Business Overview

5. BUSINESS I:'<FORMATlO:'( 5. BUSINESS I:'<FORMATlO:'( 5.1 HISTORY Pcrisai was illCorporated in Malaysia on 30 October 2003 under the !\ct as a public limited company under its present name. Pcrisai is an investment holding company. its subsidiary companies and associated company are involved in the manufacturing, supplying. commissioning and installation of corrosion control products as well as the inspection “3nd maintenance ofpipes; pipelines~ risers and heat exchangers primarily for the oil and gas industry. The history ofthe Perisai Group dates back to 1994 with the incorporation of ISSB. At that time. ISSB was involved in the development and ex.ploitation of marine gro’Nth removal and prevention systems. With continual R&D, the Perisai Group gradually moved from providing low technology corrosion control products and solutions towards providing higher technology corro~ion control products and solutions. With the incorporation of CSSB in 1996, the Group cntered into its first technical collaboration viith PRSS, whereby PRSS had provided the facilities for the testing of eSSB’s ncw products. The colJabonnion had resulted in the development of various efficient and cost effective corrosion control products and solutions, such as Corro.Cap””, FlangeShieldr”, and Riser Clamp Shield”‘, which are patented or currently pending confirmation for patent. Further information on the Perisai Group’s products and solutions is set out in section 5.3.2 of th,S Prospectus. Several corrosion control products and solutions developd hy the Perisai Group havc been verified for its effectiveness in c.ontrolling corrosion by independent accreditation bodies. For example, in March 1997. the Lloyd’s Register endorsed the vacuum seal cap, namely CorroCapTM, as being effective in combating corrosion. The Riser Clamp ShieldThf developed by the Petisai Group, which was first installed in 1998, was independently verified by DnV two and a half years later to be effee-live-in preventing corrosion. CSSFl was awarded the vendor stalus uodcr the PETRONAS VDP in May 2000 to manufactorc, supply ;md install protective systems for corrosion prevention seniees. The scope of the products included in the VDP was extended in february 2002 to include the ins-pection and maintenance of all nuts and bolts, pipe nangcs, pipe supports, and risers/riser clamps. The Perisai Group continues to collabomle with PRSS and DnV to develop new corrosion control products and solutions and improve on existing products and solutions in :.In effort to capture a wider market for it.;; products and solutions.
5.2 SHARE CAPITAL The present authorised share capital of Perisai is RM50,000,000 comprising 500.000,000 Shares, of which 156,000.000 Shares have been issued and fully paid-up. The changes in the issued and paid·up ~hare capital ofPerisai since its incorporation are as follows: Cumulative issued Date of No. of Par and paid-up allotment Shares value Consideration share capital allotted (RM) (\{M) 30.10.2003 20 0.10 Cash 2 31.05.2004 155,999,980 0.10 Consideration lor Acquisitions 15,600,000 5. BUSINI>SS INFORMAnON (CoIII’J)
5.3 BUSU,ESS OVERVIEW 5.3.1 Group structure The Perisai Group’s structure is as follows: Pl.’Tisai 60″10 100% 100% 100% 37.5% eSSB FSSH RMSB OTSB WWSB 100% [SSB
The subsidiary companies and associated company of Perisai and thelr respective principal activities are as follows: Elfective Company equity Principal activities interest held (%)

