Risk Factors

5. RISK FACTORS 5. RISK FACTORS Before investing in our Shares, prospective investors should pay particular attention to the fact that a significant portion of our operations, assets, profits and prospects are located outside Malaysia, and to a large extent its activities are governed by the legal, regulatory and business environment outside Malaysia. Our businesses are subject to a number of factors, some of which are outside our control. Prior to making an investment decision, prospective investors should carefully consider, along with other matters set forth in this Prospectus, the risks and investment considerations below. Investors should note that the following list is not an exhaustive list of all the risks we face or risks that may develop in the future. 5.1 Risks relating to markets in which we operate There are notable risks which are inherent to the markets where we operate which could adversely affect our Group’s operating results and financial condition such as: (i) Political, regulatory and economic considerations Our financial and business prospects and the industry in which we operate are closely linked to the developments in the political, economic and regulatory conditions in MENA, India and Malaysia and any other countries where we operate/intend to operate. The political, regulatory and economic uncertainties include, among others, risks of war, expropriation, nationalisation, renegotiations, termination or nullification of existing contracts, changes in interest rates and methods of taxation. We have and will continue to take effective measures such as prudent financial management, market diversification and efficient operating procedures to mitigate such risks. Any adverse developments or uncertainties in the political, economic and regulatory conditions in these countries may affect our financial performance. A discussion of the industry overview of our Group’s business is set out in Section 7 of this Prospectus. Although our Group’s current significant operations are located in countries that by and large are economically and politically stable, they are in proximity to regions or countries which face political and social unrest. (ii) The Dubai crisis On 30 November 2009, Dubai World announced that it would restructure its debt amounting to USD26 billion, of which USD6 billion is related to its real estate subsidiary, Nakheel Properties. According to IMF Survey Magazine dated 4 December 2009, it is believed that Dubai’s property sector, which is the driver of the emirate’s recent boom, will take a sluggish recovery path due to declined confidence and impaired reputation particularly among international investors and restrictive credit condition due to risk aversion. As Dubai faced liquidity issues in 2009, Abu Dhabi increasingly appeared as a more prominent player in the real estate and construction market. While Abu Dhabi has also been exposed to economic issues as Dubai, this Emirate has proven to be more resilient in dealing with the crisis. Demand in Abu Dhabi is primarily driven by its local Government’s consumption and its efforts of promoting the Emirate as a major tourism hub through improvements in the infrastructure and major construction projects. Dubai has since experienced modest economic growth in 2010 as the Emirate recorded a 2.5% year on year growth in the first 9 months of 2010. Nevertheless, we believe our exposure in this particular market is limited as we are well-diversified within the Middle Eastern market.
5. RISK FACTORS (Cont’d) Article 227 of the Companies Law permits profits to be distributed on a basis which differs from the shareholders’ percentage holding of shares if set out in the Memorandum of Association. There is no law or regulation which sets a cap on what percentage split is acceptable. However convention dictates that the maximum profit split acceptable in the UAE is 80/20 in favour of the minority shareholder. This convention is reflected by the fact that a notary will not notarise a Memorandum of Association showing a more substantive split in favour of the minority shareholder. In limited circumstances notaries have in Abu Dhabi accepted a split of 90/10. The notarisation constitutes an official endorsement of the terms of the Memorandum of Association and under Article 8 of the Companies Law, their enforceability. We have had in place various commercial agreements with our Local Partners for all our 49%-owned subsidiaries which enabled us to consolidate their financial results in our financial statements and which gave us the necessary powers to direct the management and operations of these UAE Subsidiaries. From May 2010, we reviewed and entered into new commercial arrangements in relation to EV Dubai and EV Abu Dhabi. We also entered into commercial arrangements in relation to EVSC as part of the Acquisition. These consist of shareholders’ agreements, powers of attorney and amendments to Memoranda of Associations for all of our UAE Subsidiaries, save for EV Sharjah. We also have a call option to purchase our Local Partners’ shares in EVSC, EV Dubai and EV Abu Dhabi. These documents (“UAE Agreements”) are further referred to in Section 17.4 of this Prospectus. We