Business Overview

HISTORY AND BUSINESS HISTORY AND BUSINESS Incorporation Our Company was incorporated in Malaysia on 26 March 2005 under the Act as a public limited company under its present name to act as the investment holding company of our Group in conjunction with the listing of our Group on the MESDAQ Markel. Our Company is principally an investment holding company. The core business of OUT Group is undertaken by our two (2) wholly-owned subsidiary companies. namely Morrissey and JH Tech. History and Principal Activities The history of our Group started with the incorporation of Morrissey on 5 September 2()()() under the name of Forward Matrix Technologies Sdn Bhd and was principally involved in the precision manufacturing of critical component for DC micromolor (known as the motor cores). It assumed its present name on 22 August 2002. In October 2001, Morrissey (then known as Forward Matrix Technologies Sdn Bhd) obtained the ISO 9001-2000 certification from United Kingdom Accreditation Service (“UKAS”), an international accreditation body in recognition of their commitment and efforts in maintaining a high quality system in respect of the products manufactured. In March 2002, Dato’ Tan King Seng joined Morrissey as the Managing Director bringing with him more than 20 years of wideMranging mechanical engineering experience in the area of semiconductor, optoelectronic and electronic industries. With his experience and business acumen, he steered the operations of Morrissey to the next level of technological advancement by the setting up of our own inM house R&D department to focus on the design and development of MEC as well as the design and fabrication of toolings for the production of these MEC. In the same year, we also expanded our manufacturing facilities to a second plant to cater for high volume manufacturing of precision MEC. In August 2002, our R&D team successfully designed and delivered its first motor core for a MNC customer. Leveraging on our design capabilities in MEC and the foresight on the potential of the HB LED lighting in replacing the conventional lighting in a diverse range of applications, our Group ventured into designing of the key components for HB LED as part of our business expansion plan. We successfully designed our first leadframe and the toolings for HB LED at the end of 2002. Leadframe is a metallic frame used for mounting and connecting HB LED chips and functions as the electrical leads of the HB LED. As business expanded, JH Tech was formed to undertake this new business segment. In 2003, our R&D department expanded to include five (5) R&D engineers in an effort to further strengthen our design capabilities. As a result of the expansion, Morrissey successfully ventured into the designing of fine pitch connector pins. In 2004. JH Tech also successfully ventured into the designing of other key components for HB LED such as the plastic package for leadframe using specialised material and heat sink. In the same year, Morrissey received an award from Matsushita Electronics Motor (M) Sdn Bhd in recognition of its effort in consistently providing quality products. Morrissey also began undertaking the R&D and assembly of shaft fitting process for motor cores. In May 2005, Morrissey was granted the Pioneer Status by MIDA for the manufacturing of complete unit of micromorors and connectors. The Pioneer Status is for a period of five (5) years, commencing from the production day for the pioneer products. In February 2006, Morrissey successfully designed and developed the clinch frame for HB LED and toolings for its customer. In May 2006, Morrissey received an approval-in-principle from MITI for the manufacturing of automotive safety and indicating light and approval from MIDA for Pioneer Status for a period of five (5) years, commencing from the production day of the pioneer product. LISTING SCHEME As an inlegral part of and in conjunction Witil Ihe Listing, we undertook a Ootalion scheme that was approved by the SC on 10 March 2006 and 17 May 2006 and MITI on 9 September 2005. (a) Dil’idend Payment Morrissey declared and paid an interim tax-exempt dividend amounting to RMl,OOO,OOO to ti,e shareholders of Morrissey for the financial period ended 31 December 2005 on 30 March 2006. ill Tech declared and pilid a net interim dividend amounting to RM50 1.I20 to O,e shareholders of ill Tech for O,e FYE 31 December 2005 on 30 March 2006. (b) Sub-Division of Shares mM subdivided its shares whereby every existing one (I) ordinarv share of RM 1.00 each was sub-<livided into ten (10) new ordinary shares of RMO.1O each in IHM. Upon completion of ti,e Sub-Division of Shares on 10 April 2006, our issued and paid-up share capital comprise 20 ordinary shares ofRMO.IO each in JHM. (e) Acquisitions (i) Aequisition of Morrissey Pursuant to a SSA daled 19 August 2005 between our Company and the shareholders of Morrissey, we acquired 1,000,000 ordinary shares of RM1.00 each in Morrissey, representing the entire issued and paid-up share capital of Morrissey for a purchase consideration of RM4,380,J73, satisfied entirely by an issuance of 43,797,952 JHM Shares at an issue price of approximately 10 sen per Share credited as fully paid up. 11,e purchase consideration of RM4,380,173 was arrived at on a willing-buyer willing-seller basis after taking into consideration ti,e audited shareholders’ funds of Morrissey as at 31 December 20Q4 of RM4,380,173. (ii) Acquisition of JH Tech Pursuant to a SSA daled 19 Augusl 2005 between our Company and the shareholders of JH Tech, we acquired 200,000 ordinary shares of RMl.00 each in JH Tech. representing ti,e entire issued and paid-up share capital of JH Tech for a purchase consideration of RM1.706.350 satisfied entirely by an issuance of 17,062.02g JHM Shares at an issue price of approximately 10 sen per Share erediled as fully paid up. The purchasc consideration of RM1.706.350 was arrived at on a willing-buyer willing-seller basis aner taking into consideration the audiled Shareholders Funds of JH Tech asat 31 December 2004 ofRMl,706,350. 11,e above Acquisitions were completed on 12 April 2006. Upon completion of the Acquisitions, our issued and paid-Up share capital increased from RM2 comprising 20 JHM Shares to RM6,086,000 comprising 60,860,000 JHM Shares credited as fully paid-up. The new IHM Shares issued pursuant to ti,e above Acquisitions ranked pari passu in all respects with all ti,e ti,en e,isting Shares including voting rights and rights to all dividends and distribulions that mav be declared. paid or made subsequent 10 the date of allotment thereof. (d) Public Issue In conjunclion wilh the Listing. we will issue 21,140.000 new JHM Shares at an issue price of 50 sen per Share to cligible employees. directors, business associates. individuals, companies. societies. co-operatives and institutions by way of private placement and public ofTer. subjcct to the terms and conditions of this Prospectus. Upon completion of the Pnblic Issue, our issucd and paid-np share capital will increase from RM6,086.0UO comprising 60.860,000 JHM Shares to RM8,200,000 comprising 82.000.000 JHM Shares credited as fully paid-up. (c) Listing and Quotation on MESDAQ Mal’1’ct
Upon completion of the Public Issue, our entire issued and paid-up share capital of RM8.200,000 comprising 82,OO().OOO JHM Shares together wilh the new JHM Shares that may be issued pursuant 10 the exercise of ESOS Options, representing up to twenty per centum (20%) of our issued and paid-up share capital at anyone lime during the e.~istence of tile ESOS will be listed on the MESDAQ Markel.
(I) ESOS

