5. INFORMATION ON OUR GROUP 5. INFORMATION ON OUR GROUP 5.1 INFORMATION ON OUR GROUP 5.1.1 Background and Principal Activities Our Company was incorporated in Malaysia under the Act On 10 June 2011 as a private limited company with the name PESTECH International Sdn Bhd. We subsequently converted to a public limited liability company on 9 September 2011 and assumed our present name to facilitate our listing on the Main Market of Bursa Securities. We are a home grown integrated electric power technology company in Malaysia. We are principally engaged in the provision of comprehensive power system engineering and technical solutions for the design, procurement and installation of HV and EHV substations, transmission lines and underground cables for electricity transmission and distribution in the local and international markets. We also manufacture proprietary power system components and equipment. PSB is our core operating subsidiary company. Our Group began with the formation of PSB in 1991. Our founder and Executive Chairman, Um Ah Hock, possesses background in mechanical engineering and more than 25 years of management experience. Although he is a mechanical engineer by training, Um Ah Hock had a profound interest in electrical engineering, and ventured into the trading of electrical equipment and supplies. He envisioned that worldwide energy demand will only continue to rise, as a result of increases in population and economic development, with particularly acute needs in the emerging and developing countries. While there were practical challenges in penetrating the upstream segments of eiectricity generation in most countries including Malaysia, he clearly saw opportunities in the system design, engineering and infrastructure segment of power transmission and distribution. Seizing on this vision, we aligned our focus and commenced operations in 1993 in the trading of electrical and electronic products. As we slowly gained industry experience and established our presence in the market, Um Ah Hock saw the potential and opportunity to penetrate the electric power transmission and distribution works segment of the industry. In 2000, Um Ah Hock invited Paul Um, an electrical engineer with working experience in the power transmission and distribution business with electric utilities, to join PESTECH and he was brought in as a GM to aid us to further grow and develop our business. With his technical experience and expertise, coupled with his drive and passion for the industry, his efforts to guide us to become a main player in the local scene led him to be promoted to CEO in 2008. Under our CEO’s leadership, along with our other key management, such as our GM of Sales & Marketing, Um Hon seng; GM of P&P, Lee Kong Tee; GM of 0&0, Chong Kuen Wai; and GM of Strategic Planning (Business Development), Han Fall Juan, we have grown progressively from a small player primarily involved in trading, to an established integrated electric power technology company in the engineering, design, manufacturing, installation and commissioning of electrical power transmission and distribution facility for electric utilities with operations both domestic and abroad. Over the years, we build our experience and technical expertise in the field of electrical engineering. We concentrated our efforts and successfully equipped our Group with the technical expertise and know-how to provide a comprehensive engineering, design and technical solution for the build-up of electricity supply transmission and distribution assets for utilities and industries. This technical expertise and know-how have enabled us to export our services internationally especially to the developing countries, which is generally dominated by foreign multi-national companies. 5. INFORMATION ON OUR GROUP (Cant’d) Our Group’s regional expansion As we have established our presence as a major player here in Malaysia, we began expanding in the international markets using Malaysia as the platform, particularly in the emerging and developing economies, to tap into the growth potential of these countries. In 2007, we began to venture overseas into the region focusing in Brunei, Sri Lanka and PNG. Our Group’s journey towards foreign expansion was challenging but our capabilities and expertise in project execution enabled us to overcome the initial stages of overseas market penetration and successfully compete with other foreign multi-national corporations. In 2008, we achieved a major breakthrough in our regional expansion plan and obtained our first major overseas Project when a JV between our Group and SLCC of Brunei was awarded a contract for the construction of a 66kV outdoor switchyard at Brunei’s Lumut Power Station (“LPS”), and 66kV underground cable links from LPS to the proposed Brunei Methanol Company (“BMC”) 66kV Substation in Brunei by BMC. In the same year, we established an offshore branch office in Brunei. As we built on our reputation, more opportunities in Brunei knocked on our doors and our Board decided to incorporate PBSB on 17 March 2011. We achieved a major milestone when we established our presence in PNG in 2008 as well when a JV between us and Dayen was awarded a contract for the design, manufacture, supply, construction, installation and commissioning of two (2) 132kV grid substations in Erap and Hidden Valley for the Erap -Hidden Valley Gold Mine Electrification Project by PPL. PPL is a power authority responsible for the generation, transmission, distribution and retaiiing of electricity throughout PNG. This gave us an exposure to meet expectations of a foreign engineering consulting firm and created a first contact to show our capability to build inter-connecting substation facility for connection to the electricity grid for the mining industry. We also established our presence in the Africa market during 2008 as we designed, manufactured, supplied, factory tested, export packed and delivered 33kV feeder protection and metering panels and 33kV transformer protection and metering panels to Ghana via .a customer in Malaysia. In 2009, we entered Sri Lanka market with our first project in the country to design, execute, complete and remedy any defects therein in relation to Beliatta grid substation project Lot A awarded by Ceylon Electricity Board. This substation served as an extension to the electrical transmission system supply to the Belialla region, fuelling its social and economic growth. Having successfully executed the Projects in the abovementioned overseas markets, we have enhanced our profile substantially which has facilitated the procurement of more overseas projects for our Group moving forward. In 2010, our JV with Pembinaan Tajri was awarded a contract involving the establishment of substations and a transmission link between the North Phnom Penh transmission network to the Kampong Cham network in Cambodia by Cambodia Transmission Limited. Subsequently, we established TPJV in February 2010, our subsidiary company in Cambodia to facilitate our current and future projects in the country. In the same year, we were also awarded a project in Ghana to design, supply, erect, test and commission a 161 kV single busbar substation at Ayanfuri, located approximately 20km west of Dunkwa and construction of 161kV transmission line to connect to the grid transmission system for an Australian goid mining company introduced by our customer in PNG. In addition to the above, we have recently on our own procured a Project in Cambodia for the supply of equipment and installation to connect 115kV transmission line between Cambodia Power Grid 230kV to Cambodia Power Transmission Line 115/22kV which is expected to complete by the end of the 3′” quarter of 2012.
5. INFORMATION ON OUR GROUP (Cont’d) Arising from the successful implementation of our regional expansion plan, the revenue contribution from the foreign markets has increased significantly. For the FYE 31 December 2009, 2010 and 2011, the foreign markets contributed 44.8%, 51.4% and 76.5% of our Group’s turnover respectively. Since we actively began penetrating the system design, engineering and infrastructure segment of the power transmission and distribution industry in 2000, we have established a strong track record built on providing high quality service with an emphasis on excellence. To-date, we pride ourselves for being able to compete in the international markets and deliver our Projects and services for the maintenance of delivered substations. In addition to the abovementioned countries, we aim to further expand our presence to other developing countries where there is a demand for development, improvement and build up of electricity transmission and distribution assets. Ultimately, we aspire to become one of the main regional players in the industry. Our Group is well-positioned in the industry The segmentation of the industry is as set out in the diagram below:
Utility Companies z: a.~ a. Vi ::l W V) ~ Z”~ ·u t; .::l … ” t> cOJ _ w Residential / Independent Power Producers (IPPs) Industrial* Commercial
• Industrial customers include large companies such as mining operators, steel mills, cement plants and refineries Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan dated April 2012 Utility companies typically engage third party engineering companies to design and develop transmission and distribution infrastructure, connecting residential, commercial and industrial consumers to the national grid. Large industrial users also engage these third party engineering companies to erect electricity substations within their operating premises. These third party engineering companies are also required to commission the structure prior to handing it over to the utility companies. This industry is known as the power system design, engineering and infrastructure industry, and we are involved in the HV and EHV segments of this industry which has high barriers to entry. 5. INFORMATION ON OUR GROUP (Cant’d) We believe that we are strategically positioned with the capability to provide comprehensive power system engineering and technical solutions, along with products for substation control, communication and protection. We are also geographically positioned in the fast growing ASEAN region surrounded by many developing nations such as Vietnam, Cambodia, Laos and Indonesia, enabling us to capitalise on our familiarity with the business practices and similarity in culture. In addition, we are also able to leverage on the ASEAN Free Trade Area (AFTA), which enables us to competitively price our products and services for export to ASEAN region. We conduct in-house engineering and development of our own Products and engineering solutions, enabling us to expand our Product base, enhance our competitive strengths as a value-added service provider and reduce cost We own several registered brands such as PESTECH, COPS, PROCOM and RETCOMS for application in electric power substation control, monitoring and protection apparatus. The application of our Products has no geographical barriers and can be used in many countries. We continuously enhance our existing Products features and performance capabilities, as well as design and develop new Products. In addition, we have also established technology partnerships/distributorships with certain suppliers for the distribution of their products, in which we also purchase licensed software and components directly from the manufacturers to develop our own value-added Products and engineering solutions. Our Group’s quality achievements In view of the importance of traceability, consistency and reliability of our services and products, we adopted Quality Management Systems (QMS) in accordance with ISO 9001 :2000 since 2001 and obtained certification in 2002. Subsequently, we extended our scope to ISO 9001 :2008 and adopted Occupational Health and Safety Management System (OHS MS) in accordance with OHSAS 18001:2007 in 2010. Over the years, we have accumulated several certifications and awards in recognition of our emphasis on delivering high quality products and services in a safe, secure and reliable environment. We were one of the recipients of the Enterprise 50 Award by SME Corp and Deloitte ConSUlting (M) Sdn Bhd in 2009, 2010 and 2011 ranking among the top 15. Our CEO, Paul Lim received the Outstanding Entrepreneurship Award by Enterprise Asia in 2010. Our commitment towards compliance of our safety policies has also led us to be awarded a ‘Certificate for Five Star Achievement in SAFCA for Project PMU Manjalara GIS’ in 2010 by the Asset Development Department of TNB. Recently, we obtained the best vendor award in conjunction with Vendor Day by Northern Region, Transmission Asset Development of TNB. In January 2012, our Group was awarded TNB 2012 Excellence Award for the contractor category by TNB in conjunction with the Night of Award for Vendor, Contractors and Suppliers of TNB 2012. In addition, our Group was awarded the Brand Laureate Awards 2011 under the Corporate Branding category for SMEs best brand (Engineering Power Systems). Please refer to Section 5.7 of this Prospectus for further details of our Group’s business. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) 5.1.2 Our competitive strengths Our competitive strengths are as follows:(i) Experienced and dedicated management personnel Our Group is led by qualified senior management team with longstanding experience in the system design, engineering and infrastructure segment of the power transmission and distribution industry. Our founder and Executive Chairman Lim Ah Hock has background in mechanical engineering and possesses more than 26 years of experience in management. Our CEO I Executive Director Paul Lim, who has been playing an instrumental role in growing our Group, is a registered professional engineer with 17 years of experience in the industry. He is also a certified Project Management Professional (PMP@) with the Project Management Institute, a worldwide professional association for project management. He has successfully grown our Group and built up our respectable track record of securing and executing various contracts for electrical transmission of HV and EHV substations in Malaysia, Brunei, PNG, Cambodia, Ghana and Sri Lanka. In addition, the senior management personnel of our technical team collectively possesses many years of experience in the industry, whereby our:(a) GM of Sales & Marketing, Lim Hon Seng, possesses 29 years of experience in the power systems engineering field;
(b) GM of P&P, Lee Kong Tee, has 16 years of experience as an electrical engineer;
(c) GM of 0&0, Chong Kuen Wai, has 11 years of experience in the system design field; and
(d) GM of Strategic Planning (Business Development), Han Fat! Juan, possesses 21 years of engineering experience.
Our senior management team also includes our COO, Chang Mei Lun and CFO, Teh Bee Choo, who have 20 and 26 years of working experience respectively. Our management team has contributed significantly to our success, and has the necessary industry experience. knowledge and skills to effectively grow our business moving forward. (ii) Strong technical expertise Our Group’s vast experience in the power system engineering industry was accumulated through our management team’s working ·experience. Such knowledge and experience, which have been developed over time and is not easily replicated, places the Company in good stead to compete in the international markets. The power system engineering industry is a highly technical and specialised field, requiring specific knowledge and skills in electrical and mechanical engineering. This complexity serves as a significant barrier to entry for new players in the industry. We have developed the specific technical expertise and know-how required to execute our business activities. These include:(a) switchyard layout and clearance verification;
(b) switchyard foundation loading, sizing and foundation plan:
(c) busbar, conductors, clamps and connector sizing, dimensioning and swing force calculation;
(d) switchyard steel structure design verification;
(e) lightning protection design and calculation;
(f) cable duct and layout design;
(g) earthing system design and calculation;
(h) substation insulation coordination study;
(i) design and establishment of single line diagram;
49 5. INFORMATION ON OUR GROUP (Cont’d) U) instrument transformer burden and accuracy calculation and verification; (k) protection and control system block diagram;
(I) protection relay functional verification and parameterization;
(m) control system remote signal list verification;
(n) logic and interlocking system design for RTU and SCS; and
(0) AC and DC loading and cable sizing calculation.
Our technical team is well equipped with the necessary skills and experience in power system engineering technology and product manufacturing. In addition to the senior management personnel of our technical team who have many years of industry experience, our technical team also consists of our CEOI Executive Director, Paul Lim, who brings with him a total of 17 years of industry experience. Furthermore, our GM of Sales & Marketing, Lim Hon Seng has spent 19 out of his 29 years of experience with ABB Malaysia where he executed various substation projects. With the proficiency and technical experiences, we have been able to secure and execute various types of power system engineering solutions projects in multiple countries including Malaysia, Brunei, Cambodia, PNG, Sri Lanka and Ghana. This has further solidified our capabilities. Our technical team possesses a wide range of experience ranging across the spectrum of our business activities. This includes, inter-alia, the following:• Design, development and planning of indoor and outdoor substations;
• Supply, delivery and erection of power transformers, protection and control systems, switchgears, ancillary equipment and associated civil works for transmission and distribution networks, transmission lines and substations;
• Design, installation and supply of communication and protection and control systems;
• SCADA system implementation projects;
• Substation extension projects; and
• Various other projects.
