T&T Konsult Information Memorandum 24 April 2015
Important Notice & Disclaimer This Information Memorandum is dated 24 April 2015 and relates to T&T Konsult Sdn Bhd (the company). The information contained in this document has been prepared to assist the recipient or their advisers in making their own evaluation of the company and the company’s businesses and does not purport to contain all the information that a purchaser may require. This document does not constitute an offer or invitation for the sale, purchase, exchange or transfer of any shares or other securities or any recommendation to enter into a transaction and is not intended to form the basis of any contract or investment decision. This document is only being sent to persons reasonably believed by the company to be potential acquirers, investment professionals or to persons or organisations to whom it may otherwise be lawful to distribute it. If you are not such a person, please return this document to Eaton Capital Partners, GPO Box 389, Sydney 2000, Australia or to the company’s registered office as soon as possible and take no other action. The company or Eaton Capital Partners, and their respective directors, employees, agents or advisers make no representation or warranty (express or implied) as to the accuracy or completeness of this document or any other written or oral communication transmitted to prospective purchasers in the course of their evaluation of the company and their businesses. The company does not undertake any obligation to provide any additional information or to update this document or to correct any inaccuracies, which may become apparent. This document includes certain statements with respect to the anticipated future performance of the company and as to the markets for its services. Such statements reflect various assumptions that may or may not prove to be correct. No representation or warranty (express or implied) is made by the company, Eaton Capital Partners or their respective directors, employees, agents or advisers as to the reasonableness or accuracy of such statements. The information contained in this document and any further information relating to the company supplied by the company, Eaton Capital Partners or their respective directors, employees, agents or advisers is and will be supplied on the basis that neither the company, nor any of their respective directors, employees, agents or advisers shall be liable (except in the case of fraud) for any errors or omissions or any direct, indirect or consequential loss or damage howsoever arising sustained by any person relying on such information and any such liability is expressly disclaimed. This document is intended for the exclusive use of potential purchasers to which it is being presented and is provided on the express understanding that the information contained in it will be regarded and treated as strictly confidential in accordance with the terms of the confidentiality agreement in force between the company or Eaton Capital Partners on behalf of the company and the recipient. This document may not be reproduced or used, in whole or in part, for any other purpose, nor furnished to any persons other than those to whom copies have been sent by the company or Eaton Capital Partners without the express written permission of the company or Eaton Capital Partners. Recipients not wishing to pursue the transaction must return this document to company or Eaton Capital Partners immediately. Persons who have not entered into or are not subject to a confidentiality undertaking with the company or Eaton Capital Partners and have nevertheless received this document must be aware that they have received this document in breach of a confidentiality undertaking and any use may cause damage to the company. Such persons may not act or rely on this document and must immediately return it together with any copies to the company or Eaton Capital Partners. The distribution of this document in certain jurisdictions may be restricted by law and such distribution could result in violation of the laws of such jurisdictions. Persons into whose possession this document comes should inform themselves about and observe any restrictions and legal requirements in relation to the distribution of this document and their participation in any proposals as set out in this document. Any failure to comply with these requirements may constitute a violation of the laws of the relevant jurisdiction. This document does not constitute an offer of, or the solicitation of an offer to subscribe for or buy, any securities to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction. By accepting this document you agree to be bound by the foregoing limitations. All currency is denoted in Malaysian Ringgit (RM) unless otherwise specified
Contents About this Information Memorandum.............................................................................4 About T&T Konsult ........................................................................................................5 The T&T Konsult Opportunity ........................................................................................6 T&T Konsult Key Technical Areas and Services .............................................................7 The Past—Completed Projects......................................................................................8 The Future—Pipeline Opportunities.............................................................................. 11 Management Team and Key Staff Profiles.................................................................... 13 Overview of T&T Konsult Financials.............................................................................. 18 Next Steps and Proposed Timeline..............................................................................23
About this Information Memorandum This Information Memorandum (IM) is issued by Eaton Capital Partners (ECP) on behalf of T&T Konsult Sdn Bhd (TTK) for the confidential use of a select group of organisations who have agreed to confidentiality terms and signed a Non Disclosure Agreement (NDA). ECP is advising the directors of TTK in this sale process. After reviewing the information provided in this IM there will be opportunities for interested potential acquirers to have management meetings and introductory discussions around this opportunity. Once a preferred acquirer is identified TTK intends to enter an exclusivity agreement with an established timetable for due diligence and completion. It is anticipated this sale will be completed by July 2015.