In conjunction with the Listing, we will implement an ESOS involving up to twenty per centum (20%) of our issued and paid-up sharc capital at any time during ti,e duration of the ESOS, to be issued pursuant to the Options to be granted under the ESOS to eligiblc directors and employees of our Group in accordance with the By-Laws of the ESOS. Our Board shall, within Ihe dumtion of the ESOS, make offers to grant Options to eligible directors and employees of onr Group in accordance with the By-Laws adopted by the shareholders of our Company. TIlese Options shall be exercisable at a price which is the weighted average market price of the JHM Shares for the five (5) Market Days immediately preceding tile date on wltich the Option is granted less, if ti,e directors of Ollr Company shall decide at their discretion from time to time, a discount of not more than 10%. The ESOS Slk1ll be in force for a duration of five (5) years. The new JHM Shares 10 be issued upon the exercise of the Options will, upon allotment and issue, rank pari passu in all respeels with the existing issued and paid-up shares of our Company. except thai the new shares will not be entitled to ,my dividends, rights. allotments or olher distributions, the entitlement date of which is prior to the date ofalioUnent of the said JI-lM Shares. The new JHM Shares will be subject to all the provisions of the Arlicles of Association of our Company. The ESOS Option Committee established under the By-Laws governing tlle ESOS may, in accordance with the By-Laws governing the ESOS, offer Options to the Non-Execlllive Direclors of the Company 10 subscribe to a maximwn of 200,000 shares in the Company pursuant to the ESOS. subject always to any adjustments wltich may be made in accordance with the By-Laws governing and eonslituting the ESOS. The By-Laws of the ESOS are set out in Section IGof tllis Prospectus. 5.3 SHARE CAPITAL As at the date of this Prospectus. our aUlhorised share capital is RM25,OOO,000 comprising 250.0UO.0()0 JHM Shares and our issued and paid-up share capital is RM6,08G,000 comprising 60,860,000 JHM Shares credited as fully paid-up Upon completion or the Public ISSue. our enlarged issued and paid-up share capital will increase to RM8.200,000 comprising 82,000,000 JHM Shares credited as fully paid-up. Dctails of Ute changes in our issued :l11d paid-up share capita} since incorporation tmtillhc date of this Prospectus arc as follo\\’s:­Resultant  Rcsultllnl  No. of  number of  issued  ordilHlr)’  issued anll  .ml1 paid-up  Date of  shares  Par  p<th.l-up shares  share cupitnl  allotment  allotted  nllue  Considerlltion  (cumuhltive)  (cumulath’c)  RM  RM  26.03.2005  2  l.00  Subscribers’shar..:s  2  2  10.04.2006  20  0.10  Sub-division of RM 1.00 par  20  2  value shares to RMO.l 0 par  value shares  12042006  60,859.980  0.10  lssneJ pursuant to thiJ  60.860,000  6,086,000  Acquisitions
5A BUSINESS OVERVIEW 5.4.1 O”cl-view Our Group corporate slmcture is depicted as follows:­J HM (Investm ant Holding) Morrissey JH Tech
Designing and Originaldeslgnmanufacturing of manufacturing (“ODM”)ofprecision microelectronic HB LEO componentscomponents We provide one-stop engineering solution to our customers, from the design ,1Ild development of MEC to the complete design. fabrication and assembly of toolings for the manufacturing of these MEC. MEC is a subfield of electronics and is related to the research, development and manufacture of electronic components which are miniature in design. and they can be found in all sub~ segments of the electronic components industry and are used in electronic devices such as digital cameras, mobile phones, persollal digital Hssistants Hnd automobile lightings. Cuneml)’, our Group is focused on the dcsign, developmem and provision of the following four (4) categories of MEC namel)’, HB LED componellls, DC micromotor eomponcms. fine pitch COIUleetor pins and odlers as illustrated below:-JHMCroup
~J IT ,,’7 Q IX: Flu..’ PillilJln l£l) l\fin’onuOl’ COIIU’ll.’l’tOl’ t’OIII(lOlK’l1f)\ {“orlipolll’nfll 1″‘1rw c:J 5A.2 Princillltl Place of Business, Assets and Production Facilities We operate from the following rented premises.
Description of Property I Company LoclltionfBuilt-up Arca Existing Use JHMIMorrisscy ( I) Lot A95, Jalon 2A-3, Fnctory building! K<lwasnn Pemsahaftn MIEL, Our Group’s R&D, saks, SUJ1gni Lalnng, tJ8000 Sung<li Pctani administrative and Ketlah Oaml Aman/ operations omc~ as well as J 1,460 s’lL”Lre feci its manufacturing l:’lCilitics (2) Lot A96, Jalan 2A-3, FDctory building! Kawasilll PcruSllhmm MIEL, OUf Group’s R&D and SllIlgai Lalang, 08000 Sungai Petani operations otTicc as wdl tiS Kcuah Datu] Anum/ its nml1utbcturing Iln~ililics 11,469 S<jlk1fe reet (3) A138, Jalan2B, factory building! Kawasml Pc:rusnhaun MlEL, Our Group’s operations Slll1gai L..11allg, 08000 Sungai P~la.nj oftke <IS wdl as its Kcdah Darul Amau! manufacturing facilities 15,945 square fe~l JrlTeeh 17-1-28 Bayan Point, Olliee 10tJ Mcdan Kampllug Relnu, Sales and administration 11900 Pulan Pinlmg! oflice 1,000 square t~( The manufactnring activities of JH Tech are outsourced to our major supplier in China.
5.4.3 Key Milestoncs. Achic\’cmcnts nnd A”‘”‘ds OUf key milestones, achievements <lnd awards arc CIS follows:· 2001 Morrissc ‘ received ISO 9001-2000 certification from UKAS 2002 Establislunent of our in-house R&D de artment Designed DC micromotor core Designed leadfrdme for HE LED and the toolings 2003  Designed line pilch connector pins  2004  Certilicale of Appreciation from Mineben-Matsushita Motor (M) Sdn Bhd (fonnerly known as Matsushita Electronic Molor (M) Sdn Bhd) in recognition of the enonnous contributions and efforts in providing constant reliable suooly of keY COInoonent oans/material
2005 Desi ned and dcvclo cd Mechanical Side CAM \Colin’ 2006 Desi ned and dcvelo cd Clinch Frame and toolin THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK

5.4.4 Products and Services A description of each categories of the MEC which our Group is involved in is as follows:­(a) HB LED Components LED is a solid-state device, much different than an incandescent lamp. It comprises an alloy with crystal placed into a reflective cup and chemically bonded to tiny wires and then encapsulated in epoxy. When electric current runs through those wires, the crystal material is excited. That excitement is dissipated in the form of energy, a small part of which is heat and most of which is in the form of light. LED can be broadly categorised into:­• Low/ medium brightness; and
• HB The key applications for HB LED are:­

Mobile  backlights for Liquid Crystal Display (LCD) screens and  Appliances  keypads in mobile phones, camera flashes  Display  single-colour moving message panels, full-colour video  Devices  displays  Automotive  car, truck and bus exterior lighting, car interior lighting  Illumination  architectural lighting, machine vision, chmmellellers,  decorative and accent lights  Signals  traffic signals, railroad and aviations  Others  indicator lamps in commerciaL industrial and consumer  electronics, entcrtaiIUllcnt. small indoor displays
The basic structure of HB LED consists of die (also known as chip), leadframe (where the die is placed) and encapsulation epoxy (which surrounds and protects the die and disperses the hgh!), diagranunatically illustrated as follows:-InGaN Semiconductor Flip Chip Notes: 1. Car/lOde Lead = HB LED Leadjinme
2. Heatsink slug -= Heal sink
3. InGA.\! Semiconductor Flip Chip = Die or Chip

3. Silicon Sub-mOWJ1 Chip with ESD Protection = Plastic Package Source: AfanagemeJlf ofthe JH;\J Group Our Group. t1lfough JH Tech operates as an ODM in HE LED compenents. We specialise in the design and de\’elopment of )c<‘dframe. plastic package and heat sink as a 10tHI solution pHckage roc our customers. \Ve also undertake the design. fabrication and complete assembly of the toolings for the production of the leadfranles. Leadframe is the metal frame that provides external electrical connection to HE LED die package. It is ti,e metal frame tlull semiconductors are allached to during the package assembly process. Typically a leadframe is a long metal frame with pesitions for multiple chips. After ti,e chips are attached to the leadframc. tiny wires are used to connect the chip to the frame and then the pesitions on the frame where cllips Me located are encapsulaled in epoxy. After moulding. tI,e enc,1psulated chips are mechlmically broken loose from the frame rails and the pans of the frame protmding from the package become the Pi,ckage leads. HB LED Lcadf….mc  Typc 1  Type 2  Ty’pc 3  Properties  Uses plinted cin:uit boaru (“PCB”) ond requires soldering to COlUlccl the PCB to the WI LED.  Requires sold~rjJlg. however. it is 1I:3d­free os gold pre-plating is done on the leadframe,  A clinching mdluxl and no soldering is re(lu;r~d. Uses metal slIbsLIme to COimect the HE LED, hence, it is kad·rrce.  Applicution  Automolive, display devices  Display devices, household lighting system, tdcconununication  Automotive
(b) HB LED Clincb Frame The HE LED is designed to be anached to a formable metal substrate usiug a solderless clinch process. Our Group designs and nmnufacmres the metal substrate which is also known as clinched frame. The purpose of developing the clinch frame asscmbly using solderless technology is to provide an environmental friendly solution to replace convenlioual soldering processes, which uses lead. The HB LED clinch frames are used in automotive signal lighting which require special consideration in order to meet strict performance requirements. The selection of the correct operating parameters, material and source configurations arc therefore critical. As HB LED output cau be dramatically affected by rises in temperature. therefore tI,ese rises need to be minimised. Clinching (meclmnical reveting) mcthod provides excellent tI,ermal contact but il also produccs varying levels of direct contact resistance. Therefore a slalislical approach from a representative process must be taken in order to account for all levels of conlacl resistance at thc HE LED board joint. Adhering with a thermally respense curve shows the temperature respense on each side of the mechanic,J1ly clinched HB LED. Some effon has been made to lake tile variability and thennal resistance comribution out of all these processes by mounting the HE LED chip directly to the board by a similar means by which they are usually mounted onto the leadframe. While this is perhaps a more tedious process than nonnal HE LED production methods, it provides for a direct thermal link from the chip to board. 40 (e) DC Mieromotor Components DC micromotor is a miniature motor to perform motion control on electronic devices. The applications for DC micro motor can bc catcgorised in d,C following areas: Audio visual  digital devices slich as compact discs, video compact discs  equipment  and digital “ideo discs drives, camera,  minidisk players,  video  camera,  radio  cassette  recorder,  compact  discs  changer.  Office  DC  micromotor  is  usually  used  in  office  automation  auto!l1fltion  equipment such as fax machine. copying machine. printers,  equipment  computer and computer peripherals.  Household  products  such  as  electric  toothbrush.  hair  dryer.  hair  appliances  removers, hair clippers, clcctric savers as well as toys. The  demand for smaller imemal parts due to the size of the end  products itself is considered to be small.  Computer and  disk drivers  computer  peripherals  Automotive  Some of the typical applications of DC micromotor arc for  products  power window lifter, side mirror, door lock as well as auto  cruise control. Od,er applications include emission control  devices, high light beam level adjusters.
DC micromotor is a direct current electric device that converts electricity into mechanical energy to produce motions. The basic stmeture of DC micromOlor consists of a motor core. commutator. motor coil. magnet and casing as shown below.
Motor Coil Conunuwtor + THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK Motor core is the ‘heart’ of a DC micromotor. The motor cores are stack together and fined with a shaft and a commutator which then goes through a wire winding process to become a rotor. A DC micromotor uses electric current to power the rotor. When the rotor is powered, a magnetic field is generated around the motor core. The left side of the motor core is pushed away from the left magnet and drawn towards the right. causing rotation. The current DC micromotor uses a technology that only requires thin layer of magnets surrounding the rotor and is capable of spimung at very high speed, low vibration and low noise output. The combinations of design and choice of materials used in the production of motor cores playa significant role in determining the stability and performance of the motors. Being a critical part of the DC micromotor. a motor core determines the speed, flux induction, inertia torque level, noise level. electricity current requirement and cost of the DC micromotor.
Motor Core Due to the complexity of the micro size and yet maintaining the functionality of components used in DC micromotor. the process of manufacturing tillS DC micromotor component involve a high degree of understanding in the provision of design, fabrication, assembly of toolings, material selection and testing criteria. Presently, our Group is capable of custom designing high precision level of molor cores at various sizes ranging from 9 millimeter to 6 millimeter in diameter. We also undertake the design, development and shaft fitting assembly process for our customer. Shaft fitting assembly involves the process of assembling the motor cores stack with shaft. (d) Fine Piteh Connector Pins COlmector is a device used for joining electrical circuit together. Fine pitch connector pin is a component for a connector. The fine pitch connector pins produced by us are for connectors which are mainly used in industries such as telecommunications (mobile phones. personal digital assistant) computer. office automation equipment, audio visual equipment and automotive. Fine pitch refers to the gap size between each pin of the connector where electric current trm·els. The finer the pitch, the smaller the gap. Fine pitch COIUlector are HonnaH)’ lIse for high teclmology micro products such as mobile phones, circuit boards, personal digital assistant and notebooks. Our customcr provides the product specifications for us to undertake the design of the fine pitch connector pins. Upon confirmation by customer of the design draft. a prototype of the product is done ror testing and evaluation. When approval is obtained rrom customer, we also undertake Il,e design, fabrication and assembly of tooling which amongst others takc into consideration the product design layout. prodnet specifications. machinc specifications. tooling layout dcsign, tooling material selection and tooling assembly design. As at to-datc, we have undertaken the design and manufacturing of fine pilch connector pins ranging from 1.5 millimeter to 1.0 millimeter in pitch size. We arc undertaking eontinnous R&D work to further reduce the pitch size. (e) Others We also undertake various design and manufacluriug of othcr MEC snch as andio parts and HE LED reneclor holder. (I) ProllOsed New Products As at the Latest Practicable Date, we are currently undertaking R&D activities ror the development or safety commercial vehicle LED lighting and camera Jens DC micromotor. For further elaboration of the prodncts, R&D activities and the status of developments, plcase refer to Section 5.4.13 of this Prospectus. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK
5A.5 Dcsign and Production Process Flow Chart (a) HB LED COlllllOnents Design Process Flow Chart The diagI<un below illustrates the design process now for HB LED componcnts:­———. C\1stml<l” ll”ovides die ( ~i1icatlm in lenll d Sl~ ,CUilrnl<l” S[u:ilicaliol ;nj jXJ\\cr flx,.Kn:1lI01l EV(~UI’I<n;:nJ ,,,,,i.:\\’S rn ~ sp«llic$cn; “”Ih r&r=I01h:~b1gTl ~1mruJ.1 R.:p..”tlli\'<: h:dbx:k tnl MhdtiJ¥d”ltr ~I.S t’l.’eU:d b:fcle th: OXI\llcte cksJgO IS 1imIi.~

