7. BUSINESS OVERVIEW 7.1 HISTORY OF OUR GROUP

Registration No. 201901004019 (1313346-A)

7. BUSINESS OVERVIEW

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7.1 HISTORY OF OUR GROUP

The origin of our Group dates back to 1980, when our Executive Chairman, Dato’ Seri Ong, joined MTTC. MTTC was co-established by the late Dato’ Ong Chin Teik, the father of Dato’ Seri Ong, in 1963. MTTC operated out of Penang and supported shipping activities in Penang Port. In 2000, through shareholdings in Green Peninsula Agencies Sdn Bhd, Dato’ Seri Ong jointly with our substantial shareholders, OCTSB and PKT, and Evergreen Group through Evergreen International S.A. and Gaining Enterprise S.A., established Evergreen Malaysia. At that juncture, Dato’ Seri Ong, OCTSB and PKT collectively held 51% equity interest, while Evergreen Group held the remaining 49% equity interest in Evergreen Malaysia. Evergreen Malaysia was established as the local agent for Evergreen Taiwan in Malaysia, and has been responsible for operational and administrative functions relating to the business activities of Evergreen Taiwan in Malaysia. Green Peninsula Agencies Sdn Bhd subsequently ceased to be a shareholder of Evergreen Malaysia in 2017. Leveraging on MTTC’s experience in shipping support services as well as Dato’ Seri Ong’s experience in the shipping-related industry including his experience in Evergreen Malaysia, Dato’ Seri Ong then incorporated MTT Shipping on 19 October 2010 to venture into the container liner shipping business. Ooi Lean Hin who is our Managing Director, Chan Huan Hin who is our Director of Administration and MTTC subsequently became substantial shareholders of MTT Shipping at the end of 2010. Under the leadership of Dato’ Seri Ong, we commenced business in November 2010, supported by Ooi Lean Hin, Lee Kong Siong who is our Director of Operations, Lee Hock Saing who is our Director of Marketing and Chan Huan Hin, bringing their respective shipping industry experience, knowledge and technical expertise to our business. Lee Hock Saing and Lee Kong Siong subsequently became shareholders of MTT Shipping in 2014. The growth and expansion of our business over the years are demonstrated by several key milestones as follows: Commencement of our container liner shipping business and introduction of weekly fixed-day shipping services Between November 2010 and January 2011, we chartered container vessels from Johan Shipping Sdn Bhd (“Johan Shipping”), and tugs and barges from Asia Bulkers Sdn Bhd for different charter durations. Through the chartered vessels, our Group commenced operations in the provision of container liner shipping services, focusing on routes sailing between ports in Peninsular Malaysia and East Malaysia, and certain overseas ports around the Southeast Asia region including ports in Brunei and Bangkok, Thailand. Shortly after we commenced our container liner shipping business, we introduced weekly fixed-day shipping services between Peninsular Malaysia and East Malaysia in 2011, to streamline our container liner shipping operations and vessel deployment. To support the introduction of our weekly fixed-day shipping services, we secured fixed berth windows with ports in Peninsular Malaysia as well as ports in East Malaysia. Our weekly fixed-day sailing schedule provides certainty on the days of arrival and departure at each port which helps our customers in managing their logistics and inventory cycles. Over the years, we gradually expanded our weekly fixed-day shipping services to cover additional ports, including overseas ports, and increased the frequency of sailing. See Section 7.3.2(ii) of this Prospectus for further details of our port coverage and weekly calls to each port as at the LPD.


7. BUSINESS OVERVIEW (Cont’d)

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Establishment of our shipping agent network and branch offices, as well as appointment as shipping agent for Evergreen Malaysia in Sabah and Sarawak During the early months of our business, Johan Shipping represented our Group as our shipping agent via its offices in Peninsular Malaysia and East Malaysia. In 2011, we set up our own branch offices in Port Klang, Johor, Kuching, Bintulu, Sibu, Miri, Tawau, Sandakan and Kota Kinabalu in order to establish our physical presence in these locations and to be able to provide our in-house shipping agency services at these locations. With this development, we ceased to employ shipping agency services from Johan Shipping in 2011 at these locations. Between 2010 and 2013, we also appointed third party shipping agents in Penang, Labuan, Brunei, Indonesia, Thailand and Singapore, where these shipping agents assist us in facilitating, among others, operational arrangement of vessels at ports such as berthing, unberthing, loading and unloading of containers and pilotage; arrangement of cargo movement such as receiving and releasing containers, and/or issuance of original bills of lading. In 2011, we were appointed as shipping agent for Evergreen Malaysia in Sabah and Sarawak. As an appointed shipping agent, we provide shipping agency services in relation to container liner shipping services provided by the Evergreen Group of Companies in Sabah and Sarawak. Our provision of shipping agency services for Evergreen Malaysia in Sabah and Sarawak has further strengthened our presence in East Malaysia and also provided us with an additional revenue stream. See Section 7.3.2(i)(c) of this Prospectus for further details of our role as shipping agent for Evergreen Malaysia.

Expansion of our fleet of container vessels As our business continued to expand, we started to purchase and expand our own fleet of container vessels. From 2012 up to the LPD, we took delivery of 16 container vessels, of which four of these container vessels have been disposed mainly due to the age and condition of the vessels. Our fleet of container vessels can be used in our container liner shipping business or chartered out to third party container liner shipping companies in our vessel chartering business. As at the LPD, we own a total of 12 container vessels and operate nine of these container vessels for our container liner shipping business. From 2018 up to the LPD, we have purchased six additional container vessels. We have taken deliveries of MTT Sapangar and MTT Sibu in July 2021 and the additional four container vessels are scheduled for delivery between 3Q 2021 and 1Q 2022. See Section 7.3.1 of this Prospectus for further details on our fleet of container vessels. Expansion of our overseas port coverage

In 2012, we further expanded our overseas port coverage around the Southeast Asia region by providing container liner shipping services using chartered tugs and barges to facilitate the shipment of cargo between Peninsular Malaysia and certain river-ports in Sumatera, Indonesia. We started by operating one set of tug and barge sailing between Port of Tanjung Pelepas and Port of Perawang in Sumatera, Indonesia. Over the years, we gradually increased the coverage of ports in Sumatera, Indonesia and as at the LPD, we operate six sets of chartered tugs and barges covering Port Klang (Westports and Northport) and Port of Tanjung Pelepas to five ports in Sumatera, Indonesia. See Sections 7.3.1 and 7.3.2 (ii) of this Prospectus for further details on the sets of tugs and barges operated by us.



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In 2013, along with the appointment of a third party shipping agent in Singapore, we commenced coverage of Port of Singapore under our weekly fixed-day sailing schedule. In 2019, along with the appointment of a third party shipping agent in India, we started to provide container liner shipping services covering several ports in India through container vessels operated by third party container liner shipping companies. Subsequently in July 2021, we started to provide container liner shipping services covering Yangon Port in Myanmar through container vessels operated by third party container liner shipping companies. Our existing services in India and Myanmar are in preparation for the potential expansion of our container liner shipping services using container vessels operated by our Group while expanding our overseas port coverage within and beyond the Southeast Asia region (i.e. Ho Chi Minh port in Vietnam, Yangon Port in Myanmar and Syama Prasad Mookerjee Port, Kolkata in India) and providing an additional revenue stream for our Group. See Section 7.15.1 of this Prospectus for further details on our expansion plans.

Expansion into vessel chartering business In 2014, upon delivery of our container vessel, MTT Pulau Pinang, we chartered it out to a third party container liner shipping company on a time charter until 2015 as we were at the time operating with sufficient capacity for our container liner shipping business. This allowed us to prevent the vessel from remaining idle and also to generate additional revenue for our Group. In 2018, at the time of our purchase of our container vessel, MTT Kuching Dua, it was on an on-going time charter by the previous owner to a third party container liner shipping company. With the purchase of the vessel, we assumed the charter arrangement from the previous owner until the end of the time charter in 2019. Leveraging on this experience, our Group formally ventured into the vessel chartering business in 2019 by chartering out our container vessels when there are such enquiries and the prevailing chartering rates are commercially viable. In preparation for our formal entry into the vessel chartering business, we also purchased five new container vessels, MTT Senari, MTT Samalaju, MTT Semporna, MTT Sapangar and MTT Sibu, and took delivery of these vessels in January 2020, February 2021, March 2021 and July 2021 (for MTT Sapangar and MTT Sibu) respectively and these container vessels have been chartered out to third party container liner shipping companies as at the date of the Prospectus. See Section 7.3.1 of this Prospectus for further details of container vessels used in our vessel chartering business and Section 7.3.3 for further details on our vessel chartering business. Expansion into the container depot business In December 2015, Dato’ Seri Ong, Ooi Lean Hin, Lee Hock Saing and Chan Huan Hin acquired a total of 45.5% equity interest in ICSD. Subsequently in 2017, Dato Seri Ong and Ooi Lean Hin increased their respective equity interest in ICSD and together with Lee Hock Saing and Chan Huan Hin, assumed control over ICSD.



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Through their shareholdings in ICSD, our Group began operating three container depots in Port Klang (Bandar Sultan Sulaiman), Pasir Gudang and Penang. In 2020, our Group expanded our container depot business by commencing the operations of an additional container depot in Port Klang (Westports). As at the LPD, these four container depots have a total combined storage capacity of approximately 24,500 units of containers and daily handling capacity of approximately 3,100 units of containers.

Our container depot business provides container storage and container related services such as container handling, container washing, maintenance and repair as well as empty drayage services for our container liner shipping business as well as to container hauliers, third party container liner shipping companies and shipping agencies, container leasing companies as well as box operators.

7.2 KEY MILESTONES AND AWARDS

The following table highlights the key milestones of our business: Year Key milestone

2010

Commenced our container liner shipping business, through chartered container vessels, and tugs and barges

2011 Introduced weekly fixed-day shipping services between Peninsular Malaysia and

East Malaysia Set up nine branch offices in Port Klang, Johor, Kuching, Bintulu, Sibu, Miri,

Tawau, Sandakan and Kota Kinabalu

Expanded our container liner shipping business by becoming a shipping agent for Evergreen Malaysia in Sabah and Sarawak

2012 Took delivery of four container vessels, MTT Penang (which was disposed in the same year as the vessel (which was a second hand vessel) broke down and the cost to be incurred for repairs outweighed the total economic benefits to be derived from the vessel), MTT Kuching (which was subsequently disposed in 2017), MTT Kinabalu (which was subsequently disposed in 2018) and MTT Tawau, with nominal capacities of 1,022 TEUs, 1,012 TEUs, 1,156 TEUs and 1,162 TEUs respectively

Expanded overseas port coverage in the Southeast Asia region with the provision of container liner shipping services using chartered tugs and barges for shipments between Port of Tanjung Pelepas and Port of Perawang in Sumatera, Indonesia

2013 Took delivery of a container vessel, MTT Port Klang (which was subsequently

disposed in 2017), with a nominal capacity of 1,216 TEUs

Further expanded overseas port coverage in the Southeast Asia region with the coverage of Port of Singapore under our weekly fixed-day sailing schedule

2014 Took delivery of a container vessel, MTT Pulau Pinang, with a nominal capacity of 1,157 TEUs

2015 Took delivery of a container vessel, MTT Muara, with a nominal capacity of 1,679

TEUs

Expanded into container depot business through the partial acquisition of shares in ICSD by some of our Promoters



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Year Key milestone

2016 Took delivery of two container vessels, MTT Pasir Gudang and MTT Bintulu, with nominal capacities of 1,740 TEUs and 1,489 TEUs respectively

2017 Took delivery of a container vessel, MTT Tanjung Manis, with a nominal capacity of 1,138 TEUs

2018 Took delivery of a container vessel, MTT Kuching Dua with a nominal capacity of 1,295 TEUs

Purchased two container vessels, MTT Sapangar with a nominal capacity of 1,800 TEU (which had been delivered in July 2021) and MTT Sandakan with a nominal capacity of 1,800 TEUs each (which is scheduled for delivery by 4Q 2021).

2019 Took delivery of a container vessel, MTT Pengerang, with a nominal capacity of

1,134 TEUs

Took delivery of a new container vessel, MTT Saisunee, with a nominal capacity of 1,162 TEUs

Purchased two container vessels, MTT Sibu and MTT Sarikei with a nominal

capacity of 415 TEUs each (scheduled for delivery by 3Q 2021 and 1Q 2022 respectively)

Formally ventured into vessel chartering business

Expanded overseas port coverage beyond the Southeast Asia region with provision of container liner shipping services covering several ports in India through container vessels operated by third party container liner shipping companies

2020 Expanded our container depot business by commencing the operations of an additional container depot

Took delivery of a new container vessel, MTT Senari, with a nominal capacity of 1,162 TEUs

2021 Took delivery of four new container vessels, MTT Samalaju and MTT Semporna,

each with a nominal capacity of 1,162 TEUs, MTT Sapangar with a nominal capacity of 1,800 TEUs and MTT Sibu with a nominal capacity of 415 TEUs.

Purchased two container vessels, MTT Singapore and MTT Rajang with nominal capacities of 653 TEUs and 415 TEUs respectively (scheduled for delivery by 4Q 2021 and 1Q 2022 respectively)



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Our achievements have earned us awards and recognitions in the shipping industry, as follows: Year Award Awarding body 2012 Top Customer Award Sabah Ports Sdn Bhd

2013 Top Customer Award (Shipping Agent) Sabah Ports Sdn Bhd

2014 Top Customer Award (Shipping Agent) for Sapangar Bay Container Port

Sabah Ports Sdn Bhd

2014 Top Customer Award (Shipping Agent) for Tawau Port

Sabah Ports Sdn Bhd

2017 Best Depot Award Johor Port Authority 2017 Outstanding Performance Award (Shipping

Company) Malaysian Shipowners' Association/ Ikthisas Kelautan Malaysia

2019 Best Depot Award Johor Port Authority These awards are a testament to our success in growing and becoming a well-established container liner shipping group and cementing our position as a major player supporting trade activities between Peninsular Malaysia and East Malaysia.



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7.3 OUR BUSINESS

An overview of our business activities is illustrated below:

Our revenue from our container liner shipping business is generated from:

(i) ocean freight charges when our customers engage us for shipment of containerised cargo; and

(ii) slot sale income when our customers purchase container slots from us.

Further, we also generate shipping agency fees from Evergreen Malaysia for the provision of shipping agency services in relation to container liner shipping services provided by Evergreen Group of Companies in Sabah and Sarawak. Our revenue from our vessel chartering business is generated from charter hire income when we charter out our container vessels to third party container liner shipping companies. Our revenue from our container depot business is generated from container storage fees, container handling fees (such as lift-on/ lift-off and/or pre-trip inspection), depot gate charges, container washing, maintenance and repair fees as well as empty drayage charges. The pre-trip inspection, maintenance and repair as well as empty drayage services are outsourced to third party service providers.



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In 2021, we ventured into the harbour tug business via a joint venture company, Harbour 360, with Makmal Capital Sdn Bhd, to supply harbour tug services to port operators and companies in the oil and gas industry. Prior to venturing into the business, we had carefully evaluated the feasibility of the business covering aspects such as potential market demand as well as the relevant business and operational risks. Harbour Tug is a tugboat used to assist vessels manoeuvring within port limits and to assist safe berthing and unberthing of the vessels at the port terminals. The essential role of Harbour Tugs at port terminals drives the demand for this type of tugboat. The demand for Harbour Tugs is also driven by the need to enhance port efficiency and to replace old Harbour Tugs with new ones with improved technology. Therefore, through the joint venture, we are able to capitalise on our experience in navigation within port limits, technical management and our established relationships/network with the port operators in Malaysia and overseas. As at the LPD, we have commenced the construction of our first harbour tug which is still in the midst of construction. The total estimated cost for the construction of the said harbour tug is RM16.8 million, of which Harbour 360 has made payment of RM4.2 million through the injections made by its shareholders based on their proportionate shareholdings in Harbour 360 in which MTT Shipping holds 50.0% in Harbour 360 and intend to fund the remaining cost through bank borrowings. Upon completion of the construction of the first harbour tug, we will market our harbour tug services to port operators and companies in the oil and gas industry. We may also expand our fleet of harbour tugs depending on the pace of acceptance from the market for this new service. In the same year, we also ventured into the dry bulk shipping business via a joint venture company, Lestari Maritime, to provide dry bulk shipping services. Prior to venturing into the business, we had evaluated the feasibility of the business covering aspects such as potential market demand as well as the relevant business and operational risks. According to the IMR Report, total cargo throughput for dry bulk between 2018 and 2020 recorded between 37.96 million freight weight tonnes (“FWT”) and 38.40 million FWT, indicating a steady demand for dry bulk shipping services in Malaysia. Therefore, through the joint venture, we are able to leverage on the experience, technical knowledge, network and market understanding of the team in Lestari Maritime in the dry bulk shipping business. As at the LPD, we are in the midst of identifying a suitable dry bulk vessel to be acquired for our dry bulk shipping business. The acquisition cost of one dry bulk vessel is estimated to be around RM63.0 million, which is expected to be funded 70% via bank borrowings and 30% via internally generated fund of Lestari Maritime and/or injections by its shareholders based on their proportionate shareholdings in Lestari Maritime in which MTT Shipping holds 51.0% in Lestari Maritime. MTT Shipping will fund its share of the injection by Lestari Maritime shareholders via internally generated funds and/or bank borrowings. Moving forward, upon identification of the suitable dry bulk vessel(s), we will commence our dry bulk shipping business and we may expand our fleet of dry bulk vessels subject to the prevailing market demand. See Section 9.1.14 of this Prospectus for risks associated with these ventures. The injections made by our Group into these jointly controlled entities were via our internally generated funds.


