Risk Factors

4. RISK FACTORS 4. RISK FACTORS NOTWITHSTANDING THE PROSPECTS OF OUR GROUP AS OUTLINED IN THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS (WHICH MAY NOT BE EXHAUSTIVE) THAT MAY HAVE A SIGNIFICANT IMPACT ON THE FUTURE PERFORMANCE OF OUR GROUP. YOU SHOULD CAREFULL Y CONSIDER THE RISKS AND INVESTMENT CONSIDERATIONS SET OUT BELOW ALONG WITH OTHER INFORMATION CONTAINED HEREIN IN THIS PROSPECTUS BEFORE YOU MAKE YOUR INVESTMENT DECISION. IF YOU ARE IN ANY DOUBT AS TO THE INFORMATION CONTAINED IN THIS SECTION, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER PROFESSIONAL ADVISER. THE RISKS AND INVESTMENT CONSIDERATIONS SET OUT BELOW ARE NOT AN EXHAUSTIVE LIST OF THE CHALLENGES THAT WE CURRENTLY FACE OR THAT MAY DEVELOP IN THE FUTURE. ADDITIONAL RISKS, WHETHER KNOWN OR UNKNOWN, MAY HAVE A MATERIAL ADVERSE EFFECT ON THE FINANCIAL PERFORMANCE OF OUR GROUP. 4.1 RISKS RELATING TO THE BUSINESS AND OPERATIONS OF OUR GROUP 4.1.1 Licence from the DCA The flight education and training market in Malaysia is subject to various regulations and licencing requirements. 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. The licence from the DCA is valid for one (1) year and renewable upon satisfactory audit by the DCA. Our Group’s operations could be adversely affected if our Group is unable to renew our existing licence from the DCA for whatever reasons. However, since our Group commenced operations on 1 February 2006, we have successfully renewed the licence from the DCA. Our Group does not envisage that we would encounter difficulties in renewing licence from the DCA due to our strict adherence to the conditions of the licence.
4.1.2 Reliance on MASB Our Group has entered into tenancy agreements with MASB for the use of hangars at airports in Kuala Terengganu and Kota Bharu respectively to carry out our operations. The termination or expiry of the tenancy agreements and any non-renewal or extension of the tenancy agreements due to whatever reasons could adversely affect our Group’s operations and financial performance. Notwithstanding the above, our Group has been maintaining cordial relationship with MASB. We envisage that our Group would continue to gain their support for the smooth provision of our flight education and training services.
4.1.3 Competition Our Group faces competition from the existing and new entrants, both locally and overseas. As at the LPD, our Group faces competition from seven (7) local AFTOs within Malaysia, some of which may have longer operating history. In addition, our Group also competes with approximately 26 aviation training institutions within the Association of Southeast Asian Nations (ASEAN) excluding Malaysia, of which 13 of them are offering fixed wing aircraft -CPL (Source: Independent Market Research Report prepared by Protege Associates). The principal elements of competition include, amongst others, pricing and quality of course offerings, reputation and track record especially with major airlines, quality of instructors, infrastructure and facilities. AFTOs differentiate their service offerings, quality and pricing from the rest of their competitors through the following:­4. RISK FACTORS (Cont’d) (a) Service offering -All flight courses offered by the AFTOs are subject to the DCA’s approval. Some AFTOs may have the approval to offer more courses such as AFI Course and Flight Instructor’s Rating. However, we are the only known AFTO in Malaysia to offer tertiary courses namely, the Diploma in Aviation (Pilot Training) and in collaboration with UTHM, the Bachelor of Aeronautical Engineering Technology (Professional Piloting) with Honours. in addition, we also offer Psychomotor and Psychometric tests utilising the Vienna Test System.
