4. RISK FACTORS 4. RISK FACTORS
NOTWITHSTANDI:-IC THE PROSPECTS OF THE PERISAI GROUP, AS OUTLINED I~ THE PROSPECTUS, APPLICANTS ~’OR THE ISSUE SHARES SHOULD CAREFULLY CONSIDER THE FOLLOWINC RISK FACTORS (WHICH MAY NOT BE EXHAUSTIV~;) WHICH MAY HAVE A SIGNIFICANT IMI’ACT ON THE FUTURE PERFORMANCK OF THE GROUP IN ADDITION TO OTHER INFORMATION CONTAINED ELSEWHERE HEREIN, BEFORE APPLVING FOR THE ISSUE SHARKS. 4.1 ECONOMIC, POLITICAl. AND REGULATORY RISKS The Perisai Group’s business, prospccts. financiaJ conditions and level of protitability may be affected by the development of the economic, political and regulatory environment in Malaysia. Furtherl as the Pcrisai Group’s corrosion control products and solutions are also exported to Brunei, indonesia., Thailand and Vietnam, Perisai Group’s business, pTospects, financial conditions and leve·l of profitability may also be affected by the development of the economic, political and regulatory environment in those respective COUl1tries. Any adverse development in the political situation, economic uncertainties or changes in the regulatory environment in these countries could materially and adversely affect the financial pert’OTIllanCe of the Perisai Group. These risks include risks of war, economic downturn, changes in interest rates Clnd Wlfavourable changes in Govcmment policies such as introduction of new regulations, import duties and tariffs. Whilst the Pcrisai Group practices prudent financial management and efficient operating procedures, there is no assunmcc that adverse political and economic dcvdopmcnts. whieh are beyond the Group’s control, will not materially affect the performance of lhc Pcrisai Group.
4.2 OPERATING RISKS The Group’s revenue and operating results are difficult to forecast and could be adversely affected by many factors. These include amongst others, fluctuations in demand for its products and solutions, changes in the mix of sales. changes in the Group’s operating expenses, the ability of the Group to develop new products and solutions and to control costs, cornpctiti vC conditions in the industry and general economic conditions, market acceptance of new products and solutions and other business risks common to going concern!:,. The Group continuously monitors the market acceptance of its products and solutions. Further, its R&D team will continuously undertaKe R&D to enhance its cx.isting products and solutions and develop new products and solutions to meet the changing market demand. Its position within t.he industry is expected to strengthen further with the successful listing of the Company on the MESDAQ Market. However, there is no assurance that the Group will be profitable in the future or that it will achieve increasing or consistent level of profitability. In terms ofthe recent surge in oil prices, the Directors of Perisai believe that it would ha vc a favourable impact on the Perlsai Group1s business. When oil prices increase, most 011 fields become viable. especially those that were previously classified as being marginal. This would in turn lead to an increase in fabrication activities i.e. construction of new platfomls which would increase the demand for the Gro\.JP’s products.
4.3 MARKET RESTRAINTS The market for atmospheric corrosion control products and solutions is depcndent on both the upstream scctor (offshore platforms) and downstream sec.tors (onsbore pipelincs, rer,nery installations and petrochemical complexes) of the oil and gas industries. Whilst the petrolewn industry is poised for further grm\th as the Malaysian government recognizes the need 10 promote the development of reSource based industry sneh as the petroleum industry in view that the manufacturing sector is subject to increasing intense competition from lower cost manufacturing countriel:l, Frost & Sullivan had in their Independent Market Research Report dated April 2004 stated that the markct rcstraints for atmospheric corrosion control products are as follows: 4. RISK .·ACTORS (Conl’d) (i) Excess capacity in refiner)’ facilities Currently. there are exccs~ capacities 10 the regional refinery facilities. Such excess c~lpacitles ultimalely lead 10 lower profitability thereby causing pctrolewn mullinatio””l’ to cut·back their capital expenditures, which may include spending less on atmospheric corrosion control products (Source: Frost &. SuI/ivan’s Report dared April 2004). Whilst Frost & Sullivan expects the regional excess capacity situation to diminish gradually, there is no assurance that such will be the case. (ii) Sweet variety of crude oil redue.. demand for corrosion control products and sulutions The crude oil produced in Malaysia tends to be of the swcct variety (conlaining less sulphur which is a corrosive agent), and hence. the refineries arc not subject to intense corrosion when using the feedstock. Accordingly. major new investments in the domestic downstream sector. including atmospheric corrosion control, are not scheduled in the near future. (Source: Frost &. Sullivan’s Report dated April 2004) (iii) Industrial overcapacity in petrochemicals Prices of petrochemicals, also k’1own as polymers.. are under pressure due to (i) increasing competition and industrial overcapacity, especially from the neighbouring. manufacturers based in Singapore and Thailand and (ii) the reducti”n in import duty on polymers ofbctween 