have been advised by our legal advisers that these UAE Agreements are legally binding and enforceable, as they form separate commercial arrangements which are distinct from the local shareholding requirements and they do not contravene the Companies Law. However, there can be no assurance that a court would enforce the UAE Agreements if they are challenged. Foreign-owned companies formed in the UAE commonly use commercial arrangements to achieve similar effects to the one that we have adopted, and we are not aware of such arrangements having been unilaterally challenged by the authorities in the UAE as at the LPD. In addition, Federal Law No. 17 of 2004 on the matter of Commercial Anti-Fronting (“Anti-Fronting Law”) has been enacted in the UAE and was scheduled to come into effect in November 2007. The UAE Federal Government, however, publicly announced at that time that enforcement of the Anti-Fronting Law has been suspended until 2009 and it is believed that it has been extended for a further period. We are advised by our legal advisers that the Anti-Fronting Law has not been brought into force. We are also advised that if brought into force, it will prohibit UAE nationals who trade through licences from effectively ‘sub-Iicensing’ the benefit of their licences to non-nationals where it would be illegal to do so. However, we are advised by our legal advisers that this is unlikely to apply to our situation where the UAE Agreements are structured as commercial agreements with UAE nationals and where the UAE Subsidiaries trade through their own licences. It is believed that one of the reasons for postponing the enforcement of the Anti-Fronting Law is due to public policy reasons as the UAE economy is greatly dependent on foreign investment. This is further reflected in the widely anticipated changes to the Companies Law, which are expected to relax the existing foreign ownership restrictions in order to encourage further foreign investment in the UAE. An alternative view is that due to the fact that the Anti-Fronting Law was not officially postponed further it could have come into force. This is not however supported by the fact that the law has not been published in the Official Gazette which is a Federal Law requirement for new laws to come into force. If it were in force there is a risk that it could be interpreted as applying retrospectively and that it could apply to prohibit foreign investors from having profit sharing arrangements which are more favourable to them than those expressed in the Memoranda of Association of the UAE companies. 36 5. RISK FACTORS (Cont’d) There could be a number of adverse implications for us if the UAE Agreements were to be successfully challenged, including the revocation of our UAE operating licenses. We would have to dismantle our UAE Agreements and adopt an alternative operating structure that could be less advantageous to our business and operations and could face the imposition of fines, or the liquidation of one or more of our UAE Subsidiaries. In addition, if the fact that the UAE Agreements are being challenged became known, it could have an adverse effect on the trading price of the Shares. Without prejudice to any greater sanction imposed by any other law, the person who enables a foreigner (“Fronting Person”) to undertake any economic or professional activity which it is prohibited to undertake (“Fronter”) shall be subject to a fine not exceeding AED100,000 for every breach of the Anti-Fronting Law. In case of a recurrence of such “fronting activities”, the sanction shall be imprisonment of the Fronter for a period not exceeding 2 years, with a fine of AED100,000. The Fronting Person shall be subject to the same sanctions, along with its deportation, after the imposition of such sanctions and the discharge of related obligations. In addition, the Fronter shall be removed from the commercial registration within the Commercial Registry regarding the “fronting activity” and the licence granted to him shall be revoked. The Fronter will be prohibited from undertaking such activity for a period not less than 2 years and not exceeding 5 years. (v) Exposure to Decennial Liability Under Articles 880 to 883 of the UAE Civil Code, Law No 5 of 1985 and Articles 711 to 715 of the Qatari Civil Code, Law No. 22 of 2004, contractors and design consultants in the UAE and Qatar are jointly liable, without fault, for the cost of rectifying structural defects that appear in a building or structure within 10 years of handover (“Decennial Liability”). The trigger events for Decennial Liability are total or partial collapse of a building and/or a defect threatening the stability or safety of a structure. For Decennial Liability to be applicable, it is not necessary to prove any negligence or breach of contract and the liability attached notwithstanding that the collapse or defect is caused by sub-surface conditions or that the client approved the defective work. Any agreements purporting to exclude Decennial Liability are void. We seek to mitigate our exposure to this risk by working with reputable and established consultants and contractors, and by our Group’s emphasis on safety and quality assurance/control. In the past and