Business Overview

BUSINESS OVERVIEW
BUSINESS BACKGROUND

4.1.1 History and development (a) Consolidation of public stage bus services in Ipoh and its surrounding areas under The Combined Bus The history of our Group can be traced to the year 2006 when our Managing Director, Dato’ Sri Cheong Kong Fitt founded The Combined Bus, which was incorporated under the Act as a private limited company on 2 August 2006. At the time of incorporation of The Combined Bus, its shareholders were CKS Khidmat Sdn Bhd and four (4) individual shareholders, each holding one (I) share of RM 1.00. On 22 August 2006, CKS Maju, General Omnibus, Ipoh OmnibUS, Kinta Omnibus and Reliance Omnibus became shareholders of The Combined Bus via new allotment of shares. Over the years, CKS Maju, General Omnibus, Ipoh Omnibus, Kinta Omnibus and Reliance Omnibus increased their ownership in The Combined Bus. KindlyrefertoSection4.1.I(b)for furtherdetails ofthe shareholdingstructure ofThe Combined Bus. In 2009, the Consortium Arrangement was initiated to consolidate the public bus services of General Omnibus, Ipoh Omnibus and Kinta Omnibus. Prior to the Consortium Arrangement, public bus services in Ipoh and its surrounding areas was operated by General Omnibus, Ipoh Omnibus, Kinta Omnibus and Reliance Omnibus individually, while The Combined Bus was not providing public bus services. The Consortium Arrangement is a collective arrangement comprising General Omnibus, Ipoh Omnibus and Kinta Omnibus with The Combined Bus acting as the manager to the consolidated bus operations. The above operations of public stage bus services, before and after the Consortium Arrangement was based out of Stesen Bas, Jalan Kidd in Ipoh, which is not owned or operated by our Group. Each company remains a separate entity as the nature of the Consortium Arrangement is contractual amongst the members, effected via letters issued by General Omnibus, Ipoh Omnibus and Kinta Omnibus to The Combined Bus on 22 September 2010. With this, the Consortium Arrangement was formalised although the operations of the consolidated public bus services had commenced in 2009 as the relevant documents were being prepared and finalised during this time. Kindly refer to Section 4.3.2.2 (b) of this Prospectus for further details of the Consortium Arrangement. The creation of the Consortium Arrangement was aimed at upgrading the standard of public bus services in lpoh and its surrounding areas where greater economies of scale could be achieved through the centralised management of bus services operations, the pooling of bus drivers and operational resources, as well as reduction of competition and duplication of bus routes. Further, the creation of the Consortium Arrangement allowed for the creation of a single name brand which could be easily recognized and identified by the public to inculcate public confidence. The consolidated public bus services operations under The Combined Bus commenced the same year.

Following the creation of the Consortium Arrangement, the LPKP issued a letter dated 28 January 2011 noting the collective efforts ofthe Consortium Arrangement to enhance public transportation services in Ipoh. With the coming into force of the Land Public Transport Act 2010, SPAD took over the functions of, amongst others, the LPKP in Peninsular Malaysia. In 2012, CKS Bumi joined the Consortium Arrangement. On 28 May 2012, SPAD noted the inclusion of CKS Bumi into the Consortium Arrangement. (b) Growth and expansion of our business In 2007, The Combined Bus entered into a service provider agreement with Petron Fuel for the management of an ADO incentive programme, for the provision of product orders, payment collection management as well as other services on behalf of Petron Fuel to the ADO Buyers. Our Company, was incorporated on 5 September 2008 as a private limited company, to explore and develop opportunities in the public bus transportation business, including the development of bus terminals, public bus services operations and other transportation related businesses such as petrol stations. In 2009, The Combined Bus commenced the consolidated operations of public stage bus services in Ipoh via the Consortium Arrangement. Kindly refer to Section 4.3.2.2 (b) for further details ofthe Consortium Arrangement. In the same year, The Combined Bus submitted an application to the Ipoh City Council to seek for planning approvals to construct an express bus terminal in Meru Raya, Ipoh. The Combined Bus received approval on 27 January 2010 and commenced construction of an integrated public transportation terminal, now known as Terminal AmanJaya. Dato’ Sri Cheong Kong Fitt had, at the time, envisaged the potential commercial benefits of an express bus terminal in Ipoh, including capturing on A&P opportunities through the availability of A&P space at the terminal. Our Company was converted to a public company on 26 March 20 I0, assuming our current name. We completed the acquisitions of IpohLink on 7 June 2010 and Syarikat Sumber Manusia on 15 June 20I0 to provide management services for our public bus services operations and to provide human resource management respectively, in anticipation of our Company’s acquisition of The Combined Bus. On 22 December 2010, we acquired The Combined Bus. Our Company acquired 99.62% equity interest held by CKS Maju, General Omnibus, Ipoh Omnibus and Kinta Omnibus, collectively, in The Combined Bus for a total consideration of RMI8.77 million, with the remaining 0.38% equity interest in The Combined Bus being held, at that time, by Reliance Omnibus and another individual shareholder. The consideration was settled via the issuance ofnew ordinary shares in CBS Link.

The shareholdings in The Combined Bus immediately prior to its acquisition by our Company and upon acquisition by our Company are as follows: Shareholdings as at 21 December 2010 (prior to heing acquired hy our Company) 1  <“,;:”,,)C))))))c)8))) Kok Yu Mooi@Kok Yee Mooi  Tslmre!!E 42  2  Reliance Omnibus  56,249  3  CKS Maju  8,193,709  4  Kinta Omnibus  2,250,000  5  Iuoh Omnibus  2,250,000  6  General Omnibus  2,250,000  Total  15,000,000

 

cbb «,<)<l’_< -• 0.38 54.62 15.00 15.00 15.00 100.00 Note: * minimal percentage Shareholdings as at 22 December 2010 (acquisition hy our Company) Kok Yu Mooi  Kok Yee Mooi   •  2  Reliance Omnibus  56,249  0.38  3  Perak Transit  14,943,709  99.62  Total  15,000,000  100.00
Note: *minimal percentage
The Combined Bus underwent further changes to its shareholding structure subsequent to 22 December 2010, with its present shareholding structure as detailed in Section 4.2.8 (iii) of this Prospectus. In 2011, The Combined Bus signed a Supply and License Agreement with Boustead Petroleum Marketing Sdn Bhd to operate a BHP petrol station at Terminal AmanJaya. The year 2012 waS a landmark year for us as we achieved several milestones. We acquired CKS Bmni which owned 50 stage bus permits and 50 express bus permits at that time. The Combined Bus qualified for the SPAD’s ISBSF, a fund established by the Government of Malaysia to improve the quality of bus services. We also received approval for Approved Service Project Status for The Combined Bus in 2012 from MoF. Further, The Combined Bus has received approval-in-principle from the Public Private Partnership Unit of the Prime Minister’s Department, a government grant for infrastructure cost of the Terminal AmanJaya in 2012. Most notably, we completed the construction of Terminal AmanJaya and commenced operations on 25 September 2012, which included operations of our BHP petrol station located within the terminal compound. The Ipoh City Council declared Terminal AmanJaya as a station for buses and taxi with effect from 31 July 2012. In 2012, we expanded our Group’s services to include petrol station operations with the acquisitions of CKS Labur and Star Kensington. CKS Labur had, in 2010, signed a Retailer Supply Agreement with Shell Malaysia for the operations of a Shell petrol station at Lahat which commenced operations in the same year. Earlier in 2012, Star Kensington had signed a Retailer Supply Agreement with Shell Malaysia for the operations of a Shell petrol station located in Tanjung Rambutan, Ipoh, which had commenced operations under a different fuel brand before the acquisition.

In 2014, Terminal AmanJaya’s status as the only gazetted express bus tenninal in Ipoh, Perak was formally noted by SPAD via the SPAD Circular. The SPAD Circular was released as part of SPAD’s goal of transforming land transportation and further improving the delivery of public transportation services to the public. Under the guidelines of the SPAD Circular, SPAD has determined that all express bus services operating in Ipoh are mandated to pick up and drop off passengers in Terminal AmanJaya, except in circumstances approved by SPAD. The release of this SPAD Circular is to centralise express bus operations in Terminal AmanJaya, and provide improved public transportation services to passengers in the form of comfort, safety, access to improved travel information and notification, as well as enhanced public transportation network. On 18 August 2014, we completed the acquisition of Terminal Urus to provide bus terminal management services. In 2015, CKS Bumi signed a Retail Trading Agreement with Petron Malaysia for the operations of a Petron petrol station located at Lubok Merbau, Kuala Kangsar. We commenced operations of this petrol station in August 20 15. Furtherin 2015,we receivedaLetter ofIntentfrom SPAD onthe appointment ofThe Combined Bus as bus network operator for Ipoh under the SBST Progrannne for a period of eight (8) years. In January 2016, we entered into a conditional sale and purchase agreement for the purchase of two (2) parcels of land measuring approximately 3.72 acres which are situated in Mukim of Kampar, Daerab Kampar, Perak. Further details of this agreement is set out in Section 13.4 of this Prospectus. Subsequently, in February 2016, The Combined Bus had also entered into a conditional agreement with SPAD appointing The Combined Bus as bus network operator for Ipoh under the SBST Progrannne,followingtheissuance oftheLetter ofIntentfromSPAD. TheGrouphas commenced the bus operations of six (6) routes under SBS T Programme since I June 2016. Kindly refer to Section 4.4 (v) (e) of this Prospectus for further details of this agreement with SPAD. Awards. certifications and recognitions In recognition of our corporate achievements, we received the SME Social Responsibility Excellence Award by the SMI Association of Malaysia in 20 II. In 2012, we received the Asia Success Award “Super Services Quality” from Asia Success Incorporated for being the Best Service Public Transportation and Bus Terminal in Perak. In 2013, we were awarded with the Leadership Excellence in Public Transportation Management award by The Malaysia Institute of Management. In 2014, we were awarded with the Sin Chew Business Excellence Award by Sin Chew Media Corporation Berhad. In 20 15, we were awarded with the Outstanding Private Sector Stage Bus -Truck of the Year 2015 by New Straits Times and Petronas Urania. In addition, we received 6th Position Winner of the Top 10 Excellent Eagle -Golden Eagle Award 2015 organised by Nanyang Siang Pau and 3’d Position Winner of the Best Tenninal Award -SPAD Land Public Transport Symposium 2015 by SPAD. These awards serve as a recognition of our Group’s achievement in the sector that we operate in, and demonstrate our commitment in providing public transportation services particularly to the residents oflpoh.

4.1.2 2006  2008  2009  2010  2011  2012  2014
Key milestones and achievements Im~~,~n!!I!l!’fl~~ 11::Ilt·:It’:1’Jiara~Jr~~ ~ l~S IIS:is·i,~rt r’ttm~ii:: HiiiIllll1f~li o Incorporation ofThe Combined Bus. • Incorporation of our Company. o The Combined Bus initiated the Consortium Arrangement with General Omnibus, Ipoh Omnibus and Kinta Omnibus, and consolidated the bus services operations of General Omnibus, Ipoh Omnibus and Kinta Omnibus under The Combined Bus.
o The Combined Bus submitted an application to the Ipoh City Council to seek for planning approvals to construct an express bus terminal in Meru Raya, Ipoh.
o The Combined Bus received approval for the abovementioned application and commenced construction of integrated public transportation terminal.

• Consortium Arrangement was formalised between The Combined Bus, General Omnibus, Ipoh Omnibus and Kinta Omnibus. o Completed the acquisitions of IpohLink and Syarikat Sumber Manusia to provide management services for our public bus services operations and to provide human resource management, respectively.
o Acquired The Combined Bus.
o The Consortium Arrangement was noted by LPKP.
o Signed a Supply and License Agreement with Boustead Petroleum Marketing Sdn Bhd to operate a EHP petrol station at Terminal AmanJaya.
o Terminal AmanJaya was gazetted by the Mayor of Ipoh City as the station for public service vehicles (bus and taxi services) with effect from 31 July 2012.
o Acquired CKS Bumi which held 50 stage bus permits and 50 express bus permits and CKS Bumi was noted by SPAD to join as a member ofthe Consortium Arrangement.
o Qualified for the SPAD’s ISBSF, a fund established by the Government of Malaysia to improve the quality of bus services. Further details ofthe ISBSF is set out in Section 4.4
(v) (d) ofthis Prospectus.
o Applied and received approval for Approved Service Project Status for The Combined Bus. Further details of the Approved Service Project Status is set out in Section 4.4 (v)
(b) ofthis Prospectus.
o Rcceived an approval-in-principle from Public Private Partnership Unit of the Prime Minister Department, a Government grant for infrastructure cost ofthe integrated public transportation terminal. Further details of the Government grant is set out in Section 4.4
(v) (c) ofthis Prospectus.
o Completed the acquisitions ofCKS Bumi, CKS Labur and Star Kensington, wherein we expanded our Group’s services to include petrol stations operations.
0 Completed the construction of Terminal AmanJaya and commenced operations of Terminal AmanJaya, including the operations of our BH? petrol station located within the terminal compound.
o Terminal AmanJaya’s status as the only gazetted cxpress bus terminal in Ipoh, Perak is recognized by SPAD in the SPAD Circular. The release of this SPAD Circular is to centralise express bus operations in Terminal AmanJaya, and provide improved public transportation services to passengers in the fonn of comfort, safety, access to improved travel infonnation and notification, as well as enhanced public transportation network.
o Completed the acquisition of Terminal UrliS to provide bus tenninal management services.

petrol station located at Lubok Merbau, Kuala Kangsar and commenced operations in August 2015. • Received Letter of Intent from SPAD on tbe appointment of The Combined Bus as network operator for Ipoh under the SBST Programme for a period of eight (8) years.
• The Combined Bus entered into a conditional sale and purchase agreement for the purchase of two (2) parcels of land measuring approximately 3.72 acres which are situated in Mukim of Kampar, Daerah Kampar, Perak.
• The Combined Bus then entered into a conditional agreement with SPAD pursuant to the appointment as a bus network operator for Ipoh under the SBST Programme, following the receipt of the Letter of Intcnt from SPAD in 2015. The Group has commenccd the bus operations of six (6) routes under SBST Programme since I June 2016.