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7.3.1 Our fleet of container vessels

As at the LPD, we own a fleet of 12 container vessels with a total nominal capacity of 15,442 TEUs, all operating under the Malaysian flag and registered in Port Klang. We operate nine of the container vessels in our container liner shipping business, and we charter out three of the container vessels to third party container liner shipping companies in our vessel chartering business. The details of our fleet of container vessels as at the LPD are as follows:

No. Vessel name(1)

Nominal capacity (TEUs) Usage Origin

Classification body(2)

Expiry date of the Certificate

of Classification

Year built

Age (years)

Delivery year

Acquisition cost

(RM’000)

Net book value as at 31 March

2021 (RM’000)

1. MTT Pasir Gudang(3)

1,740 Container liner

shipping

China RINA Services S.p.A.

22 November 2021

2000 21 2016 15,572 13,460

2. MTT Muara


shipping

Korea RINA Services S.p.A.

30 September 2025

2000 21 2015 22,786 14,040



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No. Vessel name(1)




of Classification

Year built

Age (years)

Delivery year

Acquisition cost

(RM’000)


2021 (RM’000)

3. MTT Bintulu


shipping

Taiwan Lloyd’s Register

30 December 2022

1997 24 2016 13,286 10,153

4. MTT Tawau


shipping

Poland RINA Services S.p.A.

25 May 2022 1997 24 2012 18,480 8,778

5. MTT Pulau Pinang


shipping

Japan Lloyd’s Register

19 February 2022

1997 24 2014 18,669 9,800



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No. Vessel name(1)




of Classification

Year built

Age (years)

Delivery year

Acquisition cost

(RM’000)


2021 (RM’000)

6. MTT Tanjung Manis


shipping

Turkey Lloyd’s Register

21 December 2025

1999 22 2017 11,249 9,542

7. MTT Kuching Dua


shipping

Taiwan Nippon Kaiji Kyokai

31 May 2025 1995 26 2018 35,558 24,826

8. MTT Pengerang(4)


shipping

Turkey RINA Services S.p.A.

24 December 2021

2006 15 2019 24,023 21,868



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No. Vessel name(1)




of Classification

Year built

Age (years)

Delivery year

Acquisition cost

(RM’000)


2021 (RM’000)

9. MTT Saisunee


shipping

China DNV GL 19 August 2024

2019 2 2019 97,118 91,340

10. MTT Senari

1,162 Vessel chartering

China DNV GL 15 January 2025

2020 2 2020 95,043 90,808

11. MTT Samalaju


China DNV GL 5 May 2022 2021 Less than 1 year

2021 78,033 77,581



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No. Vessel name(1)




of Classification

Year built

Age (years)

Delivery year

Acquisition cost

(RM’000)


2021 (RM’000)

12. MTT Semporna


China DNV GL 31 March 2026 2021 Less than 1 year

2021 79,873 N/A(5)

Total 15,442 509,690 372,197

Notes:

N/A : Not available

(1) We source new container vessels directly from shipyards or through brokers, and we source second-hand container vessels through brokers.

For new container vessels, upon deciding the type, design, quantity and capacity of the container vessel(s) that we intend to purchase, we will approach shipyards to obtain quotations for suitable container vessels with different technical specifications based on our preferred vessel type, design and capacity. We can also approach brokers who can assist in liaising and connecting us to the relevant shipyards. Upon confirmation of the type, design, quantity and all technical specifications of the container vessels, we will enter into shipbuilding agreements with the shipyards.

For second-hand container vessels, upon deciding the type, design, quantity and capacity of the container vessel(s) that we intend to purchase, we will approach brokers to obtain a list of container vessels available for sale that matches with our requirements. Upon confirmation of the selected container vessel(s), our Group will enter into negotiations with the seller through the available brokerage channel.

(2) All our container vessels are independently surveyed by IACS member to certify they are in compliance with the requirements prescribed by the relevant classification societies. Thereafter, our container vessels will be awarded with Certificate of Classification. Such requirements are standards developed by IACS members to verify the structural strength and integrity of essential parts of the vessel’s hull and its appendages, and the reliability and function of the propulsion and steering systems, power generation and other features and auxiliary systems which have been built into the vessels in order to maintain essential services on board.

(3) As at the LPD, MTT Pasir Gudang was in operation for our container liner shipping services. MTT Pasir Gudang will be chartered out to a third party container liner shipping company on a short-term charter basis.



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(4) As at the LPD, MTT Pengerang was on dry-docking. Subsequent to the dry-docking, MTT Pengerang will be chartered out to a third party container liner shipping company on a short-term charter basis.

(5) Net book value of MTT Semporna is not available as at 31 March 2021 as the purchase of the vessel was only perfected on 1 April 2021.

We do not have a formal policy to replace or dispose our container vessels. Nevertheless, our container vessels are evaluated from time to time in terms of the container vessel conditions, costs incurred for maintenance, repairs, surveys and dry docking, and any new regulations applicable to the industry to determine if they are suitable for use in our business. Notwithstanding that some of our container vessels are aged 20 years and above, we do not have any plans to replace these vessels as at the LPD as our container vessels are well maintained through our regular vessel maintenance and inspections as detailed in Section 7.5.2 of this Prospectus. Further, all our container vessels are awarded with Certificate of Classification which assures that all our container vessels are fit and safe for operations.

Subsequent to the LPD, we have taken deliveries of two container vessels, MTT Sapangar and MTT Sibu in July 2021. We expect to take deliveries of

additional four container vessels between 3Q 2021 and 1Q 2022. The details of these container vessels are as follows:

No. Vessel name

Nominal capacity (TEUs)

Usage/ intended

usage Origin Classification

body

Expiry date of the Certificate of Classification

Year built

Age (years)

Delivery year/

expected delivery

year Acquisition

cost (RM’000) Delivered vessels 1. MTT Sapangar(1) 1,800 Vessel

chartering China DNV GL 26 October 2022 2021 Less

than 1 year

2021 110,063

2. MTT Sibu(1)

415(4) Vessel

chartering

China RINA Services S.p.A.

5 July 2026 2021 Less than 1 year

2021 26,139

To be delivered 3. MTT Sandakan(2) 1,800 Vessel

chartering China N/A N/A N/A N/A 2021 106,137

4. MTT Sarikei(2) 415(4) Container

liner shipping

China N/A N/A N/A N/A 2022 24,318



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No. Vessel name

Nominal capacity (TEUs)

Usage/ intended

usage Origin Classification

body

Expiry date of the Certificate of Classification

Year built

Age (years)

Delivery year/

expected delivery

year Acquisition

cost (RM’000) 5. MTT Rajang(2)

415(4) Container

liner shipping

China N/A N/A N/A N/A 2022 29,093

6. MTT Singapore(3)

653(4) Container liner

shipping

South Korea

N/A N/A 1996 25 2021 20,221

Total 5,498 315,971

Notes:

N/A : Not available

(1) MTT Sapangar and MTT Sibu were delivered in July 2021.

(2) MTT Sandakan, MTT Sarikei and MTT Rajang are scheduled for delivery between 3Q 2021 and 1Q 2022. The photo, details of classification body, expiry date of the certificate of classification, year built and age are currently not available as the vessels have not been completely built and have not been delivered. The process to obtain the Certificate of Classification for these vessels can only be undertaken once they have been delivered to our Group.

(3) MTT Singapore is scheduled for delivery in 4Q 2021. The photo, details of classification bod and expiry date of the certificate of classification are currently not available as the vessel has not been delivered. The process to obtain the Certificate of Classification for MTT Singapore can only be undertaken once it has been delivered to our Group.

(4) Container vessels in smaller size and nominal capacity are designed to accommodate navigation to and from ports with shallower water depth. These container vessels will primarily be used for our container liner shipping business, and may also be chartered out to third party container liner shipping companies under our vessel chartering business upon request. For our vessel chartering business using these smaller container vessels, we will charter to third party container liner shipping companies to sail on services routes that are not competing with our domestic service routes.



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In 2012, we entered into a slot exchange arrangement with a third party container liner shipping company, MSC, where we exchange pre-agreed allocated container vessel space, also known as container slots, with MSC, for certain service routes provided by both our Group and MSC on a non-exclusive basis. Such arrangement, shall remain binding between our Group and MSC unless terminated by either party. We do not jointly own any container vessels with MSC, as the exchange of container slots are taken from existing operating container vessels for certain service routes offered by both our Group and MSC. With this arrangement, our customers can book container slots for the particular service routes through our Group or MSC and the bookings will be assigned either to our vessels or MSC’s vessels based on the availability of the container vessel space and arrival date at the ports. This partnership enables our Group to have additional capacity for certain service routes via MSC’s container slots and it allows us to maximise the use of the space available on our container vessels for certain service routes which enhances the economies of scale for our container liner shipping business. As at the LPD, there are two partner vessels namely Kota Naga and Salam Maju which are included as part of our service routes under this slot exchange arrangement with MSC. In the event that MSC requires additional slots on our container vessels in addition to the pre-agreed allocated container slots under the slot exchange arrangement, the additional container slots will be charged accordingly to MSC and vice versa. Upon request, we may also sell container slots to third party shipping companies which require vessel space for our service routes and freight forwarders who have regular shipment over a certain period and would like to pre-book the container slots on our container vessels. We also use tugs and barges to ship containerised cargo between Peninsular Malaysia and certain river-ports in Sumatera, Indonesia which we charter from third party owners via time charter arrangements, as we are in the midst of growing this business segment. These tugs and barges work in a set with one tug and one barge for each service. The set arrangement of tugs and barges is not fixed as each tug can be matched with any barge within its capacity. As at the LPD, we charter and operate six tugs and six barges from third party owners, as follows:

No. Tug Horsepower Origin Port of registry Owner of tug

Year built

Age (years) Chartered since

1. Endeavor 1 2 x 829 Indonesia Batam PT Megah Mandiri Sukses Sejati 2013 8 20 July 2019

2. Endeavor 3 2 x 829 Indonesia Batam PT Pulau Laut Line 2014 7 1 September 2017

3. SPGM 1288 2 x 600 Indonesia Batam PT Megah Mandiri Sukses Sejati 2010 11 1 April 2020

4. SPGM 1289 2 x 600 Indonesia Batam PT Megah Mandiri Sukses Sejati 2011 10 26 August 2019

5. SPGM 1307 2 x 650 Indonesia Batam PT Megah Mandiri Sukses Sejati 2013 8 1 January 2017

6. Millenium I 2 x 829 Indonesia Batam PT Bintang Intipersada Sejahtera 2014 7 15 February 2020



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No. Barge Nominal capacity

(TEU) Origin Port of registry Owner of barge Year built

Age (years) Chartered since

1. Pacific Sun 1 420 Indonesia Batam PT Megah Mandiri Sukses Sejati 2013 8 20 July 2019

2. Pacific Sun 3 344 Indonesia Batam PT Pulau Laut Line 2013 8 1 September 2017

3. MMSS 2501 352 Indonesia Tanjung Priok PT Megah Mandiri Sukses Sejati 2011 10 1 April 2020

4. MMSS 2502 388 Indonesia Tanjung Priok PT Megah Mandiri Sukses Sejati 2011 10 26 August 2019

5. MMSS 2507 344 Indonesia Batam PT Megah Mandiri Sukses Sejati 2013 8 1 January 2017

6. Sea Gate 2705 476 Indonesia Batam PT Bintang Intipersada Sejahtera 2014 7 1 January 2019



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7.3.2 Container liner shipping

(i) Container liner shipping services Container liner shipping is a type of shipping method using a range of standardised containers in carrying cargo on a container vessel. Standardised containers are widely used to carry cargo via different modes of transportation including container vessels, container haulage trucks and trains, thus making containerisation an efficient and cost-effective way to carry large volume of goods as it eliminates additional handling of goods (i.e. pack and unpack goods) when switching between transportation modes. We are principally involved in container liner shipping services where we ship containerised cargo using container vessels from port of loading to port of discharge. Our container liner shipping services cover routes between ports in Peninsular Malaysia and East Malaysia as well as overseas ports around the Southeast Asia region such as Singapore, Thailand, Brunei, Indonesia, India and Myanmar which are in close proximity to Malaysia. We provide weekly fixed-day container liner shipping services covering ports in Peninsular Malaysia, East Malaysia, Singapore, Thailand and Brunei where the days of arrival and departure at each port for a service route are fixed according to our weekly fixed-day sailing schedule. The distance and the voyage routes between each port are relatively short, with maximum voyage distance of 3,231 nautical miles and 14 days per voyage as at the LPD. Our weekly fixed-day sailing services are mainly provided through a fleet of container vessels operated by our Group. The container vessels operated by our Group are with nominal capacities of between 1,000 and 2,000 TEU, and these are ideal given the depth and width limitations at some of the ports covered by our Group, especially ports in East Malaysia. The average age of our fleet of container vessels as at 31 March 2021 is 16 years where eight container vessels were purchased from the secondary market and three container vessel are newly built (for avoidance of doubt, MTT Semporna is excluded from the calculation as the purchase of the vessel was only perfected on 1 April 2021). Notwithstanding the age of our container vessels, the design, capacity and condition of our container vessels are suitable for our operations based on our service routes. Our weekly fixed-day sailing services cover most of the ports in the service routes at least once a week, hence providing an advantage to our customers as it helps our customers to manage their logistics and inventory cycles. For certain busier ports (such as Kota Kinabalu Port, which we call the port for 3 times a week), we may sail up to three times on fixed days of every week, which provide our customers with more options in frequency of sailings. As at the LPD, we offer weekly fixed-day shipping services using our own container vessels based on five service routes, where each shipping service is designated for a specific service route with its respective sailing schedule. We also provide non-fixed-day container liner shipping services covering various ports in Indonesia, India and Myanmar which are provided through sets of tugs and barges operated by our Group and container vessels operated by third party container liner shipping companies. See Section 7.3.2(ii) of this Prospectus for further details of our port coverage and weekly calls to each port as at the LPD. Our business activities as a container liner operator, feeder operator and shipping agent are further described below:



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(a) Container liner operator We provide container liner shipping services to our customers covering various ports located in Malaysia and various overseas ports around the Southeast Asian region as follows:

(i) Peninsular Malaysia and East Malaysia

We primarily operate as a domestic operator between ports in Peninsular Malaysia and East Malaysia where we provide container liner shipping services to our customers (who are “shippers and consignees”) comprising manufacturers and traders (including exporters and importers) using a fleet of container vessels operated by our Group and partner vessels.

We also provide container liner shipping services to shippers and consignees indirectly

via freight forwarders, who act on behalf of shippers and consignees as their forwarding agent. In such cases, our customers are the freight forwarders.

(ii) Overseas: Singapore, Thailand, Brunei, Indonesia, India and Myanmar

We provide container liner shipping services to customers comprising shippers, consignees and freight forwarders who act on behalf of shippers and consignees for shipment of goods to and from various overseas ports around the Southeast Asia region such as Singapore, Thailand, Brunei, Indonesia, India and Myanmar.

For ports which we cover in Singapore, Thailand and Brunei, we provide container liner shipping services to our customers using a fleet of container vessels operated by our Group and partner vessels whereas for ports which we cover in Indonesia, India and Myanmar, we leverage on container vessels operated by third party container liner shipping companies to provide container liner shipping services to our customers. In doing so, this has expanded our overseas port coverage and provided additional revenue for our Group. This is also a conservative approach in preparation for the potential expansion of our container liner shipping services to Indonesia, India and Myanmar by deploying our own container vessels as it enables us to assess the demand for container liner shipping services and the feasibility of deploying our own container vessels in the region. Moving forward, our Group will continue to seek opportunities to expand our overseas port coverage in the Southeast Asia region and other surrounding countries in Asia, to grow our container liner shipping business. See Section 7.15.1 of this Prospectus for further information on our future plans to expand our container liner shipping business in Malaysia and overseas.

(b) Feeder operator

We operate as a feeder operator as follows: (i) Feeder services to Main Line Operators We provide feeder services to Main Line Operators who berth, load and/or unload their

containers, also known as transhipment containers at major hub ports such as Port Klang, Port of Tanjung Pelepas and Port of Singapore.

As a feeder operator, we provide services using container vessels operated by our

Group or partner vessels to transport containers between these major hub ports and their ultimate ports of destination/origin which are some smaller ports in Peninsular Malaysia, East Malaysia and certain ports around the Southeast Asia region that are not covered by the Main Line Operators.