eSSB 60 Manufacturing, supplying, commissioning and installation of corrosion control products and related services primarily for the oil and gas industry FSSB 100 Trading, dc’ih’ll and application of specialist composite materials primarily for the oil and gas industry RMSB 100 Provision of services relating to advanced engmeenng inspection techniques. heat exchanger tubes restoration teclrnology and plants engineering maintenance primarily for the oil and gas industry 01SB 100 Design and engineering and patent holder 100 Design and consultancy service and patent holder WWSH 37.5 Provision of environmentally friendly hydrocarbon mitigation ‘ervices primarily for the oil and gas industry Nore: (I) Wholly-‘J»”ed subsidiary o!OTSB Please refer to section 5.4 of this Prospectus for further inlormation on the subsidiary
companies and associated company ofPerisai. 5. BUSINESS INFORMATION (ColI/’d) 5.3.2 Products and solutions The following are the products and solutions provided by the Pcrisai Group: Companies offering products I Types of protection Products I Solutions solutions Cavity protection • Corro-Ciliin™ eSSB • CS 85MpTM & es I05MlHM eSSB Nuts and bolts prescrvation CorroCapTM eSSB• Flange. piping preservation FiangcShicldn1 CSSB• Riser clamp preservation Riser Clamp Shieldn, eSSB• Rehabilitation of corroded risers and pipes mildly corroded ri~ers • Fibaroll· eSSB / FSSB and pipes severely corroded risers • Composite Sleeve Repair eSSB IOTSB and pipes Marine growth removal and • Marinc Growth Tmpactor & CSSB/DISB prevention systems Marine Growth Pile Protector
Heat exchanger protection CTI Shieldn ,. RMSB• Volalile organic compound BloSo]vC·l’.”* WWSB• supprc!\sant and encapsulation of hydrocarbon fluid
Note: • Products de~’e1oped by third party further descriptions of the above products and solutions arc set out below: Products and solutions developed by tbe Perisai Group (i) Corro-Cillin”l COlTo-Cillin™ is a specially blended fonnulation of modified waxes containing organic corrosion inhibitors and thixotropic. enhancing agents for long term cavity protection. The formulation was developed by CSSB’s R&D team and is proprietary to CSSB only. eSSB purchases the basic wax compound from third party and blends the wax with other organic ingredients. Corro-Cillin™ also contains ultraviolet traces, which under an ultraviolet light causes a light blue fluorescence for checking treatment. This product requires no heating or disposal as it dries to an almost. transparent tilm. Currently, this product is widely used in CorroCapTM, FlangcShicldfM and Riser Clamp Shield”” applications as a protective coating to the structure surface. Plcase see sections 5.3.2(iii), 5.3.2(iv) and 5.3.2(v) of this Prospectus for descriptions ofCorroCapfM, FlangeShield'” and Riser Clamp Shield™ respectively. 40 5. BUSINESS INFORMATION (Cont’d) CSSB will continue to experiment the viability of using Corro-Cillin'” (or modifications or improvements to this wax formulation) for other corroslon control products which it intcnds to develop and introduce to thc markct in the future. (ii) CS 85MP'” and CS 105M P”’ CS R5MpTM (melting point 85″ Celsias) and CS IOSMI”” (melting point lOS” Celsius) are unique blends of petroleum waxes. oil and inhibitors with the ability to withstand high ambient temperature. The formulation was specially developed by CSSB’s R&D team and is proprietary to eSSB ordy. Once applied to f.lsteners, it would protect and further prolong the life span of the fasteners. These products arc non-flammable and non-toxic with non-volatile organic compounds, making it ideal fnr use in the oil and gas environment. CS IOSMP'” is different from Corro-CillinT” as the former is in a solid state below i~ melting point and thus needs to be melted for application purposes while the latter is oflower viscosity and can be sprayed onto the designated surfaces at room temperature where it dries to an almost transparent thin film. However CS I05M”pHI is thicker and more durable than C’..orro-CillinTl\I and thus offers a morc permanent protectivc laycr whcrca.,… COlTo-CillinTM, on its own, only offers temporary protection against corrosion. CS IOSMpT” is melted into liquid form, which tills all spaces leaving no voids or entrapped air, thereby preventing any ingress of moisture or water on the protected areas. Common applications include hard to treat inner void spaces on flanges and other joined metal surfaces, anchor chain lockers, riser clampsl J-tubes, under pipe saddle clamps and braces. CS l05MpTM’s unique properties makes it a vital component in the major corrosion control products developed by CSSB. namely CorroCapT”, HangeShieldT” and Riser Clamp Shield™ as a protective coating to the structure surface. Please see sections S.3.2(iii), S.3.2(iv) and 5.3.2(v) of this Prospectus for descriptions ofCorroCapTM, FlangcShicldl ‘M and Riser Clamp Shicldl”M respectively. (iii) CorroCapT” Due to the high exposure to salty water and air, humid, harsh and vulatile weather condition of offshore installation and plant working environment, corrosion of industrial bolts and nuts installed in offshore oil and gas StTucture and in petrochemical planls is inevitable. Corrosion of nuts and bolts will ultimately lead to fastener gasket sealing failure. Whcn thi~ occurs, leakagc of hydrocarbon fluids and / or gases which the pipe structure delivers occurs. Tn severe cases, this results in major disaster as the hydrocarbon fluids and i or g.ases arc flammable and therefore could cause explosion. Furthermore, hydrocarbon gases may contain toxic which results in loss of human life or injury when inhaled by personnel working on the platfonn. Therefore, it is essential that corrO<.1ed bolts and nuts be changed during maintenance schedule to avoid leakage Or damage to equipment. CSSB together wilh RIl and PRSS developed a vacuum-scaled cap for fasteners called CorroCapTM in 1996. Initially, CoeroCapTM was produced using neoprene material whic-h is able to withstand temperature up to 85° Celsius and is excellent protection against ozone and oxidation within the marine environment. The continaoas R&D elTurts by CSSB and PRSS has leud to the invention of a new formulated silicon based CorroCapT” in 2001 which can endure heat temperature up to 105° Celsius. Currently, cssn has exclusive rights to manufacture, market and ‘”ppl y CorroCapH’ throughoat the world. 5. BUSINESS INFORMATION (Omt’d) The charac..-tcristic that makes CurroCapTM unique is the incorporation of a one way valve that ~lIows air, water and excess inhibitors to escape creating a ncar vacuum seal lhcreby enhancing corrosion protection. CorroCapnl has been dc~ignt:d and manufactured 10 meet the technical challenges of offshore engineering and helps to extend the usetlll life of the nuts aod bolts and redoces the time spent on regular inspection and maintenance. COrrOCaprM is used together with Corro-Cillin”t and CS I05MpT”. Corro-CillinlMis applied on thc nnts and bolts as a first layer of protection followed by CS I05MpiM as a second layer protection prior to the installation ofCorroCapTM. (iv) FJangeShield™ OlTshore oil ami gas operations use flange piping as a convenient way to construct prcssllTe pipil1g. However, the shol1coming of pipe flanges is that the corrosion belween the unpainted and unc.oated inside surfaces between the flanges; !’.tud bore holes and the crevices in the nots are difficult to control. When blasting (to get rid of rust) is carried out for corrosion c.ontrol purposes, it is impossible to achieve good surface preparation on flanges which are inaccessible to the blast medium. It is nol uncommon to find residual blasting sand or grit lodged between the fasteners and the flange body, or up inside the bolt hole annuli. This grit acts like a sponge to retain water inside the Ilange and thus promotes rapid failure of the applied paint system. The corrosion will cause· early paint failure a11(} can compromise the structural integrity of the flange. CSSB developed a method called FlangcShieldn” which involves injecting CS IOSMpTM to tcmporarily fill thc void. The material is heated to lower its viscosity allowing it to penetrate all the crevices. flangeShield™ contains ultraviolet tracers, which under ultraviolet light causes a light blue fluorescence for checking treatment. The excess material is then sucked out leaving a coating on the pipe flangcs. The FlangcShield™ system docs not contain volatile organic compounds and cmploys a nun-toxic, non-flammable, environmentally safe. rust converting compound specifically designed fix use in the marine environment. FlangcShicld™ also incorporates the use of CorroCapTM for the protection of bolts and nuts located at the flanges. FlangeShieldr”,s uniquc application method rcsults in all the exposed areas and crevices of the flangc bcing coated with CS I05MP”” which bonds to thc surface therefore providing superior protection against corrosion compared to the traditional methods. Although the cost of implementing a FlangeShield™ system on a new offshore platform may he more expensive than using traditional paints and coatings~ the long term benefits of using FlangeShield™ are in the form of lower inspection and maintenance costs due to lower frequency of inspcction and less repair and replacement costs. (v) Riser Clamp ShieldH1 Riser clamps require periodic inspection, replacement of nuts~ bolts. clamps and neoprene pads resulting in operation shut down of the offshore rig and thus production downtime. Due lo splash zone cotTosion, extreme cases parts of corroded risers have to be cut and replaced. The neoprcne pads, placed betwecn thc clamps to prevent mctal to metal contact, trap moisture and foree the paint designed for splash lone conditions to work in submergcd conditions re~ulting in premature coating failure. Progressive failure of coating is not only econom1l.:ally impacting but can compromise the. structural integrity of the riser. 42
5. BUSINESS INFORMATION (Conl’d) CSSB combined several of its proprietary products to develop a methodology for riser clamp protection call Riser Clamp Shield”‘. The initial level of protection involved the spraying ofthrcc coats ofCnITII-CillinrM to protected areas. All nuts and bolts arc then protected by CorroCapTM, voids and crevices are filled using the FlangeShield™ system. Finally, the entire protected area is coated with CorroShield CSI05MpTM. The advantage. of this protection system is that it offers cost effectlve corrosion solution and an aesthetically pleasant look to the riser clamp. DnY, in August 2000, perlormed an inspection of the first Riser Clamp ShieldT” installed by CSSB liH a Carigali platform in May 1998 and issued a report confinning that the Riser Clamp ShieJd™ has effectively prevented corrosion for the two and half year period post installation. Although the cost of implementing a Riser Clamp Shield™ syslcm on a new offshore platform may be more expensive than using traditional protection mc-thods, the long term benefits of using Riser Clamp ShieldT” are in the fonn of lower inspcetion and maintenance costs due to lower frequency of inspection and less repair and replacement costs. (vi) Composite Sleeve Repair As mentioned previously, offshore oil and gas and marine operations have to address maintenance problems associated with risers and pipes due to corrosion and the problems associated with blasting (to get rid of rust) such as damage and metal loss to the risers. if the melal loss is nut severe, the operator can opt for the simpler Fibaroll solution as in (viii) below. However, when the metal loss to the riser exceeds 7()Q/o, the operating pressure of the pipe needs to be downgraded resulting in decreased operational cfficicney. Furthermore, the platform operator would need to seek a permanent repair lo remedy the situation before pipe leakage occurs whkh may result in injury or loss of human lile due to explosion of the hydrocarbon fluids and I or gases being leaked oul or inhalation ofpos..~ible toxic gas arising from the leakage. Permanent repair or rehabilitation of oil and gas pipeline and riser can be very costly due to the lise of expensive technology whieh involves cutting and replacing parts of the risers and pipes and therefore require the shutdown of operations which results in costly operations downtime. To rehabilitate severely corroded risers and pipes, OTSB and PRSS deVeloped a composite sleeve technique that incorporates, the innovative combination of advanced composite material, namely FibarolJ with high performance epoxy resin rogether with oversized steel sleeves and specially designed graphite end sealsj as a lotal solution for rehabilitation of severely corroded risers and pipes. The epoxy essentially consists of a load bearing epoxy resin tiller mixed with load bearing polyamines, such as Diethyltoluenediamine, BUlylphcnol and Salicyclie acid. The physical properties allow it. use in applications requiring high load bearing strength and excellent. adhesion under adverse application conditions. The product has a long working life and a low exothermic reaction (that is.. minimal heat generation during cure) that make it suitable for applications where a relatively large mass or adhesive is employed. Just as eSSB’s other systems, the Composite Sleeve Repair system will result in Jower total ownership cost for the operator in the long term due to Jess frequent inspection and lower maintenance and repair costs and the ability to avoid shutdown compared to other systems. 43 S. Bl,SINI’:SS INFORMAnON (efm/’d) eSSE performed ils first Composite Sleeve Repair engagement for Sarawak Shell in August 2002. The structural integrity of the ,leeve repair was inspected by DnV and pursuant to its report dated 25 September 2002, DnV confirmed the struetuml integrity of the Composite Sleeve Repair and also confinned that the composite sleeve is expected to have a lifespan of20 years under normal working conditions. In April 2003, eSSB was awarded its first overseas penmanent Composite Sleeve Repair joh worth approximately RM2.6 million from Brunei Shell. This engagement is the first underwater installation of a pcmlancnl sleeve repair under 34 meters of seawater without operational shutdown, (vii) Marine Growth Impactor and Marine Growth Pile Protcctor Marine growth has become a serious problem for offshore operators and platform designers today. Marine growth causes premattue damage to coating. It obscures the !:’uhstratum and has to be removed be·fore yearly inspection. Even small amounts of marine growth will significantly inc.rease wave loading and require stronger structures lhan would otneTWlSC be necessary. Depending on the type of growtn, biofoulants can weigh up to 150 pounds per cubie foot. It becomes dangerous, since it creates added area for wave loading, and drastically reduces the tatigue lite of a platform. The danger of platform overturn is therefore increased. ISSB and PRSS jointly developed the Marine Growth Impactor and Marine Growth Pile Protector to addre~~ the problems arising from marine growth. Currently, these product’ are manufactured, marketed and installed by eSSB. Marine Growth hnpaetcr is a specially designed modular equipment (with patent protection) which can be easily customised to suit different dimensions and shapes of various off….horc structure pile, This equipment utilises the natural force of the sea (wave and current) to move up down and side way to generate necessary impact toward the structure to remove the marine gro\'{th. The impactor helps oil and gas operators to save cost 011 periodic maintenance or diving operation to eradicate marine grov.·th, before inspection and marine non destructive testing are carried out. Marine Growth Pile Protector, a different design variation from Marine Grow1h Impactor, relies on breaking down the marine colonisation process. The continuous rubbing of the ruhher rollers attach with the platform structure pile by wave and current movement prevents the formation of microbial slimel the food source for marine organisms. By denying the marine gro\vth the essential nutrients, the structure piles arc able to maintain a “zero gro’W1h” profile, Thi!O i!O particularly critical in the splash zone areas as cathodic proteclion systems are inetlectivc-. Products and solutions developed by third party (viii) Fibaroll Off….horc oil and gas and marine operations have to address maintenance problems associated with risen; and pipes due to corrosion and the problems associated with hlasting (to get rid of rust) such as damage and metal loss to the pipes. In the absence of a good solution, rusting and corrosion will continue and persistent blasting w111 result in the mc-tal loss become ~cverc and in the case of risers and pipes.. replacements are required in the event the mctalloss exceeds 50~). Fibaroll i, an advanced form of Fibre Reinforced Plastic; it is widely used as structural and lining material as it does not corrode, The·re are two main clements to the Fibre Reinforced Plastic maleriaL namely the resin and the reinforcement. The resin is a molecule which when cured by ultraviolet or sunlight, forms a c.omplcx cross-linked three dimensional structure with very good structural strength. The reinforcement within the cornposjte is usually glass fibre. The glass docs not react, s. BUSINESS INFORMATION (Conl’d) but is specially coated to give good adhesion to the resin. The reinforcement basically adds structur,d ‘Support to hardened resins thus increasing the structural strength of the Fibaroll compositc. Fibaroll cures pipe that has severe pitting and needs rebuilding and has or is in danger of developing leaks. Its wide range of chemical resistanec can withstand chemicals and temperatures from product within the pipe and prevent further corrosion fonn the outside. fibaroll is developed by Fiba Tech Industries Ltd, a UK based company. fSSB was aWllrded by Fiba Tech Industries Ltd the exclusive selling and application rights in respect of Fibaroll materials in the territories of Malaysia, Brunei, Thailand (for all scctors) and Singaporc (civil strudure and shipping sectors only). For fiu1bcr details on the agreement, please refer to section 17.7 of this Prospectus. In rendering 115 services: eSSB purchases Fibaroll from FSSB. The Perisai Group has successfully cxploited Fibaroll’s special properties to provide repair and rehabilitation solutions to heavily corroded risers and pipes in offshore oil and gas operations. (ix) cn SHJ~:LDnl Heat exchangers are mechanisms (containing many metal tubes) which arc used to transfer heat from onc location or instrument to another normally through a fluid medium. By virtue of their function, heat exchangers may contain fluid at very high temperatures and some of these fluids may be chemicals. Thus, the tubes within the heat exchangers are highly susceptible to corrosion. On 19 June 2001, cn Industries Inc., a USA based company which developed a revolutionary way of re-storing the tubes of damaged heat exchangers and condensers appointed RMSB as an exclusive agent to supply, install and commission its products in Malaysia and Brunei. For further details on the agreement, plcase refer to section 17.7 (ix) of this Prospectus. The product is known as CTI Shield™ which is ” thin-walled metallic tube insert made of highly durable alloy. Once in<crted in the original tube, CTI Shield’M is mechanically and hydraulically expanded and becomes an integral part of the original tube. There are many different types of alloy combinations to select from for purpose of corrosion resistance, dcpending on the type of metal the original tube is made of and the type or chemical heing carried by the tube. CTI Shield™ is also designed tu overcome end step corrosion. Due to the cost effectiveness of CTI ShieldfM against the existing competing products, RMSB usc·s dlis product for its offshore platform c1ie·nts in connection with the insper:tion, maintenance, repair and restoring tubes in heat cxchangc[“$. (x) BioSoIve~· The traditional method for the remov.l of hydrocarbon fluid for the oil and gas industry structure 1S not environmental mendly. The Westford Chemical Corporation, a USA based company developed Bi”Solve’e and WWSB is the exclusive authorised distributor of the product in Malaysia and Brunei. BioSolve:i<.\ is a patented water based bio-remediation surfactant. which is non-hazardous, non-flammable and biodegradable, specially engineered as a c1ean-ap and mitigating agent on hydrocarbons and hydrocarbon based products. BioSolve$o: solubhscs, emulsifies and separates the hydrocarbons into exceptionally small micro emulsions while surrounding them tnto the water based solution. Thc·se actions render volatile hydrocarbons non-flammable imd at the same time greatly stimulate 5. BUSINESS INFORMATION (Cnnt’d) bioremediation of the hyurocarbon by increasing the end chain exposure crc·ated by the micro emulsions. This makes Ihe hydrocarhon a readily available and easy to assimilate food source for bacteria. These actions make BioSolve'”!!~ a unique, versatile, and environmentally supportive. technology for usc in fuel and oil spill cleanup, fire fighting, fuel and oil spill remediation, vapour suppression and general cleaning I degreasing applications.
5.3.3 Competitive advantage Under the VDp, CSSB has a monopoly for the supplY and installation of corrosion protection systems on all fasteners, flanges, riser clamps and pipe supports on Carigali’s offshore platforms and those of PETRONAS’ PSC contractors. offshore facilities in Malaysia as well as operations ownc,i by PETRONAS or its subsidiaries. Although awarded under the VOl’ scope on 25 May 2000, the fuJi implementatioo of the Vendor Status came much later upon the conclusion of the Master Service Agreement and the award of the individuaJ contracts . from PETRONAS’ PSC eontmetors, namely, inter alia. Carigali, ExxonMobil, Shell and Nippon Oil for the provision of corrosion control services in May / June 2003. The Master Service Agreement provides the basis of the said contracts betwccn PETRONAS’ pse contractors and eSSB. Each contract is for a dumtion of 3 plus 2 years from the date of the respective contracts. It should be highlighted that the scope of the VDP is not restricted to offshore oil & gas operations alone. It also app1ies to all operations owned by PETRONAS or its subsidiaries which may be onshore such as, oil & gas refineries ilnd petrochemical plants or marine related operations such as, shipping uperations) subject tu the need for such services covered by the VDP and the available resources of eSSB. The VUP was established by PETRONAS to encourage the development of Dumiputera entrepreneurs. The major conditiuns fOT a company to be appointed as a vendur under the VDP are as follows: • At least 70 percent of the company’s equity is to be held by Bumiputeras • The management must be of Bumiputera majority • The owner and operator must hold 51 percent of the company’s equity • Registered as a private llmited company under the Act • Must have a minimum paid-Up capital ofRMIOO,OOO Another of the Group’s competi,ive edge is its highly skilled key technical personnel. Tengku Daud Shaifuddin bin Tengku Zainudin, the Group Executive Director and Head of the R&D team has 15 years of experience in the oil and gas industry. The other key technical personnel ego Juhan bin Husin and Zamri bin Zakaria possess in excess of 10 years of experience each in the oil and gas industry. IThe rest of this page is intentionally lcft blank] 5. BUSINESS I1\FORMATlO:’l (Crml’J)

5.3.4 Principal place of business and localion of principal assels The principal places of business (all of which save for lhe head office are presently rcntcd) of the Petisai Group arc a~ follows: (i) Head Office
Lot No.9 Jalan PlO / 15 Kawasan Perindustrian MIEL Fasa4 43680 Bandar Barn Bangi Selangor Darnl Ehsan

(ii) Kajang Office

29 JaJan Seksyen I /23 Taman Kajang Utama 43000 K~iang Selangor Darul Ehsan
(iii) Kertih Olliee K-7135 I” Floor Persiaran Guntong Bandar Sri Kerreh Kcrtch 24300 Kcmaman Tcrcngganu Darnl Iman
(iv) Min Office 2″‘ Floor Lot 2922, MeLD Faradale Garden Jalan Bulan Sabit 98000 Min Sarawak

