Business Overview

7. BUSINESS OVERVIEW 7. BUSINESS OVERVIEW 7.1 History and background Our history can be traced back to 25 December 1996 when DTL, together with his wife, Ling Chao and his family, established our first newsstand outlet under the trade name “MAGBIT”. This outlet is located on the lower ground floor of 1 Utama Shopping Complex in Petaling Jaya, Selangor, and started out as a newsstand offering newspapers, magazines, confectioneries, beverages and tobacco products within a limited retail space. At that point in time, there was more reliance on manual labour to control the business operations such as managing and tracking inventory levels (e.g. stock in and out, stocktake, return of SKUs to suppliers), price labelling (prior to the introduction of barcoding), and managing the cash register and sales counter. In 1997, shortly after the opening of our first outlet, we opened our second outlet at Jejantas Sungai Buloh, located along the Malaysian North-South Expressway under the same trade name “MAGBIT” (Which was subsequently converted to “myNEWS.com” in 2002). In 1997, when an opportunity arose to set up an outlet in Mid Valley Megamall, Kuala Lumpur, we decided to launch our third outlet under the trade name “myNEWS.com”. This is the first “myNEWS.com” outlet opened with the aim to introduce our contemporary press and convenience outlet appearance and concept which was developed in-house from the learning cycles of the first two outlets. Today, we have 247 outlets nationwide under our own trade names, namely “myNEWS.com”, “newsplus”, “MAGBIT” and “THE FRONT PAGE”. There is no significant differentiation in how we operate and manage our outlets across the 4 trade names as we continue to be a press and convenience retailer. Further details of the locations of our outlets can be found in Section 7.4 of this Prospectus. Our trade name “myNEWS.com” was conceptualised in line with our aim to bring our customers an improved press and convenience shopping experience. The late Mr Dang Kai Ee, father of our Promoters, with his iron-works experience, constructed a prototype of the print media racks for our outlets which enabled magazines to be displayed in an easily accessible and attractive manner. With the combined effort and expertise of the Dang family, the unique contemporary “look and feel” of our outlets was created and today, our brand, trade name, customised outlet appearance and product display layout, is consistently visible in all our outlets and this clean and inviting concept has become synonymous with our trade names and brand. As our outlets and business operations began to expand, in 1998, we established our present HQ at Kepong Industrial Park, Selangor which also served as our distribution centre then. In 1999, we saw the need to put in place improved business controls with the use of IT, to cater for more efficient business operations and to allow for scalability as we expanded further. At that point in time, we were already operating 10 outlets. DTL, draWing on his background in IT and leveraging on his direct hands-on experience in operating our early outlets, developed an in-house POS system for our business with functions such as sales tracking, control and monitoring of store performance. As our business grew, this in-house POS system was replaced with our present Bisonet System to cater for the demands of an ever-increasing number of product SKUs, outlets and employees. Today, our Bisonet System, together with our WMS, is integrated within our Group’s business operations, allowing us to control, manage and monitor, amongst others, our retail and procurement activities and the capability to analyse sales data and trends in detail. Further details on the capabilities of our Bisonet System are set out in Section 7.7.1 of this Prospectus. By 2007, we had increased our brand presence significantly with the opening of our 100th outlet. This was followed by the opening of our 150th outlet in 2012. In 2009, under The BrandLaureate SMEs BestBrands Award 2009, “myNEWS.com” was accorded the “Most Promising Brand” in the sub-category of the SMEs Brand Specialty Awards, and also the “BestBrands in Retail -Press Retailer” in the SUb-category of the SIVIEs Chapter Awards. Our Managing Director, DTL, was recognised with the Silver Award, Entrepreneur of the Year 2011 by The Star Outstanding Business Awards. 7. BUSINESS OVERVIEW (cont’d) From 2009 to 2013, Bison Stores’ performance has also been consistently recognised by SME & Entrepreneurship Magazine, Malaysia where we received the SME100 Awards ­Malaysia’s Fast Moving Companies for 5 consecutive years; in addition to attaining Top 10 Ranking in the SM E1 00 Awards -Malaysia’s Fast Moving Companies in 2014. Bison Stores was also awarded the Retail Excellence Award under the Sin Chew Business Excellence Awards 2015. In 2012, we entered into an equal joint venture with WH Smith Travel to set up and operate “WHSmith” outlets within Malaysia’s international airports. As at the LPD, the joint venture entity, WH Smith Malaysia, operates 8 “WHSmith” outlets in Malaysia consisting of 1 outlet at KLlA, 2 outlets at klia2, 2 outlets each at the Langkawi International Airport and Penang International Airport and 1 outlet at the Kota Kinabalu International Airport. In 2013, WH Smith Malaysia was awarded the Certificate of Recognition for Outstanding Brand Concept at klia2 by Malaysia Airports Holdings Berhad. In February 2013, to cater for the demands of our growing business, we started operating our Bison DC at an industrial building, with approximately 125,000 sq. ft. in built-up area, located in Rawang Integrated Industrial Park, Selangor. In tandem with the establishment of our Bison DC, we upgraded our WMS using the Manhattan Warehouse Management System and integrated it with our Bisonet System. The introduction of an enhanced and integrated supply chain management system and POS system throughout our retail chain and our Bison DC enabled us to operate and monitor our business more efficiently. The capabilities of our WMS are set out in Section 7.7.2 of this Prospectus. As at the LPD, we operate 255 outlets (including the 8 “WHSmith” outlets) which are present in all but 3 states of Malaysia. Our outlets are concentrated mainly in Kuala Lumpur and Selangor where 77.3% of our outlets are located. Our retail network covers a total of approximately 174,000 sq. ft. of retail space ranging from approximately 60 sq. ft. to 2,300 sq. ft. for each outlet. Out of our 255 outlets as at the LPD, 32 of these outlets have been in operations for more than a decade. Our total outlets have grown at a CAGR of 17.8% over the 3 FYEs from 31 October 2013 to 31 October 2015. Throughout our past 19 years of operations, we have built a strong base for our press and convenience retail business founded on our established homegrown brand, our experienced management team, our long term relationship with our business partners and our in-house developed IT-based operations and distribution system. 7.2 Key achievements, milestones and awards 7.2.1 Achievements and milestones Year Achievements and milestones 1997 • We launched our trade name “myNEWS.com” and our first in-house developed contemporary press and convenience retail outlet. 1999 • Developed our first in-house POS system. • We opened our 10th outlet. 2007 • We opened our 100th outlet. 2011 • We acquired DKE, a MSC Malaysia Status company, to further develop and build on our Bisonet System. • We launched our “myNEWS.com Charity” corporate social responsibility programme. 2012 • We entered into an equal joint venture with WH Smith Travel to set up and operate “WHSmith” outlets within Malaysia’s international airports. • We opened our 150th outlet. 7. BUSINESS OVERVIEW (cont’d) Year Achievements and milestones 2013 • We commenced operations of our Bison DC. • We launched our “myNEWS.com on Wheels” mobile truck store. 2014 • We opened our 200th outlet. 2016 • We opened our 250th outlet. 7.2.2 Awards Our commitment to excellence is evidenced by the awards and certifications which we have received to-date. We set out below the awards, accolades and accreditations which we have received: Year Award I Certification Awarding body 2009 • The BrandLaureate SMEs BestBrands Award: The BrandLaureate “Most Promising Brand” in the sub-category of SIII1Es Brand Specialty Awards for “myNEWS.com” • The BrandLaureate SMEs BestBrands Award: The BrandLaureate “BestBrands in Retail -Press Retailer” in the sub-category of SMEs Chapter Awards for “myNEWS.com” 2011 • The Silver Award as Entrepreneur of the Year The Star awarded to our Managing Director, DTL Outstanding Business Awards 2009 to • SME100 Awards -Malaysia’s Fast Moving SME & 2013 Companies awarded to Bison Stores for 5 Entrepreneurship consecutive years Magazine, Malaysia 2013 • Certificate of Recognition for Outstanding Brand Malaysia Airports Concept at klia2 awarded to WH Smith Malaysia Holdings Berhad 2014 • Top 10 Ranking in the SME100 Awards ­SME& Malaysia’s Fast Moving Companies awarded to Entrepreneurship Bison Stores Magazine, Malaysia 2015 • Retail Excellence Award under the Sin Chew Sin Chew Daily and Business Excellence Awards sinchew.com.my 7.3 Our business 7.3.1 Principal business activities Our principal business activity is press and convenience retailing, which involves the conceptualisation, development, expansion, management and operations of a press and convenience retail chain throughout Malaysia under our homegrown trade names of “myNEWS.com”, “newsplus”, “MAGBIT”, “THE FRONT PAGE”; as well as the trade name of “WHSmith” (under our equal joint venture with WH Smith Travel) that retail news, books and convenience products within international airports in Malaysia. Our business encapsulates not just press and convenience retailing but also complementary services such as advertising and promotional activities and distribution services through our Bison DC. 7. BUSINESS OVERVIEW (cont’d) 7.3.2 Business model (i) Business and core revenue stream Our press and convenience outlets are typically located at shopping malls, hypermarkets, high street locations (being primary business or commercial street(s) within an urbanised or suburban area), office spaces, transportation hubs, resorts, hospitals and medical centres. These are localities which are urbanised and with high foot traffic. Presently, our growing network of outlets is mainly concentrated in Kuala Lumpur and Selangor where 77.3% of outlets are located. The growth of our outlets achieved a CAGR of 17.8% during the past 3 FYEs up to 31 October 2015. Please refer to Section 7.4 of this Prospectus for further details of our outlet locations. The core of our press and convenience retail business operations includes outlet assessment and acquisition, merchandising and procurement, centralised distribution and warehousing, IT hardware and software support, advertising and marketing, point of sale and service to the end customer. Most of our Group’s total consolidated revenue is derived from retail sales (being the over-the-counter sales to our end customers at our outlets) which is derived from 5 general categories of products and services described below: • tobacco products such as cigarettes;
• food and beverage products such as pre-packaged bakery products, drinks, dairy products, confectioneries and snacks, and alcoholic beverages (at selected outlets) as well as in-store self-served convenience food and beverages such as hot beverages, fresh bakery products and selected hot food;
• print media such as periodicals, newspapers, magazines and books;
• non-food products such as batteries, stationery, personal health care products, toys, accessories and other non-food related merchandise; and
• consumer services comprising commissions from electronic payment services (such as top-up/reloads for mobile service providers and selected bill payments), photocopying services and at selected outlets, money remittance services.

Print media is sourced on a consignment basis while consumer services income is recognised from the commissions generated. The other products are purchased from suppliers and sold to our customers at a margin. In addition to retail sales, our Group also generates revenue from advertising and promotions. Such revenue is derived from a range of sources which is related mainly to the prominent placement and/or display of products within our outlets for the purpose of promoting or advertising such products to our customers. Examples of such prominent areas include: (a) the facing or slot display area behind the cashier for tobacco products;
(b) eye-level retail shelving space or the ends of the shelving space facing the entrance of the outlet where products like confectioneries and snacks are placed to optimise sales of such products;
(c) dedicated space within chillers for the placement and display of various chilled products from a single supplier; or