(b) DC Micromotor Components anu Fine Pitch Connector Pins Design Process Flow Chali The diagram below illustrates the design process flow for both the DC micromotor components and fine pitch COllnector pins:­
ProtO!)l),; SiUl”plC ~ J y-~—­(R.’\lcw, writ”)· <nd validllCl IXcxot)’l-“le Sal1lXC
1 Re-.;t:w, ~rilY & vaJiJate ~–_.,—_…_—.

(“~:=i~~OV. )
.~t_~__ Validale by production , y M1SS prcxludim C’tNOO”ffs’ mput inchk FlSldiomd telling (fJU’ihiXllll~t, \eml<:~) and pctlonnanC<.’ rcquirt.’lrenls AwIicabk slal1.tory [lld reguhucry rcqUlrerrerts Infamtill1lkrived irom prC\llCUS similar de:si£]1.~ Cthcr n:quirem:nt cs~ial for desi£1l an:! cl>velopnu1 Review ani confinnthe CU’>torrerrequircnms D:’ielop the c!e::ngTl plan Plan an:! sourre for all neo:::iwy mltcnals Frepare tre tC/YljXlfary drawings, spccilicallolli and parts list to devdopl~ prctct)lll: sarrplc
R<:v;ev.’, verit)’ and validate in accordanre tospxl1iC<ll.ion Re\’icwani confinn tlr cwtorrer fequirenms R..~ew and confinnth:: ct:t;to~r re~rern’nls R<:’>lcw, verily and validae m accordance to s~fieation &nI pre-production sarrplc lor Cll;IDrn;:r ,tlprowl Company Number: 686148-A INFORMAnON ON JHM GROUP (Cont’d) (c) Tooling Design Process Flow Chart for MEC I Customer’s confirmation of order lh:vi.:w design Inyout, p:lr! sp~cificillion, mnchim: Tooling design review specificalion ——–1-PW'”””’J—–T—–~ —-y——-~­Involves tooling asst:mbty design, pal1 dra\ving design, material selectioll. standard component Tooling dcsign selection +-­-“””‘!”‘……, , ——–y­(,Drawmg distribullOil t i\Iatcrial ordering, machines used arc CNC milling ,Tooling fabrication ,& milling, hardening, grinding & jig gl;ndillg, wire I, cUI, profile glinding ,, ,

 

,(‘ -“‘””‘1’–,,,,, /// ,-“”‘” I Return to ~,~CkU~ —-~ : —-JIoi veudor ~. : —-‘y’—-: , Tooling assembly —~ , ,,, I,Y,,,,Tooling testing
–,,,, , , ,, ,Sample checking –” ylS.mpl, “‘mi,,,”” —-… Nor Approved 46
(d) Production Process Flow Chart for MEC The diagram below illustrates the production process flow for MEC:­
Stamping J ,/,,/ ~roccssInspection ——~—-, ,I ! Degrcasing & Packing i L__~~ I..,

/ ,/ -‘~~­<~
t….laterial purchase from suppliers will undergo inspection 10 dehmninc the thickness and width ofmaterial is accurate Raw material to undergo stamping process by pmver press machine Inspections will be carried Ollt based on: 1. Tool buy-otT check sheet
2. In-process check sheet

Degreasillg process is carried out 10 remove any oil and dirt 1’1’0111 the surface urlhe lUclaL The tillished products arc packed according to the packing requirement Bodore the finished products are shipped to the store, out-going inspcctions are carried Ollt to ensure no ddects such as dents, scratches, burr and deformation on the finished products 5.4.6  Technology Capabilities  Our Group’s technology lics in its in-house tooling design expertise combined with various industry knowledge referred intemally as Compouent Miniaturisation Concept (“CMC”). CMC uses 3D software modelling and professional competencies for design of MEC CMC also uses 3D software modelling, various tool materials selection combined with specialised fabrication and assembly process to produce a MEC tooling. Through this technology. the Group has become proficient in:­ (a)  providing design conceptualismion of MEC;  (b)  establishing design parameters. analysing and validating the design 10 meet the specific performance criteria of each industry and ascertain that the MEC design is “m£umfacturablc”;  (c)  designing of toolings and material selection for the tools; and  (d)  tools fabrication and assembly of toolings up to a tolerance level of :+:1 micron.  The following illustrates the technology tools used by the Group:  (“­\~  ~  .~  Component Mlnlaturlsation con_ce_pt__~  ,, )
r———-Technology Tools———______ 3D Software Modelling using Sotid Works 2000 Design Technology DesignII Methodotogies )In-House Miniaturisation Concepts and New Materials “-__~~__. _ In-House Tooling and Moulds Design ~essional I Design, Predictive and Simulation Tools using FEA and FMEA I Competencies J
‘——————-‘ ,——-_._—–, r————–Industry Knowledge————-______
r——-­R&D Output R&D on HB LED and Related Components , ..—–……”‘\ / /—,/ \! / Lead-Free \ ( Clinch-\ \’ SCVLLI, Leadframe Ii ‘II Frame I, ‘ // ./ A’ole: R&D on DC Micromotor /-_.—–……, / DC\ /~~~:~~:\ 1\ Micromotor ) : DC I \! \ Micromotorj ~,—~/ “,’–.,._-,,/ J R&D on Connector Pins Fine Pitch
Connector Pin SCVLL  Safety commercial vehicle LED lighting  (a)  Design of MEC  Minillturisation Design
This design method employed is our in-house components progressive miniaturisation concept. The technology employed is derived from the progressive efforls of our R&D team to miniaturise MEC n,e miniaturisation design teclmology consists of components design and tooling design_ Component designs require the use of Solid Works and CAD/CAM software_ 48 Professional Competeney OUf senior management possesses vast knowledge and experience from various industries (such as optoelectronics, semiconductor, mechanical and electrical engineering). These knowledge and experience are passed on to our R&D team for development of MEC. Our R&D team uses this knowledge and experience to establish design parameters, analysing and validating the design that will best satisfy the specific performance criteria of each industry. The process development engineers in our R&D team will ensure that the component design is Ilmanufacturablclt -that the production process is as cost~effective and efficient as possible at the required production volume. (b) Tooling Process In high precision and high speed volume mlmufacturing, the design and fabrication of tooling is fundamental in detennining the quality of the MEC produced. The following are taken into consideration in the tooling process:­(i) Tooling design
(ii) Tools material seleelion

