Business Overview

5. INFORMATION ON OUR GROUP 5. INFORMATION ON OUR GROUP
5.1 INFORMATION ON OUR GROUP 5.1.1 Our Overview and History

Overview of our Group Our Company was incorporated in Malaysia under the Act on 13 April 2015 as a private limited company under the name of LKL International Sdn Bhd and was subsequently converted to a public limited company on 16 July 2015. We are principally involved in the design and manufacturing of medical/healthcare beds, peripherals and accessories, where we are one of the largest local manufacturers in Malaysia, in terms of revenue. Our diverse range of products are used in/by a wide portfolio of customers such as hospitals and medical centres, as well as other healthcare-related facilities such as clinics and specialist institutions (i.e. fertility centres, diagnostics centres, eye specialists, orthopaedic centres, chiropractic centres, dialysis centres, confinement centres, nursing centres and etc). We also sell our products to education facilities/medical schools, wellness, beauty and aesthetics centres, pharmacies, and individuals. We generate our sales from the abovementioned wide portfolio of customers either directly by our sales team or through Agents, Distributors and project consultants. Our sales which were secured via Agents, Distributors and project consultants, contributed approximately 65.36%, 63.43%, 56.98% and 46.63% of our total revenue for the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 respectively. Further information on our mode of distribution and sales are set out in Section 5.7.8 of this Prospectus. The end-users of our products are largely hospitals and medical centres, comprising 61.32%, 56.59%, 57.68% and 58.54% of our total revenue for the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 respectively, with the remaining end-users coming from our wide portfolio of customers (as mentioned above). In Malaysia, some of these include public hospitals and medical centres such as Hospital Putrajaya, Hospital Serdang, Hospital Selayang, Pusat Perubatan Universiti Malaya, Hospital Sultanah Aminah and National Cancer Institute, Putrajaya; and private hospitals and medical centres such as Columbia Asia group of hospitals, Prince Court Medical Centre, Gleneagles Kuala Lumpur, KPJ Damansara Specialist Hospital, Pantai Hospital Kuala Lumpur, ParkCity Medical Centre, Tropicana Medical Centre and Sunway Medical Centre. We have exported our medical/healthcare beds, peripherals and accessories to over 30 countries across six (6) continents, which contributed approximately 22.57%,21.97%,19.49% and 25.37% of our total revenue for the past three (3) FYE 30 April 2013 to 2015 and six (6)­month FPE 31 October 2015 respectively. Our design and manufacturing process complies with international compliance standards. We are currently ISO 9001 :2008 and EN ISO 13485:2012 certified, which demonstrate our compliance and commitment to respected industry quality management practices for the design and development, production, assembly and distribution of durable medical equipment such as hospital beds, trolleys, tables, mobility aids and other support equipment. We have also been granted a certificate of CE registration, a registration which certifies that our products comply with the European Commission health, safety and environment protection legislation, under the European Commission 93/42/EEC and 2007/47/EEC. 5. INFORMATION ON OUR GROUP (Cont’d) History: Evolution and Growth of our Business In 1981, our Co-Founder and Managing Director, Lim Kon Lian, established Victor Company, a sole proprietorship involved in the manufacturing of steel and wooden furniture, which included hospital furniture and accessories. Prior to 1981, Lim Kon Lian had spent over ten (10) years in metal and steel fabrication, initially as a trade apprentice and subsequently as a freelance sub-contractor. In 1988, our other Co-Founder and Procurement Director, Mok Mei Lan, co-founded Victory Supplies with Lim Kon Khoon, the brother of Lim Kon Lian. Victory Supplies, which was set up primarily as the trading arm of Victor Company, was involved in the trading and supply of hospital furniture, accessories, and steel and wooden furniture and fittings. Lim Kon Lian and Mok Mei Lan jointly established our wholly-owned subsidiary, LKL Advance Metaltech on 13 October 1993, with the ultimate intention to utilise LKL Advance Metaltech, being a private limited company, to expand their business operations. LKL Advance Metaltech was a property holding company in the interim when it acquired its first property the following year with the purchase of a factory cum office building in Taman Universiti Indah, Seri Kembangan and rented the property to Victory Supplies. Victor Company ceased operations when the business was closed on 4 July 1994, and Victory Supplies assumed the manufacturing operations of Victor Company. In 1996, we commenced our intended operations as a manufacturer and trader of hospital furniture, accessories, and steel and wooden furniture and fittings at our factory in Taman Universiti Indah helmed by Lim Kon Lian. Victory Supplies continued operating concurrently from the same premises. Due to growing market demand, we began to gradually focus on the healthcare furniture and equipment business, where we sold our products to customers directly as well as through Agents, Distributors and project consultants. Within the first two (2) years of our operations, we delivered our products to hospitals and medical centres such as Assunta Hospital in Petaling Jaya, Taman Desa Medical Centre & Specialist Hospital and Hospital Tung Shin in Kuala Lumpur via our sales team. In line with the expansion of our business, we expanded our factory when we purchased an adjacent unit to our factory cum office building in Taman Universiti Indah in 1997. Along with this expansion, we automated a large part of our welding processes through the installation of robotic welding machinery in the same year. With the on-going growth of LKL Advance Metaltech, Victory Supplies ceased operations, when it was closed on 22 March 1999, with Mok Mei Lan thereafter focusing solely on LKL Advance Metaltech’s operations. As our business grew, our portfolio of customers continued to expand, where from 2000 to 2001, we delivered our products to public hospitals and medical centres such as Hospital Putrajaya, Hospital Lahad Datu and Hospital Keningau via project consultants, which had subsequently paved the way for more deliveries to other local public hospitals and medical centres. Our sales team had also secured direct orders from private hospitals and medical centres such as Sentosa Medical Centre and Pantai Cheras Medical Centre (now known as Pantai Hospital Cheras). We also secured one of our earliest export sales via Distributor when we delivered our products to a customer in Singapore in 2000, thus forming the beginning of our export track record. We continued to secure orders from this distributor in subsequent years.

 

5. INFORMATION ON OUR GROUP (Cant’d) From 2002 to 2008, we continued to expand our business reach to other public hospitals and medical centres, as we secured deliveries to Hospital Jasin, Hospital Sarikei, Hospital Serdang, Hospital Temerloh and Hospital Angkatan Tentera Setapak via project consultant as well as Pusat Perubatan Universiti Malaya via our sales team. During this period, our sales team also secured direct orders from private hospitals and medical centres such as Perak Chinese Maternity Hospital and Gleneagles Intan Medical Centre (now known as Gleneagles Kuala Lumpur). Our export track record also grew during this period with the addition of more than ten (10) new countries with sales to customers in Sri Lanka, Bangladesh, Hong Kong, Saudi Arabia, Kuwait, Pakistan, India, Vietnam, Philippines, UAE, Maldives, Indonesia, Brunei and Australia. We also exported our products to customers in Europe, having secured orders from Switzerland, Germany and Poland between 2004 and 2008. In 2008, to accommodate further expansion in our business, we relocated to our present head office and manufacturing plant in Factory Lot No.3. In 2012, due to continued growth in our business, we expanded our manufacturing facility and commenced operations in an adjacent property (Factory Lot No.1). Between 2009 and 2015, our business continued to grow and we secured orders via project consultants to Hospital Kuala Lipis, Hospital Queen Elizabeth II Kota Kinabalu, Hospital Rehabilitasi Cheras and National Cancer Institute, Putrajaya; and directly by our sales team to Darul Ehsan Medical Centre, Columbia Asia group of hospitals, Manipal Hospitals Klang (formerly known as Arunamari Specialist Medical Centre) and KPJ Pahang Specialist Hospital. Our overseas business also continued to expand during this time, as we exported to more than 15 new countries to our customers in the Netherlands, United Kingdom, Mozambique, Finland, Austria, Oman, Ghana, Mauritius, Qatar, Syria, Jordan, Botswana, Kenya, Laos, Myanmar, Thailand and Cambodia. We also managed to secure sales from customers in North America and Central/South America, with the delivery of our products to Mexico and Costa Rica respectively. In 2015, we acquired another factory (Factory Lot No. 15) located behind our current premises to accommodate our future expansion. We intend to use this factory to set up the new CNC machinery once the machinery is acquired. Please refer to Section 5.8.1 (iv) of this Prospectus for further details of our planned machinery acquisition. In the same year, we rented four (4) nearby shoplot factories (Factory Lot No. 12, Factory Lot No. 12A, Factory Lot No. 16 and Factory Lot No. 22) to relocate our storage, warehouse and some of our assembly processes due to space constraints at our current factory, as well as to carry out epoxy powder coating (which was previously carried out at another rented premise). Please refer to Section 5.8.1 (v) of this Prospectus for further details. To-date, we pride ourselves on having delivered our products to numerous public and private hospitals and medical centres in Malaysia and over 30 countries across six (6) continents, in support of the growing healthcare services industry globally. 5. INFORMATION ON OUR GROUP (Cont’d) Awards, Certifications and Recognitions In 2001, we received the ISO 9001 :2000 certification from RWTOV Anlagentechnik GmbH (updated to ISO 9001 :2008 certification, and currently certified by TOV SOD Management Service GmbH), for the design and development, production, assembly and distribution of durable medical equipment such as hospital beds, trolleys, tables, mobility aids and other support equipment. Further, in 2005, we received the EN ISO 13485:2003 certification from TOV Product Service GmbH (updated to EN ISO 13485:2012 certification, and currently certified by TOV SOD Product Service GmbH) for the design and development, production, assembly and distribution of durable medical equipment such as hospital beds, trolleys, tables, mobility aids and other support equipment. We were also granted a certificate of CE registration since 2009 by Obelis s.a., a registration which certifies that our products comply with the European Commission health, safety and environment protection legislation, under the European Commission 93/42/EEC and 2007/47/EEC. Our products under the purview of this registration are manual, hydraulic, standard electric, ICU/CCU electric and delivery beds, patient transport trolleys and stretchers, examination tables, medical tables and chairs, and overbed tables. These achievements are as a result of, amongst others, an accumulation of technical know-how and industry knowledge gained through many years of operating in the industry. Arising from our industry reputation and track record built throughout the years, we were appointed by PEMANDU in 2011 to spearhead EPP13, a designated project to develop the medical hardware and furniture cluster under the healthcare sector. The EPP13 is a NKEA under the ETP driven by PEMANDU and targets to add RM380 million to GNI and create an additional 2,900 jobs in the healthcare sector by 2020. Over the years, we have successfully grown and evolved into an established healthcare furniture and equipment manufacturer specialising in the design, manufacturing and sale of medicallhealthcare beds and the design, manufacturing, sale and trading of medical peripherals and accessories. Through our achievements, we were awarded various accolades, including:­• the “Enterprise 50” by SME Corporation Malaysia and Deloitte Malaysia in 2005;
• the “MMEBA” under the Platinum Brand Award category and under the Corporate Branding Export Market Gold Award category by MICCI and Lim Kok Wing University of Creative Technology in 2007;
• the “Golden Bull Award 2011 (Outstanding SME)” by Nanyang Siang Pau in 2011;
• the “SMEs BestBrands Awards” under the Corporate Branding Awards sector by the Asia Pacific Brand Foundation in 2011 ;
• the “1 Malaysia Enterprise Award” under the “1 Malaysia Lifecare category” by the Malaysia Food Processing and Packaging Entrepreneurs Association in 2012; and
• the “Golden Eagle Award 2015 (Malaysia 100 Excellent Enterprises)” by Nanyang Siang Pau in 2015.

According to the IMR Report, we garnered a market share of 40.5% in 2014 in Malaysia, based on our local revenue of RM31.4 million for the FYE 30 April 2015. As one of the largest local manufacturers in Malaysia, we are well-positioned to continuously strengthen our presence in Malaysia and pursue opportunities in both local and international markets. Therefore, we are seeking listing on the ACE Market of Bursa Securities to facilitate and accelerate our future growth. Our continuous commitment in maintaining the highest levels of product quality and customer service, as well as in expanding, improving and upgrading our products, coupled with our proven track record and technical know-how, will place us in a position to be able to ensure our long term growth and sustainability in the industry. Please refer to Section 5.7 of this Prospectus for further details of our Group’s business.
5. INFORMATION ON OUR GROUP (Cont’d) 5.1.2 Our competitive strengths Our competitive strengths are as follows:­(i) We are well-positioned to capitalise on the growth in the local and international healthcare industry Our medical/healthcare beds, peripherals and accessories are mainly sold to hospitals and medical centres as well as other healthcare-related facilities, either directly by our sales team or via Agents, Distributors and project consultants (please refer to Section 5.7.8 of this Prospectus for further information). Thus, the potential for our future revenue growth is promising in line with the growth of the healthcare industry locally and internationally. According to the IMR Report, the healthcare services industry in Malaysia grew, in terms of total healthcare expenditure, at a CAGR of 9.7% from RM17.8 billion in 2004 to RM41.0 billion in 2013. Growth is expected to be driven by higher incidences of chronic diseases, the demographic shift to an ageing population, the increased accessibility to healthcare services due to growth in income and/or uptake of medical insurance, as well as Government initiatives in promoting the healthcare services industry. Specifically in terms of medical/healthcare beds, Malaysia’s ratio of medical beds per 1,000 population stood at 1.9 beds in 2014, below both the developing country average and world average of 2.2 beds and 3.0 beds respectively, demonstrating that there is room for further growth for medical/healthcare beds in Malaysia’s healthcare industry. As one of Malaysia’s largest manufacturers of medical/healthcare beds, peripherals and accessories by revenue, we have strong local market presence and are well­positioned to continue to capture future growth opportunities in the healthcare industry in Malaysia. According to the IMR Report, we garnered a market share of 40.5% in 2014 in Malaysia, based on our local revenue of RM31.4 million for the FYE 30 April 2015 and the market size for medical beds, peripherals and accessories of RM77.6 million in 2014. As such, with our strong market position and proven track record, we are primed to continue to grow in tandem with the rise in healthcare expenditure and growth in healthcare services in Malaysia. In addition, the Government plays an active role in driving the healthcare equipment sector, thus benefiting the medical bed, peripheral and accessory industry. The Ministry of Health Malaysia acknowledges the shortage of medical beds in the country, and have announced that the Government have been taking measures to improve access to healthcare in general, including the upgrading of existing hospitals and the building of new hospitals in high density areas to accommodate for the lack of healthcare services and insufficient number of beds. In the 11th Malaysia Plan which was launched in May 2015, the Government announced its aim to achieve universal access to quality healthcare, and in doing so it aims to increase the medical bed ratio to 2.3 beds per 1,000 population. 5. INFORMATION ON OUR GROUP (Cont’d) Further, the global healthcare services industry has also demonstrated growth, where total healthcare expenditure increased at a CAGR of 6.4%, from USD4.3 trillion (RM16.3 trillion) in 2004 to USD7.5 trillion (RM23.6 trillion) in 2013. Particularly in the developing countries of Asia, Middle East, Africa and Central/South America, which have been, and will continue to be, our key export markets, per capita healthcare expenditure remain relatively low compared to per capita healthcare expenditure in the developed countries. Our growth potential in the medical bed, peripheral and accessory industry in Malaysia is not just limited to the demand from within the local market as there is also latent demand for medical beds in most developing countries, particularly in Asia, Middle East and Africa, and this is indicated by the lower developing country average for medical beds per 1,000 population of 2.2 beds relative to the world average of 3.0 beds. (Source: IMR Report) Premised on the above, our Group is poised to leverage on the continuing long term demand growth for healthcare services. The listing of our Group will provide the impetus to take our Group to the next phase of growth, as it will enhance our Group’s corporate and business profile, as well as increase the stature of our Group in the marketing of our products and services, particularly in the international markets. As a manufacturer and supplier to the healthcare industry, our growth will remain in tandem with growth in healthcare services. With the anticipated and sustained growth in healthcare services driving demand for healthcare furniture and equipment, we are well-positioned to benefit from these opportunities and continue on our long term growth strategies. (ii) We have delivered our products to established public and private hospitals and medical centres in the local as well as international markets We have delivered our products to both locally and internationally established hospitals and medical centres. In Malaysia, these include public hospitals and medical centres such as Hospital Putrajaya, Hospital Serdang, Hospital Selayang, Pusat Perubatan Universiti Malaya, Hospital Sultanah Aminah and National Cancer Institute, Putrajaya; and private hospitals and medical centres such as Columbia Asia group of hospitals, Prince Court Medical Centre, Gleneagles Kuala Lumpur, KPJ Damansara Specialist Hospital, Pantai Hospital Kuala Lumpur, ParkCity Medical Centre, Tropicana Medical Centre and Sunway Medical Centre. In the overseas markets, we have delivered our products across six (6) continents to over 30 countries, including hospitals in Botswana, Maldives, Mozambique, Singapore, Kenya, Bangladesh and Sri Lanka. Please refer to Section 5.7.2 of this Prospectus for details of the hospitals and medical centres where we have delivered our products. Our success in securing and retaining these hospitals and medical centres is a testament to our product quality, customer service and proven industry track record. We have been serving some of our customers for over 15 years (Assunta Hospital, Hospital Tung Shin, Pantai Hospital Cheras and Hospital Putrajaya), where these long­term business relationships have resulted in repeat orders which provide us with strong assurance in terms of business sustainability. As a supplier to these hospitals and medical centres, we have had to comply with the required local and international healthcare standards, which is evidence of our standing as a proven industry player. Due to our track record from successfully serving these hospitals and medical centres, we benefit through new sales derived from referrals from our existing customers and from our established reputation in the healthcare industry. Our continued focus on delivering high quality and cost competitive products will help ensure our on-going and future sustainability.