0% to 5% under the tcrms of AFTA (Source: Frost &. Sullivan’s Report dared April 2004). With the reduction in prices of petrochemicals, polymer manufacturers ::tre subject to narrower margins. Consequently, polymer manufacturers may also cut back 011 capital expenditures, which may include spending on atmospheric corrosion control products and solutions. However, the Perisai Group seeks to mitigate its tJcl>endence On the petrolcum industry for its future growth by diversifying into other industries such as marille shipping and power plants. The Group also intends to further develop and expand its businesses in the Brunei, Indonesian, Thai and Vietnamese markets as well as venturing into the Middle·Ea’1 market. The Group also undertakes product developmcntthrough aggressive R&D to improvc and increase the mnge of its products and solutions in its effort to expand its market base overseas to support the long·term growth of the Group. A summary of the Perisai Group’s future plan, which sets out the Group’s strategics to cn$ure the growth of the Group, is set out in section 5.7 of this Prospectus. 4.4 FUTURE GROWTH To achieve thc Group’s growth targets as sct out above, there may be significant strain on the Group’s management, linancial. customer support, operational and other resources. There can be no assurance that the Group will be successful in managing ils growlh. The Group’s proposed future plan and prospects will be dependent upon, inter oli”, the Group’s ability 10 hire and relain skilled managemcnt as well as technicul personnel, particularly the R&D personnel and enginccT8, successfully monitoring gro\\1h (including monitoring oper.:ltions. controlling costs and maintaining effective quality, inventory and service control) and obtaining adequate financing as and when needed. There can be no assurance that the Group will be able to successfully implement its future busincss plan or thaI unanticipated problems Of expenses or tcchnical dillicullies will not occur which would result in material dclays in its implementation or even deviations from its original plans. In addition, the actual resull!’; may devialc from the results expected by lhe Perisai Group due to changes in market conditions as well a< competitive pressures. 4. RISK FACTORS (Cont’d) 4.5 RELIANCE ON PETRONAS VENDOR STATUS The VDP was c,iablished by PETRONAS to encourage the development of Bumipute… entrepreneurs. CSSB was awarded the Vendor Status under the PETRONAS VDP on 2S May 2000 to manufaclure, supply and install protective ~ystems for corrosion prevention for products stipulated therein for a period of five years. Notwit.hstanding that the PETRONAS Vendor Slalus was awarded on 25 May 2000, lhe full implementation of the Vendor Status camc much later upon the conclusion of the Master Service Agreement and the award of the individual contract:; from PETRONAS~ PSC contractors, 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 contract~ between I’ETRONAS’ PSC contractors and CSSB. Each contract is for a duration of J plus 2 years from the date of the respective contracts. Under the PETRONAS VDP, Ihe Perisai Group has a monopoly for the manufacture, supply and installation of certain corrosion control products and solutions on PETRONAS’ and its subsidiaries’ offshore platforms and onshore pipelines, refineries and petrochemical plants and those of PETRONAS’ PSC contraclo”, namely, inter alia, Carigali. ExxonMobil, Shell and Nippon Oil. The said Vendor Status is subject to review upon its expiry. There can be no assurance that the Vendor Status will be cxtended, or if they were eXlended, that such extension would be effected within the anticipated limctr-dme. which may materially affect the performance of the Group. The Vendor Status can also be lerminated at uny time prior to expiry by I’ETRONAS. This may arise ifCSSB fails to meet tbc product requiremene’ of PETRONAS or if CSSB fails to comply with the requirements of the Vendor Status as stipulated in section 5.3.3 of this Pro,peetus. However, the Directors of CSSB have indicated that they will ensure to the hest of their ability that all the requirements by PETRONAS are met by the Group at all times. The Group intends to mitigate its reliance on the Vendor Status by diversifying into other industries. such as the marine industry and power plants, specifically those that are not owned by PETRONAS and its subsidiaries (which would then be covered under the VDI’). Although Perisai’s products are primarily targeted at the oil and gas industry, the Group recognises the potential in marine and power plants and therefore intends to venture into these areas in due COUl”sc. Apart from industry diversification. the Group also undertakes product development through aggressive R&D to improve and increa~ the rdnge of its products and solutiun~ in its effort to expand its market base overseas to support the long-term gro\\1h of tbe Group. The geographical diversification would further mitigate its reliance on the VlJP as the VDP is only applicable in Malaysia. To this end, the Company has already secured contracts in Brunei, Jndonc::;ia, Thailand and Vietnam. Whihit strategies are in place to ensure that the Group’s objectives are mel. there can be no assurance that such strategies can be successfully carried out or would yield the results expected by the Perisai Group.