(iii) Comprehensive range of services, including in-house engineering and development We offer a comprehensive range of services across the scope of electrical power transmission and distribution, which includes substation, transmission line and underground cable works. In addition, we also design and manufacture our own communication, protection and control products for use in our Projects as well as to be sold as finished products. PESTECH’s own Products conform to international standards and have been designed such that majority of raw materials and components can be sourced locally as far as possible. In this respect, we are able to price our Products and Projects competitively. Our in-house engineering and development activities are conducted by our D&D team, led by GM of D&D, Chong Kuen Wai with 11 years of experience in the system design field. To date, we have developed two (2) isolators, the 12kV and 36kV outdoor, single pole, double break, air break disconnectors that are normally associated with NERs. The isolators have been certified with the ASTA Type Test Certificate by ASTA BEAB Certification Services, UK. Our in-house Product range also comprises BCD input display, SIMS and AAP-10, which are complementary to our Projects in the electrical power transmission and distribution industry. Further details of our Products are set out in Section 220.127.116.11 of this Prospectus. In addition to product development, our D&D team also conducts in-house design of power system engineering and technical solutions for substations, transmission lines and underground cables. Our engineers work closely with our clients to develop the 5. INFORMATION ON OUR GROUP (Cont’d) systems layout of the project based on the client’s requirements and specifications, such as budget, schedule, land area and location. Based on the requirements and specifications, our engineers will formulate a design that is both reliable and cost effective, while also allowing for future capacity expansion of the substation, if necessary. The design also outlines the structural layout of the project, such as the switchyard layout, earthing system, cabling layout and lightning protection, as well as an integrated control, protection and communication system. We are a home-grown integrated electric power technology company with the ability to export engineering and technological know-how to overseas markets. Our track record, knowledge and abilities enable us to compete against other foreign players at competitive prices, providing us with opportunities to extend our reach beyond our present markets. (iv) High standards of Quality, Occupational Health and Safety Management System We implement high quality standards in our day-to-day operations, where the importance of traceability, consistency and reliability are emphasised throughout the organisation. We adopted Quality Management System (QMS) in accordance with ISO 9001 :2000 since 2001 and obtained certification in 2002. SUbsequently we extended our scope to ISO 9001 :2008 and adopted Occupational Health and Safety Management System (OHS MS) in accordance with OHSAS 18001:2007 in 2010 for the following certification scope: “Design, engineering, manufacture, installation, test and commission of HV and EHV electrical substation and equipment.” ISO 9001 requires the organisation to have best practices in management system and commitment as well as continuous improvement to provide services and products that meet customer needs and expectation while OHSAS 18001 requires the organisation to commit to prevent occupational ill health and injury at work place. Our commitment towards complying with our Quality, Occupational Health and Safety policy has led us to be awarded for ourefforts. In 2010, we received a “Certificate for Five Star Achievement” in SAFCA TNB for Project PMU Manjalara GIS Substation by the Asset Development Department of TNB. We also received a “Certificate of Achievement for Successfully Achieving Four Stars for the Year 2010” under the SME Competitive Rating for Enhancement (SCORE) by MITI and SME Corp. In January 2012, our Group was awarded TNB 2012 Excellence Award for the contractor category by TNB in conjunction with the Night of Award for Vendor, Contractors and Suppliers of TNB 2012. In addition, our Group was awarded the Brand Laureate Awards 2011 under the Corporate Branding category for SMEs best brand (Engineering -Power Systems). (v) Established track record and reputation Since we actively began penetrating the system design, engineering and infrastructure segment of the power transmission and distribution industry in 2000, we have established a strong track record built on providing high quality service with an emphasis on excellence. We have a line of established clientele, some of whom are repeat customers, and some of whom we have obtained through referrals from other customers and suppliers. Domestically, our list of major clients includes the following:• TNB;
• Tenaga Switchgear Sdn Bhd;
• Zafas Sdn Bhd;
• AM SGB Sdn Bhd;
• Waris Gigih Engineering & Technology Sdn Bhd;
• Tamco Switchgear (Malaysia) Sdn Bhd; and
5. INFORMATION ON OUR GROUP (Conl’d) • Sabah Electricity Sdn Bhd.
Our major foreign clients include the following:
• Siemens AG;
• Department of Electrical Services of Brunei;
• BMC of Brunei;
• Cambodian Transmission ltd of Cambodia;
• Ceylon Electricity Board of Sri Lanka; and
• Central Ashanti Gold Limited of Ghana.
To further emphasise our sound reputation in the industry, our capabilities have led many companies to establish JVs with us, such as Pembinaan Tajri, Nova Nusantara Sdn Bhd, SLCC and Dayen for our past projects. Furthermore, we have also built partnerships with certain suppliers and/or appointed as distributors for their products in Malaysia. We are currently an authorised exclusive distributor for RFL’s telecommunication products, and have been appointed as ABB’s External Channel Partner for their protection and control products, as well as their MicroSCADA Pro System products in Malaysia. We also sell NER products from Post Glover. We have signed a collaboration agreement with Toshiba for provision of services. Siemens AG has appointed us as their distributor for the non-exclusive rights to sell contractual products in certain area where contractual products comprise products, systems and services of Siemens AG including any of their respective follow-up products, systems and services. We have successfully submitted equipment / components for testing by the Quality Assurance Unit.under TNB Research Sdn Bhd, for use in electricity substations in the nation. We have been awarded with the ‘Certificate of Product Acceptance’ for the following list of products:Item/Equipment Make/Model Autoreclose and synchrocheck relay Toshiba/GRR100 Current differential relay Toshiba/GRL100 Distance relay Toshiba/GRZ100 Overcurrent and earth fault relay Toshiba/GRD110 Transformer biased differential relay Toshiba/GRT100 11kV NER Post Glover/PESTECH RTU Xcell (manufactured by Microsol Ltd)
Our list of clients and partners is a testimony of our established industry track record and reputation, built on over a decade of technical excellence and service in the industry. Some of our clients have provided us with letters of recommendation in respect of our Projects. (vi) Established product branding PESTECH is a registered trademark and is widely recognised by those in the same industry. We actively strive to establish our brand name in the market to be associated with quality and excellence. Since 2004, we have begun to trademark our brand names, for the PESTECH logo, along with the COPS brand name for our control and protection panel product, PROCOM for our RTU product, D-Switch for isolator, WACS for substation interrogation monitoring system and RETCOMS for telecommunication panel. As at to-date, the PESTECH logo, COPS brand name, 5. INFORMATION ON OUR GROUP (Cont’d) PROCOM and RETCOMS, have been registered under Class 9 with the Intellectual Property Corporation of Malaysia. In April 2011, we were certified under the Malaysian Brand Certification Scheme by SME Corporation Malaysia and SIRIM OAS International Sdn Bhd for our brands PESTECH, COPS and PROCOM, allowing us to use the National Mark of “Malaysian Brand”, which is an acknowledgement of the quality, excellence and distinction of products and services by Malaysian companies. The Malaysian Brand Certification Scheme was formulated as a branding strategy for local products and services to gain global recognition as well as to promote and enhance domestic acceptance. The certified products and services have been assessed according to worldwide accepted criteria based on an approach that combines OMS requirements, local and global customer needs, product and service quality, financial capability, corporate social responsibility, and marketing and brand strategy. The certification will enable us to increase our brand presence to be recognised as a provider of high quality products both domestically and globally. (vii) Technology partnerships We have established technology partnerships and distributorships with some of our suppliers, who are established multinational corporations such as ABB AB Sweden, ABB Malaysia and Siemens AG. Through our partnership agreements, we purchase licensed software directly from our suppliers as and when required and pay a licence fee for each software purchased. We are also given training on the use and applications of our supplier’s software and other products. With training given on the software and products, we are able to develop our own add-on platform for the design and development of our own engineering solutions and customised applications as well as our PESTECH branded Products to suit our customer’s needs and requirements. Although we perform our own development using this software, the intellectual property on the core software resides with our suppliers. By providing value-added products and services, we are able to establish an edge over our competitors in the industry. 5.1.3 Share capital and changes in share capital As at the LPD, our authorised and issued and paid-up share capital is as follows:Authorised Issued and paid-up No. of shares 100,000,000 73,000,000 Par value (RM) 0.50 0.50 Amount (RM) 50,000,000 36,500,000
Details of the changes in our issued and paid-Up share capital for the last three (3) years are as follows:Date of Allotment No. of Shares allotted Par value (RM) Consideration Cumulative Issued and Paid-up Share Capital (RM) 10 June 2011 17 AU9ust 2011 4 72,999,996 0.50 0.50 Cash (Subscribers’ shares) Otherwise than cash (Acquisition of PSB) 2 36,500,000
As at the LPD, we do not have any outstanding warrants, options, convertible securities and uncalled capital. 53 5. INFORMATION ON OUR GROUP (Cont’d) 5.1.4 Subsidiary companies and jointly-controlled entity To facilitate the listing of our Company, the Acquisition of PSB and the Acquisition of Xcell were completed on 17 August 2011. The Acquisition of PSSB was completed on 2 April 2012. Our existing corporate Group structure is as follows:
PESTECH I I 1100% ~ 100% Xcell
PSB … l100% l100% l100% 1100% j,90% j 50% TPJV PTLFornix
PSSB PBSB TP I II Details of our subsidiary companies and jointly-controlled entity are set out below:Subsidiary companies Date and Place of Incorporation Date of Commencement of Business Issued and Paid-Up Share Caoital Effective Equity Interest (‘!oj Subsidiary 10 July 1991 Malaysia 25 January 2000 Malaysia 8 July 1993 11 April 2001 RM 3,333,000 RM300,000 100 100 companies ofPESTECH PSB Xcell
Principal Activities Investment holding, provision of comprehensive power system engineering and technical solution for the design, procurement and installation of substations, transmission lines and underground cables for electricity transmission and distribution, and also manufacturing of proprietary power system components and equipment. Provision of design and supply of remote control system and data communication products. 5. INFORMATION ON OUR GROUP (Cont’d) Issued and Effective Date and Place Date of Paid-Up Equity Subsidiary of Commencement Share Interest companies Incorporation of Business Caoital (%) Subsidiary companies ofPSB Fornix 4 August 2005 Malaysia 6 September 2005 RM100,000 100 TPJV 5 February 10 March 2010 KHR 100 2010 4,000,000 Cambodia PBSB 17 March 2011 Brunei 25 October 2011 BND100 90 PSSB 10 February Yet to commence RM2 100 2012 operations Malaysia PTL 9 March 2012 Ghana Yet to commence operations GHS96,000 100 Jointly- controlled entity ofPSB 13 July 2001 Malaysia 10 September 2001 RM25,000 50 TPSB
Principal Activities Investment holding Construction of electrical substation and transmission line. Provision of electrical engineering services, specialising in transmission and
distribution specifically but not limited to include the design, manufacturing, trading, insJalling, commissioning and testing, repairs, maintenance of equipment at substations for public and private amenities. Provision of electrical, mechanical and civil engineering, subcontracting and engineering. It is currently inactive. Provision of project management, electrical substations, transmission lines erection and installation, supervision of testing and commission and civil works. It is currently inactive. Provision of electrical, mechanical and civil engineering, sUbcontracting and engineering consultancy. It is currently inactive. Further details on our subsidiary companies and jointly-controlled entity are set out in Section 5.2 below. As at the LPD, we do not have any associated companies. 55 5. INFORMATION ON OUR GROUP (Cont’d) 5.2 INFORMATION ON SUBSIDIARY COMPANIES AND JOINTLY-CONTROLLED ENTITY 5.2.1 PSB (a) Background, history and principal activities PSB (Company No. 220578-T) was incorporated in Malaysia under the Act on 10 July 1991 as a private limited liability company under the name of PESTECH Sdn Bhd. PSB commenced its business operations in the trading of electrical and electronic products on 8 July 1993. In 1995, PSB began to develop and expand its business model and in 1997, started the assembly of its first product, the NER, and became involved in HV and EHV equipment control and protection products assembly. In addition, PSB also performed commissioning and installation works for its customers in the electricity supply industry. PSB actively began its operations in its current business model in the design and engineering of electrical power substation in 2000 and established its headquarters in Shah Alam to be strategically located nearer to the main commercial centre of Malaysia. In summary, PSB is principally involved in the provision of comprehensive power system engineering and technical solution for the design, procurement and installation of HV and EHV substations, transmission lines and underground cables for electricity transmission and distribution, and also manufacturing of proprietary power system components and equipment. PSB is our core operating subsidiary company. (b) Share Capital As at the LPD, the authorised and issued and paid-up share capital of PSB is as follows:Authorised Issued and paid-up No. of shares 5,000,000 3,333,000 Par value (RM) 1.00 1.00 Amount (RM) 5,000,000 3,333,000
Details of the changes in the issued and paid-up share capital of PSB for the past three (3) years are as follows:Date of allotment 29 December 2010 No. of shares allotted 2,333.000 Consideration Cash Cumulative issued and paidup share capital (RM) 3,333,000
As at the LPD, PSB does not have any outstanding warrants, options, convertible securities and uncalled capital. (c) Substantial Shareholder PSB is our wholly-owned subsidiary company. 56 5. INFORMATION ON OUR GROUP (Cont’d) (d) Subsidiary, Jointly-Controlled Entity and Associated Companies The subsidiary companies and jointly-controlled entity of PSB are set out in Section 5.1.4 above. As at the LPD, PSB does not have any associated companies. 5.2.2 Xcell (a) Background, history and principal activities
Xcell (Company No. 503755-H) was incorporated in Malaysia under the Act on 25 January 2000 as a private limited liability company under the name of Xcell ATS (M) Sdn Bhd. Xcell commenced its business operations on 11 April 2001 and is principally involved in design and supply of remote control system and data communication products.