7. BUSINESS OVERVIEW (cant’d) (d) the placement of light box displays over the counter or on the counter to advertise mobile telecommunication products or the placement of product standees (standing either from the floor or the counter) that display and carry products such as toys, candy, phone cards or novelty items such as balloons or cards. Advertising and promotions fees are paid by product principals or suppliers and can be in the form of fixed fees per outlet, fees based on the number of products carried on the shelf per outlet or a fee based on the volume or expected volume of products sold through the outlet. We also recognise other advertising related income paid to our Group that is related to ad-hoc advertising and promotional activities such as placement of advertisement on our delivery trucks, special sales campaigns or promotions at our outlets or suppliers’ anniversary sales. The fee from this other advertising related income is determined on a case-by-case basis taking into account the nature of the advertising and promotional activity. A majority of our advertising and promotions revenue is derived from tobacco principals representing approximately 70.6% of our advertising and promotions revenue for the FYE 31 October 2015. Our Group also generates other revenue in the form of sales incentives, rebates, distribution centre charges, sales from our Bison Cafe and management services charged to WH Smith Malaysia. The products offered through our outlets are third party consumer brand products. Please refer to Section 7.5 of this Prospectus for further details of the types of products and services offered by us. (ii) Target market and locality Our target market is the end consumers who are walk-in customers. Our focus is on consumers in typically urban and suburban areas who lead fast­paced lifestyles and who favour the convenience of contemporary retail outlets. As at the LPD, 78.8% and 9.8% of our outlets are located in Malaysia’s central region (comprising Kuala Lumpur, Selangor and Negeri Sembilan) and southern region (comprising Melaka and Johor) respectively, which are regions that are relatively urbanised. As a press and convenience retailer, the focus of our retail points are mainly high foot traffic retail locations such as shopping malls, hypermarkets, transportation hubs, office spaces, high street locations, resorts and hospitals or medical centres. These are strategically placed locations to provide convenience and to cater for “on-the-go” and impulse purchases to all types of end consumers. At present, a majority of our outlets are located in shopping malls while our remaining outlets are mostly spread out amongst hypermarkets, transportation hubs, high street locations and office buildings. Please refer to Section 7.4 of this Prospectus for further details of our outlets.
7. BUSINESS OVERVIEW (cant’d) 7.3.3 Competitive advantages and key strengths (i) We own our trade names and have full autonomy over our trade names and brand We have been actively involved in the business of press and convenience retailing since 1997 when we introduced our first “myl\lEWS.com” outlet. With a continuous operating history of 19 years, we believe that we have built up significant brand equity for our own homegrown trade name and brand of “myNEWS.com” which has 223 outlets carrying this trade name as at the LPD. We have also developed other trade names, i.e. “newsplus”, “MAGBIT”, and “THE FRONT PAGE”; which we use across 24 outlets. As such, we are not reliant on any third party brand, franchising or licensing relationships or arrangements, nor are we subject to the ensuing obligations, restrictions or terms and conditions arising from such relationships or arrangements. Having full autonomy over our own trade names and brand, our business and operational systems, as well as control over the efficiency across our retail operations (from our procurement and merchandising, retail management and operations, human resources management, logistics and warehouse management, and to our front end over-the-counter POS) allow us to stay competitive. This autonomy further enables us to respond to market demands and consumer preferences in a fast and timely manner. For example, we are able to customise our outlet layout and storefront design, product and merchandise mix, and Merchandise Planogram to suit specific retail locations and demographic patterns. We also have our own Bison DC equipped with an integrated logistics and distribution system which allows us greater control over SKU movements and monitoring of in-store performance. Please see sub-paragraph (iv) below for further discussion on this competitive factor. Our brand equity is built on several key factors such as our clean and inviting outlet concept, quality of customer service, and product mix of press and convenience retail items. We believe that our brand has become synonymous with contemporary press and convenience shopping experience in Malaysia. The consistency in presenting our outlet appearance and concept throughout our retail network as well as the careful management of our “myNEWS.com” brand reputation, gives us a competitive edge in gaining traction with our customers, maintaining customer loyalty and enhancing brand recognition. Trade name strength and brand recognition also lend us a competitive advantage in securing optimal retail locations as property owners are more likely to rent their premises to tenants who have established and easily recognisable brands. (ii) We have an experienced management team Our Executive Directors have been instrumental in our growth and strategy since our Group’s formative years. Our Executive Directors are assisted by our other Key Management who have extensive knowledge and experience in retail and retail operations. Specifically, DTL’s and DTW’s long service with us, their in-depth knowledge on all aspects of our Group’s operations, as well as their retail sector experience (19 years for DTL and 17 years for DTW) are invaluable to our Group and our Group’s future plans. A majority of our Key Management have been with our Group for more than 5 years. It is our belief that with the continued growth of our Group, despite the origins of our business as a family entrepreneurship, a culture of professional management is encouraged and cultivated amongst our Key Management. 58 7. BUSINESS OVERVIEW (cant’d) Our management team is organised along functional lines where department managers are responsible for the execution of their duties and the team is led by our Managing Director, DTL. We have in place a flat organisation structure, which we believe is conducive for operational efficiency and agile business decision-making. Our flat organisation structure also enables knowledge transfer through on-the-job training and provides us with a platform to identify high performing employees for management succession planning. Our Executive Directors, who are also our Promoters, play an active role in the management and operations of our Group and have been responsible for the strategic business direction and growth of our Group. We also have in place employee retention measures such as providing competitive remuneration packages, benefits, incentives, training and development programmes at various levels from our outlet staff to our management personnel, as well as rewarding our employees for their loyalty and contribution towards our success. We believe that our Key Management’s collective experience in site acquisition, merchandising, supply chain management, outlet conceptualisation and IT will serve us well in our future growth plans as they are familiar with our branding and corporate objectives and they have also been part of our growth in the past. (iii) We use a comprehensive and integrated retail management and control system throughout our retail network We use IT as a platform to place effective business controls for our retail business. We have in place an integrated IT system encompassing our Bisonet System and WMS which are interfaced to our accounting system. The application and interaction of this IT system spans across most facets of our business operations from our back-end operations to our front-end over the counter POS. The details of the technologies used in our retail management and control system are set out in Section 7.7 of this Prospectus. The usage of IT allows us to increase accuracy, transparency and accountability in our operations flow, providing us with a competitive advantage to optimise efficiency in our operations. Our ability to leverage on and optimise the use of IT in our business operations enables us to effectively track and manage our SKU movements across our operations and monitor in-store performance on an on-demand basis. The usage of IT together with the integration of our WMS and Bisonet System has enabled us to have access to detailed and customisable sales data and allows us to analyse sales trends. This ability gives us a competitive edge in our business relations with publishers, product principals and suppliers as we are able to use such information and analysis to negotiate competitive pricing and product margins, provide feedback to publishers, product principals and suppliers on product sales performances and ensure better efficiency in advertising and promotional strategies. (iv) Our Bison DC and logistics team As at the LPD, approximately 86.7% of our SKUs received from our suppliers, managed and distributed to our network of outlets are from our Bison DC. Our Bison DC has approximately 125,000 sq. ft. built-up area and 122,601 sq. ft. of storage capacity. As at the LPD, our in-house logistics team consists of 13 delivery trucks which are owned by us, 85 employees who are located on-site and we also have the option to use third party transport service providers, when needed, to service our nationwide retail network. 59 7. BUSINESS OVERVIEW (cont’d) Having our own Bison DC as well as our own logistics team gives us a competitive advantage as it provides us with greater control over merchandise and retail planning, in particular allocation of SKUs according to their sales trends at our respective outlets. We are also better able to manage and control merchandise handling during the warehousing and distribution process, ensuring that the merchandise arrive at our outlets in good condition and satisfactory quality. This level of control also ensures timely and orderly delivery of inventory to our network of outlets so that inventory is maintained optimally at our outlets. Centralised distribution also allows us to enjoy certain supplier rebates and trading terms with our suppliers as products and merchandise are supplied to a centralised receiving point, thereby enabling us to ultimately price our products more competitively. (v) Our products and services mix focuses on convenience or “on-the-go” merchandise which are general and broad-based in nature and accessible to consumers at affordable price points We believe that our products and services mix focusing on convenience or “on-the-go” merchandise, allows us a competitive advantage to gain traction amongst a diverse range of consumer groups. Due to the general and broad­based nature of our products and services, they appeal to a wide variety of end consumers and are not dependent on anyone specific target consumer group such as age or income. In addition, a large proportion of our products and merchandise offered at our outlets are at affordable price points, and we focus on “on-the-go” convenience products such as print media, tobacco, snacks and confectionery. Other than these consumer products, we also offer a variety of consumer services as an added convenience to customers such as electronic payment services (e.g. prepaid top-up for mobile service providers and Touch’nGO reloads), photocopying services, money remittance, and ATIVI services at selected outlets. These services increase convenience for the consumers by complementing sales of products available at the outlet and also enable us to attract more foot traffic at our outlets. We believe that the demand for our “on-the-go” products and services mix is generally inelastic against the backdrop of an adverse economic decline and as compared with other forms or types of retail products, since these products are accessible to consumers at affordable price points. (vi) As the largest homegrown retail convenience store player, we are well positioned to take advantage of the growth prospects of the retail convenience store market The retail convenience store market has been the fastest growing sub­segment of the grocery retail market in Malaysia with a market size of RM 1.2 billion in terms of retail sales in 2007, which more than doubled to reach an estimated RM3.3 billion in 2015, representing a CAGR of 13.5%. The number of retail convenience store outlets has also more than doubled, increasing from 1,054 outlets in 2007 to an estimated 2,776 outlets in 2015, which translates to a CAGR of 12.9%. In addition, Malaysia’s retail convenience store penetration rate is significantly lower than other more developed countries in the Asian region such as Singapore, Hong Kong, Japan, South Korea and Taiwan, as well as other developed countries such as the United States of America, UK and Germany. As Malaysia progresses towards a developed nation status, and as 7. BUSINESS OVERVIEW (cont’d) long term economic growth prospects in Malaysia continues to be positive with increases in GOP and disposable income, retail expenditure will continue to grow and this will have a positive impact on the growth in the retail convenience store market. Given the higher convenience store penetration rate seen in the developed countries, Malaysia’s retail convenience store penetration rate is expected to increase as overall income rises, in line with global trends. Moving forward, the number of retail convenience stores in Malaysia is forecast to grow at a CAGR of 9.5%, from an estimated 2,776 outlets in 2015 to 3,327 outlets in 2017. Accordingly, the retail convenience store market size is forecast to grow, in terms of retail sales, from an estimated RM3.3 billion in 2015 to RM4.2 billion in 2017, registering a CAGR of 12.8% during this period. (Source: IMR Report) The increasing number of retail convenience stores and the growing retail convenience store market size in Malaysia illustrates the growth in demand for retail convenience stores in the country. Malaysia’s lower retail convenience store penetration rate in comparison to other developed countries signifies that the retail convenience store market in Malaysia has potential for growth in the country. As the second largest retail convenience store operator and the largest homegrown retail convenience store player in Malaysia, the Group is well­positioned to capitalise on this growth potential. 7.3.4 Future plans and strategies The future plans and strategies of our Group focus on the objective to grow our revenue, optimise margins as well as to improve our business functions and back-end operations to meet the demands of our future growth. (i) Growing our business revenue and optimising our margins (a) Expansion of our network of outlets We plan to continue with the expansion of our network of outlets which would include the setting up of new outlets and may include strategic investments in or acquisitions of existing retail chains or outlets to grow our network of outlets. However, at this point in time, we have not identified any such strategic investments or acquisitions that meet such requirements. We plan to continue expanding our network of outlets to enlarge our customer reach. As at the LPO, we operate 255 outlets (including “WHSmith” outlets). We intend to open at least another 115 new outlets by the FYE 31 October 2017. As at the LPO, our business development team is currently assessing the feasibility of opening 32 new outlets in various high foot traffic locations throughout Malaysia. Since the end of our last FYE 31 October 2015 up to the LPO, our Group opened 20 new outlets. Our plan is to prioritise our expansion of outlets in major urban areas such as the Klang Valley, Johor Bahru and Penang, followed by other parts of Malaysia. We will continually assess the feasibility of opening additional “WHSmith” outlets where opportunities arise. In addition, to further accelerate our reach to our customers by increasing our number of outlets, we have through our subsidiary, Kukuh, submitted an application to MOTCC on 26 March 2015 for the registration of a franchise under the Franchise Act 1998 with a view 61 7. BUSINESS OVERVIEW (cont’d) to expand our network of outlets by way of franchising “myNEWS.com”. The franchising of “myNEWS.com” outlets will be implemented through Kukuh. This plan to establish a registered franchise is subject to us obtaining the relevant licensing and registration approvals pursuant to the Franchise Act 1998 and the relevant regulations pertaining thereto. As at the LPD, this application is pending approval. In addition to the relevant regulatory approvals, the launch or opening of any “myNEWS.com” franchised outlets is also subject to us identifying and evaluating suitable franchisee candidate(s), both in terms of the candidate’s capabilities and whether the location of the franchise outlet is suitable. Such evaluation processes will assist our Group to mitigate the risks of our “myNEWS.com” brand equity from being affected as a result of errant franchisee(s) and to ensure that any franchise outlet is beneficial to our Group’s overall objectives for sustainable growth. The increase in our number of retail outlets would result in an increase of advertising space and product display rental capacity which we will be able to offer to our suppliers and product principals. As such, in addition to the increase in retail sales due to the larger number of outlets, we also anticipate a corresponding increase in revenue from advertising and promotional activities. (b) Continued enhancement, diversification and improvement of our product and service offerings As a press and convenience retailer, we believe that a key factor to our sustainability and performance is our product and service offerings. It is our strategy to continue to enhance, diversify and improve the selection of convenience products, print media, food, beverages, snacks and cbnsumer services in order to meet consumer needs and market demands in a timely and orderly manner. In particular, we plan to expand the selection of self-served convenience food and beverages at outlets where there is such demand in order to provide added convenience to consumers. For example, we plan to expand the range of fresh food and ready-to-eat food such as sandwiches, wraps, cut fruits, convenience food and hot beverages, which we have progressively introduced to our chain of outlets. (ii) Improving our business functions and back-end operations In order to support our growing network of outlets and product base, it is also part of our plans and strategies to improve and establish nationwide logistics and IT capabilities in the following manner: (a) to establish an additional distribution centre and/or warehouse in our prioritised expansion areas of either Johor Bahru or Penang;
(b) to establish a food preparation and packaging facility that would also include cold storage facilities;
(c) to improve our current logistics capabilities by acquiring additional transport equipment to cater for our growing network; and
(d) to improve our IT software and capabilities to ensure improved connectivity by way of:

7. BUSINESS OVERVIEW (cont’d) • additional servers for our WMS to cater for the additional number of outlets, the new distribution centre and/or warehouse as well as the food preparation and packaging facility; and
• the installation of business intelligence software to improve our reporting requirements to enable further automation of data collation and trend analysis in anticipation of servicing a larger network of outlets.