5. INFORMATION ON OUR GROUP (Cont’d) (iii) We have the required technical expertise to conform to international compliance standards in the global healthcare industry Our design and manufacturing process complies with international compliance standards. We have the ISO 9001 :2008 certification (first awarded as ISO 9001 :2000 certification) and EN ISO 13485:2012 certification (first awarded as EN ISO 13485:2003 certification) from TUV SUD Management Service GmbH (first awarded by RWTUV Anlagentechnik GmbH in 2001) and TUV SUD Product Service GmbH (first awarded by TUV Product Service GmbH in 2005) respectively, which are certification bodies based in Germany, certifying that our manufacturing process comply with the quality management system requirements for the design and development, production, assembly and distribution of durable medical equipment such as hospital beds, trolleys, tables, mobility aids and other support equipment. We have also been granted a certificate of CE registration by Obelis s.a., a registration which certifies that our products comply with the European Commission health, safety and environment protection legislation, under the European Commission 93/42/EEC and 2007/47/EEC. Our products under the purview of this registration are manual, hydraulic, standard electric, ICU/CCU electric and delivery beds, patient transport trolleys and stretchers, examination tables, medical tables and chairs, and overbed tables. The abovementioned achievements are as a result of, amongst others, an accumulation of technical know-how and industry knowledge gained through many years of operating in the industry. The local and international healthcare industry places utmost importance on the quality of medical/healthcare beds, peripherals and accessories used in hospitals and medical centres, and as such, requires manufacturers and suppliers to conform to strict international product compliance standards. To achieve and continuously maintain our high product quality standards, we place emphasis on our product design initiatives and our manufacturing processes, as well as the implementation of quality control procedures at each stage of our manufacturing process. Our commitment to technical excellence is backed by our in-house R&D team comprising five (5) personnel as at the LPD, and this team is responsible for researching new product designs and gathering intelligence on industry trends for the purpose of product development, as well as enhancing our manufacturing processes. Our R&D team’s strong technical competencies have allowed us to successfully grow our market presence over the years. To date, our R&D team has been successful in enhancing existing products with new features such as the Lateral Patient Transfer Trolley System and Longitudinal Patient Transfer Trolley System for our patient transport trolleys. Our R&D team will continue to carry out product development and product enhancements, which will allow us to meet evolving market trends and customer demands. Our R&D team is also able to support customised requests, as and when required by our customers. Furthermore, our Group has the capability to manufacture customised products, based on requirements and specifications of our customers. With our in-house technical expertise, we are able to cater to changing demands from our customers and manufacture products that suit their specific needs. These include design factors such as customised dimensions, shapes, enhanced features and colours. Our commitment to strict and uncompromising quality control standards, coupled with our emphasis on R&D and our compliance to international standards have been instrumental in establishing our reputation and positioning within the local and international healthcare industry. 5. INFORMATION ON OUR GROUP (Cont’d) (iv) We have exported our products to over 30 countries across six (6) continents We have delivered medical/healthcare beds, peripherals and accessories to destinations across six (6) continents and in over 30 countries including Bangladesh, Brunei, Cambodia, Hong Kong, India, Jordan, Kuwait, Laos, Maldives, Myanmar, Oman, Pakistan, Philippines, Qatar, Saudi Arabia, Singapore, Sri Lanka, Syria, Thailand, UAE and Vietnam in Asia; Botswana, Ghana, Kenya, Mauritius and Mozambique in Africa; Austria, Finland, Germany, Switzerland and the United Kingdom in Europe; Australia in Oceania; Mexico in North America and Costa Rica in Central/South America. Please refer to Section 5.7.2 of this Prospectus for details of our export markets. These international markets serve as a vast market for our Group to tap into. It also reflects our global footprint in the healthcare furniture and equipment industry, in support of the growing healthcare services industry globally. In the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015, our revenue from international markets accounted for 22.57%, 21.97%, 19.49% and 25.37% respectively of our total revenue. Our penetration into international markets is a testament to our industry reputation and track record, and has been facilitated by our conformance to international standards. Please refer to Section 5.7.5 of this Prospectus for further details on conformance to international standards. (v) We have a diversified range of products to cater for a wide range of customer demands Our Group has the capabilities and experience to design and manufacture a diverse range of medical/healthcare beds, peripherals and accessories, and to profitably maintain this diversified product mix. This wide range of products allows us to serve the different needs of customers as well as provides us with the flexibility to alter our product mix in the event of changing market conditions. Our medical/healthcare beds comprise electric beds, hydraulic beds and manual beds. Electric beds, particularly our ICU/CCU beds, are higher-priced medical beds typically used in more developed countries with higher healthcare expenditure budgets. Hydraulic beds are generally average-priced medical beds catering to a wide array of hospitals and medical centres. Manual beds are the most affordable medical beds as these beds have no built-in automation, and are thus suited for use in countries with lower healthcare expenditure budgets or where electricity supply is unstable. Our delivery beds also come in these same options of electric beds, hydraulic beds and manual beds, similarly to suit the varying demands of our customers. We also manufacture a wide range of medical peripherals and accessories such as patient transport trolleys, medical carts, instrument trolleys, examination tables and overbed tables to support the ancillary needs of hospitals and medical centres and other healthcare-related facilities. Our diversified capabilities and wide range of products allow us to target a large customer base, making us less dependent on any particular product and/or customer. It also enables our Group to adapt to difficult market conditions and gives us flexibility in reacting to changing customer needs and demands. Difficult market conditions may occur due to a decrease in demand for medical/healthcare beds, peripherals and accessories, which may be a result of a lower number of newly established hospitals and medical centres, and/or a cutback in public and private healthcare expenditure as well as competition from local and foreign players.
5. INFORMATION ON OUR GROUP (Cont’d) (vi) We are able to offer efficient and reliable after-sales services to our customers We are committed in providing efficient and reliable after-sales services to our customers in order to maintain strong relationships with our customers. As a result, we have been able to secure recurring orders from our key customers as well as derive sales through referrals from some of these customers. Since our establishment, we have built a strong customer base consisting of several longstanding customers, some with more than 15 years of working relationship. Some of our longest standing customers and end-users are as follows:­Name of hospital  Length of business relationship (years)  Assunta Hospital Hospital Tung Shin Pantai Hospital Cheras Hospital Putrajaya Gleneagles Kuala Lumpur Hospital Serdang Pusat Perubatan Universiti Malaya  20 19 16 15 14 12 12
Our emphasis on prompt delivery, and efficient and reliable customer service, has accorded us with our industry reputation as a trusted and reliable manufacturer and supplier of medicallhealthcare beds, peripherals and accessories, amongst our customers. For the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015, revenue contribution from provision of after-sales services to our customers amounted to RMO.749 million, RMO.851 million, RM1.000 million and RMO.700 million respectively. (vii) We have an experienced management team We have been operating in the healthcare furniture and equipment business, supporting hospitals and medical centres, for more than 15 years and throughout these years, we have been led by an experienced and dedicated management team. Our Co­Founder and Managing Director, Lim Kon Lian, has played a pivotal role in steering our growth and success since our inception. Lim Kon Lian has over 40 years of experience in steel and metal fabrication, and over 30 years in the healthcare furniture and equipment business. His experience, drive and passion for our business have been instrumental in leading our Group to its current position within the industry. Our Managing Director is supported by a strong key management team, and the commitment and teamwork between our Managing Director and our key management team have provided impetus for the continuous growth of our Group:­• Our Co-Founder, Mok Mei Lan, who is also our Procurement Director, has more than 25 years of experience in the healthcare furniture and equipment industry;
• Our Group General Manager and Head of R&D, Lim Pak Hong, joined us in 2013 and oversees overall Group management while driving product development, enhancements and customisation, allowing us to meet evolving market trends and customer demands;
• Our General Manager -Operations, Lim Ming Chang, has been with our Group for more than ten (10) years, managing various aspects of our operations including quality management and information systems;
• Our Financial Controller, Wee Chuen Lii, joined us in 2015, and brings with him over 15 years of experience in finance and accounting;
• Our Chief Marketing Officer, Lee Kah Earng, has been with our Group since 1996, and has over 20 years of sales experience;

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5. INFORMATION ON OUR GROUP (Cont’d) • Our Human Resource and Administration Manager, Elaine Lim Sin Vee, has ten
(10) years of experience in human resource and administration; and
• Our Export Manager, Lee Kam Weng joined us in 2012 and oversees all sales and marketing activities relating to our overseas Agents, Distributors and hospitals.

Throughout these years, we have built an established industry reputation through our management’s experience, technical know-how and industry knowledge. Our ability to provide high quality products, coupled with our consistent levels of reliable service, has been instrumental in attracting new and recurring orders from established hospitals and medical centres, and has enabled us to maintain our business relationships with our existing customers. We believe that the strength and experience of our key management team will enable us to continue to further grow our business and expand our market presence.
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) 5.1.3 Share capital and changes in share capital Our present authorised share capital is RM50,000,000 comprising 500,000,000 Shares of which RM31 ,580,000 comprising 315,800,000 Shares have been issued and credited as fully paid-up. Upon completion of our Listing, our issued and paid-up share capital will increase to RM42,880,000 comprising 428,800,000 Shares. Details of the changes in our issued and paid-up share capital for the past three (3) years are as follows:­Date of Allotment  No. of Shares allotted  Par value (RM)  Consideration  Cumulative Issued and Paid-up Share Capital (RM)  13 April 2015 10 March 2016  100 315,799,900  0.10 0.10  Cash Otherwise than cash for the Acquisition of LKL Advance Metaltech  10 31,580,000
There were no discounts, special terms or installment payment terms given in consideration of the above increases in our issued and paid-up share capital. As at the LPD, we do not have any outstanding warrants, options, convertible securities and uncalled capital.

THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) 5.1.4 Subsidiary To facilitate the listing of our Company, the Acquisition of LKL Advance Metaltech was completed on 10 March 2016. Our existing corporate Group structure is as follows:­LKL International 100% LKL Advance Metaltech Details of our subsidiary are set out below:­Subsidiary  Date and Place of Incorporation  Date of Commencement of Business*  Issued and Paid-Up Share Capital  Effective Equity Interest (%)  Principal Activities  LKL Advance Metaltech  13 October 1993 Malaysia  1 April 1996  RM2,000,000  100.00  Provision of medical/healthcare beds, peripherals and accessories
Note:­Date of commencement of business refers to the date of commencement of our business in provision of medical/hea/thcare beds, peripherals and accessories. Further details on our subsidiary are set out in Section 5.2 of this Prospectus below. As at the LPD, we do not have any associate. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

5. INFORMATION ON OUR GROUP (Cont’d) 5.2 INFORMATION ON OUR SUBSIDIARY 5.2.1 LKL Advance Metaltech (a) Background, history and principal activities
LKL Advance Metaltech (278577-X), which is the sole operating subsidiary of LKL International, was incorporated in Malaysia under the Act on 13 October 1993 as a private limited liability company under the name of LKL Advance Metaltech Sdn Bhd. On 1 April 1996, LKL Advance Metaltech commenced its business operations in the provision of medical/healthcare beds, peripherals and accessories.
(b) Share capital

As at the LPD, the authorised and issued and paid-up share capital of LKL Advance Metaltech are as follows:­Par value  Amount  No. of shares  (RM)  (RM)  Authorised  5,000,000  1.00  5,000,000  Issued and paid-up  2,000,000  1.00  2,000,000
Details of the changes in the issued and paid-up share capital of LKL Advance Metaltech for the past three (3) years are as follows:­Date of Allotment  No. of shares allotted  Par value (RM)  Consideration  Cumulative Issued and Paid-up Share Capital (RM)  27 April 2015 10 July 2015  500,000 500,000  1.00 1.00  Cash Cash  1,500,000 2,000,000
There were no discounts, special terms or installment payment terms given in consideration of the above increases in our issued and paid-up share capital. As at the LPD, LKL Advance Metaltech does not have any outstanding warrants, options, convertible securities and uncalled capital. (c) Substantial shareholder As at the LPD, LKL Advance Metaltech is our wholly-owned subsidiary.
(d) Subsidiary and associate As at the LPD, LKL Advance Metaltech does not have any subsidiary or associate.

