Risk Factors

5. RISK FACTORS 5. RISK FACTORS Before investing in our Shares, you should pay particular attention to the fact that, to a large extent, our Group and our operations are governed by the legal, regulatory and business environment in Malaysia, which may in some aspects differ from those which prevail in other countries. Our business is subject to a number of factors, many of which are beyond our control. Prior to making an investment decision, you should carefully consider, along with the other matters in this Prospectus, the risks and investment considerations set forth below. The risks and investment considerations set forth below are not an exhaustive list of all the risks that we are currently facing or that may develop in the future. Additional risks, whether known or unknown, may in the future have a material and adverse effect on us or our Shares. Risks relating to our business 5.1.1 Our business is highly dependent on global trading volumes, regional and global economic, financial and political conditions Our core business consists of the development, management and operations of container terminals and the provision of cargo handling and other port-related services and our results of operations are affected by the volume of our business, which in turn depends on worldwide trade volumes as well as the import and export trade volumes of the region in which we operate. Global trade volumes and the import and export trade volumes of the region in which we operate are significantly affected by changes in economic, financial and political conditions regionally or globally that are beyond our control, including sanctions, boycotts and other measures as a result of trade barriers, trade disputes and work stoppages, particularly in the transportation services industry, and acts of war, hostilities, terrorism, natural disasters or epidemics. The global economic crisis had an adverse effect on the operation of ports and related services in 2008 and 2009. The ports and related services sector saw a significant decline in global throughput and increased pricing pressure in the fourth quarter of 2008 compared to the third quarter of 2008, which continued into 2009. According to Drewry Maritime Advisors, the market recovered in 2010, with a 14.6% increase in global container throughput over 2009 and 4.4% growth over the previous peak in 2008 and in 2012, global container throughput increased by 4.5% over 2011 to reach 621.0 million TEUs. In addition to a general decrease in global import and export activity, the global credit crunch has also adversely affected the global shipping industry, as liquidity problems in the international banking sector have reduced the availability of credit, making the financing of shipments more difficult. Furthermore, there may be excess capacity in the container shipping industry. According to Drewry Maritime Advisors, the number of new container ships on order as of June 2013 was eqUivalent to 19.7% of the then-existing global fleet capacity. As a result of this large order book, there may be an excess of capacity over demand in the container shipping industry over the next few years. Should the projected excess capacity in the container shipping industry trigger a fall in freight rates, shipping lines may attempt to reduce costs by pressuring container terminal operators to provide a reduction in rates relating to stevedoring or other services. However, the effectiveness of any such attempt would be affected by the balance between supply and demand for regional container terminal capacity. Any future deterioration in regional and global economic conditions could have an adverse effect on our business, financial condition and results of operations, as well as future growth. 5. RISK FACTORS (cont’d) 5.1.2 We are dependent on a small number of customers for a significant portion of our business Our largest customer, CMA CGM Group, contributed more than 10% of our total revenue for the years ended 31 December 2010,2011 and 2012 and six (6) months ended 30 June 2013 and our five (5) largest customers accounted for an average of approximately 40.4% of our total revenue over those same periods. For details on our customers, refer to Section 7.12 of this Prospectus. Our major customers are regional and global shipping companies and there can be no assurance that, if we were to lose all, or a significant portion of the business from one (1) or more of these major customers, we would be able to obtain any business from other customers in an amount sufficient to replace any such lost revenue or, even if we were able to obtain business from other customers, that it would be on commercially reasonable terms. Any non-renewal or entering into agreements on terms and conditions unfavourable to us may adversely affect our results of operations and profitability. Additionally, we expect that a significant portion of our container revenue will continue to be attributable to a limited number of customers in the foreseeable future and if any of these customers reduce their business with us, it may result in lower capacity utilisation of our resources, which could adversely affect our profitability and results of operations. 5.1.3 We may face risks associated with debt financing and the debt covenants which could limit or affect our operations As of 30 June 2013, we have in place apprOXimately RM700.0 million outstanding in borrowings relating to the SMTN Programmes, of which SMTN I is secured over the amount maintained in certain deposits with certain licensed banks. As of 30 June 2013, the pledged deposits as securities for the borrOWings relating to the SMTN Programmes amounted to RM27.1 million. We are subject to risks associated with debt financing, including the risk that our cash flows will be insufficient to meet the required payments, including payments relating to redemption and profit rate, under our SMTN Programmes. For details on our borrowings and liquidity risk, refer to Sections 12.2.6(iii) and 12.2.14(iii) of this Prospectus, respectively. If we are not able to meet all of our obligations to repay amounts outstanding on our SMTN Programmes or any future borrOWings through our cash flow from operations, we may be required to repay maturing debt with funds from additional debt, equity financing or both. There can be no assurance that such financing will be available, or if so, on acceptable terms. If we fail to make payments under our SMTN Programmes or any future borrowings, the lenders may be able to declare a default and initiate enforcement proceedings and acceleration of payment, which may have an adverse effect on our business, financial condition and results of operations. 5. RISK FACTORS (cont’d) In addition, we may also be subject to certain covenants that may limit or otherwise adversely affect our operations. In particular, covenants contained in our current or future financing agreements may restrict us from undertaking capital expenditure in amounts and at times that we deem necessary or desirable or when specified by construction timelines for new container terminal facilities. For instance, under the SMTN Programmes, we are prohibited from making sales of certain assets and we are also required to adhere to certain financial covenants and to maintain certain financial ratios. Such financial covenants may restrict our ability to operate Westports or undertake capital expenditures and may require us to set aside funds for .maintenance or repayment of security deposits. The triggering of any of such covenants may have an adverse effect on our business, financial condition, results of operations and prospects. 5.1.4 We are exposed to credit risk with respect to our customers and our business could be adversely affected if our customers default on their obligations While we seek to limit our credit risk by setting credit limits ·for individual customers, taking financial guarantees from certain customers and monitoring outstanding receivables, our customers may in the future default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. Our credit risk is increased by the fact that our largest customers operate in the same industry and therefore may be similarly affected by changes in economic and other conditions. Delayed payment, non-payment or non-performance on the part of one (1) or more of our major customers, or a number of our smaller customers, could have a material adverse effect on our business, financial condition, results of operations and prospects. For details on our credit risk, refer to Section 12.2.14{ii) of this Prospectus. 