This document has not been registered by Bursa Malaysia Securities Berhad (“Bursa Securities”). The information in this document may be subject
to further amendments before being registered by Bursa Securities. Under no circumstances shall this document constitute an offer for subscription
or purchase of, or an invitation to subscribe for or purchase securities.
P R O S P E C T U S
KGW GROUP BERHAD
(Registration No. 202201009353 (1455050-D))
(Incorporated in Malaysia under the Companies Act 2016)
INITIAL PUBLIC OFFERING (“IPO”) IN CONJUNCTION WITH THE LISTING OF KGW GROUP BERHAD (“KGW” OR “COMPANY”) ON THE
ACE MARKET OF BURSA MALAYSIA SECURITIES BERHAD (“BURSA SECURITIES”) COMPRISING:
(I)
PUBLIC ISSUE OF 79,661,800 NEW ORDINARY SHARES IN KGW (“SHARES”) (“ISSUE SHARES”) IN THE FOLLOWING MANNER:
(A) 24,140,000 ISSUE SHARES MADE AVAILABLE FOR APPLICATION BY THE MALAYSIAN PUBLIC;
(B) 9,656,000 ISSUE SHARES MADE AVAILABLE FOR APPLICATION BY OUR ELIGIBLE DIRECTORS, EMPLOYEES AND
PERSONS WHO HAVE CONTRIBUTED TO THE SUCCESS OF KGW AND OUR SUBSIDIARIES;
(C) 7,241,800 ISSUE SHARES MADE AVAILABLE BY WAY OF PRIVATE PLACEMENT TO SELECTED INVESTORS; AND
(D) 38,624,000 ISSUE SHARES MADE AVAILABLE BY WAY OF PRIVATE PLACEMENT TO BUMIPUTERA INVESTORS APPROVED
BY THE MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY; AND
(II)
OFFER FOR SALE OF 43,452,000 EXISTING SHARES (“OFFER SHARES”) IN THE FOLLOWING MANNER:
(A) 21,726,000 OFFER SHARES MADE AVAILABLE BY WAY OF PRIVATE PLACEMENT TO SELECTED INVESTORS; AND
(B) 21,726,000 OFFER SHARES MADE AVAILABLE BY WAY OF PRIVATE PLACEMENT TO BUMIPUTERA INVESTORS
APPROVED BY THE MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY
AT AN IPO PRICE OF RM[●] PER ISSUE SHARE / OFFER SHARE, PAYABLE IN FULL UPON APPLICATION.
Principal Adviser, Sponsor, Underwriter and Placement Agent
Financial Adviser
TA SECURITIES HOLDINGS BERHAD
(Registration No. 197301001467 (14948-M))
(A Participating Organisation of Bursa Malaysia Securities Berhad)
ECO ASIA CAPITAL ADVISORY SDN BHD
(Registration No. 201801022562 (1284581-H))
NO SECURITIES WILL BE ALLOTTED OR ISSUED BASED ON THIS PROSPECTUS AFTER SIX MONTHS FROM THE DATE OF THIS
PROSPECTUS.
INVESTORS ARE ADVISED TO READ AND UNDERSTAND THE CONTENTS OF THIS PROSPECTUS. IF IN DOUBT, PLEASE CONSULT A
PROFESSIONAL ADVISER.
FOR INFORMATION CONCERNING RISK FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, SEE “RISK
FACTORS” COMMENCING ON PAGE 131.
[BURSA SECURITIES HAS APPROVED OUR IPO AND THIS PROSPECTUS HAS BEEN REGISTERED BY BURSA SECURITIES. THE
APPROVAL OF OUR IPO, AND REGISTRATION OF THIS PROSPECTUS SHOULD NOT BE TAKEN TO INDICATE THAT BURSA SECURITIES
RECOMMENDS THE OFFERING OR ASSUMES RESPONSIBILITY FOR THE CORRECTNESS OF ANY STATEMENT MADE, OPINION
EXPRESSED OR REPORT CONTAINED IN THIS PROSPECTUS. BURSA SECURITIES HAS NOT, IN ANY WAY, CONSIDERED THE MERITS
OF THE SECURITIES BEING OFFERED FOR INVESTMENT.]
BURSA SECURITIES IS NOT LIABLE FOR ANY NON-DISCLOSURE ON THE PART OF THE COMPANY AND TAKES NO RESPONSIBILITY FOR
THE CONTENTS OF THIS DOCUMENT, MAKES NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS, AND EXPRESSLY
DISCLAIMS ANY LIABILITY FOR ANY LOSS YOU MAY SUFFER ARISING FROM OR IN RELIANCE UPON THE WHOLE OR ANY PART OF THE
CONTENTS OF THIS PROSPECTUS.
THE ACE MARKET IS AN ALTERNATIVE MARKET DESIGNED PRIMARILY FOR EMERGING CORPORATIONS THAT MAY CARRY HIGHER
INVESTMENT RISK WHEN COMPARED WITH LARGER OR MORE ESTABLISHED CORPORATIONS LISTED ON THE MAIN MARKET. THERE
IS ALSO NO ASSURANCE THAT THERE WILL BE A LIQUID MARKET IN THE SHARES OR UNITS OF SHARES TRADED ON THE ACE
MARKET. YOU SHOULD BE AWARE OF THE RISKS OF INVESTING IN SUCH CORPORATIONS AND SHOULD MAKE THE DECISION TO
INVEST ONLY AFTER CAREFUL CONSIDERATION.
THE ISSUE, OFFER OR INVITATION FOR THE OFFERING IS A PROPOSAL NOT REQUIRING APPROVAL, AUTHORISATION OR
RECOGNITION OF THE SECURITIES COMMISSION MALAYSIA (“SC”) UNDER SECTION 212(8) OF THE CAPITAL MARKETS AND SERVICES
ACT 2007 (“CMSA”).
This Prospectus is dated [●]
Registration No. 202201009353 (1455050-D)
All defined terms used in this Prospectus are defined under the “Definitions” section
commencing on page x of this Prospectus.
RESPONSIBILITY STATEMENTS
Our Directors, Promoters and Selling Shareholders have seen and approved this Prospectus. They
collectively and individually accept full responsibility for the accuracy of the information. Having made
all reasonable enquiries, and to the best of their knowledge and belief, they confirm there is no false or
misleading statement or other facts which if omitted, would make any statement in this Prospectus false
or misleading.
TA Securities, being our Principal Adviser, Sponsor, Underwriter and Placement Agent, acknowledges
that, based on all available information and to the best of its knowledge and belief, this Prospectus
constitutes a full and true disclosure of all material facts concerning the offering.
STATEMENTS OF DISCLAIMER
[Approval has been granted by Bursa Securities for the listing and quotation of our Shares. Admission
to the Official List of Bursa Securities is not to be taken as an indication of the merits of the offering, our
Company or our Shares (as defined herein).]
Bursa Securities is not liable for any non-disclosure on the part of our Company and takes no
responsibility for the contents of this Prospectus, makes no representation as to its accuracy or
completeness and expressly disclaims any liability for any loss you may suffer arising from or in reliance
upon the whole or any part of the contents of this Prospectus.
[This Prospectus, together with the Application Forms, has also been lodged with the Registrar of
Companies, who takes no responsibility for its contents.]
OTHER STATEMENTS
You should note that you may seek recourse under Sections 248, 249 and 357 of the CMSA for breaches
of securities laws including any statement in the Prospectus that is false, misleading, or from which there
is a material omission; or for any misleading or deceptive act in relation to this Prospectus or the conduct
of any other person in relation to our Company.
Our Shares are offered to the public on the premise of full and accurate disclosure of all material
information concerning the offering, for which any person set out in Section 236 of the CMSA, is
responsible.
[Our Shares are classified as Shariah compliant by the Shariah Advisory Council of the SC based on
our audited combined financial statements for the financial year ended 31 December 2021. This
classification remains valid from the date of issue of this Prospectus until the next Shariah compliance
review undertaken by the Shariah Advisory Council of the SC. The new status is released in the updated
list of Shariah compliant securities, on the last Friday of May and November.]
This Prospectus is prepared and published solely for our IPO in Malaysia under the laws of Malaysia.
Our Shares are issued and offered in Malaysia based solely on the contents of this Prospectus. Our
Company, Directors, Promoters, Selling Shareholders, Principal Adviser, Sponsor, Underwriter and
Placement Agent take no responsibility for the distribution of this Prospectus (in preliminary or final form)
outside Malaysia. Our Company, Directors, Promoters, Selling Shareholders, Principal Adviser,
Sponsor, Underwriter and Placement Agent have not authorised anyone to provide any information or
to make any representation which is not contained in this Prospectus. Any information or representation
not contained herein this Prospectus must not be relied upon as having been authorised by our
Company, Directors, Promoters, Selling Shareholders, Principal Adviser, Sponsor, Underwriter and
Placement Agent, any of their representative directors, or any other persons involved in our IPO.
i
Registration No. 202201009353 (1455050-D)
This Prospectus may not be used for the purpose of and does not constitute an offer for subscription or
purchase or invitation to subscribe for or purchase of our Shares in any jurisdiction or in any
circumstances in which such an offer is not authorised or is unlawful or to any person to whom it is
unlawful to make such offer or invitation.
This Prospectus has not been and will not be made to comply with the laws of any jurisdiction other than
Malaysia, and has not been and will not be lodged, registered or approved pursuant to or under any
applicable securities or equivalent legislation or with or by any regulatory authority or other relevant body
of any jurisdiction other than Malaysia.
We will not, prior to acting on any acceptance in respect of our IPO, make or be bound to make any
enquiry as to whether you have a registered address in Malaysia and will not accept or be deemed to
accept any liability in relation thereto, whether or not any enquiry or investigation is made in connection
therewith.
It shall be your sole responsibility to ensure that your application for our IPO would be in compliance
with the terms of our IPO and would not be in contravention of any laws of any countries or jurisdictions
other than Malaysia to which you may be subjected to. We will further assume that you had accepted
our IPO in Malaysia and will be subject only to the laws of Malaysia in connection therewith.
Further, it shall be your sole responsibility, if you are or may be subject to the laws of any countries or
jurisdictions other than Malaysia, to consult your professional adviser as to whether your application for
our IPO would result in the contravention of any laws of such countries or jurisdictions. Neither we nor
our Principal Adviser nor any other advisers in relation to our IPO shall accept any responsibility or
liability in the event that any application made by you shall become illegal, unenforceable, voidable or
void in any such country or jurisdiction.
However, we reserve the right, in our absolute discretion, to treat any acceptances as invalid if we
believe that such acceptance may violate any law or applicable legal or regulatory requirements.
ELECTRONIC PROSPECTUS
This Prospectus can also be viewed or downloaded from Bursa Securities’ website at
www.bursamalaysia.com. The contents of the Electronic Prospectus (as defined herein) and the copy
of this Prospectus registered with Bursa Securities are the same.
You are advised that the internet is not a fully secured medium, and that your Internet Share Application
(as defined herein) is subject to the risk of problems occurring during data transmission, computer
security threats such as viruses, hackers and crackers, faults with computer software and other events
beyond the control of the Internet Participating Financial Institutions (as defined herein). These risks
cannot be borne by the Internet Participating Financial Institutions.
If you are in doubt as to the validity or integrity of the Electronic Prospectus, you should immediately
request from us, our Principal Adviser or our Issuing House (as defined herein), a paper printed copy of
this Prospectus.
In the event of any discrepancies arising between the contents of the Electronic Prospectus and the
contents of the paper printed copy of this Prospectus for any reason whatsoever, the contents of the
paper printed copy of this Prospectus, which are identical to the copy of the Prospectus registered with
Bursa Securities, shall prevail.
In relation to any reference in this Prospectus to third party internet sites (“Third Party Internet Sites”),
whether by way of hyperlinks or by way of description of the Third Party Internet Sites, you acknowledge
and agree that:
(i)
We and our Principal Adviser do not endorse and are not affiliated in any way with the Third
Party Internet Sites and are not responsible for the availability of, or the contents or any data,
information, files or other material provided on the Third Party Internet Sites. You shall bear all
risks associated with the access to or use of the Third Party Internet Sites;
ii
Registration No. 202201009353 (1455050-D)
(ii)
We and our Principal Adviser are not responsible for the quality of products or services in the
Third Party Internet Sites or for fulfilling any of the terms of your agreements with the Third Party
Internet Sites. We and our Principal Adviser are also not responsible for any loss, damage or
cost that you may suffer or incur in connection with or as a result of dealing with the Third Party
Internet Sites or the use of or reliance on any data, information, files or other material provided
by such parties; and
(iii)
Any data, information, files or other material downloaded from the Third Party Internet Sites is
done at your own discretion and risk. We and our Principal Adviser are not responsible, liable
or under obligation for any damage to your computer system or loss of data resulting from the
downloading of any such data, information, files or other material.
Where an Electronic Prospectus is hosted on the website of the Internet Participating Financial
Institutions, you are advised that:
(i)
The Internet Participating Financial Institutions are liable in respect of the integrity of the
contents of the Electronic Prospectus, to the extent of the contents of the Electronic Prospectus
situated on the web server of the Internet Participating Financial Institutions which may be
viewed via your web browser or other relevant software. The Internet Participating Financial
Institutions shall not be responsible in any way for the integrity of the contents of the Electronic
Prospectus which has been downloaded or otherwise obtained from the web server of the
Internet Participating Financial Institutions and subsequently communicated or disseminated in
any manner to you or other parties; and
(ii)
While all reasonable measures have been taken to ensure the accuracy and reliability of the
information provided in the Electronic Prospectus, the accuracy and reliability of the Electronic
Prospectus cannot be guaranteed as the internet is not a fully secured medium.
The Internet Participating Financial Institutions shall not be liable (whether in tort or contract or
otherwise) for any loss, damage or cost you or any other person may suffer or incur due to, as a
consequence of or in connection with any inaccuracies, changes, alterations, deletions or omissions in
respect of the information provided in the Electronic Prospectus which may arise in connection with or
as a result of any fault or faults with web browsers or other relevant software, any fault or faults on your
or any third party’s personal computer, operating system or other software, viruses or other security
threats, unauthorised access to information or systems in relation to the website of the Internet
Participating Financial Institutions, and/or problems occurring during data transmission, which may
result in inaccurate or incomplete copies of information being downloaded or displayed on your personal
computer.
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iii
Registration No. 202201009353 (1455050-D)
INDICATIVE TIMETABLE
The indicative timing of events leading to our Listing are as set out below:
Events
Tentative Dates
Opening of the application period for our IPO
[●]
Closing of the application period for our IPO
[●]
Balloting of the Applications
[●]
Allotment / Transfer of our IPO Shares to successful applicants
[●]
Listing on the ACE Market
[●]
If there is any change to the indicative timetable above, we will advertise the notice of the change in a
widely circulated English and Bahasa Malaysia daily newspapers in Malaysia and will make
announcement on Bursa Securities’ website.
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iv
Registration No. 202201009353 (1455050-D)
TABLE OF CONTENTS
PAGE
PRESENTATION OF INFORMATION
viii
FORWARD-LOOKING STATEMENTS
ix
DEFINITIONS
x
GLOSSARY OF TECHNICAL TERMS
xvi
1.
CORPORATE DIRECTORY
1
2.
APPROVALS AND CONDITIONS
2.1
Approvals and conditions
2.2
Moratorium on our Shares
6
6
7
3.
PROSPECTUS SUMMARY
3.1
Principal details relating to our IPO
3.2
Group structure and business model
3.3
Competitive strengths
3.4
Future plans and business strategies
3.5
Risk factors
3.6
Directors and key senior management
3.7
Promoters and substantial shareholders
3.8
Utilisation of proceeds
3.9
Financial and operational highlights
3.10
Dividend policy
9
9
9
10
11
12
16
16
17
17
18
4.
DETAILS OF OUR IPO
4.1
Opening and closing of Application period
4.2
Indicative timetable
4.3
Details of our IPO
4.4
Share capital and market capitalisation upon listing
4.5
Objectives of our IPO
4.6
Basis of arriving at the IPO Price
4.7
Dilution
4.8
Utilisation of proceeds from our IPO
4.9
Underwriting commission, brokerage and placement fee
4.10
Salient terms of the Underwriting Agreement
19
19
19
19
25
25
26
26
27
30
31
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS
AND KEY SENIOR MANAGEMENT
5.1
Promoters and substantial shareholders
5.2
Directors
5.3
Board practices
5.4
Key senior management
5.5
Declaration by our Promoters, Directors and key senior management
5.6
Family relationships or associations
5.7
Service contracts
5.8
Employees
32
INFORMATION ON OUR GROUP
6.1
Information on our Group
6.2
Information on our Subsidiaries
6.3
Locations of operations
6.4
Public take-overs
69
69
75
78
78
6.
v
32
36
53
60
67
67
67
68
Registration No. 202201009353 (1455050-D)
TABLE OF CONTENTS (CONT’D)
PAGE
7.
BUSINESS OVERVIEW
7.1
Our history and background
7.2
Key achievements and milestones
7.3
Principal activities
7.4
Business process
7.5
Business positioning of our Group in the logistics industry
7.6
Sales and marketing strategies
7.7
Technology used or to be used
7.8
Interruptions in business
7.9
Seasonality
7.10
Exchange control
7.11
Major customers
7.12
Types, sources and availability of inputs
7.13
Major suppliers
7.14
Quality control
7.15
Research and development activities
7.16
Competitive strengths
7.17
Operating capacity
7.18
Dependency on contracts, agreements or other arrangements
7.19
Major approvals, licenses and permits obtained
7.20
Information on material lands and buildings
7.21
Governing laws and regulations
7.22
Intellectual properties
7.23
Future plans and business strategies
7.24
Our measures to address the potential impact on our financial performance in
light of low ocean freight rates
79
79
81
82
90
93
95
99
99
100
100
101
104
105
109
109
109
111
111
112
117
118
120
121
127
8.
THE IMR REPORT
130
9.
RISK FACTORS
9.1
Risks relating to our business and our operations
9.2
Risks relating to our industry
9.3
Risks relating to the investment in our Shares
141
141
151
151
10.
RELATED PARTY TRANSACTIONS
10.1
Related party transactions
10.2
Monitoring and oversight of related party transactions
154
154
163
11.
CONFLICT OF INTERESTS
11.1
Interest in similar business and in businesses of our customers and suppliers
11.2
Declarations of conflict of interest by our advisers
164
164
165
12.
FINANCIAL INFORMATION
12.1
Historical financial information
12.2
Capitalisation and indebtedness
12.3
Management’s discussion and analysis of financial condition and results of
operations
12.4
Review of financial position
12.5
Significant factors affecting our Group’s operations and financial performance
12.6
Liquidity and capital resources
12.7
Accounting policies and audit qualification
12.8
Impact of government, economic, fiscal or monetary policies
12.9
Impact of inflation
12.10
Impact of foreign exchange rate
12.11
Impact of interest rate
12.12
Trend analysis
12.13
Order book
12.14
Dividend policy
12.15
Significant changes
167
167
172
173
vi
204
207
208
224
224
225
225
226
226
227
228
229
Registration No. 202201009353 (1455050-D)
TABLE OF CONTENTS (CONT’D)
PAGE
13.
ACCOUNTANTS’ REPORT
230
14.
REPORTING ACCOUNTANTS’ REPORT ON THE COMPILATION OF PRO FORMA
COMBINED STATEMENTS OF FINANCIAL POSITION
325
15.
ADDITIONAL INFORMATION
15.1
Share capital
15.2
Extract of our Constitution
15.3
Limitation on the right to own securities
15.4
Material litigation
15.5
Material contracts
15.6
Consents
15.7
Documents for inspection
15.8
Responsibility statements
338
338
338
343
343
344
344
345
345
16.
SUMMARISED PROCEDURES FOR APPLICATION AND ACCEPTANCE
16.1
Opening and closing of Applications
16.2
Methods of Applications
16.3
Eligibility
16.4
Procedures for application by way of Application Forms
16.5
Procedures for application by way of Electronic Share Applications
16.6
Procedures for application by way of Internet Share Applications
16.7
Authority of our Board and our Issuing House
16.8
Over / Under-subscription
16.9
Unsuccessful / Partially successful applicants
16.10
Successful applicants
16.11
Enquiries
346
346
346
347
348
349
349
349
350
350
351
352
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vii
Registration No. 202201009353 (1455050-D)
PRESENTATION OF INFORMATION
All references to “KGW” or “our Company” in this Prospectus are to KGW Group Berhad, while
references to “KGW Group” or “our Group” are to our Company and our Subsidiaries (as defined herein).
References to “we”, “us”, “our” and “ourselves” are to our Company or our Group or any member of our
Group, as the context requires. Unless the context otherwise requires, references to “Management” are
to our Executive Directors and our key senior management personnel as disclosed in this Prospectus
and statements as to our beliefs, expectations, estimates and opinions are those of our Management.
Certain abbreviations, acronyms and technical terms used are defined in the “Definitions” and “Glossary
of Technical Terms” sections of this Prospectus. Words denoting the singular shall, where applicable,
include the plural and vice versa. Words denoting the masculine gender shall, where applicable, include
the feminine and neuter genders and vice versa. References to persons shall include companies and
corporations.
In this Prospectus, references to the “Government” are to the Government of Malaysia, and references
to “RM” and “sen” are to the lawful currency of Malaysia. The word “approximately” used in this
Prospectus is to indicate that a number is not an exact one, but that number is usually rounded off to
the nearest hundredth or 2 decimal places. Any discrepancies in the tables included in this Prospectus
between the amounts listed and the total thereof are due to rounding.
If there are any discrepancies or inconsistencies between the English and Malay versions of this
Prospectus, the English version shall prevail.
Any reference to dates and times in this Prospectus are references to dates and times in Malaysia.
Any reference to any provisions of the statutes, rules, regulations, enactments or rules of stock
exchange in this Prospectus shall (where the context admits) be construed as a reference to provisions
of such statutes, rules, regulations, enactments or rules of stock exchange (as the case may be) as
modified by any written law or (if applicable) amendment or re-enactment to statutes, rules, regulations,
enactments, or rules of stock exchange for the time being in force.
This Prospectus includes statistical data provided by our Management and various third parties and
cites third party projections regarding growth and performance of the market and industry in which our
Group operates or to which we are exposed. This data is taken or derived from information published
by industry sources and from our internal data. In each such case, the source is stated in this
Prospectus. Where no source is stated, it can be assumed that the information originates from our
Management.
In particular, certain information in this Prospectus is extracted or derived from the IMR Report prepared
by Protégé Associates Sdn Bhd, an independent market researcher. We have appointed Protégé
Associates Sdn Bhd to provide a strategic analysis of the logistics industry in Malaysia. In compiling
their data for this analysis, Protégé relied on its research methodology, industry sources, sources from
government bodies, published materials and its own private databases.
We believe that the information on the industry and other statistical data and projections cited in this
Prospectus are useful in helping you to understand the major trends in the industry in which we operate.
The information on our website, or any website directly and indirectly linked to such website does not
form part of this Prospectus and should not be relied upon.
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viii
Registration No. 202201009353 (1455050-D)
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements. All statements other than statements of historical
facts included in this Prospectus, including, without limitation, those regarding our financial position,
business strategies, prospects, plans and objectives for future operations, are forward–looking
statements. Such forward-looking statements involve known and unknown risks, uncertainties,
contingencies and other factors which may cause our actual results, our performance or achievements,
or industry results, to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward-looking statements are based
on numerous assumptions regarding our present and future business strategies and the environment
in which we will operate in the future. Such forward-looking statements reflect our current views with
respect to future events and are not a guarantee of future performance.
Forward-looking statements can be identified by the use of forward-looking terminology such as the
words “may”, “will”, “would”, “could”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “aim”, “plan”,
“forecast”, or similar expressions and include all statements that are not historical facts. Such forwardlooking statements include, without limitation, statements relating to:
(i)
our future overall business development and operations;
(ii)
our future financial position, earnings, cash flows and liquidity;
(iii)
our business strategies, trends and competitive position and the effect of such competition;
(iv)
our plans and objectives for future operations; and
(v)
the general industry environment, including the demand and supply for our services.
Our actual results may defer materially from information contained in such forward-looking statements
as a result of a number of factors including, without limitations:
(i)
the economic, political and investment environment in Malaysia and globally; and
(ii)
government policy, legislation or regulation.
Additional factors that could cause actual results, performance or achievements to differ materially
include, but are not limited to those discussed in the “Risk Factors” section and the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” section of this Prospectus.
We cannot give any assurance that the forward-looking statements made in this Prospectus will be
realised. Such forward-looking statements are made only as at the LPD.
Should we become aware of any subsequent material change or development affecting any matter
disclosed in this Prospectus arising from the date of registration of this Prospectus but before the date
of allotment / transfer of the IPO Shares, we shall further issue a supplemental or replacement
prospectus, as the case may be, in accordance with the provisions of Section 238(1) of the CMSA and
Paragraph 1.02, Chapter 1 of Part II (Division 6) of the Prospectus Guidelines (Supplementary and
Replacement Prospectus).
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ix
Registration No. 202201009353 (1455050-D)
DEFINITIONS
The following definitions shall apply throughout this Prospectus unless the definitions are defined
otherwise or the context requires otherwise:
COMPANIES WITHIN OUR GROUP
KGW or our Company
:
KGW Group Berhad (Registration No. 202201009353 (1455050-D))
KGW Group or our
Group
:
KGW and our Subsidiaries, collectively
KGW Logistics
:
KGW Logistics (M) Sdn Bhd (Registration No. 200501027644 (709778V))
KGW Medica
:
KGW Medica Sdn Bhd (Registration No. 202101022342 (1422642-W))
Mattroy Logistics
:
Mattroy Logistics (Malaysia) Sdn Bhd (Registration No. 201401031317
(1107401-M))
Subsidiaries
:
KGW Logistics, Mattroy Logistics and KGW Medica, collectively
ACE Market
:
ACE Market of Bursa Securities
Acquisitions
:
Comprising the Acquisition of KGW Logistics, Acquisition of Mattroy
Logistics and Acquisition of KGW Medica
Acquisition of KGW
Logistics
:
The acquisition by KGW of the entire issued share capital of KGW
Logistics comprising 1,000,000 ordinary shares for a purchase
consideration of RM11,092,800 satisfied wholly by the issuance of
369,760,000 new Shares at an issue price of RM0.03 each, which was
completed on [●]
Acquisition of KGW
Medica
:
The acquisition by KGW of the entire issued share capital of KGW
Medica comprising 300,000 ordinary shares for a purchase
consideration of RM374,500 satisfied wholly by the issuance of
12,483,333 new Shares at an issue price of RM0.03 each, which was
completed on [●]
Acquisition of Mattroy
Logistics
:
The acquisition by KGW of the entire issued share capital of Mattroy
Logistics comprising 200,000 ordinary shares for a purchase
consideration of RM626,800 satisfied wholly by the issuance of
20,893,334 new Shares at an issue price of RM0.03 each, which was
completed on [●]
Act
:
Companies Act 2016, as may be amended from time to time
ADA
:
Authorised Depository Agent
AGM
:
Annual General Meeting
Application
:
The application for the Issue Shares by way of Application Form, the
Electronic Share Application and/or the Internet Share Application
Application Form
:
The printed application form for the application of the Issue Shares
ATM
:
Automated teller machine
GENERAL
x
Registration No. 202201009353 (1455050-D)
DEFINITIONS (CONT’D)
Authorised Financial
Institution
:
Authorised financial institution participating in the Internet Share
Application with respect to payments for our Issue Shares made
available for application under the Public Issue
BNM
:
Bank Negara Malaysia
Board
:
Board of Directors of our Company
Bursa Depository or
Depository
:
Bursa Malaysia Depository Sdn Bhd (Registration No. 198701006854
(165570-W))
Bursa Securities
:
Bursa Malaysia Securities Berhad (Registration No. 200301033577
(635998-W))
CAGR
:
Compound annual growth rate
CDS
:
Central Depository System
CDS Account
:
Account established for a Depositor by Bursa Depository for the
recording of deposits or withdrawals of securities and for dealings in
such securities by the Depositor
CF / CCC
:
Certificate of fitness for occupation or certificate of completion and
compliance or its equivalent issued by the local authorities or principal
submitting person (whichever is applicable)
CMSA
:
Capital Markets and Services Act 2007, as may be amended from time
to time
Constitution
:
Constitution of our Company, as may be amended from time to time
COVID-19
:
Coronavirus disease 2019, an infectious disease which is a global
pandemic
Dato’ Roger Wong
:
Dato’ Roger Wong Ken Hong, our Promoter, Managing Director and
major shareholder
Depositor
:
A holder of a CDS Account
Directors
:
Directors of our Company and within the meaning given in Section 2 of
the CMSA
EBITDA
:
Earnings before interest, taxation, depreciation and amortisation
EIS
:
Employment Insurance Scheme
Electronic Prospectus
:
A copy of this Prospectus that is issued, circulated or disseminated via
the internet, and/or an electronic storage medium, including but not
limited to CD-ROMs (compact disc read-only memory)
Electronic Share
Application
:
An application for the Issue Shares through a Participating Financial
Institution’s ATM
Eligible Persons
:
Collectively, the eligible Directors and employees of our Group, and
other persons who have contributed to the success of our Group
EPF
:
Employees Provident Fund
xi
Registration No. 202201009353 (1455050-D)
DEFINITIONS (CONT’D)
EPS
:
Earnings per Share
Evergreen Group
:
Refers to Evergreen Marine Corp (Malaysia) Sdn Bhd and Evergreen
Shipping Agency (America) Corporation, which are part of the
Evergreen Marine Corp (Taiwan) Ltd group of companies
Executive Directors
:
Non-independent executive directors of our Company, which include
our Managing Director
FPE
:
Financial period ended / ending 30 June, as the case may be
FYE
:
Financial year ended / ending 31 December, as the case may be
Government
:
Government of Malaysia
GP
:
Gross profit
IFRS
:
International Financial Reporting Standards, as issued by the
International Accounting Standards Board
IMR or Protégé
:
Protégé Associates Sdn Bhd (Registration No. 200401037256
(675767-H)), the independent market researcher appointed for our IPO
IMR Report
:
The independent market research report titled “Strategic Analysis of
the Logistics Industry in Malaysia” prepared by Protégé
Internet Participating
Financial Institutions
:
Participating financial institutions for the Internet Share Application, as
listed in Section 16 of this Prospectus
Internet Share
Application
:
An application for the Issue Shares through an online share application
service provided by the Internet Participating Financial Institutions
IPO
:
Initial public offering of the IPO Shares in conjunction with the listing
and quotation of our entire enlarged issued share capital on the ACE
Market of Bursa Securities
IPO Price
:
RM[●] per IPO Share
IPO Shares
:
The Issue Shares and the Offer Shares, collectively
Issue Shares
:
79,661,800 new Shares to be issued by our Company pursuant to the
Public Issue
Issuing House or TIIH
:
Tricor Investor & Issuing House Services Sdn Bhd (Registration No.
197101000970 (11324-H))
KGW Shares or Shares
:
Ordinary shares in our Company
Listing
:
The admission of KGW to the Official List and the listing and quotation
of our entire enlarged issued share capital of RM[●] comprising
482,798,567 Shares on the ACE Market
Listing Requirements
:
ACE Market Listing Requirements of Bursa Securities, as amended
from time to time
LPD
:
30 September 2022, being the latest practicable date prior to the
issuance of this Prospectus
xii
Registration No. 202201009353 (1455050-D)
DEFINITIONS (CONT’D)
Malaysian Public
:
Malaysian citizens and companies, co-operatives, societies and
institutions incorporated or organised under the laws of Malaysia
Market Day
:
Any day(s) between Monday to Friday (both days inclusive) which is
not a public holiday and on which Bursa Securities is open for trading
in securities
MCCG
:
Malaysian Code on Corporate Governance issued by the SC
MCO
:
Movement Control Order
MFRS
:
Malaysian Financial Recording Standards, as issued by the Malaysian
Accounting Standards Board
MITI
:
Ministry of International Trade and Industry of Malaysia
MSC Group
:
Refers to our suppliers Mediterranean Shipping Company (Malaysia)
Sdn Bhd and Mediterranean Shipping Company USA Inc., which are
part of the Mediterranean Shipping Company S.A. group of companies
N/A
:
Not applicable or not available
NA
:
Net assets
NBV
:
Net book value
Offer for Sale
:
Offer for sale by the Selling Shareholders of 43,452,000 Offer Shares,
representing 9.00% of our enlarged total number of 482,798,567
issued Shares upon Listing, at the IPO Price comprising:
(i)
21,726,000 Offer Shares made available by way of private
placement to selected investors; and
(ii)
21,726,000 Offer Shares made available by way of private
placement to Bumiputera investors approved by the MITI
Offer Shares
:
43,452,000 existing Shares to be offered by the Selling Shareholders
pursuant to the Offer for Sale
Official List
:
A list specifying all securities which have been admitted for listing on,
and which have not been removed from, the ACE Market of Bursa
Securities
OOCL Group
:
Refers to our suppliers Orient Overseas Container Line (Malaysia) Sdn
Bhd and Orient Overseas Container Line Limited, which are
subsidiaries of Orient Overseas (International) Limited
:
Participating financial institutions for the Electronic Share Application,
as listed in Section 16 of this Prospectus
PAT
:
Profit after taxation
PBT
:
Profit before taxation
PE Multiple
:
Price-to-earnings multiple
Period Under Review
:
FYE 2019, FYE 2020, FYE 2021 and FPE 2022, collectively
Pink Form Allocation
:
The allocation of 9,656,000 Issue Shares to the Eligible Persons
Participating
Institutions
Financial
xiii
Registration No. 202201009353 (1455050-D)
DEFINITIONS (CONT’D)
Pink Form Shares
:
9,656,000 Issue Shares made available for application by the Eligible
Persons
Press Metal Group
:
Refers to our customers Press Metal Bintulu Sdn Bhd and Press Metal
Sarawak Sdn Bhd, which are subsidiaries of Press Metal Aluminium
Holdings Berhad
Promoters
:
Dato’ Roger Wong and Cheok Hui Yen, collectively
Prospectus
:
This Prospectus dated [●] in relation to our IPO
Public Issue
:
Public issue of 79,661,800 new Shares, representing 16.50% of our
enlarged total number of 482,798,567 issued Shares upon Listing, at
the IPO Price comprising:
(i)
24,140,000 Issue Shares made available for application by the
Malaysian Public via balloting;
(ii)
9,656,000 Issue Shares made available for application by the
Eligible Persons;
(iii)
7,241,800 Issue Shares made available by way of private
placement to selected investors; and
(iv)
38,624,000 Issue Shares made available by way of private
placement to Bumiputera investors approved by the MITI
QC
:
Quality control
QMS
:
Quality management system
Rules
:
Rules of Bursa Depository, as may be amended from time to time
SAC
:
Shariah Advisory Council of the SC
SC
:
Securities Commission Malaysia
Selling Shareholders
:
Dato’ Roger Wong, Cheok Hui Yen, Chow Enn Jie and Teoh Huey
Hong, collectively
Share Registrar
:
ShareWorks Sdn Bhd (Registration No. 199101019611 (229948-U))
SICDA or Central
Depositories Act
:
Securities Industry (Central Depositories) Act 1991, as may be
amended from time to time
SOCSO
:
Social Security Organisation, also known as PERKESO (Pertubuhan
Keselamatan Sosial)
Specified Shareholders
:
Dato’ Roger Wong, Datin Wong Wan Jye and Cheok Hui Yen,
collectively
sq. ft.
:
Square feet
sq. m.
:
Square metres
SST
:
Sales and service tax
xiv
Registration No. 202201009353 (1455050-D)
DEFINITIONS (CONT’D)
TA Securities or
Principal Adviser or
Sponsor or Underwriter
or Placement Agent
:
TA Securities Holdings Berhad (Registration No. 197301001467
(14948-M))
Target Property
:
A freehold 3-storey office building with an annexed 2-storey warehouse
bearing postal address No. 6, Jalan Pemaju U1/15, Seksyen U1,
Hicom Glenmarie Industrial Park, 40150 Shah Alam, Selangor Darul
Ehsan
Underwriting
Agreement
:
Underwriting agreement dated [●] entered into between our Company
and TA Securities for the purpose of our IPO
USA or US
:
United States of America
Yang Ming Group
:
Refers to our suppliers Yang Ming Line (M) Sdn Bhd and Yang Ming
Marine Transport Corp, which are part of the Yang Ming Marine
Transport Corp group of companies
RM and sen
:
Ringgit Malaysia and sen, respectively
AUD
:
Australian Dollar
EUR
:
Euro
GBP
:
British Pound
SGD
:
Singapore Dollar
USD
:
United States Dollar
CURRENCY
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
xv
Registration No. 202201009353 (1455050-D)
GLOSSARY OF TECHNICAL TERMS
This glossary contains explanation of certain terms used throughout this Prospectus in connection with
our Group and business operations. The terminologies and their meanings may not correspond to the
standard industry meanings or usage of these terms.
Air carrier
:
Within the context of this Prospectus, “air carrier” refers to an aircraft
operating carrier participating in the air shipment of cargo
Air waybill
:
An air consignment document issued by the air carrier with all the
details of the shipment involved that serves as a receipt, ownership and
transport agreement
Bill of lading
:
An ocean consignment document issued by the ocean carrier or
NVOCC with all the details of the shipment involved that serves as a
receipt, ownership and transport agreement
Cargo
:
Goods that are transported from one location to another on a vessel,
aircraft or truck on a commercial basis
Carrier
:
Within the context of this Prospectus, “carrier” refers to an organisation
engaged in transporting cargo for hire either by ocean or air
Consignee
:
The party that receives the cargo
Container
:
A standardised reusable shipping or freight container that is designed
to be used across different modes of transport, e.g. from vessel to truck
or from truck to rail, without having to unload and reload the cargo
within. The two most common container sizes used in international
trade are the 20-foot container and the 40-foot container
Containerised cargo
:
Refers to cargo that is packed into a container for transportation as a
single unit
Exporter
:
Within the context of this Prospectus, “exporter” refers to the actual
shipper that sends cargo to another country for sale
Freight forwarder
:
Within the context of this Prospectus, “freight forwarder” refers to a
service provider who organises the shipment of cargo on behalf of a
shipper or consignee, but the service provider itself is not the common
carrier responsible for transporting the cargo. Tasks undertaken by a
freight forwarder generally includes preparing and processing customs
and other shipping documentation, engaging and managing carriers
and other logistics service providers, and/or dealing with shippers,
consignees, carriers and other logistics service providers
Haulage
:
The transportation of cargo, usually containers, by road
Haulage companies
:
Within the context of this Prospectus, “haulage companies” refer to
companies that primarily transport cargo, usually containers, by road
Healthcare-related
products and devices
:
Within the context of this Prospectus, “healthcare-related products and
devices” refer to products and devices used for the improvement,
maintenance or prevention of deterioration of a person’s health, or to
diagnose and treat ill-health
Importer
:
Within the context of this Prospectus, “importer” refers to the actual
consignee that receives cargo purchased from another country
xvi
Registration No. 202201009353 (1455050-D)
GLOSSARY OF TECHNICAL TERMS (CONT’D)
Logistics services
:
Refers to the range of services facilitating the movement of goods from
a seller to a buyer within a supply chain. Logistics services include
those relating to, among others, physical transportation of goods,
organising the movement of goods, regulatory compliance and
clearance, and/or storage
MT
:
Metric tonne
Manifest
:
Refers to a document with a compilation of information on the goods
carried by a carrier along with details of the shipper and consignee, the
bill of lading, port of loading and port of discharge, as well as special
handling instructions, if any
NVOCC
:
Refers to non-vessel operating common carrier, which is an
organisation that performs the functions of an ocean carrier in an ocean
shipment but who does not own and/or operate its own vessel
Ocean carrier
:
Within the context of this Prospectus, “ocean carrier” refers to a vessel
operating carrier participating in the ocean shipment of cargo
Port of discharge
:
A port at the place of destination where cargo is unloaded from a vessel
or aircraft for onward transportation to the consignee. Within the
context of this Prospectus, “port of discharge” also refers to an airport
of destination for an air shipment
Port of loading
:
A port at the place of origin where cargo is loaded aboard a vessel or
aircraft for onward transportation to another location. Within the context
of this Prospectus, “port of loading” also refers to an airport of departure
for an air shipment
Shipment
:
The physical transportation of cargo from one location to another
Shipper
:
The party that sends the cargo
Stock-keeping unit
:
A unique code that identifies characteristics of each product, such as
brand, colour and size, used for the purpose of identifying and tracking
inventories
TEU
:
Twenty-foot equivalent unit, which is a unit of measurement based on
a 20-foot container used to indicate quantity of containers or its
equivalent. One 20-foot container is equivalent to one TEU, and one
40-foot container is equivalent to two TEU
Truck
:
A motorised vehicle used to transport cargo by road
xvii
Registration No. 202201009353 (1455050-D)
1.
CORPORATE DIRECTORY
BOARD OF DIRECTORS
Name
Designation
Address
Nationality
Tengku Faizwa Binti Independent NonTengku Razif (f)
Executive Chairman
15, Jalan 4H
Ampang Jaya
68000 Ampang
Selangor Darul Ehsan
Malaysian
Dato’ Roger Wong
Ken Hong
Managing Director
2A, Jalan PJU 1A/51B
Idaman Villas
47310 Petaling Jaya
Selangor Darul Ehsan
Malaysian
Cheok Hui Yen (f)
Executive Director
C-09-02, Block C
Damansara Suria Apartment
Taman KIP
52200 Kuala Lumpur
Wilayah Persekutuan Kuala
Lumpur
Malaysian
Lim Joo Seng (f)
Independent NonExecutive Director
8, Jalan BK 6B/11
Bandar Kinrara
47180 Puchong
Selangor Darul Ehsan
Malaysian
Lean Sze Yau
Independent NonExecutive Director
8, Jalan Puteri
3A Damansara Lagenda
47410 Petaling Jaya
Selangor Darul Eshan
Malaysian
Lee Li Choon (f)
Independent NonExecutive Director
17, Jalan Setia Tropika U13/20E
Setia Eco Park
40170 Shah Alam
Selangor Darul Ehsan
Malaysian
Note:
(f) refers to Female
1
Registration No. 202201009353 (1455050-D)
1.
CORPORATE DIRECTORY (CONT’D)
AUDIT AND RISK MANAGEMENT COMMITTEE
Name
Designation
Directorship
Lim Joo Seng
Chairman
Independent Non-Executive Director
Lean Sze Yau
Member
Independent Non-Executive Director
Lee Li Choon
Member
Independent Non-Executive Director
Name
Designation
Directorship
Lee Li Choon
Chairman
Independent Non-Executive Director
Lim Joo Seng
Member
Independent Non-Executive Director
Lean Sze Yau
Member
Independent Non-Executive Director
Name
Designation
Directorship
Lean Sze Yau
Chairman
Independent Non-Executive Director
Lim Joo Seng
Member
Independent Non-Executive Director
Lee Li Choon
Member
Independent Non-Executive Director
NOMINATION COMMITTEE
REMUNERATION COMMITTEE
2
Registration No. 202201009353 (1455050-D)
1.
CORPORATE DIRECTORY (CONT’D)
COMPANY SECRETARIES
:
Chen Wee Sam
Professional
Qualification
:
Licensed Company Secretary
(License No.: LS 0009709)
(SSM Practicing Certificate No.:
202008002853)
Thong Pui Yee
Professional
Qualification
:
Malaysia Institute of Chartered Secretaries
and Administrators
(Membership No. MAICSA 7067416)
(SSM Practicing Certificate No.:
202008000510)
No. 2-1, Jalan Sri Hartamas 8
Sri Hartamas
50480 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
REGISTERED OFFICE
:
:
:
: +603-6201 1120
D11-10-1 Block D11
Dana 1 Commercial Centre
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
Telephone No.
Email
Website
AUDITORS AND
REPORTING
ACCOUNTANTS
+603-6201 1120
No. 2-1, Jalan Sri Hartamas 8
Sri Hartamas
50480 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
HEAD OFFICE
:
: +603-7842 8899
: corporate@kgwlogistics.com
: www.kgwlogistics.com
Ecovis Malaysia PLT
(Registration No. 201404001750 (LLP0003185-LCA) & AF 001825)
No. 9-3, Jalan 109F
Plaza Danau 2
Taman Danau Desa
58100 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
:
+603-7981 1799
Partner-in-charge
Approval No.
Professional
Qualification
:
:
:
Pat Yin Lai
03073/12/2023 J
Chartered Accountant, Malaysian Institute
of Accountants (MIA) and Fellow of
Association
of
Chartered
Certified
Accountants (ACCA)
3
Registration No. 202201009353 (1455050-D)
1.
CORPORATE DIRECTORY (CONT’D)
PRINCIPAL ADVISER,
SPONSOR, UNDERWRITER
AND PLACEMENT AGENT
:
TA Securities Holdings Berhad
(Registration No. 197301001467 (14948-M))
29th Floor, Menara TA One
22, Jalan P. Ramlee
50250 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
FINANCIAL ADVISER
SOLICITORS FOR OUR IPO
:
:
Eco Asia Capital Advisory Sdn Bhd
(Registration No. 201801022562 (1284581-H))
Lot 1904, 19th Floor
Tower 1, Faber Towers
Jalan Desa Bahagia, Taman Desa
58100 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
: +603-7971 1822
Person-in-charge
Professional
Qualification
:
:
: +603-2283 2800
David Lai & Tan Advocates & Solicitors
Level 8-3 & 8-4, Wisma Miramas
No. 1, Jalan 2/190E, Taman Desa
Jalan Klang Lama
58100 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
INDEPENDENT MARKET
RESEARCHER
Khoo Chee Siang
Chartered Accountant, Fellow of the
Association of Chartered Certified
Accountants and Member of the Malaysian
Institute of Accountants
(MIA Membership No.: CA 21553)
Teh & Lee Advocates & Solicitors
A-3-3 & A-3-4
Northpoint Offices
Mid Valley City
No. 1, Medan Syed Putra Utara
59200 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
SOLICITORS FOR THE
PRINCIPAL ADVISER,
SPONSOR, UNDERWRITER
AND PLACEMENT AGENT
: +603-2072 1277
:
: +603-7972 7968
Protégé Associates Sdn Bhd
(Registration No. 200401037256 (675767-H))
Suite C-09-12, Plaza Mont Kiara
2, Jalan Kiara, Mont' Kiara
50480 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
: +603-6201 9301
Person-in-charge
Qualification
:
:
4
Seow Cheow Seng
Master in Business Administration from
Charles Sturt University, Australia and
Bachelor of Business majoring in Marketing
from RMIT University, Australia
Registration No. 202201009353 (1455050-D)
1.
CORPORATE DIRECTORY (CONT’D)
ISSUING HOUSE
:
Tricor Investor & Issuing House Services Sdn Bhd
(Registration No. 197101000970 (11324-H))
Unit 32-01, Level 32, Tower A
Vertical Business Suite, Avenue 3
Bangsar South
No. 8, Jalan Kerinchi
59200 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
SHARE REGISTRAR
:
: +603-2783 9299
ShareWorks Sdn Bhd
(Registration No. 199101019611 (229948-U))
No. 2-1, Jalan Sri Hartamas 8
Sri Hartamas
50480 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Telephone No.
: +603-6201 1120
LISTING SOUGHT
:
ACE Market of Bursa Securities
SHARIAH STATUS
:
[Approved by the SAC]
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
5
Registration No. 202201009353 (1455050-D)
2.
APPROVALS AND CONDITIONS
2.1
APPROVALS AND CONDITIONS
2.1.1
Bursa Securities
Bursa Securities had, vide its letter dated [●], approved our Listing. The approval from Bursa
Securities is subject to the following conditions:
No.
Details of conditions imposed
(i)
[●]
2.1.2
SC
Status of Compliance
[●]
Our Listing is an exempt transaction under Section 212(8) of the CMSA and is therefore not
subject to the approval of the SC.
The SC had, vide its letter dated [●], approved the resultant equity structure of our Company
pursuant to our Listing under the equity requirement for public listed companies, subject to the
following conditions:
No.
Details of conditions imposed
(i)
[●]
Status of Compliance
[●]
The SC had noted the effects of our Listing on the equity structure of our Company as follows:
Category of shareholders
As at the LPD
No. of Shares
Bumiputera
- Bumiputera investors to be
approved by MITI
- Bumiputera public investors
via balloting
- Others
Total Bumiputera
Non-Bumiputera
Malaysian
Foreigners
Total
%
After our Listing
No. of Shares
%
-
-
(1)60,350,000
12.50
-
-
(1)12,070,000
2.50
100
100
100
100.00
100.00
100.00
(2)500,000
0.10
15.10
84.90
100.00
100.00
72,920,000
409,878,567
482,798,567
482,798,567
Notes:
(1)
Based on the assumption that the Shares allocated to Bumiputera investors approved
by MITI and Bumiputera public investors via balloting shall be fully subscribed.
(2)
Based on the assumption that the Shares allocated to Tengku Faizwa Binti Tengku
Razif (Independent Non-Executive Chairman) under the Pink Form Allocation shall be
fully subscribed.
6
Registration No. 202201009353 (1455050-D)
2.
APPROVALS AND CONDITIONS (CONT’D)
2.1.3
MITI
MITI had, vide its letter dated [●], taken note of and has no objection to our Listing.
2.1.4
SAC
The SAC had, vide its letter dated [●], classified our Shares as Shariah-compliant securities
based on the latest audited combined financial statements of our Group for the FYE 2021.
2.2
MORATORIUM ON OUR SHARES
In compliance with Rule 3.19(1) of the Listing Requirements, a moratorium will be imposed on
the sale, transfer or assignment of Shares held by our Specified Shareholders as follows:
(i)
The moratorium applies to the entire shareholdings held by our Specified Shareholders
for a period of 6 months from the date of our admission to the Official List (“First 6Month Moratorium”);
(ii)
Upon the expiry of the First 6-Month Moratorium, we must ensure that our Specified
Shareholders’ aggregate shareholdings amounting to at least 45% of our total number
of issued Shares (adjusted for any bonus issue or subdivision of shares) remain under
moratorium for another period of 6 months (“Second 6-Month Moratorium”); and
(iii)
Upon the expiry of the Second 6-Month Moratorium, our Specified Shareholders may
sell, transfer or assign up to a maximum of one-third per annum (on a straight-line
basis) of their Shares held under moratorium.
In accordance with the Listing Requirements, a specified shareholder means a controlling
shareholder, a person connected with a controlling shareholder, and an executive director who
is a substantial shareholder, of our Company, or any other person as specified by Bursa
Securities.
The details of our Shares which will be subject to moratorium are as follows:
Specified Shareholders
Moratorium shares during the
First 6-Month Moratorium
No. of Shares
%(1)
Moratorium shares during the
Second 6-Month Moratorium
No. of Shares
%(1)
Dato’ Roger Wong
Cheok Hui Yen
Datin Wong Wan Jye(2)
294,741,817
33,713,359
1,123,500
61.05
6.98
0.24
194,959,380
22,299,976
-
40.38
4.62
-
Total
329,578,676
68.27
217,259,356
45.00
Specified Shareholders
Moratorium shares during
year 2 after our IPO
No. of Shares
%(1)
Moratorium shares during
year 3 after our IPO
No. of Shares
%(1)
Dato’ Roger Wong
Cheok Hui Yen
Datin Wong Wan Jye(2)
129,972,920
14,866,651
-
26.92
3.08
-
64,986,460
7,433,326
-
13.46
1.54
-
Total
144,839,571
30.00
72,419,786
15.00
Notes:
(1)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
(2)
Datin Wong Wan Jye is the spouse of our controlling shareholder, Dato’ Roger Wong,
hence a person connected with him and a specified shareholder.
7
Registration No. 202201009353 (1455050-D)
2.
APPROVALS AND CONDITIONS (CONT’D)
The moratorium has been fully accepted by our Specified Shareholders, who have provided
written undertakings that they will not sell, transfer or assign their shareholdings under
moratorium.
In addition, our other Shareholders who hold Shares prior to our IPO have provided their
undertakings not to sell, transfer or assign their entire shareholdings in our Company for a
period of 6 months from the date of our admission to the Official List as follows:
Shareholders
Purpose of moratorium
Chow Enn Jie(2)
Teoh Huey Hong(3)
Chan Sek Seng
Voluntary
Voluntary
In compliance with Rule 3.19A
of the Listing Requirements and
voluntary(4)
Total
No. of Shares
%(1)
19,092,128
9,890,463
1,123,500
3.96
2.03
0.24
30,106,091
6.23
Notes:
(1)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
(2)
Chow Enn Jie is our Sales and Marketing Director, primarily responsible for our Group’s
sales and marketing activities as well as the development and implementation of
marketing strategies. Further details of his profile are set out in Section 5.1.3(iii) of this
Prospectus.
(3)
Teoh Huey Hong is our Customer Care Director, primarily responsible for managing the
daily operations of our Group’s customer service department. Further details of her
profile are set out in Section 5.4.2(ii) of this Prospectus.
(4)
In accordance with Rule 3.19A of the Listing Requirements, the First 6-Month
Moratorium also applies to any investor who has acquired our Shares within 12 months
from the date of our submission of the listing application to Bursa Securities (“Bursa
Application Date”) and at a price lower than our IPO Price.
Chan Sek Seng (then an existing shareholder of KGW Medica with 550 shares)
subscribed for a total of 26,450 ordinary shares in KGW Medica on 25 January 2022
and 9 February 2022, i.e. within 12 months from the Bursa Application Date (“Pre-IPO
KGW Medica Shares”). Pursuant to the Acquisition of KGW Medica, 1,123,500 Shares
were issued to Chan Sek Seng, of which 1,100,614 Shares relate to the Pre-IPO KGW
Medica Shares. The 1,123,500 Shares were issued at an issue price of RM0.03 per
Share, which is lower than our IPO Price. As a result, 1,100,614 Shares held by Chan
Sek Seng is subject to Rule 3.19A of the Listing Requirements. Notwithstanding this,
Chan Sek Seng has voluntarily placed all his 1,123,500 Shares held upon our Listing
under moratorium.
Please refer to Section 6.1.2 of this Prospectus for further details on KGW Medica’s
new issues of shares in January and February 2022 as well as the Acquisition of KGW
Medica.
The moratorium restrictions are specifically endorsed on the share certificates representing
those Shares under moratorium held by our Specified Shareholders and other shareholders as
aforementioned to ensure that our Share Registrar does not register any transfer and sale that
are not in compliance with the aforesaid restriction imposed.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
8
Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY
THIS PROSPECTUS SUMMARY ONLY HIGHLIGHTS THE KEY INFORMATION FROM OTHER PARTS
OF THIS PROSPECTUS. IT DOES NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT
TO YOU. YOU SHOULD READ AND UNDERSTAND THE CONTENTS OF THE WHOLE PROSPECTUS
PRIOR TO DECIDING ON WHETHER TO INVEST IN OUR SHARES.
3.1
PRINCIPAL DETAILS RELATING TO OUR IPO
The following details relating to our IPO are derived from the full text of this Prospectus and should
be read in conjunction with that text.
Number of
IPO Shares
Allocation
Public Issue
Malaysian Public via balloting
Eligible Persons
Private placement to selected investors
Private placement to Bumiputera investors approved by the MITI
Offer for Sale
Private placement to selected investors
Private placement to Bumiputera investors approved by the MITI
Enlarged number of Shares upon Listing
IPO Price per Share
(2)
24,140,000
9,656,000
7,241,800
38,624,000
(1)
%
5.00
2.00
1.50
8.00
21,726,000
4.50
21,726,000
4.50
482,798,567
RM[●]
Market capitalisation (calculated based on the IPO Price and enlarged
RM[●]
number of Shares upon Listing)
Notes:
(1)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
(2)
12,070,000 Shares will be set aside strictly for Bumiputera public investors via public balloting.
Further details of our IPO are set out in Section 4.3.
In compliance with the Listing Requirements, a moratorium will be imposed on the sale, transfer or
assignment of Shares held by our Specified Shareholders (in compliance with Rule 3.19(1) of the
Listing Requirements) and Chan Sek Seng (in compliance with Rule 3.19A of the Listing
Requirements by virtue of his acquisition of the Pre-IPO KGW Medica Shares and on a voluntary
basis, as detailed in Section 2.2 of this Prospectus). In addition, Chow Enn Jie (our Sales and
Marketing Director) and Teoh Huey Hong (our Customer Care Director) have voluntarily placed their
Shares held upon our Listing under moratorium. Further details of these moratoriums are set out in
Section 2.2.
3.2
GROUP STRUCTURE AND BUSINESS MODEL
Our Company was incorporated in Malaysia on 14 March 2022 as a private limited company under
the name of KGW Group Sdn Bhd. On 7 October 2022, we converted into a public limited company
and assumed our current name.
Our group structure after our IPO (assuming that the Eligible Persons will fully subscribe for their
entitlement under the Pink Form Allocation and the Issue Shares made available for application by
Malaysian Public will be fully subscribed) is as follows:
9
Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
We are an investment holding company. Through our subsidiaries, we are principally involved in the
provision of logistics services (ocean freight services, air freight services and freight forwarding
services) as well as warehousing and distribution of healthcare-related products and devices. The
following diagram illustrates our Group’s principal activities:
Further details of our Group and business are set out in Sections 6 and 7 respectively.
3.3
COMPETITIVE STRENGTHS
Our competitive strengths are as follows:
(i)
We are a logistics services provider with a long track record of shipping to and from
the USA
Our Group provides ocean freight services specialising in shipping between Malaysia and
the USA. We first arranged ocean shipments from Malaysia to the USA in 2005. Since then,
we have accumulated approximately 17 years of track record in arranging and coordinating
ocean shipments between Malaysia and various ports in the USA. Beginning from 2010, we
also obtained our registration as a NVOCC with the United States Federal Maritime
Commission, which strengthened our positioning in the industry as a service provider
focusing on ocean shipments between Malaysia and the USA.
We believe that our long track record in arranging ocean shipments to and from the USA
will provide us with the platform to compete effectively and grow our business in the future.
(ii)
We have a diversified and growing customer base
We provide our logistics services to customers from a diversified range of industries. These
industries include, among others, metal products, rubber gloves and chemical products. Our
diversified customer base provides us with more business opportunities to grow our
business as we stand to benefit from the collective demand for logistics services of different
industries. By serving customers from different industries, we also believe that we are in a
better position to achieve sustainable business growth as our business performance will be
less susceptible to the downtrend of any single industry.
During the Period Under Review, we have continued to expand our customer base,
recording approximately 400 new customers in each financial year. For FYE 2019, FYE
2020, FYE 2021 and FPE 2022, we served 1,073, 1,123, 1,338, and 936 customers
(inclusive of new and returning customers) respectively. We believe that our ability to
continue attracting new customers is a testament to our experience in and knowledge of the
logistics industry as well as our reputation in the market.
10
Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
(iii)
Long-standing relationships with existing customers
In addition to our ability to attract new customers, the credibility of our services is evidenced
through our long-term business relationship with our customers, some of whom have been
with our Group for more than 10 years. We believe that this shows our ability to keep up
with the needs of our customers and providing them with the logistics services they require.
(iv)
We have an experienced key senior management team with strong industry expertise
and knowledge
Our key senior management team has substantial experience in their relevant fields and
has gained in-depth understanding and knowledge of our Group’s business operations.
They have played a vital role in promoting our growth and business expansion through their
commitment to our Group, and will continue to contribute to our growth in the future.
(v)
We have an established network of suppliers from different regions of the world
Since our inception in 2005, we have developed our network of suppliers from different
regions of the world. These suppliers include, among others, ocean carriers and freight
forwarders. By cooperating with these overseas suppliers, we are able to provide our
logistics services efficiently where our overseas suppliers will assist us in handling our
customers’ shipments in the respective countries without us having to set up operations in
the overseas countries.
As such, our network of suppliers provides us with the ability to arrange for cargo shipments
from Malaysia to various countries. Due to this, we are able to market our services to a
larger pool of potential customers as compared to a logistics services provider that is only
able to arrange for cargo shipments to a limited number of countries. We arranged for export
cargo shipments from Malaysia to 90, 92, 100 and 84 countries in the FYE 2019, FYE 2020,
FYE 2021 and FPE 2022 respectively.
Our established network of suppliers enables us to provide our services efficiently and
serves as a platform for us to further seize business opportunities for growth. This is
expected to help us to continuously expand our logistics services business.
Further details of our competitive strengths are set out in Section 7.16 of this Prospectus.
3.4
FUTURE PLANS AND BUSINESS STRATEGIES
Our future plans and business strategies are as follows:
(i)
Relocation to the Target Property to facilitate our business expansion
We expect to complete our purchase and renovation of the Target Property by the fourth
quarter of 2022 and the second quarter of 2023 respectively. We plan to relocate and
centralise our entire operations currently housed under multiple rented offices in Ara
Damansara to the Target Property by the third quarter of 2023.
Upon relocation, we plan to undertake the following to facilitate our business expansion:
(ii)
(i)
expansion of headcount to scale up operations;
(ii)
enhancement of warehouse facilities and capabilities; and
(iii)
offering warehousing services to our logistics services customers.
Expansion of warehousing and distribution services for healthcare-related products
and devices
We plan to expand on our provision of warehousing and distribution services for healthcarerelated products and devices mainly by expanding our customer base upon our relocation
to the Target Property.
11
Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
We intend to approach local businesses such as retail pharmacy chains, authorised
representatives of international healthcare companies, and SMEs involved in
manufacturing, retailing, and / or distribution of healthcare-related products and devices, to
offer our services. Our warehousing and distribution services can help these businesses to
streamline their operations and reduce operating costs as they would not need to incur
further ancillary costs of having to own and / or operate their own warehouse or to undertake
distribution of goods to their customers on their own.
We will leverage on our experience in the logistics industry, including our past experience
in providing warehousing and transportation services to our ocean / air freight customers,
to further develop and operate our warehousing and distribution business. This will be
further complemented by the experience of our personnel for this business segment in the
healthcare industry, which will lend support to our management and expansion of this
business segment.
(iii)
Development of new business opportunities for our logistics services through
providing e-commerce solutions
In consideration of the growth in the e-commerce market globally, there is potential for
Malaysian businesses to expand and sell their products to overseas buyers. We intend to
offer e-commerce solutions to assist Malaysian businesses in promoting their products
globally, initially focusing on the USA market through online business-to-consumer
marketplaces such as eBay or Amazon. Services to be offered include e-commerce store
setup for customers on various online marketplaces, e-commerce consultancy, ecommerce store management, and logistics services to ship their products to overseas
buyers.
Our business strategy of providing assistance to Malaysian businesses in establishing ecommerce channels is expected to complement our core business of providing logistics
services. Increasing the opportunity for Malaysian businesses to reach overseas customers
is envisaged to facilitate growth in cross-border trade activities, which will likely create
further opportunities for us to offer our logistics services (such as ocean / air freight services)
to these Malaysian businesses.
Further details of our future plans and business strategies are set out in Section 7.23.
3.5
RISK FACTORS
Before investing in our Shares, you should carefully consider, along with other matters in this
Prospectus, the risk factors as set out in Section 9. Some of the more important risk factors are
summarised below:
(i)
Our historical financial results may not be indicative of our future financial
performance, particularly considering that our financial results during the Period
Under Review were mainly attributable to the high ocean freight rates caused by the
COVID-19 pandemic
Our revenue is mainly derived from our ocean freight services for international shipments.
In providing ocean freight services for international shipments, our roles include sourcing
for ocean cargo space from ocean carriers to ship our customers’ cargo, for which we are
charged based on, among others, ocean freight rates set by ocean carriers. Ocean freight
charges represent the single largest cost component of our ocean freight services and one
of the key determinants of the pricing for our ocean freight services. As such, the pricing for
our ocean freight services and our revenue performance are closely linked to the prevailing
ocean freight rates set by ocean carriers.
Since the second half of 2020, global ocean freight rates had been on an upward trend
mainly due to a recovery in global economic activities after the initial outbreak of COVID-19
and the global supply chain disruptions caused by the COVID-19 pandemic. The rates only
began to drop by end of March 2022 when the global supply chain disruptions gradually
eased. This has led to, in general, an increase in the pricing for our ocean freight services
as well as improving revenue performance during the Period Under Review as follows:
12
Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
FYE 2019
FYE 2020
FYE 2021
FPE 2022
Total TEU of containers handled by us
13,742
17,242
17,106
7,697
Average ocean freight revenue per TEU (RM)
2,833
3,402
10,981
19,131
Revenue (RM’ million)
43.38
63.53
195.42
155.10
Please refer to Section 12.3 of this Prospectus for further information on our financial
performance for the Period Under Review.
Our historical financial performance during the Period Under Review only reflects our past
performance under particular conditions such as the global supply chain disruptions caused
by the COVID-19 pandemic, especially those for the FYE 2021 and FPE 2022 where our
average ocean freight revenue per TEU of container was at its highest since our
commencement of business operations in 2005. As such, our past performance does not
necessarily reflect our future financial performance, which will largely depend on, among
others, our capability to secure new orders, global trade volumes and the general
environment of the logistics industry. We may not be able to sustain our historical growth or
financial performance for various reasons including, among others, intense market
competition, adverse development in global economy and weak ocean freight rates.
Although we strive to build on and increase our business volume (i.e. the number of
containers handled by our ocean freight services) in the future to sustain or grow our
revenue, there can be no assurance that we will be able to generate the same level of
revenue and profitability as in the FYE 2021 and FPE 2022 as ocean freight rates have
since declined.
(ii)
Our business operations and financial performance may be adversely affected by
fluctuation in ocean freight rates
As our revenue is mainly derived from our ocean freight services for international shipments,
our business operations and financial performance are subject to the fluctuation in ocean
freight rates. Ocean freight charges accounted for approximately 72.32%, 75.55%, 89.47%
and 92.82% of our Group’s total cost of sales for FYE 2019, FYE 2020, FYE 2021 and FPE
2022, respectively. Fluctuation of ocean freight rates is an inherent risk of the logistics
industry, particularly those with major operations in ocean freight services like our Group.
We have been able to pass on most of the increases in ocean freight rates to our customers
during the Period Under Review, which enabled us to preserve our profit margin during the
same period. This can be seen from our Group’s GP margin, which has been hovering
between 14.19% and 16.88% throughout the Period Under Review. However, there can be
no assurance that future increases in ocean freight rates can always be passed to our
customers in order to preserve our profitability.
On the other hand, should there be a decrease in ocean freight rates, our Group may need
to follow suit and reduce the ocean freight rates charged to our customers accordingly, in
order to be in line with the prevailing market rate. This may lead to lower revenue and profits
for our Group if we are unable to increase our business volume to an extent that could
compensate the decrease in our revenue and profits caused by lower ocean freight rates.
As extracted from the IMR Report, ocean freight rates trend during the Period Under Review
and up to the date of this Prospectus is as follows:
Freight rates hovered between around USD1,400 (RM5,807) and USD1,600 (RM6,636) per
forty-foot equivalent unit of container (“FEU”) in December 2019 (RM4.1475 = USD1.00).
During the initial outbreak of the COVID-19 pandemic, freight rates remained around
USD1,500 (RM6,375) per FEU (RM4.2497 = USD1.00). Since the second half of 2020,
global freight rates had been on an upward trend with a recovery in global economic
activities after the initial outbreak of COVID-19 boosted demand for shipping. The
disruptions in the global supply chain caused by the pandemic further pushed up freight
rates in the following year. Freight rates reached a peak of more than USD10,000
(RM41,677) per FEU at end of September 2021 (RM4.1677 = USD1.00). While freight rates
continued to remain high in January and February 2022 at around USD9,400 (RM39,378)
per FEU (RM4.1892 = USD1.00), freight rates began to drop by end March 2022 to around
USD8,000 (RM33,606) per FEU (RM4.2007 = USD1.00). The subsequent high inflation and
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Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
resulting rising interest rates also affected consumer demand which also contributed to
lower shipping demand, thus lowering freight rates further. At the end of February 2023,
freight rates stood at around USD1,900 (RM8,309) per FEU (RM4.3734 = USD1.00). Note:
All foreign exchange rates are obtained from the average rate for the respective periods
based on rates from Bank Negara Malaysia. (Source: IMR Report)
Since mid-2022 up to the LPD, ocean freight rates have been volatile and decreasing. For
illustration, a comparison between the ocean freight rate per TEU of container for a
shipment from Port Klang, Malaysia to Port of Los Angeles and Port of New York and New
Jersey, USA respectively as at the LPD and the relevant historical ocean freight rates (all
based on the rate offered to us pursuant to our Carrier Service Contract with an ocean
carrier who has been one of our top 3 major suppliers for each of the year / period during
the Period Under Review) is as follows:
Difference(1) in ocean freight rate per TEU as at the LPD
as compared to that as at / for
30 June 2022(2)
FPE 2022(3)
FYE 2021(3)
FYE 2020(3)
FYE 2019(3)
From Port Klang to
Port of Los Angeles
-74.59%
-77.46%
-63.56%
-12.80%
58.48%
From Port Klang to
Port of New York and
New Jersey
-47.83%
-51.75%
-20.64%
70.19%
134.49%
Notes:
(1) A positive difference indicates that the ocean freight rate per TEU as at the LPD is
higher than the relevant historical rate for that particular historical point / period.
Conversely, a negative difference indicates that the ocean freight rate per TEU as at
the LPD is lower than the relevant historical rate for that particular historical point /
period.
(2)
Based on the rate as at 30 June 2022.
(3)
Based on daily average for the respective financial year / period.
As shown in the table above and generally, ocean freight rate for the Period Under Review
was at its lowest in FYE 2019 and increased in FYE 2020, FYE 2021 and part of FPE 2022.
It subsequently decreased during FPE 2022 and up to the LPD. Due to higher ocean freight
rates coupled with higher business volume, we achieved better financial performance in
FYE 2020 and FYE 2021 as compared to FYE 2019. Our financial performance continued
to be on the uptrend in the first half of FYE 2022, but we subsequently recorded lower
revenue and profit in the second half of FYE 2022 due to lower ocean freight rates as
well as lower business volume. Please refer to Section 12.3 of this Prospectus for further
details of our financial results during the Period Under Review.
We expect the ocean freight rates to remain volatile in the future. There can be no
assurance that our business operations and financial performance will not be adversely
affected by the continued volatility and fluctuation in ocean freight rates.
(iii)
We may not be able to successfully execute our future plans
Our Group plans to relocate and centralise our entire operations (i.e. office and warehouse)
at the Target Property by the third quarter of 2023 to facilitate our business expansion. We
also intend to offer in-house warehousing services to our logistics services customers and
develop new business opportunities for our logistics services through providing ecommerce solutions in the same quarter.
The future growth of our Group and the successful development of our future business
strategies are dependent on, amongst others, the timely and cost-effective renovation of
the Target Property, our ability to attract appropriate personnel to expand our headcount,
and our ability to market our services to potential customers.
There can be no assurance that we will be able to successfully implement our future plans
and business strategies. There can also be no assurance that in the event our future plans
14
Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
and business strategies have been implemented that they will be commercially successful.
As such, failure to execute our future plans and business strategies with success may
adversely affect our growth and financial performance.
(iv)
The demand for our logistics services and our business volume may be adversely
affected by an adverse development in global economy
Our Group’s revenue is predominantly generated from export shipments, which contributed
more than 85% to our Group’s revenue during the Period Under Review. Given the nature
of our Group’s business which focuses on export shipments, our business volume and the
performance of our Group are dependent on the performance of Malaysia’s export trades.
In this respect, the performance of Malaysia’s export trade is dependent on various factors
including, foreign demand for goods produced in Malaysia, which is in turn dependent on
the condition and performance of the global economy. As such, the demand for our logistics
services and our business volume generally change according to the level of global trade
activities and performance of the global economy.
(v)
Our business operations and financial performance are subject to the availability of
cargo space to meet our customers’ shipping requirements
We do not have any contractual arrangement for procuring ocean cargo space for
destinations other than USA or Canada or for procuring air cargo space.
Save for those under our annual Carrier Service Contracts, cargo space is offered to us by
our suppliers on a first-come-first-served basis at the point of us making booking request.
Due to this reason, there is no assurance that we will be able to procure sufficient amount
of cargo space to meet our customers’ shipping requirements from time to time.
(vi)
We are dependent on our suppliers for secure and efficient shipment of our
customers’ cargo
Due to our nature of business, we are dependent upon our relationship with our suppliers
including ocean carriers, licensed customs agents and other freight forwarders to enable us
to arrange and coordinate shipments for our customers’ cargo. A secure and efficient
shipment of our customers’ cargo to meet their delivery requirements is therefore dependent
on the timely performance and quality of the respective services provided by our suppliers.
As such, we may be affected by non-performance, late performance or poor performance
by our suppliers. Poor quality services of our suppliers or any interruption of services
provided by our suppliers may have an adverse impact on our reputation, business
operations and financial performance.
(vii)
We are dependent on other freight forwarders for business
Our revenue generated from our provision of logistics services to other freight forwarders,
both local and foreign, accounted for approximately 29.10%, 28.97%, 36.81% and 27.36%
of our total revenue in FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively. In this
regard, our business performance is dependent on these freight forwarders’ ability to market
their services. Any material deterioration in the business performance of these freight
forwarders may result in a decrease in their demand for our services, which could have a
material adverse impact on our business operations and financial performance.
(viii)
We are subject to the risk of fluctuation in foreign exchange rates
Our Group’s revenue is mainly derived from our ocean freight services for international
shipments. Quotes from our suppliers for ocean cargo space are usually in USD and some
of our customers pay us in USD. As we are unable to estimate the movement of foreign
exchange rates and its impact on our revenue and purchases in USD, any significant
fluctuation in the exchange rate of USD into RM or vice versa may have a significant impact,
whether positive or negative, on our financial performance.
(ix)
We do not have long-term contracts with our customers for our logistics services
We do not have any long-term contracts with our customers for our logistics services as we
are engaged by them on an as-needed basis. This is mainly due to the nature of our
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Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
business where the demand for our logistics services is subject to our customers’ needs for
shipping their goods as and when required depending on the orders secured. The absence
of long-term contracts may result in the fluctuation of our Group’s sales and result in
uncertainties over our financial performance.
(x)
We are dependent on the experience and expertise of our Executive Directors and
key senior management for the continuing success of our Group
Most of our Executive Directors and key senior management have over 10 years of
experience in the logistics industry and are familiar with our business operations. Any loss
of service from our Executive Directors or any of our key senior management without any
suitable or timely replacement may affect the execution and implementation of our business
strategies.
(xi)
We may face inadequacy of insurance coverage
The cargos we arrange are subject to the risks of cargo loss or damage caused by factors
beyond our control. As such, it may result in claims for damages by our customers against
us. In addition, our offices and warehouse may be exposed to the risk of burglary, fire and
flood which may cause disruption to our business operations and adversely affect our
financial performance. In order to minimise our potential financial losses, we maintain
insurance coverage for our customers’ cargo and our business premises.
Further details of our risk factors are set out in Section 9.
3.6
DIRECTORS AND KEY SENIOR MANAGEMENT
Our Directors and key senior management are as follows:
Name
Directors
Tengku Faizwa Binti Tengku Razif (f)
Dato’ Roger Wong
Cheok Hui Yen (f)
Lim Joo Seng (f)
Lean Sze Yau
Lee Li Choon (f)
Designation
Independent Non-Executive Chairman
Managing Director
Executive Director / Chief Operating Officer
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Key Senior Management
Wendy Kam
Teoh Huey Hong
Chow Enn Jie
Chief Financial Officer
Customer Care Director
Sales and Marketing Director
Further details of our Directors and key senior management are set out in Section 5.
3.7
PROMOTERS AND SUBSTANTIAL SHAREHOLDERS
The shareholdings of our Promoters and substantial shareholders in our Company (who are
Malaysians) before and after our IPO are set out below:
Before the IPO / As at the LPD
Direct
Indirect
No. of
No. of
(1)
Shares
%
Shares
Name
Promoters and
substantial shareholders
Dato’ Roger Wong
Cheok Hui Yen
330,572,167
37,811,733
82.00
9.38
Substantial shareholder
Chow Enn Jie
21,413,067
5.31
(3)
(1)
%
1,123,500
-
0.28
-
-
-
16
After the IPO(2)
Direct
Indirect
No. of
No. of
(2)
Shares
%
Shares
294,741,817 61.05
33,713,359 6.98
19,092,128
3.96
(3)
(2)
%
1,123,500 0.24
-
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Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
Notes:
(1)
Based on our issued share capital of 403,136,767 Shares after the Acquisitions but before
our IPO / as at the LPD.
(2)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
(3)
Deemed interested by virtue of his spouse’s interest pursuant to Section 8 of the Act.
Further details of our Promoters and substantial shareholders are set out in Section 5.
3.8
UTILISATION OF PROCEEDS
The gross proceeds of RM[●] million raised by our Company from our Public Issue are intended to
be used in the following manner:
Gross
proceeds
RM’000
[●]
[●]
[●]
[●]
[●]
Details of utilisation
Renovation of the Target Property
Repayment of bank borrowing
Working capital
Estimated listing expenses
Total
%
[●]
[●]
[●]
[●]
100.00
Estimated timeframe
for utilisation upon
Listing
Within 12 months
Within 3 months
Within 12 months
Within 1 month
Further details of our utilisation of proceeds is set out in Section 4.8.
3.9
FINANCIAL AND OPERATIONAL HIGHLIGHTS
The following table sets out the key financial and operational highlights of our Group for the Period
Under Review:
Financial
Revenue
GP
PBT
PAT
FYE 2019
RM’000
Audited
FYE 2020
RM’000
FYE 2021
RM’000
Unaudited
FPE 2021
RM’000
Audited
FPE 2022
RM’000
43,379
6,646
608
349
63,525
9,012
2,864
2,176
195,419
32,995
20,751
15,758
67,997
10,912
6,173
4,671
155,102
24,682
19,032
14,458
FYE 2019
RM’000
Audited
FYE 2020
RM’000
FYE 2021
RM’000
Unaudited
FPE 2021
RM’000
Audited
FPE 2022
RM’000
15.32
1.40
0.80
0.07
14.19
4.51
3.43
0.45
16.88
10.62
8.06
3.26
16.05
9.08
6.87
0.97
15.91
12.27
9.32
2.99
GP margin (%)(1)
PBT margin (%)(2)
PAT margin (%)(3)
Basic / diluted EPS (sen)(4)
Operational
Unit
Ocean freight (containerised cargo)
Ocean freight (over-sized noncontainerised cargo)
Air freight
Freight forwarding
FYE
2019
FYE
2020
FYE
2021
TEU
Tonnes
13,742
-
17,242
-
17,106
-
9,634
-
7,697
1,980
MT
Job
190
4,428
81
5,021
91
5,641
76
3,174
45
2,546
17
FPE
2021
FPE
2022
Registration No. 202201009353 (1455050-D)
3.
PROSPECTUS SUMMARY (CONT’D)
Revenue per TEU
FYE 2019
FYE 2020
FYE 2021
FPE 2021
FPE 2022
Ocean freight
Increase / Decrease
from previous year /
period
RM2,833
-
RM3,402
RM569
(20.08%)
RM10,981
RM7,579
(222.78%)
RM6,711
-
RM19,131
RM12,420
(185.07%)
Air freight
Increase / Decrease
from previous year /
period
RM10,741
-
RM23,353
RM12,612
(117.42%)
RM20,764
-RM2,589
(-11.09%)
RM15,780
-
RM18,836
RM3,056
(19.37%)
Notes:
(1)
GP margin is computed based on our GP over revenue.
(2)
PBT margin is computed based on our PBT over revenue.
(3)
PAT margin is computed based on our PAT over revenue.
(4)
Computed based on PAT attributable to owners of the Group divided by our enlarged
number of Shares in issue after our IPO. The diluted EPS is equal to the basic EPS as there
were no potential dilutive ordinary shares outstanding at the end of the respective financial
year / period.
Further details of our financial information is set out in Section 12.
3.10
DIVIDEND POLICY
We currently do not have a fixed dividend policy. Our ability to distribute dividends or make other
distributions to shareholders is subject to various factors, such as profits recorded and excess of
funds not required to be retained for working capital of our business.
Our ability to declare and pay dividends is subject to the discretion of the Board. However, the
intention to recommend dividends should not be treated as a legal obligation to do so. The level of
dividends should also not be treated as an indication of our future dividend policy.
Further details on our dividend policy is set out in Section 12.14.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
18
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO
4.1
OPENING AND CLOSING OF APPLICATION PERIOD
The Application period will open at 10.00 a.m. on [●] and will remain open until 5.00 p.m. on [●].
LATE APPLICATION WILL NOT BE ACCEPTED.
4.2
INDICATIVE TIMETABLE
Events
Tentative Dates
Opening of the Application period for our IPO
[●]
Closing of the Application period for our IPO
[●]
Balloting of the Applications
[●]
Allotment / Transfer of IPO Shares to successful applicants
[●]
Listing on the ACE Market
[●]
In the event where there is any change to the indicative timetable above, we will advertise a
notice of change in a widely circulated English and Bahasa Malaysia daily newspapers in
Malaysia and will make announcement on Bursa Securities’ website.
4.3
DETAILS OF OUR IPO
Our IPO is subject to the terms and conditions of this Prospectus and upon acceptance, our
IPO Shares are expected to be allocated in the manner described below, subject to the
clawback and reallocation provisions set out in Section 4.3.4 of this Prospectus:
Public Issue
(i) Malaysian Public via balloting
(ii) Eligible Persons
(iii) Private placement to selected investors
(iv) Private placement to Bumiputera investors
approved by the MITI
Offer for Sale
(i) Private placement to selected investors
(ii) Private placement to Bumiputera investors
approved by the MITI
Total
Number of
IPO Shares
Percentage of our
enlarged issued
share capital (%)
24,140,000
9,656,000
7,241,800
38,624,000
5.00
2.00
1.50
8.00
79,661,800
16.50
21,726,000
21,726,000
4.50
4.50
43,452,000
9.00
123,113,800
25.50
The basis of allocation of our IPO Shares shall take into account the desirability of distributing
our IPO Shares to a reasonable number of applicants to broaden the shareholding base of our
Company to meet the public spread requirements, and to establish a liquid and adequate
market for our Shares. Applicants will be selected in a fair and equitable manner to be
determined by our Board.
To the best of our knowledge and belief, there is no person who intends to subscribe for more
than 5% of our IPO Shares.
19
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
4.3.1
Public Issue
Our Public Issue of 79,661,800 Issue Shares representing approximately 16.50% of our
enlarged issued share capital, at the IPO Price will be made available in the following manner:
(i)
Malaysian Public via balloting
24,140,000 Issue Shares representing approximately 5.00% of our enlarged issued
share capital will be made available for application by the Malaysian Public via
balloting, of which at least 50.00% is to be set aside for Bumiputera investors. Any
Issue Shares not subscribed for by Bumiputera investors will be made available for
application by the other Malaysian Public via balloting.
(ii)
Eligible Persons
9,656,000 Issue Shares representing approximately 2.00% of our enlarged issued
share capital will be made available for application by our Eligible Persons in
recognition of their efforts and supports to our Group.
A total of 41 persons are eligible for the Pink Form Allocation, comprising the following:
Number of
Eligible
Persons
Eligibility
Aggregate
number of
Issue Shares
allocated
Eligible Directors(1)
4
2,000,000
Eligible employees of our Group(2)
23
6,256,000
Persons who have contributed to our success(3)
14
1,400,000
Total
41
9,656,000
The above allocation is subject to the Eligible Persons subscribing to their respective
allocations. The entitlements which are not accepted by any Eligible Persons will be reallocated to the other Eligible Persons at the discretion of our Board.
Notes:
(1)
The criteria for allocation to our eligible Directors are based on their respective
roles and responsibilities as well as their contribution to our Group. The number
of Pink Form Shares to be allocated to our eligible Directors are as follows:
Name / Designation
Number of Pink Form Shares
Tengku Faizwa Binti Tengku Razif /
Independent Non-Executive Chairman
500,000
Lim Joo Seng /
Independent Non-Executive Director
500,000
Lean Sze Yau /
Independent Non-Executive Director
500,000
Lee Li Choon /
Independent Non-Executive Director
500,000
Total
2,000,000
20
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
(2)
The criteria for allocation to our eligible employees (as approved by our Board)
are based on the following factors:
(i)
The eligible employee must be a full-time and confirmed employee and
on the payroll of our Group;
(ii)
The number of Pink Form Shares allocated to our eligible employees
are based on their seniority, position, length of service and/or their
respective contribution to our Group as well as other factors deemed
relevant by our Board; and
(iii)
The eligible employee must be at least 18 years of age.
The number of Pink Form Shares allocated under this category is inclusive of
the allocation to Wendy Kam, our Chief Financial Officer and a key senior
management, of 750,000 Pink Form Shares. Our other key senior
management have opted not to participate in the Pink Form Allocations as they
are already our shareholders.
(3)
The criteria for allocation to the persons who have contributed to our success
(as approved by our Board) are based on, amongst others, their contribution
and support to the growth of our Group, as well as the length of their
relationship with us. The persons who have contributed to the success of our
Group include our customers and suppliers.
Eligible Persons who subscribe for Pink Form Shares under this Section 4.3.1(ii) may
also apply for the Issue Shares made available for the Malaysian Public via balloting
under Section 4.3.1(i) above. Save for the Pink Form Allocations made available for
application by the Eligible Persons, it is not known to our Company as to whether any
of our substantial shareholders, Directors or key senior management have the intention
to apply for the Issue Shares made available for the Malaysian Public via balloting.
(iii)
Private placement to selected investors
7,241,800 Issue Shares representing approximately 1.50% of our enlarged issued
share capital will be made available by way of private placement to selected investors.
(iv)
Private placement to Bumiputera investors approved by the MITI
38,624,000 Issue Shares representing approximately 8.00% of our enlarged issued
share capital will be made available by way of private placement to Bumiputera
investors approved by the MITI.
The basis of allocation of our Issue Shares shall take into account the distribution of the Issue
Shares to a reasonable number of applicants to broaden our Company’s shareholding base to
meet the public spread requirements and to establish a liquid market for our Shares. Applicants
will be selected in a fair and equitable manner to be determined by our Directors. There is no
over-allotment or ‘greenshoe’ option that will increase the number of our Issue Shares.
Our Public Issue is subject to the terms and conditions of this Prospectus.
21
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
4.3.2
Offer for Sale
Our Selling Shareholders will undertake an offer for sale of 43,452,000 Offer Shares, representing approximately 9.00% of our enlarged issued share
capital at the IPO Price as follows:
(i)
21,726,000 Offer Shares representing approximately 4.50% of our enlarged issued share capital, will be made available by way of private
placement to selected investors; and
(ii)
21,726,000 Offer Shares representing approximately 4.50% of our enlarged issued share capital, will be made available by way of private
placement to Bumiputera investors approved by the MITI.
Details of our Selling Shareholders are set out below:
Name
Nature of
relationship with
our Group
Shareholdings
before IPO and as at
the LPD
No. of Shares
%(1)
Offer for Sale
No. of Shares
%(1)
%(2)
Shareholdings
after IPO
No. of Shares
%(2)
Dato’ Roger Wong
2A, Jalan PJU 1A/51B, Idaman Villas
47310 Petaling Jaya
Selangor Darul Ehsan
Promoter, substantial
shareholder and
Managing Director
330,572,167
82.00
35,830,350
8.89
7.42
294,741,817
61.05
Cheok Hui Yen
C-09-02, Block C
Damansara Suria Apartment, Taman KIP
52200 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Promoter, substantial
shareholder and
Executive Director
37,811,733
9.38
4,098,374
1.02
0.85
33,713,359
6.98
Chow Enn Jie
44, Jalan 44/38A
Taman Sri Bintang, Kepong
52100 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Substantial
shareholder and key
senior management
21,413,067
5.31
2,320,939
0.58
0.48
19,092,128
3.96
Teoh Huey Hong
B-19-6 Verve Suite
Jalan Kiara 5, Mont Kiara
51200 Kuala Lumpur
Wilayah Persekutuan Kuala Lumpur
Key senior
management
11,092,800
2.75
1,202,337
0.30
0.25
9,890,463
2.03
22
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
Notes:
(1)
Based on our issued share capital of 403,136,767 Shares after the Acquisitions and
as at the LPD.
(2)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
The Offer for Sale is expected to raise gross proceeds of approximately RM[●] which will accrue
entirely to the Selling Shareholders and we will not receive any of the proceeds. The Selling
Shareholders shall bear all expenses such as stamp duty, placement fees, registration and
share transfer fee relating to the Offer Shares, the aggregate of which is estimated to be
approximately RM[●].
The Offer for Sale is subject to the terms and conditions of this Prospectus.
Further details of our Selling Shareholders, who are also our Promoters, substantial
shareholders, Directors and/or key senior management, are set out in Sections 5.1.3 and 5.4.2
of this Prospectus.
4.3.3
Underwriting arrangement
The 24,140,000 Issue Shares made available for application by the Malaysian Public via
balloting as well as the 9,656,000 Issue Shares under the Pink Form Allocations have been
fully underwritten.
The 7,241,800 Issue Shares and 21,726,000 Offer Shares made available for private placement
to selected investors, and the 38,624,000 Issue Shares and 21,726,000 Offer Shares made
available for private placement to Bumiputera investors approved by the MITI are not
underwritten as our Placement Agent has obtained / will obtain irrevocable undertakings from
these investors to subscribe for the aforementioned Issue Shares and Offer Shares.
4.3.4
Clawback and reallocation
(i)
Issue Shares for the Malaysian Public via balloting
If any Issue Shares allocated to the Malaysian Public via balloting under Section 4.3.1(i)
of this Prospectus are not fully subscribed, the balance portion will be allocated in the
following order:
(ii)
(a)
Firstly, to our Eligible Persons as described in Section 4.3.1(ii) of this
Prospectus;
(b)
Secondly, any remaining portion will be made available by way of private
placement to selected investors under Section 4.3.1(iii) of this Prospectus; and
(c)
Finally, any remaining Issue Shares thereafter will be subscribed by our
Underwriter, subject to the terms and conditions of the Underwriting
Agreement.
Pink Form Shares for our Eligible Persons
If any Issue Shares allocated to our Eligible Persons under Section 4.3.1(ii) of this
Prospectus are not fully subscribed, the balance portion will be allocated in the
following order:
(a)
Firstly, to other Eligible Persons;
23
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
(iii)
(b)
Secondly, any remaining portion will be made available for application by the
Malaysian Public via balloting and/or by way of private placement to selected
investors under Sections 4.3.1(i) and 4.3.1(iii) of this Prospectus respectively;
and
(c)
Finally, any remaining Issue Shares thereafter will be subscribed by our
Underwriter, subject to the terms and conditions of the Underwriting
Agreement.