5. INFORMATION ON OUR GROUP (Cont’d)

 

 

5.3 LISTING SCHEME In conjunction with and as an integral part of our listing of and quotation for the entire enlarged issued and paid-up share capital of our Company on the ACE Market of Bursa Securities, the details of our Listing Scheme are as follows:­(i) Acquisition of LKL Advance Metaltech On 13 July 2015, LKL International entered into a conditional sale and purchase agreement with the vendors of LKL Advance Metaltech, being Lim Kon Lian, Mok Mei Lan, Elaine Lim Sin Vee, Lim Pak Hong and Tan Chuan Hock, to acquire the entire issued and paid-up share capital of LKL Advance Metaltech of RM2,000,000 comprising 2,000,000 ordinary shares of RM1.00 each for a purchase consideration of RM31 ,579,990 which will be wholly satisfied by the issuance of 315,799,900 new Shares at an issue price of RMO.10 per Share. The purchase consideration of LKL Advance Metaltech of RM31 ,579,990 was arrived at on a willing-buyer willing-seller basis, after taking into consideration the NA position of LKL Advance Metaltech as at 30 April 2015 of RM31,380,225 and the increase in its issued and paid-up share capital of RM500,000 comprising 500,000 ordinary shares of RM1.00 each on 10 July 2015. The purchase consideration represents a price to book ratio and price to earnings ratio of approximately 0.99 times and 5.24 times respectively. The Acquisition of LKL Advance Metaltech was completed on 10 March 2016 and LKL Advance Metaltech became a wholly-owned sUbsidiary of our Company. Upon completion of the Acquisition of LKL Advance Metaltech, the issued and paid-up share capital of our Company had increased to RM31 ,580,000, comprising 315,800,000 Shares. (ii) Public Issue Our Company undertakes a public issue of 113,000,000 new Shares, at the Issue Price, representing approximately 26.35% of our enlarged issued and paid-up share capital, payable in full on Application upon such terms and conditions as set out in this Prospectus and will be allocated and allotted in the following manner:­(a) 8,000,000 new LKL International Shares, representing approximately 1.86% of our enlarged issued and paid-up share capital, made available for application by the Malaysian Public via balloting, of which at least 50% is to be set aside strictly for Bumiputera investors;
(b) 13,200,000 new LKL International Shares, representing approximately 3.08% of our enlarged issued and paid-up share capital, made available for application by our eligible Directors, employees and persons who have contributed to the success of our Group;
(c) 42,200,000 new LKL International Shares, representing approximately 9.84% of our enlarged issued and paid-up share capital, made available by way of placement to selected investors; and
(d) 49,600,000 new LKL International Shares, representing approximately 11.57% of our enlarged issued and paid-up share capital, made available by way of placement to Bumiputera investors approved by MITI.

All the Issue Shares shall rank equally in all respects with the existing issued and paid-up share capital of our Company, including the voting rights and rights to all dividends and distributions that may be declared, made or paid subsequent to the date of the allotment thereof. Upon completion of the Public Issue, the issued and paid-up share capital of our Company will increase to RM42,880,000, comprising 428,800,000 Shares. 66
5. INFORMATION ON OUR GROUP (Cont’d) (iii) Listing The admission and the listing of and quotation for our entire enlarged issued and paid-up share capital of RM42,880,000, comprising 428,800,000 Shares on the ACE Market of Bursa Securities have been approved by Bursa Securities. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) 5.4 LOCATION OF OPERATIONS As at the LPD, the details of the land and buildings owned for our operations are as follows:­Net book value  Location  Description and Existing use  Date of certificate of fitness  Approximate built­upl Land area (sq ft)*  Leaseholdl Freehold  as at 31 October 2015  Date of acquIsition  RM’OOO
Factory Lot NO.1′”  A double-storey detached factory used as an office, manufacturing plant and warehouse  2 May 2014  34,050/43,560  Freehold  6,266  11 April 2007  Factory Lot No.3′”  A double-storey detached factory with a three (3)-storey office and other ancillary buildings used as an office and manufacturing plant  26 September 2008  57,690/43,560  Freehold  6,303  12 November 2004  Factory Lot No. 15  An intermediate semi-detached one and a half (1 Y2)-storey factory used as a manufacturing plant and warehouse  22 January 2010  9,720/11,282  Freehold  4,958  16 April 2015
Notes:­* Conversion of original measurement of properties in square meters to sq ft at 1m2 = 10. 7639fr. “, In year 2014, LKL Advance Metaltech constructed a single storey metal sheet cladded steel structure extension across Factory Lot No.1 and Factory Lot No.3 with a built-up area of approximately 19,409 sq ft (“Extension’J for the storage of inventory work-in-progress and finished goods at Factory Lot No.1 and storage of moulds at Factory Lot No.3, which were not in accordance to the approved building plans. Therefore, a cee for the Extension has yet to be obtained. To enable LKL Advance Metaltech to apply for a eee, LKL Advance Metattech is required to amalgamate Factory Lot No. 1 and Factory Lot No. 3 as the Extension is constructed across both these lands (“Amalgamation’J. Please refer to Section 9. 1 of this Prospectus for further details on the Amalgamation as well as operational, financial and legal implications arising from the Extension. 68
Company No. 1140005-V  5.  INFORMATION ON OUR GROUP (Cont’d)  As at the LPD, we are tenants of the following properties for our operations:­ Location  Description and Existing use  Approximate built-up (sq tt)  Period of tenancy! Date of expiry of tenancy  Registered owner! landlord  Annual rental RM’OOO
Factory Lot No. 12 Factory Lot No. 12A Factory Lot No. 16 No. C-G-13, Jalan BS 14!1, Taman Bukit Serdang, Pusat Perdagangan Bukit Serdang, 43300 Seri Kembangan, Selangor Darul Ehsan E-32-1 Lorong Bayan Indah 2, 11900 Bayan Lepas, Penang No. 17, (Ground Floor), Laluan Tasek Timur 3, Pusat Perdagangan Tasek Indra, 31400 Ipoh, Perak Darul Ridzuan Factory Lot No. 22 An intermediate double-storey terrace industrial unit used as a manufacturing plant and storage  7,200  An intermediate double-storey terrace industrial unit used as a manufacturing plant and storage  7,200  An intermediate double-storey terrace industrial unit used as a manufacturing plant and storage  7,200  Basement and ground floor unit of an intermediate three (3)-storey office shoplot unit used as a warehouse  1,600  Ground floor of an intermediate three (3)­storey office shoplot unit used as an office and showroom  1,800  Ground floor of an intermediate double-storey office shoplot unit used as an office and showroom  1,540  An intermediate double-storey terrace industrial unit used as a warehouse  7,200
26 May 2015 to 25 May 2018 26 May 2015 to 25 May 2018 26 May 2015 to 25 May 2018 16 January 2015 to 15 January 2017 1 January 2016 to 31 December 2017 1 June 2015 to 31 May 2017 15 November 2015 to 14 November 2016 Goh Hang Kim  84  Goh Hun Beng  84  Goh Han Eng  84  Chiap Seng Trading (M) Sdn Bhd  54  Lim Kon Lian and Lim Pak Hong  72  Yen Chun Wai  23  G.B Alliance Sdn Bhd  90
69
5. INFORMATION ON OUR GROUP (Cant’d) 5.5 KEY ACHIEVEMENTS/MILESTONES/AWARDS The key achievements/awards of our Group are as follows:­Year 1993 1994 1996 1997 2001 2005 2007 2008 2009 2011 2012 2015  Key Achievements/Awards Incorporated LKL Advance Metaltech with the ultimate intention to utilise LKL Advance Metaltech, being a private limited company, to expand Co-Founders’ business operations. LKL Advance Metaltech in the interim was a property holding company when it acquired a factory cum office building in Taman Universiti Indah, Seri Kembangan, and rented the property to Victory Supplies (a business partnership established in 1988 by our Co-Founder and Procurement Director involved in the manufacturing, trading and supply of hospital furniture, accessories, and steel and wooden furniture and fittings). Commenced intended operations as a manufacturer and trader of hospital furniture, accessories, and steel and wooden furniture and fittings. • Expanded factory through the acquisition of an adjacent unit to the factory cum office building in Taman Universiti Indah, Seri Kembangan. • Implemented automation of welding activities for the manufacturing of medical/healthcare beds through the installation of automated robotic welding machinery. Received ISO 9001 :2000 certification from RWTOV Anlagentechnik GmbH (updated to ISO 9001 :2008 certification and currently certified by TOV SOD Management Service GmbH) for the design and development, production, assembly and distribution of durable medical equipment such as hospital beds, trolleys, tables, mobility aids and other support equipment. • Received EN ISO 13485:2003 certification from TOV Product Service GmbH (updated to EN ISO 13485:2012 certification and currently certified by TOV SOD Product Service GmbH) for the design and development, production, assembly and distribution of durable medical equipment such as hospital beds, trolleys, tables, mobility aids and other support equipment. • Awarded “Enterprise 50” by SME Corporation Malaysia and Deloitte Malaysia. • Awarded “MMEBA” under the “Platinum Brand Award category” by MICCI and Lim Kok Wing University of Creative Technology. • Awarded “MMEBA” under the “Corporate Branding Export Market Gold Award category” by MICCI and Lim Kok Wing University of Creative Technology. Moved head office and manufacturing plant to Factory Lot No.3. Granted a certificate of CE registration from Obelis s.a., a registration which certifies that our products comply with the European Commission health, safety and environment protection legislation, under the European Commission 93/42/EEC and 2007/47/EEC. • Appointed under EPP13 (medical hardware and furniture cluster) of ETP to expand manufacturing premises, workforce and manufacturing capacity. • Awarded “Golden Bull Award 2011” under the Outstanding SME category by Nanyang Siang Pau. • Awarded “SMEs BestBrands Award” under the Corporate Branding Awards category by the Asia Pacific Brand Foundation. • Commenced operations in expanded manufacturing facility at Factory Lot No.1. • Awarded “1 Malaysia Enterprise Award” under the “1 Malaysia Lifecare category” by the Malaysia Food Processing and Packaging Entrepreneurs Association. • Acquired another factory in Factory Lot No. 15, which is behind current premises, to accommodate future expansion. • Rented four (4) nearby shoplot factories (Factory Lot No. 12, Factory Lot No. 12A, Factory Lot No. 16 and Factory Lot No. 22) to relocate some of our assembly and epoxy pOWder coating processes, and as storage and warehouse. • Awarded “Golden Eagle Award 2015” under the Malaysia 100 Excellent Enterprises category by Nanyang Siang Pau.

5. INFORMATION ON OUR GROUP (Cont’d) Our Group’s business milestones in both local and international markets are as follows:-Timeline  Business Milestones  1996 to 1997  Secured our first orders from Assunta Hospital in Petaling Jaya, Taman Desa Medical Centre & Specialist Hospital and Hospital Tung Shin in Kuala Lumpur.  2000 to 2001  • Secured our first orders from Hospital Putrajaya, Hospital Lahad Datu, Hospital Keningau, Sentosa Medical Centre and Pantai Cheras Medical Centre (now known as Pantai Hospital Cheras). • Expanded into Singapore.  2002 to 2008  • Secured our first orders from Hospital Jasin, Hospital Sarikei, Hospital Serdang, Hospital Temerloh, Hospital Angkatan Tentera Setapak, Pusat Perubatan Universiti Malaya, Perak Chinese Maternity Hospital and Gleneagles Intan Medical Centre (now known as Gleneagles Kuala Lumpur). • Expanded into Sri Lanka, Bangladesh, Hong Kong, Saudi Arabia, Kuwait, Pakistan, India, Vietnam, Philippines, UAE, Maldives, Indonesia, Brunei, Australia, Switzerland, Germany and Poland.  2009 to 2015  • Secured our first orders from Hospital Kuala Upis, Hospital Queen Elizabeth II Kota Kinabalu, Hospital Rehabilitasi Cheras, National Cancer Institute (Putrajaya), Darul Ehsan Medical Centre, Columbia Asia group of hospitals, Manipal Hospitals Klang (formerly known as Arunamari Specialist Medical Centre) and KPJ Pahang Specialist Hospital. • Expanded into Netherlands, United Kingdom, Mozambique, Finland, Austria, Oman, Ghana, Mauritius, Qatar, Syria, Jordan, Botswana, Kenya, Laos, Myanmar, Thailand, Cambodia, Mexico and Costa Rica.
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d)
5.6 MATERIAL CAPITAL EXPENDITURE AND DIVESTITURES Save as disclosed below, our Group did not incur any other material capital expenditure or investments for the past three (3) FYE 30 April 2013 to 2015, six (6)-month FPE 31 October 2015 and up to the LPD:­Transaction value for the  Investments Land and Building Motor Vehicles Office Equipment, Furniture and Fittings Plant and Machinery Renovation Capital Work-in-progress Total  <———FyE 30 April———–>  Six (6)-month FPE 31 October 2015 RM’OOO  31 October 2015 up to the LPD RM’OOO  2013 RM’OOO  2014 RM’OOO  2015 RM’OOO  624 230 123 174 -649  86 351 88 1,246 -920  4,969 736 221 167 9 1,002  –141 307 127 – -747 95 71 — 1,800  2,691  7,104  575  913
Our material capital expenditure during the FYE 30 April 2013 to 2015, six (6)-month FPE 31 October 2015 and up to the LPD comprised capital expenditure on land and building, motor vehicles, office equipment, furniture and fittings, plant and machinery, renovation and capital work-in-progress. Our material capital expenditure was primarily funded via a combination of bank borrowings and internally generated funds. For the FYE 30 April 2013, Our Group’s capital expenditure incurred for land, building and capital work-in-progress were mainly due to the acquisition of a single-storey house located in Seri Kembangan for workers’ accommodation purposes and construction cost for expansion of our office and warehouse at Factory Lot No.1. Our Group’s capital expenditure incurred for land, building and capital work-in-progress for the FYE 30 April 2014 were mainly due to the construction cost for our existing warehouse at Factory Lot No.1. For the FYE 30 April 2015, our Group’s capital expenditure incurred for land, building and capital work-in-progress were mainly related to the acquisition of Factory Lot No. 15 to accommodate our future expansion and construction cost for our existing warehouse at Factory Lot No.1. Our Group’s capital expenditure incurred for renovation for the six (6)-month FPE 31 October 2015 was mainly for the improvement work carried out at Factory Lot No. 12, Factory Lot No. 12A and Factory Lot No. 16. Capital expenditure incurred for plant and machinery for the FYE 30 April 2014 was mainly related to acquisition of machinery which includes bending, welding and cutting machinery for our business operations. For the six (6)-month FPE 31 October 2015, our Group’s capital expenditure incurred for plant and machinery was primarily for the acquisition of epoxy powder coating machine and wastewater treatment plant for enhancement of our business operations at Factory Lot No. 12, Factory Lot No. 12A and Factory Lot No. 16. Capital expenditure incurred for motor vehicles for the FYE 30 April 2013 to 2015 were mainly related to the acquisition of additional motor vehicles for senior management as well as for our business operations. For the period between 31 October 2015 up to the LPD, the capital expenditure incurred for motor vehicles was due to the acquisition of new motor vehicles for senior management. 5. INFORMATION ON OUR GROUP (Cant’d) Our Group’s material divestment for the past three (3) FYE 30 April 2013 to 2015, six (6)-month FPE 31 October 2015 and up to the LPD were as follows:­Divestments  Transaction value for the  <————-FyE 30 April———–>  Six (6)-month FPE 31 October 2015 RM’OOO  31 October 2015 up to the LPD RM’OOO  2013 RM’OOO  2014 RM’OOO  2015 RM’OOO  Land and Building Motor Vehicles Office Equipment, Furniture and Fittings Plant and Machinery  959 -79 – -196 -167  –10 20  -31 -41  -363 1 15  Total  1,038  363  30  72  379
Our Group’s capital divestment for land and building for the FYE 30 April 2013 was mainly related to disposal of two (2) factory cum office buildings in Taman Universiti Indah, Seri Kembangan which were acquired in 1994 and 1997. For the period between 31 October 2015 up to the LPD, our Group has disposed three (3) units of motor vehicles. As at the LPD, there are no ongoing projects that involve material capital expenditure, investments and divestitures. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d)

 

5.7 BUSINESS OVERVIEW 5.7.1 Our principal activities and products/services Our Group operates in the healthcare furniture and equipment business, where we are principally involved in the following core activities:­(i) Design, manufacturing and sale of medical/healthcare beds which include:­
• Medical beds; and
• Delivery beds.

 

(ii) Design, manufacturing, sale and trading of medical peripherals and accessories which include:­
• Patient transport trolleys;
• Medical carts;
• Instrument trolleys;
• Examination tables;
• Overbed tables; and
• Miscellaneous peripherals and accessories.