5.3.5 Production capacily The production capacity, the number of production shifts and total production output of the Group’s various production and assembly lines for the financial year ended 31 December 20m are outlined below: Number Number of Production Production of units production shifts capacity output (per day) (per month) (per month) Heat compression 2 180,000 15,000 pieccs moulding machine­pieces(l) For production of CorroeapsTM Note.. (1) Bast:don 3 shifl.\’ 5. BUSTNF:SS I1\FORMATION (Cont’d) 5.3.6 Manufacturing Process The manufacturing process for CorroCapsT\1 is set out below: Process Oescripti on Responsibilities
Production QC QC Production Production Production Production ac QC Production Store (Company No. 63281 I-X -_._———————–­5. BUSIN~;SS INFORMATION (CoIII’dj
5.3.7 Raw materials The Perisai Group’s main raw materials which contribute more than 10% ofthe Group’s total purchases for the financial year ended 31 December 2003 arc set out below: Material Country of Origin Total Purchases Fibre reinforced plastics UK 46.0% Blosolve”Ji; US 15.2% Silicone Malay,ia 14.4% Waxes UK 12.6% 88.2% These products arC generally purchased on a shon term contract hasis. Pcrisai prac.tices a “Just in time” policy in respect of the raw materials sourced locally (i.c. the raw materials are purchased when conlracts are awarded) and maintains a 4 month stock pile for raw materials which arc sourced overseas. Fibre reinforced plastics and BioSolve'” are third party products. CSSB has the exclusive righls La the application and marketing of BioSolvc’t for the oil and gas industry in West Malaysia and the exclusive sell1ng and application rights of fibre reinforced plastics in Malaysia. To date, the Perisai Group has not experienced any difficulty in sourcing its raw materials. For furthcr details on the Group’s reliance on third party products alld solutions, ie. Fibaroll and Biosolve·~, please refer to section 4.10 ofthis Prospectus.
5.3.8 Product quality The Perisai Group implements stringent quality control procedures throughout its operations to ensure the high and consistent quality of its products and solutions. Quality control inspection occurs at various stages of operations, with the firsl being the inspection of ine-oming raw materials. As part of the quality control procedure, a sample is taken from each batch of the delivered raw materials and tested to check on ils confonnity with the Group’s specifications. Following which. sevcral quality control tcst points are incorporated into the manufacturing process to ensure that every product of the Group confonns to the highest order ofquality prior to sale to its cu~tomcrs. The products and solutions or the Perisai Group have been independently verified by various independent international accreditation bodies to confonn to international standards in terms of their effectiveness in controlling and preventing corrosion and eost efficiency as welt as recognition from indepe.nde.nt market publication for their cost etl”ctiveness. Some examples of such verifications are as foIlO\\’s: Produets I Solution. Endorsement I Recognition CorroCaplM Independent accreditation of vacuum seal caps as an effective anti-corrosion product by Lloyd’s Register on successful laboratory tests in accordance with ASTM 8117 and ASTM 8610-86. FlangeShield’M Petromin, an established independenr market publication of Riser Clamp Shield™ upstream oil and gas magazine in the Asia Pacific region.. published statistics in its Octoher 2001 publication to show that while the cost of implementing FlungeShieldT\land Riser Clamp ShieldrM systems on a new offshore platroon is higher than the 49 5. BUSINESS I rORMAno (Cont’d) 5.3.9 Products I Solutions  Endorsement I Recognition  trdditional paint and coatings, in the longer term. it is more cost efficient due to the lower frequency of inspection and Jess repair and replacement costs arising from the use of flangeShieldT ‘A and Riser Clamp Shield'” systems.  DnY inspected a Carigali offshore platform two and a half years after it W:iS treated for corrosion using the Riser Clamp Shield™ system and confirmed that Riser Clamp Shield™ has eftectively prevented corrosion since its installation.  Composite Sleeve Repair  Thc structural integrity of the sleeve repair performed by eSSB lor Sarawak Shell Berhad was inspected by DnV and pursuant to its report dated 25 September 2002, DnY confirmed the struclural integrity of the Composite Sleeve Repair and also conlinncd that the composite sleeve is expected to have a lifespan of 20 years under nonnal working conditions.  Operating licences
The major operating licences held by the Peri..i Group under its operating subsidiary compallics arc as follows: (i) Both CSSB and RMSB arc licenced contracto..s of PETRONAS, whereby CSSB is licenced to manufacture, supply and install protective systems for corrosion prevention (including inspection, surface preparation and maintenance) on all nuts and bolts, pipe flanges, riser or riser clamps and pipe supports to oil and gas exploration and production companies in Malaysia and the provision of underwater engineering construction and maintenance services while RMSB is licenced to supply various equipment and provide services to oil and gas exploration and production companies in Malaysia; (ii) CSSB and RMSB are licenced contractors of MoF, whereby CSSB is licenced to supply various products and services for corrosion prevention for chemical industry and supply parts and services related to chemicals and corrosion comrol and RMSB for the provision of equipment or services relating to the power generating plant, heat exchanger and I or spare parts, cleaning of buildings. machinery and workshop equipment.. machinery and special equipment and diving services; and (iii) CSSB also holds a manufacturing licence issued by MIT! for the manufacture of protective cap:> for the oil and gas industry. Please see section 11.1 of this Prospectus for further information in rclation to the operating licences of the Pcrisa; Group. (The rest of this page is intentionally left blank] 5. BUSINESS INFORMATION (ClInl’,I) 5.3.10 Trademarks and intellectual pt’opcrty’ rights Intellectual property rights The Perisai Grnup currently jointly holds, with PRSS. varions registered intellectual property rights under its operating subsidiary companies. Details of intellecrnal propelty rights held are as follows:  Company  Description of.  Product I Solutions  palent application  Serial numher I Date  Countries  CSSB  eorrOeapT”  Protective caps for  PJ9600989  Malaysia  bolts with nuts  Application filed on  against corrosion  18.03.1996 and pending  certification  ISSB  Marine Growth  Apparatus for the  P19502118  Malaysia  Tmpactor (2)  combating of  Application filed on  underwater growth  25.07.1995 and pending  on submergeu  certification  structures  P-962091  lndonesia  Application filed on  24.07.1996 and pending  ccrtjfication  GI3 2 303 660 B  UK  Patent gTanted on  24.03.1999 for a period of  20 years commencing from  22.07.1996  US 5,791.818  USA  Patent granted on  11.08.1998 for a peliod of  20 years commencing from  22.07.1996  312283  Norway  Patcnl granted on  22.04.2002 for a period of  20 years commencing from  19.07.1996  203991  Mcx.ico  Patent granted on  30,08.2001 for a period of  20 years commencing from  25.07.1996  Marine Growth Pile  Apparatus for  lDOO05441  Indonesia  Protector (21  eliminating and  Patent granted on  preventing marine  22.10.2001 for a period of  growth on offshore  20 years commencing from  structures  25.03.1996  51
5. BlJSIJ\I£SS INFORMATION (COIlt’d) Company !’roduct I Solutions OTSB CorroCapTM (I) Composite Sleeve Repair III Description of patent application Protective caps for bolts with nuts against corrosion Mcthod and means of rcpamng a p’pe Serial number I Date  Cuuntries  GB2 296 027-B Patenl grantcd on 04.11.1998 for a period of 20 year<; commencing from 13.12.1995  UK  US 5,765,968 Pate·nt granted on 16.06.1998 for a period of 20 years commencing from 03.12.1995  USA  PAfa/1996/002345 Patent granted on 20.06.2003 for a period of 20 years c-ommencing from 14.06.1996  Mexico  036228 Application filed on 21.07.2003 and pending certification  Thailand  10 0008554 Patent granted on 11.06.2003 for a period of 20 years commencing from \8.03.1997  Indonesia  471/Cal/97-B Application filed on 17.03.1997 and pending certification  India  AU 731759 Patent granted on 19.07.2001 for 20 yea” commencing 06.02.1997  Australia  OB 2324348 Patent gr.lnted on 21.1 0.1998 for 20 years commencing 06.02.1997  UK  US 6,135,691 Patent granted on 24.10.2000 for 20 years conunencing 01 .02.1999  USA  PI 20023462 Application filed 011 17.09.2003 and pending certification  Malaysia

5. BUSINESS INFORMATION (ColII’d) Company Description of Product / Solutions patent. application Serial number I Date Countries Notes: (I) (2)

PI 20032723 Appl ication med on 21.07.2003 and peoding certification  Malaysia  10/664,807 Application med on 17.09.2003 and pending certi tication  USA  0321713.0 Application filed on 16.09.2003 and pending certification  UK  304/2003 Application filed on 16.09.2003 and pending certificiJ.tTon  UAF:  085252 Application filed on j 6.09.2003 and pending certification  Thailand  P0020030000472 Application filed nn 16.09.2003 and pending  Indonesia
certification Tile Corroc:a/M is a product o!lhejoinr collaboration Oelween eSSB.. RIL and PUSS/or the development, Iesling and commercial exploitation ~l(Jnti·cormsj(m products. PRSS alld eSSE lire joinl paten’ holders ,-elating 10 the produc1s in the MalaY~’ian region. However PRSS and (n:~B ore joint pa/.{:.’n1 holders 10 the products for the region ofdside Malaysia, pursuant 10 an agreemellt bcnveen eSSB, RfL, PI?SS and OTSB lind a deed of assignmenr hetween RiL and 01~\’H, oOlh dated 2 March 2004, whereby OTSB WdS assigned the fights (~r CorroCop’W. Pursuant to (l Licensing Agreement hetween RIL and CS8B dated 8 December 2003 and the Projec:l Agreemellt dated 12 Ju~y 1996 entered into hetH!een PRSS, eSSB and HJL for the project deveiopment of(‘orrosion control pmducts CSSB has alt exclusive licence LO exploit CorroCapTM ,hroughoul lht.? whole world. For /iJrther information on the UcclIsing Agreemell1, plea.5€ refer ‘O,\’l:,d;oll J7.70) o:fthis Prospectus. The Mdril1e Growth Impactor and Marint’ Orow,1I }.Jile ProteclOt’ are pt’oducts qi the joint coll”bor<ltion belween ISSB.. PRSS and ESB /ot’ the combating of undenvatcr gro\’v’lh on .mhmet-ged structures and prevenling marine growth on ()jJshurt~ structures. PHSS alld ISSB are joint ownclS ofthe products. Pursuant fo Ihe Principal A~reement dated 15 Fehruury 1996 entered inlo between PUSS, 1,)’88 and ESB, /SS/1 and PUSS are en/flied to receive royalties pom ESB as tSR has exclusive sole distriburifm alld matl1~fa(‘lUrinK rights to the products. l’u,:manf to Ihe DislribUlor Contracl.> between eSSB and h’SH dared 1 Ma:v 1998, cssn has acquired the e_¥clw;ive sole dislrihution and ma!l~taetlJring rights to file. product.” from ESB. For further infimnolion Oil the Distributor Cont,’acts, please refer to section 17.7 (xj of this ProJpectu:i. Tltt., Composite Sleeve Repair is a product ofthejoinf collaboratioll behveen OTSB and PRSS. PRS:S’ (lnd O’lSB have made a joint application to palenI this product. Pur,<;uam 10 a Ucensillg Agreement dated 30 April 200., entered inl(; helween PRSS, 01’88 and CSSB. OTSB and PR!)~’ (U'(:’ en tilled 10 ,.ecdv~~ royalries fro11l CSSB, which is j{iven u “lorldwide licence 10 desif.{I1, ItWII!,jacture, supply and imlalJ Ihe produr:rjhr }O years commencingFont 30 April 2003 with an option to renew/or aji4rther fen yeo,·s. 53 5. BUSINESS INFORMAnON (ColI/’d) Trademarks The list of trademarks owned by the Perisai Group, all of which arc TegisteTed / to be registered in Malaysia, are as follows: Cornpan.y  Trademark  Oale registered  Trademark No.  CSSB  “C()ffl)-Shield”  04.10.1996  96012089  “CorroCap”  Filed on 09.12.2003. Pending registration  2003-16657  “FlangcShield”  Filed on 09.12.20<11. Pending registration  2003·16658  “Riser Clamp Shield”  Filed on 09.12.2003. Pending registration  2003-16659  “Aqua·Shield”  Filed on 09.12.2003. Pending rcgistnttion  2003-16660  “Corro-Cillin”  Filed on 09.12.2003. Pending rcgi’:itration  2003-16661  “Snowcoal”  Filed 011 09.12.2003. Pending registration  2003-16662  “CS 105MP”  Filed on 09.12.2003. Pending rcgistnttlon  2003-16663  “CS 85MP”  Filed on 09.12.2003. f’ending registration  2003-16664
5.3.11 Principal markets To date, the Peri,ai Group’s pToducts and solutions have been provided predominantly to the Malaysian oil and gas operations. Fo-r the financial year ended 31 December 2003. approximately R7.3% of sales were attributed from the Malaysian oil and gas operutions with the balance uf 12.7% from the Brunei, Thailand and Jndonesian offshore oil and gas operations.
5.3.12 Marketing and distribution network The Pcrisa; Group services the pctroleum industry in Malay.ia by dealing directly with the national petroleum company, PETRONAS and it’ PSC contractors. In Jndonesia, UAE, Thailand, Brunei and Oman, the Group is represented by agents. The Group has also applied fOT patents for its majnr products and solutions in its target countries such as Malaysia, Indonesia, USA, UK, Mexico, Thailand, India and Norway. Nevertheless, the Group believes its exp011 market growth will pnneipally come from Jndonesia, Brunci, Thailand. Vietnam and the Middle East countries, For each new product or solution launched, the Group will market its products or solutions in the export markets only two years after the products or soilitioll~ are introduced and proven to be effective in the Malaysian market. This is to establish track record and to ensure that the products OT solutions the Group developed can be further improvcd and refined.

