Business Overview

5. INFORMAnON ON OUR GROUP 5. INFORMAnON ON OUR GROUP OUR HISTORY Our Company was incorporated under the Act on 13 March 2008 as a public limited company under its current name. We subsequently converted to a private limited company on 22 June 2011, to facilitate the Acquisitions and converted back to a public limited company on 29 June 2011. Our Group is involved in the provision of ICT solutions including the smart card personalisation (such as secure ID or chip-based credit / debit / bank cards), customisation of software and hardware solutions, project management, consultancy, R&D and technical consultancy services. Our Group structure is as follows: ( Datasonic
Investment holding andprovision 0/ management services ~-l()()-%—–1-1-00-%—–llOO% r—‘——., Datasonic
Datasonic Smart Consult ~ Technologies Solutions ~ Ai<:»4 h;\i;,~I:;p.f;” •.’;” “” I· Corporation Customisation ofsoftware  Smart card  R&D and technical  and hardware solutions,  personalisotian  consultancy services  project management and  consultancy
Our history began with the operations of Datasonic Corporation which was incorporated on 22 October 1980. Datasonic Corporation was originally named Bumi Packaging & Storage (M) Sdn Bhd. At the initial stage, the company was selling ICT products in the form of computer forms and credit card imprinters to financial institutions in Malaysia. The company then subsequently ventured into the personalisation services and started its business relationship with Datacard Corporation in 1983. In 1991, Datacard Corporation became a 49% joint­venture partner in Datasonic Corporation (which was named Datacard Toppan Moore (M) Sdn Bhd at that point). As a result of the joint venture, we were awarded the distribution rights for Datacard® Central Issuance Systems and Solutions in Malaysia. Since 1999, Datasonic Corporation has been the technology provider and exclusive sub-contractor of Dibena Enterprise, who was appointed as the Chairman and key member of GMPC Corporation Sdn Bhd, a consortium of five companies for the national ID or MyKad project. GMPC Corporation was formed to implement the pilot phase of the GMPC project in 1999. Under the Multi Purpose Card Flagship Application agreement between the Government and GMPC Corporation, dated I June 1999, the Government has agreed to award the GMPC project to GMPC Corporation, a consortium company, which consist of 5 members namely Dibena Enterprise, IRJS Technologies (M) Sdn Bhd, Unisys MSC Sdn Bhd, Tricubes NCR JV Sdn Bhd and CSA MSC Sdn Bhd, to undertake the GMPC project. Datasonic Corporation through Dibena Enterprise is the only consortium member which was assigned to design, set up and commission a personalisation centre as well as to supply smart card personalisation systems and solutions, consumables and provide technical support and maintenance services to NRD. The other consortium members include CSA MSC Sdn Bhd which provides the networking and computer hardware; Unisys MSC Sdn Bhd which conducts the system integration services and interface to legacy system; Tricubes NCR JV Sdn Bhd which provides smart card readers (Card Acceptance Devices) and IRJS Technologies (M) Sdn Bhd which provides raw cards (MyKad), chip with OS and readers. Upon procuring the GMPC project, GMPC Corporation will then sub­contraclthe entire GMPC project to each of its consortium members based on their respective roles. 5. INFORMATION ON OUR GROUP (Cont’dj Datasonic Corporation is the only ICT vendor involved in three (3) major smart card programs in the country, namely the GMPC, PMPC i.e. ATM chip-based card and EMV chip-based credit card migration in the country. The GMPC project was officially launched in 2001 with the purpose of migrating paper based IDs card with new smart IDs card with multiple applications for all Malaysian citizens; and the smart card ATM and EMV migration underwent a national rollout in 2003 as part of the goal of reducing fraudulent financial transactions which were then prevalent with magnetic stripe cards. In 2003, Datasonic Corporation established a RPS centre in cooperation with Bank Simpanan Nasional to provide outsourcing services for the personalisation of financial PMPC, ATM and EMV credit cards for major banks in Malaysia. In 2007, Datasonic Corporation established its own independent RPS centre in order to increase its production capacity to accommodate its increasing number of clients from the financial sector. Datasonic Corporation’s Central Issuance Card Printing System (operated by the RPS centre) was well-received particularly from Malaysian financial institutions and this spurred the company’s growth in the market. In 2005, Dato’ Abu Hanifah bin Noordin acquired Dibena Enterprise and assumed the position of Executive Chairman! CEO of the company and was also appointed as Chairman of GMPC Corporation Sdn Bhd. In 2006, following the acquisition of Datacard QSS Sdn Bhd (now known as Datasonic Corporation) by Dibena Enterprise, he assumed the position of CEO ofDatasonic Corporation. In February 2006, Dibena Enterprise acquired from Datacard Corporation its entire shareholdings in Datasonic Corporation to expand its technology and solutions services. This was to be followed by the acquisition of Datasonic Technologies a year later in 2007. Datasonic Technologies, (formerly known as Guthrie Technologies Sdn Berhad) was incorporated on 26 June 1991. The acquisition of the company by Dibena Enterprise from Kumpulan Guthrie Berhad occurred during the latler’s merger with the Sime Darby Group and Dibena Enterprise has since met the acquisition objective which was to further expand Dibena Enterprise’s portfolios to provide large-scale government ICT projects and solution services and project management services. Datasonic Technologies is involved in the provision of leT solutions and services which include project management for the implementation of leT system solutions. These solutions are customised software and hardware solutions for the government ministries and agencies, and large industries like healthcare, telecommunications, and others. Among some of its key projects include the following: Visa & Pass System for the Immigration Department of Malaysia Responsible for the entire design, development and implementation of Visa & Pass system for the Immigration Department of Malaysia since 1997 to the present. Subsequent to the implementation, Datasonic Technologies was also tasked with the technical support, enhancement and maintenance ofthe system. BPA System for the Prime Minister’s Department As the primary system provider, Datasonic Technologies is responsible for the entire development, supply, installation, commissioning, maintenance and technical support of the BPA system and its expansion into the Government sector. OKU Project for Ministry of Women, Family and Community Development Assigned as the total system provider, Datasonic Technologies is responsible for the entire front-end and back-end architecture and system design, development, installation, supplying and printing of the OKU Card to the disabled group throughout Malaysia. 5. INFORMATION ON OUR GROUP (Conl’dj SMOKU (“Sistem Maklumat Orang Kurang Upaya”) Project for Ministry of Women, Family and Community Development Datasonic Technologies secured the 2″ phase of OKU project and is responsible for the enhancement of SMOKU system for Ministry of Women, Family and Community Development. NGN Project for Telekom Malaysia Berhad Involved in the NGN project for Telekom Malaysia Berhad since 2007. As the local partner to Telekom Malaysia Berhad and Huawei Technologies (Malaysia) Sdn Bhd, Datasonic Technologies is involved in establishing, inst.alling, commissioning and decommissioning of the access network equipment and system for Telekom Malaysia Berhad. Call Centre Services Project for PTPTN Datasonic Technologies secured the project which involves the provision of systems solution, hardware and software as well as the implementation of call centre services for PTPTN in order to manage their higher education fund inquiries and other related matters. Supply of New Raw MyKad with Chips for NRD Datasonic Technologies secured the project which involves the supply of four (4) million of new raw MyKad with 100% polycarbonate material, new security features, OS and chips to NRD. Supply of Consumables for New MyKad project Datasonic Technologies secured the project which involves the supply ofconsumables for new MyKad to NRD. Maintenance of Data Center and Helpdesk system for the Immigration Department of Malaysia Datasonic Technologies secured the project which involves the provision of maintenance services of the data center and helpdesk system in the Immigration Department of Malaysia. Maintenance of Existing Passport Printers for the Immigration Department of Malaysia Datasonic Technologies secured the project which involves the provision of maintenance services of the existing passport printers, software and application system for the production of passports to the Immigration Department of Malaysia for its immigration offices in Malaysia and overseas. Supply of New Passport Polycarbonate Datapage and Laser Engraving Personalisation Equipments for the Immigration Department of Malaysia Datasonic Technologies secured the project which involves the supply of new passport polycarbonate datapage and laser engraving personalisation equipments to the Immigration Department of Malaysia. Supply of Consumables for the Existing Passport Printers to the Immigration Department of Malaysia Datasonic Technologies secured the project which involves the supply of consumables for the existing passport printers. 44 5. INFORMATION ON OUR GROUP (Cont’d) Other projects Datasonic Teclmologies is also involved in the design, supply, delivery, installation, commissioning, testing and maintenance of other leT project across the government agencies and private institutions, which include, among others, the provision of computer hardware and software solutions. Over the years, the business of our Group grew from the provision of secure ID and smart card personalisation into more diversified products and services e.g. government leT projects and services, project management and provision of other leT solutions services, namely provision of customised integrated ICT software and hardware systems and solutions. Smart Consult Solutions was incorporated in Malaysia on 2 April 2004 as a private limited company to provide R&D and teclmical consultancy to both Datasonic Corporation and Datasonic Teclmologies. Our Group utilises Smart Consult Solutions as our main channel to conduct R&D activities for the smart card as solutions and other key ICT developments which include development of centralised and decentralised card issuance system and solutions, multi-purpose ID system, integrated front-end and back-end system solutions as well as web-based HIS to support the current and future business of our Group. Smart Consult Solutions was granted the MSC status by MDEC on 18 May 2012. Due to Dato’ Abu Hanifah bin Noordin’s interest in Dibena Enterprise and our Group which may result in potential conflict of interest, our Group has taken the necessary steps to ensure that Dibena Enterprise does not, in the future, undertake any projects which will be in conflict with the business activities undertaken by the Datasonic Group by obtaining a letter of irrevocable undertaking dated 19 August 20 II from Dibena Enterprise to undertake the following: • Dibena Enterprise and its group of companies (“Dibena Group”) shall not engage, participate, compete (whether directly or indirectly) with Datasonic Group in similar business activities other than those of Datasonic Group; • Dibena Group shall not bid or tender for any projects which are of similar business with Datasonic Group either directly or indirectly through any of the companies under Dibena Group; and • Dibena Group shall not enter into similar business arrangement with any third party which will be in direct competition with the principal activities of Datasonic Group. Datasonic has also procured a similar letter of irrevocable undertaking dated 19 August 20 II directly from Dato’ Abu Hanifah bin Noordin. In addition, Datasonic Technologies has already been identified as the tendering company by our Group as evidenced by the granting of the “Company Registration Certificate” by the MOF on 18 September 2008 to 17 September 20 II, which was renewed on 18 September 20 II to 17 September 2014 (as disclosed in Section 6.9 of the Prospectus) for the submission of bid / tender of Governrnent’s projects in the field of provider I provision of service under sectors, fields and sub-fields as listed below: a. Clothing/safety equipment (“pakaianl alat keselamatan”);
b. Personal computer & related peripheral & services;
c. Small to large multi-user systems & services;
d. Workstations and related peripheral & services;

e. Software product & services; f. Other computer related services;
g. Networking products & services;
h. Laminated License/Certification & Security Pass;

1. Communication products (“alat perhubungan”); j. Teaching Aid Equipments (“alat bantuan mengajar”);
k. Signaling and CommunicationslBroadcasting Equipments (“alat semboyan perhubunganl

penyiaran”); and 1. Hospital! Laboratory Equipments (“alat kelengkapan hospital! makrnal”). 45 5. INFORMAnON ON OUR GROUP (Cont’d) As such, since 2010, Government projects/contracts are now tendered directly by our Group via Datasonic Technologies and awarded directly by the Government to our Group. This is demonstrated by the recent award by the Government of several contracts in 20I0 and 20 II such as the supply of consumables and the supply of new raw MyKad with 100% polycarbonate material, new security features, OS and chips to NRD as set out in Section 5.5 of this Prospectus. As the Government has awarded the said contracts directly to Datasonic Technologies, it appears that the existing structure ofGMPC Project (MyKad project) is no longer applicable. SHARE CAPITAL Our present authorised share capital is RMI,OOO,OOO,OOO comprising 2,000,000,000 ordinary shares of RMO.50 each, of which RM34,813,002 comprising 69,626,004 Shares are issued and credited as fully paid-up. Upon completion of our IPO, our issued and paid-up share capital will increase to RM45,000,000 comprising 90,000,000 Shares. The changes in our issued and paid-up share capital since our incorporation are as follows: Date of  No. of Shares  Par  Cumulative  Allotment  Allotted  Value  Consideration  Total  RM  RM  13.03.2008  4  0.50  Subscribers’ shares  2  11.06.2012  69,626,000  0.50  Shares issued as consideration for the  34,813,002  Acquisitions
There are no discounts, special terms or instalment payment terms applicable to the payment of consideration for the above allotments. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in our Company. 5.3 SUBSIDIARY COMPANIES 5.3.1 Datasonic Technologies (i) History and Business Datasonic Technologies was incorporated on 26 June 1991 in Malaysia under the Act as a private limited company under the name of Urbina Holdings Sdn Bhd. The company changed its name to Guthrie Systems Sendirian Berhad on 9 October 1991, to Guthrie DOE Sendirian Berhad on 17 January \992 and to Guthrie Technologies Sdn Berhad on 9 April 1998 before assuming its current name on 27 February 2008. Datasonic Teclmologies commenced operations in 1998. It is principally involved in provision of customisation of software and hardware solutions, project management and consultancy. (ii) Share Capital Datasonic Technologies’ present authorised share capital is RM8,000,000 compnsmg 8,000,000 ordinary shares of RMI.OO each, of which RM7,466,667 comprising 7,466,667 ordinary shares ofRMI.OO each have been issued and fully paid-up. 5. INFORMATION ON OUR GROUP (Cont’d) The changes in the issued and paid-up share capital of Datasonic Technologies since its incorporation are as follows: Date of  No. of Ordinary  Par  Cumulative  Allotment  Shares Allotted  Valne  Consideration  Total  RM  RM  26.06.1991  2  1.00  Cash  2  31.07.1992  5,899,998  1.00  Cash  5,900,000  22.04.1993  1,566,667  1.00  Cash  7,466,667
There are no discounts, special terms or instalment payment tenns applicable to the payment of consideration for the above allotments. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Datasonic Technologies. (iii) Shareholders and Directors Datasonic Technologies is our wholly-owned subsidiary company and its Directors are Data’ Abu Hanifah bin Noordin, Dato’ Wan Ibrahim bin Wan Ahmad, Siti Rohana binti Abd. Majid, ProfDato’ Dr Hj Abdul Razak bin Hj Omar, Md Diah bin Ramli, Datin Popi Riandani binti Dody Muchtar, Saverinus Phillip P. Kitingan, Zaiful Ayu Ibrahim bin Ibrahim, Talya Zholeikha binti Abu Hanifah and Handrianov Putra bin Abu Hanifah. (iv) Subsidiary and Associated Companies Datasonic Technologies does not have any subsidiary or associated company.
5.3.2 Datasonic Corporation (i) History and Business
Datasonic Corporation was incorporated on 22 October 1980 in Malaysia under the Act as a private limited company under the name of Bumi Packaging & Storage (M) Sdn Bhd. The company changed its name on 9 March 1983 to Jacob Plastic & Packaging Industries (M) Sdn Bhd, on 15 September 1990 to Datacard (Malaysia) Sdn Bhd, on 23 January 1991 to Datacard Toppan Moore (M) Sdn Bhd, on 24 February 1997 to Datacard-IDT (Malaysia) Sdn Bhd and on 16 February 2004 to Datacard QSS Sdn Bhd. The company subsequently assumed its present name on 19 May 2006. Datasonic Corporation commenced operations in 1983. It is principally involved in the provision of smart card personalisation.
(ii) Share Capital

Datasonic Corporation’s present authorised share capital is RMIO,OOO,OOO compnsmg 10,000,000 ordinary shares of RM 1.00 each, of which RMI 0,000,000 comprising 10,000,000 ordinary shares ofRMl.OO each have been issued and fully paid-up. The changes in the issued and paid-up share capital of Datasonic Corporation smce its incorporation are as follows: Date of  No. of Ordinary  Par  Cumulative  Allotment  Shares Allotted  Value  Consideration  Total  RM  RM  22.10.1980  4  1.00  Subscriber shares  4  03.04.1991  299,996  1.00  Cash  300,000
5. INFORMATION ON OUR GROUP (Conl’d) Date of  No. of Ordinary  Par  Cnmnlative  Allotment  Shares Allotted  Valne  Consideration  Total  RM  RM  29.04.1998  432,000  1.00  Otherwise than cash by  732,000  way ofdividend  28.09.2007  9,268,000  1.00  Otherwise than cash by  10,000,000  way ofboTIUS issue
There are no discounts, special terms or instalment payment terms applicable to the payment of consideration for the above allotments. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Datasonic Corporation. (iii) Shareholders and Directors Datasonic Corporation is our wholly-owned subsidiary and its Directors are Dato’ Abu Hanifah bin Noordin, Raghbir Singh AIL Hari Singh, Tham Choon Sam, Md Diah bin Ramli, Chew Ben Ben and Dato’ Wan Ibrahim bin Wan Ahmad. (iv) Subsidiary and Associated Companies Datasonic Corporation does not have any subsidiary or associated company.

