Risk Factors

NOTWITHSTANDING THE PROSPECTS OF OUR GROUP AS OUTLINED IN ‘rHIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS (WHICH MAY NOT BE EXHAUSTIVE) THAT MAY HAVE A SIGNIFICANT IMPACT ON OUR FUTURE PERFORMANCE, IN ADDITION TO ALL OTHER RELEVANT INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS, BEFORE MAKING AN APPLICATION FOR OUR IPO SHARES. 4.1 RISKS RELATING TO THE INDUSTRY IN WHICH OUR GROUP OPERATES 4.1.1 Global economic slowdown Any widespread and/or prolonged economic slowdown would affect consumer and business confidence, and subsequently their propensity to spend. The uncertainty over the global economies, particularly resulting from the euro zone debt problem, may also impact the local economy. This slowdown would ultimately affect the demand for oil and gas supporting services. However, various initiatives introduced by the Government such as the Economic Transformation Plan (ETP), particularly the implementation of various Entry Point Projects (EPP) under the oil, gas and energy banner will continue to proVide opportunities for the oil and gas supporting services industry. These initiatives are expected to generate domestic business activities and domestic consumption, which will in turn help counter the slowdown in the local economy. (Source:IndependentAssessment ofthe Oiland GasSupportingServicesIndustryin Malaysiaprepared by Vital Factor Consulting Sdn Bhd)
4.1.2 Sustained fall in the market price of hydrocarbons Hydrocarbons, including crude petroleum and natural gas, are internationally traded commodities that are subject to price fluctuations. Geopolitical factors, economic conditions and unforeseen supply disruptions may also influence the market price of hydrocarbons. Activities in the oil and gas industry are, to some degree, affected by fluctuations in the market price of hydrocarbons, for instance activities tend to increase during periods of sustained high hydrocarbon prices. This is due to elevated production activity, as well as increased actiVity in exploration and development. Conversely, activities tend to decline during periods of sustained low hydrocarbon prices. This is due to lower production actiVity, as well as temporarily reducing or shutting down production from reserves that are no longer commercially viable. Exploration activity, however, will still continue. There is a risk that sustained low price of hydrocarbons will negatively affect activities in the oil and gas industry, leading to lower demand for oil and gas supporting services. The Organization of the Petroleum Exporting Countries (OPEC), a grouping that includes many of the world’s largest oil producing nations, has some influence on the price of oil through their control of a sizeable proportion of the world’s production capacity and reserves. Although the influence of OPEC over the market price of oil is not absolute, the grouping has a vested interest in ensuring that oil prices do not collapse, and as such are likely to actively attempt to sustain oil prices at an “acceptable” level. (Source:IndependentAssessment ofthe Oiland GasSupportingServicesIndustryin Malaysiaprepared by Vital Factor Consulting Sdn Bhd) 4. RISK FACTORS (Cont’d)
4.1.3 Depletion of hydrocarbon resources All hydrocarbon deposits are non-renewable where it is not possible to regenerate hydrocarbons within a reasonable timeframe once they have been extracted. As such, hydrocarbon resources in all hydrocarbon-producing regions, including Malaysia, will eventually be depleted. It is likely that demand for oil and gas supporting services in Malaysia will be affected should there be a decline in upstream activities brought about by the depletion of hydrocarbon resources. The National Depletion Policy in Malaysia, which was introduced in 1980 to conserve oil and gas resources by imposing production Iir:nits, will ensure that extraction is carefully managed and sustainable over the long term. The relatively long period of time before current reserves of hydrocarbons in Malaysia are expected to be completely depleted enables operators in the oil and gas industry, including oil and gas supporting services proViders, to continue to provide their services locally and pursue new areas of growth including other industries and overseas markets. In addition, current reserve estimates generally tend to be conservative and may underestimate the actual amount of hydrocarbons that are ultimately extracted, as they do not take into account the follOWing: The existence of currently undiscovered hydrocarbon reserves; Technological advances that increases the amount of hydrocarbons that may be commercially extracted from existing reserves; and Technological advances that enable production from preViously inaccessible regions. As such, activities in the overall oil and gas industry may very well continue. beyond the current estimated date of complete hydrocarbon reserve depletion. (Source: Independent Assessment ofthe Oil and Gas Supporting Services Industry in Malaysia prepared by Vital Factor Consulting Sdn Bhd)