An AFTO which looks after the welfare of its students such as providing career advisory services and placement of students with airlines would also attract prospective students. Our good track records as a flight education and training school has established good relationship with various airlines and is able to assist with the placement of our students into these airlines;
(b) Quality -In terms of quality, the differentiation between AFTOs can be deduced from the quality of training provided and the resulting standards of cadet pilots produced. Certain AFTOs, which include APFTSB, carry a better reputation with the airlines as these airlines prefer to recruit graduates from reputable AFTOs, testifying to their ability and quality which sets these AFTOs apart from the rest of the market participants; and
(c) In terms of pricing, different AFTOs apply their own price structure and pricing is not necessarily the main element of competition as students would also take into consideration the reputation and track record of the flight schools, the quality of courses offered and instructors, infrastructure and facilities, amongst others.

• The threats from new entrants are relatively low due to high barriers to entry in the industry which includes, but not limited to, the following:­(i) Regulatory barriers -Potential new entrance may face difficulty in getting licence from the government to operate a new flight training school;
(ii) High capital requirement -The flight education and training market is a capital intensive industry. Any potential new entrants would require a huge amount of capital to invest in the setting up of a flight training school, purchasing of aircraft and fiight simulators as well as maintaining a comfortable amount of money for working capital. Therefore, potential new entrants would need to have a long investment horizon as this initial capital outlay may not be recoverable in the short term; and

(iii) Track record -The ability to attract prospective students and support from major airlines lies in the established and good track records of a fiight education and training school. New entrants without an established track record will face difficulty in competing with established players in the market. In addition, new entrants will also face difficulties in getting favourable financing facilities without a proven track record, hence reducing their competitiveness in this capital­intensive fiight education and training market. Nevertheless, although we are confident of maintaining our competitive advantages, there can be no assurance that competitive pressures in the future will not materially affect our market share and consequently our financial results.
4.1.4 Fuel price and supply Our fieet of aircraft consists of aircraft from, among others, Piper Aircraft, Inc (“Piper”) from the USA and Diamond Aircraft Industries (“Diamond”) from Austria. Piper is fuelled by Aviation Gasoline (“AVGAS”), a high-octane fuel used in piston powered aircraft, while Diamond is fuelled by the Jet A-1 fuel. The availability of AVGAS and Jet A-1 fuel is subiect to various economic and political factors and events occurrinQ throuQhout the 4. RISK FACTORS (Cont’d) world that we can neither control nor accurately predict. In addition, AVGAS and Jet A-1 fuel prices have been subject to volatility, fluctuating over the past several years. In this connection, access to adequate supplies of reasonably priced AVGAS and Jet A-1 fuel is crucial to our business and profitability and we are not able to predict both the future availability and cost of fuel supplies with any certainty. Nevertheless, the suppliers of fuel are not limited within the industry. The Jet A-1 fuel can be sourced from major oil companies such as Petronas, Sheil, Mobil and Caltex. AVGAS in Malaysia is only supplied by Petronas. However, AVGAS can also be directly sourced from countries such as the USA, Thailand and Australia should the need arises. We do not enter into any hedging arrangement to hedge against fuel price fluctuations after taking into consideration the volume consumed which may not be cost effective to hedge. However, prior to 2010, in the event of any increase in fuel price over the threshold stipulated in the agreement with students, a surcharge was charged to the students with immediate effect. Going forward, in the event of significant fuel price hike, we may Consider adjusting our fees to cover the increase in fuel cost. At the moment, our Group obtains the supply of fuel from Petronas only as the latter has been supplying sufficiently and providing satisfactory services to our Group. Our Group has the option to source our supply of fuel, particularly Jet A-1 fuel, from other major oil com panies should the need arises. To mitigate supply uncertainty, in the event of any disruptions in the supply of the Jet A-1 fuel, our students may alternatively and temporarily fly Piper during their flight training which is powered by AVGAS and vice versa, hence bringing disruption to our training sessions to the minimum.
4.1.5 Foreign exchange risk A significant portion of our purchases of spares for maintenance of our aircraft are paid in USD. Thus, any fluctuations in foreign exchange rates may have an adverse effect on our financial performance. However, as the RM is currently a managed float since the de-pegging of the RM, this may prevent any extreme fluctuations of the RM vis-a-vis USD, hence the effects of foreign currency risks are less significant and mitigated to a certain extent. In addition, it is also our Group’s guidelines to minimise the exposure of foreign exchange risk by matching local currency income against local currency costs. However, there is no assurance that any future significant fluctuations in foreign exchange rates will not have any impact On the earnings of our Group.
