Risk Factors

5. RISK FACTORS 5. RISK FACTORS An investment in our Shares involves risks. You should carefully consider the risks described below and the other information in this Prospectus before making a decision to invest. If the events underlying these risks occur, the trading price of our Shares could decline, and you could lose all orpart of your investment. Additional risks not currently known to us or that we now believe are immaterial could also harm us or affect your investment. This document also contains forward-looking statements that involve risks and uncertainties. The actual results of our operations could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere in this document. 5.1 Risks relating to the gas industry 5.1.1 Demand for gas is dependent on general economic and political conditions, and deterioration in such conditions would adversely affect the demand for gas and ultimately our business operations, profitability and financial condition Demand for gas is typically dependent on the level of general economic activity and political conditions, both domestically and internationally, because gas is used in a wide range of industries across the economy. Increase in industrialisation will increase the demand of natural gas nationwide. Adverse political conditions could affect the general economic situation which in turn, could cause industries to lower production thus lowering consumption of natural gas which in turn, will affect our Group financially due to lower volume of gas sold. A prolonged economic downturn may affect our Company as many industries will either lower production or shut down their factories causing immediate loss of revenue to us. It is not possible to predict accurately the supply and demand balances, general economic and market conditions and other factors that may affect industry operating rates and margins in the future. The uncertainty as to the growth trend of international trade and the general economic and political climate may continue to have an impact on our business operations, profitability and financial condition. 5.1.2 Volatility of international market prices for crude oil and MFO may adversely affect our buying and average selling prices of natural gas which are currently regulated by the Government We operate in the oil and gas industry, which has historically been volatile in nature in terms of prices. The Government has taken into account the volatility of oil prices when regulating our buying and average selling prices of natural gas. We cannot provide any assurance that the buying and average selling prices of natural gas will be maintained at the current revised prices in the future as we cannot assure that the Government will intervene to revise the buying and average selling prices of natural gas and this may have a material effect on our operating margins and business in the future. 5. RISK FACTORS (Cont’d)

5.1.3 The operational process for our gas is complex and hazardous The operation of our gas facilities involves a variety of safety and other operating risks, including the handling, distribution and transportation of highly flammable gas. Because our business operations involve certain inherently hazardous activities, we are exposed to a number of additional risks, including fires, explosions and other unexpected or hazardous conditions that could cause personal injuries or death, property damage, environmental damage or interruption of our operations. Our employees, customers and residents in the vicinity of our gas pipelines facilities are exposed to these hazards. Additionally, any unexpected hazards or accidents which lead to personal injuries or death or other property damage suffered by our customers or third parties could potentially expose us to claims or actions by such affected parties including legal claims although the final outcome of such claims or actions would ultimately depend on whether there is any liability on our part for any such incidents or accidents. Although we believe that we have taken adequate steps to minimise these risks, and that we have appropriate insurance coverage in place, these types of risks cannot be completely eliminated. We may experience difficulties in achieving targeted sales levels as a result of any of these risks. If we are unable to meet our targeted sales levels for a prolonged period because of technical failure at our sites or for any other reason, our sales would be adversely affected, which could have a material adverse effect on our business operations, profitability and financial condition. As a gas utility company, we place strong emphasis on reliability of supply as well as health, safety, environmental and quality issues. Our Company maintains a 24-hour Operation Control Centre equipped with a Geographical Information System and Supervisory Control and Data Acquisition (SCADA) system at our headquarters to oversee our gas infrastructure throughout Peninsular Malaysia and to ensure the smooth supply of gas to our customers. Moreover, our Company’s 24-hour emergency response teams will be despatched immediately upon notification through our dedicated emergency number. Our Company’s strong health, safety, environmental and quality track record is also evidenced by the maintenance of ISO 9001 : 2008 and ISO 14001 : 2004 certifications awarded by SIRIM QAS International Sdn Bhd. Our Company was also awarded the OHSAS 18001 : 2007 certification on 31 October 2008 for our occupational health and safety management systems.
