Risk Factors

5. RISK FACTORS 5. RISK FACTORS Before investing in our Shares, you should pay particular attention to the fact that we and to a large extent, our business and operations, are governed by or dependent on, the legal, regulatory and business environment in Malaysia, which may in some aspects differ from those which prevail in other countries. Our business is subject to a number of factors, many of which are beyond our control. Prior to making an investment decision, you should carefully consider, along with the other matters in this Prospectus, the risks and investment considerations set forth below. You should note that the risks and investment considerations set forth below are not an exhaustive Jist of all the risks that we are currently facing or that may develop in the future. Additional risks, whether known or unknown, may in the future have a material and adverse effect on us or our Shares. 5.1 Risks relating to the industry in which we operate

5.1,1 The demand for our services is, to a large extent, dependent on the levels of activity in offshore oil and gas exploration, development and production which are in turn dependent upon oil and gas prices and demand The demand for our services, to a large extent, depends on the levels of activity in offshore oil and gas exploration, the development and production activity of, and the corresponding capital spending by, oil and gas companies, which in turn are primarily affected by the trends in and outlook of oil and natural gas prices, A decline in the worldwide demand for oil and gas or in the event of prolonged lower prices of oil or gas in the future would result in reduced exploration and development of offshore areas and a decline in the demand in the offshore oil and gas industry, The levels of offshore oil and gas exploration, development and production activity are subject to large fiuctuations in response to relatively m’lnor changes in a variety of factors that are beyond our control, including: • expectations of future oil and gas prices and price volatility;
• the cost of offshore exploration for, and production and transportation of, oil and gas;
• worldwide demand for oil and gas and other petroleum-based products;
• the level of oil production by non-OPEC countries, the ability of countries within OPEC to set and maintain oil production levels and oil prices and the availability of excess production capacity by countries within OPEC;
• availability and rate of discovery of new oil and gas resources in offshore

areas; • advances in exploration, development and production technology;
• government policies and initiatives in awarding offshore exploration blocks;
• local and international political and economic conditions and policies, including developments in international trade which affect cabotage and other local laws;
• substitution by, and availability of, alternative energy sources;
• environmental and other regulations affecting our customers and their other service providers, including regulations on gas emissions and climate change;
• state of the financial markets and availability of funding options to the oil and gas companies for the funding of exploration and production activities; and

5. RISK FACTORS (Cont’d) • over supply of vessels. A decline in the level of offshore oil and gas exploration, development and production activity as well as prolonged lower prices of oil or gas, due to one or more of the above factors, would result in a decrease in the demand within the offshore oil and gas industry, such as OSV services which we offer. This could, in turn, reduce our charter rates and utilisation rates and have an adverse effect on our business, financial condition, results of operations and prospects. Moreover, increases in oil and gas prices and higher levels of expenditure by oil and gas companies for exploration, development and production activities may not necessarily result in increased demand for our services or increases In our charter rates or utilisation rates.
5.1.2 The offshore oil and gas industry is subject to government regulations The extraction and transport of oil and gas at sea is subject to inherent risks, such as blow-outs, equipment defects, accidents and crew safety, discharge of pollutants and oil spills, malfunctions, failures and misuses that could cause significant environmental damage, personal injury or loss of life and commercial damage. Our operations are subject to the local and international regulations in jurisdictions where our vessels operate, as well as in the countries in which our vessels are registered. In almost all the jurisdictions that we operate, we are required by our customers as well as by governments and regulatory agencies, to maintain HSE and security standards in the course of providing our services. These regulations govern, among others, workers’ health and safety, manning, construction and the operations of our vessels. In the event of any change in these standards, we may have to incur additional expenses to comply with such changes. Any failure to maintain such standards may result in the cancellation of our present contracts, failure to win new contracts, or regulatory authorities imposing fines, penalties or sanctions on us, revocation of our licences and permits or prohibition from continuing our operations, each of which could have a material adverse effect on our business. Failure to maintain HSE and security standards could also result in injuries, death, damage to property and to the environment and potential liability arising from such events, as well as damage to our reputation. While we benefit from cabotage laws in Malaysia partial to Malaysian-flagged vessels, our operations in foreign markets are affected by the respective jurisdictions’ and countries’ laws to our disadvantage. Currently, the Malaysian cabotage laws are subject to certain exceptions under certain international trade agreements, including GATS. Please refer to Section 7.22.2 of this Prospectus for further information on cabotage laws. If maritime cabotage services were included in the GATS or other international trade agreements, or if such restrictions were otherwise altered, maritime transportation in Malaysia could be opened to foreign-flagged vessels. If this were to occur, or if the Government’s policy on preferential treatment were to change, it could lead to the loss of preferential treatment for Malaysian-flagged vessels and significantly increase competition in the offshore oil and gas industry in Malaysia.