(b) Share Capital
As at the LPD, the authorised and issued and paid-up share capital of Xcell is as follows:Authorised Issued and paid-up No. of shares 500,000 300,000 Par value (RM) 1.00 1.00 Amount (RM) 500,000 300,000
There were no changes in the issued and paid-up share capital of Xcell for the past three (3) years. As at the LPD, Xcell does not have any outstanding warrants, options, convertible securities and uncalled capital. (c) Substantial Shareholder Xcell is our wholly-owned subsidiary company.
(d) Subsidiary and Associated Companies As at the LPD. Xcell does not have any subsidiary or associated companies.
5.2.3 Fornix (a) Background. history and principal activities Fornix (Company No. 705247-A) was incorporated in Malaysia under the Act on 4 August 2005 as a private limited liability company under the name of Fornix Sdn Bhd and commenced its business operations on 6 September 2005. Currently, Fornix is an investment holding company. 5. INFORMATION ON OUR GROUP (Cont’d) (b) Share Capital As at the LPD, the authorised and issued and paid-up share capital of Fornix is as follows:Authorised Issued and paid-up No. of shares 100,000 100,000 Par value (RM) 1.00 1.00 Amount (RM) 100,000 100,000
There were no changes in the issued and paid-up share capital of Fornix for the past three (3) years. As at the LPD, Fornix does not have any outstanding warrants, options, convertible securities and uncalled capital. (c) Substantial Shareholder Fornix is a wholly-owned subsidiary company of PSB, which is in turn a wholly owned subsidiary company of PESTECH. (d) Subsidiary and Associated Companies As at the LPD, Fornix does not have any subsidiary or associated companies. 5.2.4 TPJV (a) Background, history and principal activities TPJV (Company No. 0276EJ2010) was incorporated in Cambodia under the Laws of Cambodia on 5 February 2010 as a single member private limited company under the name of Tajri-PESTECH JV Ltd. TPJV commenced its business operations on 10 March 2010 and is principally involved in the construction of electrical substation and transmission line. (b) Share Capital As at the LPD, the authorised and issued and paid-up share capital of TPJV is as follows:
Authorised Issued and paid-up No. of shares 1,000 1,000 Par value (KHR) 4,000 4,000 Amount (KHR) 4,000,000 4,000,000
There were no changes in the issued and paid-up share capital of TPJV for the past three (3) years. As at the LPD, TPJV does not have any outstanding warrants, options, convertible securities and uncalled capital. (c) Substantial Shareholder TPJV is a wholly-owned subsidiary company of PSB, which is in turn a whollyowned subsidiary company of PESTECH. 58 5. INFORMATION ON OUR GROUP (Cont’d) (d) Subsidiary and Associated Companies As at the LPD, TPJV does not have any subsidiary or associated companies. 5.2.5 PSSB (a) Background, history and principal activities
PSSB (Company No. 977694-K) was incorporated in Malaysia under the Act on 10 February 2012 as a private limited liability company under the name of PESTECH (Sarawak) Sdn Bhd. As at the LPD, PSSB has yet to commence its operations.
(b) Share Capital
As at the LPD, the authorised and issued and paid-up share capital of PBSB is as follows:Authorised Issued and paid-up No. of shares 100,000 2 Par value (RM) 1.00 1.00 Amount (RM) 100,000 2
PSSB was recently incorporated in 2012, as such, there are no changes in the issued and paid-up share capital of PSSB. As at the LPD, PSSB does not have any outstanding warrants, options, convertible securities and uncalled capital. (c) Substantial Shareholders PSSB is a wholly-owned subsidiary company of PSB, which is in turn a wholly owned subsidiary company of PESTECH. (d) Subsidiary and Associated Companies As at the LPD, PSSB does not have any subsidiary or associated companies. 5.2.6 PTL (a) Background, history and principal activities PTL (Company No. CA-99,553) was incorporated in Ghana under the Companies Code, 1963 (Act 179) of Ghana on 9 March 2012 as a private limited company under the name of PESTECH Transmission Limited. As at the LPD, PTL has yet to commence its operations.
5. INFORMATION ON OUR GROUP (Cont’d) (b) Share Capital As at the LPD, the authorised and issued and paid-up share capital of PTL is as follows:Authorised Issued and paid-up No. of shares 1,000,000 96,000 Amount (GHS) 1,000,000 96,000
PTL was recently incorporated in 2012, as such, there are no changes in the issued and paid-up share capital of PTL. As at the LPD, PTL does not have any outstanding warrants, options, convertible securities and uncalled capital. (c) Substantial Shareholders PTL is a wholly-owned subsidiary company of PSB, which is in turn a wholly-owned subsidiary company of PESTECH. (d) Subsidiary and Associated Companies As at the LPD, PTL does not have any subsidiary or associated companies. 5.2.7 PBSB (a) Background, history and principal activities PBSB (Company No. RC/00008311) was incorporated in Brunei under the Companies Act (Cap 39) of Brunei on 17 March 2011 as a private limited company under the name of PESTECH (Brunei) Sdn Bhd. PBSB commenced operations on 25 October 2011 and is principally involved in the provision of electrical engineering services, specialising in transmission and distribution specifically but not limited to include the design, manufacturing, trading, installing, commissioning and testing, repairs, maintenance of equipment at substations for pUblic and private amenities. (b) Share Capital As at the LPD, the authorised and issued and paid-up share capital of PBSB is as follows:
Authorised Issued and paid-up No. of shares 500,000 100 Par value (BND) 1.00 1.00 Amount (BND) 500,000 100
There are no changes in the issued and paid-up share capital of PBSB since its incorporation. As at the LPD, PBSB does not have any outstanding warrants, options, convertible securities and uncalled capital. 60 5. INFORMATION ON OUR GROUP (Cont’d) (c) Substantial Shareholders
PBSB is a 90% owned subsidiary company of PSB, which is in turn a wholly-owned subsidiary company of PESTECH. The remaining 10% shareholding is held by Hairol Addy Nizam Bin Hasim, a Bruneian.
(d) Subsidiary and Associated Companies As at the LPD, PBSB does not have any subsidiary or associated companies.
5.2.8 TPSB (a) Background, history and principal activities
TPSB (Company No. 553143-U) was incorporated in Malaysia under the Act on 13 July 2001 as a jointly-controlled entity between PSB and Pembinaan Tajri under the name of Tajri-PESTECH JV Sdn Bhd. TPSB commenced its operations on 10 September 2001 and was principally involved in the provision of electrical, mechanical and civil engineering, subcontracting and engineering consultancy. It is currently inactive.
(b) Share Capital
As at the LPD, the authorised and issued and paid-up share capital of TPSB is as follows:Authorised Issued and paid-up No. of shares 100.000 25,000 Par value (RM) 1.00 1.00 Amount (RM) 100,000 25.000
There were no changes in the issued and paid-up share capital of TPSB for the past three (3) years. As at the LPD, TPSB does not have any outstanding warrants, options, convertible securities and uncalled capital. (c) Substantial Shareholder TPSB is a 50% jointly-controlled entity of PSB, which in turn is a wholly-owned subsidiary company of PESTECH. The substantial shareholders of TPSB are as follows:Direct Indirect Name No. of Shares % No. of Shares % PSB 12,500 50.0 Lim Ah Hock 12,500 50.0· Lim Pay Chuan 12,500 50.0· Pembinaan Tajri 12,500 50.0 Abd. Ghaffur Bin Ramli 12,500 50.0 A Zulkhariah Binti Aman 12,500 50.0 A Right Hectares Sdn Bhd 12,500 50.0 A Saidon Bin Yunus 12,500 50.0 • Rohaya BinU Osman 12,500 50.0 •
5. INFORMATION ON OUR GROUP (Cont’d) Notes:Deemed interested by virtue ofhis shareholdings in PESTECH. Deemed interested by virtue ofhis/her/its shareholdings in Pembinaan rajn”. # Deemed interested by virtue ofhis/her shareholdings in Right Hectares Sdn Bhd. (d) Subsidiary and Associated Companies As at the LPD, TPSB does not have any subsidiary or associated companies. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) 5.3 LISTING SCHEME AND SGP In conjunction with and as an integral part of our listing of and quotation for the entire enlarged issued and paid-up share capital of our Company on the Main Market of Bursa Securities, the details of our Listing Scheme and SGP are as follows:(i) Public Issue Our Company undertakes a public issue of 12,880,000 new Shares, at the Issue Price, representing approximately 15.00% of our enlarged issued and paid-up share capital, payable in full on application upon such terms and conditions as set out in this Prospectus and will be allocated and allotted in the following manner:(a) 6,000,000 new PESTECH Shares, representing approximately 6.99% of our enlarged issued and paid-up share capital, made available for application by the Malaysian Public via balloting, of which at least 50% is to be set aside strictly for Bumiputera investors;
(b) 5,367,000 new PESTECH Shares, representing approximately 6.25% of our enlarged issued and paid-up share capital, reserved for our eligible Directors, employees and persons who have contributed to the success of our Group; and
(c) 1,513,000 new PESTECH Shares, representing approximately 1.76% of our enlarged issued and paid-up share capital, by way of placement to identified investors.
All the Issue Shares shall rank pari passu in all respects with the existing issued and paidup shares of our Company, including the voting rights and rights to all dividends and distributions that may be declared, made or paid subsequent to the date of the allotment thereof. Upon completion of the Public Issue, the issued and paid-up share capital of our Company will increase to RM42,940,000 comprising 85,880,000 Shares. (ii) Offer for Sale The Offerors also undertake an offer for sale of 8,588,000 Offer Shares, representing 10.00% of our enlarged issued and paid-up share capital, at the Offer Price, payable in full on application upon such terms and conditions as set out in this Prospectus and will be allocated and allotted in the following manner:-. (a) 6,456,400 Offer Shares, representing approximately 7.52% of our enlarged issued and paid-up share capital, by way of placement to Bumiputera investors approved by the MITI; and
(b) 2,131,600 Offer Shares, representing approximately 2.48% of our enlarged issued and paid-up share capital, by way of placement to identified investors.
Pursuant to the Offer for Sale, the Offerors are expected to raise approximately RM8.588 million based on the Offer Price. All the Offer Shares shall rank pari passu in all respects with the existing issued and paid-up shares of our Company, including the voting rights and rights to all dividends and distributions that may be declared, made or paid subsequent to the date of the transfer thereof. 5. INFORMATION ON OUR GROUP (Cont’d) (iii) Listing The admission and the listing of and quotation for our entire enlarged issued and paid-up share capital of RM42,940,OOO comprising 85,880,000 Shares on the Main Market of Bursa Securities have been approved by Bursa Securities. (iv) SGP In conjunction with the Listing, our Company will also implement a SGP involving up to 15% of the issued and paid-up share capital of PESTECH at any time during the existence of the SGP, to be granted and/or issued to the eligible Directors and executives of our Group. In implementing the SGP, the SGP committee may in its discretion decide that the PESTECH Shares to be granted and/or issued to eligible Directors and executives may be satisfied by way of:(i) Issuance of new PESTECH Shares;
(ii) Purchase of existing PESTECH Shares from the market; or
(iii) A combination of both issuance of new PESTECH Shares and purchase of existing PESTECH Shares from the market. In considering whether to issue new PESTECH Shares or to purchase existing Shares for the purpose of the SGP, the SGP committee will take into consideration, inter-alia, factors such as the prevailing market price of the Shares, funding consideration and dilutive effects on our Company’s capital base and future returns. The implementation of the SGP will be facilitated through the establishment of a trust to be administered by the trustee in accordance with a trust deed and shall, at all times, be under the direction of the SGP committee. In determining the number of PESTECH Shares to be granted and/or issued to our eligible Directors and executives under the SGP, the following shall be taken into consideration:(i) The performance of our Group in meeting certain financial targets to be determined by our Board and/or the SGP committee; and
(ii) Our eligible Directors and executives meeting certain individual financial and/or performance targets to be determined by our Board and/or the SGP committee.