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(ii) Dedicated feeder services to certain customers

We provide dedicated feeder services to certain customers in Malaysia and Sumatera, Indonesia. For dedicated feeder services in Malaysia, we offer container liner shipping services to and from Pengerang Terminal, specifically for Petronas Chemicals Marketing (Labuan) Ltd (“Petronas”) and Aramco Chemicals Company (“Aramco”) since April 2019. Upon request from customers, we ship empty containers from Port Klang or Port of Tanjung Pelepas to Pengerang Terminal using container vessels operated by our Group, for the stuffing of petroleum products and thereafter, act as a feeder operator to ship the laden containers back to Port Klang and Port of Tanjung Pelepas for onward shipment to the ultimate destinations by the Main Line Operators. Nevertheless, due to an unforeseen accident which took place at Pengerang Integrated Petroleum Complex in 2020 (explosion and fire occurred at the plant’s Hydro Diesel Treater Unit), our container liner shipping services to Petronas and Aramco have temporarily ceased from June 2020. As we can divert our vessels to other routes within our container shipping operations as well as for our vessel chartering operations, the temporary suspension of the service to and from Pengerang Terminal will not materially affect our Group’s financial position and results of operations. We expect to re-commence our container liner shipping services to Petronas and Aramco by 4Q 2021. See Section 12.2.6 of this Prospectus for the financial impact to our Group in relation to the above. For dedicated feeder services in Sumatera, Indonesia, we offer container liner shipping services to certain customers (i.e. exporters and importers) with regular shipment in Sumatera, Indonesia. We operate a fleet of tugs and barges as detailed in Section 7.3.1 of this Prospectus for this service, providing ocean connectivity between public and private river ports in Sumatera, Indonesia and certain ports in Peninsular Malaysia. These river ports in Sumatera, Indonesia have shallower waters and are not suitable for container vessels to sail and/or to berth, therefore we use tugs and barges to facilitate shipments to these ports.

(c) Shipping agent

In Sabah and Sarawak, we represent the Evergreen Group of Companies, a global Main Line Operator offering ocean shipping services to worldwide destinations, via an agency arrangement with Evergreen Malaysia, as its local shipping agent. As the shipping agent for Evergreen Group of Companies, we are responsible for all operational activities which includes handling bookings, coordinating container logistics and vessel operations, and all other documentary services such as releasing bills of ladings and delivery orders, for container liner shipping services provided by Evergreen Group of Companies.

We are also involved in the containerised automotive shipping business where we specialise in containerised shipping of automotive vehicles. We use removable vehicle racking systems that are mounted into dry cargo containers to carry vehicles for shipment. As at the LPD, we own a total of 173 sets of removable vehicle racking systems that are used in our container liner shipping business for automotive vehicles, where each racking system is able to support and carry one vehicle. The removable vehicle racking system allows us to lash, tilt and/or lift the vehicles in the container, thus providing a space saving system that enables us to fully utilise the container space and allows up to four vehicles to be stored within a container depending on the size of the vehicles. Leveraging on our comprehensive port coverage and the advantages of our weekly fixed-day shipping services which provide certainty on the days of arrival and departure, vehicle dealers and distributors in East Malaysia can enjoy the benefits of more efficient management of their inventory and logistics of vehicles from Peninsular Malaysia to East Malaysia. Further, the containerisation of vehicles also protects the vehicles by preventing the vehicles from external damage such as being dented or scratched during handling or being directly exposed to sun or rain during shipping.



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(ii) Port coverage and service routes Our container liner shipping services are mainly centred in Port Klang in Peninsular Malaysia. Port Klang is the largest port in Malaysia with a total handling capacity of 19.6 million TEU comprising Westports and Northport. We cover Port Klang in all of our service routes for sailing using container vessels, as large volumes of containers are shipped through Port Klang. As at the LPD, the ports covered by our shipping services and the respective port calls are as follows: Region/country Port coverage Number of port calls per week Peninsular Malaysia Port Klang (1) (2) (3)

Penang Port

Johor Port (1)

Port of Tanjung Pelepas (3)

11

1

2

2

East Malaysia Kuching Port (1)

Bintulu Port (1)

Labuan Port (1)

Kota Kinabalu Port (1)

Sandakan Port

Tawau Port

Tanjung Manis Port (1)

Miri Port (4)

Sibu Port (4)

2

2

1

3

1

1

2

N/A (6)

N/A (6)

Singapore Port of Singapore (1)

1

Thailand Thai Connectivity Terminal, Bangkok (1)

Kerry Siam seaport, Laem Chabang

1

1

Brunei Port of Muara (1)

1

Indonesia Port of Perawang (3)

Port of Lubuk Gaung (3)

Port of Buatan (3)

Tebing Tinggi Port (3)

Port of Futong(3)

Port of Jakarta (5)

3

1

2

1

- (7)

N/A (6)

India Mundra Port (5)

Port of Chennai (5)

Jawaharlal Nehru Port (5)

Syama Prasad Mookerjee Port, Kolkata (5)

N/A (6)

N/A (6)

N/A (6)

N/A (6)

Myanmar Yangon Port(5) N/A (6)

Notes: (1) These ports are covered by our Group and also covered under the slot exchange arrangement

with MSC.

(2) We offer container liner shipping services to and from Port Klang, predominantly through Westports using both container vessels and sets of tugs and barges.

(3) We offer container liner shipping services to and from these ports using sets of tugs and barges.



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(4) Our container liner shipping services to and from Miri Port and Sibu Port are provided through tugs and barges operated by third party shipping companies to and from Bintulu Port and Tanjung Manis Port respectively.

(5) Our container liner shipping services to and from these ports are provided through container vessels operated by third party container liner shipping companies.

(6) The port calls to these ports are not fixed as we provide container liner shipping services to and from these ports through container vessels and tugs and barges operated by third party container liner shipping companies and third party shipping companies as explained in the notes (4) and (5) above based on shipment destinations and schedules of our customers.

(7) Our Group did not record any port call at Port of Futong as at the LPD mainly due to reduced container volume in June 2021 arising from the shortage of containers from our customers’ end.

A map of ports covered by our container liner shipping business is as follows:

Legend:

(1) Thai Connectivity Terminal, Bangkok (15) Tanjung Manis Port (2) Kerry Siam seaport, Laem Chabang (16) Sibu Port (3) Penang Port (17) Bintulu Port (4) Port Klang (18) Miri Port (5) Port of Tanjung Pelepas (19) Port of Muara, Brunei (6) Port of Singapore (20) Labuan Port (7) Johor Port (21) Kota Kinabalu Port (8) Port of Lubuk Gaung (22) Sandakan Port (9) Port of Perawang (23) Tawau Port (10) Port of Buatan (24) Mudra Port (11) Port of Futong (25) Jawaharlal Nehru Port (12) Tebing Tinggi Port (26) Port of Chennai (13) Port of Jakarta (27) Syama Prasad Mookerjee Port, Kolkata (14) Kuching Port (28) Yangon Port



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We review the performance of our service routes regularly, in terms of the deployment and utilisation of container vessels for each service route, and may modify, add or remove service routes from time to time if required. Our Group is also able to provide container liner shipping services or dedicated feeder services upon request if they are commercially viable to our Group.

(iii) Container types

To support our container liner shipping operations, we provide containers to shippers for shipment of their cargo. Our containers are also used by shippers for the carriage of goods during pre-shipping (from origin to port of loading) and post-shipping (from port of discharge to destination). As at the LPD, we own 10,763 containers (of which 2,684 containers were under finance lease and recognised as our assets) and we lease 5,172 containers, as follows:

Type of container Description Size

Number of containers as at the LPD

No. Owned Leased Total 1. Standard dry

cargo container

Fully enclosed container with doors at one end. The dry cargo containers are commonly used to carry general purpose cargo.

20-foot (“ft”) and 40-ft

7,788 2,173 9,961

2. High cube dry cargo container

Has similar structure to standard dry cargo container but with an extra foot in height. High cube dry cargo containers are suitable to carry light, voluminous or bulky cargo.

40-ft 2,470 2,869 5,339

3. Refrigerated container

Also referred to as reefer container, it is a type of container equipped with a refrigeration system that controls the temperature in the container. Refrigerated containers are typically used to carry perishable goods that require temperature control, including, among others, fresh foods such as fruits, vegetables, meat, seafood and dairy products, as well as raw materials for food and beverage processing, pharmaceutical products and medicines.

20-ft and 40-ft

436 112 548



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Type of container Description Size

Number of containers as at the LPD

No. Owned Leased Total 4. Open top

container

Containers without a solid metal roof and is designed to carry over-height cargo. The open top containers are generally used to carry cargo such as tall machinery.

20-ft and 40-ft

30 16 46

5. Flat rack container with collapsible ends

Containers with only two ends. The two ends can be collapsed to make a completely flat surface, allowing more space for heavy and over-sized cargo. Flat rack containers are often used to carry trucks and boats, pipes and odd-sized machinery.

20-ft and 40-ft

39 2 41

10,763 5,172 15,935



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7.3.3 Vessel chartering We also charter out our container vessels to container liner shipping companies to sail on service routes that are not competing with our domestic service routes, on time charter basis. As at the LPD, we charter out three container vessels, MTT Senari, MTT Samalaju and MTT Semporna. We will also be chartering out additional four vessels in July 2021, MTT Sapangar, MTT Pengerang, MTT Pasir Gudang and MTT Sibu to other container liner shipping companies. The details of our vessel chartering arrangements with container liner shipping companies are as follows: Long term charter

Vessel name Nominal capacity

(TEUs) Year built Charter period and rate (per day)

MTT Senari 1,162 2020 December 2020- December 2021

USD11,600

MTT Samalaju 1,162 2021 February 2021- February 2022

USD14,000

MTT Semporna 1,162 2021 April 2021 – April 2023

USD16,700

MTT Sibu 415 2021 July 2021 – July 2022

USD6,000

MTT Sapangar 1,800 2021 July 2021 - July 2024

USD29,750

Short term charter

Vessel name Nominal capacity

(TEUs) Year built Charter period and rate (per day)

MTT Pengerang 1,134 2006 July 2021 – August 2021

USD26,000

MTT Pasir Gudang 1,740 2000 July 2021 – September 2021

USD40,000

Most of our newly built vessels (MTT Senari, MTT Semporna and MTT Samalaju) are designed for high intake of laden containers to sail on shallow drafted waterways where at a maximum draft of 7.7 metre, these container vessels are able to load 935 TEUs at a loading capacity of 14 tonnes per TEU. Further, these container vessels are more eco-friendly as they are built with scrubbers which enable HFO consumption to comply with the new IMO sulphur emission regulation effective from 1 January 2020. MTT Sapangar on the other hand, was built with the feature to install the scrubber if deemed necessary in the future. See Section 7.3.1 of this Prospectus for further details on our fleet of container vessels.



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7.3.4 Container depot services We operate one container depot on our own land located in Port Klang (Bandar Sultan Sulaiman) and three container depots on leased lands located in Port Klang (Westports), Penang and Pasir Gudang and the details of the land area and capacity of each of our container depots as at the LPD are as follows:

Location

Operating land area (acres)

Storage capacity (unit)

Daily handling capacity

(unit) Port Klang (Bandar Sultan Sulaiman) 11.4 8,500 1,000 Port Klang (Westports) 6.0 4,000 600 Penang 8.3 5,500 800 Pasir Gudang 8.3 6,500 700 Total 33.6 24,500 3,100

We provide container storage and container-related services to external customers, namely container hauliers, third party container liner shipping companies and shipping agencies, container leasing companies as well as box operators to store their empty containers prior to deployment for the next shipment. Our container depot business also supports our container liner shipping business by allowing our own empty containers to be stored at the depots. All the empty containers stored in our depots are stacked according to the owner of the container, container size and type.

Our container-related services comprise handling (such as lift-on/lift-off and/or pre-trip inspection), washing, maintenance and repair as well as empty drayage services for the containers. The pre-trip inspection, maintenance and repair as well as empty drayage services are outsourced to third party service providers as these services are not within our area of expertise and would not contribute significantly to our Group’s revenue considering the cost and technical personnel to be employed. We intend to expand our container depot services by setting up new container depots in Port Klang (Pulau Indah), Kota Kinabalu, Kuching and Bintulu. See Section 7.15.2 of this Prospectus for further information.



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7.4 PRINCIPAL MARKETS BY BUSINESS SEGMENTS

The breakdown of our revenue by principal business segments for the financial years/period under review is as follows:

Principal business segment

FYE 31 December FPE 31 March 2018 2019 2020 2020 2021

RM’000 % RM’000 % RM’000 % RM’000 % RM’000 %

Container liner shipping

Freight income - domestic

390,010 72.5 369,269 72.4 352,513 68.5 98,252 72.1 109,497 65.1

Freight income - regional

111,098 20.7 101,664 19.9 109,757 21.3 27,074 19.9 41,809 24.8

Subtotal 501,108 93.2 470,933 92.3 462,270 89.8 125,326 92.0 151,306 89.9 Charter hire income 2,596 0.5 4,313 0.8 18,602 3.6 2,458 1.8 7,582 4.5

Other shipping related income(1)

6,761 1.3 5,642 1.1 5,513 1.1 1,372 1.0 1,901 1.1

Container depot

Depot related income

27,294 5.1 28,873 5.7 28,156 5.5 7,025 5.2 7,523 4.5

Total 537,759 100.0 509,761 100.0 514,541 100.0 136,181 100.0 168,312 100.0 Note: (1) Mainly comprising revenue recognised from shipping agency fee.

The principal market of our container liner shipping and container depot businesses is Malaysia. The charter hire income (which forms part of our container liner shipping business and represents 0.5%, 0.8%, 3.6% and 4.5% of our Group’s revenue for the FYE 31 December 2018, 31 December 2019, 31 December 2020 and FPE 31 March 2021, respectively) were derived from outside of Malaysia in which the vessels were chartered out to container liner shipping companies registered in Hong Kong, Singapore and South Korea throughout the financial years/period under review.



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7.5 OPERATIONAL PROCESSES AND TECHNOLOGY USED

7.5.1 Operational process for container liner shipping business

(a) Pre-shipping

Upon receipt of enquiry from our potential customers, our sales team will issue quotation stating the shipping charges as well as our sailing schedule. Once our customers agree on the quotation, our customers will proceed to place booking via e-mail or our e-Booking platform, stating the selected service route. See Section 7.5.3 of this Prospectus for further details of our e-Booking platform. Our customer service team will check for container space availability for the respective service route. Thereafter, the booking is confirmed once booking confirmation is sent to our customers via e-mail.



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We provide container liner shipping services to our customers comprising shippers, consignees and freight forwarders for the shipment of goods. We also provide dedicated feeder services to certain customers. Once the bookings from these customers are confirmed, we will notify these customers to pick up our empty containers from the specified container depot or deliver our empty containers to our customers. Thereafter, our customers will fill up the containers with their goods at their premises and the laden containers will be transported to the port of loading. Our customers can also use third party containers for the stuffing of their goods. As a feeder operator providing feeder services to the Main Line Operators, our customers are the Main Line Operators who tranship their containers at the major hub ports such as Port Klang, Port of Tanjung Pelepas and Port of Singapore for onward connections to their ultimate ports of destination through our vessels. Once we received the containers at the port of loading, these containers will obtain the necessary customs clearance and will be loaded onto the vessels.

(b) Shipping

Once all of the containers have been loaded onto the vessels, the vessels then set sail to the designated ports according to the pre-determined shipping service routes and schedule. Notification of Arrival (“NOA”) is despatched by the shipping agents at the respective destinations to inform consignees on the estimated time of arrival of the vessels at destination. Our customers can also track the locations of the vessels and obtain the estimated time of arrival through our e-Tracking system.

(c) Post-shipping

As the vessels arrive and berth at the port of discharge, the containers will be discharged from the vessels and stored at the port’s container yard. Upon obtaining customs clearance and payment of all related charges, the containers will be released to the respective consignees when the necessary document including the delivery order is presented to the port operator.

7.5.2 Vessel maintenance

Our container vessels are either managed in-house by our wholly-owned subsidiary, Nautica Ship Management or outsourced to a third party vessel management company, NSB Niederelbe Schiffahrtsgesellschaft mbH Co. KG (“NSB Niederelbe”). Nautica Ship Management manages both our newly built vessels and vessels purchased from secondary market. Nevertheless, we also leverage on the experience, international network as well as the technical knowledge of NSB Niederelbe in managing some of our newly built vessels. Nautica Ship Management provides the following support to ensure that our fleet of vessels remain in good running condition and meet all operational requirements:

technical management, includes maintenance, dry docking arrangements, repairs of the vessels in order to comply with the regulatory and classification society standards;

marine management services, which include audit process to assess the compliance of the vessels with the regulatory and classification society standards as well as navigation and safety arrangements;

crew management, includes sourcing of crew members from external manning agencies and planning of crew rotation. See Section 7.18 of this Prospectus for further details of our arrangement with external manning agencies;

procurement services, includes sourcing and purchasing of spare parts and equipment of the vessels, consumable, lubricating oil; and

in respect of acquisition of vessels, to undertake vessel pre-purchase inspections as well as to register new vessels with the relevant regulatory authorities and classification societies.



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7.5.2.1 Regular maintenance and repair

We employ an experienced and qualified technical team to supervise the maintenance and repair works of the vessels. Regular maintenance and repair works are usually carried out in port and at sea based on our scheduled maintenance programme by the crews on board of our vessels. The crew on board of our vessels will then report to our technical team on any issues arising from the vessel operations. Our technical team oversees, coordinates and manages all technical and crew related matters of our vessels to ensure smooth operation of our vessels. In addition, we monitor the inventory level of spare parts and replenish them as and when necessary to ensure that we will have sufficient spare parts on board for the regular maintenance and repair works.