5. RISK FACTORS (Cont’d) 5.1.3 Our industry is highly competitive and subject to intense price competition We operate in an intensely competitive industry. The principal competitive factors in the offshore oil and gas industry include: • charter rates and other costs, service and reputation of vessel operations and
crew; • pre-qualification criteria and prior experience;
• suitability of vessel types and age of vessels;
• vessel availability and cost of moving vessels from one market to another;
• technical capabilities of vessels, equipment and personnel;
• safety and efficiency; and
• complexity of maintaining logistical support.

Most of our offshore oil and gas services contracts are traditionally awarded through competitive bidding process subject to the satisfaction of the prescribed pre­qualification criteria and experience. Our industry is subject to intense price competition and pricing is usually a key factor in determining which contractor is awarded a contract. The competitive bidding process may have an adverse effect on the profit margins that we are able to attain. In addition, our industry has historically been cyclical and is affected by oil and gas price levels and volatility. There have been periods of high demand, low OSV supply and high charter rates, followed by periods of low demand, excess OSV supply and low charter rates. Changes in oil and gas prices may have a dramatic effect on OSV demand. During periods of excess OSV supply, competition in the industry may intensify and we may have to enter into lower rate contracts or our OSVs could be idle for long periods of time. There are a large number of vessels currently under construction and industry participants have placed a large number of orders for new vessels to be delivered over the next few years. Any increase in the availability of OSVs in the markets where we presently operate would increase competition for charter rates and may decrease our utilisation rates, which would adversely affect our operating margins and in turn, our financial condition and results of operations. We compete with local, regional and global companies, many of whom have established reputations and long operational track records in our industry. Compared to us, some of our competitors are larger, have more diverse fleets and businesses, have greater financial, technical, marketing and other resources, greater brand recognition and reputation, longer operational track records, greater geographical reach and lower capital/operational costs. This allows them to better withstand industry downturns, compete on the basis of price, relocate assets more easily and build or acquire additional assets, all of which may affect our revenue and profitability. Moreover, if other companies relocate or acquire vessels or offshore assets for operations in the regions where we operate, the level of competition in such regions may increase, and our business and financial condition could be adversely affected as demand for our vessels and services could be negatively affected by increased supply of similar vessels or offshore assets and services. Local competitors in each country where we operate may have more domestic experience and better relationships with customers than we do. In addition, many governments favour or effectively require contracts to be awarded to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. Such policies may affect our ability to compete effectively. 5. RISK FACTORS (Cont’d) We cannot assure you that we will be able to successfully compete in the markets where we currently operate and intend to operate as well as against new market entrants in the future. Our failure to remain competitive may have a material adverse impact on our business, financial condition, results of operations and prospects. 5.1.4 We may be affected by a fundamental change in PETRONAS’ policies towards the oil and gas industry PETRONAS’ current policies in Malaysia towards the oil and gas industry include the imposition of licensing/registration requirements and under these policies, only companies with valid licences/registrations may supply goods, products and services to the upstream sector of the oil and gas industry in Malaysia and the PETRONAS group of companies in the downstream sector. Furthermore, these policies also restrict the ability of suppliers of goods, products and services to operate in Malaysia by requiring, among others, foreign suppliers to use Malaysian content in their operations and to operate with a Malaysiar, partner or company either by forming a joint venture with the Malaysian partner or company or by designating the Malaysian partner or company as an exclusive agent representing such foreign entity. Any fundamental change in PETRONAS’ policies such as the relaxation or Iiberalisation of licencing/registration requirements for the provision of goods, products and services related to the oil and gas industry or permitting foreign suppliers to operate in Malaysia without restrictions (including without local content or a local partner or company) would have a material adverse effect on our business, financial condition, results of operations and prospects. 5.1.5 The market value of our vessels can fluctuate significantly and as a result, affect our ability to obtain financing at attractive rates and terms The highly cyclical nature of the OSV industry could result in significant volatility in the value of vessels and affect our ability to obtain financing. In particular, we may not be able to secure financing at attractive rates and terms, or at all, if the market value of our vessels drops significantly. The fluctuation in the market value of our fleet is likely to be influenced by a number of factors including: • age of the vessels, as older vessels generally attract lower valuations;