Issue Shares and Offer Shares by way of private placement to selected investors
If any Issue Shares and/or Offer Shares allocated to selected investors under Sections
4.3.1(iii) and 4.3.2(i) of this Prospectus are not fully subscribed, the balance portion will
be made available for application by the Malaysian Public via balloting under Section
4.3.1(i) of this Prospectus.
(iv)
Issue Shares and Offer Shares by way of private placement to Bumiputera
investors approved by the MITI
If any Issue Shares and/or Offer Shares allocated to Bumiputera investors approved
by the MITI under Sections 4.3.1(iv) and 4.3.2(ii) of this Prospectus are not fully
subscribed, the balance portion will be allocated in the following order:
4.3.5
(a)
Firstly, by way of private placement to selected investors under Sections
4.3.1(iii) and/or 4.3.2(i) of this Prospectus (whom are institutional investors);
(b)
Secondly, any remaining portion will be made available for application by
Bumiputera Malaysian Public via balloting under Section 4.3.1(i) of this
Prospectus;
(c)
Thirdly, any remaining portion thereafter will be made available for application
by other Malaysian Public via balloting under Section 4.3.1(i) of this
Prospectus; and
(d)
Finally, any remaining portion thereafter will be made available by way of
private placement to selected investors under Sections 4.3.1(iii) and/or 4.3.2(i)
of this Prospectus.
Price stabilisation mechanism
We will not be employing any price stabilisation mechanism that may be employed in
accordance with the Capital Markets and Services (Price Stabilization Mechanism) Regulations
2008 for our IPO.
4.3.6
Minimum level of subscription
There is no minimum subscription to be raised from our IPO. However, the minimum
subscription in terms of the number of IPO Shares will be the number of IPO Shares required
to be held by public shareholders for our Company to comply with the public shareholding
requirements as per the Listing Requirements or as approved by Bursa Securities.
Pursuant to the Listing Requirements, at least 25.00% of our enlarged issued share capital
must be held by a minimum number of 200 public shareholders holding not less than 100
Shares each at the time of our Listing. We expect to meet the public shareholding requirements
through a combination of the balloting process and the private placement exercise.
If we do not meet the public shareholding requirements, we may not be allowed to proceed with
our Listing. In such an event, all monies paid in respect of all applications for our IPO Shares
will be returned in full without interest. If any such monies are not repaid within 14 days after
we become liable to repay it, the provision of Section 243(2) of the CMSA shall apply
accordingly.
24
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
4.4
SHARE CAPITAL AND MARKET CAPITALISATION UPON LISTING
Upon completion of our IPO, our issued share capital will be as follows:
Details
Issued share capital
As at the date of this Prospectus
To be issued under our Public Issue
Enlarged issued share capital upon our Listing
No. of Shares
RM
403,136,767
79,661,800
482,798,567
12,094,110
[●]
[●]
Our Offer for Sale will not have any effect on our issued share capital.
As at the date of this Prospectus, we only have one class of share, being ordinary shares, all
of which rank equally with each other. Our Issue Shares will, upon allotment and issue, rank
equally in all respects with our existing Shares in issue, including voting rights and rights to all
dividends and distributions that may be declared, the entitlement date of which is subsequent
to the allotment date of our Issue Shares.
Our Offer Shares rank equally in all respects with our existing Shares in issue, including voting
rights and rights to all dividends and distributions that may be declared, the entitlement date of
which is subsequent to the transfer date of our Offer Shares.
Subject to any special rights attaching to any Shares which may be issued by us in the future,
our shareholders shall, in proportion to the amount of Shares held by them, be entitled to share
in the whole of the profits paid out by us as dividends and other distributions. In relation to any
surplus in the event of our liquidation, such surplus is to be distributed amongst our
shareholders in proportion to our issued share capital at the commencement of the liquidation,
in accordance with our Constitution and provisions of the Act.
At our general meeting, each shareholder who is entitled to vote may vote in person or by proxy
or by attorney or by duly authorised representative. Subject to the Listing Requirements, any
resolution put to vote in the meeting shall be decided by way of poll. On a vote by way of poll,
each shareholder present either in person or by proxy, or attorney, or other duly authorised
representative shall have one vote for each Share held or represented. On a vote by show of
hands, each shareholder present either in person or by proxy, or attorney, or other duly
authorised representative shall have one vote. A proxy may, but need not be, a shareholder of
our Company.
Based on our IPO Price and enlarged issued share capital of 482,798,567 Shares upon Listing,
our total market capitalisation will be RM[●].
4.5
OBJECTIVES OF OUR IPO
The objectives of our IPO are as follows:
(a)
to enable our Group to raise funds for the purposes specified in Section 4.8 of this
Prospectus;
(b)
to gain recognition through our listing status which will enhance our Group’s reputation
and facilitate the marketing of our services, expansion of our customer base, retention of
our employees and attraction of new talents in the industry that we operate in;
(c)
to provide an opportunity for the Malaysian Public, including our eligible Directors and
employees to participate in our equity and continuing growth; and
25
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
(d)
4.6
to enable us to tap into the equity capital market for future fund raising and to provide us
the financial flexibility to pursue future growth opportunities as and when these
opportunities arise, through other forms of capital raising avenue, such as rights issue
and private placement.
BASIS OF ARRIVING AT THE IPO PRICE
The IPO Price was determined after taking into consideration, amongst others, the following
factors:
(i)
Our Group’s business overview and history and financial performance as described in
Sections 7.1 and 12.1.1 of this Prospectus, respectively;
(ii)
Our pro forma combined NA per Share of approximately RM[●], computed based on
our Group’s pro forma combined NA of approximately RM[●] as at 30 June 2022 after
taking into consideration our Public Issue and utilisation of proceeds and our enlarged
issued share capital of 482,798,567 Shares upon Listing;
(iii)
Our EPS of approximately RM0.0326, computed based on our Group’s audited
combined PAT of approximately RM15.76 million for the FYE 2021 and our enlarged
issued share capital of 482,798,567 Shares upon Listing, translating to a PE multiple
of [●] times based on our IPO Price of RM[●] per Share. For information, we recorded
an audited combined PAT of approximately RM14.46 million for the FPE 2022;
(iv)
Our competitive strengths as set out in Section 7.16 of this Prospectus; and
(v)
Our future plans and business strategies as set out in Section 7.23 of this Prospectus.
You should note that the market price of our Shares upon and subsequent to our Listing
is subject to the vagaries of market forces and other uncertainties, which may affect the
trading price of our Shares. You should form your own views on the valuation of the IPO
Shares before deciding to invest in our Shares. You are reminded to consider the Risk
Factors set out in Section 9 of this Prospectus before deciding to invest in our Shares.
4.7
DILUTION
Dilution is the amount by which our IPO Price exceeds our pro forma combined NA per Share
immediately after our IPO. The following table illustrates such dilution on a per Share basis:
RM
[●]
IPO Price
Pro forma combined NA per Share as at 30 June 2022 after the Acquisitions
and before Public Issue
0.07
Pro forma combined NA per Share after Public Issue and utilisation of proceeds
[●]
Increase in pro forma combined NA per Share attributable to existing
shareholders
[●]
Dilution in pro forma combined NA per Share to new investors
[●]
Dilution in pro forma combined NA per Share as a percentage of our IPO Price
[●]
Further details of our pro forma combined NA per Share as at 30 June 2022 is set out in Section
14 of this Prospectus.
26
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
Save as disclosed below, there is no substantial disparity between our IPO Price and the
effective cash cost to our substantial shareholders, Directors and/or key senior management,
or persons connected with them for any of our Shares acquired by them in any transaction from
the date of our incorporation up to the date of this Prospectus:
Substantial shareholders and/or Directors
Dato’ Roger Wong
Cheok Hui Yen
Chow Enn Jie
Person connected with a substantial
shareholder and Director
Datin Wong Wan Jye(3)
Key senior management
Teoh Huey Hong
No. of Shares
held before
our IPO
Total
consideration
(RM)
Effective cash
cost per Share
(RM)
(1)330,572,167
(4)9,917,172
(2)37,811,733
(5)1,134,352
(2)21,413,067
(5)642,392
0.03
0.03
0.03
(2)1,123,500
(5)33,705
0.03
(2)11,092,800
(5)332,784
0.03
Notes:
(1)
Being Shares issued pursuant to the Acquisitions and 100 subscriber shares issued
upon the incorporation of our Company.
(2)
Being Shares issued pursuant to the Acquisitions.
(3)
Spouse of Dato’ Roger Wong.
(4)
Calculated based on the total purchase consideration for the Acquisitions attributable
to him and the RM10 paid for the 100 subscriber shares.
(5)
Calculated based on the total purchase consideration for the Acquisitions attributable
to him / her.
As at the date of this Prospectus, save for the Pink Form Allocations, there is no outstanding
right granted to anyone to acquire our Shares. The Pink Form Allocations are based on our IPO
Price.
4.8
UTILISATION OF PROCEEDS FROM OUR IPO
Based on our IPO Price, we will raise gross proceeds of RM[●] from our Public Issue. The gross
proceeds raised are intended to be used in the following manner:
Gross
proceeds
RM’000
%
Estimated timeframe
for utilisation upon
Listing
Renovation of the Target Property
[●]
1[●]
Within 12 months
Repayment of bank borrowing
[●]
[●]
Within 3 months
Working capital
[●]
[●]
Within 12 months
Estimated listing expenses
[●]
[●]
Within 1 month
Total
[●]
100.00
Details of utilisation
27
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
Pending the eventual utilisation of our Public Issue proceeds, we will place them in interestbearing short-term deposits or money market instruments with licensed financial institutions.
We will not receive any proceeds from the Offer for Sale. Based on our IPO Price, the gross
proceeds from the Offer for Sale of approximately RM[●] will accrue entirely to our Selling
Shareholders. Our Selling Shareholders shall bear the entire incidental expenses and fees such
as stamp duty, placement fees and miscellaneous fees in relation to the Offer for Sale of
approximately RM[●].
Further information on the use of our Public Issue proceeds is as follows:
4.8.1
Renovation of the Target Property
As at the LPD, our Group operates from our existing offices and warehouse located at Ara
Damansara, Selangor. These rented premises have a total built-up area of approximately
11,300 sq. ft. (including both office space and warehouse space) and currently house a total of
72 employees of our Group. Due to space constraints in these existing offices, we are unable
to house additional employees to cater for business expansion.
On 5 July 2022, we had entered into a sale and purchase agreement with MMAG Digital Sdn
Bhd for our purchase of the Target Property at a total purchase consideration of RM20.20
million. The purchase consideration was arrived at on a “willing-buyer willing-seller” basis after
taking into consideration the market value attributed to the Target Property of RM19.52 million
ascribed by the independent valuer appointed by MMAG Digital Sdn Bhd. We took cognisance
that the purchase consideration is at a premium of RM0.68 million or 3.48% to the market value
ascribed by the independent valuer. Nonetheless, we had also taken into account the strategic
location and size of the Target Property, which are deemed suitable to support our Group’s
ongoing business operations as well as our future growth.
The Target Property is a freehold 3-storey office building with an annexed 2-storey warehouse.
The breakdown of the built-up areas of the Target Property is as follows:
Built-up area
(sq. ft.)
Descriptions
Office building
- Ground floor
- First floor
- Second floor
5,527.70
5,527.70
5,527.70
16,583.10
Warehouse
- Ground floor
- First floor
18,436.33
18,436.33
36,872.66
53,455.76
Total
The Target Property enables us to relocate and centralise our entire operations currently
housed under rented premises within 2 different office blocks in Ara Damansara. Taken into
account the larger office space of the Target Property as compared to that of our existing rented
offices (approximately 9,800 sq. ft. of built-up area after excluding warehouse space), we also
intend to expand our headcount to scale up our operations, particularly our sales and marketing
team and international business development team to strengthen our marketing and business
development functions, as well as our customer service team to support the expanding
business operations. The office building of the Target Property allows us to house up to an
estimated 110 employees based on an average of 150 sq. ft. of office space per employee.
Please refer to Section 7.23.1(i) of this Prospectus for further details of our proposed expansion
of headcount.
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4.
DETAILS OF OUR IPO (CONT’D)
Upon our relocation to the Target Property, we will terminate our tenancy for all our rented
offices in Ara Damansara. As these offices are mainly rented from related parties, the relocation
will allow us to eliminate recurrent related party transactions moving forward.
In addition, we intend to utilise the warehouse space of the Target Property to expand our
warehousing and distribution of healthcare-related products and devices business. We may
also use the warehouse space of the Target Property to provide warehousing services to our
ocean / air freight customers, as and when warehousing services within the Klang Valley are
required by these customers. The Target Property’s strategic location for being relatively near
to Port Klang, KLIA Airport and Sultan Abdul Aziz Shah Airport as well as having road
connectivity to various parts of the Klang Valley renders its overall suitability for warehousing
and distribution operations.
We have completed the purchase of the Target Property in December 2022. As of December
2022, we have also obtained planning permit exemption and approval on building plan from
Majlis Bandaraya Shah Alam for the renovation of the Target Property. Following completion of
our purchase of the Target Property, we intend to renovate it to meet our operational
requirements. We expect to relocate to and commence operating from the Target Property by
the third quarter of 2023. The tentative timeline for our renovation of and subsequent relocation
to the Target Property is as follows:
Timeline
Second quarter
of 2023
Third quarter
of 2023
Milestone
Completion of renovation
•
•
•
Certificate of completion and compliance (“CCC”) and fire certificate
to be obtained
All the relevant licences, permits and approval for the business
operations at the Target Property to be obtained
Relocation of our Group’s operations to the Target Property and
commencement of operations
The total estimated cost required for our renovation of the Target Property is RM2.90 million.
The renovation works comprise mainly the construction of curtain wall, tiling works, ceiling
works, painting works, installation of passenger lift, piping works, office partitioning, and
mechanical and electrical works.
We intend to fund this total estimated cost of RM2.90 million using our Public Issue proceeds.
In this regard, we have allocated RM[●] of our Public Issue proceeds for the renovation of the
Target Property.
If the total actual cost for our renovation of the Target Property exceeds the RM2.90 million as
estimated, the deficit will be funded from our internally generated funds and/or bank borrowings.
4.8.2
Repayment of bank borrowing
To facilitate the completion of our purchase of the Target Property, we had in December 2022
obtained a term loan amounting to RM18.18 million from CIMB Islamic Bank Berhad to fully
settle the balance purchase consideration for the Target Property (after excluding deposit of
RM2.02 million paid as at the LPD). The maturity date of this term loan is in December 2042.
Our loan agreement does not include any clause on early repayment penalty, hence we are not
subject to any fees / charges for settling the aforesaid term loan before the maturity date. As at
to-date, we have made 2 monthly instalments totalling RM0.22 million for this loan and its
current outstanding principal amount stands at RM18.08 million.
In this respect, we have allocated RM[●] for part repayment of the term loan following
completion of our IPO. The current interest rate for the term loan is 3.90% per annum. A partial
29
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
repayment of RM[●] of the term loan using our Public Issue proceeds is expected to result in
interest savings of RM[●] per annum to our Group.
4.8.3
Working capital
We have allocated RM[●] from our Public Issue proceeds to supplement our general working
capital requirements. This allocation for working capital will be mainly used for the day-to-day
operations of our logistics services business, including but not limited to payroll and
administrative expenses, payment to suppliers, utility expenses and office related expenses.
4.8.4
Estimated listing expenses
We have allocated RM[●] from our Public Issue proceeds to meet the estimated expenses of
our Listing. The following summarises the estimated expenses incidental to our Listing to be
borne by us:
Total
RM’000
Description
Professional fees(1)
Fees payable to authorities
Underwriting, placement and brokerage fees
Printing, advertising fees and other incidental charges relating to our Listing
Total
Note:
(1)
[●]
[●]
[●]
[●]
[●]
Include fees for, amongst others, the Principal Adviser, Financial Adviser, Reporting
Accountants, Solicitors, IMR, Internal Controls Reviewer, Company Secretary and
Issuing House.
If our actual listing expenses exceed the RM[●] of Public Issue proceeds allocated, the deficit
will be funded out of the portion allocated for working capital. Conversely, if the actual listing
expenses are lower than the amount allocated, the excess will be reallocated to our working
capital.
4.9
UNDERWRITING COMMISSION, BROKERAGE AND PLACEMENT FEE
4.9.1
Brokerage fee
We will bear the brokerage fees to be incurred on the issue of the 33,796,000 Issue Shares
pursuant to our IPO under Sections 4.3.1(i) and 4.3.1(ii) of this Prospectus at the rate of 1.00%
of the IPO Price in respect of successful Applications which bear the stamp of TA Securities,
participating organisations of Bursa Securities, members of the Association of Banks in
Malaysia, members of the Malaysian Investment Banking Association and/or the Issuing
House. The brokerage fee is subject to SST.
30
Registration No. 202201009353 (1455050-D)
4.
DETAILS OF OUR IPO (CONT’D)
4.9.2
Underwriting commission
TA Securities, as our sole Underwriter, has agreed to underwrite 33,796,000 Issue Shares as
set out in Sections 4.3.1(i) and 4.3.1(ii) of this Prospectus. We will pay our Underwriter an
underwriting commission at the rate of 2.50% of the total value of the Shares underwritten at
the IPO Price. The underwriting commission is subject to SST.
4.9.3
Placement fee
TA Securities, as our Placement Agent, has agreed to place out the 45,865,800 Issue Shares
available by way of private placement to selected investors as well as Bumiputera investors
approved by MITI as set out in Sections 4.3.1(iii) and 4.3.1(iv) of this Prospectus respectively.
We will pay our Placement Agent a placement fee at the rate of up to 2.50% of the total value
of the Issue Shares placed out by the Placement Agent at the IPO Price. The placement fee is
subject to SST.
TA Securities has also agreed to place out the 43,452,000 Offer Shares available by way of
private placement to selected investors as well as Bumiputera investors approved by MITI as
set out in Sections 4.3.2(i) and 4.3.2(ii) of this Prospectus respectively at the same placement
fee rate. The placement fee to be incurred on the sale of the Offer Shares will be fully borne by
our Selling Shareholders.
4.10
SALIENT TERMS OF THE UNDERWRITING AGREEMENT
Our Company had on [●] entered into an Underwriting Agreement with our Underwriter,
whereby our Underwriter had agreed to underwrite 24,140,000 Issue Shares, which will be
made available for application by the Malaysian Public via balloting and 9,656,000 Issue Shares
which will be made available for application by our Eligible Persons (“Underwritten Shares”),
upon the terms and subject to the conditions therein contained.
[Terms of the underwriting agreement will be inserted upon finalisation of the agreement]
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT
5.1
PROMOTERS AND SUBSTANTIAL SHAREHOLDERS
5.1.1
Promoters’ and substantial shareholders’ shareholdings
The details of our Promoters and substantial shareholders, and their respective shareholdings in our Company before and after our IPO are as
follows:
Name
Nationality
Before our IPO / As at the LPD
Direct
Indirect
(1)
No. of Shares
%
No. of Shares
After our IPO(2)
(1)
%
Direct
No. of Shares
(2)
%
Indirect
No. of Shares
(2)
%
Promoters and
substantial shareholders
Dato’ Roger Wong
Cheok Hui Yen
Malaysian
Malaysian
330,572,167
37,811,733
82.00
9.38
(3)1,123,500
0.28
-
294,741,817
33,713,359
61.05
6.98
(3)1,123,500
-
-
0.24
-
Substantial shareholder
Chow Enn Jie
Malaysian
21,413,067
5.31
-
-
19,092,128
3.96
-
-
Notes:
(1)
Based on our issued share capital of 403,136,767 Shares after the Acquisitions but before our IPO / as at the LPD.
(2)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
(3)
Deemed interested by virtue of his spouse’s interest pursuant to Section 8 of the Act.
Save for our Promoters and substantial shareholders named above, we are not aware of any other persons who is able to, directly or indirectly, jointly
or severally, exercise control over our Company.
As at the LPD, the Shares held by our Promoters and substantial shareholders have the same voting rights and there is no arrangement between our
Company and our shareholders with third parties, the operation of which may at a subsequent date result in a change in control of our Company.
32
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
5.1.2
Changes in our Promoters’ and/or substantial shareholders’ shareholdings
The changes in the shareholdings of our Promoters and substantial shareholders in our Company since our incorporation on 14 March 2022 are as
follows:
As at incorporation
Direct
Indirect
No. of
No. of
Shares
%
Shares
Name
Promoters and
substantial
shareholders
Dato’ Roger Wong
Cheok Hui Yen
Substantial
shareholder
Chow Enn Jie
%
Before our IPO / As at the LPD(1)
Direct
Indirect
No. of
No. of
(1)
Shares
%
Shares
100
-
100.00
-
-
-
330,572,167
37,811,733
82.00
9.38
(3)1,123,500
-
-
-
-
21,413,067
5.31
(1)
%
After our IPO(2)
Direct
Indirect
No. of
No. of
(2)
Shares
%
Shares
%
294,741,817
33,713,359
61.05
6.98
(3)1,123,500
-
0.28
-
-
0.24
-
-
-
19,092,128
3.96
-
-
Notes:
(1)
Based on our issued share capital of 403,136,767 Shares after Acquisitions but before our IPO.
(2)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
(3)
Deemed interested by virtue of his spouse’s interest pursuant to Section 8 of the Act.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
33
(2)
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
5.1.3
Profiles of Promoters and substantial shareholders
(i)
Dato’ Roger Wong
Promoter, substantial shareholder and Managing Director
Dato’ Roger Wong, a Malaysian male aged 42, is our co-founder and Managing
Director. He was appointed to our Board on 14 March 2022. He is primarily
responsible for overseeing our Group’s overall business operations, the setting of our
Group’s strategic direction as well as the formulation and implementation of our
Group’s business expansion strategies.
He obtained a Bachelor of Arts in International and Strategic Studies from Universiti
Malaya in 2003. Thereafter, he started his career in the logistics industry as a
Management Trainee at Orient Star Transport Sdn Bhd, a company which provides
logistics solutions where he was mainly trained in the areas of business development
and operations. He was promoted to Sales Manager in 2004 to undertake sales and
marketing functions for logistics services.
He subsequently left the company in 2005 to set up KGW Logistics, our wholly-owned
subsidiary, where he assumed the role of Managing Director and was responsible for
the company’s overall operational matters and business growth. Since then, he has
been instrumental in the expansion of KGW Logistics’ business operations and the
key person for our overall expansion strategies.
(ii)
Cheok Hui Yen
Promoter, substantial shareholder and Executive Director
Cheok Hui Yen, a Malaysian female aged 49, is our Executive Director and Chief
Operating Officer. She was appointed to our Board on 24 September 2022. She is
responsible for strategising business plans and managing the development of
international markets and the operations of our Group.
She graduated from Locke Academy, Malaysia with a London Chamber of Commerce
& Industry (LCCI) Group Diploma in Cost Accounting in 1992. She subsequently
pursued Chartered Institute of Management Accountants (CIMA) qualifications in
Systematic College, Malaysia until 1996 but did not complete the course.
She began her career in Pan Global Insurance Berhad, an insurance company, in
1996 as a clerk and was subsequently promoted to an Executive in the Finance and
Treasury Department where she was responsible for performing bank reconciliations,
preparing cash flow projections and fund transaction reports.
In 1999, she left Pan Global Insurance Berhad to join Asian Trend (M) Sdn Bhd, a
shipping agency, as an Accounts Executive where she was responsible for managing
the overall accounting functions of the company including preparation of management
accounts. She left in 2002.
In 2003, she joined Orient Star Transport Sdn Bhd, a company which provides
logistics solutions as an Accounts Officer, where she focused on handling the
company’s overall operational accounting functions. In 2004, she was promoted to
Assistant Manager, where she participated in the business operations of the company
particularly on business process improvement to enhance efficiency and facilitate
business development.
34
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
She then left in 2004 and took a gap year to rest before joining KGW Logistics, our
wholly-owned subsidiary, as a Customer Service Manager in 2005. She was
responsible for the overall coordination of the company’s export and import
operations. She was promoted to General Manager in 2016 and was responsible for,
among others, development of international markets and operations of the company.
In 2021, she was redesignated to her current position of Chief Operating Officer.
(iii)
Chow Enn Jie
Substantial shareholder and Sales and Marketing Director
Chow Enn Jie, a Malaysian male aged 35, is our Sales and Marketing Director. In this
position, he is responsible for our Group’s sales and marketing activities as well as
the development and implementation of marketing strategies.
He graduated with a Diploma in Business Studies (E-Commerce and Marketing) from
Kolej Tunku Abdul Rahman, Malaysia in 2009.
He began his career in 2007, when he joined GPS Tech Solutions Sdn Bhd, a
company involved in fleet management technology, as a Customer Service Executive
and left in 2008 as a Customer Service Supervisor.
In 2008, he joined KGW Logistics, our wholly-owned subsidiary, and assumed the
position of Sales and Marketing Executive. He was responsible for promoting the
company’s logistics services and seeking new business opportunities. In 2012, he
was promoted to Sales and Marketing Manager where he continued to be responsible
for business development and customer relationship management. He has been our
Sales and Marketing Director since 2014.
5.1.4
Promoters and substantial shareholders’ remuneration and benefit
Save as disclosed below, there are no other amount or benefits that has been paid or is
intended to be paid to our Promoters and substantial shareholders within the 2 years
preceding the date of this Prospectus:
FYE 2020
(Actual)
RM’000
Name
FYE 2021
(Actual)
RM’000
FYE 2022
(Proposed)
RM’000
Dato’ Roger Wong
- Remuneration(1)
- Dividend
Total
223
223
298
6,205
6,503
(2)1,031
Cheok Hui Yen
- Remuneration(1)
- Dividend
Total
482
482
1,495
760
2,255
(2)769
Chow Enn Jie
- Remuneration(1)
- Dividend
Total
168
168
856
410
1,266
(2)371
1,031
769
371
Notes:
(1)
Represents aggregate remuneration and material benefits in-kind payable/paid and
proposed to be paid for services rendered to our Group in all capacities.
35
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
(2)
The provision for bonuses is not included. Such bonuses, if any, will be determined at a
later date depending on the individual performance and the performance of our Group,
subject to the recommendation of our Remuneration Committee and approval by our
Board.
5.2
DIRECTORS
5.2.1
Our Board comprises the following members:
Age
Gender
Nationality
Date of
Appointment
Tengku Faizwa
Binti Tengku Razif
42
Female
Malaysian
24 September 2022
Dato’ Roger Wong
42
Male
Malaysian
14 March 2022
Managing Director
Cheok Hui Yen
49
Female
Malaysian
24 September 2022
Executive Director
Lim Joo Seng
48
Female
Malaysian
24 September 2022
Independent NonExecutive Director
Lean Sze Yau
42
Male
Malaysian
24 September 2022
Independent NonExecutive Director
Lee Li Choon
50
Female
Malaysian
24 September 2022
Independent NonExecutive Director
Name
5.2.2
Designation
Independent NonExecutive Chairman
Profiles of Directors
The profiles of our Executive Directors, namely Dato’ Roger Wong and Cheok Hui Yen, who
are also our Promoters and substantial shareholders, are disclosed in Section 5.1.3 of this
Prospectus.
The profiles of our Independent Non-Executive Directors are as follows:
(i)
Tengku Faizwa Binti Tengku Razif
Independent Non-Executive Chairman
Tengku Faizwa Binti Tengku Razif, a Malaysian female aged 42, is our Independent
Non-Executive Chairman. She was appointed to our Board on 24 September 2022.
She graduated in 2002 with a Bachelor of Management (Honours) in Marketing from
Universiti Sains Malaysia (USM). After her graduation, she started to pursue her
passion in mental literacy development, where she provided team training
management in local schools and organised the World Memory Championship in
Kuala Lumpur on a freelance basis in 2003. In 2004, she founded The Switch Sdn
Bhd, a company specialising in training and consultation of personal development
and human resource.
In 2010, she founded Ideaspark Sdn Bhd, a company specialising in strategic thinking
consultancy, and developing training programs in accelerated learning, memory skills,
creativity enhancement and creative entrepreneurship. She was mainly in charge of
conceptualising and managing events and programs of the company. She was also
the Founding President of Malaysia Young Female Entrepreneur Network (MYFREN),
a non-government organisation registered in 2010 under the Registrar of Youth
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
Societies, Ministry of Youth and Sports, Malaysia that was established to encourage
young Malaysian females to become entrepreneurs.
Between 2010 and 2012, she was also involved in promoting and organising
entrepreneurship programs and activities catered towards the development and
training of business and entrepreneurship skills amongst young Malaysians.
Since 2018, she focuses on managing her business entities, namely Scanda
Management PLT and Scanda Sky PLT, which are involved in management services
and chartering flights for tour packages respectively.
Currently, she is also the Independent Non-Executive Chairman of Manforce Group
Berhad, a company listed on the LEAP Market of Bursa Securities.
(ii)
Lim Joo Seng
Independent Non-Executive Director
Lim Joo Seng, a Malaysian female aged 48, is our Independent Non-Executive
Director. She was appointed to our Board on 24 September 2022. She is the
Chairman of our Audit and Risk Management Committee and also a member of our
Nomination Committee and Remuneration Committee.
She graduated from Macquarie University in Sydney, Australia with a Bachelor of
Commerce (Accounting) in 1998. She is a member of Certified Practising
Accountants of Australia (CPA Australia) and the Malaysian Institute of Accountants
since January 2003 and September 2003 respectively.
She began her career in 1999 as a Tax Assistant in Sekhar & Tan, a service provider
of audit and assurance, financial advisory, tax and related services where she was
involved in preparation of tax returns for clients. She left in 2000 and joined Deloitte
KassimChan, an audit firm as an Audit Senior where she was involved in statutory
audits for clients in various industries as well as in special assignments relating to
listing and mergers and acquisitions. She left Deloitte KassimChan in end of 2003.
In 2004, she joined Eversafe Engineering Sdn Bhd, a company that is involved in
general construction, mechanical and electrical works as Finance Assistant Manager,
where she was responsible for the company’s financial reporting and accounting
matters. She left her position in 2005.
She subsequently joined Deloitte Touche Tohmatsu CPA Ltd, a service provider of
audit and assurance, consulting, financial advisory, risk advisory, tax and related
services in China in 2005 as a Manager in the Audit Department where she was
responsible for leading, managing and coordinating audit engagements with clients
from various industries. She was also involved in various assignments relating to
listing and financial due diligence.
She left the firm in 2010 and joined XinRen Aluminium Holdings Limited, a company
that produces aluminium products subsequently as its Chief Financial Officer. During
her tenure there, she was responsible for overseeing its restructuring exercise and
the preparation for its listing in Singapore. She was also responsible for managing,
coordinating and monitoring the company’s corporate exercises from acquisitions of
strategic companies to external funding exercises. In 2017, she left XinRen
Aluminium Holdings Limited and has since been engaging in financial advisory work
on a freelance basis.
37
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
In 2017, she was appointed as an Independent Non-Executive Director of Nexion
Technologies Limited, an investment holding company listed on the Hong Kong Stock
Exchange, whose subsidiaries are involved in the provision of information
communication technology solutions focusing on cyber infrastructure and cyber
security solutions. She has been the Finance Director of Nestcon Berhad group of
companies since 2019 where she is responsible for the group’s corporate affairs and
financial functions, which include financial planning, review and reporting. Nestcon
Berhad is a company listed on the ACE Market of Bursa Securities with business
focus in building construction, civil engineering and infrastructure works.
(iii)
Lean Sze Yau
Independent Non-Executive Director
Lean Sze Yau, a Malaysian male aged 42, is our Independent Non-Executive Director.
He was appointed to our Board on 24 September 2022. He is the Chairman of our
Remuneration Committee and also a member of our Audit and Risk Management
Committee and Nomination Committee.
He graduated in 2002 with a Bachelor of Laws from the University of Kent, United
Kingdom. He undertook the Bar Vocational Course (BVC) in BPP Law School,
London, United Kingdom and was admitted as a Barrister-at-Law with the Honourable
Society of Lincoln’s Inn in 2003.
In 2003, he undertook his pupillage with Messrs Amin-Tan & Co and was called to the
Malaysian Bar in 2005. During his period of chambering, he was exposed to
conveyancing and corporate matters as well as involved in several mergers and
acquisition and other corporate exercises.
In 2005, he joined Messrs William Leong & Co as an Advocate and Solicitor where he
was mainly involved in corporate and litigation practice. He was promoted to a
Partner of the firm in 2009 where he was in charge of taking conduct of and preparing
general debt-recovery litigation. He was also involved in taking conduct of and
preparing matters relating to injunction applications.
He left the firm in end of 2009 and together with his partners, Wilson Leong and
Lester Ong, founded Messrs Wilson Leong, Ong & Lean in 2010. As the Managing
Partner of the firm, he is in charge of building clientele portfolios in the banking sector
in respect of conveyancing practice, as well as heading and managing the litigation
and corporate practice departments. He is involved in taking conduct of and acting as
leading solicitor and counsel at the High Court and Court of Appeal for commercial
litigation and real estate related disputes. He is also involved in providing consultancy
and corporate advisory work in relation to commercial, banking and real estate
related matters as well as providing regular and follow up advise on issues arising
from the COVID-19 pandemic.
(iv)
Lee Li Choon
Independent Non-Executive Director
Lee Li Choon, a Malaysian female aged 50, is our Independent Non-Executive
Director. She was appointed to our Board on 24 September 2022. She is the
Chairman of our Nomination Committee and also a member of our Audit and Risk
Management Committee and Remuneration Committee.
She obtained her Bachelor of Science (Economics) from the University of London in
1996. She is a Professional Certified Coach (PCC) credentialed by the International
Coaching Federation (ICF) since 2018 and an Accredited Coaching Supervisor
credentialed by the Coaching Supervision Academy (CSA) since 2022. She was also
certified by the Marshall Goldsmith Stakeholder Centered Coaching Program in 2014.
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
In 1996, she began her career as a Personnel Assistant in International Computers
(Malaysia) Sdn Bhd (currently known as Fujitsu Computer Systems (M) Sdn Bhd), a
company which provides information technology services and solutions. In 1997, she
was promoted to Personnel Executive. Subsequently in 1999, she was promoted to
Human Resource Executive where she was responsible for maintaining the Human
Resource Information System and processing monthly payroll services. She left the
company in 2000.
She joined Orbit Telecommunications Sdn Bhd, a company that engages in
telecommunication business activities in 2000 as a Human Resource Assistant
Manager where she was responsible for the overall human resource functions in the
company. She was promoted to Human Resource Manager in the same year where
she was in charge of providing strategic human resource counsel and support to
senior management. In 2001, she was promoted to Group Senior Manager where she
was tasked with managing and overseeing the regional human resource activities.
She resigned from the company in 2002.
In 2002, she joined Huawei Technologies (Malaysia) Sdn Bhd, a company that
supplies information and communications technology infrastructure and smart devices
as a Recruitment and Training Manager where she was tasked with establishing and
maintaining the recruitment and training functions. In 2004, she was promoted to
Assistant Director where she oversaw human resource functions in Asia Pacific. She
left the company in 2006.
In 2006, she joined Deloitte Consulting (SEA) Sdn Bhd, a firm that provides consulting
and advisory services as a Regional Human Resource Manager, Southeast Asia. She
was responsible for the overall human resource functions. She left the company in
2008.
In 2008, she had a short stint in Alcatel-Lucent Malaysia Sdn Bhd, a company that
provides telecommunications technology and infrastructure as the Human Resource
Director reporting to the Vice President of Human Resources – South & Southeast
Asia and left in the same year.
In 2008, she joined Ericsson (M) Sdn Bhd, a company that is involved in design,
planning of network, supply, installation and distribution of telecommunication
equipment as Head of Human Resource and Operation Unit, Malaysia (Country Unit)
and had a few promotions within the Human Resource Department. Her last position
before she left in 2013 was Human Resource Business Partner, Operation and
Sourcing Unit for the Southeast Asia and Oceania region where she engaged in the
yearly business planning process to determine the strategic direction of the business
and translate it into long and short-term plans for the organisation.
In 2014, she started her leadership coaching practice for business owners and the
leadership team of corporations from different industries through Talent Faculty Sdn
Bhd, a company that provides professional coaching and leadership developmentrelated services.
Since 2016, she also served as an Executive Committee on a voluntary basis in the
International Coaching Federation (ICF) Malaysia Charter Chapter where she
practiced her peer leadership. She was elected as the President of ICF Malaysia
Charter Chapter in 2020 and served in this position till 2022. She currently serves as
an Immediate Past President in the Executive Committee.
Currently, she is also the Independent Non-Executive Director of KYM Holdings
Berhad, a company listed on the Main Market of Bursa Securities that provides
industrial packaging solutions.
39
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
5.2.3
Directors’ shareholdings
The shareholdings of our Directors in our Company before and after our IPO are as follows:
Before our IPO / As at the LPD
Direct
Indirect
(1)
No. of Shares
% No. of Shares
Name
After our IPO
%
Direct
No. of Shares
0.10
-
-
(1)
(2)
%
Indirect
No. of Shares
(2)
%
-
-
-
-
(3)500,000
330,572,167
82.00
(4)1,123,500
0.28
294,741,817
61.05
(4)1,123,500
0.24
37,811,733
9.38
-
-
33,713,359
6.98
-
-
Lim Joo Seng
-
-
-
-
(3)500,000
0.10
-
-
Lean Sze Yau
-
-
-
-
(3)500,000
0.10
-
-
Lee Li Choon
-
-
-
-
(3)500,000
0.10
-
-
Tengku Faizwa Binti Tengku Razif
Dato’ Roger Wong
Cheok Hui Yen
Notes:
(1)
Based on our issued share capital of 403,136,767 Shares after the Acquisitions but before our IPO / as at the LPD.
(2)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
(3)
Assuming that he / she fully subscribes for the Pink Form Shares allocated to him / her.
(4)
Deemed interested by virtue of his spouse’s interest pursuant to Section 8 of the Act.
40
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
5.2.4
Principal directorships and business activities performed outside our Group
Save as disclosed below, none of our Directors has any involvement in business activities and directorships in any other businesses / corporations
outside our Group for the past 5 years preceding the LPD:
(i)
Tengku Faizwa Binti Tengku Razif
Company
Present involvements
Coffee & Paste Sdn Bhd
Manforce Group
Berhad(1)
Position held
Director and
shareholder
Equity interest as at the
LPD (%)
Direct
Indirect
Date appointed
as director
Date resigned as
director
15 June 2016
-
50.00
-
Restaurant, export and import food
products and real estate activities
-
-
-
Investment holding, while its
subsidiaries
are
principally
involved in the provision of foreign
workers’ management services
and manual labour services
Independent Non- 18 September 2018
Executive Chairman
Principal activities
The Switch Sdn Bhd
Shareholder
26 January 2004
20 September 2011
70.00
-
Training and consultation on
personal development and human
resource
World Mind Development
Sdn Bhd
Shareholder
-
-
30.00
-
Carry on the business of mind
development and tuition centre
Fruitbuzz Asia Plantation
Sdn Bhd
Shareholder
-
-
5.00
-
Growing of other tropical and
subtropical fruits
Idea Atheneum(2)
Sole proprietorship
-
-
100.00
-
Trading of consumer goods
Ethereal Beauty(2)
Sole proprietorship
-
-
100.00
-
Distribution of beauty products
41
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
Equity interest as at the
LPD (%)
Direct
Indirect
Position held
Date appointed
as director
Date resigned as
director
Partner
27 December 2017
-
50.00
-
Business
management
consultancy services
Scanda Sky PLT(2)
Partner
13 December 2018
-
50.00
-
Provision of chartered commercial
airline
services,
air
freight
services, and bespoke tourism
Scanda Venture Capital
PLT(2)
Partner
9 March 2019
-
50.00
-
Investment holding
Jie Yao Group PLT(2)
Representative
2 March 2022
-
-
10.00(3)
Clover Consulting
International Limited(4)
Director and
shareholder
17 August 2017
-
50.00
-
Company
Present involvements
(cont’d)
Scanda Management
PLT(2)
Company
Past involvements
QVC Vision Sdn Bhd
Position held
Director and
shareholder
Date appointed as
director
Date resigned as
director
Involvements other than
director
25 October 2016
26 February 2019
-(5)
42
Principal activities
Assets and business
management services
portfolio
Hong Kong based company
providing
services
in
the
consulting, marketing and trading
of
information
communication
technology and business systems
Principal activities
Wholesale of variety of goods and
buying, selling and operating of
real estate (Dissolved on 19
November 2019)
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
Company
Position held
Date appointed as
director
Date resigned as
director
Involvements other than
director
Principal activities
Past involvements
(cont’d)
Adamas Weddings Sdn
Bhd
Director and
shareholder
14 August 2012
30 October 2019
-(5)
Weddings and events planner and
conducting
wedding
planning
courses (Dissolved on 30 October
2019)
MCB International Sdn
Bhd
Director and
shareholder
7 June 2017
26 February 2019
-(5)
Business consultancy services in
technology innovation (Dissolved
on 26 February 2019)
Ideaspark Sdn Bhd
Director and
shareholder
19 January 2010
16 September 2022
-(5)
Management, consultancy and
training and other related services
(Dissolved on 16 September 2022)
Clover Consulting Sdn
Bhd
Director and
shareholder
7 June 2016
16 September 2022
-(5)
Consulting, marketing and trading
on information communication
technology system (Dissolved on
16 September 2022)
The Sakamoto Method
Sdn Bhd
Director
11 April 2007
8 June 2018
-
Dormant, intended to carry on the
business of developing and
commercialising mental literacy
training methods (Dissolved on 8
June 2018)
43
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
Company
Position held
Date appointed as
director
Date resigned as
director
Involvements other
than director
Principal activities
Past involvements
(cont’d)
The Switch International
Sdn Bhd
Director and
shareholder
30 March 2010
8 June 2018
-(5)
To carry on the business of training and
consultation on personal development and
human resource to carry on the business
of general traders, importers, exporters,
wholesaler, retailers and merchants to
purchase or otherwise acquire for
investment shares, stock, lands, houses,
building, plantation and
property of any tenure (Dissolved on 8
June 2018)
Ready Business Network
Sdn Bhd
Director and
shareholder
30 April 2010
8 June 2018
-(5)
Dormant, intended to carry on the
business of offering annual report copy
writing services for corporate entities that
are either listed on Bursa Securities or yet
to be listed. (Dissolved on 8 June 2018)
Forward Force Sdn Bhd
Shareholder
-
-
-(5)
Human resources consultancy services,
private security activities (Dissolved on 12
August 2020)
Notes:
(1)
Listed on the LEAP Market of Bursa Securities.
(2)
Registered in Malaysia.
(3)
She has an indirect equity interest in Jie Yao Group PLT by virtue of her being a partner of Scanda Venture Capital PLT. Scanda
Venture Capital PLT is a direct partner of Jie Yao Group PLT.
(4)
Incorporated in Hong Kong.
(5)
Previously a shareholder.
44
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
(ii)
Dato’ Roger Wong
Equity interest as at the
LPD (%)
Direct
Indirect
Date appointed as
director
Date resigned as
director
Director and
shareholder
12 March 2008
-
50.00
-
Buying, selling, renting and operating
of self-owned or leased real estate for
residential
and
non-residential
buildings
Innex America Sdn Bhd
Director and
shareholder
30 July 2009
-
50.00
-
Investment holding in properties
Top Pot Holdings Sdn
Bhd
Shareholder
-
-
4.08
-
Restaurant
Position held
Date appointed as
director
Date resigned as
director
Involvements other than
director
Director
15 January 2013
2 May 2019
-
Licenced money lender
KGW Gemilang Sdn
Bhd
Director
11 November 2019
29 December
2021
-
Freight forwarding services (Dissolved
on 29 December 2021)
KGW Container Line
(M) Sdn Bhd
Director and
shareholder
2 August 2012
8 September
2020
-(1)
Mingkun Logistics (M)
Sdn Bhd (formerly
known as Mingkun
KGW Logistics (M) Sdn
Bhd)
Director and
shareholder
20 August 2018
27 April 2022
-(1)
Logistics and freight forwarding
services (Dissolved on 8 September
2020)
Activities of holding companies;
forwarding of freight; other retail sale
in
non-specialised
stores
not
elsewhere classified
Company
Present involvements
Alpha Global Assets
Sdn Bhd (formerly
known as Alpha Global
Logistics (M) Sdn Bhd)
Company
Past involvements
Kompass Kredit
Leasing Sdn Bhd
Position held
45
Principal activities
Principal activities
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
Company
Position held
Date appointed as
director
Date resigned as
director
Involvements other than
director
Principal activities
Past involvements
(cont’d)
Accelerated Global
Solutions (M) Sdn Bhd
Director and
shareholder
29 March 2021
18 May 2022
-(1)
Wholesale of a variety of goods
without any particular specialisation
not elsewhere classified; activities of
holding companies
KGW Logistics (S) Pte
Ltd(2)
Director and
shareholder
8 May 2017
5 September
2022
-(1)
Logistic services (Dissolved on 5
September 2022)
KGW Atlantic Co., Ltd(3)
Shareholder
-
-
-(1)
Logistic services
RCM Commerce Sdn
Bhd
Director and
shareholder
11 June 2019
15 April 2022
-(1)
Other cargo handling activities; Other
retail sale in non-specialized stores;
retail sale of any kind of product over
the internet
Notes:
(1)
Previously a shareholder.
(2)
Incorporated in Singapore.
(3)
Incorporated on 15 May 2018 by Dato’ Roger Wong and Truong Huu Kien Trung to venture into provision of ocean freight agency
services (including freight forwarding services) in Vietnam. Due to the difference in management directions, Dato’ Roger Wong exited
and ceased to be a shareholder of the company on 13 May 2022.
As at the LPD, the shareholders of KGW Atlantic Co. Ltd are Truong Huu Kien Trung and Tran Minh Huy, both of whom are not related
to our Group nor our Promoters, Directors and substantial shareholders. As at the LPD, this company continues to be in operations and
the principal activities remain the same.
46
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
The shareholders of KGW Atlantic Co., Ltd had on 13 March 2023 submitted to the relevant authority to change their name to KGA Co.,
Ltd.
(iii)
Cheok Hui Yen
Company
Date appointed as
director
Date resigned as
director
Involvements other than
director
Director and
shareholder
4 September 2014
8 September 2020
-(1)
Logistics and freight forwarding
services
(Dissolved
on
8
September 2020)
Shareholder
-
-
-(1)
Activities of holding companies;
forwarding of freight; other retail
sale in non-specialised stores not
elsewhere classified
Position held
Past involvements
KGW Container Line (M)
Sdn Bhd
Mingkun Logistics (M)
Sdn Bhd (formerly known
as Mingkun KGW
Logistics (M) Sdn Bhd)
Principal activities
Note:
(1)
Previously a shareholder.
(iv)
Lim Joo Seng
Company
Present involvements
Nestcon Berhad(1)
Position held
Executive
Director and
shareholder
Date appointed as
director
Date resigned as
director
26 August 2020
-
47
Equity interest as at
the LPD (%)
Direct
Indirect
0.30
-
Principal activities
Construction and civil engineering
service provider
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
Company
Position held
Date appointed as
director
Date resigned as
director
Equity interest as at
the LPD (%)
Direct
Indirect
Principal activities
Present involvements
Nestcon Infra Sdn Bhd
Director
30 January 2021
-
-
-
All types of civil engineering and
infrastructure projects
Nestcon Solar Sdn Bhd
Director
26 April 2022
-
-
-
Provide consultancy services and
construction work in relation to solar
systems
Nexion Technologies
Limited(2)
Independent
Non-Executive
Director
31 May 2017
-
-
-
Information
communication
technology
solutions
provider
focusing on cyber infrastructure and
cyber security solutions
Lynkmax Pte Ltd(3)
Non-Executive
Director
13 December 2019
-
-
-
Development
programming
consultancy
Director
14 May 2021
-
-
-
Ceased operations
Eversafe Engineering
Sdn Bhd
Notes:
(1)
Listed on the ACE Market of Bursa Securities.
(2)
Listed on the Hong Kong Stock Exchange.
(3)
Incorporated in Singapore.
48
of
software
activities;
and
IT
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
(v)
Lean Sze Yau
Equity interest as at
the LPD (%)
Date appointed as
director
Date resigned as
director
Direct
Indirect
Managing
Partner
-
-
33.33
-
Law firm
One Century Solution
Sdn Bhd
Director and
shareholder
26 October 2016
-
20.70
-
Dormant, intended to carry on the
business of providing information
technology services
WOL Holdings Sdn Bhd
Shareholder
-
-
33.00
-
Investment holding company
restaurant business
Big Wig Sdn Bhd
Director and
shareholder
29 April 2022
-
15.00
-
Property development
Position held
Date appointed as
director
Date resigned as
director
Involvements other
than director
Director
13 February 2012
11 February 2020
-
Exhibition and event management
Director
11 October 2017
16 December 2019
-
Organisation, promotions and / or
management of events
Company
Present involvements
Messrs Wilson Leong,
Ong & Lean
Company
Past involvements
One International
Exhibition Sdn Bhd
MBAM Onebuild Sdn
Bhd
Position held
49
Principal activities
Principal activities
in
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
(vi)
Lee Li Choon
Equity interest as at
the LPD (%)
Company
Date appointed as
director
Date resigned as
director
Direct
Indirect
Director
25 June 2014
-
80.0
-
Providing
consultancy,
development
services
Independent
Non-Executive
Director
5 July 2022
-
-
-
Investment holding in companies.
Its subsidiaries are principally
involved in manufacturing and
selling of high-quality industrial
paper packing products
Position held
Present involvements
Talent Faculty Sdn Bhd
KYM Holdings Bhd(1)
Principal activities
management
human
resource
and other related
Note:
(1)
Listed on the Main Market of Bursa Securities.
The involvement of our Directors as disclosed above excludes shares in public listed companies held by them as minority shareholders (less than
5.00% of the total number of issued shares of a public listed company). They do not hold any directorship in these public listed companies and the
shares held are only for trading and personal investment purposes.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
50
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
5.2.5
Involvement of our Directors in other businesses / corporations
Save as disclosed in Section 5.2.4 of this Prospectus, our Executive Directors are not involved in other businesses or corporations. The involvement
of Dato’ Roger Wong, our Managing Director, in other corporations is not expected to affect the operations of our Group as those corporations are
mainly involved in property investment or investment holding. These corporations are with minimal day-to-day activities.
The involvement of our Independent Non-Executive Directors in other business or corporations will not affect their commitment and responsibilities to
our Group as they are not involved in our Group’s day-to-day operations.
5.2.6
Directors’ remuneration and material benefits in-kind
The remuneration of our Directors including their fees, salaries, bonuses, commissions, other allowances and benefits-in-kind must be reviewed and
recommended by our Remuneration Committee and subsequently be approved by our Board. Directors’ fees and any benefits payable to Directors
shall also be subject to annual approval by our shareholders pursuant to an ordinary resolution passed at a general meeting of our Company in
accordance with our Constitution. Please refer to Section 15 of this Prospectus for further details.
The aggregate remuneration and material benefits in-kind payable/paid and proposed to be paid to our Directors for services rendered to our Group
in all capacities for FYE 2021 and FYE 2022 are as follows:
(i)
FYE 2021
Commission
RM’000
Benefits-inkind and
allowances
RM’000
Statutory
Contributions
(EPF, SOCSO
and EIS)
RM’000
Total
RM’000
Director’s
fees
RM’000
Basic
salary
RM’000
Bonuses
RM’000
Executive Directors
Dato’ Roger Wong
Cheok Hui Yen
-
174
66
45
17
1,251
46
-
33
161
298
1,495
Non-Executive Directors
Tengku Faizwa Binti Tengku Razif
Lim Joo Seng
Lean Sze Yau
Lee Li Choon
-
-
-
-
-
-
-
Name
51
(1)
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
(ii)
Proposed for FYE 2022
Name
Executive Directors
Dato’ Roger Wong
Cheok Hui Yen
Non-Executive Directors
Tengku Faizwa Binti Tengku Razif
Lim Joo Seng
Lean Sze Yau
Lee Li Choon
Notes:
(1)
Director’s
fees
RM’000
Basic
salary
RM’000
-
860
152
(3)-
-
(4)(4)(4)-
Benefits-inkind and
(2)
Bonuses (1)Commission allowances
RM’000
RM’000
RM’000
-
Statutory
Contributions
(EPF, SOCSO
and EIS)
RM’000
Total
RM’000
534
60
-
111
83
1,031
769
-
(3)-
-
(3)-
(4)(4)(4)-
(4)(4)(4)-
Our Group has in place commission policy to motivate our employees to bring in sales. In this regard, employees are rewarded based on
GP generated from the clients under his/her portfolio and were generally paid on staggered basis over a period of 12 months. Since 1 July
2022, this commission is no longer applicable to Dato’ Roger Wong and Cheok Hui Yen, who are our Executive Directors and key senior
management as well as the substantial shareholders of our Company. Save for our Directors and key senior management, all the
employees of our Group will continue to be eligible to receive commission. Our Directors and key senior management will not be eligible to
receive commission, which is governed by our general commission policy, as their remuneration is subject to the recommendation of our
Remuneration Committee and approval by our Board.
(2)
The provision for bonuses is not included. Such bonuses, if any, will be determined at a later date depending on the individual performance
and the performance of our Group, subject to the recommendation of our Remuneration Committee and approval by our Board.
(3)
Our Independent Non-Executive Chairman was appointed to our Board on 24 September 2022. The monthly Director’s fee of RM6,000 is
only payable upon Listing. Meeting allowance of RM500 per meeting is payable upon attending Board meeting as and when required.
(4)
Our Independent Non-Executive Directors were appointed to our Board on 24 September 2022. The monthly Director’s fee of RM3,000 is
only payable upon Listing. Meeting allowance of RM500 per meeting is payable upon attending Board meeting as and when required.
52
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
5.3
BOARD PRACTICES
Our Board has the following key responsibilities:
(a) review and approve the corporate plan for our Group;
(b) review and approve strategic initiatives including corporate business restructuring or
streamlining and strategic alliances, to ensure that they support long-term value creation
and take into account economic, environment and social considerations underpinning
sustainability;
(c) oversee the conduct of our Group’s businesses to evaluate whether the businesses are
being properly managed and monitor their implementation;
(d) promote good corporate governance culture within our Group which reinforces ethical,
prudent and professional behaviour;
(d) review, challenge and decide on management’s proposals for our Company, and monitor
its implementation by the management;
(e) assess and identify the principal risks of our Group’s business and ensuring the
implementation of appropriate systems to manage these risks;
(f)
set the risk appetite within which the Board expects management to operate, and ensure
that there is an appropriate risk management framework to identify, analyse, evaluate,
manage and monitor significant financial and non-financial risks;
(g) to ensure that our Company has effective Board Committees as required by the
applicable laws, regulations, rules, directives and guidelines and as recommended by the
MCCG 2021;
(h) to appoint the Board Committees, to delegate powers to such committees, to review the
composition, performance and effectiveness of such committees, and to review the
reports prepared by the Board Committees and deliberate on the recommendations
thereon;
(i)
approve the nomination, appointment and remuneration packages for our Board
members;
(j)
approve the appointment, resignation or removal of Company Secretaries of our
Company;
(k) oversee the development and implementation of investor relations programme for our
Group, where necessary;
(l)
review the adequacy and integrity of our Group’s internal control systems and
management information systems, including systems for compliance with applicable
laws, regulations, rules, directives and guidelines (including the securities laws, the Act
and the Listing Requirements);
(m) review and approve our quarterly reports and annual financial statements;
(n) review and approve our Annual Report;
(o) review and approve the capital expenditure, purchase of fixed assets, operating
expenditure, variation order and any other matters in accordance with the authority limits
set by our Company;
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5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
(p) approve the appointment of external auditors and fix their related audit fees; and
(q) ensure the integrity of our Company’s financial and non-financial reporting.
Our Board acknowledges and takes cognisance of the MCCG which contains best practices
and guidance for listed companies to improve upon or to enhance their corporate governance
as it forms an integral part of their business operations and culture. Our Board believes that
our current Board composition provides an appropriate balance in terms of skills, knowledge
and experience to promote the interest of all shareholders and to govern our Group
effectively. Our Company has adopted the recommendations under the MCCG to have at
least half of the Board comprising Independent Non-Executive Directors, that the Chairman of
our Board should not be a member of our Audit and Risk Management Committee,
Nomination Committee or Remuneration Committee, and to have at least 30% women
directors on our Board.
Our Board is also mindful of the importance of building a sustainable business, and therefore
takes into consideration the environmental, social and governance impact when developing
the corporate strategy of our Group. Our Board also ensures that we participate and
undertake activities in corporate social responsibilities.
5.3.1
Directorship
As at the LPD, the details of the date of expiration of the current term of office for each of our
Directors and the period for which our Directors have served in that office are as follows:
Date of
expiration of
the current
term of office
Subject to
retirement at
AGM 2023
No. of
year(s) in
office
Less than 1
year
Name
Tengku Faizwa Binti
Tengku Razif
Designation
Independent NonExecutive Chairman
Date of
appointment
24 September
2022
Dato’ Roger Wong
Managing Director
14 March 2022
Subject to
retirement at
AGM 2023
Less than 1
year
Cheok Hui Yen
Executive Director
24 September
2022
Subject to
retirement at
AGM 2023
Less than 1
year
Lim Joo Seng
Independent NonExecutive Director
24 September
2022
Subject to
retirement at
AGM 2023
Less than 1
year
Lean Sze Yau
Independent NonExecutive Director
24 September
2022
Subject to
retirement at
AGM 2023
Less than 1
year
Lee Li Choon
Independent NonExecutive Director
24 September
2022
Subject to
retirement at
AGM 2023
Less than 1
year
54
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
In accordance with our Constitution, at the first AGM of our Company, all our Directors shall
retire from office. At the AGM in every subsequent year, one-third (1/3), or the number
nearest to one-third (1/3), of our Directors shall retire from office and be eligible for re-election
provided always that all Directors shall retire from office at least once every 3 years but shall
be eligible for re-election. A retiring Director shall retain office until the close of the meeting at
which he retires. An election of directors shall take place each year.
5.3.2
Audit and Risk Management Committee
Our Audit and Risk Management Committee was established on 13 October 2022 and its
members are appointed by our Board. Our Audit and Risk Management Committee as at the
LPD comprises the following members:
Name
Designation
Directorship
Lim Joo Seng
Chairman
Independent Non-Executive Director
Lean Sze Yau
Member
Independent Non-Executive Director
Lee Li Choon
Member
Independent Non-Executive Director
The main function of our Audit and Risk Management Committee is to assist our Board in
fulfilling its responsibility to oversee our Group’s accounting and financial matters. The Audit
and Risk Management Committee’s responsibilities as stated in its terms of reference include,
amongst others, the following:
(a)
to review:
(i)
with the external auditors, the audit plan of our Group;
(ii)
the performance, suitability, objectivity and independence of external auditors;
(iii)
the adequacy of existing external auditors’ audit arrangements, with particular
emphasis on the scope and quality of the audit;
(iv)
the policies and procedures governing the provision of non-audit services by
external auditors;
(v)
the adequacy of the scope, functions, competency and resources of the internal
audit functions and that it has the necessary authority to carry out its work;
(vi)
with the external auditors, the evaluation of system of internal controls;
(vii)
the internal audit plan, processes, the results of the internal audit assessments,
investigation undertaken and whether or not appropriate action is taken on the
recommendations of the internal auditors;
(viii) the external auditors’ audit report;
(ix)
any management letter from the external auditors to our Company and the
management’s response to such letter;
(x)
any letter of resignation from our Company’s external auditors;
(xi)
the assistance given by the employees of our Company to the external
auditors;
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
(xii)
adequacy of our Group’s risk profile and risk management framework and
assess the resources and knowledge of the key management and employees
involved in the risk management process;
(xiii) adequacy and effectiveness of the risk management process to identify key
organisational risks and the systems and processes in place to manage those
risks;
(xiv) assess the steps and actions that the management has implemented or wish to
implement to manage and mitigate identifiable risks;
(xv)
and recommend appropriate risk management strategies, policies and risk
tolerances in line with our Group’s business objectives for our Board’s approval
to safeguard shareholders’ investments and our assets;
(xvi) effectiveness of systems for monitoring compliance with laws and regulations;
and
(xvii) all related party transactions and potential conflict of interests situations that
may arise within our Company or Group including any transaction, procedure or
course of conduct that raises questions of management integrity;
(b)
to consider the appointment and re-appointment, the audit fee and any questions of
resignation or dismissal of external auditors and whether there is a reason (supported
by grounds) to believe that our Company’s external auditors are not suitable for reappointment;
(c)
to review the quarterly results and year end financial statements, prior to the approval
by our Board, focusing particularly on:
(i)
changes in or implementation of major accounting policy changes;
(ii)
significant matters highlighted including financial reporting issues, significant
judgements made by management, significant and unusual events or
transactions, and how these matters are addressed; and
(iii)
compliance with accounting standards and other legal requirements;
(d)
to carry out any other function that may be mutually agreed upon by the Committee
and our Board, which would be beneficial to our Company and ensure the effective
discharge of the Committee’s duties and responsibilities;
(e)
to report the actions recommendations of the Committee to our Board; and
(f)
to report to Bursa Securities on any matter reported by the Committee to our Board
which has not been satisfactorily resolved resulting in a breach of the Listing
Requirements.
The recommendations of our Audit and Risk Management Committee are subject to the
approval of our Board.
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
5.3.3
Remuneration Committee
Our Remuneration Committee was established on 13 October 2022 and its members are
appointed by our Board. Our Remuneration Committee as at the LPD comprises the following
members:
Name
Designation
Directorship
Lean Sze Yau
Chairman
Independent Non-Executive Director
Lim Joo Seng
Member
Independent Non-Executive Director
Lee Li Choon
Member
Independent Non-Executive Director
The main function of our Remuneration Committee is to assist our Board in fulfilling its
responsibility to oversee our Group’s compensation, bonuses, incentives and benefits. The
Remuneration Committee’s responsibilities as stated in its terms of reference include,
amongst others, the following:
(a)
to assist our Board to establish a formal and transparent remuneration policy and
procedures for approving the remuneration of our Directors and senior management;
(b)
to review and recommend the Directors’ fees and benefits to our Board for approval;
(c)
to assist our Board to formulate policies, guidelines and set composition of various
types of components of remuneration such as basic salary, bonus and other benefits
in kind for Directors and senior management, which take into account the demands,
complexities and performance of our Company as well as skills and experience
required;
(d)
to ensure that all our Directors and senior management are fairly rewarded for their
individual contributions to our Company;
(e)
to ensure that the level of remuneration is sufficiently attractive to retain our Directors
and senior management and structuring the remuneration packages to link rewards
to individual performance; and
(f)
to assist our Board to ensure all remuneration packages and benefits given to our
Directors and senior management are in line with our Company’s remuneration
policy and complying with all laws, rules, requirements, regulations and guidelines
set by the relevant authorities and our Board from time to time.
The Director(s) concerned shall abstain from deliberation and voting on his/her own
respective remuneration.
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
5.3.4
Nomination Committee
Our Nomination Committee was established on 13 October 2022 and its members are
appointed by our Board. Our Nomination Committee as at the LPD comprises the following
members:
Name
Designation
Directorship
Lee Li Choon
Chairman
Independent Non-Executive Director
Lim Joo Seng
Member
Independent Non-Executive Director
Lean Sze Yau
Member
Independent Non-Executive Director
The main function of our Nomination Committee’s duties and responsibilities as stated in its
terms of reference, amongst others, include the following:
(a)
to review annually and recommend to our Board with regard to the structure, size,
tenure, directorships, balance and composition of our Board and Board Committees
including the required mix of skills and experience, core competencies and diversity
(in terms of age, cultural background and gender) and make recommendations to our
Board with regard to any adjustments that are deemed necessary;
(b)
to annually appraise our Board and Board Committees including but not limited to the
following:
(i)
the effectiveness of the Board Committees (including its size and composition);
(ii)
the effectiveness of our Board as a whole;
(iii)
commitment, skills and contributions of each individual Director; and
(iv)
the independence of our Independent Non-Executive Directors.
All assessments and evaluations carried out by the Committee in the discharge of all
its functions are properly documented;
(c)
to oversee the development of succession planning of our Board and senior
management;
(d)
to consider and recommend to our Board on suitable candidates for appointment as
Directors of our Company. The Committee will undertake appropriate review when
determining the process of identifying suitable candidates to ensure the requirement
and qualification of the candidate nominated is based on a prescribed set of criteria
comprising but not limited to the following:
(i)
skills, knowledge, expertise and experience;
(ii)
professionalism;
(iii)
integrity;
(iv)
existing number of directorships held;
(v)
age;
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5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
(vi)
cultural background;
(vii)
gender;
(viii)
confirmation of not being an undischarged bankrupt or involved in any court
proceedings in connection with the promotion, formation or management of a
corporation or involving fraud or dishonesty punishable on conviction with
imprisonment or subject to any investigation by any regulatory authority under
any legislation; and
(ix)
in the case of candidates being considered for the position of Independent
Non-Executive Director, such potential candidates must have the ability to
discharge such responsibilities/functions as expected from Independent NonExecutive Directors. Amongst others, the potential candidates must fulfil the
criteria used in the definition of “Independent Director” prescribed by the Listing
Requirements and able to be independent and give objective judgement to our
Board.
Where required, the members of the Committee would meet up with potential
candidates for the position of director to assess his/her suitability;
(e)
the Committee shall ensure that orientation and education programmes are provided
for new members of our Board;
(f)
the Committee shall recommend to our Board concerning the re-election of Director
to our Board pursuant to the provisions in our Company’s Constitution;
(g)
to consider and recommend the continuance of office of Independent Non-Executive
Directors who have served our Board beyond 9 years, having due regard to their
performance and ability to continue to contribute to our Board in the light of
knowledge, skills and experience required;
(h)
to annually review the term of office and performance of the Audit and Risk
Management Committee and each of its members to determine whether the Audit
and Risk Management Committee and its members have carried out their duties in
accordance with their terms of reference;
(i)
the Committee shall undertake an annual review of the training programmes
attended by our Directors for each financial year as well as the training programmes
required to aid our Directors in the discharge of their duties as Directors and to keep
abreast with industry developments and trends; and
(j)
the Committee shall provide a report summarising its activities for the year in
compliance with the Listing Requirements and any relevant regulations and adoption
of practices recommended under the MCCG 2021. The report can be incorporated
into the corporate governance statement in the annual report or corporate
governance report.
The Director concerned shall abstain from deliberation and voting on his/her own respective
re-election.
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
The fit and proper assessment on any person identified to be appointed as a Director or to
continue holding the position as a Director within our Group will be conducted prior to the
initial appointment or proposed re-election as a Director. The Committee shall be guided by
the Directors’ Fit and Proper Policy in conducting the fit and proper assessment.
5.4
KEY SENIOR MANAGEMENT
5.4.1
Our key senior management as at the LPD comprises the following:
Name
Dato’ Roger Wong
Cheok Hui Yen
Chow Enn Jie
Wendy Kam
Teoh Huey Hong
Age
Gender
Designation
42
49
35
52
40
Male
Female
Male
Female
Female
Managing Director
Executive Director / Chief Operating Officer
Sales and Marketing Director
Chief Financial Officer
Customer Care Director
All of our key senior management are Malaysian.
5.4.2
Profiles of key senior management
The profiles of Dato' Roger Wong, Cheok Hui Yen and Chow Enn Jie, who are also our
Promoters and/or substantial shareholders, are disclosed in Section 5.1.3 of this Prospectus.
The profiles of our other key senior management are as follows:
(i)
Wendy Kam
Chief Financial Officer
Wendy Kam, a Malaysian female aged 52, is our Chief Financial Officer. She is
primarily responsible for our Group’s overall accounting and finance matters.
She holds a professional qualification from the Association of Chartered Certified
Accountants (“ACCA”) since 1997. She further obtained a Master’s degree in
Business Administration majoring in Accountancy from Universiti Malaya (“MBA”) in
2003. She is also a member of the Malaysian Institute of Accountants (“MIA”) since
1999.
She has more than 20 years of experience in the accountancy and finance field. After
obtaining her Sijil Tinggi Persekolahan Malaysia (STPM) and while pursuing her ACCA
qualification on a part-time basis, she began her career in 1993 when she joined Diong
T.P. & Tan, an audit firm as an Audit Assistant. She then left and joined NEC Sales
(Malaysia) Sdn Bhd, a company which provides information technology solutions and
services in 1994 as Assistant Accounts Officer where she was responsible for
assisting in the preparation of the financial statements of the company. She left in
1995 to join WTK Holdings Berhad, an investment holding company with subsidiaries
involved in timber logging and processing, plantation and manufacturing of adhesive
and masking tapes as an Accountant, where she was responsible for overseeing the
company’s treasury matters and management accounts.
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
She left WTK Holdings Berhad in 2001 to focus on her MBA. She subsequently joined
Kolej Tunku Abdul Rahman (Penang), a tertiary education institute in 2002 as a
lecturer of business accounting while she continued to pursue her MBA on a part time
basis. She left in 2003 and in the same year joined Syed Mokhsain Holdings Sdn Bhd,
a holding company with subsidiaries involved in trading of duty-free goods as an
Accountant. She then left to join Volt Asia Enterprises (M) Sdn Bhd, a recruitment
company that provides employment services in 2006 as Senior Accountant, where she
was responsible for its accounting matters. She was subsequently promoted to
Operations Manager in 2008 where her role expanded to include operations. She left
in early 2009 to attend to personal matters.
She returned to employment in 2010 when she joined Masterskill (M) Sdn Bhd, a
company involved in the education industry as Finance Manager responsible for
accounting and finance matters. She was subsequently promoted to Head of Internal
Audit in Masterskill Education Group Berhad in April 2011 and was responsible for
managing the group’s internal audit matters. She left in 2012 to join Stamford College
(PJ) Sdn Bhd as Financial Controller, where she was responsible for overseeing the
finance and accounting matters of the company and its subsidiary. During her tenure
there, she was also involved in the company’s corporate finance matters.
She left in end of 2013 to join SCH Group Berhad (now known as Hextar Industries
Berhad), an investment holding company with subsidiaries engaged in fertiliser
manufacturing, equipment rental and supply of heavy equipment as Financial
Controller where she was responsible for overseeing the group’s financial accounting
and taxation matters. She left the company in 2018 and subsequently joined Atlantic
Blue Sdn Bhd, a wholly-owned subsidiary of Solarvest Holdings Berhad involved in the
provision of engineering, procurement, construction and commissioning services for
solar photovoltaics (PV) systems and investment in solar PV plant in end of 2018 as
Financial Controller where she was responsible for overseeing and monitoring
financial accounting and taxation matters as well as the planning and coordination of
financial reporting activities. She left the company in 2021.
She joined our Group in her current position in end of 2021.
(ii)
Teoh Huey Hong
Customer Care Director
Teoh Huey Hong, a Malaysian female aged 40, is our Customer Care Director. She is
primarily responsible for managing the daily operations of our Group’s customer
service department.
She obtained her Sijil Pelajaran Malaysia in 2000 from Keat Hwa High School, Kedah.
She subsequently studied for the ACCA Certified Accounting Technician qualification
from 2001 to 2004 but did not complete the course.
She began her career in 2005 when she joined TriStar Freight (M) Sdn Bhd, a freight
forwarding company as a Customer Service Representative where she was mainly
involved in shipment planning and cargo space booking. She left in end of 2005 to join
Sun Express Logistics (M) Sdn Bhd, a freight forwarding, transportation and general
trading company in 2006 as a Customer Service Representative where she took on
similar job functions. She left the company in 2008.
61
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
In 2008, she joined KGW Logistics, our wholly-owned subsidiary, as a Customer
Service Executive. She was promoted to Customer Service Manager in 2017 where
she was tasked with managing and guiding the customer service team in their daily
operations. She was promoted to Customer Care Director in 2022 to head our
customer service department. This represents a new position in our Group
corresponding to her experience and seniority as well as the size of our customer
service team.
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
5.4.3
Key senior management’s shareholdings
The shareholdings of our key senior management in our Company before and after our IPO are as follows:
Key senior management
Dato’ Roger Wong
Cheok Hui Yen
Chow Enn Jie
Wendy Kam
Teoh Huey Hong
Before our IPO / As at the LPD
Direct
Indirect
(1)
No. of Shares
% No. of Shares
330,572,167
37,811,733
21,413,067
11,092,800
(2)1,123,500
82.00
9.38
5.31
2.75
-
After our IPO
%
Direct
No. of Shares
0.28
-
294,741,817
33,713,359
19,092,128
(4)750,000
9,890,463
(1)
(3)
%
61.05
6.98
3.96
0.16
2.03
Indirect
No. of Shares
(2)1,123,500
Notes:
(1)
Based on our issued share capital of 403,136,767 Shares after the Acquisitions but before our IPO / as at the LPD.
(2)
Deemed interested by virtue of his spouse’s interest pursuant to Section 8 of the Act.
(3)
Based on our enlarged issued share capital of 482,798,567 Shares after our IPO.
(4)
Assuming that she fully subscribes for the Pink Form Shares allocated to her.
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63
-
(3)
%
0.24
-
Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND KEY SENIOR MANAGEMENT (CONT’D)
5.4.4
Involvement of key senior management in other businesses or corporations
Dato’ Roger Wong’s and Cheok Hui Yen’s involvement in business activities and directorship in other businesses or corporations outside our
Group for the past 5 years preceding the LPD are disclosed in Section 5.2.4 of this Prospectus.
Save as disclosed below, none of our other key senior management has any involvement in business activities and directorship in any other
businesses or corporations outside our Group for the past 5 years preceding the LPD:
(i)
Chow Enn Jie
Equity interest as at
the LPD (%)
Company
Date appointed as
director
Date resigned as
director
Direct
Indirect
Shareholder
14 July 2014
21 April 2022
49.00
-
Position held
Date appointed as
director
Date resigned as
director
Involvements other
than director
Director
3 March 2015
29 August 2018
-
Position held
Date appointed as
director
Date resigned as
director
Involvements other
than director
Principal activities
Partnership
-
-
-
Accounting services
Position held
Present involvements
Dreamatt Sdn Bhd
Company
Past involvements
Sapphire Dream Mattress
Sdn Bhd
(ii)
Principal activities
Manufacture, assembling and
trading of mattresses
Principal activities
Dormant, intended for trading of
mattresses
Wendy Kam
Company
Past involvements
Kam & Lim Management
Services
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
Chow Enn Jie’s present involvement in Dreamatt Sdn Bhd is only as a shareholder
and he is not involved in the day-to-day operations of the company. As such, this will
not affect his commitment and responsibilities to our Group.
5.4.5
Key senior management’s remuneration and material benefits-in-kind
The aggregate remuneration and material benefits-in-kind paid and proposed to be paid to
our key senior management (save for those for Dato’ Roger Wong and Cheok Hui Yen, which
are as disclosed in Section 5.2.6 of this Prospectus) for services rendered / to be rendered to
our Group in all capacities for the FYE 2021 and FYE 2022 are as follows:
Name of key senior management
Remuneration band (in bands of RM50,000)(1)
Paid for
Proposed for
FYE 2021
FYE 2022
RM’000
RM’000(3)(4)
850 – 900
0 – 50(2)
650 – 700
Chow Enn Jie
Wendy Kam
Teoh Huey Hong
350 – 400
250 – 300
350 – 400
Notes:
(1)
The remuneration includes salaries, allowances, bonuses and commission.
(2)
Wendy Kam joined our Group in December 2021.
(3)
The provision for bonuses is not included. Such bonuses, if any, will be determined at
a later date depending on the individual performance and the performance of our
Group, subject to the recommendation of our Remuneration Committee and approval
by our Board.
(4)
Our Group has in place commission policy to motivate our employees to bring in
sales. In this regard, employees are rewarded based on GP generated from the
clients under his/her portfolio and were generally paid on staggered basis over a
period of 12 months. Since 1 July 2022, this commission is no longer applicable to
Chow Enn Jie and Teoh Huey Hong, who are our key senior management as well as
shareholders of our Company. This commission is also not applicable to Wendy Kam,
who is our key senior management.
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
5.4.6
Management Reporting Structure
The management reporting structure of our Group is as follows:
KGW Group
Dato’ Roger Wong
Managing Director
Cheok Hui Yen
Executive Director /
Chief Operating Officer
Chow Enn Jie
Sales and
Marketing Director
Wendy Kam
Chief Financial Officer
Teoh Huey Hong
Customer Care Director
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
5.5
DECLARATIONS
MANAGEMENT
BY
OUR
PROMOTERS,
DIRECTORS
AND
KEY
SENIOR
None of our Promoters, Directors and key senior management is or was involved in any of the
following events, whether within or outside Malaysia:
5.6
(i)
in the last 10 years, a petition under any bankruptcy or insolvency laws was filed (and
not struck out) against him / her or any partnership in which he / she was a partner or
any corporation of which he / she was a director or member of key senior
management;
(ii)
disqualified from acting as a director of any corporation, or from taking part directly or
indirectly in the management of any corporation;
(iii)
in the last 10 years, charged or convicted in a criminal proceeding or is a named
subject of a pending criminal proceeding;
(iv)
in the last 10 years, any judgment was entered against him / her, or finding of fault,
misrepresentation, dishonesty, incompetence or malpractice on his / her part,
involving a breach of any law or regulatory requirement that relates to the capital
market;
(v)
in the last 10 years, he / she was the subject of any civil proceeding, involving an
allegation of fraud, misrepresentation, dishonesty, incompetence or malpractice on
his / her part that relates to the capital market;
(vi)
being the subject of any order, judgment or ruling of any court, government, or
regulatory authority or body temporarily enjoining him / her from engaging in any type
of business practice or activity;
(vii)
being the subject of any current investigation or disciplinary proceeding, or in the last
10 years has been reprimanded or issued any warning by any regulatory authority,
securities or derivatives exchange, professional body or government agency; or
(viii)
has an unsatisfied judgment against him / her.
FAMILY RELATIONSHIPS OR ASSOCIATIONS
There is no family relationship or association between any of our Promoters, substantial
shareholders, Directors and/or key senior management as at the LPD.
5.7
SERVICE CONTRACTS
As at the LPD, none of our Directors and/or key senior management has any existing or
proposed service contracts with our Group.
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Registration No. 202201009353 (1455050-D)
5.
INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS AND
KEY SENIOR MANAGEMENT (CONT’D)
5.8
EMPLOYEES
As at the LPD, our Group has a total workforce of 72 employees, of whom 70 are permanent
employees and 2 are contractual employees. As at the LPD, all our employees are Malaysian.
A breakdown of our Group’s employees by department for the Period Under Review and as at
the LPD is as follows:
No. of employees as at
31 December
2019
2020
2021
LPD
2
2
4
7
3
6
11
11
26
24
27
39
3
5
4
3
7
8
6
9
3
41
45
52
72
Department
Executive Directors and Management
Accounts and Finance
Customer Service
International Business Development
Sales and Marketing
Warehousing
Total
None of our employees, whether permanent or contractual, belong to any trade unions or
have any labour relationship with any union, and there have been no industrial disputes since
we commenced operations.
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Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP
6.1
INFORMATION ON OUR GROUP
6.1.1
Our Company
Our Company was incorporated in Malaysia on 14 March 2022 under the Act as a private
company limited by shares under the name of KGW Group Sdn Bhd. On 7 October 2022, we
were converted into a public limited company and assumed our present name. Our Company is
an investment holding company and was incorporated to facilitate our Listing.
Through our subsidiaries, our Group’s principal business activities include:
(i)
investment holding;
(ii)
logistics services; and
(iii)
warehousing and distribution of healthcare-related products and devices.
There have been no material changes in the manner in which we conduct our business or
activities since the incorporation of our Company up to the LPD.
6.1.2
Pre-listing internal restructuring exercise
Subsequent to FYE 2021, we carried out an internal restructuring exercise which involved the
following steps (“Internal Restructuring Exercise”):
(i)
Shareholding restructuring of KGW Medica and increase in KGW Medica’s
issued share capital
On 24 January 2022, certain existing shareholders of KGW Medica undertook a
shareholding reorganisation (“Share Reorg 1”). Ordinary shares in KGW Medica held
by these shareholders before and after the Share Reorg 1 are as follows:
Shareholders
Dato’ Roger Wong
Datin Wong Wan Jye
Ong Hoon Chen
Chan Sek Seng
Total
No. of shares / % of shareholdings in KGW Medica
Before the
% of
After the
% of
Share
share Acquisition
Share
share
Reorg 1 capital / (Disposal)
Reorg 1 capital
1,275
51.00
1,275
51.00
550
22.00
125
675
27.00
125
5.00
(125)
550
22.00
550
22.00
2,500 100.00
2,500 100.00
The Share Reorg 1 was undertaken to facilitate the exit of Ong Hoon Chen as a
shareholder of KGW Medica. The transfer of 125 ordinary shares in KGW Medica was
transacted at RM1 per share which was arrived at based on Ong Hoon Chen’s cost of
investment in those shares of RM1 per share. This is notwithstanding the unaudited
NA per share of KGW Medica of RM30.79 as at 31 December 2021, in view of Ong
Hoon Chen’s short investment period of 4 months in KGW Medica. In this respect, Ong
Hoon Chen has resolved to relinquish his shares in KGW Medica to focus on his fulltime employment and other personal commitments.
On 25 January 2022 and 9 February 2022, KGW Medica increased its issued share
capital by a total of RM297,500 from RM2,500 comprising 2,500 ordinary shares to
RM300,000 comprising 300,000 ordinary shares by issuing a total of 297,500 new
ordinary shares at an issue price of RM1 per share to its existing shareholders (“New
Issue”).
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Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP (CONT’D)
Ordinary shares in KGW Medica held by these shareholders before and after the New
Issue are as follows:
Shareholders
Dato’ Roger Wong
Datin Wong Wan Jye
Chan Sek Seng
Total
No. of shares / % of shareholdings in KGW Medica
% of
% of
Before the
share
New
After the
share
New Issue capital
Issue New Issue capital
1,275
51.00
244,725
246,000
82.00
675
27.00
26,325
27,000
9.00
550
22.00
26,450
27,000
9.00
2,500 100.00
297,500
300,000 100.00
The New Issue was undertaken to raise working capital for KGW Medica.
(ii)
Shareholding restructuring of Mattroy Logistics
On 7 April 2022, the existing shareholders of Mattroy Logistics undertook a
shareholding reorganisation (“Share Reorg 2”). Ordinary shares in Mattroy Logistics
held by these shareholders before and after the Share Reorg 2 are as follows:
Shareholders
Dato’ Roger Wong
Chow Enn Jie
Cheok Hui Yen
Total
No. of shares / % of shareholdings in Mattroy Logistics
Before the
% of
After the
% of
Share
share Acquisition
Share
share
Reorg 2 capital / (Disposal)
Reorg 2 capital
110,000
55.00
54,000
164,000
82.00
70,000
35.00
(42,000)
28,000
14.00
20,000
10.00
(12,000)
8,000
4.00
200,000 100.00
200,000 100.00
The Share Reorg 2 was undertaken mainly to realign these shareholders’
shareholdings in Mattroy Logistics with their respective contribution in the past and
future contribution to Mattroy Logistics. The 54,000 ordinary shares in Mattroy Logistics
were transacted at RM3.13 per share which was arrived at after taking into
consideration the unaudited NA per share of Mattroy Logistics of RM3.13 as at 31
December 2021.
(iii)
Acquisitions
(a)
On 30 September 2022, KGW entered into a share sale agreement to acquire
the entire issued share capital of KGW Logistics of RM1,000,000 comprising
1,000,000 ordinary shares for a purchase consideration of RM11,092,800. The
purchase consideration was fully satisfied by the issuance of 369,760,000 new
Shares at an issue price of RM0.03 per Share. Details of the vendors of KGW
Logistics and the number of Shares issued to them under the Acquisition of
KGW Logistics are as follows:
Vendors of KGW Logistics
Dato’ Roger Wong
Cheok Hui Yen
Chow Enn Jie
Teoh Huey Hong
Total
No. of
shares
acquired
820,000
100,000
50,000
30,000
1,000,000
70
% of
share
capital
82.00
10.00
5.00
3.00
100.00
Purchase
consideration
(RM)
9,096,096
1,109,280
554,640
332,784
11,092,800
No. of
KGW Shares
issued
303,203,200
36,976,000
18,488,000
11,092,800
369,760,000
Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP (CONT’D)
The Acquisition of KGW Logistics was conditional upon the approval of Bursa
Securities being obtained for the Listing, which was obtained on [●]. The
Acquisition of KGW Logistics was subsequently completed on [●]. Thereafter,
KGW Logistics became our wholly-owned subsidiary. The total purchase
consideration of RM11,092,800 was arrived at on a willing buyer-willing seller
basis and after taking into account the audited NA of KGW Logistics as at 31
December 2021 of RM11,092,831.
The new Shares issued under the Acquisition of KGW Logistics rank equally
in all respects with our existing Shares including voting rights and will be
entitled to all rights and dividends and/or other distributions, the entitlement
date of which is subsequent to the date of issuance of the new Shares.
(b)
On 30 September 2022, KGW entered into a share sale agreement to acquire
the entire issued share capital of KGW Medica of RM300,000 comprising
300,000 ordinary shares for a purchase consideration of RM374,500. The
purchase consideration was fully satisfied by the issuance of 12,483,333 new
Shares at an issue price of RM0.03 per Share. Details of the vendors of KGW
Medica and the number of Shares issued to them under the Acquisition of KGW
Medica are as follows:
Vendors of KGW Medica
Dato’ Roger Wong
Datin Wong Wan Jye
Chan Sek Seng
Total
No. of
shares
acquired
246,000
27,000
27,000
300,000
% of
share
capital
82.00
9.00
9.00
100.00
Purchase
consideration
(RM)
307,090
33,705
33,705
374,500
No. of
KGW Shares
issued
10,236,333
1,123,500
1,123,500
12,483,333
The Acquisition of KGW Medica was conditional upon the approval of Bursa
Securities being obtained for the Listing, which was obtained on [●]. The
Acquisition of KGW Medica was subsequently completed on [●]. Thereafter,
KGW Medica became our wholly-owned subsidiary. The purchase
consideration of RM374,500 was arrived at on a willing buyer-willing seller
basis and after taking into account the audited NA of KGW Medica as at 31
December 2021 of RM76,985 and subsequent increase in its issued share
capital by a total of RM297,500 on 25 January 2022 and 9 February 2022.
The new Shares issued under the Acquisition of KGW Medica rank equally in
all respects with our existing Shares including voting rights and will be entitled
to all rights and dividends and/or other distributions, the entitlement date of
which is subsequent to the date of issuance of the new Shares.
(c)
On 30 September 2022, KGW entered into a share sale agreement to acquire
the entire issued share capital of Mattroy Logistics of RM200,000 comprising
200,000 ordinary shares for a purchase consideration of RM626,800. The
purchase consideration was fully satisfied by the issuance of 20,893,334 new
Shares at an issue price of RM0.03 per Share. Details of the vendors of Mattroy
Logistics and the number of Shares issued to them under the Acquisition of
Mattroy Logistics are as follows:
Vendors of Mattroy Logistics
Dato’ Roger Wong
Chow Enn Jie
Cheok Hui Yen
Total
No. of
shares
acquired
164,000
28,000
8,000
200,000
71
% of
share
capital
82.00
14.00
4.00
100.00
Purchase
consideration
(RM)
513,976
87,752
25,072
626,800
No. of
KGW Shares
issued
17,132,534
2,925,067
835,733
20,893,334
Registration No. 202201009353 (1455050-D)
INFORMATION ON OUR GROUP (CONT’D)
6.
The Acquisition of Mattroy Logistics was conditional upon the approval of Bursa
Securities being obtained for the Listing, which was obtained on [●]. The
Acquisition of Mattroy Logistics was subsequently completed on [●]. Thereafter,
Mattroy Logistics became our wholly-owned subsidiary. The purchase
consideration of RM626,800 was arrived at on a willing buyer-willing seller basis
and after taking into account the audited NA of Mattroy Logistics as at 31
December 2021 of RM626,259.
The new Shares issued under the Acquisition of Mattroy Logistics rank equally
in all respects with our existing Shares including voting rights and will be entitled
to all rights and dividends and/or other distributions, the entitlement date of which
is subsequent to the date of issuance of the new Shares.
6.1.3
Share capital and changes in share capital
As at the LPD, our issued share capital is RM12,094,110 comprising 403,136,767 Shares.
Details of the changes in our issued share capital since incorporation are as follows:
Date of
allotment
14 March 2022
[●]
No. of
Shares
allotted
100
403,136,667
Nature of
transaction
Consideration
Subscribers’
shares
RM10.00
Otherwise than
cash for the
Acquisitions
RM12,094,100.01
Cumulative issued
share capital
(RM)
10.00
12,094,110.01
There were no discounts, special terms or installment payment terms given in consideration of
the above allotment.
As at the LPD, we do not have any outstanding warrants, options, convertible securities and
uncalled capital.
Upon completion of our Listing, our issued share capital will increase to RM[●] comprising
482,798,567 Shares.
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Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP (CONT’D)
6.1.4
Our Group structure
(i)
Our Group structure before the Acquisitions, after the Acquisitions and as at the LPD, and after our IPO is illustrated below:
Before the Acquisitions
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Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP (CONT’D)
After our IPO
(ii)
Details of the companies within our Group are set out below:
Principal
place of
business
Issued share
capital
(RM)
Effective equity
interest
(%)
15 September 2005
Malaysia
Malaysia
1,000,000
100.00
Logistics services
24 June 2021
Malaysia
Malaysia
300,000
100.00
Warehousing and distribution of
healthcare-related
products
and
devices
3 September 2014
Malaysia
Malaysia
200,000
100.00
Logistics services
Companies
within our Group
Date and place of
incorporation
KGW Logistics
KGW Medica
Mattroy Logistics
Principal activities
Further details on our Subsidiaries are set out in Section 6.2 of this Prospectus. As at the LPD, we do not have any associate companies.
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Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP (CONT’D)
6.2
INFORMATION ON OUR SUBSIDIARIES
6.2.1
KGW Logistics
(i)
Background and history
KGW Logistics was incorporated in Malaysia on 15 September 2005 under the
Companies Act 1965 as a private limited company under the name of Kunn-G
Worldwide Services (M) Sdn Bhd and is deemed registered under the Act. It assumed
its present name on 21 August 2007.
(ii)
Share capital
As at the LPD, the issued share capital of KGW Logistics is RM1,000,000 comprising
1,000,000 shares.