4.1.6 Dependency on our Directors and key management To a large extent, our continued success will depend On the abilities and continued efforts of our existing Directors and key management team. We are managed by qualified personnel with experience in the flight education and training market. The loss of any of our Directors or key management could adversely affect our ability to compete effectively in the flight education and training market and in turn, our operational and financial performance. We strive to minimise this risk by ensuring that we have the ability to retain our existing Directors as well as attract and retain our key management. This can be achieved by haVing in place human resource strategies and developing a human resource plan that includes suitable compensation packages, career development and human resource training and development for our key management. There is also a succession plan that identifies potential candidates for key positions in the organisation. Although we seek to limit our dependence On our Directors or key management, there can be nO assurance that the above measures will always be successful in retaining our 4. RISK FACTORS (Cont’d) Directors or key management or in ensuring a smooth transition or management succession plan should such key persons no longer be able to serve our Group.
4.1.7 Attracting and retaining qualified instructors and reliance on foreign instructors Attracting and retaining qualified instructors Our Group’s business model requires us to have highly skilled, dedicated and efficient instructors, who are mainly experienced pilots from the commercial or air force sectors. Our Group’s growth plans will require us to hire, train and retain a significant number of new instructors in the future. Our Group’s growth plans may be impeded by the inability to recruit qualified instructors as the DCA has set a ratio of 1:6 for the number of fiying instructors to students who are fiying to ensure the quality of training. As at the LPD, we maintain a ratio of 1:6 for the number of fiying instructors to students who are fiying. While we endeavour to ensure that the conduct of our training is within this ratio, our ability to recruit additional students depends on whether we are able to recruit the qualified instructors to ensure that we operate within the ratio imposed. From time to time, the airline industry has experienced a shortage of skilled personnel, especially pilots and our Group may face competition in attracting and retaining our instructors. The main factor that leads to the difficulty of attracting and retaining qualified instructors is wages. Qualified pilots prefer to be commercial pilots rather than fiight instructors due to the higher pay package of a commercial pilot. We may have to increase wages and benefits to attract and retain our instructors or risk considerable employee turnover. If we are unable to hire, train and retain quaiified instructors at a reasonable cost, our ability to increase our student enroiment will be affected or it may disrupt our operations, which would have a material adverse effect on our Group. Reliance on foreign instructors As at the LPD, our Group employs 13 foreign instructors from countries such as Singapore, India, Pakistan and Myanmar. Foreign instructors make up approximately 26.53% of the total number of instructors which we have employed at our academy. This is due to the fact that there is a shortage of qualified instructors locally in Malaysia. Our growth and expansion is dependent on the number of qualified instructors that we employ at our academy. If for any reasons we are unable to procure additional qualified instructors due to a shift in government regulations or policies, it could potentially slow down our growth. In addition, if our existing key foreign instructors are unable to renew their work permits due to a shift in government regulations or policies, it could potentially have an adverse effect on our operations. Our fiight academy, APFTA, is approved to train fiight instructors under our AFI Course (fixed wing). Our Company will bear the AFI Course fees of these fiight instructors and in turn they wouid be bonded by our Company for four (4) years upon compieting the course. With this, we are able to mitigate the difficulty in attracting and retaining qualified instructors and minimise our reliance on foreign instructors.
