SCB Prospectus - Announcements - Bursa Malaysia
SCB Prospectus - Announcements - Bursa Malaysia
SCB Prospectus - Announcements - Bursa Malaysia
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THIS INTRODUCTORY DOCUMENT IS FOR YOUR INFORMATION ONLY. NO ACTION IS REQUIRED TO BE TAKEN.<br />
If you have sold or transferred all your shares in Willowglen MSC Berhad (“Willowglen” or “Company”), you should at once forward<br />
this Introductory Document to the purchaser or agent through whom you effected the sale or transfer for onward transmission to the<br />
purchaser or transferee.<br />
The approval of the Securities Commission (“SC”) for the Transfer (as defined herein) should not be taken to indicate that the SC<br />
recommends the Transfer.<br />
<strong>Bursa</strong> <strong>Malaysia</strong> Securities Berhad has not perused this Introductory Document prior to its issuance, takes no<br />
responsibility for the contents of this Introductory Document, makes no representation as to its accuracy or completeness<br />
and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any<br />
part of the contents of this Introductory Document.<br />
WILLOWGLEN MSC BERHAD<br />
(Company No. 462648-V)<br />
(Incorporated in <strong>Malaysia</strong> under the Companies Act, 1965)<br />
INTRODUCTORY DOCUMENT<br />
IN RELATION TO<br />
THE TRANSFER OF THE LISTING OF AND QUOTATION FOR THE ENTIRE ISSUED AND PAID-<br />
UP SHARE CAPITAL OF WILLOWGLEN MSC BERHAD FROM THE ACE MARKET TO THE MAIN<br />
MARKET OF BURSA MALAYSIA SECURITIES BERHAD<br />
Adviser<br />
THIS INTRODUCTORY DOCUMENT IS DATED 23 SEPTEMBER 2010<br />
INVESTORS ARE ADVISED TO READ AND UNDERSTAND THE CONTENTS OF THIS<br />
INTRODUCTORY DOCUMENT. IF IN DOUBT, PLEASE CONSULT A PROFESSIONAL ADVISER.<br />
THERE ARE CERTAIN RISK FACTORS WHICH PROSPECTIVE INVESTORS SHOULD<br />
CONSIDER. TURN TO SECTION 4 HEREIN FOR “RISK FACTORS”.
Company No. 462648-V<br />
PRESENTATION OF INFORMATION<br />
RESPONSIBILITY STATEMENTS<br />
OUR DIRECTORS HAVE SEEN AND APPROVED THIS INTRODUCTORY DOCUMENT AND THEY<br />
COLLECTIVELY AND INDIVIDUALLY ACCEPT FULL RESPONSIBILITY FOR THE ACCURACY OF<br />
THE INFORMATION CONTAINED HEREIN AND CONFIRM THAT, AFTER HAVING MADE ALL<br />
REASONABLE ENQUIRIES, AND TO THE BEST OF THEIR KNOWLEDGE AND BELIEF, THEY<br />
CONFIRM THERE IS NO FALSE OR MISLEADING STATEMENT OR OTHER FACT, WHICH IF<br />
OMITTED, WOULD MAKE ANY STATEMENT IN THIS INTRODUCTORY DOCUMENT FALSE OR<br />
MISLEADING.<br />
OSK INVESTMENT BANK BERHAD (“OSK”), BEING THE ADVISER, ACKNOWLEDGES THAT,<br />
BASED ON ALL AVAILABLE INFORMATION, AND TO THE BEST OF ITS KNOWLEDGE AND<br />
BELIEF, THIS INTRODUCTORY DOCUMENT CONSTITUTES A FULL AND TRUE DISCLOSURE<br />
OF ALL MATERIAL FACTS CONCERNING THE TRANSFER.<br />
STATEMENT OF DISCLAIMER<br />
THE SECURITIES COMMISSION (“SC”) HAS APPROVED THE TRANSFER AND A COPY OF THIS<br />
INTRODUCTORY DOCUMENT HAS BEEN REGISTERED WITH THE SC. THE APPROVAL AND<br />
REGISTRATION OF THIS INTRODUCTORY DOCUMENT SHOULD NOT BE TAKEN TO INDICATE<br />
THAT THE SC RECOMMENDS THE TRANSFER OR ASSUMES RESPONSIBILITY FOR THE<br />
CORRECTNESS OF ANY STATEMENT MADE OR OPINION OR REPORT EXPRESSED IN THIS<br />
INTRODUCTORY DOCUMENT. THE SC HAS NOT, IN ANY WAY, CONSIDERED THE MERITS OF<br />
THE SECURITIES.<br />
THE SC IS NOT LIABLE FOR ANY NON-DISCLOSURE ON THE PART OF THE COMPANY AND<br />
TAKES NO RESPONSIBILITY FOR THE CONTENTS OF THIS INTRODUCTORY DOCUMENT,<br />
MAKES NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS, AND EXPRESSLY<br />
DISCLAIMS ANY LIABILITY FOR ANY LOSS YOU MAY SUFFER ARISING FROM OR IN<br />
RELIANCE UPON THE WHOLE OR ANY PART OF THIS INTRODUCTORY DOCUMENT.<br />
HOWEVER, NO ACTION IS REQUIRED TO BE TAKEN.<br />
APPROVAL HAS BEEN OBTAINED FROM BURSA MALAYSIA SECURITIES BERHAD (“BURSA<br />
SECURITIES”) FOR THE TRANSFER. THE TRANSFER IS NOT TO BE TAKEN AS AN INDICATION<br />
OF THE MERITS OF THE SECURITIES. BURSA SECURITIES SHALL NOT BE LIABLE FOR ANY<br />
NON-DISCLOSURE IN THIS INTRODUCTORY DOCUMENT AND TAKES NO RESPONSIBILITY<br />
FOR THE CONTENTS OF THIS DOCUMENT, MAKES NO REPRESENTATION AS TO ITS<br />
ACCURACY OR COMPLETENESS AND EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER<br />
FOR ANY LOSS HOWSOEVER ARISING FROM OR IN RELIANCE UPON THE WHOLE OR ANY<br />
PART OF THE CONTENTS OF THIS INTRODUCTORY DOCUMENT.<br />
INVESTORS ARE ADVISED TO NOTE THAT RECOURSE FOR FALSE OR MISLEADING<br />
STATEMENTS OR ACTS MADE IN CONNECTION WITH THE INTRODUCTORY DOCUMENT IS<br />
DIRECTLY AVAILABLE THROUGH SECTIONS 248, 249 AND 357 OF THE CAPITAL MARKETS<br />
AND SERVICES ACT, 2007.<br />
THIS INTRODUCTORY DOCUMENT CAN ALSO BE VIEWED OR DOWNLOADED FROM BURSA<br />
SECURITIES’ WEBSITE AT www.bursamalaysia.com. THE CONTENTS OF THE ELECTRONIC<br />
INTRODUCTORY DOCUMENT ARE AS PER THE CONTENTS OF THE COPY OF THIS<br />
INTRODUCTORY DOCUMENT REGISTERED WITH THE SC.<br />
i
Company No. 462648-V<br />
PRESENTATION OF INFORMATION<br />
All references to “Willowglen” and “our Company” in this Introductory Document are to Willowglen<br />
MSC Berhad, references to “our Group” are to our Company and our subsidiaries taken as a whole<br />
and references to “we”, “us”, “our” and “ourselves” are to our Company and our subsidiaries, save<br />
where the context otherwise requires. Unless the context otherwise requires, references to<br />
“management” are to our Directors, key management and key technical personnel as at the date of<br />
this Introductory Document, and statements as to our beliefs, expectations, estimates and opinions<br />
are those of our management.<br />
The word “approximately” used in this Introductory Document is to indicate that a number is not an<br />
exact one, but that number is usually rounded off to the nearest hundredth or two (2) decimal places.<br />
Any discrepancies in the tables included herein between the amounts listed and the totals thereof are<br />
due to rounding.<br />
Words denoting the singular shall, where applicable, include the plural and vice versa. Words<br />
denoting the masculine gender shall, where applicable, include the feminine and neuter genders and<br />
vice versa. Any reference to persons shall include a corporation, unless otherwise specified.<br />
Any reference in this Introductory Document to any enactment is a reference to that enactment as for<br />
the time being amended or re-enacted. Any reference to a time of day in this Introductory Document<br />
shall be reference to <strong>Malaysia</strong>n time, unless otherwise specified.<br />
This Introductory Document includes statistical data provided by us and various third parties and cites<br />
third-party projections regarding growth and performance of the industry in which we operate. This<br />
data is taken or derived from information published by industry sources and from our internal data. In<br />
each such case, the source is stated in this Introductory Document, provided that where no source is<br />
stated, it can be assumed that the information originates from us. We believe that the statistical data<br />
and projections cited in this Introductory Document are useful in helping you understand the major<br />
trends in the industry in which we operate. However, neither we nor our Adviser has independently<br />
verified these data. Neither we nor our Adviser makes any representation as to the correctness,<br />
accuracy or completeness of such data and accordingly, you should not place undue reliance on the<br />
statistical data cited in this Introductory Document. Similarly, third-party projections cited in this<br />
Introductory Document are subject to significant uncertainties that could cause actual data to differ<br />
materially from the projected figures. Hence, you should not place undue reliance on the third-party<br />
projections cited in this Introductory Document.<br />
The information on our website, or any website directly or indirectly linked to such website does not<br />
form part of this Introductory Document and you should not rely on it.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
ii
Company No. 462648-V<br />
FORWARD-LOOKING STATEMENTS<br />
This Introductory Document contains forward-looking statements. All statements other than those of<br />
historical facts included in this Introductory Document, including, without limitation, those regarding<br />
our Group’s financial position, business strategies, plans and objectives of our management for future<br />
operations, are forward-looking statements. Such forward-looking statements involve known and<br />
unknown risks, uncertainties, contingencies and other factors which may cause our actual results, our<br />
performance or achievements, or industry results, to be materially different from any future results,<br />
performance or achievements expressed or implied by such forward-looking statements. Such<br />
forward-looking statements are based on numerous assumptions regarding our Group’s present and<br />
future business strategies and the environment in which our Group will operate in the future. Such<br />
forward-looking statements reflect our management’s current view with respect to future events and<br />
are not a guarantee of future performance.<br />
Some of these forward-looking statements can be identified by the use of forward-looking terminology<br />
such as the words “may”, “will”, “would”, “could”, “believe”, “expect”, “anticipate”, “intend”, “estimate”,<br />
“aim”, “plan”, “forecast” or similar expressions and include all statements that are not historical facts.<br />
Such forward-looking statements include, without limitation, statements relating to:<br />
(a) demand for our products and services;<br />
(b) our business strategies;<br />
(c) plans and objectives of our management for future operations;<br />
(d) our financial position; and<br />
(e) our future earnings, cash flows and liquidity.<br />
Our actual results may differ materially from information contained in such forward-looking statements<br />
as a result of a number of factors beyond our control, including, without limitation:<br />
(a) the economic, political and investment environment in <strong>Malaysia</strong> and globally; and<br />
(b) government policy, legislation or regulation.<br />
Additional factors that could cause our actual results, performance or achievements to differ materially<br />
include, but are not limited to those discussed in Section 4 – “Risk Factors” and Section 10.3 –<br />
“Management’s Discussion and Analysis of Financial Conditions, Results of Operations and<br />
Prospects” of this Introductory Document. Due to these and other uncertainties, we cannot assure you<br />
that the forward-looking statements included in this Introductory Document will be realised.<br />
The forward-looking statements in this Introductory Document are based on information available to<br />
us as at the date of this Introductory Document. We expressly disclaim any obligation or undertaking<br />
to release publicly any update or revision to any forward-looking statement contained in this<br />
Introductory Document to reflect any change in our expectations with regard thereto or any change in<br />
events, conditions or circumstances on which any such statement is based.<br />
You will be deemed to have read and understood the descriptions of the assumptions and<br />
uncertainties underlying the forward-looking statements that are contained herein.<br />
iii
Company No. 462648-V<br />
DEFINITIONS<br />
The following definitions shall apply throughout this Introductory Document unless the definitions are<br />
defined otherwise or the context requires otherwise:-<br />
ACE Market : ACE Market of <strong>Bursa</strong> Securities<br />
Act : The <strong>Malaysia</strong>n Companies Act, 1965, as amended from time to<br />
time and any re-enactment thereof<br />
Board : The Board of Directors of Willowglen<br />
<strong>Bursa</strong> Depository : <strong>Bursa</strong> <strong>Malaysia</strong> Depository Sdn Bhd (65570-W), a subsidiary of<br />
<strong>Bursa</strong> Securities<br />
<strong>Bursa</strong> Securities : <strong>Bursa</strong> <strong>Malaysia</strong> Securities Berhad (635998-W)<br />
CAGR : Compounded Annual Growth Rate<br />
CMSA : Capital Markets and Services Act, 2007<br />
DCSB : Dindings Consolidated Sdn Bhd (8226-P)<br />
Director(s) : Shall have the meaning of Section 4 of the Act<br />
EBITDA : Earnings before interest, tax, depreciation and amortisation<br />
EPSB : Elegant Preference Sdn Bhd (724332-D)<br />
EPS : Earnings per Share<br />
Equimatics : Equimatics Engineering Sdn Bhd (605666-P)<br />
FPE : Financial period ended / ending, as the case may be<br />
FYE : Financial year ended / ending, as the case may be<br />
GB Tech : GB Tech Sdn Bhd (714154-U)<br />
GUI : Graphical User Interface<br />
HMI : Human Machine Interface<br />
JQHSB : Jian Qi Holdings Sdn Bhd (110363-V)<br />
KCM : Khor Chai Moi<br />
LMSB : Land Management Sdn Bhd (67853-U)<br />
Listing Requirements : Listing Requirements of <strong>Bursa</strong> Securities, and all amendments<br />
thereto<br />
LPD : 23 August 2010, being the latest practicable date prior to the<br />
issuance of this Introductory Document<br />
Main Market : The Main Market of <strong>Bursa</strong> Securities<br />
Market Day : Any day between Monday and Friday (inclusive of both days)<br />
which is not a public holiday and on which <strong>Bursa</strong> Securities is<br />
open for the trading of securities<br />
MDC : Multimedia Development Corporation Sdn Bhd (389346-D)<br />
MITI : Ministry of International Trade and Industry, <strong>Malaysia</strong><br />
MSC : Multimedia Super Corridor<br />
NA : Net assets<br />
NASB : New Advent Sdn Bhd (415255-H)<br />
OLH : Ong Leong Huat @ Wong Joo Hwa<br />
OPC : Object Linking and Embedding (“OLE”) for Process Control<br />
OSK : OSK Investment Bank Berhad (14152-V)<br />
OSKCP : OSK Capital Partners Sdn Bhd (682948-W)<br />
OSK Group : OSKH and its subsidiaries, collectively<br />
iv
Company No. 462648-V<br />
DEFINITIONS (CONT'D)<br />
OSKH : OSK Holdings Berhad (207075-U)<br />
OSKP : OSK Property Holdings Berhad (201666-D)<br />
OSKVE : OSK Venture Equities Sdn Bhd (505788-D)<br />
OSKVI : OSK Ventures International Berhad (636117-K)<br />
PAT : Profit after taxation<br />
PBT : Profit before taxation<br />
PJD : PJ Development Holdings Berhad (5938-A)<br />
PJD Group : PJD and its subsidiaries, collectively<br />
Promoters : NASB, DCSB, LMSB, OSKCP, OSKVE, OSKVI, KCM, WAC and<br />
OLH<br />
PR : Permanent Resident<br />
R&D : Research and development<br />
RM and sen : Ringgit <strong>Malaysia</strong> and sen respectively<br />
RTU : Remote Terminal Unit<br />
SC : Securities Commission<br />
SCADA : Supervisory Control and Data Acquisition<br />
SC Guidelines : The Equity Guidelines issued by the SC<br />
SGD : Singapore Dollar<br />
SMS : Short Messaging System<br />
Transfer : Transfer of the listing of and quotation for the entire issued and<br />
paid-up share capital of Willowglen from the ACE Market to the<br />
Main Market of <strong>Bursa</strong> Securities<br />
UAE : United Arab Emirates<br />
USA : United States of America<br />
USD : United States Dollar<br />
WAC : Wong Ah Chiew<br />
WHKPL : Willowglen (Hong Kong) Pte Limited (811887)<br />
Willowglen or the Company : Willowglen MSC Berhad (462648-V)<br />
Willowglen Group or the<br />
Group<br />
: Willowglen and its subsidiaries, collectively<br />
Willowglen<br />
Share(s)<br />
Share(s) or : Ordinary shares of RM0.10 each in Willowglen<br />
WMSB : Willowglen (<strong>Malaysia</strong>) Sdn Bhd (351570-A)<br />
WSPL : Willowglen Services Pte Ltd (198602842-C)<br />
Words importing the singular shall, where applicable, include the plural and vice versa and words<br />
importing the masculine gender shall, where applicable, include the feminine and neuter genders and<br />
vice versa. Reference to persons shall include a corporation, unless otherwise specified.<br />
Any reference in this Introductory Document to any enactment is a reference to that enactment as for<br />
the time being amended or re-enacted. Any reference to a time of day in this Introductory Document<br />
shall be reference to <strong>Malaysia</strong>n time, unless otherwise stated.<br />
v
Company No. 462648-V<br />
TABLE OF CONTENTS<br />
1. CORPORATE DIRECTORY......................................................................................................1<br />
2. INFORMATION SUMMARY ......................................................................................................4<br />
2.1 HISTORY AND BUSINESS ........................................................................................4<br />
2.2 DETAILS OF THE TRANSFER ..................................................................................4<br />
2.3 FINANCIAL HIGHLIGHTS..........................................................................................5<br />
2.4 RISK FACTORS .........................................................................................................7<br />
3. PARTICULARS OF THE TRANSFER ......................................................................................8<br />
3.1 INTRODUCTION........................................................................................................8<br />
3.2 DETAILS OF THE TRANSFER ..................................................................................8<br />
3.3 RATIONALE FOR THE TRANSFER ..........................................................................9<br />
3.4 APPROVALS OBTAINED & WAIVER SOUGHT........................................................9<br />
3.5 MARKET CAPITALISATION ....................................................................................10<br />
4. RISK FACTORS ......................................................................................................................11<br />
4.1 RISKS RELATING TO OUR INDUSTRY AND OUR BUSINESS .............................11<br />
4.2 RISKS RELATING TO OUR SHARES AND SHARE PRICES .................................14<br />
5. INFORMATION ON OUR GROUP ..........................................................................................15<br />
5.1 HISTORY AND BUSINESS ......................................................................................15<br />
5.2 SHARE CAPITAL .....................................................................................................17<br />
5.3 SUBSIDIARIES AND ASSOCIATED COMPANIES .................................................18<br />
5.4 INFORMATION ON SUBSIDIARIES........................................................................18<br />
5.5 MATERIAL CAPITAL EXPENDITURES AND DIVESTITURES ...............................21<br />
5.6 KEY ACHIEVEMENTS / MILESTONES ...................................................................21<br />
6. BUSINESS OVERVIEW ..........................................................................................................22<br />
6.1 OUR BUSINESS.......................................................................................................22<br />
6.2 FUTURE PLANS, STRATEGIES AND PROSPECTS ..............................................46<br />
7. INDUSTRY OVERVIEW AND OUTLOOK ..............................................................................49<br />
7.1 OVERVIEW AND OUTLOOK OF THE GLOBAL ECONOMY ..................................49<br />
7.2 OVERVIEW AND OUTLOOK OF THE ASIA PACIFIC ECONOMY..........................49<br />
7.3 OVERVIEW AND OUTLOOK OF THE MALAYSIAN ECONOMY ............................50<br />
7.4 OVERVIEW AND OUTLOOK OF THE SINGAPORE ECONOMY ...........................51<br />
7.5 OVERVIEW AND OUTLOOK OF THE SCADA INDUSTRY.....................................51<br />
7.6 INDUSTRY PLAYERS AND COMPETITION ...........................................................58<br />
7.7 RELEVANT LAWS AND REGULATIONS ................................................................58<br />
7.8 DEMAND/SUPPLY CONDITIONS ...........................................................................58<br />
7.9 SUBSTITUTE PRODUCTS / SERVICES .................................................................59<br />
7.10 INDUSTRY’S RELIANCE ON AND VULNERABILITY TO IMPORTS ......................59<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY<br />
MANAGEMENT AND/OR TECHNICAL PERSONNEL ..........................................................60<br />
8.1 DIRECTORS ............................................................................................................60<br />
8.2 BOARD PRACTICES ...............................................................................................65<br />
8.3 SUBSTANTIAL SHAREHOLDERS ..........................................................................67<br />
8.4 KEY MANAGEMENT AND TECHNICAL PERSONNEL...........................................73<br />
8.5 INVOLVEMENT OF EXECUTIVE DIRECTORS/KEY MANAGEMENT AND<br />
TECHNICAL PERSONNEL IN OTHER BUSINESSES/CORPORATIONS..............77<br />
8.6 DECLARATIONS FROM OUR PROMOTERS, DIRECTORS AND KEY<br />
MANAGEMENT AND TECHNICAL PERSONNEL...................................................77<br />
8.7 FAMILY RELATIONSHIPS AND ASSOCIATIONS ..................................................77<br />
8.8 PROMOTERS, DIRECTORS AND/OR SUBSTANTIAL SHAREHOLDERS’<br />
BENEFIT ..................................................................................................................78<br />
8.9 SERVICE AGREEMENTS........................................................................................78<br />
8.10 MANAGEMENT AND EMPLOYEES ........................................................................78<br />
8.11 EMPLOYEE TRAINING AND DEVELOPMENT .......................................................78<br />
9. RELATED PARTY TRANSACTIONS AND CONFLICT OF INTEREST ................................81<br />
9.1 RELATED PARTY TRANSACTIONS.......................................................................81<br />
9.2 TRANSACTIONS THAT ARE UNUSUAL IN NATURE OR CONDITION .................86<br />
vi
Company No. 462648-V<br />
TABLE OF CONTENTS (CONT’D)<br />
9.3 OUTSTANDING LOANS ..........................................................................................86<br />
9.4 INTERESTS IN A SIMILAR BUSINESS ...................................................................86<br />
9.5 INTERESTS IN OTHER BUSINESS WHICH ARE OUR CUSTOMERS OR<br />
SUPPLIERS .............................................................................................................86<br />
9.6 PROMOTION OF ANY MATERIAL ASSETS ACQUIRED / TO BE ACQUIRED ......86<br />
9.7 DECLARATION BY ADVISERS ...............................................................................86<br />
10. FINANCIAL INFORMATION ...................................................................................................88<br />
10.1 HISTORICAL FINANCIAL INFORMATION ..............................................................88<br />
10.2 CAPITALISATION AND INDEBTEDNESS...............................................................90<br />
10.3 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS,<br />
RESULTS OF OPERATIONS AND PROSPECTS ...................................................90<br />
11. ACCOUNTANTS’ REPORT ..................................................................................................111<br />
12. LATEST QUARTERLY REPORT OF THE WILLOWGLEN GROUP FOR THE SIX (6)<br />
MONTHS FINANCIAL PERIOD ENDED 30 JUNE 2010......................................................185<br />
13. DIRECTORS’ REPORT.........................................................................................................198<br />
14. ADDITIONAL INFORMATION ..............................................................................................199<br />
14.1 SHARE CAPITAL ...................................................................................................199<br />
14.2 ARTICLES OF ASSOCIATION...............................................................................199<br />
14.3 DIRECTORS AND SUBSTANTIAL SHAREHOLDERS..........................................204<br />
14.4 MATERIAL LITIGATION.........................................................................................204<br />
14.5 MATERIAL CONTRACTS ......................................................................................204<br />
14.6 MATERIAL COMMITMENT AND CONTINGENT LIABILITIES..............................204<br />
14.7 GOVERNMENTAL LAW, DECREE, REGULATION OR OTHER REQUIREMENT<br />
WHICH MAY AFFECT THE REPATRIATION OF CAPITAL AND THE<br />
REMITTANCE OF PROFIT ....................................................................................205<br />
14.8 TAKE-OVERS ........................................................................................................205<br />
14.9 CONSENTS............................................................................................................205<br />
14.10 DOCUMENTS FOR INSPECTION.........................................................................205<br />
14.11 RESPONSIBILITY STATEMENTS.........................................................................205<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
vii
Company No. 462648-V<br />
1. CORPORATE DIRECTORY<br />
BOARD OF DIRECTORS<br />
Name Address Occupation Nationality<br />
Alfian Bin Tan Sri Mohamed 15 Jalan BRP3/3B<br />
Company <strong>Malaysia</strong>n<br />
Basir<br />
Sunway Rahman Putra Director<br />
Chairman and Independent Bukit Rahman Putra<br />
Non-Executive Director<br />
40160 Shah Alam<br />
Selangor Darul Ehsan<br />
Khor Chai Moi<br />
Managing Director<br />
Wong Ah Chiew<br />
Non-Executive Director<br />
Wang Shi Tsang<br />
Independent Non-Executive<br />
Director<br />
Mohd Isa Bin Ismail<br />
Independent Non-Executive<br />
Director<br />
21, Persiaran Basong<br />
Damansara Heights<br />
50490 Kuala Lumpur<br />
86, Jalan Keruing<br />
Bukit Bandaraya, Bangsar<br />
59100 Kuala Lumpur<br />
4 Jalan Bunga<br />
Tanjung 11A<br />
Taman Seraya<br />
56100 Kuala Lumpur<br />
Lot 92 Jalan Kiambang 6/1<br />
Taman Kiambang Indah<br />
Senawang<br />
70450 Seremban<br />
Negeri Sembilan<br />
Company<br />
Director<br />
Company<br />
Director<br />
Company<br />
Director<br />
Company<br />
Director<br />
<strong>Malaysia</strong>n<br />
<strong>Malaysia</strong>n<br />
<strong>Malaysia</strong>n<br />
<strong>Malaysia</strong>n<br />
AUDIT COMMITTEE<br />
Name Designation Directorship<br />
Wang Shi Tsang Chairman Independent Non-Executive Director<br />
Alfian Bin Tan Sri Mohamed Basir Member Chairman and Independent Non-<br />
Wong Ah Chiew Member<br />
Executive Director<br />
Non-Executive Director<br />
Mohd Isa Bin Ismail Member Independent Non-Executive Director<br />
NOMINATION & REMUNERATION COMMITTEE<br />
Name Designation Directorship<br />
Alfian Bin Tan Sri Mohamed Basir Chairman Chairman and Independent Non-<br />
Wang Shi Tsang Member<br />
Executive Director<br />
Independent Non-Executive Director<br />
Wong Ah Chiew Member Non-Executive Director<br />
Mohd Isa Bin Ismail Member Independent Non-Executive Director<br />
COMPANY SECRETARIES : Leong Keng Yuen (MIA 6090)<br />
7 Hala Lawan Kuda<br />
30250 Ipoh<br />
Perak Darul Ridzuan<br />
1
Company No. 462648-V<br />
1. CORPORATE DIRECTORY (CONT’D)<br />
COMPANY SECRETARIES<br />
(CONT’D)<br />
: Yeoh Peik Hong (MAICSA 7034341)<br />
43 Jalan PJU 1A/1J<br />
Ara Damansara<br />
47301 Petaling Jaya<br />
Selangor Darul Ehsan<br />
REGISTERED OFFICE : 17th Floor, Plaza OSK<br />
Jalan Ampang<br />
50450 Kuala Lumpur<br />
CORPORATE OFFICE AND<br />
PRINCIPAL PLACE OF BUSINESS<br />
Telephone No. : 03-2161 7722<br />
Facsimile No. : 03-2161 7782<br />
: 17 Jalan 2/149B<br />
Taman Sri Endah<br />
Bandar Baru Sri Petaling<br />
57000 Kuala Lumpur<br />
PRINCIPAL BANKERS : CIMB Bank Berhad<br />
10 th Floor<br />
Bangunan CIMB<br />
Jalan Semantan<br />
Damansara Heights<br />
50490 Kuala Lumpur<br />
Telephone No. : 03-9057 1228<br />
Facsimile No. : 03-9057 1218<br />
Website : www.willowglen.com.my<br />
E-mail address : corpinfo@willowglen.com.my<br />
Telephone No. : 03-2084 8888<br />
Facsimile No. : 03-2084 9888<br />
United Overseas Bank <strong>Malaysia</strong> Berhad<br />
Puchong Branch<br />
No. 5 & 6, Jalan Kenari 5<br />
Bandar Puchong Jaya<br />
47100 Puchong<br />
Selangor Darul Ehsan<br />
Telephone No. : 03-8076 8989<br />
Facsimile No. : 03-8076 8181<br />
Malayan Banking Berhad<br />
Ground Floor, Support Service Building<br />
Technology Park <strong>Malaysia</strong><br />
Bukit Jalil<br />
57000 Kuala Lumpur<br />
Telephone No. : 03-8996 1069<br />
Facsimile No. : 03-8996 1073<br />
2
Company No. 462648-V<br />
1. CORPORATE DIRECTORY (CONT’D)<br />
PRINCIPAL BANKERS<br />
(CONT’D)<br />
AUDITORS AND REPORTING<br />
ACCOUNTANTS<br />
SOLICITORS FOR THE<br />
TRANSFER<br />
Malayan Banking Berhad<br />
Maybank Tower<br />
2 Battery Road<br />
Singapore 049907<br />
Telephone No. : 65-6550 7404<br />
Facsimile No. : 65-6535 6155<br />
: Baker Tilly Monteiro Heng<br />
22, Monteiro Heng Chambers<br />
Jalan Tun Sambanthan 3<br />
50470 Kuala Lumpur<br />
Telephone No. : 03-2274 8988<br />
Facsimile No. : 03-2260 1708<br />
: Cheang & Ariff<br />
39 Court @ Loke Mansion<br />
273A, Jalan Medan Tuanku<br />
50300 Kuala Lumpur<br />
Telephone No. : 03-2691 0803<br />
Facsimile No. : 03-2693 4475<br />
ADVISER : OSK Investment Bank Berhad<br />
20th Floor, Plaza OSK<br />
Jalan Ampang<br />
50450 Kuala Lumpur<br />
Telephone No. : 03 - 2333 8333<br />
Facsimile No. : 03 - 2175 3217<br />
SHARE REGISTRAR : Symphony Share Registrars Sdn Bhd<br />
Level 6, Symphony House<br />
Block D13, Pusat Dagangan Dana 1<br />
Jalan PJU 1A/46<br />
47301 Petaling Jaya<br />
Selangor Darul Ehsan<br />
STOCK EXCHANGE LISTING<br />
SOUGHT IN RELATION TO THE<br />
TRANSFER<br />
Telephone No. : 03-7841 8000<br />
Facsimile No. : 03-7841 8008<br />
: Main Market of <strong>Bursa</strong> Securities<br />
Stock Name : WILLOW<br />
Stock Code : 0008<br />
Sector : Technology<br />
3
Company No. 462648-V<br />
2. INFORMATION SUMMARY<br />
THIS FOLLOWING INFORMATION SUMMARY SETS OUT THE SALIENT INFORMATION<br />
CONTAINED IN THIS INTRODUCTORY DOCUMENT. YOU SHOULD READ AND UNDERSTAND<br />
THIS INFORMATION SUMMARY TOGETHER WITH THE FULL TEXT OF THIS INTRODUCTORY<br />
DOCUMENT.<br />
2.1 HISTORY AND BUSINESS<br />
Willowglen was incorporated in <strong>Malaysia</strong> on 20 May 1998 under the Act, as a private limited<br />
company with the name of Willowglen MSC Sdn Bhd which was subsequently converted to a<br />
public limited company on 27 November 2000.<br />
As at the LPD, Willowglen has an authorized share capital of RM100,000,000 comprising<br />
1,000,000,000 Willowglen Shares and an issued and paid-up share capital of RM24,800,000<br />
comprising 248,000,000 Willowglen Shares. Willowglen is primarily involved in the research,<br />
development and supply of real-time control systems and information solutions.<br />
As at the LPD, Willowglen has three (3) wholly-owned subsidiaries, namely WMSB, GB Tech<br />
and WSPL. Below is a graphical presentation of our Group structure:-<br />
Willowglen<br />
WMS B GBTech WS PL<br />
Further information on our Group is disclosed under Section 5 of this Introductory Document.<br />
Further information on our substantial shareholders, Directors, key management and<br />
technical personnel and their direct and indirect shareholdings in our Group are disclosed<br />
under Section 8 of this Introductory Document.<br />
2.2 DETAILS OF THE TRANSFER<br />
Willowglen is undertaking a transfer of the listing of and quotation for the entire issued and<br />
paid-up share capital of RM24,800,000 comprising 248,000,000 Willowglen Shares from the<br />
ACE Market to the Main Market of <strong>Bursa</strong> Securities by fulfilling the profit requirement test as<br />
set out in the SC’s Equity Guidelines.<br />
Please refer to Section 3 of this Introductory Document for further information on our<br />
Transfer.<br />
4
Company No. 462648-V<br />
2. INFORMATION SUMMARY (CONT'D)<br />
2.3 FINANCIAL HIGHLIGHTS<br />
2.3.1 CONSOLIDATED INCOME STATEMENTS OF OUR GROUP<br />
The following table sets forth a summary of our audited consolidated income<br />
statements for the past three (3) FYE 31 December 2009 and the unaudited six (6)month<br />
FPE 30 June 2010. The six (6)-month FPE 30 June 2009 has been included<br />
as a comparison for the six (6)-month FPE 30 June 2010.<br />
The consolidated income statements is extracted from and should be read in<br />
conjunction with the Accountants’ Report together with its accompanying notes and<br />
assumptions and the six (6)-month FPE 30 June 2010 as set out in Sections 11 and<br />
12 of this Introductory Document.<br />
Unaudited FPE 30 June<br />
2007 (1)<br />
RM'000<br />
5<br />
2008 (1)<br />
RM'000<br />
2009 (1)<br />
RM’000<br />
2009<br />
RM’000<br />
2010<br />
RM’000<br />
Revenue 51,937 51,157 62,001 31,254 27,656<br />
Cost of sales (34,302) (31,424) (37,395) (18,834) (15,922)<br />
Gross profit 17,635 19,733 24,606 12,420 11,734<br />
Other income 897 891 1,728 324 528<br />
Administrative expenses (8,764) (10,636) (11,139) (5,314) (6,298)<br />
Profit from operations 9,768 9,988 15,195 7,430 5,964<br />
Finance costs (55) (29) (31) (20) (11)<br />
PBT 9,713 9,959 15,164 7,410 5,953<br />
Income tax expense (1,475) (1,898) (2,550) (1,266) (1,023)<br />
PAT 8,238 8,061 12,614 6,144 4,930<br />
Weighted average number of<br />
ordinary shares in issue (‘000)*<br />
248,000 247,832 247,585 247,601 247,570<br />
EBITDA 9,716 9,871 15,149 7,419 5,943<br />
Gross EPS (sen) 3.92 4.02 6.12 2.99 2.40<br />
Net EPS (sen) 3.32 3.25 5.10 2.48 1.99<br />
Gross profit margin (%) 33.95 38.57 39.69 39.74 42.43<br />
PBT margin (%) 18.70 19.47 24.46 23.71 21.53<br />
PAT margin (%) 15.86 15.76 20.34 19.66 17.83<br />
Effective tax rate (%) 15.33 19.10 16.99 17.09 17.18<br />
Notes:-<br />
(1) As extracted from the audited accounts for the past three (3) FYE 31 December 2009.<br />
* Excludes treasury shares.<br />
Our audited financial statements for the past three (3) financial years have not been<br />
subjected to any audit qualification. There were no extraordinary items in the audited<br />
financial statements of our Group during the years under review.