Details of the changes in the issued share capital of KGW Logistics since incorporation
are as follows:
Date of allotment
No. of
shares
allotted
15 September 2005
Cumulative
issued share
capital
(RM)
Nature of
transaction
Consideration
(RM)
2
Subscribers’
shares
2
15 November 2005
99,998
Issue for cash
99,998
100,000
31 January 2011
150,000
Issue for cash
150,000
250,000
8 April 2019
750,000
Issue for cash
750,000
1,000,000
2
There were no discounts, special terms or installment payment terms given in
consideration of the above allotment.
As at the LPD, KGW Logistics does not have any outstanding warrants, options,
convertible securities and uncalled capital.
(iii)
Substantial shareholder and directors
As at the LPD, KGW Logistics is our wholly-owned subsidiary. The director of KGW
Logistics is Dato’ Roger Wong.
(iv)
Subsidiary and associate
As at the LPD, KGW Logistics does not have any subsidiary or associate company.
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Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP (CONT’D)
6.2.2
KGW Medica
(i)
Background and history
KGW Medica was incorporated in Malaysia on 24 June 2021 under the Act as a private
limited company under its present name.
(ii)
Share capital
As at the LPD, the issued share capital of KGW Medica is RM300,000 comprising
300,000 shares.
Details of the changes in the issued share capital of KGW Medica since incorporation
are as follows:
No. of
shares
allotted
Cumulative
issued share
capital
(RM)
Nature of
transaction
Consideration
(RM)
2,500
Subscribers’
shares
2,500
2,500
25 January 2022
97,500
Issue for cash
97,500
100,000
9 February 2022
200,000
Issue for cash
200,000
300,000
Date of allotment
24 June 2021
There were no discounts, special terms or installment payment terms given in
consideration of the above allotment.
As at the LPD, KGW Medica does not have any outstanding warrants, options,
convertible securities and uncalled capital.
(iii)
Substantial shareholder and directors
As at the LPD, KGW Medica is our wholly-owned subsidiary. The directors of KGW
Medica are Dato’ Roger Wong, Datin Wong Wan Jye and Chan Sek Seng.
(iv)
Subsidiary and associate
As at the LPD, KGW Medica does not have any subsidiary or associate company.
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Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP (CONT’D)
6.2.3
Mattroy Logistics
(i)
Background and history
Mattroy Logistics was incorporated in Malaysia on 3 September 2014 under the
Companies Act 1965 as a private limited company under its present name and is
deemed registered under the Act.
(ii)
Share capital
As at the LPD, the issued share capital of Mattroy Logistics is RM200,000 comprising
200,000 shares.
Details of the changes in the issued share capital of Mattroy Logistics since
incorporation are as follows:
Cumulative
issued share
capital
(RM)
Date of allotment
No. of
shares
allotted
Nature of
transaction
Consideration
(RM)
3 September 2014
100
Subscribers’ shares
100
8 October 2014
99,900
Issue for cash
99,900
100,000
4 February 2015
100,000
Issue for cash
100,000
200,000
100
There were no discounts, special terms or installment payment terms given in
consideration of the above allotment.
As at the LPD, Mattroy Logistics does not have any outstanding warrants, options,
convertible securities and uncalled capital.
(iii)
Substantial shareholder and directors
As at the LPD, Mattroy Logistics is our wholly-owned subsidiary. The directors of
Mattroy Logistics are Dato’ Roger Wong and Chow Enn Jie.
(iv)
Subsidiary and associate
As at the LPD, Mattroy Logistics does not have any subsidiary or associate company.
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Registration No. 202201009353 (1455050-D)
6.
INFORMATION ON OUR GROUP (CONT’D)
6.3
LOCATIONS OF OPERATIONS
As at the LPD, our Group operates from the following premises in Selangor:
Company
KGW Logistics
and Mattroy
Logistics
KGW Medica
Main
functions
Office
Location of facilities
(Address)
D5-7-1 (Block D5) and D-11-9-G, D11-10-G, D-11-10-1,
D-11-11-G, D-11-11-1 (Block D11)
Dana 1 Commercial Centre
Jalan PJU 1A/46, 47301 Petaling Jaya
Selangor Darul Ehsan
Office cum
warehouse
D5-7-G, Block D5
Dana 1 Commercial Centre
Jalan PJU 1A/46, 47301 Petaling Jaya
Selangor Darul Ehsan
Please refer to Section 7.20 of this Prospectus for further information of our Group’s material
lands and buildings.
6.4
PUBLIC TAKE-OVERS
During the last financial year and up to the LPD, there were no:
(i)
public take-over offers by third parties in respect of our Group’s shares; and
(ii)
public take-over offers by our Group in respect of other companies’ shares.
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Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW
7.1
OUR HISTORY AND BACKGROUND
Our Company was incorporated in Malaysia on 14 March 2022 as a private limited company
under the name of KGW Group Sdn Bhd. On 7 October 2022, our Company was converted
into a public limited company and assumed its current name. Our Company is an investment
holding company. Through our subsidiaries, we are principally involved in the provision of
logistics services (ocean freight services, air freight services and freight forwarding services)
as well as warehousing and distribution of healthcare-related products and devices.
The history of our Group commenced with the incorporation of KGW Logistics under the name
of Kunn-G Worldwide Services (M) Sdn Bhd on 15 September 2005 by Dato’ Roger Wong
and Dato’ Choi Fook Chye. The company went through a series of shareholding restructuring
from 2005 to 2021 involving, among others, the disposal of Dato’ Choi Fook Chye’s entire
shareholding in 2013 to his spouse, Datin Liew Min Nar, followed by the entry of our key senior
management, namely Cheok Hui Yen, Chow Enn Jie and Teoh Huey Hong, as shareholders
in 2018, and the eventual exit of Datin Liew Min Nar as a shareholder in 2021. These
shareholding restructurings were undertaken to enable equity participation by our key senior
management in the company as well as to facilitate the exit of Datin Liew Min Nar who opted
to focus on her other business commitments.
Through Kunn-G Worldwide Services (M) Sdn Bhd, we provided logistics services for ocean
and air cargo shipments with our main focus on shipments between Malaysia and the USA.
We rented and established our first office at SunwayMas Commercial Centre, Kelana Jaya,
Selangor.
We initially began our operations by serving Malaysian exporters and importers in their ocean
cargo shipments to or from overseas. We mainly assisted exporters and importers as their
agent in dealing with ocean carriers for cargo space booking and handling export / import
documentation requirements. We arranged and coordinated our first export ocean shipment
to the USA in the second half of 2005. We subsequently arranged and coordinated export
ocean shipments to South America, Europe, Asia and Oceania; and our first import ocean
shipment from Vietnam into Malaysia in the same year.
By the end of 2005, we were also appointed as an agent in Malaysia to act on behalf of a
USA-based freight forwarder, UT Freight Service (U.S.A.) Ltd. In 2006, we were appointed as
an agent in Malaysia to act on behalf of another USA-based freight forwarder, namely You
First Express Inc. As an agent, we assisted our principals by promoting their services to
exporters in Malaysia who intend to ship their products from Malaysia to the USA. During the
same year, we expanded our services when we arranged and coordinated our first import air
shipment from the USA into Malaysia and our first export air shipment from Malaysia to the
USA.
With the growth of our business and expansion of logistics services offered to our customers,
we decided to rebrand and Kunn-G Worldwide Services (M) Sdn Bhd assumed its current
name, KGW Logistics (M) Sdn Bhd, on 21 August 2007.
In March 2008, we moved into a new office located at Dana 1 Commercial Centre, Ara
Damansara, Selangor to cater for our growing business.
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Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
In 2010, KGW Logistics obtained its registration as a NVOCC with the United States Federal
Maritime Commission (“FMC”). The FMC is an independent expert agency charged with
regulating liner shipping in USA trades. As a NVOCC registered with the FMC, we are able to
issue our own house bill of lading and we are permitted to enter into service contracts with
ocean carriers (“Carrier Service Contracts”) directly, where we commit to procuring a certain
minimum quantity of cargo space over a fixed period of time in exchange for ocean carriers
committing to a certain freight rate for a fixed period of time (unless amended with written
confirmations). This allows us better control in the provision of ocean freight services for
shipments to the USA given our contractual cargo space availability and pre-determined
freight costs.
In 2011, we completed our first non-containerised ocean shipment, where we had to arrange
for the delivery of 12 units of oil tanks from Malaysia to Singapore.
In 2014, we incorporated Mattroy Logistics, which focuses on the provision of logistics services
for shipments between Malaysia and non-USA countries.
In 2015, in tandem with our continued growth, we leased an additional office, also located in
Dana 1 Commercial Centre.
In 2017, KGW Logistics was awarded the Outstanding SME Award at the Golden Bull Award
organised by Business Media International. In the same year, we also received the SME100
Awards: Malaysia’s Fast Moving Companies from Business Media International.
In 2018, we expanded further by leasing another office unit in Dana 1 Commercial Centre. In
the same year, we were awarded the SME & Entrepreneurship Business Award from Yayasan
Usahawan Malaysia | MyPreneurship in the category of “3PL of the Year”.
In 2019, KGW Logistics received the Gold Award in the “Services” category (SMEs) in the
Export Excellence Awards organised by Star Media Group. KGW Logistics was also awarded
the Prominent Business Best Brands Award by The Brand Laureate.
In 2020, we leased an additional office unit as well as another office cum storage unit also
located in Dana 1 Commercial Centre.
In 2021, KGW Logistics was awarded the Logistics Company of the Year award at the
inaugural Kuala Lumpur International Logistics & Transport Exhibition Excellence Awards coorganised by the Ministry of Transport Malaysia. In June of the same year, we incorporated
KGW Medica with the plan to venture into warehousing and distribution of healthcare-related
products and devices. Pending the development of this business, KGW Medica briefly
ventured into the trading of healthcare-related products. We have since March 2022 shifted
our focus back into the warehousing and distribution business upon securing customers for
this business.
With a track record of approximately 17 years, we are currently a logistics services provider
offering mainly ocean and air freight services as well as freight forwarding services for cargo
shipments to and from the USA and other countries. As at the LPD, we are also involved in
warehousing and distribution of healthcare-related products and devices, which gives us an
additional revenue stream that supplements our overall revenue model.
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Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
7.2
KEY ACHIEVEMENTS AND MILESTONES
The key milestones and achievements of our Group since the commencement of our business
operations are as follows:
Year
2005
Key Milestones and Achievements
Incorporation of Kunn-G Worldwide Services (M) Sdn Bhd
Commenced operations in providing logistics services for ocean and air cargo
shipments focusing on shipments between Malaysia and the USA
2007
Kunn-G Worldwide Services (M) Sdn Bhd was rebranded and assumed its current
name, KGW Logistics (M) Sdn Bhd
2008
Shifted our office to Dana 1 Commercial Centre, Ara Damansara, Selangor to cater for
our growing business
2010
KGW Logistics obtained registration as a NVOCC with the FMC
2014
Incorporated Mattroy Logistics to focus on logistics services for shipments between
Malaysia and non-USA countries
2017
Awarded the Outstanding SME Award at the Golden Bull Award organised by Business
Media International
Awarded the SME100 Awards: Malaysia’s Fast Moving Companies from Business
Media International
2018
Awarded the SME & Entrepreneurship Business Award from Yayasan Usahawan
Malaysia | MyPreneurship in the category of “3PL of the Year”
2019
Awarded the Gold Award in the “Services” category (SMEs) in the Export Excellence
Awards organised by Star Media Group
Awarded the Prominent Business Best Brands Award by The Brand Laureate
2021
Incorporated KGW Medica to venture into the provision of warehousing and distribution
of healthcare-related products and devices
Awarded the Logistics Company of the Year award at the inaugural Kuala Lumpur
International Logistics & Transport Exhibition Excellence Awards co-organised by the
Ministry of Transport Malaysia
2022
Secured KGW Medica’s first customer for warehousing and distribution services
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Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
7.3
PRINCIPAL ACTIVITIES
Logistics is widely known as the overall process of managing how resources (such as raw
materials, in-process stocks and finished goods) are acquired, stored and transported to their
final destination.
The logistics industry can be segmented into transport service providers and logistics service
providers. Transport service providers are generally the carriers or providers of the principal
transport modes, which include the operators of road, rail, air and sea transport, multimodal
operators and terminal operators.
On the other hand, logistics service providers are often referred to as the transport
intermediaries, who provide support to the aforesaid principal transport modes through the
provision of various logistics services. These logistics services include those relating to,
among others, organising the international movement of cargo, regulatory compliance and
clearance, warehousing and/or distribution.
Through our subsidiaries, namely KGW Logistics and Mattroy Logistics, we provide logistics
services including ocean freight services, air freight services and freight forwarding services.
KGW Logistics focuses on logistics services for cargo shipments to and from the USA while
Mattroy Logistics focuses on those to and from other countries. Our customers for logistics
services are exporters, importers and other freight forwarders, both local and foreign.
Besides our logistics services business, our Group, through KGW Medica, is also involved in
the warehousing and distribution of healthcare-related products and devices within Malaysia.
KGW Medica was incorporated on 24 June 2021 with the plan to venture into warehousing
and distribution of healthcare-related products and devices. Pending the development of this
business, KGW Medica briefly ventured into trading of healthcare-related products, mainly
COVID-19 antigen self-test kits. KGW Medica will discontinue its trading of healthcare-related
products operations upon full disposal of its existing inventories.
KGW Medica commenced warehousing and distribution operations since March 2022. As at
the LPD, KGW Medica’s customers for warehousing and distribution are local distributors of
healthcare-related products and devices.
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Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
Our business model is depicted in the diagram below:
Our revenue segmentation for the Period Under Review is as follows:
Revenue segmentation by business activities
Audited
FYE 2020
RM'000
%
FYE 2019
RM'000
%
Logistics services
- Ocean freight
- Air freight
- Freight forwarding
Audited
FPE 2022
RM'000
%
38,935
2,039
2,405
89.76
4.70
5.54
58,663
1,891
2,971
92.34
2.98
4.68
187,839
1,899
3,858
96.12
0.97
1.98
151,135
850
1,649
97.44
0.55
1.06
43,379
100.00
63,525
100.00
193,596
99.07
153,634
99.05
-
-
-
-
(1)1,823
0.93
(2)1,468
0.95
43,379
100.00
63,525
100.00
195,419
100.00
155,102
100.00
Warehousing and
distribution of
healthcare-related
products and devices
Total
FYE 2021
RM'000
%
Notes:
(1)
Solely from trading.
(2)
Include trading as well as warehousing and distribution of healthcare-related products
and devices.
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7.
BUSINESS OVERVIEW (CONT’D)
Revenue segmentation by geographical region of customers
Our principal market is Malaysia as 78.43%, 78.05%, 56.02% and 47.17% of our revenue for
FYE 2019, FYE 2020, FYE 2021 and FPE 2022 was generated from our customers in
Malaysia.
FYE 2019
RM’000
%
Malaysia
Overseas
- Asia(1)
- Africa(2)
- Europe(3)
- Oceania(4)
- North America(5)
- South America(6)
Total
FYE 2020
RM’000
%
Audited
FYE 2021
RM’000
%
FPE 2022
RM’000
%
34,022
78.43
49,584
78.05
109,471
56.02
73,168
47.17
5,281
92
821
152
3,011
9,357
12.18
0.21
1.89
0.35
6.94
21.57
6,695
88
253
224
6,667
14
13,941
10.54
0.14
0.40
0.35
10.50
0.02
21.95
25,758
389
2,743
403
56,279
376
85,948
13.18
0.20
1.40
0.21
28.80
0.19
43.98
19,954
741
669
476
60,068
26
81,934
12.86
0.48
0.43
0.31
38.73
0.02
52.83
43,379
100.00
63,525
100.00
195,419
100.00
155,102
100.00
Notes:
(1)
Including China, Singapore and Vietnam.
(2)
Including Egypt, Morocco and South Africa.
(3)
Including United Kingdom, Netherlands and France.
(4)
Including Australia, New Zealand and Tonga.
(5)
Including USA, Canada and Mexico. Customers from the USA contributed RM3.00
million, RM6.56 million, RM49.55 million and RM59.45 million of our revenue in FYE
2019, FYE 2020, FYE 2021 and FPE 2022 respectively, making it the foreign country
with the largest revenue contribution to our Group based on location of customers.
(6)
Including Colombia, Argentina and Brazil.
Revenue segmentation by geographical region of shipment destination
FYE 2019
RM’000
%
Malaysia(1)
Overseas(2)
- Asia(5)
- Africa(6)
- Europe(7)
- Oceania(8)
- North America(9)
- South America(10)
Total
Audited
FYE 2020
FYE 2021
RM’000
% RM’000
%
FPE 2022
RM’000
%
5,178
11.94
5,501
8.66
(3)9,903
5.07
(4)5,143
3.32
7,096
2,524
6,216
645
21,167
553
38,201
16.36
5.82
14.33
1.49
48.79
1.27
88.06
9,117
5,587
4,822
956
35,975
1,567
58,024
14.35
8.80
7.59
1.50
56.63
2.47
91.34
17,252
5,916
13,798
2,170
144,471
1,909
185,516
8.83
3.03
7.06
1.11
73.93
0.97
94.93
11,902
2,319
11,751
2,007
121,454
526
149,959
7.67
1.49
7.58
1.29
78.31
0.34
96.68
43,379
100.00
63,525
100.00
195,419
100.00
155,102
100.00
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7.
BUSINESS OVERVIEW (CONT’D)
Notes:
(1)
Represents import shipments into Malaysia.
(2)
Represents export shipments from Malaysia to overseas.
(3)
Includes revenue generated from trading of healthcare-related products in Malaysia
of RM1.82 million.
(4)
Includes revenue generated from trading, warehousing and distribution of healthcarerelated products and devices in Malaysia of RM1.47 million.
(5)
Includes India, Indonesia and Vietnam.
(6)
Includes Nigeria, South Africa and Egypt.
(7)
Includes Netherlands, Germany and United Kingdom.
(8)
Includes Australia, New Zealand and Fiji.
(9)
Includes USA, Canada and Mexico. Shipments to the USA contributed RM16.71
million, RM29.64 million, RM130.41 million and RM116.25 million of our revenue in
FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively, making it the country
with the largest revenue contribution to our Group based on shipment destination.
(10)
Includes Brazil, Chile and Peru.
Revenue segmentation by type of customers
FYE 2019
RM’000
%
Audited
FYE 2020
FYE 2021
RM’000
% RM’000
%
FPE 2022
RM’000
%
Exporters and
importers(1)
Freight forwarders
Customers for
trading, warehousing
and distribution of
healthcare-related
products and
devices(2)
30,757
70.90
45,121
71.03
121,667
62.26
111,193
71.69
12,622
-
29.10
-
18,404
-
28.97
-
71,929
1,823
36.81
0.93
42,441
1,468
27.36
0.95
Total
43,379
100.00
63,525
100.00
195,419
100.00
155,102
100.00
Notes:
(1)
These include end customers (i.e. actual shipper or consignee) and are distinguished
from freight forwarders (local and foreign) or customers involved in providing logistics
services themselves.
(2)
Customers for trading of healthcare-related products in FYE 2021 and FPE 2022
include local retail pharmacies and small and medium companies / enterprises.
Customers for warehousing and distribution of healthcare-related products and
devices in FPE 2022 include local distributors of healthcare-related products and
devices.
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7.
BUSINESS OVERVIEW (CONT’D)
7.3.1
Provision of logistics services
As a logistics services provider, we offer the services to arrange and coordinate the complete
process of a shipper’s shipment of cargo. In an export trade, the shipment process starts from
the factory / warehouse of a shipper in Malaysia up to the delivery of cargo at the designated
location of an overseas consignee. In an import trade, the shipment process starts from the
factory / warehouse of an overseas shipper and ends at a consignee’s factory / warehouse in
Malaysia.
The following diagram illustrates the general movement of cargo in an export / import trade in
Malaysia.
The complete shipment process typically involves:
•
land transportation from the original designated location to the port of loading;
•
ocean / air transportation from a Malaysian port of loading to an overseas port of
discharge, or from an overseas port of loading to a Malaysian port of discharge;
•
land transportation from the port of discharge to the final designated location; and
•
preparation and submission of relevant shipping documentations for customs
clearance and release of cargo.
Our logistics services can be classified into the following categories:
(a)
Ocean freight services
Through an extensive network of freight forwarders and multiple ocean carriers that
we work with, we are able to arrange and coordinate export and import ocean cargo
shipments for our customers. Our ocean freight services mainly entail our Group
arranging for booking of cargo space directly with ocean carriers, and thereafter
coordinating the shipment from the port of loading to the port of discharge. We appoint
foreign freight forwarders to handle our customers’ cargo in foreign countries from or
to which the cargo is shipped.
We offer our ocean freight services to exporters, importers and other freight
forwarders, both local and foreign.
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Our ocean freight services are mainly catered for container shipping. During the
Period Under Review, most of our revenue from ocean freight services was in relation
to container shipping. Within container shipping, we focus on providing ocean freight
services for Full Container Load (“FCL”) shipping instead of Less than Container Load
(“LCL”) shipping. FCL shipping refers to ocean shipment of container in which the
cargo of a single customer occupies a full container. LCL shipping, on the other hand,
involves the coordination and consolidation of multiple ocean cargo shipments from
various shippers into 1 full container shipment.
We handled 13,742 TEU, 17,242 TEU, 17,106 TEU and 7,697 TEU of containers as
part of our ocean freight services for FYE 2019, FYE 2020, FYE 2021 and FPE 2022
respectively. These containers handled were for FCL shipping and included both
export and import shipments.
We enter into Carrier Service Contracts annually for certain shipping routes to secure
certain minimum quantity of cargo space at certain freight rates. These Carrier Service
Contracts require us to ship certain committed quantity of cargo (in TEUs)
(“Committed TEUs”). If we are unable to meet the Committed TEUs, we may be
required to pay for deficit charges for the dead freight (i.e. the cargo amount agreed
to be shipped but remained unshipped) which will be calculated based on the
difference between the volume actually shipped and the Committed TEUs multiplied
by the freight rate per unit as set out in the contract. During the Period Under Review,
we fulfilled the Committed TEUs under most of our Carrier Service Contracts, except
for a few which we have agreed mutually with the ocean carriers to reduce the
Committed TEUs. We have not in the past and up to LPD incurred any deficit charges.
During the Period Under Review and as at the LPD, our Carrier Service Contracts are
for shipments between Malaysia and various states and provinces of USA and
Canada.
In addition to container shipping, we are able to handle shipment of project cargo or
over-sized cargo which may not fit into a standard shipping container. This type of
cargo generally requires us to inspect the cargo to determine its size, weight and
condition. We then determine the special equipment or container to be used to handle
the cargo. In the event that the said cargo is too large for a common container vessel,
we will arrange for shipping via a heavy-lift or breakbulk vessel. We will subsequently
establish shipping rates for our customer and once agreed upon, we will secure the
booking with the carrier. While we did not handle any shipment of project cargo or
over-sized cargo from FYE 2019 to FYE 2021, we arranged and coordinated the
shipment of approximately 1,980 tonnes of steel coil from Malaysia to the USA for 2
exporters in FPE 2022.
As part of our ocean freight services and upon the request of our ocean freight
services customers, we also provide land transportation and/or warehousing services
to facilitate our customers’ overall shipment process.
Our land transportation services are mainly catered for the transportation of cargo to
the port of loading for onward ocean shipment, or from the port of discharge to
consignees. These land transportation services are provided by third-party haulage
companies or rail transport companies engaged directly by us (for services required
within Malaysia), or indirectly via ocean carriers or foreign freight forwarders (for
services required outside of Malaysia).
Our warehousing services are mainly catered for our customers who require
temporary storage of cargo. These warehousing services are provided by third-party
warehouse operators engaged directly by us.
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BUSINESS OVERVIEW (CONT’D)
(b)
Air freight services
Through working with our network of freight forwarders, we offer the services to
arrange and coordinate export and import air cargo shipments for our customers. Our
air freight services mainly entail our Group arranging for booking of air cargo space
from other freight forwarders, and thereafter coordinating the shipment from the port
of loading to the port of discharge. We generally offer our air freight services to local
and foreign exporters and importers, and other foreign freight forwarders. The air
cargo that we handle are usually for customers that require a shorter delivery time.
We handled 190 MT, 81 MT, 91 MT and 45 MT of air cargo as part of our air freight
services for FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively. This air
cargo handled included both export and import shipments.
We source for air cargo space from other freight forwarders as this enables us to
procure a more competitive pricing given our relatively low demand for air cargo space,
which would not support our direct price negotiation with air carriers. In general, there
is no minimum space procurement that an air carrier requires for a direct price
negotiation. However, we view that an annual procurement of at least 50 to 100 MT
of cargo space from a single air carrier is necessary to facilitate the said direct price
negotiation for us to obtain commercially competitive rates. In addition, an
International Air Transport Association (IATA) cargo agent accreditation is required
for a direct sourcing of air cargo space from air carriers. We do not have the intention
to become an IATA-accredited cargo agent in the near term.
We do not have any service contracts for procurement of air cargo space with any
party.
Similar to our ocean freight services, we also provide land transportation and/or
warehousing services to our air freight services customers upon request.
(c)
Freight forwarding services
Our freight forwarding services are usually provided to local and foreign exporters and
importers, and foreign freight forwarders.
Our freight forwarding services mainly entail our Group arranging and coordinating
the services of licensed customs agents for our ocean freight services or air freight
services customers to obtain customs clearance of their shipments. We facilitate the
process of obtaining customs clearance by assisting in the preparation and
compilation of relevant shipping documents, and liaising between our customers and
the licensed customs agents to minimise errors in the process.
Our freight forwarding services also entail our Group providing handling services
mainly to foreign freight forwarders for their customers’ shipments to be exported from
or imported into Malaysia. These handling services are mainly for preparation,
submission and/or procurement of shipping documents required for purposes of
customs clearance or facilitating the release / departure of the shipments.
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7.
BUSINESS OVERVIEW (CONT’D)
7.3.2
Warehousing and distribution of healthcare-related products and devices
Noticing the increasing demand for healthcare-related products and devices and building on
our experience in the provision of logistics services, we incorporated KGW Medica in 2021 to
venture into the business of warehousing and distribution of healthcare-related products and
devices. Pending the development of this business, KGW Medica briefly ventured into trading
of healthcare-related products, mainly COVID-19 antigen self-test kits. KGW Medica will
discontinue its trading of healthcare-related products operations upon full disposal of its
existing inventories.
Our warehousing and distribution services for healthcare-related products and devices mainly
include storage of our customers’ inventories, and subsequent delivery of such items based
on our customers’ instructions. In this respect, our services are mainly charged as follows:
(i)
storage – based on storage space required and length of storage period;
(ii)
delivery – based on charges on a ‘per delivery’ basis (vary based on delivery location)
or a percentage of the total value of the invoice for the goods delivered, depending
on the services agreed to be provided by KGW Medica.
We store these healthcare-related products and devices at our rented warehouse in Dana 1
Commercial Centre. We utilise a warehouse management system (“WMS”) to facilitate the
operations at our warehouse. The WMS we utilise is a local third-party web-based and monthly
subscription-based software that enables us to manage the inventory of goods in our
warehouse, track delivery of goods, monitor inventory levels, and plan for picking, packing
and delivery of goods. The WMS also allows us to generate reports such as a detailed stock
report, sales order report and purchase order report. Additionally, our customers are also able
to monitor the inventory level of their goods at our warehouse through our WMS.
We have utilised our WMS since the commencement of the business of warehousing and
distribution of healthcare-related products and devices, and our WMS had always been a webbased software that does not require a physical server to be placed in our premises. In the
event the web-based server experiences downtime or malfunction, the aforesaid third-party
system provider will offer the server maintenance services to us without cost.
We established the WMS in 2022 upon securing our first customers for our warehousing and
distribution of healthcare-related products and devices business segment. The cost for the
WMS was approximately RM14,000, or 0.01% of our Group’s revenue for the FPE 2022. We
intend to continue with the same service provider due to our familiarity of the aforesaid
software system. However, in the event that our service provider decides to cease offering the
aforesaid WMS to us or if there are other WMS that offer similar services in a more costeffective manner, our Group is able to migrate / switch to another service provider.
We undertake delivery using our own transportation vehicle and/or third-party transportation
service providers. As at the LPD, we operate with a 2.48-tonne truck to support our
warehousing and distribution operations.
As at the LPD, the products handled by us for our warehousing and distribution customers
include nutritional products such as milk powders for diabetic patients, general wellness and
lactose intolerant individuals; health supplements such as vitamin gummies, ginkgo and milk
thistle; and medical devices such as thermometers, blood pressure monitors and silicone
catheters.
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7.
BUSINESS OVERVIEW (CONT’D)
7.4
BUSINESS PROCESS
In general, the process flow of an export ocean shipment from Malaysia starts from a local
designated location (such as a warehouse or factory) whereby the containers will be
transported to the port of loading by third-party haulage companies. Prior to loading the
containers onto the vessel, the freight forwarder will make bookings for cargo space with the
respective ocean carriers and prepare the required documentation for customs clearance in
order for the containers to be shipped to the destination country.
Once the containers have arrived at the designated overseas port of discharge, the foreign
freight forwarder will prepare the documents needed to collect the containers from the
respective carriers and for customs clearance. The foreign freight forwarder will then schedule
and arrange for the containers to be transported from the port of discharge to the final
designated location (such as a warehouse).
In this respect, our Group utilises the services of several foreign freight forwarders on a
vendor-customer basis. We work together with several freight forwarders to develop ocean
and air freight business between the 2 parties such as exchanging information on logistics
traffic between our countries and increasing logistics flow between our countries. We will also
assist each other in areas such as customs clearance as well as delivery to the consignee.
For FYE 2021, our Group has engaged the services of 219 foreign freight forwarders.
The process flow of an import ocean shipment into Malaysia is similar to that of an export
ocean shipment, except for its commencement from a designated location in a foreign country
and its conclusion at a designated location in Malaysia.
Further details of our Group’s business process flow in arranging and coordinating a
customer’s export shipment and import shipment are illustrated below:
7.4.1
Process flow for arranging and coordinating export shipment
(i)
Receive enquiry from customer, source for suppliers, prepare quotation to
customer and issue booking confirmation
Upon receiving an enquiry from the customer, we will prepare a quotation. We will
request for relevant details such as shipping method, pick up location, destination,
preferred route, shipment volume, shipment dates, shipment terms and type,
measurement and weight of cargo from the customer to prepare our quotation. Once
the customer has agreed on the quotation, booking for cargo space will be placed by
us accordingly.
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Thereafter, we will prepare a booking confirmation and cross-check the information
stated therein with the booking confirmation issued by the respective carriers to
ensure the information matches. We will then issue the booking confirmation to parties
involved such as the customer and the licensed customs agent engaged for customs
clearance purposes, and will follow up with the customer on the pick-up date.
The licensed customs agent engaged will be responsible for the completion and
processing of the documentation required for obtaining customs clearance of the
shipment, while we will assist in the preparation and compilation of relevant shipping
documents and liaising between the customer and the licensed customs agent to
minimise errors in the process. Our Group does not have an internal licensed customs
agent and uses the services of third-party licensed customs agent on a vendorcustomer basis.
(ii)
Schedule for delivery of cargo to port of loading
Prior to the shipment date, we will engage with the customer to determine whether
the customer requires land transportation services to deliver the cargo from its
designated location to the port of loading. If such services are required, we will engage
third-party haulage companies to collect and deliver the cargo based on the shipping
schedule. If the customer chooses to deliver the cargo to the port on its own, we will
provide the customer with the date and time by when the cargo should reach the port.
Simultaneously with the above, we will request for the invoice and packing list for the
cargo from the customer and hand over to the licensed customs agent to arrange for
customs clearance, if required. We will also arrange for the issuance of bill of lading
(for ocean carrier) / air waybill (for air carrier) for the customer and liaise with the
ocean or air carrier respectively, on the expected time of departure. We do not
conduct physical inspection of the cargo shipped by our customer to ensure matching
of information.
(iii)
Notification to customer and foreign freight forwarder, and delivery of cargo to
consignee
After the cargo has been loaded on board the vessel / aircraft and has departed from
the port of loading, we will notify the customer on the departure of the shipment.
Before the cargo arrives at the port of discharge, we will notify the customer and the
foreign freight forwarder appointed by us to handle the cargo in the destination country
on the estimated arrival time. The appointed foreign freight forwarder will facilitate the
release of cargo to the consignee. Once released, the cargo will be sent to the
consignee via land transportation arranged by us or by the consignee directly.
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7.
BUSINESS OVERVIEW (CONT’D)
7.4.2
Process flow for arranging and coordinating import shipment
(i)
Receive enquiry from customer, source for suppliers, prepare quotation to
customer and issue booking confirmation
Upon receiving an enquiry from the customer to arrange and coordinate an import
shipment, we will follow a process flow similar to that for an export shipment, as
described in Section 7.4.1(i) above. We will appoint a foreign freight forwarder to
handle the cargo in the origin country up to the departure of the cargo from the port
of loading, including the role of arranging for customs clearance of the shipment at
the port of loading.
(ii)
Schedule for delivery of cargo to the port of loading
Our process flow for the delivery of cargo to the port of loading for an import shipment
is similar to that for an export shipment, as described in Section 7.4.1(ii) above. These
processes are handled by the foreign freight forwarder appointed by us in the origin
country of the shipper. Similar to export shipment, physical inspection of the cargo
shipped by our customer to ensure matching of information will not be conducted.
(iii)
Receive notification from foreign freight forwarder, and delivery of cargo to
consignee
We will receive shipment notification from the foreign freight forwarder after the cargo
has been loaded on board the vessel / aircraft and departed from the port of loading.
Upon receiving the relevant shipping documentation, we will send them to the local
licensed customs agent for the preparation of customs clearance. Our Group does
not have an internal licensed customs agent and uses the services of third-party
licensed customs agent on a vendor-customer basis.
Upon the arrival of the cargo in Malaysia, we will liaise with the relevant carrier and
licensed customs agent to facilitate the release of the cargo. Once released, the cargo
will be sent to the consignee via land transportation arranged by us or by the
consignee directly.
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7.
BUSINESS OVERVIEW (CONT’D)
7.4.3
Process flow for warehousing and distribution of healthcare-related products and
devices
(i)
Receive goods
We receive our customers’ goods at our warehouse where we will check the goods
such as verifying the type of goods delivered, the stock-keeping unit, and the quantity
as per the delivery order from our customers.
(ii)
Warehouse goods
Once the goods have been checked, we will store the goods accordingly, ensuring
that each item is scanned for identification and record-keeping purposes.
(iii)
Receive sales order
Upon receiving a sales order from our customers, we will generate a picking note
whereby we will detail the type of goods and the quantity to be picked. We have been
requested by our customers to deliver orders for up to 9 pallets or 60 cartons of
products, depending on the individual sales order from our customers.
(iv)
Stock picking
We will then pick the stock according to the picking note. The order is checked again
prior to packing, after which a delivery order is generated.
(v)
Delivery
Lastly, we will deliver the goods to the designated location as instructed by our
customer using our own truck or through third-party transportation service provider.
The end-customers of our customers are both commercial and corporate in nature as
we deliver to entities such as retail pharmacies, clinics, and hospitals.
Our customers are able to keep track of their inventories through our WMS.
7.5
BUSINESS POSITIONING OF OUR GROUP IN THE LOGISTICS INDUSTRY
In providing logistics services, our Group is mainly responsible for arranging and coordinating
ocean or air cargo shipments for customers to facilitate the whole shipment process for better
efficiency.
Notwithstanding that our customers can source for logistics services offered by our Group
directly from ocean / air carriers and / or haulage companies, our Group’s key selling
propositions are as follows:
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BUSINESS OVERVIEW (CONT’D)
(i)
providing the convenience to shippers to deal with one point of contact for the whole
shipment process;
(ii)
offering competitive freight rates which may not be accessible to shippers with low
shipment volume;
(iii)
proposing optimal shipping route and schedule to shippers based on internal
evaluation of options available in the market, thus saving them the hassle and time of
comparing options offered by each individual carrier; and
(iv)
advising on the preparation and compilation of relevant shipping documents to ensure
accuracy to prevent erroneous submission leading to delay in shipment.
As such, logistics services provided by our Group are deemed value-adding in facilitating trade
activities.
For operational efficiency purposes, we do not operate our own fleet of transportation vehicles,
but rely on the transportation services of ocean / air carriers and haulage companies for our
logistics services operations. The said reliance on ocean / air carriers is common given the
nature of the global shipping industry where international cargo transportations are mainly
serviced by a relatively small number of established ocean / air carriers (as compared to the
large number of shippers requiring these services) having the optimal fleet capacity,
multinational operations and global route network for an efficient and economical operation.
In addition, our business strategy of appointing external haulage companies for movement of
cargo to or from ports by road is mainly after evaluating the capital and operational
requirements against the potential benefits from owning and operating a fleet of transportation
vehicles to support our ocean / air freight services.
As we do not restrict our sourcing of transportation services to a list of approved ocean / air
carriers or haulage companies, we are able to engage various ocean / air carriers or haulage
companies when necessary. For FYE 2019, FYE 2020, FYE 2021 and FPE 2022, we engaged
the services of 45, 42, 49, and 41 third-party ocean / air carriers or haulage companies
respectively to support the provision of our logistics services.
In addition, as disclosed in Section 7.3.1(a) of this Prospectus, we maintain Carrier Service
Contracts with various ocean carriers to facilitate our procurement of ocean cargo space to
the USA and Canada region. These Carrier Service Contracts allow us to have better control
in our provision of ocean freight services for shipments to the USA given our contractual cargo
space availability and pre-determined freight costs.
However, even with these Carrier Service Contracts, 80% of the total TEU of containers
handled by our Group per annum during the Period Under Review were not Committed TEUs
under these service contracts. Apart from the Committed TEUs for shipments to the USA and
Canada, we also procure additional ocean cargo space on a non-committed basis from ocean
carriers having service contracts with us, as well as other ocean carriers / freight forwarders
for shipments to / from other countries.
In general, these Carrier Service Contracts have the following characteristics:
•
we are required to commit to a minimum quantity of cargo space over a fixed period of
time (usually 1 year) in exchange for ocean carriers committing to a certain freight rate for
the said fixed period of time (unless amended with written confirmations);
•
they are not an exclusive contract;
•
all the service contracts are generic standard contracts provided by the ocean carriers;
and
•
the terms of these service contracts are similar to all other contracts of similar nature.
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BUSINESS OVERVIEW (CONT’D)
Our existing Carrier Service Contracts are for the period ending 30 April 2023. These Carrier
Service Contracts comprise a total of 2,553 Committed TEUs, of which 2,096 Committed TEUs
(or 82.10%) have been fulfilled as at 30 November 2022.
Our business positioning as aforementioned enables our Group to focus our resources on our
core competency of arranging and coordinating ocean / air cargo shipments for our customers.
This is expected to enable our Group to continuously improve on the efficiency of our overall
business operations for further growth.
7.6
SALES AND MARKETING STRATEGIES
7.6.1
Network with other freight forwarders
Since our inception, we have established and maintained long-term business relationship and
network with our customers and suppliers, which include other freight forwarders. This has
allowed us to leverage our working relationship and network with other freight forwarders to
attract new customers.
Certain foreign freight forwarders that we engage to handle our customers’ shipments in
overseas locations are also our customers as they sometimes engage our services to handle
their customers’ shipments to be exported from or imported into Malaysia. As such, freight
forwarders can be considered both suppliers and customers of our Group. Our business
relationship with these freight forwarders is on a vendor-customer basis. Our revenue
generated from our provision of logistics services to other freight forwarders, both local and
foreign, accounted for approximately 29.10%, 28.97%, 36.81% and 27.36% of our total
revenue in FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively. For the FYE 2019,
FYE 2020, FYE 2021 and FPE 2022, we engaged with 264, 283, 332, and 188 freight
forwarders respectively.
As such, we strive to strengthen our relationship with other freight forwarders within our
network in order to develop further business opportunities for our Group. This is expected to
facilitate our business expansion and in turn enhance our Group’s financial performance.
Aside from maintaining existing relationships with other freight forwarders that we have
established, we will also network through our memberships in various national and
international logistics and freight forwarding associations and networks. The associations and
networks that we are involved in as at the LPD are as follows:
First
membership
year
Current
membership
period(1)
2009
29 June 2021
until 28 June
2023
WCA Inter Global Hong Kong,
(“WCA Ltd”)
Special
Administrative
Region of
China
Its
directory
enables
overseas freight forwarders
to locate and engage other
service providers to assist in
their logistics requirements.
2010
Until end of
2023
Federation
of Malaysia
Malaysian Freight
Forwarders
&
Selangor Freight
Forwarders and
Logistics
Association
To promote and protect the
common interest of members
and to exchange and
disseminate latest industry
information to all members.
To represent the interest of
all logistics players in the
ever changing governmental
and business conditions of
Malaysia.
Association/
Network
Country of
origin
95
Purpose of association/
network
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7.
BUSINESS OVERVIEW (CONT’D)
First
membership
year
Current
membership
period(1)
2011
26 July 2022
until 27 June
2023
Pacific
Power Hong Kong,
Logistics Network Special
(“PPL Network”) Administrative
Region of
China
A network for independent
freight forwarders and logistic
service
providers
that
supports its members in
developing their logistics
business on a global scale.
2017
Until end of
2023
International
Federation
Freight
Forwarders
Associations
To represent the interest of
its members by actively
engaging
with
various
international organisations,
transportation organisations,
and global partners and
governments to promote and
protect the interest of the
industry.
2017
2021 until
2023
JCtrans Logistics China
Network
(“Jctrans”)
A global logistics network
that aims to provide global
networking
services
for
freight forwarders and other
logistical service providers
and facilitate relationships
between logistics players
globally.
2020
September
2020 until
September
2023
Orange Logistics China
Organization
(“OLO”)
An e-commerce platform
providing integrated services
for
global
logistics
enterprises such as global
network
building
and
business matching.
2021
29 June 2021
until 29 June
2024
World
China
International
Freight Forwarder
Alliance
(“WIFFA”)
To help its members to seek
new business and reliable
partners for their logistics
needs.
2021
23 November
2022 until 22
November
2024
Tandem
Logistics
An international network of
independent
logistics
operators
to
facilitate
relationships
between
logistics players globally.
Note:
(1)
Association/
Network
Country
origin
Austria
of
Global The
Netherlands
of Purpose
network
of
association/
In general, we will renew these memberships when the freight forwarding association
and/or network issue an invoice for the renewal fees to us nearing to the expiry. We
will deliberate on the membership fees and proceed to pay to maintain such
membership.
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7.
BUSINESS OVERVIEW (CONT’D)
7.6.2
Experienced sales and marketing team
Our sales and marketing strategies are mainly driven by our Group’s Sales and Marketing
Director, Chow Enn Jie, who has 14 years of experience in the logistics industry. Over the
years, he has acquired in-depth industry experience through our Group’s sales and marketing
activities and the development of our marketing strategies.
Chow Enn Jie currently leads our sales and marketing team, which is responsible for
understanding the needs of potential customers before offering the appropriate logistics
solutions to them. The team, comprising 10 personnel including Chow Enn Jie as at the LPD,
is well-equipped with the relevant knowledge and experience to promote our services to
potential customers. The team members have between 3 years and more than 30 years of
experience in sales and marketing and have been with our Group for periods ranging from 5
months to 14 years.
The team also works closely with our international business development team of 4 personnel
including Cheok Hui Yen to promote our services to foreign freight forwarders. We will
continue to leverage the experience, knowledge and industry network of our sales and
marketing team to identify and serve potential customers to further grow our business. The
members of our international business development team have between 5 years and 17 years
of experience in the relevant field and have been with our Group for periods ranging from 4
years to 17 years.
7.6.3
Corporate website
Our corporate website, www.kgwlogistics.com, provides basic information on our Group such
as history, awards, certifications, affiliations, services offered by us and our contact
information. This enables potential customers to have easy access to our Group’s information,
including our capabilities to meet their needs for logistics services. This will potentially
enhance our market reach and exposure, and in turn provide additional business opportunities
for us to offer our services.
7.6.4
Participating in trade fairs and exhibitions
We participate in various local and foreign trade fairs and exhibitions organised by third-party
organisers to raise market awareness of our Group as well as to promote services offered by
us. In 2019, at the invitation of the Ministry of Entrepreneur Development and Cooperatives,
we participated as an exhibitor in the Minggu Usahawan Nasional exhibition. We also
participated in the Global Freight Forwarders Conference organised by Jctrans in both
Malaysia and China in the same year. In 2020, we participated in the BiZ Meet & Go Global
Program in Malaysia at the invitation of SME Corporation Malaysia, prior to the onset of the
COVID-19 pandemic.
During the COVID-19 pandemic and when social distancing measures were imposed, we have
participated in various online events in 2020, 2021 and 2022 as listed in the table below:
Month, Year
Event
Organiser
June 2020
2nd OLO Global Logistics Cloud Meeting
OLO
September 2020
3rd OLO Global Logistics Cloud Meeting
OLO
October 2020
2nd Global Freight Forwarders Cloud Conference
Jctrans
October 2020
PPL Networks e-Summit 2020
PPL Network
November 2020
1st WIFFA Cloud Expo Exhibition
WIFFA
December 2020
4th OLO Global Logistics Cloud Meeting
OLO
March 2021
5th OLO Global Logistics Cloud Meeting
OLO
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7.
BUSINESS OVERVIEW (CONT’D)
Month, Year
Event
Organiser
March 2021
PPL Networks e-Summit 2021
PPL Network
March 2021
Specialist Freight Networks (SFN) Online Meeting
Specialist Freight Networks Ltd
June 2021
6th OLO Global Logistics Cloud Meeting
OLO
September 2021
7th
OLO
October 2021
PPL Networks e-Summit 2021
PPL Network
October 2021
6th
WIFFA
November 2021
8th OLO Global Logistics Cloud Meeting
OLO
December 2021
2nd
WIFFA
March 2022
9th OLO Global Logistics Cloud Meeting
OLO
March 2022
Specialist Freight Networks (SFN) Online Meeting
Specialist Freight Networks Ltd
June 2022
10th OLO Global Logistics Cloud Meeting
OLO
August 2022
4th
Jctrans
OLO Global Logistics Cloud Meeting
International Cargo Freight Fair
WIFFA Cloud Expo Exhibition
Global Freight Forwarders Cloud Conference
Upon the easing of COVID-19 related measures, we are now able to attend physical trade
fairs and exhibitions. In the third quarter of 2022, we had attended the WCA Asia Conference
organised by WCA Ltd in Pattaya, Thailand. We also attended the PPL Networks Annual
Global Meeting in Bali, Indonesia in October 2022.
7.6.5
Engaging with other freight forwarders and Malaysia External Trade Development
Corporation (“MATRADE”)
Our sales and marketing efforts also include engaging, on a non-exclusive basis, with thirdparties to promote Malaysian export activities as well as to provide advice on export and import
procedures and regulations. We engage with USA-based freight forwarders and participate in
meetings with said freight forwarders and potential USA-based exporters / importers that
intend to ship goods to or from Malaysia. Through such meetings, we are able to advise the
USA-based exporters / importers on the relevant regulations and procedures for shipping
goods to or from Malaysia. By having contact with potential USA-based exporters / importers
before they begin their export / import activities into / from Malaysia, we are able to position
ourself as a logistics services provider and promote our services to them.
Additionally, we also promoted export activities of Malaysian businesses by participating in
meetings with MATRADE and Malaysian businesses that intend to export their products
overseas. We have in the past been invited by MATRADE to participate in discussion on the
progress of cross-border export initiatives. Through our engagement with MATRADE,
MATRADE has referred small and medium enterprises (“SMEs”) interested in expanding to
and adopting cross-border business channels to our Group where we were able to provide
advice and guidance as well as offer our logistics services to these SMEs.
We provide general advice and guidance to local Malaysian companies on Malaysia’s export
logistics regulations, procedures and export clearance. We also provide general advice and
guidance on the import regulations and procedures of the overseas country intended for
export. Similarly, by having contact with potential Malaysian exporters before they begin their
export activities, we are able to position ourself as a logistics services provider and promote
our services to them.
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7.
BUSINESS OVERVIEW (CONT’D)
7.7
TECHNOLOGY USED OR TO BE USED
We do not employ any special technology in our business operations. However, we use
application software for our day-to-day operations, such as freight management system for
our logistics services operations and a WMS for our warehousing and distribution of
healthcare-related products and devices business.
The freight management system that we utilise is a local third-party web-based system that
enables us to generate booking confirmation, input customer and vendor information, input
carrier and agent information, input shipping instructions, generate bill of lading, track jobs, as
well as generate shipment analysis reports, which facilitate our business operations. Prior to
the onset of the COVID-19 pandemic, our Group had purchased the freight management
system software and a server to store the freight management system. The server was placed
at our premises and utilised by our employees for our logistics operations. As a result of the
COVID-19 pandemic and resulting work-from-home measures imposed, our existing freight
management software was migrated onto a web-based server and we currently pay a hosting
fee on a quarterly basis to maintain the web-based server. In this respect, if the web-based
server experiences any downtime or malfunction, the aforesaid third-party system provider
will offer the server maintenance services to us without cost.
The cost of the freight management system was approximately RM7,750, RM7,013,
RM12,738 and RM10,000 in the FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively,
which represented 0.02%, 0.01%, 0.01% and 0.01% of our Group’s revenue respectively. We
intend to continue with the same service provider due to our familiarity of the aforesaid
software system. However, in the event that our service provider decides to cease offering the
aforesaid freight management system to us, our Group is able to migrate / switch to another
service provider.
7.8
INTERRUPTIONS IN BUSINESS
We did not experience any material interruptions in our business, which had a significant
adverse effect on our operations, during the past 12 months prior to the date of this
Prospectus.
The impact of the COVID-19 pandemic on our Group is as follows:
Impact on our business operations
COVID-19 was officially declared a pandemic by the World Health Organization on 11 March
2020. In light of the COVID-19 pandemic, the Malaysian Government had announced and
imposed various control measures to curb and reduce COVID-19 transmissions across
different states or localities in the country at different points in time since 18 March 2020.
These control measures include the different phases of Movement Control Order (“MCO”)
from 18 March 2020 to 31 May 2021 and the different phases of the National Recovery Plan
(“NRP”) from 1 June 2021 onwards. We are currently in the transition to endemic phase since
April 2022.
As our business was categorised as one of the essential services, we were allowed to continue
our business operations at our business premises throughout different phases of MCO and
NRP with a reduced physical workforce capacity (depending on the phase of MCO or NRP).
However, lockdown measures imposed in different parts of the world due to the COVID-19
pandemic had caused disruption in the global shipping industry such as shortage of labour to
handle shipping containers at various ports and fluctuations in the demand for ocean shipment
due to global supply chain disruptions. These had mainly led to port congestions, significant
increase in ocean freight rates and limited supply of ocean cargo space.
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7.
BUSINESS OVERVIEW (CONT’D)
While some of the shipments that we arranged for our customers experienced delay due to
the aforesaid port congestions, there was no claim against us by our customers for late
delivery of shipment during the COVID-19 pandemic.
As for the significant increase in ocean freight rates, it was mainly caused by the limited supply
of ocean cargo space in view of the global supply chain disruptions. Nevertheless, we have
been able to pass on these increases in ocean freight rate to our customers given our
customers’ reliance on ocean shipment for transporting their goods. As a result, we recorded
significant increase in our revenue in FYE 2021 in line with the significant increase in ocean
freight rate during the same period.
As for the limited supply of ocean cargo space, our Group was able to leverage our longstanding relationships with various ocean carriers to continue to procure cargo space for our
customers’ shipments. This has enabled us to achieve business volume growth in FYE 2020
where we handled 17,242 TEU of containers in FYE 2020 as compared to 13,742 TEU of
containers in FYE 2019. In FYE 2021, we were able to largely maintain our business volume
where we handled 17,106 TEU of containers while in FPE 2022, we handled 7,697 TEU of
containers.
Impact on our cash flows, liquidity, financial position and financial performance
Notwithstanding that the COVID-19 pandemic has caused disruptions to the global economy
and world trade, we were able to achieve revenue growth during this challenging time mainly
because our ocean freight services continued to be in demand given the importance of ocean
shipment in international supply chains. While we experienced significant increases in ocean
freight rates during the COVID-19 pandemic, we managed to pass on these increases in costs
to our customers and preserved our gross profit margin. Our Group recorded revenue of
RM63.53 million for the FYE 2020 as compared to RM43.38 million in FYE 2019. Our revenue
further increased to RM195.42 million and RM155.10 million in FYE 2021 and FPE 2022
respectively. Our gross profit margin was 15.32%, 14.19%, 16.88% and 15.91% for FYE 2019,
FYE 2020, FYE 2021 and FPE 2022 respectively.
We did not experience any significant delay in the collection of our trade receivables arising
from business interruptions faced by our customers. We also continued to generate net cash
from operating activities in FYE 2020 and FYE 2021 during the COVID-19 pandemic. Further,
our current ratio improved from 1.22 times as at 31 December 2019 to 1.38 times, 1.34 times
and 1.78 times as at 31 December 2020, 31 December 2021 and 30 June 2022 respectively.
7.9
SEASONALITY
We do not experience any material seasonality in our business as the demand for our services
are generally not subject to seasonal fluctuations.
7.10
EXCHANGE CONTROL
Our Group has not established any place of business outside of Malaysia. As such, we are
not subject to any governmental laws, decrees, regulations or other legislations that may affect
the repatriation of capital and remittance of profits by or to our Group.
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7.
BUSINESS OVERVIEW (CONT’D)
7.11
MAJOR CUSTOMERS
Our Group has a large customer base which includes local and foreign exporters, importers and other freight forwarders, to whom we provide mainly ocean
freight services. In addition, our exporter and importer customers are from a wide range of industries such as metal products, chemical products and other
industrial products. Due to this reason, we have been able to achieve revenue growth during the Period Under Review through revenue contribution from
different major customers.
Our Group generated 25.37% and 19.88% of our revenue from the Press Metal Group in FYE 2019 and FYE 2020 respectively, which made it our single
largest customer for those years. Nevertheless, this trend did not repeat in FYE 2021 and FPE 2022 as we did not deal with the Press Metal Group in the said
periods. To the best of our knowledge, this was mainly because the Press Metal Group may have opted to procure ocean freight services from other freight
forwarders who offered more competitive pricing to them. We achieved revenue growth of RM131.89 million in FYE 2021 mainly through services provided to
other existing customers such as Rierden Chemical & Trading Company and PMB Silicon Sdn Bhd, as well as new customers such as CNC Cabinetry Inc.
Premised on the above, we are not dependent on any single major customer for revenue generation.
Our top 5 major customers for the Period Under Review are as follows:
FYE 2019
Press Metal Group
Sunpower International Industrial Co
Limited
WaterCo (Far East) Sdn Bhd
KGF Logistics (M) Sdn Bhd
Rierden Chemical & Trading Company
Length of
relationship
(years)(1)
Revenue contribution
Principal products /
services
Country of
incorporation
Country of shipment
destination
Producer of aluminium
products
Malaysia
Mexico, Netherlands
and Spain(3)
5
11,004
25.37
Freight forwarding services
China
USA
5
2,764
6.37
Swimming pool and spa
products, and water
treatment equipment
Malaysia
USA, United
Kingdom and
France(3)
17
2,246
5.18
Freight forwarding services
Malaysia
USA, Canada and
Australia
14
2,130
4.91
Chemical trading
USA
USA
8
2,080
4.79
20,224
46.62
Total
101
RM’000
(2)
%
Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
FYE 2020
Press Metal Group
Rierden Chemical & Trading Company
KGF Logistics (M) Sdn Bhd
WaterCo (Far East) Sdn Bhd
Sunpower International Industrial Co
Limited
Length of
relationship
(years)(1)
Revenue contribution
Principal products /
services
Country of
incorporation
Country of shipment
destination
Producer of aluminium
products
Malaysia
Nigeria, Mexico and
Vietnam(3)
5
12,631
19.88
Chemical trading
USA
USA
8
4,498
7.08
Freight forwarding services
Malaysia
USA and Canada
14
3,906
6.15
Swimming pool and spa
products, and water
treatment equipment
Malaysia
USA, France and
Belgium(3)
17
1,984
3.12
Freight forwarding services
China
USA
5
1,499
2.36
24,518
38.59
Total
RM’000
(2)
%
FYE 2021
Principal products /
services
Country of
incorporation
Country of shipment
destination
Length of
relationship
(years)(1)
Chemical trading
USA
USA
8
21,363
10.93
CNC Cabinetry Inc
Importation of cabinet and
furniture
USA
USA
2
8,001
4.09
PMB Silicon Sdn Bhd
Raw material for aluminium
and chemical industry
Malaysia
Netherlands, India
and Germany(3)
3
7,994
4.09
Lion Worldwide Services (M) Sdn Bhd
Freight forwarding services
Malaysia
USA
14
4,809
2.46
Steel wire manufacturing
Malaysia
USA and Philippines
4
4,760
2.44
46,927
24.01
Rierden Chemical & Trading Company
Wei Dat Steel Wire Sdn Bhd
Total
102
Revenue contribution
RM’000
(2)
%
Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
FPE 2022
Principal products /
services
Country of
incorporation
Country of shipment
destination
Length of
relationship
(years)(1)
Chemical trading
USA
USA
8
22,878
14.75
Raw material for aluminium
and chemical industry
Malaysia
Netherlands, India
and Poland(3)
3
9,749
6.29
Camel Energy Inc
Automotive batteries
USA
USA
2
7,638
4.92
CNC Cabinetry Inc
Importation of cabinet and
furniture
USA
USA
2
7,478
4.82
Interstate Batteries
Automotive batteries
USA
USA, Canada and
Puerto Rico
2
7,025
4.53
54,768
35.31
Rierden Chemical & Trading Company
PMB Silicon Sdn Bhd
Total
Revenue contribution
RM’000
(2)
%
Notes:
(1) Length of relationship is determined as at the LPD.
(2)
Based on revenue of RM43.38 million for FYE 2019, RM63.53 million for FYE 2020, RM195.42 million for FYE 2021 and RM155.10 million for FPE 2022.
(3)
Represent the top 3 countries of shipment destination amongst others.
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BUSINESS OVERVIEW (CONT’D)
7.12
TYPES, SOURCES AND AVAILABILITY OF INPUTS
The main inputs that we purchase for our business operations are ocean cargo space. We
incurred ocean freight charges of RM26.57 million, RM41.19 million, RM145.32 million and
RM121.06 million for the FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively, and
they accounted for 72.32%, 75.55%, 89.47% and 92.82% of our total cost of sales for the
respective financial years / period.
Ocean freight charges are charges incurred by us from ocean carriers for cargo space
procured for our customers’ shipments. These charges generally fluctuate from time to time
in accordance with the overall supply and demand condition for ocean cargo shipments.
During the Period Under Review, we experienced material increase in ocean freight charges
in FYE 2021 mainly as a result of the global supply chain disruption caused by the COVID-19
pandemic. Ocean freight rates subsequently moderated since mid-2022 in line with the easing
of the global supply chain disruptions caused by the COVID-19 pandemic.
The global supply chain disruption caused by the COVID-19 pandemic has also resulted in
shortage of ocean cargo space worldwide. Despite this, our Group was able to leverage our
long-standing relationships with various ocean carriers to continue to procure cargo space for
our customers’ shipments. In this respect, we handled 13,742, 17,242 and 17,106 TEU of
containers in FYE 2019, FYE 2020 and FYE 2021 respectively.
Due to the continued shortage of ocean cargo space during FPE 2022, we recorded a lower
business volume for our ocean freight services in FPE 2022. We handled 7,697 TEU of
containers in FPE 2022 as compared to 9,634 TEU of containers in FPE 2021.
Please refer to Section 12.3 of this Prospectus for the impact of the aforementioned
fluctuations in ocean freight rates and shortage of ocean cargo space on our business
operations and financial performance during the Period Under Review.
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7.
BUSINESS OVERVIEW (CONT’D)
7.13
MAJOR SUPPLIERS
Our top 5 major suppliers, from whom we procured ocean cargo space for our customers’ shipments, represented 53.50%, 61.50%, 68.95% and 66.26% of
our Group’s total purchases in FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively. These suppliers were selected mainly based on their availability
of cargo space, pricing and shipping time.
In addition to our top 5 major suppliers, we also maintain business relationship with other multinational ocean carriers such as CMA CGM Malaysia Sdn Bhd,
Hapag-Lloyd Malaysia Sdn Bhd and Ocean Network Express (Malaysia) Sdn Bhd. In general, all of these ocean carriers provide ocean freight and shipping
services from Malaysia to major ports in the world. Based on our past transactions with these multinational ocean carriers in FPE 2022, we believe that we
are able to procure ocean cargo space from them at a comparable pricing. As such, our business relationships with them provide us with additional avenues
to source for ocean cargo space.
Notwithstanding that the MSC Group and OOCL Group accounted for more than 15% of our total purchases for each of the financial year / period during the
Period Under Review, our substantial purchases of ocean cargo space from them during the Period Under Review were mainly due to the timing of availability
of ocean cargo space from them and our customers’ requirements for shipments, which change from time to time and are unpredictable. In general and as
set out above, ocean carriers are selected by us mainly based on their availability of cargo space, pricing and shipping time. In addition, our customers usually
do not impose any requirement on our selection of ocean carrier in arranging their shipments. As such, we are able to procure ocean cargo space from any
ocean carriers with whom we have business relationships for our business operations. During the Period Under Review, we also made substantial purchases
of ocean cargo space (accounting for close to or more than 10% of our total purchases) from other ocean carriers such as Maersk Malaysia Sdn Bhd in FYE
2019, Cosco Shipping Lines (Malaysia) Sdn Bhd in FYE 2021 and Yang Ming Group in FPE 2022.
Premised on the above, our Group is not dependent on any single major supplier, including the MSC Group and OOCL Group, for services required for our
business operations.
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7.
BUSINESS OVERVIEW (CONT’D)
Our top 5 major suppliers for the Period Under Review are as follows:
FYE 2019
Purchases
RM’000
Principal products /
services
Country of
incorporation
Length of
relationship (years)(1)
Ocean freight and shipping
Malaysia, USA
17
5,923
15.35
OOCL Group(4)
Ocean freight and shipping
Malaysia, China
17
5,821
15.09
Maersk Malaysia Sdn Bhd
Ocean freight and shipping
Malaysia
16
3,781
9.80
Freight forwarding
Malaysia
5
2,960
7.67
Ocean freight and shipping
Malaysia
17
2,179
5.65
20,664
53.56
MSC
Group(3)
Extra Trade Enterprise
Evergreen Group(5)
Total
(2)
%
FYE 2020
Principal products /
services
Country of
incorporation
Length of
relationship
(years)(1)
RM’000
MSC Group(3)
Ocean freight and shipping
Malaysia, USA
17
12,776
22.19
OOCL Group(4)
Ocean freight and shipping
Malaysia, China
17
11,141
19.35
Maersk Malaysia Sdn Bhd
Ocean freight and shipping
Malaysia
16
4,192
7.28
Cosco Shipping Lines (Malaysia) Sdn Bhd
Ocean freight and shipping
Malaysia
8
3,733
6.48
Shipping agency
Malaysia
15
3,695
6.42
35,537
61.72
Pacific Selatan Agency Sdn Bhd
Total
106
Purchases
(2)
%
Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
FYE 2021
Principal products /
services
Country of
incorporation
Length of
relationship
(years)(1)
RM’000
Ocean freight and shipping
Malaysia, China
17
51,482
30.58
MSC Group(3)
Ocean freight and shipping
Malaysia, USA
17
30,397
18.05
Cosco Shipping Lines (Malaysia) Sdn Bhd
Ocean freight and shipping
Malaysia
8
19,465
11.56
Ocean freight and shipping
Malaysia, USA
17
7,952
4.72
Shipping agency
Vietnam
8
6,960
4.13
116,256
69.04
OOCL
Group(4)
Evergreen
Group(5)
Super Cargo Service Co Ltd
Total
Purchases
(2)
%
FPE 2022
Principal products /
services
Country of
incorporation
Length of
relationship
(years)(1)
RM’000
MSC Group(3)
Ocean freight and shipping
Malaysia, USA
17
32,608
25.80
OOCL Group(4)
Ocean freight and shipping
Malaysia, China
17
24,290
19.22
Ocean freight and shipping
Malaysia, Taiwan
16
12,958
10.25
Cosco Shipping Lines (Malaysia) Sdn Bhd
Ocean freight and shipping
Malaysia
8
8,962
7.09
Evergreen Group(5)
Ocean freight and shipping
Malaysia, USA
17
7,441
5.89
86,259
68.25
Yang Ming
Group(6)
Total
Purchases
(2)
%
Notes:
(1)
Length of relationship is determined as at the LPD.
(2)
Based on total purchases of RM38.58 million for FYE 2019, RM57.57 million for FYE 2020, RM168.37 million for FYE 2021 and RM126.39 million for
FPE 2022.
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7.
BUSINESS OVERVIEW (CONT’D)
(3)
Since June 2022, there were substantial payments in USD for purchases of ocean cargo space and services to Mediterranean Shipping Company USA
Inc. (incorporated in the USA) by us to reduce foreign exchange differences arising from collection from customers in USD but payment for purchases
in RM (payment to Mediterranean Shipping Company (Malaysia) Sdn Bhd in RM). In view of this, the 2 companies within the MSC Group are presented
collectively as a single major supplier group.
(4)
The 2 companies within the OOCL Group are presented collectively as a single major supplier group due to the following:
(i)
throughout the Period Under Review, there were payments for purchases of ocean cargo space to Orient Overseas Container Line Limited
(incorporated in China) by us in accordance with the payment instruction from the OOCL Group; and
(ii)
since June 2022, there were also payments in USD by us to reduce foreign exchange differences arising from collection from customers in USD
but payment for purchases in RM (payment to Orient Overseas Container Line (Malaysia) Sdn Bhd in RM).
(5)
Since June 2022, there were substantial payments in USD for purchases of ocean cargo space and services to Evergreen Shipping Agency (America)
Corporation (incorporated in the USA) by us to reduce foreign exchange differences arising from collection from customers in USD but payment for
purchases in RM (payment to Evergreen Marine Corp (Malaysia) Sdn Bhd in RM). In view of this, the 2 companies within the Evergreen Group are
presented collectively as a single major supplier group.
(6)
Since June 2022, there were payments in USD for purchases of ocean cargo space and services to Yang Ming Marine Transport Corp (incorporated in
Taiwan) by us to reduce foreign exchange differences arising from collection from customers in USD but payment for purchases in RM (payment to
Yang Ming Line (M) Sdn Bhd in RM). In view of this, the 2 companies within the Yang Ming Group are presented collectively as a single major supplier
group.
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7.
BUSINESS OVERVIEW (CONT’D)
7.14
QUALITY CONTROL
We place emphasis on the quality of our services and as such, quality control measures are
implemented in the key aspects of our business operations. Such quality control measures
include standardising export and import shipment handling procedures, reviewing customers’
feedback, and taking corrective action for non-conforming practices, should any occur.
In April 2022, our Group obtained ISO 9001:2015 Quality Management System certification
from DQS Malaysia under the scope of “provision of freight forwarding services”. As part of
the requirements of this certification, our Group has established a quality manual which
outlines the scope of our quality management system and explanation of every requirement
under the said standard. Our Group’s management is committed to the execution of the
procedures established in the quality manual.
To ensure proper implementation of our quality management system, we have appointed our
employees in different departments to perform quality control on department-specific tasks to
ensure that the department’s operations meet the required standards.
As for KGW Medica, we obtained the Good Distribution Practice for Medical Devices
(“GDPMD”) certification from Newera International in September 2021 which certifies our
compliance with the GDPMD rules in relation to the supply chain of the healthcare-related
products and devices that we handle. This includes import and export activities, storage and
handling, warehousing and distributions, transportation, documentation as well as the
traceability of the healthcare-related products and devices.
7.15
RESEARCH AND DEVELOPMENT ACTIVITIES
As a logistics services provider, we do not undertake, and have not undertaken, any research
and development activities in connection with our business operations.
7.16
COMPETITIVE STRENGTHS
7.16.1 We are a logistics services provider with a long track record of shipping to and from
the USA
Our Group provides ocean freight services specialising in shipping between Malaysia and the
USA. We first arranged ocean shipments from Malaysia to the USA in 2005. Since then, we
have accumulated approximately 17 years of track record in arranging and coordinating ocean
shipments between Malaysia and various ports in the USA. Beginning from 2010, we also
obtained our registration as a NVOCC with the FMC, which strengthened our positioning in
the industry as a service provider focusing on ocean shipments between Malaysia and the
USA.
Through our years of track record in providing shipping services from Malaysia to the USA,
we have developed a network with other logistics services providers in various parts of the
USA including freight forwarders and haulage companies. We engage these logistics services
providers based in the USA to handle our customers’ shipments upon arrival in the USA to
facilitate the release of cargo to the consignee, as well as to arrange for land transportation of
these cargo within the USA, if required by our customers. Through working with these logistics
services providers within our network, we are able to arrange for shipping of goods from
Malaysia to various locations in the USA, including inland cities such as Chicago, Atlanta,
Dallas, and Memphis. This saves our customers from the hassle of having to engage and deal
with multiple service providers in arranging for shipment of goods.
We believe that our long track record in arranging ocean shipments to and from the USA will
provide us with the platform to compete effectively and grow our business in the future.
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7.
BUSINESS OVERVIEW (CONT’D)
7.16.2 We have a diversified and growing customer base
We provide our logistics services to customers from a diversified range of industries. These
industries include, among others, metal products, rubber gloves and chemical products. Our
diversified customer base provides us with more business opportunities to grow our business
as we stand to benefit from the collective demand for logistics services of different industries.
By serving customers from different industries, we also believe that we are in a better position
to achieve sustainable business growth as our business performance will be less susceptible
to the downtrend of any single industry.
During the Period Under Review, we have continued to expand our customer base, recording
approximately 400 new customers in each financial year. For FYE 2019, FYE 2020, FYE 2021
and FPE 2022, we served 1,073, 1,123, 1,338, and 936 customers (inclusive of new and
returning customers) respectively. We believe that our diversified and growing customer base
plays an important role in enabling us to grow or sustain our ocean freight cargo volume which
was in the range of 13,000 to 17,000 TEUs during the Period Under Review. We also believe
that our ability to continue attracting new customers is a testament to our experience in and
knowledge of the logistics industry as well as our reputation in the market.
7.16.3 Long-standing relationships with existing customers
In addition to our ability to attract new customers, the credibility of our services is evidenced
through our long-term business relationship with our customers, some of whom have been
with our Group for more than 10 years. We believe that this shows our ability to keep up with
the needs of our customers and providing them with the logistics services they require.
Our track record and long-standing business relationship with our customers will provide us a
platform for our future growth and expansion, allowing our Group to strengthen our market
position in the logistics industry in Malaysia.
7.16.4 We have an experienced key senior management team with strong industry expertise
and knowledge
We are led by our co-founder and Managing Director, Dato’ Roger Wong, who has played a
crucial role in spearheading our business operations and expansion since our inception. He
is responsible for overseeing our overall business operations, setting our strategic direction
as well as the formulation and implementation of our business expansion strategies.
Dato’ Roger Wong is supported by our Executive Director / Chief Operating Officer, Cheok
Hui Yen, who is primarily responsible for strategising business plans, managing the business
development of international markets and developing strategic partnerships with customers,
suppliers and overseas freight forwarders. Dato’ Roger Wong is further supported by Chow
Enn Jie, our Sales and Marketing Director, who is mainly responsible for our sales and
marketing activities including developing and implementing marketing strategies, as well as
our Customer Care Director, Teoh Huey Hong, who is in charge of the daily operations of our
customer service department, which handles contract negotiation with carriers, rate enquiries
and quotation requests, shipment planning and cargo space booking. All of these key senior
management personnel have more than 10 years of experience in the logistics industry and
have been with our Group for more than 10 years.
As for our overall finance and accounting matters, we are supported by our Chief Financial
Officer, Wendy Kam, who has more than 20 years of experience in the accountancy and
finance field gained from her previous jobs in different industries.
Our key senior management team has substantial experience in their relevant fields and has
gained in-depth understanding and knowledge of our Group’s business operations. They have
played a vital role in promoting our growth and business expansion through their commitment
to our Group, and will continue to contribute to our growth in the future.
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7.
BUSINESS OVERVIEW (CONT’D)
7.16.5 We have an established network of suppliers from different regions of the world
Since our inception in 2005, we have developed our network of suppliers from different regions
of the world. These suppliers include, among others, ocean carriers and freight forwarders.
By cooperating with these overseas suppliers, we are able to provide our logistics services
efficiently where our overseas suppliers will assist us in handling our customers’ shipments in
the respective countries without us having to set up operations in the overseas countries.
As such, our network of suppliers provides us with the ability to arrange for cargo shipments
from Malaysia to various countries. Due to this, we are able to market our services to a larger
pool of potential customers as compared to a logistics services provider that is only able to
arrange for cargo shipments to a limited number of countries. We arranged for export cargo
shipments from Malaysia to 90, 92, 100 and 84 countries in the FYE 2019, FYE 2020, FYE
2021 and FPE 2022 respectively.
Our established network of suppliers enables us to provide our services efficiently and serves
as a platform for us to further seize business opportunities for growth. This is expected to help
us to continuously expand our logistics services business.
7.17
OPERATING CAPACITY
As a non-asset based logistics services provider, we do not have our own fleet of vehicles for
our provision of logistics services. As such, operating capacity and its actual utilisation are not
applicable to our logistics services business.
For our warehousing and distribution of healthcare-related products and devices, we currently
operate an office cum warehouse located at Dana 1 Commercial Centre, Ara Damansara,
Selangor measuring approximately 1,510 sq. ft. Following the commencement of our
warehousing of goods for customers in May 2022, we recorded average utilisation rate for our
warehouse space of approximately 19% for the FPE 2022, as estimated based on month-end
space usage for May and June 2022.
7.18
DEPENDENCY ON CONTRACTS, AGREEMENTS OR OTHER ARRANGEMENTS
Our Group is not dependent on any contracts, agreements, or other arrangements for our
business operations. However, we are dependent on our NVOCC registration with the FMC,
a major registration obtained by our Group, for our business operations. As at the LPD, the
NVOCC registrations held by our Group were approved by the FMC in 2022 with validity up
to February 2025 and August 2025 respectively. These registrations were approved without
any major condition imposed. We rely on our NVOCC status to enter into Carrier Service
Contracts with ocean carriers, which in turn allows us better control in the provision of ocean
freight services for shipments to the USA given the contractual cargo space availability and
pre-determined freight costs made available under these Carrier Service Contracts.
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7.
BUSINESS OVERVIEW (CONT’D)
7.19
MAJOR APPROVALS, LICENSES AND PERMITS OBTAINED
Details of the major approvals, licenses and permits obtained by our Group as at the LPD are set out below:
Company
KGW
Logistics
Description of
certificate / licence
/ permit
License for trade,
business &
industries at D1109-G, D11-10-G&1,
D11-11-G&1, Block
D11, Dana 1
Commercial Centre,
Jalan PJU 1A/46,
47301 Petaling Jaya
Selangor
Approving
authority
Petaling Jaya City
Council (MBPJ)
Certificate no. /
Registration no.
/ Licence no. /
Permit no. /
Reference no.
L950000213010
Validity
period
1 January
2023 to 31
December
2023
Major conditions imposed
Nil
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112
Status of
compliance
N/A
Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
Company
KGW
Logistics
Description of
certificate / licence
/ permit
Authority as freight
forwarder under
Section 90 Customs
Act 1967
Approving
authority
Department of
Customs Malaysia
Certificate no. /
Registration no.
/ Licence no. /
Permit no. /
Reference no.
BZ1457
Validity
period
10
November
2021 to 9
June 2023
Major conditions imposed
1. Renewal of the Customs License shall be made
not later than 90 days before its expiration.
Noted
2. KGW Logistics may not change the name,
To be
complied(1)(4)
status, address, sell or transfer ownership to
any other parties without the consent of the
Customs Department.
3. Any violation of the conditions may be
punishable under Section 138 of the Customs
Act 1967 and any such offence for which no
penalty is expressly provided the offender shall
be liable to a fine of not exceeding twenty
thousand ringgit or to imprisonment for a term
not exceeding five years or to both.
KGW
Logistics
Non-Vessel
Operating Common
Carrier
Federal Maritime
Commission of
the United States
of America
022726
Up to 30
August 2025
113
Status of
compliance
Nil
Noted
N/A
Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
Company
Description of
certificate / licence
/ permit
Approving
authority
Certificate no. /
Registration no.
/ Licence no. /
Permit no. /
Reference no.
Validity
period
Major conditions imposed
Status of
compliance
KGW
Medica
License for trade,
business and
industries at D5-7-G
(Ground Floor) and
D5-7-1, Block D5,
Dana 1 Commercial
Centre, Jalan PJU
1A/46, 47301
Petaling Jaya
Selangor
Petaling Jaya City
Council (MBPJ)
L2540000624017
/
l2540000649439
1 January
2023 to 31
December
2023 / 10
January
2023 to 31
December
2023
Nil
KGW
Medica
Establishment
Licence as the
authorized
representative,
distributor and
importer at D11-101, Block D11, Dana
1 Commercial
Centre, Jalan PJU
1A/46, 47301
Petaling Jaya
Selangor
Medical Device
Authority Malaysia
MDA-2839WDP121
13 October
2021 to 12
October
2024
1.
Licensee shall not permit for the license to be
abused in any way by any party.
Complied
2.
Any changes or amendments to the
information concerning the licence shall be
notified to the authority.(2)
Noted
3.
The licence shall be revoked or suspended if
the licensee is found to amend the licence for
the purpose of deceiving; not in compliance
with Part III of Act 737 and Part V of the
Regulations Medical Devices Regulations;
found to amend the licence for the purpose of
deceiving or other purpose; and allows the
licence to be misused by another.
Noted
114
N/A
Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
Company
Description of
certificate / licence
/ permit
Approving
authority
Certificate no. /
Registration no.
/ Licence no. /
Permit no. /
Reference no.
Mattroy
Logistics
License for trade,
business and
industries at D1109-G (Ground
Floor), Block D5,
Pusat Perdagangan
Dana 1 Jalan PJU
1A/46 47301,
Petaling Jaya
Selangor
Petaling Jaya City
Council
L254000063750
4
Mattroy
Logistics
Non-Vessel
Operating Common
Carrier
Federal Maritime
Commission of
the United States
of America
Mattroy
Logistics
Authority as freight
forwarder under
Section 90 Customs
Act 1967
Department of
Customs Malaysia
Validity
period
Major conditions imposed
Status of
compliance
3 January
2023 to 31
December
2023
Nil
N/A
031217
Up to 28
February
2025
Nil
N/A
BZ3277
6 April 2021
to 5 April
2023
1. Renewal of the Customs License shall be made
not later than 90 days before its expiration.
Noted
2. Mattroy Logistics may not change the name,
status, address, sell or transfer ownership to
any other parties without the consent of the
Customs Department.
To be
complied(3)(4)
3. Any violation of the conditions may be
punishable under Section 138 of the Customs
Act 1967 and any such offence for which no
penalty is expressly provided the offender shall
be liable to a fine of not exceeding twenty
thousand ringgit or to imprisonment for a term
Noted
115
Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
Company
Description of
certificate / licence
/ permit
Approving
authority
Certificate no. /
Registration no.
/ Licence no. /
Permit no. /
Reference no.
Validity
period
Major conditions imposed
Status of
compliance
not exceeding five years or to both.
Notes:
(1)
KGW Logistics had vide letter dated 27 October 2022 applied to Royal Malaysian Customs Department (“RMCD”) to obtain consent for the change
of shareholders in relation to the Acquisition of KGW Logistics. Please refer to Section 6.1.2 of this Prospectus for further information of the Acquisition
of KGW Logistics. As at to-date, KGW Logistics is still pending consent from RMCD.
(2)
KGW Medica has notified the Medical Device Authority Malaysia in October 2022 for the change of business address to D5-7-G, Block D5, Dana 1
Commercial Centre, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor. As at to-date, KGW Medica has not received a revised licence. The revised
licence is still pending issuance and we were informed by the regulatory consultant appointed by us that the said licence is expected to be obtained
by March 2023.
(3)
Mattroy Logistics had vide letter dated 27 October 2022 applied to RMCD to obtain consent for the change of shareholders in relation to the Acquisition
of Mattroy Logistics. Please refer to Section 6.1.2 of this Prospectus for further information of the Acquisition of Mattroy Logistics.
(4)
As at to-date, the above consent from RMCD is still pending. We have followed up with RMCD and were informed that the aforementioned application
for consent is still in process. According to the verbal conversation with the relevant RMCD officer, RMCD will call and inform us once the decision
letter is available. However, the RMCD officer did not provide an expected date for the said decision. In the worst-case scenario where the application
for consent is rejected, KGW Logistics and Mattroy Logistics may forgo the licence. Nevertheless, this will not have a materially adverse impact on
our Group’s business operations and financial performance as this licence is only used for the business activity of lodging inward manifest at customs
office upon arrival of import shipments in Malaysia and this only generated revenue of less than RM20,000 for KGW Logistics and less than RM2,000
for Mattroy Logistics in FYE 2021 and in the financial period from 1 January 2022 up to the LPD respectively. In the event we are required to provide
services of lodging inward manifest following the said licence cancellation, we will outsource the services to a third party accordingly.
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7.
BUSINESS OVERVIEW (CONT’D)
7.20
INFORMATION ON MATERIAL LANDS AND BUILDINGS
7.20.1 Properties owned by our Group
As at the LPD, our Group does not own any land and buildings.
7.20.2 Properties rented by our Group
A summary of the material properties rented by our Group for our operations as at the LPD is as follows:
No.
(i)
(ii)
(iii)
Registered
owner /
Landlord
Alpha Global
Sdn Bhd
Innex America
Sdn Bhd
Datin Wong Wan
Jye
Tenant
KGW
Logistics
KGW
Logistics
KGW
Logistics
Property address
D11-11-G & D11-11-1
Block D11
Dana 1 Commercial Centre
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor
Description and
existing use
Description
2-storey shop offices
Built-up area
(approximate)
(sq. ft.)
3,513
Tenure of tenancy(1)
1 November 2022 to 31
October 2023
Rental per
annum
(RM)
90,000
Existing Use
Office
D11-09-G
Block D11
Dana 1 Commercial Centre
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor
Description
Ground floor unit of a 2storey shop offices
D11-10-G & D11-10-1
Block D11
Dana 1 Commercial Centre,
Jalan PJU 1A/46
47301 Petaling Jaya,
Selangor
Description
2-storey shop offices
1,384
1 February 2023 to 31
January 2024
37,800
2,925
1 November 2021 to 31
October 2023 (Option
to renew for an
additional 2 years)
78,000
Existing Use
Office
Existing Use
Office
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Registration No.: 202201009353 (1455050-D)
7.
No.
(iv)
(v)
BUSINESS OVERVIEW (CONT’D)
Registered
owner /
Landlord
Sisi Lau Wai
Cheng
Sisi Lau Wai
Cheng
Tenant
KGW
Logistics
KGW
Medica
Property address
D5-7-G
Block D5
Dana 1 Commercial Centre,
Jalan PJU 1A/46,47301
Petaling Jaya, Selangor.
Property Address
D5-7-1
Block D5
Dana 1 Commercial Centre,
Jalan PJU 1A/46,47301
Petaling Jaya, Selangor.
Description and
existing use
Description
Ground floor unit of a
3-storey shop offices
Built-up area
(approximate)
(sq. ft.)
1,510
Tenure of tenancy(1)
1 June 2022 to 31 May
2023
Rental per
annum
(RM)
37,200
Existing Use
Office and warehouse
Description
First floor unit of a 3-storey
shop offices
2,000
1 June 2022 to 31 May
2023
21,600
Existing Use
Store
Note:
(1)
Upon our relocation to the Target Property, we will terminate our tenancy for all our rented premises stated above.
7.21
GOVERNING LAWS AND REGULATIONS
7.21.1 Governing laws and regulations
Our Group’s business operations are subject to the following laws and regulations:
(i)
Customs Act 1967 (“CA 1967”)
Pursuant to Section 90 of the CA 1967, a person who intends to act as a customs agent shall be a registered person under the Service Tax Act 2018.
The authorities may prescribe for the breach of any violation of the conditions and may be punishable under Section 138 of the CA 1967 and any
such offence for which no penalty is expressly provided the offender shall be liable to a fine of not exceeding RM20,000 or to imprisonment for a term
not exceeding 5 years or to both. As at the LPD, both KGW Logistics and Mattroy Logistics hold and maintain valid Customs License issued by the
Royal Malaysia Customs Department of Malaysia.
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7.
BUSINESS OVERVIEW (CONT’D)
(ii)
Local Government Act 1976 (“LGA 1976”)
Pursuant to Section 102(s) of the LGA 1976, the relevant local authorities may control and supervise, by registration, licensing or otherwise, a trade,
business or industry. Businesses in Petaling Jaya are regulated by the Licensing of Trades, Businesses and Industries (Petaling Jaya City Council)
By-Laws 2007. The local authorities may prescribe for breach of any by-law, a fine not exceeding RM2,000 or a term of imprisonment not exceeding
1 year, or both and in the case of a continuing offence, a sum not exceeding RM200 for each day during which the offence is continued after conviction.
As at the LPD, our Group holds and maintains valid business and signboard licences issued by the respective local authorities.
7.21.2 Regulatory Requirements and Environmental Issue
As at the LPD, there is no breach of any property or land use conditions, non-compliance with any regulatory requirements, land rules or building regulations
/ by-laws, and environmental issue which may materially affect our Group’s operations and / or usage of properties rented by our Group as set out in Section
7.20.2 of this Prospectus.
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7.
BUSINESS OVERVIEW (CONT’D)
7.22
INTELLECTUAL PROPERTIES
As at the LPD, save for the trademark registration as disclosed below, we do not have any other intellectual property right registered and/or in the process of
registration:
Trademark
Approving
authority
Intellectual
Property
Corporation
of Malaysia
Registered
owner /
Applicant
KGW
Logistics
Application
number /
Trademark
number
TM2017052676
Classification
Class 39: Shipping agency services; freight forwarding; freighting;
freight brokerage; ship brokerage; transport brokerage; freight shipping
of goods by land, air and sea; freight warehousing; freight distribution
services; freight and cargo services; removal services; transport by air;
transport by sea; transport by land; transport by pipeline; logistics
services consisting of the storage, transportation and delivery of goods;
arranging transportation of goods; supply chain logistics and reverse
logistics services consisting of the storage, transportation and delivery
of freight; supply chain logistics and reverse logistics services consisting
of the storage, transportation and delivery of goods for others by air, rail,
ship, lorry or truck; local and long distance commercial road transport;
import and export cargo handling services; packaging and storage of
goods; loading and unloading of cargo; provision of storage
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120
Status /
Expiry date
Registered /
17 February
2027
Registration No.: 202201009353 (1455050-D)
7.
BUSINESS OVERVIEW (CONT’D)
7.23
FUTURE PLANS AND BUSINESS STRATEGIES
7.23.1 Relocation to the Target Property to facilitate our business expansion
Our Group operates from our existing offices located at Ara Damansara, Petaling Jaya,
Selangor with a total built-up area of approximately 11,300 sq. ft. which currently houses a
total of 72 employees of our Group as at the LPD. In order to cater for our future business
expansion, we will relocate to the Target Property, which is a freehold 3-storey office building
with an annexed 2-storey warehouse located at Hicom Glenmarie Industrial Park, Shah Alam,
Selangor. The Target Property has a total built-up area of approximately 53,400 sq. ft., made
up of approximately 16,500 sq. ft. of office space and approximately 36,900 sq. ft. of
warehouse space.
Our Group had on 5 July 2022 entered into a sale and purchase agreement for the purchase
of the Target Property for a total purchase consideration of RM20.20 million. The breakdown
of the total estimated cost required for the purchase and renovation of the Target Property is
set out in Section 4.8.1 of this Prospectus.
We expect to complete our purchase and renovation of the Target Property by the fourth
quarter of 2022 and the second quarter of 2023 respectively. We plan to relocate and
centralise our entire operations currently housed under multiple rented offices in Ara
Damansara to the Target Property by the third quarter of 2023.
Upon relocation, we plan to undertake the following to facilitate our business expansion:
(i) Expansion of headcount to scale up operations
Taking into account the larger office space of the Target Property as compared to that of
our existing rented offices (approximately 9,800 sq. ft.), we intend to expand our
headcount to scale up our operations, particularly our sales and marketing team and
international business development team to strengthen our marketing and business
development functions for our logistics services business. We also intend to grow our
operations / customer service team to support the expanding business operations.
As at the LPD, we have 10 and 4 personnel for our sales and marketing team (including
Chow Enn Jie, our Sales and Marketing Director) and international business development
team (including Cheok Hui Yen, our Executive Director) respectively. We intend to hire 5
additional sales and marketing employees and 4 additional international business
development employees as part of our business expansion. This will enable us to
undertake more sales and marketing activities to promote our logistics services to our
existing customers as well as to new potential customers.
The cost to be incurred for the expansion of headcount for our sales and marketing team
and international business development team is expected to be RM0.32 million per year,
which is to be funded via internally generated funds. With the bigger sales and marketing
team, we will also be able to attend additional trade fairs and seminars in order to promote
our services as well as to keep abreast of developments in the logistics industry.
In addition, as at the LPD, we have 41 customer service personnel (including Teoh Huey
Hong, our Customer Care Director) and we intend to hire 6 additional customer service
personnel to support the expanding business operations. The cost to be incurred for this
expansion of headcount is expected to be RM0.22 million per year, which is to be funded
via internally generated funds.
The aforementioned expansion of headcount is expected to take place within 12 months
from our relocation to the Target Property.
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(ii) Enhancement of warehouse facilities and capabilities
The Target Property will also facilitate our business strategy of expanding our
warehousing and distribution of healthcare-related products and devices business. This
business segment is currently housed under a rented shop lot of approximately 1,510 sq.
ft. in floor space in Ara Damansara. As such, the larger warehouse space upon relocating
to the Target Property will enable us to undertake larger volume warehousing orders,
which will contribute positively to the overall profitability of this business segment.
In addition, the large warehouse space of the Target Property will provide us with space
flexibility for an enhanced warehouse operation mainly through careful and efficient design
of storage layout and optimal use of equipment such as forklifts, pallet racking systems
and larger size pallets. There will also be sufficient space for us to concurrently undertake
various tasks involved in warehousing operations such as loading and unloading goods,
retrieving goods for delivery, and labelling, packing and sorting activities. This is expected
to improve the overall operational efficiency of this business segment, which will
potentially lead to improved financial performance.
We intend to purchase certain equipment to enhance our warehousing and distribution
capabilities. These purchases are expected to take place within 12 months from our
relocation to the Target Property. We will fund these purchases through internallygenerated funds and/or bank borrowings. The details of the equipment that we intend to
purchase are as follows:
Description
Pallet racking system
2.5 tonne forklift
2.0 tonne forklift
2.0 tonne reach truck
Yard/ container/ mobile steel ramp
Pallet jack
Total
No. of Units
RM’000
1 system
2 units
2 units
1 unit
1 unit
2 units
312
119
107
58
26
2
624
We will continue to utilise a WMS to facilitate our operations at the Target Property. The
WMS enable us to manage the inventory of goods in our warehouse, track delivery of
goods, monitor inventory levels, and plan for picking, packing and delivery of goods and
we will continue to subscribe to the WMS on a monthly basis at an estimated cost of
RM10,500 per month.
Additionally, we intend to hire 2 employees to support our warehouse operations for both
logistics services business and warehousing and distribution business. The cost to be
incurred for this expansion of headcount is expected to be RM0.10 million per year, which
is to be funded via internally generated funds.
(iii) Offering warehousing services to our logistics services customers as well as new
customers
We plan to use the warehouse space of the Target Property to provide warehousing
services to our ocean / air freight customers, as and when warehousing services within
the Klang Valley are required by these customers. Currently, these warehousing services
are provided by third-party warehouse operators engaged by us. The warehouse rental
cost paid to third-party warehouse operators was RM0.06 million, RM0.09 million, RM0.44
million and RM0.14 million for the FYE 2019, FYE 2020, FYE 2021 and FPE 2022
respectively. Following our relocation to the Target Property, we will be able to provide
these services in-house without having to incur additional rental cost. For ocean / air
freight customers that have already engaged us to provide warehousing services, we will
begin to store their goods in-house upon our relocation to the Target Property.
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To further develop our warehousing services business, we also intend to promote our
warehousing services to our other existing ocean / air freight customers as well as new
customers. We intend to offer a variety of warehousing services to our customers based
on their needs, while our charges will depend on the types of services provided by us to
them.
Our warehousing services shall entail providing storage space in terms of pallet bays or
area (in sq. ft.) together with services for stuffing and unstuffing of containers, order
processing services, and/or repacking and relabelling services. Stuffing and unstuffing of
containers refer to the loading and unloading of goods into and out of containers. We
intend to offer these services for both inbound and outbound containers. Order processing
refers to the organisation of the various processes from receiving order for relevant goods
stored in our warehouse leading up to the delivery of these goods to the purchasers on
behalf of our customers. Repacking and relabelling involve moving already packaged
items into new packaging. This can include removing items from old packaging; repacking
items into different types of containers; unpacking and repacking into retail cartons; as
well as changing labels when information is redesigned, changed or updated.
We believe that our range of warehousing services as aforementioned will contribute to
the utilisation of the warehouse space of the Target Property and in turn generate income
to our Group for further financial growth.
7.23.2 Expansion of warehousing and distribution services for healthcare-related products
and devices
We plan to expand on our provision of warehousing and distribution services for healthcarerelated products and devices mainly by expanding our customer base upon our relocation to
the Target Property.
As our warehousing and distribution services are catered for commercial purposes, we intend
to approach local businesses such as hospital groups, retail pharmacy chains, authorised
representatives of international healthcare companies, and SMEs involved in manufacturing,
retailing, and / or distribution of healthcare-related products and devices, to offer our services.
Our warehousing and distribution services can help these businesses to streamline their
operations and reduce operating costs as they would not need to incur further ancillary costs
of having to own and / or operate their own warehouse or to undertake distribution of goods
to their customers on their own. By outsourcing their warehousing and distribution activities to
us, these businesses can focus on other business activities such as marketing and formulating
business strategies for their products to grow their business.
Currently, our warehousing and distribution of healthcare-related products and devices
business is led by Datin Wong Wan Jye and Chan Sek Seng as directors of KGW Medica.
They bring with them experience in business development and/or management functions as
well as sales and channel management for the medical device and pharmaceutical industry,
gained from their previous tenure in established Malaysian and international pharmaceutical
companies. They are further supported by a team of 3 personnel with working experience in,
among others, administrative and warehouse cum despatch functions.
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Datin Wong Wan Jye is the Director of Operations of KGW Medica and is mainly responsible
for the day-to-day operations of KGW Medica and also developing strategic partnerships with
KGW Medica’s customers. She brings with her 10 years of experience in sales and channel
management for pharmaceutical and medical device industry gained in pharmaceutical
companies, namely Sanofi-Aventis (Malaysia) Sdn Bhd and Bayer Healthcare (M) Sdn Bhd.
Chan Sek Seng is the Director of Business Development of KGW Medica and is mainly
responsible for business development which includes strategising business plans and
implementing market strategies. He brings with him more than 10 years of experience in
business development and management functions as well as sales and channel management
for the medical device and pharmaceutical industry, gained from his tenure in Sanofi-Aventis
(Malaysia) Sdn Bhd, Becton Dickinson Sdn Bhd, Hovid Berhad and Kotra Pharma (M) Sdn
Bhd, all being healthcare and/or pharmaceutical company. For the avoidance of doubt, both
Datin Wong Wan Jye and Chan Sek Seng are not part of our key senior management team
considering that they are not involved in our provision of logistics services, which is our core
business.
We will leverage on our experience in the logistics industry, including our past experience in
providing warehousing and transportation services to our ocean / air freight customers, to
further develop and operate our warehousing and distribution business. This will be further
complemented by the experience of our personnel for this business segment in the healthcare
industry, which will lend support to our management and expansion of this business segment.
Through serving our existing customers for this business segment, we are gaining and
improving our competencies in the warehousing and distribution business in the healthcare
industry. Moving forward, we will proactively market for these services so as to secure
business opportunities to enable us to accumulate further experience in operating this
business segment. We believe that our direct experience from operating our warehousing and
distribution business will provide the skills and knowledge to support our expansion of this
business segment.
The prospects and outlook of the warehousing and distribution services segment in Malaysia
as extracted from the IMR Report are set out below:
As part of the global supply chain, the Malaysian logistics services market has also benefitted
from the increase in global trade. The rising demand for container and cargo space required
for the movement of goods into and out of the country has spurred the need for services such
as freight forwarding as well as consolidation. This has also benefitted NVOCCs, which
operate as freight forwarders that do not own vessels and lease or buy available space in
container vessels to provide the services of transporting cargo.
The increased movement of goods in Malaysia has also created more demand for warehouse
and storage services, which often serve as points for the transhipment of goods or temporary
storage before the products are delivered to its end destination. The local warehouse and
storage market was valued at RM1.82 billion in 2021 and is forecast to reach RM3.06 billion
by 2027. This in turn bodes well for the development of inventory management, which is an
important part of supply chain management that serves to plan and control the storage of
goods, items and crucial information about the flow and storage of goods.
The growing trend of e-commerce in Malaysia has served to support the growth of the local
courier and parcel market, whereby online purchases are delivered to the door step of
customers via courier and parcel services. More recently, the shift in consumer behaviour to
prefer digital and online shopping driven by the COVID-19 pandemic has also to further
encouraged growth of the local courier and parcel market. As at end of 2021, courier service
providers had handle 770.8 million items (2020: 462.0 million), representing an 66.8%
increase from 2020.
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As a whole, the logistics services market in Malaysia is expected to witness continued growth
along with the expansion of its various sub-segments. In 2021, the logistics services market
was valued at RM19.54 billion. Going forward, the market is expected to reach RM21.27 billion
in 2022 and expand to RM32.01 billion by 2027, at a CAGR of 8.6% during the forecast period.
(Source: IMR Report)
7.23.3 Development of new business opportunities for our logistics services through
providing e-commerce solutions
We intend to assist Malaysian businesses to promote their products overseas via online
international business-to-consumer marketplaces (such as Amazon or eBay).
In consideration of the growth in the e-commerce market globally, there is potential for
Malaysian businesses to expand and sell their products to overseas buyers. We intend to offer
e-commerce solutions to assist Malaysian businesses in promoting their products globally,
initially focusing on the USA market through online business-to-consumer marketplaces such
as eBay or Amazon.
We intend to offer our e-commerce solutions to Malaysian SMEs and product brand owners
that have yet to venture into the e-commerce segment. Services to be offered include ecommerce store setup for customers on various online marketplaces, e-commerce
consultancy, e-commerce store management, and logistics services to ship their products to
overseas buyers. This includes advising our customers on digital strategy and execution of
their e-commerce business; managing the e-commerce store including undertaking content
creation, managing the business’ social media pages, and handling customer queries and
complaints; and offering fulfilment services whereby we can provide inventory storage, as well
as picking and packing services in preparation for shipping. We will also leverage on our
experience in the logistics industry to provide our customers with logistics services to ship
their products to their customers. Our e-commerce solutions will assist the customers to create
new revenue channels to benefit from the growing e-commerce markets.
Our e-commerce solutions business will be supported by a team with the relevant working
experience in the e-commerce sector gained from previous employments. The team members
shall possess the experience in, among others, developing business strategies and
partnerships to increase e-commerce adoption and business growth, and managing
relationship with e-commerce sellers to ensure business growth.
In this respect, our Group intends to hire an experienced personnel with the aforesaid relevant
expertise to spearhead our e-commerce solutions business, along with a business
development manager to support the segment’s overall operations by the third quarter of
2023. We expect the total staff costs for these 2 personnel to amount to RM0.33 million per
annum, and we intend to fund them via internally generated funds of our Group. As and when
the need arises, our Group may employ more employees to support this business segment,
after considering the demand for our e-commerce solutions, the cost in employing additional
employees and the cash flow position of our Group at the relevant point in time.
Our business strategy of providing assistance to Malaysian businesses in establishing ecommerce channels is expected to complement our core business of providing logistics
services. Increasing the opportunity for Malaysian businesses to reach overseas customers
is envisaged to facilitate growth in cross-border trade activities, which will likely create further
opportunities for us to offer our logistics services (such as ocean / air freight services) to these
Malaysian businesses.
With our Group’s track record of providing logistics services between Malaysia and the USA,
we will be able to offer a range of services for our e-commerce solutions customers beginning
with assisting them with their e-commerce store setup, providing them with warehousing
solutions in the USA, as well as providing ocean or air freight services to deliver their products
to warehouses or directly to the buyers in the USA.
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We intend to commence offering our e-commerce solutions by the second half of 2023.
The prospects and outlook of the global e-commerce segment as extracted from the IMR
Report are set out below:
E-commerce has been developing rapidly all across the world including Malaysia. It is
common for materials of various kinds to be ordered electronically and primarily, via the
Internet under both the business-to-business and business-to-consumer model. According to
the United Nations Conference on Trade and Development (“UNCTAD”), global e-commerce
sales reached USD26.7 trillion (RM110.60 trillion) in 2019 (RM4.1425 = USD1.00), which was
an increase of 4.0% from the previous year. UNCTAD had also estimated that online retail
sales’ share of total retail sales increased from 16% in 2019 to 19% in 2020, mainly induced
by COVID-19 pandemic, which rendered more people to use online platform in purchasing
goods. In particular, total e-commerce sales in the US increased by 42.8% from USD571.23
billion (RM2.37 trillion) in 2019 (RM4.1425 = USD1.00) to USD815.45 billion (RM3.43 trillion)
in 2020 (RM4.2011 = USD1.00). This figure further grew to USD960.44 billion (RM3.98 trillion)
in 2021(RM4.1456 = USD1.00). Going forward, the e-commerce market in the US is expected
to continue on an expansionary trend, supported primarily by the growing trend of online
shopping, high internet penetration and increased smartphone usage in the country. Note: All
foreign exchange rates are obtained from the average rate for the respective periods based
on rates from BNM.
Closer to home, the shift in consumer behaviour to digital and online shopping driven by the
COVID-19 pandemic has also been witnessed in Malaysia. In particular, Alibaba Group
Holding Limited (one of the largest e-commerce businesses in China) launched a new
consolidated end-to-end logistics service between China and Malaysia. The new cross-border
logistics service allows consumers in Southeast Asia, including Malaysian consumers, to buy
products on Chinese e-commerce platforms such as Taobao, Pinduoduo, JD.com with
reduced shipping time for cross-border e-commerce parcels. As the popularity of e-commerce
continues to rise in Malaysia and consumers increase purchases online, it is expected to lead
to increased demand for ocean freight, which is one of the main transport channels used to
bring in merchandise from overseas due to cost reasons. At the same time riding on the ecommerce boom trend, many local merchants are also importing merchandise from other
countries for trading purposes in Malaysia. This development is also expected to boost
demand for the ocean freight.
(Source: IMR Report)
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7.24
OUR MEASURES TO ADDRESS THE POTENTIAL IMPACT ON OUR FINANCIAL
PERFORMANCE IN LIGHT OF LOW OCEAN FREIGHT RATES AND OUR BUSINESS
VOLUME PERFORMANCE IN FYE 2022
Since mid-2022 up to the LPD, ocean freight rates have been volatile and on decreasing trend.
We expect the ocean freight rates to remain volatile in the future. This may lead to lower
revenue and profits for our Group if we are unable to increase our business volume to an
extent that could compensate the decrease in our revenue and profits caused by lower ocean
freight rates.
In addition, we experienced a decrease in our business volume in FYE 2022 where our ocean
freight services handled 14,837 TEU of containers as compared to 17,106 TEU of containers
in FYE 2021. A continued decrease in our business volume may result in lower revenue and
profits for our Group as business volume is one of the key determinants of our overall financial
performance.
To address the aforementioned potential impact on our financial performance, we have in
place the following measures to increase our business volume:
(i)
Addressing business opportunities from shipments to and from other countries
/ regions of the world
While we have been focusing on shipments to and from the USA previously, we
acknowledge the business opportunities available in other trade lanes. We do not
require any additional license or registration for arranging shipments to and from other
countries / regions of the world. As such, we consider ourselves to have the necessary
expertise, experience and resources to capture business opportunities available in
these other trade lanes. In fact, we first started arranging and coordinating export ocean
shipments to Asia, Europe, Oceania and South America in 2005. During the Period
Under Review from FYE 2019 to FPE 2022, our revenue generated from shipments to
or from other regions apart from the North America (mostly USA) was ranging from
21.69% to 51.21% of total revenue in the respective financial year/period. This
demonstrates our capability in handling shipments for non-USA destinations, including
our ability to source for ocean cargo space for these shipments.
In this regard, we will continue to capitalise on our relevant experience, expertise and
resources to further develop and strengthen our business volume on shipments to and
from the non-USA segment. Realising the potential impact of a possible slowdown of
the US economy on our business volume in late 2022, we have since placed additional
focus and resources on developing non-USA segment businesses. In addition to solely
relying on our existing resources to facilitate this development, a new manager for our
international business development team and a new senior manager for our sales and
marketing team joined us on 1 February 2023 and 1 March 2023 respectively, both of
whom are mainly responsible for focusing on ocean freight services for non-USA trade
lanes. We will also continue to develop and expand our human resources to facilitate
this expansion in business focus;
(ii)
Placing additional focus and effort on engaging industrial product customers
We have been serving customers from various industries (such as industrial,
manufacturing and trading industries) in the past without any specific emphasis on a
particular industry. These customers are involved in producing and/or trading of
industrial products or consumer products. Moving forward, while we will continue to
maintain business relationship with all of our existing customers, we will also place
additional focus and effort on engaging with existing and potential industrial product
customers as the global demand for their products are less likely to be affected by
recession and high inflation. These include, among others, building materials, industrial
machineries, and metal products and hardware; and
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(iii)
Further strengthening our sales and marketing functions mainly through
expansion of headcount
During the Period Under Review, we have been expanding our headcount to support
our growing business operations. However, we recorded mixed performance for our
business volume in terms of TEU of containers handled under our ocean freight services
segment from FYE 2019 to FYE 2022 as follows:
TEU of containers handled
FYE 2019
13,742
FYE 2020
17,242
FYE 2021
17,106
FYE 2022
14,837
We attribute the increase in the TEU of containers handled in FYE 2020 mainly to our
headcount expansion in both FYE 2019 and FYE 2020. However, we recorded
decreases in the TEU of containers handled in FYE 2021 and FYE 2022 mainly due to
shortage of ocean cargo space, which was caused by the global supply chain
disruptions following the COVID-19 pandemic. Since July 2022, the said situation has
improved and we no longer experience significant ocean cargo space shortage. In this
regard, we expect that our current workforce, having been expanded in the past few
years, will facilitate the growth of our business volume in light of improved ocean cargo
space availability.
Notwithstanding the strength of our workforce, we were not able to maintain or grow our
overall business volume in FYE 2022 although the previous ocean cargo space
shortage situation has improved since July 2022. We believe that this was partly due to
the overall weaker export demand in the second half of 2022 for our customers’
products from the USA as the country experienced a cumulative interest rate hike of
2.75% in the second half of 2022 (first half of 2022: 1.50%) (Source:
www.federalreserve.gov) aimed at curbing inflation, and certain major retailers were
facing overstocking issues during the same period.
As a result, we experienced reduction in orders from some of our existing customers
from manufacturing and trading industries for chemical, furniture and food packaging
products who mostly export their products to the USA, as well as foreign freight
forwarders who assist their customers to import goods from Malaysia to the USA. As
such, our ability to grow our business volume with the improved ocean cargo space
availability was affected. Nevertheless, when combined with our measures as set out
in Section 7.24(i) and (ii) above, we believe that our workforce strength will be effective
in facilitating the growth of our business volume moving forward.
To further develop our human resources, we will continue to expand our headcount,
which will in turn enable us to further strengthen our sales and marketing functions. We
are of the view that an enlarged sales and marketing team will enable us to undertake
more sales and marketing activities such as participating in more network / association
meetings, international conferences, trade fairs and exhibitions. An enhanced workforce
will also provide us with more resources to undertake continued expansion of our
network with other freight forwarders around the world. These are expected to enhance
our visibility among exporters and importers as well as other freight forwarders, which
may in turn give rise to business opportunities for us to secure more customers and
achieve higher business volume.
Taking into consideration of our previous growth track record and the aforementioned
measures to increase business volume, it is reasonably expected that we would be able to
mitigate the adverse impact from a decrease in ocean freight rates on our overall financial
performance through business volume growth that may be achieved by us. While these
measures may require time to produce the positive results that we anticipate, they address
the primary aspects of our operations and business development goals, and are therefore
expected to gradually enhance our business positioning for further business volume growth.
Together with other factors that are expected to support our business growth such as our
competitive strengths, diversified and growing customer base, and continued demand for
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logistics services from export trades in Malaysia, we regard ourselves to have a sustainable
position in the logistics industry in Malaysia.
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8.
REPORTING
IMR REPORT ACCOUNTANTS’ REPORT ON THE COMPILATION OF PRO FORMA
COMBINED STATEMENTS OF FINANCIAL POSITION
.
The information in this Section 8 is based on market research conducted by Protégé Associates commissioned
by KGW Group Berhad for the purpose of the IPO.
The Board of Directors
KGW Group Berhad,
D11-10-1, Block D11,
Dana 1 Commercial Centre,
Jalan PJU 1A/46,
47301 Petaling Jaya,
Selangor.
28 OCT 1022
Dear Sirs,
Strategic Analysis of the Logistics Industry in Malaysia
Protégé Associates Sdn Bhd (“Protégé Associates”) has prepared this ‘Strategic Analysis of the Logistics
Industry in Malaysia’ for inclusion in the prospectus of KGW Group Berhad (“KGW Group”) in relation to
its proposed listing on the ACE Market of Bursa Malaysia Securities Berhad.
Protégé Associates is an independent market research and business consulting company. Our market
research reports provide an in-depth industry and business assessment for companies raising capital and
funding in the financial markets; covering their respective market dynamics such as market size, key
competitive landscape, demand and supply conditions, government regulations, industry trends and the
outlook of the industry.
Mr. Seow Cheow Seng is the Managing Director of Protégé Associates. He has 22 years of experience in
market research, having started his career at Frost & Sullivan where he spent 7 years. He has been
involved in a multitude of industries covering Automotive, Construction, Electronics, Healthcare, Energy,
IT, Oil and Gas, etc. He has also provided his market research expertise to government agencies such as
Malaysia Digital Economy Corporation Sdn Bhd, Malaysia Debt Ventures Berhad and Malaysia Technology
Development Corporation Sdn Bhd.
We have prepared this report in an independent and objective manner and have taken adequate care to
ensure the accuracy and completeness of the report. We believe that this report presents a balanced and
fair view of the industry within the boundaries and limitations of secondary statistics, primary research
and continued industry movements. Our research has been conducted to present a view of the overall
industry and may not necessarily reflect the performance of individual companies in this industry. We are
not responsible for the decisions and/ or actions of the readers of this report. This report should also not
be considered as a recommendation to buy or not to buy the shares of any company or companies.
Thank you.
Yours sincerely,
SEOW CHEOW SENG
Managing Director
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8.
REPORTING
REPORT ON THE COMPILATION OF PRO FORMA
IMR REPORT ACCOUNTANTS’
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
1.0
Overview of the Logistics Industry in Malaysia
Logistics is widely known as the overall process of managing how resources (such as raw materials, in-process stocks and
finished goods) are acquired, stored and transported to their final destination.
Local and international businesses have been undergoing a period of rapid transformation. The local and global trading patterns
and consequently physical trade flows over time and space have been increasingly reshaped by the trends towards globalisation,
development of information and communications technology (“ICT”) and integrated logistics. This development has helped to
catalyse economic growth, improve the allocation of resources and provide more choices for consumers, but has also increased
the intensity of competition. Today, the logistics industry plays an important role in the development of a local economy that
provides a significant linkage to the growth of a national economy and its competitiveness in international trade.
The logistics industry can be divided into transport service providers and logistic service providers. Both parties work hand-inhand in providing a seamless integrated range of services to end-users.
Figure 1: Structure of the Logistics Industry
Notes:
1)
2)
3PLs denotes third party logistics providers that provide multiple logistics services which are generally integrated or ‘bundled’ in
nature for their customers; and
4PLs denotes fourth party logistics providers that are generally established as a separate entity through long-term contracts or
joint venture between a primary customer and one or more partners to manage all aspects of the customer’s supply chain
Sources: Ministry of International Trade and Industry (“MITI”) and Protégé Associates
Transport Service Providers
The movement of goods across the country and around the world is generally known as cargo transportation. There are various
modes of transport whereby principal modes of transport include road, rail, air and sea transport. Transport service providers
are generally the carriers or providers of these principal transport modes. They consist of the operators of road, rail, air and sea
transport, multimodal operators and terminal operators.
Road transport operators transport goods or undertake haulage operations on the road through the use of motor vehicles
or a combination of motor vehicles such as box vans, trucks, prime movers and trailers for hire or reward.
Rail transport operators transport goods or undertake haulage operations through the use of wheeled vehicles running on
rail tracks for hire or reward.
Ocean transport operators transport goods by sea, using ships or other marine vessels for hire or reward.
Air transport operators transport goods by air, using planes or helicopters for hire or reward.
There may be more than one mode of transport involved in the transportation of cargo under a single contract. This is called
intermodal or multimodal transport. As such, the operators of more than one mode of transport are known as multimodal
transport operators.
Terminal operators refer to the parties that are handling a transportation hub such as airport and seaport, at the end of or
at the major junction on a transportation route.
1
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REPORTING
REPORT ON THE COMPILATION OF PRO FORMA
IMR REPORT ACCOUNTANTS’
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COMBINED STATEMENTS OF FINANCIAL POSITION
Logistics Service Providers
Logistics service providers are often referred to as transport intermediaries. They provide support to the principal transport
modes by offering various types of logistics service, either directly or indirectly, which includes the following:
(a)
Facilitation service providers assist and/or ease logistical process flows.
(b)
Distribution service providers deliver goods from the point of origin to the final consumers. The primary activities
of distribution services are warehousing, transportation, inventory management and courier services (by domestic and
regional distribution and courier companies).
(c)
Integrated logistics services (“ILS”) providers act as a ‘one-stop centre’ for their customers’ logistics needs by
being involved in various segments across the logistics value chain. Third party logistics providers (“3PLs”) and fourth
party logistics providers (“4PLs”) are typically providers of ILS.
(d)
Business support service providers are involved in providing various direct or indirect complementary services that
support the logistics industry.
1.1
Historical Market Performance and Growth Forecast
The term logistics services refer to a supply chain management process that plans, implements and controls the flow and storage
of goods between the point of origin and the point of consumption in an efficient manner. The main logistics services provided
include organising transport and shipping services to move goods, warehousing and distribution, storage and inventory
management services, and freight forwarding. As such, Protégé Associates has used the gross domestic product (“GDP”)
generated from transportation and storage services as the market size of the logistics industry in Malaysia.
The logistics industry in Malaysia was valued at RM46.72 billion in 2021, based on the GDP generated from economic activities
in the industry. The performance in 2021 was an improvement from the RM45.56 billion registered in 2020, whereby the decline
in 2020 was mainly attributed to the coronavirus disease 2019 (“COVID-19”) and the resulting lockdown and social distancing
measures which has affected the economic activities. While there had been a resurgence in COVID-19 cases both in Malaysia
and across the globe in 2021, the recovery in economic activities had supported the recovery in transportation and storagerelated activities.
Figure 2: Historical Size and Growth Forecast of the Logistics Industry in Malaysia, 2019-2027
Year
Market Size (RM billion)
Growth Rate (%)
2019
57.11
2020
45.56
-20.2
2021
46.72
2.6
2022 f
51.46
10.2
2023 f
54.89
6.7
2024 f
59.80
8.9
2025 f
63.87
6.8
2026 f
68.27
6.9
2027 f
73.05
7.0
Compound annual growth rate (“CAGR”) (2022-2027) (base year of 2021): 7.7%.
Note: f denotes forecast
Sources: Department of Statistics Malaysia (“DOSM”) and Protégé Associates
In the short-term (2022-2023), growth in the local logistics industry is expected to be supported by the recovery of the global
economy amidst the ongoing COVID-19 pandemic. The International Monetary Fund (“IMF”) is projecting the global economy
to register a growth of 3.2% in 2022 after an expansion of 6.1% in 2021. Global efforts in boosting vaccination rate are expected
to underpin economic recovery, which will promote further recovery of the logistics industry in Malaysia. In the first half of 2022,
the logistics industry reached RM29.72 billion, which was an increase from RM22.48 billion in the previous corresponding period.
In terms of quarter-to-quarter growth, the industry in the second quarter of 2022 reached RM15.08 billion, up from RM14.64
billion in the previous quarter. However, the global economy may be negatively affected due to various central banks around
the world increasing interest rates in response to rising inflation. Higher interest rates may affect consumer spending and
demand for goods, which may then negatively affect demand for global and local logistics services.
In the medium to long-term (2024-2027), the logistics industry in Malaysia is anticipated to be fuelled by higher adoption rate
of e-commerce as well as expansion in global economic activities. The expansion of e-commerce in the country has led to
increased demand for logistics as well as warehousing and storage services. In addition, corporations are also venturing into
emerging areas such as cold chain logistics (such as cold storage, cooling systems, cold processing and cold distribution) and
last-mile delivery services to expand their scope of services. As Malaysia is part of the global supply chain, the expansion in
global economic activity is also expected to create higher demand for transportation services and logistics services as
corporations import and export parts and components as well as other products from / to the rest of the world.
2.0
Overview of the Transportation Market in Malaysia
About 90% of the world’s trade is transported by ship, with the majority shipped using containers. The global shipping industry
is experiencing a global container shortage crisis, which has yet to be fully resolved. During the initial COVID-19 outbreak in
early 2020, many factories in Asia suspended operations, which resulted in a disruption in global supplies of goods and slowdown
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in global marine traffic. The backlogs of ships waiting to dock and unload containers at US and European ports meant longer
turnover time to Asia to load new cargo. This has led to the increasing cost of shipping during the COVID-19 pandemic, especially
on some of the world’s busiest routes.
The transportation market in Malaysia, which consists of land, ocean and air transportation, was valued at RM27.18 billion in
2021. Going forward, the market is expected to reach RM30.20 billion in 2022 and expand to RM41.05 billion by 2027, at a
CAGR of 7.1% during the forecast period. The movement of cargo and containers can be performed via three main modes,
which includes land, ocean and air.
Land Transport
Land transport includes container haulage by rail and by trucks in Malaysia. In 2021, a total of 224,444 twenty-foot equivalent
units (“TEUs”) (equivalent to 112,222 forty-foot equivalent units ("FEUs”)) of containers had been transported in the country,
an increase from 198,857 TEUs (99,429 FEUs) transported in 2020. Approximately 4.8 million tonnes of freight were transported
via rail in 2021, an increase from approximately 4.6 million tonnes of freight in 2020. There is no publicly available official data
on the amount of TEUs transported through container haulage by truck. However, as operators in Malaysia providing land
transport to third parties are required to possess a Class A permit from the Commercial Vehicle Licensing Board, Protégé
Associates shall use the number of active Class A permits as a proxy for container haulage activity in Malaysia. In 2021, there
were approximately 220,697 Class A permits, which was a slight decrease compared to 221,076 Class A permits in 2020.
Ocean Transport
According to the United Nations Conference on Trade and Development (“UNCTAD”), ports around the world handled a total
of 815.6 million TEUs (407.8 million FEUs) of containers in 2020. This represented a slight decline of 1.2% from the previous
year as compared to the decrease of 3.8% in the volume of total maritime trade of 10.6 billion tonnes. This reflects the resilience
of containerised trade amid the disruption caused by the COVID-19 pandemic. The volume recorded in 2020 also shows a steady
increase from the 701.0 million TEUs (350.5 million FEUs) recorded in 2016, representing a CAGR of 3.9% over the period.
Closer to home, the total container throughput in Malaysia reached 28.4 million TEUs (14.2 million FEUs) in 2021 which was an
increase from 26.7 million TEUs (13.4 million FEUs) recorded in the previous year. At the same time, Malaysia’s cargo throughput
(comprising dry cargo, liquid cargo, general cargo and containerised cargo) using ocean freight stood at 591.5 million freight
weight tonnes (“FWT”) in 2021. This was an increase from 564.3 million FWT in the previous year.
Air Transport
Air cargo refers to domestic and international cargo handled at airports. A total of 1,008.1 million kilograms (“KG”) of cargo
was handled by Malaysian airports in 2021. This was an increase from the 789.1 million KG recorded in 2020. In particular,
domestic cargo accounted for 26.9% of total cargo handled in 2021, with the international cargo making up the remaining
73.1% of total cargo handled. At the same time, cargo unloaded represented 50.5% of total cargo handled in 2021, and cargo
loaded accounted for the remaining 49.5%.
2.1
Overview of the Logistics Services Market in Malaysia
The logistics services market plays a crucial supporting role within the logistics industry. The market mainly provides services
supporting transport service providers such as the operators of road, rail, air and sea transport, multimodal operators and
terminal operators. These logistics services include those relating to, among others, organising the international movement of
cargo, regulatory compliance and clearance, warehousing and/or distribution. Logistic services consist of a wide range of services
which can be widely grouped into facilitation services, distribution services, integrated logistics services as well as various
business supporting services. Some of the core services under this market includes consolidation and freight forwarding, nonvessel operating common carriers (“NVOCCs”), inventory management, courier and parcel services, as well as warehousing and
storage.
Global trade involves the international exchange of goods to satisfy demand and is highly reliant on the logistics industry for
facilitation of the movement of these goods. Global trade volumes have been on the rise over the years due to globalisation.
According to statistics from UNCTAD, the value of global trade stood at around USD25 trillion (RM103.56 trillion) in 2019
(RM4.1425 = USD1.00). The value of global trade contracted in 2020 due to the COVID-19 pandemic disrupting global economic
activities, but rebounded to USD28.5 trillion (RM118.15 trillion) in 2021 (RM4.1456 = USD1.00). Global trade continued to
increase in 2022, with trade values reaching USD7.7 trillion (RM32.29 trillion) in the first quarter (RM4.1936= USD1.00). This
represents an increase of almost USD1 trillion (RM4.07 trillion) relative to the first quarter of 2021 (RM4.0678 = USD1.00) and
USD250 billion (RM1.05 trillion) higher than the last quarter of 2021 (RM4.0678 = USD1.00). This growth trend had been further
accelerated with the rise in e-commerce and the advancements in technology. It has become common practice for the sales of
goods and materials to be performed electronically via the Internet for both business-to-business and business-to-consumer
models. Note: All foreign exchange rates are obtained from the average rate for the respective periods based on rates from
Bank Negara Malaysia.
As part of the global supply chain, the Malaysian logistics services market has also benefitted from the increase in global trade.
The rising demand for container and cargo space required for the movement of goods into and out of the country has spurred
the need for services such as freight forwarding as well as consolidation. This has also benefitted NVOCCs, which operate as
freight forwarders that do not own vessels and lease or buy available space in container vessels to provide the services of
transporting cargo.
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The increased movement of goods in Malaysia has also created more demand for warehouse and storage services, which often
serve as points for the transhipment of goods or temporary storage before the products are delivered to its end destination.
The local warehouse and storage market was valued at RM1.82 billion in 2021 and is forecast to reach RM3.06 billion by 2027.
This in turn bodes well for the development of inventory management, which is an important part of supply chain management
that serves to plan and control the storage of goods, items and crucial information about the flow and storage of goods. The
growing trend of e-commerce in Malaysia has served to support the growth of the local courier and parcel market, whereby
online purchases are delivered to the door step of customers via courier and parcel services. More recently, the shift in consumer
behaviour to prefer digital and online shopping driven by the COVID-19 pandemic has also further encouraged growth of the
local courier and parcel market. As at end of 2021, courier service providers had handled 770.8 million items (2020: 462.0
million), representing an 66.8% increase from 2020.
As a whole, the logistics services market in Malaysia is expected to witness continued growth along with the expansion of its
various sub-segments. In 2021, the logistics services market was valued at RM19.54 billion. Going forward, the market is
expected to reach RM21.27 billion in 2022 and expand to RM32.01 billion by 2027, at a CAGR of 8.6% during the forecast
period.
3.0
Competitive Analysis
3.1
Competitive Landscape
The logistics industry in Malaysia is mature but highly fragmented with the presence of more than 18,000 industry players
involved in various scopes of transportation and warehousing activities in 2021. Some key barriers to entry faced by industry
players include supplier network, market reputation, operating track record which differentiates an established industry player
from another, and fleet size of vehicles/vessels owned and operated.
In general, industry players in the local logistics industry can be divided into three types namely listed local, non-listed local and
foreign-owned industry players:
Listed local industry players refer to companies which are currently public listed companies. They are typically wellcapitalised companies and generally have better financial strength than their unlisted local counterparts. This group of logistics
industry players generally strives to leverage on their financial strength to further expand their existing logistics capability,
capacity, infrastructure, fleets, workforce and/or range of service offerings. They are also likely to be more willing to make
investment in technology that can improve productivity and cost efficiency. Their level of service offerings is likely more
integrated with involvement in many activities across the industry value chain. Some of these listed local industry players include
FM Global Logistics Holdings Berhad (“FM Global”), Harbour-Link Group Berhad (“Harbour-Link”), See Hup Consolidated
Berhad (“See Hup”), Swift Haulage Berhad, Tiong Nam Logistics Holdings Berhad, Transocean Holdings Berhad
(“Transocean”), Tri-Mode System (M) Berhad (“Tri-Mode”) and Xin Hwa Holdings Berhad. There are also Malaysian companies
such as Infinity Logistics and Transport Ventures Limited (“Infinity Logistics”) and Worldgate Global Logistics Limited
(“Worldgate Global”), which are both listed on the Hong Kong Stock Exchange.
Non-listed local industry players refer to non-listed entities that are wholly-owned by Malaysians. While this group has the
largest number of participants, there are also quite a number of sizeable industry players in this group which have considerable
logistics infrastructure and fleet size as well as being capable of offering a wide array of services albeit at an operating scale
which may not be as large as those undertaken by their listed local counterparts. Non-listed local logistics industry players
generally embark on a niche business strategy that can optimise their growth potential with their relatively small resources.
They are likely to be more selective in the scope of logistics activities and geographical area that they want to participate in.
Some of these non-listed local industry players include Agility Logistics Sdn Bhd, Dimerco Express (M) Sdn Bhd, Forward Freight
Services Sdn Bhd, Interway Transport Sdn Bhd, KGW Group, Kontena Nasional Global Logistics Sdn Bhd, PKT Logistics (M) Sdn
Bhd, Tanjong Express (M) Sdn Bhd and Total Logistics Services (M) Sdn Bhd.
Foreign-owned industry players refer to entities in Malaysia which are majority-owned by foreigners. Foreign-owned
logistics industry players are generally the extension or Malaysia’s business arm of established multinational parent logistics
industry players. As such, they are able to ride on the logistical experience and expertise of their respective parent companies
to accelerate their industry learning curve. They are also able to generate business leads from the local business arm of their
parent company’s customers. Some of these foreign-owned industry players include CEVA Freight Holdings (Malaysia) Sdn Bhd,
CJ Century Logistics Holdings Berhad, DHL Global Forwarding (Malaysia) Sdn Bhd, FPS Famous Pacific Shipping Sdn Bhd, Hankyu
Hanshin Express (M) Sdn Bhd, Menlo Worldwide Forwarding Malaysia Sdn Bhd, Nippon Express (Malaysia) Sdn Bhd and Tasco
Berhad.
3.2
Comparison between KGW Group and Selected Industry Players
KGW Group is involved in the Malaysian logistics industry via its wholly-owned subsidiaries, namely KGW Logistics (M) Sdn Bhd
and Mattroy Logistics (Malaysia) Sdn Bhd which are logistics services providers with involvements in facilitation services (focusing
on providing ocean freight services, air freight services and freight forwarding services as NVOCCs), and KGW Medica Sdn Bhd
with involvements in distribution services (focusing on warehousing and distribution of healthcare-related products and devices).
For the financial year ended (“FYE”) 31 December 2021, KGW Group had a revenue of RM193.6 million from its involvement in
the Malaysian logistics industry (excluding revenue of RM1.8 million from trading business).
Protégé Associates has identified several key industry players that are comparable based on the following criteria:
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•
is a Malaysia-based public-listed local industry player; or
•
is a Malaysia-based private limited (Sdn Bhd) local industry player with a registered revenue of below RM300 million;
and
•
is involved in logistics services for ocean shipment or more (such as land transportation or air shipment).
After taking into consideration the above criteria, the following industry players have been shortlisted for comparison purposes.
Figure 3: Financial Information of KGW Group and Selected Players in the Logistics Industry in Malaysia
Revenue
(RM
million)2
Gross
Profit (RM
million)
Profit/(Loss)
before Tax
(RM million)
Profit/(Loss)
after Tax
(RM million)
December 2021
June 2021
June 2021
December 2021
March 2022
December 2021
December 2021
December 2021
December 2021
193.6
763.4*
609.0#
275.6+
112.5^
22.4$
133.0@
88.9~
134.1**
33.0
194.0
136.0
70.0
n/a
n/a
19.5
10.4
22.3
20.8
42.5
82.9
48.7
23.2
1.5
10.0
-11.8
6.1
15.8
29.5
74.7
42.5
22.4
1.4
7.3
-11.9
4.5
Gross
Profit
Margin
(%)3
16.9
25.4
22.3
25.4
n/a
n/a
14.6
11.7
16.7
31 December 2021
242.4**
n/a
8.0
6.1
31 December 2021
82.3**
11.4
-2.6
-2.7
Information
from FYE
KGW Group
FM Global
Harbour-Link
Infinity Logistics
See Hup
Transocean
Tri-Mode
Worldgate Global
Dimerco Express
(M) Sdn Bhd
Forward Freight
Services Sdn Bhd
Interway
Transport
Sdn
Bhd
31
30
30
31
31
31
31
31
31
Profit/(Loss)
before Tax
Margin (%)4
Profit/(Loss)
after Tax
Margin (%)5
10.6
5.6
13.6
17.7
20.7
6.5
7.5
-13.2
4.5
8.1
3.9
12.3
15.4
19.9
6.1
5.5
-13.3
3.4
n/a
3.3
2.5
13.8
-3.1
-3.3
Notes:
1. The companies above are considered comparable companies as they provide logistic services similar to KGW Group. Nonetheless, these
comparable companies may not be identical to KGW Group in terms of geographical area served / revenue distribution by countries, as gathered
based on publicly available information of these companies. Based on publicly available information, the geographical area served by the
comparable companies include Malaysia, Australia, USA, Indonesia, Thailand, Vietnam, India, China, Hong Kong, Special Administrative Region of
China, Brunei, Netherlands, and South Korea. In addition, they may derive revenue from other non-logistics-related business activities such as
property development, flexitank solutions, machinery hire, subcontracting works, tyre manufacturing, information technology as well as
manufacturing and trading of plastic products.
2. Revenue derived may also include other business activities, products or services
3. Gross Profit Margin = Gross Profit / Revenue
4. Profit before Tax Margin = Profit before Tax / Revenue
5. Profit after Tax Margin = Profit after Tax / Revenue
* FM Global’s revenue is segmented into International Freight and Domestic Logistics. The International Freight segment covers sea freight services,
air freight services and land freight services which comprise cross-border trucking services. The Domestic Logistics segment constitutes 3PL,
Warehousing & Distribution and Supporting Services, which include Customs Brokerage, Haulage, E-commerce Fulfilment and Last Mile Delivery
Services. The annual report does not provide a further breakdown of the segment.
# Harbour-Link’s revenue is segmented into Shipping and Marine Services, Integrated Logistics, Engineering Works and Property Development. The
Shipping and Marine Services segment comprise of container shipping liner service, tugboat and barges operations, ship agency service and ship
management services. The annual report does not provide a further breakdown of the segment. The Integrated Logistics segment comprise multimodal
transportation (3PL), haulage activities and project cargo logistics.
+ Infinity Logistics’ revenue is segmented into Integrated Freight Forwarding, Logistics Centre and Related Services, Land Transportation Services,
Flexitank Solution and Related Services, and 4PL Services. The Integrated Freight Forwarding segment involve provision of NVOCC and freight
forwarding services. The Logistics Centre and Related Services segment involve provision of warehousing and container depot services. The 4PL
segment involve provision of 4PL services and 4PL handling services.
^ See Hup’s revenue is segmented into Transportation, Forwarding and Trading & Machinery Hire and Subcontracting Works. The Forwarding segment
includes air and sea freight forwarding business.
$ Transocean’s revenue is segmented into Logistics, Tyre Manufacturing and Information Technology. The Logistics division consists of services
ranging from trucking, cross-border services, container haulage, container depot, warehousing, freight forwarding custom brokerage and project
logistics. The annual report does not provide a further breakdown of the segment.
@ Tri-Mode’s revenue is segmented into Sea Freight, Container Haulage, Air Freight, Freight Forwarding, Warehousing and Marine Insurance.
~ Worldgate’s revenue is segmented into Air Freight Forwarding and Related Activities, Sea Freight Forwarding and Related Activities, Trucking and
Warehouse and Related Activities, and Manufacturing and Trading of Plastics Products.
** For non-listed local companies, namely Dimerco Express (M) Sdn Bhd, Forward Freight Services Sdn Bhd and Interway Transport Sdn Bhd, they
are comparable to KGW as these companies meet the criteria set out in the IMR. However, there is no publicly available information on the breakdown
of revenue to ascertain the contribution from ocean freight services.
Sources: Audited combined financial statements of KGW Group, Annual Reports of FM Global, Harbour-Link, Infinity Logistics, See
Hup, Transocean, Tri-Mode, Worldgate Global, Companies Commission Malaysia (“CCM”) and Protégé Associates
3.3
Estimated Market Share
For FYE 31 December 2021, KGW Group generated revenue of RM193.6 million from its involvement in the Malaysian logistics
industry (excluding revenue of RM1.8 million from trading business), equivalent to 0.41% share of the total market size (GDP)
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of the logistics industry in Malaysia of RM46.72 billion in 2021. The aforesaid revenue also represents 0.99% share of the total
market size of the logistics services market in Malaysia of RM19.54 billion in 2021.
KGW Group generates a substantial part of its revenue through provision of ocean freight services for shipments to the USA
and as such, KGW Group’s subsidiaries, namely KGW Logistics (M) Sdn Bhd and Mattroy Logistics (Malaysia) Sdn Bhd, have
applied for and obtained registration with the United States Federal Maritime Commission as a NVOCC. There are approximately
9,000 NVOCC registration holders across the globe and around 25 of them are Malaysian companies based on the Ocean
Transportation Intermediaries list (“OTI list”) from the FMC. Amongst the 25 Malaysian NVOCC registration holders, 20 of the
companies have filed their financial performance for the FYE 2021 with the CCM. As there is no publicly available information
on the segmentation of business activities, Protégé Associates has taken the total revenue of the 20 Malaysian NVOCC
registration holders for comparison. In this respect, KGW Logistics (M) Sdn Bhd and Mattroy Logistics (Malaysia) Sdn Bhd rank
3rd and 16th respectively among the 20 Malaysian NVOCC registration holders on the OTI list for the FYE 2021 (in terms of
revenue).
4.0
Demand Conditions
Figure 4: Demand Conditions Affecting the Logistics Industry in Malaysia, 2022-2027
MediumShort-Term
Term
Impact
Demand Conditions
2022-2023
2024-2025
+
Increasing Trade Volumes Across the Globe
Medium
Medium
+
Growing
Prominence
of
E-Commerce
and
Medium
Medium
Advancements in Technology
+
Growth in the Manufacturing Sector
Medium
Medium
+
Broad Range of End-User Markets
Medium
Medium
Slower Economic Growth due to Hike in Interest Rates
High
Medium
Global Events Affecting Economic Activities
High
Medium
Long-Term
2026-2027
Medium
Medium
Medium
Medium
Low
Low
Source: Protégé Associates
Increasing Trade Volumes Across the Globe
The logistics industry plays a crucial role in supporting trade across the globe, facilitating the movement of goods across both
domestic and international borders. Global trade had been increasing over the years. According to the UNCTAD, the value of
global trade reached a record level of USD28.5 trillion (RM118.15 trillion) in 2021 (RM4.1456 = USD1.00), which was an increase
of 25% from 2020 and 13% higher as compared to 2019, before the COVID-19 pandemic struck. Closer to home, Malaysia’s
total trade (comprising total imports and total exports) increased by 24.9% to reach RM2.23 trillion in 2021. This compares to
a total trade value of RM1.17 trillion in 2010, representing a CAGR of 6.0% over the said period. In 2022, total trade was valued
at RM1.87 trillion in the first 8 months of the year, an increase from the RM1.24 trillion recorded in the previous corresponding
period. In particular, imports increased by 55.0% from RM 554.21 billion to RM858.83 billion while exports increased 30.3%
from RM778.55 billion to RM1.01 trillion. At the same time, the volume of containerised trade had also been increasing over the
years. Total container throughput (comprising exports, imports and transhipment) in Malaysia was recorded at 28.4 million TEUs
(14.2 million FEUs) in 2021, which was an increase from 26.7 million TEUs (13.4 million FEUs) in 2020 and 26.4 million TEUs
(13.2 million FEUs) in 2019. However, in the first half (“1H”) of 2022, total container throughput was 13.5 million TEUs (6.8
million FEUs), as compared to 14.3 million TEUs (7.2 million FEUs) in 1H 2021. The drop in container throughput can be
attributed to the ongoing global supply chain disruption which was exacerbated by the war between Russia and Ukraine.
Nevertheless, the total container output in the 1H 2022 was still higher compared to 12.3 million TEUs (6.2 million FEUs) in 1H
2020. The increasing trade volume in Malaysia as well as international markets is expected to support the growth in the logistics
industry in Malaysia, including for storage and warehousing services.
Growing Prominence of E-Commerce and Advancements in Technology
E-commerce has been developing rapidly all across the world including Malaysia. It is common for materials of various kinds to
be ordered electronically and primarily, via the Internet under both the business-to-business and business-to-consumer model.
According to the UNCTAD, global e-commerce sales reached USD26.7 trillion (RM110.60 trillion) in 2019 (RM4.1425 = USD1.00),
which was an increase of 4.0% from the previous year. UNCTAD had also estimated that online retail sales’ share of total retail
sales increased from 16% in 2019 to 19% in 2020, mainly induced by COVID-19 pandemic, which rendered more people to use
online platform in purchasing goods. In particular, total e-commerce sales in the United States ("US”) increased by 42.8% from
USD571.23 billion (RM2.37 trillion) in 2019 (RM4.1425 = USD1.00) to USD815.45 billion (RM3.43 trillion) in 2020 (RM4.2011 =
USD1.00). This figure further grew to USD960.44 billion (RM3.98 trillion) in 2021 (RM4.1456 = USD1.00). Going forward, the
e-commerce market in the US is expected to continue on an expansionary trend, supported primarily by the growing trend of
online shopping, high internet penetration and increased smartphone usage in the country. Note: All foreign exchange rates are
obtained from the average rate for the respective periods based on rates from Bank Negara Malaysia.
Closer to home, the shift in consumer behaviour to digital and online shopping driven by the COVID-19 pandemic has also been
witnessed in Malaysia. In particular, Alibaba Group Holding Limited (one of the largest e-commerce businesses in China)
launched a new consolidated end-to-end logistics service between China and Malaysia. The new cross-border logistics service
allows consumers in Southeast Asia, including Malaysian consumers, to buy products on Chinese e-commerce platforms such
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as Taobao, Pinduoduo, JD.com with reduced shipping time for cross-border e-commerce parcels. As the popularity of ecommerce continues to rise in Malaysia and consumers increase purchases online, it is expected to lead to increased demand
for ocean freight, which is one of the main transport channels used to bring in merchandise from overseas due to cost reasons.
At the same time riding on the e-commerce boom trend, many local merchants are also importing merchandise from other
countries for trading purposes in Malaysia. This development is also expected to boost demand for ocean freight.
In addition to the transportation market, the growing prominence of e-commerce has helped to carve out a new market for
stakeholders in the logistics industry. E-commerce merchants would be required to manage the delivery of products via their
in-house distribution channel or engage third-party services providers such as a courier service provider for the delivery of their
products. This also benefits the expansion of the warehousing and storage market, which serve as distribution hubs and support
last-mile delivery. The logistics industry is also expected to benefit from technological advancements that improve speed,
efficiency and visibility. The rise of big data analytics has enabled merchants to better understand the requirements of
consumers, and recommend more suitable products to consumers. At the same time, e-commerce platforms have evolved to
become more user friendly, whereby product searches/recommendations and payment methods have become more and more
convenient. This is expected to drive higher e-commerce sales volumes and in turn support the expansion of the various markets
within the logistics industry.
Growth in the Manufacturing Sector
Along with the growth in the global population, so has the demand for goods. To cope with the increase in demand, there has
been continuous improvements in manufacturing capabilities, namely via the adoption of automation, as well as more advanced
and efficient manufacturing technologies. According to data by the World Bank, the world manufacturing value added (“MVA”)
stood at USD13.50 trillion (RM56.71 trillion) in 2020 (RM4.2011 = USD1.00), which was a decline from USD13.95 trillion
(RM57.79 trillion) in 2019 (RM4.1425 = USD1.00) and USD14.09 trillion (RM56.86 trillion) in 2018 (RM4.0353 = USD1.00). The
decline can be attributed to the tariffs and trade tension between the world’s dominant economies, as well as the COVID-19
pandemic disrupting global economic activity. Despite the declines, the value recorded in 2020 was still higher than the
USD10.56 trillion (RM33.98 trillion) recorded in 2010 (RM3.2182 = USD1.00). This represents a CAGR of 2.5% throughout the
said period. Global MVA is expected to continue on a growth trajectory once the COVID-19 pandemic subsides and trade issues
solved. In Malaysia, the sales value from the manufacturing sector increased from RM534.45 billion in 2010 to RM1.55 trillion
in 2021, representing a CAGR of 10.2% over the said period. In particular, the local electrical and electronics ("E&E”) industry
is one of the largest sub-segments within the manufacturing sector. Following a modest increase in trade in 2020, the local E&E
industry saw a further surge in terms of trade in 2021, whereby total exports increased by 18.0% to RM455.73 billion and total
imports increased by 24.3% to RM314.35 billion. The growth of the manufacturing sector as well as resulting economic growth
is expected to provide impetus for the growth in the logistics industry, which is crucial to the movement of the manufactured
goods and products across borders. Note: All foreign exchange rates are obtained from the average rate for the respective
periods based on rates from Bank Negara Malaysia.
Broad Range of End-User Markets
Transport and logistics services are essentially the critical supporting business activities used for the movement of goods among
all the stakeholders within an industry supply chain (including the final consumers). As almost every single industry will require
storage and/or transportation services, either through a single mode or multimode of transport, it is unsurprising that the
logistics industry in Malaysia can look forward to demand from a very broad range of end-user markets. Examples of end-user
market for transport and logistics services are the agriculture, construction, manufacturing as well as mining and quarrying
sectors. It needs to be highlighted that there are many different markets that are grouped under each sector particularly the
manufacturing sector. Examples of end-user markets within the manufacturing sector that engage transport and logistics
services include but are not limited to food and beverage, E&E, medical devices, pharmaceutical, plastic products, rubber
products and steel products. By having a very broad range of end-user markets, the logistics industry in Malaysia is able to
mitigate the risk of over-reliance on a single end-user market and stand to have more room for market expansion.
Slower Economic Growth due to Hike in Interest Rates
In light of the high inflation rates in the US, the country began raising interest rates since March 2022 to combat the situation.
The move serves to increase borrowing cost to try to cool the economy and ease price inflation. However, the persistent high
prices had led to the Federal Reserve (the US central bank) continuing to raise interest rates in the few following Federal Open
Market Committee meetings. The latest hike took place in 21 September 2022, raising interest rates (Federal Funds Rate) by
75 basis points to the 3.00% to 3.25% target range. Over the span of 6 months, the Federal Funds Rate had increased by 3
percentage points. The spike in borrowing cost in the US has reduced household purchasing power and tighter monetary policy
is expected to negatively impact economic growth in the short-term.
The high inflation environment has also been present in major European economies. The European Central Bank ("ECB”) raised
interest rates across the eurozone in September 2022 to combat soaring inflation that has reached double-digit figures in some
of the bloc’s member countries. A 75-basis point increase was applied to three key ECB interest rates, raising the interest rate
on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility to 1.25%,
1.50% and 0.75% respectively, with effect from 14 September 2022. The higher interest rates is expected to lead to slower
economic growth in the region.
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The rise of interest rates in the US and Europe has also affected Asia in terms of the weakening of Asian currencies. A weaker
currency indicates that imports are now more expensive and may affect consumer purchasing power. While some Asian
economies such as India, Indonesia, Malaysia, Thailand and the Philippines have stepped up their interest rates in an effort to
catch up with the US’s monetary policy, some economies such as China have moved to lower interest rates to shore up a slowing
economy.
According to the IMF, global growth is expected to slow from the 6.0% registered in 2021 to 3.2% in 2022. The IMF has
forecasted global economic growth to further slow to 2.7% in 2023, with one third of the global economy facing risks of
contracting during the year. The economic slowdown is expected to negatively impact the expansion of the local logistics
industry.
Global Events Affecting Economic Activities
As part of the global supply chain, economic activities in Malaysia are subject to global events that may affect the economic
activities across the globe. In particular, Malaysia is a major exporter of E&E products to various parts of the world. The tension
between the US and China has affected the relationship between the top two economies in the world, with the effect spilling
over to other parts of the world. The tension began in 2018 when the US imposed punitive tariffs on China. These tariffs were
followed by restriction on both China’s access to high-tech US products and foreign investments involving security concerns and
allegations of unfair Chinese commercial practices. The US and China are among the top export destinations of Malaysian
exports.
At a more recent note, the war between Russia and Ukraine has also caused disruptions to the global supply chain. As one of
the largest exporters of oil in the world, Russia’s involvement in the war throws oil supply from the country into doubt. This has
led to oil prices spiking above USD100 (RM440.05) per barrel and renewed supply chain disruptions with the high fuel price
(2022: RM4.2011 = USD1.00). The high oil prices are also likely to aggravate inflation in the US as well as in some European
countries, which may affect demand from these countries. At the same time, the COVID-19 pandemic that began in 2020 had
also affected the global supply chain. In order to curb the spread of COVID-19, governments around the world, including
Malaysia, have imposed multiple travel and movement restrictions. This has affected the global supply chain and led to shortage
of supplies, delays from suppliers to customers, and an increase of raw material prices and logistic costs. All these factors are
expected to affect demand for products and goods globally. Additionally, rising inflation has caused various central banks around
the world increase interest rates in order to relieve inflationary pressure. Higher interest rates may affect consumer spending
and demand for goods. The disruptions in global economic activities may affect demand for Malaysian goods and products,
which will in turn have a negative impact on the local logistics industry. Note: All foreign exchange rates are obtained from the
average rate for the respective periods based on rates from Bank Negara Malaysia.
5.0
Supply Conditions
Figure 5: Supply Conditions Affecting the Logistics Industry in Malaysia, 2022-2027
MediumShort-Term
Term
Impact
Supply Conditions
2022-2023
2024-2025
+
Supportive Government Initiatives
High
High
+
A Strategic Logistics Hub with Business-Friendly
Medium
Medium
Logistics Ecosystem
High Oil Prices Affecting Fuel Cost on Logistics
High
Low
Intense Price Competition
Medium
Medium
Long-Term
2026-2027
High
Medium
Low
Medium
Source: Protégé Associates
Supportive Government Initiatives
Trading activities account for a significant portion of Malaysia’s economic activity. As such, the movement of goods and the
logistics industry plays a crucial role in the development of the country’s economic growth. In view of this, the Malaysian
Government has placed much emphasis on the development of the logistics industry in Malaysia. In particular, the Malaysian
Government had highlighted three main themes in the Twelfth Malaysia Plan (2021-2025) ("12MP”), namely resetting the
economy, strengthening security, wellbeing and inclusivity, as well as advancing sustainability. These themes are supported by
four catalytic policy enablers, which include connectivity and transport infrastructure enhancements.
On this policy enabler, the Malaysian Government will place emphasis on improving first- and last-mile connectivity, increasing
industry competitiveness and strengthening governance. The Malaysian Government aims to provide an efficient and inclusive
transportation and logistics infrastructure by enhancing accessibility to public transport, improving trade facilitation as well as
strengthening the institutional and regulatory framework. Measures will be taken to improve last-mile connectivity through the
integration of rail and road networks between airports, ports, industrial areas and cities. The capacity of ports infrastructure
and services will be increased while a multimodal cargo movement approach by the same service provider will be adopted.
Initiatives will also be taken to centralise planning and development of logistics hubs, accelerate digital adoption, encourage
mergers and acquisitions among industry players, establish a single border agency and create a national regulatory framework
for warehousing and maritime economy.
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At the same time, the electrical and electronics sector (whereby Malaysia is a huge net exporter) will be uplifted to a higher
point in the value chain in 12MP. The expansion in the sector is expected to lead to more exports of local products. The 12MP
also aims to improve internet connectivity, which is expected to enable small and medium enterprises ("SMEs”) and micro SMEs
("MSMEs”) to promote their products overseas and increase their contribution to the nation’s exports. 12MP targets contribution
of MSMEs to the nation’s exports to reach 25.0% in 2025 from 13.5% in 2020. The local logistics industry is also expected to
be supported by the National Trade Blueprint ("NTB”), which is a 5-year (2021-2025) development strategy and initiatives to
enhance Malaysia’s trade competitiveness, specifically in the exports of merchandise. Some of the specific areas covered under
the NTB are Trade Facilitation & Logistics, Standards & Conformance, Trade Promotion & Market Access, Sustainability &
Innovation, Digitization & Technology as well as Investment and Branding.
Malaysia is currently moving into the Fourth Industrial Revolution (“Industry 4.0”), whereby new and upcoming technologies
are incorporated into the manufacturing process. These include the use of the Internet of Things ("IoT”), Big Data Analytics,
artificial intelligence ("AI”), cloud computing, cognitive computing, 3D printing, smart sensors and predictive maintenance. Due
to the importance of the manufacturing sector to Malaysia’s economy, the Malaysian Government has pushed for the adoption
of Industry 4.0 among manufacturers. In particular, the implementation of Industry 4.0 has also benefited the logistics industry,
whereby the use of robotics transportation, storage automation as well as material management have served to streamline
operations of freight management companies. These efforts by the Malaysian Government are expected to support the growth
of the local logistics industry.
A Strategic Logistics Hub with Business-Friendly Logistics Ecosystem
Malaysia is located strategically within the ASEAN region. It has the greatest number of ASEAN neighbours among all the ASEAN
countries. Malaysia can rely on Brunei, Indonesia, Singapore and Thailand as countries that it shares land and/or borders with.
It also shares a sea border with the Philippines. As such, Malaysia is considered an ideal logistics gateway to the ASEAN markets.
Malaysia has also earned a reputation of having one of the most well-developed infrastructures among the industrialising
countries of Asia with a network of well-maintained highways in Peninsular Malaysia and international ports that facilitate almost
95 percent of Malaysia’s trade. As a high percentage of global trade is through ocean transport, this is expected to benefit ocean
freight providers in particular in Malaysia. The country also has over 600 industrial parks as well as a large base of relatively
young and well-educated talent with multi-lingual capability. At the same time, the bilateral and regional free trade agreements
(“FTAs”) the Malaysian Government has signed has also been supportive of country’s trade with other countries. All these have
helped to provide a boon to regional and logistics operations in the country and catalyse the growth in the local logistics industry.
High Oil Prices Affecting Fuel Cost on Logistics
Oil price fluctuations has a constantly evolving effect on the logistics industry. A rapid increase in fuel prices can lead to a
devastating effect on transportation companies as high fuel cost eat into profit margins, while a sudden fall in fuel price can
result in short-term boosts in profits which later leads to a surge in competition within the industry to provide consumers with
the lowest price. In particular, a higher fuel cost is often passed down to the clients of transportation companies, including
freight management companies. This may then lead to narrowing profit margins of these clients.
Crude oil prices had been edging up in 2021 given the vaccination efforts, loosening pandemic-related restriction and economic
recovery. There has also been a sudden spike in recent months due to the tension and war between Russia and Ukraine amid
concerns of supply disruption. The war between Russia and Ukraine had led to the Europe Brent Spot Price FOB increasing from
USD74.17 (RM312.31) per barrel in December 2021 (RM4.2107 = USD1.00) to above USD100 (RM420.07) per barrel in March
2022 (RM4.2007 = USD1.00). The compressed margins as well as intense competition among industry player may deter new
entrants from entering the industry, thus affected the supply of logistic services. Note: All foreign exchange rates are obtained
from the average rate for the respective periods based on rates from Bank Negara Malaysia.
Intense Price Competition
The level of price competition in the local logistics industry is intense due to the high level of fragmentation in the industry. As
a result, logistics industry players compete fiercely among one another in terms of pricing of services offered in order to secure
customers thus creating a highly competitive business environment.
In order to cope with the intense price competition, there are logistics industry players that strive to offer more value-added
services by becoming an integrated logistics player that can provide various transport and logistics services including
warehousing services on an integrated basis. This enables them to reduce sole reliance on the price leadership strategy and
gives them more headroom to protect their profit margin. In addition, logistics industry players also rely on their long-standing
relationship with customers as well as their services reliability in order to help fending off competitors.
6.0
Prospect and Outlook of the Logistics Industry in Malaysia
The logistics industry in Malaysia plays a crucial role in the development of the country’s economic development. In 2021, the
local logistics industry accounted for 3.0% of the country’s total GDP as was valued at RM46.72 billion. This represented an
improvement of 2.6% from the previous year when the global economy was affected by the COVID-19 pandemic. Going into
2022, the COVID-19 situation is expected to continue to improve along with global vaccination efforts. The Malaysian
Government had announced the transition of COVID-19 into an endemic phase starting 1 April 2022, with the Ministry of Health
also announcing a set of relaxed standard operating procedures that took place in the country effective 1 May 2022. Moving
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forward, the outlook of logistics industry remains positive as the recovery in global economic activities is expected to boost
demand for transport and warehousing activities as more goods are transported.
Factors influencing the industry growth are expected to come from the growing prominence of e-commerce across the globe as
well as resulting increase in trade volumes. The expansion in the manufacturing sector is also expected to drive demand for
logistics services as more goods are manufactured and transported to various destinations. However, the slowing economic
growth coupled with various global events that have negatively impacted economic activities may in the short term affect the
overall demand for logistic services. From the supply side, the logistics industry is expected to benefit from support from the
Malaysian Government in charting the direction and goals of logistics infrastructure and export trade activities in Malaysia.
Malaysia’s position as a strategic logistics hub has also helped the country develop its logistics infrastructure.
Figure 6: World Container Freight Rates, 2011- February 2023
Source: Protégé Associates
The freight rates for 2011 to February 2023 is as shown in the figure above. Freight rates hovered between around USD1,400
(RM5,807) and USD1,600 (RM6,636) per forty-foot equivalent unit of container (“FEU”) in December 2019 (RM4.1475 =
USD1.00). During the initial outbreak of the COVID-19 pandemic, freight rates remained around USD1,500 (RM6,375) per FEU
(RM4.2497 = USD1.00). Since the second half of 2020, global freight rates had been on an upward trend with a recovery in
global economic activities after the initial outbreak of COVID-19 boosted demand for shipping. The disruptions in the global
supply chain caused by the pandemic further pushed up freight rates in the following year. Freight rates reached a peak of
more than USD10,000 (RM41,677) per FEU at end of September 2021 (RM4.1677 = USD1.00). While freight rates continued to
remain high in January and February 2022 at around USD9,400 (RM39,378) per FEU (RM4.1892 = USD1.00), freight rates
began to drop by end March 2022 to around USD8,000 (RM33,606) per FEU (RM4.2007 = USD1.00). The subsequent high
inflation and resulting rising interest rates also affected consumer demand which also contributed to lower shipping demand,
thus lowering freight rates further. At the end of February 2023, freight rates stood at around USD1,900 (RM8,309) per FEU
(RM4.3734 = USD1.00). Note: All foreign exchange rates are obtained from the average rate for the respective periods based
on rates from Bank Negara Malaysia. While global port congestions are expected to slowly improve, the new International
Maritime Organization (IMO) emissions regulations as well as high raw material prices and vessel manufacturers working at
limits are expected to sustain container freight rates for the rest of the year. Moving forward, as the logistics industry is still
volatile and fluid, it may be difficult at this point to provide a forecast on future freight rates for 2023 and 2024 due to various
factors. While supply chain disruption issues may have eased in light of COVID-19 being brought under control, other factors
such as the ongoing war between Russia and Ukraine, the trade tension between the US and China as well as the slowdown in
the global economy is expected to impact demand for goods worldwide. Nonetheless, regardless of the fluctuations in freight
rates, total trade in Malaysia have remained resilient and growing over the years. Total trade was valued at RM2.23 trillion in
2021, up from RM1.17 trillion in 2010. In the first 8 months of 2022, total trade was valued at RM1.87 trillion, up from RM1.24
trillion in the previous corresponding period. In terms of volume, total container throughput rose from 26.4 million TEUs in 2019
to 28.4 million TEUs in 2021. While there had been a slight dip in container throughput in 1H 2022 to 13.5 million TEUs as
compared to 14.3 million TEUs in 1H 2021, it is still higher than the 12.3 million TEUs recorded in 1H 2020 and 13.0 million
TEUs in 1H 2019.
The Malaysian logistics industry is projected to reach RM51.46 billion in 2022 and grow to RM73.05 billion in 2027, expanding
at a CAGR of 7.7% for the forecast period. In particular, the warehousing and storage market in Malaysia is forecast to reach
RM2.01 billion in 2022 and expand at a CAGR of 8.6% to RM3.00 billion in 2027.
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9.
RISK FACTORS
NOTWITHSTANDING THE PROSPECTS OF OUR GROUP AS OUTLINED IN THIS PROSPECTUS,
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS THAT MAY HAVE A
SIGNIFICANT IMPACT ON OUR FUTURE PERFORMANCE, IN ADDITION TO ALL OTHER
RELEVANT INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS, BEFORE MAKING
AN APPLICATION FOR OUR IPO SHARES.
9.1
RISKS RELATING TO OUR BUSINESS AND OUR OPERATIONS
9.1.1
Our historical financial results may not be indicative of our future financial performance,
particularly considering that our financial results during the Period Under Review were
mainly attributable to the high ocean freight rates caused by the COVID-19 pandemic
Our revenue is mainly derived from our ocean freight services for international shipments. In
providing ocean freight services for international shipments, our roles include sourcing for
ocean cargo space from ocean carriers to ship our customers’ cargo, for which we are charged
based on, among others, ocean freight rates set by ocean carriers. Ocean freight charges
represent the single largest cost component of our ocean freight services and one of the key
determinants of the pricing for our ocean freight services. As such, the pricing for our ocean
freight services and our revenue performance are closely linked to the prevailing ocean freight
rates set by ocean carriers.
Since the second half of 2020, global ocean freight rates had been on an upward trend mainly
due to a recovery in global economic activities after the initial outbreak of COVID-19 and the
global supply chain disruptions caused by the COVID-19 pandemic. The rates only began to
drop by end of March 2022 when the global supply chain disruptions gradually eased. This has
led to, in general, an increase in the pricing for our ocean freight services as well as improving
revenue performance during the Period Under Review as follows:
FYE 2019
FYE 2020
FYE 2021
FPE 2022
Total TEU of containers handled by us
13,742
17,242
17,106
7,697
Average ocean freight revenue per TEU (RM)
2,833
3,402
10,981
19,131
Revenue (RM’ million)
43.38
63.53
195.42
155.10
Please refer to Section 12.3 of this Prospectus for further information on our financial
performance for the Period Under Review. Prior to this, we handled 8,626 TEU of containers in
FYE 2018.
Our historical financial performance during the Period Under Review only reflects our past
performance under particular conditions such as the global supply chain disruptions caused by
the COVID-19 pandemic, especially those for the FYE 2021 and FPE 2022 where our average
ocean freight revenue per TEU of container was at its highest since our commencement of
business operations in 2005. As such, our past performance does not necessarily reflect our
future financial performance, which will largely depend on, among others, our capability to
secure new orders, global trade volumes and the general environment of the logistics industry.
We may not be able to sustain our historical growth or financial performance for various reasons
including, among others, intense market competition, adverse development in global economy
and weak ocean freight rates.
Although we strive to build on and increase our business volume (i.e. the number of containers
handled by our ocean freight services) in the future to sustain or grow our revenue, there can
be no assurance that we will be able to generate the same level of revenue and profitability as
in the FYE 2021 and FPE 2022 as ocean freight rates have since declined.
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9.
RISK FACTORS (CONT’D)
9.1.2
Our business operations and financial performance may be adversely affected by
fluctuation in ocean freight rates
As our revenue is mainly derived from our ocean freight services for international shipments,
our business operations and financial performance are subject to the fluctuation in ocean freight
rates. Ocean freight charges accounted for approximately 72.32%, 75.55%, 89.47% and
92.82% of our Group’s total cost of sales for FYE 2019, FYE 2020, FYE 2021 and FPE 2022,
respectively. Fluctuation of ocean freight rates is an inherent risk of the logistics industry,
particularly to those with major operations in ocean freight services like our Group.
As extracted from the IMR Report, ocean freight rates trend in the past and up to the date of
this Prospectus is as follows:
Freight rates hovered between around USD1,400 (RM5,807) and USD1,600 (RM6,636) per
forty-foot equivalent unit of container (“FEU”) in December 2019 (RM4.1475 = USD1.00).
During the initial outbreak of the COVID-19 pandemic, freight rates remained around USD1,500
(RM6,375) per FEU (RM4.2497 = USD1.00). Since the second half of 2020, global freight rates
had been on an upward trend with a recovery in global economic activities after the initial
outbreak of COVID-19 boosted demand for shipping. The disruptions in the global supply chain
caused by the pandemic further pushed up freight rates in the following year. Freight rates
reached a peak of more than USD10,000 (RM41,677) per FEU at end of September 2021
(RM4.1677 = USD1.00). While freight rates continued to remain high in January and February
2022 at around USD9,400 (RM39,378) per FEU (RM4.1892 = USD1.00), freight rates began
to drop by end March 2022 to around USD8,000 (RM33,606) per FEU (RM4.2007 = USD1.00).
The subsequent high inflation and resulting rising interest rates also affected consumer demand
which also contributed to lower shipping demand, thus lowering freight rates further. At the end
of February 2023, freight rates stood at around USD1,900 (RM8,309) per FEU (RM4.3734 =
USD1.00). Note: All foreign exchange rates are obtained from the average rate for the
respective periods based on rates from Bank Negara Malaysia.
(Source: IMR Report)
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9.
RISK FACTORS (CONT’D)
Since mid-2022 up to the LPD, ocean freight rates have been volatile and on decreasing trend.
For illustration, a comparison between the ocean freight rate per TEU of container for a
shipment from Port Klang, Malaysia to Port of Los Angeles and Port of New York and New
Jersey, USA respectively as at the LPD and the relevant historical ocean freight rates (all based
on the rate offered to us pursuant to our Carrier Service Contract with an ocean carrier who has
been one of our top 3 major suppliers for each of the year / period during the Period Under
Review) is as follows:
Difference(1) in ocean freight rate per TEU as at the LPD
as compared to that as at / for
30 June 2022(2) FPE 2022(3) FYE 2021(3)
FYE 2020(3)
FYE 2019(3)
From Port Klang to
Port of Los Angeles
-74.59%
-77.46%
-63.56%
-12.80%
58.48%
From Port Klang to
Port of New York and
New Jersey
-47.83%
-51.75%
-20.64%
70.19%
134.49%
Notes:
(1)
A positive difference indicates that the ocean freight rate per TEU as at the LPD is higher
than the relevant historical rate for that particular historical point / period.
Conversely, a negative difference indicates that the ocean freight rate per TEU as at the
LPD is lower than the relevant historical rate for that particular historical point / period.
(2)
Based on the rate as at 30 June 2022.
(3)
Based on daily average for the respective financial year / period.
As shown in the table above and generally, ocean freight rate for the Period Under Review was
at its lowest in FYE 2019 and increased in FYE 2020, FYE 2021 and part of FPE 2022. It
subsequently decreased during FPE 2022 and up to the LPD. Due to higher ocean freight rates
coupled with higher business volume, we achieved better financial performance in FYE 2020
and FYE 2021 as compared to FYE 2019. Our financial performance continued to be on the
uptrend in the first half of FYE 2022, but we subsequently recorded lower revenue and profit in
the second half of FYE 2022 due to lower ocean freight rates as well as lower business volume.
Please refer to Section 12.3 of this Prospectus for further details of our financial results during
the Period Under Review.
According to the IMR Report, as the logistics industry is still volatile and fluid, it may be difficult
at this point to provide a forecast on future freight rates for 2023 and 2024 due to various factors.
While supply chain disruption issues may have eased in light of COVID-19 being brought under
control, other factors such as the ongoing war between Russia and Ukraine, the trade tension
between the US and China as well as the slowdown in the global economy is expected to impact
demand for goods worldwide.
We expect the ocean freight rates to remain volatile in the future. There can be no assurance
that our business operations and financial performance will not be adversely affected by the
continued volatility and fluctuation in ocean freight rates.
We have been able to pass on most of the increases in ocean freight rates to our customers
during the Period Under Review, which enabled us to preserve our profit margin during the
same period. This can be seen from our Group’s GP margin, which has been hovering between
14.19% and 16.88% throughout the Period Under Review. However, there can be no assurance
that future increases in ocean freight rates can always be passed to our customers in order to
preserve our profitability.
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RISK FACTORS (CONT’D)
On the other hand, should there be a decrease in ocean freight rates, our Group may need to
follow suit and reduce the ocean freight rates charged to our customers accordingly, in order to
be in line with the prevailing market rate. This may lead to lower revenue and profits for our
Group if we are unable to increase our business volume to an extent that could compensate
the decrease in our revenue and profits caused by lower ocean freight rates.
9.1.3
We may not be able to successfully execute our future plans
Our Group plans to relocate and centralise our entire operations (i.e. office and warehouse) at
the Target Property by the third quarter of 2023 to facilitate our business expansion. We also
intend to offer in-house warehousing services to our logistics services customers and develop
new business opportunities for our logistics services through providing e-commerce solutions
in the same quarter. Further, we plan to expand on our provision of warehousing and distribution
services for healthcare-related products and devices mainly by expanding our customer base
upon our relocation to the Target Property. As at the LPD, our warehousing operations are
housed under our rented premises located at Dana 1 Commercial Centre, Ara Damansara,
Selangor measuring approximately 1,510 sq. ft. Following the commencement of our
warehousing of goods for customers in May 2022, we recorded average utilisation rate for our
warehouse space of approximately 19% for the FPE 2022, as estimated based on month-end
space usage for May and June 2022.
The future growth of our Group and the successful development of our future business
strategies are dependent on, amongst others, the timely and cost-effective renovation of the
Target Property, our ability to attract appropriate personnel to expand our headcount, and our
ability to market our services to potential customers.
The renovation of our Target Property may be delayed due to factors such as but not limited to
natural disasters, acts of war or terrorism, political or social unrest, shortage of labour or raw
materials, delays in receiving approvals from authorities, variations in design, or where a delay
in one part of the renovation leads to subsequent delays as the renovation cannot proceed
without that particular part of renovation being complete.
Further, we may not be able to successfully execute our future plans if we fail to attract and
recruit appropriate personnel to expand our headcount. People may not respond to our job
postings for reasons such as an unsuitable renumeration package, lack of flexible working
arrangements (where possible), or unsuitable location.
Lastly, we may not be able to successfully execute our future plans in the event that we are
unable to secure customers for our new services (be it existing customers of our Group or new
customers to our Group). We may fail to attract customers for reasons such as lack of track
record in the new services we intend to offer, our potential customers having an existing service
provider for the new services we intend to offer and are unwilling to move on from the said
service provider, or if the cost of our new services are not as competitive compared to other
service providers.
There can be no assurance that we will be able to successfully implement our future plans and
business strategies. There can also be no assurance that in the event our future plans and
business strategies have been implemented that they will be commercially successful. As such,
failure to execute our future plans and business strategies with success may adversely affect
our growth and financial performance.
9.1.4
The demand for our logistics services and our business volume may be adversely
affected by an adverse development in global economy
Our Group’s revenue is predominantly generated from export shipments, which contributed
more than 85% to our Group’s revenue during the Period Under Review. Given the nature of
our Group’s business which focuses on export shipments, our business volume and the
performance of our Group are dependent on the performance of Malaysia’s export trades. For
FYE 2019, FYE 2020, FYE 2021, FPE 2021 and FPE 2022, Malaysia recorded an export value
of RM823.48 billion, RM799.20 billion, RM1.01 trillion, RM479.87 billion, and RM592.46 billion
respectively. (Source: Department of Statistics Malaysia)
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In this respect, the performance of Malaysia’s export trade is dependent on various factors
including, foreign demand for goods produced in Malaysia, which is in turn dependent on the
condition and performance of the global economy. As such, the demand for our logistics
services and our business volume generally change according to the level of global trade
activities and performance of the global economy.
The COVID-19 pandemic had led to contraction of the global economy in 2020, which
subsequently rebounded in 2021. There was no significant adverse impact on our business
volume arising from the said global economy contraction and rebound as our business volume
increased by 25.47% in FYE 2020 followed by a marginal 0.79% decrease in FYE 2021,
measured based on the TEU of containers handled by our Group for ocean freight services.
Although the global economy is expected to continue its recovery in 2022, factors such as the
ongoing war between Russia and Ukraine has led to higher commodity and energy prices,
further adding to inflationary pressures arising from supply chain disruptions caused by the
COVID-19 pandemic. For the FYE 2022, we recorded a 13.26% decrease in business volume.
This was mainly due to ocean cargo space shortage in the first half of 2022 arising from supply
chain disruptions caused by the COVID-19 pandemic. The decrease in business volume was
also partly due to lower demand for our ocean freight services in the second half of 2022. We
believe that this was partly due to the overall weaker export demand for our customers’ products
from the USA as the country experienced a cumulative interest rate hike of 2.75% in the second
half of 2022 (first half of 2022: 1.50%) (Source: www.federalreserve.gov) aimed at curbing
inflation, and certain major retailers were facing overstocking issues during the same period.
As a result, we experienced reduction in orders from some of our existing customers from
manufacturing and trading industries for chemical, furniture and food packaging products who
mostly export their products to the USA, as well as foreign freight forwarders who assist their
customers to import goods from Malaysia to the USA.
Any global economic slowdown, increase in inflation, possible global recession, or decrease in
foreign demand for goods produced in Malaysia may affect the export sales for our customers’
products. This may in turn lead to a decline in the demand for our logistics services and our
business volume, and our business operations and financial performance may be adversely
affected following such decline.
9.1.5
Our business operations and financial performance are subject to the availability of
cargo space to meet our customers’ shipping requirements
We procure cargo space from ocean carriers or other freight forwarders in our arrangement
and coordination of our customers’ cargo shipment. For ocean cargo space, we enter into
Carrier Service Contracts annually for certain shipping routes between Malaysia and the USA
or Canada to secure certain minimum quantity of cargo space at certain freight rates.
Nevertheless, the committed ocean cargo space under our annual Carrier Service Contracts
are usually insufficient to meet our customers’ shipping requirements throughout the year.
As such, we also procure additional ocean cargo space on a non-committed basis for our
customers’ shipments to the USA or Canada. We do not have any contractual arrangement for
procuring ocean cargo space for destinations other than USA or Canada or for procuring air
cargo space.
Save for those under our annual Carrier Service Contracts, cargo space is offered to us by our
suppliers on a first-come-first-served basis at the point of us making booking request. Due to
this reason, there is no assurance that we will be able to procure sufficient amount of cargo
space to meet our customers’ shipping requirements from time to time.
During the Period Under Review, we experienced shortage of ocean cargo space mainly in
FYE 2021 and FPE 2022 whereby we encountered reduced availability of ocean cargo space
from our suppliers for us to arrange for our customers’ shipments. This has partly led to a
decline in our business volume (in terms of TEU of containers handled for our ocean freight
services) in the same year/period. The said shortage of ocean cargo space, which was caused
by global supply chain disruptions following the COVID-19 pandemic, affected our arrangement
for shipments to various geographical regions including USA, Europe and within Asia. The
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RISK FACTORS (CONT’D)
actual TEU of containers handled and the TEU of containers which we were unable to ship for
our customers due to unavailability of ocean cargo space during the Period Under Review are
as follows:
FYE 2019
FYE 2020
FYE 2021
FPE 2022
13,742
13,742
17,242
35
17,277
17,106
1,389
18,495
7,697
486
8,183
Actual TEU of containers handled
TEU of containers unable to be shipped(1)
Total TEU of containers required to
meet customers’ shipping
requirements
Note:
(1)
Extracted based on written reply from ocean carriers via rejection email or failure
notification from booking system for booking of ocean cargo space pertaining to
shipments to the USA or Canada only. This is excluding verbal rejection from ocean
carriers which were not recorded and hence not quantifiable. Booking rejections
pertaining to shipments to countries other than USA and Canada are also excluded as
such information are not maintained by us,
We cannot guarantee that we will not encounter any shortage of ocean cargo space in the
future or that we will continue to be able to leverage on our relationship with our suppliers to
procure sufficient cargo space to meet our customers’ requirements. If we are unable to procure
sufficient cargo space for our customers’ shipments, our business operations and financial
performance could be adversely affected.
9.1.6
We are dependent on our suppliers for secure and efficient shipment of our customers’
cargo
Due to our nature of business, we are dependent upon our relationship with our suppliers
including ocean carriers, licensed customs agents and other freight forwarders to enable us to
arrange and coordinate shipments for our customers’ cargo. A secure and efficient shipment of
our customers’ cargo to meet their delivery requirements is therefore dependent on the timely
performance and quality of the respective services provided by our suppliers. As such, we may
be affected by non-performance, late performance or poor performance by our suppliers. Poor
quality services of our suppliers or any interruption of services provided by our suppliers may
have an adverse impact on our reputation, business operations and financial performance.
9.1.7
We are dependent on other freight forwarders for business
Certain freight forwarders that we engage to handle our customers’ shipments in overseas
locations or from whom we source for cargo space are also our customers as they sometimes
engage our services to handle their customers’ shipments to be exported from or imported into
Malaysia. As such, freight forwarders can be considered both suppliers and customers of our
Group.
Our revenue generated from our provision of logistics services to other freight forwarders, both
local and foreign, accounted for approximately 29.10%, 28.97%, 36.81% and 27.36% of our
total revenue in FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively. In this regard,
our business performance is, to a certain extent, dependent on these freight forwarders’ ability
to market their services in their respective markets and industries. Any material deterioration in
the business performance of these freight forwarders may result in a decrease in their demand
for our services, which could in turn have an adverse impact on our business operations and
financial performance.
9.1.8
We are subject to the risk of fluctuation in foreign exchange rates
Our Group’s revenue is mainly derived from our ocean freight services for international
shipments. Quotes from our suppliers for ocean cargo space are usually in USD and some of
our customers pay us in USD. Our Group’s revenue denominated in USD was approximately
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RISK FACTORS (CONT’D)
22.95%, 23.11%, 46.90% and 61.06% of our total revenue for the FYE 2019, FYE 2020, FYE
2021 and FPE 2022 respectively. Our Group’s purchases made in USD was approximately
8.06%, 6.64%, 24.07% and 58.72% of our total cost of sales for the FYE 2019, FYE 2020, FYE
2021 and FPE 2022 respectively.
The following table demonstrates the sensitivity of our Group’s revenue and cost of sales to a
reasonably possible fluctuation in USD exchange rate against RM, with all other variables held
constant:
FYE 2019
Increase/
(Decrease)
RM’000
FYE 2020
Increase/
(Decrease)
RM’000
FYE 2021
Increase/
(Decrease)
RM’000
FPE 2022
Increase/
(Decrease)
RM’000
Effects on revenue
- strengthens by 10%
- weakens by 10%
995
(995)
1,468
(1,468)
9,166
(9,166)
9,471
(9,471)
Effects on cost of sales
- strengthens by 10%
- weakens by 10%
296
(296)
362
(362)
3,910
(3,910)
7,658
(7,658)
As we are unable to estimate the movement of foreign exchange rates and its impact on our
revenue and purchases in USD, any significant fluctuation in the exchange rate of USD into
RM or vice versa may have a significant impact, whether positive or negative, on our financial
performance.
Presently, we do not enter into hedging transactions to manage our exposures to currency risk
for receivables and payables which are denominated in foreign currencies. As such, there is no
assurance that any significant fluctuation in foreign currency exchange rate will not have an
adverse impact on our overall financial performance.
9.1.9
We do not have long-term contracts with our customers for our logistics services
We do not have any long-term contracts with our customers for our logistics services as we are
engaged by them on an as-needed basis. This is mainly due to the nature of our business
where the demand for our logistics services is subject to our customers’ needs for shipping their
goods as and when required depending on their orders secured. To the best of our knowledge,
it is a norm in the logistics services industry for not having long-term contracts with customers.
The absence of long-term contracts may result in the fluctuation of our Group’s sales which
could in turn lead to uncertainties over our financial performance. While we continuously seek
to maintain and strengthen existing business relationships and establish relationships with new
customers to expand our clientele base, there can be no assurance that we will be able to
maintain our relationship with our customers.
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RISK FACTORS (CONT’D)
9.1.10 We are dependent on the experience and expertise of our Executive Directors and key
senior management for the continuing success of our Group
Our Group’s continuing success and growth are dependent upon the efforts and commitment
of our Executive Directors and other key senior management who play significant roles in our
operations and the development and implementation of our business strategies.
Our Group is led by our Executive Directors who are assisted by our other key senior
management. Most of our Executive Directors and key senior management have over 10 years
of experience in the logistics industry, mainly gained from their employment with our Group as
illustrated below:
Name
Dato’ Roger Wong
Cheok Hui Yen
Chow Enn Jie
Wendy Kam
Teoh Huey Hong
No. of years of experience in the
logistics industry as at the LPD
19
23
14
Less than 1 year
17
No. of years with our Group
as at the LPD
17
17
14
Less than 1 year
14
Our Executive Directors and key senior management are familiar with our business operations
and their abilities and expertise have contributed to the success of our Group. As such, the loss
of service from our Executive Directors or any of our other key senior management without any
suitable and/or timely replacement may affect the execution and implementation of our
business strategies. This could in turn result in adverse effect on our business operations,
financial performance and future prospects.
9.1.11 We may face inadequacy of insurance coverage
Our Group is mainly involved in the provision of logistics services, where we arrange and
coordinate ocean or air shipment of cargos for our customers. These cargos are subject to the
risks of cargo loss or damage caused by factors beyond our control such as road accidents,
water damage, improper stuffing and mishandling during the loading / unloading or
transportation process. Cargo loss or damage may result in claims for damages by our
customers against us. In the event of damaged cargo even though the service was provided by
the ocean carriers, our customers are able to claim directly from us when the shipment is under
our own house bill of lading. Nonetheless, if our customers successfully claim from us, we will
in turn make a claim against the ocean carriers on the damaged cargo.
In addition, our offices and warehouse may be exposed to the risk of, among others, burglary,
breakout of fire and flood which may cause disruption to our business operations and adversely
affect our financial performance.
In order to minimise our potential financial losses from any such risks, we maintain insurance
coverage for our customers’ cargo and our business premises. As at the LPD, we have in place,
among others, marine liability insurance for our customers’ cargo, and burglary, fire, terrorism,
and property damage insurance for our business premises. We did not experience any event
of burglary, fire or flood on our business premises during the Period Under Review and up to
the LPD.
In April 2022, we received a letter of demand from a customer claiming a sum of RM49,801.97
due to damaged cargo, the shipment of which was arranged by us for the said customer through
an ocean carrier. The aforesaid claim represents the biggest claim in comparison to 2 other
successful insurance claims that we received during the Period Under Review. As at the LPD,
we are still awaiting further information and clarification from the customer on this matter prior
to us taking our next course of action. Our Group has been liaising closely with the insurance
company to expedite on the claim. In the event that this claim is successful, the whole sum of
RM49,801.97 will be awarded to the customer out of our insurance policy, and no additional
liability will be incurred by us pertaining to this claim.
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RISK FACTORS (CONT’D)
As for the other 2 claims received by us during the Period Under Review, they were resolved
within 6 months and the amount claimed were paid to the customers out of our insurance policy
with no liability incurred by us.
Nonetheless, there is no assurance that our insurance coverage is adequate to offset all the
potential losses or liabilities that we may suffer due to claims from customers and/or unexpected
events arising from our operations. Our business operations and financial performance may be
adversely affected if such losses or liabilities exceed our insurance coverage.
9.1.12 We may face credit risk and default in payment by our customers
Generally, the trade credit terms granted to our customers range from cash terms to 45 days.
Our customers have varying degrees of creditworthiness which expose us to the risk of nonpayment by them. Should our customers fail to meet their payment obligations in accordance
with the agreed terms, our operating cash flows, financial condition and financial performance
could be adversely affected.
We are aware of the consequences arising from our exposure to credit risk and have
implemented credit risk management policies through the application of credit terms approval
and monitoring procedures on an on-going basis. We perform a background check on new
customers and normally cash term will be imposed for new customers. Credit terms are only
granted to existing customers with good standing and payment records.
We incurred net loss on impairment of trade receivables of RM0.04 million, RM0.03 million and
RM0.10 million for the FYE 2019, FYE 2020 and FYE 2021 respectively. For FPE 2022, we
recorded a net reversal of impairment of trade receivables of RM0.06 million. Although there
have been no material collection problems for trade receivables during the Period Under
Review up to the LPD, there is no assurance that our customers will be able to fulfil their
payment obligations and our Group will not encounter collection problems in the future. If our
customers default or delay on their payments, this could lead to impairment of our trade
receivables which may adversely affect our financial condition and financial performance.
9.1.13 Our business operations and financial performance may be adversely affected by the
outbreak of infectious diseases
The outbreak of pandemics of infectious diseases or other health epidemics may create
substantial economic uncertainty and global instability, which may adversely affect business
operations and overall economic activity globally.
As seen during the start of the COVID-19 pandemic, governments around the world imposed
various lockdown measures to curb the spread of the virus, leading to disruptions and
temporary cessation of business activities. Notwithstanding that our Group was allowed to
operate during the various lockdown periods implemented in Malaysia, we were required to
comply with the standard operating procedures issued by the Ministry of Health Malaysia.
Should there be a future outbreak of infectious disease similar to the COVID-19 pandemic,
governments may again impose lockdown measures including closure of international borders
as well as temporary cessation of a range of business activities. These measures may have an
adverse impact on economic activities globally, which may in turn affect the demand for our
services. We may also be required to incur additional expenditures for complying with the
necessary standard operating procedures in order to continue our business activities. As such,
our Group’s business operations and financial performance may be adversely affected if there
is another global outbreak of infectious disease in the future.
9.1.14 We are subject to geopolitical tensions affecting global trade
The logistics industry is inherently reliant on international and domestic trade to function. Due
to globalisation, the world has become increasingly connected whereby trading of goods,
services, technology and information occur freely between different countries.
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RISK FACTORS (CONT’D)
As part of the global supply chain, economic activities in Malaysia are subject to geopolitical
events that affect global economic activities. In particular, tension between the USA and China
in recent years has affected the relationship between the top two economies in the world as
tariffs were imposed on traded products, with the effect spilling over to other parts of the world.
These tariffs were followed by restriction on both China’s access to high-tech USA products
and foreign investments involving security concerns and allegations of unfair Chinese
commercial practices. The USA and China are among the top export destinations of Malaysian
exports.
More recently, the war between Russia and Ukraine has also caused disruptions to the global
supply chain due to tariffs imposed mainly on Russia. The Russia-Ukraine war has also led to
high oil prices (Russia is a leading exporter of oil globally) as well as high grain prices (both
countries are global exporters of grain) which added further inflationary pressure. All these
factors are expected to affect demand for products and goods globally. The disruptions in global
economic activities may also affect demand for Malaysian goods and products, which will in
turn have a negative impact on the local logistics industry and our business operations and
financial performance.
9.1.15 Our customers or customers’ industries may experience a trade ban
Given the nature of our Group’s business in the logistics industry, we are reliant on our
customers’ business activities as well as the industries that our customers are involved in.
In the event that our customers receive a trade ban by any overseas country that they export
their products to, we may experience a decrease in demand for our services as our customers
will not be able to trade their products in the countries where the ban is in place.
Our customers’ industries may also be subject to tariffs or trade bans enacted by different
overseas countries. This would also affect the demand for our customers’ products, which
would in turn adversely affect the demand for our services.
Therefore, should our customers or our customers’ industries experience a trade ban, our
business operations and financial performance may be adversely affected.
For illustration purposes, during the Period Under Review, our Group had provided logistics
services to several Malaysian rubber glove companies. For the FYE 2019, FYE 2020, FYE
2021 and FPE 2022, these rubber glove companies contributed to 2.20%, 4.43%, 10.24% and
3.23% of our Group’s revenue respectively. Since the onset of the COVID-19 pandemic,
selected Malaysian rubber glove companies were subject to Withhold Release Orders (“WRO”)
by the US Customs and Borders Protection (“USCBP”) whereby imports of their products were
detained at the US port of entry due to allegations of forced labour by the rubber glove
companies. Although our Group’s rubber glove customers are no longer subject to the WRO
by the USCBP, in the event that they are subject to another WRO in the future, the demand for
our logistics services may decrease, which may in turn affect our revenue and financial
performance.
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9.
RISK FACTORS (CONT’D)
9.2
RISKS RELATING TO OUR INDUSTRY
9.2.1
We operate in a competitive industry
We operate in a fragmented and competitive industry in Malaysia, with more than 18,000
industry players involved in various scopes of transportation and warehousing activities in
Malaysia in 2021. We directly and indirectly compete with other logistics service providers on a
local and international basis in the form of pricing, range of services provided, and network of
customers and suppliers.
We also face competition from certain ocean carriers which have set up business divisions to
offer similar logistics services that we provide.
Intense competition from other logistics service providers within the market may reduce the
growth in our customer base and adversely affect our market share. If we are unable to remain
competitive and build on our competitive strengths going forward, our business operations and
financial performance could be adversely affected.
9.2.2
We are subject to political, economic, and regulatory risks in Malaysia and the markets
we serve
As our Group’s revenue is mainly derived from our ocean freight services for international
shipments, our business operations and financial performance are subject to political,
economic, and regulatory conditions in those countries for our customers’ shipments. Adverse
changes in the aforementioned conditions such as changes in political leadership, risk of war,
changes in government policies regarding taxation, import duties, and tariffs, methods of
taxation, and changes in economic conditions could affect the demand for our customers’
products and lead to a decline in the demand for our logistics services. This may in turn lead to
an adverse effect on our business operations and financial performance.
9.2.3
Our customers may approach carriers directly
Our Group is principally a logistics service provider that provides services such as ocean freight,
air freight and freight forwarding services. We arrange for and coordinate export and import
shipments for our customers and our customers are mainly exporters, importers, as well as
other freight forwarders, local or foreign. Our suppliers are mainly ocean carriers with
international operations.
Although we assist our customers in arranging and coordinating export and import shipments
by procuring cargo space, we are subject to the risk of our customers directly approaching the
carriers in order to secure cargo space and arrange for their own logistics. In the event that our
customers approach carriers directly, our services may no longer be required and we may
experience a decrease in revenue. This is likely to affect our business operations and financial
performance.
9.3
RISKS RELATING TO THE INVESTMENT IN OUR SHARES
9.3.1
There is no prior market for our Shares
Prior to our Listing, there has been no public market or public trading for our Shares. The listing
of our Shares on the ACE Market does not guarantee that an active market for our Shares will
develop.
There is also no assurance that our IPO Price will correspond to the price at which our Shares
will be traded on the ACE Market.
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RISK FACTORS (CONT’D)
9.3.2
Our Listing is exposed to the risk that it may be aborted or delayed
Our Listing may be aborted or delayed should any of the following occurs:
(a)
our Underwriter exercising its rights under the Underwriting Agreement to discharge
itself from its obligations therein;
(b)
we are unable to meet the public shareholding spread requirement set by Bursa
Securities, whereby at least 25.00% of our total number of Shares for which listing is
sought must be held by a minimum number of 200 public shareholders each holding
not less than 100 Shares upon the completion of our IPO and at the point of our Listing;
and
(c)
the revocation of approvals from the relevant authorities for the Listing and/or
admission for whatever reason.
Where prior to the issuance and allotment of our IPO Shares:
(i)
the SC issues a stop order pursuant to Section 245(1) of the CMSA, the applications
for our IPO Shares shall be deemed to be withdrawn and cancelled and we or such
other person who received the monies shall repay all monies paid in respect of the
applications for our IPO Shares within 14 days of the stop order, failing which we shall
be liable to return such monies with interest at the rate of 10% per annum or at such
other rate as may be specified by the SC pursuant to Section 245(7)(a) of the CMSA;
or
(ii)
our Listing is aborted, investors will not receive any IPO Shares, and all monies paid in
respect of all applications for our IPO Shares will be refunded free of interest.
Where subsequent to the issuance and allotment or transfer of our IPO Shares:
9.3.3
(i)
the SC issues a stop order pursuant to Section 245(1) of the CMSA, any issue of our
IPO Shares shall be deemed to be void and all monies received from the applicants
shall be forthwith repaid and if any such money is not repaid within 14 days of the date
of service of the stop order, we shall be liable to return such monies with interest at the
rate of 10% per annum or at such other rate as may be specified by the SC pursuant
to Section 245(7)(b) of the CMSA; or
(ii)
our Listing is aborted other than pursuant to a stop order by the SC under Section
245(1) of the CMSA, a return of monies to our shareholders could only be achieved by
way of a cancellation of share capital as provided under the Act and its related rules.
Such cancellation can be implemented by the sanction of our shareholders by special
resolution in a general meeting and supported by either:
(aa)
the sanction of our shareholders by special resolution in a general meeting, a
consent by our creditors (unless dispensation with such consent has been
granted by the High Court of Malaya) and the confirmation of the High Court of
Malaya, in which case there can be no assurance that such monies can be
returned within a short period of time or at all under such circumstances; or
(bb)
a solvency statement from our Directors.
The trading price and trading volume of our Shares following our Listing may be volatile
The trading price and volume of our Shares may fluctuate due to various factors, some of which
are not within our control and may be unrelated or disproportionate to our financial results.
These factors may include variations in the results of our operations, changes in analysts’
recommendations or projections, changes in general market conditions and broad market
fluctuations.
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RISK FACTORS (CONT’D)
The performance of Bursa Securities is also affected by external factors such as the
performance of the regional and world bourses, inflow or outflow of foreign funds, economic
and political conditions of the country as well as the growth potential of the various sectors of
the economy. These factors invariably contribute to the volatility of trading volumes witnessed
on Bursa Securities, thus adding risks to the market price of our Shares.
9.3.4
Our Promoters will be able to exert significant influence over our Company
Our Promoters will collectively hold approximately 68.03% of our enlarged share capital upon
Listing. As a result, our Promoters will have significant influence on the outcome of certain
matters requiring the vote of shareholders unless they are required to abstain from voting by
law and/or as required by the relevant authorities.
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10.
RELATED PARTY TRANSACTIONS
10.1
RELATED PARTY TRANSACTIONS
Save for the Acquisitions and as disclosed below, we have not entered into any related party transactions with our related parties for the Period Under
Review and up to the LPD:
Transacting
parties
KGW
Logistics and
Mingkun
Logistics (M)
Sdn Bhd
(formerly
known as
Mingkun
KGW
Logistics (M)
Sdn Bhd)
(“Mingkun”)
Interested
persons and
nature of
relationship
Dato’ Roger Wong
is our Managing
Director, Promoter
and
substantial
shareholder, and
was a director and
shareholder
of
Mingkun up to 27
April 2022 and 25
May
2022
respectively
FYE 2019
FYE 2020
FYE 2021
RM’000
%
RM’000
%
RM’000
Management fee income
received from Mingkun
-
-
11
(1)5.73
-
-
Rental income received from
Mingkun for sub-let of partial
office space bearing address
D11-09-G, Block D11, Dana
1 Commercial Centre, Jalan
PJU
1A/46,
47301
Petaling
Jaya,
Selangor
-
-
12
(1)6.25
12
45
(2)0.12
26
(2)0.05
Expenses paid by KGW
Logistics on behalf of
Mingkun
-
-
2
Expenses paid by Mingkun
on behalf of KGW Logistics
-
-
60
(3)0.14
Nature of transaction
Purchases from Mingkun
Sales to Mingkun
154
1 July 2022
up to LPD
FPE 2022
% RM’000
%
RM’000
-
-
-
(1)13.19
4
(1)0.49
-
9
(2)0.01
-
-
-
N/A
*
N/A
-
-
-
*
N/A
2
N/A
-
-
-
157
(3)0.25
421
(3)0.22
93
(3)0.06
-
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
Interested
persons and
nature of
relationship
Nature of transaction
KGW
Logistics and
Innex
America Sdn
Bhd (“Innex
America”)(5)
Dato’ Roger Wong
is our Managing
Director, Promoter
and
substantial
shareholder, and a
director
and
shareholder
of
Innex America
KGW
Logistics and
Alpha Global
Asset Sdn
Bhd (formerly
known as
Alpha Global
Logistics (M)
Sdn Bhd)
(“Alpha
Global”)(6)
Dato’ Roger Wong
is our Managing
Director, Promoter
and
substantial
shareholder, and
a director and
shareholder
of
Alpha Global
Transacting
parties
FYE 2019
FYE 2020
FYE 2021
RM’000
%
RM’000
%
RM’000
Rental expenses paid to
Innex America for office
bearing address D11-09-G,
Block
D11,
Dana
1
Commercial Centre, Jalan
PJU
1A/46,
47301
Petaling
Jaya,
Selangor(5)
35
(4)0.61
38
(4)0.67
38
(4)0.34
Rental expenses paid to
Alpha
Global
for
office bearing address D1111-G & D11-11-1, Block
D11, Dana 1 Commercial
Centre, Jalan PJU 1A/46,
47301
Petaling
Jaya,
Selangor(6)
-
-
15
(4)0.26
90
(4)0.81
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
155
1 July 2022
up to LPD
FPE 2022
% RM’000
%
RM’000
19
(4)0.30
9
45
(4)0.70
23
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
Transacting
parties
KGW
Logistics and
Datin Wong
Wan Jye(7)
Interested
persons and
nature of
relationship
Datin Wong Wan
Jye is the spouse
of Dato’ Roger
Wong,
our
Managing
Director, Promoter
and
substantial
shareholder,
hence a person
connected
with
him
FYE 2019
Nature of transaction
Rental expenses paid to
Datin Wong Wan Jye for
office bearing address D1110-G & D11-10-1, Block
D11, Dana 1 Commercial
Centre, Jalan PJU 1A/46,
47301
Petaling
Jaya,
Selangor(7)
Mattroy
Dato’ Roger Wong Purchases from Mingkun
Logistics and is our Managing
Mingkun
Director, Promoter
and
substantial
shareholder, and
was a director and
shareholder
of
Mingkun up to 27
April 2022 and 25
May
2022
respectively
FYE 2020
FYE 2021
RM’000
%
RM’000
%
RM’000
78
(4)1.37
78
(4)1.37
78
(4)0.70
-
-
-
-
38
(2)0.02
156
1 July 2022
up to LPD
FPE 2022
% RM’000
%
RM’000
39
(4)0.61
20
5
*
22
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
Transacting
parties
Interested
persons and
nature of
relationship
FYE 2019
Nature of transaction
RM’000
FYE 2020
% RM’000
FYE 2021
%
RM’000
1 July 2022
up to LPD
FPE 2022
% RM’000
%
RM’000
KGW
Logistics and
KGW
Logistics (S)
Pte Ltd
(“KGWS”)
Dato’ Roger Wong
is our Managing
Director, Promoter
and
substantial
shareholder, and
a director and
shareholder
of
KGWS.
KGWS
has been struck
off
on
5
September 2022
Sales to KGWS
7
(3)0.02
-
-
-
-
-
-
-
Purchases from KGWS
3
(2)0.01
-
-
-
-
-
-
-
Expenses paid by KGW
Logistics on behalf of KGWS
-
-
6
N/A
1
N/A
1
N/A
-
KGW
Logistics and
KGF
Logistics (M)
Sdn Bhd
Datin Liew Min
Nar, a previous
director
and
shareholder
of
KGW Logistics up
to 13 May 2021
and 15 June 2021
respectively, is a
director
and
shareholder
of
KGF Logistics (M)
Sdn Bhd
Sales to KGF Logistics (M)
Sdn Bhd
2,130
(3)4.91
3,906
(3)6.15
3,871
(3)1.98
-
-
-
Purchases
from
KGF
Logistics (M) Sdn Bhd
2
(2)0.01
*
*
-
-
-
-
-
KGW
Logistics and
Cheok Hui
Yen
Cheok Hui Yen Disposal of used motor
was
a
major vehicle by KGW Logistics to
shareholder
of Cheok Hui Yen
KGW Logistics
18
(1)40.00
-
-
-
-
-
-
-
157
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
Transacting
parties
Interested
persons and
nature of
relationship
FYE 2019
Nature of transaction
FYE 2020
FYE 2021
1 July 2022
up to LPD
FPE 2022
RM’000
%
RM’000
%
RM’000
%
RM’000
%
RM’000
KGW
Logistics and
Dato’ Roger
Wong
Dato’ Roger Wong Advances to KGW Logistics(8)
is our Managing
Director, Promoter Repayments to director
and
substantial
shareholder
336
N/A
331
N/A
251
N/A
-
-
-
403
N/A
491
N/A
376
N/A
-
-
-
KGW
Logistics and
Datin Liew
Min Nar
Datin Liew Min Advances to KGW Logistics(8)
Nar
was
a
previous director Repayments to director
and shareholder
of KGW Logistics
up to 13 May 2021
and 15 June 2021
respectively
-
-
60
N/A
-
-
-
-
-
-
-
-
-
60
N/A
-
-
-
KGW
Logistics and
Cheok Hui
Yen
Cheok Hui Yen Advances to KGW Logistics(8)
is
a
major
shareholder
of Repayments
to
major
KGW Logistics
shareholder
-
-
30
N/A
-
-
-
-
-
-
-
-
-
30
N/A
-
-
-
Advances to KGW Medica(8)
-
-
-
-
41
N/A
-
-
-
Repayments to director
-
-
-
-
40
N/A
1
N/A
-
KGW Medica Chan Sek Seng is
and Chan
a director of KGW
Sek Seng
Medica
158
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
Notes:
*
Represents less than RM1,000 / Negligible.
(1)
Calculated based on our Group’s other income for each of the respective financial
years / period.
(2)
Calculated based on our Group’s cost of sales for each of the respective financial years
/ period.
(3)
Calculated based on our Group’s revenue for each of the respective financial years /
period.
(4)
Calculated based on our Group’s administrative expenses for each of the respective
financial years / period.
(5)
The current tenancy agreement is dated 18 January 2020 for the period commencing
from 1 February 2020 to 31 January 2022. Both parties had on 24 January 2022
extended the tenancy for an additional 1 year to 31 January 2023. KGW Logistics shall
give Innex America notice in writing of its desire on the renewal of tenancy not later
than 2 months prior to the expiration of the tenancy agreement.
The monthly rental rate of RM2.28 per sq. ft. is within the range of monthly rental rate
of RM2.05 per sq. ft. to RM3.67 per sq. ft. for a similar property in the vicinity, as
analysed based on publicly available information.
(6)
The current tenancy agreement is dated 26 October 2020 for the period commencing
from 1 November 2020 to 31 October 2022. Both parties had on 14 October 2022
extended the tenancy for an additional 1 year to 31 October 2023. KGW Logistics shall
give Alpha Global notice in writing of its desire on the renewal of tenancy not later than
2 months prior to the expiration of the tenancy agreement.
The monthly rental rate of RM2.13 per sq. ft. is within the range of monthly rental rate
of RM1.40 per sq. ft. to RM2.64 per sq. ft. for a similar property in the vicinity, as
analysed based on publicly available information.
(7)
The current tenancy agreement is dated 1 November 2021 for the period commencing
from 1 November 2021 to 31 October 2023. KGW Logistics shall give Datin Wong Wan
Jye notice in writing of its desire on the renewal of tenancy not later than 2 months prior
to the expiration of the tenancy agreement.
The monthly rental rate of RM2.22 per sq. ft. is within the range of monthly rental rate
of RM1.40 per sq. ft. to RM2.64 per sq. ft. for a similar property in the vicinity, as
analysed based on publicly available information.
(8)
As at the LPD, all outstanding amount of these advances have been fully settled by us.
Mingkun is principally involved in investment holding and freight forwarding business. Alpha
Global is principally involved in buying, selling, renting and operating of self-owned or leased
real estate for residential and non-residential buildings. Innex America is principally involved in
property investment holding.
Mingkun has ceased to be a related party of our Group since 25 May 2022. We may enter into
business transactions with Mingkun in our ordinary course of business in the future.
Moving forward, our tenancy arrangements with Alpha Global, Innex America and Datin Wong
Wan Jye will continue until our relocation to the Target Property, which is expected to take place
159
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
in the third quarter of 2023. We do not foresee any other business transactions with Alpha
Global and Innex America in the future.
Save for the rental of our offices from Innex America, Alpha Global and Datin Wong Wan Jye,
there are no other transactions between our Group and our related parties after our Listing. The
total rental expenses pursuant to these tenancy agreements are RM0.21 million per annum.
Our Audit and Risk Management Committee has reviewed the terms of these tenancy
agreements, including the terms of the renewal option, and is of the opinion that they were
entered into on an arm’s length basis and on normal commercial terms, and are not detrimental
to the interest of our non-interested shareholders. Further details of these rented offices are set
out in Section 7.20.2 of this Prospectus.
Save for advances to KGW Logistics or KGW Medica and for expenses paid by us on behalf of
our related parties or by our related parties on our behalf, our management are of the view that
other related party transactions as set out above were conducted on an arm’s length basis and
on competitive commercial terms not more favourable to the related parties and were not to the
detriment of our non-interested shareholders. These transactions were mainly carried out in the
Group’s ordinary course of business in line with the Group’s pricing strategy for services offered
or costing strategy for services procured.
The transactions in relation to advances to KGW Logistics or KGW Medica and expenses paid
by our Group on behalf of our related parties or by our related parties on behalf of our Group
were not conducted on arm’s length basis as they were interest-free. However, all outstanding
amount arising from these transactions have been fully settled by us and our related parties as
at the date of this Prospectus. We will not enter into any transaction involving the payment of
expenses by us on behalf of our related parties or by our related parties on our behalf moving
forward.
Our Board has confirmed that there are no other material related party transactions that we had
entered into with the related parties but not yet effected up to the date of this Prospectus.
Moving forward, if there are potential related party transactions, the related parties must first
inform our Audit and Risk Management Committee on their interests in the transaction and the
nature of the transaction before the transaction is entered into. Our Audit and Risk Management
Committee is responsible for the review of the terms of all related party transactions. In order
to ensure that related party transactions are undertaken on arm’s length basis and on normal
commercial terms, we have established the following procedures:
(a)
Recurrent related party transactions (“RRPTs”)
(i)
At least 2 other contemporaneous transactions with third parties for similar
products/services and/or quantities will be used as comparison, wherever
possible, to determine whether the price and terms offered by all related parties
are fair and reasonable and comparable to those offered by third parties; or
(ii)
In the event that quotation or comparative pricing from third parties cannot be
obtained, the transaction price will be determined by our Group based on those
offered by third parties for substantially similar type of transaction to ensure
that the recurrent related party transactions are not detrimental to us.
Our Board may seek a mandate from our shareholders at general meetings of our
Company to enter into any recurrent related party transactions. The said shareholders’
mandate will enable us to enter into such recurrent transactions which are transacted
in our ordinary course of business without having to convene numerous general
meetings to approve such recurrent transactions as and when they are entered into.
The interested persons shall abstain from voting on resolutions pertaining to the
respective transactions.
160
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
(b)
Other related party transactions
Assessments will be carried out to determine:
(i)
whether the terms of the related party transaction are fair and on arm’s length
basis, and whether these terms would apply on the same basis if the
transaction did not involve a related party;
(ii)
the rationale for our Group to enter into the related party transaction and the
nature of alternative transactions, if any; and
(iii)
whether the related party transaction would present a conflict of interest
between our Group and the related parties, taking into account the size of the
transaction and nature of the related parties’ interest in the transaction.
In accordance with the Listing Requirements, a related party transaction may require
prior approval of our shareholders at a general meeting to be convened. An independent
adviser may be appointed to comment as to whether the related party transaction is fair
and reasonable so far as the non-interested shareholders are concerned, and whether
the transaction is to the detriment of non-interested shareholders. In such instances, the
independent adviser shall also advise the non-interested shareholders on whether they
should vote in favour of the transaction.
For a related party transaction that requires prior approval of our shareholders, our Directors,
major shareholders and/or persons connected with them having any interest, direct or indirect,
in the proposed related party transaction will abstain from voting in respect of their direct and/or
indirect shareholdings. Where a person connected with a Director or major shareholder has
interest, direct or indirect, in any proposed related party transaction, the Director or major
shareholder concerned will also abstain from voting in respect of his direct and/or indirect
shareholdings.
In addition, to safeguard the interest of our Group and our non-interested shareholders, and to
mitigate any potential conflict of interest situation, our Audit and Risk Management Committee
will, amongst others, supervise and monitor any related party transaction and the terms thereof
and report to our Board for further action. Where necessary, our Board would make appropriate
disclosures in our annual report with regards to any related party transaction entered into by
us.
10.1.1 Other transactions
(a)
Transactions which are unusual in their nature or conditions
There were no transactions that were unusual in their nature or conditions, involving
goods, services, tangible or intangible assets, to which our Group was a party during
the Period Under Review and up to the LPD.
(b)
Loans and guarantees
As part of the terms of the banking and hire purchase facilities extended to our Group,
Dato’ Roger Wong has individually, and together with Chow Enn Jie (our Sales and
Marketing Director) have jointly and severally, provided personal guarantees to 5
financial institutions extending these facilities (“Financiers”). In conjunction with our
Listing, we have applied to these Financiers for a release and/or discharge of the
personal guarantees. As at the LPD, we have received conditional approval from the
aforesaid 5 Financiers for the said release of personal guarantees subject to us
replacing them with a corporate guarantee from our Company upon our successful
Listing. In view of this, we will replace the aforesaid personal guarantees with a
corporate guarantee from our Company upon our Listing.
161
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
(c)
Amount due to / from related parties / Directors
(i)
Amount due
from related
parties
Amount due from related parties
As at
31 December
2019
RM’000
As at
31 December
2020
RM’000
As at
31 December
2021
RM’000
As at
30 June
2022
RM’000
As at LPD
RM’000
-
28
6
-
-
The amount due from related parties as at the end of the respective financial
year/ period during the Period Under Review was in relation to expenses paid
on behalf of Mingkun and KGWS as well as rental and management fees owing
by Mingkun.
(ii)
Amount due to related parties
There are no outstanding amount due to related parties as at the end of the
respective financial year / period during the Period Under Review and as at the
LPD.
(iii)
Amount due to
Directors
Amount due to / from Directors
As at
31 December
2019
RM’000
As at
31 December
2020
RM’000
As at
31 December
2021
RM’000
As at
30 June
2022
RM’000
As at LPD
RM’000
959
186
1
-
-
The amount due to Directors as at the end of the respective financial year /
period during the Period Under Review was mainly in relation to advances from
directors as well as expenses paid on behalf by directors.
There were no outstanding amount due from Directors as at the end of the
respective financial year / period during the Period Under Review and as at the
LPD.
(iv)
Financial assistance provided for the benefit of a related party
Save as disclosed above, there were no other financial assistance provided by
us for the benefit of any related party for the Period Under Review and up to
the LPD.
162
Registration No. 202201009353 (1455050-D)
10.
RELATED PARTY TRANSACTIONS (CONT’D)
10.2
MONITORING AND OVERSIGHT OF RELATED PARTY TRANSACTIONS
10.2.1 Audit and Risk Management Committee review
Our Audit and Risk Management Committee reviews related party transactions and
conflict of interest situations that may arise within our Group including any transaction,
procedure or course of conduct that raises questions of management integrity. It also
maintains and periodically reviews the adequacy of the procedures and processes set
by our Company to monitor related party transactions and conflicts of interest.
Our Audit and Risk Management Committee will submit an annual report to our Board
summarising its activities during the financial year and the related significant results
and findings.
10.2.2 Our Group’s policy on related party transactions
Related party transactions by their nature, involve conflict of interest between our
Group and the related parties with whom our Group has entered into such transactions.
Any such related party transactions may individually and in aggregate give rise to
potential conflicts of interest.
It is the policy of our Group that all related party transactions in the course of our
business are made on an arm’s length basis and on normal commercial terms which
are not more favourable to the related party than those generally available to the public
and these terms are not detrimental to our non-interested shareholders who are not
part of the transaction. The related parties and any other parties who are in a position
of conflict with the interest of our Group will be required to abstain from deliberations
and voting on resolutions pertaining to the matters and/or transactions where a conflict
of interest may arise.
In addition, our Directors are required to make an annual disclosure of any related party
transactions and conflicts of interest with our Group, and our Audit and Risk
Management Committee must carry out an annual assessment of our Directors which
include an assessment of such related party transactions and/or conflict of interest. Our
Audit and Risk Management Committee will in turn report and make the appropriate
recommendations to our Board after its evaluation and assessment.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
163
Registration No. 202201009353 (1455050-D)
11.
CONFLICT OF INTERESTS
11.1
INTEREST IN SIMILAR BUSINESS AND IN BUSINESSES OF OUR CUSTOMERS AND
SUPPLIERS
As at the LPD, save as disclosed below, none of our Directors and/or substantial shareholders
has any interest, direct or indirect, in other businesses or corporations which are carrying on a
similar trade as our Group or which are the customers and/or suppliers of our Group:
(i)
Lean Sze Yau, our Independent Non-Executive Director, is a Managing Partner of
Messrs Wilson Leong, Ong & Lean (“WOL”), a legal firm. WOL had, in the FYE 2021,
FPE 2022 and from 1 July 2022 up to the LPD, provided legal services such as
conveyancing and advisory on maritime laws to our Group.
Nevertheless, this is not expected to give rise to a conflict of interest situation on the
following basis:
(a)
Lean Sze Yau was appointed to the Board on 24 September 2022 and was not
involved in our deliberation in respect of the engagement of WOL for provision
of the aforementioned legal services to our Group which took place prior to his
appointment to our Board;
(b)
Lean Sze Yau is an Independent Non-Executive Director of our Company and
as such he does not deal with our day-to-day operations, including any
appointment of advisers for the provision of professional services to our Group;
and
(c)
moving forward, our Group will not appoint WOL for legal services when Lean
Sze Yau continues to serve as an Independent Non-Executive Director of our
Company.
In accordance with Paragraph 4.0 of Guidance Note 9 of the Listing Requirements, a
person who is proposed to be or is our Independent Director (“said Director”) is
disqualified from being our Independent Director if he –
(a)
had personally provided professional advisory services to our Group within the
last 3 years; or
(b)
is presently a partner, director (except as an independent director) or major
shareholder, of a firm or corporation (“Entity”) which has provided professional
advisory services to our Group within the last 3 years,
and the consideration in aggregate is more than 5% of the gross revenue on a
consolidated basis (where applicable) of the said Director of the Entity, or RM1 million,
whichever is higher (“Threshold Limit”).
In this respect, Lean Sze Yau had not in his personal capacity provided any professional
advisory services to our Group. In addition, the conveyancing and advisory fees paid
or payable to WOL are below the Threshold Limit. Pursuant to the above, the
appointment of Lean Sze Yau as an Independent Non-Executive Director of KGW is in
compliance with Guidance Note 9 of the Listing Requirements.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
164
Registration No. 202201009353 (1455050-D)
11.
CONFLICT OF INTERESTS (CONT’D)
Our Directors will declare to our Nomination Committee and our Board of their interests in other
companies at the onset and as and when there are changes in their respective interests in
companies outside our Group. Our Nomination Committee will then evaluate if such Director’s
involvement gives rise to a potential conflict of interest situation with our Group’s business
activities. If our Directors are involved in similar business as our Group or businesses of our
customers and/or our suppliers, our Nomination Committee shall inform our Audit and Risk
Management Committee of such involvement. When a determination has been made that there
is a conflict of interest of a Director, our Nomination Committee will:
(a)
immediately inform our Board of the conflict of interest situation after deliberating with
the Audit and Risk Management Committee;
(b)
make recommendations to our Board to direct the conflicted Director to:
(i)
withdraw from all his executive involvement in our Group in relation to the
matter that has given rise to the conflict of interest (in the case where the
conflicted Director is an Executive Director); and
(ii)
abstain from all Board deliberation and voting in the matter that has given rise
to the conflict of interest.
Where there are related party transactions between our Group and our Directors (or persons
connected with them) or companies in which our Directors (or person connected with them)
have an interest, our Audit and Risk Management Committee will, amongst others, supervise
and monitor such related party transaction and the terms thereof and report to our Board for
further action. Please refer to Section 10.1 of this Prospectus for the procedures that we will
take to ensure that such related party transactions (if any) are undertaken on arm’s length basis.
11.2
DECLARATIONS OF CONFLICT OF INTEREST BY OUR ADVISERS
(a)
TA Securities has given its written confirmation that, as at the date of this Prospectus,
there is no existing or potential conflict of interest in its capacity as Principal Adviser,
Sponsor, Underwriter and Placement Agent for our Listing.
(b)
Eco Asia Capital Advisory Sdn Bhd has given its written confirmation that, as at the
date of this Prospectus, there is no existing or potential conflict of interest in its capacity
as Financial Adviser for our Listing. Its scope of work as Financial Adviser includes the
following:
(i)
to conceptualise and advise on our Group’s restructuring, equity and corporate
structure in preparation for our Listing;
(ii)
to assist our Group in compiling information and documents for our Listing;
(iii)
to assist in reviewing and commenting on the draft documents prepared by the
relevant advisers in relation to our Listing;
(iv)
to liaise with all professionals and advisers involved in our Listing;
(v)
to attend relevant meetings with us and the professionals and advisers in
relation to our Listing; and
(vi)
to assess and advise on any other issues relevant to our Listing.
Certain of our Financial Adviser’s scope of work such as conceptualisation and
advisory on our Group’s listing structure are performed jointly with our Principal Adviser.
165
Registration No. 202201009353 (1455050-D)
11.
CONFLICT OF INTERESTS (CONT’D)
(c)
Teh & Lee has given its written confirmation that, as at the date of this Prospectus,
there is no existing or potential conflict of interest in its capacity as Solicitors for our
Listing.
(d)
Ecovis Malaysia PLT has given its written confirmation that, as at the date of this
Prospectus, there is no existing or potential conflict of interest in its capacity as Auditors
and Reporting Accountants for our Listing.
(e)
Protégé has given its written confirmation that, as at the date of this Prospectus, there
is no existing or potential conflict of interest in its capacity as the IMR for our Listing.
(f)
David Lai & Tan has given its written confirmation that, as at the date of this Prospectus,
there is no existing or potential conflict of interest in its capacity as Solicitors to our
Principal Adviser, Sponsor, Underwriter and Placement Agent in respect of our Listing.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
166
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION
12.1
HISTORICAL FINANCIAL INFORMATION
Our Group’s historical audited financial information comprise the combined statements of financial position, combined statements of profit or loss and
other comprehensive income and combined statements of cash flows for the Period Under Review. The historical financial information of our Group for
the FPE 2021 is prepared based on the historical combined unaudited financial statements of our Group. These historical financial information have
been prepared in accordance with MFRS and IFRS.
The following financial information should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of
Operations set out in Section 12.3 of this Prospectus and Accountants’ Report included in Section 13 of this Prospectus.
12.1.1 Combined statements of profit or loss and other comprehensive income
The following table sets out a summary of our Group’s audited combined statements of profit or loss and other comprehensive income for the Period
Under Review as well as the unaudited combined statement of profit or loss and other comprehensive income for the FPE 2021, which was extracted
from the Accountants’ Report set out in Section 13 of this Prospectus.
FYE 2019
RM’000
Revenue
Cost of sales
GP
Other income
Administrative expenses
Other operating expenses
Net (impairment losses)/ reversal of impairment on financial assets
Profit from operations
Finance costs
PBT
Income tax expense
PAT/ Total comprehensive income
PAT/ Total comprehensive income attributable to:
- Owners of the Group
- Non-controlling interests
167
Audited
FYE 2020
RM’000
FYE 2021
RM’000
43,379
(36,733)
6,646
45
(5,694)
(205)
(39)
753
(145)
608
(259)
349
63,525
(54,513)
9,012
192
(5,690)
(491)
(30)
2,993
(129)
2,864
(688)
2,176
195,419
(162,424)
32,995
91
(11,124)
(931)
(103)
20,928
(177)
20,751
(4,993)
15,758
350
(1)
349
2,178
(2)
2,176
15,758
15,758
Unaudited
FPE 2021
RM’000
67,997
(57,085)
10,912
203
(4,512)
(270)
(65)
6,268
(95)
6,173
(1,502)
4,671
4,671
4,671
Audited
FPE 2022
RM’000
155,102
(130,420)
24,682
817
(6,392)
(66)
63
19,104
(72)
19,032
(4,574)
14,458
14,458
14,458
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
FYE 2019
RM’000
943
15.32
1.40
0.80
482,799
0.07
Audited
FYE 2020
RM’000
3,401
14.19
4.51
3.43
482,799
0.45
FYE 2021
RM’000
21,594
16.88
10.62
8.06
482,799
3.26
Unaudited
FPE 2021
RM’000
6,603
16.05
9.08
6.87
482,799
0.97
Audited
FPE 2022
RM’000
19,442
15.91
12.27
9.32
482,799
2.99
FYE 2019
RM’000
Audited
FYE 2020
RM’000
FYE 2021
RM’000
Unaudited
FPE 2021
RM’000
Audited
FPE 2022
RM’000
PBT
608
2,864
20,751
6,173
19,032
Adjusted for:
Interest income
Interest expense
Depreciation of property, plant and equipment
(9)
145
199
129
408
(7)
177
673
95
335
EBITDA
943
3,401
21,594
6,603
EBITDA(1)
GP margin (%)(2)
PBT margin (%)(3)
PAT margin (%)(4)
Number of Shares assumed in issue (‘000)(5)
Basic / diluted EPS (sen)(6)
Notes:
(1)
The table below sets forth a reconciliation of our PBT to EBITDA:
(7)-
(4)
72
342
19,442
(2)
GP margin is computed based on our GP over revenue.
(3)
PBT margin is computed based on our PBT over revenue.
(4)
PAT margin is computed based on our PAT over revenue.
(5)
Assumed enlarged number of Shares in issue in KGW after our IPO.
(6)
Computed based on PAT attributable to owners of the Group divided by our enlarged number of Shares in issue after our IPO. The diluted EPS
is equal to the basic EPS as there were no potential dilutive ordinary shares outstanding at the end of the respective financial year/period.
(7)
Represents less than RM1,000.
168
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
12.1.2 Combined statements of financial position
The following table sets out a summary of our Group’s audited combined statements of financial
position for the Period Under Review, which was extracted from the Accountants’ Report set
out in Section 13 of this Prospectus.
Audited
As at 31 December
As at 30 June
2019
2020
2021
2022
RM’000
RM’000
RM’000
RM’000
ASSETS
Non-current assets
Property, plant and equipment
Deferred tax assets
Current assets
Inventories
Trade receivables
Other receivables, deposits and
prepayments
Contract costs
Amount owing by related parties
Tax recoverable
Fixed deposits with
financial
institutions
Cash and bank balances
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Invested equity
Retained earnings
Total
equity
attributable
shareholders of the Company
Non-controlling interests
Total equity / NA
to
Non-current liabilities
Bank borrowings
Lease liabilities
Deferred tax liabilities
Current liabilities
Trade payables
Other payables and accruals
Contract liabilities
Amount owing to Directors
Bank borrowings
Lease liabilities
Income tax payable
Total liabilities
TOTAL EQUITY AND LIABILITIES
169
1,045
7
1,052
1,497
1,497
1,762
55
1,817
1,948
913
2,861
5,162
143
8,147
50
37
20,813
56
15
19,832
1,017
1,125
12
307
1,934
28
5
357
6,616
6
915
4,609
442
2,762
9,511
10,563
2,083
12,604
14,101
19,006
47,449
49,266
31,609
57,524
60,385
1,200
259
1,459
1,200
2,437
3,637
1,202
10,595
11,797
1,500
25,053
26,553
(1)
1,458
(3)
3,634
11,797
26,553
659
640
1,299
596
730
10
1,336
1,214
745
1,959
763
791
1,554
2,530
2,158
1,674
959
178
213
94
7,806
9,105
10,563
3,453
1,451
2,176
186
1,090
331
444
9,131
10,467
14,101
13,177
11,880
7,011
1
356
382
2,703
35,510
37,469
49,266
10,667
6,097
9,319
215
443
5,537
32,278
33,832
60,385
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
12.1.3 Combined statements of cash flows
The following table sets out a summary of our Group’s audited combined statements of cash
flows for the Period Under Review, which was extracted from the Accountants’ Report set out
in Section 13 of this Prospectus.
FYE 2019
RM’000
Cash flows from operating
activities
PBT
Adjustments for:
Bad debts written off
Depreciation of property, plant and
equipment
Gain on disposal of property, plant
and equipment
Gain on derecognition of a
subsidiary
Impairment losses/ (reversal of
impairment) on financial assets
Interest expenses
Interest income
Property, plant and equipment
written off
Unrealised loss / (gain) on foreign
exchange
Operating profit before changes in
working capital
Changes in working capital:
(Increase)
/
decrease
in
inventories
Increase in trade and other
receivables
Increase / (decrease) in trade and
other payables
Decrease / (increase) in contract
costs
Increase in contract liabilities
Cash generated from operations
Interest paid
Income tax paid
Income tax refunded
Net cash generated from
operating activities
Audited
FYE 2020
FYE 2021
RM’000
RM’000
FPE 2022
RM’000
608
2,864
20,751
19,032
199
4
408
61
673
7
342
(18)
-
(19)
(87)
-
-
(3)
39
30
103
(63)
145
(7)
-
129
-
177
(7)
-
72
(2)
(1)-
85
154
(34)
(722)
1,051
3,589
21,702
18,579
-
-
(37)
22
(597)
(2,905)
(12,610)
(240)
508
170
13,936
(2,048)
142
(809)
(4,682)
2,007
24
1,128
(5)
(212)
55
966
502
547
(7)
(314)
226
4,836
23,145
(29)
(2,816)
22
20,322
2,308
20,628
(1)
(2,598)
18,029
(1)-
-
-
-
18
-
(1)
20
87
(139)
(467)
(479)
(209)
Cash flows from investing
activities
Acquisition of a subsidiary, net
cash acquired
Derecognition of a subsidiary
Proceeds
from
disposal of
property, plant and equipment
Acquisition of property, plant and
equipment
170
-
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
FYE 2019
RM’000
Cash flows from investing
activities (cont’d)
(Advances to) / repayment from
related parties, net
Net cash used in investing
activities
Audited
FYE 2020
FYE 2021
RM’000
RM’000
FPE 2022
RM’000
-
(28)
22
6
(121)
(495)
(438)
(116)
7
(140)
750
(122)
-
(1,600)
7
(148)
3
(6,000)
2
(71)
298
(307)
(50)
(58)
(28)
182
-
-
-
607
(774)
(185)
(1)
(202)
(163)
(184)
(47)
(394)
780
(212)
(661)
734
(1,177)
(1,595)
(6,673)
Net increase / (decrease) in cash
and cash equivalents
Effect of exchange rate changes
1,579
(1,446)
18,289
11,240
(108)
(129)
30
793
Cash and cash equivalents at
beginning of financial year /
period
1,291
2,762
1,187
19,506
Cash and cash equivalents at
end of financial year / period
2,762
1,187
19,506
31,539
Cash flows from financing
activities
Dividend paid
Interest received
Interest paid
Proceeds from issuance of share
capital
Placement of fixed deposits
pledged with financial institutions
Withdrawal of fixed deposits
pledged with financial institutions
Net movement in amount owing to
Directors
Repayment of lease liabilities
(Repayment) / drawdown of term
loans, net
Net cash flows generated / (used
in) financing activities
Note:
(1)
Represents less than RM1,000.
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171
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
12.2
CAPITALISATION AND INDEBTEDNESS
The following table sets out our Group’s capitalisation and indebtedness based on our
unaudited combined financial statements as at 31 August 2022 and after adjusting for the
effects of our Public Issue and utilisation of proceeds from our Public Issue.
Unaudited
As at
31 August
2022
RM’000
I
After our
Public
Issue
RM’000
II
After I and
utilisation
of proceeds
RM’000
25,990
452
26,442
[●]
452
[●]
[●]
452
[●]
Indebtedness(1)
Short-term indebtedness
- Term loans
- Lease liabilities
147
164
147
164
147
164
Long-term indebtedness
- Term loans
- Lease liabilities
727
446
727
446
727
446
Contingent liabilities
-
-
-
Total indebtedness
1,484
1,484
1,484
Capitalisation
Shareholders’ equity
Total capitalisation
27,501
27,501
[●]
[●]
[●]
[●]
Total capitalisation and indebtedness
28,985
[●]
[●]
0.05
[●]
[●]
Cash and short-term deposits
Cash and bank balances
Fixed deposits with financial institutions
Gearing ratio (times)(2)
Notes:
(1)
All of our indebtedness are secured and guaranteed.
(2)
Computed based on total indebtedness divided by total shareholders’ equity.
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172
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
12.3
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following management’s discussion and analysis of our Group’s financial condition and
results of operations for the Period Under Review should be read in conjunction with our
combined financial statements and the accompanying notes as set out in the Accountants’
Report included in Section 13 of this Prospectus.
This discussion and analysis contain data derived from our combined financial statements as
well as forward-looking statements that reflect our views with respect to future events and our
future financial performance. Actual events and results may differ significantly from those
anticipated in these forward-looking statements as a result of a number of factors, including
those set forth under Section 9, Risk Factors of this Prospectus.
Overview of Our Business Operations
We are principally involved in the business of logistics services, which have contributed
100.00% of our Group’s total revenue in both FYE 2019 and FYE 2020, 99.07% of our Group’s
total revenue in FYE 2021 and 99.05% of our Group’s total revenue in FPE 2022. The remaining
0.93% of our total revenue in FYE 2021 and 0.93% of our total revenue in FPE 2022 was from
trading of healthcare-related products (i.e. COVID-19 antigen self-test kits) under KGW Medica.
Starting from FYE 2022, we also generate revenue from warehousing and distribution of
healthcare-related products and devices and the revenue generated accounted for 0.02% of
our total revenue in FPE 2022.
Under our logistics services business, we provide ocean freight, air freight and freight
forwarding services with our operations based in Ara Damansara, Selangor. We provide these
services to both local and foreign exporters, importers and other freight forwarders.
We incorporated KGW Medica in June 2021 with the plan to venture into warehousing and
distribution of healthcare-related products and devices. Pending the development of this
business, KGW Medica briefly undertook trading of healthcare-related products in FYE 2021.
We have since shifted our focus back into the warehousing and distribution business upon
securing customers for this business since March 2022. Moving forward, we will discontinue
KGW Medica’s trading of healthcare-related products upon full disposal of its existing
inventories. KGW Medica will thereafter focus on warehousing and distribution services for
healthcare-related products and devices.
As at the LPD, we have 4 reportable business segments as follows:
Business
Segment
Ocean freight
services
Description
We arrange and coordinate ocean
shipments for both local and
foreign exporters, importers and
other freight forwarders. Our
services mainly include arranging
for booking of cargo space and
coordinating shipments from the
port of loading to the port of
discharge. Our revenue from
ocean freight services mainly
comprises freight charges, terminal
handling fees and bill of lading
handling fees.
173
Basis for
Revenue Recognition
Freight charges are recognised based
upon the terms in the contract of
carriage and to the extent a service is
completed. Revenue is recognised
based on the actual service provided
up to the end of the reporting period,
as a proportion of the total services to
be provided as the customer receives
and consumes the benefits of the
Group’s performance simultaneously.
We measure the fulfilment of our
performance obligations based on the
progress of each shipment in terms of
days travelled.
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
Business
Segment
Ocean freight
services
(Cont’d)
Air
freight
services
Description
Our revenue from ocean freight
services may also include charges
for land transportation and/or
warehousing services provided
upon request of our ocean freight
customers. Charges for land
transportation and/or warehousing
services are usually bundled
together with our freight charges.
We arrange and coordinate air
shipments for local and foreign
exporters and importers, and other
foreign freight forwarders. Our
revenue from air freight services
mainly comprises freight charges
and terminal handling fees.
Basis for
Revenue Recognition
Terminal handling fees and bill of
lading handling fees are considered to
represent one single performance
obligation,
hence
revenue
is
recognised when the performance
obligation is satisfied at a point in time
when the service is fully rendered.
Same basis as those for revenue from
ocean freight services.
Similar to our revenue from ocean
freight services, our revenue from
air freight services may also
include
charges
for
land
transportation and/or warehousing
services provided upon request of
our air freight customers.
Freight
forwarding
services
Our
revenue
from
freight
forwarding services is mainly
charges
for
arranging
and
coordinating the services of
licensed customs agents for our
ocean freight or air freight
customers to obtain customs
clearance of their shipments,
charges for preparation of manifest
for import shipments to Malaysia
and export shipments to certain
countries such as USA, Canada
and Europe, as well as charges for
handling services to foreign freight
forwarders for their customers’
import and/or export shipments.
These services are considered to
represent one single performance
obligation respectively, hence revenue
is recognised when the performance
obligation is satisfied at a point in time
when the respective service is fully
rendered.
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174
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
Business
Segment
Warehousing
and
distribution of
healthcarerelated
products and
devices
Description
In our trading of healthcare-related
products, we generate revenue
from our sales to local retail
pharmacies and small and medium
companies / enterprises.
Since FYE 2022, we also generate
revenue
from
providing
warehousing
and
distribution
services for healthcare-related
products and devices.
Basis for
Revenue Recognition
Our trading revenue is recognised at a
point in time when we satisfied a
performance obligation by transferring
promised goods to customers, i.e.
based on invoice issued upon delivery
and acceptance of goods by
customers.
For warehousing and distribution
services, revenue is recognised based
upon the terms in the contract of
warehousing and distribution and to
the extent a service is completed.
For
warehousing
services,
we
measure the fulfilment of our
performance obligations based on the
storage space and duration occupied
by customers.
For distribution services, we measure
the fulfilment of our performance
obligations based on the type and
amount of distribution services
provided
and
delivery
trips
undertaken. Revenue is recognised
upon delivery and acceptance of
goods by receivers designated by our
customers.
Please refer to Section 7 of this Prospectus for further information on our business operations.
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175
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
Results from Our Business Operations
The segmental analysis of our financial results for the Period Under Review are based on business activities and geographical region of shipment
destination.
12.3.1 Revenue
On a combined basis, our Group’s revenue for the Period Under Review are analysed as follows:
(i)
Revenue by business activities
The table below sets out the breakdown and analysis of our Group’s revenue by business activities:
FYE 2019
RM'000
%
Logistics services
- Ocean freight
- Air freight
- Freight forwarding
Warehousing and distribution
of healthcare-related products
and devices
Total
Audited
FYE 2020
RM'000
%
FYE 2021
RM'000
%
Unaudited
FPE 2021
RM'000
%
Audited
FPE 2022
RM'000
%
38,935
2,039
2,405
89.76
4.70
5.54
58,663
1,891
2,971
92.34
2.98
4.68
187,839
1,899
3,858
96.12
0.97
1.98
64,652
1,205
2,140
95.08
1.77
3.15
151,135
850
1,649
97.44
0.55
1.06
43,379
100.00
63,525
100.00
193,596
99.07
67,997
100.00
153,634
99.05
-
-
-
-
(1)1,823
0.93
-
-
(2)1,468
0.95
43,379
100.00
63,525
100.00
195,419
100.00
67,997
100.00
155,102
100.00
Notes:
(1)
Solely from trading.
(2)
RM1.44 million revenue generated from trading.
176
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
The table below sets out the breakdown of the cargo volume and number of freight forwarding jobs handled by our Group for the Period Under Review:
Unit
Ocean freight (containerised cargo)(1)
Ocean freight (over-sized non-containerised cargo)
Air freight(2)
Freight forwarding(3)
FYE 2019
TEU
Tonnes
MT
Job
13,742
190
4,428
FYE 2020
17,242
81
5,021
FYE 2021
17,106
91
5,641
FPE 2021
9,634
76
3,174
FPE 2022
7,697
(4)1,980
45
2,546
Notes:
(1)
This includes shipment of, amongst others, chemical products, aluminium products, silicon metal products, steel wire products, swimming pool
and spa equipment, water treatment equipment, rubber gloves and other rubber related products for our customers from various industrial and
manufacturing industries, as well as cabinet, furniture and automotive batteries for our customers from trading industry.
(2)
This includes shipment of, amongst others, swimming pool and spa equipment, water treatment equipment, rubber gloves and other rubber
related products, food packaging products and electronic products for our customers from various industrial and manufacturing industries.
(3)
This includes freight forwarding services for customers from, amongst others, various industrial and manufacturing industries and trading
industry.
(4)
We have arranged and coordinated over-sized non-containerised cargo shipment of approximately 1,980 tonnes of steel coil from Malaysia to
the USA for 2 exporters in March 2022. The relevant revenue of RM3.89 million have been excluded from the computation of the average
revenue per TEU of container for the FPE 2022.
Ocean freight segment is our main source of revenue, contributing 89.76%, 92.34%, 96.12% and 97.44% to our Group’s revenue for the FYE 2019,
FYE 2020, FYE 2021 and FPE 2022 respectively.
Our Group’s total revenue increased by RM20.15 million or 46.45% from RM43.38 million in FYE 2019 to RM63.53 million in FYE 2020, mainly due to
the increase in revenue derived from our ocean freight segment by RM19.72 million.
Our Group’s total revenue further increased by RM131.89 million or 207.60% from RM63.53 million in FYE 2020 to RM195.42 million in FYE 2021,
mainly due to the increase in revenue derived from our ocean freight segment by RM129.18 million and the new revenue stream of RM1.82 million from
our warehousing and distribution of healthcare-related products and devices segment.
Our Group’s total revenue increased by RM87.10 million or 128.09% from RM68.00 million in FPE 2021 to RM155.10 million in FPE 2022, mainly due
to the increase in revenue derived from our ocean freight segment by RM86.49 million and the new revenue stream of RM1.47 million from our
warehousing and distribution of healthcare-related products and devices segment.
177
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
The commentaries on our Group’s revenue for each of the business segments are as follows:
(a)
Ocean freight
Our ocean freight revenue is derived from our services of arranging and coordinating ocean shipments for our customers. Our revenue mainly
comprises ocean freight charges, terminal handling fees and bill of lading handling fees. Please refer to Section 7.3.1(a) of this Prospectus for
further details of our ocean freight services.
Comparison between FYE 2019 and FYE 2020
Our ocean freight revenue increased by RM19.72 million or 50.64% from RM38.94 million in FYE 2019 to RM58.66 million in FYE 2020. The
increase in revenue was mainly due to the following:
(i)
increase in business volume by 25.47% from 13,742 TEU of containers handled in FYE 2019 to 17,242 TEU of containers handled in
FYE 2020, mainly attributable to increased orders from our existing customers and new customers secured. These increased orders
were mainly contributed by our customers including other freight forwarders as well as exporters and importers from certain industries
such as aluminium producer, silicon metal producer, chemical trading and glove manufacturing. We have increased our sales and
marketing efforts by growing the headcount in sales and marketing team and international business development team as well as
actively adopting various sales and marketing strategies such as engaging with other freight forwarders and MATRADE, and
participating in trade fairs and various online events. In addition, we believe that our increased orders were partly due to the competitive
pricing offered by us to secure higher business volume, in response to uncertainties during the early stages of the COVID-19 pandemic;
and
(ii)
increase in our average ocean freight revenue per TEU of container by 20.08% from RM2,833 in FYE 2019 to RM3,402 in FYE 2020,
mainly attributable to the increase in ocean freight rate charged by ocean carriers as a result of the limited supply of ocean cargo space
caused by global supply chain disruptions arising from the COVID-19 pandemic.
Comparison between FYE 2020 and FYE 2021
Our ocean freight revenue further increased by RM129.18 million or 220.22% from RM58.66 million in FYE 2020 to RM187.84 million in FYE
2021. The increase in revenue was mainly due to the increase in our average ocean freight revenue per TEU of container by 222.78% from
RM3,402 in FYE 2020 to RM10,981 in FYE 2021, mainly attributable to the increase in ocean freight rate charged by ocean carriers as a result
of the limited supply of ocean cargo space and continuing demand for container shipping underpinned by the economic recovery. Further, we
handled more long-haul ocean freight shipments to North America as compared to other regions which yielded higher revenue in FYE 2021.
178
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
Despite the increase in our average ocean freight revenue, our business volume has decreased marginally by 0.79% from 17,242 TEU of
containers handled in FYE 2020 to 17,106 TEU of containers handled in FYE 2021. The decrease in business volume was mainly attributable
to the limited supply of ocean cargo space for container shipments as caused by the global supply chain disruptions following the COVID-19
pandemic, which reduced the availability of ocean cargo space for us to arrange for our customers’ shipments.
Comparison between FPE 2021 and FPE 2022
Our ocean freight revenue increased by RM86.49 million or 133.78% from RM64.65 million in FPE 2021 to RM151.14 million in FPE 2022. The
increase in revenue was mainly due to the increase in our average ocean freight revenue per TEU of container by 185.07% from RM6,711 in
FPE 2021 to RM19,131 in FPE 2022, mainly attributable to the increase in ocean freight rates charged by ocean carriers as a result of the
limited supply of ocean cargo space caused by global supply chain disruptions coupled with the surge in global fuel prices and continuing
demand for container shipping underpinned by the economic recovery.
Despite the increase in our average ocean freight revenue per TEU of container, the business volume in term of TEU of container has decreased
by 20.11% from 9,634 TEU of containers handled in FPE 2021 to 7,697 TEU of containers handled in FPE 2022. The decrease in business
volume was mainly attributable to the limited supply of ocean cargo space for container shipments as caused by the global supply chain
disruptions following the COVID-19 pandemic, which reduced the availability of ocean cargo space for us to arrange for our customers’
shipments.
(b)
Air freight
Our air freight revenue is derived from our services of arranging and coordinating air shipments for our customers. Our revenue mainly
comprises air freight charges and terminal handling fees. Please refer to Section 7.3.1(b) of this Prospectus for further details of our air freight
services.
Comparison between FYE 2019 and FYE 2020
Our air freight revenue decreased by RM0.15 million or 7.35% from RM2.04 million in FYE 2019 to RM1.89 million in FYE 2020. The decrease
in revenue was mainly due to decrease in business volume by 57.37% from 190 MT of cargo handled in FYE 2019 to 81 MT of cargo handled
in FYE 2020, mainly attributable to decreased orders from our existing customers following a substantial increase in air freight rates charged
by air carriers caused by limited supply of air cargo space due to reduction in air travel in light of the COVID-19 pandemic.
The impact of the substantial decrease in business volume on our air freight revenue was partially offset by the increase in average air freight
revenue per MT of cargo handled by 117.42% from RM10,741 in FYE 2019 to RM23,353 in FYE 2020, mainly attributable to the increase in air
freight rates as a result of the limited supply of air cargo space as mentioned above.
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FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2020 and FYE 2021
Our air freight revenue increased by RM0.01 million or 0.53% from RM1.89 million in FYE 2020 to RM1.90 million in FYE 2021. The increase
in revenue was mainly due to increase in business volume by 12.35% from 81 MT of cargo handled in FYE 2020 to 91 MT of cargo handled in
FYE 2021, mainly attributable to increased orders from our new customers.
The impact of the increase in business volume on our air freight revenue was partially offset by the decrease in average air freight revenue per
MT of cargo handled by 11.09% from RM23,353 in FYE 2020 to RM20,764 in FYE 2021 as we handled greater number of shorter distance air
freight shipments which yielded lower revenue during the year.
Comparison between FPE 2021 and FPE 2022
Our air freight revenue decreased by RM0.36 million or 29.75% from RM1.21 million in FPE 2021 to RM0.85 million in FPE 2022. The decrease
in revenue was mainly due to decrease in business volume by 40.79% from 76 MT of cargo handled in FPE 2021 to 45 MT of cargo handled
in FPE 2022, mainly attributable to decreased orders from our existing customers.
The impact of the decrease in business volume on our air freight revenue was partially offset by the increase in average air freight revenue per
MT of cargo handled by 19.37% from RM15,780 in FPE 2021 to RM18,836 in FPE 2022, mainly attributable to the increase in air freight rates
as a result of the continued limited supply of air cargo space due to reduction in air travel in light of the COVID-19 pandemic, restriction in
certain aviation routes as a result of the Russia-Ukraine war as well as the high global fuel prices.
(c)
Freight forwarding
Our freight forwarding revenue includes mainly charges for arranging and coordinating the services of licensed customs agents for customs
clearances, charges for preparation of manifest for import shipments to Malaysia and export shipments to certain countries such as USA,
Canada and Europe as well as charges for handling services to foreign freight forwarders for their customers’ import and/or export shipments.
Please refer to Section 7.3.1(c) of this Prospectus for further details of our freight forwarding services.
Comparison between FYE 2019 and FYE 2020
Our freight forwarding revenue increased by RM0.56 million or 23.24% from RM2.41 million in FYE 2019 to RM2.97 million in FYE 2020. The
increase in revenue was due to the following:
(i)
increase in business volume by 13.39% from 4,428 jobs handled in FYE 2019 to 5,021 jobs handled in FYE 2020, mainly attributable
to increased orders from our existing customers as well as the securing of new customers; and
(ii)
increase in our average freight forwarding revenue per job by 9.02% from RM543 in FYE 2019 to RM592 in FYE 2020, mainly
attributable to higher price charged for jobs handled.
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FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2020 and FYE 2021
Our freight forwarding revenue further increased by RM0.89 million or 29.97% from RM2.97 million in FYE 2020 to RM3.86 million in FYE 2021.
The increase in revenue was mainly due to the following:
(i)
increase in business volume by 12.35% from 5,021 jobs handled in FYE 2020 to 5,641 jobs handled in FYE 2021, mainly attributable
to increased orders from our existing customers as well as new customers; and
(ii)
increase in our average freight forwarding revenue per job by 15.54% from RM592 in FYE 2020 to RM684 in FYE 2021, mainly
attributable to higher price charged for jobs handled.
Comparison between FPE 2021 and FPE 2022
Our freight forwarding revenue decreased by RM0.49 million or 22.90% from RM2.14 million in FPE 2021 to RM1.65 million in FPE 2022. The
decrease in revenue was mainly due to the decrease in business volume by 19.79% from 3,174 jobs handled in FPE 2021 to 2,546 jobs handled
in FPE 2022, mainly attributable to decreased orders from our existing customers.
(d)
Warehousing and distribution of healthcare-related products and devices
Our Group undertook trading of COVID-19 antigen self-test kits and generated revenue of RM1.82 million and RM1.44 million in second half of
FYE 2021 and FPE 2022 respectively. These COVID-19 antigen self-test kits were supplied to local retail pharmacies and small and medium
companies / enterprises in Klang Valley and Northern Region of Peninsular Malaysia.
We have commenced our warehousing and distribution of healthcare-related products and devices in FPE 2022 and generated revenue of
RM0.03 million from 2 customers within Klang Valley and Northern Region of Peninsular Malaysia.
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FINANCIAL INFORMATION (CONT’D)
(ii)
Revenue by geographical region of shipment destination
The table below sets out the breakdown and analysis of our Group’s revenue by geographical region of shipment destination of our Group’s
customers for the Period Under Review.
FYE 2019
RM’000
Malaysia(1)
Overseas(2)
- Asia
- Africa
- Europe
- Oceania
- North America
- South America
Total
Notes:
(1)
(2)
(3)
(4)
%
Audited
FYE 2020
RM’000
%
FYE 2021
RM’000
%
Unaudited
FPE 2021
RM’000
%
Audited
FPE 2022
RM’000
%
5,178
11.94
5,501
8.66
(3)9,903
5.07
3,977
5.85
(4)5,142
3.32
7,096
2,524
6,216
645
21,167
553
38,201
16.36
5.82
14.33
1.49
48.79
1.27
88.06
9,117
5,587
4,822
956
35,975
1,567
58,024
14.35
8.80
7.59
1.50
56.63
2.47
91.34
17,252
5,916
13,798
2,170
144,471
1,909
185,516
8.83
3.03
7.06
1.11
73.93
0.97
94.93
5,873
1,823
8,009
752
46,932
631
64,020
8.64
2.68
11.78
1.10
69.02
0.93
94.15
11,902
2,319
11,751
2,008
121,454
526
149,960
7.67
1.49
7.58
1.29
78.31
0.34
96.68
43,379
100.00
63,525
100.00
195,419
100.00
67,997
100.00
155,102
100.00
Represents import shipments into Malaysia.
Represents export shipments from Malaysia to overseas.
Including revenue generated from trading of healthcare-related products in Malaysia of RM1.82 million.
Including revenue generated from trading, warehousing and distribution of healthcare-related products and devices in Malaysia of
RM1.47 million.
Our Group’s main revenue contributor in terms of geographical region of shipment destination is North America. We generated 48.79%, 56.63%,
73.93% and 78.31% of our revenue in FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively from providing logistics services for export
shipments from Malaysia to North America.
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12.
FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2019 and FYE 2020
Our Group’s revenue increased by RM20.15 million or 46.45% from RM43.38 million in FYE 2019 to RM63.53 million in FYE 2020. The increase
in revenue was mainly derived from shipments to North America, which increased by RM14.81 million or 69.96% from RM21.17 million in FYE
2019 to RM35.98 million in FYE 2020, mainly attributable to our ocean freight segment.
The increase in our ocean freight segment revenue was mainly due to the increase in revenue generated from ocean shipments to North
America from Malaysia by RM14.30 million or 72.04% from RM19.85 million in FYE 2019 to RM34.15 million in FYE 2020, as we focused to
grow the ocean shipments mainly to USA, in view of our NVOCC registration status that allows us to have contractual cargo space availability
and pre-determined freight costs over a period of time.
Comparison between FYE 2020 and FYE 2021
Our Group’s revenue increased by RM131.89 million or 207.60% from RM63.53 million in FYE 2020 to RM195.42 million in FYE 2021. The
increase in revenue was mainly derived from shipments to North America, which increased by RM108.49 million or 301.53% from RM35.98
million in FYE 2020 to RM144.47 million in FYE 2021, mainly attributable to our ocean freight segment.
The increase in our ocean freight segment revenue was mainly due to the increase in revenue generated from ocean shipments to North
America from Malaysia by RM107.61 million or 315.11% from RM34.15 million in FYE 2020 to RM141.76 million in FYE 2021, as we continue
to focus in serving the ocean shipments mainly to USA coupled with the increase in ocean freight rates charged by ocean carriers as explained
in Section 12.3.1(i)(a) above.
The increase in our ocean freight segment revenue was also attributable to the increase in our revenue generated from ocean shipments to
Europe from Malaysia by RM9.39 million or 245.17% from RM3.83 million in FYE 2020 to RM13.22 million in FYE 2021, as one of our customers
has increased their export shipments to Europe from RM0.93 million in FYE 2020 to RM7.99 million in FYE 2021.
Comparison between FPE 2021 and FPE 2022
Our Group’s revenue increased by RM87.10 million or 128.09% from RM68.00 million in FPE 2021 to RM155.10 million in FPE 2022. The
increase in revenue was mainly derived from shipments to North America, which increased by RM74.52 million or 158.79% from RM46.93
million in FPE 2021 to RM121.45 million in FPE 2022, mainly attributable to our ocean freight segment.
The increase in our ocean freight segment revenue was mainly due to the increase in revenue generated from ocean shipments to North
America from Malaysia by RM74.96 million or 164.82% from RM45.48 million in FPE 2021 to RM120.44 million in FPE 2022, as ocean
shipments to USA continued to be our main focus while there was increase in ocean freight rates charged by ocean carriers as explained in
Section 12.3.1(i)(a) above.
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12.
FINANCIAL INFORMATION (CONT’D)
12.3.2 Cost of sales
On a combined basis, our Group’s cost of sales for the Period Under Review are analysed as follows:
(i)
Cost of sales by business activities
The table below sets forth the breakdown and analysis of our Group’s cost of sales by business activities:
FYE 2019
RM'000
Logistics services
- Ocean freight
- Air freight
- Freight forwarding
Warehousing and distribution
of healthcare-related
products and devices
Total
Note:
(1)
%
Audited
FYE 2020
RM'000
%
FYE 2021
RM'000
%
Unaudited
FPE 2021
RM'000
%
Audited
FPE 2022
RM'000
%
34,171
1,664
898
93.03
4.53
2.44
51,928
1,444
1,141
95.26
2.65
2.09
157,557
1,461
1,740
97.00
0.90
1.07
55,198
918
969
96.69
1.61
1.70
(1)127,755
604
774
97.96
0.46
0.59
36,733
100.00
54,513
100.00
160,758
98.97
57,085
100.00
129,133
99.01
-
-
-
-
1,666
1.03
-
-
1,287
0.99
36,733
100.00
54,513
100.00
162,424
100.00
57,085
100.00
130,420
100.0
0
We have arranged and coordinated over-sized non-containerised cargo shipment of approximately 1,980 tonnes of steel coil from
Malaysia to the USA for 2 exporters in March 2022. The relevant cost of sales of RM3.87 million have been excluded from the
computation of the average cost per TEU of container for the FPE 2022.
Generally, the proportion of our cost of sales for each business segment corresponds to the proportion of revenue contribution of each business
segment for the Period Under Review.
Our Group’s cost of sales increased by RM17.78 million or 48.41% from RM36.73 million in FYE 2019 to RM54.51 million in FYE 2020 mainly
due to higher cost of sales from the ocean freight segment, in tandem with our higher ocean freight revenue.
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12.
FINANCIAL INFORMATION (CONT’D)
Our Group’s cost of sales increased by RM107.91 million or 197.96% from RM54.51 million in FYE 2020 to RM162.42 million in FYE 2021
mainly due to higher cost of sales from the ocean freight segment, in tandem with the further increase in ocean freight revenue.
Our Group’s cost of sales increased by RM73.33 million or 128.45% from RM57.09 million in FPE 2021 to RM130.42 million in FPE 2022 mainly
due to higher cost of sales from the ocean freight segment, in tandem with the increase in ocean freight revenue.
The commentaries on our Group’s cost of sales for each business segment are as follows:
(a)
Ocean freight
Our cost of sales for ocean freight segment comprises mainly ocean freight charges and terminal handling charges which collectively accounted
for 89.43%, 89.71%, 95.71% and 96.70% of our ocean freight segment’s cost of sales for the FYE 2019, FYE 2020, FYE 2021 and FPE 2022
respectively. The cost of sales for ocean freight segment can be analysed as follows:
FYE 2019
RM'000
Ocean freight charges
Terminal handling charges
Carriages and delivery charges
Bill of lading charges
Others(1)
Total
Note:
(1)
26,567
3,991
1,835
872
906
34,171
%
77.75
11.68
5.37
2.55
2.65
100.00
Audited
FYE 2020
RM'000
41,186
5,401
2,657
1,160
1,524
51,928
%
79.31
10.40
5.12
2.23
2.94
100.00
FYE 2021
RM'000
145,324
5,472
2,597
1,720
2,444
157,557
%
92.24
3.47
1.65
1.09
1.55
100.00
Unaudited
FPE 2021
RM'000
%
48,026
3,136
1,212
831
1,993
55,198
87.01
5.68
2.20
1.50
3.61
100.00
Audited
FPE 2022
RM'000
121,061
2,478
1,344
874
1,998
127,755
%
94.76
1.94
1.05
0.69
1.56
100.00
Others mainly include temporary warehousing charges, electronic data interchange charges, demurrage equipment charges, detention
equipment charges and dangerous cargo surcharges.
Comparison between FYE 2019 and FYE 2020
Our cost of sales for ocean freight segment increased by RM17.76 million or 51.98% from RM34.17 million in FYE 2019 to RM51.93 million in
FYE 2020. The increase was mainly due to the increase in business volume as explained in Section 12.3.1(i)(a) coupled with the increase in
average ocean freight cost per TEU of container by 21.11% from RM2,487 in FYE 2019 to RM3,012 in FYE 2020, mainly attributable to higher
ocean freight rates charged by ocean carriers as a result of limited supply of ocean cargo space for container shipments.
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FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2020 and FYE 2021
Our cost of sales for ocean freight segment increased by RM105.63 million or 203.41% from RM51.93 million in FYE 2020 to RM157.56 million
in FYE 2021. The increase was mainly due to the further increase in average ocean freight cost per TEU of container by 205.81% from RM3,012
in FYE 2020 to RM9,211 in FYE 2021, mainly attributable to higher ocean freight rates charged by ocean carriers as a result of the continued
limited supply of ocean cargo space for container shipments. Further, we handled more long-haul ocean freight shipments to North America as
compared to other regions which required higher ocean freight cost in FYE 2021.
Comparison between FPE 2021 and FPE 2022
Our cost of sales for ocean freight segment increased by RM72.56 million or 131.45% from RM55.20 million in FPE 2021 to RM127.76 million
in FPE 2022. The increase was mainly due to the increase in average ocean freight cost per TEU of container by 180.89% from RM5,730 in
FPE 2021 to RM16,095 in FPE 2022, mainly attributable to the higher ocean freight rate charged by ocean carriers as a result of the limited
supply of ocean cargo space for container shipments coupled with the high global fuel prices.
(b)
Air freight
Our cost of sales for air freight segment comprises mainly air freight charges, carriages and delivery charges as well as terminal handling
charges, which collectively accounted for 98.92%, 97.58%, 96.78% and 96.86% of our air freight segment’s cost of sales for the FYE 2019,
FYE 2020, FYE 2021 and FPE 2022 respectively. The cost of sales for air freight segment can be analysed as follows:
FYE 2019
RM'000
Air freight charges
Carriages and delivery charges
Terminal handling charges
Others(1)
Total
Note:
(1)
1,529
68
49
18
1,664
%
91.89
4.09
2.94
1.08
100.00
Audited
FYE 2020
RM'000
1,288
50
71
35
1,444
%
89.20
3.46
4.92
2.42
100.00
FYE 2021
RM'000
1,343
40
31
47
1,461
%
91.92
2.74
2.12
3.22
100.00
Unaudited
FPE 2021
RM'000
%
840
32
22
24
918
Others mainly include temporary warehousing charges, air waybills charges and fumigation charges.
186
91.50
3.49
2.40
2.61
100.00
Audited
FPE 2022
RM'000
%
541
32
12
19
604
89.57
5.30
1.99
3.14
100.00
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2019 and FYE 2020
Our cost of sales for air freight segment decreased by RM0.22 million or 13.25% from RM1.66 million in FYE 2019 to RM1.44 million in FYE
2020, mainly attributable to lower business volume in terms of MT of cargo handled as explained in Section 12.3.1(i)(b).
The impact of the decrease in business volume on our air freight cost was partially offset by the increase in average air freight cost per MT of
cargo handled by 103.49% from RM8,764 in FYE 2019 to RM17,834 in FYE 2020, mainly attributable to the increase in air freight rates as
explained in Section 12.3.1(i)(b).
Comparison between FYE 2020 and FYE 2021
Our cost of sales for air freight segment increased by RM0.02 million or 1.39% from RM1.44 million in FYE 2020 to RM1.46 million in FYE 2021
mainly attributable to higher business volume in terms of MT of cargo handled as explained in Section 12.3.1(i)(b).
The impact of the increase in business volume on our air freight cost was partially offset by the decrease in average air freight cost per MT of
cargo handled by 10.42% from RM17,834 in FYE 2020 to RM15,976 in FYE 2021 as we handled greater number of shorter distance air freight
shipments which required lower air freight cost in FYE 2021.
Comparison between FPE 2021 and FPE 2022
Our cost of sales for air freight segment decreased by RM0.32 million or 34.78% from RM0.92 million in FPE 2021 to RM0.60 million in FPE
2022, mainly attributable to lower business volume in terms of MT of cargo handled as explained in Section 12.3.1(i)(b).
The impact of the decrease in business volume on our air freight cost was partially offset by the increase in average air freight cost per MT of
cargo handled by 11.32% from RM12,017 in FPE 2021 to RM13,377 in FPE 2022, mainly attributable to the increase in air freight rates as
explained in Section 12.3.1(i)(b).
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12.
FINANCIAL INFORMATION (CONT’D)
(c)
Freight forwarding
Our cost of sales for freight forwarding segment comprises mainly customs clearance related charges and manifest charges which collectively
accounted for 87.64%, 87.03%, 88.56% and 83.59% of our freight forwarding segment’s cost of sales for the FYE 2019, FYE 2020, FYE 2021
and FPE 2022 respectively. The cost of sales for freight forwarding segment can be analysed as follows:
FYE 2019
RM'000
Customs clearance related
charges
Manifest charges
Others(1)
Total
Note:
(1)
%
Audited
FYE 2020
RM'000
%
FYE 2021
RM'000
%
Unaudited
FPE 2021
RM'000
%
Audited
FPE 2022
RM'000
%
646
71.94
779
68.27
1,213
69.71
681
70.28
530
68.47
141
111
898
15.70
12.36
100.00
214
148
1,141
18.76
12.97
100.00
328
199
1,740
18.85
11.44
100.00
177
111
969
18.27
11.45
100.00
117
127
774
15.12
16.41
100.00
Others mainly include courier charges.
Comparison between FYE 2019 and FYE 2020
Our cost of sales for freight forwarding segment increased by RM0.24 million or 26.67% from RM0.90 million in FYE 2019 to RM1.14 million in
FYE 2020, mainly attributable to the increase in business volume as explained in Section 12.3.1(i)(c).
Comparison between FYE 2020 and FYE 2021
Our cost of sales for freight forwarding segment increased by RM0.60 million or 52.63% from RM1.14 million in FYE 2020 to RM1.74 million in
FYE 2021, mainly attributable to the increase in average cost per job by 35.68% from RM227 in FYE 2020 to RM308 in FYE 2021 coupled with
the increase in business volume as explained in Section 12.3.1(i)(c). The increase in average cost per job was mainly due to higher price
charged from licensed customs agents and other freight forwarders in conjunction with the increase in ocean freight rate charged by ocean
carriers.
Comparison between FPE 2021 and FPE 2022
Our cost of sales for freight forwarding segment decreased by RM0.20 million or 20.62% from RM0.97 million in FPE 2021 to RM0.77 million
in FPE 2022, mainly attributable to the decrease in business volume as explained in Section 12.3.1(i)(c).
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12.
FINANCIAL INFORMATION (CONT’D)
(d)
Warehousing and distribution of healthcare-related products and devices
The cost of sales for warehousing and distribution of healthcare-related products and devices segment only accounted for 1.03% and 0.99%
of our Group’s total cost of sales in FYE 2021 and FPE 2022 respectively. The cost of sales for this segment comprises mainly purchases of
COVID-19 antigen self-test kits, which accounted for 94.54% and 96.58% of the segment’s cost of sales in FYE 2021 and FPE 2022
respectively. The cost of sales for this segment can be analysed as follows:
FYE 2019
RM'000
Purchases
Sales commissions
Others(1)
Total
Note:
(1)
(ii)
-
%
Audited
FYE 2020
RM'000
-
-
%
-
FYE 2021
RM'000
1,575
83
8
1,666
%
94.54
4.98
0.48
100.00
Unaudited
FPE 2021
RM'000
%
-
-
Audited
FPE 2022
RM'000
1,243
25
19
1,287
%
96.58
1.94
1.48
100.00
Others include cost for samples given to customers, delivery charges and depreciation of property, plant and equipment (right-of-use
assets in relation to the use of our Group’s rented office cum warehouse).
Cost of sales by geographical region of shipment destination
The cost of sales analysis by geographical region of shipment destination for the Period Under Review is not presented as the information is
not available or maintained.
12.3.3 GP and GP margin
In line with the increase in total revenue, our Group’s total GP increased by RM2.36 million or 35.49% from RM6.65 million in FYE 2019 to RM9.01
million in FYE 2020. Notwithstanding the increase in revenue in FYE 2020, our GP margin decreased by 1.13% from 15.32% in FYE 2019 to 14.19% in FYE
2020. The decrease in GP margin was mainly attributable to lower GP margin from our ocean freight segment, which decreased from 12.24% in FYE 2019
to 11.48% in FYE 2020.
Our Group’s total GP increased by RM23.99 million or 266.26% from RM9.01 million in FYE 2020 to RM33.00 million in FYE 2021 in line with the increase
in total revenue. Our GP margin also increased from 14.19% in FYE 2020 to 16.88% in FYE 2021. The increase in GP margin was mainly attributable to
higher GP margin from our ocean freight segment, which increased from 11.48% in FYE 2020 to 16.12% in FYE 2021.
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12.
FINANCIAL INFORMATION (CONT’D)
Our Group’s total GP increased by RM13.77 million or 126.21% from RM10.91 million in FPE 2021 to RM24.68 million in FPE 2022 in line with the
increase in total revenue. Notwithstanding the increase in revenue in FPE 2022, our GP margin decreased marginally by 0.14% from 16.05% in FPE
2021 to 15.91% in FPE 2022. The decrease in GP margin was mainly attributable to lower GP margin from our freight forwarding segment, which
decreased from 54.72% in FPE 2021 to 53.06% in FPE 2022.
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12.
FINANCIAL INFORMATION (CONT’D)
On a combined basis, our Group’s GP and GP margin for the Period Under Review are analysed as follows:
(i)
GP and GP margin by business activities
The table below sets forth the breakdown and analysis of our Group’s GP by business activities:
FYE 2019
RM'000
Logistics services
- Ocean freight
- Air freight
- Freight forwarding
FYE 2021
RM'000
%
%
Unaudited
FPE 2021
RM'000
%
Audited
FPE 2022
RM'000
%
4,764
375
1,507
71.68
5.64
22.68
6,735
447
1,830
74.73
4.96
20.31
30,282
438
2,118
91.77
1.33
6.42
9,454
287
1,171
86.64
2.63
10.73
23,380
246
875
94.72
1.00
3.55
6,646
100.00
9,012
100.00
32,838
99.52
10,912
100.00
24,501
99.27
-
-
-
-
157
0.48
-
-
181
0.73
6,646
100.00
9,012
100.00
32,995
100.00
10,912
100.00
24,682
100.00
Warehousing and distribution
of healthcare-related products
and devices
Total
%
Audited
FYE 2020
RM'000
The table below sets forth the breakdown and analysis of our Group’s GP margin by business activities:
Logistics services
- Ocean freight
- Air freight
- Freight forwarding
Warehousing and distribution of
healthcare-related products and devices
Group’s GP margin
FYE 2019
%
Audited
FYE 2020
%
FYE 2021
%
Unaudited
FPE 2021
%
Audited
FPE 2022
%
12.24
18.39
62.66
11.48
23.64
61.60
16.12
23.06
54.90
14.62
23.82
54.72
15.47
28.94
53.06
15.32
14.19
16.96
16.05
15.95
-
-
8.61
-
12.33
15.32
14.19
16.88
16.05
15.91
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12.
FINANCIAL INFORMATION (CONT’D)
The commentaries on our Group’s GP and GP margin by business activities are as follows:
(a)
Ocean freight
GP from our ocean freight segment accounted for 71.68%, 74.73%, 91.77% and 94.72% of our Group’s GP for the FYE 2019, FYE
2020, FYE 2021 and FPE 2022 respectively.
Comparison between FYE 2019 and FYE 2020
GP for our ocean freight segment increased by RM1.98 million or 41.60% from RM4.76 million in FYE 2019 to RM6.74 million in FYE
2020 mainly attributable to higher revenue as a result of higher business volume. Nonetheless, the GP margin decreased from 12.24%
in FYE 2019 to 11.48% in FYE 2020. This was mainly due to the quantum of increase in average ocean freight cost per TEU of container
of 21.11% which is higher than the increase in average ocean freight revenue per TEU of container of 20.08%, mainly attributable to
higher increase in the ocean freight rates charged by ocean carriers to us as compared to the quantum of increase in ocean freight
rates that we offered to customers. We offered competitive pricing for our ocean freight services to customers in order to secure higher
business volume, in response to uncertainties during the early stages of the COVID-19 pandemic.
Comparison between FYE 2020 and FYE 2021
GP for our ocean freight segment further increased by RM23.54 million or 349.26% from RM6.74 million in FYE 2020 to RM30.28
million in FYE 2021 mainly attributable to higher revenue generated. GP margin for our ocean freight segment improved from 11.48%
in FYE 2020 to 16.12% in FYE 2021. This was mainly due to the quantum of increase in average ocean freight revenue per TEU of
container of 222.78% which is higher than the increase in average ocean freight cost per TEU of container of 205.81%, as our Group
was able to secure better pricing for our ocean freight services, in addition to passing on the increase in ocean freight rates. The
increase in ocean freight rates was mainly due to continuing demand for container shipments together with the limited supply of ocean
cargo space resulting from the global supply chain disruptions.
Comparison between FPE 2021 and FPE 2022
GP for our ocean freight segment increased by RM13.93 million or 147.41% from RM9.45 million in FPE 2021 to RM23.38 million in
FPE 2022 mainly attributable to higher revenue generated. GP margin for our ocean freight segment improved from 14.62% in FPE
2021 to 15.47% in FPE 2022. This was mainly due to the quantum of increase in average ocean freight revenue per TEU of container
of 185.07% which is higher than the increase in average ocean freight cost per TEU of container of 180.89%, as our Group was able
to secure better pricing for our ocean freight services, in addition to passing on the increase in ocean freight rates. The increase in
ocean freight rates was mainly due to continuing demand for container shipments together with the limited supply of ocean cargo space
resulting from the global supply chain disruptions.
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FINANCIAL INFORMATION (CONT’D)
(b)
Air freight
GP from our air freight segment accounted for 5.64%, 4.96%, 1.33% and 1.00% of our Group’s GP for the FYE 2019, FYE 2020, FYE
2021 and FPE 2022 respectively.
Comparison between FYE 2019 and FYE 2020
Notwithstanding a decrease in revenue generated from our air freight segment by 7.35% in FYE 2020, GP for this segment increased
by RM0.07 million or 18.42% from RM0.38 million in FYE 2019 to RM0.45 million in FYE 2020. GP margin for our air freight segment
improved from 18.39% in FYE 2019 to 23.64% in FYE 2020. This was because our Group, in addition to passing on the increase in air
freight rates to our customers, was able to secure better pricing for our air freight services, following the limited supply of air cargo
space due to reduction in air travel in light of the COVID-19 pandemic.
Comparison between FYE 2020 and FYE 2021
GP and GP margin for our air freight segment of RM0.44 million and 23.64% in FYE 2021 was fairly consistent with that of RM0.45
million and 23.06% in FYE 2020 as there was no material change in our air freight segment revenue and cost of sales.
Comparison between FPE 2021 and FPE 2022
GP for our air freight segment decreased by RM0.04 million or 13.79% from RM0.29 million in FPE 2021 to RM0.25 million in FPE
2022 mainly attributable to lower revenue generated as a result of decrease in business volume. Despite a lower GP, GP margin for
our air freight segment improved from 23.82% in FPE 2021 to 28.94% in FPE 2022. This was because our Group was able to secure
better pricing for our air freight services, in addition to passing on the increase in air freight rates to our customers, following the
continued limited supply of air cargo space.
(c)
Freight forwarding
GP from our freight forwarding segment accounted for 22.68%, 20.31%, 6.42% and 3.55% of our Group’s GP for the FYE 2019, FYE
2020, FYE 2021 and FPE 2022 respectively.
Comparison between FYE 2019 and FYE 2020
GP for our freight forwarding segment increased by RM0.32 million or 21.19% from RM1.51 million in FYE 2019 to RM1.83 million in
FYE 2020 mainly attributable to higher revenue as a result of higher business volume. Nonetheless, GP margin was fairly consistent
at 62.66% in FYE 2019 and 61.60% in FYE 2020 respectively.
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FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2020 and FYE 2021
GP for our freight forwarding segment increased by RM0.29 million or 15.85% from RM1.83 million in FYE 2020 to RM2.12 million in
FYE 2021 mainly attributable to higher revenue as a result of higher business volume. Nonetheless, GP margin decreased from 61.60%
in FYE 2020 to 54.90% in FYE 2021. This was mainly due to partial absorption of the segment’s higher cost of sales by us for competitive
pricing to our customers who engaged us for freight forwarding services together with ocean freight or air freight services.
Comparison between FPE 2021 and FPE 2022
GP for our freight forwarding segment decreased by RM0.29 million or 24.79% from RM1.17 million in FPE 2021 to RM0.88 million in
FPE 2022 mainly attributable to lower revenue generated as a result of decrease in business volume. GP margin was fairly consistent
at 54.72% in FPE 2021 and 53.06% in FPE 2022 respectively.
(d)
Warehousing and distribution of healthcare-related products and devices
GP from our warehousing and distribution of healthcare-related products and devices segment was RM0.16 million and RM0.18 million
in FYE 2021 and FPE 2022 respectively, accounted for less than 1.00% of our Group’s GP in the respective year/ period under review.
12.3.4 Other income
FYE 2019
RM'000
%
Audited
FYE 2020
RM'000
%
FYE 2021
RM'000
%
Gain on derecognition of a subsidiary(1)
Gain on disposal of property and
equipment
Government grant(2)
Interest income
Rental income(3)
Unrealised gain on foreign exchange, net
Wages subsidy
Others(4)
18
40.00
-
-
3
19
3.30
20.88
12
9
6
-
26.67
20.00
13.33
-
12
166
14
6.25
86.46
7.29
7
12
34
16
7.69
13.19
37.36
17.58
Total
45
100.00
192
100.00
91
100.00
194
Unaudited
FPE 2021
RM'000
%
Audited
FPE 2022
RM'000
%
19
9.36
87
10.65
6
162
16
2.96
79.80
7.88
4
4
722
(5)-
0.49
0.49
88.37
-
203
100.00
817
100.00
(5)-
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
Notes:
(1)
Gain on derecognition of KGW Gemilang Sdn Bhd, a former subsidiary of KGW Logistics which was wound up in FYE 2021.
(2)
Government grant mainly relates to overseas business travelling expenses claimed from Malaysia External Trade Development Corporation
(MATRADE) for our participation in China-Asean Expo in FYE 2019.
(3)
Rental income derived from sub-let of office space to Mingkun, a related company. The rental arrangement was terminated by the end of April
2022.
(4)
Others mainly consist of management fee received from Mingkun, a related company, for accounting function as well as rebates from suppliers.
We ceased to provide accounting service to Mingkun by the end of December 2020.
(5)
Represents less than RM1,000.
Comparison between FYE 2019 and FYE 2020
Other income increased by RM0.14 million or 280.00% from RM0.05 million in FYE 2019 to RM0.19 million in FYE 2020. The increase was mainly due
to a one-off subsidy of RM0.17 million received from SOCSO via Wage Subsidy Program, which was the Government’s assistance to businesses as
part of its COVID-19 stimulus package.
The overall increase in other income was partially offset by the non-recurrence of one-off gain on disposal of a motor vehicle and government grant
received in FYE 2019 amounting to RM0.02 million and RM0.01 million respectively.
Comparison between FYE 2020 and FYE 2021
Other income decreased by RM0.10 million or 52.63% from RM0.19 million in FYE 2020 to RM0.09 million in FYE 2021. The decrease was mainly due
to the non-recurrence of the aforementioned wage subsidy received in FYE 2020 amounting to RM0.17 million.
The overall decrease in other income was partially offset by the unrealised gain on foreign exchange of RM0.03 million arising from translation
differences between the transaction date and the reporting date. In addition, we have a gain on disposal of a motor vehicle amounting to RM0.02 million
in FYE 2021.
Comparison between FPE 2021 and FPE 2022
Other income increased by RM0.62 million or 310.00% from RM0.20 million in FPE 2021 to RM0.82 million in FPE 2022 mainly due to the increase in
unrealised gain on foreign exchange by RM0.56 million arising from higher translation differences between the transaction date and the reporting date.
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12.
FINANCIAL INFORMATION (CONT’D)
12.3.5 Administrative expenses
FYE 2019
RM'000
%
Audited
FYE 2020
RM'000
%
FYE 2021
RM'000
%
Unaudited
FPE 2021
RM'000
%
Audited
FPE 2022
RM'000
%
Advertisement
Audit fee
Depreciation of property, plant and
equipment
Directors’ remunerations
Entertainment
Office expenses
Professional fees
Rental expenses(1)
Commission
Staff costs
Subscription fees(2)
Utilities
Travelling and accommodation
Upkeep expenses
Others(3)
92
25
199
1.62
0.44
3.49
38
33
408
0.67
0.58
7.17
32
61
673
0.29
0.55
6.05
9
28
335
0.20
0.62
7.42
17
29
336
0.27
0.45
5.26
635
145
36
75
8
1,256
2,394
82
113
300
123
211
11.15
2.55
0.63
1.32
0.14
22.06
42.04
1.44
1.98
5.27
2.16
3.71
292
116
44
65
6
1,882
2,309
54
107
102
74
160
5.13
2.04
0.77
1.14
0.11
33.08
40.58
0.95
1.88
1.79
1.30
2.81
406
85
49
90
5,218
3,862
130
84
45
99
290
3.65
0.76
0.44
0.81
46.91
34.72
1.17
0.75
0.40
0.89
2.61
149
40
26
13
2,314
1,335
45
35
15
48
120
3.30
0.89
0.58
0.29
51.28
29.59
1.00
0.78
0.33
1.06
2.66
590
93
14
56
2,860
1,993
35
39
52
61
217
9.23
1.45
0.22
0.88
44.74
31.18
0.55
0.61
0.81
0.95
3.40
Total
5,694
100.00
5,690
100.00
11,124
100.00
4,512
100.00
6,392
100.00
Notes:
(1)
Represents short-term leases and low value underlying assets under MFRS 16.
(2)
Subscription fees relating to subscription to various freight forwarders and logistics associations.
(3)
Others mainly include bank charges, insurance premiums, levy and license fees, printing and stationery, postage and courier and other
miscellaneous expenses, each representing not more than 1.00% of our administrative expenses for each respective year/period under review.
196
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12.
FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2019 and FYE 2020
Total administrative expenses remained relatively consistent at RM5.69 million for both FYE 2019 and FYE 2020.
Commission increased by RM0.62 million or 49.21% from RM1.26 million in FYE 2019 to RM1.88 million in FYE 2020, in line with the increase in GP
in FYE 2020. We offered commission to all employees who are able to bring in sales, as a form of motivation. We have adopted a tiered commission
structure for employees in international business development department. There is a monthly department target set, which is the aggregate of the
monthly target set for the respective individual employee in the department. The individual employee is entitled to a commission of 1.50% of their
monthly individual target set, computed based on the GP generated from customers under the individual employee’s portfolio, with the condition that
the monthly department target is met. For those individual employees who have exceeded the monthly individual target while the monthly department
target is met, they are entitled to an additional commission of 2.00% to 2.50% on the amount exceeding their individual target set. Employees in sales
and marketing department are entitled to commission computed based on 30% of GP generated from the customers under his/her portfolio after the
monthly individual target is met. All other employees are entitled to commission computed based on 30% of GP generated from the customers introduced
by them to our Group.
Depreciation of property, plant and equipment increased by RM0.21 million or 105.00% from RM0.20 million in FYE 2019 to RM0.41 million in FYE
2020. The increase was mainly due to addition in land and buildings, electrical installation and renovation carried out in our office, and purchase of
furniture and fittings and office equipment in FYE 2020. The addition in land and buildings was due to recognition of right-of-use assets for our rented
business premises.
However, the impact of the increase in commission and depreciation of property, plant and equipment on our administrative expenses was partially
offset by the following:
(i)
decrease in directors’ remunerations by RM0.34 million mainly due to non-recurrence of a one-off directors’ fee of RM0.35 million in FYE 2019.
The one-off directors’ fee was paid to Dato’ Roger Wong and Chow Enn Jie in recognition of their past contributions to our Group;
(ii)
decrease in travelling and accommodation expenses by RM0.20 million mainly due to travel restrictions as a result of the COVID-19 pandemic;
and
(iii)
decrease in staff costs by RM0.09 million mainly due to reduction in provision for bonus in view of COVID-19 pandemic.
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12.
FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2020 and FYE 2021
Administrative expenses increased by RM5.43 million or 95.43% from RM5.69 million in FYE 2020 to RM11.12 million in FYE 2021. The increase was
mainly due to the following:
(i)
increase in commission by RM3.34 million, which was in tandem with the increase in GP in FYE 2021;
(ii)
increase in staff costs by RM1.55 million mainly due to yearly salary increments, recruitment of 6 new employees for various departments such
as customer service as well as higher provision for bonus;
(iii)
increase in depreciation of property, plant and equipment by RM0.26 million mainly due to purchase of motor vehicles, office equipment,
computer and software in FYE 2021; and
(iv)
increase in directors’ remuneration by RM0.11 million mainly due to salary increment and provision of bonus for a director.
Comparison between FPE 2021 and FPE 2022
Administrative expenses increased by RM1.88 million or 41.69% from RM4.51 million in FPE 2021 to RM6.39 million in FPE 2022. The increase was
mainly due to the following:
(i)
increase in staff costs by RM0.66 million mainly due to yearly salary increments and recruitment of 13 new employees for various departments
such as customer service, warehousing and accounts and finance;
(ii)
increase in commission by RM0.54 million which was in tandem with the increase in GP in FPE 2022; and
(iii)
increase in directors’ remunerations by RM0.44 million mainly due to salary increment for directors and appointment of new directors upon
incorporation of KGW Medica.
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12.
FINANCIAL INFORMATION (CONT’D)
12.3.6 Other operating expenses
FYE 2019
RM'000
%
Audited
FYE 2020
RM'000
%
FYE 2021
RM'000
%
Unaudited
FPE 2021
RM'000
%
Audited
FPE 2022
RM'000
%
Bad debts written off
Loss on cybercrime
Loss on foreign exchange, net
- realised
- unrealised
Property, plant and equipment written off
-
-
4
119
0.82
24.24
61
-
6.55
-
45
-
16.67
-
7
-
10.61
-
120
85
-
58.54
41.46
-
214
154
-
43.58
31.36
-
870
-
93.45
-
225
-
83.33
-
59
(1)-
89.39
-
Total
205
100.00
491
100.00
931
100.00
270
100.00
66
100.00
Note:
(1)
Represents less than RM1,000.
Comparison between FYE 2019 and FYE 2020
Other operating expenses increased by RM0.28 million or 133.33% from RM0.21 million in FYE 2019 to RM0.49 million in FYE 2020. The increase was
mainly due to the following:
(i)
increase in realised and unrealised loss on foreign exchange by RM0.16 million, mainly arising from exchange differences between USD and
RM. Realised loss was due to exchange differences between the transaction dates and settlement dates while the unrealised loss was due to
translation differences between the transaction dates and reporting dates; and
(ii)
one-off loss on cybercrime of RM0.12 million due to trade payables payment made to 3 falsified bank accounts after receiving phishing emails
from cybercriminals who forged the emails of our 3 suppliers to inform on the change of their respective bank payment details within the period
from 4 December 2020 to 30 December 2020. We have since improved our accounts and finance department standard operating procedures
to prevent such further occurrence. All our suppliers are now required to furnish their bank details by completing our supplier application form.
Prior to payment processing, our accounts and finance department shall ensure bank details of suppliers are in accordance with the existing
records maintained. In the event of any request for change in the bank details from supplier, our accounts and finance department shall contact
the supplier’s finance department to verify the change and thereafter email to the supplier’s finance department to obtain written confirmation.
Such email confirmation must be received before payment processing. The latest bank details shall then be updated to our suppliers’ bank
details records.
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FINANCIAL INFORMATION (CONT’D)
Comparison between FYE 2020 and FYE 2021
Other operating expenses increased by RM0.44 million or 89.80% from RM0.49 million in FYE 2020 to RM0.93 million in FYE 2021. The increase was
mainly due to higher realised loss on foreign exchange by RM0.66 million, in tandem with the increase in our revenue denominated in USD in FYE
2021.
However, the aforesaid impact was partially offset by the absence of unrealised foreign exchange loss and one-off loss on cybercrime during the year
(FYE 2020: RM0.15 million and RM0.12 million respectively).
Comparison between FPE 2021 and FPE 2022
Other operating expenses decreased by RM0.20 million or 74.07% from RM0.27 million in FPE 2021 to RM0.07 million in FPE 2022. The decrease
was mainly due to lower realised loss on foreign exchange by RM0.17 million arising from lower exchange differences between the transaction dates
and settlement dates.
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12.
FINANCIAL INFORMATION (CONT’D)
12.3.7 Finance costs
FYE 2019
RM'000
Bank overdraft
Lease liabilities
Term loans
Total
%
Audited
FYE 2020
RM'000
%
FYE 2021
RM'000
%
Unaudited
FPE 2021
RM'000
%
Audited
FPE 2022
RM'000
%
5
45
95
3.45
31.03
65.52
7
40
82
5.43
31.01
63.56
29
59
89
16.39
33.33
50.28
19
29
47
20.00
30.53
49.47
1
30
41
1.39
41.67
56.94
145
100.00
129
100.00
177
100.00
95
100.00
72
100.00
Comparison between FYE 2019 and FYE 2020
Finance costs decreased by RM0.02 million or 13.33% from RM0.15 million in FYE 2019 to RM0.13 million in FYE 2020. The decrease was mainly due
to lower term loans interest by RM0.01 million as a result of the lower outstanding balance.
Comparison between FYE 2020 and FYE 2021
Finance costs increased by RM0.05 million or 38.46% from RM0.13 million in FYE 2020 to RM0.18 million in FYE 2021. The increase was mainly
attributable to the following:
(i)
increase in bank overdraft interest by RM0.02 million as higher overdraft facility was utilised to finance our working capital requirements;
(ii)
increase in lease liabilities interest by RM0.02 million arising from the rental lease agreements for our rented business premises and the
purchase of new motor vehicles in FYE 2021; and
(iii)
increase in term loan interest by RM0.01 million due to drawdown of 2 additional term loans for working capital purposes.
Comparison between FPE 2021 and FPE 2022
Finance costs decreased by RM0.03 million or 30.00% from RM0.10 million in FPE 2021 to RM0.07 million in FPE 2022. The decrease was mainly due
to lower bank overdraft interest by RM0.02 million as lower overdraft facility was utilised to finance our working capital requirements.
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12.
FINANCIAL INFORMATION
12.3.8 Income tax expenses
FYE 2019
RM’000
Audited
FYE 2020
RM’000
FYE 2021
RM’000
Unaudited
FPE 2021
RM’000
Audited
FPE 2022
RM’000
Income tax expenses
259
688
4,993
1,502
4,574
Effective tax rate (%)
Statutory tax rate (%)
42.60
24.00
24.02
24.00
24.06
24.00
24.33
24.00
24.03
24.00
Our Group’s effective tax rate for the FYE 2019 of 42.60% was higher than the statutory tax
rate of 24.00% mainly due to certain expenses incurred which were not deductible for tax
purposes such as depreciation for non-qualifying property, plant and equipment (motor vehicles
and renovation works), unrealised loss on foreign exchange and entertainment expenses.
Our Group’s effective tax rate for the FYE 2020, FYE 2021 and FPE 2022 of 24.02%, 24.06%
and 24.03% respectively were largely in line with the statutory tax rate of 24.00%.
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FINANCIAL INFORMATION (CONT’D)
12.3.9 PBT and PBT margin
FYE 2019
RM’000
Audited
FYE 2020
RM’000
FYE 2021
RM’000
Unaudited
FPE 2021
RM’000
Audited
FPE 2022
RM’000
PBT
PAT
608
349
2,864
2,176
20,751
15,758
6,173
4,671
19,032
14,458
PBT margin (%)
PAT margin (%)
1.40
0.80
4.51
3.43
10.62
8.06
9.08
6.87
12.27
9.32
Comparison between FYE 2019 and FYE 2020
PBT increased by RM2.25 million or 368.85% from RM0.61 million in FYE 2019 to RM2.86
million in FYE 2020, in line with the increase in GP by RM2.36 million.
PBT margin increased from 1.40% in FYE 2019 to 4.51% in FYE 2020 despite a decrease in
GP margin by 1.13% in FYE 2020. The increase in PBT margin was mainly due to our relatively
consistent administrative expenses in FYE 2020 as compared to FYE 2019, notwithstanding a
46.45% increase in revenue in FYE 2020.
Comparison between FYE 2020 and FYE 2021
PBT increased by RM17.89 million or 625.52% from RM2.86 million in FYE 2020 to RM20.75
million in FYE 2021, in line with the increase in GP by RM23.99 million.
PBT margin increased from 4.51% in FYE 2020 to 10.62% in FYE 2021 mainly due to higher
GP margin generated from our ocean freight segment in FYE 2021. In addition, the lower rate
of increase in our administrative expenses as compared to the increase in our revenue and GP
has also contributed to our improved PBT margin in FYE 2021.
Comparison between FPE 2021 and FPE 2022
PBT increased by RM12.86 million or 208.43% from RM6.17 million in FPE 2021 to RM19.03
million in FPE 2022, in line with the increase in GP by RM13.77 million.
PBT margin increased from 9.08% in FPE 2021 to 12.27% in FPE 2022 mainly due to higher
GP margin generated from our ocean freight segment in FPE 2022. In addition, higher other
income coupled with lower rate of increase in our administrative expenses as compared to the
rate of increase in our revenue and GP has also contributed to the improved PBT margin in
FPE 2022.
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12.
FINANCIAL INFORMATION (CONT’D)
12.4
REVIEW OF FINANCIAL POSITION
12.4.1 Assets
Audited
c
As at 30 June
As at 31 December
2022
2019
2020
2021
RM’000
RM’000
RM’000
RM’000
Non-current assets
Property, plant and equipment
Deferred tax assets
Current assets
Inventories
Trade receivables
Other receivables, deposits and
prepayments
Contract costs
Amount owing by related parties
Tax recoverable
Fixed deposits with financial
institutions
Cash and bank balances
Total assets
1,045
7
1,052
1,497
1,497
1,762
55
1,817
1,948
913
2,861
5,162
8,147
37
20,813
143
50
56
15
19,832
1,017
1,125
12
1,934
28
5
6,616
6
-
307
357
915
2,762
9,511
10,563
2,083
12,604
14,101
19,006
47,449
49,266
4,609
442
31,609
57,524
60,385
Comparison between 31 December 2019 and 31 December 2020
Our Group’s total assets increased by RM3.54 million or 33.52% from RM10.56 million as at
31 December 2019 to RM14.10 million as at 31 December 2020. This was mainly due to the
increase in current assets by RM3.09 million. The increase in current assets was mainly due to
increase in trade receivables by RM2.99 million which was in tandem with the increase in our
Group’s revenue.
Comparison between 31 December 2020 and 31 December 2021
Our Group’s total assets increased by RM35.17 million or 249.43% from RM14.10 million as at
31 December 2020 to RM49.27 million as at 31 December 2021. This was mainly due to the
increase in current assets by RM34.85 million.
The increase in current assets was mainly due to:
(i)
increase in cash and bank balances by RM16.92 million and trade receivables by
RM12.67 million, in line with further growth in our Group’s revenue; and
(ii)
increase in contract costs by RM4.68 million due to higher ocean freight charges paid
in advance to ocean carriers as at 31 December 2021, pending amortisation over the
course of the relevant customers’ shipments, on a percentage of completion basis
derived from time lapse between days travelled from the port of loading to the port of
discharge.
Comparison between 31 December 2021 and 30 June 2022
Our Group’s total assets increased by RM11.12 million or 22.57% from RM49.27 million as at
31 December 2021 to RM60.39 million as at 30 June 2022. This was mainly due to the increase
in current and non-current assets by RM10.08 million and RM1.04 million respectively.
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FINANCIAL INFORMATION (CONT’D)
The increase in current assets was mainly due to:
(i)
increase in cash and bank balances by RM12.60 million, in line with the growth of our
Group’s revenue; and
(ii)
increase in other receivables, deposits and prepayments by RM0.96 million mainly due
to payment of 2% earnest deposit for the purchase of the Target Property and
prepayment of professional fees in relation to our IPO exercise.
However, the increase in current assets was partially offset by the decrease in contract costs
by RM2.01 million mainly due to lower ocean freight charges paid in advance to ocean carriers
as at 30 June 2022, pending amortisation over the course of the relevant customers’ shipments,
on a percentage of completion basis derived from time lapse between days travelled from the
port of loading to the port of discharge.
The increase in non-current assets was mainly due to the increase in deferred tax assets by
RM0.86 million as a result of deferred tax assets recognised for contract liabilities and contract
costs.
12.4.2 Liabilities
Audited
As at 30 June
As at 31 December
2022
2019
2020
2021
RM’000
RM’000
RM’000
RM’000
Non-current liabilities
Bank borrowings
Lease liabilities
Deferred tax liabilities
Current liabilities
Trade payables
Other payables and accruals
Contract liabilities
Amount owing to Directors
Bank borrowings
Lease liabilities
Income tax payable
Total liabilities
659
640
1,299
596
730
10
1,336
1,214
745
1,959
763
791
1,554
2,530
2,158
1,674
959
178
213
94
7,806
9,105
3,453
1,451
2,176
186
1,090
331
444
9,131
10,467
13,177
11,880
7,011
1
356
382
2,703
35,510
37,469
10,667
6,097
9,319
215
443
5,537
32,278
33,832
Comparison between 31 December 2019 and 31 December 2020
Our Group’s total liabilities increased by RM1.36 million or 14.93% from RM9.11 million as at
31 December 2019 to RM10.47 million as at 31 December 2020. This was mainly due to the
increase in current liabilities by RM1.33 million.
The increase in current liabilities was mainly due to:
(i)
increase in trade payables by RM0.92 million which was in tandem with the increase in
our Group’s cost of sales; and
(ii)
increase in bank borrowings by RM0.91 million mainly due to utilisation of bank
overdraft facility to finance our Group’s working capital requirements.
However, the overall increase in current liabilities was partially offset by the decrease in amount
owing to directors by RM0.77 million, resulting from repayment for advances from director.
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FINANCIAL INFORMATION (CONT’D)
Comparison between 31 December 2020 and 31 December 2021
Our Group’s total liabilities increased by RM27.00 million or 257.88% from RM10.47 million as
at 31 December 2020 to RM37.47 million as at 31 December 2021. This was mainly due to the
increase in current liabilities by RM26.38 million.
The increase in current liabilities was mainly due to:
(i)
increase in other payables and accruals by RM10.43 million mainly due to dividend
payable of RM6.00 million and accruals for commission of RM4.19 million;
(ii)
increase in trade payables by RM9.72 million which was in tandem with further increase
in our Group’s cost of sales;
(iii)
increase in contract liabilities by RM4.84 million due to timing differences with higher
billings issued to our customers compared to the revenue recognised based on the
percentage of completion method. The percentage of completion was determined
based on the number of days travelled as at year end over the total travel days from
the port of loading to the port of discharge; and
(iv)
increase in income tax payable by RM2.26 million.
However, the overall increase in current liabilities was partially offset by the decrease in bank
borrowings under current liabilities by RM0.73 million mainly due to repayment of overdraft
facility. In addition, amount owing to directors further reduced by RM0.18 million, resulting from
repayments to directors during FYE 2021.
Comparison between 31 December 2021 and 30 June 2022
Our Group’s total liabilities decreased by RM3.64 million or 9.71% from RM37.47 million as at
31 December 2021 to RM33.83 million as at 30 June 2022. This was mainly due to the decrease
in current liabilities by RM3.23 million.
The decrease in current liabilities was mainly due to:
(i)
decrease in other payables and accruals by RM5.78 million mainly due to the accrued
dividend of RM6.00 million that was paid in FPE 2022; and
(ii)
decrease in trade payables by RM2.51 million mainly due to prompt payment to
suppliers.
However, the overall decrease in current liabilities was partially offset by the following:
(i)
increase in income tax payable by RM2.83 million; and
(ii)
increase in contract liabilities by RM2.31 million due to the timing differences with
higher billings issued to clients compared to the revenue recognised based on stage of
completion method. The stage of completion was determined based on the number of
days travelled as at year/period end over the total travel days from the port of loading
to the port of discharge.
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12.
FINANCIAL INFORMATION (CONT’D)
12.5
SIGNIFICANT FACTORS AFFECTING OUR GROUP’S OPERATIONS AND FINANCIAL
PERFORMANCE
Our Group’s business operations and financial performance have been and will continue to be
affected by internal and external factors including, but not limited to, the following:
(i)
Fluctuation in ocean freight rates
As our revenue is mainly derived from our ocean freight services for international shipments,
our business operations and financial performance are subject to the fluctuation in ocean freight
rates. Ocean freight charges accounted for approximately 72.32%, 75.55%, 89.47% and 92.82%
of our Group’s total cost of sales for FYE 2019, FYE 2020, FYE 2021 and FPE 2022,
respectively. Fluctuation of ocean freight rates is an inherent risk of the logistics industry,
particularly those with major operations in ocean freight services like our Group. Since mid2022 up to the LPD, ocean freight rates have been volatile and on decreasing trend. We expect
the ocean freight rates to remain volatile in the future. There can be no assurance that our
business operations and financial performance will not be adversely affected by the continued
volatility and fluctuation in ocean freight rates.
(ii)
Dependency on our business partners such as foreign freight forwarders and other
service providers
Our business is dependent on our relationship with our suppliers including ocean carriers,
licensed customs agents and other freight forwarders to enable us to arrange and coordinate
shipments for our customers’ cargo. A secure and efficient shipment of our customers’ cargo
to meet their delivery requirements is therefore dependent on the timely performance and
quality of the respective services provided by our suppliers. As such, we may be affected by
non-performance, late performance or poor performance by our suppliers. Poor quality services
of our suppliers or any interruption of services provided by our suppliers may have an adverse
impact on our business operations and financial performance.
(iii)
Competition in the industry
We operate in a highly fragmented and competitive industry in Malaysia. We directly and
indirectly compete with other logistics service providers on a local, regional and international
basis in the form of pricing, range of services provided, and network of customers and suppliers.
We also face competition from certain ocean carriers which have set up business divisions to
offer similar logistics services that we provide. Intense competition from other logistics service
providers within the market may reduce the growth in our customer base and adversely affect
our market share. If we are unable to remain competitive and build on our competitive strengths
going forward, our business operations and financial performance could be adversely affected.
(iv)
Fluctuation in foreign exchange rates
Our Group’s revenue is mainly derived from our ocean freight services for international
shipments. Quotes from our suppliers for ocean cargo space are usually in USD and some of
our customers pay us in USD. Our Group’s revenue denominated in USD was approximately
22.95%, 23.11%, 46.90% and 61.06% of our total revenue for the FYE 2019, FYE 2020, FYE
2021 and FPE 2022 respectively. Our Group’s purchases made in USD was approximately
8.06%, 6.64%, 24.07% and 58.72% of our total cost of sales for the FYE 2019, FYE 2020, FYE
2021 and FPE 2022 respectively.
Presently, we do not enter into hedging transactions to manage our exposures to currency risk
for receivables and payables which are denominated in foreign currencies. As such, there is no
assurance that any significant fluctuation in foreign currency exchange rate will not have a
material and adverse impact on our overall financial performance.
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12.
FINANCIAL INFORMATION (CONT’D)
(v)
Political, economic and regulatory risks in Malaysia and the markets we serve
As our Group’s revenue is mainly derived from our ocean freight services for international
shipments, our business operations and financial performance are subject to political, economic
and regulatory conditions in those countries for our customers’ shipments. Adverse changes in
the aforementioned conditions such as changes in political leadership, risk of war, changes in
government policies regarding taxation, import duties, and tariffs, methods of taxation, and
changes in economic conditions could affect the demand for our customers’ products and may
lead to a decline in the demand for our logistics services. This may in turn lead to an adverse
effect on our business operations and financial performance.
12.6
LIQUIDITY AND CAPITAL RESOURCES
(i)
Working capital
Our business operations have been financed through a combination of internal and external
sources of funds. Internal sources comprise shareholders’ equity and cash generated from
business operations while external sources are credits granted by our suppliers and banking
facilities from financial institutions such as term loans, finance leases and bank overdrafts. The
principal utilisation of these funds are for our business operations and growth.
Based on our audited combined statement of financial position as at 30 June 2022, our Group
has cash and cash equivalents (excluding bank overdraft and fixed deposits pledged with
financial institutions) of RM31.54 million. The cash and cash equivalents shall be mainly utilised
as working capital for our daily operations and to fund our expansion in headcount to scale up
operations, purchase of equipment to enhance our warehousing and distribution capabilities at
the Target Property as well as to fund the start-up cost for the e-commerce solutions business.
As at 30 June 2022, our Group’s gearing ratio was 0.06 times and our current ratio was 1.78
times. As at the LPD, we have unutilised bank overdraft of RM1.00 million that may be utilised
by us to fund our operations.
After taking into consideration our cash and cash equivalents, the expected cash flow to be
generated from our operations, the amount that is available under our existing banking facilities,
as well as proceeds expected to be raised from our Public Issue, our Board is of the view that
we will have adequate working capital to meet our present and foreseeable requirements for at
least 12 months from the date of this Prospectus.
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FINANCIAL INFORMATION (CONT’D)
(ii)
Cash flows
The table below sets forth a summary of our Group’s combined statements of cash flows for
the Period Under Review. This should be read in conjunction with the Accountants’ Report as
set out in Section 13 of this Prospectus.
FYE 2019
RM’000
Net cash from operating activities
Net cash used in investing
activities
Net cash from / (used in) financing
activities
Net increase / (decrease) in cash
and cash equivalents
Note:
(1)
FPE 2022
RM’000
966
(121)
226
(495)
20,322
(438)
18,029
(116)
734
(1,177)
(1,595)
(6,673)
1,579
(1,446)
18,289
11,240
(108)
(129)
30
793
1,291
2,762
1,187
19,506
2,762
1,187
19,506
31,539
Effect of exchange rate changes
Cash and cash equivalents at the
beginning of the financial year /
period
Cash and cash equivalents at
the end of the financial year /
period(1)
Audited
FYE 2020
FYE 2021
RM’000
RM’000
The components of cash and cash equivalents are set out below:
FYE 2019
RM’000
Cash and bank balances
Fixed
deposits
with
financial institutions
Less: Bank overdrafts
Less:
Fixed
deposits
pledged
for
bank
borrowings
Audited
FYE 2020
FYE 2021
RM’000
RM’000
FPE 2022
RM’000
2,762
2,083
19,006
31,609
307
3,069
-
357
2,440
(896)
915
19,921
-
442
32,051
(70)
(307)
2,762
(357)
1,187
(415)
19,506
(442)
31,539
FYE 2019
Net cash from operating activities
Our Group recorded net cash from operating activities of RM0.96 million in FYE 2019. Our
collections of RM44.59 million was mostly offset by our payments of RM43.63 million. Such
payments were mainly for:
(i)
payment to trade suppliers of RM39.95 million;
(ii)
staff cost and directors’ remunerations of RM3.47 million, including salaries, bonus,
commission, allowances and statutory contributions; and
(iii)
tax payment of RM0.21 million.
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12.
FINANCIAL INFORMATION (CONT’D)
Net cash used in investing activities
Our Group’s net cash used in investing activities amounted to RM0.12 million in FYE 2019.
This was mainly due to the payment made for electrical installation and renovation in our offices,
purchase of computer and software, furniture and fittings and office equipment amounting to a
total of RM0.14 million.
The net cash used in investing activities was partially offset by proceeds from disposal of a
motor vehicle of RM0.02 million.
Net cash from financing activities
Our Group’s net cash from financing activities amounted to RM0.73 million in FYE 2019. This
was mainly due to the following:
(i)
proceeds from issuance of share capital of RM0.75 million;
(ii)
net advances from director of RM0.60 million for working capital; and
(iii)
interest received of RM0.01 million.
Net cash from financing activities was partially offset by repayment of lease liabilities of RM0.20
million, repayment of term loan of RM0.16 million, interest paid of RM0.14 million and net
placement of fixed deposits pledged with financial institutions of RM0.13 million.
FYE 2020
Net cash from operating activities
Our Group recorded net cash from operating activities of RM0.23 million in FYE 2020. Our
collections of RM62.86 million was mostly offset by our payments of RM62.63 million. Such
payments were mainly for:
(i)
payment to trade suppliers of RM58.79 million;
(ii)
staff cost and directors’ remunerations of RM3.52 million, including salaries, bonus,
commission, allowances and statutory contributions; and
(iii)
tax payment of RM0.31 million; and
(iv)
interest paid of RM0.01 million.
We recorded lower net cash from operating activities for FYE 2020 despite higher revenue
generated. This was mainly due to higher sales transactions closer to the end of FYE 2020
where payment has yet to be collected from customers as at 31 December 2020. As a result,
trade receivables increased by RM2.99 million as at 31 December 2020 as compared to 31
December 2019. In addition, the lower net cash from operating activities was also due to prompt
payment made to our suppliers which resulted in the overall improvement of our trade payables
turnover period from 26 days in FYE 2019 to 20 days in FYE 2020.
Net cash used in investing activities
Our Group’s net cash used in investing activities amounted to RM0.50 million in FYE 2020.
This was mainly due to the payment made for further electrical installation and renovation in
our offices, purchase of furniture and fittings, office equipment and computer and software
amounting to a total of RM0.47 million. In addition, our Group has given advances to related
parties by making payment on behalf for certain administrative expenses amounting to RM0.03
million.
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12.
FINANCIAL INFORMATION (CONT’D)
Net cash used in financing activities
Our Group’s net cash used in financing activities amounted to RM1.18 million in FYE 2020.
This was due to the following:
(i)
net repayment to director of RM0.77 million;
(ii)
repayment of lease liabilities of RM0.19 million;
(iii)
interest paid of RM0.12 million;
(iv)
placement of fixed deposits pledged with financial institutions of RM0.05 million; and
(v)
net repayment of term loan of RM0.05 million.
FYE 2021
Net cash from operating activities
Our Group recorded net cash from operating activities of RM20.32 million in FYE 2021. Our
collections of RM189.64 million was partially offset by our payments of RM169.32 million. Such
payments were mainly for:
(i)
payment to trade suppliers of RM161.18 million;
(ii)
staff cost and directors’ remunerations of RM5.29 million, including salaries, bonus,
commission, allowances and statutory contributions;
(iii)
tax payment of RM2.82 million; and
(iv)
interest paid of RM0.03 million.
We recorded significantly higher net cash from operating activities in FYE 2021, mainly due to
the substantial increase in our total revenue by RM131.89 million or 207.62% compared to FYE
2020. The overall improvement in our operating cash flow was also contributed by better
collection from customers where our trade receivables turnover period has improved from 38
days in FYE 2020 to 27 days in FYE 2021.
Net cash used in investing activities
Our Group’s net cash used in investing activities amounted to RM0.44 million in FYE 2021.
This was mainly due to the purchase of motor vehicles, office equipment, computer and
software, electrical installation and renovation, furniture and fittings and signboard amounting
to a total of RM0.48 million.
The net cash used in investing activities was partially offset by repayment from related parties
of RM0.02 million and proceeds from disposal of a motor vehicle of RM0.02 million.
Net cash used in financing activities
Our Group’s net cash used in financing activities amounted to RM1.60 million in FYE 2021.
This was mainly due to the following:
(i)
dividend paid of RM1.60 million;
(ii)
repayment of lease liabilities of RM0.39 million;
(iii)
net repayment to directors of RM0.18 million;
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FINANCIAL INFORMATION (CONT’D)
(iv)
interest paid of RM0.15 million; and
(v)
placement of fixed deposits pledged with financial institutions of RM0.06 million.
The net cash used in financing activities was partially offset by net drawdown of term loan of
RM0.78 million.
FPE 2022
Net cash from operating activities
Our Group recorded net cash from operating activities of RM18.03 million in FPE 2022. Our
collections of RM165.46 million was mostly offset by our payments of RM147.43 million. Such
payments were mainly for:
(i)
payment to trade suppliers of RM142.25 million;
(ii)
staff cost and directors’ remunerations of RM2.58 million, including salaries, bonus,
commission, allowances and statutory contributions; and
(iii)
tax payment of RM2.60 million.
Net cash used in investing activities
Our Group’s net cash used in investing activities amounted to RM0.11 million in FPE 2022.
This was mainly due to the payment made for renovation in our offices, purchase of computer
and software, furniture and fittings, motor vehicles and office equipment amounting to a total of
RM0.21 million.
The net cash used in investing activities was partially offset by the proceeds from disposal of a
motor vehicle of RM0.09 million and repayment from related parties of RM0.01 million.
Net cash used in financing activities
Our Group’s net cash used in financing activities amounted to RM6.67 million in FPE 2022.
This was mainly due to the following:
(i)
dividend paid of RM6.00 million;
(ii)
repayment of term loans of RM0.66 million,
(iii)
repayment of lease liabilities of RM0.21 million;
(iv)
interest paid of RM0.07 million; and
(v)
placement of fixed deposits pledged with financial institutions of RM0.03 million.
The net cash used in financing activities was partially offset by the proceeds from issuance of
share capital of RM0.30 million.
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12.
FINANCIAL INFORMATION (CONT’D)
(iii)
Borrowings
As at 30 June 2022, our Group’s total outstanding borrowings (excluding lease liabilities in
relation to rental lease arrangement) stood at RM1.66 million, all of which were interest-bearing
and denominated in RM. Details of our borrowings are set out below:
As at 30 June 2022
Payable
Payable
within 12
after 12
months
months
RM’000
RM’000
Type of facility
Total
RM’000
Bank overdraft
Term loans
Lease liabilities
70
145
205
763
481
70
908
686
Total
Gearing (times)(1)
420
1,244
1,664
0.06
Note:
(1)
Calculated based on total outstanding borrowings (excluding lease liabilities in relation
to rental lease arrangement of RM0.55 million) divided by total shareholders’ equity of
RM26.55 million.
The details of the types of credit facilities that our Group uses and its utilised balances as at
LPD are as follows:
Types of
credit
facilities
Tenure
Purpose
Term loan 1
Term loan 2
Bank overdraft
Lease liabilities
78 months
78 months
On demand
60 months
Working capital
Working capital
Working capital
Purchase of
motor vehicles
Range of
effective
interest rates
per annum
(%)
Facilities
limit
Balance
outstanding
as at LPD
RM’000
RM’000
(1)3.50
(3)500
(1)3.50
(3)500
430
432
629
(2)10.00
(1)3.87-
5.59
Total
1,000
(3)1,156
1,491
Notes:
(1)
Based on fixed rate.
(2)
Based on 4.00% above base financing rate per annum.
(3)
Fully drawn down.
All our Group’s borrowings are interest bearing and our Group has not defaulted on payment
of principal sums and/or interest in respect of any borrowings for the Period Under Review and
up to the LPD. We do not encounter any seasonality in our borrowing requirements.
As part of the terms of the banking and leasing facilities extended to our Group, Dato’ Roger
Wong has individually, and together with Chow Enn Jie (our Sales and Marketing Director) have
jointly and severally, provided personal guarantees to 4 financial institutions extending these
facilities.
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12.
FINANCIAL INFORMATION (CONT’D)
In conjunction with our Listing, we have applied to the financiers to obtain a release and/or
discharge of the personal guarantees by Dato’ Roger Wong and Chow Enn Jie by substituting
the same with a corporate guarantee from our Company and/or other securities from our Group
acceptable to the financiers. Until such release and/or discharge are obtained from the
respective financiers, these personal guarantees will continue to be in place to guarantee the
banking facilities extended to our Group. Please refer to Section 10.1.1(b) of this Prospectus
for further information.
As at the LPD, our Group has not breached any terms and conditions, or covenants associated
with credit arrangement or bank loan which can materially affect our financial position and
results of business operations or investment holders of their securities.
As at the LPD, save as disclosed above, our Group did not use any other financial instruments
or enter into any hedging arrangement of any type with any financial institution which may affect
our business operations.
(iv)
Treasury policies and objectives
Our operations have been predominantly funded by shareholders’ equity, internally generated
funds from our operations and external funds including borrowings from various financial
institutions as well as credit terms granted by our suppliers.
Our credit facilities as at the LPD are disclosed in the previous section above.
As at the LPD, we have unutilised bank overdraft of RM1.00 million that may be utilised by us
to fund our operations.
Our Group manages our exposure to interest rate movements by obtaining the most favourable
interest rates available and by maintaining a balanced portfolio mix of fixed and floating rate
borrowings.
(v)
Financial instruments for hedging purposes
During the Period Under Review and up to the LPD, our Group has not used any financial
instruments for hedging purposes.
(vi)
Contingent liabilities
As at the LPD, we do not have any contingent liabilities which will or may substantially affect
our financial results or position upon becoming enforceable.
(vii)
Material litigation, claims or arbitration
As at the LPD, neither our Company nor our Subsidiaries are involved in any legal action,
proceeding, prosecution or arbitration, either as plaintiff or defendant, which may have a
material adverse effect on our business operations or financial position, and our Directors are
not aware of any legal proceeding, pending or threatened, or of any fact that may give rise to
any legal proceeding which may have a material adverse effect on our business operations or
financial position.
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12.
FINANCIAL INFORMATION (CONT’D)
(viii)
Capital expenditure and divestiture
Capital expenditure
Our Group’s capital expenditure for the Period Under Review and up to LPD are as follows:
At cost
Audited
FYE 2019
RM’000
FYE 2020
RM’000
FYE 2021
RM’000
FPE 2022
RM’000
Unaudited
From 1 July
2022 up to LPD
RM’000
Land and buildings
Computer
and
software
Furniture and fittings
Motor vehicles
Office equipment
Electrical installation
and renovation
Signboard
168
26
393
46
51
57
29
6
25
19
69
73
59
289
10
760
65
45
23
381
7
30
459
3
-
-
-
8
-
-
Total
307
860
939
527
468
FYE 2019
Our Group’s capital expenditure of RM0.31 million in FYE 2019 was primarily attributable to
right-of-use assets amounting to RM0.17 million arising from the adoption of MFRS 16 ‘Leases’.
The said right-of-use assets were our Group’s rented office premises.
During FYE 2019, our Group’s capital expenditure also consisted of RM0.07 million attributable
to the electrical installation and renovation, RM0.03 million for the purchase of computer and
software, RM0.02 million for the purchase of furniture and fittings and RM0.02 million for the
purchase of office equipment, all used in our offices.
FYE 2020
Our Group’s capital expenditure of RM0.86 million in FYE 2020 was primarily attributable to
right-of-use assets (our Group’s newly rented office premises) amounting to RM0.39 million. In
addition, our Group’s capital expenditure for the FYE 2020 also comprised RM0.29 million for
electrical installation and renovation, RM0.07 million for the purchase of furniture and fittings,
RM0.06 million for the purchase of office equipment and RM0.05 million for the purchase of
computer and software, all used in our offices.
FYE 2021
Our Group’s capital expenditure of RM0.94 million in FYE 2021 was primarily attributable to
right-of-use assets (motor vehicles) amounting to RM0.76 million. These motor vehicles were
purchased for the use by management. In addition, our Group’s capital expenditure for the FYE
2021 also comprised RM0.07 million for the purchase of office equipment, RM0.05 million for
the purchase of computer and software, RM0.04 million for the electrical installation and
renovation, RM0.01 million for the purchase of furniture and fittings, and the remaining of
RM0.01 million for the purchase of signboard, all for our offices.
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12.
FINANCIAL INFORMATION (CONT’D)
FPE 2022
Our Group’s capital expenditure of RM0.53 million in FPE 2022 was primarily attributable to
right-of-use assets (motor vehicles and newly rented office premise) amounting to RM0.38
million and RM0.06 million respectively. In addition, our Group’s capital expenditure also
included RM0.03 million for the purchase of computer and software, RM0.03 million for the
electrical installation and renovation, RM0.02 million for the purchase of furniture and fittings
and the remaining RM0.01 million for the purchase of office equipment, all for our offices.
1 July 2022 up to LPD
Our Group’s capital expenditure of RM0.47 million for the financial period from 1 July 2022 up
to the LPD was primarily attributable to right-of-use assets (motor vehicle) amounting to RM0.46
million, and RM0.01 million for the purchase of computer and software and office equipment.
Capital divestiture
Our Group’s capital divestiture for the Period Under Review and up to LPD are as follows:
At NBV
Audited
Computer
and
software
Furniture and fittings
Motor vehicles
Office equipment
Electrical installation
and renovation
FYE 2019
RM’000
FYE 2020
RM’000
FYE 2021
RM’000
FPE 2022
RM’000
Unaudited
From 1 July
2022 up to LPD
RM’000
-
-
-
(4)-
-
-
-
(1),(2)-
(1)
Total
-
-
-
(1),(4)-
-
(3)1
(5)-
(1),(7)-
-
(4)-
-
1
(6)
(4)-
-
(1)-
Notes:
(1)
Represents zero NBV.
(2)
This relates to the disposal of 1 unit of motor vehicle for RM0.02 million to a related
party with a gain on disposal of RM0.02 million.
(3)
This relates to the disposal of 1 unit of motor vehicle for RM0.02 million to a third party
with a gain on disposal of RM0.02 million.
(4)
Represents write-offs of property, plant and equipment that were no longer in use.
(5)
This relates to the disposal of 1 unit of motor vehicle for RM0.09 million to a third party
with a gain on disposal of RM0.09 million.
(6)
Represents NBV of less than RM1,000.
(7)
This relates to the disposal of 1 unit of motor vehicle for RM0.18 million to a third party
with a gain on disposal of RM0.18 million.
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12.
FINANCIAL INFORMATION (CONT’D)
(ix)
Material capital commitment
Our Group’s material capital commitment as at the LPD is as follows:
As at LPD
RM’000
(1)18,180
Purchase of the Target Property
Total
Note:
(1)
18,180
Represents the remaining balance purchase consideration for the purchase of the
Target Property as set out in Section 4.8.1 of this Prospectus.
Save as disclosed above, there are no other material capital commitment incurred or known to
be incurred by our Group.
(x)
Key financial ratios
The table below sets forth the key financial ratios based on our Group’s combined financial
statements for the Period Under Review:
FYE 2019
Trade receivables turnover period
(days)(1)
Trade payables turnover period
(days)(2)
Inventory turnover period (days)(3)
Current ratio (times)(4)
Gearing ratio (times)(5)
Audited
FYE 2020
FYE 2021
FPE 2022
41
38
27
24
26
20
19
17
1.22
0.79
1.38
0.53
1.34
0.18
1.78
0.06
Notes:
(1)
Computed based on average of the opening and closing trade receivables over total
revenue for the year/ period and multiplied by 365 days for each financial year and 181
days for FPE 2022.
(2)
Computed based on average of the opening and closing trade payables over total cost
of sales for the year/ period and multiplied by 365 days for each financial year and 181
days for FPE 2022.
(3)
Inventory comprises healthcare-related products. The amount of inventory is minimal
and amounted to nil, nil, RM0.04 million and RM0.02 million for the FYE 2019, FYE
2020, FYE 2021 and FPE 2022 respectively. As such, the computation on average
inventory turnover period is not meaningful.
(4)
Computed based on current assets over current liabilities as at each financial year/
period end.
(5)
Computed based on total borrowings and lease liabilities (excluding lease liabilities in
relation to rental lease arrangement) over total shareholders’ equity as at each financial
year/ period end.
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12.
FINANCIAL INFORMATION (CONT’D)
(a)
Trade receivables turnover
The table below sets forth a summary of our Group’s trade receivables for the Period Under
Review:
FYE 2019
RM’000
Average trade receivables(1)
Revenue(3)
Trade receivables turnover period
(days)(2)
Audited
FYE 2020
FYE 2021
RM’000
RM’000
FPE 2022
RM’000
4,919
43,379
6,655
63,525
14,480
195,419
20,323
155,102
41
38
27
24
Notes:
(1)
The average trade receivables is calculated by dividing the summation of the trade
receivables at the beginning of the financial year/ period and the trade receivables at
the end of the financial year/ period by two.
(2)
Computed based on the average trade receivables over total revenue for the year/
period and multiplied by 365 days for each financial year and 181 days for FPE 2022.
(3)
Breakdown of our Group’s revenue by cash sales and credit sales are as follows:
Cash sales(1)
Credit sales
Total revenue
FYE 2019
RM’000
14,312
29,067
43,379
FYE 2020
RM’000
21,901
41,624
63,525
FYE 2021
RM’000
(2)95,296
100,123
195,419
FPE 2022
RM’000
(2)68,907
86,195
155,102
Notes:
(1)
Referring to customers on cash term (logistics services) and customers on
cash sales (trading of COVID-19 antigen self-test kits). Nevertheless, payment
from logistics services customers may not be collected on the same day the
invoice was issued, but will be collected before the bill of lading is issued to
customers, usually within 1 week from the invoice date.
(2)
Cash sales from trading of COVID-19 antigen self-test kits are minimal at less
than 1.00% of the total cash sales of our Group in the respective financial year
/ period.
All our Group’s trade receivables are classified as current assets. We offer cash term or up to
45 days credit terms for our logistics services customers and cash term or up to 30 days credit
terms for our warehousing and distribution of healthcare-related products and devices
customers. Credit terms are assessed and approved on a case-by-case basis after taking into
consideration, amongst others, the background and credit-worthiness of the customer, payment
history of the customer as well as our relationship with the customer.
Our trade receivables turnover period has improved from 41 days to 38 days and subsequently
to 27 days and 24 days in FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively. The
improvement in our trade receivables turnover period was primarily due to improvement in
collections from our customers during the Period Under Review.
Our Group has put in efforts to continuously improve our collection processes and procedures
through close monitoring and follow up actions with trade debtors so as to reduce the risk of
default. In addition, our Group consistently reviews our exposure to credit risk and we put in
place stringent credit control policy.
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12.
FINANCIAL INFORMATION (CONT’D)
We provide credit terms only to recognised and credit worthy customers and we deal with the
rest of the customers on cash term basis. New customers for our logistics services are on cash
term basis by default. Certain new customers for our warehousing and distribution of
healthcare-related products and devices and the recurring customers for all our services are
allowed to apply for credit term from us, subject to approval. Upon application for credit term, a
customer is required to fill up our credit application form and authorise us to carry out CTOS
search. We shall assess the creditworthiness of the relevant customer mainly based on the
CTOS SME Score and credit term shall only be given to customer with a scoring of ‘Good’ or
above.
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Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
The ageing analysis of our Group’s trade receivable as at 30 June 2022 is as follows:
Within
credit
period(1)
Exceed credit period(2)
(past due days)
1 - 30
31 - 60
More
61 - 90 91 - 120 than 120
Total
Net trade receivables
as at 30 June 2022
(RM’000)
Proportion of total trade
receivables (%)
10,035
6,872
2,146
337
394
48
19,832
50.60
34.65
10.82
1.70
1.99
0.24
100.00
Subsequent collections
as at LPD (RM’000)
9,670
6,867
2,146
337
394
48
19,462
Net trade receivables
after
subsequent
collections (RM’000)
Proportion of trade
receivables
after
subsequent collections
as at LPD (%)
365
5
-
-
-
-
370
98.65
1.35
-
-
-
-
100.00
Notes:
(1)
Represents cash on delivery (“COD”) invoices issued on 30 June 2022 and invoices
with credit term of up to 45 days which were not past due as at 30 June 2022.
(2)
Following note (1) above, this includes COD invoices where payment was not collected
on the same day the invoices were issued.
Our Group’s total trade receivables past due as at 30 June 2022 is RM9.80 million, representing
49.40% of total trade receivables. Subsequent to 30 June 2022 and up to LPD, we collected
RM19.46 million, representing 98.13% of the total trade receivables as at 30 June 2022.
We have not encountered any major disputes with our trade receivables. With respect to our
overdue trade receivables, we have generally been able to collect payment eventually as
evidenced by our subsequent collections of past due trade receivables after 30 June 2022. Our
management is of the view that these overdue trade receivables are recoverable and we will
closely monitor the recoverability of the overdue trade receivables on a regular and on-going
basis.
Generally, we will assess the adequacy of impairment loss allowance on the overall trade
receivables balance at every reporting period and the need for bad debts write off based on our
historical collection experience. Our impairment on trade receivables and bad debts written off
for the Period Under Review are as follows:
FYE 2019
RM’000
Impairment losses/ (reversal of
impairment) on trade receivables
Bad debts written off
220
Audited
FYE 2020
FYE 2021
RM’000
RM’000
FPE 2022
RM’000
39
30
103
(63)
-
4
61
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Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
The impairment losses on trade receivables for the Period Under Review consists of specific
allowance and lifetime expected credit loss allowance. The impairment loss of RM0.04 million
in FYE 2019 and RM0.03 million in FYE 2020 was mainly in relation to specific allowance for
several customers. The impairment loss of RM0.10 million in FYE 2021 was mainly in relation
to specific allowance of RM0.02 million for a customer and lifetime expected credit loss
allowance of RM0.08 million from all trade receivables, considering the probability of default.
The increase in bad debts written off from RM0.01 million in FYE 2020 to RM0.06 million in
FYE 2021 was attributable to non-recoverable trade receivables from 3 customers.
The reversal of impairment losses on trade receivables in FPE 2022 of RM0.06 million was
relevant to the reversal of the lifetime expected credit loss allowance on trade receivables as a
result of reduction in expected risk of default.
(b)
Trade payables turnover
The table below sets forth a summary of our Group’s trade payables for the Period Under
Review:
FYE 2019
RM’000
Average trade payables(1)
Cost of sales
Trade payables turnover period
(days)(2)
2,657
36,733
26
Audited
FYE 2020
FYE 2021
RM’000
RM’000
2,992
54,513
20
8,315
162,424
19
FPE 2022
RM’000
11,922
130,420
17
Notes:
(1)
The average trade payables is calculated by dividing the summation of the trade
payables at the beginning of the financial year/ period and the trade payables at the
end of the financial year/ period by two.
(2)
Computed based on the average trade payables over total cost of sales for the year/
period and multiplied by 365 days for each financial year and 181 days for FPE 2022.
All our Group’s trade payables are classified as current liabilities. The normal credit terms
granted by our suppliers to us range from cash terms to 45 days. Other credit terms are
assessed and approved on a case-by-case basis.
Our trade payables turnover period has improved from 26 days to 20 days and subsequently
to 19 days and 17 days in FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively. The
improvement in our trade payables turnover period was mainly due to prompt payments to our
suppliers in order to maintain good business relationships and uninterrupted supports from the
suppliers.
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Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
The ageing analysis of our Group’s trade payables as at 30 June 2022 is as follows:
Exceed credit period
(past due days)(2)
1-30
31 - 60 61 - 90 Over 90
Total
7,005
3,378
284
-
-
10,667
trade
65.67
31.67
2.66
-
-
100.00
Subsequent payments as at
LPD (RM’000)
6,831
3,378
284
-
-
10,493
Trade
payables
after
subsequent
payments
(RM’000)
Proportion of trade payables
after subsequent payments as
at LPD (%)
174
-
-
-
-
174
100.00
-
-
-
-
100.00
Within
credit
period(1)
Trade payables as at
30 June 2022 (RM’000)
Proportion of total
payables (%)
Notes:
(1)
Represents COD invoices received on 30 June 2022 and invoices with credit term of
up to 45 days which were not past due as at 30 June 2022.
(2)
Following note (1) above, this includes COD invoices where payment was not made on
the same day the invoices were issued.
Our Group’s total trade payables past due as at 30 June 2022 is RM3.66 million, representing
34.33% of total trade payables. Subsequent to 30 June 2022 and up to LPD, we have made
payments of RM10.49 million, representing 98.31% of the total trade payables as at 30 June
2022, of which RM3.66 million were relating to trade payables past due as at 30 June 2022.
As at LPD, there were no disputes in respect of our total outstanding trade payables and no
legal action has been initiated by our suppliers to demand for payment from us.
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Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
(c)
Current ratio
The table below sets forth a summary of our Group’s current ratio for the Period Under Review:
Audited
As at 31 December
As at 30 June
2019
2020
2021
2022
RM’000
RM’000
RM’000
RM’000
Current assets
Current liabilities
Current ratio (times)(1)
Note:
(1)
9,511
7,806
12,604
9,131
47,449
35,510
57,524
32,278
1.22
1.38
1.34
1.78
Current ratio is calculated based on current assets over current liabilities.
Our Group’s current ratio increased from 1.22 times as at 31 December 2019 to 1.38 times as
at 31 December 2020. This was mainly attributable to the increase in current assets from
RM9.51 million as at 31 December 2019 to RM12.60 million as at 31 December 2020,
representing an increase of RM3.09 million or 32.49%, without a corresponding increase in
current liabilities. The increase in current assets was mainly due to increase in trade receivables
which increased by RM2.99 million or 57.95% from RM5.16 million in FYE 2019 to RM8.15
million in FYE 2020.
Our Group’s current ratio decreased from 1.38 times as at 31 December 2020 to 1.34 times as
at 31 December 2021. This was mainly attributable to the increase in current liabilities from
RM9.13 million as at 31 December 2020 to RM35.51 million as at 31 December 2021,
representing an increase of RM26.38 million or 288.94%. The said increase was mainly
attributable to the increase in trade and other payables and accruals as well as contract
liabilities which collectively increased by RM24.99 million or 352.97% from RM7.08 million as
at 31 December 2020 to RM32.07 million as at 31 December 2021. The increase in trade
payables by RM9.72 million was in tandem with the increase in our Group’s cost of sales in
FYE 2021, whilst the increase in other payables and accruals by RM10.43 million was mainly
due to dividend payable and accruals for commission. Meanwhile, the increase in contract
liabilities by RM4.84 million was due to timing differences with higher billings issued to our
customers compared to the revenue recognised based on the percentage of completion
method.
Our Group’s current ratio increased from 1.34 times as at 31 December 2021 to 1.78 times as
at 30 June 2022. This was mainly attributable to the increase in current assets from RM47.45
million as at 31 December 2021 to RM57.52 million as at 30 June 2022, representing an
increase of RM10.07 million or 21.22%, without a corresponding increase in current liabilities.
The increase in current assets was mainly due to increase in cash and bank balances by
RM12.60 million or 66.28% from RM19.01 million as at 31 December 2021 to RM31.61 million
as at 30 June 2022.
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Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
(d)
Gearing ratio
The table below sets forth a summary of our Group’s gearing ratio for the Period Under Review:
Audited
As at 31 December
As at 30 June
2019
2020
2021
2022
RM’000
RM’000
RM’000
RM’000
Total borrowings(1)
Total equity attributable to
shareholders of the Company
Gearing ratio (times)(2)
1,154
1,459
1,942
3,637
2,099
11,797
1,664
26,553
0.79
0.53
0.18
0.06
Notes:
(1)
Total borrowings include term loans, bank overdraft and lease liabilities (excluding
lease liabilities in relation to rental lease arrangement of RM0.54 million as at 31
December 2019, RM0.81 million as at 31 December 2020 and RM0.60 million as at 31
December 2021 and RM0.55 million as at 30 June 2022).
(2)
Gearing ratio is calculated based on total borrowings over total equity attributable to
shareholders of the Company.
Our Group’s gearing ratio improved from 0.79 times as at 31 December 2019 to 0.53 times as
at 31 December 2020 despite our total borrowings increased by RM0.79 million as at 31
December 2020. The improvement is due to higher quantum of increase in our total
shareholders’ equity by RM2.18 million as at 31 December 2020, as a result of the increase in
retained earnings.
Our Group’s gearing ratio improved further from 0.53 times as at 31 December 2020 to 0.18
times as at 31 December 2021 despite our total borrowings increased by RM0.16 million as at
31 December 2021. The improvement is due to higher quantum of increase in our total
shareholders’ equity by RM8.16 million as at 31 December 2021, mainly attributable to further
increase in retained earnings.
Our Group’s gearing ratio improved from 0.18 times as at 31 December 2021 to 0.06 times as
at 30 June 2022. The improvement is due to higher quantum of increase in our total
shareholders’ equity by RM14.76 million as at 30 June 2022, mainly attributable to the increase
in retained earnings.
12.7
ACCOUNTING POLICIES AND AUDIT QUALIFICATION
There was no accounting policy adopted which is peculiar to our Group because of the nature
of our business or the industry we operate in during the Period Under Review. The Accountants’
Report did not contain any audit qualification for the Period Under Review.
12.8
IMPACT OF GOVERNMENT, ECONOMIC, FISCAL OR MONETARY POLICIES
There were no government, economic, fiscal or monetary policies or factors which have
materially affected our financial performance during the Period Under Review. There is no
assurance that our financial performance will not be adversely affected by the impact of
changes in government, economic, fiscal or monetary policies or factors moving forward. Risks
relating to government, economic, fiscal or monetary policies or factors which may adversely
and materially affect our business operations are set out in Section 9 of this Prospectus.
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12.
FINANCIAL INFORMATION (CONT’D)
12.9
IMPACT OF INFLATION
Inflation has not had a material impact on our business, financial condition or results of
operations for the Period Under Review. However, there is no assurance that our business
operations and financial performance will not be adversely affected by the impact of inflation in
the future.
12.10
IMPACT OF FOREIGN EXCHANGE RATE
Our Group is exposed to foreign exchange risk as some of our sales and purchases are
denominated in foreign currencies.
The transactional currency exposure arising from financial assets and liabilities that are
denominated in a currency other than our functional currency of RM for the Period Under
Review are as follows:
AUD
RM’000
As at 31 December 2019
Financial assets
Trade receivables
Cash and bank balances
EUR
RM’000
GBP
RM’000
SGD
RM’000
USD
RM’000
Total
RM’000
-
(1)-
(1)-
-
11
11
878
1,879
2,757
889
1,879
2,768
14
42
8
8
701
773
(14)
(42)
(8)
3
2,056
1,995
-
-
-
9
9
2,224
1,266
3,490
2,233
1,266
3,499
Financial liabilities
Trade payables
-
2
(1)-
2
940
944
Net exposure
-
(2)
(1)
-
7
2,550
2,555
-
-
-
7
7
9,668
7,714
17,382
9,675
7,714
17,389
Financial liabilities
Trade payables
-
10
2
23
12,334
12,369
Net exposure
-
(10)
(2)
(16)
5,048
5,020
Financial liabilities
Trade payables
Net exposure
As at 31 December 2020
Financial assets
Trade receivables
Cash and bank balances
As at 31 December 2021
Financial assets
Trade receivables
Cash and bank balances
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12.
FINANCIAL INFORMATION (CONT’D)
AUD
RM’000
EUR
RM’000
GBP
RM’000
SGD
RM’000
USD
RM’000
Total
RM’000
-
-
-
-
8,460
19,911
28,371
8,460
19,911
28,371
Financial liabilities
Trade payables
-
7
-
2
8,609
8,618
Net exposure
-
(7)
-
(2)
19,762
19,753
As at 30 June 2022
Financial assets
Trade receivables
Cash and bank balances
Note:
(1)
Represents less than RM1,000.
Kindly refer to Note 33.3(iv) of the Accountants’ Report included in Section 13 of this Prospectus
for the sensitivity analysis on our PAT to a 10% strengthening and weakening of AUD, EUR,
GBP, SGD and USD exchange rate against RM, with all other variables held constant.
We do not enter into any currency hedging transactions to manage our exposures to currency
risk for our receivables and payables which are denominated in foreign currencies. We monitor
and manage our foreign exchange exposure through natural hedge by maintaining USDdenominated bank account for receipts and payments in USD.
12.11
IMPACT OF INTEREST RATE
Our exposure to interest rate risks relates primarily to our borrowings from banks. We manage
our net exposure to interest rate risks by obtaining financing at acceptable borrowing costs and
by monitoring the changes in interest rates on an ongoing basis. We do not enter into interest
rate hedging transactions as the cost involved outweighs the potential risk impact of interest
rate fluctuation.
A sensitivity analysis performed on our Group based on our outstanding floating rate bank
borrowings as at 30 June 2022 indicates that our PAT for FPE 2022 would increase or decrease
by approximately RM265, as a result of increase or decrease in interest rates by 50 basis points
on these borrowings, assuming all other variables remain constant.
Our financial results for the Period Under Review were not materially affected by fluctuations
in interest rates.
12.12
TREND ANALYSIS
Based on our track record for the Period Under Review, including our segmental analysis of
revenue and profitability, the following trends may continue to affect our business:
(i)
During the Period Under Review, more than 85.00% of our revenue was derived from
the ocean freight segment. We expect this segment to continue contributing
significantly to our revenue in the future;
(ii)
During the Period Under Review, North America has been our main focus for logistics
services and we will continue to focus in this region for our logistics services;
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12.
FINANCIAL INFORMATION (CONT’D)
(iii)
The main component of our cost of sales was derived from ocean freight segment
which accounted for more than 90.00% of our total cost of sales during the Period
Under Review. Moving forward, our cost of sales is expected to fluctuate in tandem
with the growth of our business and would mainly depend on, amongst others,
fluctuation of ocean freight rates; and
(iv)
We achieved a GP margin of 15.32%, 14.19%, 16.88% and 15.91% for the FYE 2019,
FYE 2020, FYE 2021 and FPE 2022 respectively. Moving forward, our GP margin will
depend on, amongst others, our continued ability to manage our costs efficiently and
price our services competitively.
The financial position and results of operation of our Group have been, and will continue to be
affected by various key factors primarily relating to the industry in which we are operating in.
As at the LPD, except as disclosed in this Section 12, the IMR Report in Section 8 of this
Prospectus, risk factors in Section 9 of this Prospectus and to the best of our Board’s knowledge
and belief, our operations have not been and are not expected to be affected by any of the
following:
(i)
known trends, demands, commitments, events or uncertainties that have had or that
we reasonably expect to have a material favourable or unfavourable impact on our
financial performance, finance position, operations, liquidity and capital resources of
our Group;
(ii)
material commitment for capital expenditure;
(iii)
known trends, demands, commitments, events or uncertainties that are reasonably
likely to make our Group’s historical financial statements not indicative of the future
financial performance and position; and
(iv)
known events or uncertainties that have had or that we reasonably expect to have, a
material unfavourable impact on our financial performance, financial position,
operations, liquidity and capital resources in relation to interruptions to our business
operations pursuant to the COVID-19 pandemic.
Our Board is optimistic about the future prospects of our Group given the positive outlook of
the logistics industry in Malaysia as set out in the IMR Report in Section 8 of this Prospectus,
and our Group’s competitive strengths, as well as our future plans and business strategies as
set out in Sections 7.16 and 7.23 of this Prospectus respectively.
12.13
ORDER BOOK
Order book is not relevant to our business as we are a logistics services provider which provides
logistics services to meet the on-going demand of our customers.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
227
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
12.14
DIVIDEND POLICY
We may declare dividends by ordinary resolution to be approved by our shareholders at a
general meeting, but we may not pay dividends in excess of the amount recommended by our
Board. Our Board may also declare an interim dividend without the approval of our
shareholders. In making recommendations for dividends for approval by our shareholders, our
Board will consider various factors including, amongst others, our Group’s:
(i)
ability to generate positive operating cash flow;
(ii)
working capital needs and availability of cash;
(iii)
capital expenditure and business expansion;
(iv)
compliance with financial covenants of loan agreements, if any;
(v)
compliance with requirements of Section 132 of the Act;
(vi)
overall financial performance and condition; and
(vii)
prospects taking into account the general economic and business conditions prevailing.
The dividends declared and paid for the Period Under Review and up to the LPD are as follows:
FYE 2019
RM’000
FYE 2020
RM’000
FYE 2021
RM’000
FPE 2022
RM’000
Up to the
LPD
RM’000
KGW Logistics
-
-
(1)7,500
-
-
Mattroy Logistics
-
-
(2)100
-
-
Total
-
-
7,600
-
-
Notes:
(1)
RM1.50 million was paid on 31 December 2021, and RM6.00 million was paid on 18
March 2022.
(2)
Paid on 27 December 2021.
We do not intend to declare further dividend prior to our Listing.
We currently do not have a fixed dividend policy. Our ability to distribute dividends or make
other distributions to shareholders is subject to various factors, such as profits recorded and
excess of funds not required to be retained for working capital of our business.
Our ability to declare and pay dividends is subject to the discretion of the Board. However, the
intention to recommend dividends should not be treated as a legal obligation to do so. The level
of dividends should also not be treated as an indication of our future dividend policy.
As we are an investment holding company, our income, and therefore our ability to pay
dividends, depend on the dividends we receive from our subsidiaries. The payment of dividends
by our subsidiaries will in turn depend on their distributable profits, financial performance,
financial condition and capital expenditure plans.
Save for certain banking restrictive covenants which our Group is subject to, there are no
dividend restrictions imposed on our Group as at the LPD. There are no specific legal, financial
or economic restrictions on our Subsidiaries to declare and pay dividends to us.
228
Registration No. 202201009353 (1455050-D)
12.
FINANCIAL INFORMATION (CONT’D)
12.15
SIGNIFICANT CHANGES
Save as disclosed in this Prospectus, there is no significant changes that have occurred which
may have a material effect on our financial position and results of operations subsequent to the
FPE 2022 up to the LPD.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
229
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
GROUP BERHAD
(Incorporated in Malaysia)
202201009353 (1455050-D)
ACCOUNTANTS’ REPORT ON
COMBINED FINANCIAL STATEMENTS
~FOR THE FINANCIAL YEARS ENDED
31 DECEMBER 2019, 2020 AND 2021
AND FOR FINANCIAL PERIODS ENDED
30 JUNE 2021 AND 2022
ECOVIS MALAYSIA PLT
201404001750 (LLP0003 185-LCA) & AF 001825
Chartered Accountants
PNA
CMAN
211
211
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
@4 ECOVIS’
21 October 2022
The Board of Directors
KGW Group Berhad
No. D1 1-10-01 Block D1
Dana 1 Commercial Centre
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor, Malaysia
Dear Sirs
REPORTING
CONTAINED
ACCOUNTANTS’ OPINION ON THE COMBINED
IN THE ACCOUNTANTS’ REPORT OF KGW GROUP
FINANCIAL
BERHAD
STATEMENTS
Opinion
We have audited the combined financial statements of KGW Group Berhad (“Company”) and its combining
entities (collectively referred to as “the Group”), which comprises the combined statements of financial position
as at 31 December 2019, 31 December 2020, 31 December 2021
profit or loss and other comprehensive
and 30 June 2022, the combined statements of
income, combined statements of changes in equity and combined
statements of cash flow for the financial years ended 31 December 2019, 31 December 2020, 31 December
2021 and 6 months financial period ended 30 June 2022, and a summary of significant accounting policies as
set out on page 13 to 93.
This combined financial statements of the Group have been prepared solely for inclusion in the prospectus to
be issued in connection to the listing and quotation of the entire enlarged issued share capital of the Company
on the ACE Market of Bursa Malaysia Securities Berhad (the “Listing”). This report is required by the
Prospectus Guidelines issued by the Securities Commission Malaysia and for no other purpose.
In our opinion, the accompanying combined financial statements of the Group gives a true and fair view of the
financial positions of the Group as at 31 December 2019, 31 December 2020, 31 December 2021 and 30 June
2022, and of its financial performance and its cash flows for the financial years ended 31 December 2019, 31
December 2020 and 31 December 2021 and the financial period ended 30 June 2022 in accordance with
Malaysian Financial Reporting Standards and International Financial Reporting Standard.
Basis for Opinion
We
conducted
our audit in accordance with approved
standards on auditing in Malaysia and International
Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Reporting
Accountants’ Responsibilities for the Audit of the Combined Financial Statements section of our report. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
ECOVIS MALAYSIA PLT 201404001750 (LLP0003185-LCA) & AF 001825 Chartered Accountants, No 9-3, Jalan 109F, Plaza Danau 2, Taman Danau Desa, 58100 Kuala
Lumpur, Malaysia Phone: +60(3) 7981 1799 Fax: +60(3) 7980 4796 E-Mail: kuala-lumpur@ecovis.com my
A member of ECOVIS International, a network of tax advisors, accountants, auditors and lawyers, operating in more than 80 countries across 6 continents
ECOVIS International is a Swiss association, Each Member Firm is an independent legal entity in its own country and is only liable for its own acts or omissions, not those of
any other entity. ECOVIS MALAYSIA PLT is a Malaysia member firm of ECOVIS International
--11PNA
CMAN
212
212
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
fa
"° ECOVIS
Independence and Other Ethical Responsibilities
We are independent of the Group in accordance
Practice) of the Malaysian Institute of Accountants
for Accountants’ Jnternational Code of Ethics
Independence Standards) (““1ESBA Code’), and we
with the By-Laws and the IESBA Code.
with the By-Laws (on Professional Ethics, Conduct and
(“By-Laws”) and the International Ethics Standards Board
for Professional Accountants (including International
have fulfilled our other ethical responsibilities in accordance
Directors’ Responsibilities for the Combined Financial Statements
The Directors of the Company are responsible for the preparation of combined financial statements
that gives a true and fair view in accordance with Malaysian Financial Reporting Standards and
Financial Reporting Standards. The Directors are also responsible for such internal control as
determine is necessary to enable the preparation of combined financial statements of the Group
from material misstatement, whether due to fraud or error.
of the Group
International
the Directors
that are free
In preparing the combined financial statements of the Group, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Reporting Accountants’ Responsibilities for the Audit of the Combined Financial Statements
Our objectives are to obtain reasonable assurance about whether the combined financial statements of the Group
as a whole is free from material misstatement, whether due to fraud or error, and to issue a report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with approved standards on auditing in Malaysia and ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on basis of these combined financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and ISAs, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
(a)
Identify and assess the risks of material misstatement of the combined financial statements of the Group,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(b)
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
(c)
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Directors.
--22PNA
CMAN
213
213
°
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
fa
"° ECOVIS
Reporting Accountants’ Responsibilities for the Audit of the Combined Financial Statements (cont'd)
As part of an audit in accordance with approved standards on auditing in Malaysia and ISAs, we exercise
professional judgement and maintain professional skepticism throughout the audit. We also: (cont’d)
(d)
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on of the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditors’ report to the related
disclosures in the combined financial statements of the Group or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
(e)
Evaluate the overall presentation, structure and content of the combined financial statements of the Group,
including the disclosures, and whether the combined financial statements of the Company represents the
underlying transactions and events in a manner that achieves fair presentation.
(f)
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the combined financial statements of the Group. We
are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
Other Matters
The comparative information that comprises the combined statement of financial position as at 30 June 2021,
and the combined statement of profit or loss and other comprehensive income, combined statement of changes
in equity and the combined statement of cash flows for the financial period ended 30 June 2021 and their related
explanatory information has not been audited.
Restriction on Distribution and Use
This report is made solely to the Group and for inclusion in the prospectus in connection with the listing and
quotation of the entire enlarged issued share capital of the Company on the ACE Market of Bursa Malaysia
Securities Berhad and should not be relied upon for any other purposes. We do not assume responsibility to any
other person for the content of this report.
Lis
ECOVIS MALAYSIA
AF 001825
PLT
PAT YIN LAI
03073/12/2023 J
Chartered Accountants
Chartered Accountant
Kuala Lumpur
21 October 2022
-3PNA
CMAN
214
214
°
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
COMBINED
REPORT (CONT’D)
STATEMENTS
OF FINANCIAL
POSITION
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
Note
RM
RM
Non-current assets
Property, plant and equipment
8
1,947,537
2,021,781
1,762,058
Deferred tax assets
9
913,170
22,096
55,401
2,860,707
2,043,877
1,817,459
1,497,349
1,497,349
1,045,079
6,661
1,051,740
Curre nt assets
Inventories
10
Trade receivables
VW
Other receivables, depostts
14,750
-
37,030
-
-
19,832,220
17,911,147
20,812,750
8,147,172
5,162,177
and prepayments
Contract costs
12
1,017,137
45,397
56,719
49,784
142,866
13
4,608,799
4,502,190
6,616,039
1,933,570
1,124,309
Amount owing by related parties
14
8,872
5,880
28,161
Tax recoverable
Fixed deposits with financial institutions
Cash and bank balances
Total assets
-
15
20,489
442,188
382,331
914,685
-
4,537
12,340
357,131
307,131
31,609,139
5,725,871
19,005,864
2,083,139
2,762,291
$7,524,233
28,596,297
47,448,967
12,603,494
9,511,114
60,384,940
30,640,174
49,266,426
14,100,843
10,562,854
--44215
215
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353
ACCOUNTANTS’
COMBINED
(1455050-D)
REPORT (CONT’D)
STATEMENTS
OF FINANCIAL POSITION (CONT’D)
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
Note
RM
RM
Equity and liabilities
Equity
Invested equity
16
1,500,010
1,200,000
1,202,500
1,200,000
1,200,000
Retained earnings
17
25,052,674
7,108,311
10,594,709
2,436,892
258,428
26,552,684
8,308,311
11,797,209
3,636,892
1,458,428
Total equity attributable to
shareholders of the Company
Non-controlling interests
-
Total equity
(2,867)
-
(2,867)
(724)
26,552,684
8,305,444
11,797,209
3,634,025
1,457,704
Non-current liabilities
Bank borrowings
18
763,351
1,399,642
1,213,961
595,664
658,999
Lease liabilities
19
791,084
928,831
745,085
730,239
639,787
Deferred tax liabilities
9
-
-
-
10,041
1,554,435
2,328,473
1,959,046
1,335,944
1,298,786
Current liabilities
Trade payables
20
10,667,383
9,465,897
13,176,792
3,453,352
2,530,243
Other payables and accruals
21
6,096,217
2,541,384
11,880,193
1,450,734
2,158,408
Contract liabilities
22
9,318,956
5,009,898
7,011,048
2,175,526
1,673,507
315,618
500
185,752
959,309
Amount owing to Directors
3
-
Bank borrowings
18
215,487
419,780
356,180
1,090,275
178,226
Lease liabilities
19
442,783
402,899
382,282
331,209
212,971
5,536,995
1,850,781
2,703,176
444,026
93,700
32,277,821
20,006,257
35,510,171
9,130,874
7,806,364
Total liabilities
33,832,256
22,334,730
37,469,217
10,466,818
9,105,150
Total equity and liabilities
60,384,940
30,640,174
49,266,426
14,100,843
10,562,854
Income tax payable
The accompanying notes form an integral part of these combined financial statements.
--55216
216
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353
ACCOUNTANTS’
COMBINED
INCOME
(1455050-D)
REPORT (CONT’D)
STATEMENTS
OF
PROFIT
OR
LOSS
AND
OTHER
FPE 30 June
2022
COMPREHENSIVE
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
Note
Revenue
24
RM
RM
155,102,243
67,997,134
195,419,198
63,525,450
43,378,997
Cost of sales
(130,420,315)
(57,084,544)
(162,424,301)
(54,512,750)
(36,732,711)
Gross profit
24,681,928
10,912,590
32,994,897
9,012,700
6,646,286
817,498
202,840
90,933
191,855
Other income
Administrative expenses
Other operating expenses
Net reversal/(loss) on
impairment of financial assets
(4,511,975)
(11,123,645)
(5,689,964)
(5,693,765)
(65,940)
(270,395)
(930,876)
(490,824)
(204,808)
62,571
Profit from operations
44,473
(6,392,471)
19,103,586
(94,881)
(103,734)
20,927,575
(177,124)
(29,618)
2,994,149
(129,352)
(38,677)
753,509
Finance costs
25
Profit before tax
26
19,031,913
6,173,120
20,750,45 |
Tax expense
27
(4,573,948)
(1,501,701)
(4,992,634)
14,457,965
4,671,419
15,757,817
2,176,321
349,423
14,457,965
4,671,419
15,757,817
2,178,464
350,637
Net profit/total comprehensive
income for the period/year
(71,673)
(65,059)
6,268,001
2,864,797
(688,476)
(145,161)
608,348
(258,925)
Net profit/total comprehensive
income for the financial
period/year attributable to:
Owners of the Group
Non-controlling interests
-
-
-
(2,143)
(1,214)
14,457,965
4,671,419
15,757,817
2,176,321
349,423
10.01
3.89
13.12
1.82
0.35
EPS attributable to owners
ofthe Group :
Basic and diluted
28
The accompanying notes form an integral part of these combined financial statements.
--66217
217
14.
13.
13.
Group Berhad
At 31 December 2021
29
16
16
Note
RM
RM
1,202,500
2,500
1,200,000
1,200,000
750,000
350,637
750,000
357,791
10,594,709
15,757,817
(7.600.000)
3,636,892
2,436,892
11,797,209
15,757,817
(7,600,000)
2,500
2,178,464
1.458.428
RM
Total
rs
2,178,464
258,428
350,637
(92,209)
eamings
Invested equity
450,000
Distributable
Retained
Attributable to owners of the Group
Non-distributable
<¢+-
-7-7218
218
The accompanying notes form an integral part of these combined financial statements.
Net profit/total comprehensive income for the
financial year
Dividends to owners
Derecognition ofa subsidiary
Issuance of shares
Transaction with owners:-
At 31 December 2020/1 January 2021
Net profit/total comprehensive income for the
financial year
At 31 December 2019/1 January 2020
financial year
Net profit4otal comprehensive income for the
Shares issued pursuant to acquisition of interest in
subsidiary from non-controlling interests
Issuance of shares
REPORT (CONT’D)
STATEMENTS OF CHANGES IN EQUITY
Transaction with owners:
At f January 2019
COMBINED
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no, 202201009353 (1455050-D)
KGW
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
Non-
RM
490
2,867
(2,867)
(2,143)
(724)
(1,214)
interests
controlling
11,797,209
15,757,817
(7.600.000)
2,867
2,500
3,634,025
2,176,321
1,457,704
349,423
490
750,000
357,791
RM
Total equity
14.
13.
13.
Group Berhad
STATEMENTS
At 30 June 2022
1,500,010
-
297,510
14,457,965
26,552,684
26,552,684
25,052,674
219
219
297,510
-
-
14,457,965
297,510
14,457,965
-
The accompanying notes form an integral part of these combined financial statements.
-8-8-
Net profit/total comprehensive income for the
:
.
financial period
Issuance of shares
Transaction with owners:-
11,797,209
11,797,209
10,594,709
1,202,500
At 1 January 2022
4.671.419
3,634,025
8,305,444
-
(2,867)
RM
Total equity
(2,867)
RM
8,308,311
4,671,419
3.636.892
RM
Total
7,108,311
4,671,419
2.436.892
RM
Noncontrolling
interests
1,200,000
-
1,200,000
RM
Invested equity
———_»
At 30 June 2021 (unaudited)
16
Note
Distributable
Retained
earnings
Attributable to owners of the Group
Non-distributable
+
OF CHANGES IN EQUITY (CONT’D)
REPORT (CONT’D)
Net profitttotal comprehensive income for the
financial period
At 1 January 2021
COMBINED
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
COMBINED
REPORT (CONT’D)
STATEMENTS
OF CASH FLOWS
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
Note
Cash flows from operating activities
Profit before tax
RM
RM
19,031,913
6,173,120
20,750,451
2,864,797
608,348
6,958
44,520
60,974
4.247
341,782
335,318
672,874
408,051
(86,999)
(18,728)
(18,728)
-
(18,000)
(2,984)
-
-
Adjustments for :
Bad debts written off
Depreciation of property. plant
and equipment
Gain on disposal of property,
plant and equipment
Gain on derecognition of a subsidiary
(Reversal)/Impairment losses
on financial assets
-
-
-
198,596
(62,571)
65,059
103,734
29,618
38.677
Interest expenses
71,673
94,881
177,124
129,352
145,161
Interest income
Unrealised (gain)/loss on foreign
(2.303)
exchange, net
Property, plant and
equipment written off
Operating profit before
changes in working capital
Decrease/(Increase) in inventories
(722,550)
(161,941)
(33,671)
-
-
375
18,578,278
(7,154)
6,532,229
21,702,620
153,599
(7,131)
84,498
-
3,589,664
-
1,050,149
-
(37,030)
-
-
(9,929,247)
(12,610,171)
(2,905,119)
(596,802)
(2,047,991)
7,093,405
13,936,356
170,193
508,469
2,007,240
2,307,908
(2,568,620)
2,834,372
(4,682,469)
4,835,522
(809,261)
502,019
141,683
23,629
Cash generated from operations
20,628,019
3,962,139
Interest paid
Income tax paid
(1,403)
(2,597,898)
Increase in trade and other
receivables
(Decrease)/Increase in trade and
other payables
22,280
-
(239,696)
Decrease/(increase) in contract
costs
Increase in contract liabilities
Income tax refunded
23,144,828
(19,453)
(143.035)
-
-
(28,727)
(2,816,073)
547,496
1,127,128
(6,931)
(313,645)
21,684
-
(4,787)
(211,521)
54,660
Net cash generated from
operating activities
18,028,718
3,799,651
--99220
220
20,321,712
226,920
965,480
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS?’ REPORT (CONT’D)
COMBINED
STATEMENTS
OF CASH FLOWS
(CONT’D)
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
Note
Cash flows from investing activities
Acquisition ofa subsidiary,
net of cash acquired
Derecognition ofa subsidiary
Proceeds from disposal of
property, plant and equipment
Acquisition of property, plant
and equipment
Repayment from/(advances) to
related parties, net
RM
RM
-
-
-
-
-
-
(1,000)
-
20,000
-
87,000
(a)
(209,214)
20,000
(401,022)
5,880
19,289
(478,855)
22,281
490
18,000
(467,119)
(139,301)
(28,161)
-
(120,811)
Net cash used in investing
activities
Cash flows from financing activities
Dividend paid
Interest received
(361,733)
(437,574)
(495,280)
(6,000,000)
-
(1,600,000)
-
2,303
Interest paid
Proceeds from issuance of
share capital
Placement of fixed deposits
pledged with financial institutions
Withdrawal of fixed deposits
pledged with financial institutions
Net movement in amount
owing to Directors
(116,334)
(70,270)
(75,428)
297,510
(27,503)
-
(b)
(500)
(b)
(211,923)
Drawdown of term loans
(b)
Repayment of term loans
(b)
(661,124)
-
(148.397)
2,500
(122,421)
-
7A31
(140,374)
750,000
(25,200)
(57,554)
(50,000)
-
-
-
129,866
(185,252)
(773,557)
606,968
(189,718)
(394,081)
(184,512)
(202,476)
-
-
(220,145)
(46,939)
(162,775)
(1,595,775)
(1,177,429)
-
Repayment of lease liabilities
7,154
1,000,000
(82,673)
1,000,000
(307,131)
182,270
Net cash (used in)/generated
from financing activities
(6,671,507)
756,847
--1010 221
221
733,613
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
COMBINED
REPORT (CONT’D)
STATEMENTS
OF CASH FLOWS (CONT’D)
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
Note
RM
RM
Net increase/(decrease) in
cash and cash equivalents
Effect of exchange rate changes
11,240,877
4,194,765
18,288,363
(1,445,789)
1,578,282
792,577
231,811
30,015
(129,016)
19,505,864
1,187,486
1,187,486
2,762,291
1,290,550
31,539,318
5,614,062
19,505,864
1,187,486
2,762,291
(106,541)
Cash and cash equivalents at
beginning of financial
period/year
Cash and cash equivalents at
end of financial period/year
(a)
30
Purchase of property, plant and equipment
The Group made the following cash payment to purchase property, plant and equipment:
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
(unaudited)
Note
Property. plant and equipment
D4,
A
,
e
7
acquired
Amount
settled via finance
lease arrangements
(b)
8
RM
RM
RM
RM
527,637
861,022
938,855
860,321
307,400
(318,423)
(460,000)
(460,000)
(393,202)
(168,099)
209,214
401,022
478,855
467,119
139,301
Changes in liabilities arising from financing activities:
Acquisition of
Net financing
At
1 January
At
new lease
cash flows
30 June
RM
RM
RM
RM
30 June 2022
Lease liabilities
1,127,367
(211,923)
1,233,867
Term loans
1,570,141
-
(661,124)
909,017
500
-
(500)
Amount owing to Directors
2,698,008
318,423
318,423
(873,547)
The accompanying notes form an integral part of these combined financial statements.
--ll11 222
222
-
2,142,884
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
COMBINED
(b)
REPORT (CONT’D)
STATEMENTS
OF CASH FLOWS (CONT’D)
Changes in liabilities arising from financing activities: (cont’d)
At
Acquisition of
Net financing
At
1 January
new lease
cash flows
30 June
RM
RM
RM
RM
30 June 2021 (unaudited)
Lease liabilities
1,061,448
460,000
(189,718)
1,331,730
917,327
1,707,613
460,000
129,866
857,475
315,618
3,354,961
790,286
Term loans
Amount owing to Directors
185,752
2,037,486
-
At
Acquisition of
Net financing
At
1 January
new lease
cash flows
31 December
RM
RM
RM
RM
31 December 2021
1,061,448
790,286
185,752
460,000
-
(394,081)
779,855
(185,252)
1,127,367
1,570,141
500
2,037,486
460,000
200,522
2,698,008
Lease liabilities
852,758
393,202
(184,512)
1,061,448
Term loans
837,225
(46.939)
790,286
Lease liabilities
Term loans
Amount owing to Directors
31 December 2020
Amount owing to Directors
-
959,309
2,649,292
393,202
(773.557)
(1,005,008)
185,752
2.037,486
887,135
168,099
(202,476)
852,758
31 December 2019
Lease liabilities
Term loans
1,000,000
Amount owing to Directors
352,34]
2,239,476
168,099
(162,775)
606,968
241,717
The accompanying notes form an integral part of these combined financial statements.
--1212 223
223
837,225
959,309
2,649,292
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353
ACCOUNTANTS’
1.
GENERAL
(1455050-D)
REPORT (CONT’D)
INFORMATION
KGW Group Berhad (“KGW” or the “Company”) was incorporated on 14 March 2022 as a private limited liability
company with issued and paid up share capital of RM10 comprising 100 ordinary shares. The Company was subsequently
converted into a public limited liability company on 7 October 2022.
The registered office is located at No. 2-1, Jalan Sri Hartamas 8, Sri Hartamas, 50480 Kuala Lumpur. The principal place
of business is located at No. D1 1-10-01, Block D11, Dana | Commercial Centre, Jalan PJU 1A/46, 47301 Petaling Jaya,
Selangor.
The principal activity of the Company is investment holding whilst the principal activities of its combining entities are
disclosed in Note 2 to the report. The Company was incorporated to acquire the combining entities pursuant to the
restructuring exercise and proposed listing exercise as disclosed in Note 2 to this report.
RESTRUCTURING
EXERCISE
For the purpose of its Proposed Listing on the ACE Market of Bursa Securities (“Proposed Listing”), KGW is undertaking
a restructuring exercise via the acquisition of KGW Logistics (M) Sdn. Bhd. (“KGW Logistics”), KGW Medica Sdn.
Bhd. (‘KGW Medica”) and Mattroy Logistics (Malaysia) Sdn. Bhd. (“Mattroy Logistics”) (collectively known as
“Group”).
For the purposes of the proposed Listing, conditional share sale agreements were executed for:
(i)
(ii)
the acquisition by the Company of the entire issued share capital in KGW Logistics comprising 1,000,000 ordinary
shares for a purchase consideration of RM11,092,800 which was satisfied via the issuance of 369,760,000 new
Shares at an issue price of RMO.03 per Share. The acquisition of KGW Logistics was completed on [e].
the acquisition by the Company of the entire issued share capital in KGW
shares for a purchase consideration of RM374,500
at an issue price of RM0.03 per Share. The acquisition of KGW
(iii)
Medica comprising 300,000 ordinary
which was satisfied via the issuance of 12,483,333 new Shares
Medica was completed on [e].
| the acquisition by the Company of the entire issued share capital in Mattroy Logistics comprising 200,000 ordinary
shares for a purchase consideration of RM626,800
which was satisfied via the issuance of 20,893,334 new Shares
at an issue price of RM0.03 per Share. The acquisition of Mattroy Logistics was completed on [e].
--1313 224
224
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
2.
REPORT (CONT’D)
RESTRUCTURING
EXERCISE
(CONT’D)
The corporate structure following completion of the restructuring exercise is as follows:
KGW
i
KGW
|
Logistics
KGW Medica
Mattroy Logistics
100%
100%
100%
KGW and its combining entities are collectively known
statements contained in this Accountants’ Report.
as “KGW
Group” or “the Group” in the combined financial
Details of the combining entities at the date of this report are as follows:
Issued
Effective equity interest
Name of
Date of
share
combining
incor-
capital
2022
2021
2021
2020
2019
poration
(RM)
%
%
%
%
%
Principal activities
15 September
2005
1,000,000
100
100
100
100
100
Logistic services
provider including
entities
KGW
Logistics
At 30 June
At 31 December
provision of ocean
and air freight
services , freight
forwarding services
and other supporting
services.
KGW
Medica
24 June 2021
100,000
100
100
100
-
-
Warehousing and
distribution of
pharmaceutical and
medical goods
Mattroy
Logistics
3 September
200,000
100
100
2014
100
100
100
Logistic services
provider including
provision of ocean
and air fretght
services , freight
forwarding services
and other supporting
services.
All the above combining entities are incorporated in Malaysia.
--1414 225
225
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
2..
RESTRUCTURING
'
REPORT (CONT’D)
EXERCISE
(CONT’D)
On 11 November 2019, KGW Logistics has subscribed 51 ordinary shares representing 51% equity interest in KGW
Gemilang for a cash consideration of RM51.
incorporation. During financial year 2021,
completed on 29 December 2021.