20I6

4.1.3 New Share Issuance Prior to our IPO, we have undertaken the following exercises which encompass: (i) On 31 July 2015 and 21 August 2015, we have completed the conversion of 72,000,000 RCPS and 100,000,000 RCPS”, respectively held by our RCPS holders into Perak Transit Shares at the conversion rate of RMO.IO per RCPS via the issuance of 72,000,000 new Perak Transit Shares and 100,000,000 new Perak Transit Shares, respectively;
(ii) As at 31 December 2014, the Directors of Perak Transit had extended interest free loans amounting to RM21,828,668 to Perak Transit Group (“Loan”), which RMI8,328,668 was fully settled via cash on 23 June 2015. For the remaining balance, on 21 July 2015, Perak Transit capitalised RM3,500,000 via the issuance of35,000,000 new Perak Transit Shares to Dato’ Sri Cheong Kong Fitt and Dato’ Cheong Peak Sooi of 20,000,000 Perak Transit Shares and 15,000,000 Perak Transit Shares, respectively; and

(iii) Pursuant to the Investment Agreement entered into between Perak Transit (the customer), Bank Muamalat Malaysia Berhad (the arranger, advisor, fucility agent and sole shareholder of Muamalat Venture) and Muamalat Venture (the investor), Muamalat Venture had provided Musharakah Capital funding totalling RM20,000,000 being financing facilities to the Group structured on a shariah compliant basis (“Investment”). In this regard, Muamalat Venture has decided to convert this Investment into 190,476,000 new Perak Transit Shares at the conversion rate of RMO.I05 per Share pursuant to the Investment Agreement. Muamalat Venture has provided irrevocable letter of undertaking to Perak Transit dated 23 September 2015 to complete the conversion after Bursa Securities’ approval for the proposed listing and prior to the registration of this Prospectus of Perak Transit with the SC. On 15 July 2016, the conversion of Muamalat Venture’s Investment into 190,476,000 new Perak Transit Shares was completed. Upon completion of the New Share Issuance, our issued and paid-up share capital increased from RM50,047,200 comprising 500,472,000 ordinary shares of RMO.IO each to RM89,794,800 comprising 897,948,000 Perak Transit Shares. Note: In relation to the abovementioned RCPS, the purpose of the issuance of RCPS is to provide funding to the Perak Transit Group. Further details ofthe RCPS holders and the salient terms of the RCPS are set out in the Section 6.1.3 of this Prospectus and Note 5.27 of Section I I ­Accountants ‘ Report.

4.2 OUR GROUP Our Group structure as at LPD is as follow: 69.99% I  CKSBUMI

PERAK TRANSIT 95.71% I  100.0%  too.o%1  STAR KENSINGTON  SYARIKAT SUMBER MAIlUSIA  IPOHLINK  99.89%  loo.O%  THE  TERMINAL
COMBINED URUSBUS too.o%1 CKSLABUR 4.2.1 Our subsidiaries As at the LPD, our subsidiaries and their respective principal activities are as follows:

CKS Bumi  2 July 2008 / Malaysia  500,000  69.99  2008  Bus operator, operator of petrol station and providing management services  CKS Labur  5 March 2008 / Malaysia  250,000  100.0  2008  Operator of petrol station  IpohLink  23 July 2008 /  300,000  100.0  2008  Providing management  Malaysia  services for bus  o erations  Star Kensington  7 September 2006/ Malaysia  350,000  95.71  2006  Operator ofpetrol station  Syarikat  II September  100,000  100.0  2009  Providing services of  Sumber  2009 / Malaysia  human resource  Manusia  management  The  2 August 2006 /  55,600,003  99.89  2006  Operators of bus terminal,  Combined  Malaysia  petrol station and public  Bus  transportation  Terminal Drus  25 April 2012 / Malaysia  100,000  100.0  2012  Bus terminal management
As at the LPD, our Company does not have any associated company.

4.2.2 Our share capital aud chauges iu share capital As at the LPD, our authorised and issued and paid-up share capital is as follows:

Authorised  5,000,000,000  0.10  500,000,000  Issued and fully paid-up  897,948,000  0.10  89,794,800
The changes in our issued and paid-up share capital since our incorporation are as follows:
* Faktor Azam Sdn Bhd was a wholly owned subsidiary ofour Company and was disposed on 18 August 2014. ** Our Company has on 31 May 2013 allotted and issued 172,000,000 RCPS which were subsequentlyfull)’ converted into Shares. The capitalisation of Muamalat Venture’s Investment into 190.476.000 Shares pursuant to the Investment Agreement which was completed on 15 July 2016, as stated in Section 4.1.3 (iii) of this Prospectus. As at the LPD, our Company does not have any outstanding warrants, options, convertible securities or uncalled capital. Upon completion of our IPO, our issued and paid-up share capital will increase to RMI14,294,800 comprising 1,142,948,000 Shares as a result of the Publie Issue.

4.2.3 CKS Bumi (i) History and business CKS Bumi was incorporated in Malaysia under the Act on 2 July 2008 as a private limited company. CKS Bumi is principally involved as business of agents and contractors of transportation, bus operator and operator of petrol station. In FYE 2015, CKS Bumi ceased the business as agents and contractors of transportation and commenced business operations in operating petrol station and in providing management services. Other than as stated above, there has been no material change in its business or activities since its date of incorporation. (ii) Share capital As at the LPD, the authorised and issued and paid-up share capital of CKS Bumi are as follows:

5,000,0005,000,000 500,000500,000 The changes in the issued and paid-up share capital of CKS Bumi since its incorporation are as follows:
As at the LPD, CKS Bumi does not have any outstanding warrants, options, convertible securities or uncalled shares. (iii) Shareholders CKS Bumi is a 69.99% owned subsidiary of Perak Transit. The remaining 30.01% interest in CKS Bumi are held by Rozilawati Binti Mohamad (150,000 ordinary shares of RMI.OO each in CKS Bumi) and CKS Maju (one (I) ordinary share of RMl.OO each in CKS Bumi). (iv) Subsidiary and associated company As at the LPD, CKS Bumi does not have any subsidiary or associated company.
(v) Acquisitions or disposals of material assets

As at the LPD, CKS Bumi has not acquired or disposed of any material assets other than in the ordinary course ofits business.

4.2.4 CKS Labur (i) History and business CKS Labur was incorporated in Malaysia under the Act on 5 March 2008 as a private limited company. CKS Labur is principally involved as an operator of petrol station. There has been no material change in its business or activities since its date of incorporation. (Ii) Share capital As at the LPD, the authorised and issued and paid-up share capital of CKS Labur are as follows: ti1·1:;1,1′;;; iliiillil ‘i!11111  1111111  ~m  Hi’  Authorised  500,000  1.00  500,000  Issued and fully paid-up  250,000  1.00  250,000
The changes in the issued and paid-up share capital of CKS Labur since its incorporation are as follows:
As at the LPD, CKS Labur does not have any outstanding warrants, options, convertible securities or uncalled shares. (iii) Substantial shareholder CKS Labur is a wholly owned subsidiary ofPerak Transit. (iv) Subsidiary and associated company As at the LPD, CKS Labur does not have any subsidiary or associated company.
(v) Acquisitions or disposals of material assets

As at the LPD, CKS Labur has not acquired or disposed of any material assets other than in the ordinary course of its business.

4.2.5 IpohLink (i) History and business IpohLink was incorporated in Malaysia under the Act on 23 July 2008 as a private limited company under the name of Ipoh Terminal Services Sdn Bhd. Subsequently, on 23 September 2008, it changed its name to Ipoh Sentral Sdn Bhd. IpohLink assumed to its present name on 27 September 2010. IpohLink is principally involved in providing management services for bus operations. There has been no material change in its business or activities since its date of incorporation. (ii) Share capital As at the LPD, the authorised and issued and paid-up share capital ofIpohLink are as follows: 112 “1;::::: ,,; n~:  I~~  I::  \ ;  Authorised  500,000  1.00  500,000  Issued and fully paid-up  300,000  1.00  300,000
The changes in the issued and paid-up share capital of IpohLink since its incorporation are as follows:
As at the LPD, IpohLink does not have any outstanding warrants, options, convertible securities or uncalled shares. (iii) Substantial shareholder IpohLink is a wholly owned subsidiary ofPerak Transit. (iv) Subsidiary and associated company As at the LPD, IpohLink does not have any subsidiary or associated company.
(v) Acquisitions or disposals of material assets

As at the LPD, IpohLink has not acquired or disposed of any material assets other than in the ordinary course ofits business.

4.2.6 Star Kensington (i) History and business Star Kensington was incorporated in Malaysia under the Act on 7 September 2006 as a private limited company. Star Kensington is principally involved as an operator of petrol station. There has been no material change in its business or activities since its date of incorporation. (Ii) Share capital As at the LPD, the authorised and issued and paid-up share capital of Star Kensington are as follows: ~2iHF!!n ::.:: ~:,:: :~Nb;  ,,;  l~j..  Authorised  500,000  1.00  500,000  Issued and fullv oaid-UD  350,000  1.00  350,000
The changes in the issued and paid-up share capital of Star Kensington since its incorporation are as follows:
As at the LPD, Star Kensington does not have any outstanding warrants, options, convertible securities or uncalled shares. (iii) Shareholders Star Kensington is a 95.71% owned subsidiary of Perak Transit. The remaining 4.29% interest in Star Kensington are held by Mohamad Rosli Bin Hassan (15,000 ordinary shares of RMI.OO each in Star Kensington) and CKS Maju (one (I) ordinary share ofRMI.OO each in Star Kensington). (iv) Subsidiary and associated company As at the LPD, Star Kensington does not have any subsidiary or associated company.
(v) Acquisitions or disposals of material assets

As at the LPD, Star Kensington has not acquired or disposed of any material assets other than in the ordinary course of its business.

4.2.7 Syarikat Sumber Manusla (I) History and business
Syarikat Sumber Manusia was incorporated in Malaysia under the Act on II September 2009 as a private limited company. Syarikat Sumber Manusia is principally involved in providing services ofhuman resource management. There has been no material change in its business or activities since its date of incorporation.
(ii) Share capital

As at the LPD, the authorised and issued and paid-up share capital of Syarikat Sumber Manusia are as follows: I::1:: ..•. :::.: :: :..• ,  :: :biNh”  !fEy}>”r  ,­ Authorised  500,000  1.00  500,000  Issued and fully paid-up  100,000  1.00  100,000
The changes in the issued and paid-up share capital of Syarikat Sumber Manusia since its incorporation are as follows:
As at the LPD, Syarikat Sumber Manusia does not have any outstanding warrants, options, convertible securities or uncalled shares. (iii) Substantial shareholder Syarikat Sumber Manusia is a wholly owned subsidiary ofPerak Transit. (Iv) Subsidiary and associated company As at the LPD, Syarikat Sumber Manusia does not have any subsidiary or associated company. (v) Acquisitions or disposals of material assets As at the LPD, Syarikat Sumber Manusia has not acquired or disposed of any material assets otherthanthat inthe ordinary course ofitsbusiness.

4.2.8 The Combined Bus (i) History and business The Combined Bus was incorporated in Malaysia uuder the Act on 2 August 2006 as a private limited company. The Combiued Bus is principally involved as operators of bus terminal, petrol station aud public trausportation. There has been no material change in its business or activities since its date of iucorporation. (ll) Share capital As at the LPD, the authorised and issued and paid-up share capital of The Combined Bus are as follows: ij”‘,i’F’ii;;J’!’!i H+0»,<00,: Authorised Issued and fully paid-up  I;:~~F  100,000,000 55,600,003  ii,  1.00 1.00  idSi  100,000,000 55,600,003
The changes in the issued and paid-up share capital of The Combined Bus since its incorporation are as follows:
02.08.2006 22.08.2006 28.03.2008 16.02.2009 23.01.2010 25.01.2010 18.05.2010 18.02.2011 08.05.2013 12.09.2014 5 99,995 150,000 750,000 5,815,000 3,185,000 5,000,000 3 36,500,000 4,100,000 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Cash Cash Cash Cash Cash Shares issued for acquisition of buses Bonus issue Cash Cash Capitalisation of amount owing to Perak Transit 5 100,000 250,000 1,000,000 6,815,000 10,000,000 15,000,000 15,000,003 51,500,003 55,600,003 As at the LPD, The Combined Bus does not have any outstanding warrants, options, convertible securities or uncalled shares. (iii) Shareholders The Combined Bus is a 99.89% owned subsidiary of Perak Transit. The remaining 0.11% interest are held by Reliance Omnibus (56,249 ordinary shares of RMl.OO each in The Combined Bus), Kok Yu Mooi @ Kok Yee Mooi (42 ordinary shares of RMl.OO each in The Combined Bus) and CKS Maju (one (I) ordinary share of RMl.OO each in The Combined Bus).

(iv) Subsidiary and associated company
As at the LPD, The Combined Bus does not have any subsidiary or associated company.
(v) Acquisitions or disposals of material assets

As at the LPD, The Combined Bus has not acquired or disposed of any material assets other than in the ordinary course of its business. 4.2.9 Terminal Urus (i) History and business Terminal Vrus was incorporated in Malaysia under the Act on 25 April 2012 as a private limited company. Terminal Vrus is principally involved in management of bus terminal. There has been no material change in its business or activities since its date of incorporation. (ii) Share capital As at the LPD, the authorised and issued and paid-up share capital of Terminal Vrus are as follows: !! ~i 1;;;  “‘: 27KilioiiliffRM),  Authorised  100,000  1.00  100,000  Issued and fully oaid-uo  100,000  1.00  100,000
The changes in the issued and paid-up share capital of Terminal Vrus since its incorporation are as follows:
As at the LPD, Terminal Vrus does not have any outstanding warrants, options, convertible securities or uncalled shares. (iii) Substantial shareholder Terminal Vrus is a wholly owned subsidiary ofPerak Transit. (iv) Subsidiary and associated company As at the LPD, Terminal Vrus does not have any subsidiary or associated company.
(v) Acquisitions or disposals of material assets

As at the LPD, Terminal Vrus has not acquired or disposed of any material assets other than in the ordinary course of its business.

 

4.3 PRINCIPAL ACTIVITIES AND SERVICES 

Our Group is principally involved in the operations of Terminal AmanJaya integrated public transportation terminal and the provision of public bus services. Our Group is also involved in petrol station operations and the management of ADO incentive progranune. 4.3.1 Integrated public transportation terminal operations The Combined Bus is the owner and operator of Terminal AmanJaya, the only gazetted express bus terminal in Ipoh, located strategically in Bandar Meru Raya, Ipoh. Terminal AmanJaya is a three (3) storey building complex that has bus platforms, bus holding bays, ticketing counters, retail space, office space, promotional space, budget hotel, lobby and basement carpark. As at the LPD, the gross building area of Terminal AmanJaya is approximately 208,802 sq ft, and it is located on a total land area of approximately 363,174 sq ft. Terminal AmanJaya has a total of 17 departure bays on the ground floor for express buses to pick up passengers and five (5) arrival bays on the first floor for express buses to drop off passengers. We impose an entrance fee on express buses that enter Terminal AmanJaya to pick up and drop off passengers. Terminal AmanJaya has a total of 40 holding bays, where express buses are held, or bypassed, to facilitate efficient ground movement of buses. As at the LPD, a total of 33 express bus operators operate express bus services from Terminal AmanJaya, connecting Ipoh to other cities and towns nationwide in Peninsular Malaysia. Our Terminal AmanJaya also has a taxi stand for commuters and visitors to commute to other destinations. Additionally, stage buses that ply the Terminal AmanJaya route will pick up and drop off passengers at the express bus arrival bays of Terminal AmanJaya. The major operations of Terminal AmanJaya centres on terminal operations including ticketing sales, bus and passenger traffic control, travel information counters, rental of retail, commercial space and promotional facilities, indoor and outdoor advertising, project facilitation, petrol station, security services and carpark fucilities. Terminal AmanJaya commenced operations in September 2012, and we commenced recording passenger traffic data from March 2013 onwards. Passenger traffic data is represented by the number of ticket-purchasing passengers. The total passenger traffic at Terminal AmanJaya was registered at 573,022 persons in the FYE 2013 and this increased to 822,775 persons in the FYE 2015. From January 2016 up to the LPD, we have recorded 494,152 passengers at Terminal AmanJaya. Number of passengers (persons) FYE 2013 (,) 573,022 FYE 2014 (b) 760,740 FYE 2015 (b) 822,775 FPE 2016 (0) 250,883 From January 2016 up to the LPD 494,152 Notes: (a)  For the period of March 2013 to December 2013 as data collection on passenger traffic only  commenced in March 2013.  (b)  For the period ofJanuary to December ofthe respective FYE.  (c)  For the period ofJanuary 2016 to April 2016.