5.3.3 Smart Consnlt Solntions (i) History and Business
Smart Consult Solutions was incorporated on 2 April 2004 in Malaysia under the Act as a private limited company. Smart Consult Solutions commenced operations in 2012. It is principally involved in the provision of R&D and technical consultancy services.
(ii) Share Capital

Smart Consult Solutions’ present authorised share capital is RM500,000 comprising 500,000 ordinary shares ofRMI.OO each, of which RMIOO,OOI comprising 100,001 ordinary shares of RM1.00 each have been issued and fully paid-up. The changes in the issued and paid-up share capital of Smart Consult Solutions since its incorporation are as follows: Date of  No. of Ordinary  Par  Cumulative  Allotment  Shares Allotted  Value  Consideration  Total  RM  RM
2 April 2004 100,001 1.00 Cash 100,001 There are no discounts, special terms or instalment payment terms applicable to the payment of consideration for the above allotments. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Smart Consult Solutions. (iii) Shareholders and Directors Smart Consult Solutions is our wholly-owned subsidiary company and its Directors are Dato’ Abu Hanifah bin Noordin, Chew Ben Ben, Tham Choon Sam and Teng Boon Hou @ Andrew Teng. 48 5. INFORMATION ON OUR GROUP (Con/’d) (iv) Subsidiary and Associated Companies Smart Consult Solutions does not have any subsidiary or associated company. LISTING SCHEME In conjunction with and as an integral part of our Listing, we proposed a Listing Scheme which was approved by the SC on 27 September 20 II. The Listing Scheme involves the following:
5.4. I Acquisitions Datasonic Technologies Datasonic acquired the entire equity interest in Datasonic Technologies of RM7,466,667 comprising 7,466,667 ordinary shares ofRMl.OO each for a total purchase consideration ofRM9,098,000 satisfied entirely by the issuance of 18,196,000 Datasonic Shares at an issue price of RMO.50 per Datasonic Share. Pursuant to the conditional share sale agreement dated 24 June 2011, Datasonic acquired the entire equity interest in Datasonic Technologies from the existing shareholder of Datasonic Technologies as follows: No. of  0/0 of Issued  No. of  Ordinary Shares  and Paid-Up  Purchase  Datasonic  Shareholder  Acquired  Share Capital  Consideration  Shares Issued  RM  Dibena Enterprise  7,466,667  100.00  9,098,000  18,/96,000
The purchase consideration of RM9,098,000 was arrived at on a willing buyer-willing seller basis and represents approximately the audited NA of Datasonic Technologies as at 31 December 2010 of RM9,098,508. Datasonic Technologies has on 8 June 2012 declared a dividend of RM2.00 million to its eXIstmg shareholders based the on the audited FPE 29 February 2012. The said dividend was paid on 24 July 2012. The acquisition of Datasonic Technologies was completed on II June 2012. Datasonic Comoration Datasonic acquired the entire equity interest in Datasonic Corporation of RMIO,OOO,OOO comprising 10,000,000 ordinary shares of RMl.OO each for a total purchase consideration of RMI9,441,000 satisfied entirely by the issuance of 38,882,000 Datasonic Shares at an issue price of RMO.50 per Datasonic Share. Pursuant to the conditional share sale agreement dated 24 June 2011, Datasonic acquired the entire equity interest in Datasonic Corporation from the existing shareholders of Datasonic Corporation as follows: 5. INFORMATION ON OUR GROUP (Conl’d) Shareholders  No. of Ordinary Shares Acquired  % ofIssued and Paid-Up Share Capital  Purchase Consideration RM  No. of Datasonic Shares Issued  Dibena Enterprise  7,550,000  75.5  14,678,000  29,356,000  Dato’ Abu Hanifah bin Noordin  2,449,999  245  4,762,998  9,525,996  Nor’aini binti Mat  1  *  2  4  10,000,000  100.0  19,441,000  38,882,000
Nole: • Negligible. The purchase consideration ofRM19,441,000 was arrived at on a willing buyer-willing seller basis and represents approximately the audited NA of Datasonic Corporation as at 31 December 2010 of RM 19,440,600. In addition, Datasonic Corporation has declared a single tier exempt dividend for FYE 31 December 2010 to its respective shareholders being Dibena Enterprise and Dato’ Abu Hanifah bin Noordin. He has subsequently has by way of letter dated 24 June 2011 instructed Datasonic Corporation to pay his entitlement ofRM6,174,000 directly to Datasonic. In consideration thereof, Datasonic has on II June 2012 issued 12,348,000 new Datasonic Shares to Dato’ Abu Hanifah bin Noordin. Datasonic Corporation has two (2) subsidiary companies, namely Hong Zhong Systems & Solutions (HK) Ltd, a 99.99% owned subsidiary company and Million Mega Network Sdn Bhd, a 51% owned subsidiary company. As part of the Listing Scheme, Datasonic Corporation has on 11 June 2012 disposed Hong Zhong Systems & Solutions (HK) Ltd and Million Mega Network Sdn Bhd to Dibena Enterprise for a consideration ofRM1.00 and RM765,000 respectively. The disposal consideration for Hong Zhong Systems & Solutions (HK) Ltd was arrived at on a willing buyer-willing seller basis given that the company recorded negative shareholders funds as at 31 December 2010 of RM 1.21 million, whilst the disposal consideration for Million Mega Network Sdn Bhd was based on the cost of investment by Datasonic Corporation in the company. Datasonic Corporation has fully provided for the diminution in value of its cost of investment in Hong Zhong Systems & Solutions (HK) Ltd. Therefore the disposal consideration of RM 1.00 will result in a gain of a similar amount. Whereas for Million Mega Network Sdn Bhd, the disposal at cost of investment will result in no-gain-no-Ioss position. Datasonic Corporation has on 8 June 2012 declared a dividend of RM5.00 million to its existing shareholders based the on the audited FPE 29 February 2012. The said dividend was paid on 24 July 2012. The acquisition of Datasonic Corporation was completed on 11 June 2012. Smart Consult Solutions Datasonic acquired the entire equity interest in Smart Consult Solutions of RM100,001 comprising 100,00 I ordinary shares of RM1.00 each for a total purchase consideration of RM 100,000 satisfied entirely by the issuance of200,000 Datasonic Shares at an issue price of Rl\1O.50 per Datasonic Share.

 

5. INFORMATION ON OUR GROUP (Cont’d) Pursuant to the share sale agreement dated 24 June 2011, Datasonic acquired the entire equity interest in Smart Consult Solutions from the existing shareholder of Smart Consult Solutions as follows: No. of  % of Issued  No. of  Ordinary Shares  and Paid-Up  Purchase  Datasonic  Shareholder  Acquired  Share Capital  Consideration  Shares Issued  RM  Dibena Enterprise  100,001  100.00  100,000  200,000
The purchase consideration was arrived at on a willing buyer-willing seller basis and represents approximately the paid-up capital of Smart Consult Solutions as at 31 December 2010. The net liabilities of Smart Consult Solutions as at 31 December 2010 are RM755,031. The acquisition of Smart Consult Solutions was completed on II June 2012. THE RESTOF THIS PAGE HAS BEENINTENTIONALLYLEFTBLANK 5. INFORMATION ON OUR GROUP (Conl’d) 5.4.2 Public Issue Iu coujuuction with our Listiug, we will uudertake a public issue of 20,373,996 new Shares, represeuting approximately 22.64% of our eularged issued aud paid-up share capital at the IPO Price to be allocated iu the followiug mauner: (i) Public Trauche 6,000,000 Public Issue Shares, representing approximately 6.67% of our enlarged issued aud paid-up share capital, have been reserved for applicatiou by the Public, of which at least 50% shall be set aside for Bumiputera investors including individuals, companies, societies, co­operatives and institutions; (ii) Piuk Form Trauche 4,009,996 Public Issue Shares, represeutiug approximately 4.46% of our eularged issued aud paid-up share capital, have been reserved for application by our eligible Directors, employees and persons who have contributed to the success of our Group; (iii) MITI Trauche 8,517,000 Public Issue Shares, represeuting approximately 9.46% of our Company’s enlarged issued and paid-up share capital, have been reserved for Bumiputera investors approved by the MITI; and (iv) Placemeut Trauche 1,847,000 Pnblic Issne Shares, representing approximately 2.05% of our enlarged issned and paid-up share capital, have been reserved for placement to selected investors. The Pnblic Issne Shares shall rank pari passn in all respects with our existing issued aud paid-up Shares, iucludiug voting rights and the rights to all dividends and other distributions that may be declared snbsequent to the date of allotment thereof. 5.4.3 Offer for Sale In conjunction with our Listing, the Offeror will offer up to 7,932,000 Offer Shares, representing approximately up to 8.81 % of our enlarged issued and paid-up share capital to selected investors, identified by us or our Placement Agent. 5.4.4 Listiug ou Bursa Securities The admission and the listing of and quotation for our entire enlarged issued and paid-up share capital ofRM45,000,000 comprising 90,000,000 Shares on the Main Market of Bursa Securities was approved in-principle on 8 March 2012. S. IN FORMAnON ON OUR GROUP (Coni’d) 5.5 KEY ACHIEVEMENTS AND MILESTONES Our key achievements and milestones since inception are as follows: Year Kev achievements and miles/ones 1980 • Incorporated Datasonic Corporation in Malaysia under the Act. 1983 • Datasonic Corporation started its business relationship with Datacard Corporation. 1991 • Datacard Corporation acquires 49.00% of Datasonic Corporation, leading to the joint-venture partnership between the companies and was awarded distributioo rights for Datacard® products and services in Malaysia. • Datasonic Technologies was incorporated in Malaysia under the Act. 1997-1999 • Datasonic Corporation established its presence in the Malaysian card personalisation market by capturing a market share in the fmancial services sector in Malaysia. • Datasonic Technologies was awarded a contract by Immigration Department of Malaysia for the provision of computerisation hardware and software services for Visa and Pass system. 1998-200 I • Datasonic Technologies was awarded another contract by Permodalan Nasional Berhad for modernisation and computerisation of Visa and Pass system for Immigration Department of Malaysia. 1999 • Datasonic Corporation became the sole sub-contractor to Dibena Enterprise in the GMPC pilot project for the NRD. 1999-2003 • Datasonic Technologies was awarded a contract by Immigration Department of Malaysia to supply consumables and provide maintenance services for Foreign Worker Card Printing system. 2001 • Datasonic Technologies was awarded a contract by Heitech Padu Berhad for upgrading of Visa and Pass Central system for Immigration Department of Malaysia. 2001-2003 • Datasonic Technologies was awarded a contract ‘by Prime Minister’s Department for provision of BPA system. 2002-2003 • Datasonic Technologies was awarded the contract by Immigration Department of Malaysia for expansion of Visa and Pass system to other local branches of Immigration Department of Malaysia. • Datasonic Technologies was awarded the contract by Immigration Department of Malaysia for expansion of Visa and Pass system to other overseas branches of Immigration Department of Malaysia. 2003 • Datasonic Corporation cooperated with Bank Simpanan Nasional to set-up the RPS centre for the production ofPMPC, ATM cards, EMV chip-based credit cards, and other related services to local and foreign financial institutions. The RPS centre was certified by Visa International and MasterCard International for its strict adherence to international security standards for financial card issuance services. 2003-2004 • Datasonic Technologies was awarded a contract by Immigration Department of Malaysia for supply of Foreign Worker Card Printing system to Immigration Department of Malaysia. 5. INFORMATION ON OUR GROUP (Con/’d) Year Kev achievements and milestones 2003-2005 • Datasonic Corporation was appointed as the exclusive sub-contractor to Dibena Enterprise in the national roll-out of the GMPC MyKad project, MyKid project and MyPR (Permanent Resident) project for the NRD. 2004 • Smart Consult Solutions was incorporated in Malaysia under the Act 2005-2007 • Datasonic Technologies was awarded the contract by the Prime Minister’s Department for provision of support and maintenance services for BPA system or the BPA system of Prime Minister’s Department. 2007 • Datasonic Corporation set-up a new RPS centre in Petaling Jaya Highway Centre with increased production capacity to meet current and future demands for financial card issuance. The new personalisation centre was certified by Visa International, MasterCard International, Proton World International, and Malaysian Electronic Payment System Sdn Bhd for its strict adherence to the international security standards for financial card issuance. 2007-2010 • Datasonic Technologies was awarded the contract by the Prime Minister’s Department for development, supply, installation and commissioning, training and technical support services for ‘System Pemantauan Aduan Agensi Awam’ (“iSPAAA”) for BPA system of Prime Minister’s Department. 2008 • Datasomc Corporation secured 3-year contracts from two major financial institutions to set-up the in-house and outsourcing personalisation centre for the production of EMV compliant credit cards for Malaysia. 2008-2010 • Datasonic Technologies was awarded the contract by the Ministry of Women, Family and Community Development for the provision of system design, development, installation, supplying and printing of all OKU cards to the disabled group throughout Malaysia. 2009 • Datasonic Corporation was awarded a 2-year contract from Genting Malaysia Berhad to supply consumables and technical support and maintenance services for alI its desktop printing system and solutions. 20I0 • Enterprise 50 Award 20I0 bestowed to Datasonic Technologies by SmalI and Medium Enterprise (“SME”) Corp Malaysia in recognition for its outstanding achievement amongst Malaysia SME. • Smart Consult Solutions’s R&D unit has successfulIy developed the chip as for supply of new MyKad (new chip with new as and new fulI polycarbonate card structure) for the NRD.
• Datasonic Technologies was awarded the contract by PTPTN for the provision of

systems solution, hardware and software as well as the implementation of call centre services for the management of higher education fund inquiries and other related matters. 2011 • Datasonic Corporation through Dibena Enterprise was awarded the contract by NRD for the supply of centralised and decentralised MyKad issuance system for NRD headquarters and 14 NRD branches nationwide. The duration of the contract is from I May 20 II to 30 April 2013 (“Decentralised Printing Project”). • Datasonic Technologies was awarded the contract by NRD for the provision of maintenance support and maintenances services for the DC9000 Central Issuance machines for NRD. The duration of the contract is from I July 20 II to 31 December 20 II. 5. INFORMATION ON OUR GROUP (Cont’d) Vear 2012  Kev achievements and milestones • Datasonic Techoologies was awarded the contract by lnunigration Department of Malaysia for the provision of maintenance services to the data center and helpdesk system in the lnunigration Department of Malaysia. The duration of the contract is from I July 20 II to 30 June 2013. • Datasonic Techoologies was awarded the contract by lnunigration Department of Malaysia for the provision of maintenance services of the existing passport printers, software and application system for the production of passports. The duration of the contract is from I August 20 II to 31 July 2012. • Datasonic Techoologies was awarded the contract from the NRD for the supply of 4 million of new raw MyKad with 100% polycarbonate material, new security features, OS and chips to NRD. The duration of the contract is from I January 2012 to 31 December 2013. • Datasonic Techoologies secured the 2″d phase ofOKU project from the Ministry of Women, Family and Community Development for the provision of the enhancement of SMOKU system for Ministry of Women, Family and Community Development. The duration of the contract is from 3 January 2012 to 2 January 2013. • Datasonic Technologies secured a contract from the Immigration Department of Malaysia to supply new passport polycarbonate dalapage and laser engraving personalisation equipment to the Immigration Department of Malaysia. The duration of the contract is from 1 February 2013 to 31 January 2018. • Datasonic Technologies secured a contract from the Immigration Department of Malaysia to supply consumables for the existing passport printers. The duration of the contract is from 1 May 2012 to 28 February 2013. • Smart Consult Solutions was granted the MSC status by MDEC.
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OUR BUSINESS We currently operate on the following business model:

• Customisation of software and hardware solutions, project management and consultancy
• Personalisation of smart cards
• R&D and technical consultancy services

Government and non-Government L_S_a_Ie_o_f_c_o_ns_u_m_ab_l_e_s—–‘ L_s_a_le_O_f_e_q_u_i_pm_e_n_t_11 s_a_l_e_o_f_c_a_rd_s _

Exclusive distributor of Datacard® Central Issuance Systems and Solutions in Malaysia Established relationships with foreign smart card players I  Technical competencies  I  Expertise in project management  Experienced leadership team  I  Commitment in R&D  I  Established relationships with the Government  One-stop centre for smart cards personalisation
6. BUSINESS OVERVIEW (Conl’d) 6.2 PRINCIPAL ACTIVITIES AND PRODUCTS We provide secure customisation of software and hardware solutions, project management and consultancy. smart card personalisation, R&D and technical consultancy services. These principal activities are summarised below: Comoanv Princioal activities Descriotion Datasonic Smart card personalisation entails the supply of Government secure ID card (MyKad, Corporation printing system and solutions, consumables, cards, MyKid and MyPR) personalisalion printer spare parts, technical and maintenance solutions, financial PMPC / ATM / debit services, personalisation of financial cards, ID card and EMV credil card personalisation cards and loyalty cards, project management and solutions. commercial identity and loyally smart card professional services which covers the card personalisation solutions. following products and service offerings; Sales of hardware I printers and contract • Services provided for customers with service consumables for smart card personalisation system and solutions. service contract Other selVices include consullation, project • Services provided for customers with noo­
• Sale ofconsumables management. lTaining. technical support.
• Sale ofcards maintenance and other services.
• Sale of equipment
• Smart card printer software development
• Smart card personalisation services

Datasonic Customisation of software and hardware systems Provision of large-scale customised ICT Technologies system solutions, from the design stage up which covers the following products and service solutions, project management and consultancy to the maintenance stage (i.e. design, setup, offerings: install, commission. maintenance and technical support) and project management contract • SelVices provided for customers with service seTVices such as the Visa & Pass System and Malaysian Foreign Worker ID Card for service contract • SelVices provided for customers with non-

the Immigration Department of Malaysia, OKU Project for Ministry of Women,• Sale of consurnables Family and Community Development,
• Sale of equipment
NGN project for Telekom Malaysia• Smart card printer software development
Berhad and Call Centre SelVices Project for PTPTN. Datasonic Technologies has also been awarded by NRD for a 2-year conlTact for the supply of 4 million of new raw MyKad with 100% polycarbonate material, new security features, OS and chip of which the OS was developed by Smart Consult Solutions. In April 2012, the Immigration Department of Malaysia has awarded Datasonic Technologies a five (5) year contract to supply the new passport polycarbonate datapage and laser engraving personalisation equipment. R&D and technical consultancy services Solutions Smart Consult R&D and technical consultancy SeMces for smart card OS solutions, border conlTol system and other ICT solutions. 6. BUSINESS OVERVIEW (Cont’d) 6.2.1 Principal Products and Services Our products and services can be classified into seven (7) categories as follows: (i) Services provided for customers with service contract Services provided for customers with service contract refer to revenue derived from machinery servicing and spare parts replacement for customers with a signed contract or agreement. Some of these service contracts include those maintenance and technical support for the NRD, Immigration Department of Malaysia, NGN project for Telekom Malaysia Berhad and other service contracts with customers like Genting Malaysia Berhad, Citibank Berhad and others. (ii) Services provided for customers with non-service contract Services provided for customers with non-service contract revenue refer to revenue derived from ad hoc servicing and spare parts replacement based on purchase orders Le. where there are no signed contracts or agreements. Some of these non-service contracts include receipt of customer request I order, execution of service or provision of parts I equipment replacement and the issuance of bills to corporate customers. (iii) Sale of consumables Sale of consumables comprises revenue derived from sale of, among others, ribbons, cleaners, and products for card lamination. These consumables are sold to our customers who have purchased Datacard® printers and other equipment from us, and are used in the various card personalisation processes. (iv) Sale of cards Sale of cards comprises revenue derived from sale of contact and contactless smart cards for financial institutions as ATM, credit / debit cards, for major corporations as ID and loyalty cards for the storage of customer information and for Government as national identification documents.

Financial cards (v) Sale of equipment Sale of equipment comprises revenue derived from sale of centralised issuance systems such as MX6000, MX2000, MXIOOO, Maxsys printing system and decentralised desktop printers such as SD260, SD360, SP25, SP35, SP55, SP75 and other equipment such as DC280P embosser, DCI50i embosser, LCP9000 desktop laser colour printers and IXLA laser printer. 6. BUSINESS OVERVIEW (Cont’d)
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(vi) Smart card printer software development Smart card software development refers to revenue derived from system design, installation. integration, maintenance and technical supports of our smart card system solutions and services for all the Government and non-Government customers such as the Visa & Pass System and the supply of new raw MyKad with 100% polycarbonate material, new security features, OS and chips. 6. BUSINESS OVERVIEW (Cont’dj (vii) Smart card personalisation services Smart card personalisation services are provided by our Group’s RPS centre as value-added and cost effective outsource alternative for the personalisation of financial smart cards. Smart card personalisation services refer to revenue derived from printing, embossing, indent printing, laminating, topcoat application and envelop insertion using the Datacard® Card Issuance Systems to enable our customers to quickly and efficiently produce the credit I debit and ATM cards.

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6. BUSINESS OVERVIEW (Conl’d) 6.2.2 Production Processes (i) Services provided for customers with and withont service contract and sale of consumables, cards and equipment With respect to services provided for customers with and without service contract, and sale of consumables, cards and equipment by our Group, the process flows are illustrated below: Obtain client request for products / services 1
Submit purchase order to supplier or sign subcontract with service provider !
Receipt I acceptance of deliveries or services 1 carry out work to meet customers requirements I ! Invoicing upon delivery and. completion of work The process is further elaborated below: (I) We receive purchase order from our customer for products / services. The purchase order may be accompanied by a letter of award or contract;
(2) We submit purchase order to supplier or sign subcontract with service provider ­Where the customers requires equipment, consumables or cards, our Group will submit a purchase order to the relevant vendor / supplier to buy the necessary products and services. Where the customers require specific system requirements to be performed, which are to be conducted by a third party, a purchase order will be issued to sub-contractor or a contract will be signed with the sub-contractor;
(3) Upon receiving / deliveries of equipment, consumables and cards, we will submit delivery order (for sales of products) and status update (for provision of services) to the customers;
(4) Where there are additional services required, we will carry out the work to meet the customers’ requirements based on specification; and
(5) Upon delivery and completion of our work we will invoice the customers and upon receipt of payment from our customer, we will make payment to the vendor / sub­contractor.

61 6. BUSINESS OVERVIEW (Conl’d) In addition to the sale of products and provision of services to customers upon the receipt of the customer’s purchase order as higWighted earlier, our Group also conducts the sale of service bureau products / outsourcing services. These are based on Service Level Agreement (“SLA”) signed between onr Gronp. The process flow is depicted as follows: Submit quotation/proposal to customer 1
Enter into SLA and initiate project management plans I !
Process client card production file I 1 Generate production report !
Invoicing upon delivery and completion of work Note: In certain instances, instead ofan SU, a purchase order may be accepted as well. The above process is reflective of the provision of service bureau / outsourcing services based on a SLA / purchase order from customers whereby customers may request for specific outsourcing services, and our Group will provide a proposal/quotation for the customers to VIew. The process is further elaborated below: (1) Our Group submits a proposal and quotation to the customer based on our understanding of their needs for specific outsourcing services;
(2) Where the customer is agreeable to the proposal and quotations for our outsourcing services, we will enter into SLA with the customer and will start the outsourcing job in project management mode. Our project management team will then work out the project implementation timelines with the customer, develop card profiles and scripting, perform VAT by generating the test card for approval, pilot the card and subsequently conduct the live card production in mass quantity;
(3) The card production file process start with the process of downloading of card production data from customer server, transferring and preparation of card production data according to machine file format and personalisation of card which include encoding of data, embossing and printing of cards, insertion of card into mailers and envelopes and lastly, the packing and mailing of card to customers / end applicants;

62 6. BUSINESS OVERVIEW (Conl’d) (4) Generation of card production reports is performed on a daily basis. Our production team will compile all daily production reports into a monthly card production report for sales department to generate the sales order. The sales order will in turn be submitted to Finance Department in order for them to begin the invoicing process; and
(S) We invoice the customer for the card outsourcing services rendered.

(ii) Smart card printer software development The process taken by our Group in developing the smart card printer software is as follows: Issues requirements I specifications to development team !
Conduct software research, architecture and planning !
Verification and testing 1
Deployment and field testing 1
Implementation and integration; support, training and maintenance !
Invoicing upon delivery and completion of work -The process of smart card printer software development is further elaborated below: (1) Our software product development starts with the request from the management I customer. The software product specifications are drafted by the R&D I professional services team and reviewed by the head of division / management. The R&D team will then discuss and finalise the product and project scope to ensure a timely product delivery;
(2) With the defined list of software specifications, the R&D team will brainstorm, discuss, develop and implement the structure and architecture of the software. The software will be worked on by a different engineer for each section in order to speed up the development and implementation timeline;

63 6. BUSINESS OVERVIEW (Conl’J) (3) The completed software will be tested on its functionality and features as required by the product requirements. If the testing fails. the codes will be debugged and fixed (if the failures are due to software coding issue) to meet the requirements. When it passes and meets all the design specification and features, then it will move to next step; (4) At this stage, the software will be subject to testing on an actual application enviromnent for the VAT. If the testing fails. the codes will be debugged and fixed (if the failures due to software coding issue) to meet the requirements. When it passes and meets all the design specification and features, it will then be signed off for test implementation; (5) The completed and tested software will be implemented and integrated into the customer’s system as peT project specifications, procedures and timelines. In addition, there will also be the provision of software training and support to the customer and customer service personnel. Further support and maintenance will also be conducted where requested by the customer; and (6) We invoice the customer for the smart card printer software development services rendered. (iii) Smart card personalisation services In tenns of the process to be carried out at the RPS centre for the production from a raw card to a personalised card, the following is the process flow: Receipt of Raw Cards and Packing Consumables I !
Issuers send in daily and project embossing files to the RPS !
System administrator converts the embossing files into personalisation machine format ! Operations personnel tabulate the production and card retrieval list I !
Card retrieval list is forwarded to the vault controller for card retrieving !
Uploading data into chip and/or magnetic stripe, embossing / printing of card as well as front / rear indent printing 1 card mailing 6. BUSINESS OVERVIEW (Conl’d) The descriptions of the above process flow are as follows: (I) At the beginning stage of the process flow, the issuers or their authorised contractors send in pre-printed PMPC / ATM and EMV credit cards and packing consumables to the RPS centre; (2) Issuers send in daily and project embossing files to the RPS centre via File Transfer Protocol (UFTP”). The embossing files contain card holder information, conversion report (packing details), and mailing list for the card personalisation issuance. For security reasons, the data is transferred in the fann of production files and splitting reports using an encrypted fannat; (3) The system administrator converts the embossing files into personalisation machine fannat to enable the personalisation activities. Then the card personalisation machine integrates and incorporates the data into the card itself. Conversion and mailing reports are converted and subsequently printed to ensure accuracy and for the card mailing process respectively; (4) Upon receiving the conversion and mailing report, operations personnel in the RPS centre tabulate the production and card retrieval list for card retrieval and set up purposes; (5) Card retrieval list is forwarded to the vault controller for card retrieving. Subsequently, the pre-printed raw cards are handed over to the production operator for the next stage of the process; (6) All cards received are counted and checked before the actual personalisation process. Production supervisors concurrently load and decrypt the appropriate files into the daily production schedule. Thereafter, the operator carries out the card personalisation in accordance with the card type requirements (this includes personalisation of data into chip and/or magnetic stripe, embossing / printing of card as well as front / rear indent printing). All cards are subjected to the QC procedure to ensure that the cards are correctly personalised; and (7) Upon receiving the personalised cards, the mailing team carries out the mailing activities which consist of card sorting, insertion of brochures I promotional leaflets, and final packing. Sorted cards (by issuer / bank branch / card holder addresses) are counted and appended with dispatch documents before being dispatched out of the RPS centre. 6. BUSINESS OVERVIEW (Conl’d) The above process can be matched to the system architecture used at the RPS to conduct smart card personalisation, which is as follows:
(1) Firstly, data from the customer is transferred to the RPS’s computer server for processing. The data that is transferred is the personalised information of each cardholder that needs to be incorporated into the cards, in both physical and logical fann. The physical personalisation is the aesthetic designs and patterns that will be printed on the cards, which includes the personalised cardholder’s name, embossing of card number, and so on. The logical personalisation is the cardholder information that the customer wants to incorporate into the memory chip of each card. Typical information incorporated in the logical personalisation process includes the card holder’s names, card identity number, contact information, and so on; (2) After the data is received at the RPS computer server, the data is transferred to the DPS where the data is refonnatted into the card personalisation machine fonnat file; (3) The data is then transferred to the P3 system where the card’s data printing format is generated for the card personalisation process; and (4) Finally the data is sent to the card personalisation system where the physical and logical personalisation is incorporated into each card, then sorted and finally mailed out to card holders. 6. BUSINESS OVERVIEW (Conl’d) 6.2.3 Business Development and Marketing Our overall marketing strategy is aimed at ensuring the availability and competitiveness of a range of quality products and services to generate value for customers; and to enlarge the reach and entry into markets by way of R&D breakthrough and competitive solutions and services. Our marketing strategies are as follows: (i) To provide advanced, innovative, and high quality products and services to our customers to meet or exceed their expectations in the fast-changing ICT market. To this end, our R&D activities via Smart Consult Solutions have focused on developing and enhancing systems and solutions for our Group’s existing and new customers and carry out research into new technology that better meets the business and operations requirements of our customers. Technological advancements may create further opportunities for new applications (for the smart cards market) or enhanced systems (for the ICT solutions market). In order to tap onto these opportunities, we will have to ensure that our products, solutions and services are able to meet the current and future requirements of all our customers; (ii) To customise and deliver integrated solutions and services to maximise investment returns to customers. We will ensure that solutions implemented for customers are customised to suit their needs and individual business and operational requirements. All solutions will also be integrated into the existing systems used by the customers in order to enhance their efficiency and minimise their operational costs. As each solution implemented is an investment by the customer, delivering a customer-specific solution will assist the customer to generate returns on investment at the fastest possible rate due to the potential efficiencies and cost savings generated thereof; (iii) To focus on science and technology, and to continuously conduct in-depth R&D for the improvement and invention of advanced, innovative, and leading edge technologies to stay ahead of global competition. We, via Smart Consult Solutions, will focus on R&D to ensure that the products and services are of high quality and able to meet international standards. For instance, our Group will need to keep abreast of smart card technology in order to ensure that our personalisation products, solutions and services are able to meet our customers’ needs to stay ahead of the competition; and (Iv) To develop and establish strong distribution channels and marketing network to increase and widen our market penetration. To this end, we plan to continue with the existing groups of suppliers, distributors and resellers, while also leveraging on the global brands of their strategic partners to increase and widen our marketing and distribution network. In addition, our Group will continue to strengthen the capabilities of our distribution channel to continuously generate new marketing avenues for our Group. Our Group’s strategy to continuously develop a strong portfolio of ICT solutions through driven and focused R&D is expected to bolster the marketing process as customers will be able to select from various existing solutions and to further obtain greater customisation via a specific system or solution. Our Management believes that through implementation of the above measures, our Group will be able to create more value added solutions and services for our customers to fully transform Datasonic into a established JCT player within the next five (5) years after Listing. 6. BUSINESS OVERVIEW (Conl’d) 6.2.4 Distribution Channels OUf products and services are marketed through our direct sales channel and through our appointed business partners and resellers. Within our Group, there are ten (10) sales personnel, each serving a different market segment from the Government segment to the financial and commercial segments. As at the LPD, we have appointed one (1) reseller to serve the Northern Region in Peninsular Malaysia, three (3) resellers to serve the Central ReglOn and one (1) reseller to serve the Southern Region. We have one (1) representative office in Sabah to serve East Malaysia region. These resellers have collectively contributed approximately 3.18%, 1.99%,0.65%,0.21% and 0.48% of our total revenue for the pastfour (4) FYE 31 December 2008 to 2011 and the FPE 29 February 2012. Apart from the distribution channels, sales of our products and services are further enhanced via our strategic alliance with local and foreign business and technology partners. The following are our strategic partners who have worked closely with us, and whose brands and technological strengths are well established in the market: (i) Datacard Corporation -a company involved in the provision of secure ID and personalisation solutions for more than 30 years. The company has a global presence in more than 120 countries across the world~ and (ii) Huawei Technologies (Malaysia) Sdn Bhd -a subsidiary company of Huawei Technologies Co., Ltd, China which is involved in the provision of NGN. The company is our strategic technology partner and we have worked together with Huawei Technologies (Malaysia) Sdn Bhd for the Telekom Malaysia Berhad NGN project under Establish, Operate and Transfer (“EDT”) partnership model. Our Group’s sales and distribution channels described above are illustrated below: Sales and Distribntion Channels Products and Services Sales of products and provision of services • Services provided for customers with service contract
• Services provided for non-service contract
• Sale of consumables