About T&T Konsult Founded in 1991, T&T Konsult Sdn Bhd (TTK) is an award winning diversified engineering consultancy based in Kuala Lumpur, Malaysia. TTK offers a diverse suite of consulting engineering services including highway and rail, sanitary landfill and coastal engineering. However it is primarily focused on civil, structural and geotechnical engineering. This includes the supervision of large scale infrastructure and construction projects. TTK predominantly works for government departments, local government, commercial organisations, developers, contractors, private individuals and other consulting firms. TTK has grown to over 70 highly adept engineering, draft persons and supervising staff. TTK is an ISO 9001 accredited organisation which prides itself on technical excellence and the delivery of services of a higher standard and lower cost than its larger competitors. Management is talented, passionate, internationally experienced, and formally qualified at notable international universities. For the financial year ended 31 December 2014, TTK’s pre- audited financial statements showed total revenues in excess of RM14m, including fee revenues of RM12m, and an effective pre-tax profit of RM3m. TTK has budgeted a pre-tax profit of RM3.2m for the current financial year (calendar 2015). Servicing both the public and private sector TTK has built an enviable list of blue-chip clients, many of whom remain long term repeat clients that TTK has followed throughout Asia and into the Middle East. Notable clients include: • • • •
Putrajaya Holdings Berhad Bank Negara Malaysia Sato Kogyo Putrajaya Corporation
• • • •
Gamuda Bhd PLUS Lendlease JKR
TTK has a long standing relationship with Tonkin Taylor, a New Zealand based engineering consultancy firm. Tonkin Taylor has been involved with TTK since its inception. Whilst the existing relationship between TTK and Tonkin Taylor has served both organisations well, both the Malaysian directors and directors of Tonkin Taylor believe that due to a shift in strategy from Tonkin Taylor, the timing is right to consider an acquisition and subsequent divestment of TTK from the Tonkin Taylor group.
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The T&T Konsult Opportunity Malaysia is an emerging global economy that experienced transformational growth in the late 20th century which has continued into the new millennium. Malaysia today is the third largest economy in South East Asia (behind only the significantly more heavily populated Indonesia and Thailand) and the third richest (GDP per capita) economy in South East Asia (behind Singapore and Brunei). Malaysia’s GDP growth in 2014 was 6%, and a 2013 World Bank report ranked Malaysia sixth in the world in an ‘ease of doing business index’. TTK has shared it nation’s transformational journey, enjoying strong profitability for a number of years including ‘normalised’ Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of between RM2.8-3.8m for the past five financial years. TTK has positioned itself and grown to a level where it is now primed to be scaled and further developed. TTK offers a strategic acquirer a unique opportunity to; 1. capitalise on a market entry platform into an exciting regional growth market; 2. create a scalable offshoring platform, utilising TTK’s extremely well trained and IS9001 accredited technical staff; 3. access client base that TTK have developed over the last 20 years; 4. access a strong pipeline of identified opportunities; 5. utilise the reputation TTK has built for itself as being quality driven engineering firm; and 6. expand TTK services offering with complementary services to offer a full spectrum end-toend consulting and design service. Many consulting engineering firms exhibit experienced staff and strong client lists. Few match TTK’s pedigree. TTK is multi award winning. Its staff are passionate and talented. TTK has a close alignment with visionary architects such as Hijjas Kasturi, considered the father of Malaysian architecture. TTK has been worked on many projects of national prominence including iconic office buildings, museums and arts facilities, urban developments, highways, transit system and major sanitary landfills. In its work TTK routinely demonstrates a capacity to solve the unsolvable. TTK seeks a strategic acquirer to fulfil its next stage of development and growth aspirations. Management of TTK remain committed to growing the business as it enters its next chapter. The opportunity exists therefore to acquire 100% of shares TTK.
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T&T Konsult Key Technical Areas and Services TTK is well recognised and highly experienced in providing technical engineering consulting services on small to large infrastructure projects across a diverse spectrum of technical areas. This diversity enables TTK to undertake end-to-end consulting engineering engagements. TTK segments its technical offering into the following three key disciplines.
Structural The structural engineering discipline focuses on low and high rise buildings and buildings with unique structural configurations. TTK works closely with some of the leading architects in Malaysia including Hijjas Kasturi, GDP Architects and BEP Architects. Through TTK’s geotechnical engineering expertise it is able to provide designs for both raft and piled foundations, deep basements and a full range of retaining systems. In addition TTK’s civil section can design and supervise all site development and utilities requirements. For major buildings TTK is able to provide full spectrum civil, structural and geotechnical engineering. Specific areas of structural expertise include; • Building and Civil Structures • Industrial Projects
• Infrastructural Development • Earth Structures.
Civil TTK’s civil engineering discipline has successfully delivered a comprehensive range of projects with a key focus on linear developments. TTK designed and supervised one of the largest landfills in Southeast Asia (120 million tonne capacity) including leachate treatment and zero discharge conditions using irrigation. TTK has been involved in monorail, LRT and MRT developments and the double tracking of KTM rail lines. TTK has also carried out port, marina and airport design including the design of dolphin jetties for 140,000 dwt tankers in Saudi, Arabia. Specific areas of civil expertise include; • Highway and Rail • Sanitary Landfill
• Bridges • Reclamation.