(b) Front view of the building plan
(c) Rear view of the building plan
(d) Left view of the building plan

 

 

~  -,.-…..  ~–:=::””­ I:  1′.~:;;;~~-~­ ~  i  =====l ~,  …  I  nh1Lm-tl~~ F”n ~ IIYlli Xft 1\ \ \r–rl~·~”···
:-… -~-_.:..-.–…:::::=-“,,”—~–._••—–.: I r—­(e) Right view of the building plan
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 4. BUSINESS OVERVIEW (Cont’d) (f) Aerial external view of Tenninal AmanJaya
(g) Internal view of Tenninal AmanJaya

 

 

4.3.1.1 4.3.1.2 Rental of A&P spaces We derive a significant portion of our Group’s revenue from the rental of A&P space at Tenninal AmanJaya. In this regard, we provide rental of promotion space and indoor advertising space in the common areas such as around the tenninal lobby, arOlUld retail outlets, at the holding bay area, against the exterior tenninal walls and the outdoor carpark area of Tenninal AmanJaya. We also provide outdoor advertising space to customers which is carried out via our outdoor three-faced advertising billboard located within the compound of Tenninal AmanJaya. The rental of promotional space and indoor advertising space are significant revenue driver for our Group. We rent A&P spaces at Tenninal AmanJaya to third party companies for a fixed sum on an annual basis, where these third party companies shall source for advertisers and end-users of promotional spaces. During the FYE 2013 and FYE 2014, we engaged Rezeki Megajaya for the rental of A&P spaces at Tenninal AmanJaya. In April 2015, our Group had subsequently entered into agreements with two (2) other companies, namely Century Edge Group and Angkasa Aman, for the rental of A&P spaces at Tenninal AmanJaya (for further details, kindly refer to Section 4.6 ofthis Prospectus) where: • Century Edge Group has been our customer for the rental of promotional spaces at Tenninal AmanJaya for an initial period of one (I) year (from April 2015 to March 2016) and the rental period for promotional spaces at Tenninal AmanJaya was renewed for subsequent period of one (I) year. Century Edge Group will undertake and/or carry out business activities as principal and/or as event managers-organisers, which includes the management, planning and organising of events, exhibitions and activities at Tenninal AmanJaya; and
• Angkasa Aman has been our customer for the rental of advertising spaces at Tenninal AmanJaya for an iniiial period of one (I) year (from April 2015 to March 2016) and the rental period for advertising spaces at Tenninal AmanJaya was renewed for subsequent period of one (I) year. Angkasa Aman shall undertake and/or carry out business activities as principal and/or as management agents for advertising, branding and/or marketing activities at Tenninal AmanJaya.

Rental of shops and kiosks As at the LPD, Tenninal AmanJaya has a gross leasable area of 49,291.4 sq ft comprising space leased to tenants with retail operations in apparel and accessories, computer and mobile phone products, convenience store, souvenir, phannacy, stationery, entertainment, food and beverage, home furnishing, budget hotel, office space, ticketing counters and miscellaneous services (as set out below). Our tenninal operations team is responsible for the sourcing and securing of prospective tenants, rental collection, provision of building maintenance and security services as well as assist in promotional activities and events at Tenninal AmanJaya. Company No.: 831878-V 4. BUSINESS OVERVlEW (Cont’d) The breakdown of rental tenancies for the past three (3) FYE 2013 to FYE 2015, the FPE 2016 and up to the LPD by retail category at Terminal AmanJaya is as depicted below:
Apparel and accessories 61 3,407.5 1 6.92 1 I Computer and mobile phonc products 1 41 820.0 1 1.66 1 Convenience store, souvenir, pharmacy and stationery 6 2,959.71 6.00 I Entertainment C’) 1 7,879.2 15.98 21 1,176.5 1 2.39 1 3 1 1,064.0 I 2.16 I 592,754.0 I 5.1~ 1 6,378.5 12.94 12 I 13,237.0 I 26.85 I 1 1 960.5 1 1.95 I 3 I 602.0 I 1.22 I 592,754.0 I 5. 1~ 1 6,378.5 12.94 12 I 13,518.9 I 27.43 IFood and beverage Home furnishing Budget hotel Office space Ticketing counters(b) Miscellaneous services (c) Vacant space Cd) Gross leasable area 17 15,259.9 I 30.97 I 4.171 2,055.5 3.6538 1,800.0 7 4,263.61 8.65 1 N/A 10,846.0 22.00 80 1 49,291.4 I 100.0 II 41  2,394.8 1  3 1  486.01  ~I  3,421.8 1 7,879.2
13 I 13,990.0 I 2,055.5 1 1 3,256.5 38 1,800.0 61 3,801.6 1 N/A 10,206.0 74 I 49,291.4 1 4.86 I 0.99 1 946.1 15.98 28.38 I 4.17 6.61 3.65 7.71 1 20.71 100.0 I 3 1 3 32 8,608.9 2,055.5 4,180.6 1,720.0 N/~ I 4,451.6 1 3,664.8 68 1 49,291.4 1 17.47 4.17 8.48 3.49 9.03 1 7.43 100.0 I 3 1 4 32 8,608.9 2,055.5 4,642.6 1,680.0 N/~ I 5,266.51 2,824.0 69 I 49,291.4 I 17.47 4.17 9.42 3.41 10.68 1 5.72 100.0 1 21 3 I ~I
III 3 I 4 32 N/~
1 4,671.4 I 722.0 I 4,105.51 6,378.5 7,918.9 I 8,608.9 2,055.5 4,642.6 1,720.0 I 5,753.91 2,714.2 72 1 49,291.4 I 1.46 8.33 12.94 16.07 17.47 4.17 9.42 3.49 11.67 5.50 100.0 68

Notes: NIA  Not applicable  (a)  Entertainment includes video arcade center and karaoke for the FYE 2013 to FYE 2014. Since I January 2015, the video arcade center has since ceased leasing retail space at  Terminal AmanJaya.  (b)  Excluding one (1) Perak Transit express bus ticketing counter  (c)  Miscellaneous services include ATMs, e-library. car wash, luggage storage services and money changer services.  (d)  Refers to space available for rental.
The gross leased-out area at Terminal AmanJaya increased from 38,445.4 sq ft as at 31 December 2013 to 46,467.4 sq ft in the FPE 2016, and subsequently to 46,577.2 sq ft as at the LPD. This growth is a result of the growth in passenger traffic following the relocation of express bus services (Medan Gopeng) in Ipoh City to our terminal, and further bolstered by the surrounding development in Bandar Meru Raya.

4.3.1.3 Project Facilitation Our Group has experience in terminal development, construction, management and operations based on our experience in developing and operating Terminal AmanJaya. We are thus able to leverage on this experience to provide services to our customers in relation to the terminal development and operations. Our Group can provide the following, namely: (i) renting of TenninaI AmanJaya’s equipment, utilities and facilities such as meeting and conference room, exhibition hall, all electronic equipment (for example, projector, tele-conferencing facilities, printer, facsimile and photocopier), office equipment, as well as internet access;
(ii) preparing of preliminary concept paper for the proposed development of integrated pUblic transportation terminal;

(iii) assisting in the design, planning and procurement of approvals of the proposed integrated public transportation terminal; and (iv) attending all meetings and discussions organized by our potential customers with SPAD, Government officials and local councils to facilitate the integrated public transportation terminal construction and operations. Our customers are able to visit Terminal AmanJaya to view its physical layout and gain understanding of its operations and our management personnel would be able to share our experiences and expertise in the development of Terminal AmanJaya. 10 addition to the provision of our services, we are able to share our know-how, experience and knowledge with our customers in relation to: A. the constrnctions and operations of an integrated public transportation terminal; B. strategy to derive revenue from rental of shops and kiosks and A&P activities; C. efficient cost structure in the construction of an integrated public transportation terminal; D. during the concept planning and design stages: (a) conceptualising the development of the proposed integrated public transportation terminal, advise on the practicality of location and the detailed process in procuring the relevant authorities’ approvals for the purposes of developing and constrncting the proposed integrated public transportation terminal (for example the specific requirements of the local authorities, Land Office, SPAD and any other relevant authorities);
(b) providing our input on the proposed integrated public transportation terminal building plans, which specific requirements of the respective authorities are to be complied with to ensure the relevant approvals shall be procured (including proeuring the certificate of completion and compliance, upon completion of the proposed integrated public transportation terminal); and

 

(v) upon completion of the integrated public transportation terminal stages: (a) develop strategies to promote the use of the new integrated public transportation terminal;
(b) develop strategies to invite and select tenants to occupy the new integrated public transportation terminal; and
(c) to assist in developing an efficient operational cost structure of the integrated public transportation terminal, for example terminal maintenance and upkeep cost, utilities, payroll etc.

Premised on our services above, in the FYE 2014, FYE 2015 and the FPE 2016, our Group derives revenue in the form of the Project Facilitation Fee from one (I) customer, namely, Maksima Timur. 4.3.1.4 Others We also derive smaller streams of revenue from basement car park charges and fees imposed on the usage oflavatory at Terminal AmanJaya. 4.3.2 Public bus services Our public bus services primarily encompass public express bus and stage bus services. We also offer bus charter services to interested parties. 4.3.2.1 Express buses According to the SPAD Licensing Guidelines issued after the Land Public Transport Act 2010 came into effect, express buses are defmed as buses plying along the routes approved by SPAD, with a timetable and fare table, for the carriage of passengers at separate fares on a service which contains no fare stages of less than 32 kilometres, which means that express bus services are only provided for routes that are above 32 kilometres in distance. As at the LPD, we have permits for nine (9) express bus routes, however at this juncture, we are only operating four (4) express bus routes connecting Terminal AmanJaya to neighbouring towns namely Cameron HigWands, Taiping, Teluk Intan and Lumut. Additionally, we also operate one (1) express bus route connecting Kampar to Terminal Bersepadu Selatan, Kuala Lumpur. The remaining permits for the four (4) express bus routes namely Ipoh-Butterwortb-Alor Setar-Bukit Kayu Hitam, Ipoh-KLIA-LCCT, Ipoh-Kuala Kangsar-Grik-Betong and Kuala Lumpur (Hentian Duta)-Tapah-Cameron Highlands are not being utilised to ply these routes as our Group do not have sufficient quantity of express buses at this juncture. However, our Group is expecting 25 new express buses to be delivered by end of2016. We utilise air-conditioned buses for the provision of express bus services. The fares of our express buses are as set out by SPAD and any fare revisions are subject to the approval of SPAD. Express bus tickets are sold through counter sales at Stesen Bas, Jalan Kidd and Terminal AmanJaya.

Express bus routes:
Our express buses carry the Perak Transit name. (a) Express Bus Model: Hino (RKIJSLL) Engine Capacity: 7,961 cubic centimeters (“CC”) Passenger Capacity: Capable of ferrying a maximum of30 persons at anyone time
(b) Express Bus Model: King Long Xiamen (XMQ6117) Engine Capacity: 7,800 CC Passenger Capacity: Capable of ferrying a maximum of28 persons at anyone time

 

The summary of the statistics on the Group’s express buses for the financial years/period under review and as at LPD is set out in Section 9.1.3.

4.3.2.2 Stage buses (a) Stage buses operations Stage buses are buses plying along a route approved by SPAD for the carriage ofpassengers on a service which contains fare stages, with a separate fare, timetable and schedule of fares for each fare stage. As at the LPD, we operated 27 stage bus routes covering Ipoh and its surrounding areas. We utilise air-conditioned buses for the provision of stage bus services. Our public stage bus service operates from Stesen Bas, Jalan Kidd, which is not owned or operated by our Group. The stage bus routes that we ply are applied to and approved by SPAD, where for selected routes we may be required to comply with minimum approved number oftrips and frequency per day as determined by SPAD. The fares of our public stage buses are as set out by SPAD and any fare revisions are subject to the approval of SPAD. Our public stage buses are manned by drivers and conductors who are responsible for collecting fares from boarding passengers. We have also installed ticketing machines in our stage buses, for the collection of fares in buses that do not have conductors (Le. One Man Operation). We operate stage bus services at the Stesen Bas, Jalan Kidd where our Group undertakes the following activities: (I) Planning, coordination and overseeing the bus scheduling, routing and daily operations;
(2) Recommendation and recruitment of employees for positions of vacancy such as bus drivers, station masters, checkers, admin personnel etc;
(3) Training, supervising and evaluating the performance of our staff that are based in the Stesen Bas, Jalan Kidd, including bus drivers; and
(4) Receiving and responding to inquiries concerning bus routing and stage bus transportation related matters.

Since the commencement of our operations in 2009 with an initial fleet size of105 buses, we have expanded our fleet size to 146 buses as at FPE 2016 which remains up to the LPD. As at the FPE 2016 which remains up to LPD, we have a total of 146 buses, of which 119 were used for public stage bus operations and the remaining 27 were used for express bus operations. These buses are also available for bus charter services. 4. BUSINESS OVERVIEW(Cont’d) The stage bus routes are depicted as below:
114 117 94A 94 113 112 91 116 35 37 46 39 47 44 66 69 70 67 68 99 22 T30a* T30b* T34* T37* F303* F304* Notes: * Stage bus routes involved in the SBST Programme. Kindly refer to our Company’s website at (www.peraktransit.com.my). for further details of our stage bus routes. Our stage buses carry the Perak Transit name: (a) Stage Bus Model: King Long Xiamen (XMQ6931G) Engine Capacity: 6,494CC Passenger capacity: Capable of ferrying a maximum of 51 persons at anyone time

(b) Consortium Arrangement We commenced stage bus operations after the formation of the Consortium Arrangement in 2009 as stated in Section 4.1.1 (a) of this Prospectus and some ofthe salient terms ofthe Consortium Arrangement are as follows: (i) The Combined Bus operates the services with the bus permits of General Omnibus, Ipoh Onmibus and Kinta Onmibus registered in their respective names (collectively, “Third Party Bus Permit Holder(s)”) for the purpose ofproviding public bus services;
(ii) The Combined Bus pays all expenses for the operations and maintenance of the buses, and to ensure that the operations conform to all the rule, regulations and requirements of all authorities; and

(iii) The Combined Bus is entitled to all the revenue and profits accrued from the business. The Consortium Arrangement is not an incorporated entity but an arrangement between the members and The Combined Bus, to pool the resources of each member (i.e. utilisation of the bus permits and contribution ofbuses) for the creation ofacomprehensive bus operations network. The following table provides a summary of the bus permits and stage buses registered under the Third Party Bus Permit Holders and CKS Bumi together with the carrying value of the buses as at 30 April 2016:
63(2)Third Party Bus 63 13.91 Permit Holders Total 119 119 28.90 Notes: (1) Registered under the name ofCKS Bumi, a subsidiary ofPerak Transit and held in trustfor The Combined Bus.
(2) The Specific Buses (as defined below) registered under the names of the Third Party Bus Permit Holders, respectively and held in trust for The Combined Bus.
(3) Our Group’s value ofstage buses and express buses is RM40.0 million as at 30 April 2016 (as stated in Section 5.16 of the Accountants’ Report)

comprising:
CKSBumi 14.99 10.66 25.65 Third Party Bus Permit Holders  13.91 28.90  0.44 11.10  14.35 40.00