(iii) Tools fabrication and tooling assembly
Tooling Design Tooling designs require the use of Solid Works and CAD/CAM software, which can provide 2D and 3D modelling with simulation cap<lbilities. Tools Material Selection In high volume manufacturing the selection of materials used for the tooling is crucial as the machines are capable of operating up to 1,000 strokes per minute. The higher the number of strokes per minute, the materials are subject to higher stresses and the higher the heat dissipation, hence the materials used must be hard enough to take the stress and high heat resistance level. The hardness of the materials used will determine the durability of the tooling, the harder the material the beltcr it is to preserve the precision cut of the tooling. However, the harder the material. the morc difficult it is to fabricate the tooling. Lastly, in tile selection of materials, cost consideration also plays a factor to ensure that it is still cost effective for our
customers. The more commonly used material for tools is carbon steel which can be easily fabricated. High speed steel and tungsten carbide arc normally used for high speed and precision manufactnring. Ceramic is used for high speed and high precision manufacturing due to its durability as it can provide minimum burr occurring on the parts manufactured as compared to the others. Burr is a rough edge or area remaining on the components after it has been cast. cut or drilled. Tools Fabrication and Toolim.: Assemblv The high precision level required of the tooling will ensure that at the stage of assembly, all the various tooling parts will fit finnly and precisely. This will determine the quality and fiuishes of the MEC produced at tile manufacturing stage. Our tooling parts have to comply with a tolerance level of between ±l to ±5 microns. In the typical design of tooling. the tools set is normally constnlcted, fabricated and assembled in a ml1lUler whereby the stamping, shaping and punchiug of the components is in a vertical manner, whereby the tool set stamp the components from the top. 49 OUf R&D team has achieved a significant milestone in which we have developed and designed tooling that are able 10 undertake multiple bending and forming from bOlh sides (vertical and horizontal concurrently) at a high speed movement commonly known as “Mcchanical Side CAM teclmology”. (c) Technological Tools OUf R&D engineers use a combination of three-dimensional and solid modelling software with prcdictive capabilities to ensure that component designs mcct all performance criteria. Finite Element Analysis (FEA) is used to optimize component design. while Failure Mode Effect Analysis (FMEA) helps ensure that potential design problems arc climinated prior to production. Process simulation helps validate the manufacturing process. 5.4.7 Princillal Markets for Products Presently, ,ve design, develop and manufacture intennediary products for market leaders in their respective industries. The end products of our customers are llsed in a diverse range of applications such as automotive, mobile appliances, audio visual and office automation equipment computer and computer peripherals. Our customcrs are predominantly MNCs with manufacturing facilities in various countries. Our subsidiary, Morrissey is a licensed manufacturing warehouse company and our customers ultimately sell their products globally. The principal markets for our products for Ihe FYE 31 December 2005 are shown as follows:-Princinal Markets  Percentage of total sales  Thailand China Malaysia (Customers under Licensed lllanufacturing warehousc (LMW) and Free trade Zonc (FTZ)) •  40.2% 9.0% 50.8%
• LAIlV customers are reqUIred to expo!” at least 80% of their producTs and FfZ CIlSfomel:5 are required to export 100% oftheir products. In thc future. we intend to expand our market geographically with the development of the safety commercial vehicle LED lighting and thc camera lens DC micromotor. 5.4.8 Distribution and Marl,eting Strategies Presently, our products comprise :M:E:C which are used in diverse applications covering various industries. Our products and services are sold mainly to MNCs operaling in the region which ultimately export their end products worldwide. Our sales and customer service team focuses on maintaining good business relationships with our existing customers. Our R&D team works closely with the sales and customer service team through regular customer visitations to obtain customers’ feedbacks in order to enhance our product quality. Over tlle years. we have consistently met delivery deadlines and provided quality customer support to our customers to sustain long-tenn business relationships and maintain customer loyalty. Our sales personnel also make sales presentation to existing and potential customers to promote our Group’s capabilities. 50 We arc guided by our marketing philosophy to achieve total customer satisfaction by providing quality products and services that meet customers’ stringent specificat ions and reacting promptly to their needs and feedbacks. The track record with our existing customers who are mainly MNCs servc as testimonies to our quality product offerings. We will continuously upgrade our technology and machine capabilities with investment in high-end machine!}’ and R&D activities to enhance our competitive edge in the market placc. Our strategy is to build strong and close business relationships with leading playcrs in their respective industries and work together with them in developiug new products or enhaucing on thc existing products through our R&D capabilities. In this manner, we are able to keep abreast with the latest devclopment and leclmological changes and position ourselves at the forefront of the industry. 5.4.9 Demand and Scasonalit,Y Generally, our Group enjoys a stable and constaut demand for its products throughout the year with the exception of the festive season where there arc less working days in a month. We do not encounter any significant seasonal effects on our sales from the local and overseas market. 5A,IO Types, Source and Availability of Raw Materials The Ilk1in raw malenals used by liS for our business aClivilies are as fo11ows:­Material’s NliOlC  Description  Silicon steel Copper Stainless Steel Mild sted  St..:::elllHoy used for producing motor cores. A uuctile, malleable, reddish-bro\\-11 metallic element that is an t.:x..,;dlcnt condudor of heat Hnd electricity and is widely used for e1eclricn! \\iring, water piping, and corrosion-resistant parts, either pure or i.n alloys such as brass and bronze. Various stltcls alloyed \\lith at least 10 percent chromiulU and sometimes containing other eh.:ments and that are resistant to corrosion or rusting associated with exposure to water and moistme. A type of steel having a !ow’er proportion of carbon than ordinary sted, relldaing it softer nnd more malleable. It is used for jig & tixture
The above raw materials clre mainly sourced locally cmd some arc imported from Japan, Koren and Germany. These materials are rC<ldily available in the market and we arc not dependent on any single supplier. The prices of these raw materials me llIark to the prices quoted on lhe London Metal Exchange. Hence. we are exposed to price Ouctuations of the f(l\V materials. However, our risk is mitigated to a certain extent in lhat our sales quotation has a price variation clause in the event of a change in the price of the raw materials as quoted on the London MetHl Exchange of between the range of ±3% to ±to%. Notwithstanding tltis, we would normally re-negotiate and mutually agree with our customers before revising selling price to maintain goodwill. In addition to the above, we also source silicon steel from the supplicr appointed by one of our customers, namely Sunrock Steel Centre (M) Sdn 8M. Onr customer also sources its supply of raw materials from the same supplier and has bulk purchase orders and we are able to obtain competitive pricing due to the bulk purchase by our customer. Funher details on Ihe availability of raw materials and flnctuation in prices are provided in Section 4(A)(i) or this Prospectus. 51 5.·1.11 M”tcri,,1 Plant & Equipment Our Group’s major machineries used are as fol1ows:~
Desenntion  Puroose  Net book y;lIue as itt 31.12.2005 RM’OOO  Po\\’cr Press machines Grinding machines Profile Projector Clinching machincs Wire Cut mliehines  To support high speed stamping. To support grinding pans & maintenance tooling. To support quality assurance -dimension checking. To support clinching process. To support looling fabrication process.  2.139 225 228 290 5Xj
As at tile Latest Practicable Date, our current operating capacities per year for ti,e varions prodncts are as follows:­Current  Optimum  Prolluetion  prolluetion  capacity  capacity  (million units)  (million units)  (%)  DC micromotor components  2,289  3,053  75.0%  Fine pitch cOllllcclor pins  90  118  76.3%  HB LED leadIramc’  540  600  90.0%  Clinch frame HE LED  0.216  1.44  150%

• Based 011 the capacIty a/localed by our l11(lJor supplier. The optimnm capacity is based on two (2) len (IO)-hour shirts per day for 26 working days in a month. Based on the above operating capacities, we do not foresee to have any constraints on OUf production capacities. 5A.12 Quality Control Proccdures Our Gronp, through Morrissey has been awarded with ti,e intemationally recognised quality standHrds -ISO 900 I:2000 in recognition of its outstanding achievement in ql.,lity control processes. With Ihis certification, we have the responsibility for establisliing and documenting a quality management syslem that is in compliance wilh tile ISO 9001 :2000 sWndards. We are committed to implementing, Inaintaining and continuously improving our established quality management system. Our Group’s quality management system encompasses tile following:­(a) Identifying all relevant activities that will affect our abilities or responsibilities, to provide services and products thm fulfil customers’ requirements 3S well as applicable regulatory requiremenls;
(b) Outline the sequence and intefllction of these activities;
(c) State Ihe criteria and methods needed 10 ensure that both the operation and control of these activities / processes are effective;
(d) Ensure the availability of resources and information necessary to support the operation and monitoring of these activities I processes; and
(e) Monitor, measure. and analyse these activities / processes, as well as implement actions necessary to achieve the planned results and continual improvement of these activities / processes.

With regards to the quality assurance of our products, we ensure that raw materials, in-process products and finished products arc inspected and tested for compliance to customers’ requirements or in-house requirements and its status are properly identified throughout the manufacturing process. Our Group is also subjected to regular external audits by its customers and the quality accreditation bodics for re-certification of its ISO for quality service standards. 5.4.13 R&D We believe that investment in R&D is important to enhance OUf design capabilities, reduce development cycle timc and improve quality to remain compctitive in thc indnstry’. (a) R&D Objectives The R&D objectives of our Group are as follows:­(i) To enhance our core competencies in design ‘md development capabilities to support our long term grO\vth;
(ii) To provide our existing and potential customers with a one-stop engineering solution in producing MEC;