as at the LPD, our Group has not been affected by any liability arising from our exposure to Decennial Liability. However, there can be no assurance that the above measures taken or to be taken will be successful and that any liability arising from our exposure to Decennial Liability will not have any material adverse effect on our Group’s financial position, business and operations. (vi) Exposure to limitation periods of up to 10 years in the UAE and up to 15 years in Qatar The limitation periods to make contractual claims other than claims for Decennial Liability (for example for negligent design or defective workmanship) for our projects continues for a period of 10 years in the UAE and for a period of 15 years in Qatar from the due date for the fulfillment of the obligation (Le. usually in the context of a construction contract, completion of the works or the end of the defects liability period, depending on the nature of the claim). As such, in relation to our completed projects, we continue to be exposed to possibilities for contractual claims other than claims for Decennial Liability for a period of 10 years in the UAE and 15 years in Qatar. 5. RISK FACTORS (Cont’d) We seek to mitigate our exposure to this risk by working with reputable and established consultants and contractors, and by our Group emphasis on safety and quality assurance/control. In the past and as at the LPD, we have not been affected by any liability arising from the exposure to limitation periods of up to 10 years in the UAE and up to 15 years in Qatar. However, there can be no assurance that the above measures taken or to be taken will be successful and that any liability arising from such exposure will not have any material adverse effect on our Group’s financial position, business and operations. (vii) Dependence on the Middle Eastern market As a significant portion of our Group’s revenue is derived from our operations in the Middle Eastern markets such as the UAE and Qatar, the performance of our Group is invariably linked to the economic environment of these countries. For the FYE 31 December 2010, our Group’s revenue from our principal markets in the UAE and Qatar was RM569.03 million, representing 76.39% of our Group’s total revenue of RM744.93 million. The dependence on the Middle Eastern market could potentially limit our Group’s sources of revenues and any negative systemic impact on the domestic country or general economic condition of the region could have adverse effects on our Group’s operating results and financial performance. In view of this, we seek to mitigate these risks by diversifying into other markets, notably India, as evidenced by our on-going projects in Chennai and Mumbai, and South East Asia. For example, we are currently involved in the construction of Marathon Futurex, Trump Tower and 2x660MW Coal Fired Thermal Power Plant in India, and Bank Kerjasama Rakyat Malaysia Office Tower in Malaysia. We are also in the process of tendering for various projects in Singapore and Vietnam. Further details of key on-going projects undertaken by our Company are set out in Sections 6.2.1 (v) and 6.2.2{ii} of this Prospectus. {viii} Risk of expansion into new geographical areas, services and market segments As part of our growth strategy, we will continue to identify expansion opportunities in new geographical areas, services and market segments. In the past, we have ventured into new geographical areas by invitation from our clients with whom we have established a good working relationship. We will only venture into new services and market segments which are complementary to our existing expertise, experience and facilities. Expansion into new geographical areas, services and market segments involves numerous risks, including but not limited to the financial costs of setting up such operations, investment in machinery and equipment and working capital requirements, where required. While we will carefully consider the opportunities and risks thereof, there can be no assurance that any such expansion will achieve a sufficient level of revenue which will cover our operational costs and if we fail to manage such costs, our profitability and financial position may be adversely affected. (ix) Emerging markets are subject to greater risks than more developed markets We conduct a significant portion of our operations in certain countries in the MENA and Asia regions. These countries may be subject to political, social, economic and market conditions, which differ significantly from those in more developed countries. Among the risks that may have a material impact on our business, operating results, cash flows and financial condition include: {a} socio-political unrest and economic instability; 38 5. RISK FACTORS (Cont’d) (b) regulatory, taxation and legal structure changes;
(c) government interventions, including tariffs, protectionism and subsidies;
(d) difficulties and delays in obtaining new permits and consents for our operations or renewing eXisting ones;
(e) arbitrary or inconsistent governmental action;
(f) lack of infrastructure;
(g) cancellation of contractual rights;
(h) inability to repatriate profits and/or dividends; and
(i) expropriation of assets.