(i)
KGW Gemilang had not commenced any business since the date of
KGW
Summary of the effect of striking off KGW
Gemilang
had been struck off and the strike off process was
Gemilang is as follows:
RM
Asset and liabilities derecognised:
Cash and cash equivalents
1,000
Payables
(6,851)
(5,851)
Total share of net liabilities derecognised (51%)
(2,984)
Gain on derecognition of KGW
(2,984)
Gemilang
Net cash outflows, presented under investing activities
in the statement of cash flows
3.
SHARE
(1,000)
CAPITAL
The details of the changes in the issued share capital of KGW
Date ofallotment
14 March 2022
No. of shares
Cumulative no. of
alloted
shares allotted
Group Berhad since its incorporation are as follow:Cumulative
issued share
Consideration
capital
100
100
[e]
369,760,000
369,760,100
[e}
12,483,333
382,243,433
[e]
20,893,334
403,136,767
Acquisition of Mattroy Logistics
79,661,800
482,798,567
Public issue
Upon listing
--1515 226
226
Cash
Acquisition of KGW
Acquisition of KGW
(RM)
10
Logistics
11,092,810
Medica
11,467,310
12,094,110
[e]
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
4.
REPORT (CONT’D)
BASIS OF COMBINATION
This report comprises solely the individual financial statements of the combining entities for FYE 31 December 2019, 31
December 2020, 31 December 2021 and FPE 30 June 2022 aggregated and adjusted for interco for preparation of the
combined financial statements for this report.
The combined financial statements were prepared based on the audited financial statements of combining entities which
were prepared in accordance with MFRS and IFRS for the purpose of combination. The combining entities maintain their
accounting records and prepare the relevant statutory financial statements in accordance with MFRS, IFRS and the
requirements of the Act in Malaysia.
The relevant financial years/period of the audited financial statements combined for the purpose of this report are as
follows:
Company
Relevant Financial Years/Period
KGW Logistics
FYE 31 December 2019*
KHLC PLT
FYE 31 December 2020
FYE 31 December 2021
FPE 30 June 2022
Ecovis Malaysia PLT
Ecovis Malaysia PLT
Ecovis Malaysia PLT
FYE 31 December 2019*
KHLC
FYE 31 December 2020*
KHLC PLT
FYE 31 December 2021
FPE 30 June 2022
Ecovis Malaysia PLT
Ecovis Malaysia PLT
Mattroy Logistics
Auditors
PLT
KGW
Medica
FPE 31 December 2021
FPE 30 June 2022
Ecovis Malaysia PLT
Ecovis Malaysia PLT
KGW
Group Berhad
FPE 30 June 2022
Ecovis Malaysia PLT
*Reaudited by Ecovis Malaysia PLT for the purpose of this report.
The audited financial statements of combining entities for the relevant financial years/period reported above were not
subject to any qualification or modification.
The combined financial statements disclosed in page 4 to 93 of this report consist of the financial statements of the
combining entities which were under common control throughout the reporting periods by Dato’ Roger Wong Ken Hong,
being the key management personnel and major shareholder of the combining entities. The combined financial statements
of the Group for the FYE
31
December 2019, 31 December 2020,
31 December 2021
and FPE 30 June 2022 have been
prepared in a manner as if the combined entities under common control were operating as a single economic entity at the
beginning of the earliest comparative period presented or, if later, at the date that common control was established.
Entities under common control are entities which are ultimately controlled by the same parties both during and after the
reporting periods and that control is not transitory. Common control exists when the same parties have ultimate collective
power to govern the financial and operating policies of each of the combining entities so as to obtain benefits from their
activities, and that ultimate collective power is not transitory.
--1616 227
227
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
4.
REPORT (CONT’D)
BASIS OF COMBINATION (CONT’D)
The merger accounting principles are used to include the assets, liabilities, results, equity changes and cash flows of the
combining entities in the combined financial statements. In applying merger accounting, financial statement line items of
the combining entities for the reporting period in which the common contro! combination occurs, and for any comparative
periods disclosed, are included in the combined financial statements as if the combination had occurred from the date
when the combining entities first came under the control of the controlling party or parties.
A single uniform set of accounting policies is adopted by the combining entities. Therefore, the assets, liabilities and
equity of the combining entities are recognised at the carrying amounts in the combined financial statements. The carrying
amounts are included as if such combined financial statements had been prepared by the controlling party, including
adjustments required for conforming to the Group’s accounting policies and applying those policies to all years presented.
There is no recognition of any goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable
assets, liabilities and contingent liabilities over cost at the time of the common control combination. The effects of all
transactions and balances between the combining entities, whether occurring before or after the combination, are
eliminated in preparing the combined financial statements.
The financial information as presented in the combined financial statements do not correspond to the consolidated
financial statements of the Group, as the combined financial statements reflect business combinations under common
control for the purpose of the proposed Listing. Consequently, the financial information from the combined financial
statements do not purport to predict the financial positions, results of operations and cash flows of the Group during the
reporting periods.
BASIS OF PREPARATION
5.1
Statement of compliance
The combined financial statements have been prepared in accordance with Malaysian
(“MFRS”) and International Financial Reporting Standards (“IFRS”).
Financial Reporting Standards
The combined financial statements are prepared under the historical cost convention except otherwise indicated in the
summary of significant accounting policies set out in Note 6 to the combined financial statements.
The combined financial statements are presented
presentation currency of the combining entities.
in Ringgit
Malaysia
(“RM”),
which
is also the functional
and
The preparation of the combined financial statements in conformity with MFRS requires the Directors to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. The areas involving such judgements, estimates and assumptions are disclosed in
Note 7 to the combined financial statements. Although these estimates and assumptions are based on the Directors’ best
knowledge of events and actions, actual results may differ from these estimates.
--1717 228
228
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
5.
BASIS OF PREPARATION
(CONT’D)
5.2
Adoption of new MFRS, amendments/improvements to MFRS and new IC Interpretation
The Group has adopted the following new MFRS, amendments/improvements to MFRS and new IC Interpretation (“IC Int”)
in FPE 30 June 2022:
MERS
(including the consequential amendments)
Amendments to MFRSs
Amendments to MFRS 3
Amendments to MFRS
116
Amendments to MFRS
137
Effective Date
Annual Improvements to MFRS Standards 20182020
‘Business
Combinations’
-— Reference
to the
Conceptual Framework
‘Property, Plant and Equipment’ — Proceeds before
Intended Use
‘Provisions, Contingent Liabilities and Contingent
Assets’ ~ Onerous Contracts — Cost of Fulfilling a
Contract
1 January 2022
| January 2022
1 January 2022
1 January 2022
The adoption of the above amendments to MFRS did not result in significant changes in the accounting policies of the Group
and has no significant effect on the financial performance or position of the Group for the relevant financial periods/years.
The Group has adopted MFRS 16, ‘Leases’ which is effective for annual periods beginning on or after | January 2019. The
effects of the adoption are as dicussed below:
()
MERS
16, ‘Leases’
MFRS 16 replaces the guidance in MFRS 117, ‘Leases’, IC Int 4, ‘Determining Whether an Arrangement Contains a Lease’,
IC Int 115, ‘Operating Leases — Incentives’ and IC Int 127, ‘Evaluating the Substance of Transactions Involving the Legal
Form ofa Lease’.
MERS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognised a right-of-use asset
representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. There
are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the
current standard which continues to be classified as finance or operating lease.
The Group adopted MFRS 16 using the full retrospective approach, under which the effect of initial application is recognised
as an adjustment to retained earnings at | January 2019. The effects of adoption of MFRS 16 have been reflected in the
combined financial statements of the Group for the years/periods ended 31 December 2019, 31 December 2020, 31 December
2021, 30 June 2021 and 30 June 2022.
--1818 229
229
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202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
5.
BASIS OF PREPARATION
(CONT’D)
5.2
Adoption of new MFRS, amendments/improvements to MFRS and new IC Int (Cont’d)
(i)
MFRS
16, ‘Leases’ (cont’d)
The following table presents the impact of changes to the statement of financial position of the Group resulting from the
adoption of MFRS 16 as at | January 2019:
As at
31 December 2018
Adoption of
MFRS 16
As at
1 January 2019
RM
RM
RM
Non-current asset
Property, plant and equipment
484,159
452,116
936,275
317,255
395,241
712,496
117,764
435,019
56,875
452,116
174,639
887,135
Non-current liability
Lease liabilities
Current liability
Lease liabilities
Total liabilities
The weighted average lessee’s incremental borrowing rates applied to the lease liabilities of the Group on 1 January 2019
range from 4.42% to 5.66% per annum,
Right-of-use assets comprise long-term lease on premises, and motor vehicles under finance lease agreements. Subsequent to
the initial recognition, the right-of-use assets are measured at cost less any accumulated depreciation, accumulated impairment
losses and adjusted for any remeasurement of lease liabilities.
Other than the above, the Group has elected to apply exemption from application of MFRS 16 for leases of property, plant and
equipment expiring within 12 months from date of transition and those involving low value underlying assets. The lease
payments are recognised as an expense on a straight line basis over the remaining lease term.
--1919 230
230
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
5.
BASIS OF PREPARATION
(CONT’D)
5.3.
New MFRS, amendments/improvements to MFRS and new IC Int that have been issued, but not yet adopted
The following are new MFRS, amendments, improvements to MFRS and new IC Int that have been issued by the
Malaysian Accounting Standards Board (‘MASB”) but are not yet effective and have not been adopted by the Group. The
Group intends to adopt these standards, amendments to published standards and IC Int, if applicable, when they become
effective for the following financial year:
MFRS
(Including the consequential
Amendments to MFRS
101
Amendments to MFRS
108
Amendments to MFRS
112
MFRS 17 and Amendmends
MERS 17
Amendments to MFRS 10
to
amendments)
Effective Date
‘Presentation
of
Financial
Statements’
Classification of Liabilities as Current or Noncurrent and Disclosure of Accounting Policies
‘Accounting,
Policies,
Changes
in Accounting
Estimates and Errors’ — Definition of Accounting
Estimates
‘Income Taxes’ — Deferred Tax Related to Assets and
Liabilities Arising from a Single Transaction
“Insurance Contracts’
‘Consolidated
Financial
Statements’
—
Sale
or
1 January 2023
] January 2023
1 January 2023
1 January 2023
To be announced
Contribution of Assets between an Investor and its
Associate or Joint Venture
Amendments to MFRS
128
‘Investment
in Associates and Join Ventures’ — Sale
To be announced
or Contribution of Assets between an Investor and
its Associate or Joint Venture
The initial application of the abovementioned new and amendments to published standards and IC Int, where applicable,
are not expected to have any material financial impact to the Group’s financial statements.
--2020 231
231
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14.
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13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT
SIGNIFICANT ACCOUNTING
(a)
(CONT’D)
POLICIES
Basis of consolidation
(i)
Investment in subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial
statements of subsidiaries are included in the combined financial statements from the date that control
commences
until the date that control ceases.
Control is achieved when the Group is exposed to, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. In assessing control,
potential voting rights that presently are exercisable are taken into account.
The Group also considers it has de facto power over an investee when, despite not having the majority of
voting rights, it has the current ability to direct the activities of the investee that significantly affects the
investee’s return. When the Group has less than a majority of the voting or similar rights of an investee, the
Group considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
e
e
e
The contractual arrangement with the other vote holders of the investee;
~=Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights.
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.
Investments in subsidiaries are measured in the Company’s separate financial statements at cost less any
impairment losses, unless the investment is held for sale (accounted for in accordance with MFRS
5, “Non-
current Assets Held for Sale and Discontinued Operations’) or distribution. The cost of investment includes
transaction costs.
The policy for the recognition and measurement of impairment losses is in accordance with Note 6(d) to this
report. On disposal, the difference between the net disposal proceeds and its carrying amount is recognised
as gain or loss on disposal in profit or loss.
--2121 232
232
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14.
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REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT (CONT’D)
SIGNIFICANT ACCOUNTING
(a)
POLICIES (CONT’D)
Basis of consolidation (cont'd)
(ii)
Business combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is the
date on which control is transferred to the Group. The cost of an acquisition is measured as the aggregate of
the consideration transferred measured at acquisition date fair value and the amount of any non-controlling
interests in the acquiree. Acquisition-related costs are expensed as incurred and included in administrative
expenses.
For each business combination, the Group elects whether to measure the non-controlling interest in the
acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. When the Group
acquires a business, it assesses the financial assets and financial liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its
acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered
in the determination of goodwill.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and
within the scope of MFRS 9, ‘Financial Instruments’ (“MFRS 9”) is measured at fair value with changes in
fair value recognised either in profit or loss or as a change to other comprehensive income. If the contingent
consideration is not within the scope of MFRS 9, it is measured in accordance with the appropriate MFRS.
Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted
for within equity.
--2222 233
233
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT (CONT’D)
SIGNIFICANT ACCOUNTING
(a)
POLICIES (CONT’D)
Basis of consolidation (cont'd)
(iii)
Loss of control
Upon the loss of control ofa combining entity, the Group derecognises the assets and liabilities of the former
combining entity, any non-controlling interests and the other components of equity related to the former
combining entity from the combined statement of financial position. Any surplus or deficit arising on the loss
of control is recognised in profit or loss. If the Group retains any interest in the former combining entity, then
such interest is measured at fair value at the date the control ceases. Subsequently it is accounted for as an
equity-accounted investee or as an equity instrument at fair value through other comprehensive income
(“FVTOCI”) depending on the level of influence retained.
(iv)
Non-controlling interests
Non-controlling interests at the end of the reporting period, being the equity in a combining entity not
attributable directly or indirectly to the equity holders of the Company, are presented in the combined
statement of financial position and statement of changes in equity, separately from equity attributable to
equity holders of the Company. Non-controlling interests in the results of the Group is presented in the
combined statement of profit or loss and other comprehensive income as an allocation of the profit or loss
and the comprehensive income for the year between non-controlling interests. and the equity holders of the
Company.
Losses applicable to non-controlling interests in a combining entity are allocated to the non-controlling
interests even if doing so causes the non-controlling interests to have a deficit balance.
Transactions with non-controlling interests are accounted for using the entity
transactions with non-controlling interests are accounted for as transactions with
non-controlling interests, the difference between the consideration and carrying
net assets acquired is recognised directly in equity. Gain or loss on disposal to
recognised directly in equity.
(v)
concept method, whereby,
owners. On acquisition of
amount of the share of the
non-controlling interests is
Transactions eliminated on combination
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the combined financial statements.
--2323 234
234
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14.
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13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
6.
SIGNIFICANT ACCOUNTING
(b)
POLICIES (CONT’D)
Foreign currencies transactions and balances
Transactions in foreign currencies are measured in the functional currency of the Group and are recorded on initial
recognition in the functional currency at exchange rates approximating those ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the
reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are
translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in
foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was
determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting
date are recognised in profit or loss. Exchange differences arising on the translation of non-monetary items carried
at fair value are included in the profit or loss for the financial year except for the differences arising on the translation
of non-monetary items in respect of which gains and losses are recognised directly in equity.
In the combined financial statements, when settlement of a monetary item receivable from, or payable to, a foreign
operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising
from such a monetary item are considered to form part ofa net investment in a foreign operation and are recognised
in other comprehensive income, and are presented in the translation reserve in equity at group level.
(c)
Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and
equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably.
Subsequent to initial recognition, property, plant and equipment are measured at cost less accumulated depreciation
and accumulated impairment losses.
When significant parts of property, plant and
recognises such parts as individual assets with
when a major inspection is performed, its cost
equipment as a replacement if the recognition
recognised in profit or loss as incurred.
equipment are required to be replaced
specific useful lives and depreciate them
is recognised in the carrying amount of
criteria are satisfied. All other repair and
at intervals, the Group
accordingly. Likewise,
the property, plant and
maintenance costs are
Depreciation of an asset begins when it is ready for its intended use. Freehold land is not depreciated but are subject
to impairment test if there is any indication of impairment. Depreciation is computed on the straight-line basis over
the estimated useful lives of the assets, at the following annual rates:
Computers and software
Furniture and fittings
Motor vehicle
Office equipment
Electrical installation and renovation
Signboard
20% - 25%
20%
20%
20%
20%
15%
Land and buildings — right-of-use assets
Over lease period of2 — 7 years
--24
24- 235
235
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14.
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13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353
ACCOUNTANTS’
6.
(1455050-D)
REPORT (CONT’D)
SIGNIFICANT ACCOUNTING
(c)
POLICIES (CONT’D)
Property, plant and equipment (cont'd)
The carrying amounts of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable. The policy for the recognition and
measurement of impairment losses is in accordance with Note 6(d) to this report.
The residual values, useful lives and depreciation method are reviewed at each financial year end, and adjusted
prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying
amount is recognised in profit or loss.
(d)
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset (except for inventories and
tax recoverable) may be impaired. If any such indication exists, the Group makes an estimate of the asset's
recoverable amount. For goodwill and intangible assets that have indefinite useful lives or that are not available for
use, the recoverable amount is estimated each period at the same time.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows from continuing use CGU. Subject to an operating segment ceiling test, for the purpose of
goodwill impairment testing, CGU to which goodwill has been allocated are aggregated so that the level at which
impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting
purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a
CGU or a group of CGUs that are expected to benefit from the synergies of the combination.
An asset's recoverable amount is the higher of an asset's fair value less costs to sell and its value-in-use. Where the
carrying amount of an asset or its related CGU exceeds its estimated recoverable amount, the asset is written down
to its recoverable amount.
In assessing value-in-use, the estimated future cash flows expected to be generated by the asset are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken
into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations
are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair
value indicators.
--25
25- 236
236
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
6.
SIGNIFICANT ACCOUNTING
(d)
POLICIES (CONT’D)
Impairment of non-financial assets (cont’d)
Impairment losses are recognised in profit or loss except for assets that have been previously revalued where the
revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other
comprehensive income up to the amount of any previous revaluation. Impairment losses recognised in respect of
CGU are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the
carrying amounts of the other assets in the CGU on a pro-rated basis.
An impairment loss in respect of goodwill is not reversed. In respect of assets other than goodwill, an assessment is
made at each reporting date as to whether there is any indication that previously recognised impairment losses may
no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been
a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was
recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had
been recognised previously. Such reversal is credited to profit or Joss in the financial year in which the reversal is
recognised.
(e)
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the first-in, first-out method. The cost includes cost of purchase and other incidental
expenses in bringing the items into its present location and condition, tf any.
Net realisable value is the estimated selling price in the ordinary
completion and the estimated costs necessary to make the sale.
(f)
course of business
less estimated costs of
Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and bank balances and deposits placed with licensed banks, other
short term and highly liquid investment which have an insignificant risk of changes in value. For the purpose of the
statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.
(g)
Financial assets
Financial assets are recognised in the statement of financial position when, and only when, the combining entities
become a party to the contractual provisions of the financial instrument.
When financial assets are initially recognised, they are measured at fair value, plus, in the case of financial assets
not at fair value through profit or loss (“FVTPL”), directly attributable transaction costs.
-- 26
26-237
237
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS?’ REPORT (CONT’D)
6.
SIGNIFICANT ACCOUNTING
(g)
POLICIES (CONT’D)
Financial assets (cont’d)
The Group determines the classification of financial assets upon initial recognition. The measurement for each
classification of financial assets under MFRS 9 are as below:
(i)
Financial assets measured
at amortised cost
Financial assets that are debt instruments are measured at amortised cost if they are held within a business
model whose objectives are to collect contractual cash flows and have contractual terms which give rise on
specific dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective
interest method. Gains or losses are recognised in profit or loss through the amortisation process and when the
financial assets are impaired or derecognised.
(ii)
Financial assets measured at fair value
Financial assets that are debt instruments are measured at fair value through other comprehensive income
(“FVTOCTI”) if they are held within a business model whose objectives are to collect contractual cash flows
and selling the financial assets, and have contractual terms which give rise on specific dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
Subsequent to initial recognition, these financial assets are measured at fair value. Any gains or losses arising
from the changes in fair value of these financial assets are recognised in other comprehensive income, except
impairment losses, exchange differences and interest income which are recognised in profit or loss. The
cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to
profit or loss as a reclassification adjustment when the financial asset is derecognised.
Financial assets that are debt instruments which do not satisfy the requirements to be measured at amortised
cost or FVTOCI are measured at fair value through profit or loss (“‘FVTPL”). The Group do not have any
financial assets measured at FVTOCI or FVTPL.
Equity instruments are classified as financial assets measured at FVTPL if they are held for trading or are
designated as such upon initial recognition. Financial assets are classified as held for trading if they are acquired
principally for sale in the near term or are derivatives that do not meet the hedge accounting criteria (including
separated embedded derivatives).
Subsequent to initial recognition, financial assets that are equity instruments are measured at fair value. Any
gains or losses arising from the changes in fair value of these financial assets are recognised in other
comprehensive income and are not subsequently transferred to profit or loss. Dividends on equity instruments
are recognised in profit or loss when the Group’s right to receive payment is established.
--2727 238
238
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT (CONT’D)
SIGNIFICANT ACCOUNTING
(g)
POLICIES (CONT’D)
Financial assets (cont’d)
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On
derecognition 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 other comprehensive income is
recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the
period generally established by reguiation or convention in the marketplace concerned. All regular way purchases
and sales of financial assets are recognised or derecognised on the settlement date, i.e. the date that the asset is
delivered to or by the Group.
(h)
Impairment of financial assets
The Group assesses at each financial year end whether there has been a significant increase in credit risk for financial
assets by comparing the risk of default occurring over the expected life with the risk of default since initial
recognition.
In determining whether credit risk on a financial asset has increased significantly since initial recognition, the Group
uses historical experience and other supportive information to assess deterioration in credit quality of a financial
asset. The Group assesses whether the credit risk on a financial asset has increased significantly on an individual or
collective basis. For collective basis evaluation, financial assets are grouped on the basis of similar risk
characteristics.
The Group considers past loss experience and observable data such as current changes and future forecasts in
economic conditions to estimate the amount of expected impairment loss. The methodology and assumptions
including any forecasts of future economic conditions are reviewed regularly.
The amount of impairment loss is measured as the probability-weighted present value of all cash shortfalls over the
expected life of the financial asset discounted at its original effective interest rate. The cash shortfall is the difference
between all contractual cash flows that are due to the Group and all the cash flows that the Group expects to receive.
The carrying amount of the financial asset is reduced through the use of an allowance account and the impairment
loss is recognised in profit or loss. When a financial asset becomes uncollectible, it is written off against the
allowance account.
The Group measures the impairment loss on financial assets other than trade receivables based on the two-step
approach:
(i)
12-months expected credit loss (“ECL”)
For a financial asset for which there is no significant increase in credit risk since initial recognition, the Group
shall measure the allowance for impairment for that financial asset at an amount based on the probability of
default occurring within the next 12 months considering the loss given default of that financial asset.
-- 28
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239
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
SIGNIFICANT
(h)
REPORT (CONT’D)
ACCOUNTING
POLICIES (CONT’D)
Impairment of financial assets (cont’d)
The Group measures the impairment loss on financial assets other than trade receivables based on the two-step
approach: (cont’d)
(ii) Lifetime ECL
For a financial asset for which there is a significant increase in credit risk since initial recognition, a lifetime
ECL for that financial asset is recognised as allowance for impairment by the Group. If, in a subsequent period
the significant increase in credit risk since initial recognition is no longer evident, the Group shall revert the
loss allowance measurement from lifetime ECL to 12-months ECL.
If in a subsequent period, the credit quality improves and reverses any previously assessed significant increase in
credit risk since initial recognition, then the impairment loss reverts from lifetime to 12-months ECL.
For trade receivables, the Group measures impairment loss based on lifetime ECL at each reporting date until the
financial assets are derecognised.
(i)
Financial liabilities
(i)
Initial recognition and subsequent measurement
Financial liabilities are classified according to the substance of the contractual arrangements entered into and
the definitions of a financial liability. All financial liabilities are measured initially at fair value plus directly
attributable costs, except in the case of financial liabilities at FVTPL.
Financial liabilities are recognised in the statement of financial position when, and only when, the Group
becomes a party to the contractual provisions of the financial instrument. Financial liabilities are classified as
either financial liabilities at FVTPL or other financial liabilities.
a.
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial
designated upon initial recognition as at FVTPL.
liabilities
held
for trading
and
financial
liabilities
Financial liabilities held for trading include derivatives entered into by the Group that do not meet the
hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated
at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives
include exchange differences.
The Group does not have any financial liabilities at FVTPL
financial years.
--29
29-240
240
in the current financial year and previous
[ Registration
Registration
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Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated
in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT
SIGNIFICANT ACCOUNTING
(i)
(CONT’D)
POLICIES (CONT’D)
Financial liabilities (cont’d)
(i)
Initial recognition and subsequent measurement (cont'd)
b.
Other financial liabilities
The Group’s other financial liabilities consist of payables, borrowings and lease liabilities.
Other financial liabilities are recognised initially at fair value plus directly attributable transaction costs
and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least twelve months after the reporting date.
(ii)
Derecognition
A financial liability is derecognised when the obligation under the liability is extinguished. 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 a derecognition
of the original liability and the recognition of a new liability, and the difference in the respective carrying
amounts is recognised in profit or loss.
(j)
Provisions for liabilities
Provisions for liabilities are recognised when the Group has a present obligation (legal or constructive) as a result
ofa past event, it is probable that an outflow of economic resources will be required to settle the obligation and the
amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is
probable that an outflow of economic resources will be required to settle the obligation, the provision is
If the effect of the time value of money is material, provisions are discounted using a current pre-tax
reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the
due to the passage of time is recognised as a finance cost.
--3030 241
241
no longer
reversed.
rate that
provision
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT (CONT’D)
SIGNIFICANT ACCOUNTING
(k)
POLICIES (CONT’D)
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all
of its liabilities. Ordinary shares are classified as equity instruments.
Ordinary shares are recorded at the proceeds received at issuance and classified as equity. Transaction costs directly
related to the issuance of equity instrument are accounted for as a deduction from equity, net of any related income
tax benefit. Otherwise, they are charged to profit or loss.
Dividends on ordinary shares are recognised as liabilities when proposed or declared before the reporting date. A
dividend proposed or declared after the reporting date, but before the report are authorised for issue, is not
recognised as liability at the reporting date.
(1)
Leases
The Group has recognised and measured its leases in accordance MFRS 16 effective from 1 January 2019. The
financial impact to the combined financial statements on initial application of this standard is disclosed in Note 5.2(i)
to this report.
e
As lessee
The Group recognises a right-of-use asset and a lease liability at the commencement date of the contract for all
leases excluding short-term leases or leases for which the underlying asset is of low value, conveying the right
to control the use of an identified asset for a period of time.
The right-of-use assets are initially recorded at cost, which comprise:
e
the amount of the initial measurement of the lease liability;
«
any lease payments made at or before the commencement date of the lease, less any lease
e
e
any initial direct costs incurred by the Group; and
an estimate of costs to be incurred by the Group in dismantling and removing the underlying asset, restoring
the site on which it is located or restoring the underlying asset to the condition required by the lessor.
incentives received;
Subsequent to the initial recognition, the right-of-use assets are measured at cost less any accumulated
depreciation and accumulated impairment losses, and adjusted for any remeasurement of the lease liability.
Depreciation is computed on a straight-line basis over the estimated useful lives of the right-of-use assets or lease
term whichever is earlier.
--3131 242
242
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT (CONT’D)
SIGNIFICANT ACCOUNTING
()
POLICIES (CONT’D)
Leases (cont’d)
As lessee
If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of
the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-ofuse asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group
depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The policy for the recognition and measurement of impairment
losses is in accordance with Note 6(d) to this report.
The lease liability is initially measured at the present value of the lease payments that are not paid at that date.
The lease payments are discounted using the interest rate implicit in the lease. If rate cannot be readily
determined, the Group’s incremental borrowing rate is used. Subsequent to the initial recognition, the Group
measures the lease liability by increasing the carrying amount to reflect interest on the lease liability, reducing
the carrying amount to reflect lease payments made, and remeasuring the carrying amount to reflect any
reassessment or lease modifications.
As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as
operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount
of the leased asset and recognised over the lease term on the same basis as rental income.
(m)
Revenue recognition
Revenue comprises payment that the Group expects to be entitled to in exchange for sale of goods and services, net
of SST, rebates and/or discounts after eliminating sales within the Group.
The Group recognises revenue from contracts with customers based on the five-step model as set out in MFRS
15:
(i)
Identify contract(s) with a customer. A contract is defined as an agreement between two or more parties that
creates enforceable rights and obligations and sets out the criteria that must be met.
(ii)
Identify performance obligations in the contract. A performance obligation is a promise in a contract with a
customer to transfer a good or service to the customer.
(iii) Determine the transaction price. The transaction price is the amount of consideration to which the combining
entities expects to be entitled in exchange for transferring promised goods or services to a customer, excluding
amounts collected on behalf of third parties.
--3232 243
243
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
6.
SIGNIFICANT ACCOUNTING
(m)
POLICIES (CONT’D)
Revenue recognition (cont'd)
The Group recognises revenue from contracts with customers based on the five-step model as set out in MFRS
15:
(cont’d)
(iv) Allocate the transaction price to the performance obligations in the contract. For a contract that has more than
one performance obligation, the Group allocates the transaction price to each performance obligation in an
amount that depicts the amount of consideration to which the Group expects to be entitled in exchange for
satisfying each performance obligation.
(v)
Recognise revenue when (or as) the Group satisfies a performance obligation.
The Group satisfies a performance obligation and recognises revenue over time if the Group’s performance:
(i)
Does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment
for performance completed to date; or
(ii)
Creates or enhances an asset that the customer controls as the asset is created or enhanced; or
(iii) Provides benefits that the customer simultaneously receives and consumes as the Group performs.
For performance obligations where any one of the above conditions is not met, revenue is recognised at the point in
time at which the performance obligation is satisfied.
When the Group satisfies a performance obligation by delivering the promised goods or services, it creates a
contract-based asset on the amount of consideration earned by the performance. Where the amount of consideration
received from a customer exceeds the amount of revenue recognised, this gives rise to a contract liability.
Revenue is measured at the fair value of consideration
performance obligation in contracts with customers:
(i)
received
or receivable.
The
following
describes the
Revenue from contracts with customers
Revenue is recognised when the Group satisfies a performance obligation by transferring a promised good or
service to the customer, which is when the customer obtains control of the good or service. A performance
obligation may be satisfied at a point in time or over time. The amount of revenue recognised is the amount
allocated to the satisfied performance obligation.
--3333 244
244
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353
(1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
6.
SIGNIFICANT
(m)
ACCOUNTING
POLICIES (CONT’D)
Revenue recognition (cont’d)
(i)
Revenue
(a)
from contracts with customers (cont’d)
Air and ocean freight
Revenue from air and ocean freight includes air and ocean freight charges of inbound and outbound
transportation of cargo, delivery and warehousing charges which are recognised based upon the terms in
the contract of carriage and to the extent a service is completed. Revenue is recognised based on the actual
service provided up to the end of the reporting period as a proportion of the total services to be provided
as the customer receives and consumes the benefits of the Group’s performance simultaneously. The
Group measures the fulfilment of its performance obligations on the progress of each shipment in terms
of days travelled.
Other incidental revenue included in air and ocean freight were terminal handling charges, bill of lading
handling charges and other related charges which are considered to represent one single performance
obligation satisfied at a point in time when the services are fully rendered.
(b)
Freight forwarding
These revenue include mainly customs clearance, preparation of import and export documentation and
other handling charges. These integrated services are considered to represent one single performance
obligation satisfied at a point in time when the services are fully rendered.
(c)
Sale of medical and healthcare products
Revenue from sale of medical and healthcare products is recognised at a point in time when the Group
satisfies a performance obligation by transferring promised goods to a customer. An asset is transferred
as and when the customer obtains control of that asset, which coincides with the delivery and acceptance
of goods by customers.
(d)
Warehousing and distribution of healthcare products
Revenue from warehousing services is recognised overtime, we measure based upon the terms in the
contract of warehousing and to the extent the service is completed. The Group measured the fulfilment of
its performance obligations based on the storage space and duration occupied by customers.
Revenue for distribution services, the Group measure the fulfilment of its performance obligations based
on the type and amount of distribution services provided and delivery trips undertaken. Revenue is
recognised upon delivery and acceptance of goods by receivers designated by the customers.
--3434 245
245
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202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT
SIGNIFICANT ACCOUNTING
(m)
(CONT’D)
POLICIES (CONT’D)
Revenue recognition (cont’d)
(ii)
Other income
(a)
Interest income
Interest income is recognised as it accrues, using the effective interest method.
(b)
Rental income
Revenue from rental of property, plant and equipment is recognised over the lease term on accrual basis.
(n)
Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the
activities to prepare the asset for its intended use or sale are in progress and the expenditure and borrowing costs
are incurred. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary
to prepare the qualifying asset for its intended use or sale are interrupted or completed.
All borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of
interest and other costs that the Group incurred in connection with the borrowing of funds.
(0)
Employee
(i)
benefits
Short-term employee benefits
Short-term employment benefits, such as wages, salaries and social security contributions, are recognised as
an expenses in the financial year in which the associated services are rendered by employees of the Group.
Short-term accumulating compensated absences, such as paid annual leave, are recognised when the employees
render services that increase their entitlement to future compensated absences.
Non-accumulating compensated absences, such as sick leave, are recognised when the absences occur.
The expected cost of accumulating compensated absences is measured as the additional amount expected to be
paid as a result of the unused entitlement that has accumulated at the reporting date.
Profit-sharing and bonus plans are recognised when the Group has a present legal or constructive obligation to
make payments as a result of past events and a reliable estimate of the obligation can be made. A present
obligation exists when, and only when the Group has no realistic alternative but to make the payments.
--3535 246
246
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202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
6.
REPORT (CONT’D)
SIGNIFICANT ACCOUNTING
(o)
POLICIES (CONT’D)
Employee benefits (cont’d)
(ii)
Defined contribution plans
Defined contributions plans are post-employment benefits plans under which the Group pays fixed
contributions into separate entities or funds and will have no legal or constructive obligation to pay further
contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee
services in the current and preceding financial years. Such contributions are recognised as an expense in the
profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees
Provident Fund (“EPF”).
(p)
Taxes
The tax expense in the profit or loss represents the aggregate amount of current tax and deferred tax.
(i)
Current tax
Current tax is the expected amount of income taxes payable in respect of the taxable profit for the period and
is measured using the tax rates that have been enacted at the reporting date, and adjustment of tax payable in
respect of the previous financial year.
Current taxes is recognised in profit or loss except to the extent that the tax relates to items recognised outside
profit or loss, either in other comprehensive income or directly in equity.
(ii)
Deferred tax
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities in the combined statements of financial position and their tax bases. Deferred
tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to apply to the
temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by
the end of the reporting period.
Deferred tax is provided for, using the liability method, on temporary differences at the reporting date arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle,
deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are
recognised for all deductible temporary differences, unutilised tax losses and unused tax credits to the extent
that it is probable that taxable profit will be available against which the deductible temporary differences,
unutilised tax losses and unused tax credits can be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or
the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in the profit or loss, except when it arises from transaction which is recognised in
other comprehensive income or directly in equity, in which case the deferred tax is charged or credited in other
comprehensive income or directly in equity.
36- -- 36
247
247
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(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS?
6.
REPORT
SIGNIFICANT ACCOUNTING
(p)
(CONT’D)
POLICIES (CONT’D)
Taxes (cont'd)
(iii) Sales and Service Tax (“SST”)
Expenses and assets are recognised net of SST except:
e
where SST incurred in a purchase of asset or service is not recoverable from the authority, in which case
the SST is recognised as part of cost of acquisition of asset or as part of the expense item as applicable; and
e
payables that are stated as SST inclusive.
The rate for sales tax is fixed at 5% or 10%, while the rate for service tax is fixed at 6%.
(q)
Fair value measurement
Fair value of an asset or a liability, except
that would be received to sell an asset
participants at the measurement date. The
liability takes place either in the principal
for share-based payment and lease transactions, is determined as the price
or paid to transfer a liability in an orderly transaction between market
measurement assumes that the transaction to sell the asset or transfer the
market or in the absence of a principal market, in the most advantageous
market.
For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible.
Fair values are categorised into different level in a fair value hierarchy based on the input used in the valuation
technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at
the measurement date.
Level 2: inputs other than quoted prices included within | level that are observable for the asset or liability, either
directly or indirectly.
Level 3: unobservable inputs for the asset or liability.
The Group recognises transfer between levels of the fair value hierarchy as of the date of the event or change in
circumstances that caused the transfers.
--3737 248
248
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
6.
SIGNIFICANT ACCOUNTING
(r)
POLICIES (CONT’D)
Contingent liability and contingent asset
A contingent liability is a possible obligation that arises from past events whose existence would be confirmed by
the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a
present obligation that is not recognised because it is not probable that an outflow of resources would be required
to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot
be recognised because it cannot be measured reliably. The Group does not recognise a contingent liability but
discloses its existence in the financial statements.
A contingent asset is a possible asset that arises from past events whose existence would be confirmed by the
occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group
does not recognise a contingent asset but discloses its existence where the inflows of economic benefits are probable,
but not virtually certain.
In the acquisition of subsidiaries by the Group under business combinations not under common control, contingent
liabilities assumed are measured initially at their fair value at the acquisition date.
(s)
Related parties
A related party is a person or an entity that is related to the Group under the following conditions:
(i)
A person or a close member of that person’s family:
(a)
(b)
(c)
is a member of the key management personnel of the reporting entity or of a parent of the reporting
entity;
has control or joint control over the reporting entity; or
has significant influence over the reporting entity.
(ii) | Any one of the following condition applies:
(a) _
the entity and the reporting entity are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others).
(b) _ either entity is an associate or joint venture of the other entity (or ofa member ofa group of which the
other entity is a member).
(c)
both entities are joint ventures ofa third entity.
(d)
either entity is a joint venture ofa third entity and the other entity is an associate of the third entity.
(e)
the entity is a post-employment benefit plan for the benefit of employees of either the reporting entity
or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring
employers are also related to the reporting entity.
(f)
the entity is controlled or jointly controlled by a person identified in Note 6(s)(i).
(g)
a person identified in Note 6(s)(i)(b) has significant influence over the entity or is a member of the
key management personnel of the entity or of a parent of the entity.
(h)
the entity, or any member of a group of which it is a part, provides key management personnel services
to the reporting entity or to the parent of the reporting entity.
38- -- 38
249
249
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Registration
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No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
6.
SIGNIFICANT ACCOUNTING
(s)
POLICIES (CONT’D)
Related parties (cont’d)
(iii)
Directly, or indirectly through one or more intermediaries, the party:
(a)
(b)
(c}
controls, is controlled by, or is under common control with, the Group (this includes
subsidiaries, fellow subsidiaries and fellow associates and joint ventures);
has an interest in the entity that gives it significant influence over the entity; or
has joint control over the entity.
parents,
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise)
of that entity.
Close members of the family of an individual are those family members who may be expected to influence, or be
influenced by, that individual in their dealings with entity and include:
(i)
(ii)
(iii)
(o)
that person’s children and spouse or domestic partner;
children of that person’s spouse or domestic partner; and
dependants of that person or that person’s spouse or domestic partner.
Contract costs
Contract costs are freight expenses deferred and amortised over the course of the freights services on a percentage
completion basis that is consistent with revenue recognition. This percentage of completion is derived from time
lapse between days travelled from the loading port to the destination port. Contract costs are recognised as an asset
if they represent incremental costs of obtaining a contract or fulfilment costs that (i) relate directly to a contract or
to an anticipated contract; (ii) generate or enhance resources to be used in meeting obligations under the contract;
and (iii) are expected to be recovered,
(u)
Contract liabilities
Contract liabilities are the obligations to transfer services to customer for which the Group has received the
consideration from or has billed the customer. In the case of freight services revenue, contract liabilities represents
the excess of freight services charges that had been billed to customer to date over revenue recognised based on
stage of completion. The stage of completion is determined by the number of days of travel completed as at year end
in relation to the total travel days from the loading port to the destination port.
--3939 250
250
[ Registration
Registration
No.
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Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
6.
SIGNIFICANT ACCOUNTING
(v)
POLICIES (CONT’D)
Earnings per ordinary share (“EPS”)
The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares.
Basic EPS is calculated by dividing the net profit or loss attributable to ordinary shareholders of the Group by the
weighted average number of ordinary shares outstanding during the periods, adjusted for own shares held.
Diluted EPS is determined by adjusting the net profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential
ordinary shares.
(w)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker is the person or group that allocates resources and assesses the
performance of the operating segments of an entity.
Segment revenue, expense, assets and liabilities are those amount resulting from the operating activities ofa segment
that are directly attributable to the segment and the relavant portion that can be allocated on a reasonable basis to
the segment. Segment revenue, expense, assets and liabilities are determined before intra-group balances and intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intra-group
balances and transactions are between group enterprises within a single segment.
(x)
Current versus non-current classification
Assets and liabilities in statement of financial position are presented based on current/non-current classification. An
asset is current when it is:
e
e
®
e
Expected to be realised or intended to be sold or consumed in normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realised within twelve months after the reporting period; or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
e It is expected to be settled in normal operating cycle;
e Itis held primarily for the purpose of trading;
e It is due to be settled within twelve months after the reporting period; or
e There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
40--- 40
251
251
|
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353
ACCOUNTANTS’
7.
(1455050-D)
REPORT (CONT’D)
SIGNIFICANT ACCOUNTING
ESTIMATES
AND JUDGEMENT
The preparation of financial statements in conformity with MFRS requires management to exercise their judgement in the
process of applying the Group’s accounting policies and the use of accounting estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the reporting date
and which may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in
future periods. Although these judgements and estimates are based on the management’s best knowledge of current events
and actions, actual results may differ.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which
are more likely to be materially adjusted due to estimates and assumptions tuming out to be wrong. Detailed information
about each of these estimates and judgements is disclosed below:
(i)
Measurement of right-of-use assets and lease liabilities
The right-of-use assets are depreciated on the straight-line basis over the assets’ useful lives or lease term,
whichever is earlier. Management estimates the useful lives of these assets based on expected usage level and
current conditions of the assets with proper maintenance schedule, therefore future depreciation charges could be
revised.
The lease term has been determined based on the non-cancellable period of lease in term and conditions of the
arrangements together with both:
i.
ii.
periods covered by an option to extend the leases; and
periods covered by an option to terminate the lease.
In determining whether it is reasonably certain that an option to extend the lease or not to exercise an option to
terminate the lease will be exercised, management has considered all relevant factors and circumstances that have
created the economic incentives to exercise such option when exercising their judgement in the assessment.
The lease terms and incremental borrowing rates have been determined using appropriate assumptions as necessary
including management’s estimation of the application internal costs.
(ii)
Measurement of income taxes
Liability for taxation is recognised based on estimates of whether additional taxes will be payable. The estimation
process includes seeking advice of whether additional taxes will be payable. When the final outcome of the tax
payable is determined with the tax authority, the amount might be different from the initial estimate of the tax
payable. Such difference may impact the income tax in the period when such determination is made. The Group
will adjust for the differences as over- or under- provision of income tax in the period in which those differences
arise.
--A]
41 -252
252
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
7.
SIGNIFICANT
REPORT
ACCOUNTING
(CONT’D)
ESTIMATES AND JUDGEMENT
(CONT’D)
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which
are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong. Detailed information
about each of these estimates and judgements is disclosed below: (cont’d)
(iii)
Useful lives of property, plant and equipment
MERS 116, ‘Property, Plant and Equipment’ requires the review of the residual value and remaining useful life of
an item of property, plant and equipment at each financial year end. The Group reviewed the residual values and
remaining useful lives of its property, plant and equipment and found that no revisions to the residual values and
remaining useful lives of these assets were necessary.
(iv)
Impairment of financial assets
Impairment is established when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of receivables. This is determined based on the ageing profile, expected
collection patterns of individual receivable balances, credit quality and credit losses incurred. Management
carefully monitors the credit quality of receivable balances and makes estimates about the amount of credit losses
that have been incurred at each financial statement reporting date. Any changes to the ageing profile, collection
patterns, credit quality and credit losses can have an impact on the impairment recorded.
--4242 253
253
14.
13.
13.
Group Berhad
8.
REPORT (CONT’D)
725,850
At 31 December 2021
Disposals
Additions
Additions
At 31 December 2020/
1 January 2021
254
254
-- 43
43- -
266,146
9,790
50,800
352,501
256,356
301,701
1,013,417
1,013,417
183,361
72,995
255,505
46,196
393,202
620,215
1,394,433
759,692
(41,512)
676,253
676,253
158,379
24,982
Motor
vehicles
RM
(49,597)
229,733
25,772
Furniture
and fittings
RM
Disposals
452,116
168,099
Computer
and software
RM
At 31 December 2019/
1 January 2020
Additions
At I January 2019
At 31 December
Cost
Land and
buildings
RM
PROPERTY, PLANT AND EQUIPMENT
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW
COMBINED STATEMENTS OF FINANCIAL POSITION
302,612
65,293
237,319
59,348
177,971
158,220
19,751
RM
equipment
Office
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D)
591,408
45,480
7,800
3,928,317
938,855
(41,512)
3,030,974
860,321
545,928
2,170,653
1,912,850
307,400
(49,597)
Total
RM
288,580
7,800
RM
Signboard
257,348
188,552
68,796
Electrical
installation and
renovation
RM
14.
13.
13.
Group Berhad
202,090
272,732
79,769
63,621
46,415
566,641
782,497
$23,234
At 31 December 2020
At 31 December 2019
446,776
32,405
34,652
215,856
255
255
-44- 44 -
34,426
86,671
64,056
169,685
238,080
230,920
20,750
148,935
142,817
6,118
-
28,990
209,090
194,276
14,814
-
RM
RM
133,939
96,981
96,981
Furniture
and fittings
Computer
and software
At 31 December 2021
Net carrying amounts
At 31 December 2021
Disposals
Depreciation charge
Depreciation charge
At 3] December 2020/
1 January 2021
1 January 2020
Depreciation charge
Disposals
At 31 December 2019/
At | January 2019
Accumulated depreciation
At 31 December
Land and
buildings
RM
(CONT’D)
REPORT (CONT’D)
PROPERTY, PLANT AND EQUIPMENT
ACCOUNTANTS’
Registration no. 202201009353 (1455050-D)
(Incorporated in Malaysia)
KGW
322,667
195,719
698,654
695,779
(40,240)
255,485
480,534
126,948
353,586
354,853
48,330
(49,597)
RM
Motor
vehicles
78,569
294,871
73,970
39,768
242,973
6,825
1,045,079
1,497,349
1,762,058
2,166,259
975
348,435
672,874
(40,240)
975
97,378
408,051
1,125,574
976,575
198,596
(49,597)
Total
RM
1,533,625
RM
Signboard
251,057
178,779
72,278
18,641
160,138
Electrical
installation and
renovation
RM
103,140
199,472
36,123
163,349
25,146
138,203
124,491
13,712
RM
Office
equipment
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
8.
At 30 June 2021 (unaudited)
Net carrying amounts
At 30 June 2021 (unaudited)
674,569
338,848
107,928
Disposals
230,920
64,281
254,132
238,080
16,052
318,413
1,013,417
Depreciation charge
301,701
16,712
1,013,417
At 1 January 2021
Accumulated depreciation
At 30 June 2021 (unaudited)
Additions
Disposals
At | January 2021
At 30 June
Cost
Computer
and software
RM
(CONT’D)
Land and
buildings
RM
EQUIPMENT
REPORT (CONT’D)
PROPERTY, PLANT AND
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW Group Berhad
256
256
-45- 45 -
72,937
186,389
169,685
16,704
259,326
827,758
566,763
480,534
126,469
(40,240)
676,253
759,780
(41,512)
1,394,521
vehicles
RM
and fittings
RM
256,356
2,970
Motor
Furniture
110,116
181,083
163,349
17,734
291,199
264,710
301,098
251,057
50,041
565,808
545,928
19,880
RM
237,319
53,880
RM
equipment
Office
Electrical
installation and
renovation
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
2,021,781
1,828,703
390
7,410
335,318
(40,240)
1,533,625
3,850,484
3,030,974
861,022
(41,512)
Total
RM
390
7,800
7,800
Signboard
RM
14.
13.
13.
Group Berhad
8.
PLANT AND
At 30 June 2022
Net carrying amounts
At 30 June 2022
Written off
Disposals
Depreciation charge
At | January 2022
Accumulated depreciation
At 30 June 2022
Written off
Disposals
Additions
At | January 2022
Cost
At 30 June
PROPERTY,
510,290
560,550
446,776
113,774
1,070,840
1,013,417
57,423
257
257
-- 46
46 --
73,877
123,669
[25,672
89,079
202,090
12,767
(91,188)
943,340
657,527
695,779
136,342
(174,594)
1,600,867
197,546
93,695
145,706
199,472
16,481
(70,247)
-
239,401
302,612
7,404
(70,615)
-
RM
1,394,433
381,029
(174,595)
equipment
RM
Office
vehicles
Motor
266,146
22,588
(91,188)
and fittings
RM
Furniture
272,732
19,881
(166,941)
214,751
352,501
29,193
(166,943)
and software
RM
buildings
RM
Computer
(CONT’D)
Land and
EQUIPMENT
ACCOUNTANTS’ REPORT (CONT’D)
Registration no. 202201009353 (1455050-D)
(Incorporated in Malaysia)
KGW
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
Electrical
231,016
332,005
348,435
41,952
(58,382)
-
563,021
591,408
30,000
(58,387)
-
RM
installation and
renovation
6,240
1,560
585
975
7,800
7,800
RM
Signboard
1,947,537
1,946,689
2,166,259
341,782
(386,758)
(174,594)
3,894,226
3,928,317
527,637
(387,133)
(174,595)
Total
RM
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
IKGW Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
8
PROPERTY,
(a)
REPORT (CONT’D)
PLANT
AND
EQUIPMENT
(CONT’D)
Right-of-use assets
Right-of-use assets represent operating lease agreements entered into by the Group for the use of office and
warehouse. The lease is for an initial lease with period ranging from 24 to 58 months with option to renew for
another 24 months.
The Group also has motor vehicles with initial lease term of five years.
Additional information on the right-of-use assets is as follows:Land and
buildings
Motor
vehicles
Total
RM
RM
RM
At 31 December
Cost
At | January 2019
452,116
Addition
676,253
168,099
At 31 December 2019/1 January 2020
-
620,215
Addition
676,253
393,202
At 31 December 2020/1 January 2021
-
Reclassification
-
At 31 December 2021
1,013,417
168,099
1,296,468
-
1,013,417
Addition
1,128,369
393,202
676,253
1,689,670
759,692
759,692
(41,512)
(41,512)
1,394,433
2,407,850
Accumulated depreciation
At | January 2019
-
Depreciation charge
At 31 December 2019/1
January 2020
305,256
305,256
96,981
48,330
145,311
96,981
353,586
450,567
133,939
126,948
260,887
230,920
480,534
711,454
Depreciation charge
215,856
254,101
469,957
Reclassification
At 31 December 2021
446,776
(G8,856)
695,779
(38,856)
1,142,555
At 31 December 2021
566,641
698,654
1,265,295
At 31 December 2020
782,497
195,719
978,216
At 31 December 2019
$23,234
322,667
845,901
Depreciation charge
At 31
December 2020/1
January 2021
-
Net carrying amount
The above right-of-use assets have been included in property, plant and equipment.
--47
47 -258
258
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
8.
PROPERTY,
(a)
PLANT AND EQUIPMENT
(CONT’D)
Right-of-use assets (cont’d)
Additional information on the right-of-use assets is as follows:-
Land and
buildings
Motor
vehicles
Total
RM
RM
RM
-
At 30 June
Cost
At 1 January 2021
1,013,417
Addition
676,253
1,689,670
-
759,692
759,692
1,013,417
(41,512)
1,394,433
(41,512)
2,407,850
At | January 2021
230,920
480,534
711,454
Depreciation charge
107,928
125,085
233,013
(38,944)
566,675
(38,944)
905,523
1,013,417
1,394,433
2,407,850
57,423
375,229
432,652
1,070,840
(174,595)
1,595,067
(174,595)
2,665,907
At 1 January 2022
446,776
695,779
1,142,555
Depreciation charge
113,774
Reclassification
At 30 June 2021 (unaudited)
Accumulated depreciation
Reclassification
At 30 June 2021 (unaudited)
338,848
Cost
At | January 2022
Addition
Disposal
At 30 June 2022
-
’ Accumulated depreciation
135,956
249,730
560,550
(174,594)
657,141
(174,594)
1,217,691
At 30 June 2022
510,290
937,926
1,448,216
At 30 June 2021 (unaudited)
674,569
827,758
1,502,327
Disposal
At 30 June 2022
-
Net carrying amount
The above right-of-use assets have been included in property, plant and equipment.
A --- 48
259
259
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
8
PROPERTY,
(b)
PLANT AND EQUIPMENT
(CONT’D)
Included in property, plant and equipment of the Group are the following fully depreciated property, plant and
equipment which are stil] in use:
At 30 June
At 31 December
2022
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Cost:
Computer and software
64,512
200,967
211,502
166,943
68,803
Furniture and fittings
63,038
92,534
149.265
91,188
152,608
Motor vehicles
-
Office equipment
Electrical installation
and renovation
DEFERRED
-
70,396
108,184
174,595
-
137,000
76,258
111,586
133,547
56,682
184,046
53,882
180,031
331,493
458,367
856,408
388,271
513,028
TAX ASSETS/(LIABILITIES)
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Deferred tax assets/
(liabilities):
At | January
Charged to profit or loss
55,401
(10,041)
(10,041)
6,661
3,695
857,769
32,137
65,442
(16,702)
2,966
At 30 June/3 1 December
913,170
22,096
55,401
(10,041)
6,661
The components and movement of the Group’s deferred tax assets and liabilities are as follows:
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
RM
1,143,886
121,849
94,802
58,070
981
36,955
32,005
51,972
16,391
-
(unaudited)
RM
Deferred tax assets:
Contract cost and contract
liabilities
Impairment losses on trade
receivables
Property, plant and equipment
Total deferred tax assets
1,180,841
153,854
-- 49
49-260
260
146,774
74,461
5,870
6,851
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
9.
DEFERRED
TAX ASSETS/(LIABILITIES) (CONT’D)
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Deferred tax liabilities:
Contract cost and contract
liabilities
-
-
-
-
Unrealised expenses/income
(80,811)
(173,412)
(92,892)
(38,866)
(91,373)
-
(84,502)
-
(190)
-
Total deferred tax liabilities
(267,671)
(131,758)
(91,373)
(84,502)
(190)
913,170
22,096
55,401
(10,041)
Property, plant and equipment
Net deferred tax
assets/(liabilities)
10.
(13,448)
6,661
INVENTORIES
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
At cost:
Trading goods
14,750
-
37,030
-
-
1,243,464
-
1,575,020
-
-
Recognised in profit or loss:
Inventories recognised
in cost of sales
11.
TRADE
RECEIVABLES
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
RM
17,960,501
20,978,111
7,057,500
84,000
6,668
1,157,967
524,391
18,044,501
20,984,779
8,215,467
5,200,854
(unaudited)
RM
Third parties
Related parties
19,941,678
19,941,678
Less: Impairment losses
(109,458)
19,832,220
(133,354)
17,911,147
50- -- 50
261
261
(172,029)
20,812,750
(68,295)
8,147,172
4,676,463
(38,677)
5,162,177
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
11.
TRADE
REPORT
RECEIVABLES
(CONT’D)
(CONT’D)
Trade receivables of the Group are non-interest bearing and the normal credit terms range from cash on delivery to 45
days (30 June 2021: cash on delivery to 45 days; 31 December 2021: cash on delivery to 45 days; 31 December 2020:
cash on delivery to 45 days; 31 December 2019: cash on delivery to 45 days) terms. Other credit terms are assessed and
approved on a case-by-case basis. They are recognised at their original invoice amounts which represent their fair values
on initial recognition.
Ageing analysis on trade receivables
The ageing analysis of trade receivables are as follows:
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Not past due
10,034,837
RM
5,258,265
6,737,601
3,143,906
2,617,539
1,780,892
Past due
- 30 days
6,872,183
7,706,688
9,503,726
3,453,824
- 31 to 60 days
2,145,865
2,602,857
3,239,534
1,173,996
348,314
- 61 to 90 days
337,314
1,290,040
590,185
221,838
247,759
- 91 days to 120 days
393,829
404,999
128,125
77,228
140,731
- more than 120 days
48,192
648,298
613,579
76,380
26,942
9,797,383
12,652,882
14,075,149
5,003,266
2,544,638
19,832,220
17,911,147
20,812,750
8,147,172
5,162,177
109,458
19,941,678
133,354
18,044,501
172,029
20,984,779
68,295
8,215,467
38,677
5,200,854
Impaired and provided for
Receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy receivables with good payment records with the
Group.
None of the trade receivables of the Group that are neither past due nor impaired have been renegotiated during the
financial year/period.
Receivables that are past due but not impaired
The Group has trade receivables amounting to RM9,797,383 (30 June 2021: RM12,652,882; 31 December 2021:
RM14,075,149; 31 December 2020: RM5,003,266; 31 December 2019: RM2,544,638) that are past due at the reporting
date but are not impaired.
Trade receivables that were past due but not impaired relate to customers that have good track record with the Group.
Based on past experience and no adverse information to date, the Directors of the Group is of the opinion that no provision
for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and
the balances are recoverable.
--5151 262
262
—
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
IKGW Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
11.
TRADE
RECEIVABLES
(CONT’D)
Receivables that are past due and impaired
The Group has trade receivables amounting to RM109,458 (30 June 2021: RM133,354; 31 December 2021: RM172,029;
31 December 2020: RM68,295; 31 December 2019: RM38,677) that have been impaired.
Receivables that are individually determined to be impaired at the end of the financial year/period relate to receivables
that are facing significant financial difficulties and have defaulted on payments or the Directors of the Group are of the
opinion that they are not recoverable.
The Group applies the simplified approach whereby allowance for impairment is measured
movement of impairment losses on the trade receivables of the Group are as follows:
at lifetime ECL.
Lifetime ECL
Specific
allowance
allowance
Total
RM
RM
RM
The
At 1 January 2019
Charge for the year (Note 26)
At 31 December 2019/
1 January 2020
Charge for the year (Note 26)
1,858
36,819
38,677
1,858
36,819
38,677
5,366
24,252
29,618
At 31 December 2020/
1 January 2021
Charge for the year (Note 26)
7,224
61,071
68,295
77,024
26,710
103,734
At 31
84,248
87,781
172,029
December
2021
At 1 January 2021
Lifetime ECL
Specific
allowance
allowance
Total
RM
RM
RM
7,224
61,071
68,295
Charge for the period (Note 26)
61,846
3,213
65,059
At 30 June 2021 (unaudited)
69,070
64,284
133,354
84,248
87,781
172,029
(1,446)
(62,571)
86,335
109,458
At | January 2022
Reversal charge for the period (Note 26)
(61,125)
At 30 June 2022
23,123
--5252 263
263
—
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
11.
TRADE
REPORT
RECEIVABLES
The currency exposure
(CONT’D)
(CONT’D)
profile of trade receivables is summarised as follow:
At 30 June
At 31 December
2022
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Ringgit Malaysia
United States Dollar
RM
11,481,848
9,069,182
11,309,404
5,982,755
4,312,040
8,459,830
8,968,587
9,668,374
2,223,643
877,714
11,007
Singapore Dollar
-
6,732
7,001
9,069
Euro
-
-
-
-
19,941,678
12.
OTHER
RECEIVABLES,
18,044,501
20,984,779
8,215,467
93
5,200,854
DEPOSITS AND PREPAYMENTS
At 30 June
At 31 December
2022
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Other receivables
13.
RM
9,626
2,998
6,451
4,437
106,311
Deposits
449,701
35,700
42,700
39,106
29,905
Prepayments
557,810
6,699
7,568
6,241
6,650
1,017,137
45,397
56,719
49,784
142,866
CONTRACT
COSTS
At 30 June
2022
At 31
2021
December
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Contract costs
4,608,799
RM
4,502,190
6,616,039
1,933,570
1,124,309
Contract costs are freight expenses deferred and amortised over the course of the freights services on a percentage
completion basis that is consistent with revenue recognition. This percentage of completion is derived from time lapse
between days travelled from the loading port to the destination port. The Group expects to charge out the above contract
costs within one year. There was no impairment loss in relation to contract costs capitalised.
--5353 264
264
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS?’ REPORT (CONT’D)
14.
AMOUNT
OWING
BY RELATED
PARTIES
Amount owing by related parties are unsecured, interest free and repayable on demand in cash and cash equivalents.
15.
FIXED DEPOSITS WITH
FINANCIAL
INSTITUTIONS
Deposit placed with financial institutions as at the end of each reporting period have average maturity period of 365 days
(30 June 2021: 365 days; 31 December 2021: 31 days to 365 days; 31 December 2020: 365 days; 31 December 2019: 365
days) and the effective interest rate for the Group range from 1.85% to 2.35% (30 June 2021: 1.85%; 31 December 2021:
1.5% to 1.85%; 31 December 2020: 3.35%; 31 December 2019: 3.1%) respectively per annum.
Fixed deposits with financial institutions are pledged for bank facilities granted to the Group as disclosed in Note 18 to
the report.
--5454 265
265
14.
13.
13.
Group Berhad
16.
Logistics
Total invested equity
financial period
At date of incorporation/end of the
KGW Medica
year
paid
Issued and fully
At beginning/end of the financial
Mattroy
Issuance of shares
At end of the financial year
paid
Issued and fully
At beginning of the financial
year
KGW
1,000,000
1,000,000
1,202,500
2,500
200,000
266
266
-55- 55 -
1,202,500
2,500
200,000
1,000,000
-
-
1,000,000
1,200,000
-
200,000
1,000,000
1,000,000
-
shares
shares
RM
No. of
2020
1,200,000
-
200,000
1,000,000
1,000,000
RM
FYE 31 December
No. of
2021
The movement in the issued and paid-up share capital of the combining entities are as follows:
1,200,000
200,000
1,000,000
750,000
250,000
shares
No. of
2019
1,200,000
200,000
750,000
1,000,000
250,000
RM
For the purpose of this report, the total number of shares for all financial periods/years end represents the aggregate number of issued and fully paid-up shares of all
entities within the Group, net of shares held by non-controlling interests.
INVESTED EQUITY
ACCOUNTANTS’
REPORT (CONT’D)
Registration no. 202201009353 (1455050-D)
(Uncorporated in Malaysia)
KGW
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D)
14.
13.
13.
Group Berhad
16.
EQUITY
(CONT’D)
REPORT (CONT’D)
Medica
Total invested equity
Issued and fully
paid
At beginning of the financial period
Issuance of shares
At end of the financial period
KGW
Issued and fully paid
At beginning/end of the financial period
Mattroy
paid
Issued and fully
At beginning/end of the financial period
KGW Logistics
financial period
Issued and fully paid
At date of incorporation/end of the
KGW
267
267
-56- 56 -
The movement in the issued and paid-up share capital of the combining entities are as follows:
2,500
297,500
300,000
1,500,010
2,500
300,000
1,500,100
200,000
297,500
200,000
1,000,000
1,200,000
200,000
1,000,000
shares
shares
100
No. of
1,000,000
FPE 30 June
of
No.
2022
2021
1,200,000
200,000
1,000,000
(unaudited)
RM
For the purpose of this report, the total number of shares for all financial periods/years end represents the aggregate number of issued and fully paid-up shares of all
entities within the Group, net of shares held by non-controlling interests.
INVESTED
ACCOUNTANTS’
Registration no. 202201009353 (1455050-D)
(Incorporated in Malaysia)
KGW
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
17.
RETAINED
REPORT
(CONT’D)
EARNINGS
The Group’s policy is to treat all gains and losses in statement of profit or loss and other comprehensive income (i.e. nonowner transactions or events) as revenue reserves. Other than retained earnings, all other revenue reserves are regarded
as non-distributable in the form of cash dividends to shareholders.
The retained earnings of the Group are available for distribution by way of cash dividends or dividends in specie. Under
the single-tier system of taxation, dividends payable to shareholders are deemed net of income taxes. There are no potential
income tax consequences to the combining entities that would result from the payment of dividends to shareholders. The
dividends would not be taxable in the hands of the shareholders.
18.
BANK
BORROWINGS
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Current liabilities:
Bank overdraft
Term loans
RM
69,821
111,809
145,666
307,971
356,180
-
895,653
194,622
178,226
-
215,487
419,780
356,180
1,090,275
178,226
763,351
1,399,642
1,213,961
595,664
658,999
69,821
111,809
Non-current liabilities:
Term loans
Total borrowings:
Bank overdraft
Term loans
-
895,653
-
909,017
1,707,613
1,570,141
790,286
837,225
978,838
1,819,422
1,570,141
1,685,939
837,225
215,487
419,780
356,180
1,090,275
178,226
636,347
127,004
1,099,721
299,921
1,001,621
212,340
595,664
-
658,999
-
978,838
1,819,422
1,570,141
1,685,939
837,225
Maturity of borrowings:
- Not later than one year
- Later than one year
and not later than
five years
- Later than five years
--5757 268
268
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
18.
BANK
REPORT (CONT’D)
BORROWINGS
(CONT’D)
The above bank borrowings obtained from financial institutions are secured on the following:
(i)
(ii)
Open All Monies Facilities Agreement entered into between the Group and the bank;
Assignment ofa Single Contribution Reducing Term Plan issued by Sun Life Malaysia Takaful Berhad under the
name ofa director of KGW Logistics;
(iii) | Guarantee in favour of the bank by Credit Guarantee Corporation Malaysia Berhad under the Portfolio Guarantee
Scheme-I;
(iv)
Upfront fixed deposit of RM300,000 with yearly sinking fund of RM50,000 until the overdraft facility is fully
secured together with all interest accruing from time to time in respect of fixed deposit as disclosed in Note 15 to
this report;
(v)
Joint and several guarantee by the director and shareholder of KGW
Logistics; and
(vi)
Guarantee by Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) under SJPP-TRRF-I for RM400,000.
The term
loans bear
interest at nil (30 June
2021:
3.50%;
31
December
2021:
Logistics and the directors of Mattroy
3.50%;
31
December
2020:
3.50%;
31
December 2019: 3.50%) above the Base Financing Rate per annum and 3.50% (30 June 2021: 3.50%; 31 December 2021:
3.50%; 31 December 2020: nil, 31 December 2019: nil) fixed rate per annum on monthly rest and on daily rest respectively.
The bank overdraft bears interest at 4.00% (30 June 2021: 4.00%; 31 December 2021: 4.00%; 31 December 2020: 4.00%;
31 December 2019: 4.00%) above the Base Financing Rate per annum.
58- -- 58
269
269
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353
ACCOUNTANTS’
19.
LEASE
(1455050-D)
REPORT (CONT’D)
LYABILITIES
At 30 June
At 31 December
2022
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Minimum
RM
lease payment
- Not later than one year
495,459
461,650
430,917
371,627
248,687
846,605
1,001,664
796,029
783,971
697,419
1,342,064
1,463,314
1,226,946
1,155,598
946,106
- Later than one year and not
later than five years
Less: Future finance charges
Present value of lease liabilities
(108,197)
(131,584)
(99,579)
(94,150)
(93,348)
1,233,867
1,331,730
1,127,367
1,061,448
852,758
442,783
402,899
382,282
331,209
212,971
791,084
928,831
745,085
730,239
639,787
Current
- Not later than one year
Non-current
- Later than one year and not
later than five years
Lease arrangements for leased buildings and motor vehicles of the Group are disclosed in Note 8 to this report.
The incremental borrowing rate and interest rate implicit in lease applied by the Group to lease liabilities range from 3.22%
to 5.81% and 3.87% to 5.59% (30 June 2021: 4.80% to 5.81% and 4.42% to 5.59%; 31 December 2021: 4.80% to 5.81%
and 4.42% to 5.59%; 31
December 2020: 4.80% to 5.81% and 4.42% to 5.66%; 31 December 2019: 4.88% to
5.03% and
4.42% to 5.66%) per annum.
The following are the amounts recognised in profit or loss:
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
(unaudited)
RM
ae
Depreciation
expenses 0
right-of-use assets
f
Interest
expense on lease
liabilities
RM
RM
249,730
233,013
469,957
260,887
145311
29,787
29,137
59,547
40,396
45,222
5,500
8,000
Expenses relating to shortterm leases
-
ised
Total
amount recognise
in profit or losses
-
-
279,517
262,150
529,504
306,783
198,533
241,710
218,855
453,628
230,408
255,698
Total cash outflows for leases
(including short-term leases)
--5959 270
270
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
20.
TRADE
REPORT (CONT’D)
PAYABLES
At 30 June
2022
2021
At 31 December
2020
2021
2019
(unaudited)
RM
Third parties
RM
10,667,383
Related parties
RM
RM
9,459,775
13,172,899
3,438,815
6,122
3,893
14,537
14,888
9,465,897
13,176,792
3,453,352
2,530,243
10,667,383
RM
2,515,355
The trade credit term granted to the Group range from cash on delivery to 45 days (30 June 2021: cash on delivery to 45
days; 31 December 2021: cash on delivery to 45 days; 31 December 2020: cash on delivery to 45 days; 31 December
2019: cash on delivery to 45 days).
The currency exposure profile of trade payables are as follows:
At 30 June
2021
(unaudited)
RM
RM
December
2021
RM
2020
2019
RM
RM
Ringgit Malaysia
2,048,483
6,368,915
807,908
2,509,805
1,756,808
United States Dollar
8,609,104
3,071,052
12,333,919
939,680
700,796
Singapore Dollar
2,339
4,936
23,045
1,599
7,885
Euro
74ST
15,813
10,035
1,920
42,454
British Pound Sterling
-
5,181
1,885
348
Australian Dollar
-
-
-
10,667,383
21.
At 3§
2022
OTHER
PAYABLES
9,465,897
13,176,792
3,453,352
8,274
14,026
2,530,243
AND ACCRUALS
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
(unaudited)
RM
Other payables
Dividend payable
Accruals
RM
RM
85,163
-
90,091
-
147,387
6,000,000
253,713
-
579,241
-
6,011,054
2,451,293
5,732,806
1,197,021
1,579,167
6,096,217
2,541,384
11,880,193
1,450,734
2,158,408
Included in other payables are amount of nil (30 June 2021: nil; 31 December 2021: nil; 31 December 2020: nil; 31
December
2019:
RM139,901),
owing to close family member of the Director of the Group
and amount of nil (30 June
2021: nil; 31 December 2021: nil; 31 December 2020: RM45,000; 31 December 2019: nil), owing to individuals which
have interest in the Group. The amounts are unsecured, interest free and repayable on demand in cash and cash equivalents.
60--- 60
271
271
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
22.
CONTRACT
REPORT (CONT’D)
LIABILITIES
At 30 June
At 30 June/
31 December
(a)
2022
2021
(unaudited)
2021
At 31 December
2020
2019
RM
RM
RM
RM
RM
9,318,956
5,009,898
7,011,048
2,175,526
1,673,507
Movement in contract liabilities
FPE 30 June
2022
2021
2021
FYE 31 December
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Contract liabilities
At 1 January
7,011,048
Net revenue
recognised
Net billing issued
At 30 June/
31 December
(b)
2,175,526
2,175,526
1,673,507
1,649,878
(145,166,873)
(58,819,237)
(178,564,754)
(51,651,131)
(34,570,070)
147,474,781
61,653,609
183,400,276
$2,153,150
34,593,699
9,318,956
5,009,898
7,011,048
2,175,526
1,673,507
Transaction price allocated to remaining performance obligation
The Group expects to recognise revenue from remaining performance obligation for shipping contracts within one
year.
23.
AMOUNT
OWING
TO DIRECTORS
Amount owing to Directors is unsecured, interest free and payable on demand in cash and cash equivalents.
--6161 272
272
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
24.
REPORT (CONT’D)
REVENUE
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
(unaudited)
RM
RM
RM
RM
RM
151,135,221
64,652,414
187,839,161
58,663,630
38,935,550
850,618
1,204,846
1,899,018
1,890,723
2,038,919
1,648,628
2,139,874
3,857,726
2,971,097
2,404,528
153,634,467
67,997,134
193,595,905
63,525,450
43,378,997
Logistics services:
- Ocean freight
- Air freight
- Freight forwarding
Warehousing, trading
and distribution of:
- Healthcare-related
products
1,467,776
;
1.823.293
;
-
155,102,243
67,997,134
195,419,198
63,525,450
43,378,997
9,935,370
9,177,897
16,854,444
11,874,319
8,808,927
145,166,873
$8,819,237
178,564,754
51,651,131
34,570,070
155,102,243
67,997,134
195,419,198
63,525,450
43,378,997
Timing of revenue
recognition
- At a point of time
- Over time
25.
FINANCE
COSTS
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Bank overdraft interest
RM
1,403
19,453
28,727
6,931
4,787
Lease liabilities interest
29,787
29,137
59,547
40,396
45,222
Term loans interest
40,483
46,291
88,850
82,025
95,152
71,673
94,881
177,124
129,352
145,161
All of the finance costs above represents interest expenses of financial liabilities that are not measured at fair value
through profit or loss.
--6262 273
273
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
26.
REPORT (CONT’D)
PROFIT BEFORE TAX.
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
(unaudited)
RM
RM
RM
29,500
27,725
61,000
Auditors' remuneration:
- Current year
32,700
24,500
- Overprovision in prior
year
Bad debts written off
-
-
6,958
-
44,520
-
60,974
(550)
4,247
-
341,782
335,318
672,874
408,051
198,596
Depreciation of property,
plant and equipment
Employee benefits
expenses:
- Salaries, allowances and
bonus
- Commission
- Defined contribution
plan
1,485,139
1,097,913
2,773,191
1,824,493
1,981,468
2,859,810
2,313,923
5,217,607
1,882,291
859,563
463,625
205,945
1,000,343
411,460
266,131
18,935
16,386
32,716
27,181
24,020
25,468
14,506
55,724
45,393
122,627
- Social security
contributions
- Other staff related
expenses
Formation cost
2,171
-
2,479
-
-
Gain on disposal of
property, plant and
equipment
(86,999)
(18,728)
(18,728)
-
(18,000)
Interest income |
Gain on derecognition of
(2,303)
-
(7,154)
-
(7,131)
a Subsidiary
Net impairment losses on
-
-
(2,984)
-
-
trade receivables:
- lifetime ECL
allowances
- specific allowances
(61,125)
61,846
77,024
5,366
1,858
(1,446)
3,213
26,710
24,252
36,819
225,875
869,903
213,916
120,309
5,500
8,000
Realised loss on foreign
exchange, net
Rental expenses ;
Property, plant and
equipment written off
Rental income
58,606
-
-
-
375
(4,000)
7.
(6,000)
(12,000)
(12,000)
(6,360)
(722,550)
(161,941)
(33,671)
153,599
84,498
Unrealised (gain)/loss
on foreign exchange
' The amount represents interest income of financial assets measured at amortised cost calculated using the effective
interest method.
2 The amount represents low value underlying assets leases and short term leases under MFRS
63 --- 63
274
274
16.
[ Registration
Registration
No.
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(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
27.
TAX
REPORT
(CONT?’D)
EXPENSE
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Income tax
Current year
(Over)/Underprovision in
prior years
5,432,471
1,533,838
5,092,276
655,326
208,149
(754)
5,431,717
1,533,838
(34,200)
5,058,076
16,448
671,774
53,742
261,891
(66,088)
130,822
Deferred tax (Note 9)
Current year
Under/(Over)provision in
prior years
(865,851)
(29,395)
8,082
(2,742)
(857,769)
4,573,948
(32,137)
1,501,701
646
(65,442)
4,992,634
(2,850)
(114,120)
16,702
688,476
(116)
(2,966)
258,925
A reconciliation of tax expense applicable to profit before tax at the statutory income tax rate to tax expense at the
effective income tax rate of the Group is as follows:
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Profit before tax
RM
19,031,913
6,173,120
20,750,451
2,864,797
608,348
4,567,659
1,481,549
4,980,108
687,551
146,004
Malaysian statutory tax
rate of 24%
Tax effect in respect of:
Non-taxable income
Non-deductible expenses
(20,880)
(37,983)
(35,976)
47,263
77,041
121,686
117,697
-
99,069
-
(27,422)
(16,164)
(39,630)
(19,100)
(39,774)
(34,200)
16,448
53,742
Difference in tax rate for:
- small and medium
companies in Malaysia
(Over)/Underprovision of
current tax in prior years
(754)
-
Under/(Over)provision
of deferred tax in prior
years
8,082
(2,742)
646
(114,120)
(116)
Tax expense for the
financial period/year
4,573,948
1,501,701
--6464 275
275
4,992,634
688,476
258,925
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
28.
EARNINGS
REPORT (CONT’D)
PER SHARE
Basic and diluted EPS are calculated by dividing the profit for the financial period/year attributable to owners of the
Group by the weighted average number of ordinary shares in issue for the financial periods/years.
For the purpose of this report, the number of ordinary shares for the FPE 30 June 2022 and 30 June 2021 and FYE 31
December 2019, 31 December 2020 and 31 December 2021 represents the weighted average aggregate ordinary
shares issued of the Group.
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
(unaudited)
Profit for the financial
period/year attributable
to owners of the Group (RM)
14,457,965
4,671,419
15,757,817
2,178,464
350,637
1,443,984
1,200,097
1,201,308
1,200,000
1,000,685
10.01
3.89
13.12
1.82
0.35
Weighted average number
of ordinary shares at
30 June/3 1 December (unit)
Basic and diluted EPS (RM)
There were no dilutive potential equity instruments in issue as at each FPE and FYE that have dilutive effect to the
EPS.
29,
DIVIDENDS
FYE
31 December
2021
RM
Dividends paid by KGW Logistics:
Interim single tier dividend of RM1.50 per ordinary share for the
financial year ended 31 December 2021 paid on 31 December
2021
1,500,000
Interim single tier dividend of RM6.00 per ordinary share for the
financial year ended 31 December 2021 paid on 18 March 2022
6,000,000
Dividends paid by Mattroy Logistics:
Interim single tier dividend of RM0.50 per ordinary share for the
financial year ended 31 December 2021 paid on 27 December
2021
100,000
7,600,000
65 --- 65
276
276
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
30.
EQUIVALENTS
CASH
AND CASH
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
Cash and bank balances
Fixed deposits with financial
institutions
RM
31,609,139
5,725,871
19,005,864
2,083,139
2,762,291
442,188
32,051,327
382,331
6,108,202
914,685
19,920,549
357,131
2,440,270
307,131
3,069,422
(69,821)
(111,809)
-
(895,653)
-
( 442, 188)
(382,331)
2,331
Less: Bank overdraft
Less: Fixed deposit pledged
for bank borrowings
.
31,539,318
5,614,062
(414,685)
;
19,505,864
(357,131)
;
(307,131)
;
1,187,486
2,762,291
The currency exposure profile of cash and cash equivalents is as follows:
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
USD
RM
31.
RELATED
(a)
PARTY
RM
19,911,333
12,139,994
4,583,507
1,524,695
7,713,408
12,207,141
1,266,152
1,174,118
1,879,167
1,190,255
32,051,327
6,108,202
19,920,549
2,440,270
3,069,422
DISCLOSURES
Identities of related parties
Parties are considered to be related to the Group if the combining entities have the ability, directly or indirectly,
to control the party or exercise significant influence over the party in making financial and operating decisions,
or vice versa, or influence over the party in making financial and operating decisions, or vice versa, or where
combining entities and the party are subject to common control or common significant influence. Related parties
could be individual or other entities.
The Group has related party relationships with its combining entities, entities
substantial financial interests and key management personnel of the Group.
66 --- 66
277
277
in which
the Director has
[ Registration
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Registration No.
No. 202201009353
202201009353 (1455050-D)
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
31.
RELATED
PARTY
DISCLOSURES
(CONT’D)
In addition to the information detailed elsewhere in the report, the combining
transactions with related parties during the reporting periods:
FPE 30 June
2022
entities had the following
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
RM
63,900
3,322,167
40,024
6,000
127,800
4,291,828
47,180
12,000
52,800
4,063,048
25,600
12,000
34,650
2,196,566
49,662
-
1,910
2,189
11,100
8,502
334
(unaudited)
RM
Entities in which Directors
have interest
- Rental expenses paid
- Sales billed to
- Purchase billed from
~ Rental income received
63,900
92,680
4,566
4,000
- Management fee
income received
.
- Payment on behalf of entities
-
818
-
- Payment on behalf by entities
114
2,189
FPE 30 June
2022
-
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Director of the Company
- Advances from/
(repayment to)
Director, net
-
(129,864)
(125,752)
(159,784)
(66,805)
39,000
(59,500)
78,000
60,000
78,000
78,000
(30,000)
30,000
Directors of the Combining
entities
~ Advances from/(repayment to)
Directors, net
- Rental expenses paid
(500)
39,000
Key management personnel
of the Combining entities
- Advances from/(repayment
to), net
"
.
”
- Proceeds from disposal
of motor vehicles
-
--6767 278
278
18,000
[ Registration
Registration
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Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
31.
REPORT (CONT’D)
RELATED PARTY DISCLOSURES (CONT’D)
(b)
In addition to the information detailed elsewhere in the report, the combining
transactions with related parties during the reporting periods: (cont’d)
FPE 30 June
2022
entities
had the following
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Related parties compensation:
~ Salaries, allowances and
bonus
- Commission
26,000
51,500
31,000
26,000
-
-
5,000
-
-
3,380
1,625
7,345
4,030
3,380
380
214
523
445
445
43
24
60
5]
51
29,803
14,363
64,428
35,526
29,876
- Defined contribution plan
~ Social security
contributions
- Other staff related
expenses
(c)
12,500
Compensation of Directors and key management personnel
Key management personnel are those persons having the authority and responsibility for planning, directing and
controlling the activities of the entity, directly and indirectly, including any Director (whether executive or
otherwise) of the Group.
The remuneration of Directors and key management personnel of the Group during the financial periods/years
are as follows:
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
Director of the Combining
entities compensation:
- Director fee
~ Directors’
salaries,
allowances and bonus
- Director
Di
non-fee
- fe
emoluments
- Defined contribution plan
~ Social security
us
contributions
- Other staff related
expenses
RM
RM
15,600
-
496,400
132,000
15,400
7
-
364,200
-
-
206,000
-
350,000
249,977
396.615
60,954
16,140
39,600
84,312
32,989
1,509
829
1,657
1,657
1,036
173
95
190
190
1.279
590,036
149,064
405,647
292,159
1,031,896
68--- 68
279
279
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT?’D)
31.
RELATED
(c)
PARTY
DISCLOSURES
(CONT?’D)
Compensation of Directors and key management personnel (cont’d)
The remuneration of Directors and key management personnel of the Group during the financial periods/years
are as follows: (cont’d)
FPE 30 June
2022
Key management
personnel
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
compensation:
- Salaries, allowances and
bonus
- Commission
275,400
811,701
91,800
1,511,450
291,100
2,384,881
257,600
417,246
207,600
623,192
- Defined contribution plan
130,610
38,129
305,525
113,159
67,088
1,657
1,243
2,555
2,486
2,486
190
142
592
484
284
1,219,558
1,642,764
2,984,653
790,975
900,650
~ Social
security
contributions
- Other staff related
expenses
32.
SEGMENT
INFORMATION
The Group has two reportable operating segments — Logistics services provider and Healthcare products as described
below. They have been segregated as two strategic business units for internal reporting to the Director for performance
evaluation and resource allocation.
Operating segments
Logistics services provider
Nature
Provision of ocean and air freight services , freight forwarding services and
other supporting services.
Healthcare products
Warehousing and distribution of pharmaceutical and medical goods.
69- -- 69
280
280
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
32.
SEGMENT
REPORT (CONT’D)
INFORMATION
(CONT’D)
Operating segments
FYE 31 December 2021
Logistic
Healthcare
services
products
Total
RM
RM
RM
Revenue
External revenues
193,595,905
1,823,293
195,419,198
21,502,640
90,655
21,593,295
Results
Segment results
Depreciation of property,
plant and equipment
(672,863)
Interest income
7,154
Finance costs
(177,124)
(il)
-
(672,874)
7,154
(177,124)
Profit before tax
20,659,807
90,644
Tax expense
(4,976,475)
(16,159)
20,750,451
(4,992,634)
Profit for the financial year
15,683,332
74,485
15,757,817
938,476
379
938,855
49,004,431
206,594
49,211,025
Assets
Additions to non-current
assets |
Segment assets
Deferred tax assets
55,401
Total assets
-
55,401
49,059,832
206,594
49,266,426
Segment liabilities
34,652,591
113,450
34,766,041
Income tax payable
2,687,017
16,159
2,703,176
37,339,608
129,609
37,469,217
Liabilities
Total liabilities
--7070 281
281
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
32.
SEGMENT
REPORT (CONT’D)
INFORMATION
(CONT’D)
Operating segments (cont'd)
FYE 31 December 2021
Logistic
Healthcare
services
products
Total
RM
RM
RM
Other non-cash items
Bad debts written off
60,974
-
60,974
(18,728)
-
(18,728)
Gain on disposal of property,
plant and equipment
Impairment losses on
trade receivables:
- lifetime ECL allowances
77,024
-
77,024
- specific allowances
26,710
-
26,710
(33,671)
-
(33,671)
Unrealised gain on
foreign exchange, net
FPE 30 June 2022
Logistic
Healthcare
services
products
Total
RM
RM
RM
Revenue
External revenues
153,634,467
1,467,776
155,102,243
19,438,687
4,378
19,443,065
Results
Segment results
Depreciation of property,
plant and equipment
(335,433)
Interest income
2,303
(6,349)
(341,782)
-
2,303
(70,515)
(1,158)
(71,673)
Profit before tax
Tax expense
19,035,042
(4,573,948)
(3,129)
-
19,031,913
(4,573,948)
Profit for the financial period
14,461,094
(3,129)
14,457,965
Finance costs
--71
71 -282
282
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202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
32.
SEGMENT
REPORT (CONT’D)
INFORMATION
(CONT’D)
Operating segments (cont’d)
FPE 30 June 2022
Logistic
Healthcare
services
products
Total
RM
RM
RM
Assets
Additions to non-current
assets |
Segment assets
Deferred tax assets
380,502
89,712
470,214
58,988,330
483,440
59,471,770
913,170
Total assets
-
913,170
59,901,500
483,440
60,384,940
Segment liabilities
28,199,336
95,925
28,295,261
Income tax payable
5,518,812
18,183
5,536,995
33,718,148
114,108
33,832,256
Liabilities
Total liabilities
Other non-cash items
Bad debts written off
6,958
-
6,958
Gain on disposal of property,
plant and equipment
(86,999)
-
(86,999)
(61,125)
(1,446)
-
(61,125)
(1,446)
(722,550)
-
(722,550)
Reversal of impairment losses on
trade receivables:
- lifetime ECL allowances
- specific allowances
Unrealised gain on
foreign exchange, net
' Additions to non-current assets include additions of property, plant and equipment but exclude addition to right-ofuse assets in relation to rental lease arrangement.
Information about operating segments for financial year ended 31 December 2020 and 31 December 2019 and
financial period 30 June 2021 had not been reported separately as the Group’s revenue, profit or loss, assets and
liabilities were mainly confined to a single operating segment, namely the logistics services.
--72
72 -283
283
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202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
32.
SEGMENT
REPORT (CONT’D)
INFORMATION
(CONT’D)
Geographical segments
Revenue of the Group based on the geographical location of its customers are as follows:
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Revenue from
external customers
Malaysia
Africa
Asia
Europe
North America
South America
Oceania
Malaysia
Outside Malaysia
73,167,741
741,296
19,954,055
668,996
60,068,047
26,423
475,685
44,139,337
75,804
8,411,986
794,932
14,250,377
185,529
139,169
109,471,085
388,932
25,757,699
2,742,892
56,278,622
376,430
403,538
49,584,103
88,475
6,694,728
253,028
6,667,076
13,781
224,259
34,022,420
91,804
5,281,177
820,471
3,011,320
151,805
155,102,243
67,997,134
195,419,198
63,525,450
43,378,997
73,167,741
81,934,502
44,139,337
23,857,797
109,471,085
85,948,113
49,584,103
13,941,347
34,022,420
9,356,577
155,102,243
67,997,134
195,419,198
63,525,450
43,378,997
Non-current assets of the Group are located in Malaysia.
Major customers
Major customers with revenue of at least 10% of the Group’s total revenue are as follows:
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
4,498,046
12,631,281
2,079,915
11,003,762
(unaudited)
RM
Customer A
Customer B
22,877,863
-
RM
6,189,817
-
--7373 284
284
21,363,387
-
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202201009353 (1455050-D)
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
33.
FINANCIAL
INSTRUMENTS
33.1 Classification of financial instruments
Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost
based on their respective classification. The significant accounting policies in Note 6(g), 6(h) and 6(i) describe how
the classes of financial instruments are measured, and how income and expense, including fair value gains and losses,
are recognised.
The table below provides an analysis of financial instruments of the Group in the statement of financial position by
the classes and categories of financial instruments to which they are assigned and therefore by the measurement basis:
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
(unaudited)
RM
RM
RM
19,832,220
17,911,147
20,812,750
8,147,172
5,162,177
459,327
38,698
49,15]
43,543
136,216
8.872
5,880
28,161
4.4 igg
382,331
914,685
357,131
307,131
31,609,139
52,342,874
5,725,871
24,066,919
19,005,864
40,788,330
2,083,139
10,659,146
2,762,291
8,367,815
Financial assets
At amortised cost:-
Trade receivables
Other receivables and
deposits (excluding
prepayments)
Amount owing by related
-
;
parties
Fixed
deposits with financial
institutions
Cash and bank balances
Financial liabilities
At amortised cost:Trade payables
Other payables and accruals
Amount owing to Directors
Bank borrowings
Lease liabilities
10,667,383
9,465,897
13,176,792
3,453,352
2,530,243
6,096,217
2,541,384
11,880,193
1,450,734
2,158,408
315,618
500
185,752
959,309
978,838
1,819,422
1,570,141
1,685,939
837,225
1,233,867
1,331,730
1,127,367
1,061,448
852,758
18,976,305
15,474,051
27,754,993
7,837,225
7,337,943
-
The Group is exposed to financial risk arising from its operations and the use of financial instruments. The key
financial risks include credit risk, liquidity risk, foreign currency risk and interest rate risk.