5.3.13 R&D The Group recognises the importance of R&D which has brought the Group success to what it is today and in facilitating fulure gTowth of the Group, which will be dependent on rcgular enhancement of its existing products and solutions and introduction of new products and solutions which arc cffcdivc, competitively priced, environmentally friendly and v\lcll 5. BUSII\I(SS INFORMATION (Cont’d) accepted by the market. The Group believes that having a strong and well-structured R&D team is essential lor the development of innovative and successful new products and solutions. This is reflecled by a total of RM3.16 million spent on R&D in the past two financial years cndcd 31 December 2003, which is an average of approxlmatcly 11.5% of the total turnnver for each of the respective financial years. The Group eurrcntly has its own R&D iacilities for development of its products. The Perisai Group conceived and developed all its products while PRSS provides the testing facilities at its labomtorics for the testing ofPcrisai Group’s products and if required for further enhancement of the prodncts. Even though the joint research collaborations between the Group and PRSS arc on a case by case basis. the management ofthc Group believes that due to the success of many of the Group’s existing produc.ts and solutions which are the results of the research partnership between PRSS and the Group, PRSS will continue to work with the Group as its R&D partner in rcspect of future product development. The products jointly owned and developed with PRSS are CorroCapTM, Marine Growth Impactor and Protector, Composite Sleeve Repair and . l’ibaroll-PMS (riser I pipeline maintenance system). The collaboration with DnV -is also important to the success of the Group”s existing and future product development as it provides testing fiICilities and independent verification and certification on the effectiveness of the Group’s products and solutions in respect of their ability to control and prevent corrosion as well as the dnrability of these products and solutions, DnV is not involved in developing and conceptualizing any of the Pcrisai Group’s products. There are no joint venture agreements between the Pl.:risai Group and OnY. Protilc:o; of these tv.’o organi~’ltions are as folluws: (i) PRSS PRSS;s the wholly-owned R&D subsidiary or PETRONAS. Envisioned to be a bigh perfonnanc.e R&D organisation focused on meeting its stakeholders’ requirement, PRSS is committed in providing quality research and technical services to meet the research and tecbnological needs nt the PETRONAS group of companies as wcll as othe·r petrotellm relaled companies, both domestically and abroad in the areas of exploration and production, refining, ga~ and petrochemic-als, product dcvc\opmcnt. materials and cOITosion, environmental management, digital infonnation services and scienti lie services. (ii) DnV DnV is an autonomOlls, independent and internationally recognised scientific fouodation headquartered in Oslo, Norway with the objectives of safeguarding life, property and the environment, at sea and onshore. The organisation is staffed by more than 5.000 employees operating in 300 offices worldwide. DnV’s spcciallies include certification, verification and consultancy servic·es relating to ships, offshore structurcH ltnd installations and onshore industries. These certification “indude certification of the effectiveness of corrosion control products and structures. DnV has been working with eSSB since 2000. The Perisai Group uf;cs the facil1ties ofDnV to perform certain tests as certain equipment mvned by DnV are currently not available in Malaysia. To complement the R&D facilities of PRSS, the Group intends to enhancc its own R&D facilities. Accordmgly, approximately RM8 million of the proceeds raised from the Public Issue will be utilised by Perisai to purchase lbe necessary equipment including equipment which are currently not available in Malaysia for its R&D facilities. This is expected to reduce the Group’s usage of DnV’s faeilit;es in Singapore for its R&D. The proceed’ shall also provide tl1c Group with the financial resources to recruit more engineers to conduct in-house R&D. 5. BIJSTNESS TNFORMATlOJ\ (Conl’d) The R&D team is divided into three tlivision!\, namely Corrosion Control, Composites and Design Engineering and Electronics and Sib’llal Processing and is headed by Tengku Daud Shaifuddin bin Tcngku Zainudin.  HeadofR& D Tengku Daud Shaifuddin bin Tengku Zainudin  R&D Partner PRSS  I  I I  I
Corrosion Control Solution Compo~itcs and Design Engineering Electronics and Signal Processing
-Juhari bin Husin  -Dr. K. Basker  -Dr. Dino Isa Amshah  -Nagendran all C. Nadarajah  -1e1Irey De Jong  -Parthipan S Krishnasamy  -Zamri bin Zakaria  -Mohd. Sanim bin Ismail
The Group’s pioneering R&D team, which includes the following personnel whose profiles are set out in section 7.8 of the Prospectus, have been responsible for the development of products and solutions such as CorroCapTM, FlangeShiel(rrM, Riser Clamp Shidd™, COTTO­CillinT”, Corro-Shield™ and Composite Sleeve Repair: (i) Tengkll Dalld Shaifllddin bin Tengku Zainudin
(ii) Nagendran a/I C. Nadarajah

(iii) Juhan bin Husin (iv) Zamri bin Zakaria
(v) Mohd. Sanim bin 1smail

In addition 10 the above personnel, the Group has recently engaged new personnel and consultants as part Of118 programme to strengthen the R&D team and improve the structure of the R&D process. The new tcam members who have recently joined the Group are as follows: (i) Dr. Dino !sa Amshah
(ii) Jeffrcy Dc long

(iii) Dr. K. Basker (iv) Parthipan S Krishnasamy The profiles of the new R&D Team arc set out bclow: (i) Dr. Hino Isa Amshah Dr. Dino holds a Doctorate of Philosophy in Electrical and Electronics Enginecring from thc University of Nottingham, UK and spccialiscs in Analog Electronics and Circuits and Signal Processing. Dr. Dino’s illustrious working career includes being an Engineering Scction Head, Planl Manager and Chief Technology Offiecr (“CTO”) in various multinational companies. From 1996 to 2001, Dr. Dino was attached to Crystal Clear Technology whereupon he “ancd as a Plant Manager and progressed to the position of CTO. As the era, Dr. Dino was responsible for implementing a 5­ycar technology roadmap of the company. At present, Dr. Dino is a lecturer in the University of Nottingham Leaching the subjects of C Programming, Analog
Electronics, Signa] Processing, Numerical Methods and Analog Circuits. Dr Dino joined the Group as a R&D consultanL on 1 December 2003. 56