5.1.4 Competition with other fuel substitutes such as coal, diesel, LPG and MFO There are other fuel substitutes to natural gas such as coal, diesel, LPG and MFO. Notwithstanding that, currently natural gas remains the most economical source of energy in Malaysia as the price of natural gas regulated by the Government is lower compared to its substitutes such as coal, diesel, LPG and MFO. The usage of natural gas is also cleaner and more environmentally-friendly as compared to its substitutes. We cannot provide any assurance that the price of natural gas, which currently is still based on the price as regulated by the Government, will continue to be lower than its substitutes such as coal, diesel, LPG and MFO in the future. In the event that the Government decides to intervene in our buying and average selling prices of natural gas to the extent where the price of natural gas is equivalent to or higher than the price of its substitutes, the demand for natural gas may be affected negatively and this may have a material effect on our operating margins and business in the future. 5. RISK FACTORS (Cont’d)
5.2 Risks relating to our business 5.2.1 Buying and average selling prices of natural gas which are regulated and approved by the Government as at LPD As at LPD, the buying and average selling prices of natural gas are based on the prices as regulated and approved by the Government. In August 2008, the Government regulated our buying price of natural gas at RM17.99 per MMBtu and our selling price at an average of RM22.06 per MMBtu. Following the sharp fall of crude oil prices, in March 2009, the Government reduced our buying price of natural gas by 38.6% to RM11.05 per MIVIBtu and reduced our selling price by 32.0% from an average of RM22.06 per MMBtu to an average of RM15.00 per MMBtu. On 30 May 2011, the Government announced the revision of natural gas prices with respect to electrical and non-electrical sectors commencing from 1 June 2011. As indicated in the announcement, the buying price of natural gas for our Company will be increased by RM3.00 per MMBtu every six (6) months beginning 1 June 2011 to December 2015 and our buying price of natural gas will be at market prices starting from 2016. The first (1 st) revision to the natural gas price, commencing from 1 June 2011, entailed the revision of our buying price of natural gas upwards by 27.1 % from RM11.05 per MMBtu to RM14.05 per MMBtu and the revision of our average selling price of natural gas upwards by 7.1% from an average of RM15.00 per MMBtu to RM16.07 per MMBtu. The first (1 st) revision to the natural gas prices commencing 1 June 2011 was implemented and took effect in accordance with the notification and instruction from the Energy Commission to our Company on 31 May 2011. The table below sets out our buying and average selling prices of natural gas beginning from 1 June 2011 to December 2015 as announced by the Government: Revised price based on a fixed revision of RM3.00 per MMBtu every six (6) months* 2012 2013 20142011 2015Price before
DecDec Jun Jun Dec Jun DecJun Jun Decrevision (RMI Sector MMBtu) lRM/MMBtu) Industrial 23.05 26.05 29.05GMB 11.05 14.05 17.05 20.05 32.05 35.05 38.05 41.05 19.1216.07 22.16 25.21 28.05 31.10 34.15Customers 15.00 37.20 40.25 43.30 ofGMB <2 MMScfd (average)
(Source: Press statement dated 30 May 2011 published on Ministry of Energy, Green Technology and Water’s official website www.ketfha.gov.my) GMB’s 3.95 2.02 2.07 2.11 2.16 2.00 2.05 2.10 2.15 2.20 2.25 average margin
(Source: Press statement dated 30 May 2011 published on Ministry of Energy, Green Technology and . Water’s official website www.ketfha.gov.my) Note: The revised price based on a fixed revision of RM3.00 per MMBtu every six (6) months is in relation to GMB’s buying price for natural gas. 36 5. RISK FACTORS (Cont’d) Nevertheless, as at LPD, the Ener~y Commission has yet to issue an instruction to our Company for the second (2°) revision of natural gas prices, scheduled to commence from 1 December 2011 onwards for the revision of our buying price and average selling price of natural gas to RM17.05 per MMBtu and RM19.12 per MMBtu respectively. Pending the instruction and notification to our Company from the Energy Commission, the buying price and average selling price of natural gas as at LPD remain at RM14.05 per MMBtu and RM16.07 per MMBtu respectively. The gas supply industry, which we operate in, is governed by the GSA. In view that as at LPD, the buying and average selling prices of natural gas are regulated and approved by the Government, we cannot provide any assurance that the buying and average selling prices of natural gas will be maintained at the current revised prices in the future. If the buying price of natural gas is increased and such price increase is not allowed to be reflected in higher selling price charged to our customers or if the selling price of natural gas is reduced, our operating margins will be reduced accordingly and such reduction in operating margins may have a material adverse effect on our business operations, profitability and financial condition. [The rest of this page is intentionally left blank] I Company No. 240409-T I 5. RISK FACTORS (Cont’d) In addition to the above, it should be noted that pursuant to the New Gas Supply Agreement, our buying price from PETRONAS from 1 January 2013 to 31 December 2022 is as follows: Buying price under the New Gas Supply Agreement in accordance with the volume” of gas supplied From 1 January 2013 until  From 1 January 2014 until  From 1 August 2014 until  From 1 January 2015 until  31 December 2013  31 July 2014  31 December 2014 -­ 31 December 2022  Gigajoule  MMScfd  Gigajoule  MMScfd  Gigajoule  MMScfd  Gigajoule  MMScfd  per day  (approximate)  per day  (approximate)  per day  (approximate)  per day  (approximate)  Maximum volume of gas supply contracted  414,721  382  414,721  382  325,697  300  325,697  300  by PETRONAS per day which shall be  subject  to  Government  regulated  price”  (“D01”)  Maximum volume of gas supply contracted  43,426  40  75,996  70  165,020  152  208,446  192  by PETRONAS per day which shall be  subject to LNG plus price (“D02”)  Total  458,147  422  490,717  452  490,717  452  534,143  492  Notes:
Currently, the Government regulated price is as per the announcement made by the Government on 30 May 2011, details of which are set out above. As indicated in the announcement, the buying price of natural gas for our Company will be increased by RM3.00 per MMBtu eve!}’ six (6) months beginning 1 June 2011 to December 2015 and the buying price of natural gas will be at market prices starting from 2016. 1\ The volume of gas supplied is on a step-up basis. In view of the anticipated changes to the prices of natural gas, our Company intends to review the selling prices of natural gas and subject to such new selling prices being approved by the Energy Commission, our Company will revise the selling prices with all our customers. In the event the Energy Commission does not approve such new selling prices, we may resort to supply up to the DQ1 volume only, if it is not feasible to supply the DQ2 volume to our customers. Therefore, whilst the Government had, by the press release on 30 May 2011, announced our buying and average selling prices beginning from June 2011 to December 2015, under the New Gas Supply Agreement signed with PETRONAS, our buying prices throughout the tenure of the New Gas Supply Agreement would be based on either Government regulated price and/or LNG plus price, depending on the volume to be supplied to us by PETRONAS. 38
5. RISK FACTORS (Cont’dj Nevertheless, in respect of the pricing arrangements pursuant to the New Gas Supply Agreement as disclosed above, we cannot assure you that such arrangements will not have a material adverse effect on our business operations, profitability and financial condition in the event that we fail to implement the price revision with our customers. Additionally as highlighted earlier, in the event we have to resort to supply up to the DQ1 volume only, this may have a negative impact on our ability to expand our customer base. 5.2.2 As our business depends heavily on our gas pipelines, any significant damage to our gas pipelines may have a material adverse effect on our business operations, profitability and financial condition As at LPD, we operate a total of approximately 1,800 km pipelines across Peninsular Malaysia, particularly in key industrial areas such as Shah Alam, Prai, Senawang, Bangi, Kamunting and Pasir Gudang. Our gas infrastructure design, construction and operation is to enable natural gas to be sold and delivered safely, reliably and efficiently. As illustrated in the NGDS diagram included in Section 7.8 of this Prospectus, our gas pipelines are connected from each city gate station which is predominantly owned and operated by PGB to the respective odoriser stations, district stations, service stations, area stations and regulating stations and ending at our industrial, commercial and residential end users. Any occurrence of damage, accident, explosion or natural disaster on any parts of the same gas pipeline facilities network may materially affect our gas supply and sales to our customers. The biggest risk to our gas pipeline system is gas pipeline damage and rupture. The major cause of pipeline damage and rupture is due to third party activities within the vicinity of our gas pipeline system. Among the third party activities that can lead to gas pipeline damage and rupture are digging activities and piling works undertaken by heavy equipment such as excavators or piling machinery. The accidents caused by third parties which result in gas pipeline damage and rupture are mainly not prevented due to failure by them in giVing prior notification to our Company on the activities being undertaken by the said third parties. To mitigate the above risk, daily pipeline patrolling, supervision of third party activities and implementation of work permit system for third parties are measures taken to prevent damage to our gas pipelines. Furthermore, 24 hours communication access to our Operations Control Centre is made available to third parties to obtain information on our gas pipelines n~twork. The location of our gas pipelines are indicated with warning and stone markers. Apart from third party activities, our gas pipeline facilities may be subject to damage caused by material and construction defect, corrosion and ground movement. To ensure the integrity of our pipeline system, our Company has adopted a stringent standard for pipeline design, material selection and construction procedures to ensure the quality of gas pipelines constructed. Our pipes are coated with a high integrity coating system to prevent corrosion and damage to our pipelines. Any significant damage to our gas pipeline facilities may have a material interruption in our supply of gas to our customers, which may result in loss of customers’ confidence and adversely affect our business operations, profitability and financial condition. For the past three (3) FYE 31 December 2009,2010 and 2011 and up to the LPD, our Group had encountered 27 pipeline leaks caused by third party works and eight (8) pipeline leaks a majority of which were caused by soil movement, resulting in an aggregate loss of approximately RM123,744 in revenue. Notwithstanding the above, as at LPD, we have not encountered any significant gas supply interruptions at our gas pipeline facilities that had a material adverse effect on our business operations, profitability and financial condition. 39 5. RISK FACTORS (Cont’d) In addition, regular cathodic protection inspection, pipeline integrity and leakage surveys are carried out to ensure continuous protection from damage of gas pipelines. Supervisory Control and Data Acquisition (SCADA) system at strategic locations and well trained emergency response teams at all supply areas are established to manage these risks. Although we believe that we have taken adequate steps to minimise these risks, and that we have appropriate operation and maintenance programmes in place, we cannot assure you that the aforementioned risks can be completely eliminated. 