Business Overview

4.1 HISTORY AND BUSINESS 4.1 HISTORY AND BUSINESS Our Company was incorporated in Malaysia on 16 December 1999 under the Act as a private limited company under the name of Kelington Engineering Sdn Bhd and commenced business operations on I March 2000. Subsequently, on 23 July 2007, our Company was converted into a public limited company, and on 5 September 2008, we assumed our present name. As at the date of this Prospectus, our Company has three (3) wholly-owned subsidiaries, Kelington Technologies Sdn Bhd (formerly known as KE Manufacturing Sdn Bhd), Kelington Engineering (Shanghai) Co., Ltd. and Kelington Engineering (S) Pte Ltd. KE Shanghai in tum has a wholly-owned subsidiary, Kelington Trading (Shanghai) Co., Ltd. Additionally, our Company also has a registered branch located in Taiwan and does not have any associated companies. Our Group is principally engaged in the business ofproviding engineering services and general trading, specifically in the provision of UHP gas and chemical delivery system solutions that comprise products and services such as (a) system design and installation; (b) gas and chemical delivery equipment; (c) control and instrumentation; (d) QA and QC services; and (e) maintenance and servicing to various Foundries (Semiconductor I FPD) as well as clients who require UHP gas or chemical delivery systems in Malaysia, the PRC, Taiwan and Singapore. Our Company, together with our branch office and subsidiary companies, all undertake the provision of UHP gas and chemical delivery system solutions. Our operational structure is segregated geographically among Malaysia, the PRC, Taiwan and Singapore. Our product and service offerings cover most of the entire spectrum of a typical UHP delivery system, which includes the following:­(i) UHP system design;
(ii) Fabrication and installation;

(iii) Gas and chemical delivery equipment; (iv) QA and QC services;
(v) Control and instrumentation; and
(vi) Maintenance and servicing.

 

4.2 LISTING SCHEME In conjunction with, and as an integral part of our Listing, we undertook a listing scheme which was approved by the SC vide their approval letters dated 3 I March 2008, 15 October 2008, 23 March 2009 and 18 September 2009, details ofwhich are set out as follow:­(a) Bonus Issue We carried out a bonus issue of 1,500,000 new ordinary shares of par value RMI.OO each on the basis of three (3) new ordinary shares of par value of RM I. 00 each for every ten (I0) existing ordinary shares of par value of RM 1.00 each held, paid out to the shareholders of our Company. The Bonus Issue was effected by way of capitalising RMI,500,000 from our Company’s retained profits reserves amounting to RM90I,000 and share premium reserves amounting to RM599,000 based on our Company’s latest audited financial position as at 3 I December 2008. The Bonus Issue was completed on II September 2009. The Bonus Shares issued pursuant to the Bonus Issue ranked pari passu in all respects with the then existing ordinary shares in Kelington. Upon completion of the Bonus Issue, our Company’s issued and fully paid-up share capital increased from RM5,000,000 comprising 5,000,000 ordinary shares of par value of RMI.OO each to RM6,500,000 comprising 6,500,000 ordinary shares of par value ofRMI.OO each. (b) Share Sub-Division After the Bonus Issue, our Company implemented a sub-division of the par value of our Company’s ordinary shares, whereby each existing ordinary share of RMI.OO was split into ten (10) ordinary shares ofRMO.lO each. Upon completion of the Share Sub-Division on II September 2009, our issued and paid-up share capital was revised to RM6,500,000 comprising 65,000,000 ordinary shares ofRMO.IO each. (e) Share Transfer Upon completion of the Share Sub-Division and in order to recognise the contributions of certain employees of our Group (including the Key Management Employees), the shareholders of our Company transferred a total of 750,000 Shares (“Transfer Shares”) held by them to sixteen (16) key employees at a nominal consideration of RM 1.00 per employee. As a result of the Shares Transfer, which was completed on II September 2009, the shareholding of our Company’s substantial shareholders and the aggregate Transfer Shares are set out as follows:-Kelington Shareholders  Shareholding as at the Latest Practicable DateO)  No. of Transfer  Shareholdings after Share Transfer  No. of Shares  %  Shares  No. of Shares  %  Palace Star Allied Moral Sky Walker  45,532,500 9,730,500 9,737,000  70.05% 14.97% 14.98%  (525,375) (112,275) (112,350)  45,007,125 9,618,225 9,624,650  69.24% 14.80% 14.81%  Total Promoters  65,000,000  100.00%  (750,000)  64,250,000  98.85%  The Transfer Shares  – – 750,000  1.15%  Total  65,000,000  100.00%  65,000,000  100.00%
Note:­(1) Shareholding as at the Latest Practicable Date is based on the shareholding after the completion ofthe Bonus Issue and the Share Sub-Division. The basis of the allocation of the Transfer Shares takes into account the employment position, length of service as well as the level of contribution by the employees to our Group. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (d) Offer for Sale In conjunction with the Listing, the Offerors will also implement an Offer for Sale for 9,000,000 existing Shares at the Offer Price to identified investors, subject to terms and conditions contained in this Prospectus. The Offer for Sale is expected to result in the Offerors ralsmg gross proceeds of RM4,nO,000. As at the date of this Prospectus, our Placement Agent has received irrevocable undertakings from selected investors to acquire the Offer Shares. (e) Public Issue In conjunction with the Listing, we will issue 9,710,000 new Shares at the Issue Price to eligible employees, business associates, individuals, companies, societies, co-operatives and institutions by way of private placement and public offer, subject to the terms and conditions contained in this Prospectus. The Public Issue is expected to result in our Company raising gross proceeds ofRM5,146,300, the proposed utilisation of which is set out in Section 2.7 of this Prospectus. Upon completion of the Public Issue, our issued and paid-up share capital will increase from RM6,500,000 comprising 65,000,000 Shares to RM7,471,000 comprising 74,710,000 Shares credited as fully paid-up. There is no minimum subscription as the Issues Shares are either underwritten or investors have been identified to subscribe for it. (f) Listing and Quotation on ACE Market Upon completion of the IPO, our entire issued and paid-up share capital of RM7,471,000 comprising 74,710,000 Shares will be listed on the ACE Market.
4.3 SHARE CAPITAL The authorised and issued and paid-up share capital of our Company as at the date of this Prospectus and upon completion of the IPO are as follows:­As at the date of the Prospectus  Upon completion of the IPQ  Par Value  No. of Shares  RM  No. of Shares  RM  RM  Authorised Issued and paid-up  250,000,000 65,000,000  25,000,000 6,500,000  250,000,000 74,710,000  25,000,000 7,471,000  0,10 0,10
THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK Details of the changes in our issued and paid-up share capital since incorporation until the date of this Prospectus are as follows:­Date of allotment  No. of ordinary shares allotted  Par Value (RM)  Consideration  Resultant number of issued and paid-up shares (cumulative)  Resultant issued and paid-up share capital (cumulative) (RM)  16.12.1999  2  1.00  Cash  2  2  19.04.2000  1,998  1.00  Cash  2,000  2,000  14.06.2001  198,000  1.00  Cash  200,000  200,000  26.\2.2003  800,000  1.00  Other than cash (I)  1,000,000  1,000,000  25.09.2004  401,000  1.00  Other than cash (I)  1,401,000  1,401,000  22.11.2004  599,000  1.00  Cash  2,000,000  2,000,000  07022006  \,500,000  1.00  Other than cash (I)  3,500,000  3,500,000  08.02.2006  1,500,000  1.00  Cash  5,000,000  5,000,000  11.09.2009  1,500,000  1.00  Other than cash (I)  6,500,000  6,500,000  11.09.2009  – 0.10  Other than cash (2)  65,000,000  6,500,000
Notes:­(1) In the form ofthe Bonus Issue.
(2) In theform ofthe Share Sub-Division.

BUSINESS OVERVIEW 4.4.1 Overview Our Group’s corporate structure as at the Latest Practicable Date is depicted as follows:­KE Taiwan (registered as branch office in Taiwan) 1100%1100% KE Singapore (incorporated in KTSB (incorporated in Malaysia) Singapore) 4.4.2 Key Milestones, Achievements and Awards Our key milestones, achievements and awards since our incorporation are as follows:­Kelington (incorporated in Malaysia)  100%  KE Shanghai (incorporated in the PRC)  100%  KTS (incorporated in the PRC)
Year  Milestone Events  December 1999  Incorporation of Kelington as a UHP gas delivery systems solutions provider in Malaysia. Commencement of business and secured maiden key project in Malaysia for SilTerra Malaysia Sdn Bhd’s Foundry at Kulim, Malaysia. Incorporated KE Shanghai as a wholly foreign owned enterprise to represent our Group’s business interest in the PRC. Acquired the current premises of our corporate office in Bukit Jelutong  March 2000  April 2002  December  2002  Industrial Park. The site provides our Group with an additional working space for fabrication works thus enabling us to undertake larger and more sophisticated projects. We moved into the new premises in June 2003. Secured our first project in Taiwan for a TFT-LCD Base Build project with HannStar Display Corporation. This project marked our Group’s first foray into Taiwan. Manufactured first equipment, i.e. VMB and VMP as OEM which was successfully installed for export to the Taiwan market. Secured our first major project in the PRC for a Wafer Fabrication project with Taiwan Semiconductor Manufacturing Corporation (“TSMC”) Songjiang. Registration of KE Taiwan as our branch office in Taiwan to represent our Group’s business interest in Taiwan. Awarded Emerging SMI 2004 Award from the SMI Association of Malaysia. Entry of Sky Walker, a company related to a major Taiwanese gas supplier,  March 2003  March 2004  May 2004  August 2004  December 2004  December  2005  BOCLH and major Semiconductor manufacturers in Taiwan such as TSMC and United Microelectronics Corporation (“UMC”), amongst others, as a substantial shareholder of our Company. Introduced K-Flow Vision, a modelling and simulation software incorporating gas I chemical properties and engineering database. Further details of K-Flow Vision are set out in Section 4.11.2 of this Prospectus. Setting up of KE Singapore as a wholly-owned subsidiary to represent our Group’s business interest in Singapore. Secured the project to design and build our first Solar Cell plant for Suntech Power Holdings in the PRC. Secured the project to design and build bulk and specialty gas system for the first 300mm wafer fabrication foundry of Promos Technologies Inc. (Chongqing), China  July 2006  November 2006  June 2007  September 2007
Year  Milestone Events  May 2008  Our wholly-owned subsidiary company, KTSB attained Pioneer Status from MIT! which provides for a tax exemption of up to 100% for a period of 10 years with retrospective effect from 28 May 2007 for the manufacturing of UHP gas/chemicaVpure water distribution systems and parts thereof for the electronics and pharmaceuticals industry. Secured the first project to build the chemical slurry plant for Renewable Energy Corporation in Singapore. This project marked our Group’s first foray into Singapore. Completed the turnkey Bulk Chemical Delivery System for Seagate Skudai, which mark our Company’s capability in designing and building large scale chemical delivery systems.  December 2008  January 2009