In line with our proposed outlet expansion plans described above, having an additional distribution centre and/or warehouse would enable us to better service our existing and new outlets beyond Kuala Lumpur and Selangor where our Bison DC is located. The improvements to our IT software and capabilities, for example the improved connectivity for our WMS required for our additional distribution centre, will assist us in monitoring and controlling SKU movements and the efficiency of our operations as we continue to expand our network of outlets nationwide. In addition, better control over supply chains such as by having in-house food preparation and packaging capabilities will allow us greater control over the quality of convenience food products offered as part of our continued efforts to diversify our product and service offerings. As at the LPD, no particular land or properties have been identified for the additional distribution centre and/or warehouse or facilities mentioned above. (The rest of this page has been intentionally left blank) 7. BUSINESS OVERVIEW (cant’d) 7.4 Our outlets We operate, as at the LPD, 255 outlets (including “WHSmith” outlets) in Malaysia. The table below sets out the distribution of our outlets by each state in Malaysia as at the LPD. w  C)  VI- E 0  « a.. I- Region  CI.l ;; :l 0 “iii-0 l­ ~ fI) ~ w z >. E  VI :l c.. VI 3= CI.l r:::  I-m C) « :2:  Z 0 0::: 11. w J: I­ .l:-‘E fI) J: ~
Northern region Perak 10 10 Pulau Pinang 119 2 Kedah 42 2 Pahang 11 2622 4 Central region Kuala Lumpur 9887 10 Selangor 9989 5 3 Negeri Sembilan 4 3 1 201179 16 2 3 Southern region Johor 1714 2 Melaka 862 2520 4 East Malaysia Sabah 1 Sarawak 22 3 2 Total 255223 20 3 8 Our retail network covers a total of approximately 174,000 sq. ft. of retail space with outlets ranging from approximately 60 sq. ft. to 2,300 sq. ft. in retail space. As at the LPD, 223 of our outlets operate under the trade name of “myNEWS.com”, 20 outlets under the trade name of “newsplus”, 3 outlets under the trade name of “MAGBIT” and 1 outlet under the trade name of “THE FRONT PAGE”. There is no significant differentiation in terms of how we operate and manage our outlets across the 4 trade names used by our Group as we have maintained as a press and convenience retailer since the introduction of our first “myNEWS.com” outlet in 1997. Since we are able to customise our product mix for each outlet to cater to our customers’ preferences in different locations, the product mix and SKU allocations for each outlet may vary based on factors such as locality, demography and available retail space. 7. BUSINESS OVERVIEW (cont’d) Typically, the location of outlets will determine the nature of the product mix as follows: No. Typical locations Product mix 1. • Shopping malls • Higher proportion of retail • Hypermarkets space dedicated for print media • Selected convenience products and consumer services 2. • Hospitals or medical centres • Higher proportion of retail • High street (including highway space dedicated to
locations) convenience products and consumer services
• Offices
• Only carries a selected range of
• Resorts print media

3. • Transportation hubs • Offers only bestselling SKUs for • Shopping malls where small floor optimal stocking and turnover spaces are tenanted • Minimal range of print media In addition to our outlets carrying our in-house developed trade names, we have 8 outlets that operate under the trade name “WHSmith” under our equal joint venture with WH Smith Travel which generally retail news, books and convenience products within international airports in lVIalaysia. We also operate 1 mobile truck store known as “myNEWS.com on Wheels” which is typically stationed at major sporting or entertainment events or launches that have wider visibility and advertising exposure. At these locations, our “myNEWS.com on Wheels” truck retails tobacco products, fresh food, snacks and beverages as there is generally a higher demand for convenience retail products at these locations as compared to print media. In the course of opening new outlets, our Group’s priority has been to use our main trade name of “myNEWS.com”, as it is our most easily recognisable trade name. The “newsplus” trade name was initially introduced in 2004 to serve transportation hubs but over the years, it has also been used for non-transportation locations. The last “newsplus” outlet was opened in 2011. Having an additional trade name other than “myNEWS.com” allows us the fleXibility to strategically use a different trade name, if required. The “MAG BIT” trade name was the first trade name used by our Group in 1996 for the opening of our first outlet, as well as our second outlet in 1997 (which has since been converted into a “myNEWS.com” outlet). An additional 2 “MAGBIT” outlets were opened in 2005 and 2006. Our sole “THE FRONT PAGE” outlet was opened in 2004. Although the “MAGBIT” and “THE FRONT PAGE” outlets continue to operate as at the LPD, they do so only in respect of these 4 outlets and the trade names have not been used for any new outlets since then. We do not foresee that we will open any further new outlets with our “MAGBIT” or “THE FRONT PAGE” trade names and our “newsplus” trade name would only be used if there is a strategic reason to do so. Since 2011, all of our Group’s new outlets have been opened under the “myNEWS.com” trade name and we have also converted a total of 11 “newsplus” outlets into “myI\IEWS.com” outlets. This is consistent with our strategy in focusing on “myNEWS.com” as our main trade name. Some of our outlets offer a sit-in area with complimentary Wi-Fi and power points for the use of our customers. As at LPD, we offer this service at 40 of our outlets, typically located in high streets, to complement our product offering of self-serve fresh food, snacks and hot beverages. 7. BUSINESS OVERVIEW (cont’d) The opening hours of our outlets differ depending on locality. Most of our outlets, which are located at shopping malls and hypermarkets, have operating hours from 10 a.m. to 10 p.m., foHowing the respective opening hours of these locations. However, as at LPD, we have 40 high street outlets which operate 24-hours, and 41 mainly high street and transportation hub outlets that operate extended opening hours from 7 a.m. to 11 p.m. or beyond 16 hours. 7.5 Our products and services 7.5.1 Product and service offerings As at the LPD, our Group carries a total of 5,561 SKUs. The types of products and services offered at our press and convenience outlets may be generally categorised as follows: (i) Print media We carry a wide range of print media which comprise of periodicals, newspapers, magazines and books. As at the LPD, print media accounted for approximately 26.3% of our total SKUs, consisting of approximately 43 newspaper titles, 660 magazine titles and 760 book titles. The range of magazines which we offer span across a vast variety of topics and include but are not limited to, aviation, automobile, comic and cartoon periodicals, computing and IT, food and culinary, gardening and household, hobbies, arts and craft, photography, leisure, travel and living, sports, health and fitness, society, current affairs, politics, economics, finance and business, wealth management, entertainment, fashion and lifestyle and geography. A large proportion of our books consists of children storybooks and novels, education reference books and materials. We also carry a wide range of both domestic and international daily and weekly newspapers. (ii) Convenience retail products We have a diverse mix of convenience retail products such as: (a) food and beverages including pre-packaged bakery products, drinks, dairy products, confectioneries and snacks;
(b) self-served convenience food and beverages including hot beverages, fresh bakery products and selected hot food;
(c) general groceries and household products;
(d) personal hygiene products;
(e) selected pharmaceutical products;
(f) stationery;
(g) children toys;
(h) tobacco products such as cigarettes, loose tobacco and other related paraphernalia; and
(i) mobile prepaid starter packs.

The merchandise and product mix varies depending on locality of the outlet and its demographic pattern. As at the LPD, convenience retail products account for approximately 71.2% of our total SKUs. 7. BUSINESS OVERVIEW (cont’d) (iii) Consumer services To provide added convenience to our customers, we also offer various consumer services such as: (a) electronic payment services of prepaid top-up for mobile service providers and Touch’nGo, bill payments and the sale of gaming vouchers for online games and related content which is available at all of our outlets save for 9 outlets which do not provide bill payments;
(b) money remittance services (3 outlets);
(c) ATM services (4 outlets); and
(d) photocopying services (40 outlets).

As at the LPD, consumer services account for approximately 2.5% of our total SKUs. Most of our Group’s total consolidated revenue is derived from retail sales (being the over-the-counter sales to our end customers at our outlets). 7.5.2 Advertising and promotional activities As a supporting activity to our press and convenience retailing business, we also undertake advertising and promotional activities for several of our product principals and suppliers where we receive, amongst others, placement and advertising fees. The advertising and promotional activities that we carry out with our product principals and suppliers include: (i) in-store product highlights and in-store advertising space;
(ii) collaborating with product principals and suppliers for sales campaigns or promotions exclusive to our press and convenience outlets;

(iii) monthly thematic promotions to introduce value buy items and new listing of merchandise across all categories of products; (iv) seasonal and festive promotional campaigns at our outlets;
(v) periodical contests and competitions carried out in collaboration with product principals or suppliers for our customers to participate;
(vi) participating in the sales campaigns and promotions of our product principals and/or suppliers; and

(vii) initiating other promotional modes such as corporate social responsibility fund raising. 7.5.3 Distribution services Another source of our Group’s revenue is derived from distribution services for our product principals and suppliers. As at the LPD, approximately 86.7% of our SKUs received from our suppliers, managed and distributed to our network of outlets are from our Bison DC. Income derived from our distribution services provided to these suppliers, instead of the suppliers distributing directly or through third parties to our network of outlets, accounted for approximately 0.2%, 0.6%, and 0.7% of our total Group revenue for each of the respective FYEs 31 October 2013 to 31 October 2015. 7. BUSINESS OVERVIEW (cont’d) 7.6 Operational processes and facilities 7.6.1 Outlet opening process The table below sets out a general overview of the process flow for the opening of each of our outlets.
Approval by Chief Operating Officer and Finance Department • Submission of site assessment results for consideration !
Store Development • Negotiation and formalisation of tenancy arrangements Planninq and developinq outlet lavout • ! Fit-Out Stage • Securing necessary expenditure for outlet purchases and operations
• Renovation
• Setting up IT hardware and POS integration to Bisonet System