Geotechnical TTK’s Geotechnical engineering discipline supports both the civil and structural sections and provides services in the specialist areas of petro-chemical facilities, major industrials, port facilities and major reclamations. TTK was also responsible jointly for the soft ground engineering for Kuala Lumpur International Airport constructed over extensive peat deposits. Specific areas of geotechnical expertise include; • • • •
Foundation Design Site Investigation and Testing Pavement Engineering Slope Stability
• Engineering Geology • Tunnel Engineering • Drainage.
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The Past—Completed Projects TTK has successfully delivered projects in both Malaysia and internationally across a wide range of private and public sector clients. These range from design and supervision of some of Kuala Lumpur’s most innovative buildings to the design and implementation of award winning landfill projects.
Notable Projects TTK Have Undertaken Civil & Structural and Geotechnical
Sasana Kijang, Kuala Lumpur TTK lead the design and supervision of the international class institutional training facilities museum/arts centre/conference facilities completed in 2011 for Bank Negara Malaysia. The demanding layout posed enormous challenges to the standard framings of this 1 million s.f. building. It consists of 5 floors above ground and 4 floors below ground level on a sloping site. The building incorporates elegant structural steel works.
National Institutes of Health, Setia Alam This privatisation project by SP Setia for the Ministry Of Health is currently the largest development at Bandar Setia Alam. The 40 acres campus comprises over 20 buildings for the various government health institutes and R&D facilities, offices and residences. Expected to be completed in 2016 at a cost of over RM900 million.
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One Medini and Medini Signature, Iskandar TTK provided all civil, structural and geotechnical engineering services for the 4 blocks of 30 storey condominium with 150,000 sf commercial block in the new township of Iskandar Malaysia for WCT Land. Estimated to cost over RM 450 Million, the first phase is expected to be completed by 2015, and will provide half of the total 1328 units of med-high cost apartments. The second phase is expected to be completed by 2016.
Alor Pongsu Interchange at KM 181 North–South Expressway TTK was appointed by PLUS to undertake the planning, design and construction supervision of a new RM 140 million trumpet interchange and toll plaza complex on geotechnically challenging ground conditions. The Scope of services also includes topographical survey, soil investigation, traffic study, utilities detection survey, land acquisition, architectural services, M&E services and landscaping.
Central Spine Road— Raub To Relong, Pahang This four-lane dual-carriageway highway is part of the 400km Central Spine Road being upgraded by Eastern Corridor Economic Region. The 58 km section undertaken by T&T traverses a challenging alignment with major cuts and fills, 13 bridges, 4 interchanges, 23 underpasses and many rural settlements costing over RM 800 million.
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Shuqaiq, Iwpp, Saudi Arabia TTK undertook the design for the turnkey contract for all the marine works comprising a dolphin jetty for a 100,000 dwt tanker, 1.2km long under sea intake culvert, discharge channel, jetties, ash pond and various temporary works. These works are part of the 800mw power station Shuqaiq IWPP that was commissioned in early 2010.
Bukit Tagar Sanitary Landfill With a total land area over 1700 acres and refuse capacity of 120 million metric tons, this modern sanitary landfill is one of the largest in the world. It will cater for solid disposal from KL and Selangor for the next 40 years. The landfill is being developed in 22 Phases and is fully lined with a dual-layer low permeability liner, comprehensive leachate collection system and gas extraction pipes to alleviate the risk of leakage and environmental contamination. Advance Phase—Designed as a semi-aerobic cell covering an area of about 6 ha. and has airspace capacity of 1.2 million metric tons. It was constructed under fast-track contract and completed within 6 months and started receiving waste on 1 April 2005 Phase 1—Covering an area of about 25 ha., this anaerobic cell has an estimated airspace capacity of 3.9 metric tons. The design incorporates 12 sub-cells in line with staged operation for better leachate and stormwater management. Cell is lined with clay-HDPE membrane liner system and equipped with leachate pipe collection and stormwater management. Leachate Treatment Plant—This state of the art development is the first leachate treatment plant in Malaysia and is designed to cater for 1,000 m3 of leachate per day. Operating as a sequencing batch reactor, the system includes pre-denitrification, DAF plant, sludge thickener and Phragmites reed beds to comply with DOE strict requirements on effluent quality. TTK has been recognied for its superior design work on the Bukit Tagar Sanitary Landfill and has subsequently been award the following awards for the project: • IEM Outstanding Engineering Award 2008 • ACEM Gold Award of Special Merit 2008. • Engineering Achievement Award 2008 by the ASEAN Federation of Engineering Organisation