4.4.3 Capital Expenditure and Divesture Saved as disclosed below, our Company has not incurred any material capital expenditure and divestiture (including interest in other corporations), since the beginning of our Company’s last three (3) FYEs to the date of this Prospectus:­FYE31 December 2006 RM’OOO  FYE31 December 2007 RM’OOO  FYE31 December 2008 RM’OOO  FPE 30 April 2009 RM’OOO  Malaysia PRC Taiwan Singapore  32 86 17 – 325 420 118 – 210 643 98 – 25 16 -8  Total  135  863  951  49
The capital expenditure of our Group consist mainly of tool and equipments used in our operations. All of the above capital expenditure were financed through internal funding. On 20 October 2006, our Company disposed off a 51 % subsidiary company, VSR Technologies by way of a dividend-in-specie to the shareholders of our Company on a pro­rata basis. VSR Technologies and its group of companies are principally engaged in the business of supplying, installing and servicing of engineering and medical equipment, fabrication and installation of control panel systems, as well as the trading and distribution of telemetry and remote monitoring products. As the core business of VSR Technologies does not complement that of our Group and in the interest of preserving a focused core business for the purpose of the Listing, our Board had decided that VSR Technologies shall not form part of the Kelington Group, which is the listed group under the Listing. Since I May 2009 up to the Latest Practicable Date, our Company has incurred approximately USDO.17 million (equivalent to approximately RMO.59 million) for the acquisition of tools and equipment which was financed through internal funding and approximately RMO.80 million for the purchase of two (2) motor vehicles which was financed through hire purchase. Save for the aforementioned, there are no material capital expenditure or divestitures incurred or in progress since I May 2009 up to the date of this Prospectus.

4.5 SUBSIDIARY COMPANIES 4.5.1 Information on KTSB (a) History and business KTSB (Company No. 562280-U) was incorporated as a private limited company under the Act in Malaysia on 22 October 2001 under the name ofKE Manufacturing Sdn Bhd. Subsequently, on 5 November 2008, KE Manufacturing Sdn Bhd assumed it present name. The principal activity of KTSB is the manufacturing of UHP gas / chemical delivery system related equipment. KTSB commenced business in May 2007 whilst prior to then, the company was dormant. On 14 May 2008, KTSB was granted approval for Pioneer Status under the Investment Promotion Act 1986 by MIT!, which provides for a tax exemption of up to 100% for a period of ten (10) years, subject to renewal at the end of the fifth (5 th) year, with retrospective effect from 28 May 2007, for the manufacturing of UHP gas/chemical/pure water distribution systems and parts thereof for the electronics and pharmaceuticals industry. (b) Share capital As at the Latest Practicable Date, the authorised share capital of KTSB is RM5,000,000 comprising 5,000,000 ordinary shares of RMl.OO each and the issued and paid-up share capital of KTSB is RM2,000,000 comprising 2,000,000 ordinary shares ofRMl.OO each. Details of the changes in the issued and paid-up share capital of KTSB since its incorporation up to the Latest Practicable Date are as follows:­Par  Total issued and paid- Date of  No. of ordinary  Value  up share capital  Allotment  shares Allotted  (RM)  Consideration  (RM)  22 October 2001  2  1.00  Cash  2  (Subscribers’  shares)  26 July 2006  19,998  1.00  Other than cash(l)  20,000  2 April 2009  1,980,000  1.00  Other than cash(‘)  2,000,0000
Notes:­(1) In theform ofcapitalisationofamountsowedbyKTSB toKelington.
(2) In theform ofcapitalisationofKTSB’sretainedprofits

(c) Substantial Shareholders KTSB is wholly-owned by Kelington.
(d) Subsidiary and Associated Companies KTSB does not have any subsidiaries or associated companies.

 

4.5.2 Information on KE Shanghai (a) History and business KE Shanghai (Registration Number: Qiduhuzongzi no. 030753 (Fengxian» was incorporated as a wholly foreign owned enterprise under the laws of the PRC on 16 April 2002. The principal activities of KE Shanghai are the design and installation of mechanical and piping engineering systems and provision of related technical consulting services. KE Shanghai commenced operations on 16 April 2002 and has a duration ofbusiness operation oftwenty (20) years ending IS April 2022. KE Shanghai has been granted tax incentive by the Shanghai Tax Bureau on 10 July 2005 pursuant to the Tax Reduction and Exemption Notice for 100% tax exemption from January 2005 to December 2006 and 50% tax exemption from January 2007 to December 2009. (b) Registered Capital As at the Latest Practicable Date, the current registered capital of KE Shanghai is USD200,000 (fully paid-up) (or equivalent to approximately RM696,OOO) and the total investment is USD280,000 (or equivalent to approximately RM974,400), which is in compliance with the PRC debt to equity ratio requirements. Details of the changes in registered share capital of KE Shanghai since its incorporation date up to the Latest Practicable Date are as follows:­Registered  Total  capital  registered  Date of  contribution  capital  contribution  Consideration  (USD)  (USD)  17July 2002  Capital contribution  34,435  34,435  10 March 2003  Cash  165,565  200,000
(c) Substantial Shareholders KE Shanghai is a wholly-owned subsidiary of Kelington.
(d) Subsidiary and Associated Companies

KE Shanghai is the 100% holding company of one (I) subsidiary, being KTS, further details of which are set out in Section 4.5.4 below. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK
4.5.3 Information on KE Singapore (a) History and business
KE Singapore (Company No.: 2006083382) was incorporated in Singapore as a private limited company under Singapore’s Companies Act Cap. 50 on 8 June 2006. KE Singapore was incorporated under the name of AMPS Electrical Engineering Pte Ltd and assumed its present name on 5 December 2006. Kelington had on 24 November 2006 acquired two (2) ordinary shares of SGDI.OO each from its founding shareholder for the nominal consideration of SGD2. Upon completion of the aforesaid acquisition, KE Singapore became a wholly-owned subsidiary of our Company. KE Singapore is principally involved with the provision of UHP delivery systems related engineering services for our Singapore clients.
(b) Share capital

As at the Latest Practicable Date, the issued and paid-up share capital of KE Singapore is SGD200,000 (or equivalent to approximately RM491,920) comprising 200,000 ordinary shares. Details of the changes in the issued and paid-up share capital of KE Singapore since its incorporation date up to the Latest Practicable Date are as follows:­No. of ordinary  Issue Price  Total issued and paid-up  Date of  shares  per share  share capital  allotment  allotted  (SGD)  Consideration  (SGD)  8 June 2006  2  1.00  Cash  2  23 February  199,998  1.00  Cash  200,000  2009
(c) Substantial Shareholders KE Singapore is a wholly-owned subsidiary of Kelington.

(d) Subsidiary and Associated Companies KE Singapore does not have any subsidiaries or associated companies.

 

4.5.4 Information on KTS (a) History and business KTS (Business License No. 310115001116340) was incorporated as a limited liability company under the laws of the PRC on 18 March 2009 and commenced operations in August 2009. The principal activity of KTS is to engage in trading business, the sale of machinery equipment and its parts and components, pipeline components, cable and electric line, rubber and plastic products, instrument, metal materials, electric tools, hardware and electric material and construction materials as well as import and export of goods and technology (subject to administrative permit where applicable). 41 (b) Registered Capital As at the Latest Practicable Date, the current fully paid registered capital of KTS is RMB I ,000,000 (or equivalent to approximately RM589,700). Details of the changes in the registered capital ofKTS since its incorporation date up to the Latest Practicable Date are as follows:­Registered  Total  capital  registered  Date of  contribution  capital  contribution  Consideration  (RMB)  (RMB)  18 February 2009  Cash  1,000,000  1,000,000
(e) Substantial Shareholders KTS is a wholly-owned subsidiary ofKE Shanghai.

(f) Subsidiary and Associated Companies KTS does not have any subsidiaries or associated companies.

 

4.5.5 Information on KE Taiwan (a) History and business
KE Taiwan (Registration No.:2724l615) was registered as a branch office by our Company on 30 August 2004 under the laws of Taiwan. KE Taiwan commenced its operations on 6 September 2004 with its principal activities being the design and installation of UHP delivery systems and provision of related technical consulting services and represents our Company’s operational entity in Taiwan.
(b) Registered Working Capital

As at the Latest Practicable Date, the registered working capital for operations of KE Taiwan in Taiwan amounts to NTD4,900,000 (or equivalent to approximately RM525,280). THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK PRODUCTS AND SERVICES For illustration purposes only, the following chart gives a brief overview of the main components within a UHP gas / chemical network in a Wafer Foundry. The UHP gas / chemical delivery system’s main purpose is to ensure that the pipeline into the core wafer manufacturing process/environment will not introduce any foreign micro-contaminants, moisture or oxygen which can create serious challenges for the operations and yield of a Wafer Foundry (and/or a FPD Fabrication plant). Gas • Manufactured on site
• Piped through underground pipes
• Gas cylinders from specialty gas manufacturers

Chemicals • Chemicals cylinders from specialty Chemicals manufacturers
• Point-of-use Chemical Generation (POUCG)
• Large Containers

(Note: Deionised Water is generated on site) (Source’ The IMR)
.l.!HP Gai;DeJlvery . ,Sy~tem ‘ .Piping .” .” __ .. ‘, • Gasoabinets ‘ ·.GasparieIS

• FHiers. ….