7.5.2.2 Regulatory inspections

In addition to regular maintenance and repair works, each vessel is surveyed and inspected by the classification society surveyor from the IACS in accordance with the applicable rules of the relevant classification societies (“Rules”) in which the vessels are classed. The types of inspections include annual survey, ad-hoc inspection, periodic survey, special survey and intermediate survey. An annual survey is to be carried out yearly and ad-hoc inspection is to be done following an accident. The annual survey can be carried out when our vessels call at ports whilst the scope and extent of the ad-hoc inspection procedures are dependent on the vessel’s condition at the time of inspection. All of our vessels are classed by reputable international classification societies such as Lloyd’s Register, RINA Services S.p.A., Nippon Kaiji Kyokai and DNV GL. We monitor the classification status of the vessels on an ongoing basis as part of our ship management procedure. (a) Dry docking

We are required to dry-dock each of our vessels twice every five years for one intermediate survey and one special survey. During these dry-dockings, our vessels are surveyed and inspected by the classification society surveyor, hence these vessels will be out of operation. The intermediate inspection which is held between the second and third year entails survey, maintenance and repair works, while special inspection entails a major inspection and prior to such inspection, repairing or replacing the vessel components or equipment may be required to comply with the requirements of the classification societies. Special inspection is a mandatory requirement for class renewal based on a five-year cycle from the date of delivery of the vessels. The average number of days required for intermediate inspection is between five and seven days while special inspection can take up to 14 days, depending on the age of the vessels. We incurred RM15.4 million, RM16.7 million, RM8.6 million and RM4.1 million in dry-docking costs for the FYEs 31 December 2018, 31 December 2019, 31 December 2020 and FPE 31 March 2021, respectively, which were capitalised as a separate component of the vessel costs.

(b) Under water inspection in lieu of dry docking (“UWILD”)

If the vessels are below 15 years old, intermediate survey can be undertaken via UWILD. UWILD is an alternative to dry docking wherein the submerged part of the vessel hull is inspected while afloat in operation, using a remotely-operated submersible with CCTV camera and/or using divers with CCTV camera. We can opt for UWILD for the intermediate survey of our existing vessels and vessels to be acquired in the future which are below 15 years old.



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7.5.3 Technology used

Container liner shipping business We employ a shipping software (“iKapal’s Shipping System”) which was solely developed by a third party vendor, NM SOVY Technology Sdn Bhd, to support and facilitate the daily operations of our container liner shipping business. We hold the intellectual property rights for iKapal’s Shipping System. See Section 7.21 of this Prospectus for further details of the intellectual property rights held by our Group.

(VGM: Verified Gross Mass) iKapal’s Shipping System is designed with multiple modules, each with specific functions and features to facilitate our container liner shipping business operations, including, among others:

processing of bookings and transactions;

management of shipping rates;

management of containers;

management of vessel operations; and

customer service and documentation. All the modules are integrated to form a solution which streamlines and simplifies the coordination of our business processes. iKapal’s Shipping System can be accessed by all our branch offices and shipping agents in overseas to efficiently manage the daily operations of our container liner shipping business. Further, we have also subscribed to a third party e-Manifest portal, an intermediary system that connects us and our network of shipping agents with the Malaysian Customs Department’s system. It speeds up the submission of manifest data for customs clearance and automates the updates of clearance results received in the database of our iKapal’s Shipping System.



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In addition, our customers are able to perform various functions conveniently under the iKapal’s Shipping System through our online portal accessible from our corporate website which serves as a direct contact point to customers, including:

e-Booking : Allows our customers to place bookings for our container liner shipping services. Under the e-Booking platform, our customers are required to specify the shipment details such as the type of containers, international commercial terms, place of receipt, port of loading, place of final destination, port of discharge, estimated shipment date and cargo description.

e-Tracking : Allows our customers to track the location of their container or shipment on a real-time basis. Under our e-Tracking system, our customers are able to trace the location of their cargo or shipment using the respective bill of lading number, booking number or container number.

e-Shipping Instructions

: Allows our customers to fill in and update information in relation to their shipping instruction such as shippers’ name and address, consignees’ name and address and container details for the auto-generation of bill of lading to our customers.

VGM : Allows our customers to submit the gross mass of their cargo in a container for the purposes of declaration and verification by our Group.

Container depot business We employ a depot management system (“SOVY-Depot System”) developed by a third party vendor, NM SOVY Technology Sdn Bhd, to facilitate the daily operations of our container depots. One of the key features of the SOVY-Depot System is the automation of business processes, whereby it helps to facilitate the transmissions of information between multiple function units of our container depot operations as well as the transmissions of information with our customers who integrate their container management system with SOVY-Depot System. For instance, the conditions of containers will be transmitted and recorded in SOVY-Depot System upon inspections and the notifications of container repairs along with the estimated cost of repair will be sent to the container owners automatically. The container owners will then decide if they want to proceed with the repair. Further, container owners can access to the real-time status on the movement of their containers (i.e. gate-in and gate-out) from/to our depot through their container management system which is integrated to SOVY-Depot System, for them to conveniently track the location of their containers. In addition, invoices and summary of charges are sent to our customers upon completion of tasks. Some of the key functions of the SOVY-Depot System are as follows: Key function Description Haulier notification and booking appointment

- SOVY-Depot System can be integrated with our customer’s container management system to automatically feed real-time information on container movement status from SOVY-Depot System directly into our customer’s container management system. This allows our customers to conveniently track the location of their containers.



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Key function Description

- SOVY-Depot System is also integrated with a third party booking platform, namely CargoMove, which is used by our customers to book time slots for pick-up and drop off of containers. This integration allows us to automate the receival, processing and tracking of our customers’ bookings as manual entering of booking information from CargoMove into SOVY-Depot System is not required. Thus, shorten processing time and minimise human errors which consequently improve the efficiency of our container depot operations.

Depot monitoring

- An internal system that allows us to monitor the scheduled pickup and drop off of the containers by hauliers, which helps us to plan the traffic within the depots and to prepare the required equipment such as forklifts and stackers used to lift the containers.

- It also helps in our operational planning and improves the efficiency of

containers handling at our depots.

Depot container handling

- Each of the forklifts and stackers used in our depots are equipped with a forklift mounted terminal, a tablet mounted on the forklift which allows forklift drivers to have real-time visibility of containers in queue to carry out container handling tasks.

- This reduces the flow of manual instructions between the forklift drivers

and planning team, hence simplifying the workflow of containers handling at our depots.

Paperless gate-in and gate-out process

- Cameras are installed at the entry and exit gates of each of our container depots to facilitate the inspection of the conditions of containers. At the entry gates, inspections are conducted to identify containers that require repairs. At the exit gates, inspections are conducted to ensure the containers leaving our container depots are in good conditions.

- The photos taken by the cameras and the results of inspections are transmitted and recorded in the SOVY-Depot System automatically.

- This eliminates manual transmissions of information and records from

gate operators and inspectors to the systems, and reduces the risk of human errors during information transmissions.



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7.6 TYPES, SOURCES AND AVAILABILITY OF INPUTS The main inputs that we purchased and charges that we incurred were from our container liner shipping operations, which primarily comprised of terminal handling charges, bunker fuel and equipment costs, and they collectively accounted for 59.9%, 56.5%%, 52.4% and 54.8% of our total direct costs for the FYE 31 December 2018, 31 December 2019, 31 December 2020 and FPE 31 March 2021, respectively. See Section 12.2.5(ii) of this Prospectus for further details on our direct costs.

Terminal handling charges are charges paid to the ports and other relevant parties for the activities and services undertaken at the ports which we sail to, including the lift-on/lift-off and stevedoring services for containers loaded to and/or discharged from our vessels, detention charges, wharf handling charges for containers and lift-on/lift-off and storage of containers at container yard. These services are generally provided by port operators. During the financial years/period under review, we did not face major price fluctuations in terminal handling charges. Bunker fuel is fuel used in our container vessels and tugboats. We refuel our container vessels in Port Klang and Port of Singapore. The cost of bunker fuel fluctuates according to the prevailing global oil prices. Global oil prices are affected by various factors beyond our control such as changes in global demand and supply conditions, geopolitical events affecting major oil producing countries, government policies and the level of global economic activities. Nevertheless, we factor in a bunker adjustment factor in our freight rate quoted to our customers, in part as recovery costs to us for the fluctuation of bunker fuel cost and hence, we are able to pass on any increase in bunker fuel cost as a result of price fluctuation to our customers. During the financial years/period under review, we did not face any difficulties in sourcing suppliers for bunker fuel. Equipment costs are costs relating to containers, including leasing costs, container repairs, and storage costs as well as haulage charges for handling containers. As we own a majority of containers as detailed in Section 7.3.2(iii) of this Prospectus for our container liner shipping operations, we are less susceptible to price fluctuations of container leasing costs. During the financial years/period under review, we did not face any major fluctuations in our equipment costs.



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7.7 MATERIAL PROPERTIES AND EQUIPMENT

7.7.1 Material real properties of our Group

Details of the material properties owned by our Group or leased/tenanted by our Group are set out in Annexure A of this Prospectus.

7.7.2 Material equipment owned by our Group A summary of the material equipment owned and used by us as at 31 March 2021 are as follows:

Equipment Number of units

Average life span (years) (1)

Average age

(years) (2)

Audited NBV as at

31 March 2021 (RM ’000)

Container liner shipping and vessel chartering

Container vessels 11(3) 25 16 372,197 Containers 10,764 10 5 43,726 Removable vehicle racking systems 173 5 2 530 Container depot Forklifts and stackers 24 10 5 10,748

427,201

Notes: (1) Average lifespan of the equipment is computed based on the average lifespan of five, 10 and 25 years

respectively for each type of equipment, which is consistent with the computation of depreciation for equipment based on our Group’s accounting policy.

(2) Average age of the equipment is computed since the year of built or year of purchase and up to 31 March 2021.

(3) For avoidance of doubt, MTT Semporna is not included as the purchase of the vessel was only perfected on 1 April 2021.

Subsequent to the FPE 31 March 2021 and up to the LPD, we took delivery of one additional container vessel, purchased one additional forklift and three additional stackers as well as disposed one container. See Sections 7.3.1 and 7.3.2(iii) of this Prospectus for further details on the container vessels as well as the description of the types of containers owned by us, respectively.



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7.8 OPERATING CAPACITY AND UTILISATION RATES

7.8.1 Container liner shipping operations We seek to maximise our financial results from our container liner shipping operations by maximising utilisation rate of available container slot space on container vessels operated by our Group. The utilisation rate of our container liner shipping operations is measured by the proportion of actual lifting (i.e. actual number of laden containers carried) of container vessels operated by our Group against the available capacity of container vessels operated by our Group. Trade imbalances are common in the container liner shipping industry where cargo inflows and outflows of ports along the voyage may not necessarily be in a correspondingly equivalent volume. Hence, we are often required to reposition empty containers from ports with predominantly inbound cargo (“demand ports”) to ports with predominantly outbound cargo (“supply ports”) in a round voyage of our service routes. Our journeys in a round voyage of our service routes can be generally classified as follows: (i) Head Haul journey, which refers to the main journey where we transport laden containers

from supply ports to demand ports, e.g. from ports in Peninsular Malaysia and Singapore to ports in East Malaysia and Brunei;

(ii) Back Haul journey, which refers to the return journey of the voyage e.g. from ports in

East Malaysia and Brunei to ports in Peninsular Malaysia and Singapore. Our container vessels are mostly occupied with empty containers for Back Haul journeys due to the need to reposition empty containers to supply ports and typically less cargo movement from East Malaysia and Brunei to Peninsular Malaysia and Singapore; and

(iii) Intra-way Haul journey, which refers to the journey in between Head Haul and Back Haul

journeys, e.g. from a port in East Malaysia to another port in East Malaysia. We will call on ports between East Malaysia or Peninsular Malaysia along the round voyage of our service routes as and when we have laden or empty containers to discharge or pick up.

The diagram below illustrates an example of types of journeys as mentioned above:



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As illustrated above, our Head Haul journey starts from Port Klang (“Port A”) or Johor Port (“Port B”) to Kuching Port (“Port C”) or Bintulu Port (“Port D”) to transport laden containers for our customers. During our Head Haul journey, our container vessels may make several stops at ports in which the containers may be lifted off the container vessels and/or new laden containers can be lifted onto our container vessels (in this case, Port B and Port C). The trips between Port A and Port B as well as trips between Port C and Port D will be regarded as Intra-way Haul journey. Subsequently, we will transport all the empty containers from the supply port (Port C or Port D) back to the demand port (Port A or Port B) and this return trip is referred to as Back Haul journey.

Inherent to the abovementioned trade imbalances and cargo patterns, our freight income is contributed mainly from revenue generated by the Head Haul and Back Haul journeys of the round voyage. Therefore, the utilisation rate of our container liner shipping operations is represented with the utilisation rate for Head Haul and Back Haul journeys. Intra-way Haul journeys are excluded from our utilisation rate consideration and are separately classified as additional revenue generated on the Intra-way Haul journey of the round voyage.

Table below sets out the utilisation rate of our container liner shipping operations for the financial years/period under review:

FYE 31 December FPE 31 March

2018 2019 2020 2020 2021

Head Haul journeys

Available capacity (TEU)(1)

210,488 212,887 202,403 66,398 58,494

Actual lifting (TEU)(2) 150,758 141,306 151,198 45,113 49,395

Utilisation rate (%)(3) 71.6 66.4(5) 74.7 67.9 84.4(6)

Back Haul journeys

Available capacity (TEU)(1)

210,488 212,887 202,403 66,398 58,494

Actual lifting (TEU)(2) 51,223 52,452 59,067 23,351 14,931

Utilisation rate (%)(3)(4) 24.3 24.6 29.2 35.2 25.5(7)

Notes: (1) Being the aggregate of the actual space available on container vessels operated by our Group,

measured at a loading capacity of 14 tonnes per TEU for the financial years/period indicated.

(2) Actual number of laden containers carried by container vessels operated by our Group and/or our partner vessels for the financial years/period indicated for the abovementioned journey.

(3) Computed based on the actual lifting made by our group over the total available capacity.

(4) The utilisation rates for the Back Haul journeys were significantly lower than the utilisation rates of the Head Haul journeys as we only take into account the laden containers for the computation of the utilisation rate. As mentioned above, container vessels in the Back Haul journeys were mostly occupied with empty containers that we need to bring back to their respective supply port.

(5) The decrease in the utilisation rate for the FYE 31 December 2019 for the Head Haul journeys was mainly due to a decrease in actual lifting, as a result of slowdown in demand for most of the goods that we transport to East Malaysia. This was due to normalisation in the demand of goods in FYE 31 December 2019 after a spike in the demand of goods in the FYE 31 December 2018 in relation to the Goods and Services Tax holiday in the third quarter of 2018.



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(6) The increase in the utilisation rate for the FPE 31 March 2021 for the Head Haul journeys was mainly due to a decrease in available capacity as we deployed lesser container vessels for use in our container liner shipping business to capitalise on the increased demand in our vessel chartering business, as well as an increase in actual lifting contributed by an additional port coverage to Kerry Siam seaport, Laem Chabang port and an increase in the demand for our container liner shipping services from ports in Peninsular Malaysia to ports in East Malaysia.

(7) The decrease in the utilisation rate for the FPE 31 March 2021 for the Back Haul journeys was mainly attributed to the global shortage of shipping capacity and container equipment supply arising from the disruption in the containers’ turnaround time as well as increase in ocean voyages’ period. As a result, exporters in East Malaysia were experiencing difficulties in securing containers as well as the shipping capacity from the Main Line Operators for their exports which had a direct corresponding impact on our Back Haul journeys’ utilisation rate.

The table above excludes the operations carried out by our subsidiary, Sea Navigator which provide dedicated feeder services through tugs and barges operated by our Group to our customers' own terminals at ports such as Port of Perawang, Tebing Tinggi Port, Port of Buatan, Port of Lubuk Gaung and Port of Futong to major hub ports such as Port Klang and Port of Tanjung Pelepas. As such, it will not be meaningful to disclose the utilisation rate as the rate will purely depend on the shipper’s volume. The total volume of containers transported by the tugs and barges operated by our Group for the financial years/period under review are as follows:


2018 2019 2020 2020 2021

Actual lifting (TEU) (1) 97,698 95,450 106,618 25,613 19,631

Note: (1) Actual number of laden containers carried by tugs and barges operated by our Group for the financial

years/period indicated. 7.8.2 Container depot operations

Table below sets out the utilisation rate for our container depot operations for the financial years/period under review: FYE 31 December FPE 31 March

2018 2019 2020 2020 2021 Handling capacity (unit) (1) 633,890 652,374 913,700 220,900 223,300

Actual lifting (unit) (2) 473,204 463,274 510,169 121,188 144,372

Utilisation rate (%) 74.7 71.0 55.8 (3) 54.9 64.7 (4)

Notes: (1) Computed based on maximum number of containers that can be lifted in a day, multiplied by number

of actual working days for the financial years/period indicated.

(2) Actual number of containers lifted in our container depots for the financial years/period indicated.

(3) The decrease in the utilisation rate for the FYE 31 December 2020 was mainly due to an increase in handling capacity as we commenced our container depot operations in Port Klang (Westports). The utilisation rate of our expanded container depot handling capacity was also affected by a general slowdown in trade activities due to the imposition of movement restrictions in 2020.

(4) The increase in the utilisation rate for the FPE 31 March 2021 was mainly due to an increase in actual lifting as we secured new customers for our container depot operations.



