Company Background

The Company was incorporated in Malaysia under the CA 2016 on 10 November 2021 as a private limited company under the name of Vestland Sdn Bhd and was subsequently converted to a public limited company on 28 April 2022 and adopted the present name of Vestland Berhad.

The company is an investment holding company and they are primarily involved in the construction of residential and non-residential buildings through the wholly-owned subsidiary, Vestland Resources.

Use of proceeds

1. Acquisition of new head office/refinancing of borrowings for acquisition of new head office- 13.37% (within 3 months)
2. Performance bonds and/or cash deposits for construction projects - 19.25% (within 15 months)
3. Working capital - 59.71% (within 12 months)
4. Estimated listing expenses - 23.38% (within 3 months)

Acquisition of new head office/refinancing of borrowings for acquisition of new head office- 13.37% (within 3 months)

The total consideration for the New Head Office amounts to RM9.38 million, for which the company has secured bank borrowings of RM7.50 million from AmBank (M) Berhad on 3 January 2022 (RM6.12 million) and 20 April 2022 (RM1.38 million) respectively, with maturity periods of 20 years and the balance will be financed via our internally generated funds. As at the LPD, the purchase consideration has been fully settled.

The company has earmarked RM7.50 million or 13.37% of the total gross proceeds to be raised from the Public Issue for the repayment of the bank borrowings utilised for the acquisition of the New Head Office. The repayment of the aforementioned facilities is expected to have a positive financial impact on the Group with interest savings of approximately RM0.30 million per annum, calculated based on the effective interest rate of 3.95% for the term loan secured to finance the acquisition of the New Head Office. However, the company is subjected to a one-off prepayment fee of approximately RM0.23 million arising from the early repayment of the said bank borrowings.

Performance bonds and/or cash deposits for construction projects - 19.25% (within 15 months)

Some of the construction projects that the company is involved in require performance bonds in the form of an approved bank guarantee or a cash deposit (in-lieu of a performance bond) to be provided to the awarding party, as security for the proper and due performance of works as set out in the construction contracts. In order for a licensed bank to issue a bank guarantee for performance bonds in favour of the customers, the company is usually required to maintain a security deposit in the form of fixed deposits pledged with licensed banks.

The number of performance bonds and/or cash deposits are expected to increase in line with the growth of the construction business and the value of contracts awarded to us. Hence, the company is earmarked RM10.80 million or 19.25% of the total gross proceeds to be utilized for the performance bonds and/or cash deposits for the ongoing and future construction projects as follows:-

Working capital - 59.71% (within 12 months)

The Group’s working capital requirement is expected to increase in line with the growth in the business operations.

The company has earmarked RM33.50 million or 59.71% of the total gross proceeds to be raised from the Public Issue to supplement the working capital requirements. The breakdown of the allocation is in the manner set out below:-

The proceeds are allocated for payment of subcontractor services and purchases of construction materials as these are our largest cost of sales items, contributing approximately 82.49%, 85.35%, 87.42% and 84.43% of the total costs of sales for the past 3 FYEs 2019, 2020, 2021 and for the FPE 2022 respectively. The company envisages that such working capital requirements will be mainly utilized for the ongoing projects as follows:-

Business model

The Group is principally involved in the provision of construction services in various states in Malaysia. For the Financial Years and Period Under Review, the business model is as follows:

The following are the types of completed and ongoing building construction projects of the Group:

Building construction

Within building construction, the company is involved in the build segment as well as design and build segment. As a building construction contractor, the business activities are segmented into the following:

(i) Build segment: As a contractor for building construction projects, the company is responsible for the overall project including project management and planning, the appointment of subcontractors, procurement of labour and materials, and monitoring the stages of construction works to ensure completion of works up to project handover to the customer.

(ii) Design and build segment: As a design and build contractor, the company is responsible for the overall project management as well as planning and coordinating the design aspects of the project covering the technical specifications to meet the building compliance requirements as well as the coordination of the relevant submissions to the authorities.

Civil Engineering

Civil engineering works segment: The company also secured 3 projects relating to civil engineering works involving earthworks and rock hacking works each in the FYE 2021 and FPE 2022.For further information on the scope of work undertaken in-house and subcontracted to third parties.

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