 

Healthcare Furniture and Equipment Design, manufacturing and sale of medicalfhealthcare beds U~I Medical beds . . … “‘I Delivery beds Design, manufacturing, sale and trading ofmedical peripherals and accessories «<‘1 Patienttransporttrolleys I …umm••~ Medical carts ~ Instrumenttrolleys 1 Examination tables ~l Overbed tables Miscellaneous .” perlpheralsand accessories Our products are designed by our in-house R&D team based on market requirements and patient ergonomics. Our in-house R&D team also designs product customisations, as and when required by our customers. Our R&D team uses 2D and 3D computer-aided design and drafting software applications such as SolidWorks and AutoCAD for the design of our products. Please refer to Section 5.7.6 of this Prospectus for further details of our R&D activities. The manufacturing of our products involve the shearing, cutting, punching, drilling, bending and welding of steel parts into steel frames, followed by grinding, finishing and surface treatment of the steel materials. The manufactured steel materials are then assembled and fitted with other parts and components (such as electric and hydraulic control systems, mattresses, castors/wheels, side rails, head boards, foot boards, and other accessories and fittings) to form the finished product. Please refer to Section 5.7.4 of this Prospectus for further details of our manufacturing activities and process flow. 74 5. INFORMATION ON OUR GROUP (Cont’d) We sell our products to hospitals and medical centres and other healthcare-related facilities in both the local and international markets, either directly by our sales team or through Agents, Distributors and project consultants. Please refer to Section 5.7.2 of this Prospectus for further details of our principal markets. In addition, we are also involved in trading, primarily medical peripherals and accessories, as a value-added service to both local and international customers, upon their request. Our principal business activities are segmented as follows:­(a) Design, manufacturing and sale of medicallhealthcare beds (1) Medical beds Medical beds refer to beds specially designed for hospitalised patients or individuals in need of any form of healthcare service. Medical beds have different features from ordinary beds (such as adjustable height, back rest, knee rest and castors/wheels) for the purpose of providing comfort and well­being of patients, and for the convenience of healthcare professionals (i.e. doctors and nurses) during the provision of healthcare services. Medical beds are essential supplies to hospitals and medical centres to house hospitalised patients. Medical beds are a measure of capacity for hospitals and medical centres as medical beds determine the number of patients any particular hospital or medical centre can support. Our portfolio of medical beds are as follows:­(i) Standard electric beds Standard electric beds are medical beds typically used in general wards to house hospitalised patients. These beds are electrically powered to enable height, back rest and/or knee rest adjustments. (ii) ICU! CCU electric beds ICU/CCU electric beds are medical beds used in ICU and CCU wards for high-risk patients who require constant monitoring by highly trained healthcare professionals (i.e. doctors and nurses). These beds are electrically powered to enable height, back rest and/or knee rest adjustments, and have other salient features such as translucent bases for X-ray procedures and built-in digital weighing scales for healthcare professionals to perform X-ray procedures and to weigh immobile patients. (iii) Hydraulic beds Hydraulic beds are typically used in general wards to house hospitalised patients. A hydraulic bed is fitted with a foot pedal-operated hydraulic jack to enable height adjustments, and a gas spring mechanism to enable back rest and/or knee rest adjustments. (iv) Manual beds Manual beds are typically used in general wards to house hospitalised patients. These beds are fitted with a manual crank mechanism to enable height, back rest and/or knee rest adjustments. II Company No. 1140005-V II 5. INFORMATION ON OUR GROUP (Cont’d) The list of our medical bed products are shown as follows:­Product Features Standard Electric Beds Electric control system • Four (4)-section bed base Adjustable height, back rest and knee rest
• Detachable head board and foot board
• Collapsible side rails
• Four (4) comer-rotating bumpers
• Four (4) castors/wheels with either two (2) diagonally­fitted brakes or central locking system

Additional features:­• Extra-low beds with minimum height of 240mm for patients with limited mobility
• Backup battery attached to the bed
• Manual crank mechanism override
• Trendelenburg and reverse Trendelenburg positions

Electric control system Four (4)-section bed base Adjustable height, back rest and knee rest Trendelenburg and reverse Trendelenburg positions ICU/CCU Electric Beds • Detachable PE head board and foot board
• Split fold down PE side rails Four (4) wheels with central locking system
• Backrest has a translucent base to allow for X-ray procedures

Additional features:­• Digital weighing scale with LCD screen and control panel on the foot board
• Zero scale function which allows for easy-monitoring of additional weight
• Bed exit alarm system which alerts healthcare professionals if the patient leaves the bed for more than a specified time period
• Under-bed light

Hydraulic control system Adjustable height controlled by a foot pedal-operated hydraulic jack Adjustable back rest and knee rest controlled by either gas spring mechanism or manual crank mechanism Detachable head board and foot board Hydraulic Beds• Four (4) castors/wheels with either two (2) diagonally­fitted brakes or central locking system Additional features:­• Trendelenburg and reverse Trendelenburg positions, controlled by a gas spring mechanism

 

5. INFORMATION ON OUR GROUP (Cont’d) Product Manual Beds  Features Additional features:­• Adjustable height, back rest and/or knee rest • Detachable head board and foot board • Collapsible or mid-length side rails • Built-in bumper • • Manual crank control mechanism Four (4) castors/wheels with two (2) diagonally-fitted brakes Features only for psychiatric bed:­• Welded restraint straps bar in six (6) positions • Bed frame legs are mounted to the floor with floor plugs
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) (2) Delivery beds Delivery beds are specially designed beds to provide additional support for mothers during labour, delivery and/or after-delivery stages. As such, delivery beds typically have removable leg sections, for the convenience of mothers and healthcare professionals, especially during the delivery stage. The list of our delivery beds are shown as follows:­Product Features Electric delivery beds • Electric control system
• Adjustable height and back rest
• Trendelenburg and reverse Trendelenburg positions, controlled either by electric or gas spring mechanism Built-in backup battery Four (4) 150mm-diameter wheels with central locking system Manual override CPR release lever at both sides of back rest Removable leg sections Detachable head board and foot board Spilt fold down PE side rails Two (2) stirrups & straps to allow for a lithotomy position

Hydraulic delivery beds • Adjustable height controlled by a foot pedal-operated hydraulic jack
• Adjustable backrest controlled by either a manual mechanism or a gas spring mechanism Trendelenburg and reverse Trendelenburg positions, controlled by a gas spring mechanism Four (4) wheels with either two (2) diagonally-fitted brakes or central locking system
• Detachable foot board, head board and foot rest Removable leg sections Two (2) stirrups & straps to allow for a lithotomy position

Additional features:­• Accessory stand Tilting controlled by either a manual crank mechanism or a gas spring mechanism Two (2) stirrups & straps to allow for a lithotomy position Detachable head board Fixed height delivery bedsAdditional features:­• Four (4) 125mm-diameter wheels with two (2) diagonally fitted brakes
• Ratchet back rest
• Detachable side rails and foot rest

 

 

 

 

5. INFORMATION ON OUR GROUP (Cont’d) (b) Design, manufacturing, sale and trading of medical peripherals and accessories Medical peripherals and accessories refer to peripherals and accessories which are mainly used in hospitals and medical centres as well as other healthcare-related facilities for a variety of purposes including transport and examination of patients as well as storage of belongings and medical supplies. Among some of the major medical peripherals and accessories which we offer include:­Product Patient transport trolley Examination table  Description Patient transport trolleys are used by healthcare professionals to transport patients within and out of the hospital. These patient transport trolleys are similar in appearance and features to medical beds, such as collapsible side rails, bumpers and IV drip holder. However, patient transport trolleys are narrower to allow for easier mobility. Our patient transport trolleys have the following features:­• Five (5) castors/wheels • Adjustable height controlled by hydraulic system • Collapsible side rails • PVC bumper guard rails • Push handle • Vertical oxygen tank holder • IV drip holder Additional features:­• Patient transfer board (for selected models) • Lateral Patient Transfer Trolley System (for selected models) • Longitudinal Patient Transfer Trolley System (for selected models) • Adjustable height controlled by a foot pedal-operated hydraulic jack • Adjustable back rest and tilting controlled by gas spring • Trendelenburg and reverse Trendelenburg positions, controlled either by a foot pedal-operated hydraulic jack or gas spring mechanism • Full-length or half-length translucent base to allow for X­ray procedures Examination tables are flat base medical beds where patients are placed during a medical examination. Examination tables mayor may not have a back rest. Our examination tables have the following features:­• Knockdown version available • Built-in paper roll holder (for selected models) • Built-in step stool (for selected models) • Back rest with ratchet mechanism (for selected models)
5. INFORMATION ON OUR GROUP (Cont’d) Product Medical cart Instrument trolley Overbed table Miscellaneous peripherals and accessories  Description Medical carts are used by healthcare professionals to temporarily or permanently hold and/or store medical equipment, instruments and accessories. Our medical carts have the following features:­• Oxygen tank bracket • Defibrillator tray • IV drip holder • Cardiac board Instrument trolleys are designed for healthcare professionals to hold medical instruments while they are examining a patient or performing surgery on a patient. Our instrument trolleys have the following features:­• Multi-purpose trolley • Can be modified according to customers’ requirements Overbed tables are movable platforms designed for hospitalised patients to place their meals and/or belongings, in order to enable easy access to. these items. Overbed tables are especially important for hospitalised patients who are limited to their bed for long periods of time. Our overbed tables have the following features:­• Fixed height, or adjustable height controlled by either tension spring knob lock or by two (2) fingertips • Tabletop diameter size (mm):­o 810(L) x 360(W) o 850(L) x 370(W) o 900(L) x 400(W) Additional features:­• C-shape leg base Our miscellaneous peripherals and accessories primarily include the following:­• Step stool • Kick stand • IV pole stand • Examination light • X-ray viewer • Canvas beds • Reclining chairs • Ward screen • Oxygen cylinder cart • Others

5. INFORMATION ON OUR GROUP (Cont’d) 5.7.2 Our Principal Markets Our principal market is in Malaysia. We have also exported our products to over 30 countries across six (6) continents. The breakdown of our revenue by our principal markets for the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 are as follows:­<—————————-FyE 30 April——————————–> Six (6)-month 2013  2014  2015  FPE 31 October  2015  Principal  RM’OOO  %  RM’OOO  %  RM’OOO  %  RM’OOO  %  Markets  Local  21,740  77.43  30,347  78.03  31,431  80.51  11,983  74.63  (Malaysia)  Overseas  6,337  22.57  8,546  21.97  7,608  19.49  4,074  25.37  Total  28,077  100.00  38,893  100.00  39,039  100.00  16,057  100.00  Overseas  Botswana  22  0.35  16  0.19  1,106  14.54  140  3.44  Maldives  67  1.06  – – 1,026  13.49  639  15.69  Mozambique  – – 474  5.55  990  13.01  4  0.10  Singapore  1,850  29.19  1,422  16.64  771  10.13  362  8.89  Kenya  61  0.96  312  3.65  659  8.66  – – Bangladesh  313  4.94  427  5.00  533  7.01  2,006  49.24  Sri Lanka  463  7.30  – – 488  6.41  4  0.10  UAE  211  3.33  337  3.94  344  4.52  295  7.24  Philippines  178  2.81  13  0.15  309  4.06  42  1.03  Kuwait  281  4.44  89  1.04  260  3.42  302  7.41  Brunei  84  1.33  154  1.80  202  2.66  10  0.25  Syria  – – – – 144  1.89  – – Costa Rica  – – – – 136  1.78  – – Vietnam  2,108  33.26  197  2.31  118  1.55  – – Saudi Arabia  247  3.90  4,063  47.54  100  1.32  7  0.17  Mauritius  – – 26  0.30  76  1.01  1  0.02  Cambodia  87  1.37  51  0.60  74  0.97  115  2.82  Ghana  11  0.18  17  0.20  63  0.83  3  0.07  Germany  – – 84  0.98  48  0.63  2  0.05  Hong Kong  73  1.15  112  1.31  37  0.49  34  0.83  Switzerland  51  0.81  32  0.37  36  0.47  – – Myanmar  12  0.19  58  0.68  33  0.43  – – Thailand  42  0.66  219  2.56  25  0.33  38  0.93  Pakistan  3  0.05  21  0.25  20  0.26  – – India  9  0.14  94  1.10  7  0.09  – – Oman  9  0.14  – – 3  0.04  24  0.59  United Kingdom 125  1.97  – – – – – – Jordan  30  0.47  92  1.08  – – – – Austria  – – 153  1.79  – – – – Laos  – – 42  0.49  – – – – Finland  – – 28  0.33  – – – – South Africa  – – 12  0.14  – – – – Qatar  – – 1  0.01  – – – – Indonesia  – – – – – – 46  1.13  Total  6,337  100.00  8,546  100.00  7,608  100.00  4,074  100.00

 