Any unexpected changes in the political, social, economic or other conditions in these countries may have a material adverse effect on the international investments that we have made or may make in the future, which may in turn have a material adverse effect on our business, financial condition and results of operations. However, in the MENA region, a major part of our operations are in the UAE and Qatar, which have relatively stable political structures coupled with higher degree of prosperity, which are important in maintaining social stability.
5.2 Risks relating to our business and operations (i) Business risks We are in the construction industry and depend on winning new contracts for our business and growth. This risk is inherent in our industry. Closely connected to this risk, is the project risk which we face when executing each contract. Further details of project risk are set out in Section 5.2(iii) of this Prospectus. Our customers may also delay or terminate their projects. Delays will also affect our project margins due to additional time spent on negotiations and resolving issues, which in turn could delay the recognition of revenues and profits from the projects. Additionally, our receipt of payments may be reduced and/or delayed. We may also have to incur additional costs as a result of the delays. The structural steel engineering sector that we are in is highly dependent on the construction industry of the countries in which we operate, which in turn is a function of economic growth. Our business may be adversely affected by among others, any adverse development in the availability of contracts or in the supply and demand of building materials resulting from an economic and consequently industry slump. Our business is also subject to the cyclical nature of the construction industry and hence vulnerability to any downturn in the industry is unavoidable. However, our Group has been able to manage the business risks in the past as evidenced by our progressive increase in revenue and profits. 5. RISK FACTORS (Cont’d) (ii) Competition Our Group faces competition from incumbents as well as new entrants into the structural steel engineering sector. Due to our international presence, we are consistently competing with other multinational construction firms that possess significant financial, managerial, technology and other resources, as well as vast industry experience. Increase in competition could potentially lead to pressures on the growth of the business and revenue which would affect the profitability of our Group. Notwithstanding this, we believe that our Group is well placed to compete in this sector. In fact, we believe that we have several competitive advantages over our rivals due to our market reputation, track record, quality work and ability to execute demanding and complex projects within the stipulated timeframe. We believe that we are well regarded by our customers and have developed local expertise in countries where we operate. Nevertheless, we cannot assure you that we will be able to maintain our existing market position in the future despite our proactive measures to mitigate these risks, which include, among others, constant monitoring and study of industry demand, requirements and competitive positioning. In addition, the construction industry in the countries we operate in is rapidly changing. If we cannot respond to changes in market conditions more swiftly or effectively than our competitors, our ability to generate revenue, our financial position and our results of operations as well as future growth could be adversely affected. (iii) Project risks Due to the nature and complexity of the projects that our Group undertakes, our business is subject to project risks. Any underperformance in project execution will adversely impact our Group’s financial performance, reputation and future prospects. Failure to complete contractual work within the stipulated schedule could potentially lead to liquidated damages for delays or compensation to our customers, which may in turn, adversely affect our net profits and reputation. As at the LPD, our Group has been able to manage the project risks in the past. We will continuously conduct detailed studies on the nature and complexity of implementation to avoid project cost overruns. Some of the projects and contracts undertaken by our Group require our engagement of specialist sub-contractors. Any delay, non-performance, or inadequacy of these parties could adversely affect our Group’s financial performance and reputation. We seek to mitigate these risks by engaging only reputable/experienced sub-contractors, closely monitoring the performance of these parties and carrying out detailed evaluation prior to their engagement. Our contracts are based on prices estimated at bid time. There may be instances that our Group may incur cost overruns which will adversely affect profits or incur losses for such a project. Although we maintain a commendable track record of timely project completion with quality and best practices with regard to our services, there can be no assurance that failures would not occur and affect our Group’s financial performance and reputation.