4.1.8 Short operating period of our Group Our Group started operations in February 2006 and during the course of approximately five (5) years, we have expanded our operations through the acquisition of more aircraft and setting up of additional training centres. It may be difficult to evaluate our Group’s future prospects because of our short operating history. Our Group should be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. With our proven track records, we beiieve that we will continue to be able to experience good growth through our competitive strengths and strategies. Please refer to Section 5.1.2 and 5.8.1 of this Prospectus for details on the competitive strengths and strategies of our Group. 4. RISK FACTORS (Cont’d)
4.1.9 Incurring significant amount of borrowings Our Group has historically required financing to acquire aircraft and is likely to require further financing and incur significant amount of borrowings in the future to fund the acquisition of additional aircraft, operations, working capital and other anticipated capital expenditure. There is no assurance that our Group will be able to raise such financing on favourable terms, which could have a material adverse effect on our Group. In addition, there can also be no assurance that our gearing level will remain the same in the future and our performance would remain favourable in the event of any adverse changes in interest rate in respect of the existing and new financing facilities that are procured or to be procured. Further, our Group’s future credit facilities may contain covenants that limit our Group’s operating and financing activities and require the creation of security interests over our assets. Our Group’s ability to meet our repayment obligations and to fund planned capital expenditure will depend on the success of our business strategy and our ability to generate sufficient revenues to satisfy our obligations, which are subject to many uncertainties and contingencies beyond our control. Notwithstanding the above, the interest rate exposure is managed through the use of fixed and variable rate instruments and our Directors shall evaluate and closely monitor the financial position of our Group prior to entering into any new credit facilities. In addition, our Group intends to utilise RM8.0 million of the proceeds from the Public Issue to repay our bank borrowings, and hence mitigating the above risks in the near future. Our Directors believe that after taking into consideration the expected proceeds from the Public Issue and the existing banking facilities available, our Group has adequate liquidity and capital resources for our present requirements and the requirements for the next 12 months from the date of this Prospectus.
4.1.10 Insurance coverage Our Group is involved in the provision of flight education and training services which involves heavy investments in items such as aircraft, simulators and buildings such as our hangar and accommodation facilities. Our academy is dependent on these equipment and facilities and any loss or incapacitation of these equipment and facilities could potentially impact our continuing operations. In ensuring such risks are kept to a minimum level, we review and ensure adequate coverage for our equipment and facilities on a continuous basis. The aircraft of our Group, which is the most valuable asset in terms of its value, has insurance coverage of approximately 96% (based on NBV as at 31 December 2010). Although we have taken necessary steps to ensure that our equipment and facilities are adequately insured, there can be no assurance that our insurance coverage would be adequate to compensate the replacement costs of the assets or any consequential losses arising thereof. In addition, flight training service involves a certain degree of risk not only with our aircraft, but also with our cadets and instructors. Our cadets could potentially be injured whilst flying in, alighting from, or mounting into aircraft in the course of their flight training. Our instructors could potentially lose their licences due to ill health or accidents in the course of their flight training duties. Therefore, we place great importance on ensuring the quality and safety of our procedures and operations. We strive to continuously maintain high standards and quality in all our operations by conforming to industry best practices. Notwithstanding the above, there can be no assurance that our operations will not suffer from accidents either due to negligence, omission or sabotage and this may subject our Group to lawsuits and/or liability claims. In such events, we may have to pay compensation and/or incur significant litigation costs. In addition, any complaints or liability claims by customers may also affect the reputation of our academy. 4. RISK FACTORS (Cont’d) Our Group has therefore insured our operations against potential loss through insurance coverage for all our aircraft, simulators and buildings facilities. Our Group also insured our cadets and instructors against personal accidents and loss of licence in respect of our instructors. We also take up medical insurance for our cadets and instructors. In line with industry practice. some business risks to which our Group is subject to are uninsured. For example, our Group does not maintain insurance for loss of profit or revenue for mechanical breakdown. In addition, where our Group does maintain insurance coverage, it may not be fully reimbursed for all losses which it suffers due to policy terms and limitations. This could cause our Group to bear substantial losses which would directly impact our Group’s financial position. We believe that our current insurance coverage is consistent with industry practices and compliant with the regulator’s requirements. 