4.1.4 Changes in PETRONAS’ Policy A fundamental change in· PETRONAS’ policy with regards to regUlating the oil and gas industry in Malaysia may come about through the Iiberalisation of the oil and gas industry. PETRONAS may Iiberalise the oil and gas industry in Malaysia by: Removing licencing reqUirements for the provision of supporting products and services; Loosening licencing reqUirements such that it becomes easier to obtain a licence; and Allowing foreign suppliers to operate in Malaysia Without the need to operate with a local partner and other restrictions. Liberalising the oil and gas industry in this manner will negatively impact incumbent service providers by increasing competition in the industry. 4. RISK FACTORS (Cont’d} Currently, operators that meet the licencing and registration requirements compete with other operators based on commercial, technological and other factors. In the event of any Iiberalisation, existing service providers would not be significantly worse off as they are already operating in a competitive environment. (Source: Independent Assessment ofthe Oil and Gas Supporting Services Industry in Malaysia prepared by Vital Factor Consulting Sdn Bhd)
4.2 RISKS RELATING TO OUR GROUP 4.2.1 Dependency on major customers We are dependent on our major customers, Petronas Carigali, Petrofac, ExxonMobii and Newfield: Petronas Carigali accounted for 16.84%, 69.41%, 66.37% and 59.72% of our total Group revenue for FYE 2011, FYE 2012, FYE 2013 and FYE 2014 respectively; Petrofac accounted for 1.63%, 11.35% and 12.38% of our total Group revenue for FYE 2011, FYE 2013 and FYE 2014 respectively; ExxonMobii accounted for 22.65%, 12.84% and 7.47% of our total Group revenue for FYE 2011, FYE 2012 and FYE 2013 respectively; and Newfield accounted for 4.08%, 0.33%, 0.36% and 10.55% of our total Group revenue for FYE 2011, FYE 2012, FYE 2013 and,FYE 2014 respectively. There is a risk that losing these major customers may adversely affect our financial performance. Sections 6.3.2 and 6.13 of this Prospectus detail our existing contracts with our major customers which will ensure our continued relationship with them for the near future. Nonetheless, there is no assurance that our dependency on these customers will not impact our future business performance.
4.2.2 Dependency on the Peninsular Malaysia HUC Contract With an estimated work value of RM899 million (as set out in Section 6.3.2 of this Prospectus), our Group is dependent on the Peninsular Malaysia HUC Contract to provide offshore hook up and commissioning and topside major maintenance for production platforms located offshore peninsular Malaysia which was secured by us on 13 November 2013 and will expire in May 2018. Our management foresees that the bulk of our future revenue up to 2018 shall be derived from this contract thus our dependency on this contract. The salient terms of this contract are set out in Section 6.13 ofthis Prospectus. . We are confident that with our proven track record, experience and our competitive advantages in the required fields of expertise, we are able to deliver or implement our works as set out in the contract without having any material delays in the contract resulting in the risk of termination of the Peninsular Malaysia HUC Contract. Nevertheless, Petronas Carigali may at any time, terminate this contract without cause by giving 30 days prior written notice. The Peninsular Malaysia HUC Contract is non-exclusive and Petronas carigali reserves the right to engage other contractors to perform similar or 4. RISK FACTORS (Cont'(/) identical scope of work and/or supply similar or identical goods at any time· during the duration of the contract.


4.2.3 Dependency on experienced management and key personnel The experiences, abilities and efforts of our existing Directors, key management team and technical personnel contribute to the continued success of our Group’s business. Having a strong key management team is vital to maintain the quality of our Group’s services whilst retaining the business confidence of our customers. The loss of any key personnel from lack of succession planning or replaced timely or an inability to attract and retain personnel can create an unfavourable or material impact on our Group’s operations. Our Group strives to minimise this risk by ensuring that it has the ability to retain the existing Directors, key management as well· as technical personnel. Our Group· recognises the importance of attracting and retaining the key personnel and have a human resource plan that include suitable remuneration packages, career development, training and development for all levels of staff besides plans for incentive schemes that serve to attract, motivate and retain key personnel. Although our Group seek to limit and minimise this risk, though, there can be no assurance that the above measures will always be successful in retaining our Directors and key personnel or in ensuring a smooth transition or management succession plan should such key persons no longer be able to serve our Group.