5. RISK FACTORS (Cont’d) (iv) Shortage of raw material We depend on our suppliers for raw material used in our steel fabrication such as steel plates and rolled sections. We obtain most of our raw material including steel plates and sections from reputable international mills/trading houses and local/overseas stockists. We purchase all our raw material on a purchase order basis and we do not have long term contracts with any of our suppliers. To maintain our competitiveness, we have obtained from our reputable suppliers, sufficient quantities of material at acceptable prices in a timely manner and will continue to do so. However, there is no assurance we can accomplish this at all times.
(v) Fluctuating price of steel As a structural steel turnkey contractor, steel is a major input for our Group’s business and its price is a critical cost determinant. Generally, steel-based raw material account for about 25% to 35% of the value of the contract. As steel prices are determined by worldwide supply and demand, a shortage of steel supply will likely increase its price. We seek to mitigate these risks by closely monitoring raw steel prices and obtaining quotes from reputable international mills/trading houses prior to submitting a bid. Immediately upon the award of the contract, orders are placed for about 95% of the required raw steel material by locking in the quotes obtained earlier from these suppliers within 2 to 4 weeks from the date of the award. The validity of our quotes varies according to the requirements of our clients and is generally valid for between 30 to 90 days. In certain cases where the finalisation period is longer due to the large quantum involved, the validity period may extend to 180 days. In such cases, our Company will include reasonable price escalation clauses into the quotes for our clients based on the available trend in the global commodity market. Through this procurement process, our Group is able to manage the volatility of steel prices by locking-in the steel prices. This enables us to avoid profit margin erosion should steel prices increase later. As a result, we have maintained our profit margins in the past even when steel prices were at an industry high. While we have been able to manage the risk associated with the fluctuating steel prices and maintained our profit margins, there is no assurance that we can accomplish this at all times.
(vi) Currency fluctuation risk Our Group’s reporting currency is in RM but our Group’s current major businesses are located abroad and are primarily in Middle Eastern countries such as UAE and Qatar. We also plan to expand our operations in India. We are therefore exposed to currency fluctuation risk. The UAE and Qatar have pegged their currencies to the USD. As such, we are subject to translation risks as our consolidated financial statements are denominated in RM while the financial statements our Company’s foreign subsidiaries are denominated in AED, QR and Rs. 5. RISK FACTORS (Cont’d) Our Group has limited exposure to cross-border financing as projects are being financed in the local currencies in which we operate. In limited instances, it is foreseeable that borrowings denominated in one currency are used to finance projects in another currency. In view of this, we seek to mitigate the risk of fluctuations in foreign currency by practicing prudent financial management and actively monitoring these fluctuations. For example, the pegging of the AED and OR to the USD further reduces our exposure to foreign currency fluctuations as a majority of our turnover are in AED and OR, and our purchases of raw steel materials is in USD. This provides some form of natural hedging as we are able to utilise the receipt of revenue in AED and OR to pay for our purchases of raw steel materials in USD. In the past, our Group has not encountered any foreign exchange fluctuations that have materially affected our profitability. Further details on foreign currency risk are set out in Section 6.5.31 (c) of the Accountants’ Report. While our Group believes that we have taken the necessary steps to mitigate our exposure, there can be no assurance that any significant fluctuations in exchange rates or any financial crisis in the future will not have an adverse material effect on the financial performance of our Group. (vii) Operating risks Similar to other businesses, our Group’s financial position and performance could be adversely affected by various operating risks such as the inefficiency of our operation and changing market demand. In order to mitigate these risks, we continuously employ prudent management and operation practices, monitor the market acceptance of our products and services and extensively invest in the latest technology and equipment to meet the changing market demand. We place strong emphasis on continuous quality control namely, ISO certification to ensure our products and services meet our clients’ requirements without compromising on safety in our operations. As part of our safety measures, we strictly follow the approved method statements and sequence to ensure stability during construction. In addition, we conduct safety induction program for our employees prior to the commencement of new projects. 