• vessel specification and the general condition of the vessels, as lower specification vessels generally attract lower valuations;
• global economic and market conditions affecting the offshore oil and gas industry, as a decline in market conditions would cause downward pressure on valuations and vice versa;
• changes in the supply of, and demand for, certain types and sizes of vessels, as lower demand for, or greater supply of, OSVs may cause valuations to fall, and vice versa;
• changes in the cost of building new vessels, as valuations may decline if it becomes cheaper to build new vessels;
• governmental or other regulations, as regulations which require material changes to vessel design may cause valuations of older vessels to fall;
• the prevailing level of day-rates, as lower day-rates will cause downward pressure on valuations and vice versa; and
• technological advances, as our existing vessels may be valued lower if new technology is introduced which makes our fleet less attractive.

52 5. RISK FACTORS (Cont’d) Lower charter rates and utilisation rates could also adversely affect the resale and fair value of our vessels and consequently, cause us to breach certain covenants of some of our existing financing faciiities such as the market value of vessei-to-ioan outstanding ratio and/or impact our ability to secure financing at competitive rates or at aiL 5.1.6 Maritime claimants could enforce maritime liens by the arrest of our vessels through foreclosure proceedings, which could adversely affect our cash flow and result in a significant loss of earnings Under the maritime iaw of many jurisdictions, claimants for breach of certain maritime contracts, vessel mortgagees, crew members, suppiiers of goods and services to a vessei, shippers of cargo and other parties may be entitled to a maritime iien against that vessei for unsatisfied debts, claims or damages. In addition, in certain jurisdictions, a maritime iien holder may enforce its iien by arresting a vessel through foreclosure proceedings. This would appiy even if our vessels are chartered-out. in addition, international vessel arrest conventions and certain nationai jurisdictions permit so-called “sister ship” arrests, aliowing the arrest of vessels that are within the same legal ownership as the vessel which is subject to the ciaim or lien. Certain jurisdictions go further, permitting not only the arrest of vessels within the same legai ownership, but also any “associated” vesseL in these jurisdictions, an “association” may be recognised when two vessels are owned by companies controlled by the same party. Consequentiy, a ciaim may be asserted against us or our vessels for the liability of one or more of the other vessels we own. Any arrest or attachment of one or more of our vessels could resuit in a significant loss of earnings and cash fiow or require us to provide security invoiving iarge sums of money to have the arrest lifted. 5.2 Risks relating to our business and our operations 5.2.1 We require a number of approvals, licences, registrations and permits to operate our business, and failure to obtain or renew them in a timely manner may adversely affect our operations Our Group requires certain approvals, licences, registrations, permits and certifications to operate. Please refer to Annexure A of this Prospectus for further information on our major licences and permits. We cannot assure you that the approvals, licences, registrations, permits and certifications issued to us would not be suspended or revoked in the event of non-compliance or aiieged non-compliance with any terms or conditions thereof, or pursuant to any reguiatory action. If we fail to comply with the requirements of any such laws, rules or regulations or directions from the relevant reguiatory authorities, we could be subject to substantiai administrative, civii and criminai penalties, the imposition of remedial obligations, the issuance of injunctive reiief or the non-renewai or revocation of our Group’s business and operational approvals, licences, permits, registrations and certifications. Further, certain of our approvals, licences, permits, registrations and certifications are subject to periodic renewaL There can be no assurance that we may be able to renew these approvals, iicences, permits, registrations and certifications in a timely manner or at ail, which couid result in a materiai adverse effect on our business, financial condition, resuits of operations and prospects. 