Business Overview

5. INFORMATION ON OUR GROUP 5. INFORMATION ON OUR GROUP 5.1 INFORMATION ON APFT 5.1.1 Background and history Our Company was incorporated in Malaysia under the Act on 19 January 2010 as a private limited liability company under the name APFT Sdn Bhd. Our Company was subsequently converted to a public limited liability company and assumed our present name on 12 February 201 0 to facilitate our listing on the Main Market of Bursa Securities. Our Group currently owns and operates Malaysia’s leading fiight education and training academy, the APFTA, on the basis that our Group commands the largest market share of 37.8% of the fiight education and training market in Malaysia based on number of students graduated from AFTOs in 2009 as stated in DCA’s latest available Annual Report 2009 (Source: Independent Market Research Report prepared by Protege Associates). As at the LPD, we have a fieet strength of 35 aircraft and a total of 49 qualified and experienced fiight and ground instructors, and we operate out of three (3) major commercial airports in Malaysia. Our success in growing APFTA into Malaysia’s leading fiight education and training academy has enabled us to leverage on our expertise and expand into the folloWing new and complementary areas within the aviation sector:­(i) Chartered commercial fiight services (expected to commence operations by June 2011 under APFT Services);
(ii) MRO services (expected to commence operations by June 2011 under APFT Engineering); and

(iii) Maintenance training services (commenced operations on 4 July 2010 under APFT Maintenance Training). Ultimately, we aim to become one of the leading regional integrated aviation service providers. Our Group was founded by Dato’ Faruk and his son Arif Bin Faruk, who first ventured into the fiight education and training service business when they foresaw the huge potential and growth offered by this largely untapped market then, both locally and abroad. The rapid expansion enveloping the air travel industry at that time, which saw many airlines adding routes and expanding their services across the region, have resulted in soaring demand for pilots in countries such as Malaysia, Indonesia, Singapore and India. In addition, given the proactive promotion of the fiight education and training market by the government of Malaysia then, our founders started APFTA in 2006 when APFTSB was issued with a licence effective from 1 February 2006 by the DCA. Our establishment was one of humble beginnings. We began operations with our first academy, situated in Kota Bharu, Kelantan with only four (4) aircraft and a handful of dedicated staff and instructors. Today, APFTA is the leading fiight education and training service provider in Malaysia. Our flight training courses are accredited by the DCA and consequentially, internationally recognised by the ICAO. Our pioneering, innovative and market-driven endeavours towards the provision of fiight education and training services have allowed us to accomplish many firsts and exclusives within the fiight education and training market in Malaysia. Our impressive credentials We were the first AFTO in Malaysia approved and accredited with the IPTS status by the MOHE which enabled us to offer the Diploma in Aviation (Pilot Training), making us the first AFTO to offer our own diploma. The addition of the abovementioned advanced tertiary course into our flight training programmes provides our cadet pilots with additional recognised paper qualification, and equips them with the necessary management knowledge. In July 2010, we collaborate with UTHM in the offering of a degree level programme, the Bachelor of Aeronautical Engineering Technology (Professional Piloting) 5, INFORMATION ON OUR GROUP (Cont’d) with HDnDurs that enables APFTA tD award degree programme credit for certain course wDrk completed through APFTA’s CPLlIR licensing course. We are committed to the continued development and proliferation of human capital for the aviation industry through our strong focus on innovation and market-driven curriculum development, and the prDvision of internationally recognised, quality education and training programmes. Since the founding of our academy, we have signed various letters of intent, MOUs and agreements with parties such as UPM and Embry-Riddle, a US-based aviation and aerospace university, to cDllabDrate in offering aeronautical related degrees. Our prestige as the leading night education and training service provider in Malaysia was further boosted, when we were given the privilege to collaborate and partner with Jeppesen, a Boeing company, who is also a leading global aviation player. We became the only night education and training service provider in Malaysia authorised by Jeppesen to conduct the Aviation English Test, a requirement by the ICAO for pilot licensing. In addition, we are also their appointed representative for the marketing of Jeppesen’s Licenced Dispatcher CDurse. The offering of the Jeppesen Licensed Dispatcher Course allDws Dur Group tD prDvide a wider spectrum of aviatiDn related courses. By having a comprehensive range Df aviation related CDurse Dfferings, our Group is able to target a wider range Df custDmers and further strengthen Dur pDsitiDn within the flight education and training market. Separately, as a value-added service to our cadets, we also conduct psychomDtDr and psychometric test utilising the Vienna Test System, a computerised assessment system designed to evaluate the ability and personality of cadet pilots. We have an experienced and highly qualified team of instructDrs to ensure a consistent delivery of high quality education and training for our cadet pilots. Our qualified and experienced instructors possess an average of more than 20 years of professional night experience. They are able to offer and share their industry experiences and exposures with our cadets. Our instructors come from variDus backgrounds which include former and retired career pilots with major commercial airlines such as MAS and retired military air force personnel from various countries such as Pakistan, Myanmar, India, Singapore and Malaysia. We also pride ourselves in being Dne Df the better equipped flight education and training service providers in Malaysia in terms Df night training infrastructure, in-campus ground training facilities and accommodation. As at the LPD, to the best of our knowledge, our fleet strength of 35 aircraft, which include state-of-the-art Diamond aircraft, is the largest within the night education and training market in Malaysia. We have also purchased the Alsim night training simulators which allDw us to conduct MCC Training. In additiDn, Dur Group operates out of three (3) commercial airports providing our students with ample airspace fDr night training. Our APFTA in Kota Bharu has seven (7) classroDms tD cDnduct ground training and classes as well as lecture halls, discussion rooms, simulatDr roDm, flight planning roDm and library. Furthermore, our Group provides our full-time cadets with comfortable, safe and clean accommodation that is equipped with all the necessary amenities. We are the first AFTO in Malaysia awarded the IS09001 :2000 Quality Management Systems certification, which was later upgraded to IS09001 :2008 on 12 May 2010, attesting to our cDmmitment towards the provision of high quality night education and training services. We have also put in place our own QMS in accordance with the DCA requirements. Dedicated personnel has been designated and allDcated to oversee matters relating to compliance and quality, and this helps in maintaining the high quality of night training standards in APFTA. Our academy has experienced high grow1h Dver a short period of time since the commencement of our operations in 2006. As at the LPD, we have enrolled more than 750 students at our academy. We continue to enjoy SUppDrt from our business partners and our customers which include local and overseas airlines such as MAS, AirAsia, Garuda 5. INFORMATION ON OUR GROUP (Cont’d) Indonesia, Sri Wijaya Air and Nepal Airlines, all of which have sent their cadets to train at our academy. Their support represents an endorsement of the high quality of our academy. We have been recognised and approved by the Indonesian aviation authority, the DGCA, to train Indonesian cadet pilots leading to the direct issuance of an Indonesian pilot licence for both the ab-initio and AFI courses. The recognition and approval from the DGCA to train Indonesian cadet pilots allows us to expand our penetration into the Indonesian market as cadet pilots from Indonesia who complete their flight education and training in APFT will be directly awarded an Indonesian pilot licence from the DGCA without being required to undertake a conversion course in Indonesia. The cadets who are trained at other flight schools which are not recognised and approved by the DGCA will be required to go through a conversion course back in Indonesia in order to be awarded the Indonesian pilot licence. As such, the recognition and approval by the Indonesian aviation authority gives us a strong competitive advantage. In addition, we will also benefit from the expected increase in demand for pilots within the Indonesian aviation market due to the lifting of the ban by the EC on several Indonesian airlines. Since EU lifted its ban, Garuda has announced an aggressive expansion plan known as the quantum leap where it plans to double its fleet to 116 aircraft by 2014. Meanwhile, Lion Air, Indonesia’s largest private carrier will also be receiving up to 144 units of Boeing 737-900ER from 2007 to 2012 in anticipation of the lifting of ban by EC. (Source: Independent Market Research Report prepared by Protege Associates) Our new services in Malaysia and foreign venture in India Our Group’s vision is to become one of the leading regional integrated aviation service providers and we have already put in place various plans and initiatives to achieve this via our Subsidiary Companies as set out below which has distinct business of its own with promising growth prospects. This will provide momentum towards sustainable growth in the revenue and earnings of our Group. Subsidiary Companies Plans and initiatives We intend to provide chartered commercial flight services targeted at unscheduled flights requirements and leisure seekers who wish to travel by light aircraft to their desired destinations through APFT Services as our Group believes that there is a huge and untapped market in the provision of chartered commercial flight services. We believe that we are well positioned to offer chartered commercial flight services as we already have our own hangar. We have received an ASP which is a pre-requisite towards obtaining the AOC. We are currently in the midst of complying with the conditions set forth by the DCA in order for the AOC to be issued before APFT Services can commence its operations. APFT Services We intend to venture into the provision of MRO services through APFT Engineering. Synergistic values can be derived as it has performed MRO related services within our Group and in future will provide the MRO services to external clientele, ensuring another sustainable revenue generator for our Group. APFT Engineering has already submitted the application for Part-145 Maintenance Organisation Approval (to operate as a maintenance service provider) to the DCA and is currently in the midst of processing and complying with the regulations set forth by the DCA. APFT Engineering I——-‘—————–‘ 5. INFORMATION ON OUR GROUP (Cont’d) Subsidiary Companies APFT Maintenance Training Plans and initiatives We operate a maintenance training centre with the aim of providing various maintenance training programmes through a newiy incorporated subsidiary company, APFT Maintenance Training. Aircraft maintenance engineering students are required to undergo practical training as part of their stipulated training syllabus by their respective education providers. As at the LPD, a total of 20 students have undergone and completed on-the-job practical training with APFTSB. These practical training students spend up to six (6) months undergoing their training under the supervision of our Senior Technicians. We see an uptrend in the demand for engineering education and training services and intend to ieverage on our experience and expertise in this area to further expand our scope of services and revenue streams. Currently, there is a global shortage of licensed aircraft engineers and technicians and we believe that there will be demand for our maintenance training services. In addition to the above, our Group currently also offers non-bank remittance services through APFT Express. This additional service further value-adds to the range of service offerings currently made available to our cadets in APFTA. Foreign cadets, who form a growing number of APFTA’s cadets will be able to make foreign currency payments through APFT Express while APFTSB will also be able to remit funds to foreign counterparties for payment of aircraft and parts purchased. Besides introducing new services in Malaysia and after having established our leading position in Malaysia, we have also embarked on overseas expansion into the India market. In October 2009, we signed a MOU with GHIAL, which will see us expanding our flight education and training services to India. We intend to establish a flight training school in collaboration with GHIAL. We intend that the proposed academy will conduct its courses using Jeppesen courseware. We believe that we will be able to capitalise on GHIAL’s support to gain a strong foothold in the huge market in India where there is vast potential for pilot training and other aviation training services. We are also ready to tap into new markets for our fiight education and training services business. We have identified Jeppesen as one of the companies to assist us in developing our training systems and syllabus for MPL training. Meanwhile, we expect an increase in uptake of our helicopter training programme in view of the healthy growth in demand for helicopter chartering services in particular from offshore services companies based in the East Coast of Peninsular Malaysia. In addition, MHS has already sent their cadets to our APFTA for helicopter training. 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:­(a) Established market reputation and track record Our Group currently owns and operates Malaysia’s leading fiight education and training academy, the APFTA, on the basis that our Group commands the largest market share of 37.8% of the fiight education and training market in Malaysia based on number of students graduated from AFTOs in 2009 as stated in DCA’s latest available Annual Report 2009 (Source: Independent Market Research Report prepared by Protege Associates). This was achieved in spite of our relatively short operating history. We have an established reputation in the fiight education and training market for producing highly competent and outstanding pilots. Cadets who graduated from our academy are highly sought after by major commercial airlines and other players in the aviation industry. They possess the necessary hard skills and also have the all-round qualities to succeed in their career including having strong sense of professionalism and discipline in carrying out their responsibilities as well as possessing the required soft skills. As a testament to the quality of our training programmes, we do not only cater to major airlines in Malaysia, such as MAS and AirAsia, but also regional airlines such as Garuda Indonesia and Sri Wijaya Air of Indonesia, and Nepal Airlines of Nepal and established good reputation with them. Our industry reputation is further supported by a track record of excellence as evidenced by the many awards and pioneering achievements attained by us, one of which is our collaboration with Jeppesen, where we became their sale representative in conducting the Aviation English Test. We also became the first AFTO in Malaysia awarded the IPTS status, through which we are able to offer various recognised and accredited advanced tertiary courses. We are also the first AFTO awarded the IS09001 :2000 Quality Management Systems certification, which was later upgraded to the IS09001 :2008 on 12 May 2010. Our focus in ensuring the quality of our programmes has also served to help us maintain our outstanding track record amongst major airlines and prospective students. Having an established market reputation and track record gives us a strong competitive advantage in the fiight education and training market in Malaysia. It provides a big pull-factor in convincing prospective airlines and students, of our capabilities. (b) APFTA being a reputable academy known for our strict discipline Our APFTA places great importance in discipline and takes all matters relating to the breaking of rules and insubordination seriously. All our cadets are instilled with and are trained to follow a particular code of conduct. Our academy does not allow students to have their own transport and we conduct random drug tests in each quarter of the year. We also conduct fortnightly inspections on cleanliness of uniforms and accommodation and on grooming standards on all cadets. Any cadet found guilty of flouting the rules or cited for insubordination is faced with the risk of being expulsed from our academy based on the severity of the wrongdoing. This strict policy is enforced to instil a high level of discipline in our cadets as well as to mould them with the correct mindset especially on the high responsibilities of a professional pilot which will put them in good stead in their future careers. 5. INFORMATION ON OUR GROUP (Cont’d) As such, discipline issues such as absenteeism are very low at our academy and the rate of our cadets successfully completing their training is high with the drop-out rate of our cadets almost non-existent. (c) Continuously innovate and pioneer quality market-driven programmes and courses Since the founding of our APFTA, we have signed various [etters of intent, MOUs and agreements with renowned institutions such as Embry-Ridd[e, UTHM and UPM to collaborate in offering aeronautical related degrees. We believe that our range of flight education and training programmes and courses are of high standards and we are continuously innovating and pioneering market-driven programmes in responding to the latest market demands. To ensure that our Group continues to produce quality pilots, we constantly hold meetings and feedback sessions with our business partners and customers including major airlines to seek their feedback, if any. Many of the operational improvements and value added components of our courses as well as the structure and formulation of new courses and sy[labuses are as a result of the continuous communication and feedback gathered from industry players. This continuous process of learning and improvements helps us to maintain our leading position within the flight education and training market in Malaysia. Our programmes and courses are designed to produce all-rounded pilots who are competent in technical areas and non-technical areas such as management, Eng[ish language skills and soft skills. All our cadets undergo psychologica[ assessments such as the Vienna Test System (VTS) and psychomotor tests to evaluate reaction times and other psychomotor functions. We also have an ongoing development and innovation programme which study and analyse current market movements and trends. In turn, we are able to introduce new, innovative programmes and courses. Through this, we have managed to achieve the followings: (i) Deve[oped our own diploma course, the Diploma in Aviation (Pilot Training), which incorporates Eng[ish language training and management modules. This diploma course is included as part of our integrated ab-initio flight training course and is a value-added initiative by us which we provide to all our cadets;
(ii) Became the first AFTO to incorporate a management diploma module as part of our flight training course. The management diploma further enhances the all-round quality of our graduates and provides them with a recognised academic qualification which can be used to gain entry with exemptions via credit transfers into degree [evel programmes. These credit transfers will be taken into consideration by UTHM and at the discretion of UTHM can be used to gain exemptions when undertaking their degree [evel programmes;