4.2.4 Competition from existing competitors within the industry Our Group faces competition from existing competitors within the industry we operate in. Some of these existing competitors have fundamentally similar capabilities and compete with each other on key attributes which include resource ability, competency, reliability, range of services provided, experiences as well as a good track record for timely completion of projects. Although competition exists in the oil and gas supporting services industry, it is imperfect due to requirements for licencing and registration that partly inhibits totally free competition. In addition, there are numerous barriers to entry in the industry, including requirements of pre qualifications by customers based on technical compliance, capacity, proven track record, safety record and experiences in the required areas of expertise such as offshore hook up and commissioning. Notwithstanding the competitive environment of the industry, our Group is confident that our competitive advantages, niches and strengths will give our Group the edge needed to maintain or secure more contracts and market share within the scope of offshore hook up and commissioning. [ The rest of this page is intentionally left blank] 4. RISK FACTORS ( Cont’d)
4.3 RISKS RELATING TO THE INVESTMENT IN OUR SHARES 4.3.3 No prior market for our Shares Prior to our Listing, there was no public trading for our Shares. Accordingly, there can be no asSurance that an active market for our Shares will develop upon our Listing or, if developed, that such market will be sustained. Our IPO Price of RM1.10 per Share was determined after taking into consideration a number of factors including but not limited to our historical earnings, prospects and future plans, our financial and operating history and the market value of our assets. There can be no assurance that our IPO Price will correspond to the price at which our Shares will be traded on the Main Market of Bursa Securities upon or subsequent to our Listing or that an active market for our Shares will develop and continue upon or subsequent to our Listing. The price at which our Shares will trade on the Main Market of Bursa Securities after our IPO may be influenced by a number of factors including, amongst others, the depth and liquidity of the market for our Shares, investors’ individual perceptions of our Group, market and economic conditions.
4.3.4 Failure/delay in or abortion of our Listing Our Listing is exposed to the risk that it may be aborted or delayed on the occurrence of any one or more of the following events: (a) The identified investors fail to subscribe for the portion of our IPO Shares;
(b) Our Underwriter~xercising its rights pursuant to the Underwriting Agreement discharging itself from their obligations therein; and
(c) We are unable to meet the public shareholding spread requirement as determined by Bursa Securities, which is at least 25% of our total number of Shares for which listing is sought must be held by a minimum number of 1,000 public shareholders holding not less than 1,000 Shares each upon the completion of our IPO and at the point of our Listing.

In· this respect, we will exercise our best endeavour to comply with the various regulatory requirements, including, inter-alia, the public shareholding spreads requirement in paragraph (c) above· for our successful Listing. However, there can be no assurance that the abovementioned factors/events will not cause a delay in or non-implementation of our Listing. Upon the occurrence of any of these events, investors will not receive any Shares and we will return in full without interest, all monies paid in respect of any application for our Shares within 14 days, failing which the provisions of sub-sections 243(2) and 243(6) of the CI\1SA will apply accordingly and we will be liable to repay the monies with interest at the rate of 10.0% per annum or such other rate as may be prescribed by the SC upon expiration of that period until full refund is made. In the event our Listing is aborted and/or terminated, and our Shares have been allotted to the shareholders, a return of monies to all holders of our Shares could only be achieved by way of cancellation of share capital as provided under the Act and its related rules. Such cancellation requires the sanction of our shareholders by special resolution in a general meeting, consent of our creditors (unless dispensation with such consent has been granted by the High Court of Malaya) .and the confirmation of the High Court of Malaya. There can be no assurance that such monies can be recovered within a short period of time or at all in such circumstances. 4. RISK FACTORS ( Cont’d)

4.3.5 Dividend payment Our Company, an investment holding company, derives its income mainly from dividends received from our subsidiaries. Hence, our ability to pay future dividend and our ability to sustain our dividend policy in the future are largely dependent on the performance of our subsidiary companies. In determining the size of any dividend recommendation, we will also take into consideration a number of factors, including but not limited to our financial performance, cash flow requirements, debt servicing and financing commitments, availability of distributable reserves and tax-exempt profits/tax credits, future expansion plans, loan covenants and compliance with regulatory reqUirements.