4.1.11 Operation safety and health matters Our Group’s operations are subject to various laws and regulations, including those relating to operation safety and worker health. We believe that our existing operations are in compliance with the relevant laws and regulations and are not aware of any operation safety and health matters currently that may have a material adverse effect on our operations. However, there is no assurance that major accidents, which may adversely affect our revenue, will not occur in the future. Since the commencement of our operations, our Group has encountered three (3) aircraft incidents arising from aircraft engine-related problems, the details of which are as follows:­Ai rcrafttvpe  Diamond DA40 (Owned’  Eanle 150B (Leased’  Diamond DA40 (Owned)  Date of accidents  25 Mav2008 Kampung Kolam, Tok Uban Pasir Mas, Kelantan Engine problem. Forced landing was executed. The cadet pilot escaped unhurt. No third party property was damaged. Engine component defects, specifically the gearbox assembly which has been replaced with a new design by the engine manufacturer. Claims of approximately RM580,000 has been made to the engine manufacturer for the damaged aircraft and is still pending settlement as at the LPD. The manufacturer has replaced the gearbox assembly for all the Diamond DA40 in the fleet.  9 March 2010 Kampung Tualang Salak, Jelawat Bachok, Kelantan Propeller problem. Forced landing was executed. The instructor and the cadet encountered minor injuries. The cadet and instructor have since recovered and resumed training and work respectively. No third party property was damaged. Failure of propeller due to the subject aircraft having history of propeller strike. The lessor has since checked all aircraft leased to APFTSB to ensure that there is no possible defect in the other aircraft leased \0 APFTSB.  26 Mav2010 Tok Jembal, Kuala Terengganu, Terenooanu After preliminary checks, it was found to be a high pressure pump failure. Forced landing was executed. No injuries were sustained by the instructor and cadet. No third party property was damaged. Engine failed due to malfunction of high pressure pump. The pump was returned to the manufacturer for further investigation. Manufacturer has replaced the high pressure pump and is conducting further investigation.  Location  Synopsis  Findings  Recourse
4. RISK FACTORS (Cont’d) The above aircraft incidents did not have an impact on our Group’s operations as our Group has 14 Diamond aircraft which is sufficient for the purpose of conducting scheduled flight training for students without any interruption in the event an aircraft is not functional. As for the aircraft incident involving the Eagle 150B, the lessor has provided a replacement aircraft to replace the damaged aircraft, hence not affecting the number of Eagle 150B aircraft available for use by our students. Furthermore, the Eagle 150B aircraft is only used for PPL course, where the number of flying hours involved is minimal. The aircraft incidents also did not impact our Group financially as the cost incurred on the damaged aircraft were borne by the manufacturer or lessor. Our Group adheres to the following post incident procedures in the event of an accident:­(a) The PIC I duty instructor who is involved or is made aware of the incidenVaccident will inform the Principal, Chief Instructor (“CI”), Chief Flying Instructor and Flight Safety Officer (“FSO”) immediately by any possible means.
(b) Depending on the nature of the incident I accident, the Principal or CI or FSO will decide whether it is to be handled domestically or to be reported to DCA for necessary actions.
(c) Depending on the nature of the incident I accident, legal or insurance requirement, the PIC or the company representative is to make a police report at the nearest police station.
(d) The administrative head or the representative will take necessary actions for the requirements of insurances.
(e) Depending on the nature of incidenVaccident the inquiry will be formalised either by the DCA or by the Principal.
(f) The PIC or his representative to submit the written report in the format stipulated by the DCA to the management within 24 hours of the occurrence.
(g) Any reportable accident or incident must comply with the requirements under the Mandatory Occurrence Reporting Scheme issued by the DCA.

As measures to mitigate the above incidents, our Group has been working closely with aircraft manufacturers such as Diamond and Piper to discuss on improvements and enhancements to the aircraft. In addition, we have stopped leasing and returned the Eagle aircraft when the ten (10) new Piper aircraft, which have been delivered and assembled, became operational in early October 2010 upon obtaining the certificate of airworthiness from the DCA. Furthermore, our Group has mitigated some of these potential operation safety and health liabilities by purchasing, amongst others, employees’ liability and workmen compensation insurance policies. However, the risks of operation safety and health costs and liabilities exist in our Group’s operations, and there can be no assurance that claims for damages resulting from our Group’s operations will not have any material adverse effect on our Group’s financial condition or results of operations.
