Business Overview

5. INFORMAnON ON OUR GROUP 5. INFORMAnON ON OUR GROUP INCORPORATION AND HISTORY Overview of our Business Our Company was incorporated in Malaysia under the Act on 22 October 2015 as a private limited company under the name of HLT Global Sdn Bhd. On 28 December 2015, we entered into the SSA with the Vendors for the acquisition of the entire issued and paid-up share capital of HL Advance. Subsequently on 7 January 2016, our Company was converted to a public limited company under our present name to embark on our Listing. Our Group’s corporate structure is as follows:­HLT Global 100% HL Advance We are an investment holding company. Through our wholly-owned subsidiary, HL Advance, we are principally involved in the design, fabrication, installation, testing and commissioning of glove-dipping lines, the provision of upgrading and modification works for glove-dipping lines, and the supply and trading of associated parts and components. The glove-dipping lines produced by us can be designed to cater for the manufacturing of natural and/or synthetic rubber gloves. Our customers are rubber glove manufacturing companies involved in the production of natural and/or synthetic rubber gloves used across various industries including medical, industrial and food processing industries. Since its commencement of business operations in 2009, HL Advance had supplied glove-dipping lines to rubber glove manufacturers in Malaysia, Indonesia, Thailand, China and India. Some of the rubber glove manufacturers we serve include Cardinal Health 222 (Thailand) Ltd in Thailand, PT Medisafe Technologies in Indonesia, Kanam Latex Industries Pvt Ltd in India as well as those in Malaysia such as Green Prospect Sdn Bhd, YTY Industry Sdn Bhd, Rubberex Alliance Sdn Bhd, Latexx Manufacturing Sdn Bhd and WRP Asia Pacific Sdn Bhd. Collectively, these rubber glove manufacturers contributed 92.37%, 83.52%, 98.39% and 65.66% to our total revenue for the FYE 2013, FYE 2014, FYE 2015 and FPE 2016 respectively. The breakdown of revenue contributed by each of these rubber glove manufacturers for the Period Under Review are as follows:­FYE 2013  FYE 2014  FYE 2015  FPE 2016  RM’OOO  Asa % of total revenue  RM’OOO  Asa % of total revenue  RM’OOO  Asa % of total revenue  RM’OOO  Asa % of total revenue  Cardinal Health 222 (Thailand) Ltd  – – 402  0.92  32,895  43.46  12,333  25.86  PT Medisafe Technologies  15,012  32.61  13,290  30.51  550  0.73  250  0.52  Kanam Latex Industries Pvt Ltd  – – 1,037  2.38  1,454  1.92  – – Green Prospect Sdn Bhd  13,015  28.27  9,085  20.85  9,411  12.43  9,090  19.06  YTY Industry Sdn Bhd  9,921  21.54  314  0.72  76  0.10  45  0.09  Rubberex Alliance Sdn Bhd  – – 11,506  26.41  23,416  30.93  1,182  2.48  Latexx Manufacturing Sdn Bhd  3,444  7.48  201  0.46  402  0.53  96  0.20  WRP Asia Pacific Sdn Bhd  1,139  2.47  552  1.27  6,272  8.29  8,320  17.45  Total  42,531  92.37  36,387  83.52  74,476  98.39  31,316  65.66
5. INFORMATION ON OUR GROUP (Cont’d) History of our Business The history of our business can be traced back to the year 1990, when Hup Lek (Partnership), a business partnership, was established by Wong Kok Wah, our co-Founder and Deputy Chairman/Executive Director, and Chan Yoke Chun, our co-Founder and Executive Director/CEO, to carry out metal fabrication works for various industrial applications, including the fabrication of parts and components such as latex storage tanks, mixing tanks, stainless steel railing and equipment as a subcontractor to glove-dipping line manufacturers. Since inception, Hup Lek (Pmtnership) was solely run by Wong Kok Wah, while Chan Yoke Chun joined the operations of Hup Lek (Pmtnership) in 1995. Hup Lek (Pmtnership) was then operating out of a rented light industrial factory lot in Bukit Serdang, Selangor. Over the years, our Founders learned the trade and honed their expertise in the fabrication of various parts and components of glove-dipping lines and gradually expanded the business activities of Hup Lek (Partnership) to include design, fabrication, installation, testing and commissioning of glove­dipping lines. As business expanded, our Founders together with the other pmtner of Hup Lek (Partnership), namely the late Liew Wah Thiam, who joined Hup Lek (Partnership) in 1992, established Hup Lek Engineering on 7 May 1998 to assume the business operations of Hup Lek (Partnership). Thereafter, Hup Lek (Paltnership) ceased its operations and its business registration expired on 15 December 1999. Hup Lek Engineering’s business continued to prosper as it further developed the glove-dipping line business operations assumed from Hup Lek (Partnership) by securing orders from local and foreign rubber glove manufacturers, including SGMP Company Limited in Thailand, Riverstone Resources Sdn Bhd, YTY Industry Sdn Bhd, PT Medisafe Technologies, Shorubber (Malaysia) Sdn Bhd and Safeskin Medical & Scientific (Thailand) Ltd. in Thailand. During this period, Hup Lek Engineering continued to engage in fabrication of stainless steel tanks and equipment for various industrial applications so as to enhance its revenue stream. In addition to the manufacturing of glove-dipping lines and fabrication of stainless steel products for industrial applications, Hup Lek Engineering had also ventured into wholesaling of medical equipment and pharmaceutical products in 2003 via its investment in HNB Marketing Sdn Bhd, a 50.00%-owned associated company of Hup Lek Engineering. The said investment was mooted when Hup Lek Engineering was invited by the founders of HNB Marketing Sdn Bhd to take up a strategic interest with a passive role in the company which involves in the healthcare industry and our Promoters were convinced with the anticipated long-term growth of the healthcare industry. As business grew, Hup Lek Engineering moved to a larger rented premises located in Balakong, Selangor, and thereafter to its own head office cum factory premises located in Puchong, Selangor in 2009. Our Group’s involvement in the glove-dipping line business was in 2009 when we commenced our operations as a glove-dipping line manufacturer through HL Advance, a company incorporated under the Act on 8 August 2006 by our Founders. This forms an integral step of our Founders’ reorganisation plan to streamline our Group’s operations to focus on the glove-dipping line manufacturing business, while having Hup Lek Engineering continue with its business on fabrication of other stainless steel products for industrial applications and its investment in HNB Marketing Sdn Bhd. As such, HL Advance gradually assumed Hup Lek Engineering’s glove-dipping line manufacturing business with a focus on new orders while Hup Lek Engineering continued to finish off its then secured and subsisting orders for glove-dipping lines. HL Advance was then sharing the same head office cum factory premises ofHup Lek Engineering in Puchong, Selangor, Le. the HL Advance Premises. Soon after we commenced operations in October 2009, we secured local orders for glove-dipping lines from Central Medicare Sdn Bhd as well as Green Prospect Sdn Bhd and YTY Industry Sdn Bhd, both of which are cUlTently within the Indorama Corporation Pte. Ltd. group of companies, a multinational group involved in the manufacturing of a multitude of industrial products including rubber gloves. [The rest of this page has been intentionally left blank] 5. INFORMATION ON OUR GROUP (Cont’ll)
In the following year, we secured an order for glove-dipping line from Shorubber (Malaysia) Sdn Bhd, a subsidiary of Showa Glove Co. Ltd. which is a multinational rubber glove manufacturer based in Japan, and continued to secure a repeat order for glove-dipping lines from YTY IndustIy Sdn Bhd. In 2011, we secured our first foreign order from Shandong Intco Medical Products Co., Ltd., a rubber glove manufacturer based in China. Our other customers for glove-dipping lines in 2011 included HL Rubber Industries Sdn Bhd, Latexx Manufacturing Sdn Bhd (a subsidiary of Latexx Pminers Berhad) and YTY Industry Sdn Bhd. In line with our continued business growth and having established our financial capability after only two (2) years in operations, we entered into an agreement to acquire the HL Advance Premises from Hup Lek Engineering in December 2011. In 2012, we continued to secure further orders for glove-dipping lines from recurring customers, namely YTY Industry Sdn Bhd and HL Rubber Industries Sdn Bhd. With the on-going growth of HL Advance, Hup Lek Engineering eventually ceased its manufacturing operations and became primarily involved in the provision of subcontracting and support services for the manufacturing industry while also continuing with its investment in HNB Marketing Sdn Bhd. On 28 December 2015, our Founders disposed of their collective 100.0% equity interests in Hup Lek Engineering in line with our intention to outsource fabrication and installation works to subcontractors due to the project-based nature of our business operations. As a consequence, both of our Founders also resigned as directors of Hup Lek Engineering and HNB Marketing Sdn Bhd. We further expanded our international presence when we secured orders for glove-dipping lines from PT Medisafe Technologies, a subsidiary of Indorama Corporation Pte. Ltd., and Kanam Latex Industries Pvt. Ltd. in 2013 and 2014 respectively. Our Group also successfully secured an order for glove-dipping lines from a new customer in 2014, namely Rubberex Alliance Sdn Bhd, a subsidiary of Rubberex Corporation (M) Berhad. In 2015, our orders for glove-dipping lines came from both local and foreign customers including, amongst others, Cardinal Health 222 (Thailand) Ltd (a subsidiary of Cardinal Health, Inc., a multinational company involved in health care services), Rubberex Alliance Sdn Bhd and WRP Asia Pacific Sdn Bhd, with further orders for glove-dipping lines being secured by us from WRP Asia Pacific Sdn Bhd in 2016. Since the commencement of our operations in 2009 and up to the LPD, we have installed and commissioned more than sixty (60) units of glove-dipping lines based on customised specifications tailored to the detailed requirements of our local and foreign customers. Over the years, we have made progressive improvements on the glove-dipping lines produced in terms of design and performance. Key characteristics of the glove-dipping lines which we are cUlTently capable of producing include, inter-alia, choice of single fOlmer or double former, flexible conveyor chain length and frame structure height of up to 1,600 m and 18 m respectively, production output speed of up to 36 thousand pieces of rubber glove per hour for double former glove-dipping lines, and heating system with different fuel types such as natural gaslcompressed natural gas heating system and biomass/coal/light fuel oil/gas boiler heating system. In addition to the supply of glove-dipping lines as aforementioned, we are also engaged in the provision of upgrading and modification works for glove-dipping lines as well as supply and trading of associated pmis and components. Since the commencement of our operations in 2009, our customers for upgrading and modification works and/or supply and trading of associated pmis and components include local and foreign rubber glove manufacturers such as United Medical Industries Co Ltd in Saudi Arabia, Showa Gloves Vietnam Co., Ltd in Vietnam and Riverstone Resources Sdn Bhd as well as those to whom we have supplied glove-dipping lines. [The rest of this page has been intentionally left blank] 5. INFORMATION ON OUR GROUP (Cont’d) Our Group’s Achievements, Certifications and Awards In recognition of our Group’s achievement, we received the Golden Eagle Award under the Malaysian 100 Excellent Enterprises category in both 2013 and 2015. The Golden Eagle Award is organised by Nanyang Siang Pau, a Malaysia based Chinese newspaper, with the aim of honouring the best of Malaysian businesses by giving them due recognition of their success and achievements. Further, Chan Yoke Chun, our co-Founder and Executive Director/CEO, was recognised for her effOlis and achievements towards women entrepreneurship when HL Advance was selected by MATRADE in November 2014 to pmiicipate in WEDP through the involvement of Chan Yoke Chun, where annual financial incentives are given by MATRADE to the selected companies to pmiicipate in international trade exhibitions for the marketing and promotion of their companies and businesses for a period of three (3) years. In June 2010, HL Advance was granted a Pioneer Status Celiification by the MIT! under the Promotion of Investment Act, 1986 for pioneer activity in machinery for dipped latex products and pmis thereof. With the Pioneer Status, the statutory business income of HL Advance from the said pioneer activity will be fully exempted from income tax for a period of five (5) years from November 2009 to November 2014. In December 2014, HL Advance received Pioneer Status with regard to the same pioneer activity for the second five (5)-year period from November 2014 to November 2019. The details of our sole subsidiary, HL Advance, are as set out in Section 5.3 of this Prospectus. 5.2 SHARE CAPITAL Our present authorised share capital is RM50,000,000 comprIsmg 500,000,000 Shares, of which RM22,433,000 comprising 224,330,000 Shares have been issued and credited as fully paid-up. Pursuant to our Public Issue, our issued and paid-up share capital will be increased to RM26,392,100 comprising 263,921,000 Shares. Assuming a full exercise of the 1sl Tranche ESOS Options, our issued and paid-up share capital will be further increased to RM26,592, 100 comprising 265,921,000 Shares. The changes in the issued and paid-up share capital of our Company since its incorporation are as follows:­Cumulative issued  and paid-up share  Date of  No. of Shares  Par value  Type of issue /  capital  allotment  allotted  (RM)  Consideration  (RM)  22 October 2015  100  0.10  Subscribers’ shares / Cash  10  20 October 2016  224,329,900  0.10  Pursuant to the Acquisition /  22,433,000  Otherwise than cash
None of our Shares as tabulated above were issued at a discount, on special terms or instalment payment terms. Save for the 1sl Tranche ESOS Options, there are no outstanding warrants, options, convertible securities or uncalled capital in our Company as at the LPD.
5.3 INFORMATION ON OUR SUBSIDIARY 5.3.1 History and Business HL Advance was incorporated in Malaysia as a private limited company under the Act on 8 August 2006. It is principally involved in the design, fabrication, installation, testing and commissioning of glove-dipping lines, the provision of upgrading and modification works for glove-dipping lines, and the supply and trading of associated parts and components. HL Advance commenced its operations in October 2009.