5.1.5 Our business requires significant periodic capital expenditure and we may not be able to secure funding as necessary or on desirable terms We operate in a capital intensive industry thatrequires substantial amounts of capital and other long-term expenditures including those relating to the development of new container terminal facilities. We recently completed the construction and began full operations of CT6 in March 2013, and intend to continue the expansion of Westports’ capacity with the construction of three (3) new container terminals, CT7, CTa and CT9. We expect CT7 to be completed and become fully operational in 2015 while the timing and construction of CTa and CT9 will depend on market conditions. Currently, we intend to fund the expansion through cash flows generated from operations and proceeds from the issuance of sukuk under the SMTN II. In the future, however, we may not be able to fund capital expenditure solely from cash provided by our financing facilities or from cash flows from operations, thereby requiring us to obtain additional equity or debt financing. Our ability to arrange external financing and the cost of such financing are dependent on numerous factors, inclUding our future financial condition, contractual restrictions applicable to us, general economic and capital market conditions, interest rates, credit availability from banks or other lenders, investors’ confidence in us, applicable provisions of. tax and securities laws and political and economic conditions in any relevant jurisdiction. We cannot assure you that we will be able to arrange any such external financing on commercially reasonable terms, if at all. If we are unable to generate or obtain funds sufficient to make, or are otherwise restricted from making necessary or desirable capital expenditure and other investments, we may be unable to grow our business, which may have a material adverse effect on our financial condition, results of operations and prospects. 5. RISK FACTORS (cont’d) 5.1.6 We are exposed to certain risks in respect of the expansion of our existing tenninals and port facilities and the development and construction of new tenninals and port facilities Our new projects contemplated or currently under development include the construction of three (3) new container terminals as well as additional infrastructure to support the new terminals. Such expansion and construction projects, typically require substantial capital expenditure throughout the development, construction and upgrading phases and may take months or years before they become operational, during which time we are subject to a number of construction, financing, operating and other risks beyond our control, including, but not limited to: (i) shortages of materials, equipment and labour;
(ii) adverse weather conditions and natural disasters;

(iii) adverse changes in demand for our services; (iv) labour disputes and/or disputes with sub-contractors;
(v) inadequate infrastructure, including as a result of failure by third parties to fulfill their obligations relating to the provision of utilities and transportation links that are necessary or desirable for the successful operation of a project;
(vi) failure to complete projects according to specification;

(vii) accidents; (viii) changes in governmental priorities; and (ix) an inability to obtain and maintain project development permission or requisite governmental licences, permits or approvals. We are in the process of expanding our existing terminals and port facilities and expect to develop and construct new terminals and port facilities. Delays with respect to these projects may negatively affect our ability to complete our current or future projects on schedule, if at all, or within the estimated budget and may prevent us from achieving the projected revenues, internal rates of return or increased capacity associated with such projects. In addition, there can be no assurance that our revenues generated upon the completion of our projects will be sufficient to cover the associated construction and development costs. In addition, the timing and speed of commencement of revenue-generating operations from our projects and capital expenditures, such as the expansion of our container terminal capacity or the addition of other services, may vary considerably from our expectations based upon the size and complexity of the project being implemented. These factors may make it difficult to replace anticipated income that we do not receive as a result of delays in implementing our services or due to losses of customers, which may have a material adverse effect on our business, results of operations, financial condition and prospects. 5. RISK FACTORS (cont’d) 5.1.7 We face significant competition in the container terminal industry which could adversely affect our ability to maintain or increase our market share and profitability The container terminal industry in the region in which we operate is highly competitive. We face significant competition from other ports in the region, such as Northport, Port of Tanjung Pelepas and Port of Singapore for trade volume and throughput. Some of our competitors have greater financial resources, greater capacity, larger facilities and other capabilities, including better connectivity, which generally results in better cost and other efficiencies for customers. As a result, there can be no assurance that we will be able to compete successfully in the future against our eXisting or potential competitors or that our business, financial condition, results of operations and prospects will not be adversely affected by increased competition. The container terminal industry has been characterised in recent years by the consolidation of participants to create global terminal operators, which enable them to offer global networks to their customers, which are themselves consolidating. According to Drewry Maritime Advisors, the top ten (10) international container terminal operators collectively accounted for more than 63% of global throughput for the year ended 31 December 2011. Industry consolidation has created increased competition for us as other global terminal operators are able to offer their shipping line customers alternative global networks and, in some cases, leverage existing relationships with shipping lines in one (1) region to support growth in other regions. The container shipping industry has also experienced significant consolidation as the major shipping lines seek to capitalise on economies of scale and enhance their global presence. This trend has reduced the number of potential customers for the container terminal industry and increased the impact that losing an existing customer or gaining a new customer could have on a terminal operator’s business. For instance, if a current customer of ours merges or forms an alliance with a customer of a competitor port, there is no guarantee that the newly merged entity or newly formed alliance will use our port services rather than our competitors. In addition, shipping lines, which are our major customers, are increasingly investing in seaports and in their own dedicated terminal facilities and to the extent that these customers make such investments in the Straits of Malacca, they may prefer to use these facilities over ours. In addition to consolidation through mergers and acquisitions, shipping lines have increasingly entered into various forms of intra-industry cooperative arrangements, inclUding the creation of liner alliances designed to increase the number of times ships sail on certain routes and broaden geographic coverage. These alliances provide terminal operators with the potential to align themselves as network or preferred terminal operators and thereby mirror the growth of, and make network propositions with respect to, such alliances. We expect that this trend will benefit the largest container terminal operators because of the high investment costs associated with maintaining a portfolio with the geographic scope necessary to offer a network proposition to the major shipping lines. Consolidation within the container terminal and container shipping industries, and the various intra-industry cooperative arrangements has also had the effect of both strengthening the business of our competitors and reducing the number of shipping customers available to us. We cannot assure you that consolidation within or between the container terminal and container shipping industries will not become more prevalent or that our competitors will not undertake additional mergers and acquisitions to increase their capacity, economies of scale and financial and market strength. There can be no assurance that we will be able to retain our customers in the face of increased competition. For details on competition, refer to Section 7.10 of this Prospectus. If we are unable to compete effectively against our competitors, we may not be able to maintain or increase our market share and may Jose customers or be forced to offer better incentives to retain customers, which could have a material adverse effect on our financial condition, results of operations and prospects. 5. RISK FACTORS (cont’d) 5.1.8 Our results of operations may fluctuate significantly as a result of the seasonality of the shipping industry The container port industry has historically experienced monthly variations in revenue as a result of various holiday seasons. In the past decade, these variations have resulted in monthly volatility in our operating results with revenues generally growing throughout the course of the year with increases during certain holiday seasons. In 2012, Westports’ throughput experienced steady growth throughout the year as a result of increased cargo shipments from Asia and the Middle East, which peaked as a result of the Chinese New Year and the month of Ramadan, which in turn had caused an increase in throughput at various times throughout the year. As a result, our results of operations may fluctuate significantly and comparisons of operating results between different periods within a single financial year, or between different periods in different financial years, may not necessarily be meaningful and should not be relied upon as an indicator of our overall performance. 