!
Administration and • Identifying and applying for regulatory approvals and Licensing licences such as business and signage licences Operations  !  •  Assigning and scheduling manpower  Stock Up  !  • •  HQ issues stock orders to deliver merchandise for outlet Bison DC delivers merchandise to outlet
! I Outlet Openingl——-­Continuous Management Review and Monitoring  • •  Monitoring sales performance / operation costs of outlet New merchandisinq listinqs, revamp or closure
The identification and acquisition of outlet locations are conducted through our business development team (consisting 9 personnel as at the LPD) that focuses on outlet acquisition and development to, amongst others, stUdy outlet locations and identify optimal retail locations with high foot traffic. Our branding, trade names and image, which we believe have come to be associated with bringing contemporary press and convenience shopping experience to consumers, provides us with a wider pool of high foot traffic locations. Our business development team is tasked to source for potential sites and carry out feasibility studies on such potential sites. Sources of potential sites come from, 7. BUSINESS OVERVIEW (cant’d) amongst others, scouting for new sites, invitations from owners of shopping malls, residential or commercial developments, as well as references from real estate brokers and property developers. Factors that we take into consideration when assessing the feasibility of a new site include the location of the site, location features and surrounding profile, tenancy costs and terms and conditions of renting the site, demographics and consumer group profile, buying behaviour as well as competitors and traffic flow at the said location. We will also evaluate and carry out financial feasibility studies such as estimates of investment costs and returns. The site evaluation results are then submitted for review and approval by our Chief Operating Officer and the Finance Department. Once the decision to acquire the new site is made, we will proceed to negotiate with the site owner to secure a formal tenancy arrangement. Most of our tenancies do not exceed 3 years. Once finalised, all relevant departments are notified of the new outlet opening to support the process flow of setting up and opening of the outlet. One of the more important stages of this process is the designing and planning of the outlet layout. This involves designing the schematics of the outlet and storefront, flow and space planning, merchandise and services mix to be offered at the new outlet as well as designing the Merchandise Planogram, based on the available floor space and retail space. At this stage, we will apply our location-specific strategy to determine the allocation of retail space and the appropriate products and services mix for the new outlet following our Merchandise Planogram. Once all these are completed, renovations will be carried out at the new outlet based on the final and approved specifications upon obtaining vacant possession. The outfitting of the new outlet is carried out by our operations team, who will take necessary steps to outfit the new outlet by way of supervising the renovation and installation of furniture and fittings, equipment, as well as scheduling and providing the manpower to operate the new outlet. Our IT team will also set up our Bisonet System and necessary POS and IT hardware (including installation of CCTV system) at the new outlet to complete the outfitting process. Necessary regUlatory approvals and licences are then applied for and obtained for the new outlet. Upon the completion of the outlet’s refurbishment, our merchandising team will then proceed to issue stock orders to our Bison DC or suppliers, where necessary, in the case of direct delivery from suppliers to our outlets, for the delivery of merchandise to the new outlet and stocking for sale. Finally, as a control measure, our internal control team will inspect the new outlet to ensure all merchandise is displayed in accordance with the prescribed Merchandise Planogram. The new outlet will then be opened for business. Upon opening, we practise continuous monitoring and review of the financial and operational performance of each new outlet. We also carry out a review of the products and services mix at the new outlet on a quarterly basis or more frequently as and when considered necessary. Subject to the results of such monitoring, we may implement certain strategies like introducing new merchandise listings and/or phasing out of slow moving inventory to optimise the outlet’s performance. This process allows us to take appropriate measures as and when required in order to remain responsive to market needs and demands. We also undertake refurbishments of our outlets on an on-going basis as and when required, typically once in every 5 to 8 years to address wear and tear as well as to improve, update or change storefront appearance which may have become outdated. 7. BUSINESS OVERVIEW (cont’d) 7.6.2  Warehousing and distribution process  Bison DC  Sales Order Online sales order at outlet via Bisonet System  integrated  WMS
Delivery at Outlet • Outlet personnel scan barcoded seal
• Physical check of delivery
• Confirmation of receipt and update of inventory via Bisonet System

Extraction of sales order at a pre-determined cut off time 1
Order picking • WMS generates picking order which contains SKU location, flow and sequence of picking location
• Warehouse worker (“Picker”) scans bar code of SKU on sales order
• Picker scans bar code of SKU storage rack
• Picker scans product bar code to confirm matching SKU bar code per sales order
• Picker places products into trolley I tote

t
Order check • Picker hands over trolley I tote to checker to check and confirm accuracy of SKU and quantity
• Checker scans barcoded seals for delivery totes
• Checker seals delivery totes and sends them to loading bay staging area for loading

Delivery order generated Route scheduler generates driver manifest –~-­Loading and delivery
7. BUSINESS OVERVIEW (cont’d) Our warehousing and distribution facilities and capabilities to service our retail network is made up of our Bison DC with its 122,601 sq. ft. storage capacity, delivery trucks and on-site warehouse employees. Together with our WMS and Bisonet System, Bison DC provides us with control over merchandise and retail planning, in particular allocation of SKUs according to their sales trends at our respective outlets. The WMS assists us to manage and control merchandise handling during the warehousing and distribution process. This control feature also allows for timely and orderly delivery of inventory to our network of outlets so that inventory is maintained optimally at our outlets. To mitigate the risks of delay or disruption to our delivery system, we regularly maintain our delivery trucks and have in place a vehicle monitoring system to ensure timely delivery. We also secure alternative third party logistics providers to ensure that any delay or disruption in our distribution systems is addressed or to manage any increased distribution requirements during festive and peak periods when inventory turnover is at its highest. We also strive to minimise variances and errors in fulfilling sales orders raised by our respective outlets, through the use of our WMS. Our WMS is integrated with our Bisonet System and is programmed to, amongst others, use barcoding technology to manage placement and storage of our inventory taking into account product life cycle and sequencing of stock picking. In addition, all our delivery totes or bundles are sealed with barcoded security seals to control product damage as well as to avoid pilferage and discrepancies in the delivery process. Throughout our years of operations, we have established a reliable network of suppliers, thereby minimising the risk of insufficient or delayed supply of products. We also use our Bisonet System to track and monitor our inventory levels and sales at each outlet. With regards to placing of stock orders by our outlets, it is also monitored by our field managers. Data compiled by our Bisonet System enables us to anticipate future demands and evaluate our customers’ purchasing patterns and trends through the movement of inventory at our outlets. With this information, it allows us to respond in a timely manner to maintain optimal level and range of inventory at each particular outlet to minimise obsolete or slow-moving SKUs. Other than the above, in respect of certain SKUs, the product principals or suppliers deliver the products or merchandise directly to our outlets. Such SKUs include newspapers, dairy and bakery products. 7.7 Technologies We have in place an integrated retail management and control system that spans from our procurement and merchandising activities, retail management and operations, human resources management, logistics and warehouse management to our front-end over-the-counter POS. We use barcoding for all our inventories and SKUs to track our SKU movements throL1ghout our warehousing and distribution operations process, retail operations as well as to monitor sales performance, our outlets’ daily operations, pilferage and security risks. Our retail management and control system encompasses our Bisonet System and WMS. (The rest of this page has been intentionally left blank)
7. BUSINESS OVERVIEW (cont’d) The relationship of our retail management and control system with our key operational processes is highlighted in the chart below. PO ISSUED TO REPlENISH
PICKINGS & DELIVERIES
Legend: • SO: Stock order
• PO: Purchase order

7.7.1 Bisonet System Our Bisonet System is a customised retail outlet operations system developed by us, housed under and maintained by our MSC Malaysia Status subsidiary, DKE. This system is critical to our Group’s business as we use it to carry out, amongst others, the following functions: Description BisonPOS (outlet) -our POS system to capture sales and stock transactions BisonPOS (HQ) -centralised control settings and report viewing at our HQ Key functions —=——————-­• • • • online stock orders to our Bison DC capturing payment modes (via cash; debit or credit card; voucher; multicurrency in respect of the “WHSmith” outlets) • inventory monitoring for all SKUs at outlets
• audit trail reports
• cash management monitoring
merchandising and supply procurement management sales orders monitoring
• sales and costs of sales consolidation reports
• review of operational compliance, sales performance reporting and variance reporting

7. BUSINESS OVERVIEW (cont’d) Description Key fu nctions BisonPOS (Bison DC) • tracking receipt and returns of print media handling and management SKUs at Bison DC of print media • tracking delivery and returns of print media SKUs to and from outlets Second screen advertising • serves as a display to customers with scan attached with POS item pricing detail and display of images, video or advertising centrally controlled from HQ Mobility solution • capturing stock count figures and mobile scanning of print reconciliation for outlet stocktake media and merchandise Memorandum broadcasting • paperless broadcasting of internal memoranda from HQ to outlet POS terminals Bison electronic PunchCard • monitoring and control over the operations of the POS terminals • logging staff working hours and overtime timing calculation
• monitoring of outlet visitation and inspection
• cash declarations by outlet staff for control purposes

7.7.2 WMS We use our WMS to track and manage SKU movements and our distribution logistics. The system enables us to: (i) track and trace SKUs in our Bison DC;
(ii) fulfil outlet stock orders and record them throughout the inventory picking process chain at our Bison DC, verify checks before delivery, as well as actual delivery and receipt of SKUs at our outlets by the use of real-time barcode retrieval and matching;

(iii) manage use of space for inventory within our Bison DC; (iv) manage and optimise storage of inventory according to their product life cycles;
(v) control and optimise inventory holding;
(vi) record and to track returns to suppliers; and

(vii) generate productivity reports for our logistics and deliveries such as punctuality of delivery and variances of inventory in transition. 7.7.3 Safeguards for our IT system Our IT system is safeguarded by two alternate servers including an on-site backup server and an external remote server located off-site. In addition to our IT personnel who are on standby to support any system failures or malfunctions, we also train our outlet personnel to carry out basic repair and recovery measures to minimise outlet downtime. Furthermore, as a preventive measure, we regularly conduct scheduled tests of our IT disaster recovery system. 73
7. BUSINESS OVERVIEW (cont’d) 7.8 Cash management As a retail business, cash payment constitutes a significant proportion of our sales transactions. In the course of our outlet operations, we process a large volume of cash daily. We try to minimise any fraud, mismanagement or mishandling of cash by implementing standardised cash management practices. For accountability and safety purposes, our control measures include designating authorised personnel to handle cash at the outlet and strict cash bank-in or cash collection procedures. We also put in place several tiers of check and balance measures at different levels of our operations for the purpose of detecting possible variances in our cash management process flow, as described in the diagram below. This is achieved through reconciliation and cross-checking procedures at our HQ level as well as through our internal control team. In the event of fraud, mismanagement or mishandling of cash, we will take appropriate actions such as internal inquiry with disciplinary action or report such incidences to the police, where required. The diagram below outlines our cash management practices and control measures: Authorised personnel BisonPOS system
Internal control team Internal inquiry with prompts cashier carries out bank-in or begins checking via disciplinary action or collection and reporting Counter I —+ —+ I In the event of 1—-‘—+ CCTV and interviews 1—+ police report (where when cash register to HQ for daily cash variances Sales reaches set level cashier at HQ if required) made with primary check reconciliation as a necessary CCTV footage A I Internal control team at HQ checks for daily variances between sales and cash drops as second tier check HQ reconciles monthly total collection from outlets to sales 74 7. BUSINESS OVERVIEW (cont’d) 7.9 Security and loss prevention In the course of the operations of our outlets, some of which operate 24 hours, we are susceptible to pilferage, shoplifting, theft and robbery. As preventive measures to deter pilferage and robbery, all our outlets are installed with alarm systems, security cameras and safes. We also have in place our internal control team that is responsible for, amongst others, monitoring and investigating pilferage, cash variances and random outlet spot checks. To minimise losses from pilferage, shoplifting and theft, our Bisonet System serves as a centralised platform to automate routine stocktake instructions to our outlet personnel, to track and record sales and inventory movement and to detect and report variances to our HQ, including the use of CCTV footage. This allows us to investigate, trace and resolve incidences of pilferage, shoplifting and theft in a timely manner. Our Bison DC is patrolled 24 hours by third party security services provider and monitored by CCTV. To minimise loss of merchandise in transit, our delivery totes or bundles are all sealed with barcoded seals. We also closely monitor our delivery trucks by GPS tracking and their compliance with the assigned drivers’ manifests. Please refer to Section 7.6.2 of this Prospectus for details of our distribution process flow. 7.10 Insurance We purchase insurance policies for fire, burglary, money in transit, public liability, fidelity and product liability insurance for consumables sold by us to defray our exposure to numerous risks arising from the operations of our press and convenience retailing business, covering our central HQ functions, warehousing and distribution processes to the operations of our outlets and Bison Cafe. Please refer to Section 5 of this Prospectus which sets out a discussion of the risk factors which we are susceptible to. We believe our current insurance coverage undertaken is adequate for our business and current level of operations. 7.11 Corporate social responsibility In 2011, we established our “myNEWS.com Charity” programme with an aim to run a sustainable platform for donation drives. To maximise our fundraising efforts, we leverage on our extensive network of outlets to organise donation drives. The size of our retail chain with 255 outlets across Malaysia assists us to achieve a wide reach for our donation drives and allows willing customers convenient access to contribute by donating at strategically placed donation boxes. We also encourage our suppliers to participate in the donation drives. Since initiating the “myNEWS.com Charity” programme in 2011, we have successfully raised an aggregate in excess of RM370,OOO towards various social and charitable causes as part of our corporate social responsibility efforts. 7.12 Marketing activities 7.12.1 Modes of marketing Marketing plays a key role in generating traction amongst end consumers and to build our trade names and brand reputation as one of Malaysia’s leading press and convenience retail chain. As a press and convenience retailer, we believe that our brand presence, through our network of outlets, is crucial to the success of our business and financial performance. It is our strategy to upkeep and enhance the value of our homegrown trade names, in particular “myNEWS.com” in line with our objective to bring contemporary press and convenience experience to our customers. 7. BUSINESS OVERVIEW (cont’d) We also undertake marketing measures through: (i) our actual network of outlets and the marketing of our trade names and brands from our signages throughout Malaysia that will continue to grow as our reach expands since our outlets are well placed in generally high foot traffic localities;
(ii) the association of our trade names and branding with consumer product brands which we carry, via advertising and promotional activities conducted for our selected product principals and suppliers. Please refer to Section