4.1.12 No long-term contracts with customers As at the LPD, we do not have long-term contracts with our customers as our direct customers comprise predominantly individual students who obtain funding from, amongst others, government agencies, private corporations and financial institutions, to take up our courses. Despite the lack of formal long-term contracts, our Group has been continuously expanding our customer base since the commencement of our operations which include, inter-alia, the followings:­(i) Our Group has signed a memorandum of agreement with UTHM and MOU with UPM and Yayasan Terengganu whereby these parties will send students to our academy; 4. RISK FACTORS (Conl’d) (ii) We have also previously entered into direct arrangements with local and overseas airlines (“Arrangements with Airlines”), such as MAS, AirAsia, Garuda Indonesia and Sri Wijaya Air of Indonesia, and Nepal Airlines of Nepal, to train students recruited by these airlines; and (iii) We have also signed a MOU with GHIAL to jointly set up a fiight training academy at the Rajiv Gandhi International Airport, Shamshabad in Hyderabad, India. With the setting up of this new fiight training academy in India, we expect our customer base to expand further. We have had good business relationships with the abovementioned parties and have not encountered any major problems in our past dealings with them. In addition, in line with our aim on quality enhancement, we continuously strive to enhance our training programme to suit customers’ requirement. Furthermore, it is also part of our plan to further expand our presence in both the domestic and regional markets. Please refer to Section 5.8.1 of this Prospectus for further details on our future plans and strategies.
4.1.13 Revenue contribution from students recruited by airlines and under sponsorship Approximately 32.35%,35.69%,14.72% and 2.51% of our Group’s revenue for the FYE 31 December 2007, 2008, 2009 and 2010 respectively are contributed by. students recruited by airlines from the Arrangement with Airlines (as mentioned in Section 4.1.12 above) and approximately 14.40%, 38.52%,43.95% and 19.30% for the same financial years under review respectively are contributed by students with scholarships or who are sponsored by third-party organisations, mainly MARA and Yayasan Terengganu. Our Group’s financial results may be adversely affected in the event of deterioration in the financial position and/or businesses of these airlines or that government bodies such as MARA or Yayasan Terengganu withdraw or reduce their funding or sponsorships to students. In mitigation, our Group has been in discussion with other government bodies such as other educational bodies and foundations on possible tripartite arrangements with these government bodies whereby students who enrolled with APFTSB will be funded by these government bodies. In addition, our Group is also in discussion with certain financial institutions for similar arrangements. Further, our marketing strategy is aimed at getting students from countries in the region such as Indonesia.
4.1.14 Adverse weather conditions Adverse weather conditions can significantly impact our business operations. In particular, our fiight training academy in Kota Bharu has. in the past, experienced heavy downpour during the Northeast monsoon season. Consequently, students are unable to practise fiying and to log their required fiying hours during bad weather. This may cause a backlog in fiight training exercises for affected students and hence, may delay student’s progression towards their scheduled completion date and may in turn affect our financial position accordingly. To mitigate the above situation, in addition to the fiight training academy in Kota Bharu, we also have the option to conduct fiight training at our satellite aerodromes at the Sultan Abdul Aziz Shah Airport in Subang, Selangor and the Sultan Mahmud Airport in Terengganu to enable our students to continue their fiight training exercises at any of these airports which are not affected by bad weather conditions, hence minimising disruptions to students’ fiight training schedule. We also intend to extend our fiight education and training service offerings to the southern region of Malaysia through the opening of a satellite fiight training academy in Tanjung Labuh, Batu Pahat, Johor. Upon its completion, we will have four (4) fiight training centres catering to our fiight education and training services. 4. RISK FACTORS (Cont’d)

4.2 RISKS RELATING TO INVESTING IN OUR SHARES 4.2.1 No prior market for our Shares Prior to the IPO, there has been no public market for our Shares. Hence, there is no assurance that upon listing, an active market in our Shares will develop, or, if developed, that such a market can be sustained. The IPO Price was determined after taking into consideration various factors and we believe that a variety of factors could cause our Share price to fluctuate and such fluctuations may adversely affect the market price of our Shares. There can be no assurance that the IPO Price will correspond to the price at which our Shares will trade on the Main Market of Bursa Securities upon our Listing and the market price of our Shares will not decline below the IPO Price.
