4. RISK FACTORS 4. RISK FACTORS OUR BUSINESS IS SUBJECT TO A NUMBER OF RISK FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL. BEFORE MAKING AN INVESTMENT DECISION, YOU SHOULD CAREFULLY CONSIDER, ALONG WITH THE OTHER MA TTERS IN THIS PROSPECTUS, THE RISKS AND INVESTMENT CONSIDERA TlONS SET OUT BELOW. THE RISKS AND INVESTMENT CONSIDERA TlONS SET OUT BELOW ARE NOT AN EXHAUSTIVE OR EXCLUSIVE LIST OF THE CHALLENGES THAT WE CURRENTLY FACE OR THAT MAY DEVELOP IN THE FUTURE. ADDITIONAL RISKS, WHETHER KNOWN OR UNKNOWN, MA Y IN THE FUTURE HA VE A MATERIAL ADVERSE EFFECT ON US OR OUR SHARES. IF YOU ARE IN ANY DOUBT AS TO THE INFORMATION CONTAINED IN THIS SECTION, YOU SHOULD CONSULT YOUR STOCKBROKERS, BANK MANAGERS, SOLICITORS, ACCOUNTANTS OR OTHER PROFESSIONAL ADVISERS. 4.1 RISKS RELATING TO OUR OPERATIONS 4.1.1 Reliance on Approvals, Licences and Permits The Malaysian and Singaporean construction industry is highly regulated, with various government bodies governing the approval of iicences and certificates including CIDB and BCA, which govern the operations of our Group in Malaysia and Singapore. As such, we are bound by the terms of the licences and certificates awarded by such authorities, which dictate the types and nature of activities which we engage in. These iicences and certificates accord our Group various privileges such as limitless tender capacity and the ability to operate the limitless tenders throughout Malaysia and Singapore. Under the Lembaga Pembangunan Industri Pembinaan Malaysia Act 1994, it is mandatory for all contractors to register with the CIDB before undertaking to carry out and complete any construction work in Malaysia. As such, SunCon, Sunway Engineering and Sunway Geotechnics (M) are currently Grade “7” contractors registered with the CIDB and with this Grade “7” registration grade, SunCon, Sunway Engineering and Sunway Geotechnics (M) have the capacity to tender for construction projects without restriction in the values of the projects. In addition, the Certificates of Procurement of Government Work issued by the CIDB to SunCon and Sunway Engineering entitle SunCon and Sunway Engineering to bid for government or government-related projects. Similarly, in Singapore, our manufacturing and sale of precast concrete products business segment is registered with the BCA where we are currently a Grade “L6” contractor capable of undertaking pre-cast concrete works of unlimited values. Presently, the branch of Sunway Innopave established in Abu Dhabi is licensed by the Department of Municipal Affairs of Abu Dhabi to carry out its building projects in Abu Dhabi. However, there are no licencing requirements applicable in Trinidad and Tobago or India which are similar or equivalent to CIDB licensing requirements in Malaysia. 4. RISK FACTORS (CONT’D) There can be no assurance that our licences and certificates will not be revoked or suspended prior to their expiration. There can also be no assurance that we will be able to renew such licences and certificates and other clearances from authorities Any revocation or non-renewal of our licences, certificates and other clearances from authorities or failure by us to obtain new licences, certificates and other clearances from authorities (if so required) will have a material impact on our ability to continue our business operations and hence will affect our profitability. However, as at the LPD our Group has not experienced any revocation or suspension of our licences and certificate prior to expiration, non-renewal of our existing licences, certificates and other clearances from authorities, or failure to obtain new licences. 4.1.2 Project Risks Our Group’s contracts with clients are subject to the following risk factors: (i) Clients may delay or cancel their projects. Delays may arise from changes in client’s requirements or delay in approval by the relevant authorities. In the event that the delay is prolonged, clients may resort to cancellation, postponement or scaling down of their projects. Project delays may affect profit margins and may delay the recognition of revenues. Additional costs may also be incurred as a result of these delays
(ii) For each proJect, the detailed management and execution of the works are headed by a project manager The project manager is also responsible for day-today operations of the project site. While we have a management control system in place involving tabling of periodic reports and our senior management review the periodic reports and conduct their separate assessment on the delays and problems on site, if any, the progress of the works will be seriously affected if the project manager fails to perform his duty expediently as this will result in delays and cost overruns.
