Risk Factors

3. RISK FACTORS 3. RISK FACTORS Notwithstanding the prospects of our Group as outlined in this Prospectus, before deciding to invest in our Restricted Offer Shares, you should carefully consider the following risk factors (which may not be exhaustive) aiong with other information contained herein before you make your investment decision. If you are in doubt as to the information contained in this section, you should consull your stockbroker, bank manager, solicitor, accountant or other professional advisers. RISKS RELATING TO OUR BUSINESS (i) Performance of the property market Our financial performance is iargeiy dependent on the performance of the property market in Malaysia and other countries in which we operate. Any adverse developments affecting the property markets such as the deterioration in property demand and the property rental market may have an adverse impact on our business operations and financial performance. While our operations and financial performance have not been materially and adversely affected by the performance of the property market in Malaysia or other countries in which we operate, we will diligently monitor the development and changes within the Malaysian and overseas property markets in planning our future developments to maintain our competitiveness. The performance of the property market is also affected by the regulatory environment. In efforts to promote a more stable and sustainable property markets, local authorities in Malaysia, Singapore and PRC have introduced certain regulatory restrictions and schemes. In Malaysia, Real Property Gains Tax (“RPGT”) was reinstated by the Malaysian government in 2010 to deter speculative activities in the secondary property market. Subsequent to 2010, the RPGT rates were revised higher by the Malaysian government as part of its efforts to further curb speculation in the property market. As announced in the Malaysian Budget 2014 (“Budget”) effective 1 January 2014, the RPGT rates for the disposal of properties have been revised as follows:­Disposal period  RPGT Rates (%l  Companies  Individuals (citizens & permanent residents)  Individuals (non citizens)  For disoosals within 3 vears  30  30  30  For disposais in the 4 vear  20  20  30  For disoosals in the 5′” vear  15  15  30  For disposals after 5 ‘ vear  5  0  5
Notwithstanding the increase in RPGT rales, we believe that our property sales will not be materially affected as our properties, particularly our township developments are mainly targeted at genuine first-time house buyers rather than property speculators. Additionally, the Malaysian government had also imposed a minimum purchase price of RM500,OOO on properties purchasable by foreigners. The said minimum price was revised further from RM500,000 to RM1 ,000,000 in the Budget as part of the Malaysian government’s plans to restrict speculative activities in the property market. In FYE 2013, Malaysian property sales made to foreigners accounts for approximately 10% of the total sales value of IOIPG in Malaysia. While this measure may affect foreigners’ demand for properties in Malaysia, IOIPG’s developments in Malaysia ie, township developments, are targeted to the local market and as such we are of the opinion that the measure will not adversely affect our property sales. In 2010, Bank Negara Malaysia had also introduced a maximum loan-to-value (“LTV”) ratio of 70% with regards to third home purchases. Under the ruling, potential third home purchasers are only able to obtain loan-financing facility of up to 70% of the value of their proposed third home purchases. This ruling was introduced by Bank Negara Malaysia with the aim of discouraging speculation in the property market. In November 2013, Bank Negara Malaysia issued a ruling that the banks are required to give out property loans based on net selling price of the properties, which excludes rebates and discounts as opposed to the gross selling price of the subject properties. In addition, banks can no longer provide financing for projects with developer interest bearing schemes (“DIBS”). DIBS is generally a form of promolional incentive offered to potential purchasers in a bid by property developers to attract property buyers. Under DIBS, interests of the loan undertaken by the buyers are borne by the property developers until the property has been constructed. However, we are of the view that such restriction should not have a material impact on our operations and financial performance given that we presently only have a few property projects with DIBS option and we are also able to offer other forms of promotional incentives, which 3. RISK FACTORS (Cont’d) substitutes DIBS, to attract potential purchasers. However, any further introduction of cooling measures by Bank Negara Malaysia andlor the Malaysian government to control price levels of the Malaysian property market may adversely impact our property development business. In Singapore, the Singapore government has implemented seven (7) rounds of property curbs and cooling measures since September 2009 to keep the buoyancy of the property market in check. Such measures included, inter alia, the lowering of LTV limits, the increase in minimum cash downpayment, the imposition of Additional Buyer’s Stamp Duty (“ABSD”) and the stipulation of a maximum loan tenure. On 12 January 2013, the Singapore government further increased ABSD rates for certain categories of residential property purchasers on purchases or acquisitions of residential properties on or from 12 January 2013 onwards. In addition, the Singapore government had also recently shortened the maximum tenure of industrial leasehold lands under Industrial Government Land Sales Programme (“IGLS”) from sixty (60) years to thirty (30) years. This was implemented to promote affordable industrial lands and to discourage speculative activities. Any extension of the ABSD scheme or the introduction of further cooling measures to control price levels of properly in Singapore may adversely impact our property deveiopment