5. INFORMATION ON OUR GROUP (Cont’d) We sell our products in Malaysia directly to hospitals and medical centres as well as via Agents, Distributors and project consultants. For the FYE 30 April 2013 to 2015 and up to the LPD, we pride ourselves that we have delivered our products to, amongst others, many public and private hospitals and medical centres in Malaysia such as the following:­Local public hospitals and medical centres Hospital Kuala Upis Hospital Melaka Hospital Putrajaya Hospital Queen Elizabeth II Hospital Raja Permaisuri Bainun Ipoh Hospital Rehabilitasi Cheras Hospital Selayang Hospital Serdang Hospital Sultanah Aminah Hospital Sungai Buloh National Cancer Institute, Putrajaya Pusat Perubatan Universiti Malaya  Local private hospitals and medical centres Assunta Hospital Columbia Asia group of hospitals Darul Ehsan Medical Centre Gleneagles Kuala Lumpur Gleneagles Penang Hospital Tung Shin KPJ Damansara Specialist Hospital KPJ Pahang Specialist Hospital KPJ Tawakkal Specialist Hospital Kuantan Medical Centre Manipal Hospitals Klang Nilai Medical Centre Pantai Hospital Ampang Pantai Hospital Ayer Keroh Pantai Hospital Cheras Pantai Hospital Ipoh Pantai Hospital Kuala Lumpur Pantai Hospital Penang Pantai Hospital Sungai Petani Pasir Gudang Specialist Hospital ParkCity Medical Centre Perak Chinese Maternity Hospital Prince Court Medical Centre Sentosa Medical Centre Subang Jaya Medical Centre Sunway Medical Centre Taiping Medical Centre Taman Desa Medical Centre & Specialist Hospital Tropicana Medical Centre
5. INFORMATION ON OUR GROUP (Cont’d) Internationally, we also sell our products directly to hospitals and medical centres as well as via overseas Agents and Distributors, and we have delivered our products to over 30 countries since our inception, e.g. Botswana, Maldives, Mozambique, Singapore and Bangladesh. Some of the overseas hospitals and medical centres that we have sold to directly via our sales team for the FYE 30 April 2013 to 2015 and up to the LPD are as follows:­Overseas public and private hospitals and medical centres  Country  Apollo Hospital -Bangalore Apollo Hospital -Chennai Apollo Bramwell Hospital Hemas Capital Hospital Apollo Hospitals Dhaka Labaid Specialized Hospital Bangladesh Specialized Hospital  India India Republic of Mauritius Sri Lanka Bangladesh Bangladesh Bangladesh
5.7.3 Key types, sources and availability of supplies Our raw materials consist of steel materials (i.e. sheets, tubes and bars) used for the manufacturing of steel frames of our products. These materials are sourced from local trading agents. Thus far, we have not experienced any material shortages in sourcing the above materials for our operations. Furthermore, these materials are commodities which are readily available from many local as well as overseas suppliers. We also source supplies such as castors/wheels, accessories and fittings, electrical components and hydraulic pumps from local and overseas suppliers, which we assemble with our manufactured steel materials to form the finished products. We have also not experienced any material shortages in sourcing the above materials for our operations, as they are readily available from many local and overseas suppliers. Further, ABS and PE head boards, foot boards and side rails used in our medicallhealthcare beds are manufactured according to our specifications by our outsourced manufacturers based in Taiwan and China. For the ABS components, we own and provide the plastic injection moulds to our outsourced manufacturers. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cant’d) The major material and supplies purchased by our Group are as follows:­Type of Materials and Supplies  Originating Country  <—————————-FyE 30 April——————————-> 2013 2014 2015 RM’OOO % RM’OOO % RM’OOO %  Six (6)-month FPE 31 October 2015 RM’OOO %  Steel sheets, tubes and bars  Malaysia  1,869  17.16  1,949  12.92  2,293  14.11  841  14.94  Castors/wheels  Malaysia  696  6.39  1,253  8.31  949  5.84  449  7.97  Overseas (i.e. Germany and China)  376  3.45  315  2.09  616  3.79  302  5.37  Accessories and fittings (i.e. side rails, head boards and foot boards)  Malaysia Overseas (i.e. China, Taiwan and Germany)  1,034 948  9.49 8.70  1,423 1,987  9.43 13.17  1,427 1,367  8.78 8.41  430 644  7.63 11.43  Electrical components  Overseas (i.e. Denmark and China)  1,189  10.92  2,064  13.69  1,666  10.25  826  14.66  Hydraulic pumps  Overseas (i.e. Germany)  365  3.35  898  5.95  405  2.49  103  1.83  Trading* and other miscellaneous materials and supplies (including parts and component fittings)  Malaysia Overseas (i.e. Taiwan, China, United Kingdom)  3,128 1,288  28.72 11.82  3,731 1,465  24.73 9.71  6,171 1,360  37.96 8.37  1,590 447  28.24 7.93  Total Purchases  10,893  100.00  15,085  100.00  16,254  100.00  5,632  100.00
Note:­ *  Purchased for our trading business and not as materials and supplies for manufacturing. Our involvement in the trading business is as a value-added service, to fulfil customers’ requests and requirements. The trading products sourced and sold by us are products which we are unable to manufacture due to constraint ofresources, such as machinery capability, or if able to manufacture, would entail substantial labour time and resources that may not render the manufacturing of such products practical.
Please refer to Section 4.1.7 of this Prospectus for information on the volatility in prices of our raw materials. 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.4 Process flow We manufacture the steel frames for our products, which involve the shearing, cutting, punching, drilling, bending and welding of steel materials. Steel materials that require milling and lathe works are outsourced to a third party as we do not own any milling and lathe machines. This is then followed by grinding, finishing and surface treatment of the steel frames, before it is assembled to form the finished product. The assembly process involves the assembly of manufactured steel materials with other parts and components to form the finished product. For our medical/healthcare beds and patient transport trolleys, this comprises the following:­• Electric and hydraulic control systems, mattresses, castors/wheels, aluminium side rails, accessories and fittings, gas spring mechanisms and optional features such as weighing scales and translucent base panels procured as finished materials and supplies from third party suppliers; and
• ABS/PE head boards, foot boards and side rails procured as finished materials from our outsourced manufacturers in Taiwan and China.

The assembly of our medical peripherals and accessories such as medical carts, instrument trolleys and overbed tables consist largely of the steel frames and body, castors/wheels, and miscellaneous fittings. This is then followed by grinding, finishing and surface treatment of the assembled materials, to form the finished product. A typical process flow depicting the major processes for our Group’s manufacturing activities (including products manufactured according to customer’s specification) is illustrated below:­Receipt of Materials & Supplies’ Electric and hydraulic Receipt of Raw Materials Optional features such and translucent base Gas spring mechanism QC “, Outsourced Manufacturing
of Parts” ASS head boards. foot boards and side rails PE head boards. foot boards and side ralls Notes:­Materials and supplies listed above may vary in accordance to the type ofproduct manufactured. Outsourced manufacturing of parts is only required in the manufacturing of certain products such as medical beds and patient transport trolleys. 85 5. INFORMATION ON OUR GROUP (Cont’d) (i) Receipt of materials and supplies Upon receipt of materials and supplies, our PC inspectors will carry out inspection on the materials and supplies. Our materials and supplies comprise raw materials such as steel; and finished materials and supplies that consist primarily of non-steel parts and components. Steel materials include sheets, tubes and bars; while non-steel parts and components include ABS and PE head boards, foot boards and side rails, as well as electric and hydraulic control systems, mattresses, castors/wheels, aluminium side rails, accessories and fittings, gas spring mechanisms and/or optional features such as weighing scales and translucent base panels. Our PC inspectors will ensure that the materials and supplies are free from defects. After inspection, the steel materials will be processed. (ii) Processing of steel materials Steel materials may either be processed in-house or outsourced to a third party, depending on the processes required. Processes such as milling and lathe works* are outsourced to a third party as we do not own any milling and lathe machines. Both milling and lathe work are processes to remove unwanted steel material, where the steel undergoes cutting and shaping by using milling and/or lathe machinery. For steel materials that are processed in-house, the materials will first be sorted into two (2) categories, namely steel sheets,and steel tubes and bars, so as to undergo different processes. Note:­Milling and lathe works are not significant as it contributed 2.11%, 2.34%, 2.70% and 2.22% to our total cost of sales for the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 respectively. For steel sheets:­(a) Shearing Steel sheets will be processed using our cutting machine, as per the design plans. QC inspection will be performed after shearing to ensure dimensions are accurate as per the design plans. (b) Punching Upon shearing of steel sheets, the steel sheets will undergo the punching process to form shapes within the sheets. Punching of shapes onto steel sheets are carried out with our punching machine. On completion of the punching process, our PC inspectors will carry out in-process dimensional checks on the punched steel sheets to ensure that they are punched according to the design plans.

5. INFORMATION ON OUR GROUP (Cont’d) (c) Bending Upon punching of steel sheets, the steel sheets will undergo bending. The bending process is either carried out manually or using bending machinery. On completion of the bending process, our PC inspectors will carry out dimensional checks on the formed steel sheets to ensure that they are according to the design plans. (d) Spot Welding The steel sheets will undergo spot welding using a spot welding machine. Spot welding is typically used to join steel materials together. For steel tubes and bars:­(a) Cutting Steel tubes and bars will be processed as per the design plans, either manually or using a cutting machine. QC inspection will be performed after cutting to ensure dimensions are accurate as per the design plans. (b) Punching Upon cutting of steel tubes and bars, the steel tubes and bars will undergo punching process to form shapes within tubes and bars. Punching of shapes onto steel tubes and bars are carried out with our punching machine. On completion of the punching process, our PC inspectors will carry out dimensional checks on the punched steel tubes and bars to ensure that they are punched according to the design plans. (c) Drilling Upon punching of steel tubes and bars, the steel tubes and bars will undergo the drilling process to form holes within the steel tubes and bars. Drilling of holes into steel tubes and bars are also carried out with our punching machine. On completion of the drilling process, our PC inspectors will carry out checks on the steel tubes and bars to ensure that they are drilled according to the design plans.

 

5. INFORMATION ON OUR GROUP (Cont’d) (d) Bending Upon drilling of steel tubes and bars, the steel tubes and bars will undergo bending according to the design plans. The bending process is either carried out manually or using bending machinery. Our PC inspectors will carry out dimensional checks on the formed steel parts to ensure that they are according to the design plans. (iii) Final welding Steel materials that have been processed will then undergo final welding to form the final product. Most of our final welding processes are undertaken using our robotic welding machinery. However, we also perform manual welding if the production quantity is low. (iv) Grinding and finishing Upon welding, the steel materials will go through the grinding and finishing process.
(v) Surface treatment After grinding and finishing, the steel materials will be sent for surface treatment in accordance to requirements of the product and/or customer. Surface treatment prevents rust and abrasions, extends the life of the surface and improves the safety of the products. Among the type of surface treatments we provide are pre-treatment and epoxy powder coating.
(vi) Assembling and fitting The manufactured steel materials are then assembled and fitted with other parts and components, as specified in the design plans. After this stage, our QAlQC team will perform a final test and inspection on the final finished product. (vii) Delivery/storage The final product will be packed before it is delivered to our customers as per their delivery instructions. The final product may either be delivered to the customer upon completion or temporarily stored in our warehouse pending delivery. We typically take an average duration of two and a half (2.50) hours to manufacture one (1) medical/healthcare bed, without taking into account waiting time for receipt of materials and supplies. The average duration taken to manufacture medical peripherals and accessories vary due to the large number of products, where the time required to manufacture each product differs. As part of our inventories planning, we commence certain manufacturing processes (such as cutting tubes/bars or shearing sheets) for some of the common parts and components e.g. castors/wheels fitting parts, drawer rails and steel hinges, prior to receipt of purchase orders from our customers. We also maintain certain popular selling products as buffer stock.

 

5. INFORMATION ON OUR GROUP (Cont’d) 5.7.5 QA and control procedure We have a commitment towards manufacturing quality to ensure that our products meet local and international requirements. We presently comply with the following local and international standards:­Standard  Certification Body  Description of Standard  Year First Awarded  Latest Year Renewed  Scope of Certification  ISO  TOVSOD  This standard specifies the  2001  2014  Design and  9001:2008  Management  requirements for quality  development,  Service GmbH  management system  production,  where an organisation:  assembly and  (i) needs to demonstrate  distribution of  its ability to consistently  durable medical  manufacture products  equipment such  that meet customer and  as hospital beds,  applicable regulatory  trolleys, tables,  requirements; and  mobility aids and  (ii) aims to enhance  other support  customer satisfaction  equipment.  through effective  application of its quality  management system.  EN ISO  TOV SOD  This standard specifies the  2005  2014  Design and  13485:2012  Product Service  requirements for quality  development,  GmbH  management system  production,  where an organisation  assembly and  needs to demonstrate its  distribution of  ability to provide medical  durable medical  devices and related  equipment such  products/services to meet  as hospital beds,  customer requirements  trolleys, tables,  and regulatory  mobility aids and  requirements specific to  other support  these products.  equipment.  CE Mark  Obelis s.a.  This mark is a registration  2009  N/A  The sale of  for products such as  medical devices in  medical devices and  the EU territory,  related products/services,  provided  which certifies that our  requirements of  products comply with the  the European  European Commission  Council Directive  health, safety and  are complied. Our  environment protection  products under  legislation, under the  the purview of this  European Commission  registration are  93/42/EEC and  manual, hydraulic,  2007/47/EEC.  electric, ICU/CCU  and delivery beds,  patient transport  trolleys and  stretchers,  examination  tables, medical  tables and chairs,  and overbed  tables.
5. INFORMATION ON OUR GROUP (Cant’d) Our General Manager -Operations, Lim Ming Chang, is also our Quality Management Representative. As at the LPD, our Group has a QNQC team led by Lim Kon Khoon, and three (3) other personnel. The main responsibilities of the QNQC team is primarily on finished goods inspection, where prior to final product packaging, an inspection on the specifications and quality will be conducted to ensure that our customer’s specifications have been met. In addition, upon receipt of raw materials, outsourced manufacturing parts, and other supplies and materials, QC checks are conducted by our PC inspectors on the specifications and quality to ensure that the materials are as per our purchase order. In-process QC checks supervised by our PC inspectors will also be conducted at various stages of our manufacturing process, such as:­• Shearing/cutting process;
• Punching process;
• Bending process;
• Spot welding process;
• Robotic welding process; and
• Grinding and finishing process.

This is to ensure that the quality of our products is upheld and the specifications of our customers are met.

 

5.7.6 R&D We are constantly exploring and keeping up with the growth in technology and its potential applications. As at the LPD, our R&D activities are carried out by our dedicated R&D team comprising five (5) personnel. We recognise the importance of R&D to ensure we remain competitive to sustain our continuous growth. Our R&D strategies are:­• To broaden and further explore our Group’s fundamental technologies;
• To enhance the capabilities of our R&D team; and
• To reduce the time taken for our Group’s return on investments. As such, our Group abides by the following R&D policies:­
• To design products that will attain the highest level of customer satisfaction by meeting customers’ requirements and expectations;
• To encourage all personnel to contribute ideas and recommendations;
• To design value-added products;
• To provide the best solution for customers in addition to solving technical issues; and
• To be consistently updated with the latest technology, and be constantly aware of latest market trends and demands.

 

5. INFORMATION ON OUR GROUP (Cant’d) Product! Solution  Past R&D Achievements  Lateral Patient Transfer Trolley System Longitudinal Patient Transfer Trolley System  On-going R&D Projects  Bed Mat Sensor  Future R&D Projects  Patient LiftfHoist Digital Controlled Heater for the Baby Cot Digital Warmer Built-in Nurse Call Feature
Our R&D designs are determined based on the following factors:­• Requirements and specifications of our customers;
• Feedbacks from our management and sales team; and
• Latest market trends and demands. Our past, on-going and future R&D projects are as follows:­

Description
Allows for transferring of patients to a parallel trolley or bed. Modified from lateral patient transfer trolley system for increased convenience of transferring a patient by way of downward sliding from one trolley to another trolley or bed to cater for narrow hospital corridors and tight spaces. A device which allows detection of a patient’s exit from the hospital bed. A mechanism which facilitates the lifting of a patient from one (1) place to another by a lifting mechanism. A device which allows automated control of temperature. Add-on feature to medical/healthcare beds to call for nurses’ assistance. Year  Year  commenced!  completed!  expected  expected  commencement  completion of  of research  research  June 2011  February 2012  November 2014  March 2015  January 2015  June 2016  June 2016  December 2016  June 2016  June 2017  December 2016  June 2017

5. INFORMATION ON OUR GROUP (Cont’d) In the FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015, we incurred estimated R&D expenses of RMO.105 million, RMO.204 million, RMO.252 million and RMO.083 million respectively, which accounted for 0.37%, 0.52%, 0.65% and 0.52% of our total revenue in the corresponding years/period as follows:­Total revenue for the FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 were RM28.077 million, RM38.893 million, RM39.039 million and RM16.057 million respectively. Based on the salaries of our R&D personnel.

THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.7 Technology used and to be used We manufacture medical/healthcare beds, peripherals and accessories, using the following technology/processes:­(a) Automated robotic welding technology

Automated robotic welding is an automated process carried out by programmable robotic arms. The use of automated robotic welding machinery allow for increased accuracy and throughput, leading to greater efficiency in a high production industry and higher consistency in producing quality products, as well as reduces the need for labour, thereby increasing the safety of the workplace and reducing dependency on human resources.
(b) CAD and CAM

We use CAD software applications for 2D and 3D product design and drafting, as well as CAM software to control machine tools and related machinery in our manufacturing process.
(c) CNC machinery

 

As set out in Section 3.9 of this Prospectus, we intend to utilise part of our listing proceeds to acquire CNC laser shearing machine, CNC laser cutting machine and CNC punching machine. CNC machinery refers to the automation of machinery and tools used in the manufacturing of steel and plastic materials. These machinery are controlled through programmed commands encoded in a software programme, based on drawings produced from CAD and CAM softwares. The use of CNC machinery allows for high-speed preCISion shearing, cutting, and punching, which will increase operating efficiencies and process accuracies. Further, these machinery will also allow for high-precision profile machining or shaping, enabling us to refine our product finishing through cutting/shaping of complex geometries and patterns, and on thin-walled tubes and profiles without deformation. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d)
5.7.8 Modes of marketing, distribution and sales Our modes of distribution and sales
Our diverse range of products are used in/by a wide portfolio of customers such as hospitals and medical centres, as well as other healthcare-related facilities such as clinics and specialist institutions (i.e. fertility centres, diagnostics centres, eye specialists, orthopaedic centres, chiropractic centres, dialysis centres, confinement centres, nursing centres and etc). We also sell our products to education facilities/medical schools, wellness, beauty and aesthetics centres, pharmacies, and individuals. We sell our products in both the local and international markets, either directly by our sales team or through Agents, Distributors and project consultants, as illustrated below:­Mode of distribution and salesI I
I

~ ~ Direct Indirect I T

Intermediaries (a) Agents; End-user customers ~————­(b) Distributors; and
(c) Project consultants

(i) Direct via our sales team
Our sales to hospitals and medical centres, which have been secured directly by our sales team, are generated through direct contact with potential customers and referrals from our past and existing customers. Our customers may also include customers which have contacted us to enquire about our products and walk-in customers. Our corporate website and participation in exhibitions and trade shows have also helped us to secure customers directly in the past (Please refer to below for further information on exhibitions and trade shows). (ii) Indirect via Agents, Distributors and project consultants Our sales are also secured through third parties that include Agents, Distributors and project consultants, as illustrated below:­(a) Agents
Agents work with hospitals and medical centres to source medical/healthcare beds, peripherals and accessories for:­• the construction of new overseas public and private hospitals or medical centres;
• capacity expansion of existing local public hospitals or medical centres;
• capacity expansion of existing overseas public and private hospitals or medical centres; or
• replacement of existing medical/healthcare beds, peripherals and accessories which are at the end of their useful lifespan.

94

 

5. INFORMATION ON OUR GROUP (Cont’d) Other healthcare-related facilities or end users could also purchase our products via Agents as part of a one-stop arrangement offered by the agent. In most cases, the identity of the end-user customer is known to us and we may deliver directly to those end-user customers. Our sales through Agents are not on consignment basis. After-sales services are usually provided by Agents as minimal technical expertise is required. (b) Distributors
Distributors purchase our products from us for onward sales to their customers. We deliver our products to our Distributors and as such, the identity of the end­user customers are not known to us. After-sales services will be provided by us in the event the Distributors and/or end-user customers approach us directly.
(c) Project consultants
Project consultants typically advise on the number of required medical/healthcare beds, peripherals and accessories for the construction of new local public hospitals or medical centres, or capacity expansion of existing local public hospitals or medical centres which involve construction works, including the layout of these hospitals or medical centres. As sales secured through project consultants are for specific projects, the identity of the end-user customer is generally known to us. After-sales services are usually provided by us.

THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) Hospitals and medical centres may source medical/healthcare beds, peripherals and accessories for a variety of reasons, including the construction of a new hospital or medical centre, hospital or medical centre capacity expansion, replacement of existing medical/healthcare beds, peripherals and accessories which are at the end of its useful lifespan, as well as ad-hoc purchases of new medical/healthcare beds, peripherals and accessories. Typical scenarios in which sales to hospitals and medical centres may be secured via these sales channels, are as follows:­
Company No. 1140005-V

5. INFORMATION ON OUR GROUP (Cant’d) The breakdown of our number of customers and revenue by our mode of distribution and sales for the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 are as follows:­

<—————————————————-FYE 30 Apri1—..—————————————————-> Six (6)-month <————–2013 ————–> <———-2014 ———> <———–2015 ———-> <—-FPE 31 October 2015—–> Mode of Distribution Total % of Total % of Total % of Total % of Number of Revenue Total Number of Revenue Total Number of Revenue Total Number of Revenue Total Customers RM’OOO Revenue Customers RM’OOO Revenue Customers RM’OOO Revenue Customers RM’OOO Revenue Direct approach# 248 9,726 34.64 289 14,225 36.57 332 16,795 43.02 373 8,570 53.37 -Hospital and medical 142 8,854 31.53 158 13,509 34.73 175 15,754 40.36 151 7,850 48.89centres ~ Local 138 8,330 29.67 151 13,110 33.71 167 14,740 37.76 143 5,078 31.63 ~ Overseas 4 524 1.86 7 399 1.02 8 1,014 2.60 8 2,772 17.26 -Others” 106 872 3.11 131 716 1.84 157 1,041 2.66 222 720 4.48 ~ Local 104 791 2.82 130 708 1.82 155 1,036 2.65 220 707 4.40 ~ Overseas 2 81 0.29 1 8 0.02 2 5 0.01 2 13 0.08 Agents, Distributors 571 18,351 65.36 554 24,668 63.43 564 22,244 56.98 371 7,487 46.63 and project consultants”‘# -Agents 36 3,561 12.68 29 1,320 3.39 41 6,876 17.61 26 2,609 16.25 ~ Local 33 1,478 5.26 28 1,305 3.35 35 4,488 11.50 23 1,871 11.65 ~ Overseas 3 2,083 7.42 1 15 0.04 6 2,388 6.11 3 738 4.60 -Distributors 524 9,518 33.90 508 15,820 40.68 521 15,071 38.61 345 4,878 30.38 ~ Local 487 7,179 25.57 459 8,676 22.31 481 10,797 27.66 313 3,395 21.14 ~ Overseas 37 2,339 8.33 49 7,144 18.37 40 4,274 10.95 32 1,483 9.24 -Project consultants 11 5,272 18.78 17 7,528 19.36 2 297 0.76 –­(Local)
Total 819 28,077 100.00 843 38,893 100.00 896 39,039 100.00 744 16,057 100.00 97
5. INFORMATION ON OUR GROUP (Cant’d) Notes:­*  Notwithstanding the contribution from Agents, Distributors and project consultants is more than contribution from direct approach in the past three (3) FYE 30 April 2013 to 2015, we are not dependent on any single agent, distributor or project consultant. Please refer to Section 5.7. 14 of this Prospectus for further information on our major customers.  A  Others include other healthcare-related facilities such as clinics, specialist institutions (i.e. fertility centres, diagnostic centres, eye specialists, orthopaedic centres, chiropractic centres, dialysis centres, confinement centres, nursing centres, and etc), education facilities/medical schools, weI/ness, beauty and aesthetics centres, pharmacies and individuals (doctors and walk-in customers).  #  The above breakdown has been tabulated based on the customers’ name set out in the invoices.
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5. INFORMATION ON OUR GROUP (Cont’d) Our marketing strategies We understand the importance of building our brand recognition and market standing in order to boost our sales. As such, we constantly invest in various marketing strategies to raise our corporate profile. The sales and marketing strategies initiated by our Group include the following:­(i) Trade exhibitions and events An im portant aspect of our sales and marketing activities is our Group’s participation in local and international trade exhibitions, as these events are an effective medium to showcase our products and meet potential customers. The following are examples of the major trade exhibitions and events that we have participated in over the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015:­
Year 2012 2013  Name of Trade Exhibition/Event HKTDC Hong Kong International Medical Devices and Supplies Fair 2012 APHM International Healthcare Conference and Exhibition 2012 MEDICA Fair Asia 2012 Vietnam Medi-Pharm Expo 2012 KPJ Healthcare Conference and Exhibition 2012 Showcase Malaysia 2012 MEDICA 2012 Arab Health 2013 International Conference of Nursing, Pharmacy and Health Sciences 2013 Africa Health 2013 Kenya Medex 2013 Medical Fair Thailand 2013 APHM International Healthcare Conference and Exhibition 2013 53rd MMA Annual General Meeting and Scientific Meeting Showcase Malaysia 2013  Organiser HKTDC APHM Messe Dusseldorf Asia Pte Ltd National Trade Fair & Advertising Company KPJ Healthcare Berhad MATRADE Messe GmbH Dusseldorf MATRADE KPJ Healthcare University College II R South Africa BV Profex Exhibition Organizer FZ, LLC Messe Dusseldorf Asia Pte Ltd APHM MMA Trade Development Authority of Pakistan  Location Hong Kong Kuala Lumpur, Malaysia Singapore Hanoi, Vietnam Selangor, Malaysia Yangon, Myanmar Dusseldorf, Germany DUbai, UAE Kuala Lumpur, Malaysia Johannesburg, South Africa Nairobi, Kenya Bangkok, Thailand Selangor, Malaysia Negeri Sembilan, Malaysia Karachi, Pakistan
5. INFORMATION ON OUR GROUP (Cont’d) Year  Name of Trade Exhibition/Event  Organiser  Location  2013 (Coni’d)  International Modern Hospital Show 2013  Japan Association Nippon Management Association Hospital and Omni  Tokyo, Japan  3’d International Clinical Emergency Medicine 2013  Conference  on  Malaysian Society for Traumatology and Emergency Medicine  Kuala Lumpur, Malaysia  Cambodia and Malaysia Small and Medium Enterprises Products & Services Interactive Exhibition and Seminar 2013  The Associated Chinese Chambers of Commerce and Industry of Malaysia  Phnom Cambodia  Penh,  National Geriatric Conference  Malaysia Society of Geriatric Medicine  Kuala Lumpur, Malaysia  KPJ Healthcare Conference and Exhibition 2013  KPJ Healthcare Berhad  Selangor, Malaysia  International Trade Malaysia 2013  Qube Integrated Malaysia Sdn Bhd  Kuala Lumpur, Malaysia  Simposium Warga Emas Kebangsaan 2013  National Elderly Symposium  Kuala Lumpur, Malaysia  2014  Arab Health 2014  Informa Life Sciences Exhibitions  Dubai, UAE  Medical Fair India 2014  Messe Dusseldorf GmbH  Mumbai, India  APHM International Healthcare Conference and Exhibition 2014  APHM  Selangor, Malaysia  Medical Fair Asia 2014  Messe Dusseldorf Asia Pte Ltd  Singapore  Medical Myanmar 2014  Fireworks Trade Media Pte Ltd  Yangon, Myanmar  Medical Philippines  Fireworks Trade Media Pte Ltd  Manila, Philippines  MEDICA 2014  Messe Dusseldorf GmbH  Dusseldorf, Germany  KPJ Healthcare Conference and Exhibition 2014  KPJ Healthcare Berhad  Putrajaya, Malaysia  2015  Arab Health 2015  Informa Life Sciences Exhibitions  Dubai, UAE  1st Pantai Nursing Seminar  Hospital Pantai Ayer Keroh Sdn Bhd  Melaka, Malaysia  2nd Joint Effort between Indonesian Malaysian (Nurses Wound, Ostomy and Continence) Nursing Workshop and Conference 2015  Kelab Jururawat Pusat Perubatan Universiti Malaya  Kuala Lumpur, Malaysia
5. INFORMATION ON OUR GROUP (Cont’d) Year 2015 (Cont’d)  Name of Trade Exhibition/Event 5th Nursing Congress 2015 Medical Fair Thailand 2015 i h Meditex Bangladesh 2015 Intemational Expo Specialised Marketing Mission on Medical Devices and Pharmaceuticals APHM International Healthcare Conference and Exhibition 2015 FIME Intemational Medical Expo KPJ Medical Workshop and Exhibition 2015 4th International Clinical Conference on Emergency Medicine 2015  Organiser Persatuan Pendidikan Jururawat Hospital Wanita dan Kanak-kanak Sabah Messe Dusseldorf Asia Pte Ltd Conference & Exhibition Management Services Ltd MATRADE APHM FIME, Inc KPJ Healthcare Berhad Malaysian Society for Traumatology and Emergency Medicine  Location Sabah, Malaysia Bangkok, Thailand Dhaka, Bangladesh Riyadh, Saudi Arabia and Doha, Qatar Kuala Lumpur, Malaysia Florida, United States Selangor, Malaysia Kuala Lumpur, Malaysia
Such participation also allows us to stay updated on the relevant market trends and technical information, as well as expand our business networking within the industry. Additionally, participation in these trade exhibitions and events greatly enhances our brand visibility and our Group’s presence. (ii) Advertising We undertake advertising activities through trade directories such as the Medical Supplies Annual Directory to increase the awareness of our brand and products. (iii) Corporate website We have established our corporate website at http://www.lklbeds.com which provides immediate searchable information on our Company, including product and service offerings. The current widespread use of the internet as a source of information enables us to cross geographical borders and facilitates access from any part of the world, enhancing our potential market reach and exposure.

 

5. INFORMATION ON OUR GROUP (Cont’d) 5.7.9 Major approvals, licences and permits obtained Details of major approvals, licences and permits applicable to our Group as at the LPD are as follows:­Authority Licence/Company Description of
Date of issuance/ licence/approval commencement! expiry Reference no. A017197MITI
(a) Advance LKL Manufacturing Licence in Issue date: 18 accordance with the Industrial
January 2013 Metaltech Co-ordination Act 1975 (“ICA”) for the manufacturing of
Commencementhospital and medical furniture date: 7 January at Factory Lot NO.3 2009* (b) Expiry date: N/A (c)
(d)

Major conditions imposed
Permitted product for manufacturing:­Hospital and Medical Furniture. Factory Lot No. 3 is subject to the approval from the relevant State Govemment and Department of Environment. MITI and Malaysian Investment Development Authority (“MIDA”) shall be informed of any sales of shares of LKL Advance Metaltech. LKL Advance Metaltech must train Malaysian citizens so that transfer of technology and expertise can be channelled to all levels of designations/positions. Status of compliance  Complied.
102

Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) Company  Description of licence!approval  Authority  Licence! Reference no.  Date of issuance! commencement! expiry  LKL Advance Metaltech  Manufacturing Licence in accordance with the ICA for the manufacturing of hospital and medical furniture at Factory Lot NO.1  MITI  A020154  Issue date: 9 June 2015 Commencement date: 9 June 2015 Expiry date: N!A  (a) Hospital (b) Factory subject from  (c) MITI shares  (d) LKL must can levels
Major conditions imposed
Permitted product for manufacturing:­and Medical Furniture. LotNo. 1is to the approval the relevant State Government and Department of Environment. and MIDA shall be informed of any sales of of LKL Advance Metaltech.
Advance Metaltech train Malaysian citizens so that transfer of technology and expertise be channelled to all of designations! positions. Status of compliance  Complied.
103

Company No. 1140005-V
5. INFORMATION ON OUR GROUP (Cont’d) Company  Description of licence/approval  Authority  Licence! Reference no.  Date of issuance/ commencement! expiry  LKL Advance Metaltech  Manufacturing Licence in accordance with the ICA for the manufacturing of hospital and medical furniture at Factory Lot No. 15  MITI  A020156  Issue date: 27 July 2015 Commencement date: 9 June 2015 Expiry date: N/A
Major conditions imposed
(a) Permitted product for
manufacturing:­Hospital and Medical Furniture.
(b) Factory Lot No. 15 is subject to the approval
(c) MITI and MIDA shall be informed of any sales of shares of LKL Advance Metaltech.
(d) LKL Advance Metaltech must train Malaysian citizens so that transfer of technology and expertise can be channelled to all levels of designations/ positions.

from  the  relevant  State  Government  and  Department  of  Environment.
Status of compliance Complied. 104

 

5. INFORMATION ON OUR GROUP (Cont’d) Authority Licence/
Company Description of Date of issuance/ Major conditions imposed licence/approval commencement! expiry Reference no. A020155MITI
LKL Manufacturing Licence in Issue date: 9 June (a) Permitted Advance accordance with the ICA for 2015
manufacturing:-Metaltech the manufacturing of hospital Hospital and and medical fumiture at Furniture. Factory Lot No. 12, Factory Lot Commencement date: 9 June 2015 No. 12A and Factory Lot No. (b) Factory Lot16 Expiry date: N!A
Factory Lot No. Factory Lot subject to from the Government Department Environment.
(c) MITI and MIDA informed of any shares of Metaltech.