(iii) Unfavourable economic conditions and/or financial performance of our clients may cause them to terminate their project(s) with us. Alternatively, due to the clients’ financial difficulties or other reasons, they may not pay for work done or pay promptly according to the agreed timeline, resulting in cash flow difficulties for our Group. While we are generally selective in our clients and our clientele includes organisations with strong credit standing like government-linked companies and agencies of the government, our Group’s business may be adversely affected by the occurrence of such events. (iv) There may be disputes with our clients on the scope or quality of work carried out by us which may lead to unbudgeted additional costs at our end. Our key management team, armed with their experience and expertise, work closely with our clients and their consultants to ensure that work requirements and quality expectations are met Further, our works are also supervised by our clients’ project consultants, which typically consists people from various professions such as architects, engineers and quantity surveyors. Notwithstanding the above, there can be no assurance that we will not encounter disputes with our clients. 4. RISK FACTORS (CONT’D) 4.1.3 Possible Delays in Completion of Construction Projects Construction projects are subject to certain deadlines and budgets. Any extensions of time in the projects will usually result in project cost overruns as well as possibly attract negative reputation and legal uncertainties such as the imposition of the LAD by the client. In the event of a delay in a project due to conditions beyond our control, which may include, amongst others, inclement weather, unexpected soil conditions and unforeseen engineering or environment or site condition issues, we will apply for an extension of time for the completion of the project. If the extension of time is successfully approved and granted by the superintending officer, the LAD will not be imposed. However, if a delay in a project is due to our fault, the superintending officer will usually make recommendations to the client to deduct the LAD from our progress payments or payment from the contractors if our progress payments are insufficient to deduct the LAD, which will in turn reduce the total revenue generated from the project and accordingly affect the profitability of the project. As such, timeliness in completing construction projects is vital in upholding our Group’s financial performance and our Group’s reputation in the construction industry. The timely completion of any construction project is also dependent on various external factors, which may include but are not limited to, securing the necessary permits or approvals from relevant government agencies or authorities on a timely basis, adequacy in the supply of raw materials and availability of workers. Notwithstanding the above, historically we have not experienced any material adverse financial effects from delays in completion of construction projects undertaken by us. 4.1.4 Availability and Fluctuations in Prices of Raw Materials Due to the nature of our business, we are constantly required to purchase a wide range of raw materials, which include steel bars, ready mixed concrete, diesel, electrical cables and fittings, from our suppliers. However, raw materials are price sensitive and there can be no assurance that our Group will be able to obtain sufficient quantities of raw materials for our projects when such materials are scarce in the market. At the same time, there is no assurance that any shortage or increase in the cost of raw materials will not have an adverse effect on our financial performance. Price fluctuations in the raw materials market caused by the price volatility of raw materials, which are beyond our control, could also result in increased costs and result in a material adverse effect on our Group’s financial performance. Notwithstanding the above, we have not in the past experienced any significant price increase in raw materials as well. Further, any past price increment which has had a material adverse effect on our Group’s financial performance is also experienced by the rest of the construction industry as a whole. 4. RISK FACTORS (CONT’D) 4.1.5 Dependence on the Services of Our Subcontractors Our Group customarily engages subcontractors to provide various services and certain labour-intensive works in our construction projects. Subcontractors are appointed through the assessment of tenders submitted by the subcontractors, as well as our past working experiences with them. Upon negotiation, formal contractual agreements are executed between our Group and subcontractors to ensure that the terms and conditions for the sub-contracts are predefined before the commencement of any construction work. Notwithstanding this formal contractual relationship, any failure of a subcontractor to provide its contracted services may lead to delays or damages and penalties against our Group in favour of the client who awarded the construction project to us. There are no guarantees that any failure by our subcontractors to provide agreed contracted services will not adversely affect our Group’s financial performance, despite measures taken by our Group to perform regular assessments on our subcontractors’ ability to deliver services in a timely, reliable and satisfactory manner, their financial performance and our Group’s effort to maintain good relationships with a large pool of qualified subcontractors. 4.1.6 Dependence on Directors and Key Management Our success depends on the abilities and continuing efforts of our Directors and key management and key technical personnel. The loss of these persons without a suitable and timely replacement, or our inability to attract and retain qualified and skilled key management, key technical personnel could adversely affect our continued ability to maintain our Group’s competitive performance, which may then adversely affect our businesses, financial conditions, results of operations and prospects. 