5.1.9 Our inability to successfUlly implement our expansion plans and effectively manage our growth strategy could have an adverse effect on our business, results of operations and financial condition We have experienced considerable growth in our revenue over the past three (3) financial years. Our operational revenue for the years ended 31 December 2010, 2011 and 2012 was approximately RM975.0 million, RM1,115.3 million and RM1,226.2 million, respectively. Similarly, we have experienced growth in our operational revenue from RM600.5 million for the six (6) months ended 30 June 2012 to RM642.8 million for the six (6) months ended 30 June 2013. Our future prospects will depend upon our ability to grow our business and operations further. There can be no assurance that we will be able to grow our business and operations at the expected levels or at all. and accordingly, we cannot assure you that our operating revenue will continue to achieve a growth rate similar to those achieved in recent years. Further, there can be no assurance that we will be able to effectively manage growth in business levels pursuant to the implementation of our expansion plans. In order to manage the growth effectively, we must also implement and improve our operating systems, IT platforms, procedures and internal controls on a timely basis. If we fail to implement such systems, procedures and controls or if there is any weakness in our internal controls, we may not be able to meet our customers’ needs, hire and retain new employees, pursue new businesses, complete future strategic agreements or operate our business effectively. There can be no assurance that our existing or future management, operational and financial systems, procedures and controls will be adequate to support future operations or to establish or develop business relationships beneficial to future operations. Failure to manage growth effectively could have an adverse effect on our business, financial condition, results of operations and prospects. 5. RISK FACTORS (cont’d) 5.1.10 Rising costs of fuel and electricity may affect us Fuel and electricity costs account for a significant portion of our operating expenses. Any increase in the costs of fuel and electricity as a result of market forces or inflationary pressure may adversely affect our business, financial condition, results of operations and prospects. For example, our fuel cost increased by 55.6% from the year ended 31 December 2010 as compared to the year ended 31 December 2011 which was primarily due to, among others, the increase in fuel price, which increased by 40.0% from an average of US$90.05 per barrel in 2010 to an average of US$126.06 per barrel in 2011. Fuel and electricity costs accounted for 15.8%,18.9% and 19.1 % of our total operational cost of sales for the years ended 31 December 2010, 2011 and 2012, respectively. Fuel and electricity costs accounted for 19.5% and 17.5% of our total operational cost of sales for the six (6) months ended 30 June 2012 and 2013, respectively. 5.1.11 Increases in our costs may materially and adversely affect our operating results if we are unable to pass on such increases to our customers through an increase in tariffs in a timely manner The tariffs we charge customers in our port business are regulated by the PKA and must comply with a published list of maximum tariffs that can be charged. The PKA is a regulatory body established to facilitate and regulate Port Klang with regards to policy-making and investment planning, and, in cooperation with the GOM which sets the maximum tariffs, is responsible for regulating the maximum tariff rates we may charge to customers and prohibiting any changes in those tariffs. Tariff increases have been implemented in phases and thus there may be time lags between the events that caused us to petition for an increase and the actual increase in the tariff, which could negatively affect our results of operations. If we are unable to raise tariffs in a timely manner to cover increased expenses or to respond to changes in market conditions, our business, financial condition and results of operations may be adversely affected. For details on tariffs and fees, refer to Section 7.6.5 of this Prospectus. 5.1.12 Our operations are dependent on the availability of good road and rail connectivity and any disruption in the operation of or delays in the improvements to the road and rail network may have an adverse effect on our business and results of operations Port Klang’s South Port connects to Westports via rail which connects Westports to inland depots such as Ipoh Cargo Terminal in Perak, Nilai Inland Port in Negeri Sembilan, Padang Sesar (at the Malaysian-Thailand border) and Segamat Inland Port in Johor. Through the Port Klang -Kuala Lumpur railway line, Westports is linked to the entire Malayan Railways network (also known as Keretapi Tanah Melayu railway network). Additionally, the North-South Expressway, North-South Expressway Central Link, Shah Alam Expressway and South Klang Valley Expressway all provide transport connectivity between Westports and the rest of Malaysia. As we are planning for capacity expansion, there can be no assurance that the existing system can cater for the increase in traffic reSUlting from increased throughput at our expanded facilities. 5. RISK FACTORS (cont’d) In addition, we are working with the local authorities to improve transportation links to the Klang Valley and the rest of Peninsular Malaysia. For example, we are currently in negotiations with the relevant authorities to approve additional funding to expand the access road to Pulau Indah from the current two (2) lanes to three (3) lanes in each direction. In addition, we expect that the South Klang Valley Expressway, certain sections of which are still under construction and expected to be operational by 2014, will provide additional access and reduce transportation time for cargo to and from South Klang Valley. However, there can be no assurance that existing or planned supporting road, highway and .railway infrastructure near Westports will be completed or will not be closed, relocated, terminated or delayed. Such an occurrence would adversely impact the accessibility of Westports and our appeal and marketability to customers. This, in turn, may have an adverse effect on our business, financial condition, results of operations and prospects. 5.1.13 Changes in technology or improper maintenance may render our current equipment obsolete or require us to make substantial capital investments Our business operations depend on key pieces of technologically advanced equipment and machinery, including cranes and yard handling equipment which are essential to our operations. We may be unable to ensure that such equipment and machinery are in line with the latest technological advances. The operation of such equipment and machinery may result in customers using competitor ports equipped with more advanced and efficient equipment resulting in a loss of revenue which may have an adverse effect on our business, financial condition and results of operations. For example, the increasing containerisation of cargoes in recent years has resulted in the construction of larger container vessels, which benefit from lower operating and voyage unit costs, such as fuel, port and canal fees, manning, repairs, insurance and ship management costs. According to Drewry Maritime Advisors, the average container vessel size has tripled over the past 20 years and will continue to grow as approximately 76% of the current containership order book is composed of ships in excess of 8,000 TEUs. The increasing number of relatively large ships puts pressure on container terminal operators to offer facilities with deepwater access and develop sophisticated shipping and port-related technology to meet the demands of these larger vessels (over 300 metres in length). Further, a significant part of the equipment which we use requires regular maintenance, upgrading, revamping or replacement. Despite our planned operating and capital expenditure, there can be no assurance that the equipment will not suffer material damage throl,lgh wear and tear, natural disasters or industrial accidents, or will not require further significant capital improvements or maintenance in the future. Additionally, we may fail to maintain sufficient financing and budgetary controls, planning and monitoring systems, procurement coordination, scheduling for equipment upgrading and maintenance and efficient use of hired services with respect to our equipment, all of which may increase the cost of operations which could have an adverse effect on our business, financial condition, results of operations and prospects. 