business in Singapore. Any extension of the ABSD scheme or the introduction of further stringent measures to control price levels of property in Singapore may adversely impact our property development business in Singapore. Similarly in Xlamen, PRe, the local government, Xiamen Resources and Housing Administrafive Bureau announced in 2013 a series of cooling down measures involving price control regulations on property transactions. Please refer to Section 5 for our independent market research report for further details on the regulatory restrictions imposed on our businesses. The above measures may affect the demand for properties which in turn may adversely impact our property development business. (ii) Competition from other property developers Although there are some barriers of entry into the property industry, we experience intense competition from existing piayers and new market entrants in respect of Landbank, supply of raw materials and labour and seiling prices of property. There are many local and foreign property developers undertaking property development and investment projects both in Malaysia and other countries in which we operate, thus putting downward pressure on property prices and creating material and labour scarcity. While we seek to remain competitive in terms of pricing, design, quality and strategic marketing, there is no assurance that our proactive measures can effectively mitigate the potential adverse effects of competition on our fulure financial performance and position. Further details on our market share and competitive environment are set out in Section 5 of this Prospectus. (iii) Our profitability may be affected by cost fluctuation and demand for properties Our profitability may be affected by any increase in land acquisition costs and fluctuation of construction costs which are inherent to our industry. Higher cost of materials (including steel, cement and tiles), labour costs, contractor fees and overheads, will reduce our profit margin in the event we are unable to pass these increased costs to customers in the form of higher selling prices. Selling prices of properties are largely determined by product differentiation in terms of location, reputation, quaiity, design and the conditions of the property market in Malaysia and the countries in which we operate. There can be no assurance that any changes in development cost will not have any material impact on our financial performance. Although our contractors bear the risk of fluctuation in prices of construction materials, a persistent uptrend in costs will likely have a lasting effect on our profit margins. We seek to limit this risk by continuing to closely monitor and manage the construction costs while making all reasonable efforts to maintain the quality of our products. 3. RISK FACTORS (Cont’d) The demand for our properties is affected by the economic climate, conditions of the property markel, buyers’ perception and negative consumer sentiment and changes in market rental yields and interest rates, which we may not have any control over. We continuously seek to mitigate these risks by constantly reviewing our development and marketing strategies in response to the ever­changing market conditions and adopt;’ng different development concepts and techniques that position our Group to meet the needs of our target markets, (iv) Delay in completion of projects We sell most of our properties prior to the completion of their construction I.e. sell and build concept. Therefore, we may be affected by external factors which may give rise to delay in delivery of our properties to our buyers. These external tactors include, but are not limited to, regulatory approvals and permits from various authorities, adverse weather conditions, unsatisfactory pertormance of contractors, accidents at project sites, stop work orders issued by relevant local authorities, labour disputes and availability of quality rnaterials and labour. Apart frorn the stop work orders highlighted in Section 4.11 of this Prospectus, we have not faced any rnaterial interruptions or delay in the completion of our projects. As a township developer, we engage independent contractors in all our projects and as such, we rnay experience delay due to failure of our contractors to cornplete their work based on an agreed tirne schedule and to the specifications required. We Iirnit this risk by inviting bids frorn our panel of registered and experienced contractors with track records and proven capabilities. Further, we are also able fa claim frorn our contractors in the event of such delays, sUbject to the terrns and conditions set out in our contracting arrangements. These terms and conditions generally include failure by our contractor to deliver projects without prior approval for extension of tirne in accordance with the Malaysian Institute of Architects’ Building Contract PAM 2006 guidelines. Although we have been successful in our claims against our contractors in the past, there have not been many incidences of such claims as we have put in place a stringent contractor selection process and closely monitor and supervise our contractors to ensure timely delivery of projects. Notwifhstanding the above, any delay in completion rnay give rise to potential ciairns for liquidated damages frorn our buyers pursuant to the terrns of the sale and purchase agreernents entered into and such c1airns rnay adversely affect our Group’s reputation and financial perforrnance. Our wealth of experience in dealing with contractors will selVe to rnitigate the above risk. Our