Company No. 462648-V<br />
2. INFORMATION SUMMARY (CONT'D)<br />
2.3.2 CONSOLIDATED BALANCE SHEET OF WILLOWGLEN AS AT 31 DECEMBER<br />
2009<br />
ASSETS<br />
The following table summarises the audited consolidated balance sheet of our Group<br />
as at 31 December 2009 and the unaudited consolidated balance sheet of our Group<br />
as at 30 June 2010 which can be found in the Accountants’ Report and the latest<br />
report for the six (6)-month FPE 30 June 2010 as set out in Sections 11 and 12 of<br />
this Introductory Document.<br />
6<br />
Audited as at Unaudited as at<br />
31 December 2009 30 June 2010<br />
RM’000 RM’000<br />
Non-current assets 9,064 9,252<br />
Current assets 60,412 56,403<br />
TOTAL ASSETS 69,476 65,655<br />
EQUITY AND LIABILITIES<br />
Equity attributable to shareholders of the company<br />
Share capital 24,800 24,800<br />
Treasury shares (75) (75)<br />
Reserves 35,636 32,033<br />
Total Equity 60,361 56,758<br />
Non-current liability 93 88<br />
Current liabilities 9,022 8,809<br />
Total liabilities 9,115 8,897<br />
TOTAL EQUITY AND LIABILITIES 69,476 65,655<br />
Number of shares in issue (‘000)* 247,570 247,570<br />
NA per share (RM) 0.24 0.23<br />
Note:<br />
* Excludes treasury shares.<br />
Further information on our financials are set out in Section 10 of this Introductory Document.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
Company No. 462648-V<br />
2. INFORMATION SUMMARY (CONT'D)<br />
2.4 RISK FACTORS<br />
You should carefully consider, along with other matters in this Introductory Document, the<br />
risks and investment considerations as set out in Section 4 of this Introductory Document<br />
(which may not be exhaustive):<br />
(a) Risks relating to our industry and our business:<br />
i. Competition<br />
ii. Rapid Technological I Product Change in the SCADA Market<br />
iii. Product Risks<br />
iv. Dependence on Directors and Key Personnel<br />
v. Reliance on Major Relationships<br />
vi. Protection of Group and Third Party Proprietary Technology / Intellectual<br />
Property Rights<br />
vii. Litigation Risks<br />
viii. Change in MSC Status<br />
(b) Risks relating to our Shares and Share prices<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
7
Company No. 462648-V<br />
3. PARTICULARS OF THE TRANSFER<br />
3.1 INTRODUCTION<br />
On 24 November 2009, OSK had announced on behalf of our Board that we propose to<br />
undertake a transfer of the listing of and quotation for our entire issued and paid-up share<br />
capital from the ACE Market to the Main Market of <strong>Bursa</strong> Securities.<br />
The SC had, vide its letter dated 27 August 2010 approved our Transfer. The conditions<br />
imposed by the SC as well as our status of compliance are set out in Section 3.4 of this<br />
Introductory Document. The approval of the SC, however, shall not be taken to indicate that<br />
the SC recommends our Transfer.<br />
Approval in-principle has also been obtained from <strong>Bursa</strong> Securities vide its letter dated 13<br />
September 2010 for our Transfer. Willowglen Shares will be transferred to the Main Market of<br />
<strong>Bursa</strong> Securities two (2) clear market days after the following:-<br />
(i) Issuance of this Introductory Document in relation to the Transfer;<br />
(ii) A box advertisement for the Transfer is advertised; and<br />
(iii) Announcement to <strong>Bursa</strong> Securities on the date of Transfer.<br />
The SC and <strong>Bursa</strong> Securities assume no responsibility for the correctness of any statement<br />
made or of any opinion or report expressed in this Introductory Document. Our transfer to the<br />
Official List of the Main Market of <strong>Bursa</strong> Securities shall not be taken as an indication of the<br />
merits of our Company, our Shares or our Transfer.<br />
You should rely on the information contained in this Introductory Document or any applicable<br />
Introductory Document supplement. We or our adviser have not authorised anyone to provide<br />
you with information that is different and not contained in this Introductory Document. The<br />
delivery of this Introductory Document or any issue made in connection with this Introductory<br />
Document shall not, under any circumstances, constitute a representation or create any<br />
implication that there has been no change in our affairs since the date of this Introductory<br />
Document. Nonetheless, should our Company become aware of any subsequent material<br />
change or development affecting a matter disclosed in this Introductory Document arising<br />
from the date of issue of this Introductory Document up to the date of the Transfer, our<br />
Company shall further issue a supplemental or replacement document, as the case may be,<br />
in accordance with the provisions of Section 238 of the CMSA.<br />
THE PURPOSE OF THIS INTRODUCTORY DOCUMENT IS TO PROVIDE YOU WITH OUR<br />
INFORMATION AND THE DETAILS OF THE TRANSFER, AND IT IS INTENDED FOR<br />
YOUR INFORMATION ONLY. NO ACTION IS REQUIRED ON YOUR PART.<br />
3.2 DETAILS OF THE TRANSFER<br />
Under the profit test as set out under Chapter 8 of the SC Guidelines, a company listed on the<br />
ACE Market may seek a transfer of listing to the Main Market if it meets the profit<br />
requirements of three (3) to five (5) financial years based on audited financial statements, with<br />
an aggregate after-tax profit of at least RM20 million and an after-tax profit for the most recent<br />
financial year of at least RM6 million.<br />
The Willowglen Group recorded an aggregate audited consolidated PAT of approximately<br />
RM28.91 million over the past three (3) financial years ended 31 December 2009 and an<br />
audited consolidated PAT of approximately RM12.61 million in respect of the FYE 31<br />
December 2009. Willowglen has thus fulfilled the profit test requirements and is eligible for a<br />
transfer.<br />
8
Company No. 462648-V<br />
3. PARTICULARS OF THE TRANSFER (CONT’D)<br />
FYE 31 December<br />
2007<br />
(RM’000)<br />
2008<br />
(RM’000)<br />
9<br />
2009<br />
(RM’000)<br />
Aggregate<br />
(RM’000)<br />
PAT 8,238 8,061 12,614 28,913<br />
Willowglen did not, in the past three (3) to five (5) financial years in consideration, experience<br />
any change to its core business activity nor did the Company have any changes in its<br />
controlling shareholders. As such, Willowglen has met the requirements under the provision<br />
of the profit test as stated in the SC Guidelines.<br />
As Willowglen is a MSC status company, there is no Bumiputera equity requirement. Hence,<br />
the Company does not require MITI to nominate investors to take up the additional shares for<br />
the compliance of the 12.5% or at least half of the total public portion to be held by<br />
Bumiputera requirement, whichever is higher.<br />
3.3 RATIONALE FOR THE TRANSFER<br />
The Transfer, when completed, will better reflect the stature of the operations of our Group<br />
and will also accord us with greater recognition and acceptance amongst investors<br />
particularly institutional investors. The Transfer is expected to enhance our prestige and<br />
reputation, and the confidence of our Group’s customers, suppliers and bankers as well as<br />
our shareholders in our Group.<br />
3.4 APPROVALS OBTAINED & WAIVER SOUGHT<br />
The SC granted its approval for the Transfer vide its letter dated 27 August 2010. <strong>Bursa</strong><br />
Securities granted its approval for the Transfer vide its letter dated 13 September 2010. The<br />
condition imposed by the SC and the status of compliance with the condition are set out as<br />
follows:-<br />
Conditions imposed by the SC Status of compliance<br />
OSK/ Willowglen to fully comply with all the relevant requirements<br />
pertaining to the implementation of the Proposed Transfer as<br />
stipulated in the Equity Guidelines.<br />
Complied<br />
The SC had approved the following exemptions sought by us under the <strong>Prospectus</strong><br />
Guidelines vide its letter dated 30 September 2009:-<br />
Details of exemption Decisions and<br />
conditions imposed<br />
by the SC<br />
Chapter 5, Information<br />
Summary - Waiver<br />
sought from complying<br />
with Chapter 5<br />
Approved, subject to<br />
Willowglen disclosing<br />
the relevant details<br />
available on the<br />
Proposed Transfer in<br />
the Introductory<br />
Document.<br />
Status of compliance<br />
Met. A summary of the Transfer and relevant<br />
details of our Group are set out in Section 2 of<br />
this Introductory Document.
Company No. 462648-V<br />
3. PARTICULARS OF THE TRANSFER (CONT’D)<br />
Chapter 12 –<br />
Paragraphs 12.10–<br />
12.12 - Waiver sought<br />
from submitting interim<br />
audited financial<br />
statement. Instead, a<br />
copy of the latest<br />
quarterly report of<br />
Willowglen will be<br />
included in the<br />
Introductory Document.<br />
Chapter 12 –<br />
Paragraph 12.16 -<br />
Waiver sought from<br />
submitting pro forma<br />
financial information.<br />
Instead, a copy of the<br />
latest audited financial<br />
statement of<br />
Willowglen will be<br />
included in the<br />
Introductory Document.<br />
Approved, subject to<br />
Willowglen including its<br />
latest quarterly report<br />
in the Introductory<br />
Document.<br />
Approved, subject to<br />
Willowglen making the<br />
disclosure using actual<br />
financial information<br />
confirming to the SC<br />
that Willowglen Group<br />
has been in existence<br />
since the beginning of<br />
the relevant period.<br />
3.5 MARKET CAPITALISATION<br />
10<br />
Met. The latest report for the six (6)-month FPE<br />
30 June 2010 of Willowglen Group is set out in<br />
Section 12 of this Introductory Document.<br />
Met. The Accountants' Report prepared based<br />
on actual financial information of our Group is<br />
set out in Section 11 of this Introductory<br />
Document.<br />
We confirm that our Group has been in<br />
existence since the beginning of the FYE 31<br />
December 2007, being the beginning of the<br />
profit track record period pursuant to the<br />
Transfer.<br />
Based on the issued and paid-up capital of our Company of 248,000,000 Shares and the five<br />
(5)-days volume weighted Share price up to the LPD of approximately RM0.34 per Share, our<br />
total market capitalisation is RM84.32 million. There is no theoretical adjustment to the price<br />
of our Shares in conjunction with the Transfer.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
Company No. 462648-V<br />
4. RISK FACTORS<br />
YOU SHOULD RELY ON YOUR OWN EVALUATION AND CAREFULLY CONSIDER THE MERITS,<br />
RISKS AND INVESTMENT CONSIDERATIONS AS SET OUT BELOW, TOGETHER WITH THE<br />
REST OF THE INFORMATION IN THIS INTRODUCTORY DOCUMENT. THE INFORMATION<br />
BELOW MAY NOT BE EXHAUSTIVE. ADDITIONAL RISKS AND UNCERTAINTIES, WHETHER<br />
KNOWN OR UNKNOWN, MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR COMPANY AND<br />
SHARES IN THE FUTURE.<br />
4.1 RISKS RELATING TO OUR INDUSTRY AND OUR BUSINESS<br />
4.1.1 Competition<br />
The SCADA market is a niche, competitive and rapidly changing market within the<br />
larger market for process control systems. Our Group has experienced and expects<br />
to continue to experience intense competition from current and future competitors.<br />
Our Group believes that our ability to compete depends upon many factors within and<br />
outside of our control, including the timing and market acceptance of new products<br />
and services and also enhancements developed by our Group and our competitors,<br />
product functionality, ease of use, performance, price, value for money, reliability,<br />
customer service and support, sales and marketing efforts, product distribution<br />
channels and the resources of competitors.<br />
However, our Group has been in operation since 1987 and has vast experience in<br />
regard to the <strong>Malaysia</strong>n and Singaporean markets. To mitigate the risk of<br />
competition, our Group focuses on technologies which are highly reliable and has the<br />
competitive advantage in being the one of the few integrated SCADA providers in<br />
<strong>Malaysia</strong> and Singapore that offers real time video capabilities. The systems which<br />
our Group supplies are also customised, thus providing a degree of differentiation<br />
which helps to secure further business from the customers.<br />
Our Group's technological platforms for our SCADA systems are on par with the<br />
global technological advances in the SCADA and information technology industries.<br />
This is evident in the SysLink 3 system whose sophistication and flexibility enable its<br />
deployment in diverse industrial applications. Our Group's progressive R&D effort has<br />
produced SCADA products which are on par with, if not ahead of, other SCADA<br />
products being developed around the world. The competition comes from other<br />
SCADA software in the utilities market which includes Citect, iFix, Cimplicity, iSCADA<br />
and WinCC. Our Group believes that the technology would continue to evolve in the<br />
SCADA software market. Anticipating this, our Group believes that software<br />
innovation and prompt service are critical in retaining our current customer base<br />
amidst the competitive and changing environment. Our Group would continue to<br />
improve the product through constant upgrades and improvements, in line with our<br />
ongoing R&D efforts.<br />
4.1.2 Rapid Technological / Product Change in the SCADA Market<br />
The market for our Group's products is characterised by rapid technological<br />
developments, evolving industry standards, swift changes in customer requirements,<br />
computer operating environments and software and hardware applications, and<br />
frequent new product introductions and enhancements. Our Group's future depends<br />
substantially upon our ability to address the increasingly sophisticated needs of our<br />
customers. To the extent that one or more of our Group's competitors introduce<br />
products and services that better address customer needs or for any reason gain<br />
market share, our Group's business, operating results and financial condition could<br />
be materially adversely affected. Our Group may or may not be successful in<br />
developing and marketing new products or enhancements to our existing products to<br />
adequately address the changing needs of the marketplace. In recognition of this, our<br />
Group constantly endeavours to develop and/or enhance our products expeditiously.<br />
11
Company No. 462648-V<br />
4. RISK FACTORS (CONT'D)<br />
Our Group is also susceptible to various security risks in the form of computer<br />
viruses, industrial espionage, hacking and fraud. As a mitigating factor, our Group<br />
had implemented security measures such as data encoding/encryption and installing<br />
anti-virus software so as to safeguard the assets and systems of our Group.<br />
4.1.3 Product Risks<br />
Our Group's future results will substantially depend on market acceptance of the<br />
products we develop. A reduction in demand or an increase in competition in the<br />
market for these products, or our Group's other existing or future products, will have a<br />
material adverse effect on our Group's business, results and financial condition.<br />
There is also no assurance that our Group will be able to develop and introduce new<br />
products and services or enhancements in a timely manner in response to changing<br />
market conditions or customer requirements or that the process will not encounter<br />
unforeseen problems.<br />
To date, our Group's products have been well-received by our customers and we<br />
expect that enhancements and improvements of features, quick time to market and<br />
good technical service should ensure continuous acceptance of our Group’s<br />
products.<br />
4.1.4 Dependence on Directors and Key Personnel<br />
Our Group’s future performance depends to a significant extent upon the continued<br />
efforts and abilities as well as the networking of our directors, key technical, sales and<br />
marketing, and senior management personnel. The loss of the services of any of<br />
these individuals may have a material adverse effect on our Group. Our Group’s<br />
future success also depends on our ability to attract sufficient skilled employees.<br />
As a mitigating factor, our Group currently enjoys a cordial relationship with its<br />
employees and they do not belong to any trade union. The employees are also<br />
frequently sent to various courses to upgrade their knowledge.<br />
4.1.5 Reliance on Major Relationships<br />
Our Group has, in the past, been substantially dependent on revenue from contracts<br />
with the Housing Development Board of Singapore and SP PowerAssets Limited,<br />
which are our major customers. Our Group's relationship with them has spanned over<br />
twenty three (23) years, during which our Group has built up goodwill through the<br />
customer's repeat orders. In our Group's present circumstances, any material<br />
reduction in revenue from these customers will materially adversely affect our Group's<br />
operating results. Willowglen will continue to minimise our dependency on our major<br />
customers by: -<br />
a) Expanding our market penetration to other countries through trade shows<br />
and product exhibitions as to create product and brand awareness into the<br />
country;<br />
b) Sourcing for new business / clients by either finding JV partners or appointing<br />
local distributors in countries where Willowglen has yet to have a presence;<br />
and<br />
c) Continuously expanding the capabilities of the SCADA system to enable<br />
Willowglen to penetrate into new markets / industries.<br />
Willowglen has been maintaining good relationships with our customers and will<br />
continue to provide good service to our existing customers to strengthen this<br />
relationship. Our Group does not foresee any circumstances that our clients would<br />
switch to other suppliers under the current business conditions. However, we are<br />
12
Company No. 462648-V<br />
4. RISK FACTORS (CONT'D)<br />
making progress in an effort to widen our customer base so as to reduce our<br />
dependence on any single customer.<br />
Our Group has a number of business alliances with third parties and affiliates to<br />
provide marketing and support activities for our Group's products and services. Our<br />
Group relies to a certain extent upon some of our agents to provide marketing and<br />
sales opportunities for our Group's products and services. Our Group's strategy in<br />
entering into these relationships is to present a best of breed approach where our<br />
Group and our agents present a solutions approach to their customers, leverage the<br />
marketing and sales efforts of our agents, and gain additional exposure and market<br />
visibility for our products. These relationships also assist our Group in keeping pace<br />
with technological and marketing developments, and in certain instances, provide our<br />
Group with technical assistance for our Group's product development efforts.<br />
The agents that our Group is working with are SCADA Systems & Services Ltd from<br />
the United Kingdom and Total Solutions from Abu Dhabi, UAE respectively. Our<br />
Group's appointment of these agents supplements our marketing efforts and as such<br />
is not expected to have any adverse effect on our sales growth.<br />
However, there can be no assurance that these companies will not develop or market<br />
products which compete with our Group's products in the future or will not otherwise<br />
discontinue their relationships with or support of our Group. The failure of our Group<br />
to maintain our existing relationships, or to establish new relationships in the future<br />
for any reason, could have a material adverse effect on our Group's business,<br />
operating results and financial condition.<br />
4.1.6 Protection of Group and Third Party Proprietary Technology / Intellectual<br />
Property Rights<br />
Our Group's success is also dependent upon our ability to use industry standard third<br />
party proprietary technology, and our ability to protect our proprietary technology. The<br />
necessary recording and documentation has been properly implemented to protect<br />
our Group’s copyright on our products. The directors believe that risks are relatively<br />
low due to the nature of our Group's products, as SCADA systems involve<br />
innumerable aspects which are complex and require time to develop and integrate.<br />
Moreover, we have implemented the key lock protection system in SysLink 3 to<br />
protect our products from unauthorised usage and duplication. Our Group will also<br />
procure our employees to sign an agreement which will effectively limit the possibility<br />
of the direct copying of our products by employees who resign.<br />
4.1.7 Litigation Risks<br />
Our Group's agreements with our customers typically contain provisions designed to<br />
limit our Group's exposure to potential product liability claims. We have not<br />
experienced any material product liability claims. It is possible, however, that the<br />
limitation of liability provisions contained in our Group's customer agreements may<br />
not be effective as a result of existing or future laws or unfavourable judicial<br />
decisions. Furthermore, some of our Group's agreements with our customers are<br />
governed by foreign laws, and there are no assurances that the purported limitation<br />
on liability clauses in those agreements would be enforced.<br />
4.1.8 Change in MSC Status<br />
Willowglen was granted the MSC status on 31 March 1998 by MDC. By virtue of this,<br />
our Company has been granted full pioneer status which accords our Company with<br />
five (5) years of income tax exemption on our statutory income commencing on 4<br />
June 2002 and was further extended to 3 June 2012 for the maximum allowable<br />
period of ten (10) years.<br />
13
Company No. 462648-V<br />
4. RISK FACTORS (CONT'D)<br />
The MDC is the body responsible for monitoring all MSC designated companies.<br />
MDC has the right to revoke any company's MSC status at any time if it does not<br />
comply with the conditions of grant of MSC status as imposed by the MDC. As such,<br />
there can be no assurance that our Company will continue to retain our MSC and<br />
pioneer status or that we will continue to enjoy or not experience delays in enjoying<br />
the MSC incentives, all of which could affect our Group's business, operating results<br />
and financial condition. There can also be no assurance that the conditions of grant of<br />
MSC status and or the MSC incentives will not be changed or modified in any way in<br />
the future.<br />
To this end, we maintain a good relationship with MDC. We endeavour to keep<br />
abreast of all the compliance requirements of the MSC status, of which the major<br />
conditions imposed on our Company and our status of compliance thereof have been<br />
disclosed in Section 6.1.10 of this Introductory Document.<br />
4.2 RISKS RELATING TO OUR SHARES AND SHARE PRICES<br />
The market price of our Shares may be highly volatile and could be subject to wide<br />
fluctuations in response to, inter-alia, the following factors, some of which are beyond our<br />
control:<br />
(a) variation in our operating results;<br />
(b) success of failure of our management team in implementing business and growth<br />
strategies;<br />
(c) changes in securities analysts’ recommendations, perceptions or estimates of our<br />
financial performance;<br />
(d) changes in conditions affecting industries, general economic conditions or stock market<br />
sentiments or other events or factors;<br />
(e) changes in market valuations and share prices of companies with similar businesses to<br />
our Group that may be listed in <strong>Malaysia</strong> or anywhere else in the world;<br />
(f) additions or departure of key management and key technical personnel;<br />
(g) fluctuations in stock market prices and volume; or<br />
(h) involvement in litigation.<br />
Control of existing substantial shareholders may limit your ability to influence the<br />
outcome of decisions requiring the approval of shareholders<br />
As at the LPD, NASB, LMSB, OSKVE, OSKCP, OLH, KCM and WAC collectively hold<br />
172,982,974 Willowglen Shares representing 69.87% of the issued and paid-up share capital<br />
of Willowglen. As a result, it is likely that the said shareholders will influence the outcome of<br />
certain transactions/matters requiring the vote of Willowglen shareholders, including the<br />
constitution of our Board and the direction and future operations of our Group, decision<br />
regarding acquisitions and other business opportunities, the declaration of dividends and the<br />
issuance of additional Shares and other securities. It should be noted that our major<br />
shareholders will abstain from voting for resolutions in relation to related party transactions<br />
which might be carried out by the Company in our course of business.<br />
However, we have appointed three (3) independent non-executive directors to our Board and<br />
set up an audit committee to independently oversee the overall operational and financial<br />
matters of our Group. The appointments in place serve towards good corporate governance<br />
to, amongst others, ensure that any future transactions involving related parties are entered<br />
into on arm’s length terms with our Group.<br />
14
Company No. 462648-V<br />
5. INFORMATION ON OUR GROUP<br />
5.1 HISTORY AND BUSINESS<br />
Incorporation<br />
Willowglen was incorporated in <strong>Malaysia</strong> on 20 May 1998 under the Act as a private limited<br />
company with the name of Willowglen MSC Sdn Bhd, after it was granted MSC Status by<br />
MDC on 31 March 1998. It was subsequently awarded pioneer status under Section 14A of<br />
the Promotion of Investments (Amendment) Act 1986 by the MITI for a period of five (5) years<br />
commencing on 4 June 2002 and this was further extended to 3 June 2012 for the maximum<br />
allowable period of ten (10) years.<br />
Our Company was converted into a public limited company on 27 November 2000 and<br />
assumed our present name. Willowglen was listed on the former MESDAQ Market on 29 April<br />
2002. On 3 August 2009, Willowglen, together with the other companies listed on the<br />
MESDAQ Market were automatically transferred to the new ACE Market of <strong>Bursa</strong> Securities.<br />
History and principal activities<br />
Willowglen is principally engaged in the research, development and supply of real-time control<br />
systems and information solutions. Our Group’s advanced real time technology is the result of<br />
more than twenty three (23) years of experience in the SCADA industry.<br />
The history of our Group goes back to 16 December 1986, with the incorporation of WSPL as<br />
a marketing and technical support base for our then Canada-based parent company,<br />
Willowglen Systems Ltd. Since its incorporation, WSPL has grown into an ISO 9001 certified<br />
company with businesses in the ASEAN region and Taiwan. On 31 March 1998, Willowglen<br />
was granted the MSC Status. In March 1999, the R&D activities were relocated to Willowglen<br />
in <strong>Malaysia</strong> with the transfer of the key R&D personnel from WSPL.<br />
In October 2000, all three (3) companies underwent a restructuring exercise whereby<br />
Willowglen acquired WSPL and WMSB. In line with our Group’s plans to penetrate regional<br />
markets, WHKPL was incorporated in Hong Kong on 28 August 2002 to market our Group’s<br />
products in Hong Kong and Southern China. On 20 September 2002, it became a whollyowned<br />
subsidiary of Willowglen. However, due to the intense competition and the preference<br />
in these markets to use SCADA systems that run on Programmable Logic Controllers<br />
(“PLCs”) rather than Remote Terminal Units (“RTUs”), Willowglen’s products did not gain<br />
much acceptance. Following several years of sustained losses since its entry into this new<br />
market, the management decided to withdraw from the Hong Kong market. WHKPL has since<br />
been dissolved by way of deregistration on 16 April 2010.<br />
Our Group acquired a dormant company, GB Tech, on 5 November 2007. The acquisition of<br />
GB Tech was intended for the undertaking of future expansion in relation to our business of<br />
supply of computer-based control systems particularly in the distribution and assembly of<br />
equipment related to Integrated Monitoring Systems (“IMS”). This acquisition has resulted in<br />
GB Tech becoming a wholly-owned subsidiary of Willowglen and the current corporate<br />
structure of the Willowglen Group.<br />
Willowglen subsequently discovered that there was an existing requirement that a bidder<br />
must have an existing project track record in order to secure new projects. Being a dormant<br />
company, GB Tech did not possess such track record. Willowglen subsequently decided to<br />
use WMSB as the vehicle to bid for new IMS businesses whilst GB Tech was left dormant.<br />
The Group does not have any plans for GB Tech at this juncture<br />
15
Company No. 462648-V<br />
5. INFORMATION ON OUR GROUP (CONT'D)<br />
Willlowglen is an integrated provider of customised SCADA systems, being involved in all<br />
stages of the design, development, production, supply, installation and maintenance of such<br />
systems. SCADA is used to monitor and control remote field equipment. It is used in a wide<br />
range of process control applications and business systems. Examples include switchgear in<br />
electrical substations, compressors and turbines in a gas pipeline, as well as pumps and<br />
valves function. There is also an increased usage of utilizing SCADA to integrate into building<br />
management and related control automation. The following industries are the main market of<br />
SCADA system:-<br />
(a) Oil and gas utilities<br />
(b) Power utilities<br />
(c) Sewerage and drainage utilities<br />
(d) Water utilities<br />
(e) Railroads<br />
(f) Infrastructure monitoring / Building monitoring<br />
Products and services provided<br />
Our Group’s software products are marketed under the SysLink brand name. The initial<br />
version, SysLink I, was developed in 1993. The development of the enhanced version,<br />
SysLink II, began in 1995 while SysLink III had been actively marketed from early 2002<br />
onwards. Hardware products, also designed in-house, encompass a variety of products<br />
including modems, communication controllers and RTU. RTU is an electronic device which<br />
interfaces with an object in a physical world to a control system or a SCADA system by<br />
transmitting data to the system and/or altering the state of connected objects. Some RTUs<br />
feature advanced capabilities including audio and video capture and compression functions.<br />
Our R&D team had delivered a new hardware board, EXP6518 which is an expansion card<br />
for the RTU6500 series, and had developed an internal hardware test system to ensure<br />
manufacturing quality of the product. The new software product, SysLink version 3.8.2 was<br />
successfully released. This version had added more depth to our SCADA product range.<br />
The following are the major SCADA products of our Group:<br />
1. SCADA Software package: SysLink 3.8.2<br />
2. RTU series for different scales:<br />
Medium to High Input/Output requirements: RTU6000 series, RTU7000 series<br />
and RTU6500 series<br />
Low Input/Output requirements: RTU4600 series<br />
SysLink 3.8.2 was developed to add in the OPC client function, expanding support for more<br />
relational database servers, including Oracle, MySQL and Microsoft SQL Server. It has also<br />
incorporated a new industrial standard protocol IEC 60870-5-104. Our R&D team is also<br />
diligently working to improve on all parts of the software to prepare SysLink to be an off-theshelf<br />
product in the future.<br />
In addition, our Group provides services for custom engineering design (both hardware and<br />
software), training, maintenance and after-sales support. Our Group’s customers include<br />
government and private enterprises involved in the above-mentioned activities, mainly in<br />
Singapore and <strong>Malaysia</strong> as well as other ASEAN countries.<br />
16
Company No. 462648-V<br />
5. INFORMATION ON OUR GROUP (CONT'D)<br />
During the years from 2006 to 2009, smaller form-factor RTU and single-board RTU were<br />
developed to cater for different industry requirements. The SysLink software was upgraded<br />
with additional features numerous times and the latest version of SysLink, 3.8.2, was released<br />
recently. It has incorporated more industrial communication protocols and is equipped with<br />
many new features for fulfilling our customers’ needs. Our Group has deployed SysLink and<br />
Willowglen RTUs to water treatment, sewerage, early warning system, power and oil & gas<br />
industries. In addition to traditional utility industries, there are increased usage of SCADA in<br />
building management and related control automation requirements.<br />
Our Group’s vision is to be a world-class SCADA solutions provider in Asia. With this vision in<br />
mind, we aim to establish a stronger presence in <strong>Malaysia</strong> in order to benefit from the strong<br />
demand for SCADA products in <strong>Malaysia</strong> and the ASEAN region. Our Group aspires to be an<br />
export-oriented enterprise which offers innovative and high value-added products and<br />
services.<br />
Group structure<br />
As at the LPD, Willowglen has three (3) wholly-owned subsidiaries, WMSB, GB Tech and<br />
WSPL. Below is a graphical presentation of our group structure:-<br />
Willowglen<br />
WMS B GBTech WS PL<br />
Further information on the above companies are disclosed in Sections 5.3 and 5.4 of this<br />
Introductory Document.<br />
5.2 SHARE CAPITAL<br />
As at the LPD, we have an authorised share capital of RM100,000,000, comprising<br />
1,000,000,000 Willowglen Shares and an issued and paid-up share capital of RM24,800,000<br />
comprising 248,000,000 Willowglen Shares.<br />
The details of the changes in our issued and paid-up share capital since incorporation until<br />
the LPD are as follows:-<br />
No. of shares<br />
Total issued and<br />
paid-up share capital<br />
Date of Allotment<br />
allotted Consideration<br />
(RM)<br />
20.05.1998 2 Cash 2<br />
14.08.1998 99,998 Cash 100,000<br />
07.08.2000 - Subdivision of shares of RM1.00<br />
each into shares of RM0.10 each<br />
100,000<br />
09.10.2000 45,562,490 Other than cash 4,656,249<br />
24.10.2000 -<br />
27.10.2000<br />
30.10.2000 -<br />
1.11.2000<br />
37,000,000 Cash 8,356,249<br />
99,585,932<br />
2,851,578<br />
Other than cash<br />
Cash<br />
17<br />
18,600,000<br />
12.04.2002 62,000,000 Cash 24,800,000<br />
As at the LPD, there are no outstanding warrants, options, convertible securities in our<br />
Company.