‘RegUlators: ·Fldw meters’ ‘~Ar1~lysers:: .,’., • ‘Otherconipone~ts:” ” · -.,…”. :.<‘. :.,:.: ‘ …..:. .~. UHP Gas/Chemical Delivery System -Monitoring and Analysing Systems -Environ­ Materials  Toxic Gas  mental  Management  Monitoring  Systems  Systems  Operation
Core Wafer Manufacturing Fab Fab Wall The UHP delivery system also includes monitoring and analysing systems such as environmental systems, materials management systems, toxic gas monitoring operation as well as solid and liquid waste management system to ensure the purity of the gas / chemicals during Foundry operations. All these components are specially designed and constructed from specific materials and connected to each other by using precision welding techniques such as tube, orbital and laser. Through these specialty-welding techniques, the connections are extremely secure such that no foreign micro­contaminants, moisture or oxygen can enter the gas / chemical stream. This is crucial because particles generated through friction, abrasion, and deterioration of an object could contaminate the gas / chemical stream. The list of products and services which our Group offers in the provision of a total UHF gas / chemical delivery system solution are as follows:­(i)  UHP system design;  (ii)  Fabrication and installation;  (iii)  Gas and chemical delivery equipment;  (iv)  QA and QC services;  (v)  Control and instrumentation; and  (vi)  Maintenance and servicing.
Details of the abovementioned products and services are as follows:­(i) UHP system design The needs and requirements of the client must be closely examined in order to provide a foundation for the overall design and purity of the UHP delivery system. This segment can be further segregated into pre-planning and planning stage. The pre-planning stage is meant to assess ihe client’s needs and typical1yincludes procedures such as ground and site analysis, feasibility studies, budget planning, studies on increasing efficiency and cost reduction, delivery system conceptualisation, capacity analysis, single station or multiple-cylinder systems, and also cylinder changeover methods. The planning stage is usually conducted after pre-planning is completed. This stage is more detailed and involves planning out the execution and construction or fabrication stages of the UHP delivery system. (Ii) Fabrication and installation This stage involves the physical construction and fabrication of the UHP delivery system. Typically, at this stage it involves the building and fabrication of the piping and interconnections of the delivery system, as well as the installation of the various equipment to the system such as Gas Cabinets, Gas Panels, filters, Abatement Systems, control system, monitoring system, etc. This is usually done as part of the construction of the Wafer Foundry or manufacturing plant itself. The installation of the piping and interconnection are usually done with specialised stainless steel pipes and fittings welded together with orbital welding techniques to produce superior joints to accord for a low failure rate in the UHP delivery system. All installation and fabrication works done by our Group will be for both the Base Build and the Hook Up packages. (iii) Gas and chemical delivery equipment The UHP delivery system equipment is either manufactured in-house or sourced externally according to design specifications. These include, amongst others, bulk gas purifiers, Gas Bunkers, Central Chemical Store, on-line gas analysis equipment, UHP filters, vacuum pumps, Abatement system, Chillers and Chemical Distribution Boxes. Since 2003, our Group has designed and manufactured an array of UHP-related equipment which includes, amongst others, Gas Panels, VMBs and VMPs which were installed under our Base Build or Hook Up packages. In addition to the above mentioned, our Group also supplies a number of other equipment via third party manufacturers for the UHP delivery system commissioned by our Group. Examples of such third party equipment are as follows:­(iv) QA and QC services Equipment  Purposes  Gas Cabinet VMB VMP Purifier Gas Generator Storage Tank  Supply source of specialty gases. Distribution and pressure control for specialty gases. Distribution and pressure control for non-hazardous gases. Purification of gases to achieve high purity specification. Production of gases e.g. Nitrogen, Oxygen, Argon, and Hydrogen. Storage ofliquefied gases.
Equipment  Purposes  Bulk Chemical Plant Gas Detector and Monitoring System  Distribution and pressure and flow control ofvarious chemicals. Detection of hazardous gases and provides alarm and warning for emergency purposes.
QA and QC services generally encompass tests done on the air quality and the particle size and quantity observed at the end point of use. Our Group conducts such QA and QC services as a matter of procedure for the provision of our own services and products as well as third party certification for other UHP delivery systems. The types ofQA and QC test done are as below: Test Helium leak test Particle count Oxygen and moisture impurity test Pressure decay test Purpose of test Ensures the hazardous gases / chemical contained in a system is leak-free. Ensures the absence of particles exceeding a certain size which will result in contaminations of the finished products. Ensures minimal level of oxygen and moisture or water molecules exists in the system which will otherwise result in contaminations of the finished products. Ensures the piping network installed can withstand certain operating pressures. Our QA and QC programs are complemented with the availability of testing equipment, which allow us to perform tests on installed systems. Such testing are performed by our employees who are accredited to provide such certification services. (v) Control and instrumentation Control and instrumentation is a critical system in any Wafer Fabrication or FPD Fabrication plant. It is responsible for the constant monitoring and control functions to regulate the plant’s UHP Utilities requirements. Due to the use of substantial amounts of hazardous materials in a typical Wafer Fabrication plant, a good control and instrumentation system is essential for the detection and shutting off of potential leakages, and to alarm the plant workers to evacuate the plant in the event of leakages. With our hazardous gas / chemical monitoring and control system, which is a combination of our in-house developed software, SCADA system, and third (3rd) party gas or chemical detectors hardware, we are able to customise to the end-users’ specific control and instrumentation requirements. Our SCADA system is able to cater to the complex nature of a UHP distribution network within a Wafer Fabrication or FPD Fabrication plant, which in many cases involve the connections of up to hundreds of process tools, with the delivery to each process tool having a specific set of control requirements. (vi) Maintenance and servicing Due to the importance of UHP delivery systems to the manufacturing process of a Foundry or high technology manufacturing plant, a UHP delivery system has to be always be kept in proper condition to ensure that the manufacturing processes are able to consistently achieve high levels of quality and output. 45 Furthermore, equipment suppliers will be required to provide maintenance service, which can be done via a maintenance contract or ad-hoc service calls by the customers. A typical maintenance service contract would include post-equipment supply servicing under the warranty period of between one (I) to two (2) years and post-warranty maintenance on a yearly contract. Maintenance and servicing under our purview are mainly for equipment such as Gas Cabinet, VMB / VMP, and Abatement System which we supply under the gas delivery system as well as chemical dispensing unit and chemical manifold box under the chemical delivery system. The typical maintenance works for gas and chemical delivery system equipment are as follows:­• Replacement of faulty gas or chemical delivery system components including but not limited to pressure regulators, flow sensors, vacuum generators, filters etc;
• Modification or conversion of applicable equipment for the utilisation of another type of gas or chemical;
• Installation of additional distribution points in a gas or chemical delivery system via the addition of “sticks” in the delivery system; and
• Programmable logic controller program medication to increase or vary the control functions or troubleshooting.

 

4.7 BUSINESS ACTIVITY REVENUE Through the various products and services (as described under Section 4.6 above) provided by our Group, we have generated revenue amounting to approximately RM60.06 million for the FYE 31 December 2008 and approximately RM12.72 million for the four (4) months FPE 30 April 2009. We derive a substantial portion of our revenue through the design, fabrication and installation of UHP delivery systems. This aspect of our services is known as Base Build and Hook Up. We also derive revenue from the sale of our own equipment such as VMB / VMP / Gas Panels, QA and QC as well as from the sale of third party materials and equipment for our projects. There are other forms of revenue as well which are derived from the testing, installation and commissioning of UHP delivery systems. Our revenue segregated by the various categories of services for the audited FYE 31 December 2008 and the audited four (4) months FPE 30 April 2009 are set out below:­Revenue categories (Audited)  FYE 31 December 2008 (RM’OOO)  0/0  4 months FPE 30 April 2009 (RM’OOO)  %  Base Build HookUp Others  49,026 7,923 3,109  81.6 13.2 5.2  7,079 1,961 3,684  55.6 15.4 29.0  Total  60,058  100.0%  12,724  100.0%
The revenue model for our products and services are as follows:­(a) Base Build
Base Build activities involve the building of the UHP delivery system itself which would include the construction or fabrication of the piping and interconnects of the UHP delivery system. This is usually done as part of the construction of a Semiconductor or FPD Foundry, or high technology manufacturing plant. The Base Build represents the “back-bone” of the entire UHP delivery system, which connects the gas and chemical source to be distributed throughout the Foundry or manufacturing plant. Under this service, the process to complete the Base Build would require, as part of the overall process, the design of the UHP delivery system, the actual construction and fabrication, procurement of the necessary equipment needed, installation and finally the qualification and validation of the entire Base Build system.
(b) Hook Up and Maintenance