(iii) To broaden the scope of our R&D activities to include the commercialisation of mobile phone camera lens DC micromotor and safety commcrcial vehicle LED hghting; and (iv) To promote the conservation of environment. In line with the above R&D objectives. we have established a “Three Horizon Progressive R&D Gro\Vth Strategies” which covers a ten (1O)-year period from 2001 to 2010, which is further elaborated in paragraph (c) below. (b) R&D Facilities and Personnel Currently, our Group’s R&D initiatives are spearheaded by Mr Ooi Yeok Hock, Head of R&D Department supported by a team of technical persolUlel comprisiug four (4) R&D designers focusing on dcsigning critical pmts and tooling and four (4) engineers undertaking the development activities. (c) Ongoing and Future R&D Projects The ongoing and future R&D projects by our Group are encompassed in our ‘Three Horizon Progressive R&D Plan” as outlined below:­First Horizon Second Horizoll Third Horizon Time Frame  2001 -2002  2003 -2005  2006 -2010  R&D strategies  To achieve the  To provide one-stop  To broaden the scope  fundamental  engineering solution to  of R&D to include the  capabilily 10  other MEC industry  commercialisation of  produce consistent  finished products  high quality  precision MEC  Target customer  Computer &  Electronics & LED  Telecommunication  based I industry  electronics  and automobile  Achievement  Producing quality  Design and production  Completed the R&D  motor cores for a  of leadframes and fine  of lead-free Jeadframes  MNC customer  pilCh connector pins.  for HB LED.  Primary level of design  Completed the design  and prototype of a full  and development of  unit of DC micromotor  HB LED clinch frame
We are presently at the Third Horizon of our R&D plan and has successfully completed the R&D of lead-free leadframes for HB LED and completed the design and development of HB LED clinch frame for our customers, which includes the design of toolings for the abovememioned components. Presently, the Group’s R&D team is undertaking the following R&D projects: (i) Lead-free Leadframes for HB LED
For certain design of HB LED, one of the steps of the manufacturing process involves the soldering of the LED to the leadframe, and in most cases lead-containing solders are being used. With the ever increasing concerns over environmental lssue and the European Directive 2002/951EC, we have initiated R&D work to have a lead-free chemical solution to replace the traditional plating method, which involves producing waste that are discharged into the environment. The European Directive 2002/95/EC places restrictions on the use of certain hazardous substances such as lead, mercury, cadmium and hexavalent chromium in electrical and electronic equipments shipped to the European Union countries effective I July 2006. This process employs chemical plating technology to produce lead-free leadframe. The lead-free leadframe chemical plating technology is an R&D effort by our Group. The R&D has been completed and mass production has commenced in June 2006.
(ii) Clinch Frame Assembly for HB LED

Clinch frame assembly uses a metal substrate to clinch the HB LED without the soldering process. The clinch frame assembly removes the soldering process, thereby eliminating the use of lead but continues to maintain the conductivity compared 10 the soldering method. Our R&D team has completed the design of the metal substrates and the design, fabrication and assembly of the toolings for the first model and mass production has commenced in May 2006. This R&D project is expected to continue until 3″ Quaner of 2006 as we have to develop and design the metal substrate for a few models. 54 (iii) (iv)
(v)

Safet)’ Commercial Vehicle LED Lighting Attributes such as small size. low pO\ver consumption and rapid switch-on time have lead to widespread use of HB LED in vehicles. For commercial vehicles, HE LED lighting is widely used in the United States of America as a safety feature. HB LED lighting llas the following advantages compared to the cOllventionallighting for vchicles:· Longer life span of about 100,000 hours compared to the 7S0 to LOOO honrs for the conventional lighting Virtuall)” maintenance free Low energy consumption Rapid switch-on time and clearly visible from long distance Operating and maintenance cost reduction We believed that the proportion of HB LED lighting used in commercial vehicles \”‘ill increase and will largely replace the conventional bulb/inC<lIldeseent lighting. Seeing this trend and recognising the opportunity, we intend to leverage on our intenk1l capabilities to develop, produce and eommereialise the safety commercial vehicle LED lighting for the local and export markets. The R&D activities for safety commercial vehicle LED lighting project will commence in 3″ Quarter of 2006 and expected to be eommercialised by 2007, Camera Lens DC Mieromotor CmnCfa lens DC micromotors arc used mainly in camera-phones with optical 1.00111. Camera (ens DC micromotor. is a very miniature DC micromotor used 10 control the focusing lens used in the camera phone. The lirst opticall.Oom eamem-phone was launched in May 200~ with 2x optical zoom. Current models of camera mobile phones have the eapabiJit;, of 3,\ optical zoom. For this R&D project. we have completed tJ,e design and assembly of a complete unit of prototype DC mieromotor. The ne~1 stage of the R&D work will involve miniiiturising the DC micromotor to fit into the camera phones with optical zoom. R&D work is expected to be completed by mid­2007 and commercialisation by 2008, Finc Pitch Connector Pins R&D activities for fine pitch connector pins are a continuous process to reduce the connector pins’ pitch size from the current J.Omm to O.4mm. The R&D would also cover the area of new raw material source 10 produce the connector pins. This is due to the high electricity resistance and the smaller the electricity conductivity problems encountered when pitch size becomes smaller. The new materi(t! must possess the existing mew) characteristic for high volume m,ISS production such as strength, stiffness while maintain.ing IO\\’ electricity resistance and high electricity conductivity_ (d) Our Group’s R&D Expenses The table below sets out our Group’s R&D expenses and the corresponding percentage of R&D expenses to revenue over the past three (3) FYE 31 December 2005:­FYE 31 December  2003  2004  2005  R&D expenditure # (RM’OOO) Revenue * (RM’OOO) R&D expenditure/Revenue (%)  105 18,158 0.6  567 20,504 2.8  804 24,126 3.3
# Represents developmem costs capitafi.’ied during the re~peetive financial year. • Refers fo theproformaconsolidated revenue ofthe Group. 5.4.14 Approvals, Major Licences and Permits The major licences and permits for our Group are as follows:­Morrissey Authority! Type  Descriplion of License  Issue Date I Expiry Date  Major Conditions Imposed  Status of Compliance  Kastam dan Eksais DiRaia Malavsia I  At least 80% of completed units shall be exported and the remaining 20% to be sold locally shall be subjected to all applicable duties or taxes allhat lime. Morrissey’s current operating site as disclosed in section 5.4.2 must be approved by the State Government and the Depanmem of Environment. Morrissey needs to inform MIT! of any sale of its shares. Morrissey needs to provide training for its Malaysian employees so that the transfer of technological knowledge and skills can be applied to slaff at all levels.  Complied Approval from the Slate Government of Kedah DaruI Aman has been obtai ned on 24 July 2005. Approval from the Department of Environment has been obtained on 23 May 2006. Complied. A leiter regarding the sale of Morrissey’s shares has been sent to M1TI un 21 April 2006. Ongoing.  Manufncluring Warehouse Licence & Warehouse License MITII Manufacluring License  Miniature Engineering metal parts! Mould bases! Assembly Motors I Connectors with or without wires or cables  1 May 20061 30 Aprit 2008 I Seplember 2005 No expiry date for the licence
Authorityl Type  Description of License  Issue DIlle I Expiry Date  Major Conditions [mposed  Status of Cumpliance  MITII Manut~lcturing Li~nse  AutOllloli,’e Safety and lndict'”tling, Light  Morrissey n.:cci,’cd th~ approval.jn­principle on 5 May 20U!>.  Monissey’s current operating $ite as discloseO iu section 5.4.2 must be npproved by the State Goveml1l~llt and the Depm1ment of Environment. Moms::>ey needs to infoTIn .MITl of any sale of its shares. Morris~y needs to provide training for its Maluysian employees so that the transfer of technological knowledge and skills C<11l be (lpplied to s([II1′ (II alll~vels.  To be complied. Moni$~Y hm~ a six (6) month, timeframc to submit the relevilllt applictllions ror approval. Compli~d. A klt~r regarding the sale of Monissey’s shares has b~n sent to MITI on 21 ApnI2006. Ongoing.
SA.15 Brand Numcs, Patents, Trade Mad<s, Licences, Technical Assistance Agreements, Franchises and Other Intellectual Pn’lle’1y Rights Our Group currcntly does not hold any brand names. patents, trade marks. licences. teclUlical assistance agreements. francluses and other intellcctual property rights. 5,4,16 Our ComIletitiye Strengths and Adyantages OUf competitive strengths and advantages are as set out below:­(a) Possesx Strong Design and Develollment Capabilities Our R&D department encompasses a temn of four (4) designcrs and four (4) engineers solely responsible for designing critical components for MEC and toolings as well as developing these inlo protolypes. Through the accumulation of c.,periences C1nd technical know how, we are leveraging on these capabilities to further develop new products and en.hancement of current producls. The technical capabilities have allowed us to implement a more pro-active business model. Instead of reacting to customers’ specificalions for the components. our design engineers work closely with Ille sales team to pro-actively develop new MEC or enhance existing MEC, in hne with the changing trend of the E&E industry. In addition, accredited to our continuous R&D effort, our Group is able to focus on niche market scgmcnts which require considerable stringent quality products i.e. mobile phone camcra lens DC micromotor and HE LED. Today, we ha’·e built a strong reputation in the design and development of components for DC nucromotor, HE LED and COlUlector. Our design and development capabilities are flilly supported by our e.,tensive tecluuc.11 k!low-how and industry knowledge. 57 (II) Industry’ Insight & Knowledge, M….ket Intelligence
Through our established relatiouship with the respective leading industry players, we are able to obwin industry information panicularly in the area of teclUlology advancemem and market trends. Tills has funher enhanced our R&D activities and enabled LIS to remain resilient in a competitive environment.
(e) Quality P..oducts ..nd Se..vices

We consistently conform to stringent quality management system. To our credit, Morrissey obtained the ISO 9001-2000 cenification in 2001, shortly after its incorporation as well as recognition from customers. OUf Group’s intermll quality target of micromotor components based on sampling method is less than 5 defects per million units. The fact that our Group’s products are supplied to MNCs in the semiconductor industry emails the compliance of certain level of quality in our products. (d) Envi..onmental Conce..ns and Safety Issue
In view of OllT Group’s responsibility in environmental concerns, our Group is venturing into the design and development of lead-free leadframe projccl. aiming at shifting away from using lead in the plating process.
(e) Experienced, Dedic..ted and Competent M..n..gement Team