4.1.7 Securing Premises for Our Singapore Manufacturing and Sale of Precast Concrete Products Business Our Singapore manufacturing and sale of precast concrete products business currently operates on two parcels of land leased from the HOB in Tampines on short term leases. We have been informed that the HOB may no longer renew the lease upon the expiry in 2017. The Singapore government changes its policy to encourage Singapore precast players to automate their production with priority for land lease given to the setup of Integrated Construction and Precast Hubs (“ICPH”). Any investment in an ICPH is expected to be substantial with rough estimates of cost ranging from SG060.0 million to SG080.0 million. Our Group has not decided on whether to make such an investment but should we be unable to renew the leases and secure a premise in Singapore, we will be relying on our Senai precast plant and/or our future Sunway Iskandar precast piant to supply the products to our Singapore clients. This may however impact our competitiveness in Singapore and affect our profitability due to higher logistics and/or raw materials costs. While our Senai precast plant and/or our future Sunway Iskandar precast plant can be expanded to produce all the precast components that are currently produced in Singapore, we will incur higher logistics costs for transportation. In addition, certain raw materials like steel bars are cheaper in Singapore due to a difference in the tariff structures between Malaysia and Singapore. 4. RISK FACTORS (CONT’D) Our Group is establishing a new precast plant in Sunway Iskandar partly to address the potential need to relocate our Singapore premises for manufacturing and sale of precast concrete products. Should there be a need to relocate our premises for our manufacturing and sale of precast concrete products business from Singapore to Johor, there may be a temporary drop during the transitional period in our PBT as our Senai precast plant and/or the our future Sunway Iskandar precast plant build up their capacity and gain customers’ acceptance. In a worst-case scenario, based on management estimates, the above factors could potentially adversely affect our PBT by between RM10.0 million and RM15.0 million per annum for an initial period of one to three years post relocation but it should normalise thereafter. 4.1.8 Borrowings and Financing Risks Our total borrowings for the FYE 31 December 2014 amounted to approximately RM135.2 million, all of which are interest-bearing. As such, any additional borrowings and/or increase in interest rates, which is beyond our control, may result in an increase in interest expense, which may affect our profitability. There can be no assurance that current interest rates will be maintained in the future and/or that any increase in our borrowings will not have any material adverse effect on our financial performance. Notwithstanding the above, it is noted that we have not experienced any increase in interest rates which has had a material adverse impact on our financial performance in the past Our credit facilities may also be subject to periodic review by financial institutions from which we obtain financing, and contain certain covenants which may limit our operating and financing flexibility. Any act or omission by us that breaches such covenants may give rights to the relevant financial institutions to terminate the relevant credit facilities and/or enforce any security granted in relation to those credit facilities. This may in turn cause a cross default of the other credit facility agreements. While we naturally will endeavour to constantly monitor compliance with all such covenants, there can nevertheless be no assurance that our performance will not be adversely affected should we breach any such covenants under any of our existing loan/facility agreements. Notwithstanding the above, we have not been materially and adversely affected by any breach of such financial covenants in the past 4.1.9 We are Exposed to Overseas Business Risks For the FYE 31 December 2014, we generated our revenue from Malaysia and Singapore operations and our existing order book consisted solely of projects in these two countries. As such, we are exposed to political, economic and regulatory risks in these countries. In addition, we may tender for construction projects overseas in the future given our successful track record in securing and completing projects in the UAE and India in the past Any such expansion will expose us to additional risks given the different business operating conditions and regulatory environments in the foreign countries in which we may operate, such as, among others, political and foreign exchange risks. 4. RISK FACTORS (eONrD) 4.1.10 Fluctuations in Gross Profit Margin Our Group’s gross profit margin may fluctuate for each financial year For instance, our Group’s overall gross profit margin decreased from 19.5% for FYE 31 December 2012 to 18.4% for FYE 31 December 2013 but then increased to 21.0% in FYE 31 December 2014. For segmental information relating to gross profit and gross profit margin, please refer to Section 11.2.2(ii) of this Prospectus. The level and sustainability of our Group’s overall gross profit margin depends on the revenue generated by each of our projects less cost of sales and the manner and timing of implementation of our projects, as each project differs in terms, inter alia, of project scope of work, technical specifications, project duration and costs. Cost of materials and project delays and cancellations, which are to a large extent beyond our Group’s control, may also affect our profit margins. Our Group cannot guarantee that our gross profit margin will not fluctuate from time to time. Similarly, our Group cannot assure that historical or current levels of gross profit margin can be sustained in the future and if there is a decline in overall gross profit margin, we cannot assure that we can achieve or maintain profitability in the future. 