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The Future—Pipeline Opportunities In its current form TTK have often been constrained by resources that preclude access to lucrative contracts, or limit tenders to selected elements of a contract. Management nonetheless are pursuing a number of immediate opportunities outlined below:
PLUS Highways PLUS is one of the largest highway concession companies in Malaysia. PLUS operates the North-South highway and the three other major highways throughout the country. With these operations there is a continuous need and demand for upgrading work on the roads. TTK has a long term established relationship with PLUS, with PLUS using TTK for four of its current works. PLUS has several specific major works in the pipeline which are: • Johor Bahru—Sedenak highway upgrading Currently the stretch of highway between Johor Bahru and Sedenak, in the south of Malaysia is extremely congested and has been identified as a priority by PLUS for widening. TTK has been engaged by PLUS for widening operations in the past and will likely be award this work again. • Senawang—Kuala Lumpur International Airport (KLIA) highway The new highway between Senawang and KLIA is due to start construction in 2016. PLUS and the Malaysian Government require certified Independent Checking Engineers for this new privatized highway to ensure quality standards are maintained and to ensure government’s interest are protected. • ‘SPEED’ Highway The Subang-Pantai Elevated Dispersal is a new privatised urban highway recently conceptualised by TTK. The 15km long, fully elevated highway will alleviate the congestion at Damansara and Subang interchanges of the PLUS highway. The concept has been well received by PLUS and is currently being further evaluated before a detailed feasibility study. TTK remains the obvious choice for the design work for the project.
Medini Township Medini is a Township development spanning 2,230 acre (9.2 sq km) developed to become the Central Business District of Nusajaya in the southern economic zone of Iskandar Malaysia. Medini is in the heart of Nusajaya surrounded by established signature developments such as EduCity, an international best-in-class education hub; Pinewood Iskandar Malaysia Studios, with over 100,000 square feet of film stages; Kota Iskandar, the new Johor State Administrative Capital and Puteri Harbour, a premium waterfront development across the strait from Singapore. TTK has completed several projects in Medini Township for several different clients. At present opportunities for projects include: Medini developments—TTK is currently working for WCT Land, a diversified development and investment company, on four phases of Medini Iskandar, comprising six condominium towers and two commercial blocks. The next phases of development will see WCT develop a Hotel, a Convention Centre and an office tower. TTK is perfectly positioned to win the engineering
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design and supervision work for this next phase. In addition to this work at Medini, another lot of 26 acres of mixed development is due to commence nearby for WCT Land which TTK anticipate to be short listed for. Medini Shopping Mall—Phase 2 of an existing retail mall is to be co-developed by Lendlease, an Australian developer and long term client of TTK. TTK has been shortlisted for the Geotechnical work and will likely be shortlisted for the subsequent structural work.
Central Spine Road The Central Spine Road is a new highway under construction in the central of Peninsula Malaysia. It is a 325 km toll-free highway that replaces the former 2-lane Gua Musang Highway and Karak-Tampin highway. Currently TTK is working for JKR (Ministry of Works) on the design of a 50 km stretch of the highway anticipated to cost over RM850m. TTK has almost completed the design and the implementation and is awaiting government funding in the 11th Malaysia Plan (2016- 2020). It is likely that the highway will be converted to a toll-road and be implemented through a privatisation scheme earlier. TTK is well placed to receive additional work as the road continues to be developed.
Port of Tanjung Pelepas The Port of Tanjung Pelepas (PTP) is a container port located in south-western Johor, Malaysia. Currently the port is currently exploring options for a large reclamation project as part of phase 3 of the expansion for the rapidly growing port. The dredging and reclamation work alone is estimated to cost RM1 billion. TTK has undertaken the preliminary engineering design for this Phase 3 in 2014 and is expecting to be awarded the detailed design for the reclamation work. Separately from the phase 3 works, the existing PTP wharf structure is to be urgently extended at an estimated total cost of over RM100M. TTK is expecting to be shortlisted for the design and supervision of this work.