5. RISK FACTORS (cont’d) 5.1.14 Our IT systems which operate the terminal facilities may be subject to failure, which could result in delays to our operations Our business spans a wide range of activities that are subject to rapid and significant changes in technology. We currently use our IT systems to facilitate a smooth flow of traffic and transactions, all of which adhere to current standards. We operate a variety of software programs and systems that control various aspects of Westports’ operations. Examples of such systems are COSMOS, which controls every aspect of Westports’ operations and our e-Terminal Plus, which provides an interface to the entire port community and integrates many of our operations to benefit our customers. In addition to these primary IT systems, we utilise other types of software and IT to ensure that there are no interruptions to Westports’ operations. We have had temporary outages of our software systems in the past, and any material failure or breakdown in these systems in the future could interrupt normal business operations and result in a significant slowdown in operational and management efficiency for the duration of such failure or breakdown. Any prolonged failure or breakdown could significantly impact our ability to offer services to our customers, which may have an adverse effect on our business, financial condition, results of operations and prospects. Similarly, any significant delays or interruptions in our IT systems could cause delays and interruptions in the loading or unloading of customer cargo which could negatively impact our reputation as an efficient and reliable terminal operator. 5.1.15 We rely on third party vendors for certain port operations which may be subject to interruption We rely on certain third party vendors to supply and maintain much of our equipment and IT systems as well as provide marine tug boat services, pilotage services and prime mover fleet services. In the event that one (1) or more of such third party vendors cease operations or become unable or unwilling to meet our needs, for example, due to work stoppage or labour unrest, there can be no assurance that we would be able to replace any such vendors promptly or on commercially reasonable terms. Delay or failure in finding suitable replacements could adversely affect our business, financial condition, results of operations and prospects. 5.1.16 We may not maintain sufficient insurance coverage for the risks associated with the operation of our business Though we maintain insurance policies covering both assets and employees on terms common to the industry, our operations may be affected by a number of risks, including terrorist acts and war-related events, for which full insurance cover is either not available or not available on commercially reasonable terms. In addition, the severity and frequency of various other events, such as accidents and other mishaps, business interruptions or potential damage to our facilities, property and equipment caused by inclement weather, human error, pollution and labour disputes, as well as risks relating to our prOVision of services to customers, including, with respect to our container terminal operations, damage to customers’ property, delays, misrouting of cargo and documentation errors, may result in losses or expose us to liabilities in excess of our insurance coverage or significantly impair our reputation. There can be no assurance that our insurance coverage will be sufficient to cover the loss arising from any or all such events or that we will be able to renew our existing insurance cover on commercially reasonable terms, if at all. 5. RISK FACTORS (cont’d) Should an incident occur in relation to which we have no insurance cover or inadequate insurance cover, we could lose the capital invested in, and anticipated future revenues relating to, any property that is damaged or destroyed and, in certain cases, we may remain liable for financial obligations related to the impacted property. Similarly, in the event that any assessments are made against us in excess of any related insurance cover that we may maintain, our assets could be subject to attachment, confiscation or restraint under various judicial procedures. Any of these occurrences could have an adverse effect on our business, financial condition, results of operations and prospects. Additionally, we are required to obtain insurance as per the terms of the Port Licence granted under the Privatisation Agreement and have secured insurance such as industrial all risk insurance, equipment all risk insurance, public liability insurance, corporate liability insurance and statutory insurances. If we fail to maintain sufficient levels of insurance, PKA may obtain such insurance policies on our behalf and PKA will be entitled to recover cost and expenses incurred in doing so with interest chargeable at an agreed rate, which may adversely affect our business, financial condition and results of operations. For details on our insurance policies, refer to Section 7.8 of this Prospectus.
5.1.17 Upgrading or repairs to the container terminals may disrupt our operations Our container terminals may need to undergo upgrading or redevelopment works from time to time and may also require unforeseen ad hoc maintenance or repairs in respect of faults or problems that may develop or because of new planning laws or regulations. Our business and operations may suffer some disruptions and it may not be possible to continue operations on areas affected by such upgrading or redevelopment works. In addition, physical damage to the container terminals resulting from fire, severe weather or other causes may lead to a significant disruption to the business and operations of Westports and, together with the foregoing, may impose unforeseen costs and may have an adverse effect on our business, financial condition, results of operations and prospects. 5.1.18 We are required to have a number of approvals, licences, registrations, permits and property rights for our business from various regulatory authorities as well as under the Privatisation Agreement, and the failure to obtain or renew them in a timely manner may adversely affect our operations We require a number of approvals, licences, registrations and permissions for operating our business, inter alia, approvals from various government entities such as for a Port Licence and Lease Agreement from the PKA, a licence for the management, operation and maintenance of information assets and information systems from CyberSecurity Malaysia, an agency under the Ministry of Science, Technology and Innovation, and certificates of fitness for our hoisting machines and unfired pressure vessels from the Department of Occupational Safety and Health, some of which may have expired and for which we have either made or are in the process of making an application for obtaining approval or renewal. However, there can be no assurance that such approval or renewal will be obtained, which could have a material adverse effect on our operations. For further details on our major licenses and permits, refer to Section 7.9 and Annexure B of this Prospectus. 5. RISK FACTORS (cont’d) We are also required to obtain approval from the GOM for various activities under the Privatisation Agreement. Under the Privatisation Agreement and the Port Licence, we are required to ensure that Westports complies with all plans, policies and directives of the GOM and the PKA, including the Malaysian National Port Policy and the Westports Development Plan, and to ensure that Westports remains equipped to provide and maintain a full range of competitive and adequate port services. Furthermore, we are required to ensure that Westports’ facilities and services are profitable and effectively managed, and are required to allow the GOM and/or the PKA to conduct operational and financial audits throughout the concession period. We are also required to comply with all laws and the GOM policies on the conservation and preservation of the environment within Westports and to take all reasonable precautions to prevent pollution and adhere to all laws and regulations pertaining to pollution and discharge of effluent matters. Our Port Licence may be suspended or revoked if the Privatisation Agreement or the Lease Agreement is terminated (for whatsoever reason). In this regard, we cannot assure you that such agreements will not be prematurely terminated (with or without cause) by the GOM or PKA, respectively. Additionally, any expansion of the scope of the regulations governing the environmental obligations, in particular, would likely involve sUbstantial additional costs, including costs relating to maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address environmental incidents or external threats. Our failure to obtain or comply with any of these or any other required approvals or licences, registrations, permits or renewals thereof, in a timely manner, or at all, could lead to substantial penalties, including criminal or administrative penalties, other punitive measures and/or increased regulatory scrutiny, trigger a default under one (1) or more of our financing agreements or invalidate and/or increase the cost of the insurance that we maintain for our business. For the most serious violations, we may also be forced to suspend operations until we obtain such certifications, permits or licences or otherwise bring our operations into compliance. If we are unable to control the costs involved in complying with these and other laws and regUlations, or recover the full amount of such costs from our customers, our business, financial condition, results of operations and prospects may be adversely affected. Furthermore, we may not be able to renew our Lease Agreement on the same terms upon expiration. Any revision or alteration of the terms of the Lease Agreement could adversely affect our business, financial condition, results of operations and prospects. 