The Directors review and agree policies and procedure for the management of these risks, which are executed by the
Managing Director. The Group’s financial risk management policies are to ensure that adequate financial resources
are available for the development of the Group’s operations whilst managing its credit risk, liquidity risk, foreign
currency risk and interest rate risk. The Group operates within policies and guidelines that are approved by the
Directors, which includes not engaging in speculative transactions.
The following sections provide details regarding the Group’s exposure to the abovementioned financial risks and the
objectives, policies and processes for the management of those risks.
--7474 285
285
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353
ACCOUNTANTS’
33.
FINANCIAL
(1455050-D)
REPORT
INSTRUMENTS
(CONT’D)
(CONT’D)
33.2 Net gains and losses arising from financial instruments
FPE 30 June
2022
FYE 31 December
2021
2021
2020
2019
RM
RM
RM
(unaudited)
RM
RM
Net gains/(losses) arising from:
Financial assets measured
at amortised cost
Financial liabilities
(648,622)
(15,155)
(905,306)
13,067
217,328
(317,899)
(234,836)
measured at
amortised cost
1,251,440
(19,998)
68,707
Interest income and interest expense arising from financial instruments are not included in the above net gains and
losses. They are disclosed in Note 25 and Note 26 to the report.
33.3 Financial risk management, objectives and policies
(i)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s
fluctuate because of changes in market interest rates.
financial instruments will
The Group manages the net exposure to interest rate risks by maintaining sufficient lines of credit to obtain
acceptable lending costs and by monitoring the exposure to such risks on an ongoing basis. The management does
not enter into interest rate hedging transactions as the cost of such instruments outweighs the potential risk of
interest rate fluctuation.
The interest rate profile of the Group’s significant interest bearing financial instruments, based on the carrying
amounts as at the end of the reporting period is as follows:
At 30 June
2022
At 31 December
2021
2021
2020
2019
(unaudited)
RM
RM
RM
RM
RM
442,188
382,331
914,685
357,131
307,131
Fixed rate instruments
Financial assets
Fixed deposits with
financial institution
Financial liabilities
Bank borrowings
Lease liabilities
909,017
1,011,986
979,963
1,233,867
1,331,730
1,127,367
1,061,448
852,758
-
69,821
807,436
590,178
1,685,939
837,225
Floating rate instruments
Financial liabilities
Bank borrowings
--7575 286
286
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
33.
FINANCIAL
REPORT (CONT’D)
INSTRUMENTS
(CONT’D)
33.3 Financial risk management, objectives and policies (cont’d)
(i)
Interest rate risk (cont’d)
Sensitivity analysis is not disclosed on fixed rate instruments as fixed rate instruments are not exposed to interest
rate risk and are measured at amortised cost.
A 50 basis points strengthening in the interest rate of floating rate instruments as at the end of the reporting periods
would have decreased Group’s profit after tax by RM265 (30 June 2021: RM3,068; 31 December 2021: RM2,243;
31 December 2020: RM6,407; 31 December 2019: RM3,181). A 50 basis points weakening would have had an
equal but opposite effect on the profit before tax. This assumes that all other variables remain constant.
Gi)
Credit risk
(a) Trade receivables
Credit risk is the risk ofa financial loss to the Group that may arise ifa customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally
from its trade and other receivables.
The management has in place credit procedures to monitor and minimise the exposure of default. Receivables
are monitored on a regular and an ongoing basis. Credit evaluations are performed on all customers requiring
credit over a certain amount.
Credit risk concentration profile
The Group has no concentration of credit risk except for the amounts owing by one (30 June 2021: nil; 31
December 2021: nil; 31 December 2020: three; 31 December 2019: two) customers which constituted
approximately 18% (30 June 2021: nil; 31 December 2021: nil; 31 December 2020: 36%; 31 December 2019:
40%) of its trade receivables as at the end of the reporting period.
Exposure
to credit risk
At the end of financial year, the Group’s maximum exposure to credit risk is represented by the carrying
amount of trade receivables recognised in the statement of financial position.
Information regarding ageing analysis for trade receivables is disclosed in Note 11 to the report.
Assessment of impairment losses
The Group considers the probability of default upon initial recognition of asset and applies the simplified
approach to measure expected credit losses (“ECL”) using lifetime ECL allowance for all trade receivables.
The Group considers a receivable as being in default requiring individual impairment assessment when the
debtor fails to make payment for invoices more than 120 days past due. Financial assets are written off when
there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with
the Group. Where receivables have been written off, the Group continues to engage enforcement activity to
attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
76 --- 76
287
287
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
REPORT (CONT’D)
33.
FINANCIAL
INSTRUMENTS
(CONT’D)
33.3 Financial risk management, objectives and policies (cont’d)
(ii)
Credit risk (cont'd)
(a) Trade receivables (cont’d)
Assessment of impairment losses (cont’d)
An impairment analysis is performed at each reporting date using provision matrix to measure ECL for all
trade receivables.
The ECL asessment incorporate historical default experience, customers’ financial information, past trends
of payments of each customer individually and forward-looking information such as forecast of economic
conditions where the gross domestic product is expected to increase/decrease over the next year, leading to
change in the number of defaults.
The following are credit risk management practices and quantitative
amounts arising from ECL for trade receivables.
--7777 288
288
and qualitative
information
about
14.
13.
13.
Group Berhad
FINANCIAL INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(ii)
(a)
3,315
496
471
23,123
--78
78- 289
289
109,458
3,411
11,729
51,507
394,325
337,785
Total
Total impairment loss (RM)
3,701
6,875,594
10,046,566
7.18
past due
120 days
More than
0.13
past due
120 days
0.18
past due
90 days
86,335
2,149,566
0.05
0.17
past due
0.12
past due
60 days
Impaired receivables (RM)
Loss allowance (RM)
Gross carrying amount (RM)
Expected loss rate (%)
30 June 2022
Current
30 days
The loss allowance as at 30 June 2022 and comparative years and period is determined as follows:
Assessment of impairment losses (cont’d)
Trade receivables (cont'd)
Credit risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
Registration no. 202201009353 (1455050-D)
(Incorporated in Malaysia)
KGW
COMBINED STATEMENTS OF FINANCIAL POSITION
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
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202201009353 (1455050-D)
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14.
13.
13.
Group Berhad
FINANCIAL
INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(ii)
(a)
47,210
69,070
-- 79
79 -290
290
133,354
1,408
695,508
406,407
Total
Total impairment loss (RM)
1,947
6,553
4,887
7,065
6.84
past due
120 days
More than
0.35
past due
120 days
64,284
1,291,987
2,609,410
7,711,575
5,265,330
0.15
past due
0.25
past due
90 days
0.06
0.14
past due
60 days
Impaired receivables (RM)
Loss allowance (RM)
Gross carrying amount (RM)
Expected loss rate (%)
30 June 2021 (unaudited)
Current
30 days
The loss allowance as at 30 June 2022 and comparative years and period is determined as follows:
Assessment of impairment losses (cont’d)
Trade receivables (cont'd)
Credit risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
| Registration
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No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
FINANCIAL
INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(ii)
(a)
120 days
60,064
445
291
291
-- 80
80- -
172,029
Total impairment loss (RM)
84,248
Total
87,781
873
6,002
8,767
8,097
673,643
128,570
591,058
3,247,631
9,509,728
6,746,368
8.73
past due
0.35
past due
More than
0.15
past due
120 days
0.25
past due
90 days
0.06
0.14
past due
60 days
Impaired receivables (RM)
Loss allowance (RM)
Gross carrying amount (RM)
Expected loss rate (%)
31 December 2021
Current
30 days
The loss allowance as at 30 June 2022 and comparative years and period is determined as follows:
Assessment of impairment losses (cont’d)
Trade receivables (cont’d)
Credit risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW Group Berhad
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
Group Berhad
FINANCIAL
INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(ii)
(a)
*Less than 0.01%
-8]- 81 292
292
69
84
5,712
118,911
5.96
past due
120 days
More than
Total
7,224
68,295
556
40,478
221,922
0.11
past due
120 days
Total impairment loss (RM)
744
1,174,552
3,454,568
0.04
past due
90 days
61,071
59
3,143,965
0.05
past due
0.02
past due
60 days
Impaired receivables (RM)
Loss allowance (RM)
Gross carrying amount (RM)
Expected loss rate (%)
31 December 2020
Current
30 days
The loss allowance as at 30 June 2022 and comparative years and period is determined as follows:
Assessment of impairment losses (cont’d)
Trade receivables (cont’d)
Credit risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW
COMBINED STATEMENTS OF FINANCIAL POSITION
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
Group Berhad
FINANCIAL
INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(ii)
(a)
134
247,893
96
140,826
0.07
past due
1,450
28,393
4.9]
past due
120 days
More than
Total
1,858
*Less than 0.01%
-- 82
82 -293
293
38,677
40
348,354
0.05
past due
120 days
Total impairment loss (RM)
62
1,780,954
0.01
past due
90 days
36,819
76
2,617,615
-*
past due
60 days
Impaired receivables (RM)
Loss allowance (RM)
Gross carrying amount (RM)
Expected loss rate (%)
31 December 2019
Current
30 days
The loss allowance as at 30 June 2022 and comparative years and period is determined as follows:
Assessment of impairment losses (cont’d)
Trade receivables (cont’d)
Credit risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
Registration no. 202201009353 (1455050-D)
(Incorporated in Malaysia)
KGW
COMBINED STATEMENTS OF FINANCIAL POSITION
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
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No. 202201009353
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(1455050-D) |
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14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
33.
FINANCIAL
REPORT
INSTRUMENTS
(CONT’D)
(CONT’D)
33.3 Financial risk management, objectives and policies (cont’d)
(ii)
Credit risk (cont’d)
(b)
Other receivables
Exposure to credit risk, credit quality and collateral
Other receivable balances are monitored on an ongoing basis.
As the Group does not hold any collateral, the maximum exposure to credit risk is represented by the carrying
amount of other receivables as at the end of the reporting period.
Ageing analysis of other receivables and impairment losses
The Group does not maintain ageing analysis for other receivables. Based on past experience, the Directors
determine whether impairment is necessary in respect of other receivables applying the general approach to
determine the ECL.
(c)
Cash and cash equivalents
Cash and cash equivalents are held with financial institutions. The Group minimises credit risk by dealing
exclusively with high credit rating counterparties.
Exposure to credit risk, credit quality and collateral
In view of the sound credit rating of counterparties, management does not expect any counterparty to fail to
meets its obligations. As at the end of the reporting period, the maximum exposure to credit risk is represented
by the carrying amount of bank balances and fixed deposits in the statement of financial position.
Impairment losses
Bank balances and fixed deposits have low credit risk and they are protected to an extent by Perbadanan
Insurans Deposit Malaysia. Consequently, the Group is of the view that loss allowance is not material and
hence it is not provided for.
83 - -- 83
294
294
14.
13.
13.
FINANCIAL INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(iii)
Lease liabilities
Bank borrowings
Other payables and accruals
Trade payables
30 June 2022
10,667,383
6,096,217
978,838
1,233,867
18,976,305
295
295
-84- 84 -
10,667,383
6,096,217
1,074,151
1,342,064
19,179,815
RM
RM
amount
Contractual
undiscounted
cash flows
Carrying
244,928
495,459
17,503,987
10,667,383
6,096,217
RM
On demand
or within
one year
700,429
846,605
1,547,034
RM
Two to
five years
RM
128,794
128,794
More than
five years
The table below summarises the maturity profile of the Group’s financial liabilities at the end of the reporting period based on undiscounted contractual payments:
Analysis of financial instruments by remaining contractual maturities
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
The Group maintains a level of cash and cash equivalents, bank overdrafts and loan facilities deemed adequate by management to ensure, as far as possible, that
it will have sufficient liquidity to meet its liabilities when they fall due.
and flexibility of cash flow through the use of standby credit facilities.
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s exposure to liquidity risk
arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of funding
Liquidity risk
33.3 Financial risk management, objectives and policies (cont'd)
33.
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW Group Berhad
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
Group Berhad
FINANCIAL
INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
1,819,422
1,331,730
15,474,051
Bank borrowings
Lease liabilities
500
1,753,688
1,226,946
28,038,119
500
1,570,141
1,127,367
27,754,993
-- 85
85- 296
296
11,880,193
13,176,792
11,880,193
Other payables and accruals
Amount due to Directors
Bank borrowings
Lease liabilities
13,176,792
1,463,314
15,838,392
2,052,179
9,465,897
2,541,384
315,618
Contractual
undiscounted
cash flows
RM
Trade payables
31 December 2021
9,465,897
2,541,384
315,618
30 June 2021 (unaudited)
Trade payables
Other payables and accruals
Amount due to Directors
Carrying
amount
RM
500
433,034
430,917
25,921,436
11,880,193
13;176,792
461,650
13,292,907
508,358
9,465,897
2,541,384
315,618
On demand
or within
one year
RM
1,105,563
796,029
1,901,592
1,001,664
2,243,073
1,241,409
Two to
five years
RM
-
-
-
-
215,091
215,091
302,412
302,412
More than
five years
RM
-
-
-
-
-
-
The table below summarises the maturity profile of the Group’s financial liabilities at the end of the reporting period based on undiscounted contractual payments:
(cont'd)
Analysis of financial instruments by remaining contractual maturities (cont’d)
(iii) ~~ Liquidity risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
Registration no. 202201009353 (1455050-D)
Uncorporated in Malaysia)
KGW
COMBINED STATEMENTS OF FINANCIAL POSITION
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
Group Berhad
FINANCIAL INSTRUMENTS (CONT'D)
REPORT (CONT’D)
(ii)
Other payables and accruals
Amount due to Directors
Bank borrowings
Lease liabilities
31 December 2019
Trade payables
31 December 2020
Trade payables
Other payables and accruals
Amount due to Directors
Bank borrowings
Lease liabilities
2,158,408
959,309
837,225
852,758
7,337,943
2,530,243
3,453,352
1,450,734
185,752
1,685,939
1,061,448
7,837,225
Carrying
amount
RM
-- 86
86 -297
297
2,158,408
959,309
1,031,271
946,106
7,625,337
2,530,243
3,453,352
1,450,734
185,752
1,815,947
1,155,598
8,061,383
Contractual
undiscounted
cash flows
RM
2,158,408
959,309
257,927
248,687
6,154,574
2,530,243
3,453,352
1,450,734
185,752
1,153,580
371,627
6,615,045
On demand
or within
one year
RM
-
773,344
697,419
1,470,763
662,367
783,971
1,446,338
Two to
five years
RM
-
-
More than
five years
RM
-
-
-
The table below summarises the maturity profile of the Group’s financial liabilities at the end of the reporting period based on undiscounted contractual payments:
(cont’d)
Analysis of financial instruments by remaining contractual maturities (cont’d)
Liquidity risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
Group Berhad
FINANCIAL
INSTRUMENTS
REPORT
(CONT’D)
(CONT’D)
(iv)
-- 8787 298
298
(7,457)
Net exposure
-
-
-
-
-
GBP
RM
-
7,457
RM
EUR
Financial liabilities
Trade payables
Trade receivables
Cash and bank balances
30 June 2022
Financial assets
The Group’s exposure to foreign currency at each reporting date is as follows:
-
-
(2,339)
2,339
SGD
RM
19,762,059
8,609,104
28,371,163
8,459,830
19,911,333
USD
RM
19,752,263
8,618,900
28,371,163
8,459,830
19,911,333
Total
RM
The Group is exposed to foreign currency risks as a result of its normal operating activities with foreign companies, denominated mainly in Australian Dollar
(“AUD”), United States Dollar (“USD”) , Euro (“EUR”), British Pound Sterling (“GBP”) and Singapore Dollar (“SGD”).
Foreign exchange risk
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
Registration no. 202201009353 (1455050-D)
(Incorporated in Malaysia)
KGW
COMBINED STATEMENTS OF FINANCIAL POSITION
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
Group Berhad
FINANCIAL
INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(iv)
299
299
(10,035)
Net exposure
-- 88
88 --
10,035
-
(15,813)
15,813
-
Trade payables
Financial liabilities
Trade receivables
Cash and bank balances
31 December 2021
Financial assets
Net exposure
Financial liabilities
Trade payables
Trade receivables
Cash and bank balances
30 June 2021 (unaudited)
Financial assets
EUR
RM
The Group’s exposure to foreign currency at each reporting date is as follows: (cont’d)
Foreign exchange risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW
23,045
(16,044)
(1,885)
5,047,863
12,333,919
17,381,782
7,001
1,885
9,668,374
_ 7,713,408
10,481,042
7,001
1,796
(5,181)
3,071,052
13,552,094
6,732
4,936
8,968,587
4,583,507
USD
RM
6,732
SGD
RM
5.181
GBP
RM
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
5,019,899
12,368,884
9,675,375
7,713,408
17,388,783
10,461,844
3,096,982
13,558,826
8,975,319
4,583,507
RM
Total
14.
13.
13.
Group Berhad
FINANCIAL
INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(iv)
(348)
(1,920)
Net exposure
-- 89
89 -300
300
348
1,920
GBP
RM
Trade payables
Financial liabilities
Trade receivables
Cash and bank balances
31 December 2020
Financial assets
RM
EUR
The Group’s exposure to foreign currency at each reporting date is as follows: (cont’d)
Foreign exchange risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
Registration no. 202201009353 (1455050-D)
(Incorporated in Malaysia)
KGW
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
REPORT
ACCOUNTANTS’
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
7,470
2,550,115
939,680
3,489,795
9,069
1,599
2,223,643
1,266,152
USD
RM
9,069
SGD
RM
2,555,317
943,547
3,498,864
2,232,712
1,266,152
Total
RM
14.
13.
13.
Group Berhad
FINANCIAL INSTRUMENTS
(CONT’D)
REPORT (CONT’D)
(iv)
-- 90
90 -301
301
(14,026)
Net exposure
-
(42,361)
42,454
93
-
14,026
93
EUR
RM
-
Trade payables
Financial liabilities
Trade receivables
Cash and bank balances
31 December 2019
Financial assets
AUD
RM
The Group’s exposure to foreign currency at each reporting date is as follows: (cont’d)
Foreign exchange risk (cont’d)
33.3 Financial risk management, objectives and policies (cont’d)
33.
ACCOUNTANTS’
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
KGW
8,274
-
-
(8,274)
GBP
RM
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
3,122
7,885
11,007
11,007
SGD
RM
-
2,056,085
700,796
2,756,881
877,714
1,879,167
USD
RM
1,994,546
773,435
2,767,981
888,814
1,879,167
Total
RM
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
33.
FINANCIAL
REPORT (CONT’D)
INSTRUMENTS
(CONT’D)
33.3 Financial risk management, objectives and policies (cont'd)
(iv)
Foreign exchange risk (cont’d)
Sensitivity analysis for foreign currency risk
The
following
fluctuation
table demonstrates
in the EUR,
GBP,
SGD,
the sensitivity of the Group’s
USD
and
AUD
exchange
profit after tax to a reasonably
rate against
RM,
possible
with all other variables
held
constant.
At 30 June
2022
2021
Increase/
Increase/
(decrease)
(decrease)
(unaudited)
RM
RM
Effects on profit after tax
EUR
- strengthens by 10%
- weakens by 10%
(567)
567
GBP
- strengthens by 10%
- weakens by 10%
-
At 31 December
2020
Increase/
(decrease)
2019
Increase/
(decrease)
RM
RM
RM
(1,202)
1,202
(763)
763
(146)
146
(3,219)
3,219
(394)
394
(143)
143
(26)
26
(629)
629
SGD
- strengthens by 10%
- weakens by 10%
(178)
178
136
(136)
(1,219)
1,219
568
(568)
237
(237)
USD
- strengthens by 10%
~ weakens by 10%
1,501,916
(1,501,916)
796,559
(796,559)
383,638
(383,638)
193,809
(193,809)
156,262
(156,262)
AUD
- strengthens by 10%
- weakens by 10%
(v)
2021
Increase/
(decrease)
-
-
-
-
(1,066)
1,066
Fair value of financial instruments
The carrying amount of financial assets and financial liabilities maturing within the next 12 months approximated
their fair values due to relatively short term maturity of these financial instruments.
The carrying amount of the floating rate term loans approximate their fair values as these instruments bear
interest at variable rates.
The carrying amount of the fixed rate term loans approximately their fair values as these instruments bear interest
that approximated the market lending rates at the reporting date.
--9]
91 -302
302
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT(CONT’D)
(CONT’D)
ACCOUNTANTS’
REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
34.
REPORT (CONT’D)
CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure the Group’s ability to continue as a going concern
and maximise shareholders’ value.
To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic
conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.
The Group manages its capital based on debt-to-equity ratio. The Group’s strategies were unchanged from the previous
financial year. The debt-to-equity ratio is calculated as net debt divided by total shareholders’ equity. Net debt is calculated
as bank borrowings plus amount owing to Directors and lease liabilities less cash and cash equivalents.
The debt-to-equity ratio of the Group as at the end of the reporting period is as follows:
At 30 June
2022
At 31 December
2021
2021
2020
2019
RM
RM
RM
959,309
(unaudited)
RM
Amount owing to Directors
RM
315,618
500
185,752
Bank borrowings
978,838
-
1,819,422
1,570,141
1,685,939
837,225
Lease liabilities #
686,284
628,492
528,655
256,384
317,255
1,665,122
2,763,532
2,099,296
2,128,075
2,113,789
(31,539,318)
(29,874,196)
(5,614,062)
(2,850,530)
(19,505,864)
(17,406,568)
(1,187,486)
940,589
(2,762,291)
(648,502)
26,552,684
8,308,311
11,797,209
3,636,892
1,458,428
Less: Cash and cash
equivalents
Net (cash)/debt
Total shareholders' equity
Debt-to-equity ratio
N/A*
N/A*
N/A*
0.26
# Exclude lease liabilities in relation to rental lease arrangement.
* The gearing ratio is not applicable as the cash and cash equivalents is sufficient to cover the entire debt
obligation.
-- 92
92- 303
303
N/A*
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
35.
SIGNIFICANT
(i)
REPORT
EVENT
DURING
(CONT’D)
AND AFTER THE REPORTING
The Coronavirus disease 2019 “COVID-19”
PERIOD
pandemic
The World Health Organisation declared the 2019 Novel Coronavirus infection (“COVID-19”) a global pandemic
on 11 March 2020. The Government of Malaysia imposed a Movement Control Order (““MCO”) effective from 18
March 2020 followed by various phases of the MCO subsequently to curb the spread of the COVID-19 pandemic
during 2020 and 2021. These orders and the resurgence of COVID-19 cases, movement restriction orders and
targeted containment measures implemented in many countries have caused disruptions to business activities
nationwide, especially markets in which the Group operates.
The restrictions imposed have not, however, negatively impacted the Group’s financial performance as most of its
operations were allowed to operate throughout the MCO under the respective guidelines set by the National Security
Council and the Ministry of International Trade and Industry. The Group has performed assessment on the overall
impact of COVID-19 situation on its operations, including the recoverability of the carrying amount of assets and
concluded that there was no material adverse effect on the Group at reporting date.
As at the date of authorisation of this report, the COVID-19 pandemic situation is still evolving and uncertain. The
Group will continue to actively monitor and manage its operations to minimise any impact arising from the COVID19 pandemic.
(ii)
Acquisition of property land and building
On 21 April 2022,
the Group had signed a letter of offer with a third party at a consideration of RM20.20 million to
acquire a freehold land and building located at Hicom
Glenmarie Industrial Park, Shah Alam, Selangor with a total
built-up area of 53,455.76 sq. ft.. The sales and purchase agreement had been entered by the Group on 05 July 2022.
As of the date of this report, deposit amount of RM2,020,000 had being paid to the vendor. The Group are currently
pending approval of loan by the financial institution to finance the property.
(iii)
Acquisition of KGW
Logistics,
Mattroy Logistics and KGW
On 30 September 2022, KGW entered into a conditional
Logistics and KGW Medica Vendors:
(a)
Medica
share sale agreement with KGW
Logistics, Mattroy
to acquire the entire equity interest in KGW Logistics comprising 1,000,000 ordinary shares for a total purchase
consideration of RM11,092,800 to be satisfied via the issuance of 369,760,000 new Shares at an issue price of
RM0O.03 per Share;
(b)
to acquire the entire equity interest in Mattroy Logistics comprising 200,000 ordinary shares for a total purchase
consideration of RM626,800 to be satisfied via the issuance of 20,893,334 new Shares at an issue price of
RMO0.03 per Share; and
(c)
to acquire the entire equity interest in KGW Medica comprising 300,000 ordinary shares for a purchase
consideration of RM374,500 to be satisfied via the issuance of 12,483,333 new Shares at an issue price of
RM0.03 per Share.
The Acquisition is conditional upon the approval of the relevant authorities being obtained for Listing of KGW
within 9 months from agreement date. The new Shares issued under the Acquisition rank equally in all respects with
existing Shares. Upon completion of the Acquisition, KGW Logistics, Mattroy Logistics and KGW Medica become
the wholly-owned subsidiaries of KGW.
--93
93 -304
304
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
13.
13.
REPORTING
ACCOUNTANTS’
REPORT ON THE COMPILATION OF PRO FORMA
ACCOUNTANTS’
REPORT
ACCOUNTANTS’
REPORT (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW
Group Berhad
(Incorporated in Malaysia)
Registration no. 202201009353 (1455050-D)
ACCOUNTANTS’
STATEMENT
REPORT
(CONT’D)
BY DIRECTORS
We, Dato’ Roger Wong Ken
in the opinion of the Directors,
Malaysian Financial Reporting
of the financial position of the
Hong and Cheok Hui Yen, being two
the combined financial statements set
Standards and International Financial
Group as at 30 June 2022 and 30 June
of the Directors of KGW Group Berhad, state that,
out on pages 4 to 93 are drawn up in accordance with
Reporting Standards so as to give a true and fair view
2021, 31 December 2021, 31 December 2020 and 31
December 2019 and of their financial performance, changes in equity and cash flows for each of the financial periods ended
30 June 2022 and 30 June 2021 and financial years ended 31 December 2021, 31 December 2020 and 31 December 2019"
Signed in accordance with a resolution of the Directors,
Dato’ Roger Wong Ken Hong
Cheok Hii Yen
Director
Director
21 October 2022
--9494 305
305
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Registration
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202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION
Da
|“° ECOVIS
ECOVIS MALAYSIA PLT
Kuala Lumpur office
201404001750 (LLP0003185-LCA) & AF 001825
Chartered Accountants. Kuala Lumpur, Malaysia
:
Phone: +603 7981 1799
Fax-No: +603 7980 4796
The Board of Directors
KGW GROUP BERHAD
D11-10-1, Block D11
Dana 1 Commercial Centre
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
Kuala Lumpur, 21 October 2022
Dear Sirs,
KGW
GROUP
BERHAD
(“KGW”
(COLLECTIVELY “THE GROUP”)
REPORT ON THE COMPILATION
INCLUDED IN A PROSPECTUS
OR
“THE
COMPANY”)
OF PRO FORMA
COMBINED
AND
ITS
COMBINING
ENTITIES
STATEMENT OF FINANCIAL POSITION
We have completed our assurance engagement to report on the compilation of pro forma combined statement
of financial position of the Group as at 30 June 2022. The pro forma combined statement of financial position
as at 30 June 2022 (“Pro Forma Combined Statement of Financial Position”) together with the accompanying
notes are prepared by the Board of Directors of KGW (“the Directors”) for inclusion in the prospectus of the
Company (“the Prospectus”) in connection with the listing and quotation of the entire enlarged issued share
capital of KGW on the ACE Market of Bursa Malaysia Securities Berhad (“the Listing”) and have been stamped
by us for identification purposes.
The applicable criteria on the basis of which the Directors have compiled the Pro Forma Combined Statement
of Financial Position are described in the notes to the Pro Forma Combined Statement of Financial Position.
The Pro Forma Combined Statement of Financial Position are prepared in accordance with the requirements
of Chapter 9, Part Il Division |: Equity of the Prospectus Guidelines issued by the Securities Commission
Malaysia (“Prospectus Guidelines”) and the Guidance Note for Issuers of Pro Forma Financial Information
issued by the Malaysian Institute of Accountants (“Guidance Note”).
The Pro Forma Combined Statement of Financial Position have been compiled by the Directors, for
purposes only, solely to illustrate the impact of the events or transactions as set out in the notes
Forma Combined Statement of Finanical Position as if the events have occurred or the transactions
effected on 30 June 2022. As part of this process, information about the Group’s financial position
extracted
by the Directors from the Group’s audited
combined
illustrative
to the Pro
have been
have been
statement of financial position as at 30 June
2022, on which an audit report has been issued by us.
Directors’ Responsibility for the Pro Forma Combined Statement of Financial Position
The Directors of the Company are responsible for compiling the Pro Forma Combined Statement of Financial
Position on the basis described in the notes to the Pro Forma Combined Statement of Financial Position and
in accordance with the requirements of the Prospectus Guidelines and the Guidance Notes.
ECOVIS MALAYSIA PLT 201404001750 (LLP0003185-LCA) & AF 001825 Chartered Accountants, No 9-3, Jalan 109F, Plaza Danau 2, Taman Danau Desa, 58100
Kuala Lumpur, Malaysia Phone: +60(3) 7981 1799 Fax: +60(3) 7980 4796 E-Mail: kuala-lumpur@ecovis.com.my
A member of ECOVIS Internationai, a network of tax advisors, accountants, auditors, lawyers, operating in more than 80 countries across 6 continents.
ECOVIS International is a Swiss association. Each Member Firm is an independent legal entity in its own country and is only liable for its own acts or omissions, not those
of any other entity. ECOVIS MALAYSIA PLT is a Malaysia member firm of ECOVIS international.
Page 1 of 3
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CMAN
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@
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
Da
|“° ECOVIS
Reporting Accountants’ Independence and Quality Control
We
have
complied
with the independence
and
other ethical
requirement
of the By-Laws
(on Professional
Ethics, Conduct and Practice) of the Malaysian Institute of Accountants and the International Ethics Standards
Board for Accountants’ /nternational Code of Ethics for Professional Accountants (including International
Independence Standards), which is founded on fundamental principles of integrity, objectivity, professional
competence and due care, confidentiality and professional behaviour.
Our Firm applies International Standard on Quality Control 1 (ISQC
1), Quality Control for Firms that Perform
Audits and Reviews of Financial Statements, and other Assurance and Related Services Engagements and
accordingly maintains a comprehensive system of quality control including documented policies and
procedures regarding compliance with ethical requirements, professional standards and applicable legal and
regulatory requirements.
Reporting Accountants’ Responsibility
Our responsibility is to express an opinion, as required by the Prospectus Guidelines, about whether the Pro
Forma Combined Statement of Financial Position have been compiled, in all material respects, by the Directors
on the basis as described in the notes to the Pro Forma Combined Statement of Financial Position.
We conducted our engagement in accordance with International Standard on Assurance Engagement (“ISAE”)
3420, Assurance Engagement to Report on the Compilation of Pro Forma Financial Information Included in a
Prospectus,
issued
by the
International
Auditing
and
Assurance
Malaysian Institute of Accountants. This standard requires that we
reasonable assurance about whether the Directors have compiled,
Standards
Board
and
adopted
by the
plan and perform procedures to obtain
in all material respects, the Pro Forma
Combined Statement of Financial Position on the basis set out in the notes to the Pro Forma Combined
Statement of Financial Position and in accordance with the requirements of the Prospectus Guidelines and the
Guidance Note.
For the purpose of this engagement,
we are not responsible for updating or reissuing any reports or opinions
on any historical financial information used in compiling the Pro Forma
Position,
nor
have
we,
in the
course
of this engagement,
performed
Combined
an
audit
Statement of Financial
or review
of the
financial
information used in compiling the Pro Forma Combined Statement of Financial Position.
The purpose for inclusion of the Pro Forma Combined Statement of Financial Position in the Prospectus is
solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the
entity as if the event had occurred or the transaction had been undertaken at an earlier date selected for
purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the events
or transactions would have been as presented.
A reasonable assurance engagement to report on whether the Pro Forma Combined Statement of Financial
Position have been compiled, in all material respects, on the basis of the applicable criteria involves performing
procedures to assess whether the applicable criteria used by the Directors in the compilation of the Pro Forma
Combined Statement of Financial Position provide a reasonable basis for presenting the significant effects
directly attributable to the events or transactions, and to obtain sufficient appropriate evidence about whether:
(1)
the related pro forma adjustments give appropriate effect to those criteria; and
(ii)
the Pro Forma Combined Statement of Financial Position
adjustments to the unadjusted financial information.
reflects the proper application of those
Page 2 of 3
PNA
CMAN
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@
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
Da
|“° ECOVIS
Reporting Accountants’ Responsibility (cont’d)
The procedures selected depend on our judgement, having regard to our understanding of the nature of the
Group, the events or transactions in respect of which the Pro Forma Combined Statement of Financial Position
have been compiled, and other relevant engagement circumstances.
The engagement also involves evaiuating the overall presentation of the Pro Forma Combined Statement of
Financial Position.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Pro Forma Combined Statement of Financial Position have been compiled, in all material
respects, on the basis set out in the notes to the Pro Forma Combined Statement of Financial Position and in
accordance with the requirements of the Prospectus Guidelines and the Guidance Notes.
Other Matters
This report has been
not be. used for any
employee of the firm
report contrary to the
prepared solely for the purpose stated above, in connection with the Listing and should
other purpose without our prior written consent. Neither the firm nor any member or
undertakes responsibility arising in any way whatsoever to any party in respect of this
aforesaid purpose.
Yours faithfully,
Covet
ECOVIS MALAYSIA PLT
AF 001825
Chartered Accountants
PAT YIN LAI
03073/1 2/2023 J
Chartered Accountant
Kuala Lumpur
21 October 2022
Page 3 of 3
PNA
CMAN
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308
@
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
KGW
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
GROUP
PRO FORMA
BERHAD
ECOVIS
COMBINED
STATEMENT
(AF 001825)
OF FINANCIAL POSITION
MALAYSIA
Charter
AS AT 30 JUNE 2022
1.0
Introduction
The
pro
forma
combined
statement
of financial
position
of KGW
Group
Berhad
("KGW"
or the
"Company") and its combining entities (collectively referred as "the Group") as at 30 June 2022 together
with the notes thereon, for which the Board of Directors ("the Directors") of KGW are solely responsible,
have been prepared for illustrative only for the purpose of inclusion in the prospectus of the Company in
connection with the listing and quotation of the entire enlarged issued share capital of the Company on the
ACE Market of Bursa Malaysia Securities Berhad ("Bursa Securities") ("the Listing").
2.0
Pro Forma Group and Basis of Preparation
2.1
Basis of Preparation
The applicable criteria on the basis of which the Directors have compiled the pro forma combined
statement of financial position are as described forthwith. The pro forma combined statement of financial
position are prepared in accordance with the requirements of Chapter 9, Part I] Division 1: Equity of the
Prospectus Guidelines issued by the Securities Commission Malaysia ("Prospectus Guidelines") and the
Guidance Note for Issuers of Pro Forma Financial Information issued by the Malaysian Institute of
Accountants.
The pro forma combined statement of financial position of KGW
Group had been prepared based on the
audited combined statement of financial position of the Group as at 30 June 2022, which was prepared in
accordance
Reporting
with
Malaysian
Standards
("IFRS"),
Financial
Reporting
and in a manner
position and the accounting policies of KGW
Standards
("MFRS")
and
International
Financial
consistent with the format of the statement of financial
as disclosed in its audited combined financial statements for
the financial] period ended 30 June 2022.
The pro forma combined statement of financial position is presented in Ringgit Malaysia ("RM").
The pro forma combined statement of financial position together with the related notes thereon, have been
prepared solely to illustrate the impact of the events and transactions set out in Note 3 to the pro forma
combined statement of financial position had the events occurred or transactions been undertaken on 30
June 2022. The pro forma combined statement of financial position are not necessarily indicative of the
financial position that would have been attained had the Listing actually occurred at the respective dates.
Further, such information does not purport to predict the future financial position of the Group.
The rest of this page is intentionally left blank
1
309
309
PLT
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
KGW
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
GROUP
PRO FORMA
BERHAD
COMBINED
ECOVIS
STATEMENT
OF FINANCIAL POSITION
arered
AS
2.0
2.1
AT
30 JUNE
2022
MALAYSIA
is oore78
Accountants
For iclentification purposes only
Pro Forma Group and Basis of Preparation (Cont'd)
Basis of Preparation (Cont'd)
For the purpose of accounting for the Pre-Initial Public Offering ("Pre-IPO") Exercise as described in Note
2.2.1, the Group has applied the merger method of accounting as the combining entities within the Group
are under common control by Dato’ Roger Wong Ken Hong, being the key management personnel and the
major shareholder of the combining entities before and after the Pre-IPO Exercise. Under the merger
method of accounting, the difference between the cost of investment recorded by the Company (i.e. the
consideration for the acquisition of the combining entities) and the share capital of the acquirees, KGW
Logistics (M) Sdn. Bhd. ("KGW Logistics"), KGW Medica Sdn. Bhd. ("KGW Medica") and Mattroy
Logistics (Malaysia) Sdn. Bhd. ("Mattroy Logistics"), are accounted for as reorganisation reserve as
follows:
RM
New shares issued by the Company as consideration for the acquisition of:
- KGW
Logistics
- KGW
Medica
11,092,800
374,500
- Mattroy Logistics
626,800
Less: Reversal of issued and paid-up share capital on acquisition date:
- KGW Logistics
(1,000,000)
- KGW Medica
(300,000)
- Mattroy Logistics
(200,000)
Reorganisation reserve
10,594,100
The auditors’ report of the audited combined
financial statements of the Group for the financial period
ended 30 June 2022 was not subject to any qualification, modification or disclaimer of opinion.
The pro forma financial information of the Group comprises the pro forma combined statement of financial
position as at 30 June 2022, adjusted for the impact of the Pre-IPO Exercise (Note 2.2.1), IPO (Note 2.2.2)
and utilisation of proceeds from the IPO (Note 3.1.3).
2.2
Listing Scheme
In conjunction with and as an integral part of the listing and quotation of the entire enlarged issued share
capital of KGW on the ACE Market, the Company intends to undertake the following transactions:
The rest of this page is intentionally left blank
2
310
310
PLT
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
KGW GROUP BERHAD
PRO FORMA
AS
COMBINED
AT 30 JUNE
STATEMENT
Chartered Accountants
For identification purposes only
Pro Forma Group and Basis of Preparation (Cont'd)
2.2
Listing Scheme (cont'd)
2.2.1
Pre-IPO Exercise
30
MALAYSIA
(AF 001825)
2022
2.0
On
ECOVIS
OF FINANCIAL POSITION
September
2022,
the Company
had
entered
into three
conditional
Share
Sale
Agreements ("SSA") with the selling shareholders to acquire the equity interest in KGW
and
Purchase
Logistics, KGW
Medica and Mattroy Logistics:
(i)
Acquisition
of the
RM11,092,800
entire
equity
to be satisfied
interest
via the
in
KGW
issuance
Logistics
of 369,760,000
for
a purchase
KGW
Shares
consideration
at an
issue
of
price
of
RMO0.03 per Share;
(it)
Acquisition of the entire equity interest in KGW
222
Medica for a purchase consideration of RM374,500
to be satisfied via the issuance of 12,483,333 KGW
(ili) Acquisition
RM626,800
of the
entire
equity
interest
Shares at an issue price of RM0.03
in Mattroy
Logistics
to be satisfied via the issuance of 20,893,334 KGW
for a purchase
per Share; and
consideration
of
Shares at an issue price of RM0.03
per Share.
(collectively known as "Acquisitions")
The
total
purchase
consideration
audited net assets of KGW
KGW
Medica's
increase
of RM12,094,100
Logistics, KGW
in share
capital
was
arrived
after taking
into consideration
of the
Medica and Mattroy Logistics as at 31 December 2021 and
on 25
January 2022
and
9 February
2022.
The
SSA
was
completed on [e].
2.2.2
IPO
2.2.2.1.
Public Issue
In conjunction with the IPO, the Company will undertake Public Issue of 79,661,800 new KGW
("Public Issue") and Offer for Sale of 43,452,000 existing KGW
Shares
Shares ("Offer Shares") at an IPO price
of RM[e] per share. The Public Issue of 79,661,800 KGW Shares will be issued in the following manner:
(a)
24,140,000 new KGW
(b)
9,656,000 new KGW
Shares made available for application by the Malaysian Public;
Shares made available for application by the eligible Directors, employees and
persons who have contributed to the success of the Group;
3
311
311
PLT
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
KGW GROUP BERHAD
COMBINED
PRO FORMA
AS
AT
30 JUNE
STATEMENT
2022
For identification purposes only
2.0
Pro Forma Group and Basis of Preparation (Cont'd)
2.2
Listing Scheme (cont'd)
2.2.2.
IPO (Cont'd)
2.2.2.1
Public Issue (Cont'd)
In conjunction
with the IPO,
the Company
will undertake public issue of 79,661,800
("Public Issue") and Offer for Sale of 43,452,000 existing KGW
share. The Public Issue of 79,661,800 KGW
(c)
ECOVIS MALAYSIA
Chonan Accountants
OF FINANCIAL POSITION
38,624,000 new KGW
new KGW
Shares
Shares at an IPO price of RM[e] per
Shares will be issued in the following manner: (cont'd)
Shares by way of private placement to Bumiputera investors approved by the
Ministry of International Trade and Industry ("MITI"); and
(d)
2.2.2.2
7,241,800 new KGW
Shares by way of private placement to institutional and selected investors.
Offer for Sale
The Offer for Sale of 43,452,000 Offer Shares will be made available in the following manner:
(a)
Private Placement
- 21,726,000
Offer
Shares
made
available
by way
of private
placement
to Bumiputera
investors
approved by MITT; and
- 21,726,000 Offer Shares made available by way of private placement to institutional and selected
investors.
2.2.2.3
Listing
The admission of KGW to the Official List of Bursa Securities, and the entire enlarged issued share capital
of RM[e] comprising 482,798,567 KGW Shares shall be listed and quoted on the ACE Market upon
completion of the Public Issue.
The rest of this page is intentionally left blank
4
312
312
PLT
3.0
Equity
Share capital
Invested equity
Reorganisation reserve
Retained earnings
Total equity attributable to
shareholders of the Company
Equity and liabilities
Total assets
Cash and bank balances
Fixed deposit with financial institution
Amount owing by related parties
Contract costs
Other receivables, deposits and prepayments
Trade receivables
Inventories
Current assets
Deferred tax asets
Property, plant and equipment
Non-current assets
Assets
26,552,684
25,052,674
10
1,500,000
442,188
31,609,139
57,524,233
60,384,940
14,750
19,832,220
1,017,137
4,608,799
1,947,537
913,170
2,860,707
30 June 2022 ‘”
RM
Audited as at
Pro Forma Combined Statement of Financial Position as at 30 June 2022
5
313
313
12.094.100
(1.500,000)
(10,594,100)
RM
Acquisitions
<+— Pre-IPO->
26,552,684
(10,594,100)
25,052,674
12,094,110
442,188
31,609,139
57,524,233
60,384,940
14,750
19,832,220
1,017,137
4,608,799
1,947,537
913.170
2,860,707
After Acquisitions
RM
Pro Forma I
IPO
[e]
[e]
(404,000)
MALAYSIA
PLT
Le]
[e]
(10,594,100)
[e]
442,188
le]
[e]
le]
14,750
19,832,220
613,137
4,608,799
[¢]
913,170
Le]
Pro Forma II
After Pro Forma
II and utilisation of|
proceeds
RM
Chartered Accountants
For identification purposes only
(AF 001825)
Le]
[°]
(10,594,100)
25,052.674
[e]
[e]
ECOVIS
RM
Utilisation of
proceeds
[e]
442,188
14,750
19,832,220
1,017,137
4,608,799
1,947.537
913,170
2,860,707
RM
After Pro Forma I
and IPO
Pro Forma II
REPORTING
ACCOUNTANTS’REPORT
REPORT
COMPILATION
OF FORMA
PRO FORMA
REPORTING ACCOUNTANTS’
ON
THE
COMPILATION
OF
FORMA
COMBINED
ACCOUNTANTS’
REPORT
ONON
THETHE
COMPILATION
OF PRO
PRO
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW GROUP BERHAD
PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
14.
14.
[ Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
3.0
Shares in issue
0.06
1.8
1,665,122
17.70
26,552,684
1,500,100
33,832,256
60,384,940
-
“
791,084
763,351
0.06
1.8
1,665,122
0.07
26,552,684
403,136,767
33,832,256
60,384,940
32,277,821
5,536,995
442,783
215,487
9,318,956
6,096,217
10,667,383
1,554,435
RM
After Acqui
RM
{PO
[e]
-
-
-
-
-
-
-
-
-
-
-
Calculated based on total current assets divided by total current liabilities of the Group
314
314
-6
791,084
763,351
[e]
[e]
1,665,122
[eo]
[eo]
482,798,567
33,832,256
[e]
32,277,821
5,536,995
442,783
215,487
9,318,956
6,096,217
10,667,383
1,554,435
RM
After Pro Forma I
and IPO
Pro Forma IT
Calculated based on the total borrowings (excluding lease liabilities arising from rental of land and buildings) of the Group divided by the total equity of the Group
Exeluding lease liabilities arising from rental of land and buildings
‘) Extracted from KGW's audited combined financial statements for the financial period ended 30 June 2022
Gearing (times)
Current ratio (times)
Borrowings
Net assets per Share (RM)
Net assets (RM)
Number of KGW
Total equity and liabilities
Total liabilities
-
442,783
Lease liabilities
-
215,487
Bank borrowings
-
5,536,995
9,318,956
Contract liabilities
-
32,277,821
6,096,217
Other payables and accruals
Income tax payable
10,667,383
Trade payables
-
-
1,554,435
Current liabi
-
791,084
-
763,351
Bank borrowings
RM
RM
Lease liabil
Non-current lia
Liabilities
Acquisitions
Audited as at
30 June 2022 ©”
Pro Forma Combined Statement of Financial Position as at 30 June 2022 (Cont'd)
Pro Forma I
[e]
-
-
-
-
-
~
-
-
-
-
-
763,351
791,084
Chartered Accountants
For identification purposes only
(AF 001825}
[e]
[eo]
1,665,122
[e]
[e]
482,798,567
33,832,256
[eo]
32,277,821
5,536,995
442,783
215,487
9,318,956
6,096,217
10,667,383
1,554,435
RM
ECOVIS MALAYSIA PLT
RM
Pro Forma III
After Pro Forma
Utilisation of — If and utilisation of
proceeds
proceeds
REPORTING
ACCOUNTANTS’REPORT
REPORT
COMPILATION
OF FORMA
PRO FORMA
REPORTING ACCOUNTANTS’
ON
THE
COMPILATION
OF
FORMA
COMBINED
ACCOUNTANTS’
REPORT
ONON
THETHE
COMPILATION
OF PRO
PRO
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
COMBINED STATEMENTS OF FINANCIAL POSITION
KGW GROUP BERHAD
PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
14.
14.
| Registration
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT'D)
KGW GROUP BERHAD
PRO FORMA
COMBINED
STATEMENT
ECOVIS MALAYSIA PLT
OF FINANCIAL POSITION
(AF 001825)
Chartered Accountants
AS AT 30 JUNE 2022
For identification purposes only
3.1
Notes to Pro Forma Combined
3.1.1
Pro Forma I
Statement of Financial Position
Pro Forma I incorporates the effects of Acquisitions as set out in Note 2.2.1.
Pro Forma U
Pro Forma U incorporates the effects of Pro Forma| and IPO as set out in Note 2.2.2.
Pro Forma
III
Pro Forma LJ incorporates the effects of Pro Forma II, Subsequent Events and the utilisation of proceeds from IPO.
The estimated gross proceeds from IPO of RM[e] will be utilised as follows:
Estimated time frame
RM
(from the listing date)
Purchase and renovation of property “”?
[e]
Within 12 months
Working capital
[e]
Within 12 months
fe]
Within 1 month
:
Estimated listing expenses
Le]
Notes:
a)
The Group had entered into a sales and purchase agreement on 5 July 2022 to acquire a target property for a total
purchase consideration of RM20.20
deposit
payment
of RM2.02
million.
million. As at 30 September 2022
In accordance
with Paragraph
("LPD"), the Group
9.18(a)(ii), Division
has made total
1, Equity of the
Prospectus Guidelines, the Group has illustrated the utilisation of proceeds of RM[e] to acquire the property in
the Pro Forma Combined Statement of Financial Position. Out of the allocated proceeds, RM[e] will be allocated
for renovation works and RM[e] will be allocated for legal fee, stamp duty and fee to authorities. The balance of
RM[e]
will be allocated for settlement of the acquisition of the target property or settlement of the bank
borrowings obtained to finance the acquisition of the property (if obtained subsequently). As at the LPD, the
Group had yet to enter into any contractual binding arrangements in relation to the renovation of the property.
Accordingly, the utilisation of proceeds for renovation
is not reflected in the Pro Forma Combined Statement of
Financial Position.
(2)
The estimated listing expenses comprise the following:
RM
Professional fees
Fees payable to authorities
[eo]
[*]
Underwriting, placement and brokerage fees
[e]
Printing, advertising fees and contingencies
Le}
[e]
Upon completion of the IPO, an estimated listing expenses of RM[e], which is directly attributable to the
issuance of new KGW Shares will be offset against share capital. The remaining estimated listing expenses of
RM[e]
will be charged out to profit or loss.
7
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315
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
KGW
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
GROUP
PRO FORMA
BERHAD
COMBINED
ECOVIS
STATEMENT OF FINANCIAL POSITION
MALAYSIA
(AF 001825}
Chartered Accountants
AS AT 30 JUNE 2022
For identification purposes only
3.2
Pro Forma Effects on Financial Statement Line Items
3.2.1
Effects on Property, Plant and Equipment
RM
As audited on 30 June 2022 and after effects of Pro Forma
RM
I and II
1,947,537
Pro Forma Hk:
Subsequent events:
- Purchase of property
[e]
- Payment for legal fee, stamp duty and fee to authorities arising from
the purchase of property
[eo]
[9]
te]
After effects of Pro Forma III
3.2.2
Effects eon Cash and Bank Balances
RM
As audited on 30 June 2022 and after effects of Pro Forma
RM
31,609,139
I
Pro Forma Il:
ie]
{*]
IPO
After effects of Pro Forma II
Pro Forma Hl:
Subsequent events:
- Payment of remaining deposit for acquisition of property
[eo]
- Payment of balance acquisition price of target
[eo]
“
Utilisation of proceeds from IPO:
- Part settlement of acquisition of target property
[e]
- Payment for legal fee, stamp duty and fee to authorities arising from
the purchase of property
- Payment for estimated listing expenses
[e]
[e]
After effects of Pro Forma
[e]
[e]
le]
HI
Note :
“ As at the LPD, the Group had yet to enter into any contractual binding arrangements in relation to the financing of
the target property. Accordingly, the settlement of balance acquisition price of the target property is through internally
generated funds.
3.2.3
Effects on Other Receivables, Deposits and Prepayments
RM
RM
1,017,137
As audited on 30 June 2022 and after effects of Pro Forma I and II
Pro Forma III:
Subsequent event:
- Transfer of deposit paid as at 30 June 2022 for the purchase of
property to property, plant and equipment
After effects of Pro Forma
(404,000)
(404,000)
613,137
III
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[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
KGW GROUP BERHAD
PRO FORMA COMBINED
AS AT 30 JUNE 2022
ECOVIS
STATEMENT
OF FINANCIAL
POSITION
MALAYSIA
(AF 001825)
Chartered Accountants
For identification purposes only
3.2
Pro Forma Effects on Financial Statement Line Items (Cont'd)
3.2.4
Effects on Share Capital
No. of shares
AS audited on 30 June 2022
RM
100
10
- Shares issued on Acquisitions
403,136,667
12,094,100
After effects of Pro Forma I
403,136,767
12,094,110
Pro Forma I:
Acquisitions:
Pro Forma U:
IPO
After effects of Pro Forma I
79,661,800
[e]
482,798,567
[e]
Pro Forma JU:
Utilisation of proceeds from IPO:
- Estimated listing expenses offset against equity
-
After effects of Pro Forma III
3.2.5
[eo]
482,798,567
[e]
Effects on Invested Equity
RM
As audited on 30 June 2022
RM
1,500,000
Pro Forma I:
Acquisitions
(1,500,000)
After effects of Pro Forma I, If and HI
3.2.6
-
Effects on Reorganisation Reserve
RM
RM
As audited on 30 June 2022
-
Pro Forma |:
Acquisitions:
- Shares issued on Acquisitions
- Elimination of ordinary shares of KGW Logistics, KGW Medica and
Mattroy Logistics
(1,500,000)
After effects of Pro Forma I, I, 1
3.2.7.
12.094.100
10,594,100
10,594,100
Effects on Retained Earnings
RM
As audited on 30 June 2022
25,052,674
Pro Forma UI:
Utilisation of proceeds from IPO:
- Estimated listing expenses charged to profit or loss
[e]
After effects of Pro Forma I, Il and HI
[e]
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99
317
317
PLT
[ Registration
Registration
No.
202201009353
(1455050-D)
Registration No.
No. 202201009353
202201009353 (1455050-D)
(1455050-D) |
14.
14.
14.
REPORTING
REPORTING
ACCOUNTANTS’
REPORT
ON
THE
COMPILATION
OF
PRO
FORMA
REPORTING ACCOUNTANTS’
ACCOUNTANTS’ REPORT
REPORT ON
ON THE
THE COMPILATION
COMPILATION OF
OF PRO
PRO FORMA
FORMA
COMBINED
COMBINED
STATEMENTS
OF
FINANCIAL
POSITION
COMBINED STATEMENTS
STATEMENTS OF
OF FINANCIAL
FINANCIAL POSITION
POSITION (CONT’D)
(CONT’D)
KGW GROUP BERHAD
PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION
AS AT 30 JONE 2022
4.0
Approval by the Board of Directors
The pro forma combined statement of financial position is approved by the Board of Directors of KGW Group
Berhad in accordance with Directors’ resolution dated 21 October 2022.
Dato' Roger Wong
Director
Ken Hong
Cheok
Hui Yen
Director
10
10
318
318
Registration No. 202201009353 (1455050-D)
15.
ADDITIONAL INFORMATION
15.1
SHARE CAPITAL
15.2
(i)
No Shares will be allotted, issued or offered on the basis of this Prospectus later than 6
months after the date of this Prospectus.
(ii)
As at the date of this Prospectus, we only have 1 class of shares, namely ordinary shares,
all of which rank equally with one another.
(iii)
None of our Group’s share capital is under any option or agreed conditionally or
unconditionally to be put under any option as at the date of this Prospectus.
(iv)
No person has been or is entitled to be given an option to subscribe for any share, stock,
debenture or other security of our Group, except for the Pink Form Allocation.
(v)
There is no scheme involving our Directors and employees in the capital of our Group,
except for the Pink Form Allocation.
(vi)
Save as disclosed in Sections 4.3 and 6.1.3 of this Prospectus, no shares, debentures,
warrants, options, convertible securities or uncalled capital of our Group have been or are
proposed to be issued as fully or partly paid-up, in cash or otherwise than in cash, within
the 3 years preceding the date of this Prospectus.
(vii)
As at the date of this Prospectus, our Group does not have any outstanding convertible
securities, options, warrants or uncalled capital.
EXTRACT OF OUR CONSTITUTION
The following provisions relating to the selected matters are reproduced from our Constitution
which complies with the Listing Requirements, the Act and the Rules.
The words, terms and expressions appearing in the following provisions shall bear the same
meanings used in our Constitution unless they are otherwise defined herein or the context
otherwise requires.
15.2.1 Remuneration, voting and borrowing powers of Directors
(i)
Remuneration of Directors
Clause 119
Subject to the Act and this Constitution, the fees and any benefits payable to the Directors
(including any compensation for loss of employment of the Director or any former Director)
or any increase thereof shall from time to time be determined by an Ordinary Resolution
of the Company in general meeting provided that:
(a)
The fees of the non-executive Directors shall be a fixed sum and not by a
commission on or percentage of profits or turnover, and such fee shall be divided
amongst the non-executive Directors as they shall determine or failing agreement,
equally.
(b)
The salaries payable to executive Directors may not include a commission on or
percentage of turnover.
338
Registration No. 202201009353 (1455050-D)
15.
ADDITIONAL INFORMATION (CONT’D)
(c)
The Director shall also be paid such travelling, hotel or other expenses as may
reasonably be incurred by them in the execution of their duties including such
expenses incurred in connection with their attendance at meetings of Directors. If
by arrangement with the other Directors, any Director shall perform or render any
duties or services outside his ordinary duties as a Director or shall make any
special exertions in going or residing away from his usual place of business or
residence for any of the purposes of the Company or shall give special attention
to the business of the Company as a member of a committee of Directors, the
Directors may pay him special remuneration in a lump sum in addition to his
ordinary remuneration.
(d)
Any fee paid to an alternate director shall be agreed between himself and the
Director nominating him and shall be paid out of the remuneration of the latter.
Clause 123
Subject to the provisions of the Act, any Director may act by himself or his firm in a
professional capacity for the Company, and he or his firm shall be entitled to remuneration
for professional services as if he was not a Director, provided that nothing herein contained
shall authorise a Director or his firm to act as auditor of the Company.
Clause 126
The remuneration of a Managing Director, a Deputy Managing Director and an Executive
Director given due to his office as executive or management position, if any, shall be fixed
by the Directors and may be by way of salary or commission or participation in profits or
otherwise or by any or all of these modes, but shall not be a commission on or percentage
of turnover but it may be a term of their appointment that they shall receive pension,
gratuity or other benefits upon their retirement.
(ii)
Voting powers of Directors
Clause 122
No Director shall be disqualified by his office from holding any office or place of profit under
the Company or under any company in which the Company shall be a shareholder or
otherwise interested in conjunction with his office of Director (except that of auditor) or
from contracting with the Company either as vendor, purchaser, or otherwise, nor shall
any such contract or any contract or arrangement entered into by or on behalf of the
Company in which any Director shall be in any way interested be avoided, nor shall any
Director be liable to account to the Company for any profit arising from any such office or
place of profit or realised by any such contract or arrangement by reason only of such
Director holding that office or of the fiduciary relations thereby established provided always
that Sections 221, 222 and 228 and all other relevant provisions of the Act and this
Constitution are complied with. A Director who is in any way, whether directly or indirectly,
interested in a contract entered into or proposed to be entered into by the company, unless
the interest is one that need not be disclosed under Section 221 of the Act, shall be
counted only to make the quorum at the meeting of the Directors but shall not participate
in any discussion while the contract or proposed contract is being considered during the
meeting and shall not vote on the contract or proposed contract.
Clause 143
Subject to the provisions of this Constitution, question arising at any meeting shall be
decided by a majority of votes of the Directors present, each Director having one (1) vote.
In case of an equality of votes, the Chairman shall have a second or casting vote provided
always that the Chairman of a meeting at which only two (2) Directors are present or at
which only two (2) Directors are competent to vote on the questions at issue shall not have
a second or casting vote.
339
Registration No. 202201009353 (1455050-D)
15.
ADDITIONAL INFORMATION (CONT’D)
(iii)
Borrowing powers of Directors
Clause 151
The Directors may from time to time at their discretion raise or borrow for the purpose of
the Company such sums of moneys as they think proper. The Directors shall not borrow
any money or mortgage or charge any of the Company’s or its subsidiaries’ undertaking,
property or any uncalled capital, or to issue debentures and other securities whether
outright or as security for any debt, liability or obligation of an unrelated third party.
15.2.2 Change in share capital and variation of class rights
(i)
Change in share capital
Clause 8
Subject to the provisions of the Act, this Constitution and any rules, regulations and
guidelines thereunder issued by the Exchange and any other relevant authority, the
Company shall have the power to purchase its own shares and thereafter to deal with the
shares purchased in accordance with the provisions of the Act and any rules, regulations
and guidelines thereunder or issued by the Exchange and any other relevant authorities
in respect thereof.
The Company shall not purchase its own shares unless:
(a)
the Company is solvent at the date of the purchase and will not become insolvent
by incurring the debts involved in the obligation to pay for the shares so purchased;
(b)
the purchase is made through the Exchange and in accordance with the relevant
rules of the Exchange; and
(c)
the purchase is made in good faith and in the interests of the Company.
Clause 62
Subject to the provisions of the Act and the Listing Requirements, the Company may by
Ordinary Resolution:
(a)
consolidate and divide all or any of its share capital, the proportion between
the amount paid and the amount, if any, unpaid on each subdivided share shall
be the same as it was in the case of the share from which the subdivided share
is derived;
(b)
subdivide its shares or any of the shares, whatever is in the subdivision, the
proportion between the amount paid and the amount, if any, unpaid on each
subdivided share shall be the same as it was in the case of the share from
which the subdivided share is derived;
(c)
cancel shares which at the date of the passing of the resolution in that regard,
have not been taken or agreed to be taken by any person or which have been
forfeited and diminish the amount of its share capital by the amount of the
shares so cancelled or in such other manner allowed by law; or
(d)
subject to this Constitution and the Act, convert and/or re-classify any class of
shares into any other class of shares.
Clause 63
The Company may by Special Resolution reduce its share capital, in any manner
authorised by the Act.
340
Registration No. 202201009353 (1455050-D)
15.
ADDITIONAL INFORMATION (CONT’D)
Clause 64
The Company in a general meeting may from time to time by passing of an Ordinary
Resolution, whether all the shares for the time being issued have been fully called up or
not, increase its capital by the creation and issuance of new shares, with such aggregate
increase to be of such amount and to be divided into shares of such respective amounts
as the Company in such general meeting directs and such new shares or any of them may
have such preference or priority over the then existing shares of the Company and that
such rights and privileges be different from those of such existing shares as the Directors
may think fit.
(ii)
Variation of class rights
Clause 19
If at any time the share capital is divided into different classes of shares, the rights attached
to any class (unless otherwise provided by the terms of issue of the shares of that class)
may, whether or not the Company is being wound up, be varied with the consent in writing
of the holders of seventy-five per centum (75%) of the issued shares of that class, or with
the sanction of a Special Resolution passed at a separate general meeting of the holders
of the shares of that class. To every such separate general meeting the provisions in this
Constitution relating to the General Meeting shall mutatis mutandis apply, but so that the
necessary quorum shall be two (2) persons at least holding or representing by proxy onethird of the issued shares of the class and that any holder of shares of the class present in
person or by proxy may demand a poll. To every such Special Resolution, the provisions
of Section 292 of the Act shall, with such adaptations as are necessary, apply.
15.2.3 Transfer of shares
Clause 39
(a)
Subject to the restriction of this Constitution, the Central Depositories Act and the Rules,
Non-Deposited Securities shall be transferable by a duly executed and stamped
instrument of transfer lodged at the Office accompanied by the certificate of the NonDeposited Securities to be transferred (if any) and such other evidence (if any) as the
Directors may reasonably require to show the right of the transferor to make the transfer.
All instruments of transfer which shall be registered shall be retained by the Company.
(b)
The transfer of any Deposited Securities or class of Deposited Security of the Company,
shall be by way of book entry by the Depository in accordance with the Rules and,
notwithstanding Section 105, 106 or 110 of the Act but subject to Section 148(2) of the Act
and any exemption that may be made from compliance with Section 148(1) of the Act, the
Company shall be precluded from registering and effecting any transfer of the Deposited
Securities.
Clause 41
In the case of Deposited Security, the Depository may refuse to register any transfer of Deposited
Security that does not comply with the Central Depositories Act and Rules or where the reason for
the transfer does not fall within any of the approved reasons provided in the Rules.
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341
Registration No. 202201009353 (1455050-D)
15.
ADDITIONAL INFORMATION (CONT’D)
15.2.4 Rights, preferences and restrictions attached to each class of shares relating to voting,
dividend, liquidation and any special rights
Clause 94
(a)
For so long as the Company is listed, and subject to the Listing Requirements, any
resolution set out in the notice of any general meeting, or in any notice of resolution which
may properly be moved and is intended to be moved at any general meeting shall be voted
by poll and the Company must appoint at least one scrutineer to validate the votes cast at
the general meeting. Such scrutineer must not be an officer of the Company or its related
corporation and must be independent of the person undertaking the polling process. If
such scrutineer is interested in a resolution to be passed at the general meeting, the
scrutineer must refrain from acting as the scrutineer for that resolution.
(b)
In the event that the Company has been unlisted, at any general meetings a resolution put
to the vote of the meeting shall be decided on a show of hands unless a poll is (before or
on the declaration of the result of the show of hands) demanded:
(i)
by the Chairman;
(ii)
by at least three (3) Members present in person or by proxy or by attorney or in
the case of a corporation by a representative and entitled to vote thereat;
(iii)
by a Member or Members present in person or by proxy or by attorney or in the
case of a corporation by a representative and representing not less than ten per
centum (10%) of the total voting rights of all the Members having the right to vote
at the meeting, excluding treasury shares; or
(iv)
by a Member or Members holding shares in the Company conferring a right to
vote at the meeting being shares on which an aggregate sum has been paid up
equal to not less than ten per centum (10%) of the total paid up shares conferring
that right, excluding treasury shares.
A proxy shall be entitled to vote on a show of hands on any question at any general meeting.
(c)
Unless a poll is so demanded in accordance with the foregoing provision, a declaration by
the Chairman of the meeting that a resolution has on a show of hands been carried or
carried unanimously or with a particular majority or is lost, and an entry to that effect in the
minutes of the proceedings of the Company pursuant to Section 343 of the Act, shall be
conclusive evidence of the fact without proof of the number or proportion of the votes
recorded in favour of or against the resolution.
Clause 103
Subject to any rights or restrictions for the time being attached to any class or classes of shares
by or in accordance with this Constitution, on a show of hands every person present who is a
member or proxy or an authorised corporate representative, or holder of preference shares or
attorney or other duly authorised representative shall be entitled to one (1) vote and in the case of
a poll every member present in person or by proxy or by attorney or other duly authorised
representative shall be entitled one (1) vote for every share held by him upon which all calls due
to the Company have been paid. A person entitled to more than one (1) vote need not use all his
votes or cast all the votes he uses on a poll in the same way. The shares held or represented by
a member present in person or by proxy or by attorney or other duly authorised representative
shall, in relation to shares of a Depositor, be the number of shares entered against his name in the
Record of Depositors.
342
Registration No. 202201009353 (1455050-D)
15.
ADDITIONAL INFORMATION (CONT’D)
15.2.5 Limitation on the rights to hold securities and/or exercise voting
Clause 105
(a)
A Member who is of unsound mind or whose person or estate is liable to be dealt with in
any way under the law relating to mental disorder may vote, whether on a show of hands
or on a poll, by his committee or by such other person as properly has the management
of his estate, and any such committee or other person may vote by proxy or attorney.
Evidence to the Directors’ satisfaction of the person claiming to exercise the right to vote
shall be deposited at the Office, at least forty-eight (48) hours before the time appointed
for holding the meeting or adjourned meeting at which the right to vote is to be exercised
or in the case of a poll, not less than twenty-four (24) hours before the time appointed for
the taking of the poll. If this is not done, the right to vote shall not be exercisable.
(b)
The legal personal representative of a deceased Member or the person entitled under the
Clauses of transmission of shares to any share in consequence of the death or bankruptcy
of any Member may vote at any general meeting in respect thereof in the same manner
as if he was the registered holder of such shares provided that not less than forty-eight
(48) hours before the time for holding the meeting or adjourned meeting at which the
person named in the form of appointment of proxy proposes to vote, or in the case of a
poll, not less than twenty-four (24) hours before the time appointed for the taking of the
poll, he shall satisfy the Directors of his right to any share in consequence of the death or
bankruptcy of any member unless the Directors shall have previously admitted his right to
vote in respect thereof.
Clause 102
Subject to Clauses 76 and 77 and any special rights or restrictions for the time being attached to
any class or classes of shares, at meetings of Members or classes of Members, each Member
shall be entitled to be present and to vote at any general meeting of the Company either personally
or by proxy or by attorney and to be reckoned in a quorum in respect of shares fully paid and in
respect of partly paid shares upon which all calls due to the Company have been paid.
Clause 106
No Member shall vote at any general meeting or at any separate meeting of the holders of any
class of shares in the Company, either in person or by proxy or attorney, nor be counted as one of
the quorum in respect of any share held by him unless all calls and other moneys presently payable
by him in respect of that share have been paid.
15.3
LIMITATION ON THE RIGHT TO OWN SECURITIES
There are no limitations imposed by law or by the constituent documents of our Company on the
right to own securities including limitation on the right of non-residents or foreign shareholders to
hold or exercise their voting rights on our Shares.
15.4
MATERIAL LITIGATION
Our Group is not engaged in any material litigation and/or arbitration, either as plaintiff or
defendant, which has a material effect on our financial position, and our Directors are not aware of
any proceedings pending or threatened, or of any fact likely to give rise to any proceedings, which
might materially and adversely affect our financial position or business as at the LPD.
343
Registration No. 202201009353 (1455050-D)
15.
ADDITIONAL INFORMATION (CONT’D)
15.5
MATERIAL CONTRACTS
Save as disclosed below, we have not entered into any material contract (not being contracts
entered into in the ordinary course of business) for the Period Under Review up to the date of this
Prospectus:
15.6
(i)
sale and purchase agreement dated 5 July 2022 for the Target Property entered into
between KGW Logistics and MMAG Digital Sdn Bhd (Registration No.:200901035960
(879082-T)) with a contract value of RM20,200,000, of which RM2,020,000 (representing
10% of the contract value) has been paid as deposit. The Target Property is located at
Hicom Glenmarie Industrial Park, Shah Alam, Selangor. The balance purchase price of
RM18,180,000 is to be settled on or before 31 December 2022. Please refer to Section
4.8.1 of this Prospectus for further details;
(ii)
share sale agreement dated 30 September 2022 entered into between KGW and Dato’
Roger Wong, Cheok Hui Yen, Chow Enn Jie and Teoh Huey Hong for the Acquisition of
KGW Logistics. Please refer to Section 6.1.2(iii)(a) of this Prospectus for further details;
(iii)
share sale agreement dated 30 September 2022 entered into between KGW and Dato’
Roger Wong, Datin Wong Wan Jye and Chan Sek Seng for the Acquisition of KGW
Medica. Please refer to Section 6.1.2(iii)(b) of this Prospectus for further details;
(iv)
share sale agreement dated 30 September 2022 entered into between KGW and Dato’
Roger Wong, Chow Enn Jie and Cheok Hui Yen for the Acquisition of Mattroy Logistics.
Please refer to Section 6.1.2(iii)(c) of this Prospectus for further details; and
(v)
Underwriting Agreement dated [●] between our Company and the Underwriter for the
underwriting of 33,796,000 Issue Shares based on the underwriting commission at the rate
set out in Section 4.9.2 of this Prospectus. Please refer to Section 4.10 of this Prospectus
for further details of the Underwriting Agreement.
CONSENTS
(i)
The written consents of our Principal Adviser, Sponsor, Underwriter and Placement Agent,
Financial Adviser, Solicitors for our IPO, Solicitors for our Principal Adviser, Sponsor,
Underwriter and Placement Agent, Share Registrar, Issuing House and Company
Secretaries for the inclusion in this Prospectus of their names in the form and context in
which their names appear in this Prospectus have been given before the issuance of this
Prospectus, and have not subsequently been withdrawn.
(ii)
The written consent of the Auditors and Reporting Accountants for the inclusion in this
Prospectus of their name, the Accountants’ Report and the Reporting Accountants’ Report
on the Compilation of Pro Forma Consolidated Statements of Financial Position in the form
and context in which they are contained in this Prospectus has been given before the
issuance of this Prospectus, and has not subsequently been withdrawn.
(iii)
The written consent of the IMR for the inclusion in this Prospectus of its name and the IMR
Report and all references thereto in the form and context in which they are contained in
this Prospectus has been given before the issuance of this Prospectus, and has not
subsequently been withdrawn.
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Registration No. 202201009353 (1455050-D)
15.
ADDITIONAL INFORMATION (CONT’D)
15.7
DOCUMENTS FOR INSPECTION
Copies of the following documents may be inspected at our registered office during office hours
for a period of 6 months from the date of this Prospectus:
(i)
Our Constitution;
(ii)
The Accountants’ Report as included in Section 13 of this Prospectus;
(iii)
The Reporting Accountants’ Report on the Compilation of Pro Forma Consolidated
Statements of Financial Position of our Group as included in Section 14 of this Prospectus;
(iv)
The material contracts referred to in Section 15.5 of this Prospectus;
(v)
The letters of consent referred to in Section 15.6 of this Prospectus; and
(vi)
The audited financial statements of:
(vii)
15.8
(a)
KGW for the financial period from 14 March 2022 (date of incorporation) to 30
June 2022;
(b)
KGW Logistics for the FYE 2019, FYE 2020 and FYE 2021;
(c)
Mattroy Logistics for the FYE 2019, FYE 2020 and FYE 2021; and
(d)
KGW Medica for the financial period from 24 June 2021 (date of incorporation) to
31 December 2021.
The IMR Report as included in Section 8 of this Prospectus.
RESPONSIBILITY STATEMENTS
(i)
TA Securities acknowledges that, based on all available information and to the best of its
knowledge and belief, this Prospectus constitutes a full and true disclosure of all material
facts relating to our IPO.
(ii)
This Prospectus has been seen and approved by our Directors, Promoters and the Selling
Shareholders and they collectively and individually accept full responsibility for the
accuracy of the information. Having made all reasonable enquiries, and to the best of their
knowledge and belief, they confirm that there is no false or misleading statement or other
facts which if omitted, would make any statement in this Prospectus false or misleading.
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Registration No. 202201009353 (1455050-D)
16.
SUMMARISED PROCEDURES FOR APPLICATION AND ACCEPTANCE
THIS SUMMARY OF PROCEDURES FOR APPLICATION AND ACCEPTANCE DOES NOT CONTAIN
THE DETAILED PROCEDURES AND FULL TERMS AND CONDITIONS AND YOU CANNOT RELY ON
THIS SUMMARY FOR PURPOSES OF ANY APPLICATION FOR OUR IPO SHARES. YOU MUST
REFER TO THE DETAILED PROCEDURES AND TERMS AND CONDITIONS AS SET OUT IN THE
“DETAILED PROCEDURES FOR APPLICATION AND ACCEPTANCE” ACCOMPANYING THE
ELECTRONIC COPY OF OUR PROSPECTUS ON THE WEBSITE OF BURSA SECURITIES. YOU
SHOULD ALSO CONTACT THE ISSUING HOUSE FOR FURTHER ENQUIRIES.
Unless otherwise defined, all words and expressions used here shall carry the same meaning as
ascribed to them in our Prospectus.
Unless the context otherwise requires, words used in the singular include the plural, and vice versa.
16.1
OPENING AND CLOSING OF APPLICATIONS
OPENING OF THE APPLICATION PERIOD: 10.00 A.M., [dd/mm/yyyy]
CLOSING OF THE APPLICATION PERIOD: 5.00 P.M., [dd/mm/yyyy]
Applications for the IPO Shares will open and close at the times and dates stated above.
In the event of any changes to the date or time for closing, we will advertise the notice of changes
in a widely circulated daily English and Bahasa Malaysia newspaper in Malaysia.
Late Applications will not be accepted.
16.2
METHODS OF APPLICATIONS
16.2.1 Application for our IPO Shares by the Malaysian Public and Eligible Persons
Application must accord with our Prospectus and our Constitution. The submission of an
Application Form does not mean that your Application will succeed. You agree to be bound
by our Constitution.
Types of application and category of investors
(a) Applications by the Malaysian Public:
(i) Individuals
(ii) Non-Individuals
(b) Applications by Eligible Persons:
Application method
•
•
White Application form; or
Electronic Share Application;
or
• Internet Share Application
White Application form only
Pink Application Form only
16.2.2 Application by selected investors via private placement
Types of application
Applications by:
(i) Institutional and
investors
Application method
selected
The Placement Agent will contact the institutional and
selected investors directly. They should follow the
Placement Agent’s instructions.
(ii) Bumiputera
investors
approved by the MITI
MITI will contact the Bumiputera investors directly.
They should follow MITI’s instructions.
Selected investors and Bumiputera investors approved by the MITI may still apply for our
IPO Shares offered to the Malaysian Public using the White Application Form, Electronic
Share Application or Internet Share Application.
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Registration No. 202201009353 (1455050-D)
16.
SUMMARISED PROCEDURES FOR APPLICATION AND ACCEPTANCE (CONT’D)
16.3
ELIGIBILITY
16.3.1 General
You must have a CDS Account and a correspondence address in Malaysia. If you do not
have a CDS Account, you may open a CDS Account by contacting any of the ADAs set
out in Section 12 of the Detailed Procedures for Application and Acceptance
accompanying the Electronic Prospectus on the website of Bursa Securities. The CDS
Account must be in your own name. Invalid, nominee or third party CDS Accounts will
not be accepted for the Applications.
Only ONE Application Form for each category from each applicant will be considered and
APPLICATIONS MUST BE FOR AT LEAST 100 IPO SHARES OR MULTIPLES OF 100
IPO SHARES.
MULTIPLE APPLICATIONS WILL NOT BE ACCEPTED UNLESS EXPRESSLY
ALLOWED IN THESE TERMS AND CONDITIONS. AN APPLICANT WHO SUBMITS
MULTIPLE APPLICATIONS IN HIS OWN NAME OR BY USING THE NAME OF
OTHERS, WITH OR WITHOUT THEIR CONSENT, COMMITS AN OFFENCE UNDER
SECTION 179 OF THE CMSA AND IF CONVICTED, MAY BE PUNISHED WITH A
MINIMUM FINE OF RM1,000,000 AND A JAIL TERM OF UP TO 10 YEARS UNDER
SECTION 182 OF THE CMSA.
AN APPLICANT IS NOT ALLOWED TO SUBMIT MULTIPLE APPLICATIONS IN THE
SAME CATEGORY OF APPLICATION.
16.3.2 Application by the Malaysian Public
You can only apply for our IPO Shares if you fulfill all of the following:
(i)
You must be one of the following:
(a)
A Malaysian citizen who is at least 18 years old as at the date of the
application for our IPO Shares;
(b)
A corporation / institution incorporated in Malaysia with a majority of
Malaysian citizens on your board of directors / trustees and if you have a
share capital, more than half of the issued share capital, excluding
preference share capital, is held by Malaysian citizens; or
(c)
A superannuation, co-operative, foundation, provident, pension fund
established or operating in Malaysia;
(ii)
You must not be a director or employee of our Issuing House or an immediate
family member of a director or employee of our Issuing House; and
(iii)
You must submit Applications by using only one of the following methods:
(a)
White Application Form;
(b)
Electronic Share Application; or
(c)
Internet Share Application.
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Registration No. 202201009353 (1455050-D)
16.
SUMMARISED PROCEDURES FOR APPLICATION AND ACCEPTANCE (CONT’D)
16.3.3 Application by Eligible Persons
Eligible Persons will be provided with Pink Application Forms and letters from us detailing
their respective allocation as well as detailed procedures on how to subscribe to the
allocated IPO Shares. Applicants must follow the notes and instructions on the said
documents and where relevant, in this Prospectus.
Eligible Persons may request for a copy of the printed Prospectus from our Company at
no cost and are given an option to have the printed Prospectus delivered to them free of
charge, or to obtain the printed Prospectus from our Company, our Issuing House, TA
Securities, Participating Organisations of Bursa Securities and Members of the
Association of Banks in Malaysia or Malaysian Investment Banking Association.
The Eligible Persons are not precluded from making additional application under the
Malaysian Public category using either the White Application Form, Electronic Share
Application or Internet Share Application.
16.4
PROCEDURES FOR APPLICATION BY WAY OF APPLICATION FORMS
The Application Form must be completed in accordance with the notes and instructions contained
in the respective category of the Application Form. Applications made on the incorrect type of
Application Form or which do not conform STRICTLY to the terms of our Prospectus or the
respective category of Application Form or notes and instructions or which are illegible will not be
accepted.
The FULL amount payable is based on the IPO Price of RM[●] for each IPO Share.
Payment must be made out in favour of “TIIH SHARE ISSUE ACCOUNT NO. [xx]” and crossed
“A/C PAYEE ONLY” and endorsed on the reverse side with your name and address.
Each completed Application Form, accompanied by the appropriate remittance and legible
photocopy of the relevant documents may be submitted using one of the following methods:
(i)
despatch by ORDINARY POST in the official envelopes provided to the following address:
Tricor Investor & Issuing House Services Sdn Bhd (197101000970 (11324-H))
Unit 32-01, Level 32, Tower A
Vertical Business Suite
Avenue 3, Bangsar South
No. 8, Jalan Kerinchi
59200 Kuala Lumpur
(ii)
DELIVER BY HAND AND DEPOSIT in the drop-in boxes provided at the following
address:
Tricor Customer Service Centre
Unit G-3, Ground Floor
Vertical Podium
Avenue 3, Bangsar South
No. 8, Jalan Kerinchi
59200 Kuala Lumpur
so as to arrive not later than 5.00 p.m. on [dd/mm/yyyy] or by such other time and date specified
in any change to the date or time for closing.
We, together with our Issuing House, will not issue any acknowledgement of the receipt of your
Application Forms or Application monies. Please direct all enquiries in respect of the White
Application Form to our Issuing House.
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Registration No. 202201009353 (1455050-D)
16.
SUMMARISED PROCEDURES FOR APPLICATION AND ACCEPTANCE (CONT’D)
16.5
PROCEDURES FOR APPLICATION BY WAY OF ELECTRONIC SHARE APPLICATIONS
Only Malaysian individuals may apply for our IPO Shares offered to the Malaysian Public by way
of Electronic Share Application.
Electronic Share Applications may be made through the ATM of the following Participating
Financial Institutions and their branches, namely, Affin Bank Berhad, Alliance Bank Malaysia
Berhad, AmBank (M) Berhad, CIMB Bank Berhad, Malayan Banking Berhad, Public Bank Berhad
and RHB Bank Berhad. A processing fee will be charged by the respective Participating Financial
Institutions (unless waived) for each Electronic Share Application.
The exact procedures, terms and conditions for Electronic Share Application are set out on the
ATM screens of the relevant Participating Financial Institutions.
16.6
PROCEDURES FOR APPLICATION BY WAY OF INTERNET SHARE APPLICATIONS
Only Malaysian individuals may use the Internet Share Application to apply for our IPO Shares
offered to the Malaysian Public.
Internet Share Applications may be made through an internet financial services website of the
Internet Participating Financial Institutions, namely, Affin Bank Berhad, Alliance Bank Malaysia
Berhad, CIMB Bank Berhad, CGS-CIMB Securities Sdn Bhd, Malayan Banking Berhad, Public
Bank Berhad and RHB Bank Berhad. A processing fee will be charged by the respective Internet
Participating Financial Institutions (unless waived) for each Internet Share Application.
The exact procedures, terms and conditions for Internet Share Application are set out on the
internet financial services website of the respective Internet Participating Financial Institutions.
16.7
AUTHORITY OF OUR BOARD AND OUR ISSUING HOUSE
Our Issuing House, on the authority of our Board reserves the right to:
(i)
reject Applications which:
(a)
do not conform to the instructions of our Prospectus, Application Forms, Electronic
Share Application and Internet Share Application (where applicable); or
(b)
are illegible, incomplete or inaccurate; or
(c)
are accompanied by an improperly drawn up, or improper form of, remittance; or
(ii)
reject or accept any Application, in whole or in part, on a non-discriminatory basis without
the need to give any reason; and
(iii)
bank in all Application monies (including those from unsuccessful/partially successful
applicants) which would subsequently be refunded, where applicable (without interest), in
accordance with Section 16.9 below.
If you are successful in your Application, our Board reserves the right to require you to appear in
person at the registered office of our Issuing House at any time within 14 days of the date of the
notice issued to you to ascertain that your Application is genuine and valid. Our Board shall not be
responsible for any loss or non-receipt of the said notice nor will it be accountable for any expenses
incurred or to be incurred by you for the purpose of complying with this provision.
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Registration No. 202201009353 (1455050-D)
16.
SUMMARISED PROCEDURES FOR APPLICATION AND ACCEPTANCE (CONT’D)
16.8
OVER / UNDER-SUBSCRIPTION
In the event of over-subscription, our Issuing House will conduct a ballot in the manner approved
by our Directors to determine the acceptance of Applications in a fair and equitable manner. In
determining the manner of balloting, our Directors will consider the desirability of allotting and
allocating our IPO Shares to a reasonable number of applicants for the purpose of broadening the
shareholding base of our Company and establishing a liquid and adequate market for our Shares.
The basis of allocation of shares and the balloting results in connection therewith will be furnished
by our Issuing House to Bursa Securities, all major Bahasa Malaysia and English newspapers as
well as posted on our Issuing House’s website https://tiih.online within 1 Market Day after the
balloting event.
Pursuant to the Listing Requirements, we are required to have a minimum of 25% of our
Company’s issued share capital to be held by at least 200 public shareholders holding not less
than 100 Shares each upon Listing and completion of our IPO. We expect to achieve this at the
point of Listing. In the event the above requirement is not met, we may not be allowed to proceed
with our Listing. In the event thereof, monies paid in respect of all Applications will be returned in
full (without interest).
In the event of an under-subscription of our IPO Shares by the Malaysian Public and/or Eligible
Persons, subject to the underwriting arrangement and reallocation as set out in Sections 4.3.3 and
4.3.4 of our Prospectus, any of the abovementioned IPO Shares not applied for will then be
subscribed by the Underwriter based on the terms of the Underwriting Agreement.
16.9
UNSUCCESSFUL / PARTIALLY SUCCESSFUL APPLICANTS
If you are unsuccessful / partially successful in your Application, your Application monies (without
interest) will be refunded to you in the following manner.
16.9.1 For applications by way of Application Forms
(i)
The Application monies or the balance of it, as the case may be, will be refunded
to you through the self-addressed and stamped Official “A” envelope you provided
by ordinary post (for fully unsuccessful applications) or by crediting into your bank
account (the same bank account you have provided to Bursa Depository for the
purposes of cash dividend / distribution) or if you have not provided such bank
account information to Bursa Depository, the balance of Application monies will
be refunded via banker’s draft sent by ordinary / registered post to your last
address maintained with Bursa Depository (for partially successful applications)
within 10 Market Days from the date of the final ballot at your own risk.
(ii)
If your Application is rejected because you did not provide a CDS account number,
your Application monies will be refunded via banker’s draft sent by ordinary /
registered post to your address as stated in the NRIC or any official valid
temporary identity documents issued by the relevant authorities from time to time
or the authority card (if you are a member of the armed forces or police) at your
own risk.
(iii)
A number of Applications will be reserved to replace any successfully balloted
Applications that are subsequently rejected. The Application monies relating to
these Applications which are subsequently rejected or unsuccessful or only partly
successful will be refunded (without interest) by our Issuing House as per items (i)
and (ii) above (as the case may be).
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Registration No. 202201009353 (1455050-D)
16.
SUMMARISED PROCEDURES FOR APPLICATION AND ACCEPTANCE (CONT’D)
(iv)
Our Issuing House reserves the right to bank into its bank account all Application
monies from unsuccessful applicants. These monies will be refunded (without
interest) within 10 Market Days from the date of the final ballot by crediting into
your bank account (the same bank account you have provided to Bursa
Depository for the purposes of cash dividend / distribution) or by issuance of
banker’s draft sent by ordinary post / registered post to your last address
maintained with Bursa Depository if you have not provided such bank account
information to Bursa Depository or as per item (ii) above (as the case may be).
16.9.2 For applications by way of Electronic Share Application and Internet Share
Application
16.10
(i)
Our Issuing House shall inform the Participating Financial Institutions or Internet
Participating Financial Institutions of the unsuccessful or partially successful
Applications within 2 Market Days after the balloting date. The full amount of the
Application monies or the balance of it will be credited (without interest) into your
account with the Participating Financial Institutions or Internet Participating
Financial Institutions (or arranged with the Authorised Financial Institutions) within
2 Market Days after the receipt of confirmation from our Issuing House.
(ii)
You may check your account on the 5th Market Day from the balloting date.
(iii)
A number of Applications will be reserved to replace any successfully balloted
Applications that are subsequently rejected. The Application monies relating to
these Applications which are subsequently rejected will be refunded (without
interest) by our Issuing House by crediting into your account with the Participating
Financial Institution or Internet Participating Financial Institutions (or arranged with
the Authorised Financial Institutions) not later than 10 Market Days from the date
of the final ballot. For Applications that are held in reserve and which are
subsequently unsuccessful or partially successful, the relevant Participating
Financial Institutions will be informed of the unsuccessful or partially successful
Applications within 2 Market Days after the final balloting date. The Participating
Financial Institutions will credit the Application monies or any part thereof (without
interest) within 2 Market Days after the receipt of confirmation from our Issuing
House.
SUCCESSFUL APPLICANTS
If you are successful in your Application:
(i)
Our IPO Shares allotted to you will be credited into your CDS account.
(ii)
A notice of allotment will be despatched to you at your last address maintained with the
Bursa Depository, at your own risk, before our Listing. This is your only acknowledgement
of acceptance of your Application.
(iii)
In accordance with Section 14(1) of the SICDA, Bursa Securities has prescribed our
Shares as Prescribed Securities. As such, our IPO Shares issued / offered through our
Prospectus will be deposited directly with Bursa Depository and any dealings in these
Shares will be carried out in accordance with the SICDA and Rules of Bursa Depository.
(iv)
In accordance with Section 29 of the SICDA, all dealings in our Shares will be by book
entries through CDS accounts. No physical share certificates will be issued to you and you
shall not be entitled to withdraw any deposited securities held jointly with Bursa Depository
or its nominee as long as our Shares are listed on Bursa Securities.
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Registration No. 202201009353 (1455050-D)
16.
SUMMARISED PROCEDURES FOR APPLICATION AND ACCEPTANCE (CONT’D)
16.11
ENQUIRIES
Enquiries in respect of the applications may be directed as follows:
Mode of application
Application Form
Parties to direct the enquiries
Issuing House Enquiry Services Telephone at +603-2783 9299
Electronic Share Application
Participating Financial Institution
Internet Share Application
Internet Participating Financial Institution and Authorised
Financial Institution
The results of the allocation of IPO Shares derived from successful balloting will be made available
to the public at the Issuing House website at https://tiih.online, within 1 Market Day after the
balloting date.
You may also check the status of your Application at the above website, 5 Market Days after the
balloting date or by calling your respective ADA during office hours at the telephone number as
stated in the list of ADAs set out in Section 12 of the Detailed Procedures for Application and
Acceptance accompanying the Electronic Prospectus on the website of Bursa Securities.
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