(iii) Became the first AFTO to offer various recognised and accredited advanced tertiary courses. We are collaborating with UTHM in the offering of a degree [evel programme, the Bache[or of Aeronautica[ Engineering Technology (Professiona[ Piloting) with Honours. The first batch of students for this degree programme has attended the introductory phase of the flight training at APFTA on 24 July 2010; and (iv) Became the sale representative in Malaysia appointed by Jeppesen to conduct the Aviation English test and course on their behalf. Further, plans are already in place for us to be a pioneering force in the aviation industry via our expansion into complementary areas within the aviation industry, which will see us being transformed into an integrated aviation service provider. 5. INFORMATION ON OUR GROUP (Conl’d) We believe that by continuously innovating while at the same time ensuring the quality of our range of programmes and courses, we are able to maintain a high level of competitiveness within the market and will in turn lead to sustainable revenue and profit growth of our Group. (d) Large and modern fleet of aircraft, airspace and flight simulators The capacity of our APFTA is basically determined by the following three (3) faclors:­(i) The availability of aircraft;
(ii) The number of flight instructors; and

(iii) The availability of airspace. In comparison to all other flight education and training service providers in Malaysia, as at the LPD, to the best of our knowledge, we have the largest and most advanced fleet of flight training aircraft, with a fleet of 35 aircraft comprising 28 single-engine aircraft, six (6) twin-engine aircraft and one (1) helicopter. Majority of our aircraft are new hence, the serviceability level of our aircraft is high and aircraft downtime is minimised, enabling our cadets to efficiently log their mandatory flying hours and reduce downtime. By having a large fleet of modern aircraft, we are also able to take in and cater for more cadets without compromising on quality. Meanwhile, a flight training aircraft is only allowed to fly and conduct its training maneuvers wilhin an authorised area which has been specifically designated as flight training airspace. We currently operate out of three (3) major commercial airports in Malaysia with ample flight training airspace. The airspace currently utilised by our Group lies within the Kota Bharu, Kuala Terengganu and Subang areas and these particular airspaces are comparatively less busy when compared with other flight airspace in the country. We are therefore able to take on more cadets as well as offer a higher availability of training airspace to our cadets ensuring that they are able to obtain better and more efficient training as compared to our other competitors. Lastly, we currently own and operate two (2) flight simulators, the Alsim AL200 MCC and the Alsim AL200 DA42 which are both JAR-STD3 (A) compliant. These flight simulators are used for all aspects of the instrument rating flight syllabus and the MCC Course. Through the usage of these advanced flight simulators, our instructors are able to conduct training sessions by simulating various flight conditions and scenarios which provides an invaluable flying experience for our cadets. Cadets will be able to greatly enhance their flight handling skills through simulator training and this will be very useful for any future type rating or airline simulator assessment. (e) Highly qualified and experienced flight and ground instructors Our ability to compete effectively in the flight education and training market in Malaysia lies, amongst others, with the strength of our team of instructors. As at the LPD, we have a total of 49 qualified and experienced flight and ground instructors. We have an experienced team of instructors who are able to offer and share their industry-relevant experiences and exposures with our cadets. They come from various backgrounds which include former and retired career pilots with major commercial airlines such as MAS as well as retired military air force personnel from various countries including Pakistan, Myanmar, India, Singapore and Malaysia. Due to their experiences and exposures, they understand what is demanded of the cadets and, will accordingly ensure that they are well trained and equipped to succeed when they join the aviation industry upon graduating. 5. INFORMATION ON OUR GROUP (Cont’d) Our team of ground and flight instructors are led by our principal and Executive Director, Mejar (Rtd) Data’ Mohd Kalaithe @ Mohd Khalid Bin Ali, who possesses more than 40 years of experience in the aviation industry of which 25 years are spent on aviation management. Our instructors have an average of 20 years of professionai flight experience and invaluable exposures gained from their employment within the aviation industry. (f) Experienced Management Team Our past success and future growth have been and will always be infiuenced by the presence and leadership of several key personnel within our organisation. The expertise, experiences and competencies of our highly competent management team give us a strong and sustainable competitive strength over our competitors. Our founder and Executive Chairman, Data’ Faruk is an accomplished businessman, with sound business acumen drawn from over 30 years of experience in the stock braking and banking industries. Much of our Group’s success today is attributed to Data’ Faruk, whose ability as a skilled strategist, is instrumental in setting the business direction and managing the resources of our Group. Data’ Faruk is also able to leverage on his vast network of business contacts which has played a significant role in advancing the profile of APFT as well as our Group’s local and overseas ventures. Our co-founder and Non-Independent Non-Executive Director, Arif Bin Faruk is a career pilot with tremendous experience gained from his years of working in the aviation industry. He is a qualified aeronautical engineer and has over 12 years experience in the aviation industry, with experience as both a pilot and an aeronautical design engineer. He obtained his pilot licence in 2006 and is currently attached with Jet Premier One Sdn Bhd as a pilot for the Government of Malaysia’s Airbus Corporate Jet. Our Group is run by a highly competent management team who has had many years of experience in the areas of aviation, financial services and engineering. 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 As at the LPD, our authorised and issued and paid-up share capital is as follows:­Par value Amount No. of shares (RM) (RM) Authorised 250,000,000 0.20 50,000,000 Issued and paid-up 135,000,000 0.20 27,000,000
Delails of the changes in our issued and paid-up share capital since incorporation until the date of this Prospectus are as follows:­Date of Allotment I Subdivision  No. of shares allotted  Par value (RM)  Consideration  Cumulative No. of Issued and Paid-up shares  Cumulative Issued and Paid.up Share Caoital IRMI  19.1.2010 13.5.2010 22.6.2010 L  8 . 134,999,990  0.25 0.20 0.20  Cash Share split Shares issued pursuant to the Acquisition of APFTSB and the Acquisition of APFT Services  8 10 135,000,000  2 2 27,000,000
As at the LPD, our Company does not have any outstanding warrants, options, convertible securities and uncalled capital.
5.1.4 Subsidiary and associated companies To facilitate the listing of APFT Berhad, the Acquisition of APFT Maintenance Training was completed on 29 April 2010 whilst the Acquisition of APFTSB, Acquisition of APFT Services, Acquisition of APFT Engineering and Acquisition of APFT Express were completed on 22 June 2010. Our existing corporate Group structure is as follows:· APFT I IL100% 1100% L100% ~ 100% ~ 100% APFTSB APFT
APFTAPFT APFT Maintenance Services Engineering Express Training 5. INFORMATION ON OUR GROUP (Cont’d) Details of our subsidiary companies are set out below:­Subsidiary company  Date and Place of Incorporation  Date of Commencement of Business  Issued and Paid-Up Share Capital (RM)  Effective Equity Interest (“!o)  Principal Activities  APFTSB  13.12.2000 Malaysia  1.2.2006  3,000,000  100.00  Provision of night education and training services.  APFT Services  4.1.2007 Malaysia  N/A  3,000,000  100.00  APFT Services is currently renting out aircraft and helicopter within our Group and is expected to commence the provision of chartered night services by June 2011.  APFT  4.1.2007  N/A  150,000  100.00  Provision of MRO  Engineering  Malaysia  services for aircraft and helicopter. It is currently dormant and is expected to commence operalions by June 2011.  APFT Express  27.9.1984 Malaysia  12.5.2010  200,000  100.00  Provision of non­bank remittance services.  APFT  27.4.2010  N/A  2  100.00  Provision of  Maintenance  Malaysia  maintenance  Training  training services for the aviation industry.
Further details on our Subsidiary Companies are set out in Section 5.2 below. As at the LPD, we do not have any associated companies. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d)

5.2 INFORMATION ON SUBSIDIARY COMPANIES 5.2.1 APFTSB i. Background, history and principal activity APFTSB was incorporated in Malaysia under the Act on 13 December 2000 as a private limited liability company under the name of Flight Training Systems Sdn Bhd. It subsequently underwent several name changes from Flight Training Systems Sdn Bhd to Farad Systems Sdn Bhd on 11 July 2005, then to Subang Flight Training Sdn Bhd on 15 September 2005, subsequently to Forad Aerospace Sdn Bhd on 11 November 2005 and finally to its present name on 26 July 2006. APFTSB commenced operations as an AFTO on 1 February 2006. APFTSB is principally involved in the provision of flight education and training services through the operation of an approved AFTO namely, APFTA, with its main operation located at Old Terminal Building, Sultan Ismail Petra Airport, Kota Bharu, Kelantan Darul Nairn. APFTSB is our core operating subsidiary that has met the requirements for the Listing. ii. Share Capital As at the LPD, the authorised and issued and paid-up share capital of APFTSB is as follows:­Authorised Issued and paid-up  No. of shares 5,000.000 3,000,000  Par value (RM) 1.00 1.00  Amount (RM) 5.000,000 3.000,000
Details of the changes in the issued and paid-up share capital of APFTSB since incorporation are as follows: Date of allotment 13.12.2000 11.1.2006 13.4.2006 13.10.2008  No. of shares allotted 2 999,998 1,000,000 1,000,000  Consideration Cash Cash Cash Cash  Cumulative issued and paid­up share capital (RM) 2 1,000,000 2,000,000 3,000,000
As at the LPD, APFTSB does not have any outstanding warrants, options. convertible securities and uncalled capital. iii. Substantial Shareholder APFTSB is our wholly-owned subsidiary company. On 22 June 2010. APFT acquired the entire equity interest of APFTSB, comprising 3,000,000 ordinary shares of RM1.00 each in APFTSB far a purchase consideration of RM24,194,577 satisfied by the issuance of 120,972,885 APFT Shares. The purchase consideration was derived after taking into consideration, inter alia, the NTA of APFTSB as at 31 December 2009 of RM13,819,81 0 and the earnings potential of APFTSB. 5. INFORMATION ON OUR GROUP (Cont’d) iv. Subsidiary and Associated Companies As at the LPD, APFTSB does not have any subsidiary or associated companies. 5.2.2 APFT Services i. Background, history and principal activity APFT Services was incorporated in Malaysia under the Act on 4 January 2007 as a private limited liability company under the name of APFT Services Sdn Bhd. APFT Services is currently renting out aircraft and helicopter within our Group and is expected to commence the provision of chartered flight services by June 2011. ii. Share Capital As at the LPD, the authorised and issued and paid-up share capital of APFT Services is as follows:­Authorised tssued and paid-up  No. of shares 5,000,000 3,000,000  Par value (RM) 1.00 1.00  Amount (RM) 5,000,000 3,000,000
Details of the changes in the issued and paid-up share capital of APFT Services since incorporation are as follows: Date of allotment 4.1.2007 12.3.2007 26.3.2007  No. of shares allotted 2 1,999,998 1,000,000  Consideration Cash Cash Cash  Cumulative issued and paid­up share capital (RM) 2 2,000,000 3,000,000
As at the LPD, APFT Services does not have any outstanding warrants, options, convertible securities and uncalled capital. iii. Substantial Shareholder APFT Services is our wholly-owned subsidiary company. On 22 June 2010, APFT acquired the entire equity interest of APFT Services, comprising 3,000,000 ordinary shares of RM1.00 each in APFT Services for a purchase consideration of RM2,805,421 satisfied by the issuance of 14,027,105 APFT Shares. The purchase consideration was derived after taking into consideration the NTA of APFT Services as at 31 December 2009 of RM2,805,421. iv. Subsidiary and Associated Companies As at the LPD, APFT Services does not have any subsidiary or associated companies. 5. INFORMATION ON OUR GROUP (Cont’d)
5.2.3 APFT Engineering i. Background, history and principal activity APFT Engineering was incorporated in Malaysia under the Act on 4 January 2007 as a private limited liability company under the name of APFT Maintenance Sdn Bhd. Subsequently, it changed its name to Kota Bharu Flying Club Sdn Bhd on 28 December 2007 and assumed its present name on 16 February 2009. It is currently dormant and is expected to commence operations for the provision of MRO services for aircraft and helicopter to both APFTSB and external clientele by June 2011. Ii. Share Capital As at the LPD, the authorised and issued and paid-up share capital of APFT Engineering is as follows:­Authorised Issued and paid-up  No. of shares 500,000 150,000  Par value (RM) 1.00 1.00  Amount (RM) 500,000 150,000
Details of the changes in the issued and paid-up share capital of APFT Engineering since incorporation are as follows: Date of allotment 4.1.2007 3.3.2010  No. of shares allotted 2 149,998  Consideration Cash Cash  Cumulative issued and paid. up share capital (RM) 2 150,000
As at the LPD, APFT En9ineerin9 does not have any outstanding warrants, options, convertible securities and uncalled capital. iii. Substantial Shareholder APFT Engineering is our wholly-owned subsidiary company. On 22 June 2010, APFT acquired the entire equity interest of APFT Engineering, comprising 150,000 ordinary shares of RM1.00 each in APFT Engineering for a cash consideration of RM142,359. The purchase consideration was derived after taking into consideration the adjusted NTA of APFT Engineering as at 31 December 2009 of RM142,359 (after adjusting for the issuance of 150,000 new shares in APFT Engineering subsequent to 31 December 2009). iv. Subsidiary and Associated Companies As at the LPD, APFT Engineering does not have any subsidiary or associated companies. 5. INFORMATION ON OUR GROUP (Cont’d)
5.2.4 APFT Express i. Background, history and principal activity APFT Express was incorporated in Malaysia on 27 September 1984 as a private limited liability company under the name of K-Farm Vet (Malaysia) Sdn Bhd. It subsequently underwent several name changes from K-Farm Vet (Malaysia) Sdn Bhd to Intest Sdn Bhd on 15 August 1987, then to Forad Consult Sdn Bhd on 15 August 1991 and finally to its present name on 2 April 2008. APFT Express commenced operations for the provision of non-bank remittance services on 12 May 2010. ii. Share Capital As at the LPD, the authorised and issued and paid-up share capital of APFT Express is as follows:­Authorised Issued and paid-up  No. of shares 500,000 200,000  Par value (RM) 1.00 1.00  Amount (RM) 500,000 200,000
Details of the changes in the issued and paid-up share capital of APFT Express since incorporation are as follows: Date of allotment 27.9.1984 3.3.2010 23.7.2010  No. of shares allotted 2 149,998 50,000  Consideration Cash Cash Cash  Cumulative issued and paid. up share capital (RM) 2 150,000 200,000
As at the LPD, APFT Express does not have any outstanding warrants, options, convertible securities and uncalled capital. iii. Substantial Shareholder APFT Express is our wholly-owned subsidiary company. On 22 June 2010, APFT acquired the entire equity interest of APFT Express, comprising 150,000 ordinary shares of RM1.00 each in APFT Express for a cash consideration of RM108,938. The purchase consideration was derived after taking into consideration the adjusted NTA of APFT Express as at 31 December 2009 of RM108,938 (after adjusting for the issuance of 150,000 new shares in APFT Express subsequent to 31 December 2009). iv. SUbsidiary and Associated Companies As at the LPD, APFT Express does not have any subsidiary or associated companies. 5. INFORMATION ON OUR GROUP (Cont’d)
5.2.5 APFT Maintenance Training i. Background, history and principal activity APFT Maintenance Training was incorporated in Malaysia under the Act on 27 April 2010 as a private limited liability company under the name of APFT Maintenance Training Sdn Bhd. It commenced the provision of maintenance training services for the aviation industry on 4 July 2010. Ii. Share Capital As at the LPD, the authorised and issued and paid-up share capital of APFT Maintenance Training is as follows:­Authorised Issued and paid-up  No. of shares 100,000 2  Par value (RM) 1.00 1.00  Amount (RM) 100,000 2
Details of the changes in the issued and paid-up share capital of APFT Maintenance Training since incorporation are as follows: Date of allotment 27.4.2010  No. of shares allotted 2  Consideration Cash  Cumulative issued and paid-Up share capital (RM) 2
As at the LPD, APFT Maintenance Training does not have any outstanding warrants, options, convertible securities and uncalled capital. iii. Substantial Shareholder APFT Maintenance Training is our wholly-owned subsidiary company. On 29 April 2010, APFT acquired the entire equity interest of APFT Maintenance Training, comprising 2 ordinary shares of RM1.00 each in APFT Maintenance Training for a cash consideration of RM2.00. The Acquisition of APFT Maintenance Training was completed on 29 April 2010. The purchase consideration was derived after taking into consideration the issued and paid-up capital of APFT Maintenance Training of RM2 since date of incorporation. iv. Subsidiary and Associated Companies As at the LPD, APFT Maintenance Training does not have any subsidiary or associated companies. 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 Main Market of Bursa Securities, we undertake the following Listing Scheme:­(i) Public Issue Our Company will undertake a public issue of 22,000,000 new Shares, at the Issue Price, 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) 15,000,000 new APFT Shares, representing approximately 9.55% of our enlarged issued and paid-up share capital, to be made available for application by the Malaysian Public via balloting; and
(b) 7,000,000 new APFT Shares, representing approximately 4.46% of our enlarged issued and paid-up share capital, reserved for the eligible employees and persons who have contributed to the success of our Group.