(d) LKL Advance must train citizens so that transfer of technology can be channelled levels of positions.

product for Medical No. 12, 12A and No. 16 is the approval relevant State and of shall be sales of LKL Advance Metaltech Malaysian and expertise to all designations! Status of compliance  Complied.
105

Company No. 1140005-V
5. INFORMATION ON OUR GROUP (Cont’d) Authority Licence/ Major conditions imposed licence/approval Company Date of issuance/Description of
commencement! expiry Reference no. 357-02006492 Issue date: N/A Certificate of Registration of Ministry of LKL
(a) Any Advance LKL Advance Metaltech for the Finance
information Metaltech (“MOF”)supply / service sector, field MOF and sUb-field Commencement date: 29 May 2015 the occur.Expiry date: 28 May 2018 (b) visit inspection without prior notification. (c) Newly to make the date registered.
changes to the submitted to must be updated online within 21 days from date the changes MOF has a right to make or conduct audit at any time registered companies are not allowed any changes to Owner and Directors within 6 months from the the company was Status of compliance Noted on item (a). 106

5. INFORMATION ON OUR GROUP (Cont’d) Company  Description of licence/approval  Authority  Licence/ Reference no.  Date of issuance/ commencement! expiry  Major conditions imposed  I Status of compliance  LKL Advance Metaltech  Establishment licence issued to LKL Advance Metaltech in accordance to the Medical Device Act 2012 (“MDAct”)  MDA  KP2673518215  Issue date: N/A Commencement date: 5 June 2015  General conditions 1. The approval is given based on the information received.  I  Complied.  Expiry date: 4 June 2018  2. The Establishment is toI provide all information within the time frame set when requested by the MDA.  3. The Establishment must comply with all directions issued by the MDA from time to time.  4. MDA has the right to make visit or audit inspection on the Establishment at any time without prior information.  5. MDA can suspend or cancel the Establishment License or take any legal action if the Establishment fails to comply with any terms of the Establishment License.  6. The Establishment License issued by the MDA cannot be transferred.
107
Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) Company LKL Advance Metaltech  Description of licence/approval Certificate of fitness of air receiver /vacuum tank (SL PMT 21870) in accordance with Factories and Machineries Act 1967 (“FAMA”) and the Factories and Machinery (Notification, Certificate of Fitness and Inspections) Regulations 1970 Location of the machine: Factory Lot No.3  Authority DaSH  Licence/ Reference no. PMT ­SL 148321  Date of issuance/ commencement! expiry Issue date: 9 March 2015 Commencement date: N/A Expiry date: 25 May 2016  Major conditions imposed 7. The Establishment License is to be displayed at a location easy to be sighted and is to be presented if asked by any officer with the authority. 8. Establishment is to make an application for license renewal no later than one (1) year before the expiry of the license. 9. Establishment cannot penn it the Establishment License to be wrongfully used by any individual/ company in any manner. This certificate is valid until the date stated in the certificate, unless suspended, revoked or otherwise tenninated earlier under the provisions of FAMA and provided that the provisions of FAMA and the regulations in respect of air receiver/vacuum tank (Pengandung Tekanan Tak Berapi) shall not be violated.  Status of compliance Noted.
108
Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) Company LKL Advance Metaltech LKL Advance Metaltech  Description of licence/approval Certificate of fitness of oil separator (SL PMT 21871) in accordance with FAMA and the Factories and Machinery (Notification, Certificate of Fitness and Inspections) Regulations 1970 Location of the machine: Factory Lot NO.3 ISO 9001 :2008 Certificate to certify that LKL Advance Metaltech has established and applies a Quality Management System for Design and Development, Production, Assembly and Distribution of durable medical equipment such as Hospital Beds, Trolleys, Tables, Mobility Aids and Other Support Equipment.  Authority DOSH TUV SUD Management Service GmbH  Licence/ Reference no. PMT -SL 148320 1210024509 TMS  Date of issuance/ commencement! expiry Issue Date: 9 March 2015 Commencement date: N/A Expiry date: 25 May 2016 Major conditions imposed This certificate is valid until the date stated in the certificate, unless suspended, revoked or otherwise terminated earlier under the provisions of FAMA and provided that the provisions of FAMA and the regulations in respect of air receiver/vacuum tank (Pengandung Tekanan Tak Berapi) shall not be violated. Issue date: 22 I Nil. January 2014 Commencement date: 1 February 2014 Expiry date: 31 January 2017  Status of compliance Noted. Nil.
109

Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) Company  Description of licence/approval  Authority  Licence/ Reference no.  Date of issuance/ commencement! expiry Major conditions imposed Status of compliance  LKL Advance Metaltech  EN ISO 13485:2012 + AC:2012 Certificate to certify that LKL Advance Metaltech has established and is maintaining a Quality Management System for Design and Development, Production, Assembly and Distribution of Durable Medical Equipment such as Hospital Beds, Trolleys, Tables, Mobility Aids and other Support Equipment.  TUV SUO Product Service GmbH  Q1N 1311 54632005  I Issue date: 28 I Nil. I Nil. January 2014 Commencement date: 1 February 2014 Expiry date: 31 January 2017  LKL Advance Metaltech  Certificate of CE Registration  Obelis SA  1003091032  Issue date: 17 March 2009 Commencement date: 5 March 2009 Expiry date: Allowed to continue to sell provided that there is continuing compliance with the requirements imposed LKL Advance Metaltech is allowed to sell its products in the EU territory provided that LKL Advance Metaltech continues to comply with the European Council Directive 93/42EEC and 2007/47/EC. The certificate will only be valid in the case of the Belgian Competent Authority will not reject the classification of the following products attached as Class I products: 1. Hospital Beds -Manual Hydraulic, Electric, ICU/CCU. 2. Hospital Obstetric/ Delivery Bed -Hydraulic and Electric. 3. Hospital Examination Table -Manual and Electric. Met.
110

Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) Company  Description of  Authority  Licence/  Date of issuance/  licence/approval  Reference no.  commencement!  expiry  LKL  Business  license  for  Factory  Majlis  2120081200049  Issue date: N/A  Advance  Lot NO.3  Perbandaran  Metaltech  •  2 Iklan bersinar  melintang/tak  Subang Jaya (“MPSJ”)  Commencement date: N/A  •  Pejabat  urusan  (>  260  meter.per.segi -3 lot atau lebih)  Expiry date: 31 December 2016  The  previous  description  of  “Kilang  Membuat  Lain-Lain  Peralatan  Keperluan  Rumah  «501  meter.per.segi)  was  replaced with the following:­ •  Kilang Membuat Lain-Lain  Peralatan  Keperluan  Rumah  «501  meter.per.segi.)(Kilang  Perabot Hospital)
4.
5.
6.

(a)
(b)

 

Major conditions imposed Status of compliance Hospital Patient Transport Trolley and Stretcher. Hospital Medical Table and Chair.
Hospital Overbed Table.
The license is to be Complied. displayed on the business premise and is to be renewed before its expiry. Business License can be renewed 3 months before its expiry. 111

Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) Company LKL Advance Metaltech  Description of licence/approval Business license for Factory Lot NO.1 • Iklan melintang/tak bersinar • Gudang (memborong/ menyimpan) (>500 meter.per.segi) • Lain-Lain Aktiviti Industri Pembuatan (>500 meter.per.segi) (Kilang Perabot Hospital)  Authority MPSJ  Licence/ Reference no. 2120150700108  Date of issuance/ commencement! expiry Issue date: N/A Commencement date: N/A Expiry date: 9 September 2016  Major conditions imposed (a) The license is to be displayed on the business premise and is to be renewed before its expiry. (b) Business License can be renewed 3 months before its expiry.  Status of compliance Complied.  LKL Advance Metaltech  Business license for Factory Lot No. 15 • Iklan melintang/tak bersinar • Lain-Lain Aktiviti Industri Pembuatan (>501 meter.per.segi) (Kilang Perabot Hospital) • Gudang (memborong/menyimpan) «501 meter.per.segi.)  MPSJ  2120150700109  Issue date: N/A Commencement date: N/A Expiry date: 9 September 2016  (a) (b)  The license is to be displayed on the business premise and is to be renewed before its expiry. Business License can be renewed 3 months before its expiry.  Complied.
112

Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) Company LKL Advance Metaltech  Description of licence/approval Business license for Factory Lot No. 12, Factory Lot No. 12A and Factory Lot No. 16 • Iklan melintangltak bersinar • Kilang Membuat Lain-Lain Peralatan Keperluan Rumah (>500 meter.per.segi) (Kilang Perabot Hospital)  Authority MPSJ  Licence/ Reference no. 2120150700117  Date of issuance/ commencement! expiry Issue’date: N/A Commencement date: N/A Expiry Date: 31 December 2016  Major conditions imposed (a) This license is to be displayed on the business premise and is to be renewed before its expiry. (b) Business License can be renewed 3 months before its expiry.  Status of compliance Complied.  LKL Advance Metaltech  Business license for E-32-1 Lorong Bayan Indah 2, 11900 Bayan Lepas, Penang • Sebarang pembuatan atau tred lain -jualan runcit «100) • Melintang tidak berlampu  Majlis Bandaraya Pulau Pinang (“MBPP”)  LC2015090429  Issue date: 31 December 2015 Commencement date: 31 December 2015 Expiry date: 31 December 2016  Permit number of the permanent signboard number issued by MBPP must be inserted into the approved signboards.  Complied.  LKL Advance Metaltech  Business license for No.17, (Ground Floor), Laluan Tasek Timur 3, Pusat Perdagangan Tasek Indra, 31400 Ipoh, Perak Darul Ridzuan • Lain-lain Perdagangan/ Perusahaan  Majlis Bandaraya Ipoh  L0102671-01  Issue date:-N/A Commencement date: 20 August 2015 Expiry date: 19 August 2016  Nil  N/A.
113

Company No. 1140005-V 5. INFORMATION ON OUR GROUP (Cont’d) Company LKL Advance Metaltech  Description of licence/approval Business licence for No. C-G­13, Jalan BS 14/1, Taman Bukit Serdang, Pusat Perdagangan Bukit Serdang, 43300 Seri Kembangan, Selangor Darul Ehsan • Iklan melintang/tak bersinar Gudang• (memborong/menyimpan) «501 meter.per.segi) (Gudang Perabot Hospital)  Authority MPSJ  Licencel Reference no. 2120151000206  Date of issuancel commencement! expiry Issue date:-N/A Commencement date: 20 August 2015 Expiry Date: 27 December 2016  Major conditions imposed (a) This license is to be displayed at the business premise and is to be renewed before its expiry. (b) This license can be renewed 3 months before the expiry of the license.  Status of compliance Complied.  LKL Advance Metaltech  Business licence for Factory Lot No. 22 • Iklan melintang/tak bersinar • GUdang (memborong/menyimpan) (>500 meter.per.segi) • Lain-lain Aktiviti Industri Pembuatan (>500 meter.per.segi. ) (Kilang Perabot Hospital)  MPSJ  2120151000225  Issue date:-N/A Commencement date: 20 August 2015 Expiry Date: 13 January 2017  (a) (b)  This license is to be displayed at the business premise and is to be renewed before its expiry. This license can be renewed 3 months before the expiry of the license.  Complied.
Note:­
LKL Advance Meta/tech was previously issued a manufacturing license for Factory Lot No.3 for production of “metal furniture” on 26 May 2009 (“Previous ML”). The commencement date of this Previous ML was 7 January 2009. The current manufacturing license for Factory Lot No.3 for production of “hospital and medical furniture” was issued on 18 January 2013, and maintains the commencement date from the Previous ML. 114
Company No. 1140005-V
5. INFORMATION ON OUR GROUP (Cont’d) Registration and permits under the MDAct Section 5(1) of the MDAct which came into operation on 30 June 2013 requires, amongst others, that all medical devices shall be registered before they can be imported, exported or placed in the market. Section 80(1) of the MDAct states that a person who has imported, exported or placed in the market any medical device prior to 30 June 2013 shall apply for the registration of the medical devices within twenty four months from 30 June 2013, Le., by 30 June 2015. Such person who has applied for registration of their medical devices may continue to import, export or place in the market the medical devices pending registration. Subsequently, pursuant to the Medical Device (Exemption) Order 2015 made on 26 June 2015, the Minister of Health Malaysia has further allowed any person who has submitted an application for registration of a medical device between 1 July 2015 until 30 June 2016 to continue to import, export or place in the market the medical device pending registration. As at the LPD, in addition to the above major business licenses, permits and approvals applicable to our Group, LKL Advance Metaltech has also made applications under section 5(1) of the MDAct, for which applications were received by MDA on 30 June 2015, 24 August 2015 and 1 Septem ber 2015, for the registration of our current medical devices under 78 product family groups, grouped by LKL Advance Metaltech based on the rules of grouping as prescribed under the MDAct. Our applications for registration are presently pending registration by the MDA. The applications for these 78 product family groups were made based on the potential for future sale of these products at the point of application, with the revenue contribution from these 78 product family groups comprising an average of 80.93% for the past three (3) FYE 30 April 2013 to 2015 and 83.25% for the six (6)-month FPE 31 October 2015. Our management believes that these 78 product family groups are expected to represent our Group’s future sales of medical devices. Nonetheless, moving forward, for products that may be sold in the future but are not part of the 78 product family groups, LKL Advance Metaltech will apply for the registration of these products as and when they are sold, where applicable. If our medical devices are not awarded registration, we will not be able to import, export or place in the market such medical devices. Further, section 45(1) of the MDAct states, amongst others, that an establishment may apply to the MDA for a permit to export a registered medical device. However, as our applications for the registration of our products as medical devices are still pending determination by the MDA, there is no registered medical device which an export permit can be applied for at this stage. 115

 

5. INFORMATION ON OUR GROUP (Cont’d) 5.7.10 Patents, trademarks and registrations Save for the trademark of our logo, we do not hold any other patents, trademarks or registrations.
No.  Trademark  Applicant  Registration numberl Application number  Class  Place of application  Status of trademark  1.  Healthcare ® ~~~-=i ~~~~  LKL Advance Metaltech  99010626  10*  Intellectual Property Corporation of Malaysia  The trademark is registered for a period of ten (10) years until 23 October 2019.
Note:­
* Class 10 of the Nice Classification for trademarks includes “hospital bedsteads, trolleys, steel and wooden furniture for medical purpose and medical engineering products, all included in class 10”. I THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK I 116

5. INFORMATION ON OUR GROUP (Cont’d) 5.7.11 Contracts/arrangements on which our Group is highly dependent As at the LPD, our Group has not entered into any contracts/arrangements for which our Group is highly dependent upon.

5.7.12 Interruptions to business and operations Our Group has not experienced any interruption in business which had a significant effect on operations during the twelve (12) months period prior to the date of this Prospectus.