4.6 COMPETITION The future success of the Group will depend, to a large extent: on its ability to increase its market share in its target markets. Tfthe Group does not keep pace with the product and technological advances, the Group’s competitive position and prospects for growth could be adversely affected, especially where there can be no assurance thalthe Group’s competitors will not develop technology or products that are more effective than those of the Group’,. The Perisai Group faces potential competition from both the local and global front as well as from potential new entrants to the industry as described below: (i) Locol front Whilst the Perisai Group cnjoys a monopoly for the supply and installation of certain Corrosion control products and solutions which the Group provides to PETRONAS’ and its subsidiaries’ offshore platfom,s and onshore pipelines, refineries and petrochemical plants and those of PETRONAS’ PSC contractors by virtue of the appointment of CSSB as a supplier under the I’ETRONAS VDP, the Perisai Group races competition from painls and coatings companies which provide ulternative corrosion control products (i.e. products which the Group does not produce). ln 2002, the Perisai Group has 9% market share in the Malaysian 4. RISK FACTORS (Conl’d) market for cono~ion control products while the remainmg 91 % are held by paints and coatings companies (Source: f’rost & Sullivan’s report dated April 2004). However, it should be noted that this survey was based on CSSB’s industry position prior to the conclusion ofthe Master Servicc Agreement and the award of the individual contracts from PETRONAS’ PSC contractors, namely, inler alia, Carigali, ExxonMobil, Shell and Nippon Oil for the provision of corrosion wnrrol services in May i June 2003. The managemenl of the Group believes that following the conclusion of the said agreements, the Group will be able to command a higher market share for corrosion control products and solutions, (ii) Global front On the global fronl, Ihe Perisai Group also faces competition from companies providlllg substitute products and solutions. Some substitute products and solutions are set ouf below: Perisai Group’s Substitute products I Types of protection products I solutions solutions Nuts and bolts preservation CorroCapTtH Protective coating Fluorocarbon coating Flange piping preservation FlangeShield™ Caulking Tape Wmps Rehabilitation of corroded risers and pipes mildly corroded risers and Fibaroll Stainless Steel und pIpes Aluminium Cladding Systems Clock Spring and Armour Plate Wrap severely corroded risers and Composite Sleeve Repair Cut and replace pipes Heat exchanger protection eTl Shield™ Prefabricated plastic and nylon insert Marine growth removal and Marine Growth Impac.tor Marine Growth Remover and prevention systems & Marine Growth Pile Prcvcnlcr Protee-tor
Further descriptions on the products and solutions offered by the Pcris:ii Group are set out in section 5.3.2 of this Prospectus. Furrher, the Perisai Group may face competition from potential new entrants in the market, who may be able to offer alternative products or solutions that may compctc with that of Perisai Group’s products or solutions. The management ofPerisai believes that its products and solutions are more effective and cost emdenl compared to thc available substitute products und solutions as the products and solutions offered by the Perisa; Group do not require Ihe shutting down ofoil and gas facilities during remedial and repair work which results in costly production downtime. Tbe collaborative R&D work with PRSS had also resulted in Ihe enhancement of existing products and solutions and development of new products and solutions, which are more effective and eost efficient. Further, given the Group’s geographical proximity to the operations of the regional oil and gas industry, tlle team of experienced and skiUed personnel of the Pcrisai Group is able to provide timely services to such operations. Notwithstanding the aforesaid factors that are expected to enllble the Group to remain competitive and kcep its compcliti ve edge in the future, there can be no assurance that the Perisai Group will be able to m”intain 4. RiSK fACTORS (Cum’dj or increase its market share in light of c.ompetition from players providing alternative corrosion control products and solutions. 