5. RISK FACTORS (Cont’d) 5.2.2 We are dependent on our major end customer As our major end customer, PETRONAS Carigali contributes a substantial portion of our revenue, and any cancellation or termination of our contracts with PETRONAS Carigali in the future, if not replaced, could materially and adversely affect our financial condition and results of operations. In the years ended 31 December 2011, 2012 and 2013, PETRONAS Carigali contributed 64.6%, 80.4% and 71.7% of our total revenue, respectively. A reduction in the oil and gas sales prices or overall sales volumes may lead to reduced levels of activity by PETRONAS Carigali, resulting in lower demand for our services. Any cancellation or termination of our contracts with PETRONAS Carigali in the future could have a material adverse effect on our business, financial condition, results of operations and prospects. Please refer to Section 7.8.6 of this Prospectus for further information on our relationship with PETRONAS Carigali as our major end customer. 5.2.3 Our charter contracts may be subject to early termination Our charter contracts are for varying periods of time. In line with industry practice, our customer contracts ordinarily contain clauses which could, among others, give the customer a right of early termination with a notice of termination for any or no reason whatsoever. Some of our charter contracts may also be terminated due to, inter-alia, completion of customers’ projects ahead of schedule, with related compensation and in certain cases, for cause upon the occurrence of certain events, such as non­performance events of force majeure, loss or seizure of vessels or unavailability of the vessel due to various reasons such as confiscation or requisition by the government of the jurisdiction under which the vessels are registered and/or operate. In addition, our customers require the vessels which they are chartering to be inspected both prior to as well as during the period of our charter contracts. In particular, one of our customers performs regular inspection on the vessels which they have chartered in accordance with its vessel inspection and risk management system. In line with amendments to the manner in which the said customer handles inspection issues, it issued a notice of default notifying us that we had failed to comply with the inspection guidelines imposed by them in respect of one of our vessels and required corrective action to be taken within the stipulated period. Failure to undertake remedial action within the period stipulated in the notice could allow the said customer to exercise certain contractual rights, including the right to withhold payments due to us, invoke the bank guarantees provided and/or suspend or terminate the underlying contract. We have undertaken the required remedial actions to address such non-compliance. To date, the said customer has not exercised those contractual rights and the vessel is currently still in use by them. We cannot assure you that the said customer will not exercise any such contractual rights in the future. We expect that the said customer will continue to issue notices of default in the future in the event that we are not able to rectify, or take remedial action in respect of, any issues identified by such customer within the timeframe stipulated by it. The termination of existing charter contracts and the inability to secure replacement contracts within a reasonable timeframe and on satisfactory terms may reduce our revenue and may have a material adverse impact on our financial condition and results of operations. Our revenue and profitability may also be materially and adversely affected if we are not able to re-deploy our vessels for a period of time upon termination of existing contracts. 5. RISK FACTORS (Cont’d)

5.2.4 Our results of operations may be adversely affected by our inability to secure contracts or negotiate favourable contract terms Most charter contracts, especially, long-term contracts in the local and international markets, are awarded following competitive bidding processes and satisfaction of certain prescribed pre-qualification criteria, including experience in operating vessels under long-term charters, suitability of vessel types, technical capabilities of vessels, equipment and personnel as well as safety record. If we are unable to meet customers’ pre-qualification requirements, we may lose the opportunity to bid for and consequently fail to secure new contracts which could materially and adversely affect our business and growth plans. Although we generally endeavour to obtain better terms in contracts for our vessels where possible, low demand and adverse market conditions at the time of negotiating contracts may result in us accepting less favourable terms. In addition, as most of our contracts are awarded through a competitive bidding process, our ability to negotiate contractual terms with our customers is limited. We generally seek to use standard form charter party contracts. In most instances, we may be required to use customer-specific standard forms of charter parties and contracts adopted as a matter of policy by a customer, which may further affect our ability to negotiate such contractual terms. As a result, we would be subject to less favourable terms, which could have a material adverse effect on our financial condition and profitability.