 

• Sale of cards
• Sale of equipment Smart card printer software development

Smart card personalisation services Customers • Government
• Non-Government

Illl!l!lProvides suppcrtvtabmnd. and !echnologJalls!renglll III IIIII
6. BUSINESS OVERVIEW (Cont’d) 6.2.5 Principal Markets Malaysia is our principal market For Ihe FYE 31 December 2010 and FYE 31 December 20 II as well as the FPE 29 February 2012, the breakdowns of Our revenue by end customer category and business segments are as follows: Revenue by end customer category  FYE 31 December 2010  FYE 31 December 2011  FPE 29 February 2012  RM’OOO  %  RM’OOO  %  RM’OOO  %  Government  23,899  55.29  67,239  77.89  23,894  91.57  Non~Govemment  19,324  44.71  19,090  22.11  2,199  8.43  43,223  100.00  86,329  100.00  26,093  100.00  Consolidation  (3,672)  (7,922)  (8,777)  adjustments •  Total  39,551  78,407  17,316
Note: • The consolidation adjustments are in relation to inter-company sales Revenue by business segment  FYE 31 December 2010  FYE 31 December 2011  FPE 29 February 2012  RM’OOO  %  RM’OOO  %  RM’OOO  %  Services provided for  20,705  47.90  38,877  4503  6,553  25.11  customers with service  contract  Services provided for  740  1.71  560  0.63  7  0.03  customers with non- service contract  Sale ofconsumables  12,546  29.03  17,984  20.83  6,169  23.64  Sale ofcards  1,695  3.92  653  0.76  12,558  48.13  Sale of equipment  2,233  5.17  23,191  26.86  241  0.92  Smart card printer  1,113  2.57  295  0.34  41  0.16  software development  Smart card  4,191  9.70  4,769  5.53  524  2.01  personalisation  services  43,223  100.00  86,329  100.00  26,093  100.00  Consolidation  (3,672)  (7,922)  (8,777)  adjustments •  Total  39551  78407  17.316
Note: • The consolidation adjustments are in relation to inter-company sales. 69 6. BUSINESS OVERVIEW (Cont’d) 6.2.6 Competitive Strengths We believe that our historical performance and future prospects are underpinned by a combination of our competitive strengths. With our long established presence in the smart cards market in Malaysia, we have been able to build on our core competencies. Our competitive strengths include: (i) Exclusive distributor of Datacard® Central Issuance Systems and Solutions in Malaysia We are the exclusive distributor in Malaysia for Datacard Corporation for Datacard® Central Issuance Systems and Solutions through Datasomc Corporation since 1991. There is a close working partnership between Datasonic Corporation and Datacard Corporation. As Datacard Corporation is an established brand and generally accepted by governmental and financial institutions seclors. Being lhe exclusive distributor of Datacard® Central lssuance Systems and Solutions in Malaysia gives us the competitive edge over OUT competitors, We have leveraged on Datacard Corporation to make inroads into the Malaysia smart card personalisation market. (ii) Established relationships with foreign smart card players Other than Datacard Corporation and its related companies, our Group also has established relationship with other foreign smart card players, namely, Digital Identification Solutions AG (“DIS”), Germany (provider of ID cards and passport/visa applications), IXLA S.A. of Italy (provider of hardware, laser source and software for laser card personalisation) and Ttiib AG Switzerland (manufacturer and personalisation provider of national ID documents and passport datapage). Such relationship shaIl benefit our Group in terms of widening the range of products and services in the area of laser engraving technology for desktop smart card personalisation solutions. Our Group works wilh DIS to develop the decentralised printing system and solutions for the NRD where DIS supplies the LCP9000 desklop laser colour prinlers whilsl we develop and integrale the printing solutions to enable printing of MyKad with laser engraving features in a single pass approach in decentralised desktop environment. With the support from DIS as the principal, il has enable us 10 offer the new decentralised printing solutions to NRD which lead 10 the securing of the RM20.7 million contracts from NRD for the decentralised MyKad issuance printing systems. Apart from that, our Group works with IXLA S.A. in the development of our proposed new passport booklet as weIl as foreign worker card for Immigration Department of Malaysia. IXLA S.A is the principal for the IXLA XP4 laser printer whilst we develop, customise and integrale our software solutions for the proposed high security passport booklet wilh polycarbonate datapage. In addition, our Group also works closely with Ttiib AG Switzerland in our proposed passport projecl to design and customise Ihe polycarbonate datapage for Immigration Department of Malaysia. The new proposed design for the polycarbonate dalapage for the passport was customised specificaIly for the Inunigration Department of Malaysia. We also integraIe our solutions to perform the personalisation of the polycarbonate datapage and chips by using Datacard Corporation PB6500 passport printing system and IXLA XP4 desktop laser printer for the production of high security e-passport. The strategic partnerships with the abovementioned multi-national companies provide us with a wider range of products and services in secure ID and card personalisation solutions. Our Group’s partnership with these foreign smart card players which are the established global leaders in the smart card industry has enabled us to reach out to a wider target market. 6. BUSINESS OVERVIEW (Conl’d) (iii) Technical competencies Our Group’s long history in the smart cards market in Malaysia has provided us with technical competencies to develop advanced and innovative solutions for our customers. Our technical team possesses experience and technical know-how to develop in-house multi-applications solutions which enable systems integration with other system vendors. Our Group’s technical capabilities is one of the key reasons why our customers continue to select Datasonic to provide service and technical support when they purchase our products and services in Malaysia. (iv) Expertise in project management Our team of professional staff are well-equipped with expertise in project management skills, having implemented and managed projects for the Government and non-Government sectors. Among some of the projects which our team has managed include the GMPC project, EMV migration, Visa and Pass system, BPA system, new raw MyKad and polycarbonate dalapage passport project. OUf Group’s strength and expertise in project management continue to drive the successful and timely completion of all project objectives and deliverables and we continue to generate high customer satisfaction which is evidenced by the continued patronage of our long-tenn customers. (v) Experienced leadership team Our Group has been led by an experienced Board with the relevant credentials to lead and drive our Group towards becoming an ICT solutions provider. In addition, our dedicated management tearn has been successful in fonnulating and implementing our strategic plans with a sound review process to enable our Group to achieve our business goals and objectives. We continue to train and develop our employees to build up our management and technical capabilities. (vi) Commitment in R&D We are committed in supporting R&D activities to ensure that our products, services and solutions are relevant and useful to the markets we serve. For the last four (4) FYE 31 December 2008 to 2011, we have invested approximately RMI1.59 million in R&D. In 2010, we have successfully developed a smart card OS through our R&D activities. The focus on R&D is dual-pronged to provide betler solutions for our existing customers in order to meet the present needs of the market and also to conduct research into newer technologies in order to remain competitive. (vii) Estahlished relationships with the Government OUf Group, via Datasonic Corporation, has been involved in the provision of smart card personalisation products and services for the GMPC project since 1999. Building on this long­tenn relationship with the Government, our Group has also extended our services to include the provision ofcustomised leT solutions to other ministries and agencies. In addition to the established relationship with the various Government agencies, we have also secured several long tenn contracts from the various Government agencies which include Visa and Pass project, BPA project, OKU project, decentralised printing system for new MyKad and MyKid projects and polycarbonale datapage passport project. 71 6. BUSINESS OVERVIEW (Conl’d) (viii) One-stop centre for smart card personalisation We act as a one-stop outsourcing centre for financial institutions and corporate customers with regards to the personalisation of their ATM I PMPC and EMV cards. Our RPS centre provides complete personalisation solutions and services for our financial ang corporate customers and we help manage our entire financial card issuance processes from procurement, card personalisation to distribution of cards to their end consumers. Our RPS centre has obtained the certification from various bodies which include Visa International, MasterCard International, Proton World International as well as Malaysia Electronic Payment System for our adherence to the stringent standards on card issuance which enable us to issue all kinds of ATM, debit and EMV card for all our banking customers. As an independent personalisation solutions provider, we can work with all cards vendors and manufacturers supporting their chip and card platforms and applications for our card personalisation solutions. This gives us the competitive edge in terms of our technical strength and experience in personalising all kinds of financial cards in the market for our customers. 6.3 SEASONALITY OUf Group does not experience significant fluctuations in our business due to seasonal factors. 6.4 PRODUCTION 6.4.1 Production Facilities RPS centre is a service bureau centre certified by bodies like Visa International and MasterCard International to perform financial card (ATM, debit and EMV credit cards) personalisation services. Currently, our RPS centre is capable of producing more than 2.00 million personalised PMPC I ATM and EMV cards per annum. In 2011, we produced a total of 2.951.093 personalised cards. As at 29 February 2012, the NBV of the material plant and equipment of our RPS centre is RM 1.34 million. 6.4.2 Production Capacity and Output As at 29 February 2012, our RPS centre production capacity is summarised in the table below: 6. BUSINESS OVERVIEW (Con/’d) Production area  Factory equipment and machineries  Production capacity  Production output  Production utilisation  sq. ft.  Number of cards per day’  Number of cards per day”  %  3,500  Two (2) units of DC9000 and three (3) units of MX6000 Central (Large Volume) Issuance System  15,480  10,150  65.57
Stora~e area  Storage capacity  SQ. ft.  1,500  1 million cards and consumables
Notes:  * **  Based on three (3) eight (8)-hour shifts per day 0/22 working days per month. Based on tlVo (2) eight (8)-hour shifts per day 0/22 working days per month.  72
We also plan to increase our production capacity with the new RPS centre as part of our future plans. Further details on the expected increase in our production capacity after completion of the new RPS centre are set out in Section 6.15 of this Prospectus. 6.5 TECHNOLOGY USED AND DESIGN & DEVELOPMENT Our Group recognises that R&D is an integral part of our operations. We keep abreast with new technologies and designs in order to stay ahead of competition. We invest in R&D to produce innovative solutions for our customers in order to fulfil market demand and the needs of our customers which in tum enhances our competitive edge. In terms of R&D investment, our Group has spent an average of RM2.90 million per year for the last four (4) FYE 31 December 2008 to 2011. The table below sets out the R&D expenses for the past four (4) FYE 31 December 2008 to 2011 and the FPE 29 February 2012: R&D expenses  < ———-FYE 31 December ——–>  FPE29 Februarv  2008  2009  2010  2011  2012  RM  RM  RM  RM  RM  MX6000 central issuance system Decentralised desktop issuance system Development cost Personnel cost  2,606,854 –200,629  -475,418 -242,365  -25,054 3,558,441 297,336  451,213 -2,851,445 882,905  –52,813 14,034  Total R&D expenses  2,807,483  717,783  3,880,831  4,185,563  66,847  Total R&D expenses as a percentage of our Group’s total revenue (%)  10.20  2.23  9.81  5.34  0.39
In 2008, our Group has incurred R&D expenses amount to approximately RM2.81 million which was mainly attributable to the purchase of new MX6000 central issuance system for R&D to provide laser engraving on new polycarbonate card. However, in 2009, we incurred a lower R&D expenses of approximately RMO.72 million given that we have only invested in some smaller scale decentralised desktop issuance systems. Subsequently in 2010, we invested approximately RM3.88 million in R&D expenses for the development of the smart card OS in preparation for the Proof of Concept in relation to the supply of 4 million new raw MyKad to the NRD. In 2011, we invested approximately RM4.19 million in R&D expenses of which RM2.85 million was for the: development and enhancement of smart card operating system for NRD. 6. BUSINESS OVERVIEW (Con/’d) In conducting our R&D, we employ the following R&D cycle: Design requirements and specifications
(i) Stage 1: Design reqnirements and specifications OUf software product development starts with the request from the management or our marketing I sales department based on our market research and feedback (which IS obtained from market analysis and study on the existing markets and new market potential) and our customer requirements. From the required software product features and application requirements, our R&D team will develop the software product specifications. The software product specificatIOns deveioped by our R&D team will be reviewed by our management and the marketing I sales team. After geltmg the necessary feedback, our R&D tearu will then finalise the product and project scope to ensure a timely product delivery. (ii) Stage 2: Software research, architecture and planning With the defined list of product specifications, our R&D team will brainstorm, discuss and develop the structure and architecture of the software with inputs in the form of specifications, application, suppliers’ and software tools’ capabilities. A process known as ‘divide and conquer’ is then applied to partition the planned application into multiple blocks and sections so that each block and section will be handled by a different engineer to speed up the development and implementation timeline. (iii) Stage 3: Implementation and integration During the implementation phase, our project team members will start the coding and programming upon assigmnent of the blocks or sections to them. Each block must have the ability to interface with the previous and next blocks. All the blocks will then be integrated together to have the master software codes for the designated software product before proceeding to hardware emulation and debugging. After implementation and integration, the engineering team will document the internal design of the software for verification, testing, deployment, maintenance and future product enhancements. (iv) Stage 4: Verification and testing During this phase, the software codes will be ported to a hardware emulator to test the software’s functionality and features as specified in the product requirements. The emulator may be subjected to testing with other applications (key management system, smart card reader, and others). If the testing fails, the codes will be debugged and fixed to meet the requirements. When it passes and meets all the design specifications and features, it will move to deployment and field testing. (v) Stage 5: Deployment and field testing Deployment will start after the software codes are thoroughly verified and tested. At this stage, the software codes would be loaded into the testing device (hardware). The software codes will then be subjected to testing on an actual application enviromnent. If the testing fails, the codes will be debugged and fixed to meet the requirements. When it passes and meets all the design specifications and features, it will then be released for user acceptance testing, or field testing or POC depending on the customer requirements. 74 6. BUSINESS OVERVIEW (Cont’d) (vi) Stage 6: Software training, support and maintenance This pbase focuses on tbe provision of software training and support to tbe application engineer, customer service and end customer. The training will serve to optimise software usage and functionaJities. Training classes are also regularly conducted for experienced and new users to enhance their skills and usage of the software. After field deployment, the software system will be maintained and enhanced based on newly identified problems, issues, usage feedback and new requirements from the users. Current R&D activities R&D on smart card as represents one of our core R&D activities. Smart card as is traditionally designed as an independent product such as the native chip operating design which can cater for many applications. Due to the nature of the smart card’s native chip as, any design changes will require code modifications. The challenge for the designer is to ensure code efficiency and appropriateness on the memory allocation for existing applications loaded in the chip. The smart card chip’s memory would need to be dynamically manipulated to handle a variety of applications. Currently our R&D team is working towards the goal of attaining an acceptable level of functionality for the MMU witb tbe minimum code size. Our R&D team is also focusing on chip as portability to make smart card chip as as neutral as possible in order to simplify the hardware porting process. Software-based encryptions needed to perfonn this function. Software-based encryption is more cost-effective and efficient for hardware porting, thus making it the preferred choice for users. Our R&D team has been conducting a process of converting the algorithm into code and evaluating the performance which is aimed at further optimising the code and performance. In 2010, our Group has successfully developed our own smart card as, whicb bas successfully developed the pac for the Government. This proprietary as will be used for the proposed new fully carbonate MyKad structure. In 2011, in addition to our software development on card operating system, our R&D team is also exploring the smart card application under android tablet as. Apart from the development of smart card OS, we have also carried out extensive R&D activities in the development of centralised and decentralised smart card issuance system and solutions which involve the adoption of the latest laser engraving technology and other smart card security features in order to enhance our smart card system solutions for our customers. Since 2008. our Group has invested in centralised and decentralised system and software and has successfully developed and customised centralised and decentralised sy~tem and solutions for OUf customers. In addition, our Group has successfully developed an instant credit card issuance application system and solution for the banking industry. In 20I0, our Group has secured a contract from a foreign bank and has helped our customer to launch the credit card instant issuance system in more than] 5 branches nationwide. As a result of our R&D efforts, we bave, through Dibena Enterprise, secured the following project: (i) Supply of 5 units of MX6000 for the centralised smart card issuance system;
(ii) Supply of 20 units of LCP9000 colour laser printer for the decentralised smart card issuance