Upon completion of the Public Issue, the issued and paid-up share capital of our Company will increase to RM31 ,400,000 comprising 157,000,000 Shares. (ii) Offer for Sale Our Offerors will also undertake an offer for sale of 17,250,000 Offer Shares, representing approximately 10.99 % of our enlarged issued and paid-up share capital, at the Offer Price, payable in full on application upon such terms and conditions as set out in this Prospectus, to identified investors. Pursuant to the Offer for Sale, the Offerors are expected to raise RM8.63 million based on the Offer Price. The Offer Shares and the Issue Shares will, upon allotment and issue, rank equally in all respects with our existing issued Shares which are fully paid-up including voting rights and rights to all dividends and distributions that may be declared subsequent to the date of allotment of our Shares. (iii) Listing The admission and the listing of and quotation for our entire enlarged issued and paid-up share capital of RM31,400,000, comprising 157,000,000 Shares on the Main Market of Bursa Securities. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
5. INFORMATION ON OUR GROUP (Cont’d) 5.4 LOCATION OF OPERATIONS The locations of our Group’s operational and administrative premises are as follows:­Location Facilities Purpose of Location Suite 50-5-5, 5th Floor Wisma UOA Damansara 50, Jalan Dungun Bukit Damansara . 50490 Kuala Lumpur Oid Terminai Building Suilan Ismail Petra Airport Pengkalan Chepa 16100 Kola Bharu Kelantan Darul Nairn Sultan Mahmud Airport 21300 Kuala Terengganu Terengganu Darul Iman Sultan Abdul Aziz Shah Airport 47200 Subang Selangor Darui Ehsan Corporate office FUlly functional commercial airport equipped wilh Radar, Instrument Landing System and other approach aids. Fully functional commercial airport equipped with Radar, Instrument Landing System and other approach aids. Fully functional commercial airport equipped with Radar, Instrument Landing System and other approach aids. Corporate office Main flight training academy with both ground schooi and night school. All cadets begin their training at this location. Satellite flight training academy to main flight training academy in Kota Bharu. Training of advanced cadets who are close to completing their training, prOViding them with more flight hours. Satellite flight training academy to main flight training academy in Kota Bharu. Training of advanced cadets who are close to completing their training, orovidino them with more niaht hours.

5.5 KEY ACHIEVEMENTS! MILESTONES! AWARDS The key achievements! milestones! awards of our Group are as follows:­Date  Achievements I Milestones  February 2006  APFTSB received approvai from the DCA to operate as an AFTO. APFTA received delivery of first Alsim flight simulator. Official opening ceremony of APFTA by His Highness Duli Yang Maha Mulia Tuanku ismail Petra, the Sultan of Kelantan. Graduation ceremony of the first batch of cadets trained at APFTA. Graduation ceremony of the second and third batch of APFTA cadets. APFTSB was awarded the IPTS stalus by the MOHE. APFTSB was also awarded the IS09001 :2000 Quality Management Systems certification by SiRIM. APFTA received delivery of its own Diamond DA40 single-engine and Diamond DA42 twin-engine aircraft. APFTSB signed a cooperation and marketing agreement with Jeppesen GmbH (a unit of Boeing USA) for APFTA to act as a representative for Jeppesen to conduct the Aviation English test and course in addition to other Jeppesen training systems.  August 2006  February 2007  August 2007  September 2007  March 2008  June 2008  Graduation ceremony of the fourth to sixth batch of APFTA cadets. APFTSB signed an agreement with MAS and MARA whereby students chosen by MAS will be funded by MARA to undergo training at APFTA. Upon graduation, these students will be employed by MAS. Graduation ceremony of initial batch of Nepal Airline cadets who trained at APFTA.  August 2008
5. INFORMATION ON OUR GROUP (Cont’d) Date  Achievements I Milestones  February 2009  Graduation ceremony of the seventh to tenth batch of APFTA cadets. APFTA’s new hangar at Sultan Ismail Petra Airport officially opened by Tuan Guru Data’ Haji Nik Abdul Aziz, the Menteri Besar of Kelantan. APFTSB signed a MOU with Yayasan Terengganu. Under the MOU, Yayasan Terengganu will fund Terengganu youths to undertake aviation related courses at APFTA where they will be employed by MAS upon their graduation. APFTSB received approval to operate a satellite fiight training academy at the Sultan Abdul Aziz Shah Airport. Subang in Selangor. APFTSB signed a MOU with UTHM whereby APFTSB will provide ground school and fiight training to UTHM students as part of their Bachelor of Aeronautical Engineering Technology (Professional Piloting) degree at UTHM. Our Executive Chairman, Data’ Faruk was awarded the Asia Pacific Entrepreneurship Award (APEA) For Most Promising Entrepreneur in recognition of his outstanding accomplishment in the past and present and his vision to drive our Group as a leading business in the near future. APFTA participated in the New Straits Times Press (Malaysia) Berhad School Sponsorship Programme by sponsoring 10.000 copies of the New Straits Times newspaper to ten (10) schools in Kelantan per annum, Each school, which are mostly in rural areas, will receive five (5) copies of the newspaper on each school day. APFTSB signed a MOU with GHIAL to jointly set up a fiight training academy at the Rajiv Gandhi Intemational Airport. Shamshabad in Hyderabad. India. APFTA’s night training courses recognised and approved by the DGCA, enabling APFTA to train Indonesia cadets, Graduation ceremony of the eleventh to sixteenth batch of APFTA cadets. APFTA Alumni Committee was formed to take charge of administering the affairs of the APFTA Alumni Association. The APFTA Alumni Association is established with the aim of assisting APFTA graduates in keeping touch with their alma mater as well as fellow students. APFTSB was awarded the Global Award (Diamond Winner) in recognition of its excellent achievements. APFTSB signed a letter of intent with Embry-Riddle to collaborate in offering aeronautical related degrees. Embry-Riddle Aeronautical University a US-based aviation and aerospace university. APFTSB signed a MOU with UPM to collaborate in education, research and development of aviation related courses. APFTSB received approval to operate a satellite night training academy at the Suttan Mahmud Airport, Kuala Terengganu in Terengganu, APFTSB was awarded the Productivity Award 2009 (Open Category) by the Malaysia Productivity Corporation in recognition of its excellence in its quantitative and qualitative enhancement within its organisation. APFTSB was awarded the IS09001 :2008 OMS certification by SIRIM. APFTSB was awarded the Star Outstanding Business Award 2010 by The Star Newspaper for people’s choice of outstanding Malaysian brand. APFTSB was awarded the 2nd Malaysia Independence Award 2010 by the Selangor Petaling Business & Industry Association in recognition of APFTSB’s achievements and contributions towards nation building. APFTSB was awarded the SME 100 Award 2010-Fast Moving Companies by Business Media International in recognition of APFTSB being one of Malaysia’s fast moving companies. APFTSB was awarded the Asia Pacific International Honesty Enterprise -KERIS Award 2010 by Asia Pacific International Honesty Enterprise in recognition of its contribution towards the education and training sector in Malaysia.  May 2009  July 2009  August 2009  September 2009  October 2009  November 2009  December 2009  January 2010  February 2010  April 2010  May 2010  August 2010  November 2010  December 2010  January 2011
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 for the past three (3) FYE 31 December 2008 to 2010:­Expenditure Building in progress·  2008 RM’OOO 4,108  Internal fund 58%  Transaction value for FYE 31 December Borrowings 2009 Internal Borrowings fund RM’OOO 42% 2,105 12% 88%  2010 1,026  Internal fund 23%  Borrowings 77%  Leasehold building  – – – – – – 172  100%  – Aircraft  – – – 5,830  50%  50%  8,910  46%  54%  Aircraft Engine  – – – 1,560  100%  – 590  100%  – Simulator  1,160  15%  85%  27  100%  – – – – Others”  365  100%  – 485  28%  72%  338  100%  – Total  5,633  10,007 ,””-‘.  ‘0  11,036  _.,-
Noles:  •  Building in progress for the FYE 31 December 2008 and 2009 is rela/ed to the construction of hangar while for the FYE 31 December 2010, it is related to construction of students’ accommodation and hangar at the Sultan Mahmud Airport in Kuafa Terengganu.  Others comprise the following:­
Expenditure  2008 RM’OOO  2009 RM’OOO  2010 RM’OOO  Others  -Computers  131  20  35  -Electrical installation and renovation  41  40  121  -Air-conditioner, signboard, furniture and  fittings  70  68  32  -Motor vehicles  – 300  – -Flying equipment and office equipment  60  57  150  -Refueler and skid tank  63  – – Total  365  485  338  00
Our Group had no material divestitures for the past three (3) FYE 31 December 2008 to 2010. The above capital expenditure was financed through a combination of internally generated funds and bank borrowings. As at the LPD, we have not undertaken any material capital expenditure and material divestitures that is currently in progress. 5. INFORMATION ON OUR GROUP (Cont’d)
5.7 BUSINESS OVERVIEW 5.7.1 Our services and courses offered Our Group is principally a flight education and training service provider. Moving forward, our vision is to become one of the leading regional integrated aviation service providers. APFTA is an AFTO that complies with all the strict requirements set out by the DCA in order to maintain safety and standards of professional pilot training in Maiaysia. Accordingiy, the flight training courses run by APFTA are also accredited by the DCA and consequentially internationally recognised by iCAO. APFTA is also an IPTS, and is fully accredited by the MOHE. 5.7.1.1 Flight education and training services We offer courses in flying both fixed wing and helicopter (rotary wing). Most cadets train to become commerciai piiots and subscribe to our fixed wing courses. Flight training courses offered by us include basic ab-initio training which involves training of cadets assuming that they have no prior knowledge and experience in flying any type of aircraft whatsoever. Ab-initio integrated courses are intended for full time cadets. Ab-initio integrated training refers to a completely uninterrupted training course where a cadet obtains a CPUIR and multi-engine rating simultaneously upon completion of an approved flight training course. PPL is the basic licence required to take up recreational flying. The PPL allows its holder the privilege of flying a single-engine piston aircraft. Our PPL offering helps in promoting the general aviation industry in Malaysia and it provides aviation enthusiasts with the opportunity to take up recreational flying rather than pursuing a career as a commercial pilot. Meanwhile, the CPL is the minimum licence required for commercial flying. it is the first step towards becoming a professional pilot with a commercial airiine. All cadets undergoing the integrated flight training at APFTA are required to pass mandatory examination papers set by the JAA. All flight cadets in Malaysia sit for the same examination papers administered by UKCAA to obtain a DCA frozen ATPL. In addition to the CPL, cadets will train in APFTA to obtain certain ratings such as IR and muili-engine rating. The IR allows them to fly under meteoroiogical instrument conditions (in bad visibility and at night), while a multi-engine rating will aliow them to fly an aircraft with more than one engine. After graduating from a flying academy and once attached with an airline, the cadet will continue to add ratings to his licence depending on the type of aircraft the cadet is required to operate by the airline, for example, ratings to operate Boeing 737 or 747, Airbus A320 or A330 etc. In order to obtain these additional specific ratings, the cadet will undergo additional specific training provided by the airline. He may then proceed to obtain his TRior TRE ratings. After logging a minimum of 1,500 hours of flight time with certain restrictions imposed, a co-pilot may apply for a full ATPL (i.e. the frozen ATPL will be unfrozen). Once issued with a full ATPL (unfrozen ATPL), the holder of the full ATPL may then be considered for promotion to the rank of Captain. 5. INFORMATION ON OUR GROUP (Cont’d) The illustration below depicts the pilot training progression and pathway chart. Pilot Training Progression and Pathway Chart
In addition 10 the above, we have started offering helicopter flight training courses and it has garnered interest from various parties including MHS, who has sent cadets to train with us. In addition, it is envisaged that there will be a significant increase in demand for helicopter piiots from offshore oil and gas companies which will need to transport equipment and staff to offshore platforms using helicopters.
5.7.1.2 Academic Courses As a dynamic and forward looking company, we constantly strive to improve the qualily of our course content, training and teaching practices as well as our facilities in order to enhance the quality of our cadets. To this end, and as a direct result of continuous discussions with our commercial airlines business partners, especially MAS, a diploma course was proposed and developed. We became the first AFTO in Malaysia to develop our own diploma programme -the Diploma in Aviation (Pilot Training) that is recognised by the MOHE through the MQA. Thus, all our cadet pilots will not only become professional pilots but also obtain recognised paper qualifications upon completion of their training. Continuing on with this academic initiative, our Group, in collaboration with UTHM, has developed a new degree programme that started in July 2010. This new undergraduate degree course, the Bachelor in Aeronautical Engineering Technology (Professional Piloting) is a four (4) year degree programme in which the student will undergo an initial two (2) years of academic studies at UTHM and a further two (2) years of flight training at APFTA. At Ihe end of this undergraduate degree course, the student will be conferred with a professional pilot licence (CPUIR frozen ATPL) as well as a Bachelor in Aeronautical Engineering Technology (Professional Piloting). The first batch of students has attended the introductory phase of the flight training at APFTA on 24 July 2010. Key programme courses offered by our APFTA are as follows:­(i)  PPL Course Fixed Wing;  (i1)  PPL Course (PPL-H) Rotary Wing;  (iii)  Ab-initio Integrated Course (fixed wing);  (iv)  Ab-initio Integrated Course (rotary wing);  (v)  Diploma in Aviation (Pilot Training) offered in conjunction with (iii) and (iv);  (vi)  AFI Course (fixed wing);  (vii)  Aircraft maintenance engineering licence course;