5.7.13 Seasonality We do not experience any material seasonality or cyclicality in our business as the demand for our products is neither subject to seasonal fluctuations nor cyclical variations. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
Company No. 1140005-V

5. INFORMATION ON OUR GROUP (Cont’d) 5.7.14 Major customers Major customers who contributed more than 10% of our Group’s revenue for the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 are as follows:­Major Customers  <­ .. —-.·.·.·.·.·.·.-·····-·-·FYE 30 April··· . 2013 2014 % of Total % of Total RM’OOO Revenue@ RM’OOO Revenue@  .> 2015 % of Total RM’OOO Revenue@  Six (6)·month FPE 31 October 2015 % of Total RM’OOO Revenue@  Length of business relationship (years)  Techbay Sdn Bhd (“Techbay”)  – – 5,854  15.05  – – – – 3  Nomas Trading Est (“Nomas”)  307  1.09  4,293  11.04  105  0.27  7  0.04  12
Note:·
@ Total revenue for the FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 were RM28.077 million, RM38.893 million, RM39.039 million and RM16. 057 million respectively. Techbay is a company through which we delivered a few large orders of medical/healthcare beds, peripherals and accessories for a new public hospital in East Malaysia in the FYE 30 April 2014, where Techbay was the contractor for the hospital. In the same FYE, we also secured a few large orders of medical/healthcare beds, peripherals and accessories from Nomas, a distributor based in Saudi Arabia, which involved in the trading and distribution of medical and laboratory equipment. In the course of our business, we generally secure large orders from new hospitals and medical centres and/or existing hospitals and medical centres undergoing expansion and refurbishment. As a result, the percentage of our sales from that customer in that particular year may be relatively high. Accordingly, our Group’s major customers, if any, differ from year to year. Premised on the above, we do not have any dependencies on any customers in our business. 118
Company No. 1140005-V

 

5. INFORMATION ON OUR GROUP (Cont’d) 5.7.15 Major suppliers Our major suppliers that contributed more than 10% of our purchases for the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 are as follows:­Major Suppliers  <———————————-FyE 30 April—————————–> 2013 2014 2015 % of Total % of Total % of Total RM’OOO Purchases@ RM’OOO Purchases@ RM’OOO Purchases@  Six (6)-month FPE 31 October 2015 % of Total RM’OOO Purchases@  Length of business relationship (years)  Linak A/S (electrical components)  1,189  10.92  2,064  13.68  1,568  9.65  819  14.54  20  Fook May Hardware Sdn Bhd (steel materials)  1,173  10.77  1,122  7.44  1,215  7.48  436  7.74  20  Catharine International Co Ltd (various supplies including ABS components and trading products)  1,133  10.40  1,172  7.77  909  5.59  166  2.95  20  United Multi Medic Sdn Bhd (“UMM”)*  – – 196  1.30  2,346  14.43  – – 2
Notes:­
@ Total purchases for the FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 were RM10.893 million, RM15.085 million, RM16.254 million and RM5.632 million respectively. UMM was previously a related party used as an intermediary for the purchase of parts and components as well as medical peripherals and accessories, either as raw materials or for the Group’s trading business. It ceased operations as trader of hospital and medical furniture and consequently as our intermediary for the purchase of supplies in March 2015. All transactions previously conducted through UMM are now being undertaken directly by our Group. As mentioned in Section 5.7.3 of this Prospectus, raw materials and supplies required in our manufacturing process are readily available from many local and overseas suppliers. Therefore, our Group does not have dependencies on any of our suppliers. Nevertheless, we have purchased certain raw materials from a single supplier in the past three (3) FYE 30 April 2013 to 2015 and six (6)-month FPE 31 October 2015 (save for UMM) due to our long working relationship, efficient and reliable pre and after-sales service provided by them to our Group. 119
5. INFORMATION ON OUR GROUP (Cont’d) 5.8 FUTURE PLANS, STRATEGIES AND PROSPECTS 5.8.1 Future plans and strategies (i) We will continue to seek local market opportunities and strengthen our presence in Malaysia We intend to leverage on our proven track record and established reputation in Malaysia to tap into the growth in the local healthcare services industry. According to the IMR Report, healthcare expenditure in Malaysia has demonstrated uninterrupted growth, rising from RM17.8 billion in 2004 to RM41.0 billion in 2013, at a CAGR of 9.7% over this period. The prospects for growth in the medical bed, peripheral and accessory industry in Malaysia are positive as the industry is expected to continue being driven by growth in demand for healthcare services locally, which is driven by changes in lifestyle leading to higher incidences of chronic diseases, the demographic shift to an ageing population, the increased accessibility to healthcare services due to growth in income and/or uptake of medical insurance, as well as Government initiatives in driving the healthcare services industry. The Government plays an active role in driving the healthcare equipment sector, thus benefiting the medical bed, peripheral and accessory industry. The Ministry of Health Malaysia acknowledges the shortage of medical beds in the country, and have announced that the Government have been taking measures to improve access to healthcare in general, including the upgrading of existing hospitals and the building of new hospitals in high density areas to accommodate for the lack of healthcare services and insufficient number of beds. In the 11th Malaysia Plan which was launched in May 2015, the Government announced its aim to achieve universal access to quality healthcare, and in doing so it aims to increase the medical bed ratio to 2.3 beds per 1,000 population. The medical bed, peripheral and accessory industry in Malaysia had a market size of approximately RM40.2 million in 2008, and this grew to approximately RM77.6 million in 2014, at a CAGR of 11.6%. Moving forward, the medical bed, peripheral and accessory market size is estimated to grow from RM86.3 million in 2015 to RM118.9 million in 2018, at a CAGR of 11.3%. Further, there is latent demand for medical/healthcare beds in Malaysia, where in 2014, the number of medical/healthcare beds in Malaysia stood at 1.9 beds per 1,000 population, below the average for developing countries at 2.2 beds per 1,000 population and the world average of 3.0 beds per 1,000 population. Over the period between 2011 and 2013, the number of medical beds in public and private hospitals and medical centres in Malaysia saw an annual increase of 730, 1,050, and 1,172 beds in 2011, 2012 and 2013, respectively. This led to an increase of 3.97% of total number of medical beds from a total number of medical beds of 55,923 in 2011 to 58,145 beds in 2013. In 2014, the number of medical beds in public and private hospitals and medical centres declined by 574 beds to 57,571 beds. The decline in the total number of medical beds in 2014 of 574 beds is in line with the decrease in number of hospitals in Malaysia in the same year. The decline in number of hospitals in 2014 is attributed to the different method of tabulating the number of private hospitals in 2013 and 2014, as highlighted in Section 6: Chapter 3 -The Healthcare Services Industry (The Healthcare Services Industry in Malaysia) of this Prospectus. Notwithstanding this, there may also have been closures of smaller private hospitals in 2014 as a result of rising costs of operations. Thus, the decline in hospitals appears to be due to factors other than demand for healthcare services, as demand for healthcare services has demonstrated an increase as evidence by the rise in hospital admissions in Malaysia from 3,323,000 in 2013 to 3,696,800 in 2014, a growth of 11.2%.

 

5. INFORMATION ON OUR GROUP (Cont’d) Nevertheless, it is important to note that this annual growth in medical beds over the three (3)-year period is a net annual increase, which does not take into account the annual growth of replacement medical beds, thus signifying that the overall growth in demand for medical beds is realistically higher. Our Group’s annual medical bed sales in Malaysia has been consistently higher than the annual increase of registered medical beds in Malaysia over the three (3)-year period including the decrease recorded in 2014, indicating that the statistics on the annual increase/decrease of registered medical beds in Malaysia does not include the annual increase of replacement medical beds, as shown below:­2011  2012  2013  2014  Net annual increase/(decrease) of medical beds in pUblic and private hospitals and medical centres in Malaysia (units) Our GrouPc’s annual medical bed sales in Malaysia a) (units)  730 3,200  1,050 2,201  1,172 4,021  (574) 4,431
Note:­(a) Our Group’s annual medical bed sales volume includes electric, hydraulic, manual and delivery beds sold during the respective calendar year. (Source: IMR Report) We will continue to seek opportunities in public and private hospitals and medical centres in Malaysia. With our position as one of the largest local manufacturers in terms of revenue in the healthcare furniture and equipment industry in Malaysia, we are well­positioned to continue growing our market presence and increase our overall share of the local market. To achieve this, we will remain focused in our commitment to the highest levels of product quality and customer service, as well as continuously expand, improve and upgrade our products. We will also continue to work closely with the public and private hospitals and medical centres, and with Agents, Distributors and project consultants. Our continued growth and success in Malaysia will further strengthen our Group’s financial position and will provide the platform for our Group to expand into other markets in the future, as it offers our Group strong and credible customer references to new potential customers. (ii) We intend to grow our sales in our existing export markets We have delivered our products to destinations across six (6) continents and in over 30 countries worldwide. Our exports have accounted for an average of 21.22% of our revenue in the past three (3) FYE 30 April 2013 to 2015 and 25.37% for six (6)-month FPE 31 October 2015. Please refer to Section 5.7.2 of this Prospectus for details of our export markets. Given our historical track record, we expect to be able to tap into further opportunities in the existing export markets in which we operate. Our international track record provides us with a foundation and platform for further expansion and growth in these markets, as we are able to leverage on our proven products as well as the established relationships with overseas Agents. 121
5. INFORMATION ON OUR GROUP (Cont’d) We will also continue to participate in international trade shows and exhibitions, as these have been proven in the past to be effective in reaching out to, and engaging with, potential new customers. As such, in future, we remain committed to participating in the major annual international trade shows and exhibitions as shown in Section 5.7.8 of this Prospectus. Through these approaches, we anticipate greater accelerated growth as we are able to increase our visibility and presence in the international markets. This is expected to contribute to further long term growth of our Group’s business, as well as to enhance the results of our operations and financial performance. (iii) We plan to strengthen our global footprint by progressively expanding to new geographical markets We currently export our products to over 30 countries worldwide. To continue expanding our business, we intend to strengthen our global footprint by penetrating new markets, including in both developed countries and emerging economies. According to the IMR Report, the global healthcare services industry grew, in terms of total healthcare expenditure, at a CAGR of 6.4% from 2004 to 2013, growing from USD4.3 trillion (RM16.3 trillion) in 2004 to USD7.5 trillion (RM23.6 trillion) in 2013. The growing healthcare industry globally presents growth opportunities for our Group. Our products have been proven in the markets in which we presently operate and with our ISO 9001 :2008, EN ISO 13485:2012 certifications and “CE” registration, we have been certified to internationally accepted standards. This gives us a strong foundation and platform for expansion into new markets and territories. We have to-date, received enquiries from Agents and customers from new markets such as Ethiopia, Suriname, Uganda, Rwanda and Iran, largely through Agents and our website as well as international trade shows and exhibitions. As at the LPD, we are maintaining on-going communications with some of these customers, and are exploring potential future sales opportunities. Further, we have participated in our first trade exhibition in the USA in August 2015, with the aim of progressive expansion into the markets in the Americas. By expanding our presence to new markets with significant growth opportunities, we aim to increase our revenue sources to enhance our overall Group’s earnings and profitability. (iv) We aim to acquire new machinery to increase automation in our manufacturing processes We currently automate some of our welding processes with the use of automated robotic welding machinery. At present, we have seven (7) units of robotic welding machinery in our production facility. We also have a semi-automated metal shearing, cutting and punching machine. Moving forward, we intend to increase our automation through the acquisition of CNC laser shearing machine, CNC laser cutting machine and CNC punching machine. These machinery will allow for high-speed precision shearing, cutting, and punching, which will increase our operating efficiencies and process accuracies. Further, these machinery will also allow for high-precision profile machining or shaping, enabling us to refine our product finishing through cutting/shaping of complex geometries and patterns, and on thin-walled tubes and profiles without deformation. The total cost of acquiring these CNC machinery will be approximately RM8.500 million, which we intend to fund via our proceeds from the Public Issue.
5. INFORMATION ON OUR GROUP (Cont’d) We also intend to install a conveyor line to facilitate the epoxy powder coating process of our manufacturing operations at an approximate cost of RM1.500 million, which we intend to fund via our internally generated funds and/or bank borrowings. Currently, our epoxy powder coating process is conducted manually in our rented properties, Factory Lot No. 12A and Factory Lot No. 16. Previously, the epoxy powder coating process was carried out at another rented premise (in Taman Universiti Indah) and was recently relocated to Factory Lot No. 12A and Factory Lot No. 16 as these factories are nearer to our head office. We expect the CNC machinery to be installed within nine (9) months of our confirmation of order. For the epoxy powder coating conveyor line, we expect installation within six (6) months of completion of our planned land amalgamation and expansion works. Please refer to Section 5.8.1 (v) and Section 9.1 of this Prospectus for further details of the land amalgamation exercise and expansion works. The acquisition of the new CNC machinery and the epoxy powder coating conveyor line is expected to increase our production efficiency to facilitate our growth plans and strategies. In addition, with faster and more precise shearing, cutting, shaping and punching processes, wastages will be minimised and will contribute to better cost control and savings for our Group. (v) We intend to expand our manufacturing plant to facilitate our plans for greater automation and to increase our storage area As at the LPD, we have commenced the process of amalgamating the two (2) pieces of properties in which our current head office, manufacturing plants and warehouse are located. The amalgamation of the properties will result in additional space in between Factory Lot NO.1 and Factory Lot NO.3. Please refer to Section 9.1 of this Prospectus for further details of the land amalgamation exercise. We intend to utilise the resulting additional space to expand our manufacturing plants. With this expansion, we plan to install a conveyor line, which will be funded via our internally generated funds and/or bank borrowings, to partially automate our epoxy powder coating process as well as to increase our storage area for finished products. The epoxy powder coating process is currently performed manually in Factory Lot No. 12A and Factory Lot No. 16. Subsequent to the automation of our epoxy powder coating process via the installation of the conveyor line in the additional space in between Factory Lot NO.1 and Factory Lot No.3, the epoxy powder coating process located in Factory Lot No. 12A and Factory Lot No. 16 will then be used to manually powder coat bulky and fewer unit items. The increase in automation and storage capacity will enable us to expand more aggressively, as we will be able to accept more job orders. The expansion of our automated processes and storage capacity will ensure that we will be able to manage capacity limitations for the foreseeable future taking into consideration the trend of increasing orders experienced by the management in the past three (3) FYE 30 April 2013 to 2015. The total cost of the land amalgamation and building expansion is expected to cost approximately RM2.500 million, which we intend to fund via our internally generated funds and/or bank borrowings. We target to complete the land amalgamation exercise by mid 2017, following which we plan to commence expansion works immediately, with a target timeframe to complete by mid 2018, within one (1) year of commencement of expansion works. The conveyor line for the epoxy powder coating process is expected to be installed within six (6) months thereafter, i.e. end 2018. The expansion of our manufacturing facility will facilitate our other growth strategies, namely to strengthen our local and global footprint, as well as to further expand our products to new geographical markets. 123 5. INFORMATION ON OUR GROUP (Cont’d)
5.8.2 Prospects Our Board is of the view that our Group will enjoy positive and promising growth and favourable prospects in the long-term premised on the following:­(i) Our competitive strengths as follows:­(a) We are well-positioned to capitalise on the growth in the local and international healthcare industry;
(b) We have delivered our products to established public and private hospitals and medical centres in the local as well as international markets;
(c) We have the required technical expertise to conform to international compliance standards in the global healthcare industry;
(d) We have exported our products to over 30 countries across six (6) continents;
(e) We have a diversified range of products to cater for a wide range of customer demands;
(f) We are able to offer efficient and reliable after-sales services to our customers; and
(g) We have an experienced management team.

Further details of our competitive strengths are set out in Section 5.1.2 of this Prospectus. (ii) Our Group’s future plans and strategies as set out in Section 5.8.1 of this Prospectus. (iii) The promising prospects of the healthcare furniture and equipment industry as set out in Section 6 of this Prospectus. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

 

 

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