5. BUSINESS INFORMATION (Cont’d) As a ~-pcciaJist in analog e)ectronics. analog circuits and signal processing, Dr. Dino will playa vital role in the Group’s development of a new generation of “smart” corrosion conlrol products and solutions. These product~ and solutions will incorporate microchips to track the internal environment of the structure, predict the failure mode and transmit the appropriate electronic signals to the owner/operator to provide early warning of potentia) instability, thus allowing remedial action to be taken before the damage (}Ccurs. (ii) Jeffrey De Jong Jeffrey is a Dutch national and holds a Bachelor of Scieoee in Architecture and Master of Science in Building Technology from the University of Technology ofthe Netherlands. After oblaining his masters degree in 1983, Jeffrey worked for British and Dutch companies based in Singapore and Malay,;a respectively where he was responsible for the design and implementation of space frames and skylights in modern buildings ami optimisation of reinforced and sleel structures. Jeffrey pioneered in developing methods of repairs, strengthening and protection based on compo’ite technology. Jeffrey joined the Group as a R&D consultanl on I December 20m. Having worked in a British company specialising in developing methods of repairs. strengthening and protection based on composite technology, Jeffrey is a specialist in composite products R&D. (iii) Dr. K. Basker Dr. l:3askar holds a Master in Structural Engineering from Anna Univcrsity~ Chennai and Poetorate of Philosophy in Structural Engineering from the National University of Singapore. He started his career in 1996 with the Indian operations of a construction and infmslructure multinational whe-reupon he analysed and designed various industrial, petrochemical aod oil refiocry slnleture,. in …rly 2002, Pr. Baskar joined the Sing.aporc operations of lJnV as a Structural/Industrial Engineer and his work involved analy~is and review of birue·tures and components and planning, coordination and execution of laboratory ~;tt11ctural and component K~ts for various c1icn(s. The subjects under his analysis and review. comprise metal. concrete and composite strucnlres. Dr Bask”r joined the Group in february 2004 as a member of the R&D team. Dr.. Baskar is a specialist in ~tructural engineering, across a widE: range of materials such as metal, cnncrete and composites. As a full time R&D stafl’in the Group, Dr. Baskcr “,’ill be involved in mo,t of the new products and solutio.., to be developed by the Group involving composites. Dr. Baskar will be complemented by Jeffrey’s extensive knowledge in advanced composite matcrials. (iv) rarthipan S Krishnasamy Patthipan graduated iTom the University of Tbomewood UK with a Bachelor of Engineering majoring in Electrical and Electronic. Prior to joining eSSB. MI’. Parthipan was attached to various multinatiomlls in the semiconductor and electronic industry and was responsible for project’ such as the manutacruring methodology of new products and technology transfers from holding companies. Parthipan joined eSSB on J December 2003 and is involved in the improvement and refinement of (he pennancnt Composile Sleeve Repair system. Parthipan will be working with Dr. Dina towards the development of corrosion control produ(.1s and solutions that will incorpori:lte micro­chips to track the internal environment of the structure, predict the fuilurc mode and transmit the appropriate electronic signals to the owner,’ operator to provide early warning ofpotcntial in~tability. 57 5. BUSIJ\ESS INFORMATION (Colll’d) 5.3.14 Market size and competition 1n the d()mc~lic front, there is no direct competitor, both local and foreign.. due to CSSB’s appointment as a supplier under VDP. The Perisai Group has a monopoly for Ihe manufacture, supply anu installation of corrosion protection systems on all fasteners, flanges, riser clamps and pipe supports on Carigali’s otl’shoTe platforms and those of PETRONAS’ PSC cootractors’ otl’shoTe facilities in Malaysia as well as operations owned by PETRONAS or its subsidiaries. Out of the total market size of around RM120 million for atmospheric corrosioo control prodocts in 2002 in Malaysia. computed based on the number of oif and gas platforms and onshore installations, the Perisoi Group had a market share of approximately 9%. The rest of the market is accounted by the various paints and coatings companies, which arc not direct competitors to CSSB’s Tange of products and solutions. This is due to the tuct that paints and coatings are normally used when there is a budget constraint on the part of the clients. They are basically available off-the-shclves and are viewed as commodilies in the market. (Source: Frost & Sullivall Report dated AprillU04j Howeyer, it should be noted that this survey was conducted on CSSB’s industry position prior to the conclusion of the Master Service Agreement and the award afthe indiVidual contracts from PETRONAS’ PSC contractors, namely, illleI’ alia, Carigali., ExxnnMobil, Shell and Nippon Oil for the provision of corrosion control services in May,’ June 2003. Jn the global front, the Perisai Group also faces competition from companies providing substitute products and solutions as follows: Perisaj Group’s Competitors I Substitute Types of protection products I solutions Products or Solutions Nuts and bolts preservation CorroCapTM Rodolid (Germany) and Sapsc”llnternationa! (UK) Flange piping -preservation FlangeShield™ Caulking Tapc Wraps Rehabilitation of corroded risers and pipes mildly corroded riseTs “nd Fibaroll Clock Spring (USA) and pIpes Armour Plate Wrap (USA) severely corroded risers and Composite Sleeve Repair Pipeline integrity International pipes (British), Mexssub Oilstates Hydrotech (USA) Heat exchanger protection CTI ShieJd™ Prefabricated plastic and nylon insert Marine growth removal and Marine Growth TmpuL1:or lEV-Group prevention systems & Marine Growth Pile Protector 5. RUSINESS INFORMAnON (Conl’d) 5.3.15 Employees The Group recognises the importance of its employees and the upgrading of their skills and knowledge. The Group provides staff training aod development progtammes for its staff through on~thc-job training and in-house training programmes. The Group believes that on­thc-job~training is an effective means of providing practical training for its employees. Apart trom on-the-job training, the employees are also sent to attend both extemal technical and managerial cour~cs. As at 31 May 2004, the Perisai Group has a total workforce of7& employees. The employee structurc of lhe Group is as follows: Categor,’ Total Average no of )’eafS of service Managerial and professional 20 3 Technical and supervisory 51 4 Clerical and related occupations 42 General workers 32 Total 78 None of the employees are members of any unions and there has not been any industrial disputes in the past. 5.3.16 Development milestones The development miles1onc~ of the Perisai Group are summarised below: Year’ Company Achievement Febmary 1996 Issn FOlnled technical collaboration with PRSS to calTY out joint research, development, engineering, testing and commercial exploitation of marine growth removal and prevention system. July 1996 CSSB Formed technical collaboration with PRSS to provide testing faci litics al its laboratories for CSSE’s products. March 1997 CSSB Independent accreditation of vacuwn sea] caps as an effectlVe anti-corrosion product by Lloyd’s Regi’ter on ,uccessfuJ laboratory tests in accordance with ASTM B 117 and ASTM B61 0-86. May 1998 CSSB Perf<mncd the first Ri,er Clamp Shie1d”‘M installation for a CARIGALI offshore platform. Further to an independent inspection by DoYon 23 August 2000, the Riser Clamp Shield’IM was confirmed to have efkctively prevented corrosion since the time it was installed. May 2000 CSSE Awarded Yendor status under thc PETRONAS VDP by PETRONAS and the MoF to manufacture, market and install prot.ective systems for corrosion prevention on all fasteners, new pipe flange surfaces and pipe supports including surface preparation, supply and inSl.1llarion 00 corroded fasteners and flanges surface. 59 5, BUSINESS ll’iFORMAnON (Conl’d) Year June 2000 Augusl2000 July 2001 September 200 I November 2001 february 2002 April 2002 November 2002 December 2002 January 2003 Compan)’ CSSI3 C5SB CSSB FSSB CSSB CSSB CSSB CSSB CSSB CSSB Achievement Awarded first major contract valued at RM8 million by PRSS for Ihe complete proreelion all the nuts, bolts, nanges and riser clamps in several newly installed offshore platforms with CSSB’s products, namely CorroCap”‘, l’1angeShiel<lTM and Riser Clamp Shield”M The initial contract was awarded by CAR1GALl to PRSS which was later subcontracted to CSSB. Independent verifie”tion by DnV of field trials of CSSB’s an11 c.orrosion products after two and a half years indicating “zero corro~ion” ror Rjse~ Clamp Shield™ and CorroCapsTM, Improved silicon formulation for CorroCap””” and improved wax fonnulation fOT Corro-CiIlin™ resulting in their melting points increased to 105() Ce\cius resulting in greater heat resistance. Granted the exclusive selling and applie”tion rights of fibaroll by Fib” Tech Jndustries Ltd for Malaysia, Thailand, Taiwan, Brunei and Singapore market. Signed a Price Agreement with Malaysia LNG Sdn 8M for a two (2) plus one (t) contract to provide serv;ees under the VDP scope. YDP scope was extended to include me inspection and m”intcnance of all nuts and bolts, pipe flanges, pipe supports, and tisers/ri,cr clamps. Awarded its first Composite Sleeve Repair engagement by Shell at a contract value ofRM5.45 million. This reprc«nts the first time the permanent sleeve repair lcchnology was used after development. The project was completed in August 2002 and obtained a certification from [JnV. This was” breakthrough for CSSt3 “S the Compo,ite Sleeve Rep”ir was still “t the experimental stage when the· contract was awarded. AW”Tdcd a sale order amounting to approximately RM3.3 million in connection with the supply and installation of CorroCapTM and F1angeShicld™ for complete protection of “11 the nuts, holts and flanges of a large onshore platform operated by Nippon Oil Exploration (M”laysia) Ltd. Ineated otnhe coast of Malaysia. Awarded a sale order in respect of Matine Growth Pile Protector amounting to RM265,OOO to be supplied to an olTshore platform operated by PertamimtffotalFi,mElfE&P lndonesie in Indonesia. WWSB appointed CSSB as its sale “nd exclusive distributor of Biosolve” products for oil and g”S industry t’lf West Mal”y,ia only. 60 5. BUSIN~SS INFORMATION (Colli”/) Year Company Achievement March 2003 eSSB Secured two contracts with Carigali both for the duMion of ) plus 2 years for the inspection and mailltenance of heat exchanger April 2003 eSSB Awarded first overseas pemluncnt Composite Sleeve Repair job worln approximately RM2.6 million hom Brunei Shell. This engagement was the world’s first underwater installation of its kind resulting in two (2) pemlancnt sleeve repairs under 34 meters of SC3\\’3.ter without operatlOnal ,hutdovm. May; June 2003 eSSB Awarded conlracts from PETRONAS’s PSC contractors (Cangali.• ExxonMobil, Shell and Nippon Oil) for a three plus two years to provide services under its VDP scope. July 2003 CSSB Awarded a sale order amounting to approximately RM700,OOO in connection with the· supply and installation of CorroCapr… and FlangeShicldn , for protection of nuts, holts and flanges at an offshore platfonn operated by Catigali-Triton Operating Company Sdn. Bhd. located at Malaysia-Thailand waters.
5.3.17 Interruptions to operations There have been no interruptions to the Perisai Group’s business or opcmllons in the past 12 months. 5.4 SUBSIDIARY AND ASSOCIATED COM I’ANIES As at the date of this Prospedus, the details of the subsidiary and associated companies of Pcrisai: all of which \vere incorporated in Malaysia, are as follows: Date of  Issued and  Effective  Date I Place of  commencement  paid-Up  equity  Company  incorporation  of operation  share capitlll  interl’st  Principal activities  (RM)  held  (%)  CSSB  15.041996i  2 May 1996  600,000  60  Manufacturing. supplying,  Malaysia  commissioning and installation  ofcorrosion control products  and related services primarily for  the· oil and gas industry  FSSll  10.03.1993 i  I November  500,000  lOa  Trading, design and application  Malaysia  2002  of specialist composite malcriab  primari Iy for thc oi Iand gas  industry  RMSB  23.021999 i  2 January 200G  100,000  100  Pmvlsion of services to  Malaysia  advanced engineering inspection  tL’-Chniques, heat exchanger tubes  restoration technology and  plants engineering maintenance  primarily for the oil and gas  industry
5. BUSINESS INfORl\1 ATION (Coll/’d) Date of Issued and Effective Datl” I Place of commencement paid-up equity Company incorporation of operation share capital interest Principal activities (RM) held (%) OTSB 03.03.1999/ I AuguSllOOI 500,000 100 Design and engineering and Mal~ysiJ patent holder 135B”) 01.08.1994/ I July 1995 100,000 100 Design and consultancy service Malaysia and patent holder WWSB 30.1 0.2(J02 ; 2 January 2003 \00,000 37.5 Provision ofenvironmentally Malaysia friendly hydrocarbon miligation services primarily for the oil and gas: industry Noll’: (i) Wholly-ol1,ned subsidiary qlOTSH Further information on the subsidiary and aS$ociated companies of Pcrisai is ~ct out hereafter. 5.4.1 CSSB (i) History and bu,iness CSSB was lnc.orporated as a Pi; vate limited company in Malaysia under the Act on J5 April 1996 as Corrosheild Sdl1 Bhd and subsequel1tly adoptcd its present name nn 3 May 1996. CSSB is principally involved in the manufacturing, supplying, commissioning and installalion of corrosion controls products and related services. eSSB is a company registcred with the MoF and licenced by PETRONAS to carry out a range of maintenance services relating to corrosion control. With close collabnration with pRSS, eSSB also develops, markcts and installs corrosion protective products, which are currently being installed in the oil and gas industry, 011 25 May 2000 eSSB was awardcd the PETRONAS Vcndor Slatus under the YOI’ to manuracture, supply lmd install protective systems for corrosion prevention on all fasteners, new pipe flanges surfaces and pipe supports including surface preparation, supply and installation on corroded fastcncrs and Danges for a period of five· years. Thc scope of the product included in the PETRONAS Vendor Status was cxlcl1ded on 6 Fcbruary 2002 to include inspection and maintenance of all nuts and bolt” pipe tlanges, riser, riser clamps and pipe supports. Notwithstanding that thc PETRONAS Vendor Status was awarded nn 25 May 2000, the full implementation of the Vendor Status came much later upon the conclusion of the Master Service Agreement and the award of the individual contracts from PETRONAS’ pse contractors, namcly. in/er alia. Carigali, ExxonMobil, Shell and Nippon Oil fur the provision of corrosion control services in May I June 2003. The Master Service Agreement provides the basis of the said contracts between, PETRONAS’ PSC contractors and CSSB. Each contract is for a duration of 3 plus 2 years from lhe date of the respective contracts. [The rest of this page is intentionally left blank] 62 S. RUSINESS INFORMATION (Coul’d) (ii) (iii) (iv) Share capital The present authorised share capital of CSSB is RM 1.000.000 comprising 1,000,000 ordinary shares of RM1.00 each, of which RM600,000 comprising 600,000 ordinary shares ofRM1.00 each have been issued and fully paid-up. The changes in the iss1Jcd and paid-up share capital of CSSB since its incorpomtion are as follows:  No. of  Cumulative issued  Date of  sh:.tres  and paid-up  allotment  allotted  Par \’alue  Consideration  share capital  (RM)  (RM)  15.04.1996  2  \.00  Subscriber shares  2  -cash  04.12.1996  599,998  1.00  Cash  600,000