We have ,Ul experienced Immagement team led by our Group Executive Chairman and Managing Director. Dato’ Tan King Seng and assisted by a teclmically competent team of executive officers. Our executive officers ha\’e in-depth industry knowledge with regards to customers’ preferences and requirements. both in the MEC and other aspeets of the electronics industry. Our product knowledge. business network and strong management capabilities are vital to the continued growth and future development of the Group. 5A.1? Interruptions in Operutions During the Pust Twelve (12) Months \Ve did not c:\pcriencc any disruption in business which had a significant eITect on our operations dUling the past twelve (12) months. 5.4.18 Exceptiolllll Factors Affecting the Business Save for the risk factors highlighted in Seclion 4 of this Prospectus, our Group does not foresee any exceptional factors, which may affect its business. 5.4.19 Major Customers Our major customers for the past three (3) FYE 31 December 2005 are as follows:­Customer Name I-lana Semiconductor (BKK) Co Ltd  <—-Percentage of total sales —> FYE 31.12.2003 FYE 31.12.200~ FYE 31.12.2005 % % % 49.4 61.3 40.0  Mincbca-Matsushita Motor (M) Sdll13hd  45,4  33,4  27.6  CS Opto Semiconductors Sun Bhd Hirose Electric (M) Sdll BM  -OJ  -1.0  10,4 9.0  Omac Sales Ltd  – – 9.0
Based on our financial statements for the FYE 31 December 2005, a substantial portion of our sales were made to five (5) customers comprising 960/0 of our Group sales. We do not have a wide customer base due to the characteristic of the market segment that we are operating in, whereby it is a niche market \vith only a handful of 11l,~or global players commanding a sizeable global market share in the respective industry. We have strategized ourselves to focus on design and development capabilities to service thesc customcrs in the niche market segment/industry, such as diverse range of application for the products and high induslry grow1h. Our business model is premised on the fact that the ability to secure either one (I) or two (2) of this handfnl of global players in their respective industries as our customers will provide us with the opportunity to grow with these global players. These global companies have volume grO\\1h and wide range of products, which will also give us the opportunity to provide a wider range of products to these customers. Further information on our dependency on these major customers. actions taken to reduce dependency and expand our cuslomer base arc set out in Section ~(A)(a) of this Prospectus.
5.4.20 Major SUJlJlliers Our major suppliers for the past three (3) FYE 31 December 2005 are as follows:­Supplier Name Jinan Jingheng Ymnada Electronic Precision Tcc1mology Co. Ltd Sunrock Steel Centre (M) Sdn Bild Nippon Mining (Singapore) Pte Ltd Wieland Mek11s (Singapore) Pte Ltd <–Perccnhlgc of tOhl1 purchases –> FYE 31.12.2003 % 68.7  FYE 31.12.200~ % 745  FYE 31.12.2005 % 679  30.0  237  25.2  – – 2.1  – – 1.7
We are not highly dependent on any of our major snppliers as there are other suppliers who can provide the manufacturing process outsourced by us and also the major raw materials lIsed are easily available. For further information on the availability of raw materials and dependency of major supplicr. please refer to Section 4(A)(i) and Ul of this Prospectus. 59 5.4.21 Real Properly The Group does not own any real property. The rented properties of the Group which are material to the operations of the Group, all of which have been issued with the certificate of fitness, are as follows:­Company  LocationIBuilt-up Area  Description of Property I Existing Use  Date of commencemenV Date of expiry  Morrissey  (1 ) Lot A95. Jalan 2A-3. Kawasan Perusahaan M1EL. Sungai Lalang. 08000 Sungai Petani Kedah DaTUI Aman/ 11 ,460 square feet (2) Lot A96. Jalan 2A-3. Kawasan Perusahaan MIEL, Sungai Lalang, 08000 Sungai Petani Kedah DaTu) Arnanl II .469 square reel (3) A138. Jalan 28. Kawasan Perusahaan MIEL, Sungai Lalang. 08000 Sungai Petani Kedah Daru] Amanl 15.945 square feet  Factory building! OUf Group’s R&D. sales, administrative and operations office as well as its manufacturing facilities Factory building! OUT Group’s R&D and operations office as well as its manufacturing facilities Factory building! OUf Group’s operations office as well as its manufacturing facilities  I January 20041 31 December 2006 I July 20031 30 June 2006 • IS March 20061 14 March 2009  JH Tech  17-1-28 Bayan Point, Medan Kampung ReJau. 11900 Pulau Pinang! 1.000 square feet  Office loti Sales and administration office  I August 20051 31 July 2006
• Morrissey is in the process of renewing the (manc)’ agreement with the landlord for a further period ofthree (3) years from the said expiry dale. Our Group is not in breach of any law, rules and building regulations in relation to the use of the buildings rented by us. 5.5 SUBSIDIARY COMPANIES 5.5.1 Information on Morrissey (a) Hislory and business Morrissey was incorporated as a private limited company under the Act in Malaysia on 5 September 2000 as Forward Matrix Technologies Sdn. Bhd. It assumed its present name on 22 August 2002. The principal activities of Morrissey are the designing and manufacturing of precision MEC. It commenced operations on 5 September 2000. Morrissey operates from A95 & A96, Jalan 2A-3. Kawasan Perusahaan MIEL Sungai Lalang, 08000 Sungai Petani, Kedah Darul Aman as well as A 138, Jalan 28, Kawasan Perusahaan MIEL, Sungai LaJang, 08000 Sungai Petani, Kedah Darul Aman. (b) Share capital The present authorised share capital of Morrissey is RMLOOO,OOO comprising LOOO,OOO ordinary shares of RMLOO each. The issued and paid-up share capital of Morrissey is RMLOOO,OOO comprising 1,000,000 ordinary slk1res ofRMLOO each, Details of the changes in the issued and paid-up share capital of the company smce its incorporation are as fo11oW5:-Datc of Allotment  No. of Ordinury Shares Allotteu  Par V~llue (RM)  Consideration  Total issued llnd pnid-up share capitnl (RMl  05.09.2000  3  1.00  Subscribers’ shares  3  25,09.2000  499,997  1.00  Cash  500,000  1907.2002  500,000  1.00  Cash  t,OOO,OOO
(c) Substantial Shareholders Morrissey is wholly-owned by JHM,

(d) Subsidh\l’y and Associated Companies Morrissey docs not have any subsidiary or associated company.

 