4.2 RtSKS RELATING TO OUR INDUSTRY 4.2.1 Dependence on the Property Market and Government Infrastructure Spending The sustainability of the performance of construction companies depends to a large extent on the continued strength in demand in the property sector and government infrastructure spending. Furthermore, the property sector is susceptible to risks such as rise in financing costs, fluctuating demand for real estate properties, as well as property cooling measures irnplemented by the Federal and/or State Governments. In Singapore, our manufacturing and sale of precast concrete products business segment is also dependent on the number and timing of launches by HDB which impacts the tinal demand for precast concrete products. These risks may give rise to a negative impact on property buyers’ sentiments and demand for properties leading to the possible delay or cancellation of construction projects. Under such circumstances, our Group’s business may be affected. However, according to the IMR report, the outlook for property in Malaysia and Singapore remain positive due to government plans, policies and stimulus for economic development that drives demand for construction services, growth prospects of end-user markets, growth in economic corridors, increasing disposable income and affluence of the population, and growing dernand for affordable housing. Please refer to the IMR report for the prospects of the construction industries in Malaysia and Singapore. While the Malaysian economy is expected to maintain moderate growth moving forward and the construction industry in Malaysia is expected to benefit from government-led initiatives and spending, such as infrastructure jobs like the Second MRT Line and LRT 3 which were announced in Budget 2015, there is no assurance that there will be no delay in the commencement of such projects. Malaysia’s fiscal deficit may also restrict further investment on infrastructure spending. Any delay in the commencement of government infrastructure projects may affect the stability of the construction industry. 4. RISK FACTORS (CONT’D) 4.2.2 Competition Risks The construction industry is highly competitive and we face competition from various construction companies, both listed and non-listed companies. Competitive pressures may result in highly competitive pricing in order to secure a contract, which may affect our financial performance. While the main operating companies within our Group are registered with CIDB and BCA and these registrations with CIDB and BCA enable us to tender for government and private sector projects within the categories of works which we are licensed to carry out, as set out in Section 6.19 of this Prospectus, and it can be said that the barriers of entry into the construction market are relatively high as huge capital investment is required to purchase machinery and equipment in order to undertake large-scale projects, no assurance can be given that we will be able to compete effectively with current and new entrants into the construction industry in the future. It should be noted though that we have not experienced any material decrease in order book which has had a material adverse effect on our financial performance in the past. 4.2.3 Dependence on Foreign Workers The industry in which our Group operates is heavily dependent on the employment of foreign workers due to the shortage of local workers in the local construction industry whereby we expect this shortage to continue in the future. While the employment of foreign workers is currently allowed in the construction industry, these foreign workers can only be sourced from specific countries as determined by the Malaysian Government and Singapore Government. In general, approval is granted based on the merits of each case and is subject to conditions imposed by the relevant authorities from time to time. Additionally, the Malaysian Government or Singapore Government may arnend policies relating to the employment of foreign workers in the construction industry andlor introduce new conditions from time to time. As our Group’s operations are highly dependent on the supply of foreign workers, any scarcity in supply or delays in registration of foreign workers would adversely affect our business. Furthermore, any increase in the levy or minimum wages for foreign workers or any other additional costs to be paid to the Malaysian Government and Singapore Government in relation to the employment of foreign workers would increase our Group’s construction overheads and directly impact our financial performance. While we have not experienced any prolonged period of material adverse impact on our business operations arising from material shortages of foreign worker supply in the past, should the Malaysian Government or the Singapore Government amend its policies and impose any restriction or limit to the number of foreign workers to be employed for our projects or there is any other negative impact on the supply of foreign workers, the completion of our construction projects may be delayed, hence affecting our Group’s business plans and financial performance. ~ Company Number: 1108506-W II 4. RISK FACTORS (CONT’D) 4.2.4 Workplace Safety and Health Matters Our Group’s operations are subject to laws and regulations relating to workplace safety and workers’ health. The relevant applicable legislations or regulations to which our day to day construction operations are sUbject to include the Occupational Safety and Health Act 1994, the Destruction of Disease-Bearing Insects Act, 1975, the Lembaga Pembangunan Industrl Pemblnaan Malaysia Act, 1994 and the Street, Drainage and Building Act, 1974. Currently we are not aware of any breaches of applicable workplace safety and health requirements which would have a material adverse effect on the financial position and business of our Group. In the past, there have been occurrences of certain incidents at our construction worksites that have previously resulted in stop-work orders being imposed under the Occupational Health and