4.7 HEALTH AND SAFETY RISKS The Perisai Group is involved in the maintenance and installation of corrosion control products and solutions in oil and gas facilities and is therefore subject to disruption by a variety of risks and bozard, which are beyond its control such as fires, cxplo’iiions, leakage and other accidents at the oil and gas facilities. These risks could ultimately result in per~ona] injury~ business interruptions and possibly legal proceedings. To address these risks, the Perisai Group has establisbed a detailed health, safety and environmental policy that clearly set out the safety measures for each level of operations that must be strictly adhered to by its employees. Further, the Pcrisai Group, as registered contractors for PETRONAS, is subject to the Occupational Safet)’ and Health Act, 19R4. This Act is enforced by the Department of Occupational Safety and Health, a dcpartmcnt under the Ministry nfHuman Resources. Under rhis Act, employers have the duty to ensure, as far as pmeticable, the safety, health and welfare at work of all his employees. This includes the provision of equipment and systems of work that are, so far as is practicable, safe and without risks to health. Bolh safety and absence of risks to health in connection with the use or operation, handling, storage and transport ofplant and substances must bc present. The employers must also ensure the provision of such infonnatlon, lralning and supervision as is necessary to ensurel as far as is practicable, the safety and health at work of his employces. While the Perisai Group emphasises on health and safely throughout all levels of its opemtions and undertakes continuous health and safety tralnlng for its employees: there is no assurance that inc.idents and damagcs will not occur. However, PeTis<ii believes that the risks can be mitigated through lts stringent health and safety practices which includes, inter alia, an annual audit of its health and safety rccord and an cmergency response plan to cater for any incidents at the operating facHities of the ‘Perisai Group. In addition, the Group believes that it has maintained adequate level of insurance· coverage against such risk. Since its incorporation, the Perisai Group has not experienced any major health, safety and cTlvlronmcntalillcidcnts or incurred any major loss resulting in a substantial claim against its insurance policy. NOlwithslanding the above~ no assurance can be given that any coverage arranged will be adequate and available to c-Over any c1alms arising thereon. 4,8 ENVIROII/MEN1’A L CONCERNS Most of the products and solutions offered by lhe Perisai Group arc cnvironmentally friendly and the Group believes that its existing opcrations arc in strict compliance with the relevant environmental legislation governing activities within MC1laysiu sLLch as the Environmental Quality Act, 1974 and the Exclusive Economic Zone Act, 1984. Nevertheless, there is a possibility that the Government may change its regulations with. regards to envirorunental matters in the future which would require the Group to modify its facilities or incur expenses thai could have an effect on the Group’s operating results. In the event the relevant environmental rcgulations in Malaysia are changed, no assurance can be given that the ensuing steps taken by the Group to comply with such new regulations will not have a material cA1:ct on its operating results. 4.9 INTELL~:CTUAL PROPERTY RIGHTS JOINTLY HELD WiTH PRSS The intellectual property rights of several of the Perisai Group’s pro,iucts arc jointly held with PRSS, namely CorroCapTM, Composite Sleevc Repair, Marine Growth Impactor and Marine Growth Pile Protector. The patents for the said products arc eilher jointly held or joint application for patenls have been made. The solicitors of Perisai, Messrs. Paul Cheah & Associates opiued that PRSS is not entitled to claim full ownership of the intellectual property rights under the existing agreements bctween PRSS aod the Perisai Group nor under thc Patent Act 19X3. Thc Patent Act 1983 stipulates that “In the absence of any agTccmcnt to the contrary between parties. joint owners of a patent may separately assign their rights in the patent… hut may only jointly withdrav\” the patcnt application, ~lIrrendcr the 4. RISK FACTORS (Coll/’d) patent or conclude a licence contract”. Therefore under the Patent Act 1983, PRSS cannot unilaterally claim full ownership of the patent’ without the consent of the Perisai Group. In addition, there is no provision for a unilateral termination by the parties in any of the agreements between PRSS and the Perisai Group unless hy mutual agreement by both parties or a clause permitting PRSS to claim full ownership of the intellectual property rights in any circumstances. As joint consent of PRSS would unly be required in limited circumglances such as for the surrendering or withdrawing the jointly held patents or granting licence contracts relating to the patent to third parties, any unilateral decision by PRSS would not materially affect the Perisai Group’s business or development of its products. Under the agreements between PRSS and Pcrisai Group, both parties have specific duties to carry out, with PRSS’s duties primarily that of testing the products in its labordtories. The Perisai Group has autonomy in carrying out its duties and docs nnl need approval ()f consent from PRSS in carrying nut any developmental work. All prOduCLl\ of the Pcrisai Grnup have been conceived and independently developed by the Perisa; Group. Accordingly, the Directors of Perisai are of the view that tbe issue of PRSS claiming full ownership of the intellectual property rights or PRSS not consenting to any business decision by the Perisai Group will not arise and therefore would not impact the Group’s business.