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Management Team and Key Staff Profiles Organisational Chart
T & T KONSULT SDN BHD
TECHNICAL ADVISOR Bryan A. Richards
BOARD OF DIRECTORS Ir. Steven Yong Ir. Faisol Hussain Ir. Foo Toon Bin
ACCOUNTS / ADMIN Angela Wong Tung Ming Yvonne Chong Sharon Ong Joanne Ting Yoke Kiew Ruslaniza Mahat Hariati Mohd Sunari
ASSOCIATE DIRECTORS Mohd Masri Theeran Samsul Nazim Darus Azam Syariff Zahar
GEOTECHNICAL
CIVIL
STRUCTURAL
PROJECT MANAGER Azam Syariff Zahar
PROJECT MANAGER Samsul Nazim Darus (IQA)
PROJECT MANAGERS Ir. Shirley Tan Lay Oi Ir. Amir Kamarol Hedzree
GEOTECHNICAL ENGINEERS SENIOR ENGINEERS Tan Chee Lee Vigneshwaran K. Noraini Mat Jeni ENGINEER Tan Zhi Howe
HIGHWAY ENGINEERS SENIOR ENGINEER Nor Azniza Ishak ENGINEERS Mohamad Hafizzudin Nordin Hizwan Halijatul Asror
DRAFTING/ TECHNICIANS Sathiananthan Letchumanan (Coordinator/ QMR) Halim Bin Yatim Mohd Najib Abd Razak Ronny Wong Chan Wa Anna Chang Sow Kuan Wong Yap Hong Mariam Md Din Awang Udin Awang Udah Norazila Halimi Salmawati Abdul Manan Law Poh Yin Ismail Ramli
CIVIL ENGINEERS ENGINEERS Nor Aishah Abdul Ghani Wan Hayati Wan Ismail Mohd Syafiq Shahrin
STRUCTURAL/ BRIDGE ENGINEERS SENIOR ENGINEERS Ir. Fazidah Hussain Ir. Nor Laila Kamaruddin Fazuli Fauzi Deric Su How Toon Siti Aishah Abdullah Chiu Pek Sin Shah Izuddin Ibrahim ENGINEERS Wan Syaidatul Diba Muhammad Noraisyikin Mt Nanyan Kok Chin Tan Lee Jien Yeih
RESIDENT/ ASSISTANT ENGINEERS Lokman Mohd Bisri (M1140) Ir. Jamal Nasir (M1091) Shahril Bin Abdul Aziz (M1105) Maskor Kosni (M1099) Mohd Fazli Othman (M1091)
CLERKS OF WORKS Hisham Othman (M1091) Suvermanian A/L Narayaren (M1091) Mat Isa Yunus (M1105) Azlan Hisab (M1105) Amirul Azam Mahmud (M1099) Mohd Shah Fazle Ishak (M1099) Hairul Nizam Mohd Zaini (M1099) Mohd Hafis Suep (M1099) Dzulkefli Ahmad (M1084) Azwan Ghani (M1084) Jefrydin Abd Rashid (M1084) Mariah Osman (Site Clerk M1091)
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Senior Executives Profiles Steven Yong is the Director of T&T Konsult, responsible for overall management of the consultancy practice and the technical direction of the firm’s geotechnical group. He is a Registered Professional Engineer with over 30 years of experience in consulting engineering work. A graduate from the University of Canterbury, he worked in Tonkin & Taylor in Auckland before returning to Malaysia in 1990.
Steven Yong
Managing Director
Mr Yong has worked in many parts of Asia, including Hong Kong, Taiwan, Vietnam, Thailand, and in the Middle East. In Malaysia, examples of Mr Yong’s project experience, covering both project management and geotechnical engineering inputs, include Bukit Tagar Sanitary Landfill, LRT II Cut and Cover Tunnels Project, BASF–Petronas Project, Tioman Island Marina, Selangor Turf Club, Westport Container Wharf Expansion.
Faisol Hussain is the Executive Director of T&T Konsult, responsible for managing the firms Civil/ Structural group. He has over 28 years’ experience in engineering consultancy, covering a wide diversity of projects. A graduate of Canterbury University, he worked in Wellington and London before setting up T&T Konsult in 1991.
Faisol Hussain
Executive Director
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Faisol has been responsible for the technical direction and management of all civil and buildings projects undertaken by T&T Konsult since its inception in 1991. Together with his strong team of capable engineers and technicians, a series of high profile and challenging jobs have been successfully completed, such as the Securities Commission Building, Shuqaiq IWPP marine works in Saudi Arabia and the Monorail Stations in KL.
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Senior Executives Profiles Foo Toon Bin has more than 30 years’ experience in a broad field of engineering design works. He has worked in many parts of the world including China, Hong Kong, Papua New Guinea, Indonesia, Vietnam and for over 9 years in New Zealand.
Foo Toon Bin
He has extensive experience in marine structures, bridges and industrial structures such as cement silos, brewery, and oil storage steel tanks. He has lead the T&T structural team in the design and implementation of many prominent buildings in Kuala Lumpur that includes the KL Monorail Stations, Bandar Wawasan, Sasana Kijang, and Medini Condominiums in Iskandar. Foo Toon Bin holds a First Class Degree from University of Canterbury and an MBA. He is an Associate Director of T&T Konsult.
Mohd Masri Theeran has extensive civil, highway and transportation engineering experience gained over the last 26 years. Prior to joining T&T in he was involved in the implementation of some mega infrastructure projects in Malaysia including the North South Expressway, FHR2 Improvement Works, NSE Central Link & KLIA Expressway, New Pantai Expressway, Ipoh-Lumut Expressway, Johor Bahru Eastern Dispersal Link and expressways in India and Indonesia.