5.3 Risks relating to our Company (i) Dependence on our Directors and key management We believe that our continued success and future performance depends to a large extent upon the skills, abilities, experience, competency and continuous efforts of our existing Directors and key management and on our Group’s ability to hire and retain qualified and competent personnel. The vast experience, .knowledge and expertise of our Directors and key management are pivotal to our success. While we have made efforts to nurture and maintain good relationships with our senior management team, there can be no assurance that the loss of any of the key personnel can be avoided and would not materially affect our Group’s business, operating results and financial conditions. 5. RISK FACTORS (Cont’d) We seek to mitigate this risk by incorporating effective human resource management and development, which includes competitive compensation packages, training and personnel development programmes to attract and retain skilled personnel. We also implement an effective succession plan to groom our existing staff members to further support our senior management and/or to shoulder further responsibilities in preparation for long term expansion and to continuously formulate suitable incentives and to create a conducive working environment. We have also set in place, proper systems and documentation requirements in order to ensure continuity, effective training and minimising workflow disruption in the event of resignations. With effective retention policy in place, some of our key management have been working with us between 5 to 19 years. However, there can be no assurance that the above measures taken or to be taken will be successful and that any change in our Group’s existing Directors and key management will not have any material effect on our Group’s business and operations. (ii) Dependence on skilled workforce and staff Due to the nature of our operations which involves complex engineering, fabrication and steel erection works, our ability to meet future challenges depends on our ability to attract, recruit and retain talented and skilled workforce supervisors, fabricators and qualified welders. In order to mitigate the shortage of available engineers and skilled workforce in the market, we continuously recruit and provide appropriate on­the-job and structured in-house training to them to enhance their skill level. These trainings inadvertently contribute to their career development. (iii) Subject to “pay when paid” clause for payment collection Under some of our contracts with main contractors (who are directly appointed by the employers who are usually owners of the projects), we are subject to the “pay when paid” clause. Our Group will only be paid for our services rendered if our main contractor for the project has been paid himself. In the event our main contractor is unable to collect his payment from the employer or there is a delay in his collection, our rights to payment under the contract will be forfeited or alternatively our payment will be similarly deferred or delayed. This clause is generally applicable to a majority of our Group’s contracts except in cases where letter of credit arrangements have been agreed upon with the clients. A claim against the main contractor’s client in tort would theoretically be possible if the client’s non-payment of the main contractor was wrongful. However, a claim against the main contractor would be difficult as the main contractor would rely on the pay when paid clause. It might be possible to bring a claim against the main contractor based on breach of the obligation of good faith imposed by the UAE Civil Code if the main contractor had made no effort to collect payment from the client, or if the client was withholding money from the main contractor by reason of the main contractor’s own breach of contract. We seek to mitigate this risk by structuring our payments on a milestone basis e.g. stipulate that payment is required when our fabricated steel products are delivered on site and where possible, we will collect a percentage of the contract value from our main contractor as advance payment for the purchase of raw steel material. In the past and as at the LPD, we had only 1 case in 2008 where the main contractor was unable to collect payment from the client. As a result, we were unable to collect payment from the main contractor due to the suspension of the project by the main contractor’s client. However, the advance payment and progress payment which were previously collected by us from the main contractor, were more than sufficient to offset the amount which was not collected. 5. RISK FACTORS (Cont’dj However, there can be no assurance that these measures will be adequate. Failure or serious delays in payments will have a material adverse effect on our Group’s financial position, business and operations. (iv) Working capital requirements Our business requires significant working capital to finance the purchase of materials, the hiring of equipment and the performance of engineering, construction and other work on projects before payments are received from customers. These working capital requirements may increase as our order book increases. Additional borrowings for working capital purposes will increase our interest expense and may affect our business, financial condition and results of operations. Our Directors are of the opinion that, after taking into consideration the funds