track record as set out in Section 4 of this Prospectus is a testament to our ability to manage, deliver and compiete large scale projects on time. (v) Performance of joint ventures Our joint venture projects are with the following parties: (i) Ho Bee Investrnent Ltd through Pinnacle (Sentosa) for the development of the “Cape Royale” and through Seaview (Sentosa) for the developrnent of Seascape at Sentosa Cove, both located in Sentosa Cove, Singapore; (i1) Ascent View Holdings Pte. Ltd. (a wholly-owned subsidiary of Cify Developrnents Lirnited), through South Beach Consortiurn for the developrnent of a rnixed use developrnent at Beach Road, Singapore; (iii) Kirn Seng Heng Realty Pte Ltd and LBH Pte Ltd through Mergui Developrnent tor fhe developrnent of Cityscape at Farrer Park, Singapore; and (iv) Sirne Darby Brunsfleld Motorworld Sdn Bhd through PJ Midtown Developrnent for the development of a rnixed developrnent in Section 13, Petaling Jaya, Selangor Darul Ehsan. We are exposed to the risk of termination of our joint ventures. Such risks are to a certain extent rnitigated as our joint venture agreements generally contain terrns that govern the treatment of termination events to the detrirnent of the defaulting party and we would generally seek to enforce our rights as set out within these agreernents. However, the occurrence of such events rnay materially and adversely affect the perforrnance of our joint ventures, which in turn rnay rnaterially and adversely affect our business, financial condition, results of operations and prospects. 3. RISK FACTORS (Cont’d) Based on our past track record, we have not faced termination or abortion of any joint venture development projects undertaken by us as a result ot any default in obligations or breach of responsibilities by us or our joint venture partners. We have met our responsibilities as and when they are due and have not defaulted on our obligations. Further, we are also cautious in choosing our business partners and have established internal criteria in terms of financial standing, reputation and quaiity of management in our decisions in co-operations with external parties. Currently, our joint venture partners are established property developers and have strong track record in development of properties in Malaysia and Singapore respectively. However, there is no assurance that we will not face such risks in the future. (vi) Country risks tram our ventures in Singapore and the PRC We are involved in the property development industry in Singapore and the PRC. In addition to our developments projects in Singapore as disclosed in the preceding section, we have also invested in two separate developments in the Jimei District in Xiamen, PRC. As at 30 June 2013, the foreign projects are estimated to generate a total GDV of SGD2.9 billion in Singapore and RMB6.7 billion in the PRC. Hence, we are exposed to economic, political, legisiative, regulatory, taxation and other developments that may adversely affect our investments in these countries. Further, the repatriation of the investment and potential protits trom our investments wili also be subject to the relevant policies of Singapore and the PRC which are in existence at the point of repatriation. Any fluctuations in the exchange rate between RM, the SGD and RMB would also affect the reported future results of our ventures in those countries, respectively. We believe that undertaking our investments in Singapore via joint ventures with locally established joint-venture partners provides the benefit of local market and regulatory knowledge, expertise and resources as well as sharing of risks and rewards. In Xiamen, PRC, we have appointed reputable local contractors and will leverage on their experience, expertise and knowiedge in developing our Landbank. (vii) Scarcity at commercially viable Landbank tor development For our Group to continue to be successful in the property development industry, we rely to a large extent on our existing Landbank, as well as on our ability to identity and acquire suitable Landbank with development potential to deliver sustainable growth and profitability. However, like our peers, we also face intense competition trom other property developers in identifying and acquiring strategically located Landbank at commercially viable prices. The competition among industry players has to a certain extent, created some scarcity in strategically located land, which may result in higher land acquisition cost, thus may lead to a potential decrease in our profitability and adversely affect our prospects. We believe that we are in a relatively stronger position than most of our peers as we have approximately 10,000 acres of undeveloped Landbank in Malaysia, Singapore and Xiamen, PRC as at LPD. Besides developing properties from our existing large Landbank, we have also prudently managed our risk by entering into joint ventures with land owners and/or reputable third party developers who possess the right expertise and experiences to jointly develop lands on commercially viable profit sharing terms. Notwithstanding the above, there can be no assurance that we will be able to continue to identify new Landbank and replenish our Landbank on commercially-viable prices and on suitable terms, or be able to secure opportunities to jointly deveiop iands with land owners on commercially viable profit sharing terms and with good development potentiai to spur our growth. Further, our established track record and the list of our completed projects shown in Section 4 of this Prospectus also serve as a testament of our success in adapting to and meeting our customers’ needs. However, there is no assurance that our past periormance is an indication of expected future revenue and profitability and the demand for properties in the market as well as the advent of property overhang may have a direct adverse impact on the financiai performance and prospects of our property business. 