Company No. 462648-V<br />
5. INFORMATION ON OUR GROUP (CONT'D)<br />
5.3 SUBSIDIARIES AND ASSOCIATED COMPANIES<br />
We are an investment holding company with three (3) subsidiary companies as set out<br />
below:-<br />
Subsidiary<br />
Date and Place<br />
of Incorporation<br />
WMSB 18.07.1995,<br />
<strong>Malaysia</strong><br />
WSPL 16.12.1986,<br />
Singapore<br />
GB Tech 28.10.2005,<br />
<strong>Malaysia</strong><br />
Date of<br />
business<br />
commencement<br />
18<br />
Issued and<br />
Paid-Up Share<br />
Capital<br />
Effective<br />
Equity<br />
Interest<br />
(%) Principal<br />
Activities<br />
April 1996 RM5,000,000 100 Sales,<br />
implementation and<br />
maintenance of<br />
computer-based<br />
control systems<br />
January 1988 SGD1,500,002 100 Design, supply,<br />
engineering,<br />
implementation and<br />
maintenance of<br />
computer-based<br />
control systems<br />
Dormant RM10 100 Dormant<br />
As at the LPD, we do not have any other subsidiary or associated companies.<br />
5.4 INFORMATION ON SUBSIDIARIES<br />
5.4.1 Information on WMSB<br />
(a) History and Business<br />
WMSB was incorporated in <strong>Malaysia</strong> on 18 July 1995 under the Act as a<br />
private limited company. WMSB is principally involved in the marketing,<br />
project implementation and maintenance of SCADA systems. WMSB<br />
commenced business in April 1996.<br />
(b) Share Capital<br />
As at the LPD, the authorised and issued and paid-up share capital of WMSB<br />
are as follows:-<br />
Par value<br />
Amount<br />
No. of shares<br />
(RM)<br />
(RM)<br />
Authorised 5,000,000 1.00 5,000,000<br />
Issued and paid-up 5,000,000 1.00 5,000,000
Company No. 462648-V<br />
5. INFORMATION ON OUR GROUP (CONT'D)<br />
Details of the changes in the issued and paid-up share capital of WMSB<br />
since its incorporation up to the LPD are as follows:-<br />
No. of Par value<br />
Cumulative<br />
Total<br />
Date of Allotment shares (RM) Consideration<br />
(RM)<br />
18.07.1995 2 1.00 Cash 2<br />
08.04.1996 99,998 1.00 Cash 100,000<br />
14.08.1998 100,000 1.00 Cash 200,000<br />
30.06.1999 1,200,000 1.00 Other than cash 1,400,000<br />
30.06.2000 2,200,000 1.00 Cash 3,600,000<br />
19.11.2004 1,400,000 1.00 Cash 5,000,000<br />
(c) Substantial Shareholder<br />
WMSB is our wholly-owned subsidiary.<br />
(d) Subsidiary and Associate Companies<br />
5.4.2 Information on WSPL<br />
WMSB does not have any subsidiary or associate companies.<br />
(a) History and Business<br />
WSPL was incorporated in Singapore on 16 December 1986 under the<br />
Companies Act Cap. 50 as a private limited company. WSPL is principally<br />
involved in the design, supply, engineering, project implementation and<br />
maintenance of SCADA systems. WSPL commenced business in January<br />
1988.<br />
(b) Share Capital<br />
As at the LPD, the authorised and issued and paid-up share capital of WSPL<br />
are as follows:-<br />
Par value<br />
Amount<br />
No. of shares (SGD)<br />
(SGD)<br />
Authorised 5,000,000 1.00 5,000,000<br />
Issued and paid-up 1,500,002 1.00 1,500,002<br />
Details of the changes in the issued and paid-up share capital of WSPL since<br />
its incorporation up to the LPD are as follows:-<br />
Par value<br />
Cumulative<br />
Total<br />
Date of Allotment No. of shares (SGD) Consideration (SGD)<br />
16.12.1986 2 1.00 Cash 2<br />
15.12.1992 500,000 1.00 Cash 500,002<br />
16.04.1996 1,000,000 1.00 Other than cash 1,500,002<br />
19
Company No. 462648-V<br />
5. INFORMATION ON OUR GROUP (CONT'D)<br />
(c) Substantial Shareholder<br />
WSPL is our wholly-owned subsidiary.<br />
(d) Subsidiary and Associate Companies<br />
WSPL does not have any subsidiary or associate companies.<br />
5.4.3 Information on GB Tech<br />
(a) History and Business<br />
GB Tech was incorporated in <strong>Malaysia</strong> under the Act on 28 October 2005.<br />
GB Tech is a dormant company.<br />
(b) Share Capital<br />
As at the LPD, the authorised and issued and paid-up share capital of GB<br />
Tech are as follows:-<br />
Par value<br />
Amount<br />
No. of shares<br />
(RM)<br />
(RM)<br />
Authorised 100,000 1.00 100,000<br />
Issued and paid-up 10 1.00 10<br />
There were no changes in the issued and paid-up share capital of GB Tech<br />
since its incorporation.<br />
(c) Substantial Shareholder<br />
GB Tech is our wholly-owned subsidiary.<br />
(d) Subsidiary and Associate Companies<br />
GB Tech does not have any subsidiary or associate companies.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
20
Company No. 462648-V<br />
5. INFORMATION ON OUR GROUP (CONT'D)<br />
5.5 MATERIAL CAPITAL EXPENDITURES AND DIVESTITURES<br />
There were no material capital expenditures and divestitures for the past three (3) FYE 31<br />
December 2009 and up to the LPD other than the following detailed below:-<br />
FYE 31 December<br />
2007<br />
21<br />
FYE 31 December<br />
2008<br />
FYE 31 December<br />
2009<br />
Addition Disposal Addition Disposal Addition Disposal<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Buildings 1,035 - - - - -<br />
Prepaid Land Lease<br />
Payments<br />
1,287 - - - - -<br />
Investment Properties 748 - - - - -<br />
5.6 KEY ACHIEVEMENTS / MILESTONES<br />
Over the years, our key achievements and milestones are set out below:<br />
Year Description<br />
2002 Willowglen was listed on the MESDAQ Market<br />
2003 Completed the development and testing of SysLink 3.5 to be used for industrial<br />
projects. SysLink 3.5 is a SCADA software providing flexible communication options<br />
and excellent graphical performance<br />
2003 Completed the design and prototyping of our remote terminal units, RTU7000 series.<br />
The product was put into production in the same year<br />
2004 Completed the development and release of SysLink 3.6. This version of the software<br />
was incorporated with historical archiving and full implementation of the International<br />
Electrotechnical Commission (“IEC”)<br />
2005 Completed the production of the RS485 isolator and repeater<br />
2006 Completed the development and release of SysLink 3.7. This version of the software<br />
was incorporated with a new high performance display engine, a DNP3 Slave protocol<br />
and a new RTU scanning protocol<br />
2006 Completed the design and prototyping of 6500 series Input/Output (“I/O”) modules. The<br />
product was put into production in the same year<br />
2006 Completed the revised expansion card module EXP7013G<br />
2007 Completed the development and release of SysLink 3.8. This version of the software<br />
was incorporated with new Schematic Editor, DNP3 Master protocol and new Human<br />
Machine Interface (“HMI”) interface program<br />
2007 Ventured into Integrated Monitoring Systems (IMS)<br />
2008 Completed the single-board RTU series, RTU4600 to provide a more cost effective<br />
solution<br />
2009 Delivered CPU6500 which is a compact and low powered solution and EXP6518, a<br />
multi channel communication card to complete the RTU6500 series of RTU product
Company No. 462648-V<br />
6. BUSINESS OVERVIEW<br />
6.1 OUR BUSINESS<br />
Our Group is principally engaged in the research, development and supply of computer-based<br />
control systems.<br />
6.1.1 Our Principal Products<br />
Our Group provides SCADA systems on a turnkey basis. Our Group’s principal<br />
products can be categorised into three (3) categories, the details of which are as<br />
follows: -<br />
Software<br />
Our Group markets our SCADA software under the SysLink brand name.<br />
The initial version, SysLink I, was developed in 1993. It was developed for the<br />
Windows 3.1 and later the Windows NT systems running on personal computer<br />
technology. It closely integrates with commercially available databases and<br />
spreadsheet applications, hence providing a flexible and cost-effective solution for<br />
users.<br />
The development of the enhanced version, SysLink II, began in 1995. SysLink II is a<br />
more powerful package than SysLink I and includes remote video monitoring<br />
features. It runs on both UNIX workstations and Windows based personal computer<br />
systems. Its architecture is capable of monitoring and controlling a very large number<br />
of remote devices, hence making it a highly scalable solution for projects of any size.<br />
SysLink I and II were fully and independently developed by our Group without any<br />
external input. The development of the later generation version, SysLink III, has been<br />
marketed from year 2002 onwards which has enhanced features compared to the<br />
earlier versions.<br />
SysLink III was later named as SysLink 3 and continues its evolvement. Our Group<br />
has released and deployed SysLink 3 series on various projects. SysLink 3 series,<br />
including 3.6, 3.7, 3.8, 3.8.1, 3.8.2, has been improved with more industrial<br />
communication protocols, new graphical features and enhancements and also<br />
allowing the integration and interfacing with enterprise business systems. With the<br />
robust features of SysLink 3, which is on par with other prominent SCADA products,<br />
our Group has been able and will continue to win projects in the competitive utilities<br />
market.<br />
Hardware<br />
Our Group has a wide range of modems, RTUs and communication controllers for<br />
different kinds of applications. Our hardware products, developed by our engineers,<br />
include the latest video compression, transmission and decompression capabilities.<br />
Our Group’s RTUs have been designed to be fully compatible with one another. This<br />
means that a Willowglen SCADA system can be implemented or upgraded with a<br />
combination of RTUs, giving customers a wide range of performance and cost saving<br />
possibilities.<br />
22
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
With years of development on RTUs, our Group’s RTUs now ranges from a wide<br />
variety of products to cater for low to high scale of Input/Output requirements. The<br />
range of RTU products includes:<br />
Medium to High Input/Output requirements:<br />
RTU6000 series<br />
RTU7000 series<br />
RTU6500 series<br />
Low Input/Output requirements: RTU4600 series<br />
Services<br />
As an integrated SCADA and security solutions provider, our Group provides our<br />
customers with customisation services for the engineering design of SCADA systems<br />
to cater for their needs (both hardware and software). To add value to our services,<br />
we also provide training, maintenance and after-sales support to our customers.<br />
Proposed or New Product / Services<br />
Our Group has been and will continue to be working to improve our SysLink software<br />
further for preparation for the repackaging and marketing of the software as an offthe-shelf<br />
product in the near future.<br />
6.1.2 Our Principal Markets<br />
(a) Singapore and <strong>Malaysia</strong><br />
We have established ourselves as a major SCADA solutions provider to the<br />
government and statutory bodies in Singapore and <strong>Malaysia</strong>. Our activities in<br />
these markets are primarily in the supply of systems to various utilities and<br />
niche applications such as lift monitoring, non-revenue-water monitoring and<br />
cable oil pressure monitoring. These markets are an important source of<br />
revenue for our Group. Besides commissioning new systems, our source of<br />
revenue also come from the expansion and upgrading of existing systems, as<br />
well as, from the maintenance contracts for the systems sold in these<br />
markets.<br />
(b) Asia (excluding Singapore and <strong>Malaysia</strong>)<br />
Our Group has also ventured into other regional markets in South East Asia<br />
and East Asia over the past twenty three (23) years, through the appointment<br />
of agents or partners in the various countries. Our Group has successfully<br />
implemented SCADA and security solutions for various applications in<br />
Cambodia, Taiwan, Thailand and Indonesia. To date, our Group has<br />
appointed an agent in Cambodia, TEM Trading Co Ltd, to market our<br />
products in the local market. Prior to the FYE 31 December 2007, the Group<br />
also recognised revenues generated from Taiwan, Thailand and Indonesia<br />
amounting to RM191,767, RM166,411 and RM293,978 respectively.<br />
(c) Europe and Middle East<br />
Our Group has also pursued projects in the European and Middle Eastern<br />
markets. Our Group’s marketing efforts in Europe and Middle East are<br />
undertaken in conjunction with our business partner, SCADA Systems &<br />
Services Ltd and Total Solutions of the United Kingdom and Abu Dhabi, UAE<br />
respectively.<br />
23
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
The percentages of our Group’s revenue derived from export markets (other than<br />
Singapore) for the past three (3) FYE 31 December 2009, are as follows:-<br />
Contribution to the Group’s Revenue<br />
2007 2008 2009<br />
Countries RM’000 % RM’000 % RM’000 %<br />
Slovenia 771 1.48 2,022 3.95 3,116 5.03<br />
UAE - - 278 0.54 87 0.14<br />
Cambodia - - 118 0.23 373 0.60<br />
6.1.3 Seasonality<br />
Our business is not materially affected by any seasonal or cyclical factors other than<br />
the general economic environment in each of the countries in which we operate.<br />
6.1.4 Our Competitive Strengths<br />
Our Group have, over the years, established competitive strengths as follows:-<br />
(i) Lower production cost and better control of design<br />
We are able to control the cost of our products through the direct design and<br />
production method. The amount of cost savings is significant in comparison<br />
to the buying or licensing of foreign technologies. By producing everything in<br />
house, we have also been able to have direct control over the production<br />
schedule of our products and services ensuring that customer schedules are<br />
met. This has enabled us to deliver on time at a lower cost, which in time<br />
centric industries such as the utility industry, we are able to outperform our<br />
competitors.<br />
(ii) Localised design<br />
Over the years, we have been developing our products, especially on the<br />
hardware side locally using readily available parts as well as electronic<br />
components which are suitable for the local climate. Being able to design<br />
hardware and software to meet the challenges of the local tropical climate is<br />
critical in being able to meet local customer demands as these components<br />
are very sensitive to interference and could easily malfunction due to<br />
overheating. Examples of the localisation of our products include the<br />
incorporation of lightning/surge protection as well as utilising components<br />
which are suitable for usage in high humidity and temperature conditions.<br />
Utilising locally available components also allows us to easily source for<br />
replacement parts in the event that certain components need to be replaced<br />
urgently.<br />
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24
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
(iii) Customisation to suit customers needs<br />
The evolving IT industry has raised the bars for all solution providers, in<br />
which, customisations has been playing a very important role in the evolution<br />
of the industry. The ability to design special software or hardware for the<br />
customers’ specifications is the key to acquiring jobs as most of the software<br />
users today require the IT solution that they purchase to perform exactly to<br />
their expectations. A lot of customisation has been done to our software to<br />
fulfil our customers’ requirement, such as having specific report designs,<br />
SMS communication protocols and special control variables. We have been<br />
able to and will continue to innovate and customise our software to suit our<br />
customers specific needs, outperforming our competitors in this functionality<br />
as we have less restrictions in modifying our proprietary software.<br />
(iv) Continuous R&D efforts<br />
To cater for our customisation and localisation needs, our Group continuously<br />
develops our software as well as the integration capabilities of our hardware.<br />
We are committed to our R&D efforts and our Group’s long track record<br />
proves that we can give our customers added surety that our Groups’<br />
products will be able to meet their specific requirements as well as to be on<br />
par with the technological advancements of the SCADA industry. Our R&D,<br />
headed by our Chief Technical Officer, strives to incorporate incremental<br />
improvements in each of the new SCADA systems that we implement and<br />
our continuous upgrading of our SysLink 3 software reflects our commitment<br />
to R&D.<br />
(v) Local market presence and support<br />
Our Group is based in <strong>Malaysia</strong> and Singapore and have established our<br />
presence sufficiently to cater for and service the clients in these markets. We<br />
have our offices in both countries with our service personnel able to attend to<br />
our customers within the stipulated timeframe. Where our competitors, which<br />
consists of large foreign companies may only have a local sales office, our<br />
Group can give a high level of direct technical support with our products<br />
having a high percentage of local content rather than having to wait for<br />
answers and technical know-how from foreign head offices thus reducing our<br />
service lead time as well as dependencies on other parties.<br />
(vi) Cooperation<br />
As the SCADA industry involves different components to meet different<br />
needs and requirements, we sometimes have to compete with our suppliers<br />
and/or customers. Our Group employs a judicious mixture of competition and<br />
cooperation with suppliers, customers and firms producing complementary<br />
and related products, which leads to new business relationships and market<br />
expansion. Our Group also have business affiliates overseas, which is more<br />
prominent in markets like the United Kingdom and Middle East to provide<br />
sales and services of our products. This has enabled us to stretch our reach<br />
beyond the physical existence of our offices.<br />
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25
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
6.1.5 Types, Sources and Availability of Raw Materials / Input<br />
We manufacture most of our products at our supplier factory in Singapore, in which,<br />
the manufacturing process of our components uses large quantities of high quality<br />
materials/components which originate from the US, Europe and Asia. We source<br />
these components through distributors located in China, Hong Kong, Taiwan and<br />
Singapore. The materials and components that are sourced locally and overseas are<br />
as follows:<br />
Item Description Locally Overseas<br />
Singapore China Japan USA Taiwan Korea<br />
Capacitors <br />
Super Capacitor / Battery <br />
Resistors <br />
Inductor/Transformer/Relay <br />
Light Emitting Diode (“LED”) <br />
Crystal / Oscillator <br />
Diode/Transistor <br />
Surge Protector <br />
Integrated Circuit (“IC”) <br />
Connector/Socket <br />
Jumpers <br />
Printed Circuit Board (“PCB”) <br />
Due to uncertainty in the lead times of the components and the volatility of the prices<br />
of these items, we maintain sufficient inventory levels to avoid the possibility of having<br />
disruptions on our product delivery time.<br />
6.1.6 Technology Used or To Be Used<br />
Software<br />
As our product integrates well on both Windows and UNIX operating systems, a lot of<br />
our core technology is derived from open source technology. One of the major<br />
development tool used to develop our software is Nokia’s Qt GUI Framework, a tool<br />
widely used by many users around the world.<br />
The advantages for us to use open source technologies are:<br />
i. Not locked to a specific vendor;<br />
ii. Lower development and product cost; and<br />
iii. A lot of support from developers/forum via the internet. Hence the experience<br />
and knowledge comes from developers around the world.<br />
With this, our R&D engineers are trained to be resourceful and knowledgeable. We<br />
are able to constantly adapt to the latest technology flexibly with the amount of<br />
research and updates done to accommodate the latest technology trend.<br />
26
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
Hardware<br />
We are currently using the latest embedded processors for our RTU board which<br />
provides high computing power but consume very low power. Being in a fast moving<br />
industry, we have to constantly keep up with the technological trends of SCADA. In<br />
this regard, we are already beginning to use Application Specific Integrated Circuits<br />
(“ASIC”) and Field Programmable Gate Arrays (“FPGA”) technologies in our RTU<br />
designs in the future. ASIC and FPGA are the new technologies available in the field<br />
of microelectronics. Willowglen has only recently been considering these<br />
technologies for the design of their future products as there have been instances<br />
where there are requirements to use smaller control panels and boxes due to space<br />
constraints. Using ASIC and FPGA gives the advantage of having smaller boards,<br />
lower power requirements as well as increase reliabilities to facilitate the reduction in<br />
component size.<br />
Other than the advantages mentioned above, the benefits in using ASIC and FPGA<br />
are:<br />
(i) cost effective for production in larger scale; and<br />
(ii) smaller in size with improved functionality.<br />
This will ensure our RTUs remain competitive in catering for the needs of our<br />
customers when it comes to the requirements of having high performance, small form<br />
factor and low power consumption.<br />
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27
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
6.1.7 Process Flow of the Business Operations of Our Group<br />
Our general process flow of the business operations is depicted in the following<br />
diagram:<br />
Customer<br />
Customer<br />
Requirements<br />
& Feedback<br />
Customer<br />
acceptance<br />
Customer<br />
Satisfaction<br />
Feedback<br />
Research & Design<br />
Research &<br />
Development -<br />
Review Input<br />
Requirements<br />
Integration Test<br />
Review & Approve<br />
software & hardware<br />
manual<br />
Final Product<br />
release<br />
28<br />
System Design,<br />
Customization &<br />
Hardware Support<br />
Purchasing &<br />
Out-Sourcing<br />
Marketing<br />
Looking for<br />
potential client<br />
Bid Review &<br />
proposal /quotation<br />
submission<br />
Handover to Project<br />
section<br />
Project plan<br />
preparation, design<br />
specification<br />
Factory<br />
Acceptance Test<br />
Project<br />
Packing, Delivery &<br />
Installation.<br />
Site Acceptance Test<br />
/ Testing &<br />
Comissioning<br />
Project Warranty,<br />
Maintenance Contract<br />
& Servicing<br />
Post Project<br />
Analysis & Measure<br />
Objective<br />
Our businesses are secured by our business development team which includes<br />
certain members of our top management, where they look for new clients and market<br />
our products. At the same time, there are referrals of projects or business from other<br />
parties or also clients who contacts us directly to seek for our products and services.<br />
These clients consist of the end users, vendors and consultants for a certain project.
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
Once we have established contact with the clients or when there is an invitation to<br />
bid, we usually receive the conditions or specifications where the prospective clients<br />
will list down the technical specifications in a data sheet together with the schematics<br />
of the said project. This data sheet is cross checked with our R&D personnel where a<br />
preliminary solution is designed for the users’ application. With the preliminary<br />
design, the cost for the project can be estimated and be used for our bid in the<br />
project. In most industry that utilizes our SCADA products, an open tender is the<br />
norm for customers to select a suitable and competitive supplier. Only in some minor<br />
circumstances do clients request for quotes directly, in which, we give our clients our<br />
quotation based on our costing once we obtain the preliminary design. Once the said<br />
project is secured, it will be passed on to the project team.<br />
Project Execution<br />
The project team will execute the said project by first planning the schedule for the<br />
overall delivery of the equipments based on their experience as well as other<br />
suppliers’ lead time. A more detailed calculation of the required specification and<br />
standards for the components and ancillary equipments as well as a new design work<br />
will be done together with the R&D team. The customization of the SCADA software<br />
is done based on the requirements of the users and the industry as well as our<br />
experience in other projects. We also pre-empt the requirements and needs for the<br />
ancillary equipments from other suppliers and take the functionality and limitations of<br />
these equipment into account. Our project team will conduct a site survey to assess<br />
on-site installation constraints and considerations then accordingly plan the layout for<br />
the site installation. We will update our design and submit our proposal complete with<br />
the schedule, design specifications as well as materials used to the clients for<br />
confirmation. Once the client concurs with our proposal the project will be duly<br />
executed by the Project Team.<br />
Once the clients confirm the design, our purchasing engineer will proceed to<br />
purchase the necessary components and ancillaries to complete the project. The<br />
customisation of the SCADA software is then carried out with integration tests done<br />
periodically at a piecemeal basis to ensure that the SCADA software can interface<br />
with the supporting hardware and equipments properly. After we find the SCADA<br />
software satisfactory, we inform the vendor or end user as the case may be and a<br />
Factory Acceptance Test is carried out together with the other equipments. Once this<br />
is done our SCADA solutions are then packaged and boxed under the supervision of<br />
the customer or vendor and taken by the forwarding agents to site. The customer will<br />
also need to sign off on a Factory Acceptance form to certify that they have accepted<br />
the functionality of the equipment before delivery to site. A hardware and software<br />
manual approved by our Chief Technology Officer will be packaged with our products<br />
for proper operation and monitoring of the SCADA systems.<br />
Site installation will commence when our project team reaches the project site and<br />
upon the delivery of other equipment and ancillaries required in the project. Our<br />
SCADA solution is then hooked up to the equipments and individual tests are done on<br />
the functionality of the SCADA system. Some troubleshooting may be required at this<br />
stage which will be duly handled by our Project Engineers. Once we find the SCADA<br />
system to be satisfactory, we will inform the customers so that a Site Acceptance Test<br />
can be carried out. Upon the completion of the test, the customer or vendors have to<br />
sign a customer acceptance form to certify that they are satisfied with the system<br />
upon the installation. The equipments are then formally handed over to the customers<br />
and our warranty period will commence. A typical SCADA system has a warranty<br />
period of twelve (12) months. All of these terms will fall under our scope in the project<br />
warranty agreement, and subsequently if maintenance is required, the Maintenance<br />
and Service Contract.<br />
29
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
Hardware Development<br />
With the information gathered from the bid or other hardware development cross<br />
reference, we develop a Hardware Module Functional Specification Document which<br />
serves to define the objective of the development project. We then estimate the<br />
hardware development timeframe and subsequently prepare the hardware<br />
development schedule taking into consideration costing as well as Human Resource<br />
Planning for the project.<br />
The execution of the project will begin with the ordering of parts and components and<br />
the design and drawing of the schematics and modification of the design according to<br />
the parts and components available. The firmware is developed concurrently to<br />
support the hardware as well as to enable to communication between modules in the<br />
hardware designed. Once a satisfactory design is obtained, a prototype PCB testing<br />
is carried out to ensure that the product is functioning properly and test results will be<br />
kept on a prototype test record for review and future reference. Once the prototype is<br />
finalised for production, a manual for the product will be prepared for the final product<br />
release after the prototype finalisation and approval of the product are completed.<br />
This process is depicted below:<br />
HardwareDesign<br />
Schematic<br />
PCBDesign<br />
Components<br />
Purchasing<br />
Functional<br />
S pecification<br />
Document<br />
Establish<br />
DevelopmentPlan&<br />
Schedule<br />
Partsearch&order.<br />
Breadboardconcept<br />
andcomponents<br />
PrototypePCB<br />
Assembly<br />
PrototypePCB<br />
Testing<br />
PrototypeFinalisation<br />
andApproval<br />
ManualPreparation&<br />
Review<br />
FirmwareDesign<br />
PCBFabrication<br />
30<br />
ProductRelease<br />
PrototypeTestRecord<br />
End
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
Software Development<br />
The software development process is usually initiated by a change in the functionality<br />
or design prompted by user feedback or by the requirements set by the management<br />
team. The change is subsequently planned and a development plan and schedule is<br />
formalised. As per the hardware development, a functional specification document is<br />
developed before the execution of the project to determine the objectives. This<br />
functional specification document is reviewed by the project team as well as the<br />
management team to ensure that the functionalities of the software are sufficient to<br />
meet the customers’ requirements. This is then compared with the preliminary<br />
research done to ensure that the expectations and requirements of the industry are<br />
coherent. This process is repeated until a satisfactory software specification is<br />
obtained, in which, the coding of the software will commence. The completed<br />
software will undergo testing, which involve the communication of the software with<br />
the hardware modules. Once satisfactory, a user and programmer manual will be<br />
produced and the source code will be checked in. A system integration test will follow<br />
to ensure the software and hardware can function as a total system without glitch.<br />
The completed software will be documented with the proper manuals and other<br />
required documentations and approved by users. Future improvements of the<br />
software is done based on the feedback of customers as well as bugs on the<br />
software, if found.<br />
We normally ask our customers for their feedback via a customer satisfaction<br />
feedback survey where a form is filled up to document the areas where there can be<br />
improvements done to our products and services. We will carry out a post mortem for<br />
the project and take the improvement needs into consideration for the upgrade of our<br />
product and services.<br />
All of our business process is done with compliance to the ISO9001 Quality<br />
Standards to ensure continuous improvement and customer satisfaction as well as<br />
Total Quality Management Systems as stipulated by the standards. Please refer to<br />
Section 6.1.8 in this Introductory Document for the details on our Quality<br />
Management System.<br />
6.1.8 Quality Management System<br />
Our products and services follows and complies with the requirements of ISO 9001,<br />
which is the internationally recognised standard for the quality management of<br />
businesses. It applies to the processes that create and control the products and<br />
services an organisation supplies and prescribes systematic control of activities to<br />
ensure that the needs and expectations of customers are met.<br />
We adopt the following management practices as part and parcel of our approach to<br />
comply with the standards as prescribed by ISO9001:-<br />
Monitoring and control mechanisms; and<br />
Quality control<br />
(a) Monitoring and control mechanisms<br />
The purpose of monitoring and control mechanisms is to establish our<br />
management oversight controls and reporting as well as the communication<br />
procedures within our project team and our management team. Our project team<br />
comprises of the Project Management Team, Project Engineer and technicians.<br />
(i) Our Project Management Team comprises our management team individuals<br />
which are in charge of technical issues such as the COO, CTO, Software<br />
Manager, Project Manager, and Hardware and Procurement Manager.<br />
31
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
(ii) The Project Manager / Engineer is the engineer assigned to be fully in charge<br />
of a project and overseeing a group of technicians under his supervision. He<br />
will also be responsible in liaising with the other departments such as<br />
purchasing to ensure the successful completion of the project.<br />
(iii) The technicians are responsible to execute the project under the supervision<br />
of the Project Engineer.<br />
For every project undertaken, documentation is required to keep track of project<br />
status, actions, issues, problems and deliverables.<br />
(b) Quality Control<br />
The following types of verification and validation activities are carried out to<br />
ensure the quality of deliverables:<br />
(i) Review<br />
Reviews are conducted by our Project Manager / Engineer to ensure:<br />
Compliance to requirements and specifications;<br />
Compliance to process standards; and<br />
Fulfilment of project objectives.<br />
The following types of reviews are organised:<br />
Deliverables reviews; and<br />
Project reviews.<br />
Reviews can be formal or informal. Informal reviews on deliverables are also<br />
termed inspections. All formal review activities are planned and are<br />
subsequently monitored. All review findings are recorded. The defects and<br />
issues are then consolidated and corrected. As a rule, all deliverables are<br />
formally reviewed by our Project Manager / Engineer. All project reviews are<br />
formal. Our Project Manager / Engineer reviews each project at the end of<br />
each phase of the project.<br />
(ii) Testing<br />
The levels of testing to be carried out in a project are decided at the<br />
beginning of the project and are recorded. The various levels of testing are:<br />
Functional – electrical and mechanical integrity testing at hardware<br />
and/or module level to ensure that our products meet their specifications<br />
and functionality.<br />
Integration – product integrity testing at system level as well as the<br />
communication between two or more modules and also with other<br />
devices. Safety and reliability testing at sub-level performed to ensure<br />
stability of the system.<br />
System – Testing at a total system level to ensure the functionality of the<br />
entire solution together with all other equipments and ancillaries for<br />
seamless integration and functionality. Safety and reliability testing at<br />
system level to ensure sustainability of the system.<br />
Testing activities are planned and monitored. Major testing activities include<br />
Factory Acceptance Tests (FATs) as well as Site Acceptance Tests (SATs).<br />
Certificates and handover documents are signed upon the completion of<br />
tests.<br />
32
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
(iii) Final inspection<br />
A final inspection is performed before each delivery to the client. This<br />
ensures that all verification and validation activities affecting the deliverables<br />
have been completed and all such defects have been tracked to closure.<br />
(iv) Customer feedback / complaints<br />
The post mortem validation process is also important as some of the issues<br />
or needs of the customers only arises after the execution of the project. This<br />
serves as an avenue for our Group to keep abreast with the changes in the<br />
SCADA industry. The complaints given by customers also allow us to<br />
indentify our weaknesses and endeavour to rectify the problem for its root<br />
cause.<br />
(v) Feedback on failed marketing bid<br />
Rejection of our bids serve as an excellent ground to learn from our<br />
shortcomings compared to other competitors in the SCADA industry. We<br />
analyze each and every failure of bids to understand where the competitors<br />
outperformed us and take corrective measures to improve and rectify our<br />
weaknesses, if any.<br />
6.1.9 Marketing and Distribution<br />
Our business model is depicted below:<br />
Business<br />
Focus<br />
Core<br />
Revenue<br />
Streams<br />
Target<br />
Markets<br />
SCADA Solutions for Utilities<br />
Oil<br />
and<br />
Gas<br />
Water<br />
Sewerage<br />
and<br />
Drainage<br />
Utility Companies / Government<br />
33<br />
SCADA Solutions for<br />
Infrastructure<br />
Railroads<br />
Infrastructure<br />
Monitoring<br />
Infrastructure Companies<br />
/<br />
Government<br />
The following methods are used to market our products and solutions:-<br />
i. Advertising in trade journals;<br />
ii. Trade shows and conferences;<br />
iii. Targeted sales calls and meet-ups;<br />
iv. Customer referrals; and<br />
v. Web site referrals.<br />
SCADA Solutions for Building<br />
and Other Industries<br />
Building<br />
Monitoring<br />
Other SCADA<br />
Applications<br />
Developers / Building<br />
Operators / Government /<br />
Other Supervisory and<br />
Control Intensive Industries<br />
We also engage agents / distributors in various countries to promote our products<br />
and solutions. These agents / distributors will not only promote our products, but will<br />
also act as market research agents to obtain feedback for us which is critical to our<br />
product development process.
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
6.1.10 Approvals, major licences and permits obtained<br />
Details of major business licenses, permits and approvals applicable to our Group as at the LPD are as follows:-<br />
Company Approving<br />
Authority / Issuer<br />
Type of approvals /<br />
licences / permits<br />
Willowglen MDC MSC Status Certificate<br />
to award Willowglen<br />
the status of MSC and<br />
entitlements to the<br />
incentives, rights and<br />
privileges provided for<br />
under the Bill of<br />
Guarantees<br />
License and<br />
certificate no.<br />
34<br />
Date of<br />
Commencement/<br />
(Expiry Date)<br />
0073 31.03.1998<br />
(Until revoked)<br />
Major conditions imposed Status of<br />
compliance<br />
Commence operations of and undertake<br />
the MSC-Qualifying Activities within six (6)months<br />
from the date of approval or by<br />
such date(s) as may be specified in our<br />
Company's approved business plan, with<br />
any proposed changes being first<br />
consented to by MDC<br />
Locate our Company's headquarters and<br />
the implementation and operation of the<br />
MSC-Qualifying Activities in Cyberjaya<br />
within six (6) months from the date of the<br />
approval<br />
Ensure that at all times at least 15% of the<br />
total number of employees (excluding<br />
support staff) of our Company shall be<br />
"knowledge workers" (as defined by MDC)<br />
Continuously comply with the MSC's<br />
environmental guidelines<br />
Submit to MDC a copy of our Company's<br />
Annual Report and Audited Statements in<br />
parallel with submission to the CCM<br />
Comply with all such statutory, regulatory;<br />
and/ or licensing requirements as may be<br />
applicable<br />
Complied
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
Company Approving<br />
Authority / Issuer<br />
Type of approvals /<br />
licences / permits<br />
Willowglen MITI Pioneer Status /<br />
MITI:ID/BI/S/0.535/23-<br />
270<br />
Willowglen MITI Pioneer Status /<br />
MITI:ID/BI/S/0.535/23-<br />
270-(12)<br />
WMSB Royal Customs And<br />
Excise <strong>Malaysia</strong><br />
License and<br />
certificate no.<br />
35<br />
Date of<br />
Commencement/<br />
(Expiry Date)<br />
- 24.09.2002<br />
(23.09.2007)<br />
- 04.06.2007<br />
(03.06.2012)<br />
Licensed Manufacturer A080251 15.04.2007 /<br />
(Until revoked)<br />
WMSB CIDB <strong>Malaysia</strong> G7 Contractor License A129829 29.03.10 /<br />
(28.03.2011)<br />
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Major conditions imposed Status of<br />
compliance<br />
None Not<br />
applicable<br />
None Not<br />
applicable<br />
None Not<br />
applicable<br />
None Not<br />
applicable
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
Company Approving<br />
Authority / Issuer<br />
Type of approvals /<br />
licences / permits<br />
WMSB Ministry of Finance Registration for<br />
Categories :<br />
030100,030200,<br />
040100,060100,<br />
130100,140200,<br />
150100,160402,<br />
180200,190300,<br />
200100,200400,<br />
210101,210102,<br />
210103,210104,<br />
210105,210106,<br />
220103,220104,<br />
220106,220109,<br />
220111<br />
WMSB Suruhanjaya<br />
Perkhidmatan Air<br />
Negara (“SPAN”)<br />
Permit IPA Jenis C3 &<br />
C4 (Bekalan Air) for<br />
Semenanjung<br />
<strong>Malaysia</strong>, Wilayah-<br />
Wilayah Persekutuan<br />
Putrajaya and Labuan<br />
License and<br />
certificate no.<br />
36<br />
Date of<br />
Commencement/<br />
(Expiry Date)<br />
267956 14.06.2008 /<br />
(13.06.2011)<br />
13980 & 13981 19.11.2009 /<br />
(18.11.2010)<br />
Major conditions imposed Status of<br />
compliance<br />
None Not<br />
applicable<br />
None Not<br />
applicable
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
Company Approving<br />
Authority / Issuer<br />
Type of approvals /<br />
licences / permits<br />
WMSB SPAN Permit IPA Jenis C3 &<br />
C4 (Pembetungan) for<br />
Semenanjung<br />
<strong>Malaysia</strong>, Wilayah-<br />
Wilayah Persekutuan<br />
Putrajaya and Labuan<br />
WMSB SPAN Permit IPA Jenis D<br />
(Bekalan Air) for<br />
Selangor, Pulau<br />
Pinang and Pahang<br />
WMSB SPAN Permit IPA Jenis D<br />
(Pembetungan) for<br />
Selangor, Pulau<br />
Pinang, Pahang and<br />
Negeri Sembilan<br />
License and<br />
certificate no.<br />
37<br />
Date of<br />
Commencement/<br />
(Expiry Date)<br />
13985 & 13986 19.11.2009 /<br />
(18.11.2010)<br />
13982 - 13984 19.11.2009 /<br />
(18.11.2010)<br />
13987 – 13990 19.11.2009 /<br />
(18.11.2010)<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
Major conditions imposed Status of<br />
compliance<br />
None Not<br />
applicable<br />
None Not<br />
applicable<br />
None Not<br />
applicable
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
6.1.11 Brand Names, Patents, Trade Marks, Licenses, Technical Assistance<br />
Agreements, Franchises and Other Intellectual Property Rights<br />
As at the LPD, we have submitted our application to register the ‘Willowglen’<br />
trademark with Perbadanan Harta Intelek <strong>Malaysia</strong> under Class 42. Save as<br />
disclosed, our Group does not have any other registered intellectual property rights in<br />
the form of patents, trademarks or designs. It is also not a party to any licensing<br />
agreements.<br />
6.1.12 Salient Terms of the Contracts/Arrangements on which Our Group is Highly<br />
Dependent<br />
6.1.13 R&D<br />
There are no contracts/arrangements on which our Group is highly dependent as at<br />
the LPD which have been entered into by us.<br />
Our Group has launched our new series of hardware, the RTU4600 series, in the<br />
second quarter of 2008. This series of RTU caters for projects that require low<br />
input/output points as the communication gateway and will enable our Group to<br />
reduce project cost and become more competitive. The RTU4600 is a RTU, or a<br />
microprocessor controlled electronic device which interfaces feedback from the field<br />
equipment to the SCADA systems by transmitting data to the system. The RTU4600<br />
comes with a built-in I/O interface to obtain input from the field equipment.<br />
Prior to the existence of RTU4600, the I/Os are usually connected to the Central<br />
Processing Unit (“CPU”) to process these data. However, as the cost of CPUs are<br />
higher, it is not justifiable to use a CPU unit when there is a small amount of I/Os<br />
involved in a project. CPUs are more suitable to be used in a project when there are<br />
many I/Os or field instruments required.<br />
By using the RTU4600, the inputs from the I/O are processed by the microprocessors<br />
into usable data, and hence there is no need for CPUs anymore. This has<br />
successfully reduced the cost for projects where there are low numbers of I/Os by<br />
approximately 20% to 30%.<br />
The RTU4600 series have been deployed to different industrial projects with its web<br />
application and SMS feature.<br />
After the launch of SysLink 3.8, our Group continued to improve on this version of the<br />
software by incorporating additional features to suit the needs and requirements of<br />
different industries.<br />
The enhanced version of SysLink that incorporated new features such as WebRTU,<br />
SMS and OPC server (an industrial communication protocol) was released and<br />
deployed to projects from October 2008.<br />
Given the existing RTU series and SysLink, our Group is able to provide a complete<br />
range of software and hardware products in SCADA system which includes the<br />
following:-<br />
Software products : SysLink (SCADA package)<br />
Hardware products : RTU6000 series, RTU7000 series, RTU6500 series,<br />
RTU4600 series and ISO-485 (RS485 isolator)<br />
38
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
The current and planned R&D activities undertaken by our Group’s R&D department<br />
are summarised below:-<br />
Year R&D Activities<br />
2010 Improving SysLink software to market as an off-the-shelf product<br />
2010 Certifications of RTU7000 and RTU6500 with SIRIM<br />
Our Group’s R&D expenses over the last three (3) financial years and a comparison<br />
of the R&D expenses as a percentage of our Group’s revenue are as follows:-<br />
2007<br />
FYE 31 December<br />
2008<br />
2009<br />
(RM)<br />
(RM)<br />
(RM)<br />
Salary 456,688 564,727 569,022<br />
Expenses (purchase of parts,<br />
53,163 66,389 31,295<br />
components and maintenance<br />
fees for computer software)<br />
Total R&D Expenses 509,851 631,116 600,317<br />
% of R&D Expenses to Revenue 0.98% 1.23% 0.97%<br />
6.1.14 Interruptions in Business<br />
Our Group has not experienced any material interruption to the business of our Group<br />
in the past twelve (12) months preceding the date of this Introductory Document.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
39
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
6.1.15 Property, Plant and Equipment<br />
Registered<br />
Owner Title Details / Address<br />
WMSB Pajakan Negeri 17630, Lot No.<br />
35063 and Pajakan Negeri 17631,<br />
Lot No. 35064, Mukim Petaling,<br />
District and State of Wilayah<br />
Persekutuan.<br />
Our Group currently owns the following landed properties which are held by WMSB:-<br />
No. 1 & 3, Jalan 2/149B, Taman<br />
Sri Endah, Bandar Baru Sri<br />
Petaling, 57000 Kuala Lumpur<br />
WMSB Pajakan Negeri 17636, Lot No.<br />
35069, Pajakan Negeri 17637, Lot<br />
No. 35070, Pajakan Negeri 17638,<br />
Lot No. 35071 and Pajakan Negeri<br />
17639, Lot No. 35072, Mukim<br />
Petaling, District and State of<br />
Wilayah Persekutuan.<br />
No. 15 & 17, Jalan 2/149B, Taman<br />
Sri Endah, Bandar Baru Sri<br />
Petaling, 57000 Kuala Lumpur<br />
Description /<br />
Existing Use<br />
Two units of 3storey<br />
terrace<br />
shop offices<br />
currently leased<br />
out on a 2-year<br />
renewable lease /<br />
office premise<br />
Four units of 3storey<br />
terrace<br />
shop offices /<br />
operational office<br />
Land Area /<br />
Gross Built-Up<br />
Area Tenure<br />
246 square<br />
metres / 662<br />
square metres<br />
490 square<br />
metres / 1,324<br />
square metres<br />
93-year leasehold<br />
expiring on 19<br />
February 2083<br />
93-year leasehold<br />
expiring on 19<br />
February 2083<br />
None of the assets disclosed above have been re-valued in conjunction with the Transfer.<br />
40<br />
Express Condition /<br />
Restrictions-in-Interest Encumbrances<br />
Use of premises is for shop<br />
office only / The land shall not<br />
be transferred, assigned or<br />
charged in anyway dealt with<br />
or any part thereof to any<br />
person whomsoever without<br />
the prior written approval from<br />
Ministry of Federal Territories<br />
and Urban Wellbeing<br />
Use of premises is for shop<br />
office only / The land shall not<br />
be transferred, assigned or<br />
charged in anyway dealt with<br />
or any part thereof to any<br />
person whomsoever without<br />
the prior written approval from<br />
Ministry of Federal Territories<br />
and Urban Wellbeing<br />
Issuance<br />
Date for<br />
Certificate<br />
of Fitness<br />
Audited net<br />
book value<br />
as at 31<br />
December<br />
2009<br />
(RM)<br />
None 19.03.1996 1,495,000<br />
None 19.03.1996 2,932,633<br />
To the best knowledge of the Board, none of the properties disclosed above are in breach of any land-use conditions and/or are in material<br />
non-compliance with current statutory requirements, land rules or building regulations. To the best knowledge of the Board, the properties<br />
disclosed above are not subject to any regulatory requirement and environmental issues which may materially affect our Group’s operations<br />
and utilisation of assets.
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
6.1.16 Material Tangible Fixed Asset Other Than Properties<br />
As at the LPD, our Group does not own any material tangible fixed assets other than<br />
properties.<br />
6.1.17 Material Plan to Construct, Expand or Improve our Facilities<br />
As at the LPD, our Group does not have any material plans to construct, expand or<br />
improve our facilities.<br />
6.1.18 Major Customers<br />
Our Group's major customers are mainly from the following sectors:-<br />
(a) Oil and gas utilities;<br />
(b) Power utilities;<br />
(c) Sewerage and drainage utilities;<br />
(d) Water utilities;<br />
(e) Railroads;<br />
(f) Infrastructure monitoring; and<br />
(g) Building monitoring.<br />
Our major customers to whom we have sold 10% or more of our revenue to for the<br />
FYE 31 December 2009, are SP PowerAssets Limited and HDB-Technology<br />
Development Unit 3, contributing approximately 23.55% and 13.95% respectively<br />
towards our Group’s total revenue.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
41
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
List of our major customers ((those individually contributing 10% or more of our Group’s revenue) with their percentage contribution to our Group’s total<br />
revenue for the past three (3) FYE 31 December 2009 and the six (6)-month FPE 30 June 2010 are set out below:-<br />
Customers<br />
SP PowerAssets<br />
Limited (“SP<br />
PowerAssets”)<br />
HDB-Technology<br />
Development<br />
Unit 3 (“HDB”)<br />
Energy Market<br />
Authority<br />
(”EMA”)<br />
Surbana<br />
Technologies<br />
Pte Ltd<br />
(”Surbana”)<br />
Note: * less than 10%.<br />
FYE 31 December FPE 30 June<br />
Country Year(s) of<br />
Products Sold/<br />
2007 2008 2009 2010<br />
of origin relationship<br />
Services Provided RM’000 % RM’000 % RM’000 % RM’000 %<br />
Singapore 23 Testing, Commissioning & Maintenance<br />
of PD Monitoring System;<br />
Supply, Installation, Commissioning &<br />
Maintenance of the Integrated Security<br />
Operation Surveillance System<br />
13,339 25.68 12,361 24.16 14,601 23.55 3,189 11.53<br />
Singapore 23 Supply, Installation & Commissioning of<br />
the Lift Telemetry Monitoring System<br />
and Lift Surveillance System<br />
Singapore 4 Supply, Installation and Commissioning<br />
of Gas Monitoring System<br />
Singapore 7 Lift Telemetry Monitoring System<br />
Maintenance<br />
42<br />
6,647 12.80 14,073 27.51 8,649 13.95 4,115 14.88<br />
5,936 11.43 - * - * - *<br />
- * - * - * 2,220 8.03
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
The loss of these major customers may adversely affect our operating results.<br />
Nevertheless, our Group has been dealing with SP PowerAssets and HDB for the<br />
past twenty three (23) years respectively, which indicates that there is a stable<br />
business relationship with these customers and will continue to provide good service<br />
to our existing customers to strengthen this relationship. We intend to minimise our<br />
dependency on our major customers by: -<br />
d) Expanding our market penetration to other countries through trade shows<br />
and product exhibitions as to create product and brand awareness into the<br />
country;<br />
e) Sourcing for new business / clients by either finding JV partners or<br />
appointing local distributors in countries where Willowglen has yet to have its<br />
presence; and<br />
f) Continuously expanding the capabilities of the SCADA system to enable<br />
Willowglen to penetrate into new markets / industries.<br />
Willowglen has been maintaining good relationships with our customers and will<br />
continue to provide good service to our existing customers to strengthen this<br />
relationship. Our Group does not foresee any circumstances that our clients would<br />
switch to other suppliers under the current business conditions.<br />
However, no assurance can be given that the loss of any one or more of our major<br />
customers resulting from, inter alia, cessation of business relations or otherwise,<br />
would not have an adverse impact on our operating results in the future.<br />
6.1.19 Major Suppliers<br />
For the past three (3) FYE 31 December 2009, there were no suppliers who<br />
individually supplied 10% or more of the Group's total purchases.<br />
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43
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
6.1.20 Major ProjectsSecured/Completed<br />
Our Group’s major projects (above RM1.00 million) secured/completed during the<br />
financial years/period under review include the following:-<br />
Brief Description of Project<br />
Maintenance of SCADA Systems for the monitoring and control of<br />
gas transmission and distribution networks for a period of one (1)<br />
year on a quarterly preventive maintenance and ad-hoc corrective<br />
maintenance basis.<br />
Supply, Installation & Commissioning of Intrusion Detection System<br />
(“IDS”) at 1,000 22KV and 6.6KV substations.<br />
The Building Monitoring Centre (“BMC”) project was set up to cater<br />
for the monitoring of TMS and Photovoltaic Monitoring Systems that<br />
have been installed in public housing estates in Singapore.<br />
Comprehensive maintenance of a Master Station for a period of five<br />
(5) years consisting preventive and corrective maintenance of one<br />
(1) TMS Master Station that is linked up with 18,000 LMD from all<br />
HDB sites.<br />
Comprehensive maintenance of TMS for a period of five (5) years<br />
comprising corrective maintenance of 3,800 LMD located all over<br />
the Singapore island.<br />
Supply, Installation & Commissioning of Integrated Security<br />
Operation Surveillance Systems (“ISOSS”) consisting Building<br />
Access Control Systems (“BACS”), CCTV Systems, Fence Intrusion<br />
Detection Systems (“FIDS”) and Public Announcement (“PA”)<br />
Systems at thirty (30) 66KV substations<br />
Upgrade of ISOSS through the supply, installation and<br />
commissioning of additional CCTVs, Fence Intrusion Detection<br />
Systems (“FIDS”) and Building Access Control Systems at various<br />
230KV substations.<br />
Supply, Installation & Commissioning of Lift Surveillance Systems<br />
(“LSS”) for 336 lifts in one of the public housing estates in<br />
Singapore.<br />
Supply, Installation & Commissioning of LSS for 164 lifts in one of<br />
the public housing estates in Singapore.<br />
Maintenance of SCADA systems for the monitoring and control of<br />
the gas transmission and distribution networks for one (1) year on a<br />
quarterly preventive maintenance and ad-hoc corrective<br />
maintenance basis.<br />
Supply, installation & commissioning of a Partial Discharge<br />
Monitoring (“PDM”) System for a 132KV substation at an oil<br />
refinery.<br />
Supply, installation & commissioning of SCADA systems to manage<br />
and operate the Lime and CO2 Dosing Plant.<br />
Supply, installation & commissioning of SCADA systems to manage<br />
the new Industrial Water Pumping Station to facilitate the pumping<br />
of Newater to the Jurong Island Storage Reservoir.<br />
44<br />
Status of<br />
Completion as<br />
Value<br />
at LPD (RM’000)<br />
Completed 1,064<br />
Completed 3,625<br />
Completed 2,824<br />
Completed 2,129<br />
Completed 1,892<br />
Completed 11,130<br />
Completed 2,464<br />
Completed 2,150<br />
Completed 1,507<br />
Completed 1,161<br />
Completed 1,619<br />
Ongoing 1,100<br />
Ongoing 1,183
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
Brief Description of Project<br />
Maintenance of SCADA systems for the monitoring and control of<br />
the gas transmission and distribution networks for twenty-four (24)<br />
months on a quarterly preventive maintenance and ad-hoc<br />
corrective maintenance basis.<br />
Maintenance of ISOSS at twenty (20) 230KV substations for twentyfour<br />
(24) months on a quarterly preventive maintenance and ad-hoc<br />
corrective maintenance basis.<br />
Supply, installation & commissioning of LSS for 165 lifts and 142<br />
staircases in one of the public housing estates.<br />
Supply, installation & commissioning of Power Monitoring Systems<br />
to monitor and manage the High Voltage 22KV Electrical systems<br />
and power meters.<br />
Maintenance of TMS for a period of five (5) years on a preventive<br />
and corrective maintenance basis for a TMS Master Station.<br />
Maintenance of TMS for a period of five (5) years. This<br />
comprehensive maintenance covers the preventive and corrective<br />
maintenance of 113 Area Receiving Stations (“ARS”) located all over<br />
Singapore.<br />
Maintenance of TMS for a period of five (5) years. This<br />
comprehensive maintenance covers the preventive and corrective<br />
maintenance of 1,600 LMDs located all over Singapore.<br />
Maintenance of TMS for a period of five (5) years. This<br />
comprehensive maintenance covers the preventive and corrective<br />
maintenance of 9,000 LMDs located all over Singapore.<br />
Maintenance of Partial Discharge Monitoring (“PDM”) systems at<br />
thirteen (13) 400KV and 230KV substations for twenty-four (24)<br />
months which comprises quarterly preventive maintenance and adhoc<br />
corrective maintenance.<br />
45<br />
Status of<br />
Completion as<br />
Value<br />
at LPD (RM’000)<br />
Ongoing 2,337<br />
Ongoing 1,586<br />
Ongoing 1,630<br />
Ongoing 1,364<br />
Ongoing 4,257<br />
Ongoing 2,271<br />
Ongoing 1,183<br />
Ongoing 7,096<br />
Ongoing 2,915<br />
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Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
6.2 FUTURE PLANS, STRATEGIES AND PROSPECTS<br />
6.2.1 Future Plans and Strategies of our Group<br />
Our Group will focus on securing jobs in other areas such as the transportation<br />
sector, water and waste-water management, and power distribution sectors. Our<br />
Group will also strive to capture additional markets in security monitoring, building<br />
management and environmental control systems and other related business<br />
opportunities.<br />
Moving forward, as a listed entity on the Main Market of <strong>Bursa</strong> Securities, our Group<br />
will look into other areas to expand our business as follows:-<br />
(a) Mergers and Acquisitions<br />
Our Group is of the view that there are many other synergistic industries where<br />
the Group can benefit from such as oil and gas skid fabrication, security<br />
system/biometric hardware manufacturing, applications software such as<br />
Enterprise Resource Planning (“ERP”) software solutions, whereby the<br />
acquisition into these industries/companies will allow a new stream of steady<br />
businesses as well as improving the Group’s revenues and profits. The inclusion<br />
of such businesses also expands our Group’s business portfolio and diversifies<br />
our risk of being too reliant on our current businesses. This will effectively be a<br />
risk mitigating plan moving forward should there be a slowdown in the SCADA<br />
industry.<br />
The source of funding for such acquisition would be either from internally<br />
generated funds or through bank borrowings. However, should there be a need<br />
for a capital raising exercise, our Group will ensure that the necessary<br />
announcements and applications to <strong>Bursa</strong> Securities is made. The detailed<br />
decision will be only made as of when there is a concrete plan of any mergers<br />
and acquisitions.<br />
Our Group is in negotiations to acquire a foreign-based SCADA company.<br />
Through this acquisition, Willowglen expects to be able to enlarge our<br />
international market share as well as to improve on the R&D on our SCADA<br />
products.<br />
(b) Strategic Alliances<br />
Our Group recognises the power and the importance in collaborating with certain<br />
established players in the industries that we service, research institutes as well as<br />
working with other third party business experts in developing our products and<br />
services to cater for the evolving SCADA industry. The change in application<br />
requirements for SCADA, which are most likely spearheaded by companies<br />
which are established or leaders in the industries that they are in, are often<br />
required to suit the current day requirements of control and security. These<br />
features are often very prominent for the utility industry as well as the<br />
security/building safety industries.<br />
By being in the picture to help these companies develop their current Control<br />
System Software, our Group will have the opportunity to be one of the first<br />
SCADA service providers to develop new functionality for our software to meet<br />
the demands of the industry. Coupled with our R&D capabilities, we believe that<br />
we can also pre-empt the trends of the development in the SCADA industry and<br />
in the near future, provide new innovation and creative solutions beforehand. Our<br />
Group currently has a few strategic partners in Europe, which plays the role of<br />
distributing our SCADA products in the region. These partners are also in charge<br />
of the basic technical support of SCADA projects executed in the region and also<br />
46
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
collaborating with our Group to service the end customers should there be any<br />
major support needed.<br />
Our Group is also planning to form a joint venture with an Indonesian company to<br />
market and distribute our Group’s products and services in Indonesia.<br />
(c) Human Resource Development<br />
In order to maintain and increase our competitiveness in the industry, we are<br />
constantly investing in human capital and talent in our Group and also keeping<br />
abreast with new technological advancements via training as well as attending<br />
exhibitions, tradeshows and workshops. Our Group also envisages being one of<br />
the preferred employers by providing competitive employment packages. This in<br />
turn, will ensure the best human resource pool for our Group and improving the<br />
competency and competitiveness of our Group in the industry.<br />
(d) Further Development of SysLink and Other Upcoming Solutions<br />
Our Group is continuously exploring to further develop our SysLink software such<br />
as the current intention to fully upgrade and develop SysLink 3 to be a complete<br />
off-the-shelf software solution. Our Group envisages that there would be other<br />
developments that could be done for the off-the-shelf product as well as other<br />
products which our R&D division might come out with in the near future. In line<br />
with the other expansion plans of our Group, we will also develop our SCADA<br />
software and other related solutions to incorporate new application fields to cater<br />
for our Groups’ expansion into these industries.<br />
(e) Marketing Development<br />
Our marketing strategies will be focused on market penetration and building<br />
Willowglen and SysLink as an internationally-recognised brand. Domestically, we<br />
will expand by acquiring new synergistic businesses as well as having alliance<br />
and partnerships with major players of industries. We also plan to increase our<br />
distribution channels via agents and other solution providers by having our<br />
software available off-the-shelf. This will allow other solution providers to save<br />
cost by not necessary having us to customise the solutions for them. In addition,<br />
this would also open up the opportunity for us to build up our training business<br />
where we can train the other solution providers in using and developing our<br />
existing SCADA platform for their usage.<br />
In terms of geographical reach, we are continuously seeking regional partners<br />
and expanding our distribution network. We are looking to further expand our<br />
network geographically via having regional distributorships, joint-ventures,<br />
acquisitions and strategic alliances. Our Group has also started negotiations with<br />
a company in Thailand who are seeking to secure the distribution rights of the<br />
Willowglen Group’s Syslink software in Thailand.<br />
To ensure the future success of our Group, we are also focusing on developing<br />
our Willowglen and SysLink brand names to become an internationallyrecognised<br />
brand. We will participate in international trade shows and exhibitions<br />
to further promote our brand name. Coupled with our MSC status, we are given<br />
the incentive to take part in these events with the providence of subsidy by MDC.<br />
6.2.2 Prospects of our Group<br />
The Group does not foresee any material impact arising from the prevailing economic<br />
conditions on the Group’s existing business due to the following reasons:-<br />
47
Company No. 462648-V<br />
6. BUSINESS OVERVIEW (CONT’D)<br />
(i) the Singapore Government has stepped up their effort to increase security in the<br />
island state to counter the terrorism threat, which has led to an increase in the<br />
demand for IMS implementation;<br />
(ii) the Singapore Government has continued to place high importance on water<br />
management, which has also led to more SCADA projects being implemented in<br />
this industry. As SCADA systems are well-suited for the industry, demand for<br />
products such as the WIllowglen Group’s SysLink software is also expected to<br />
improve;<br />
(iii) Willowglen’s business in Singapore has not been affected by the past economic<br />
downturns and the Group does not foresee that this trend would change in the<br />
future; and<br />
(iv) there have been delays in the roll-out of government projects in <strong>Malaysia</strong> due to<br />
the slower economy, but management expects that these projects will resume<br />
and translate into future income for the Group.<br />
Premised on the foregoing and the prospects and outlook of the industry as set out in<br />
Section 7 of this Introductory Document, our Board is of the view that our Group is<br />
expected to enjoy positive growth and favourable prospects in the long-term.<br />
Notwithstanding the above, you should consider certain risk factors which are<br />
relevant to our business, which many are out of our control as set out in Section 4 of<br />
this Introductory Document.<br />
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48
Company No. 462648-V<br />
7. INDUSTRY OVERVIEW AND OUTLOOK<br />
7.1 OVERVIEW AND OUTLOOK OF THE GLOBAL ECONOMY<br />
In the first half of 2009, the global economy experienced the sharpest contraction since the<br />
Second World War, with countries accounting for more than 60% of world output mired in a<br />
synchronised recession. The full impact of the 2008 international financial crisis on the real<br />
economy was felt in the first quarter of 2009, where a large number of economies<br />
experienced significant contractions in real GDP. In advanced economies, the financial crisis<br />
and the ensuing credit crunch led to a sharp decline in private sector demand. Household<br />
consumption was curtailed, affected by a combination of factors including deteriorating<br />
employment prospects, falling house prices and difficulties in obtaining access to credit.<br />
Similarly, businesses cut their production sharply while inventories were drawn down to<br />
abnormally low levels amid weak demand and tight credit conditions. The international<br />
production and trade network unraveled sending shocks to emerging economies. The Asian<br />
economies, particularly those with a higher degree of trade openness, were affected by the<br />
collapse in world trade that resulted from the sudden plunge in demand from advanced<br />
economies, leading to double-digit declines in exports and production. The deterioration in the<br />
trade-related sectors subsequently impacted the rest of the economy as household and<br />
business confidence was adversely affected.<br />
Recovery in the global economy, which commenced in the second half of 2009, is expected to<br />
remain gradual and uneven in 2010 as economies emerge from the worst post-World War II<br />
recession. The strength and pace of the recovery will vary considerably across the<br />
economies, depending on the extent of the region-specific structural problems in the<br />
aftermath of the global financial crisis. The advanced economies are expected to record<br />
modest growth in 2010 given the prevailing high unemployment, the ongoing de-leveraging<br />
process and the weak financial systems that continue to restrain lending activity to the real<br />
sector. The Asian economies are, however, expected to continue to lead the global recovery<br />
as sources of growth become broad-based, supported by the further strengthening of both<br />
domestic demand and external demand, amid improved intraregional trade, especially with<br />
the People’s Republic of China.<br />
(Source: Bank Negara <strong>Malaysia</strong> Annual Report 2009)<br />
7.2 OVERVIEW AND OUTLOOK OF THE ASIA PACIFIC ECONOMY<br />
The pace of the recovery in advanced economies has been held back by high unemployment<br />
rates, weak household balance sheets, and anemic bank credit, and it remains heavily<br />
dependent on macroeconomic policy support. By contrast, activity in many emerging and<br />
developing markets has continued to rebound swiftly over the course of 2009 and in the first<br />
quarter of 2010, particularly in Asia. The pattern of economic recovery has varied within Asia,<br />
with the more domestically oriented economies (China, India, and Indonesia) and Australia<br />
escaping a recession, and the more export oriented economies experiencing a sharply Vshaped<br />
business cycle. By the end of 2009, output in most of Asia had returned to pre-crisis<br />
levels, even in those economies hit hardest by the crisis.<br />
Asia’s faster recovery relative to the rest of the world seems to mark a break from the past.<br />
Although Asia’s GDP trend growth has exceeded that of advanced economies over the last<br />
three decades, this is the first time that Asia’s contribution to a global recovery has<br />
outstripped that of other regions. Furthermore, while in past recessions Asia’s recovery<br />
generally was driven by exports, this time it has also been reinforced by resilient domestic<br />
demand, particularly household consumption. Finally, while in past recoveries capital was<br />
slow to return to Asia, this time net capital inflows to the region have surged, a reflection of<br />
extremely high levels of global liquidity but also a testament to Asia’s improved resilience and<br />
economic framework.<br />
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7. INDUSTRY OVERVIEW AND OUTLOOK (CONT’D)<br />
Over the near term, Asia is expected to continue leading the global recovery. The pace of the<br />
recovery will, nonetheless, remain uneven across Asia. China’s growth is expected to return<br />
to double digits in 2010, with private domestic demand boosted by measures to increase<br />
consumption and private investment. This will have positive spillovers for the rest of the<br />
region, as Chinese demand boosts imports, particularly of commodities and capital goods.<br />
Asia’s relatively strong cyclical position may pose near-term risks as the capital inflows could<br />
lead to overheating in some economies and increase their vulnerability to a strong upswing in<br />
the credit and asset price cycles, with the propensity for a subsequent abrupt reversal.<br />
Over the medium term, Asia’s main policy challenge will be to ensure that private domestic<br />
demand becomes a more prominent engine of growth. Once the adjustment in inventories<br />
has run its course, Asia’s exports to advanced economies should moderate somewhat, as<br />
domestic demand in these economies is expected to remain below pre-crisis levels,<br />
undermining global demand.<br />
(Source: Regional Economic Outlook, Asia and Pacific: Leading the Global Recovery; Rebalancing for<br />
the Medium Term, International Monetary Fund, April 2010)<br />
7.3 OVERVIEW AND OUTLOOK OF THE MALAYSIAN ECONOMY<br />
The <strong>Malaysia</strong>n economy contracted by 1.7% in 2009, a year when the global economy<br />
experienced its deepest downturn in modern history. The domestic economy experienced the<br />
full impact of the global recession in the first quarter, declining by 6.2%, marking the first yearon-year<br />
contraction in real GDP since the third quarter of 2001. The collapse in global<br />
demand and world trade led to double-digit declines in <strong>Malaysia</strong>’s exports and industrial<br />
production. Given the high degree of openness of the economy, the deterioration in external<br />
demand affected employment, income and overall business and consumer sentiments,<br />
causing private consumption and private investment activities to decline in the first quarter of<br />
the year. Growth during the quarter was also affected by large inventory drawdown,<br />
particularly in the manufacturing and commodity sectors.<br />
However, the accelerated implementation of fiscal stimulus measures, the aggressive easing<br />
of monetary policies and the comprehensive measures introduced to ensure continued<br />
access to financing, contributed to the stabilisation in the domestic economy in the second<br />
quarter and the subsequent recovery in the second half of the year. In addition to higher<br />
public spending, the policy measures also helped to revive private sector sentiment, which,<br />
together with improving labour market conditions, led to an expansion in private consumption<br />
in the second half of the year. Signs also emerged to indicate that private investment activities<br />
had begun to stabilize towards the end of the year. Moreover, external demand provided<br />
further impetus to growth as the global economy, particularly the regional economies,<br />
gradually recovered. As a result, the <strong>Malaysia</strong>n economy resumed its growth momentum in<br />
the fourth quarter, growing by 4.5%, with strengthened domestic and external demand<br />
contributing to growth.<br />
The <strong>Malaysia</strong>n economy is projected to grow by 4.5% to 5.5% in 2010, underpinned by<br />
strengthening domestic demand and an improving external environment. While the public<br />
sector will remain supportive, growth is expected to be driven by greater private sector activity<br />
and robust external demand from the regional countries. The underlying strong<br />
macroeconomic fundamentals, the healthy private sector financial position and the strong<br />
financial system will provide support to a private sector-led recovery. A supportive monetary<br />
environment, including continued access to competitive financing will remain in place to foster<br />
recovery in the private sector activities.<br />
(Source: Bank Negara <strong>Malaysia</strong> Annual Report 2009)<br />
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7.4 OVERVIEW AND OUTLOOK OF THE SINGAPORE ECONOMY<br />
The Singapore economy contracted quarter on quarter at a seasonally adjusted annual rate of<br />
2.8% in the fourth-quarter of 2009 after rebounding by double-digits in the previous two<br />
quarters. The fourth-quarter decline was mainly due to a steep plunge in pharmaceutical<br />
manufacturing. Meanwhile, most other sectors, with the exception of financial services,<br />
recorded firm growth in the fourth-quarter. Excluding pharmaceuticals, GDP is estimated to<br />
have expanded for the third consecutive quarter. Sectors which had stronger regional<br />
linkages, such as transport & storage and wholesale & retail trade grew at their fastest rates<br />
since the recession began. For the whole of 2009, the Singapore economy shrank by 2.0%,<br />
with the manufacturing and services sectors contracting some 4.1% and 2.2% respectively,<br />
while the construction industry grew rapidly by 16.0%.<br />
The Singapore economy is likely to see relatively firm growth in the immediate quarters,<br />
owing to the continued recovery momentum of global trade and manufacturing. Recent<br />
monthly data suggests that Singapore’s re-exports and industrial output have gained further<br />
traction, which augurs well for the trade related clusters. Moreover, in the first half of 2010,<br />
output in the domestic manufacturing sector will likely see a step-up, due to new capacity in<br />
pharmaceuticals and chemicals.<br />
However, beyond the first half of 2010, the domestic outlook is less certain. After a global<br />
recovery fuelled by monetary easing and unprecedented fiscal support, the world economy<br />
will have to be able to rely more on private demand to propel growth when such support is<br />
withdrawn. For the latter part of the year, economic prospects hinge on the ability of global<br />
private demand to advance sufficiently to fill the gap left when the effects of public stimuli<br />
recede.<br />
Against the more positive prognosis for Asian economies, industries in Singapore which cater<br />
to final demand in the region could perform relatively better. Accordingly, growth is expected<br />
to be firm for tourism-related services as well as regionally-oriented business services and<br />
financial activities. The recovery in investment in emerging Asia could also spur demand for<br />
raw materials such as chemicals, which Singapore is well-placed to tap.<br />
On the whole, the Singapore economy is forecast to expand by between 4.5% and 6.5% in<br />
2010.<br />
(Source: Monetary Authority of Singapore: Recent Economic Developments in Singapore, 3 March<br />
2010)<br />
7.5 OVERVIEW AND OUTLOOK OF THE SCADA INDUSTRY<br />
SCADA or Supervisory Control and Data Acquisition Systems are industrial and commercial<br />
feedback control and monitoring systems that permit users to monitor and control remote<br />
facilities from one or several control centres. A typical SCADA system comprises of a Master<br />
Terminal/Telemetry Unit (MTU), one or more field data-gathering units such as Remote<br />
Telemetry Units (RTUs), Programmable Logic Controllers (PLCs), field instrumentations and<br />
field control and communication equipments, as well as the software to monitor and remotely<br />
control these units. SCADA is a software package positioned based on the hardware, and<br />
interfaced through PLCs or other such commercial hardware modules.<br />
The benefits conferred by SCADA systems on users include the following:-<br />
(a) Increase in operational efficiency;<br />
(b) Enhancement of system reliability;<br />
(c) Enhancement of operational safety and security;<br />
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7. INDUSTRY OVERVIEW AND OUTLOOK (CONT’D)<br />
(d) Centralised control;<br />
(e) Reduced manpower requirements:<br />
(f) Provision of information vital for operations and planning; and<br />
(g) Reduction in operating and maintenance costs.<br />
The SCADA industry grows with energy production (oil and gas, electricity etc.) and<br />
population (waterworks, sewerage, communications, transport, etc.) and also with the rapidly<br />
increasing capabilities of computer and telecommunications technology.<br />
7.5.1 Global Market Outlook and Revenue Forecast for the SCADA Industry<br />
The market revenues for the SCADA systems globally were USD4.99 billion in 2008<br />
and are projected to grow at a rate of 6.6 percent from 2008 to 2015, reaching a<br />
market size of USD7.81 billion. The SCADA market is considered still at a<br />
development stage where there are huge potential ahead.<br />
The global financial crisis in late 2008 has dampened investments in equipment and<br />
utilities globally, and in turn created a slight dip in growth rate of SCADA market in<br />
2008. The market is expected to recover by 2010 in light of intensive economic<br />
stimulus packages from central governments all over the world. There are huge<br />
potential for retrofits and upgrades in mature markets such as United States and<br />
Western Europe. The increasing number of drilling operations in the North Sea,<br />
Middle East regions, China, and India has contributed and will continue to contribute<br />
significantly to the growth of the SCADA market. The increase demand for energy to<br />
power the growth of manufacturing bases throughout Eastern Europe, Asia, and Latin<br />
America is also creating demand for SCADA systems.<br />
Technology continues to evolve in SCADA markets and innovation is always critical<br />
to retain customers amidst the competitive environment. There is an increased usage<br />
of reliability centered maintenance (RCM) tools, preventive and predictive<br />
maintenance tools, and business analytics. Mobile asset management tools are<br />
growing at a significant rate, but with limited vertical penetration. Service Oriented<br />
architecture based solutions are expected to continue to dominate the market in the<br />
future. Tier-1 participants would bundle Enterprise Asset Management solutions as<br />
part of the whole enterprise-wide offerings, including Enterprise Resource Planning,<br />
Customer Relationship Management and Supply Chain Management systems.<br />
Reliability centered maintenance, predictive maintenance and business logic<br />
implementation are some of the applications that are increasingly gaining presence<br />
among end users.<br />
(Source: Frost & Sullivan - SCADA Industry Overview Assessment)<br />
The drivers of growth in the SCADA market are:-<br />
(i) Trend towards Process Automation<br />
The global trend towards process automation is opening up new markets for<br />
SCADA systems. Factories have not historically required the supervisory<br />
control offered by SCADA systems, but some industries are now finding the<br />
prospects of uniform quality control and resource allocation decisions across<br />
multiple production facilities to be very attractive. In Asia, the lack of<br />
automation in both the infrastructure and industrial base is perceived to be a<br />
limiting factor for continued economic growth. Furthermore, the growing cost<br />
of labour should increase expenditures on SCADA and other industrial<br />
automation.<br />
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7. INDUSTRY OVERVIEW AND OUTLOOK (CONT’D)<br />
(ii) Commitment to Infrastructure Development<br />
The developing countries are committing to infrastructure development as<br />
they strive to achieve economic independence and to entice international<br />
investment. As they invest in and upgrade their infrastructure, the need for<br />
SCADA systems will continue to grow.<br />
(iii) Energy Ceiling in Asia<br />
In Asia, rapid economic growth has put tremendous pressure on current<br />
infrastructures. The lack of additional energy production capacity is seen to<br />
be a limiting factor in continued economic growth. Thus, electric power<br />
production is at the top of all government priority lists throughout the region.<br />
Motivations for SCADA systems are various and may include any of the<br />
following: to decrease power costs, reduce manpower requirements, increase<br />
operational efficiency, improve the level of service, avoid environmental<br />
incidents or have a fully integrated generation, transmission, distribution and<br />
billing system.<br />
(iv) Personal Computer Based Systems<br />
The development of robust, reliable personal computer based systems is<br />
expected to significantly expand potential markets. Historically, SCADA<br />
systems have used minicomputers or workstations and cost millions to install.<br />
Cost-driven industries and developing nations cannot afford such<br />
investments. Today, personal computers are sufficiently powerful to handle<br />
most small applications, at a fraction of the price. The demand for such<br />
systems is also driven by the strong customer preference for Windows<br />
operating systems.<br />
(v) The Middle Class in Developing Countries<br />
The emerging middle classes in developing countries are demanding various<br />
amenities, including potable water, wastewater treatment, reliable electricity<br />
and central heating.<br />
(vi) Expansion of Natural Gas<br />
Natural gas companies are expanding into the worldwide electricity<br />
generation market. Clean, relatively cheap and abundant, natural gas is<br />
playing an increasingly larger role in the world energy market as gas<br />
companies are looking to enter the electricity generation market as a<br />
competitive fuel to petroleum and coal. This requires pipelines to reach endusers,<br />
and pipelines need SCADA monitoring for leaks, flow and routing.<br />
(vii) Environmental Regulations<br />
In the water and wastewater industries, increasingly stringent environmental<br />
regulations in developed nations and more effective governmental bodies in<br />
developing countries are projected to accelerate new SCADA system<br />
demand.<br />
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7. INDUSTRY OVERVIEW AND OUTLOOK (CONT’D)<br />
(viii) Urbanisation<br />
The expansion of urbanisation and transportation in developing countries,<br />
coupled with the clogging of commuter arteries in metropolitan areas of<br />
developed countries, is expected to drive the demand for traffic flow control<br />
systems. As the number of projects in this area continues to increase,<br />
demand for SCADA systems that control power line status, traction power<br />
and traffic flow is anticipated to increase over the future years.<br />
(Source: Frost & Sullivan - World SCADA Systems and Software Markets #7248-12)<br />
Revenue<br />
Revenue Growth Rate<br />
Year<br />
(USD ‘million) (%)<br />
2005 4,150.0 -<br />
2006 4,402.5 7.0<br />
2007 4,697.6 7.7<br />
2008 4,993.3 6.9<br />
2009 5,134.0 3.5<br />
2010 5,780.6 5.0<br />
2011 5,780.6 7.0<br />
2012 6,676.2 7.7<br />
2013 7,217.5 8.5<br />
2014 7,217.5 9.0<br />
2015<br />
Compound annual growth rate (2008 – 2014): 6.6%<br />
7,813.7 9.1<br />
Note: All figures are rounded and the base year used is 2008.<br />
(Source: Frost & Sullivan - SCADA Industry Overview Assessment)<br />
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7. INDUSTRY OVERVIEW AND OUTLOOK (CONT’D)<br />
7.5.2 Asia Pacific Market Outlook and Revenue Forecast<br />
The market revenues for SCADA systems in Asia Pacific (includes Asia, Australia<br />