generated from our existing operations, the current order book as at the LPD and net proceeds from the Issue Shares, we have sufficient working capital for a period of 12 months from the date of issue of this Prospectus to meet our needs and foreseeable requirements. (v) Delay in recoverability of trade receivables liquidity constraint could arise due to delays in realisation or non-collectability, whether in part or in full, of receivables which would adversely impact our Group’s financial position and performance. As at the LPD, about RM143.18 million or 83.62% of our outstanding trade contract receivables of about RM171.23 million as at 31 December 2010, has been collected. We seek to mitigate these risks by monitoring our receivables positions closely and effectively. Notwithstanding the above, the delay in realisation and non-collectability, whether in part or in full, of trade receivables still forms part of the business risk of our Group. Further details of our trade contract receivables are set out in Section 14.5.6(i) of this Prospectus. (vi) Adequacy of insurance coverage There are certain losses for which insurance coverage is not available or commercially viable, such as losses due to natural disasters, terrorism, war or civil disorders or other force majeure events. If we suffer any uninsured losses, damages and liabilities in the course of our operations, we may not have sufficient funds to cover any such losses, damages or liabilities or to replace any project development which has been destroyed. Furthermore, any payment we make to cover any losses, damages or liabilities could have material adverse effect on our business, operations and financial condition. Our Group is aware of the adverse consequences arising from inadequate insurance coverage that could adversely affect ourbusiness operations. In ensuring such risks are maintained to the minimum, our Group has taken necessary measures to ensure that its critical business, operations, equipment and all its other assets including its personnel are adequately covered by insurance. We also have insurance coverage where they are statutorily required in countries we operate. 5. RISK FACTORS (Cont’d) (vii) Risk of participation in strategic alliances, acquisitions or investments In order to expand our business, we explore and will continue to explore the possibilities of participating in strategic alliances, acquisitions, or investments. Participation in strategic alliances, acquisitions, or investments involves numerous risks, including but not limited to difficulties in the assimilation of the management, operations, services, products and personnel and the possible diversion of management attention from other business concerns and complications in the assimilation of the operations, management, products, services and personnel. The success of executing our growth strategies would depend on the successful integration of their operations with ours and our ability to identify suitable partners. There can be no assurance that we will be able to implement such growth strategies successfully. As such, the performance of any strategic alliances, acquisitions or investments could fall short of expectations.
5.4 Risks relating to our Shares (i) No prior market for our Shares There has been no public market for our Shares prior to our IPO. There can be no assurance that an active market for our Shares will develop upon our Listing on the Main Market of Bursa Securities or, if developed, that such market will be sustained. The Retail Price was determined after taking .into consideration various factors including, but not limited to, our financial and operating history and conditions, our future prospects and the future prospects of the industry in which we operate, our management and the prevailing economic and market conditions prior to the issue of this Prospectus. We cannot guarantee that the market price of our Shares will not decline below our Retail Price. We believe that a number of factors could cause the price of our Shares to fluctuate, including (without limitation) sales of substantial amounts of our Shares in the public market in the immediate future, announcements of developments relating to our business, fluctuations in our operating results and sales levels, general industry conditions or the world-wide economy, announcements of new products or product enhancements by our competitors, and developments in patent, copyright or other intellectual property rights. Such fluctuations may adversely affect the market price of our Shares. We cannot assure that the Retail Price will correspond to the price at which our Shares will trade on the Main Market of Bursa Securities either upon or subsequent to our listing or that an active market for our Shares will develop and continue upon or subsequent to our Listing. (ii) Delay or failure in our Listing The occurrence of certain events, including the following, may cause delay in or termination of our Listing: (a) our Underwriter, exercising its rights pursuant to the Underwriting Agreement, discharge itself from its obligations thereunder;
(b) we are unable to meet the minimum public spread requirement of Bursa Securities, which is at least 25% of our enlarged share capital after the IPO of 774,000,000 ECB Shares must be held by a minimum number of 1,000 public shareholders holding not less than 100 shares each, upon completion of the IPO and at the time of our Listing; or