4.10 RELIANCE ON THIRD PARTY PRODUCTS AND SOLUTIONS In rendering its corrosion control services, the Group relies on the usage and application of inter alia, Fibaroll and RioSolve@. Fibaroll was developed by Fiba Tech Industries Ltd, a UK based company and BioSolve” was developed hy Westford Chemical Corporation, a USA based company. On 7 September 2001 FSSB was awarded by Fiba Tech Industries Ltd the exelusive selling and application rights in respect of Fibaroll materials in the territories of Malaysia, Brunei, Thailand (for all sectors) and Singapore (civil structure and shipping sectors only). The main condition stipulated in the agreement is for FSSB to maintain a minimum stock of Fibaroll and also generate a slipulated minimum sales volume per annum. WWSB is the exclusive authorised distributor of BioSolve” in Malaysia and Brunei. On 16 January 2003 WWSB entered into a Distribution Agreement with CSSB, appointing eSSB as the sole exclusive distributor of BioSolve” products to the oil and gas industry in West Malaysia with a condition that eSSB is required to purchase a minimum stipulated stock of BioSolve~ products annually for a tenure of two years (3,800 litres for the first year and 7,600 litres for the subsequent year) commencing from the date of the Distribution Agreement with an extension of two years upon expiry, subject to agreement from both parties. There can be no assurance that the Perisai Group would be able to continue to retain and extend the exclusive rights for both Fibaroll and BioSolve'” respectively, which may materially affect the Group’s business, financial condition and operating results. However, the Perisai Group seeks to mitigate the risk of relying on third party products and solutions by undertaking product development and solutions through aggressive R&D to improve and increase the range of its products and solutions.
4.11 DEPENDENCE ON MAJOR CUSTOMERS Presently, the Group’s main customers are PETRONAS’s subsidiaries and its PSC contractors namely, inter alia, Carigali, ExxonMobil, Shell and Nippon Oil, representing approximately 87.3% of the Group’s total turnover for the financial year ended 31 Deccmhcr 2003. In this respect, the Group has been dependent OIl these customers? who arc major oil and gas companies in Malaysia. There can be no as~urancc that their busincs….. relationship will not be disrupted. The Pcrisai Group has been actively involved in the corrosion conlrol industry since 1996 and to date, has not breached any terms which has resulted in the termination of any of its projects. Further, the Perisai Group has maintained good performance record with the major customers. In any event, to mitigate the Group’s reliance on these major customers, the Group intends to widen its customer base by diversifying into other industries such as marine shipping and power plants. It is also the Group’s intention to penetrate the overseas market further for its existing corrosion control products and solutions subsequent to the Group having successfully secured contracts in Brunei. Indonesia, Thailand and Vietnam. The Group is also presently marketing its produels and services in Myanmar. 4. RISK FACTORS (Coni ‘d) 4,12 FOREIGN EXCHANGE RISK The Peri’ai Group imports most of its raw materials directly trom the UK, US and Japan and its expansion plans will widen its customer base in Brunei, Indonesia, Thailand, Vietnam and Myanmar. The purchases and sales are denominated either in usn or the relevant local currencies. In this regard, there is a potential that. the Group may be exposed to foreign exchange risk. There can be no aSSurance that future fluctuations in exchange rates will not adversely impact the tinancial condition orihe Pcri8ai Group. 4,13 I>EPE:”lDENCE ON SKILLED WORKFORCE AND KEY PERSONNEL The activities of the Perisai Group require a highly skilled workforce. In this respect, to a certain extent, the Group’s ability to attract and retain its highly skilled workforce, especially R&D personnel and engineers~ is crucial to sustain an efficient level of operations within the Group. If the Group is unable to attract and retain its skilled workforcc, the performance and future prospects of the Perisai Group may he adversely affected, particularly the loss of any key membor of the Group’s board of directors, senior management or key teclmical pc-rsonnel which could adversely affect the Group’s competitive advantage. The Group has a management succession plan and plans to develop the knowledge of its human reSOUTces (as set out in section 8.5 of this I’rospeetu,) by developing staff training and development activities / programmes for its staff to improve performance and productivity. With a view to retain their services and encouraging them to improve their perfonnance standards and efficiency, Perisai may in due course propose to implement an employees’ share option 5che-me for the benefit of the Group’~ eligible employees and directors. Nonethc1c!;s, there remains no assurance that the Group’s management succession plan nor the proposed employees’ share option scheme will be able to retain its workforce and key personnel. 