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7.9 OUR CUSTOMERS As a container liner operator, our customers are shippers and consignees such as manufacturers, traders (including importers and exporters) and freight forwarders who act on behalf of shippers or consignees as their forwarding agent. As a feeder operator, our customers are the Main Line Operators and certain customers for our dedicated feeder services. For our container depot operations, our customers are container hauliers, third party container liner shipping companies and shipping agencies, container leasing companies as well as box operators. Our Group serves a diversified portfolio of customers where we handle cargo for our customers from various industries among others, food and beverage products, basic materials, consumer basic products, automotive related products, industrial related products as well as plastic and rubber products. The revenue contribution from our container liner shipping operations by type of goods shipped by us based on the manifests and bill of lading of the containers for the financial years/period under review is as follows:


Type of goods 2018 2019 2020 2020 2021

RM’000 % RM’000 % RM’000 % RM’000 % RM’000 %

Food and beverage (1) 132,912 28.4 124,041 28.4 123,889 28.8 31,830 27.1 39,270 27.7

Basic materials (2) 99,135 21.2 94,739 21.7 92,734 21.6 27,162 23.1 28,899 20.4

Consumer basic products (3)

75,062 16.1 64,596 14.8 68,151 15.9 16,149 13.7 22,509 15.8

Automotive related (4) 54,379 11.6 51,742 11.8 54,913 12.8 19,319 16.4 15,978 11.3

General and consolidated cargo (5)

48,764 10.4 46,599 10.7 42,617 9.9 11,449 9.7 17,218 12.1

Industrial related (6) 29,859 6.4 34,677 7.9 28,982 6.7 6,906 5.9 11,069 7.8

Plastic and rubber products (7)

27,124 5.8 20,772 4.8 18,651 4.3 4,806 4.1 7,068 5.0

Total (8) 467,235 100.0 437,166 100.0 429,938 100.0 117,621 100.0 142,011 100.0

Notes: (1) Comprising prepared food and beverage products.

(2) Comprising raw material products including, among others, chemicals, minerals, alloys, building and construction materials, wood products as well as oil and gas products.

(3) Comprising consumer products among others, household products, pharmaceuticals and toiletries (including cosmetics), textiles, yarns and other related materials.

(4) Comprising automotive equipment including automotive parts.

(5) Comprising various general goods from third party shippers that are not dangerous goods. Consolidated cargo comprising packaged general goods from multiple third party shippers into one container.

(6) Comprising industrial electrical and electronic products, machineries and equipment, and telecommunication related products and materials.

(7) Includes, among others, packaging materials, containers and gloves.



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(8) Total revenue from freight income, excluding slot sale income, Auto Logistics (i.e. containerised shipping of automotive vehicles as referred to in Section 7.3.2 of this Prospectus) and other freight income comprising detention and demurrage charges, and other related freight charges.

The revenue contribution from our container depot operations by type of customers for the

financial years/period under review is as follows:

Type of customers


2018 2019 2020 2020 2021

RM’000 % RM’000 % RM’000 % RM’000 % RM’000 %

Container hauliers 11,422 41.8 12,207 42.3 13,536 48.1 3,088 44.0 3,936 52.3

Third party container liner shipping companies and shipping agencies

14,867 54.5 13,472 46.7 11,812 42.0 3,038 43.2 3,382 45.0

Container leasing companies

926 3.4 3,136 10.9 2,750 9.8 889 12.7 53 0.7

Box operators 79 0.3 58 0.2 57 0.2 10 0.1 152 2.0

Total 27,294 100.0 28,873 100.0 28,156 100.0 7,025 100.0 7,523 100.0

7.10 MAJOR CUSTOMERS Our top five major customers by revenue for the financial years/period under review are as follows:

FYE 31 December 2018

Major customer Revenue (RM’000)

% of our Group’s revenue

Type of services provided

Type of customer

Approximate length of relationship as at 31 March 2021

Evergreen Malaysia(1)

32,890 6.1 Container liner shipping and shipping agency services

Main Line Operator

10 years

MSC 21,985 4.1 Container liner

shipping via slot exchange / slot sales

Domestic Operator

8 years

Pilot Logistics Services Sdn Bhd

17,171 3.2 Container liner shipping

Freight forwarder

9 years

FM Multimodal Services Sdn Bhd


Freight forwarder

10 years

Greenpen Freight Services Sdn Bhd


Freight forwarder

10 years

For the FYE 31 December 2018, our top five major customers collectively contributed RM101.8 million or 18.9% of our Group’s revenue.



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Major customer Revenue (RM’000)



Type of customer

Approximate length of

relationship as at 31

March 2021



Main Line Operator

10 years



Domestic Operator

8 years



Freight forwarder

9 years



Freight forwarder

10 years



Freight forwarder

10 years

For the FYE 31 December 2019, our top five major customers collectively contributed RM87.5 million or 17.2% of our Group’s revenue. FYE 31 December 2020

Major customers Revenue (RM’000)



Type of customer




Main Line Operator

10 years



Domestic Operator

8 years



Freight forwarder

10 years



Freight forwarder

10 years



Freight forwarder

9 years

For the FYE 31 December 2020, our top five major customers collectively contributed RM82.7 million or 16.1% of our Group’s revenue.



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FPE 31 March 2021

Major customers Revenue (RM’000)



Type of customer




Main Line Operator

10 years



Domestic Operator

8 years



Freight forwarder

10 years

RCL Feeder Pte Ltd 4,223 2.5 Vessel charter hire Container liner

shipping company

Less than 1 year

Priority Synergy Sdn Bhd


Freight forwarder

10 years

Note:

(1) Evergreen Malaysia is the local agent of Evergreen Group of Companies, a Main Line Operator.

For the FPE 31 March 2021, our top five major customers collectively contributed RM27.1 million or 16.1% of our Group’s revenue. Our Group is not dependent on any customer as each of our major customers contributes less than 10% of our Group’s revenue for the financial years/period under review. Save for Evergreen Malaysia which we have a shipping agency arrangement with, we do not have any long term contracts or agreements with our other major customers.



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7.11 MAJOR SUPPLIERS Our top five major suppliers by purchases for the financial years/period under review are as follows: FYE 31 December 2018

Major supplier Purchases (RM’000)

% of our Group’s

purchases Type of purchases


Victory Supply Sdn Bhd 57,385 15.0 Bunker fuel 3 years Westports Malaysia Sdn Bhd

49,803 13.0 Terminal handling and marine charges

10 years

Sabah Ports Sdn Bhd 32,532 8.5 Terminal handling

and marine charges

9 years

Lembaga Pelabuhan Kuching


9 years

Fultonn Marine Sdn Bhd 14,716 3.8 Bunker fuel 2 years

For the FYE 31 December 2018, our top five major suppliers collectively contributed RM171.5 million or 44.8% of our Group’s purchases.



% of our Group’s



Westports Malaysia Sdn Bhd 50,447 13.5 Terminal handling

and marine charges 10 years

GP Global APAC Pte Ltd 36,336 9.7 Bunker fuel 2 years

Sabah Ports Sdn Bhd 28,630 7.7 Terminal handling and marine charges

9 years

Zengo Corporation Sdn Bhd 22,845 6.1 Bunker fuel 10 years Lembaga Pelabuhan Kuching 13,143 3.5 Terminal handling


For the FYE 31 December 2019, our top five major suppliers collectively contributed RM151.4 million or 40.6% of our Group’s purchases.



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% of our Group’s



Westports Malaysia Sdn Bhd 58,929 16.5 Terminal handling


Sabah Ports Sdn Bhd 26,036 7.3 Terminal handling and marine charges

9 years

Ombak Suria Sdn Bhd 23,667 6.6 Bunker fuel Less than 1 year

GP Global APAC Pte Ltd 15,977 4.5 Bunker fuel 2 years

Lembaga Pelabuhan Kuching 13,614 3.8 Terminal handling and marine charges

9 years

For the FYE 31 December 2020, our top five major suppliers collectively contributed RM138.2 million or 38.6% of our Group’s purchases. FPE 31 March 2021


% of our Group’s



Ombak Suria Sdn Bhd 19,709 18.2 Bunker fuel Less than 1 year Westports Malaysia Sdn Bhd 17,035 15.8 Terminal handling


Sabah Ports Sdn Bhd 8,006 7.4 Terminal handling


Lembaga Pelabuhan Kuching


9 years

Penang Port Sdn Bhd 3,603 3.3 Terminal handling


For the FPE 31 March 2021, our top five major suppliers collectively contributed RM53.0 million or 49.0% of our Group’s purchases.



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Purchases from bunker fuel providers and port operators were used to support our businesses in container liner shipping where we purchase bunker fuel for the operations of our vessels and port services (i.e. terminal handling and marine charges) such as pilotage, berthing and lift-on/lift-off of containers. Our Group is not dependent on any supplier due to the following factors:

(i) certain services provided by our suppliers such as the provision of bunker fuel are widely

available in the market and the rate of bunker fuel offered by the bunker fuel suppliers are based on the market price which fluctuates according to the prevailing global oil prices; and

(ii) our container shipping operations serve multiple ports across Peninsular Malaysia and

East Malaysia as well as certain ports in Singapore, Thailand, Brunei, Indonesia and India. Accordingly, our Group is not dependent on the continued operations of any single port including Westports Malaysia Sdn Bhd, Sabah Ports Sdn Bhd, Lembaga Pelabuhan Kuching and Penang Port Sdn Bhd which are our major suppliers. However, any disruptions occurring at the ports such as port congestion, stoppages and expansion works of the container terminals at the respective ports could have a material adverse effect on the business operations and financial condition of our Group. See Section 9.2.3 of this Prospectus for further details on the risk in relation to the potential disruptions occurring at the ports.



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7.12 MARKETING AND BUSINESS DEVELOPMENT ACTIVITIES We actively engage in the following sales and marketing strategies: (i) Wide network of offices in Malaysia and network of shipping agents

We have physical presence in both Peninsular Malaysia and East Malaysia, where our offices are in close proximity to most of the ports covered by our Group. We also have shipping agents in Penang, Labuan and other countries which our container liner shipping services cover namely Singapore, Thailand, Brunei, Indonesia, India and Myanmar. This spread of offices in multiple states are our sales and marketing arms, as well as operational offices, and serve as the primary contact points with our customers. Our network of shipping agents assists us in facilitating, among others, operational arrangement of vessels at ports such as berthing, unberthing, loading and unloading of containers and pilotage; arrangement of cargo movement such as receiving and releasing containers; and/or issuance of original bills of lading.

(ii) Customer-oriented sales and marketing personnel

Our sales and marketing personnel are responsible for understanding customers’ needs, preparing price quotations, participating in price negotiations, confirming sales and establishing and maintaining relationships with our customers. They are equipped with the necessary knowledge in container liner shipping and container depot business in order to attract sales by understanding customers’ needs and proposing suitable shipping solutions to customers. The experience, knowledge, industry network and strong understanding in the shipping industry carried by our sales and marketing personnel enables us to identify and engage potential customers directly to secure new sales. These potential customers are also identified through referrals from our business associates as well as from our industry network.

(iii) Corporate website as source of information to our services Our corporate website, www.mttsl.com.my, is a means of introducing our Group’s services to our potential customers and provides immediate basic information on our Group. The current widespread use of the internet as a source of information enables us to cross geographical boundaries and facilitates access from any part of the world, enhancing our potential market reach and exposure.

(iv) Online portal as a direct contact point to customers We have an online portal under iKapal’s Shipping System that can be accessed through our corporate website. It serves as an online interface that allows customers to check our sailing schedule, place bookings for our container liner shipping services, track the location of their cargo or shipment on a real-time basis, and fill in and update their shipping instructions. Our online portal serves as a direct contact point and allows our customers to perform the various functions at their convenience, thus enhancing our customer reach and exposure. See Section 7.5.3 of this Prospectus for further details of our online portal under iKapal’s Shipping System.



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7.13 RESEARCH AND DEVELOPMENT We do not undertake, and have not undertaken, any research and development in connection with our business operations.

7.14 COMPETITIVE STRENGTHS

7.14.1 We own our fleet of vessels, ensuring greater control over our container liner shipping operations and enabling us to capture demand from the charter market As at the LPD, our Group owns 12 container vessels and operates nine vessels for our container liner shipping business. Our fleet of vessels is the backbone of our shipping business. By owning these vessels to support our shipping business, it allows us to have a greater control over our operations as we can have the certainty of having sufficient fleet of container vessels which are suitable for the ports water depth along our services routes at all times. Having our own fleet of container vessels also allow us to expand our service routes and increase our frequency of sailings to certain ports when there is an increase in demand for our container shipping operations. Further, our own fleet of container vessels also enables us to capture demand from the charter market as our container vessels can be chartered out to other container vessel operators. In view of the recent strong charter demand for containers vessels with capacity between 1,000 TEUs and 2,999 TEUs as detailed in the IMR Report, our Group is also well positioned to capitalise on this strong charter demand. Depending on prevailing market demand and conditions, our own fleet of container vessels thus provide us the opportunity and flexibility to optimise the utilisation and revenue generation of our container vessels from both our container liner shipping business and vessel chartering business. Our Group believes that having our own fleet of vessels is one of the significant elements driving the success of our container liner shipping business and vessel chartering business, as it allows us to have a greater control and flexibility over our container shipping and vessel chartering operations. This provides a strong foundation for the continuing growth and sustainability of our business.

7.14.2 We provide weekly fixed-day shipping services and comprehensive port coverage across Peninsular Malaysia and East Malaysia Our Group offers weekly fixed-day shipping services between Peninsular Malaysia and East Malaysia, while some of these service routes also cover overseas ports around the Southeast Asia region such as Singapore, Thailand and Brunei. The days of departure and arrival for our service routes are fixed according to the respective weekly fixed-day sailing schedule. See Section 7.3.2(ii) of this Prospectus for further details of our comprehensive port coverage. Our weekly fixed-day shipping services between Peninsular Malaysia and East Malaysia provide certainty to our customers on the exact days of departure and arrival of their goods at each port, which enables our customers to effectively manage their logistics and inventory cycles in maintaining an optimal level of inventory, particularly for manufacturing companies by taking our shipping schedules into consideration. In addition, our comprehensive coverage of ports across Peninsular Malaysia and East Malaysia facilitates the shipment of goods to many states/locations in Malaysia, giving us a competitive edge among our customers who have goods to be distributed across various locations in Malaysia. Further, it has also positioned us as a strong feeder operator in Malaysia which complements the global shipping companies that berth at major hub ports including Port Klang, Port of Tanjung Pelepas and Port of Singapore, where these global shipping companies also require the goods carried on their vessels to be further distributed and shipped to different states in Malaysia.



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Our weekly fixed-day shipping services and comprehensive port coverage support trade activities between Peninsular Malaysia and East Malaysia. We believe that our weekly fixed-day shipping services and comprehensive port coverage across Peninsular Malaysia and East Malaysia will continue to help our customers in managing their business in terms of logistics and inventory management as well as distribution of goods, thus ensuring demand for our shipping services. This will in turn contribute to the growth of our shipping business in Malaysia as well as continue to enhance our standing among the global shipping companies and major ports in Malaysia.

7.14.3 We are a leading player in container liner shipping between Peninsular Malaysia and East Malaysia with a 37.2% market share by total container throughput between Peninsular Malaysia and East Malaysia in 2020 We are one of the major container liner shipping companies in Malaysia for the shipping of containerised cargo between Peninsular Malaysia and East Malaysia as demonstrated by our market share of 37.2%, according to the IMR Report, which is based on the total container throughput between Peninsular Malaysia to East Malaysia in 2020. Our success in becoming a major shipping company in Malaysia is largely attributed to our weekly fixed-day shipping services that provide our customers with certainty and assurance in managing their logistics and inventory. As recognition of our business achievements, we have received various awards for our container liner shipping business over the years. We were awarded the “Top Customer Award (Shipping Agent)” by Sabah Ports Sdn Bhd for three consecutive years from 2012 to 2014 and the “Outstanding Performance Award (Shipping Company)” by Malaysian Shipowners’ Association in 2017. These awards are a testament to our growth in the shipping industry as we have successfully grown into a well-established container liner shipping group and cemented our position as a major player supporting trade between Peninsular Malaysia and East Malaysia. Moving forward, our leading position and reputation in the container liner shipping industry will provide confidence to our customers in terms of our capabilities in the provision of container liner shipping services and the quality of our services, which will in turn facilitate the growth and expansion of our business.

7.14.4 We have established long-term business relationships with our suppliers and customers The growth and expansion of our Group in the shipping industry is supported by our established business relationships with our customers and suppliers. We have developed our network of suppliers and customers for the past 11 years since the commencement of our business in 2010. We have close working relationships with our suppliers including port operators and bunker fuel suppliers as well as our customers which mainly comprise shippers, consignees, freight forwarders and the Main Line Operators. One of our most significant business relationships is our partnership with Evergreen Malaysia, which we have worked with for the past 11 years. Our relationship with Evergreen Malaysia started in 2010 when we became its feeder operator in Malaysia. Subsequently in 2011, we were appointed as its shipping agent to provide shipping agency services in relation to container liner shipping services provided by the Evergreen Group of Companies in Sabah and Sarawak. See Section 7.3.2(i)(c) of this Prospectus for further details of our role as a shipping agent to Evergreen Malaysia. Having a strong relationship with an established Main Line Operator has given us the credentials that may help us to expand our customer base and contribute to the on-going growth and expansion of our business. Our established and long standing business relationships with our customers and suppliers will provide us a platform for our future growth and expansion, allowing our Group to continue strengthening our market position in the shipping industry in Malaysia.



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7.14.5 We have digitalised our business operations for greater operational efficiency Our Group understands the importance of adopting the latest relevant digital-related technologies into our business operations in order to maintain and/or improve our operational efficiency. We employ a proprietary information technology (“IT”) system (i.e. shipping software namely iKapal’s Shipping System) solely developed by a third party vendor, to support the day-to-day operations for our container liner shipping business. We also employ a third party software, the SOVY-Depot System, to coordinate the daily operations of our container depot business.