5.1.19 Our inability to maintain the Privatisation Agreement may adversely affect our financial condition and results of operations The Privatisation Agreement with the GOM and PKA contains clauses that allow the GOM or PKA to terminate the Privatisation Agreement if we do not comply with any provision, obligation, covenant, warranty or undertaking as stipUlated in the Privatisation Agreement or our Port Licence, which includes compliance with any policy of the GOM and PKA and other directives of the GOM. Additionally, the GOM may terminate the Privatisation Agreement without any reason if the GOM considers that such termination is necessary for national interest, in the interest of national security or for the purpose of government policy or public policy. The GOM via UKAS, in granting its consent to our IPO and the Listing, had imposed a condition that 51 % of the equity shareholding in WMSB must be held by Malaysian citizens at all times after the Listing. 52 5. RISK FACTORS (cont’d) To the extent the level of shareholdings of Malaysians in WHB falls below 51 %, remedial measures may include: (i) undertaking a proposal involving the issuance of new WHB Shares to Malaysians sUbject to regulatory and shareholders’ approvals being obtained; (ii) seeking the assistance of our Malaysian major shareholders to increase their shareholding in our Company; and (iii) seeking indulgence from the GOM, via UKAS, for an extension of time to comply with the said condition whilst we formulate other potential remedial measures to address any shortfall. We cannot assure you that the GOM will grant us an extension of time to comply or address the equity shareholding condition or that our Malaysian major shareholders would lend any assistance, and there can also be no assurance that the Company would be able to complete such an issuance of Shares and any issuance may dilute our Company’s then existing shareholders. There can be no assurance that the Privatisation Agreement will not be prematurely terminated (with or without cause) or that we will not be penalised (with or without cause) by the GOM. If we are unable to maintain the Privatisation Agreement, our business, results of operations, financial condition and prospects may be adversely affected. In addition, under the terms of the Privatisation Agreement, WMSB attained the right to develop and operate Westports for a period of 30 years until 31 August 2024. The GOM has agreed to extend this period by another 30 years to 31 August 2054, subject to the fulfilment of the following conditions: (i) the completion of the reclamation of the land and incidental works for CT6 to CT9 on or before 1 January 2014; and (ii) the completion of construction works for CT6 to be fully operational on or before 1 January 2014. In March 2013, the construction works for CT6 were completed and CT6 commenced full operations. In September 2012, land reclamation and incidental works for CT7 was completed. Furthermore, as at the LPD, approximately 91 % of the land reclamation and incidental works for CT8 and CT9 have been completed and are expected to be fully completed by 31 December 2013. If we fail to satisfy the remaining conditions for the extension by the prescribed date and such condition cannot be extended, waived or amended, we may not be able to extend the concession beyond 31 August 2024, which may have an adverse effect on our business, results of operations, financial condition and prospects. 5.1.20 Our operations are subject to extensive environmental, health, safety and other related regulations We, like other port operators globally and regionally, are subject to various central, state and local environmental, health and safety laws and regulations concerning issues such as accidents, damage caused by air emissions, wastewater discharges, solid and hazardous waste handling and disposal. These laws, rules and regulations also prescribe the punishments for any violations. In addition, we are subject to the ISPS Code which places additional security, safety and other such obligations on us. Any such additional compliance would require substantial investment in time on behalf of our management and staff, which may adversely affect our business and results of operations. Further, if we fail to adhere to such newly enacted or newly applicable laws, rules or regulations, we may lose accreditation and our operations may be disrupted. For details on safety, health and environment and quality assurance, refer to Section 7.7 of this Prospectus. 5. RISK FACTORS (cont’d) While we believe that our facilities are in compliance in all material respects with the applicable environmental laws and health and safety regulations and we have obtained the requisite permissions and clearances, we may incur additional costs and liabilities in relation to environmental concerns and compliance with these laws and regulations or any remedial measures in relation thereto. These additional costs and liabilities could be the result of penalties, fines, remedial measures and clean up liabilities or due to failing to adequately comply with more onerous laws or regulations. Any non-compliance with such laws and regulations may force us to close Westports’ operations until we are in compliance with these laws and regulations, and in that event, our business, results of operations, financial condition and prospects may be adversely affected. 5.1.21 We may handle goods that are hazardous, which could result in spills and/or environmental damage Certain of our customers are involved in the transportation of hazardous materials. The transportation of these materials, which are handled by us or our third-party operators, such as petroleum or chemicals, is subject to the risk of leaks and spills, which may cause environmental damage. Furthermore, our customers may ship undeclared hazardous cargo to avoid surcharges for which we may be held accountable. Although our management believes that our container terminals do not handle or store these hazardous chemicals in quantities that are in violation of any applicable regulations, there can be no assurance that they have not in the past or will not in the future violate applicable environmental regulations. Violations of environmental regulations may subject us to fines and penalties or result in the closure or temporary suspension of our operations. If we are found to have violated any environmental regulations because of the cargo handled and stored or required to discontinue handling such cargo, it could have a material adverse effect on our business, financial condition, results of operations and prospects. 5.1.22 Our business and facilities may be adversely affected by severe weather conditions or natural disasters in Malaysia or elsewhere Our business and operating facilities may be adversely affected by severe weather conditions, such as heavy rain and flooding, haze, dense fog and low visibility, climatic changes or natural disasters such as earthquakes, tremors, tsunamis and hurricanes. Such severe weather conditions, climatic changes or natural disasters may force us to temporarily suspend operations at our terminals. In some cases, we may temporarily suspend operations based on warnings from local and national meteorological departments. If weather conditions, climatic changes or natural disasters of any type were to force the terminals to close for an extended period of time, our facilities and our business may be adversely affected. In addition, any weather condition, climatic change or natural disaster, including but not limited to severe monsoons or flooding, affecting ports that serve as starting points or final destinations for shipping lines calling at Westports may have an adverse effect on our business. Additionally, natural disasters in Malaysia or in Southeast Asia may lead to a disruption of transportation networks, information systems and communication service on which we rely for sustained periods of time. Further prolonged spells of natural calamities could have a negative impact on the Malaysian economy, adversely affecting our business. We may also be liable to our customers for disruption in our operations resulting from such damage or destruction. Furthermore, prolonged disruption of port operations may entitle our customers to terminate their contracts. Any such disruptions may have an adverse effect on our business, financial condition, results of operations and prospects. 5. RISK FACTORS (cont’d)

5.1.23 Our operations depend on the adequate and timely supply of spare parts and equipment at acceptable prices and quality Our successful operations depend on our ability to obtain spare parts and equipment from suppliers at commercially acceptable prices and quality in a timely manner. We are exposed to the market risk of price fluctuations for certain spare parts and equipment. The prices and availability of such items may vary significantly from period to period due to factors such as consumer demand, production capacity, market conditions and costs of raw materials. The supply of spare parts and equipment required for our operations to a large extent depends on the economic, natural and other conditions of the region where we operate our business. As such, we cannot assure you that we will be able to continue to obtain sufficient spare parts or equipment at commercially acceptable prices, in a timely manner, or at all. Furthermore, if we are forced to acquire such items at commercially acceptable prices, we may be prevented from passing on any cost increases to our customers. Any failure to obtain adequate spare parts and equipment in a timely manner or to do so on commercially acceptable terms, may materially and adversely affect our business, results of operations and financial condition.