5.2.5 We operate in a highly capital intensive industry which requires high levels of borrowings We operate in a capital intensive industry which requires high levels of funding. We have and will continue to have a significant amount of borrowings. As at 31 December 2013, our total borrowings stood at RM1,103.3 million, or RM867.7 million excluding the RCPS-i and accrued profit rate thereon, which were mandatorily converted into our Shares on 23 May 2014. Our ability to service our debts and other contractual obligations will depend on our future operations and cash flow generation, which in turn will be affected by various factors, many of which are beyond our control. As a result of our indebtedness, we are exposed to interest/profit rate risk, primarily from borrowings bearing variable interest/profit rates. As at 31 December 2013, RM623.2 million or 56.5% of our total borrowings bore a variable rate of interest/profit. Excluding the RCPS-i and accrued profit rate thereon, 71.8% of our total borrowings as at 31 December 2013 bore a variable rate of interest/profit. Changes in economic conditions could result in higher interest/profit rates and reducing our profitability and funds available to meet capital and operational expenditure or other purposes. Please refer to Section 12.2.3(v) of this Prospectus for further information on the level of our borrowings and finance cost. We cannot assure you that we will have sufficient capital resources to construct or acquire the vessels and equipment required to expand our fieet size. While we expect our cash on hand, cash flow from operations, proceeds from our Public Issue and available borrowings under our credit facilities to be adequate to fund our existing commitments, our ability to pay these amounts is dependent upon the success of our business and operations. 5. RISK FACTORS (Cont’d) Our ability to obtain financing and the costs of capital of such financing are dependent on numerous factors, including general economic and capital market conditions, credit availability from financial institutions, the continued success of our operations and other laws that are conducive to our raising capital. If we are unable to raise adequate capital in a timely manner and on acceptable terms, or at all, our business, financial condition, results of operations and prospects could be adversely affected. Further, if we decide to raise additional funds through the issuance of equity or equity-linked instruments, your interests as our shareholders may be diluted. If we decide to meet our capital requirements through debt financing, our debt interest obligations will increase and we may be sUbject to additional restrictive covenants. 5.2.6 We are exposed to the risk relating to the condition under certain of our financing agreements which requires ECSB to remain as our single largest shareholder Certain of our financing agreements require that ECSB (direct[y or indirectly) shall remain as our single largest shareholder, where applicab[e, subject to the successful implementation of our Listing. We have no control over the actions of ECSB and we cannot assure you that ECSB will always comply with the said condition. In the event that ECSB ceases to be our single largest shareholder or notifies us of its intention to reduce its shareho[ding in our Company such that it ceases to be our single largest shareholder, we will negotiate for the removal of the said condition or seek to re­finance these facilities. There can be no assurance that we will be successful with such negotiation or re-financing exercise. If we are unsuccessful in negotiating or refinancing any such agreements, then we may be in breach of such agreements which could result in the lenders exercising their rights to call for immediate repayment of the entire amount outstanding, which could also potentially trigger cross-default proVisions in respect of our borrowings contained within our other financing arrangements, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Please refer to Section 12.2.7 of this Prospectus for details of our financing facilities which require ECSB to remain as our single largest shareholder (directly or indirectly). As at the LPO, ECSB is indirectly our single largest shareholder and will remain as our single largest shareholder upon completion of our IPO. 5.2.7 Orydocking, maintenance and repair for our vessels and equipment may require substantial expenditure and time We are required to maintain our vessels and/or our equipment to certain standards and to maintain the certification of such vessels and/or certain equipment. Such maintenance may involve substantial costs and result in loss of opportunity from downtime, which may materially and adversely affect our results of operations. Our operations are dependent on the operating efficiency and reliability of our vessels and/or our equipment in terms of operational worthiness and the safety environment. Any unexpected breakdown or non-performance of vessels and/or equipment is difficult to predict and in the event of downtime, additional costs and losses may be incurred by our customers arising from the disruption of their workflow and scheduled activities and some of these costs may be passed on to us. Rectification of the