5.2.3 Dependency on PETRONAS for supply of natural gas On 18 August 1997, we signed the Existing Gas Supply Agreement with PETRONAS where PETRONAS is to supply us with natural gas. Starting from 2003 to 31 October 2009, the maximum amount of natural gas that PETRONAS agreed to supply us with was up to 150 MMScfd. We faced an ongoing challenge of securing more gas to meet the growing demand of our industrial, commercial and residential customers. On 1 November 2009, we signed the First Supplemental Agreement to the Existing Gas Supply Agreement with PETRONAS which resulted in an increase of the gas supply volume from 150 MMScfd to 300 MMScfd. On 12 July 2010, we signed the Second Supplemental Agreement to the Existing Gas Supply Agreement pursuant to which PETRONAS agreed that for the period commencing from ‘I December 2009 until 31 December 2011. the maximum permissible offtake of natural gas on any day by us shall be increased by 82 MMScfd. Subsequently on 5 April 2011, PETRONAS has further agreed that the additional gas supply volume of 82 MMScfd shall be extended until 31 December 2012. The Existing Gas Supply Agreement which took effect from 6 January 1993 is for a duration of 20 years and will expire on 31 December 2012. In view of the impending expiry of the Existing Gas Supply Agreement, we signed the New Gas Supply Agreement with PETRONAS on 23 February 2012 to replace the Existing Gas Supply Agreement upon its expiry on 31 December 2012. The tenure of the New Gas Supply Agreement is for a period of 10 years but the New Gas Supply Agreement provides that our Company has the right to request for a further extension of five (5) years subject to the availability of gas supply and the renegotiation of any terms of the agreement, if requested by either ourselves or PETRONAS, The New Gas Supply Agreement is for the supply of natural gas of up to 534,143 gigajoule per day (which is equivalent to approximately 492 MMScfd) for the period commencing from 1 January 2013 until 31 December 2022 on a step-up basis. Details of the step­up volume pursuant to the New Gas Supply Agreement are as follows: Period Maximum gas supply volume from PETRONAS per day Gigajoule per day MMScfd (approximate) 1 January 2013-31 December 2013 458,147 422 1 January 2014 -31 December 2014 490,717 452 1 January 2015 -31 December 2022 534,143 492 As mentioned above, under the New Gas Supply Agreement, PETRONAS agreed to supply up to 534,143 gigajoule of natural gas per day (which is equivalent to approximately 492 MMScfd) for the period commencing from 1 January 2013 until 31 December 2022 on a step-up basis. Further particulars in respect of the availability of supplies and terms of both the Existing Gas Supply Agreement and New Gas Supply Agreement are set out in Sections 7.9.1 and 7.9.2 of this Prospectus. 40 5. RISK FACTORS (Cont’d) If there are material interruptions in the supply of gas, or supply shortages or suspension due to gas deficiency from PETRONAS, our gas operations and delivery may be delayed or suspended, which may result in loss of customers and material loss of revenue. We cannot assure you that there will not be any non-scheduled material interruptions in the supply of gas from PETRONAS which may have a material adverse effect on our business operations, profitability and financial condition. As one of the means to address any impact arising from interruptions in gas supply, it is our Company’s practice to include in the contracts entered into with our customers for the sale and supply of natural gas, the relevant provisions to protect our Company’s position vis-a-vis the customers in the event of interruptions in gas supply which are not within our Company’s control. In terms of the provisions to protect our Company’s position vis-a-vis the customers in the event of supply shortages or suspension by PETRONAS due to gas deficiency, it has been and will be included in the contracts entered into or to be entered into with our industrial and commercial customers for the sale and supply of natural gas. Additionally, in the future, our Company may have the option of purchasing LNG from parties other than PETRONAS. 5.2.4 Our obligation in respect of take-or-pay for natural gas Pursuant to the Existing Gas Supply Agreement and the New Gas Supply Agreement, we are liable to a take-or-pay (“T-O-P”) obligation which obliges our Company to take the stipulated quantities of natural gas in any given year. This T-O­P obligation is expressed as an obligation to take up the stipulated percentages of the contracted quantity of natural gas supplied under the relevant agreements and is referred to as the T-O-P quantity. Our Company is under an obligation to take and pay PETRONAS for the T-O-P quantity of natural gas as stipulated even if the actual quantity of natural gas taken by us is less than the T-O-P quantity. In the event that we are unable to utilise up to the T-O-P quantity, we are still liable to pay PETRONAS for natural gas that has not been taken by us up to the T-O-P quantity. This may have a material adverse effect on our business operations, profitability and financial condition. Notwithstanding the above, this T-O-P obligation will be passed through to our existing and future customers through the incorporation of a provision to cater for such T-O-P obligation in the new contracts to be entered into with all our industrial and commercial customers.
5.2.5 Surcharges imposed on us by PETRONAS Under the Existing Gas Supply Agreement and the New Gas Supply Agreement, we are required to observe the excess gas pricing for natural gas taken above the stipulated quantity. In the New Gas Supply Agreement, the excess gas pricing is imposed over any . quantity of natural gas taken above 105% of the daily quantity contracted on any day. The excess gas pricing may impose a significant additional cost to our Company as any excess quantity of natural gas so taken shall be paid for based on the excess gas price in addition to the contracted price. 41 5. RISK FACTORS (Cont’d) In addition to the excess gas pricing*, pursuant to the New Gas Supply Agreement which takes effect from 1 January 2013, surcharges are imposed on us such as overrun surcharge and variance surcharge which may have a material adverse effect on our business operations, profitability and financial condition. Details of the abovementioned surcharges are as follows: • Variance surcharge -Variance surcharge is imposed for any quantity of natural gas taken outside the variance tolerance, which refers to any intake of natural gas in any given day that differs (whether positively or negatively) from the daily nominated quantity of natural gas quoted by us to PETRONAS by more than 5%, subject to any amendments to the PGB Network Code by PGB in relation to the variance surcharge from time to time.