4,14 R&D As mentioned previously, the future success ofthe Group will depend. to 1:1 large extent, on its ability to increase its market share in its target markets. Its ability to increase its market share is in tum, to a large extent, dependent of the Group’s ability to keep up with the prodnci and technological advances and develop new products and solut.ions which are efficient anel cost effective in a timely marmer to respond to changing environment and market demand. Even though the Group is active in R&D of new produc.ts and technology, there is no assurance that the Group’s R&D effort will lead to the successful introduction of new and improved products and sol\ltions. The Group may encountcr delays or problems in connection with its R&D efforts. New products and solutions often take longer to develop and exceed budgeted cost than initially estimated. There may be delays in SGHting volume production of new products and new products may not be conunercially succcsHful. Delays or deficiencies in development, manufacturing, delivery of or demand for new produeb or of higher cost targets could have a negative effect on the Group’s business, operating results or financial condition and thereby inhibiting future growth prospects. 4.15 OWNERSHIP AND CONTROL The promoters of Pcrisai as named in section 7.1 of this Prospec-tus collectively hold an aggregate of I J4,607,678 Shares, which represents approximately 55.10% of the enlarged issued and paid-up share capital of Perisai upon completion ofthe Public Issue. The promoters wi 11 therefore be able to exercise the voting rights attached to their holding of the Shares in respect of matters requiring shareholders’ approval, including the eledion of directors. Depending on how they choose 10 vole and heeause of the size of their collective share.holdings, the controlling shareholders will have a signiticant influence over matters that require the passing of ordinary resolutions rrom the Company’s shareholders, unless they are required to abstain from voting by law and i or the relevant authorities, 4. RISK FACTORS (Gmt’d) The Company has appointed 2 independent director.; 10 represent rhe interest;; of rhe minority shareholders ofthe Company.
4.16 FORWARD LOOKING STATEME:’ITS Certain statements contained in this Prospec(u~ arc based on historical data, which may not be reflective of future results. Other &tatements which aTC forward looking in nature are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, pcrfonnance or achievements to differ materiatl y from the future results~ pcrfomlance or achievements expressed or implied in such forward looking statements. The inclusion of a forward·looking statement in this Prospectus should not be regarded that the plans and objeclives of the Perisai Group will be achieved.
4.17 .’AILURE OR DELAY r THE LISTING The listing exercise is exposed to Ihe risk that it may fail or bc delayed should the following events occur: (a) The Company or RHB Sakura fails to honour its res-pcL1:ive obligation pursuant to thc lerms and conditions of the underwriting agreement; or
(b) The Company is unable to meet the public spread requirement of at least 25% but not more than 49% of the issued and paid-up share capital of the Company being held by a minimum of 200 puhlic shareholders holding not less than 100 Issue Shares each.
In thc event of the failure of the listing of Perisai on the MESDAQ Market, investors shal1 he refunded their application money without interest.
4.18 NO PRIOR MARKET FOR THE SHARES There has been no prior market for the Company’s Shares hefore the Public I…ue. Consequently, there can be no assunmce that an active market for the Shares will develop upon their listing on the MESDAQ Market, or ifdeveloped, that such market wil1 be sustained.
4.19 VOLATILITY IN THE PRICES OF THE SHARES The issue pricc of RMO.33 per Issue Share has been determined after taking into consideralion a number of factors, including, inter o/ia, the prcvailing market conditions, the Group’s technology, eslimates of business b’towth potential, revenue prospects for the Group, an assessment of the Group’s management and thc proforma NTA of the Peri..i Group. However, there can be no assurance that the issue price of the Issue Shares will correspond to the market prices of the Shares after the Public Issue. The market prices of the Shares following the Public Issue may he volatile. Factors such as competition, regulatory changes, operating profit or loss and cash tlow, general trends in interest rates, Malaysian and ioternalional equity markets and the Malaysian economy, as well as other factors, could cause the market price of Ihe Shares to fluctuate. In addition. the global ,”tock markelS have from time to time experienced extreme price and volume fluctuations, which may adversely affect the market price of the Shares. Such flucluations may materially adversely affecl the market price of the Shares following the Public Issue. IThe rest of this page is intrnlionally left blank]