5.5.2 Information on JH Tech (a) History and business JH Tech was incorporated as a private limited company under the Act in Malaysia on 5 Scptember 200 L The pnncipal activities of JH Tech are the original design mannfacturing of H8 LED components, It commenced operations on I March 2002. JH Tech’s sales and administration office is located at 17-1-28 8ayan Point. Medan Kampung Relau, 11900 Pulau Pinang, The manufacturing process of JH Tech is outsomced to third party, (b) Share capital The prescnt authorised share capital of JH Tech is RMSOO,OOO comprising SOO,OOO ordinary shares of RM 1.00 each, TIle issued and paid-up share capital of JH Tech is RM200,000 comprising 200,000 ordinary shares ofRMLOO each, Details of the changes in the issued and paid-up share capital of the company since its incorporation arc as follow5:­D<lte of allotment  No. of Ordilulry Shares AlIot!cu  Par Value (RM)  Consideration  Tutal issued and paid-up shllrc cupital (RM)  05.09.200 t  2  100  Subscribers’ shares  2  24,09.200t  99.998  1.00  Cash  100,000  Ot,tt.2002  100,000  1.00  Cash  200,000
(c) Substantial Shareholders JH Tech is wholly-owned by JHM. (d) Subsidiary and Associated Companies JH Tech does not have any subsidiary or associated company. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK INDUSTRY OVERVIEW 6.1 OVERVIEW OF THE GLOBAL ECONOMY In 2005. global economic expansion was sustained at i:I robust pace of -1-.3%. The expansion was remarkably resiliem against the backdrop of higher oil prices. escalating interest rates, large balance of payment imbalances and illlerfercnces from natural diS<1sters. While the economies of the United States and China remained the I\l,ljor engines of global growth. the recovery in Japan and tlle Euro area in the second half of the year gained momentum, providing additional support to the global economy. Consumer spending was sustained. reinforced to a major extent by the pass-through wealth effects. particularly from robust hOllsing markets in several major economies. Reflecting robust dcltwnd conditions, stronger corporate financial positions and increasing capacity ulilization. investment spending grew further. Meanwhile. growlll in the Asian region strengthened in the second half of the year as the uptrend in the global electronics cycle became evident. Overall, ltigher global growth was reflected in the continued expansion in global trade, which expanded at a strong pace of 70/0. The global grO\’1h demonstrated greater resilience to energy shocks, with the flow-on effects in large part offset by productivity gHins, continued income gro\\’1h and wealth creation, in tandem with improved energy efficiency and technological improvements during the last two deeadcs. Hence. whilc both higher oil and commodity prices did havc some impact on inflation. the effect was relatively modest as sustained improvements in productivity, the globalisation of production chains and the emergence of competitive sources of supply from several rcgions of the world assistcd to mitigate the effects. Going forward, the global outlook for 2006 is expected to remain positive. Both global output and global trade are projected to expand at a strong pace of 4.3% and 7.4%, respectively in 2006. Global growth is projectcd to expand across the mnjor economies, with the economies of Japan and the Euro area playing a more significant role. Another notable feature is the stronger investment uptrend seen in scveral Itlnjor economics. For lhe Asian region, the global electronics upcycle is expected to strengthen further following ltigher information technology spending in the industrial economics and stronger intra·regional dCl11nnd. As a result of sustnined economic gro\\1h and an upturn in inflation caused primarily by higher energy prices, several central banks initiated consecutive il1CreHSCs in interest rates from relatively low levels towards a morc neutral stance, in 2005. While monetary stimulus has been affected due to increased interest rates, monetary conditions arc projected to continue to remain accommodative to gro,\’lh in 2006. Both the timing and magnitude of monetary policy actions would depend on country-specific factors. including the strength of economic growth. inOationary expectations, movements jn the c~changc rates and the performance of the financial markets. (‘<‘imrce: Bank Negara Malaysia Annua/ Report 200512006) 6.2 OVERVIEW OF THE MALAYSIAN ECONOMY Real gross domcstie product (“GOP”) expanded by 5.3% in 2005. notwithstanding the persistently high crude oil prices and the cyclical downtum in the global electronics industry. The e~pansion was mainly private-sector driven and \Vas underpilliled by supportive macroeconomic policies and favourable financial conditions. Private consumer demand was sllstajned at a strong pace. In managing the economy, pubhe policy in 2005 focused on accelerating the shift towards higher n,ltlc-added Hctivlties, strengt]lelung the business environmcnt to develop new sources of gro\\1h and enhancing competitiveness. The Malaysian economy is e.,peelcd to strengthen further in 2006. Real GOP is projected to expand at a faster rate of around 6%. driven both by strengthening exports <lnd resilient domestic demand. The growth is e~pcctcd to be both broad-based nnd balanced, supported by expansions in all the economic sectors. The global semiconductor upcycle, sustained global growth <lnd ltigher prices for primary commodities are expected to havc positive effects on exports, as \vell as private consumption and investment. Current indicators suggest that the upturn in the global semiconductor industry, which began in the second half of 2005. would gain further momentum in 2006. Malaysia is expected to benefit from this favourable development with n stronger growth in manufactured e~ports, pm1icularly in computers and semiconductors. The govcmment is expected to continue to focus on strengthening the fiscal position, with the ultimate aim of supporting economic growth without compromising the long-tenn fiscal sustainability. In 2006, prices are projected to increase, driven largely by cost-push factors. Nevertheless, inflation is expected to remain at manageable levels during the year as both capacity expansion and productivity improvements in the domestic economy are anticipated to help contain price pressures. Monetary policy will, therefore, remain supportive of growth. While some downside risks remain. the strong macroeconomic fundamentals and diversified economic structure is expected to provide some degree of economic resilience. The factors that supported domestic demand in 2005 arc expected to continue to provide further stimulus in 2006. While private consumption is an important source of growth in domestic demand, private investment is projected to play an increasingly strong supportive role in sustaining economic growth over the longer term. In addition, a modest increase in public sector expenditure is expected when the implementation of the Ninth Malaysia Plan commences in April 2006. Hence. tlus is expected to provide a further boost to economic grO\v1h in the course of the year. (Source: Bank Negara Malaysia Annual Report 2005/2006) OVERVIEW OF THE HB LED MARKET HB LEDs continue to make inroads into lighting applications that were traditionally dominated by incandescents and other light sources. They can be used as tmffie signals, automotive brake lights. arcluteetural lighting and full-colour display keeps rowing. The improvements in wlute LED has spurred the use as backlights and HE LED manufacturers envision a \vider applications for it in the futurc. HB LEDs promise significant reductions in power consumption compared to incandescents stich as fluoreseeuts and light bulbs, as well as longer life and greater reliability. Moreover, teclmological improvements in lIB LED semiconductors and packaging have helped to increase light output. making HB LED brighter and reducing replacement cosl. As a result, lIB LEDs are becoming more viable in a variety of applications. In the near future, improvements in HB LED teclmology will soon make it possible for HB LEDs to substitute cold-cathode fluorescent lamps CCCFLs”) as backlighting sources in notebooks and computers. Backlighting is a teclmology that enables extreme improvement in picture quality by reproducing more vivid colours and colour depth. Backlighting is becoming an important application for HE LEDs. Although cost is still an issue. economies of scale is expected to bring these improvements to the market. Growth of the HE LEDs has been on the upward trend for the past one decade except for the flattening market in 2000-2001. The worldwide market was valued at USD 1.2 billion in 2000 and bounced to USD 1.8 billion in 2002. In 2004. the lIB LED market was estimated to be worth USD3.6 billion. The soaring growth was mainly driven by increasing lise of HB LEDs as well as \vider application markets such as mobile phones, i:lutomotives and electronic equipmellts. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK The major applications for HE LEDs are as follows:­Ma’or Produc(A Iications’-_:; ­Automot;”e Interior -DlIshboard_ re”,ling lights. door lights, pointer illumination, Liquid Crysllli DisplllY (LCD”) backlighting. map lights. Exterior -Rear combination lights. sig,.,llighting, fog-lamp, centre high mount stop light. rog lamps, tail lamps. break lighting_
Telecommunications Backlight for mobile phone keypads and LCD display, nash for camera phone. Consumer Appliances LCD illumination (cxamples: PDAs. MP3-Players. LCD mo,utors, LCD televisions) and Light source ror many kinds or optical devices (examples: optical mouse, 5Ca’Uler)_
Lighling Architecture lighting and generallighling.
Display Signages snch as entry/exit sign and traffic lights.
L-_ (Sol/rce: Independent Market Research Report dated April 2006 by Infocredit D&B) 6,4 OVERVIEW OF DC MICROMOTOR MARKET Currently, thc DC micromotor manufacturers consist of players whosc corc business is rocuscd on the production of electronic mechanical or molion comrol products of various type of electronic micromotor inclnding DC micromotor. In Asia, Minebea-Matsushita Motor Corporation (“”MMMC”) ‘md Mabuchi Motor Co. from Japan arc some of the established players in the DC micromotor sub­segmcnt. Attributed to Malaysia’s markct oriented economy and attractive govenuncnt policies such as quality manpower and tax incentives. many leading E&E companies arc located in MalaysHl. The major applications for DC microtllotor are as follows:-Milior Product AnnUcation Audio Video Products In Ilus application market. Ille den.,nd for micromotor are for digital devices such as Compact Disc (“”CD”). Video Compact Disc (“”VCD”) lind Digital Video Disc (DVO”) drives, camera, mini disc pillyers. video camera, radio cllssette recorder. CD changer. Office Automation Equipment Office Automation Equipment such as fax machine. copying Inclchine. printers etc. Household Al’l’lhmces Household appliances such as electric loothbrush, hair drycr, hair removers. hair clippers. eleclric savers as well as toys. TIle demand ror smaller intenk11 pans due to the size of the end products it self is considered to be small. Automotive Products With the advancement in the automotive electronics, modem motor vehicles are able to orfer vllriOUS fcalures. Some of the typical applicmions or DC micromotor are for power window liner. side mirror, door lock as well ass auto cruise conlrol. Others applications include anlomatic antenna IiOeL emission control devices and highlight be.1111level adjusters. (S’lUrce: independent Markel Research Report dated April 2006 by Infacredll D&B) PERFORMANCE OF SELECTED APPLICAnON MARKETS FOR MEC The major applications market for MEC includes E&E products and automotive electronic components. In addition. the MEC such as HB LED and DC micromotor arc also used in the medical and mihtary sectors. In the E&E sector, MEC can be found in Audio Video products. Office Automation products. ICT equipments as well as household appliances. Thus, the market performance of these sectors will affect the demand for intermediate products such as MEC. As the demand in these sectors grows. the need for MEC in assembling the end-products will grow as well. (a) Automotive Sector Although the use of HB LED in the automotive is still limited to selected range of luxury vehicles, demand for it is expected to soar as the safety and reliability issues in motor vehicles gain momentum. On the other hand. the applications of electronic micromotor as motion control components for motor vehicles have been well-established. In 2005, there are six (6) motor vehicle mannfacturers. nine (9) assemblers and fifty (50) franchise holders of various brands of vehicles in Malaysia \vith an aIumal installed capacity of 896.000 units. The gro\\1h rate for the production> (in unit) and total industry volnme (in unit) of the automotive industry in Malaysia from 1996 to 2005 are as [0110\\’5:­! Total Industry Gro;ihR~~Total : VolumeYear Production ‘” % __199~_–I_ 393,105 __.~__-+-. 364,789 . 1997 i 459,123 16.8, 404,837 11.0 1998 ‘170,832 ·62.8 163,851 -59.5 I———l——..—-.-” ,,——, —.. 1999 305,134 78.6 288,547 76.1 ——–+———..————–.._–_.,.. ‘-“_·-‘—1 2~00 _:. 358~496 175 . 343}7} 18.91 ,-~~l~~-···-~:;:~~:·-:i:0>-1~m~–“”-:-i·-_…\
2004 …~ 464,386 7.7 r 487,605 1’—–204-· 1 __~~_J.. 547,996 18.0. I 551,042 …l_.13_0 …..J Notes: *denotes the total production refers fo the total ofpassenger cars and commercial vehicles. The global sales (in unit) of major automotive players from 2001 to 2005 are as follows:­Name of Manufacturer 2001 2002 20031 2004 I 2005 I ‘000 ‘000 ‘000 1 ‘000 1 ‘000 -;:::o~;~:~~:orati~n f -::~:~_ =::::;~ ..::~;~+ -::~~~ L-.::~~~~ ~~OYotaMoto;:CorpOraiion Volkswagen AG r-DaiffiJerChrysler AG  5,526 5,107+4,479  5,543 4,996 –.-4,540·  -.  ~,1I3 5,016 4,356  I 6,719 5,079 –4.ii9″j  __2:~081 5,243l 4,356 I  ‘NIssanMotorCompany ……………._ _ __..­ _.+..  2,597  –·-2,771 3,057—-3,388 _ ,~ ..__ _­.. – -‘3,6IS­ Honda Motor Company  2,580  2,666  2,888  2,983  3,242  BMW AG  I  881  906  1,105  1,209  ..·…··· ..i-;328  Total  ._._–~  i  36,234  36,806  37,871  39,888  41,186  AlliiualGfowthRate(%) I na N;;i~:: IW denote;-;;7>t al’ailab/~-L—-~–·_·­ 1.6  .  29  .  5.3′ L…-­__. l_.  3.3 .–“”.-1  66
(b) Audio Visual (“AV”) Products
In Malaysia, sales value of AV products has been decreasing over the years. In 2005, the sales of AV products were valued at RM9.4 billion compared to RM12.0 billion in thc previous year. In the same year. Mala:ysia exported an estimated AV products which amounted to RM8.3 billion compared to RM7.7 billion in 2004.
(c) Of1’ice Automation (“OA”) Equipment