5. INFORMATION ON OUR GROUP (Cont’d) 5.3.2 Share Capital As at the LPD, the authorised share capital of HL Advance is RM500,000 comprising 500,000 ordinary shares of RMl.OO each, of which 400,000 ordinary shares of RM1.00 each have been issued and fully paid-up. There were no changes in the issued and paid-up share capital of HL Advance for the past three (3) years prior to the LPD. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in HL Advance.
5.3.3 Substantial Shareholder HL Advance is a wholly-owned subsidiary of our Company.
5.3.4 Directors As at the LPD, the Directors ofHL Advance are Chan Yoke Chun and Wong Kok Wah.
5.3.5 Subsidiary and Associated Company As at the LPD, HL Advance does not have any subsidiary or associated company.

5.4 LISTING SCHEME In conjunction with, and as an integral part of our Listing, our Listing Scheme involves the following:­5.4.1 Acquisition Pursuant to a SSA entered into between HLT Global and the Vendors on 28 December 2015, HLT Global acquired the entire issued and paid-up share capital of HL Advance, comprising 400,000 ordinary shares of RMl.00 each in HL Advance, from the Vendors for a purchase consideration of RM22,432,990 satisfied entirely by the issuance of 224,329,900 new Shares at an issue price of RMO.lO per Share. The allocation of the Shares is as follows:­Equity interest held Purchase No. of shares held in HL Advance consideration No. of new Vendors in HL Advance (%) (RM) Shares issued Chan Yoke Chun 204,000 51.00 11,440,825 114,408,250 Wong Kok Wah 196,000 49.00 10,992,165 109,921,650 Total 400,000 100.00 22,432,990 224,329,900 The purchase consideration of RM22,432,990 for the Acquisition was arrived at on a ‘willing-buyer willing-seller’ basis after taking into consideration the audited NA of HL Advance as at 31 July 2015 of RM22,434,029. Pursuant to the completion of the Acquisition on 20 October 2016, a total of 224,329,900 new Shares were issued to the Vendors. [The rest of this page has been intentionally left blank] 5. INFORMATION ON OUR GROUP (Cont’d) 5.4.2 IPO (i) Public Issue We are undel1aking a public issue of 39,591,000 Public Issue Shares, subject to the terms and conditions of this Prospectus, at the IPO Price to be allocated in the following manner:­(a) 13,199,000 Balloting Shares, representing approximately 5.00% of our enlarged issued and paid-up share capital, will be made available for application by the Malaysian Public via balloting, of which at least 50% shall be set aside for Bumiputera investors including individuals, companies, societies, co-operatives and institutions;
(b) 26,392,000 Bumiputera Placement Shares, representing approximately 10.00% of our enlarged issued and paid-up share capital, will be made available for application by Bumiputera investors approved by MIT! via private placement.

The Public Issue Shares will, upon allotment and issue, rank pari passu in all respects with the other existing issued and paid-up ordinary shares of our Company including voting rights and rights to all dividends and distributions that may be declared subsequent to the date of allotment ofthe Public Issue Shares. (ii) Offer for Sale Our Offerors are undertaking the Offer for Sale of up to 34,309,000 Offer Shares, subject to the terms and conditions of this Prospectus, at the IPO Price to be allocated in the manner as described below:­(a) 2,000,000 Pink Form Shares, representing approximately 0.76% of our enlarged issued and paid-up share capital, will be made available for application by the Eligible Parties; and
(b) 32,309,000 Placement Shares, representing approximately 12.24% of our enlarged issued and paid-up share capital, will be made available for application by selected investors via private placement.

The proceeds from the Offer for Sale will accrue entirely to the Offerors. The Offer Shares rank pari passu in all respects with the other existing Shares In issue including voting rights and rights to all dividends and distributions. 5.4.3 ESOS In conjunction with our Listing, we are implementing an ESOS which entails the issuance of up to 10.00% of our issued and paid-up share capital (excluding treasury shares) at anyone time during the tenure of the ESOS, subject to the terms and conditions of the ESOS By-Laws. Prior to our Listing, the 151 Tranche ESOS Options have been granted to the eligible Directors and employees of our Group. The number of ESOS Options allocated to our Directors and key management under the 151 Tranche ESOS Options are set out in Section 3.3.4 of this Prospectus. Please refer to Section 3.3.4 and the ESOS By-Laws in Section 15 of this Prospectus for fiu1her details of our ESOS. 5.4.4 Listing Upon completion of the Public Issue and Offer for Sale, our Company shall be admitted to the Official List and our entire enlarged issued and paid-up share capital of RM26,392,100 comprising 263,921,000 Shares shall be listed and quoted on the ACE Market of Bursa Securities. 6. BUSINESS OVERVIEW PRINCIPAL ACTIVITIES, PRODUCTS AND SERVICES We are a glove-dipping line manufacturer principally involved in the design, fabrication, installation, testing and commissioning of glove-dipping lines, the provision of upgrading and modification works for glove-dipping lines, and the supply and trading of associated parts and components. The glove­dipping lines manufactured by us can be designed to cater for the manufacturing of natural rubber gloves and synthetic rubber gloves. Our customers are rubber glove manufacturing companies involved in the production of natural and/or synthetic rubber gloves used across various industries including medical, industrial and food processing industries. A typical rubber glove manufacturing process involves the following steps:­
(17) (16) Please refer to Section 7 of this Prospectus for further information on the rubber glove manufacturing process. Our glove-dipping lines can facilitate steps (1) to (13) of the rubber glove manufacturing process as depicted above, while steps (14) to (17) will either be handled manually by our customers or through an integrated automated glove stripping machinery, automated layering machinery, automated visual inspection equipment and automated packing machinery. As highlighted in Section 6.20.3 of this Prospectus, it is part of our future plans to expand our business to include the manufacturing of automated components for our glove-dipping lines, including automated glove stripping machinery, automated layering machinery,  automated  visual  inspection  equipment and automated packing  machinery.  [The rest of this page has been intentionally left blank]
6. BUSINESS OVERVIEW (Collt’d) 6.1.1 Design, fabrication, installation, testing and commissioning of glove-dipping lines We possess the technical knowledge and experience in designing, fabricating, installing, testing and commissioning of glove-dipping lines that meet our customers’ requirements on production efficiency and effectiveness. Through customising on, inter-alia, the overall speed and length of conveyor chain, design of dipping tank and oven, and heating system, our glove-dipping lines are designed and manufactured with the aim of:­(i) attaining greater production efficiency through optimal utilisation of resources (such as energy costs and compounded solution utilised), increased automation and production output per hour, thereby achieving the desired production capacity of our customers; and
(ii) manufacturing quality end-products, Le., rubber gloves, that conform to our customers’ specifications, in terms of end-product attributes, such as the Acceptable Quality Level and physical properties.

Some of the customised features of our glove-dipping lines include:­single or double former glove-dipping lines. Single former glove-dipping lines are typically more suitable for manufacturing lower volumes of rubber gloves (which may occur in the manufacturing of specialised rubber gloves), while double former glove-dipping lines are generally used for mass production; • production output per hour of up to 17 thousand and 36 thousand pieces of glove per hour for single former glove-dipping lines and double former glove-dipping lines respectively. To facilitate a higher production output per hour, various components fitted thereon, such as the length of conveyor chain, design of dipping tanks and ovens, and beading station, will be customised accordingly;
• flexible length and height of the glove-dipping lines of up to 160 m and 18 m respectively, which serve to accommodate the desired length of conveyor chain that may run up to 1,600 m, thereby achieving the intended production output per hour so as to provide adequate time for the dipping and drying processes required in the manufacturing of rubber gloves;
• custom-designed dipping tanks in terms of dimensions and dipping profiles with due consideration given to the compounded solution to be carried, the intended production output per hour and the specifications of rubber gloves to be manufactured;

custom-designed ovens in terms of dimensions, air flow, and the types of heating system and insulant with due consideration given to the heating requirements at various drying processes of a glove-dipping line and the aim of minimising heat loss; and different types of heating system, such as natural gas/compress natural gas heating system and biomass/coaVlight fuel oiVgas boiler heating system. Our glove-dipping lines comprise components which are either:­(a) designed and fabricated by us, such as the entire steel structure of the glove-dipping line, conveyor chain track, former holder track, former cleaning system, dipping tanks, water tanks, ovens and beading station; or
(b) sourced from third party manufacturers, such as motors, former holders, conveyor chain, fiberglass tanks and centralised control panel.