system; and (iii) Supply of 14 units ofCP80 Plus card printer for the decentralised smart card issuance system. In addition to our R&D in smart card as, our Group has also undertaken R&D activities in the following areas in line with our strategy to be all ICT player and to remain competitive in our core business: 75 6. BUSINESS OVERVIEW (Clmt’d) (i)  Modularising components of smart card software system and OS to support applications and shortening the development cycle in the customisation process;  different  (ii)  Development of multi-purpose secure 1D solutions provider in the smart card market;  solutions with the aim  to  become  a  one  stop  (iii)  Development of integrated front-end and back-end smart card solutions for Governnon-Government applications;  ment and  (iv)  Development of advanced Total HIS using personal digital assistant and ICI proimprove the quality and safety of healthcare; and  cedure to  (v)  Development of multi model biometric border control system for the Government.
Our R&D team has also worked on the GMPC project to improve and enhance the quality and security features of the national identity cards. The scope of enhancement is categorised into 3 categories: (i) Support of dynamic application structure -In tenns of smart card applications, we have developed a very thorough and subtle design for memory re-allocation and fe-arrangement to support the loading of applications dynamically without affecting applications that co-exist on the chip; (ii) Support of the most widely adopted encryption algorithm -We continue to improve on our proprietary solution by supporting the most widely adoption encryption algorithm such as Triple DES, Advance Encryption Standard (“AES”) and the RSA and develop our Group’s solutions; and (iii) Support of hardware platfonn portability -We provide support for the portability of the smart card OS onto different hardware platfonns. Our R&D team has the capability of developing our smart card OS into a hardware-platfonn-neutral design and the ability to create a HAL which communicates between hardware and the designed OS. Our R&D tearn has started work on the HAL library some years back and is continuously improving the HAL library. Our Group’s R&D personnel and facilities As at the LPD, we have a total of ten (10) dedicated personnel involved in R&D work, supported by 23 technical staff. We have adequate facilities to provide our customers with a comprehensive and complete range of solutions for chip based security products for both their local and overseas projects. Within our areas of specialisation, our R&D team has invested significantly in both hardware and software resources in order to perfonn smart card chip OS development, validation, testing and maintenance. OUf hardware and software investments include: (i) Centralised and decentralised printer systems (hardware and software) for R&D development;
(ii) Handheld and personal computer based readers from various manufacturers to check the chip OS perfonnance and design efficiency;

(iii) Emulator from different chip manufacturers for chip OS porting and HAL library development purposes; (iv) In-house validation tool for chip design and code integrity verification; and
(v) Probing tool used to support projects which require the Application Protocol Data Unit command backward capability.

76 6. BUSINESS OVERVIEW (Cont’d) We also intend to utilise part of our IPO proceeds to expand our Group’s R&D activities. Future R&D plans Moving forward, we will be focusing our 5-year R&D plan on the development of more customised, integrated systems / applications to support our operations and business growth and will be working on the following areas: (i) Java OS Applets (Contact-based and Contactless-based) and Smart Card Reader Application Software;
(ii) Native COS (Contactless-based) and Smart Card Reader Application;

(iii) Native COS (Contact and Contactless-based) with AES-256 and RSA-4096 + KMS (Key Management System) and Smart Card Reader Application Software; (iv) MiFare / MiFare+ / DESFire (Contactless-based) solutions;
(v) Integrated, customised smart card application software (centralised and decentralised)

solutions for Government, banking and commercial sector; (vi) e-Hospital solutions which include Total HIS, Laboratory Information System, Blood Bank Information System and etc; and (vii) Multi model biometric solutions (fingerprint, facial! iris recognition), e-Passport solutions, web-enabled Visa and Pass system, i-Visa and e-Visa system and other smart card related solutions. 6.6 QUALITY ASSURANCE We have a team of five (5) supervisors in our RPS centre who are responsible for our quality assurance. There are sixteen (16) team leaders who are assigned with QC responsibility. These QC personnel perfonn cross-functional QC activities across all production lines. During production, our assigned team leaders and QC personnel are divided into sections to perfonn QC activities in accordance with their assigned production lines. OUf QC control revolves around the ‘maker and checker’ concept in which production operators are the makers while the team leader and QC personnel shall serve as the checkers respectively. Our process ensures that the quality of our cards is at its highest and enables the QC personnel to detect and rectify shortcomings promptly and accurately. The duties of the QC personnel include: (i) Performing verification on cards retrieved from vault;
(ii) Performing QC checks via our QC system on cards produced based on sampling method in accordance with QC matrix;

(iii) Performing QC checks on card recycling activities; (iv) Performing QC checks on damaged or rejected cards;
(v) Compiling production records on rejected cards for analysis;
(vi) Analysing the production reject ratio; and

6. BUSINESS OVERVIEW (Con/’d) (vii) Verification on reconciliation activities performed at cenain pre-set stages of the card production. In addition to the ahove QC process, we have also established a Production and Operations Management (“POM”) Department to further strengthen our QC processes and procedures. The POM Department is independent of the RPS centre. This will allow POM personnel to perform tbe quality and ccmpliance checks independently based On existing policies, procedures and processes of RPS centre to ensure that our standards and guidelines are strictly adhered to. In acccrdance with our POM Compliance Policy, our POM personnel are required to perform compliance checks on the regular basis on all RPS entities, systems, hardware, process and personnel. This is in-line with our internal Audit Policy and the standards of Visa and MasterCard, as well as industry best practices. Apart from that, POM personnel also carry out the project management role for RPS businesses to deal with all banks on their business requirements and to document all project papers, processes and procedures. We have our POM Compliance Policy which sets out in delail tbe compliance coverage, scope and duties of compliance officers, and key areas of compliance such as daily production, security and IT systems, environment and safety, destruction of secure items, quality assurance, training and maintenance. Waste management programme Managing waste from the RPS centre is part of our QC management as the waste is considered secured waste which contains confidential information of cardholders of our customers. Such secured waste has to be disposed safely and securely. The disposal of waste is subject to strict control. All items to be destroyed are shredded using a cross cut shredder on a daily basis to ensure that information on \he rejected items is beyond retrieval by unauthorised parties. The waste is then disposed according to our Group’s internal procedure for the said waste disposal. Maintenance policy We also have a maintenance policy designed to ensure lhat aU machinery. information technology infrastructure and other assets and premises are kept in good order for our Group. Our Group’s maintenance policy includes: (i) Periodic review of machine maintenance, analysis of hardware downtime and rectification plan; (li) Periodic review of the maintenance of information technology infrastructure to include activities such as housekeeping, installation of system patches, antivirus maintenance, cabling and control of testing protoccls; (iii) Periodic review and maintenance of genera] hardware such as smoke detectors. magnetic locks, alarm testing, functional doors and bypass door keys; and (iv) Periodic maintenance for extemal and internal premises such as staircases, hand rails, lights, floodlights, sirens, locks, emergency doors to ensure that all items are kept in order and fully functional. 6. BUSINESS OVERVIEW (Con/’d) MAJOR CUSTOMERS Our major customers (i.e. those which contributed 10% or more of total sales) for the past four (4) FYE 31 December 2008 to 2011 and the FPE 29 February 2012 are as follows: Enterprise end Enterprise cnd Huawei of major of
Customer category (I)  Types of products and services purchased (3) and (5)  Approximate length of relationship years 15  2008 RM’OOO 13,137  < –.—————–FYE 31 December ———.———-> 2009 2010 2011 % RM’OOO % RM’OOO % RM’OOO 47.73 17,666 54.95 14,049 35.52 34,819  % 44.41  FPE 29 Februarv 2012 RM’OOO % 290 1.67  (2)  (3) and (4)  3  – – 919  2.86  8,597  21.74  10,907  13.91  1,162  6.71  (I) (I)  (3) and (5) (3)  15 15  -2,740  -9.95  1,792  -5.57  3,462 1,864  8.75 4.71  8,691 14,103  11.08 17.99  9,536 5,370  55.07 31.01  15,877  57.68  20,377  63.38  27,972  70.72  68,520  87.39  16,358  94.46  27,524  100.00  32,149  100.00  39,551  100.00  78,407  100.00  17,316  100.00  57  59  65  51  26
Notes:  (1)  Government.  (2)  Non-Government.  (3)  Services provided/or customers with service contract such as maintenance and technical support for the NRD, Immigration Department of Malaysia, NGN  project for Telekom Malaysia Berhad and other service contracts with customers like Genting Malaysia Berhad, Citibank Berhad and others.  (4)  Services providedfor customers with non-service contract such as receipt ofcustomer request / order, execution ofservice or provision ofparts / equipment  replacement and the issuance ofbills to corporate customers.  (5)  Sales ofconsumables such as ribbons, cleaners, and productsfor card lamination.  79
6. BUSINESS OVERVIEW (Conl’d) For the FYE 31 December 2011, our Group has 51 customers which include those with secured contracts with us and those without secured contracts with us but who provide orders to us on an ad-hoc basis. Generally, these customers are from the Government, financial institutions, leT and telecommunication sectors. Dibena Enterprise is our largest customer and accounts for 58.32% of revenue contribution for FYE 31 December 2011 and approximately 8.38% of revenue contribution for the FPE 29 February 2012. Dibena Enterprise is a consortium member of GMPC Corporation Sdn Bhd, in securing the GMPC contract from the NRD. Since 1999, we have been appointed as the sole sub-contractor to Dibena Enterprise to undertake the NRD project. Most of our Group’s sales for the FYE 31 December 2008 to 2011 were made to Dibena Enterprise and accounted for almost half or more of the total Group sales per annum. Dibena Enterprise is therefore the largest customer for our Group. Hence, our Group is dependent on Dibena Enterprise. To mitigate the potential conflict of interest due to Dato’ Abu Hanifah bin Noordin’s interest in Dibena Enterprise and our Group, as detailed in Section 10.3 of this Prospectus we have taken the necessary steps by obtaining a letter of irrevocable undertaking dated 19 August 2011 from Dibena Enterprise to undertake the following: (i) Dibena Enterprise and its group of companies (“Dibena Group”) shall not engage, participate, compete (whether directly or indirectly) with Datasonic Group in similar business activities;
(ii) Dibena Group shall not bid or tender for any projects which are of similar business with Datasonic Group either directly or indirectly through any of the companies under Dibena Group; and