In the OA equipment segment, Malaysia has registered sales value of an estimated RM50.4 billion in 2005 compared to R1V133.7 billion in 2004. In 1v1alaysia. there arc twenty two (22) companies producing OA equipment snch as projectors, photocopiers, typewriters, display panels, calcnlator, test eqnipment and related office equipment. Between 2000 and 2004, the compounded annual growth rate for the world tradc of OA was 4.8%. 1n 2004, world trade in OA equipment was valued at USDl.l trillion or increase of 21.5% compared to USD933 billion in 2003. (d) Mobile Phone In 2004, total mobile phone users worldwide were registered at about 1.5 billion. Meanwhile the average market penetration rate world\vide was reported at 27.4% in 2004 compmed to 22.6% in 2003. It is worth mentioning that some of the regions such as the Asia region’s penetration rate arc still below the average world market penetration mte. In 2004, Asia region’s mobile phone penetration rate soared to 18.7% from 15.3% in 2003 which corresponds to every one hundred inhabitants there are about 19 mobile phone users in 2004 (Source: Independent Markel Research Report daled April 2006 by Il1jocredil D&B) 6,6 BARRIERS TO ENTRY (a) Stringent Pre-qualification The MEC sub-segment is dominated by large established MNCs players which subject new vendors to laborious screening and pre-qualification procedures. This is a lengthy and time­consuming process which will take up to six (6) months or morc. Such stringent screening makes it difficult for new entmnts who lack the necessary track record to quali(v as approved vendors. Likewise the rigid and time-consuming accreditntion or qualification process by MNCs give rise to high switching costs, making it less desirable for MNCs to frequently change vendors unless there are compelling reasons to do so. This makes it difficult for new entrants [0 penetrate the market. (b) R&D Capabilities To remain competitive and be a one-stop engineering solution provider for MEC, we must have R&D capabilities to respond to the market demand and our customers’ requirements for specific functions for the MEC. R&D capabilities are not limited to design competency i.e. using Computer Aided Design (“CAD”)/Computer Aided Manufacturing (“CAM”) software in 2-D and 3-D format as currently, industry players must be skilled at processes such as applying various softwarc systcms for simulation of complete machining process and testing of their prototypes and products. Design and development activities play a pivotal role in ensuring that the local MEC players are moving to a higher value chain. The ability to provide services such as product dcsign and tooling/moulding design and development are essential for local players to move up the value chain, from manufacturing-based activities to design capabilities as it requires a combination of sound technical competencies that involves mnltiple engineering disciplines and significant time to build-up such design capabilities. (c) Tcchnical Expertise The players in the MEC sub-segment rely on industry knowledge and technical c’pcrtise to meet its challenges related to safe and cost-effective production of both customised and generic MEC Local companies utilise their past knowledge and R&D capabilities to secure, build and maintain its business relationships with its customers. MEC manufacturers also depend on their years of experience in both the electronics components industry and leverage on the knowledge and R&D activities to ensure that they are competitive. Thus. without these competitive advantages, new entrants will find the industry difficult to penetrate into and compete with established players. (d) Strong Relationship With Customers Local MEC mannfacturers should have good rapport and long-term, established relationslrips with their clients, wlrich can be an impediment for new players entering the market. In the MEC sub-segment, having strong understanding of the customers’ demands is paramount, as customers do not easily respond to new players \vho have not yet proven their capability both in manufacturing and R&D. Thus, players must have closely knitted relationship with their customers coupled with good understanding of their client needs. (Sollree: Independent Market Research Report dated April 2006 by In{oeredit D&B) 6.7 RELEVANT LAWS AND REGULATIONS GOVERNING THE INDUSTRY AND PECULIARITIES OF THE INDUSTRY The major incentives for manufacturers in the MEC industry are the Pioneer Status, Investment Ta’ Allowance (“ITA”) and Reinvestment Allowance. Eligibility for Pioneer Status or ITA is based on certain priorities, iucluding the levels of value-added, teclmology used and industrial linkages. A company granted Pioneer Status enjoys a 5-ycar partial or full exemption from the payment of income tax depending on the criteria it had met. A company granted ITA gets a partial or full allowance from its qualifying capital expenditure such as factory. plant, machinery or other equipment used for the approved project, incurred within five years from the date on which the first qlk’1lif)’ing capital expenditure is incurred. Companies can offset this allowance against their statutory income in the year of assessment. To obtain Reinvestment Allowance, a company has to be in operation for at least 12 months and incur qualifying capital expenditure to expand production capacity, modernise and upgrade production facilities, diversify into related products, and automate its production facilities, The Reinvestment Allowance can then be used to offset against the statutory income for the year of assessment The Malaysian Govenunent is supportive of the growth of the electronics industry as it is an important sub-sector of the manufacturing industry and it is the major export earner. The Government offers various investment incentives such as pioneer status, reinvestment allowances, tax relief for capital allowances and double deduction on expenses for promotions of exports. The main incentives are provided for in the Promotion of Investment Act, 1986 and the Income Act. 1967. Save as set out above, there arc no specific regulations governing the MEC industry in Malaysia nor are we currently aware of any specific material peculiarity in the said industry. (Source: Independent Market Research Report dated April 2006 by Itlfocredit D&’8) 6.8 PROSPECTS AND OUTLOOK OF THE INDUSTRY The outlook for the MEC sub-segment is related and dependent upon other industries where demand is derived from. With regards to HE LED and DC micromotor, the grow1h of these industries is hnked to the performance of the industrial manufacturing markets particularly the E&E. communications (particularly mobile phones) and automotive industries. The main drivers of grow1h for both HE LED and DC micromotor lie in the performance of the application markets as set out in Section 6.5 above. In 2004. the global HB LED markct value was estimated to be wOrtll USD3.6 billion and is e,pected to rcach USD7.2 billion by the end of 2009. This is in contrast with the lower-grade LED which is facing overcapacity as well as stiff price cutting competition among the players. Eventually, the advancement in desigus and developments will enable HE LED to replace conventional lighting. In addition. potential market can also be seen with product application in backlighting for display dcviccs and medical equipments. With the growing demand for energy saving electronic devices, HB LED is able to mect both criteria perfectly. As MNCs outsourcc some of their manufacturing and R&D processes. local MEC manufacturers will have the opportunity to participate in tlus flourishing market. In recent time, the DC micromotor market has been facing stiff price competition among the manufacturers due to emergence of oversupply and increase in raw materials cost. In addition, the manufacturing activities have been shifting to low production cost countries like China. In order to remain resilient in a competitive environment, local manufacturers must move up the value chain through continuously upgrading and investing in R&D activities in particular enhancing their capabilities in designing and development of DC micromotor which can cater to wider application markets such as the mobile phone markct. In summary. focusing on the potcntial application markets conpled with continuous product upgrading and enhancement via R&D acthiies will pave the way for sustainable gro”1h for local players in the MEC industry. (Source: Indepel1denr Market Research Report dated April 2006 by llifocredit D613) 6.9 FUTURE PLANS, STRATEGIES AND PROSPECTS Our Group continues to strengthen our core competencies in design, development and production of MEC by utilising our R&D capabilitics to promote a safer environment by substituting non-hazardous material in its product dcvelopmcnt plan. Our Group also endeavours to be pro-acti\’c towards the dc\’elopment in the MEC industry and will continuously identify busincss opportnnities. In an elfort 10 maintain our competitive advantage and sustainability in the industry, our strategies for future grO\\1h are as follows:­(a) Enhance R&D Capabilities The MEC industry is characterised by technological advancemcnts, changes in consumer market application which is driven by miniaturisation for reasons of mobility, functionality and freedom of design. Our challenge is to undertake R&D and design of these MEC with high complexity at micron dimensions and at the same time maintaining the functional propcrties of these MEC. Towards this end, wc continuously keep ourselves abreast with the latest development in the industry and enhance our R&D capabilities to ensure we remain competitive in the industry. Amongst the steps taken are:­(i) increasing the persOImel in the R&D team;
(ii) investment in R&D equipments;

(iii) allocation of resources for R&D; and (iv) identifying R&D projects with good business opportunity. (b) Expand Product Range
Leveraging on our R&D and design capabihties. we have ventured into a few R&D projects to expand our product range. details of which are as set out in Section 5.4.13(c) of this Prospectus.
(c) Penetrate into New Marliets

Our Group currently has cnstomers in Malaysia, Thailand and China. Resulting from the expansion of our product range. we intend to expand our market in China and penetrate into Taiwan market as well. For the mobile phone camera lens DC micromotor, our target markets arc in China and Taiwan, as 1110St of the mobile phone manufacturers are concentrated in these two countries. For the safety commercial vehicle LED lighting. we intend to initially launch the product in Malaysia by working closely with the local commercial vehicle manufacturers and subsequently to penetrate into Thlliland and China. (d) To proactively worl’ with our customers to offer innovative engineering solutions We do not only provide engineering solution to meet customers’ needs, but we are also pro­active towards the development and changing trend of the MEC indnstry. With onr teclullcal capabilities and in-depth knowledge of the industry. we work closely with our customers to offer innovative engineering solutions to meet the demands of the industry. For example, we are currently developing the lead-free leadframe in line with growing concerns on environmental issues. Our safety commercial vehicle LED lighting project for commercial vehicles is to promote awareness on safely issues for road users. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK

 

 

 

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