The SGP shall be in force for a duration of five (5) years. However, our Board at its discretion, upon the recommendation of the SGP committee, may extend the SGP for a further period of up to five (5) years or any other duration that is allowed by the relevant authorities. In the event new Shares are issued pursuant to the SGP, ‘such new Shares will, upon allotment and issue, rank pari passu in all respects with our existing issued and paid-up share capital, except that the new Shares will not be entitled to any dividend, right, allotment or other distribution, the entitlement date of which is prior to the date of allotment of the said Shares. The new Shares will be subject to all provision of our Articles of Association. In the event existing Shares are purchased from the market pursuant to the SGP, such Shares will rank equally in all respects with our other existing issued Shares including voting rights and rights to all dividends and distributions that may be declared subsequent to the date of transfer. The listing of and quotation for any new Share(s) to be issued pursuant to the SGP on the Main Market of Bursa Securities have been approved by Bursa Securities. For further information, please refer to Section 14 of this Prospectus. 5. INFORMATION ON OUR GROUP (Cont’d) 5.4 LOCATION OF OPERATIONS The location of our Group’s operational and administrative premises is as follows:Company Purpose Location PESTECH Corporate Office No. 26, Jalan Utarid U5/14, Seksyen U5, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia PSB Factory and warehouse No. 26, Jalan Utarid U5/14, Seksyen U5, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia Branch office No. 04A, TIngkat 4, WismaSESB, Jalan Tunku Abdul Rahman, 88673 Kota Kinabalu, Sabah, Malaysia Branch office Ground Floor of No. 273, Vauxhall Street, Colombo 02, Sri Lanka Xcell Corporate office No. 26, Jalan Utarid U5/14, Seksyen U5, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia TPJV Corporate office No.04E, National Road No.5, Group 6 Spean Khpous Village, Sangkat Kilometre No.6, Khan Russey Keo, Phnom Penh, Cambodia PBSB Corporate office Unit 3, 1″ Floor, Block A, Urairah Complex, Kampung Kiulap, Bandar Seri Bengawan BE1518, .Brunei Darussalam
5. INFORMATION ON OUR GROUP (Cont’d) 5.5 KEY ACHIEVEMENTS / MILESTONES / AWARDS The key achievements / milestones / awards of our Group are as follows:Year Key Milestones / Awards 2001 • Our JV with Pembinaan Tajri was awarded a contract from TNB for the design, supply, erection and commissioning of 275kV and 132kV transmission substations and upgrading of associated bay equipment and protection equipment for TNB substations. • Awarded first PMU job for the erection, installation, testing and commissioning of a 132kV outdoor transformer bay, 132kV indoor equipment and 33kV indoor equipment inclusive of ancillary equipment, earthing systems, power and auxiliary cables for Seberang Jaya temporary substation from Projass Engineering Sdn Bhd. • Obtained first SCADA system implementation contract to design, engineer, manufacture and supply SCADA systems to TNB substations in Putrajaya, Selangor and Kuala Lumpur from Central Energy Sdn Bhd. • Awarded a contract from Microsol Aust. Pty Ltd to supply RTUs to North Korea which was sponsored by the Australian Agency for International Development (AusAID). • Successful certification of ISO 9001:2000 for Quality Management System. • Awarded a contract from Microsol Aust. Pty Ltd to supply RTUs to Vietnam. • Awarded a fast-track job for the design, engineering, manufacture of secondary equipment, installation, testing and commissioning of 275kV switchgears, 3x60MVAr 275kV capacitor banks and ancillary equipment for KL North substation. We completed the Project in approximately seven (7) months as compared to the normal timeframe of 12 to 15 months required for a similar Project. • Awarded a project to design, manufacture, assemble, construct and commission the TNB PMU 132/11 kV Sultan Idris Power Station (Woh) and PMU 132111kV Sultan Yusoff Power Station (Jor) substations in Cameron Highlands by Zafas Sdn Bhd. Awarded by ASTA BEAB Certification Services, UK for ASTA Type Test Certificate for 12 kV and 36 kV outdoor, single pole, double break, air break disconnectors that are normally associated with neutral earthing resistors. • Our JV with SLCC was awarded an overseas project in Brunei for the design and construction of 66kV outdoor switchyard at Brunei’s LPS, and 66kV underground cable links from LPS to the proposed BMC 66kV electrical substation in Brunei by BMC. • Our JV with Dayen was awarded a project in PNG for the design, manufacture, supply, construction, installation and commissioning of the Erap 132kV Grid Substation for the Erap -Hidden Valley Gold Mine Electrification Project by PPL. 2002 2004 2006 2008
5. INFORMATION ON OUR GROUP (Cont’d)
Key Milestones I AwardsYear • Awarded first contract for the supply of our Products for the Ghana market to design, manufacture, supply, factory test, export pack and deliver 33kV feeder protection and metering panels and 33kV transformer protection and metering panels via a customer in Malaysia. 2009 • One of the recipients of the Enterprise 50 Award for the year 2009 by SME Corp and Deloilte Consulting (M) Sdn Bhd.
• Awarded a contract from Department of Energy Services, Brunei for the supply of relays to Brunei.
• Awarded first project in Sri Lanka to design, execute, complete and remedy any defects therein in relation to Belialta grid substation project Lot A by Ceylon Electricity Board.
2010 • Awarded Certificate of Achievement for Successfully Achieving Four Stars for the Year 2010 under the SME Competitiveness Rating for Enhancement (SCORE) by MITI and SME Corp.
• Our JV with Pembinaan Tajri was awarded a contract involving the establishment of substations and a transmission link between the North Phnom Penh transmission network to the Kampong Cham network in Cambodia by Cambodian Transmission Limited.
• Obtained OHSAS 18001 :2007 certification.
• Our Executive Director I CEO, Paul Lim received Outstanding Entrepreneurship Award 2010 by Enterprise Asia.
• Received Certificate for Five Star Achievement in Safety Compliance Audit (SAFCA) for Project PMU Manjalara GIS substation awarded by Asset Development Department of TNB.
• Obtained our first Project in Ghana to design, supply, test and commission a 161kV single busbar substation at Ayanfuri.
• One of the recipients of the Enterprise 50 Award for the year 2010 by SME Corp and Deloille Consulting (M) Sdn Bhd.
2011 • Awarded “Best Vendor” in conjunction with Vendor Day by Northern Region, Transmission Asset Development of TNB.
• Awarded Malaysian Brand certification by SME Corp.
• One of the recipients of the Enterprise 50 Award for the year 2011 by SME Corp and Deloille ConSUlting (M) Sdn Bhd.
2012 • Awarded TNB 2012 Excellence Award for the contractor category by TNB.
• Awarded Brand Laureate Awards 2011 for SMEs Chapter Awards (corporate branding category) by Brand Laureate.
5. INFORMATION ON OUR GROUP (Cont’d) 5.6 CAPITAL EXPENDITURE AND DIVESTITURES Save as disclosed below, our Group did not incur any other capital expenditure or investments and had no other divestitures for the past three (3) FYE 31 December 2009 to 2011;Transaction value for the FYE 31 December 2009 2010 2011 RM’OOO RM’OOO RM’OOO Building Office equipment Motor vehicles Motor vehicles under hire purchase Renovation Tools and equipment 4,179 1,163 217 -269 195 -443 182 118 109 173 -445 30 313 38 278 Total capital expenditures 6,023 1,025 1,104 Investment Unquoted shares (associated companies) Unquoted shares (subsidiary companies) 30 60 — -36,500 Total investment 90 – 36,500 Divestitures Motor vehicles (69) – (655) Total divestitures (69) – (655)
The above capital expenditures were financed through internally generated. funds and bank borrowings. Our Group incurred capital expenditure on a need-be basis, hence the amount of capital expenditure incurred every year may vary. For the FYE 31 December 2009, our Group’s capital expenditures were substantially higher as compared to FYE 31 December 2010 and 2011 mainly due to the cost incurred for the construction of our present corporate office and manufacturing facility in Shah Alam. In addition, the capital expenditures on office equipment, renovations, tools and equipment were incurred pursuant to our aforesaid new corporate office as well as to accommodate our Group’s business expansions. For the FYE 31 December 2011, our Group’s total investment of RM36.500 million was due to the Acquisition of PSB, whilst our Group’s divestitures of RMO.655 million was due to disposal of motor vehicles during the financial year. As at the LPD, we have not undertaken any material capital expenditure and material divestitures that is currently in progress. 5. INFORMATION ON OUR GROUP (Cont’d) 5.7 BUSINESS OVERVIEW 5.7.1 Our Projects I Products We are an integrated electric power technology company. We are principally engaged in the provision of comprehensive power system engineering and technical solutions for the design, procurement and installation of HV and EHV substations, transmission lines and underground cables for electricity transmission and distribution in the local and international markets. We also manufacture proprietary power system components and equipment. As part of our power system engineering and technical solutions, we offer the following services:• The design of indoor and outdoor electrical substations, structural and civii layout for HV substations, and transmission line and underground cable systems;
• Project management, construction and commissioning of HV and EHV substations;
• Earthing, conductors, clamps and connectors design;
• Primary and secondary systems design including calculation and verification;
• Protection, control and communication system design and implementation; and
• SCADA system implementation. The breakdown of our Group’s revenue by Projects, Products and investment holding for the past three (3) FYE 31 December 2009 to 2011 is as follows:<——–FYE 31 December > 2009 2010 2011
RM’OOO % RM’OOO % RM’OOO % Projects 75,662 87.4 96,852 84.2 128,732 98.3 Products 10,886 12.6 18,604 16.2 11,584 8.9 Investment 564 0.5 564 0.4 holdin9 Total 86,548 100.0 116,020 100.9 140,880 107.6 Consolidation (1,038) (0.9) (9,933) (7.6) adjustment Total 86,548 100.0 114,982 100.0 130,947 100.0 18.104.22.168 Selected key Projects Malaysia In 2009, our JV with Pembinaan Tajri was awarded a project by TNB to construct a PMU 132133kV Manjalara indoor GIS substation. The substation is part of the system improvement for the electricity network within the Manjalara and Desa Park City area of Kuala Lumpur. We are responsible for the design, manufacture, supply, construction, installation and commissioning for the project. In the course of executing the project, we were awarded S-Star achievement in SAFCA audit by the Asset Development (Central) Transmission Division of TNB. 5. INFORMATION ON OUR GROUP (Cont’d) Year Customer Project Description Awarded in completed November 2011 2009, in TNB Design, manufacture, supply, construction, installation and commissioning of a PMU 132133kV Manjalara indoor GIS substation.
View of the project site
5. INFORMATION ON OUR GROUP (Cont’d) In June 2008, our JV with Dayen, a public-listed engineering, procurement and construction company based in Singapore, was awarded a project by PPL, a power authority responsible for the generation, transmission, distribution and retailing of electricity throughout PNG, for the Erap-Hidden Valley Gold Mine Electrification Project. We were responsible for the electrical works and design, manufacture, supply, construction, installation and commissioning of the two (2) 132kV substations. We successfully commissioned the Erap 132kV Grid Substation on 23 March 2010, and completed the handover of the grid substations to PPL on 31 March 2010. As for the Hidden Valley substation, it was fully commissioned and handed over to PPL on 23 January 2011. This grid substations project was parl of PPL’s overall development plan for a gold mine at the Hidden Valley site, which includes the power expansion and development works at the Ramu Power Station, 132kV Transmission Line Construction Works between Erap and Hidden Valley and the 132kV Erap and Hidden Valley Grid Substations Project with contracts awarded to companies from China, Malaysia and Singapore. The completion of the Erap 132kV Grid Substation and its linkage to the existing PNG 132kV Ramu-Taraka, Lae transmission network is a strategic milestone achievement for PPL. The completion of the project would enable PPL to bring electrical power from Ramu Power Station to the gold mine at the Hidden Valley site, and also for future rural electrification to the people in the Morobe Province that is situated between the Ramu Power Station and Hidden Valley. Year Customer Project Description Awarded in 2008, completed in January 2011 PPL Design, manufacture, supply, construction, installation and commissioning of the Erap and Hidden Valley 132/11 kV Grid Substations in PNG for the Erap -Hidden Valley Gold Mine Electrification Project
Map of the project site -,L·i., Q 19?m~kfIl_ ,i… “–NiJFimPACrf.1C o 100 i100 m~ ~~-.–~~ ~.~~. ..~:7:’.:.~~2: ~ ..
5. INFORMATION ON OUR GROUP (Cant’d) View of the completed substation switchyard 5. INFORMATION ON OUR GROUP (Cont’d)
Cambodia In 2010, our JV with Pembinaan Tajri was awarded a project by Cambodia Transmission Limited to establish substations and a transmission link between North Phnom Penh and Kampong Cham in Cambodia. The project involves the design, building, testing and commissioning of a 110km long, 230kV double-circuit transmission line from North Phnom Penh to Kampong Cham, along with the substation facilities and upgrades. Salient terms of the present JV agreement with Pembinaan Tajri in respect of the Project in Cambodia are as follows:(i) The agreement shall subsist until the com pletion of the Project in Cambodia including warranty period for the Project in Cambodia unless earlier terminated or mutually extended by both parties;
(ii) The parties are to co-operate on an exclusive basis to design, build, test and commission 110km long 230kV transmission line between North Phnom Penh to Kampong Cham inclUding upgrades to substation facilities. Both parties will collaborate in project execution and transfer of know-how with regards to substation design, transmission lines and underground cable works, however, PSB is responsible for the full scope of work within the Project in Cambodia from project design, execution inclUding engineering, procurement and commissioning;
(iii) Each party shall be severally responsible and liable for their own performance, losses and liabilities; and (iv) The agreement shall be terminated if the Project in Cambodia is awarded to a third party; cancelled by the client; not awarded within 12 months from the date of the agreement unless extended in writing by mutual agreement; or both parties mutually agree to terminate the agreement. The contract outlines the erection of two (2) transmission substations, one (1) at North Phnom Penh (220/115kV) and the other at Kampong Cham (115kV) and the interconnecting transmission lines of 11 Okm long linking the two (2) substations. The transmission tower will first operate at 115kV before being upgraded to 220kV in the future. Year Customer Project Description Awarded currently expected in 2013 in 2010, ongoing, completion Cambodian Transmission Limited Design, build, test and commission of the North Phnom Penh and Kampong Cham transmission substations and the transmission lines interconnecting the two (2) substations
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) Map of the project site
View of the outdoor switchyard at the Cambodia project site
5. INFORMATION ON OUR GROUP (Cont’d) Our delivered and installed panels
Ghana In 2010, we were awarded a Project in Ghana, where we obtained a contract to design, supply, test and commission a 161kV single busbar substation at Ayanfuri, located approximately 20km west of Dunkwa and construction of 161 kV transmission line to connect to the grid transmission system. The project involved adding a 161/11.5kV substation into the existing 161kV transmission line from Dunkwa to Asawinso. The additional substation will supply electric power to the Central Ashanti Gold Mine. The substation has a single busbar topology, which interconnects three (3) bays, designated for the newly terminated Dunkwa to Ayanfuri transmission line, the newly terminated Asawinso to Ayanfuri transmission line, and a 161/11.5kV, 25/33MVA power transformer to supply power to the Central Ashanti Gold Mine. Year Customer Project Description Awarded in 2010, completed in May 2011 Central Ashanti Gold Limited Design, supply, test and commission a 161 kV single busbar substation at Ayanfuri, Ghana
5. INFORMATION ON OUR GROUP (Cant’d) Map of the project site
Aerial view of the substation
5. INFORMATION ON OUR GROUP (Cont’d) 22.214.171.124 Our in-house product range Our range of power system control components and equipment under the PESTECH brand includes:• BCD input display;
• Control and protection panels;
• HV isolator;
• Telecommunication and teleprotection;
• SIMS; and
• Alarm annunciation panel
Product Brand Description. . “Visual’ BCD input display BCD The BCD input display is designed to convert BCD signals into a numeric value. Control and protection panels COPS COPS is a control, protection and monitoring unit which enables remote control operation of primary high voltage equipment and protection systems in substations. HV isolator D-Switch The disconnector switch (D-switch) is used in power utilities to separate equipment from either the energy source or the ground.