(iii) Dibena Group shall not enter into similar business arrangement with any third party which will be in direct competition with the principal activities of Datasonic Group. In addition, our Group has also procured a similar letter of irrevocable undertaking directly from Dato’ Abu Hanifah bin Noordin. Notwithstanding the above, we wish to highlight that the NRD project was awarded by the Government. The irrevocable undertakings from Dibena Enterprise and Dato’ Abu Hanifah bin Noordin, respectively are not binding on the Government. As such, there is nothing to prevent the Government from awarding any projects to other companies outside our Group as well as the Dibena Group. As disclosed in Section 15.4 of this Prospectus, our Group is currently engaged in a material litigation with Huawei Technologies (Malaysia) Sdn Bhd. However, our Group’s financial performance will not be materially affected as the contribution of Huawei Technologies (Malaysia) Sdn Bhd to our Group has been decreasing since FYE 3] December 2010. In addition, our Directors are of the opinion that the abovementioned material litigation would not affect the business relationship with Huawei Technologies (Malaysia) Sdn Bhd as our Group is continuously fulfilling our Group’s obligation for the NGN project. 6. BUSINESS OVERVIEW (Con/’J) Presently, our Group acts as the sole subcontractor to Dibena Enterprise for the following contracts: Date of  Parties to the  Nature of  Duration of the  Contract Value  No.  Award  Contract  Contract  Contract  (RM’miIlion)  (From ITo)  1.  17.06.2008  Dibena  Supply of  17.06.2008 until expiry  39.6  Enterprise and  consumables to  or tennination of main  Datasonic  NRD  contract  Corporation  2.  31.01.2011  Dibena  NGN project  29.04.2009 to  26.1  Enterprise and  03.09.2011 which was  Datasonic  subsequently extended  Technologies  until 31.12.2011  3.  01.05.2011′  Dibena  Supply of 5  01.5.2011 to  24.3  Enterprise and  units of  30.04.2013  Datasonic  MX6000,20  Corporation  units of  LCP9000 and  14 units of  CP80 Plus
Note: , The tender was submitted by Dibena Enterprise in 2008, but only recentiy Qwarded by the Government in Moy20n. Notwithstanding the irrevocable undertaking letters provided by Dibena Enterprise and Dato’ Abu Hanifah bin Noordin above, and that moving forward from 2010, all Government projects/contracts are being tendered and awarded directly by the Government to our Group via Datasonic Technologies, our Group will continue with the above subcontracting arrangement in view of the following: (i) With regards to the 151 contract, as stated in the table above, the Government had already granted a letter of award dated 2 September 2010 directly to Datasonic Technologies for the supply of consumables for the NRD project. The said contract, which was effective for a period from 1 December 2010 to 30 November 2011, was subsequently extended to 30 November 2012. Arising from this, our Group has been supplying the consumables directly to the NRD without having to rely on Dibena Enterprise; (ii) With regards to the 2nd contracts, as stated in the table above, for the NGN project, the contract has expired on 31 December 2011. Based on the terrns of the contract, our Group is still fulfilling its obligation for all purchase orders received on or before 31 December 2011 for the NGN project; and (iii) With regards to the 3″ contract, as stated in the table above, for the supply of 5 units of MX6000, 20 units of LCP9000 and 14 units of CP80 Plus to the NRD, the delivery has commence in December 2011. As such, the potential conflict will be resolved upon complete delivery of the said units. Pursuant to the irrevocable undertaking letter dated 19 August 2011 from Dibena Enterprise, any future order by NRD will be awarded directly to the Datasonic Group. 6. BUSINESS OVERVIEW (Cont’d) Although the dependency on Dibena Enterprise has been mitigated, our Group will continue to be dependent on NRD. The dependency is expected to be sustained given the three (3) new contracts secured from NRD, namely the supply of centralised and decentralised MyKad issuance system for NRD headquarters and 14 NRD branches nationwide, supply of 4 million of new raw MyKad with 100% polycarbonate material with new security features, OS and chips to NRD and the supply of new passport polycarbonate datapage and laser engraving personalisation equipments to the Immigration Department of Malaysia THE RESTOF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 6. BUSINESS OVERVIEW (Cont’d) 6.8 SUPPLIERS 6.8.1 Types, Sources aud Availability of Materials OUf Group mainly purchases equipment, cards and consumables for sale or to be used in the smart card personalisation services. The breakdown of purchases by our Group for our provision of ICT solutions, customisation of software and hardware for the FYE 31 December 2011 and the FPE 29 February 2012 is as follows: < —–­FYE 31 December 2011 ——–>  < ———FPE 29 Februarv 2012 ——–>  Type of purchases  Value of nurchases  0/0 of total Group Durchases  Sources of SUDDlv  Value of Durchases  % of total Group Durchases  Sources of SUDDlv  Local  ImDort  Local  ImDort  RM’OOO  %  %  %  RM’OOO  %  %  %  Consumables Cards Equipment Software Sub-contract/Services:+: Others (mainly freight charges)  6,446 5,966 9,857 445 9,401 412  19.82 18.34 30.30 1.37 28.90 1.27  1.39 5.49 3.82 0.48 24.99 0.30  18.43 12.85 26.48 0.88 3.92 0.97  842 555 2,505 32 1,117 204  16.02 10.56 47.67 0.61 21.26 3.88  -9.56 8.11 -11.28 0.08  16.02 1.00 39.56 0.61 9.98 3.80  Total  32,527  100.00  36.47  63.53  5,255  100.00  29.03  70.97
Note:  •  The sub-contract/services purchased by us are mainly as/allows:  (iJ  Sub-contract by Datasonic Technologies to Datasonic Corporation/or the Maintenance and Technical support services in NRD; and  (ii)  Sub-contract works/or NGN projectfor Telekom Malaysia Berhad, sub-contract works to support the Maintenance ofImmigration Department of  Malaysia and BPA project.
The purchase price of the above has remained stable over the last five (5) years. We are therefore not exposed to material price fluctuations in our purchases. In addition, there has been no shortage in the past. As we are the exclusive distributor for Datacard® Central Issuance Systems and Solutions in Malaysia, we do not expect to face any supply problem for our purchases of consumables and equipment. 83 6. BUSINESS OVERVIEW (Conl’d) 6.8.2 Major Suppliers Our major suppliers (i.e. those which contributed 10% or more oftota! purchases) for the past four (4) FYE 31 December 2008 to 2011 and the FPE 29 February 2012 are as follows: Types of products and  Approximate  <  FYE 31 December  > …  I’PE 29 I’ebru.-r~
services  Icneth of  Major Supplier  purchased  relationship  2008  2009  2010  2011  2012  Datacard Corporation  …. ears  RM’OOO  %  RM’OOO  %  RM’OOO  %  RM’Ooo  %  RM’Ooo  %  Printing system and solutions, and con sum abies  21  6,641  61.49  3,408  34.92  4,618  26.13  10,211  31.39  1,774  33.76  Digital Identification  Printing  3  .  .  476  4.87  – .  3,577  11.00  1,101  20.95  Solutions Pie. Ltd.  system and  solutions. and  consurnables  Excelpoint Systems (Pte) Ltd  Chip Cards  2  .  .  – – 2,015  11.40  .  .  ·  – Morpho Cards  Chip Cards  5  1,032  9.56  2,184  22.37  941  5.32  1,588  4.88  ·  – (Singapore) Pte. Ltd.  (formerly known as  Sagem Orga  (Singapore) Pte Ltd)  Intelhum Sdn. Bhd.  Sub­ 7  1,203  11.14  436  4.47  – – .  – ·  – contracting  services  Total by major  8,876  82.19  6,504  66.63  7,574  42.85  15,376  47.27  2,875  54.71  suppliers  Total purchases  10,799  100.00  9,761  100.00  17,677  100.00  32,528  100.00  5,255  100.00  Total number of suppliers  27  38  86  149  48
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6. BUSINESS OVERVIEW (Cont’d) OUf purchases are sourced from local as well as foreign suppliers. The foreign suppliers are located in countries such as US, Singapore, China and Italy. Over the last four (4) FYE 31 December 2008 to 2011 and the FPE 29 February 2012, Datacard Corporation was our single largest supplier. Therefore, our Group is dependent on Datacard Corporation for the supply of printing system and solutions, including consumables. Nevertheless, OUf Group has established a long term business relationship with Datacard Corporation since 1983. We have been the exclusive distributor of Datacard® Central Issuance Systems and Solutions in Malaysia since 1991 and this exclusive right has recently been extended for a period of three (3) years from I April 2011 to 31 March 2014. 6.8.3 DIstributorship As at the LPD, we have been granted distributorships by Datacard Corporation as detailed below: Supplier Datacard Corporation  Type of DIstributorship Exclusive distributor Non-exclusive distributor  Salient Terms and Conditions Datasonic Corporation has been appointed to distribute for resale to end users, within Malaysia of the following exclusive products which are part of the Datacard® Central Issuance Systems and Solutions: (i) MXI000; (ii) MX2000; (iii) MX6000; (iv) Maxsys; (v) MXD/MXi; (vi) PB6500; and (vii) CI supplies and parts Datacard reserves the right to use any distribution method it may select at any place, including but not limited to Malaysia for the non-exclusive products for the desktop products comprising, amongst others: (i) 150i embossing system; (ii) 280 series card personalisation system; (iii) 450 embossing system; and (iv) FP65i. Status of Compliance I Expiry Date of Distributorshio This distributorship is effective from 1 April 2011 to 31 March 2014.
85 6. BUSINESS OVERVIEW (Cont’d) Snpplier Digital Identification Solutions Group Gct International Fzco (“GET”)  Type of Distributorship Exclusive distributor Exclusive distributor Salient Terms and Conditions In view of the mutual commitment between Datasonic Technologies and Digital Identification Solutions Group on thc supply of thc LCP9000 .desktop laser colour printers programme for the MyKad project, Datasonic Technologies has been appointed as exclusive distributor for Digital Identification Solutions LCP9000 desktop laser colour printers and consumabJes in 1vlaiaysia and the MyKad project. Ministry of Home Affairs required that Datasonic Technologies be the local supplier of all ink ribbons and Crystagram holographic laminate film (“Consumables”) for the GET/Toppan passport issuance system (“Project”) pursuant to a supply contract entered into between the parties on 23 April 2012 (“Supply Contract”). GET will supply Datasonic Technologies exclusively with Consumables necessary for the Project in accordance with the requirements of Ministry of Home Affairs. Status of Compliauce / Expiry Date of Distributorship This distributorship is effective from 10 October 2011. This Supply Contract shall be effective for one (I) year from 23 April 2012 and will be automatically renewed for an additional one (l) year unless notice is provided by either party within thirty (30) days of the then current term. This Supply Contract will be automatically extended for as many years as the Customer Contract is extended by the Customer and such contract requires the sale of the Consumables to Datasonic Technologies.
86
6. BUSINESS OVERVIEW (Cont’d) MAJOR LICENCES, PERMITS AND REGISTRATIONS As at the LPD, the major licences issued to our Group are summarised as below:
Company Datasonic Corporation Datasonic Corporation Datasonic Corporation DatasonlC Corporation Datasonic Corporation Datasonic Corporation  Issuing Authority Visa MasterCard MEPS MEPS MEPS MEPS  Type of Licences/Description Scope of Certification: i) Magnetic Stripe Personalizer ii) IC Personalizer To perfann the card production activities e.g. card mailing, card personalizing, card embossing, card encoding and chip personalisation ATMI e-Debit Oberthur Cosmo v4 SDNDDA ATMI e-Debit JMV PRO V2 on ST23ZL48 ATMI e-Debit ST23YR18 PRISMA CP -18K ATMI e-Debit ST23YS08 PRISMA BP -8K Issue Date 1Validity Period Salient Conditions 1 January 2012 1 Nil With effect from 1 January 2012 to 31 December 2012 1 April 2012 1 With Nil effect from 1 April 2012 to 30 April 2013 2 September 20101 Nil With effect from 2 September 2010 to 1 September 2012 26 March 20121 Nil With effect from 26 March 2012 to 25 March 2014 5 July 20111 Nil With effect from 5 July 2011 to 4 July 2013 5 July 20111 Nil With effect from 5 July 2011 to 4 July 2013  Status of Compliance Complied Complied Complied Complied Complied Complied
87 6. BUSINESS OVERVIEW (Cont’d) Company Datasonic Corporation Datasonic Technologies  Issuing Authority MEPS MOF  Type of Licences/Description ATMI e-Debit i) MULTOS MCi i8K on INFINEON SLE66CXi 86PE ii) MULTOS MLi 20K on INFINEON SLE66CLX206PEM iii) MULTOS MLi 36K on INFINEON SLE66CLX360PEM Company Registration Certificate* Confinnation registration of Datasonic Technologies in the field of provider! provision of services under sectors, fields, and sub-fields as listed below: 1. Personal computer & related peripheral & services 2. Small to large multi-user systems & services 3. Workstations and related peripheral & services 4. Software product & services 5. Other computer related services 6. Networking products & services 7. Laminated License/Certification & Security Pass 8. Communication products (“alat perhubungan”) 9. Teaching Aid Equipments (“alat bantuan mengajar”) Issue Date I Validity Period 4 May 20i II With effect from 4 May 2011 to 3 May 2013 18 September 20111 With effect from 18 September 2011 to 17 September 2014 Status of Salient Conditions Compliance Nil Complied Equity Conditions: Complied No equity conditions imposed. Major Conditions: L This licence js granted based on information provided by Datasonic Technologies. 2. Any changel alteration of information provided should be amended! updated via online services Le. “Modul Kemaskini Profil” at ~perolehan.gov.my within 21 days from the date of modification. 3. The company shall disclose all the information if requested by the MOF within such period as set by the MOF.
88
6. BUSINESS OVERVIEW (Cont’d) Issuing Issue Date / Validity Status of Company Authority Type of Licencesmescription Period Salient Conditions Compliance 10. Signaling and Communications 4. The company must ensure that / Broadcasting Equipments there is no duplicity in the grant of (“alat semboyan perhubungan/ registration for the categories of penyiaran”) services under this certificate to the II. Hospital! Laboratory following companies:-Equipments (“Alat i. Having common owners, kelengkapan hospital! board of directors, directors, makmal”) management and employees; 12. Clothing/ safety equipment ii. Operating in the same premise. (“Pakaian / Alat keselamatan”) 5. The MOF has a right to conduct site visit or examine the audit at any time without first informing the company. 6. In the event of failure to comply with terms & conditions of registration, (including the abovementioned) would render; i. Code of respective fields andlor Datasonic Technologies’ registration be cancelled or suspended or revoked; II. The owner/ board of directors/ director be subjected to disciplinary action (e.g. blacklisted without notice if the information supplied is not genuine! false) 89 6. BUSINESS OVERVIEW (Cont’d) Company Datasonic Technologies  Issuing Authority MOF  Type of Licences/Description Issue Date! Validity Period Salient Conditions 7. The company’s registration with the MOF could be revoked! cancelled and automatically extinguished from System ePerolehan in the event Datasonic Technologies failed to apply for renewal of registration after 1 year from the date of expiry of registration. Under such circumstances, Datasonic Technologies would have to make a new application. 8. Datasonic Technologies’ MOF registration shall be cancelled, suspended or revoked if the company committed any breach provided in the MOF licence. 9. The company must ensure that the registration with MOF is valid throughout the period the contract is in force. Status of Compliance Bumiputera Company Registration Certificate! Certify that Datasonic Technologies has been granted! awarded the status as “Syarikat Bumiputera” by MOF. 18 September 2011/ With effect from 18 September 2011 to 17 September 2014 Equity Conditions: Complied 1. The company shall always strive to maintain and increase its ranking so that: i. The Bumiputera composition in the equity structure, members of Directors, Chief Executive Officers, Executive Directors, General Managers, key personnel, employees within the management level and all other employees shall always exceed 51 %.
90 6. BUSINESS OVERVIEW (Cont’d) Issuing Issue Date / Validity Status of Company Authority Type of Licences/Description Period Salient Conditions Compliance ii. Bumiputera shall, as majority, play an important role in the company’s business dealing, in monitoring or supervising management of the company, in managing company’s finance, in making important decisions as well as attending meetings & other official dealings on behalf of the company. Major Conditions: 1. If there is any alteration to any of the condition stated above, MOF should be informed immediately so that relevant amendment in the Registration Record can be made.
2. Any change/ alteration of information provided should be amended via online services i.e. “Mcdul Kemaskini Profil” at www.eperolehan.gov.my within 21 days from the date of modification. Failure in doing so, MOF may raise doubt on the authenticity of the company’s Bumiputera’s status.
3. The Bumiputera status awarded to the company will be revoked and its status in the ePerolehan System be cancelled ifMOF found out that:

9] 6. BUSINESS OVERVIEW (Cont’d) Company Datasonic Technologies  Issuing Authority Dewan Bandaraya Kota Kinabalu  Type of Licences/Description Business License of Datasonic Technologies’ / Sabah Office Issue Date / Validity Period Salient Conditions i. The company had breached the terms & conditions as mentioned above; or ii. The company’s management and its contract has been passed on to another party. 4. MOF is authorised to enforce disciplinary action upon the company and cancelled the information in relation to company’s registration if: i. The company’s Bumiputera’s status is cancelled/ revoked in ePerolehan system ii. The company’s registration is suspended! revoked in ePerolehan system iii. Other non~comp1iance with the rules which entitled MOF to revoked and cancel the company’s Bumiputera’s status in ePerolehan system. 5. The company must ensure that the registration with MOF is valid throughout the period the contract is in force 13 January 2012/ Nil With effect from 13 January 2012 to 31 December 2012 Status of Compliance Complied
92 6. BUSINESS OVERVIEW (Cont’d) Issuing Issue Date / Validity Status of Compauy Authority Type of LicenceslDescription Period Salient Conditions Compliance Smart  Ministry of  MSC Malaysia Status  22  May 2012 (Date  The  MSC  Malaysia  Status  Company  Consult  Finance  of acceptance)  hereby agrees to:  Solutions  / valid until revoked  unless  (i)  complete business registration of the proposed entity as a locally incorporated company under the  Companies Act 1965 within one (1)  month from  the date of this letter,  commence  operations  of  the  proposed  entity  within  six  (6)  months from the date of this letter,  and  undertake  such  activities  specified  in  the  MSC  Malaysia  Status  Company’s  business  plan  (“Business Plan”)  as  approved by  MDeC  below  (“MSC  Malaysia  Qualifying  Activities”)  within  six  (6)  months  from  the  date of this  letter or by such date(s) as may be  specified  in  the  Business  Plan  (which date(s) may be extended or  modified with the written consent of  Multimedia  Development  Corporation  Sdn  Bhd  (“MDeC”))  and  thereafter  continue  with  such  business  and  actIvItIes  unless  otherwise approved by MDeC. The  MSC Malaysia Qualifying Activities  are as follows:
Met and will continue to be met 93 6. BUSINESS OVERVIEW (Cont’d) Issuing Issue Date / Validity Status of Company Authority Type of Licences/Description Period Salient Conditions Compliance a) Research, design, development and commercialization of the following smart card solution: . Total Smart Card Solution (TSCS) b) Provision of implementation, technical services and maintenance related to the above mentioned solutions in accordance to the business plan Any changes proposed to the above MSC Malaysia Qualifying Activities as detailed in the Business Plan must receive the prior written consent of MDeC; (ii) locate the implementation and operation of the MSC Malaysia Qualifying Activities in a Designated Premises in an MSC Malaysia Cybercity with minimum office space of 2,000 sq ft, within six (6) months from the date of this letter. The MSC Malaysia Status Company shall obtain MDeC’s prior written approval in the event of any changes in the location or address ofthe company; (iii) ensure that at all times at least fifteen percent (15%) of the total number of employees excluding Met and will continue to be met Complied and Noted(l) Complied and will continue to be 94 6. BUSINESS OVERVIEW (Conl’d) Issuing Issue Date I Validity Status of Company Authority Type of LiccllceslDcscription Period Salient Conditions Compliance support staff) or the MSC  complied  Malaysia Status Company shall be  “knowledge workers” (as defined  by .MDeC). “Knowledge  workers” shall be recruited,  employed and I or appointed  solely for the purpose of  undertaking the MSC Malaysia  Qualifying activities;  (iv)  ensure that any products produced  pursuant to the MSC Malaysia  Qualifying Activities are original,  and that no part or portion of such  Noted  Product is an infringement or  violation of any intellectual  property or any proprietary rights  of any third party, or constitutes a  misappropriation of know-how  belonging to any third party;  (v)  submit to MDeC a copy of the  MSC Malaysia Status Company’s  Annual Report and Audited  Statements in parallel with  Noted  submission to the CCM;  (vi)  ensure that all informalion andlor  documents furnished by the MSC  Malaysia Status Company to  MDeC or any other authority or  Noted  agency do not contain any false,  untrue or inaccurate statements or  omit to state any facts, the  omission of which would make
95 6. BUSINESS OVERVIEW (Conl’d) Compauy  Issuing Authority  Type of LicenceslDescription  Issue Date / Validity Period Salient Conditions any statements made therein in the light of the circumstances under which they are made, misleading; (vii) inform and obtain the prior approval of MDeC for any proposed change in the name of the MSC Malaysia Status Company; (viii) inform MDeC of any change in the equity structure or shareholding structure of the MSC Malaysia Status Company, or such other changes that may affect the direction or operation of the MSC Malaysia Status Company. MDeC must be informed of any change before steps are taken to effect such change; and (ix) comply with all such statutory, regulatory and/or licensing requirements as may be applicable, including but not limited to the Transfer ,Pricing Guidelines issued by the Inland Revenue Board of Malaysia on 2 July 2003, and such other amendments as may be applicable from time to time. Status of Compliance Noted Noted Complied and noted
96 6. BUSINESS OVERVIEW (Conl’d) Notes: • Certificates issued by the Ministry ofFinance which are required/or Datasonic Techn%gies to bl’d/tenderfor Government projects (1) Please refer to Section 6.14.2 ofthis Prospectus for details on the Smart Consult Solutions’ premises. 6.10 INTELLECTUAL PROPERTY RIGHTS Our Group has applied or registered the following trademarks with the Intellectual Property Corporation of Malaysia (“MyIPO”): Class Application Trademark LOl!o Rel!istrant No. Descriotion of Class Headine: of Trademark No. Status of Application

Datasonic Corporation  42  Datasonic Corporation  36  Datasonic Corporation  35
Technical consultation and research in the field of customer credit card programs; computer voice and audio programming services; all included in Class 42. Fraud management services with respect to financial, credit and debit card services; issuing credit debit and other cards and digitally capturing photos and other images to be placed on the cards; fraud detection services; wireless electronic processing of credit card, and chip card transactions; credit card debit card and chip card authorizations; credit card debit card and chip card payment; all included in Class 36. Data searches in computer files; data processing in the fields of business sales and inventory, providing data processing and data searches for financial institutions; all included in Class 35. 03014816 03014817 03014818 Registered and valid from 31 October 2003 t0310ctober2013 Registered and valid from 31 October 2003 to 31 October 2013 Registered and valid from 31 October 2003 to 31 October 2013 97 6. BUSINESS OVERVIEW (Coni’d) Class No.

Datasonic 16 Corporation
Datasonic 9 Corporation REGIONAL Datasonic 35 PERSONALISAnON Corporation SOLUTION Description of Class Headine. of Trademark Printed matters such as letterheads, envelopes, name cards, pamphlets, catalogues, periodicals, books, magazines, sign boards, diaries, papers, card boards, bill boards, stationery, photographs, teaching materials, office files, printed forms, stickers, pictures, post cards, printed publications, newsletters, posters periodicals, membership cards; all included in Class 16. Blank magnetic cards; pre-recorded or encoded magnetic cards; computer software and programs; relational datahase integration, database management, data access, data control; computer software for performing and processing electronic commerce and procurement services; computer software , hardware, tenninals, printers, check reader, smart chip card readers, and peripherals for use in connection with smart chip card transactions; all included in Class 9. Data processing and billing and payment services in the fields of facilities management, credit and debit card, computerised order and data processing in the fields of business sales and inventory, providing data processing and customer services for financial institutions; advertising services namely selective insertion of promotional and infonnational materials into mailings directed to credit card holders, and mail processing services for others, developing and implementing electronic commerce capabilitjes for clients via a global communications network and automated teller machines, providing information management services namely storage and retrieval of infonnation and data and preparing models and Application No. 03014819  Status of Aoolication Registered and valid from 31 October 2003 to 3 I October 20 13  03014820  Registered and valid from 31 October 2003 to 31 October 2013  03015288  Registered and valid from II November 2003 to 11 Novem ber 2013
98 6. BUSINESS OVERVIEW (ColI/’d) Class Application Trademark Logo Registrant No. Description of Class Heading of Trademark No. Status of Application REGIONAL PERSONALISATION SOLUTI 0 N REGIONAL PERSONALISATION SOLUTION REGIONAL PERSONALlSATION SOLUTI 0 N Datasonic Corporation  36  Datasonic Corporation  42  Datasonic Corpor~tion  16
reports based on such infonnation for use in management activities, credit and risk management analysis, and assessment services, marketing services for others namely database modelling scoring and value added products for card issuers, deposit banks and other direct marketers, data processing services in the field of credit card, debit card and chip card transactions and payments, and applicant background screening services; all included in Class 35. Fraud management services with respect to financial credit and debit card services; issuing credit debit and other cards and digitally capturing photos and other images to be placed on the cards; fraud detection services; wireless electronic processing of credit card and chip card transactions; credit card debit card and chip card authorizations; credit card debit card and chip card payment; all included in Class 36. Technical consultation and research in the field of customer credit card programs; computer voice and audio programming services; all included in Class 42. Printed matters such as letterheads, envelopes, name cards, pamphlets, catalogues, periodicals, books, magazines, sign boards, diaries, papers, card boards, bill boards, stationery, photographs, teaching materials, office files, printed fonns, stickers, pictures, post cards, printed publications, newsletters, posters periodicals, membership cards; all included in Class 16. 03015289  Passed full examination  03015291 03015292  Registered and valid from 11 November 2003 to 11 November 2013 Accepted
99 6. BUSINESS OVERVIEW (Con/’d) 6.11 DEPENDENCY ON PATENTS, INTELLECTUAL PROPERTY RIGHTS, LICENCES, INDUSTRIAL, COMMERCIAL OR FINANCIAL CONTRACTS 6.11.I Dependency on Intellectual Property Rights Save as disclosed in Section 6.10 of this Prospectus, our Group is not dependent on any patents or intellectual property rights for our business operations. 6.11.2 Dependency on Major Licences Save as disclosed in Section 6.9 of this Prospectus, our Group is not dependent on any major licences, for our business operations. 6.11.3 Dependency on Industrial, Commercial and Financial Contracts OUf Group is not highly dependent on any material contracts or agreements including industrial, commercial and financial contracts, which are material to our business or profitability. 6.12 REGULATORY REQUIREMENTS AND ENVIRONMENTAL ISSUE Save as disclosed below, as at the LPD, our Board believes that we are in compliance in respect of all regulatory requirements (including land rules and building regulations) and environmental issues which may materially affect our Group’s operations and/or utilisation of assets: (i) The property owned by our Group bearing the postal address of No. 54 and 56 Jalan Gasing, 46000 Petaling Jaya, Selangor with the titles description of P.N. 6443 and P.N. 6444. Lot 567 and 568, Seksyen 5, Bandar Petaling Jaya, District of Petaling (“Property”) is currently used as administrative office for Datasonic Corporation. However, based on the land search results conducted on the titles, the express condition is “‘Bangunan Kediaman”. Pursuant to Section 125
(I) of the National Land Code, 1965, this is a breach of express condition. We have appointed Urban Scale, a land planning consultant firm providing consultancy on land planning services, which had submitted an application to the local authorities on 28 October 2011 for the change of the building usage for the Jalan Gasing Administrative Office. As at the LPD, Majlis Bandaraya Petaling Jaya has granted an approval for the changed of building usage from “Bangunan Kediaman” to “Pejabat”.
(ii) The Certificate of Fitness (“CF”) in relation to the Property, which we purchased in 2008, is not available to our Group. Datasonic Corporation has, by way of letter dated 31 May 2011, written to the Director of Majlis Bandaraya Petaling Jaya (“MBPJ”) to request for the Certificate of Fitness. We have also appointed Urban Scale to follow up with the MBPJ on this matter. However, MBPJ has reverted via a letter dated 28 July 20 II that they were unable to locate the building plan.

In regards to the above and the conditions imposed by the SC’s approval letter dated 27 September 2011 in relation to the Jalan Gasing Administrative Office and the extension of time to comply with the said imposed conditions as disclosed in Section 9.1 of this Prospectus, our Group has on 27 April 2012 appointed Tech Realtors as our property agent to sell the Jalan Gasing Administrative Office, as our Group intends to relocate the Jalan Gasing Administrative Office. In the event that the aforementioned properties are not disposed during the abovementioned timeframe, Datasonic will relocate its Jalan Gasing Administrative Office. As at the LPD, our Group is identifying and negotiating for a suitable location for its adminstrative office within the Klang Valley and the abovementioned properties has not been disposed. 6. BUSINESS OVERVIEW (Conl’d) 6.13 INTERRUPTIONS TO BUSINESS AND OPERATIONS We have not experienced any material interruption in business which had a significant effect on our operations during the past twelve (12) months preceding the LPD. 6.14 PROPERTY, PLANT AND EQUIPMENT 6.14.1 Own Properties As at the LPD, we own the following properties: Registered/ Beneficial Owner  TitleJAddress  Description! Existing Use  Tenure  Land Area/ Built -up Area sq. ft.  Audited NBV as at 29 February 2012 RM’OOO  Issuance Date of Certificate of Fitness  Datasonic Corporation  P.N. 6443, Lot 567 Seksyen 5 Bandar Petaling Jaya District ofPetaling! No. 54 Jalan Gasing 46000 Petaling Jaya SelangorA  I-storey bungalow/ Currently being used as office  99 years leasehold expiring on 3 October 2072  8,182.73  1,285  •  Datasonic Corporation  P.N. 6444, Lot 568 Seksyen 5 Bandar Petaling Jaya District ofPetaling/ No. 56 Jalan Gasing 46000 Petaling Jaya SelangorA  I-storey bungalow/ Currently being used as office  99 years leasehold expiring on 23 April 2066  7,263.76  1,277  •  Datasonic Corporation  HS(D) No. 223124, PTNo. 6 Seksyen 20, Bandar Petaling Jaya, District ofPetaling! Wisma Sinflora, No. 2D Jalan Kilang 206, 46050 Petaling Jaya, Selangor  4-storey commercial building / Currently vacant  60 years leasehold property expiring on 3 August 2065  1,189.74  2,560  #
101 6. BUSINESS OVERVIEW (Cont’d) Notes: • Please refer to Section 6./2 a/this Prospectusforfurther details in relation to the CF. A Do/asanic has appointed Tech Reallors as our property agent to dispose the Property by 26 September 2011. III the event tllat the aforementioned properties are not disposed during the time/rame. Darosanic will relocate its Jalan Gasing Administrative Office. As at the LPD, our Group is identifying a suitable location within the Klang Valley, # Please refer to Section 6./5.1 (if) of/his Prospectus/orfilyther details in relation to the CF. 6.14.2 Rented Properties As at the LPD, we rent the following properties: Land/Gross  Descriptiob!  Rental Period  Built-up  Tenant  Landlord  Address  Existing Use  Rental  Area  RM  sq. ft.  Datasonic  Business  No. 3-3  3rd floor of a 4 storey shop- One (1) year  RMl,200 per  1,200  Corporation  Advancement  The Highway Centre  office! Used for office and  from 1  month  Scrvices Sdn  Jalan 51/205  storage of documents,  December 2011  Bhd  Section 51  envelopes and leaflets  to 30 Novembcr  46050 Petaling Jaya Selangor  2012  Darnl Ehsan  Datasonic  Chong Loo Sang  No. 55-2  2″” floor of a 4 storey shop- Two (2) years  RMI,400 per  1,200  Corporation  Realty Sdn Bhd  The Highway Centre Ja1an  office! Used as showroom,  from 1 March  month  51/205  office and storage  2011 to 28  Section 51  Febrnary 2013  46050 Petaling Jaya Selangor  Darnl Ehsan  Datasonic  Petrotrek  Sdn  No. 15-3  3rd floor of a 4 storey shop- Two (2) years  RMI,300 per  1,200  Corporation  Bhd  The Highway Centre Jalan  office! Used for office  from 1 August  month  51/205  2011 to 31 July  Section 51  2013  46050 Petaling Jaya  Selangor Darnl Ehsan  102
6. BUSINESS OVERVIEW (Con/’d) Land/Gross  Description!  Rental Period  Built-up  Tenant  Landlord  Address  Existing Use  Rental  Area  RM  sq. fl.  Datasonic  Tan Lip Heng  No.9-I  1SI floor of a 4 storey shep- One (I) year  RMI,300 per  1,200  Corporation  The Highway Centre Jalan  office/ Used for office  from 1  month  51/205  September 2011  Section 51  to 31 August  47300 Petaling Jaya Selangor  2012  Darul Ehsan  Datasonic  Soh Hyap Chye  No.IIG  Ground floor of a 4 storey  Three (3) years  RM4,600 per  4,500  Corporation  The Highway Centre Jalan  shop-office! Used for  from 1 Oetober  month  51/205  administrative. operational  201lt031  Seclion 51  and production, office  October 2014  46050 Petaling Jaya Selangor  Darul Ehsan  Datasonic  PNB  Level 6  6th floor of a 12 storey  Six (6) months  RM27,974.70  7,173  Corporation!  Commercial Sdn  Bangunan Setia I  commercial building! Used  from 15 April  (Office) and  Datasonic  Bhd  15, Lorong Dungun  for office on a sharing  2011 to 15  RMI,008.00  Technologies  Damansara Heights 50490  basis with Datasonic  October 2011″  (Parking) per  Kuala Lumpur  Technologies  month  Datasonic  Datasonic  Leve16  6th floor ofa 12 storey  Six (6) months  RM13,987.35  7,173  Technologies  Corporation  Bangunan Setia 1  commercial building! Used  commencing  (Rental) and  (sub-tenant)  IS, Lorong Dungun  for office on a sharing  from 15 April  RM693.00  Damansara Heights 50490  basis with Datasonic  20lltol5  (Parking) per  Kuala Lumpur  Corporation  October 20 II ”  mOnlh
103 6. BUSINESS OVERVIEW (Cont’d) 6. BUSINESS OVERVIEW (Cont’d) Tenant  Landlord  Address  DescriptionJ Existing Use  Rental Period  Rental RM  Land/Gross Built-up Area sq. ft.  Datasonic Technologies  OSK Trustees Berhad (as Trustee for UOA REIT)  Unit 0-2, Ground Floof, Wisma UOA Pantai, No. II, Jalan Pantai Jaya (Jalan 4/83A) 59200 Kuala Lumpur  Ground floor of a 7 storey commercial building / Used as Telekom Malaysia Berhad’s NGN project  Six (6) months commencing from I January 2012 to 30 June 2012A  RM24,62 1.00 (inclusive of service charges) per month  7,879  Datasonic Technologies  Anajon Sdn Bhd  G~1-3, Lot 40, 1st Floor, Block G, Alamesra Plaza Ulama at Lorong Plaza Utama 1, Alamesra, Jalan VMS, Sulaman-Coastal Highway, 88400 Kota Kinabalu, Sabah  1st floor of a 2 storey commercial building fUsed as representative office in Sabah  One (1) year from I March 2012 to 28 February 2013  RMI,200 (inclusive of monthly service charge of RMIOO) per month  1,200  Datasonic Technologies  Cyberview Sdn Bhd  Unit A-G-03 SME Technopreneur Centre 2 Cyberjaya (SME 2) 2260 Jalan Usahawan 1, Cyber 6, 63000 Cyberjaya, Selangor Darul Ehsan  Ground floor ofa 3 storey commercial building I Solely and Exclusively for our engagement in business of customisation of software and hardware solutions, project management and consultancy  Two (2) years commencing from 1 January 2012t031 December 2013  RM2,905.00 per month  1,162  Smart Consult Solutions  Cyberview Sdn Bhd  Unit B-I-03, B-I-04 and B­1-05 SME Technopreneur Centre (SME I) Cyberjaya, 2270 Jalan Usahawan 2 Cyber 6, 63000 Cyberjaya, Selangor Darul Ehsan  Ground floor of a 3 storey commercial building/ Solely and exclusively for our business in Software Development  Two (2) years commencing from I November 2011 to 31 October 2013  RM5,360.00 per month  2,144  104
Tenant Datasonic  Landlord Anuar bin Zainal Abidin Address Unit 23-2 Gaya Bangsar Condominium No.1, Jalan Bangsar Vtama, 59000 Kuala Lumpur  Description! Existing Use Apartment! Residential for overseas business consultant  Rental Period One (I) year from 1 May 2012 to 30 April 2013  Rental RM RM3,400  Land/Gross Built-up Area sq. ft. 1,192
Notes: • Automaticrenewal 0/thetenancy period withonemonthnotice oftermination. A The tenancy agreement has been renewed/or a one (1) year tenancy period/rom 1 July 2012 to 30 June 2013.
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6. BUSINESS OVERVIEW (Conl’d) 6.15 FUTURE PLANS, STRATEGIES AND PROSPECTS 6.15.1 Future Plans and Strategies To achieve our business goals and objectives, we have developed the following future plans and strategies to consolidate and expand our business in Malaysia and overseas, The following chart illustrates the progress and roadmap in pursuing our vision of enriching life through advanced and innovative leT solutions and realising our mission ofbecoming an leT solutions provider in Malaysia and overseas, ll’adlnq and SeJVIees Provision of Secure IDand SmartCard Personalisation SelVices
2006-2007 2008·2010 2011-2015
Ntb: MA _ NIJIrppkltM Over the last 5 years, other than consolidating our position in GMPC projects in NRD and becoming one of the leading personalisation centres for financial institutions in Malaysia, our Group is transforming from a trading and services company to a ICT solutions provider in Malaysia, We have established significant presence in the Immigration Department of Malaysia for Visa & Pass system and e-passport personalisation solutions, Prime Minister’s Department for the BPA system, Ministry of Women, Family and Community Development for the ID system for the under-privilege groups and Telekom Malaysia Berhad for NGN. We recognise the importance of continuous R&D for quality management and development of innovative products to stay ahead of competition and expand our business in Malaysia and overseas, Our Group has invested in R&D, successfully developed high performance as for multi application secure ill programmes, web-enabled Visa & Pass system, i-Visa & e-Visa solutions, ICAO compliant e-passport solutions, multi model biometric solutions and Total HIS, 6. BUSINESS OVERVIEW (Cont’d) To acquire new technologies and expand our business locally and overseas, we have fonned business partnerships with globallCT players in US, Germany, Italy, Switzerland, China, Japan and Korea to exploit business opportunities not only in Malaysia, but also in overseas. Moving forward, multi application secure ID, ICAO compliant e-passport, i-Visa & e-Visa, multi model biometric solutions, e-Hospital solutions and telecommunication would be our targeted markets and would provide our Group new business opportunities for sustainable growth and profitability. The Listing will provide the funding for our continuous R&D and expansion programmes. Further details of our key future plans / projects include: (i) Continued Market Expansion in Established and Potential Service Areas We have established ourselves as a contender with a proven track record in the provision of secure ID and card personalisation services to the Government and non-Government sectors. Starting with mUlti-purpose secure ID and smart card personalisation services, we have now diversified into integrated leI solutions for smart cards and are expanding into the Government, telecommunications, financial, commercial, healthcare and transportation sectors. Apart from diversification, our Group has also identified business expansion plans to tap into growing industries and penetrate into new business areas. We plan to expand and diversify our service offerings to our existing customers and plan to expand into China and the ASEAN region, adding a third possible avenue for our growth. Our Group will continue to expand the market share and leadership position by way of securing more projects and new customers. whilst maintaining established customers. In addition, our Group plans to grow all our service areas. For instance, the sale of smart cards for the corporate sector which can be further enhanced by creating a larger customer portfolio or extending the present use of the smart cards to more applications. In addition to the established service areas, we plan to utilise all leT knowledge gained from these service areas to incubate and subsequently further develop our Group into an ICT solutions provider in both smart card personalisation system solutions and other ICT system solutions for the Government and non-Government sectors. The timeline to achieve this plan is from 2012 to 2015. (ii) Setting up of New Premises for Headquarter, RPS Centre and Smart Cards Manufacturing Plant To further improve our Group’s operations, increase our efficiency and to strengthen our market position in the leT business, we plan to set up a new headquarter cum RPS centre and smart cards manufacturing plant. Our Group has on 10 November 20 II, being the date after SC had approved our IPO as disclosed in Section 9.1 of this Prospectus, acquired a leasehold land together with a commercial building, bearing the address of No. 2D, Jalan Kilang 206, 46050 Petaling Jaya measuring approximately 1,189.74 square metres for a cash consideration of RM4.3 million. The acquisition of the said property was funded through bank borrowings and intemal1y generated funds. The commercial building is intended to house our new headquarter cum RPS centre. Prior to the completion of the acquisition, we were infonned that Sinflora Trading Sdn Bhd was not able to locate the CF of the said property from MBPJ. Our Group had on 31 October 2011 and 21 April 2012 written to MBPJ to request for a copy of the CF for Wisma Sinflora. Our Group will continue to follow up with MBPJ on this matter and, if necessary, will appoint a consultant by third quarter of 2012 to advice the Company on the appropriate course of action to be taken to obtain the CF. 6. BUSINESS OVERVIEW (Conl’d) Wisma Sinflora is currently vacant. We plan to commence renovation on our new headquarter cum RPS centre by end of 2012, subject to the CF being obtained. Upon completion of our new headquarter cum RPS centre, all our subsidiary companies namely Datasonic Corporation~ Datasonic Technologies and Smart Consult Solutions, will be housed in the new headquarter in order to enhance efficiency and promote cost effectiveness. The existing RPS centre will be decommissioned as soon as the new RPS centre is fully operational in the new office building in Wisma Sinflora. OUf Group has yet to decide on whether to continue with the tenancy of the existing RPS centre in the future. The new headquarter cum RPS centre is expected to have a built-up area of approximately 16,000 sq. ft. This will enable our Group to increase our production capacity by approximately 3,500 cards per day. The increased production capacity will improve our output for our card personalisation process, which in turn will enable our Group to expand our services to existing and new banking customers. A centralised location will also enable services to be more efficient, to enhance logistical arrangements and to consolidate activities within one area. Apart from that, our Group also plans to utilise part of our listing proceeds to set up a smart cards manufacturing plant for the production of smart cards (new raw MyKad for NRD). The manufacturing plant is expected to occupy approximately 11,000 sq. ft. of production floor space and a production capacity of approximately 750,000 smart cards per month. The location of the proposed manufacturing plan has yet to be identified at this stage. The timeline to achieve this plan is from 2012 to 2013. (iii) Government secnre ID and ICAO compliant e-passport Projects We will continue to work closely with Datacard Corporation, Digital Identification Solutions AG from Germany and IXLA S.A. from Italy to offer centralised and decentralised printing systems to the Government using laser engravable polycarbonate data page and laser printing systems. We are offering both high-speed and high-perfonnance card issuance systems, as well as desktop printing systems for secure ID project and proposed ICAO compliant e-passport projects. Upon Listing, we will utilise part of the listing proceeds to finance our R&D activities to strengthen and enhance our technical competencies in the provision of leT solutions such as multi application secure ID, Total HIS and ICAO compliant e-passport programmes in Malaysia and overseas. (iv) Mnlti-Purpose Student ID We plan to capitalise on our know-how in multi-purpose card system and solutions to provide multi-purpose student ID card system for the Government and private schools. Presently, many primary and secondary schools located throughout the country may have basic Student ID cards for their students, mainly for the use of identification. Smart cards will be issued as Student ID to each student and these smart cards will have multi-faceted uses which include student identification, storing of student infonnation, access control. attendance recording, authentication for examinations, card management system, database management (of student’S academic and extra-eurricular perfonnance) and e-payment solutions for the payment of school fees and purchases made at the canteen and! or the book-store. The timeline to achieve this plan is from 2012 to 20IS. 6. BUSINESS OVERVIEW (Con/’d) (v) BPA System and Application Software As at the LPD, the BPA system has been rolled out to 17 ministries and 21 agencies within the Government sector. Leveraging on our ability to customise solutions for our customers, such as the BPA system in the Prime Minister’s Department and the Visa and Pass system for the Immigration Department of Malaysia, we plan to market the BPA system and application software to other ministries and agencies. The timeline to achieve this plan is from 2012 to 2015. (vi) Telecommunications As part of our expansion and transformation plan, we plan to continue our venture into the provision of telecommunication network systems, which include the NON and emergency response system. The NON project in Telekom Malaysia Berhad was awarded to Huawei Technologies (M) Sdn Bhd in 2008 and Dibena Enterprise is the local partner of Huawei Technologies (M) Sdn Bhd in the above project. This project is part of our future plan to expand our business and exploit more business opportunities in the telecommunications industry. The timeline to achieve this plan is from 2012 to 2015. (vii) e-Hospital Solndons To promote medical tourism, the Ministry of Health Malaysia is encouraging public and private hospitals to attain the ICI accreditation for the Total HIS, in addition to the Malaysian Standard of Quality Healthcare (“MSQH”). There are about 140 government hospitals in Malaysia and more than 120 government hospitals do not have HIS yet. Our Group, via Datasonic Technologies, has developed a ICI-oriented HIS system and is submitting our proposal to the Ministry of Health to implement the JCI-oriented HIS system to government hospitals in Malaysia. In addition to government hospitals, we also plan to market our HIS to private hospitals, both locally and overseas The timeline to achieve this plan is from 2012 to 2015. (viii) Multi-Purpose Smart Card Solutions for Local and Overseas Markets Our Group plans to leverage on the expertise and experience gained from the GMPC project and EMV migration to expand our business in overseas. This will include total solution for multi application national ill programmes and EMV migration. In the short to medium term, we plan to expand into the markets within the ASEAN region and Middle East. Upon listing, we will able to capitalise on our experience and technical know-how and to allocate adequate resources to expand our business in overseas market. The timeline to achieve this plan is from 2012 to 2015. (xi) i-Visa, e-Visa and Multi Model Biometric Border Control System Leveraging on our experience in the development of Visa & Pass system and OS for the smart ill, we have developed a web-enabled Visa & Pass system based on service oriented platform. The new system will include i-Visa and e-Visa solutions and multi model biometric solutions for border control project in Malaysia and ASEAN countries. The timeline to achieve this plan is from 2012 to 2015. 6. BUSINESS OVERVIEW (Conl’d) 6.15.2 Prospects The market outlook for both the smart card and smart card solutions markets in Malaysia is positive, with demand being driven from existing applications (GMPC, PMPC and others), adoption by new market areas (loyalty, physical access and others), new technology and improvements (Near Field Communications (“NFC”) and contactless) as well as new applications being driven by the Government and financial sectors. Demand may be minimally impacted by the moderate interest from existing cardholders towards new applications in the near term but this is not expected to contribute any significant impact on the overall market demand. In terms of supply, a stable and reliable supply of product and services in both the smart cards market and smart card solutions market can be attributed to the presence of established market players, continued support by the Government and financial sector and a reliable supply of IC chips for smart cards manufacturing. Supply is only expected to be minimally impacted by the presence of cheaper alternatives like magnetic stripe cards or lower technology proximity cards. However, these alternatives are usually used in applications which do not require high security and hence, are not expected to pose a serious challenge to the smart cards and smart card solutions markets. With the positive market outlook for the smart card and smart card solutions markets, market players are expected to benefit and continue to grow over the next few years. Among the factors which enable established market players with a proven track record to sustain strong growth may include their historical record of success, established partnerships with vendors, proven ability to meet stringent standards and compliance issues as well as proven financial capacity to invest in the required machinery and equipment. In addition, market players which participate in more than one area have greater diversification and more products and services in their portfolio to offer to their customers. These may include Datasonic Corporation and IRIS Corporation Berhad. Certain market players may also have gained sufficient experience and expertise from their involvement in the smart cards market to further expand into the greater ICT industry, thus providing them with a competitive advantage breaking into a growth industry. Datasonic Corporation has taken this route and has branched into becoming an lCT solutions provider, with some integrated customised solutions development and implementation projects across the governmental and telecommunications sector under its belt. Market players in this space are expected to perform even better than those who solely participate in the smart cards or smart card solutions market. Branching out into the ICT industry is expected to bring in good results for market players like Datasonic Corporation. According to Malaysia External Trade Development Corporation, the period from 2005 to 2010 saw ICT expenditure in the country growing at a CAGR of 10.0 percent to RM22.0 billion. The Malaysian ICT industry is expected to continue to see positive prospects into the long term. In addition, the Malaysian ICT industry is expected to continue to see positive prospects into the long term with the growth in 2011 expected at just below 10 percent. The Government further expects that the ICT industry will gain more momentum due to the convergence of digitalisation and its impact on other industries and the economy. The ICT industry has been eannarked as one of the National Key Economic Areas in the lOMP and aims to shift the country from being an average producer of general ICT products and services to a niche producer of selected ICT products and services, and to progress from being a net importer to a net exporter. Continued growth in the ICT industry is expected with favourable Government policies and plans as outlined in the Tenth Malaysia Plan and Economic Transformation Programme. (Source: IMR Report) 6. BUSINESS OVERVIEW (Cont’d) Based on the positive outlook in the leT industry, our future plans and strategies and our competitive strengths as outlined in Section 6.2.6 of this Prospectus, our Board is of the view that we are well positioned to achieve sustainable growth. Whilst we recognise the market challenges in the industry and the risk factors as outlined in Section 4 of this Prospectus, we are committed to implement our future plans and strategies to achieve our business goals and objectives. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFTBLANK

 

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