 

 

5. INFORMATION ON OUR GROUP (Cont’d) (viii) Bachelor of Aeronautical Engineering Technology (Professional Piloting) with Honours’*”; (Ix) Aviation English (Jeppesen)'”; and (x) Licensed Dispatcher course”. Notes: ” Offered in collaboration with UTHM in Batu Pahat, Johor.
.. Offered in collaboration with Jeppesen. 5.7.1.3 Course Structure A) PPL Course Fixed Wing

• Minimum age of 17 years.
• Pass medical examination (Class II) by a DCA approved medical practiUoner.
• Adequate competency in the English language.
• PPL ground training covers a minimum of 80 hours of tutorials and lectures on aviation theory subjects:

 

Air Law, Flight Rules and Procedures; • Navigation & Meteorology;
• Aircraft General Knowledge;
• Radio Telephony Theory;
• Radio Telephony -Practical;
• Human Performance and Limitation; and
• All examination a ers are set and evaluated b the DCA.

 

B) Ab-initio tntegrated Course (Fixed Wing)

• Leiter of approval from the DCA. • Minimum age of 18 years. • Successful completion of Sijil Pelajaran Malaysia, 0′ Levels or equivalent for overseas cadet pi lois with five (5) credit passes (Compulsory subjects of English, Mathematics and Physics plus any two (2) other sUbjects). • Pass medical examination (Class [) by a DCA approved medical practitioner. • Good eyesighl (visual acuity of at least 6/60 wilhout optical aid, correctable to 6/6) and not colour blind. CPUIR and Frozen ATPL
• The course wlll be conducted in two phases:­• PPL Phase • 80 hours of tutorials and lectures, covering the following subjects:~ • Air Law, Flight Rules and Procedures:
• Navigaflon & Meteorology;
• Aircraft General Knowledge;

• Radio Teiephony Theory; • Radio Telephony -Practical;
• Human Performance and Limitation;
• All examination a ers are set and evaluated b the DCA;

 

5. INFORMATION ON OUR GROUP (Conl’d)
• CPUIR and ATPL Phase; and
• 750 hours of tutorials and lectures, making a total of 830 hours for the Integrated Course. All subjects are as per JAA guidelines. The examination papers are set and evaluated by the UKCAA.

• The subjects covered are: • Air Law;
• Human Performance and Limitation;
• Airframe Systems;
• Principles of Flight;
• VFR Communications;
• IFR Communicattons;
• Navigation;
• Radio Navigation;
• Instruments and Electronics;
• Flight Planning;
• Meteorology;
• Performance;
• Mass and Balance;
• Operational Procedures; and
• T e Technical.

 

• Flight training consists of 200 hours flying: • 145 hours on single-engine aircraft;
• 20 hours on the simulator (single-engine);
• Ten (10) hours on the simulator (twin-engine); and
• 25 hours in twin-en ine aircraft.

Note:­The breakdown in tile flight training hours for the single-engine aircraft, twin-engine aircraft and simulators are consistent wi/I! the directive of the DCA. According /0 the DCA’s directive, the training hours for a professional pifof license (CPUIR) course shall consist of no/less than 200 hours of which 35 !lours shalf be on multi-engine aircraft and the credit hours on a flight and navigation procedures trainer (simulators) sf7alf be 30 110urs. • The duration of the course is 72 weeks, C) Diploma in Aviation (Pilot Training) Course” li~~J!jJJt.(tJ:1!’~mt:’IT[;BI:t~~,TIl, • In addition to the ground school subjects and flight training, cadets are required to sit for additional seven (7) subjects which include: • Management:
• Essentials of Management;
• Human Resource Management;
• Organisational Behaviour; and
• Interpersonal Communication;

 

• MQA:
• Islam/Moral, Pengajian Malaysia;
• Bahasa Kebangsaan I & II; and
• Pro’ect Pa er.

 

 

Note: Offered and awarded in conjunction with the ab-initio Integrated Course (Fixed Wing and Rotary Wing). 5. INFORMATION ON OUR GROUP (Cont’d) D) PPL Course (PPL-H) Rotary Wing !’I’~1:Ii!lulill!1u~ I

• Minimum age of 17 years. Pass medical examination (Class II) by a DCA approved medical practitioner.

• Ade uate com etenc in the En lish Ian ua e.
• PPL(H) Ground training covers a minimum of 80 hours of tutorials and lectures on aviation theory subjects:
• Air Law. Flight Rules and Procedures;
• Navigation & Meteorology; Aircraft General KnOWledge; Radio Telephony Theory;

• Radio Telephony -Practical;
• Human Performance and Limitation; Helicopter Aerodynamics; and

• Helicopter Technical.

 

• All examination a ers are set and evaluated b the DCA.
• Fli ht trainin consists of 45 hours helico ter sin Ie-en ine fl in .

 

• The duration of the course is 12 weeks. E) Ab-initio Integrated Course (Rotary Wing)

• Leller of approval from the DCA.
• Minimum age of 18 years. Successful completion of Sijil Pelajaran Malaysia, 0′ Levels or equivalenl for overseas cadet pilots with five (5) credit passes (Compulsory subjects of English. Mathematics and Physics plus any two (2) other subjects.
• Pass medical examination (Class I) by a DCA approved medical practitioner.
• Good eyesight (visual acuity of at least 6/60 without optical aid, correctable to 6/6) and not colour blind.

THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d)
• CPL(H) is conducted in two (2) phases: • PPL Phase • 80 hours of tutorials and lectures, covering the following subjects: • Air Law, Flight Rules and Procedures;
• Navigation & Meteorology;
• Aircraft General Knowledge;

Radio Telephony Theory; • Radio Telephony -Practical; Human Performance and Limitation;

• Helicopter Aerodynamics; and
• Helicopter Technical.

• All examination papers are sel and evaluated by the DCA. • CPL Phase • 750 hours of tutorials and lectures, making a total of 830 hours for the Integrated Course. All subjects are as per JAA guidelines. The examination papers are set and evaluated by the UKCAA. The subjects covered are: • Air Law;
• Human Performance and Limitation;
• Airframe Systems;
• Principles of Flight: VFR Communications: IFR Communications;

• Navigation; Radio Navigation; Instruments and Electronics;

 

Flight Planning; • Meteorology; Performance; Mass and Balance; Operational Procedures; and

• Helico ter T e Technical.

 

F) AFI Course
• Malaysian Citizen. • Holder of CPUIR License.
• 200 hours of fiight time. of which not less than 150 hours should be as PIC if the candidate holds a CPL or ATPL.
• Meet Ihe DCA requirements for CPL level knowledge.
• Hold an ICAO level four (4) aviation English certificate recognised by the DCA.

• 30 hours on single-engine piston aircraft of which five (5) hours should have been during Ihe six (6) months preceding the pre-entry lesl. • Ten (10) hours of Instrument Flying (“IF”) inslruclion of which nol more than five
(5) hours may be in a simulator (FNPT 2).
• Letter of approval from the DCA.

• Pass medical examination Class I b a DCA a roved medical ractitioner. 5. INFORMATION ON OUR GROUP (Cont’d) ‘-“~’tj’.J ‘. ..t:. l • 40 hours of tutorials, 75 hours of teaching practice and seven (7) hours of ro ress tests.
G) Aviation English (Jeppesen) Competency in speaking, reading and writing in the English language is essential for all pilots and ATC. As part of their licensing requirements, all pilots and ATC are required to demonstrate ICAO level four (4) (Operational) English language proficiency. The Jeppesen English proficiency evaluation is designed to assess a candidate’s ability to understand and use ICAO phraseologies as well as common English. The ICAO Aviation English Test is intended to measure the six (6) sub skills in the ICAO proficiency scale, namely: Pronunciation, Structure, Vocabulary, Fluency, Comprehension and Interactions. The ICAO Aviation English Test is split into eight (8) parts:­Part A  Aviation Reading  Reading out aviation related messages loudly, smoothlv and naturallv. Reading out common English messages ioudly. smoothly and naturally. Listening to sentences one at a time, and reDeatine each sentence exacllv as heard.  Part B  Common English Reading  Part C  Repeat  Part 0  Short Answer Question  Answering of questions using only a single word. or a short Dhrase of two to three words.  Part E  Readback  Listening to ICAO radio messages and saying in retum an appropriate readback using ICAO ohraseoloaies. Responding to, or correcting a radio communication exchange between two soeakers. Listening to four stories and retelling each storv as heard. in the oerson’s own words.  Part F  Correction and Confirmations  Part G  Story-Retelling  Part H  Open Questions  Listening to two questions, and providing an opinion and supporting reasons in response to the two ouestions.
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) H) Bachelor of Aeronautical Engineering Technology (Professional Piloting) with Honours
5. INFORMATION ON OUR GROUP (Cont’d) • • 1 ••• Year 2 Semester 3 • Industrial Training Year 3 Semester 1 • Foreign Language • Bachelor Project II • Airport Management • Aviation Economics and Management • Entrepreneur
I) Aircraft maintenance engineering licence course Aircraft maintenance engineering licences fall in broad categories of the following: A -Aeroplane (One (1) or two (2) depending on maximum takeoff weight of aircraft) C -Engines (Gas turbine orland piston engine) D -Engine Overhaul X -Avionics with Autopilot rating R-Radio A combination of the above licences may be held depending on the examinations taken from the subjects iisted below along with a DCA aural examination. Year 3 Semester 2 and 3  • Ab initio integrated course  Year 4  • Ab initio integrated course