Safety Act 1994 but we have acted promptly to attend to any rectification actions which have been required on the part of our Group in order to satisfy the relevant authorities that any breach or potential breach of workplace safety and health requirements have been satisfactorily addressed. There have also been instances where workslte closure orders have been issued by the relevant authorities under the Destruction of Disease-Bearing Insects Act 1975 in connection with the cleanliness of our worksites and the requirement to prevent the propagation of disease-bearing insects and we have taken the necessary action to resolve or address these incidents. Nevertheless, due to the intrinsic nature of construction activities, which often involves complex activities being carried out by teams of workers, we remain exposed to the occurrence of accidents and potential resultant workplace safety and health liabilities and workplace accidents and incidents caused by human error and other factors are a typical risk associated with carrying out construction work, particularly complex and large-scale construction works such as MRT construction works. Irrespective of the cause of such accidents or incidents, our Group may be considered by operation of law to be In breach of prevailing workplace safety and health regulations and requirements as in certain circumstances, our Group may be imposed with a stop-work order for a short period or other penalties upon the occurrence of any such accidents or incidents, pending investigation as to the cause of such accidents or incidents by the relevant authorities. For instance, in June 2014 during the course of construction of the MRT, metal sheet pile which was being placed on a stack within the worksite at our Pusat Bandar Damansara MRT construction site slipped and fell on a passing road vehicle, causing minor injuries to the motorist. Following such incident, the subcontractor and its staff working at the construction site who were responsible for carrying out the relevant works were terminated and the subcontractor was also blacklisted from being awarded further contracts with SunCon. Prior to the cause of the incident being established and penalties being imposed on the relevant subcontractor, a stop-work order was imposed for a short period of time. While such incident did not have any material impact on the project works being carried out by SunCon in the relevant circumstances, there can be no assurance that any other accident or incident would not have a material adverse effect on the timeliness of completion of project works or give rise to liabilities on the part of our Group and ultimately result in a material adverse impact on the financial position and business of our Group. 4. RISK FACTORS (CONT’D) Further, it is noted that in general, all our construction activities generate dust, waste and noise pollution. We are required to comply with various environmental laws and regulations relating to water, air and noise pollution, and the disposal of waste materials. Any failure to comply with such environmental laws and regulations may result in penalties and in serious cases, closure of our construction sites. Should this occur, our operating profits could be adversely affected. Any tightening of environmental laws may also require us to invest in equipment and machinery or to implement added processes to our current operations to meet the changes required in the new environmental laws and regulations. Further, some of our operations may be affected by changes in environmental, health and safety laws and regulations and compliance with such new laws and regulations may entail significant additional expenses for us. There can be no assurance that the future costs of compliance with such laws and regulations will not have a material adverse impact on our businesses and profitability. Nevertheless, this risk has not adversely affected us in the past and we have not experienced any material breach of workplace safety and health requirements which have had a material adverse impact on our business operations in the past. 4.2.5 Adequacy of Insurance Coverage Our Group believes that we have adequate insurance coverage on our assets, employees or construction projects and it is also our practice as well as a requirement of our clients as a condition to commencement of contract works for us to take up, amongst others, contractors’ aI/ risk insurance and pUblic liability insurance. In ensuring risks of under-insurance are minimised, our Group reviews our insurance policies on a regular basis to ensure that there is adequate coverage on our assets, employees and construction projects with the relevant insurance policies such as contractors’ all risk insurance, fire insurance, workers’ insurance and public liability insurance in order to manage any losses which may arise for our project needs. However, there can be no assurance that aI/liabilities incurred will be sufficiently covered by insurance and as such, claims for damages arising from our Group’s operations which are not adequately covered by our insurance coverage may have an adverse impact on our Group’s financial condition or results of operations. Notwithstanding the above, we have not experienced any claim for damages arising from our Group’s operations which has not been sufficiently covered by insurance in the past. 4.2.6 Uncertainty in Securing New Contracts and Maintaining Order Book The financial results of our Group depend on our ability to secure contracts on a timely basis. Our business development team is always on the lookout for new business opportunities to sustain the Group’s business continuity and growth. Our technical team and labour workforce wil/ concurrently seek to provide and maintain a consistent quality and timeliness of service delivery to our clients to encourage recurring business with existing clients and business with new clients. However, there can be no assurance that we will not face a situation of uncertainty in securing new contracts in the future. 