Complementing the Base Build, a Hook Up package conslstmg of installation works is considered the “last mile” delivery system from the Base Build to the primary and process tools or equipment that actually utilise the UHP gases or chemicals to fabricate Wafers and FPD, etc. The provision of the Hook Up service is very similar to that of the Base Build system wherein the work process would also include, as part of the overall process, the design aspect of the Hook Up (which would include taking into account integration issues with the Base Build system, the entire Foundry infrastructures and the other systems as well as the requirements of the primary and process tools which will ultimately use the UHP gases or chemicals). Once the design phase is completed, the actual construction and fabrication will commence with the procurement of the necessary equipment, installation and finally the qualification and validation of the entire Hook Up system. Unlike a Base Build system which represents the backbone of the UHP delivery system, for a Foundry or a high technology manufacturing plant, there can be many Hook Up systems depending on the requirements of the manufacturing process. For instance, in relation to a Semiconductor Foundry, after the completion of the initial Base Build, there may be typically up to three (3) to four (4) phases of Hook Up systems over a period of twelve (12) to twenty four (24) months, installed on the same Base Build to channel the UHP gases or chemicals to the individual primary and process tools for fabrication. Together with the provision of Hook Up systems, we also provide maintenance services for UHP delivery services. Due to the importance of a UHP delivery system to a Foundry or manufacturing plant, a UHP delivery system has to be always kept in the proper condition to ensure that the manufacturing process is able to achieve high levels of quality and output. Furthermore, equipment suppliers will be required to provide maintenance service, which is done via maintenance contracts or ad-hoc service calls by the customers. A typical maintenance service contract would include the provision of technical support service on site as well as regular status reports. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (c) Others Others comprise mainly trading of materials for the purpose of our projects and other ancillary testing, installation and commissioning works for clients. The bulk of this segment is derived from the trading of materials such as pipes, fittings and consumables, which are used for fabrication and installation works under our projects. These materials are normally traded at a slight margin. In addition to the abovementioned products and services, we also possess the capabilities to provide the following products and services, which we have historically recognised revenue from such business activities but not in the FYE 31 December 2008 and the four (4) months FPE 30 April 2009 due to the resources constraint and the nature of orders from customers. Notwithstanding that, going forward, we intend to maintain the following products and services as our core business activities due to their complementary nature. (a) QA and QC In addition to internal QA and QC which form part of our Base Build and Hook Up service packages, our Group also has the ability to conduct 3’d party QA and QC certification on installed UHP gas or chemical delivery systems for the purpose of specification qualification and commissioning. Our QA and QC programs are complemented with the availability of testing equipment, which allows us to perform tests on the installed systems and such testing are performed by our employees who are accredited to provide such certification services. Under this, tests will be done to determine air quality as well as determining the particle size and quantity at end point of use. As mentioned above, employees who are the Certified Welding Inspector (“CWI”) provided by the American Welding Society (“AWS”) will undertake such QA or QC programs. The AWS is an internationally acclaimed certification program aimed at identifying qualified welding personnel. In addition to our QA and QC programs being undertaken by CWIs, our QC and QA programs cannot be done without testing equipment such as Helium leak mass spectrometer, hydrocarbon analyser, particle counter, moisture analyser, etc., that are used together to determine the purity levels of a UHP delivery system and to confirm whether the system meets the specifications and requirements for which it was designed for. The main reason that such qualification and validation is done is to ensure high levels of productivity, yield and overall quality of the UHP delivery system as well as to identify any design faults / flaws or installation errors before commissioning. The safety of the UHP delivery system is one of the paramount concerns when conducting qualification and validation. Our ability to independently conduct QA and QC certification has enhanced our Group’s reputation as a high quality UHP delivery systems provider. (b) Equipment Under this segment, the revenue recognised is derived from the sale of equipment such as Gas Panels, VMB and VMP manufactured by us. Chemical  Dlstt1bt1tloo  Hook Up  Boxes  Valve M311lfoh:l  1,,-.I.–lrt~tI­ BoxE’s (YMB}  ~~~~~l!t!llJ!bd=l~~t=:2~r:::lntegr81ed  Cl1llle  Control SYlltem  “”” .,ild {

In a typical Wafer Foundry, equipment required for a UHP delivery system would include items such as Gas Cabinets, VMBs, VMPs, purifiers, Nitrogen generator, Gas Bunkers, Central Chemical Store, on-line analysis equipment, filters, vacuum pumps, Abatement systems, Chillers, and Chemical Distribution Boxes. Some of these equipment would also be required in large quantities (in the hundreds) in order to fully integrate a complete UHP delivery system. The actual contract sum is however dependent on the extent to which such equipment are purchased from the various suppliers. For the supply of equipment from external sources, such supply is done as part of our Base Build and Hook Up packages. An example of the utilisation of equipment as described above within a typical Wafer Foundry are set out in the following diagram:­Special Bulk Gas GaSG5 Yard (Source. The Management) THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK Bulk GBS Continuous Chemical Gas I>urlflcts Quality Ol~pensing Cabinet Analysis Moduln

4.8 LOCAL AND EXPORT REVENUE Our Group has operations in the following locations:­(a) Malaysia The Malaysian UHP delivery system industry is highly correlated to the condition of its dependent industries, especially the Wafer Foundries and the FPD industry. However, in Malaysia, planned investments for Wafer Foundries and FPD Fabs are relatively smaller as compared to that of the PRC and Taiwan. The investment amounts are also not constant and experience fluctuations between years. (Source: The IMR) The growth of the UHP delivery system industry in Malaysia historically is largely based on the construction and upgrading of Wafer Fabrication plants. We were the pioneer in the country to participate in the construction of the power logic fabrication plant for Infineon Technologies AG (“Infineon”) in Kulim, Kedah. The Infineon project cost a total of approximately RM4.3 billion, of which approximately RM64.8 million was allocated to the construction of UHP gas / chemical delivery system (Source: The IMR), out of which we were able to secure approximately RM20 million. Going forward, the UHP gas/chemical industry is expected to be led by the solar cell manufacturing industry along with other non Wafer Fabrication for the next couple of years. (Source: The IMR) For the FYE 31 December 2008 and the four (4) months FPE 30 April 2009, the Malaysian market contributed approximately 37.4% and 57.3%, respectively to our Group’s total revenue. (b) Taiwan The revenue contribution from the Taiwan market is largely attributed to our involvements in various key Wafer Fabrication projects in recent time, including Wafer Fabrication project, TFT-LCD plants and solar cell plants. Our Group expects that, going forward, Taiwan will continue to be an exciting geographic location for the provision of UHP delivery services since Taiwan is home to the largest Wafer Foundries in the world, being TSMC and UMC, and is also a pioneering nation in terms of TFT-LCD technology development. Through our presence in Taiwan, we believe that we are strategically positioned to ride on the same technology wave with the well acknowledged Semiconductor and FPD players and thus being able to transfer the knowledge and expertise gained to our domestic operations. For the FYE 31 December 2008 and the four (4) months FPE 30 April 2009, the Taiwan market contributed approximately 27.6% and 20.4%, respectively to our Group’s total revenue. (c) The PRC For the FYE 31 December 2008 and four (4) months FPE 30 April 2009, the revenue contribution from our PRC market amounted to approximately 33.8% and 20.9%, respectively to our Group’s total revenue, attributed mainly to Wafer Foundry Base Build projects. Similar to Taiwan, our Group expects that, going forward, the PRC would be our key growth engines due to its strong economic growth and the government’s promotion of investment in high technology industries, which is expected to drive demand for UHP delivery systems. (d) Singapore
In December 2008, KE Singapore commenced its operations where it secured its first project in Singapore to design and build a chemical slurry delivery system for Renewable Energy Corporation, an international integrated solar cell company. Since the project has not started to contribute until after the four (4) months FPE 30 April 2009, KE Singapore did not contribute to our Group’s revenue for the FYE 31 December 2008 and the four (4) months FPE 30 April 2009.
(e) Others

Our Group has on several occasions secured and successfully completed projects in Indonesia. As such, our Group is not restricted to only operating in our principal markets as mentioned above, we often evaluate and keep track of the other potential Asian markets as mentioned above where in the future, we may venture into in order to grow our Group’s footprint in the regIOn.
4.9 TYPES, SOURCES AND AVAILABILITY OF RAW MATERIALS The main raw materials purchased by our Group are steel piping and fittings which generally account for approximately 25% of a typical project cost. In addition to steel piping and fittings, other significant raw materials which are commonly utilised include thennal plastic piping, storage tanks and other components such as valves, regulators and flow meters. However, aside from purchasing from our suppliers, we also procure such raw materials through our sub-contractors which provide the raw materials as part of their labour and welding services. In such cases, we are unable to quantify the cost of such raw materials as it is generally included as part of the entire cost package offered by the sub­contractors. These raw materials are sourced locally and/or imported depending on the locations of the projects. We import certain desired grades of raw materials which are not available in the local market to meet certain project specifications. However, despite the cyclical nature of the steel industry whereby, steel prices are influenced by numerous factors, many of which are beyond the control of our Group, as explained in Section 3.2(g) of this Prospectus, we have not faced any disruptions in the supply of raw materials. Traditionally we have been able to factor in the cost of our main raw materials such as steel piping and fittings, into our project bidding, as the quantity and specification of the steel piping and fittings required are usually detennined upfront after the UHP delivery system design is finalised. Furthennore, as our projects generally span between three (3) to six (6) months, fluctuation in steel prices is not expected to have a significant impact on our project costing. Furthennore, we are able to switch suppliers for such raw materials easily as we maintain close relationships with several suppliers both local and overseas. The supply of steel piping and fittings are also easily available in the local and overseas market. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK
4.10 KELINGTON’S COMPETITIVE ADVANTAGE Our Group, like other dedicated UHP delivery system specialists, are unique and different from other general engineering companies due to the following factors:­(i) Our Group has a unique competency that sets us apart from other general engineering companies due to our ability to maximise our capabilities in the convergence of gas I chemical properties and fluid dynamics simulation knowledge with that of high-level engineering technical knowledge. With our senior engineering personnel’s expertise and simulation technology, we have developed over the years strong design and simulation knowledge. which places us in a unique position among our peers. On a standalone basis, gas I chemical companies have strong competencies in gas system and UHP solutions knowledge whereas general engineering companies have strong project construction management but lack gas I chemical system knowledge. Our Group has the ability to bridge this gap as a one-stop UHP delivery system solutions provider enabling us to understand and implement total UHP delivery system solutions. (ii) Our Group has the intellectual knowledge, technological capabilities and the skilled workforce as well as the relationship to undertake turnkey main contractor functions, involving the entire suite of services from design, construction/fabrication, installation and commissioning of a UHP gas or chemical delivery system project. We have also demonstrated our ability to complete almost the entire value chain of a UHP delivery system project. (iii) The medium used in a UHP delivery system is mainly hazardous gases and chemicals which are either flammable, toxic, corrosive or asphyxia. As such, customers demand system providers with sound track records to execute any fabrication and installation of UHP systems. In addition to that, customers also expect high quality control standards in testing and certification. Our Group has developed stringent in-house standard operating procedures to execute projects to meet customer quality expectations, coupled with the CWI certification of two of our Key Management Employees by the AWS. We pride ourselves in providing high quality products and services with an impeccable safety record. Since our incorporation we have a proven track record in the implementation and completion of UHP delivery system projects not only in Malaysia but also in the PRC and Taiwan. (iv) Our existing clientele base and on-going working relationship with major Wafer Fabrication giants also reflect our customers’ confidence in us. We have successfully established a strong reputation in the PRC, Taiwanese and Malaysian marketplace for our products and services. This is evident in our Group’s previous and continuing role in providing UHP delivery system solutions to internationally recognised Wafer Fabrication and/or FPD Fabrication players such as Infineon, TSMC, HannStar Display Corporation (“Hannstar”), Winbond Electronics Corporation (“Winbond”) and ProMOS Technologies Inc. (Chongqing), amongst others. Furthermore, our ability to secure repeated contracts, either as a direct contractor or subcontractors to perform works for these corporations is also a testament of the quality of our products and services.
(v) Our products and services complement gas and/or chemical companies rather than compete with them as compared to normal engineering companies. For dedicated UHP delivery system specialists like us, our products and services are complementary to gas or chemical companies since they would prefer to focus on their core business on the supply of gas and/or chemicals while being able to outsource projects to UHP delivery system specialists like us who have the capabilities to complement the entire UHP delivery system and supply project for a Foundry or a high-technology manufacturing plant. This complementary relationship serves to assist us in developing a close relationship with such gas and/or chemical companies and simultaneously being able to leverage on their outsourcing trend.
(vi) We have and continue to actively pursue R&D initiatives through collaboration with customers, suppliers and/or consultants with the prime objectives:­
(a) To improve UHP levels of Base Build and Hook Up from our existing products and services in order to prepare ourselves for the next level of technological advancement;
(b) To build up our own internal capabilities especially in the areas of design simulation and enhancements in quality assurance protocols with the view of improving the efficiency of our work process; and
(c) Introduction ofnew products and services.