J) Licensed Dispatcher Course We work together with Jeppesen, in offering their licensed dispatcher course to all those interested in this career path to obtain the necessary applied knowledge. Our licensed dispatcher course meets all necessary ICAO requirements and also the stringent standards which are set by Jeppesen. As the airlines industry grows and regional and private aircraft increase in the region, so do the requirement to train licensed dispatchers as this is a mandatory job specification requirement in order to run any commercial or charter night operation. 5. INFORMATION ON OUR GROUP (Cont’d) Currently, our Group is the only fiight school in Malaysia offering the Licensed Dispatcher Course in collaboration with Jeppesen. In Maiaysia, other alternative course to the Licensed Dispatcher Course offered by us is the DCA FOO/FD (Flight Operation Officer/Flight Dispatcher) License which is also offered by Aviation Management College. The Licensed Dispatch Course cover the duties and responsibilities of aircraft dispatcher and in-depth knowledge of commercial aviation dispatch procedures, work rules, local and international regulations and the use of sophisticated electronic fiight planning systems, fiight following and weather software. Upon completion of this course, applicants will be proficient in the following subject areas:­Meteorology, Aeromedical, Emergency, Security, Communications, Air Traffic Control, Navigation Principles, Navigation Systems, Instrument Approach Procedures, Charts and Airspace, Aerodynamics, Aircraft Systems, Weight and Balance, Aircraft Performance, Aircraft MEUCDL, Regulations, Special Navigation & International Ops, Deicing and Anti-icing, Manual Flight Planning, Dispatch Resource Management, and Practical Dispatching. 5.7.2 Our Principal Markets For the FYE 31 December 2010, most of our revenue is derived within Malaysia. As at the LPD, we have a student population of 390 students of whom approximately 96.41 % are Malaysians, while approximately 3.59% are foreigners. Our goal is to augment our leadership position within the fiight education and training market in Malaysia and to expand our business both locally and regionally. Moving forward, it is our intention to expand our presence in the regional markets particularly Indonesia, Myanmar and india as we can further leverage on our current capabilities and competencies to become one of the region’s leading integrated aviation service providers.
5.7.3 Seasonality Our business does not experience any material seasonality. 5,7.4 Capacity, aircraft fleet, instructors and accommodation Over the years, we have been steadily expanding and increasing our operational capacity by purchasing and leasing new aircraft and hiring additional instructors. We also have at our disposal, sophisticated and advanced fiight simulators, as well as ample fiight training airspace for us to provide our cadets with high quality training in addition to enabling us to train our cadets more efficiently and effectively. Listed below is our total number of aircraft and instructors as at the end of the past three (3) FYE 31 December 2008 to 2010 and its year-on-year percentage of growth:­
2008  23  30  % growth  5%  36%  2009  29  43  % growth  26%  43%  2010  35  50  % growth  21%  16%
5. INFORMATION ON OUR GROUP (Cont’d) Students’ capacity of our APFTA for the past three (3) FYE 31 December 2008 to 2010 is set out below:
Maximum  294  354  420  Actual  291  336  390  Percentage of utilisation (%)  99%  95%  93%
The basis of calculation for the optimal student capacity takes into consideration the following:­(i)  The ratio of instructor to students;  (ii)  The ratio of students to a classroom; and  (iii)  The number of aircraft available;
on the assumption that the APFTA has the liberty to mobilise and schedule its resources between ground training and flight training throughout the course. Currently, the existing large allocation of training airspace granted to APFTSB does not pose a restriction on the maximum capacity above. Aircraft Fleet In comparison to all other flight education and training service providers in Malaysia, as at the LPD, to the best of our knowledge, we have the largest and most advanced fleet of flight training aircraft in Malaysia, with a fleet of 35 aircraft in total, comprising 28 single-engine aircraft, six (6) twin-engine aircraft and one (1) helicopter. A list of all our aircraft as at the LPD is tabled below:­Aircraft Type  Owned  Number of Units  Leased  Single-Engine  Oiamond OA40 Piper PA28 Warrior  10 18  — Twin-Engine  Diamond DA4Z Piper Seneca PA34  4” 1  -1  Helicopter  Robinson R44  1  – Total Units:  34  1  Grand Total:  35
Note: As at the LPD, the ownership of APFTA for one (1) unit of the aircraft is in the process of being registered with the DCA. Ab-initio flight training uses light general aviation aircraft and fixed based simulators for instructional purposes. These aircraft fall under small aircraft category (a maximum takeoff weight of 5,700 kg and below with a seating of nine (g) persons or less). 5. INFORMATION ON OUR GROUP (Cont’d) Our fieet of aircraft consists of multiple types of aircraft buill by different manufacturers such as Piper from the USA and Diamond from Austria. Typically, our aircraft is expected to have perpetual life span subject 10 scheduled maintenance of airframe parts and engine. However, the aircraft is depreciated over a period of 25 years. We expeci the disposal of our aircraft to take place after approximately seven (7) years of usage taking into consideration the following:­(i) The total cost of maintaining aircraft vis-a-vis the cost of purchasing new aircraft; and
(ii) The expiry of the financing period for the aircraft.

By having a large fieet of modern aircraft means that our cadets will be able to efficiently log their mandatory fiying hours. Having a large and modern fieet of aircraft also translates to less downtime for cadets, through less faulty aircraft or unavailability of aircraft due to scheduled maintenance. Cadets stand to benefit from this as well, as they are able to log fiying hours efficiently without having to experience unnecessary delays caused by unavailability of aircraft due to servicing and maintenance requirements. More importantly, by having a large fieet of modern aircraft, we are able to take in and cater for more cadets. The capacity of our APFTA is basically determined by three (3) factors as follows:­(i) The availability of aircraft;
(ii) The number of fiight instructors; and

(iii) The availability of airspace. As at the LPD, to the best of our knowledge, we have the largest fieet of fiight training aircraft in Malaysia. As such, we are able to take in and cater to a larger number of cadets without compromising on quality. We have purchased an additional ten (10) new Piper PA28 aircraft in 2010 which have been delivered, assembled and became operational in early October 2010. We also have the option of purchasing another ten (10) Piper PA28 aircraft in 2011. Diamond DA40/DA42
The most modern and advanced general aviation aircraft built by Diamond are used in APFTA. The DA40, a single-engine piston aircraft capable of speeds of up to 178 knots (330kmh) is a sleek and maneuverable training aircraft. 68 5. INFORMATION ON OUR GROUP (Cont’d)
The DA42, its twin-engine sibling, is used for multi-engine and instrument training. Along with its great outward visibility, the Diamond DA42 or Diamond Twin Star is equipped with the most advanced array of navigational and fiight instruments (the Garmin G1000) rivalling even the most advanced modern airliner. As at the LPD, we own ten (10) units of the DA40 and four (4) units of the DA42 for our fiight training activities. Asian Aerospace Services Ltd which is an authorised agent for Diamond aircraft in this region and Thielert Aircraft Engines GmbH (the engine manufacturer) work closely with us with regards to the maintenance of our Diamond aircraft and the handling of spare parts and supplies for our Diamond aircraft. In addition, we also deal directly with Diamond in Austria on spare part orders for our in-house inventory so that we are able to maintain the maximum possible serviceability of our fieet of aircraft. Piper PA2S Warrior
The Piper PA28 Warrior is a durable and dependable aircraft which makes it a perfect fiight trainer. Basic handling characteristics and stability of the aircraft eases the transition of our cadets from land borne to airborne. As at the LPD, we own 18 units of the Piper PA28 Warrior. 5. INFORMATION ON OUR GROUP (Cont’d) Piper PA34 Seneca
The Piper PA34 Seneca is a six (6) seater twin-engine aircraft which we currently use for flight training which is also suitable for light aircraft chartering services. We have two (2) of these aircraft in our fleet, whereby one (1) is owned and the other leased. Robinson R44
The R44 is a single-engine helicopter with a semi-rigid two-bladed main rotor and a two­bladed tail rotor and a skid landing gear. It has an enclosed cabin with two rows of side-by­side seating for a pilot and three passengers. 5. INFORMATION ON OUR GROUP (Cont’d) Instructors All our instructors are highly qualified, possess an average of 20 years of professional flight experience and invaluable exposures gained from their employment within the aviation industry. On average, each of our fiying instructor has more than 4,000 fiying hours and each of our ground instructor has more than 27 years of working experience either in the air force or commercial sectors. Six (6) of our fiying instructors are approved DCA Authorised Examiners. Most of our instructors have served either the armed forces or commercial airlines for many years and are experienced pilots. Please refer to Section 7.2.2 of this Prospectus for the profiles and qualifications of our Principal and chief instructors. In accordance with DCA’s directive, a flight instructor is allowed to fiy up to a maximum of 800 hours for each 12month period, a weekly limit of 20 hours and a daily limit of four (4) hours except for navigation training where the limit is six (6) hours per day. For flight training session, there will usually be one (1) instructor to a maximum of two (2) students in an aircraft. The student will undergo solo fiying after the required hours with instructors, normally between 10 and 15 hours. As at the LPD, we have a totai of 49 qualified and experienced night and ground instructors out of which 36 are flight instructors and 13 are ground instructors. The wealth of experience of our flight instructors will no doubt provide our cadets with excellent guidance and training in the course of their studies at our APFTA. Accommodation Our full-time cadets are provided with comfortable, safe and clean accommodation which is equipped with various amenities such as a gymnasium, a lounge with television and DVD piayer, a cafe, and a dining hall. Our crew residence in Kota Bharu consists of 36 villas with each villa capable of housing six (6) students each. The villas provide a private room to each cadet and have common amenities such as a bathroom, kitchenette, lounge area, dining area and ironing equipment. Our villas have been designed to provide our cadets with a conducive environment to study, rest and participate in recreational activities. Training Airspace Our Group operates out of three (3) major commercial airports in Malaysia which has a large allocation of night training airspace. Allocated flight training airspace in three (3) of our primary areas of operations is as follows;­Kola Bharu Kuala Terengganu Subang Uban Batu Rakil Hulu Langat Bachok Rusila Port Klang Kerengga Tanjung Karang Mercang The details of the tenancy arrangements for the office, fiying academy and hangar space at Sultan Ismail Petra Airport, Kota Bharu and Sultan Mahmud Airport, Kuala Terengganu are set out in Section 9.1.2 of this Prospectus. Additionally, APFTSB has also rented an office space and hangar at Sultan Abdul Aziz Shah Airport, Subang from Systematic Aviation Services Sdn Bhd (“SAS”) pursuant to a monthly rental arrangement with SAS. 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.5 Quality control procedures As an organisation involved in the provision of fiight education and training services and aviation related services, our Group places high emphasis on safety and quality procedures. We strive to continuously maintain high standards and quality in all our operations by conforming to industry best practices. In addition, the key licence to operate our APFTA was issued by the DCA, and the issuance of the licence by the DCA is subject to annual audits and stringent quality tests. As such, quality control forms a very critical aspect of our Group. We have established, documented and implemented a OMS in accordance with the requirements of the AFTO Manual by the DCA. The key parties involved in the quality control procedures include, amongst others, the following:­(i) Manager of Pilot Training is responsible for coordinating and monitoring the development of each batch of cadets to ensure that the cadets finish their course in the stipulated timeframe of 20 months; (Ii) Chief Instructor is responsible for overseeing both the flying and ground schools to ensure that all instructors meet the required standards of academic teaching when conducting their duties. He is also responsible for maintaining the standard of instruction and flight procedures at APFTA to ensure that all the required academic standards are met or exceeded; (iii) Chief Flying Instructor is responsible for the standard of academic teaching of the flying school to ensure that all required standards are met. He is also the safety officer, responsible for making sure that all staff members are made fully aware of any shortcomings in the pursuit of high training performances without compromising on safety standards; (iv) Chief Ground Instructor is responsible for the standard of academic teaching of the ground school to ensure that all required standards are met;
(v) Chief Simulator Instructor is responsible for the standard of academic teaching of simulator training to ensure that all required standards are met;