7.5.2 for further details of our advertising and promotional activities; (iii) advertising and to promote consumer awareness of our branding via our “myNEWS.com on Wheels” mobile truck store which is typically stationed at major sporting events, entertainment events and launches; and (iv) initiating other promotional modes such as corporate social responsibility fund raising and through online presence and social media. 7.12.2 Distribution channel Our distribution channel is direct from our outlets to our customers. 7.13 Seasonality Our Group typically experiences a reduction in sales revenue in February due to the shorter month, which thereafter normalises until the Ramadhan fasting month when sales revenue experience a reduction again. Save for the above, our Group does not experience any other material seasonality in sales. 7.14 Major customers We have no individual customer who account for 10% or more of our Group’s total revenue for the 3 FYEs 31 October 2013, 31 October 2014 and 31 October 2015. Our Group is not dependent on any single customer for business. 7.15 Major suppliers The value of purchases from our suppliers that accounted for more than 10% of our Group’s total purchases during the 3 FYEs 31 October 2013, 31 October 2014 and 31 October 2015 are as follows: Value of purchases FYE 31 October Supplier  New  Foo  Hing  4 years 5  Tobacco  Sdn  Bhd  months I  (“New Foo Hing”)  Malaysia  Lein Hing Enterprise  18 years 8  Sdn Bhd (“Lein Hing”)  months I  Malaysia  CSS Tobacco Sdn Bhd  8 years 6  (“eSS”)  months I  Malaysia
2013  2014  2015  (RM’OOO)  %(1)  (RM’OOO)  %(1)  (RM’OOO)  %(1)  17,799  16.7  18,594  14.7  24,997  16.8  13,726  12.9  14,527  11.5  22,858  15.3  9,260  8.7  10,889  8.6  16,386  11.0
Note:  (1)  Represents the percentage of total purchases for the respective year.  76
7. BUSINESS OVERVIEW (cont’d) We purchase “British American Tobacco” products from New Foo Hing, “Phillip Morris International” products from Lein Hing, and “Japan Tobacco International” products from CSS. We maintain good relationships with these major suppliers and their respective product principals whom they distribute tobacco products for, namely New Foo Hing for British American Tobacco (Malaysia) Berhad (“BAT”), Lein Hing for Godfrey Phillips (Malaysia) Sdn Bhd (“PMI”) and CSS for JT International Trading Sdn Bhd (“JTI”). Our retail outlets have historically been carrying British American Tobacco products for the past 19 years and in respect of the past 4 years and 5 months through New Foo Hing as a BAT-appointed distributor. Prior to that, our purchases of British American Tobacco products were conducted directly with the product principal, BAT. We also have had 18 years and 8 months of continuous business relationship with Lein Hing as distributor and PMI as product principal. We have been carrying “Japan Tobacco International” products for the past 19 years, and in the past 8 years and 6 months we have dealt directly with JTI’s appointed distributor, CSS. We believe that this indicates a stable and good business relationship with our major suppliers and associated product principals. A discussion on our dependence on our major suppliers is set out in Section 5.1.8 of this Prospectus. 7.16 Approvals, major licences and permits obtained Details of the approvals, major licences and permits obtained by our Group for the operation of our business and the status of compliance are as set out below: 7.16.1 Business and signage licences for our outlets Prior to commencing operations for each of our outlets, we are required in accordance with the Local Government Act 1976, Local Authorities Ordinance 1996 of Sarawak, Trades Licensing Ordinance 1949 of Sabah and the by-laws of the respective local councils and authorities to obtain business and signage licences for each of our outlets. The business licence is a licence granted to the outlet to undertake business operations within the outlet premises whereas the signage licence is granted to enable the outlet to display its signboard and advertisements on the premises. These business and signage licences are renewable typically on a yearly basis. Pursuant to subsection 107(6) of the Local Government Act 1976, any person who fails to exhibit or produce his licences on the premises shall be liable to a fine not exceeding RM500 or to imprisonment for a term not exceeding 6 months or to both. In addition, as a general penalty, a fine of not exceeding RM2,000 or a term of imprisonment not exceeding 1 year or both will be imposed on anyone who is guilty of any offence against the Local Government Act 1976 or any by-law, rule or regulation for which no penalty is expressly provided. A similar penalty provision can also be found in the Local Authorities Ordinance 1996 of Sarawak save and except that in Sarawak an absolute fine of RM2,000 will be imposed on those who are found guilty of such offence. In Sabah, the Trades Licensing Ordinance 1949 of Sabah imposes on persons who carryon any business without a valid licence a fine of four times the amount of the licence fee and a further fine of RM10 for each day or part of a day during which the contravention continues. Based on our Group’s experience, the abovementioned business and signage licences are typically obtained within 3 months after the opening of the outlets. Applications for the business and signage licences can only be made after the outlets have been fitted-out and stocked-up as verification to the local councils and authorities that the outlets are ready for opening. For this reason, in most cases such licences remain pending at the time of outlet opening. This situation affects only the opening of new outlets. With the new outlets being fitted-out and stocked-up already at the point of the application for the licences, it would be impractical for our Group to allow the affected 7. BUSINESS OVERVIEW (cant’d) outlet(s) to be left idle and to continue to incur rental expenses while awaiting the issuance of the business and signage licences. Furthermore, there may also be situations where property owners require our Group to open the outlets by certain pre-determined dates, for example, in conjunction with the opening of a shopping mall. Our Group foresees that this situation will continue to arise as and when our Group opens new outlets in Malaysia. Additionally, delays in the granting of business and/or signage licenses may also occur due to administrative and/or out of the ordinary situations. For existing outlets, the yearly renewal process for the business and signage licences is done procedurally once a year prior to their expiry, and as such the timing for a renewal application can be anticipated and planned ahead. However, despite the risk of penalties imposed by the local councils and authorities for non-compliance of business and signage licences, the day-to-day operations of those outlets are not affected, including that of our Group’s applicable insurance coverage. As at the LPD, our Group has experienced delay in obtaining the business and signage licences in respect of 11 outlets (“Outstanding Licences”). Save for the above, our Group’s 244 remaining outlets as at the LPD have obtained their respective business and signage licences from their respective local councils and authorities, all of which are valid and in force as at the LPD. Our Group will continue to actively liaise with the relevant councils and authorities to speed up the progress of the Outstanding Licences. Although our Board expects to obtain the Outstanding Licences and any other future applications for new outlets within the typical timeframe, if such timeframe becomes protracted, our Board will take such action as it considers necessary if such licences are not forthcoming. (The rest of this page has been intentionally left blank)

7. BUSINESS OVERVIEW (cont’d) 7.16.2 MSC Malaysia Status and pioneer status certification Approving Licencel Date of authority I Reference issuance I Company issuer Description of licence I approval I permit -.:-n:..:o-.:-” _ Validity DKE Government MSC Malaysia Status granted for DKE to enjoy 2431 Effective of Malaysia ­the incentives, rights and privileges provided for Date: MDeC under the Bill of Guarantee 1 April 2010• To provide a world-class physical and information infrastructure;

Validity: • To allow unrestricted employment of local Valid until and foreign knowledge workers;
and unless revoked exempting companies with MSC Malaysia Status from local ownership requirements; • To ensure freedom of ownership by
• To give the freedom to source capital globally for MSC Malaysia infrastructure, and the right to borrow funds globally;
• To provide competitive financial incentives, including Pioneer Status (100 percent tax exemption) for up to 10 years or an Investment Tax Allowance for up to 5 years and no duties on the importation of multimedia equipment;
• To become a regional leader in Intellectual Property Protection and Cyberlaws;
• To ensure no censorship of the internet;
• To provide globally competitive telecommunications tariffs;
• To tender key MSC Malaysia infrastructure contracts to leading companies willing to use the MSC Malaysia as their regional hub; and
• To provide a high-powered implementation agency to act as an effective one-stop super shop.