breakdown or non-performance, depending on its severity, may also require replacement or repair of key components and there may be long lead times for the procurement of these components which may result in such vessels and/or equipment being out of service and being unable to generate revenue for us over extended periods of time. 56 5. RISK FACTORS (Cont’d) 5,2.8 We are subject to evolving environmental regulations We are subject to environmental regulations pursuant to a variety of international conventions and state and municipal laws and regulations. Compliance with such regulations can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental regulations is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. This may result in a material increase in our costs of operating our fleet or otherwise materially and adversely affect our business, financial condition, results of operations and prospects. The discharge of pollutants into the air or water may give rise to liabilities to governmental authorities and third parties and may require us to incur costs to remedy such discharge. Changes in environmental regulations may also expose us to liability for the conduct of or conditions caused by others, or for actions which were in compliance with all applicable laws at the time such actions were taken. Furthermore, some environmental regulations provide for joint and several strict liabilities for environmental remediation of releases of hazardous substances, which could result in liability for environmental damage without regard to negligence or fault. 5.2.9 We are subject to hazards customary to the operation of vessels and unforeseen interruptions Our operations are subject to various operating hazards and risks, including those beyond our control, such as: • catastrophic marine and other natural disasters;
• adverse sea and weather conditions;
• infectious communicable diseases;
• unanticipated geological conditions; and
• war, sabotage, piracy and terrorism risks.

Our operations are also subject to operating hazards and risks that may be somewhat within our control, such as: • equipment failures;
• navigation errors and crew negligence;
• collisions, grounding and fire; • oil and hazardous substance spills, containment and clean up;

• labour shortages and strikes; and
• damage to and loss of vessels.

5. RISK FACTORS (Cont’d) These risks present a threat to the safety of our personnel and damage to our vessels, cargo, equipment under tow and other property, as well as the environment. We could be required to suspend our operations as a result of these hazards. In such event, we would experience loss of revenue and possibly property damage, and additionally, third parties may have significant claims against us for damages due to personal injury, death, property damage, pollution and loss of business. Additionally, we may be penalised by the relevant authorities if we are determined to be responsible for the occurrence of any of such hazards. If we are unable to obtain adequate compensation under our insurance coverage, our business, financial condition and results of operations would be adversely affected. Furthermore, any deliberate misconduct by our crew members may create a liability for our Group or may cause reputational harm to our business. 5.2.10 We are dependent on our key management and key technical personnel as well as our ability to hire and retain skilled and qualified employees Our key management have been and will continue to be instrumental in implementing our Group’s business strategies determined by our Board. The loss of the services of our key management without suitable and timely replacements may lead to a loss or deterioration of important business relations which would have a material adverse impact on our business, financial condition, results of operations and prospects. Please refer to Section 9.2 of this Prospectus for further information on our key management. Furthermore, our success depends largely on our ability to attract and retain highly skilled and qualified personnel and marine crew such as ship captains, sailors, engineers, operators and OP officers. Skilled personnel and marine crew with appropriate experience in the offshore oil and gas industry are scarce and the employment market for them is very competitive, resulting in inflationary pressure on hiring, training and retention costs for skilled marine crew. As a result of the volatility of the oil and gas industry and the demanding nature of the work, potential employees may choose to pursue employment in fields that offer a more desirable work environment at wage rates that are more competitive than ours. For such reasons, companies in the offshore oil and gas industry typically offer attractive compensation packages to attract and retain qualified personnel. In addition, due to the shortage of experienced, qualified and skilled local marine crew, particularly for the higher ranking deck officers and engineers,we have to employ foreign nationals to fill these posts, for which work permits and visas are required. We may experience a reduction in the experience level of our skilled personnel as a result of any increased attrition, which may lead to higher downtime and operating incidents, which in turn