(Vi) OMS manager is responsible for auditing and reporting on all our OMS activities and reports his findings directly to our Board. He is responsible for checking and making sure that all activities carried out by APFTA meet the required standards; and (vii) Publication Officer is responsible for compiling all documentation and manuals pertaining to APFTA’s flying school and ground school operations. The auditing aspect of our OMS involves the inspection and analysis of records to establish if procedures and requirements are up to standard in accordance with the requirements of the AFTO Manual by the DCA. Our auditing process follows a flexible timetable to cater for unscheduled audits which have proven to be more effective in identifying potential performance issues in our area of operations. Findings contained in our audit reports are reviewed by our executive and senior management at OMS review meetings. Our OMS review meetings focus on assessing the suitability, adequacy and effectiveness of our continuing OMS procedures. Our definitive goal of conducting these meetings is to provide us with an opportunity to identify areas which are underperforming, and to take the appropriate corrective action to ensure that we comply with or exceed the standards in accordance with the requirements of the AFTO Manual by the DCA. Our commitment to high standards, safety and quality is further enhanced as we are subjected to annual audits by major commercial airlines that send their cadets to train with us. Thus, it is evident that we need to ensure compliance with stringent requirements as well as satisfy the high standards expected by these major commercial airlines. 5. INFORMATION ON OUR GROUP (Cont’d) In recognition of our OA efforts, we obtained our IS09001 :2000 OMS certification from SIRIM in 2007, which was later upgraded to IS09001:2008 on 12 May 2010. 5.7.6 Technology used and R&D Flight Simulators Our Simulator Centre operates two (2) fiight simulators, the Alsim AL200 MCC and the Alsim AL200 DA42 which are both compliant with JAR-STD3 (Al. These fiight simulators are used for all aspects of the instrument rating fiight syllabus as well as the MCC Course. Training sessions are conducted by experienced instructors who can adjust or replicate various fiight conditions and scenarios which might not be replicable under normal fiying conditions. These training sessions provide invaluable experience to our cadet pilots on various potential real-life emergency scenarios. Simulator training also contributes to developing the cadet’s aircraft handling skills which will be useful for any future type rating or airline simulator assessment. As at the LPD, we owned the following two (2) fiight simulators:­
A high tech flight training device with lull visual simulation. It also has accurate handling forces of multiple types of aircraftAlsim AL200MCC 1from single-engine pistons to multi-engine jet aircraft. This simulator is a valuable asset for
Alsim DM2 A state-ol-the-art flight training device which is fully representative of the DA 42 aircraft providing maximum fidelity and ease of transfer from simulator to aircraft training. The DA 42 allows the cadet to become familiar with the aircraft systems, Garmin 1000 dynamic and aircraft dynamics.
5. INFORMATION ON OUR GROUP (Cont’d) Our Group does not carry out any specific R&D activities. 5.7.7 Mode of marketing Since commencement of operations in 2006, the marketing activities of our Group are led by the Executive Chairman, Principal of our APFTA, the Chief Instructor and Registrar. In 2010, we recruited a Business Development and Marketing Manager to assist our Group in marketing activities. Marketing activities are undertaken by them who leveraged on their network and contacts established through the many years they have been in the industry. The principal method through which our Group sources most of our students is through the networking activities undertaken by our Group focusing on airline companies and government agencies such as MARA and Yayasan Terengganu. Furthermore, our Group has also entered into collaboration with institutions of higher learning such as UTHM, to provide flight training to UTHM students as part of their Bachelor of Aeronautical Engineering Technology (Professional Piloting) degree at UTHM, and UPM to collaborate in education, research and development of aviation related courses. Our marketing approach and activities are implemented through various channels which are aimed at increasing awareness of APFTA as the leading flight education and training service provider in Malaysia. Our mode of marketing includes the following:­(a) APFT web site Our Group has a website on the World Wide Web located at: http://www.apfl.edu.my/. It provides accurate, comprehensive and up-to-date information with regards to APFTSB’s course offerings and information pertaining to our Group. The APFT website also has an integrated forum where cadets, instructors and staff participate in active discussion on various topics. The forum is an effective and quick communication platform that serves to keep all its participants informed and up-to-date on all aspects associated with our APFT Group. (b) Participation in career and educational fairs As part of our marketing drive to spread awareness of our academy as well as to highlight our course offerings and services, we participate in career and educational fairs within Malaysia and Indonesia. Education exhibitions aim to be a one-stop-centre for applicants to find out more about education options in Malaysia and also provide them with opportunities to speak to educators and fellow students alike. Education exhibitions also offer advice to aspiring students via talks and forums for discussion on various educational options and career paths. Career counselling and guidance are also provided free of charge to all aspiring students. In January 2010, we participated in the Karnival Jom Masuk U education exhibition held in Selangor. By participating in this exhibition, we met a host of potential applicants and their parents who were seeking the latest information with regards to flight training and education options in Malaysia. Potential applicants and their parents also had the opportunity to discuss in more detail, with some of our instructors, about our APFTA and the courses which we offer. Among the other career fairs and educational exhibitions we have participated in are the Indonesia Education Fair and the MATRADE educational exhibition. The exposure and response gained from our participation in career and educational fairs have raised our profile considerably and we have had many applicants to our academy linked to our participation in these fairs. 5. INFORMATION ON OUR GROUP (Cont’d) In September 2010, we participated in the Asia Pacific Airline Training Symposium 2010 held in Kuala Lumpur in which topics discussed include technology development and its effect on training and operations, training methods for the new generation pilots, Competency Based Training, Evidenced-Based Training, regulator training and results from several multi-crew pilot licensing programs. Our participation in this symposium enables us to keep abreast with new training methods for pilots and meet with various participants who are within the aviation industry, adding to our network of contacts. (c) School visits and career guidance talks We have also visited schools in Kuala Lumpur to give career talks and career guidance advice to their students. These talks and guidance advice are conducted by our instructors to highlight career prospects as well as to answer any queries the students might have pertaining to the aviation industry. These school visits and career guidance talks have raised the awareness of the flight training courses available at our academy as well as APFT’s profile among potential students. (d) Indonesian representative As part of our strategy to tap the regional market, our Group has also engaged a representative in Indonesia to assist in marketing our flight training and education programmes in Indonesia. The market potential is huge in Indonesia due to the sheer pool of potential students. Funding is also readily available as each province in Indonesia is an autonomous state and has its own allocations to fund residents of its province to undertake fiight training programmes. In addition, our qualifications are recognised and approved by the DGCA. Indonesian cadets who graduate from our academy are issued an Indonesian pilots licence upon completion of their training and passing the requisite exam papers at our academy. This recognition is extended to both our ab-initio and AFI courses. As such, we have a significant selling point in our recruitment drive for more Indonesian cadets. (e) Establishment of the APFTA alumni association APFTA has established an alumni association to assist the growing number of APFTA graduates to keep in touch with their alma mater and fellow students. Newsletters are circulated to all alumni members on a regular basis to keep former students informed of the various activities and developments that are happening at APFTA. The APFTA Alumni Association will also enable our current students to tap into and learn from the experiences of their seniors. In addition, the APFTA Alumni Association will also be able to assist current and former students in seeking job placements. The APFTA Alumni Association will no doubt bring a sense of pride to all our former students and foster in them a sense of belonging and affinity to the academy long after they have graduated. For us, being associated with our former students who are now successful career pilots provides APFTA with a good marketing tool. This is due to the fact that the former students will act as effective ambassadors who will espouse the quality of APFTA’s flight training course offerings. 5. INFORMATION ON OUR GROUP (Conl’d) (f) Publication of an internal newsletter Publishing a newsletter gives us a wider audience in our bid to create awareness on the various flight education and training programmes and courses we offer. Print media is a cost effective and convenient medium which is used for its mass appeal and allows for comprehensive coverage and communication of our marketing messages. It allows us to broaden APFTA’s appeal both internally as well as externally. APFTA publishes an in-house semi-annuai newsletter known as “The Aviator”. The newsletter highlights major developments in APFTA such as the signing of agreements or MOUs and the purchase and arrival of new aircraft. In addition, the newsletter also features the various events that have been organised by APFTA which includes graduation ceremonies, training seminars as well as carrying articles of APFTA which have been published in the mainstream media. The newsletter aiso publishes articles contributed by cadets and instructors alike sharing their past and present experiences in flying. The newsletter creates a sense of camaraderie not only between the cadets and instructors but also within the APFTA establishment in general as the newsletter keeps everyone informed on the latest developments at APFTA in addition to giving cadets and staff a piatform to share their thoughts and experiences. (g) Event sponsorship One of the marketing activities conducted by APFTA is the sponsorship of newspapers to various schools in Kelantan. Our involvement in this sponsorship programme generated publicity for APFT as various news articles and pictures highlighting the sponsorship, was carried and published in major national newspapers. Presently, APFTA is sponsoring 10,000 copies of the New Straits Times (“NST”) newspaper per annum to ten (10) schools in Kelantan under the New Straits Times Press (Malaysia) Berhad Schooi Sponsorship Programme. Under this sponsorship programme, each school, which are mostly in rural areas, will receive five (5) copies of the NST newspaper on each schooi day. APFTA is participating in this sponsorship programme as part of our community outreach programme to instil good reading habits in students from a young age in addition to encouraging students to read more and improve their command of the English language. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK ~ Company No. 886873-TJI 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.8 Approvals, major licences and permits obtained Details of major business licences, permits and approvals applicable to our Group as at the LPD are as follows:­Approving /  Date of  Issuing  Type of approvals /  Issuance I  Status of  Companv  Authoritv  licences / permits  Validitv  Equitv and other maior conditions imposed  compliance  APFTSB  DCA  Approval for the course of instruction in flying training  31.1.2011 Effective From 1.2.2011 to 31.1.2012  (i) The training must be conducted in accordance with AIC 25/ 2005 with the approved syllabUS and Operations Manual for the purpose of the issuance of the flight crew licences and ratings: (a) Private pilot (aeroplane/helicopter) licence; (b) Commercial pilot (aeroplane / helicopter) licence; (c) Night VFR rating (aeropiane/helicopter); (d) IR (aeroplane); (e) AFI’s rating (aeroplane); and (f) Flying instructor rating (aeroplane).  Complied  (ii) The course shall be conducted at Kota Bharu Aerodrome. Satellite Aerodrome Operations’ are at Kuala Terengganu and Subang Airport.  Complied  Certification that Flight  (iii) The principal and staff under whose direction the courses are to be conducted shall be persons whose qualifications and experience meet the requirements of the DCA@ N/A  Complied  7.9.2010  N/A  Simulation Training Device  Serial No. AL42 18 has met  Effective  the qualification  from  requirements of AIC  7.9.2010 to  01/2009 for a flight and  21.8.2011  navigation procedures  trainer levei Ii Certification that Flight  NIA 27.12.2010  NIA  Simulation Training Device  Serial No. A2MG30 has met  Effective  the qualification  from  requirements of AIC/01/2009  27.12.2010  for a night and navigation  to  procedures trainer level Ii  23.12.2011
77
II Company No. 886873-T II 5. INFORMATION ON OUR GROUP (Cont’d) Company  Approving I Issuing Authority  Type of approvals I licences I permits  Date of Issuance I Validity  Equity and other malor conditions imposed  Status of compliance  APFTSB  MOHE  Establishment of APFTA  13.8.2007 N/A  Chief Executive (i) Section 31 of the PHEIA in relation to the appointment and registration of the chief executive shall be complied with. The Registrar General of iPTS may refuse 10 register a chief executive pursuant to Section 31 (3) of the PHEIA. (ii) Section 32 of the PHEIA in reiation to the regulations on registration of chief executive shall be complied with. (iii) Section 37 of the PHEIA in relation to the powers of the Registrar General under Section 31(3) to deal with the chief executive shall be complied wilh. Lecturers (i) Priority shall be given to Malaysians citizens who are qualified and experienced in the programmes of study taught. (ii) All the lecturers shall have updated vaiid permits to teach and shall comply with Section 51 of the PHEIA. (iii) Foreign lecturers shall have valid teaching passes and comply with the conditions required by Immigration Department of Malaysia.  Complied Complied Complied Complied To be Complied’ Complied
78 II Company No. 886873-T II 5. INFORMATION ON OUR GROUP (Cont’d) Comoany  Approving I Issuing Authority  Type of approvals I licences I permits  Date of Issuance I Validity  Equity and other major conditions Imposed  Status of compliance  (iv) The number of lecturers shall be increased with the increase in the number students according to the lecturer-student ratio sel by MQA. Compulsory subjects pursuant to PHEIA  Complied Complied Complied Complied Complied Complied Complied Compiled Complied  ‘—– AIlIPTS shall teach the following subjects: (i) Malaysian education; (il) Islam Religion education for students professing the Islamic religion; and (iii) Moral education for non·Muslim students. Medium of Instruction (i) All IPTS shall conduct its courses in the national language; and (ii) If any courses or substantial part of the course conducted by the IPTS in English or Arabic, the nationai language shall be taught as compulsory subject for the student who undertakes such course. Registration of the Institution To enable the institution to be registered, the conditions which have to be complied with include the following: (i) If the company has not been incorporated, the institution is required within one (1) year from the date of the approval ietter to establish a company in this country: (a) to have a paid up capital of not less than RM200,OOO.OO; (b) the Bumiputera shareholdings have to be at ieast 30%; and
79
II Company No. 886873-T II 5. INFORMATION ON OUR GROUP (Cont’d) Comoanv  Approving I Issuing Authorltv  Type of approvals I licences I permits  Date of Issuance I Validity  Equity and other major conditions imoosed  Status of compliance  (c) the Memorandum & Articles of the company stating that sole object of the company is to establish and operate an institution for private higher education. (ii) The constitution of the institution cannot be changed without the prior approval of the Director General in accordance with Section 30(2) of the PHEIA. (iii) The Director General has to be satisfied with the suitability of the location of the premises. safety aspect for purposes of the institution for registration in accordance with Section 27(a)(i-V) of the PHEIA. Additional conditions (i) The approval for the institution may be revoked if the conditions of the approval letter are not complied with in accordance with Section 54 of the PHEiA. (ii) The approval from the MOHE shall be obtained prior to any changes to the conditions of approval. (iii) All the conditions stated in the approval letter shall be valid and applicabie to APFTA. Approved oremises Sullan Ismail Petra Airport. Pengkalan Chepa. 16100 Kota Shanu. Kelantan Darul Naim. Registration Conditions (I) The number of rooms which has been approved and registered (18 in total). (ii) The teaching course and training program which has been approved (Diploma in Aviation Manaqement-KN 8739).••  Complied Complied Complied Noted Noted Noted  Registration of APFTA as anlPTS  13.7.2009 Effective from 15.8.2007 to 14.8.2012  Complied Complied Complied
80 ~ Company No. 886873-T II 5. INFORMATION ON OUR GROUP (Cont’d) Approving I Issuing Comoanv I Authority Type of approvals I licences I cermlts Approval for Diploma in Aviation Management'”  Date of Issuance I Validity Eauitv and other malor conditions imposed Status of compliance Noted Effective from 3.3.2008 to I (ii) 2.3.2013 3.3.2008 Special Conditions (I) The Registralion Certificate is not transferable. (ii) Any changes or transfer of any conditions require the prior INoted approval of (he Director General. (iii) A copy of the Registration Certificate must be displayed at a I Complied place where iL can be easily be seen at APFTA’s premise, (iv) APFTA shall comply with directions from Ministry of Education r Noted issued from time to time such as amendments to PHEJA and regulations made pursuant thereto. (v) The Registration Certificate is valid for the above mentioned I Complied premises only. (vi) APFTA is required to comply with conditions imposed by local I Noted aUlhorilies and other government agencies. (i) The approved conditions for the course based on the I Complied recommendation of MQA shall be observed. APFTSB is responsible to invite MQA 10 assess whether Ihe I Complied~ minimum standard is achieved after the course has been conducted for the following period: (a) semester for certificate /bachelor degree level; (b) 4 semester for diploma/degree level; or (c) 1 year for doctorate level. (iii) All certificates. diploma and degrees of the institutions can only I Noted be awarded when minimum standard is achieved, failure to do so may resull in the course approved to be revoked and APFTSB may be subject to legal action pursuant !o Section 77 of PHEIA. (iv) The validity period of the course is five (5) years from the date I Noted or approval. (v) In the event that APFTSB wishes to re·offer the course (after I Noted the expiry of the five (5)-year period), APFTSB is required to renew the approval within one (1) year prior to the expiry of the validity period of the course.
81 ~ Company No. 886873-T ~ 5. INFORMATION ON OUR GROUP (Cont’d) Company  Approving J Issuing Authority  Type of approvals I licences f permits  Date of Issuance I Validity  Equity and other major conditions Imposed  Status of compliance  APFTSB  MQA  Approval to conduct Diploma in Aviation Management (KN6739)”  21.2.2008  (i) APFTSB is responsible to invite MQA to assess whether the minimum standard is achieved before the end of the semester for the first cohort of students intake. (ii) APFTSB is required to conduct the course follOWing the semester system not more than 2Y2 semesters (35 weeks) a year in accordance with the Circular LAN Bil:6 of 1999. (iii) To ensure that equipment relating to the course for the first year is ready and that there are sufficient number of such equipment before the course commences. (iv) To ensure that reference books, journals and magazines related to the course are sufficient in number and are updated. (v) To ensure that all instructors possess basic qualification of ~Instructional Technique” which is stipulated by the DCA for instructors who teach the main subjects, for example, radio, meteor etc.  Complied Complied Complied Complied Complied
Notes: A Salellite Aerodrome Operations is an alternate base aerodrome which may be used by our APFTA (or flying training.
@ Pursuant to Regulation 45(4) o( the Civil Aviation Regulation 1996, Ihe Director General of Civil Aviation Malaysia or tin authorised person may, al anytime, for the purpose o( the ragulalion including the determination o( the standards of insfruction end (acilities provided by the applicant or holder o( Ihe certi(icale of approval and lha aulhorisation (in relation to provision o( inslruction in flying) • Em/er upon any o( its premises: (a) 10 inspect and examine the stale o( such premises or any building or (acility therein; and
(b) 10 inspect any record meintained by it or any document in its possession in connection wilh the activities to which the certificate and the authorisation relate.