4. RISK FACTORS (CONT’D) The financial results of our Group is dependent on our ability to secure contracts on a timely basis and there can be no certainty that our current order book of RM2.8 billion as at 31 March 2015, can be sustained in the future given that tenders for construction contracts are very competitive due to there being numerous players in the industry. There can also be no assurance that there will be a continuous upward trend or a sustained level of activity in the construction sector in Malaysia and Singapore. Our inability to maintain a strong order book may have a material adverse impact on our Group’s future profitability, financial performance and prospects, more so as we are a pure play construction company. Furthermore, while the synergies with our ultimate holding company, Sunway provide our Group with a relatively better opportunity as compared with our competitors to secure a steady stream of new contracts from the Sunway Group to sustain our performance, there is also a risk that our Group’s future financial performance and prospects wili be adversely affected if there is a downward trend in the property development activities undertaken by the Sunway Group. 4.2.7 Political, Economic and Regulatory Risk Our financial and business prospects, and the prospects of the industry in which we operate, wiil depend to some degree on the developments on the political, economic and regulatory front in the countries in which we operate. Amongst the political, economic and regulatory factors are changes in inflation rates, interest rates and foreign exchange rates, war, terrorism activities, riots, expropriations, changes in political leadership and unfavourable changes in government policies and regulations. However, there can be no assurance that adverse political, economic and regulatory changes, which are beyond our control, will not materially affect our Group’s businesses. Notwithstanding the above, we have not experienced any adverse political, economic and regulatory changes which have had a material adverse impact on our business operations in the past. 4.2.8 Vulnerability to Changes in Government Regulations Our Group’s operations are governed by the terms of the licences awarded by CIDB and BCA, which set out the types and nature of activities which a construction company in Malaysia and Singapore is allowed to undertake. In addition to the above, our Group is also subject to, amongst others, the Construction Industry Payment and Adjudication Act 2012, the LPIP Act, the Water Services Industry Act 2006, the Occupational Safety and Health Act 1994, the Environmental Quality Act 1974 and the Factories and Machinery Act 1967 and their relevant regulations in Malaysia. Furthermore, construction works carried out at construction sites are often subject to the guidelines of the local authorities and the directives and terms imposed by local authorities, from time to time. 4. RISK FACTORS (CONT’D) Our Singapore operations are subject to government legislation, regulations and policies which affect the construction industry in Singapore, including amongst others, the Employment of Foreign Manpower Act, Chapter 91A, the Building Control Act, Chapter 29, the Building Control (Licensing of Builders) RegUlations 2008, the Environmental Public Health Act, Chapter 95, the Building and Construction Industry Security of Payment Act Chapter 30B, the Workplace Safety and Health Act, Chapter 354A, the Workplace Safety and Health (General Provisions) RegUlations, the Workplace Safety and Health (Safety and Health Management System and Auditing) Regulations 2009 and the Workplace Safety and Health (Construction) Regulations 2007 which govern amongst other things: (i) employment of workers (inclUding foreign workers) in Singapore, such as overtime limits, the Man-Year Entitlements allocation system and the conditions of the work permits of foreign workers;
(ii) licensing of builders;
(iii) approval and execution of plans of building works; (iv) workplace safety and health; and
(v) environmental matters such as pUblic health and noise pollution,
the contravention of which may subject our Group, our Group’s employees and/or our Directors to statutory penalties which may be significant, such as fines imposed by the relevant authorities or we may have to modify, suspend or discontinue our operations. It should be noted that the legislation, regulations and policies affecting the construction industry in Singapore are subject to amendments from time to time. Any such changes could adversely affect our business operations and/or have a negative effect on the demand for our construction services. We have not experienced any severe restrictions on our conduct of business which have had a material adverse impact on our business operations in the past. However, there is no assurance that any adverse development or change in the regulatory environment would not have an adverse impact on our ability to conduct business going forward. 4.3 RISKS RELATING TO OUR LISTING 4.3.1 No Prior Market for Our Shares and Possible Volatility of Our Share Prices Prior to our Listing, there has been no public market for our Shares. There can be no assurance that an active market in our Shares will be developed or be sustained upon Listing. We cannot assure you that the market price of our Shares will not decline below the Final Retail Price and the Institutional Price following our Listing. We believe that a number of factors could cause our Share price to fluctuate, including but not limited to announcements of developments relating to our business, fluctuations in our operating results, general industry conditions, the performance of the global economy, future sales by our shareholders of substantial amounts of our Shares or other securities relating to our Shares in the open market after our Listing or the perception that these sales may occur. This could also materially and adversely affect our ability to raise capital at a time and at a Share price we deem appropriate.