4.3.2.3
In view of this Consortium Arrangement, the Third Party Bus Pennit Holders as the registered owners shall hold these buses in trust for The Combined Bus. Further, the physical bus pennits and all the documents pertaining to ownership of these stage buses (i.e. registration cards, insurance policies) (“Specific Buses”) are retained by our Group. Since 2010, SPAD has begun to grant bus permits directly to CKS Bumi and as at 30 April 2016, CKS Bumi has 56 bus pennits which are able to support most of our Group’s daily bus operations. As at the LPD, our Group’s stage buses cater for the 27 stage bus routes covering Ipoh and its surrounding areas. CKS Bumi’s pennits are for 24 stage bus routes which are the same routes with the Third Party Bus Pennit Holders’ permits. Only three (3) of the 27 stage bus routes operated by our Group are registered under the Third Party Bus Pennit Holders (i.e. route 46 (Ipoh-Manjung); route 37 (lpoh-Tanjung Tualang); and route 39 (Ipoh-Parit­Bruas). Having said this, in the unlikely event the Third Party Bus Pennit Holders’ pennits are not able to be utilised by our Group, our Group shall use those bus pennits issued in the name of CKS Bumi to ply the existing routes or apply for new bus pennits and register the Specific Buses in the name of CKS Bumi. Charter services We also operate bus charter services for customers from private and public sectors to meet their transportation needs. Our charter services are primarily provided to our customers on a daily, weekly or monthly basis. Bus charter services allows our Group to realise fixed (or pre-detennined) income for our bus services that is not dependent on the number ofticket purchasing passengers. We enter into individual contracts with our customers to address the specific needs and requirements of such customers. Our bus charter rates are dependent on initial pick-up and final drop-off destinations, rental dates and duration, as well as number of buses required. In addition to the individual contracts, on 1 August 2015, we entered into a bus charter and bus advertising agreement with Rezeki Megajaya, where Rezeki Megajaya will pay our Group a fixed monthly fee of RM550,000 (inclusive of GST) for an initial period of one (I) year that shall be renewed for subsequent periods of one (I) year unless otherwise terminated. Rezeki Megajaya shall utilise the Group’s buses for bus charter services as well as to use the internal and external spaces of the buses for the purposes of bus advertisement. The arrangement of the bus advertisement for Rezeki Megajaya is based on the availability of the advertisement spaces on Perak Transit operating buses. Rezeki Megajaya shall procure its own end customers, however Rezeki Megajaya shall infonn and consult with the Group on the bus advertisements and bus charter customers with regard to the end customers’ usage and purpose (including date and duration of travels and size and types of advertisements). Either the Group or Rezeki Megajaya has the liberty to tenninate this agreement by giving three (3) months’ notice. With effect from I April 2016, this contract sum was revised to the rate of RM649,000 per month (inclusive of GST). Our Group reserves the right to decline any bus charter and bus advertising business whicb is reasonably deemed to be contrary to the interest of our Group and for activities that are related to any unlawful and/or any immoral activities. We leverageonourfleet ofbusesforthedelivery ofourbuscharterservices.

4.3.3 Petrol station operations and the management of ADO incentive programme We fIrst entered into this business when we were appointed as a service provider for the management of an ADO incentive programme. Over time, we expanded into petrol station operations. Our Group’s venture into the petrol station operations segment was mainly intended to complement our Group’s revenue, which is in line with our Group’s business as a public transportation company, and that fuel also forms part of the supplies to our Group’s bus operations. In 2007, our Group had entered into a service provider agreement with Petron Fuel (i.e. the management of ADO incentive programme) for the provision of product orders, payment collection management as well as other services on behalf of Petron Fuel to the ADO Buyers. SpecifIcally, the role of The Combined Bus is outlined below: • procure orders, manage the collation and consolidation of ADO orders made by ADO Buyers;
• act as the appointed agent, to collect and deliver ADO from Petron Fuel’s terminals to ADO Buyers, including compiling and submitting invoices and assisting Petron Fuel in collecting payments from these ADO Buyers;
• use its own vehicles or make alternative suitable arrangements at its own cost to deliver the ADO orders to the ADO Buyers; and
• assist Petron Fuel in collecting payment from ADO Buyers, and act as a facilitator in terms of transmitting and disseminating any information between Petron Fuel and the ADO Buyers.

As at the LPD, we serve one (I) ADO Buyer which is a transportation company that owns and operates buses. The delivery of ADO to ADO Buyers is outsourced by our Group to a third party transportation company. In return, Petron Fuel shall pay The Combined Bus volume incentives when the orders procured and managed by The Combined Bus over a pre-determined period has reached and/or exceeded a minimum target sum. As The Combined Bus receives the volume incentives from Petron Fuel, The Combined Bus pays a portion of the incentives received (as determined from time to time) to the ADO Buyers, and retains the remaining portion of the incentives. However, these activities have been declining during the financial years under review and do not contribute significantly to our Group’s fInancial results in FPE 2016. Further, our Group currently operates a total of four (4) petrol stations, comprising one (I) Shell petrol station located at Lahat; one (I) Shell petrol station in Tanjung Rambutan; one (I) BHP petrol station at Terminal AmanJaya and one (I) Petron petrol station at Lubok Merbau, Kuala Kangsar, all of which are located in Perak. Our petrol station operations involve the retail sale of petrol and diesel, as well as operations of retail marts. The details ofthe Group’s (being a “dealer”) petrol station business model is based on “Dealer­owned-dealer-operate” model whereby: (a) Our Group will erect a service station and convenience store, according to such specifIcations as may be prescribed by the petrol company, on lands owned by our Group and operated by our Group; and
(b) The petrol company will supply all motor fuels, lubricating oils and other petroleum products at the petrol stations.

The construction cost for the four (4) petrol stations are as below: ~. IE ~ ~Et~~~H!H ~:: Yl.iei:::f::::iYh[l,[llrri’ilIi:,:ii, (I) Shell petrol station, Lahat, Perak
(2) Shell petrol station, Tanjung Rambutan, Perak
(3) BHP petrol station, Terminal AmanJaya, Perak
(4) Petron petrol station, Lubok Merbau, Kuala

Kangsar, Perak Total I) 1,990 1,800 3,393 7,924 The licenses and salient terms of the agreements with the respective petrol companies are set out in Section 4.16 and Section 4.20, respectively.

4.4 COMPETITIVE STRENGTHS 

Our Group is primarily involved in the public transportation sector through the operations of Terminal AmanJaya integrated public transportation terminal as well as the provision of public bus services. Further we also operate four (4) petrol stations in Ipoh, Lahat, Terminal AmanJaya and Kuala Kangsar, all of which are in Perak. Our Group’s business model is as follows: • We are involved in integrated public transportation terminal operations, public bus services and petrol station operations and the management ofADO incentive programme;
• Our main earnings driver is integrated public transportation terminal operations that primarily comprises the rental 0 f A&P space and rental of retail space. Our public bus services and petrol station business shall complement our integrated public transportation terminal operations and we intend to grow our integrated public transportation terminal operations via expanding our existing Terminal AmanJaya, operating newly built terminals or jointly develop new integrated public transportation terminals; and
• To provide infrastructure facilities and transportation services in the public transportation sector.

Additionally, our business model further enhances our market position as a provider of public transportation services, as we are able to provide services across multiple segments of the public transportation value chain, such as integrated public transportation terminal operations and bus operations. In our role of delivering public bus services to the local and visiting population, we support the Government’s efforts to transform public bus services through the provision of accessible and quality bus services. We attribute our success to the following key competitive strengths: (i) Terminal AmanJaya is the only gazetted express bus terminal in Ipoh, providing services and amenities to passengers and visitors Terminal AmanJaya has a total of 22 arrival and departure bays, as well as 40 holding bays. As at the LPD, a total of 33 express bus operators operate express bus services from Terminal AmanJaya. Kindly refer to Section 4.3.1 of this Prospectus for further details of the major operations of Terminal AmanJaya.

As the only express bus terminal in Ipoh, Terminal AmanJaya is able to draw high traffic from various visitors using public bus transportation services such as bus operators, bus commuters and taxi operators. Terminal AmanJaya also provides lifestyle amenities and services to attract visitors, other than bus passengers, to the terminal. Terminal AmanJaya is able to draw high traffic from visitors, premised on the following:

• Ipoh City Council has declared Terminal AmanJaya as the station for buses and taxis with effect from 31 July 2012; and
• Further, in 2014, Terminal AmanJaya was identified via a SPAD Circular, as the only gazetted express bus terminal in Ipoh, Perak. Under this SPAD Circular, SPAD has determined that all express bus services operating in Ipoh are mandated to pick up and drop offpassengers in Terminal AmanJaya, except in circumstances approved by SPAD.

Collectively, this effectively makes Terminal AmanJaya the sole provider of tenninal services for express bus services in Ipoh with no close substitutes within Ipoh, and thus drawing passengers of express bus services to this terminal. Further, Terminal AmanJaya is located in Bandar Meru Raya, which has been identified as an area for development by PKNP. Notable developments in Bandar Meru Raya include Hotel Casuarina@Meru and AmanJaya Convention Centre, as well as several Government agencies such as Kementerian Hal Ehwal Dalam Negeri, Jabatan Audit Negeri Perak and Jabatan Perhutanan Negeri Perak. Bandar Meru Raya has also been selected as the site for the Movie Animation Park Studio, a joint venture between PCB Development Sdn Bhd and RSG Maps Sdn Bhd (formerly known as Sanderson Project Development (Malaysia) Sdn Bhd) to develop a 20.8-hectare site as an animation theme park at an estimated investment of RM389.9 million. There is also a commercial centre as well as large hypermarket retailer, Mydin, located within the surrounding area of Terminal AmanJaya. The surrounding commercial development Bandar Meru Raya has the potential to attract visitors and passengers to Terminal AmanJaya. We derive substantial revenue from the rental of A&P spaces, where advertisers and promoters are able to leverage on the passenger and visitor traffic to Terminal AmanJaya. At Terminal ArnanJaya, we offer our retail tenants as well as external parties A&P mediums in the form of rental of promotional space and indoor advertising space in the common areas such as around the terminal lobby, around retail outlets, at the holding bay area, against the exterior terminal walls and the outdoor carpark area. We also have an outdoor three-faced advertising billboard located within the compound of Terminal AmanJaya for outdoor advertising. We recorded revenues of RMIO.17 million, RM19.34 million, RM17.45 million and RM5.91 million respectively for the rental of A&P spaces in the FYE 2013, FYE 2014, FYE 2015 and the FPE 2016 respectively. Our GP margins for the rental of A&P spaces in the FYE 2013, FYE 2014, FYE 2015 and the FPE 2016 were recorded at approximately 99.92%, 99.96%, 99.95% and 99.95% respectively. Terminal AmanJaya offers passengers and visitors a wide range of retail options arising from the varied retail tenants that have leased shops and kiosks at Terminal AmanJaya. Terminal ArnanJaya is a strategic location for retail tenants to grow their businesses, as our Group has witnessed bus passengers growing from 573,022 persons for the period of March to December 2013 to 709,411 persons for the period of March to December 2015 at a CAGR of 11.3% for the period of March 2013 to December 2015.

Our Gronp recorded rental of shops and kiosks of RM2.92 million, RM 1.31 million, RM 1.78 million and RM1.14 million in the FYE 2013, FYE 2014, FYE 2015 and the FPE 2016 respectively. Onr GP margin for the rental of shops and kiosks in the FYE 2013 was recorded at approximately 1.98%. However, in FYE 2014 and FYE 2015 our Group recorded gross loss margins for the rental of shops and kiosks at approximately 45.69% and 23.05% respectively. Subsequently, in FPE 2016, the GP margin for the rental of shops and kiosks was recorded at approximately 41.72%. We encourage our tenants to rent A&P spaces at Terminal AmanJaya to promote their businesses and/or products. Our Group has recorded growth in earning contributions from the integrated public transportation terminal operations of Terminal AmanJaya for the past three (3) FYE 2013 to FYE 2015 and the FPE 2016 (kindly refer to Section 10.3 of this Prospectus for further details). (ii) We have successfully built Terminal AmauJaya and operated Terminal AmanJaya as an integrated public transportation terminal since September 2012 In the course of developing Terminal AmanJaya, our Group has gained valuable experience in terminal setup and operations that encompass site selection and identification, passenger traffic movement and projection, licensing and regulatory compliance, terminal layout design, terminal operations, terminal services marketing and branding. The experience and know-how of our management in these areas has aIlowed us to develop Terminal AmanJaya into a high traffic integrated public transportation terminal in Ipoh, Perak. The successful construction and commercial operations of Terminal AmanJaya has enabled our Group to build a good reputation in the public transportation sector and this has attracted interest from several external parties and government agencies who have approached us to set up new bus terminals in other cities and towns, so that our Terminal AmanJaya can be replicated in other cities and towns. The experience gained from the operations of Terminal AmanJaya will provide the platform for our Group to extend our terminal operations services to other towns and cities in Malaysia. (iii) Terminal AmanJaya is strategically located in Meru Raya, Ipoh The Perak AmanJaya Plan is a masterplan developed by the State Government of Perak together with Institut Darnl Ridzuan. The objective of this plan is to improve the quality of income, opportunity and standard of living in Perak. The Perak AmanJaya Plan identifies integrated public transportation services as one of the key development areas and recommended an approach that improves integration, access, reliability and comfort to increase its relevance in the public space. Terminal AmanJaya is located in Bandar Meru Raya, an area identified for development by PKNP. A total of 1,500 acres of land surrounding Terminal AmanJaya has been allocated for development. Among the notable developments located within the surrounding area of Terminal AmanJaya in Bandar Meru Raya are as foIlows: Hotel Casuarina@Meru; Amanjaya Convention Centre; Government offices for Kementerian Hal Ehwal Dalam Negeri, Jabatan Audit Negeri Perak, Jabattm Bomba Dan Penyelamat Negeri Perak and Jabatan Perhutanan Negeri Perak; and Mydin hypermarket  Offices for Majlis Amanah Rakyat, Kompleks Yayasan Perak, Jabatan Arkib and Jabatan Ketua Pengarah Tanah & Galian; The Movie Animation Park Studio, a joint venture between PCB Development Sdn Bhd and RSG Maps Sdn Bhd (formerly known as Sanderson Project Development (Malaysia) Sdn Bhd); and Specialist hospital centre