Mohd Masri Theeran
He has led the T&T design team for numerous large civil projects including Bukit Tagar Sanitary Landfill, Berjaya City Development, Masri was also involved in some rail and light transit projects including the Putrajaya Monorail, Ipoh-Padang Besar Double Tracking and feasibility of the Penang and Beijing Monorail systems. Masri holds a Ms. Sc. in Civil Engineering degree from University of Miami. He is an Associate Director of T&T Konsult.
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Senior Executives Profiles
Samsul Nazim Darus
Samsul Nazim Darus has 16 years of experience in civil and highway projects encompassing the full spectrum from project feasibility studies, detailed design, project management and on-site supervision. He has led T&T project team in numerous large projects including Central Spine Road, North-South Expressway Central Link Widening and Penang Second Crossing. In 2011, he was appointed as main committee member to Arahan Teknik (Jalan) – Design Review Checklist for Road Project which was published in 2013. A graduate from University Kebangsaan Malaysia in Civil Engineering Degree with Overall Civil Engineering Best Student Award, Smsul is currently the Design Manager and Associate Director of T&T Konsult Sdn Bhd.
Azam Syariff
Azam Syariff bin Zahar has 12 years of experience providing geotechnical engineering services for a wide range of civil engineering projects from pre-feasibility studies through to detailed engineering, Independent Check Engineer, on-site construction supervision, quality assurance, troubleshooting and overall project coordination. These projects based both in Malaysia and abroad (Vietnam and Iran), have included government, commercial and industrial buildings, highways, railways, power plants, petrochemical complexes and land reclamation projects. Some of the recent major projects that he was directly involved with include the Klang Valley MRT, Double Track Railway, Central Spine Road, Hydrocarbon Storage and Distribution Facility in Tanjung Bin, Land Reclamation and Ground Improvement Works for Westport, Port of Tanjung Pelepas, and National Institute of Health. Azam is the Geotechnical Design Manager and Associate Director of T&T Konsult Sdn Bhd. He holds a Civil Engineering degree from Nagoya Institute of Technology, Japan.
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Senior Executives Profiles Bryan Richards is a managing consultant at T&T Konsult and the current Managing Director (Asian Operations) of Tonkin & Taylor International. Bryan is currently Tonkin Taylor’s representative in Malaysia and the Philippines and works predominantly on the development of projects in the Asia Pacific region. Having worked widely in the UK and New Zealand, Bryan is a fellow of IPENZ and IHT-UK and is a Chartered Professional Engineer in New Zealand.
Bryan Richards
Managing Consultant
Bryan has been involved in buildings and infrastructure development in Europe, Asia and the Pacific for almost 50 years. He has played a lead role in privatized project initiatives covering toll expressways, water supply and solid waste management. He has also managed specialist design teams involved in the North-South Expressway, KL International Airport, KL Monorel, KL Light Rail and the Bukit Tagar landfill project in Malaysia. Project involvement has also included water supply, small hydro and irrigation projects in Malaysia, Philippines, Nepal, Pacific Islands and Vietnam, and major buildings in Kuala Lumpur including the Securities Commissions Building, MPPJ Headquarters, Bank Negara, Chung Khiaw Bank and the Shangri-la Hotel
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Overview of T&T Konsult Financials Basis of Preparation TTK has its accounts audited annually. The audit for the financial year ended December 2014 has been conducted by T.K. Lim and Associates (Chartered Accountants). The forecasts for the Financial Years ending December 2015, 2016 and 2017 in 8.3 below, contain provision for work already contracted and work likely to be secured on the basis of current market intelligence and client representations, i.e. likely repeat work. TTK management consider that the forecasts are highly conservative and achievable, with little recourse applied to opportunities not yet identified. The achievability of profit forecasts is informed by the Profit Before tax (PBT) result achieved in the last four audited financial years in 8.2 below. Forecast profitability does not include the potential realisation of pipeline opportunities that would be available to TTK within a larger international platform. Similarly forecast profitability does not include improvements in operational performance and contract profitability that TTK management consider possible were it not constrained by resourcing constraints and management ‘reach’. TTK’s accounting results translate into commensurate cashflow returns, and its Balance Sheet and financial ratios exceed best practice for any industry.
Audited EBITDA (Normalised) Over the past five completed financial years, TTK’s audited EBITDA has ranged from RM2.8m to RM3.8m.
Normalised EBITDA (Historical)
$m 4 3 2 1 0
2010
2011
2012
2013
2014
Note that: • Tonkin and Taylor’s input into T&T Konsult is renumerated through fees charged as according to Technical Assistance Fees and Subcontractor Fees. This has been reclassified as an appropriation of profit. • In 2013 a major positive WIP adjustment occurred in respect of a prior year project. This has been reapportioned to 2012 in order that revenues and costs to derive revenue are appropriately matched.