5. RISK FACTORS (Cont’d) (c) the approvals of Bursa Securities, SC or any other relevant authorities for our Listing are revoked, withdrawn or cancelled. In such an event, subject to restrictions set out in Section 5.4(iii) of this Prospectus, we will return in full without interest, all monies paid in respect of any applications accepted. Although our Directors will endeavour to ensure our timeliness and compliance of the various Listing Requirements, including among others, the public spread requirement imposed by Bursa Securities for the success of our Listing, we cannot assure that the abovementioned events will not cause a delay in or abortion of our Listing. (iii) Admission to the Official List of Bursa Securities not granted Delays in the Listing and the commencement of trading in shares on Bursa Securities have occurred in the past. In respect of the Issue Shares comprised in the IPO Shares, following their allotment and issue to investors, a return of monies to such investors may be effected by way of either a repurchase by our Company of those Shares at the Retail Price, or by way of a reduction of our share capital. Such capital reduction shall not be effected if on the date of reduction is to be effected, there are reasonable grounds for believing that our Company is, or after the reduction would be, unable to pay its liabilities as they become due. If Bursa Securities does not admit our Shares for Listing, the market for our Shares will be illiquid and it may not be possible to trade our Shares. This may also have a materially adverse effect on the value of our Shares. (iv) Control by Promoter Upon completion of our IPO, our Promoter who is also the substantial shareholder, will beneficially own about 70.00% of our enlarged share capital after the IPO of 774,000,000 ECB Shares. He will be able to control the outcome of certain matters requiring the vote of our shareholders including the constitution of our Board and thus, the direction and future operations of our Group, unless he is required to abstain from voting by law and/or relevant authorities. Nevertheless, we have appointed 3 Independent Directors and formed an Audit Committee as a step towards good corporate governance to ensure that any future transactions involving related parties, if any, are entered into on normal commercial terms and on arms-length basis, thereby safeguarding the interests of the minority shareholders and the general public at large. In the event of any related party transactions involving our Promoter/substantial shareholder giving rise to a conflict of interest, he would also be required to abstain from voting. (v) Volatility in the market price of our Shares The market price of our Shares may fluctuate as a result of variations in its operating results. If the trading volume of our Shares is low, the price fluctuation may be exacerbated, particularly as no stabilising transactions can or will be undertaken in respect of our Shares in connection with this listing exercise or thereafter. The market price of our Shares, as in the case of other public listed companies shares, are also prone to valuation and recommendations of securities analysts on the fair value of our Shares. 5. RISK FACTORS (Conf’d) (vi) Disclosure regarding forward looking statements and viability of future plans Certain statements contained in this Prospectus are based on historical data, which may not be reflective of future results. Other statements that are not statements of historical facts and are based on estimates and assumptions constitute forward looking statements. These statements are in relation to our expected future financial position, business strategy, plans, prospects and industry outlook. You can identify some of these statements by forward looking terms such as “expect”, “believe”, “plan”, “intend”, “estimate”, “anticipate”, “may”, “will”, “would”, and “could” or similar words. However, you should note that these words are not exclusive means of identifying forward looking statements. These forward looking statements are subject to known and unknown risks, uncertainties and other factors which may cause our actual results, performance and achievements, to be materially different from any future results, plans, performances and achievements expressed or implied by such forward looking statements. Although we believe that the expectations reflected in these forward looking statements are reasonable at the time this Prospectus is issued, we cannot assure that such expectations can be achieved and actual results, performance and achievements may be materially different from those expected. Any differences in our expectations from our actual performance might adversely affect our result in the financial and business performance and plans. In light of these and other uncertainties, the inclusion of a forward looking statement in this Prospectus should not be regarded as a representation or warranty by us or our advisers that our plans and objectives will be achieved. Hence, you should ensure that you read and understand the assumptions and uncertainties underlying the forward looking statements that are contained herein. [The rest of this page is intentionally left blank]

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