3. RISK FACTORS (Cont’d) (viii) We may be affected by property overhang and/or unsold properties Property overhang is commonly caused by oversupply and/or low take-up rate of new property launches by property developers. Other factors contributing to property overhang may include economic downturn and unfavourable market conditions. Any prolonged rise in the property overhang situation would inevitably result in us potentially holding high number of unsold properties. Apart from the general property overhang situation, an increase in the number of unsold properties in the property market may also be due to other factors such as weak reception on the launched properties, location of the development and changes in consumer preferences. Although we have continued and are able to hold unsold properties post-completion, there is no assurance that these unsold properties may not have a material impact on our financial performance. To manage any issues of holding unsold properties, as a township developer, we have managed to capitalise on our experience to offer different types of residential and commercial properties to suit different market demand at our respective townships. In addition to this, our Group also continues to monitor and adapt to deliver quality products, ensuring timely completion of our projects. We also seek to maintain stringent management of our construction cost to ensure our Group remains competitive so as to withstand any adverse effects from any potential property

overhang. To further mitigate some of the inherent risks of property deveiopment, our Group have also ventured into investment properties by managing malls, hotels and office towers to provide an alternative and consistent source of income stream in its more mature township developments. (ix) We are exposed to foreign exchange fluctuations The reporting currency of our statutory financial statements is presented In RM as our Company is incorporated in Malaysia. However, we have operations in Singapore and Xiamen, PRC through our jointly controlled entities and/or subsidiaries where their functional currencies are denominated in SGD and/or RMB. We are hence exposed to foreign exchange fluctuation at each reporting date when the financial results of our overseas operations are consolidated for purposes of presentation into our Group’s consolidated financial statements. We are also exposed to foreign exchange risk as we may provide additional capital/funds to our foreign subsidiaries/jointly controlled entities and/or repatriate our profits from these entities, if such need arises from time to time. However, our risk is to a certain extent mitigated as our investments in Singapore (except for Clementi Development, a subsidiary of 101PG) are limited by the size of our exposure through joint controlled entities. Further, for the past three (3) financial years, we have not been materially affected by the fluctuations of the foreign exchange. Nevertheless, there can be no assurance that any significant fluctuations in foreign exchange rates will not have an adverse material impact on our financial performance. (x) Inherent risks in the property development industry We are subject to inherent risks in the property development industry. These may include, inter-alia, changes in general economic conditions, inflation and changes in business conditions such as deterioration in prevailing market conditions, shortage of labour supply, increase in labour and raw material costs, fluctuating demand for real estate properties and changes in government policies on lending by banks. Further, as a property developer, we are also quite dependent on the continuous provision of services by our experienced contractors with track records and proven capabilities. Our Group endeavours to minimise these risks by developing quaiity properties to suit the needs and preferences of our target markets and deliver value to our existing and potentiai customers as well
as maintaining strong relationship with our contractors. Although we have taken and will continue to take various steps to mitigate our business risks, there can be no assurance that any changes to the factors mentioned above will not have any material adverse impact on Our financial performance. (xi) Inherent risks in the property investment industry We develop residential and commercial properties (which include shop lots, office towers and retail malls), some of which are held as investment properties. Our major investment properties include 101 Mall in Puchong and Kuiai, Puchong Financial Corporate Centre, One iOI Square, Two 101 Square and 101 Boulevard in Puchong. Please refer to Section 4 of this Prospectus for the list of
our investment properties. 3. RISK FACTORS (Conl’d) Investment properties are subject to, inter-alia, risks incidental to the ownership and management of residential and commercial properties including, amongst others, competition for tenants, change in market rents, inability to secure new tenants/lessees or renew leases or re-let spaces as existing leases expire, illiquidity of property investments and inability to dispose olf major investment properties for the values at which they are recorded in our financial statements, deterioration in the value of our properties, inability to collect outstanding rentals from tenants/lessees, increased operating costs, the need to renovate, repair and re-Iet space periodically and to pay the associated