5. INFORMATION ON OUR GROUP (Cont’d) DescriptionBrand VisualProduct Telecommunication RETCOMSand teleprotection The telecommunication and teleprotection panel combines communication and protection into one, by incorporating synchronous digital hierarchy as the transmission media, and multiplexer (sourced from RFL)
and teleprotection products in one panel. The NER protects power equipment against fault currents by NER RES limiting the ground fault current to a certain level to prevent damage. RTU PROCOM The RTU, marketed under the brand name PROCOM, provides interfacing of substation equipment with remote control center under SCADA implementation.
The SIMS, marketed under the brand name WEBS, facilitates full control or remote access to various intelligent electronic devices (IEDs) SIMS WACS by creating a gateway to each lED through the respective manufacturer’s own proprietary software.
5. INFORMATION ON OUR GROUP (Cont’d) Brand'””
-Visual The AAP-10 is a micro-processor based alarm annunciation panel with universal power supply inputs. It provides the operator with vivid Alarm Annunciation visual indication of alarmsAAPpanel signalling. The logical function incorparated in the microprocessor allows logical operation on its input to activate the alarm indication.
In addition, we are an authorised distributor of telecommunication products from RFL. We also sell NER products from Post Glover. We manufacture our Products under the registered trade mark of COPS, for protection and control panels and PROCOM for RTU. As at the LPD, PESTECH logo, COPS brand name, PROCOM and RETCOMS have been registered under Class 9 with the Intellectual Property Corporation of Malaysia. Through the collaboration with our technology partners/distributors in the field of substation control automation, we are able to extend the range of services that we can provide to our customers. These include the service and maintenance of existing installation, launching of new products based on established platform, and competency in engineering and designing systems based on a wide range of universally accepted industry products. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.2 Our Principal Markets Our revenue contribution is mainly derived from two (2) sources I.e. Projects and Products. Projects are executed both domestically and overseas which includes the utilisation of our manufactured Products. Similarly, the manufacturing and sales of our Products to third parties cater for both domestic and overseas markets. Based on the FYE 31 December 2011, our revenue contribution by foreign and domestic markets is as shown below:Revenue for the FYE 31 December 2011 • Proportion of RM’OOO total revenue % Foreign 100,201 76.5 Domestic 30,746 23.5 Total revenue 130,947 100.0 Note:• After deducting consolidation adjustment. In analysing revenue contribution, revenue generated in the FYE 31 December 2011 is mainly derived from foreign markets, where the breakdown between foreign and domestic markets comprises 76.5% and 23.5% respectively. Further revenue breakdown of contribution from foreign markets comprise the following .countries:Revenue for the FYE 31 December 2011 • %of RM’OOO total revenue Cambodia 75,521 57.7 Ghana 2,599 2.0 Sri Lanka 18,199 13.9 Brunei 3,882 2.9 Total foreign revenue 100,201 76.5 Note:• After deducting consolidation adjustment. Based on the above, our Group’s foreign market revenue is primarily derived from Cambodia and Sri Lanka in the FYE 31 December 2011. Our key target customers in foreign markets are mainly government-linked companies, authorities or companies in the developing countries which need electrical and electronic power system infrastructure for transmission and distribution of electricity at the HV and EHV levels. Moving forward, it is our intention to expand our presence in the international markets as we can further leverage on our current capabilities and competencies to become one of the main regional players in the industry. 5.7.3 Seasonality We do not experience any material seasonality in our business. 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.4 Types, sources and availability of raw materials/input 2011 Supply Purchase Value (RM’OOO) Sources • Domestic Import (‘Yo)(‘Yo) Sources of Import Transformers Circuit breakers Relays Current transformers Voltage transformers 4,189 17 6,474 3,486 430 -100 -100 100 100 -100 — Indonesia N/A Japan, Finland, Sweden N/A N/A Third Party Services Civil works Substation erection 21,962 4,097 100 100 — N/A N/A . 2010 Transformers Circuit breakers Relays Currenttransfonners Voltage transformers 11,243 11,499 2,816 1,024 954 -100 — 100 -100 100 100 Indonesia N/A Japan, Finland, Sweden Sweden Sweden Third Party Services Civil works 11,020 100 – N/A 2009 Transformers Relays Current transformers Surge arrestors 17,865 2,351 1,419 782 —- 100 100 100 100 India Japan, Finland, Sweden Sweden Japan Third Party Services Substation erection Civil works Erection and project manaqement 7,749 1,031 71 100 100 100 — N/A N/A N/A
5. INFORMATION ON OUR GROUP (Cont’d) Note:Sources are determined from the perspective of the operating entity. For the past 12 months up to the LPD, our Group has not experienced any significant shortage in the supply of raw materials and third party services used in our business operations. 5.7.5 Production/operating capacities and output Project Our Projects are mainly contract based. Time taken to complete a project from the design stage to the commissioning and handover stage to our customer may vary between six (6) months and as long as a few years. The timeline of the completion of a project will depend on the scope of work to be done and the requirement and specifications of the customer. On average, the design team is able to undertake three (3) substation projects at anyone time, where the design of each substation takes approximately 45 working days. In a year, we are able to undertake an estimated 12 new substation projects. Our capacity is based on our manpower, and our ability to increase our capacity will be dependent on increasing manpower. Products Our capacity is dependent on several factors, such as availability of manpower and fioorspace. As at the LPD, we are able to complete 200 various types of panels (such as control and protection panels, telecommunication and tele-protection panels, RTU and SIMS) and 20 NERs in a timeframe of eight (8) weeks, at a rate of one eight (8)-hour shift per day. Our production fioor has an area of 14,000 square feet and is able to accommodate the production of 80 various types of panels at anyone time. Notwithstanding, given our available fioorspace, we are able to expand our capacity by increasing our manpower to add more shifts in a day. Premised on the above, our annual production capacity and utilisation rates for the FYE 31 December 2011 are as follows:Type of Products Annual production capacity I Cunitf Output (unit) Utilisation rate % Panels· 1,300 179 13.8 NER 130 58 44.6
Notes:· Comprising various types of panels such as control and protection panels, telecommunication and teleprotection panels, RTU and SIMS. At a rate of eight (B)-hour shift per day The production of our panels and NERs are generally project based, i.e. we produce only when there is a purchase order from our customers (which is for use in their projects) or when required in the execution of our Projects. Our strategy in the FYE 31 December 2011 remained the same as the previous years where we focused and channelled our resources towards the implementation of the substantial contracts in hand especially for our overseas Projects and as such, we were selective in the sale of Products as undertaking Projects would create a higher value for our Group. In addition, we do not produce the products for the purpose of holding or keeping stock for future sales. As such, the utilisation rates of our production for the FYE 31 December 2011 were low. 82 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.6 Process flow Our business activities are broadly divided into two (2) categories: Project implementation and Product manufacturing. The overall process flow for our business activities are depicted below:[ Suppiers ] [ Subcontractors j PROJECT IMPLEMENTATION’\. / Tender Planning & Project -Bidding Design Construction .. ‘:’.. …….Customer Customer.. ~l..Requirement . _ .._ .._ .._ .._ .._..-_ .. _0· 1-..-‘iPRODUCT MANUFACTURIN(;”~ PJanning&I L..o l-Sales Product Manufacturing I Design l.. _____ ._ .. -_. __ .._..-._.._.. Procurement of Materials and Equipment
Project implementation Under Project implementation, we typically obtain business opportunities via a tender bidding process. Our Sales & Marketing team will identify the prospective tenders to participate in, and we will submit our proposal accordingly. Once we have been awarded the Project, our 0&0 department will work closely with the customer to identify the requirements and technical specifications of the Project. Based on our customer’s requirements and specifications, the 0&0 team will plan and design the control drawings for the layout and structure of the substation, as well as the control, protection and telecommunication systems to be implemented. Once the customer has approved the drawings, construction and installation works will commence, and our R&T team will conduct testing of equipment onsite to ensure compliance to our standards. When all the equipment has passed the tests, commissioning will be carried out and the substation will then be handed over to the customer. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5. INFORMATION ON OUR GROUP (Cont’d) Product manufacturing We manufacture our own Products to be used in HV and EHV substations as part of our technical solutions to our customers. The D&D team will design the product according to the technical specifications of the project. The metal fabrication of the product is outsourced to third-party fabricators and delivered to our facilities to be assembled and to undergo quality control. We also obtain electrical components from third-party manufacturers. The R&T team will conduct a factory test, and if required, a factory acceptance test (“FAr) in the presence of the customer to ensure compliance to their standards. Once the product has passed all the testing procedures, it will be delivered to the project site and installed. Project implementation process A typical project for the construction of a substation, transmission line or underground cable system refers to a project that includes the design, engineering, manufacturing, supply, installation, testing and commissioning of the structure and its related equipment. The implementation of a project follows the procedures established in our Project Management Manual. In summary, the processes involved in a project are depicted below: Planning and Procurement t
Construction and Installation of Equipment -l, Quality Control Site Testing and Commissioning -l,
Project Completion and Handover
Stage Processes Planning and Procurement In the planning stage, we discuss the requirements and needs of the customer when designing the layout of the project’s system. We take into account the customer’s budget, schedule, specifications, land area, location and other factors/constraints. Our engineers will then fonmulate a design that can be both reliable and cost-effective, while also allowing for expansion, if necessary. The design will outline the structural layout of the project, such as the switchyard layout, earthing system, cabling layout and lightning protection, as well as an integrated control, protection and communication system. The D&D team is responsible for the engineering and design of the project as per the project requirements. When the draWing of the design is approved and released for construction, the Project team will procure the required materials, which may be sourced from third-party manufacturers or suppliers, or from our in-house developed products. Construction and Installation of Equipment Based on the customer-approved drawings, the project team will prepare the installation layout plan (“ILP”). The materials shall be delivered to the site, and the team will commence construction and
5. INFORMATION ON OUR GROUP (Cont’d)
Site Testing and Commissioning Project Completion and Handover
installation of equipment, based on the customer-approved ILP. In general, we will outsource the civil construction work to a third party appointed by us to commence the civil construction work. The installation of equipment will commence upon the completion of civil construction work. Once the equipment has been installed, the R&T team (a section under the D&D department), or a third-party tester, will conduct testing of equipment onsite. Commissioning will be carried out after the testing has been completed and passed. Upon completion of the project, a completion certificate, or a take over certificate will be issued by the client. Product manufacturing process We design and manufacture our own Products to be utilised as part of our power systems engineering solutions. A summary of the processes involved in the manufacturing of our Products is as depicted below: Design Metal Fabrication Procurement Quality AssemblyControl —–,> Completion Stage Processes Design The design and drawing of a product blueprint is prepared by the D&D team, which will be approved by the head of sections respectively in the division and head of department. Once the drawings have been approved, a BOM is issued listing the necessary supplies and components required for the manufacturing of the product. We subcontract out the metal fabrication stage of our manufacturing process to third-party fabricators. Metal fabrication will be executed based on our approved drawings and schedule. The procurement of materials is carried out according to the BOM, where a purchase order is raised to source the required components from both local and foreign suppliers. The assembly stage is divided into two (2) parts: assembly of metal housing and assembly of electrical parts. First, we assemble the metal housing of the product to form the skeleton upon which the components will be fitted in. Then, we assemble the various electrical components into the metal housing, along with the wiring works. Metal Fabrication Procurement Assembly
5. INFORMATION ON OUR GROUP (Cont’d) Stage Processes Once the product has been fully assembled, we will conduct tests to ensure the product complies with all our standards. An in-house factory test will first be conducted on all our products, and if required, an FAT in the presence of the customer. Once the product has successfully passed the various testing procedures, it is completed and handed over to the customer. Completion
5.7.7 Quality control assurance and procedures We place great emphasis in ensuring that our products are subject to stringent quality control in order to meet our customers’ requirements and industrial standards. The commitment on quality broadly entails areas such as processes and scope, document control and policy, planning, and supplier and procurement review and monitoring/evaluation. We are committed to delivering high quality products to our customers by placing emphasis on defect prevention while ensuring that we have a consistent detection program in place. Our quality system is intended to ensure that our customer receives a product that is designed and manufactured in accordance with the customers’, industries and our own strict quality requirements. We believe in the utmost importance of continually delivering products and services that are of high quality and free from defects to our customers. We place strong emphasis on quality control of our Products, whereby all our Products will undergo stringent testing before being delivered to our customers. As such, our Group abides by the following quality, occupational health and safety policy: • We commit to provide quality services that consistently meet total customer satisfaction through continuous improvement of the quality, occupational health and safety management system. We shall to the best of our abilities ensure the safety, health and welfare of our employees at our work sites by complying with safety, health and legal requirements currently enforced by the Government of Malaysia and other requirements enforced by relevant parties. We shall ensure that the quality, occupational health and safety policy is communicated and understood by all employees. The quality, occupational health and safety policy shall be reviewed regularly for continuing suitability during management review. To achieve and maintain the intent of the quality policy, the management has established the following quality objective, which shall be reviewed periodically during the management review meeting. • To achieve zero error on drawings submitted to customers for approval;
• To achieve 99.9% defect-free Products after factory test;
• To ensure 99.9% Products acceptance during FAT; and
• To meet at least 99.9% of customer handover deadline.