 

THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK Further details in relation to our business and product development initiatives are set out in Section 4.16, 4.17 and 7 of this Prospectus.
4.11 TECHNOLOGY We utilise the following key technologies as part of our overall business operations:­4.11.1 Orbital welding Orbital welding is a specialised welding technique known for its high precision and reliability as compared to conventional manual welding methods. Orbital welding was first used in the 1960’s when the aerospace industry recognised the need for a superior joining technique for aerospace hydraulic lines. A mechanism was developed in which the arc from a tungsten electrode was rotated around the tubing weld joint. The arc welding current is regulated with a control system thus automating the entire process. Our orbital welding system comprises a control computer whereby welding parameters for different applications are stored in memory and can be caUed up when needed for a specific application. Coupled with the use of tools such as Maglite torch and Mitutoyo dial gauge, our welders are able to produce large number of identical welds with very little room for errors or defects, which is paramount in the UHP delivery system industry.
4.11.2 Simulation technology (K-Flow Vision) K-Flow Vision is our simulation software jointly developed with an Irish software company, based on the discipline of fluid dynamics. As part of the pre-planning stage and the planning stage, we use K-Flow Vision to carry out process simulation to determine pipe sizing, network routing, material selection, layout design, etc. for our UHP gas delivery systems. With this software, we are able to carry out modelling and simulation to predict flow patterns to optimise design, sizing, routing and space management. K-Flow Vision is equipped with a large database of gas properties used commonly by the Wafer Foundries and TFT-LCD manufacturers. As part of our product development plan as stated in Section 4.17.2 of this Prospectus, the database shall be continuously updated to expand the software’s capabilities, efficiency and accuracy for real-time network simulation taking into account the studies of material and fluid dynamics properties as well as new technology, fabrication and installation developments. The use of this software has significantly improved our design time, precision and allows us to be more flexible in our design of UHP delivery systems as compared to conventional design tools since all process simulations are conducted on the computer and enhances our ability to analyse the inter-dependency (if any) of the UHP system being designed. The simulation software has provided potential customers with the ability to “visualise” the workings and impact of gas utilities delivery as well as the ability to simulate a variety of results based on different circumstances. This improvement has enhanced our ability to efficiently complete our design phase and marketability leading to shorter lead-time from design to fabrication to installation. This convergence of our gas knowledge and on-line modelling knowledge through K-Flow Vision together with our engineering capabilities is an important differentiating factor of our Company from other general engineering companies. 4.11.3 UHP certification and commissioning technologies We have adopted the following technologies as part of our overall certification and commissioning capabilities to ensure that our products and services meet the required QA and QC standards specified and required by our customers:­(i) Helium leak detection
• to ensure the hazardous gases I chemicals contained in a system is leak-free.
(ii) Particle count

• to ensure the absence of particles exceeding a certain size which will result in contaminations of the finished products. (iii) Trace oxygen analysis • to ensure minimal level of oxygen molecules exists in the UHP delivery system which will otherwise result in contaminations of the finished products. (iv) Trace moisture analysis • to ensure minimal level of water molecules exists in the UHP delivery system which will otherwise result in contaminations of the finished products. 4.11.4 Gas and chemical purification and abatement technologies The use of gas and chemical purification and abatement technologies is critical to ensure that the gases and chemicals fed into the UHP delivery system are of the specified purity level while the waste gases and chemicals produced as a result are treated accordingly prior to disposal. There are generally 3 types of purification processes: (I) Catalytical Oxidation, (2) Physical Adsorption and (3) Chemical Adsorption. The actual process used is dependent on the nature of the impurities to be removed. The materials used in the purifiers are also critical, and can generally be categorised into: (I) Getter material, (2) Catalyst material and (3) Zeolite materials. These materials are developed using state-of-the-art technologies such as Resin, Reactive Micro Matrix (RMM) and Getter Stabilised Zeolite (GSZ) technologies. 4.11.5 Metallurgical knowledge Our team of engineers are well equipped with metallurgy knowledge which essentially ensures that our Group is constantly at the forefront in terms of advancement in metallurgical technologies and their applications in UHP delivery systems. Our engineers are able to test and inspect the properties of metal so as to develop the ideal metal for use in UHP delivery systems applications. Our knowledge of scientific methods allows us to run chemical tests on the materials through the use of electron microscope and/or magnetic instruments. Furthermore, we also compile data for corrosion and stress analyses to determine how a sample metal behaves under varying external environments. Such properties are then factored into the design and construction of a UHP delivery system to ensure the materials used are safe, effective and cost-efficient. 4.11.6 Clean room I booth I environment technology A clean room I booth I environment is a work area with controlled temperature and humidity to protect sensitive equipment from contamination. Our clean rooms are generally used for the fabrication works of UHP gas or chemical delivery systems. A clean room is generally constructed with plastic walls and ceilings, external lighting, and is fed with a continuous influx of clean, dust-free air. 4.12 QUALITY ASSURANCE AND CONTROL PROCEDURES We have always emphasised on the quality and safety aspect providing our products and services. As such, we have documented and codified our standard operating procedures (“SOPs”), which cover a wide range of activities crucial to the safe and efficient discharge of our operational personnel’s duties and responsibilities. The areas covered by the SOPs include the followings:­(i) UHP and clean room protocols
The UHP and clean room protocols require the strict observance of certain procedures, such as the refrainment from certain activities and always dressed in proper attire to avoid contamination of the clean room to ensure the UHP requirements are not compromised.
(ii) Vendor selection procedures

The selection of the appropriate subcontractors or vendors is crucial to ensure that our Group’s deliverables are not compromised by poor workmanship and/or supplies by the contractors or vendors. A systematic selection procedure is observed at all times which include evaluation of the subcontractors’ or vendors’ profiles, quality and safety records, as well as their financial history. (iii) Training modules The training modules cater for our technicians and contractors and cover the relevant format, methodology and objectives to be achieved for the training courses. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (iv) Incoming QA and QC
QA and QC is imperative in our operations so as to maintain our impeccable safety record. Incoming material QC is the first step in QA and QC by ensuring the incoming raw materials meet the relevant quality requirements. The SOP for incoming QC sets out the detailed procedures for inspection, acceptance and rejection criteria as well as data record.
(v) Welder certification
The welding certification procedures are designed to qualify the personnel to be engaged for orbital welding. A stringent set of requirements including equipment set up and monitoring, weld quality in terms of the acceptable weld for the tube range shall be met before a welder is qualified.
(vi) Welding procedure and evaluation