5.1.24 We are exposed to certain operational risks relating to work stoppages We may experience disruptions to our operations due to labour disputes or other labour unrest and are exposed to the risk of formation of unions, which may adversely affect our business, financial condition, results of operations and prospects. Any disruptions of transportation services or the vendors of our outsourced services due to strikes, or other events could also impair our customers’ ability to use any of our terminals. Such disruptions may adversely affect our business, financial condition, results of operations and prospects.
5.1.25 Certain tax incentives or exemptions from the GOM may no longer be available to us in the future We are eligible for certain tax incentives and exemptions granted by the GOM relating to capital expenditure allowances. For us to benefit from these tax incentives and exemptions, certain conditions must be satisfied during the period in which these tax incentives are in effect. For details on our tax benefits and tax expense, refer to Sections 12.2.2(v) and 12.2.4(x) of this Prospectus, respectively. To the extent that these conditions are not met before their respective expiry dates, these tax incentives and exemptions may no longer be available to us. If GOM authorities choose to discontinue the tax benefits we currently receive, either due to our failure to meet certain conditions necessary for such renewal or due to a change in law, our results of operations and financial position may be adversely affected. 5. RISK FACTORS (cont’d) 5.1.26 Fluctuations in currency exchange rates may have an adverse effect on our results of operations Although our revenue is denominated in RM, we are exposed to fluctuations in foreign currency exchange rates in relation to purchases in currencies other than RM. We have incurred, and expect to continue to incur, expenses, such as purchases of machineries and parts, which are denominated mainly in US Dollar. For the six (6) months ended 30 June 2013, approximately RM76.3 million of our purchases were denominated in foreign currencies. Further, our purchase of fuel, although denominated in RM, is exposed to fluctuations in foreign currency exchange rates as our fuel cost is also dependent on the global fuel price. As a result, currency fluctuations may have an impact on our results of operations. A depreciation of RM against US Dollar could increase the costs of fuel, machineries and parts necessary for the operation of our business. Conversely, an appreciation of RM against US Dollar may reduce the costs of fuel and such equipment in RM terms. Furthermore, an appreciation of the RM against other currencies may reduce our revenues due to a reduction in our competitiveness as the tariffs charged for our services may be more costly as compared against other currencies charged by our competitors. For details on currency risk, refer to Section 12.2.14(iv) of this Prospectus. 5.1.27 Our key management team and other key personnel in our business units are critical to our continued success and the loss of, or the inability to attract and retain, such personnel in the future could harm our business Our success SUbstantially depends on the continued service and performance of our key management team and other key personnel for the management and running of port operations and the planning and execution of our business strategy. Our ability to implement our business strategy will depend, in large part, on our ability to attract, train, motivate and retain highly skilled personnel. There is intense competition for experienced senior management and other key personnel with technical and industry expertise in the port industry and if we lose the services of any of these key individuals to competitors and are unable to find suitable replacements in a timely manner, our ability to implement and realise our strategic objectives could be impaired. The loss of services of some of our senior management team may adversely affect our business, results of operations and prospects. For details on our key management, refer to Section 9.6 of this Prospectus. 5.1.28 The GOM (through MOF Inc.) by virtue of the Special Share may have interests which conflict with those of our shareholders Pursuant to the Privatisation Agreement, WMSB is required to ensure that one (1) Special Share is held by the GOM through the MOF Inc. The Special Share is currently held by the MOF Inc. but may be transferred to its successor or any minister of the GOM, representative or any person acting on behalf of the GOM. The MOF Inc. as the holder of the Special Share (“Special Shareholder”) or any person acting on behalf of the Special Shareholder shall be entitled to receive notice of and to attend and speak at all general meetings or any other meeting of any class of shareholders of WMSB, but the Special Share shall carry no right to vote or any other rights at such meeting. The Special Shareholder shall be entitled to nominate one (1) director to be on the board of directors of WMSB. 5. RISK FACTORS (cont’d) Certain matters, including the alteration of the Articles of Association of WMSB relating to the rights of the Special Shareholder, proposed dissolution of WMSB, issuance of new shares (when aggregated with all other existing issued shares of WMSB, carry the right to cast on a poll more than 10% of the right to vote by all members at a general meeting of WMSB) or any substantial disposal of assets or any proposals affecting national interests, require the prior consent of the Special Shareholder. There can be no assurance that the interests of the GOM-appointed board member or the representative of the Special Shareholder will be aligned with those of our shareholders, in particular on matters involving national interests. For the terms of the Special Share held by the MOF Inc., refer to Section 6.5 of this Prospectus. 5.1.29 Any change in government control or regUlations may have an adverse effect on our financial condition The growth of the shipping and logistics industry moves in tandem with the growth of the manufacturing industry. Therefore, any government control or regulations imposed on either the shipping industry or the manufacturing industry could adversely affect our future growth and level of profitability. The GOM does, from time to time, adopt policies and implement guidelines that may affect business in Malaysia, such as methods of taxation, currency exchange controls, licensing regUlations and other regulations. However, there can be no assurance that any change or amendments to the laws, policies and regulations by the GOM will not adversely affect our business, financial condition, results of operations and prospects. 5.1.30 The pro forma financial information contained in this Prospectus may not accurately reflect our historical financial position, results of operations and cash flows The pro forma financial information as of and for the years ended 31 December 2010, 2011 and 2012 and the six (6) months ended 30 June 2013 included elsewhere in this Prospectus have been prepared incorporating adjustments to reflect the MSA Termination and its related tax effects at the statutory tax rate of 25%. As the pro forma financial information is prepared for illustrative purposes only, such information, because of its nature, may not give a true picture of the effects of the adjustments on our financial position, results of operations or cash flows had the MSA Termination actually occurred on the stated date of such pro forma financial information. Further, such information does not purport to predict our future financial condition, results of operations, prospects or cash flows. As a result, your ability to understand our financial condition, results of operations or cash flows based on our historical consolidated financial statements or pro forma financial information may be limited. 5. RISK FACTORS (cont’d) 5.1.31 Forward-looking statements in this Prospectus may not be accurate and are subject to uncertainties and contingencies This Prospectu,s contains forward-looking statements. All statements other than statements of historical facts included in this Prospectus, including, without limitation, those regarding our financial position, business strategies, prospects, plans and objectives of our Group for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future result, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Forward-looking statements can be identified by the use of forward-looking terminologies such as the words “may”, “will”, “would”, “could”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “aim”, “plan”, “forecast” or similar expressions and include all statements that are not historical facts. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. Such factors include, among others, general economic and business conditions, competitive environment of the industry in which we operate, the impact of future regulatory or government policy changes affecting us or the industry in which we operate, the continued availability of capital and financing and other factors beyond our control. In light of these uncertainties, the inclusion of such forward-looking statements in this Prospectus should not be regarded as a representation or warranty by us or our advisers that such plans and objectives will be achieved and we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this Prospectus to reflect any changes in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

5.1.32 Terrorist acts and other catastrophic events may affect our operations Our business operations could be adversely affected or disrupted by terrorist attack, natural disasters (such as earthquakes, floods, tsunamis, hurricanes, hydrologic and climatic patterns, fires or typhoons) or other catastrophic or otherwise disruptive events, including, but not limited to: (i) invasion, piracy, sabotage, rebellion, revolution, insurrection, military or usurped power, war and radioactive or other material environmental contamination;
(ii) riots or other forms of civil disturbance;

(iii) any recurrence of severe acute respiratory syndrome or outbreak of Avian Flu or other contagious disease, which may adversely affect global or regional trade volumes or customer demand with respect to cargo transported to or from affected areas or lead to any imposition of quarantines; (iv) denial of the use of any railway, port, airport, shipping service or other means of public transport; and
(v) strike or lock-out or other industrial action by workers or employers.