In striving to achieve the above objectives, we have in place the quality control measures as disclosed below. In view of the importance of traceability, consistency and reliability of our services and Products, we adopted OMS in accordance with ISO 9001 :2000 since 2001 and obtained certification in 2002. Subsequently we extended our scope to ISO 9001 :2008 and OHS MS in accordance with OHSAS 18001 :2007 in 2010 for the following certification scope: 86 5. INFORMATION ON OUR GROUP (Cont’d) “Design, engineering, manufacture, installation, test and commission of HV and EHV electrical substation and equipment” Quality assurance and control are managed by our QHSE department. To ensure that our Products consistently conform to our standards, we have established a QMS for inspection of incoming materials, factory test, FAT and calibration. Quality control measure Procedure Inspection of incoming materials All materials will be assigned a stock code number for material identification upon issuance of purchase order (“PO”). Delivery to factory: Upon the delivery of the materials, store personnel will perform ‘incoming inspection’ as per the quality plan and ‘standard sampling table’ to ensure its quality and compliance to the delivery order (“DO”) and PO. The store personnel will then stamp the ‘received date’ on each material and paste the colour stickers based on the overall inspection results (Red -Reject, Blue -On Hold and Green -Pass). Materials with green stickers will be transferred to the store area and recorded in ‘goods received note’. Materials with blue stickers will be placed at ‘on hold area’ until the replacement/rework process is completed. Materials with red stickers will be placed at ‘rejected area’. The project engineer will inform the supplier for replacement. Delivery to Project work site: Upon the delivery of the materials, the site supervisor or project engineer will perform ‘incoming inspection’ as per the quality plan and ‘standard sampling table’ to ensure its quality and compliance to the DO and PO. Materials that do not have any defects will be used directly at the site, while defective materials will be rejected and returned to the supplier for rework or replacement. Materials that have been reworked or replaced will be subject to re-inspection. Factory test Our P&P team is responsible for ensuring that the in-house factory test is organised and carried out in accordance with the factory test procedure or quality plan. P&P may request R&T to perform the factory test by submitting the R&T request form. R&T will update and record the status of the test into the FTR. Any non-conformance will be recorded in the non-conformance report. In the event that more than five (5) defects are recorded in the report, R&T will issue a corrective action request (“CAR”) to the P&P department, where P&P personnel shall rectify the non-conformance. Upon acceptance of the test results, P&P personnel will review and sign the FTR. Quality control Upon completion of the manufacturing process and factory test, the product will be sent for quality control inspection. The quality control inspection will be carried out according to the established checklist. The products that meet the quality control inspection criteria will be affixed with “QC Approved” sticker and prepared for FAT or delivery. The product that does not meet the inspection criteria will be returned to the production team for rework, and upon satisfactory completion, sent to quality control for re-inspection. FAT Where applicable, an invitation for a FAT will be sent to the customer.
5. INFORMATION ON OUR GROUP (Cont’d) Quality control Procedure measure P&P personnel will invite the customer and sales & marketing team to attend the FAT, as the FAT has to be carried out in the presence of the customer. If the customer accepts the invitation, R&T will perform the test according to the FAT procedure or project quality management plan, if applicable. The FAT shall be conducted based on the FAT checklist. The FAT checklist details out the processes of the test to be conducted, along with the standards that need to be complied to. All test equipment must be calibrated prior to testing, and any previous non-compliance of the product must be declared beforehand. A copy of the checklist will be given to the customer after the FAT is completed. Several testing procedures will be carried out to test the functionality and accuracy of the product. The R&T team conducts simulation tests to give the customers a walk-through on how the product should function. Some of the test procedures include: (a) Inspection of installation works and cabling;
(b) Checking of electrical ports; and
(c) Synchronisation test.
All test equipment is subject to calibration to ensure its measurements are accurate and within the specification limits. When equipment is due for calibration, it will be identified, segregated and sent for the necessary calibration work before being used. Calibration is done both internally and by external third-party calibration bodies. Internal calibration is conducted by the R&T team as per the yearly equipment calibration schedule, where the details of calibration work will be in accordance with the instructions of the internal calibration work guide. If the services of an external calibration body are required, a suitable party will be identified and engaged. Calibration Details of our project quality management plan, corrective action I preventive action request and customer feedback and complaint handling are set out belbw:Quality control measure Project quality management plan Procedure The project manager will develop the respective project quality management plans by identifying all quality requirements, acceptance criteria and deliverables for the project. The quality requirements can be obtained from the specific project documents. The project manager can also refer to the company’s QMS as a guideline to define the quality requirements for the project. This document shall provide the guidelines for determining the quality standard requirements of the project and devising ways to satisfy these quality requirements. The quality management plan consists of the following:(a) Quality policy; (b) Quality procedures; (c) Quality standards; (d) Ways of ensuring compliance with quality standards; 88
5. INFORMATION ON OUR GROUP (Cont’d) Quality control measure Procedure (e) Resources required; and (f) Activities to be carried out. When customer complaints are received or non-conforrnance issue
Corrective action I detected, the respective department shall forward the issue to aSHE preventive department. aSHE personnel will issue a CAR form to the respective action request departments and call for a CAR meeting to identify the responsible personnel and investigate the root cause. The responsible personnel shall take the necessary corrective action and record it in the CAR form accordingly. The CAR form will be reviewed by the management and the preventive action plan will be developed whenever applicable. Customer When customer complaints are received via phone, fax, email or letter, feedback and it shall be forwarded to the aSHE department. who will then call for a complaint CAR meeting to decide on the corrective actions required. The person handling responsible shall take the necessary corrective action as decided.
5.7.8 Technology used and E&D Our Group carries out E&D activities. Our focus is essentially on enhancing our production process and product development in the field of control and indication equipment. We have an in-house E&D department which is responsible for the regular engineering activities on electrical products and equipment and constantly conducts information technical studies into the enhancement of the production process and innovation, catering for different needs and specifications of individual customers. Electric power transmission and distribution, along with the electrical devices involved in the process, generally employ engineering know-how and practices that are known in the industry. We have established key technologies and competencies required to provide efficient electric power transmission and distribution solution to utilities and industrial customer to fuel and maintain social and economic development. Our Group’s area of expertise can be segregated into the following:(i) Construction of HV and EHV substation;
(ii) Protection and control systems;
(iii) Communication and tele-control; and (iv) CAD tools and customised design tools. The key technologies and engineering know-how utilised by our Group’s area of expertise in our business operations include the following:(a) Construction of HV and EHV substation (Electric power transmission and distribution) Electric power transmission involves the transfer of electricity from generating power plants to substations, while electric power distribution transfers electricity from substations to the end users. Key technologies utilised in the electric power transmission and distribution system ensure the safe and reliable handling of HV and EHV electrical system to bring electrical power to the industry and consumer. The key technologies and engineering systems used can be categorised into the following:89 5. INFORMATION ON OUR GROUP (Cont’d) i. Earthing system design for HV and EHV substation; An earthing system is the core of a reliable HV and EHV substation and it is a system created to ensure flow of fault current into the ground when there is an electrical fault. Fault current occurs when there is a short circuit to the system. The earthing design system will ensure that there will not be any thermal or mechanical damage that occurs to equipment within a substation, thereby resulting in safety to operations and maintenance personnel. The earthing system design also guarantees that there will be no electrical shocks arising from current leakage in the substation. Three (3) voltages are considered during the substation earthing design i.e. touch voltage, step voltage, and mesh voltage. Touch voltage is the difference in potential between the surface of a touched and earthed equipment when a man is standing and touching the earthed equipment or structure. Step voltage is the potential difference that will develop when a man bridges a distance of one (1) meter with his feet while not touching any earthed equipment. Mesh voltage is the maximum touch voltage that is developed in the mesh of the substation’s earthing grid. It is required to calculate the earth impedances from the measured ground resistivity and subsequently determine the allowable step and touch voltages of an electrical substation. Our technical know-how and experience then allow us to design the earthing grid to establish the step and touch voltages below the required calculated threshold in an optimal manner. The earthing grid is established through the use of combination of copper bars and earth rods based on the results of our value engineering. ii. HV and EHV substation layout design and insulation coordination; The layout of a substation determines the security of supply and its safe operation to the personnel. The design of a substation may effectively result in complete duplication or loss of supply due to a single fault within the substation. Due to the high implementation costs, a balance has to be achieved between complete security of supply and capital investment. Depending on the customer requirement and budget, a substation layout of different specifications can be designed. Other than the security of supply, the layout of substation is governed by the electrical insulation and arrangement of switchgear components. Rules of spatial separation are applied to establish a safe working arrangement of electrical components at HV and EHV levels. This design consideration is based on the electrical insulation capacities of surrounding air and its pollution indexes. Spatial separation in electrical substation design considers the followings:• Earth clearance -the clearance between live parts and earthed structures;
• Phase clearance -the clearance between live parts of different phases;
• Isolating clearance -the clearance between terminals of isolator and its live connection; and
• Section clearance: the clearance between live parts and terminals of a work section. The terminals of work section may be the ground or earthed platform.
5. INFORMATION ON OUR GROUP (Cont’d) iii. iv. FDrmulas and guidelines are established tD determine minimum sectiDn clearance required in the substatiDn tD define its maintenance zone, wDrk areas and earth clearance. The iSDlatiDn distance established tD separate the wDrk area from its adjacent live parts is integrated in the substatiDn layDut design. Therefore, together with maintenance zDning, the separatiDn, by iSDlating distance and phase clearances, Df the substatiDn cDmpDnents and Df the cDnductDrs intercDnnecting them cDnstitute the main basis Df substatiDn layDuts. The electrical insulatiDn cDDrdinatiDn Df substatiDn switchgear compDnents is the next cDnsideratiDn in designing an electrical substatiDn. The insulatiDn CDDrdinatiDn IDDks intD imprDving the flashover threshDld Df the substatiDn equipment cDmbating pDllutiDn, air humidity, electrical surges, lightning and etc. The technDIDgy used includes the use Df increased creepage length Df insulators, resistance level Df ground, defining discharge capacities Df surge arrestors and defining the base insulatiDn level switchgear cDmpDnents. A properly designed substatiDn layDut and well cDDrdinated insulatiDn cDDrdinatiDn between its equipment will result in the cDnstructiDn Df a HV and EHV substatiDn that is secure, safe and reliable in its DperatiDns. Main conductDrs, clamps and busbar sizing; CDnductors and busbars in an electrical substatiDn prDvide the intercDnnectivity Df substatiDn compDnents tD direct electrical pDwer tD its proper use. It is the next main cDmpDnents Df a substatiDn design. The types Df cDnductDrs include flat surface cDnductDrs, stranded cDnductDrs and tubular cDnductDrs. The materials Df cDnductors used in a HV and EHV substatiDn are usually CDpper Dr aluminum. Steel is nDt preferred due tD its pDDr cDnductivity and high susceptibility tD cDrrDsiDn. The selectiDn Df cDnductDrs and busbars in a substatiDn takes the following intD cDnsideratiDn:• Its capability tD carry the specified cDntinuDus IDad currents and its short time currents;
• Its ability tD withstand forces acted Dn it due tD its functiDn. These fDrces cDmprise Df its weight, weight Df Dther cDnductDrs and equipment, shDrt circuit fDrces, atmDspheric fDrces such as wind and ice IDading, its swings and electrical magnetic fDrces;
• Its shape and design ShDUld be cDrona free at the rated vDltage;
• There shDuld be a minimum number Df jDints; and
• There ShDUld be a minimum number of support insulatDrs.
The technDIDgy and knDw-hDw in the selection Df cDnductDrs are essential in designing a reliable substatiDn. Lightning protection system; Lightning strike is Dne Df the main reaSDns Df substatiDn and equipment failure fDr a HV and EHV substatiDn. A direct strike Df lightning intD a substatiDn causes failure in substatiDn equipment, due tD the extremely high vDltage Df a lightning surge. If the travelling wave Df a lightning surge thrDugh transmissiDn line to a substatiDn is nDt cDntrolied and cDDrdinated thrDugh the transmission line tDwer, earthing and surge prDtectiDn, it will alsD cause detrimental damage tD substatiDn equipment. 91 5. INFORMATION ON OUR GROUP (Cont’d) Effective lightning protection system is required to protect the substation from direct lightning strike. This is achieved through the use of overhead earth wire shield in the outdoor substation or the use of lightning rod on earth mass within the substation. The shielding of outdoors electrical installation through the use of earth wire over the substation installation provides a zone of protection for lightning strike. The zone of protection is calculated based on international standards, for example BS (British Standards) or DIN (Deutsches Institut fOr Normung or the German Institute for Standardization). The earth wire provides a zone of protection for substation equipment by directing lightning strike to the substation earth grid. The earth wire shielding of a substation depends upon the integrity of the earth wire. A broken or damage earth wire will affect its functionality. An alternative to the earth wire is the installation of lightning rod on top of earth mass in a substation to provide lightning protection. The lightning rod creates a spherical zone of protection to the substation switchyard. The installation of a few lightning rods establishes overlapping spherical zone of protection through calculation. This will provide long-term lightning protection to the substation. v. HV apparatus for isolation and switching; and A HV and EHV substation constitute various components and devices for purpose of isolation and switching electricity at various voltage levels. The main components of a substation include circuit breaker, instruments transformer, isolators and power transformers. The circuit breaker is a device that is capable of breaking the HV electrical circuit in a normal oondilion as well as during fault condition to isolate faulty sections of an electrical system. The instrument transformers provide a means of measuring the current and voltage in the network to determine its state of operation and its health. Isolators in a substation provide a means of isolating section of a circuit from live parts for ease of maintenance or creating a work area. The power transformer in a substation transforms the voltage of electricity from one level to the next lower level depending on its purpose. A transformer is necessary to increase voltage before electricity is transmitted over long distances from a generating power plant to a substation via the transmission lines. Electricity is transmitted in high voltages as a higher voltage reduces transmission loss due to lower resistance of the wires. A transformer is also used to decrease voltage before electricity is distributed from the substation to end users. The substation design defines short circuit level, base insulation level, and performance requirement that is required in the selection of components of the substation. The specification of the instrument transformer depends on the sensitivity and the settings of the protection system. The parameter of the power transformer is defined to determine that the allowable short circuit current in the system design is not breached. The losses of the power transformer determine the efficiency of the substation to give customer value in their investment. These inter-related specifications of the substation components, when correctly defined, will add value to the electrical network. Our technical expertise in these fields gives us an edge in providing value engineering to the customer to deliver and construct a substation that is value for money. The know-how also gives us an edge over competitor to reach a 5. INFORMATION ON OUR GROUP (Cont’d) compromise between cost and specification that will serve its purpose as required by the client without sacrificing its reliability and its functionality. vi. Civil structural requirement The construction of electrical HV and EHV substation cannot be done without civil construction. The civil construction requirement will have to be coordinated with the electrical requirement in terms of the loading of the equipment, the movement of the electrical equipment, the short circuit force that the civil structure will have to withstand and the functional and operational requirements of substation control room design due to the electrical equipment arrangement and layout. It is within part of our competency to specify these parameters required to the civil structural designer to ensure proper construction of civil facility to house substation equipment. These areas of inputs are an important aspect of constructing a functioning and reliable facility to ensure the electrical equipment is installed correctly to perform its function. A wrongly constructed foundation or switchgear room will adversely affect the service life of the installed equipment. Circuit breakers are designed to detect fault conditions and interrupt the electrical flow. When a fault is detected, contacts within the circuit breaker will open to interrupt the electrical current using mechanically stored energy such as springs or compressed air. Once the current is interrupted, an arc is generated, which needs to be insulated and extinguished so that the contacts are able to withstand the voltage. There are several types of circuit breakers, classified by the method by which it extinguishes the arc to disconnect the circuit:• Oil circuit breakers -vaporises oil to send a jet of 0.i1 through the arc;
• Gas circuit breakers -stretches the arc and uses sulphur dioxide to extinguish it;
• Vacuum circuit breakers -stretches small arcs to extinguish it; and
• Air circuit breakers -uses compressed air to extinguish the arc.