The iKapal’s Shipping System and SOVY-Depot System are designed with modules and functions that streamline, automate and simplify the coordination of our businesses, thus improving the efficiency of our business and operational process. Additionally, both the iKapal’s Shipping System and SOVY-Depot System also simplify the communications between our Group and our customers. Under iKapal’s Shipping System, there is a portal that acts as an online interface which allows our customers to perform various functions such as, booking container space on our vessels, tracking their shipments as well as filling in and updating their shipment details. The online portal enables our customers to perform the abovementioned functions at their convenience and reduces manual communications and paperwork needed. Further, SOVY-Depot System can be integrated with our customer’s container management system to automatically feed real-time information on container movement status from SOVY-Depot System directly into our customer’s container management system. See Section 7.5.3 of this Prospectus for further details of iKapal’s Shipping System and the SOVY-Depot System.

The IT systems that we employ have improved the operational efficiency of our business by simplifying communications between departments, and between our Group and our customers; as well as minimising human errors through elimination of manual processes. Further, by digitalising our business, we have also captured meaningful data related to our operational performance, and we are able to analyse this data to further improve our performance and enhance our customers’ experience. As such, we will continue to leverage on technology for the future growth of our Group’s business. See Section 7.15.4 of this Prospectus for further details on our future plan to

enhance our IT infrastructure.

7.14.6 We have an experienced and long serving Key Senior Management team with substantial industry experience We have a group of Key Senior Management team with vast experience in the shipping and logistics industry as well as in-depth knowledge in our business across a broad spectrum of business activities, including operations, sales and marketing, and finance. Our Group was founded by our Executive Chairman, Dato’ Seri Ong, who has 41 years of experience in the shipping and shipping support business. Dato’ Seri Ong has since led our Group together with our Managing Director, Ooi Lean Hin, who has 40 years of experience in the shipping industry.



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Our Key Senior Management is as follows:

Name Designation Years with relevant

working experience (1) Years with our Group

Dato’ Seri Ong Executive Chairman 41 11 Ooi Lean Hin Managing Director 40 11 Chan Huan Hin Director of Administration 32 11 Clarice Ong Yee Sian Director of Corporate Affairs 7 7 Lee Kong Siong Director of Operations 31 11 Lee Hock Saing Director of Marketing 36 11 Yap Bee Yong Chief Finance Officer 33 4 Ronnie Tan Kean Sing General Manager

(Commercial) 27 19

Chua Song How General Manager (Operations)

25 19

Note: (1) The years with relevant experience reflect the experience relevant to their respective work scope, or

relevant to shipping, shipping-support and/or logistics businesses, whichever comes earlier, up to the LPD.

Our Key Senior Management team has substantial experience in their relevant fields for an average of 30 years and has been with us for an average of 12 years, demonstrating their in-depth understanding and knowledge to our Group’s business operations as well as their commitment to our Group. Our Key Senior Management team has played a vital role in promoting our growth and business expansion, and will continue to contribute to our growth in the future. See Sections 5.2.3 and 5.3.3 of this Prospectus for the profiles of our Executive Directors and Key Senior Management, respectively.

Registration No. 201901004019 (1313346-A) 7. BUSINESS OVERVIEW (Cont’d)

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7.15 STRATEGIES AND FUTURE PLANS

7.15.1 We intend to continue expanding our container liner shipping business in Malaysia and overseas, as well as our vessel chartering business by expanding our fleet of container vessels Our success in the container liner shipping and vessel chartering businesses are attributed to, among others, owning our own fleet of container vessels, ability in providing weekly fixed-day shipping services and having a team of experienced Key Senior Management. As part of our long term business growth, we intend to acquire additional container vessels to expand our container liner shipping business in Malaysia and overseas, as well as our vessel chartering business. We expect to receive four additional container vessels, MTT Sandakan (1,800 TEUs), MTT Sarikei (415 TEUs), MTT Singapore (653 TEUs) and MTT Rajang (415 TEUs) between 3Q 2021 and 1Q 2022, and we have taken delivery of MTT Sapangar (1,800 TEUs) and MTT Sibu (415 TEUs) in July 2021. Upon delivery, we intend to operate these container vessels for our container liner shipping business or our vessel chartering business, depending on prevailing market demand and conditions. To further expand our fleet of container vessels, we also intend to purchase additional new and/or second-hand container vessels with nominal capacity between 800 TEUs and 2,500 TEUs, to support the future growth of our container liner shipping business, as well as our vessel chartering business. With additional container vessels, we will be able to increase our port callings in existing service routes and expand our port coverage to new service routes, both within Malaysia as well as overseas, such as Ho Chi Minh port in Vietnam, Yangon Port in Myanmar, and Syama Prasad Mookerjee Port, Kolkata in India. We may initially collaborate with existing operators covering these service routes through slot exchange arrangements while growing our market presence in these new areas. Over time, we aim to deploy our own container vessels to these new areas which will be supported by our expanded fleet of container vessels. Further, we will be able to capitalise on strong charter demand for container vessels of between 1,000 TEUs and 2,999 TEUs. According to the IMR Report, the total capacity of chartered container vessels of between 1,000 TEUs and 2,999 TEUs grew from 2.1 million TEUs as at 1 December 2018 to 2.2 million TEUs as at 1 June 2021. Further, container vessels of this capacity range had the highest number of chartered vessels where it accounted for 1,200 units out of a total 3,034 units chartered (39.6%), indicating recent strong charter demand for container vessels within this capacity range. The recent strong charter demand for container vessels of between 1,000 TEUs and 2,999 TEUs is also reflected in the increase in daily charter rates of between USD8,300 per day and USD15,500.0 per day (as at December 2020) to between USD18,000 per day and USD35,000 per day (as at June 2021). We secured our most recent charter contract at USD29,750 per day in July 2021 for MTT Sapangar, which will be chartered out for 3 years. We intend to use RM[●] million from the proceeds from our Public Issue to fund or partially fund the purchase of these additional container vessels and we expect to complete the purchase within 36 months upon our Listing. As the purchase of these container vessels is subject to availability of container vessels in the market in terms of price, nominal capacity and specifications that meet the requirements of our Group’s expansion, our Group is unable to determine the exact purchase timeline and the type, quantity and usage of these container vessels at this time. Upon delivery, we may operate the container vessels for our container liner shipping business, or for our vessel chartering business, depending on prevailing market demand and conditions. The purchase of the additional container vessels is expected to provide positive impact to the revenue derived from our container liner shipping and/or vessel chartering businesses. Further, premised on the strong charter demand for container vessels, our Group believes that this is a timely and strategic move that will allow our Group to capitalise on this market opportunity to further improve the financial performance of our Group.


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We also review the performance of our service routes regularly, in terms of the deployment and utilisation of our container vessels for each service route, and may modify, add or remove service routes from time to time if required. Our Group is also able to provide container liner services or dedicated feeder services upon request if they are commercially viable to our Group.

7.15.2 We intend to expand our container depot and containerised automotive shipping business by setting up new container depots in Port Klang (Pulau Indah), Kota Kinabalu, Kuching and Bintulu Our Group operates four container depots located in Port Klang (Westports), Port Klang (Bandar Sultan Sulaiman), Penang and Pasir Gudang, all of which are located in Peninsular Malaysia, where we provide container storage and container-related services to external customers, i.e. container hauliers, third party container liner shipping companies and shipping agencies, container leasing companies as well as box operators, to temporarily store empty containers. As our container liner shipping business continues to grow, we plan to also expand our container depot business, where we intend to set up another container depot in Port Klang (Pulau Indah) and three new container depots in East Malaysia, namely in Kota Kinabalu, Kuching and Bintulu. The new container depots in East Malaysia will expand our container depot coverage and strengthen our presence where the new container depots will support our container liner shipping services in East Malaysia as well as generate additional income from external customers. For the proposed new container depot in Kota Kinabalu, our Group has acquired a piece of land measuring 17.1 acres in 2018 and this container depot will be used to provide container storage and container-related services as well as to be used as our auto logistics loading and unloading facility. As at the LPD, the proposed container depot is under construction with approximately 90% completed, and is estimated to be ready for operations by January 2022. In 2020, we also acquired several pieces of adjoining land in Pulau Indah with a total land area of approximately 20.6 acres to set up the proposed new container depot in Port Klang. The proposed new container depot in Port Klang (Pulau Indah) will be used to provide container storage and container-related services as well as to expand our containerised automotive shipping business. In addition, there will be a designated area in the new container depot that will be used to park the vehicles before the vehicles are driven and lashed to the vehicle racking system in the containers. Land preparation activities are currently on-going on the land and thereafter, the set-up of surrounding basic infrastructure such as access roads, streetlights and electricity lines will be completed by the developer of the land. We expect to receive vacant possession of the land by 4Q 2022. All the costs related to these land acquisitions as well as the set-up cost of the container depots have been funded via internally generated funds and bank borrowings. As at the LPD, our Group is also in the midst of identifying suitable land in Kuching and Bintulu with land area of approximately between 10 and 12 acres each to set up the proposed new container depots where the total cost is estimated to be RM75.0 million including land acquisition cost and constructions cost. We intend to use RM[●] million of the proceeds from our Public Issue to partially fund the land acquisition and the set-up costs while the balance of RM[●] million will be funded through bank borrowings. We expect to commence the land acquisition within 24 months upon our Listing and complete the construction activities within 36 months upon our Listing. The new container depot in Kota Kinabalu is expected to increase our storage and handling capacity for empty containers by 16.3% to 28,500 units in total and 12.9% to 3,500 units in total respectively. However, we are unable to determine the storage and handling capacity for container depots in Port Klang (Pulau Indah), Kuching and Bintulu at this time as we have yet to begin the construction in these container depots. With the additional capacity, we expect to increase our customer base and consequently grow our revenue from this business segment.


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7.15.3 We intend to purchase additional containers to support our growing container liner shipping business As at the LPD, we have a total of 15,935 containers where we own 10,763 containers (of which 2,684 containers were under finance leases and recognised as our assets) and we lease 5,172 containers. Our containers are for supporting our container liner shipping operations where we provide containers to shippers for shipment of their cargo. We intend to purchase additional 4,000 containers comprising standard dry cargo containers, refrigerated containers and special containers for oversize cargo in 20-ft and/or 40-ft. These additional containers will support the growth and expansion of our container liner shipping business with the purchase of additional container vessels and possibly adding new service routes as set out in Section 7.15.1 of this Prospectus. We will continue to lease these containers in addition to our own containers, for use in our container liner shipping operations, depending on the demand for our container liner shipping services. The total cost for the purchase of containers is estimated to be approximately RM49.3 million in total where we intend to use RM[●] million of the proceeds from our Public Issue to partially fund the purchase of the containers while the balance of RM[●] million will be funded through bank borrowings and/or internally generated funds. Subject to the prevailing market prices of the containers, we expect to complete the purchase of the containers within 36 months upon our Listing. The additional containers are expected to increase the number of our own containers from 10,763 containers as at the LPD to 14,763 containers.

7.15.4 We intend to enhance our IT infrastructure to further improve our operational efficiency As at the LPD, our Group employs iKapal’s Shipping System to support the day-to-day operations for our container liner shipping business. We also employ the SOVY-Depot System to coordinate the daily operations of our container depot business. See Section 7.5.3 of this Prospectus for further details of our iKapal’s Shipping System and the SOVY-Depot System. As we recognise the importance of adopting latest relevant digital-related technologies into our business operations to maintain and/or improve our operational efficiency, we intend to further enhance our IT infrastructure through the following: • Enhance the functions and upgrade the interface of our online portal under iKapal’s Shipping

System As at the LPD, our customers are allowed to perform various functions such as booking container space on our vessels, tracking their shipments as well as filling in and updating their shipment details via our online portal under iKapal’s Shipping System. Moving forward, we intend to enhance our online portal to provide more comprehensive functions to our customers and further automate our operational processes. These additional functions include access to sailing schedules and freight rates, making payments electronically to complete the booking online, download invoices and statements of account and printing of e-bill of lading. To enable these additional functions, further integration between our IT systems, business intelligence systems and iKapal’s Shipping System will be required. This integration will allow us to collect more comprehensive data on our operations (e.g. shipment statistics, and container and shipment tracking reports) to have more insights on our operational process which will enable us to make data-driven decisions and formulate relevant strategies for continuous improvement. We also intend to upgrade the interface of our online portal and develop a mobile application to provide mobile-friendly access to iKapal’s Shipping System, which will enhance our customers’ user experience and provide convenience in transacting with our Group.


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As at the LPD, we are in the midst of appointing NM SOVY Technology Sdn Bhd and another third party vendor to commence the abovementioned enhancement and upgrade of our online portal. The abovementioned enhancement and upgrade of online portal are expected to be carried out concurrently with the enhancement of other IT infrastructure, which are both expected to be completed within 12 months from our Listing. Following the completion of the abovementioned enhancement and upgrade of our online portal, subsequent system updates/upgrades and modifications may be required. We intend to use RM[●] million of the proceeds from our Public Issue within 36 months from our Listing for the abovementioned enhancement and upgrade of online portal as well as any further system updates/upgrades and modifications, if required.

• Enhance automation functions of SOVY-Depot System

We also intend to enhance the functions of the SOVY-Depot System to increase automation of our operational processes by enhancing mobile applications with text recognition technology to facilitate tracking and safety monitoring of containers, as well as the development of dashboards and business intelligence system, among others. We also intend to add a costing module to allow us to have access to detailed analysis on our cost of materials, labour and overhead costs. Coupled with the integration to our business intelligence system, these enhancements will enable us to make data-driven decisions and formulate relevant strategies for continuous improvement. As at the LPD, we are in the midst of appointing NM SOVY Technology Sdn Bhd to commence the enhancement works. The abovementioned enhancement of this software is expected to be carried out concurrently with the enhancement of other IT infrastructure, which is expected to be completed within 12 months from our Listing. Following the completion of the abovementioned enhancement, subsequent system updates/upgrades and modifications may be required. We intend to use RM[●] million of the proceeds from our Public Issue within 36 months from our Listing for the abovementioned enhancement and any further system updates/upgrades and modifications, if required.

• Implementation of a ship management system to centralise the management of our container vessels

As at the LPD, each of our container vessel’s crew management, procurement and maintenance are managed separately. As we expand our fleet of container vessels, we intend to implement a ship management system to centralise the management of our container vessels operations under one system. This ship management system will be a cloud-based software solution that will enable crew management, procurement, technical management, inventory and spare parts management, documentation, safety monitoring, risk assessment as well as maintenance tracking and planning. We intend to purchase an off-the-shelf ship management system software solution from a third party vendor. As at the LPD, we are in the midst of evaluating the features and negotiating with our identified vendors for the purchase of the ship management system. The implementation of this system will be executed in three phases where: phase 1 comprises the purchase and implementation of crew management and

procurement modules; phase 2 comprises technical management, and inventory and spare parts

management modules; and phase 3 comprises documentation, safety, risk assessment as well as maintenance

tracking and planning modules. Phase 1, phase 2 and phase 3 are expected to be completed within 12 to 36 months from our Listing and they are expected to be carried out concurrently with the enhancement of our other IT infrastructure. We intend to use RM[●] of the proceeds from our Public Issue for the implementation of this ship management system.


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In order to support these IT infrastructure enhancements, we intend to carry out the following upgrade in network infrastructure which we intend to use RM[●] million of the proceeds from our Public Issue: • Implementation of a document management system paired with workflow automation features

As at the LPD, our documents such as suppliers’ invoices, shipping documents, office documents and financial accounting records are in hardcopy. We intend to purchase and implement a document management system paired with workflow automation features to digitalise our documents which will allow us to automate the storing, management and tracking of our documents in digital format. When the documents are in digital format, it eases recording, tracking and sharing of information, and enhances collaboration among various departments within our Group which is expected to improve the efficiency of our business processes. We intend to purchase an off-the-shelf document management system software solution from a third party vendor. As at the LPD, we are in the midst of evaluating the features and negotiating with identified vendors for the purchase of the document management system. The implementation of this system is expected to be carried out concurrently with the enhancement of our other IT infrastructure and is expected to be completed within 12 months from our Listing.

• Improve internet connectivity of our container vessels

As at the LPD, the internet access of our container vessels on the open sea is provided via satellite connection. We intend to implement 4th generation long-term evolution (“4G LTE”) connectivity for most of our container vessels to increase connectivity speed when the container vessels are less than 50 nautical miles from the shore. A stronger and stable internet connectivity will secure the connection of our container vessels to our ship management system. As at the LPD, we are in the midst of evaluating the features and negotiating with identified vendors for the purchase of 4G LTE connectivity solution. This improvement is expected to be carried out concurrently with the enhancement of our other IT infrastructure and is expected to be completed within 36 months from our Listing.

• Upgrade of our existing IT network infrastructure including various hardware and software

In view of our ongoing business expansion, we also intend to upgrade our existing IT network infrastructure including various hardware and software to improve our operational efficiency and to ensure our hardware and software are compatible to the new software and systems to be implemented. As at the LPD, we are in the midst of appointing third party vendors to commence the upgrading works for our IT network infrastructure. This upgrade is expected to be carried out concurrently with the enhancement of our other IT infrastructure. It is expected to be completed within 12 months from our Listing.

The total investment for the enhancement of our IT infrastructure is estimated to be approximately RM12.0 million in total where we intend to use RM[●] million of the proceeds from our Public Issue to partially fund the cost of this initiative, while the balance of RM[●] million will be funded through bank borrowings and/or internally generated funds.