As at the date of this Prospectus.. save a:\ d.isclosed be.1ow, there arc no out1:\tanding warrants, options, convertible securities nr uncalled capital ofCSSI3: Pursuant to the project agreement dated 12 July 1996 between eSSB, RII. and PRSS for the project development of corrosion control products, an option was granted to PRSS to purchase up to 30% of the issued ,hare capital of essl3 under such teoms to be agreed between PRSS and eSSB. In this respect, Tenglru Daud Shaifuddin bin Tengkn Zainudin who currently holds 40% equity interest in CSSB has given an irrevocable undenaking to the board of diredo”, of eSSB on 2 January 2004 to sell his shares in CSSB in the event the option is exercised by PRSS. Substantial shareholders According to the Register of Membe”, as at 31 May 2004, the substantial shareholders of eSSB (5% or more of the issued and paid-up share capital) are as followS’ <——–Sharenolding——-> Citiun,hip Il’lace Name Direct % Indirect ”10 of incorporation I’erisailll 360,000 60 Malaysia Tengku LJaud 240,000 40 360,000 (1l 60 (21 Malaysian Shaifuddin bin Tengku Zainudin ,~i()le: (lj The substantial shareholders oIP(~,.;s([i are deemed interested in eSSB by virtue of Perisal’s substantial shareholdings in eSSB. Please refer 10 Section 7.1.2 (~r this Prospectus for details ofJhe subsramial shareholders ojPen”,mi. (2) Deemed interested bJ’ virlue afhis substolltial shareholdings in Perisai. Subsidiar)’ .. nd associated companies As at the date of this Prospcctos, eSSB does nol have any subsidiary or associaled compames. 63 5. BUSINESS INFORMATION (CoIII’d) 5.4.2  FSSB  (i)  History and business  FSSB was incorp()rated as a private limited company in Malaysia under tlw Act on  10 March 1993. FSSB adopted its present name on IS July 2002. FSSB is principally  involved in the tmdingl design and application of specialist composite materials.  FSSB sells and applics FibaTolI matcrials and systcms for corrosion control in  Malaysia. Brunci, Thailand and Taiwan. FSSB was granted an exclusive selling and  application rights in respect of Fibaroll materials and systems in Malaysia, Brunei  and Thailand for all types of pr<\jects and in Singaporc tor civil structure and  shipping projects in 200\. FSSB has now expanded its services into design,  manufacture, supply and instanation of riser pipeline maintenance systems such as  Fibaroll-PMS (riser i pipeline maintenance system) and Fibaroll AFS (anti-fouling  system).  (ii)  Share capital  The present authorised share capital of FSSB is RM500,000 comprising 500.000  ordinary shares ofRM\.OO each, all ofwhich have been issued and fully paid-up.  Thc changes in the issued and paid-up share capital of FSSB since its incorporation  arc as f<)lIows:  No. of Cumulative  Date of shares issued  allotment allotted Par value Consideration and paid-up  (RM) share capital  (RM)  10.03.1993 2 \.00 Subscriber sbares -cash 2  1501.2002 9S \.00 Cash 100  11.07.2002 199.900 \.00 Cash 200,000  23.06.2003 300,000 1.00 Casb 500.000  As at the dale of this Prospeclus. there arc no outstanding warrants, options,  convertible securities or uncalled capital of FSSB.  (iii)  Substantial shareholder  FSSB is a wbolly-owned subsidiary of Perisai.  (iv)  Subsidiary and associated companies  As at the date of this Prospectus.. FSSB docs not have any subsidiary or associated  companies.  IThe rest of this page is intentionally left blank]
5. BUSINESS INFORMATION (Cofll’dj —————–.—._—-~———­5.4.3 RMSR (i) History and business RMSB wus incorpomtcd CiS a private limited company in Malaysia under the Act on 23 February 1999 and cummenced operations in .iuly 2000. RMSB principally provldes services for advanced engineering inspection techniques, heat exchanger tubes restoration technology and plants engineering maintenance. The initial scope of business of RMSn was the provision of services related to rope access techniques (abseiling) for general and oil and gas industries. Howcvefl since 2001, the scope of business was expanded 10 include provision of services related to advanced inspection lechniques, heat exchanger tubes restoration technology and specialised engineering maintenance on heat exchangers.. boilers, process vessels and thermal equipment through smart partnership with overseas compan;cs. (ii) Share capital The present authorised share capital of RMSB is RM 100,000 c.omprising 100,000 ordinary shares ofRM1.00 each, all of which have been issued and fully paid-up. The changes in the isslied and paid-up share capital of RMSB since its incorporation are as follows: No. of  Cumulati\’e  Date of  shares  issued  allotment  allotted  Par value  Consideration  and paid-up  (RM)  share capital  (RM)  23.021999  2  1.00  Subscriber shares -cash  2  26.09.2000  99,998  1.00  Cash  100,000
As <It the d<Jte of this Prospectus, there are no outstanding warrants, option!’., convertible securities or uncalled capital of RMSB. (iii) Substantial sbareholder RMSB is a wholly-owned subsidiary of Perisai. (iv) Subsidiary and associated companies As at the dale of this Prospectus, RMSB does not have any subsidiury or associated companies. 5.4.4 OTS8 (i) History and business OTSB was incorporated as a private limited company in Malaysia u1lderthe Act on 3 March 1999. OTSB is a wholly-owned subsidiary of Perisai and is principally involved in design and engineering of marine gro\\·1h control systems and Composite Slceve Repair Technology and is also a patcnt holder. OTSB jointly with PRSS have made a patent application on 21 .iuly 2003 for the Composite Sleeve Repair Technology. Apart from sharing the ownership of the patent, OTSB and PRSS will jointly further dcvclop the Composite Sleeve Repair Technology. 65 5. Bl’SI.’1ESS INI’ORMATlOI\ (Com’d) 5. BUSINESS INrORMAnON (Con/’d) (ii)  Share capital  The present authorised share capital of OTSB is RM500,OOO comprising 500,000  ordinary shares ofRMI.OO each, all of which have been issued and fully paid·up.  The changes in the issued and paid-up share capital of OTS8 since its incorporation  are as follows:  No. of Cumulativrissucd  Date of shares and paid-up  allotment allotted Par value Consideration share capital  (RM) (RI\1)  03.03.1999 2 1.00 Subscriber sharcs ­2  Cash  10.09.1999 99,998 1.00 Capitalisation of 10U,OOO  amOlUlt owing to  directors  26.06.2003 400,000 1.00 Cash 500,000  As at thc date of this Prospcetus, there are no outstanding warrants, options,  convertible securities or uncalled capital of OTS8.  (iii)  Substantial sbareholder  OTS8 is a wholly·owned subsidiary ofPerisai.  (iv)  Subsidiary and associate.d companies  As at the date of this Prospecms, ISSB is the only subsidiary company of OTSB.  Please rcrer to section 5.4.5 of this Prospecttls for further information on ISSfl.  5.4.5  ISSB  (i)  History and bnsiness  ISSB was incorporated as a private limited company in Malaysia under the Act on I  August 1994. ISS8 provides design and consultancy services and is also the joint  owners with PRSS for marine growth control products (Marine Growth Impactor and  Marine Growth Pile Protector) developed by [SSB jointly with PRSS.  In 1996. ISSB entered into a contract with ESfl and PRSS to develop apparatus for  combating marine growth 011 submerged structuresl cleaner collar and collar adapted  with propeller and fins.  (ii)  Share capital  The present authorised’ share capital of ISSB is RMIOO,OOO comprising 100,000  ordinary shares of RM 1.00 each, all of which have beeo issued and fully paid-up.
The changes in the issued and paid-up share capital of ISSB since its incorporation arc as follows: No. of Cumulatiyc issued Dale of shares and paid-up allolment allotted Par value Consideration share capital (RM) (RM) 01.08.1994 2 1.00 Subscriber shares 2 -cash 06.01.1996 99,998 1.00 Cash 100,000 As at the date of this Prospectus, there arc no outstanding warrants, options, convertible securilies or uncalled capital of/SSB. (iii) Substantial shareholder ISSB is a wholly-owned subsidiary of 015B. (iv) Subsidiary and associated companies As al the date of this Prospectus, [SSE docs not have any subsidiary or assoeialed compamc<.;. 5.4.6 WWSB (i) History and business WWSI:3 was incorporated as a private limited company in Malaysia Wlder the Act on 30 October 2002. WWSB is invnlvcd in the provision of environmentally friendly hydrocarbon mitigation services (distributed under the name of BioSolve~). (ii) Share eapilal Tbe present authorised share capital of WWSB is RMIQO,OOO comprising 100,000 ordinary shares of RM1.00 each. all of which have been issued and fully paid-up. The changes in the issued and paid-up share capital of WWSB since its incorporation are as follows: No. of Cumulative issued Date of shares and paid-up allotment allotted Par value Consideration share capital (RM) (RM) 30.10.2002 2 1.00 Subscriber shares-2 cash 02.01.2003 99,998 1.00 CU’h 100.000 As at the· date of th1S Prospectus, there are no outstanding warrants, options, convert1blc ,ecurities or uncalled capital ofWWSB. S. BUSIN.:SS INF’ORMAnON (Com’d) (iii) Substantial shareholders According 10 lhc Register of Mcmbcn; as at 31 May 2004, the subslancial shareholders of WWS13 (5% or more of the issued and paid-up share capital) arc as follows: <-Shareholding > Citizenship I Place of Name Direct % Indirect ~. inL’orporation Christopher /\nak 42.500 42.5 Malaysian James Perisai(‘) 37,500 37.5 -Malaysia Abu Bilkar bin M(tsri 20,000 20.0 -Malaysian Note.­(1) The substamial sharehoMers (~r Peri…ai are deemed inU:re….led in WWSH by virtue of Perisai’s substantial sJwreholdings ift WWSB. Please refer to Section 7. J.2 of thiJ Prospectus for details ofthe substantial shareholders ofPerisai. (iv) Subsidiary and associated companies As at the date of this Prospectus, WWSB does nol have any subsidiary or associated companies. (The rest of this page is intentionaU)’ left blank) ————————–_._——-­5. BUSl~ESS INFORMATION (Conl’d) MAJOR CUSTOMERS For the tinaneial year ended 31 December 2003. the top 10 customers of the Perisai Group are as follows: 0.!u of total turnover for Len~th of the financial year ended Relationship “.’lame 31 December 2003 (years) Carigali 51.4 7 Nippon Oil Exploration (M) Ltd 12.9 2 PRSS 11.0 7 JolTren Omar Co. Sendirian Berhad (Brunei Shell) 9.9 2 Ramunia Fabricator Sdn Bhd 5.5 2 JMSB-KMSB Joint Venture 2.2 1 Carigali Triton Operating Co Sdn Bhd 1.9 2 PertaminaffotalFinaElfE&P Tndonesie 1.3 1 UEC Engineering Sdn Bhd 1.2 1 PJ Energy Services Co Ltd 1.2 2 Total 98.5 rresenily, the Group ;, dependent on Cariga]i and PRSS, who arc subsidiaries of PETRONAS for most of its sales. However, with the Group’s proven track record, competent personnel and stringent quality control requirements and standards, effective and efficient products and solutions that conform to the high standards of its customers, the Perisui Group is well positioned to continue securing busines~ from it:; c.uSlomers. The Group also expects uemand from its existing customers to sustain as these companies are aware of the signlficant potential loss in revenue in the event corrosion on their platfonns are not managed. Moreover, the Perisai Group has been actively involved in the con-osion control industry since 1996 and to dalc, has not breached any temlS which has resulted in the termination of any of its projcct~. Further, the Perisai Group intends 10 widen its customer base by diversifying into other industries such as marine shipping and power plants and expand into other countries. 1n this respect, the Group has successfully secured contracts in Brunei, Indonesia, Thailand and Vietnam and is pret\ently marketing its products and services in Myanmar. IThe rest of this pa~e is intentionalJ)’ left blank] 5. BUSINESS INFORMATION (Conl’d) 5.6 MAJOR SVPPLJERS For the financial year ended 31 December 2003, the top 10 suppliers to the Perisa! Group are as follows: U/o of total purchase for Length of the tin.ncial )’e.r ended Rel.tion.hip Name Raw Materials 31 December 2003 (years) Fiba Tech Industries Ltd Fibre reinforced plastics 46.0 2 Westford Chemical Biosolvc’t 15.2 Corporation Texehem Materials Sdn Bhd Silicone 14.4 3 Honey Well Ltd Waxes 12.6 5 I.avatron Density Sdn Bhd Epoxy 2.1 3 Imej Warisan Sdn Bhd Fibre glass material J.R 3 Ny,in Trading Sdn flhd Co”,umables 1.5 5 Min Industries Sdn Bhd Floating rubber 1.3 6 Polyolefins Pipes Bhd Poly pipes 1.2 6 Safety Innovators Sdn Bhd Personal protective 0.8 5 equipment Total 96.9 The Perisai Group is dependent on Fiba Tech Industries Ltd and Westford Chemical Corporation for the supply of fibre reinforced plastics and Biosolve” respectively. For further information on how the Perisai Group mitigates the risk of relying on third purty products and solutions, please refer to Section 4.10 of thl~ Prospectus. For the other raw materials, the Directors of Perisai believes that they arc not dependant on any slngle supplier and there would also not be any difficulty in sourcing their raw materials from other suppliers. The Perisai Group continues to purchase its raw materials from the same suppliers due to its long-term business relationship with thc respective suppliers, with whom it enjoys a consistent timely supply at eompetitive prices. 5.7 fliTUIHi PLANS The Perisai Group has a market share ofapproximately 9% for eurrosion eonlrol products in 2002, with the rest of the market accounted by the various paints and coatings companies, which are not diroct competitors to the Group’s range of products. Over the next 5 years, the Group’s business goal is to establish itself as the market leader in the offshore oil and gas sCL.1or of the Asian region, divers! fy into other related services to the oil and gas industry as well as introduce the Group’s corrosion control products and solUlions to the onshore oil and gas, marine and power industries. To achieve this, the Group will be embarking on the following broad strategies over the next 5 years: (i) consolidation ofposition in the Malaysian omhore oil and gas industry;
(ii) product development;