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6. BUSINESS OVERVIEW (Cont’d) An illustration of a glove-dipping line, and its various components, are shown as follows:­(~) . @ ~ ITEM NO.  DESCRIPTION  10  ACID TANK  lb  HOT WATER RINSE TANK  1c  ALKALINE TANK  ld  ROTATIONAL BRUSH TANK  1e  HORIZONTAL BRUSH TANK  50  PRE-COAGULANT OVEN  20  COAGULANT DIPPING TANK  5b  POST-COAGULANT OVEN  2b  LATEX DIPPING TANK  5c  LATEX OVEN  30  PRE-LEACHING TANK  5d  PRE-POLYMER OVEN  2c  POLYMER TANK
ITEM NO. 6 5e 3b 40 4b 4c 3c 2d 5f 7 8 9 10 11 DESCRIPTION BEADING STATION MAIN OVEN COOLING TANK CHLORINE TANK SOAK RINSE TANK NEUTRALIZER TANK POST-LEACHING TANK SLURRY TANK SLURRY OVEN MAIN STEEL STRUCTURE CENTRALISED CONTROL PANEL
MAIN DRIVE MOTOR CONVEYOR CHAIN & CONVEYOR CHAIN TRACK
FORMER HOLDER TRACK, FORMER HOLDERS & FORMER
@ 0 QiJ0fy e ~ ~ Note: Reference numbers in the above diagram are based on the glove-dipping line components listed in the table in the ensuing page. 47 6. BUSINESS OVERVIEW (Cont’d) Ref Glove-dipping line No components Description A former cleaning system cleans formers before the start of the next production cycle and it consists of the following components:­I. Former cleaning system Ia. acid tank, which contains acid for the purpose of removing residues from the surface of formers from the previous production cycle; Ib. hot water rinse tank, which serves to wash away acid from the surface of formers; Ic. alkaline tank, which contains alkaline cleaning solution for the purpose of neutralising formers after washing from acid tank as well as removing non-latex and other organic residues from the surface of formers; Id. rotational brush tank, which contains nylon brushes for mechanical scrubbing and removal of the remaining residues from the surface of formers; and Ie. horizontal brush tank, which contains nylon brushes for mechanical scrubbing and removal of the remaining residues from the surface of formers. 2. Dipping tanks serve to contain compounded solution and will be installed at different stages of a glove-dipping line. As formers pass through, they will be dipped into the solution contained in the dipping tanks for coating purpose. 2a. coagulant dipping tank, which contains coagulant that serves to facilitate the formation of a uniform layer of latex film onto the former; 2b. latex dipping tank, which contains compounded latex for the purpose of coating onto the former to form a uniform layer of latex film; 2c. polymer tank, which contains polymer for the purpose (latex dipping tank) of coating onto the inner surface of powder-free rubber gloves to ease donning; and
6. BUSINESS OVERVIEW (Cont’d) Ref Glove-dipping line No components Description 2d. slurry tank, which contains slurry for the purpose of coating a layer of powder onto the surface of powdered rubber gloves to prevent them from sticking together and to ease donning. For powder-free rubber glove, this tank will act as lubrication tank to enhance donning. Dipping tank (cont’d) 3. Water tanks, such as hot water rinse tank (indicated as item l(b) above), pre-leaching tank, cooling tank and post­leaching tank, serve to contain water for the purpose of rinsing and cooling, will be installed at different stages of a glove-dipping line. 3a. pre-leaching tank, which serves to remove water soluble chemicals and protein residues on rubber gloves before the vuJcanisation process; 3b. cooling tank, which serves to chill down former before chlorination; and 3c. post-leaching tank, which serves to further remove water soluble chemicals and protein residues on rubber gloves after the vulcanisation process. 4. 4a. chlorine tank serves to subject rubber gloves to chlorine solution at controlled concentration for the purpose of surface treatment to provide a slippery effect on the surface of rubber glove to ease donning.
6. BUSINESS OVERVIEW (Conl’d) Ref Glove-dipping line No components Description 4b. soak rinse tank serves to wash away excessive chlorine solution from the surface of rubber gloves. Fiberglass tanks (cont’d) 4c. neutral izer tank serves to ensure excessive chlorine solution is neutralized before proceed to post-leaching process. 5. Ovens will be installed at different stages of a glove­dipping line for the purpose of drying formers before coagulant dipping and after coagulant and latex dipping. It also facilitates the eventual vulcanisation process, which serves to dry and vulcanise latex film formed on former into a more durable material. 5a. pre-coagulant oven, which serves to dry former before coagulant dipping; 5b. post-coagulant oven, which serves to partially dry coagulant solution after coagulant dipping; 5c. latex oven, which serves to dly the layer of latex film formed on former after latex dipping; 5d. pre-polymer oven, which serves to dry the layer of latex film formed on former after pre-leaching; 5e. main oven, which facilitates the eventual vulcanisation process that dries and vulcanises the layer of latex film formed on former into a more durable material, and hence forming the eventual rubber glove; and 5f. slurry oven, which serves to dry slurry solution after slurry dipping or the chlorination process.
(main oven) 6. BUSINESS OVERVIEW (Conl’d)
[The rest of this page has been intentionally left blank] 6. BUSINESS OVERVIEW (Coni’d) Ref No  Glove-dipping line components  Description  10.  Conveyor chain and conveyor chain track  A conveyor chain is a chain-driven mechanical handling component of a glove-dipping line, which will be fitted onto the conveyor chain track. It serves to carry and move former holders together with formers in a uniform circular motion throughout the glove-dipping line on a continuous basis powered by main drive motor.  11.  A former holder track runs in parallel with the conveyor chain track and it serves as a resting track for former holders.  A former holder attaches former to the conveyor chain and can be arranged in single or double rows, depending on whether it is a single or double former glove-dipping line. Formers are purchased by our customers separately from former manufacturers.
6.1.2 Provision of upgrading and modification works for glove-dipping lines In addition to the fabrication and installation of new glove-dipping lines, we also provide upgrading and modification works for our customers, particularly on the upgrading of their existing glove-dipping lines in terms of production output per hour, or modification of the relevant components of their existing glove-dipping lines for the purpose of manufacturing different types and quality of rubber glove. As opposed to a complete glove-dipping line, upgrading and modification works require our supply of selected components which form part of the glove-dipping Jines. 6.1.3 Supply and trading of the associated parts and components We also supply the associated parts and components of glove-dipping line, such as conveyor chain, bearings, former holders, beading brushes and washing brushes, to our customers, as and when required. These parts and components, which are sourced from third party manufacturers, are typically used as replacement palts due to general wear and tear. [The rest of this page has been intentionally left blank) 6. BUSINESS OVERVIEW (Cont’d) The breakdown of our revenue by products and services for the Period Under Review are as follows:­FYE  FPE  2013  2014  2015  2016  Products and Services  RM’OOO  %  RM’OOO  %  RM’OOO  0/0  RM’OOO  0/0  Design, fabrication, installation, testing and commissioning of glove-dipping lines  36,523  79.32  34,072  78.20  69,897  92.34  46,633  97.78  Upgrading and modification works for glove-dipping lines  8,328  18.09  7,924  18.19  5,734  7.57  675  1.42  Supply and trading of associated parts and components  1,191  2.59  1,572  3.61  66  0.09  384  0.80  Total Revenue  46,042  100.00  43,568  100.00  75,697  100.00  47,692  100.00
6.2 BUSINESS PROCESS FLOW The diagram below illustrates our overall process flow for the design, fabrication, installation, testing and commissioning of glove-dipping lines upon securing an order. Technical design and planning ] + Sourcing ofmaterials and parts ( I) In-house On-site fabrication works fabrication works 1 ++
Testing and quality assurance +
Logistics ..  +  Installation  +  J  Testing and commissioning
++ I-landover ] [The rest of this page has been intentionally left blank] 6. BUSINESS OVERVIEW (Coni’d) 6.2.1 Technical design and planning The process begins with technical design, where our technical team will produce a draft shop drawing which contains the technical design for the order secured based on the requirements of our customer, such as production output per hour, length and height of the glove-dipping line, design of dipping tanks and ovens, and types of heating system, with due consideration given to the proposed budget and factory layout plan of our customer. On-site assessment will be cmTied out at the customer’s factory to ensure optimal utilisation of factory floor space. Thereafter, the draft shop drawing will be finalised upon subsequent discussions and deliberations with our customer. Following the finalisation of shop drawing, we will proceed with planning on the proposed implementation of the order secured, particularly on budgeting, schedule of implementation, sourcing of materials and parts, human resource planning, fabrication schedule and logistics. 6.2.2 Sourcing of materials and parts Based on the specifications of the glove-dipping line to be manufactured, we will identify and procure the required materials and pm1s, such as steel beams, pipes and plates, conveyor chain, former holders, nylon brushes, motors, insulant, heat exchangers, blower fans, fiberglass tanks and centralised control panel as well as factory consumables such as welding wires, argon gas, industrial adhesives and tapes, bolts and nuts, etc. Prior to fabrication and/or installation, inspection will be carried out on materials and parts procured for quality control purposes and conformity with the required specifications. 6.2.3 In-house fabrication worl{s Fabrication of dipping tanks, water tanks, conveyor chain track, former holder track, former cleaning system, ovens and beading station will be carried out at our factory. The sequential steps of our in­house fabrication process are as follows:­• steel materials will be marked and cut into the required dimensions and thereafter, rolled and/or formed into the required shape in accordance with the shop drawing for the relevant components of our glove-dipping lines;
• the rolled/formed structures will then be assembled, fitted and welded together with the relevant pm1s and fittings, such as motor, stirrer system, nylon brush, heat exchanger, blower fan and insulant, to form the relevant components of our glove-dipping lines; and
• thereafter, the aforesaid components will undergo surface treatment in accordance with the level of surface treatment required by our customer, where the components may be painted and/or polished.

6.2.4 On-site fabrication works The main steel structure of a glove-dipping line comprises ve11ical and horizontal steel beams, which are cut and welded on-site in accordance with the shop drawing to form the mainframe that holds up all the components of a glove-dipping line. Other ancillary components attached to the main steel structure, such as steel platforms, staircases, piping support and tanks supp0l1, will also be fabricated on-site together with the main steel structure. All on-site fabrication works will be carried out by our project team, comprising a project manager, site engineer, technician and subcontractors. 6.2.5 Testing and quality assurance We will carry out factory acceptance tests on in-house fabricated components once the associated fabrication works are completed with the aim of asce11aining that the fabricated components conform to the specifications as per the shop drawing and are fully functional. Kindly refer to Section 6.8 ofthis Prospectus for more details on our quality assurance procedures for in-house fabricated components. As for on-site fabrication works, our project team will undertake on-site inspections on completed fabrication works to ensure that they conform to the required specifications. 6. BUSINESS OVERVIEW (Cont’d) 6.2.6 Installation After the testing and quality assurance procedures, all in-house fabricated components and third pmty manufactured components procured, such as motors, former holders, conveyor chain, fiberglass tanks and centralised control panel, will then be transp0l1ed to our customer’s factory, where they will be assembled, installed and integrated with the main steel structure fabricated on-site to form a glove­dipping line. The assembling, installation and integration works will be carried out by our subcontractors under the supervision of our project manager and site engineer. 6.2.7 Testing and commissioning Upon completion of the installation process, we will begin testing and commissioning of the glove­dipping line. Our project team will canoy out installation qualification tests on machine components, such as motors, blower fans, heat exchangers, gas burner and centralised control panel, with the aim of ascel1aining that the glove-dipping line is fully functional and is in accordance with the specifications and requirements of our customer. The installation qualification tests comprise:­• a dry-run, which serves to test the performance and stability of the glove-dipping line prior to the actual production run. During this test, the glove-dipping line will be operated under a test environment without water and compounded solution being channelled into the water tanks and dipping tanks for the purpose of minimising the effect of a possible failure; and
• a wet-run, which will be carried out after a dry-run where the glove-dipping line will be operated under an actual production environment to ensure that it is fully functional.