Major conditions imposed  Status of compliance  The major conditions imposed by MDeC vide its letter dated 1 April 2010 in respect of DKE’s MSC Malaysia Status are as follows:  DKE hereby agrees to:  (i)  complete business registration of the proposed entity as a locally incorporated company under the Companies Act 1965 within one (1) month from the date of the approval letter, commence operations of the proposed entity within six (6) months from the date of the approval letter, and undertake such activities specified in DKE’s business plan (“Business Plan”) as approved by MDeC below (“MSC Malaysia Qualifying Activities”) within six (6) months from the date of the approval letter or by such date(s) as may be specified in the Business Plan (which date(s) may be extended or modified with the written consent of MDeC) and thereafter continue with such business and activities unless otherwise approved by MDeC. The MSC Malaysia Qualifying Activities are as follows:  Complied  (a)  Research, development and following software:  commercialization  of the  DKE Publications Software  and  Magazine  Distribution  (b)  Provision of implementation, maintenance and technical services related to the above software.  Any changes proposed to the above MSC Malaysia Qualifying Activities as detailed in the Business Plan must receive the prior written consent of MDeC;
79
7. BUSINESS OVERVIEW (cont’d) Company  Approving Authority / issuer  Description of licence / approval/ permit  Licence/ Reference no.  Date of issuance / Validity  Major conditions imposed  Status of compliance  (ii) (iii) (Iv) (v) (vi) (vii)  locate the implementation and operation of the MSC Malaysia Qualifying Activities in a Designated Premises in an MSC Malaysia Cybercentre with minimum office space of 1,200 sq ft, within six (6) months from the date of the approval letter. DKE shall obtain MDeC’s prior written approval in the event of any changes in the location or address of the company; ensure that at all times at least fifteen percent (15%) of the total number of employees (excluding support staff) of DKE shall be “knowledge workers” (as defined by MDeC). “Knowledge workers” shall be recruited, employed and/or appointed solely for the purpose of undertaking the MSC Malaysia Qualifying Activities. The recruitment, employment and/or appointment of foreign “knowledge workers” (if any) shall be the sole responsibility of DKE and MDeC shall not be held responsible for any liability arising from such recruitment, employment and/or appointment; ensure that any products produced pursuant to the MSC Malaysia Qualifying Activities are original, and that no part or portion of such product is an infringement or violation of any intellectual property or any proprietary rights of any third party, or constitutes a misappropriation of know-how belonging to any third party; submit to MDeC a copy of DKE’s Annual Report and Audited Statements in parallel with submission to the Companies Commission of Malaysia; ensure that all information and/or documents furnished by DKE to MDeC or any other authority or agency do not contain any false, untrue or inaccurate statements or omit to state any facts, the omission of which would make any statements made therein in the light of the circumstances under which they are made, misleading; inform and obtain the prior approval of MDeC for any proposed change in the name of DKE;  Complied Complied Complied Complied Compiled Complied
80 7. BUSINESS OVERVIEW (cont’d) Company DKE  Approving Authority! issuer MITI  Description of licence! approval 1permit Pioneer certificate and extension approval for pioneer status in accordance with Promotion of Investments Act 1986.  Licence! Reference no. Certificate No. 3681 Extension approval letter 020/B18/0 00027/2/M SC/2  Date of issuance! Validity 28 Augu~ ~1~ 16 August 2015 ~ 15 Augu~ 2020  Major conditions imposed (viii) inform MDeC of any change in the equity structure or shareholding structure of DKE, or such other changes that may affect the direction or operation of DKE. MDeC must be informed of any change before steps are taken to effect such change; and (ix) comply with all such statutory, regulatory and/or licensing requirements as may be applicable, including but not limited to the Transfer Pricing Guidelines issued by the Inland Revenue Board of Malaysia on 2 July 2003, and such other amendments as may be applicable from time to time. The MSC Malaysia Status granted to DKE shall not be transferable or assignable in any way whatsoever without the prior written consent of MDeC. The pioneer status is subject to DKE’s compliance with the conditions imposed by MDeC vide its letter dated 1 April 2010 in respect of DKE’s MSC Malaysia Status, details of which have been set out above in this Section 7.16.2.  Status of compliance Complied Complied Noted  (The rest of this page has been intentionally left blank)
81 7. BUSINESS OVERVIEW (cont’d) 7.16.3 Other operational licences I approvals Company  Approving authority 1 Issuer  Description of licence 1approval 1permit  Licencel Reference no.  Date of issuance 1 Validity  Major conditions imposed  Status of compliance  Bison Stores  WU Malaysia  Certificate of appointment as money services business agent to conduct remittance business in accordance with section 43(1) of the Money Services Business Act 2011 at the following premises: (i) Lot G98B & G98C, Ground Floor, The Curve, Mutiara Damansara, Jalan PJU 7/3, Mutiara Damansara, 47800 Petaling Jaya, Selangor; (ii) Lot G30, Ground Floor, Centrepoint, No. 3, Lebuh Bandar Utama, Bandar Utama, 47800 Petaling Jaya, Selangor; and (iii) No. 40, Jalan SS21/58, Damansara Utama, 47400, Petaling Jaya, Selangor.  00032-002  Validity: 20 September 2015 to 19 September 2018  (i) Ensure that Bison Stores complies with the requirements of the Money Services Business Act 2011 and other terms set by BNM; (ii) Bison Stores is fully responsible towards all money services business transactions and activities carried out on behalf of WU Malaysia; (iii) Ensure Bison Stores displays the certificate of appointment in a conspicuous position at the premises for customer verification that Bison Stores is an agent to WU Malaysia;and (iv) Ensure that Bison Stores properly display on all its signage the information indicating that the company is the agent to WU Malaysia. The signage should include WU Malaysia’s name, address and details on how to contact WU Malaysia.  Complied  Bison Stores  Department of Occupational Safety and Health, Selangor  Certificate of fitness of cargo lift with registration no. SL PMA 1519 in accordance with the Factories and Machinery Act 1967 (“FMA”) and Regulation 10(2) of the Factories and Machinery (Notification, Certificate of Fitness and Inspections) Regulations 1970  PMA-SL 211174  6 August 20151 Until 6 October 2016  This certificate is valid until the date stated in the certificate, unless suspended, revoked or otherwise terminated earlier under the FMA and provided that the provisions of the FMA and the regulations in respect of hoisting machine shall not be violated.  Complied  Location of the machine: Lot 142, Jalan Industri 2/4, Rawang Integrated Industrial Park, 48000 Rawang, Selangor  Bison Stores  Department of Occupational Safety and Health, Selangor  Certificate of fitness of cargo lift with registration no. SL PMA 1520 in accordance with the FMA and Regulation 10(2) of the Factories and Machinery (Notification, Certificate of Fitness and Inspections) Regulations 1970  PMA-SL 211175  6 August 2015 1 Until 6 October 2016  This certificate is valid until the date stated in the certificate, unless suspended, revoked or otherwise terminated earlier under the FMA and provided that the provisions of the FMA and the regulations in respect of hoisting machine shall not be violated.  Complied  Location of the machine: Lot 142, Jalan Industri 2/4, Rawang Integrated Industrial Park, 48000 Rawang, Selangor
82

 

7. BUSINESS OVERVIEW (cont’d) Company Bison Stores Bison Stores DKE Bison Stores Approving authority 1 Issuer Land Public Transport Commission (“SPAD”)
Majlis Perbandaran Selayang
Majlis Bandaraya Petaling Jaya
Majlis Perbandaran Selayang
Description of licence 1approval 1pennit Operator licence including vehicle permit, service level requirements and permit for service over the Peninsular Malaysia in accordance with Land Public Transport Act 2010 Licence for Lot 142 (Pechan Lot 1289), Jalan Industri 2/4, Rawang Integrated Industrial Park, 48000 Rawang, Selangor Alat tulis (membuat 1memproses) <500m2 Memproses buku, alat tulis, makanan ringan Alat tulis (memborong 1menyimpan) <501 m 2 Menyimpan buku, alat tulis, makanan ringan & barangan runcit Pelekat lesen Menggiling & mengisar bhn makanan, herba, rempah ratus, bahan-bahan yang dikisar DSB (membuat 1memproses) < 20 Memproses barang runcit dan makanan Iklan tidak bercahaya tidak melebihi 8m2 Bison DC / Logo Iklan tidak bercahaya tidak melebihi 8m2 Bison DC / Logo Licence for Lot 3.01, Level 3, First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor . Pejabat urusan -Bayaran pelekat premis Licences for Lot 258 -259, Jalan KIP 4, KIP Industrial Park, 52200 Kepong, Kuala Lumpur . Pejabat Urusan -melebihi 120MP Iklan tidak bercahaya tidak melebihi 8m2 MYNEWS.COM Iklan  tidak  bercahaya  tidak  melebihi  8m2  Bison Cafe  Iklan  tidak  bercahaya  tidak  melebihi  8m2  WHSMITH
Licencel Reference no. 306295X (LC) Account No: L­52241 L9500001 73533 Account No: L­55926 Date of issuance 1 Validity 22 May 2013 1 22 May 2013 to 21 May 2018 Valid until 30 June 2016 Valid until 31 December 2016 Valid until 30 June 2016 83 Major conditions imposed (i) The renewal must be made at least 90 days before the expiration;
(ii) Any changes to the permit for service must obtain the prior written consent from SPAD through application for changing the requirements and to be recorded in the special conditions of this vehicle permit; and

(iii) Loss of this special conditions permit for service should be reported immediately to the nearest SPAD offices. Nil Nil Nil Status of compliance Complied Not applicable Not applicable Not applicable
7. BUSINESS OVERVIEW (cont’d) Approving Licence! Date of authority! Reference issuance! Status of Company Issuer Description of licence! approval! permit no. Validity Major conditions imposed compliance • Iklan tidak bercahaya tidak melebihi 8m2 Bison Stores

• Iklan tidak bercahaya tidak melebihi 8m2 MYNEWS.COM

 

Bison Majlis Licence for Lot 260, Jalan KIP 4, KIP Industrial Account Valid until Nil Not Stores Perbandaran Park, 52200 Kepong, Kuala Lumpur No: L-30 June applicable. Selayang • Pejabat Urusan -melebihi 120MP 57998 2016 • Iklan tidak bercahaya tidak melebihi 8m2 Bison Stores

• Iklan tidak bercahaya tidak melebihi 8m2 MYNEWS.COM

 

(The rest of this page has been intentionally left blank) 84 7. BUSINESS OVERVIEW (cont’d) 7.17 Quality control procedures Our quality control approaches and measures are carried out with an overall opjective to monitor and maintain the quality and condition of our SKUs at all stages of our retail operations from warehousing to over-the-counter point of sales, as well as the quality of consumer services we offer to our customers. Amongst others, our Group adopts the following approaches and measures in our operations: (i) central distribution of a large proportion of our SKUs to our network of outlets to effectively control quality and condition as well as for accountability in inventory management;
(ii) inspection of incoming products supplied and tracking of product cycles, in particular, expiry dates of food and beverage items;

(iii) the continuous training of our employees to ensure operational efficiency, productivity throughout all stages of our operations and in particular, level of customer service at our outlets; (iv) standardisation of product display guidelines and prescribed Merchandise Planograms; and
(v) uniform attire and name tags for our personnel to maintain a standard brand image.

In addition to the above measures, we have an internal control team comprising 21 employees as at the LPD, tasked to undertake internal audit and investigative functions. Our internal control team essentially carries out the following functions to ensure that quality standards are maintained: (i) quality checks and quality assurance controls such as internal store audit for expired products, stock availabilities, stocktake, the condition and upkeep of the outlets, compliance with standardised product display guidelines and Merchandise Planograms;
(ii) central monitoring of daily operations from our HQ via real-time CCTV footage and random inspection of real-time corresponding screenshots of the cash register at POS terminals for verification of sale transactions; and

(iii) investigative functions in cases of pilferage, loss or theft. (The rest of this page has been intentionally left blank) 7. BUSINESS OVERVIEW (cant’d) 7.18 Licences, patents, trade marks, brand names, technical assistance agreements, franchises and other intellectual property rights Save as disclosed below, our Group does not have any other licences, patents, trade marks, brand names, technical assistance agreements, franchises and other intellectual property rights: 7.18.1 Trade mark registrations Application or Issuing Name of registration no. No. Trade mark authority applicant / Class 1. IPC Bison Stores 05018333/ Malaysia Class 16
2. IPC Bison Stores 05018329/ Malaysia Class 16
Description Proprietor of the said trade mark for a period of 10 years in respect of the following goods: Advertisement material of paper or cardboard; banners and signboards of paper and cardboard; paper bags; brochures; bags envelopes or pouches of paper or plastic for packaging; booklets; boxes of cardboard or paper; bottle envelopes and wrappers of cardboard or paper; bubble packs of plastic for wrapping or packaging; credit card imprinters, non-electronic; magazines; newsletters; handbooks; packing paper; pamphlets; paper and paper articles; cardboard and cardboard articles; cards; forms; labels; manuals; office requisites except furniture; pamphlets; paperweights; pen and pencils; pen and pencils cases and holders; periodicals; photographs; printed matter and publications; postcards; posters; signs; stationery; stickers; wrapping materials; writing materials; writing paper; writing pads; all included in Class 16. Proprietor of the said trade mark for a period of 10 years in respect of the following goods: Advertisement material of paper or cardboard; banners and signboards of paper and cardboard; paper bags; brochures; bags envelopes or pouches of paper or plastic for packaging; booklets; boxes of cardboard or paper; bottle envelopes and wrappers of cardboard or paper; bubble packs of plastic for wrapping or packaging; credit card imprinters, non-electronic; magazines; newsletters; handbooks; packing paper; pamphlets; paper and paper articles; cardboard and cardboard articles; cards; forms; labels; manuals; office requisites except furniture; pamphlets; paperweights; pen and pencils; pen and pencils cases and holders; periodicals; photographs; printed matter and publications; postcards; posters; signs; stationery; stickers; wrapping materials; writing materials; writing paper; writing pads; all included in Class 16. 86 Status / Registration validity Registered / 27 October 2015 to 27 October 2025 Certificate issuance date: 15 October 2015 Registered / 27 October 2015 to 27 October 2025 Certificate issuance date: 15 October 2015
7. BUSINESS OVERVIEW (cont’d) Issuing No. Trade mark authority 3. IPC Malaysia
4. IPC Malaysia
5. IPC Malaysia
Name of applicant Bison Stores Bison Stores Bison Stores Application or registration no. I Class 05018330 I Class 35 01016209 I Class 35 05018331 I Class 16 Description Proprietor of the said trade mark for a period of 10 years in respect of the following services: Retail services and retail store services relating to I in the field of I dealing with newsstand selling newspapers, books, magazines, stationeries, cigarettes, smoker’s articles and anything related to the aforesaid goods; stationeries, phone cards and anything related to the aforesaid goods; magazine reservation services, photo developing and anything related to the aforesaid photo developing; bill payments service, pharmaceutical products and anything related to the aforesaid goods; all included in Class 35. Proprietor of the said trade mark for a period of 10 years in respect of the following services with conditions: Retail newsagent services featuring books, magazines, newspapers, food and beverages, tobacco, cigarettes, cigars, smoker’s articles, matches, films, batteries, pharmaceuticals, stationeries, phone cards, magazine reservation service, courier service, photo developing, laundry and bill payments service; all included in Class 35. Registration of this trade mark shall give no right to the exclusive use of the word’.com’. Proprietor of the said trade mark for a period of 10 years in respect of the following goods with condition: Advertisement material of paper or cardboard; banners and signboards of paper and cardboard; paper bags; brochures; bags envelopes or pouches of paper or plastic for packaging; booklets; boxes of cardboard or paper; bottle envelopes and wrappers of cardboard or paper; bubble packs of plastic for wrapping or packaging; credit card imprinters, non-electronic; magazines; newsletters; handbooks; packing paper; pamphlets; paper and paper articles; cardboard and cardboard articles; cards; forms; labels; manuals; office requisites (except furniture); pamphlets; paperweights; pen and pencils; pen and pencils cases and holders; periodicals; photographs; printed matter and publications; postcards; posters; signs; stationery; stickers; wrapping materials; writing materials; writing paper; writing pads; all included in Class 16. Status I Registration validity Registered I 27 October 2015 to 27 October 2025 Certificate issuance date: 15 October 2015 Registered I 20 December 2011 to 20 December 2021 Certificate issuance date: 13 July 2012 Registered I 27 October 2015 to 27 October 2025 Certificate issuance date: 15 October 2015 87
7. BUSINESS OVERVIEW (cant’d) Application or Issuing Name of registration no. No. Trade mark authority applicant f Class IPC Bison Stores 050183321 Malaysia Class 35 6.
7. IPC Bison Stores 20140011681 Malaysia Class 16
8. IPC Malaysia Bison Stores 20140011691 Class 43