4.3.6 Continued control by our Promoters Upon Listing, the Promoters will collectively hold a total of approXimately 71.96% of our enlarged issued and paid-up share capital. Depending on how they choose to vote and because of their shareholdings, these shareholders will generally be expected to have significant influence on the outcome of certain matters requiring the vote of our shareholders unless they are reqUired to (jbstain from voting by law and/or as required by the relevant authorities. Nevertheless, as a step towards good corporate governance, we have appointed 5 Independent Non-Executive Directors and set up an Audit Committee to ensure that, inter­alia, all future transactions involVing related parties are entered into at arm’s length basis, on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment to our minority shareholders.
4.3.7 Trading price and volume of our Shares The trading prices and volume of our Shares could be subject to fluctuations in response to various factors, some of which are not within our control and may be unrelated or disproportionate to our operating results. These factors may include variations in the results of our operations, changes in analysts’ recommendations or projections, changes in general market conditions and broad market fluctuations. In addition, the performance of Bursa Securities is very much dependent on external factors such as the performance of the regional and world bourses and the inflow or outflow of foreign funds. Sentiments are also largely driven by internal factors such as economic and political conditions of the country as well as the growth potential of the various sectors of the economy. These factors invariably contribute to the volatility of trading volumes Witnessed on Bursa Securities, thus adding risks to the market price of our listed shares. Nevertheless, the profitability of our Group is not dependent on the performance of Bursa Securities as the business activities of our Group have no direct correlation with the performance of securities listed on Bursa Securities.
4.3.8 Underwriting risk 14,694,000 IPO Shares are to be underwritten by the Underwriter. The underwriting commission is payable by our Group for our IPO Shares for the unsUbscribed portion of our IPO Shares reserved for Malaysian Public and eligible Directors and employees. However, the agreement of the Underwriter to underwrite up to 14,694,000 IPO Shares should not be taken as an indication of the merits or assurance of the value of our IPO Shares. 4. RISK FACTORS (Cont’d)
4.4 OTHER RISKS 4.4.1 Political and economic risks The performance of our Group is correlated to the overall economic and political conditions both domestically and internationally, as it is largely dependent on the performance of the oil and gas supporting services industry. Like all other business entities, adverse developments in political, economic and regulatory conditions in Malaysia could unfavourably affect our financial position and business prospects. These risks include, among others, risks of war, changes in economic conditions, changes in interest rates and unfavourable changes in government policies such as introduction of new regulations, import duties and tariffs. Our Group has taken efforts to diversify our range of services and markets as well· as pre­empting certain regulations to mitigate any possible adverse impact on our Group from any adverse development in political, economic and regulatory authorities. . Whilst we strive to continue to take effective measures such as prudent financial management ahd efficient operating procedures, there is no assurance that adverSe political, economic and regulatory factors will not materially affect our operations, financial performance and future prospects.
4.4.2 Forward-looking/prospective statements Certain statements in this Prospectus are based on historical data which may not be reflective of future results and others are forward-looking in nature that are based on assumptions and subject to uncertainties and contingencies which mayor may not be achievable. Whether such statements would ultimately prove to be accurate depends upon a variety of factors that may affect our businesses and operations, and such forward-looking statements also involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, plans, performances and achievements, expressed or implied, by such prospective statements. Although we believe that the expectations reflected in such future statements are reasonable at this time, there can be no assurance that such prospective statements or expectations will prove to be correct in the future. Any deviation from the expectations may have a material adverse effect on our business and financial performance. The above is not an exhaustive list of challenges we are currently facing or that may develop in the future. Additional risks whether known or unknown, may in the future have a material adverse effect on us and/or our Shares. [ The rest of this page is intentionally left blank]

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