This process will be performed in the presence of our customer for acceptance and confirmation purposes. 6.2.8 Handover Upon successful installation and commissioning, the glove-dipping line will then be handed over to the customer, along with the spare part list, instruction manual and shop drawing. We will also issue a handover letter to the customer, upon request. 6.2.9 Estimated implementation timeframe Based on our management’s estimates and depending on the specifications of glove-dipping lines to be manufactured, such as single or double former glove-dipping lines and the required production output per hour, the estimated implementation timeframe for one (1) unit of glove-dipping line commencing from technical design and planning stage up to the eventual handover would take approximately 6 months to 12 months, as follows:­Stages of implementation  Estimated timeframe  • Technical design and planning • Sourcing of materials and parts  }  within 1 month to 3 months  • In-house fabrication works • On-site fabrication works • Testing and quality assurance • Installation  }  within 5 months to 6 months  • Testing and commissioning • Handover  }  within 1 week to 3 months
Premised on the above and depending on the number of glove-dipping lines in each order, the implementation of our orders would generally range from 6 months to 15 months from the date of receipt of the order and hence, can often spread over two (2) financial years. 55 6. BUSINESS OVERVIEW (Cont’d) KEY ACHIEVEMENTS, MILESTONES AND AWARDS Our key achievements and milestones since incorporation are as follows:­Year 2009 2010 2011 2013 2014 2015  • • • • • • • • • • • • • • • •  Key Milestones Commenced operations as a glove-dipping line manufacturer Secured our earliest local orders for glove-dipping line from Central Medicare Sdn Bhd, YTY Industry Sdn Bhd and Green Prospect Sdn Bhd Secured order for glove-dipping line from Shorubber (Malaysia) Sdn Bhd Received a Pioneer Status Certification from MIT! for a 5-year period from 2009 to 2014 Secured our first foreign order for glove-dipping line, from Shandong Intco Medical Products Co. Ltd., a glove manufacturer based in China Secured orders for glove-dipping line from HL Rubber Industries Sdn Bhd and Latexx Manufacturing Sdn Bhd Entered into an agreement to acquire HL Advance Premises from Hup Lek Engineering Expanded our overseas market to include Indonesia through an order for glove-dipping line secured from PT Medisafe Technologies Received the Golden Eagle Award under the Malaysian 100 Excellent Enterprises category Expanded our overseas market for glove-dipping line to include India through an order for glove-dipping line secured from Kanam Latex Industries Pvt. Ltd. Secured order for glove-dipping line from Rubberex Alliance Sdn Bhd We were selected by MATRADE to pmticipate in WEDP as a recognition of the efforts and achievements of Chan Yoke Chun, our co-Founder and Executive Director/CEO towards women entrepreneurship Received the second set of Pioneer Status Certification from MITI for a further 5-year period ending November 2019 Expanded our overseas market for glove-dipping line to include Thailand through an order for glove-dipping line secured from Cardinal Health 222 (Thailand) Ltd Secured order for glove-dipping line from WRP Asia Pacific Sdn Bhd Received the Golden Eagle Award under the Malaysian 100 Excellent Enterprises category as well as the 4th position winner of the Top 10 Excellent Eagle
[The rest of this page has been intentionally left blank] 6. BUSINESS OVERVIEW (Cont’d) 6.4 PRINCIPAL MARKETS & COMPETITIVE LANDSCAPE 6.4.1 Principal Marl{ets For the Period Under Review, our products have been sold to customers in Malaysia, China, Thailand, India, Indonesia, Vietnam and Saudi Arabia. The breakdown of our revenue by our principal markets for the Period Under Review are as follows:­FYE  FPE  2013  2014  2015  2016  Principal Markets  RM’OOO  %  RM’OOO  0/0  RM’OOO  %  RM’OOO  0/0  Malaysia  30,953  67.23  28,720  65.92  40,610  53.65  35,109  73.62  Thailand  – – 402  0.92  32,895  43.45  12,333  25.86  Indonesia  15,012  32.61  13,290  30.50  550  0.73  250  0.52  China  – – – – 6  0.01  – – India  – – 1,036  2.38  1,454  1.92  – – Saudi Arabia  22  0.04  120  0.28  182  0.24  – – Vietnam  55  0.12  – – – – – – Total Revenue  46,042  100.00  43,568  100.00  75,697  100.00  47,692  100.00
As illustrated above, our revenue was mainly generated from local sales to our customers in Malaysia, contributing between 53.65% and 73.62% to our total revenue for the Period Under review. Notably, such contribution has been tapering off from 67.23% in FYE 2013 to 53.65% in FYE 2015, while our foreign sales have grown from 32.77% in FYE 2013 to 46.35% in FYE 2015, particularly through foreign sales to Indonesia and Thailand. Nevertheless, for the FPE 2016, contribution from local sales accounted for 73.62% of our total revenue with the remaining 26.38% being generated from foreign sales as a result of new orders for glove-dipping lines secured during such period were solely from local customers and none from foreign customers. Our foreign sales for the FPE 2016 were derived from the execution of an existing order for glove-dipping lines in Thailand brought forward from the FYE 2015, and the supply and trading of parts and components to a customer in Indonesia based on ad­hoc orders, both of which were also our revenue contributors for the FYE 2015 from Thailand and Indonesia respectively. In the absence of new major orders from these two (2) customers for the FPE 2016, we recorded lower sales from Thailand and Indonesia for the FPE 2016 as compared to the FYE 2015. Such trend observed was mainly due to the nature of our business, which is on project basis, as well as the factors as more paI1icuiarly explained in Section 4.1.2 of this Prospectus, where orders secured from our major customers contribute a significant portion of our Group’s annual revenue for any given year and hence, the domicile of such major customers will accordingly influence our recognition of revenue by foreign or local sales. Kindly refer to Section 11.3 .2(i) of this Prospectus for fUl1her commentaries on our historical revenue for the Period Under Review. 6.4.2 Competitive Landscape Our Group competes with other companies involved in the design and fabrication of glove-dipping lines. During the Period Under Review, Malaysia was our single largest market, whilst we have also received orders from other countries. For the FPE 2016, local sales and foreign sales contributed 73.62% and 26.38% to our total revenue respectively, with Thailand being our main contributor for foreign sales at 25.86% of our total revenue. 6. BUSINESS OVERVIEW (CoIlI’d) In Malaysia, our Group competes with companies such as Control Instruments (M) Sdn Bhd, Kendek Products Sdn Bhd, KSG Engineering Sdn Bhd, MPMT Industries Sdn Bhd, RIPCOL Industries Sdn Bhd, Sama Kejuruteraan Sdn Bhd and Xin Xin Engineering Sdn Bhd. Further information on these companies is given in sub-section 3 titled “Key Industry Players”, Section 7 of this Prospectus. The competitive landscape in Thailand, as given in sub-section 4 titled “Overview of the Glove-Dipping Line Industry in Thailand”, Section 7 of this Prospectus, is largely dominated by glove-dipping line manufacturers based in Malaysia, including our Group, Sama Kejuruteraan (Thailand) Co. Ltd. and Kendek Industry (Thailand) Co. Ltd. The industry also comprises local industry players in Thailand including RPM Power Co. Ltd. and Poon Engineering & Supply Co. Ltd. Rubber glove manufacturing companies, which are the customers of glove-dipping line manufacturers, are generally careful when selecting glove-dipping line manufacturers. The typical criteria for selection include, inter alia, the design and manufacturing capabilities of the glove-dipping line manufacturers, the knowledge and experience of its technical team, product quality and pricing. It is thus important for glove-dipping line manufacturers to uphold a track record of providing products that conform to the required production specifications of their customers and within their financial budget, in order to differentiate themselves from other existing competitors. Our recurring orders from our customers are testament to our ability to uphold such a track record, and this has enabled us to build business relationships with our customers. Our Group believes that our customers are less likely to change glove-dipping line manufacturers once we have successfully gained their trust and confidence in delivering products that conform to their required production specifications. This will enable us to build brand loyalty amongst our existing customers. In light ofthis, new entrants to the glove-dipping line industry will face the following barriers to entry:­(i) prior business relationships with rubber glove manufacturing companies. New entrants may face difficulty to penetrate the subsisting business relationships between rubber glove manufacturers and their existing glove-dipping lines manufacturers, particularly those who have gained the trust and confidence of their rubber glove manufacturing customers, where this’ is equivalent to building brand loyalty with customers; and
(ii) reputation in the glove-dipping line industry. As customers typically prefer to work with glove­dipping line manufacturers with track record, new entrants may find difficulty to establish their credential and reputation in the industry.

We believe our ability to successfully compete in the glove-dipping line manufacturing industry will continue to be driven by the following business drivers:­track record and market reputation of a manufacturer of glove-dipping lines are crucial to the rubber glove manufacturers as it gives them the trust and confidence on the product quality and services rendered by the glove-dipping lines manufacturers; and • knowledge and experience of the technical and management teams as well as design and manufacturing capabilities employed by them in the manufacturing of glove-dipping lines would influence the build quality of the glove-dipping lines produced and hence, the ability of the same in achieving the desired production capacity and producing quality end-products that conform to the customers’ specifications. The glove-dipping line industry, on the other hand, IS expected to continue to benefit from the following industry drivers:­~ growth in demand for rubber gloves resulting from growing end-user markets pursuant to, amongst others, growth in the global and domestic healthcare industry; ~ continued growth in the global economy, leading to greater spending power amongst consumers and thus benefiting the end-user industries; and 58 6. BUSINESS OVERVIEW (Cont’d) >-continuous technological advancements of glove-dipping lines, leading to a need for replacement and/or modifications of existing glove-dipping lines. Please refer to Section 7 of this Prospectus for further infOlmation on the key growth drivers of the glove-dipping line industry. 6.5 COMPETITIVE STRENGTHS 6.5.1 Provision of a comprehensive solution for glove-dipping lines Our core competency and competitive strength lie in our ability to provide our customers with a comprehensive solution from design, fabrication, installation, testing and up to commissioning of the glove-dipping lines. Essentially, we would manage the entire process flow as illustrated in Section 6.2 of this Prospectus with the end result of handing over fully functional glove-dipping lines to our customers. This would enable us to manage the quality and production cost of our glove-dipping lines, and at the same time, enabling our customers to have a better control over the budget and schedule of implementation for their proposed glove-dipping lines. 6.5.2 Design and manufacturing capabilities Having the right compounded solutions and the precise glove-dipping lines are critical in the production of rubber gloves that conform to the required specifications, in terms of end-product attributes, such as the Acceptable Quality Level and physical properties. In this regard, glove-dipping lines are required to be designed in correspondence with the relevant compounded solutions, such as the dipping parameters of dipping tanks, which includes the dipping angle, immersion speed, withdrawal speed and dipping time, as well as the heating parameters, which includes the design of heating system and insulation of ovens used in the vulcanisation process, for which glove-dipping line manufacturers with design and manufacturing capabilities will be sought after. We work closely with our customers from technical design and planning stage up to the eventual handover of our glove-dipping lines to customers. With our design and manufacturing capabilities, we are capable of producing glove-dipping lines that cater for the manufacturing of natural rubber gloves and synthetic rubber gloves. In terms of design capability, we have the knowledge and experience in designing our glove-dipping lines with customised features, which include:­single or double former glove-dipping lines; • production output per hour of up to 17 thousand and 36 thousand pieces of glove per hour for single former glove-dipping lines and double former glove-dipping lines respectively;
• flexible length and height ofthe glove-dipping line of up to 160 m and 18 m respectively;
• custom-designed dipping tanks and ovens; and

different types of heating system, such as natural gaslcompress natural gas heating system and biomass/coal/light fuel oil/gas boiler heating system. Our design capability lies within the knowledge and experience of our technical team as more particularly set out in Section 6.5.4 of this Prospectus, which have enabled us to be more responsive to the requirements of our customers in coming up with the technical designs for glove-dipping lines that conform to the required production specifications of our customers and within their financial budget. As glove-dipping lines will take up large areas of factory floor space, we will also take into account the physical dimensions of our customers’ factories in our shop drawing in order to ensure optimal utilisation of factory floor space, smooth implementation and the glove-dipping lines manufactured by us are in accordance with the specifications and requirements of our customers. 6. BUSINESS OVERVIEW (Cont’d) In terms of manufacturing capability, our glove-dipping lines are manufactured based on the aforesaid customisations with the aim of:­(i) attaining greater production efficiency through optimal utilisation of resources (such as energy costs and compounded solution utilised), increased automation and production output per hour, thereby achieving the desired production capacity of our customers; and
(ii) manufacturing quality end-products, i.e., rubber gloves, that conform to our customers’ specifications, in terms of end-product attributes, such as the Acceptable Quality Level and physical properties.