 

Description Proprietor of the said trade mark for a period of 10 years in respect of the following services: Retail services and retail store services relating to or in the field of or dealing with newsstand selling newspapers, books, magazines, stationeries, cigarettes, smoker’s articles and anything related to the aforesaid goods; stationeries, phone cards and anything related to the aforesaid goods; magazine reservation services, bill payments service, pharmaceutical products and anything related to the aforesaid goods; all included in Class 35. Proprietor of the said trade mark for a period of 10 years in respect of the following goods: Advertisement material of paper or cardboard; banners and signboards of paper and cardboard; paper bags; brochures; bags envelopes or pouches of paper or plastic for packaging; booklets; boxes of cardboard or paper; bottle envelopes and wrappers of cardboard or paper; bubble packs of plastic for wrapping or packaging; credit card imprinters, non-electronic; magazines; newsletters; handbooks; packing paper; pamphlets; paper and paper articles; cardboard and cardboard articles; cards; forms; labels; manuals; office requisites except furniture; pamphlets; paperweights; pen and pencils; pen and pencils cases and holders; periodicals; photographs; printed matter and pUblications; postcards; posters; signs; stationery; stickers; wrapping materials; writing materials; writing paper; writing pads; all included in Class 16. Proprietor of the said trade mark for a period of 10 years in respect of the following services: Cafes in bookstores, cafeterias in bookstores, snack bars in bookstores, self service cafes, cafeterias and snack bars, food and drink kiosks or bars selling cigarettes and anything related to products, sweets and candles and anything related to the aforesaid goods; all included in Class 43. Status f Registration validity Registered 1 27 October 2015 to 27 October 2025 Certificate issuance date: 15 October 2015 Registered 1 27 January 2014 to 27 January 2024 Certificate issuance date: 25 August 2015 Registered 1 27 January 2014 to 27 January 2024 Certificate issuance date: 17 August 2015 88 7. BUSINESS OVERVIEW (cant’d) 7.18.2  Trade mark applications  No.  Trade mark  Issuing Authority  Name of applicant  Application no.! Class / Application date  Description  Status / Registration validity
1. Intellectual Property Office of Singapore
2. Directorate General of Intellectual Property Rights, Indonesia
3. Directorate General of Intellectual Property Rights, Indonesia

Bison Stores  T1411181E/  Classes 16 and 35  /  16 July 2014  Bison Stores  000.2014.033963  / Class 16 / 18  July 2014  Bison Stores  JOO.2014.033965/  Class 35/  18 July 2014
Class 16 Advertisement material of paper or cardboard; banners and signboards of paper and cardboard; paper bags; brochures; bags envelopes or pouches of paper or plastic for packaging; booklets; boxes of cardboard or paper; bottle envelopes and wrappers of cardboard or paper; bubble packs of plastic for wrapping or packaging; credit card imprinters, non-electronic; magazines; newsletters; handbooks; packing paper; pamphlets; paper and paper articles; cardboard and cardboard articles; cards; forms; labels; manuals; office requisites except furniture; pamphlets; paperweights; pen and pencils; pen and pencils cases and holders; periodicals; photographs; printed matter and publications; postcards; posters; signs; stationery; stickers; wrapping materials; writing materials; writing paper; writing pads; all included in Class 16. Class 35 Retail services and retail store services relating to/in the field of/dealing with newsstand selling newspapers, books, magazines, stationeries, cigarettes, smoker’s articles and anything related to the aforesaid goods; stationeries, phone cards and anything related to the aforesaid goods; magazine reservation services, photo developing and anything related to the aforesaid photo developing; bill payments service, pharmaceutical products and anything related to the aforesaid goods; all included in Class 35. Paper, cardboard and articles made from such materials; printed matter; paper and plastic materials for packaging; magazines; newsletters; stationery; wrapping materials. Retail services and retail store services; newsstand and bookstore services, stationery store services; convenience store services. 89 Application for registration of the trade mark has been filed on 16 July 2014. Pending registration. Application for registration of the trade mark has been filed on 18 July 2014. Pending registration. Application for registration of the trade mark has been filed on 18 July 2014. Pending registration.
7. BUSINESS OVERVIEW (cont’d) No. Trade mark Issuing Authority
Name of applicant Application no.l Class I Application date Description Status I Registration validity
IPC Bison Stores 2015065442 I Malaysia Class 16 4.
5. IPC Bison Stores 2015065443 I Malaysia Class 43

List of goods or services: Book marks; book ends; paper, cardboard and goods made from these materials, not included in other classes; printed matter; bookbinding material; photographs; stationery; adhesives for stationery or household purposes; instructional and teaching material (except apparatus); plastic materials for packaging (not included in other classes); calendars; greeting cards; cards; advertising material expressed in card form; cards (stationery); business cards; gift cards; invitation cards; menu cards; printed matter in the form of cards; writing cards; name cards; magazines (periodicals); manuals (handbooks); cookbooks; newsletters; newspapers; pamphlets; periodicals; postcards; posters; printed publications; tickets; seal (stamps); address stamps; rubber stamps; self-inking stamps, for office use; catalogues; paper coasters; place mats of paper; paper placemats; drawing or writing pads; envelopes; notebooks; pen or pencil holders or cases; photograph stands; placards; prints; rulers; erasers; scrap books; stamp pads; stickers; wrapping paper; all included in Class 16. List of goods or services: Services for providing food and drink; restaurant services, cafe and cafeteria services, canteen services; catering services, bistro, snack bar and bar services; coffee shop services; bakery services; services rendered or associated with operating restaurants and other establishment or facilities engaged in providing food and drink prepared for consumption; preparation services of food and drink for sale; preparation services of carry-out foods and drinks; kitchen services for preparation offood and beverage; kitchen services, services rendered or associated with operating kitchen for preparation of food and beverage; establishment and facility services engaged in providing kitchen services for preparation of food and beverage; preparation services of food and beverage for sale; preparation services of carry-out foods and beverage; provision of food and beverage services through an on-line computer network, provision of food and beverage services through telephone call-in or hotline, related services thereof; all included in Class 43. Application for registration of the trade mark has been filed on 17 September 2015. Pending registration. Application for registration of the trade mark has been filed on 17 September 2015. Pending registration. 90 7. BUSINESS OVERVIEW (cont’d) 7.18.3 Licence of intellectual property rights granted to WH Smith Malaysia Pursuant to our equal joint venture with WH Smith Travel, WH Smith Retail Holdings Limited had via a Licence of Intellectual Property Rights dated 12 May 2015 (“WHS IPR Licence”) granted our associate, WH Smith Malaysia, a non-exclusive, non­transferable, revocable, royalty-free licence to use several registered trade marks associated with the “WHSmith” brand (which may be varied by WH Smith Retail Holdings Limited from time to time) to operate “WHSmith” outlets in Malaysia. The WHS IPR Licence is effective from 23 May 2012 and shall terminate upon termination of our equal joint venture with WH Smith Travel. The WHS IPR Licence is governed by the laws of England and Wales; and WH Smith Malaysia shall only use such intellectual property rights in accordance with the manner as set out in the WHS IPR Licence. 7.19 Research and development Product research and development is not a requirement for our Group as our Group is primarily engaged in press and convenience retailing. As such, our Group does not carry out any specific research and development activities and therefore has not formed any research and development policy. As a result of this, our Group did not incur any expenditure or capitalise any development cost that was specific to research and development activities during the 3 FYEs 31 October 2013, 31 October 2014 and 31 October 2015. 7.20 Interruptions to the business for the past 12 months We have not experienced any interruptions to our business having a significant effect on our Group’s operation for the past 12 months prior to the LPD. 7.21 Employees 7.21.1 Number of employees As at the LPD, our Group has a total workforce of 991 employees of whom 527 are permanent employees and 464 are contractual foreign workers. We pay social insurance for our employees, including, medical, personal accident and work injury insurance in compliance with applicable local laws and regulations concerning social insurance. None of our employees belong to any trade unions and there has been no industrial dispute since we commenced operations. A summary of our Group’s total workforce by job functions for the past 3 FYEs up to 31 October 2015 as well as at the LPD are set out below: Number of employees FYE 31 October As at the Categories Management Administration(1) Operations(2) -HQ / Bison DC -Outlets(3) Total workforce 2013 33 62 57 590 647
742
2014 45 76 92 691 783 904 2015 45 83 111 749 860
988 LPD
45 82 104 760 7. BUSINESS OVERVIEW (cont’d) Notes: (1) Includes personnel from the finance department, merchandising, marketing, human resources, purchasing and internal control.
(2) Includes operational support personnel and operational internal control team based in HQ, as well as personnel based in Bison DC.
(3) Includes area managers and retail personnel based at our outlets, WH Smith Malaysia personnel and Bison Cafe staff.

The increase in the total workforce over the past 3 FYEs up to 31 October 2015 is due to our expanding retail chain and growing business operations since each additional outlet would require additional outlet supervisors, area managers and retail personnel to operate such outlets. Our retail staff increased by 17.1% in 31 October 2014 and 8.4% in 31 October 2015. As at the LPD, it grew a further 1.5% from 31 October 2015. Our foreign workers are sourced from the following countries and their job functions as at the LPD are as follows: Number of foreign workers as at the LPD Operations Location Management Administration HQ/Bison Total DC Outlets Nepal 15 36 321 372 Philippines 5 83 88 Bangladesh 22 Indonesia 2 Total 20 39 405 464 All the foreign workers employed by us have valid working permits and are not in breach of any immigration laws. 7.21.2 Training and development Our Company believes that the ability to retain quality employees is instrumental to our success. Hence, we emphasise the importance of training and development programmes as a continuing process for our employees at all levels from our outlet staff to our management personnel. These programmes relate to in-house workshops and external training programmes to update our employees on the latest developments within our Group and the industry that we are involved in and to enhance productivity. We have in place a training centre at Bandar Utama, Selangor to provide basic operation training, customer satisfaction training and store management skill courses to our existing and new employees. Practical training is also conducted at our outlets. All new employees are required to undergo induction training programmes to familiarise themselves with their job scope and responsibilities, our working environment, products and services, operations, safety and emergency policies and procedures. These training programmes also provide us with an avenue to identify high performing employees to fill in roles of our outlet managers. A discussion on the human resource challenges that we face is set out in Section 5.1.10 of this Prospectus.
7. BUSINESS OVERVIEW (cant’d) 7.21.3 Management succession plan Our business is organised along functional lines where heads of departments are responsible for the execution of their duties. This allows our Managing Director and Chief Operating Officer to focus on strategic matters and on further developing the business for growth and success. In order to ensure business continuity, we strive to execute good succession planning through the following measures which includes amongst others: (i) identifying key competencies and requirements for managers and higher positions. Job and candidate profiles are developed for management position in line with the business goals, strategies and culture of our Group;
(ii) taking a positive approach towards addressing talent management to ensure the organisation has talent readily available from a capability perspective to undertake leadership positions throughout the organisation; and