(b) Control and protection systems Control and protection systems are necessary to monitor the entire transmission and distribution grid together with the linked substations. In addition, as substations present a potentially hazardous working environment, remote control and protection systems are necessary to effectively and safely monitor the operations of various electrical equipment. The remote monitoring enables the system to react to electricity overloads or faults by isolating the affected area through the control and protection system. Control systems are put in place to manage and regulate the flow of incoming and outgoing electricity. Protection systems, through protective relays, are able to trip circuit breakers in the event of a fault such as over-current and over-voltage. Relays form an integral part of control and protection systems in substations. (i) Relay A relay, in simple terms, is a device that continuously monitors the health of an electrical circuit and activates its electromechanical switch to operate a 5. INFORMATION ON OUR GROUP (Cont’d) circuit breaker in the event of fault. This is achieved through the input of current and voltage information of a circuit to the relays. The role of protection relays is to protect the substation components from being damaged by electrical fault. Protecting the power transformers, power cables, isolators and personnel safety are the main functions of relays. A relay only operates during a fault in its own protected zone, and will only operate in the event of fault. There are many types of protection relays suitable for many kinds of application in the power system. The competency in choosing the correct protection system for a specific purpose will ensure reliability of supply. The protection system must also be discriminative and secure. A wrong application and setting of protection system will have catastrophic effect to the power system as well as damaging the equipment in the substation. We specialised in the design of protection system for application in various parts of the substation for various purposes. Each of the application ensures duplicate protection of main and backup function is available to give customer protection in their investment in their power system. (ii) SCADA system The control and monitoring system of a substation is going towards automation and remote control due to the advancement of communication medium and technology in secure communication. Our engineers have been involved in providing SCADA facility in our delivery of substation to utilities since 2002. The current SCADA capability includes the delivery of substation control system at the substation level to control and monitor the functionality and health of substation components through a server in the substation control room. The human machine interface in the control room provides interfacing to the substation apparatus remotely through software with control functionality directly available on the computer screen. The software is programmed with substation wide operation interlocking and synchronising function to avoid wrong operation sequence arising from human errors and also provide password access control to prevent unauthorised operation. Other than at the substation level, our Products also provide a gateway communication interface to a remote control center of utility. At the control center, utility will be able to have a global view of its entire operational and connected substations in their network. The control center will then have control over the network power flow, loss reduction, fault identification and isolation. Through the control center, utility also can operate the circuit breaker and isolator remotely even when the substation is unmanned. SCADA facility when implemented, provides utility with online information of the status of its network. This will improve its reliability and customer satisfaction tremendously as fault identification and isolation can be performed automatically and swiftly. (c) Communication and tele-control In electrical transmission and distribution, information is transmitted in binary fomn through communication system either through the power line or through fibre optic cables incorporated in the transmission line ground wire. Data, protection signal and voice is transmitted within the network to facilitate .SCADA and tele-control functionality. 5. INFORMATION ON OUR GROUP (Cont’d) Communication system for electric substation is part of our core competency to provide a complete service to our customer as technology partner in the construction of electric substation in the transmission and distribution level. Either through power line carrier communication or through fibre synchronous digital hierarchy communication, a multiplexer is provided in the substation to multiplex data and information into a time-modulated signal to be transmitted across the utility substation network. At each substation the specific relevant data is then de-multiplex to its terminal through programming of its time frame. The communication panel produced by our Group provides secure and reliable communication required in substation environment as the communication channel also serves as a medium that transmits protection relay communication between inter-connected substations in their determination of the operating condition of the transmission line. Tripping information is also sent to remote substation through the communication multiplexer. The high electromagnetic compatibility and electromagnetic interference in the substation produced by the HV and EHV electrical system requires communication equipment used in substation to be properly shielded. The design of communication system for substations employ N + 1 redundancy in its power suppiies, control modules and channels of communication to ensure secure and reliable communication of up to 99.99% availability. N + 1 redundancy is a form of resilience that ensures system availability in the event of component failure where components (i.e. N) have at least one independent backup component. (d) CAD tools and customised design tools CAD is the use of computer technology in the design process. We utilise CAD tools as well as simulators to aid the design of our Products and Projects. Some of the software we utilise and their primary functions are described as follows:(i) CAD Tools
• Autocad LT: aids in 2-dimesional (2D) drawing for substation primary and secondary design, and electrical circuitry design;
• Autocad Electrical: aids in electrical circuitry design automation, wiring diagram self-generation, cable schedule self generation; and
• Solid Work: aids in 3-dimensional (3D) drawing and 3D modelling for product development.
(ii) Earthing Design Simulator
• Auto Grid: utilised for soil modelling, substation earthing design calculation and result simulation (iii) Customised Design Aided Tool • Busbar Sizing Tool: calculates the continuous current carrying capacity, conductor stress, thermal short time rating and deflection of busbar in accordance to International Electrotechnical Commission (IEC) standards;
• Mechanical Forces Calculation Tool: analyzes the mechanical effect for a flexible conductor during normal and short circuit condition in accordance to IEC standards;
5. INFORMATION ON OUR GROUP (Cont’d) • Lightning Protection Calculation Tool: determines the substation lightning protection design in accordance to the Institute of Electrical and Electronics Engineers (IEEE) standards; and
• Substation Earthing Calculation Tool: determines the substation earthing design in accordance to IEEE standards.
5.7.9 Marketing and distribution Our Sales & Marketing team is led by our GM, Lim Hon Seng, who has 28 years of experience in the power systems engineering field. As at the LPD, we have 11 members in the Sales & Marketing team, managing our various clients and seeking new business opportunities. For the past three (3) FYE 31 December 2009,2010 and 2011, our sales and marketing expenditure was recorded at RMO.90 million, RM1.25 million and RM1.63 million respectively. We utilise various sales channels to procure projects as well as to promote greater awareness for our Products and services. The diagram below depicts the different avenues we use to generate sales:
Overseas SalesTechnicalRequest for Office &Exhibitions Present,ation &Tender Bidding Referrals Proposals RepresentativeTraining Partner (a) Tender bidding We tender for projects from private organisations and Government bodies by submitting our tender applications to the relevant parties. Tender notices for projects are published in newspapers. We also receive tender invitations directly from companies to tender for projects. Once we determine we have the required track record, experience and resources to deliver the specifications, parameters and requirements of the project, we will submit our tender application and quote to the relevant party. There are typically two (2) stages in a tender evaluation process. The first stage is the technical evaluation stage, where the candidates are evaluated based on track record, financial strength, experience and resources. Once the competent candidates have been selected, they will move on to the second stage, which is the commercial stage. In this stage, the candidates, who have all been deemed qualified for the job, will compete based on pricing strategies. (b) Referrals We secure new business opportunities through referrals from companies we have worked with. We obtain referrals for new projects from past and present clientele, external consultants and other business associates due to our good track records and high quality service. 5. INFORMATION ON OUR GROUP (Cont’d) (c) Request for proposals
Through our references in the industry, we also generate sales from proposals we have been invited to submit. These requests for proposals are normally associated with projects that have special requirements, such as fast track projects, projects that require special skills and projects with unconventional designs.
We engage in active targeted marketing activities such as participation in international exhibitions. In 2008, we took part in the Conference of the Electric Power Supply Industry (CEPSI) in Macau organised by Companhia de Electricidade de Macau (CEM). In the exhibition, we showcased our Products such as our isolator, NER, SIMS, RTU and telecommunication and teleprotection equipment. In 2011, we participated in the SME Innovation Showcase in Kuala Lumpur organised by MITI and SME Corp. Date Name Organiser Location 27-31 October 2008 Conference of the Electric Power Supply Industry (CEPSI) Companhia de Electricidade de Macau (CEM) Macau 20-23 July 2010 ASEAN Elenex Malaysian Exhibition Services Sdn Bhd Kuala Lumpur 7-9 June 2011 SME Innovation Showcase MITI and SME Corp Kuala Lumpur
We also obtain sales opportunities through our clients who may have visited our website or read about us in newspaper articles. We have also in the past listed our subsidiary company, PSB, in trade directories of MITI and Matrade. (e) Technical presentation and training We regularly give technical presentations and training sessions to our customers in our effort to keep them up-to-date with the types of technology we can offer, as well as to promote the services that are available in the industry. Training for the operations and maintenance of our Products is periodically conducted for our clients in order to maintain our client’s competency in operating our equipment. This creates familiarity and wide acceptance of our Products. (f) Overseas sales offices and representative partner Our offices in the region, i.e. Cambodia, Sri Lanka and Brunei not only serve as project offices but also function as our local marketing and sales offices to manage our foreign clients and market our range of Products and services. Our overseas offices helped us access these markets, enabling us to obtain new business opportunities to continue our presence in these countries. By establishing overseas offices, our sales officers are then able to familiarise ourselves with the local market and build networks within the local industry. This emphasises our continued commitment to expand our presence overseas to position ourselves as an international player. As at the LPD, we have established offices I subsidiary companies in Brunei, Sri Lanka and Cambodia. 97 5. INFORMATION ON OUR GROUP (Conl’d) Presently, we are also exploring opportunities in Laos and Vietnam. We have established industry contacts to seek new business ventures on our behalf and may appoint formal agents in these countries respectively. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK [COiiany No. 948035-U II 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.10 Approvals, major licences and permits obtained Details of major business licenses, permits and approvals appiicable to our Group as at the LPD are as follows:Company Approving I Issuing Authoritv Type of approvals I licences I permits Date of Issuance I Validitv . d th . dlt’ I dl Status ofEqultyan 0 er major con IOns mpose comoliance PSB Majlls Bandaraya Shah Business Licence (Licence 03.11.2011 I No equity or other major conditions imposed. N/A Alam NO.OU501012009002 31.12.2012 (LS)) Felda Holdings Berhad Vendor registration N/A I 31.08.2013 1. This certificate is issued based on the INoted (“Felda”) account PSB has information submitted by PSB. registered with Felda and is eligible to participate in 2. Therefore any changes in the information IComplied bidsl tenders in companies submitted by PSB in connection with this belonging to the Felda certificate must be conveyed to the group. (Licence No. NB Bahagian Perolehan, Felda. 01 Og0900928-01 ) 3. This certificate may be revoked if PSB is INoted PSB is registered in the found to have committed a price collusion following field codes: with other companies when submitting a 0101 -General tender. Engineering 0102-Mechanical Engineering 0103-Electrical engineering 0301-Stationery and others 0302-0ffice, residentiai and exhibition kits 0311-Factoryl workshop equipments
gg II Company No. 948035-U II 5. INFORMATION ON OUR GROUP (Cont’dl Company Approving I Issuing Authoritv Type of approvals I licences I permits Date of Issuance I Validitv Equity and other major condillons imposed Status of compliance MOF Contractor Registration 18.08.2009 I 1. Online changes are to be made where Complied Account (Licence No. 357 23.10.2012 there are any changes to the infonmalion 01005432) submitted by the company in respect of the registration with MOF within 10 days PSB is now registered with the MOF in the following from the date infonnation. of such changes to the categories: 2. PSB must ensure that the area of work I Complied 020101-Fumiture registered in the certificate does not 020300-Electrical items contradict with any approved area of work of any company having the same 040100-Communication shareholders or directors as PSB. equipment 200100· Motor and alatubah (including tools) 3. MOF reserves the right to cancel II Noted suspend the registration of the Company with MoF without giving any nolice, if it is 200199-Manufacturer found that any false infonmation was (manufacturer for submitted by the Company. control protection panel (COPS), Remote tenminal 4. The Company is not allowed to make any I Complied units (PROCOM), changes to the ownership and Neutral Earthing Directorship for six (6) months from the Resistor (POST date of registration. GLOVER) 200200-Electric generator 5. The certificate could be cancelled if the I Noted station and contractor fails to proceed with contracts generator made with the Government of Malaysia equipment I or the contractor is found to have spare part engaged in price collusions with other 200300-Cable, companies prior to submitting for accessories and government tenders conductor 210101· Personal computer and related peripheral services