5. RISK FACTORS (cont’d) 5.1.33 Certain of our structures that we currently use do not have the requisite CFOs, which may adversely affect our operations Our development applications for our port facilities which are in accordance with the Westports Development Plan are submitted to the PKA for their approval prior to the development of our port facilities. Our port facilities that are constructed and completed as at the date of this Prospectus have all been issued with certificates of practical completion. These certificates of practical completion were issued by the independent consulting engineer in-charge of the construction and development of our port facilities. Notwithstanding this, certain wharves and structures that we are currently utilising do not have the requisite CFOs and in view of this, we have submitted the applications for some of the CFOs on 31 January 2013 and 14 August 2013, respectively. As at the LPD, there are certain applications for the CFOs which have not been made and we have not yet obtained the CFOs for applications which had been made on the aforementioned dates. Refer to Annexure A of this Prospectus for details of the wharves and structures which are pending the said CFOs. Although we are taking necessary steps to obtain the CFOs for these wharves and structures, there can be no assurance that we will receive the CFOs and neither can we assure you that we will not be penalised for utilising the said wharves or structures without a CFO. Further, there can be no assurance that we will be able to submit the aforesaid outstanding applications in a timely manner as such applications are dependent upon various GOM ~gencies’ inspection and/or approval. Our failure to obtain these CFOs in a timely manner, or at all, could lead to the imposition of penalties and/or other punitive measures. In addition, there can be also no assurance that our business, financial condition, results of operation and prospects will not be adversely affected as a result of any imposition of penalties and/or other punitive measures or our failure to obtain the CFOs in a timely manner, or at all. 5.2 Risks relating to the port industry 5.2.1 We rely on security procedures carried out at other port facilities and by our shipping line customers, which are outside our control We inspect the physical condition and the seals of containers that enter Westports in accordance with our own practices and the inspection procedures prescribed by, and under the authority of the PKA charged with oversight of Westports. We also rely on the security procedures carried out by shipping line customers and the port facilities that containers have previously passed through to supplement our own inspection to varying degrees. However, there can be no assurance that the cargo that passes through Westports will not be affected by breaches in security or acts of terrorism, either directly or indirectly, in other areas of the supply chain, which would have an impact on us. A security breach or act of terrorism that occurs at one (1) or more of the facilities, or at a shipping line or other port facility that has handled the cargo prior to the cargo arriving at our facilities, could subject us to significant liability, inclUding the risk of litigation and damage to our reputation. 5. RISK FACTORS (cont’d) In addition, a major security breach or act of terrorism that occurs at one of the facilities or one of our competitors’ facilities may result in a temporary shutdown of the container terminal industry and/or the introduction of additional or more stringent security measures and other regulations affecting the container terminal industry, including us. The costs associated with any such outcome may have an adverse effect on our business, financial condition, results of operations and prospects. 5.2.2 Additional security requirements may increase our operating costs and restrict our ability to conduct our business In recent years, various international bodies and governmental agencies and authorities have implemented numerous security measures that affect container terminal operations and the costs associated with such operations. Examples of recent security measures include the ISPS Code, which was implemented in 2004, and, to the extent that we handle cargo destined for the United States, the global security initiatives emanating from the US Safe Ports Act of 2006, specifically the Container Security Initiative and the Secure Freight Initiative, which require us to work with US Customs and Border Protection agents to identify high risk containers prior to shipment to the United States. Failure to comply with the security requirements applicable to us or to obtain relevant security-related certifications may, among other things, prevent certain shipping line customers from using our facilities and result in higher insurance premiums, which could have an adverse effect on our business, financial condition, results of operations and prospects. The costs associated with existing and any additional or updated security measures will negatively affect our operating income to the extent that we are unable to recover the full amount of such costs from our customers, who generally also have faced increased security-related costs. Similarly, additional security measures that require us to increase the scope of our screening procedures may effectively reduce the capacity of, and increase congestion at, Westports, which may negatively affect our business, financial condition, results of operations and prospects. (The rest of this page has been intentionally left blank) 5. RISK FACTORS (cont’d) 5.3 Risks relating to our Shares 5.3.1 Future issuance or sales, or market perception of sales, of substantial amounts of our Shares or other securities relating to our Shares in the public market could materially and adversely affect the prevailing market price of our Shares following our IPO Future sales by our shareholders of substantial amounts of our Shares or other securities relating to our Shares in the open market after the IPO, or the perception that these sales may occur, could adversely affect the market prices of our Shares prevailing from time to time. The market price of our Shares may decline as a result of future sales of substantial amounts of our Shares or other securities relating to our Shares in the open market, the issuance of new Shares or other securities relating to our Shares, or the perception that such sales or issuances may occur. This could also materially and adversely affect our ability to raise capital at a time and at a price we deem appropriate. 5.3.2 Ownership and control by our existing shareholders Our controlling shareholders, PRSB and SASB (being a person connected to PRSB). will collectively hold in aggregate approximately 46.80% (on the assumption that the Over-Allotment Option is not exercised) of our issued and paid-up share capital upon Listing, of which, as at the LPD, 30,612,245 Pre-subdivided WHB Shares have been pledged with AmBank (M) Berhad as security for bank facilities granted to PRSB. As a result, the controlling shareholders will be able to influence the outcome of certain matters requiring the vote of our shareholders, unless they are required to abstain from voting either by law and/or by the relevant guidelines or regulations. We cannot assure you that the views of our controlling shareholders will be aligned with that of management or of our other shareholders. 5.3.3 There has been no prior market for our Shares and it is uncertain whether a market will ever develop or, if a market does develop, whether it will be sustained There has been no prior market for our Shares and it is uncertain whether a market will ever develop or, if a market does develop, whether it will be sustained. There can be no assurance as to the liquidity of any market that may develop for our Shares, the ability of our shareholders to sell their Shares or the prices at which holders would be able to sell their Shares. Our Shares could trade at prices that may be lower than the Final Retail Price and/or Institutional Price depending on many factors, including prevailing economic and financial conditions in Malaysia. our operating results and the markets for similar securities. In addition, markets for securities in emerging markets have been subjected to disruptions that have caused intense volatility in the prices of securities similar to our Shares. There can be no assurance that the market for our Shares, if any, will not be subject to similar disruptions. Any disruption in such markets may have an adverse effect on the price of our Shares. 5. RISK FACTORS (cont’d) 5.3.4 Our Share price and trading volume may be volatile The market price of our Shares may fluctuate as a result of, among others, variations in the trading liquidity of our Shares, differences between our actual financial operating results and those expected by investors and analysts, changes in analysts’ recommendations or projections, changes in general market conditions and broad market fluctuations. The market price of our Shares is also susceptible to developments in the port and shipping industry, including new developments or technology advancements, corporate exercises, acquisitions or strategic alliances by our competitors. Furthermore, if the trading volume of our Shares is low, any price fluctuation may be exacerbated. Accordingly, there can be no assurance that our Shares will not trade at prices lower than the Final Retail Price and/or the Institutional Price. Over the past few years, the Malaysian, regional and global equity markets have experienced significant price and volume volatility which have affected the share price of many pUblic listed companies. Share prices of these companies have experienced wide fluctuations which were not always related to their respective operating performance. There can be no assurance that the price and trading volume of our Shares will not suffer similar fluctuations in the future. 5.3.5 We cannot assure you that we will declare and distribute any dividends in the future Dividend payments are not guaranteed and our Board may decide, at its absolute discretion, at any time and for any reason, not to pay dividends or to change our dividend policy. If we are unable to pay dividends in accordance with our dividend policy, or unable to pay dividends at levels anticipated by our investors, the market price of our Shares may be negatively affected and the value of any investment in our Shares may be reduced. Under our current policy, we propose to pay dividends out of cash generated from our operations after setting aside necessary funding for capital expenditure and working capital requirements. As part of this policy, our Company targets a dividend payout ratio of not less than 75% of our consolidated profit attributable to our equity holders under MFRS and IFRS, beginning 1 January 2013. Any payment of dividends may adversely affect our ability to fund unexpected capital expenditures as well as the ability to make payments on our borrowings and financing if cash flow from operations is insufficient. As a result, we may be required to incur additional borrowings or raise new capital by issuing equity securities, which we may not be able to do on favourable terms, or at all. Furthermore, in the event that we incur new borrowings SUbsequent to our IPO, we may be SUbject to financial covenants restricting our ability to pay dividends. 5. RISK FACTORS (cont’d) In addition, we are an investment holding company and we conduct substantially all of our operations through WMSB. Accordingly, an important source of our income, and consequently an important factor in our ability to pay dividends on our Shares, is the amount of dividends and other distributions that we receive from WMSB. The ability of WMSB to pay dividends or make other distributions to us in the future will depend upon, among others, its operating results, earnings, capital requirements and general financial condition, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from WMSB. For example, under the SMTN II, WMSB may not declare dividend on share capital if upon such declaration or following such declaration (i) (a) its finance service cover ratio is less than 1.25 times, or (b) its finance to equity ratio exceeds 2.00 times, (ii) an event of default occurs, and (iii) funds in the sinking fund account and/or profit service reserve account do not meet the required credit balance. In addition, changes in MFRS and IFRS may also affect the ability of WMSB, and consequently, our ability, to declare and pay dividends. Furthermore, as a shareholder of WMSB, our claims against WMSB will generally rank junior to those of all other creditors and claimants of WMSB. In the event of WMSB’s liquidation, there may not be sufficient assets after paying creditors and claimants for us to recoup our investment and this may have a material and adverse effect on our business, results of operations and financial position. For a description of our dividend policy, refer to Sections 3.10 and 12.6 of this Prospectus. 5.3.6 There may be a delay in our Listing or failure to list our Shares Our Listing may be potentially delayed or aborted upon the occurrence of certain events, including the following: (i) we are unable to meet the public shareholding spread requirement under the Listing Requirements of having at least 25.0% of our Shares for which Listing is sought being held by at least 1,000 public shareholders holding not less than 100 Shares each at the point of Listing; or
(ii) the revocation of the approval of Bursa Securities for the Listing and/or admission to the Official List for Whatever reason.

If our Listing is aborted, investors will not receive any Shares and the Selling Shareholders will return in full, without interest, all monies paid in respect of any application for our Shares. If any such monies are not repaid in full within 14 days after the Selling Shareholders become liable to repay it, the provisions of subsections 243(2) and 243(6) of the CMSA shall apply accordingly. 5.3.7 Because the Retail Price and the Institutional Price are higher than our NA value per Share, purchasers of our Shares will experience immediate and substantial dilution and purchasers of our Shares may experience further dilution if we issue additional Shares in the future The Retail Price is higher than our NA value per Share prior to our IPO. Therefore, purchasers of our Shares will experience an immediate dilution in NA value of RM2.10 per Share, assuming that the Retail Price of RM2.50 per Share is equivalent to the Final Retail Price and the Institutional Price, and our existing shareholders will also experience a decrease in the NA value per Share. If we issue additional Shares in the future, you may experience further dilution. 63 5. RISK FACTORS (cont’d)

 

 

5.3.8 Future fundraising may dilute shareholders’ equity or restrict our operations We may require additional funding for our future growth. This may result in dilution of our shareholders’ equity, or restrictions imposed by additional debt funding such as maintenance of a certain level of current ratio, gearing ratio and/or dividend payouts, amongst others. Our capital requirements are dependent on, amongst others, our business, the availability of our resources for attracting, maintaining and enlarging our customer base and the need to maintain and expand our production facilities. Thus, we may need additional capital expenditure for mergers and acquisitions or investments. An issue of Shares or other securities to raise funds will dilute shareholders’ equity interest and may, in the case of a rights issue, require additional investments by shareholders. (The rest of this page has been intentionally left blank)

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