• Overrun surcharge* -Overrun surcharge is imposed for any quantity of natural gas taken above the overrun tolerance, which refers to any quantity exceeding 102% of the maximum hourly limit set by us or the authorised overrun quantity agreed with PETRONAS, subject to any amendments to the PGB Network Code by PGB in relation to the overrun surcharge from time to time.

Note: * Under the New Gas Supply Agreement, we are only liable to pay for the excess gas pricing or the overrun surcharge, whichever is higher. In addition to the excess gas pricing, the imposition of variance surcharge and overrun surcharge on us which takes effect from 1 January 2013 onwards requires us to continue monitoring our customers’ natural gas consumption to ensure that the capacity of natural gas allotted to us by PETRONAS matches the actual quantity of natural gas taken by us on any day and at any hour of the day. As the quantity of natural gas taken by us is dependent upon our customers’ consumption and in order to limit our exposure to the excess gas pricing and surcharges, it is critical that we have appropriate monitoring procedures on our customers’ hourly and daily gas consumption level to ensure that we can estimate the volume of natural gas required by us accurately. While we can use all reasonable measures available to monitor the natural gas consumption level of our customers, we cannot control any unexpected increase or decrease in their intake arising from circumstances whether within or outside their control which may result in an overall over or under consumption of natural gas by our customers at each delivery point in any given day or at any hour of the day. Such situations may result in us being liable for additional charges under the excess gas pricing and/or the relevant surcharges. Notwithstanding the above, this excess gas pricing and surcharges will be passed through to our existing and future customers through the incorporation of provisions to cater for such excess gas pricing and surcharges in the new contracts to be entered into with our industrial and commercial customers. I Company No. 240409-1 I 5. RISK FACTORS (Cont’d) 5.2.6 If we are unable to comply with the express conditions pertaining to the use of land endorsed on the issue documents of title of the relevant land (“Land Use Conditions”) on which our stations are erected, this may result in us having to relocate the affected stations to other suitable locations On 7 October 2011, the approval from the SC was granted for the IPO and the Listing under Section 212(5) of the CMSA and the equity requirements for public companies, subject to the conditions, inter alia, where GMB is to identify those plots of land erected with stations which are not designated for gas station use and rectify the non-compliance within 12 months from the date of the SC’s approval letter for the Listing. Pursuant thereto, we have identified that as at LPD, out of the plots of land on which our 1,020 gas stations are erected, there are 22 stations which have been identified as haVing been erected on land not designated for gas station use where we are in the midst of rectifying the same or where we have been following up with the relevant land owners or authorities to ascertain the respective Land Use Conditions. Further particulars with regard to the status for the relevant land are as follows: No. Description Status No. of stations Odoriser District Regulating Area Total Stations Stations Stations Stations Stations (i) Stations built on land where • We are in the midst of fUlfilling the requirements 33 we are the owner and the land imposed by the relevant land offices to complete the is not designated for gas application to amend the Land Use Conditions to station use include the use of the relevant land for the purpose
of erecting gas stations.
(ii) Stations built on land not • For those plots of land which have been identified as 6 613

owned by us land not designated for gas station use, we have requested the respective land owners to amend the Land Use Conditions to include the use of the land for the purpose of erecting gas station and are in the midst of following up and/or negotiating with the individual land owners.
43 I Company No. 240409-T I 5. RISK FACTORS (Cont’d). No.  Description  Status  Odoriser Stations  No. of stations District Regulating Stations Stations  Area Stations  Total Stations  • For those plots of land where we have not been able to ascertain the respective Land Use Conditions, we have been following up with the relevant land owners or authorities to ascertain whether the erection of our gas stations on the relevant land may contravene the respective Land Use Conditions.  2  4  6  2  13  6  22
In·respect of those plots of land owned by us which are not designated for gas station use, we have written to the relevant land offices in December 2011 to apply for consent to amend the Land Use Conditions to include the use of the relevant land for the purpose of erecting gas station and are in the midst of fulfilling the relevant requirements imposed by the relevant land offices to complete the application. If any of our applications is not approved by the relevant land authorities, we may appeal to the court within the period of three (3) months beginning with the date on which the decision of the relevant land authorities is communicated to us, and in the event that the outcome of our appeal to the court is not in our favour, we may have to relocate the affected gas stations to other locations where the erection of these stations will not contravene the Land Use Conditions of the relevant land if the relevant land authorities require us to do so. We cannot assure you that all the approvals from the relevant land authorities will be obtained in the timeframe that we have anticipated or at all. In the event that our Company is required to relocate our stations to other locations where the erection of these stations will not contravene the Land Use Conditions of the relevant land, there can be no assurance that we are able to acquire or rent or lease such relevant land which would be within the proximity of our customers. Notwithstanding that, we do not expect the relocation costs to materially and adversely affect our business operations, profitability and financial condition. In respect of those plots of land not owned by us which are not designated for gas station use, we shall exercise our best effort to request and negotiate with, to the extent possible, the respective land owners to amend the Land Use Conditions to include the use of the land for the purpose of erecting gas station. In the event that we are certain that we would not receive any response from the land owners; or that we are unable to arrive at a mutual agreement with the land owners to amend the Land Use Conditions; or that the relevant Land Use Conditions cannot be amended due to any unforeseen circumstances e.g. the applications to amend the relevant Land Use Conditions are not approved by the relevant land authorities or where it may not be feasible to amend the relevant Land Use Conditions due to high costs, we may have to relocate the affected gas stations to other locations in the event that the relevant land authorities require us to do so. We do not expect the relocation costs to materially and adversely affect our business operations, profitability and financial condition. 