100 II Company No. 948035-U II 5. INFORMATION ON OUR GROUP (Cont’d) Company Approving 1Issuing Authoritv Type of approvals 1 licences 1 cermits Date of Issuance 1 Validitv Equity and other major conditions imposed Status of compliance 210103-Workstations and related peripheral services 210104-Software product and services 210105-Other computer related services 210106-Networking products and services PKK must be informed of any changes to the Pusat Khidmat Registration with PKK N/A 112.08.2013 Complied Kontraktor (“PKK”) (Reference No. 0102 A 2001E222) information submitted by the company in respect of the registration with PKK within 21 days from the date of such changes to the information. PKK reserves the right to cancel or suspend the registration of PSB as contractor with PKK without giving any notice, if it is found that any false information was submitted by PSB, or where there is any failure by PSB to provide the required information. No equity or other major conditions imposed. Sabah Electricity Board Registration as supply and 06.10.2009 1 N/A (Licence No. services contractor 23.10.2012 SESB/P/BBV/002/1679) No equity or other major conditions imposed. Ener9Y Commission Form.Q -Certificate of N/A 103.04.2013 N/A (Licence No. (TKL) KE registration as electrical 220578T/2011) contractor under class A No equity or other major conditions imposed. Energy Commission Form U -Certificate of N/A 1 14.03.2013 N/A (Licence No. (TKL) PPS registration as a 220578T/2011) manufacturer of switch board
101 II Company No. 948035·U II 5. INFORMATION ON OUR GROUP (Cont’d) Company Approving I Issuing Authoritv Type of approvals I licences loermils Date of Issuance I Validitv Equity and other major conditions imposed Status of comoliance Tenaga Nasional Certificate of registration N/A 123.10.2012 The vaiidity period of this registration is Complied Berhad as service provider and sUbject to the validity of other registrations contractor with the MOF, Pusat Khidmat Kontraktor Awam, Pusat Khidmat Kontraktor Elektrik and other professional certificates. MIDA Manufacturing license no. 01.06.2011 I N/A 1. PSB is required to notify MITI and MIDA Complied A 018143 bearing serial of any disposal of shares in PSB. no. A 30828 2. PSB is also required to obtain a no Complied objection letterl consent ietter from the department of environment and the relevant Selangor government. Construction and Certificate of registration 10.11.20091 The Contractor is not allowed to undertake to Complied Industry Development no. 0120001212 -JG 27.12.2012 participate in any construction project which Board (“CIDB”) 061358 exceeds the applicable value set out under its registration grade and shall not be involved in any construction project which is outside its scope of category registered. TPJY Ministry of Commerce, Letter of Approvai No. 16.02.2010 I N/A None N/A Cambodia 0829 PN. ChBP for the Incorporation oITPJV Ministry of Commerce, Commercial Registration 16.02.2010 I None N/A Cambodia Certificate No. 0829 05.02.2013 Ministry of Commerce, Articies of Incorporation 12.09.2011/N/A None N/A Cambodia Generai Department of Letter from the Ministry of 03.03.2010 I N/A None N/A Tax Economy and Finance, Cambodia for Tax Registration No. 060975 GDT. LTD General Department of Value-Added Tax 19.03.2010 I N/A None N/A Tax Certificate No. 380 Nationai Social Enterprise Registration 20.07.2010 I N/A None N/A Security Fund Certificate 05/10 BSSBP
102 ::J ,;, M 0 co.,. ‘” 0 z c: ‘” E 0 0 ~ z « …. m I-u.. W …. >…. …. « z 0 i= z W I~ z w (“) 0w m ~ en « J: w « ” a. !!l J: I-
u.. 0 I-en w”t>… 0:: l: W0 J:U I-a. ::l 0 0:: .91 .0 ” 0:: ‘” u::l ‘” 0 ~ z 0 ~ Z 0 , i= 2 « ,g ~ :;; ‘” 0:: 0 u.. Z .,; [I Company No. 948035-U II 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.11 Patents, trademarks and registrations Save for the trademarks and patent registration for our logo and Products disclosed below, we do not hold any other patents, trademarks or registrations. Trademarks Trademark Applicant
Registration number I Place of application Status of trademarkNo. Aoolication number PSB 04008403 Malaysia Registered under Class g*1. COil) ® • 2.I PSB 07008014 Malaysia Registered under Class 9* I ~PESTEC:H’ sen BI-lO Effecti…e.Efficienl.Excellenl 3. I PSB 04008402 1-Malaysia ~stered under Class 9*II .. 4. I I PSB I 2010021210 I Malaysia I Registered under Class 9*
II Company No. 948035-U II 5. INFORMATION ON OUR GROUP (Cont’d) No. 5. 6. 7. 8. Trademark i)-)\VitCH™ ~e~A~C:HTM Effecllve.Efficienl.Excellenl ~iC)TM Applicant PSB PSB PESTECH PSB Registration num ber I AODlication number 06011713 2010004127 2011021961 2012005552 Place of application Malaysia Malaysia Malaysia Malaysia Status of trademark Application of trademark is currently pending approval Application of trademark is pending approval Application of trademark is pending approval Application of trademark is pending approval
Note:Under the Malaysian Trademark Classes, Class 9 includes scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signaling, checking (supervision), lifesaving and teaching apparatus and instruments; apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission or reproduction of sound or images; magnetic data carries, recording discs; automatic vending machines and mechanisms for coin operated apparatus; cash registers, calculating machines, data processing equipment and computers; fire-extinguishing apparatus. 105 II Company No. 948035-U II 5. INFORMATION ON OUR GROUP (Cont’d) Patent No. Patent Applicant Application number Place of application Status of patent 1. Isolator for high current carrying capacity PSB UI20064111 Malaysia The patent application has complied with the requirements of the Patents Act 1983 and Patents Regulations 1986. PSB is in the process of oblaining the Notice of Grant.
5.7.12 5.7.13 Contracts/arrangements on which our Group is highly dependent As at the LPD. our Group has not entered into any contracts/arrangements for which our Group is highly dependent upon. Interruptions in business Our Group has not experienced any material interruption to the business of our Group in the past 12 months preceding the LPD. I THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK I
II Company No. 948035-U II 5. INFORMATION ON OUR GROUP (Cont’d) 5.7.14 Major customers The major customers that contributed 10% or more to our Group’s revenue for the past three (3) FYE 31 December 2009 to 2011 are listed below:Name Country of origin Product sold I Service rendered Length of relationship as at the LPD (years) 2009 RM’OOO Contribution to total GrOUD revenue FYE 31 December 2010 % RM’OOO % 2011 RM’OOO % BMC Brunei Project 4 13,677 15.8 – – – – TNB Malaysia Project 11 30,967 35.8 41,449 36.0 20,979 16.0 Cambodian Transmission Ltd Cambodia Project 2 – – 31,481 27.4 75,521 57.6 Ceylon Electricity Board Sri Lanka Project 2 – – 4,875 4.2 18,199 13,9 Central Ashanti Gold Ltd Ghana Project 2 – – 15,090 13.1 2,599 2,0 PPL PNG Project 4 17,915 20.7 3,819 3,3 – –
For the past three (3) FYE 31 December 2009 to 2011, TNS has been one of our major customers contributing approximately 35.8%, 36.0% and 16,0% of our total revenue recorded for the respective financial years. This is a testament to the quality and reliability of our products and services, In view that the local market is expected to remain as one of the major contributors to our Group’s revenues, PESTECH will continue to bid for local contracts and consequently, TNS will continue to be one of our major customers as TNS is the largest electricity utility company in Malaysia. As such, our Group is to a certain extent reliant on TNB as a major customer and for our domestic market. As mentioned under Section 5,1,1 of this Prospectus, our Group began to venture inlo the foreign markets in ,2007. Subsequently, our JV with SLCC was awarded a Project by the SMC. In turn, the project has recorded approximately RM13.7 million, representing approximately 15.8% of our total revenue recorded for the FYE 31 December 2009. In addition, our JV with Dayen was also awarded a Project by PPL in PNG which has recorded approximately RM17.9 million and RM3.9 million for the FYE 31 December 2009 and 2010 respectively. Since then, foreign projects have been the major contributors to our total revenue. For the FYE 31 December 2010 and 2011, our Projects in Cambodia recorded approximateiy RM31.5 million and RM75,5 million respectively whilst our Projects in Ghana recorded approximately RM15.1 million and RM2.6 million respectively. In addition, our Sri Lanka Project contributed approximately RM4.9 million and RM18.2 million for the 107 II Company No. 948035-U II 5. INFORMATION ON OUR GROUP (Cont’d) FYE 31 December 2010 and 2011 respectively. In the future, our Group expects that foreign projects will continue to be a major contributor to our total revenue. This is also in line with our Group’s future plans as stated in Section 5.8.1 of this Prospectus to expand our presence in the internationai markets and our aim to become a major integrated electric power technology company. 5.7.15 Major suppliers The major suppliers that contributed 10% or more to our Group’s purchases for the past three (3) FYE 31 December 2009 to 2011 are listed below:
5. INFORMATION ON OUR GROUP (Cont’d) 5.8 FUTURE PLANS, STRATEGIES AND PROSPECTS 5.8.1 Future plans and strategies In order to maintain and enhance our competitive edge, our Group intends to deploy the following strategies as part of our future plans for the next three (3) years:(i} Expand overseas presence We have, to date, implemented Projects in or supplied Products to Malaysia, Cambodia, Sri Lanka, PNG, Ghana, Brunei and Tanzania, and we plan to increase our operations in these countries as well as penetrate other markets in the region. We have also established offices I subsidiary companies in Brunei, Sri Lanka and Cambodia. We aim to expand our presence to other developing countries where there is a demand for the development. improvement and build up of electricity transmission and distribution assets. As an efficient and reliable electrical transmission and distribution system is a key necessity for modern society, this creates ample opportunities for us to extend our reach and introduce our expertise to developing countries in other regions, namely South East Asia, Africa and South America. For our existing overseas markets, we aim to become a main player in the provision of Project works for electrical transmission and distribution networks. We also plan to expand our range of services to include contracts for power station Balance-of-Plant in the near future. In terms of expanding our presence to new markets, we plan to enter Laos, Myanmar and Vietnam as these countries currently have increasing electricity demand, fuelling the need for new infrastructure for electricity generation, transmission and distribution. In particular, hydro power stations are being buill in Laos to supply electricity to Cambodia, Vietnam and China. Our Cambodia office will serve as a platform to venture into these markets. We believe we can leverage on factors such as familiarity with the business practices and similarity in culture in addition to our competitive strengths to compete successfully in these countries. (ii} Expansion of our Product base As we grow and progress, we will continue to expand our Product base and range of services in the local and overseas markets. We believe the introduction of new products and services will facilitate our efforts in becoming a main player in the markets we compete in. We believe our Product base can serve as a main area of business in the future. With the receipt of listing proceeds of RM1.400 million earmarked for product development, we will intensify the marketing and promotional activities for our Products in Malaysia and the region as well as conducting the necessary engineering and development efforts to enhance our Products in meeting customers’ needs and requirements. We expect to be able to leverage on our Group’s present technical collaboration and partnerships with some of the established multinational companies in the industry such as ABB AB Sweden, ABB Malaysia and Siemens Malaysia as well as any future and potential technological partnership with other major companies to grow our Product base. We believe that the technology know how and knowledge shared to us by our partners will help to expand and enhance our Product base with the introduction of new products in the engineering, design, manufacturing, installation and commissioning of electrical power transmission and distribution facility. 5. INFORMATION ON OUR GROUP (Cont’d) Apart from the collaboration and partnership with established MNC, collaboration between ·our Group and education institutions could also assist us in the engineering and development process of creating new products for our Group as well as attracting potential talents. In this regard, we have proposed and Universiti Malaya has accepted to co-operate with us to develop certain products, which is pending the execution of a formal agreement. We also intend to continue participating in local and international exhibitions or trade shows related to the industry to introduce our products and increase our Group’s profile and name in the industry. In addition, we plan to be selective in our selection of local contracting works directly for special projects and projects which are strategic in nature, i.e. high value Projects which generate higher returns or milestone Projects which would enable us to boost our track record and enhance our profile/expertise. (iii) Expand range of services to system design, engineering and infrastructure services of power generation plants The field of power systems engineering encom passes electric power generation, transmission and distribution. Though we currently have knowledge and experience in transmission and distribution systems, we have not been involved in the power generation segment of the industry. It is therefore of strategic importance to extend our know-how into the area of power generation to provide system design for the installation of power station Balance-of-Plant services. Hence, we intend to expand our range of services to include system design, engineering and infrastructure works of power generation plants, specifically for biomass and solar photovoltaic power systems under the renewable energy sector. The renewable energy sector is an up and coming market, an important area that we cannot ignore as it is an alternative energy source to reduce the industry’s dependency on fossil fuel. With the familiarity and knowledge in the electrical utility network, we are armed with the advantage of being efficient i.e. optimising the system design in the connectivity of renewable energy sources to the utility grid. We are particularly interested in the fields of biomass power plant design and solar photovoltaic system design. A conceptual design of the structural and mechanical sections of a biomass power plant using empty fruit bunches of palm oil and rice husks shall be established in order to extend our business to providing construction services of biomass power plants. A solar photovoltaic system design shall be established to connect photovoltaic installation to the utility grid. 5,8.2 Prospects Our Board is of the view that our Group will enjoy positive and promising growth and favourable prospects in the long-term premised on the following:(i) Our competitive strengths are as follows:(a) Experienced and dedicated management personnel;
(b) Strong technical expertise;
(c) Comprehensive range of services, including in-house engineering and development;
(d) High standards of Quality, Occupational Health and Safety Management System;
(e) Established track record and reputation;
5. INFORMATION ON OUR GROUP (Cant’d) (f) Established product branding; and
(g) Technology partnerships.
Further details of our competitive strengths are set out in Section 5.1.2 of this Prospectus. (ii) Our Group’s future plans and strategies as set out in Section 5.8.1 of this Prospectus. (iii) The promising prospects of system design, engineering, and infrastructure in the power transmission and distribution industry as mentioned in Section 6 of this Prospectus. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK