GCCP Resources Limited Offer Document (Part 1) PDF
GCCP Resources Limited Offer Document (Part 1) PDF
GCCP Resources Limited Offer Document (Part 1) PDF
in Malaysia
CORPORATE PROFILE
GCCP Resources Limited is principally engaged in
the quarrying and processing of limestone (calcium
carbonate) by crushing the quarried calcium carbonate
into varying particle sizes as required by our customers.
We have one of the biggest GCC-grade calcium
carbonate reserves and resources in Malaysia.
OUR QUARRIES
GRIDLAND QUARRY
Site area: approx. 25.0 acres
Facility:
up to 40,000 tons/month current crushing capacity
produced 111,148 tons of crushed calcium carbonate
as at Latest Practicable Date
Total measured & indicated mineral resource:
~26 million tons*
Mining elevation: 50.0 - 240.0 metres
Products: PCC-grade crushed calcium carbonate
up to 90.0mm
HYPER ACT QUARRY
Site area: approx. 60.0 acres
Total measured & indicated mineral resource:
~160 million tons*
Mining elevation: 100.0 - 400.0 metres
Planned facilities:
crushing plant by 2H2015 (up to 1,000 tons/hour)
powder production plant by 1Q2016
(initial capacity of 20,000 tons/month)
Planned products: GCC-grade crushed calcium carbonate
up to 100.0mm and calcium carbonate powder
*as at 30 September 2014
INDICATED
RESOURCES
(MT)
TOTAL
MEASURED AND
INDICATED (MT)
INFERRED
RESOURCES
(MT)
1.4
24
26
20
160
10
47
120
HYPER ACT QUARRY
(1)
(2)
GRIDLAND QUARRY
RESERVES
GRIDLAND (MT)
TOTAL (MT)
PROVED
2.2
n.a.
2.2
PROBABLE
19.7
4.3
24.0
TOTAL
22.0(3)
4.3
26.3
(2)
(3)
COMPETITIVE STRENGTHS
WE HAVE ONE OF THE BIGGEST GCC-GRADE CALCIUM
CARBONATE RESERVES AND RESOURCES IN MALAYSIA
Based on the Independent Qualified Persons Report, we
have calcium carbonate reserves of ~26.3 million tons and
total measured & indicated resources of ~186 million tons
QUALITY OF CALCIUM CARBONATE IS OF GCC-GRADE
AND PCC-GRADE
Calcium carbonate content of the calcium carbonate
reserves is higher than 96.0% at both quarries
Average ISO brightness value of 94.7 for calcium carbonate
samples analysed from Hyper Act Quarry
OUR QUARRIES ARE EASILY ACCESSIBLE AND
CONVENIENTLY LOCATED
Situated close to ports, airports, highways and rail systems
Close to potential customers
expedient delivery of products and transport
cost-savings
WE HAVE AN EXPERIENCED AND COMPETENT
MANAGEMENT TEAM
Executive Chairman and CEO, Alex Loo, is a seasoned
entrepreneur with experience in the minerals industry
Experienced senior management in their respective fields
STRONG WORKING RELATIONSHIPS WITH
CONTRACTORS/CONSULTANTS
Established relationships with leading industry players
in respective niche markets in Malaysia
achieve cost efficiencies in crushed
calcium carbonate production
EXTRACTION &
PRODUCTION PROCESS
CALCIUM CARBONATE
AND ITS USES
2 TYPES OF CALCIUM CARBONATE, BASED ON
THEIR COMMERCIAL PRODUCTION METHODS
QUARRYING
Calcium carbonate
blocks are extracted
TRANSPORTED
TO CRUSHER
Calcium carbonate
blocks transported to
primary crusher
PAPER
PRIMARY CRUSHER
Calcium carbonate
blocks are crushed
into smaller rocks
PAINTS
PLASTICS
RUBBER
CONVEYED
TO SECONDARY
CRUSHER
Conveyer belt
transports calcium
carbonate rocks to
secondary crusher
SECONDARY CRUSHER
Crushed into finer
calcium carbonate
particles
CRUSHED
CALCIUM
CARBONATE
FOR SALE
DEVELOPMENT PLAN
(HYPER ACT QUARRY)
1Q2015
Commence the acquisition of a plot of land in
quarry vicinity
2Q2015
Complete acquisition of the plot of land
Commence construction of crushing plant
Commence construction of powder production plant
2H2015
Crushing plant expected to be operational
1Q2016
Powder production plant expected to be operational
PROSPECTS
EXPECTED INCREASE IN WORLD CALCIUM CARBONATE CONSUMPTION
Projected increase in the world demand forecast1
(2011 vs. 2016)
MILLION
TONS
65
60
55
50
.5%.
E 3 P.A
8
71.9
10
38
36
14
11
29
2016
2011
PCC
.1%
14
12
14.0
2011
27
4 A.
GE H P.
A
T
ER W
AV GRO
10
10
60.4
18
16
AG H
ER WT
AV GRO
MILLION
TONS
PCC
GCC
GCC
75
70
PAPER
PAINT
RUBBER
PLASTICS
ADHESIVES / SEALANTS
OTHERS
17.1
2016
US$/MT
160.0
140.0
120.0
102.4
100.0
80.0
130.9
126.4
124.7
102.0
103.7
107.9
136.9
138.0
115.4
116.0
107.2
84.6
89.9
8.58
9.36
9.73
9.58
9.65
9.73
9.75
2007
2008
2009
2010
2011
2012
2013
60.0
40.0
20.0
0
HYDRATED LIME
QUICK LIME
CRUSHED LIME
Sources:
1
Roskill Information Services, as extracted from the Independent Qualified Persons Report
2
Quicklime, Hydrate-Mineral Commodity Summaries 2012 and 2014; Crush Stone-Mineral Commodity Summaries 2012 and 2014, as extracted from the Independent Qualified Persons Report
TABLE OF CONTENTS
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
20
SELLING RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
24
29
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
32
THE PLACEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
37
49
50
PLACEMENT STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
55
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
66
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
RESTRUCTURING EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
GROUP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76
77
TABLE OF CONTENTS
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
99
HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
BUSINESS OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100
OUR QUARRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101
103
INDEPENDENT VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
105
WORK PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
PRODUCTION CAPACITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
107
QUALITY ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108
108
109
CREDIT MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
INVENTORY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
111
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
112
GOVERNMENT REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
113
117
117
STAFF TRAINING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
117
118
SAFETY POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
118
COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
COMPETITIVE STRENGTHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
119
121
INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123
PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126
127
ORDER BOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129
TREND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130
TABLE OF CONTENTS
DIRECTORS, MANAGEMENT AND STAFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135
137
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138
139
SERVICE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
143
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
161
NOMINATING COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
161
REMUNERATION COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
161
AUDIT COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162
BOARD PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
165
166
166
169
171
173
173
INTERESTS OF EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
175
175
176
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
183
SINGAPORE TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
183
187
MALAYSIAN TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
187
189
191
191
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
193
TABLE OF CONTENTS
MEMORANDUM AND ARTICLES OF ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .
193
MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
194
MATERIAL LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
196
197
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
199
CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
201
202
202
A-1
B-1
C-1
D-1
E-1
F-1
G-1
H-1
I-1
J-1
K-1
CORPORATE INFORMATION
BOARD OF DIRECTORS
COMPANY SECRETARY
REGISTERED OFFICE
ISSUE MANAGER,
SPONSOR AND
PLACEMENT AGENT
INDEPENDENT
AUDITORS AND
REPORTING
ACCOUNTANTS
SOLICITORS TO THE
PLACEMENT AND LEGAL
ADVISER TO OUR
COMPANY ON
SINGAPORE LAW
INDEPENDENT
GEOLOGIST
CORPORATE INFORMATION
INDEPENDENT VALUER
PRINCIPAL BANKER
RECEIVING BANKER
DEFINITIONS
In this Offer Document and the accompanying Application Forms, unless the context otherwise
requires, the following definitions apply throughout where the context so admits:
Companies within our Group
Company
Gridland
Hyper Act
Authority
CDP or Depository
CPF
GPF
GPF (Delta)
GPF (Falcon)
Independent Geologist
Independent Valuer
IRAS
Receiving Banker
SGX-ST
Share Registrar
DEFINITIONS
Solicitors to the Placement
Wilma Global
Woodburn
9M
Application Forms
Application List
Articles or Articles of
Association
Associate
(a)
General
(ii)
DEFINITIONS
(b)
(ii)
Award Shares
Awards
Catalist
Catalist Rules
CEO
CFO
Companies Act
DEFINITIONS
Controlling Shareholder
A person who:
(a)
(b)
Conversion
Conversion Shares
127,612,933 Shares, issued and allotted to the PrePlacement Investors on the terms and conditions set out
in the Convertible Loan Agreements
COO
Director
Entity at Risk
EPS
Executive Directors
Executive Officers
FY
10
DEFINITIONS
GCCP Employee Share Option
Scheme or ESOS
Gridland Quarry
Independent Directors
Interested Person
(a)
(b)
Listing
LPS
11
DEFINITIONS
Management Agreement
Management
and
Placement
Arrangements of this Offer Document
Market Day
Memorandum
NAV
Nominating Committee
NTA
Offer Document
Options
Option Shares
PER
Placement
Placement Agreement
Management
and
Placement
Arrangements of this Offer Document
12
DEFINITIONS
Placement Price
Placement Shares
Pre-Placement Investors
Remuneration Committee
Restructuring Exercise
Securities Account
Service Agreements
SFR
Share(s)
Share Split
Shareholder(s)
Singapore
13
DEFINITIONS
Substantial Shareholder(s)
ft
feet
grams
kg
Kilograms
km
Kilometres
Metres
m 3
Cubic metres
mm
Millimetres
Mt
MYR
Malaysian ringgit
sq ft
Square feet
sq km
Square kilometres
sq m
Square metres
S$ and cents
Tons
US$
USA dollars
% or per cent.
Micrometres
All references to Alex Loo, Dato Thomas Koh and Ian Lim in this Offer Document shall be a
reference to Loo An Swee, Dato Koh Boon Thye and Lim Koh Huat respectively.
Any capitalised terms relating to the GCCP Performance Share Plan and the GCCP Employee
Share Option Scheme which are not defined in this section of this Offer Document shall have the
meanings ascribed to them as stated in Appendix I and Appendix J of this Offer Document
respectively.
14
DEFINITIONS
The expression business trust has the same meaning ascribed to it in Section 2 of the Business
Trusts Act (Chapter 31A) of Singapore.
The expression Entity includes a corporation, an unincorporated association, a partnership and
the government of any state, but does not include a trust.
The expressions Depositor, Depository Agent and Depository Register shall have the
meanings ascribed to them respectively in Section 130A of the Companies Act.
References in this Offer Document to Appendix or Appendices are references to an appendix or
appendices respectively in this Offer Document.
Any discrepancies in tables included herein between the total sum of amounts listed and the totals
shown thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not
be an arithmetic aggregation of the figures which precede them.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders
and vice versa. References to persons shall include corporations.
Any reference in this Offer Document and the Application Forms to any statue or enactment is a
reference to that statue or enactment as for the time being amended or re-enacted.
Any word defined under the Companies Act, the Cayman Companies Law, the SFA, SFR or any
statutory modification thereof and used in this Offer Document and the Application Forms shall,
where applicable, have the meaning ascribed to it under the Companies Act, the Cayman
Companies Law, the SFA, SFR or any statutory modification thereto, as the case may be.
Any reference in this Offer Document and the Application Forms to any statute or enactment is a
reference to that statute or enactment as for the time being amended or re-enacted.
Any reference in this Offer Document and the Application Forms to Shares being allotted to an
applicant includes allotment to CDP for the account of that applicant.
Any reference to a time of day in this Offer Document and the Application Forms is a reference to
Singapore time unless otherwise stated.
Any reference in this Offer Document to the Group, we, our, us or their other grammatical
variations is a reference to our Company, or Group, or any member of our Group, as the context
requires.
15
Competent Person
Feasibility Study
GCC
16
ISO
JORC
JORC Code
limestone
17
Mineral Resource
Modifying Factors
Ore Reserves
18
Pre-Feasibility Study
PVC
Polyvinyl Chloride
quarrying
VALMIN Code
wheel loader
19
(b)
(c)
(d)
(e)
other matters discussed in this Offer Document regarding matters that are not historical fact,
are only predictions. These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or achievements
to be materially different from any future results, performance or achievements expected,
expressed or implied by these forward-looking statements. These risks, uncertainties and other
factors include, among others:
(a)
changes in political, social and economic conditions and the regulatory environment in which
we conduct business;
(b)
(c)
changes in the availability and prices of utilities and supplies which we require for the
operation of our business;
(d)
changes in competitive conditions and our ability to compete under such conditions;
(e)
changes in our future capital needs and the availability of financing and capital to fund such
needs;
(f)
(g)
in respect of our quarrying licences, estimates of reserves and resources, our ability to
convert limestone resources into limestone reserves and to replace limestone reserves with
additional limestone resources and statements regarding anticipated future exploitation and
feasibility study results; and
(h)
20
21
SELLING RESTRICTIONS
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for our
Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is
not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation.
No action has been or will be taken under the requirements of the legislation or regulations of, or
of the legal or regulatory requirements of any jurisdiction, except as disclosed below and for the
filing and/or registration of this Offer Document in Singapore in order to permit a public offering
of our Placement Shares and the public distribution of this Offer Document in Singapore. The
distribution of this Offer Document and the offering of our Placement Shares in certain
jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may come
into possession of this Offer Document are required by our Company and the Issue Manager,
Sponsor and Placement Agent to inform themselves about, and to observe and comply with, any
such restrictions at their own expense and without liability to us and the Issue Manager, Sponsor
and Placement Agent.
Malaysia
The Offer Document has not been reviewed and approved by the Securities Commission of
Malaysia (the Commission) and will not be registered as a prospectus with the Commission but
a copy of this Offer Document will be deposited with the Commission in accordance with section
229(4) of the Capital Markets and Services Act, 2007 (CMSA).
Accordingly, this Offer Document or any amendment or supplement to it may not be distributed in
Malaysia directly or indirectly for the purpose of making available, offering or subscription, or
issuing an invitation to subscribe for, the Placement Shares in Malaysia except to a Qualified
Person (as defined below).
Any investment to which this Offer Document relates in Malaysia is available only through a holder
of Capital Markets Services License granted pursuant to the CMSA who carries on the business
of dealing in securities to the following persons (Qualified Person):
(i)
(ii)
(iii) a person who, if they acquire the Placement Shares, does so only pursuant to a private
placement, and as principal on terms that the Placement Shares are acquired at a
consideration of no less than MYR250,000 or its equivalent in foreign currencies for each
transaction whether such amount is paid for in cash or otherwise;
(iv) an individual whose total net personal assets, or total net joint assets with his or her spouse,
exceeds MYR3,000,000 or its equivalent in foreign currencies, excluding the value of the
primary residence of the individual;
(v)
an individual who has a gross annual income exceeding MYR300,000 or its equivalent in
foreign currencies per annum in the preceding 12 months;
(vi) an individual who, jointly with his or her spouse, has a gross annual income of MYR400,000
or its equivalent in foreign currencies per annum in the preceding 12 months;
(vii) a corporation with total net assets exceeding MYR10,000,000 or its equivalent in foreign
currencies based on the last audited accounts;
22
SELLING RESTRICTIONS
(viii) a partnership with total net assets exceeding MYR10,000,000 or its equivalent in foreign
currencies;
(ix) a bank licensee or insurance licensee as defined in the Labuan Financial Services and
Securities Act 2010 (Act 704); and
(x)
an Islamic bank licensee or takaful licensee as defined in the Labuan Islamic Financial
Services and Securities Act 2010 (Act 705).
23
24
(b)
an omission from the Offer Document of any information that should have been included in
it under Section 243 of the SFA; or
(c)
a new circumstance that has arisen since the Offer Document was lodged with the SGX-ST,
acting on behalf of the Authority, and would have been required by Section 243 of the SFA
to be included in the Offer Document if it had arisen before this Offer Document was lodged,
that is materially adverse from the point of view of an investor, we may lodge a supplementary or
replacement offer document with the SGX-ST, acting on behalf of the Authority.
In the event that a supplementary or replacement offer document is lodged with the SGX-ST,
acting as agent on behalf of the Authority, the Placement shall be kept open for at least 14 days
after the lodgement of such supplementary or replacement offer document.
Where prior to the lodgement of the supplementary or replacement offer document, applications
have been made under this Offer Document to subscribe for the Placement Shares and:
(a)
where the Placement Shares have not been issued to the applicants, our Company shall:
(i)
within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement offer document, give the applicants
notice in writing of how to obtain, or arrange to receive, a copy of the supplementary or
replacement offer document, and provide the applicants with an option to withdraw their
applications and take all reasonable steps to make available within a reasonable period
the supplementary or replacement offer document to the applicants who have indicated
that they wish to obtain, or have arranged to receive, a copy of the supplementary or
replacement offer document;
(ii)
within seven (7) days from the date of lodgement of the supplementary or replacement
offer document, give the applicants the supplementary or replacement offer document,
as the case may be, and provide the applicants with an option to withdraw their
applications; or
(iii) treat the applications as withdrawn and cancelled, in which case the applications shall
be deemed to have been withdrawn and cancelled, and our Company shall within seven
(7) days from the date of lodgement of the supplementary or replacement offer
document, return all monies paid in respect of any application, without interest or any
share of revenue or other benefit arising therefrom and at the applicants own risk; or
25
where the Placement Shares have been issued to the applicants, our Company shall:
(i)
within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement offer document, give the applicants
notice in writing of how to obtain, or arrange to receive, a copy of the supplementary or
replacement offer document, and provide the applicants with an option to return to our
Company the Placement Shares which they do not wish to retain title in, and take all
reasonable steps to make available within a reasonable period the supplementary or
replacement offer document to the applicants who have indicated that they wish to
obtain, or have arranged to receive, a copy of the supplementary or replacement offer
document; or
(ii)
within seven (7) days from the date of lodgement of the supplementary or replacement
offer document, give the applicants the supplementary or replacement offer document,
as the case may be, and provide the applicants with an option to return to our Company
the Placement Shares, which they do not wish to retain title in.
Any applicant who wishes to exercise his option under paragraph (a)(i) or (a)(ii) to withdraw his
application shall, within 14 days from the date of lodgement of the supplementary or replacement
offer document, notify our Company of this, whereupon our Company shall, within seven (7) days
from the receipt of such notification, return the application monies without interest or any share of
revenue or other benefit arising therefrom and at his own risk, and he will not have any claim
against our Company and the Issue Manager, Sponsor and Placement Agent.
An applicant who wishes to exercise his option under paragraph (b)(i) or (b)(ii) to return the
Placement Shares issued to him shall, within 14 days from the date of lodgement of the
supplementary or replacement offer document, notify our Company of this and return all
documents, if any, purporting to be evidence of title to those Placement Shares to our Company,
whereupon our Company shall, within seven (7) days from the receipt of such notification and
documents, subject to compliance with the Cayman Companies Law, purchase the applicants
Placement Shares at the Placement Price and pay to him all monies paid by him for those
Placement Shares, without interest or any share of revenue or other benefit arising therefrom and
at his own risk, and he will not have any claim against our Company or the Issue Manager,
Sponsor and Placement Agent.
Pursuant to Section 242 of the SFA, the Authority may, in certain circumstances issue a stop order
(the Stop Order) to our Company, directing that no Shares or no further Shares to which this
Offer Document relates, be allotted and issued. Such circumstances will include a situation where
this Offer Document (i) contains any statement or matter which, in the Authoritys opinion, is false
or misleading, (ii) omits any information that should have been included in it under the SFA, or (iii)
does not, in the Authoritys opinion, comply with the requirements of the SFA.
In the event that the Authority issues a Stop Order and applications to subscribe for the Placement
Shares have been made prior to the Stop Order, then:
(a)
where the Placement Shares have not been issued to the applicants, the applications for the
Placement Shares shall be deemed to have been withdrawn and cancelled and our Company
shall, within 14 days from the date of the Stop Order, pay to the applicants all monies the
applicants have paid on account of their applications for the Placement Shares; or
(b)
where the Placement Shares have been issued to the applicants, the SFA provides that the
issue of the Placement Shares shall be deemed to be void and our Company is required to,
26
27
28
Event
6 May 2015
The above timetable is only indicative as it assumes that the date of closing of the Application List
will be on 28 April 2015, the date of admission of our Shares to Catalist will be 30 April 2015, the
SGX-STs shareholding spread requirement will be complied with and the Placement Shares will
be issued and fully paid-up prior to 30 April 2015.
The above timetable and procedures may be subject to such modification(s) as the SGX-ST may,
in its absolute discretion, decide, including the commencement of trading on a ready basis and
the commencement date of such trading.
In the event of any changes in the closure of the Application List or the time period during which
the Placement is open, we will publicly announce the same:
(i)
(ii)
We will publicly announce the level of subscription and the results of the distribution of the
Placement Shares pursuant to the Placement, as soon as it is practicable after the close of the
Application List through channels in (i) and (ii) above.
You should consult the SGX-STs announcement on the ready trading date released on
the internet (at the SGX-ST website http://www.sgx.com) or the newspapers, or check with
your brokers on the date on which trading on a ready basis will commence.
29
PLAN OF DISTRIBUTION
THE PLACEMENT
The Placement is for 122,000,000 Placement Shares offered in Singapore and the Listing is
managed and sponsored by PPCF.
Prior to the Placement, there has been no public market for our Shares. The Placement Price is
determined by us in consultation with the Issue Manager, Sponsor and Placement Agent, taking
into account, inter alia, prevailing market conditions and the estimated market demand for the
Placement Shares, determined through a book-building process. The Placement Price is the same
for all Placement Shares and is payable in full on application.
Pursuant to the Management Agreement entered into between us and PPCF as set out in the
section entitled General and Statutory Information Management and Placement Arrangements
of this Offer Document, we have appointed PPCF and PPCF has agreed to manage and to be the
full Sponsor of the Listing. The Issue Manager and Sponsor will receive a management fee from
our Company for its services rendered in connection with the Listing.
PLACEMENT SHARES
The Placement Shares are made available to retail and institutional
may apply through their brokers or financial institutions by way
Application for the Placement Shares may only be made by way of
terms, conditions and procedures for application and acceptance
entitled Terms, Conditions and Procedures for Application and
Document.
Pursuant to the Placement Agreement, we have appointed PPCF as the Placement Agent and
PPCF has agreed to procure subscribers for the Placement Shares for a placement commission
of 3.5% of the aggregate Placement Price for each Placement Share, payable by our Company.
Subject to any applicable laws and regulations, our Company agrees that the Placement Agent
may, at their absolute discretion, appoint one or more sub-placement agents for the Placement
Shares.
Subscribers of the Placement Shares may be required to pay brokerage or selling commission of
up to 1.0% of the Placement Price (and the prevailing goods and services tax thereon, if
applicable) to the Placement Agent or any sub-placement agent that may be appointed by the
Placement Agent.
SUBSCRIPTION FOR PLACEMENT SHARES
None of our Executive Directors or Substantial Shareholders intends to subscribe for the
Placement Shares. As far as we are aware, none of our Independent Directors, the members of
our Companys management or employees intends to subscribe for more than 5.0% of the
Placement Shares in the Placement.
To the best of our knowledge and belief, as at the date of this Offer Document, we are not aware
of any person who intends to subscribe for more than 5.0% of the Placement Shares. However,
through a book-building process to assess market demand for our Shares, there may be person(s)
who may indicate an interest to subscribe for Shares amounting to more than 5.0% of the
Placement Shares. If such person(s) were to make an application for more than 5.0% of the
Placement Shares pursuant to the Placement and are subsequently allotted such number of
30
PLAN OF DISTRIBUTION
Shares, we will make the necessary announcements at an appropriate time. The final allotment of
Shares will be in accordance with the shareholding spread and distribution guidelines as set out
in Rule 406 of the Catalist Rules.
No Shares shall be issued and allotted on the basis of this Offer Document later than six (6)
months after the date of registration of this Offer Document.
INTERESTS OF ISSUE MANAGER, SPONSOR AND PLACEMENT AGENT
In the reasonable opinion of our Directors, save as disclosed below and in the section entitled
General and Statutory Information Management and Placement Arrangements of this Offer
Document, our Company does not have any material relationship with the Issue Manager,
Sponsor and Placement Agent, PPCF, in relation to the Placement:
(a)
PPCF is the Issue Manager, Sponsor and Placement Agent in relation to the Listing; and
(b)
PPCF will be the continuing sponsor of our Company for a period of at least three (3) years
from the date our Company is admitted and listed on Catalist.
31
FY2011
FY2012
FY2013
9M2014
2,294,356
7,668,290
432,990
703,222
550,118
88,578
(352,441)
(1,569,153)
(2,341,724)
(10,705,786)
(389,689)
(1,574,589)
(2,341,724)
(10,705,786)
(0.04)
(0.1)
(0.2)
(1.0)
(0.03)
(0.1)
(0.2)
(0.9)
(2)
32
As at
31 December
2011
As at
31 December
2012
As at
31 December
2013
As at
30
September
2014
Non-current assets
4,890,955
5,162,808
12,786,960
27,096,756
Current assets
5,140,403
2,983,114
1,053,095
22,117,583
10,031,358
8,145,922
13,840,055
49,214,339
79,590
352,347
1,435,796
20,722,402
Current liabilities
4,917,028
4,333,424
16,285,189
27,059,639
Total liabilities
4,996,618
4,685,771
17,720,985
47,782,041
NAV (3)
5,034,740
3,460,151
(3,880,930)
1,432,298
0.5
0.3
(0.4)
0.1
(MYR)
Total assets
Non-current liabilities
For comparative purposes, the pre-Placement LPS for the Period Under Review has been computed based on the
loss for the year attributable to owners of our Company and our pre-Placement share capital of 1,071,432,933
Shares.
(2)
For comparative purposes, the post-Placement LPS for the Period Under Review has been computed based on the
loss for the year attributable to owners of our Company and our post-Placement share capital of 1,193,432,933
Shares.
(3)
The pro forma NAV based on the unaudited pro forma financial information would be MYR49.9 million and MYR41.3
million as at 31 December 2013 and 30 September 2014 respectively.
(4)
The NAV per Share has been computed based on our pre-Placement share capital of 1,071,432,933 Shares.
(5)
The pro forma NAV per Share based on the unaudited pro forma financial information would be MYR4.7 cents and
MYR3.9 cents as at 31 December 2013 and 30 September 2014 respectively.
We have one of the biggest GCC-grade limestone reserves and resources in Malaysia;
(b)
(c)
(d)
Our Gridland Quarry and Hyper Act Quarry are easily accessible and conveniently located;
and
(e)
33
(b)
(c)
(b)
(c)
(d)
(e)
(f)
34
THE PLACEMENT
Placement Price
Placement Size
The Placement
Listing Status
Prior to the Listing, there had been no public market for our
Shares. Our Shares will be quoted on Catalist, subject to
admission of our Company to Catalist and permission for
dealing in, and for quotation of, our Shares being granted
by the SGX-ST.
Risk Factors
Use of Proceeds
35
EXCHANGE RATES
The following table sets out, for each of the financial years or periods indicated, the average and
closing exchange rates for MYR/S$. Where applicable, the exchange rates in the below table are
used for the translation of our Groups financial statements disclosed elsewhere in this Offer
Document.
MYR/S$1
Average
Closing
FY2011
2.4334
2.4441
FY2012
2.4713
2.4932
FY2013
2.5173
2.5963
9M2014
2.5775
2.5712
The table below sets forth the highest and lowest exchange rates between MYR and S$ for each
of the past six (6) months prior to the Latest Practicable Date and for the period from 1 February
2015 up to the Latest Practicable Date, and how much MYR can be bought with one S$.
MYR/S$1
Month
High
Low
August 2014
2.5799
2.5219
September 2014
2.5712
2.5297
October 2014
2.5798
2.5405
November 2014
2.5959
2.5596
December 2014
2.6803
2.6047
January 2015
2.7058
2.6413
2.6846
2.6186
As at the Latest Practicable Date, the exchange rate between MYR and S$ was MYR2.6827 to
S$1.0000.
Notes:
(1)
The above exchange rates have been calculated with reference to exchange rates quoted from OANDA Corporation
and should not be construed as representation that the MYR amounts actually represent such amounts or could be
converted into the S$ at the rate indicated, or at any other rate, or at all.
(2)
OANDA Corporation has not consented to the inclusion of the above information in this Offer Document for the
purpose of Section 249 of the SFA and is therefore not liable for the relevant information under Sections 253 and
254 of the SFA. While our Directors and the Issue Manager, Sponsor and Placement Agent have taken reasonable
action to ensure that the information is extracted accurately and fairly, and has been included in this Offer Document
in its proper form and context, they have not independently verified the accuracy of the relevant information.
36
RISK FACTORS
You should evaluate carefully each of the following risk factors and all of the other information set
forth in this Offer Document before deciding to invest in our Shares. Some of the following
considerations relate principally to the industry in which we operate and our business in general.
Other considerations relate principally to general social, economic, political and regulatory
conditions, the securities market and ownership of our Shares, including possible future dilution
in the value of our Shares.
You should also note that certain of the statements set forth below constitute forward-looking
statements that involve risks and uncertainties. If any of the following risk factors and
uncertainties develops into actual events, our business, financial condition or results of operations
or cash flows could be materially and adversely affected. In such circumstances, the trading price
of our Shares could decline due to any of these risk factors, and you may lose all or part of your
investment. To the best of our Directors belief and knowledge, all the risk factors that are material
to investors in making an informed judgement have been set out below.
RISKS RELATING TO OUR BUSINESS OR THE INDUSTRY
We have a limited operating history and track record of carrying out our business activities.
Our past financial performance as an ad-hoc trader of iron ore and coal is also not an
indication of our future performance in the business of the quarrying and processing of
limestone.
Our Group was only established in 2009 and has a limited history upon which to assess its future
expected performance. Prior to the commencement of the quarrying of limestone from the
Gridland Quarry in January 2013, we derived all of our revenue from the ad-hoc trading of iron ore
and coal, from which we recorded revenues of MYR2.3 million and MYR7.7 million in FY2011 and
FY2012 respectively. Subsequently, our Group ceased the trading of iron ore and coal to focus on
our limestone quarrying and processing business. As such, our past financial performance
attributable to the ad-hoc trading of iron ore and coal bears no relation to, and provides no
indication as to our future financial performance in the business of quarrying and processing of
limestone.
As production only commenced in June 2014, we did not derive any revenue from the quarrying
and processing of limestone in FY2011, FY2012 and FY2013, and recorded revenue of MYR0.4
million from our Groups limestone quarrying activities in 9M2014. During the Period Under
Review, our Group recorded losses of MYR0.4 million, MYR1.6 million, MYR2.3 million and
MYR10.7 million in FY2011, FY2012, FY2013 and 9M2014 respectively. The failure of our Group
to generate profits from its limestone quarrying activities could have an adverse impact on the
development of and future production from our Groups concession areas, which in turn could
have an adverse effect on the financial condition and results of operations of our Group.
We have yet to establish a strong sales track record
We are in the initial stage of production of our crushed limestone and have been actively
marketing our crushed limestone and seeking to establish our domestic sales channels and
networks. As we are a new player in the market, the orders which we have received to date are
relatively modest in number and size. In the event we are unable to secure a stable or regular
source of sales or revenue through entry into and fulfilment of off-take agreements and/or are
unable to establish our domestic sales channels and networks, our revenue and cash flow will be
adversely affected. This will in turn have an adverse effect on our financial position or results,
prospects and future growth.
37
RISK FACTORS
We may not be able to discover new limestone reserves to maintain a commercially viable
quarrying operation
As indicated in the Independent Qualified Persons Report, our current Ore Reserves of the
Gridland Quarry and the Hyper Act Quarry amounted to approximately 26.3Mt. Based on the
planned production schedule for our quarrying operations, it is expected that the quarrying of
these Ore Reserves will be completed by us in 2021. While we are continuously conducting
exploration activities, there is no assurance that these exploration activities will result in the
discovery of new reserves as quarrying exploration is unpredictable in nature. The success of any
quarrying exploration depends on various factors including, among other things, (i) whether
limestone bodies can be located; (ii) whether the location of limestone bodies are economically
viable to the quarry; (iii) whether appropriate quarrying and processing facilities can be
economically constructed; and (iv) whether necessary governmental permits, licences and
consents can be obtained. In order to maintain limestone production beyond the life of the current
proved and probable reserves, we must identify further reserves capable of economic exploitation.
However, due to the unpredictable and speculative nature of the quarrying industry, there is no
assurance that any exploration program will result in the discovery of valuable resources.
In addition, even if a viable deposit is discovered, it may require substantial capital expenditure
and time from the initial phases of exploration until production commences during which the
capital cost and economic feasibility may change. There is also no assurance that reported
resources can be converted into reserves. Furthermore, actual results upon production may differ
from those anticipated at the time of the discovery. In addition, there are a number of uncertainties
inherent in the development and construction of any new quarry or an extension to an existing
quarry, including: (a) the availability and timing of necessary governmental approvals; (b) the
timing and cost necessary to construct quarrying and processing facilities; (c) the availability and
cost of labour, utilities, auxiliary materials and other supplies and the accessibility of
transportation and other infrastructure; and (d) the availability of funds to finance construction and
production activities.
In order to maintain limestone production beyond the life of our Ore Reserves, other than through
acquisitions, additional limestone reserves must be identified either to extend the life of the
existing quarries or justify the development of new projects. In the event that our exploration
programs do not result in the replacement of such limestone reserves or result in new
commercially viable quarrying operation beyond the Ore Reserves identified, this could have an
adverse impact on the future operations, results and growth of our Group.
Our business, revenues and profits are affected by the volatility of prices for limestone and
the global economy
Our financial results will be highly sensitive to changes in the prices of limestone. Limestone
prices may be affected by numerous factors, including supply and demand conditions,
expectations with respect to the rate of inflation, global and regional political and economic crises.
The demand for and supply of limestone affect limestone prices but not necessarily in the same
manner as demand and supply affect the prices of other commodities.
38
RISK FACTORS
Our business, financial condition and results are dependent upon the prices of, and demand for,
limestone, and also the global economy. Declines in limestone prices and any economic downturn
may adversely affect our business, revenue and profit. Our profitability is, and will largely be
determined by the difference between the prices received for crushed limestone that our Group
produces and the costs of developing, producing and selling the crushed limestone produced. Our
Group does not and will not have control over the factors affecting international prices for
limestone. These factors include:
(a)
political, economic, financial and social developments in limestone producing regions and in
the global economy;
(b)
the ability of the limestone producing nations to set and maintain limestone production levels
and prices;
(c)
(d)
(e)
We expect that there may be volatility and uncertainty in international prices for limestone in the
future, and accordingly, our revenue and profit in any financial reporting period may be subject to
such volatility.
Our actual operating costs may differ significantly from estimates
The operating costs of our Group are based on certain estimates and assumptions with respect
to the method and timing of quarrying activities. By their nature, these estimates and assumptions
are subject to significant uncertainties and the actual costs may materially differ from these
estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and
the underlying assumptions will be realised in practice and in the event that our Group has
underestimated our operating costs, our financial condition and results of operations will be
adversely affected.
Our actual limestone processing capacity may differ significantly from managements
expectations of the processing capacity
The limestone processing capacity of our Group is based on certain estimates and assumptions,
which include, inter alia, the construction of the crusher plant facility in the Hyper Act Quarry on
the second quarter of FY2015, the processing capacity of each crusher plant, the time taken for
each limestone processing cycle. These estimates and assumptions are subject to significant
uncertainties and the actual limestone processing capacity may materially differ from
managements expectations and assumptions. Accordingly, no assurance can be given that the
expected limestone processing capacity and the underlying assumptions will be realised in
practice and in the event that our Group has overestimated our limestone processing capacity, we
will not be able to achieve the managements anticipated level of production and profitability.
39
RISK FACTORS
We may not be able to obtain, maintain or renew governmental permits necessary for
exploration, quarrying or production at our limestone quarries
In the ordinary course of business, quarrying companies are required to seek governmental
permits and approvals for exploration and quarrying, expansion and renewal of existing
operations or for the commencement of new operations. Obtaining or renewing the necessary
licences for the purpose of quarrying from the Department of Lands and Mines of Perak and the
Minerals and Geoscience Department of Perak can be a complex and time-consuming process
and often involves costly undertakings on our part. The duration and success of obtaining such
approvals are contingent upon many variables and are dependent on the decisions of the
Department of Lands and Mines of Perak and the Minerals and Geoscience Department of Perak.
Environmental protection and rehabilitation requirements, including the approvals of
environmental assessment reports, environmental management plans, rehabilitation plans and
compliance with the environmental monitoring requirements, may increase our costs and cause
delays depending on the nature of the activity to be permitted and the interpretation of applicable
requirements implemented by the permitting authority. In addition, the Minerals and Geoscience
Department of Perak and the Department of Lands and Mines of Perak may vary, modify or impose
further conditions upon renewal of the our existing licences and approvals or application of new
licences and approvals.
There can be no assurance that all necessary permits and approvals for our activities will be
obtained and, if obtained, that the costs involved will not exceed those estimated by us. It is
possible that the costs and delays associated with the compliance with such standards and
regulations could affect our ability to proceed with the development or operation of a quarry or
quarries. In the event that Gridland is unable to renew its licences and Hyper Act is not able to
procure and renew the relevant licences, our Group will not be able to carry out the activities of
quarrying and processing limestone and our operations, financial condition and future growth will
be adversely affected.
Since the commencement of our operations till the Latest Practicable Date, there has been no
incident of our Group being unable to obtain, maintain or renew governmental permits necessary
for exploration, quarrying or production at our limestone quarries.
We may need to obtain further financing for our existing business and future growth
We will have to fund the investment costs for capital expenditure and operating costs required for
our limestone quarrying project. We may also require additional funding for our growth plans. We
have estimated our funding requirements in order to implement our growth plans as set out in the
section entitled General Information on our Company and our Group Business Strategies and
Future Plans of this Offer Document.
In the event that the costs of implementing our growth plans should exceed our funding estimates
significantly or that we come across opportunities to grow through expansion plans which cannot
be predicted at this juncture, and our funds generated from our operations prove insufficient for
such purposes, we may need to raise additional funds to meet these funding requirements. We will
consider obtaining such funding from new issuance of equity, debt instruments and/or external
bank borrowings, as appropriate. In addition, we may need to obtain additional equity or debt
financing for other business opportunities that our Group deems favourable to our future growth
and prospects. Funding through the new issuance of equity will lead to a dilution in the interests
of the Shareholders. An increase in debt financing may be accompanied by conditions that restrict
our ability to pay dividends or require us to seek lenders consent for payment of dividends, or
restrict our freedom to operate our business by requiring lenders consent for certain corporate
actions.
40
RISK FACTORS
In addition, there is no assurance that we will be able to obtain additional financing on terms that
are favourable and acceptable. If we are not able to secure adequate financing, our business and
growth may be negatively affected.
Uncertainties inherent in the assumptions made in arriving at the valuation of our Mineral
Resource estimates may affect the value of our Shares
The valuation of our Mineral Resource estimates requires consideration of all relevant factors
affecting the operation of our business and our ability to generate future investment returns.
Please refer to Appendix G entitled Independent Valuation Report of this Offer Document for
further details.
The conclusion of the value is based on accepted valuation procedures and practices promulgated
in the VALMIN Code that rely substantially on the use of numerous assumptions and the
consideration of many uncertainties, not all of which can be easily quantified or ascertained.
Furthermore, while the assumptions and consideration of such matters are considered by us to be
reasonable, they are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the control of our Group.
Our future cash flow, results of operations and financial condition will be affected if we fail
to achieve our production estimates
Estimates of future production for the quarrying operations of our Group are subject to change and
based on various assumptions. The production estimates are based on, among other things,
resource and reserve estimates, estimated production rates, progress of quarry and plant
development, prices of products and costs of production. The production schedules for Gridland
Quarry and the Hyper Act Quarry are considered preliminary and several assumptions that are
made by our Group including the assumptions made for the production estimates, are as set out
in the Independent Qualified Persons Report.
Due to the above reasons, there is no assurance that we will be able to achieve its production
estimates and in such event, the future cash flow, results of operations and financial condition of
our Group could be adversely affected. Actual production may also vary from the estimates for a
variety of other reasons as set out below:
(a)
actual limestone quarried varying from estimates in grade, tonnage, and other
characteristics;
(b)
(c)
(d)
industrial accidents;
(e)
equipment failures;
(f)
natural phenomena such as inclement weather conditions, floods, blizzards, droughts, rock
slides and earthquakes;
(g)
41
RISK FACTORS
(h)
(i)
shortages of principal supplies needed for operation, including explosives, fuels, equipment
parts and lubricating oil;
(j)
litigation; and
(k)
The occurrences of any of the above events could result in damage to mineral properties,
interruptions in production, injury or death to persons, damage to the properties of our Group or
others, monetary losses and legal liabilities. These factors may cause a mineral deposit that has
been quarried profitably in the past to become unprofitable. Quarrying operations frequently
experience unexpected problems during the initial development phase. Delays or interruptions
can often occur in the initial stage of production.
As our Group is in the preliminary stage of production, it is possible that actual cash operating
costs and economic returns will differ significantly from those that are estimated. There is no
assurance that we will be able to realise the estimated recovery rate at the Gridland Quarry, Hyper
Act Quarry or any other quarries operated by us in the future and in such event, the future growth
prospects and results of operations of our Group may be adversely affected.
We rely on our contractors and/or consultants for certain services
We work closely with our contractors and/or consultants to carry out our business operations.
Such contractors and/or consultants have offered their services and provided their support to our
Group at prices which are more favourable than those offered by other contractors and/or
consultants. The quarrying operations of our Group, in particular Hyper Act, rely on the services
provided by the contractors and/or consultants and our ability to maintain our relationships with
the contractors and/or consultants whom our Group does not enter into any long term contract
with.
Any failure by our Group to retain the services of the contractors and/or consultants on the current
favourable terms, or obtain replacements on favourable terms or at all may affect our Groups
business and results of operations. Details of the contractors and/or consultants of our Group are
set out in the section entitled General Information on our Company and our Group Key
Contractors and Consultants of this Offer Document.
In addition, as we may outsource substantially our quarrying activities pursuant to service
contracts with third party contractors, our operations will be affected by the performance of such
third party contractors. Although we monitor the work of such third party contractors to ensure that
the work is carried out on time, on budget and to specification, we may not be able to control the
quality, safety and environmental standards of the work done by the third party contractors to the
same extent as when the work is performed by our own employees. Any failure by the third party
contractors to meet our Groups quality, safety and environmental standards could affect our
Groups compliance with government rules and regulations relating to exploration, quarrying and
workers safety and may also result in liabilities to third parties, which in turn could have a material
adverse effect on our Groups business, reputation, financial condition and results of operations.
42
RISK FACTORS
Our business is exposed to uncertainties in relation to its expansion plans
As described in the section entitled General Information on our Company and our Group
Business Strategies and Future Plans of this Offer Document, the growth strategies of our Group
include the execution of our development plan for the Hyper Act Quarry and engaging in further
exploration activities to increase limestone resources and output. There is no guarantee that the
implementation and execution of such business strategies and future plans will be successful as
this involves a number of risks and uncertainties and it is dependent on approvals from the
governmental and regulatory authorities and requires substantial capital expenditure, financial
and management resources. In the event that we are not able to achieve a sufficient level of
revenue or manage our costs effectively or the commencement of these planned expansions is
delayed or aborted, our future financial performance and position will be adversely affected.
Our operations are exposed to regulations and risks in relation to production safety and the
occurrence of accidents
As a limestone quarrying company, we are subject to extensive laws, rules and regulations
imposed by the Malaysian government regarding occupational safety and health. In particular, our
quarrying operations involve the handling and storage of chemicals and other dangerous articles
and the usage of various heavy machineries. We may experience in the future increased costs of
production arising from compliance with occupational safety and health laws and regulations.
There can be no assurance that more stringent laws, regulations or policies regarding
occupational safety and health will not be implemented or that the existing laws, regulations and
policies will not be more stringently enforced. We may not be able to comply with all existing or
future laws, regulations and policies in relation to occupational safety and health issues
economically or at all. Should we fail to comply with any occupational safety and health laws or
regulations, we would be required to rectify the occupational safety and health problems within a
period prescribed under the laws and regulations or as prescribed by the regulatory authorities.
Failure to rectify any problem could lead to suspension of our operations and offences committed
against the laws and regulations could lead to penalties involving mandatory fines and/or
imprisonment. In addition, there can be no assurance that accidents arising from the mishandling
of dangerous articles will not occur in the future. Should we fail to comply with any relevant laws,
regulations or policies or should any accident occur as a result of the mishandling of dangerous
articles, our business, reputation, financial condition and results of operations may be adversely
affected, and we may be subject to penalties, civil liabilities or criminal liabilities.
We and/or our third party contractors may encounter accidents, technical difficulties, mechanical
failure or breakdown in the exploration, quarrying and production processes, as well as possible
localised mud-slides, instability of the slopes, and subsidence of the working areas due to natural
disasters. The occurrence of accidents may disrupt or result in a suspension of our operations,
increase production costs, result in liabilities incurred by our Group and harm our Groups
reputation. Such incidents may also result in a breach of the conditions of the quarrying rights, or
any other consents, approvals or authorisations, which may result in fines and penalties or even
possible revocation of our quarrying rights. In any of such events, our business and financial
performance will be adversely affected. In the event of accidents which are not covered by the
insurance or workmens compensation policies taken by our Group, or if claims arising from such
accidents are in excess of our insurance coverage, and/or any of our insurance claims are
contested by the insurance companies, we will be required to pay such compensation. Under such
circumstances, the business and financial performance of our Group will be adversely affected.
43
RISK FACTORS
Since the commencement of our operations till the Latest Practicable Date, no accidents,
technical difficulties, mechanical failure or breakdown in the exploration, quarrying and production
processes, as well as possible localised mud-slides, instability of the slopes, and subsidence of
the working areas due to natural disasters have occurred at the quarrying site operated by our
Group.
Our operations are exposed to risks in relation to environmental protection and
rehabilitation
Operations of limestone quarries are subject to environmental risks and hazards. Our production
and operations are subject to laws, rules and regulations imposed by the Malaysian government
regarding environmental matters, such as prevention of pollution of the air, noise and earth, the
treatment and discharge of hazardous wastes and materials and environmental rehabilitation.
Environmental hazards may occur in connection with our operations as a result of human
negligence, force majeure or otherwise. The occurrence of any environmental hazards may delay
production, increase production costs, cause personal injuries or property damage, result in
liabilities incurred by our Group and/or damage our Groups reputation. Such incidents may also
result in a breach of the conditions of our Groups environmental approvals and/or approvals to
conduct quarry operations or other consents, approvals or authorisations, which may result in
fines, penalties, or even possible revocation of the quarrying rights. In any of such events, our
business and financial performance will be adversely affected.
In the future, we may experience increased costs of production arising from compliance with
environmental laws and regulations. Moreover, the development of the Malaysian economy and
the improvements in the living standards of the population may lead to a heightened awareness
of environmental protection. As a result, it is possible that more stringent environmental laws,
regulations and policies may be implemented in the future, or the existing environmental laws,
regulations and policies may be more strictly enforced. We may not always be able to comply with
existing or future laws, regulations or policies in relation to environmental protection and
rehabilitation economically or at all. Should we fail to comply with any such existing or future laws,
regulations or policies, we may be subject to penalties and liabilities under Malaysian laws and
regulations, including but not limited to warnings, fines, prosecution, suspension of production and
closure of the facility that fails to comply with the relevant environmental standards. In addition,
we may also be subject to actions by environment protection groups or other interested persons
who object to the actual or perceived environmental impact of our quarrying operation or other
actual or perceived condition at our mines. These actions may delay or halt production or may
create negative publicity related to our mines. Accordingly, our operations and financial condition
will be adversely affected.
Our quarrying operations have a finite life and eventual closure of these operations will
entail costs and risks regarding ongoing monitoring, rehabilitation and compliance with
environmental standards
Our quarrying operations have a finite life and will eventually be closed. The key costs and risks
for quarry closures are as follow:
(a)
(b)
(c)
RISK FACTORS
(d)
relinquishment of the site with associated permanent structures and community development
infrastructure and programs to new owners.
The successful completion of these tasks is dependent on our ability to successfully implement
negotiated agreements with the relevant government, community and employees. The
consequences of a difficult closure range from increased closure costs and handover delays to
ongoing environmental rehabilitation costs and damage to the reputation of our Group if desired
outcomes cannot be achieved, which could materially and adversely affect our business and
results of operations.
We may not be able to maintain the provision of adequate and uninterrupted supplies of
electricity, water, diesel, auxiliary materials, equipment and spare parts
Electricity and water are the main utilities used in our quarrying activities. There can be no
assurance that supplies of electricity, water, diesel, auxiliary materials, equipment or spare parts
will not be interrupted or that their prices will not increase in the future. In the event that our
existing suppliers cease to supply us with electricity, water, diesel, auxiliary materials, equipment
or spare parts at existing or lower prices or at all, and we are not able to procure alternative
sources of such supply, our financial condition and results of operations will be adversely affected.
In addition, although we currently generate electricity in-house, an interruption in electricity supply
due to a breakdown of our generators or for any other reasons will materially and adversely affect
our Groups production by disrupting operations such as water pumping.
Since the commencement of our operations till the Latest Practicable Date, there has been no
disruption of supply of electricity, water, diesel, auxiliary materials, equipment or spare parts to our
Group.
Severe weather conditions, natural disasters and other events beyond our control could
materially and adversely affect our business and results of operations
Severe weather conditions such as heavy rainfall and natural disasters such as landslides,
earthquakes, fire hazards, floods and other events beyond our control may require us to evacuate
personnel or curtail operations and may result in damage to our quarries, equipment or facilities,
which could result in the temporary suspension of operations or a reduction in our productivity.
During periods of curtailed activity due to adverse weather conditions, natural disasters or other
events beyond our control, we may continue to incur operating expenses while production has
slowed down or ceased altogether. Any damages to our projects or delays in our operations
caused by severe weather conditions, natural disasters or other events beyond our control could
materially and adversely affect our business and results of operations.
We are dependent on certain key personnel for our continued success
Our success to date is attributable to the contributions and expertise of the executive officers of
our Group who have built the business of our Group under the guidance and leadership of our
Executive Chairman and CEO, Alex Loo, and our Executive Director and COO, Pang Kim Chon.
Our Groups continued success and growth will depend, to a large extent, on our ability to retain
the services of the Executive Directors and the Executive Officers. The loss of services of our
Executive Chairman and CEO, our Executive Director and CEO or any of the Executive Officers
without suitable and timely replacement, or the inability to attract and retain other qualified
personnel would have an adverse impact on our operations and financial performance.
45
RISK FACTORS
Our operations are dependent on our ability to retain and recruit skilled personnel and
professional staff
The business of our Group requires skilled personnel and professional staff in the areas of
quarrying and production of limestone, operations, engineering, finance and accounting.
Competition for such skilled personnel and professional staff is intense and comes primarily from
similar businesses active in the industry, many of which possess greater resources. Limitations on
our ability to hire, train and retain the required number of skilled personnel and professional staff
would reduce our capacity to undertake further projects and may have an adverse impact on the
operations, results and growth of our Group.
We may be exposed to risk of loss and potential liabilities that may not be covered or
adequately covered by insurance
Certain liabilities and risks in respect of the business, operations and assets of our Group may not
be covered or adequately covered by insurance for a variety of reasons such as acts of God, theft
and robbery. In the event that we are not insured or are inadequately insured against losses,
damage or liabilities, the financial performance our Group will be adversely affected. Please refer
to the section entitled General Information on our Company and our Group Insurance of this
Offer Document for further details on our existing insurance coverage.
We are exposed to the creditworthiness of our customers
Our performance is dependent on the creditworthiness of our customers. Material default in
payment by our major customers may adversely affect our financial performance and cash flow.
We are unable to assure that there will be no risk of default by our customers in the future, or that
we will not experience cash flow problems as a result of such default. If these events occur, our
business may be adversely affected.
Since the commencement of our operations till the Latest Practicable Date, there has been no
incident of default by our customers in their payments.
We face intense competition from our competitors
We face competition from both domestic and foreign competitors who are also engaged in similar
businesses. Certain competitors may have access to more resources, be better-positioned to
pursue new expansion and development opportunities and/or possess competitive advantages,
including control over or access to low-cost raw materials, access to low-cost credit, geographical
proximity to suppliers or customers and relationships with global market participants. These
competitors may also compete with us for skilled labour required for our limestone quarrying
operations.
In the event that we may not be able to compete effectively against our competitors, both the sales
and the pricing of our products may be adversely affected, which in turn may have an adverse
effect on our business and financial performance.
46
RISK FACTORS
We will record further losses from fair value adjustments to the derivative financial
instruments relating to the Convertible Loan Agreements and we have negative working
capital and negative cash flow from operating activities for the Period Under Review
In January, April & August 2014, our Company had entered into the Convertible Loan Agreements
with the Pre-Placement Investors for an aggregate amount of S$18.8 million (the Convertible
Loan). Subsequently on 2 May 2014, GPF (Delta) had converted a portion of the Convertible
Loan amounting to S$4.0 million into shares. As at 30 September 2014, our Group recorded
MYR29.5 million in derivative financial instruments which represent the initial recognition of the
derivative component of the Convertible Loan that relates to the Pre-Placement Investors right to
convert the Convertible Loan into Shares. No fair value adjustments were made as at 30
September 2014, as the fair value of the derivative financial instruments approximates its values
at initial recognition. In compliance with International Financial Reporting Standards, subsequent
to the initial recognition, the derivative financial instruments are to be measured at fair value with
changes in fair value recorded through profit or loss which are non-cash in nature. Pursuant to our
Companys Listing on the SGX-ST, it is likely that the changes in fair value will be recorded as a
loss and as a result, our Group will record further losses due to the fair value adjustments on the
derivative financial instruments.
Please refer to the section entitled Capitalisation and Indebtedness of this Offer Document for
further details on the Convertible Loan, Appendix B entitled Audited Interim Consolidated
Financial Statements for the Nine-month Period Ended 30 September 2014 of this Offer
Document for further details in respect of the fair value of the derivative financial instruments and
Appendix C entitled Unaudited pro forma Financial Information for the Financial Year Ended 31
December 2013 and the Nine-month Period ended 30 September 2014 of this Offer Document for
details on the pro forma loss on conversion of the Convertible Loan.
Our Company had negative working capital as at the end of the Period Under Review. Our
negative working capital was due mainly to the use of short term financing to fund our capital
expenditures. As such, we are subject to the risk that our current assets will be insufficient to meet
our obligations under the current liabilities. In such event, additional capital, debt or other forms
of financing may be required for our working capital. If any of the aforesaid events occur and we
do not have sufficient internal resources and are unable for any reason, to raise additional capital,
debt or other financing for our working capital requirements, our business, operating results,
liquidity and financial position will be adversely affected.
Furthermore, our Company had negative cash flow from operations as at the end of the Period
Under Review. Our negative cash flow from operations was due mainly to loss before tax recorded
as we had only commenced production in June 2014 and revenue generated was not large
enough to cover our expenses.
Please refer to the section entitled Managements Discussion and Analysis of Results of
Operations and Financial Position of this Offer Document for further details.
Terrorist attacks, armed conflicts, and/or outbreak of Severe Acute Respiratory Syndrome
(SARS), avian influenza, H1N1, H7N9, Middle East Respiratory Syndrome Coronavirus
(MERS-CoV), Ebola virus disease (EVD) and/or other communicable diseases, may
affect the markets in which we operate and our business and operations
The effects of terrorist attacks or armed conflicts may materially and adversely affect our business
or those of our suppliers or customers. Such terrorist attacks or armed conflicts could have an
adverse effect on our limestone business. Political and economic instability in some regions of the
47
RISK FACTORS
world may also result from such terrorist attacks and armed conflicts, and could negatively impact
our business. The consequences of any of these terrorist attacks or armed conflicts are
unpredictable, and we are not able to foresee such events that could have an adverse impact on
our limestone business. An outbreak of contagious disease may have an adverse effect on the
economies of certain Asian countries and may materially and adversely affect our limestone
business.
For example, in the first half of 2003, certain countries in Asia experienced an outbreak of SARS,
a highly contagious form of atypical pneumonia. In 2009, there was a global outbreak of a new
strain of influenza A virus sub-type H1N1. In the last few years, large parts of Asia experienced
unprecedented outbreaks of avian flu. In 2013, a deadly strain of influenza A virus sub-type H7N9
was reported in the Peoples Republic of China. These infectious diseases seriously interrupted
economic activities and general demand for goods plummeted in the affected regions.
In similar vein, a new strand of virus called MERS-CoV, which also causes acute respiratory
illness, was discovered in 2012. In April 2014, the Ministry of Health in Malaysia reported its first
confirmed case of MERS-CoV. Nonetheless, as the global MERS-CoV situation is still unfolding,
it is uncertain the full impact the infection can have on the economies of Asian countries.
There can be no assurance that an outbreak of SARS, avian flu, H1N1, H7N9, MERS-CoV, EVD
or other contagious diseases, or the measures taken by the governments of affected countries
against such potential outbreaks, will not seriously interrupt our operations or those of our
contractors, suppliers and/or customers. This, in turn, may have a material adverse effect on our
business. The perception that there may be a recurrence of an outbreak of SARS, avian flu, H1N1,
H7N9, MERS-CoV, EVD or other contagious diseases may also have an adverse effect on the
economic conditions of countries in Asia and accordingly, our business.
Our business may be adversely affected by recent developments in the global markets
Since the global economic downturn in late 2008, there have been negative developments in the
global financial markets including the downgrading by major international credit rating agencies of
sovereign debts issued by some of the European Union member countries and the difficult
conditions in the global credit and capital markets. These challenging market conditions have
given rise to reduced liquidity, greater volatility, widening of credit spreads, lack of price
transparency in credit markets, a reduction in available financing, government intervention and
lack of market confidence. These factors, combined with declining business and consumer
confidence, have resulted in global economic uncertainties.
It is difficult to predict how long these developments will last. Further, there can be no assurance
that measures implemented by governments around the world to stabilise the credit and capital
markets will improve market confidence and the overall credit environment and economy. A global
economic downturn could adversely affect our ability to obtain short-term and long-term financing.
It could also result in an increase in the cost of our bank borrowings and reduction in the amount
of banking facilities currently available to us. The inability of our Group to access capital efficiently,
on time, or at all, as a result of possible economic difficulties, may have an adverse effect on our
business. Any deterioration in the global economy could in turn adversely affect the health of the
local economy and impact our business.
In the event that the global economic conditions do not improve or any recovery is halted or
reversed, our business may be adversely affected.
48
RISK FACTORS
RISKS RELATING TO OUR OPERATIONS IN MALAYSIA
We are subject to the Malaysian regulatory regime for the limestone industry
Our operations are subject to a range of Malaysian laws, regulations, policies, guidelines,
standards and requirements in relation to, among other things, quarry development, production,
taxation, labour standards, occupational health and safety, waste treatment and environmental
protection and operation management.
For example, Gridlands existing quarrying right over the lands known as PN 258390, Lot 302284,
Sungai Raya, Kinta and PN 380610, Lot 332220 Sungai Raya, Kinta, Perak is evidenced by a
removal of mineral licence in its favour issued by the Director of Lands and Mines of Perak
pursuant to the Mineral (Perak) Enactment 2003. Such licence shall be valid only till 31 December
2015. In the event that Gridland is unable to renew its licences and Hyper Act is not able to procure
and renew the relevant licences, our Group will not be able to carry out the activities of quarrying
and processing limestone, and our operations, financial condition and future growth will be
adversely affected.
In addition, any changes to the laws, regulations, policies, standards and requirements
concerning any of the aforesaid matters (including any change to the policy regarding the grant
of the quarry lease or quarrying rights in Malaysia that is unfavourable to our Group) or to the
interpretation or enforcement thereof may increase our operating costs and/or may affect our
Group adversely.
There is no assurance that we will be able to comply with any new Malaysian laws, regulations,
policies, standards and requirements applicable to the limestone industry or any changes in
existing laws, regulations, policies, standards and requirements economically or at all. Further,
any such new Malaysian laws, regulations, policies, standards and requirements or any such
change in existing laws, regulations, policies, standards and requirements may also constrain our
future expansion plans and adversely affect the profitability of our Group.
Our business is subject to political, economic, regulatory and social conditions in Malaysia
We are currently operating our business in Malaysia. Our business operations are therefore
dependent on the political, economic, regulatory and social conditions in Malaysia. Any changes
in the policies implemented by the government of Malaysia which may result in currency and
interest rate fluctuations, inflation, capital restrictions, price and wage controls, expropriation and
changes in taxes and duties detrimental to our business may materially affect our operations,
financial performance and future growth. In particular, in the event of expropriation, we may not
be able to continue our business as we would not be able to enforce any quarrying or exploration
rights we had obtained or receive any compensation for the loss of such quarrying or exploration
rights. Unfavourable changes in the social, economic and political conditions of Malaysia or in the
Malaysian government policies in the future may have a negative impact on the operations and
business in Malaysia, which will in turn adversely affect the overall financial performance of our
Group. In addition, Malaysia foreign exchange control may limit our ability to utilise our cash
effectively and affect our ability to receive dividends and other payments from our Malaysian
subsidiaries.
We are subject to the foreign exchange legislation and regulations in Malaysia
Local and foreign investors are subject to foreign exchange administration rules in Malaysia.
Pursuant to the Financial Services Act 2013 and Islamic Financial Services Act 2013, Bank
Negara Malaysia, which is the central bank of Malaysia (Bank Negara) has issued notices
49
RISK FACTORS
(Notices) which embody its general permissions and directions in respect of remittance of funds
to and from Malaysia. The Notices set out the circumstances in which the specific approval of
Bank Negara need not be obtained by residents and non-residents to remit funds to and from
Malaysia. These Notices are reviewed regularly by Bank Negara in line with the changing
environment. As at the Latest Practicable Date, foreign investors are free to repatriate divestment
proceeds, profits, dividends or any income arising from investments in Malaysia. Any future
restriction by the Notices on repatriation of funds may limit our ability on dividends distribution to
the Shareholders from business operations in Malaysia.
There is no assurance that the relevant rules and regulations on foreign exchange control in
Malaysia will not change. In the event that there is any adverse change in the foreign exchange
rules and regulations relating to the borrowing or repatriation of foreign currency, our business and
results of operation may be adversely affected.
RISKS RELATING TO AN INVESTMENT IN OUR SHARES
Investment in shares quoted on Catalist involves a higher degree of risk and can be less
liquid than shares quoted on the Main Board of the SGX-ST
An application has been made for our Shares to be listed for quotation on Catalist, a listing
platform designed primarily for fast-growing and emerging or smaller companies to which a higher
investment risk tends to be attached as compared to larger or more established companies listed
on the Main Board of the SGX-ST. An investment in shares quoted on Catalist may carry a higher
risk than an investment in shares quoted on the Main Board of the SGX-ST. Catalist was newly
formed in December 2007 and the future success and liquidity in the market of our Shares cannot
be guaranteed.
There is no prior market for our Shares and the Placement may not result in an active or
liquid market for our Shares
Prior to this Placement, there has been no public market for our Shares. Although we have made
an application to the SGX-ST to list our Shares on Catalist, there is no assurance that an active
trading market for our Shares will develop or if developed, be sustained after the Placement.
There is also no assurance that the market price for our Shares will not decline below the
Placement Price. The market price of our Shares could be subject to significant fluctuations as
investors sentiments may be affected by external factors such as the outbreak of war, escalation
of hostilities or outbreak of infectious diseases (whether in Singapore or elsewhere). Other factors
including the liquidity of our Shares in the market, differences between our actual financial or
operating results and those expected by investors and analysts, the general market conditions
and broad market fluctuations may also result in significant fluctuations in the market price of our
Shares.
Our Share price may be volatile in future which could result in substantial losses for
investors subscribing for Shares pursuant to the Placement
The trading price of our Shares may fluctuate significantly and rapidly after the Placement as a
result of, among others, the following factors, some of which are beyond our control:
(a)
(b)
(c)
RISK FACTORS
(d)
(e)
(f)
(g)
Future sale, availability or issuance of Shares could adversely affect our Share price
Any future sale, availability or issuance of a large number of our Shares can have a downward
pressure on our Share price. The sale of a significant amount of Shares in the public market after
the Placement, or the perception that such sales may occur, could materially and adversely affect
the market price of our Shares. These factors also affect our ability to sell additional equity
securities. Except as otherwise described in the section entitled Share Capital Moratorium of
this Offer Document, there will be no restriction on the ability of our existing Shareholders to sell
their Shares either on Catalist or otherwise.
In addition, our Share price may be under downward pressure if certain Shareholders sell their
Shares upon the expiry of their moratorium periods.
Negative publicity which includes those relating to any of our Directors, Executive Officers
or Substantial Shareholders may adversely affect our Share price
Negative publicity or announcements relating to our Group and any of our Directors, Executive
Officers or Substantial Shareholders may adversely affect the market perception or the Share
performance of our Share, whether or not it is justified. Examples of these include unsuccessful
attempts in joint ventures, acquisitions or takeovers, or involvement in insolvency proceedings.
As a significant portion of our operations and assets are located outside Singapore,
investors may find it difficult to enforce a Singapore judgment against our Group or
management
A significant portion of our Groups operations and assets are located outside Singapore.
Accordingly, Shareholders may encounter difficulties in effecting service of process in Singapore
if they wish to make a claim against our Group, or the enforcement of a Singapore judgement
against the assets of our Group.
Investors in our Shares would face immediate and substantial dilution in the NAV per Share
and may experience future dilution
Our Placement Price of S$0.23 is higher than our Groups pro forma NAV per Share of 3.3 cents
based on the post-Placement issued share capital. If we were liquidated immediately following this
Placement on the basis of our NAV, each investor subscribing to this Placement would receive
less than the price they paid for their Shares. Please refer to the section entitled Dilution of this
Offer Document for details of the immediate dilution of our Shares incurred by new investors.
In addition, we may issue share awards under the GCCP Performance Share Plan and share
options under the GCCP Employee Share Option Scheme. To the extent that such share awards
and/or share options are ultimately granted and Award Shares or Option Shares are issued
pursuant to such grant, there may be further dilution to investors participating in the Placement.
51
RISK FACTORS
Further details of the GCCP Performance Share Plan and the GCCP Employee Share Option
Scheme are described in the section entitled GCCP Performance Share Plan and GCCP
Employee Share Option Scheme of this Offer Document.
We may not be able to pay dividends in the future
Our ability to declare dividends to our Shareholders will depend on our future financial
performance and distributable reserves of our Company. Our Companys future financial
performance and distributable reserves depend on several factors, such as the successful
implementation of our strategies, the general economic conditions, demand for and selling prices
of our products and services. Many of these factors may be beyond our control. As such, there is
no assurance that our Company will be able to pay dividends to our Shareholders after the
completion of the Placement. In the event that any company in our Group enters into any loan
agreements in the future, covenants therein may also limit when and how much dividends it can
declare and pay.
We are a Cayman Islands incorporated company and the rights and protection accorded to
our shareholders may not be the same as those of other jurisdictions
Our Company is incorporated in the Cayman Islands as an exempted company and is subject to
the Cayman Companies Law. We will also have to comply with the Catalist Rules upon our
admission to the Catalist. The Companies Act may provide shareholders of Singapore
incorporated companies certain rights and protection of which there may be no corresponding
rights or protections under the Cayman Companies Law. As such, if you invest in our Shares, you
may or may not be accorded the same level of shareholder rights and protection that a
shareholder of a Singapore incorporated company would be accorded under the Companies Act.
The rights of our shareholders and the responsibilities of our management and the Board of
Directors under Cayman Islands law may be different from those applicable to a company
incorporated in another jurisdiction, including Singapore and Malaysia. Our corporate affairs are
governed by our Articles, the Cayman Companies Law and the common law of the Cayman
Islands. The laws of the Cayman Islands relating to the protection of the interests of minority
shareholders are to a large extent governed by the common law of the Cayman Islands. The
common law of the Cayman Islands is derived in part from comparatively limited judicial precedent
in the Cayman Islands as well as that from English common law, which has persuasive, but not
binding, authority on a court in the Cayman Islands. The laws of the Cayman Islands relating to
the protection of the interests of minority shareholders may differ in some respects from those
established under statutes and under judicial precedents in Singapore or other jurisdictions. Our
public shareholders may have more difficulty in protecting their interests in connection with
actions taken by our management, members of our Board of Directors or our principal
shareholders than they would as shareholders of a company incorporated in another jurisdiction.
Please refer to Appendix D entitled Selected Extracts of our Articles of Association of this Offer
Document for more details.
52
PLACEMENT STATISTICS
S$0.23
Placement Price
Net Asset Value per Share (1)
Pro forma NAV per Share based on the unaudited pro forma consolidated
statement of financial position of our Group as at 30 September 2014:
(a)
before adjusting for the estimated net proceeds from the issue of
Placement Shares and based on the pre-Placement share capital of
1,071,432,933 Shares
1.5 cents
(b)
after adjusting for the estimated net proceeds from the issue of
Placement Shares and based on the post-Placement share capital of
1,193,432,933 Shares
3.3 cents
Premium of Placement Price over the pro forma NAV per Share based on
the unaudited pro forma consolidated statement of financial position as at
30 September 2014:
(a)
before adjusting for the estimated net proceeds from the issue of
Placement Shares and based on the pre-Placement share capital of
1,071,432,933 Shares
1,433.3%
(b)
after adjusting for the estimated net proceeds from the issue of
Placement Shares and based on the post-Placement share capital of
1,193,432,933 Shares
597.0%
0.1 cents
Historical net loss per Share of our Group for FY2013 based on our
Companys pre-Placement share capital of 1,071,432,933 Shares,
assuming that the Service Agreements had been in place from the
beginning of FY2013
0.1 cents
Not applicable
Historical PER based on the Placement Price and the historical net EPS of
our Group for FY2013, assuming that the Service Agreements had been in
place from the beginning of FY2013
Not applicable
53
PLACEMENT STATISTICS
Net Operating Cash Flow (2)(3)
Historical net operating cash flow per Share of our Group for FY2013 based
on the pre-Placement share capital of 1,071,432,933 Shares
0.3 cents
Historical net operating cash flow per Share of our Group for FY2013 based
on the pre-Placement share capital of 1,071,432,933 Shares, assuming
that the Service Agreements had been in place from the beginning of
FY2013
0.2 cents
76.7 times
Ratio of Placement Price to historical net operating cash flow per Share of
our Group for FY2013 based on the pre-Placement share capital of
1,071,432,933 Shares, assuming that the Service Agreements had been in
place from the beginning of FY2013
115.0 times
Market Capitalisation
Market capitalisation based on the Placement Price and post-Placement
share capital of 1,193,432,933 Shares
S$274.5 million
Notes:
(1)
Based on an exchange rate of S$1.0000 to MYR2.5712, being the closing exchange rate at at 30 September 2014.
(2)
Based on an exchange rate of S$1.0000 to MYR2.5173, being the average exchange rate for FY2013.
(3)
Net operating cash flow refers to net cash inflows from operating activities.
54
Amount in
aggregate
(S$000)
Estimated amount
allocated for each
dollar of the gross
proceeds to be raised
from the issue of the
Placement Shares as a
percentage of the
gross proceeds
(%)
15,000
53.5
Working Capital
8,232
29.3
4,828
17.2
28,060
100.0
Total
Note:
(1)
The estimated expenses amounted to approximately S$4.8 million, out of which approximately S$1.3 million will be
capitalised against the capital of our Company and the balance of the estimated expenses will be charged to the
profit and loss of our Company.
In the reasonable opinion of our Directors, there is no minimum amount which must be raised by
the Placement. Currently, we are not engaged in any formal discussion with any parties for
acquisitions, joint ventures or the formation of strategic alliances.
Pending the deployment of the net proceeds from the Placement, the funds will be placed in
deposits with banks and financial institutions or invested in money market instruments or used for
our working capital requirements as our Directors may deem fit at their absolute discretion.
We will make periodic announcements on the use of the net proceeds from the Placement as and
when the funds are materially disbursed, and provide a status report on the use of the proceeds
in the annual report(s) of our Company.
The discussion above represents our Companys reasonable estimate of its allocation of the net
proceeds of the Placement based upon its current plans for our Group and reasonable estimates
regarding its anticipated expenditures. Actual expenditures may vary from these estimates and we
will announce the reasons for such deviations. Our Company may find it necessary or advisable
to reallocate the net proceeds within the categories described above or to use portions of the net
proceeds for other purposes and in the event that our Company decides to reallocate the net
proceeds of the Placement for other purposes, our Company will publicly announce its intention
to do so through an SGXNET announcement to be posted on the internet at the SGX-ST website
http://www.sgx.com.
55
Estimated
amount (1)
(S$000)
(2)
Miscellaneous expenses
Total
Estimated amount
allocated for each
dollar of the gross
proceeds to be raised
from the issue of the
Placement Shares as a
percentage of the
gross proceeds
(%) (1)
45
0.2
3,404
12.1
982
3.5
398
1.4
4,828
17.2
Notes:
(1)
(2)
The amount of placement commission per Placement Share, agreed upon between the Issue Manager, Sponsor and
Placement Agent and our Company is 3.5% of the Placement Price payable for each Placement Share. Please refer
to the section entitled General and Statutory Information Management and Placement Arrangements of this Offer
Document for more details.
56
DIVIDEND POLICY
Our Company has not declared or paid any dividends since its incorporation and our subsidiaries
have not declared or paid any dividends in the Period Under Review.
We currently do not have a fixed dividend policy as we are not profitable. As and when we are
profitable, and if we determine it to be in the best interests of our Company and the Shareholders,
we may declare dividends by way of an ordinary resolution of our Shareholders a general meeting,
but may not pay dividends in excess of the amount recommended by our Board of Directors. The
declaration and payment of dividends will be determined at the sole discretion of our Directors,
subject to the approval of our Shareholders. There can be no assurance that dividends will be paid
in the future and the amount of dividends declared and paid by us in the past should not be taken
as an indicant of the dividends payable in the future.
The form, frequency and amount of future dividends on our Shares will depend on our earnings,
general financial condition, results of operations, capital requirements, cash flow, general
business condition, our development plans and other factors as our Directors may, in their
absolute discretion, deem appropriate (Dividend Factors).
Subject to the Cayman Companies Law and the Articles, we may declare an annual dividend
subject to the approval of our Shareholders in a general meeting but the amount of such dividend
shall not exceed the amount recommended by our Directors. Our Directors may also declare an
interim dividend without the approval of our Shareholders.
Our ability to declare and pay dividends will be dependent on our cash income, the cash available,
our results, financial condition, other cash requirements including capital expenditures, our
borrowing arrangements and other contractual restrictions applicable, and restrictions under
applicable laws, rules and/or regulations. Further details as to the restrictions are also set out in
the section entitled Risk Factors We may be unable to pay dividends in the future of this Offer
Document.
However, investors should note that all foregoing statements, are merely statements of our
present intention and shall not constitute legally binding statements in respect of our future
dividends, which may be subject to modification (including reduction or non-declaration thereof)
in our Directors sole and absolute discretion. No inference should or can be made from any of the
foregoing statements as to our actual future profitability or ability to pay dividends in any of the
periods discussed. The form, frequency and amount of future dividends will depend on the
Dividend Factors.
For information relating to taxes payable on dividends, please refer to the section entitled
Taxation of this Offer Document.
57
SHARE CAPITAL
Our Company was incorporated as an exempted company limited by shares in Cayman Islands on
1 November 2013 under the name of Ultimate Prime Ventures Limited. On 10 July 2014, we
changed our name to GCCP Resources Limited.
As at the date of incorporation, our authorised share capital was US$50,000 comprising 50,000
shares of par value US$1 each and our issued and paid-up share capital was US$1 comprising
one (1) share of par value US$1 each.
As at the date of this Offer Document, our authorised share capital is US$50,000 comprising
221,797,700,000 (1) Shares and the sum of our issued and paid-up share capital and share
premium is US$15.5 million and there are 1,071,432,933 issued Shares.
Note:
(1)
Pursuant to written resolutions dated 26 February 2015 and 16 April 2015 (the Resolutions), our
shareholders approved, among other things, the following:
(a)
(b)
(c)
the allotment and issue of 127,612,933 Shares (Conversion Shares) pursuant to the
Conversion to the Pre-Placement Investors, which when allotted, issued and fully-paid, will
rank pari passu with the existing issued Shares;
(d)
the allotment and issue of the Placement Shares on the basis that the Placement Shares,
when allotted, issued and fully paid, will rank pari passu in all respects with the existing
issued Shares;
(e)
the adoption of the GCCP Performance Share Plan, and the authorisation of our Directors,
to allot and issue Shares upon the release of Awards granted under the GCCP Performance
Share Plan;
(f)
the adoption of the GCCP Employee Share Option Scheme, and the authorisation of our
Directors to allot and issue Shares pursuant to the exercise of Options granted under the
GCCP Employee Share Option Scheme;
(g)
the approval of the listing and quotation of all the issued Shares (including the Placement
Shares to be issued and allotted pursuant to the Placement), the Conversion Shares, the
Option Shares and the Award Shares on Catalist;
58
SHARE CAPITAL
(h)
(i)
(ii)
(iii) notwithstanding that such authority may have ceased to be in force at the time that
Instruments are to be issued, issue additional Instruments arising from
adjustments made to the number of Instruments previously issued in the event of
rights, bonus or other capitalisation issues,
at any time and upon such terms and conditions and for such purposes and to such
persons as our Directors may in their absolute discretion deem fit; and
(b)
issue Shares in pursuance of any Instrument made or granted by our Directors pursuant
to (a)(ii) and/or (a)(iii) above, while such authority was in force (notwithstanding that
such issue of Shares pursuant to the Instruments may occur after the expiration of the
authority contained in the resolution),
provided that:
(1)
the aggregate number of Shares to be issued pursuant to such authority (including the
Shares to be issued in pursuance of Instruments made or granted pursuant to this
authority but excluding Shares which may be issued pursuant to any adjustments
(Adjustments) effected under any relevant Instrument, which Adjustments shall be
made in compliance with the provisions of the Catalist Rules for the time being in force
(unless such compliance has been waived by the SGX-ST) and the Articles of
Association for the time being of our Company), does not exceed 100.0% of the post
Placement issued share capital excluding treasury shares, and provided further that the
aggregate number of Shares to be issued other than on a pro rata basis to Shareholders
(including Shares to be issued in pursuance of Instruments made or granted pursuant
to such authority but excluding Shares which may be issued pursuant to Adjustments
effected under any relevant Instrument) shall not exceed 50.0% of the post Placement
issued share capital excluding treasury shares;
(2)
in exercising such authority, our Company shall comply with the provisions of the
Catalist Rules for the time being in force (unless such compliance has been waived by
the SGX-ST) and the Articles of Association for the time being of our Company; and
(3)
unless revoked or varied by our Company in general meeting by ordinary resolution, the
authority so conferred shall continue in force until the conclusion of the next annual
general meeting of our Company or the date by which the next annual general meeting
of our Company is required to be held, whichever is the earlier.
59
SHARE CAPITAL
For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the Catalist
Rules, the post-Placement issued share capital shall mean the total number of issued
Shares of our Company (excluding treasury shares) immediately after the Placement, after
adjusting for: (i) new Shares arising from the conversion or exercise of any convertible
securities; (ii) new Shares arising from exercising share options or vesting of share awards
outstanding or subsisting at the time such authority is given, provided the options or awards
were granted in compliance with the Catalist Rules; and (iii) any subsequent bonus issue,
consolidation or sub-division of Shares.
As at the date of this Offer Document, there is only one class of shares in the capital of our
Company, being the Shares. A summary of the Articles of Association relating to, among others,
the voting rights of our Shareholders are set out in Appendix D entitled Selected Extracts of our
Articles of Association of this Offer Document.
As at the date of this Offer Document, our authorised share capital is US$50,000 comprising
221,797,700,000 (1) Shares and the sum of our issued and paid-up share capital and share
premium is US$15.5 million, and there are 1,071,432,933 issued Shares. Upon the issue and
allotment of the Placement Shares which are the subject of the Placement, our authorised share
capital will be US$50,000 comprising 221,797,700,000 (1) Shares and the resultant sum of our
issued and paid-up share capital of our Company and share premium will be increased to US$36.2
million, and there will be 1,193,432,933 issued Shares.
Note:
(1)
No person has, or has the right to be given, an option to subscribe for or purchase any securities
of our Company or our subsidiaries. As at the Latest Practicable Date, no option to subscribe for
Shares in our Company has been granted to, or was exercised by, any of our Directors or
Executive Officers.
Details of the changes in the issued and paid-up share capital of our Company since the date of
incorporation and immediately after the Placement are set out below:
Number of
issued shares
199
200
9,400
200
600
4,663,886
60
SHARE CAPITAL
Number of
issued shares
Share Split
943,820,000
4,663,886
127,612,933
15,544,639
122,000,000
36,173,958
1,193,432,933
36,173,958
The issued share capital and share premium of our Company as at incorporation, before the
Placement, and after the Placement, are set forth below. This should be read in conjunction with
Appendix A entitled Audited Consolidated Financial Statements for the financial years ended 31
December 2011, 2012 and 2013, Appendix B entitled Audited Interim Consolidated Financial
Statements for the nine-month period ended 30 September 2014 and Appendix C entitled
Unaudited Pro Forma Financial Information for the financial year ended 31 December 2013 and
the nine-month period ended 30 September 2014 of this Offer Document.
As at
Incorporation
Immediately
before the
Placement
1 share of par
value US$1 each
1,071,432,933
Shares
15,544,639
Immediately
after the
Placement
1,193,432,933
Shares
36,173,958
Save as disclosed above, there have been no other changes in the share capital of our Company
since the date of its incorporation on 1 November 2013.
There were no changes in the issued and paid-up share capital or the number and classes of
shares of each of our subsidiaries, within the three (3) years preceding the Latest Practicable
Date.
Save as disclosed in this section, no shares in or debentures of our Company or our subsidiaries
have been issued, or are proposed to be issued, as fully or partly paid-up for cash, or for a
consideration other than cash, during the last three (3) years preceding the date of lodgement of
this Offer Document.
61
SHARE CAPITAL
SHAREHOLDING AND OWNERSHIP STRUCTURE
Our Directors and Substantial Shareholders and their respective shareholdings immediately
before and after the Placement are summarised below:
Before the Placement
Direct interest
No. of
Shares
Deemed interest
Direct interest
No. of
Shares
No. of
Shares
Deemed interest
No. of
Shares
Directors
Alex Loo(1)
461,190,880
43.0
178,719,080
16.7
461,190,880
38.6
178,719,080
15.0
(1)
178,719,080
16.7
178,719,080
15.0
178,719,080
16.7
178,719,080
15.0
133,078,620
12.4
133,078,620
11.2
64,494,367
6.0
64,494,367
5.4
99,981,999
9.3
99,981,999
8.4
54,451,153
5.1
54,451,153
4.6
GPF (Delta)(2)
47,191,000
4.4
47,191,000
4.0
GPF (Falcon)(2)
17,303,367
1.6
17,303,367
1.5
35,487,632
3.3
35,487,632
3.0
Other Pre-Placement
Investors(5)
46,420,213
4.3
46,420,213
3.9
35,487,632
3.3
35,487,632
3.0
62,103,356
5.8
62,103,356
5.2
122,000,000
10.2
(2)
Accion
(3)
Woodburn
Other Shareholders
(6)
Public
Total
1,071,432,933 100.0
1,193,432,933 100.0
Notes:
(1)
Wilma Global is an investment holding company incorporated in the British Virgin Islands on 22 August 2014. Alex
Loo, our Executive Chairman and CEO and Pang Kim Chon, our Executive Director and COO, holds 50.4% and
49.6% of Wilma Global respectively and are each deemed interested in the Shares held by Wilma Global.
(2)
GPF (Delta) and GPF (Falcon) are segregated portfolios under GPF, a fund company established as a segregated
portfolio company in the Cayman Islands. The fund manager of GPF is Accion, with full discretionary power and
authority over the investments for each segregated portfolio of GPF. Accordingly, Accion is deemed interested in the
Shares held by GPF (Delta) and GPF (Falcon). Accion does not hold any shares in GPF (Delta) and GPF (Falcon).
The directors and shareholders of Accion are Chua Thiam Joo, Pay Cher Wee and Teo Kian Huat.
(3)
Pay Cher Wee is the sole shareholder of Grandale Enterprises Limited, an investment holding company
incorporated in the British Virgin Islands on 9 March 2012, and a director and shareholder of Accion. He is deemed
interested in the Shares held by Grandale Enterprises Limited and the Shares which Accion is deemed interested
in. Save as disclosed above, Pay Cher Wee is not related, directly or indirectly, to the Directors, Executive Officers
and Substantial Shareholders of our Company.
62
SHARE CAPITAL
(4)
Woodburn is an investment holding company incorporated in the British Virgin Islands on 29 April 2013. Woodburn
is owned by Qing Guangmei, who is not related, directly or indirectly, to the Directors, Executive Officers or
Substantial Shareholders of our Company.
(5)
The other Pre-Placement Investors apart from GPF (Delta), GPF (Falcon) and Woodburn are Soo Kee Wee, Ng Han
Meng, Ciliandra Fangiono, Fong Kim Chit, Lee Chun Fun, Wang Yu Huei, Teo Khiam Chong and Chang Wei Chian
Benjamin. Save as disclosed above, the Pre-Placement Investors are not related, directly or indirectly, to the
Directors, Executive Officers and Substantial Shareholders of our Company.
(6)
The other existing Shareholders are Loh Heng Kwai, Ian Lim and NovaGold Limited.
(7)
The other existing public Shareholders are Koay Teng Chin and Teng Chang Yeow, who are not related to the
Directors, Substantial Shareholders, controlling Shareholders and their Associates and are deemed to be existing
public shareholders. Accordingly, they are included in the minimum 15% Shares to be held in public hands in
accordance with Rule 406(1) of the Catalist Rules.
Save as disclosed above and in the section entitled Directors, Management and Staff of this
Offer Document, there are no other relationships among our Directors, Substantial Shareholders
and Executive Officers.
Save as disclosed in the section entitled Restructuring Exercise of this Offer Document, there
has been no change in the percentage ownership of Shares of our Directors and Substantial
Shareholders from the incorporation of our Company until the Latest Practicable Date.
The Shares held by our Directors and Substantial Shareholders do not carry voting rights that are
different from the Placement Shares. Our Directors are not aware of any arrangement, the
operation of which may, at a subsequent date, result in a change in control of our Company.
As at the Latest Practicable Date, our Company has only one class of shares, being our Shares
which are in registered form. There is no restriction on the transfer of fully paid ordinary shares
in scripless form except where required by law or the Catalist Rules or our Articles.
There has not been any public take-over offer by a third party in respect of our Shares or by our
Company in respect of the shares of another corporation or units of business trust which has
occurred between the date of its incorporation to the Latest Practicable Date.
Save as disclosed above, our Company is not directly or indirectly owned or controlled, whether
severally or jointly by any other corporation, any government or person.
There are no Shares in our Company that are held by or on behalf of our Company or by the
subsidiaries of our Company.
SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP
Save as disclosed below and in the sections entitled Share Capital and Restructuring Exercise
of this Offer Document, there were no significant changes in the percentage of ownership of our
Directors and Substantial Shareholders in our Company in the last three (3) years prior to the
Latest Practicable Date.
63
SHARE CAPITAL
MORATORIUM
Promotors and other shareholders
To demonstrate commitment to our Group, the following persons in the table below has
undertaken to the Issue Manager and Sponsor not to, amongst others, directly or indirectly, sell,
contract to sell, realise, transfer, assign, pledge, grant any option to purchase, grant any security
over, encumber of otherwise dispose of, or enter into any agreement that will directly or indirectly
constitute or will be deemed as a disposal of any part of his shareholding interests in our Company
immediately after the Listing (Original Shareholding):
(a)
for a period of 12 months commencing from our Companys date of admission to Catalist
(Initial Period);
(b)
to below 50.0% of such persons Original Shareholding (adjusted for any bonus issue or
subdivision) in our Company for a period of 12 months commencing from the expiry of the
Initial Period (Second Period); and
(c)
to below 25.0% of such persons Original Shareholdings (adjusted for any bonus issue or
subdivision) in our Company for a period of 12 months commencing from the expiry of the
Second Period.
Original Shareholding
Percentage (%) of
post-Placement
share capital
Alex Loo
461,190,880
38.6
Wilma Global
178,719,080
15.0
133,078,620
11.2
4,435,954
0.4
Name
Ian Lim
Alex Loo and Pang Kim Chon has each also undertaken to the Issue Manager and Sponsor not
to, amongst others, directly or indirectly, sell, contract to sell, realise, transfer, assign, pledge,
grant any option to purchase, grant any security over, encumber of otherwise dispose of, or enter
into any agreement that will directly or indirectly constitute or will be deemed as a disposal of any
part of his shareholding interests in Wilma Global for a period of 36 months commencing from our
Companys date of admission to Catalist.
Other Shareholders
To demonstrate commitment to our Group, the following persons in the table below has each
undertaken to the Issue Manager and Sponsor not to, amongst others, directly or indirectly, sell,
contract to sell, realise, transfer, assign, pledge, grant any option to purchase, grant any security
over, encumber of otherwise dispose of, or enter into any agreement that will directly or indirectly
constitute or will be deemed as a disposal of any part of his shareholding interests in our Company
immediately after the Listing for a period of 12 months commencing from our Companys date of
admission to Catalist (Initial Period), and for a period of six (6) months thereafter not to sell,
transfer, assign, dispose of, realise or enter into any agreement that will directly or indirectly
constitute or will be deemed as a disposal of any part of such persons shareholding interests in
our Company to below 50.0% of their respective original shareholdings (adjusted for any bonus
issue or subdivision) in our Company.
64
SHARE CAPITAL
Number of Shares
Percentage (%) of
post-Placement
share capital
35,487,632
3.0
NovaGold Limited
17,743,816
1.5
13,307,862
1.1
Name
Number of Shares
Percentage (%) of
post-Placement
share capital
GPF (Delta)
25,451,870
2.1
Woodburn
28,364,197
2.4
Wang Yu Huei
12,616,713
1.1
GPF (Falcon)
7,303,367
0.6
2,813,872
0.2
Ng Han Meng
1,758,670
0.1
Ciliandra Fangiono
1,758,670
0.1
1,758,670
0.1
703,469
0.1
548,553
0.05
548,553
0.05
Name
65
(ii)
(ii)
(MYR)
Cash and cash equivalents
As at
30 September
2014
As at
31 January 2015
18,301,712
8,734,356
As adjusted
for the net
proceeds from
the Placement
71,058,062(1)
Indebtedness
Current
Bank overdraft, secured
Derivative financial instruments
20,465,398
(2)
20,465,398
(2)
(3)
157,598
234,962
234,962
313,016
321,230
321,230
19,423,633
19,465,395
355,959
630,342
630,342
942,810
830,216
830,216
41,658,414
41,947,543
2,016,750
1,432,298
9,318,975
43,090,712
51,266,518
Non-current
Convertible loan
Total indebtedness
Total shareholders equity
Total capitalisation and
indebtedness
(3)
111,573,474(1)(3)
113,590,224
Notes:
(1)
Adjusted to include the net proceeds from the placement of approximately MYR62.3 million (or the equivalent of
S$23.2 million based on an exchange rate of S$1.0000 to MYR2.6827, being the closing exchange rate as at the
Latest Practicable Date).
(2)
The MYR20.5 million in derivative financial instruments represents the derivative component of the Convertible Loan
that relates to the Pre-Placement Investors right to convert the Convertible Loan into Shares.
(3)
The Company entered into the Convertible Loan Agreements with the Pre-Placement Investors for
an aggregate amount of S$18.8 million at an interest rate of 16.0% per annum that converts into
ordinary fully paid shares upon our Company listing on the SGX-ST. One of the Pre-Placement
Investors had converted the Convertible Loan with a nominal value of S$4.0 million into Shares
on 2 May 2014.
66
Utilised
(MYR)
1,650,000
1,650,000
2,000,000
2,000,000 BLR(1)+2.25
2,300,000
2,300,000 BLR(1)+1.00
60 months
commencing from
1 month from the
date of first
release of the
term loan
Types of
facilities/(name of bank)
Unutilised
(MYR)
Interest
rate
(%)
Maturity profile
BLR(1)+1.00
May 2018
Notes:
(1)
(2)
The Company had accepted a letter of offer from United Overseas Bank (Malaysia) Bhd in relation to the term loan
on 9 December 2014, and will enter into a facilities agreement with UOB Bank.
As at the Latest Practicable Date, all our existing borrowings were secured by, among others,
mortgages over our properties as well as joint and several personal guarantees and collaterals
provided by our Executive Chairman and CEO, Alex Loo, and his spouse, Tan Swee Tiang. Please
refer to the section entitled Interested Person Transactions Present and Ongoing Interested
Person Transactions of this Offer Document for further details.
67
68
DILUTION
Dilution is the amount by which the Placement Price paid by the subscribers of our Shares in this
Placement exceeds our NAV per Share immediately after the Placement. Our pro forma NAV per
Share as at 30 September 2014, after adjusting for the Conversion but before adjusting for the
estimated net proceeds due to our Company from the Placement and based on our Companys
pre-Placement issued and paid-up share capital of 1,071,432,933 Shares, was approximately 1.5
cents per Share.
Pursuant to the Placement in respect of, inter alia, 122,000,000 Placement Shares at the
Placement Price, our pro forma NAV per Share as at 30 September 2014, after adjusting for the
Conversion, and the estimated net proceeds due to our Company from the Placement and based
on our Companys post-Placement issued and paid up share capital of 1,193,432,933 Shares
would have been approximately 3.3 cents. This represents an immediate increase in pro forma
NAV per Share of approximately 1.8 cents to our existing Shareholders and an immediate dilution
in NAV per Share of approximately 19.7 cents or approximately 85.7% to our new public investors.
The following table illustrates the dilution on a per Share basis as at 30 September 2014:
Cents (S$)
Placement Price per Share
23.0
Pro forma NAV per Share adjusted for the Conversion and based on
the pre-Placement share capital of 1,071,432,933 Shares
1.5
1.8
Pro forma NAV per Share after the issue of Placement Shares and based on
the post-Placement share capital of 1,193,432,933 Shares
3.3
19.7
Dilution in pro forma NAV per Share to new public investors (%)
85.7
69
DILUTION
The following table summarises the total number of Shares that have been subscribed for and/or
purchased by our existing Shareholders since our incorporation, the total consideration paid by
them and the average effective cash cost per Share in respect of such Shares to our
Shareholders, and the public Shareholders who subscribe for the Placement Shares at the
Placement Price pursuant to the Placement:
Number of
Shares
acquired
by such
Shareholder
Total
Consideration
(S$)
Average
effective cost
per Share
(cents)
Directors
Alex Loo
631,038,052
1,944,793
0.3
88,719,080
25.5
0.00003
Wilma Global
178,719,080
51.4
0.00003
133,078,620
38.2
0.00003
Woodburn
54,451,153
6,000,000
11.0
GPF (Delta)
47,191,000
5,000,000
10.6
GPF (Falcon)
17,303,367
2,300,000
13.3
6,292,133
800,000
12.7
Ng Han Meng
3,932,583
500,000
12.7
Ciliandra Fangiono
3,932,583
500,000
12.7
3,932,583
500,000
12.7
1,573,034
200,000
12.7
Wang Yu Huei
24,616,713
2,760,000
11.2
1,070,292
120,000
11.2
1,070,292
120,000
11.2
44,359,540
12.7
0.00003
35,487,632
10.2
0.00003
NovaGold Limited
17,743,816
5.1
0.00003
17,743,816
5.1
0.00003
13,307,862
3.8
0.00003
4,435,954
38,892
0.9
122,000,000
28,060,000
23.0
Pre-Placement Shareholders
Ian Lim
New public Shareholders
70
RESTRUCTURING EXERCISE
In anticipation of the Placement, our Group undertook the Restructuring Exercise to rationalise
and streamline our Groups corporate structure, pursuant to which our Company became the
holding company for our operations.
The details of our Restructuring Exercise are as follows:
(1)
(2)
our Executive Chairman and CEO, Alex Loo acquired one (1) share of par value US$1
from Offshore Incorporations (Cayman) Limited for a consideration of US$1; and
(b)
the following parties subscribed for such number of shares of par value US$1 each at
a subscription price of US$1 per Share as set out below:
Number of
Shares
Subscribed
for
Subscription
Amount
(US$)
Resultant
Shares
held by
Shareholder
Resultant
Shareholding
Percentage
(%)
137
137
138
69.0
20
20
20
10.0
30
30
30
15.0
2.5
2.0
1.5
199
199
200
100.0
Name
Alex Loo
Total
Following the above transactions, the total issued and paid up share capital of our Company
increased from US$1 to US$200 comprising 200 shares of par value US$1 each.
71
RESTRUCTURING EXERCISE
(3)
Alex Loo, 2,500,000 ordinary shares in the share capital of Gridland at a cash
consideration of MYR2.5 million; and
(b)
Tan Swee Tiang (who was holding such shares on trust on behalf of Alex Loo),
2,500,000 ordinary shares in the share capital of Gridland at a cash consideration of
MYR2.5 million.
Both transfers were made on a willing buyer willing seller basis and were not on an arms
length basis nor on normal commercial terms as the consideration was based on the issued
and paid up share capital of Gridland, which was in a net liabilities position at the time of
acquisition.
Following the completion of the abovementioned transfers, Gridland became a wholly-owned
subsidiary of our Company.
(4)
Alex Loo, one (1) ordinary share in the share capital of Hyper Act at a cash
consideration of MYR1; and
(b)
Chung Man Chong, one (1) ordinary share in the share capital of Hyper Act at a cash
consideration of MYR1.
Both transfers were made on a willing buyer willing seller basis and were not made on an
arms length basis nor on normal commercial terms as the consideration was based on the
issued and paid up share capital of Hyper Act, which was in a net liabilities position at the
time of acquisition.
Following the completion of the abovementioned transfers, Hyper Act became a whollyowned subsidiary of our Company.
(5)
on 10 February 2014, Alex Loo acquired five (5) shares of par value US$1 each
amounting to 2.5% of the total number of shares of par value US$1 each of our
Company from Siew Peng Keong for a consideration of US$5; and
72
RESTRUCTURING EXERCISE
(b)
on 14 March 2014, the following parties acquired such number of shares of par value
US$1 each from Alex Loo for such consideration as set out below:
Number of
Shares
Shareholding
Percentage
(%)
Consideration
(US$)
10
5.0
10
NovaGold Limited
2.0
4.0
22
11.0
22
Name
Total
Following the above transactions, Alex Loo held 121 shares of par value US$1 each
amounting to 60.5% of the total number of shares of par value US$1 each.
(6)
Share Split
On 15 April 2014, each share of par value US$1 each in our Company was sub-divided into
47 shares of par value US$0.021 each in our Company, resulting in 9,400 shares of par value
US$0.021 each.
(7)
Alex Loo subscribed for 200 shares of par value US$0.021 each for a consideration of
MYR5.0 million which is to be satisfied by way of the capitalisation of the debt of
MYR5.0 million owed by our Company to Alex Loo; and
(b)
GPF (Delta) subscribed for 400 shares of par value US$0.021 each for a consideration
of S$4.0 million which is to be satisfied by way of the capitalisation of the debt of S$4.0
million owed by our Company to GPF (Delta).
Following the above transactions, the total issued and paid up share capital of our Company
increased from US$200 to US$212.8 comprising 10,000 shares of par value US$0.021 each
and the shareholdings of our Company were as follows:
Number of
Shares
Shareholding
Percentage
(%)
5,887
58.9
GPF (Delta)
400
4.0
940
9.4
1,410
14.1
188
1.9
141
1.4
Name
Alex Loo
73
RESTRUCTURING EXERCISE
Number of
Shares
Name
Teng Chang Yeow
470
4.7
NovaGold Limited
188
1.9
376
3.8
10,000
100.0
Total
(8)
Shareholding
Percentage
(%)
Acquisition of our Controlling Shareholder, Wilma Global, by Alex Loo and Pang Kim
Chon
Wilma Global, our Controlling Shareholder, was incorporated on 22 August 2014 in the
British Virgin Islands in accordance with the laws of the British Virgin Islands as a company
limited by shares.
On 23 October 2014, our Executive Chairman and CEO, Alex Loo was issued 5,036 ordinary
shares in the capital of Wilma Global for a consideration of US$50.36 and our Executive
Director and COO, Pang Kim Chon was issued 4,964 ordinary shares in the capital of Wilma
Global for a consideration of US$49.64.
(9)
Share Split
On 26 February 2015, each share of par value US$0.021 each in our Company was
sub-divided into 94,382 Shares resulting in 943,820,000 issued Shares.
Name
Alex Loo
Pang Kim Chon
Total
Number of Shares
Shareholding as a
percentage of the total
number of Shares after
the Share Split
(%)
90,000,000
88,719,080
9.5
9.4
178,719,080
18.9
74
RESTRUCTURING EXERCISE
The consideration for the acquisition of such Shares by Wilma Global was satisfied by the
issue of new ordinary shares in the share capital of Wilma Global as follows:
Name
Alex Loo
Pang Kim Chon
Total
Resultant Number
of shares in
Wilma Global
Shareholding as a
percentage of the
total number
of shares in
Wilma Global
(%)
90,000,000
88,719,080
50.4
49.6
178,719,080
100.0
Following the above transaction, the shareholdings of our Company were as follows:
Number of Shares
Shareholding
Percentage
(%)
Alex Loo
Wilma Global
Chung Man Chong
Teng Chang Yeow
NovaGold Limited
Griffin (Delta)
Grandale Enterprises Limited
Koay Teng Chin
Loh Heng Kwai
Ian Lim
461,190,880
178,719,080
133,078,620
44,359,540
17,743,816
37,752,800
35,487,632
17,743,816
13,307,862
4,435,954
48.9
18.9
14.1
4.7
1.9
4.0
3.8
1.9
1.4
0.5
Total
943,820,000
100.0
Name
75
GROUP STRUCTURE
Our Group structure after the Restructuring Exercise and as at the date of this Offer Document is
as follows:
Company
100%
100%
Gridland
Hyper Act
The details of each subsidiary of our Group as at the date of this Offer Document are as follows:
Principal Business
Activities/ Principal Place
of Business
% Ownership
Interest held by our
Company/Group
Gridland
3 February
2009/Malaysia
100
Hyper Act
19 October
2009/Malaysia
100
Company
Save as disclosed above, our Group does not have any subsidiaries or associated companies.
Save as disclosed in this Offer Document, none of our Directors or Substantial Shareholders has
any interest, whether direct or indirect, in our Group or any of our subsidiaries of our Group.
Our subsidiaries are not listed on any stock exchange.
76
(MYR)
Revenue
Cost of sales
Gross profit
FY2011
Audited
FY2012
2,294,356
7,668,290
(1,591,134) (7,118,172)
Unaudited
9M2013
FY2013
Audited
9M2014
432,990
(344,412)
703,222
550,118
88,578
49,475
10,690
26,102
13,353
13,225
12,711
164,024
(8,221,511)
Finance costs
(427,858)
(2,750,102)
(328,595)
(37,248)
(5,436)
(448,221)
(338,606)
(0.04)
(0.1)
(0.2)
(0.1)
(1.0)
Post-Placement LPS
(cents) (2)
(0.03)
(0.1)
(0.2)
(0.1)
(0.9)
Notes:
(1)
For comparative purposes, the pre-Placement LPS for the Period Under Review has been computated based on the
loss for the year attributable to owners of our Company and our pre-Placement share capital of 1,071,432,933
Shares.
(2)
For comparative purposes, the post-Placement LPS for the Period Under Review has been computated based on
the loss for the year attributable to owners of our Company and our post-Placement share capital of 1,193,432,933
Shares.
77
(MYR)
ASSETS
Non-current asset
Property, plant and equipment
Prepayments for property,
plant and equipment
As at
30 September
2014
4,890,955
5,162,808
9,304,960
27,096,756
3,482,000
4,890,955
5,162,808
12,786,960
27,096,756
4,769,623
3,799
363,747
3,234
2,352,942
3,411
621,938
3,623
1,200
57,359
11,397
833,245
149,926
1,168
417,950
1,544,332
789,305
1,062,188
18,301,712
2,096
5,140,403
2,983,114
1,053,095
22,117,583
10,031,358
8,145,922
13,840,055
49,214,339
103,762
27,432
4,756,057
150,257
17,169
4,165,998
11,671,011
181,862
4,432,316
3,797,519
2,326,109
470,613
29,777
20,465,398
4,917,028
4,333,424
16,285,189
27,059,639
7,471
72,119
352,347
1,435,796
20,722,402
79,590
352,347
1,435,796
20,722,402
Total liabilities
4,996,618
4,685,771
17,720,985
47,782,041
Net assets/(liabilities)
5,034,740
3,460,151
(3,880,930)
1,432,298
5,000,002
5,000,002
Current assets
Inventories
Trade and other receivables
Prepayments
Pledged deposits
Cash at banks and on hand
Income tax recoverable
Total assets
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables
Accrued operating expenses
Loans and borrowings
Derivative financial
instruments
Income tax payable
Non-current liabilities
Deferred tax liabilities
Loans and borrowings
Equity attributable to
owners
of the Company
Share capital
Accumulated
earnings/(losses)
34,738
Total equity
Total equity and liabilities
NAV per Share (cents)
(1)
645
16,019,659
(1,539,851)
(3,881,575)
(14,587,361)
5,034,740
3,460,151
(3,880,930)
1,432,298
10,031,358
8,145,922
13,840,055
49,214,339
0.5
0.3
(0.4)
0.1
Note:
(1)
The NAV per Share has been computed based on our pre-Placement share capital of 1,071,432,933 Shares.
78
(MYR)
Revenue
432,990
Cost of sales
(344,412)
Gross profit
88,578
26,102
13,225
164,024
(8,221,511)
7,243,763
(6,891,364)
42,577,040
(42,129,516)
(51,714,306)
(56,976,564)
(1,919,605)
(2)
(51,714,306)
(56,976,564)
(4.8)
(5.3)
(4.3)
(4.8)
Notes:
(1)
For comparative purposes, the pro forma pre-Placement LPS for the Period Under Review has been computated
based on the loss for the year attributable to owners of our Company and our pre-Placement share capital of
1,071,432,933 Shares.
(2)
For comparative purposes, the pro forma post-Placement LPS for the Period Under Review has been computated
based on the loss for the year attributable to owners of our Company and our post-Placement share capital of
1,193,432,933 Shares.
79
(MYR)
As at
30 September 2014
ASSETS
Non-current asset
Property, plant and equipment
9,304,960
27,096,756
3,482,000
12,786,960
27,096,756
417,950
57,359
1,544,332
Prepayments
11,397
789,305
833,245
1,062,188
48,979,166
18,301,712
1,168
2,096
49,882,335
22,117,583
62,669,295
49,214,339
6,671,011
3,797,519
181,862
2,326,109
4,432,316
470,613
11,285,189
6,594,241
1,435,796
1,298,769
Total liabilities
12,720,985
7,893,010
Net assets
49,948,310
41,321,329
Share capital
103,202,467
102,179,468
Accumulated losses
(53,254,157)
(60,858,139)
Total equity
49,948,310
41,321,329
62,669,295
49,214,339
4.7
3.9
Current assets
Inventories
Pledged deposits
Cash at banks and on hand
Income tax recoverable
Total assets
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables
Accrued operating expenses
Loans and borrowings
Non-current liabilities
Loans and borrowings
The pro forma NAV per Share has been computed based on our pre-Placement share capital of 1,071,432,933
Shares.
80
our Company entered into the Convertible Loan Agreements with the Pre-Placement
Investors for an aggregate amount of S$18.8 million at an interest rate of 16.0% per annum
that converts into ordinary fully paid shares upon our Company listing on the SGX-ST. One
of the Pre-Placement Investors had converted the Convertible Loan with a nominal value of
S$4.0 million into Shares on 2 May 2014.
The term of the Convertible Loan Agreements is 24 months from the drawdown date. The
holders have the right to demand repayment if the Company does not complete an initial
public offering on the SGX-ST after 24 months from the drawdown date or abort the process
for the application of the initial public offering. For the purpose of the pro forma adjustments,
our Company is assumed to be listed on the SGX-ST in March 2015 and the Convertible
Loan is assumed to convert into ordinary fully paid shares. This results in a loss on
conversion of S$16.4 million; and
(b)
our Company issued an aggregate of 200 Shares pursuant to step 7 of the Restructuring
Exercise for MYR5.0 million pursuant to a capitalisation of loans owing to a Director.
81
FY2011
(MYR)
%
Iron ore
Coal
1,606,991
Crushed limestone
Total
FY2013
(MYR)
%
79.0
Unaudited
9M2013
(MYR)
%
Audited
9M2014
(MYR)
%
21.0
432,990 100.0
432,990 100.0
(b)
processing capacity;
(c)
(d)
(e)
Please refer to the section entitled Risk Factors of this Offer Document for other factors which
may affect our revenue.
Cost of sales
For FY2011 and FY2012, the cost of sales recognised was mainly from the sale of iron ore and
coal. As the sale of crushed limestone only commenced in June 2014, our Group did not recognise
any cost of sales in relation to the sale of our crushed limestone in FY2013 but recognised cost
of sales in 9M2014. The breakdown of our cost of sales for FY2011, FY2012, FY2013, 9M2013
and 9M2014 are set out below:
Audited
FY2012
(MYR)
%
FY2011
(MYR)
%
Iron ore
Raw material
Audited
9M2014
(MYR)
%
16.3
344,412
100.0
7,118,172 100.0
344,412
100.0
1,161,582
Crushing cost
1,591,134 100.0
Unaudited
9M2013
(MYR)
%
83.7
Coal
Raw material
Total
FY2013
(MYR)
%
83
mining costs;
(b)
(c)
(d)
The factors that affect our cost of sales include the following:
(i)
(ii)
84
the interest accrual of MYR6.8 million of the Convertible Loan which assumes the
Conversion of the Convertible Loan occurring in March 2015. The finance cost relates to the
accretion of the carrying amount of the liability component to the principal amount of the
Convertible Loan; and
(b)
the accounting treatment for the loss on the Conversion of the Convertible Loan into Shares
at a conversion price which ranges from 50.0% to 65.0% of the target valuation of S$200
million divided by the number of Shares prior to Conversion.
the interest accrual of MYR4.1 million of the Convertible Loan which assumes the
Conversion of the Convertible Loan occurring in March 2015. The finance cost relates to the
accretion of the carrying amount of the liability component to the principal amount of the
Convertible Loan; and
85
the accounting treatment for the loss on the Conversion of the Convertible Loan into Shares
at a conversion price which ranges from 50.0% to 65.0% of the target valuation of S$200
million divided by the number of Shares prior to Conversion.
FY2011 vs FY2012
Revenue
Our Group was mainly engaged in the business of trading minerals in FY2011 and FY2012. Our
total revenue increased by approximately MYR5.4 million or 234.8% from MYR2.3 million in
FY2011 to MYR7.7 million in FY2012. This increase was mainly due to the increase in demand of
iron ore from our sole customer and also the additional sale of coal in FY2012.
Cost of sales
Our cost of sales increased by MYR5.5 million or 343.8% from MYR1.6 million in FY2011 to
MYR7.1 million in FY2012. This increase was mainly due to the increase in sales of iron ore and
the additional sale of coal in FY2012.
Gross profit and margin
Our gross profit decreased by approximately MYR0.1 million or 14.3% from MYR0.7 million in
FY2011 to MYR0.6 million in FY2012. This decrease was due to a lower margin generated from
the sale of iron ore as a result of the volatility of iron ore prices and higher cost of sales.
Consequently, the gross profit margin decreased from 30.7% in FY2011 to 7.2% in FY2012.
Other income
Our other income decreased by MYR26,074 or 52.7%, from MYR49,475 in FY2011 to MYR23,401
in FY2012. This was due to our Group recording a lower interest arising from the part-withdrawal
of our fixed deposits and a one-off interest received for the retention sum from the prior year. In
FY2012, our Group further recorded MYR12,711 as a result of a gain on disposal of property, plant
and equipment. There was no such gain on disposal of property, plant and equipment in FY2011.
General and administrative expenses
Our general and administrative expenses increased by MYR1.1 million or 157.1% from MYR0.7
million in FY2011 to MYR1.8 million in FY2012. The increase was mainly due to the increase in
salary and wages, sales commission paid to third parties and expenses such as sub-contractor
wages, blasting expenses and expenses from the maintenance and rental of various heavy
equipments and machinery for the building of infrastructure at the Gridland Quarry.
Finance costs
Finance costs decreased by MYR0.1 million or 25.0% from MYR0.4 million in FY2011 to MYR0.3
million in FY2012 mainly due to the reduction in term loans.
86
87
88
89
90
91
to demonstrate his commitment to our Group, our Groups Executive Chairman and CEO,
Alex Loo, capitalised his shareholders loan of MYR5.0 million to strengthen the Groups
working capital position. This has improved our Groups capitalisation and lowered our
gearing, enabling our Group better access to external borrowings if required;
(b)
(c)
as at 30 September 2014, our Group has repaid a loan of MYR2.0 million. As at the Latest
Practicable Date, our Group has a facility of MYR4.3 million which has not been utilised. As
such, our Group believes that it is able to obtain additional borrowings if required;
(d)
while the Gridland Quarry has only begun production in June 2014, our Group estimates that
production and sales will be self-sustaining in providing positive cash flows in FY2015; and
(e)
the preparatory works on the Hyper Act Quarry are on-going. Completion of preparatory
works and commencement of stockpiling of limestone is estimated to be completed within the
second half of 2015. Thereafter, our Group will be able to generate additional revenue and
operating cash flows from the commencement of production at the Hyper Act Quarry, which
will improve the working capital position of our Group.
Our Directors are of the reasonable opinion that, after taking into consideration the above and
having made due and careful enquiry and after taking into account the expected cash flows
generated from our Groups operations, our Groups banking facilities and our Groups existing
cash at banks and on hand, the working capital available to our Group as at the date of lodgement
of this Offer Document is sufficient for present requirements and for at least 18 months after the
Listing of our Group on Catalist.
The Sponsor is of the reasonable opinion that, after taking into consideration the above and
having made due and careful enquiry and after taking into account the expected cash flows
generated from our Groups operations, our Groups banking facilities and our Groups existing
cash at banks and on hand, the working capital available to our Group as at the date of lodgement
of this Offer Document is sufficient for present requirements and for at least 18 months after the
listing of our Group on the Catalist.
92
(MYR)
FY2011
Audited
FY2012
FY2013
(955,342)
1,275,785
7,149,529
(196,812)
400,947
15,713
Audited
9M2014
3,480,305 (10,849,738)
(751,207) (1,326,645)
Unaudited
9M2013
1,320,244
45,781,584
152,945
267,440
20,060,851
150,055
(1,909,194)
Note:
(1)
Cash and cash equivalents at the end of the period includes cash at banks and on hand, and bank overdrafts. Cash
at banks and on hand amounted to MYR3,234, MYR3,623, MYR0.1 million, and MYR18.3 million for FY2011,
FY2012, FY2013, and 9M2014 respectively. Bank overdrafts amounted to MYR0.7 million, MYR2.1 million, and
MYR2.1 million for FY2011, FY2012 and FY2013 respectively. There is no bank overdraft for 9M2014.
FY2011
In FY2011, we recorded a net cash outflow from operating activities of MYR1.0 million, which was
a result of operating cash inflows before changes in working capital of MYR0.4 million adjusted for
working capital outflows of MYR0.9 million and net interest paid of MYR0.4 million. The decrease
in net working capital was mainly due to the following:
(a)
(b)
Net cash outflow from investing activity of MYR0.2 million was due to purchases of property, plant
and equipment.
93
(b)
Net cash outflow from investing activities of MYR0.2 million, which was due to the purchase of
property, plant and equipment. This was partially offset by proceeds from disposals of plant,
property and equipment of MYR94,940.
Net cash outflow from financing activities of MYR2.4 million which was due to the repayment of
term loans of MYR4.0 million, repayment of hire purchases of MYR0.2 million and the placement
of pledged deposits of MYR0.2 million. This was partially offset by proceeds from term loans of
MYR2.0 million.
As at 31 December 2012, our cash and cash equivalents were an overdraft of MYR2.1 million.
FY2013
In FY2013, we recorded a net cash inflow from operating activities of MYR7.1 million, which was
a result of operating cash outflows before changes in working capital of MYR0.7 million adjusted
for working capital inflows of MYR9.0 million, exploration expenditure of MYR0.7 million and net
interest paid of MYR0.4 million. The increase in net working capital was mainly due to the
following:
(a)
(b)
(c)
Net cash outflow from investing activities of MYR8.1 million was due to the purchases and
prepayment of purchases of property, plant and equipment.
94
(b)
(c)
(d)
Net cash outflow from investing activity amounted to MYR14.9 million, which was due to
purchases of property, plant and equipment.
Net cash inflow generated from financing activities of MYR45.8 million was mainly due to the
proceeds received from the issuance of convertible loans of MYR48.3 million. This was partially
offset by repayments of term loans of MYR2.2 million, repayment of hire purchase of MYR0.1
million and placement of pledged deposits of MYR0.2 million.
As at 30 September 2014, our cash and cash equivalents were MYR18.3 million.
SEASONALITY
Our Group does not experience any significant seasonality in the course of our business.
INFLATION
Our financial performance for the Period Under Review was not materially affected by inflation.
95
(MYR)
FY2011
FY2012
FY2013
53,889
152,348
4,459,351
237,923
649,967
200,980
Total
291,812
802,315
4,660,331
Leasehold land
9M2013
9M2014
1 October 2014
up to the
Latest
Practicable
Date
4,336,678 10,433,188
200,980
8,175,807
298,437
4,537,658 18,608,995
298,437
The above capital expenditures were primarily financed by external generated funds comprised
mainly of borrowings from financial institutions and capital investment from shareholders,
directors and investors.
Divestments
The divestments made by our Group during the Period Under Review and from 1 October 2014
up to the Latest Practicable Date were as follows:
FY2011
FY2012
FY2013
9M2013
9M2014
1 October
2014 up to
the Latest
Practicable
Date
102,786
74,900
1,430
Total
102,786
74,900
1,430
(MYR)
Capital commitments
As at the Latest Practicable Date, our Group did not have any capital commitments.
96
As at
30 September
2014
As at the
Latest
Practicable
Date
34,000
142,510
34,000
142,510
(MYR)
Not later than 1 year
Total
As at
30 September
2014
(MYR)
As at the
Latest
Practicable
Date
157,598
279,747
355,959
804,877
513,557
1,084,624
The above finance lease commitments were primarily financed by internally generated resources.
Contingent liabilities
As at the Latest Practicable Date, our Group does not have any contingent liabilities.
EXCHANGE CONTROLS
Malaysia
There is no restriction on amount of repatriation of capital, profits, and income earned from
Malaysia. Repatriation of funds from divestment of MYR assets or profits and dividends arising
from the investments in Malaysia, however, must be made in foreign currency other than the
currency of the State of Israel.
97
98
99
100
Gridland Quarry has a total acreage of approximately 25.0 acres and has a mining elevation
ranging from 50.0m to 240.0m. The Gridland Quarry is located in the Sengat Quarry Zone which,
based on the Independent Qualified Persons Report, is well known for good limestone deposits.
The Gridland Quarry is accessible to any motor vehicles or highway trucks through the
surrounding area.
As of 30 September 2014, the limestone Mineral Resource in the Gridland Quarry comprises a
total Measured and Indicated Mineral Resource of 26Mt (totals may appear to be inconsistent due
to appropriate rounding and are inclusive of Ore Reserves), which includes a Measured Mineral
Resource of 1.4Mt and an Indicated Mineral Resource of 24Mt.
As of 30 September 2014, the limestone Ore Reserves in the Gridland Quarry comprise 4.3Mt of
Probable Ore Reserves.
101
102
Category
Hyper Act
Tonnage
(Mt)
Hyper Act
Grade
(CaCO 3%)
Gridland
Tonnage
(Mt)
Gridland
Grade
(CaCO 3%)
Measured
47
96
1.4
98
Indicated
120
96
24
98
160 (2)
96
26 (2)
98
10
96
20
98
Inferred
Notes:
(1)
The procedures and parameters used for resource estimation are set out in section V of Appendix F entitled
Independent Qualified Persons Report of this Offer Document.
(2)
The total figure is the aggregate of the Measured and Indicated Mineral Resource and may appear to be inconsistent
due to appropriate rounding.
103
Category
Mineral
Type
Hyper Act
Tonnage
(Mt)
Hyper Act
Grade
(CaCO 3%)
Gridland
Tonnage
(Mt)
Gridland
Grade
(CaCO 3%)
Proved
Limestone
2.2
96.1
N/A (2)
Probable
Limestone
19.7
96.1
4.3
98.2
96.1
4.3
98.2
Total
Limestone
22.0
(3)
N/A (2)
Notes:
(1)
The procedures and parameters used for reserve estimation are set out in section VIII of Appendix F entitled
Independent Qualified Persons Report of this Offer Document.
(2)
(3)
The total figure is the aggregate of the Proved and Probable Ore Reserves and may appear to be inconsistent due
to appropriate rounding.
Please refer to the section entitled Glossary of Technical Terms of this Offer Document for the
definitions of Measured, Indicated and Inferred Resources as well as Proved and Probable Ore
Reserves.
The Resource and Reserves estimates should not be regarded as a representation that all these
amounts can be achieved and/or be economically exploited and nothing contained herein should
be interpreted as an assurance of the economic life of our limestone Reserves and Resource or
the economic viability of our future operations. The actual quarry life can also differ from the
projected quarry life for a number of reasons, including, inter alia, changes in the production rate.
In addition, as we have possession of the Gridland Quarry and the Hyper Act Quarry and the right
to undertake the business operations only for the lease terms of the respective quarries, assuming
there is no renewal of the lease terms of the respective quarries upon their expiry, we may not be
able to fully extract and monetise the Resource and/or the Reserves available at the Gridland
Quarry and Hyper Act Quarry.
To the best of our knowledge, no material changes have occurred to the Gridland Quarry, the
Hyper Act Quarry and/or the business since the effective date of the Independent Qualified
Persons Report, being 30 September 2014, which has or may have a material impact on the key
bases and assumptions and/or the findings or opinions under the Independent Qualified Persons
Report.
Please refer to Appendix F entitled Independent Qualified Persons Report of this Offer
Document for further details of Resource and Reserves estimation in our Gridland Quarry and
Hyper Act Quarry.
INDEPENDENT VALUATION
As part of the Listing, the Directors have appointed the Independent Valuer to conduct an
independent valuation of the Gridland Quarry and the Hyper Act Quarry. The Independent
Valuation Report has been prepared in accordance with the VALMIN Code. The valuation was
carried out on a Fair Market Value basis. Please refer to Appendix G entitled Independent
Valuation Report of this Offer Document for further details.
Fair Market Value is defined as the amount of money (or the cash equivalent of some other
consideration) for which the mineral asset should change hands on the valuation date in an open
and unrestricted market between a willing buyer and a willing seller in an arms length
transaction, with each party acting knowledgeably, prudently and without compulsion.
104
ground calcium carbonate (GCC), which is produced by crushing and grinding a carbonate
rock, such as limestone; and
(b)
(ii)
adhesives;
animal feed;
ceramics;
cleaning products;
elastomers;
fertilisers;
foodstuff;
glass;
paints;
paper;
plastics;
pharmaceuticals;
rubber;
sealants;
toiletries; and
water treatment.
105
Processing
Sale
Quarrying
Quarrying consists of removing blocks or pieces of stone from an identified and unearthed
geologic deposit. Differences in the particular quarrying techniques used often stems from
variations in the physical properties of the deposit itself (such as density, fracturing/bedding
planes and depth), financial considerations, and the site owners preference.
In summary, the quarrying process involves the following steps:
(a)
(b)
(c)
(d)
There are two (2) types of quarrying operation methods which can be implemented smoothly. They
are the open-cast quarrying method and the basement quarrying method. These two (2) types of
quarrying operations are similar except that an open-cast quarrying method develops upwards
and downwards and the basement quarrying method develops downwards. The relevant permit
which the Group has, enables the Group to implement the open-cast quarrying method or the
basement quarrying method, depending on the stage of quarrying which the Group is in for the
particular quarry it is conducting the quarrying work.
In order for quarrying works to commence, there would be a need to gain access to the limestone
deposit. This is achieved by removing the layer of earth, vegetation and rock unsuitable for the
final limestone product, which are collectively referred to as overburden, with heavy equipment
that is mostly coupled with small explosive charges. The overburden is then transferred to onsite
storage for potential use in later reclamation of the site.
After the face of the limestone is exposed, the stone is removed from the quarry in benches using
a variety of techniques suitable to the geology and characteristics of the limestone deposit.
Benches typically have a height and depth equating to eight (8) to 12 ft and length of 20 ft or more.
106
(2)
FY2012
FY2013
9M2014
40,000
48,649
N.A.
N.A.
N.A.
20.1
107
The maximum production capacity during the financial periods under review were calculated based on an average
production rate of 240.0t per hour, the aggregate eight (8) hours work shift per day for 21 operating days per month.
(2)
Our Group is in the initial stages of production and has not been operating at full capacity. Actual production is
anticipated to increase as our Group ramps up production after the first few months of operation.
(3)
The utilisation rates were computed using actual volumes of crushed limestone produced divided by the estimated
maximum production capacity.
QUALITY ASSURANCE
We place great emphasis on the quality of our crushed limestone. We believe that having an
established quality management system is one of the main factors contributing to our success and
reputation of quality products.
We monitor the quality of our limestone through on-site inspections at the quarries. Samples of
crushed limestone are collected once a month from our stockpiles at the quarries and analysed
by sending to third party laboratories for chemical composition, colour and brightness. It is
anticipated that Hyper Act would have its own laboratory and such testing may be conducted
in-house.
Our quality assurance processes are led by a quarry manager. He is responsible for overseeing
the various inspections conducted on-site and at the crusher plants. As at the Latest Practicable
Date, the quarry manager is assisted by two (2) workers.
During the period 1 October 2014 to the Latest Practicable Date, we have not received any
significant complaints from customers of our crushed limestone.
OUR MAJOR CUSTOMERS
We sell our crushed limestone of various sizes to domestic customers.
In June 2014, our Group commenced production of crushed limestone. As at the Latest
Practicable Date, our Group has two (2) customers, namely Limetreat Sdn Bhd, a subsidiary of
NSL Chemicals Sdn Bhd, and Pulai Rock Industries Sdn Bhd.
Major customers
100.0
79.0
21.0
48.0
52.0
108
Major suppliers
Nature of services
Contractor for
mechanical and
electrical works
0.2
3.1
4.8
4.4
2.4
0.1
Rental of pneumatic
crawler drill
2.0
7.9
2.8
Our Group carefully evaluates and chooses experienced suppliers and will only work with those
who are able to provide good and timely services at competitive prices.
We generally do not enter into long-term or exclusive agreements with any of our major suppliers.
Our Group is not materially dependent on any contract with any supplier and the products supplied
by the above major suppliers can be sourced from other alternative suppliers in the market without
significant difficulties.
To the best of our Directors knowledge, we are not aware of any information or arrangements
which would lead to a cessation or non-renewal of our current relationship with any of the above
major suppliers or service providers.
As at the date of this Offer Document, none of our Directors or Substantial Shareholders or their
respective Associates has any interest (direct or indirect) in the abovementioned major suppliers
or service providers.
109
FY2012
FY2013
9M2014
N.A.
30 (1)
As our Group commenced production in June 2014, we have recorded trade receivables for only four (4) months in
9M2014.
In FY2011, our trade receivables were mainly due to proceeds from the sale of iron ore and were
not relevant to our current business. Our trade receivables in 9M2014 are due to the sales of our
crushed limestone.
As we commenced production in June 2014, we have recorded trade receivables for only four (4)
months in 9M2014. Our trade receivables (net of impairment loss on trade receivables) as at 30
September 2014 amounted to MYR0.2 million and the trade receivables ageing schedule as at 30
September 2014 was as follows:
Percentage of total
trade receivables
(%)
100.0
100.0
As at the Latest Practicable Date, the trade receivables of MYR0.2 million had been fully collected.
Save for the above, during the Period Under Review, all outstanding trade receivables from third
parties were collected within the credit period extended. No provisions for bad debts were made.
Credit terms granted by our suppliers
In general, the credit period stipulated in the contracts signed between our Group and our
suppliers is within 30 days of delivery of goods and services. It is not meaningful to calculate the
trade payables turnover days of our Group for the Period Under Review as the expenditure
incurred by our Group during the Period Under Review was not of a trading nature.
110
FY2012
FY2013
9M2014
N.A.
30 (1)
As our Group commenced production in June 2014, we have recorded trade payables for only four (4) months in
9M2014.
In FY2011, our trade payables were mainly attributable to cost of iron ore purchased and were not
relevant to our current business. Our trade payables in 9M2014 are due to the production of our
crushed limestone.
INVENTORY MANAGEMENT
It is not meaningful to calculate the inventory turnover days of our Group for the Period Under
Review in line with the absence of significant sales of our Group for such period.
Due to the nature of our business and the time required to extract and remove limestone from the
quarries, we typically require our customers to provide a notice period of approximately one (1)
to two (2) months for the delivery of our crushed limestone, depending on the size of the order.
As such, contracts are typically entered into in advance and the actual delivery of our crushed
limestone takes place approximately one (1) to two (2) months from the date the contract was
entered into.
SALES AND MARKETING
Our Executive Chairman and CEO, Alex Loo and our Executive Director and COO, Pang Kim Chon
oversee the sales and marketing aspects of our Group which covers our domestic sales and
exports and are assisted by a business development manager. Presently, the sales and marketing
of our Group include (i) formulating sales and marketing strategies; (ii) establishing and
maintaining relationships with new and existing customers; and (iii) direct marketing, trade fairs
and conferences. We intend to set up a sales and marketing department and to hire a manager
to oversee the department.
From time to time, we are also approached directly by customers.
INSURANCE
For the Period Under Review and for the period commencing from 1 October 2014 up to the Latest
Practicable Date, we were in compliance with applicable Malaysia laws, rules and regulations
obtaining insurance for our employees.
For our office and other working premises, we have maintained insurance policies which cover
such premises for losses due to fire. As for staff and employees, we have taken up policies
including social security insurance. For our limestone quarrying operations, we have taken up
policies such as public liability, motor equipment and equipment all-risks insurance.
111
Description of
Approval/Licence
Issuing Body
Date of Expiry
Removal of mineral
licence (also known as
Form K)
Department of
Lands and Mines
of Perak
31 December
2015
Minerals and
Geoscience
Department of
Perak
31 December
2015
Letter of Authorisation
for Quarry Blasting
Minerals and
Geoscience
Department of
Perak
Not applicable
Occupational
Safety and
Health
Administration
Not applicable
Letter of Approval in
relation to the
application to extend the
approval of buying,
carrying and use of
explosives (Explosives
Approval)
Police contingent
headquarters of
the Royal
Malaysia Police
Ipoh, Perak
31 December
2015
112
113
the quarry scheme approval letter being displayed at the office of the quarry at all times;
(b)
the boundaries of the quarry land being marked clearly, correctly and preserved;
(c)
public liability insurance being obtained to cover any potential damage to public property;
and
(d)
115
116
118
Product
Main Competitor
Gridland Quarry
We believe that we are able to provide limestone products which meet our customers needs and
preferences when competing with limestone products from our competitors.
To the best of our Directors knowledge, there are no published statistics that can be used to
accurately measure the market share of our business.
COMPETITIVE STRENGTHS
We have one of the biggest GCC-grade limestone reserves and resources in Malaysia
Based on the Independent Qualified Persons Report, our Group has approximately 26.3Mt of Ore
Reserves, and approximately 186Mt of total Measured and Indicated Resources of limestone. In
particular, the Hyper Act Quarry which has approximately 22.0Mt of Ore Reserves, and
approximately 160Mt of total Measured and Indicated Resources of GCC-grade limestone. Our
Directors believe our Group holds one of the biggest GCC-grade limestone deposits in Malaysia,
which is used in the production of GCC products.
Our current production plan for the Hyper Act Quarry is to reach full production and produce
approximately 3.5Mt of GCC-grade crushed limestone and limestone powder in 2017, sufficient to
provide a constant supply of such crushed limestone and limestone powder.
Given that limestone, being a natural resource and having to be extracted from existing or newly
discovered limestone quarries, is limited in supply and growing in demand. Our Directors believe
that having one of the biggest limestone reserves in Malaysia will make us one of the few
limestone producers in Malaysia that is able to meet the growing demand of GCC-grade and
PCC-grade limestone.
119
120
Tenure
Description
of use
1,021,301
Gridland Quarry
67,705
Until 17 September
2056
Gridland Quarry
422,505
357,922
435,615
871,209
383,389
Location
PN 380610 Lot 332220 (formerly
known as H.S.(D)214917, Lot
302283 and H.S.(D)53384 PT
2799) Mukim Sungai Raya,
Daerah Kinta, Negeri Perak
PN 258390 Lot 302284,
Mukim Sungai Raya,
Daerah Kinta, Negeri Perak
121
Tenant/
Lessee
Location
Approximate
land area
(sq ft)
Tenure
Monthly
Rental
Description
of use
Lessor
Gridland
1,400
Until 31 March
2015(1)
MYR900
Chai Sen
Hoo
Gridland
1,465
Until 31 March
2015(2)
MYR2,200
Residential
property (for
occupation by
employees)
Serene
Diane A/P
Santhana
Dass
Gridland
1,948
Until 30 April
2015
MYR450
Office
Pretty
Beauty Zone
(a
partnership)
Gridland
2,410
Until 31 March
2015(3)
MYR2,350
Office
Yeong Kwok
Seng
On 1 October 2014, Gridland entered into sale and purchase agreements in relation to the
purchase of Units 21-01, 21-02, 21-03 and 21-3A in a mixed development known as Cascades
(Corporate) erected on part of all that piece of leasehold land held under PN 97694, Lot 53298
(formerly held under HS(D) 237769, PT 9793), Pekan Baru Sungai Buloh, Daerah Petaling, Negeri
Selangor by Gridland (the Cascades Properties). As at the Latest Practicable Date, Gridland is
in the process of acquiring vacant possession of the Cascades Properties for use by the Group
as corporate offices. (4) Please refer to the section entitled General and Statutory Information
Material Contracts of this Offer Document for further details.
As at the Latest Practicable Date, the fixed assets of our Group, comprising heavy equipment,
machineries, motor vehicles, equipment and furniture, computer and software, mining property
and construction-in-progress, have a net book value of approximately MYR29.5 million.
To the best of our Directors knowledge and belief, there are no regulatory requirements that may
materially affect our Groups utilisation of tangible fixed assets.
Notes:
(1)
The tenancy has subsequently been renewed on 28 March 2015 with the Lessor on substantially the same terms
up till 31 March 2016.
(2)
The tenancy has subsequently been renewed on 1 April 2015 with the Lessor on substantially the same terms up
till 31 March 2016.
(3)
The tenancy has subsequently been renewed on 13 April 2015 with the Lessor on substantially the same terms up
till 30 June 2015.
(4)
Vacant possession of the Cascades Properties was passed to Gridland on 14 April 2015.
122
2011 (t)
Growth
(% p.a.)
2016 (t)
Share
2016 (%)
Paper
29,050,000
3.1
33,900,000
38
Plastics
19,275,000
4.6
24,135,000
27
Paint
8,800,000
3.8
10,605,000
12
Adhesives/Sealants
4,775,000
5.0
6,090,000
Rubber
5,075,000
2.8
5,830,000
Others
7,400,000
2.5
8,370,000
74,375,000
3.6
88,930,000
100
Total
Source: Roskill Information Services
This is lower than the forecast growth in global GDP of 4.5% p.a. to 2016, largely because of the
substitution or replacement with other minerals. Paper will continue to be the largest market for
both forms of calcium carbonate but growth is expected to be limited by low levels of demand in
developed economies and the increasing use of digital media. Higher growth rates are expected
in adhesives/sealants (5.0% p.a.) and plastics (4.6% p.a.).
Demand Forecast for GCC
World demand for GCC is forecast to rise by an average of 3.5% p.a. through 2016 to reach nearly
72.0Mt as shown in the table below.
World demand forecast for GCC by market 2011 and 2016
2011 (t)
Growth
(% p.a.)
2016 (t)
Share
2016 (%)
Paper
23,750,000
3.1
27,675,000
38
Plastics
15,500,000
4.5
19,200,000
27
Paint
6,950,000
3.6
8,290,000
11
Adhesives/Sealants
4,400,000
4.8
5,570,000
Rubber
3,600,000
2.8
4,125,000
Others
6,225,000
2.4
7,020,000
10
60,425,000
3.5
71,880,000
100
Total
Source: Roskill Information Services
123
Plastics
Paint
Rubber
Adhesive
Paper
Total
14,800,000
11,700,000
3,075,000
1,825,000
2,350,000
1,460,000
35,210,000
Europe
8,000,000
2,900,000
2,075,000
915,000
1,450,000
1,900,000
17,240,000
North
America
3,775,000
2,425,000
1,085,000
735,000
1,500,000
2,700,000
12,220,000
South
America
500,000
300,000
325,000
175,000
175,000
350,000
1,825,000
Others
600,000
1,875,000
1,730,000
475,000
95,000
610,000
5,385,000
27,675,000
19,200,000
8,290,000
4,125,000
5,570,000
7,020,000
71,880,000
Asia
Total
2011 (t)
Growth
(% p.a.)
2016 (t)
Share
2016 (%)
Paper
5,300,000
3.3
6,225,000
36
Plastics
3,775,000
5.5
4,935,000
29
Paint
1,850,000
4.6
2,315,000
14
Adhesives/Sealants
1,475,000
2.9
1,705,000
10
Rubber
375,000
6.8
520,000
Others
1,175,000
2.8
1,350,000
13,950,000
4.1
17,050,000
100
Total
Source: Roskill Information Services
124
Plastics
Paint
Rubber Adhesive
Paper
Total
Asia
2,850,000
4,350,000
1,795
975,000
370,000
Europe
1,675,000
160,000
120
155,000
60,000
160,000
2,330,000
North America
1,350,000
215,000
220
240,000
55,000
135,000
2,215,000
South America
225,000
100,000
90
60,000
15,000
120,000
610,000
Others
125,000
110,000
90
275,000
20,000
65,000
685,000
6,225,000
4,935,000
Total
2,315 1,705,000
870,000 11,210,000
2007
2008
2009
2010
2011
2012
2013
84.6
89.9
102
103.7
107.9
115.4
116.0
102.4
107.2
126.4
124.7
130.9
136.9
138.0
8.58
9.36
9.73
9.58
9.65
9.73
9.75
Sources:
Quicklime, Hydrate Mineral Commodity Summaries 2012 and 2014
http://minerals.usgs.gov/minerals/pubs/commodity/lime/mcs-2012-lime.pdf;
http://minerals.usgs.gov/minerals/pubs/commodity/lime/mcs-2014-lime.pdf;
Crush stone Mineral commodity summaries 2012 and 2014
http://minerals.usgs.gov/minerals/pubs/commodity/stone_crushed/mcs-2014-stonc.pdf;
http://minerals.usgs.gov/minerals/pubs/commodity/stone_crushed/mcs-2012-stonc.pdf
125
160
140
120
100
60
40
20
0
2007
2008
2009
2010
2011
2012
2013
Sources:
Quicklime, Hydrate-Mineral Commodity Summaries 2012 and 2014
http://minerals.usgs.gov/minerals/pubs/commodity/lime/mcs-2012-lime.pdf;
http://minerals.usgs.gov/minerals/pubs/commodity/lime/mcs-2014-lime.pdf;
Crush Stone-Mineral Commodity Summaries 2012 and 2014
http://minerals.usgs.gov/minerals/pubs/commodity/stone_crushed/mcs-2014-stonc.pdf;
http://minerals.usgs.gov/minerals/pubs/commodity/stone_crushed/mcs-2012-stonc.pdf
PROSPECTS
The following discussion about limestone quarryings prospects includes forward-looking
statements that involve risks and uncertainties. Actual results could differ from those that may be
projected or implied in these forward-looking statements. Please refer to the section entitled
Cautionary Note on Forward-Looking Statements of this Offer Document.
Our Directors believe that the prospects of the limestone industry are good due to the following
factors:
Limestone consumption is projected to increase
Based on the development trend predicted by Roskill Information Services for the world total
demand for GCC and PCC over the period 2011 to 2016, it is expected that the world total demand
for limestone to grow from 2011 to 2016.
126
Source: Mineral Commodity Summaries 2012 and Mineral Commodity Summary 2014 by USGS. USGS has not
consented to the inclusion of this statement, information or compilation (as the case may be) for the purposes of
Section 249 of the SFA, and are therefore not liable for this statement under Sections 253 and 254 of the SFA. While
our Directors have taken reasonable actions to ensure that the information have been reproduced in its proper form
and context, and that the information is extracted accurately and fairly, they have not conducted an independent
review, or verified the accuracy of the contents, of the above information.
acquire a plot of land in the vicinity of the Hyper Act Quarry, on which we intend to set up the
limestone production facility for the Hyper Act Quarry, which includes, inter alia, a workshop,
site office and an electrical substation (Plant Site);
(b)
commission the construction of the Hyper Act Crushing Plant, a 1,000t per hour crushing
plant, which is to be situated at the Plant Site; and
(c)
commission the construction of the Powder Plant, a limestone powder production plant
127
(ii)
In aggregate, the estimated capital expenditure for the Development Plan is approximately
MYR210.3 million. We have earmarked approximately S$15.0 million (or the equivalent of
MYR40.2 million) of the proceeds to the Placement to be used to fund the Development Plan.
For further details on the estimated capital expenditure for the Development Plan, please refer to
Appendix F entitled Independent Qualified Persons Report of this Offer Document.
The Independent Geologist and the Independent Valuer have reviewed the development plans as
disclosed above, and have opined that they are satisfied with, and have no comments to, such
plans and phases, and the capital expenditure for each such phase, for our Company to
commence production.
For further details on the Hyper Act Quarry, please refer to the section entitled General
Information on our Company and our Group Our Quarries of this Offer Document.
Further exploration activities to increase limestone resources and output
We intend to carry out further exploration activities such as geological mapping, rock sampling,
drilling activities, excavating and tunnelling, collection and analysis of exploration data and
exploring and locating new deposits within specific areas permitted for exploration.
Barring any unforeseen circumstances, we intend to engage a professional geological company
to survey the areas permitted for exploration and determine the quantity of limestone resources
present in these areas. The survey results will assist us to facilitate the increase of our Groups
limestone resources and enable us to plan our business operations to optimise efficiency.
128
129
Limestone, being a natural resource, and especially those of high-grade quality, is prone to
depletion due to extraction. As supply dwindles, the price of limestone will increase if demand
stays constant, and such increase will be greater with increased demand, which would lead
to an increase in prices of limestone;
(b)
We are in the development phase of the operations of the Hyper Act Quarry and a ramp-up
phase in respect of the operations of the Gridland Quarry. We expect our cost of operations
to materially increase with the commencement of our quarrying operations of the Hyper Act
Quarry and the increase of our operations in the Gridland Quarry; and
(c)
Costs of diesel, labour and electricity are expected to increase in the near future and in the
event our Group is unable to pass on all or part of such costs to our customers, such overall
increase in our costs of operations will result in lower profit margins for our Group.
Save as disclosed above in the sections entitled Risk Factors, Managements Discussion and
Analysis of Results of Operations and Financial Position, General Information on our Company
and our Group Prospects and General Information on our Company and our Group Business
Strategies and Future Plans of this Offer Document, and barring any unforeseen circumstances,
our Directors believe that there are no other significant recent known trends in the prices and
costs of our products and services, or any known uncertainties, demands, commitments or events
that are reasonably likely to have a material effect on our revenue, profitability, liquidity and capital
resources. They are also not aware of any such trends that would cause the financial information
disclosed in this Offer Document to be not necessarily indicative of our future operating results or
financial condition. Please also refer to the section entitled Cautionary Note on Forward-Looking
Statements of this Offer Document for further details.
130
Name
Age
Residential address
Country of
principal
residence
Designation/
principal
occupation
Loo An Swee
(Alex Loo)
47
89 Persiaran Dedap
Batik Sierramas
47000 Sungai Buloh
Selangor, Malaysia
Malaysia
Executive
Chairman and CEO
51
Lot 49H12A
Lorong Puncak Desa 1
Kiansom Country Height
Jalan Kiansom
88450 Inanam
Kota Kinabalu
Sabah, Malaysia
Malaysia
Executive Director
and COO
47
Singapore
Lead Independent
Director
57
Malaysia
Independent
Director
47
Malaysia
Independent
Director
The working, business experience and areas of responsibility of our Directors are set out below:
Alex Loo is our Executive Chairman and CEO. He is responsible for our Groups overall
management, formulating our Groups strategic directions and expansion plans, developing and
maintaining relationships with our customers and suppliers and overseeing our Groups general
operations. He has been instrumental in the expansion of our Group and continually sources for
investment opportunities to promote the growth of our Groups business.
Alex Loo started his career as a marketing executive at Renaware Marketing Sdn. Bhd. after
obtaining the Sijil Pelajaran Malaysia (SPM), or the Malaysian Certificate of Education in 1985.
Alex Loo joined Dragonway Furniture Fitting Sdn Bhd as a marketing executive in 1989. In 1993,
he left Dragonway Furniture Fitting Sdn Bhd and established Vantage Wood Sdn Bhd, a company
that was engaged in the supply of timber materials for construction use, where he was the chief
executive officer. In 1998, he established Vantage Resources Sdn Bhd, a company that was
engaged in the business of coal trading, where he was also the chief executive officer. He left both
Vantage Wood Sdn Bhd and Vantage Resources Sdn Bhd in 2007 and subsequently established
our Group in 2009 through the incorporation of Gridland.
131
132
Present Directorships
Past Directorships
Alex Loo
Group Companies
Gridland
Hyper Act
Group Companies
Other Companies
E.X Builders Hardware (M)
Sdn Bhd (2)
Vantage Wood Sdn Bhd
Vantage Resources Sdn Bhd
Cosmo World Resources
Sdn Bhd
Agile Consortium Sdn Bhd
Grand Mega Resources
(M) Sdn Bhd
Tekan Wawasan Sdn Bhd
Exponential Quarry Sdn Bhd.
Wilma Global Investments
Limited
Golden Bond Enterprises
Limited
Other Companies
Tasek Cement Quarries
Sdn Bhd
Deluxe Focus Sdn Bhd (1)
Hanzen Wood Products
Sdn Bhd (1)
Malaysian-Myanmar Resources
Sdn Bhd
Sinmalindo Construction
Sdn Bhd (1)
Group Companies
Gridland
Hyper Act
Group Companies
Other Companies
Rimyasa Marketing Sdn Bhd
Gunung Aneka Sdn Bhd (4)
Mobilaffiche (M) Sdn Bhd
Aim Advertising Sdn Bhd
Vantage Resources Sdn Bhd
Vantage Wood Sdn Bhd
Rimyasa Corporation Sdn Bhd
PEP Publication Sdn Bhd
Proaktif Media Sdn Bhd
Keluarga Timur Sdn Bhd
Cosmo World Resources
Sdn. Bhd.
Profit Nation Borneo Sdn. Bhd.
Wilma Global Investments
Limited
Other Companies
Kayu Segak Sdn Bhd (1)
133
Present Directorships
Past Directorships
Group Companies
Group Companies
Other Companies
Arena Selasih Sdn Bhd
Vibrant Consortium Sdn Bhd
Other Companies
Sistem Leasing (Malaysia)
Sdn Bhd (1)
Concord Arcade Sdn Bhd (1)
HMC International Sdn Bhd
Group Companies
Group Companies
Other Companies
Trusjadi Holdings Sdn Bhd
Tangkob Associates Sdn Bhd
Rayasan Sdn Bhd (4)
Pontian United Plantations
Sdn Bhd
Pontian Fico Plantations
Sdn Bhd
Pontian Orico Plantations
Sdn Bhd
Pontian Hillco Plantations
Sdn Bhd
Pontian Materis Plantations
Sdn Bhd
Pontian Pendirosa Plantations
Sdn Bhd
Pontian Subok Plantations
Sdn Bhd
Kilang Kelapa Sawit Pontian
Sdn Bhd
Bangsan Sdn Bhd
Redefined Land Sdn Bhd
Rawajaya Sdn Bhd
Blossom Plantations Sdn Bhd
Sabahanya Plantations Sdn Bhd
Malacca Plantation Sdn Bhd
Jubilant Paradise Sdn. Bhd.
Fortune Plantations Sdn. Bhd.
Asian Plantations (Sarawak)
Sdn. Bhd.
Asian Plantations (Sarawak) II
Sdn. Bhd.
Other Companies
Teledex Associates Sdn Bhd (1)
Felda Farm Products Sdn Bhd
Feltex Co. Ltd
PT Felda Indo Rubber
Australian Agricultural Co Ltd
Tangkob Omya (Malaysia)
Sdn Bhd (3)
134
Present Directorships
Past Directorships
Group Companies
Group Companies
Other Companies
Greenzone Energy Pte. Ltd.
Amersun Energy Pte. Ltd.
R H Energy (HK) Limited
Zoneda Energy Ltd.
Hiap Tong Corporation Ltd.
Isoteam Ltd.
Other Companies
QTC Technologies Pte. Ltd.
Amersun Coating Pte. Ltd.
Natural Best Limited
Ruihua Petrochemical Co., Ltd
Chiwayland International Limited
(formerly known as R H Energy
Ltd.)
Notes:
(1)
(2)
(3)
(4)
EXECUTIVE OFFICERS
The day-to-day operations are entrusted to our Executive Directors who are assisted by an
experienced and qualified team of Executive Officers. The particulars of our Executive Officers are
set out below:
Name
Age
Residential address
Country of
principal
residence
Designation/
principal occupation
42
39 Jalan Mempoyan
Taman Tanamera
47630 Subang Jaya
Selangor, Malaysia
Malaysia
CFO
53
Malaysia
Director of Operations
(Gridland)
135
136
Present Directorships
Past Directorships
Ian Lim
Group Companies
Hyper Act
Group Companies
Other Companies
Other Companies
Group Companies
Group Companies
Other Companies
Other Companies
Note:
(1)
Executive Director
and COO
CFO
Ian Lim
Director of
Operations (Gridland)
Loh Heng Kwai
137
As at
31 December
2011
As at
31 December
2012
As at
31 December
2013
As at
30
September
2014
As at
the Latest
Practicable
Date
Management (1)
Finance,
accounts,
administration
Business
development
Operations
26
26
Total
11
36
37
Note:
(1)
The number of employees increased from 11 to 37 in line with the expansion of the business plans
and scope of our Group. We do not experience any significant seasonal fluctuations in our number
of employees. We do not employ any temporary or part time employees.
The relationship between the management of our Group and our employees is good and is
expected to continue and remain as such in the future. The employees of our Group are not
unionised and there have been no industrial disputes with the employees or any work stoppage
which has affected our Groups operations since we commenced operations.
Other than amounts set aside or accrued in respect of mandatory employee funds, we have not
set aside or accrued any amount of money to provide for pension, retirement or similar benefits
to our employees.
138
FY2013
FY2014
FY2015
(Estimated)
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Band A
Directors
Alex Loo
Executive Officers
Ian Lim
Loh Heng Kwai
Note:
(1)
Related Employees
Save for remuneration paid to Loo Han Hwa, who is the brother of our Executive Chairman and
CEO, Alex Loo, in respect of his employment as a general worker with Gridland since August 2012
and the remuneration paid to Loo Wooi Hong, the son of Alex Loo, in respect of his employment
as an administrative executive of Gridland since November 2014, for the Period Under Review
and up to the Latest Practicable Date there was no remuneration paid to employees, who are
related to our Directors, Substantial Shareholders or Controlling Shareholders (including related
employees who have since left our Company).
Between 1 October 2014 to the Latest Practicable Date, the estimated aggregate remuneration
(including bonus) of employees who are related to our Directors and Substantial Shareholders or
Controlling Shareholders is approximately MYR29,500.
As at the Latest Practicable Date, save as otherwise disclosed in this Offer Document, there was
no employee who was related to the Directors or Substantial Shareholders.
139
if the Executive becomes bankrupt or makes any arrangement or composition with his
creditors generally;
(b)
if the Executive is convicted of any criminal offence (save for an offence under any road
traffic legislation for which he is not sentenced to any term of immediate or suspended
imprisonment) and sentenced to any term of immediate or suspended imprisonment;
(c)
(d)
if the Executive becomes prohibited by law or any order from any regulatory body or
governmental authority from being, or ceases to be, an employee or director of our Company
for any reason whatsoever;
(e)
if the Executive becomes guilty of any wilful misconduct in the discharge of his duties; or
(f)
if the Executive breaches any material provision under the Service Agreement.
140
Executives
Alex Loo
50,000
40,000
Under the Service Agreements, each Executive is entitled an incentive bonus based on the
consolidated audited profit before tax, the aforementioned incentive bonus and minority interests,
of the Group (PBT) for any financial year, is calculated as follows:
Alex Loo
PBT
Incentive bonus
(i)
(ii)
1.5% of the PBT for the first S$5 million plus 2.0% on the
excess amount of PBT from S$5,000,0001 onward
1.5% of the PBT for the first S$5 million plus 2.0% of the
PBT from S$5,000,0001 to S$10,000,000 plus 3.0% on
the excess amount of PBT from S$10,000,001 onward
Incentive bonus
(i)
(ii)
1.2% of the PBT for the first S$5 million plus 1.8% on the
excess amount of PBT from S$5,000,0001 onward
1.2% of the PBT for the first S$5 million plus 1.8% of the
PBT from S$5,000,0001 to S$10,000,000 plus 2.5% on
the excess amount of PBT from S$10,000,001 onward
Save as disclosed above, there are no bonus or profit-sharing plans or any other profit-linked
agreements or arrangements between our Company and any of our Directors, Executive Officers
or employees. The Executives shall not be entitled to further Directors fees under the Service
Agreements.
141
142
to attract potential employees with relevant skills to contribute to our Group and to
create value for Shareholders;
(b)
to instill loyalty to, and a stronger identification by the Participants with the long-term
prosperity of, our Group;
143
2.
(c)
to motivate the Participants to optimise their performance standards and efficiency and
to maintain a high level of contribution to our Group;
(d)
to give recognition to the contributions made by the Participants to the success of our
Group; and
(e)
to retain key employees of our Group whose contributions are essential to the long-term
prosperity of our Group.
2.1 Eligibility
The Performance Share Plan allows for participation by Group Employees (including Group
Executive Directors) and Non-Executive Directors (including Independent Directors) who
have attained the age of 21 years on or before the relevant date of Award provided that none
shall be an undischarged bankrupt at the relevant time, and who, in the absolute discretion
of the Remuneration Committee will be eligible to participate in the Performance Share Plan.
Controlling Shareholders or their Associates who meet the above eligibility criteria are
eligible to participate in the Performance Share Plan provided that (a) the participation of,
and (b) the terms of each grant and the actual number of Awards granted under the
Performance Share Plan to, a Participant who is a Controlling Shareholder or an Associate
of a Controlling Shareholder shall be approved by our independent Shareholders in separate
resolutions for each such person.
There shall be no restriction on the eligibility of any Participant to participate in any other
share incentive schemes or share plans implemented or to be implemented by our Company
or any other company within our Group.
Subject to the Cayman Companies Law and any requirement of the SGX-ST, the terms of
eligibility for participation in the Performance Share Plan may be amended from time to time
at the absolute discretion of the Remuneration Committee.
2.2 Awards
Awards represent the right of a Participant to receive fully paid Shares free of charge, upon
the Participant achieving the prescribed performance targets.
The selection of the Participants and the number of Shares which are the subject of each
Award to be granted to a Participant in accordance with the Performance Share Plan shall
be determined at the absolute discretion of the Remuneration Committee, which shall take
into account criteria such as, inter alia, the rank, scope of responsibilities, performance,
years of service and potential for future development and contribution to the success of our
Group.
144
(b)
(c)
The Remuneration Committee will take into account various factors when determining the
method to arrive at the exact number of Shares comprised in an Award. Such factors include,
but are not limited to, the current price of the Shares, the total issued share capital of our
Company and the pre-determined Singapore dollar amount which the Remuneration
Committee decides that a Participant deserves for meeting his performance targets. For
example, Shares may be awarded based on predetermined Singapore dollar amounts such
that the quantum of Shares comprised in the Award is dependent on the closing price of the
Shares transacted on the Market Day that such Award is vested. Alternatively, the
Remuneration Committee may decide for absolute numbers of Shares to be awarded to
Participants irrespective of the price of the Shares. The Remuneration Committee shall
monitor the grant of Awards carefully to ensure that the size of the Performance Share Plan
will comply with the relevant Catalist Rules.
2.3 Size and duration of the Performance Share Plan
The total number of Shares which may be delivered pursuant to the vesting of Awards on any
date, when added to the aggregate number of Shares issued and/or issuable in respect of (i)
all Awards granted under the Performance Share Plan; (ii) all Options granted under the
ESOS; and (iii) all other Shares issued and/or issuable under any other share-based
incentive schemes or share plans of our Company, shall not exceed 15.0% of the total
number of issued Shares (excluding treasury shares) of our Company from time to time.
145
146
Variation of Capital
If a variation in the issued ordinary share capital of our Company, whether by way of a
capitalisation issue or other circumstances (for example, rights issue, capital reduction,
subdivision, consolidation of shares or distribution) shall take place, then:
(A)
the class and/or number of Shares which are the subject of an Award to the extent
not yet vested; and/or
(B)
the class and/or number of Shares over which future Awards may be granted under
the Performance Share Plan,
shall be adjusted by the Remuneration Committee to give each Participant the same
proportion of the equity capital of our Company as that to which he was previously
entitled and, in doing so, the Remuneration Committee shall determine, at its own
discretion, the manner in which such adjustment shall be made.
Unless the Remuneration Committee considers an adjustment to be appropriate, the
following events shall not normally be regarded as a circumstance requiring adjustment:
(aa) the issue of securities as consideration for an acquisition or a private placement
of securities;
(bb) the cancellation of issued Shares purchased or acquired by our Company by way
of a market purchase of such Shares undertaken by our Company on the SGX-ST
during the period when a share purchase mandate granted by Shareholders
(including any renewal of such mandate) is in force;
(cc) the issue of Shares or other securities convertible into or with rights to acquire or
subscribe for Shares to its employees pursuant to any share option scheme or
share plan approved by Shareholders in general meeting, including the
Performance Share Plan; and
(dd) any issue of Shares arising from the exercise of any warrants or the conversion of
any convertible securities issued by our Company.
Notwithstanding the provisions of the rules of the Performance Share Plan:
(1)
the adjustment must be made in such a way that a Participant will not receive a
benefit that a Shareholder does not receive; and
(2)
(B)
date of grant;
(ii)
The following disclosures (as applicable) will be made by our Company in our annual report
for so long as the Performance Share Plan continues in operation:
(A)
(B)
(2)
Participants (other than those in paragraph (B)(1) above) who have received
Shares pursuant to the vesting of Awards granted under the Performance Share
Plan which, in aggregate, represent 5.0% or more of the total number of Shares
available under the Performance Share Plan,
148
imposing restrictions on the number of Awards that may be vested within each financial
year; and
(ii)
In compliance with the requirements of the Catalist Rules, any Participant of the Performance
Share Plan who is a member of the Remuneration Committee shall not be involved in the
deliberation or decision in respect of Awards granted to or to be granted to him.
2.8 Rationale for participation by the Controlling Shareholders and their Associates in the
Performance Share Plan
Our Company acknowledges that the services and contributions of employees who are
Controlling Shareholders or Associates of our Controlling Shareholders are important to the
development and success of our Group. The extension of the Performance Share Plan to
confirmed full-time employees who are Controlling Shareholders and Associates of our
Controlling Shareholders allows our Group to have a fair and equitable system to reward
employees who have actively contributed to the progress and success of our Group. The
participation of the Controlling Shareholders and their Associates in the Performance Share
Plan will serve both as a reward to them for their dedicated services to our Group and a
motivation for them to take a long-term view of our Group.
149
150
(b)
to retain key employees and directors whose contributions are essential to the
long-term growth and profitability of our Group;
152
4.
(c)
to instill loyalty to, and a stronger identification by participants with the long-term
prosperity of, our Group;
(d)
to attract potential employees with relevant skills to contribute to our Group and to
create value for our Shareholders; and
(e)
4.1 Participants
The ESOS allows for participation by Group Employees (including Group Executive
Directors) and Non-Executive Directors (including Independent Directors) who have attained
the age of 21 on or prior to the relevant date of grant of the Option, provided that none shall
be an undischarged bankrupt or have entered into a composition with his creditors.
Controlling Shareholders and their Associates who have contributed to the development and
success of the Group shall be eligible to participate in the ESOS, provided that (i) the
participation of; and (ii) the terms of any Options to be granted and the actual number of
Shares to be granted under the ESOS, to a Participant who is a Controlling Shareholder or
an associate of a Controlling Shareholder shall be approved by the independent
Shareholders in separate resolutions for each such person.
4.2 Administration
The ESOS shall be administered by the Remuneration Committee with powers to determine,
inter alia, the following:
(i)
(ii)
153
154
155
grant Options set at a discount to the Market Price of a Share (subject to a maximum
limit of 20.0%); and
(b)
determine the Participants to whom, and the Options to which, such reduction in
exercise prices will apply.
In determining whether to give a discount and the quantum of the discount, the Remuneration
Committee shall be at liberty to take into consideration factors including the performance of
our Company and our Group, the performance of the Participant concerned, the contribution
of the Participant to the success and development of our Group and the prevailing market
conditions.
At present, our Company foresees that Discounted Options may be granted principally in the
following circumstances:
(a)
Firstly, where it is considered more effective to reward and retain talented employees
by way of a Discounted Option rather than a Market Price Option. This is to reward the
outstanding performers who have contributed significantly to our Groups performance
and the Discounted Option serves as additional incentives to such Group employees.
Options granted by our Company on the basis of Market Price may not be as attractive
and realistic in the event of an overly buoyant market and inflated share prices. Hence
during such period the ability to offer Discounted Options would allow our Company to
grant Options on a more realistic and economically feasible basis. Furthermore,
Discounted Options will give an opportunity to our Group employees to realise some
tangible benefits even if external events cause the Share price to remain largely static.
156
The Remuneration Committee will have the absolute discretion to grant Discounted Options,
to determine the level of discount (subject to a maximum discount of 20.0% of the Market
Price) and the grantees to whom, and the Options to which, such discount in the exercise
price will apply provided that our Shareholders in general meeting shall have authorised, in
a separate resolution, the making of offers and grants of Options under the ESOS, at a
discount not exceeding the maximum discount as aforesaid.
Our Company may also grant Options without any discount to the Market Price. Additionally,
our Company may, if it deems fit, impose conditions on the exercise of the Options (whether
such Options are granted at the Market Price or at a discount to the Market Price), such as
restricting the number of Option Shares for which the Option may be exercised during the
initial years following its vesting.
4.13 Rationale for participation by employees of our Group (including Group Executive
Directors) in the ESOS
The extension of the ESOS to employees of our Group (including Group Executive Directors)
allows us to have a fair and equitable system to reward employees and Executive Directors
of our Group who have made and who continue to make significant contributions to the
long-term growth of our Group.
We believe that the grant of Options to the employees and Executive Directors of our Group
will enable us to attract, retain and provide incentives to its participants to produce higher
standards of performance as well as encourage greater dedication and loyalty to our Group.
This would enable our Company to give recognition to past contributions and services as well
as to motivate participants generally to contribute towards the long-term growth of our Group.
157
158
the exercise of an Option at a discounted exercise price would translate into a reduction
of the proceeds from the exercise of such Options, as compared to the proceeds that
our Company would have received from such exercise had the exercise been made at
the prevailing Market Price of our Shares. Such reduction of the exercise proceeds
would represent the monetary cost to our Company of granting Options with a
discounted exercise price;
(b)
as the monetary cost of granting Options with a discounted exercise price is borne by
our Company, the earnings of our Company would effectively be reduced by an amount
corresponding to the reduced interest earnings that our Company would have received
from the difference in proceeds from an exercise price with no discount versus the
discounted exercise price. Such reduction would, accordingly, result in the dilution of
our Companys EPS; and
(c)
the effect of the issue and allotment of new Shares upon the exercise of Options on our
Companys NAV per Share is accretive if the exercise price is above the NAV per Share,
but dilutive otherwise.
159
160
CORPORATE GOVERNANCE
Corporate governance refers to the processes and structure by which the business and affairs of
a company are directed and managed, in order to enhance long-term shareholder value through
enhancing corporate performance and accountability. Good corporate governance therefore
embodies both enterprise (performance) and accountability (conformance).
Our Directors recognise the importance of corporate governance and the offering of high
standards of accountability to our Shareholders.
Our Board has formed three (3) committees: (i) the Nominating Committee; (ii) the Remuneration
Committee; and (iii) the Audit Committee.
NOMINATING COMMITTEE
Our Nominating Committee comprises Denys Collin Munang, Tan Eng Ann and Dato Thomas Koh.
The Chairman of the Nominating Committee is Denys Collin Munang.
Our Nominating Committee will be responsible for:
(a)
reviewing and recommending the nomination or re-nomination of our Directors having regard
to our Directors contribution and performance;
(b)
(c)
deciding whether or not a Director is able to and has been adequately carrying out his duties
as a director; and
(d)
reviewing and approving any new employment of related persons and the proposed terms of
their employment.
The Nominating Committee will decide how our Boards performance is to be evaluated and
propose objective performance criteria, subject to the approval of our Board, which address how
our Board has enhanced long-term shareholders value. Our Board will also implement a process
to be carried out by the Nominating Committee for assessing the effectiveness of our Board as a
whole and for assessing the contribution of each individual Director to the effectiveness of our
Board. Each member of the Nominating Committee shall abstain from voting on any resolutions
in respect of the assessment of his performance or re-nomination as Director.
REMUNERATION COMMITTEE
Our Remuneration Committee comprises Dato Thomas Koh, Tan Eng Ann, and Denys Collin
Munang.
The Chairman of the Remuneration Committee is Dato Thomas Koh.
Our Remuneration Committee will recommend to our Board a framework of remuneration for our
Directors and Executive Officers, and determine specific remuneration packages for each
Executive Director. The recommendations of our Remuneration Committee should be submitted
for endorsement by the entire Board. All aspects of remuneration, including but not limited to
directors fees, salaries, allowances, bonuses and other benefits-in-kind shall be covered by our
Remuneration Committee. Each member of the Remuneration Committee shall abstain from
voting on any resolutions in respect of his remuneration package.
161
CORPORATE GOVERNANCE
The remuneration of related employees will be reviewed annually by our Remuneration Committee
to ensure that their remuneration packages are in line with our staff remuneration guidelines and
commensurate with their respective job scope and level of responsibilities. Any bonuses, pay
increases and/or promotions for these related employees will also be subject to the review and
approval of our Remuneration Committee. In the event that a member of our Remuneration
Committee is related to the employee under review, he will abstain from participating in the review.
AUDIT COMMITTEE
Our Audit Committee comprises Tan Eng Ann, Dato Thomas Koh and Denys Collin Munang.
The Chairman of the Audit Committee is Tan Eng Ann.
Our Audit Committee does not have any existing business or professional relationship of a
material nature with our Group, our Directors or Substantial Shareholders.
Our Audit Committee will assist our Board in discharging their responsibilities to safeguard our
assets, maintain adequate accounting records and develop and maintain effective systems of
internal control, with the overall objective of ensuring that our management creates and maintains
an effective control environment in our Group.
Our Audit Committee will provide a channel of communication between our Board, our
management and our external auditors on matters relating to audit.
Our Audit Committee shall meet periodically to perform the following functions:
(a)
consider the appointment or re-appointment of the external auditors, the level of their
remuneration and matters relating to resignation or dismissal of the external auditors, and
review with the external auditors the audit plans, their evaluation of the system of internal
accounting controls, their audit reports, their management letter and our managements
response before submission of the results of such review to our Board for approval;
(b)
consider the appointment or re-appointment of the internal auditors, the level of their
remuneration and matters relating to resignation or dismissal of the internal auditors, and
review with the internal auditors the internal audit plans and their evaluation of the adequacy
of our system of internal accounting controls and accounting system before submission of
the results of such review to our Board for approval prior to the incorporation of such results
in our annual report (where necessary);
(c)
(d)
review the assistance and co-operation given by our Companys officers to the internal and
external auditors;
(e)
review the half yearly and annual, and quarterly if applicable, financial statements and
results announcements before submission to our Board for approval, focusing in particular,
on changes in accounting policies and practices, major areas of judgement, significant
adjustments resulting from the audit, the going concern statement, compliance with
accounting standards as well as compliance with any stock exchange and
statutory/regulatory requirements;
162
CORPORATE GOVERNANCE
(f)
review and discuss with the external auditors any suspected fraud or irregularity, or
suspected infringement of any relevant laws, rules or regulations, which has or is likely to
have a material impact on our Groups operating results or financial position, and consider
the adequacy of our managements response;
(g)
review transactions falling within the scope of Chapter 9 and Chapter 10 of the Catalist Rules
(if any);
(h)
review and approve the review procedures Interested Person Transactions on a quarterly
basis;
(i)
maintain an Interested Person Transactions register and review the same on a quarterly
basis;
(j)
review potential conflicts of interest (if any) and to set out a framework to resolve or mitigate
any potential conflicts of interests;
(k)
review the effectiveness and adequacy of our administrative, operating, internal accounting
and financial control procedures;
(l)
review our key financial risk areas, with a view to providing an independent oversight on our
Groups financial reporting, the outcome of such review to be disclosed in the annual reports
or the findings are material, immediately announced via SGXNET;
(m) undertake such other reviews and projects as may be requested by our Board and report to
our Board its findings from time to time on matters arising and requiring the attention of our
Audit Committee;
(n)
generally to undertake such other functions and duties as may be required by statute or the
Catalist Rules, and by such amendments made thereto from time to time;
(o)
review arrangements by which our staff may, in confidence, raise concerns about possible
improprieties in matters of financial reporting and to ensure that arrangements are in place
for the independent investigations of such matter and for appropriate follow-up; and
(p)
review our Groups compliance with such functions and duties as may be required under the
relevant statutes or the Catalist Rules, including such amendments made thereto from time
to time.
Apart from the duties listed above, our Audit Committee shall commission and review the findings
of internal investigations into matters where there is any suspected fraud or irregularity, or failure
of internal controls or suspected infringement of any law, rule or regulation of the jurisdictions in
which our Group operates, which has or is likely to have a material impact on our Companys
operating results and/or financial position. In the event that a member of our Audit Committee is
interested in any matter being considered by our Audit Committee, he will abstain from reviewing
and deliberating on that particular transaction or voting on that particular resolution.
163
CORPORATE GOVERNANCE
Our Audit Committee, after having conducted an interview with Ian Lim and considered:
(a)
the qualifications and his past working experiences (as described in the section entitled
Directors, Management and Staff Executive Officers of this Offer Document) which are
compatible with his position as CFO of our Group;
(b)
(c)
the absence of negative feedback on Ian Lim from the representatives of the Independent
Auditors and Reporting Accountants, Ernst & Young LLP, and our internal auditors, RSM
Ethos Pte Ltd; and
(d)
the absence of internal control weakness attributable to Ian Lim identified during the internal
control review conducted by our internal auditors, RSM Ethos Pte Ltd,
is of the view that Ian Lim is suitable for the position of CFO of our Group.
Further, after making all reasonable enquiries, and to the best of their knowledge and belief,
nothing has come to the attention of our Audit Committee to cause them to believe that Ian Lim
does not have the competence, character and integrity expected of a CFO of a listed issuer.
In addition, Ian Lim shall be subject to performance appraisal by our Audit Committee on an
annual basis to ensure satisfactory performance.
Our Audit Committee shall also commission an annual internal control audit until such time as our
Audit Committee is satisfied that our Groups internal controls are robust and effective enough to
mitigate our Groups internal control weaknesses (if any). Prior to the decommissioning of such an
annual audit, our Board is required to report to the SGX-ST and the Sponsor on how the key
internal control weaknesses have been rectified, and the basis for the decision to decommission
the annual internal control audit. Thereafter, such audits may be initiated by the Audit Committee
as and when it deems fit to satisfy itself that our Groups internal controls remain robust and
effective. Upon completion of the internal control audit, appropriate disclosure must be made via
SGXNET on any material, price-sensitive internal control weaknesses and any follow-up actions
to be taken by our Board.
Based on the foregoing, our Board, to the best of its knowledge and belief, with the concurrence
of our Audit Committee, based on the internal controls established and maintained by our Group,
work performed by the external and internal auditors, and reviews by our Board and our Audit
Committee, is of the opinion that our internal controls of our Group are adequate to address the
financial, operational and compliance risks.
164
CORPORATE GOVERNANCE
BOARD PRACTICES
Each of our Directors has served in office in our Company since the following dates:
Name
Date of commencement
Alex Loo
2 December 2013
2 December 2013
30 September 2014
30 September 2014
30 September 2014
Our Directors are appointed by our Shareholders at a general meeting. Each Director shall retire
from office at least once every three (3) years. However, a retiring Director is eligible for
re-election at the meeting at which he retires. Further details on the appointment and retirement
of Directors can be found in the section entitled Description of Ordinary Shares and Appendix D
entitled Selected Extracts of our Articles of Association of this Offer Document.
165
(MYR000)
Purchase of iron ore
FY2011
FY2012
FY2013
9M2014
1 October 2014
up to the Latest
Practicable Date
1,514
5,651
Such transactions were not conducted on an arms length basis or on normal commercial terms
having regard that the iron ore was purchased at a cost-plus basis without any reference to the
prevailing market rate of iron ore.
Advances granted to ACJ
Our Group had in the past extended advances to ACJ for the purposes of securing the iron ore
purchases from ACJ. These advances were not on an arms length basis or on normal commercial
terms as they were interest-free, unsecured and had no fixed terms of repayment.
The details of the aggregate amounts owing from ACJ to our Group for the Relevant Period are
as follows:
(MYR000)
Advances to ACJ
As at
31 December
2011
As at
31 December
2012
As at
31 December
2013
As at
30
September
2014
As at the Latest
Practicable Date
1,003
682
The largest amount outstanding during the Relevant Period is approximately MYR1.7 million.
All outstanding amounts were fully settled by December 2013. Our Group does not intend to enter
into such transactions following the Listing.
166
As at
31 December
2011
As at
31 December
2012
As at
31 December
2013
As at
30
September
2014
As at the Latest
Practicable Date
Company
5,000
869
Gridland
2,381
12
12
158
As at
31 December
2011
As at
31 December
2012
As at
31 December
2013
As at
30
September
2014
As at the Latest
Practicable Date
Company
732
Gridland
Hyper Act
(MYR000)
Hyper Act
(MYR000)
The aforesaid loans were made on an interest-free basis with no fixed terms of repayment.
Accordingly these transactions were not on an arms length basis nor were they on normal
commercial terms.
The largest amount outstanding in relation to such loans from Alex Loo and Pang Kim Chon during
the Relevant Period was MYR7.5 million and MYR0.7 million respectively. As at the Latest
Practicable Date, all outstanding loans were fully repaid to Alex Loo and Pang Kim Chon by our
Company.
Our Group does not intend to enter into such transactions following the Listing.
167
(MYR000)
Loans to Alex Loo
As at
31 December
2011
As at
31 December
2012
As at
31 December
2013
As at
30
September
2014
As at the Latest
Practicable Date
3,328
718
The aforesaid loans were made on an interest-free basis with no fixed terms of repayment.
Accordingly, these transactions were not on an arms length basis nor were they on normal
commercial terms.
The largest amount outstanding in relation to such loans to Alex Loo during the Relevant Period
was MYR3.3 million. As at the Latest Practicable Date, all outstanding loans were fully repaid to
Gridland by Alex Loo.
Our Group does not intend to enter into such transactions following the Listing.
Provision of legal services by Isharidah Ho Chong & Menon
Dato Thomas Koh is our Independent Director and a practising advocate and solicitor in Malaysia
and a senior partner holding approximately 33.0% of the equity interest in Isharidah Ho Chong &
Menon (IHCM), a law firm in Malaysia. IHCM is accordingly an Interested Person.
Legal services were provided by IHCM to our Group during the Relevant Period. Such
transactions were carried out on an arms length basis and based on normal commercial terms
and market prices which are charged to other clients by IHCM for similar services.
The details of the aggregate amounts of fees incurred for legal services provided by IHCM during
the Relevant Period are as set out below:
(MYR000)
Fees for legal
services
FY2011
FY2012
FY2013
9M2014
1 October 2014
up to the Latest
Practicable Date
27
11
11
22
22
As at the Latest Practicable Date, all such fees have been fully paid. Our Group does not intend
to enter into such transactions following the Listing.
168
the legal services provided by IHCM to the Company was in the ordinary course of business;
(ii)
the fees charged by IHCM to the Group were on an arms length basis and were based on
normal commercial terms and market prices which are charged to other clients by IHCM for
similar services;
(iii) the aggregate amount of fees incurred over any financial year by the Group for the legal
services provided by IHCM was not a significant amount and did not exceed the Guideline
2.3(d) of Principle 2 in the Code of Corporate Governance of S$200,000;
(iv) Dato Thomas has no personal present on-going transactions with the Group; and
(v)
the Group does not intend to enter into such transactions following the Listing.
As at 31
December
2013
As at 30
September
2014
Largest
Amount
Outstanding
for the
Relevant
Period
Amount
Outstanding
as at
the Latest
Practicable
Date
As at 31
December
2011
As at 31
December
2012
445
294
228
445
191
1,650
1,289
1,650
1,185
160
168
147
(MYR000)
Details of Guarantee/charge
Details of Guarantee/charge
Letter of guarantee dated 19
March 2014 by Alex Loo in
respect of a hire purchase facility
for a vehicle given to Public Bank
Berhad
169
(MYR000)
As at 31
December
2011
As at 31
December
2012
As at 31
December
2013
As at 30
September
2014
Largest
Amount
Outstanding
for the
Relevant
Period
Amount
Outstanding
as at
the Latest
Practicable
Date
Details of Guarantee/charge
Letter of guarantee dated 4
August 2014 by Alex Loo in
respect of a hire purchase facility
for a vehicle given to Public Bank
Berhad
87
88
80
738
2,000
2,000
27
2,000
193
179
86
155
86
134
As no consideration was paid to the Guarantors for the provision of the Guarantees such
transactions were not on an arms length basis and not on normal commercial terms but beneficial
to the Company.
Subsequent to the listing of our Shares on Catalist, our Company and/or the Guarantors intend to
request the respective banks to release and/or discharge the Guarantees by substituting or
replacing the same with corporate guarantees from our Company. Should the terms and
conditions of the existing facilities be affected by the withdrawal of the Guarantees, we are
confident that after the listing of our Shares on Catalist, we should be able to secure alternative
bank facilities on terms similar to those applicable to the existing facilities. In the event the banks
do not agree to release the Guarantors from the Guarantees and we are unable to secure
alternative bank facilities on similar terms, the Guarantors will continue to provide the Guarantees,
for so long as Alex Loo remains a Controlling Shareholder or Director, until such time when we are
able to secure alternative facilities from other financial institutions.
170
The CFO will maintain a register of Interested Person Transactions which will be updated
regularly and disclosed to the relevant personnel to enable identification of Interested
Persons. The register will record the basis on which Interested Person Transactions are
entered into and the approval or review by the Audit Committee, CFO or any duly appointed
Director as the case may be. The register shall also record the basis for entry into the
transactions, including the quotations and other evidence obtained to support such basis.
This register of Interested Person Transactions shall be reviewed by the Audit Committee at
least on a quarterly basis;
(b)
(c)
In relation to any sale of products to Interested Persons, the price and terms of two (2) other
completed transactions of the same or substantially the same type of transactions to
unrelated third parties are to be used as comparison wherever possible. The Interested
Persons shall not be charged at rates lower than the lowest price of that charged to the
unrelated third parties;
(d)
All Interested Persons Transactions above S$100,000 are to be approved by a Director who
shall not be an Interested Person in respect of the particular transaction. Any contracts to be
made with an Interested Person shall not be approved unless the pricing is determined in
accordance with the Groups usual business practices and policies, consistent with the usual
margin given or price received by the Group for the same or substantially similar type of
transactions between the Group and unrelated parties and the terms are no more favourable
than those extended to or received from unrelated parties;
(e)
For the purposes above, where applicable, contracts for the same or substantially similar
type of transactions entered into between the Group and unrelated third parties will be used
as a basis for comparison to determine whether the price and terms offered to or received
from the Interested Person are no more favourable than those extended to unrelated parties;
171
In addition, the Group shall monitor all Interested Person Transactions entered into by
categorising the transactions as follows:
(i)
a category one Interested Person Transaction is one where the value thereof is in
excess of 3.0% of the NTA of our Group; and
(ii)
a category two Interested Person Transaction is one where the value thereof is below
or equal to 3.0% of the NTA of our Group.
All category one Interested Person Transactions must be approved by the Audit Committee
prior to entry whereas category two Interested Person Transactions need not be approved
by the Audit Committee prior to entry but shall be reviewed on a quarterly basis by the Audit
Committee; and
(g)
When renting properties from or to an Interested Person, the Directors shall take appropriate
steps to ensure that such rent is commensurate with the prevailing market rates, including
adopting measures such as making relevant enquiries with landlords of similar properties
and obtaining suitable reports or reviews published by property agents (as necessary),
including independent valuation report by property valuer, where appropriate. The rent
payable shall be based on the most competitive market rental rate of similar property in terms
of size and location, based on the results of the relevant enquiries. Such transactions shall
be subject to review by the Audit Committee on a half-yearly basis.
Our Group will prepare relevant information to assist the Audit Committee in its review.
Before any agreement or arrangement with an Interested Person that is not in the ordinary course
of business of our Group is transacted, prior approval must be obtained from the Audit Committee.
The Audit Committee will review all Interested Person Transactions, if any, on a quarterly basis to
ensure that they are carried out on an arms length basis and in accordance with the procedures
outlined above. It will take into account all relevant non-qualitative factors. In the event that a
member of the Audit Committee is interested in any Interested Person Transactions, he will
abstain from reviewing that particular transaction. Any decision to proceed with such an
agreement or arrangement would be recorded for review by the Audit Committee.
Disclosure will be made in our Groups annual report of the aggregate value of Interested Person
Transactions during the relevant financial year under review and in the subsequent annual reports
for the subsequent financial years of our Group.
Internal auditors will be appointed and their internal audit plan will incorporate a review of all the
Interested Person Transactions at least on an annual basis. The internal audit report will be
reviewed by the Audit Committee to ascertain whether the guidelines and procedures established
to monitor Interested Person Transactions have been complied with.
The Audit Committee shall also review from time to time such guidelines and procedures to
determine if they are adequate and/or commercially practicable in ensuring that Interested Person
Transactions are conducted on normal commercial terms, on an arms length basis and do not
prejudice the interests of our Group and our Shareholders. Further, if during these periodic
reviews by the Audit Committee, the Audit Committee is of the opinion that the guidelines and
procedures as stated above are not sufficient to ensure that Interested Person Transactions will
be on normal commercial terms, on an arms length basis and not prejudicial to the interests of our
Group and our Shareholders, the Audit Committee will adopt such new guidelines and review
procedures for future Interested Person Transactions as may be appropriate.
172
EXECUTIVE
OFFICER,
CONTROLLING
In general, a conflict of interest arises when any of our Directors, the CEO, Controlling
Shareholders or their Associates are carrying on or have any interest in any other corporation
carrying on the same business or dealing in similar products as our Company.
All of our Directors and key executive staff, including the CEO, have a duty to disclose their
interests in respect of any transaction in which they have any personal material interest or any
actual or potential conflicts of interest (including a conflict that arises from their directorship or
employment or personal investment in any corporation). Upon such disclosure, such Directors will
not participate in any proceedings of the Board and shall abstain from voting in respect of any
such transaction where the conflict arises.
Exponential Quarry Sdn Bhd
Exponential Quarry Sdn Bhd (Exponential) is a Malaysia incorporated company which is 95.0%
held by our Executive Chairman and CEO, Alex Loo. The remaining 5.0% shareholding interests
in Exponential is held by his spouse, Tan Swee Tiang. Exponential acquired a limestone quarry of
nine (9) acres at Perak, Malaysia in January 2013 (Exponential Quarry) and is not within the
Groups future business plans. Since the acquisition of the Exponential Quarry, which is not
operational, there has been no capital expenditure used for the development of the Exponential
Quarry. Furthermore, no capital expenditure is planned for the quarrying of limestone or
processing or production of limestone from Exponential Quarry. The Exponential Quarry acquired
by Exponential is held for investment purposes due to its strategic location adjacent to other
quarry owners. We understand that our Groups Executive Chairman and CEO, Alex Loo, intends
to sell Exponential in the future. Based on the foregoing, the Directors are of the view that there
is no conflict of interest between our Group and Exponential.
173
procure that Exponential shall not engage in any business that is similar to or which is in
competition with the business of the Company and its subsidiaries and associated
companies (to the extent applicable) (Group), as the Groups business may be from time
to time;
(b)
not have any interest, directly or indirectly, in, and/or provide any assistance, financial,
technical or otherwise, to, any person or entity to carry on any business which is in
competition with the Groups business;
(c)
not be a director and/or hold an executive management position (including but not limited to
board membership) in any entity whose business competes with the Groups business;
(d)
ensure that no company or business in which he and/or any of his Associates, is in the
position to control, dominate or influence decision making shall engage in any business that
is similar to or which is in competition with the Groups business, as the Groups business
may be from time to time;
(e)
not solicit, market to or entice away, whether directly or indirectly, from the Group any
customer of the Group; and
(f)
disclose to the Audit Committee of our Company his and/or any of his Associates interests
in respect of any contract, arrangement, proposal, transaction or any other matter
whatsoever in which he and/or any of his Associates has any personal material interest,
directly or indirectly, or any actual or potential conflicts of interest (including conflicts of
interest that arise from his or his Associates directorship(s). Upon such disclosure, he and/or
any of his Associates shall abstain from voting in respect of any such contract, arrangement,
proposal, transaction or matter in which the conflict of interest arises, unless and until our
Audit Committee has determined that no such conflict of interest exists.
Our Company has also entered into an agreement with our Executive Chairman and CEO, Alex
Loo and Exponential on 24 October 2014 (the ROFR Agreement) pursuant to which:
(i)
Alex Loo granted our Company a right of first refusal in respect of any sale of his shares in
Exponential; and
(ii)
Exponential granted our Company a right of first refusal in respect of any sale of the
Exponential Quarry,
174
(b)
in any entity carrying on the same business or dealing in similar services which competes
materially and directly with the existing business of our Group; and
(c)
in any enterprise or company that is our Groups customer or supplier of goods and services.
Save as disclosed in the sections entitled Interested Person Transactions and Directors,
Management and Staff Service Agreements of this Offer Document, none of our Directors has
any interest in any existing contract or arrangement which is significant in relation to the business
of our Company and our subsidiaries, taken as a whole.
INTERESTS OF EXPERTS
No expert is:
(a)
(b)
has a material interest, whether direct or indirect, in our Shares or the shares of our
subsidiaries; or
(c)
has a material economic interest, whether direct or indirect, in our Company, including an
interest in the success of the Placement.
PPCF is the Issue Manager, Sponsor and Placement Agent in relation to the Listing; and
(b)
PPCF will be the Continuing Sponsor of our Company for a period of at least three (3) years
from the date our Company is admitted and listed on Catalist.
175
176
177
178
179
a company;
(ii)
(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and
(vii) any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights;
(b)
a company with any of its directors (together with their close relatives, related trusts as well
as companies controlled by any of the directors, their close relatives and related trusts);
(c)
a company with any of its pension funds and employee share schemes;
(d)
a person with any investment company, unit trust or other fund whose investment such
person manages on a discretionary basis, but only in respect of the investment account
which such person manages;
180
a financial or other professional adviser, including a stockbroker, with its customer in respect
of the shareholdings of:
(i)
the adviser and persons controlling, controlled by or under the same control as the
adviser; and
(ii)
all the funds which the adviser manages on a discretionary basis, where the
shareholdings of the adviser and any of those funds in the customer total 10.0% or more
of the customers equity share capital;
(f)
directors of a company (together with their close relatives, related trusts and companies
controlled by any of such directors, their close relatives and related trusts) which is subject
to an offer or where the directors have reason to believe a bona fide offer for their company
may be imminent;
(g)
partners; and
(h)
an individual;
(ii)
(vi) any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights.
Under the Singapore Take-over Code, a mandatory offer made with consideration other than cash
must be accompanied by a cash alternative at not less than the highest price paid by the offeror
or any person acting in concert within the preceding six (6) months.
Liquidation or Other Return of Capital
Our Shareholders are entitled to the surplus assets of our Company in the event that it is wound
up.
Indemnity
Cayman Islands law does not limit the extent to which a companys articles of association may
provide for indemnification of officers and directors, except to the extent any such provision may
be held by the court to be contrary to public policy (for example, for purporting to provide
indemnification against the consequences of committing a crime).
Our Articles provide that our Directors and officers shall be indemnified from and against all
liability which they incur in executing of their duty in their respective offices, provided that this
indemnity shall not extend to any matter in respect of any negligence, fraud, breach of fiduciary
obligations or dishonesty which may attach to any of the said persons.
181
182
TAXATION
The following is a discussion of certain tax matters arising under the current tax laws in Singapore
and Malaysia and is not intended to be and does not constitute legal or tax advice.
While this discussion is considered to be a correct interpretation of existing laws in force as at the
date of this Offer Document, no assurance can be given that the courts or fiscal authorities
responsible for the administration of such laws will agree with this interpretation or that changes
in such law, which may be retrospective, will not occur. The discussion is limited to a general
description of certain tax consequences in Singapore and Malaysia with respect to ownership of
the Shares by Singapore investors, and does not purport to be a comprehensive or exhaustive
description of all of the tax considerations that may be relevant to a Shareholders decision with
regard to the ownership of the Shares.
Prospective investors should consult their tax advisers regarding Singapore and Malaysia
tax and other tax consequences of owning and disposing the Shares. It is emphasised that
neither our Company, the Directors nor any other persons involved in this Placement
accepts responsibility for any tax effects or liabilities resulting from the subscription,
purchase, holding or disposal of our Shares.
SINGAPORE TAXATION
The following discussion describes the material Singapore income tax, stamp duty, goods and
services tax and estate duty consequences of the purchase, ownership and disposal of the
Shares.
Singapore Income Tax
Individual income tax
Individual taxpayers who are Singapore tax residents are subject to tax on income accrued or
derived from Singapore. All foreign-sourced income (except for income received through a
partnership in Singapore) received on or after 1 January 2004 in Singapore by tax resident
individuals will be exempt from tax. Certain Singapore-sourced investment income (such as
interest from debt securities) derived by tax resident individuals on or after 1 January 2004 from
certain financial instruments (other than income derived through a partnership in Singapore or
from the carrying on of a trade, business or profession) will be exempt from tax.
A Singapore tax resident individual is taxed at progressive rates ranging from 2 per cent. to a
maximum rate of 20 per cent. with effect from the year of assessment 2012.
Non-resident individuals, subject to certain exceptions, are generally subject to income tax on
income accrued in or derived from Singapore at a flat rate of 20 per cent. However, Singapore
does not tax capital gains. A non-resident individual (other than a director) exercising a short-term
employment in Singapore for not more than 60 days may be exempt from tax in Singapore.
An individual is regarded as a tax resident in Singapore if in the calendar year preceding the year
of assessment, he was physically present in Singapore or exercised an employment in Singapore
(other than as a director of a company) for 183 days or more, or if he ordinarily resides in
Singapore.
183
TAXATION
Corporate income tax
A Singapore tax resident corporate taxpayer is subject to Singapore income tax on:
Foreign income in the form of branch profits, dividends and service fee income (specified
foreign income) received or deemed received in Singapore by a Singapore tax resident
corporate taxpayer on or after 1 June 2003 are exempted from Singapore tax subject to meeting
the qualifying conditions.
A non-Singapore tax resident corporate taxpayer, subject to certain exceptions, is subject to
Singapore income tax on income accrued in or derived from Singapore, and on foreign income
received or deemed received in Singapore.
A company is regarded as tax resident in Singapore if the control and management of the
companys business is exercised in Singapore. Normally, control and management of the
company is vested in its board of directors and therefore if the board of directors meets and
conducts the companys business in Singapore, the company will be regarded as tax resident in
Singapore.
The corporate tax rate in Singapore is 17.0% with effect from the Year of Assessment 2010 after
allowing partial tax exemption on the first S$300,000 of a companys chargeable income as
follows:
(i)
(ii)
Further, companies will, subject to certain conditions, be eligible for full tax exemption on their
normal chargeable income (other than Singapore dividends) of up to S$100,000 and 50.0% tax
exemption on up to the next S$200,000 of normal chargeable income in each of the companys
first three consecutive years of assessment. The remaining chargeable income (after the tax
exemption) will be taxed at the applicable corporate tax rate.
Dividend Distributions
As the Company will be tax resident in Singapore, dividends paid by the Company would be
considered as sourced from Singapore. Dividends received in respect of the Shares by either
Singapore tax resident or non-Singapore tax resident taxpayers are not subject to Singapore
withholding tax, even if paid to non-Singapore resident shareholders.
184
TAXATION
Prior to 1 January 2003, Singapore operated an imputation system of taxation. Under the
imputation system, the income tax paid by a Singapore tax resident company on its taxable
income was imputed to and deemed to be paid on behalf of its shareholders, upon distribution.
Where these profits were distributed as dividends (commonly known as franked dividends) to
shareholders, the dividends received by the shareholders were net of the corporate income tax
paid by the Company. Shareholders were taxed on the gross amount of dividends (that is, the
amount of net proceeds received plus an amount which the Company had deducted from the gross
proceeds and paid as corporate income tax). The income tax paid effectively becomes available
to shareholders as a tax credit for set-off against their Singapore income tax liabilities.
With effect from 1 January 2003 (subject to certain transitional rules), Singapore has adopted the
One-Tier Corporate Tax System (One-Tier System). Under this One-Tier System, the tax
collected from corporate profits is the final tax and the Company can pay tax exempt (1-tier)
dividends which are tax exempt in the hands of the shareholder, regardless of the tax residence
status or the legal form of the shareholder.
During a five-year transitional period expiring on 31 December 2007, companies with unutilised
dividend franking credits may remain under the imputation system for the purpose of paying
franked dividends. Such companies will automatically move to the One-Tier System when the
dividend franking credits are fully utilised.
Companies, however, have the irrevocable option to move to the One-Tier System at an earlier
date before the dividend franking credits are exhausted. The imputation credit system is available
only up to year of assessment 2008. Thereafter, the One-Tier System will take effect for all
companies.
Where a company has income that is exempt from tax or taxed at concessionary tax rates or utilise
investment allowances or are granted tax rebates or receive foreign dividends for which a foreign
tax credit (obtained pursuant to a double taxation treaty with one of Singapores treaty partners
or unilaterally granted under the Singapore Income Tax Act, Chapter 134 of Singapore) has been
allowed and pay dividends out of these sources of income, the company may pay tax exempt
dividends (referred to as normal exempt dividends) out of such income. Normal exempt dividends
paid to shareholders of shares which are not of a preferential nature are free from Singapore
income tax. In the case of a company which is in the One-Tier System, such a company can pay
tax exempt (one-tier) dividends (instead of normal exempt dividends) out of their exempt profits
to shareholders. Hence, dividends paid by such companies as tax exempt (one-tier) dividends to
all their shareholders, including shareholders of shares of a preferential nature, will not be subject
to tax in the hands of these shareholders.
Capital Gains Tax
Singapore does not impose a tax on capital gains. However, there are no specific laws or
regulations which deal with the characterisation of capital gains, and hence, gains may be
construed to be of an income nature and therefore be subject to tax if they arise from activities
which the IRAS regards as the carrying on of a trade or business in Singapore. Any profits from
the disposal of the Shares are not taxable in Singapore unless the seller is regarded as having
derived gains of a trading nature in Singapore, in which case, the disposal profits would be taxable
as trading income.
185
TAXATION
Bonus Shares
Under current Singapore tax law and practice, a capitalisation of profits followed by the issue of
new shares, credited as fully paid, pro-rata to shareholders (bonus issue) does not represent
a distribution of dividends by a company to its shareholders. Therefore, a Singapore resident
shareholder receiving shares by way of a bonus issue should not have a liability to Singapore tax.
When a dividend is to be satisfied wholly or in part in the form of an allotment of ordinary shares
credited as fully paid, the dividend declared will be treated as income to its shareholders.
However, as the Company will move to the One-Tier System after 31 December 2007, any
dividend paid on or after 1 January 2008 will be exempt from Singapore tax. Similarly, when
shareholders are given the right to elect to receive an allotment of ordinary shares credited as fully
paid in lieu of cash, the dividend declared will be treated as exempt (one-tier) dividend income and
will not be subject to Singapore tax.
Adoption of FRS 39 treatment for Singapore income tax purposes
On 30 December 2005, the IRAS issued a circular entitled Income Tax Implications arising from
the adoption of FRS 39-Financial Instruments: Recognition and Measurement (the FRS 39
Circular). Legislative amendments to give effect to the FRS 39 Circular have been enacted via
the Income Tax (Amendment) Act 2006, with such amendments having been deemed to come into
operation on 1 January 2005. The FRS 39 Circular generally applies, subject to the tax treatment
under the FRS 39 Circular should consult their own accounting and tax advisers regarding the
Singapore income tax consequences of their acquisition, holding or conversion of the Shares.
Stamp Duty
There is no stamp duty payable on the subscription, allotment or holding of our Shares.
Stamp duty is payable on the instrument of transfer of our Shares at the rate of S$2 for every
S$1,000 or any part thereof, computed on the consideration paid or market value of our Shares
registered in Singapore, whichever is higher.
The purchaser is liable for stamp duty, unless there is an agreement to the contrary. No stamp duty
is payable if no instrument of transfer is executed (such as in the case of scripless shares, the
transfer of which does not require instruments of transfer to be executed) or if the instrument of
transfer is executed outside Singapore. However, stamp duty may be payable if the instrument of
transfer which is executed outside Singapore is subsequently received in Singapore.
However, as our Shares will be listed on Catalist and their transfers will be scripless transfers
via the CDP, no stamp duty will be imposed on the transfers of our Shares via the CDP.
Goods and Services Tax (GST)
The sale of the Shares by an investor belonging to Singapore through a SGX-ST member or to
another person belonging in Singapore is an exempt sale not subject to GST. Any GST directly or
indirectly incurred by the investor in respect of this exempt sale will become an additional cost to
the investor.
186
TAXATION
Where our Shares are sold by a GST-registered investor in the course of a business to a person
belonging outside Singapore, and that person is outside Singapore when the sale is executed, the
sale should generally, subject to satisfaction of certain conditions, be considered a taxable supply
subject to GST at zero-rate. Any GST incurred by a GST-registered investor in the making of this
supply in the course of furtherance of a business may, subject to the provisions of the Goods and
Services Tax Act, be offset against the investors GST liability and, in the event of an excess input
tax credit, recovered from the Comptroller of GST of Singapore.
Services such as brokerage, handling and clearing services rendered by a GST-registered person
to an investor belonging in Singapore in connection with the investors purchase, sale or holding
of our Shares will be subject to GST at the current rate of 7.0%. Similar services rendered to an
investor belonging outside Singapore is generally subject to GST at zero-rate, provided that the
investor is outside Singapore when the services are performed and the services provided do not
benefit any Singapore persons.
Estate duty
With effect from 15 February 2008, Singapore estate duty has been abolished.
Individuals, whether or not domiciled in Singapore, should consult their own tax advisers
regarding the Singapore tax and estate duty consequences of their ownership of the
Shares.
CAYMAN ISLANDS TAXATION
Pursuant to Section 6 of the Tax Concessions Law (Revised) of the Cayman Islands, the Company
has obtained an undertaking from the Governor-in-Council:
(1)
that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits
or income or gains or appreciation shall apply to the Company or its operations; and
(2)
that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be
payable on the shares, debentures or other obligations of the Company.
The undertaking for the Company is for a period of 20 years from 4 November 2014.
The Cayman Islands currently levy no taxes on individuals or corporations based upon profits,
income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate
duty. There are no other taxes likely to be material to the Company levied by the Government of
the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on
certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The
Cayman Islands are not party to any double tax treaties.
MALAYSIAN TAXATION
The following discussion describes the material Malaysian tax on dividend and tax on gains from
sale.
Dividend Distributions
Under Malaysian tax law, income tax is charged for each year of assessment on income accruing
in or derived from Malaysia or received in Malaysia from outside Malaysia.
187
TAXATION
However, the income of any person, other than a Malaysian resident company carrying on the
business of banking, insurance or sea or air transport, for the basis year for a year of assessment
derived from sources outside Malaysia and received in Malaysia, is tax-exempt under the
Malaysian Income Tax Act.
Dividends paid, credited or distributed by a company which is tax resident in Malaysia
(Malaysian resident company) would be deemed to be derived from Malaysia.
A company is resident in Malaysia for tax purposes if the management and control of its business
are exercised in Malaysia.
Subject to certain exceptions, the prevailing corporate tax rate for the year of assessment 2014
is 25.0%. With effect from the year of assessment 2016, the corporate tax rate will be reduced to
24.0%.
Gains on Disposal of the Shares in a Malaysian company
There is no capital gains tax in Malaysia except for real property gains tax (RPGT) which is
charged upon gains arising from the disposal of real property in Malaysia or shares in a real
property company incorporated in Malaysia. As such, any gains from the subsequent sale of the
shares in a Malaysian company not being a real property company would not be subject to RPGT
in Malaysia.
However, any gains from the subsequent sales of shares in a Malaysian company by a person who
deals in shares may be regarded as income that is subject to income tax under the Malaysian
Income Tax Act.
Single Tier System
The single tier system has replaced the imputation system with effect from 1 January 2014.
Under the single tier system, income tax payable on the chargeable income of a company is a final
tax in Malaysia. There is no further need for the dividend paying company to deduct tax when
paying dividends. The dividend paying company can freely distribute dividends without having to
keep track of a dividend franking account.
Dividends received by the shareholders are tax-exempted in their hands. Expenses incurred by
the shareholder in the production of the dividend income will not be deductible.
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189
190
Save as disclosed below, none of our Directors, Executive Officers and Controlling
Shareholders:
(a)
has, at any time during the last ten (10) years, had an application or a petition under any
bankruptcy laws of any jurisdiction filed against him or against a partnership of which
he was a partner at the time he was a partner or at any within two (2) years from the
date he ceased to be a partner;
(b)
has, at any time during the last ten (10) years, had an application or a petition under any
law of any jurisdiction filed against an entity (not being a partnership) of which he was
a director or an equivalent person or key executive at the time when he was a director
or an equivalent person or a key executive of that entity or at any time within two (2)
years from the date he ceased to be a director or an equivalent person or a key
executive of that entity, for the winding up or dissolution of that entity or, where that
entity is the trustee of a business trust, that business trust, on the ground of insolvency;
(c)
(d)
has ever been convicted of any offence, in Singapore or elsewhere, involving fraud or
dishonesty which is punishable with imprisonment, or has been the subject of any
criminal proceedings (including any pending criminal proceedings of which he is aware)
for such purpose;
(e)
has ever been convicted of any offence, in Singapore or elsewhere, involving a breach
of any law or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere, or has been the subject of any criminal proceedings (including
any pending criminal proceedings of which he is aware) for such breach;
(f)
has, at any time during the last ten (10) years, had judgement entered against him in
any civil proceedings in Singapore or elsewhere involving a breach of any law or
regulatory requirement that relates to the securities or futures industry in Singapore or
elsewhere, or a finding of fraud, misrepresentation or dishonesty on his part, nor has he
been the subject of any civil proceedings (including any pending civil proceedings of
which he is aware) involving an allegation of fraud, misrepresentation or dishonesty on
his part;
(g)
has ever been convicted in Singapore or elsewhere of any offence in connection with
the formation or management of any entity or business trust;
(h)
has ever been disqualified from acting as a director or equivalent person of any entity
(including the trustee of a business trust), or from taking part directly or indirectly in the
management of any entity or business trust;
(i)
has ever been the subject of any order, judgement or ruling of any court, tribunal or
governmental body, permanently or temporarily enjoining him from engaging in any type
of business practice or activity;
191
has ever, to his knowledge, been concerned with the management or conduct, in
Singapore or elsewhere, of the affairs of:
(i)
any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;
(ii)
any entity (not being a corporation) which has been investigated for a breach of
any law or regulatory requirement governing such entities in Singapore or
elsewhere;
(iii) any business trust which has been investigated for a breach of any law or
regulatory requirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law
or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned with the corporation or partnership entity or business trust; and
(k)
has ever been the subject of any current or past investigation or disciplinary
proceedings, or has been reprimanded or issued any warning, by the Authority or any
other regulatory authority, exchange, professional body or government agency, whether
in Singapore or elsewhere.
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(3)
No sum or benefit has been paid or is agreed to be paid to any Director or expert, or to any
firm in which such Director or expert is a partner or any corporation in which such Director
or expert holds shares or debentures, in cash or shares or otherwise, by any person to
induce him to become, or to qualify him as, a Director, or otherwise for services rendered by
him or by such firm or corporation in connection with the promotion or formation of our
Company.
(4)
Save as disclosed in the section entitled Directors, Management and Staff Service
Agreements of this Offer Document, there are no existing or proposed service contracts
between our Directors and our Company.
SHARE CAPITAL
(5)
As at the Latest Practicable Date, there is only one class of shares in the capital of our
Company, being ordinary shares. There are no founder, management or deferred shares.
The rights and privileges attached to our Shares are stated in the Articles.
(6)
Save as disclosed below and in the sections entitled Share Capital and Restructuring
Exercise of this Offer Document, there are no changes in the issued and paid-up share
capital of our Company and our subsidiaries within the last three (3) years preceding the date
of this Offer Document.
(7)
Save as disclosed below and in the sections entitled Share Capital and Restructuring
Exercise of this Offer Document, no shares in, or debentures of, our Company or any of our
subsidiaries has been issued, or are proposed to be issued, as fully or partially paid for cash
or for a consideration other than cash, during the last three (3) years preceding the date of
lodgement of this Offer Document.
(8)
No option to subscribe for shares in, or debentures of, our Company or our subsidiaries has
granted to, or was exercised by, any of our Directors or Executive Officers within the two (2)
financial years.
(9)
Apart from the GCCP Performance Share Plan and the GCCP Employee Share Option
Scheme, our Company does not have any arrangement that involves the issue or grant of
shares in our Company to the employees of our Group.
(10) The interests of our Directors and Substantial Shareholders in our Shares as at the Latest
Practicable Date are set out in the section entitled Share Capital Shareholding and
Ownership Structure of this Offer Document.
MEMORANDUM AND ARTICLES OF ASSOCIATION
(11) Memorandum of Association
The Memorandum states, among others, that the liability of members of our Company is
limited.
Our Companys objects and purposes are set out in full in the Memorandum which is
available for inspection at our Share Registrars office as stated in the section entitled
General and Statutory Information Documents for Inspection of this Offer Document.
193
the convertible loan facility agreement dated 9 January 2014 (as amended by a
supplemental agreement dated 6 February 2014 and further amended by a second and
third supplemental agreement dated 3 April 2014 and 20 August 2014 respectively and
letters of extension dated 20 October 2014 and 26 January 2015) entered into by our
Company, Gridland, Hyper Act, GPF (Delta), Alex Loo, Chung Man Chong and Pang
Kim Chon;
(b)
the convertible loan facility agreement dated 3 April 2014 (as amended by a
supplemental agreement dated 20 August 2014 and letters of extension dated 20
October 2014 and 26 January 2015) entered into by our Company, Gridland, Hyper Act,
Woodburn, Alex Loo, Chung Man Chong and Pang Kim Chon;
(c)
the convertible loan facility agreement dated 20 August 2014 (as amended by letters of
extension dated 20 October 2014 and 26 January 2015) entered into by our Company,
Gridland, Hyper Act, Woodburn, Alex Loo, Chung Man Chong and Pang Kim Chon;
(d)
the convertible loan facility agreement dated 20 August 2014 (as amended by letters of
extension dated 20 October 2014 and 26 January 2015) entered into by our Company,
Gridland, Hyper Act, GPF (Falcon), Alex Loo, Chung Man Chong and Pang Kim Chon;
(e)
the convertible loan facility agreement dated 20 August 2014 (as amended by letters of
extension dated 20 October 2014 and 26 January 2015) entered into by our Company,
Gridland, Hyper Act, Soo Kee Wee, Ng Han Meng, Ciliandra Fangiono, Fong Kim Chit,
Lee Chun Fun, Alex Loo, Chung Man Chong and Pang Kim Chon;
(f)
the convertible loan facility agreement dated 20 August 2014 (as amended by letters of
extension dated 20 October 2014 and 26 January 2015) entered into by our Company,
Gridland, Hyper Act, Wang Yu Huei, Teo Khiam Chong, Chang Wei Chian Benjamin,
Alex Loo, Chung Man Chong and Pang Kim Chon;
(g)
(h)
194
the sale and purchase agreement dated 30 December 2013 entered into between Hyper
Act and YBU Holdings Sdn Bhd in relation to acquisition of vacant quarry land
measuring approximately 3.5618 hectares in area held under Title No. HS(D) 217328
PT 24226 Mukim Sungai Raya by Hyper Act;
(j)
the sale and purchase agreement dated 30 December 2013 entered into between Hyper
Act and Virgo-Up Ventures Sdn Bhd in relation to the acquisition of vacant quarry land
measuring approximately 3.3252 hectares in area held under Title No. HS(D) 215515
PT 24149 Mukim Sungai Raya by Hyper Act;
(k)
the sale and purchase agreement dated 30 December 2013 entered into between Hyper
Act and Konsep Tuah Sdn Bhd in relation to the acquisition of vacant quarry land
measuring approximately 3.9252 hectares in area held under Title No. HS(D) 214644
PT 24116 Mukim Sungai Raya by Hyper Act;
(l)
the sale and purchase agreement dated 30 December 2013 entered into between Hyper
Act and Shafarra Trade, Travel and Services Sdn Bhd in relation to the acquisition of
vacant quarry land measuring approximately 4.047 hectares in area held under Title No.
HS(D) 212118 PT 23164 Mukim Sungai Raya by Hyper Act;
(m) the sale and purchase agreement dated 30 December 2013 entered into between Hyper
Act and Yayasan Bina Upaya Darul Ridzuan in relation to acquisition of vacant quarry
land measuring approximately 80938 square meters in area held under Title No. HS(D)
199908 PT 23014 Mukim Sungai Raya by Hyper Act;
(n)
the contract entered into between Hyper Act, Sri Sarana Timber Enterprise Sdn Bhd and
Pulai Rock Quarry Sdn Bhd (the Contractor) dated 1 August 2014 in relation to the
appointment of the Contractor for the provision of services relating to the construction
of an access road;
(o)
the sale and purchase agreement entered into between Gridland and Hua Lay Realty
Sdn Bhd dated 1 October 2014 in relation to the purchase of Unit 21-01 in a mixed
development known as Cascades (Corporate) erected on part of all that piece of
leasehold land held under PN 97694, Lot 53298 (formerly held under HS(D) 237769, PT
9793), Pekan Baru Sungai Buloh, Daerah Petaling, Negeri Selangor by Gridland;
(p)
the sale and purchase agreement entered into between Gridland and Hua Lay Realty
Sdn Bhd dated 1 October 2014 in relation to the purchase of Unit 21-02 in a mixed
development known as Cascades (Corporate) erected on part of all that piece of
leasehold land held under PN 97694, Lot 53298 (formerly held under HS(D) 237769, PT
9793), Pekan Baru Sungai Buloh, Daerah Petaling, Negeri Selangor by Gridland;
(q)
the sale and purchase agreement entered into between Gridland and Hua Lay Realty
Sdn Bhd dated 1 October 2014 in relation to the purchase of Unit 21-03 in a mixed
development known as Cascades (Corporate) erected on part of all that piece of
leasehold land held under PN 97694, Lot 53298 (formerly held under HS(D) 237769, PT
9793), Pekan Baru Sungai Buloh, Daerah Petaling, Negeri Selangor by Gridland;
(r)
the sale and purchase agreement entered into between Gridland and Hua Lay Realty
Sdn Bhd dated 1 October 2014 in relation to the purchase of Unit 21-3A in a mixed
195
the tenancy agreement entered into between Chai Sen Hoo and Gridland dated
28 March 2014 in relation to the lease of unit 1D, Persiaran Rapat Baru, Medan
Lapangan Lagenda, 31350, Ipoh, Perak by Gridland;
(t)
the tenancy agreement entered into between Serene Diane A/P Santhana Dass and
Gridland dated 1 April 2014 in relation to the lease of unit A-1-3, Block A (Azalea)
Damaipuri Condominium, Cheateau Garden, 30250, Ipoh, Perak by Gridland;
(u)
the tenancy agreement entered into between Phoon Kah Leong and Gridland dated
1 October 2013 in relation to the lease of 64, Jalan Rapat Baru 16, Lapangan Melodi,
31350 Ipoh, Perak by Gridland;
(v)
the tenancy agreement entered into between Yap Kwee Chin and Gridland dated
17 January 2014 in relation to the lease of 106, BLK J, Riana Green Condo, Jalan PJU
3/1 C, Tropicana Golf & Country Resort 47410, Petaling Jaya by Gridland;
(w) the tenancy agreement entered into between Pretty Beauty Zone and Gridland dated
1 May 2014 in relation to the lease of First Floor, 30, Medan Lapangan Lagenda 2,
Medan Lapangan Lagenda, 31350, Ipoh, Perak by Gridland; and
(x)
the tenancy agreement entered into between Yeong Kwok Seng and Gridland dated
1 January 2014 in relation to the lease of 56-2 & 56-M, Jalan PJU 5/21, The Strand,
Kota Damansara, 47810, Petaling Jaya by Gridland.
MATERIAL LITIGATION
(14) Save as disclosed below, to the best of our knowledge and belief, having made all
reasonable enquiries, neither our Company nor any of our subsidiaries is engaged in any
legal or arbitration proceedings as plaintiff or defendant, including those which are pending
or known to be contemplated, which may have or which have had in the 12 months
immediately preceding the date of lodgement of the Offer Document, a material effect on our
Groups financial position or profitability of our Company or our subsidiaries or associated
companies.
Gridland was served with a writ of summons filed on 6 February 2015 by Ujiteknik Geoenviro
Sdn Bhd (UGSB), a service provider that Gridland had engaged for the provision of drilling
exploration and extraction of limestone samples for the purposes of preparing the
Independent Qualified Persons Report (UGSB Services). UGSB is claiming for, among
others, MYR321,367.76 (Claim Amount) in damages in relation to sums that are allegedly
unpaid by Gridland for the UGSB Services, interest accruing from the Claim Amount and
legal cost. The matter was fixed for mention on 11 March 2015. Gridlands counsel has filed
Statement of Defence and Counter Claim on 8 April 2015 claiming for, among others,
MYR162,222,222.00 in damages for depreciation to Gridlands drilling project which was
discontinued due to delay by UGSB, MYR618,411.82 for interest payable by Gridland due to
the delay by UGSB, all interest accruing and legal cost. Further, Gridlands counsel is
preparing the relevant application to transfer the matter to the High Court at Ipoh, as the
amount claimed by Gridland has exceeded the monetary jurisdiction of the Sessions Court
at Ipoh.
196
PPCF becomes aware of any material breach by our Company and/or its agents(s) of
any warranties, representations, covenants or undertakings given by our Company to
PPCF in the Management Agreement; or
(b)
there shall have been, since the date of the Management Agreement, any change or
prospective change in or any introduction or prospective introduction of any legislation,
regulation, policy, directive, guideline, rule or byelaw by any relevant government or
regulatory body, whether or not having the force of law, or any other occurrence of
similar nature that would materially change the scope of work, responsibility or liability
required of PPCF; or
(c)
there is a conflict of interest for PPCF, or any dispute, conflict or disagreement with our
Company or our Company wilfully fails to comply with any advice from or
recommendation of PPCF.
(18) The Placement Agreement and the obligation of the Placement Agent under the Placement
Agreement is conditional upon, inter alia, the following:
(a)
the Offer Document having been registered with the SGX-ST, acting as agent on behalf
of the Authority, by the Issue Date (as defined in the Placement Agreement) in
accordance with the Catalist Rules;
(b)
the registration notice being issued or granted by the SGX-ST, acting as agent on behalf
of the Authority and such registration notice not being revoked or withdrawn on or prior
to the Closing Date (as defined in the Placement Agreement);
(c)
the compliance by our Company to the satisfaction of the SGX-ST with all the conditions
imposed by the SGX-ST in issuing the registration notice (if any), where such conditions
are required to be complied with by the Closing Date;
(d)
the SGX-ST not having withdrawn or changed the terms and conditions for its letter of
eligibility for Admission (as defined in the Placement Agreement) and our Company
having complied with any conditions contained therein required to be complied with
prior to the Listing;
197
such approvals as may be required for the transactions described in the Placement
Agreement and in the Offer Document in relation to the Listing and the Placement being
obtained, and not withdrawn or amended, on or before the date on which our Company
is admitted to Catalist (or such other date as our Company and Placement Agent may
agree in writing);
(f)
there having been, in the reasonable opinion of the Placement Agent, no material
adverse change or any development likely to result in a material adverse change in the
financial or other condition of our Group between the date of the Placement Agreement
and the Closing Date nor the occurrence of any event nor the discovery of any fact
rendering untrue or incorrect in any respect, as at the Closing Date, any of the
warranties or representations nor any breach by our Company of any of its obligations
under the Placement Agreement;
(g)
the compliance by our Company with all applicable laws and regulations concerning the
Placement, admission to Catalist and the transactions contemplated in the Placement
Agreement and the Offer Document and no new laws, regulations and directives having
been promulgated, published and/or issued and/or having taken effect or any other
similar matter having occurred which, in the reasonable opinion of the Placement Agent,
has or may have an adverse effect on the Placement and the Listing;
(h)
the delivery by our Company to the Placement Agent on the Closing Date of a
certificate, in the form set out in the Schedule to the Placement Agreement, signed by
the authorised signatories for and on behalf of our Company respectively;
(i)
the delivery to the Placement Agent of all legal due diligence reports in relation to the
Listing and the Placement Agent being satisfied with the results, findings, advice,
opinions and/or conclusions set out in such reports;
(j)
the letters of undertaking referred to in the Offer Document in the section entitled
Shareholders Moratorium being executed and delivered to the Issue Manager,
Sponsor and Placement Agent before the date of registration of the Offer Document with
the SGX-ST, acting as agent on behalf of the Authority; and
(k)
(19) In the reasonable opinion of our Directors, save as disclosed below and in the section
entitled Plan of Distribution of this Offer Document, PPCF, the Issue Manager, Sponsor and
Placement Agent does not have a material relationship with our Group:
(a)
PPCF is the Issue Manager, Sponsor and Placement Agent of the Listing and the
Placement; and
(b)
PPCF will be the Continuing Sponsor of our Company for a period of at least three (3)
years from the date our Company is admitted and listed on Catalist.
198
199
known trends or demands, commitments, events or uncertainties that will result in or are
reasonably likely to result in our Groups liquidity increasing or decreasing in any
material way;
(b)
(c)
(d)
the business and financial prospects and any significant recent trends in production,
sales and inventory, and in the costs and selling prices of products and services and
known trends or uncertainties that have had or that we reasonably expect will have a
material favourable or unfavourable impact on revenues, profitability, liquidity, capital
resources or operating income or that would cause financial information disclosed to be
not necessarily indicative of the future operating results or financial condition of our
Company.
(31) Save as disclosed in this Offer Document, our Directors are not aware of any event which has
occurred since the end of 9M2014 (being the end of the period covered by the most recent
financial statements of our Group included in the Offer Document) to the Latest Practicable
Date which may have a material effect on the financial position and results of our Group or
the financial information provided in this Offer Document.
(32) Save as disclosed in the Section entitled Restructuring Exercise of this Offer Document, no
amount of cash or securities or benefit has been paid or given to any promoter within the two
(2) years preceding the Latest Practicable Date or is proposed or intended to be paid or given
to any promoter at any time.
(33) Save as disclosed in the section entitled General and Statutory Information Management
and Placement Agreements of this Offer Document, no commission, discount or brokerage
has been paid or other special terms granted within the two (2) years preceding the Latest
Practicable Date or is payable to any Director, promoter, expert, proposed director or any
other person for subscribing or agreeing to subscribe or procuring or agreeing to procure
subscriptions for any Shares in, or debentures of, our Company or our subsidiaries.
(34) Details, including the name, address and professional qualifications including membership in
a professional body of the auditors of our Company for the period under review are as
follows:
Name, professional
qualification and
address
Ernst & Young LLP
One Raffles Quay
North Tower Level 18
Singapore 048583
Professional body
Institute of Singapore
Chartered Accountants
Partner-in-charge/
Professional qualification
Adrian Koh/A member of the
Institute of Singapore Chartered
Accountants
We currently have no intention of changing our auditors after the listing of our Company on
Catalist.
200
201
(b)
the Audited Consolidated Financial Statements for the financial years ended
31 December 2011, 2012 and 2013 as set out in Appendix A entitled Audited
Consolidated Financial Statements for the financial years ended 31 December 2011,
2012 and 2013;
(c)
the Audited Interim Consolidated Financial Statements for the nine-month period ended
30 September 2014 as set out in Appendix B entitled Audited Interim Consolidated
Financial Statements for the nine-month period ended 30 September 2014;
(d)
the Unaudited Pro Forma Financial Information for the financial year ended
31 December 2013 and the nine-month period ended 30 September 2014 as set out in
Appendix C entitled Unaudited Pro Forma Financial Information for the financial year
ended 31 December 2013 and the nine-month period ended 30 September 2014;
(e)
the legal opinion from Jeff Leong, Poon & Wong set out in Appendix E entitled Legal
Opinion from Jeff Leong, Poon & Wong of this Offer Document;
(f)
the Independent Qualified Persons Report set out in Appendix F entitled Independent
Qualified Persons Report of this Offer Document;
202
the Independent Valuation Report set out in Appendix G entitled Independent Valuation
Report of this Offer Document;
(h)
the material contracts referred to in the section entitled General and Statutory
Information Material Contracts of this Offer Document;
(i)
the letters of consent referred to in the section entitled General and Statutory
Information Consents this Offer Document; and
(j)
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A-3
A-4
A-6
A-7
A-8
A-9
A-11
A-2
(ii)
at the date of this statement, there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they fall due.
Loo An Swee
Director
A-3
A-4
A-5
Revenue
Note
Year ended
31.12.11
MYR
Year ended
31.12.12
MYR
2,294,356
7,668,290
(1,591,134)
(7,118,172)
Cost of sales
Gross profit
Year ended
31.12.13
MYR
703,222
550,118
49,475
10,690
26,102
12,711
(677,280)
(1,814,077)
(1,919,605)
Finance costs
(427,858)
(328,595)
(448,221)
(352,441)
(1,569,153)
(2,341,724)
(37,248)
(5,436)
(389,689)
(1,574,589)
(2,341,724)
1,948
7,873
The accompanying accounting policies and explanatory notes form an integral part of
the consolidated financial statements.
A-6
11,709
ASSETS
Non-current assets
Property, plant and equipment
Prepayments for property, plant and
equipment
Current assets
Trade and other receivables
Prepayments
Pledged deposits
Cash at banks and on hand
Income tax recoverable
Note
2011
MYR
2012
MYR
10
4,890,955
5,162,808
9,304,960
20
3,482,000
4,890,955
5,162,808
12,786,960
4,769,623
3,799
363,747
3,234
2,352,942
3,411
621,938
3,623
1,200
57,359
11,397
833,245
149,926
1,168
5,140,403
2,983,114
1,053,095
10,031,358
8,145,922
13,840,055
103,762
27,432
4,756,057
29,777
150,257
17,169
4,165,998
11,671,011
181,862
4,432,316
4,917,028
4,333,424
16,285,189
11
12
13
Total assets
EQUITY AND LIABILITIES
Current liabilities
Other payables
Accrued operating expenses
Loans and borrowings
Income tax payable
14
15
223,375
(1,350,310) (15,232,094)
7,471
72,119
352,347
1,435,796
79,590
352,347
1,435,796
Total liabilities
4,996,618
4,685,771
17,720,985
Net assets/(liabilities)
5,034,740
3,460,151
(3,880,930)
5,000,002
34,738
5,000,002
(1,539,851)
645
(3,881,575)
5,034,740
3,460,151
(3,880,930)
10,031,358
8,145,922
13,840,055
16
15
2013
MYR
17
Total equity/(deficit)
Total equity and liabilities
The accompanying accounting policies and explanatory notes form an integral part of
the consolidated financial statements.
A-7
Share capital
(Note 17)
MYR
Balance at 1 January 2011
5,000,002
5,000,002
Accumulated
earnings/
(losses)
MYR
424,427
(389,689)
34,738
Total equity
MYR
5,424,429
(389,689)
5,034,740
(1,574,589)
(1,574,589)
5,000,002
(1,539,851)
3,460,151
(2,341,724)
(2,341,724)
645
645
(5,000,002)
(5,000,002)
(4,999,357)
(4,999,357)
645
(3,881,575)
The accompanying accounting policies and explanatory notes form an integral part of
the consolidated financial statements.
A-8
(3,880,930)
Note
Operating activities
Loss before tax, total
Adjustment for:
Depreciation of property, plant and equipment
Gain on disposal of property, plant and equipment
Write-off of property, plant and equipment
Exploration expenditure
Interest income
Finance costs
Total adjustments
Operating cash flows before changes in working
capital
Changes in working capital:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
Increase in trade and other payables
Increase/(decrease) in accrued operating expenses
Year ended
31.12.11
MYR
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
(352,441)
(1,569,153)
(2,341,724)
332,277
(49,475)
427,858
448,233
(12,711)
(10,690)
328,595
458,259
59,920
653,516
(26,102)
448,221
710,660
753,427
358,219
(815,726)
(747,910)
2,416,681
388
46,495
(10,263)
2,295,583
(7,986)
6,520,752
164,693
(1,020,394)
(3,798)
89,905
71
1,593,814
(934,216)
2,453,301
8,973,042
(575,997)
49,475
(427,858)
(962)
1,637,575
10,690
(328,595)
(43,885)
8,225,132
(653,516)
26,102
(448,221)
32
(955,342)
1,275,785
7,149,529
Investing activities
Purchases of property, plant and equipment
Prepayments for purchase of property, plant and
equipment
Proceeds from disposal of property, plant and
equipment
(196,812)
(271,315)
94,940
(4,660,331)
(3,482,000)
(196,812)
(176,375)
(8,142,331)
Financing activities
Proceeds from issuance of ordinary shares
Proceeds from term loans
Repayment of term loans
Repayment of hire purchase
Placement of pledged deposits
626,137
(209,747)
(5,552)
(9,891)
2,000,000
(4,000,000)
(167,865)
(258,190)
645
1,579,500
(131,401)
(91,689)
(211,308)
400,947
(2,426,055)
1,145,747
(751,207)
15,713
(1,326,645)
(735,494)
152,945
(2,062,139)
(735,494)
(2,062,139)
(1,909,194)
13
A-9
Note
Year ended
31.12.11
MYR
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
10
291,812
802,315
4,660,331
(95,000)
(531,000)
196,812
271,315
The accompanying accounting policies and explanatory notes form an integral part of
the consolidated financial statements.
A-10
4,660,331
Corporate information
1.1
The Company
The Company was incorporated in Cayman Islands on 1 November 2013 as a company
limited by shares under the name of Ultimate Prime Ventures Limited.
The registered office of the Company is located at Floor 4, Willow House, PO Box 2804,
Grand Cayman KY1-1112, Cayman Islands and the principal place of business of the Group
is located at No. 56-2, Jalan PJU 5/21, The Strand Kota Damansara, 47810, Petaling Jaya,
Selangor, Malaysia.
The principal activity of the Company is investment holding. The principal activities of its
subsidiaries are quarry master and sale of related products.
The Company changed its name to GCCP Resources Limited on 10 July 2014.
1.2
(b)
A-11
2.1
Basis of preparation
Pursuant to the Restructuring Exercise as more fully explained in Note 1.2, the Company
became the holding company of the companies now comprising the Group in December
2013. The companies now comprising the Group were under the common control of the
Controlling Shareholder before and after the Restructuring Exercise. Accordingly, for the
purpose of this report, the Restructuring Exercise has been accounted for by applying the
pooling of interest method of accounting as if the Restructuring Exercise had been
completed on 1 January 2011.
The consolidated statements of financial position of the Group as at 31 December 2011,
2012 and 2013 have been prepared to present the assets and liabilities of the subsidiaries
using the existing book values of the subsidiaries. No adjustments are made to reflect fair
values, or recognise any new assets or liabilities as a result of the Restructuring Exercise.
All intra-group transactions and balances have been eliminated on combination.
The consolidated financial statements of the Group have been prepared in accordance with
the pooling of interest method. The assets and liabilities of the Company and its
subsidiaries are reflected at their carrying amounts reported in the consolidated financial
statements. Any difference between the consideration and the share capital of the
subsidiary acquired is reflected within equity as merger reserve. The statement of
comprehensive income reflects the results of the Company and its subsidiaries for the
entire periods under review.
The consolidated financial statements of the Group have been prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
The consolidated financial statements have been prepared on the historical cost basis
except as disclosed in the accounting policies below.
The consolidated financial statements are presented in Malaysian Ringgit (MYR) except
when otherwise stated.
2.2
A-12
2.2
2.3
2.4
Description
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment
Entities
Amendments to IAS 32 Offsetting Financial Assets and
Financial Liabilities
A-13
1 January 2014
1 January 2014
2.4
Description
Amendments to IAS 36 Recoverable Amount Disclosures for
Non-Financial Assets
IFRIC Interpretation 21 Levies
Annual Improvements to IFRS 2010-2012 Cycle
Annual Improvements to IFRS 2011-2013 Cycle
Annual Improvements to IFRS 2012-2014 Cycle
Amendments to IAS 1: Disclosure Initiative
IFRS 15 Revenue from Contracts with Customers
IFRS 9 Financial Instruments
1 January 2014
1 January
1 July
1 July
1 January
1 January
1 January
1 January
2014
2014
2014
2016
2016
2017
2018
The directors expect that the adoption of the standards above will have no material impact
on the financial statements in the period of initial application except for the following:
IFRS 15 establishes a new five-step model that will apply to revenue arising from contracts
with customers. Under IFRS 15, revenue is recognised at an amount that reflects the
consideration to which an entity expects to be entitled in exchange for transferring goods
or services to a customer. The new revenue standard is applicable to all entities and will
supersede all current revenue recognition requirements under IFRS. Either a full or
modified retrospective application is required for annual periods beginning on or after
1 January 2017 with early adoption permitted. The Group is currently assessing the impact
of IFRS 15 and plans to adopt the new standard on the required effective date.
2.5
Power over the investee (i.e., existing rights that give it the current ability to direct the
relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
A-14
2.5
Assets, liabilities, reserves, revenue and expense of Gridland Sdn. Bhd. and Hyper Act
Marketing Sdn. Bhd. are consolidated at their existing carrying amounts;
For the purpose of the preparation of the consolidated financial statements, the share
capital as at 31 December 2011 and 2012 represented the issue and paid up share
capital of Gridland Sdn. Bhd. and Hyper Act Marketing Sdn. Bhd. The issued share
capital as at 31 December 2013 represented the share capital of the Company.
A-15
2.6
2.7
Leasehold land
31 to 44 years
Office equipment
10 years
10 years
Renovation
10 years
Motor vehicles
5 years
10 years
A-16
2.7
10 years
Sign board
10 years
5 years
The carrying values of property, plant and equipment are reviewed for impairment when
events or changes in circumstances indicate that the carrying value may not be
recoverable.
The assets useful life and depreciation method are reviewed at each reporting period and
adjusted prospectively, if appropriate.
An item of property, plant and equipment and any significant part initially recognised is
derecognised upon disposal or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is
included in profit or loss when the asset is derecognised.
2.8
A-17
2.8
2.9
Financial assets
Initial recognition and measurement
Financial assets are classified at initial recognition as loans and receivables. There
are no other categories of financial assets. Financial assets are recognised initially at
fair value plus transaction costs that are attributable to the acquisition of the financial
asset.
Subsequent measurement
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. After initial measurement, such
financial assets are subsequently measured at amortised cost using the effective
interest rate (EIR) method, less impairment. Amortised cost is calculated by taking
into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in interest income in profit or
loss. The losses arising from impairment are recognised in the profit or loss in other
operating expenses.
De-recognition
A financial asset is derecognised when the rights to receive cash flows from the asset
have expired. On de-recognition of a financial asset in its entirety, the difference
between the carrying amount and the sum of the consideration received and any
cumulative gain or loss that had been recognised in profit or loss.
A-18
2.9
A-19
2.9
(c)
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified at initial recognition as loans and borrowings and
payables, as appropriate. The Group has not designated any financial liabilities upon
initial recognition at fair value through profit or loss. Financial liabilities are recognised
initially at fair value and net of directly attributable transaction costs.
The Groups financial liabilities include other payables, loans and borrowings including
bank overdrafts, term loans and obligations under finance leases.
Subsequent measurement
After initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the EIR method. Gains and losses are recognised
in profit or loss when the liabilities are derecognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation
is included as finance costs in profit or loss.
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged
or cancelled, or expires. When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the
de-recognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in the statement of profit
or loss.
A-20
2.9
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the
current best estimate. If it is no longer probable that an outflow of economic resources will
be required to settle the obligation, the provision is reversed. If the effect of the time value
of money is material, provisions are discounted using a current pre-tax rate that reflects,
where appropriate, the risks specific to the liability. When discounting is used, the increase
in the provision due to the passage of time is recognised as a finance cost.
A-21
A-22
A-23
2.16 Taxes
(a)
(b)
Deferred tax
Deferred tax is provided using the liability method on temporary differences between
the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except
when the deferred tax liability arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, the carry
forward of unused tax credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised, except when the deferred tax asset
relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
A-24
(c)
Sales tax
Revenue, expenses and assets are recognised net of the amount of sales tax except:
Receivables and payables are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the consolidated statement of financial
position.
2.17 Share capital and share issuance expenses
Proceeds from issuance of ordinary shares are recognised as share capital in equity.
Incremental costs directly attributable to the issuance of ordinary shares are deducted
against share capital.
2.18 Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for mineral resources, the
determination of technical feasibility and the assessment of commercial viability of an
identified resource.
A-25
Licence costs paid in connection with a right to explore in an existing exploration area are
capitalised and amortised over the term of the permit.
Once the legal right to explore has been acquired, exploration expenditure is charged to
profit or loss as incurred, unless the directors conclude that a future economic benefit is
more likely than not to be realised. These costs include directly attributable employee
remuneration, materials and fuels used, surveying costs, drilling costs and payments made
to contractors.
In evaluating whether the expenditures meet the criteria to be capitalised, several different
sources of information are used. The information that is used to determine the probability
of future benefits depends on the extent of exploration that has been performed.
2.19 Segment reporting
For management purposes, the Group is organised into operating segments based on their
products and services. In 2011 and 2012, the Group was engaged in the business of trading
minerals. The Group ceased the business in trading minerals in the end of 2012 and moving
on to the business of exploration and mining of limestone. In 2013, the Group is in the
business of exploration and mining of limestone representing the only operating segment
for the year. No operating segment was reported as there is no revenue generated for the
year ended 31 December 2013.
A-26
4.
Revenue
Revenue represents invoiced sales after allowance for goods returned and trade discounts.
5.
Interest income
6.
Year ended
31.12.11
MYR
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
49,475
10,690
26,102
Year ended
31.12.11
MYR
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
346,270
226,045
254,937
1,640
22,808
18,852
79,948
79,742
174,432
427,858
328,595
448,221
Finance costs
A-27
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
332,277
448,233
458,259
Director fee
50,000
50,000
Exploration expenditure
653,516
59,920
38,778
343,114
469,383
172,235
205,142
8.
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
29,777
12,907
29,777
12,907
7,471
(7,471)
7,471
(7,471)
37,248
5,436
A-28
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
(352,441)
(1,569,153)
(2,341,724)
(88,110)
(392,288)
(585,431)
125,358
147,578
500,282
237,239
85,149
12,907
37,248
5,436
A-29
A-30
10.
5,226,520
53,889
5,280,409
152,348
5,432,757
4,459,351
9,892,108
Group
Cost:
At 1 January 2011
Additions
At 31 December 2011
and 1 January 2012
Additions
Disposals
At 31 December 2012
and 1 January 2013
Additions
Write-off
At 31 December 2013
34,004
32,574
1,430
12,655
19,919
12,655
Leasehold
Office
land
equipment
MYR
MYR
41,172
36,622
4,550
25,035
11,587
25,035
20,607
20,607
20,607
20,607
Furniture
and
fittings Renovation
MYR
MYR
617,961
617,961
102,786
617,961
(102,786)
102,786
Motor
vehicles
MYR
1,940
67,640
(65,700)
67,640
67,640
Water tank
and pump
MYR
9,200
(9,200)
9,200
9,200
Tool and
utensil
MYR
500
500
500
Sign
board
MYR
6,217,861
4,660,331
(74,900)
5,518,332
802,315
(102,786)
5,226,520
291,812
Total
MYR
195,000 10,803,292
195,000
Plant
and
machinery
MYR
A-31
10.
295,100
298,469
593,569
308,159
901,728
286,628
1,188,356
4,686,840
4,531,029
8,703,752
Group
Accumulated depreciation:
At 1 January 2011
Charge for the year
At 31 December 2011
and 1 January 2012
Charge for the year
Disposals
At 31 December 2012
and 1 January 2013
Charge for the year
Write-off
At 31 December 2013
At 31 December 2012
At 31 December 2013
26,081
28,051
11,389
7,923
4,523
3,400
1,266
3,257
1,266
Leasehold
Office
land
equipment
MYR
MYR
32,166
30,951
22,794
9,006
5,671
3,335
2,241
3,430
2,241
14,425
16,486
18,547
6,182
4,121
2,061
2,060
2,061
2,060
Furniture
and
fittings Renovation
MYR
MYR
370,778
494,369
82,229
247,183
123,592
123,591
20,557
123,592
(20,557)
20,557
Motor
vehicles
MYR
1,358
54,112
60,876
582
13,528
194
(13,140)
6,764
6,764
6,764
Water tank
and pump
MYR
7,360
8,280
1,840
(1,840)
920
920
920
Tool and
utensil
MYR
400
450
100
50
50
50
Sign
board
MYR
156,000
39,000
39,000
Plant
and
machinery
MYR
9,304,960
5,162,808
4,890,955
1,498,332
1,055,053
458,259
(14,980)
627,377
448,233
(20,557)
295,100
332,277
Total
MYR
11.
2012
MYR
2013
MYR
Trade receivables
438,724
Other receivables
7,294
1,002,617
723,540
5,765
3,328,282
717,502
911,900
44,300
4,769,623
2,352,942
57,359
3,234
3,623
149,926
363,747
621,938
833,245
5,136,604
2,978,503
1,040,530
Deposits
Total trade and other receivables
Add:
Cash at banks and on hand (Note 13)
Pledged deposits (Note 12)
Total loans and receivables
A-32
12.
Pledged deposits
Pledged deposits are short-term deposits made for varying periods of between one month
and twelve months, and earn interests at the respective short-term deposit rates.
13.
Singapore Dollar
United States Dollar
2012
MYR
2013
MYR
9,598
3,439
For the purpose of the consolidated statements of cash flows, cash and cash equivalents
comprise the following at the end of the reporting period:
2011
MYR
3,234
(738,728)
2012
MYR
3,623
(2,065,762)
2013
MYR
149,926
(2,059,120)
(735,494)
(2,062,139)
(1,909,194)
A-33
Other payables
Other payables
Amounts due to directors
Amounts due to shareholders
2011
MYR
91,745
12,017
2012
MYR
138,240
12,017
2013
MYR
838,877
8,472,134
2,360,000
103,762
150,257
11,671,011
27,432
4,828,176
17,169
4,518,345
181,862
5,868,112
4,959,370
4,685,771
17,720,985
2012
MYR
2013
MYR
17,329
100,236
104,877
4,000,000
2,000,000
1,972,593
(4)
295,726
738,728
2,065,762
2,059,120
4,756,057
4,165,998
4,432,316
Current:
Obligations under finance leases (1)
(Note 21)
Term loans:
(2)
A-34
2012
MYR
2013
MYR
72,119
352,347
256,016
1,179,780
72,119
352,347
1,435,796
4,828,176
4,518,345
5,868,112
Non-current:
Obligations under finance leases (1)
(Note 21)
Term loan:
MYR loan at BLR + 1.00% per annum (4)
These obligations are secured by a charge over the leased assets (Note 10). The discount
rate implicit in the leases ranges from 4.50% to 5.11% (2012: 4.60% to 5.21%, 2011: 5.28%
to 5.31%) per annum. These obligations are denominated in MYR.
(2)
Bank overdrafts
Bank overdrafts are denominated in MYR, bear interest at 8.85% (2012: 8.85%, 2011:
8.85%) per annum and are secured by a first party first and second legal charge on the
leasehold quarry lands as disclosed in Note 10, charge on pledged deposits as disclosed
in Note 12, and jointly and severally guaranteed by the directors of the Group.
(3)
The loan is secured by a first party first and second legal charge on the leasehold quarry
lands as disclosed in Note 10, charge on pledged deposits as disclosed in Note 12, and
jointly and severally guaranteed by the directors of the Group.
(4)
The loan is secured by a third party second legal charge on a freehold residential land with
a 2-storey bungalow held by a director of the Group.
A-35
17.
2011
MYR
2012
MYR
2013
MYR
7,471
Share capital
2011
Number of
shares
Issued and fully
paid ordinary
shares
At 1 January
Issuance of shares
pursuant to
Restructuring
Exercise
Adjustment arising
from the
Restructuring
Exercise
At 31 December
2012
Number of
shares
MYR
2013
Number of
shares
MYR
MYR
5,000,002
5,000,002
5,000,002
5,000,002
5,000,002
5,000,002
200
645
5,000,002
5,000,002
5,000,002
5,000,002
(5,000,002) (5,000,002)
200
645
Pursuant to the Restructuring Exercise disclosed in Note 1.2, the Company acquired the
entire equity in Gridland Sdn. Bhd. and Hyper Act Marketing Sdn. Bhd. for MYR5,000,000
and MYR2 respectively.
The holders of ordinary shares are entitled to receive dividends as and when declared by
the Company. All ordinary shares carry one vote per share without restrictions.
18.
Employee benefits
A-36
Year ended
31.12.11
MYR
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
34,738
3,581
459
306,866
33,183
3,065
417,180
47,387
4,816
38,778
343,114
469,383
Purchase of goods
In addition to the related party information disclosed elsewhere in the consolidated
financial statements, the following significant transactions between the Group and
related parties took place during the financial years on terms agreed between the
parties during the financial year:
(b)
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
1,513,798
5,651,188
Year ended
31.12.11
MYR
Year ended
31.12.12
MYR
Year ended
31.12.13
MYR
50,000
50,000
Director fee
20.
Year ended
31.12.11
MYR
Commitments
(a)
Capital commitments
Capital expenditure contracted for as at the end of the reporting period but not
recognised in the consolidated financial statements are as follows:
2011
MYR
2012
MYR
2013
MYR
3,596,200
A-37
Commitments (contd)
(b)
(c)
2012
MYR
36,900
2013
MYR
5,400
900
37,800
5,400
21,576
17,329
119,088
100,236
119,088
104,877
79,057
72,119
378,646
352,347
269,482
256,016
100,633
89,448
497,734
452,583
388,570
360,893
(11,185)
89,448
89,448
A-38
(45,151)
452,583
452,583
(27,677)
360,893
360,893
(b)
Fair value of financial instruments by classes that are not carried at fair value
and whose carrying amounts are not a reasonable approximation of fair value
The fair value of financial assets and liabilities by classes that are not carried at fair
value and whose carrying amounts are not reasonable approximation of fair value are
as follows:
2011
2012
Carrying
amount
MYR
Fair
value
(Level 3)
MYR
72,119
79,057
2013
Carrying
amount
MYR
Fair
value
(Level 3)
MYR
Carrying
amount
MYR
Fair
value
(Level 3)
MYR
352,347
378,646
256,016
269,482
Financial
liabilities
Loans and
borrowings
(non-current)
Obligations
under finance
leases
The obligations under finance leases have been categorised as Level 3 significant
unobservable inputs under the fair value hierarchy.
A-39
Fair value of financial instruments by classes that are not carried at fair value
and whose carrying amounts are not a reasonable approximation of fair value
(contd)
Valuation
technique
Discounted
cashflow
Significant
unobservable
input
Discount rate
One to
five years
MYR
Total
MYR
2011
Financial assets:
Trade and other receivables
Cash at banks and on hand
Pledged deposits
4,769,623
3,234
363,747
4,769,623
3,234
363,747
5,136,604
5,136,604
Financial liabilities:
Other payables
Accrued operating expenses
Loans and borrowings
103,762
27,432
4,848,208
79,057
103,762
27,432
4,927,265
4,979,402
79,057
5,058,459
157,202
(79,057)
78,145
2012
Financial assets:
Trade and other receivables
Cash at banks and on hand
Pledged deposits
2,352,942
3,623
621,938
2,352,942
3,623
621,938
2,978,503
2,978,503
Financial liabilities:
Other payables
Accrued operating expenses
Loans and borrowings
150,257
17,169
4,366,448
378,646
150,257
17,169
4,745,094
4,533,874
378,646
4,912,520
(1,555,371)
(378,646)
(1,934,017)
A-41
Total
MYR
57,359
149,926
833,245
57,359
149,926
833,245
1,040,530
1,040,530
Financial liabilities:
Other payables
Accrued operating expenses
Loans and borrowings
11,671,011
181,862
4,556,636
1,610,630
11,671,011
181,862
6,167,266
16,409,509
1,610,630
18,020,139
(15,368,979)
(1,610,630)
(16,979,609)
23.
One to
five years
MYR
Capital management
The primary objective of the Groups capital management is to ensure that it maintains a
sufficient cash in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes
in economic conditions. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes during the financial years
ended 31 December 2013, 2012 and 2011.
The Groups capital comprises of issued capital add loans and borrowings less
accumulated losses. As at 31 December 2011, 2012 and 2013, the Group has capital of
MYR 9,862,916, MYR 7,978,496 and MYR 1,987,182. The Group manages its capital to
ensure its ability to continue as a going concern and to optimise returns to its shareholders.
A-42
Segment information
For management purposes, the Group is organised into business units based on their
products and services, and has two reportable segments as follows:
(i)
Trading
(ii)
Mining
No operating segments have been aggregated to form the above reportable operating
segments.
In 2011 and 2012, the Group was engaged in the business of trading minerals. The Group
ceased the business in trading minerals in the end of 2012 and moving on to the business
of mining of limestone. In 2013, the Group is in the business of exploration and mining of
limestone representing the only operating segment for the year.
Accordingly, in 2011 and 2012 all significant operating decisions are based upon analysis
of Group as one trading segment. The financial results from this segment are equivalent to
the financial statements of the Group as a whole. Total expenditure incurred by the Group
arises in MYR and all of the Groups non-current assets reside in Malaysia. No operating
segment was reported as there is no revenue generated for the year ended 31 December
2013.
Information about major customers
There was no revenue during the financial year ended 31 December 2013 as the Company
has ceased its trading operations. During the financial years ended 31 December 2012 and
2011 revenue from two (2011: one) customers amount to MYR7,668,290 (2011:
MYR2,294,356) arising from sale of iron ore and coal.
25.
Subsequent events
(a)
In January, April and August 2014, the Company entered into Convertible Loan
Agreements for a total aggregate principal amount of Singapore Dollars (S$) 18.8
million each at an interest rate of 16% per annum that converts into ordinary fully paid
shares when the Company receives approval to list on the Singapore Stock Exchange.
The term of the Convertible Loan Agreements is 24 months from the drawdown date.
The holders have the right to demand repayment if the Company does not complete
an initial public offering on the Singapore Stock Exchange after 24 months from the
drawdown date or abort the process for the application of the initial public offering.
On 2 May 2014, one of the convertible loan holders has converted the convertible loan
with nominal value of S$4 million into new ordinary shares of the Company.
A-43
26.
One of its subsidiaries, Gridland Sdn. Bhd. was served with a writ of summons filed on
6 February 2015 by Ujiteknik Geoenviro Sdn Bhd (UGSB), a service provider that
was engaged for the provision of drilling exploration and extraction of limestone
samples for the purposes of preparing the Independent Qualified Persons Report
(UGSB Services). UGSB is claiming for, among others, MYR 321,368 in damages in
relation to sums arising from allegedly unpaid invoices issued in respect of the UGSB
Services, interest accruing from the damages and legal cost.
A-44
B-1
Page
Statement by directors
B-3
B-4
B-6
B-7
B-8
B-9
B-2
B-11
(ii)
at the date of this statement, there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they fall due.
Loo An Swee
Director
B-3
B-5
Note
Revenue
Period ended
30.09.13
MYR
Unaudited
Period ended
30.09.14
MYR
Audited
432,990
Cost of sales
(344,412)
Gross profit
88,578
13,353
13,225
164,024
(1,275,007)
(8,221,511)
Finance costs
(338,606)
(2,750,102)
(1,600,260)
(10,705,786)
(1,600,260)
(10,705,786)
8,001
The accompanying accounting policies and explanatory notes form an integral part of
the interim consolidated financial statements.
B-6
1,092
ASSETS
Non-current assets
Property, plant and equipment
Prepayments for property, plant and equipment
30.09.14
MYR
Audited
9,304,960
3,482,000
27,096,756
12,786,960
27,096,756
57,359
11,397
833,245
149,926
1,168
417,950
1,544,332
789,305
1,062,188
18,301,712
2,096
1,053,095
22,117,583
13,840,055
49,214,339
11,671,011
181,862
4,432,316
3,797,519
2,326,109
470,613
20,465,398
16,285,189
27,059,639
(15,232,094)
(4,942,056)
1,435,796
20,722,402
Total liabilities
17,720,985
47,782,041
Net (liabilities)/assets
(3,880,930)
1,432,298
645
(3,881,575)
16,019,659
(14,587,361)
Total (deficit)/equity
(3,880,930)
1,432,298
13,840,055
49,214,339
Current assets
Inventories
Trade and other receivables
Prepayments
Pledged deposits
Cash at banks and on hand
Income tax recoverable
10
31.12.13
MYR
Audited
11
12
13
14
Total assets
EQUITY AND LIABILITIES
Current liabilities
Other payables
Accrued operating expenses
Loans and borrowings
Derivative financial instruments
15
16
17
16
18
The accompanying accounting policies and explanatory notes form an integral part of
the interim consolidated financial statements.
B-7
Accumulated
losses
MYR
Total
MYR
Unaudited
Balance as at 1 January 2013
Loss for the period, representing total
comprehensive income for the period
Balance as at 30 September 2013
5,000,002
(1,539,851)
3,460,151
(1,600,260)
(1,600,260)
5,000,002
(3,140,111)
1,859,891
645
(3,881,575)
(3,880,930)
(10,705,786)
(10,705,786)
Audited
Balance as at 1 January 2014
Loss for the period, representing total
comprehensive income for the period
Contributions by owners:
Issuance of new ordinary shares
5,000,000
5,000,000
11,019,014
11,019,014
16,019,014
16,019,014
16,019,659
(14,587,361)
The accompanying accounting policies and explanatory notes form an integral part of
the interim consolidated financial statements.
B-8
1,432,298
Note
Operating activities
Loss before tax, total
Adjustments for:
Depreciation of property, plant and equipment
Write-off of property, plant and equipment
Exploration expenditure
Interest income
Finance costs
Unrealised exchange gain
Total adjustments
(10,705,786)
273,068
295,377
(13,353)
338,606
893,698
815,960
1,239
291,120
(13,225)
2,750,102
(164,024)
3,681,172
(706,562)
(7,024,614)
(239,690)
3,411
5,059,377
(14,489)
4,808,609
(1,486,973)
(417,950)
(777,908)
(2,873,492)
2,144,247
(3,412,076)
4,102,047
(295,377)
13,353
(338,606)
(1,112)
(10,436,690)
(291,120)
13,225
(134,225)
(928)
3,480,305
(10,849,738)
(4,533,109)
(14,870,995)
(4,533,109)
(14,870,995)
Financing activities
Proceeds from issuance of convertible loans
Proceeds from term loans
Repayment of term loans
Repayment of hire purchase
Placement of pledged deposits
1,650,0000
(86,625)
(64,778)
(178,353)
48,306,137
(2,192,274)
(103,336)
(228,943)
1,320,244
45,781,584
267,440
20,060,851
Investing activity
Purchases of property, plant and equipment
14
B-9
(2,062,139)
150,055
(1,909,194)
(1,794,699)
18,301,712
Period ended
30.09.14
MYR
Audited
4,533,109
18,608,995
(256,000)
(3,482,000)
4,533,109
14,870,995
The accompanying accounting policies and explanatory notes form an integral part of
the interim consolidated financial statements.
B-10
Corporate information
1.1
The Company
The Company was incorporated in Cayman Islands on 1 November 2013 as a company
limited by shares under the name of Ultimate Prime Ventures Limited.
The registered office of the Company is located at Floor 4, Willow House, PO Box 2804,
Grand Cayman KY1-1112, Cayman Islands and the principal place of business of the Group
is located at No 56-2, Jalan PJU 5/21, The Strand Kota Damansara, 47810, Petaling Jaya,
Selangor, Malaysia.
The principal activity of the Company is investment holding. The principal activities of its
subsidiaries are quarry master and sale of related products.
The Company changed its name to GCCP Resources Limited on 10 July 2014.
1.2
(b)
B-11
2.1
Basis of Preparation
Pursuant to the Restructuring Exercise as more fully explained in Note 1.2, the Company
became the holding company of the companies now comprising the Group in December
2013. The companies now comprising the Group were under the common control of the
Controlling Shareholder before and after the Restructuring Exercise. Accordingly, for the
purpose of this report, the Restructuring Exercise has been accounted for by applying the
pooling of interest method of accounting as if the Restructuring Exercise had been
completed on 1 January 2013.
The interim consolidated financial statements for the nine-month period ended 30
September 2014 have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board.
The interim consolidated financial statements have been prepared on the historical cost
basis except as disclosed in the accounting policies below.
The interim consolidated financial statements are presented in Malaysian Ringgit (MYR)
except when otherwise stated.
2.2
2.3
Description
Annual Improvements to IFRS 2010-2012 Cycle
Annual Improvements to IFRS 2011-2013 Cycle
Annual Improvements to IFRS 2012-2014 Cycle
Amendments to IAS 1: Disclosure Initiative
IFRS 15 Revenue from Contracts with Customers
IFRS 9 Financial Instruments
B-12
1
1
1
1
1 July
1 July
January
January
January
January
2014
2014
2016
2016
2017
2018
2.3
2.4
Power over the investee (i.e., existing rights that give it the current ability to direct the
relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
The Group reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary
and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and
expenses of a subsidiary acquired or disposed during the period are included in the interim
consolidated statement of profit or loss and other comprehensive income from the date the
Group gains control until the date the Group ceases to control the subsidiary.
B-13
2.4
2.5
2.6
B-14
2.6
Leasehold land:
31 to 44 years
Building:
10 years
Office equipment:
10 years
10 years
Renovation
10 years
Motor vehicles
5 years
10 years
10 years
Sign board:
10 years
5 years
Crusher plant
15 years
The carrying values of property, plant and equipment are reviewed for impairment when
events or changes in circumstances indicate that the carrying value may not be
recoverable.
The assets useful life and depreciation method are reviewed at each reporting period and
adjusted prospectively, if appropriate.
An item of property, plant and equipment and any significant part initially recognised is
derecognised upon disposal or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is
included in profit or loss when the asset is derecognised.
B-15
2.7
2.8
Financial assets
Initial recognition and measurement
Financial assets are classified at initial recognition as loans and receivables. There
are no other categories of financial assets. Financial assets are recognised initially at
fair value plus transaction costs that are attributable to the acquisition of the financial
asset.
B-16
2.8
(b)
B-17
2.8
B-18
2.8
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified at initial recognition as loans and borrowings and
payables, as appropriate. The Group has not designated any financial liabilities upon
initial recognition at fair value through profit or loss. Financial liabilities are recognised
initially at fair value and net of directly attributable transaction costs.
The Groups financial liabilities include other payables, loans and borrowings including
bank overdrafts, term loans and obligations under finance leases.
Subsequent measurement
After initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the EIR method. Gains and losses are recognised
in profit or loss when the liabilities are derecognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation
is included as finance costs in profit or loss.
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged
or cancelled, or expires. When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference
in the respective carrying amounts is recognised in the statement of profit or loss.
(d)
B-19
2.9
2.10 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the
current best estimate. If it is no longer probable that an outflow of economic resources will
be required to settle the obligation, the provision is reversed. If the effect of the time value
of money is material, provisions are discounted using a current pre-tax rate that reflects,
where appropriate, the risks specific to the liability. When discounting is used, the increase
in the provision due to the passage of time is recognised as a finance cost.
2.11
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in
bringing the inventories to their present location and condition are accounted for as follows:
Finished goods and work-in-progress: costs of direct materials and labour and a
proportion of manufacturing overheads based on normal operating capacity. These
costs are assigned on a weighted average cost basis.
Where necessary, allowance is provided for damaged, obsolete and slow moving items to
adjust the carrying value of inventories to the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and the estimated costs necessary to make the sale.
2.12 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an
asset that necessarily takes a substantial period of time to get ready for its intended use or
sale (a qualifying asset) are capitalised as part of the cost of the respective asset.
Borrowing costs consist of interest and other costs that an entity incurs in connection with
the borrowing of funds.
B-20
B-21
B-22
(b)
Deferred tax
Deferred tax is provided using the liability method on temporary differences between
the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except
when the deferred tax liability arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, the carry
forward of unused tax credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised, except when the deferred tax asset
relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
B-23
Receivables and payables are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the interim consolidated statement of
financial position.
2.17 Share capital and share issuance expenses
Proceeds from issuance of ordinary shares are recognised as share capital in equity.
Incremental costs directly attributable to the issuance of ordinary shares are deducted
against share capital.
B-24
Licence costs paid in connection with a right to explore in an existing exploration area are
capitalised and amortised over the term of the permit.
Once the legal right to explore has been acquired, exploration expenditure is charged to
profit or loss as incurred, unless the directors conclude that a future economic benefit is
more likely than not to be realised. These costs include directly attributable employee
remuneration, materials and fuels used, surveying costs, drilling costs and payments made
to contractors.
In evaluating whether the expenditures meet the criteria to be capitalised, several different
sources of information are used. The information that is used to determine the probability
of future benefits depends on the extent of exploration that has been performed.
2.19 Segment reporting
For management purposes, the Group is organised into one main operating segment, which
involves exploration for limestone. All of the Groups activities are interrelated, and discrete
financial information is reported to the Board as a single segment.
Accordingly, all significant operating decisions are based upon analysis of the Group as one
segment. The financial results from this segment are equivalent to the financial statements
of the Group as a whole. Total expenditure incurred by the Group arises in Malaysia Ringgit
(MYR) and all of the Groups non-current assets reside in Malaysia.
B-25
4.
Revenue
Revenue represents invoiced sales after allowance for goods returned and trade discounts.
5.
Interest income
6.
Period ended
30.09.13
MYR
Unaudited
Period ended
30.09.14
MYR
Audited
13,353
13,225
Period ended
30.09.13
MYR
Unaudited
Period ended
30.09.14
MYR
Audited
Finance costs
B-26
180,181
70,756
29,228
15,972
129,197
47,497
2,615,877
338,606
2,750,102
273,068
815,960
Exploration expenditure
295,377
291,120
50,000
10,000
270,000
399,415
1,061,902
344,412
155,442
101,884
4,223,870
Director fee
Director remuneration
Employee benefits expense (Note 19)
Inventories recognised as an expense in cost of
sales (Note 11)
Operating lease expense
Initial public offering expenses
8.
Period ended
30.09.14
MYR
Audited
Period ended
30.09.14
MYR
Audited
(1,600,260)
(10,705,786)
(316,392)
(714,650)
Non-deductible expenses
124,647
164,965
191,745
549,685
B-27
9.
B-28
10.
1,188,356
8,703,752
At 31 December 2013
901,728
286,628
9,892,108
At 31 December 2013
Accumulated depreciation:
At 1 January 2013
Charge for the year
Write-off
5,432,757
4,459,351
Audited
Group
Cost:
At 1 January 2013
Additions
Write-off
26,081
7,923
4,523
3,400
34,004
32,574
1,430
Leasehold
Office
land
equipment
MYR
MYR
32,166
9,006
5,671
3,335
41,172
36,622
4,550
B-29
14,425
6,182
4,121
2,061
20,607
20,607
Furniture
and
fittings
Renovation
MYR
MYR
370,778
247,183
123,592
123,591
617,961
617,961
Motor
vehicles
MYR
1,358
582
13,528
194
(13,140)
1,940
67,640
(65,700)
Water tank
and pump
MYR
1,840
(1,840)
9,200
(9,200)
Tool and
utensil
MYR
400
100
50
50
500
500
Sign
board
MYR
156,000
39,000
39,000
195,000
195,000
Plant and
machinery
MYR
9,304,960
1,498,332
1,055,053
458,259
(14,980)
10,803,292
6,217,861
4,660,331
(74,900)
Total
MYR
10.
At 30 September 2014
At 30 September 2014
Write-off
At 1 January 2014
18,635,777
1,518,519
330,163
1,188,356
Accumulated depreciation:
20,154,296
Write-off
At 30 September 2014
10,262,188
9,892,108
165,393
5,607
5,607
171,000
171,000
MYR
MYR
Additions
At 1 January 2014
Cost:
Group
Audited
Building
Leasehold
land
27,186
9,648
(191)
1,916
7,923
36,834
(1,430)
4,260
34,004
MYR
Office
equipment
29,560
12,892
3,886
9,006
42,452
1,280
41,172
MYR
Furniture
and
fittings
B-30
19,177
7,780
1,598
6,182
26,957
6,350
20,607
MYR
Renovation
855,971
399,943
152,760
247,183
1,255,914
637,953
617,961
MYR
Motor
vehicles
504
1,436
854
582
1,940
1,940
MYR
Water
tank and
pump
17,000
17,000
17,000
MYR
Tool and
utensil
362
138
38
100
500
500
MYR
Sign
board
1,374,412
222,424
183,424
39,000
1,596,836
1,401,836
195,000
MYR
Plant and
machinery
5,971,414
135,714
135,714
6,107,128
6,107,128
MYR
Crusher
plant
27,096,756
2,314,101
(191)
815,960
1,498,332
29,410,857
(1,430)
18,608,995
10,803,292
MYR
Total
11.
Inventories
30.09.14
MYR
Audited
Interim consolidated statement of financial position:
Work-in-progress (at cost)
59,429
358,521
417,950
B-31
344,412
30.09.14
MYR
Audited
Trade receivables
235,283
Other receivables
7,294
28,453
642,500
5,765
Deposits
44,300
638,096
57,359
1,544,332
833,245
1,062,188
149,926
18,301,712
1,040,530
20,908,232
Add:
Trade receivables
Trade receivables are non-interest bearing and are generally on 30 days terms. They are
recognised at their original invoice amounts which represent their fair value on initial
recognition.
Amount due from convertible loan holder
In August 2014, the Company entered into Convertible Loan Agreements for a total
aggregate principal amount of Singapore Dollars (S$) 8.8 million at an interest rate of 16%
per annum that converts into ordinary fully paid shares when the Company receives
approval to list on the Singapore Stock Exchange.
As at the end of the reporting period, an amount of S$250,000 remained outstanding by one
of the convertible loan holder. The amount was fully settled subsequent to the period end.
B-32
62,076
Pledged deposits
Pledged deposits are made for varying periods of between one month and twelve months,
and earn interests at the respective short-term deposit rates.
14.
30.09.14
MYR
Audited
Singapore Dollar
9,598
16,473,831
3,439
3,440
B-33
15.
149,926
30.09.14
MYR
Audited
18,301,712
(2,059,120)
(1,909,194)
18,301,712
31.12.13
MYR
Audited
30.09.14
MYR
Audited
Other payables
838,877
2,196,499
8,472,134
1,601,020
2,360,000
11,671,011
3,797,519
181,862
2,326,109
5,868,112
21,193,015
17,720,985
27,316,643
Add:
Accrued operating expenses
Loans and borrowings (Note 16)
Total financial liabilities carried at amortised cost
Trade payables
These amounts are non-interest bearing and generally settled on 30 to 60-day terms.
Amounts due to directors
Amounts due to directors are non-trade related, unsecured, non-interest bearing, repayable
upon demand and are to be settled in cash.
B-34
Non-current:
Obligations under finance leases (1)
Term loan:
MYR loan at BLR + 1.00% per annum (4)
Convertible loans (5)
30.09.14
MYR
Audited
104,877
157,598
1,972,593
295,726
2,059,120
313,016
4,432,316
470,613
256,016
355,959
1,179,780
942,810
19,423,633
1,435,796
20,722,402
5,868,112
21,193,015
(2)
Bank overdrafts
Bank overdrafts are denominated in MYR, bear interest at 8.85% per annum and are
secured by a first party first and second legal charge on the leasehold quarry lands as
disclosed in Note 10, charge on pledged deposits as disclosed in Note 13, and jointly
and severally guaranteed by the directors of the Group.
(3)
(4)
B-35
Convertible loans
In January and April 2014, the Company entered into Convertible Loan Agreements for
a principal amount of Singapore Dollars (S$) 5 million each at an interest rate of 16%
per annum that converts into ordinary fully paid shares when the Company receives
approval to list on the Singapore Stock Exchange. The term of the Convertible Loan
Agreements is 24 months from the drawdown date. The holders have the right to
demand repayment if the Company does not complete an initial public offering on the
Singapore Stock Exchange after 24 months from the drawdown date or abort the
process for the application of the initial public offering.
In August 2014, the Company entered into another Convertible Loan Agreements for
a total aggregate principal amount of Singapore Dollars (S$) 8.8 million at an interest
rate of 16% per annum that converts into ordinary fully paid shares when the Company
receives approval to list on the Singapore Stock Exchange. The term of the
Convertible Loan Agreements is 24 months from the drawdown date. The holders have
the right to demand repayment if the Company does not complete an initial public
offering on the Singapore Stock Exchange after 24 months from the drawdown date or
abort the process for the application of the initial public offering.
The Convertible loans are extended to the Company on the condition that pledge
documents are duly executed by the Company. The Company shall pledge its shares
in GSB and HAM to the convertible loan holders as security for the fulfilment of the
Companys obligations to the loan holders. The pledge documents contain a term to
the effect that the pledge shall be discharged within seven business days of the
conversion or the repayment of all outstanding payments under the convertible loan
agreements.
As at 30 September 2014, part of a convertible loan with nominal value of S$4 million
have been converted into new ordinary shares of the Company.
The carrying amount of the liability component of the convertible loan at the statement
of financial position date is arrived at as follows:
30.09.14
MYR
Audited
Face value of convertible loans
Fair value of derivative financial instruments at the date of
drawdown (Note 17)
(20,465,398)
16,821,725
2,615,877
(13,969)
19,423,633
B-36
37,287,123
20,465,398
20,465,398
Derivative component of the convertible loan relates to the investors right to convert into
ordinary fully paid shares at a conversion price which ranges from 50% to 65% of the target
valuation of S$200 million divided by the number of shares prior to conversion.
The fair value of the derivative financial instrument as at 30 September 2014 approximates
the value at initial recognition, hence no fair value adjustments is made.
18.
Share capital
31.12.13
Number of
shares
MYR
Audited
Audited
30.09.14
Number of
shares
MYR
Audited
Audited
5,000,002
5,000,002
200
645
200
645
(5,000,002)
(5,000,002)
200
645
200
645
9,400
645
200
5,000,000
(2)
400
11,019,014
200
645
10,000
16,019,659
Subdivision of shares
(1 share to 47 shares) (1)
B-37
19.
(1)
On 2 May 2014, the shareholders approved the subdivision of every one (1) share into
47 shares, whereupon the issued and paid-up share capital was enlarged from 200 to
9,400 shares.
(2)
On 2 May 2014, S$4 million of the convertible loan was converted into 400 fully paid
ordinary shares of the Company.
Employee benefits
Period ended
30.09.13
MYR
Unaudited
Employee benefits expense:
Salaries and bonuses
Employees Provident Fund
Social Security Organisation (SOCSO)
20.
Period ended
30.09.14
MYR
Audited
360,611
35,230
3,574
958,818
98,187
4,897
399,415
1,061,902
Period ended
30.09.13
MYR
Unaudited
Period ended
30.09.14
MYR
Audited
50,000
450,000
54,000
177
10,000
50,000
514,177
50,000
312,488
201,689
50,000
514,177
B-38
Commitments
(a)
Capital commitments
Capital expenditure contracted for as at the end of the reporting period but not
recognised in the interim consolidated financial statements are as follows:
31.12.13
MYR
Audited
30.09.14
MYR
Audited
3,596,200
B-39
31.12.13
MYR
Audited
30.09.14
MYR
Audited
5,400
34,000
5,400
34,000
Commitments (contd)
(c)
22.
30.09.14
Audited
Present
Minimum
value of
lease
payments
payments
(Note 16)
MYR
MYR
119,088
104,877
177,886
157,598
269,482
256,016
378,058
355,959
388,570
360,893
555,944
513,557
(27,677)
360,893
360,893
(42,387)
513,557
513,557
B-40
Note
Significant
unobservable
inputs
(Level 3)
30.09.14
MYR
Audited
17
20,465,398
Financial liabilities:
Derivative financial instruments
Embedded derivative within the convertible
loans
There have been no transfers between Level 1 and Level 2 or Level 2 and Level 3
during the financial period ended 30 September 2014.
As at 30 September 2014, the Group does not have any financial instruments which
are classified under Level 1 and Level 2 of the fair value hierarchy.
(i)
Valuation
technique
Significant
unobservable
input
Discounted
cash flow
Probability of IPO
being successful
B-41
Value
31%
Carrying
amount
Effect of reasonably
possible alternative
assumptions
Profit or loss
30.09.14
MYR
33,098,634
12,633,236
(ii)
For derivative financial liability, the Company adjusted the fair value
measurement based on managements assumption on the success rate of
the IPO by increasing the adjustments to 50%.
B-42
(c)
Fair value of financial instruments by classes that are not carried at fair value
and whose carrying amounts are not a reasonable approximation of fair value
The fair value of financial assets and liabilities by classes that are not carried at fair
value and whose carrying amounts are not reasonable approximation of fair value are
as follows:
Financial liabilities:
Loans and borrowings
(non-current)
Obligations under finance
leases
31.12.13
Carrying
Fair Value
amount
(Level 3)
MYR
MYR
Audited
Audited
30.09.14
Carrying
Fair Value
amount
(Level 3)
MYR
MYR
Audited
Audited
256,016
355,959
B-43
269,482
378,058
Fair value of financial instruments by classes that are not carried at fair value
and whose carrying amounts are not a reasonable approximation of fair value
(contd)
The obligation under finance leases have been categorised as Level 3 significant
unobservable inputs under the fair value hierarchy.
Valuation technique
Significant
unobservable input
Discount rate
Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should
a counterparty default on its obligations. The Groups exposure to credit risk arises
primarily from trade and other receivables. For other financial assets (including cash
and bank balances), the Group minimises credit risk by dealing exclusively with high
credit rating counterparties.
Exposure to credit risk
At the end of the reporting period, the Groups maximum exposure to credit risk is
represented by the carrying amount of each class of financial assets recognised in the
statement of financial position.
B-44
(b)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial
obligations due to shortage of funds. The Groups exposure to liquidity risk arises
primarily from mismatches of the maturities of financial assets and liabilities. The
Groups objective is to maintain a balance between continuity of funding and flexibility
through the use of stand-by credit facilities.
The Groups liquidity risk management policy is to maintain sufficient liquid financial
assets and stand-by credit facilities with various banks. In addition, the Group
monitors and maintains a level of cash and cash equivalents deemed adequate by the
management to finance the Groups operation and mitigate the effect of fluctuations in
cash flows.
The Group assessed the concentration of risk with respect to refinancing its debt and
concluded it to be low. Access to sources of funding is sufficiently available and debts
maturity within 12 months can be rolled over with existing lenders, if necessary.
B-45
One to
five years
MYR
Total
MYR
Audited
31.12.2013
Financial assets:
Trade and other receivables
57,359
57,359
149,926
149,926
Pledged deposits
833,245
833,245
1,040,530
1,040,530
11,671,011
11,671,011
181,862
181,862
4,556,636
1,610,630
6,167,266
16,409,509
1,610,630
18,020,139
(15,368,979)
(1,610,630)
(16,979,609)
B-46
One to
five years
MYR
Total
MYR
Audited
30.09.2014
Financial assets:
Trade and other receivables
1,544,332
1,544,332
18,301,712
18,301,712
1,062,188
1,062,188
20,908,232
20,908,232
Other payables
3,797,519
3,797,519
2,326,109
2,326,109
575,590
20,844,560
21,420,150
20,465,398
20,465,398
27,164,616
20,844,560
48,009,176
(6,256,384)
(20,844,560)
(27,100,944)
Pledged deposits
Total undiscounted financial assets
Financial liabilities:
24.
Capital management
The primary objective of the Groups capital management is to ensure that it maintains a
sufficient cash in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes
in economic conditions. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes during the financial year
ended 31 December 2013 and nine-month period ended 30 September 2014.
B-47
25.
Segment information
For management purposes, the Group is organised into one main operating segment, which
involves exploration for limestone. All of the Groups activities are interrelated, and discrete
financial information is reported to the Board as a single segment.
Accordingly, all significant operating decisions are based upon analysis of the Group as one
segment. The financial results from this segment are equivalent to the financial statements
of the Group as a whole. Total expenditure incurred by the Group arises in Malaysia Ringgit
(MYR) and all of the Groups non-current assets reside in Malaysia. The Groups revenue
is also sourced from Malaysia.
Information about a major customer
Revenue from one major customer amount to MYR 212,665, arising from sale of limestone.
26.
Subsequent event
One of its subsidiaries, Gridland Sdn. Bhd. was served with a writ of summons filed on 6
February 2015 by Ujiteknik Geoenviro Sdn Bhd (UGSB), a service provider that was
engaged for the provision of drilling exploration and extraction of limestone samples for the
purposes of preparing the Independent Qualified Persons Report (UGSB Services).
UGSB is claiming for, among others, MYR321,368 in damages in relation to sums arising
from allegedly unpaid invoices issued in respect of the UGSB Services, interest accruing
from the damages and legal cost.
27.
B-48
C-1
Page
C-3
C-6
C-7
C-8
C-9
C-10
C-12
C-14
C-2
The related pro forma adjustments give appropriate effect to those criteria; and
(ii)
The pro forma financial information reflects the proper application of those adjustments to the
unadjusted financial information.
The procedures selected depend on the practitioners judgment, having regard to the
practitioners understanding of the nature of the Group, the event or transaction in respect of
which the pro forma financial information has been compiled, and other relevant engagement
circumstances.
The engagement also involves evaluating the overall presentation of the pro forma financial
information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
C-4
(b)
(ii)
on the basis of the applicable criteria stated in Note 3 to the pro forma financial
information; and
Each material adjustment made to the information used in the preparation of the pro forma
consolidated financial information is appropriate for the purpose of preparing such unaudited
financial information.
C-5
Year ended
31.12.13
MYR
Audited
Pro forma
Year ended
31.12.13
MYR
Unaudited
Pro forma
adjustments
MYR
Other income
Interest income
26,102
26,102
Other expense
General and administrative expense
Finance costs
(1,919,605)
(448,221)
(6,795,542)
(A)
(7,243,763)
(42,577,040)
(B)
(42,577,040)
(2,341,724)
(1,919,605)
(2,341,724)
The accompanying accounting policies and explanatory notes form an integral part of
the unaudited pro forma financial information.
C-6
(51,714,306)
(51,714,306)
Period ended
30.09.14
MYR
Audited
Revenue
Pro forma
Period ended
30.09.14
MYR
Unaudited
Pro forma
adjustments
MYR
432,990
432,990
Cost of sales
(344,412)
(344,412)
Gross profit
88,578
88,578
13,225
13,225
164,024
164,024
(8,221,511)
Finance costs
(2,750,102)
(4,141,262)
(A)
(6,891,364)
(42,129,516)
(B)
(42,129,516)
(10,705,786)
(8,221,511)
(10,705,786)
The accompanying accounting policies and explanatory notes form an integral part of
the unaudited pro forma financial information.
C-7
(56,976,564)
(56,976,564)
Note
ASSETS
Non-current assets
Property, plant and equipment
Prepayments for property, plant
and equipment
Current assets
Other receivables
Prepayments
Pledged deposits
Cash at banks and on hand
Income tax recoverable
31.12.13
MYR
Audited
Pro forma
adjustments
MYR
Pro forma
31.12.13
MYR
Unaudited
9,304,960
9,304,960
3,482,000
3,482,000
12,786,960
12,786,960
57,359
11,397
833,245
149,926
1,168
57,359
11,397
833,245
48,979,166
1,168
48,829,240
(C)
1,053,095
49,882,335
Total assets
13,840,055
62,669,295
11,671,011
181,862
4,432,316
(5,000,000)
(D)
6,671,011
181,862
4,432,316
16,285,189
11,285,189
(15,232,094)
38,597,146
1,435,796
1,435,796
Total liabilities
17,720,985
12,720,985
Net (liabilities)/assets
(3,880,930)
49,948,310
645
98,201,822
(C)
5,000,000
(D)
(49,372,582) (A,B)
103,202,467
Accumulated losses
(3,881,575)
Total (deficit)/equity
(3,880,930)
49,948,310
13,840,055
62,669,295
The accompanying accounting policies and explanatory notes form an integral part of
the unaudited pro forma financial information.
C-8
(53,254,157)
30.09.14
MYR
Audited
Pro forma
adjustments
MYR
Pro forma
30.09.14
MYR
Unaudited
ASSETS
Non-current asset
Property, plant and equipment
27,096,756
27,096,756
Current assets
Inventories
Trade and other receivables
Prepayments
Pledged deposits
Cash at banks and on hand
Income tax recoverable
417,950
1,544,332
789,305
1,062,188
18,301,712
2,096
417,950
1,544,332
789,305
1,062,188
18,301,712
2,096
22,117,583
22,117,583
Total assets
49,214,339
49,214,339
3,797,519
2,326,109
470,613
20,465,398
3,797,519
2,326,109
470,613
(20,465,398)
(C)
27,059,639
6,594,241
(4,942,056)
15,523,342
Non-current liabilities
Loans and borrowings
20,722,402
Total liabilities
47,782,041
7,893,010
1,432,298
41,321,329
Net assets
Equity attributable to owners of the
Company
Share capital
Accumulated losses
Total equity
Total equity and liabilities
16,019,659
(14,587,361)
(19,423,633)
(C)
1,298,769
86,159,809
(C) 102,179,468
(46,270,778) (A,B) (60,858,139)
1,432,298
41,321,329
49,214,339
49,214,339
The accompanying accounting policies and explanatory notes form an integral part of
the unaudited pro forma financial information.
C-9
Year ended
31.12.13
MYR
Audited
Pro forma
Year ended
31.12.13
MYR
Unaudited
Pro forma
adjustments
MYR
Operating activities
Loss before tax, total
(2,341,724)
(51,714,306)
Adjustment for:
Depreciation of property, plant and equipment
458,259
458,259
59,920
59,920
Exploration expenditure
653,516
653,516
Interest income
(26,102)
(26,102)
Finance costs
448,221
6,795,542
(A)
7,243,763
42,577,040
(B)
42,577,040
1,593,814
(747,910)
50,966,396
(747,910)
2,295,583
Increase in prepayments
Increase in trade and other payables
(7,986)
2,295,583
(7,986)
6,520,752
6,520,752
164,693
164,693
8,973,042
8,973,042
8,225,132
8,225,132
Exploration expenditure
Interest received
Interest paid
Income taxes refunded
(653,516)
(653,516)
26,102
26,102
(448,221)
(448,221)
32
32
7,149,529
7,149,529
(4,660,331)
(4,660,331)
(3,482,000)
(3,482,000)
(8,142,331)
(8,142,331)
C-10
Year ended
31.12.13
MYR
Audited
Pro forma
Year ended
31.12.13
MYR
Unaudited
Pro forma
adjustments
MYR
Financing activities
Proceeds from issuance of ordinary shares
645
645
48,829,240
(C)
1,579,500
48,829,240
1,579,500
(131,401)
(131,401)
(91,689)
(91,689)
(211,308)
(211,308)
1,145,747
152,945
49,974,987
48,829,240
(C)
48,982,185
(2,062,139)
(2,062,139)
(1,909,194)
46,920,046
The accompanying accounting policies and explanatory notes form an integral part of
the unaudited pro forma financial information.
C-11
(10,705,786)
(56,976,564)
815,960
1,239
291,120
(13,225)
2,750,102
(164,024)
3,681,172
815,960
1,239
291,120
(13,225)
6,891,364
(164,024)
42,129,516
49,951,950
4,141,262
(A)
42,129,516
(B)
(7,024,614)
(7,024,614)
(1,486,973)
(417,950)
(777,908)
(2,873,492)
2,144,247
(3,412,076)
(1,486,973)
(417,950)
(777,908)
(2,873,492)
2,144,247
(3,412,076)
(10,436,690)
(291,120)
13,225
(134,225)
(928)
(10,436,690)
(291,120)
13,225
(134,225)
(928)
(10,849,738)
(10,849,738)
Investing activity
Purchases of property, plant and equipment
(14,870,995)
(14,870,995)
(14,870,995)
(14,870,995)
C-12
Pro forma
Period ended
30.09.14
MYR
Unaudited
Financing activities
Proceeds from issuance of convertible loans
Repayment of term loans
Repayment of hire purchase
Placement of pledged deposits
48,306,137
(2,192,274)
(103,336)
(228,943)
48,306,137
(2,192,274)
(103,336)
(228,943)
45,781,584
45,781,584
20,060,851
20,060,851
150,055
(1,909,194)
150,055
(1,909,194)
18,301,712
18,301,712
The accompanying accounting policies and explanatory notes form an integral part of
the unaudited pro forma financial information.
C-13
The pro forma adjustment reflects the interest accrual of convertible loan issued as disclosed
in Note 2 (a) and (b). The finance cost relates to the accretion of carrying amount of liability
component to the principal amount of convertible loan.
(B)
The pro forma adjustment reflects the accounting treatment for loss on conversion of the
convertible loan into new ordinary shares of the Company as disclosed in Note 2 (a) and (b)
at a conversion price which ranges from 50% to 65% of the target valuation of S$200 million
divided by the number of shares prior to conversion.
(C) The pro forma adjustment reflects the Convertible Loan Agreements entered by the
Company as disclosed in Note 2 (a) and (b). It is assumed that the Listing Approval was
obtained in March 2015, and all convertible loans with total aggregate principal amount of
Singapore Dollars (S$) 14.8 million (31.12.2013: S$18.8 million) are converted into
ordinary fully paid shares accordingly. The accounting treatment for loss on conversion of the
convertible loan is accounted for under pro forma adjustment (B).
(D) The pro forma adjustment reflects an issuance of ordinary shares pursuant to a capitalisation
of loans owing to the Director on 2 May 2014 as disclosed in Note 2 (c).
C-14
Corporate Information
The Company was incorporated in Cayman Islands on 1 November 2013 as a company
limited by shares under the name of Ultimate Prime Ventures Limited.
The registered office of the Company is located at Floor 4, Willow House, PO Box 2804,
Grand Cayman KY1-1112, Cayman Islands and the principal place of business of the Group
is located at No 56-2, Jalan PJU 5/21, The Strand Kota Damansara, 47810, Petaling Jaya,
Selangor, Malaysia.
The principal activity of the Company is investment holding. The principal activities of its
subsidiaries are quarry master and sale of related products.
The Company changed its name to GCCP Resources Limited on 10 July 2014.
2.
Subsequent events
(a)
In January and April 2014, the Company entered into Convertible Loan Agreements for
a principal amount of S$5 million each at an interest rate of 16% per annum that
converts into ordinary fully paid shares when the Company receives approval to list on
the Singapore Stock Exchange. The term of the Convertible Loan Agreements is 24
months from the drawdown date. The holders have the right to demand repayment if the
Company does not complete an initial public offering on the Singapore Stock Exchange
after 24 months from the drawdown date or abort the process for the application of the
initial public offering.
On 2 May 2014, one of the convertible loan holders has converted the convertible loan
with nominal value of S$4 million into new ordinary shares of the Company. For the
purpose of the pro forma adjustments, the Company is assumed to receive approval to
list on the Catalist of the Singapore Exchange Security Trading Limited in March 2015
and the remaining convertible loans with total aggregate principal amount of S$14.4
million are assumed to convert into ordinary fully paid shares.
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In August 2014, the Company entered into Convertible Loan Agreements for a total
aggregate principal amount of S$8.8 million at an interest rate of 16% per annum that
converts into ordinary fully paid shares when the Company receives approval to list on
the Singapore Stock Exchange. The term of the Convertible Loan Agreements is 24
months from the drawdown date. The holders have the right to demand repayment if the
Company does not complete an initial public offering on the Singapore Stock Exchange
after 24 months from the drawdown date or abort the process for the application of the
initial public offering.
For the purpose of the pro forma adjustments, the Company is assumed to receive
approval to list on the Catalist of the Singapore Exchange Security Trading Limited in
March 2015 and the convertible loans are assumed to convert into ordinary fully paid
shares. This results in a loss on conversion of S$16,392,808.
(c)
3.
On 2 May 2014, the Company issued an aggregate of 200 ordinary shares for MYR 5
million pursuant to a capitalisation of loans owing to the Director.
the financial results and cash flows of the Group for the financial year ended 31
December 2013 and the nine-month period ended 30 September 2014 would have been
if the significant change to the capital structure of the Group as disclosed in Note 2 had
occurred on 1 January 2013 and 1 January 2014, respectively; and
(ii)
the financial position of the Group would have been, as at 31 December 2013 and 30
September 2014 if the significant change to the capital structure of the Group as
disclosed in Note 2 had occurred on 31 December 2013 and 30 September 2014.
The unaudited pro forma financial information has been prepared based on the audited
consolidated financial statements of the Group for the financial year ended 31 December
2013 and the audited interim consolidated financial statements for the nine-month period
ended 30 September 2014 which were prepared in accordance with the International
Financial Reporting Standards (IFRS), as issued by the International Accounting Standards
Board.
The audited consolidated financial statements of the Group for the financial year ended 31
December 2013 and audited interim consolidated financial statements for the nine-month
period ended 30 September 2014 were audited by Ernst & Young LLP Singapore, Public
Accountants and Chartered Accountants.
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4.
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2.
Directors
(a)
D-1
(c)
(d)
(e)
Dividends and distribution (Articles 136, 137, 138, 140 and 143)
Subject to the Cayman Companies Law, the Company in general meeting may from time
to time declare dividends in any currency to be paid to the members but no dividend
shall be declared in excess of the amount recommended by the Board. Dividends may
be declared and paid out of the profits of the Company, realised or unrealised, or from
any reserve set aside from profits which the Directors determine is no longer needed.
With the sanction of an ordinary resolution, dividends may also be declared and paid
out of the share premium account or any other fund or account which may be authorised
for this purpose in accordance with the Cayman Companies Law, provided that no
distribution or dividend may be paid to Members out of the share premium account
unless, immediately following the date on which the distribution or dividend is proposed
to be paid, the Company shall be able to pay its debts as they fall due in the ordinary
course of business.
Except in so far as the rights attaching to, or the terms of issue of, any share otherwise
provide (i) all dividends shall be declared and paid according to the amounts paid up on
the shares in respect of which the dividend is paid, but no amount paid up on a share
in advance of calls shall be treated as paid up on the share; and (ii) all dividends shall
be apportioned and paid pro rata according to the amounts paid up on the shares during
any portion or portions of the period in respect of which the dividend is paid. The Board
may deduct from any dividend or other moneys payable to a member by the Company
on or in respect of any shares all sums of money (if any) presently payable by him to
the Company on account of calls or otherwise.
All dividends or bonuses unclaimed for one year after having been declared may be
invested or otherwise made use of by the Board for the benefit of the Company until
claimed. Any dividend or bonuses unclaimed after a period of six years from the date
of declaration shall be forfeited and shall revert to the Company.
(b)
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Share in profits
Holders of shares shall be entitled to share in the Companys profits by way of dividends
declared or distribution approved by the Company in general meeting in accordance
with the Cayman Companies Law.
(d)
(e)
Redemption provisions
The shares do not have redemption rights.
(f)
Sinking fund
The Articles do not contain sinking fund provisions.
(g)
D-4
(i)
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6.
7.
8.
D-7
Applicability of the Singapore Take-over and Merger Laws and Regulations (Article
167(4))
For so long as the shares of the Company are listed on the Designated Stock Exchange
(which includes the SGX-ST), the provisions of sections 138, 139 and 140 of the Singapore
Securities and Futures Act (Cap. 289) and the Singapore Code on Take-overs and Mergers
shall apply, mutatis mutandis, to all take-over offers for shares of the Company.
D-8
20 April 2015
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