(iii) industry diversification; (iv) geographic market expansion; and (v) human resource development. Please refer to section 8 ofthis Prospectus for timher details on tbe future plans oflhe Group. 6. INDUSTRY OVERVIEW
6.1 INTRODUCTION The Peri”‘; Group is involved in Lhe manufacturing, supplying, commissioning and inSlallation of corrm,;on control products as well as the inspection and maintenance of pipes, pipelines, risers and heat exchangers primarily for the oil and gas induslTy. Accordingly, the market for the Group’s products and solution is dependent on hoth the upstream sectm (offshore platforms) and downstream sector (onshore pipelines, refinery installalions and petrochemical complexes) of the oil and gas industry. Further, apart from servicing oil and gas facilities in Malaysia, the Group also provides corrosion control producls and solutions to overseas oil and gas facilities, parlicularly to Brunei and Indonesia. Accordingly, the market for the Group’s corrosion control products and solutions is dependent on the perfoonance of the petroleum inUu.’\try in Malaysia, Brunei and Indonesia. 6.2 OVERVIEW OF THE GLOBAL ECONOMY Macroeconomic stimuli, inventory dynamics and a stronger turnaround in the high technology markets arc expected to set the stage for a wider recovery through the traditional channels of international transmission. With glohal trade steadiLy increasing, and interest rates at historically low levels, the glohal economy is poised for a gradual recovery. Lower inlerest rates helped keep Ihe consumers’ demand for durable products strong. Together with fiscal easing, Lhat demand should provide support for an economic rebound in the USA, and to a lesser extent in some A’dan and European countries. The recovery in the global markets is shaped primarily by the developments in the industriah,ountries. If corporate spending on IT investments in the USA, Eurn Area and Japan does not pick up towards tlle end of 2003 due to weak business confidence, then Lhe global recovery could be delayed until 2004. Therefore, both the world economy and global trade arc anticipated to improve, moving forward into 2005. Uncertainties, especially gcopoliljca.l onc..~. arc keeping investors cautious, throughout most parts of the world. In the developing couotries, investment behavior has Oceome a key element of the outlook. They are especially vulnerable to jitters in the financial markelS. Sudden reversals in capital flows can dampen inveslments sharply and weaken the growth momentum. Hence, countries with strong policies in place are more likely to avoid or smoothly absorb external financial shocks. The downside risks to the forecasts include the emergence of other flash points in lhe Middle East, terrorist reprisals, the USA economy slows down markedly, the USD declines too sharply and the further weakening of the Japanese economy. A weakened USD would translate into slower demand for imported goods into the USA, with repercussions for the Asian export-<lriented economies. Japan remains an important trading partner and a source of capital for many of the neighboring Asian countries, not withstanding its prolonged economic weakness. Hence, its economic performance has a direct effect on its neighbors. (Sol/ree: Frost & SI/Ilivan Report dated April 2004) 6.3 OVERVIEW OF THE MALAYSJAN ECONOMY While events in Ihe first half of 2003 had an impact On growth, the mutually reinforcing combination of strong economic fundamentals, supportive monetary and financial policies and decisive Government action provided the platform for growth to accelerate in the second half. For 2003 real GDP expanded by 5.2% (2002: 4.1 %), exceeding Ihe official forecast of 4.5%. Growth in 2003 was broad based and balanced across sectors. The manufacturing sector grew by 8.2% on the back of strong production growth, both in the export-oriented and domestic-oriented industries. Export-oriented industries, particularly the electronics and chemicals industries, benefited from lhe recuvery in the global electronics sector as investment demand picked-up in most major economies. This growth was also seeo in the strong expansion in manufactured exporls (8.2%) and cap.cily utilisation levels that exceeded 80%. In certain industries. the 90% utilisation level was breached in 2003, prompting an increase in capital expenditure. 6. INDUSTRY OVERVIEW (Con/’dj The Malaysian economy is expected [0 stTengthen further in 2004, building on the strong gro”1h momentum in the second half of 2003 and brighter prospects fOT global growth in 2004. Real GOP is expected to expand by 6-6.5% (2003: 5.2%). underpinncd by Slronger domestic demand and reintimed by more favourable external demand. GToMh will mainly be plivate sectoT-driven. while the public sector gradually consolidates. The growing consumer and business l.:on1idcnct: since the second quarter of 2003, strengthened economic fundamcmals and the positive impact of pro-growth fiscal and monetary measures are expected to mutually reinforce robust consumer spc.nding and the upturn in private investment activitles. (Source: Bank Negam Malaysia Annual Reporr 2003) 6.4 OVERVIEW OF THE MALAYSiAN OIL AND GAS INDUSTRY Malaysia has around 500,000 square kilometer.; of acreage available for petroleum exploration, of which 205,500 square kilometers (41.1%) are currently coveTed underthe terms of the PSC, Due to its monopolistic and privilegcd stalus in the upstream oil and gas sector, PETRONAS entered into the PSCs mostly under terms that arc beneficial to the company. The PSCs are normally undertaken with a number of petroleum multinati()nal~ and each contract obligates the contractor to provide all the financing and bear all the risks of exploration, development and production activities, in exchange for a share of the total production. Out of the 123 oil fields discovered, there are 47 producing oil fields currently, In 2002, daily production of crude oil and natuml gas amounted to 698,000 barrels and 131.7 million cubic meters, respectively. At the current pace of production, the reserves of crude oil and natural gas are expected to last for around 13 years and 54 years, respectively, The importance of the petroleum industry can be seen from the fact it contributes more than 9 percentage points to the country’s GDP. Ongoing and future prouuction projects in the upstream se-cto! in Malaysia arc expected to amount to RMI 1.2 billion through 2005, In South·liast Asia, ongoing and future pipeline projects are projected at approximately RM 18.6 bi1lion through 2009. The natural gas production from the gas fields offshore Terengganu is delivered (0 the gas processing plants in Kertch. Subsequently, the processed natural gas is then delivered by pipcline as fuel to the cnd-users, which include households, manufacturers and power companies, as wen as feedstock to petroche-mic-al, ammonia and urea plants in the peninsula. Meanwhile, the natural gas production from the gas fields offshore Sabah is transported to the processing plant on Labuan lsland, and subsequently to the mcthanol plant as feedstock and the direct reduced iron plant as fuel. Lastly, natural gas production from the gas fields offshore Sarawak is channeled to the three liqueficd natural gas plants as well as thc ammonia and urea plants in Bintulu, Sarawak. In July 2002, Murphy Oil COIl’oration, an independent contractor working for PETRONAS struck crude oil in 1,340 meters nfwater 150 kilometers in the Baram Delta off the coast of Sabah. The field has an estimated recoverable reserve of up to 700 million barrels, or nearly 21 % of the country’s t2111cutTent crude oil re~ervcs. The country has the largest gas reserves and 27th largest c-rude oil reserves in the world. (.S’Ollrce: Frost & Sullivan Report dated April 20()4) Crude oil production (excluding condensates) rosc by 5% to 625,800 harrels per day (bpd) compared with 2002, c1nse to the year’s production target of 626,000 bpd under the National Depletion Policy. The increase in production during t.he year was driven by increased domestic demand for petroleum products and higher external demand, particularly from India. Australia, Thailand, People’s Republic of China and US, whIch together accounted for about 65% of Malaysia’s total export of oil. Exports to these countries increased by 34% during the year. Higher output emanated from existing oil fields as well as four new oil fields that came on stream dUTing the year, The increase in export volume and sharply higher export prices (22%), lilted gross receipts from crude oil exports by 35% to RM15.7 billion (2002: RMII ,6 billion), to aeeouot for 4% ofgross exports. Natural gas production expanded by 5.2% in 2003 as the sector was ahte to respond to the higher demand given all increase in production capacity, especially with the t:ommencement of the Malaysian 6. INDUSTRY OVERV’I>W (Com ‘d) Liquefied Natural Gas (MLNG) Tiga plant in May 2003 and the coming on stream of four new gas fields during the year. Domestic demand remained favourable, particularly from the power generation sub-sector, which consumed 66% of total domestic gas production. Higher omake by all Liquefied Natural Gas (LNG) buyers, namely Japan, Korea and Chinese Taipei as well as Ihe increase in export prices (RM766 per tonne; 2002: RM659) led to the sharp increase of 34.X% in export receipts generated from LNG. (Source: Bank Negam Malaysia Annual Report 2003) 6.5 OVERVIEW OF THE BRUNET OIL AND GAS INDUSTRY The economy of Hrunei is heavily dependent on the petroleum industry. It generates between 75 percent and 90 percent of the government’s revenues and accounts for slightly more than 50 percent of the GOP. Reserves of crude 011 and natural gas were estimated to be around 1.35 billion barrels and 391 billion cubic mete”, Tespectively in 2002. Tn the “me year, daily output amounted to 197.300 barrels of crude oil and condensates, and 30 million euhic meters of natural gas. The petroleum industry in Brunei is also venturing into deep water exploration activities, duo to the maturing of existing ticld~. In an effort to create more value added -products, the Brunei government is also encouraging the· development of large-scale petrochemical projects, to take advantage of the huge natural gas reserves in the country. Brunei Shell Petroleum Company spends ,IT} average of usn10 million on atmospheric corrosion control per ,mnurn. Approximately 50 percent of the costs arc channeled lnto offshore struc.tures, while the remaining into onshore installations. However, the figure spent on atmospheric corrosion control products varles from year to year as it is very project specific and is also a function of the urgency of the remedial actions needed. (Source: Frosl & Sullivan Report dated Apri/2004) 6.6 OVERVIEW 0.’ THE IJliDONESIA~OIL AND GAS INDUSTRY In 2002, Indonesia has crude oil reserves and natural gas reserves of around 5 billion barrels and 2.6 trillion cubic metcrs, respectively. O.ily production amounted to about 1.25 million barrels or crude oil ,md 86.1 million cubic meters of natura’ gas in 2002. In~p-jte of its huge petroleum reserves due to its g.eological factor endowments, Indonesia ;s viewt:d as being beleaguered by issues of regulatory cnforc-cment, taxation, labor disputes, political stability~ native land claims and forced socio-economic contributions outside the regular taxes. 1n addition, Indonesian waters suffer the dubiou-s reputation of being !iubject to the highest number of piracy incidents, as reported by the International Maritime Burcau. This affects the passage of merchant ships thTough Indonesian waters, and ultimately, docking at Indonesian ports that have the potential to generate the demand for atmospheric corrosion control products, through maintenance anti. rc.pair. It is estimated that Indonesia’s petroleum industry spends .round USDJO million pcr annum on atmospheric corrosion control. It is also subjected to budget constraints and is a functjon of the urgency of the remedial actions needed on the part of the petroleum corporations. CSSB markets its products directly to the end-users in the Indonesian market. (Source: Frost & Sullivan Report dated April 2(04) 6. INDUSTRY OVERVIEW (Conf’d) 6.7 OVERVIEW or THE CORROSION CONTROL PRODUCTS INDUSTRY 6.7.1 Market size In the global petroleum offshore platform market alone, the demand is projected conservatively at KM5.9 billion. based on the estimated 5,848 platforms in the world. Tn Malaysia, the market for atmospheric e·orrasion preventlvc products was estimated at around RM 120 million (USD31.6 million) in 2002. The market is anticipated 10 inclease dramatically, 10 Teach RM201.2 million in 2008. yielding a compound annual grO\.\1h Tate of 8.9o,,~. In Brunei and [ndonesia, the market for atmospheric corrosion preventive products was estimated at around USDIO million each, in the same year. (Source.’ FrOSf & SuI/ivan Report dated April 20(4) 6.7.2 Industry player and compet.itions The market sll.e for atmo~phcric corrosion products was mainly computed based on the number of oil and gas platforms and onshore installations. Of t.he total market. sizc for atmosphericcorrosionconlrol products ofapproximalely RMI20million in2002.CSSB hada market share of approximately 9%. The rest of the markct is accoW1ted by the various paints and coatings companies, which are not direct competitors to CSSB’s range of produc.ts and solutions. Some of the more promincnt companies supplying paints and coatings to the petroleum industry include: (i) JOlun (M) Sdn Rhd
(ii) Nippon Paint (1′.1) Sdn Bhd