6.5.3 Experienced management team Our co-Founder and Deputy Chairman/Executive Director, Wong Kok Wah, has played a pivotal role in growing our business. Wong Kok Wah has more than 30 years of experience in steel and metalworking, including 26 years in the glove-dipping line industry. He is responsible for our Group’s business development and sales as well as our entire manufacturing operations. Our other co-Founder and Executive Director/CEO, Chan Yoke Chun, oversees the overall management and operations of our Group. Chan Yoke Chun has more than 20 years of experience in the glove-dipping line industry and alongside with Wong Kok Wah, has overseen the expansion of our Group. Since the commencement of our business operations in 2009 and up to the LPD, we have installed and commissioned more than sixty (60) units of glove-dipping lines based on customised specifications tailored to the detailed requirements of our local and foreign customers. Our co-Founders are supported by an experienced key management team with different backgrounds and experiences. Their experience and commitment have provided impetus for the continuous growth of our Group. Kindly refer to Sections 8.2.2 and 8.3.2 of this Prospectus for the detailed profiles of our Directors and key management personnel. 6.5.4 Knowledge and experience of our technical team Our technical team, which is responsible for various aspects of our manufacturing operations such as technical design and planning, fabrication works, implementation of orders as well as testing and quality assurance, is currently led by our General Manager of Operations, Muhammad Idris Yap Bin Abdullah, who possesses an academic qualification in chemistry and has had previous work experience with a number of rubber glove manufacturing companies. With the knowledge and experience of our technical team, we can better understand the requirements of our customers and this would enable us to produce technical designs for glove-dipping lines that conform to the required production specifications of our customers. With this knowledge, we are also better equipped to provide technical support to our customers and remain up-to-date with technological changes in the rubber glove industry and to grow and evolve with our customers. Over the years, we have made progressive improvements on the glove-dipping lines produced in terms of design and performance. Key characteristics of the glove-dipping lines which we are currently capable of producing include, inter-alia, choice of single fOlmer or double former, flexible conveyor chain length and frame structure height of up to 1,600 m and 18 m respectively, production output speed of up to 36 thousand pieces of rubber glove per hour for double former glove-dipping lines, and heating system with different fuel types such as natural gas/compressed natural gas heating system and biomass/coal/light fuel oil/gas boiler heating system. Kindly refer to Section 8.3.2 of this Prospectus for the detailed profiles of the senior members of our technical team, namely, Muhammad Idris Yap Bin Abdullah and Yam Chee Leong. [The rest ofthis page has been intentionally left blank] 6. BUSINESS OVERVIEW (Cont’d) 6.5.5 Track record Our co-Founders have had over 15 years of experience in the glove-dipping line industly prior to the establishment of our Group. Their experience has provided us with in-depth industry knowledge and technical capabilities, and from which, we have developed a pool of local and foreign customers in the rubber glove manufacturing industry. Since our inception, we have completed different ranges of glove-dipping lines for a number of local and foreign customers. For the Period Under Review, we have completed a total of forty seven (47) units of glove-dipping lines, of which thirty five (35) units have been delivered to local customers, while the remaining twelve (12) units to foreign customers. As a testimony to our track record and our design and manufacturing capabilities, we have received recurring orders from our customers, including HL Rubber Industries Sdn Bhd, Green Prospect Sdn Bhd, YTY IndustlY Sdn Bhd, Rubberex Alliance Sdn Bhd and Kanam Latex Industries Pvt. Ltd. In addition, as stated in the executive summary of the IMR RepOIi enclosed in Section 7 of this Prospectus, the size of local glove-dipping line industry in Malaysia was computed based on revenues of identified industry players, which have manufacturing facilities in Malaysia. In 2015, the glove­dipping line industry size in Malaysia as estimated by Smith Zander was approximately RM284.2 million. Based on our Group’s revenue of RM75.7 million for the FYE 2015, our Group garnered an industry revenue share of26.6%. (Source: fMR Report) We have thus positioned ourselves as a reliable glove-dipping line manufacturer over the years through successful delivery of quality products, which conformed to our customers’ specifications, on a timely manner. We believe that our track record and project references will SUppOlt our Group’s future expansion and growth. 6.5.6 Ability to comply with the requirements set by our customers Over 70.0% of our customers, in terms of value of orders for glove-dipping lines secured by us during the Period Under Review, are either foreign-based or owned by multinational corporations/public listed company in Malaysia. These customers typically have selection processes for suppliers or contractors, including our Group, where they will carry out detailed assessments on suppliers/contractors to ensure that the suppliers/contractors selected possess the relevant experience and credentials. Our success in securing orders from our customers demonstrates our capabilities in complying with the requirements set by them and is a testament to our track record, product quality and manufacturing expeltise. This will further contribute to our growing credentials and strengthen our reputation as a reliable glove-dipping line manufacturer. 6.6 TYPES, SOURCES AND AVAILABILITY OF RESOURCES The primary materials and parts used in the fabrication of glove-dipping lines consist of steel beams, pipes and plates, conveyor chain, former holders, nylon brushes, motors, insulant, heat exchangers, blower fans and fiberglass tanks. These materials are either sourced from local suppliers or impOlted directly. On a case-by-case basis and out of cost-efficiency considerations, celiain materials and parts required may be sourced in the country where our foreign customers are based. Thus far, we have not experienced any material shOltage in sourcing the aforesaid materials and paIts for our operations. Fmthermore, these materials are readily available from many suppliers in Malaysia as well as overseas. Although the costs of materials and paIts, particularly steel materials, may vary from time to time, the quotation for our products will reflect the prevailing prices of the relevant materials and parts as our purchases of the required materials and parts are generally made upon receipt of confirmed order from our customers, except for steel materials where we may stock up when steel prices fall. [The rest ofthis page has been intentionally left blank] 61 6. BUSINESS OVERVIEW (Cont’d) 6.7 TECHNOLOGY USED In our production operations, we fabricate glove-dipping lines, including the main steel structure (which forms the mainfi:ame that holds up all the components of a glove-dipping line), dipping tanks, water tanks, conveyor chain track, former holder track, former cleaning system, ovens and beading station, using the following technology/processes:­6.7.1 Fabrication processes (i) Welding technology. It is a metal forming process where two (2) metal surfaces are formed and joined strongly with the use of compatible filler material and molten pool. We cUiTently employ the following welding techniques in the welding of parts and components for our glove­dipping lines:­
• electric arc welding;
• carbon dioxide welding; and
• tungsten/argon inert gas welding.

 

(ii) Roll forming processes. It is a continuous metal forming process, in which roll forming machinery are used to shape steel plates into cylinder shapes as the steel plates move through the machinery. A 1’011 forming machinery consists of a sequence of rollers located on the top and bottom ofthe machinery.

(iii) Cutting processes. It will be undertaken using semi-automated cutting machinery. The machinery will perform the cutting processes according to the specifications set by our technical team. (iv) Other fabrication processes such as bending and drilling. 6.7.2 Computer-aided software We use two (2) dimensional and three (3) dimensional computer-aided design software, such as AutoCAD and SolidWorks, in the design of our glove-dipping lines including the associated components. In addition, we also utilise Minitab, a statistical software for data analysis, to aid our design and development activities as it allows our technical team to monitor and track the performance of the components of our glove-dipping lines, thereby enabling immediate input, analysis and statistical charting. 6.8 QUALITY ASSURANCE PROCEDURES We are committed to ensuring that our glove-dipping lines meet the specifications and requirements of our customers. In this regard, we observe in-process quality assurance procedures during our sourcing of materials and parts as well as our fabrication processes, so as to ensure that the glove-dipping line components are manufactured in accordance with the required specifications. For on-site fabrication works, on-site inspections will be carried out upon completion to ensure conformity to the required specifications, whilst for in-house fabricated components, our General Manager of Operations, Muhammad Idris Yap Bin Abdullah, who oversees our overall process flow, will ensure the relevant factory acceptance tests are being carried out prior to on-site installation with the aim of ensuring that the fabricated components meet our customer’s specifications. Visual inspections will be carried out on all fabricated components and in addition, leak tests will be performed on fabricated dipping tanks. [The rest of this page has been intentionally left blank] 6. BUSINESS OVERVIEW (Conl’d) Our factory acceptance tests consist of the following tests and inspections:­Factory acceptance tests  Descriptions  Visual inspections  Visual inspections will be performed on fabricated components in order to ensure that they have been fabricated according to our customers’ specifications. Leak tests will be undertaken to celtify that there are no leakages in the fabricated dipping tanks. A leak test is performed by pumping water into the relevant fabricated component until a pre­determined water pressure is reached and maintained for a minimum of24 hours. Should water pressure drops below the pre­determined level within 24 hours, all welded joints will be carefully inspected to determine the source of potential leakages and rectified accordingly. A further leak test will be carried out and repeated, if necessary, until the relevant fabricated component has successfully passed the test.  Leak test
Save as disclosed in Section 6.14 of this Prospectus, there are no other relevant standards, regulations or laws that we would be required to comply with during our production process or are relevant to the glove-dipping lines manufactured by us, except for the specifications and requirements of our customers as stated in each order. 6.9 RESEARCH AND DEVELOPMENT As at the LPD, we do not have a formal R&D team nor have we set up any formal R&D plan or policy. Nevertheless, we presently undertake design and development efforts to continuously improve our glove-dipping lines during our technical design and planning process. In doing so, we ensure that we constantly explore and keep abreast of the latest technology trends and market development. Our design and development efforts are carried out by our technical team, led by Muhammad Idris Yap Bin Abdullah, our General Manager of Operations, with activities centred on improving the production efficiency and effectiveness of our glove-dipping lines through enhancements and customisations of various associated components, including the length and height of glove-dipping lines, design of dipping tanks and ovens, and types of heating system. Through continuous enhancements and customisations, we have been able to enhance the overall functionalities of our glove-dipping lines to:­(i) attain greater production efficiency through the following efforts, thereby achieving the desired production capacity of our customers:­our design and development effOits include researching on increasing production efficiency, specifically in increasing production output per hour. As at the LPD, our double former glove-dipping lines are capable of producing up to 36 thousand pieces of rubber glove per hour; and • increased automation, where we have thus far incorporated automated controls over latex and coagulant level, acid and alkaline level and concentration as well as oven humidity and temperature in our glove-dipping lines through integration with the centralised control panel. (ii) manufacture quality end-products, i.e., rubber gloves, that conform to our customers’ specifications, in terms of end-product attributes, such as the Acceptable Quality Level and physical properties. 6. BUSINESS OVERVIEW (Cont’d) As we do not have a formal R&D team as at the LPD, we did not recognise any expenditure for R&D activities for the Period Under Review. However, as paI1 of our future plans, we plan to set up a dedicated R&D team to formalise our continuous R&D efforts, a measure which we anticipate will contribute positively towards the long term growth and sustainability of our Group. FU11her details on our proposed R&D plan are disclosed in Section 6.20.4 of this Prospectus. 6.10 SEASONALITY We do not experience any material seasonality in our business. 6.11 INTERRUPTION TO BUSINESS AND OPERATIONS Our Group has not experienced any interruption in business which had a significant effect on operations during the twelve (12) months period prior to the date of this Prospectus. 6.12 EMPLOYEES 6.12.1 Category of employees As at the LPD, our Group has a total of28 employees, out of which 26 are permanent employees and 2 are contractual employees. Malaysians accounted for 92.86% of our total employees while the remaining 7.14% are foreign nationals with valid visit passes (temporary employment)(l). The detailed breakdown of our employees for the past three (3) FYE 2013 to FYE 2015 and as at the LPD are as follows:­Department  Total Number of Employees  As at 31 December  As at the LPD 2013  2014  2015  Directors (2)  2  2  2  2  Technical and Engineering  5  5  7  8  Finance and Accounts  3  3  4  3  Purchasing and Logistics  2  2  2  2  Human Resource and Administration  2  3  4  3  Production (including foreign workers)  11  18  12  10  Total  25  33  31  28
Notes:­(1)  Foreign workers with valid visit passes (temporary employment) are permitted to enter and remain in West  Malaysiafor the duration specified in their visitpasses and to be employed as factory workers by our Group.  (2)  Excluding our Non-Executive Directors.
[The rest of this page has been intentionally left blank] 6. BUSINESS OVERVIEW (Cont’d) As illustrated above, the number of our employees has increased from 25 as at 31 December 2013 to 31 as at 31 December 2015, and as at the LPD, the number of our employees stood at 28. The departments, which observed major changes in terms of the number of employees, are as follows:­• technical and engineering department, which had added two (2) new employees in 2015, in line with our higher foreign sales, where we would need to mobilise members of our technical team to the foreign project site; and
• production department, which had added seven (7) new employees in 2014, but having a lower number of employees of 12 and 10 as at 31 December 2015 and the LPD respectively. We maintain a small number of production workers as we rely mainly on our subcontractors for fabrication and installation works in our business operations as we believe it would not be cost effective to maintain a large production workforce given the project-based nature of our orders from customers.