maintenance costs. We serve to limit the above risks by closely monitoring and managing our property investment through our in-house property management division. However, there can be no assurance that any changes to the factors mentioned above will not have any material adverse impact on our financial performance. (xii) Inherent risks in the leisure and hospitality industry Our leisure and hospitality segment comprise golf courses and hotels in Malaysia. We are hence subject to the risks inherent to the leisure and hospitality industry such as, the fluctuation in demand for our leisure and hospitality services, competition from our peers who offer similar products, changes in business conditions, decline in the level of tourism and changes in consumer trends. We serve to limit such risks by continuously monitoring the market trends and encouraging feedback from our customers in order to continuously improve our performance. However, there can be no assurance that any changes to the factors mentioned above wili not have any material adverse impact on our financial performance. Further, the leisure and hospitality industry is typically quite susceptible to the ellects of outbreak of infectious diseases, which tend to curbs travel and tourist arrivals. As such, it an outbreak of infectious disease such as severe acute respiratory syndrome (SARS) or avian flu or swine flu were to occur, the financial condition and operating results of our leisure and hospitality business may be adversely allected. RISKS RELATING TO OUR OPERATIONS (i) Government policies, legislation, regulations and requirements We are subject to the relevant laws and regulations of the countries in which we operate. The following are brief descriptions of the government policies, legislation and regulations, amongst others, that are typically applicable to our businesses in the countries we operate in, all of which are not exhaustive and for information purposes only:
Malaysia We operate in the Malaysian property development and investment industry which is governed by government policies and legislation, regulations and requirements established to control and protect consumers as well as to determine minimum industry standards. The legislation, regulations and requirements that govern the construction and property development industries include, but are not limited to, the Malaysian Construction Industry Development Board Act 1994, the Housing Development (Control and Licensing) Act 1966 (“HDA”), the Housing Development (Control and Licensing) Regulations 19a9, the Housing Deveiopment (Housing Development Account) Regulations 1991, the Strata Titles Act 19a5, the Building and Common Property (Maintenance and Management) Act 2007, the Street, Drainage and Building Act 1974, the Unitorm Building By-laws 1984, the Architects Act 1967, the Town and Country Pianning Act, 1976, the Local Government Act 1976 and the Environmental Quality Act 1974. Betore commencing any project, a developer is required to apply for planning and building plan approvals, in relation to which the local government has a significant input in administering all aspects ot property development including planning and building plan approvais as well as the maintenance of infrastructure such as street lighting, under amongst others the Street, Drainage and Building Act 1974, the Uniform Building By-laws 19a4, the Town and Country Planning Act, 1976 and the Locai Government Act 1976. After obtaining the aforesaid approvais, where applicable, the developer is required to obtain a housing developer’s licence and advertising permit from the Ministry of Housing and Local Government under the HDA and the Housing Development (Control and Licensing) Regulations 19a9. Delays in the process of obtaining the requisite approvals or failure to comply with one or more of such legislation, regulations and requirements may allect the progress of our projects. 3. RISK FACTORS (Cont’d) PRC In order to develop and complete a real estate development project in the PRC, a developer must obtain various permits, licenses, certificates and approvals fr\om the relevant administrative authorities at various stages of the real estate development, including, among others, land use rights certificates under the Land Administration Law of PRC ( {‘I”i’A~;fl:’IliIl!l±it!l~l1.IljtJ ), Construction Land Planning Permits and Construction Planning Permits under the Urban and Rural Planning Law of PRC ( {‘I”i’A~;fl:’IliIl!lli£~iJil~JJt) ), Construction Works Commencement Permits .under the Construction Law of PRC ( «’I”i’A~;fl:’Ilill!llt\1l:Jt» ), Pre-Sale Permits and certificates of completion under Urban Real Estate Administration Law of PRC ( «’I”i’A~;fl:’IliIl!lli£ mmit!lF~l1.IlJt» ) and Regulation on Quality Management of Construction Project ( {ltil!:If¥ml Ji~l1.Il~d9~) ). Each approval is dependent on the satisfaction of certain conditions. Delays in the process of obtaining any of the requisite approvais or permits or failure to comply with the laws, regulations and/or any conditions or requirements specified in any of the approvals or permits may affect the progress of, or the developer’s qualification to develop, our projects in the PRC. Singapore We are also subject to the relevant laws and regulations of Singapore in relation to our property development business in Singapore, such as the following: (a) housing developer’s licence The housing developer’s licence is required for a developer who intends to develop a project with more than four units of housing accommodation and it has to be obtained prior to undertaking the business of housing development; (b) approval from the Urban Redevelopment Authority and Building and Construction Authority of Singapore
All proposed property development projects in Singapore require a written permission granted by the Urban Redevelopment Authority setting out specific requirements and limits for each property development, such as land use, gross plot ratio, building height and bUilding form on the development site.