(iii) Sime Leigh Sdn Bhd (i v) International Coalings Sdn Bhd (v) Corrncoat CoO’osion Services Sdn Bhd
(vi) Chugoku Paints (1′.1) Sdn Bhd

(vii) Dime! (M) Sdn Bhd (viii) Hempel (1′.1) Sdn I3hd (i.•) DNT (1′.1) Sdn Rhd (Source: Frost & Sullivan Report dated April 2004) However, it should be noted that this survey was conducted based on CSSB’s industry position prior 10 the conclusion of the Master Service Agreement and the award of the individual contracts from PETRONAS’ PSC contractors, namcly, h,rer alia, Carigali. ExxonMobil, Shell and Nippon Oil for the provi,ion of corrosion conlrol services in May I June 2003. (The rest of this page is int.entionally left blankl 6. INDUSTRY OVERVIEW (Cont’d) 6.7.3 Barriers to entry There is a high barrier 10 entry. principally in terms of proprietary product lechnology. The design characteristics arc kepi proprietary through patents that typically last around fiftccn yean; in Malaysia. Also, a cumpany must be appuintcd by PETRONAS under the VDP in order to venture into the petroleum industry. Tn addition. the atmospheric corrosion control market is unique in the scow thm there is a very high ratio of fixed costs to variable costs. Fixed costs include warch(}u.~ng facilities, rentals, R&D costs, salaries and plant and machinery. On the other hand, the variable costs includc offshore allowances, cost of material inputs and transportation charges for product installation. The sunk costs may be unrecoverable if a market participant decides to leave the market. Thuc is no main exit barrier in the corrosion protective indu~try. (Source: Frost & Sill/ivan Repor’ dated April 2004) Under Ihe VDP, eSSB has a monopoly for the supply and installation of corrosion protection systems on all fasteners, flanges, riser clamps and pipe supports on Carigali’s offshore platforms and those of PETRONAS’ PSC eontraclor” ofl’shore facilitics in Malaysia as well as operations uwned by PETRONAS or ils subsidiaries. Although awarded under the VDP scope on 25 May 2000, the full implementation of the Vc·ndor Status came mueh later upon the conclusion or the Master Service Agreement and the award of the individual contracts from PETRONAS’ PSC contractors, namcly, illler olio, Carigali, ExxonMobil, Shell and Nippun Oil for the provision of corrosion cuntTol services in May! June 2003. The Master Service Agreement provides the basis of thc said contracts hctween PETRONAS’ PSC contractoTS and eSSE. Each contract is signco for a duration of 3 plus 2 years from the date of the respective contract.s. 6,7.4 Relevant law and regulation gov..niug the industry PETRONt\S was incorporated in 1974 as the country’s national petroleum company to develop the nation’s petroleum resources, the ownership of which has been vested in the company by the Petroleum Development Act \974, and to participate in the refining, manufacturing and marketing of petroleum product”i as provided under the same Act. The mOJlopoli~1ic status in the upstream operation, based on the same Act~ is expected to remain in the foreseeahle future. As the sole shareholder, the guverrument controls the approval of all corporate matters under the Malaysian Companies Act, including the approval of dividends and the appointment of directors. Also, the salOe Act slipulates that the company is suhject tu the control and direction of the Prime Ministcr~ making the company’s management potentially affected by government policie~. However, the government has provided the company with adequate latitude to manage itself based on commercial principles and wi1l likely be the same for the fUl’Cseeable future. Both the operators and contractors, as well as their subcontractors. are subject to the Occupational Safety and Health Act, 1984. This Act is enforced by the Department of Occupational Safety and Health. a department under the Ministry of Human Resources. Under this Act, employers have the outy to ensnre, as f.lT as practicable, the safety, health and wclfare at work of all his employees. This includes the provision of plant and systems ofworl< that are, so far as is pmcticable, safe and without risks to health. Both safety and absence of risks to health in connection wilh the use OT opemtion. handling, ’10rdge and transport of plant and sub~1ances must be present. The employers must also ensure the provision of suc-h information, trdining and supervi~;on as is necessary to ensure, as far as is practicable,. the safety and health at work of his employees. In environmental issues, both the Environmental Quality Act, 1974 and the Exclusive Econumie Zone Act, 1984 apply to the otlshorc petroleum industry. The Department of Env’ironmcnt comes into play if the petroleum activities are within the territorial waters of Malaysia. If activities take place beyond the territorial waters, that is, the economic exclusive zone. then both PETRONAS <.inti the Ministry of Domestic Trade anti Consumer affairs ha\’c 6. I”lDliSTRY OVERVIEW (Com’d) regulatory control over the environmental aspects of offshore operations. The territorial waters are defined as situated within twe~ve nuutical miles from the coast. The maritime zone adjacent to the tcnitolial water may not extend beyond 200 nautical miles from the baselines from which th~ breadth of the territorial waters is measured., under the framework of the United Nations Convention on the Law of the Sea, which entered into roree in 1994. Besides these national environmental regulations. international agreements do applYl as well <is voluntary measures in the fonn of codes of practice. (Source: Frost & Sullivan Report doled April 2004) 6.7.5 Substitute products and solutions There-are many corrosion control methods available and they include protective coatings, corrosion-resi::;tant metals and alloys, corrosion inhibitors, polymers and anodic and cathodic protection. Protective coatings comprise galvanising and mctalhsing. Stainless steel, nickel­based alloys and titanium alloys are also used for corrosion control purposes. Paints and coatings are the most common fonn of cOITosion control substitute. However, they are mOTC suitable for shott-term remedial purposes, due to the hosti]C marine or near-marine environment, with saltwater being the main corrosive agent. Some substitutes require the suspension or shutting down of production during the remedial or repair phase. This translates in10 expensive downtime, as the petroleum operators arc obliged to produce a certain quantity of petroleum per day. The selection of a particular technique of atmospheric corrosion control is depe-ndent on a number of factors, like the intended service, application, planned ~ervicc life and cost. The details of Perisai’, products and their advantages are listed below; Products  Substitute  Advanb~es of Perisai GrouD’s Droducts  Coml-Cillin I ~  Grease or paint  Grease has the tendency to dry up making it  ineffective in  the  long  tcon  and  does  not  offer  inspec-tability,  a  key  criteria,  for  protection systems. Paint is not effective on  nuts, bolts and flanges as it is impossible to  have  access  to  carry  out  good  surface  preparation for the paint to be effective.  CS H5MP ..,  Grease or paint  As above  CS l05MP M  Grease or paint  As above  CorroCap’M  Traditional coating  Although the life (If these nuts and bolts can  be  extended  by  protective  eoarings  and  paints, this is a difficult task due to the odd  shapes  of the  nuts  and  bolts  and  their  inaccessibility  t.o  inspection  and  service.  Traditional  coating products  such  as  anti­ corrosive·  paints  amI  red  lead  primers  arc  environmentally  harmful  and  thus,  the  remoyal and disposal of these products are a  complex  and  expensive  part  of  any  maintenance project and requires specialist  advice, equipment and procedures resulting  in high costs.  ror health, environmental and  safety reasons, the use of these products arc  being reduced gradually.
6. INDllSTRY OVERVIEW (Conr’dj Products  Substitute Fluorocarbon coating  Advanta2es of Group’s products Fluorocarbon coating is vulnerable to mechanical damage or rough handling \vhich is difficult to avoid during the installation of the bolts and nuts which ultimately results in failure of the protective coating.  FlangeShield M  -Caulking -Tape wraps  Caulking is a procc·ss whereby anti-corrosion material in the form of a paste or putty is inserted 10 between of pIpe flanges to prevent corrosion. Nevertheless) the caulk does not bond to the steel and thus fonn a tight crevice which retains water through capillary action, Caulking seal prevents natural evaporation and exacerbates the problem. This system provides no inspcetabilily, The use of tapes alone doc> not prevent galvanic corrosion from taking place and very often these tapes have limited Ii fe and require replacement and routine maintenance.  Riser Clamp Shield'”  None  Fibaroll  -Stainless Steel and Aluminlum Cladding Systems -Clock Spling and Armour Plate Wrap  This system is susceptible to crevice corrOSlon and water IOgress when the .Utinless steel cladding is damaged or dented leading to accelerated coating failure. It is expensive, requires routine maintenance and does not allow inspeetability. The Clock Spring Sleeve and Armour Plate Wrap are specially developed high strength composite material. Its umque coilshape allows the Clock Spring tn wrap tightly around pipe of virtually any size. Applied with a fast-curing, yet incredibly strong adhesive, it COrolS a composite wrap which actually exceeds the yield sttcngth of the original pIpe. Once installed, the Clock Spring and Armour Plate Wrap fonn an extraordinary strong and durable repair. However, these systems arc expensive (at \cast 4 times more expensive than Fibaroll’s solution) and do not have the unique all in one system of adhesive and glass reinforced plastic laminates wbieh Fibaroll has.
6. INDUSTRY OVERVIEW (Collt’d) Products  Substitute  Ad” of Perisai Group~s oroducts  Composite Sleeve  -Hot Tapping and  Permanent repair or rehabilitation of oil and  Repair  Heavy Duty Metal  gas pipeline and riser call be very costly due  Connector  to the use of expensive technology like hot  tapping and heavy duty melal connector.  Worst of all, the repair using tIle above  lec.hniques invol ve cutting and replacing  parts of the risers and pipes and thereti>re  require the shutdown of operntions which  results in costly operations downtime.  Marine Growth  Marine Growth  The cleaning part of the MGR of the single  Impactor  Remover  competitor (lEV Group) is made from stecl  (“MGR”)  and is designed to scrape the marine growth  from the piles. This has been proven to be  undesirable as it causes damage on client’s  existing coatings. The Group’s product uses  plastic parts and derives the mass from the  water entering the chumber to cause an  impact action to remove the calcareous  marine growth and is more C,ost effective and  safer than the competitor’s product.  Marine Growth Pile  Marine Growth  The competitor’s product uses bri~tlcs and is  Protector  Prevent(lf (MGP)  modular unlike the Group’s product which  uses rubber rollers and il:i one single fused  wlit. The Group’s product has proven more  durable as it is a single unit unlike the  modular unit of the competllOr’S which  based nn feedback from client’s has the  tendency to break at the modular joints.  -Use ofpre­ Thc weaknesses of using pre-fabricated  rabricated plastic,  plastic, ceramic or nylon inserts or intcrnal  ceramic or nylon  coating are that they do not restore the· lube  inserts  back to original strucrural integrity and in the  -lnternal coating  case of coating, it is practically impossible to  coat the internal part of the tube effectively  and therefore does not cffeetively tical with  the problems posed by corrosion. The use of  plastic, ceramtc or nylon inserts also  promotes end step c·orrosion (i.e. corrosion  which occurs at tho~ areas within 6 inche:-;  from either or both ends of the tube), a  phenomenon which occurs due to the heavy  waII, of the inserts.  BioSolvc”  None
6.7.6 Industry reliance and vulnerability to imports Most of the global suppliers of atmospheric corrosion protection products and so\utions are either European or American companies. However, CSSB~ being a Bumiputera company. is given priority in the petroleum industry by PETRONAS in its vendor development progrdm, as part of the government’s efforts to build and develop a strong indigenous business community. In this context, the company is working closely with PRSS to jointly develop alld 78 6. INDUSTRY OVERVIEW (Coat”d) patent several products and solutions globally, in the field of atmospheric. corrosion control. Imports 01′ foreign sources of atmospheric corrosion control products from USA and Europe are much more expensive. Hence, CSSB has a strong position in the atmospheric corroslon control market in Malaysia. (Source: Frost & Sullivan Report dated April 2(04) 6.7.7 Prospects and outlook ofthe industry The market for atmospheric corrosion control products was estimated at around RM 120 million in 2002. The market is anticipated to increase dramatically, to reach RM201.2 million in 2008, yielding a compound annual growth rate of 8.9%. There is a trcnd towards applying corrosion control products when the plant and equipment is tirst commissioned, instead or applying remedial actions when normal corrosion takes place. The following factors are expected to drivc the growth of the industry:· (i) Technological advances stimulate exploration and prodnction activities The hydrocarbon potential of the Baram Delta has long been secn as promising, but the cost of deep-water prospecting repelled most potential investors. The recent discovery could bring about morC deep-water cxploration and production activities ill both Malaysia and Asia as a wholc. Deep~watcr exploration is the final frontier of the pctroleum industry, with the maturing of existing petroleum fields. Over the past few years, there have been dramatic changes in technology that greatly reduces the cost of acces~1ng a molecule of petroleum. Both ultra-deep platforms and next generation seismic-imaging techniques allow reservoirs to be visualised on a screen in minutes rather than the months it would have taken a few years ago. The· arrival of three dimension seismic imaging in the late eighties and nineties helped transformed the petroleum industry. By assisting to makc sense of what is going on inside the rocks underground, tltis has made the process of finding petroleum much Icss of a hit-and­miss affair. However, there is still room for further improvement. Another potential tcclmological advance lies in thc development of smarter drill bits that encase sensors capable of measuring conditions in the surrounding rocks. They act as the eyes and ears for the driller, by looking far ahead of the drill bit and communicating to the operator in Tcal time. Thanks largely to tedmological advances~ the average finding and development cost of crude oil has fanen to a third of the RM76 a barrel it was two decades ago. MC:.lnwhile~ the average extraction cost has fallen by half: to less than RM15 a barrel. The averdgc recovery rdtc rOT an oil field remains at between 30% and 35%. .Tn other words, of all the crude oil proven to exist in a given rcservojr~ petroleum companies typically get only about a third to the market. The key is not simply to coax more crude oil from tlte oil·bearing rocks of a reservoir, but also to tap smaller fields nearby that were previously uncconomic~ by using tools such as multi-directional wells. As a barbinger of things to come, the usc of chemicals pumped down the wells under high pressure could enhance the fracturing of low penneability rocks and thereby increasing the production. In addition~ installing c.omprc~sors at the bottom of the wells could help to stave off the decline in reservoir pressure over a period of time, and so boost petroleum recovery. Hence, the arrival of sequential technological advances in three broad areas should collectively add up to improved recovery rates and lower extraction costs. This includes better visua’i~tion of reservoirs, better ploecment and drilling and better mOllagement once the wells are in production. Needless to say, the longer the reservoirs are producing petroleum, the longer are the platforms and associated facilities arc needed, and the more corrosion control measures are nceded. 79 6. INDUSTRY OVERVIEW (Collt’d) (il) Expansion of downstream gas activities spurs demand Currently, Malaysia is the thiru largest exporter of liqueticd natural gas (LNG), atier Indonesia and Algeria. There arc three LNG plants in operation in Bintulu.. Sarawak. The first LNG plant came on-stream in 1983, the second one in 1996 and the third one in 2003. The natural gas comes from the offshore fields in Sarawak. Collectively, the three plants make the Bintulu I.NG complex the world’s largest LNG production center with a combined capacity of23 million metric tons per annum. Besides the LNG plants, other gas projects include the Peninsula Gas Utilisation project in west Malaysia, gas supply to the western coast of Sabah and the Trans­Thailand-Malaysia Gas Pipeline System. Under the Trans-Thailand-Malaysia Gas Pipeline System, gas will be transpO/ted from the Malaysia-Thai Joint Development Area to the Peninsula Gas Utilisation pipeline at Changlun, Kedah. This linkage is expected to make a mark a major step towards realising the trans-ASEAN Gas Grid project. PETRONAS also owns and operates two of the five refineries in Malaysia, producing about a quarter miJlion ban-cis per day, Due to constant exposure to the weathering agents, these gas fal:ilitics also need corrosion control. (iii) Development of Petrochemical Industry Stimulates I)emand To date, integrated petrochemical complexes have been es13blishcd in Gebeng (Pahang)., Kertch (Terengganu) and Tanjung Langsal (Johore) in the country. Collectively, there are 25 petrochemical projects located in the three petrochemical complexes. To achieve self-sufficiency in selected petrochemical products, PETRONAS is planning to invest around RM6.9 billion during the period between 200 land 2005, with both local and foreign partners, on the petrochemical industry. The feedstock to these petrochemical plants comes from the gas deposits eXlracted by 66 petroleum platf(,m1S lying offshore in Trenggana. Being located ncar to the coastal areas.. these petrochemical plants are subjected to constant corrosion, and hence, need corrosion control produc.ts. (iv) Promotinn of Shipbuilding Industry Encourages Demand The government plans to gradually establish a ship building and repair infrastructure._ as the country is a major trading nation. The industry has developed naturally on the basi…. of national requirements and the need for transportation of goods along the coa”line. Opportunities are present in the building of ships and boats such as small t<lnkers, cargo vessels, ferries, tugboats and trawlers, the n::pairing of ships and boats and the fabrication of smaller craft like leisure yachts, pleasure boats and sailboats. 1\l present, only a handful of ship yards have the capability and capacity to build and repair ocean-going ships, generally in the range of not more than 5,000 dead weight tons. Repair.; on a few foreign ships have been undertaken on a jobbing basis. 1\11 these activities require substantial amOlillt of corrosion control products in the refurbishjng and repairing phases. However, the development of the shipping industry is forecasted to be slow and relalively constant during the duration of the fOTcca~t period. (Source: Frost & Sullivan Report dOled April ](}04j (Tbe rest of this page is intentionally Icft blank] 80



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