could adversely affect revenue and increase costs. If we are unable to continue to attract and retain skilled and qualified employees and/or there is a change in labour laws and regulations in a particular country which restricts our skilled and expatriate personnel from working in such country, we may not be able to operate efficiently. Our inability to hire, train and retain sufficient number of skilled and qualified employees could impair our ability to manage and grow our business. Please refer to Section 7.17 of this Prospectus for further information on our OSV crew. 5. RISK FACTORS (Cont’d) 5.2.11 As we continue to expand internationally, we are increasingly susceptible to legal, regulatory, political, economic and competitive conditions outside of Malaysia, as well as operational risks different from those that we face in Malaysia We expect to continue expanding our business activities outside of Malaysia. Some of our vessels operate In foreign waters and we are therefore subject to a number of risks inherent in any business operating in foreign countries. These risks include, among others, political instability, expropriation, nationalisation or detention of vessels and other forms of public and governmental regulation, foreign currency fluctuations, problems arising from collections from customers, repatriation of funds, piracy and terrorist attacks. In addition, as we expand internationally, most of our operations will be sUbject to Port State Control regulations, including foreign laws. We may be required to procure a local partner or otherwise restructure our operations to comply with such regulations or may be required to cease operations in these areas. Furthermore, a flag state government could seize one or more of our vessels for title or for hire. Requisition for title occurs when a flag state government takes control of a vessel and becomes her owner. Requisition for hire occurs when a flag state government takes control of a vessel and effectively becomes her charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Although our business and operations have so far not been materially and adversely affected by such events, we are unable to predict whether we can remain unaffected by the consequences of such events in the future. If any of these events or other similar events occurs in the future, it may have a material impact on our operations and consequently, materially and adversely affect our financial condition, results of operations and prospects.
5.2.12 We are exposed to technological risk The offshore oil and gas industry is a highly technical and technology-based industry. The technological standards of our vessels, equipment and machinery may change based on the requirements of the industry. While we currently have a modern fleet and many of our vessels have the latest technology, the vessels, equipment and processes that we currently use may become obsolete or less efficient compared to more technology advanced vessels, equipment and processes that may be developed in the future. As our customers move their offshore operations into deeper waters, they may demand more powerful vessels equipped with greater technological capabilities and larger capacities to support their operations. The cost to upgrade our vessels or equipment or implementation of such advanced technology processes could be significant and could adversely affect our business, financial condition, results of operations and prospects. [The rest of this page has been intentionally left blank]
5. RISK FACTORS (Cont’d) 5.2.13 We are exposed to business and operational risks pursuant to our future plans and strategies and our future plans and strategies are subject to change As part of our future plans and strategies, we plan to, among others, expand our fleet size to provide our customers with a diversified range of value-added services across the offshore oil and gas life cycle as well as selectively expanding into deepwater projects. Our future plans and strategies may result in us facing various business and operational risks, which may include inability to secure contracts or negotiate favourable contract terms, insufficient cash flow, insufficient funding capability and inability to hire suitable workforce. Moreover, by undertaking these future plans and strategies, we may put additional strain on our operational and financial resources, as well as on our management, potentially reducing their focus in overseeing our day-to­day business. In addition, our plans to expand our fleet are subject to change based on market conditions, customer requirements and other future events. We evaluate our fleet and expansions plans on an on-going basis to ensure we balance customer needs with our vessel composition and, we may decide to change our future plans and strategies, which may include disposal of vessels before delivery, if the requirements change. Accordingly, we cannot be certain that we will implement our future plans and strategies or successfully implement them or that we will successfully address the risks that our future plans will expose us to. In the event that we do not successfully address these risks, our business, financial condition, results of operations and prospects could be adversely affected.
5.2.14 We are exposed to risks of shipyards and suppliers failing to perform their contractual obligations We depend on shipyards and suppliers for the timely delivery of our OSVs, equipment and services. Consequently, we may face the risk of delayed delivery of vessels or equipment or services such as drydocking, repair and maintenance, non­compliance with the specifications and/or non-delivery of our OSVs, equipment and services from shipyards and suppliers. In the event we are unable to find an alternative shipyard or supplier, this may affect our obligations to our customers. In such circumstances, our business, financial condition, results of operations and prospects may be adversely affected.
5.2.15 We may have inadequate insurance coverage to cover all losses or liabilities that may arise in connection with our operations The operation of our vessels involves inherent risks such as oil spills, damage to or loss of vessels and cargo sustained in collisions, property loss and interruptions to operations caused by adverse weather and environmental conditions, mechanical failures, crew negligence and navigation errors. The occurrence of any of these events may result in damage to or loss of our vessels and our vessels’ cargo or other property and injury to passengers and personnel on board. In addition, concerns about other factors such as hijacking or attacks have caused significant increases in the cost of insurance coverage and may result in higher insurance charges and in turn, higher operating costs in the future. In the event of an oil spill or damaged or lost cargo, we may incur liability for containment, clean-up, salvage costs and other damage that may arise. We may also be liable for damage sustained in collisions and wreck removal charges arising from the operation of our vessels. Moreover, our customers may become subject to penalties, fines or insurance claims and may attempt to pass on part or all of these costs to us. In addition, we may be liable for substantial fines and penalties imposed by the authorities of the relevant jurisdictions. 60 5. RISK FACTORS (Cont’d) There can be no assurance that a[1 potential liabilities and losses can be adequately insured at all times or that any insured sum will be paid. In the event of damage or losses in excess of our insurance coverage, we may be required to make material compensation payments. As such, our financial condition may be materially and adversely affected. Furthermore, events such as wars, sabotage, piracy or terrorist attacks may result in substantial increases in our insurance premiums, thereby affecting our financial condition and results of operations.

5.2.16 We are exposed to risks arising from foreign exchange fluctuations Our customer contracts in Malaysia and operating costs are generally denominated in RM while our international contracts, shipbuilding expenditure, one of our credit facilities and certain of our operating expenses are denominated in foreign currencies, primarily the USD. However, we report our financial results in RM. Therefore, as a result of adverse foreign currency fiuctuations against the RM which would in turn result in translation differences when converting other currency amounts to RM for financial reporting purposes, our results of operations and financial condition will be affected. We are also exposed to foreign exchange fluctuations in the event of differences in the timing and amounts of receipts and payments in foreign currencies. To the extent there are any such timing differences, a significant fluctuation in the applicable foreign currencies against the RM arising from such timing differences, for example in respect of credit terms given to our customers and by our suppliers, we may incur foreign exchange losses. 5.2.17 Our controlling shareholder, substantial shareholders or non-executive Directors may have interests that may not be aligned or may conflict with those of our Company or our other shareholders Upon completion of our IPO and assuming the Over-allotment Option is not exercised, our controlling shareholder, ECSB (through its subsidiaries, Hallmark and SFSB), will own about 47.6% of our enlarged issued and paid-up share capital. As our controlling shareholder, 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, ECSB (through its subsidiaries) will be able to vote on matters such as election of our Directors and the approval of any corporate proposal or transaction requiring the approval of our shareholders, including the approval of all final dividends. The interests of our controlling shareholder may not be aligned or may conflict with those of our Company or our other shareholders. Our substantial shareholders or non-executive Directors may also in the future engage in businesses carrying on a similar trade as ours or businesses which serve as our customers or suppliers, from which potential conflicts of interest may arise.

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