As at the LPD, the teaching permits (or 42 out of 47 instructors and lecturers who require teaching permit to teach at our APFTA have been obtained. Of the five (5) outstanding teaching permi/s, four (4) are (or the instructors who started their role as instructors at APFTA recently, in Decamber 2010 and January 2011 and their applications have been submitted and pending issuance by MOHE. The remaining one (1) outstanding teaching permd is (or an instructor whose teaching permit has recently expired in December 2010 and his application (or the renewal has also been submitted and is pending (or approval by MOHE. The course name “Diploma in Aviation Management” was subsequently changed to “Diploma in Aviation (Pifol Training)” pursuant to the approvalletfer dated 3 April 2008 from MQA. At the invitation of APFTSB, the representatives from MOA had attended APFTA (or the assessment on whether the minimum standard is achieved for the programme. A report dated 14 January 2011 on the assessment has been issued (or APFTSB’s feedback which was submitted to MOA on 28 January 2011. As at the LPD, the decision on the accreditation of the programme by MOA is still pending. 82 II Company No. 886873-T II 5. INFORMATION ON OUR GROUP (Cont’d) Registration of our aircraft with the DCA and issuance of Certificate of Airworthiness by the DCA (a) Diamond Aircraft Industries GmbH DA 40D and GmbH DA 42
(b) Piper Aircraft Corporation PA-28-161 and PA-34-220T

Validity Period of  Registration marks of  Certificate of Registration” No.  Certificate of Airworthiness** No.  Certificate of  aircraft  (Date of Issue)  (Date of Issue)  Airworthiness  1  NRA  M1399 (18.9.2007)  M1193  12.11.2007)  10.1.2011 -11.11.2011  2  NRB  M1400  18.9.2007  M1194  12.11.2007  10.1.2011-11.11.2011  3  NRC  M1401  18.9.2007  M1203  26.12.2007  16.12.2010 -25.12.2011  4  NRD  M1402  18.9.2007  M1195  12.11.2007  10.1.2011-11.11.2011  5  NRE  M1403  18.9.2007  M1199  21.01.2011  21.1.2011-22.11.2011  6  NRF’  ,  M1415  22.11.2007)  M1210  11.2.2009)  14.4.2010 -10.2.2011  7  NRG  M1404  18.9.2007)  M1200  11.10.2010\  11.10.2010-10.10.2011  8  NRW  M1416 (22.11.2007)  M1209  10.2.2009)  11.4.2010-10.2.2011  9  NRJ’  M1417 (22.11.2007)  M1212  10.2.2009)  14.4.2010 -9.2.2011  10  NRK’  M1418 (22.11.2007)  M1211 (10.2.2009)  14.4.2010 -9.2.2011  11  JAQ  ‘  M1446 (13.6.2008)  M1242 (16.11.2009)  9.8.2010-17.8.2011  12  NRX  M142011.12.2007\  M1258  16.1.2009  13.01.2011 -15.1.2012  13  NRY  M1390  6.8.2007)  M1188  9.11.2009  6.10.2010 -9.10.2011  14  NRZ  M1391  6.8.2007)  M1189  9.11.2009  6.10.2010-9.10.2011
Validity Period of  Registration marks of  Certificate of Registration” No.  Certificate of Alrworthiness** No.  Certificate of  aircraft  (Date of Issue)  COate of Issue)  Airworthiness  1  NRS  M1549 118.11.2009)  M1318 (19.11.2009  9.8.2010 -17.8.2011  2  NRT  M1297 27.5.20101  M1091 127.05.2010  27.5.2010 -2.4.2011  3  NRL  M1496 116.2.2009)  M1276 (02.04.2009  2.4.2010 -1.4.2011  4  NRMh  M1479 9.1.2009)  M1266 (20.02.2009)  20.4.2010 -19.2.2011  5  NRN  M1501 111.3.2009)  M1280 (04.05.2009)  4.7.2010 -3.5.2011  6  NRP  M1497 (16.2.2009)  M1275 (31.03.2009  31.3.2010 -30.3.2011  7  NRQ  M1519 14.5.2009\  M1315 (02.11.2009)  27.12.2010 -1.11.2011  8  NRR  M1520 4.5.2009)  M1312 30.10.2009  26.10.2010 -29.10.2011  9  NRW·  M1509 14.10.20091  M1325 06.01.2010  21.01.2011 -5.01.2012  10  ANU”  M1178 2.9.2008)  M0993 25.08.2010  25.11.2010 -24.8.2011  11  NKA  M1593 24.08.2010)  M1367 11.10.2010  11.10.2010 -10.10.2011  12  NKB  M1594 24.08.2010)  M1368 11.10.2010  11.10.2010 -10.10.2011  13  NKC  M1595 24.08.2010  M1369 11.10.2010  11.10.2010 -10.10.2011  14  NKD  M1596 24.08.2010  M1370 11.10.2010  11.10.2010 -10.10.2011  15  NKE  M1597 24.08.2010  M1371 11.10.2010  11.10.2010 -10.10.2011  16  NKF  M1598 (24.08.2010)  M1372 (11.10.2010)  11.10.2010-10.10.2011  17  NKG  M1599 (24.08.2010)  M1376 (11.10.2010)  11.10.2010 -10.10.2011  – 83
II Company No. 886873-T II 5. INFORMATION ON OUR GROUP (Conl’d) Validity Period of  Registration marks of  Certificate of Registration’ No.  Certificate of Airworthiness·· No.  Certificate of  aircraft  IDate of Issue)  IDate of Issue)  Airworthiness  18  NKH  M1600 (24.08.2010)  M1373 (11.10.2010  11.10.2010 -10.10.2011  19  NKJ  M1601 (24.08.2010)  M1374 (11.10.2010  11.10.2010 -10.10.2011  20  NKK  M1602 (24.08.2010)  M1375 (11.10.2010  11.10.2010-10.10.2011
(c) Robinson Helicopter Company R44 Registration marks of aircraft  Certificate of Registration’ No. (Date of Issue)  Certificate of Airworthiness” No. (Date of Issue)  Validity Period of Certificate of Airworthiness  1  NRIr  M1548 (18.11.2009\  M1319 (12.4.2010\  12.4.10 -15.2.2011
Notes:  The condition imposed in the Certificate of Registration is that (I) the regis/ration is not transferable and (ii) no entries or endorsements may be made in  the  certificate except by the DCA which we have complied.  The condition imposed in the Certificate of Airworthiness is that no entries or endorsements may be made in the certificate except by the DCA which  we have complied.  Registered under APFT Services.  @  Registered under Perfect Aviation Sdn Bhd whom we leased the aircraft from.  h  The application for the renewal of these certificates of airworthiness are in process.  ,  The ownership of APFTA for the aircraft is in the process of being registered with the DCA.  I  THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK  I
84
~ Company No. 886873·T I 5. INFORMATION ON OUR GROUP (Cont’d) Approving I Issuing  Type of approvals I  Date of Issuance I  Status of  Companv  Authoritv  licences I permits  Validltv  EQuitv and other malor conditions imposed  compliance  APFT  BNM  Remittance service  14.9.2009  (i) APFT Express is required to commence its  Complied  Express  provider  14.5.2010  remittance business on or before  13.05.2010 failing which the approval will  Expires on  be cancelled.  3.5.2011  (ii) APFT Express shall maintain at all times, a  I Complied  minimum shareholders’ funds, unimpaired  by losses of RM100,000 at anyone time.  (iii) APFT Express shall ensure at all times,  I Complied  that the directors, shareholders, chief  executive officer and senior management  officer comply with the “Fit and Proper”  crileria as determined by the Controller of  Forei9n Exchange (“Controller”).  (iv) APFT Express shall notify the Controller at  I Complied  least 14 days before the occurrence of any  changes of the directors, shareholders,  chief executive officer and senior  management officer. APFT Express must  ensure that the new candidates for  directors, shareholders, chief executive  officer and senior management officer  satisfy the “Fit and Proper” criteria as  determined by the Controller.
I THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK I 85
~ Company No. 886873-T ~ 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.9 Intellectual properties, patents, trademarks and registrations Save for the trade mark registration and application for registration of our logo and trademarks below with the Intellectual Property Corporation of Malaysia, we do not hold any other patents or registrations. ~ASIA PACIFIC FLIGHT TRAINING  Issuing Authorilv  Trade mark No. ! Application No.  Issuing Date! Submission Dale  Class  Validity  Intellectual Property Corporation of Malaysia  07021867  5.1.2010  41  6.11.2007 to 6.11.2017  ~apft  Intellectual Property Corporation of Malaysia  2010008839  20.5.2010  41  (Pending registration)  AVIAToR  inlellectual Property Corporalion of Malaysia  09016216  3.9.2009  16  (Pending registration)
Services Aerospace training and teaching. arranging and conducting of training through workshop and provision of education. Aerospace training and teaching, arranging and conducting of training through workshop and provision of education, aviation ground and flight schools. Magazine, newsletter. printed matter; paper, cardboard and goods made from these materials; bookbinding materials and stalionery all included in Class 16. I THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK I 86
5. INFORMATION ON OUR GROUP (Cont’d) 5.7.10 Salient terms of the contracts/arrangements on which our Group is highly dependent Save as disclosed below, we have not entered into any other contracts/arrangements for which our Group is highly dependent as at the LPD: Premises at Sultan Ismail Petra Airport, Kota Bharu Pursuant to the tenancy agreement dated 12 October 2010 between MASB and APFTSB (“KB Tenancy Agreement”), MASB agreed to rent the part of the general aviation area at Sultan Ismail Petra Airport, Kota Bharu of approximately 87,995 square feet of land for purposes of hangar space, parking apron, aircraft shade and taxiway. The salient terms of the KB Tenancy Agreement include the following: (i) the tenancy period is for a period of three (3) years commencing 1 August 2009 with an extension of three (3) years plus three (3) years with an option of further period at the sale and absolute discretion of MASB.
(ii) monthly rental payable by APFTSB (after offsetting cost incurred by APFTSB in improvements made to the runway) is as follows:­
(a) first three (3) years: RM17,493.00
(b) second optional three (3) years: RM26,292.00
(c) third optional three (3) years: RM35,092.00

 

(iii) MASB or APFTSB may terminate the tenancy any time by giving not less than two (2) months notice in writing to the other without assigning any reason and upon termination of the KB Tenancy Agreement, APFTSB shall vacate the premise on or before the notice period provided always that in the event that APFTSB is in breach of any terms of the KB Tenancy Agreement, APFTSB shall not be entitled to terminate the KB Tenancy Agreement pursuant to this clause. (iv) MASB shall be entitled at any time thereafter to serve a notice on APFTSB pursuant to section 235 of the National Land Code 1965 (notice before forfeiture of the tenancy) in the following events: (a) if any rent reserved or any other monies payable to MASB under the KB Tenancy Agreement remains unpaid after it has become due and payable; or
(b) APFTSB omits or fails to observe or perform any of its covenants or obligations under the KB Tenancy Agreement; or
(c) a winding up order is presented against APFTSB or its holding company which is not discharged within 14 days or a resolution for winding up has been passed by APFTSB or its holding company; or
(d) if a distress or execution or attachment or other process of a court of competent jurisdiction is levied or issued against any of its properties of APFTSB, the effect of which, in the opinion of MASB, would materially and adversely affect APFTSB; or
(e) APFTSB makes any assignment for the benefit of its creditors for liquidation of its debts by composition or otherwise to be levied upon its goods or in any event shall happen by reason whereof the renewal of any licence in respect of its business shall be refused; or
(f) the composition of shareholders and their respective shareholdings in APFTSB or the management or control of APFTSB is changed, altered or amended in any way (not applicable if APFTSB becomes a public listed company); or

5. INFORMATION ON OUR GROUP (Cont’d) (g) in the event MASB considers that the performance of APFTSB in running its business is not satisfactory; or
(h) the revocation of or the refusal by the appropriate Malaysian Authority to renew the relevant licences or permits; or
(i) in the event that MASB is in the opinion that APFTSB has assigned, underlet or parted with the actual or legal possession of the land or any part thereof without the prior written consent of MASB and APFTSB has in the opinion of MASB failed to discharged its burden of proving otherwise within 14 days from the date of notice in writing by MASB to do so.

It is mutually agreed that a reasonable time which to remedy the breach of the subject matter of the said notice is 14 days and upon expiration of the said period without the breach being remedied to MASB’s satisfaction, then MASB shall be at liberty to re-enter the premises and the tenancy shall terminate without prejudice to MASB’s rights in respect of any breach of APFTSB’s covenant under the KB Tenancy Agreement. Premises at Sultan Mahmud Airport. Kuala Terengganu Pursuant to the tenancy agreement dated 10 June 2010 between MASB and APFTSB (“KT Tenancy Agreement”), MASB agreed to rent the part of the general aviation area at Sultan Mahmud Airport, Kuala Terengganu of approximately 11,162.20 square feet of land for purposes of hangar space for office, garage, shelter and related services. The salient terms of the KT Tenancy Agreement include the following: (i) the tenancy period is for a period of three (3) years commencing 1 August 2009 with an extension of three (3) years plus three (3) years with an option of further period at the sole and absolute discretion of MASB.
(ii) monthly rental payable by APFTSB is RM8,929.76.