(c) restrictions under the Residential Property Act (Cap. 274) of Singapore (the “RPA”)

The RPA restricts the purchase or transfer of residential property (including residential vacant land) to Singapore citizens and approved purchasers which includes Singapore companies. A Singapore company, as defined under the RPA, is a company in which all of the members and directors are Singapore citizens or where the member is another company. in which all the members and directors of such company are Singapore citizens. A clearance certificate or qualifying certificate, as the case may be, must be obtained from the Controller of Residentiai Properties before the purchase or acquisition of an estate or interest in any residential property; and (d) others regulations and guidelines Property developers in Singapore are also subject to the zoning, planning, and design regulations and guidelines issued by the Urban Redevelopment Authority of Singapore, as weli as other various laws and regulations relating to workplace health and safety and environment pollution control. We have been and will continue to be in compliance in all material respects with the legislation, regulations and requirements of the respective countries in which we operate in respect of our business operations. However, there can be no assurance that any changes Or new additions to the present government policies, legislation, regulations or requirements will not have a material impact on our operations or financial perfonnance. 3. RISK FACTORS (Cont’d) (ii) Non-renewal of I failure to obtain permits, licences and certificates Our permits, licences and certificates (for exampie, CIDB I construction licences, housing development licences including developer’s licences and advertising permits and business licenses) are sUbject to periodic review and renewal by the relevant government authorities. In addition, the standards of compliance required may from time to time be subject to changes. Failure to obtain or renew such permits, licences or certificates or revocation of such permits, licences or certificates or changes Imposed on the terms and conditions of licensing may cause disruption or delay in relation to our business operations and consequential financial loss to our Group. Although our Group has not experienced any difficulty in obtaining and maintaining the requisite permits and licences in the past, and our Group does not foresee any potential issues arising from the renewal of our existing permits and licenses, there is no assurance that existing permits and licenses will be renewed, or renewed within the anticipated timeframe, or that any new licences required by our Group will be obtained or obtained in a timely manner or maintained without interruption after being obtained. (iii) We may be affected by political and economic conditions The business operations of our Group are closely linked to the economic fundamentals and political stability of Malaysia and other countries in which we operate. Any political and economic uncertainties including, but are not limited to, risks of war, expropriation, nalionalisation and unfavourable changes in government policies such as changes in interest rates, methods of taxation, exchange control regulations or the introduction of new rules and regUlations could result in material adverse effects on the financial performance and position of our Group. As at LPD, we have not been materially and adversely affected by any of the factors set out above. There can be no assurance that any changes to these factors will not have a material adverse impact on the financial performance and position of our Group. However, we seek to mitigate such risks by implementing prudent financial and risk management and efficient operating procedures. (iv) Reliance on the Directors and key management personnel We believe that our continued success will depend to a significant extent upon the abilities, skills, experience, competency and continuous efforts of our existing Directors and key management team as disclosed in Section 6 of this Prospectus. In partiCUlar, the extensive experience and leadership of our Execuitve Chairman, Tan Sri Lee as disclosed in Section 6.1.2(il) of this Prospectus. He is deemed pivotal to the operations of our Group, having founded the property businesses for more than twenty (25) years ago and ably led the management throughout such period. Through his entrepreneurial leadership and stewardship, strategic foresight, guidance and vision as well as his vast experience and business linkages, our Group had grown to become one of the property groups

in Malaysia. Tan Sri Lee is also the Executive Chairman of laiC. His executive chairman positions in laic and IOIPG may potentially materially affect the business operation of our Group in the event his duties are not discharged effectively and in a timely manner. However, the management of IOIPG believes that Tan Sri Lee is able to discharge his duties effectively as our Executive Chairman moving forward as he has done for many years during the period that IOIP was a listed company on the Main Market of Bursa Securities. This is because Tan Sri Lee is ably supported by a dedicated and separate group of management teams for both businesses, all of whom have a wealth of experience in the respective plantation or property industry. Notwithstanding the above, any significant or sudden loss of the services of our other Directors and/or key management personnel without suitabie and timely replacement or our inability to attract and retain qualified and skilled key management may have an adverse effect on our Group’s
business operations. We continuously strive to groom and deveiop younger members of the management team to gradually assume greater responsibilities in preparation for our long-term expansion and in furtherance of our succession plan. As such, our Group has put in place management succession plans and training programmes to reduce dependency on senior management and key personnel. We also ensure that all employees are given recognition and are adequately rewarded for their