(iii) having in place employee retention measures and human resources development such as competitive remuneration packages, benefits, incentives and training and development programmes. In addition, our flat organisation structure is conducive for knowledge transfer through on-the-job training and provides us with a platform to identify high performing employees for management succession planning. Our middle management are constantly exposed to various aspects of our business activities in order to ensure that they have a full understanding of the responsibilities and the decision-making process and are equipped with the knowledge necessary for them to succeed to senior management positions. Furthermore, we also have in place our Nominating Committee whose responsibilities include, amongst others, reviewing the Board’s succession planning, recommending candidates for appointment to our Board and board committees. Please refer to Section 9.1.9 of this Prospectus for further details of our Nominating Committee and their scope of responsibilities. 7.22 Dependency on contracts, agreements, documents or other arrangements As at the LPD, our Group is not highly dependent on any material contracts or agreements including patents or licences, industrial, commercial or financial contracts which are material to our Group’s business or profitability. (The rest of this page has been intentionally left blank) 7. BUSINESS OVERVIEW (cont’d) 7.23  Material properties, plant, machinery and equipment  7.23.1  Material properties owned by our Group  The material properties owned by our Group are as follows:  No.  Location 1Postal address  Registered 1 Beneficial owner  Description 1Existing use  Express conditions of land use 1Category of land use  Encumbrances  Land 1Built-up area (sq. ft.)  Tenure 1 Date of expiry of lease  Date of issuance of CF/CCC  NBVas at 31 October 2015 (RM)  1. Geran 212277, Lot 21191, Mukim Rawang, Daerah Gombak, Negeri Selangor bearing postal address of Lot 142, Jalan Industri 2/4, Rawang Integrated Industrial Park, 48000 Rawang, Selangor  Bison Stores  A double-storey detached warehouse with two units of guard houses 1Warehouse  Industrial 1 Industrial  United Overseas Bank (Malaysia) Berhad  Land area: 108,715 (equivalent to 10,100 sq. m.) Built-up area: 125,270 (equivalent to 11,638 sq. m.)  Freehold Perpetuity  1  14 January 2004  18,059,000  2.  Geran 213977, Lot 2801, Bandar Kepong, Daerah Gombak, Negeri Selangor bearing postal address of 258, Jalan KIP 4, Taman Perindustrian KIP, 52200 Kuala Lumpur  Bison Stores  A 1 ‘h storey factory lot 1 premises  terrace Office  Industrial 1 Industrial  United Overseas Bank (Malaysia) Berhad  Land area: 2,002 (equivalent to 186 sq. m.) Built-up area: 2,750 (equivalent to 255.47 sq. m.)  Freehold Perpetuity  1  24 April 1999  1,606,458  3.  Geran 213978, Lot 2802, Bandar Kepong, Daerah Gombak, Negeri Selangor bearing postal address of 259, Jalan KIP 4, Taman Perindustrian KIP, 52200 Kuala Lumpur  Bison Stores  A 1 ‘h storey factory lot 1 premises  terrace Office  Industrial 1 Industrial  United Overseas Bank (Malaysia) Berhad  Land area: 2,002 (equivalent to 186 sq. m.) Built-up area: 2,750 (equivalent to 255.47 sq. m.)  Freehold Perpetuity  1  24 April 1999  1,606,458  94
7. BUSINESS OVERVIEW (cont’d) 7. BUSINESS OVERVIEW (cont’d) Express  conditions  Tenure /  Registered /  of land use  Date of  Date of  NBV as at  Beneficial  Description / Existing  / Category  Land / Built-up  expiry of  issuance of  31 October 2015  No.  Location / Postal address  owner  use  of land use  Encumbrances  area (sq. ft.)  lease  CF/CCC  (RM)  4.  HS(D) 158129, PT 41071,  Mukim  Bison Stores  5  storey  terraced  shop  Commercial  CIMB  Bank  Land area:  99  years,  25 June  3,745,831  Sungai  Buloh,  Daerah  Petaling,  office / Vacant  Building /  Berhad  2,433  expired  on  2014  Negeri  Selangor  bearing  postal  Building  (equivalent to  22  May  address of No. 48, Jalan Nova K  226 sq. m.)  2095  U5/K,  Seksyen  U5, 40150  Shah  Built-up area:  Alam, Selangor  12,163  (equivalent to  1,129.97 sq. m.)  5.  HS(D)  296565,  PT  36936  Bandar  Setia  1 unit of Parcel  No.  B- Commercial  Public  Bank  Built-up area:  Freehold  /  11 August  280,304  (previously  held  under  HS(D)  Alam Sdn Bhd  30-15  in  1  multi-storey  Building  /  Berhad  486  Perpetuity  2015  264383),  PT 26534,  Mukim  Bukit  (as developer)  building comprising of 3  Building  (equivalent to  Raja, District of Petaling, State of  / Bison Stores  office towers (Tower B – 45.15 sq. m.)  Selangor  identified  as  Parcel  No.  (as purchaser)  36 storeys) / Vacant  B-30-15, Storey No. 30, Type A1­ Trefoil,  Block  No.  Tower  B,  Accessory  Parcel  No.  L4-305,  Project  Trefoil  located  at  Shah  Alam,  Selangor  bearing  postal  address of  B-30-15, Trefoil @ Setia City, No.  2, Jalan Setia Dagang AH U13/AH,  Setia Alam, Seksyen U13,  40170  Shah Alam, Selangor  6.  HS(D)  296565,  PT  36936  Bandar  Setia  1 unit of Parcel  No.  B- Commercial  Public  Bank  Built-up area:  Freehold  /  11 August  280,304  (previously  held  under  HS(D)  Alam Sdn Bhd  30-16  in  1  multi-storey  Building  /  Berhad  486  Perpetuity  2015  264383,  PT 26534),  Mukim  Bukit  (as developer)  building comprising of 3  Building  (equivalent to  Raja, District of Petaling, State of  / Bison Stores  office towers (Tower B – 45.15 sq. m.)  Selangor  identified  as  Parcel  No.  (as purchaser)  36 storeys) / Vacant  B-30-16, Storey No. 30, Type A1­ Trefoil,  Block  No.  Tower  B,  Accessory  Parcel  No.  L4-304,  Project  Trefoil  located  at  Shah  Alam,  Selangor  bearing  postal  address  of  B-30-16,  Trefoil  @  Setia  City,  No.  2,  Jalan  Setia  Dagang  AH  U13/AH, Setia Alam,  Seksyen U13,  40170  Shah Alam,  Selangor­ 95

 

7.23.2 Material properties rented by our Group The material properties rented by our Group are as follows: (i) Our retail outlets We do not own the properties on which our outlets and cafe operate from. All of our outlets are rented from third parties. Most of our tenancies are for terms not exceeding 3 years. The total tenanted area for our outlets is approximately 176,000 sq. ft, ranging from approximately 60 sq. ft. to 2,300 sq. ft. for each outlet as at the LPD. The distribution of our outlets by each state of Malaysia as at the LPD is set out in Section 7.4 of this Prospectus. The total rental paid by our Group for the FYEs 31 October 2013, 31 October 2014 and 31 October 2015 for our rented outlets is approximately R1\II12.40 million, RM15.29 million and RM18.87 million respectively. In Peninsular Malaysia, any occupation or granting of permission to occupy any building or part thereof without a CF/CCC will render the registered proprietor or occupier liable to a fine and/or imprisonment of persons such as directors, company secretary or similar officers within our Group. The Street, Drainage and Building Act 1974 provides that any person who occupies or permits to be occupied any building or any part thereof without a CCC, shall be liable on conviction to a fine not exceeding RM250,000 or to imprisonment for a term not exceeding 10 years or to both. In addition, any usage of land that our Group occupies that is inconsistent with the category of land use and/or express condition as set out in the title or any use of a building or part thereof for a purpose other than that for which it was originally constructed, could subject the affected land to forfeiture by the Land Administrator, pursuant to the National Land Code 1965 and expose our Group to fines and/or imprisonment of persons such as directors, company secretary or similar officers within our Group. In East Malaysia, where matters in relation to administration of land in Sabah and Sarawak are governed by the Sabah Land Ordinance 1930 and the Sarawak Land Code 1958 respectively; any usage of land that is inconsistent with the condition set out in the title or occupation of any building or any part thereof without a valid occupation certificate will render the registered proprietor or occupier liable to a fine and/or imprisonment, which varies depending on the district and location in the 2 states. As at the LPD, all of our tenanted properties have their respective CF/CCC save for 13 tenanted properties for which the status of their CF/CCC is uncertain or that no CF/CCC has been issued (“Outstanding CF/CCC”). These 13 tenanted properties which comprise our outlets only represent 5.1 % of our total 255 outlets as at the LPD. Our Group will continue to work with the property owners to obtain the CF/CCC in respect of those CF/CCC which have not been provided to us, and to assist the property owners, to the extent possible, to apply and obtain the CF/CCC, failing which our Board will take such action as it considers necessary, including to reassess and to reconsider the operations of the affected outlet such as either temporarily ceasing operations pending resolution of the CF/CCC or permanently ceasing operations in the event the CF/CCC is not forthcoming. Our Board anticipates a timeframe of 12 months from the date of the SC’s approval for our IPO to rectify the above non-compliance. 7. BUSINESS OVERVIEW (cont’d) (ii) Our office premises LandI Date of Company Description I Tenure of tenancyl Built-up area issuance of Rental a year (Tenant) Landlord Postal address Existing use Expiry date of tenancy (sq. ft.) CF/CCC (RM) Bison Ling Chao 260, Jalan KIP 4, A 1 Y2 storey 2 years Land area: 3,154 24 April 1999 72,000 Stores and Wonq KIP Industrial terrace 1 November 2015 to 30 (equivalent to Siew Na(f) Park, 52200 Kuala factory lot I October 2017 293 sq. m.) Lumpur Office premises DKE Bandar Lot 3.01 Level 3 Office unit I 3 years Built-up area: 28 April 2010 86,160 Utama City First Avenue, Management 1 September 2013 to 31 1,436 Sdn Bhd Bandar Utama office for DKE August 2016 47800 Petaling Jaya Selangor
Note: (1) This tenancy is a related party transaction between Bison Stores, Ling Chao (spouse of DTL) and Wong Siew Na (spouse of DTH), who are persons connected to our Executive Directors and Substantial Shareholders. Please refer to Section 11.1.2 of this Prospectus for further details of this related party transaction. Save as set out in Section 7.23.2(i) of this Prospectus in respect for our tenanted properties, the properties stated in Sections 7.23.1 and 7.23.2 above have not breached any of the land use conditions I permissible land use; and where buildings are involved, we are in compliance with applicable laws, rules and building regulations. 7.23.3 Material plant, machinery and equipment As at the LPD, our Group does not own any material plant, machinery and equipment. 97 7. BUSINESS OVERVIEW (cont’d) 7.24 Governing laws and regulations including environmental concerns 7.24.1 Government laws and regulations Our Group’s retail operations are subject to the following governing laws and regulations: (i) the Goods and Services Tax Act 2014 which governs the imposition and collection of goods and services tax and for matters connected therewith;
(ii) the Local Government Act 1976, Local Authorities Ordinance 1996 of Sarawak, Trades Licensing Ordinance 1949 of Sabah and the by-laws of the respective local councils and authorities setting out the requirements to obtain business and signage licences;

(iii) the Sale of Goods Act 1957 governing the sales of goods; (iv) the Price Control and Anti-Profiteering Act 2011 which serves to control prices of goods and charges for services and to prohibit profiteering;
(v) the Money Services Business Act 2011 which governs the licensing, regulation and supervision of money services business and to provide for related matters;
(vi) the National Land Code 1965, Sabah Land Ordinance 1930 and Sarawak Land Code 1958 governing the administration of land matters in Peninsular Malaysia, Sabah and Sarawak respectively;

(vii) the Street, Drainage and Building Act 1974, Sabah Building Ordinance 1994, Sarawak Local Government Ordinance 1961 and the relevant by-laws issued pursuant thereto regulating, amongst others, the occupation of buildings; and (viii) the Food Act 1983 and the Control of Tobacco Product Regulations 2004 regulating, amongst others, control of sale of tobacco products and tobacco product advertisement. As at the LPD, save as those set out in Sections 7.16.1 and 7.23.2(i) of this Prospectus, we are not in breach of laws and regulations governing our business that may have a material adverse impact on our retail operations. 7.24.2 Environmental regulations During the normal course of our business operations, our Group does not generate any waste that is classified as a Scheduled Waste under the Environmental Quality (Scheduled Waste) Regulations 2005 and as such our Group is not subject to any environmental regulations. (The rest of this page has been intentionally left blank)

 

 

 

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