(iii) MASB or APFTSB may terminate the tenancy any time by giving not less than two (2) months notice in writing to the other without assigning any reason and upon termination of the KT Tenancy Agreement, APFTSB shall vacate the premise on or before the notice period provided always that in the event that APFTSB is in breach of any terms of the KT Tenancy Agreement, APFTSB shall not be entitied to terminate the KT Tenancy Agreement pursuant to this clause. (iv) MASB shall be entitied at any lime thereafter to serve a notice on APFTSB pursuant to section 235 of the National Land Code 1965 (notice before forfeiture of the tenancy) in the following events: (a) if any rent reserved or any other monies payable to MASB under the KT Tenancy Agreement remains unpaid after it has become due and payable; or
(b) APFTSB omits or fails to observe or perform any of its covenants or obligations under the KT Tenancy Agreement; or
(c) a winding up order is presented against APFTSB or its holding company which is not discharged within 14 days or a resolution for winding up has been passed by APFTSB or its holding company; or
(d) if a distress or execution or attachment or other process of a court of competent jurisdiction is levied or issued against any of its properties of APFTSB, the effect of which, in the opinion of MASB, would materially and adversely affect APFTSB; or

5. INFORMATION ON OUR GROUP (Cont’d) (e) APFTSB makes any assignment for the benefit of its creditors for liquidation of its debts by composition or otherwise to be levied upon its goods or in any event shall happen by reason whereof the renewal of any licence in respect of its business shall be refused; or
(f) the composition of shareholders and their respective shareholdings in APFTSB or the management or controi of APFTSB is changed, altered or amended in any way (not applicable if APFTSB becomes a public listed company); or
(g) in the event MASB considers that the performance of APFTSB in running its business is not satisfactory; or
(h) the revocation of or the refusal by the appropriate Malaysian Authority to renew the relevant licences or permits; or
(i) in the event that MASB is in the opinion that APFTSB has assigned, underlet or parted with the actual or legal possession of the land or any part thereof without the prior written consent of MASB and APFTSB has in the opinion of MASB failed to discharged its burden of proving otherwise within 14 days from the date of notice in writing by MASB to do so.

It is mutually agreed that a reasonable time which to remedy the breach of the subject matter of the said notice is 14 days and upon expiration of the said period without the breach being remedied to MASB’s satisfaelion, then MASB shall be at liberty to re­enter the premises and the tenancy shall terminate without prejudice to MASB’s rights in respect of any breach of APFTSB’s covenant under the KT Tenancy Agreement. 5.7.11 Interruptions in business Our Group has not experienced any material interruption to the business of our Group in the past 12 months preceding the date of this Prospectus. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK II Company No. 886873-T II 5. INFORMATION ON OUR GROUP (Cont’d)

5.7.12 Major customers The major customer that contributed 10% or more to our Group’s total revenue for the past three (3) FYE 31 December 2008 to 2010 is listed beiow:­Name  Country of origin  Length of relationship as at  FYE 31 December  2008  2009  2010  the LPD (Years)  RM ‘000  %  RM ‘000  %  RM ‘000  %  MAS  Malaysia  5  7,398  21.53  2,995  7.87  252  0.67
Initially, from the commencement of APFTSB’s operations in February 2006 until June 2008, APFTSB had direct arrangement with MAS whereby APFTSB entered into contract with MAS for MAS to send their trainee pilots to APFTSB for flight education and training. MAS was the responsible party for payment of the fees to APFTSB under this arrangement. Subsequently, this direct arrangement with MAS ceased in mid 2008 after MAS and APFTSB entered into tripartite agreements with MARA and Yayasan Terengganu in 2008 and 2009 respectively whereby:­(i) APFTSB enters into direct enrolment contract with the students selected by MAS and MARA (under the tripartite arrangement involving MARA) and students selected by MAS from candidates provided by Yayasan Terengganu (under the tripartite arrangement involving Yayasan Terengganu) Whereby the students is the billing party. These students fall under the category of students with scholarships or who are sponsored by third-party organisations as disclosed in Section 11.4.1 (a)(iv) of this Prospectus;
(ii) the students would in turn obtain funding from Yayasan Terengganu or MARA; and

(iii) MAS wouid empioy the students upon graduation and deduct the salary of the employed students for repayment of funding provided by MARA and Yayasan Terengganu. As a result of this arrangement, MAS’s contribution to the Group’s turnover, representing spillover revenue from the previous years, has reduced to less than 10% in the FYE 31 December 2009 and 2010. Our target customers are primarily secondary school leavers while our existing customer base as at the LPD is our currently enrolled students. Our students may be classified into the following groups:­• Private students;
• Students with scholarships or who are sponsored by third-party organisations; and
• Students who are recruited by airlines pursuant to the Arrangement with Airlines (as mentioned in Section 4.1.12(ii) of this Prospectus).

Please refer to Section 11.4.1 of this Prospectus for further detaiis on the above. 90 II Company No. 8868731] 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.13 Majorsuppliers The major suppliers that contributed 10% or more to our Group’s total purchases for the past three (3) FYE 31 December 2008 to 2010 are listed below:­Name Petronas Dagangan Berhad Asian Aerospace Services Ltd Essence Food Parcel CTRM Aviation Sdn Bhd ADMAL Sdn Bhd Serving Platter Sdn Bhd Length of  FYE 31 December  Country of origin  relationship as at the LPD (years)  Supplv  2008  2009  2010  RM’OOO  %  RM’OOO  %  RM’OOO  %  Malaysia  5  Supply of aviation fuel  2,065  20.60  2,333  23.67  2,354  25.92  Thailand  4  Supply of aircraft parts  2,330  23.25  1,788  18.14  926  10.19  Malaysia  5  Provision of student food  1,083  10.81  1,639  16.65  309  3.41  Malaysia  5  Rental of aircraft  1,083  10.81  1,353  13.73  1,434  15.79  Malaysia  4  Rental of aircraft  1,900  18.96  – .  – – Malaysia  1  Provision of student food  – – – – 1,417  15.60
Our key costs of services include suppiy of fuel and rental of aircraft. Over the years, our Group is able to engage and secure good relationship with our various suppliers and our Group does not rely heaVily on any single supplier as there are alternatives available to our Group in sourcing for our supplies. In addition, going forward, our Group does not foresee to encounter any significant problem in obtaining supplies from and continuing the relationship with our suppliers. Our Group also does not expect to face difficulties in sourcing qualily service at competitive price from alternative suppliers. 91 5. INFORMATION ON OUR GROUP (Cont’d) 5.8 FUTURE PLANS, STRATEGIES AND PROSPECTS 5.8.1 Future plans and strategies Our Group is a dynamic, forward looking and a market driven organisation which constantly strives to reinvent ourselves by continuously improving our current offerings and innovating new services. We are currently the leading flight education and training service provider in Malaysia and we want to further leverage on our current capabilities and competencies to become one of the region’s leading integrated aviation service providers, and have accordingly put in place the following development plans to help us achieve this:­(a) We intend to venture into new, complementary businesses to become one of the leading regional integrated aviation service providers We currently own and operate Maiaysia’s leading flight education and training academy, the APFTA. Our success in growing APFTA into Malaysia’s leading flight education and training academy has spurred us to leverage on our expertise and expand into new, complementary areas and eventually become one of the leading regional integrated aviation service providers. We have acquired the following subsidiary companies to achieve these:­APFT Services Our Group believes that there is a huge, untapped market in the provision of chartered commercial flight services. Our growing fleet of both fixed wing aircraft and helicopter puts us in a comfortable position to expand into the area of aircraft chartering services. APFT Services will be used to provide chartered commercial flight services targeted at meeting the huge demand for unscheduled flight requirements. We have already identified the following target groups for our chartered commerciai flight services:­(i) Organisations which require regular flights to remote areas as part of their servicing of their utilities or facilities (substation and power lines or communications tower monitoring activities, surveillance of pipelines etc.);
(ii) Leisure group intending to go for a joyride in Kota Bharu; and

(iii) Tourists going for island-hopping to islands such as Perhentian Island and Redang Island. We have received an ASP which is a pre-requisite towards obtaining the AOC. We are currently in the midst of complying with the conditions set forth by the DCA in order for the AOC to be issued before APFT Services can commence its operations. As at the LPD, APFT Services owns four (4) aircraft which is sufficient upon commencement of business. Our bases in Kota Bharu and Kuala Terengganu are fully-equipped with supporting infrastructure. With such established ground assets and human resources, we are well-poised to embark on the provision of chartered commercial flight services. As at the LPD, APFT Services currently renting out of aircraft and helicopters within our Group and we expect to commence the operations in the provision of chartered flight services for unscheduled flight requirements by June 2011. 5. INFORMATION ON OUR GROUP (Cont’d) APFT Engineering We intend to venture into the areas of MRO service provision for aircraft and helicopter through APFT Engineering. Our Group, through our subsidiary APFTSB, currently employs a team of skilled aircraft maintenance engineers and technicians to maintain our fleet of aircraft. A total of 40 staff inclusive of engineers, technicians and ground handlers will be transferred from APFTSB to APFT Engineering. Currently, the priority for APFT Engineering is to service the aircraft for APFTSB. Upon the part-145 Maintenance Organisation Approval being obtained, the Company will further expand its workforce in order to cater the demand of its aircraft servicing business. We therefore believe that synergistic values can be derived from the inclusion of APFT Engineering into our Group as it will not only perform all MRO related services for APFTSB but also to external clientele, ensuring another sustainable revenue generator for our Group by leveraging on existing core competencies. We will also benefit from the economies of scale and attain the required leverage to venture into the business of providing aircraft MRO services. APFT Engineering has already submitted the application for Part-145 Maintenance Organisation Approval (to operate as a maintenance service provider) to the DCA and it is in the midst of processing and complying with the regulations set forth by the DCA. Piper Aircraft Asia Sdn Bhd, in Brunei, has indicated its intention to appoint APFT Engineering as an authorised service centre for Piper products upon our obtaining the part-145 Maintenance Organisation Approval. In addition, we have also approached Diamond for us to be appointed as authorised service centre for Diamond aircraft. As at the LPD, APFT Engineering has not commenced operations and we expect to commence operations by June 2011. (b) We will expand our domestic and regional market Our Group intends to increase and further expand our presence in both the domestic and regional markets as follows:­Purchasing additional aircraft We purchased an additional ten (10) new Piper PA28 aircraft in 2010, for a total cost of RM8.8 million, which were delivered, assembled and became operational in October 2010. We also have the option to purchase another ten (10) new Piper PA28 aircraft in 2011. We will also be hiring more instructors in order to cater to our increased intake of cadets. Our student capacity will be projected to increase by a total of approximateiy 98 students with the additional aircraft in 2010 and 2011. The cost of purchasing the additional aircraft in 2011 will be approximateiy RM8.3 million. The 10 new aircraft acquired in 2010 was financed through internally-generated funds and advances from directors while those intended to be acquired in 2011 be financed through internally-generated funds and bank borrowings. Opening of new academy in Batu Pahat. Johor We intend to extend our flight education and training offerings to the southern region of Malaysia through the opening of another satellite flight training academy in Tanjung Labuh, Batu Pahat, Johor in partnership with UTHM. This satellite flight training academy at Tanjung Labuh will be jointly maintained and 5. INFORMATION ON OUR GROUP (Cont’d) shared with UTHM to conduct aviation related courses and programmes. Upon its completion, we will have three (3) satellite fiight training academies in addition to our main academy in Kota Bharu catering to the fiight education and training market in Malaysia. The new academy is expected to be completed within two (2) years. The cost of opening up the new satellite flight training academy for training is estimated at between RM5 million and RM7 million comprising mainly the cost of constructing hangar and upgrading of runway. It will be financed through internally generated funds. Setting-up of a new joint venture in India We will be expanding into the promising fiight education and training market in India. We signed a MOU with GHIAL in October 2009 where we and GHIAL have expressed our intention to jointly set up a fiight training academy at the Rajiv Gandhi International Airport, Shamshabad in Hyderabad, India. We believe that we will be able to capitalise on GHIAL’s support to gain a strong foothold in the huge market in India where there is a huge potential for pilot training as well as other aviation training services. The expansion into India is expected to jumpstart our ambition to become one of the leading regional integrated aviation service providers. This is also in line with our objective to further grow our student base beyond Malaysia. Our Group believes that given our established reputation and track record in the fiight education and training market in Malaysia, our foray into the Indian fiight education and training market would be a fruitful one. Our Group will also expand into other markets around the region in the near future subject to market conditions and suitability. (c) We will continue to develop strategic educational partnerships and new programmes and courses Our Group intends to introduce and offer newer, more market-driven and high quality fiight education and training related programmes and courses. We will continuously review and improve upon our existing programmes and courses offerings to meet market as well as our customers’ ever changing demands. To this end, we will continuously seek out potential partners for strategic collaboration in addition to our on-going efforts to develop new programmes and courses. We are currently looking at the following initiative for this purpose:­Strategic collaboration with Embry-Riddle In February 2010, we signed a letter of intent with Embry-Riddle to collaborate in offering aeronautical related degrees. We are in the midst of structuring various courses for Embry-Riddle’s approval and to ensure that it complies with the MQA standards and requirements. We target to finalise the various courses and expect to offer those courses in the second half of 2011. 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 highlighted in Section 5.1.2 of this Prospectus;
(ii) The prospects and outlook of the fiight education and training market as set out in Section 6 of this Prospectus; and

(iii) Future plans as set out in Section 5.8.1 above. In addition, as mentioned in Section 6 of this Prospectus, with the support of the Malaysian Government for the nation’s aviation industry as well as the captive demand for professionally trained pilots, it is suggested that the well-timed policy and international aviation developments as stated below will augur well for providers of fiight education and training in Malaysia:­(i) The Malaysian Government’s initiatives towards transforming Malaysia as a global aerospace nation by 2015; and
(ii) Asia Pacific will see the delivery of an estimated 16,000 new planes for the period 2009 to 2028.

(Source: Independent Market Research Report prepared by Protege Associates) THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

 

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