded our range of commercial laundry equipment to include the Huebsch brand of vended commercial laundry equipment, manufactured by Alliance Laundry. The decision to expand into the distribution of vended commercial laundry equipment was in line with the rapid urbanisation in Malaysia which has spurred demand for vended laundry services among urbanites. In 2013, we further expanded our range of vended commercial laundry equipment to include the Speed Queen brand of vended commercial laundry equipment, also manufactured by Alliance Laundry. We have distributed both Huebsch and Speed Queen brands of vended commercial laundry equipment to self-service launderettes around Malaysia. In 2013, we sold a total of 362 units of Speed Queen and Huebsch brands of vended commercial laundry equipment which contributed to 68% of our total revenue for the year due to an increase in the number of self-service launderettes around Malaysia. In 2015, we established our first Speed Queen self-service launderette in Taman United, Kuala Lumpur, as part of our marketing strategy to showcase and promote the Speed Queen brand of vended commercial laundry equipment including the design of commercial laundrettes for both business owners and end-users. Our revenue has increased at a CAGR of 50.0% over the past four (4) FYEs 2012 to 2015 (comprising of the CAGR of the commercial laundry business segment of 141.7% and CAGR of the medical devices business segment of 15.3%) and we pride ourselves as a reputable equipment distribution company servicing the commercial laundry equipment and medical devices industries in Malaysia. Over the years, CS Laundry has successfully broaden its portfolio of equipment, accessories, consumables, spare parts and services by securing new distributorships of various brands of commercial laundry equipment from reputable international brand manufacturers. Throughout the years, Best Contact and Maymedic have also continued their expansion by serving more hospitals and medical centres nationwide as well as securing more exclusive and non-exclusive distribution rights from other medical devices manufacturers to cater to their customers’ requirement. Our endeavour has allowed our Group to secure reputable group of hospitals including KPJ Healthcare Group and Columbia Asia Group as our customers. For FPE 31 March 2016, KPJ Healthcare Group and Columbia Asia Group have contributed approximately 10.0% and 5.4% to our Group’s total revenue, respectively. In addition, we have also obtained the exclusive and non-exclusive distribution rights for various established brands of medical devices such as Newmed (non-exclusive), Medifa (exclusive), CareStream (non-exclusive) and Ziehm Imaging (exclusive).

6. BUSINESS OVERVIEW (Cont’d) 6.2 COMPETITIVE STRENGTHS Our business is supported by the following competitive strengths which help to sustain our business as well as to support our growth:­6.2.1 Distributor for well-established and well-known brands of commercial laundry equipment and medical devices Our business relies on the quality of the products that we distribute to our customers as our customers place great emphasis on the reliability of our products, since this affects long term repair and maintenance expenses. Since our inception, we have been sourcing our products from reputable international brand manufacturers which have proven operating track record (such as the number of years in operation, past achievements, its customer services and distribution networks, its customer base, its reported financial figures and media presences (i.e. press releases and news portal) and which offer a comprehensive portfolio of equipment, spare parts, accessories and consumables. Some of our notable international brand manufacturers include the following:­(a) Alliance Laundry (an international manufacturer of commercial laundry equipment such as Speed Queen, Huebsch, Primus and Unimac. Alliance Laundry is listed on New York Stock Exchange);
(b) Hitachi Medical Systems (S) Ptd Ltd (a subsidiary of Hitachi Medical Corporation, a reputable Japanese manufacturer of medical diagnostic imaging products such as cr and MRI system); and
(c) STERIS Corporation (a leading global manufacturer of infection prevention, contamination control, surgical and critical care technologies and products).

Amongst our international brand manufacturers, we have secured exclusive distributorships for several range of products supplied by STERIS Corporation, Hitachi Medical Systems (S) Ptd Ltd, Ziehm Imaging GmbH and Medifa-Hesse GmBH & Co. KG. As an exclusive distributor, our Group has secured a market for ourselves by ensuring that all retailers in Malaysia who want to purchase branded medical devices which are manufactured by the abovementioned manufacturers, are reqUired to purchase them from us. As at the LPD, our Group has been appointed as the exclusive distributor in Malaysia for a total of five (5) brands of medical devices, namely STERIS, Albert Browne, Hitachi, Medifa and Ziehm Imaging brands of medical devices. Details of the revenue contribution of the exclusive distributorship for the last four (4) FYEs 2012 to 2014 as well as FPE 31 March 2016 are as follows:­Revenue FPE 31 FYE FYE FYE FYE March Distributorships 2012 2013 2014 2015 2016 RM’OOO RM’OOO RM’OOO RM’OOO RM’OOO STERIS Corporation 3,349 2,847 2,807 6,009 611 Hitachi Medical Systems (S) Pte Ltd 4,366 15,680 7,894 4,440 771 Medifa-Hesse GmBH & Co. KG 360 80 Ziehm Imaging GmBH 530 290 967 1,087 847 Total 8,245 18,817 12,028 11,616 2,229

 

6. BUSINESS OVERVIEW (Cont’d) We have also been appointed as the non-exclusive distributor in the Malaysian market for ten (10) brands of commercial laundry equipment, namely Speed Queen, Huebsch, Lapauw, Maxi, Forenta, Renzacci, Jensen, Senking, Domus and Sea Lion as well as seven (7) brands of medical devices, namely Trilux Medical, CareStream, Quantum, MinXray, Newmed, General Electric and Elma. Although we are non-exclusive distributor for the abovementioned brands of commercial laundry equipment and the abovementioned brands of medical devices, we do not face vigorous competition for these brands as typically only a limited number of distributors are appointed for the Malaysian market. We believe that from our international brand manufacturers’ commercial perspective, they would normally limit the number of distributors for their product(s) and brand(s) for a particular geographical region to avoid unhealthy or damaging competition amongst their distributors that may jeopardise sales performance and lead to brand dilution resulting from potential price undercutting and disjointed promotion of brand. In addition, our Group has cultivated a strong and good working relationship with these international brand manufacturers and have established a strong distribution network and customer base over the years. Such achievements are important for these international brand manufacturers to further expand its market coverage and penetration into the commercial laundry equipment and medical devices industries not only in Malaysia, but also in the South East Asia region. Another testimony of our strength in the commercial laundry equipment and medical devices industries is the length of our working relationship with our international brand manufacturers. The following summarises key international brand manufacturers that have more than five (5) years of business relationship with our Group:­Length  International brand  of  Percentage (%)  manufacturersl  relationship  contribution to our  No.  Country of origin  (years)  Type of equipment supplied  Group’s purchases  FYE  FPE 31  2015  March 2016
(i) Renzacci S.p.A -Industria 17 Commercial laundry equipment 0.1 3.1 LavatricijItaly
(ii) Alliance Laundry/USA 15 Commercial laundry equipment 54.2 47.9

(iii) Jensen Asia Pte Ltd/Belgium 15 Commercial laundry equipment (iv) Hitachi Medical Systems (S) Pte 12 Medical imaging equipment 5.6 12.9 Ltd/Japan
(v) STERIS Corporation/USA 10 Disinfection, sterilisation and 7.8 7.7

surgical room equipment (Vi) Lapauw International/Belgium 17 Commercial laundry equipment (Vii) Carestream Health Malaysia Sdn 7 Medical imaging equipment 13.5 6.5 Bhd/USA (Viii) Jiangsu Sea-Lion Machinery 7 Commercial laundry equipment Group/China (ix) Ziehm Imaging GmBH/Germany 5 Medical imaging equipment 2.2 6.2 We have also on 19 April 2016 received a written confirmation from Alliance Laundry that CS Laundry is the sole authorised distributor for Alliance Laundry in the Malaysian region. The salient terms of the distribution agreement between CS Laundry and Alliance Laundry dated 1 January 2016 are as follows:­(a) The distribution agreement between CS Laundry and Alliance Laundry is on a non­exclusive basis only, with a one (1) year validity period and renewable yearly based on the calendar year subject to CS Laundry meeting the purchase goal as set out in (c) below.
6. BUSINESS OVERVIEW (Cont’d) (b) CS Laundry is authorised to distribute, promote, sell and provide after-sales service for Speed Queen brand of vended commercial laundry equipment to self-service launderette operators and also Huebsch brand of on-premise commercial laundry equipment in the Malaysian region.
(c) Alliance Laundry has not set any specific sales target to be met by CS Laundry on an annual basis. However, it is agreed that CS Laundry shall make total purchases of USD5,OOO,OOO in 2016 from Alliance Laundry.
(d) CS Laundry may use Alliance Laundry’s trademark relating to the products for display purposes in connection with solicitation of orders for products from any customer in Malaysia and in any other matter previously approved by Alliance Laundry in writing. In addition, CS Laundry shall not register any of Alliance Laundry’s trademarks or any mark or name resembling them.
(e) The distributorship agreement is subject to immediate termination by Alliance Laundry upon the occurrence of the following, among others:­
(i) insolvency, liquidation on the part of CS Laundry;
(ii) breach of distribution agreement by CS Laundry;

(iii) CS Laundry ceasing the promotion and sale of products in the ordinary course of business; (iv) a significant change in the ownership or organisation structure of CS Laundry as determined by Alliance Laundry (a letter of no objection was obtained from Alliance Laundry on 29 September 2015); or
(v) any act of bribery.

 

(f) In the event of termination, the following shall apply, among others:­
(i) CS Laundry shall cease all sales and activities on behalf of Alliance Laundry and shall return to Alliance Laundry and immediately cease all use of its proprietary property;
(ii) CS Laundry shall remove from its property and immediately discontinue the use, directly or indirectly any trademark design and marking owned by Alliance Laundry and further certify in writing to Alliance Laundry that it has completely terminated its use.

 

We believe that cultivating and maintaining good business relationships with our international brand manufacturers are critical to our success. We constantly maintain good relationships by hosting/making regular visits and having direct forums with our international brand manufacturers, which allow us to provide timely feedback to our manufacturers on their products and services, including technical issues encountered by our customers or by our technical support teams. Due to our close relationship with our international brand manufacturers, we are also able to keep abreast with the latest developments in the industries. 6.2.2 Diversity in our range of products and services Under our commercial laundry equipment business segment, we distribute a comprehensive range of commercial laundry equipment including washers, dryers, tumble dryers, continuous batch washers, dry cleaning machines, feeders, flatwork ironers and presses, which are marketed under international brands such as Speed Queen, Huebsch and Jensen. In addition, we are able to provide comprehensive commercial laundry equipment solution for our customers from conceptualisation of design, supply and installation of fully-functional laundry facility to after-sales repair and maintenance service. Kindly refer to Section 6.6.1 of this Prospectus for description of our commercial laundry equipment business. Our knowledge and experience in setting up self-service launderettes for customers have received acknowledgment from our customers as well as our international brand manufacturer, Alliance Laundry, subsequently enabling us to set up Speed Queen self-service launderettes. As we are able to provide a complete range of commercial laundry products and services, we

6. BUSINESS OVERVIEW (Cont’d) serve a diversified customer base from various end-user markets such as the retail sector, healthcare sector and hospitality sector. Under our medical devices business segment, we offer a comprehensive range of medical imaging equipment as well as disinfection, sterilisation and surgical room products that cater to the demands and stringent requirements of our customers in the healthcare sector. For our medical imaging equipment sub-segment, we carry medical imaging products of various uses, which include X-Rays, I”1RI system, CT scan, CR system and medical imaging films and printers which are marketed under international brands such as Hitachi, CareStream and Ziehm Imaging. For our disinfection, sterilisation and surgical room equipment sub-segment, we carry a comprehensive range of products including steriliser, washer/disinfector, drying/warming cabinet, consumables for surgical instrument care and sterilising process, operating tables and lightings, which are marketed under well-known international brands such as STERIS, Newmed and Trilux Medical. As part of our integral services, we provide our customers a comprehensive range of equipment and solutions, including design consultancy, supply and installation of equipment which cater to the complete set-up of medical imaging room or central sterile supply department and after-sales repair and maintenance service. The medical devices that we carry conform to the requirements and regulations set by the tJlDA Act and tJlDR Act, which is a mandatory framework for medical devices registration in Malaysia that sets out stringent regulations with regards to the distribution of medical devices.