Geographically, Bandar Meru Raya is located within a 15-minute drive from the North-South Expressway, providing express buses entering and exiting Ipoh fast resulting in convenient access to Terminal AmanJaya. Bandar Meru Raya has also been recognised as an MSC Malaysia Cybercentre. Coupled with the PKNP development plans, Terminal AmanJaya is well-positioned to benefit from the commercial developments and opportunities anticipated to arise from the area. The strategic location of Terminal AmanJaya in a developing commercial area (Le. Bandar Meru Raya) have the potential to draw a larger crowd comprising govermnent and private sector employees, business owners and/or operators, residential population as well as tourists and visitors to our terminal. Following thereto, this will contribute towards the sustainability of our Group’s terminal operations business. Further, the on-going and future developments in Bandar Meru Raya are also expected to increase the value ofthe properties in the area, which ifrealised, will positively impact the value ofTerminal AmanJaya as well. (iv) We have a track record in the operations of public stage bus services We have a track record in public bus services, demonstrated by the growth and expansion in our Group’s business since our inception and commencement of business. We have expanded our public bus services operations from 105 buses in 2009 to 146 buses as at FPE 2016. As at the LPD, we operate 27 stage bus routes covering Ipoh and its surrounding areas. Our Group’s revenue from bus operations were RMI5.20 million, RM16.66 million, RM21.62 million and RM7.26 million in the FYE 2013, FYE 2014, FYE 2015 and the FPE 2016, respectively. As a testament of our ability to provide public stage bus services, we received a Letter of Intent from SPAD on 29 June 2015, appointing The Combined Bus as the network operator for Ipuh under the SBST Programme, where the network operator will be paid cost per vehicles-km run for stage bus routes in Ipoh for a period of eight (8) years. In February 2016, The Combined Bus entered into a conditional agreement with SPAD for the appointment as bus network operator for Ipoh under the SBST Programme for 16 stage bus routes in Ipoh for a period of eight (8) years. Our Group has commenced the bus operations of six (6) routes under SBST Programme since I June 2016. (v) We are well positioned to capture opportunities in the pUblic transportation sector in Malaysia We are well positioned to leverage on the benefits and incentives offered to public transportation providers in Malaysia. To-date, we have been beneficiaries ofthe following: (a) Sales tax and GST exemption of CKD bus and air conditioning equipment In 201 I, MoF approved our application for exemption of sales tax for the purchases of CKD buses and air conditioning equipment. Further, we were also granted approval to realise sales tax exemption on our CKD bus components. These one-off sales tax exemptions have provided substantial cost savings on cost of purchases, depreciation and operating expenses for our bus services, which have contributed favourably to the profitability of our bus services operations. Our total cost savings from sales tax exemption of CKD buses and air conditioning equipment in the respective financial years are as follows: 1:;m:,,;uIm”::~i£i:,'” 11::’;” FYE2013 FYE 2014 FYE 2015  “iii]”  0.38 million 2.02 million 0.04 million  Total  2.44 million
4. BUSINESS OVERVIEW(Cont’d) These one-off sales tax exemptions have subsequently been replaced by the GST exemption. MoF has approved our application for exemption of GST for the purchase of CKD buses and air conditioning equipment on 10 June 2015. Our total cost savings from GST exemption of CKD buses and air conditioning equipment in the respective [mancial year/period are as follows: I ‘..;’ .:. . .: ::…: ‘::’ ”  ;-,’  FYE 2015  0.11 million  FPE 2016  0.46 million  Total  0.57 million
(b) Approved Service Project status In 2012, MoF granted and approved the Approved Service Project status for our Group where we can claim up to 60% of the amount of capital expenditure invested during the tax investment allowance period of up to five (5) years between 2012 and 2017. Our Group has committed substantial investment in total capital expenditure for the construction of Tenninal AmanJaya infrastructure, facilities and equipment, and purchase of buses to better serve the public. The retained earnings and savings on lower tax payments will allow our Group to achieve higher profitability, enhance shareholders’ fund and prospects of dividends to shareholders. The construction of Terminal AmanJaya was completed, and became fully operational in September 2012. Total tax investment allowances generated from Approved Service Project in the respective financial years/period are as follows: FYE2013 24.19 million FYE 2014 19.56 million FYE 2015 5.65 million FPE 2016 2.52 million Total 51.92 million
As at the FPE 2016, total tax investtnent allowances amounting to RM88.37 million has not been utilised. Following that, we expect to receive RM12.26 million tax investtnent allowances from the Approved Service Project status in FYE 2016. (c) Government grant for the construction of Terminal AmanJaya
In 2012, we received a one-time Government grant from the Public Private Partnership Unit of the Prime Minister’s Departtnent of RM9.98 million. The Government agreed to provide a grant to the Company for the implementation of the project an amount equivalent to ten per centum (10%) of the project’s construction costs or RM9.98 million, whichever is lower, to fund the principal infrastructure cost of Tenninal AmanJaya. This, together with internal funds and bank borrowing, has allowed our Group to complete the construction in August 2012 and commercialise operations at Terminal AmanJaya on 25 September 2012.
(d) ISBSF

In 2012, we qualified for financial assistance under SPAD’s ISBSF. The ISBSF is a fund established by the Government of Malaysia to improve the quality of bus services. The ISBSF initiative is also expected to promote the continuity of bus services, and promote bus services as an effective mode of transportation.

The total funds recorded by The Combined Bus which was recognised under income from bus operations in the respective fmandal years/period are as follows: litH:1Ei.!2tlH iT;  ; tId  iIHiiil!::  FYE2013  2.91 million  FYE 2014  2.33 million  FYE 2015  2.43 million  FPE 2016  0.80 million  Total  8.47 million
We expect to receive RM1.87 million from the SPAD’s ISBSF for FYE 2016. The ISBSF is renewable every six (6) months, subject to SPAD’s approval. (e) SBST Programme We received a Letter ofIntent from SPAD on 29 June 2015, appointing The Combined Bus as the network operator for Ipoh under the SBST Programme, where for a period of eight (8) years the network operator will be paid cost per vehicle-km run for stage bus services rendered for stage bus routes in Ipoh. On 18 February 2016, The Combined Bus entered into a conditional agreement with SPAD to formalise The Combined Bus’ appointment as a bus network operator for Ipoh under the SBST Programme for 16 stage bus routes in Ipoh. The SBST Programme was introduced under the National Land Public Transport Master Plan (2012 -2030) with a focus on improving operator viability and expanding bus route coverage by migrating from the fare-box revenue collection model to the gross-cost service delivery model. The salient details of the aforesaid agreement with SPAD outlines that a contract of 8 years will be offered to The Combined Bus for provision of stage bus services (“Services”) in the abovementioned 16 stage bus routes in Ipoh. A gross cost model will be applied for the contract, where fares collected pursuant to the Services will be deposited to SPAD and The Combined Bus will be paid cost per vehicle-km for Services rendered. Under the SBST Progranune, SPAD would determine the stage bus routes, its operation costs and receive the fares collected. Then, the bus service operators will be paid a rate per km for each vehicle, which the operator must ensure the quality of the service which has been agreed upon. For illustrative purposes: Route A is a 10 km bus route determined by SPAD under SBST Programme. Each day there are 5 return trips on Route A which means in a day the buses rendered 100 km bus service. Assuming that SPAD will pay RM4. 00 for 1 km bus service rendered, the bus operator will be paid RM400. After the official appointment and the implementation as network operator for Ipoh, The Combined Bus is expected to experience an increase in its revenue from the stage bus services segment of approximately RM1.2 million per annum. We expect to receive RM 5.20 million from the SPAD’s SBST Progranune for FYE 2016. (I) Growth opportunities arising from growth in the public bus transportation sector The continuing growth and improvement of the public bus transportation sector in Malaysia, including in the Northern region, will bode well to the future earnings potential of our Group. Our offering as an integrated public transportation terminal and bus services provider puts us in a position to capitalise on this growth, as well as to pursue further opportunities to ensure the long term sustainability of our Group.

According to the IMR, tbe total registered buses in Malaysia witnessed an increase from 62,784 buses in 2013 to 65,044 buses in 2014 at a CAGR of 3.6%. Growth in the Northern region exceeded national growth as total registered buses increased from 12,243 buses to 12,722 buses at a CAGR of3.9%. The Northern region witnessed strong growth rate on the back of increased urbanisation and trade activities as well as population growth. (vi) We operate in an industry with barriers to entry Tbe public bus transportation sector in Malaysia is regulated by SPAD. Under the purview of the Land Public Transport Act 2010 (Act 715) and Land Public Transport Commission Act 2010 (Act 714), which were enacted to provide the mandate and focus in managing land public transportation in Peninsular Malaysia, SPAD was established to manage all land public transportation matters, including critical activities concerning planning, licensing and enforcement. SPAD has been appointed as the single authority to monitor and enforce standards in providing long-tenn plans for the public transportation system in Malaysia. As SUCh, we operate in an industry with barriers to entry, and consequently do not face substantial competition from new industry players. As stated in Section 4.4 (i) above, Tenninal AmanJaya has been declared the station for public services vehicles (buses and taxi services) with effect on 31 July 2012. Kindly refer to Section 4.1.1 (b) above for further details in relation to the SPAD Circular. Without express written consent from SPAD, express bus operators are prohibited from picking up and dropping offpassengers in other locations in Ipoh. (vii) We have an experienced and committed key management team We have been operating our business since 2009, and we are led by an experienced and committed management team. Our Managing Director Dato’ Sri Cheong Kong Fitt plays a pivotal role in steering the growth and success of our Group. His experience, drive and passion for our business have been instrumental to our Group’s success to-date. He has conceptualised and implemented various business and marketing strategies that have led our Group to its current standing in the industry. Our Managing Director is supported by our key management personnel, including our Executive Director, Dato’ Cheong Peak Sooi, our Chief Financial Officer, Loh Kwang Yean; our Administration and Finance Manager, Jennifer Chin Yi Teng, our Tenninal Manager, Nur Liana Binti Ahmad Tarmizi and our Bus Operations Administrator, Chen Lee Keen who collectively have exposure across a broad spectrum of business activities, from bus and tenninal operations and finance. Since our inception, we have built an established reputation in the industry through our management’s experience and expertise in the provision ofpublic transportation services, as well as our ability to provide quality service and consistent levels of customer service. The core competencies of our key management team will enable us to sustain our future growth and improve the overall financial perfonnance of our Group.

4.5 PRINCIPAL SEGMENTS AND MARKETS 

The breakdown of our sales revenue by business segment for the past three (3) FYE 2013 to FYE 2015 and the FPE 2016 are as follows:
Integrated public  transportation tenninal  operations  -Rental of A&P spaces -Rental of shops and  10,173  15.79  19,338  24.93  17,450  23.54  5,905  23.21  kiosks -Project Facilitation  2,922  4.54  1,311  1.69  1,779  2.40  1,141  4.48  Fee  3,800  4.90  9,669  13.04  2,396  9.42  _Others (1)  444  0.69  546  0.70  649  0.88  249  098  Subtotal  13,539  21.02  24,995  32.22  29,547  39.86  9,691  38.09  Bus operations  15,203  23.61  16,659  21.47  21,616  29.16  7,259  28.53  Petrol stations  operations and the  management of ADO  incentive programme  35,652  55.37  35,924  46.31  22,960  30.98  8,493  33.38  Total  64,394  100.0  77,578  100.0  74123  100.0  25443  100.0
Note:  (1)  Other revenues from the integrated public transpo rtation terminal operations comprising fees such as bus  and taxi entrance fees,  revenue from basement  car park charges and fees imposed on the usage of
lavatory in Terminal AmanJaya. The breakdown of our GP margin by business segment for the past three (3) FYE 2013 to FYE 2015 and the FPE 2016 are as follows:
Integrated public transportation tenninal operations -Rental ofA&P 99.92 99.96 99.95 99.95 spaces(l) -Rental of shops and 1.98 (45.69) (23.05) 41.72 kiosks -Project Facilitation59.56 84.04 76.88 Fee(2) -Others
99.55(3) 100.0(3) 97.23(4) 94.38(4) Bus operations 16.20 17.60 28.91 30.21 Petrol station operations 6.09 387 3.06 and the management of ADO incentive programme 7.60 Consolidated GP 24.58 34.37 44.42 42.87 mar ins Notes: (1)  The cost in deriving the GP and GP margin ofRental ofA&P spaces is in relation to the depreciation of the outdoor threejaced advertising billboard.

(2) The cost in deriving the GP and GP margin ofProject Facilitation Fee is in relation to the payroll cost and terminal related expenses (i.e. mainly depreciation). The basis of apportioning payroll cost and terminal related expenses due to Project Facilitation Fee, is arrived at based on the directors’ estimation of
(a) the time apportionment with an average of2 hours per day over 8 working hours of the two (2) Executive Directors and two (2) terminal staffs for two (2) out offive (5) office working days; and
(b) number of hours where Maksima Timur is allowed to access Terminal AmanJaya’s equipment, utilities andfacilities, e.g. from 6.00 a.m. to 7.00 p.m. on a daily basis.

 

(3) The cost in deriving the GP and GP margin ofOthers for FYE 2013 and FYE 2014 are in reiation to the cost afprinting bus entrance tickets for all express buses that utilise Terminal AmanJaya, save for those express buses operated by Perak Transit.
(4) The cost in deriving the GP and GP margin ofOthers for FYE 2015 and FPE 2016 is in relation to the cost afprinting bus entrance tickets for all express buses that utilise Terminal AmanJaya, save for those express buses operated by Perak Transit and payroll cost incurred by Terminal Urus as disclosed in Section 10.3.2.3 (#) ofthis Prospectus.

Kindly refer to Section 10.3.2 of this Prospectns for analysis of our Group’s revenue and gross profit margin for the past three (3) FYE 2013 to FYE 2015 and the FPE 2016.

4.6 MAJOR CUSTOMERS 

Our Group’s customers mainly comprise users of our public bus services; tenants of our retail shops and kiosks, A&P customers for the rental of indoor and outdoor (including the three-faced advertising billboard located within the compound of Terminal AmanJaya) A&P spaces; bus operators utilising Terminal AmanJaya; and retail customers at our petrol stations. Our Group’s major customers which have contributed more than 10% of our total revenue in the past three (3) FYE 2013 to FYE 2015 and the FPE 2016 are as follows:
Rezeki Megajaya  21,520  27.74  10,114  13.64  2,169  8.52  2  Maksima Timur  3,800  4.90  9,669  13.04  2,396  9.42  2  Century Edge Grou  7,217  9.74  3,379  13.28  Total Group’s revenue  64,394  100.0  77,578  100.0  74,123  100.0  25,443  100.0
In the FYE 2014 and FYE 2015, our Group’s major customers were Rezeki Megajaya and Maksima Timur. Rezeki Megajaya contributed RM21.52 million (representing 27.74%) and RMIO.II million (representing 13.64%) of our Group’s revenue for FYE 2014 and FYE 2015 respectively. Rezeki Megajaya was our Group’s major customer mainly for rental of A&P spaces at Terminal AmanJaya, including the rental of outdoor three-faced advertising billboard space located within the compound of Terminal AmanJaya until 31 March 2015. Rezeki Megajaya shall source for advertisers and end-users for the promotional spaces. Subsequently, Rezeki Megajaya contributed revenue to our Group from bus charter services (following the agreement with Rezeki Megajaya dated I August 2015) amounting to RM4.67 million (representing 6.30%) and RM2.17 million (representing 8.52%) of our Group’s revenue forFYE 2015 andFPE 2016 respectively.