44 5. RISK FACTORS (Cont’d) In respect of those plots of land not owned by us on which our gas stations are erected and where we are required to further ascertain the respective Land Use Conditions, we shall continue to follow up with the respective land owners or authorities until we are able to ascertain whether the erection of our gas stations on the relevant land may contravene the respective Land Use Conditions. In the event that the relevant Land Use Conditions of those plots of land owned or not owned by us are unable to be amended to include the use of the land for the purpose of erecting gas stations and if we are unable to relocate our stations when instructed by the relevant authorities, we cannot assure you that the relevant land on which our stations are erected would not be forfeited by the relevant land authorities. Notwithstanding the above, since the commencement of our operations until the LPD, we have not encountered any problems arising from the erection of our gas stations on the relevant land. 5.2.7 Our development and operational plans have significant capital expenditure and financing requirements, which are subject to a number of risks and uncertainties The gas business is capital intensive. Our ability to maintain and increase our revenues, net income and cash flows depends upon continued capital spending. Our actual capital expenditures may vary significantly from planned amounts due to various factors, including our ability to generate sufficient cash flows from operations to finance capital expenditures, ability to finance such expenditures through borrowings and ability to secure additional gas supply from PETRONAS for new customers. We may incur substantial capital expenditures from time to time in connection with projects intended to expand our operational capacity or capabilities and improve our business. These projects may include, but are not limited to, construction of new gas pipelines to other new customers. Failure to successfully complete these projects in a timely manner due to inadequate capital resources or otherwise may have an adverse effect on our operations and the execution of our business plans. In addition, if we are unable to obtain sufficient funding for our planned capital expenditures, our business operations, profitability and financial condition could be adversely affected. Our ability to obtain external financing and to make timely repayments of our debt obligations, if any, are subject to various uncertainties, including our future results of operations, financial condition and cash flows, the condition of the Malaysian economy and the demand for natural gas, the cost of financing and the condition of financial markets and the continuing willingness of banks to provide new loans. We cannot assure you that any required additional financing, either on a short-term or long-term basis, will be made available to us on satisfactory terms. If adequate funds are not available on satisfactory terms, we may have to curtail expansion plans, which could result in loss of new customers, the inability to successfully implement our business strategies and as such limit the growth of our businesses. In addition, our investments in our subsidiaries could require our support, such as the provision of guarantees for bank financing activities, to fund these subsidiaries’ operations. 5. RISK FACTORS (Cont’d) 5.2.8 We operate in a highly regulated industry, and if we are unable to maintain our gas supply licences and comply with the legislation required to operate our business, or if the Government decides to deregulate the gas industry, this may limit our ability to do business and/or subject us to litigation or penalties We are licensed under the GSA by the Energy Commission, with the approval of the Minister. Our licence to supply and sell reticulated natural gas in Peninsular Malaysia was granted on 1 September 1998 and will expire on 1 September 2028. In addition, we have also been granted the licence to supply and sell reticulated LPG on 15 December 2000 and the said licence will expire on 15 December 2020. Our licensed activities are principally regulated by the Energy Commission. The gas supply legislation provides a regulatory framework where both the Government and industry are expected to playa part in ensuring economical, quality, efficiency, reliability and safety in the use of natural gas and LPG. Standards are set by the GSA for appropriate systems and practices to be put in place. The Gas Supply Regulations 1997 provides a comprehensive set of preventive measures to ensure the safety of gas pipelines and installations at each stage of the process such as during installation, commissioning, operation, maintenance, repair, upgrading and removal of the system. Provisions also exist to deal with foreseeable problems such as third party intrusions and tampering with the gas system. Breach of, or non-compliance with, these laws and regulations may result in the suspension, withdrawal, non-renewal or termination of our licences or permits, or the imposition of penalties, by the relevant authorities. We may also be subject to stricter enforcement or interpretation of existing laws and regulations. In the future, we may be required to renew these licences or to obtain new licences. While we have not experienced any requirement to obtain any new licence, we cannot assure you that in the future the relevant authorities will not issue any new requirement to obtain new licences. The suspension, withdrawal, non-renewal or termination of our licences or permits, the imposition of penalties or increased compliance costs could have a material adverse effect on our business operations, profitability and financial condition. Further to the above, in the event the Government decides to deregulate the gas service industry in Peninsular Malaysia, our business model and the competitive environment of the industry which we operate in may be different which could materially adversely affect our business operations, profitability and financial condition.

5.2.9 Collection risk We grant a credit period to our customers of within 30 days. A late payment charge of 1.0% per month may be imposed on the outstanding balance of customers who fail to settle their payments within the stipulated credit period of 30 days. The supply of gas will be disconnected if gas bills are outstanding for more than 40 days. Collection risk is minimised as our Company imposes a two (2)-month bank guarantee of the average monthly gas bill of each customer on new and all existing customers except for one of our industrial customers. A credit review committee meets every two weeks and closely monitors our receivables profile. All the precautionary measures taken to minimise collection risks may protect us from cost increases but does not protect us from loss of business and reduced profitability as our Group’s profitability is subject to the ability of the customers to pay for the amount of gas supplied. 46 5. RISK FACTORS (Cont’d)
5.3 Risks relating to our Company 5.3.1 Industrial market makes up approximately 99.1% and 99.2% of the total volume of natural gas sold for the FYE 31 December 2010 and 31 December 2011 respectively Approximately 99.1 % and 99.2% of our total sales volume of natural gas were sold to the industrial sector in the FYE 31 December 2010 and the 31 December 2011 respectively. Currently, our customer base consists of diverse industries such as food and beverage, rubber, non-metallic minerals, glass, fabricated and basic metal, chemicals, electric and electronics, paper, printing and publishing, textiles, hotels, shopping malls as well as hospitals. We expect that our heavy reliance on the industrial sector to drive our profits will continue into the future and as a result, any adverse changes in the economic climate of the country and the industrial sector could have a material adverse effect on our business operations, profitability and financial condition. 5.3.2 Rights of the holder of the Special Rights RPS As part of the Pre-IPO Exercise, one (1) Special Rights RPS at an issue price of RMO.50 was issued to PETRONAS. Our Company adopted the special rights attached to the Special Rights RPS via amendments to the Memorandum and Articles of Association of our Company. The special rights include, inter alia, the following: (i) prior consent of PETRONAS is required for a sale or disposal of our Company’s assets where any of the percentage ratios of such transaction is 25% or more, such percentage ratios are to be calculated in accordance with the definition of “percentage ratios” as defined in the Listing Requirements;
(ii) prior consent of PETRONAS is required for any acquisition of assets by our Company where any of the percentage ratios of such transaction is 25% or more, such percentage ratios are to be calculated in accordance with the definition of “percentage ratios” as defined in the Listing Requirements; and

(iii) prior consent of PETRONAS is required for any proposal for change in nature of business and principal activities of our Company. Notwithstanding that certain transactions may be beneficial to our Company and our shareholders, it is PETRONAS’ prerogative whether it wishes to grant its consent for us to undertake such transactions. 5.3.3 We may not be able to attract and retain key management personnel and employees with specialised skills We depend on our Directors, key management personnel and workers with specialised skills, particularly in the design and engineering, project management, operation and maintenance as well as quality and safety assurance areas, to manage our Group’s operations. The loss of any of these individuals, or our inability to attract, recruit and retain appropriate replacement employees and successors, may adversely affect our business operations, profitability and financial condition. We have implemented human resource management and development plans that attempt to manage issues involving recruitment, retention, succession planning, compensation, benefits, learning and development.

5. RISK FACTORS (Cont’d) 5.3.4 Our insurance may not have adequate coverage for, and may not cover, all ris~s to which we are exposed Our business is subject to inherent risks, such as equipment defects, malfunctions, failures or leakage, which could cause leaks or spills, personal injury or loss of life, as well as damage to the environment through massive fire as natural gas is highly flammable. We could also be adversely affected by business interruptions caused by war, terrorist activities, mechanical failure, human error, political action, fire and other circumstances or events. While we have insurance coverage for various aspects of our business, our insurance coverage may not cover, or may be insufficient to cover, all losses that we suffer. Claims arising from incidents involving an accident, failure or other incidents arising from our operations may result in incurring primary or secondary liability for significant amounts of damages, including from tort, statutory, regulatory or other types of claims that may be significantly in excess of our insurance coverage. If we incur substantial liability and the damages are not covered by insurance or exceed policy limits, or if we are unable to obtain liability insurance, our business operations, profitability and financial condition could be materially adversely affected. Even if certain risks are currently covered by insurance, there is no assurance that such insurance will be generally available in the future or that premiums will be commercially justifiable.
5.3.5 Control by a substantial shareholder As disclosed in Section 9.3.1 of this Prospectus, upon completion of our IPO, MMC­Shapadu will own about 40.7% of our enlarged issued and paid-up share capital and thus will be able to exercise control of more than 33% of our Company. The direct and indirect substantial shareholders of MMC-Shapadu are as set out in Section 9.3.2.1 of this Prospectus. As the controlling shareholder of our Company, other than in respect of certain votes regarding matters in which it is an interested party and must abstain from voting under the Listing Requirements, MMC-Shapadu will be able to influence the election of our Directors, and the approval of any corporate proposals or transactions requiring the approval of our shareholders. Although we will be required to comply with the conflict of interests rule under the Listing Requirements, the interests of MMC-Shapadu may differ from or conflict with the interests of other shareholders of our Company. [rhe rest of this page is intentionally left blank] 5. RISK FACTORS (Cont’d)
5.4 Risks relating to the IPO 5.4.1 An active trading market for our Shares may not develop, and our trading price may fluctuate significantly Prior to the IPO, no public market for our Shares existed. On 31 October 2011, we obtained the approval of Bursa Securities for the listing of and quotation for our Shares on the Main Market of Bursa Securities. However, a listing on the Main Market of Bursa Securities does not ensure that there will be a liquid public market for our Shares after the IPO. If an active public market for our Shares does not develop after the IPO, the market price and liquidity of our Shares may be adversely affected. The Institutional Price and the Retail Price were determined through negotiations among us, our Promoters/ Offerors and the Sole Bookrunner, and they may not necessarily be indicative of the market price after the IPO is completed. The prices at which our Shares will trade after the IPO will be determined by the marketplace and may be influenced by many factors, including but not limited to: (i) our financial results;
(ii) the history of, and the prospects for, our business and the industry in which we compete;

(iii) an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenue and cost structures; (iv) the present state of our development;
(v) the valuation of publicly-traded companies that are engaged in business activities similar to us; and
(vi) volatility in the securities markets of Malaysia.

You may be unable to resell our Shares at or above the Final Retail Price and, as a result, you may lose all or part of your investment. 5.4.2 Sales of substantial amount of our Shares in the public or private market, or the perception that those sales may occur, could materially and adversely affect the prevailing market price of our Shares Upon completion of the IPO, the Offerors will own between 14.80% and 40.70% of the total issued and paid-up share capital of our Company. The Offerors have undertaken not to transfer their respective Shares for a period of six (6) months after the completion of the IPO. However, upon completion of this six (6)-month lock-up period. we cannot provide any assurance that the Offerors will not dispose of any large blocks of our Shares in the future to the public or to a strategic or financial investor. Sales of substantial amount of our Shares in the public or private market, or the perception that these sales may occur, could materially and adversely affect the prevailing market price of our Shares. 5. RISK FACTORS (Cont’d) 5.4.3 If there is significant volatility in the price of our Shares following the IPO, you may lose all or part of your investment, and securities litigation or enforcement action may be brought against us Following the IPO, the price at which our Shares will trade may be volatile. The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices of securities. These fluctuations often have been unrelated or disproportionate to the operating performance of publicly-traded companies. In the past, following periods of volatility in the market price of a particular company’s securities, securities litigation or securities enforcement action has sometimes been brought against that company. If similar litigation or enforcement action were instituted against us, it could result in substantial costs and divert management’s attention and resources from our core business. 5.4.4 Certain transactions that our Company may undertake subsequent to the Listing may dilute the ownership of shareholders in our Shares As a result of adjustments from rights offerings, certain issuances of new Shares and certain other actions we may take to modify our capital structure subsequent to the Listing, shareholders may experience a dilution in their ownership of our Shares. There can be no assurance that we will not take any of the foregoing actions. Similar actions in the future may adversely affect the market price of our Shares.
5.4.5 There may be a delay or cancellation of the Listing The occurrence of anyone or more of the following events may cause a delay in or cancellation of the Listing: (i) the Sole Bookrunner exercises its rights subject to the terms and conditions of the Placement Agreement to discharge itself from its obligations; or
(ii) the Joint Underwriters exercise their rights subject to the terms and conditions of the Underwriting Agreement to discharge themselves from their obligations; or

(iii) we and our Promoters! Offerors decide in our absolute discretion not to proceed with the Listing; or (iv) we are unable to meet the public shareholding spread requirement as determined by Bursa Securities of having at least 25% of the issued and paid-up ordinary shares of GMB being held by a minimum of 1,000 public shareholders holding not less than 100 Shares each upon completion of the IPO and at the point of Listing. 5. RISK FACTORS (Cont’d)
5.4.6 We may not be able to fulfil our dividend policy in the future We intend to adopt a policy of active capital management. We propose to pay dividends out of cash generated by our operations after setting aside the necessary funding for gas pipelines expansion and improvement and working capital needs. For the FYE 31 December 2012, our Company intends to propose a dividend payout ratio of 100% of our Company’s PAT under FRS and thereafter, our Company targets a dividend payout ratio of not less than 75% of our Company’s PAT under FRS in each subsequent financial year, subject to the recommendation of our Board and to any applicable law, licence and contractual obligations and provided that such distribution would not be detrimental to our cash requirements or to any plans approved by our Board. Dividend payments are not guaranteed and our Board may decide, in its absolute discretion, at any time and for any reason, not to pay dividends or to change our dividend policy. If we are unable to fulfill our dividend policy, or pay dividends at levels anticipated by our investors, the market price of our Shares may be negatively affected and the value of the investment in our Shares may be reduced. Further, our dividend policy, to the extent implemented, may adversely affect our ability to fund unexpected capital expenditures as well as our ability to service interest and principal repayments on our loans (if any). As a result, we may be required to borrow additional money or raise capital by issuing new equity securities, which may not be obtained on attractive terms or at all. Further, in the event we incur new borrowings subsequent to the Listing, we may be subject to covenants restricting our ability to pay dividends. rrhe rest of this page is intentionally left blank]

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