contribution to the success of our Group. 3. RISK FACTORS (Cont’d) (v) Our borrowings and debt covenants may affect our financial performance Our working capital requirements are met partly by borrowings and partly via intemally-generated funds. Our tolal proforma borrowings as at 30 June 2013 comprised approximately SGD226.9 miilion (equivalent to approximately RM569.93 miilion based on the exchange rate of RM2.5121:SGD1.00) which is interest-bearing. There can be no assurance that our financial performance will not be affected in the event of unfavourable changes in interest rates and that any additional borrowings will not have any material effect on our financial performance. As such, we adopt careful project planning and monitoring to ensure that our cash fiows are well managed. We also enjoy good credit standing with our bankers and have adequate credit facilities as we service our debt repayment obligations on time. In addition, we are bound by covenants contained in credit faciiity agreements entered by us with lenders which may affect our operating and financial fiexibility. The aforesaid covenants are of a nature which is commonly contained in credit facility agreements in Singapore. Any act by us falling within the ambit or scope of such covenants will require the consent of the relevant banks or financiers. Breach of such covenants may give rise to a right by the banks or financiers to terminate the relevant credit facility andlor enforce any security granted in relation to that credit facility. Our Board is aware of such covenants and will take all necessary precautions to prevent any such breach. To the best of our Board’s knowiedge, as at LPD, neither we nor any of our subsidiaries are in breach of any terms and conditions or covenants associated with credit arrangements or bank loans, which may materially affect our business operations or financial position. (vi) Insurance coverage may not be adequate for our operations We are aware of the adverse consequences arising from inadequate insurance coverage. To manage such risks, we periodically review our insurance coverage to ensure adequate coverage for our material assets inclUding all on-going projects, completed projects (up until cessation of defect liability period) and liabiiities arising from construction and development works and other leisure and hospitality assets. Allhough our Group has taken the necessary measures to ensure that all our assets and potential liabilities are adequately insured, there can be no assurance that our insurance coverage will be adequate to compensate for the replacement costs of such assets or any consequential losses or damages arising from construction or development work liabilities. (vii) Our operations may be affected by material litigation, claims or arbitration As at LPD, save as disclosed in Section 14.5 of this Prospectus, our Group is not engaged in any material litigation or arbitration proceedings which have or may have a material effect On our business operations or financial position, and our Directors are unaware of any proceedings threatened or of any fact likely to give rise to any proceedings which may materially affect our
business operations or financial position. However, there can be no assurance that there will be no proceedings in the future that could adversely affect the business operations and profitability of our Group. (Viii) We engage in related party transactions We engage in certain transactions with companies in which our directors, substantial shareholders and connected persons have interests, as set out in Section 8 of this Prospectus. We have taken steps to resolve any conflict of interest that may arise from related party transactions in the future which will be assessed, approved and monitored by the Audit and Risk Management Committee comprising of independent directors to ensure that the transactions are undertaken at arm’s length
and on normal business terms consistent with our usual business practices and policies. . The Act and other relevant regulations provide certain protection to shareholders including but not limited to mandatory shareholder approvals for all related party transactions and the abstentions from voting by shareholders who have an interest in the transaclions. (ix) The accounting outcome of our Group may be affected as a result of changes to the FRS and related interpretations after the date of this Prospectus Our financial reporting is made in accordance with the Financiai Reporting Standards (“FRS”) in Malaysia issued by the Malaysian Accounting Standard Board (“MASB”). The FRS and related interpretations may change after the date of this Prospectus as the MASB may release additional FRS or modify the existing FRS requirements from time to time to reflect the changes and updates made to the International Financial Reporting Standards (“IFRS”). Hence, we are therefore exposed 3. RISK FACTORS (Cont’d) to the potential impact of new IFRSs and interpretations issued by the Internationai Financial Reporting Interpretations Committee (“IFRIC”) in particular the coming into effect of IC Interpretation 15: Agreements for the Construction of Real Estate (“tC 15”) issued by IFRIC. IC 15 will be applicable to public companies engaged in development activities from 1 January 2014

onwards. The adoption of IC 15 would result in significant changes to the recognition of our revenue. With the adoption of the IC 15, our revenue and corresponding deveiopment cost will only be recognised upon completion of our respective development projects, as opposed to the percentage of compietion method currently adopted by us and the other property developers. Hence, in the event we do not complete any property development project in a given financial year, compliance with IC 15 may result in our profit for the said financial year to be materially and adverseiy affected. Therefore, with the adoption of IC 15, the timing for the completion of our property development projects will be crucial in ensuring the recognition of revenue and the eventual financial result of our Group is maintained. Notwithstanding the above, while the timing of revenue recognition may be different (delayed), the overall amount of profits earned and cashflow in respect of the development projects should not be materially affected. (xl Disclosure regarding forward-tooking statements Certain statements in this Prospectus are based on historical data, which may not be reflective of our future results and any forward-looking statements are subject to uncertainties and contingencies. All forward-looking statements are based on estimates, forecasts and assumptions made by our Company and Group, and although believed to be reasonable, are subject to unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of our Group to differ materially from the future results, perfonnance and achievements expressed or implied in such forward-looking statements. Such factors include, in/er­alia, general economic and business conditions, competition and the impact of new laws and regulations affecting our Group. In the light of these and other uncertainties, the inclusion of any forward-looking statements in this Prospectus should not be regarded as a representation by our Company or our Company’s advisers that the plans and objectives of our Group will be achieved. 