Maksima Timur contributed RM3.80 million (representing 4.90%), RM9.67 million (representing 13.04%) and RM2.40 million (representing 9.42%) of our Group’s revenue for FYE 2014, FYE 2015 and FPE 2016, respectively, which represents all our Group’s Project Facilitation Fee income for the financial years/period under review. Maksima Timur is involved as an operator of transportation business, property development and investment holding. Property development activity includes acting as Project Manager (for the construction of the new integrated land transportation terminal complexes) to prospective parties, which fucilitate the development of new integrated land transport terminal complexes). The services by our Group to Maksima Timur include rental of Terminal AmanJaya’s equipment, utilities and facilities, preparing preliminary concept paper for proposed project, discussion and sharing of knowledge relating to design, planning and construction of terminal and attending all meetings organised by Maksima Timur with SPAD and other relevant governmental departments. Kindly refer to Section 8.1.2 for further details on Maksima Timur. Century Edge Group contributed RM7.22 million (representing 9.74%) and RM3.38 million (representing 13.28%) of our Group’s revenue for FYE 2015 and FPE 2016 respectively. Our Group engaged Century Edge Group to undertake the rental of promotional spaces at Terminal AmanJaya since I April 20 15. Rezeki Megajaya pays rental to our Group based on the end-user’s usage of A&P spaces. These end­users of A&P spaces are procured by Rezeki Megajaya. This arrangement relieves our Group from having to procure for A&P end-users and we are assured of the rental collection from Rezeki Megajaya for the A&P spaces in Terminal AmanJaya. Rezeki Megajaya shall only procure end-users who will rent the A&P spaces not exceeding one (1) year as our Group wishes to reserve the right to revise the A&P rental rates. Further, Rezeki Megajaya shall not rent the A&P spaces at Terminal AmanJaya to end-users for A&P activities that are related to gambling, funerary services and! or any immoral activities. Further, in order to encourage Rezeki Megajaya to promote our Group’s A&P spaces in Terminal AmanJaya, our Group will pay incentives to Rezeki Megajaya as follows: (i) If our Group received rental above RMI.70 million in a month from the A&P rental proceeds, ourGroup shallpayan incentive ofRM30,000for thatmonth to RezekiMegajaya;
(ii) If our Group received any amount above RMI.85 million A&P rental proceeds, our Group shall pay an incentive of RM30, 000 and an additional 1% on the amount exceeding RM1.85 million; or

(iii) Should our Group received any amount below RM1.70 million A&P rental proceeds, Rezeki Megajaya does not get any incentive and our Group will record lower monthly rental income fromA&P. Our Group’s rental income derived from Rezeki Megajaya has always been above RM1.70 million when Rezeki Megajaya was our customerfor the A&P space. The A&P rental proceeds is recognised as revenue in our Group whilst we also incur expenses in the form of incentives payable to Rezeki Megajaya. Further, Rezeki Megajaya is the trade debtor of our Group. As stated in Section 3.I(v), Rezeki Megajaya had ceased to be our Group’s customer for A&P services in April 2015 as the company has since focused its management work services and resources on bus hire-charter, leisure and commercial travels and bus advertisement activities.

In April 20 IS, our Group had subsequently entered into agreements with two (2) other companies, namely Century Edge Group and Angkasa Aman, for the rental of A&P spaces and outdoor tluee-faced advertising billboard located within the compound of Tenninal AmanJaya. • Century Edge Group provides marketing solutions, event management and real estate services. Our Group has engaged Century Edge Group for the rental of promotional space at Tenninal AmanJaya. In April 2015, Century Edge Group became our customer for the duration of one (1) year and pays fixed monthly rental of RM 850,000 (inclusive of GST) to our Group. Centurj Edge Group shall pay our Group a fixed monthly rental, regardless of the income received by Century Edge Group from its own end-users for promotional activities. Century Edge Group shall be responsible to procure its own end-users for promotional activities. Century Edge Group shall have the exclusive rights to the promotional space of Tenninal AmanJaya. With effect from I April 2016, this contract was renewed for an additional year with the revised rental at the rate of RM952,000 per month (inclusive of GST) for the rental of indoor and outdoor lobby, concourses, verandas and tannac. Century Edge Group shall rent these promotional spaces to end-users. In addition to this renewal, with effect from I April 2016, Century Edge Group also rents 50 parking bays located at the basement carpark for car dealers to store and exhibit their cars. These additional spaces were rented to Century Edge Group for an additional fee of RM79,500 (inclusive of GST) per month. Century Edge Group shall only procure end-users who will rent the promotional spaces for durations not exceeding one (1) year. Further, Century Edge Group shall not rent the promotional spaces at Tenninal AmanJaya to end-users for promotional activities that are related to unlawful or immoral purpose or any purpose that may adversely affect Tenninal AmanJaya.
• Angkasa Aman is involved in outdoor and indoor advertising, printing of banners, buntings and posters, as well as rental management of promotional space and billboards. In April 20 IS, Angkasa Aman became our customer for the duration of one (I) year and pays fixed monthly rental of RM650,000 (inclusive of GST) to our Group. Angkasa Aman shall pay our Group a fixed monthly rental, regardless of the income received by Angkasa Aman from its own end­users for advertising activities. Angkasa Arnan shall be responsible to procure its own end-users for advertising activities. Angkasa Aman shall have the exclusive rights to the advertising space of Tenninal AmanJaya. With effect from I April 2016, this contract was renewed for an additional year with the revised rental at the rate ofRM728,000 per month (inclusive ofGST),for the rental of indoor and outdoor advertising spaces and billboards where Angkasa Aman shall rent these advertising spaces to end-users. Angkasa Aman shall only procure end-users who will rent the advertising spaces for durations not exceeding one (I) year. Further, Angkasa Aman shall not rent the advertising spaces to end-users for advertising activities that are related to unlawful or immoral purpose or any purpose that may adversely affect Tenninal AmanJaya.

Kindly refer to Sections 3.1 (v) and 4.3.1.1 of this Prospectus for further details in relation to our Group’s rental arrangement in Tenninal AmanJaya. The key difference between the rental arrangement between both Century Edge Group and Angkasa Aman compared to Rezeki Megajaya’s rental arrangement is that the former pays flat rate monthly rental to our Group, whereas Rezeki Megajaya’s rental arrangement was incentive-based depending on the actual rental income our Group has received. We strive to create cordial business relationships with our customers and place significant emphasis on developing and maintaining customers satisfaction, goodwill and rapport. None of our Directors or substantial shareholders have any interest, direct or indirect, in any of the above companies.

MAJOR SUPPLIERS 

Over the years, we have established good working relationships with our suppliers. Our suppliers include those from whom we purchase motor vehicles, fuel and spare parts (such as tyres and car batteries). Our major suppliers which have contributed more than 10% of our purchases in the past three (3) FYEs and the FPE 2016 are as follows:
Shell Malaysia and Petron Malaysia are the authorised distributors of the respective range of fuels and lubricants in Malaysia, and we are dependent on these suppliers for the provision of fuels and lubricants for the operations ofour Shell and Petron petrol stations. Notwithstanding the above, the GP margin for petrol station operations and the management of ADO incentive programme shows a declining trend from 7.60% in FYE 2013, 6.09% in FYE 2014, 3.87% in FYE 2015, and subsequently 3.06% in FPE 2016. In this regard, the above reliance on our major suppliers in terms of income is not a major risk factor to our Group.

4.8 PROCESS FLOW OF SERVICE DELIVERY 

We conduct our public bus business in a relatively autonomous manner where revenues and costs are accounted directly under our subsidiary, The Combined Bus. The key operational divisions of the bus services business are as follows:

• The Bus Operations Division is responsible for the on-going network planning, scheduling and maintenance of the bus routes. Routes are planned to meet the needs of the commuting public and in accordance with the standards laid down by SPAD. These standards include specifications on accessibility, service efficiency, hours of operation, affordability and service information. Routes planned are subject to approval by the SPAD before implementation.
• The Bus Operations Division is also responsible for producing schedules specifying the deployment of buses and drivers to the various bus routes. The number of buses required for each service, timetable for the despatch of each service and the number of drivers assigned to each service are spelt out in the schedules. Studies are carried out by the Bus Operations Division on a continuous basis through ticketing sales to monitor bus loading.
In addition, the Bus Operations Division conducts ticket inspection on the buses to identify fare leakage due to underpayment or non-payment of fares.
• The Bus Terminal Division manages Terminal AmanJaya where it controls the timeliness of each service by despatching buses according to the timetable scheduled for each service. The Bus Terminal Division is also responsible for passenger safety in Terminal AmanJaya.

 

4.9 OPERATING CAPACITIES AND UTILISATION RATES 

4.9.1 Occupancy rates for Terminal AmanJaya 

The occupancy rate of Terminal AmanJaya is defmed by the ratio of gross leased area comprising shoplots, kiosk, pushcarts and ticketing counters compared to the gross leasable area of Terminal AmanJaya. Our occupancy rates for Terminal AmanJaya based on gross leased area shows an increasing trend from 78.00% as at 31 December 2013 to 79.29% as at 31 December 2014, and subsequently 92.57% as at 31 December 2015. As at 30 April 2016, the occupancy rates increased to 94.27%. We witnessed an increase in occupancy rates from 31 December 2013 to 31 December 2015, and subsequently to 30 April 2016. The increase in occupancy rates was a result of more retail tenants leasing retail space at Terminal AmanJaya due to rising passenger and visitor traffic. Kindly refer to Section 4.3.1.2 for the details of the breakdown of tenancies by retail category in Terminal AmanJaya for the FYE 2013 to FYE 2015 and the FPE 2016. The total registered passenger traffic at Terminal AmanJaya shows an increasing trend of 573,022 persons in the FYE 2013 to 760,740 persons in the FYE 20J4, and subsequently to 822,775 in FYE 2015. From J January 2016 up to 30 April 20J6, we recorded 250,883 passengers at Terminal AmanJaya. Kindly refer to Section 4.3.J for further details. Our gross leasable area, gross leased area and occupancy rates for the past three (3) FYE 2013, FYE 2014, FYE 2015 and the FPE 2016 are as depicted below:
FYE 2013 FYE 2014 FYE 2015  49,291.4 49,291.4 49,291.4  38,445.4 39,085.4 45,626.6  78.00 79.29 92.57

4.9.2 Utilisation rates for A&P space at Terminal AmanJaya 

The utilisation rate of A&P space at Terminal AmanJaya as at 31 December is defined by the ratio ofJeased A&P space compared to the available A&P space at Terminal AmanJaya. The recording of data for leased A&P space commenced in the FYE 2014 period. The utilisation rates for advertising space and promotional space at Terminal AmanJaya as at 31 December 2014 is 60.13% and 60.09% respectively. Further, the utilisation rates for advertising space and promotional space at Terminal AmanJaya as at 31 December 2015 is 70.06% and 65.18% respectively. The utilisation rates for advertising space and promotional space at Terminal AmanJaya as at 30 April 2016 is 72.95% and 68.01% respectively.

Our available A&P space, leased space and utilisation rates as at 31 December 2014, 31 December 2015 and 30 April 2016 are as depicted below:
Note: (a) Data collection for available and leased A&P space only commenced in the FYE 2014.
FPE 2016  Advertising space  15,000.0  10,943  72.95  Promotional space  40,000.0  27,204  68.01
4.9.3 Public stage bus and express bus services The armual utilisation rate of our Group’s stage bus and express bus service is defmed by the ratio of occupied seats compared to the number of available seats on our stage bus and express bus over a period of365 operating days. The utilisation rates for our stage bus services increased from 26.52% in the FYE 2013 to 31.38% in the FYE 2014, and subsequently to 32.24% in FYE 2015. In FPE 2016, our stage bus services utilisation rate was at 31.45%. Our maximum annual seating capacity is dependent on the number of stage buses we have plying routes for a specific period. In the FYE 2013 our maximum annual seating capacity is based on 92 buses operating over a period of twelve months. Upon a series of acquisition and writing off of old buses, our Group had a total of 87 buses and 82 buses in the FYE 2014 and FYE 2015 respectively that were utilised for stage bus services. In FPE 2016, our Group had 82 buses that were utilised for stage bus services. The reduction in the number of stage buses (from 92 buses in the FYE 2013 to 82 buses in the FPE 2016) that were used to ply the same number of routes was mainly due to the efficiency of the newer buses. The use of new buses for stage bus services allowed our Group to reduce the number of allocated buses that were on standby to replace the older buses that were unable to operate due to frequent maintenance downtime and/or breakdown.

The growth in our utilisation rate is also a result of operating under the Consortium Arrangement, where it allowed our Group to benefit from the rationalisation of duplicating bus routes. Further, our Group had improved the delivery of stage bus services where we enhanced the quality of service with more buses plying selected routes and improved the scheduling of routes as well as punctuality of bus services which resulted in improved utilisation rates for our stage bus services. The slight decrease in the utilisation rate in FPE 2016 to 31.45% (FYE 2015: 32.24%) was mainly due to seasonal factors where more passengers is expected during the festive seasons and longer school holidays in the mid to end of the year. As at the LPD, we operate 27 stage bus routes covering Ipoh and its surrounding areas. The utilisation rates for our express bus services registered a year-on-year increase from 30.14% in the FYE 2013 to 35.62% in the FYE 2014, and subsequently witnessed a year-on­year increase to 38.39% in the FYE 20 IS. In FPE 2016, our express bus services utilisation rate was 19.78%. In the FYE 2013, the scale of our express bus service operations was for the Ipoh -TaipingrouteandIpoh-CameronHighlandsroute.IntheFYE20I4,ourGroupreducedthe frequency of scheduling while maintaining the number of express buses plying the Ipoh ­Taiping route and Ipoh -Cameron Highlands route. This led to an increase in utilisation rates for our Group’s express bus services as we were able to reallocate our buses to operate at peak periods ofthe day, when demand for express bus tickets to these destinations are high. In FYE 20 IS, we acquired six (6) new express buses plying the Ipoh -Taiping route and Ipoh -Cameron Highlands route; which gives our Group a maximum all-.1lual seating capacity of 112,000 seats. In the same year, our annual load increased to 43,000 seats from 26,000 seats in FYE 2014 due to higher demand, which resulted in a higher utilisation rate. The utilisation rate for our express bus services registered a year-on-year decrease from 38.39% in the FYE 2015 to 19.78% in the FPE 2016. In the FPE 2016, we increased the seating capacity by acquiring 16 new express buses plying three (3) new routes which are the Ipoh -Kampar -Teluk Intan route, Ipoh -Seri Iskandar -Lumut route and Kampar -Terminal Bersepadu Selatan route. Since our express buses commenced plying these new routes from April 2016, the level of awareness among passengers towards these new routes service has been relatively low and thus influenced our utilisation rate in the FPE 2016. Our Group’s utilisation rate for express bus services is expected to improve in time as the level of passenger awareness for these new routes increases. For illustration purposes, assuming the 16 new express buses were not acquired and we do not ply the three (3) new routes, the utilisation rate shall be approximately 45.95%. Our annual maximum seating capacity, actual load volumes and utilisation rates for the FYE FYE 2013, FYE 2014, FYE 2015 and the FPE 2016 are as depicted below:
Stage bus  FYE 2013  23,307 (i)  6,182  26.52  FYE 2014  20,296 (ii)  6,368  31.38  FYE 2015  18,825 (iii)  6,069  32.24  FPE 2016  6,241(iv}  1,963  31.45

Express bus  FYE 2013  146 (v)  44  30.14  FYE20l4  73 (vi)  26  35.62  FYE 2015  112 (vii)  43  38.39  FPE 2016  91 (viii)  18  19.78
Notes. (i) Based on 17 stage buses capable offerrying a maximum of 51 passengers at anyone time, 15 stage buses capable afferrying a maximum of31 passengers at anyone time, 50 stage buses capable offerrying a maximum of 62 passengers at anyone time, 5 stage buses capable of ferrying a maximum of64 passengers at anyone time and 5 stage buses capable offerrying a maximum of 32 passengers at anyone time, each taking an average of 13 trips daily and operating over a period of365 days.
(ii) Based on 62 stage buses capable offerrying a maximum of51 passengers at anyone time, 15 stage buses capable offerrying a maximum of 31 passengers at anyone time, 5 stage buses capable offerrying a maximum of62 passengers at anyone time and 5 stage buses capable of ferrying a maximum of64 passengers at anyone time each taking an average of13 trips daily and operating over a period of365 days.