and New Zealand) was USD1.13 billion in 2008 and projected to grow at 8.5 percent<br />
from 2008 to 2015, reaching a market size of USD2 billion in 2015. Asia Pacific<br />
accounted for 16 percent of the world SCADA market revenues in 2008. The growth<br />
of economies, especially in India, China, Vietnam and Indonesia has created the<br />
need for reliable power and robust transmission lines and monitoring systems.<br />
In the oil & gas sector there are a few large projects being considered, however<br />
political instability and risk involved in certain countries makes it a difficult market for<br />
automation companies. Upstream and midstream investments are expected to<br />
increase for SCADA markets especially in the power transmission and distribution<br />
sector. India is expected to invest in power in the order of 75 Giga-watt (GW) in the<br />
next five to seven years and China is surging much ahead in this aspect. Countries<br />
such as Vietnam and Indonesia are allocating funds toward energy investment, and<br />
the market is expected to boom in the coming years. However, revenues from the<br />
Japanese and South Korean markets remain stable. Australia is investing heavily in<br />
mining and other natural resources, but the growth of SCADA in these regions are<br />
limited. Most end-user companies in the Asia Pacific region are looking at increasing<br />
their capacity, and are hence anticipated to invest in SCADA systems in a significant<br />
manner.<br />
Revenue<br />
Revenue Growth Rate<br />
Year<br />
(USD ‘million) (%)<br />
2005 885.8 -<br />
2006 970.6 9.1<br />
2007 1048.8 8.1<br />
2008 1132.7 8.5<br />
2009 1188.1 5.8<br />
2010 1288.1 8.5<br />
2011 1401.2 10.3<br />
2012 1524.6 11.2<br />
2013 1663.7 11.6<br />
2014 1824.1 12.5<br />
2015<br />
Compound annual growth rate (2008 – 2014): 8.5%<br />
2003.8 12.6<br />
Note: All figures are rounded and the base year used is 2008.<br />
(Source: Frost & Sullivan - SCADA Industry Overview Assessment)<br />
7.5.3 Singapore Market Outlook and Revenue Forecast<br />
The SCADA market in Singapore generated revenues of USD29 million in 2008 and<br />
is estimated to generate USD39.1 million at a CAGR of 4.4 percent in 2015.<br />
Singapore is an established market with relatively low growth rate due to the absence<br />
of significant number of green field projects. Nevertheless, brown field projects<br />
(retrofitting and upgrading) will continue to boost the market. The growing trend of oil<br />
and gas, utility, water and wastewater treatment industries will drive sales of SCADA.<br />
This factor drives the manufacturers to concentrate more on R&D to develop<br />
technologically advanced SCADA products such as Web-based solutions. Need for<br />
real-time decision making, web-based communications and data transfer increases<br />
the usage of SCADA solution in Singapore. Blurring difference between SCADA<br />
function and other automation systems such as Process Automation Control<br />
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7. INDUSTRY OVERVIEW AND OUTLOOK (CONT’D)<br />
decreases the market size of SCADA. Customers concerns on cyber threats faced by<br />
Web-based SCADA solution also dampen sales.<br />
Year<br />
56<br />
Revenue<br />
(USD ‘million)<br />
Revenue<br />
Growth Rate<br />
(%)<br />
2005 25.5 -<br />
2006 26.8 5.1<br />
2007 27.9 4.2<br />
2008 29.0 3.8<br />
2009 29.9 3.0<br />
2010 31.2 4.5<br />
2011 32.7 4.8<br />
2012 34.2 4.6<br />
2013 35.8 4.6<br />
2014 37.3 4.4<br />
2015 39.1 4.8<br />
Compound annual growth rate (2008 – 2014): 4.4%<br />
Note: All figures are rounded and the base year used is 2008.<br />
(Source: Frost & Sullivan - SCADA Industry Overview Assessment)<br />
Power industry contributed 38 percent, the highest revenue among all end user<br />
industries in 2008. Oil and gas is another important end user sector which contributed<br />
18 percent in 2008. Chemical and petrochemical generated revenues account for 16<br />
percent of the total SCADA market in Singapore. Water and wastewater treatment<br />
industry in Singapore gains increasing significance in the Singapore SCADA market<br />
and accounts for 15 percent in 2008. The others are discrete industries and<br />
transportation sectors accounting for 13 percent of the total revenue.<br />
(Source: Frost & Sullivan - SCADA Industry Overview Assessment)<br />
7.5.4 <strong>Malaysia</strong> Market Outlook and Revenue Forecast<br />
The SCADA market in <strong>Malaysia</strong> generated revenues of USD45.8 million in 2008 and<br />
is estimated to generate USD79.1 million in 2015 at a CAGR of 8.1 percent. With the<br />
growing trend of the oil and gas, utility and water treatment industries in <strong>Malaysia</strong>,<br />
SCADA systems market is expected to grow at a very good rate. This factor drives<br />
the manufacturers to concentrate more on R&D to develop technologically advanced<br />
SCADA products such as Web-based solutions. Since newer, SCADA software can<br />
be incorporated with existing programmable logic controls, small scale industries in<br />
<strong>Malaysia</strong> are more eager to get their shop floor automated. Standardisation of<br />
product quality in process industries globally forces industries to get into customized<br />
automation products. Web-based communications and data transfer increases the<br />
usage of SCADA solutions. Increasing industrialization drives the demand.<br />
Nevertheless, limited growth rate of automobile, food and beverage industries<br />
restrains the growth of SCADA solutions. Introduction of Process Automation<br />
Controls reduces the market size of SCADA solutions by capturing the lower-end<br />
applications, which requires only basic monitoring and controlling functions. Limited<br />
exposure to newer SCADA solutions also deters market growth.<br />
Power is the largest end user segment for <strong>Malaysia</strong> SCADA market. It generated<br />
USD12.4 million of revenue in 2008, accounting for 27 percent of the total market<br />
size. The power industry is a heavy user of SCADA system but the <strong>Malaysia</strong> power<br />
industry is not expected to have high growth rate in taking in SCADA systems in the<br />
forecast period. This is because the <strong>Malaysia</strong>n power industry in perceived as a
Company No. 462648-V<br />
7. INDUSTRY OVERVIEW AND OUTLOOK (CONT’D)<br />
saturated market by automation vendors as it has sufficient installed capacity and<br />
additional back-up capacity to meet its power demand. Nevertheless, business<br />
opportunities are likely to come from revamping and green technology. The next<br />
largest end user segment is oil and gas industry which contributed USD9.2 million of<br />
revenue in 2008, accounting for 20 percent of the total SCADA market in <strong>Malaysia</strong>.<br />
Oil and gas is the dominating industry in <strong>Malaysia</strong>, it is set to grow sustainably and<br />
provide continuous opportunity for SCADA vendors. It is followed by food and<br />
beverage, chemical and petrochemical, metal and mining at 15.5 percent, 15.0<br />
percent and 7.5 percent of contribution respectively. Other industries such as<br />
automotive, transportation and minor end user industries contributed a total of<br />
USD2.3 million in total revenues.<br />
Revenue<br />
Revenue Growth Rate<br />
Year<br />
(USD ‘million) (%)<br />
2005 34.9 -<br />
2006 38.5 10.8<br />
2007 42.3 9.5<br />
2008 45.8 7.5<br />
2009 48.2 4.0<br />
2010 51.8 6.5<br />
2011 56.2 7.4<br />
2012 60.9 7.8<br />
2013 66.0 8.0<br />
2014 72.8 8.1<br />
2015<br />
Compound annual growth rate (2008 – 2014): 8.1%<br />
79.1 7.9<br />
Note: All figures are rounded and the base year used is 2008.<br />
(Source: Frost & Sullivan - SCADA Industry Overview Assessment)<br />
SCADA systems are now being used in a wide range of applications and business processes<br />
including business performance measurement, business system integration, migration<br />
planning and management solutions to enable required business process changes.<br />
Companies with global assets make use of the enhanced capabilities and functionalities of<br />
SCADA in managing its assets and to improve the core business processes. SCADA has<br />
been used as a technology to support its business processes and improve the flow of real<br />
time knowledge.<br />
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7.6 INDUSTRY PLAYERS AND COMPETITION<br />
Competition<br />
The SCADA industry differentiates vendors by product innovations, experience in successful<br />
implementations, quality of service, and pricing. The Group therefore faces competition from<br />
different sources in different kinds of projects.<br />
Four (4) types of SCADA competitors have been identified: traditional SCADA companies,<br />
large process control companies that occasionally consider SCADA projects, small systems<br />
suppliers that provide basic systems based on personal computers and/or programmable<br />
logic controllers, and systems integrators using off-the-shelf SCADA packages.<br />
Direct competition comes from companies that have a complete SCADA system product line.<br />
The most effective competition comes from competitors who are of approximately the same<br />
size as the Group and who, like the Group, have both the financial and human resource<br />
flexibility to make quick and specific decisions about investment and sales strategies.<br />
Indirect competition comes from suppliers in the process control industry who attempt to<br />
broaden their market by extending their product sales to SCADA applications. This has been<br />
sporadic and not seen as a significant threat to the Group.<br />
In large tenders, competition comes from multinational companies such as Siemens AG,<br />
Schneider Electric, Honeywell and ABB. An advantage that the Group has over these<br />
competitors is that the Group is focused on delivering SCADA solutions, whilst the large<br />
competitors are usually diversified groups with only a division providing SCADA solutions as a<br />
complement to their other businesses.<br />
In small tenders, the Group faces competition from small local engineering companies. These<br />
companies usually import SCADA related software and hardware, and then repackage and<br />
sell them as solutions. The Group has a price/cost advantage over these competitors as it<br />
designs and produces its own SCADA software and hardware.<br />
Key participants in the Singaporean and <strong>Malaysia</strong>n SCADA market are Siemens AG,<br />
Siemens SG, ABB, Honeywell, PSI (inCONTROL TECH), Schneider Electric (Citect) and<br />
General Electric. Siemens AG, ABB and Honeywell are strong at process industries such as<br />
power and oil and gas. Siemens SG has a comprehensive coverage over process industries<br />
and discrete industries as well as utility and transportation.<br />
(Source: Frost & Sullivan - SCADA Industry Overview Assessment)<br />
7.7 RELEVANT LAWS AND REGULATIONS<br />
Presently, save for general company and contract laws, the business activities of the Group in<br />
<strong>Malaysia</strong> and Singapore are not subject to any specific legislation or regulations.<br />
7.8 DEMAND/SUPPLY CONDITIONS<br />
Our Group is of the opinion that SCADA systems are now being used in a wide range of<br />
applications and business processes including business performance measurement, business<br />
system integration, migration planning and management solutions to enable required<br />
business process changes. Companies with global assets make use of the enhanced<br />
capabilities and functionalities of SCADA in managing its assets and to improve the core<br />
business processes.<br />
With the rising manpower costs, many developing countries are looking at SCADA systems<br />
as a means to circumvent these rising costs. All of the above will seemingly increase the<br />
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7. INDUSTRY OVERVIEW AND OUTLOOK (CONT’D)<br />
demand for SCADA systems worldwide, which will be favourable to our Group as an<br />
integrated SCADA solutions provider.<br />
7.9 SUBSTITUTE PRODUCTS / SERVICES<br />
Besides other available SCADA Products in the market, Distribution Control Systems (“DCS”)<br />
is the popular alternative available for systems control and monitoring of processes and<br />
equipments.<br />
However, there are significant differences between SCADA and DCS which dictates the<br />
choice of the system used to control and monitor equipments. Hence, DCS cannot fully<br />
substitute SCADA systems or vice versa. The factors that determine the usage of SCADA or<br />
DCS systems are:-<br />
a) DCS is process oriented, events and alarm lists are secondary in importance to the<br />
process displays. The generation and display of data, especially analogue trends and<br />
standard process blocks and thus more user-friendly.<br />
b) SCADA is data-gathering oriented and event driven. A change of state will cause the<br />
system to generate all alarms, events, database updates and any special processing<br />
required relating to that change directly from the recognition of that change.<br />
c) Location and distance of the control room to the field equipments. DCS are situated<br />
near to the field equipments whereas SCADA systems are usually located further<br />
away.<br />
There are advantages of using SCADA over other control systems, such as:-<br />
a) More cost effective;<br />
b) SCADA systems are indirectly connected via a database to the field equipment and<br />
can continue operating even when telecommunications are temporarily lost;<br />
c) More complex polling capabilities are typically provided by SCADA systems to help<br />
address telecommunication restrictions; and<br />
d) Able to deal with controlling assets over a very large geographical area.<br />
There are instances where SCADA systems are used in conjunction of DCS for the optimum<br />
level of control, supervisory and reporting in highly specialized industries such as Oil and Gas<br />
and Power Generation.<br />
7.10 INDUSTRY’S RELIANCE ON AND VULNERABILITY TO IMPORTS<br />
Although our raw materials (which are mainly electronic / electrical components) are available<br />
worldwide, our Board believes that we may be subjected to a certain degree of vulnerability to<br />
global supply fluctuations and other regulatory controls imposed on imports which will, in turn,<br />
affect the pricing of our hardware products.<br />
To mitigate this risk, our Group currently have a pool of overseas suppliers from different<br />
countries and markets, and thus does not foresee that there would be difficulty in obtaining<br />
any imported parts or raw materials. Notwithstanding the above, our Group can still source for<br />
the raw materials locally, albeit at a higher cost.<br />
59
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT AND/OR TECHNICAL PERSONNEL<br />
8.1 DIRECTORS<br />
8.1.1 Directors’ Shareholdings<br />
Based on our Register of Directors’ Shareholdings as at the LPD, the direct and indirect interests of our Directors in our issued and paid-up<br />
share capital are as follows:-<br />
As at the LPD<br />
Direct Indirect<br />
Name Nationality No. of Shares ^<br />
Directors<br />
% No. of Shares %<br />
Alfian Bin Tan Sri <strong>Malaysia</strong>n - - - -<br />
Mohamed Basir<br />
KCM <strong>Malaysia</strong>n 1,617,600 0.65 126,104,737 1<br />
WAC <strong>Malaysia</strong>n 1,500,000 0.61 127,141,037 2<br />
Notes:-<br />
1. Deemed interested through her interest in LMSB and DCSB<br />
2. Deemed interested through his interest in DCSB, EPSB and JQHSB, his spouse and son<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
60<br />
50.94<br />
51.36<br />
Wang Shi Tsang <strong>Malaysia</strong>n - - - -<br />
Mohd Isa Bin Ismail <strong>Malaysia</strong>n - - - -
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
8.1.2 Profiles of Directors<br />
Encik Alfian Bin Tan Sri Mohamed Basir, aged 36, is the Chairman and<br />
Independent Non-executive Director of the Company. He was appointed to the Board<br />
on 9 October 2003.<br />
Encik Alfian is a Chartered Accountant and a Member of the <strong>Malaysia</strong>n Institute of<br />
Accountants. He graduated from the University of Malaya with a Bachelor of<br />
Accounting (Hons) Degree.<br />
Encik Alfian’s career began at Ernst & Young, Kuala Lumpur, a global accounting<br />
firm. Specialising in the financial sector, he gained a wealth of experience managing<br />
large financial audits and special due diligence assignments, in conjunction with the<br />
consolidation of the local banking sector, at various local financial institutions such as<br />
the former Bank Bumiputera <strong>Malaysia</strong> Berhad and the Utama Banking Group. His<br />
experience also extends internationally, including assignments at the Central Bank of<br />
Mongolia and other commercial banks in Mongolia.<br />
Due to his keen interest in the Information and Communication Technology (“ICT”)<br />
sector, he left Ernst & Young in 2001 to set up an ICT and management consulting<br />
firm, Trade Roof Sdn Bhd. Over the next six (6) years, he had ventured further into<br />
the ICT and telecommunications industry, being involved in a number of technologybased<br />
companies. He is currently the Chief Executive Officer of Blue Horus Solutions<br />
Sdn Bhd, a regional mobile telecommunications-based solutions provider with<br />
operations in <strong>Malaysia</strong>, Cambodia and Indonesia.<br />
He is also on the Board of various private limited companies. Amongst them is Dream<br />
Security Global Sdn Bhd, a <strong>Malaysia</strong>n-South Korean venture involved in the area of<br />
Information and Telecommunications Security.<br />
Madam Khor Chai Moi, aged 57, is the Managing Director of the Company. She<br />
joined the Board on 20 March 1998 as First Director of the Company and resigned on<br />
30 July 1998. On 19 June 2000, she was reappointed to the Board and subsequently<br />
appointed as Managing Director on 3 November 2004.<br />
Mdm. Khor holds a Bachelor of Business Degree in Accounting from the University of<br />
South Queensland, Australia, as well as a Master of Business Administration from the<br />
University of Hull, United Kingdom.<br />
Mdm. Khor has been the Managing Director of DCSB since 1992. She is also a<br />
Director of several private limited companies. Mdm. Khor is currently an Executive<br />
Director of PJ Development Holdings Berhad, a company listed on the Main Market of<br />
<strong>Bursa</strong> Securities.<br />
Mr. Wong Ah Chiew, aged 62, is a Non-executive Director of the Company. He<br />
joined the Board on 20 March 1998 as First Director of the Company and resigned on<br />
30 July 1998. On 19 June 2000, he was reappointed to the Board.<br />
Mr. Wong holds a Bachelor of Science Degree in Electrical and Electronic<br />
Engineering from the University of Strathclyde, Scotland. He started his career in<br />
1973 as Assistant District Engineer with Perak River Hydro Electric Power Co. Ltd,<br />
where he worked until 1982.<br />
In 1982, Mr. Wong left the public service to join DCSB as a Director where he<br />
managed the marketing and administrative aspects of the housing and commercial<br />
property projects undertaken by the group.<br />
61
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
Some of these projects included Taman Dindings, Ayer Tawar; Taman Desa Aman,<br />
Teluk Intan; Taman Sri Setapak, Kuala Lumpur; Taman Damai Jaya, Johor and<br />
Taman Sri Endah, Kuala Lumpur. Mr. Wong has more than 29 years of experience in<br />
property development.<br />
He was the Managing Director of MCB Holdings Berhad (now known as Crimson<br />
Land Berhad), a company listed on <strong>Bursa</strong> Securities, from 1 August 1992 to 28<br />
November 1997. Mr. Wong is also currently the Managing Director of PJ<br />
Development Holdings Berhad, a company listed on the Main Market of <strong>Bursa</strong><br />
Securities.<br />
Mr. Wang Shi Tsang, aged 56, is an Independent Non-executive Director of the<br />
Company. He was appointed to the Board on 27 June 2002.<br />
Mr. Wang holds a Master of Science Degree in Taxation from USA. He is a Fellow of<br />
the <strong>Malaysia</strong>n Institute of Taxation, an Associate Member of The <strong>Malaysia</strong>n Institute<br />
of Chartered Secretaries & Administrators and a Certified Financial Planner.<br />
Currently, he acts as Senior Manager of Corporate Affairs & Taxation in a public<br />
listed company in <strong>Malaysia</strong> and deals with both corporate and tax matters. Prior to his<br />
present employment, he had served with the Inland Revenue Department (now<br />
known as the Inland Revenue Board) for 14 years and last held the position of<br />
Assistant Director.<br />
Encik Mohd Isa Bin Ismail, aged 47, is an Independent Non-executive Director of<br />
the Company. He was appointed to the Board on 29 December 2006.<br />
Encik Mohd Isa holds a Diploma in Accountancy from the University Technology<br />
MARA (1984).<br />
He was a Financial Analyst and Cost Analyst of Motorola Semiconductor Sdn Bhd for<br />
8 years until 1993 and a Dealer’s Representative in K & N Kenanga Bhd (now known<br />
as Kenanga Investment Bank Berhad) for a year. In 1995, he was appointed as a<br />
Director of Greatwall Plastic Industries Bhd and he resigned in 1997.<br />
Currently, he is an independent non-executive Director of Len Cheong Holdings<br />
Berhad, a company listed on the Main Market of <strong>Bursa</strong> Securities. He is also a<br />
Director of WMG Advisory Services Sdn Bhd and Shoraka Capital Sdn Bhd, which<br />
are involved in the provision of consultancy services.<br />
8.1.3 Other principal Directorships for the last five (5) years and other principal<br />
business activities performed outside the Willowglen Group<br />
Save as disclosed below, there are no other principal directorships and/or business<br />
activities performed by our Directors outside our Group for the last five (5) years<br />
preceding the date of this Introductory Document:-<br />
Name Designation Company<br />
Alfian Bin Tan Sri Mohamed<br />
Basir<br />
Director and Chief<br />
Executive Officer<br />
62<br />
Blue Horus Solutions Sdn<br />
Bhd<br />
Director Dream Security Global<br />
Sdn Bhd<br />
Director Multimedia Mojo Sdn Bhd<br />
Director Aqilient Capital Sdn Bhd
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
Name Designation Company<br />
Director Alanya International Sdn<br />
Bhd<br />
KCM<br />
WAC<br />
Director Gema Meridian Sdn Bhd<br />
Director Open Path Consult Sdn<br />
Bhd<br />
Director MyCell Technologies Sdn<br />
Bhd<br />
Director MySign Sdn Bhd<br />
Director Pasatel System Sdn Bhd<br />
Director Nasioncom Holdings Bhd<br />
(2004 - 2006)<br />
Executive Director PJD<br />
Director Subsidiaries of PJD:<br />
63<br />
PJDCP Malta Sdn Bhd<br />
PJD Malta Sdn Bhd<br />
PJD Construction Sdn<br />
Bhd<br />
Acotec-Concrete<br />
Products Sdn Bhd<br />
OCC Cables Berhad<br />
Managing Director DCSB and its<br />
subsidiaries:<br />
D&M Services Sdn Bhd<br />
Dindings Consolidated<br />
Properties Sdn Bhd<br />
Dindings Construction<br />
Sdn Bhd<br />
Dindings Life Agency<br />
Sdn Bhd<br />
Director Regal Meridian Sdn Bhd<br />
Director Nova Terrace Sdn Bhd<br />
Director 3 Fairies Sdn Bhd<br />
Director J. B. Properties Sdn Bhd<br />
Director Ladang Setia Sdn Bhd<br />
Director Sincere Source Sdn Bhd<br />
Managing Director PJD<br />
Director Subsidiaries of PJD<br />
Director DCSB and its subsidiary,<br />
Dindings Consolidated<br />
Properties Sdn Bhd
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
Name Designation Company<br />
Director Nova Terrace Sdn Bhd<br />
Mohd Isa Bin Ismail<br />
8.1.4 Directors’ Remuneration and Benefits<br />
Director Elegant Preference Sdn<br />
Bhd<br />
Director Equity & Property<br />
Investment Corporation<br />
Limited<br />
Director YSY Development Sdn<br />
Bhd (1992 – 2008)<br />
Director OLP Management<br />
Services Sdn Bhd (2003 –<br />
2008)<br />
Non-Executive Director Len Cheong Holdings<br />
Berhad<br />
Director WMG Advisory Services<br />
Sdn Bhd<br />
Director Shoraka Capital Sdn Bhd<br />
The aggregate remuneration and benefits paid and proposed to be paid for services<br />
rendered to our Group for the FYE 31 December 2009 and FYE 31 December 2010<br />
are as follows:-<br />
Number of Directors<br />
Range (RM) FYE 31 December 2009 FYE 31 December 2010<br />
50,000 and below 4 4<br />
50,001 – 100,000 - -<br />
100,001 – 150,000 - -<br />
150,001 – 200,000 - -<br />
200,001 – 250,000 - -<br />
250,001 – 300,000 - -<br />
300,001 – 350,000 1 1<br />
8.1.5 Service Agreement<br />
As at the LPD, none of our Directors has any existing or proposed service<br />
agreements with our Group.<br />
64
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
8.2 BOARD PRACTICES<br />
8.2.1 Directorship<br />
Name<br />
Alfian Bin Tan Sri<br />
Mohamed Basir<br />
Date of<br />
appointment Designation<br />
09.10.2003 Chairman and<br />
Independent Non-<br />
Executive Director<br />
65<br />
Expiration of<br />
the current<br />
term of office<br />
No. of<br />
years in<br />
office<br />
15 th AGM 6.7<br />
KCM 19.06.2000 Managing Director 13 th AGM 10.0<br />
WAC 19.06.2000 Non-Executive<br />
Director<br />
Wang Shi Tsang 27.06.2002 Independent Non-<br />
Executive Director<br />
Mohd Isa Bin Ismail 29.12.2006 Independent Non-<br />
Executive Director<br />
8.2.2 Audit Committee<br />
Our Audit Committee comprises the following members:-<br />
14 th AGM 10.0<br />
13 th AGM 8.0<br />
14 th AGM 3.5<br />
Name Designation Directorship<br />
Wang Shi Tsang Chairman Independent Non-Executive Director<br />
Alfian Bin Tan Sri Mohamed Basir Member Chairman and Independent Non-<br />
Executive Director<br />
WAC Member Non-Executive Director<br />
Mohd Isa Bin Ismail Member Independent Non-Executive Director<br />
The main functions of the Audit Committee include inter-alia, the review of audit plans<br />
and audit reports with our external auditors, review of the auditors’ evaluation of<br />
internal accounting controls and management information systems, review of the<br />
scope of internal audit procedures, review of the financial statements, and nomination<br />
of the external auditors.<br />
8.2.3 Nomination & Remuneration Committee<br />
Our Nomination & Remuneration Committee comprises the following members:-<br />
Name Designation Directorship<br />
Alfian Bin Tan Sri Mohamed Basir Chairman Chairman and Independent Non-<br />
Executive Director<br />
Wang Shi Tsang Member Independent Non-Executive Director<br />
WAC Member Non-Executive Director<br />
Mohd Isa Bin Ismail Member Independent Non-Executive Director
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
The main functions of the Nomination & Remuneration Committee include inter-alia,<br />
the recommendation to the Board on the assessment and appointment of new<br />
directors, meet to discuss and review the assessment of the other committees and<br />
their members in a periodic review of the members’ performance and their<br />
contribution to their respective committees and make recommendation to the Board,<br />
carry out annual reviews and recommend to the Board the remuneration,<br />
compensation and benefits package of the Executive Directors.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
66
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
8.3 SUBSTANTIAL SHAREHOLDERS<br />
8.3.1 Shareholdings of Substantial Shareholders<br />
The substantial shareholders and their shareholdings in the Company for the past three (3) years up to the LPD are as follows:-<br />
31 December 2007 31 December 2008 31 December 2009 As at the LPD<br />
Direct Indirect Direct Indirect Direct Indirect Direct Indirect<br />
Name<br />
No. of<br />
Shares<br />
%<br />
No. of<br />
Shares<br />
%<br />
No. of<br />
Shares %<br />
No. of<br />
Shares %<br />
No. of<br />
Shares %<br />
No. of<br />
Shares %<br />
No. of<br />
Shares %<br />
No. of<br />
Shares %<br />
NASB 125,900,237 50.77 - - 125,900,237 50.82 - - 125,900,237 50.85 - - 125,900,237 50.85 - -<br />
DCSB - - 125,900,237 1<br />
50.77 - - 125,900,237 1<br />
67<br />
50.82 - - 125,900,237 1<br />
LMSB - - - - - - - - 204,500 0.08 125,900,237 2<br />
50.85 - - 125,900,237 1<br />
50.85 204,500 0.08 125,900,237 2<br />
OSKVE 22,465,000 9.06 - - 22,465,000 9.07 - - 22,465,000 9.07 - - 22,465,000 9.07 - -<br />
OSKCP 20,054,837 8.09 - - 20,054,837 8.10 - - 20,054,837 8.10 - - 20,054,837 8.10 - -<br />
OSKVI - - 42,519,837 3<br />
OSKH - - 42,519,837 4<br />
OLH - - 42,519,837 5<br />
KCM 1,468,600 0.59 125,900,237 6<br />
WAC 1,500,000 0.61 126,309,237 8<br />
Notes:-<br />
17.15 - - 42,519,837 3<br />
17.15 - - 42,519,837 4<br />
17.15 - - 42,519,837 5<br />
50.77 1,468,600 0.59 125,900,237 6<br />
50.93 1,500,000 0.61 126,389,237 9<br />
1. Deemed interested through NASB<br />
2. Deemed interested through DCSB<br />
3. Deemed interested through OSKVE and OSKCP<br />
4. Deemed interest through OSKVI<br />
5. Deemed interest through OSKH<br />
6. Deemed interested through her interest in DCSB<br />
7. Deemed interested through her interest in LMSB and DCSB<br />
8. Deemed interest through his interest in DCSB and JQHSB<br />
9. Deemed interest through his interest in DCSB, EPSB, JQHSB and his family member(s)<br />
17.16 - - 42,519,837 3<br />
17.17 - - 42,519,837 3<br />
50.85<br />
50.85<br />
17.17<br />
17.16 - - - - - - - -<br />
17.16 - - 42,519,837 4<br />
50.82 1,617,600 0.65 126,104,737 7<br />
51.02 1,500,000 0.61 127,141,037 9<br />
17.17 - - 42,519,837 4<br />
50.94 1,617,600 0.65 126,104,737 7<br />
51.36 1,500,000 0.61 127,141,037 9<br />
17.17<br />
50.94<br />
51.36
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
8.3.2 Profile of Promoters and Substantial Shareholders<br />
Save for KCM and WAC, the profiles of which have already been disclosed in<br />
Section 8.1.2, the profiles of the other substantial shareholders of our Group are as<br />
follows:-<br />
NASB<br />
NASB was incorporated in <strong>Malaysia</strong> on 30 December 1996 as Rittal (M) Sdn Bhd<br />
under the Act as a private limited company. On 16 July 1999, its company name was<br />
changed to its present name. NASB is principally involved in investment holding.<br />
As at the LPD, the substantial shareholders and their respective shareholdings in<br />
NASB are as follows:<br />
Substantial Shareholders<br />
68<br />
Direct Indirect<br />
No. of NASB<br />
shares<br />
% No. of NASB<br />
shares<br />
DCSB 20 100 - -<br />
Ong Yee Ching - - 20 1<br />
100<br />
Simon Wong Chu Keong - - 20 2<br />
100<br />
Notes:<br />
1. Deemed interest by virtue of her parent’s shareholding in DCSB<br />
2. Deemed interest by virtue of his parents’ shareholding in DCSB<br />
As at the LPD, the Directors and their respective shareholdings in NASB are as<br />
follows:<br />
Directors<br />
Direct Indirect<br />
No. of NASB<br />
shares<br />
% No. of NASB<br />
shares<br />
Ong Yee Ching - - 100<br />
Simon Wong Chu Keong - - 20 2<br />
100<br />
Notes:<br />
1. Deemed interest by virtue of her parent’s shareholding in DCSB<br />
2. Deemed interest by virtue of his parents’ shareholding in DCSB<br />
DCSB<br />
DCSB was incorporated in <strong>Malaysia</strong> on 2 December 1968 as Dindings Developments<br />
& Finance Sendirian Berhad under the Act as a private limited company. On 23<br />
November 1979, its company name was changed to Dindings Realty Development<br />
Sdn Bhd and subsequently assumed its present name on 25 May 1984. DCSB is<br />
principally involved in investment and property development.<br />
20 1<br />
%<br />
%
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
As at the LPD, the substantial shareholders and their respective shareholdings in<br />
DCSB are as follows:<br />
Substantial Shareholders<br />
69<br />
Direct Indirect<br />
No. of DCSB<br />
shares<br />
% No. of DCSB<br />
shares<br />
LMSB 3,750,000 32.89 - -<br />
KCM 3,738,680 32.79 4,275,000 1<br />
37.50<br />
WAC 1,990,532 17.46 - -<br />
Tan Hui Chuan 1,236,968 10.85 - -<br />
Note:<br />
1. Deemed interested through her family member and LMSB<br />
As at the LPD, the Directors and their respective shareholdings in DCSB are as<br />
follows:<br />
Directors<br />
Direct Indirect<br />
No. of DCSB<br />
shares<br />
% No. of DCSB<br />
shares<br />
KCM 3,738,680 32.79 4,275,000 1<br />
37.50<br />
WAC 1,990,532 17.46 - -<br />
Note:-<br />
1. Deemed interested through her family member and LMSB<br />
LMSB<br />
LMSB was incorporated in <strong>Malaysia</strong> on 24 February 1981 under the Act as a private<br />
limited company. LMSB is principally involved in investment holding.<br />
As at the LPD, the substantial shareholders and their respective shareholdings in<br />
LMSB are as follows:<br />
Substantial Shareholders<br />
Direct Indirect<br />
No. of LMSB<br />
shares<br />
% No. of LMSB<br />
shares<br />
KCM 201,000 25.10 600,000 1<br />
Ong Yin Suen 120,000 14.98 681,000 1<br />
Ong Yee Ching 120,000 14.98 681,000 1<br />
Ong Ju Yan 120,000 14.98 681,000 1<br />
Ong Yee Min 120,000 14.98 681,000 1<br />
Ong Ju Xing 120,000 14.98 681,000 1<br />
Note:-<br />
1. Deemed interested through her / his family members<br />
%<br />
%<br />
%<br />
74.90<br />
85.02<br />
85.02<br />
85.02<br />
85.02<br />
85.02
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
As at the LPD, the Directors and their respective shareholdings in LMSB are as<br />
follows:<br />
Directors<br />
70<br />
Direct Indirect<br />
No. of LMSB<br />
shares<br />
% No. of LMSB<br />
shares<br />
Ong Yin Suen 120,000 14.98 681,000 1<br />
Ong Yee Ching 120,000 14.98 681,000 1<br />
Ong Ju Xing 120,000 14.98 681,000 1<br />
Note:-<br />
1. Deemed interested through her / his family members<br />
OSKVE<br />
%<br />
85.02<br />
85.02<br />
85.02<br />
OSKVE was incorporated in <strong>Malaysia</strong> on 18 February 2000 under the Act as a private<br />
limited company under the name of O.S.K. Venture Equities Sdn Bhd. Thereafter, on<br />
24 November 2000, it changed its name to OSKVE.<br />
OSKVE is principally engaged in the venture capital business.<br />
As at the LPD, the substantial shareholders and their respective shareholdings in<br />
OSKVE are as follows:<br />
Substantial Shareholders<br />
No. of OSKVE<br />
shares<br />
Direct Indirect<br />
% No. of OSKVE<br />
shares<br />
OSKVI 10,000,000 100.00 - -<br />
OLH - - 10,000,000 1 100.00<br />
Note:-<br />
1. Deemed interested by virtue of his substantial shareholdings in OSKVI<br />
As at the LPD, the Directors and their respective shareholdings in OSKVE are as<br />
follows:<br />
O<br />
Directors<br />
No. of OSKVE<br />
shares<br />
Direct Indirect<br />
% No. of OSKVE<br />
shares<br />
Ong Ju Yan - - - -<br />
Yee Chee Wai - - - -<br />
Lim Ah Lay - - - -<br />
Woon Chong Boon - - - -<br />
%<br />
%
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
Note:<br />
OSKCP<br />
OSKCP was incorporated in <strong>Malaysia</strong> on 2 March 2005 under the Act as a private<br />
limited company. OSKCP is an investment holding company and is principally<br />
involved in the private equity business.<br />
As at the LPD, the substantial shareholders and their respective shareholdings in<br />
OSKCP are as follows:<br />
Substantial Shareholders<br />
71<br />
No. of OSKCP<br />
shares<br />
Direct Indirect<br />
% No. of OSKCP<br />
shares<br />
OSKVI 2 100.00 - -<br />
OLH - - 2 1 100.00<br />
1. Deemed interested by virtue of his substantial shareholdings in OSKVI<br />
As at the LPD, the Directors and their respective shareholdings in OSKCP are as<br />
follows:<br />
Directors<br />
No. of OSKCP<br />
shares<br />
Direct Indirect<br />
% No. of OSKCP<br />
shares<br />
Ong Ju Yan - - - -<br />
Yee Chee Wai - - - -<br />
Lim Ah Lay - - - -<br />
Woon Chong Boon - - - -<br />
OSKVI<br />
OSKVI was incorporated in <strong>Malaysia</strong> on 5 December 2003 under the Act as a public<br />
limited company. OSKVI is an investment holding company listed on the ACE Market<br />
of <strong>Bursa</strong> Securities. Its wholly-owned subsidiaries are principally involved in the<br />
venture capital business, to undertake management of investments in securities of<br />
venture companies and private equity.<br />
As at the LPD, the substantial shareholder and his respective shareholding in OSKVI<br />
are as follows:<br />
Substantial Shareholders<br />
No. of OSKVI<br />
shares<br />
Direct Indirect<br />
% No. of OSKVI<br />
shares<br />
OLH 29,343,214 19.99 - -<br />
%<br />
%<br />
%
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT<br />
AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
As at the LPD, the Directors and their respective shareholdings in OSKVI are as<br />
follows:<br />
Directors<br />
Dato’ Nik Mohamed Din Bin<br />
Datuk Nik Yusoff<br />
Notes:<br />
1. Deemed interested by virtue of his substantial shareholdings in Harmony Chime Sdn Bhd and<br />
disclosure made pursuant to Section 134 (12) (c) of the Act.<br />
2. Disclosure made pursuant to Section 134 (12) (c) of the Act.<br />
3. Deemed interest by virtue of his substantial shareholdings in LMSB<br />
* Negligible<br />
Ong Leong Huat @ Wong Joo Hwa, aged 65, is the Group Managing Director/CEO<br />
of OSK. He holds a Capital Markets and Services Representative’s license issued by<br />
the SC under the CMSA for dealing in securities. Mr. Ong was a Director of MESDAQ<br />
from July 1999 to March 2002, a member of the Capital Advisory Council appointed<br />
by the SC in 2004 to advise on issues relating to the implementation of the Capital<br />
Market Master Plan. He was a member of the Securities Market Consultative Panel of<br />
<strong>Bursa</strong> <strong>Malaysia</strong>.<br />
For over 17 years since 1969, he was attached to a leading financial institution for 17<br />
years from 1969 where he last held the position of Senior General Manager. He was<br />
the Managing Director/CEO of OSK Securities Berhad (now known as OSK<br />
Investment Bank Berhad) from July 1985 to January 2007 and thereafter appointed as<br />
the Group Managing Director/CEO of OSK, a position he still holds.<br />
Mr. Ong is also a Non-independent Non-executive Director of OSKH and an<br />
Independent Non-Executive Director of <strong>Bursa</strong> <strong>Malaysia</strong> Berhad.<br />
72<br />
No. of OSKVI<br />
shares<br />
Direct Indirect<br />
% No. of OSKVI<br />
shares<br />
2,425,574 1.65 - -<br />
Wong Chong Kim 470,504 0.32 449,690 1 0.31<br />
Yee Chee Wai - - 578 2 *<br />
Ong Ju Yan 332,902 0.23 2,683,210 3 1.83<br />
Tan Sri Datuk Dr. Omar Bin<br />
Abdul Rahman<br />
- - - -<br />
Foo San Kan 498,810 0.34 - -<br />
Dato’ Abdul Azim bin Mohd.<br />
Zabidi<br />
- - - -<br />
%
Company No. 462648-V<br />
8. INFORMATION ON DIRECTORS, SUBSTANTIAL SHAREHOLDERS, KEY MANAGEMENT AND/OR TECHNICAL PERSONNEL (CONT’D)<br />
8.4 KEY MANAGEMENT AND TECHNICAL PERSONNEL<br />
8.4.1 Key Management and Technical Personnel’s Shareholdings<br />
As at the LPD, the direct and indirect interests of our key management and technical personnel in our issued and paid-up share capital are as<br />
follows:-<br />
As at the LPD<br />
Direct Indirect<br />
Name Designation Nationality No. of Shares ^<br />
% No. of Shares %<br />
Diong King Ewu Managing Director - <strong>Malaysia</strong>n /<br />
4,566,479 1.84 - -<br />
WSPL<br />
Singapore PR<br />
Long Tin Jui Chief Operating Officer <strong>Malaysia</strong>n 100,000 0.04 - -<br />
Nik Azlan Bin Nik Yusoff Chief Technical Officer <strong>Malaysia</strong>n - - - -<br />
Chew Nyuk Seong Senior Manager –<br />
Accounts & Finance<br />
Notes:-<br />
1. Held through nominee company<br />
2. Deemed interest through his spouse’s nominee<br />
<strong>Malaysia</strong>n - - - -<br />
Phan Vee Yee Project Manager <strong>Malaysia</strong>n - - - -<br />
Tan Jun<br />
General Manager Chinese Citizen /<br />
Singapore PR<br />
Cheong Fong Hoon Senior Business<br />
Development Manager<br />
Koh Beng Boon Manager – Hardware<br />
Support & Purchasing<br />
Lee Beng Hong Business Development<br />
Manager<br />
73<br />
- - 200,091 1<br />
Singaporean - - 233,500 1<br />
Singaporean - - 2,725,511 2<br />
0.08<br />
0.09<br />
1.10<br />
Singaporean - - - -
Company No. 462648-V<br />
8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND<br />
KEY MANAGEMENT AND TECHNICAL PERSONNEL (CONT’D)<br />
8.4.2 Profiles<br />
The profiles of the key management and technical personnel of our Group are as<br />
follows:-<br />
Diong King Ewu, a <strong>Malaysia</strong>n aged 60, is the Managing Director of WSPL. He holds<br />
a Bachelor’s degree in Electrical Engineering from the University of Singapore. Mr.<br />
Diong began his career in 1975 in the Public Utilities Board of Singapore. He started<br />
as an engineer in the Electricity Department, where he was responsible for the<br />
installation, operation and maintenance of power distribution networks. In 1978, he<br />
was transferred to the Water Department, where he was responsible for the<br />
installation, operation and maintenance of large pumping plants and standby<br />
generator sets. In 1981, Mr. Diong moved to Colosseum Corporation Pte Ltd of<br />
Singapore as manager of the Industrial Control Division, where he was responsible<br />
for marketing, sales and technical support of Willowglen SCADA systems and<br />
industrial process control systems.<br />
In 1985, Mr. Diong joined Willowglen Systems Ltd as its Regional Marketing<br />
Manager, responsible for the marketing and technical sales support of Willowglen<br />
SCADA systems in ASEAN countries. In 1986, Mr. Diong was appointed a director of<br />
WSPL and in 1995, he was appointed Managing Director of WSPL. In 2000, he was<br />
appointed Managing Director of Willowglen. In 2004, Mr. Diong relinquished the post<br />
of Managing Director of Willowglen to concentrate on growing the business of WSPL.<br />
Long Tin Jui, a <strong>Malaysia</strong>n aged 44, is the Chief Operating Officer of WMSB. He<br />
graduated from Tunku Abdul Rahman College in 1989 with a Diploma in Electronics<br />
Engineering.<br />
Mr. Long began his career in 1989 as a technician with Honeywell Engineering<br />
<strong>Malaysia</strong> in the company's Service Department, initially responsible for servicing<br />
Honeywell's range of mainframes and minicomputers, and later moving on to<br />
servicing building automation system products. His final move was to control systems<br />
products where, as a Service Engineer, he was involved in servicing, installing and<br />
commissioning control systems. He left the company in 1993 to join Foxboro (M) Sdn<br />
Bhd as a System Engineer. At Foxboro, he was involved in the design, programming<br />
and implementation of various projects, where he was also a team leader. After two<br />
(2) years, he left to join Yokogawa Electric (<strong>Malaysia</strong>) Sdn Bhd in 1995 as a System<br />
Engineer, where he was subsequently promoted to Senior Project Engineer in 1998.<br />
During his four (4) years with Yokogawa Electric, he was involved in various aspects<br />
of project lifecycle such as project management, designing, engineering and liaison.<br />
He joined WMSB in 1999 as Project Manager. Subsequently in 2006 he was<br />
promoted to Chief Operating Officer.<br />
Nik Azlan Bin Nik Yusoff, a <strong>Malaysia</strong>n aged 38, is the Chief Technical Officer of<br />
Willowglen. He graduated in 1994 and holds dual degrees in Electrical Engineering<br />
and Computer Science from Washington University, St. Louis, United States.<br />
Encik Nik Azlan began his career at Sapura Advanced Systems Sdn Bhd as a<br />
systems engineer where he was involved in a joint development project with CAE Inc.<br />
Canada (CAE) to develop the MiG-29N flight simulator for the Royal <strong>Malaysia</strong>n Air<br />
Force (“RMAF”). The project team was sent to acquire simulator technology for the<br />
purpose of performing maintenance and upgrades locally. His involvement in the<br />
project team was to develop hardware and software for audio, flight control and<br />
autopilot systems together with other CAE engineers. In 1998, he joined CAE as their<br />
permanent staff. In his position as Flight Control, then later as Autopilot engineer, he<br />
completed multiple simulator development projects for various airlines and training<br />
centres around the world. As the project lead, he designed and delivered new<br />
hardware and software for CAE’s next generation of flight simulators.<br />
74
Company No. 462648-V<br />
8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND<br />
KEY MANAGEMENT AND TECHNICAL PERSONNEL (CONT’D)<br />
Upon returning to <strong>Malaysia</strong>, Encik Nik Azlan joined Motorola Technology, Penang, in<br />
2007 as Senior Staff Software Engineer. At Motorola, his responsibilities include<br />
managing a multinational team of engineers developing new features for Motorola’s<br />
new digital two-way radios. In 2008 he moved to Kuala Lumpur to take up position as<br />
Software Architect for Vedel IT Services Sdn. Bhd. At Vedel IT, he started and<br />
managed a team for Mita-Teknik, Denmark, developing embedded control systems<br />
software for wind turbines. He joined Willowglen in June 2010.<br />
Chew Nyuk Seong, a <strong>Malaysia</strong>n aged 39, is the Senior Manager in charge of<br />
Accounts & Finance of the Willowglen Group. He is a member of the <strong>Malaysia</strong>n<br />
Institute of Accountants and has graduated with a professional qualification from the<br />
Association of Chartered Certified Accountants and the Institute of Chartered<br />
Secretaries and Administrators.<br />
Mr Chew began his career in 1994 as a Tax Assistant with Anthony Skelchy Tax<br />
Services Sdn Bhd (now known as PKF Tax Services Sdn Bhd). In 1995, he joined<br />
Amsteel Securities (M) Sdn Bhd, a member of the Lion Group of Companies as an<br />
Operations Executive. He last held the position of Assistant Finance Manager before<br />
leaving the company in 2002 to join WMSB as an Accountant. In 2004, he left WMSB<br />
to join Dindings Consolidated Sdn Bhd as the Manager in charge of Accounts and<br />
Finance. He re-joined Willowglen in 2007 and since then he has been actively<br />
involved in the financial and accounting matters of the Group.<br />
Phan Vee Yee, a <strong>Malaysia</strong>n aged 39, is the Project Manager of WMSB. He<br />
graduated with Master of Science Degree in Mechatronics from De MontFort<br />
University, United Kingdom. He gained his Diploma in Electronics Engineering from<br />
Tunku Abdul Rahman College in <strong>Malaysia</strong> and also passed the British Engineering<br />
Council Part 1 & Part II in Electronics Engineering since 1995.<br />
He began his career as a system engineer in the oil & gas industry under Yokogawa<br />
Electric for 3 years. He was responsible for projects implementation in Distributed<br />
Control System for the process plant control and monitoring. In December 1999, he<br />
joined WMSB in the project department. His main responsibility in WMSB are project<br />
management, planning, lead and train up the project department key personnel and<br />
provides support to the marketing team.<br />
Tan Jun, a Chinese citizen aged 42, is the General Manager of WSPL. She<br />
graduated with a Bachelor Degree in Electrical Engineering from Shanghai Jiaotong<br />
University, China in 1989. She obtained her Master Degree in Engineering in the<br />
same university in 1992.<br />
She began her career as a Lecturer in the Automatic Control Department in Shanghai<br />
Jiaotong University in 1992. She had taught various subjects for undergraduates and<br />
was also a key researcher in a R&D group for national industrial automation research<br />
projects in the university.<br />
She came to Singapore in 1997 and joined WSPL as a Software Engineer in the<br />
same year. She was involved in SCADA software development and project technical<br />
support. In 2002, she was promoted to Software Manager. She led software design<br />
and development in various projects. With her strong technical knowledge, she also<br />
actively participated in sales activities to promote company products and solutions. In<br />
2008, she was promoted to her current position where she is responsible overall for<br />
the Company’s project operations and performance.<br />
Cheong Fong Hoon, a Singaporean aged 57, is the Senior Business Development<br />
Manager of WSPL. He holds a Diploma in Electronic Engineering and Diploma in<br />
75
Company No. 462648-V<br />
8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND<br />
KEY MANAGEMENT AND TECHNICAL PERSONNEL (CONT’D)<br />
Marketing Management from Ngee Ann Polytechnic, Singapore as well as a Diploma<br />
in Marketing from the Chartered Institute of Marketing in the United Kingdom.<br />
Mr. Cheong's career began with Singapore Telecom where he served as a Technical<br />
Officer from 1976 to 1982. He then moved to Anderson Digital Equipment in<br />
Singapore, where he served as a Technical Service Engineer from 1982 to 1983. In<br />
1983, he moved again to Colosseum Corporation Pte Ltd in Singapore as an<br />
Assistant Manager in the Telecommunications Division. Mr. Cheong joined WSPL in<br />
1988 as Manager of the Special Projects Division. His duties were to oversee the<br />
implementation and maintenance of SCADA systems for PowerGrid Ltd., PowerGas<br />
Ltd. and the Ministry of Environment. In 2000, he moved to the Business<br />
Development Division as a Business Development Manager. Mr. Cheong was<br />
promoted to his present position, where he is responsible for developing and<br />
managing WSPL's clientele base.<br />
Koh Beng Boon, a Singaporean aged 52, is the Hardware and Purchasing Manager<br />
of WSPL. He holds a Diploma in Electrical/Electronics Engineering from Ngee Ann<br />
Technical College of Singapore.<br />
Mr. Koh began his career in 1981 as Technical Assistant with General Electric<br />
Consumer (USA) Pte. Ltd. He left in 1983 to join International Control System Pte.<br />
Ltd. as a Senior Customer Engineer, where he was responsible for the servicing and<br />
testing of a wide range of computer systems.<br />
In 1988, Mr. Koh joined WSPL. In his current position, he is responsible for all<br />
hardware support related functions on projects undertaken by WSPL. This includes<br />
planning, directing and controlling the entire procurement function of the company. Mr<br />
Koh is also responsible for WSPL's in-house workshop and store operations for the<br />
production, quality inspection, hardware integration, testing and warranty repair of the<br />
hardware cards of RTU.<br />
Lee Beng Hong, a Singaporean aged 51, is the Business Development Manager of<br />
WSPL. He holds a Diploma in Electronics and Telecommunications Engineering from<br />
the Singapore Polytechnic and Diploma in Business Administration from Singapore<br />
Institute of Management (“SIM”).<br />
Mr. Lee started his career in 1981 as a technician with Fairchild Pte Ltd in Singapore,<br />
responsible for the maintenance of computers and integrated circuit testing machines.<br />
He progressed to become a Technical Officer at the Public Works Department of<br />
Singapore, where he was responsible for fire alarm/halon systems and other<br />
electronics control systems. From there, in 1984 Mr. Lee moved on to Indeco<br />
Engineers Pte Ltd as an engineer in charge of supervising the maintenance of<br />
building automation systems and security systems in Changi Airport as well as<br />
various other large buildings.<br />
Mr. Lee joined WSPL as an engineer in 1989. He was involved in projects and<br />
maintenance jobs during his tenure as an engineer. In his current position, he is<br />
responsible for the business development particularly in sourcing projects and<br />
maintenance jobs related to HDB Tele-monitoring Systems.<br />
76
Company No. 462648-V<br />
8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND<br />
KEY MANAGEMENT AND TECHNICAL PERSONNEL (CONT’D)<br />
8.5 INVOLVEMENT OF EXECUTIVE DIRECTORS/KEY MANAGEMENT AND<br />
TECHNICAL PERSONNEL IN OTHER BUSINESSES/CORPORATIONS<br />
As at the LPD, save for the companies disclosed in Section 8.1.3 of this Introductory<br />
Document, none of our Executive Directors and/or key management and technical personnel<br />
are actively involved in the activities or operations of other business or corporations. As such,<br />
they are able to allocate sufficient time and efforts so as not to impact their contribution to our<br />
Group or negatively impact their ability to act as the Executive Directors, key management<br />
and technical personnel of our Group.<br />
8.6 DECLARATIONS FROM OUR PROMOTERS, DIRECTORS AND KEY<br />
MANAGEMENT AND TECHNICAL PERSONNEL<br />
None of our Promoters, Directors and key management and technical personnel is or was<br />
involved in any of the following events, whether within or outside <strong>Malaysia</strong> for the past five (5)<br />
years:-<br />
(i) a petition under any bankruptcy or insolvency law was filed (and not struck out)<br />
against such person or any partnership in which he was a partner, or any corporation<br />
of which he was a director or key personnel;<br />
(ii) disqualified from acting as a director of any corporation, or from taking part directly or<br />
indirectly in the management of the corporation;<br />
(iii) charged and/or convicted in criminal proceeding, or is a named subject of pending<br />
criminal proceedings;<br />
(iv) any judgment entered against such person involving a breach of any law or regulatory<br />
requirement that relates to the securities or futures industry; or<br />
(v) the subject of any order, judgment or ruling of any court of competent jurisdiction,<br />
tribunal or government or regulatory body permanently or temporarily enjoining him<br />
from acting as an investment adviser, dealer in securities, director or employee of a<br />
financial institution and engaging in any type of business practice or activity.<br />
8.7 FAMILY RELATIONSHIPS AND ASSOCIATIONS<br />
Save as disclosed below, there are no family relationships (as defined under Section 122A of<br />
the Act) and associations between or amongst our Directors, Promoters, substantial<br />
shareholders and key management and technical personnel.<br />
(i) WAC is the brother-in-law of KCM who is married to his brother, OLH;<br />
(ii) WAC is the father of Mr. Simon Wong Chu Keong who is one of the directors of<br />
NASB;<br />
(iii) KCM is the mother of Ms. Ong Yee Ching who is one of the directors of NASB and<br />
LMSB;<br />
(iv) KCM is the mother of Ms. Ong Yin Suen and Ong Ju Xing who are directors of LMSB;<br />
(v) KCM is the mother of Mr. Ong Ju Yan who is one of the directors of OSKVE, OSKCP<br />
and OSKVI; and<br />
(vi) Mr. Wong Chong Kim, a director of OSKVI, is the brother of WAC and brother-in-law<br />
of KCM.<br />
77
Company No. 462648-V<br />
8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND<br />
KEY MANAGEMENT AND TECHNICAL PERSONNEL (CONT’D)<br />
8.8 PROMOTERS, DIRECTORS AND/OR SUBSTANTIAL SHAREHOLDERS’<br />
BENEFIT<br />
Save for the salaries, bonuses, allowances and dividend, there have been no amounts and<br />
benefits that have been or are intended to be paid or given to our Promoters, Directors and/or<br />
substantial shareholders within the two (2) years preceding the date of this Introductory<br />
Document.<br />
8.9 SERVICE AGREEMENTS<br />
As at the LPD, none of our Directors, key management and technical personnel has any<br />
existing or proposed service agreements with our Group.<br />
8.10 MANAGEMENT AND EMPLOYEES<br />
As at the LPD, our Group has a total of 169 employees, ranging from the management and<br />
professional level to general workers. Out of the 169 employees, 47.34% or 80 employees<br />
are <strong>Malaysia</strong>n whereas the remaining 52.67% or 89 employees are Singaporean and other<br />
nationalities. Since WSPL is a Singapore incorporated company with its main operations in<br />
Singapore, it hires employees directly in Singapore.<br />
The details of our Group’s total workforce are as follows:-<br />
Category No. of Employees<br />
2007 2008 2009 As at the LPD<br />
Management 25 23 24 21<br />
Technical 122 135 130 134<br />
Administration 15 14 13 14<br />
Total 162 172 167 169<br />
We do not experience any significant seasonal fluctuations in our number of employees. As at<br />
the LPD, we have only one (1) employee who is employed under a contract.<br />
8.11 EMPLOYEE TRAINING AND DEVELOPMENT<br />
Our Group is an ISO-certified company. Hence, we have arranged numerous training<br />
programmes designed and executed to improve total quality standards, management skills<br />
and knowledge as well as efficient productivity levels and safety measures for our employees.<br />
In addition, on-the-job trainings are conducted regularly for our employees to learn the<br />
technical know-how and the relevant knowledge effectively.<br />
The past training and development programmes which have been undertaken by our Group<br />
are set out below:-<br />
Year Name of Programme Organiser<br />
2007 AutoCAD Training (Intermediate) Institute of Technical<br />
Practical pricing for sales results<br />
Education<br />
PKMH Training<br />
PLC and CX-Programmer<br />
Resources Group Sdn<br />
Bhd<br />
Omron Electronics Sdn<br />
Bhd<br />
78
Company No. 462648-V<br />
8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND<br />
KEY MANAGEMENT AND TECHNICAL PERSONNEL (CONT’D)<br />
Year Name of Programme Organiser<br />
Clerical skills development program Advision Management<br />
Services<br />
Incentives – A tax tool KPMG<br />
Sdn Bhd<br />
Tax Services<br />
EDB 650 Advanced Administration & Troubleshooting for<br />
ASE<br />
79<br />
Sybase Software<br />
(<strong>Malaysia</strong>) Sdn Bhd<br />
Vijeo Citect SCADA Programming Schneider Electric<br />
2008 Practical troubleshooting & problem solving of industrial<br />
data communication<br />
IDC Technologies (M)<br />
Sdn Bhd<br />
Foretech CCTV Training Foretech Co Ltd<br />
FMM Certificate in Electrical Wireman FMM Institute<br />
ICA 2008 Conference on delivering superior performing Facon Exhibitions Sdn<br />
plants with process automation solutions<br />
Bhd<br />
Lighting & power surge protection in preventing damages Lighting Power Surge<br />
in sensitive electronic equipment<br />
Protection Sdn Bhd<br />
CIDB Safety Protection Construction Industry<br />
Project Management Training<br />
Development Board<br />
PJD<br />
2009 50 contractual problems relevant to <strong>Malaysia</strong> & their Hill International<br />
solutions<br />
<strong>Malaysia</strong> Sdn Bhd<br />
Purchasing & negotiation skills CX Management<br />
Flexible product development<br />
Development<br />
JFPS Group (M) Sdn<br />
Bhd<br />
2009 MSC <strong>Malaysia</strong> Open Source Conference Multimedia<br />
Development<br />
Corporation Sdn Bhd<br />
Government grants and financial assistance for <strong>Malaysia</strong>n The Exporters Club<br />
companies<br />
Falco Web Training KL Alarm System<br />
Starwatch Training<br />
Distributor Sdn Bhd<br />
Prisma Bytes Sdn Bhd<br />
ELV products training AFS Engineering (M)<br />
Sdn Bhd<br />
AIPHONE Training Hyper<br />
Bhd<br />
Advance Sdn<br />
How to supervise & lead people IPA Training Sdn Bhd<br />
Import, export procedures Efficient ED Sdn Bhd<br />
2010 Project Risk Management Construction Industry<br />
Development Board<br />
Power Systems Reliability & Quality Workshop Singapore<br />
Training Institute<br />
Power<br />
BizSafe Level 2 Risk management Course Bond International<br />
Selecting PLC Platforms Workshop 1<br />
Consultants Pte Ltd<br />
Siemens Pte Ltd<br />
Safety Orientation Course for Workers (Oil/Petrochemical) NTUC Learning Hub
Company No. 462648-V<br />
8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND<br />
KEY MANAGEMENT AND TECHNICAL PERSONNEL (CONT’D)<br />
Our Group focuses on training and development through the provision of numerous structural<br />
and effective training programmes for our employees. Our Group realises the significance of<br />
continuous training and development of our employees’ skills and knowledge. As such, our<br />
Group provides various training programmes to our employees for skills and knowledge<br />
improvement.<br />
Additionally, since we are an ISO-certified company, it is compulsory to provide ISO training<br />
programmes for our employees in the areas of ISO regulations and policies. Other than that,<br />
our administration and accounting staff also attended accounting training and other education<br />
programmes for the management skills and knowledge improvement.<br />
Year Name of Programme Organiser<br />
2007 Workshop on changes in OHSAS 18001:2007 &<br />
changes in ISO 9001:2009<br />
SGS<br />
2008 ISO 9001:2000 Internal Quality Audit PJD Development Holdings<br />
Berhad<br />
2009 ISO 9001:2008<br />
ISO 9001:2008 Version<br />
ISO 9001:2008 Version Update<br />
80<br />
SGS<br />
In-house<br />
In-house<br />
2010 ISO 9001:2008 Internal Quality Audit Global Infoskills<br />
In future, our Group will emphasise more on the ISO training programmes and quality<br />
management programmes with the objective of skills and knowledge enhancement, especially<br />
in the areas of ISO.<br />
None of our employees are members of any union nor have there been any industrial<br />
disputes in the past.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
Company No. 462648-V<br />
9. RELATED PARTY TRANSACTIONS AND CONFLICT OF INTEREST<br />
9.1 RELATED PARTY TRANSACTIONS<br />
Save as disclosed below, there are no other existing and/or proposed related party transactions entered or to be entered into which involves the<br />
interest, direct or indirect, of our Directors, substantial shareholders, key management and technical personnel and/ or persons connected with such<br />
Directors, substantial shareholders or key management and technical personnel in respect of the three (3) most recent completed financial years and<br />
the subsequent financial period thereof immediately preceding the date of this Introductory Document:-<br />
Transacting<br />
Party Nature of Business Nature of Transaction<br />
Recurrent related party transactions<br />
DCSB Group Investment and<br />
property development,<br />
with subsidiaries in<br />
general insurance<br />
DCSB Group Investment and<br />
property development,<br />
with subsidiaries in<br />
general insurance<br />
Equimatics Sales, implementation<br />
and maintenance of<br />
computer-based control<br />
systems<br />
Payment of insurance<br />
premiums by the Willowglen<br />
Group to DCSB Group for<br />
insurance policies for<br />
coverage of company’s<br />
assets, employees and<br />
projects.<br />
Supply of Group’s product –<br />
SCADA Systems, IT services,<br />
security and smart home<br />
system to the DCSB Group.<br />
Supply of Group’s product –<br />
SCADA Systems, IT services,<br />
security and smart home<br />
system to Equimatics.<br />
NASB Investment holdings Management fees payable to<br />
NASB for secretarial and<br />
other general services<br />
Actual value for the FYE 31 December Interested substantial Shareholdings as<br />
Actual shareholder/Director at the LPD<br />
value for /Key management and<br />
2007 2008 2009<br />
the FPE 30<br />
June 2010<br />
technical<br />
personnel/person Direct Indirect<br />
RM’000 RM’000 RM’000 RM’000 connected to them (%) (%)<br />
29 24 19 11 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
141 - 23 263 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
697 1,220 50 - Alfian Bin Tan Sri<br />
Mohamed Basir<br />
Rohaila Bt. Tan Sri<br />
Mohamed Basir (a)<br />
22 - - - LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
81<br />
32.89<br />
-<br />
-<br />
32.79<br />
17.46<br />
32.89<br />
-<br />
-<br />
32.79<br />
17.46<br />
-<br />
-<br />
-<br />
20<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
32.89<br />
-<br />
-<br />
-<br />
-<br />
32.89<br />
-<br />
-<br />
-<br />
20<br />
-<br />
-<br />
20<br />
20
Company No. 462648-V<br />
9. RELATED PARTY TRANSACTIONS AND CONFLICT OF INTEREST (CONT’D)<br />
Transacting<br />
Party Nature of Business Nature of Transaction<br />
OSK Group Investment holdings,<br />
property development<br />
and financial services<br />
OSK Group Investment holdings,<br />
property development<br />
and financial services<br />
OSKP Investment holdings<br />
and property<br />
development<br />
PJD Group Investment holdings<br />
and property<br />
investment<br />
Supply of Group’s product –<br />
SCADA Systems, IT services,<br />
security and smart home<br />
system to the OSK Group.<br />
Payment to OSK by<br />
Willowglen Group for<br />
provision of advisory<br />
services.<br />
Supply of Group’s product –<br />
SCADA Systems, IT services,<br />
security and smart home<br />
system to OSKP.<br />
Supply of Group’s product –<br />
SCADA Systems, IT services,<br />
security and smart home<br />
system to the PJD Group.<br />
Actual value for the FYE 31 December Interested substantial Shareholdings as<br />
Actual shareholder/Director at the LPD<br />
value for /Key management and<br />
2007 2008 2009<br />
the FPE 30<br />
June 2010<br />
technical<br />
personnel/person Direct Indirect<br />
RM’000 RM’000 RM’000 RM’000 connected to them (%) (%)<br />
17 136 378 45 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
OLH (b)<br />
Wong Chong Kim (c)<br />
0.02 3.52<br />
- 3.52<br />
-<br />
-<br />
0.97 3.73<br />
- 3.61<br />
24.02 6.51<br />
0.15<br />
-<br />
7 7 - - LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
OLH (b)<br />
Wong Chong Kim (c)<br />
0.02 3.52<br />
- 3.52<br />
-<br />
-<br />
0.97 3.73<br />
- 3.61<br />
24.02 6.51<br />
0.15<br />
-<br />
- - - 3 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
OLH (b)<br />
Wong Chong Kim (c)<br />
0.84 6.01<br />
0.01 6.00<br />
-<br />
-<br />
2.08 6.00<br />
- 6.08<br />
24.82<br />
-<br />
0.93<br />
-<br />
0.97 19.81<br />
18.90 0.91<br />
-<br />
-<br />
6.24 22.70<br />
0.52 20.65<br />
-<br />
-<br />
498 2,839 82 628 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
Wong Chong Shee (d)<br />
82
Company No. 462648-V<br />
9. RELATED PARTY TRANSACTIONS AND CONFLICT OF INTEREST (CONT’D)<br />
Transacting<br />
Party Nature of Business Nature of Transaction<br />
PJD Group Investment holdings<br />
and property<br />
investment<br />
PJD Group Investment holdings<br />
and property<br />
investment<br />
PJD Group Investment holdings<br />
and property<br />
investment<br />
PJD Group Investment holdings<br />
and property<br />
investment<br />
Payment to PJD Group by<br />
Willowglen Group for<br />
provision of internal audit<br />
services on the Willowglen<br />
Group.<br />
Rental received from PJD<br />
Group to Willowglen Group<br />
for the leasing of shop lot<br />
units (5,200 square feet) in<br />
Bandar Baru Sri Petaling. The<br />
tenancy is effective from 1<br />
July 2008 to 30 June 2010 at<br />
a monthly rental of RM6,500<br />
renewable for a further period<br />
of 1 year.<br />
Payment to PJD Group by<br />
Willowglen Group for hotel<br />
accommodation, facilities,<br />
food and beverages for staff.<br />
Payment to PJD Group by<br />
Willowglen Group for<br />
provision of Information<br />
Technology services.<br />
Actual value for the FYE 31 December Interested substantial Shareholdings as<br />
Actual shareholder/Director at the LPD<br />
value for /Key management and<br />
2007 2008 2009<br />
the FPE 30<br />
June 2010<br />
technical<br />
personnel/person Direct Indirect<br />
RM’000 RM’000 RM’000 RM’000 connected to them (%) (%)<br />
- - 12 12 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
Wong Chong Shee (d)<br />
0.97 19.81<br />
18.90 0.91<br />
-<br />
-<br />
6.24 22.70<br />
0.52 20.65<br />
-<br />
-<br />
- 61 78 46 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
Wong Chong Shee (d)<br />
0.97 19.81<br />
18.90 0.91<br />
-<br />
-<br />
6.24 22.70<br />
0.52 20.65<br />
-<br />
-<br />
83<br />
3 6 3 24 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
Wong Chong Shee (d)<br />
- - - 8 LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
Wong Chong Shee (d)<br />
0.97<br />
18.90<br />
-<br />
6.24<br />
0.52<br />
-<br />
0.97<br />
18.90<br />
-<br />
6.24<br />
0.52<br />
-<br />
19.81<br />
0.91<br />
-<br />
22.70<br />
20.65<br />
-<br />
19.81<br />
0.91<br />
-<br />
22.70<br />
20.65<br />
-
Company No. 462648-V<br />
9. RELATED PARTY TRANSACTIONS AND CONFLICT OF INTEREST (CONT’D)<br />
Transacting<br />
Party Nature of Business Nature of Transaction<br />
Tekmark Group Investment holdings Purchase and maintenance of<br />
electrical, computer and<br />
related accessories by<br />
Willowglen Group from<br />
Tekmark Group for office and<br />
project use.<br />
Tekmark Group Investment holdings Rental received from<br />
Tekmark Group for leasing of<br />
shop lot units in Bandar Baru<br />
Sri Petaling<br />
Non-recurrent related party transactions<br />
PJD Group Investment holdings<br />
and property<br />
investment<br />
Acquisition of lands held<br />
under Title PN 17636 –<br />
17639, Lot No. 35069 –<br />
35072, all in the Mukim of<br />
Petaling, District and State of<br />
Wilayah Persekutuan,<br />
together with four (4) units of<br />
three (3)-storey shop offices<br />
erected thereon<br />
Actual value for the FYE 31 December Interested substantial Shareholdings as<br />
Actual shareholder/Director at the LPD<br />
value for /Key management and<br />
2007 2008 2009<br />
the FPE 30<br />
June 2010<br />
technical<br />
personnel/person Direct Indirect<br />
RM’000 RM’000 RM’000 RM’000 connected to them (%) (%)<br />
84<br />
3 5 3 - LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
OLH (b)<br />
Khor Neng Tiang (e)<br />
Ong Yee Ching (f)<br />
Wong Ai Lin<br />
57 5 - - LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
OLH (b)<br />
Khor Neng Tiang (e)<br />
Ong Yee Ching (f)<br />
Wong Ai Lin<br />
2,990 - - - LMSB<br />
DCSB<br />
NASB<br />
KCM<br />
WAC<br />
Wong Chong Shee (d)<br />
-<br />
-<br />
-<br />
19.82<br />
-<br />
23.78<br />
54.40<br />
-<br />
2.00<br />
-<br />
-<br />
-<br />
19.82<br />
-<br />
23.78<br />
54.40<br />
-<br />
2.00<br />
0.97<br />
18.90<br />
-<br />
6.24<br />
0.52<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
-<br />
19.81<br />
0.91<br />
-<br />
22.70<br />
20.65<br />
-
Company No. 462648-V<br />
9. RELATED PARTY TRANSACTIONS AND CONFLICT OF INTEREST (CONT’D)<br />
Notes:-<br />
(a) Rohaila Bt Tan Sri Mohamed Basir, who is a director and substantial shareholder of Equimatics, is deemed a person connected to Alfian Bin Tan Sri Mohamed Basir pursuant to<br />
Section 122A of the Act as she is the sister of Alfian Bin Tan Sri Mohamed Basir. She resigned as director of Equimatics w.e.f. 24 August 2009 and ceased to be a shareholder of<br />
Equimatics w.e.f. 1 October 2009.<br />
(b) OLH, a director and major shareholder of OSK, is deemed a person connected to KCM pursuant to Section 122A of the Act, is the spouse of KCM and the brother of WAC. He is also<br />
a major shareholder of OSKP.<br />
(c) Wong Chong Kim, a director of OSK and OSKP, is deemed a person connected to WAC and KCM pursuant to Section 122A of the Act as he is the brother of WAC and brother-in-law<br />
of KCM.<br />
(d) Wong Chong Shee, a director of PJD, is deemed a person connected to WAC and KCM pursuant to Section 122A of the Act as he is the brother of WAC and brother-in-law of KCM.<br />
(e) Khor Neng Tiang, a major shareholder of Tekmark, is deemed a person connected to KCM pursuant to Section 122A of the Act as he is the brother of KCM.<br />
(f) Ong Yee Ching, a major shareholder of Tekmark, is deemed a person connected to KCM pursuant to Section 122A of the Act as she is the daughter of KCM and OLH.<br />
All the above transactions are conducted in the ordinary course of business, carried out on an arm’s length basis and are on normal commercial<br />
terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to our minority<br />
shareholders.<br />
The appropriate disclosures will be made in the annual report of our Company of the aggregate value of the transactions based on the nature of the<br />
transactions made, names of the related parties involved in each type of transaction, and their relationship with our Group.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
85
Company No. 462648-V<br />
9. RELATED PARTY TRANSACTIONS AND CONFLICT OF INTEREST (CONT’D)<br />
9.2 TRANSACTIONS THAT ARE UNUSUAL IN NATURE OR CONDITION<br />
As at the LPD, our Board has confirmed that to their best knowledge and belief, there<br />
are no transactions that are unusual in their nature or conditions, involving goods,<br />
services, tangible or intangible assets, to which our Group is a party since our<br />
incorporation.<br />
9.3 OUTSTANDING LOANS<br />
As at the LPD, our Board has confirmed that our Group has no outstanding non-trade<br />
payables to related parties and there are also no outstanding non-trade receivables<br />
due from related parties to our Group.<br />
9.4 INTERESTS IN A SIMILAR BUSINESS<br />
Our Board is not aware of any similar assets, businesses or interest within the<br />
Willowglen Group owned by our substantial shareholders, Directors and/or key<br />
management and technical personnel of our Group.<br />
9.5 INTERESTS IN OTHER BUSINESS WHICH ARE OUR CUSTOMERS OR<br />
SUPPLIERS<br />
Save as disclosed in Sections 8.1.3 and 9.1 of this Introductory Document, none of<br />
our substantial shareholders, Directors and/or key management and technical<br />
personnel of our Group have any interest, direct or indirect, in any other businesses<br />
or corporations which are our Group’s customers or suppliers.<br />
9.6 PROMOTION OF ANY MATERIAL ASSETS ACQUIRED / TO BE ACQUIRED<br />
None of our Directors and substantial shareholders has any interest, direct or indirect,<br />
in any promotion of, or in, any material asset, within the three (3) most recent<br />
completed financial years and the subsequent financial period thereof immediately<br />
preceding the date of this Introductory Document, acquired or disposed of by, or<br />
leased to us or our subsidiaries, or is proposed to be acquired or disposed of by or<br />
leased to us or our subsidiaries.<br />
9.7 DECLARATION BY ADVISERS<br />
i. Adviser<br />
Save as disclosed below, OSK confirms that, as at the date of this<br />
Introductory Document, there is no other existing or potential conflict of<br />
interest in its capacity as the Adviser for the Transfer.<br />
As at the LPD, OSKVE and OSKCP holds 22,465,000 and 20,054,837<br />
Willowglen Shares, representing approximately 9.07% and 8.10% (excluding<br />
treasury shares of 429,800 Willowglen Shares as at 5 May 2009) of the<br />
equity interest in Willowglen respectively. OSKVE and OSKCP are the<br />
wholly-owned subsidiaries of OSKVI whereas OSK is the wholly-owned<br />
subsidiary of OSKH. Therefore, OSKVE, OSKCP and OSK are related by<br />
virtue of OLH’s substantial shareholdings in OSKVI and OSKH.<br />
OLH is also the spouse of KCM and the brother to WAC, Directors and<br />
substantial shareholders of Willowglen.<br />
86
Company No. 462648-V<br />
9. RELATED PARTY TRANSACTIONS AND CONFLICT OF INTEREST (CONT’D)<br />
Willowglen has also purchased RM2.30 million subordinated notes issued by<br />
OSK for a cash consideration of RM2.22 million on 18 June 2009.The<br />
subordinated notes were issued by OSK on 14 July 2008. The tenure of the<br />
issue is ten (10) years, maturing on 13 July 2018 and callable after a<br />
minimum of five (5) years from the issue date (i.e. on 15 July 2013) and on<br />
every semi-annual coupon payment date thereafter. The Subordinated Notes<br />
carry a coupon rate of 7.50% per annum.<br />
The interests disclosed above may give rise to a potential conflict of interest<br />
but this is mitigated by the following:-<br />
(i) OSK, OSKVE and OSKCP are separate companies each having their<br />
own distinct management teams and employees. In addition, OSKVE<br />
and OSKCP are wholly-owned subsidiaries of OSKVI, which is<br />
separately listed on the ACE Market. OSKVI, being a public listed entity<br />
has its own check and balances in the form of independent directors<br />
and audit committee or various board committees to maintain its<br />
business operations respectively;<br />
(ii) the management of Willowglen is independent of OSK when making<br />
the decision to invest and maximise the value of their free cash, and<br />
after considering various factors, selected the subordinated notes<br />
issued by OSK as an instrument to invest in. Furthermore, the RM2.3<br />
million worth of subordinated notes invested by Willowglen only forms<br />
0.77% of the total issue size of the subordinated notes issed by OSK of<br />
RM300 million and 3.8% of the NA of the Willowglen Group of RM60.36<br />
million as at 31 December 2009;<br />
(iii) there are no common directors in the board of OSK and the board of<br />
Willowglen;<br />
(iv) the Corporate Finance Division is required as part of OSK's investment<br />
banking license to comply with strict policies and guidelines issued by<br />
the SC, <strong>Bursa</strong> Securities and Bank Negara <strong>Malaysia</strong> governing its<br />
advisory operations. These guidelines call for, amongst others, firewall<br />
policies, clear segregation between dealing and advisory activities and<br />
the formation of an independent committee to review its business<br />
operations; and<br />
(v) save for the professional fees, OSK will not be deriving any benefit<br />
from the Transfer.<br />
ii. Solicitors<br />
Messrs. Cheang & Ariff has given its confirmation that there is no existing or<br />
potential conflict of interest in its capacity as the Solicitors for the Transfer.<br />
iii. Reporting Accountants<br />
Messrs. Baker Tilly Monteiro Heng has given its confirmation that there is no<br />
existing or potential conflict of interest in its capacity as the Reporting<br />
Accountants for the Transfer.<br />
87
Company No. 462648-V<br />
10. FINANCIAL INFORMATION<br />
10.1 HISTORICAL FINANCIAL INFORMATION<br />
10.1.1 Consolidated Income Statements<br />
The following table sets forth a summary of our audited consolidated income<br />
statements for the past three (3) FYE 31 December 2009 and the unaudited six (6)month<br />
FPE 30 June 2010. The six (6)-month FPE 30 June 2009 has been included<br />
as a comparison for the six (6)-month FPE 30 June 2010.<br />
The consolidated income statements is extracted from and should be read in<br />
conjunction with the Accountants’ Report together with its accompanying notes and<br />
assumptions and the six (6)-month FPE 30 June 2010 as set out in Sections 11 and<br />
12 of this Introductory Document.<br />
Unaudited FPE 30 June<br />
2007 (1)<br />
RM'000<br />
2008 (1)<br />
RM’000<br />
2009 (1)<br />
RM’000<br />
2009<br />
RM’000<br />
2010<br />
RM’000<br />
Revenue 51,937 51,157 62,001 31,254 27,656<br />
Cost of sales (34,302) (31,424) (37,395) (18,834) (15,922)<br />
Gross profit 17,635 19,733 24,606 12,420 11,734<br />
Other income 897 891 1,728 324 528<br />
Administrative expenses (8,764) (10,636) (11,139) (5,314) (6,298)<br />
Profit from operations 9,768 9,988 15,195 7,430 5,964<br />
Finance costs (55) (29) (31) (20) (11)<br />
PBT 9,713 9,959 15,164 7,410 5,953<br />
Income tax expense (1,475) (1,898) (2,550) (1,266) (1,023)<br />
PAT 8,238 8,061 12,614 6,144 4,930<br />
Weighted average number of<br />
ordinary shares in issue<br />
(‘000)*<br />
248,000 247,832 247,585 247,601 247,570<br />
EBITDA 9,716 9,871 15,149 7,419 5,943<br />
Gross EPS (sen) 3.92 4.02 6.12 2.99 2.40<br />
Net EPS (sen) 3.32 3.25 5.10 2.48 1.99<br />
Gross profit margin (%) 33.95 38.57 39.69 39.74 42.43<br />
PBT margin (%) 18.70 19.47 24.46 23.71 21.53<br />
PAT margin (%) 15.86 15.76 20.34 19.66 17.83<br />
Effective tax rate (%) 15.33 19.10 16.99 17.09 17.18<br />
Notes:-<br />
(1) As extracted from the audited accounts for the past three (3) FYE 31 December 2009<br />
* Excludes treasury shares<br />
88
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
10.1.2 Consolidated Balance Sheets<br />
The following table summarises the audited consolidated balance sheet of our Group<br />
as at 31 December 2009 and the unaudited consolidated balance sheet for our Group<br />
as at 30 June 2010 which can be found in the Accountants’ Report and the latest<br />
report for the six (6)-month FPE 30 June 2010 as set out in Sections 11 and 12 of<br />
this Introductory Document.<br />
Audited as at Unaudited as at<br />
31 December 2009 30 June 2010<br />
RM’000 RM’000<br />
ASSETS<br />
Non-current Assets<br />
Property, plant and equipment 3,579 5,211<br />
Prepaid land lease payments 1,659 -<br />
Investment properties 1,495 1,495<br />
Other investments 2,147 -<br />
Available-for-sale investments - 2,363<br />
Deferred tax assets 184 183<br />
Current assets<br />
9,064 9,252<br />
Inventories 1,478 1,504<br />
Amount due from contract customers 15,859 13,475<br />
Trade receivables 9,443 10,893<br />
Other receivables, deposits and prepayments 1,304 1,853<br />
Tax recoverable 51 -<br />
Fixed deposits placed with licensed banks 19,723 13,244<br />
Cash and bank balances 12,554 15, 434<br />
60,412 56,403<br />
TOTAL ASSETS 69,476 65,655<br />
EQUITY AND LIABILITIES<br />
Equity attributable to shareholders of the company<br />
Share capital 24,800 24,800<br />
Treasury shares (75) (75)<br />
Reserves 35,636 32,033<br />
Total Equity 60,361 56,758<br />
Non-current liability<br />
Deferred tax liabilities 93 88<br />
Current liabilities<br />
Amount due to contract customers 2,217 2,012<br />
Trade payables 3,094 4,032<br />
Other payables and accruals 1,304 902<br />
Tax payable 2,407 1,863<br />
9,022 8,809<br />
Total liabilities 9,115 8,897<br />
TOTAL EQUITY AND LIABILITIES 69,476 65,655<br />
Number of shares in issue (‘000)* 247,570 247,570<br />
NA per share (RM) 0.24 0.23<br />
Note: * Excludes treasury shares<br />
89
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
10.2 CAPITALISATION AND INDEBTEDNESS<br />
The following table summarises our cash and cash equivalents, capitalisation and<br />
indebtedness as at 30 June 2010:-<br />
As at<br />
30 June 2010<br />
RM’000<br />
Cash and cash equivalents 26,405<br />
INDEBTEDNESS<br />
Short Term (Due within 12 months)<br />
None -<br />
Long Term (Due after 12 months)<br />
None -<br />
CAPITALISATION<br />
Total shareholders’ equity 56,758<br />
Total capitalisation 56,758<br />
Total capitalisation and indebtedness 56,758<br />
The contingent liabilities of our Group are as set out in Section 10.3.11 of this Introductory<br />
Document.<br />
10.3 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS,<br />
RESULTS OF OPERATIONS AND PROSPECTS<br />
The following management’s discussion and analysis of our Group’s financial<br />
conditions, results of operations and prospects should be read in conjunction with the<br />
Accountants’ Report together with its accompanying notes and assumptions and the<br />
unaudited six (6)-month FPE 30 June 2010 as set out in Sections 11 and 12 of this<br />
Introductory Document.<br />
10.3.1 Analysis of Our Group’s Operating Results<br />
Revenue<br />
The segmental revenue by geographical markets for the financial years / periods<br />
under review is as follows:-<br />
< ------- FPE 30 June ------- ><br />
2007 2008 2009 2009 2010<br />
RM'000 % RM'000 % RM'000 % RM'000 % RM'000 %<br />
<strong>Malaysia</strong> 10,026 19.3 7,895 15.4 7,991 12.9 3,576 11.4 3,889 14.1<br />
Singapore 41,140 79.2 41,240 80.6 50,894 82.1 27,402 87.7 22,852 82.6<br />
Europe 771 1.5 2,022 4.0 3,116 5.0 276 0.9 915 3.3<br />
Others - - - - - - - - - -<br />
Total 51,937 100.0 51,157 100.0 62,001 100.0 31,254 100.0 27,656 100.0<br />
90
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
Our Group’s revenue increased by 31.67% to RM51.94 million in the FYE 31<br />
December 2007 as compared to RM39.45 million in the FYE 31 December 2006. The<br />
increase in revenue was mainly driven by the contribution from ten (10) new<br />
additional SCADA projects secured during the financial year from our existing and<br />
new clients which contributed RM20,523,458 to the Group’s revenue, as a result of<br />
our aggressive sales and marketing efforts which includes increasing the revenue<br />
target for our sales and marketing personnel to tender for more projects. Our Group<br />
started to advertise in the print media, specifically in industry-related magazines<br />
during FYE 31 December 2006, in which contributed to the increase in business in<br />
FYE 31 December 2007. Sales and marketing expenses had increased by<br />
approximately RM106,000 from RM1.89 million in the prior financial year to RM2<br />
million for the FYE 31 December 2007.<br />
There was also an increase in the number of upgrading projects of HDB flats in<br />
Singapore in 2007, prompting an increase in the number of SCADA projects awarded<br />
relating to building management, lift monitoring and control. During this period,<br />
Willowglen secured an additional four (4) projects in relation to building management,<br />
lift monitoring and control with contract values amounting to RM8,470,434. The<br />
increase in the number of upgrading projects for HDB flats in Singapore was<br />
attributable to the new policy implemented by Singapore Government. The Lift<br />
Upgrading Programme (“LUP”) which was enacted in 2006 requires eligible HDB<br />
blocks to provide lift access on every floor by 2014. Following this, the HDB has<br />
initiated an upgrade to the HDB blocks by stages and in the process engaged<br />
Willowglen to provide the control and monitoring system for their lifts. Revenue for the<br />
financial year was mainly contributed by SP PowerAssets, HDB and EMA amounting<br />
to approximately 49.91% of the Group’s revenue.<br />
In the FYE 31 December 2008, the revenue for the Willowglen Group was marginally<br />
reduced by 1.5% from RM51.94 million to RM51.16 million as compared to the FYE<br />
31 December 2007. The decrease in revenue was mainly due to the competitive<br />
business environment and global economic downturn during the financial year under<br />
review. Revenue generated from the <strong>Malaysia</strong> market reduced by RM2.13 million to<br />
RM7.895 million in the FYE 31 December 2008. This was partly due to the fact that<br />
most of the sewage treatment plant projects secured by the Group earlier has been<br />
completed or was nearing completion.<br />
The Group’s major projects (above RM1.00 million) which were completed or nearing<br />
completion during the FYE 31 December 2008 include the following:-<br />
<strong>Malaysia</strong><br />
Brief Description of Project<br />
Supply, testing and commissioning of instrumentation panel, SCADA system<br />
for five (5) sewage treatment plants (“STP”) in the Klang Valley.<br />
Supply and installation of CCTV and SCADA systems for the Electrified Double<br />
Track Project between Rawang and Ipoh.<br />
Design, supply, deliver, install, testing, commissioning, training and<br />
maintenance of SCADA and PLC systems at Sewage Treatment Plant 2<br />
Package 2 (4 sites).<br />
Supply, delivery, installation, testing and commissioning of SCADA Systems in<br />
DBKL public housing estates.<br />
Supply, delivery, installation, testing and commissioning of the electrical and<br />
instrumentation works for the Damansara and Sunggala STP.<br />
91<br />
Value<br />
(RM’000)<br />
7,374<br />
2,849<br />
2,814<br />
2,269<br />
2,023
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
Singapore<br />
Brief Description of Project<br />
Supply, installation & commissioning of a Gas Monitoring System (“GMS”) for<br />
the remote monitoring of pipeline networks transporting natural gas into various<br />
power stations in Singapore.<br />
Maintenance of Telemetry Monitoring Systems (“TMS”) for a period of five (5)<br />
years consisting preventive and corrective maintenance of 2,500 Lift Monitoring<br />
Devices located all over the Singapore Island.<br />
Supply, installation and commissioning of Intrusion Detection Systems (“IDS”)<br />
capable of detecting unauthorized entry into power distribution substations at<br />
1,000 substations.<br />
Provision for the maintenance of 83 Remote Terminal Units (“RTUs”) installed<br />
at transmission substations on a 6-monthly preventive maintenance and ad-hoc<br />
corrective maintenance basis.<br />
Supply, installation & commissioning of 2,400 Lift Mornitoring Devices (“LMD”)<br />
and 10 Area Receiving Stations (“ARS”) under the Lift Upgrade Program<br />
(“LUP”).<br />
Supply, installation & commissioning of Integrated, Security and Operation<br />
Surveillance System (“ISOSS”) consisting Building Access Control Systems<br />
(“BACS”), CCTV Systems, Fence Intrusion Detection Systems (“FIDS”) and<br />
Public Announcement (“PA”) Systems at thirty (30) 66KV substations.<br />
Supply, installation & commissioning of 650 Lift Surveillance Systems (“LSS”)<br />
and 70 Lift Lobby Systems (“LLS”) under the LUP.<br />
Supply, installation & commissioning of Building Monitorign Centre (“BMC”) for<br />
the monitoring of TMS and Photovoltaic Monitoring Systems for public housing<br />
in Singapore.<br />
Supply, installation & commissioning of the Partial Discharge Monitoring<br />
(“PDM”) Systems consisting Ultra High Frequency (“UHF”) sensors, Data<br />
Acquisition Units and Micro-controller Base Units at four (4) 66KV substations.<br />
Supply, installation & commissioning of RTUs and Modbus Servers at six (6)<br />
Gas Offtake and Metering Stations.<br />
Maintenance of PDM Systems at five (5) 400KV and 230KV substations for a<br />
period of twenty-four (24) months comprising quarterly preventive and ad-hoc<br />
corrective maintenance.<br />
92<br />
Value<br />
(RM’000)<br />
6,918<br />
3,302<br />
3,285<br />
1,947<br />
14,386<br />
11,130<br />
3,717<br />
2,020<br />
1,952<br />
1,849<br />
1,007<br />
Meanwhile, the revenue contribution from the Europe market has increased by<br />
RM1.25 million to RM2.02 million in the FYE 31 December 2008 as compared to<br />
RM771,000 recorded in the previous financial year. As it is a normal occurrence in<br />
the SCADA industry that clients will need to upgrade their control system to fulfill the<br />
requirement of their respective industries, many of the Group’s existing clients have<br />
initiated upgrading works on their existing control system. In the FYE 31 December<br />
2008, one of the clients in Europe has initiated an upgrade of their existing SCADA<br />
system contributing to an increase to the Group’s revenue from Europe.<br />
Revenue for the Willowglen Group increased further by RM10.844 million or 21.20%<br />
from RM51.16 million to RM62.001 million in the FYE 31 December 2009. The<br />
increase in revenue was mainly due to the increase in the number of long term<br />
projects secured by our Group during the FYE 31 December 2009. The number of<br />
contracts secured by the Willowglen Group had increased to 134 projects as<br />
compared to 106 projects secured in the previous financial year. There were 60 new
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
long term projects secured during the said financial year, which contributed RM37.95<br />
million of revenue for that financial year. The increase was mainly due to the<br />
aggressive sales and marketing efforts and the result of government stimulus<br />
packages in Singapore, which resulted in an increase in spending in the infrastructure<br />
segment especially in power distribution and security of public buildings. This resulted<br />
in a substantial growth in the power and electric utility and construction industries<br />
which requires SCADA systems in the transmission and distribution of electricity and<br />
for monitoring and operation of the surveillance system.<br />
The Willowglen Group recorded a lower revenue of RM27.66 million for the six (6)<br />
months ended 30 June 2010 or a decrease of 11.51% as compared to the<br />
corresponding period in 2009. The decrease in revenue was mainly due to the fact<br />
that most of the projects have been completed in 2009 as a result of the stimulus<br />
package announced by the Singapore Government, resulting in a general reduction in<br />
the number of projects awarded during the beginning of the year. However,<br />
management expects that earnings growth from its Singapore operations will be<br />
supported by the fact that the overall economic conditions are improving in<br />
Singapore.<br />
Gross Profit<br />
Despite the increased in revenue, the Willowglen Group’s gross profit margin was<br />
reduced from 44.25% to 33.95% as compared to the FYE 31 December 2006. This<br />
was mainly due to increased competition in the water, housing and power industry.<br />
The competition that exists in the market has caused players in the industry to reduce<br />
prices to attract customers to engage their services. To mitigate this risk, our Group<br />
implemented cost cutting strategies which include sourcing for contractors that offer<br />
better pricing and terms. We had also reduced the amount of work sub-contracted out<br />
to third parties in order to preserve our operating margins. Management is of the<br />
opinion that, based on the industry survey as well as from the past engagements of<br />
the Group, the average margins by segments should are:-<br />
Segments GP Margin (%)<br />
Oil & gas utilities, power utilities and railroads 30 - 40<br />
Sewerage & drainage utilities, water utilities and infrastructure<br />
monitoring<br />
15 - 20<br />
Despite the decrease in revenue, the Willowglen Group’s gross profit margin for the<br />
FYE 31 December 2008 increased from 33.95% to 38.57% as compared to the FYE<br />
31 December 2007 as a result of the Group’s cost cutting measures. Our<br />
procurement team had been aggressively sourcing for better sub-contractors and<br />
products and to negotiate for better pricing and terms, resulting in substantial cost<br />
savings for our Group. Our management estimates that the Group has managed to<br />
save around RM1.42 million as a result of the implementation of cost cutting<br />
measures.<br />
Gross profit increased from RM19.73 million in the FYE 31 December 2008 to<br />
RM24.61 million in the FYE 31 December 2009, representing an increase of RM4.87<br />
million, mainly due to an increase in revenue as explained above. Gross profit margin<br />
for the FYE 31 December 2009 improved further to 39.69% as compared to 38.57%<br />
in the FYE 31 December 2008. The continued increase in the profit margins was<br />
primarily due to the management continued efforts to control cost in its operations.<br />
For the FPE 30 June 2010, gross profit decreased by RM0.69 million from RM12.42<br />
million in the FPE 30 June 2009 to RM11.73 million, mainly due to a decrease in<br />
revenue as explained above. However, the gross profit margin for our Group during<br />
the FPE 30 June 2010 was higher at 42.43% as compared to 39.74% in the same<br />
FPE 30 June 2009. This is another improvement in our Group’s effort and<br />
performance to reduce cost and to improve our Group’s profitability.<br />
93
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
PBT<br />
Profit before tax margin for the FYE 31 December 2007 had also decreased to<br />
18.70% as compared to 24.06% in the FYE 31 December 2006 due to increased<br />
competition in the water, housing and power industry as explained in the gross profit<br />
section above. The competition in the market has resulted in a decrease in the prices<br />
for products and services offered by Willowglen’s competitors, hurting margins across<br />
the industry.<br />
The profit before tax margin for the FYE 31 December 2008 did not increase at the<br />
same pace with the gross profit margin for the same financial year. This is mainly due<br />
to higher administrative expenses incurred as a result of the increase in staff costs of<br />
13.43% or approximately RM1.955 million. During the past financial year, the<br />
Willowglen Group has revised its remuneration package to include better<br />
compensation in order to be in line with market practices and to minimise the staff<br />
turnover rate. The higher administrative expenses were also attributable to the<br />
increase in office rental expenses of 44.99% or approximately RM0.359 million<br />
resulting from the increase in property rental prices in Singapore.<br />
The increase in the profit before tax margin from 19.47% to 24.46% in the FYE 31<br />
December 2009 was mainly due to the government grant of approximately RM0.821<br />
million received by WSPL pursuant to the Job Credit Scheme implemented by the<br />
Singapore Government in order to assist local enterprises during the economic<br />
downturn.<br />
The decrease in the profit before tax margin from 23.71% to 21.53% in the FPE 30<br />
June 2010 was mainly due to the progressive reduction in government grant received<br />
by WSPL pursuant to the Job Credit Scheme implemented by the Singapore<br />
Government in order to assist the enterprises during the economic downturn.<br />
Effective Tax Rate<br />
Our effective tax rate for the FYE 31 December 2009 was 16.99% which is lower than<br />
the <strong>Malaysia</strong>n statutory tax rate of 25%. The lower effective tax rate is mainly due to<br />
the tax on profits of our overseas subsidiary, WSPL which is subject to a lower tax<br />
rate in Singapore.<br />
10.3.2 Factors Affecting Future Financial Conditions and Results<br />
Our Group’s financial condition and results of operations have been, and will continue<br />
to be affected by amongst others, the following key factors:-<br />
(a) The government’s continuous spending in infrastructure and development<br />
works; and<br />
(b) Our ability to maintain our operating margins in the current economic<br />
environment.<br />
After taking into consideration the above factors and the risk factors relating to our<br />
business, industry and our ability to mitigate such risk factors as set out in Section 4<br />
of this Introductory Document, we are of the opinion that our future financial condition<br />
and results will remain profitable.<br />
This is mainly due to our competitive strengths and advantages as set out in Section<br />
6.1.4 of this Introductory Document as well as the prospects of the SCADA Industry<br />
as set out in Section 7.5 of this Introductory Document. Our future plans and<br />
strategies as set out in Section 6.2.1 of this Introductory Document will further<br />
contribute to sustainable growth in our financial performance.<br />
94
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
10.3.3 Segmental Analysis<br />
The Group operates principally in one industry. As such, reporting on geographical<br />
segmental information is presented, based on the Group’s management and internal<br />
reporting structure.<br />
Segment results, assets and liabilities include items directly attributable to a segment<br />
as well as those that can be allocated on a reasonable basis. Unallocated items<br />
comprise mainly interest-earning assets and revenue, corporate assets and<br />
expenses. Segment capital expenditure is the total cost incurred during the year to<br />
acquire property, plant and equipment. Inter-segment pricing is determined on a<br />
negotiated basis.<br />
The directors of the Company are of the opinion that the inter-segment transactions<br />
have been entered into in the normal course of business and the terms are no less<br />
favourable than those arranged with third parties.<br />
The table below sets forth the breakdown of our Group’s revenue by geographical<br />
segments and consolidated PBT for the past three (3) FYE 31 December 2007 to 31<br />
December 2009 and the six (6)-month FPE 30 June 2010:-<br />
Analysis of contribution to revenue by geographical segments:-<br />
Year 2007 <strong>Malaysia</strong> Singapore Europe Others<br />
Inter-Segment<br />
Elimination Total<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from external 10,797 41,140 - - - 51,937<br />
customers<br />
Inter-segment revenue 1,735 632 - - (2,367) -<br />
Total revenue 12,532 41,772 - - (2,367) 51,937<br />
Segment results 5,235 8,271 - (14) (4,676) 8,816<br />
Interest income 523<br />
Other income 374<br />
Profit before tax 9,713<br />
Tax expense (1,475)<br />
Net profit for the financial<br />
year<br />
8,238<br />
Segment assets 14,812 22,416 - 4 - 37,232<br />
Unallocated assets 16,437<br />
Total segment assets 53,669<br />
Segment liabilities 1,661 2,312 - 2 - 3,975<br />
Unallocated liabilities 313<br />
Total segment liabilities 4,288<br />
Capital expenditure 3,546 172 - - - 3,718<br />
Amortisation<br />
depreciation<br />
and<br />
Non-cash expenses other<br />
than depreciation and<br />
amortisation<br />
Revenue from sales to<br />
external customers by<br />
location of customers<br />
259 267 - - - 526<br />
- - - - - -<br />
10,026 41,140 771 - - 51,937<br />
95
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
Year 2008 <strong>Malaysia</strong> Singapore Europe Others<br />
Inter-Segment<br />
Elimination Total<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from external<br />
customers 9,917 41,240 - - - 51,157<br />
Inter-segment revenue 1,106 751 - - (1,857) -<br />
Total revenue 11,023 41,991 - - (1,857) 51,157<br />
Segment results 4,073 9,813 - (3) (4,815) 9,068<br />
Interest income 587<br />
Other income 304<br />
Profit before tax 9,959<br />
Tax expense (1,898)<br />
Net profit for the financial<br />
year 8,061<br />
Segment assets 27,529 31,742 - 2 - 59,273<br />
Segment liabilities 2,052 3,610 - 2 - 5,664<br />
Capital expenditure 359 794 - - - 1,153<br />
Amortisation and<br />
depreciation 272 227 - - - 499<br />
Non-cash expenses other<br />
than depreciation and<br />
amortisation 9 8 - - - 17<br />
Revenue from sales to<br />
external customers by<br />
location of customers 7,895 41,240 2,022 - - 51,157<br />
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96
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
Year 2009 <strong>Malaysia</strong> Singapore Europe Others<br />
Inter-Segment<br />
Elimination Total<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from external<br />
customers 11,107 50,894 - - - 62,001<br />
Inter-segment revenue 1,895 96 - - (1,991) -<br />
Total revenue 13,002 50,990 - - (1,991) 62,001<br />
Segment results 12,005 13,659 - (7) (12,221) 13,436<br />
Interest income 575<br />
Other income 1,153<br />
Profit before tax 15,164<br />
Tax expense (2,550)<br />
Net profit for the financial<br />
year 12,614<br />
Segment assets 34,862 34,379 - - - 69,241<br />
Segment liabilities 2,396 4,217 - 2 - 6,615<br />
Capital expenditure 211 205 - - - 416<br />
Amortisation and<br />
depreciation 268 292 - - - 560<br />
Non-cash expenses other<br />
than depreciation and<br />
amortisation 264 - - - - 264<br />
Revenue from sales to<br />
external customers by<br />
location of customers 7,991 50,894 3,116 - - 62,001<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
97
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
FPE 30 June 2010 <strong>Malaysia</strong> Singapore Europe Others<br />
Inter-Segment<br />
Elimination Total<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from external<br />
customers 4,804 22,852 - - - 27,656<br />
Inter-segment revenue 745 - - - (745) -<br />
Total revenue 5,549 22,852 - - (745) 27,656<br />
Segment results (214) 5,909 - - (270) 5,425<br />
Interest income 300<br />
Other income 228<br />
Profit before tax 5,953<br />
Tax expense (1,023)<br />
Net profit for the financial<br />
year 4,930<br />
Segment assets 26,831 38,640 65,471<br />
Segment liabilities 1,674 5,272 - - - 6,946<br />
Capital expenditure 39 286 - - - 325<br />
Amortisation and<br />
depreciation 139 151 - - - 290<br />
Non-cash expenses other<br />
than depreciation and<br />
amortisation - - - - - -<br />
Revenue from sales to<br />
external customers by<br />
location of customers 3,889 22,852 915 - - 27,656<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
98
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
Analysis of contribution to revenue by companies:-<br />
2007 WMSC WMSB GBTech WSPL WHKPL Elimination Consolidated<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from<br />
external<br />
customers<br />
Inter-segment<br />
revenue<br />
317 10,480 - 41,140 - - 51,937<br />
1,735 - 632 - (2,367) -<br />
Total revenue 2,052 10,480 41,772 - (2,367) 51,937<br />
Segment result 4,555 681 (1) 8,271 (14) (4,676) 8,816<br />
Interest income 523<br />
Other income 374<br />
Profit before tax 9,713<br />
Tax expense (1,475)<br />
Net profit for the<br />
financial year<br />
8,238<br />
Segment assets 1,855 12,957 - 22,416 4 - 37,232<br />
Unallocated assets 16,437<br />
Total<br />
asset<br />
segment<br />
53,669<br />
Segment liabilities 82 1,577 2 2,312 2 - 3,975<br />
Unallocated<br />
liabilities<br />
313<br />
Total<br />
liabilities<br />
segment<br />
4,288<br />
Capital expenditure 94 3,452 172 - - 3,718<br />
Amortisation<br />
depreciation<br />
and 66 193 - 267 - - 526<br />
Non-cash<br />
- - - - - - -<br />
expenses other<br />
than depreciation<br />
and amortization<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
99
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
2008 WMSC WMSB GBTech WSPL WHKPL Elimination Consolidated<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from<br />
external<br />
customers<br />
Inter-segment<br />
revenue<br />
1,450 8,467 - 41,240 - - 51,157<br />
1,106 - - 751 - (1,857) -<br />
Total revenue 2,556 8,467 - 41,991 - (1,857) 51,157<br />
Segment result 4,047 29 (3) 9,813 (3) (4,815) 9,068<br />
Interest income 587<br />
Other income 304<br />
Profit before tax 9,959<br />
Tax expense (1,898)<br />
Net profit for the<br />
financial year<br />
8,061<br />
Segment assets 1,980 16,481 9,068 31,742 2 - 59,273<br />
Segment liabilities 71 1,978 3 3,610 2 - 5,664<br />
Capital expenditure 27 332 - 794 - - 1,153<br />
Amortisation<br />
depreciation<br />
and 47 225 - 227 - - 499<br />
Non-cash<br />
9 - - 8 - - 17<br />
expenses other<br />
than depreciation<br />
and amortization<br />
2009 WMSC WMSB GBTech WSPL WHKPL Elimination Consolidated<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from<br />
external<br />
customers<br />
Inter-segment<br />
revenue<br />
76 11,031 50,894 - - 62,001<br />
1,895 - 96 - (1,991) -<br />
Total revenue 1,971 11,031 50,990 - (1,991) 62,001<br />
Segment result 11,811 194 13,659 (7) (12,221) 13,436<br />
Interest income 575<br />
Other income 1,153<br />
Profit before tax 15,164<br />
Tax expense (2,550)<br />
Net profit for the<br />
financial year<br />
12,614<br />
Segment assets 15,996 18,819 47 34,379 - - 69,241<br />
Segment liabilities 191 2,203 2 4,217 2 - 6,615<br />
Capital expenditure 131 80 - 205 - - 416<br />
Amortisation<br />
depreciation<br />
and 51 217 - 292 - - 560<br />
Non-cash<br />
41 223 - - - - 264<br />
expenses other<br />
than depreciation<br />
and amortization<br />
100
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
FPE 30 June2010 WMSC WMSB GBTech WSPL WHKPL<br />
Inter-Segment<br />
Elimination Total<br />
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from external<br />
customers 34 4,769 - 22,852 - - 27,656<br />
Inter-segment revenue 745 - - - - (745) -<br />
Total revenue 779 4,769 - 22,852 - (745) 27,656<br />
Segment results (251) 37 - 5,909 - (270) 5,425<br />
Interest income 300<br />
Other income 228<br />
Profit before tax 5,953<br />
Tax expense (1,023)<br />
Net profit for the financial<br />
period 4,930<br />
Segment assets 9,727 17,096 8 38,640 - - 65,471<br />
Segment liabilities 43 1,630 1 5,272 - - 6,946<br />
Capital expenditure 26 13 - 286 - - 325<br />
Amortisation and<br />
depreciation<br />
Non-cash expenses other<br />
than depreciation and<br />
30 109 - 151 - - 290<br />
amortisation - - - - - - -<br />
Analysis of contribution to revenue by products/services (segregated by<br />
projects and maintenance):-<br />
2007 Projects Maintenance Trading Elimination Consolidated<br />
RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from<br />
external<br />
customers<br />
Inter-segment<br />
revenue<br />
43,449 8,488 - - 51,937<br />
2,367 - - (2,367) -<br />
Total revenue 45,816 8,488 - (2,367) 51,937<br />
Segment result 10,687 2,805 - (4,676) 8,816<br />
Interest income 523<br />
Other income 374<br />
Profit before tax 9,713<br />
Tax expense (1,475)<br />
Net profit for the<br />
financial year<br />
8,238<br />
101
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
2008 Project Maintenance Trading Elimination Consolidated<br />
RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from 41,143 9,992 22 - 51,157<br />
external customers<br />
Inter-segment<br />
revenue<br />
1,857 - (1,857) -<br />
Total revenue 43,000 9,992 22 (1,857) 51,157<br />
Segment result 11,040 2,840 3 (4,815) 9,068<br />
Interest income 587<br />
Other income 304<br />
Profit before tax 9,959<br />
Tax expense (1,898)<br />
Net profit for the<br />
financial year<br />
8,061<br />
2009 Project Maintenance Trading Elimination Consolidated<br />
RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue<br />
external<br />
customers<br />
from 50,436 11,473 92 - 62,001<br />
Inter-segment<br />
revenue<br />
1,991 - - (1,991) -<br />
Total revenue 52,427 11,473 92 (1,991) 62,001<br />
Segment result 22,223 3,415 19 (12,221) 13,436<br />
Interest income 575<br />
Other income 1,153<br />
Profit before tax 15,164<br />
Tax expense (2,550)<br />
Net profit for the<br />
financial year<br />
12,614<br />
FPE 30 June 2010 Project<br />
Maintenance Trading<br />
102<br />
Inter-Segment<br />
Elimination Total<br />
RM’000 RM’000 RM’000 RM’000 RM’000<br />
Revenue from external<br />
customers<br />
Inter-segment revenue<br />
21,530 6,036 90 - 27,656<br />
745 - - (745) -<br />
Total revenue 22,275 6,036 90 (745) 27,656<br />
Segment results 4,200 1,463 32 (270) 5,425<br />
Interest income 300<br />
Other income 228<br />
Profit before tax 5,953<br />
Tax expense (1,023)<br />
Net profit for the financial<br />
period 4,930<br />
Based on the segmental analysis, our Group’s revenue for the past three (3) FYE 31<br />
December 2009 and the six (6)-month FPE 30 June 2010 were contributed by the<br />
revenue generated mainly from operations in <strong>Malaysia</strong> and Singapore.<br />
The <strong>Malaysia</strong> and Singapore markets are the main contributors of revenue to our<br />
Group. The operations in Singapore contributed to about 82% of our Group’s total
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
revenue with the balance coming from operations in <strong>Malaysia</strong>. In Singapore, our<br />
business is more focused in the power industry and also building facilities monitoring<br />
whereas in <strong>Malaysia</strong>, we are engaged mostly in sectors such as water and wastewater<br />
utility, railway monitoring and building facilities monitoring.<br />
Due to certain restrictions, our group faced challenges in getting into the oil and gas<br />
and power distribution sectors in <strong>Malaysia</strong> which generate better profit margins as<br />
compared to other industries. In <strong>Malaysia</strong> and Singapore, we market directly and use<br />
strategic alliances whereas in our overseas market, we market using agents and also<br />
enter into joint venture arrangements. Our Group is currently planning to enter into a<br />
joint venture arrangement with a company in Indonesia to market our Group’s system<br />
to Indonesia. Under this arrangement, the Willowglen Group will be responsible for<br />
the supply and implementation of SCADA systems and the provision of technical<br />
expertise.<br />
Our Group has also started negotiations with a company in Thailand who are seeking<br />
to secure the distribution rights of the Willowglen Group’s Syslink software in<br />
Thailand.<br />
10.3.4 Material Changes in Revenue<br />
The reasons for the material changes in revenue for the past three (3) FYE 31<br />
December 2009 and the six (6)-month FPE 30 June 2010 are set out in Section<br />
10.3.1 of this Introductory Document.<br />
10.3.5 Impact of Foreign Exchange Rates<br />
Our Group operates internationally and are exposed to fluctuations in various<br />
currencies, mainly the Euro and the USD. Our revenue from overseas sales are billed<br />
in Euro and USD while our reporting currency is denominated in RM. Our Group has<br />
also potential foreign exchange exposures in our foreign subsidiary, WSPL, operating<br />
out of Singapore. However, our Group hedges our exposure to fluctuations in foreign<br />
exchange rates where necessary except for our foreign subsidiary, WSPL.<br />
Notwithstanding the above, for the past three (3) FYE 31 December 2009 and the six<br />
(6) month FPE 30 June 2010, our Group’s financial performance was not materially<br />
affected by fluctuations in the foreign exchange rates.<br />
10.3.6 Impact of Inflation<br />
There was no material impact of inflation on our historical profits for the past three (3)<br />
FYE 31 December 2007 to 31 December 2009 and the six (6)-month FPE 30 June<br />
2010.<br />
10.3.7 Government, Economic, Fiscal or Monetary Policies or Factors<br />
There is no government, economic, fiscal or monetary policies or factors that have<br />
materially impacted our historical profits for the past three (3) FYE 31 December 2007<br />
to 31 December 2009 and the six (6)-month FPE 30 June 2010.<br />
103
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
10.3.8 Liquidity and Capital Resources<br />
Our Group's main sources of liquidity and capital consists of a combination of internal<br />
sources of funds derived mainly from cash generated from operations as well as<br />
external sources of funds from capital contribution by our existing shareholders.<br />
(a) Cash Flows<br />
The summary of the consolidated cash flow statement for the audited FYE 31<br />
December 2009 and the six(6)-month FPE 30 June 2010 is as follows:-<br />
104<br />
Audited FYE<br />
31 December<br />
2009<br />
Six (6)-month<br />
FPE 30 June<br />
2010<br />
RM’000 RM’000<br />
Net cash flow from operating activities 8,736 4,842<br />
Net cash flow used in investing activities (2,541) (303)<br />
Net cash flow used in financing activities (5,641) (7,974)<br />
Net increase/(decrease) in cash and cash<br />
554 (3,435)<br />
equivalents<br />
Effect of exchange rate changes on opening cash and<br />
cash equivalents 1,437 (711)<br />
Cash and cash equivalents at the beginning of the year 28,560 30,551<br />
Cash and cash equivalents at the end of the year 30,551 26,405<br />
Net cash flow from operating activities<br />
For the FYE 31 December 2009, our Group generated cash flow from<br />
operating activities before adjustments for working capital of approximately<br />
RM14.57 million. After adjustments for the increase in working capital of<br />
approximately RM5.83 million, our Group’s net cash inflows from operating<br />
activities was approximately RM8.74 million. This amount is lower than<br />
reflected in our income statement due to the fact that the billings were done<br />
towards the end of 2009 and the collection of the trade receivables were only<br />
due and subsequently collected on the following financial quarter.<br />
For the FPE 30 June 2010, the operating profit before working capital<br />
changes amounted to RM5.20 million. However, after adjustments for<br />
working capital such as inventories, amount due from contract customers,<br />
receivables and payables, the net cash inflow from our operations was<br />
RM4.84 million.<br />
Net cash flow used in investing activities<br />
For the FYE 31 December 2009, the cash flow used in investing activities<br />
mainly consists of capital expenditure as below:-<br />
Capital Expenditure Amount<br />
(RM‘000)<br />
Office Furniture 3<br />
Office Equipment 55<br />
Computer Equipment 185<br />
Motor Vehicle 92<br />
Renovation 81<br />
Total 416
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
There was an amount of approximately RM2.14 million used for the purchase<br />
of subordinated notes issued by OSK as investment securities. It was noted<br />
that there was an inflow of cash of RM22,000 from the disposal of computer<br />
equipments in the financial year.<br />
For FPE 30 June 2010, the net cash used in investing activities is mainly due<br />
to the purchase of property, plant and equipment which includes: -<br />
Capital Expenditure Amount<br />
(RM’000)<br />
Office Renovation 70<br />
Computer Equipment 59<br />
Office Equipment 15<br />
Office Furniture 3<br />
Motor Vehicles 178<br />
Total 325<br />
The capital expenditure is funded by our internally generated funds and the<br />
cash flow utilisation will not affect the operations of our Company. The capital<br />
expenditure is for the daily operations of our business and will indirectly help<br />
our Group to generate future income.<br />
Our Group envisages that there will be an amount of RM172,500 per annum<br />
of cash inflow due to the interest from the subordinated notes amounting to<br />
RM2.3 million purchased. The amount will be paid semi-annually in January<br />
and July each year at a coupon rate of 7.50% per annum until its maturity on<br />
13 July 2018.<br />
Net cash flow used in financing activities<br />
Our Group’s net cash used in financing activities amounted to approximately<br />
RM5.64 million for the FYE 31 December 2009 was mainly due to the<br />
payment of dividends amounting to approximately RM4.95 million (equivalent<br />
to 2 sen per Share). There was another amount of RM670,000 in the form of<br />
fixed deposits pledged to the bank for bank guarantee facilities. The<br />
outstanding amount of fixed deposits pledged to the bank is standing at<br />
RM1.73 million as of 31 December 2009. The remaining sum of<br />
approximately RM20,000 was used for the buy back of our Shares.<br />
For FPE 30 June 2010, there was a register of RM0.54 million used, which<br />
was the amount of fixed deposits pledged to licensed banks for bank<br />
guarantees facilities and a payment of dividend to shareholders of RM7.43<br />
million.<br />
Following the above, it is noted our operations are funded by a combination<br />
of internal and external sources of funds. Internal sources of funds comprise<br />
mainly of cash generated from our operating activities and cash and bank<br />
balances, while external sources of funds comprise mainly of capital<br />
contribution from our existing shareholders.<br />
Our Directors are of the view that there are no legal, financial or economic<br />
restrictions on the ability of our subsidiary to transfer funds to our Company in<br />
the form of cash dividends and/or loan or advances.<br />
105
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
(b) Working capital<br />
Our Board is of the opinion that, after taking into consideration the cash flow<br />
position, our Company would have adequate working capital for a period of<br />
twelve (12) months from the date of this Introductory Document.<br />
(c) Borrowings<br />
10.3.9 Material Commitment<br />
As at the LPD, our Group does not have any outstanding borrowings.<br />
As at the LPD, our Directors are not aware of any material commitments for capital<br />
expenditure contracted or known to be contracted by our Group that is likely to have a<br />
material adverse effect on our financial position.<br />
10.3.10 Material Litigation<br />
As at the LPD, neither our Company nor our subsidiaries are engaged in any<br />
litigation, either as plaintiff or defendant, which has a material effect on our financial<br />
position or our subsidiaries and our Directors have no knowledge of any proceedings<br />
pending or threatened against us and our subsidiaries or of any facts likely to give<br />
rise to any proceedings which might materially and adversely affect our position or<br />
business.<br />
10.3.11 Contingent Liabilities<br />
Save as disclosed below, our Board does not know of any material contingent<br />
liabilities incurred by our Group that is likely to have a material adverse effect on our<br />
financial position.<br />
Contingent Liabilities Amount<br />
(RM’000)<br />
Corporate guarantee granted to CIMB in consideration of CIMB 1,500<br />
agreed to extend banking facilities of up to RM1.5 million to WMSB<br />
10.3.12 Key Financial Ratios<br />
The key financial ratios for the past three (3) FYE 31 December 2009 and the six (6)<br />
month FPE 30 June 2010 are as follows:-<br />
Trade receivables turnover period<br />
(days)<br />
Trade payables turnover period<br />
(days)<br />
106<br />
FYE 31 December Six (6) month<br />
FPE 30 June<br />
2007 2008 2009 2009* 2010*<br />
74 75 54 61 67<br />
31 35 31 32 41<br />
Inventory turnover period (days) 14 17 15 16 17<br />
Note: * Annualised
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
Trade Receivables<br />
As at 30 June 2010, the trade receivables of our Group amounted to approximately<br />
RM10.89 million which can be analysed as follows:-<br />
Within credit period<br />
Exceed<br />
credit period<br />
0-30 days 31-60 days 0ver 60 days Total<br />
Trade receivables (RM‘000) 9,115 804 974 10,893<br />
% of total trade receivables (%) 83.7 7.4 8.9 100.0<br />
For the FYE 31 December 2007 and 2008, the trade receivables turnover period was<br />
74 days and 75 days respectively. Beginning the FYE 31 December 2009, we<br />
resolved to closely monitor our credit policy and to take reasonable steps to ensure<br />
the collection of trade receivables within the credit period granted. As a result, the<br />
trade receivables turnover period improved to 54 days in the FYE 31 December 2009.<br />
This comes about despite the unfavourable economic conditions in the first half of<br />
2009, which caused some our clients to conserve cash flows in their business. Our<br />
Group has put in extra effort to ensure the timely collection of outstanding trade<br />
receivables. Our management is of the opinion that the remaining outstanding trade<br />
receivables are recoverable in full after taking into consideration the established<br />
payment track record of those customers and the close relationship between our<br />
Group and the said customers.<br />
Our management will continuously monitor our customers closely to ensure<br />
collections are in line with the normal credit period.<br />
Trade Payables<br />
The normal credit period granted to us by our suppliers and sub-contractors ranges<br />
from 30 to 60 days or on a back-to-back basis. There were no significant disputes<br />
with respect to trade payables for the financial years / periods under review.<br />
As at 30 June 2010, the trade payables of our Group amounted to approximately<br />
RM4.03 million which can be analysed as follows:-<br />
Within credit period<br />
Exceed<br />
credit period<br />
0-30 days 31-60 days 0ver 60 days Total<br />
Trade payables (RM‘000) 3,079 258 695 4,032<br />
% of total trade payables (%) 76.4 6.4 17.2 100.0<br />
107
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
Inventories<br />
Our inventory turnover period increased from 14 days for the FYE 31 December 2007<br />
to 17 days for the FYE 31 December 2008 due to slower sales as reflected in the<br />
analysis of our operating results section earlier. As our business is conducted on a<br />
project to project basis, we order components and other ancillary equipment as and<br />
when they are needed. However, there are instances where there are delays in the<br />
projects which cause us to hold on to the components and equipment longer than<br />
desired.<br />
The inventory level is closely monitored by estimating the demand required from the<br />
projects and the lead time required to produce them. Therefore, we do not carry a<br />
large amount of inventories. Our management is of the view that our inventory<br />
turnover period is low and we will continue to keep it at a minimal level.<br />
10.3.13 State of our Order Book<br />
The Group’s outstanding order book as at LPD is approximately RM54.5 million. The<br />
current outstanding order book of significant order (value of RM1.00 million and<br />
above) as at 31 July 2010:-<br />
<strong>Malaysia</strong><br />
Brief Description of Project<br />
108<br />
Expected Date<br />
of Completion<br />
Contract<br />
Value<br />
(RM’000)<br />
Upgrade of SCADA System 31.12.2010 6,394<br />
Supply, Installation & Commissioning of Perimeter Security<br />
System<br />
Supply, Installation & Commissioning of Extra Low Voltage<br />
Services<br />
Supply, Installation & Commissioning of Integrated Security<br />
Operation Surveillance System (“ISOSS”)<br />
Supply, Installation & Commissioning of SCADA, CCTV,<br />
PA System & Data Networking System<br />
31.08.2010 1,945<br />
31.10.2010 1,680<br />
16.12.2010 1,650<br />
31.10.2010 1,573<br />
Supply, Installation & Commissioning of ISOSS 31.08.2010 1,493<br />
Supply, Installation & Commissioning of CCTV and SCADA<br />
System<br />
31.08.2010 1,440<br />
Supply, Installation & Commissioning of ISOSS 31.08.2010 1,103<br />
Singapore<br />
17,278<br />
Brief Description of Project<br />
Expected Date<br />
of Completion<br />
Value<br />
(RM’000)<br />
Supply, Installation & Commissioning of LMD 17.12.2010 14,366<br />
Supply, Installation & Commissioning of ISOSS 31.12.2010 8,785<br />
Supply, Installation & Commissioning of Lift Monitoring<br />
Device (“LMD”) & Telemetry Monitoring System (“TMS”)<br />
25.12.2013 7,475<br />
Supply, Installation & Commissioning of LSS 05.06.2012 6,149
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
Brief Description of Project<br />
Expected Date<br />
of Completion<br />
Value<br />
(RM’000)<br />
Supply, Installation & Commissioning of LSS 04.02.2011 3,717<br />
Supply, Installation & Commissioning of Partial Discharge<br />
Monitoring System (“PDMS”)<br />
109<br />
31.12.2010 3,623<br />
Supply, Installation & Commissioning of LMD & LSS 30.06.2011 2,138<br />
Supply, Installation & Commissioning of Power Monitoring<br />
System (“PMS”)<br />
Supply, Installation & Commissioning of Programmable<br />
Logic Control (“PLC”) & SCADA System<br />
Supply, Installation & Commissioning of Cable Oil Pressure<br />
Monitoring (“COP”) System<br />
31.03.2011 1,325<br />
31.12.2010 1,058<br />
12.08.2013 1,549<br />
Supply, Installation & Commissioning of LSS 31.08.2014 6,646<br />
Maintenance of TMS 31.07.2014 7,096<br />
Maintenance of TMS 31.07.2014 4,080<br />
Maintenance of PDMS 31.05.2012 2,915<br />
Maintenance of TMS 31.07.2014 2,141<br />
Maintenance of Remote Terminal Unit (“RTU”) 30.11.2010 1,942<br />
Maintenance of COP System 31.12.2010 1,688<br />
Maintenance of ISOSS 31.12.2012 1,586<br />
Maintenance of Gas Monitoring System 31.01.2011 1,176<br />
Maintenance of LSS 31.12.2010 1,123<br />
Maintenance of TMS 31.07.2014 1,112<br />
81,690<br />
The Group continuously sources for new projects and businesses and the projects<br />
that we have tendered for as at the LPD amounts to RM138.66 million. However, we<br />
do not provide any assurance that all the projects tendered for by our Group will<br />
materialise.<br />
10.3.14 Trend Information<br />
As at LPD, to the best of our Directors’ knowledge and belief, our operations have not<br />
been and are not expected to be affected by any of the following:<br />
(a) known trends, demands, commitments, events and uncertainties that have<br />
had or that we reasonably expect to have, a material favourable or<br />
unfavourable impact on our financial performance, position and operations<br />
other than those discussed in this section, and Sections 4, 7 and 8 of this<br />
Introductory Document;<br />
(b) unusual, infrequent events or transactions or any significant economic<br />
changes that have materially affected our financial performance, positions<br />
and operations of our Group save as disclosed in this section and Section 4<br />
of this Introductory Document;
Company No. 462648-V<br />
10. FINANCIAL INFORMATION (CONT’D)<br />
(c) known trends, demands, commitments, events or uncertainties that have<br />
resulted in a material impact on our Company revenue and / or profits, save<br />
for those have been disclosed in this section, and Sections 7 and 8 of this<br />
Introductory Document;<br />
(d) known events, demands, commitments, events or uncertainties that have had<br />
or that we reasonably expect to have, a material favourable or unfavourable<br />
impact on our Group’s liquidity and capital resources, other than those<br />
disclosed in this section, and Sections 4, 7 and 8 of this Introductory<br />
Document; and<br />
(e) known trends, demands, commitments, events or uncertainties that are<br />
reasonably likely to make our Group’s historical financial statements not<br />
indicative of our future performance and position other than those disclosed<br />
in this section and in Sections 4 and 7 of this Introductory Document.<br />
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK<br />
110
Company No. 462648-V<br />
14. ADDITIONAL INFORMATION<br />
14.1 SHARE CAPITAL<br />
(i) As at the LPD, our Board is not aware of any need of capital raising and is of the<br />
opinion that no security will be allotted or issued on the basis of this Introductory<br />
Document later than twelve (12) months after the date of the issue of this Introductory<br />
Document.<br />
(ii) None of the Group's capital is under option or agreed conditionally or unconditionally<br />
to be put under option.<br />
(iii) There is currently no scheme for or involving our Directors and employees in the<br />
capital of our Group.<br />
(iv) There is no limitation imposed either by the laws of <strong>Malaysia</strong> or by the Memorandum<br />
and Articles of Association of Willowglen on the rights of non-resident shareholders to<br />
hold or exercise voting rights in respect of the Willowglen Shares.<br />
(v) As at the LPD, there is only one (1) class of shares in the Company, namely ordinary<br />
shares of RM0.10 each, all of which rank pari passu with one another.<br />
(vi) Subject to any special rights attached to any Willowglen shares which the Group may<br />
issue in the future, ordinary shareholders shall, in proportion to the amount paid-up on<br />
the Willowglen Shares held by them, be entitled to share in the whole of the profits<br />
paid out by the Company as dividends and other distributions and the whole of any<br />
surplus in the event of any liquidation, in accordance with the Articles of Association of<br />
the Company.<br />
(vii) Each shareholder shall be entitled to vote at any general meeting of the Company in<br />
person or in proxy, or by attorney, and on a show of hands, each person present who<br />
is a shareholder or representative or proxy or attorney of a shareholder shall have 1<br />
vote, and on a poll, every shareholder present in person or by proxy or by attorney or<br />
other duly authorized representative shall have 1 vote for each Willowglen Share held.<br />
A proxy may but need not be a member of the Company.<br />
14.2 ARTICLES OF ASSOCIATION<br />
The following provisions are reproduced from our Group’s Articles of Association which<br />
comply with the Listing Requirements of <strong>Bursa</strong> Securities and Rules of <strong>Bursa</strong> Depository:-<br />
(i) Transfer of Shares<br />
The provisions in the Articles of Association in respect of the arrangements for<br />
transfer of the securities and restrictions on their free transferability are as follows:-<br />
Article 18<br />
The transfer of any listed security or class of listed security of the Company, shall be<br />
by way of book entry by the Central Depository in accordance with the Rules and,<br />
notwithstanding section 103 and 104 of the Act, but subject to subsection 107C(2) of<br />
the Act and any exemption that may be made from compliance with subsection<br />
107C(1) of the Act, the Company shall be precluded from registering and effecting<br />
any transfer of the listed securities. Subject to these Articles, there shall be no<br />
restriction on the transfer of fully paid shares except where required by law.<br />
199
Company No. 462648-V<br />
14. ADDITIONAL INFORMATION (CONT’D)<br />
Article 19<br />
No share shall in any circumstances be transferred to any infant, bankrupt or person<br />
of unsound mind.<br />
Article 22<br />
The Register of Transfers may be closed at such time and for such period as the<br />
Directors may from time to time determine Provided Always that it shall not be closed<br />
for more than thirty (30) days in any year. Any notice of intention to fix the books<br />
closing date and the reason therefore shall be given to the Exchange, such notice<br />
shall state the book closing date, which shall be at least twelve (12) market days (or<br />
such other period as prescribed by the Exchange or any relevant governing laws<br />
and/or guidelines) after the date of notification to the Exchange, and the address of<br />
share registry at which documents will be accepted for registration. At least three (3)<br />
market days prior notice shall be given to the Central Depository to enable the<br />
Central Depository to prepare the appropriate Record of Depositors.<br />
Article 23<br />
Neither the Company nor its Directors nor any of its officers shall incur any liability for<br />
registering or acting upon a transfer of shares apparently made by sufficient parties,<br />
although the same may by reason of any fraud or other cause not known to the<br />
Company or its Directors or other officers be legally in-operative or insufficient to pass<br />
the property in the shares proposed or professed to be transferred, and although the<br />
transfer may, as between the transferor and transferee, be liable to be set aside and<br />
in every such case, the person registered as transferee, his executors, administrators<br />
and assignees alone shall be entitled to be recognised as the holder of such shares<br />
and the previous holder shall, so far as the Company is concerned, be deemed to<br />
have transferred his whole title thereto. Provided always that where the share is a<br />
depository security, subject to the Rules, a transfer or withdrawal of the share may be<br />
carried out by the person becoming so entitled.<br />
(ii) Remuneration of our Directors<br />
The provisions in the Articles dealing with the remuneration of the Directors of our<br />
Group are as follows:-<br />
Article 75<br />
The Company in a general meeting shall from time to time determine the fees of the<br />
Director. Unless otherwise directed by the resolution by which it is voted, any such<br />
fees shall be divided amongst the Directors as they may agree or failing agreement<br />
equally. Fees payable to Directors shall not be increased except pursuant to a<br />
resolution passed at a general meeting where notice of proposed increase has been<br />
given in the notice convening the meeting. The Directors shall also be entitled to be<br />
repaid all travelling and hotel expenses properly incurred by them respectively in or<br />
about the performance of their duties as Directors, including their expenses of<br />
travelling to and from meetings of Directors or general meetings or which he may<br />
otherwise incur on or about the business of the Company. If by arrangement with<br />
Directors, any Director shall perform or render any special duties or service outside<br />
his ordinary duties as a Director, in particular without limiting to the generality of the<br />
foregoing if any Director being willing shall be called upon to perform extra services o<br />
to make any special exertions in going or residing away from his usual place of<br />
business or residence for any of the purposes of the Company or in giving special<br />
attention to the business of the Company as a member of a Committee of Directors,<br />
the Directors may pay him special remuneration, in addition to his Director’s fees, and<br />
such special remuneration may be by way of a fixed sum, or otherwise as may be<br />
200
Company No. 462648-V<br />
14. ADDITIONAL INFORMATION (CONT’D)<br />
arranged. PROVIDED THAT no Director (non-executive or executive) shall be<br />
remunerated by a commission on or percentage of turnover and that nothing herein<br />
shall prejudice the power of the Directors to appoint any of their number to be the<br />
employee or agent of the Company at such remuneration which shall not include a<br />
commission on or percentage of turnover. The fee payable to non-executive Directors<br />
shall be fixed sums as shall be determined by the Company in general meeting.<br />
Article 76<br />
The Directors may from time to time appoint any one of or more of their body to be the<br />
Managing Director of the Company and may from time to time (subject to the<br />
provisions of any contract between him and the Company) remove or dismiss him<br />
from office and appoint another in his place. Where the period of appointment of the<br />
Managing Director is for a fixed term, the term shall not exceed five (5) years with<br />
powers to the Directors to re-appoint thereafter, and upon such terms as they think fit.<br />
The Company may vest in the Managing Director such of the powers hereby vested in<br />
the Directors generally as they may think fit and such powers may be made<br />
exercisable for such period or periods upon such conditions and subject to such<br />
restrictions and generally upon such terms to remuneration and otherwise as they<br />
may determine and may from time to time revoke, withdraw, alter or vary all or any of<br />
such powers and subject thereto, shall always be under the control of the Board of<br />
Directors. The remuneration of a Managing Director may be by way of salary or<br />
commission or participation in profits or by any or all those modes but shall not include<br />
a commission on or percentage of turnover.<br />
Article 78<br />
(4) An alternate Director may be repaid by the Company such expenses as<br />
might properly be repaid to him if he were a Director and he shall be entitled<br />
to receive from the Company such proportion (if any) of the remuneration<br />
otherwise payable to his appointer as such appointer may by notice in writing<br />
to the Company from time to time direct, but save as aforesaid he shall not in<br />
respect of such appointment be entitled to receive any remuneration from the<br />
Company.<br />
(iii) Voting and Borrowing Powers of Our Directors<br />
The provisions in the Articles dealing with the voting and borrowing powers of the<br />
Directors of the Company including voting powers in relation to proposals,<br />
arrangements or contracts in which they are interested are as follows:-<br />
Article 78<br />
(3) An alternate Director shall be entitled (subject to his giving to the Company<br />
an address within <strong>Malaysia</strong> at which notices may be served on him) to<br />
receive notice of meetings of the Directors and to attend and vote as a<br />
Director at any such meeting at which the Director appointing him is not<br />
personally present and generally in the absence of his appointer to perform<br />
all the functions of his appointer as a Director.<br />
Article 86<br />
The Directors may from time to time at their discretion raise or borrow for the purpose<br />
of the Company such sums of moneys, as they think proper.<br />
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14. ADDITIONAL INFORMATION (CONT’D)<br />
Article 87<br />
The Directors may raise or secure the payment of such money in such manner and<br />
upon such terms and conditions in all respects as they think fit, and in particular by<br />
the issue of debentures or debenture stock of the Company (both present and future)<br />
including uncalled capital, or by means of charges, mortgages, bonds and disposition<br />
in security or bonds of cash-credit, with or without power of sale, as the Directors<br />
shall think fit.<br />
Article 88<br />
The Director, shall not borrow any money or mortgage or charge any of the<br />
Company’s or the subsidiaries’ undertaking, property or any uncalled capital, or to<br />
issue debentures and other securities whether outright or as a security for any debt,<br />
liability or obligation of an unrelated third party.<br />
Article 108<br />
A resolution in writing signed or approved by letter, telegram or facsimile by all the<br />
Directors who may at the time be present in <strong>Malaysia</strong> and who are sufficient to form a<br />
quorum, shall be as valid and effectual as if it had been passed at a meeting of the<br />
Directors duly called and constituted; provided that where a Director is not so present<br />
but has an alternate who is present, then such resolution shall be signed by such<br />
alternate. All such resolutions shall be described as “Directors’ Circular Resolution”<br />
and may consist of several documents in like form each signed by one or more of the<br />
Directors and shall be forwarded or otherwise delivered to the Secretary without delay<br />
and shall be recorded by him the Company’s minute book following the receipt<br />
thereof by him.<br />
Article 109<br />
(1) A Director who is in any way, whether directly or indirectly interested in a<br />
contract or proposed contract with the Company shall declare the nature of<br />
his interest in accordance with the provisions of the Act. Save as by the next<br />
following paragraph of this Article otherwise provided, a Director shall not<br />
vote in respect of any contract or arrangement in which he is interested (and<br />
if he shall do so his vote shall not be counted), nor shall he be counted for the<br />
purpose of any resolution regarding the same in the quorum present at the<br />
meeting, but this Article shall not apply to:-<br />
(i) any arrangement for giving to him any security or indemnity in<br />
respect of money lent by him or obligations undertaken by him for the<br />
benefit of the Company; or<br />
(ii) any arrangement for the giving by the Company of any security to a<br />
third party in respect of a debt or obligation of the Company for which<br />
he himself has assumed responsibility in whole or in part under a<br />
guarantee or indemnity or by the deposit of a security.<br />
(iv) Changes in Capital or Variation of Class Rights<br />
The provisions in the Articles as to changes in the share capital and variation of class<br />
rights, which are as stringent as those provided in the Companies Act, 1965 are as<br />
follows:-<br />
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14. ADDITIONAL INFORMATION (CONT’D)<br />
Article 44<br />
The Company may by ordinary resolution:<br />
(a) Consolidate and divide all of its share capital into shares of larger amounts<br />
than its existing shares.<br />
(b) (i) Cancel any shares which at the date of passing of the resolution have not<br />
been taken, or agreed to be taken, by any person or which have been<br />
forfeited and diminish the amount of its capital by the amount of shares<br />
so cancelled.<br />
(ii) Cancel any shares that have been purchased by the Company and<br />
extinguish all rights attaching to the shares including suspended rights in<br />
accordance with Section 67A of the Act and the Listing Requirements.<br />
(c) Sub-divide shares, or any of them, into shares of smaller amount than is fixed<br />
by the Memorandum of Association (subject, nevertheless, to the provisions of<br />
the Art) and so that the resolution whereby any share is sub-divided may<br />
determine that, as between the holders of the shares resulting from such subdivision,<br />
one or more of the shares may have such preference or other special<br />
rights over, or may have such deferred special rights, or be subject to any<br />
such restrictions as compared with others as the Company has power to<br />
attached to unissued or new shares.<br />
Article 45<br />
(a) The Company may by special resolution reduce its share capital, any capital<br />
redemption reserve fund or any share premium account in any manner and<br />
with, and subject to, any incident authorised, and consent required by law.<br />
(b) The Company may reduce its issued share capital by the cancellation of<br />
shares purchased by the Company and the amount by which the Company’s<br />
issued capital is diminished shall be transferred to the capital redemption<br />
reserve in accordance with Section 67A of the Act and the Listing<br />
Requirements.<br />
Article 46<br />
If at any time the share capital is divided into different classes of shares, the rights<br />
attached to any class (unless otherwise provided by the terms of issue of the shares<br />
of that class) may whether or not the Company is being wound up, be varied with the<br />
sanction of a special resolution passed at a separate General Meeting of the holders<br />
of the shares of the class. To every such separate General Meeting the provisions of<br />
these Articles relating to General Meeting shall mutatis mutandis apply, but so that<br />
the necessary quorum shall be two persons at least holding or representing by proxy<br />
one-third of the issued shares of the class and that any holder of shares of the class<br />
present in person or by proxy may demand a poll. To every such special resolution<br />
the provisions of Section 152 of the Act shall with such adaptations as are necessary<br />
apply. Provided however that in the event of the necessary majority not having been<br />
obtained in the manner aforesaid consent in writing may be secured from Members<br />
holding at least three-fourths of the issued shares of the class and such consent if<br />
obtained within two months from the date of the separate General Meeting shall have<br />
the force and validity of a special resolution duly carried by a vote in person or by<br />
proxy.<br />
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Company No. 462648-V<br />
14. ADDITIONAL INFORMATION (CONT’D)<br />
Article 47<br />
The rights conferred upon the holders of the shares of any class with preference or<br />
other rights shall not, unless otherwise expressly provided by the terms of issue of the<br />
shares of that class, be deemed to be varied by the creation or issue of further shares<br />
ranking as regards participation in the profits or assets of the Company in some or in<br />
all respects pari passu therewith but in no respect in priority thereto.<br />
14.3 DIRECTORS AND SUBSTANTIAL SHAREHOLDERS<br />
(i) The names, addresses and occupations of our Directors are set out in the Corporate<br />
Directory section of this Introductory Document.<br />
(ii) A Director is not required to hold any qualification shares in our Company unless<br />
otherwise so fixed by our Company in general meeting.<br />
(iii) Save as disclosed in Section 8.1.4 (Directors' Remuneration and Benefits) of this<br />
Introductory Document and other than remuneration in the normal course of<br />
employment, no amount or benefit has been paid or intended to be paid or given by<br />
our Company to any substantial shareholder or Directors within the two (2) years<br />
preceding the date of this Introductory Document.<br />
(iv) Save as disclosed in Sections 9.1 and 9.7 (Related-Party Transactions and Conflict<br />
of Interests) of this Introductory Document, none of our Directors or substantial<br />
shareholders has any interest in any contract or arrangement subsisting as at the date<br />
of this Introductory Document, which is significant in relation to the business of our<br />
Company or our Group taken as a whole.<br />
(v) Save as disclosed in Section 8.3.1 (Substantial Shareholders' Shareholdings) of this<br />
Introductory Document, our Directors are not aware of any person who is able to,<br />
directly or indirectly, jointly or severally, exercise control over our Company and our<br />
subsidiary companies.<br />
14.4 MATERIAL LITIGATION<br />
We are not engaged in any material litigation and/or arbitration, either as plaintiff or<br />
defendant, which has a material effect on our financial position, and our Directors are not<br />
aware of any proceedings pending or threatened, or of any fact likely to give rise to any<br />
proceedings, which might materially and adversely affect our financial position or business.<br />
14.5 MATERIAL CONTRACTS<br />
Neither we nor our subsidiaries have entered into any contracts which are material (not being<br />
contracts entered into in the ordinary course of business) within the two (2) years preceding<br />
the date of this Introductory Document.<br />
14.6 MATERIAL COMMITMENT AND CONTINGENT LIABILITIES<br />
As at the LPD, and as disclosed in Section 10.3.9 of this Introductory Document, our<br />
Directors are not aware of any material capital commitment contracted or known to be<br />
contracted by us which, upon becoming enforceable, may have a material impact on our<br />
financial position.<br />
Further, our Directors are not aware of any contingent liabilities incurred by us that, upon<br />
becoming enforceable, may have a material impact on our financial position, save as<br />
disclosed under Section 10.3.11 of this Introductory Document.<br />
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Company No. 462648-V<br />
14. ADDITIONAL INFORMATION (CONT’D)<br />
14.7 GOVERNMENTAL LAW, DECREE, REGULATION OR OTHER REQUIREMENT<br />
WHICH MAY AFFECT THE REPATRIATION OF CAPITAL AND THE<br />
REMITTANCE OF PROFIT<br />
There is no governmental law, decree, regulation or other requirement which may affect the<br />
repatriation of capital and the remittance of profit by or to our Group.<br />
14.8 TAKE-OVERS<br />
During the last financial year and the current financial year, there were no:-<br />
(i) Public take-over offers by third parties in respect of our Group’s shares; and<br />
(ii) Public take-over offers by our Group in respect of other companies’ shares.<br />
14.9 CONSENTS<br />
(i) The written consents of our Adviser, Solicitors, Principal Bankers, Share Registrar<br />
and Company Secretary to the inclusion in this Introductory Document of their names<br />
in the form and context in which their names appear have been given before the<br />
issue of this Introductory Document, and have not subsequently been withdrawn.<br />
(ii) The written consent of our Auditors and Reporting Accountants to the inclusion in this<br />
Introductory Document of their name, the Accountants’ Report and letter relating to<br />
the proforma / audited consolidated financial information in the form and context in<br />
which they are contained in this Introductory Document has been given before the<br />
issue of this Introductory Document, and has not subsequently been withdrawn.<br />
14.10 DOCUMENTS FOR INSPECTION<br />
Copies of the following documents may be inspected at our head office or such other places<br />
as the SC may determine, during office hours for a period of twelve (12) months from the date<br />
of this Introductory Document:-<br />
(i) Our Memorandum and Articles of Association;<br />
(ii) The Accountants’ Report and Directors’ Report as included in Sections 11 and 13 of<br />
this Introductory Document, respectively;<br />
(iii) The Reporting Accountants’ letters relating to the proforma / audited consolidated<br />
financial information of our Group as at 31 December 2009 referred to in Section 11<br />
of this Introductory Document;<br />
(iv) The letters of consent referred to in Section 14.9 of this Introductory Document;<br />
(v) The audited financial statements of our Group for the last three (3) FYE 31 December<br />
2009; and<br />
(vi) The unaudited six (6)-month financial statements of our Group for the latest FPE 30<br />
June 2010.<br />
14.11 RESPONSIBILITY STATEMENTS<br />
(i) This Introductory Document has been seen and approved by our Directors and<br />
Promoters and they collectively and individually accept full responsibility for the<br />
accuracy of the information contained herein and confirm, having made all<br />
reasonable enquiries, and to the best of their knowledge and belief, there are no<br />
false or misleading statement or other facts the omission of which would make any<br />
statement herein false or misleading.<br />
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Company No. 462648-V<br />
14. ADDITIONAL INFORMATION (CONT’D)<br />
(ii) OSK as the Adviser, acknowledges that, based on all available information and to<br />
the best of its knowledge and belief, this Introductory Document constitutes a full and<br />
true disclosure of all material facts relating to the Transfer.<br />
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