The SOP for welding procedure and evaluation covers the entire UHP orbital welding procedure and is aimed at achieving consistency in the welds. As orbital welding is a highly sophisticated process, the control of certain variables, both programmable and non­programmable, must be performed in strict adherence to the weld schedule development. (vii) UHP field installation procedure The UHP field installation procedure covers the entire spectrum of the installation of UHP Utilities delivery systems on-site. As the first step the SOP specifies the procedure on the preparation and handling of the raw materials. This is followed by field installation procedures which include a general work procedure for pre-fabrication works, workshop requirements, etc. (viii) QA and QC certification Prior to commencing a leak integrity and analytical certification, the system shall be inspected to ensure the welding quality is as per design specification. The QA and QC certification procedure (as described in Section 4.11.3 of this Prospectus) sets out the systematic approach to performing the QA and QC procedures so as to ensure consistency in high quality deliverables. (ix) Document control Document control procedure essentially sets out the documentation and filing procedures for both on-going and completed jobs, so as to ensure proper records are kept and accountabilities for works performed are traceable at all times. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK 4.13 MARKETING Our Group has adopted a structured and forward-thinking marketing strategy to further reinforce our objectives to be one of the top UHP delivery system solutions providers in the region. The following sets the approach of our marketing strategy to achieve our objective:­4.13.1 Customer retention We view customer retention as an important aspect of our marketing strategy as a significant proportion of our revenue is recurrent due to Base Build expansion and subsequent Hook-Up works from the previous completed projects. As such, aside from our on-going commitment to provide quality and reliable services to our customers, we also constantly keep in touch with such recurrent customers to inform them of technical updates and our product and service offerings so as to retain their continuous support. Specifically, we have adopted a key customer program whereby a list of our key customers is identified and updated continually. As part of our relationship management with the said key customers, our marketing personnel will regularly conduct marketing activities such as products and services presentation including, free consultancy on design and safety issues. Our R&D staffs are also constantly involved in fostering and maintaining business relationships with existing customers by working closely with customers in resolving technical issues and providing valuable technical input to enhance product quality. Furthermore, our Key Management Employees are extensively involved on a day-to-day basis in marketing initiatives with existing customers to foster and maintain business relationships, especially the PRC and Taiwanese customers who place great value on working relationship built on interpersonal trust. 4.13.2 Strategic location We are currently located in four (4) strategic locations as detailed under Section 4.8 of this Prospectus, of significance are Taiwan and the PRC which are considered the major growth areas for the Semiconductor or FPD manufacturing industry. Within this four (4) strategic locations, our Group’s business interest there are also very well represented either in the form of a wholly-owned corporate entity incorporated in the said country or a registered branch office of our Company. 4.13.3 After-sales services and maintenance We place great emphasis on delivering high customer satisfaction as this would lead to customer retention, which is evident in our numerous recurring customers. We are committed to providing extensive after-sales services and maintenance for our products and services for a period of approximately one (I) year after the project’s completion, and warrant that our products and services are defect-free and above all, safe and meet all the stringent requirements. We believe that this inspires confidence on our own products and services thus giving additional confidence to existing or even potential customers. 4.13.4 Promotional activities (Website) Our web-site is constantly updated to present accurate infonnation on our company, products and services. We use our website as our front to project our corporate philosophy and good corporate social responsibility. This will effectively serve as one of the channels to instil public confidence in our Company at the point of admission to the ACE Market. 4.13.5 Project references We recognise the marketing value created through association with reputable customers, and would like to obtain more project references through such customers as a result. Project references will only be made when customers are completely satisfied with our products and services, and hence our commitment to place our customers’ satisfaction as a top priority for our deliverables is of utmost importance. To this end, we would also like to leverage on our association with BOCLH to encourage other gas companies such as the Air Liquide Group, Air Products and Praxair, Inc to adopt similar outsourcing model for UHP project management which we had successfully executed together with BOCLH. Our existing clientele base and on-going working relationships with major Wafer Fabrication global giants also reflect our customers’ confidence in our Company. We have successfully established a strong reputation in the PRC, Taiwanese and Malaysian marketplace for our products and services, as evident in our previous and continuing roles in providing UHP delivery system solutions to internationally recognised Wafer Fabrication and/or FPD Fabrication players such as Infineon, TSMC, HannStar and Winbond. Incidentally, TSMC and Winbond are also our indirect minority shareholders via Sky Walker. 4.14 CYCLICAL NATURE OF THE BUSINESS The cyclicality and seasonality of the Semiconductor industry can result in volatility of our operating results. The Semiconductor industry is characterised as one that is highly cyclical and heavily dependent on the servicing industries, particularly the electrical and electronics (E&E) industry. The demand for Semiconductor products is constantly subject to booms and busts and typically tracks the end-market demand for personal computers, cellular phones and other electronic equipment. Notwithstanding the budget constraints faced by Semiconductor manufacturers during downturns, in order to keep up with the ever-decreasing line width technology in Semiconductors, the upgrades of the existing Semiconductor Foundries, including the UHP delivery systems are still necessary, albeit not as frequent as during periods of market expansion. (Source.’ The /MR) As the demand for UHP delivery system is driven largely by the capital expenditures of Semiconductor manufacturers in Foundries, the UHP delivery system industry is therefore subject to the cyclical nature of the Semiconductor industry, as well as the ever increasing need to keep up with the rapid technological developments of Semiconductor manufacturing, which will always indirectly support demand for UHP delivery systems. Furthennore, as the Semiconductor product life cycle gradually shortens, such reinvestments on capital expenditures are made more frequent over shorter life cycles. With the increasing application of UHP delivery systems in other industries such as LED, pharmaceuticals and bio-science, etc., the volatility of our operating results is expected to reduce going forward in-line with the Semiconductor’s shortening product life cycle, constant reinvestment and the increasing application ofUHP delivery systems to other industries. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK 4.15 BRAND NAME, PATENTS, TRADE MARKS, LICENCES, TECHNICAL ASSISTANCE AGREEMENTS, FRANCHISES AND OTHER INTELLECTUAL PROPERTY RIGHTS As at the Latest Practicable Date, our Company has registered the following trade mark applications with the Malaysian Intellectual Property Office (MyIPO):­Trademark @~i
@~i
Application No.1 (Class)
06017507/ (37) 06017509/ (42) Description Installation, servicing, repair and maintenance of piping system, gas system and gas detection system, UHP system, and chemical systems; project management services related to the foregoing Engineering design services; project management, design; engineering project management services; advisory services relating to the design of engineering products; mechanical and electrical engineering design services; design and consultancy services relating to piping system, gas and gas detection systems, UHP systems, and chemical systems; quality audits; quality control; quality control testing; quality testing; quality assurance consultancy; computer software design and development; computer system design and development Registration  Expiry  Date  Date  26/09/2006  26/09/2016  26/09/2006  26/09/2016
Further to the above, as at the Latest Practicable Date, our Company has also copyrights over our foHowing literary works:­Copyright Material  Evidence of ownership  Date of Signing  UHP Safety Management Protocol Safety & Health Handbook  Statutory Declaration signed by Gan Hung Keng for and on behalf of Kelington Statutory Declaration signed by Gan Hung Keng for and on behalf of Kelington  27/03/2007 27/03/2007
THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK 4.16 RESEARCH AND DEVELOPMENT 4.16.1 R&D Policies Our R&D policies are based on our Group’s aspirations and anticipated developments within the industry in three (3) year periods. At this juncture, our Group’s R&D policies and timing is expected to end in 2011 before we introduce new R&D policies for the next three (3) years after that. Going forward, we have identified the thrust of our growth to come largely from the PRC, Taiwan and Singapore markets, hence our existing R&D activities shall be tailored largely to the needs of these three (3) markets. In order to achieve our R&D objectives, we have also set out the structural improvements for the next three (3) years to facilitate our Group’s R&D efforts. The structural improvements include development of the R&D staff force, as well as leveraging on teclmology advancements to boost our R&D capabilities. Through our R&D efforts, we aim to realise the following benefits:­(i) to enhance our Base Build / Hook Up and in-house capabilities to keep up with teclmological advancements;
(ii) to sustain and grow the business;
(ii) to increase revenue and profitability;

(iii) to create competitive advantages; and (iv) to increase our customer satisfaction. We are a business entity that is responsible to our shareholders for sustainable profits and at the same time pride ourselves in the area of corporate social responsibility. As such, our R&D policies are practicable in approach and incorporates the following:­(i) Continue to be one of the key players in the UHP delivery system industry and at the same time widen our service offerings in the entire UHP value chain so as to differentiate ourselves as the UHP specialist of choice in the industry;
(ii) Strive to be proactive in identifying and engineering better and more innovative solutions for our customers so as to ensure our relevance in the market;

(iii) Focus on developing new values and strategic products and services that complement and add value to the current products and services; and (iv) Remain 100% focus on safety at all times to sustain our impeccable accident record. 4.16.2 Facilities And Equipment Currently our R&D works are conducted at our cleanroom located at our headquarters in Shah Alam and BOCLH’s cleanroom located at Taichung, Taiwan. Our cleanroom at Shah Alam has an area of 49m2 and a Class 100 rating, and is used mainly for R&D fieldworks, whereas BOCLH’s cleanroom has a size of 60m2 and a Class 100 rating, and is used mainly for collaborative R&D fieldworks with BOCLH in Taiwan. In addition to the cleanrooms, we have two (2) sets of analytical equipment, of which one (l) set is catered exclusively for R&D purposes. 4.16.3 Human Resource Allocation Since the second (2nd) quarter of 2007, a dedicated Teclmology Development Division led by Gan Hung Keng has been tasked with the key roles and responsibilities for our product development plans. The division consists of a Section Head and an R&D Engineer, and is supported by an internal project engineering team. 4.17 PRODUCT DEVELOPMENT PLAN Our overall R&D plan is centred on the four (4) aspects as stated below:­(i) Improving existing Base Build and Hook Up capabilities;
(ii) Improving in-house capabilities;

(iii) Gas sub-assembly in process tools; and (iv) Equipment. The key objective of our R&D plan is to improve the quality, efficiency and cost of our current products and services as well as our in-house capabilities. We also aim to introduce and develop new products and services that complement our current core products and services. This will eventually position us as a total solutions provider with in-house manufacturing capabilities for UHP delivery systems. 4.17.1 Improving existing Base Build and Hook Up capabilities As part of our R&D plan for Base Build and Hook Up, we would like to increase our UHP capability from the existing impurities traces in parts per billion (ppb) to that of parts per trillion (ppt). Furthermore, we would also like to improve our products and services to meet the latest technology requirements in the areas of Wafer Fabrication and FPD as well as miniaturisation (via nanotechnology). We believe that this area of R&D is of paramount importance to us as the results of such development will enable us to keep pace with the ever increasing UHP requirements as technology evolves. The R&D for Base Build and Hook Up, which represent the key revenue generators for our Group, comprises mainly of continuous enhancements over the next three (3) years in line with our R&D policies. Such continuous enhancements shall take the form of incremental improvements to our design, fabrication and installation of UHP delivery systems. With the R&D in place, we expect to be adequately equipped with the capabilities to meet the technological requirements of future generations of Wafer Fabrication and FPD Fabrication such as 300mm Wafer Fabrication plant and the 8th generation FPD plant, as well as more advanced nanotechnology applications going forward. 4.17.2 Improving in-house capabilities The improvement in our in-house capabilities is structured towards the enhancement of our software utilised to improve efficiency and reduce lead-time from design stage to fabrication stage. We are also looking into introducing a new QA technology to improve the traceability and accountability of our UHP delivery systems. The R&D for our software with the view of improving our in-house capabilities is segregated into the followings:­(i) e-QAM; and
(ii) K-Flow Vision

THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (i) e-QAM e-QAM (or Electronics-based Quality Assurance Management) is a concept developed and pioneered by our Group to improve the efficiency and traceability of the QA process during the installation of an UHP delivery system. It is used to provide detailed information on the construction of the UHP Utilities delivery system, which includes, amongst others, piping blueprints, details of welders, method of welding used and number of welding points performed. Traditionally such information are typically recorded manually and kept in hardcopy format. e-QAM is pioneered and developed by ourselves mainly for our own internal QA works, with the aim of achieving consistent quality for our deliverables. The software is expected to improve the conventional ways of QA work processes within our industry to that of a systematic process via electronic means so as to achieve more accurate findings, thus directly improving the quality of our products and services. We expect the first phase of the e-QAM to be developed for testing within twelve (12) months from the Listing. (ii) K-Flow Vision Together with an Irish software company, we had jointly developed the K-Flow Vision modelling and simulation software whereby we are able to carry our modelling and simulation during the design phase of Base Build and Hook Up for UHP gas delivery systems. The use of this software has tremendously improved our Group’s ability to efficiently complete our design phase and marketability leading to shorter lead-time from design to fabrication to installation. The R&D plans for K-Flow Vision include general enhancement of the software through continuously updating its database to expand software’s capabilities, efficiency and accuracy for real-time network simulation taking into account the studies of material and fluid dynamics properties as well as new technology, fabrication and installation developments. This R&D effort is done on a continuous basis with an intention of extending the software’s capabilities to include UHP chemicals by the first (I”) quarter of201O. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK 4.17.3 Gas sub-assembly in process tools The overall UHP gas delivery system in a Foundry is typically made up of the gas delivery system from the gas sources to the VMB and/or VMP and subsequently to the process tools via the Base Build and the Hook Up. Within the primary and the process tools themselves, there are separate individual UHP gas delivery systems and networks (on a much smaller scale) which deliver the UHP Utilities to the final point of use. The network of delivery system within these primary and process tools is known as gas sub-assembly. Some examples of process tools include Etching tools, Diffusion tools and ion implantation tools. The following diagram is an illustration of the Base Build, Hook Up and the gas sub-assembly in process tools:­
VMB Base Build Specialty gas (Source: The Management) As we are currently involved in the delivery of gases to the point of process tools themselves but have not been involved in the UHP gas delivery system within the gas sub-assembly. It is our intention to build on our capabilities in gas sub-assembly for such primary and process tools. We are currently at the stage of prototype design for gas sub-assembly and expect to be able to providethefullrange ofgassub-assembly bythesecond(2nd) quarterof2011. 4.17.4 Equipment The R&D for our equipment is segregated into the followings:­(i) Gas Cabinet;
(ii) Chemical dispensing unit and chemical manifold box;