(iii) Based on 62 stage buses capable offerrying a maximum of51 passengers at anyone time, 15 stage buses capable afferrying a maximum of31 passengers at any one time and 5 stage buses capable offerrying a maximum of64 passengers at anyone time, each taking an average of13 trips daily and operating over a period of365 days. (iv) Based on 62 stage buses capable offerrying a maximum of51 passengers at anyone time, 15 stage buses capable offerrying a maximum of31 passengers at anyone time and 5 stage buses capable offerrying a maximum of64 passengers at anyone t,me, each taking an average of13 trips daily and operating over a period of121 days.
(v) Based on 5 express buses with 28 seats and 2 express buses with 30 seats, each taking an average of2 daily trips and operating over a period of365 days.
(vi) Based on 5 express buses with 28 seats and 2 express buses with 30 seats, each taking an average of1daily trip andoperatingover aperiod of365 days.

(vii) Based on 11 express buses with 28 seats, each taking an average of1 daily trip and operating over a period of365 days. (viii) Based on 27 express buses with 28 seats, each taking an average of 1 daily trip and operating over a period of121 days The summary ofthe asset and its value in relation to the stage bnses and express buses is set out in Section 9.1.3. 4.9.4 Utilisation rates for Petrol stations The annual utilisation rate for our petrol stations is defmed by the ratio of our retail sales of fuels compared to the annual capacity of our fuel storage tanks. The utilisation rates of our Group’s petrol station business were registered at 7.10%, 6.68%, and 4.45% for the FYE 2013, FYE 2014 and FYE 2015 respectively. Our Group’s annual fuel storage capacity is calculated based on fuel storage capacity over a period of twelve months. In the FPE 2016, the utilisation rate of our Group’s petrol station bnsiness was registered at 5.14%.

Our Group witnessed a declining trend in utilisation rates for the FYE 2013 to FYE 2015. In the FYE 2014, the price of RON95 petrol variant was increased from RM2.1O per litre to RM2.26 per litre. This ultimately led to more prudent consumption of petrol by vehicle users and thereby resulted in lower retail sales ofpetrol. The lower utilisation rate in the FYE 2014 was also due to the lower annual sales of diesel as a result of the lower commercial price of diesel (diesel price which fluctuates based on global crude oil price) of approximately RM1.75 per litre in comparison to the pump price (diesel price at petrol stations which has been fixed by MTDCC) of RM2.23 per litre. This resulted in reduced demand for diesel among commercial vehicle users that frequented our Group’s petrol stations, as these commercial vehicle operators were able to purchase diesel on their own directly from fuel suppliers at the lower commercial price and made available to its own vehicle at their respective premises. Subsequently in FYE 2015, the price of RON95 petrol variant decreased from RM2.26 per litre to RM1.95 per litre. The utilisation rate for FYE 2015 decreased due to the continuing decrease in demand for diesel from our petrol stations since there is still substantial pricing disparity between the commercial price of diesel as compared to the pump price of diesel (i.e. approximately RMI.45 per litre as opposed to RM1.90 per litre). In addition, in FYE 2015, our Group commenced CKS Bumi’s Petron station operation that resulted in the increase of our annual fuel storage tank capacity. The higher utilisation rate of 5.14% in FPE 2016 (FYE 2015: 4.45%) was mainly due to improved sales at CKS Bumi’s Petron station during the FPE 2016. In the FPE 2016, the price ofRON95 petrol variant further decreased from RM1.95 per litre to RM1.70 per litre, thereby leading to higher sales ofpetrol being recorded in our Group’s petrol stations. Our annual fuel storage tank capacity, annual retail sales of fuels and utilisation rates for the past three (3) FYE 2013, FYE 2014, FYE 2015 and the FPE 2016 are as depicted below:
FYE 2013 (b) FYE 2014 (b) FYE 2015(0) FPE 2016(d)  235,973 235,973 256,293 97,587  16,758 15,759 11,395 5,015  7.10 6.68 4.45 5.14
Notes:  (aJ  Fuel storage tank capacity for the year is calculated based on the capacity offuel storage tank capacity per day annually.  (b)  Capacity and utilisation rates are calculated for CKS Labur (i.e. Shell), Star Kensington (i.e. Shell) and The Combined Bus (i.e. BHP) but ex£lude CKS Bumi (i.e. Petron, since it only commenced operations in August 2015).  (e)  Capacity and utilisation rates are calculated for CKS Labur (i.e. Shell), Star Kensington (i.e. Shell), The Combined Bus (i.e. BHP) and CKS Bumi (i.e. Petron, after commencement of its operations in August 2015).  (d)  Capacity and utilisation rates are calculated for CKS Labur (i.e. Shell), Star Kensington (i.e. Shell), The Combined Bus (i.e. BHP) and CKS Bumi (i.e. Petron, after commencement of its operations in August 2015), over the period of four (4) months from January 2016 to April 2016.

4.10 TECHNOLOGY USED 

We are in the process of implementing an electronic ticketing system to further improve our customer service efficiency, processes and procedures, as well as to lower operational costs. As at the LPD, we have installed 8 physical electronic ticketing booths at Terminal AmanJaya. This electronic ticketing system operates on comprises liquid crystal display (LCD) bus schedule information system; license plate recognition system; terminal management system; and terminal e-ticketing system, and will allow commuters to carry out online searches by bus route and time, booking of bus tickets and online payment. We intend to fully implement this system by 2017. To further monitor the operations of our fleet activities, we have installed GPS tracking systems in all our buses to continuously monitor and manage the operation of buses through the availability of real time information. This method of service monitoring and controlling enables our Group to improve fleet management through driver behaviour monitoring for safety, compliance and security, maintenance control, and emergency assistance. These systems are intended to help our Group achieve better cost control and to increase the efficiency of our operations.

4.11 RESEARCH AND DEVELOPMENT 

We do not have a formal R&D division and thus, have not recorded any R&D expenses since our inception.

4.12 TYPES, SOURCES AND AVAILABILITY OF RESOURCES I RAW MATERIALS 

Fuels, lubricants and bus spare parts comprised our major purchases where it accounted for approximately 93.86%, 96.21%, 94.47% and 95.03% respectively of our total purchases for the FYE 2013, FYE 2014, FYE 2015 and the FPE 2016, as shown in the table below:
Fuels, lubricants, petrol stations’ retail mart products and bus spare parts’  30,182  93.86  32,272  96.21  21,485  94.47  8,624  95.03  Repair and maintenance  1,490  4.63  969  2.89  878  3.86  289  3.18  T res and tubes  485  1.51  302  0.90  379  1.67  162  1.79  Total Group’s urchases  32,157  100.0  33,543  100.0  22,742  100.0  9,075  100.0

Notes: Computed based the purchases of the respective material components and parts over our Group’s total purchases for the FYEs 2013 to FYE 2015 and the FPE 2016. • The purchase offUels, lubricants and petrol stations’ retail mart products are mainly for retail sales at our petrol stations. The principal materials, components and parts that we use are generally widely available and sourced from local suppliers. The prices of our materials, components and parts are subject to price fluctuations as a result of demand and supply conditions.

We have developed policies and procedures that guide our selection ofsubcontractors and suppliers. All selected suppliers are evaluated in terms of financial performance, production capacities, ability to deliver products that meet our quality requirement, and ability to deliver in a timely manner. We will appoint experienced suppliers that are reliable and fmancially secure to ensure the quality of services that we deliver to our customers. We maintain long term relationships with most of our suppliers, whereinthelength ofourrelationshipwith oursuppliersspannedbetween1to5years.

4.13 MODES OF MARKETING AND SALES 

Our Terminal AmanJaya is the only gazetted express bus terminal in lpoh. Thus, our Terminal AmanJaya facility in this respect is able to market on its own to attract visitors. Similarly, our petrol stations under the established brands ofShell, BHP and Petron are also able to attract retail consumers. We continually kept the public informed of the services that we provide. The public is informed of the launch of new services or changes to current services through press releases and notices put up at the relevant bus interchanges and bus stops. Upon the launch of new bus routes or new bus schedules, our bus operations team organises launch events, where announcement of these new bus routes or bus schedules are announced to the public. Other means of communication include service information at bus stops and bus interchanges. In addition, we operate an information counter where commuters can make enquiries. The information counter also serves as a channel for commuters to give their feedback. We will place at Terminal AmanJaya an electronic display system informing commuters of the estimated boarding times of departing bus services.

4.14 QUALITY CONTROL, CERTIFICATIONS AND RECOGNITION 

Our Group recognises that it is vital to provide quality services and maintain high standards in our operations. To attract and retain bus drivers and commuters, we have adopted a comprehensive set of policies: Bus drivers We conduct an induction programme for our new bus drivers to inform them of our policies, as well as the laws and regulations that they are subject to, such as the requirements for the renewal of their PSV license imposed by SPAD and Jabatan Pengangkutan Jalan. Our bus drivers are required to possess and maintain their PSV licences and undergo the courses required by SPAD. SPAD requires bus drivers (including relief drivers) to renew their PSV licence annually. Bus fleet Prior to acquiring new buses, our Group carries out studies and research on the feasibility of the relevant vehicle model, such as its safety features, fuel efficiency and cost-effectiveness to our Group and bus drivers. We require our buses to undergo regular maintenance at our workshop periodically in order to ensure that the condition of our fleet is kept at an optimal level. As we operate our own in-house workshop, we are able to ensure that high standards of repair and maintenance are met. In addition to the regular servicing, our buses are sent for inspection prior to the renewal ofannual road tax. Terminal operations As part of our commitment in delivering optimal service levels at Terminal AmanJaya, our terminal operations team is responsible for ensuring the quality and timely delivery of seeurity services, traffic management and reception services.

Our security services are delivered by four (4) teams of security personnel that operate on a rotation basis to provide 24-hours security at Terminal AmanJaya. In addition to patrolling the premises and ensuring safety on the premise, our security team will also assist with traffic management and crowd management. Traffic management is a key activity at Terminal AmanJaya as this facility witnesses high passenger and bus traffic. Our traffic management team is responsible for managing crowd movement and bus movement on the terminal premises, as well as checking all incoming and exiting buses. Our traffic management team ensures buses are directed from the entrance of the terminal to the holding bay area or arrival and/or departure bay area in an orderly manner for the convenience and safety of alighting passengers. The reception services at Terminal AmanJaya aim to provide optimal customer service to visitors patronising Terminal AmanJaya. Our reception services are delivered by three (3) teams on a 24-hour shift basis daily. Feedback channel To monitor quality and service levels, we have implemented a public feedback channel at the information counter at Terminal AmanJaya. Any feedback or complaint from the public about our terminal operation services are documented and investigated if necessary. After investigation, the management would decide on the appropriate action to be taken. A complaint will generally be responded to by our customer service department within one (I) week.

4.15 INTELLECTUAL PROPERTY

We do not own nor are we dependent on any registered trademark, patent or license or intellectual property rights.

 

4.16 APPROVALS / MAJOR LICENSES / PERMITS

Below are the approvals, major licences and permits obtained by our Group for our business operations: (a) The Combined Bus
99
Company No.: 831878-V 4. BUSINESS OVERVIEW (Conf’dj
Jabatan Kastam Diraja  26.09.2014  Not applicable  Pennohanan Pendaftaran Di  No  specific  conditions  other I Complied  Malaysia (Pusat  Bawah Seksyen 21 Akta  than to authorise the taxation  Pemprosesan GST)  Cukai Barang dan  period to be done monthly, on  Perkhidmatan: Pendaftaran  an  accrual basis, with the first  Nonnal  taxation  duration  being  (Serial no.: 001834762240)  01.04.2015.
(b) CKS Bumi
routes Operating for an initial 12 stage I Complied bus routes which was subsequently increased to 18 stage bus routes No specified conditions, except I Complied to renew prior to the expiry date No specific conditions other I Complied than to authorise the taxation period to be done 3 months’ once, on an accrual basis, with the first taxation duration being 01.08.2015 100 Company No.: 831878-V 4. BUSINESS OVERVIEW(Cont’d)
MTDCC  14.08.2015  13.08.2017  Approval for operation of  None specified, to be read  I Complied  petrol station ~ PETRON, at  together with the licence  Lot 3590, Jalan Industrial I,  immediately below  Stesyen Minyak, Kawasan  Perindustrian IKS, 33000  Kuala Kangsar, Perak.  (License no.: 18588)  MTDCC  14.08.2015  13.08.2017  Sales license in support of  Retail ofRON 95 petrol, RON  I Complied  license no (Lesen Runcit).:  97 petrol and diesel at the stated  18588  premises.  (License No.: PR004966)  A maximum of60,000 liters of  RON 95, 20,000 liters ofRON  97 and 80,000 liters ofdiesel to  be in their possession at any  given time.
(c) CKS Labur
101 Company No.: 831878-V 4. BUSINESS OVERVIEW(Cont’d)
license No. (Lesen Runcit):  97 petrol and diesel at the stated  16607  premises.  (License No.: K.R19904)  A maximum of 60,000 liters of  RON 95, 30,000 liters of RON  97 and 60,000 liters of diesel to  be in their possession  at  any  given time  Majlis Oaerab Batu Gajah  I 21.08.2016  I 20.08.2017  I Business license for operation  To  renew  before  the  next I Complied  ofpetrol kiosk  expiry  (License No.: LOO06740-8)  Jabatan Kastam Oiraja  24.09.2014  Not applicable  Permohanan Pendaftaran Oi  No specific conditions other  I Complied  Malaysia (pusat  Bawah Seksyen 21 Akta  than to authorise the taxation  Pemprosesan GST)  Cukai Barang dan  period to be done monthly, on  Perkhidmatan: Pendaflaran  an accrual basis, with the fITst  Normal  taxation duration being  (Serial no.: 001432428544)  01.08.2015
102 Company No.: 831878-V 4. BUSINESS OVERVIEW(Cool’d) (d) Star Kensington MTDCC MTDCC  23.05.2015  02.04.2018 22.05.2018  Approval for operation of petrol kiosk -Shell, at Lot PT 136632, Taman Tanjung Mewah, Jalan Tambun, 31250 Ipoh, Perak (License No.: 16340) Sales license for in support of license No. (Lesen runcit): ]6340 (License No.: KR14662)  None specified, to together with the immediately below be read licence Complied Retail ofRON 95 petrol, RON I Complied 97 petrol and diesel at the stated premises. A maximum of 54,600 liters of RON 95, 27,300 liters of RON 97 and 54,600 liters of diesel to be in their possession at any given time  M”\ilis Bandaraya Ipoh  01.01.20]6  31.12.2016  Business license for operation ofpetro! kiosk (License No.: L0079211-01)  To renew expiry  before  the  next  I  Complied  Jabatan Kastam Diraja Malaysia (pusat Pemprosesan GST)  27.09.2014  Not applicable  Permohanan Pendaftaran Di Bawah Seksyen 21 Akta Cukai Barang dan Perkhidmatan: Pendaftaran Normal (Serial no.: 00] 172840448)  No specific conditions other than to authorise the taxation period to be done monthly, on an accrual basis, with the first taxation duration being 01.04.2015  Complied
103

4.17 SEASONALITY / CYCLICALITY 

We witness higher than average passenger movement for our public bus services business during long weekends, public holidays and school holidays, where commuters take advantage of the long break to travel. Our Tenninal AmanJaya and petrol station operations also witness similar seasonal trends.