3.3 RISKS RELATING TO THE LISTING (i) No prior market for our Shares Prior to our Listing, there has been no public market for our Shares. There can be no assurance that an active market for our Shares will develop and continue to develop upon or SUbsequent to our Listing or, if developed, that such a market can be or will be sustained. The Offer Price has been determined after taking into consideration a number of factors, including but not limited to our Group’s financial and operating history and condition, competitive strengths and advantages, future plans, strategies and prospects of our Group and prevailing market conditions. There can be no assurance that the Offer Price will correspond to the market price at which our Shares will trade on the Main Market of Bursa Securities upon or subsequent to OUr Listing. Further, we believe that it is possible that our Shares may be subject to price volatility which may not have any correlation with our Group’s net asset value, performance, profitability or financial position. Price volatility may be affected by the liquidity of our Shares, announcements of any developments relating to our business operations, fluctuations in our operating results. general market conditions in the industries in which we operate, as well as investors’ perception of our financial performance and/or future prospects. (ii) Potential delay or failure of our Listing Our Listing may fail or be delayed should any of the following events occur:­(a) our Company is unable to meet the public spread requirements, I.e. at least 25% of the total issued and paid-up share capital of our Company must be held by a minimum of one (1,000) public sharehoiders holding not less than one thousand (1,000) public shareholders holding not less than one hundred (100) Shares each in our Company at the point of Listing; and 3. RISK FACTORS (Cont’d) (b) the approvals from Bursa Securities, SC or any other relevant authorities for our Listing are revoked, withdrawn or cancelled. In such event, we will return in full without interest, all monies received from the applicants, in compliance with the provisions of subsection 243(2) of the CMSA. Our Group will endeavour to comply with the Listing Requirements and Equity Guidelines where whichever is applicable and relevant to the above factors. However, there can be no assurance that the abovementioned factors I events will not cause a delay in or abortion of our Listing. (iii) Capital markets risks The performance of the local bourse is very much dependent on external factors such as the performance of the regional and world bourses, and the flow of foreign funds. Sentiments are also driven by internal factors such as political and economic conditions. These factors invariably contribute to the volatility of the local bourse. Our Shares upon Listing will be subject to the vagaries of the Malaysian capital mar1<ets. Nevertheless, the profitability of our Group is not dependent on the performance of Bursa Securities as the business activities of our Group have no direct correlation with the performance of Bursa Securities. Our share price may be volatile in response to, inter alia, the following factors, some of which are beyond our control:-‘ (a) variations in our operating results;
(b) changes in securities analysts’ recommendations, perceptions or estimates of our financial performance or future prospects;
(0) changes in market valuations and share prices of companies with similar businesses to our Company thai may be listed in Malaysia;
(d) announcements by us of significant acquisitions, disposals, strategic alliances or joint ventures;
(e) fluctuations in slack market prices and trading volume;
(f) our involvement in material litigation;
(g) additions or departures of key personnel;
(h) success or failure of our management in implementing business and growth strategies; and
(i) changes in conditions affecting the industries in which we operate, general economic conditions or stock market sentiments.

(iv) Dividend payment is not assured Our ability to pay dividends or make other distributions to our shareholders depends upon our financial performance and the dividends or other distributions received from our subsidiaries. If our Group incur debts or losses, our ability to pay dividends will be restricted. In addition, restrictive covenants in bank credit facilities or other agreements that our Group may enter into in the future may also restrict our ability to make dividends and other distributions to our shareholders. There is no assurance that we will be able to record profits and have sufficient funds over and above our funding requirements, other obligations and business plans to decl~re dividends or make· other distributions to our shareholders. Please refer to Section 10 of this Prospectus for details on our dividend policy. (v) Future fundraising may dilute your shareholdings and restrict our operations We may require additional funding for future growth. This may result in the dilution of our shareholders’ equity, or restrictions imposed by additional debt funding. Our capital requirements are dependent on, among others, our business, and the availability of our resources for attracting, maintaining and enlarging our customer base. We may also reqUire additional capital expenditure for investments, mergers and acquisitions. Any issue of shares or other equity linked-securities to raise funds will diiute sharehoiders’ equity interests. In the case of a rights issue, shareholders will be required to commit additional investments.

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