(iii) Precision parts; and (iv) VMB / VMP / Gas Panels.
(i) Gas Cabinet

As part of our R&D plan, we would also like to develop our in-house Gas Cabinet with smalJer footprints and enhanced space, power and efficiency management as compared to available mainstream Gas Cabinets. Due to the highly hazardous nature of these equipments, extensive analysis of the feedbacks and comments gathered during the user-testing phase is required so as to incOIporate the necessary enhancements to the prototypes prior to the product rolJ­out. The prototype for Gas Cabinet is now ready and is currently under in-house testing by the Technology Development Division in colJaboration with customers’ representatives. The prototype wilJ be improved further after colJation of alJ feedbacks from the customers and we expect to commence field-testing by 4th quarter of2009. (ii) Chemical dispensing unit and chemical manifold box We have also ventured into the development of chemical equipment by developing our own in-house chemical dispensing unit and chemical manifold box to complement our existing UHP chemical delivery expertise. We have successfulJy built our first bulk chemical plant for Seagate Skudai, which is a customized UHP chemical delivery system folJowing their plant design in the United Kingdom. As at the Latest Practicable Date, our own Chemical Delivery Module prototype is also ready for commercialisation. (iii) Precision parts Equipment precision parts are the consumable component parts typicalJy required in Wafer Fabrication and FPD Fabrication plants, including but not limited to the nuts, bolts and screws made of specialty materials. An important distinction of these parts from the conventional parts widely available from hardware shops is that they are made of materials (plastics and/or metals) that have specific chemical, tensile and other properties required for the stringent environment in the fabrication plants. We intend to venture into the equipment precision parts market as an original design manufacturer based on our familiarity with these products. FolJowing from the above, we would like to position ourselves as an original design manufacturer for the existing tools manufacturers by the second (2nd) quarter of2011. (iv) VMB / VMP / Gas Panels We have previously successfulJy commercialised our in-house manufactured VMB / VMP and have successfulJy completed our first VMB / VMP instalJation project in March 2004. As for our Gas Panel, we have since 2003 designed and manufactured our Gas Panel for Hannstar and Infovision Optoelectronics (Kunshan) Co. under Base Build and Hook Up packages. Going forward, the R&D for our VMB / VMP / Gas Panel wilJ consist of continuous improvements to the design and space requirements of these products. This is expected to lead to the development ofVMB / VMP / Gas Panel which are more compact and ergonomic without compromising its performance. 4.17.5 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 up to FYE 31 December 2008 and the four (4) months FPE 30 April 2009:­Description  (Audited) FYE 31 December  (Audited) FPE 30 April  2006 (RM’OOO)  2007 (RM’OOO)  2008 (RM’OOO)  2009 (RM’OOO)  R&D expenditure Revenue R&D expenditure/Revenue (%)  139 30,256 0.46%  66 57,242 0,12%  80 60,058 0,13%  25 12,724 0.20%
During the past three (3) FYEs up to FYE 31 December 2008 and the four (4)-month FPE 30 April 2009, our Group has capitalised the following R&D expenses in relation to equipment such as VMBNMPs:­Description  (Audited) FYE 31 December  (Audited) FPE 30 April  2006 (RM’OOO)  2007 (RM’OOO)  2008 (RM’OOO)  2009 (RM’OOO)  R&D Capitalised  91  7  – 14
All of our Group’s R&D have been funded by our internally generated funds with no external and/or corporations-sponsored assistance. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK 4.18 APPROVALS, MAJOR LICENCES AND PERMITS Our Group’s operations do not require any specialised operating license. Nonetheless, set out as follows are the list of licences, permits and certificates, which may not be exhaustive, as at the Latest Practicable Date that our Group has procured for the purpose of operating our Group’s business:­(i) Kelington Certificate of Registration of Contractor No 312794 by the Ministry of Finance  Issuing authority Registration reference Type of licence Licence no./ Permit no. Date of commencement Date of expiry Equityl Employment! Other major conditions imposed Status of compliance Ministry of Finance 357-02010537 Supply 1 Service related to equipment and system to prevent fire, laboratory equipment, machines and specialized equipment, machines and workshop equipment Certificate ofRegistration of Contractor No. 312794 22/07/2009 21/07/2012 None Not applicable
Certificate of Registration No A126036 by Construction Industry Development Board Malaysia (“CIDB Malaysia”)  Issuing authority Registration reference Type of licence Licence no./ Permit no, Date of commencement Date of expiry Equityl Employment! Other major conditions imposed Status of compliance CIDB Malaysia 0120040525-SL095505 Grade G7, No limit Certificate ofRegistration No, A126036 16/1212008 24/05/2010 None Not applicable
THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK 66 (i) Kelington (cont’d) Certificate of Registration No. AD 240981 by Contractor Service Center (Pusat Khidmat Kontraktor) of the Ministry of Entrepreneurial Development and Co-operatives  Issuing authority Registration reference Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance Contractor Service Center (Pusat Khidmat Kontraktor) of the Ministry of Entrepreneurial Development and Co-operatives 1006 A 2004 0212 Class C, Head III, Sub-head 17a, 171 *** Certificate of Registration AD 240981 10/04/2008 09/04/2010 There is an express condition that companies with foreign equity and qualified to participate in tenders above RM50 million only as per Treasury circular Bil 5/2007. Complied
Certificate of Registration No. 1000032060 by Telekom Research & Development Sdn Bhd Issuing authority Registration reference Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance Telekom Research & Development Sdn Bhd 1000032060 Supply/service related to engineering goods and laboratory apparatus Vendor no. 1020246 20/12/2008 19/12/2010 The Company must ensure that the field registered in this certificate is not overlapping with the field approved by Telekom Research & Development Sdn Bhd on any of the company: (i)  with  the  same  owner  or  same  director  as  the  Company; or  (ii)  operating in the same premise as the Company.
Complied (i) Kelington (cont’d) Business Licence 2008  Issuing authority Registration Reference Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance  Majlis Bandaraya Shah Alam (MBSA) MBSNLSPILS/600-3/l/l841 Advertisement Licence OU80 10920060002 Not applicable 31/12/2009 None Not applicable
(ii) KTSB Pioneer Status Incentive Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance  MITI Pioneer Status Incentive under the Investment Promotion Act 1986 for manufacturing of ultra high purity gas/chemical/pure water distribution system and parts thereof for electronics and pharmaceutical industries 3051 28 May 2007 27 May 2012 (subject to renewal for an additional five (5) years) 1) Added value production of the company shall be at least 30% 2) Number of staff at management, technical and supervisory level shall be at least 15% of total manpower of the company Complied
(ii) KTSB (cont’d) Certificate of Registration No A176612 by CIDB Malaysia Issuing authority Registration reference Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance CIDB Malaysia 0120081216-SL 121256 Grade G I, not exceeding RM200,000.00 Certificate of Registration No. AI76612 16/12/2008 15/12/2009 None Not applicable
(iii) KE Shanghai Business Licence  Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance  Shanghai Administration ofIndustry and Commerce Business licence with a scope of business for design and installation of mechanical and piping engineering systems and provision of related technical consulting services 0213937 (Registration No. Qiduhuzongzi No. 030753 (Fengxian)) 16 April 2002 Operation term of 20 years from 16 April 2002 to 15 April 2022 Annual inspection Complied
THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (iii) KE Shanghai (cont’d) Approval Certificate Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity! Employment! Other major conditions imposed Status of compliance  Shanghai People’s Government Establishment of company 158533 (Approval No. Shangwaizi Hufengduzizi [2002] No. 1024) 5 April 2002 Not applicable Annual inspection Complied
Tax Registration Certificate Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity! Employment! Other major conditions imposed Status of compliance  Shanghai State Taxation Bureau and Shanghai Local Taxation Bureau Tax registration 1460528 GuolDi Shui Hu Zi No. 310226737495714 16 November 2006 Not applicable Annual inspection Complied
THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (iii) KE Shanghai (cont’d) Financial Registration Certificate  Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance Finance Bureau of Fengxian District, Shanghai Certificate for foreign investment enterprises 310226737495714 19 May 2006 15 April 2022 Annual inspection Complied
Registration Certificate for Customs Declaration of Import and Export of Goods  Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance Shanghai Customs Customs import and export 317940449 15 March 2006 15 March 2012 To be renewed within 30 days from expiry date. Not applicable
THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (iii) KE Shanghai (cont’d) Organisation Code Certificate  Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance  Quality and Technical Supervision Bureau, Shanghai Official identification code of an enterprise [2004] 2686603 310226130545) 18 March 2009 18 March 2013 Not applicable Not applicable (Registration No. Zudaiguan
Foreign Exchange Registration Certificate  Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance State Administration of Foreign Exchange, Shanghai Foreign exchange registration 210000020974 27 May 2004 Not applicable Annual inspection Complied
THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (iii) KE Shanghai (cont’d) Installation, Alternation, Repair & Maintenance License of Special Equipment  Issuing authority Type of licence Licence no.! Permit no. Date of commencement Date of expiry Equity! Employment! Other major conditions imposed Status of compliance Shanghai Municipal Bureau of Quality and Technical Supervision Qualification of Installation of High-pressure Pipe TS3831A095-2013 7 July 2009 6 July 2013 Not applicable Not applicable
(iv) KE Taiwan Business Registration Card 1  Issuing authority Type of licence Registration reference Date of commencement Date ofexpiry Equity! Employment! Other major conditions imposed Status of compliance  Republic of China (ROC) Ministry of Economic Affairs Amended Registration Card for Kelington Engineering Sdn Bhd Chin-Shou-Shen-0970I208640 dated 18 August 2008 Not applicable Not applicable Not applicable Not applicable
THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK (iv) KE Taiwan (cont’d) Business Registration Card 2  Issuing authority Type of licence Registration reference Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance  Republic of China (ROC) Ministry of Economic Affairs Amended Registration Card for Kelington Engineering Sdn Bhd, Taiwan Branch Chin-Shou-Shen-0970 1208640 dated 18 August 2008 30 August 2004 Not applicable Not applicable Not applicable
Profit-Seeking Enterprise Registration Certificate Issuing authority Type of licence Registration reference Licence no.! Permit no. Date of commencement Date of expiry Equity/ Employment! Other major conditions imposed Status of compliance Hsinchu County Government Profit-Seeking Enterprise Registration Certificate Hsin-Hsien-Shen-0940 1337 dated 26 August 2008 27241615 5 September 2004 Not applicable Not applicable Not applicable
(Note: The Profit-Seeking Enterprise Registration Certificate requirement has been abolished. However. business entities must still maintain its tax registration by making periodic purchase of Government Uniform Invoice (“GUl”). According to KE Taiwan’s GUI Purchase Record, the last GUI purchase was made on 26 June 2009. As such, tax registration ofKE Taiwan is current.)
4.19 INTERRUPTIONS IN OPERATIONS DURING THE PAST TWELVE (12) MONTHS We did not experience any disruption in business which had a significant effect on our operations during the past twelve (12) months preceding the Latest Practicable Date. 4.20 EXCEPTIONAL FACTORS AFFECTING THE BUSINESS Save for the risk factors highlighted in Section 3 of this Prospectus, our Group does not foresee any exceptional factors which may affect our business. 4.21 MAJOR CUSTOMERS AND SUPPLIERS 4.21.1 Major Customers Our major customers (being those contributing more than 10% of revenue) for the past three (3) FYEs up to 31 December 2008 and the four (4) months FPE 30 April 2009 are as follows:­Customer Name Total revenue (RM ‘000)  … FYE31 December 2006 30,256  Percentage of total revenue FYE31 FYE31 December December 2007 2008 57,242 60,058  ~ 4 month FPE30 April 2009 12,724  Pembinaan Ando Sdn Bhd CTC(I)  -24.19%  21.83% 23.49% 15.59% 14.76%  9.13% 4.94%  BOC Lienhwa (BYI) Holding Co., Ltd (I)  12.30%  14.08% 8.62%  0.98%  BOCLH Industrial Gases (Suzhou) Co., Ltd (I) Infineon Technologies (Kulim) Sdn Bhd  7.07% – -11.05% 11.78% 7.73%  0.29% 1.92%  Air Products Sdn Bhd  2.39%  — 26.40%  UCT Engineering (M) Sdn Bhd L&K Engineering Co., Ltd IAQ Solutions Sdn Bhd Asia IC MIC-Process, Inc Linde Electronics & Specialty Gases (Suzhou) Co. Ltd  12.45% –17.34% 11.71%  0.19% 3.94% -6.70% —-9.84% 3.56%  7.60% 11.49% 8.80% -0.39%
Note: (1) These companies are related to/form part of the BOCLH Group which is also related to our Group. For the relevant financial years / periods under review, some of our revenue are derived from customers who are part of the BOCLH Group, which is related to our Group by virtue of their indirect shareholding interests in our Company through Sky Walker. Please refer to Section 3.2(f) ofthis Prospectus for mitigating factors of the dependence on these major customers. Please also refer to Section 10.1 of this Prospectus for further details on related party transactions. 4.21.2 Major Suppliers Our major suppliers (being those contributing more than 10% of purchases) for the past three (3) FYEs up to 31 December 2008 and the four (4) months FPE 30 April 2009 are as follows:­…  Percentage of total purchases  ~  FYE31  FYE31  FYE31  4 month FPE  Supplier Name  December  December  December  30 April 2009  2006  2007  2008  Total purchases (RM’OOO)  20,145  46,258  43,996  7,823  Dynamic High Purity Eng  29.62%  11.32%  5.66%  5.20%  Sdn Bhd  LYL Engineering Sdn Bhd  – – 1.43%  16.14%  SAES Pure Gas Inc.  – 1.63%  – 15.31%
Our major purchases comprise of sub-contract works such as welding as well as purchase of raw materials such as steel pipes, fittings and other consumables, etc. Our supplies are usually quoted upfront prior to the commencement of each project, and are subject to the cost of the raw materials, especially the steels used in the pipes and fittings. As such, any fluctuations in the price of steel will be reflected in our project costing and passed on to our customers via our project biddings. Based on the table above, a significant portion of our total purchases in FYE 31 December 2006 and 2007 is derived from Dynamic High Purity Eng Sdn Bhd (“Dynamic High Purity”) which we had engaged as sub-contractors for welding works. Notwithstanding the abovementioned, such sub-contractor works could easily be switched to other similar suppliers without affecting the cost structure materially, as shown in the decrease in use of Dynamic High Purity in subsequent FYEs and the use of different sub-contractors, like LYL Engineering Sdn Bhd in FPE 30 April 2009. Going forward and save for the sub-contracting for welding works, we anticipate that the diverse supplier base will remain largely status quo.
4.22 REAL PROPERTY As at the Latest Practicable Date, our Group owns the following real property which is utilised for our operations:­Company  Built-up Area and Location  Description of Property / Existing Use  Land Title  Net Book Value as at 30 April 2009  Kelington  320m’ 3, Jalan Astaka U8/83, Seksyen U8, Bukit Jelutong Industrial Park, 40150 Shah Alam, Malaysia  Headquarter and gas equipment fabrication  H.S.(D) 142744 P.T. 17689 Mukim of Damansara Daerah Petaling, Negeri Selangor  RM2,523,OOO
The above property owned by our Company is a semi detached three (3) storey factory situated on a piece of freehold industrial land measuring approximately 1,575 m2. The property is catered for industrial usage and has been issued with the relevant certificate of fitness as at the Latest Practicable Date. As far as we are aware, our Group is not in breach of any law, rules and building regulations in relation to the use of the property. The abovementioned property has been charged to HSBC Bank Malaysia Berhad for general facilities, including the term loan balance of approximately RM888,000 as at 30 April 2009, overdraft, and letter of credit as well as other standby facilities, such as bankers acceptance and bank guarantee which are utilised by our Company. In addition, our Group also rents the following properties which are material to our Group’s operations:­Company  Built-up Area and Location  Description of Property I Existing Use  Date of commencement ­Date of expiry  KE Taiwan KE Taiwan KE Taiwan KE Shanghai KE Singapore KTS  165m” 1F., No. 137, Sec. 5, Hsinlung Rd., Jubei City, Hsinchu County 302, Taiwan 165m2 2F., No. 137, Sec. 5, Hsinlung Rd., Jubei City, Hsinchu County 302, Taiwan 60m’ *1 Da Cheng South Road, Wu Chi Town, Tai Chung County, Taiwan 206m2 Lot 203, Blk 1,3000 Long Dong Avenue, Zhangjiang Pudong, Shanghai 10m’ “9, Temasek Boulevard, 31/F Suntec Tower 2, Singapore 038989 20m2 Room 303, Block 2, No. 815 of Miaojing Road, Pudong New District, Shanghai  Entire ground floor of a 5­storey building utilised for storage and operational office Entire first floor of a 5­storey building utilised for management office Cleanroom facility for gas equipment fabrication Office suite utilised as an operational office Office suite utilised as an administrative office Office suite utilised as an operational office  I September 2008 to 31 August 2018 1 September 2008 to 31 August 2018 Not applicable I August 2007 to 31 July 2010 I August 2009 to 3I January 2010 15 February 2009 to 15 February 2012
Noles:  *  Facility owned by BOCLH. Our Group has been given permission to utilise the facility by  BOCLH.
Relates to the licence for usage offacilities and services. The abovementioned real property owned and rented by our Group are not subject to any regulatory requirement and environmental issues which may materially affect our Group’s operations and utilisation of assets. THE REST OF THE PAGE IS INTENTIONALLY LEFT BLANK

 

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