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Profit and Loss Trend Profit & Loss By Year
2013
2014
2015
2016
2017
Revenue from Services Revenue from Services
13,888,686
11,935,280
13,250,000
13,912,500
14,608,125
Reimbursable Revenue
429,459
1,515,104
100,000
100,000
100,000
Non Operating Income
74,189
808,160
75,000
75,000
75,000
Total Revenue
14,392,334
14,258,543
13,425,000
14,087,500
14,783,125
Consulting Staff Costs
-
-
-
-
-
Contract Staff Costs
1,218,088
1,917,533
100,000
100,000
100,000
Other Direct Costs
1,235,917
258,720
188,996
200,000
200,000
Total Cost of sales
2,454,004
2,176,254
288,996
300,000
300,000
Gross Profit
11,938,329
12,082,290
13,136,004
13,787,500
14,483,125
Staffing Costs
6,842,485
7,748,007
8,609,932
9,040,429
9,492,450
Travel Costs
82,925
97,583
111,849
117,441
123,314
Professional Services and Insurance
225,887
238,997
308,633
324,065
340,268
Property and Office Sundries
275,438
272,870
313,083
328,737
345,174
Foreign Exchange Differences
663
2,160
-
-
-
Technical Assistance - T&T
954,601
1,466,308
200,000
200,000
200,000
Provision for Doubtful Debts
173,748
129,621
-
-
-
Other
8,117
120,990
11,394
10,000
10,000
Total—Operating Expenses
8,563,863
10,076,537
9,554,891
10,020,672
10,511,206
EBITDA
3,374,467
2,005,753
3,581,113
3,766,828
3,971,919
Depreciation and Amortisation
330,331
374,219
380,000
342,000
304,000
Interest Income
-6,720
-50,225
-48,156
-50,000
-50,000
Interest & Financing Costs
40,555
43,209
72,240
57,792
46,234
Profit Before Tax
3,010,301
1,638,550
3,177,029
3,417,036
3,671,686
PBT—Revenue %
21%
11%
24%
24%
25%
Income Tax Expense
814,572
400,350
769,257
829,259
892,921
Net Profit After Tax
2,19 5,729
1,238,200
2,407,772
2,587,777
2,778,764
Direct Cost of Sales
Overhead Expenses
EBITDA Normalisation Adjustments Revenue Recognition—Timing
-2,038,272
-
-
-
-
Non Operating Income
-
-783,446
-
-
-
Subcontractor fee (Tonkin & Taylor Ltd)
890,221
180,000
-
-
-
Technical Assistance fee (Tonkin & Taylor Ltd)
954,600
1,466,308
200,000
200,000
200,000
Total Normalisation Adjustments
-19 3,451
862,861
200,000
200,000
200,000
Normalised EBITDA
3,181,016
2,868,614
3,781,113
3,966,828
4,171,919
T&T Konsult Information Memorandum | May 2015
19
Revenue by Segment Segment
2010
%
Civil
3,708,787
38%
Structural
3,677,872
Geotechnical
2011
%
2012
%
2013
%
2014
%
5,353,680
43%
1,575,562
21%
4,858,126
34%
3,355,453
25%
38%
2,687,211
22%
2,878,361
38%
2,814,111
20%
1,925,810
14%
1,027,662
11%
2,949,529
24%
1,481,335
20%
4,110,410
29%
4,706,854
35%
Supervision
1,286,523
13%
1,322,019
11%
1,603,193
21%
2,507,162
18%
3,461,467
26%
TOTAL
9,700,844
100%
12,312,439
100%
7,538,451
100%
100%
13,449,584
100%
Revenue Mix 2010–2014
Civil
18%
Structural
33%
Geotechnical Supervision
25% 24%
20
T&T Konsult Information Memorandum | May 2015
14,289,809
TTK Balance Sheet Balance Sheet
2013
2014
2015
2016
2017
Current Assets Cash
3,607,174
3,163,389
4,753,274
4,280,788
3,892,404
Work in Progress
4,539,343
4,196,523
2,237,500
2,347,917
2,463,854
Trade receivables
2,752,726
4,509,452
4,475,000
4,695,833
4,927,708
Other current assets
204,152
365,203
350,000
350,000
350,000
Total Current Assets
11,103,395
12,234,566
11,815,774
11,674,538
11,633,966
Property, Plant & Equipment
1,223,119
565,801
500,000
450,000
400,000
Total Non-current Assets
1,223,119
565,801
500,000
450,000
400,000
Total Assets
12,326,514
12,800,367
12,315,774
12,124,538
12,033,966
Trade Creditors & Payables
450,617
793,270
637,605
730,376
734,545
Income Invoiced in Advance
455,265
144,311
-
-
-
Accruals
1,153,030
866,110
1,034,992
970,399
1,076,806
Accrued Corporate Tax
288,862
51,942
100,087
192,314
207,315
Payable TT NZ
3,879,297
4,636,965
3,091,310
1,545,655
-
Total Current Liabilities
6,227,072
6,492,599
4,863,995
3,438,745
2,018,666
Deferred Taxation
45,000
45,000
45,000
45,000
45,000
Hire Purchase Liabilities
519,660
459,785
399,911
340,036
280,162
Total Non Current Liabilities
564,660
504,785
444,911
385,036
325,162
Total—Liabilities
6,791,732
6,997,384
5,308,906