None of our employees belong to any labour union and as at the LPD, there has not been any past material industrial dispute between our management and our employees. 6.12.2 Training and development All new employees which we reclUit are required to undergo an in-house orientation conducted by the respective department heads to familiarise themselves with our corporate vision, culture and policies. New technical personnel are also provided training to equip them with the necessary working knowledge and skills in order for them to carry out their job responsibilities efficiently. We will ensure, through job interview prior to recruitment, that all new recruits have the relevant knowledge and experience to perform their job. We strive to identify, develop and retain competent human capital. Development of human capital is not just done through training but through a blended learning approach which include learning by doing, coaching and mentoring. We recognise that our employees are talents of many facets. By reviewing our employees’ leadership and performance contribution, we have a more focused approach in managing the different types of talent in the organisation. We undertake an annual staffperfonnance review, which assists us in having a better perspective of our bench strength by individual functional areas. 6.12.3 Management succession plan We recognise the importance of management succession for business continuity and hence, have taken the following steps with the aim of retaining our key management staff and at the same time, grooming our lower and middle management staff:­(i) career development, which is not just done through training but via a blended learning approach which include learning by doing, coaching and mentoring;
(ii) career progression, where our senior management/technical staff has been and will continue to be grooming lower and middle management staff to gradually assume greater responsibilities after due assessments and reviews of our staff’s ability, knowledge, skills and performance contribution; and

(iii) competitive remuneration and benefits based upon our annual staff performance review. If the need arises, we will recruit qualified personnel with knowledge and expertise of our business to enhance our operations. [The rest of this page has been intentionally left blank] 6. BUSINESS OVERVIEW (Cont’d) 6.13 MODES OF MARKETING, DISTRIBUTION AND SALES Our business development and sales initiatives are mainly driven by our Deputy Chairman/Executive Director, Wong Kok Wah, who has over 25 years of experience in the glove-dipping line industry, and thus has substantial industry experience and network of contacts. We utilise the following sales and marketing strategies to sustain and expand our business:­6.13.1 Referrals from our customers and business associates Through years of experience in the glove-dipping line business, we have developed a strong network of domestic and international business relationships and as a result, we receive business refenals from past and present customers as well as business associates. Moving forward, we will continue to leverage on our reputation in the industry, track record in delivering quality products and the business relationships built with our customers to procure more business referrals. 6.13.2 Trade shows and exhibitions Trade shows and exhibitions are an effective way to showcase our products and our capabilities. With the pmticipation of HL Advance in the WEDP, we are eligible, subject to fulfilment of the terms and conditionsofthe WEDP, foranannualfinancial incentive ofuptoRMI00,000peryearforaperiod of three (3) years, between 2015 and 2017, to participate in up to three (3) export promotional activities a year, which comprise international trade exhibitions for the marketing and promotion of the business of HL Advance. The salient terms and conditions of WEDP are as follows:­(i) The participation of the company in the WEDP is subject to a trial period of one (1) year. MATRADE reserves the right to withdraw the offer if it is in MATRADE’s opinion that, the company is found to be not cooperative or is not active in the trial period.
(ii) At any time during the period of the WEDP, MATRADE reserves the right to withdraw the offer by providing 30 days’ notice to the company without giving any reason.

(iii) The company is obligated to inform MATRADE in writing in the event of any change in the shareholding of the company. In the event of any change in the shareholding of the company which results in a change of the status of the company as a women-owned company, where at least 51 % of equity of the company is owned by women, MATRADE reserves the right to revise the company’s pmticipation in the WEDP. In relation to the foregoing condition, upon Listing, there will be a change of the status of the Company as a women-owned company, and MATRADE reserves the right to revise the Company’s participation in the WEDP. Our recent participation in the 181h Southeast Asian Healthcare and Pharma Show 2015 held in Kuala Lumpur has allowed us to stay updated on relevant market trends and technical information, expand our business networking within the industry as well as provided us with opportunities to meet potential customers. Furthermore, we believe that the participation in trade shows and exhibitions will enhance our business visibility. Moving forward, we will continue to participate in similar events to promote our products and our capabilities. [The rest of this page has been intentionally left blank] [Company No.: 1163324-H I 6. BUSINESS OVERVIEW (Cont’d) 6.14 APPROVALS, MAJOR LICENCES AND PERMITS As at the LPD, details ofapprovals, major licences and permits obtained by our Group are as follows:­Date of issuance /  License No.1  commencement /  Status of  Company  Description of license / approval  Authority  Reference No.  expiry  Major Conditions Imposed  Compliance  HL Advance  Composite licence for No.6, Jalan Industri Mas 7, Taman Mas, 47130 Puchong, Selangor Darul Ehsan • Kilang memproses / membuat kejuruteraan logam / besi / mekanikal / plastik • Memborong / menjual (barangan besi) • Kilang menyimpan barang (yang diluluskan sahaja) • Pejabat pengurusan  MPS  23262  Issue date: 9.12.2015 Commencement date: Not applicable(l) Expiry date: 31.12.2016  (a) The licence must be displayed at a location clearly seen and ownership of which cannot be transferred except with the consent ofthe Yang Dipertua, MPS. (b) MPS can use its discretion to revoke or not renew the licence without assigning any reason.  Complied  HL Advance  Manufacturing licence for the  MIT!  A018332  Issue date:  (i) The licence is subject to the approval from  Complied  manufacturing of machinery for dipped latex products and parts thereof at No.6, Jalan Industri Mas 7, Taman Mas, 47130 Puchong, Selangor Darul Ehsan  Commencement date: 13.08.2008(2) 22.9.20 II(2) Expiry date: Not applicable(3)  (ii) MIT! and MIDA shall be informed of any sale of shares of HL Advance. the relevant State Government and Department ofEnvironment. (iii) HL Advance must train Malaysian citizens so that transfer oftechnology and expertise can be channelled to all levels of  designations / positions.  (iv) HL Advance shall carry out its projects as  approved and in accordance with the law  and regulations in Malaysia.
67 [COmPany No.: 1163fui[] 6. BUSINESS OVERVIEW (Cont’d) Company  Description of license / approval  Date of issuance / License No.1 commencement / Authority Reference No. expiry  Major Conditions Imposed  Status of Compliance  (v) The license or a certified true copy of it must be displayed in the factory where manufacturing activities are carried out. (vi) HL Advance is encouraged to ensure that the composition of the Board of Directors of HL Advance shall, as much as possible, mirror its equity structure. MITI must be informed of the appointment and any change of the members of the Board of Directors ofHL Advance. (vii) For local sales, HL Advance shall, as much as possible, utilise the services rendered by Malaysian citizens including appointment of distribution companies owned by Malaysians citizens in which at least 30% of its sales in Malaysia are distributed by Bumiputera distributors. (viii)If HL Advance decides to expand its production capacity or diversify its production, HL Advance shall obtain the approval of the Licensing Officer (Secretary General of MIT!) by submitting an application using the relevant forms which can be obtained from MIDA’s website or the nearest MIDA office.
[The rest of this page has been intentionally left blank] 68 I Company No.: l163324-H I 6. BUSINESS OVERVIEW (Cont’d) Date of issuance /  License No.1  commencement /  Status of  Company  Description of license / approval  Authority  Reference No.  expiry  Major Conditions Imposed  Compliance  HL Advance  Pioneer certificate in accordance with Promotion of Investment Act  MITI  4632  Issue date: 19.12.2014(4)  (a) Value-added of the production of the machinery should achieve at least 30%.  Complied  1986  Commencement date: 4.11.2014(4)  (b) The total number of employees at the managerial, technical and supervisory  Expiry date: 3.11.2019  level shall be at least 15% of the total number ofHL Advance’s employees.  (c) HL Advance is required to submit a report  confirming the compliance of the terms  and conditions set out in (a) and (b)  certified by accredited external auditors  for each year during the incentive period  to MIDA and Inland Revenue Board of  Malaysia.  HL Advance  Certificate of fitness for a single girder electric overhead travelling crane (“Crane”) in accordance with the FAMA and Regulation 10(2) of the Factories and Machinery (Notification, Certificate of Fitness and Inspections) Regulations, 1970  DOSH  234208  Issue date: 12.04.2016 Commencement date: Not applicable(5) Expiry date: 06.06.2017  This certificate is valid until the expiry date stated in the certificate, unless suspended, revoked or otherwise terminated earlier under the provisions of FAMA and provided that the provisions of FAMA and the regulations relating to the Crane shall not be violated.  Complied  Machine registration number: SL PMA22232  Location ofthe machine:  No.6, Jalan Industri Mas 7, Taman Mas, 47130 Puchong, Selangor.
69 I Company No.: 1163324-H I 6. BUSINESS OVERVIEW (Cont’d) Date of issuance /  License No.1  commencement /  Status of  Company  Description of license / approval  Authority  Reference No.  expiry  Major Conditions Imposed  Compliance  HL Advance  Certificate of fitness for a single girder electric overhead travelling crane (“Crane”) in accordance with the FAMA and Regulation 10(2) of the Factories and Machinery (Notification, Certificate of Fitness and Inspections) Regulations, 1970 Machine registration number: SL PMA 22233 Location of the machine: No.6, Jalan Industri Mas 7, Taman Mas, 47130 Puchong, Selangor.  DOSH  234207  Issue date: 12.04.2016 Commencement date: Not applicable(j) Expiry date: 06.06.2017  This certificate is valid until the expiry date stated in the certificate, unless suspended, revoked or otherwise terminated earlier under the provisions of FAMA and provided that the provisions of FAMA and the regulations relating to the Crane shall not be violated.  Complied
Notes:­(1) Not applicable as there is no commencement date stated on the composite licence.
(2) HL Advance’s application for the manufacturing licence was approved by MIT! on 13 August 2008 and following which, HL Advance may commence its manufacturing operations. However, HL Advance did not proceed to procure a manufacturing licence immediately as pursuant to the Guidelines and Procedures for Automatic Issuance ofManufacturing Licence issued by MIDA, only a person who engages in any manufacturing activity with shareholders’ fund ofRM2.5 million and above or employing 75 or more full-time paid employees are required to obtain a manufacturing licence and at that material time, HL Advance’s shareholders’ fund was less than RM2.5 million and they employed less than 75 full-time paid employees. Subsequently, when HL Advance’s shareholders’ funds increased to more than RM2.5 million, an application was submitted to MIT! and MIT! issued the manufacturing licence on 22 September 2011 with a retrospective commencement date on 13 August 2008 which was the date when the original application for manufacturing licence was approved. As a result, the issue date ofthe manufacturing licence is subsequent to the commencement date.
(3) There is no expiry date to the manufacturing licence as it is deemed to be valid unless revoked in accordance with the Industrial Co-ordination Act 1975.
(4) The pioneer certificate was issued by MIT! for pioneer status in accordance with Promotion ofInvestment Act 1986. The issue date and commencement date ofthe pioneer certificate are different because the renewed pioneer certificate was not issued immediately upon expiry ofthe previous pioneer certificate which had expired on 3 November 2014. Hence, the renewed pioneer certificate when it was issued on 19 December 2014 had a retrospective commencement date of4 November 2014.
(5) Not applicable as there is no commencement date stated on the certificate offitness.