6.2.3 Focus on efficient and reliable after-sales services In order to generate good customers’ experience, we are committed to providing efficient and reliable after-sales services. We are able to provide repair and maintenance services either on ad-hoc basis or routine preventive maintenance to complement the products distributed by us. When our customer lodges a service request or problem, our Sales Personnel is to attend to the customer within forty eight (48) hours and to take the necessary corrective and preventive actions within fourteen (14) days (“Service Delivery Timeline”). Although the Service Delivery Timeline is not guaranteed and is on a best effort basis, to-date we have not received any written complaints from our customers for the failure of our Sales Personnel to attend to their service request or problem within the timeframe set above. During FYE 2013, FYE 2014 and FYE 2015, our Group has consistently met the Service Delivery Timeline for 99.0% of such cases. We also practise a systematic service request scheduling method that documents internally­generated customer service requirements (through our preventive maintenance records) as well as external customer service request (through call-ins from our customers) which enable us to efficiently plan for the availability and despatch of our Technical Personnel based on the date, time and location of service appointment. In order to meet increasing demands for quality standard from our customers, our Group has consistently improved the quality of our services through internationally recognised best practices and international quality accreditation. Our stringent quality control procedures have enabled us to meet customers’ expectation in the market in terms of quality and delivery of our service. Our commitment to quality services in distribution of commercial laundry equipment and medical devices has been affirmed with our QMS being in compliance to the ISO 9001 :2008 and DIN ISO 13485:2003 (only applies to medical imaging equipment business segment). Our various past awards achieved are further testament to the quality of our products and services. Please refer to Section 6.5.2 of this Prospectus for details of the awards, accreditations and recognitions received by our Group. 6. BUSINESS OVERVIEW (Cont’d) We believe that customer satisfaction and feedbacks are vital for the continual improvement of our service and central to our continuing business growth. We prioritise effective communication with our customers to ensure that their requirements and satisfaction are continually fulfilled and improved. Our Sales Personnel and Technical Personnel are well­versed with our products design and specifications and are eqUipped with market and technical knowledge to provide sound advice and recommendation in terms of the types of products required and their suitability at the designated premises. Our Sales Personnel also assesses our customers’ perception on our services and performances through direct communication with them either through telephone conversation or face-to-face meetings. In addition, we conduct yearly customer satisfaction survey and questionnaires as well as after the testing and commissioning stage of our products in order to gather their feedbacks for our continuous improvement. As a result, we have been able to secure recurring orders from our customers as well as derive sales through referrals from some of our customers. Our emphasis on prompt delivery, and efficient and reliable customer service, has accorded us with our industry reputation as a trusted and reliable distributor of commercial laundry equipment and medical devices. As at the LPD, our Group has submitted applications to register one hundred and ten (110) medical devices with the MDA comprising medical imaging equipment, sterilisation and disinfection equipment, surgical room equipment as well as its related accessories and consumables, of which fifteen (15) applications for the medical deVices have been approved by the MDA. Upon successfully registering all of our medical device products with the MDA, we expect to target a higher number of customers, making us less dependent on any single product and/or customer. This would also enable our Group to adapt to difficult market conditions and give us flexibility in reacting to changing customer needs and demands. 6.2.4 Established track record We have been involved in the distribution of commercial laundry equipment business segment for more than fifteen (15) years and in the distribution of medical devices business segment for more than ten (10) years. Throughout the years, we have built an established industry reputation through our management’s experience, technical know-how and industry knowledge. We have established ourselves as a reputable and reliable proVider of commercial laundry equipment and medical devices in Malaysia. This is achieved through our consistent and timely delivery of quality products and services as well as our extensive technical support and comprehensive training services. Our technical team is also equipped with the necessary qualifications, expertise and experience to proVide technical support in the follOWing areas:­(a) installation, testing and commissioning of equipment;
(b) prOVide support on relevant health and safety inspections for both commercial laundry equipment and medical devices;
(c) provides training to customers on the various precautionary measures in relation to the handling of equipment including its health and safety features; and
(d) attending to our customer’s call-ins for routine service request for repair and maintenance of equipment.

To date, we have not received any written complaint with regards to the service quality of our technical support. 6. BUSINESS OVERVIEW (Cont’d) Our ability to provide high quality products, coupled with our consistent level of reliable after­sales services have been instrumental in attracting new and recurring orders from our customers. Our customers have continued to appoint us for their subsequent purchases and upgrading of their commercial laundry equipment and medical devices. For our commercial laundry equipment business segment, we received recurring orders for preventive maintenance services from our customers. As for our medical devices business segment, we received recurring orders for consumables such as printing films, sterile assurance products and instrument cleaning chemistries and disinfectant. Our customers have also referred and recommended us to some of their customers and this has enabled us to widen our customer base. The referrals and recommendations by our customers serve as a testament of our experience, product quality and service assurance in the industry. We have distributed our products to established medical service providers such as KPJ Healthcare Group and Columbia Asia Group, which are recognised healthcare providers with hospitals and medical centres nationwide. As at the LPD, we have distributed our range of medical devices such as IVIRI system, CT scanner, digital radiography system, X-Ray system, various types of sterilisers, medical printing system, washers/disinfectors as well as its related spare parts, accessories and consumables to twenty-eight (28) and ten (10) branches of hospitals and medical centres under the KPJ Healthcare Group and Columbia Asia Group, respectively. We have been serving both these customers for over five (5) years. However, Columbia Asia Group has not been regarded as our Group’s major customer during the financial years/period under review as it contributed less than 10% of the revenue for the medical imaging equipment and disinfection, sterilisation and surgical room equipment sub­segments, respectively. Our success in securing and retaining these healthcare groups as our customers is a testament to our product quality, customer service and proven industry track record. The revenue contribution from KPJ Healthcare Group and Columbia Asia Group to our Group for the financial years/period under review are as follows:­FYE FYE FYE FYE FPE 31 March 2012 2013 2014 2015 2016 RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 Medical imaging eguipment sub-segment Columbia Asia Group 1,007 5.3 2,021 5.7 4,335 8.5 2,935 4.6 723 4.9 KPJ Healthcare Group 4,662 24.5 3,832 10.9 4,453 8.8 3,385 5.3 1,144 7.7 Disinfection, sterilisation and surgical room equipment sub-segment Columbia Asia Group 276 1.4 273 0.8 1,470 2.9 892 1.4 80 0.5 KPJ Healthcare Group 612 3.2 1,108 3.1 1,445 2.8 1,563 2.4 337 2.3 As a further testament of our track record and performance in the commercial laundry equipment business segment, we have obtained various awards, accreditations and recognition from our international brand manufacturers and relevant authorities. Kindly refer to Section 6.5.2 of this Prospectus for details of these awards, accreditations and recognitions. In addition to the above, we have successfully obtained Establishment Licenses from the MDA for distribution to the healthcare providers in Malaysia. 6.2.5 Experienced key management personnel and skilled employees Our Group is backed by experienced Executive Directors who have in-depth market and technical knowledge, coupled with strong network of customers and international brand manufacturers.

6. BUSINESS OVERVIEW (Cont’d) In addition, our Group is also supported by a team of skilled employees who possess the necessary qualification and industry specific experience to carry out sales and technical functions which are vital in building good relationships with both our customers and international brand manufacturers. 6.3 FUTURE PLANS The future plans and prospects of our Group focus on certain key areas with the objective to enhance our revenue growth, optimise margin as well as enhance our business and operational support functions to meet the demands of our future growth. Our aim is to further strengthen our competitive position in the commercial laundry equipment and medical devices industries, increase shareholders’ value and increase our market share in the segment that we compete in. We intend to achieve our objectives through the following strategies:­6.3.1 Setting up of Speed Queen self-service launderette outlets as concept stores We intend to utilise RM2.60 million or 16.2% of our IPO proceeds to fully finance the establishment of eleven (11) Speed Queen self-service launderette outlets across Malaysia as part of our marketing strategy to showcase and promote the Speed Queen brand of vended commercial laundry equipment. Our marketing strategy is to pursue strong brand awareness of the Speed Queen brand name in IVlalaysia as well as to position us as the preferred distributor of commercial laundry equipment in Malaysia. Our chain of Speed Queen self-service launderette outlets shall operate twenty four (24) hours a day, seven (7) days a week, to maximise convenience for our walk-in customers. These outlets shall be designed to feature the Speed Queen brand colours and style, using various branding material and stickers involving Speed Queen ‘Q’ logo as a branding tool to promote the Speed Queen brand of vended commercial laundry equipment. These outlets shall be operated as a self-service launderette outlet and will service walk-in customers to do their laundries. By establishing more Speed Queen self-service launderette outlets around Malaysia, we stand to ride on the potential growth in the penetration of the Speed Queen brand of vended commercial laundry equipment in Malaysia, in line with the expected growth in the vended commercial laundry eqUipment segment in Malaysia. As more Speed Queen self-service launderette outlets are established, we are in a better position to increase our visibility as a distributor of Speed Queen brand of vended commercial laundry equipment, particularly through approaches from prospective investors seeking commercial opportunities in the investments of self-service launderettes in Malaysia or potential end-users across various industries/sectors. It also helps that we have ready self-service launderette outlets eqUipped with Speed Queen commercial laundry equipment for real-time physical viewing and actual product performance assessment by the prospective investors and potential end-users. In addition, we can further entrench our association with the Speed Queen brand given our ability to provide a full range of services from being a distributor of the Speed Queen brand of vended commercial laundry equipment to providing the reqUired consultancy services such as outlet planning up to the after-sales support such as eqUipment maintenance and repair services. More importantly, we stand to gain valuable technical experience and understanding from hands-on experience with the brand’s commercial laundry equipment at the outlets, which can give us a competitive advantage in terms of proViding prompt and reliable services to customers. We also stand to reap economies of scale due to higher volume of commercial laundry eqUipment involved which can potentially result in cost 6. BUSINESS OVERVIEW (Cont’d) savings from bulk orders. In addition, the expected growth in the sales of Speed Queen brand of commercial laundry equipment in tandem with the rising number of Speed Queen self-service launderette outlets established by our Group can help to strengthen our bargaining power and relationship with our principal, namely Alliance Laundry. Given the above, we stand to be more competitive as a distributor of commercial laundry equipment in Malaysia, notwithstanding the non-exclusive nature of our distributorship arrangement with Alliance Laundry. Based on the foregoing, we believe that the rollout of this chain of “Speed Queen” self-service launderette outlets would provide us with a strong platform to capture the growth in Malaysia’s vended laundry outlet market and enlarge our customer base. Alliance Laundry has been our supplier since 2001 and has been providing us with the necessary support, resources, information, technical and business knowledge in supporting our marketing and sales efforts to accelerate our growth, meeting sales targets and allowing us to better position our Group as its distributor for the Speed Queen brand of vended commercial laundry equipment in the Malaysian region. We further mitigate the risk of Alliance Laundry appointing another distributor by continuing to drive sales of its products and brands in Malaysia, maintaining good rapport with them through constant engagement and promoting the Speed Queen brand as well as increasing the penetration rate of Speed Queen self-service launderette outlets in Malaysia. In addition, given that the Speed Queen brand is already internationally recognised (With presence in regions such as North America, Europe and Asia) and an established brand (since 1928), we are entering the market from the position of strength given the strong brand involved as well as the goodwill generated by the brand for vended commercial laundry equipment based on its long standing business history and international presence. There is also already an established set of industry best practices that we will adopt from Alliance Laundry to help to shorten our learning curve. Alliance Laundry has been providing support and training since the commencement of business relationship with our Group in 2001. Alliance Laundry is also ready to provide the necessary support and training to our technical and sales employees. The sales of Speed Queen vended commercial laundry equipment stand to improve in tandem with the opening of more Speed Queen self-service launderette outlets leading to larger customer base from potential new investors in the self-service launderette business segment. We also believe that there will continue to be significant opportunities to grow our distribution network, promoting the Speed Queen brand of vended commercial laundry equipment, both within Klang Valley regions as well as the rest of Peninsular Malaysia, which are presently underserved with a low penetration of self-service launderette outlets. Based on the feedback from our customers and our Company’s internal data as well as market players in the commercial laundry equipment industry, there is limited presence of self-service launderettes outside of the Klang Valley region, whereby the concept of self-service laundrettes is considered less traditional and relatively new and less established. This gives us the opportunity to expand our market presence and distribution coverage network by penetrating into prime areas in the Northern, Southern and East Coast regions of Malaysia. We have been operating our first Speed Queen self-service launderette outlet at a rented shoplot located in Taman United, Kuala Lumpur since September 2015. We intend to establish and setup eleven (11) new outlets by the end of 2018. Our business development team is in the process of identifying suitable locations to open the eleven (11) new Speed Queen self-service launderette outlets in major townships in several states such as the Klang Valley, Johor, Penang, Melaka, Negeri Sembilan, Terengganu
6. BUSINESS OVERVIEW (Cont’d) and Kelantan. The new outlets shall be established at major townships in each state that stands to have potentially high demand for the self-service laundry services. These major townships refer to urban areas with a population size of at least 5.0% of the total state population. However, at this point in time, we have not identified any specific locations in these states. Our Group continuously assesses future opportunities as well as identifies and evaluates potential locations for these launderette outlets where opportunities arise. There are numerous factors involved in identifying and securing appropriate sites, including, but not limited to, the identification and availability of suitable locations with the appropriate population demographics, traffic patterns, local retail and business attractions and infrastructure that can drive high levels of customer traffic and store level sales. We shall be renting shoplot units to establish and operate each Speed Queen self­service outlet. We estimate that the set-up of each self-service launderette outlet will take between one (1) to two (2) months to complete, and average cost estimated to be up to RIV10.23 million per Speed Queen self-service launderette outlet (excluding the rental cost of each Speed Queen self-service launderette outlet, which shall be funded via the revenue generated from the operations of each outlet), which will be funded from the proceeds of our Public Issue. This includes the following:­(i) Purchase and installation of Speed Queen vended commercial laundry equipment which include washers, dryers, accessories, consumables and its related equipment;
(ii) Installation of basic facilities such as fixtures and fittings and related facilities for use by consumers while waiting for their laundry cleaning process to be completed;

(iii) Cost of renovation of the launderette premises.

6.3.2 Continuous expansion of our existing portfolio of products and brands We offer a wide range of commercial laundry equipment, medical devices, spare parts, accessories and consumables, as well as comprehensive after-sales service offerings. As at the LPD, our Group has been appointed as an exclusive distributor in Malaysia for a total of five (5) brands of medical devices, namely STERIS, Albert Browne, Hitachi, Medifa and Ziehm Imaging brands of medical devices. We have also been appointed as the non-exclusive distributor in the Malaysian market for a total of a total of ten (10) brands of commercial laundry equipment namely Speed Queen, Huebsch, Lapauw, Maxi, Forenta, Renzacci, Jensen, Senking, Domus and Sea Lion as well as a total of seven (7) brands of medical devices, namely Trilux Medical, CareStream, Quantum, MinXray, Newmed, General Electric and Elma. We believe that a key factor to our sustainability and performance is our product and service offerings. Through our expertise and capability to provide comprehensive range of products to the commercial laundry equipment and medical devices industries, we believe that we have a competitive edge to leverage on, for our further expansion into the domestic market. Our Group’s existing distribution network and extensive customer base allows our Group to add more suitable new products to our existing portfolio. While our Group does not hold exclusive distributorship for all the brands that our Group represent, we are able to provide comprehensive range of commercial laundry equipment and medical devices, offering wide and flexible choices to our customers in terms of brands, product specifications and prices. We regularly conduct market research to identify new product categories to be launched in response to the latest market trends and our customers’ preferences. These include the Widening of our range of brands and types of commercial laundry equipment and medical devices. 6. BUSINESS OVERVIEW (Cont’d) Moving forward, we plan to continuously expand our Group’s existing distribution portfolio of products and brands. This can be achieved by obtaining additional product distributorships from existing and new manufacturers, both domestically and internationally. Among the selection criteria that we will consider include the manufacturer’s ability to provide niche or unique product offering, compatibility with our existing products, spare parts availability, proven performance and experience (quality references) and ability to meet quality and regulatory specifications and standards. For our commercial laundry equipment business segment, we plan to expand our product range to include wet cleaning machines (an alternative to traditional dry cleaning processes) and sanitising and hygienising cabinet (an alternative to remove odours and bacteria from garments). For medical devices, we plan to expand our product range through our existing and new distributorships. We are aware that there exists consumer preference for specific type of product from specific brand. From communication with our customers, we have received specific requests for certain brands that have the features and capabilities that cater to their requirements. Thus, we intend to secure the distributorship rights for these products to capture more sales from our customers. We will also continue to conduct market research to identify new product categories to be launched in response to the latest market trends and our customers’ preferences. These will further widen of our range of brands and types of commercial laundry equipment and medical devices. We also intend to ride on the growing demand for self-service launderettes. We strive to offer a broader range of commercial laundry equipment that can meet the demand from existing or new self-service launderettes. It is our strategy to continue to enhance, diversify and improve our range of products and services offered in order to meet customer needs and market demands. 6.3.3 Expansion of sales and marketing activities as well as market expansion As part of our growth strategy, we plan to utilise a total of RM1.71 million or 10.7% from our IPO proceeds for our brand building activities which are scheduled to be implemented within twelve (12) months from our Listing. This is to strengthen our market position by undertaking aggressive promotional, advertising and marketing activities of our range of products and services. This includes campaigns, promotions, online advertisements, billboards and other target based marketing activities. We believe our efforts in expanding our existing sales and marketing network would increase brand awareness of our range of products and services in Malaysia. In view of the above strategy, we intend to use various advertising media including print and broadcast media, and out-of-home media to increase our brand awareness among consumers. To broaden our customer base, we also aim to strengthen and widen our distribution network locally and abroad. In addition to our efforts to expand further in the domestic market, we also aim to broaden our customer base by gradually expanding into the South East Asian region, mainly Indonesia and IndoChina. Our overseas expansion will be driven by forming strategic alliances with local entities in target countries. We shall also participate in trade exhibitions, seminars and marketing events in these countries to showcase our products and meet potential local partners and customers. By doing so, we can tap into the knowledge and goodwill of local partners and customers in understanding the local markets as well as securing good locations for the further expansion of our business. 6. BUSINESS OVERVIEW (Cont’d) We also intend to focus our marketing effort in these new markets with the aim to increase our revenue generated from the expansion of distributorship of commercial laundry equipment and medical devices in these countries. We will utilise indirect distribution strategies through our intermediaries, such as trading houses, suppliers and importers of commercial laundry equipment and medical devices located overseas. This strategy will enable us to utilise the existing network of the intermediaries to expand our market coverage without incurring high capital investment in developing and maintaining retail infrastructure. In those countries that our brand manufacturers have already appointed distributors to distribute their products such as Vietnam, Thailand and Indonesia (for Speed Queen brand of vended commercial laundry equipment), we will work closely with our brand manufacturers to ensure that we will be able to expand in these countries within the terms of the existing distributorship arrangement with the distributors in these countries. For example, we may seek the permission of our brand manufacturers to distribute to those geographical market segments which are currently being under­served by the existing distributor. In cases where we lack local market knowledge, we may form strategic alliances with local entities that have such knowledge (either through a joint venture arrangement or unincorporated business collaboration). Our contribution to such strategic alliances will be in the form of providing our technical expertise. As disclosed in Section 6.2.4 of this Prospectus, our technical team is equipped with the necessary qualifications, expertise and experience to provide technical support in the follOWing areas:­(i) installation, testing and commissioning of equipment;
(ii) provide support on relevant health and safety inspections for both commercial laundry equipment and medical devices;

(iii) provides training to customers on various precautionary measures in relation to the handling of equipment including its health and safety features; and (iv) attending to our customer’s call-ins for routine service request for repair and maintenance of equipment We plan to commence our expansion plans into the South East Asian region within twenty four (24) months from the date of our Listing. 6.4 PROSPECTS OF OUR GROUP According to the IMR report, both the commercial laundry equipment and medical devices industries have positive outlook moving forward.

6.4.1 Commercial laundry equipment business segment The size (revenue) of the commercial laundry equipment industry in Malaysia stood at RM201.1 million in 2015 and is expected to reach RM271.3 million in 2020. The forecast CAGR for this industry from 2016 to 2020 is 4.3%. The positive outlook on the demand for commercial laundry equipment in Malaysia is mainly attributed to the fundamental societal changes that drive demand for commercial laundry services. The commercial appeal of self-service launderettes also drives investment in vended commercial laundry equipment. In addition, the increasing demand from the hospitality industry and healthcare sector also contributes to the growth of this industry. Besides that, the steady population growth, automation innovation and replacement of aging commercial laundry equipment are also expected to drive the future growth of the commercial laundry equipment industry. On the supply side, the push for greener commercial laundry equipment is also expected to have a positive impact on the 6. BUSINESS OVERVIEW (Cont’d) commercial laundry equipment industry as it will appeal to modern consumers who are more inclined to adopt environmentally friendly practices, while also patronising businesses that boast eco-friendly products and services. 6.4.2 Medical devices business segment The medical devices industry in Malaysia was valued at RM10.24 billion in 2015 and is expected to reach RM17,41 billion in 2020. The forecast CAGR for this industry from 2016 to 2020 is 11.2%. The positive outlook on the demand for medical devices in Malaysia stems mainly from Malaysia’s growing and ageing population, the growing prevalence of chronic lifestyle diseases and increasing healthcare expenditure on healthcare services, leading to greater demand for use of medical devices, the increasing number of healthcare providers and a growing healthcare travel industry. On the supply side, the industry is expected to be boosted by strong government support and presence of established supporting industries. The availability of more medical devices in the market is expected to further support the growth of distribution segment as authorised representatives and distributor remained vital in their role as an integral link between the manufacturers and end-users. Further details on industry prospects and outlook are set out in Section 7 of this Prospectus. Our Directors believe that the prospects of our Group are favourable given the competitive strengths of our Group as outlined in Section 6.2 of this Prospectus. With the implementation of our proposed future plans outlined in Section 6.3 above, we believe that we can further grow our business in both the key industries that we are participating. 6.5 KEY ACHIEVEMENTS, AWARDS AND RECOGNITION 6.5.1 Key achievements The table below sets out our Group’s key development and achievements/milestones over the years:­Year Milestones 2000 • Successfully penetrated into the hospitality sector by distributing commercial laundry equipment, its related spare parts as well as providing maintenance services to Regent Hotel Kuala Lumpur and Micasa Hotel Kuala Lumpur. 2001 • Obtained distributorship from Alliance Laundry and commenced distribution of Huebsch brand of commercial laundry equipment and its related spare parts accessories and consumables. 2002 • Obtained distributorship from Jensen Asia Pte Ltd and commenced distribution of Jensen and Sen king brands of commercial laundry equipment and its related parts. 2003 • Entered into the non-formalised business collaboration with Amirdic to jointly supply commercial laundry equipment and provide after-sales maintenance services to UMMC as Amirdic’s sub-contractor. 6. BUSINESS OVERVIEW (Cont’d) Year Milestones 2004 • Best Contact underwent a business rationalisation to change its business focus into the distribution of medical devices and the restructuring of its shareholdings structure. • Obtained distribution rights to distribute Hitachi brand of medical imaging equipment and its related accessories and consumables. 2006 • Incorporated Maymedic to venture into the distribution of disinfection and sterilisation equipment as well as surgical room equipment. • Obtained distribution rights to distribute STERIS brand of disinfection and sterilisation as well as surgical room equipment and its related accessories and consumables. 2007 • Obtained distribution rights to distribute CareStream brand of medical imaging equipment and its related accessories and consumables. 2010 • Distributed vended commercial laundry equipment to multi-housing complexes, hotels and hostels, such as Hampshire Park Condominium in Jalan Ampang, Sri Hijauan Condominium in Shah Alam, Pullman Kuala Lumpur City Centre Hotel and Residences (previously known as Prince Hotel Kuala Lumpur) and Lagenda College in Mantin, Negeri Sembilan. • Obtained distribution rights to distribute Ziehm Imaging brand of medical imaging equipment as well as its related accessories and consumables. 2011 • Obtained distribution rights to distribute Newmed brand of disinfection and sterilisation equipment and its related accessories and consumables. 2012 • Obtained non-exclusive authorised distributorship from Dilssa Laundry SA (now known as Onnera Laundry Barcelona) to distribute Domus brand of commercial laundry equipment. • Obtained non-exclusive rights as an agent of Jiangsu Sea-Lion Machinery Group to distribute Sea-Lion brand of commercial laundry equipment. 2013 • Obtained non-exclusive authorised distributorship from Alliance Laundry to distribute Speed Queen brand of commercial laundry equipment. 2014 • Obtained distribution rights to distribute Quantum brand of medical imaging equipment and its related accessories and consumables from Quantum Medical Imaging LLC. • Obtained exclusive authorised distributorship from Medifa-Hesse GmBH & Co. KG for Medifa brand of surgical room equipment and its related accessories and consumables.
• Obtained non-exclusive authorised distribution rights to distribute Trilux Medical brand of surgical room equipment and its related accessories and consumables.
• Obtained non-exclusive authorised distributorship rights to distribute MinXRay brand of medical imaging equipment and its related accessories and consumables.
• CS Laundry is authorised by Alliance Laundry to use Speed Queen brand for setting up Speed Queen self-service launderette(2).
• Successfully registered fifteen (15) medical devices with the MDA(3)

2015 • Best Contact and Maymedic are licensed as authorised representative, importer and distributor of medical devices by the MDA(l). 2016 • Obtained distribution rights from Elma Schmidbauer GmbH of Germany to distribute Elma brand of ultrasonic and steam jet technology cleaners and its related accessories. 6. BUSINESS OVERVIEW (Cont’d) Notes:­(1) Best Contact and Maymedic first obtained the Establishment Licenses to act as authorised representative, importer and distributor of medical devices on 16 February 2015 and 12 August 2015, respectively. Although [VIDA Act came into force on 30 June 2013, a saving provision therein allows a grace period of up to 30 June 2015 for any person to submit an application for an Establishment License. Best Contact and Maymedic had complied with the aforesaid submission deadline on 30 June 2015.
(2) Apart from the distribution agreement already entered into between Alliance Laundry and CS Laundry, there are no other specific agreement which was signed by the parties in respect of the use of Speed Queen brand in setting up self-service launderettes. However, Alliance Laundry has given its express authorisation to CS Laundry vide a letter dated 4 August 2015 to use the Speed Queen brand for the setting up of Speed Queen self-service launderettes, subject to CS Laundry conforming to the gUidelines applicable to Speed Queen self-service launderettes.
(3) As at the LPD, we have received ten (10) certificates of registration for ten (10) medical devices from the MDA and we are currently awaiting the issuance of certificates of registration for the remaining five (5) approved applications for five (5) medical devices.

6.5.2 Awards, accreditations and recognitions Over the years, we have been awarded with the following awards, accreditations and recognitions, details of which are as follows:­Company AwardsjAccreditationsjRecognitions Awarding Body Year CS Laundry Outstanding Sales Award, 2001 IPSO-LSG N.VY) 2001 CS Laundry Outstanding Sales Award, 2002 IPSO-LSG N.V. (1) 2002 CS Laundry Excellent Sales Award, 2002 Alliance Laundry 2002 CS Laundry Outstanding Sales Award, 2003 IPSO-LSG N.V. (1) 2003 CS Laundry Excellent Sales Award, 2003 Alliance Laundry 2003 CS Laundry Excellent Sales Award, 2004 Alliance Laundry 2004 CS Laundry Excellent Sales Award, 2005 Alliance Laundry 2005 CS Laundry Excellent Sales Award, 2006 Alliance Laundry 2006 CS Laundry Excellent Sales Award, 2007 Alliance Laundry 2007 IVlaymedic Best Performance New Dealer Award, 2007 STERIS Corporation 2007 CS Laundry Excellent Sales Award, 2008 Alliance Laundry 2008 IVlaymedic Strategic Award, 2009 STERIS Corporation 2009 Best Contact ISO 9001:2008 DQS GmbH(2) 2009 Best Contact DIN ISO 13485:2003 DQS Medizinprodukte GmbH(3) 2009 CS Laundry Excellent Sales Award, 2010 Alliance Laundry 2010 Maymedic ISO 9001:2008 DQS GmbH(2) 2011 Maymedic Top Services Performance Award, 2011 STERIS Corporation 2011 Best Contact ASEAN Business Achievement Award, 2011 Carestream Health Inc. 2011 CS Laundry ISO 9001:2008 DQS GmbH(2) 2012 CS Laundry Excellent Sales Award, 2013 Alliance Laundry 2013 CS Laundry Excellent Sales Award, 2014 Alliance Laundry 2014 Notes:­(1) Alliance Laundry Systems (ALS) had acquired IPSO-LSG N.V. in 2006 and subsequently changed its name to Alliance Laundry. 6. BUSINESS OVERVIEW (Cont’d) (2) DQS GmbH is the largest subsidiary of DQS Holding GmbH, Germany’s leading certification body for management systems. The group provides assessments and certifications of management systems and processes of any type. The ISO 9001:2008 accreditation awarded by DQS GmbH (a subsidiary of DQS Holding GmbH) is awarded based on our Group’s compliance with the standard imposed by DQS GmbH which specifies the requirements for QMS where an organisation:­(a) needs to demonstrate its ability to consistently provide products that meet customer and applicable regulatory requirements; and
(b) aims to enhance customer satisfaction through effective application of its QMS.

(3) DQS Medizinprodukte GmbH, headquartered in Frankfurt, is a subsidiary of DQS Holding GmbH and a certifier on the assessment and certification of management systems in enterprises and organisations. The DIN ISO 13485:2003 accreditation has been awarded to Best Contact by DQS Medizinprodukte GmbH for its achievement in complying with the standard for demonstrating its ability to provide medical devices and related services that consistently meet customer requirements and regulatory requirements applicable to medical devices and related services. The above sales awards awarded to our Group by Alliance Laundry, STERIS Corporation and Carestream Health Inc. in recognition of the performance of our Group, are based on internal criteria set by the aforesaid parties. Our Group understands from our manufacturers that these awards were awarded to our Group for our contribution to the regional sales volume achieved for the Malaysian market. 6.6 PRINCIPAL ACTIVITIES AND PRODUCTS We are principally involved in the distribution of equipment specialising in the commercial laundry equipment and medical devices industries in Malaysia. The scope of our distribution business activities are as follows:­(a) Supply, installation, testing and commissioning of the follOWing commercial laundry equipment:­
(i) vended commercial laundry equipment; and
(ii) on-premise commercial laundry equipment.

 

(b) Supply, installation, testing and commissioning of the following medical devices:­
(i) medical imaging equipment; and
(ii) disinfection, sterilisation and surgical room equipment.

 

6. BUSINESS OVERVIEW (Cont’d) Our business activities are depicted as follows:­
Commercial Laundry Equipment
,.——;~;~;;-~~-~~~~~~u~~; ——-, , -T~;;i;’i —‘; Testing and Commissioning: and Commissioning i Vended On-premise ‘ ,..—–, Disinfection, i commercial commercial , ‘ Medical sterilisation and : laundry laundry, imaging surgical room i :-“(]I lim t eDliinment i.•, ~__~~_iP=ent eouin~:~t )”‘–Cc_ -~~ -~:c~ —r—-_~I -T…-_–_–._—_,,_–._: -_–“””l——-r-­m
• Self-Service Launderettes
• On-Premise laundries
• Multi-Housing laundries
• Other laundries

Healthcare Providers • Hospitals
• Medical centres
• Physiotherapy and orthorpaedic centres
• Specialist centres and/or clinics (i.e. optometry, skin and aesthetic and dental specialist)

Notes:­(i) Our distribution activities include value-added services ranging from designing and planning layout for self-service launderettes and on-premise laundries, recommending the appropriate type of commercial laundry equipment, to after-sales services such as training as well as repair and maintenance works; and
(ii) Our distribution activities include value-added services ranging from product recommendations, operation workflow design, obtaining relevant approvals from authorities for use of medical devices, to after-sales services such as training, repair and maintenance works.

For our commercial laundry equipment business segment, our Group’s target markets include self-service launderettes, on-premise laundries such as hotels, hospitals and nursing homes, multi-housing laundries such as apartments and condominiums as well as other laundries such as traditional non self-service laundry shop. For our medical devices business segment, we target healthcare proViders such as hospitals and medical centres, physiotherapy and orthopaedic centres as well as specialist centres and/or clinics such as optometry, skin and aesthetic and dental specialist. 6.6.1 Commercial laundry equipment business segment The commercial laundry equipment business segment is spearheaded by Lim Jit Wei, our Executive Director, who has been instrumental in our foray into the commercial laundry equipment industry in Malaysia. Commercial laundry equipment is used for large volume washing and heavy-duty usage in businesses and institutions that provide commercial laundry services. Such businesses focus less on the equipment’s appearances, but emphasises on the construction of the equipment, their durability for long term and more frequent usage. Our products under the commercial laundry equipment business segment can be categorised under two (2) main product categories, namely vended commercial laundry equipment and on-premise commercial laundry equipment. Our distribution activities for commercial laundry equipment include the supply, installation, testing and commissioning of these equipment. We also distribute the related spare parts, accessories and consumables of commercial laundry 6. BUSINESS OVERVIEW (Cont’d) equipment. The commercial laundry equipment that we distribute has an estimated product lifespan of up to twelve (12) years with regular interval maintenance. In addition, as part of our distribution package offerings, we also provide consultancy services such as designing and planning of our customer’s self-service launderette layout, presentation and other related services in setting up self-service launderette and on-premise laundries. This involves recommending the type of commercial laundry equipment to be installed, drawing of schematics and layouts, flow and space planning, fixture and fittings as well as other fit-outs to be installed. We maintain several self-service launderette layout templates to suit our customer’s preferences which have been designed to attract end users to our customer’s self-service launderette and maximise its full potential. Once renovation of the launderette outlet is completed, we assist our customers to outfit their new launderette outlet, including the installation of commercial laundry equipment (washer, dryer, etc), furniture and fittings, and others. In August 2015, we have been authorised by Alliance Laundry to use the Speed Queen brand for self-service launderette based on Speed Queen’s store design, floor plan and layout, as outlined in Speed Queen’s laundromats guidelines and manuals. Pursuant thereto, we have expanded our self-service launderette store layout design and presentation to include the option of offering the floor plan and layout design featuring the Speed Queen brand colours and style, using various branding material and stickers incorporating Speed Queen ‘Q’ logo as a branding tool to promote the Speed Queen brand. This involves reinforcing the Speed Queen brand name at its storefront window applique to repeat the ‘Q’ wallcovering motif. The follOWing illustrates the store design, floor plan and layout featuring the Speed Queen brand colours and style:­
User Guide Waiting Area for Price List
TUmble Dryer Laundry LinenTumble Dryer Washers ChemicalFolding Trolley Dispensing SystemTable We also established our first Speed Queen self-service launderette in Taman United, Kuala Lumpur which has been operating since September 2015. In addition, five (5) of our customer’s self-service launderette outlets located in Kota Bahru, Kelantan, Pontian and Johor Bahru, Johor have also been designed and set up with the Speed Queen store design, floor plan and layout as well as being fully equipped with Speed Queen’s range of washers and tumble dryers. These outlets have been operating since 2015. The details are as follows:­6. BUSINESS OVERVIEW (Cont’d) 6. BUSINESS OVERVIEW (Cont’d) Number of Speed  {l)Sales  Name  of  self-service  Queen vended  by our  launderette  outlets! Nature  commercial  Group  No.  of operations  Location  laundry equipment  RM’OOO
(1)  KB Laundry/Sole proprietorship  PT820, Tingkat Bawah Padang Garong, Jalan Wakaf IVlek Zainab TG Chat, 15350 Kota Bahru, Kelantan  10  218  (2)  Laundry Terminal Enterprise/ Sole proprietorship  15, Jalan Cengkerik 5 (Ground Floor), Pusat Perdagangan Kempas, 81200 Johor Bahru, Johor  8  169  (3)  Dobi Pelangi/Sole proprietorship  PT274, Seksyen 24, Jalan Sultan Yahya Petra Lundang, 15150 Kota Bharu, Kelantan  7  157  (4)  Dobi Amirah Sdn limited company  Bhd/Private  PT 2226 Jalan Long Yunus, 15200 Kota Bharu, Kelantan  7  157  (5)  Eco Speed proprietorship  Laundry/Sole  SH54, Jalan Pasar Lama, Pekan Nanas 82000 Pontian, Johor Total  8 40  164 865  Note:­ (1)  The sales of Speed Queen vended commercial laundry equipment to these self-service launderette outlets are one-off sales which have been recognised as revenue in our Group’s financial statements for FYE 2015.  These self-service launderette outlets are owned by our customers and operated as self­service launderette outlets to service walk-in customers to do their laundries. We have informed Alliance Laundry of the display at our customer’s self-service launderette outlets of various branding material and stickers incorporating Speed Queen ‘Q/ logo and the Speed Queen store design as a branding tool to promote the Speed Queen brand at these self­service launderette outlets. However, there is no express requirement for CS Laundry to inform/notify/confirm to Alliance Laundry of the display of the branding used and the Speed Queen store design based on the authorisation letter issued by Alliance Laundry dated 4 August 2015.  The operational and financial benefits of the Speed Queen stores design, layout and floor plan are as follows:­ (a) (b) (c)  Allowing our Group to provide value added services to our customers, in terms of store design of an internationally recognised brand which in turn is expected to increase sales of Speed Queen brand of vended commercial laundry equipment; Provides our customers with a comprehensive solution in store design and layout as well as enhancing the image of their outlets (by utilising an international brand image) to attract users of the self-service laundry services; and Promotes the Speed Queen brand awareness amongst the public and potential customers, which is expected to eventually translate into higher sales and market share.
We also provide support to our customers in terms of training, after-sales services and other services. In addition, we also provide repair and maintenance services for our range of commercial laundry equipment. We source our commercial laundry equipment as well as its related spare parts, accessories and consumables from reputable international brand manufacturers with proven operating track record as well as portfolio of quality products. As at the LPD, our Group is the distributor of the following brands of commercial laundry equipment in Malaysia (on a non­exclusive basis):­No. Name of manufacturer! Country of origin Type of equipment Brands (a)  Alliance Laundry/USA  Washer,  dryer,  washer  • Speed  Queen  (Vended  extractor,  tumble  dryer,  commercial  laundry  f1atwork ironer  equipment)  • Huebsch  (On-premise  commercial  laundry  equipment)C1)
(b) Lapauw Internationalj Flatwork ironer, folder • Lapauw Belgium
(c) Maxi Companies/USA Washer, dryer, washer • Maxi extractor, tumbler dryer, • Forenta flatwork ironer
(d) Renzacci S.p.A -Industria Dry cleaning machine • Renzacci Lavatrici/Italy
(e) Jensen Asia Pte Ltd/ Continuous batch washer, • Jensen
Belgium batch dryer, feeder, • Senking flatwork ironer, folder, presses
(f) Onerra Laundry Barcelona Washer, tumble dryer • Domus
S.A (Domus)/Spain
(g) Jiangsu Sea-Lion Washer extractor, tumble • Sea Lion Machinery Group (Corp)/ dryer China
(h) Pony S.P.A./Italy Industrial presses machine • Pony(2) and ironing table
(i) Chempro Technology (M) Chemical dispensing • Nova(2) Sdn Bhd/Malaysia system

Notes:­(1) We have ceased accepting new orders for the distribution of Huebsch brand of vended commercial laundry equipment since the second (2nd) half of FYE 2015 as we are focusing on our marketing efforts to promote the Speed Queen brand of vended commercial laundry equipment, which is gaining popularity and market acceptance in the vended commercial laundry equipment industry in Malaysia. However, we are still 6. BUSINESS OVERVIEW (Cont’d) distributing Huebsch brand of vended commercial laundry as at the LPD for purchase orders received during the second (2nd) half of 2015. (2) We currently source these range of on-premise commercial laundry equipment through Pony S.P.A. (manufacturer of Pony brand) and Chempro Technology (M) Sdn Bhd (distributor for Nova brand of chemical dispensing system in Malaysia). Both Pony S.P.A. and Chempro Technology (M) Sdn Bhd have not imposed any distributorship terms on us nor given us any letters of distributorship. Products purchased under these brands are made based on ad hoc basis, as and when we receive orders for these brands by our customers. In addition, the total purchases and total revenue for both brands represent less than 1.0% of our Group’s total purchases and total revenue for the past four (4) FYEs 2012 to 2015 as well as FPE 31 March 2016. The following describes the types of products that we distribute under each product category. (a) Vended commercial laundry equipment Vended commercial laundry equipment refers to commercial laundry equipment designed with payment system, for users to insert coins to initiate the washing/drying sequence of the equipment. Vended commercial laundry equipment is generally associated with self-service laundry where users are able to run the washer or dryer with minimal gUidance. They are supplied to our customers operating self-service launderettes, multi-family complexes and/or hotels and resorts. The range of vended commercial laundry products that we distribute are as follows:­Equipment I Accessories Description Brands Washers

Washers are used for washing laundry and are available in top/front load. Tumble dryers are used to remove moisture from laundry after they are washed in a washer. They can be equipped with gas heating or electric heating for its drying function and are fitted with cylinder rotation to eliminate wrinkling by rotating/tumbling. They are available in stacked types to minimise floor space. • Speed Queen
• Domus
• Speed Queen
• Domus
• Maxi
• Forenta

6. BUSINESS OVERVIEW (Cont’d) Equipment / Accessories Description Brands Coin changer Coin changers are used to exchange money notes for • OEM(l) coins.
Note:­(1) We source these range of coin changer by various OEM brands (which are generic coin changer that does not carry any brand name) through other distributors and wholesalers. We are also not the appointed distributor by any specific OEIVl manufacturer of coin changer. (b) On-premise commercial laundry equipment On-premise commercial laundry equipment refers to commercial laundry equipment designed without payment system. They are generally used for laundry purpose in business premises and not for self-service usage by end-users. On-premise commercial laundry equipment are supplied to our customers in hospitality and healthcare sectors such as hotels and resorts, hospitals and clinics and nursing homes. These customers operate their own laundries within their business premises. The range of on-premise commercial laundry products that we distribute are as follows:­Products Description Brands
Washer extractor Washers are used for washing laundry and are available in • Huebsch top/front load. They are mainly used to wash laundry and spin • Domus them dry. They are suitable for laundries that conduct large • Sea Lion amounts of washing. Continuous batch Continuous batch washers are mainly used for washing large • Senking washer amounts of laundry. They are equipped with multiple sectors, zones, stages or modules comprising pre-wash, wash, rinse and finishing zones.
6. BUSINESS OVERVIEW (Cant’d) Products Description Brands Batch dryer Batch dryers are for shaking, conditioning or full drying of • Senking water extracted linen. They work in conjunction with water extraction presses or centrifugal extractors and a continuous batch washer or washer extractors.
Tumble dryer Tumble dryers are used for drying laundry. They are usually • Huebsch equipped with larger capacity than normal dryers and available • Sea Lion in stacked types to minimise floor space.
Feeder Feeders are used to feed the large-sized wet laundry to • Jensen flatwork finisher or ironers.
Dry cleaning machine Dry cleaning machine are used for dry cleaning of laundry • Renzacci items.
6. BUSINESS OVERVIEW (Cont’d) Products Description Brands
Flatwork ironer Flatwork ironers are used to iron large linens and garments. • Jensen They are used to remove wrinkles and dry large items like • Lapauwtextiles and linens. Ironers are either steam-heated or gas­• Huebsch heated. • Maxi
• Forenta

 

Spotting Table Folder Folders are used to fold large laundry items into a pre­• Jensen determined size. • Lapauw Spotting tables are used to remove any kind of staining in both • Pony the dry cleaning and garment industries. Industrial presses  Presses are used in the finishing process. They are suitable for  •  Pony  machine  garments such  as  shirts, trousers and specific garment parts  like collars and cuffs.

6. BUSINESS OVERVIEW (Cont’d) Products Description Brands Ironing table Ironing tables are complements of the ironing process. • Pony
Chemical dispensing Chemical dispensing system is used to dispense chemicals • Nova system such as washing detergent, softener and sterilising agent into the commercial laundry equipment.
6.6.2 Medical devices business segment The medical devices business segment involves the distribution of two (2) product categories, namely medical imaging equipment as well as disinfection, sterilisation and surgical room equipment. The medical imaging business segment is headed by our Managing Director, Liaw Chong Lin and its business is carried out by Best Contact. The disinfection, sterilisation and surgical equipment business segment is headed by our Executive Director, Chung Eng Lam and its business is carried out by Maymedic. We also distribute the related spare parts, accessories and consumables of medical devices such as MRI system, CT scanner, digital radiography system, X-Ray system, various types of sterilisers, medical printing system and washers/disinfectors. We mainly distribute our range of medical devices such as MRI system, CT scanner, digital radiography system, X-Ray system, various types of sterilisers, medical printing system and washers/disinfectors to the healthcare and medical service providers such as medical institutions, medical centres, physiotherapy centres and dental clinics in Malaysia. For our medical devices business segment, our Group’s target markets are healthcare providers such as hospitals and medical centres. Our distribution activities of medical devices business segment includes the supply, equipping, installation, development, testing and commissioning of various medical devices at the medical imaging departments, operating theatres and central sterile supply departments of medical institutions. The medical devices that we distribute have an estimated product lifespan of between five (5) years to ten (10) years with regular interval maintenance. We also prOVide product recommendations, operation workflow design, mechanical and engineering services, installation, training as well as assisting our customers in obtaining the relevant approvals from authorities for use of such medical devices (such as obtaining the approval from the Atomic Energy Licensing Board of Malaysia for the installation and usage of CT scanner in the medical centres/hospitals). We also provide support to our customers in terms of training, after-sales services repair and maintenance services and other services. 6. BUSINESS OVERVIEW (Cont’d) 6. BUSINESS OVERVIEW (Cont’d) We have submitted applications for the registration of our range of medical devices with the MDA and pending determination of our applications, we are permitted under the MDA Act to continue distributing our medical devices in the market. However, there are no conditions/requirements imposed by the MDA for the continuous distribution of the medical devices prior to approval from the MDA.  Our Group has been appointed as the exclusive distributor of the following brands of medical imaging equipment, disinfection, sterilisation and surgical room equipment in Malaysia:­ No.  Name of manufacturer/ Country of origin  Type of Equipment/ Accessories/ Consumables  Brands  (a)  STERIS Corporation/USA  Steam steriliser, electric steam generators, liquid chemical sterilant processing system, low temperature sterilisation system, washer/disinfector, sonic energy equipment, consumables for sterile assurance products, instrument cleaning chemistries and disinfecta nts  • STERIS • Albert Browne  (b)  Hitachi Medical Ltd/Japan  Systems  (S)  Pte  Digital radiographic system, mobile X-Ray system, digital radiography/fluoroscopy system, MRI system and CT scanner system  • Hitachi  (c)  Medifa-Hesse KG/Germany  GmBH  &  Co.  Surgical table  • Medifa  (d)  Ziehm Imaging GmBH/Germany  Mobile C-Arm system  • Ziehm Imaging  We have also been appointed as the non-exclusive distributor to serve the Malaysian market for the following brands of medical devices:­ No.  Name of manufacturer/ Country of origin  Type of Equipment/ Accessories/Consumables  Brands
(a)  Trilux  Medical  GmBH  &  Co.  Surgical lighting and pendant system  • Trilux Medical  KG/Germany  (b)  Carestream Health Malaysia Sdn Bhd/  Digital  radiographic  system,  mobile  X-Ray  • CareStream  USA  system, CR system, medical printing system  and imaging films  (c)  Quantum Medical Imaging LLC/USA  Digital radiographic system  • Quantum  (d)  MinXray Inc./USA  Portable X-Ray system  • MinXray  (e)  Newmed S.r.L/Italy  Table top steam  steriliser  • Newmed  (f)  GE Healthcare Pte Ltd/ Germany  Bone densitometer  • General Electric  (g)  Elma Schmidbauer GmbH/Germany  Ultra-sonic cleaners,  steam  cleaner,  related  • Elma  accessories and consumables
(a) Medical imaging equipment Medical imaging equipment refers to equipment used for the production of visual presentations of body parts, tissues or organs for use in clinical diagnosis. Medical imaging equipment is used in the course of confirming, correctly assessing and documenting the course of the disease/ illness, as well as in accessing the response to treatment. The range of medical imaging equipment that we distribute is as follows:­Equipment!Accessories!Consumables Description Brands MRI system The MRI system uses magnetic field and • Hitachi pulses of radio wave energy to create clinical images of part of the body including the brain, spinal cord, bones and joints, soft tissue, internal organs, breast, heart and blood vessels.

CT scanner The CT scanner uses X-Rays to create clinical • Hitachi images of cross-sections of the body. The system is equipped with a rotating mechanism and detector that realises whole body imaging at a high-speed view rate. Digital radiography system The digital radiography system uses X-Rays to • Hitachi create clinical radiography images. The system • CareStream is equipped with a selection of 32, 50 or 80 • Quantum high voltage generator, X-Ray parameter settings as well as region settings by anatomical programs that generate precision X-Ray outputs and images.

6. BUSINESS OVERVIEW (Cont’d) Equipment/Accessories/Consumables Description Brands Mobile X-Ray system The mobile X-Ray system is used at hospital • Hitachi bedsides, operating rooms, intensive care units • CareStream or emergency rooms to perform quick radiographic imaging. The system is compact, mobile, and easy to drive.
Portable medical X-Ray unit Portable X-Ray unit is designed for use by • MinXray mobile imaging providers, military applications, disaster relief, forensics, athletic events or anywhere an X-Ray machine must be brought to a patient. The portable X-Ray unit is capable of all routine radiographic views. Detailed images of chest, abdomen, skull, spine and extremities are easily obtained with short exposure times on ambulatory and non­ambulatory patients. Digital radiography/Fluoroscopy Radiography/fluoroscopy system uses X-Rays • Hitachi system to accommodate various types of medical examinations such as upper/lower digestive tract examinations. It provides fluoroscopy and radiography images effective for diagnosis. The mobile C-arm system is based on X-Ray • Ziehm technology and can be used flexibly in various Imaging operating rooms within a clinic/hospital. A C-arm contains the X-Ray generator and an image intensifier or flat panel detectors. The C-shaped connecting element allows movement horizontally, vertically and around the swivel axes, so that X-Ray images can be produced from almost any angle.

 

Bone densitometer Bone densitometer is used for osteoporosis • General assessment, assist physician to predict fracture Electric risk, and monitor response to therapy. It is also widely use in providing accurate information for body composition such as percentage of lean mass, fat mass and bone mass.
6. BUSINESS OVERVIEW (Cont’d) Equipment/Accessories/Consumables Description Brands CR system The CR system is a system that reads imaging • CareStream plate cassette and digitises the imqge. The digital image can then be viewed and enhanced using software. CR cassettes are imaging plates that are made of photostimulable storage phosphor layer coated on a support. It is use to record X-Ray data and to be read out by a CR system to produce clinical images. Medical printing system The medical printing system includes medical • CareStream printing solutions for the entire imaging chain including CR, digital radiography, radiology information systems, picture archiving and communication system, hardcopy digital output and traditional film and screen products.

Consumables for medical printing  The imaging films provide density uniformity  •  CareStream  systems -Imaging films  and visibility to produce precise and consistent  images.

(b) Disinfection, sterilisation and surgical room equipment Disinfection, sterilisation and surgical room equipment refers to equipment used in infection control procedures, as they ensure that medical and surgical instruments do not transmit infectious pathogens to patients. Disinfection, sterilisation and surgical room equipment are used in various departments such as the surgical, sterile processing and infection prevention departments in healthcare facilities. In addition, we also distribute operating tables and surgical lighting to our customers in the healthcare sector. The range of disinfection, sterilisation and surgical room equipment as well as its related accessories and consumables that we distribute are as follows:­Products/Accessories/Consumables Description Brands Steam steriliser Steam sterilisers, sometimes referred to as • STERIS steam autoclaves or autoclaves are essential part of decontamination and sterilisation process performed by centralised sterile supply department.
Steam steriliser is used to sterilise porous, heat and moisture stable surgical instrument in healthcare facilities. They are available in various size and capacity to accommodate the volume required for sterilisation. 6. BUSINESS OVERVIEW (Cont’d) Products/Accessories/Consumables Description Brands Electric steam generators Electric steam generators provide high quality • STERIS steam needed to power equipment such as sterilisers, water stills, utensil sanitisers and water temperature boosters for washing equipment. They provide a steam source when in-house supply is not available, when an emergency standby is required or when a remote location needs to be served.
Liquid chemical sterilant processing The liquid chemical sterilant processing system • STERIS system provides the peracedic acid form of sterilisation of heat sensitive critical and semi-critical devices such surgical and diagnostic scopes, instruments and accessories for immediate use. The sterile processing system is designed and configured to the unique design of the instrument types to be sterilised.
Low temperature sterilisation system Low temperature sterilisation systems are used • STERIS in the sterilisation of cleaned, rinsed and dried
reusable metal and non-metal medical devices that are sensitive to heat and moisture. Vaporised hydrogen peroxide is used as the sterilant. Washers/ Disinfectors Washers/Disinfectors are used in the cleaning • STERIS of soiled reusable utensils, trays, glassware, bedpans and urinals, rubber and plastic goods, simple hard-surfaced rigid surgical instruments (i.e. forceps and clamps), theatre shoes and other similar and related items found in healthcare facilities.
Sonic energy equipment Sonic energy equipment is used to thoroughly • STERIS clean (remove tissue, blood and other • Elma contaminants) instruments prior to final disinfection and sterilisation.
6. BUSINESS OVERVIEW (Cont’d) Products!Accessories!Consumables Description Brands Consumables for sterile assurance The consumables for sterile assurance product • Albert Browne products are used for different stages of • STERIS decontamination process namely, cleaning, disinfection and sterilisation.
Instrument cleaning chemistries and disinfectants

Instrument cleaning chemistries and disinfectants are used for cleaning, decontamination and sterilisation of surgical instruments. They can be used manually and in automated washersjdisinfectors and ultrasonic cleaners. Table top steam steriliser is used to sterilise porous, heat and moisture stable surgical instrument in healthcare facilities. It is mainly used in dental clinics and surgical rooms. Steam cleaner provide steam pressure for pre­cleaning in the medical hygiene area. • STERIS
• Newmed
• Elma

 

Surgical table A surgical table is used in the operation • Medifa theatre where surgeons perform surgical operations on the patient.
6. BUSINESS OVERVIEW (Cont’d)
Products/Accessories/Consumables Description Brands Surgical lighting and pendant system Surgical lighting refers to operating lights or • Trilux Medical surgical light heads to assist medical personnel during a surgical operation. Functionalities and designs include high illumination depth that enables further positioning away from object, flexible ceiling and mobile version, greater movement due to cardanics in the light head and energy-efficient high performance light emitting diodes. A ceiling pendant system is mounted to the ceiling providing electricity outlets, medical gases outlets for anaesthesia, profusion and surgical need. 6.6.3 Repair and maintenance services The range of products, spare parts and consumables that we distribute must meet our customers’ requirements in terms of specifications and functionalities. Product warranties are given to our customers provided that similar warranties are obtained on a back-to-back basis from our manufacturers, details of which are as follows:­(a) Product warranty period for commercial laundry equipment generally cover up to twelve (12) months;
(b) Product warranty period for medical imaging equipment ranged up to twelve (12) months (depending of the type of equipment, spare parts or accessories); and
(c) Product warranty period for disinfection, sterilisation and surgical room equipment ranged up to twelve (12) months (depending of the type of equipment, spare parts or accessories).

Upon expiration of the product warranty period, our customer can choose to continue to engage us for repair and maintenance work for a contract period or when needed, as part of our value-added repair and maintenance services to our customers. Details are as follows:­(a) Repair services When we receive breakdown report from our customer, our Technical Personnel team will be despatched on site to perform troubleshoot, inspection and repair works for commercial laundry equipment and medical devices. There will not be repair fee charged to our customer for the repair work performed for commercial laundry equipment and medical devices which are still within the warranty period and/or subscribed under our preventive maintenance contract. If otherwise, we will inform our customer of the fees to be charged and cost of spare parts (if any) and will only proceed to repair when our customer agrees to the fees. (b) Preventive maintenance services Preventive maintenance is essential to ensure all the laundry equipment and medical devices are operating at maximum efficiency levels. It also helps our customers to avoid costly breakdowns. Preventive maintenance will be carried out using the 6. BUSINESS OVERVIEW (Cont’d) preventive maintenance checklist. Any sign of torn and worn will be recorded before repair work commences. For both commercial laundry equipment and medical device business segments, we offer yearly preventive maintenance contract to our customers. The preventive maintenance contract covers four (4) planned visits to site per annum to carry out regular service, maintenance and testing of the equipment and attending to ad-hoc breakdown, repair or replacement of spare parts. We practise a systematic service request scheduling method that allows us to qUickly dispatch our Technical Personnel in response to both internally-generated and ad-hoc customer service requests. Internally-generated service requests for preventive maintenance are based on our list of previous maintenance history, maintenance schedule recommended by manufacturer, repeated service request analysis and monitoring of service areas wherein we will review them on a monthly basis and follow up with our customers. Ad-hoc customer requests are based on emergency call-in from our customers. 6.7 OUR BUSINESS PROCESSES Due to the nature of our equipment distribution business, most of the stages in our sales and technical operation processes share similar activities. However, there exist several differences that may vary, due to the specific requirements requested by customers. The general process flow of our sales and operations practiced is as follows:­
6. BUSINESS OVERVIEW (Cont’d) (1) Enquiries/Quotation/Repair and maintenance request from customer or tendering process Customer may enquire about the products and services offered by our Group or submit requests for quotations for our product and/or service. Our sales personnel from Sales and Marketing Department will then gather sufficient information (i.e. preparation of relevant product and service catalogue) and follow up with the customer on the enquiries. When a customer is requesting for quotation, our Sales Personnel from Sales and Marketing Department will be responsible for determining the price and necessary information to be include in the quotation slip. In some cases, site visits are performed to assess the condition of the intended equipment installation site, prior to the preparation of site draWings with equipment layout for customer’s approval. For quotations issued for the sale of commercial laundry equipment, our customers are to communicate their decision within two (2) weeks from the date of issuance of the quotation. As for quotation issued for medical devices, our customers are allowed up to six (6) months from the date of issuance of quotations. The validity of these quotations issued for spare parts and consumables ranges from one (1) to eight (8) weeks, depending on the types of spare parts and consumables required. Enquiries regarding repair and maintenance services are forwarded to our Technical Department, who will be responsible for preparation of necessary information for quotation or to despatch our Technical Personnel to site for troubleshooting and to determine the replacement parts and service charges. We also participate in tendering for the supply of medical devices to public and private hospitals. Agents engaged by the hospitals are responsible for the tendering process. Please refer to Section 6.13.1(b) of this Prospectus for details of the agents. Upon receiving bidding invitation, we will evaluate the project’s requirements in terms of the project budget, timeline, schedule, location and the project’s technical aspect. The final pricing of the bid/tender will be submitted after evaluating all relevant costs. Before the letter of award is awarded, we will present the brief details of our bid to the respective project’s tender committee. Among the details to be presented are our technical capabilities and quality control, related project experience, availability of resources, project cost and timeline. If we are successful in securing the project, we will be notified through the issuance of the letter of award. Once the letter of award is received, we will embark on the project. (2) Sales process Upon receiving the purchase orders and deposit payment from customer(s), we will then proceed to order products from the relevant international brand manufacturer(s). Generally, our brand manufacturers will take between three (3) to four (4) months to deliver our order. From thereon, it will take about one (1) month to set up the commercial laundry equipment or medical devices before they are operational. Further details of our sales process are as follows:­(a) Order confirmation Once our customer agrees and confirms on the order either verbally (only for repetitive customers), e-mail acknowledgement, acceptance on the quotation and/or through issuance of customer’s purchase order, our Sales or Technical Personnel will review the order to ensure our customer’s requirement are correctly described before acknowledging the acceptance of the order. Our customers are not required to prOVide letters of credit, but are required to make an initial deposit 6. BUSINESS OVERVIEW (Cont’d) payment via cheque(s) and/or electronic fund transfer for the equipment ordered. We will then proceed to order products from the relevant manufacturer(s) upon receiving the purchase orders and deposit payment from customer(s). The payment terms for the remaining outstanding balance are subject to the agreed terms negotiated between both parties. (b) Processing of order Once the order is confirmed, our Technical Manager will schedule and plan for the resources requirement, date of delivery and installation (if applicable). At the same time, our Sales Personnel will liaise with our customer on the appropriate dates for delivery, installation (if applicable), testing, commissioning as well as training. In terms of scheduling and planning for resources requirement, we place orders for our products, usually the equipment which we do not keep stock, with our manufacturers upon receiving confirmation on our customer’s order. Goods from our suppliers are delivered either to our storage facilities or to our customer’s business premise. Generally, our manufacturers take between three (3) to four (4) months to deliver our order. As for spare parts and consumables, we have in put in place a set of inventory management procedure to ensure optimal inventory level. If installation is required for the equipment, we will also plan for the availability of our Technical Personnel to be despatched on site. Upon confirmation on the date of delivery and/or maintenance by our customer, our Technical Personnel shall verify that the packed spare parts, consumables and/or eqUipment’s serial and model number are according to the request. A delivery order and invoice will be prepared and arranged for transport to customer. As for installation of equipment, a separate invoice will be issued upon confirmation on the date of installation by our customers. (3) Operation process Delivery of product order (a) Delivery We will deliver the equipment, spare parts or consumables to our customer on the agreed date, either directly from our manufacturers or from our storage facilities. We outsource the forwarding and transportation services to Lim Teow Yong & Sons, a local logistic and transportation company, which is not related to our Promoters, substantial shareholders and/or our Directors. We may at any time seek the services of other logistic and transportation provider for the delivery of products to our customers. We follow up on the delivery process and make sure that the products are delivered on time and in good condition. (b) Installation The equipment or spare parts are checked against the purchase order to ensure they are correct. Where there is any inadequacy in the equipment or spare part such as non-conforming product or service requirement, we shall ensure necessary corrective and preventive actions taken with relevant parties to rectify the matter. For equipment or spare part that requires installation, our Technical Personnel will perform the product unpacking and installation according to its manual. 6. BUSINESS OVERVIEW (Cont’d) In terms of commercial laundry equipment, the installation process entails connecting the commercial laundry equipment to the water inlet and drainage pipe and electrical supply. In terms of medical devices, the installation process entails integration of the medical devices to our customer’s database network for access to patients’ information. (c) Testing and commissioning Once the installation process is completed, our Technical Personnel will proceed with a series of testing activities according to the manufacturer’s product manual. These tests are aimed at checking the functionality, accuracy and safety and ensuring its compliance to specification. Tests results are then analysed and the customer will acknowledge and confirm that the equipment is fit for use as per their requirements. (d) Training Our Sales Personnel or Marketing Personnel will conduct on-site and off-site training to enable our customers to familiarise with the functions of the equipment. In terms of our commercial laundry equipment, we demonstrate a test run and provide our customers on basic technical know-how and troubleshooting. In terms of our medical devices, we organise regular in-service seminars and trainings providing demonstrations and test runs of medical equipment, technical and application procedures as well as updates on regulatory requirements to ensure our customer’s employees’ competencies and to keep our customers informed of latest development in the healthcare sector. These training programs provided are not chargeable and are provided by our Technical Personnel after the testing and commissioning of the equipment have been performed to ease our client’s adoption of our products and enhance users’ experience and better understanding of the equipment. Delivery of repair and maintenance order (a) Troubleshooting Upon receiving a service request, our Technical Personnel will work with our customers to identify the issues faced by our customers. If necessary, our Technical Personnel will visit the customers’ premise to assess the equipment condition before proposing an appropriate servicing proposal required for the equipment. If service request is within the warranty period and according to the warranty terms and conditions, no charge will be invoiced to our customers. If the service is chargeable, our Technical Personnel shall request for issue of quotation slip to our customers. (b) Servicing and preventive maintenance For preventive maintenance request, our Technical Personnel are despatched on site to perform repair and maintenance according to the planned maintenance schedule and to record all servicing and maintenance related observation and activities for tracea bility. 6. BUSINESS OVERVIEW (Cont’d) All of our products come with a warranty for a period of up to twelve (12) months for product defects. Upon the expiration of the product warranty period, our Group will offer preventive maintenance services under a one (1) year contract to our customers for future repair and maintenance works on the product(s). If the affected product(s) at the point in time is already outside the warranty period and there is no existing servicing and preventive maintenance contract for the product(s) involved, a fee will then be charged for the consultation as well as the resulting repair and maintenance works performed including the cost of replacement parts and components, if any. The fee incurred is dependent on amongst others, the type of works required, replacement spare parts and components involved, administration and transportation costs, which will be proposed by our Technical Personnel. Our customers are charged via invoices issued to them and payment are to be made upon completion of our job or certain milestones (under preventive maintenance contracts) via cheque(s) and electronic fund transfer. 6.8 MAJOR EQUIPMENT, STORAGE SPACE AND LOCATION OF OPERATIONS 6.8.1 Major equipment Save for three (3) units of motor vehicles acquired for use in our sales and marketing activities, our Group has not invested in any major equipment for our business operations for FYE 2015 and FPE 31 March 2016. The audited NBV of the said motor vehicles as at 31 March 2016 is RM0,47 million. 6.8.2 Storage space Details of our storage space for the storage of our equipment, accessories, spare parts and consumables for the financial years and financial period under review are as follows:­Owned storage space Size No. Company Location (sq m) (1) CS Laundry l\Jo. 21-1, Jalan 5/152, Batu 6, Jalan Puchong, Taman Perindustrian 242 aUG, 58200 Kuala Lumpur
(2) Best No. 13-12, Jalan 13/155B, Aked Esplanad, Bukit Jalil 57000 Kuala 47 Contact Lumpur
(3) Maymedic No. 19-1, Jalan 5/152, Batu 6, Jalan Puchong, Taman Perindustrian 156 aUG, 58200 Kuala Lumpur

6. BUSINESS OVERVIEW (Cont’d) Rented storage space We have also appointed the following third party for the storage of our inventories at their warehouse, details are as follows:­Service fee Size per month Company Landlord Location (sq m) (RM) CS Laundry C.H. Robinson PT No 119975, Jalan Canang Emas 524 8,387 Freight Services 7/KS10, Telok Gong, 42000, Port Klang, Sdn Bhd Selangor Lot 69887, Jalan Pelabuhan Utara, P.O. Box 292, 42000 Port Klang, Selangor 6.8.3 Location of operations Our Group operates from the following premises owned by our Group:­Subsidiaries Location Main Functions Address Maymedic Jalan Puchong Kuala Administration office, No. 19-1, No. 19-2 & No. 19-3, Lumpur sales office and storage Jalan 5/152, Batu 6, Jalan space Puchong, Taman Perindustrian OUG, 58200 Kuala Lumpur CS Laundry  Jalan  Puchong  Kuala  Administration  office,  No. 21-1, 21-2 & 21-3, Jalan 5/152,  Lumpur  sales  office  and  storage  Batu  6,  Jalan  Puchong,  Taman  space  Perindustrian  OUG,  58200  Kuala  Lumpur  Best Contact  Bukit  Jalil,  Kuala  Head  office  of  our  No.  13-12  Jalan  13/155B,  Aked  Lumpur  Company,  administration  Espalanad,  Bukit Jalil  57000 Kuala  office,  sales  office  and  Lumpur  storage space
6.9 QUALITY ASSURANCE POLICY AND QUALITY CONTROL One of the important factors in the distribution of a wide range of commercial laundry equipment and medical devices is the ability of the distributor to deliver quality products within the specifications stated by their customers. We have an in-house quality assurance team that enables our Group to undertake quality inspection and control testing of the products that we distribute. Our quality control team is chaired by our Quality IVlanagement Representative and is assisted by two (2) Technical Supervisors. They are responsible for quality control and ensuring that our quality control policies and measures are adhered to. They are responsible for ensuring all incoming products meet the required specifications. 6. BUSINESS OVERVIEW (Cont~) Our quality assurance team essentially adopts the following approaches and procedures to ensure that quality standards are maintained:­No. Procedures Descriptions (a) Product Quality All incoming goods from our manufacturers are verified against the respective
Control Delivery Orders or Purchase Orders on the actual quantity and condition received and is subject to visual inspection to ensure their suitability before being accepted by us. For consumables and spare parts, the quantity will be recorded into our computer system. Our goods are stored in a manner to facilitate first in first out basis. We maintain records of stock receiving, inspection and distribution to ensure traceability of our products throughout the supply chain.
(b) Service Quality For delivery of equipment, our Technical Personnel will record all installation status

Control in individual progress report. If there are defects detected in relation to the installation service rendered, corrective and preventive actions will then be taken. If the defects detected are related to the equipment itself, control of non-confirming products will be undertaken to rectify issue with the relevant manufacturer for return or replacement. Specifically for the installation of ionising radiation-emitting imaging equipment, a radiation shield room needs to be constructed before installing the equipment. We generally outsource the construction of such radiation shield room to an approved sub-contractor but are responsible for the inspection of the radiation shield room. During equipment testing process, our Technical Personnel will conduct a series of testing activities according to the manufacturer’s product manual and ensure correct placement of safety sticker on the equipment. For delivery of repair and maintenance services, our Technical Personnel will record all status of repair and preventive maintenance. If there is fault detected, our Technical Personnel will inform our customer and recommend corrective actions. For the continuing improvement of the quality of our product and services, our sales and marketing department consistently follow-up with our customers to obtain their feedback on the performance of our products and services. Our Group also selects international brand manufacturers with valid and recognised quality accreditations to service as our suppliers of our range of equipment, accessories, consumables and spare parts. Our Group strives to ensure that proper implementation and compliance with quality control is reflected in the quality of our products. Our Group has established a QMS system to meet our customers’ quality requirements and this QMS system adhere closely to the relevant international ISO gUidelines. We have also put in place a quality control manual (which details the quality process and procedures which is in compliance with ISO 9001:2008) which we adhere to in our distribution processes. The quality manual is reviewed as and when necessary. Our commitment to quality is evidenced by our Group’s QMS system being accredited with ISO 9001:2008 for the compliant for the distribution of our products. This marks our continuous commitment towards distribution quality to ensure that our products meet local and international requirements. Our ISO accreditation requires our subsidiaries to be subject to annual audits in order to ensure our on-going conformity to the QMS process. We presently comply with the following local and international standards:­6. BUSINESS OVERVIEW (Cont’d) Company Best Contact and Maymedic CS Laundry Best Contact specialise commercial laundry and equipment and industrial (b) aims to enhance customer laundry equipment as well as satisfaction through trading of its spare parts effective application of its Standards!  Certification  Year  Year  Body  Awarded  Renewed  Scope of Certification  Description of Standard
ISO  2009  2014  Provision  of  supply,  This  standard  specifies  the  9001:2008/  (Best  installation  and  servicing  of  requirements for QMS where an  DQS GmbH  Contact)  medical  diagnostic  imaging  organisation:­ systems  and  medical  2011  2014  equipment  (a)  needs  to  demonstrate  its  (Maymedic)  ability  to  consistently  provide products that meet  2012  2015  Provision  of  supply,  customer  and  applicable  installation  and  service  of  regulatory  requirements;
QMS. DIN ISO 2009 2014 Provision of installation and This standard specifies the 13485:2003/ servicing of medical requirements for QMS where an DQS diagnostic imaging systems, organisation needs to Medizinprodukte which does not only focus on demonstrate its ability to GmbH process improvement and provide medical devices and customer satisfaction but related services that consistently also addresses regulatory meet customer requirements requirements in terms of the and regulatory requirements design, assembly and applicable to medical devices marketing of medical devices and related services. Product warranty and claim As a distributor of commercial laundry eqUipment and medical devices, our Group relies on our manufacturers to ensure that their products meet the required quality standards. In addition, we conduct periodical visits to our manufacturers’ premises/factories to better understand their products and quality standard. We firmly believe that with the experience and expertise of our Group and by working closely with our international brand manufacturers, to ensure that the quality of our range of commercial laundry equipment and medical devices products are met, any defects in these products supplied are minimised. A product warranty is given to our customers provided that warranty is obtained on a back­to-back basis from our manufacturers. Such back-to-back arrangement is an industry practice within the distribution market segment. We provide our customers with exchange/return policies (should the products are of inferior quality or do not meet their specifications) that allow them to replace or return the defective or flawed products. We will issue credit notes to our customers for any returned goods. Such returned products will be expensed out in our income statements, where we record it as sales return and our revenue will be reduced accordingly. We will also issue debit notes to our manufacturers and charged it to our income statements where our cost of sales will be reduced accordingly. For replacement / exchange of products which are defective, we will also exchange / obtain replacements of such defective products from our manufacturers and no book entry is made into the accounting system. Our Group has recourse to claim (in lieu of replacements / exchanges) from the manufacturers of the products that we distribute, should there be any defects in their products. To date, we have not experienced any difficulties with our manufacturers in exchanging and replacing defective products, or making the necessary 124 6. BUSINESS OVERVIEW (Cont’d) monetary claims against these defective products. As such, the impact to our Group arising from any of these warranty claims is minimal. For the financial years/period under review, the amount of sales return recorded for our distribution and of commercial laundry equipment and medical devices are as follows:­FPE 31 FYE FYE FYE FYE March 2012 2013 2014 2015 2016 Commercial laundry equipment business segment Sales return (RM’OOO) 13 18 14 46 % of revenue 0.5 0.2 0.1 0.1 Medical imaqinq equipment sub-segment Sales return (RM’OOO) 16 1 % of revenue 0.2 0.03 Disinfection. sterilisation and surgical room equipment sub-segment Sales return (RM’OOO) 0.9 3 (1)187 5 % of revenue 0.01 0.1 3.2 0.5 Note:­(1) The higher sales return for the disinfection, sterilisation and surgical room equipment sub-segment as the medical device product delivered to our customer was not suitable and did not meet the required specifications for their usage. This situation arose due to changes in specifications made by the customer after the delivery of the product. These medical devices were subsequently returned back to us and correspondingly we had also returned the same products to our manufacturers and obtained a replacement for the correct product that meets our customer’s revised specifications. We have not experienced any negative implications resulting from this event such as compensation to the customer or inability to retain the customer. The associated costs in relation to the above return of medical device was RM3,000 and was borne by Maymedic. 6.10 R&D 6.10.1 Policies of R&D Our Group’s revenue for the past four (4) FYEs 2012 to 2015 as well as for FPE 31 March 2016 comprises distribution of commercial laundry equipment and medical devices. Due to the nature of our business, our Group does not undertake any R&D activities. Notwithstanding this, we keep abreast of market requirement by continuously monitoring new product development rolled out by manufacturers and provide feedback from time to time to gUide our manufacturers’ R&D activities. As such, our Group places an emphasis on continuous product identification to cater to the changing needs of both our existing and potential customers. In addition, we strive to enhance the quality of our services by putting in place a QMS that meets the requirements of the ISO standards as well as continuously provide internal and external training and development programmes to our employees. 6. BUSINESS OVERVIEW (Cont’d) 6.10.2 R&D expenditure Our Group did not incur any expenditure or capitalise any development cost that was specific to R&D activities during the financial years and financial period under review. 6.10.3 Relevant technology Inventory management and accounting system Our Group utilises technology in our computerised inventory management and accounting system to facilitate our distribution business activity. We currently operate a third-party computerised inventory management and accounting system that is customised to meet our Group’s specific requirements. The computerised inventory management and accounting system enables our Group to:­(a)  Systematically  track  and  manage  inventories  of the  various  types  of  commercial  laundry equipment and medical devices;  (b)  Manage business relations with customers while monitori ng their  credit  history; and  (c)  Streamline our inventory procurement process.
Data such as inventory levels, customer’s purchase, pricing, credit and payment history and manufacturer’s pricing and payment history is automatically captured and stored on our Group’s database. This data is available on-screen to authorised personnel. Some of the key features and capabilities of our Group’s computerised inventory management and accounting system include:­(a) Inventory management:-On-screen inventory level enquiry, showing monthly stock movement;
(b) Customer purchase management:-On-screen enquiry of customer’s purchase, pricing and payment history;

(c) Customer credit management:­(i) Customer credit history database; and
(ii) Automated credit approval based on customer’s credit history, with manual transaction approval by authorised personnel on a case-by-case basis;

(d) Automated customer invoice generation:-Customer invoices are generated on a batch basis and are based on customer’s delivery orders to save time; (e) Procurement management:­(i) On-screen enquiry of supplier purchase and payment record; and
(ii) On-screen enquiry of supplier purchase price.

Our Group has integrated our computerised inventory management and accounting system with our business operations. Our employees have been trained to use this system in their day-to-day operations. The computerised inventory and management system is currently in use at our Group’s head office located at Bukit Jalil, Kuala Lumpur. 6. BUSINESS OVERVIEW (Cont’d) 6.11 PRINCIPAL MARKETS Our market for the sales of commercial laundry equipment and medical devices as well as its related spare parts and the maintenance medical devices is in Malaysia. Details of our customer segments in the commercial laundry equipment and medical devices business segment are as follows:­Customer Segments Description
Self-service launderettes On-premise laundries IVJulti-housing laundries Other laundries Healthcare providers Self-service launderettes are commercial establishments typically for walk-in, washing and drying. The commercial laundry equipment used in self-service launderettes includes top load washers, washer-extractors and tumble dryers. Owners and operators of self-service launderettes generally rely on distributors of commercial laundry equipment to help them to find locations for stores, design the self-service launderettes, provide and install equipment, provide technical and maintenance support as well as provide broader business services. Distributors frequently host seminars to explain the investment opportunities to potential self­service launderette operators. On-premise laundries are generally located at businesses that wash or process significantly larger loads of textiles and garments in relatively shorter time. These businesses include but are not limited to hotels, hospitals, nursing homes, correctional institutions, sport facilities, car washes, gyms and fire stations. Common commercial laundry equipment used for on-premise laundries includes washer-extractors, tumble dryers and flatwork finishers. This segment includes common laundry facilities in multi-dwelling units such as apartments and condominiums, universities and military installations. The commercial laundry equipment that are suitable for multi-housing laundries include small chassis top load and front load washers and small-chassis dryers that are vended, equipped with different type of payment system. Normally, route operators manage the multi-housing laundries with their own service and technical employees. Route operators purchase, install and service the commercial laundry equipment under contract with property management companies. Examples of other laundries include traditional non-self-service laundry shops as well as outsourced laundry service providers. They typically keep accounts for regular customers and cultivate long-term customers in particular neighbourhoods. Traditional non-self-service laundry shops also offer dry cleaning services besides the common laundry services of washing and drying. Meanwhile, outsourced laundry service providers offer large scale laundry services to businesses and institutions. They also have the capability to undertake laundry involving large or over-sized articles of textile and apparel. Healthcare providers refer to establishments that proVide healthcare facilities and treatment services such as hospitalisations, home care visits, professional consultations, physiotherapies, rehabilitations and dentistry to healthcare consumers. Examples of healthcare providers include hospitals, medical centres, physiotherapy and orthopaedic centres as well as specialist centres and clinics (Le. optometry, skin and aesthetic and dental specialist). 6. BUSINESS OVERVIEW (Cont’d) We have distributed our range of medical devices directly to hospitals and medical centres as well as via agents. To-date, we have delivered our medical devices products to approximately 46 public hospitals and 146 private hospitals in Malaysia, respectively. 6.12 MARKET SHARE For the FYE 2015, CS Laundry generated revenue of RM39.4 million, equivalent to a 19.6% share of the commercial laundry equipment industry in Malaysia in 2015 according to the IMR Report.
In addition, CS Laundry generated revenue of RM38.1 million from the sales of vended commercial laundry equipment, equivalent to a 40.1% share of the total market size in terms of revenue for the vended commercial laundry equipment market in 2015 of RM95.0 million.
For the same year, Best Contact and Maymedic generated revenue of RM17.3 million and RM7.7 million, respectively, which is equivalent to less than 1.0% market share of the medical devices industry in Malaysia in 2015, according to the IMR Report. (Source: IMR Report) 6.13 MODE OF DISTRIBUTION AND MARKETING STRATEGIES The major thrust of our Group’s sales and marketing strategy is to position ourselves as a distributor of quality commercial laundry equipment and medical devices to our targeted customer base in various segments. To implement this marketing strategy, our Group has our own sales and marketing team to focus on business development with existing and potential customers. As at the LPD, our Group has a total of eleven (11) sales executives serving existing customers and developing new businesses throughout Malaysia. 6. BUSINESS OVERVIEW (Cont’d) 6.13.1 Modes of distribution Our Group’s modes of distribution are as follows:­(a) Direct approach Sales generated directly by our sales team are based on direct contact with potential customers and referrals from our past and existing customers. (b) Agents Our sales are also secured through agents, which are companies tasked with the sourcing and supply of commercial laundry equipment and medical devices for:­(i) Construction of new hospitals/medical centres;
(ii) Capacity expansion of existing hospitals/medical centres;

(iii) Replacement of existing commercial laundry equipment and medical devices at hospitals/medical centres; or (iv) Providing maintenance and repair services for commercial laundry equipment and medical devices at these hospitals/medical centres. We work with these agents to jointly submit a tender/bidding application to fulfil the project requirements. Our Group’s selection criteria of these agents are based on the following criteria’s and considerations:­(i) Tender/bidding/award requirements, criteria and conditions imposed by the respective customers; and
(ii) Track record, reputation, strength of financial position as well as length of relationship of these agents with our Group.

Based on the above, we will work closely with these agents to fulfil the specific requirements and conditions set out in the tender/bidding criteria for a particular contract for distribution to the end user via these agents. 6.13.2 Marketing strategies We place emphasis on marketing in terms of creating brand awareness and product recognition. We understand the importance of building our brand awareness and market standing in order to boost our sales revenue. As such, we constantly invest in various marketing strategies to raise our corporate profile. The sales and marketing strategies initiated by our Group for the two (2) business segments include the following:­Commercial laundry equipment business seqment (a) Billboard advertisements We advertise our ranges of commercial laundry equipment products and services through billboard advertisements. As at the LPD, we have placed twenty-five (25) billboard advertisements located along several major highways, such as the North­South Expressway, Klang Valley Expressway and East Coast Expressway. We also tapped on the online marketing channel through regular updates on our company website and social media such as Facebook and Google Advert for online advertising and promotional programmes. We believe that this channel of advertising enables us to carry out more targeted efforts aimed at various segments of consumers in Malaysia. 6. BUSINESS OVERVIEW (Cont’d) (b) Setting up of Speed Queen self-service launderettes In addition, we have established and operated our first Speed Queen self-service launderettes located at Taman United, Kuala Lumpur. We view this as a good step to promote our range of Speed Queen range of vended commercial laundry equipment, where we can showcase an actual active physical store for our potential customers to view and experience first-hand our product and service offerings. It is essentially a concept store that can help to drive brand awareness. As part of our plan to continue to build our products and services reputation, we intend to use our IPO proceed to establish eleven (11) Speed Queen self-service launderettes throughout Peninsular Malaysia. (c) Corporate websites We have established our corporate websites for commercial laundry equipment business segment at http://www.cslaundry.com.my which provides immediate searchable information on our Company, including product and service offerings. The current widespread use of the internet as a source of information enables us to cross geographical borders and facilitates access from any part of the world, enhancing our potential market reach and exposure. Medical devices business segment (a) Trade exhibitions, seminars and events An important aspect of our sale and marketing activities is our Group’s participation in local and international trade exhibition, as these events are an effective medium to showcase our products and meet potential customers. We also organise seminars where we invite various speakers with relevant background in the medical devices industry as well as healthcare sector to prOVide their expert views relating to the various medical devices products and industry development. These seminars also allow us to gather valuable feedback from our customers as well as to keep abreast of the latest industry developments. The following are some of the trade exhibitions, seminars and events that we have participated over the past four (4) FYEs 2012 to 2015 and FPE 31 March 2016:­Name of Trade Year Exhibitions/Seminars/Events Organiser Location 2016 World Hand Hygiene Day Infection Control Department, UMMC Kuala Lumpur 13th Annual Scientific Meeting of Infection Infection Control Association Johor Bahru Control Association Malaysia Malaysia Malaysian Sterile Service Association 21st Malaysian Sterile Service Association Subang, Annual General Meeting Conference & Selangor Exhibition 46th Malaysian Orthopaedic Association Malaysian Orthopaedic Association Johor Bahru 2015 Malaysian Congress of Radiology, 2015 Malaysian Congress of Radiology Putrajaya 6. BUSINESS OVERVIEW (Cont’d) Name of Trade Year Exhibitions/Seminars/Events Organiser Location IVJinimally Invasive Spine Surgery Workshop & Universiti Kebangsaan Malaysia Kuala Lumpur Live Surgery Medical Centre and Aesculap Academy Malaysia Kursus Pensterilan Peringkat Zon Sabah Bahagian Perkembangan Perubatan, Sarawak Sarawak MOH Kursus Pensterilan Peringkat Negeri Kelantan Jabatan Kesihatan Negeri Kelantan Pasir Puteh, Kelantan 2014 CT and MRI Seminar Hitachi Medical Systems (S) Pte Ltd Ho Chi Minh City, Vietnam South East Asia Radiographers’ Conference & Malaysia Society of Radiographers Malacca 2nd Radiation Theraphy Symposium, 2014 4th East Coast Gastrohepatology Conference MOH Kuantan, Pahang Kursus Penggunaan Autoklaf Pusat Perubatan Universiti Kuala Lumpur Kebangsaan Malaysia 2012 42nd Malaysian Orthopedic Association, 2012 Malaysian Orthopedic Association Pahang Malaysia Congress College of Radiology, 2012 Malaysia Congress of Radiology Penang Such participation also allows us to stay updated on the relevant market trends, latest industry developments and technical information, as well as expand our business networking within the industry. Additionally, participation in these trade exhibitions, seminars and events greatly enhances our brand awareness and our Group’s presence. (b) Advertising We undertake advertising activities through trade directories such as the Medical Supplies Annual Directory as well as sponsorship of medical publications such as the Health Magazine issued by KPJ Healthcare Group to increase the awareness of our products and services. (c) Corporate websites We have established our corporate websites at http://www.bestcontact.com.my and http://www.maymedic.com.my which provide immediate searchable information on our Company, including product and service offerings. The current widespread use of the internet as a source of information enables us to cross geographical borders and facilitates access from any part of the world, enhancing our potential market reach and exposure. [ The rest of this page is intentionally left blank] I Company No.: 1135238-U I 6. BUSINESS OVERVIEW (Cont’d) 6.14 MAJOR CUSTOMERS Our customers that have contributed 10% or more of our total revenue for the past four (4) FYEs 2012 to 2015 as well as FPE 31 March 2016 are as follows:­Length of FPE 31 March relationship FYE 2012 FYE 2013 FYE 2014 FYE 2015 2016 Country Type of Major Customers of origin customer Years RM’OOO 0/0 RM’OOO 0/0 RM’OOO % RM’OOO 0/0 RM’OOO 0/0 Commercial laundry equipment business segment City Coin Laundry Sdn Malaysia Self-service 3 1,769 5.0 13,212 25.9 10,625 16.5 Bhd launderette provider Medical devices business segment<2) Medical imaginq equipment sub-segment KPJ Healthcare Group(3)  Malaysia  Healthcare service provider  10  4,662  24.5  3,832  10.9  4,453  8.8  3,385  5.3  1,144  7.7  Healthlink Services Sdn Bhd3) Total  Malaysia  Healthcare service provider  4  4,662  24.5  5,009 10,610  14.2 30.0  15 17,680  (1) 34.6  14,010  21.8  1,144  7.7  Notes:­
(1) Denotes less than one (1) percent of total revenue for the respective financial years.
(2) There was no customer in the disinfection, sterilisation and surgical room equipment sub-segment that has contributed 10.0% or more of our total revenue for the past four (4) FYEs 2012 to 2015 as well as FPE 31 March 2016.

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6. BUSINESS OVERVIEW (Cont’d) (3) The revenue contribution from KPJ Healthcare Group and Healthlink Services Sdn Bhd for our Group’s overall revenue for the past four (4) FYEs 2012 to 2015 as well as FPE 31 March 2016 are as follows:­FPE 31 FYE FYE FYE FYE March No. Major customers 2012 2013 2014 2015 2016 0/0 0/0 0/0 0/0 0/0 (a) KPJ Healthcare Group 27.7 14.0 11.6 7.7 10.0
(b) Healthlink Services Sdn Bhd 18.0 0.1

The above revenue contribution from KPJ Healthcare Group and Healthlink Services Sdn Bhd are derived from the medical imaging equipment as well as the disinfection, sterilisation and surgical room equipment sub-segments. Commercial laundry equipment business segment The fluctuation in revenue contribution from our customers varies from year to year depending on various factors, such as the number of new self-service launderette outlet set up by new operators, expansion of the number of launderette outlets by the existing chain of launderette operators/franchisor and replacement of washers and dryers at our customers’ laundry outlets. Our customers mainly comprise operators of chain of launderettes such as City Coin Laundry Sdn Bhd (proprietor of “Laundry Bar” chain of launderettes) and Mr Bean Coin Laundry (operator of “Mr Bean Dobi” chain of launderettes) in the Klang Valley region from FYE 2013 to FYE 2015. However, Mr Bean Coin Laundry was not regarded as our Group’s major customer during the financial years/period under review as it contributed less than 10% of our Group’s revenue. The revenue contribution from Mr Bean Coin Laundry to our Group for the financial years/period under review is as follows:­FYE FYE FYE FYE FPE 31 2012 2013 2014 2015 March 2016 RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 Commercial laundry equipment business segment Mr Bean Coin 1,639 3.2 994 1.5Laundry We have distributed commercial laundry equipment to City Coin Laundry Sdn Bhd since 2013. Since then, City Coin Laundry Sdn Bhd has been our major customer for FYE 2014 and FYE 2015, contributing approximately 25.9% and 16.5% of our Group’s total revenue for the FYE 2014 and FYE 2015, respectively. We distributed both Huebsch and Speed Queen brands of vended commercial laundry equipment to City Coin Laundry Sdn Bhd during the financial years under review. “Laundry Bar” is a trademark self-services laundry concept of City Coin Laundry Sdn Bhd. We have reduced our dependency on City Coin Laundry Sdn Bhd in view of the setting up by various chain of other launderettes by our other customers using Speed Queen brand of vended commercial laundry. Our Group’s continuous marketing efforts since FYE 2013 to create better awareness and increasing market acceptance by the self-service launderette operators for the Speed Queen brand of vended commercial laundry equipment (both washers and dryers), has enabled our Group to increase our distribution of the Speed Queen brand of vended commercial laundry equipment. 6. BUSINESS OVERVIEW (Cont’d) The unique and additional features of the Speed Queen brand of vended commercial laundry equipment coupled with the good maintenance and after-sales service provided by our technical team has contributed to the well-acceptance of Speed Queen brand of vended commercial laundry equipment by self-service launderette owners across Peninsular Malaysia. For our on-premise commercial laundry equipment, revenue generated during the financial years and financial period under review mainly consist of distribution of various types of equipment such as washer extractor, dry cleaning machine, ironing machine and flatwork ironer as well as other furnishing equipment. These include various international and reputable brands such as Sea Lion, Renzacci, Pony and Lapauw. Medical devices business segment We have been servicing KPJ Healthcare Group for approximately ten (10) years and they have been our major customer for our medical devices business segment, contributing approximately 27.7%, 14.0%, 11.6%, 7.7% and 10.0% of our Group’s total revenue for the FYE 2012, FYE 2013, FYE 2014, FYE 2015 and FPE 31 March 2016, respectively. Over the financial years and financial period under review, we have been distributing our range of medical imaging equipment to KPJ Healthcare Group hospitals located nationwide (new and existing hospitals). This includes CT scans, mobile C-Arm system, MRI system, digital radiography system, mobile X-Ray system, digital imaging solution and medical printing system of various brands including Hitachi, CareStream, MinXray, Trilux Medical, STERIS, Albert Browne and Ziehm Imaging. The demand and supply of our range of medical devices as well as its related accessories, consumables and spare parts depends on the requirements of our customers (e.g. healthcare providers and life sciences) in the healthcare industry in their usage at different levels of their medical operations. Once purchased, our customers are not reqUired to frequently replace its medical devices as it has an estimated product lifespan of between five (5) years to ten (10) years, with regular interval maintenance. As such, we are not expected to generate sales of medical devices from our customers frequently. Nevertheless, demand for spare parts (from scheduled maintenance), accessories and consumables are relatively repetitive and constant in nature by our customers as our customers are required to replace these spare parts, accessories and consumables for use in their medical operations as and when required. We have maintained good business relationships with our customers, most of which have more than two (2) years of relationship with our Group. We also occasionally enter into repair and preventive maintenance contract with our customers, to carry out regular service, maintenance and testing of the equipment, attending to breakdown, repair or replacement of spare parts. Our Group has established long standing and strong relationships with our customers, including agents, and have not, to-date, faced any material fluctuations in our sales in the absence of long-term sales contracts. Our established relationships with our customers will also provide us with the platform for sustained business continuity and growth. [ The rest of this page is intentionally left blank] I Company No.: 1135238-U I 6. BUSINESS OVERVIEW (Cont’d) 6.15 MAJOR SUPPLIERS Our major suppliers that have contributed 10% or more of our total purchases for the past four (4) FYEs 2012 to 2015 as well as FPE 30 June 2015 are as follows:­FPE 31 March FYE 2012 FYE 2013 FYE 2014 FYE 2015 2016 Length of Purchase Purchase Purchase Purchase Purchase Country Type of relationship value value value value value Major Suppliers of origin supplier Years RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 RM’OOO 0/0 Commercial laundry eguipment business segment Alliance Laundry USA Manufacturer 15 1,035 8.7 5,787 19.7 16,380 46.3 26,272 54.2 4,462 47.9 Medical imaging eguipment sub-segment Hitachi Medical Japan Manufacturer 12 2,327 19.5 11,937 40.6 3,580 10.1 2,704 5.6 1,196 12.9 Systems (S) Pte Ltd(l) Carestream Health USA Manufacturer 7 2,466 20.7 3,753 12.8 2,625 7.4 6,550 13.5 609 6.5 Malaysia Sdn Bhd2) Disinfection. sterilisation and surgical room eguipment sub-segment STERIS Corporation USA Manufacturer 10 2,445 20.5 2,357 8.0 2,483 7.0 3,798 7.8 721 7.7 Total 8,273 69.4 23,834 81.1 25,068 70.8 39,324 81.1 6,988 75.0 Notes:­(1) Hitachi Medical Systems (S) Pte Ltd was incorporated in 1994 to take over the activities as a representative office of Hitach i Medical Corporation and to market Hitachi brand of medical equipment in Asia. The company is represented by its distributors in South East Asia, Middle East and South Asian Association for Regional Cooperation.
(2) Carestream Health Malaysia Sdn Bhd is the representative office and subsidiary of Carestream Health Inc. It is responsible for importing its range of medical devices as well as providing training, marketing and related services for its channel partners in the Malaysian region.

135 6. BUSINESS OVERVIEW (Cont’d) All our purchases with our international brand manufacturers are on purchase order basis and we do not enter into any purchase contracts with our international brand manufacturers. Our Group relies on our major international brand manufacturers which have provided us with the distribution rights to distribute their range of commercial laundry equipment and medical devices in Malaysia. Our Group usually make purchases from our approved list of manufacturers and prefers to maintain long-term business relationships with our manufacturers based upon their trustworthiness and reliability in the distribution of quality commercial laundry equipment and medical devices as well as its related spare parts, accessories and consumables. Our Group has also established long-term working relationships with our major international brand manufacturers of which half of them have been maintaining working relationships with our Group for more than five (5) years. Commercial laundry eguipment business segment Alliance Laundry has been our major supplier, which accounted approximately 8.7%, 19.7%, 46.3%, 54.2% and 47.9% of our total purchases for the past four (4) FYEs 2012 to 2015 as well as FPE 31 March 2016, respectively. Hence, we are dependent on Alliance Laundry as our major supplier. We have been working with Alliance Laundry for approXimately fifteen (15) years since 2001. Alliance Laundry is the manufacturer and supplier of various brands of commercial laundry equipment such as Speed Queen and Huebsch which we distribute. Medical devices business segment Our top two (2) suppliers for the medical imaging equipment sub-segment are Hitachi Medical Systems (S) Pte Ltd and Carestream Health Malaysia Sdn Bhd, which collectively accounted approximately 40.2%, 53.4%, 17.5%, 19.1% and 19.4%, of our total purchases for the past four (4) FYEs 2012 to 2015 as well as FPE 31 March 2016, respectively. STERIS Corporation has been our major supplier for the disinfection, sterilisation and surgical room equipment sub-segment, which accounted approXimately 20.5%, 8.0%, 7.0%, 7.8% and 7.7% of our total purchases for the past four (4) FYEs 2012 to 2015 as well as FPE 31 l\!larch 2016, respectively. 6.16 TYPE, SOURCES & AVAILABILITY OF RAW MATERIAL/SUPPLIES The majority of our products, spare parts, consumable and accessories are sourced from our international brand manufacturers (from countries such as USA, Spain, Italy, Belgium, Germany and Japan). We have not faced any major interruptions in supplies from our distributors and suppliers that have had a significant impact on our operations during the past four (4) FYEs 2012 to 2015, FPE 31 March 2016 and up to the LPD. 6.17 SEASONALITY OF OUR BUSINESS Generally, our Group’s business is not affected by seasonality. 6.18 INTERRUPTIONS IN BUSINESS Our Group has not experienced any interruption in the form of major operational breakdowns or trade disputes that have a significant effect on our operations during the past four (4) FYEs 2012 to 2015, FPE 31 March 2016 and up to the LPD.

 

 

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