3,823,781
2,343,827
Net Assets
5,534,783
5,802,983
7,006,868
8,300,757
9,690,139
Share Capital
250,000
250,000
250,000
250,000
250,000
Reserves
78,944
78,944
78,944
78,944
78,944
Retained Earnings
5,205,838
5,474,039
6,677,924
7,971,813
9,361,195
Total equity
5,534,782
5,802,983
7,006,868
8,300,757
9,690,139
Non-current Assets
Liabilities Current Liabilities
Non Current Liabilities
Represented By:
T&T Konsult Information Memorandum | May 2015
21
TTK Cash Flows Statement of Cash Flows
2013
2014
2015
2016
2017
Operating Activities Receipts from customers
12,358,994
12,533,684
15,274,163
13,756,250
14,435,313
Payments to suppliers and employees
-9,498,939
-11,600,440
-11,361,123
-11,838,149
-12,246,286
Interest & Financing Costs
-40,555
-43,209
-72,240
-57,792
-46,234
Interest received
6,720
50,225
48,156
50,000
50,000
Income tax paid
-185,544
-637,270
-721,112
-737,032
-877,921
Net Cash from Operating Activities
2,640,675
302,991
3,167,844
1,173,277
1,314,872
Investing & Financing Activities Proceeds from sale of property, plant & equipment
783,446
Purchase of property, plant & equipment
-294,798
-500,348
-314,199
-292,000
-254,000
Payment of Hire Purchase Liabilities
15,153
-59,875
-59,875
-59,875
-59,875
Dividends paid
-
-970,000
-1,203,886
-1,293,888
-1,389,382
Net Cash from Investing & Financing Activities
-279,645
-746,776
-1,577,959
-1,645,763
-1,703,257
Increase / (Decrease) in Cash
2,361,030
-443,785
1,589,885
-472,486
-388,384
Cash and Cash Equivalents at beginning of Financial Year
1,246,144
3,607,174
3,163,389
4,753,274
4,280,788
Effect of exchange rate change
-
-
-
-
-
Cash and Cash Equivalents at end of Financial Year
3,607,174
3,163,389
4,753,274
4,280,788
3,892,404
Risks TTK’s business is subject to risk factors, both specific to its business activities and of a general nature. Individually, or in combination, these risks might affect the future operating performance of the Company. As with any investment there can be no guarantee that the Company will achieve its stated objectives or that any forward looking statements or forecasts will eventuate. An acquisition of the Company should be considered in light of relevant risks, both general and specific. Risk mitigation strategies are in place for those risks considered to be probable and consequential in the opinion of TTK. The risks above are substantially mitigated by the levels of already contracted revenue and highly probable repeat work. TTK has received advice from Zico Lawyers that foreign ownership of all of the shares in TTK would not present a problem to a prospective acquirer providing it is appropriately structured.
22
T&T Konsult Information Memorandum | May 2015
Next Steps and Proposed Timeline After reviewing the information provided in this IM there will be opportunities for interested potential acquirers to have management meetings and introductory discussions around this opportunity. The general timeframe of this offer will be as follows: 1. IM sent to identified interested parties—from 20th–31st April 2015 2. General discussions and management meetings over May 2015 3. Expressions of interest received by ECP by at least the end May 2015 4. Consideration of expressions of interest and discussions leading to the choice of a preferred acquirer in early June 2015 5. Due diligence with a preferred acquirer over June 2015 6. Close by end July 2015. ECP reserve the right, on behalf of the T&T Konsult Board, to enter negotiations exclusively with one party only at any time without reference to the other parties. ECP also reserve the right to modify any dates mentioned in this IM and to enter exclusivity with a party.
T&T Konsult Information Memorandum | May 2015
23
Further information and arrangements can be made by contacting:
Mr Roger Cameron
Associate Director of Eaton Capital on +61 419 394 397 or by email: roger.cameron@eatoncapitalpartners.com — or —
Mr Peter Bergin
Finance Partner of Eaton Capital on +61 409 280 563 or by email: peter.bergin@eatoncapitalpartners.com