70 [~ompany No.: 1163324-E] 6. BUSINESS OVERVIEW (Cont’d) 6.15 PROPERTY, PLANT AND EQUIPMENT 6.15.1 Property owned by our Group Details ofthe material property owned by our Group as at the LPD are as follows:­Registered Owner HL Advance  Titlel Address PM 4518, Lot 36522, Mukim ofDengkil, District of Sepang, State of Se1angor Daru1 Ehsan I No.6, Jalan 1ndustri Mas 7, Taman Mas, 47130 Puchong, Selangor  Descriptionl Existing use One (1 )-storey detached factory with a three (3)­storey annexed office building! Office cum factory for our business operations  Land Areal Gross Floor Area (sq. ft.) 40,6881 30,388 Date of issuance of Certificate of Fitness I Certificate of Completion and Compliance 19.9.2009 and 20.8.2015 Category of Land Usel Tenure Industrial I Leasehold for a period of99 years expiring on 11 August 2096 Encumbrances Charged in favour of Public Bank Berhad and lease of a part of the land to Tenaga Nasiona1 Berhad for a period of30 years ending 22 April 2040 Audited Net Book Value as at 31 July 2016 (RM’OOO) 3,857
As at the LPD, there is no breach of any property or land use conditions and/or non-compliance with any regulatory requirements, land rules, building regulations and environmental issue which may materially affect our Group’s operations and utilisation ofthe above property owned by our Group. 6.15.2 Property rented by our Group As at the LPD, we do not have any subsisting tenancy agreement. [The rest ofthis page has been intentionally left blank] 71 6. BUSINESS OVERVIEW (Cont’d) 6.15.3 Plant and Equipment The summary of the material plant and equipment owned by our Group as at the LPD are set out be10w:­Plant and equipment  Description/Function  (1) Age of machinery (years)  (2) Estimated useable lifespan (years)  No. of units as at the LPD  Audited net book value as at 31 July 2016 (RM’OOO)  Press machinery  For forming of steel materials through the application of pressure  i to 7  20  8  377 354 91 162 16 9 (4) -20 91  Forklift  For lifting or moving materials and parts  (3) 1 to 6  10  7  Welding machinery  For welding of steel materials  3 to 7  10  210  Shearing machinery  For shearing of steel materials  1 to 7  20  6  Cutting machinery  For cutting of steel materials  2 to 7  10  33  Roll forming machinery  For roll forming ofsteel materials  6  20  1  Overhead cranes  For lifting and lowering materials and to move them from one place to another  7  20  2  Stripping machinery  For forming of strip steel  1  20  1  Others (5)  – (3) 1 to 7  10  78  Total  1,120
Notes:­(1)  Calculated based on the year ofacquisition up to the LPD.  (2)  Based on our management’s best estimates.  (3)  Within one (1) year.  (4)  Fully depreciated as at 31 July 2016.  (5)  Comprising, inter alia, disc grinders, bandsaw and plate rolling machinery.
[The rest ofthis page has been intentionally left blank] 6. BUSINESS OVERVIEW (Cont’d) 6.15.4 Production Capacities and Output Our annual revenue depends on the orders secured and implemented by us for each of the financial year. Depending on the required specifications of our customers, the implementation timeframe for each order generally ranges between 6 months and 15 months from the date of receipt of the order and hence, can often be spread over two (2) financial years. In this regard, we cannot establish with certainty on our annual production capacity of glove-dipping lines and the associated utilisation rate. However, based on the capacity constraints experienced by us, we acknowledged that our annual production capacity of glove-dipping lines can predominantly be constrained by the number of latex dipping tank that we can fabricate per year due to the following factors:­(i) Involves complex fabrication works
A latex dipping tank requires more complex fabrication works as compared with the other components of our glove-dipping lines.
(ii) Long fabrication process

Based on our historical production records, on average, we can only fabricate up to one (1) latex dipping tank for double former glove-dipping lines or two (2) latex dipping tanks for single former glove-dipping lines every half a (Yz) month based on our cun’ent production facilities and floor space. (iii) Our factory space constraints About 25% or approximately 5,916 sq ft of our current factory’s gross production floor space of 23,666 sq ft has been allocated solely for the fabrication of latex dipping tanks, whilst the remaining areas are required for the fabrication of other components of our glove-dipping lines. Based on the area allocated, we can only fabricate up to one (1) or two (2) latex dipping tanks for double former glove-dipping lines and single former glove-dipping lines respectively, at a given point in time. Premised on the foregoing, our Board, based on its best estimates, has calculated our estimated maximum annual capacity, estimated annual production and estimated utilisation rates for the Period Under Review as follows:­I ..  (I) Estimated maximum … annual capacity (Units Of glove-dipping .lines manufactured)  (3) Estimated annual production (Units of glove-dipping lines manufactured)  Estimated utilisation rate (%)  FYE 2013  II lines  10 lines  90.91  FYE 2014  II lines  8 lines  72.73  FYE 2015  II lines  9 lines  81.82  FPE 2016  (2) 6 Y, lines  (4) 5 Y, lines  84.62
Notes:­(I) Calculated based on the following parameter/assumptions:­parameter ~ each glove-dipping line, whether single former or double former, would require to be fitted with two (2) units oflatex dipping tanks; assumption ~ a single former glove-dipping line is assumed as half (r’2) line, while a double former glove-dipping line is assumed as one (I) lines; and 6. BUSINESS OVERVIEW (Cont’d) assumption ~ based on our average fabrication time of one (1) latex dipping tank for double former glove-dipping lines every halfa (i’2) month and coupled with an assumed time lag of10.0% between the completion ofone latex dipping tank to the commencement ofanother latex dipping tank, our estimated maximum annualfabrication capacity would be asfollows:­No. of mOlltlz(s) Average time taken to manufacture one (1) unit of latex dipping tankfor double former glove-dipping line (a) 0.50 Assumed time lag (10.0%) (b) = (a) x 10.0% 0.05 (c) = (a) + (b) 0.55 Estimated number oflatex dipping tanks to be manufacturedper year (d) = 12 months / (c) 21.82 Number oflatex dipping tanks requiredfor each unit of double former glove-dipping line (e) 2 Estimated maximum annual capacity ofdouble former glove-dipping lines (j) = (d) / (e) 10.91 Rounded to the nearest number 11.00 (2) Prorated based on an estimated maximum annual capacity of11 lines.
(3) The aggregate of the units ofglove-dipping lines completed during the year/period and the proportionate partially completed units ofglove-dipping lines during the same year/period presented in equivalent to double former glove-dipping lines.
(4) Excludingfour (4) lines manufacturedfor a local customer where the fabrication oflatex dipping tanks was undertakenatthe saidcustomer’sfactory, hencedidnotutilisetheproductionfloorspace ofourfactory.

6.15.5 Material Plans to Construct, Expand or Improve Facilities Save as disclosed in Section 6.20.1 of this Prospectus, we have no immediate plan to construct, expand or improve on our existing facilities. 6.16 INTELLECTUAL PROPERTY RIGHTS Save as disclosed below, our Group does not have any other licenses, patents, trademarks, brand names, technical assistance agreements and other intellectual propelty rights as at the LPD:­…… ; Trademark  Issuing authority  Trademark application number  Registered date I Expiry date  Class  Description  f1-1  Intellectual Property Corporation of Malaysia  2011007012  18.4.2011 I 18.4.2021  7  Machines for dipped latex products, glove-dipping machines, machines and machine tools; motors and engines (except for land vehicles); machine coupling and transmission components (except for land vehicles); all included in class 7.

6.17 DEPENDENCY ON CONTRACTS/ARRANGEMENTS/LICENCESIPATENTS Save as disclosed in Sections 6.14 and 6.16 of this Prospectus, our Group is not dependent on any other contractl arrangementl licencel patent. I Company No.: 1163324-H I 6. BUSINESS OVERVIEW (Cont’d) 6.18 MAJOR CUSTOMERS Our Group’s major customers which have contributed 10% or more of our total revenue for at least one (1) ofthe past three (3) FYE 2013 to FYE 2015 or the FPE 2016 are as follows:­Major customers  Length of relationship as at the LPD  FYE 2013  FYE 2014  FYE 2015  FPE 2016  RM’OOO  0/0  RM’OOO  %  RM’OOO  0/0  RM’OOO  0/0  Cardinal Health 222 (Thailand) Ltd  2 years  – – 402  0.9  32,895  43.5  12,333  25.8  Rubberex Alliance Sdn Bhd  2 years  – – 11,506  26.4  23,416  30.9  1,182  2.5  YTY Industry Sdn Bhd (I)  7 years  9,921  21.5  314  0.7  76  0.1  45  0.1  Green Prospect Sdn Bhd (I)  7 years  13,015  28.3  9,085  20.9  9,411  12.4  9,090  19.1  PT Medisafe Technologies (I)  4 years  15,012  32.6  13,290  30.5  550  0.7  250  0.5  Latex Form Sdn Bhd  3 years  – – 4,467  10.3  – – – – WRP Asia Pacific Sdn Bhd  5 years  1,139  2.5  552  1.3  6,272  8.3  8,320  17.4  Central Medicare Sdn Bhd  6 years  – – – – 13  *  15,865  33.3  Sub-total from major customers  39,087  84.9  39,616  91.0  72,633  95.9  47,085  98.7  Total Revenue  46,042  100.0  43,568  100.0  75,697  100.0  47,692  100.0
Notes:­(1) Being the subsidiaries ofthe lndorama Corporation Pte Ltd group ofcompanies. * Negligible [The rest ofthis page has been intentional1y left blank] 75 I Company No.: 1163324-H I 6. BUSINESS OVERVIEW (Cont’d) Given the nature of our business, which is on a project basis, the overall composition of our customers varies from year to year but a significant portion of our Group’s annual revenue for any given year was contributed by a small number of major customers as shown above due to, inter alia, the large value of each order from our major customers as a proportion to our total revenue and the long implementation timeframe for each order of between 6 months and 15 months, which can often spread over two (2) financial years. In this regard, revenue contribution from any given major customer will generally peak during the initial year of implementation and taper off in the following year, with the remaining insignificant sum, usually being the retention sum, being recognised in the subsequent year. It is on this premise, our major customers, who contributed more than 10% of our total revenue, may not be continued for more than two (2) consecutive financial years. For the Period Under Review, companies within the Indorama Corporation Pte Ltd group, namely YTY Industry Sdn Bhd, Green Prospect Sdn Bhd and PT Medisafe Technologies, collectively contributed more than 50% of our total revenue for two (2) consecutive financial years, i.e. FYE 2013 and FYE 2014. Notwithstanding the foregoing, the following are the mitigating factors against our potential dependency on any of our customers, including, but not limited to, the Indorama Corporation Pte Ltd group of companies, in our business:­• although YTY Industry Sdn Bhd, Green Prospect Sdn Bhd and PT Medisafe Technologies are within the Indorama Corporation Pte Ltd group, they are separate business entities and are independent of each other in their business decision making. For the Period Under Review, orders for glove-dipping lines were secured by HL Advance from these companies individually rather than through their holding company, Indorama Corporation Pte Ltd. The large value of orders for glove­dipping lines from these companies in the FYE 2013 and FYE 2014 was mainly attributable to the timing of expansion of these companies;
• we continuously seek opportunities in the domestic and export markets. As illustrated in the table above, we secured orders for glove-dipping lines from Rubberex Alliance Sdn Bhd and Cardinal Health 222 (Thailand) Ltd in the FYE 2014 and FYE 2015 respectively, both of which had become our major customers in the FYE 2015, replacing our other major customers from the FYE 2013 and FYE 2014 (including the Indorama Corporation Pte Ltd group of companies) as the main revenue contributors to our Group. We secured an order for glove-dipping lines from Central Medicare Sdn Bhd in December 2015 and pursuant thereto, it became the main revenue contributor to our Group for the FPE 2016;
• as illustrated in Section 4.1.3 of this Prospectus, our commitment in providing our customers with quality products and servi ces has enabled us to achieve business growth through repeat orders from our pool of recurring customers. As we continue to develop future business opportunities, our pool of recurring customers is expected to expand accordingly; and
• pursuant to our future plan to increase product offering by manufacturing certain automated components of a glove-dipping line in-house, we will be able to expand our product offering to include more automated components, which is expected to enable us to market our products to a larger group of potential customers. Please refer to Section 6.20.3 ofthis Prospectus for the details of our plans to increase product automation.

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I Company No.: I 1633ifRJ 6. BUSINESS OVERVIEW (Cont’d) 6.19 MAJOR SUPPLIERS Our Group’s major suppliers which have contributed 10% or more of our total purchases for at least one (1) of the past three (3) FYE 2013 to FYE 2015 or FPE 2016 are as follows:­Major suppliers  Type of supplies  Length of relationship as at the LPD  FYE 2013  FYE 2014  FYE 2015  FPE 2016  RM’OOO  %  RM’OOO  %  RM’OOO  %  RM’OOO  %  Yankong Stainless Sdn Bhd  Stainless steel materials  6 years  1,768  6.4  2,624  10.4  4,644  9.1  3,501  10.0  Sichuan Deyang Xinze Bearing Co. Ltd  Former holders and conveyor chains  5 years  28  0.1  2,970  11.8  3,652  7.2  2,642  7.6  Airvenco Sdn Bhd  Component for heating system including, inter-alia, fan chambers and heat exchanger  6 years  3,336  12.1  4,104  16.3  4,700  9.3  613  1.7  LCT Marketing (M) Sdn Bhd  Thermal oil piping  5 years  2,018  7.3  2,973  11.8  152  0.3  – – Yoshiki Solutions (Thailand) Co. Ltd  Steel and other metal materials and parts  1 year  – – – – 5,773  11.4  4,433  12.7  Choo Bee Hardware Sdn Bhd  Steel plates  7 years  1,732  6.2  1,641  6.5  3,112  6.1  4,457  12.8  Sub-total from major suppliers  8,882  32.1  14,312  56.8  22,033  43.4  15,646  44.8  Total Purchases  27,658  100.0  25,206  100.0  50,813  100.0  34,920  100.0
Materials and parts required in our manufacturing process are readily available from many suppliers in Malaysia as well as overseas. Therefore, there is no material dependence of our Group on any of our suppliers. Nevertheless, we have purchased certain materials and parts such as steel materials, heat exchangers, fan chambers, conveyor chains and former holders from the same suppliers for the Period Under Review due to our previous cordial working relationships and the level of pre and after sales service provided by them to our Group. [The rest of this page has been intentionally left blank] 77 6. BUSINESS OVERVIEW (Cont’d) 6.20 FUTURE PLANS, STRATEGIES AND PROSPECTS 6.20.1 Expansion of production capacity As illustrated in Section 6.15.4 of this Prospectus, the utilisation rates of our production capacity for the Period Under Review were estimated at 90.91%, 72.73%,81.82% and 84.62%, respectively. Such high utilisation rates support the proposed expansion of our production capacity, particularly in light of the capacity constraints experienced by us due largely to the limited production floor space at our current factory. Currently, we are operating at our own factory premises located in Puchong, Selangor, with a gross production floor space of 23,666 sq ft. As part of our business expansion plan, we intend to set up a new factory in an area within the southem pali of the Klang Valley, e.g. Puchong, Banting, Klang, etc with a proposed built-up area of approximately 57,000 sq ft, out of which approximately 60.00% or 34,200 sq ft will be earmarked for production purposes. This serves to increase our production capacity thereby enabling us to undeliake more orders. While we will remain diligent in selecting customers, our proposed expansion of production capacity will ensure that we will not be constrained by production floor space limitation, and this will be an impetus to bring our Group to the next phase of growth. Our management estimates that, based on an estimated gross land size of about two (2) acres, the total costs for land acquisition and factory construction would be in the range of between RM9.00 million and RM12.00 million, which is proposed to be partly financed through our IPO proceeds. Additional funding required will be met through intemally generated funds and/or extemal borrowings. As at the LPD, we have yet to identify a suitable parcel of vacant land for this purpose. We expect to complete our expansion of production capacity as aforementioned within two (2) years from our Listing. In essence, the proposed increase in our production capacity will enable us to strengthen our mal’ket presence and facilitate the long term growth of our Group, as well as to give us a platform to pursue new customers, thereby enhancing the revenue, profitability and future sustainability of our Group. 6.20.2 Continue to seek market opportunities and strengthen our market presence We intend to leverage on our track record and market reputation to tap into the growth in the rubber glove industry. As stated in the executive summary of the IMR Report enclosed in Section 7 of this Prospectus, the rubber glove industry is a vibrant and growing industly, where global rubber glove demand has grown from 65.3 billion pairs in 2009 to 88.0 billion pairs in 2014, registering a CAGR of 6.1 %. Malaysia, as the world’s largest manufacturer of rubber gloves, has been the backbone of this growth, with production growing from 40.1 billion pairs in 2009 to 59.4 billion pairs in 2015, registering a CAGR of 6.8% during this period. The prospects for growth in the rubber glove industry are positive as the industry is expected to continue to be driven by growth in the global and domestic healthcare industry (including outbreaks in epidemic and pandemic diseases), increasing demand arising from other end-user markets such as manufacturing, continued growth in the global economy, and availability of raw materials utilised in the manufacturing of rubber gloves. We will continue to seek opportunities in the domestic and expOli markets. With our track record and market reputation in the glove-dipping line industry in Malaysia, we are well-placed to continue growing our market presence and increase our overall market share. We will remain focused in our commitment on product quality and customer service, as well as continuously improve and upgrade our glove-dipping lines. To achieve this, we will increase our sales and marketing efforts, as outlined in Section 6.13 of this Prospectus. Further, we will increase the frequency of visits to existing customers to help us secure repeat orders, as well as to potential customer to win new sales. Our Group also intends to increase our participation and visits to trade shows and exhibitions, both locally and intemationally. 6. BUSINESS OVERVIEW (Cont’d) As at the LPD, we have identified the following trade shows and exhibitions in which we intend to participate and/or attend:­Year  Event  Organiser  Location  May  The 24th Vietnam  Vietnam Advertisement &  Hanoi International  2017  International Medical &  Fair Exhibition JSC  Centre for Exhibition  Pharmaceutical  Exhibition  July  The 20th China  Shanghai Juyi Exhibition  Shanghai World Expo  2017  (Shanghai) International  Service Co., Ltd  Exhibition & Convention  Medical Devices  Center  Exhibition 2017  November 2017  METALEX 2017­ASEAN’s Largest International Machine  Reed Tradex  Bangkok International Trade and Exhibition Centre  Tool & Metalworking Technology Trade Exhibition and  Conference
Our continued growth and success will further strengthen our Group’s financial position and will provide the platform for our Group to expand into other markets in the future. As our Group continues to secure more customers and orders locally and internationally, it will support our long term sustainability and growth of our Group. 6.20.3 Increase product offering Currently, certain components of a glove-dipping line manufactured by us, such as, automated glove stripping machinery, automated layering machinery, automated visual inspection equipment and automated packing machinery are procured by our customers directly and provided to us to be integrated into our glove-dipping lines. The manufacturing of these components requires a dedicated R&D team and specialised machinery and equipment such as computer numerical control machinery. With the proposed expansion of our production capacity as mentioned in Section 6.20.1 of this Prospectus, we intend to set up a dedicated R&D team (as mentioned in Section 6.20.4 of this Prospectus) and to purchase two (2) units of computer numerical control machinery (with each unit estimated to cost between RMO.30 million and RMO.60 million) with the aim of manufacturing the aforesaid automated components in-house. We propose to finance the purchase of computer numerical control machinery through internally generated funds and/or equipment financing from financial institutions. By manufacturing these components in-house, we will be able to expand our product offering to include more automated components, thereby enhancing our Group’s revenue and profitability. We intend to commence manufacturing the aforementioned automated components after setting up our R&D team. 6.20.4 Setting up of a dedicated R&D team Currently, our design and development effOits are carried out by our technical team. Moving forward, we plan to set up a dedicated R&D team to formalise our R&D activities, a measure which we anticipate will contribute towards the long term growth and sustainability of our Group. The primary objective of our R&D team would be product development as well as on-going improvement of glove­dipping processes via technological improvements. To achieve this, the R&D policies and strategies that we aim to implement and adhere to are, amongst others, as follows: to design and manufacture glove-dipping lines that will achieve the highest level of customer satisfaction; to provide the most optimal solution to our customers in addition to solving technical issues; 6. BUSINESS OVERVIEW (Cont’d) • to improve energy efficiency and increase process automation for our glove-dipping lines; and
• to be consistently updated with the latest technology, and be constantly aware of latest market trends and demands.

We plan to staff our R&D team initially with one (I) chemist, one (1) engineer and two (2) draughtsmen, and will gradually expand the team as and when required. Fmther, we will also need to invest in equipment which will include simulation software that will be used to compute and simulate possible outcomes from new upgrades and developments. Pursuant to our Listing, we have allocated RMI.50 million of the proceeds from our Public Issue for the setting up of R&D facilities. For the initial stage, we intend to focus our R&D effort on improving energy efficiency of our glove-dipping lines as well as on process automation. The RMl.50 million allocated for R&D expenditure is earmarked for investment in related equipment and software including, inter-alia, simulation software, infrared thermometer, optic system and thermal oil flow meter. The establishment of a dedicated R&D team will enable our Group to remain at the forefront of industry technologies, manufacturing processes and market trends, which will provide a strong foundation for our Group’s future growth and development. We expect to set up our R&D team within 18 months from our Listing. 6.20.5 Prospects As stated in the executive summary of the IMR Report enclosed in Section 7 of this Prospectus, the glove-dipping line industry in Malaysia is forecast to grow at a healthy CAGR of 15.2%, fi’om an estimated RM326.5 million in 2016 to RM575.9 million in 2020. This is in line with the vibrant and growing rubber glove industry, as evidenced by global rubber glove demand which has grown from 65.3 billion pairs in 2009 to 88.0 billion pairs in 2014, registering a CAGR of 6.1 %. In particular, Malaysia dominates the global rubber glove industry as the largest producer and exporter, producing 59.4 billion pairs and exporting 658,016.0 tonnes of rubber gloves in 2015. In 2015, Smith Zander estimates that our Group garnered an industry revenue share of 26.6% based on our revenue ofRM75.7 million for the FYE 2015. Thus, with our competitive strengths as highlighted in Section 6.5 of this Prospectus, we believe that we are poised to increase our presence in the glove­dipping line industry, as well as to capture opportunities in the export markets. Moving forward, our Group intends to strengthen our position in the glove-dipping line industry in Malaysia through the following strategies as highlighted in Section 6.20 of this Prospectus:­• expansion of production capacity;
• continue to seek market oppOitunities and strengthen our market presence;
• increase product offering; and
• setting up a dedicated R&D team.

Premised on our future plans and strategies as highlighted above, our competitIve strengths as highlighted in Section 6.5 of this Prospectus and the prospects and outlook of the glove-dipping line industry as set out in Section 7 of this Prospectus, our Board is of the view that our Group will enjoy positive growth and favourable prospects moving forward. [The rest ofthis page has been intentionally left blank]

 

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