4.18 INTERRUPTIONS TO BUSINESS AND OPERATIONS 

Our Group has not experienced any interruption to our business and operations, in the fonn of trade disputes or major operational breakdown which has a significant effect on our business performance during the 12 months period prior to the LPD.

4.19 REGULATORY REQUIREMENTS AND ENVIRONMENTAL ISSUE 

Our Group is not in breach of any regulatory requirement or environmental issue which may materially affect our operations and the utilisation of our Group’s assets. As at the LPD, there are no proceedings or investigations in any environmental issues which may materially affect our operations and utilisation of assets.

4.20 DEPENDENCE ON CONTRACTS OR ARRANGEMENTS 

As at the LPD, save as disclosed below and in Sections 4.16 of this Prospectus, there are no patents, or licenses, industrial, commercial or [mancial contracts (including informal arrangements or understandings), which have been entered into by us that we are highly dependent on or that is material to our business and/or profitability. (i) Retailer supply agreement entered into between CKS Labur and Shell Malaysia on 18 June 2010 for the supply of Shell fuel for its petrol station in Lahat, Perak. Vide this agreement, Shell Malaysia shall supply CKS Labur with motor fuel, with CKS Labur promoting the brand associated with Shell Malaysia and deliver the Shell Malaysia customer value proposition to the high standards required by Shell Malaysia, for the duration of 10 years commencing 18 June 2010 and ending on 17 June 2020;
(ii) Retailer supply agreement entered into between Star Kensington and Shell Malaysia on 12 April 2012 for the supply of Shell fuel for its petrol station in Tanjung Rambutan, Perak. Vide this agreement, Shell Malaysia shall supply Star Kensington with motor fuel, with Star Kensington promoting the brand associated with Shell Malaysia and deliver the Shell Malaysia customer value proposition to the high standards required by Shell Malaysia, for the duration of 10 years commencing 12 April 2012 and ending on 12 April 2022;

(iii) Retail trading agreement entered into between CKS Bumi and Petron Malaysia on 19 March 2015 for the supply of Petron fuel for its petrol station in Lubok Merbau, Perak. Vide this agreement, CKS Bumi shall set up the petrol station at its own cost and obtain all licences necessary to operate a petrol station, and purchase a minimum of 200 kilo litres of unleaded premium and unleaded regular fuel; and 250 kilo litres of diesel from Petron Malaysia for the duration of 15 years; and 4. BUSINESS OVERVIEW (Conrd) (iv) Supply and licence agreement entered into between The Combined Bus and Boustead Petroleum Marketing Sdn Bhd on 25 August 20 II for the supply of BHP fuel for its petrol station in Meru Raya, Perak. Vide this agreement, The Combined Bus shall exclusively market and sell Boustead Petroleum bulk petroleum products, packed products (Le. lubricants, gear oils, coolant, brake fluid and battery water) at The Combined Bus’s petrol station for the duration of20 years. Notwithstanding to the above, in the event of any non-renewal or termination of the supply agreements above, we are able to source from other fuel suppliers as we have the ready infrastructure facilities and experiences to meet the procedures for operating a petrol station, as well as our Group has been successful in securing approvals for our applications to operate petrol stations.

4.21 FUTURE PLANS AND STRATEGIES 

Our strategy and future plans for the growth and expansion of our business is described below: (i) We intend to develop integrated public transportation terminal in other parts of Perak and other regions in Malaysia Our Group is the owner and operator of Terminal AmanJaya, where since its operations in 2012, is an integrated public transportation terminal with ticketing and retail outlets, promotional space as well as commercial offices available for rental. Based on our track record of operating Terminal AmanJaya, we intend to develop the integrated public transportation terminals in other parts of Perak as well as other regions in Peninsular Malaysia. The successful construction and commercial operations of Terminal AmanJaya, which is the proven business model in terminal operations has enabled our Group to build a strong reputation in the public transportation sector, and this has attracted interest from several external parties and government agencies who have approached us to set up new bus terminals in other cities and towns. With the experience and expertise gained from operating Terminal AmanJaya, we are in a prime position to offer our services in terminal construction and operations to our potential customers, as part of our Group’s expansion plans. Having worked on the concept papers of the proposed Terminal Kampar, we assessed its business viability in relation to Kampar’s socio-economic development, and thus planned to pursue the proposed Terminal Kampar project. In May 20 IS, The Combined Bus wrote to Majlis Daerah Kampar to express our Group’s intention to be the developer and operator of Terminal Kampar. Subsequently, The Combined Bus further submitted an official request to UPEN on 14 August 2015 to express this intention and on 18 December 20 IS, UPEN gave the approval to The Combined Bus to submit the planning approval (“Kebenaran Merancang”) for Terminal Kampar. Following thereto, on 13 January 2016, our Group entered into a conditional sale and purchase agreement to purchase the land for the construction of Terminal Kampar (Kindly refer to Sections 9.2.2 and 13.4 for further details on the conditional sale and purchase agreement). Our Group submitted the Kebenaran Merancang application on I February 2016 and subsequently the planning approvals from Majlis Daerah Kampar were granted on 20 May 2016. We plan to commence the construction and development of Terminal Kampar in the 2nd half of 2016. 4. BUSINESS OVERVIEW(Cont’d) In this regard, our Group has earmarked a portion approximately RM20.0 million from the proceeds of the Public Issue to expand our terminal operations to Kampar, Perak, and fund the remaining cost by way of internal funds and bank borrowings. Based on our preliminary assessment, the overall cost for construction of the Terminal Kampar is approximately RM128.33 million. The details are set out in Section 2.7 (i) of this Prospectus. We have selected Kampar as the site to build Terminal Kampar based on the following factors: (a) growing population and increasing economic activities in and surrounding Kampar town which creates need for public transportation services;
(b) existence of several higher learning institutions in Kampar, namely Universiti Tunku Abdul Rahman (UTAR), Kolej Tunku Abdul Rahman (KTAR) and Westlake International School (WIS), resulting in high student population that will require transportation services;
(c) local development plans such as the development ofTaman Bandar Baru in Kampar; and
(d) strategic location of Kampar in close proximity to North-South Expressway (exit Gopeng­Tapah) which will encourage the town to attract more population and business activities.

Our Group is also exploring opportunities for the construction of new integrated public transportation terminal in two (2) major towns in Pahang and Terengganu, namely Temerloh and Kemaman as well as the management and operations of these integrated public transportation terminals. As at the LPD, we are in preliminary discussions with the relevant authorities, and parties to fIrm up the pertinent details, and the mode of funding for these initiatives will be decided once the details have been fInalised. Further, we are also studying an opportunity to manage and operate a bus terminal in a major city in Pahang, where we are presently in the midst of negotiations with the relevant authorities and parties. The expansion of our Group’s services into the management and operations of other bus terminals, on a management fee basis, will provide our Group with an additional revenue stream, thus potentially enhancing our fmancial performance and results of operations. Concurrently, our Group will continue to explore such expansion opportunities in other states in Malaysia, as this will provide an impetus for increased scalability of our Group’s business to ensure our long term continuity and sustainability. (li) We plan to develop Terminal AmanJaya into a commercial and lifestyle hub Terminal AmanJaya is centrally located in the 1,500 acres of land in Bandar Meru Raya that has been identifIed for development as a satellite metropolis with commercial, retail, transportation and recreational facilities as well as a centre of administration, to facilitate quality living and tourism activities supported by integrated information and communication technology infrastructure. Notable developments in Bandar Meru Raya include Hotel Casuarina@Meru and AmanJaya Convention Centre, as well as several Government agencies such as Kementerian Hal Ehwal Dalam Negeri, Jabatan Audit Negeri Perak and Jabatan Perhutanan Negeri Perak. The Movie Animation Park Studio, a joint venture between PCB Development Sdn Bhd and RSG Maps Sdn Bhd (formerly known as Sanderson Project Development (Malaysia) Sdn Bhd) is an animation theme park that is being developed on a 20.8-hectare site in Bandar Meru Raya at an estimated investment of RM389.9 million. There is also a commercial centre and a Mydin hypermarket located within the surrounding area of Terminal AmanJaya.

These developments have the potential to draw a larger crowd comprising government and private sector employees, business owners and/or operators, residential population as well as tourists and visitors to Bandar Meru Raya. This will bode well for our Group’s plans to expand Tenninal AmanJaya and develop it into a retail and lifestyle hub with a focus on commercial and lifestyle-related businesses and/or activities. The envisioned expanded Tenninal AmanJaya shall include indoor entertainment amenities. Our Group intends to expand Tenninal AmanJaya for retail operations on 135,721 sq ft of undeveloped land area, that will increase the existing gross building area of Tenninal AmanJaya by 166,443 sq ft. The new and expanded Tenninal AmanJaya will have a gross building area of 375,245 sq ft in total. This expansion will lead to an increase in the gross leasable area and A&P spaces. Our Group expect to realise additional income with the expansion of Tenninal AmanJaya from the following: (a) the increase in gross leasable area will contribute to additional rental revenue from retail tenants for shops and kiosks; and
(b) the increase in available space for A&P will contribute to additional rental revenue from A&P space.

(iii) We intend to increase revenue from the rental of A&P space by adopting new A&P platforms and by increasing A&P space at Terminal AmanJaya As at the LPD, the A&P space in Tenninal AmanJaya includes indoor space in the common areas such as around the tenninal lobby, around retail outlets, at the holding bay area; and outdoor space at the external tenninal walls, outdoor carpark area and three-faced billboard in the compound ofTenninal AmanJaya. Between 2010 and 2014, total advertising expenditure in Malaysia grew from RM9.4 billion to RM14.4 billion at a CAGR of11.3% on the back ofpositive market sentiment. This growth has been underpinned by an expansion ofadvertising solutions moving beyond traditional channels as it penetrates the digital space. While total advertising expenditure grew from RM13.7 billion in 2013 to RM14.4 billion in 2014, out-of-home advertising expenditure grew from RM245.8 million to RM271. 7 million in thesameperiodat aCAGR of1O.5%. Source: IMR Report We believe that out-of-home A&P will continue to grow with the adoption of digital technologies driving increased revenue opportunities and continued audience growth. Thus, we intend to adopt new A&P platfonns in Tenninal AmanJaya to drive audience interactivity and engagement. This includes digital platfonns with physical digital signage infrastructure as well as new media digital capabilities that can leverage mobile, social and online technologies to drive audience interactivity and engagement. Digital A&P platfonns are attractive as they: • allow for the development of more visually engaging and effective marketing campaigns;
• enable rapid content delivery and the ability to quickly launch new or change existing marketing campaigns; and
• present new engagement opportunities with interactive touch screens, gesture recognition and mobile and online interactivity.

The planned expansion of Terminal AmanJaya into a commercial and lifestyle hub (kindly refer to Section 4.21 (ii)) will allow us to further increase A&P space that is available for A&P. The adoption of digital platforms as additional mediums for A&P, and the increase in available A&P space at Terminal AmanJaya will bode well for our Group’s integrated public transportation terminal operations, thereby contributing to an increase in our Group’s revenue. (iv) We plan to expand our bus services operations through the acquisition of new buses As at the LPD, we have a fleet of 146 buses. We have taken active steps to expand our fleet size, where we intend to acquire another 25 express buses that will allow us to expand our express bus services, and the 25 new express buses are expected to be delivered in 2016. Prior to acquiring new buses, our Group carries out studies and research on market demand trends and the feasibility of the relevant vehicle model, such as its safety features, fuel efficiency, cost-effectiveness to our Group and bus drivers, and estimated profitability in relation to such acquisitions. We have therefore introduced different vehicle models to be used as our buses over the years. (v) We intend to expand our network of bus services through the acquisition of new bus route permits As at the LPD, we operate 27 stage bus routes covering Ipoh and its surrounding areas. These routes are approved by SPAD. We periodically review our bus routes to cater for changing commuter travel patterns. We have identified several routes with high passenger load that are currently underserved by existing bus operators. To this end, we will expand our stage bus services to include 16 new stage bus routes under the SBST Programme. In April 2015, we received Letter of Intent on the appointment of our subsidiary, The Combined Bus, as the network operator for lpoh under the SBST Programme, where for a period of eight (8) years the network operator will be paid cost per vehicle-km run for stage bus services rendered in Ipoh. On 18 February 2016, The Combined Bus entered into a conditional agreement with SPAD for the appointment as bus network operator for Ipoh under the SBST Programme for 16 new stage bus routes in Ipoh. The expansion of our network of bus services will enable our Group to increase our public transportation footprint as well as to grow our Group’s revenue. As a business with core operations in public transportation, our focus will remain on growing our integrated public transportation terminal operations, where we have taken a two (2) pronged approach to firstly further develop Terminal AmanJaya into a commercial and lifestyle hub, and secondly to replicate the integrated public transportation terminal model in other parts ofPerak, and other regions in Malaysia. We envisage that integrated public transportation terminal operations wi!! be a revenue driver for our Group’s future earnings where the rental of A&P space as well as rental of retail space will continue to be key income generators, and will be supplemented from revenue ofthe public bus services and petrol station operations. Thus, we have allocated approximately RM20.0 million from the Public Issue to expand our terminal operations in Terminal Kampar. Since commercial operations in September 2012, Terminal AmanJaya has achieved several milestones in terms of growth in passenger traffic, growth in gross leased area, growth in rental of A&P space as well as growth in terminal operations revenue and gross profit for our Group. Further, as a new terminal with infrastructure and service amenities, Terminal AmanJaya is able to provide comfort, convenience, access to improved travel information and notification as well as enhanced public transportation network, which can be replicated in other cities and towns. This serves as a testament to our Group’s ability as well as scalability of our business model. 4. BUSINESS OVERVIEW(Conl’d) Our Group has also been recognised by the public sector, namely the state of Perak via UPEN and SPAD as a provider of public transportation services. We will continue to strengthen our commitment to providing public transportation services to the public as it is a fundamental pillar of our corporate social responsibility and national service values. The prospects for the public transportation sector in Malaysia will continue to be bolstered by Government initialise, plans and policies in an effort to increase accessibility to and provide reliable public transportation to the public through the establishment of integrated public transportation terminal and improved bus services. This will bode well for our Group’s growth as we seek to expand our presence beyond Ipoh.

 

 

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