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7.15.5 We may selectively pursue acquisitions and investments in companies as part of our growth strategy As part of our future plan and growth strategy, we may also selectively pursue acquisitions and investments in other companies. We may seek acquisitions of companies that complement and have direct cost and capability synergies with our container liner shipping and container depot operations as well as businesses with significant growth potential, enabling us to expand our operations and achieve value adding integration for our existing segments and customers. We will be selective about company acquisitions, first assessing if the proposed target business presents a clear value proposition. In light of the above strategy, we are exploring investment and acquisition opportunities in companies with technologies or skills set that are complementary and are expected to add value to our existing business. As at the LPD, we have not identified any target business and/or company to be acquired.

7.16 SEASONALITY Our business is subject to certain seasonal factors such as festive periods. We typically experience an increase in the number of containers shipped one to three months before these festive periods such as Hari Raya, Chinese New Year, Gawai Dayak, Harvest Festival and Christmas. For example, in the FYE 31 December 2018, the number of containers shipped saw a substantial increase in March 2018 before the Harvest Festival in end May 2018 and Gawai Dayak in early June 2018 as well as another substantial increase in May 2018 before Hari Raya in June 2018. There was also a substantial increase in November 2018 before Christmas in December 2018 and Chinese New Year in early February 2019. The increase in containers shipped are mainly contributed by consumer products shipped from Peninsular Malaysia to East Malaysia. However, in the FYE 31 December 2020 and FPE 31 March 2021, we did not experience any seasonality effect ahead of these festive periods as the number of containers shipped in the FYE 31 December 2020 and FPE 31 March 2021 was affected by the COVID-19 pandemic as further explained in Section 7.17 of this Prospectus.



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7.17 INTERRUPTIONS TO OUR BUSINESS AND OPERATIONS

7.17.1 Impact of the COVID-19 pandemic on our operations As our business is deemed as essential services under the transportation sector, our operations are not subject to any mandatory closure or halt in operations pursuant to the imposition of movement restrictions (i.e. various stages of MCO including MCO 1.0, CMCO, RMCO, MCO 2.0, MCO 3.0, NRP and EMCO) by the Government of Malaysia. Further, all our branch offices in Malaysia and our shipping agent offices in Malaysia and overseas countries are allowed to operate, subject to standard operating procedures (“SOP”) set out by the respective governments, which include limited capacity in office, reduced workforce capacity and additional safety measures in place. Notwithstanding that some employees (i.e. office staff) have been instructed to work from home, our operations have not been affected as it can be carried out by our employees at home as usual. However, our business and operations were impacted by and subject to external factors such as fluctuation in demand for container liner shipping services, port congestion and shortage of containers, among others, as a result of the COVID-19 pandemic, the details of the impact of the COVID-19 pandemic to each of our business segment are as follows: (i) Container liner shipping business

As a result of the COVID-19 pandemic and the imposition of movement restrictions, there were some fluctuations in the demand for our container liner shipping services as represented by our monthly lifting. The total lifting in our container liner shipping business from January 2020 to June 2021 is shown as follows:

In February 2020 and March 2020, we experienced higher liftings due to the outbreak of the COVID-19 pandemic in China which resulted in many companies in Malaysia foreseeing potential disruptions to the global supply chain and thereby increasing their inventories beforehand, which contributed to the increase in our total lifting. The COVID-19 situation in China in early 2020 also led to disruptions to some direct sailings of international container liner shipping companies from ports in China to ports in East Malaysia. As a result, companies and businesses in East Malaysia were forced to source from other countries where the sea freight connectivity between these countries and Malaysia are generally through Port Klang. This increased the demand for our container liner shipping services from Port Klang to East Malaysia in February 2020 and March 2020 before the impact of the MCO 1.0 materialised in April 2020.



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In April 2020, our Group saw the impact of the imposition of MCO 1.0 where our total lifting decreased by 40.1%. This was attributed to the disruptions to the global supply chain and mandatory temporary halt on many business operations and economic activities, including manufacturing activities, which led to a lower production output and reduced procurement of materials, causing lower demand for container liner shipping services. The decrease in demand for our container liner shipping services in April 2020 had resulted in many of our container vessels deployed on our service routes were loaded with minimal containers. As such, together with MSC, we embarked on a rationalisation plan from May 2020 to June 2020, to adjust our service routes, number of port calls and container vessels deployed according to the prevailing demand for container liner shipping services. Under the rationalisation plan, in May 2020 and June 2020, we reduced up to five port calls per week; up to two operated container vessels deployed; and reduced up to one partnered container vessel under our slot exchange arrangement with MSC. Notwithstanding the overall reduction in the number of port calls during the rationalisation period, our Group did not cancel berthings to any port covered under our service routes. Notwithstanding the decline in our total lifting in April 2020, the overall demand for our container liner shipping services had gradually recovered since May 2020 following the imposition of CMCO beginning 4 May 2020 where more business activities resumed. As the demand for our container liner shipping services recovered, we also gradually increased our number of port calls and deployed additional container vessel(s) while closely monitoring market conditions along with the estimated demand for our container liner shipping services and the utilisation of our container vessels. However, our total lifting declined by 6.7% and 11.4% in October 2020 and November 2020 respectively, mainly due to the resurgence in COVID-19 cases in Malaysia that led to the imposition of another CMCO, causing some slowdown in trade activities and delays from shippers in shipping their goods. In December 2020, owing to a clearance of shipment backlogs from our customers as a result of the slowdown and delays in October 2020 and November 2020, coupled with the increase in consumer spending during the Christmas period, our total lifting increased by 23.0%. Notwithstanding the fluctuations in demand for our container liner shipping services as impacted by the COVID-19 pandemic, our total lifting in the FYE 31 December 2020 was higher than the FYE 31 December 2019 by 9.2%. However, our revenue from freight income in the FYE 31 December 2020 saw a decrease of 1.8% as compared to the FYE 31 December 2019 mainly due to, among others, a decrease in average freight rates. As detailed in Section 12.2.2(ii) of this Prospectus, fluctuation in freight rates is one of the significant factors affecting our financial condition and results of operations. During MCO 2.0, the demand for our container liner shipping services was not negatively impacted as factories were allowed to operate. Nevertheless, our total lifting declined by 20.8% and 6.5% in April 2021 and May 2021 respectively, mainly caused by the port congestion in Kuching Port as detailed in Section 7.17.6 of this Prospectus. Further to the easing of the port congestion in Kuching Port in early June 2021, our customers increased their shipments and this contributed to an increase in our total lifting in June 2021 by 19.6%. As at the LPD, there was no significant impact to our container handling arising from the imposition of the MCO 3.0 and NRP. Owing to the nature of our industry where the demand for our container liner shipping services is largely dependent on regional and domestic trade activities which are, in turn, subject to global trade activities and global economic conditions, we constantly review and make adjustments to our service routes and port calls in each service route according to the market dynamics.



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We also experienced delays in shipment as a result of port congestion arising from the COVID-19 pandemic where there were circumstances of delayed berthings of our container vessels at certain ports such as Port Klang, Labuan Port and Port of Singapore. Nevertheless, as the duration of delayed berthings were within three days, our business operations were not materially impacted by these port congestions. While there were delays in some of our shipments, our Group is not liable for any losses or damages caused by the delays as covered under terms of carriage in the bill of lading. The COVID-19 pandemic has also resulted in the global container shipping industry facing an industry-wide shortage of empty containers due to expanded container turnaround time from land, port congestions at major ports as well as increase in shipping demand following the recovery of trade activities. As a result, the availability of our containers remains tight. However, as at the LPD, our Group did not face major container shortage issues for our container liner shipping operations. We also did not face any major disruptions in the supply of bunker fuel or encounter any reduction in workforce for our container liner shipping operations.

(ii) Vessel chartering business At the early onset of the outbreak of the COVID-19 pandemic, our vessel chartering business was negatively impacted as the demand for container vessel chartering services decreased as a result of disruptions in trade activities and the global supply chain. For example, our container vessel, namely MTT Senari, was chartered out at a daily charter rate of USD9,100 in May 2020 as compared to a daily charter rate of USD11,500 in February 2020. Nevertheless, according to the IMR Report, over time, the COVID-19 pandemic has caused an unprecedented shortage of containers as well as port congestion, which has resulted in the disruption in vessel scheduling and prolonged container vessel turnaround time, thus reducing the availability of shipping capacity. As the global economy gradually reopened following the easing of lockdown measures in various countries, container shipping operators rushed to secure more shipping capacity to capitalise on the recovery in shipping demand arising from increasing trade activities. Container shipping operators may have, therefore resorted to chartering additional container vessels to compensate for the lack of shipping capacity, leading to a surge in demand for container vessel chartering services, as reflected in the increase in the total chartered capacity for container vessels of 1,000 TEUs to 2,999 TEUs from 2.1 million TEUs as at 1 December 2019 to 2.2 million TEUs as at 1 June 2021, an increase of approximately 120,000 TEUs. The recent strong charter demand for container vessels of between 1,000 TEUs and 2,999 TEUs is also reflected in the spike in daily charter rates as at December 2020 of between USD8,300 per day and USD15,500 per day and between USD18,000 per day and USD35,000 per day as at June 2021. Leveraging on the increase in demand for vessel chartering due to the aforementioned reasons, in the FYE 31 December 2020, we increased the number of container vessels chartered out to third party container liner shipping companies as we were able to secure high daily charter rates. As a result of the increase in number of vessels chartered and charter hire rates, our revenue from charter hire income registered an increase of 331.3% from the FYE 31 December 2019 to the FYE 31 December 2020. As we charter out our container vessels to foreign container liner shipping companies to sail on service routes that do not compete with our Group’s service routes, our vessel chartering business has benefited from the increasing daily charter rates globally. Save for the negative impact at the early onset of the outbreak of the COVID-19 pandemic, our vessel chartering business has not been negatively impacted by the various stages of MCO and NRP in Malaysia.



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(iii) Container depot business

Despite the imposition of movement restrictions by the Government of Malaysia, all our container depots have been allowed to operate as usual as our container depot business is deemed as essential services under the transportation sector. As such, our container depot business did not face any interruptions in operations. The average container lifting per day of our container depot business from January 2020 to June 2021 is shown as follows:

As a result of the imposition of MCO 1.0, there was a decrease in container handling in our container depots in April 2020 as there was lesser demand for empty containers from our customers due to the temporary halt on many business operations and economic activities. Following the imposition of CMCO beginning 4 May 2020, we witnessed a recovery in handling activities following the recovery in demand for empty containers for trade activities. Subsequently, there was a decline in our container handling in October 2020 mainly due to the imposition of a further CMCO leading to slowdown in trade activities. Notwithstanding that container handling activities at our container depots registered an increase in overall in the FYE 31 December 2020, our depot related income generated from our container depot business for the FYE 31 December 2020 was slightly affected with a decrease of 2.5% compared to the FYE 31 December 2019. This was due to the decrease in container storage activities as a result of the container shortage issue. Our container depot business was not adversely impacted by the RMCO and the MCO 2.0 as businesses were allowed to operate. However, following the imposition of the MCO 3.0 and NRP, it caused a temporary disruption in manufacturing and retail activities which subsequently affected shipment volume. The reduction in local trade activities led to lesser demand for empty containers in Malaysia and empty containers were re-positioned for overseas market which reduced the demand for our container depot services to store empty containers as reflected in the decline of our container handling by 18.3% in June 2021.

As at the LPD, our Group did not face any material variation to the material contracts that we have entered into arising from the COVID-19 pandemic. Further, there was no fines or penalties imposed on us in relation to violation or breach of any rules and regulations in Malaysia and overseas pertaining to the restrictions arising from the COVID-19 pandemic.

7.17.2 Impact of the COVID-19 pandemic on our cash flows, liquidity, financial position and financial performance As a result of the COVID-19 pandemic, in the FYE 31 December 2020, our Group experienced periodic fluctuations in the demand for our container liner shipping services and decreased storage of containers in our container depots, which impacted our revenue from our container liner shipping business segment and container depot business segment, respectively.



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Nevertheless, our Group’s revenue for the FYE 31 December 2020 registered a growth which was mainly contributed by the increase in revenue from our vessel chartering business. Further, while there were delays in some of our shipments, our Group is not liable for any losses or damages caused by the delays as covered under terms of carriage in the bill of lading. We did not face any major difficulties in the collection of our trade receivables arising from business interruptions faced by our customers. We did not receive any claw backs or reduction in the banking facilities limit granted to us by our lenders. In addition, we do not expect any material impairment to our assets or receivables. Based on the above, our Board is of the view that there is no material impact of the COVID-19 pandemic on our cash flows, liquidity, financial position and financial performance.

7.17.3 Impact of the COVID-19 pandemic on our business and earning prospects

According to the IMR Report, the container shipping industry generally moves in tandem with the economic and trade activities. Therefore, the temporary disruptions by the COVID-19 pandemic on the economic and trade activities both in Malaysia and in countries around the world may affect the container shipping industry in Malaysia. Nevertheless, as the Government of Malaysia has sped up the administration of vaccine and aim to reach vaccination rate of 400,000 a day in August in order to achieve 80% herd immunity by September, and when the infected cases gradually subside and remain minimal, movement and business operating restrictions are expected to be uplifted which will allow economic and trade activities to resume and gradually recover back to pre-COVID level. Based on the above, our Group believes that in the near term, our container liner shipping

business will be supported by gradual recovering consumer spending as well as recovering

business and production activities following the reopening of business and economic activities

when a bigger population is immunised after vaccination. Further, while there was decrease in

the demand for our container liner shipping services in the Q2 2021, this is mitigated by the

increasing demand for our vessel chartering business. With our fleet of owned container

vessels, our Group is able to manage and adjust the usage of our container vessels (i.e. either

use them for container liner shipping business or vessel chartering business) in response to the

prevailing market situation and demand.

In the long term, our container liner shipping business will be supported by the growth in international and domestic trade activities as well as recovery in Malaysia’s external trade activities once the impact of the COVID-19 pandemic subsides. The recovery of the container shipping industry is also expected to drive the recovery and growth of our container depot business as our container depots serve as a support facility to the overall container shipping industry. According to the IMR Report, the global container vessel chartering industry is currently experiencing a strong charter demand as demonstrated by the spike in daily charter rates as at December 2020 of between USD8,300 per day and USD15,500 per day and between USD18,000 per day and USD35,000 per day as at June 2021 for container vessels of between 1,000 TEUs and 2,999 TEUs. However, this surge in demand for vessel chartering is expected to ease gradually when global port congestion subsides, and shipping operations revert to pre-COVID-19 conditions. Nevertheless, moving forward, the global container vessel chartering industry is expected to be driven by the growth in the global container shipping industry. An increase in demand for container shipping services will drive the demand for container vessel chartering to support any long term and short term shipping capacity demand. As such, our Group believes that our vessel chartering business will benefit from the growth in the global container shipping industry.



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7.17.4 Strategy and steps taken to address the impact of the COVID-19 pandemic To ensure business continuity and to minimise the risk of infection, we have imposed a work from home policy for certain employees since the imposition of the MCO 1.0. As at the LPD, all of our employees are working from home except for certain employees in the operations, maintenance and repair, and driver (forklift) departments. Our workforce capacity in our container depots is also being adjusted from time to time to ensure compliance with the SOPs stipulated by the Government of Malaysia. Further, in response to the COVID-19 pandemic, our Group has established a COVID-19 pandemic preparedness plan which outlines infection control measures to be adhered by all our employees and visitors to our offices. The infection control measures include, among others: (i) wearing of face masks in work places; (ii) taking and recording of body temperature on a daily basis before entering work places; (iii) sanitising hands before entering work places and, all employees and visitors are

encouraged to sanitise and wash their hands with soap and water frequently throughout the day;

(iv) sanitising all common areas of work places regularly or at least twice a day; (v) practicing 1 metre physical distancing at work places; (vi) installing physical barriers (e.g. clear plastic sneeze guards) at work places and pantry; (vii) avoiding sharing of personal belongings such as laptops, stationaries, prayer mats and

utensils; and (viii) avoiding unnecessary face-to-face meetings, where possible.

In the FYE 31 December 2020, FPE 31 March 2021 and up to the LPD, our Group incurred a total of RM64,834, RM7,143 and RM8,354 respectively for the implementation of these infection control measures. Apart from these infection control measures, the crew members (including our in-house crew members and third party crew members) for container vessels operated by our Group at any ports in Malaysia, are subject to SOPs outlined by Marine Department Malaysia, in accordance with the general guidelines set by the Government of Malaysia. Before signing on to board a vessel, crew members are required to undergo COVID-19 tests and/or quarantine at designated quarantine centres determined by the Government of Malaysia. Crew members who are tested positive for COVID-19 are not allowed to board a vessel. Further, according to the guidelines set by Marine Department Malaysia, these crew members are not allowed to disembark at any ports during berthing to avoid potential spreading of the virus and/or being infected by the virus. For crew members who are signing off from a vessel, they are required to undergo COVID-19 tests and/or quarantine at home or at designated quarantine centres determined by the Government of Malaysia. All costs associated with the adherence of the SOPs related to the crew members, including COVID-19 tests, quarantine process, logistics and follow-up treatments are borne by our Group. In the FYE 31 December 2020, FPE 31 March 2021 and up to the LPD, our Group incurred a total of RM1.00 million, RM333,854 and RM216,882, respectively for the adherence of these SOPs.