4.2.2 Share price volatility and volume of our Shares The performance of Bursa Securities is very much dependent on external factors such as the performance of the regional and world bourses and the inflow or outflow of foreign funds. Sentiment is also largely driven by internal factors such as economic and political conditions of the country as well as the growth potential of the various sectors of the economy. These factors invariably contribute to the volatility of trading volumes witnessed on Bursa Securities, thus adding risks to the market price of our listed Shares. Nevertheless, the profitability of our Group is not dependent on the performance of Bursa Securities as the business activities of the Group have no direct correlation with the performance of securities listed on Bursa Securities. In addition, the market price of our Shares may be highly volatile and could fluctuate significantly and rapidly in response to, amongst others, the following factors, some of which are beyond our control:­(i) Variations in our results and operations;
(ii) Success or failure in our key management team in implementing business and growth strategies;

(iii) Changes in securities analysts’ recommendations, perceptions or estimates of our financial performance; (iv) Changes in conditions affecting the industry, the general economic conditions or stock market sentiments or other events or factors;
(v) Additions or departures of our key management;
(vi) Fluctuations in stock market prices and volumes; or

(vii) Involvement in litigation.
4.2.3 Ability to pay dividends and make distributions Our Company’s ability to pay dividends or make other distributions to our shareholders may be subject to restrictions contained in future loan agreements which may limit dividends without the prior written consent of the lenders, as well as to our Company having sufficient funds which are not needed to fund our Group’s operations, business plans or other obligations. As our Company is a shareholder of our subsidiaries, our claims as such will generally rank junior to all other creditors and claimants against our subsidiaries. In the event of a subsidiary’s liquidation, there may not be sufficient assets for our Company to recoup our investment. 4. RISK FACTORS (Cont’d)
4.2.4 Ownership and control by our existing shareholders As disclosed in Section 7.1.1 of this Prospectus, our Promoters will directly and indirectly, own in aggregate 75% of our enlarged issued and paid-up share capital upon listing. As a result, they will still be able to, in the foreseeable future, effectively control the business direction and management of our Group as well as having voting control over our Group and as such, will likely influence the outcome of certain matters requiring the vote of our shareholders, unless it is required that they abstain from voting either by law and/or by the relevant guidelines or regulations. Nevertheless, our Group has appointed three (3) independent directors and set up an Audit Committee to ensure that any future transactions involving related parties are entered into on arms-length basis or normal commercial terms that are not more favourable to the related parties than those generally available to third parties and are not detrimental to our minority shareholders, and to facilitate good corporate governance whilst promoting greater corporate transparency.
4.2.5 Failure or delay in our Listing The occurrence of anyone or more of the following events, which is not exhaustive, may cause a delay in or cancellation of our Listing:­(i) The placees under the private placement tranche of the Offer for Sale fail to acquire the Shares allocated to them;
(ii) Our Underwriters exercising its rights pursuant to the Underwriting Agreement to discharge themselves from its obligations thereunder; and/or

(iii) We are unable to meet the public spread requirement of the Listing Requirements, i.e. at least 25% of our issued and paid-up share capital for which listing is sought must be held by a minimum number of 1,000 public shareholders holding not less than 100 Shares each at the point of our Listing. In such event, investors will not receive any of our IPO Shares and we together with the Offerors will return in full, without interest, all monies paid in respect of any application for our IPO Shares in compliance with sub-section 243(2) of the CMSA.
4.2.6 Forward-looking statements This Prospectus contains certain forward-looking statements that are based on historical data, which may not be reflective of the future performance of our Group and others are forward-looking in nature which is subject to uncertainties and contingencies. Forward­looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from future results. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies, the environment in which our present and future business strategies have been developed and the environment in which we will operate in the future. Although our Group believes that the expectations reflected in such forward-looking statements are reasonable at this point in time, we can give no assurance that such expectations will be justifiable. Whether or not such statements prove to be accurate would be dependent upon a variety of factors that may have an effect on the business and operations of our Group. In light of these uncertainties, the inclusion of such forward-looking statements in this Prospectus should not be regarded as a representation or warranty by us, the Offerors or our advisers, that our plans and objectives will be achieved.


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