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Business contingency plan Our Group has also put in place a business contingency plan in the event of any infected cases of our employees, which is summarised as follows:

(i) COVID-19 rapid response team

We have set up a COVID-19 rapid response team which comprises representatives across departments to centrally coordinate, plan and execute actions required for our business operations arising from COVID-19 incidents related to our employees. The set-up of our COVID-19 rapid response team allows our Group to effectively manage and mitigate risks arising from any COVID-19 infections within our Group through implementation of the necessary counter measures and preventive actions in our business operations.

(ii) Emergency plan for COVID-19 incidents We have also developed an emergency plan for all our branch offices and container depots in preparation for any infected cases in these locations. The emergency plan outlines emergency procedures and instructions of closures for the affected locations, ensuring our employees are well informed of the required actions to effectively manage and minimise the negative impact of the COVID-19 incidents to our business operations.

(iii) COVID-19 incident recovery plan Upon proper sanitisation and prior to resuming our business operations in the affected locations, we will also gather information required to determine the impact of the COVID-19 incidents as well as actions required to resume our business operations.

(iv) Operations back-up plan Our employees are divided into two teams based on our business operations to minimise contact with each other. In the event that any of our employees are infected, the particular team of the infected employee(s) will be quarantined and we may utilise employees from other team to overcome any manpower shortages.



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7.17.5 COVID-19 incidents related to our employees As at the LPD, our Group has reported 17 confirmed cases for COVID-19, including employees from our container depots in Port Klang (Bandar Sultan Sulaiman) and Port Klang (Westports), our branch offices in Port Klang and Kota Kinabalu as well as our headquarters. Upon confirmation of these positive cases, our Group took the necessary steps according to the guidelines released by the Government of Malaysia, to minimise the risk of cross infection and to ensure safety of our employees and work places. Among the steps taken include contact tracing to identify employees who have come in contact with the confirmed cases, arranging for COVID-19 tests, instructing home quarantine for all close contacts, and closure of the respective work places for disinfection, among others. Out of the 17 confirmed COVID-19 cases, 11 cases were employees from our container depot in Port Klang (Bandar Sultan Sulaiman), who tested positive on 28 May 2021 and were placed on quarantine for approximately 2 weeks. Subsequent to the confirmation of these positive cases, our container depot in Port Klang (Bandar Sultan Sulaiman) was closed for sanitisation until 29 May 2021. Further, due to the reduced workforce, the operational hours of our container depot in Port Klang (Bandar Sultan Sulaiman) were reduced to a single shift until 7 June 2021. To avoid major interruptions to our container depot operations, during the period of reduced operating hours of our container depot in Port Klang (Bandar Sultan Sulaiman), some containers that were intended to be handled by our container depot in Port Klang (Bandar Sultan Sulaiman) were redirected to our container depot in Port Klang (Westports). Save for the minor interruptions to our business operations that caused by the 11 COVID-19 confirmed cases in our container depot in Port Klang (Bandar Sultan Sulaiman), the remaining 6 COVID-19 confirmed cases did not cause any major interruptions to our business operations as attributed to our business contingency plans in place as well as the collective support and cooperation from all our employees. For the FYE 31 December 2020, FPE 31 March 2021 and up to the LPD, our Group incurred a total of RM7,500, RM19,957 and RM50,704, respectively for costs related to the confirmed cases such as COVID-19 tests undertaken by our employees and disinfections carried out at our work places.



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7.17.6 Impact of port congestion on our operations Apart from the impact arising from the COVID-19 pandemic, our container liner shipping operations were also impacted by port congestion and equipment breakdown in Kuching Port. In end March 2021, a computer outage occurred in Kuching Port due to ingression of water into electrical conduits at the port had caused interruptions to the port’s operation and leading to port congestion. Our voyage to Kuching Port was affected by the port congestion due to longer waiting time for berthing. As a result, it led to delays in shipments and disruptions/delayed berthing to the subsequent ports within the same voyage. Despite the port congestion situation at Kuching Port, our Group did not face major impact in our service to other ports in East Malaysia as we isolated our services to Kuching Port from services to other ports in East Malaysia, thereby restricting the disruption to the services to Kuching Port. Further, as covered under terms of carriage in the bill of lading and to minimise the negative financial impact that resulted from the port congestion in Kuching Port to our operations, we imposed port congestion surcharge on our customers. Subsequently, the port congestion in Kuching Port was resolved in early June 2021. Save for these incidents due to the COVID-19 pandemic and port congestion, we did not experience any material interruptions in our business activities which had a significant effect on our operations, during the past 12 months preceding the LPD.



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7.18 EMPLOYEES

As at 31 March 2021, our Group employed a total workforce of 611 employees, of which 387 are permanent employees and 224 are contract employees. The following sets out the functional areas and geographical location of our employees as at 31 March 2021:

Designation / Department Permanent employee Contract employee

Total Local Foreign Local Foreign

Executive Directors 4 - - - 4 Key Senior Management 5 - - - 5 Management 33 - 1 - 34 Corporate services (1) 48 - - - 48 Sales and marketing 31 - - - 31 Customer service 81 - 1 - 82 Operations 79 - - 7 86 Logistics 33 - - - 33 Maintenance and repair 49 - - 11 60 Information technology 2 - - - 2 Drivers (forklift) 22 - - 5 27 Crew members - - 33 166 199 Total 387 - 35 189 611

Note:

(1) Corporate services department includes employees under corporate affairs, administration, finance, human resources and compliance functions.

Geographical location Permanent employee Contract employee

Total Local Foreign Local Foreign

Selangor 191 - 2 9 202 Johor 41 - - 14 55 Penang 29 - - - 29 Sarawak 81 - - - 81 Sabah 45 - - - 45 On board (crew members) - - 33 166 199 Total 387 - 35 189 611

As at 31 March 2021, local employees accounted for approximately 69.1% of our total workforce while the remaining 30.9% are foreign employees from China, the Philippines, Myanmar, Indonesia, Bangladesh, Pakistan and India. All of our foreign employees have valid working permits and/or documentations. Our foreign employees are primarily crew members or are involved in our Group’s depot operations. We source crew members from external manning agencies in overseas according to our requirements for our container liner shipping business. We are not dependent on these external manning agencies as we can easily source for alternative service providers in respect of the services provided by them. As at 31 March 2021, we have a total 166 crew members sourced from external manning agencies serving on vessels we operate for an average agreed service period of six to nine months.

Except for our local crew members who belong to National Union of Seafarers of Peninsular Malaysia, none of our other employees belong to any labour union.



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During the FYEs 31 December 2018, 31 December 2019, 31 December 2020, FPE 31 March 2021 and up to the LPD, there was no major industrial dispute involving our employees. During the same period, we did not face any labour shortage that led to any disruption to our business operations.

7.19 GOVERNING LAWS AND REGULATIONS Our business is regulated by specific laws of Malaysia and Hong Kong. See Annexure C of this Prospectus for an overview of the material regulatory requirements governing our Group which are material to our business operation.

7.20 MAJOR LICENCES, PERMITS AND APPROVALS We have various licenses and permits for our operations in Malaysia. See Annexure B for details of our major licenses, permits and approvals. Save as disclosed in Annexure B of this Prospectus, our Group is not dependent on any major licenses, permits registration and other intellectual property rights for our business operations.

7.21 INTELLECTUAL PROPERTY RIGHTS As at the LPD and save as disclosed below, our Group does not have any other brand names, trademarks, patents, license agreements and intellectual property rights.

7.21.1 Copyright

As at the LPD, the Group had submitted a copyright voluntary notification for the following software to the Intellectual Property Corporation of Malaysia:

Title of work

Registered owner / Notification no. / Registration

date

Application type

iKapal’s Shipping

System

MTT Shipping Sdn Bhd/

CRLY00016000/

13 September 2019

Copyright voluntary notification

7.21.2 Trademark

As at the LPD, our Group had registered the following trademark with the Intellectual Property Corporation of Malaysia:

Trademark

Registration no. / Place of

registration Status Validity

period

Class/Description

of trademark

TM2019039171/

Malaysia

Registered 24 October

2019 –

24 October

2029

Class 39: Freight

(shipping of

goods); all

included in class

39



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As at the LPD, we are also in the midst of applying for trademark registration for our Company’s corporate logo. The application for the registration of the trademark with the Intellectual Property Corporation of Malaysia was submitted on 28 September 2020 and as at the LPD, the trademark is currently under substantive examination, the details of which are as follows:

Trademark

Registration no. / Place of

registration Status Validity

period

Class/Description of trademark

TM2020021974/

Malaysia

Application

for this

trademark is

“Under

Substantive

Examination”

Not

available

Class 39:

Transport;

packaging and

storage of goods;

travel

arrangement

As at the LPD, as our Company has yet to commence any business activities, the corporate logo is yet to be in use for business operation purposes.

7.22 INSURANCE As at the LPD, our Group has the following insurance policies in place: (i) Marine hull and machinery insurance for all our vessels for the hull and material and

machinery outfit against any damage, loss and/or destruction caused by fire, explosion, vandalism, sabotage, violent theft, piracy, malicious mischief, natural disasters (earthquake, volcanic eruption, lighting), collision, and/or war risks, at an aggregate coverage of RM499,820,000.

(ii) Protection and indemnity insurance for all our vessels which covers cargo liabilities,

liabilities in respect of seafarers, liabilities in respect of persons other than seafarers or passengers, pollution arising from among others, bunker oil, wreck removal liabilities and loss of or damage to properties, the coverage of which is in accordance with the Club Rules 2021 of the Shipowners’ Mutual Protection and Indemnity Association (Luxembourg), which set out the terms and conditions of coverage under insurances taken up with the Shipowners’ Mutual Protection and Indemnity Association (Luxembourg).

(iii) Mortgagee interest insurance for four vessels, namely MTT Tanjung Manis, MTT

Saisunee, MTT Senari and MTT Semporna, at the request of the mortgagee/financier of the vessels to supplement the marine hull and machinery insurance for the purpose of indemnifying the mortgagee/financier in the event of loss or damage suffered by the shipowners which are not claimable under the marine hull and machinery insurance, at an aggregate coverage of RM219,718,400.

(iv) All-risks insurance for our laptops, liquid crystal display projectors and accessories, at

an aggregate coverage of RM101,604.60. (v) Fire insurance for all our furniture, fitting, renovation, air conditioner and all

electrical/electronic equipment, office equipment, buildings, all property pertaining to our trade or held by us in trust or on commission and containers in relation to any damage caused by fire and explosions, at an aggregate coverage of RM4,538,000.

(vi) Burglary insurance for all movable and immovable properties including but not limited

to furniture, fittings, fixtures, office equipment, computer/software, containers, furniture and all property pertaining to our trade or held by us in trust or on commission, at an aggregate coverage of RM5,147,592.



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(vii) Equipment insurance for our forklifts, stackers and trucks in relation to any damage to the equipment caused by but not limited to theft, at an aggregate coverage of RM10,177,800.

(viii) Public liability insurance for any bodily injury or illness suffered by any person or loss

of or damage to property happening in connection with the business and occurring within the premises and territorial limit whether due to fault, negligence or by any defect in the buildings, works or machinery, at an aggregate coverage of RM8,500,000.

(ix) Plate glass insurance for all glass doors and windows including all other plate glass,

tempered glass, embossment, lettering or ornamental work of any kind of belonging to our trade and business, at an aggregate coverage of RM80,000.

(x) Money insurance for loss of our money in transit, including cash sales to and from

banks, other financial institutions and the like in respect of wages and money in our premises in locked drawers, cash registers, cabinets and/or safes during and after office hours, at an aggregate coverage of RM20,000.

(xi) Motor vehicle insurance for our motor vehicles in relation to any damage to our motor

vehicles as the result of an accident, at an aggregate coverage of RM2,430,000. (xii) Group health insurance in relation to expenses of hospitalisation, surgical and

ambulatory expenses incurred by our employees at an aggregate coverage of RM14,125,000.

(xiii) Group term life insurance in relation to compensation to our employees in the event of

death, total and permanent disability and terminal illness at an aggregate coverage of RM21,490,000.

(xiv) Personal accident insurance in relation to compensation to our employees in the event

of injuries, disability or death caused by an accident at an aggregate coverage of RM79,890,000.

(xv) Foreign worker hospitalisation and surgical insurance in relation to any expenses

incurred for the medical, hospitalisation and consultation fee of the foreign workers employed by our Group, at an aggregate coverage of RM320,000.

The insurance policies that we currently hold are customary in the industry in which we operate in and we will review our insurance coverage periodically. Save for an insurance claim of RM4.6 million made during the FYE 31 December 2018 under the marine hull and machinery insurance of MTT Tanjung Manis for damages sustained to the engines of MTT Tanjung Manis, our Group did not make any material insurance claim during the financial years/period under review and up to the LPD. See Section 9.1.4 of this Prospectus for further details of the insurance claim.

7.23 MATERIAL DEPENDENCY ON COMMERCIAL CONTRACTS, AGREEMENTS OR OTHER ARRANGEMENTS As at the LPD, there are no contracts, agreement and other arrangements or other matters which have been entered into by or issued to us or which we are materially dependent and is material to our Group’s business and profitability.



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7.24 ENVIRONMENTAL, SOCIAL AND GOVERNANCE Our Group is committed to act responsibly in our business operations, not only to our business stakeholders but also in supporting our employees and community. We strive to provide our customers with visibility and transparency, cultivate a diverse work environment for our employees and contribute positively to the communities in which we operate. We are also conscious that our operations in the shipping industry is exposed to risks relating to health, safety and environment, corruption, emissions and hazards to marine wildlife, we have established principles, policies and processes to mitigate risks in our daily operations. Under the supervision of our Board, our Key Senior Management team is committed to safeguard the operations of our businesses.

7.24.1 SOCIAL

We place strong emphasis on development, engagement and wellbeing of our employees. We encourage our employees to consistently improve and upgrade their skillset and knowledge. Employees are also encouraged to share their knowledge within and beyond department in our Group. Our crew members and employees responsible for ship management operations are also regularly trained to ensure they are equipped with the necessary knowledge of our safety and environmental protection policy.

We prioritise employee retention in our Group through various employee engagement

initiatives. For example, in 2015, we established a sports club for our employees. For the

financial years/period under review, we organised a series of sports and recreational activities

through the sports club, which has allowed us to enhance our employee engagement as well

as to improve internal communication among employees across all our offices in Malaysia.

We also endeavour to create pleasant environment for our employees. For example, the galleys of eight of our container vessels operated by our Group have undergone the sertu samak process carried out by a contractor approved by Jabatan Kemajuan Islam Malaysia (JAKIM) to ensure the galleys in our container vessels are Muslim-friendly. We have also launched several corporate social responsibility campaigns for the financial years/period under review. For example, in 2020, we collaborated with National Autism Society of Malaysia (“NASOM”) to create awareness of autism through a campaign themed “Understand, Accept and Respect”, whereby we have printed calendar with message on autism characteristics and distributed them to our customers. We have also initiated a fund-raising campaign to collect donation for NASOM. Since the outbreak of the COVID-19 pandemic and up to the LPD, we have also made donations of medical equipment to various hospitals in Malaysia for a total contribution of RM91,275.

7.24.2 ENVIRONMENTAL

The IMO has ruled that from 1 January 2020, all vessels, operating outside designated emission control areas (i.e. the Baltic Sea area, the North Sea area, the North American area (covering designated coastal areas off the United States and Canada) and the United States Caribbean Sea area (waters around Puerto Rico and the United States Virgin Islands), are required to use fuel oil with lower sulphur content of no more than 0.5% (mass by mass) as opposed to the current limit of 3.5% (“IMO 2020”). Operators who intend to continue using high sulphur bunker fuel are required to fit their vessels with sulphur-cleaning devices known as scrubbers. Ship owners can also opt for other sources of cleaner fuel such as liquefied natural gas (“LNG”).



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In a move to comply to the sulphur content limit of IMO 2020 and as part of our commitment to reduce maritime pollution, protect marine ecosystem and to mitigate negative impact of our operations to global climate change, we have purchased four new container vessels fitted with scrubbers that are able to remove particulate matter and harmful components from the combustion in engine in these container vessels. For the existing eight container vessels in our fleet, we have also changed the consumption of HFO to VLSFO for these vessels, ensuring minimal emissions of green-house gasses and compliance to the sulphur content limit of IMO 2020. As at the LPD, all our container vessels are IMO 2020 compliant. We do not anticipate our existing suppliers to restrict or reduce the sale of HFO for use in our container vessels fitted with scrubbers. In the event when such occasion arises, we can source HFO from other local or overseas suppliers as HFO is readily available in the market and all major ports.

7.24.3 GOVERNANCE We are committed to uphold the highest standards of corporate governance and ethical conduct in accordance with the principles and practices of corporate governance as set out in the MCCG. A high standard of corporate governance is a fundamental part of our Group in discharging our responsibilities to protect and enhance shareholders’ value and financial performance of our Group, with high corporate accountability, transparency and integrity. Our corporate governance overview statement provides an outline of the corporate governance practices of our Group in accordance with the three principles stipulated in the MCCG, which covers board leadership and effectiveness, effective audit and risk management and integrity in corporate reporting and establishing meaningful relationship with our stakeholders. As at the LPD, our Group has yet to adopt the recommendation under MCCG to have a Board comprising at least 30% women directors. In this regard, our Group endeavours to comply with the recommendation within six months from the completion of the Listing. See Section 5.2.1 for further information.

Documents

7. BUSINESS OVERVIEW 7.1 HISTORY OF OUR GROUP